TEMPE ETO REF 2026 - PURCHASE AGREEMENT.DOCX
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03/24/26
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PURCHASE AGREEMENT
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Seller
and
THE CITY OF TEMPE, ARIZONA
Related to
CITY OF TEMPE, ARIZONA
EXCISE TAX REVENUE REFUNDING OBLIGATIONS
SERIES 2026
Dated as of June 1, 2026
(i)
TABLE OF CONTENTS
Section 1.
Definitions ...............................................................................................................1
Section 2.
Term and Payments .................................................................................................1
Section 3.
Pledge of Excise Taxes; Limited Obligations .........................................................2
Section 4.
Surplus and Deficiency of Excise Taxes .................................................................3
Section 5.
Use of Other Funds at the Option of City................................................................3
Section 6.
Additional Parity Obligations..................................................................................4
Section 7.
City to Maintain Excise Taxes Coverage of Three Times Debt Service.................4
Section 8.
Definition of Excise Taxes ......................................................................................4
Section 9.
Representations, Warranties and Covenants............................................................5
Section 10.
Providing for Payment.............................................................................................5
Section 11.
Transfer of the Prior Project ....................................................................................6
Section 12.
Event of Default; Remedies Upon Event of Default ...............................................6
Section 13.
Assignment ..............................................................................................................7
Section 14.
Miscellaneous ..........................................................................................................7
Section 15.
Notices; Mailing Addresses.....................................................................................8
Section 16.
Federal Law Provisions ...........................................................................................8
Section 17.
City’s Easement to Seller.......................................................................................12
Section 18.
Covenant as to Conflict of Interest; Other Statutory Restrictions .........................12
Section 19.
Seller’s Limited Authority.....................................................................................13
Section 20.
Seller as Trustee.....................................................................................................13
EXHIBIT A - PAYMENT SCHEDULE
EXHIBIT B - FORM OF BILL OF SALE
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, made and entered into as of June 1, 2026 (this
“Agreement”), by and between THE CITY OF TEMPE, ARIZONA, a municipal corporation
and a political subdivision under the laws of the State of Arizona (“City”) and U.S. BANK TRUST
COMPANY, NATIONAL ASSOCIATION, a national banking association (“Seller”), in its
capacity as trustee (“Trustee”) under the Trust Agreement, dated as of June 1, 2026, by and
between Trustee and City (the “Trust Agreement”),
W I T N E S S E T H:
Section 1.
Definitions. All terms not otherwise defined herein are as defined in the
Trust Agreement.
Section 2.
Term and Payments.
(a)
For the purpose of refinancing certain of the costs not paid to date of
construction, renovation and acquisition of various water and wastewater improvements, an energy
retrofit program and other projects for City (collectively, the “Prior Project”) originally financed
and refinanced with the proceeds of City’s Excise Tax Revenue and Revenue Refunding
Obligations, Series 2016 (the portion thereof remaining outstanding after the refunding of the
Obligations Being Refunded as described in the Trust Agreement is referred to herein as the “2016
Obligations”), evidencing proportionate interests of the owners thereof in purchase price payments
to be made by City pursuant to the Purchase Agreement, dated as of June 1, 2016, City hereby
sells and conveys any interests it has in the Prior Project to Seller without any representation or
warranty, express or implied, for the sum of $10.00 and Seller hereby resells to City and City
hereby repurchases from Seller the Prior Project.
(b)
To provide the funds necessary for refinancing the costs of the Prior Project,
Seller, as trustee under the Trust Agreement, will execute and deliver the Excise Tax Revenue
Refunding Obligations, Series 2026 (the “2026 Obligations”) and Seller shall have no further
obligation to provide funds for such purpose.
(c)
As the purchase price for the Prior Project, City agrees to make Payments
to Seller at the address specified pursuant to Section 15 hereof (or such other address as Seller may
designate in writing) three Business Days in advance of the Payment Dates set forth, and in the
amounts set forth, in the payment schedule attached hereto as Exhibit A and incorporated herein.
City’s obligation to make Payments shall be limited to payment from Excise Taxes (as defined in
Section 8 below) pledged to the payment thereof by City. City shall receive a credit against
amounts due equal to any amounts held in the Payment Fund and available for such purpose.
