HomeMy WebLinkAboutOB 1 WTR SYS PURC 04-05-93OLD BUSINESS NO. 1
4-5-93
AGENDA
DATE: MARCH 30, 1993 Inter -Com
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: RONALD A. NAULT, DIRECTOR OF FINANCE
SUBJECT: ADOPT CITY OF TUSTIN RESOLUTION NO.
PURCHASE AND OTHER RELATED ACTIONS
RECOMMENDATION:
93-30 WATER SYSTEM
Adopt City of Tustin Resolution No. 93-30 approving a Trust
Agreement, Installment Purchase Agreement and Escrow Agreement;
accepting a bid for the purchase of its $11,500,000 Water System
Revenue Certification of Participation, 1993 Series; rejecting all
other bids; approving the form of the Official Statement; and
taking certain related actions.
DISCUSSION:
This is the last step in the bond issue process, accepting the bids
and approving the documents in their new final form. Bids will be
opened on the morning of April 5 at the City's Bond Counsel offices
of Mudge Rose. The Bond Counsel and Financial Advisors will bring
the bids and an award recommendation to the City Council meeting
that evening. The actual bond closing will take place April 21 at
the Mudge Rose offices in Los Angeles.
As of the date of this staff report, the bonds of other agencies
rated "A"+ have been sold at between 5.5 and 6.00 percent. We have
received an "A" rating from Standard and Poor's and expect a
similar rating from Moody's.
The final documents will be forwarded for signatures before the
closing date after all parties, including underwriters counsel, has
had one last opportunity to make final changes that would be
considered immaterial to documents as they appear at this time.
�AM.'C.1
Ronald A. Nault
Director of Finance
RAN:ls
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CITY OF TUSTIN RESOLUTION NO. 93-30
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, APPROVING A TRUST
AGREEMENT, INSTALLMENT PURCHASE AGREEMENT AND
ESCROW AGREEMENT, ACCEPTING A HID FOR THE
PURCHASE OF ITS $11,500,000 WATER SYSTEM
REVENUE CERTIFICATES OF PARTICIPATION, 1993
SERIES; REJECTING ALL OTHER SIDS; APPROVING
THE FORM OF THE OFFICIAL STATEMENT; AND TARING
CERTAIN RELATED ACTION
WHEREAS, the City of Tustin (the "City") is a municipal
corporation organized and existing under the Constitution and laws
of the State of California; and
WHEREAS, the City of Tustin Water Corporation (the
"Corporation") is a nonprofit public benefit corporation organized
and existing under the laws of the State of California with the
authority to assist the City in the financing of costs related to,
among other things, public improvements; and
WHEREAS, the City has proposed that the Corporation
assist the City in the financing of the acquisition of the water
system currently owned by the Corporation (the "Project"); and
WHEREAS, it has been proposed that. the Corporation sell
the Project and that the City purchase such Project from the
Corporation pursuant to an Installment Purchase Agreement, dated as
of April 1, 1993, by and between the City and the Corporation (the
"Installment Purchase Agreement"), the proposed form of which has
been presented to this City Council, pursuant to which the City
will agree to make certain purchase payments (the "Purchase
Payments") in connection therewith; and
WHEREAS, it has been proposed that the Corporation grant,
assign and transfer all of its right to receive the Purchase
Payments from the City to Bank of America National Trust and
Savings Association, as Trustee (the "Trustee") pursuant to an
Assignment Agreement, dated as of April 1, 1993, by and between the
Corporation and the Trustee (the "Assignment Agreement"); and
WHEREAS, the Corporation and the City have determined
that it would be in the best interests of the Corporation, the City
and the citizens of the City to authorize, pursuant to the Trust
Agreement, dated as of April 1, 1993, by and among the Corporation,
the Trustee and the City (the "Trust Agreement"), the proposed form
of which has been presented to this City Council, the preparation,
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execution, sale and delivery of Water System Revenue Certificates
of Participation, 1993 Series, in an aggregate principal amount of
$11,500,000 (the "Certificates"), which Certificates evidence and
represent direct and proportionate interests in the Principal
Components and Interest Components of the Purchase Payments; and
WHEREAS, the City has determined that use of a portion of
the proceeds of the Certificates to refund bonds issued in 1983
relating to the Project mill result in significant savings to the
City; and
WHEREAS, there has been presented to this City Council a
proposed form of Escrow Agreement, dated as of April 1, 1993, among
the City, the Corporation and the Trustee (the "Escrow Agreement");
and
WHEREAS, this City Council, in compliance with all
requirements of law has heretofore adopted, on March 1, 1993,
Resolution No. 93-19 (the "Proposal Resolution"), entitled:
"Resolution of the City Council of the City of Tustin,
California Authorizing the Invitation of Proposals for
the Purchase of Nct to Exceed $12,000,000 aggregate
Principal Amount of Certificates of Participation of Said
City; Approving the Notice Inviting Bids and the Notice
of Intention to Sell Certificates; and Authorizing the
Delivery of the Preliminary Official Statement and the
Publication of the Notice of Intention to Sell
Certificates and the Notice Inviting Bids"; and
WHEREAS, the City has determined that it is in the best
interest of the City and the citizens of the City to approve the
above documents and authorize and approve the transactions
contemplated thereby; and
WHEREAS, this City Council deems it necessary to sell at
this time the Certificates as authorized by the Proposal Resolution
and this Resolution.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows:
Section 1: Approval of Documents. That the Trust
Agreement, the Installment Purchase Agreement and the Escrow
Agreement presented to this City Council are hereby approved. The
Mayor, the City Manager, the Finance Director and the City Clerk
are authorized and directed for and in the name of the City to
execute and deliver -,said agreements. The agreements shall be
executed. in the forms hereby approved, with such additions thereto
and changes therein as are recommended or approved by Co -Special
Counsel to the City and approved by such Officers or any such
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Officer, such approval to be conclusively evidenced by the
execution and delivery thereof.
Section 2. Appointment of Trustee. That Bank of America
National Trust and Savings Association is hereby appointed as
Trustee on behalf of the owners of the Certificates with the duties
and powers of such Trustee as set forth in the Trust Agreement (as
executed and delivered).
Section 3. Compliance with Conditions Precedent. All
steps required to be taken precedent to the authorization, issuance
and sale of the Certificates have been duly and regularly taken as
provided by law.
Section 4. Notice of Intention to Sell Certificates and
Notice Inviting Bids. The Notice of Intention to Sell Certificates
(as approved by the City Council in the Proposal Resolution) was
published as required by law and the Notice Inviting Bids was
published as required by the Proposal Resolution. Pursuant to the
Notice Inviting Bids and the Notice of Intention to Sell
Certificates, proposals have been received, opened, read and
examined.
Section 5. Successful Bidder. The proposal for the
purchase of the Certificates attached hereto and marked Exhibit A,
and by this reference incorporated herein, is the best bid for the
Certificates. Such proposal is hereby accepted in accordance with
the terms thereof, and in accordance with and subject to the
Proposal Resolution.
Section 6. All Other Proposals Rejected. All proposals
other than the one accepted pursuant to Section 5 hereof are
rejected.
Section 7. Interest Rates on the Certificates. The
Certificates shall bear interest at the interest rates as set forth
in the accepted proposal.
Section S. Purchase Price for the Certificates. The
Certificates shall be delivered to the successful bidder upon
payment of the purchase price determined pursuant to the accepted
proposal and the Notice Inviting Bids, plus accrued interest from
April 1, 1993 to the date of delivery of the certificates.
Section 9. Ratification. All actions and proceedings
heretofore taken in connection with the authorization, issuance and
sale of the Certificates are hereby ratified and confirmed.
Section So. Official Statement Approved. A final
Official Statement (the "final Official Statement") in
substantially the form of the Preliminary Official Statement, with
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such changes thereto as are necessary to reflect the actual terms
of the Certificates and such other changes as the Finance Director
or the City Clerk shall approve, is hereby approved, and the City
Council hereby approves the use of the final Official Statement by
the successful bidder in connection with the offering and sale of
the Certificates, and the City Council hereby further approves the
use by the successful bidder of any supplement or amendment to the
final official Statement which is necessary so that the final
Official Statement does not include any untrue statement of a
material fact and does not omit to state a material fact necessary
to make the statements therein not misleading.
Section 11. official Statement Furnished. The Finance
Director and the Financial Advisor to the City for the issuance of
the Certificates are hereby authorized and directed to cause to be
furnished to the successful bidder a reasonable number of copies of
the Official Statement.
Section 12. General Authorization. The City Clerk, the
Finance Director and all authorized officers, deputy officers or
employees, consultants and counsel, are hereby authorized to do all
acts and things necessary or desirable in carrying out the
financing contemplated by the Trust Agreement, the Installment
Purchase Agreement, the Escrow Agreement, the Proposal Resolution
and this Resolution.
Section 13. Effective Date. This Resolution shall take
effect upon its adoption.
(SEAL)
ATTEST:
ADOPTED, SIGNED AND APPROVED this 5th day of April, 1993.
City Clerk
1:\100,"1'uq ,\Aua11k 13 J,.: 4
Mayor
CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF TUSTIN )
I, Mary Wynn, City Clerk of the City of Tustin, do hereby certify
that the ,foregoing Resolution No. 93-30 was introduced and adopted
at a regular meeting provided by law, of the City Council of the
City of Tustin held on the 5th day of April, 1993 by the following
vote of the members thereof:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
AND I FURTHER certify that the Mayor of the City of Tustin signed
said Resolution No. 93-30 on the 5th day of April, 1993.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
seal of the City of Tustin this 5th day of April, 1993.
CITY CLERK OF THE CITY OF TUSTIN
(SEAL)
I, Mary Wynn, City Clerk of the City of Tustin, do hereby certify
that the foregoing is the original of Resolution No. 93-30 duly
passed and adopted by the Tustin City Council on April 5, 1993.
CITY CLERK OF THE CITY OF TUSTIN
TRUST AGREEMENT
by and among
CITY OF TUSTIN WATER CORPORATION
and
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
as Trustee
and
THE CITY OF TUSTIN
Dated as of April 1, 1993
TABLE OF CONTENTS
TITLE Page
ARTICLE I
ARTICLE III
CERTIFICATESp TERMS AND PROVISIONS
DEFINITIONS AND EXHIBITS
SECTION
SECTION
1.01.
Definitions . . . . . . . . . . . . .
. . 1
SECTION
1.02.
Exhibit . . . . . . . . . . . . .
. . 10
Distribution of Trust Estate . . . . . . . .
11
ARTICLE II
3.03.
The 1993 Certificates . . . . . . . . . .
12
DECLARATION OF TRUST . . . . . . .
. . 10
SECTION
2.01.
Declaration of Trust by Trustee . .
. . . 10
SECTION
2.02.
Deposit of Moneys . .. .
. . . 10
SECTION
2.03.
Conditions Precedent Satisfied . . .
. it
ARTICLE III
ARTICLE IV
PREPAYMENT OF 1993 CERTIFICATES
SECTION
CERTIFICATESp TERMS AND PROVISIONS
Prepayment . . . . . . .
SECTION
3.01.
Preparation of 1993 Certificates . . . . .
11
SECTION
3.02.
Payments from Trust Estate Only;
. . . . . . . . . . . . . .
19
Distribution of Trust Estate . . . . . . . .
11
SECTION
3.03.
The 1993 Certificates . . . . . . . . . .
12
SECTION
3.05.
Execution . . . . . . . . . . . . . . . .
13
SECTION
3.06.
Exchange . . . . . . . . . . . . .
14
SECTION
3.07.
Negotiability, Transfer and Registry . . .
14
SECTION
3.08.
Certificate Registration Books . . .
15
SECTION
3.09.
Regulations with Respect to Exchanges and
Transfers . . . . . . . . .
15
SECTION
3.10.
Certificates Mutilated, Destroyed, Stolen
or
Lost . . .. . . . . . .
15
SECTION
3.11.
Temporary Certificates . . . . . .
16
SECTION
3.12.
Cancellation of Certificates . . . . . . .
16
SECTION
3.13.
Book -Entry Format . . . . . . . . . . . .
16
ARTICLE IV
PREPAYMENT OF 1993 CERTIFICATES
SECTION
4.01.
Prepayment . . . . . . .
19
SECTION
4.02.
Selection of Certificates for
Prepayment
. . . . . . . . . . . . . .
19
SECTION
4.03.
Notice of Prepayment . . . . . . . . . .
19
SECTION
4.04.
Payment of Certificates Upon Prepayment .
20
SECTION
4.05.
Partial Prepayment of Certificates . . .
21
SECTION
4.06.
Effect of Prepayment . . . . . . . . . .
21
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ARTICLE V
ESTABLISHMENT AND ADMINISTRATION OF CERTAIN
FUNDS AND ACCOUNTS
SECTION
5.01.
Establishment of Project Trust Fund . . .
21
SECTION
5.03.
Reserve Account . . . . . . . . . . . . .
23
SECTION
5.04.
Construction Account . . . . . . . . . . .
24
SECTION
5.05.
Deposits of Money . . . . . . . . . . . .
26
SECTION
5.06.
Valuation and Sale of Investments . . . .
26
SECTION
5.07..
Investment of Certain Accounts . . . . . .
27
ARTICLE VI
DEFEASANCE
SECTION 7.01. Certificates Deemed Paid; Discharge of
Trust Agreement . . . . . . . . . . . . . 35
SECTION 7.02. Application of Trust Money . . . . . . . . 36
ARTICLE VIII
SECTION 8.01. Mailing . . . . . . . . . . . . 36
SECTION 8.02. Powers of Amendment . . . . . . . . . . 36
SECTION 8.04. Exclusion of Certificates . . . . . . . . 39
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THE TRUSTEE AND PAYING AGENT
SECTION
6.01. Duties, Immunities and Liabilities of
Trustee . . . . . . . . . . . . . . . .
28
SECTION
6.02. Right of Trustee to Rely upon Documents,
Etc. . .
29
SECTION
6.03. Trustee Not Responsible*for Recitals . . .
29
SECTION
6.04. Right of Trustee to Acquire Certificates
29
SECTION
6.05. Moneys Received by Trustee to be Held in
Trust . . . . . . . . .
30
SECTION
6.06. Compensation and Indemnification of
Trustee . . . . . . . . . .
30
SECTION
6.07. Qualifications of Trustee . . . . . . . .
31
SECTION
6.08. Resignation and Removal of Trustee and
Appointment of Successor Trustee . . . . . .
31
SECTION
6.09. Acceptance of Trust by Successor Trustee .
32
SECTION
6.10. Merger or Consolidation of Trustee . . . .
33
SECTION
6.11. Obligations of Trustee . . . . . . .
33
SECTION
6.12. Paying Agent for Certificates . . . . . .
33
SECTION
6.13. Resignation or Removal of Paying Agent;
Appointment of Successor . . . . . . . . . .
