HomeMy WebLinkAbout10 RESOLUTION NO. 03-69 � • • Agenda Item 10
AGENDA REPORT Reviewed:
Manager
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MEETING DATE: MAY 5, 2003
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: RONALD A. NAULT, FINANCE DIRECTOR
SUBJECT: RESOLUTION NO. 03-69 APPROVING THE SUBSTITUTION OF AN
ALTERNATE LETTER OF CREDIT FOR AN EXISTING LETTER OF CREDIT
FOR THE CITY OF TUSTIN LIMITED OBLIGATION IMPROVEMENT BONDS
REASSESSMENT DISTRICT NO. 95-2
SUMMARY:
Kredietbank, NV has been the Letter of Credit provider on the City's Limited Obligation
Improvement Bonds for Reassessment District No. 95-2 since 1993. They have experienced some
degradation in their short term rating and have asked the City to find a substitute Letter of Credit
bank and let them terminate their agreement with the City. The City's Financial Advisors,
UBS/PaineWebber, have recommended the Bank of New York as the new provider. The Bank of
New York's short term credit rating is higher than Kredietbank's and they will assume the duties at
the same fees and terms as Kredietbank. The City's bonds will be slightly better viewed in the
marketplace at no additional cost to the City.
RECOMMENDATION:
1. Adopt Resolution No. 03-69 approving the substitution of an alternate Letter of Credit for an
existing Letter of Credit for the City of Tustin Limited Obligation Improvement Bonds
Reassessment District No. 95-2 (Tustin Ranch), approving the form of and authorizing the
execution and delivery of a reimbursement agreement, and authorizing the execution of
necessary documents and certificates and related actions.
2. Authorize the Finance Director to sign the Letter of Credit and Reimbursement Agreement
between the City of Tustin and the Bank of New York.
FISCAL IMPACT:
None.
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DISCUSSION:
The City of Tustin Limited Obligation Improvement Bonds, Reassessment District No. 95-2, were
originally issued in 1985/86 as a variable rate debt instrument. Variable rate debt instruments have
very short investment periods, generally one to thirty days, and they constantly mature and are
reissued. A Letter of Credit is a necessary instrument that bond investors look for as security
against the issuer not being able to repay bonds on time. It is basically a cash flow guarantee.
Kredietbank, NV has had their short term rating reduced several times by Standard & Poor's. They
have made a business decision to limit their exposure in the marketplace. The City's Financial
Advisor has surveyed the market and recommends that the City substitute the Bank of New York
for Kredietbank/as Letter of Credit provider for the City's Limited Obligation Improvement Bonds.
La
Ronald A. Nault
Finance Director
Attachments:
Resolution No. 03-69
Letter of Credit and Reimbursement Agreement
RAN:Resol Won0369AItemateLetterOfcreoitStafReport Aoc
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1 RESOLUTION NO. 03-69
2
3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, APPROVING THE SUBSTITUTION OF AN ALTERNATE
4 LETTER OF CREDIT FOR AN EXISTING LETTER OF CREDIT FOR THE
CITY OF TUSTIN LIMITED OBLIGATION IMPROVEMENT BONDS
5 REASSESSMENT DISTRICT NO. 95-2 (TUSTIN RANCH), APPROVING THE
FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF A
6 REIMBURSEMENT AGREEMENT AND AUTHORIZING THE EXECUTION OF
7 NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS
8 WHEREAS, pursuant to a Fiscal Agent Agreement, dated as of February 1, 1996, by
9 and between the City of Tustin (the "City") and State Street Bank and Trust Company of
California, N.A., as fiscal agent (the "Fiscal Agent") (as so amended, the "Fiscal Agent
10 Agreement"), the City issued its Limited Obligation Improvement Bonds Reassessment
District No. 95-2 (Tustin Ranch), Series A in the aggregate principal amount of $41,500,000
11 (the "Bonds"); and
12 WHEREAS, in order to provide security for the payment of the principal of and
13 interest on the Bonds and to provide liquidity support for the purchase of tendered Bonds, the
City entered into a Reimbursement, Credit and Security Agreement, dated as of February 1,
14 1996, with Kredietbank N.V., New York Branch (currently known as KBC Bank NV and
referred to herein as the "Existing Bank"), pursuant to which the Existing Bank issued its
15 irrevocable Letter of Credit (the "Existing Letter of Credit"); and
16 WHEREAS, Section 5.04(f) of the Fiscal Agent Agreement provides that, subject to
the conditions specified therein, at any time, the City may, at its option, provide for delivery to
17 the Fiscal Agent of an Alternate Letter of Credit in substitution for the then existing Letter of
18 Credit; and
19 WHEREAS, the City desires to substitute an irrevocable Letter of Credit (the "BNY
Letter of Credit") issued by The Bank of New York ("BNY"), for the Existing Letter of Credit; and
20 WHEREAS, the BNY Letter of Credit will be issued pursuant to a Reimbursement,
21 Credit and Security Agreement, dated as of May 1, 2003, by and between the City and BNY
(such Reimbursement Agreement, in the form presented to this meeting, with such changes,
22 insertions and omissions as are made pursuant to this Resolution, being referred to herein as
the "Reimbursement Agreement"); and
23
WHEREAS, there has been prepared and submitted to this meeting a form of the
24 Reimbursement Agreement; and
25 WHEREAS, the City desires to proceed to authorize the execution of such documents
26 and the performance of such acts as may be necessary or desirable to effect the substitution
of the BNY Letter of Credit for the Existing Letter of Credit;
27
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1 NOW, THEREFORE, the City Council the City of Tustin does hereby resolve as
follows:
2
Section 1. The Reimbursement Agreement, in substantially the form submitted to this
3 meeting and made a part hereof as though set forth herein, be and the same is hereby
4 approved. The Mayor of the City, the Mayor Pro Tem of the City or such other member of
the City Council as the Mayor may designate, the City Manager of the City and the Director
5 of Finance of the City, or such other officer of the City as the City Manager or the Director of
Finance may designate (the "Authorized Officers") are, and each of them is, hereby
6 authorized and directed, for and in the name of the City, to execute and deliver the
Reimbursement Agreement in the form submitted to this meeting, with such changes,
7 insertions and omissions as the Authorized Officer executing the same may require or
approve, such requirement or approval to be conclusively evidenced by the execution of the
8 Reimbursement Agreement by such Authorized Officer.
9 Section 2. The termination of the Existing Letter of Credit and the substitution
10 therefor of the BNY Letter of Credit is hereby approved and the officers and employees of the
City are hereby authorized and directed, for and in the name and on behalf of the City, to
11 take such actions and to execute and deliver such documents, instruments, notices,
certificates and representations as are necessary or appropriate to effect such termination
12 and substitution.
13 Section 3. The officers and employees of the City are, and each of them hereby is,
authorized and directed, to do and cause to be done any and all acts and things necessary
14 or proper in order to consummate the transactions herein authorized and otherwise to carry
15 out, give effect to and comply with the terms and intent of this Resolution.
16 Section 4. All actions heretofore taken by the officers and employees of the City with
respect to the transactions herein authorized are hereby approved, confirmed and ratified.
17
Section 5. This Resolution shall take effect immediately upon its adoption.
18
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
19 Tustin on the 5th day of May, 2003.
20
21
22 Tracy Wills Worley
Mayor
23
ATTEST:
24
25
26 Pamela Stoker
27 City Clerk
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1
2 CITY OF TUSTIN
3 RESOLUTION CERTIFICATION
4
5 STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
6 CITY OF TUSTIN
7
8 RESOLUTION NO. 03-69
9
10 Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, does hereby certify that the whole number of the members of the City Council is five;
11 that the above and foregoing Resolution was duly and regularly passed and adopted at a
regular meeting of the City Council held on the 5th day of May, 2003, by the following vote:
12
13 COUNCILMEMBER AYES:
14 COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
15 COUNCILMEMBER ABSENT:
16
17
18 Pamela Stoker
19 City Clerk
20
21
22
23
24
25
26
27
RES:ResolutionNo03-69AltemateLetterOfCredit.doc
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S
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
Dated as of April 1, 2003
Between
CITY OF TUSTIN
and
THE BANK OF NEW YORK
Relating to:
CITY OF TUSTIN
LIMITED OBLIGATION IMPROVEMENT BONDS
REASSESMENT DISTRICT NO. 95-2 (TUSTIN RANCH)
SERIES A
212210 1.DOC DRAFT: 04/03/2003
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
Section 1.01. Definitions 1
Section 1.02. Interpretation 5
Section 1.03. Time of Day; Computation of Time Periods 5
ARTICLE II LETTER OF CREDIT AND REIMBURSEMENT 5
Section 2.01. Issuance of Letter of Credit 5
Section 2.02. Reimbursement 6
Section 2.03. Interest 6
Section 2.04. Fees and Charges 7
Section 2.05. Payments and Computations 7
Section 2.06. Increased Costs 8
Section 2.07. No Deduction for Taxes 9
Section 2.08. Obligations Absolute 10
Section 2.09. Indemnification 10
Section 2.10. Liability of Bank 11
ARTICLE III SECURITY 12
Section 3.01. Security and Subrogation Under Bond Documents 12
Section 3.02. Incorporation by Reference 12
ARTICLE IV CONDITIONS PRECEDENT 12
Section 4.01. Documentation 12
Section 4.02. Other Conditions 14
ARTICLE V REPRESENTATIONS AND WARRANTIES 14
Section 5.01. Existence 14
Section 5.02. Power and Authorization 14
Section 5.03. No Legal Bar 15
Section 5.04. Consents 15
Section 5.05. Litigation 15
Section 5.06. Enforceability 15
Section 5.07. Changes in Law 15
Section 5.08. Disclosure of Information 16
Section 5.09. Reassessment District, Pledge and Liens 16
Section 5.10. Representations in Other Documents 16
ARTICLE VI GENERAL COVENANTS 16
Section 6.01. Maintenance of Existence 17
Section 6.02. Compliance with this Agreement and Bond Documents 17
Section 6.03. Laws. Permits and Obligations 17
• •
Section 6.04. Accounting Records and Financial Statements 17
Section 6.05. Visitation and Examination 17
Section 6.06. Maintenance of Tax-Exempt Status of Bonds 17
Section 6.07. Enforcement of Irvine Agreements 18
Section 6.08. Agreement to Market Fixed Rate Bonds 18
Section 6.09. Collection and Payment of Reassessments and Additional
Assessments 18
Section 6.10. Punctual Payment 18
Section 6.11. No Other Encumbrances 18
Section 6.12. Consents Under Bond Documents 19
Section 6.13. No Change in Bond Documents 19
Section 6.14. Limitation on Optional Calls 19
Section 6.15. Conversions; Limitation 19
Section 6.16. Application of Letter of Credit Drawings 19
Section 6.17. Further Assurances 19
ARTICLE VII DEFAULTS AND REMEDIES 20
Section 7.01. Events of Default 20
Section 7.02. Remedies 21
Section 7.03. Waivers; Consents 22
Section 7.04. No Waiver; Remedies Cumulative 22
Section 7.05. Waiver of Laws 22
Section 7.06. Absolute Obligation of City 22
ARTICLE VIII MISCELLANEOUS 22
Section 8.01. Notices 22
Section 8.02. Successors and Assigns 24
Section 8.03. Survival of Representations, Warranties and Covenants 24
Section 8.04. Counterparts 24
Section 8.05. Costs, Expenses and Taxes 24
Section 8.06. Amendments 25
Section 8.07. Severability; Interest Limitation 25
Section 8.08. Complete Agreement 25
Section 8.09. Conflicts 26
Section 8.10. Waiver of Jury Trial and Certain Damages. 26
Section 8.11. Governing Law 26
Section 8.12. Table of Contents and Headings 26
Section 8.13. Participations 26
Section 8.14. Limited Obligation; No Personal Liability 26
ii
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LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
THIS AGREEMENT is made as of April 1, 2003 between CITY OF TUSTIN, a general
law city and a political subdivision of the State of California (the "City"), and THE BANK OF
NEW YORK, a New York banking corporation (the `Bank").
RECITALS
A. The City issued $41,500,000 aggregate principal amount of its Limited Obligation
Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Series A (the "Bonds")
pursuant to a Fiscal Agent Agreement dated as of February 1, 1996 (the "Fiscal Agent
Agreement") between the City and State Street Bank. and Trust Company of California, N.A., as
fiscal agent (including any successor fiscal agent under the Fiscal Agent Agreement, the "Fiscal
Agent"), of which $[28,900,000] principal amount of Bonds are currently outstanding. The
Bonds are secured by unpaid reassessments on the area duly designated by the city as
Reassessment District No. 95-2 (Tustin Ranch) in connection with the issuance of the Bonds (the
"Reassessment District").