(d)
The obligations of City to make Payments from the sources described herein
and to perform and observe the other agreements contained herein shall be absolute and
unconditional and shall not be subject to any defense or any right of set-off, abatement,
counterclaim, or recoupment arising out of any breach of Seller of any obligation to City or
otherwise, or out of indebtedness or liability at any time owing to City by Seller. Until such time
as all of the Payments shall have been fully paid or provided for, City (i) will not suspend or
discontinue any Payments provided for in this Section 2, (ii) will perform and observe all other
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agreements contained in this Agreement, and (iii) will not terminate the term of this Agreement
for any cause, including, without limiting the generality of the foregoing, failure of Seller or any
other person to complete the refinancing of a portion of the costs of the Prior Project, the
occurrence of any acts or circumstances that may constitute failure of consideration, eviction or
constructive eviction, destruction of or damage to the Prior Project, the taking by eminent domain
of title to or temporary use of any or all of the Prior Project, commercial frustration of purpose,
abandonment of the Prior Project by City, any change in the tax or other laws of the United States
of America or of the State or any political subdivision of either or any failure of Seller to perform
and observe any agreement, whether express or implied, or any duty, liability or obligation arising
out of or connected with the Trust Agreement or this Agreement. Nothing contained in this Section
shall be construed to release Seller from the performance of any of the agreements on its part
herein or in the Trust Agreement contained and in the event Seller shall fail to perform any such
agreements on its part, City may institute such action against Seller as City may deem necessary
to compel performance so long as such action does not abrogate the obligations of City contained
in the first sentence of this paragraph (d). This Agreement shall not terminate so long as any
payments are due and owing under the 2026 Obligations.
(e)
City shall also pay to the United States of America any amounts required
by Section 16(b)(ii) hereof.
It is understood and agreed that Seller shall in no event be deemed an owner of the Prior
Project or appear on any records (including, without limitation, real property records) as an owner
of the Prior Project.
Section 3.
Pledge of Excise Taxes; Limited Obligations.
(a)
City hereby pledges for the payment of the purchase price hereunder
(including, without limitation, any amounts due on the 2026 Obligations) and all other amounts
payable pursuant hereto, the Excise Taxes. City intends that this pledge shall be a first lien pledge
upon such amounts of the Excise Taxes as will be sufficient to make the Payments when due. City
agrees and covenants to make said Payments from the Excise Taxes, except to the extent it chooses
to make the Payments from other funds pursuant to Section 5. Said pledge of, and said lien on,
the Excise Taxes is hereby irrevocably made and created for the prompt and punctual payment of
the Payments according to the terms hereof, and to create and maintain the funds as hereinafter
specified in this Agreement or as may be specified in the Trust Agreement. All of the Payments
are coequal as to the pledge of and lien on the Excise Taxes pledged for the payment thereof and
share ratably, without preference, priority or distinction, as to the source or method of payment
from Excise Taxes or security therefor. The rights of the Owners of the 2026 Obligations to
payment from Excise Taxes are on a parity with the rights to payment from such Excise Taxes of
the holders of City’s:
(i)
Excise Tax Revenue Obligations, Taxable Series 2011B (Qualified
Energy Conservation Bonds – Direct Pay) (the “2011 Obligations”);
(ii)
2016 Obligations;
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(iii)
Excise Tax Revenue Refunding Obligations, Series 2019 (the “2019
Obligations”);
(iv)
Excise Tax Revenue Refunding Obligations, Taxable Series 2021
(the “2021 Obligations”);
(v)
Excise Tax Revenue Refunding Obligations, Series 2024 (the “2024
Obligations”);
(vi)
Excise Tax Revenue Obligations, Series 2025 (the “2025
Obligations”); and
(vii)
Additional Parity Obligations.
(b)
City shall remit to Trustee from Excise Taxes all amounts due under this
Agreement in the amounts and at the times and for the purposes as required herein. City’s
obligation to make payments of any amounts due under this Agreement, including amounts due
after default or termination hereof, is limited to payment from Excise Taxes and shall in no
circumstances constitute a general obligation of, or a pledge of the full faith and credit of, City,
the State, or any of its political subdivisions, or require the levy of, or be payable from the proceeds
of, any ad valorem taxes.
Section 4.
Surplus and Deficiency of Excise Taxes. Subject to the right with respect
to the Excise Taxes of the owners of the 2011 Obligations, the 2016 Obligations, the 2019
Obligations, the 2021 Obligations, the 2024 Obligations and the 2025 Obligations (collectively,
the “Existing Parity Obligations”) and any Additional Parity Obligations, all Excise Taxes in
excess of amounts, if any, required to be deposited with or held by Trustee for payments due under
this Agreement and the Trust Agreement shall constitute surplus revenues and may be used by
City for any lawful purpose for the benefit of City, including the payment of junior lien obligations
to which such Excise Taxes may from time to time be pledged. If at any time the moneys in the
funds and accounts held for payment of amounts due under this Agreement or the Trust Agreement
are not sufficient to make the deposits and transfers required, any such deficiency shall be made
up from the first moneys thereafter received and available for such transfers under the terms of
this Agreement and, with respect to payment from Excise Taxes, pro rata, as applicable, with
amounts due with respect to Existing Parity Obligations and any Additional Parity Obligations,
and the transfer of any such sum or sums to said fund or accounts as may be necessary to make up
any such deficiency shall be in addition to the then-current transfers required to be made pursuant
hereto.
City shall impose all necessary Excise Taxes, shall collect and receive the proceeds of
sufficient Excise Taxes, and pay such proceeds to Trustee in such amounts and at such times as
will be fully sufficient, in conjunction with any other legally available moneys (but not proceeds
of ad valorem taxes, except in compliance with Section 5) which City may from time to time
lawfully choose to pay to Trustee, to assure the punctual performance of all duties requiring the
payment or expenditure of money by City under the terms of this Agreement. Such payments shall
be made on the dates specified herein during the term of this Agreement and shall be sufficient to
meet all requirements for the 2026 Obligations.