34
ARTICLE VII
DEFEASANCE
SECTION 7.01. Certificates Deemed Paid; Discharge of
Trust Agreement . . . . . . . . . . . . . 35
SECTION 7.02. Application of Trust Money . . . . . . . . 36
ARTICLE VIII
SECTION 8.01. Mailing . . . . . . . . . . . . 36
SECTION 8.02. Powers of Amendment . . . . . . . . . . 36
SECTION 8.04. Exclusion of Certificates . . . . . . . . 39
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SECTION 8.05. Notation on Certificates . . . . . . . . . 39
'SECTION 8.06. Additional Certificates . . . . . . . 39
ARTICLE IB
SECTION 9.01. Power to Enter into Trust Agreement,
ARTICLE K
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default .. . . . . 45
SECTION 10.02. Institution of Legal • Proceedings by
Trustee. . . 45
SECTION 10.03. Distribution of Proceeds of Remedies . . 46
SECTION 10.04. Suit By Owners . . . . . . . . 46
SECTION 10.05. Effect of Delay or Omission to Pursue
Remedy . . . . . . . . . . . 47
SECTION 10.06. Remedies Cumulative . . . . . . . . . . . 47
ARTICLE %I
MISCELLANEOUS
SECTION 11.01. Payment of Purchase Payments; Unclaimed
Installment Purchase Agreement and Assignment
47
SECTION
Agreement
•Binding
42
SECTION
9.02. Valid and Obligations
42
SECTION
9.03. Extension of Payment . . . . . . . . . . .
42
SECTION
9.04. Encumbrances . . . . . . . . . . . . . . .
42
SECTION
9.05. Tax Covenants . . . . . .
42
SECTION
9.06. Account Records and Statements . . . . . .
44
SECTION
9.07. Recording and Filing . . . . . . . . .
44
SECTION
9.08. Amendment of Installment Purchase
50
SECTION
Agreement . . . . . . . . . . . . . . . . . .
44
SECTION
9.09. Enforcement . . . . . . . . . . . . . . .
45
SECTION
9.10. Further Assurances . . . . . . . . . . . .
45
ARTICLE K
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default .. . . . . 45
SECTION 10.02. Institution of Legal • Proceedings by
Trustee. . . 45
SECTION 10.03. Distribution of Proceeds of Remedies . . 46
SECTION 10.04. Suit By Owners . . . . . . . . 46
SECTION 10.05. Effect of Delay or Omission to Pursue
Remedy . . . . . . . . . . . 47
SECTION 10.06. Remedies Cumulative . . . . . . . . . . . 47
ARTICLE %I
MISCELLANEOUS
SECTION 11.01. Payment of Purchase Payments; Unclaimed
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Moneys . . . . . . . . . . . .. .
47
SECTION
11.02. Evidence of Signatures of Owners and
Ownership of Certificates . . . .
48
SECTION
11.03. Moneys Held for Particular Certificates
49
SECTION
11.04. Publication of Notice; Suspension of
Publication . . . . . . . .
49
SECTION
11.05. Severability of Invalid Provisions . . .
49
SECTION
11.06. Notices . . . . . . . . . . . . . . . .
49
SECTION
11.07. California Law . . . . . . . . . . . . .
50
SECTION
11.08. Binding on Successors . . . . . . . . . .
50
SECTION
11.09. Headings . . . . . . . . .
50
SECTION
11.10. Execution in Counterparts . . . . . . . .
50
SECTION
11.11. Consent of Parties . . . . . . . . . . .
51
B:\TRSTAGR6.DDC iii
ARTICLE XII
CERTIFICATE FORK
SECTION 12.01. Certificate Form . . . . . . . . . . . . 51
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . 60
EXHIBIT A - Initial Deposits to Funds and Accounts . . . . A-1
8:\TRSTAGR6.DW iv
THIS TRUST AGREEMENT, dated as of April 1, 1993 (the
"Trust Agreement"), by and among CITY OF TUSTIN WATER CORPORATION,
a California nonprofit public benefit corporation, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association organized and existing under the laws of the United
States, as trustee, and the CITY OF TUSTIN.
W I T N E 8 8 E T H:
WHEREAS, effective on the Delivery Date the Corporation
will sell the Project to the City and the City will be obligated to
make Purchase Payments pursuant to the Installment Purchase
Agreement; and
WHEREAS, the Corporation will establish a trust pursuant
to this Trust Agreement and direct the Trustee to execute and
deliver 1993 Certificates representing proportionate interests in
the Principal Components and Interest Components of 1993 Purchase
Payments to and including the earlier of the maturity or prepayment
of all of such 1993 Certificates.
NOW, THEREFORE, for and in consideration of the mutual
covenants hereinafter contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
SECTION 1.01. Definitions. The terms defined in this
Section 1.01 shall have the meanings ascribed to them in this
Section 1.01 for all purposes of this Trust Agreement unless the
context clearly indicates some other meaning. All capitalized
terms used herein which are defined in the Installment Purchase
Agreement and not defined herein shall have the meanings specified
in the Installment Purchase Agreement.
$'Assignment Agreementif shall mean that certain Assignment
Agreement between the Corporation and the Trustee, dated as of
April 1, 1993, pursuant to which the Corporation assigns certain
rights to the Trustee for the benefit of the Owners of the 1993
Certificates, as originally entered into and as it may from time to
time be amended, modified or supplemented.
$'Authorized
Manager and any person
and authorized to act
signed by the City Man
that, in matters invo
matters, the Treasurer
act as the Authorized
6:\TRSTAGR6.D0C
City Representative" shall mean the City
or persons designated by the City Manager
on behalf of the City by a Written Request
ager and delivered to the Trustee; except,
Lving the investment of funds and related
of the City (or his or her designee) shall
:ity Representative.
$$Authorized Corporation Representative#@ shall mean the
President of the Corporation or any other person or persons
designated by the President or Board of Directors of the
Corporation and authorized to act on behalf of the Corporation by
a Written Request signed by the President of the Corporation or by
a certified resolution adopted by the Board of Directors of the
Corporation and delivered to the Trustee.
IlAuthorized Newspaperit shall mean The Daily Bond Buyer or
any other newspaper specializing in financial matters, customarily
published at least once a day for at least five days (other than
legal holidays) in each calendar week, printed in the English
language, and of general circulation in the Borough of Manhattan,
County and State of New York and a newspaper customarily published
at least once a day for at least five days (other than legal
holidays) in each calendar week, printed in the English language,
and of general circulation in the City.
11Authorized Officer of the Trusteell shall mean and
include the chairman of the board of directors, the president,
every vice president, every assistant vice president, every trust
officer and every officer and assistant officer of the Trustee.
"Business DayU shall mean a day other than (i) a Saturday
or Sunday or (ii) a day on which commercial banks in the city in
which the trustee maintains its corporate trust office are
authorized or required by law or executive order to close, (iii) a
day on which the New York Stock Exchange is closed, (iv) a day on
which the issuer of the Credit Facility, if any, is authorized or
required by law or executive order to close or (v) a day on which
the issuer of the Reserve Account Policy, if any, is authorized or
required by law or executive order to close.
o'Certificate" or ^Certificatesit shall mean the 1993
Certificates executed and delivered by the Trustee pursuant to this
Trust Agreement, together with any additional certificates of
participation executed and delivered pursuant hereto.
$'City" shall mean the City of Tustin, California.
"Codell shall mean the Internal Revenue Code of 1986, as
amended.
"Corporate Trust Office'$ shall mean, with respect to the
Trustee, the office which is the corporate trust office of the
Trustee situated in Los Angeles, California.
IsCorporation"
Corporation, a California
its successors or assign
Agreement.
BATRSTAGR6.DDC
shall mean the City of Tustin Water
nonprofit public benefit corporation, or
s appointed in accordance with this Trust
IsCosts of Issuancell shall mean any costs or expenses paid
or incurred in connection with the preparation, execution and
delivery of the 1993 Certificates,; including but not limited to
fees and expenses of the Trustee and its counsel, printing costs,
word processing costs, special counsel and other legal fees and
expenses, rating agency fees, financial advisor fees, accounting
fees, legal fees and other expenses incurred by the City or the
Corporation in connection with qualification or registration, or
determining the exemption from registration or qualification, of
the 1993 Certificates under the "Blue Sky" laws of any
jurisdiction, and fees payable to any other consultants or experts
retained in connection with such preparation, execution and
delivery.
IsCounsellf shall mean an attorney at law, or firm of
attorneys, of recognized standing and who are qualified to pass on
the legality of the particular matter.
$'Credit Facility'$ shall mean an irrevocable and
unconditional letter of credit, a standby purchase agreement, a
line of credit or other similar credit arrangement issued by a
Qualified Bank to satisfy all or a portion of the Reserve
Requirement.
"DTC" shall mean the Depository Trust Company, New York,
New York, a limited purpose trust company organized under the laws
of the State of New York, in its capacity as securities depository
for the 1993 Certificates.
I'Escrow Accountle shall mean the account so designated
established pursuant to the Escrow Agreement.
"Escrow AgentIf shall mean the Escrow Agent which is a
party to the Escrow Agreement.
"Escrow Agreementow shall mean the Escrow Agreement, dated
as of April 1, 1993, between the City and the Escrow Agent.
IfEvent of DefaultIl shall mean any of the events specified
in Section 10.01 hereof.
('Government obligations'$ shall mean any of the following,
to the extent noncallable by the issuer thereof:
(i) obligations of, including specified
portions thereof (which may consist of specified
portions of the interest thereon), or obligations,
including specified portions thereof (which may
consist of specified portions of the interest
thereon), the payment of the principal of and
interest on which are unconditionally guaranteed
by, the United States of America;
8:\TRSTRGR6.DOC
(ii) bonds, debentures or notes issued by any
of the following Federal Agencies: Banks for
Cooperatives, Federal Land Banks, Federal Financing
Bank, or Federal National Mortgage Association
(including participation certificates);
(iii) public housing bonds, temporary notes
or preliminary loan notes, fully secured by
contracts with the United States of America;
(iv) bonds, debentures or notes issued by any
Federal agency hereafter created by an act of
Congress, the payment of the principal of and
interest on which are unconditionally guaranteed by
the United States of America; and
(v) direct general obligations of, or
obligations the payment of the principal of and
interest on which are unconditionally guaranteed by
the State or local agencies thereof.
"Information Services') shall mean Financial Information,
Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th
Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services' "Called Bond Service," 65 Broadway, 16th
Floor, New York, New York 10006; Moody's "Municipal and Govern-
ment," 99 Church Street, 8th Floor, New York, New York 10007,
Attention: Municipal News Reports; and Standard & Poor's "Called
Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or,
in accordance with the then current guidelines of the Securities
and Exchange Commission, to such other addresses and/or such other
services providing information with respect to called bonds as the
City may designate.
',Installment Purchase Agreement" shall mean the Install-
ment Purchase Agreement between the City and the Corporation, dated
as of April 1, 1993, as amended or supplemented from time to time.
ItInterest Component" shall mean any Purchase Payment, or
portion thereof, which is designated and paid as interest pursuant
to the terms of the Installment Purchase Agreement; the Interest
Component of a Certificate is the proportionate interest in the
Interest Component of the Purchase Payments which is evidenced by
such Certificate.
IfInterest Component Payment Date" shall mean October 1
and April 1 of each year (beginning, with respect to the 1993
Certificates, October 1, 1993, and ending on the final maturity
date of such Certificates).
111993 Certificates" shall mean all the certificates of
participation authorized by.Section 3.03 of this Trust Agreement
BATRSTAGR6.DOC 4
and designated as "City of Tustin, Water System Revenue
Certificates of Participation, 1993 Series."
110utstanding,11 when used with reference to Certificates,
shall mean, as of any date, Certificates theretofore or thereupon
prepared, executed and delivered under this Trust Agreement except:
(a) Certificates cancelled by the Trustee or
delivered to the Trustee for cancellation at or
prior to such date;
(b) Certificates (or portions of Certifi-
cates) deemed paid pursuant to Section 7.01 hereof;
and
(c) Certificates in lieu of or in substi-
tution for which other Certificates shall have been
prepared, executed and delivered pursuant to
Article III hereof.
FlOwner" shall mean the registered owner of any
Certificate or Certificates as shown on the Certificate register to
be maintained by the Trustee pursuant to Section 3.08 hereof.
flParticipantel shall mean a securities broker, dealer,
bank, trust company, clearing corporation or other organization
which has access, directly or indirectly, to DTC for holding of
securities or clearance and settlement of securities transactions
on its behalf as provided in Section 3.13 hereof.
"Permitted Investments') shall mean any of the following
except to the extent not permitted by the laws of the State:
(i) Government Obligations;
(ii) any of the following obligations of
federal agencies not guaranteed by the United
States of America: (a) debentures issued by the
Federal Housing Administration; (b) participation
certificates or senior debt obligations of the
Federal Home Loan Mortgage Corporation or Farm
Credit Banks (consisting of Federal Land Banks,
Federal Intermediate Credit Banks or Banks for
Cooperatives); (c) bonds of any federal home loan
bank established under said act and stocks, bonds,
debentures, participations and other obligations of
or issued by the Federal National Mortgage
Association, the Student Loan Marketing
Association, the Government National Mortgage
Association and the Federal Home Loan Mortgage
Corporation; and bonds, notes or other obligations
8:\TRSTAGR6.D0C 5
issued or assumed by the International Bank for
Reconstruction and Development;
(iii) interest-bearing demand or time deposits
(including certificates of deposit) in federal
banks or banking associations (including the
Trustee) or State of California chartered banks,
provided that (a) in the case of a savings and loan
association, such demand or time deposits shall be
fully insured by the Federal Savings and Loan
Insurance Corporation, or the unsecured obligations
of such savings and loan association shall be rated
in one of the two highest rating categories of a
Rating Agency, and (b) in the case of a bank, such
demand or time deposits shall be fully insured by
the Federal Deposit Insurance Corporation, or the
unsecured long-term obligations of such bank (or
the unsecured obligations of the parent bank
holding company of which such bank is the lead
bank) shall be rated in one of the two highest
rating categories of a Rating Agency;
(iv) repurchase agreements entered into with
financial institutions such as banks or trust
companies organized under State law or national
banks or banking associations, insurance companies
or government bond dealers reporting to, trading
with, and recognized as a primary dealer by, the
Federal Reserve Bank of New York and a member of
the Securities Investors' Protection Corporation or
with a dealer or parent holding company provided
that: (a) the unsecured obligations of any
financial institution shall be rated in one of the
two highest rating categories of a Rating Agency,
or such financial institution shall be the lead
bank of a banking holding company whose unsecured
long-term obligations are rated in one of the two
highest rating categories of a Rating Agency; (b)
the most recent reported combined capital, surplus
and undivided profits of such financial institution
shall be not less than $100 million; (c) the
repurchase obligation under any such repurchase
obligation shall be required to be performed in not
more than thirty (30) days; -and (d) the entity
holding such securities as described in clause (c)
shall have a valid and perfected first security
interest therein for the benefit of the Trustee
under the California Commercial Code or pursuant to
the book entry procedures described by 31 C.F.R.
306.1 et seq. or 31 C.F.R. 850.0 et seq. and are
rated in one of the two highest rating categories
of a Rating Agency;
BATRSTAGR&DDC
(v) bankers acceptances endorsed and guaran-
teed by banks described in clause (iv) above;
(vi) obligations, the interest on which is
excluded from federal income taxation under Section
103 of the Code and which are rated in'the one of
the two highest rating categories of a Rating
Agency;
(vii) money market or mutual funds which
invest solely in Government obligations or in
obligations described in the preceding clause (ii)
of this definition or money market funds which are
rated in the highest rating category by a Rating
Agency;
(viii) units of a taxable government money
market portfolio comprised solely of obligations
listed in (i), (ii), or (iv) above;
(ix) any investment which is a legal invest-
ment for proceeds of the Certificates, and which
investment is made pursuant to an agreement between
the City or the Trustee or any successor Trustee
and a financial institution or governmental body
whose long-term obligations are rated in one of the
two highest rating categories of a Rating Agency;
(x) commercial paper of "prime" quality of
the highest ranking or of the highest letter and
numerical rating as provided for by a Rating
Agency, of issuing corporations that are organized
and operating within the United States and having
total assets in excess of five hundred million
dollars ($500,000,000) and having an "AA" or higher
rating for the issuer's debentures or other
long-term unsecured obligations, other than
commercial paper, as provided for by a Rating
Agency and provided that purchases of eligible
commercial paper may not exceed 180 days maturity
nor represent more than 10 percent of the
outstanding paper of an issuing corporation;
(xi) any general obligation of a bank or
insurance company whose long-term debt obligations
are rated in one of the two highest rating
categories of a Rating Agency; or
(xii) any other lawful investment for City funds
under the Government Code of the State of California as
amended from time to time.