B. To ensure the payment of the principal of and interest on the Adjustable Rate
Bonds (as hereinafter defined) and to provide funds for the payment of the purchase price of
Adjustable Rate Bonds which have been tendered for purchase pursuant to the Fiscal Agent
Agreement and the Bonds to the extent remarketing proceeds are not available therefor,
Kredietbank N.V. (New York Branch) has issued to the Fiscal Agent for the account of the City
its irrevocable, direct pay letter of credit dated February 29, 1996 (the "KB Letter of Credit"),
which, as amended, will expire on
C. In order to continue secure the payment of the Adjustable Rate Bonds and to
facilitate the remarketing of the Bonds and thereby achieve interest cost savings, the City has
requested the Bank to issue its irrevocable direct pay letter of credit in substantially the form of
Exhibit A hereto (including any amendments thereto and any substitute letter of credit issued
upon the transfer thereof in accordance with its terms, the "Letter of Credit") to the Fiscal Agent
for the account of the City in substitution for the KB Letter of Credit, and the Bank is willing to
do so, upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and the undertakings herein set
forth and intending to be legally bound, the City and the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions
Terms defined in the caption and recitals of this Agreement have the meanings specified
therein. In addition, the following terms shall have the meanings specified in this Section:
• •
"Act" means the Refunding Act of 1984 for 1915 Improvement Act Bonds, being
Division 11.5 of the California Streets and Highways Code, and the Improvement Bond Act of
1915, as amended, Division 10 of the California Streets and Highways Code.
"Additional Assessments" has the meaning ascribed to such term in Section 5.09.
"Adjustable Rate Bond Reassessments" means the Reassessments upon the
Adjustable Rate Parcels.
"Adjustable Rate Bonds" has the meaning ascribed to such term in the Fiscal
Agent Agreement.
"Adjustable Rate Parcels" means the parcels of land within the Reassessment
District other than any such parcels which have been designated by the City pursuant to the
Fiscal Agent Agreement as parcels upon which the Reassessments shall secure Fixed Rate
Bonds.
"Agreement" means this Letter of Credit and Reimbursement Agreement, as the
same may be supplemented or amended from time to time.
"Alternate Base Rate" means a fluctuating rate of interest per annum equal at all
times to the higher of(a) the Prime Rate and (b) the Federal Funds Effective Rate plus 0.1% per
annum.
"Alternate Letter of Credit" means an Alternate Letter of Credit, as defined in the
Fiscal Agent Agreement, delivered to the Fiscal Agent in substitution for the Letter of Credit as
security for the payment of the principal of and interest on the Bonds.
"Authorized Representative" means the City Manager or the Treasurer of the City
or any other Person designated as an Authorized Representative of the City, in a written
certificate of an Authorized Representative of the City filed with the Fiscal Agent, to make the
certifications or take the other actions indicated by the context.
"Bank Bonds" has the meaning ascribed to such term in Section 3.03.
"Bond Documents" means the Bonds, the Fiscal Agent Agreement, the
Remarketing Agreement and the Protocol Agreement.
"Business Day" means any day other than (i) a Saturday, Sunday or legal holiday,
(ii) a day on which banking institutions in Los Angeles, California or New York,New York or in
any other city where either the principal corporate trust office of the Fiscal Agent, the corporate
trust office of the Paying Agent designated for payment and tender of Bonds or the office of the
Bank at which drafts are required to be presented under the Letter of Credit, is located are
required or authorized by law(including executive order) to close, or (iii) a day on which the
New York Stock Exchange, Inc. is closed.
"Closing Date" means the date on which all conditions precedent to the issuance
of the Letter of Credit specified in Article IV hereof have been satisfied or waived.
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"Continuing Costs of the Adjustable Rate Bonds" has the meaning ascribed to
such term in the Fiscal Agent Agreement.
"Default" means an event which with the passage of time or giving of notice or
both would become an Event of Default.
"Event of Default" means each of the events described in Section 7.01.
"Federal Funds Effective Rate" means, for any day, a rate per annum (expressed
as a decimal, rounded upwards, if necessary, to the next highest 1/100 of 1%), equal to the
weighted average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day; provided,
that (i) if the day for which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (ii) if such rate is not so published
for any day, the Federal Funds Rate for such day shall be the average of the quotations for such
day on such transactions received by the Bank from three federal funds brokers of recognized
standing selected by the Bank.
"Fixed Rate Bond" has the meaning ascribed to such term in the Fiscal Agent
Agreement.
"IACI" means Irvine Apartment Communities, Inc., a Delaware corporation and a
publicly traded self-administered equity real estate investment trust.
"IACLP" means Irvine Apartment Communities, L.P., a Delaware limited
partnership, of which IACI is its sole general partner and TIC is the sole limited partner.
"Interest Component" has the meaning ascribed to such term in the Letter of
Credit.
"Interest Draft" has the meaning ascribed to such term in the Letter of Credit.
"Irvine" means any or all of TIC, IACLP or IACI.
"Offering Document" means any official statement, offering memorandum,
placement memorandum or similar document relating to any remarketing of the Bonds.
"Outstanding" when used with reference to the Bonds has the meaning ascribed to
such term in the Fiscal Agent Agreement.
"Participating Bank" shall have the meaning ascribed to such term in Section
8.13.
"Participation Agreement" shall have the meaning ascribed to such term in
Section 8.13.
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"Paying Agent" has the meaning ascribed to such term in the Fiscal Agent
Agreement.
"Person" means any individual, corporation, limited liability company,
partnership,joint venture, association,joint-stock company, estate, trust, unincorporated
organization, governmental body or any agency or political subdivision thereof, or other legal
entity.
"Prime Rate" means the rate of interest publicly announced from time to time by
the Bank at its principal office in New York City as its prime rate or prime lending rate, such rate
to be adjusted automatically (without notice) at the opening of business on the effective date of
any change in such publicly announced rate. This rate of interest is determined from time to time
by the Bank as a means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor necessarily reflective of the lowest rate of interest actually charged
by the Bank to any particular class or category of customers of the Bank. The Bank may make
commercial loans or other loans at rates of interest at, above or below the Prime Rate.
"Principal Component" has the meaning ascribed to such term in the Letter of
Credit.
"Protocol Agreement" means the Protocol Agreement dated as of February 1,
1996 between the City and TIC with respect to the Reassessment District, as the same may be
amended or supplemented from time to time.
"Purchase Draft" has the meaning ascribed to such term in the Letter of Credit.
"Reassessments" has the meaning ascribed to such term in the Fiscal Agent
Agreement.
"Remarketing Agent" has the meaning ascribed to such term in the Fiscal Agent
Agreement (at the date of this Agreement, the Remarketing Agent is UBS PaineWebber Inc.).
"Remarketing Agreement" means the Remarketing Agreement dated as of
February 1, 1996 between the City and the Remarketing Agent relating to the Bonds, and any
replacement remarketing agreement with the original or any successor Remarketing Agent.
"Redemption Draft" has the meaning ascribed to such term in the Letter of Credit.
"State" means the State of California.
"Stated Amount" of the Letter of Credit, as of the time of any determination,
means the maximum amount available to be drawn at such time under the Letter of Credit in
accordance with its terms, assuming compliance with all conditions to a drawing and without
giving effect to any unreimbursed drawings.
"Stated Expiration Date" means , 2006, or such later date to which
the expiry date of the Letter of Credit may be extended by the Bank in accordance with Section
2.01.
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"Termination Date" means the Stated Expiration Date of the Letter of Credit or
such earlier date on which the undertaking of the Bank thereunder shall have terminated in
accordance with the terms of the Letter of Credit.
"TIC" means The Irvine Company, a Michigan corporation.
Section 1.02. Interpretation
The following rules shall apply to the construction of this Agreement unless the context
requires otherwise: (a) the singular includes the plural and the plural, the singular; (b) words
importing any gender include the other genders; (c) references to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statute; (d) references to
"writing" include printing, photocopy, typing, facsimile, lithography and other means of
reproducing words in a tangible visible form; (e) the words "including," "includes" and
"include" are not words of limitation; (I) references to the caption, recitals, sections (or
subdivisions of sections), exhibits, appendices, annexes or schedules are to those of this
Agreement unless otherwise indicated; (g) references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and other modifications to
such instruments, but only to the extent that such amendments and other modifications are
permitted or not prohibited by the terms of this Agreement; and (h) references to Persons include
their permitted successors and assigns.
Section 1.03. Time of Day; Computation of Time Periods
In this Agreement:
(a) References to any time of the day are to eastern standard time or eastern
daylight saving time, as in effect in New York, New York on such day; and
(b) In the computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding."
ARTICLE II
LETTER OF CREDIT AND REIMBURSEMENT
Section 2.01. Issuance of Letter of Credit
The City hereby requests the Bank to issue the Letter of Credit to the Fiscal Agent for the
City's account. Subject to the conditions precedent hereinafter set forth, the Bank will issue the
Letter of Credit to the Fiscal Agent on the Closing Date. The initial Stated Amount of the Letter
of Credit shall be $ , which is the sum of(i) a Principal Component equal to the
$ principal amount of the Adjustable Rate Bonds Outstanding on the Closing Date
plus (ii) an Interest Component of$ , the amount equal to 52 days' interest on such
Adjustable Rate Bonds computed at the rate of 12% per annum on the basis of a 365-day year.
The Letter of Credit shall expire at 5:00 p.m. on , 2006, unless prior to such time
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the Bank, at its option, upon written request of the City, by an amendment to the Letter of Credit
delivered to the Fiscal Agent, shall have extended the expiry date of the Letter of Credit, in
which case the Letter of Credit shall expire as set forth in such amendment. The expiry date of
the Letter of Credit may be successively extended in the same fashion. The Bank shall have no
obligation to grant any such extensions.
Section 2.02. Reimbursement
The City will pay or cause to be paid to the Bank, with interest as provided in Section
2.03(a):
(a) a sum equal to each amount drawn under the Letter of Credit by an
Interest Draft, on the same Business Day that such drawing is honored;
(b) a sum equal to each amount drawn against the Interest Component of the
Letter of Credit by a Purchase Draft, on or before the first to occur of(i) the fifth Business Day
of the first calendar month following the calendar month in which such drawing is honored, (ii)
the date on which the Bonds purchased with the proceeds of such Purchase Draft are remarketed
by the Remarketing Agent, or (iii) the date on which the Bonds purchased with the proceeds of
such Purchase Draft are redeemed or otherwise paid in full;
(c) a sum equal to each amount drawn against the Principal Component of the
Letter of Credit by a Purchase Draft, on or before the first to occur of(i) the date on which the
Bonds purchased with the proceeds of such Purchase Draft are remarketed by the Remarketing
Agent or (ii) the date on which the Bonds purchased with the proceeds of such Purchase Draft
are redeemed or otherwise paid in full; provided, that if such sum has not become due and
payable as aforesaid or has not otherwise been paid in full on or before the 60th day following
the Business Day on which such drawing is honored, then the outstanding balance of such sum
shall be payable in 82 approximately equal consecutive monthly installments (as stipulated by
the Bank), commencing on the first Business Day of the third calendar month following the
calendar month in which such drawing is honored and continuing on the first Business Day of
each calendar month thereafter; and on the first Business Day of the 84th calendar month
following the calendar month in which such drawing is honored, the entire unpaid balance of
such sum and all unpaid accrued interest thereon shall be due and payable in full; and
(d) a sum equal to each amount drawn under a Letter of Credit by a
Redemption Draft, on the same Business Day that such drawing is honored.
Section 2.03. Interest
(a) Interest on Drawings. All sums payable to the Bank under Section 2.02
shall bear interest, from the date the corresponding drawing under the Letter of Credit is honored
by the Bank until such sums are paid in full, at the Alternate Base Rate; provided,that (i) any
sum payable to the Bank under Section 2.02(c) which is outstanding in excess of three years
shall thereafter bear interest at the Alternate Base Rate plus 1% per annum, and (ii) if any sum
payable to the Bank under Section 2.02 or interest thereon or any other amount due pursuant to
this Agreement is not paid within 10 days of the date such sum, interest or other amount is due
and payable by the City to the Bank pursuant to this Agreement, then all such sums shall
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thereafter bear interest at the Alternate Base Rate plus 2% per annum until paid in full. Interest
accruing pursuant to this Section during each calendar month shall be due and payable on the
fifth Business Day of the next calendar month and on the date the respective sum is paid. Except
as the Bank may otherwise elect, all payments by or on behalf of the City to reimburse the Bank
for drawings under the Letter of Credit and interest accrued thereon, including all amounts
credited to such payments pursuant to Section 2.05(c), shall be applied first to the payment of
interest due and payable by the City under this Section and then to the reduction of the principal
balance of sums due and payable by the City under Section 2.02.