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Section 5.
Use of Other Funds at the Option of City. City may, at City’s sole option,
make the Payments from its other funds as permitted by law and as City shall determine from time
to time, but Seller acknowledges that it has no claim hereunder to such other funds. No part of the
purchase price payable pursuant to this Agreement shall be payable out of any ad valorem taxes
imposed by City or from bonds or other obligations, the payment of which City’s general taxing
authority is pledged, unless (i) the same shall have been duly budgeted by City according to law,
(ii) such payment or payments shall be within the budget limitations of the statutes of the State,
and (iii) any such bonded indebtedness or other obligation is within the debt limitations of the
Constitution of the State.
Section 6.
Additional Parity Obligations. So long as the 2026 Obligations remain
outstanding and the principal and interest thereon shall be unpaid or unprovided for or any other
amounts remain unpaid or unprovided for hereunder, City will not further encumber the Excise
Taxes pledged hereunder on a basis equal to the pledge hereunder unless the Excise Taxes
collected in the next preceding Fiscal Year shall have amounted to at least three (3) times the
highest combined Debt Service requirements for any succeeding Fiscal Year for all Parity
Obligations, including with respect to the Existing Parity Obligations and the Additional Parity
Obligations so proposed to be issued, as certified by City in writing. Subject to the foregoing, and
to other terms and conditions set forth herein, City shall have the right to incur Additional Parity
Obligations payable from and secured by the Excise Taxes, on a parity with the 2026 Obligations
and the Existing Parity Obligations.
Section 7.
City to Maintain Excise Taxes Coverage of Three Times Debt Service.
City covenants and agrees that the Excise Taxes which it presently imposes will continue to be
imposed in each Fiscal Year so that the amount of Excise Taxes, all within and for such Fiscal
Year of City, shall be equal to at least three (3) times the total of the Debt Service for all outstanding
2026 Obligations and other Outstanding Parity Obligations in such Fiscal Year. City further
covenants and agrees that if such receipts for any such Fiscal Year shall not equal three (3) times
such Debt Service for such Fiscal Year, or if at any time it appears that the current Fiscal Year’s
receipts will not be sufficient to meet such Fiscal Year’s actual Debt Service, City will either
impose new Excise Taxes or will increase the rates of such taxes currently imposed, subject to the
requirements of Section 5.02 of City’s charter, in order that (i) the current Fiscal Year’s receipts
will be sufficient to meet such Fiscal Year’s Debt Service requirement, and (ii) the next succeeding
Fiscal Year’s receipts will be equal to at least three (3) times the next succeeding Fiscal Year’s
Debt Service requirement.
Section 8.
Definition of Excise Taxes. “Excise Taxes” shall mean all unrestricted
excise, transaction, franchise, privilege and business taxes, State-shared sales and income taxes,
fees for licenses and permits, and State revenue-sharing, now or hereafter validly imposed by City
or contributed, allocated and paid over to City and not earmarked by the contributor for a contrary
or inconsistent purpose. Excise Taxes shall include, without limitation, all fines and forfeitures
but shall not include the excise tax revenues collected and paid to City under (a) the 0.50%
transaction privilege (sales) and use tax approved by the voters of City on September 10, 1996, the
use of which is restricted to improvement and operation of the public transit system of City, (b)
the 0.10% transaction privilege (sales) and use tax approved by the voters of City on November 6,
2018, the use of which is restricted to fund arts and culture throughout City, (c) the 1.00% increase
in the transient lodging tax on hotels approved by the voters of City on September 10, 2002, the
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use of which is restricted to fund programs of the Tempe Convention and Visitor’s Bureau, or (d)
or any other similar tax restricted as to its use.
City’s obligation to make the payments under this Agreement or the Trust Agreement does
not constitute an obligation of City or the State of Arizona (the “State”), or any of its political
subdivisions, for which City or the State, or any of its political subdivisions, is obligated to levy
or pledge any form of ad valorem taxation nor does the obligation to make any payments under
this Agreement or the Trust Agreement constitute an indebtedness of City or of the State or any of
its political subdivisions within the meaning of the Constitution of the State or otherwise. The
pledge of Excise Taxes is on a parity with the existing pledges of Excise Taxes as described in the
Trust Agreement.
Section 9.
Representations, Warranties and Covenants.