B.\TRSTAGR6.DDC
('Prepayment Date$, means the date fixed for an optional or
mandatory prepayment, as the case may be, prior to maturity of the
Certificates.
IlPrepayment Price$$ shall mean a price equal to the
Principal Component represented by a Certificate, plus the Interest
Component accrued to the applicable Prepayment Date, plus premium,
if applicable.
$$Principal Componentil shall mean with respect to a
Purchase Payment, the portion thereof which is designated and paid
as principal pursuant to the terms of the Installment Purchase
Agreement; the Principal Component of a Certificate is the
proportionate interest in the Principal Component of the Purchase
Payments which is evidenced by such Certificate.
IlPrincipal Component Payment Date,, shall mean April 1 of
each year (beginning, with respect to the 1993 Certificates, April
1, 1994 and ending on April 1, 2013.)
"Qualified Hanks' shall mean a state or national bank or
trust company or savings and loan association or a foreign bank
with a domestic branch or agency which is organized and in good
standing under the laws of the United States or any state thereof
or any foreign country, which has a capital and surplus of
$25,000,000 or more and which has a short-term debt rating of the
highest ranking or of the highest letter and numerical rating as
provided by Moody's or by S&P.
"Rating Agency#' shall mean Moody's or S&P (together, the
"Rating Agencies").
IlRecord Datell shall mean with respect to any Interest
Component Payment Date for a Certificate the fifteenth day of the
calendar month immediately preceding each Interest Component
Payment Date.
"Reserve Account Policyll shall mean a policy of insurance
or surety bond issued by a municipal bond insurer, obligations
insured by which have a rating by Moody's and S&P which at the time
of issuance is the highest rating then issued by said Rating
Agency, to satisfy all or a portion of the Reserve Requirement.
IlReserve Requirements@ shall mean, at any date of
determination and as computed by the City the least of (i) an
amount equal to the maximum amount of Purchase Payments due on any
April 1 and the next succeeding October 1 of any year with respect
to Outstanding Certificates, (ii) an amount equal to 10% of the
proceeds (within the meaning of Section 148 of the Code) of all
Certificates then Outstanding, or (iii) an amount equal to 125% of
the average annual Purchase Payments due with respect to
Outstanding Certificates; provided, however that such Reserve
B:\TRSTAGR6.DOC 8
Requirement or a portion thereof may be provided by one or more
Reserve Account Policies or Credit Facilities upon the filing by
the City with the Trustee of written evidence that the use of such
Reserve Account Policies or Credit Facilities to satisfy the
Reserve Requirement or any portion thereof will not by itself
result in the downgrading or withdrawal of any credit rating then
in effect with respect to the Certificates.
('Securities Depositories" shall mean The Depository Trust
Company, 711 Stewart Avenue, Garden City, New York 11530, Fax -(516)
227-4039 or 4190; Midwest Securities Trust Company, Capital
Structures -Call Notification, 440 South LaSalle Street, Chicago,
Illinois 60605, Fax -(312) 663-2343; Philadelphia Depository Trust
Company, Reorganization Division, 1900 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Bond Department, Dex-(215)
496-5058; or, in accordance with then current guidelines of the
Securities Exchange Commission, to such other addresses and/or such
other securities depositories as the City may designate.
"Series" shall mean all Certificates designated by
descriptive title or otherwise as a series and prepared, executed
and delivered in a simultaneous transaction, and any Certificates
thereafter prepared, executed and delivered in lieu of or in
exchange or substitution for such Certificates, pursuant to the
provisions of this Trust Agreement, regardless of variations in
maturity, interest rate, prepayment or other provisions.
especial Counsels' shall mean a nationally recognized law
firm specializing in the area of tax-exempt municipal finance
appointed by the City.
OuStatell shall mean the State of California.
19supplemental Trust Agreement" shall mean any agreement
supplemental to or amendatory of this Trust Agreement.
ItTrust.Agreementot shall mean this Trust Agreement, dated
as of April 1, 1993, entered into by and among the Trustee, the
Corporation and the City, as originally executed and entered into
and as it may from time to time be amended or supplemented in
accordance herewith.
"Trust Estate" shall mean all estate, right, title and
interest of the Trustee in and to the Purchase Payments and the
proceeds of the Certificates and all rights to enforce the Purchase
Payments under the Installment Purchase Agreement, including,
without limitation all amounts from time to time deposited in the
funds, accounts and subaccounts created pursuant to this Trust
Agreement and, to the extent set forth herein, investment earnings
thereon.
B:\TRSTAGR6.DOC
('Written Requests' shall mean a written instrument signed
by an Authorized City Representative or an Authorized Corporation
Representative, as the case may be.
SECTION 1.02. Exhibit. The following Exhibit is attached
to and by this reference made a part of this Trust Agreement:
Exhibit A: Delivery Date Deposits to Accounts.
ARTICLE II
DECLARATION OF TRUST
SECTION 2.01. Declaration of Trust by Trustee. The
Corporation hereby establishes a trust and hereby grants, conveys,
assigns and transfers the Trust Estate to the Trustee.. The Trustee
hereby declares that it holds and will hold the Trust Estate upon
the trusts hereinafter set forth and for the use and benefit of the
Owners, as more particularly set forth herein.
SECTION 2.02. Deposit of Moneys. In order to induce the
City to enter into the Installment Purchase Agreement, and to
insure that the Project will be available for use, the Corporation
is entering into this Trust Agreement and will cause the Trustee to
execute and deliver the 1993 Certificates, and from the proceeds of
the sale of the 1993 Certificates (including accrued interest
received) and the following transfers, the following deposits shall
be made by the Trustee:
(i) to the Purchase Payment Account, from the
proceeds of the sale of the 1993 Certificates, the
amount set forth with respect thereto in Exhibit A
hereto, constituting accrued interest on the 1993
Certificates, to be applied toward the payment of
the Interest Component of the 1993 Purchase Payment
due on October 1, 1993;
(ii) to the Reserve Account, from the proceeds
of the sale of the 1993 Certificates, the amount
set forth with respect thereto in Exhibit A hereto,
constituting an amount equal to the Reserve
Requirement on the Delivery Date with respect to
the 1993 Certificates;
(iii) to the Escrow Account, from the 1983
Reserve Account and the proceeds of the sale of the
1993 Certificates, the amount set forth with
respect thereto in Exhibit A hereto, to acquire
direct obligations of or guaranteed by the United
States, the principal of and interest, when due,
will provide moneys sufficient to pay the principal
and interest when due and the redemption price, on
B:\TRSTAGR6.D0C 10
October 1, 1993, of the Corporation's $3,675,000
outstanding City of Tustin water Corporation Lease
Revenue Bonds, Series A; and
(iv) to the Construction Account, from the
proceeds of the sale of the 1993 Certificates, the
amount set forth with respect thereto in Exhibit A
hereto, constituting (a) an amount sufficient to
pay Costs of Issuance with respect to the 1993
Certificates, (b) $772,292 to repay the balance
owed by the City to - the Orange County Water
District pursuant to the Nitrate Demonstration
Project Agreement dated January 16, 1985 between
Orange County Water District and the City (as
amended, the "Demonstration Agreement") entered
into for the benefit of the Water System, (c)
$614,542 to reimburse the City for payments
heretofore made by the City to the Orange County
Water District pursuant to the Demonstration
Agreement, and (d) the balance of the proceeds of
the sale of the 1993 Certificates.
SECTION'2.03. Conditions Precedent Satisfied. Each party
hereto represents that all acts, conditions and things required of
it by law to exist, happen and be performed by it precedent to and
in connection with the execution and entering into of this Trust
Agreement have happened and have been performed in regular and due
time, form and manner as required by law, and each party hereto
represents that it is now duly empowered to execute and enter into
this Trust Agreement.
ARTICLE III
CERTIFICATES, TERMS AND PROVISIONS
SECTION 3.01. Preparation of 1993 Certificates. The City
is hereby directed to prepare and the Trustee is directed to
execute and deliver 1993 Certificates evidencing direct and
proportionate interests in the Purchase Payments to be paid by the
City under the Installment Purchase Agreement. Each Certificate
shall represent a direct and proportionate interest both in the
Principal Components of Purchase Payments due and payable on the
maturity date thereof or any Prepayment Date of the 1993
Certificates and in the Interest Components of Purchase Payments
due and payable on Interest Component Payment Dates, to and
including such maturity date or Prepayment Date.
SECTION 3.02. Payments from Trust Estate Only;
Distribution of Trust Estate. (a) Except as otherwise expressly
provided herein, all amounts payable by the Trustee with respect to
the Certificates pursuant to this Trust Agreement shall be paid
only from the income of and proceeds from the Trust Estate and only
6:\TRSTAGR6.D0C 11
to the extent that the Trustee shall have actually received
sufficient income or proceeds from the Trust Estate to make such
payments in accordance with the terms of this Article III. Each
Owner agrees, except as otherwise expressly provided herein, to
look solely to the income of and the proceeds from the Trust Estate
to the extent available for distribution to such Owner as herein
provided and that the Trustee is not personally liable to any Owner
for any amounts payable under this Trust Agreement.
(b) So long as the Installment Purchase Agreement shall
be in effect, all Purchase Payments shall be paid directly to the
Trustee from the Treasurer of the City for distribution, in
accordance with this Trust Agreement.
SECTION 3.03. The 1993 Certificates. There are hereby
authorized 1993 Certificates to be designated as "City of Tustin,
Water System Revenue Certificates of Participation, 1993 Series."
The 1993 Certificates evidence direct and proportionate interests
in the right to receive Purchase Payments, shall be in the
aggregate Principal Component of Eleven Million Five Hundred
Thousand dollars ($11,500,000) and shall contain Interest
Components accruing from the dates set forth below.
The 1993 Certificates shall be prepared in the form of
fully registered certificates in denominations of five thousand
dollars ($5,000) or any integral multiple thereof.
The interest, principal, and prepayment premiums, if any,
due with respect to the 1993 Certificates shall be payable in
lawful money of the United States of America. The interest due
with respect to the 1993 Certificates shall be payable on their
Interest Component Payment Dates by check or draft mailed on the
applicable Interest Payment Date by the Trustee to the respective
Owners thereof at their addresses as they appear in the books
required to be kept by the Trustee pursuant to the provisions of
Section 3.07 hereof on the Record Date with respect to each
Interest Component Payment Date; provided, that in the case of an
Owner of $1,000,000 or more in aggregate principal amount of 1993
Certificates, upon written request of such Owner delivered to the
Trustee not less than twenty (20) days prior to any Interest
Component Payment Date (which request shall remain in effect until
revoked or revised by such Owner in a subsequent writing delivered
to the Trustee), such interest shall be paid in immediately
available funds by wire transfer at the expense of the City to an
account specified by the Owner in such written request on the
following Interest Component Payment Date. The principal and
prepayment premiums, if any, due with respect to the 1993
Certificates shall be payable by check or draft upon surrender
thereof at the Corporate Trust Office of the Trustee.
The 1993 Certificates shall be dated April 1, 1993.
Interest with respect to the 1993 Certificates shall accrue on
8:\TRSTAGR6.D0C 12
overdue principal at the same rate borne by the particular 1993
Certificates. Interest with respect to each 1993 Certificate shall
accrue from the April 1 or October 1 next preceding the date of
execution thereof unless (i) it is executed on an April 1 or
October 1, in which event interest shall accrue from the date of
execution thereof; (ii) it is executed on or prior to October 1,
1993 in which event interest shall accrue from April 1, 1993; or
(iii) it is executed after a Record Date and prior to the next
succeeding Interest Component Payment Date, in which case interest
shall accrue from the next succeeding Interest Component Payment
Date; provided, however, that if, at the time of execution of any
Certificate, interest is in default on Outstanding Certificates,
the Trustee shall establish a special record date for payment of
any interest in default hereunder and interest with respect to such
Certificate shall accrue from the date to which interest has
previously been paid in full or made available for payment on such
Outstanding Certificates. Interest Components with respect to the
Certificates will be computed on the basis of a 360 -day year of
twelve 30 -day months.
SECTION 3.04. Payment Dates. The interest due with
respect to the 1993 Certificates shall become due and payable on
each Interest Component Payment Date from the date determined
pursuant to Section 3.03 hereof to maturity or the Prepayment Date
prior thereto, and shall evidence and represent the Interest
Component of the Purchase Payments becoming due on each such
Interest Component Payment Date. The Principal Component evidenced
and represented by the 1993 Certificates shall become due and
payable in the amounts and on April 1 in the years, and the
interest due with respect to the 1993 Certificates shall be payable
at the rates, as set forth below.
SECTION 3.05. Execution. The Certificates shall be
executed by the Trustee as registrar under this Trust Agreement, by
B:\TRSTAGR6.D0C 13
PRINCIPAL
PRINCIPAL
AMOUNT OF
AMOUNT OF
MATURITY
1993
MATURITY
1993
(APRIL 1)
CERTIFICATES
RATE (APRIL 1)
CERTIFICATES RATE
1994
$275,000
$ 2004
$ 550,000 1
1995
300,000
2005
600,000
1996
325,000
2006
625,000
1997
350,000
2007
675,000
1998
375,000
2008
725,000
1999
400,000
2009
775,000
2000
425,000
2010
825,000
2001
450,000
2011
875,000
2002
500,000
2012
925,000
2003
525,000
2013
1,000,000
SECTION 3.05. Execution. The Certificates shall be
executed by the Trustee as registrar under this Trust Agreement, by
B:\TRSTAGR6.D0C 13
the manual signature of an authorized signatory of the Trustee. In
case any authorized signatory of the Trustee who shall have
executed any of the Certificates shall cease to be an authorized
signatory of the Trustee before the Certificates so executed shall
have been delivered, such Certificates may nevertheless be
delivered and, upon such delivery, shall be as binding as though
such authorized signatory of the Trustee had continued to be an
authorized signatory of the Trustee and also any Certificate may be
executed on behalf of the Trustee by any person who at the actual
date of the execution of such Certificate shall be an authorized
signatory of the Trustee although at the nominal date of such
Certificate any such person shall not have been an authorized
signatory of the Trustee.
SECTION 3.06. Exchange. Certificates, upon surrender
thereof at the Corporate Trust Office of the Trustee, may, at the
option of the Owner and upon payment by such Owner of any charges
which the Trustee may make as provided in Section 3.09 hereof, be
exchanged for an equal aggregate principal amount of registered
Certificates of the same maturity, tenor and Series of any other
authorized denominations.
SECTION 3.07. Negotiability, Transfer and Registry. (a)
Each Certificate shall be transferable only upon the books of the
Trustee which shall be kept for that purpose at the Corporate Trust
Office of the Trustee, by the Owner in person or by his or her
attorney duly authorized in writing, upon surrender thereof
together with a written instrument of transfer satisfactory to the
Trustee duly executed by the Owner or his or her duly authorized
attorney and upon payment of such Owner of any charges which the
Trustee may make as provided in Section 3.09 hereof. Upon the
transfer of any such Certificate the Trustee shall execute and
deliver in the name of the transferee a new Certificate or
Certificates of the same Principal Component, Series, tenor and
maturity as the surrendered Certificate.
(b) The Trustee may deem and treat the person in whose
name any Certificate shall be registered upon the books of the
Trustee as the absolute Owner of such Certificate, whether such
Certificate shall be overdue or not, for the purpose of receiving
payment of, or on account of, the Principal Component and premium,
if any, and Interest Component with respect to such Certificate and
for all other purposes, and all such payments so made to any such
Owner or upon his or her order shall be valid and effectual to
satisfy and discharge the liability upon such Certificate to the
extent of the sum or sums so paid, and the Trustee shall not be
affected by any notice to the contrary.