(b) General Interest Accrual. Except as otherwise provided in Section
2.03(a), all payments to the Bank under this Agreement shall be accompanied by interest accrued
thereon from the date such payments become due to the date of payment at the Alternate Base
Rate; provided that if any amount is not paid within 10 days of the date such amount is due and
payable to the Bank pursuant to this Agreement, then such amount shall thereafter bear interest at
the Alternate Base Rate plus 2% per annum until paid in full.
Section 2.04. Fees and Charges
(a) Commitment Fee. The City shall pay to the Bank a Letter of Credit
commitment fee computed at the rate of 50 basis points (0.50%) per annum on the average daily
Stated Amount of the Letter of Credit. The commitment fee shall accrue from the Closing Date
and shall be payable in arrears on each February 15, May 15, August 15 and November 15
thereafter and on the Termination Date.
(b) Transaction and Transfer Charges. The City shall pay to the Bank, all
reasonable transaction charges that the Bank may make for drawings under the Letter of Credit
(as of the date hereof, the transaction charge for each drawing shall be $150). Such transaction
charges shall be payable upon submission to the City by the Bank of the Bank's bill therefor. In
addition, the City shall pay to the Bank on demand any and all reasonable charges and expenses
which the Bank may pay or incur relative to the Letter of Credit. The City shall pay to the Bank
upon each transfer of the Letter of Credit to a successor Fiscal Agent in accordance with its
terms a transfer fee of$1,000, together with any and all reasonable costs and expenses of the
Bank incurred in connection with such transfer.
Section 2.05. Payments and Computations
(a) Place and Manner of Payment. The City shall make or arrange to make
each payment hereunder on the day when due in lawful money of the United States of America
to the Bank:
(i) In the case of reimbursements of drawings under the Letter of
Credit, by Federal funds wire transfer to:
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The Bank of New York
ABA# 021000018
A/C# 11-15
A/C Name: General Ledger
Attn: Standby LC Dept.
Ref: City of Tustin
(ii) In the case of all other payments, by Federal funds wire transfer to:
The Bank of New York
ABA# 021000018
A/C# 8033297689
A/C Name: SFPD
Attn: Kareen Sinclair
Ref: City of Tustin
Payments received after 3:00 p.m. on any day shall be deemed to be received on the next
Business Day. The Borrower authorizes the Bank, if and to the extent payment is not made when
due hereunder, to charge from time to time against any of the Borrower's accounts with the Bank
any amount so due. Whenever any payment to be made hereunder shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the computation of payment of
interest or fee, as the case may be.
(b) Computations. Computations of all interest and fees payable by the City
hereunder shall be made on the basis of a 360-day year for the actual number of days (including
the first day but excluding the last day) elapsed.
(c) Credits for Payments on Bank Bonds. Amounts received by the Bank as
payment of principal of and/or interest on Bank Bonds held by or for the account of the Bank
shall be credited against the payments due under Section 2.02(6), Section 2.02(c) and Section
2.03 on the date received by the Bank.
Section 2.06. Increased Costs
If after the date of this Agreement any enactment, promulgation or adoption of or change
in any applicable foreign or domestic law, regulation or rule or in the interpretation or
administration thereof by any court, administrative or governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or compliance by
the Bank or any Participating Bank (or any controlling affiliate) with any guideline, request or
directive issued after the date hereof(whether or not having the force of law) of any such
authority, central bank or comparable agency, shall either (i) impose, modify or deem applicable
any reserve, special deposit, insurance assessment or similar requirement (including without
limitation a guideline, request or directive which affects the manner in which the Bank or any
Participating Bank allocates capital resources to its commitments and/or risks, including its
obligations and/or risks under this Agreement, the Letter of Credit, any Bank Bonds or any
Participation Agreement), (ii) affect the amount of capital required or expected to be maintained
by the Bank or any Participating Bank (or any controlling affiliate), (iii) subject the Bank or any
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Participating Bank (or any controlling affiliate) to any tax, levy, impost, duty, deduction,
withholding or other charge or change the basis of taxation of the Bank or any Participating Bank
(other than a change in a rate of tax based on overall net income of the Bank or such
Participating Bank), or (iv) impose on the Bank or any Participating Bank any other condition
regarding this Agreement, the Letter of Credit, any Bank Bonds or any Participation Agreement,
and the result of any event referred to in clause (i), (ii), (iii) or(iv) of this sentence shall be to
increase the direct or indirect cost to the Bank or any Participating Bank of issuing or
maintaining the Letter of Credit or the obligations and/or risks of the Bank or any Participating
Bank under this Agreement, any Bank Bonds or any Participation Agreement or to reduce the
amounts receivable by the Bank or any Participating Bank hereunder, under any Bank Bonds or
under any Participation Agreement or to reduce the rate of return on the capital of the Bank or
any Participating Bank in connection with this Agreement, any Bank Bonds or any Participation
Agreement (which increase in cost, reduction in amounts receivable or reduction in rate of return
shall be determined by the Bank's or the Participating Bank's reasonable allocation of such cost
increase, reduction in amounts receivable or reduction in rate of return resulting from such
event), then within 30 days after demand by the Bank (on behalf of itself or any Participating
Bank), the City shall pay to the Bank or the applicable Participating Bank, from time to time as
specified by the Bank or the applicable Participating Bank, additional amounts that in the
aggregate shall be sufficient to compensate the Bank or such Participating Bank for such
increased cost, reduction in amounts receivable or reduction in rate of return. A certificate as to
such increased cost, reduction in amounts receivable by the Bank or any Participating Bank or
reduction in rate of return submitted by the Bank or the applicable Participating Bank to the City
containing an explanation of such increased cost, reduction in amounts receivable or reduction in
rate of return and the manner of calculation thereof shall, in absence of manifest error, be
conclusive and binding for all purposes. Any amounts paid by the City to the Bank pursuant to
this Section or Section 2.07 which are subsequently recovered by the Bank, or with respect to
which the Bank is reimbursed, from any taxing or other governmental agency shall be repaid to
the City by the Bank within 30 days after the officers of the Bank responsible for administering
this Agreement acquire actual knowledge of such recovery or reimbursement.
Section 2.07. No Deduction for Taxes
All payments by the City to the Bank under this Agreement or any Bank Bonds shall be
made free and clear of and without deduction for any present or future taxes or other amounts for
or on account of levies, imposts, duties, deductions, withholdings or other charges of whatsoever
nature (including, without limitation, interest, additions to tax and penalties thereon), imposed,
levied, collected, withheld or assessed by any governmental authority (excluding any taxes based
on income of the Bank and excluding franchise and similar taxes imposed by the jurisdiction
under which it is organized or in which the Bank's office at the address set forth in Section 8.01
is located or any political subdivision thereof) (collectively, "Taxes"). If the City shall be
required to withhold or deduct Taxes from any sum payable to the Bank hereunder or under any
Bank Bonds, (i) the sum payable to the Bank shall be increased as may be necessary so that the
Bank receives an amount equal to the sum it would have received had no such withholdings or
deductions been made, (ii) the City shall make such necessary withholdings and deductions, and
(iii) the City shall pay the full amount withheld or deducted to the relevant authority according to
applicable law so that the Bank shall not be required to make any deduction or payment of such
Taxes.
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S
Section 2.08. Obligations Absolute
The obligations of the City under this Article shall be absolute, unconditional and
irrevocable, shall be performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following circumstances: (i). any
lack of validity or enforceability of the Letter of Credit, the Bond Documents or any other
agreement or document relating thereto; (ii) any amendment or waiver of or any consent to or
departure from the Letter of Credit, the Bond Documents or any document relating thereto; (iii)
the existence of any claim, set-off, defense or other right which the City may have at any time
against the Fiscal Agent (or any Person for whom the Fiscal Agent may be acting), the Paying
Agent(or any Person for whom the Paying Agent may be acting), the Remarketing Agent, the
Bank, any Participating Bank or any other Person, whether in connection with this Agreement,
the transactions described herein or any unrelated transaction; or (iv) any of the circumstances
contemplated in clauses (1) through (7), inclusive, of Section 2.10(a).
Section 2.09. Indemnification
In addition to any and all rights of reimbursement, indemnification, subrogation or any
other rights pursuant hereto or under law or equity, to the fullest extent permitted by applicable
law, but subject to the limitations set forth in Section 8.14, the City hereby indemnifies and holds
harmless the Bank and the Participating Banks (and their directors, officers, employees and
agents) from and against any and all claims, damages, losses, liabilities, costs or expenses
(including reasonable attorneys' fees for counsel of the Bank's or the applicable Participating
Bank's choice) whatsoever which the Bank or any Participating Bank may incur (or which may
be claimed against the Bank or any Participating Bank by any Person whatsoever) by reason of
or in connection with (a) the issuance or a transfer of, or payment or failure to pay under, the
Letter of Credit, (b) any breach by the City of any representation, warranty, covenant, term or
condition in, or the occurrence of any default by the City under this Agreement or the Bond
Documents, including all reasonable fees or expenses resulting from the settlement or defense of
any claims or liabilities arising as a result of any such breach or default, (c) any untrue statement
or alleged untrue statement of any material fact contained or incorporated by reference in any
Offering Document or the omission or alleged omission to state in any Offering Document a
material fact necessary to make such statements, in the light of the circumstances under which
they are or were made, not misleading, (d) the remarketing of the Bonds, (e) the use of the
proceeds of the Bonds, and (f) involvement of the Bank or any Participating Bank in any legal
suit, investigation, proceeding, inquiry or action as a consequence, direct or indirect, of the
Bank's issuance of the Letter of Credit, its entering into this Agreement or action taken
thereunder or under any of the Bond Documents, or any other event or transaction in connection
with or contemplated by any of the foregoing; provided the City shall not be required to
indemnify the Bank or any Participating Bank for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by (i) the willful misconduct or gross
negligence of the Bank in determining whether documents presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii) the Bank's willful failure to pay under the
Letter of Credit after the presentation to it by the Fiscal Agent of a draft strictly complying with
the terms and conditions of the Letter of Credit, unless the Bank in good faith believes that it is
prohibited by law or other legal authority from making such payment, or (iii) any untrue
statement of a material fact contained in or incorporated by reference in any description of the
Bank furnished by the Bank for inclusion in an Offering Document or any omission to state in
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any such description of the Bank a material fact necessary to make such statements, in light of
the circumstances under which they were made, not misleading. Nothing in this Section is
intended to limit the City's reimbursement and interest payment obligations contained in Section
2.02 and Section 2.03. The obligations of the City under this Section shall survive the
termination of this Agreement.
Section 2.10. Liability of Bank
(a) As between the City and the Bank, the City assumes all risks of the acts or
omissions of the Fiscal Agent with respect to the Fiscal Agent's use of the Letter of Credit.
Neither the Bank nor any of its officers or directors shall be liable or responsible for: (I) the use
which may be made by the Fiscal Agent of the Letter of Credit or for any acts or omissions of the
Fiscal Agent or the Paying Agent in connection therewith; (2) the form, validity, sufficiency,
accuracy or genuineness of any documents (including without limitation any documents
presented under the Letter of Credit), or of any statement therein or endorsement thereon, even if
any such documents, statements or endorsements should in fact prove to be in any or all respects
invalid, insufficient, fraudulent, forged, inaccurate or untrue; (3) the payment by the Bank
against presentation of documents which do not comply with the terms of the Letter of Credit,
including failure of any documents to bear any reference or adequate reference to the Letter of
Credit, or any other failure by the Fiscal Agent to comply fully with conditions required in order
to effect a drawing under the Letter of Credit; (4) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign the Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (5) errors, omissions, interruptions, losses or delays in transmission or
delivery of any messages by mail, facsimile, cable, telegraph, telex, telephone or otherwise; (6)
any loss or delay in the transmission or otherwise of any document or draft required in order to
make a drawing under the Letter of Credit; or(7) any other circumstances whatsoever in making
or failing to make payment under the Letter of Credit; except only that the City shall have a
claim against the Bank, and the Bank shall be liable to the City, to the extent, but only to the
extent, of any direct, as opposed to special, exemplary, consequential or punitive, damages
suffered by the City which the City proves were caused by (i) the willful misconduct or gross
negligence of the Bank in determining whether documents presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii) the Bank's willful failure to pay under the
Letter of Credit after the presentation to it by the Fiscal Agent of a draft strictly complying with
the terms and conditions of the Letter of Credit, unless the Bank in good faith believes that it is
prohibited by law or other legal authority from making such payment. In furtherance and not in
limitation of the foregoing, the Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any notice or information to
the contrary; provided that if the Bank shall receive timely written notification from the Fiscal
Agent that documents conforming to the terms of the Letter of Credit presented to the Bank are
not to be honored, the Bank agrees that it will not honor such documents.