(a)
Except with respect to its power and authority to enter into this Agreement
and to perform its covenants hereunder, Seller has made and makes no representation or warranty,
express or implied, and assumes no obligation with respect to the title, merchantability, condition,
quality or fitness of the Prior Project for any particular purpose or the conformity of the Prior
Project to any plans, specifications, construction contract, purchase order, model or sample, or as
to its design, construction, delivery, installation, construction oversight and operation or its suit-
ability for use by City. All such risks shall be borne by City without in any way excusing City
from its obligations under this Agreement and Seller shall not be liable to City for any damages
on account of such risks. Except with respect to any acts by Seller which are not undertaken at
City’s request or with City’s prior approval, City agrees to waive all claims against Seller growing
out of the acquisition, construction and installation of the Prior Project. Seller shall have no
liability to City for any failure of any acquisition, construction and installation contractor to
perform any construction contract in any respect. Seller shall have no obligation to obtain or
ensure compliance with any required Arizona Department of Environmental Quality permits or
approval procedures. In the event of any defect in any item of the Prior Project or other claim with
respect to the Prior Project, City understands and agrees that City’s recourse will be against the
contractor, manufacturer or supplier of such Prior Project and, where applicable, the person selling
the property to Seller, and not against Seller. For such purpose, Seller hereby assigns and transfers
to City the right, title and interest of Seller in and to all representations, warranties and service
agreements relating to the Prior Project made or entered into by Seller and by any contractor,
manufacturers or suppliers of the Prior Project. Seller further designates City as its attorney-in-
fact granting to City the right to initiate and take all actions necessary to enforce any and all
construction contracts and all such warranties and service agreements.
(b)
City represents, warrants and covenants that it has the power to enter into
this Agreement; that this Agreement is a lawful, valid and binding obligation of City, enforceable
against City in accordance with its terms, and has been duly authorized, executed and delivered by
City; that all required procedures for execution and performance of this Agreement, including
publication of notice, public hearing or competitive bidding, if applicable, have been or will be
complied with in a timely manner; and that all Payments hereunder will be paid when due out of
funds which are legally available for such purposes.
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Section 10.
Providing for Payment. City may provide for the payment of any Payment
in any one or more of the following ways:
(a)
by paying such Payment as provided herein as and when the same becomes
due and payable at its scheduled due date pursuant to Section 2 hereof;
(b)
by depositing with Trustee or a Depository Trustee (as defined below), in
trust for such purposes, money which, together with the amounts then on deposit with Trustee and
available for such Payment is fully sufficient to make, or cause to be made, such Payment at its
scheduled due date; or
(c)
subject to the satisfaction of the terms set forth in Section 13.1 of the Trust
Agreement, by depositing with a Depository Trustee, in trust for such purpose, any Defeasance
Obligations, in such amount as shall be certified to Seller and City, by a national firm of certified
public accountants selected by City, as being fully sufficient, together with the interest to accrue
thereon and moneys then on deposit with Trustee or a Depository Trustee and available for such
Payment, to make, or cause to be made, such Payment at its scheduled due date.
A Depository Trustee shall be any bank or trust company, including Seller, with a
combined capital and surplus of at least Fifty Million Dollars ($50,000,000) and subject to
supervision or examination by federal or State authority who holds money and securities in trust
for the purposes set forth in subparagraphs (b) or (c) of this Section 10 (a “Depository Trustee”).
Section 11.
Transfer of the Prior Project. Seller shall execute appropriate transfer
documents in the form attached hereto as Exhibit B, which shall transfer Seller’s right, title and
interest, if any, in and to the Prior Project. Seller shall convey title free from any liens,
encumbrances or security interests created by Seller except as may be otherwise imposed
hereunder or under the Trust Agreement, or as otherwise consented to in writing by City.
Section 12.
Event of Default; Remedies Upon Event of Default. The occurrence of
one or more of the events listed in Section 12(a)(i) shall constitute an “Event of Default.”
(a)
(i) Upon (A) the nonpayment of the whole or any part of any Payment at
the time when the same is to be paid as provided herein or in the Trust Agreement, (B) the violation
by City of any other covenant or provision of this Agreement or the Trust Agreement, (C) the
occurrence of an event of default with respect to any Outstanding Parity Obligations other than the
2026 Obligations, or (D) the insolvency or bankruptcy of City as the same may be defined under
any law of the United States of America or the State, or any voluntary or involuntary action of
City or others to take advantage of, or to impose, as the case may be, any law for the relief of
debtors or creditors, including a petition for reorganization (each a “default”), and
(ii)
if such default has not been cured (A) in the case of nonpayment of
any Payment hereunder or under the Trust Agreement on the due date, or the nonpayment of
installment payments on their due dates with respect to any other Parity Obligations; (B) in the
case of the breach of any other covenant or provision of the Trust Agreement or this Agreement
not cured within sixty (60) days after notice in writing from Seller specifying such default; and
(C) in the case of any other default under any other Parity Obligations after any notice and passage
of time provided for under the proceedings under which such Parity Obligations were issued,
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(iii)
subject to the limitations of and protections under the Trust
Agreement, Seller may take whatever action at law or in equity may appear necessary or desirable
to collect the Payments and any other amounts payable by City under the Trust Agreement or this
Purchase Agreement, then due and thereafter as they come due, or to enforce performance and
observance of any pledge, obligation, agreement, or covenant of City under the Trust Agreement
or this Purchase Agreement.