(c) The Trustee shall not be required to transfer or
exchange (i) any Certificate in the fifteen days prior to selection
of Certificates for prepayment (whether or not such Certificate is
BATRSTAGR6.000 14
thereafter selected for prepayment) and (ii) any Certificate
selected for prepayment in whole or in part.
SECTION 3.08. Certificate Registration Books. The Trustee
will keep at its Corporate Trust Office sufficient books for the
registration of the ownership, transfer and exchange of the
Certificates, which books shall be available for inspection by the
City and its designated agent or any Owner or his or her agent duly
authorized in writing at reasonable hours and under reasonable
conditions; and upon presentation for such purpose the Trustee
shall, under such reasonable regulations as it may prescribe,
register the ownership, transfer or exchange of the Certificates in
such books as hereinabove provided. The ownership of any
Certificates may be proved by the books required to be kept by the
Trustee pursuant to the provisions of this Section 3.08.
SECTION 3.09. Regulations with Respect to Exchanges and
Transfers. In all cases in which the privilege of exchanging
Certificates or transferring Certificates is exercised, the Trustee
shall execute and deliver Certificates in accordance with the
provisions of this Trust Agreement. All Certificates surrendered
in any such exchanges or transfers shall forthwith be cancelled by
the Trustee and destroyed, and the Trustee shall certify as to
their destruction. For every such exchange or transfer of
Certificates, whether temporary or definitive, the Trustee may make
a charge to the Owners thereof sufficient to reimburse it for any
tax, fee or charge required to be paid with respect to such
exchange or transfer.
SECTION 3.10. Certificates Mutilated, Destroyed, Stolen
or Lost. In case any Certificate shall become mutilated or be
destroyed, stolen or lost, the Trustee shall execute and deliver a
new Certificate of like maturity, Series and Principal Component as
the Certificate so mutilated, destroyed, stolen or lost, in
exchange and substitution for such mutilated Certificate, upon
surrender and cancellation of such mutilated Certificate, or in
lieu of and substitution for the Certificate destroyed, stolen or
lost, upon filing with the Trustee evidence satisfactory to the
Trustee that such Certificate has been destroyed, stolen or lost
and proof of ownership thereof, and upon furnishing the Trustee
with indemnity satisfactory to the Trustee and complying with such
other reasonable regulations as the Trustee may prescribe and
paying such expenses as the Trustee may incur. All Certificates so
surrendered to the Trustee shall be cancelled by it and destroyed,
and the Trustee shall certify in writing as to their destruction.
Any such new Certificates issued pursuant to this Section 3.10 in
substitution for Certificates alleged to be destroyed, stolen or
lost shall be entitled to equal and proportionate benefits, with
all other Certificates delivered under this Trust Agreement, in any
moneys or security held by the Trustee for the benefit of the
Owners.
BATRSTAGR&DOC 15
SECTION 3.11. Temporary Certificates. (a) Until
definitive Certificates are prepared, the Corporation or the City
may direct the Trustee to execute and deliver, in the same manner
as is provided in this Article III, in lieu of definitive
Certificates, one or more temporary Certificates substantially of
the tenor of the definitive Certificates in lieu of which such
temporary Certificate or Certificates are issued, in denominations
authorized hereunder, so long as no such Certificate shall have its
Principal Component becoming payable in more than one year, and
with such omissions, insertions and variations as may be
appropriate to temporary Certificates. At the expense of the City,
the City shall prepare and the Trustee shall execute and, upon the
surrender of such temporary Certificates and the cancellation of
such surrendered temporary Certificates, the Trustee shall without
charge to the Owner thereof, in exchange therefor, deliver
definitive Certificates, of the same Principal Component, Series
and maturity as the temporary Certificates surrendered. Until so
exchanged, the temporary Certificates shall in all respects be
entitled to the same benefits and security as definitive
Certificates executed and delivered pursuant to this Trust
Agreement.
(b) If the City shall request the execution and delivery
of temporary Certificates in more than one denomination, the Owner
of any temporary Certificate or Certificates may, at his or her
option, surrender the same to the Trustee in exchange for another
temporary Certificate or Certificates of like Principal Component,
Series and maturity of any other authorized denomination or
denominations, and thereupon the Trustee shall execute and deliver,
in exchange for the temporary Certificate or Certificates so
surrendered and upon payment of the taxes, fees and charges
provided for in Section 3.09 hereof, a temporary Certificate or
Certificates of like aggregate Principal Component, Series and
maturity in such other authorized denomination or denominations as
shall be requested by such Owner.
(c) All temporary. Certificates surrendered in exchange
either for another temporary Certificate or Certificates or for a
definitive Certificate or Certificates shall be forthwith cancelled
by the Trustee and destroyed, and the Trustee shall certify in
writing as to their destruction
SECTION 3.12. Cancellation of Certificates. All
Certificates paid or prepaid, either at or before maturity, shall
be delivered to the Trustee when such payment or prepayment is made
and such Certificates shall thereupon be promptly cancelled and
destroyed, and the Trustee shall certify in writing as to their
destruction.
SECTION 3.13. Book -Entry Format. (a) Except as provided
in subsection (c) of this Section 3.13, the registered owner of all
of the 1993 Certificates shall initially be Cede & Co., as nominee
B:\TRSTAW6_DOC 16
of DTC. Payment of Interest Components for any 1993 Certificates
registered as of each Record Date in the name of Cede & Co. shall
be made by wire transfer to the account of Cede & Co. on the
Interest Component Payment Date for the 1993 Certificates at the
address indicated on the Record Date for Cede & Co. in the
registration books kept by the Trustee.
(b) The 1993 Certificates shall initially be issued in
the form of separate single authenticated fully registered 1993
Certificates in the Principal Component of each separate stated
maturity of the 1993 Certificates. Upon initial issuance, the
ownership of each such 1993 Certificate shall be registered in the
registration book kept by the Trustee in the name of Cede & Co., as
nominee of DTC. The Trustee shall treat DTC (or its nominee) as
the sole and exclusive owner of the 1993 Certificates registered in
its name for the purposes of payment of the Principal Component,
premium or Interest Component represented by the 1993 Certificates,
selecting the 1993 Certificates or portions thereof to be prepaid,
giving any notice permitted or required to be given to the Owners
thereof under the Trust Agreement, registering the transfer of 1993
Certificates, obtaining any consent or other action to be taken by
the Owners thereof and for all other purposes whatsoever; and the
Trustee shall not be affected by any notice to the contrary. The
Trustee shall not have any responsibility or obligation to any DTC
Participant or any Beneficial Owner. The City and the Trustee
shall have no responsibility with respect to the accuracy of any
records maintained by DTC, Cede & Co. or any Participant with
respect to any ownership interest in the 1993 Certificates; the
payment by DTC or any Participant to any Beneficial Owner of any
amount of the Principal Component, premium, if any, or Interest
Component with respect to the 1993 Certificates; the delivery to
any Participant or any Beneficial Owner of any notice which is
permitted or required to be given to the Owners thereof hereunder;
the selection by DTC or any Participant of any person to receive
payment in the event of a partial prepayment of 1993 Certificates;
or any consent given or other action taken by DTC as the Owners
thereof. The Trustee shall pay all Principal Components of,
premium, if any, and Interest Components with respect to the 1993
Certificates only to or "upon the order of" (as that term is used
in the Uniform Commercial Code as adopted in the State of New
Jersey) Cede & Co., as nominee of DTC, and all such payments shall
be valid and effective to fully satisfy and discharge the City's
obligations with respect to the Principal Components of, premium,
if any, and Interest Components with respect to the 1993
Certificates to the extent of the sum or sums so paid. Said
Principal Components and premium, if any, shall be paid to DTC in
immediately available funds on each Principal Component Payment
Date or Prepayment Date to:
B:\TRSTAGR6.D0C 17
Muni Redemption Department
The Depository Trust Company
55 Water street
23rd Floor
New York, New York 10041
Attention: Collections supervisor
Upon delivery by DTC to the Trustee of written notice to the effect
that DTC had determined to substitute a new nominee in place of
Cede & Co., and subject to the provisions herein with respect to
record dates, the word "Cede & Co." in this Trust Agreement shall
refer to such new nominee of DTC.
(c) In the event the City determines that it is in the
best interest of the Beneficial Owners of the 1993 Certificates
that they be able to obtain certificates, the City will notify DTC
and the Trustee of the availability through DTC of 1993
Certificates. In such event, the Trustee shall execute, transfer
and exchange 1993 Certificates as requested by DTC and any other
Owner thereof in appropriate amounts. DTC may determine to
discontinue providing its services with respect to the 1993
Certificates at any time by giving notice to the City and the
Trustee and discharging its responsibilities with respect thereto
under applicable law. Under such circumstances (if there is no
successor securities depository), the City and the Trustee shall be
obligated to deliver 1993 Certificates as described in this Trust
Agreement. In the event 1993 Certificates are issued to any Owner
other than DTC, the provisions of this Trust Agreement shall apply
to, among other things, the transfer and exchange of such 1993
Certificates and the method of payment of Principal Components of,
and Interest Components with respect to, such 1993 Certificates and
the amounts due on the Interest Component Payment Dates and the
Principal Component Payment Dates of such 1993 Certificates.
Whenever DTC requests the City and the Trustee to do so, the
Trustee and the City will cooperate with DTC in taking appropriate
action after reasonable notice (a) to make available one or more
separate certificates -evidencing the 1993 Certificates to any DTC
Participant having 1993'Certificates credited to its DTC account or
(b) to arrange for another securities depository to maintain
custody of certificates evidencing the 1993 Certificates.
(d) In connection with any notice or other communication
to be provided to Owners- of 1993 Certificates pursuant to this
Trust Agreement by the Trustee with respect to any consent or other
action to be taken by Owners of 1993 Certificates so long as any
1993 Certificate is registered in the name of Cede & Co., as
nominee of DTC, the Trustee shall establish a record date for such
consent or other action and give DTC notice of such record date not
less than 15 calendar days in advance of such record date to the
extent possible.
B:\TRSTAGR6.DOC is
ARTICLE IV
PREPAYMENT OF 1993 CERTIFICATES
SECTION 4.01. Prepayment.
(a) Optional Prepayment. The 1993 Certificates maturing
on or after April 1, 2004, are subject to prepayment at the option
of the City at any time on or after April 1, 2003 in integral
multiples of $5,000, at the Principal Component thereof together
with any applicable premium, and the related Interest Components
due on the date fixed for such prepayment, from any source of
funds, upon notice as provided herein. The prepayment price
(expressed as a percentage of the total principal amount prepaid)
upon prepayment is set forth below:
Period During Which Prepaid Prepayment
(both dates inclusive) Price
April
1,
2003
through March 31, 2004
102%
April
1,
2004
through March 31, 2005
101
April
1,
2005
and thereafter
100
(b) Revised Schedule of 1993 Purchase Payments. Upon
prepayment pursuant to Section 4.01(a), the City shall provide the
Trustee and the Corporation with a revised schedule of 1993
Purchase Payments which schedule shall take into account such
prepayment.
SECTION 4.02. Selection of Certificates for Prepayment.
In the case of prepayment of less than all Outstanding
Certificates, the Trustee shall select the Certificates
representing the Principal Components to be prepaid to correspond
to the Principal Components of Purchase Payments prepaid by the
City in conformance with Section 5.6 of the Installment Purchase
Agreement. Any selection of the Certificates by the Trustee shall
be binding upon the Owners.
When Principal Components represented by the Certificates
are to be prepaid at the option of the City as set forth in
Subsection 4.01(a) above, the City shall give written notice to the
Trustee of the exercise of such option at least forty-five (45)
days but not more than ninety (90) days prior to the proposed
Prepayment Date. Such notice shall state the proposed Prepayment
Date, the aggregate Principal Component of the Certificates to be
prepaid and the maturity or maturities from which each prepayment
shall be made.
SECTION 4.03. Notice of Prepayment. Notice of prepayment
shall be mailed by the Trustee by first-class mail postage prepaid,
B:\TRSTAGR6.DOC 19
not less than thirty (30) nor more than sixty (60) days prior to
the Prepayment Date to (i) the respective Owners of any
certificates representing Principal Components designated for
prepayment at their addresses appearing on the Certificate
registration books of the Trustee and (ii) each Information
Service. Notice of prepayment shall also be given by telecopy,
certified, registered or overnight mail to the Securities
Depositories on the day of the mailing of notice of prepayment to
the Owners and the Information Services. Each notice of prepayment
shall state the date of such notice, the Prepayment Date, the
Prepayment Price, the place or places of prepayment (including the
name and appropriate address or addresses of the Trustee), the
CUSIP number, if any, of the maturity or maturities to be prepaid
and, if less than all of such maturity, the distinctive certificate
numbers of the Certificates of such maturity to be prepaid and, in
the case of Certificates representing Principal Components to be
prepaid in part only, the respective portions of the Principal
Component represented thereby to be prepaid. Each such notice
shall also state that on said date there will become due and
payable with respect to each of said Certificates the Prepayment
Price thereof or of said specified portion of the Principal
Component represented thereby in the case of a Certificate to be
prepaid in part only, and that from and after such Prepayment Date,
the related Interest Component due with respect thereto shall cease
to accrue, and shall require that such Certificates be then
surrendered at the address or addresses of the Trustee specified in
the prepayment notice. Notwithstanding anything herein to the
contrary, the Trustee shall not give notice of any prepayment
pursuant to Section 4.01 hereof until and unless the Trustee has
received and has available from all sources sufficient funds to pay
the Prepayment Price represented by all Certificates to be prepaid.
Notice of prepayment of Certificates shall be given by
the Trustee, at the expense of the City, for and on behalf of the
City.
Failure by the Trustee to give notice pursuant to this
Section 4.03 to any one or more of the Information Services or
Securities Depositories shall not affect the sufficiency of the
proceedings for prepayment. Failure by the Trustee to mail notice
of prepayment pursuant to this Section 4.03 to any one or more of
the respective Owners of any Certificates representing Principal
Components designated for prepayment shall affect the sufficiency
of the proceedings for prepayment only with respect to the Owner or
Owners to whom such notice was not mailed. An affidavit of an
Authorized Officer of the Trustee that notice of prepayment was
mailed to the Owners of the Certificates shall be conclusive
evidence of the mailing of such notice.
SECTION 4.04. Payment of Certificates Upon Prepayment.
- Prior to each Prepayment Date, the Trustee shall make provision for
the payment of the Principal Components to be prepaid on such date
B:\TRSTAGR6.DOC 20
by setting aside from moneys available therefor and holding in
trust, an amount within the Purchase Payment Account sufficient to
pay the Prepayment Price of such Certificates. Upon presentation
and surrender of any such Certificate at the Corporate Trust Office
of the Trustee on or after the Prepayment Date, the Trustee shall
pay the Prepayment Price of such Certificate only to the extent
that moneys are set aside for such purpose. The Trustee shall be
responsible only to prepay Principal Components to the extent of
available moneys and shall not be liable or responsible for, and
shall be indemnified by the City against, failure to prepay
Principal Components to the extent that no moneys are available
therefor.
SECTION 4.05. Partial Prepayment of Certificates. Upon
surrender of any Certificate representing Principal Components to
be prepaid in part only, the Trustee shall execute and deliver to
the Owner thereof a new Certificate or Certificates representing
Principal Components equal to the unprepaid Principal Component of
the Certificate surrendered of the same maturity.