(b) Except for the Bank's obligations under the Letter of Credit, the Bank
shall have no liability to the City or any other Person as a result of any reduction of the credit
rating of the Bank or any deterioration in the Bank's financial condition. No reduction of the
Bank's credit rating or deterioration in the Bank's financial condition shall reduce or in any way
diminish the obligations of the City to the Bank under this Agreement, including without
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limitation the City's obligations to pay Letter of Credit commitment fees to the Bank and to
reimburse the Bank, with interest, for drawings under the Letter of Credit.
ARTICLE III
SECURITY
•
Section 3.01. Security and Subrogation Under Bond Documents
The City and the Bank intend that(i) the obligations of the City under this Agreement
shall have the benefit and security of the Fiscal Agent Agreement, as provided in the Fiscal
Agent Agreement, and (ii) in the event of one or more draws under the Letter of Credit and the
application of the proceeds thereof to the payment of principal of and/or interest on Adjustable
Rate Bonds, the Bank will be subrogated pro tanto to the rights of the Fiscal Agent and the
holders of the Adjustable Rate Bonds in and to all funds and security held by the Fiscal Agent
under the Fiscal Agent Agreement for the payment of the principal of and interest on the
Adjustable Rate Bonds, including without limitation all Adjustable Rate Bond Reassessments
and any and all bond proceeds funds, escrow funds, revenue funds, debt service funds and
redemption funds and securities and other instruments comprising investments thereof pledged
or held as security for the payment of Adjustable Rate Bonds. In addition, the Bank shall have
any and all other subrogation rights available to the Bank at law or in equity.
Section 3.02. Incorporation by Reference
The pledge and security interest granted for the benefit of the Bank pursuant to the Fiscal
Agent Agreement is hereby incorporated herein by this reference, and shall extend to and secure
all obligations of the City to the Bank hereunder, notwithstanding any termination or discharge
of the Fiscal Agent Agreement and shall survive until all sums owing hereunder are paid in full.
ARTICLE IV
CONDITIONS PRECEDENT
Each of the following are conditions precedent to the Bank's issuance of the Letter of
Credit:
Section 4.01. Documentation
The Bank shall have received each of the following in form and substance satisfactory to
the Bank:
(a) An copy of this Agreement duly executed by an Authorized
Representative of the City;
(b) Copies of the Fiscal Agent Agreement, the Remarketing Agreement and
the Protocol Agreement certified to be correct and complete as of the Closing Date by an
Authorized Representative of the City;
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(c) Certified copies of all proceedings taken by the City authorizing the
formation of the Reassessment District, the levy of the Reassessments, and the execution,
delivery and performance of this Agreement;
(d) A certificate of an Authorized Representative of the City as of the Closing
Date stating that(i) the representations and warranties contained in Article V are true and correct
and (ii) no Default or Event of Default has occurred and is continuing;
(e) A certificate of an authorized representative of TIC as of the Closing Date
(i) stating that (A) the representations and warranties of TIC contained in the Protocol
Agreement are true and correct and (B) the Protocol Agreement is in full force and effect and is
enforceable by the Bank as a third party beneficiary to the extent provided therein and (ii)
covering such matters with respect to the Reassessment District as the Bank may reasonably
request;
(f) An opinion of the City Attorney to the effect that (1) the City is a duly
created and validly existing municipal corporation under the Constitution and laws of the State,
constituting a general law city of the State with all requisite power and authority to execute and
deliver this Agreement and perform its obligations under this Agreement and the Bond
Documents, (2) except as set forth in such opinion, the City has obtained from the governmental
authorities, boards, agencies, courts, officers and commissions having jurisdiction over it all
approvals, consents, authorizations, certifications, reviews and other orders that are necessary for
the execution and delivery of this Agreement and performance by the City of this Agreement and
the Bond Documents, (3) the execution and delivery by the City of this Agreement have been
duly authorized by all requisite action of the City Council of the City and all conditions
precedent to the execution and delivery by the City of this Agreement have been fulfilled,
(4) this Agreement has been duly executed and delivered by the City and this Agreement and the
Bond Documents constitute legal, valid and binding obligations of the City enforceable against
the City in accordance with their terms, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency or other laws affecting the rights of creditors
generally and by the application of general principles of equity, (5) the execution and delivery of
this Agreement and the performance by the City of this Agreement and the Bond Documents will
not violate, conflict with or constitute a default under any law, rule, regulation, order or
judgment applicable to the City, (6) to the best knowledge of such counsel, the City is not in any
material way in breach of or in default under this Agreement or the Bond Documents, and no
event has occurred and is continuing which, with the passage of time or the giving of notice or
both, would constitute an event of default under this Agreement or any Bond Document, and (7)
there is no pending or, to the best knowledge of such counsel, threatened action, suit, proceeding,
inquiry or investigation before or by any court, governmental agency or arbitrator against or
involving the City or the Reassessment District which, in any case, might materially adversely
affect the validity or enforceability of this Agreement or the Bond Documents;
(g) Opinions of Jones, Hall, Hill & White, San Francisco, California, Bond
Counsel, covering such matters as to the City, the Bond Documents and this Agreement as the
Bank may reasonably request;
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(h) An opinion of Stradling, Yocca, Carlson & Rauth, Newport Beach,
California, counsel to Irvine, with respect to the Protocol Agreement and covering such other
matters as to Irvine as the Bank may reasonably request;
(i) [An updated appraisal report of Gary L. Vogt and Associates]; and
(j) Such other documents, instruments, certificates, opinions, approvals and
assurances customary in this type of financing as the Bank or its counsel may reasonably request.
Section 4.02. Other Conditions
As additional conditions to the issuance of the Letter of Credit, on the Closing Date, (i)
the representations and warranties set forth in Article V and in any and all documents delivered
to the Bank in connection herewith shall be true and correct in all material respects, (ii) no
Default or Event of Default shall have occurring and be continuing and (iii) all costs and
expenses of the Bank accrued to the Closing Date and payable pursuant to Section 8.05
(including the fees and disbursements of counsel to the Bank to the extent then invoiced), shall
have been paid.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The City represents and warrants as follows:
Section 5.01. Existence
The City is a municipal corporation, constituting a general law city and a political
subdivision of the State, duly organized, validly existing under and by virtue of the Constitution
and laws of the State.
Section 5.02. Power and Authorization
The City has all requisite power and authority to execute and deliver this Agreement and
perform its obligations under this Agreement and the Bond Documents. The City has taken all
necessary action to form the Reassessment District, to levy the Reassessments and to authorize
the execution and delivery of this Agreement and the performance of this Agreement and the
Bond Documents. The City is duly authorized pursuant to the Act to pledge and assign the
Reassessments, the Additional Assessments and other assets purported to be pledged and
assigned under the Fiscal Agent Agreement in the manner and to the extent provided in the
Fiscal Agent Agreement. The City and the Fiscal Agent (subject to the provisions of Article VIII
of the Fiscal Agent Agreement) shall at all times, to the extent permitted by law, defend,
preserve and protect such pledge and assignment of the Reassessments, the Additional
Assessments and other assets and all the rights of the owners of the Bonds under the Fiscal
Agent Agreement, and the Bank under the Fiscal Agent Agreement and this Agreement, against
all claims and demands of all Persons whomsoever.
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Section 5.03. No Legal Bar
The City is not in default under any of the provisions of the laws of the State which
would affect its existence or its powers referred to in Section 5.02. The formation of the
Reassessment District, the levy of the Reassessments and the Additional Assessments, the
execution, delivery and performance by the City of this Agreement, and the execution, delivery
and performance by the City of the Bond Documents did not, do not and will not constitute a
default under, or violate or conflict with, any provision of any applicable law or regulation or of
any order, writ,judgment or decree of any court, arbitrator or governmental authority, or any
contract to which the City is a party or is bound or to which the Reassessment District is subject.
Section 5.04. Consents
The City has obtained all consents, permits, licenses and approvals of, and has made all
registrations and declarations with, any governmental authorities, legislative bodies, boards,
agencies or commissions required under law which would constitute conditions precedent to the
formation of the Reassessment District, the levy of the Reassessments and the Additional
Assessments, or the execution and delivery of this Agreement or the absence of which would
materially adversely affect the performance by the City of its obligations under this Agreement,
the Fiscal Agent Agreement and the other Bond Documents.
Section 5.05. Litigation
Except as disclosed in Schedule 5.05 hereto, there is no action, suit, inquiry, investigation
or proceeding to which the City is a party at law or in equity, before or by any court, government
agency, public board or body and which is pending or, to the best knowledge of the City,
threatened, affecting the existence of the City or the titles of its representatives to their respective
offices, or affecting or seeking to prohibit, restrain or enjoin the execution or delivery of this
Agreement or in any way contesting or affecting the validity or enforceability of this Agreement
or any of the Bond Documents, or contesting the exclusion from gross income for federal income
tax purposes of interest on the Bonds, or contesting the powers of the city, in connection with
any of the transactions contemplated by this Agreement, the Fiscal Agent Agreement and the
other Bond Documents, the result of which could, if decided adversely to the City, have a
materially adverse effect on the City's ability to perform its obligations under this Agreement
and the Bond Documents.
Section 5.06. Enforceability
This Agreement has been duly executed by the City, and this Agreement, the Fiscal
Agent Agreement, the Remarketing Agreement, the Protocol Agreement and the Bonds
constitute legal, valid and binding obligations of the City, enforceable against the City in
accordance with their respective terms (except as such enforceability may be limited by
bankruptcy, moratorium or other similar laws affecting creditors' rights generally and provided
that the application of equitable remedies is subject to the application of equitable principles).
Section 5.07. Changes in Law
There is not pending any change of law which, if enacted or adopted, could have a
material adverse effect on the City's ability to perform its obligations under this Agreement or
any of the Bond Documents.
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Section 5.08. Disclosure of Information
The information relating to the City supplied in writing by the City to the Bank in
connection with the negotiation of this Agreement is true and correct and does not contain an
untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they were made, not
misleading.
Section 5.09. Reassessment District, Pledge and Liens
The Reassessment District is duly formed and validly existing, and the Reassessments
have been duly and validly levied on all parcels of land in the Reassessment District. The
Adjustable Rate Bonds and the obligations owing to the Bank pursuant to this Agreement, the
Fiscal Agent Agreement and any Bank Bonds purchased by the Bank from time to time are and
will be secured by a pledge under the Fiscal Agent Agreement of(i) the Adjustable Rate Bond
Reassessments (including all payments, prepayments, interest, penalties and other amounts
receivable or received by the Fiscal Agent or the City from time to time in respect of Adjustable
Rate Bond Reassessments), (ii) amounts for the Continuing Costs of the Adjustable Rate Bonds
(including all payments, prepayments, interest, penalties and other amounts which are receivable
or received from time to time by the Fiscal Agent or the City in respect of the Continuing Costs
of the Adjustable Rate Bonds) and all Additional Assessments therefor, and (iii) all other
amounts held from time to time in any fund or account established under the Fiscal Agent
Agreement (except any such fund or account established solely for Fixed Rate Bonds). The
Adjustable Rate Bond Reassessments constitute valid and enforceable first liens against the
Adjustable Rate Parcels (including all present and future improvements thereon comprising part
of such parcels) coequal with the liens securing real property taxes thereon. The City has the
authority to levy additional assessments on the Adjustable Rate Parcels for amounts to pay the
Continuing Costs of the Adjustable Rate Bonds (the "Additional Assessments"), and the
Additional Assessments will constitute valid and enforceable first liens on the Adjustable Rate
Parcels coequal with the liens for the Adjustable Rate Bond Reassessments and the liens securing
real property taxes thereon. The Fiscal Agent Agreement validly and enforceably pledges, in
Section 6.01 thereof, the Adjustable Rate Bond Reassessments and the Additional Assessments
to the payment of all amounts due under the Adjustable Rate Bonds and this Agreement and such
pledge constitutes a first lien and charge against the Adjustable Rate Bond Reassessments and
the Additional Assessments.
Section 5.10. Representations in Other Documents
The City hereby makes to and for the benefit of the Bank each of the representations and
warranties of the City contained in the Bond Documents and the other documents delivered by
the City in connection therewith, and each such representation and warranty shall be deemed to
be reaffirmed by the City at the time of each draw on the Letter of Credit.
ARTICLE VI
GENERAL COVENANTS
So long as any amount is available to be drawn under the Letter of Credit or any amount
is owing to the Bank hereunder or under any Bond Document, the City covenants that, except to
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the extent the Bank shall otherwise consent in writing, each of the following covenants shall be
performed and complied with by the City:
Section 6.01. Maintenance of Existence
The City will maintain its existence as a municipal corporation constituting a general law
city of the State under the Constitution and laws of the State.