(b)
Seller, upon the bringing of a suit to collect the Payments in default, may as
a matter of right, without notice and without giving bond to City or anyone claiming under City,
(i) have a receiver appointed of all the Excise Taxes which are so pledged for the payment of
amounts due hereunder, with such powers as the court making such appointment shall confer; and
City does hereby irrevocably consent to such appointment, and (ii) seek and obtain injunctive
relief.
(c)
City’s obligations under this Agreement, including, without limitation, its
obligation to pay the Payments, shall survive any action brought as provided in this Section 12,
and City shall continue to pay the Payments and perform all other obligations provided in this
Agreement; provided, however, that City shall be credited with any amount received by Trustee
pursuant to actions brought under this Section 12.
(d)
The obligation of City to make Payments is not subject to acceleration and
such Payments may not be made immediately due and payable for any reason.
Section 13.
Assignment. City may assign, transfer, pledge or hypothecate or otherwise
dispose of this Agreement, or any interest therein; provided, that City remains obligated to make
the Payments hereunder. Seller shall be entitled to sell, pledge or assign all of its right, title and
interest in, to and under this Agreement, to an entity succeeding it as Trustee under the Trust
Agreement.
Section 14.
Miscellaneous.
(a)
No covenant or obligation herein to be performed by City may be waived
except by the written consent of Seller and a waiver of any such covenant or obligation or a
forbearance to invoke any remedy on any occasion shall not constitute or be treated as a waiver of
such covenant or obligation as to any other occasion and shall not preclude Seller from invoking
such remedy at any later time prior to City’s cure of the condition giving rise to such remedy.
(b)
This Agreement shall be construed and governed in accordance with the
laws of the State in effect from time to time.
(c)
This Agreement constitutes the entire agreement between the parties and
shall not be modified, waived, discharged, terminated, amended, supplemented, altered or changed
in any respect except by a written document signed by both Seller and City. This Agreement may
not be amended except as provided in the Trust Agreement.
(d)
Any term or provision of this Agreement found to be prohibited by law or
unenforceable or which would cause this Agreement to be invalid, prohibited by law or unenforce-
able shall be ineffective to the extent of such prohibition or unenforceability without, to the extent
8
reasonably possible, causing the remainder of this Agreement to be invalid, prohibited by law or
unenforceable.
(e)
Seller hereunder shall have the right at any time or times, by notice to City
to designate or appoint any person or entity to act as agent or trustee for Seller for any purposes
hereunder.
(f)
City agrees to pay interest at the rates specified in Exhibit A.
(g)
Use of any gender herein is for purposes of convenience only and shall be
deemed to mean and include the masculine or feminine gender whenever and wherever
appropriate.
(h)
The captions set forth herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
(i)
Except as otherwise provided herein, this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs, successors, assigns and personal
representatives, as the case may be. Any person or entity acquiring any interest in or to Seller’s
right, title or interest herein shall be and have the rights of a third-party beneficiary hereunder.
(j)
Any payments due on a day which is not a Business Day may be made on
the next Business Day and will be deemed to have been made on the date due.
Section 15.
Notices; Mailing Addresses. All notices, consents or other
communications required or permitted hereunder shall be deemed sufficient if given in writing
addressed and mailed by registered or certified mail, or delivered to the party for which the same
is intended or certified, as follows:
If to Seller:
U.S. Bank Trust Company, National Association
1101 West Washington Street
Tempe, Arizona 85288
Attention: Global Corporate Trust
If to City:
City of Tempe, Arizona
Finance Department
31 East 5th Street
Tempe, Arizona 85281
Attention: Deputy City Manager/Chief Financial Officer
All notices, approvals, consents, requests and any communications to Seller hereunder
must be in writing in English and must be in the form of a document that is signed manually
or by way of an electronic signature (including electronic images of handwritten signatures
and digital signatures provided by DocuSign, Orbit, Adobe Sign or any other electronic signature
provider acceptable to Seller). Electronic signatures believed by Seller to comply with the
ESIGN ACT of 2000 or other applicable law shall be deemed original signatures for all purposes.
If City chooses to use electronic signatures to sign documents delivered to Seller, City agrees to
assume all risks arising out of its use of electronic signatures, including without limitation the risk
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of Seller acting on an unauthorized document and the risk of interception or misuse by third
parties. Notwithstanding the foregoing, City may in any instance and in its sole discretion require
that an original document bearing a manual signature be delivered to Seller in lieu of, or in
addition to, any document signed via electronic signature.
Section 16.
Federal Law Provisions.