SECTION 4.06. Effect of Prepayment. If notice of
prepayment has been duly given as aforesaid and funds for the
payment of the Prepayment Price of the Certificates to be prepaid
are held by the Trustee on the designated Prepayment Date, then on
the Prepayment Date designated in such notice, the Prepayment Price
of the Certificates representing Principal Components so called for
prepayment shall become payable as specified in such notice; and
from and after the date so designated Interest Components due with
respect to the Principal Components of the Certificates or portions
thereof so called for prepayment shall cease to accrue, such
Certificates shall cease to be entitled to any benefit, protection
or security hereunder and the Owners of such Certificates shall
have no rights in respect thereof except to receive payment of the
Prepayment Price. The Trustee shall, upon surrender for payment of
any of the Certificates to be prepaid on their Prepayment Dates,
pay such Certificates at the Prepayment Price.
All Certificates representing Principal Components
prepaid in whole or in part pursuant to the provisions of this
article shall be cancelled by the Trustee and destroyed, and the
Trustee shall certify in writing as to their destruction.
ARTICLE V
ESTABLISHMENT AND ADMINISTRATION OF CERTAIN
FUNDS AND ACCOUNTS
SECTION 5.01. Establishment of Project Trust Fund. There
is hereby established with the Trustee a special trust fund for the
1993 Certificates, which special trust fund shall be designated as
the 111993 Project Trust Fund." The Trustee shall keep the 1993
Project Trust Fund separate and apart from all other funds and
BATRSTAGR6.00C 21
moneys held by it. Within the 1993 Project Trust Fund, there are
hereby established the Purchase Payment Account and the Reserve
Account.
SECTION 5.02. Purchase Payment Account.
(a) The Trustee shall deposit in the Purchase Payment
Account the following:
(i) on the Delivery Date, the amount
representing accrued interest on the 1993
Certificates, set forth with respect to the
Purchase Payment Account in Exhibit A hereto; and
(ii) when received, Purchase Payments made by
the City pursuant to Section 5.2 of the Installment
Purchase Agreement; and
(iii) from time to time, moneys transferred
from the Construction Account pursuant to Sections
5.04(d) and 5.04(e)(iv) hereof, which moneys shall
be used as provided in such Sections; and
(iv) from time to time, moneys transferred
from the Reserve Account pursuant to Section
5.03(b) hereof; and
(v) amounts delivered to the Trustee by the
City for the payment of the premium portion of the
Prepayment Price to be paid pursuant to Section
4.01(a) hereof; and
(vi) all other moneys received by the Trustee
under and pursuant to the provisions of the
Installment Purchase Agreement which are required
to be or which are accompanied by directions that
such moneys are to be paid into the Purchase
Payment Account.
(b) The Trustee shall withdraw moneys from the Purchase
Payment Account at such times and in such amounts as are necessary
to make payments of Principal Components, Interest Components or
premium, if any; provided, however, that such payments shall be
deemed made first from investment income, if any, transferred to
the Purchase Payment Account from the Reserve Account pursuant to
Section 5.03(d) hereof and investment income received with respect
to moneys deposited to the Purchase Payment Account pursuant to
Section 5.02(a)(i) hereof.
(c) The amounts deposited in the Purchase Payment Account
pursuant to subsection 5.02(a)(i) hereof, and the investment income
B:\TRSTAGR6.DOC 22
therefrom, shall be applied toward the payment of the Interest
Component of the 1993 Purchase Payment due on October 1, 1993.
(d) After the Completion Certificate is filed with
respect to the Project, if, on the day after any Purchase Payment
Date (i) all Principal Components, premium and Interest Components
which became due and payable on or before such date have been paid
in full, and (ii) there are moneys on deposit in the Purchase
Payment Account, other than that required for prepayment of
Certificates, and (iii) the amount on deposit in the Reserve
Account is less than the Reserve Requirement, then the Trustee
shall transfer from the Purchase Payment Account to the Reserve
Account the lesser of (i) an amount which, when added to the amount
on deposit in the Reserve Account, will equal the Reserve
Requirement, or (ii) all amounts on deposit in the Purchase Payment
Account.
(e) After the Completion Certificate is filed with
respect to the Project, if, on the day after any Purchase Payment
Date (i) all transfers have been made pursuant to Section 5.02(d)
hereof, and (ii) there are moneys on deposit in the Purchase
Payment Account other than that required for prepayment of
Certificates and other than excess Construction Account moneys
transferred pursuant to Section 5.04(d) hereof, then the Trustee
shall (i) at the request of the City, transfer such funds to the
City or (ii) apply such funds to reduce the next succeeding
Purchase Payment payable by the City.
SECTION 5.03. Reserve Account. (a) The Trustee shall
deposit in the Reserve Account the following:
(i) on the Delivery Date, from the proceeds
of the sale of the 1993 Certificates, the amount
set forth with respect to such Account in Exhibit A
hereto, constituting an amount equal to the Reserve
Requirement with respect to the 1993 Certificates
on the Delivery Date; and
(ii) from time to time, any Purchase Payment,
or portion thereof, made after the appropriate
Purchase Payment Date in an amount equal to the
amount transferred from the Reserve Account to the
Purchase Payment Account on such Purchase Payment
Date pursuant to subsection 5.03(b) hereof; and
(iii) from time to time, moneys transferred
from the Purchase Payment Account pursuant to
Section 5.02(d) hereof.
(b) If, on any Purchase Payment Date, the amount
available in the Purchase Payment Account is less than the amount
necessary to pay the Principal Component or the Interest Component
B:\TRSTAGR6.D0C 23
to be paid on such date with respect to any Certificate, then the
Trustee shall transfer from the Reserve Account to the Purchase
Payment Account the lesser of: (i) an amount sufficient to enable
the Trustee to pay the Principal Component and Interest Component
with respect to such Certificate from the Purchase Payment Account,
or (ii) all amounts on deposit in the ReserveAccount. In the
event of such transfer, the Trustee shall, within five (5) days
after making such transfer, provide written notice to the City and
the Corporation of the amount and date of such transfer.
(c) Until the Completion Certificate is filed for the
Project, the Trustee shall, on the first Business Day of each
month, transfer to the Treasurer for deposit in the Construction
Account moneys in the Reserve Account in excess of the Reserve
Requirement, to the extent that such moneys constitute investment
income received at or prior to the end of the immediately preceding
month.
(d) After the Completion Certificate is filed for the
Project, the Trustee shall, on each Purchase Payment Date, transfer
to the Purchase Payment Account moneys in the Reserve Account in
excess of the Reserve Requirement, to the extent that such moneys
constitute investment income received since the immediately
preceding Purchase Payment Date.
SECTION 5.04. Construction Account. (a) There is hereby
established with the Treasurer the Construction Account, which
Account shall be kept separate and apart from all other funds and
moneys held by the City. The Treasurer shall deposit in the
Construction Account the following:
(i) on the Delivery Date, from the proceeds
of the sale of the 1993 Certificates, the amount
set forth with respect to the Construction Account
in Exhibit A hereto; and
(ii) from time to time, moneys transferred by
the Trustee from the Reserve Account pursuant to
subsection 5.03(c) hereof.
(b) Costs of Issuance shall be paid from amounts on
deposit in the Construction Account. The Treasurer shall make such
payments in the amounts, at the times, in the manner, and on the
other terms and conditions set forth herein. No such payment shall
be made until the Treasurer shall have received a requisition
signed by an Authorized City Representative stating with respect to
each payment to be made: (1) the requisition number, (2) the name
and address of the person, firm, corporation or agency to which
payment is due or has been made, (3) the amount to be paid, (4)
identification of the item to which such payment is to be applied,
(5) that each obligation mentioned therein is a proper charge
against the Construction Account and has not been the basis of any
BATRSTAGR6.DDC 24
previous withdrawal from the Construction Account. In addition,
each requisition shall have attached a copy of each invoice,
statement or other billing documentation for which payment is
claimed.
(c) The Cost of the Project shall be paid from the
amounts on deposit in the Construction Account. The Treasurer
shall make such payments in the amounts, at the times, in the
manner, and on terms and conditions as set forth in this subsection
(c). No such payment shall be made until the Treasurer shall have
received a requisition signed by an Authorized City Representative
setting forth with respect to each payment to be made: (1) the
requisition number, (2) the name and address of the person, firm,
corporation or agency to whom payment is due or has been made, (3)
the amount to be paid, (4) the item to which such payment is to be
applied, and (5) that such payment obligation has been properly
incurred, is an item of Cost of the Project, is a proper charge
against the Construction Account and has not been the basis of any
previous withdrawal from the Construction Account.
(d) Notwithstanding any of the other provisions of this
Section 5.04, to the extent that other moneys are not available
therefor, amounts in the Construction Account shall be withdrawn
and transferred to the Trustee for deposit in the Purchase Payment
Account and applied by the Trustee to the payment of the Principal
Component or Interest Component with respect to the Certificates.
(e) After the Completion Certificate is filed for the
Project, the Authorized City Representative will direct the
Treasurer to transfer any moneys held in the Construction Account
and not required for the payment of any remaining part of the Cost
of the Project, as stated in the Completion Certificate to the
Trustee for deposit in the Reserve Account to the extent the amount
on deposit in the Reserve Account is less than the Reserve
Requirement, and, thereafter the Authorized City Representative
will direct the Treasurer to apply such moneys, at the City's
discretion, to (i) the expansion or enlargement of the Project,
(ii) the betterment or improvement of the Project, (iii) the
expansion, enlargement or improvement of the Water System, or (iv)
the Purchase Payment Account held by the Trustee for (1) the
payment of Interest Components, (2) the payment of Principal
Components represented by the Certificates, or the prepayment of
Principal Components represented by the Certificates if such
prepayment may be made at the option of the City pursuant to
Section 4.01(a) hereof, (3) the purchase of Certificates on the
open market, to the extent such Certificates are available for
purchase at a purchase price no greater than one hundred percent
(100%) of the Principal Component thereof plus accrued interest to
the date of such purchase, or (v) any combination of the foregoing
(i) through (iv). No payment pursuant to clauses (i), (ii) or
(iii) of this Section 5.04(e) shall be made until the Treasurer
shall have received a requisition signed by an Authorized City
B.XTRSTAGR6.DDC 2 5
Representative setting forth with respect to each payment to be
made: (1) the requisition number, (2) the name and address of the
person, firm, corporation or agency to whom payment is due or has
been made, (3) the amount to be paid, (4) the time to which such
payment is to be applied, and (5) that such payment obligation has
been properly incurred, is a proper charge against the Construction
Account and has not been the basis of any previous withdrawal from
the Construction Account. In addition, each requisition shall have
attached a copy of each invoice, statement or other billing
documentation for which payment is claimed.
SECTION 5.05. Deposits of Money. All moneys held by or
deposited with the Trustee or the City under the provisions of this
Trust Agreement shall be held in trust and applied only in
accordance with the provisions of this Trust Agreement, and the
1993 Project Trust Fund established by this Trust Agreement shall
be a trust fund for the purposes thereof. All moneys deposited
with the Trustee and the City shall be credited to the particular
account to which such moneys belong.
SECTION 5.06. Valuation and Sale of Investments.
Obligations purchased as an investment of moneys in any account
created under the provisions of this Trust Agreement shall be
deemed at all times to be a part of such account or subaccount and
any profit realized from the liquidation of such investment and any
income or interest received on account of such investment, except
as otherwise provided in Sections 5.03(c) and 5.03(d) with respect
to interest earnings, shall be credited to, and any loss resulting
from the liquidation of such investment shall be charged to, such
account.
In computing the amount in any account created under the
provisions of this Trust Agreement for any purpose provided in this
Trust Agreement, obligations purchased as an investment of moneys
therein shall be valued at the lower of cost or the market value of
such obligations (including accrued interest).
Except as otherwise provided in this Trust Agreement, the
Trustee shall sell at the best price obtainable or present for
prepayment or transfer as provided in the next sentence any
obligation so purchased as an investment whenever it shall be
requested in writing by an Authorized City Representative to do so
or whenever it shall be necessary in order to provide moneys to
meet any payment or transfer from any account held by it. In lieu
of such sale or presentment for prepayment, the Trustee may, in
making the payment or transfer from any account mentioned in the
preceding sentence, transfer such investment obligations or
interest appertaining thereto at its acquisition cost if such
investment obligations shall mature or be collectable at or prior
to the time the proceeds thereof shall be needed, and such transfer
of investment obligations may be made in book entry form. The
Trustee shall not be liable or responsible for making any such
B:\TRSTAGR6.DOC 2 6
investment in the manner provided above or for any loss resulting
from any such investment. The Trustee may act as principal or
agent in the acquisition or disposition of any investment. The
Trustee shall hold all investments in its name as trustee.
SECTION 5.07. Investment of Certain Accounts. (a) Moneys
in the Construction Account and the Purchase Payment Account shall
be invested and reinvested by the City and the Trustee,
respectively, to the fullest extent practicable in Permitted
Investments which mature not later than such times as shall be
necessary to provide moneys when needed for payments to be made
from such accounts and in any event not later than the final
maturity of the Certificates. Notwithstanding the foregoing,
moneys deposited in the Purchase Payment Account pursuant to
Section 5.02(a)(i) hereof shall be held in cash by the Trustee or
shall be invested and reinvested by the Trustee in obligations
described in clauses (i) through (iv) of the definition of
Government Obligations. Moneys in the Reserve Account shall be
invested and reinvested by the Trustee to the fullest extent
practicable in Permitted Investments which mature or are available
not more than ten years from the date of investment. The Trustee
shall make all such investments of moneys held by it in accordance
with instructions, confirmed in writing, received from an
Authorized City Representative. The Authorized City Representative
may instruct the Trustee at least two Business Days prior to making
any investment in any Permitted Investments with moneys in any
account established under this Trust Agreement, to combine such
moneys with moneys in any other account, but solely for purposes of
making such investment in such Permitted Investments. The Trustee
shall account for investments in accordance with the funds and
accounts to which they are credited. In the absence of instruction
from the Authorized City Representative, the Trustee shall invest
only in Permitted Investments described in subparagraph (vii) of
the definition of Permitted Investments. The Trustee shall not be
liable for losses on investments made in accordance with this
Section 5.07.
(b) If the City or the Corporation or both enter into one
or more interest rate swap agreements corresponding to the interest
payable with respect to one or more Series of Certificates or any
portion thereof, the amounts received by the Corporation or the
City, if any, pursuant to such a swap agreement may be applied to
the deposits required hereunder.
(c) Nothing in this -Trust Agreement shall prevent any
Government Obligations acquired as investments of funds held under
the Trust Agreement from being issued or held in book -entry form on
the books of the Department of the Treasury of the United States of
America.
B:\TRSTAGR6.DOC 2 7
ARTICLE VI
THE TRUSTEE AND PAYING AGENT
SECTION 6.01. Duties, Immunities and Liabilities of
Trustee. The Trustee shall, prior to an Event of Default, and
after the curing of all Events of Default which may have occurred,
perform such duties and only such duties as are specifically set
forth in this Trust Agreement. The Trustee shall, during the
existence of any Event of Default (which has not been cured),
exercise such of the rights and powers vested in it by this Trust
Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
No provision of this Trust Agreement (including
particularly Section 3.02 hereof) shall be construed to relieve the
Trustee from liability for its own willful misconduct or
negligence, except that:
(a) prior to such an Event of Default hereunder and after
the curing of all Events of Default which may have occurred and in
the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificate
or opinion furnished to the Trustee conforming to the requirements
of this Trust Agreement; but in the case of any such certificate or
opinion which by any provisions hereof is specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not it conforms to the
requirements of this Trust Agreement; and
(b) at all times, regardless of whether or not any Event
of Default shall exist:
(1) the Trustee shall not be liable for any error of
judgment made in,good faith by an Authorized Officer or
Officers of the Trustee unless it shall be proved that the
Trustee was negligent in ascertaining and/or failing to
ascertain the pertinent facts; and
(2) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Owners of Outstanding
Certificates representing not less than a majority of the
Principal Components relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee under this Trust Agreement.