Section 6.02. Compliance with this Agreement and Bond Documents
The City will observe and perform each term, covenant, condition and agreement on its
part to be performed or observed under this Agreement and the Bond Documents.
Section 6.03. Laws. Permits and Obligations
The City will comply with all valid acts, rules, regulations, orders and directions of any
legislative, executive, administrative or judicial body applicable to this Agreement or any of the
Bond Documents, violations of which could have a material adverse effect on the rights of the
Bank or the Fiscal Agent under this Agreement or any of the Bond Documents or the city's
ability to perform its obligations under this Agreement or any of the Bond Documents.
Section 6.04. Accounting Records and Financial Statements
The City will cause the Fiscal Agent at all times to keep, or cause to be kept, proper
books of record and account, prepared in accordance with trust industry standards, in which
complete and accurate entries shall be made of all transactions relating to the proceeds of the
Bonds, the Reassessments, the Additional Assessments and all funds and accounts established
pursuant to the Fiscal Agent Agreement. Such books of record and account shall be available for
inspection by the Bank, during regular business hours and upon 24 hours notice and under
reasonable circumstances as agreed to by the Fiscal Agent. The City will furnish, or cause the
Fiscal Agent to furnish, to the Bank as soon as available but in no event later than 31 days after
the end of each calendar month, a financial statement in detail reasonably satisfactory to the
Bank with respect to receipts of amounts in respect of Adjustable Rate Bond Reassessments and
Additional Assessments and deposits to, disbursements from and balances of the funds, accounts
and subaccounts established under the Fiscal Agent Agreement.
Section 6.05. Visitation and Examination
Except to the extent prohibited by law, the City will permit any person designated by the
Bank to visit any of the offices of the City to examine the books and financial records, including
without limitation minutes of meetings at the City Council, and make copies thereof or extracts
therefrom, and to discuss the affairs, finances and accounts of the City with its principal officials,
all at such reasonable times and as often as the Bank may reasonably request, to the extent such
information and material relate to the transactions contemplated by this Agreement and the Bond
Documents.
Section 6.06. Maintenance of Tax-Exempt Status of Bonds
The City will not take any action or omit to take any action which, if taken or omitted,
would adversely affect the exclusion of interest on the Bonds from gross income for federal
income tax purposes or the exemption of interest on the Bonds from State personal income taxes.
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Section 6.07. Enforcement of Irvine Agreements
The City will take such action to enforce the Protocol Agreement and other agreements of
the City with Irvine relating to the Reassessment District and the parcels of land therein as the
Bank may reasonably direct.
Section 6.08. Agreement to Market Fixed Rate Bonds
Prior to any conversion of Bonds to Fixed Rate Bonds, the City will enter into an
agreement with UBS PaineWebber Inc. or another national firm reasonably acceptable to the
Bank for the sale of such Bonds upon conversion to Fixed Rate Bonds on a"subject to sale"
basis; provided, that in the event of a failure to remarket such Bonds, such conversion shall not
take place and such Bonds shall remain outstanding as Adjustable Rate Bonds.
Section 6.09. Collection and Payment of Reassessments and Additional Assessments
The City will collect and deposit with the Fiscal Agent, or cause the Fiscal Agent to
collect, for payment to the Bank when due the Adjustable Rate Bond Reassessments. The City
will levy the Additional Assessments, and will collect and deposit with the Fiscal Agent, or
cause the Fiscal Agent to collect, the Additional Assessments for payment when due of the
Continuing Costs of the Adjustable Rate Bonds (including, without limitation, amounts payable
by the City to the Bank hereunder in respect of fees, costs and indemnification). In the event of a
delinquency in the payment of Adjustable Rate Bond Reassessments or Additional Assessments,
the City will diligently proceed by foreclosure proceedings to collect the same in accordance
with the Fiscal Agent Agreement.
Section 6.10. Punctual Payment
The City will punctually pay or cause to be paid the principal, interest and other amounts
becoming due from time to time in respect of this Agreement and the Adjustable Rate Bonds, in
strict conformity with the terms of this Agreement, the Adjustable Rate Bonds and the Fiscal
Agent Agreement, according to the true intent and meaning thereof, but only out of the
Adjustable Rate Bond Reassessments, the Additional Assessments and other assets pledged for
such payment as provided in the Fiscal Agent Agreement and received by the City or the Fiscal
Agent.
Section 6.11. No Other Encumbrances
Except for the pledge and lien created by the Fiscal Agent Agreement, so long as any of
the Adjustable Rate Bonds are outstanding or the City has any obligations under this Agreement,
the City will not create, or permit to be created or exist, any pledge, lien, charge of other
encumbrance upon the Adjustable Rate Bond Reassessments, the funds and accounts established
under Fiscal Agent Agreement with respect to the Adjustable Rate Bonds or the City's
obligations under this Agreement, or any other assets pledged or assigned under the Fiscal Agent
Agreement as security for the Adjustable Rate Bonds or the City's obligations under this
Agreement.
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Section 6.12. Consents Under Bond Documents
The City will obtain the consent of the Bank whenever the City is required to obtain the
consent of the Fiscal Agent under the Fiscal Agent Agreement, unless such consent relates solely
to Fixed Rate Bonds.
Section 6.13. No Change in Bond Documents
The City shall not cancel, terminate, amend, supplement, modify or waive any of the
provisions of the Fiscal Agent Agreement, the Protocol Agreement or any of the other Bond
Documents and will not consent to any such cancellation, termination, amendment, supplement,
modification or waiver, without the prior written consent of the Bank, unless such consent relates
solely to Fixed Rate Bonds and does not adversely affect the rights or interests of the Bank.
Section 6.14. Limitation on Optional Calls
The City will not exercise its rights under the Bond Documents to call any Adjustable
Rate Bonds for any optional redemption thereof, unless the City first demonstrates to the
reasonable satisfaction of the Bank that at the time of such redemption the Bank will be fully
reimbursed for all drawings on the Letter of Credit in connection with such redemption.
Section 6.15. Conversions; Limitation
The Fiscal Agent Agreement and the Protocol Agreement require that in connection with
any sale by Irvine of Adjustable Rate Parcels, (a) within nine months of the completion of such
sale, Adjustable Rate Bonds in an amount equal to or exceeding the Reassessments on such
parcels shall be either(i) converted to Fixed Rate Bonds or (ii) redeemed, and (b) prior to such
conversion or redemption the Reassessments and Continuing Costs of the Adjustable Rate Bonds
with respect to such parcels shall be payable by TIC on behalf of the Person purchasing such
parcels. The City will, as and to the extent permitted by the Act, the Fiscal Agent Agreement and
the Protocol Agreement, exercise its right to convert Adjustable Rate Bonds to Fixed Rate Bonds
with respect to any and all parcels of land in the Reassessment District sold or to be sold by
Irvine. The City shall not convert Bonds to any mode other than the Daily Mode, the Weekly
Mode, the Monthly Mode or the Fixed Rate Mode (as defined in the Fiscal Agent Agreement).
Section 6.16. Application of Letter of Credit Drawings
The City will cause the Fiscal Agent and the Paying Agent to apply the proceeds of any
and all drawings under the Letter of Credit in accordance with the certifications of the Fiscal
Agent contained in the respective Interest Drafts, Purchase Drafts and Redemption Drafts.
Section 6.17. Further Assurances
The City will execute and deliver from time to time such further instruments and take
such further actions as may be reasonably required by the Bank to carry out the purposes and
provisions of this Agreement and the Bond Documents and to assure the Bank of its rights and
benefits under this Agreement and the Bond Documents, including, without limitation, the
subrogation and security rights in favor of the Bank contemplated by Article III.
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ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01. Events of Default
Each of the following shall constitute an Event of Default hereunder:
(a) Failure by the City to make or cause to be made to the Bank when due
under this Agreement any payment as (i) reimbursement for a drawing under the Letter of Credit,
(ii) a Letter of Credit commitment fee, or (iii) interest on any such drawing or commitment fee;
(b) Failure by the City to make any other payment to the Bank under this
Agreement within 10 days of the date when it is due;
(c) Default in the payment when due of any principal of or interest on any
Adjustable Rate Bond (except to the extent that such failure is solely attributable to a default by
the Bank in payment of a conforming draw request presented under the Letter of Credit);
(d) Failure by the City to perform or comply with any of the terms or
conditions contained in Section 6.01, 6.11, 6.13, 6.14, 6.15 or 6.16;
(e) Failure by the City (or TIC with respect to the Protocol Agreement) to
perform or comply with any of the other terms or conditions contained in this Agreement or with
any of the terms and conditions contained the Bond Documents and continuance of such failure
for 30 days after the earlier of written notice from the Bank to the City (and TIC with respect to
the Protocol Agreement), or such longer period to which the Bank in its sole discretion may
agree in the case of a failure not curable by the exercise of due diligence within such 30-day
period, provided that the City (or TIC with respect to its obligations under the Protocol
Agreement) shall have commenced to cure such failure within such 30-day period and shall
complete such cure as quickly as reasonably possible with the exercise of due diligence;
(f) Any of the representations or warranties of the City or Irvine set forth in
this Agreement or the Bond Documents or in the other document furnished to the Bank pursuant
to the terms hereof proves to have been false or misleading in any material respect;
(g) Any material provision of this Agreement or the Bond Documents shall at
any time for any reason cease to be valid and binding on the City or TIC, as applicable, or shall
be declared to be null and void, or shall be violative of any applicable law relating to a maximum
amount of interest permitted to be contracted for, charged or received, or the validity or
enforceability thereof shall be contested by the City or TIC or any governmental agency, court or
authority, or the City or TIC, as applicable, shall deny that it has any or further liability or
obligation under this Agreement or any of the Bond Documents to which it is a party;
(h) The occurrence of an Event of Default as defined in the Fiscal Agent
Agreement (without regard to any waiver of such Event of Default by any Person other than the
Bank); or
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(i) The City or Irvine shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or the like of the City or Irvine or of property of the City
or Irvine or (ii) admit in writing the inability of the City or Irvine to pay its debts generally as
they become due, or (iii) make a general assignment for the benefit of creditors, or (iv) be
adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under the United States
Bankruptcy Code or file a voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against the City or Irvine in any
bankruptcy, reorganization or insolvency proceeding, or take corporate action for the purpose of
effecting any of the foregoing, or (vi) have instituted against it, without its application, approval
or consent, a proceeding in any court of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect of the City or
Irvine an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding
up or liquidation, a composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the like of the City or Irvine or of all
or any substantial part of the assets of the City or Irvine or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being contested by the City
or Irvine in good faith, the same shall (A) result in the entry of an order for relief or any such
adjudication or appointment or(B) remain undismissed and undischarged for a period of 60
days.
Section 7.02. Remedies
Upon or after the occurrence of any Event of Default, the Bank may, at its sole option
and without prior notice, demand or presentment, and to the extent permitted by applicable law,
do any or all of the following:
(a) Notify the Fiscal Agent that such Event of Default has occurred and direct
the Fiscal Agent in the exercise of remedies under and pursuant to the Bond Documents;
(b) Direct the Fiscal Agent to call the Adjustable Rate Bonds for mandatory
purchase pursuant to the Fiscal Agent Agreement;
(c) By mandamus, suit, action or proceeding, compel the City and its
members, officers, agents and employees to perform each and every term, provision, covenant
and agreement contained in this Agreement, in the Fiscal Agent Agreement and in the Bonds,
and require the carrying out of any or all such terms, provisions, covenants and agreements of the
City and the fulfillment of all duties imposed upon by it by the Act;
(d) By suit, action or proceeding in equity, enjoin any acts or things which are
unlawful or the violation of any rights of the Bank or the Fiscal Agent;
(e) By suit, action or proceeding in any court of competent jurisdiction,
require the city and its members, officers, agents and employees to account as if the City and
they were the trustees of an express trust; and
(f) Exercise, or cause to be exercised, any and all such remedies as it may
have under this Agreement, the Bond Documents or any other document or at law or in equity.
21
• •
Section 7.03. Waivers; Consents
No waiver of, or consent with respect to, any provision of this Agreement or the Bond
Documents by the Bank shall in any event be effective unless the same shall be in writing and
signed by the Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
Section 7.04. No Waiver; Remedies Cumulative
No failure on the part of the Bank to exercise, and no delay in exercising, any right
hereunder or under the Bond Documents shall operate as a waiver thereof; and no single or
partial exercise by the Bank of any right hereunder or under the Bond Documents shall preclude
any other or further exercise thereof or the exercise of any other right. To the extent permitted by
applicable law, the remedies herein and in the Bond Documents provided are cumulative and not
exclusive of any remedies available under any other document or at law or in equity.