(a)
(i)
As described in further detail in the Tax Certificate, no direction by
City for the making of any investment or other use of the proceeds of the 2026 Obligations or of
the Prior Project shall be made, permitted to be made or omitted from being made which would
cause the 2026 Obligations to be “arbitrage bonds” as that term is defined in Section 148 (or any
successor provision thereto) of the Code or “private activity bonds” as that term is defined in
Section 141 (or any successor provision thereto) of the Code, and the requirements of such sections
and related regulations of the Code shall be complied with throughout the term of the 2026
Obligations. Particularly, City shall be the owner of the Prior Project for federal income tax
purposes. City shall not enter into any management or service contract with any entity other than
a governmental entity for the operation of any portion of the Prior Project unless the management
or service contract complies with the requirements of such authority as may control at the time, or
any lease or other arrangement with any entity other than a governmental entity that gives such
entity special legal entitlements with respect to any portion of the Prior Project. Also, the payment
of principal and interest with respect to the 2026 Obligations shall not be guaranteed (in whole or
in part) by the United States or any agency or instrumentality of the United States. The proceeds
of the 2026 Obligations, or amounts treated as proceeds of the 2026 Obligations, shall not be
invested (directly or indirectly) in federally insured deposits or accounts, except to the extent such
proceeds may be so invested for an initial temporary period until needed for the purpose for which
the 2026 Obligations are being executed and delivered, may be so used in making investments in
a bona fide debt service fund or may be invested in obligations issued by the United States
Treasury. City shall comply with the procedures and covenants contained in any arbitrage rebate
provision or separate agreement executed in connection with the execution and delivery of the
2026 Obligations (initially those in paragraph (b) and the Tax Certificate) for so long as
compliance is necessary in order to maintain the exclusion from gross income for federal income
tax purposes of interest with respect to the 2026 Obligations. In consideration of the purchase and
acceptance of the 2026 Obligations by the owners from time to time thereof and of retaining such
exclusion and as authorized by Title 35, Chapter 3, Article 7, Arizona Revised Statutes, City shall,
and the appropriate officials of City are hereby directed, to take all action required to retain such
exclusion or to refrain from taking any action prohibited by the Code which would adversely affect
in any respect such exclusion.
(ii)
(A)
City shall take all necessary and desirable steps, as
determined by the City Council, to comply with the requirements hereunder in order to ensure that
interest with respect to the 2026 Obligations is excluded from gross income for federal income tax
purposes under the Code; provided, however, compliance with any such requirement shall not be
required in the event City receives a Special Counsel’s Opinion that either compliance with such
requirement is not required to maintain the exclusion from gross income of interest with respect to
the 2026 Obligations or compliance with some other requirement will meet the requirements of
the Code relating to such exclusion. In the event City receives such a Special Counsel’s Opinion,
the parties agree to amend this Agreement to conform to the requirements set forth in such opinion.
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(B)
If for any reason any requirement hereunder is not complied
with, City shall take all necessary and desirable steps, as determined by City, to correct such
noncompliance within a reasonable period of time after such noncompliance is discovered or
should have been discovered with the exercise of reasonable diligence and City shall pay any
required interest or penalty under hereinafter described Regulations Section 1.148-3(h) with
respect to the Code.
(C)
Written procedures have been established for City to ensure
that all nonqualified obligations are remediated according to the requirements under the Code and
related Regulations and to monitor the requirements of Section 148 of the Code relating to
arbitrage, with which City will comply.
(b)
(i)
Undefined terms used in this subparagraph shall have the meanings
given to them in the Code and the Regulations.
(ii)
Unless an exception is available to the satisfaction of a City
Representative, City shall cause the Rebate Requirement to be calculated and shall pay to the
United States of America:
(A)
not later than 60 days after the end of the fifth Bond Year
and every fifth Bond Year thereafter, an amount which, when added to the future value of all
previous Rebate Payments with respect to the 2026 Obligations (determined as of such
Computation Date), is equal to at least 90% of the sum of the Rebate Requirement (determined as
of the last day of such Bond Year) plus the future value of all previous Rebate Payments with
respect to the 2026 Obligations (determined as of the last day of such Bond Year); and
(B)
not later than 60 days after the retirement of the last 2026
Obligation, an amount equal to 100% of the Rebate Requirement (determined as of the date of
retirement of the last 2026 Obligation).
Each Rebate Payment required to be made under this Section shall be filed on or before the date
such payment is due, with the Internal Revenue Service at the appropriate location and with
required forms and other materials, currently by addressing it to IRS Service Center, Ogden, Utah
84201, and accompanying it with IRS Form 8038-T.
(iii)
No Nonpurpose Investment shall be acquired for an amount in
excess of its fair market value. No Nonpurpose Investment shall be sold or otherwise disposed of
for an amount less than its fair market value.
(iv)
For purposes of paragraph (iii), whether a Nonpurpose Investment
has been purchased or sold or disposed of for its fair market value shall be determined as follows:
(A)
The fair market value of a Nonpurpose Investment generally
shall be the price at which a willing purchaser would purchase the Nonpurpose Investment from a
willing seller in a bona fide arm’s length transaction. Fair market value shall be determined on the
date on which a contract to purchase or sell the Nonpurpose Investment becomes binding.
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(B)
Except as provided in subparagraphs (v) or (vi), a
Nonpurpose Investment that is not of a type traded on an established securities market, within the
meaning of Code Section 1273, is rebuttably presumed to be acquired or disposed of for a price
that is not equal to its fair market value.