None of the provisions contained in this Trust Agreement
shall require the Trustee to expend or risk its own funds or
B:\TRSTAGR6.D0C 28
otherwise incur individual financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers if there shall be reasonable grounds for believing that the
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 6.02. Right of Trustee to Rely upon Documents,
Etc. Except as otherwise provided in Section 6.01 hereof:
(a) the Trustee may rely and shall be protected in acting
upon*any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, certificate or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any notice, request, direction, election, order or
demand of the Corporation or the City mentioned herein shall be
sufficiently evidenced by an instrument signed in the name of the
Corporation or of the City by an Authorized Corporation
Representative or an Authorized City Representative, respectively;
(c) the Trustee may consult with Counsel (who may be
Counsel for the Corporation or the City) and the opinion of such
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in good
faith and in accordance with the opinion of such Counsel; and
(d) whenever in the administration of the trusts of this
Trust Agreement the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate of an
Authorized City Representative or an Authorized Corporation
Representative, as appropriate; and such certificate shall be full
warrant to the Trustee for any action taken or suffered by it under
the provisions of this Trust Agreement upon the faith thereof.
SECTION 6.03. Trustee Not Responsible for Recitals. The
recitals contained herein and in the Certificates shall be taken as
the statements of the Corporation and the City, and the Trustee
assumes no responsibility for the validity or correctness of the
same. The Trustee makes no representation as to the validity or
sufficiency of this Trust Agreement or of the Certificates. The
Trustee shall not be accountable for the use or application of any
of the Certificates delivered hereunder or of the proceeds of such
Certificates except as provided herein.
SECTION 6.04. Right of Trustee to Acquire Certificates.
The Trustee and its officers and directors may acquire and hold, or
become the pledgee of, Certificates and otherwise deal with the
B:\TRSTAGR6.DDC 2 9
corporation and the City in the manner and to the same extent and
with like effect as though it were not the Trustee hereunder.
SECTION 6.05. Moneys Received by Trustee to be Held in
Trust. All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other
trust funds except to theextent specifically required by this
Trust Agreement or required by law. The Trustee shall be obligated
to invest all moneys received by it hereunder in accordance with
Section 5.07 hereof. Any interest allowed on any such moneys shall
be deposited in the account to which such moneys are credited.
SECTION 6.06. Compensation and Indemnification of
Trustee. The City covenants to cause the Trustee to be paid from
time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee pursuant to
any agreement entered into between the City and the Trustee, which
compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust, and the City
will cause the Trustee to be paid or reimbursed, upon request of
the Trustee for all reasonable expenses and disbursements incurred
or made by the Trustee in accordance with any of the provisions of
this Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its Counsel and of all persons not
regularly in its employ). The City also covenants to indemnify the
Trustee for, and to hold it harmless against, any loss, liability,
expense or advance incurred or made without negligence or willful
misconduct on the part of the Trustee, arising out of or in
connection with (i) the acceptance or administration of this trust,
(ii) the condition, management, maintenance or use of or from any
work or thing done in connection with the Project by the City,
(iii) any act of negligence or willful misconduct of the City or
the Corporation or any of their agents, contractors, employees,
invitees, licensees or officers in connection with the Project,
(iv) the delivery or sale of the Certificates and the carrying out
of any of the transactions contemplated by the Certificates, this
Trust Agreement, the Assignment Agreement or the Installment
Purchase Agreement, other than those transactions to be performed
by the Trustee hereunder or thereunder, as the case may be; and (v)
any untrue statement or alleged untrue statement of any material
fact or omission or alleged omission to state a material fact
necessary to make the statements made, in light of the
circumstances under which they were made, not misleading in any
official statement or other disclosure document utilized in
connection with the delivery or sale of the Certificates including
the fees, costs and expenses of defending itself against any claim
of liability. The obligations of the City under this Section 6.06
and Section 6.12 hereof to cause the Trustee to be compensated for
services and to be paid or reimbursed for expenses, disbursements
B:\TRSTAGR6.DOC 30
and liabilities shall constitute additional obligations hereunder.
Such additional obligations shall have priority over the
Certificates in respect of all property and funds held or collected
by the Trustee as such, except funds held by the Trustee for the
benefit of the Owners of particular Certificates and except funds
held in the Purchase Payment Account. Notwithstanding any contrary
provision hereof, this covenant shall remain in full force and
effect, even though all obligations secured hereby may have been
fully paid and satisfied and this Trust Agreement may have been
released and discharged.
SECTION 6.07. Qualifications of Trustee. There shall at
all times be a trustee hereunder which shall be a bank or trust
company organized and doing business under the laws of the United
States or any of the states of the United States, authorized under
such laws to exercise corporate trust powers, subject to
supervision or examination by federal or state authority and, if
required by law, qualified to do business in the State. Any
successor Trustee to Bank of America National Trust and Savings
Association shall have a combined capital and surplus of at least
seventy-five million dollars ($75,000,000). If such bank or trust
company publishes reports of condition at least annually, pursuant
to law or to the requirements of any supervising or examining
authority above referred to, then for the purposes of this Section
6.07, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the
provisions of this Section 6.07, the Trustee shall resign
immediately in the manner and with the effect specified in Section
6.08 hereof.
SECTION 6.08. Resignation and Removal of Trustee and
Appointment of Successor Trustee. (a) The Trustee may at any time
resign by giving written notice to the City and by giving to the
Owners of the Certificates notice by mail of such resignation.
Upon receiving such notice of resignation, the City, with the
written approval of the Corporation (which approval shall not be
unreasonably withheld), shall promptly appoint a successor trustee
by an instrument in writing executed by an Authorized City
Representative. If no successor trustee shall have been so
appointed and shall have accepted appointment within sixty (60)
days after the mailing of such notice of resignation, the resigning
trustee may at the expense of the City petition any court of
competent jurisdiction for the appointment of a successor trustee,
or any Owner may, on behalf of himself or herself and others
similarly situated, petition any such court for the appointment of
a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case any of the following shall occur --
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(1) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.07 hereof and shall fail to
resign after written request therefor by the City or by any
Owner who has been a bona fide Owner of a Certificate for at
least six months,
(2) the Trustee shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or substantially all of its property shall be
appointed, or any public officer shall take charge or control
of the Trustee or substantially all of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation, or
(3) at such time as there is no Event of Default
hereunder, the Corporation shall determine to remove the
Trustee
then, in any such case, the City, with the written approval of the
Corporation {which approval shall not be unreasonably withheld),
may remove the Trustee and appoint a successor trustee by an
instrument in writing executed by an Authorized City
Representative, or any such Owner may, on behalf of himself or
herself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The Owners of Outstanding Certificates representing
a majority in aggregate Principal Component may at any time remove
the Trustee and appoint a successor trustee by an instrument or
concurrent instruments in writing signed by such Owners.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the
provisions of this Section 6.08 shall become effective upon
acceptance of appointment by the successor trustee as provided in
Section 6.09 hereof.
SECTION 6.09. Acceptance of Trust by Successor Trustee.
Any successor trustee appointed as provided in Section 6.08 hereof
shall execute, acknowledge and deliver to the Corporation, the City
and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of
the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts, duties and obligations
of its predecessor in the trusts hereunder, with like effect as if
originally named as Trustee herein; but, nevertheless, on the
written request of the Corporation executed by an Authorized
Corporation Representative or of the City executed by an Authorized
B:\TRSTAGR6.DOC 32
City Representative or on the request of the successor trustee, the
trustee ceasing to act shall execute and deliver an instrument
transferring to such successor trustee, upon the trusts herein
expressed, all the rights, powers and trusts of the trustee so
ceasing to act. Upon request of any such successor trustee, the
Corporation and the City shall execute any and all instruments in
writing necessary or desirable for more fully and certainly vesting
in and confirming to such successor trustee all such rights, powers
and duties.
No successor trustee shall accept appointment as provided
in this Section 6.09 unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of Section
6.07 hereof.
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.09, notice of the succession of such
trustee to the trusts hereunder shall be published at least once in
an Authorized Newspaper. If the Corporation or the City fails to
publish such notice -within ten (10) days after acceptance of
appointment by the successor trustee, the successor trustee shall
cause such notice to be published at the expense of the City.
Notice of the succession of such Trustee shall also be given by the
successor trustee by first class mail to each Rating Agency having
a rating in effect for the Certificates.
BECTIO14 6.10. Merger or Consolidation of Trustee. Any
corporation into which the Trustee may be merged or with which it
may be consolidated, or any corporation resulting from any merger
or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing
of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided
that such successor trustee shall be eligible under the provisions
of Section 6.07 hereof.
SECTION 6.11. Obligations of Trustee. Upon payment in
full of all Certificates within the meaning of Section 7.01 hereof,
the Trustee shall execute any certificate which the Corporation or
the City may reasonably request to evidence payment in full under
the terms of the Installment Purchase Agreement.
SECTION 6.12. Paying Agent for Certificates. The Trustee
may appoint a Paying Agent for the Certificates, with the prior
consent of the City, which shall be a bank or trust company duly
organized under the laws of the United States or any state or
territory thereof, having a capital stock and surplus aggregating
at least $10,000,000, and willing and able to accept the office on
reasonable and customary terms and authorized by law to perform all
the duties imposed by it by this Trust Agreement.
B:\TRSTAGR6.DDC 33
The Paying Agent shall perform such duties and only such
duties as are specifically, authorized by the Trustee and in
exercising such duties shall be entitled to the immunities and
standard of care applicable to the Trustee prior to an Event of
Default and after the curing of an Event of Default.
The City covenants to cause the Paying Agent to be paid
from time to time, and the Paying Agent shall be entitled to,
reasonable compensation for all services rendered by it pursuant to
the agreement entered into between the City and the Paying Agent,
subject to the provisions of Section 6.06 hereof, in the exercise
and performance of any of the powers and duties hereunder of the
Paying Agent, which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust, and the City will cause the Paying Agent to be paid
or reimbursed, upon request of the Paying Agent for all expenses
and disbursements incurred or made by the Paying Agent in
accordance with any of the provisions of this Trust Agreement
(including the reasonable compensation and the expenses and
_. disbursements of its Counsel and of all persons not regularly in
its employ) except any such expense or disbursement as may arise
from its own negligence or willful misconduct. The City also
covenants to indemnify the Paying Agent for, and to hold it
harmless against, any loss, liability, expense or advance incurred
or made without negligence or willful misconduct on the part of the
Paying Agent, arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses
of defending itself against any claim of liability in the premises.
SECTION 6.13. Resignation or Removal of Paying Agent;
Appointment of Successor. Any Paying Agent may at any time resign
and be discharged of the duties and obligations created by this
Trust Agreement by giving at least sixty (60) days written notice
to the Trustee and the City. Any Paying Agent may be removed at
any time by an instrument filed with such Paying Agent and the
Trustee. Any successor Paying Agent shall be appointed by the
City, with the approval of the Corporation, and shall be a bank or
trust company duly organized under the laws of the United States or
any state or territory thereof, having a capital stock and surplus
aggregating at least $10,000,000, and willing and able to accept
the office on reasonable and customary terms and authorized by law
to perform all the duties imposed upon it by this Trust Agreement.
In the event of the resignation or removal of any Paying
Agent, such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there is
no successor, to the Trustee. In the event that for any reason
there shall be a vacancy in the office of any Paying Agent, the
Trustee shall act as such Paying Agent.
B:\TRSTAGR6.DDC 34
ARTICLE VII
DEFEASANCE
SECTION 7.01. Certificates Deemed Paid; Discharge of
Trust Agreement. The Principal Components and Interest Components
with respect to any Certificate will be deemed paid for all
purposes of this Trust Agreement when
(a) Payment of the Principal Component and Interest
Component with respect to such Certificate to the due date of such
Principal Component and Interest Component (whether at maturity,
upon prepayment or otherwise) either has been (1) made in
accordance with the terms of the Certificates or (2) provided for
by depositing with the Trustee (i) moneys sufficient to make such
payment and/or (ii) to the extent permitted by law, Government
Obligations maturing as to principal and interest in such amounts
and at such times as will, together with any moneys held by the
Trustee for such purpose, assure the availability of sufficient
moneys to make such payment and any applicable premium thereon; and
(b) All compensation and expenses of the Trustee and the
Paying Agent, pertaining to each Certificate in respect of which
such payment or deposit is made, have been paid or provided for to
the Trustee and the Paying Agent's satisfaction.
When the Principal Components and Interest Components
with respect to a Certificate are deemed paid, such Certificate
will no longer be secured by or entitled to the benefits of this
Trust Agreement, except for payment from the sources specified in
Section 7.01(a) and it may be transferred, exchanged, registered or
replaced as provided in Article III hereof.
To assure compliance with clause (2) of Section 7.01(a)
hereof, if applicable, the City shall deliver to the Trustee an
opinion or report of an independent certified public accountant
confirming the availability of sufficient moneys as described
therein. The Trustee may conclusively rely upon such opinion or
report.
Notwithstanding the foregoing, no deposit under clause
(2) of Section 7.01(a) shall be deemed a payment of the Principal
Components or Interest Components with respect to the Certificates
until (1) (a) in the case of any such Certificates that are to be
prepaid on any date prior to their maturity, the City shall have
given to the Trustee in form satisfactory to the Trustee
irrevocable instructions to mail notice of prepayment of such
Certificates in accordance with Section 4.03 hereof and (b) in the
event such Certificates are not by their terms subject to
prepayment within the next succeeding sixty (60) days, the City
shall have given the Trustee, in form satisfactory to the Trustee,
irrevocable instructions to mail a notice to the Owners of such
B:\TRSTAGR6.DOC 35
Certificates that the deposit required by Section 7.01 (a)(2) above
has been made with the Trustee and that the Principal Components or
Interest Components with respect to the Certificates are deemed to
have been paid under this Section 7.01 and stating the maturity or
prepayment date upon which moneys are to be available for the
payment of the Principal Components of and prepayment premiums, if
any, due with respect to such Certificates, or (2) the maturity of
the Principal Component represented by the Certificate. Any notice
given under clause (1) of this paragraph with respect to Principal
Components constituting fewer than all Principal Components of a
maturity shall specify the letter and number or other
distinguishing mark of each such Certificate representing Principal
Components to be paid.
When all Outstanding Certificates are deemed paid under
the foregoing provisions of this Section 7.01, and the requirements
of Section 6.4 of the Installment Purchase Agreement have been met,
the Trustee will upon request of the City acknowledge the discharge
of the Corporation's and City's obligations under this Trust
Agreement and the Certificates except for obligations under (i)
Article III hereof in respect of the transfer, exchange,
registration and replacement of Certificates, (ii) Section 9.05
hereof and (iii) Section 6.06 hereof.
SECTION 7.02. Application of Trust Money. The Trustee
shall hold in trust money or direct obligations of (including
obligations issued or held in book entry form on the books of) the
Department of the Treasury of the United States of America
deposited with it pursuant to Section 7.01 and shall apply the
deposited money and the money from such direct obligations in
accordance with this Trust Agreement only to the payment of the
Principal Components, premium, if any, and Interest Components with
respect to the Certificates for which the deposit has been made.
ARTICLE VIII
AMENDMENTS
SECTION 8.01. Mailing. Any provision in this Article
VIII for the mailing of a notice or other paper to Owners shall be
fully complied with if it is mailed postage prepaid only to each
Owner of Certificates then Outstanding at his or her address
appearing upon the registration books of.the Trustee.