Section 7.05. Waiver of Laws
The City shall not at any time insist upon or plead in any manner whatsoever, or claim or
take the benefit or advantage of, any stay or extension law now or at any time hereafter in force
that may affect the covenants and agreements contained in this Agreement, the Fiscal Agent
Agreement or the Bonds, and all benefit or advantage of any such law or laws is hereby
expressly waived by the City to the extent permitted by law.
Section 7.06. Absolute Obligation of City
Nothing in this Agreement, the Fiscal Agent Agreement or the Bonds contained shall
affect or impair the obligation of the City, which is absolute and unconditional, to pay the City's
obligations under this Agreement and to pay the principal of and interest on any and all Bank
Bonds at their dates of maturity, or upon call for redemption, as herein and in the Fiscal Agent
Agreement provided, but only out of the Reassessments, the Additional Assessments and other
assets herein pledged therefor and received by the City or the Fiscal Agent, or affect or impair
the rights of the Bank, which are also absolute and unconditional, to enforce such payment of
Bank Bonds by virtue of the contract embodied therein.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices
All notices and other communications provided for hereunder shall be in writing and sent
by United States certified or registered mail, return receipt requested, or by telegraph, telex,
telecopier or private delivery service, addressed as follows:
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If to the Bank:
The Bank of New York
One Wall Street, 18th Floor
New York, New York 10286
Attention: Kareen Sinclair
Telephone: (212) 635-
Telecopier: (212) 635-4975
with a copy to:
The Bank of New York
700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: John Greenlee
Telephone: (213) 630-6265
Telecopier: (213) 630-6215
If to the City:
City of Tustin
300 Centennial Way
Tustin, California 92680
Attention: Ronald Nault
Director of Finance
Telephone: (714) 573-3061
Telecopier: (714) 832-0825
If to Irvine:
The Irvine Company
550 Newport Center Drive P.O. Box I
Newport Beach, California 92658-8904
Attention: Vice President, Public Finance
Telephone: (949) 720-2884
Telecopier: (949) 720-9453
If to the Fiscal Agent or the Paying Agent:
State Street Bank and Trust
Company of California, N.A., Fiscal Agent
725 South Figueroa Street, Suite 3100
Los Angeles, California 90017
Attention: Corporate Trust Department
Scott C. Emmons
Telephone: (213) 362-7369
Telecopier: (213) 362-7357
23
• •
If to the Remarketing Agent:
UBS PaineWebber Inc.
Municipal Securities Group, Short Term Trading
1285 Avenue of the Americas, 10 Floor
New York, New York 10019
Attention: Manager, Short Term Trading
Telephone: (212) 713-4692
Telecopier: (212) 713-3797
All notices to the Bank shall refer to this Agreement and the Bonds and the number of the Letter
of Credit. The Bank, the City, Irvine, the Fiscal Agent, the Paying Agent or the Remarketing
Agent may change the address to which notices to it are to be sent by written notice given to the
other Persons listed in this Section. All notices shall, when mailed as aforesaid, be effective on
the date indicated on the return receipt, and all notices given by other means shall be effective
when received. Whenever in this Agreement the giving of notice is required, the giving of such
notice may be waived in writing by the Person entitled to receive such notice and in any such
case the giving or receipt of such notice shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
Section 8.02. Successors and Assigns
This Agreement shall inure to the benefit of and shall be binding upon the parties hereto
and their respective successors and assigns; provided that this Agreement shall also inure to the
benefit of the Participating Banks as provided herein. The City may not assign its rights under
this Agreement without the prior written consent of the Bank. The City and the Bank intend that,
except as set forth in the first sentence of this Section, no other person shall have any claim or
interest under this Agreement or right of action hereon or hereunder.
Section 8.03. Survival of Representations, Warranties and Covenants
All representations, warranties and covenants made by the City herein and in any
document delivered pursuant hereto shall survive the delivery of this Agreement, the Letter of
Credit and any advances under the Letter of Credit.
Section 8.04. Counterparts
The execution and delivery hereof by the City and the Bank shall constitute a contract
between them for the uses and purposes herein set forth, and this Agreement may be executed in
any number of counterparts, with each executed counterpart constituting an original and all
counterparts together constituting one agreement.
Section 8.05. Costs, Expenses and Taxes
The City agrees to pay on demand all costs. and expenses of the Bank in connection with
the preparation, execution, delivery and administration of this Agreement and the Letter of
Credit and any other documents that may be delivered in connection with this Agreement, the
Letter of Credit or the Bond Documents or any amendments or supplements thereto, including
without limitation the reasonable fees and expenses of counsel for the Bank with respect thereto
and with respect to advising the Bank as to its rights and responsibilities under this Agreement,
24
the Letter of Credit, the Bond Documents and such other documents, and all costs and expenses,
including without limitation reasonable counsel fees and expenses, if any, in connection with the
enforcement of this Agreement, the Letter of Credit, the Bond Documents and such other
documents. In addition, the City shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution and delivery of this Agreement, the
Letter of Credit,the Bond Documents and such other documents, and shall indemnify and hold
the Bank and the Participating Banks harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes and fees.
Section 8.06. Amendments
This Agreement may be amended by an instrument in writing executed and delivered by
the City and the Bank.
Section 8.07. Severability; Interest Limitation
If any provision hereof is found by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction, it shall be ineffective as to such jurisdiction only to the extent
of such prohibition or unenforceability, and such prohibition or unenforceability shall not
invalidate the balance of such provision as to such jurisdiction to the extent it is not prohibited or
unenforceable, nor invalidate such provision in any other jurisdiction, nor invalidate the other
provisions hereof, all of which shall be liberally construed in order to effect the provisions of this
Agreement. Notwithstanding anything to the contrary herein contained, the total liability of the
City for payment of interest pursuant hereto shall not exceed the maximum amount, if any, of
such interest permitted by applicable law to be contracted for, charged or received, and if any
payments by the City to the Bank include interest in excess of such a maximum amount, the
Bank shall apply such excess to the reduction of the unpaid principal amount or other sums due
from the City pursuant hereto, or if none is due, such excess shall be refunded to the City;
provided that, to the extent permitted by applicable law, in the event the interest is not collected,
is applied to principal or is refunded pursuant to this sentence and interest thereafter payable
pursuant hereto shall be less than such maximum amount, then such interest thereafter so payable
shall be increased up to such maximum amount to the extent necessary to recover the amount of
interest, if any, theretofore uncollected, applied to principal or refunded pursuant to this
sentence. Any such application or refund shall not cure or waive any Event of Default. In
determining whether or not any interest payable under this Agreement exceeds the highest rate
permitted by law, any non-principal payment (except payments specifically stated in this
Agreement to be "interest") shall be deemed, to the extent permitted by applicable law, to be an
expense, fee, premium or penalty rather than interest.
Section 8.08. Complete Agreement
Taken together with the Fiscal Agent Agreement and the other instruments and
documents delivered in compliance herewith, this Agreement is a complete memorandum of the
agreement of the City and the Bank. Waivers or modifications of any provision hereof must be in
writing signed by the party to be charged with the effect thereof.
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Section 8.09. Conflicts
Insofar as possible the provisions of this Agreement shall be deemed complementary to
the terms of the Fiscal Agent Agreement, but in the event of conflict the terms hereof shall
control to the extent such are enforceable under applicable law.
Section 8.10. Waiver of Jury Trial and Certain Damages.
THE CITY AND THE BANK HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, (A) ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
LETTER OF CREDIT OR THE BOND DOCUMENTS AND (B) ANY RIGHT TO CLAIM OR
RECOVER IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE LETTER OF CREDIT OR THE BOND DOCUMENTS ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, DIRECT DAMAGES.
Section 8.11. Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws of the
State. The Letter of Credit shall be governed and construed as set forth in paragraph 12 thereof.
Section 8.12. Table of Contents and Headings
The Table of Contents and Section headings of this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.
Section 8.13. Participations
The Bank may at any time enter into one or more participation agreements (each, a
"Participation Agreement") with other banks (each, a"Participating Bank") whereby the Bank
will allocate to the Participating Banks certain percentages of the payment obligations of the City
under this Agreement and any Bank Bonds and the funding obligations of the Bank under the
Letter of Credit and this Agreement. The City acknowledges that Section 2.06 and the
indemnities under Section 2.09 and Section 8.05 are also for the benefit of the Participating
Banks, and agree to make any payments required by such provisions for the account of any one
or more Participating Banks on demand of the Bank. Notwithstanding the foregoing, the City
shall not be required to respond to requests or inquiries made by any of the Participating Banks
unless such requests or inquiries are made through the Bank. The City hereby waives any right of
set-off it may at any time have against the Bank or any Participating Bank as a result of the
participations of the Participating Banks in the payment obligations of the City under this
Agreement. The Bank agrees to give written notice to the City identifying each Participating
Bank with whom the Bank has entered into a Participation Agreement from time to time;
provided that failure to give any such notice shall not affect the rights of any Participating Bank
or result in any liability of the Bank.
Section 8.14. Limited Obligation; No Personal Liability
The obligations of the City under this Agreement shall not be general obligations of the
City, but shall be limited obligations, payable solely from the Adjustable Rate Bond
26
•
Reassessments (including all payments, prepayments, interest, penalties and other amounts
receivable or received by the Fiscal Agent or the City in respect of Adjustable Rate Bond
Reassessments), the Additional Assessments and amounts for the Continuing Costs of the
Adjustable Rate Bonds (including all payments, prepayments, interest, penalties and other
amounts which are receivable or received by the Fiscal Agent or the City in respect of the
Continuing Costs of the Adjustable Rate Bonds), the proceeds of the Bonds, the funds and
accounts established under the Fiscal Agent Agreement (except any such fund or account
established solely for Fixed Rate Bonds) and any and all other assets pledged therefor under the
Fiscal Agent Agreement. Neither the faith and credit of the City nor of the State or any political
subdivision thereof is pledged to the payment of this Agreement. Notwithstanding any other
provision of this Agreement, the City is not obligated to advance available surplus funds from
the City treasury to make any payment under this Agreement. No member, officer, agent or
employee of the City shall be individually or personally liable for the payment of the obligations
of the City under this Agreement or be subject to any personal liability or accountability by
reason of the execution and delivery hereof; but nothing herein contained shall relieve any such
member, officer, agent or employee from the performance of any official duty provided by law
or by the Fiscal Agent Agreement or this Agreement.
•
27
IN WITNESS WHEREOF, the City and the Bank have caused this Agreement to be duly
executed and delivered as of the date first above written.
CITY OF TUSTIN
By:
Ronald A. Nault
Finance Director
THE BANK OF NEW YORK
By:
John Greenlee
Managing Director
28
EXHIBIT A
FORM OF LETTER OF CREDIT
OUR REF. NO. DATE
S000##### April , 2003
State Street Bank and Trust
Company of California, N.A., Fiscal Agent
725 South Figueroa Street, Suite 3100
Los Angeles, CA 90017
Attention: Corporate Trust Department
Re: City of Tustin -- Limited Obligation Improvement Bonds,
Reassessment District No. 95-2 (Tustin Ranch). Series A
Dear Sirs:
We hereby establish, at the request and for the account of City of Tustin, a California
municipal corporation (the "City"), in your favor, for the benefit of the holders of the bonds
referred to below and as Fiscal Agent under the Fiscal Agent Agreement dated as of February 1,
1996, as amended and supplemented, between the City and you (as the same hereafter may be
amended, supplemented or otherwise modified from time to time, the "Fiscal Agent
Agreement"), pursuant to which $41,500,000 in aggregate principal amount of the City's
Limited Obligation Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Series
A (the "Bonds"), were issued, and of which $ aggregate principal amount of Bonds
are outstanding, our direct pay, irrevocable letter of credit, No. S000##### (this "Letter of
Credit"), in the initial amount of$ consisting of the sum of(i) $ (as
reduced and reinstated in accordance with the provisions hereof, the "Principal Component")
which may be drawn with respect to the payment of principal, or the portion of the purchase
price corresponding to the principal amount, of the Bonds and (ii) $ (as reduced and
reinstated in accordance with the provisions hereof, the "Interest Component") which may be
drawn with respect to the payment of up to 52 days' interest, or the portion of the purchase price
corresponding to up to 52 days' interest, on the Bonds (computed for all purposes hereunder at a
rate of 12% per annum on the basis of a 365-day year), effective immediately and expiring at
5:00 p.m. (New York City time) on , 2006 (the "Expiration Date"). All drawings
under this Letter of Credit will be paid with our own funds.