(C)
If a United States Treasury obligation is acquired directly
from or sold or disposed of directly to the United States Treasury, such acquisition or sale or
disposition shall be treated as establishing the fair market value of the obligation.
(v)
The purchase price of a certificate of deposit that has a fixed interest
rate, a fixed payment schedule and a substantial penalty for early withdrawal is considered to be
its fair market value if the yield on the certificate of deposit is not less than:
(A)
the yield on reasonably comparable direct obligations of the
United States; and
(B)
the highest yield that is published or posted by the provider
to be currently available from the provider on reasonably comparable certificates of deposit offered
to the public.
(vi)
A guaranteed investment contract shall be considered acquired and
disposed of for an amount equal to its fair market value if:
(A)
A bona fide solicitation in writing for a specified guaranteed
investment contract, including all material terms, is timely forwarded to all potential providers.
The solicitation must include a statement that the submission of a bid is a representation that the
potential provider did not consult with any other potential provider about its bid, that the bid was
determined without regard to any other formal or informal agreement that the potential provider
has with City or any other person (whether or not in connection with the 2026 Obligations), and
that the bid is not being submitted solely as a courtesy to City or any other person for purposes of
satisfying the requirements in the Regulations that City receive bids from at least one reasonably
competitive provider and at least three providers that do not have a material financial interest in
the 2026 Obligations.
(B)
All potential providers have an equal opportunity to bid, with
no potential provider having the opportunity to review other bids before providing a bid.
(C)
At least three reasonably competitive providers (i.e., having
an established industry reputation as a competitive provider of the type of investments being
purchased) are solicited for bids. At least three bids must be received from providers that have no
material financial interest in the 2026 Obligations (e.g., a lead underwriter within 15 days of the
issue date of the 2026 Obligations or a financial advisor with respect to the investment) and at least
one of such three bids must be from a reasonably competitive provider. If City uses an agent to
conduct the bidding, the agent may not bid.
(D)
The highest-yielding guaranteed investment contract for
which a qualifying bid is made (determined net of broker’s fees) is purchased.
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(E)
The determination of the terms of the guaranteed investment
contract takes into account as a significant factor the reasonably expected deposit and drawdown
schedule for the amounts to be invested.
(F)
The terms for the guaranteed investment contract are
commercially reasonable (i.e. have a legitimate business purpose other than to increase the
purchase price or reduce the yield of the guaranteed investment contract).
(G)
The provider of the investment contract certifies the
administrative costs (as defined in Regulations Section 1.148-5(e)) that it pays (or expects to pay)
to third parties in connection with the guaranteed investment contract.
(H)
City retains until three years after the last Outstanding 2026
Obligation is retired, (1) a copy of the guaranteed investment contract, (2) a receipt or other record
of the amount actually paid for the guaranteed investment contract, including any administrative
costs paid by City and a copy of the provider’s certification described in (G) above, (3) the name
of the person and entity submitting each bid, the time and date of the bid, and the bid results and
(4) the bid solicitation form and, if the terms of the guaranteed investment contract deviate from
the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation
and stating the purpose of the deviation.
(vii)
Such experts and consultants shall be employed by City to make, as
necessary, any calculations in respect of rebates to be made to the United States of America in
accordance with Section 148(f) of the Code with respect to the 2026 Obligations.
(c)
City shall comply with and carry out all of the provisions of the Continuing
Disclosure Undertaking, provided that the performance by City of such obligations shall be subject
to the annual appropriation of any funds that may be necessary to permit such performance.
Notwithstanding any other provision of this Agreement, failure of City to comply with the
Continuing Disclosure Undertaking shall not be considered an event of default; however, Seller
may (and, at the request of the original purchaser of the 2026 Obligations or the owners of at least
25% aggregate principal amount in Outstanding 2026 Obligations and receipt of indemnity to its
satisfaction, shall) take such actions as may be necessary and appropriate, including seeking
specific performance by court order, to cause City to comply with its obligations under the
Continuing Disclosure Agreement.
(d)
Seller has no duty or obligations under this Section 16 and has no duty to
monitor compliance by City with this Section 16.
Section 17.
City’s Easement to Seller. City hereby gives express permission to Seller
to cause the Prior Project to be refinanced and maintained and hereby grants and conveys to Seller,
and all persons claiming by, through or under Seller, including its successors and assigns under
the Trust Agreement and the Owners of the 2026 Obligations for whom it acts, a nonexclusive
easement upon, in and to the Prior Project for the purpose of permitting the Prior Project to be
maintained upon the premises.
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Section 18.
Covenant as to Conflict of Interest; Other Statutory Restrictions.
(a)
To the extent applicable by provision of law, Seller acknowledges that this
Agreement is subject to cancellation pursuant to Section 38-511, Arizona Revised Statutes, the
provisions of which are incorporated herein and which provides that City may within three (3)
years after its execution cancel any contract (including this Agreement) without penalty or further
obligation made by City if any person significantly involved in initiating, negotiating, securing,
drafting or creating the contract on behalf of City is at any time while the contract or any extension
of the contract is in effect, an employee or agent of any other party to the contract in any capacity
or a consultant to any other party to the contract with respect to the subject matter of the contract.