SECTION 8.02. Powers of Amendment. This Trust Agreement
and the rights and obligations provided hereby may be modified or
amended at any time by a Supplemental Trust Agreement, entered into
among the Corporation, the City and the Trustee without the consent
of any Owners but only (1) to cure any ambiguity, supply any
omission, or cure or correct any defect or inconsistent provision
in this Trust Agreement, (2) to insert such provisions clarifying
matters or questions arising under this Trust Agreement as are
R:\TRSTAGR6.D0C - 3 6
necessary or desirable and are not contrary to or inconsistent with
this Trust Agreement as theretofore in effect, (3) if, in the
opinion of Counsel, such amendment or modification does not
materially adversely affect the rights of the Owners of the
Certificates or (4) to provide for the preparation and execution by
the Trustee of additional Certificates permitted by Section 8.06
hereof.
Any other modification or amendment of this Trust
Agreement and of the rights and obligations of the City and of the
Owners of the Certificates hereunder, in any particular, may be
made by a Supplemental Trust Agreement, entered into among the
Trustee, the Corporation and the City and with the written consent,
given as provided in Section 8.03 hereof, of the Owners of
Outstanding Certificates representing at least a majority of the
aggregate unpaid Principal Component at the time such consent is
given; provided, however, that if any such modification or
amendment will, by its terms, not take effect so long as any
Certificates of any specified maturity remain Outstanding, the
consent of the Owners of such Certificates shall not be required
and such Certificates shall not be deemed to be Outstanding for the
purpose of any calculation of Outstanding Certificates under this
Section 8.02. No such modification or amendment shall permit a
change in the terms of prepayment or maturity of the Principal
Component represented by any Outstanding Certificates or of any
Interest Component represented thereby or a reduction in the
Principal Component or the Prepayment Price represented thereby or
in the rate of interest represented thereby without the consent of
the Owner of such Certificate, or shall reduce the percentages or
otherwise affect the classes of Certificates the consent of the
Owners of which is required to effect any such modification or
amendment, or shall change or modify any of the rights or
obligations of the Trustee without its written assent thereto.
Such amendment shall not be effective unless and until there shall
have been filed with the Trustee an opinion of Counsel stating that
such Supplemental Trust Agreement has been duly and lawfully
entered into by the parties thereto and filed with the Corporation,
the City and the Trustee in accordance with the provisions of this
Trust Agreement, is authorized or permitted by this Trust
Agreement, and is valid and binding upon the parties thereto in
accordance with its terms. Notice of any modification or amendment
of this Trust Agreement, together with a copy of such modification
or amendment, shall be given by first class mail to each Rating
Agency having a rating in effect for the Certificates.
SECTION 8.03. Consent of Owners. Whenever a modification
or amendment requires the consent of the Owners, then the Trustee,
the Corporation and the City may at any time enter into a
Supplemental Trust Agreement making a modification or amendment
permitted by the provisions of Section 8.02 hereof to take effect
when and as provided in this Section 8.03. A copy of such
Supplemental Trust Agreement (or brief summary thereof or reference
B:\TRSTAGR6.D0C 37
thereto in form approved by the Trustee), together with a request
to Owners for their consent thereto in form satisfactory to the
Trustee and the City, shall be mailed by the Trustee to the owners
(but failure to mail such copy and request shall not affect the
validity of the Supplemental Trust Agreement when consented to as
in this Section 8.03 provided). Such Supplemental Trust Agreement
shall not be effective unless and until (a) there shall have been
filed with the Trustee (i) the written consents of Owners of the
percentages of Outstanding Certificates specified in Section 8.02
hereof and (ii) an opinion of Counsel stating that such
Supplemental Trust Agreement has been duly and lawfully entered
into by the parties thereto and filed with the Corporation, the
City and the Trustee in accordance with the provisions of this
Trust Agreement, is authorized or permitted by this Trust
Agreement, and is valid and binding upon the parties thereto in
accordance with its terms. Each such consent shall be effective
only if accompanied by proof of the Owner, at the date of such
consent, of the Certificates with respect to which such consent is
given, which proof shall be such as is permitted by Section 11.02
hereof. ---A certificate or certificates executed by the Trustee and
filed with the Corporation and the City stating that it has
examined such proof and that such proof is sufficient in accordance
with Section 11.02 hereof shall be conclusive that the consents
have been given by the Owners of the Certificates described in such
certificate or certificates of the Trustee. Any such consent shall
be binding upon the Owner of the Certificates giving such consent
and, anything in Section 11.02 hereof to the contrary
notwithstanding, upon any subsequent Owner of such Certificates and
of any Certificates issued in exchange therefor (whether or not
such subsequent Owner thereof has notice thereof). At any time
after the Owners of the required percentages of Certificates shall
have filed their consents to the Supplemental Trust Agreement,. the
Trustee shall make and file with the Corporation and the City a
written statement that the owners of such required percentages of
Certificates have filed such consents. Such written statements
shall be conclusive that such consents have been so filed. At any
time thereafter, a - notice stating in substance that the
Supplemental Trust Agreement (which may be referred to as a
Supplemental Trust Agreement entered into by the parties thereto on
a stated date, a copy of which is on file with the Trustee) has
been consented to by the owners of the required percentages of
Certificates and will be effective as provided in this Section
8.03, shall be given to Owners by the Trustee at the expense of the
City by mailing such notice to Owners (but failure to mail such
notice shall not prevent such Supplemental Trust Agreement from
becoming effective and binding as in this Section 8.03 provided).
The Trustee shall file with the Corporation and the City proof of
the mailing of such notice. A record, consisting of the
certificates or statements required or permitted by this Section
8.03 to be made by the Trustee, shall be proof of the matters
therein stated. Such Supplemental Trust Agreement making such
amendment or modification shall be deemed conclusively binding upon
B:\TRSTAGR6.DOC 3 8
the Corporation, the City and the Trustee and the Owners of all
Certificates at the expiration of forty (40) days after the filing
by the Trustee of the proof of the mailing of such last mentioned
notice, except in the event of a final decree of a court of
competent jurisdiction setting aside such Supplemental Trust
Agreement in a legal action or equitable proceeding for such
purpose commenced within such forty (40) day period; provided,
however, that the Trustee, the Corporation and the City during such
forty (40) day period and any such further period during which any
such action or proceeding may be pending shall be entitled in their
absolute discretion to take such action, or to refrain from taking
such action, with respect to such Supplemental Trust Agreement as
they may deem expedient.
SECTION 8.04. Exclusion of Certificates. Certificates
owned or held by or for the account of the City or the Corporation
shall not be deemed Outstanding for the purpose of consent or other
action or any calculation of Outstanding Certificates provided for
in this Article VIII, and the City and the Corporation shall not be
entitled with respect to such Certificates to give any consent or
take any other action provided for in this Article VIII. At the
time of any consent or other action taken under this Article VIII,
the City shall furnish the Trustee a certificate of an Authorized
City Representative and an Authorized Corporation Representative,
upon which the Trustee may rely, describing all Certificates so to
be excluded.
SECTION 8.05. Notation on Certificates. Certificates
executed and delivered after the effective date of any action taken
as in this Article VIII provided may, and if the Trustee so
determines shall, bear a notation by endorsement or otherwise in
form approved by the City and the Trustee as to such action, and in
that case upon demand of the Owner of any Certificate Outstanding
at such effective date and presentation of his or her Certificate
for the purpose at the Corporate Trust Office of the Trustee or
upon any transfer or exchange of any Certificate Outstanding at
such effective date, -suitable notation shall be made on such
Certificate or upon any Certificates executed and delivered upon
any such transfer or exchange by the Trustee as to any such action.
If the City shall so determine, new Certificates so modified as in
the opinion of the City to conform to such action shall be prepared
by the City and executed and delivered by the Trustee, and upon
demand of the Owner of any Certificate then Outstanding shall be
exchanged, without cost to such Owner, for Certificates of the same
maturity and principal amount then Outstanding, upon surrender of
such Certificates.
SECTION 8.06. Additional Certificates. Subsequent to the
execution and delivery by the Trustee of the 1993 Certificates, the
Trustee shall, upon written request or requests of an Authorized
City Representative and of an Authorized Corporation
Representative, execute and deliver from time to time one or more
8:\TRSTAGR6.DOC 3 9
Series of additional Certificates representing such aggregate
Principal Components as may be set forth in such written request or
requests, provided that the City shall have delivered to the
Trustee a certificate of an Authorized City Representative
certifying as to the compliance by the City with all of the
conditions set forth in Section 6.6 of the Installment Purchase
Agreement which are hereby made conditions precedent to the
preparation, execution and delivery of such additional Certificates
and compliance with each of the following conditions:
(a) The parties to this Trust Agreement shall have
executed a Supplemental Trust Agreement setting forth the terms and
provisions of such additional Certificates, including the
establishment of such funds and accounts, separate and apart from
the funds and accounts established hereunder for the 1993
Certificates, as shall be necessary or appropriate;
(b) The Principal Components and Interest Components with
respect to such additional Certificates and any premium payable
upon prepayment of- such additional Certificates shall be payable
only on Purchase Payment Dates applicable to the 1993 Certificates;
(c) The Installment Purchase Agreement shall have been
amended by the parties thereto if necessary to (i) increase or
_. adjust the Purchase Payments due and payable on each Purchase
Payment Date to an amount sufficient to pay the Principal
Components, premium (if any) and Interest Components payable with
respect to all Outstanding Certificates, including all additional
Certificates as and when such Principal Components and Interest
Components mature or become due and payable (except to the extent
such Principal Components, premium (if any) and Interest Components
may be payable out of moneys then in the Reserve Account or
otherwise on deposit with the Trustee in accordance with this Trust
Agreement), (ii) amend the definition of "Project", if necessary,
to include as part of the Project all additions, betterments,
extensions, improvements or replacements, or such other real or
personal property (whether or not located upon the Project as such
Project is constituted as of the date of this Trust Agreement), to
be financed, acquired or constructed by the preparation, execution
and delivery of such additional Certificates, and (iii) make such
other revisions to the Installment Purchase Agreement as are
necessitated by the execution and delivery _of such additional
Certificates (provided, however, that such other revisions shall
not prejudice the rights of the Owners of Outstanding Certificates
to payments under the terms of this Trust Agreement);
(d) There shall have been delivered to the Trustee a
counterpart of the amendments required by Section 8.06(c);
(e) The Trustee shall have received a certificate of an
Authorized Corporation Representative that there exists on the part
of the Corporation no Event of Default;
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(f) The Trustee shall have received a certificate of an
Authorized City Representative that there exists on the part of the
City no Event of Default;
(g) The Trustee shall have received an opinion of special
Counsel stating to the effect that (i) said Supplemental Trust
Agreement and said amendments to the Installment Purchase Agreement
comply in all respects with the requirements of this Section 8.06,
(ii) said Supplemental Trust Agreement and said amendments to the
Installment Purchase Agreement have been duly authorized, executed
and delivered by each of the respective parties thereto (provided
that said opinion of Counsel, in rendering the opinions set forth
in this clause (ii), shall be entitled to rely upon one or more
other opinions of Counsel, including counsel to any of the
respective parties to said Supplemental Trust Agreement or said
Installment Purchase Agreement), (iii) assuming that no Event of
Default has occurred and is continuing, this Trust Agreement, as
amended by said Supplemental Trust Agreement, and the Installment
Purchase Agreement, as amended by the respective amendments
thereto, constitute the legal, valid and binding obligations of the
respective parties thereto, enforceable against said parties in
accordance with their respective terms (except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, debt adjustment or other laws affecting creditors'
rights generally, and except to the extent that enforcement thereof
may be limited by general principles of equity, regardless of
whether enforcement is sought in a legal or equitable proceeding)
and (iv) the execution of such Supplemental Trust Agreement and
said amendments to the Installment Purchase Agreement, and
performance by the parties thereunder, does not adversely affect
the exclusion from gross income for Federal income tax purposes or
the exemption under State law of the Interest Components with
respect to any Certificates, including additional Certificates,
theretofore prepared, executed and delivered; and
(h) Such other conditions shall have been satisfied, and
such other instruments shall have been duly executed and delivered
to the Trustee, as the Trustee, the City or the Corporation shall
have reasonably requested.
Upon delivery to the Trustee of the foregoing
instruments, the Trustee shall cause to be executed and delivered
additional Certificates representing the aggregate Principal
Components specified in such Supplemental Trust Agreement, and such
additional Certificates shall be equally and ratably secured with
all Certificates, including any additional Certificates,
theretofore prepared, executed and delivered, all without
preference, priority or distinction (other than with respect to
maturity, payment, prepayment or sinking fund payments (if any)) of
any one Certificate, including additional Certificates, over any
other; provided, however, that no provision of this Trust Agreement
shall require the City to consent to or otherwise permit the
8:\TRSTAGR6.DW 4 1
preparation, execution and delivery of additional Certificates, it
being understood and agreed that any such consent or other action
of the City to permit the preparation, execution and delivery of
additional Certificates, or lack thereof, shall be in the sole
discretion of the City.
ARTICLE IS
COVENANTS
SECTION 9.01. Power to Enter into Trust Agreement,
Installment Purchase Agreement and Assignment Agreement. The
Corporation and the City each covenant that each will observe and
faithfully perform at all times all of its covenants, undertakings
and agreements contained in this Trust Agreement and the
Installment Purchase Agreement. The Corporation and the City each
represent and covenant that each is duly authorized to enter into
this Trust Agreement and the Installment Purchase Agreement and the
Corporation represents and covenants that it is duly authorized to
enter into the Assignment Agreement; that all action on the part of
each for the delivery, of Certificates and the execution and
delivery of this Trust Agreement has been duly and effectively
taken.
SECTION 9.02. Valid and Binding Obligations. The
obligation of the City to make Purchase Payments under and pursuant
to the Installment Purchase Agreement and the provisions of this
Trust Agreement shall be legal, valid and binding obligations of
the City. The Corporation shall at all times, to the extent
permitted by law, defend, preserve and protect said obligations and
assignment of all its interest in the Installment Purchase
Agreement, and all the rights of the Owners under this Trust
Agreement against all claims and demands made thereon.
SECTION 9.03. Extension of Payment. Neither the
Corporation, the City nor the Trustee shall directly or indirectly
extend or assent to the extension of the payment dates of any of
the Purchase Payments or the maturity of the Certificates
representing an interest therein, or the time of payment of any
claims for interest by the Owners of Certificates.
SECTION 9.04. Encumbrances. The Corporation and the City
each covenant that each will not create or suffer to be created any
lien; encumbrance or charge upon the Project or any improvements
thereto except as permitted herein and in the Installment Purchase
Agreement.
SECTION 9.05. Tax Covenants. (a) The Corporation and the
City each covenant that, in order to maintain the exclusion from
gross income for federal income tax purposes of the Interest
B'\TRSTAGR6.DDC 4 2
Components of the Purchase Payments, and for no other purpose, each
will satisfy, or take such actions as may be necessary to cause to
be satisfied, each provision of the Code necessary to maintain such
exclusion. In furtherance of this covenant, the Corporation and
the City each covenant to comply with the Tax Certificate as a
source of guidance with the requirements of the Code.
(b) The Corporation and the City each covenant that no
part of the proceeds of the Certificates shall be used, directly or
indirectly, to acquire any "investment property", as defined in
Section 148 of the Code, and it shall not take or permit to be
taken any other action or actions, which would cause the obligation
represented by the Installment Purchase Agreement to be an
"arbitrage bond" within the meaning of Section 148 of the Code, as
in effect from time to time, or under applicable Treasury
regulations promulgated thereunder. In order to assure compliance
with the rebate requirements of Section 148 of the Code, the
Corporation and the City each further covenant that it will pay or
cause to be paid to the United States Treasury Department the
amounts necessary to satisfy the requirements of Section 148(f) of
the Code, as required in the Tax Certificate, and that it will
establish such accounting procedures as are necessary to adequately
determine, account for and pay over any such amount or amounts
required to be paid to the United States in a manner consistent
with the requirements of Section 148 of the Code, such covenant to
survive the termination of this Trust Agreement pursuant to Section
7.01 hereof.