Drawings: We hereby irrevocably authorize you to draw on us on any day, other than a
Saturday or Sunday, on which banks are not required or authorized to close in New York, New
York (a "Business Day") in an aggregate amount not exceeding the sum of the Principal
Component and the Interest Component at the time of such drawing (such sum is referred to
sometimes herein as the "Stated Amount") of this Letter of Credit in accordance with the terms
and conditions, and subject to reduction and reinstatement, as hereinafter set forth:
A-1
• •
1. You may make a single drawing of an amount not exceeding the Interest
Component by delivering to us a certificate on your letterhead in the form of Annex 1
attached hereto appropriately completed (such certificate being an "Interest Draft"). If,
after our honor of your Interest Draft, you shall not have received from us within ten (10)
calendar days from the date of presentment of such Interest Draft a notice to the effect
that we have not been reimbursed for such drawing and that the Interest Component of
this Letter of Credit will not be reinstated, your right to draw on us by an Interest Draft in
an amount not exceeding the Interest Component shall (subject to the provisions below
providing for reductions and increases in the amounts available hereunder) be
automatically reinstated, effective the eleventh (11th) calendar day from the date of
presentment of such Interest Draft. The automatic reinstatement of your right to draw on
us by your Interest Draft shall be applicable to successive drawings.
2. You may make one or more drawings of up to an aggregate amount not
exceeding the Stated Amount by delivering to us one or more certificates on your
letterhead in the form of Annex 2 attached hereto appropriately completed (each such
certificate being a "Purchase Draft"). Upon our honoring any Purchase Draft presented
by you hereunder, the Principal Component of this Letter of Credit and the amounts
available to be drawn by you hereunder by any subsequent Purchase Draft and
Redemption Draft and shall be automatically decreased by an amount equal to the
amount drawn by such Purchase Draft corresponding to the principal amount of Bonds to
be purchased and the Interest Component shall be automatically decreased by an amount
equal to 52 days' interest with respect to the principal amount of Bonds to be purchased.
The amounts of the Principal Component and Interest Component available to be drawn
hereunder shall be reinstated (a) automatically when and to the extent that both (i) we
have received immediately available funds for application to the City's reimbursement
obligation for such drawing and (ii) you have delivered to us a certificate on your
letterhead in respect of such reinstatement in the form of Annex 4 attached hereto
appropriately completed and purportedly signed by one of your authorized signatories or
(b) when and to the extent that we, at our option, upon the City's request, advise you in
writing that such reinstatement shall occur. We shall have no obligation to grant any such
reinstatement except as provided in clause (a) of the preceding sentence.
3. You may make one or more drawings of up to an aggregate amount not
exceeding the Stated Amount by delivering to us one or more certificates on your
letterhead in the form of Annex 3 attached hereto appropriately completed (each such
certificate being a "Redemption Draft"). Upon our honoring any Redemption Draft
presented by you hereunder, the Principal Component of this Letter of Credit and the
amounts available to be drawn by you hereunder by any subsequent Purchase Draft and
Redemption Draft shall be automatically and permanently decreased by an amount equal
to the amount drawn by such Redemption Draft corresponding to the principal amount of
Bonds to be redeemed and the Interest Component shall be automatically and
permanently decreased by an amount equal to 52 days' interest with respect to the
principal amount of Bonds to be redeemed.
Only you (or a transferee permitted by the terms of this Letter of Credit) may make drawings
under this Letter of Credit.
A-2
• •
Presentation: Funds from us under this Letter of Credit are available to you against
presentation of your Interest Drafts, Tender Drafts and Redemption Drafts (each, a "Draft").
Each such Draft shall be dated the date of its presentation and purportedly signed by one of your
authorized signatories, and shall be presented at our office located at 101 Barclay Street, New
York, New York 10286, Floor 8 East, Trade Services Division, Attention: Manager, Standby
Letter of Credit Department (or at any other office in the City and State of New York that may
be designated by us by written notice delivered to you at least three Business Days prior to a date
on which interest is payable on the Bonds). A Draft may be presented by telecopy transmission
to us at 212-298-1482 if it contains an additional certification by you that the original manually
signed Draft will be mailed to us concurrently by first class mail. As an accommodation, and not
as a condition, we request that you endeavor to give us telephonic notice at 212-815-3462 or
212-815-3482 that a Draft is being submitted by telecopy. We may from time to time designate
other numbers for purposes of telecopy presentations and telephonic notices by written notice to
you at your address set forth above.
Payment: If we receive your Interest Draft or Redemption Draft at our office specified
above, all in strict conformity with the terms and conditions of this Letter of Credit prior to 5:00
p.m. on a Business Day, we will honor the same in accordance with your payment instructions
by 2:00 p.m. on the Business Day immediately following the date of presentation of your Draft
or, if later, by 2:00 p.m. on the payment date (which shall be a Business Day) specified in such
Draft. If we receive any such Interest Draft or Redemption Draft after 5:00 p.m., it will be
deemed to have been received at 9:00 a.m. on the next following Business Day. If we receive
your Purchase Draft at our office specified above, all in strict conformity with the terms and
conditions of this Letter of Credit, at or prior to 12:30 p.m. on a Business Day, we will honor the
same in accordance with your payment instructions by 4:00 p.m. on such Business Day or, if
later, by 2:00 p.m. on the payment date (which shall be a Business Day) specified in such Draft;
and if we receive your Purchase Draft at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, after 12:30 p.m. on a Business Day, we will honor the same in
accordance with your payment instructions by 2:00 p.m. on the next following Business Day or,
if later, by 2:00 p.m. on the payment date (which shall be a Business Day) specified in such
Draft. All times of day referred to in this paragraph are eastern standard time or eastern daylight
savings time as in effect in New York City on the relevant date. If requested by you, payment
under this Letter of Credit will be made by wire transfer of same day Federal Reserve Bank of
New York funds to your account in a bank on the Federal Reserve wire system or by deposit of
same day funds into a designated account that you maintain with us. Upon the payment to you or
your account of the amount specified in a Draft drawn hereunder, we shall be fully discharged on
our obligation under this Letter of Credit with respect to such Draft, and we shall not thereafter
be obligated to make any further payments under this Letter of Credit with respect to such Draft.
Reduction: You may from time to time, permanently reduce the Principal Component of
this Letter of Credit to an amount not less than the principal amount of the Adjustable Rate
Bonds then outstanding, and permanently reduce the Interest Component to an amount not less
than 52 days' interest on the Principal Component, by delivering to us a certificate on your
letterhead in the form of Annex 5 attached hereto appropriately completed and purportedly
signed by one of your authorized signatories.
A-3
• •
Termination: Upon the earliest of(i) the Expiration Date, (ii) the day on which we
receive a certificate on your letterhead in the form of Annex 6 attached hereto purportedly signed
by one of your authorized officers, to the effect that either (a) there are no Adjustable Rate Bonds
outstanding or (b) the City has provided and you have accepted an Alternate Letter of Credit as
defined in, and in accordance with the terms of, the Fiscal Agent Agreement that is effective on
or before the date of such certificate, (iii) the day on which a Redemption Draft for the entire
Principal Component hereof is honored, this Letter of Credit shall terminate and we shall no
longer have any obligations hereunder.
Transfer: This Letter of Credit is transferable in its entirety to any transferee whom you
certify to us has succeeded you as Trustee under the Fiscal Agent Agreement, and may be
successively transferred; provided, however, that under no circumstances shall this Letter of
Credit be transferred to any person or entity with which U.S. persons or entities are prohibited
from conducting business under U.S. Foreign Assets Control Regulations or any other applicable
U.S. laws and regulations. Transfer of this Letter of Credit to such transferee shall be effected by
the presentation to us of this Letter of Credit accompanied by a certificate in substantially the
form of Annex 7 attached hereto. Upon such presentation we shall forthwith transfer the same to
your transferee or, if so requested by your transferee, issue a letter of credit to your transferee
with provisions therein consistent with this Letter of Credit.
Governing Law: This Letter of Credit shall be subject to the Uniform Customs and
Practice for Documentary Credits, 1993 Revision, International Chamber of Commerce
Publication No. 500 (the "Uniform Customs"); except (i) if this Letter of Credit would have
otherwise expired by its terms during a period when our business has been interrupted by acts of
God or other events not within our control, our obligations hereunder shall continue for a
maximum of 15 days after resumption of our business, notwithstanding Article 17 of the
Uniform Customs, (ii) to the extent this Letter of Credit requires draws within particular periods
of time, failure to make such draws during such periods shall not cause this Letter of Credit to
expire or funds hereunder to be unavailable, notwithstanding Article 41 of the Uniform Customs,
and (iii) successive transfers are permitted as provided above notwithstanding Article 48 of the
Uniform Customs. This Letter of Credit shall be deemed to be issued under the laws of the State
of New York and shall, as to matters not governed by the Uniform Customs, be governed by and
construed in accordance with the law of the State of New York.
Scope of Undertaking: This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein (including, without limitation, the Bonds),
except only the Drafts referred to herein, which are hereby incorporated by reference; and any
such reference shall not be deemed to incorporate herein by reference any document, instrument
or agreement except for such Drafts. Notwithstanding the foregoing, nothing in this Letter of
Credit shall affect our rights under the Uniform Customs and New York law.
Communications: Communications with respect to this Letter of Credit other than
presentations of Drafts hereunder shall be in writing, shall specifically refer to the number of this
Letter of Credit and shall be addressed to us at 101 Barclay Street, New York, New York 10286,
Floor 8 East, Trade Services Division, Attention: Manager, Standby Letter of Credit Department
A-4
• •
(telecopy: 212-298-1482), or at any other office that may be designated by us by written notice
to you at your address set forth above.
Very truly yours,
THE BANK OF NEW YORK
By:
Name:
Authorized Signatory
A-5
• •
ANNEX 1
[Form of Interest Draft]
To: The Bank of New York
101 Barclay Street, 8 East
New York, New York 10286
Attention: Manager, Standby Letter of Credit Department
Interest Draft
Letter of Credit No. S000#####
The undersigned, a duly authorized officer of State Street Bank and Trust Company of
California, N.A. (the "Fiscal Agent"), hereby certifies to The Bank of New York (the "Bank"),
with reference to irrevocable letter of credit number S000##### (the "Letter of Credit"; the terms
defined therein or in the Fiscal Agent Agreement dated as of February 1, 1996 between the
Fiscal Agent and City of Tustin (the "Fiscal Agent Agreement") and not otherwise defined
herein being used herein as therein defined) issued by the Bank in favor of the Fiscal Agent, as
follows:
(1) The Fiscal Agent is the Fiscal Agent under the Fiscal Agent Agreement
for the holders of the Bonds.
(2) The Fiscal Agent is making a drawing under the Letter of Credit with
respect to a payment of interest on Adjustable Rate Bonds due on an Interest Payment
Date under the Fiscal Agent Agreement (an "Interest Drawing").
(3) [This drawing is the first Interest Drawing presented by the Fiscal Agent
under the Letter of Credit.]' [The Interest Drawing last presented by the Fiscal Agent
under the Letter of Credit was honored and paid by the Bank on , and
the Fiscal Agent has not received a notice from the Bank that such drawing has not been
reimbursed and that the Interest Component of the Letter of Credit will not be
reinstated.]
(4) The amount of this drawing is $ . It does not exceed 52 days'
interest on the Adjustable Rate Bonds and does not exceed the amount available to be
drawn under the Letter of Credit.
(5) The amount demanded hereby does not include (a) any amount in respect
of the payment of interest on Adjustable Rate Bonds being purchased or redeemed on the
Interest Payment Date to which this drawing relates, or(b) any amount in respect of the
To be used in the first Interest Drawing.
2 To be used in each Interest Drawing other than the first Interest Drawing.
A-6
• •
payment of interest on Bank Bonds or Adjustable Rate Bonds owned of record by the
City.
(6) Please pay the requested amount on [date] in the following
manner:
(7) If this Draft is being presented-by telecopier, the original of such Draft is
being mailed to you concurrently by first class mail.
IN WITNESS WHEREOF, the Fiscal Agent has executed and delivered this Interest
Draft on the day of , .
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Fiscal Agent
By:
Name:
Title:
A-7
• •
ANNEX 2
[Form of Purchase Draft]
To: The Bank of New York
101 Barclay Street, 8 East
New York, New York 10286
Attention: Manager, Standby Letter of Credit Department
Purchase Draft
Letter of Credit No. S000#####
The undersigned, a duly authorized officer of State Street Bank and Trust Company of
California,N.A. (the "Fiscal Agent"), hereby certifies to The Bank of New York (the "Bank"),
with reference to irrevocable letter of credit number S000##### (the "Letter of Credit"; the terms
defined therein or in the Fiscal Agent Agreement dated as of February 1, 1996 between the
Fiscal Agent and City of Tustin (the "Fiscal Agent Agreement") and not otherwise defined
herein being used herein as therein defined) issued by the Bank in favor of the Fiscal Agent, as
follows:
(1) The Fiscal Agent is the Fiscal Agent under the Fiscal Agent Agreement
for the holders of the Bonds.