The cancellation shall be effective when written notice is received by all other parties to the
contract unless the notice specifies a later time. Seller covenants not to employ as an employee,
an agent or, with respect to the subject matter of this Agreement, a consultant, any person
significantly involved in initiating, negotiating, securing, drafting or creating this Agreement on
behalf of City within three years from the execution of this Agreement, unless a waiver of Section
38-511, Arizona Revised Statutes, is provided by City. No basis exists for City to cancel this
Agreement pursuant to Section 38-511, Arizona Revised Statutes, as of the date hereof.
(b)
To the extent applicable under Section 41-4401, Arizona Revised Statutes,
Seller shall comply with all federal immigration laws and regulations that relate to its employees
and its compliance with the “e-verify” requirements under Section 23-214(A), Arizona Revised
Statutes. The breach by Seller of the foregoing shall be deemed a material breach of this
Agreement and may result in the termination of the services of Seller by City. City retains the
legal right to randomly inspect the papers and records of Seller to ensure that Seller is complying
with the above-mentioned warranty. Seller shall keep such papers and records open for random
inspection during normal business hours by City. Seller shall cooperate with the random
inspections by City including granting City entry rights onto its property to perform such random
inspections and waiving its respective rights to keep such papers and records confidential.
(c)
To the extent applicable under Section 35-393, et seq., Arizona Revised
Statutes, Seller hereby certifies it is not currently engaged in, and for the duration of this
Agreement shall not engage in, a boycott of Israel. The term “boycott” has the meaning set forth
in Section 35-393, Arizona Revised Statutes. If City determines that Seller’s certification above
is false or that it has breached such agreement, City may remove Seller hereunder as provided by
law.
(d)
To the extent applicable under Section 35-394, Arizona Revised Statutes,
Seller hereby certifies it does not currently, and for the duration of this Agreement shall not use:
(i) the forced labor of ethnic Uyghurs in the People’s Republic of China, (ii) any goods or services
produced by the forced labor of ethnic Uyghurs in the People’s Republic of China, and (iii) any
contractors, subcontractors or suppliers that use the forced labor or any goods or services produced
by the forced labor of ethnic Uyghurs in the People’s Republic of China. The foregoing
certification is made to the best knowledge of Seller without any current independent investigation
or without any future independent investigation for the duration of this Agreement. If Seller
becomes aware during the duration of this Agreement that it is not in compliance with such
certification, Seller shall take such actions as provided by law, including providing the required
notice to City. If City determines that Seller is not in compliance with the foregoing certification
14
and has not taken remedial action, City shall terminate Seller’s role as Seller hereunder pursuant
to Article VIII of the Trust Agreement.
Section 19.
Seller’s Limited Authority. Notwithstanding any other terms or
provisions of this Agreement, Seller’s interest in the Prior Project and responsibility for causing
the refinancing of the Prior Project is solely for the purpose of facilitating the refinancing of the
Prior Project and Seller shall not have the power, authority or obligation to assume any
responsibility for the overall management of the Prior Project, including, without limitation, any
day-to-day decision-making or operational aspects of the Prior Project. The elements of the Prior
Project and the sites therefor were selected by City and all design and engineering criteria and
specifications for the Prior Project were determined by City.
Section 20.
Seller as Trustee. Seller is acting hereunder in its capacity as Trustee under
the Trust Agreement and is entitled to all the rights, protections, immunities and indemnities
hereunder as afforded to Trustee under the Trust Agreement. The term “Seller,” when used herein,
shall mean Trustee as defined in the Trust Agreement.
[Signature page follows.]
[Signature page to Purchase Agreement]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Seller:
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION
By ...........................................................................
Authorized Representative
City:
CITY OF TEMPE, ARIZONA
By............................................................................
Corey D. Woods, Mayor
ATTEST:
..................................................................
Kara A. DeArrastia, City Clerk
APPROVED AS TO FORM:
......................................................................
Eric C. Anderson, City Attorney
A-1
EXHIBIT A
PAYMENT SCHEDULE FOR 2026 OBLIGATIONS
Payment
Date
Principal
Interest
Total
TOTAL
B-1
EXHIBIT B
FORM OF BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS:
That U.S. Bank Trust Company, National Association, as trustee but in its separate
capacity as seller (the “Seller”), for good and valuable consideration received by the Seller from
the City of Tempe, Arizona (the “City”), receipt of which is hereby acknowledged, does by these
presents, and to the extent not otherwise prohibited by applicable law with regard to any part
thereof, grant, bargain, sell and convey to the City, its successors and assigns, without recourse,
representation or warranty, the Prior Project (as such term is defined in the Purchase Agreement,
dated as of June 1, 2026, by and between the Seller and the City), to have and to hold the Prior
Project as sold to the City and its successors and assigns forever.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be executed this
____ day of June 2026.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Seller
By...............................................................................
Authorized Representative