(2) The Fiscal Agent is making a drawing under the Letter of Credit with
respect to a payment, upon an optional or a mandatory tender of all or less than all of the
Adjustable Rate Bond pursuant to Section 5.01 or 5.02 of the Fiscal Agent Agreement, of
the unpaid principal amount of Adjustable Rate Bonds to be purchased as a result of such
tender and not successfully remarketed and up to 52 days' interest on such Bonds.
(3) The amount of this drawing is $ , which is the sum of:
(a) $ being drawn in respect of the payment of unpaid
principal of Adjustable Rate Bonds to be purchased; and
(b) $ being drawn in respect of the payment of interest on
Adjustable Rate Bonds to be purchased.
(4) The amount of this drawing (a) was computed in compliance with the
terms and conditions of the Bonds and the Fiscal Agent Agreement and does not exceed
the amount available to be drawn by the Fiscal Agent under the Letter of Credit, and (b)
does not include any amount payable in respect of Bank Bonds or Adjustable Rate Bonds
owned of record by the City.
A-8
• •
(5) Please pay the requested amount on [date] in the following
manner:
(6) If this Draft is being presented-by telecopier, the original of such Draft is
being mailed to you concurrently by first class mail.
IN WITNESS WHEREOF, the Fiscal Agent has executed and delivered this Purchase
Draft on the day of , .
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Fiscal Agent
By:
Name:
Title:
A-9
• •
ANNEX 3
[Form of Redemption Draft]
To: The Bank of New York
101 Barclay Street, 8 East
New York, New York 10286
Attention: Manager, Standby Letter of Credit Department
Redemption Draft
Letter of Credit No. 5000#####
The undersigned, a duly authorized officer of State Street Bank and Trust Company of
California, N.A. (the "Fiscal Agent"), hereby certifies to The Bank of New York (the "Bank"),
with reference to irrevocable letter of credit number S000##### (the "Letter of Credit"; the terms
defined therein or in the Fiscal Agent Agreement dated as of February 1, 1996 between the
Fiscal Agent and City of Tustin (the "Fiscal Agent Agreement") and not otherwise defined
herein being used herein as therein defined) issued by the Bank in favor of the Fiscal Agent, as
follows:
(1) The Fiscal Agent is the Fiscal Agent under the Fiscal Agent Agreement
for the holders of the Bonds.
(2) The Fiscal Agent is making a drawing under the Letter of Credit with
respect to a payment, upon redemption of Adjustable Rate Bonds, of the unpaid principal
amount of Bonds to be redeemed pursuant to the Fiscal Agent Agreement and up to 52
days' interest on such Bonds in connection with (check and complete one):
[ ] An optional redemption of Adjustable Rate Bonds.
[ ] A mandatory redemption of Adjustable Rate Bonds.
[ ] The payment of Adjustable Rate Bonds at maturity pursuant to the Fiscal
Agent Agreement.
(3) The amount of this drawing is equal to the sum of:
(a) $ being drawn in respect of the payment of unpaid principal
of Adjustable Rate Bonds; and
(b) $ being drawn in respect of the payment of accrued interest
on Adjustable Rate Bonds to be redeemed.
A-10
•
(4) After applying the amount of this drawing to the redemption of Adjustable
Rate Bonds (check and complete one):
[ ] $ principal amount of Adjustable Rate Bonds will remain
outstanding
[ ] No Adjustable Rate Bonds will remain outstanding. This Draft is the final
Draft to be presented under the Letter of Credit. The Fiscal Agent
acknowledges that, pursuant to the terms of the Letter of Credit, upon the
Bank's honoring this Draft, the Letter of Credit shall terminate.
(5) The amount of this drawing (a) was computed in compliance with the
terms and conditions of the Bonds and the Fiscal Agent Agreement and does not exceed
the amount available to be drawn by the Fiscal Agent under the Letter of Credit, and (b)
does not include any amount payable in respect of Bank Bonds or Adjustable Rate Bonds
held of record by the City.
(6) Please pay the requested amount on [date] in the following
manner:
(7) If this Draft is being presented-by telecopier, the original of such Draft is
being mailed to you concurrently by first class mail.
IN WITNESS WHEREOF, the Fiscal Agent has executed and delivered this Redemption
Draft on the day of
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Fiscal Agent
By:
Name:
Title:
A-11
• •
ANNEX 4
[Form of Certificate for Reinstatement of Stated Amount]
To: The Bank of New York
101 Barclay Street, 8 East
New York, New York 10286
Attention: Manager, Standby Letter of Credit Department
Certificate for Reinstatement of Stated Amount of
Letter of Credit No. S000#####
The undersigned, a duly authorized officer of State Street Bank and Trust Company of
California, N.A. (the "Fiscal Agent"), hereby certifies to The Bank of New York (the "Bank"),
with reference to irrevocable letter of credit number S000##### (the "Letter of Credit"; the terms
defined therein or in the Fiscal Agent Agreement dated as of February 1, 1996 between the
Fiscal Agent and City of Tustin (the "Fiscal Agent Agreement") and not otherwise defined
herein being used herein as therein defined) issued by the Bank in favor of the Fiscal Agent, as
follows:
(1) The Fiscal Agent is the Fiscal Agent under the Fiscal Agent Agreement
for the holders of the Bonds.
(2) On the date of this Certificate $ aggregate principal amount of
Bank Bonds are being remarketed by the Remarketing Agent. All of such Bank Bonds
were heretofore purchased (or intended to be purchased) with the proceeds of one or
more Purchase Drafts in the total amount of$ , of which proceeds $
was drawn in respect of principal of such Bonds and $ was drawn in respect of
accrued interest on such Bonds. Prior to the date of this Certificate there has been no
reinstatement of the Letter of Credit Amount with respect to amounts drawn by such
Purchase Drafts to purchase such Bonds.
(3) The Paying Agent and/or the Fiscal Agent has received for immediate
payment to the Bank in respect of the Adjustable Rate Bonds described in paragraph 2 of
this Certificate the total amount of$ , consisting of$ representing
remarketing proceeds) and $ representing excess proceeds of the Purchase
Drafts described in paragraph 2. Such total amount is being paid to the Bank at the above
address with reference to the Letter of Credit as reimbursement for amounts drawn under
the Letter of Credit by the Purchase Drafts described in paragraph 2 of this Certificate.
(4) Of the total amount referred to in paragraph 3 of this Certificate,
$ corresponds to the aggregate principal amount of Bonds described in.
paragraph 2 of this Certificate and $ corresponds to accrued interest on such
Bonds.
A-12
• •
(5) Payment of the total amount referred to in paragraph 3 of this Certificate,
together with other amounts heretofore paid to the Bank by or on behalf of the City in
respect of interest on such Bonds, represents reimbursement for the entire outstanding
balance of all amounts drawn in respect of the Bonds described in paragraph 2 of this
Certificate. The foregoing certification is made in reliance upon representations by the
Paying Agent and/or the Bank to the Fiscal Agent that, upon payment of such amounts,
the Bank will be fully reimbursed for all Purchase Drafts (or allocable portions thereof)
presented to the Bank to purchase such Bonds.
(6) You are hereby requested to reinstate the Stated Amount of the Letter of
Credit in the amount of$ , of which $ shall be allocated to the
Principal Component and $ (representing 52 days of interest on the amount
allocated to the Principal component, computed at the rate of 12% on the basis of a 365-
day year) shall be allocated to the Interest Component. PLEASE CONFIRM SUCH
REINSTATEMENT BY TELEPHONE TO THE FISCAL AGENT AT
ATTENTION:
(7) If this Certificate is being presented by telecopier, the original of this
Certificate is being mailed to you concurrently by first class mail.
IN WITNESS WHEREOF, the Fiscal Agent has executed and delivered this Certificate
on the day of
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Fiscal Agent
By:
Name:
Title:
A-13
• •
ANNEX 5
[Form of Certificate for Reduction of Stated Amount]
To: The Bank of New York
101 Barclay Street, 8 East
New York, New York 10286
Attention: Manager, Standby Letter of Credit Department
Certificate for Reduction of Stated Amount of
Letter of Credit No. S000#####
The undersigned, a duly authorized officer of State Street Bank and Trust Company of
California, N.A. (the "Fiscal Agent"), hereby certifies to The Bank of New York (the `Bank"),
with reference to irrevocable letter of credit number S000##### (the"Letter of Credit"; the terms
defined therein or in the Fiscal Agent Agreement dated as of February 1, 1996 between the
Fiscal Agent and City of Tustin (the "Fiscal Agent Agreement") and not otherwise defined
herein being used herein as therein defined) issued by the Bank in favor of the Fiscal Agent, as
follows:
(1) The Fiscal Agent is the Fiscal Agent under the Fiscal Agent Agreement
for the holders of the Bonds.
(2) Pursuant to the terms of the Letter of Credit, the Bank is hereby directed to
reduce the Stated Amount and the related Principal and Interest Components thereof,
effective on the Business Day on which you receive this Certificate, so that after such
reduction the Stated Amount shall be $ , of which $ shall be the
Principal Component and $ shall be the Interest Component (calculated on such
Principal Component at the rate of 12% per annum and on the basis of a 365-day year).
The foregoing reduction does not give effect to any prior reductions of the Stated
Amount, and the related Principal and Interest Components, resulting from unreimbursed
drawings which have not been reinstated.
(3) The Bank is being directed to reduce the Stated Amount because
$ principal amount of the Adjustable Rate Bonds have been converted to bear
interest at a Fixed Interest Rate or have been redeemed or are deemed to have been paid.
The aggregate principal amount of Adjustable Rate Bonds outstanding on the date of this
Certificate is $
(4) If this Certificate is presented by telecopier, the original of this Certificate
is being mailed to you concurrently by first class mail.
A-14
• •
IN WITNESS WHEREOF, the Fiscal Agent has executed and delivered this Certificate
on the day of ,
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Fiscal Agent
By:
Name:
Title:
A-15
ANNEX 6
[Form of Certificate of Termination]
To: The Bank of New York
101 Barclay Street, 8 East
New York, New York 10286
Attention: Manager, Standby Letter of Credit Department
Certificate of Termination of
Letter of Credit No. S000#####
The undersigned, a duly authorized officer of State Street Bank and Trust Company of
California,N.A. (the "Fiscal Agent"), hereby certifies to The Bank of New York (the "Bank"),
with reference to irrevocable letter of credit number S000##### (the "Letter of Credit"; the terms
defined therein or in the Fiscal Agent Agreement dated as of February 1, 1996 between the
Fiscal Agent and City of Tustin (the "Fiscal Agent Agreement") and not otherwise defined
herein being used herein as therein defined) issued by the Bank in favor of the Fiscal Agent, as
follows:
(1) The Fiscal Agent is the Fiscal Agent under the Fiscal Agent Agreement
for the holders of the Bonds.
(2) Pursuant to the Fiscal Agent Agreement and the Letter of Credit, the
Letter of Credit shall be terminated on the date the Bank receives this Certificate, and the
Fiscal Agent is herewith delivering the Letter of Credit for cancellation, because (check
one):
[ ] No Adjustable Rate Bonds remain Outstanding.
[ ] The City has provided, and the Fiscal Agent has accepted, an Alternate
Letter of Credit in accordance with the terms of the Fiscal Agent
Agreement that is effective on or before the date of this Certificate.
IN WITNESS WHEREOF, the Fiscal Agent has executed and delivered this Certificate
on the day of
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Fiscal Agent
By:
Name:
Title:
A-16
•
ANNEX 7
[Form of Transfer Certificate]
INSTRUCTION TO TRANSFER
[Date]
The Bank of New York
Trade Services Division
101 Barclay Street, Floor 8E
New York, New York 10286
Attention: Manager
Standby Letter of Credit Department
Re: Your Letter of Credit No. 5000#####
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably transfers to:
[Name of Transferee]
[Address]
all rights of the undersigned beneficiary to draw under the above-captioned irrevocable letter of
credit (the "Letter of Credit"). The transferee has succeeded the undersigned as Fiscal Agent
under the Fiscal Agent Agreement (as defined in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary in the Letter of Credit are
transferred to the transferee and the transferee shall hereafter have the sole rights as beneficiary
thereof; provided, however, that no right shall be deemed to have been transferred to the
transferee until such transfer complies with the requirements of the Letter of Credit pertaining to
transfers.
A-17
• •
The Letter of Credit is returned herewith and in accordance therewith we direct that this
transfer be effective and that you transfer the Letter of Credit to our transferee or that, if so
requested by the transferee, you issue a new irrevocable letter of credit in favor of the transferee
with provisions consistent with the Letter of Credit.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA,N.A.,
as Fiscal Agent
By:
Name:
Title:
A-18