(c) The Corporation and the City each covenant that it
will not take any action or omit to take any action, which action
or omission, if reasonably expected on the date of initial
execution and delivery of the Certificates, would result in a loss
of exclusion from gross income for purposes of federal income
taxation, under Section 103(a) of the Code, of Interest Components
paid by the City and received by the Owners of the Certificates.
(d) The Corporation and the City each covenant that it
will not use or permit the use of the Project by any person (other
than the City or other state or local governmental unit) in such
manner or to such extent as would result in a loss of exclusion of
the Interest Components of Purchase Payments from gross income for
Federal income tax purposes under Section 103(a) of the Code.
(e) Notwithstanding any provision of this Trust
Agreement, and except as provided below, the Corporation and the
City each covenant that none of the moneys contained in any of the
funds or accounts created pursuant to this Trust Agreement shall
be: (i) used in making loans guaranteed by the United States (or
any agency or instrumentality thereof), (ii) invested directly or
indirectly in a deposit or account insured by the Federal Deposit
Insurance Corporation, National Credit Union Administration or any
other similar Federally chartered corporation, or (iii) otherwise
B:\TRSTAGR6.DOC 43
- invested directly or indirectly in obligations guaranteed (in whole
or in part) by the United States (or any agency or instrumentality
thereof); provided, however, that the above restrictions do not
apply to: (i) the investment of moneys held in the Purchase
Payment Account or any other "bona fide debt service fund" as
defined in the Tax Certificate, and in the Reserve Account, (ii) to
investments in direct obligations of the United States Treasury,
(iii) to investments in obligations guaranteed by the Federal
National Mortgage Association, Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation, (iv) to
investments permitted under regulations issued pursuant to Section
149 (b)(3)(B) of the Code, or (v) to such other investments as, in
the opinion of Special Counsel, are investments permitted under
this Trust Agreement which do not jeopardize the exclusion from
gross income for Federal. income tax purposes of the Interest
Components with respect to the Certificates.
SECTION 9.06. Account Records and Statements. The
Trustee shall at all times keep proper accounting records and
statements in which complete and correct entries shall be made of
all transactions relating to the receipt, deposit and disbursement
of the proceeds of the Certificates, the Purchase Payments, and all
funds and accounts established pursuant to this Trust Agreement.
Such accounting records shall be available for inspection by the
_ Corporation, the City and any Owner of Outstanding Certificates
representing at least twenty-five percent (25%) of the aggregate
unpaid Principal Component or his or her agent duly authorized in
writing at reasonable hours and under reasonable conditions. Not
later than the 15th day of each month commencing on May 15, 1993
and continuing so long as any Certificates remain Outstanding, the
Trustee will furnish to the City and any Owner of Outstanding
Certificates representing at least twenty-five percent (25%) of the
aggregate unpaid Principal Component who may so request (at the
expense of such Owner) a complete statement covering the receipts,
deposits and disbursements of the proceeds of the Certificates, the
Purchase Payments, and all funds and accounts established pursuant
to this Trust Agreement -for the preceding month.
SECTION 9.07. Recording and Filing. The City shall file,
re¢e6Zdregister, renew, refile and all documents as may be
required by law in order to maintain the Installment Purchase
Agreement and this Trust Agreement, in such manner, at such times
and in such places as required and to the extent permitted by law
in order to fully perfect, preserve and protect the rights and
interests of the Owners.
SECTION 9.08. Amendment of Installment Purchase
Agreement. The Corporation shall not consent to the amendment,
alteration or modification, in whole or in part, of the Installment
Purchase Agreement except (a) to the extent such amendment,
alteration or modification shall cure an ambiguity, supply an
omission, or cure or correct a defect or inconsistent provision
B ATRSTAGR6.DDC 44
therein, (b) to the extent such amendment, alteration or
modification shall insert such provisions clarifying matters or
questions arising thereunder as are necessary or desirable and are
not contrary to or inconsistent with the Trust Agreement, (c) if,
in the opinion of Counsel, such amendment, alteration or
modification does not materially adversely affect the rights of the
Owners of the Certificates, (d) as may be necessary in connection
with the issuance of additional Certificates pursuant to the
provisions of this Trust Agreement, or (e) with the written consent
of the Owners of a majority in aggregate Principal Component of the
Certificates then outstanding, exclusive of Certificates owned by
the Corporation or the City. Any such written consent shall be
obtained in the manner provided in Article VIII hereof for
amendments to the Trust Agreement. No such amendment, alteration
or modification shall be effective unless and until there shall
have been filed with the Trustee an opinion of Counsel stating that
such amendment, alteration or modification has been duly and
lawfully entered into by the parties thereto, is authorized or
permitted by this Trust Agreement and is valid and binding upon the
parties thereto in accordance with its terms. For purposes of this
Trust Agreement, no change or revision of Exhibit A made pursuant
to Section 4.1(a) of the Installment Purchase Agreement shall
constitute an amendment, alteration or modification of the
Installment Purchase Agreement.
SECTION 9.09. Enforcement. The Trustee shall promptly
collect all amounts due pursuant to the Installment Purchase
Agreement subject at all times to Article VI hereof, and upon
default hereunder, shall enforce, take all steps, actions and
proceedings reasonably necessary to protect and preserve all rights
and interests of the Trustee and the Owners under the Installment
Purchase Agreement and this Trust Agreement as provided in Article
X.
SECTION 9.10. Further Assurances. The Corporation and
the City each covenant that each shall promptly execute and deliver
or cause to be executed and delivered all other and further
assurances, documents or instruments and promptly do or cause to be
done all such other and further things as may be necessary or
reasonably required in order to carry out the purposes and
intentions of this Trust Agreement and for preserving and
protecting the rights and interests of the Owners.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default. The existence of an
Event of Default under the Installment Purchase Agreement is hereby
declared an Event of Default under this Trust Agreement.
SECTION 10.02. Institution of Legal Proceedings by
Trustee. If an Event of Default shall happen and be continuing,
8:\TRSTAGR6.D0C 4 5
r the Trustee in its discretion may, and upon the written request of
the owners of outstanding Certificates representing not less than
twenty-five percent (25%) of the aggregate unpaid Principal
Component, and upon being indemnified to its satisfaction therefor,
shall, proceed to protect or enforce its rights or the rights of
the owners of Certificates under this Trust Agreement by a suit in
equity or action at law, either for the specific performance of any
covenant or agreement contained herein or in the Installment
Purchase Agreement, or in aid of the execution of any power herein
granted, or for the enforcement of any other appropriate legal or
equitable remedy as the Trustee shall deem most effectual in
support of any of its rights or duties hereunder.
SECTION 10.03. Distribution of Proceeds of Remedies. All
moneys received by the Trustee pursuant to remedies taken under
this Trust Agreement or held in any fund or account established by
this Trust Agreement are to be applied, after the payment of all
fees and expenses of the Trustee, as follows, in the following
order:
First: To the payment to the persons entitled thereto of
all Interest Components then due in the order of the due date
thereof, and, if the amount available shall not be sufficient to
pay in full any Interest Component maturing on the same date, then
to the payment thereof ratably, according to the amounts due
thereon, to the persons entitled thereto;
Second: To the payment to the persons entitled thereto
of the unpaid Principal Component with respect to any Certificates
which shall have become due, whether at maturity or by call for
prepayment, in the order of their due dates, with interest on the
overdue Principal Component at the rate borne by the respective
Certificates, and, if the amount available shall not be sufficient
to pay in full all the Certificates due on any date, then to the
payment thereof ratably, according to the amounts of Principal
Component due on such date to the persons entitled thereto, without
any discrimination or preference; and
Third: If there shall exist any remainder after the
foregoing payments, such remainder shall be paid to the City.
SECTION 10.04. suit By Owners. No Owner has any right,
remedy or power to institute any suit, action or proceeding for the
enforcement of this Trust Agreement, the Installment Purchase
Agreement or the Certificates, for the execution of any trust, or
exercise of any other right, remedy or power under such agreements
or instruments, unless (a) there has occurred and is continuing an
Event of Default of which the Trustee has been notified; (b) the
Owners of Outstanding Certificates representing at least
twenty-five percent (25%) of the aggregate unpaid Principal
Component shall have made a written request to the Trustee and
shall have afforded the Trustee a reasonable opportunity to proceed
8:\TRSTAGR6.DDC 46
to exercise the rights, remedies and powers or to institute the
suit, action or proceeding in its own name, and shall have offered
indemnification to the Trustee as provided in this Trust Agreement;
and (c) the Trustee shall have failed or refused thereafter to
exercise the rights, remedies and powers or to institute the suit,
action or proceeding in its own name.
SECTION 10.05. Effect of Delay or Omission to Pursue
Remedy. No delay or omission of the Trustee or of any Owner to
exercise any right or power arising from any Event of Default shall
impair any such right or power or shall be construed to be a waiver
of any such Event of Default or acquiescence therein; and every
power and remedy given by this Article X to the Trustee or to the
Owners may be exercised from time to time, and as often as shall be
deemed expedient. In case the Trustee shall have proceeded to
enforce any right under this Trust Agreement and such proceedings
shall have been discontinued or abandoned because of waiver or for
any other reasons, or shall have been determined adversely to the
Trustee, then and in every such case the Trustee and the Owners,
severally and respectively, shall be restored to their former
positions and rights hereunder; and all remedies, rights and powers
of the Trustee and the Owners shall continue as though no such
proceedings had been taken.
SECTION 10.06. Remedies Cumulative. No remedy herein
conferred upon or reserved to the Trustee or to any Owner is
intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing in law or
in equity or by statute or otherwise; and the exercise by the
Trustee or by any Owner or any remedy hereunder shall not limit or
impair the exercise of any other remedy given hereunder.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Payment of Purchase Payments; Unclaimed
Moneys. (a) If and when the Principal Components and Interest
Components with respect to the Certificates delivered pursuant
hereto shall become due and payable in accordance with their terms,
or shall become subject to prepayment and have been called for
prepayment in accordance with Section 4.01 hereof, all amounts
payable to the Trustee and the Paying Agent have been paid and the
whole amount of the Principal Component and Interest Component due
and payable with respect to all of the Certificates shall have been
paid or set aside for payment with the Trustee or a Paying Agent,
then and in that case, the right, title and interest of the Trustee
under this Trust Agreement shall thereupon cease, terminate and
become void, and the Trustee shall convey all property, other than
money held by the Trustee or Paying Agent for the payment of
unpresented Certificates, and interest therein which it obtained
B:\TRSTAGR6.D0C 47
under this Trust Agreement free and clear of all liens thereon
which the Trustee may have.
(b) Anything in this Trust Agreement to the contrary
notwithstanding, any moneys held by the Trustee in trust for the
payment and discharge of the Principal Component, Prepayment Price,
if applicable, and Interest Component with respect to any of the
Certificates which remain unclaimed for one (1) year after the date
when the payment shall have become due and payable, shall, at the
Written Request of the City be repaid by the Trustee to the City,
as its absolute property and free from trust, and the Trustee shall
thereupon be released and discharged with respect thereto and the
Owners shall look only to the City for the payment of such
Certificates; provided, however, that before making any such
payment to the City, the Trustee shall, at the expense of the City,
cause to be published at least twice, at an interval of not less
than seven (7) days between publication, in an Authorized
Newspaper, a notice that said moneys remain unclaimed and that,
after a date named in said notice, which date shall not be less
than thirty (30) days after the date of the first publication of
such notice, the balance of such moneys then unclaimed will be
returned to the City.
SECTION 11.02. Evidence of Signatures of Owners and
Ownership of Certificates. (a) Any request, consent, revocation of
consent or other instrument which this Trust Agreement may require
or permit to be signed and executed by the Owners may be in one or
more instruments of similar tenor, and shall be signed or executed
by such Owners in person or by their attorneys appointed in
writing. Proof of the execution of any such instrument, or of an
instrument appointing any such attorney shall be sufficient for any
purpose of this Trust Agreement (except as otherwise therein
expressly provided) if made in the following manner, or in any
other manner satisfactory to the Trustee, which may nevertheless in
its discretion require further or other proof in cases where it
deems the same desirable: the fact and date of the execution by
any Owner or his or her attorney of such instruments may be proved
by a guarantee of the signature thereon by a bank or trust company
or by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds, that the person
signing such request or other instrument acknowledged to him or her
the execution thereof, or by an affidavit of a witness of such
execution, duly sworn to before such notary public or other
officer. Where such execution is by an officer of a corporation or
association or a member of a partnership, on behalf of such
corporation, association or partnership, such signature guarantee,
certificate or affidavit shall also constitute sufficient proof of
his or her authority.
(b) The ownership of Certificates and the amount, numbers
and other identification, and date of holding the same shall be
proved by the registration books.
B:\TRSTAGR6.D0C 4 8
(C) Any request or consent by the owner of any
Certificate shall bind all future Owners of such Certificate in
respect of anything done or suffered to be done by the Corporation,
the City or the Trustee in accordance therewith.
SECTION 11.03. Moneys Held for Particular Certificates.
The amounts held by the Trustee for the payment of the Interest
Component, Principal Component or premium, if any, due on any date
with respect to particular Certificates shall, on and after such
date and pending such payment, be set aside on its books, held in
trust by it for the Owners of the Certificates entitled thereto,
and shall not be invested by the Trustee and the Trustee shall not
be held liable for interest thereon.
SECTION 11.04. Publication of Notice, Suspension of
Publication. (a) Any publication to be made under the provisions
of this. Trust Agreement in successive weeks or on successive dates
may be made in each instance upon any Business Day of the week and
need not be made in the same Authorized Newspaper for any or all of
the successive publications but may be made in different Authorized
Newspapers.
(b) If, because of the temporary or permanent suspension
of the publication or general circulation of one or more Authorized
Newspapers, or for any other reason, it is impossible or
impractical to publish any notice pursuant to this Trust Agreement
in the manner herein provided, then such publication in lieu
thereof as shall be made with the approval of the City shall
constitute a sufficient publication of such notice.
SECTION 11.05. Severability of Invalid Provisions. If
any one or more of the covenants or agreements provided in this
Trust Agreement on the part of the City or the Corporation to be
performed should be contrary to law, then such covenant or
covenants or agreement or agreements shall be deemed severable from
the remaining covenants and agreements, and shall in no way affect
the validity of the other provisions of this Trust Agreement.
SECTION 11.06. Notices. Except as expressly set forth
herein, all notices, certificates, requests or other communications
(other than payments by the City) hereunder shall be in writing and
shall be sufficiently given and shall be deemed given when
delivered or mailed by first class mail, postage prepaid, to the
parties at their respective places of business. All notices or
other communications required by the provisions hereof required to
be given by telephone, telex or other high-speed means of
communication shall be given to the numbers indicated below.
8:\TRSTAGR6.DDC 49
With respect to the City, notices shall be directed to:
Treasurer
City of Tustin
15222 Del Amo Avenue
Tustin, California 92680
With respect to the Corporation, notices shall be
directed to:
City of Tustin
15222 Del Amo Avenue
Tustin, California 92680
Attn: Secretary, City of Tustin Water Corporation
With respect to the Trustee, notices shall be directed
to:
Sank of America National Trust and
Savings Association
Corporate Trust Document Review #H23-80
333 South Hope Street
23rd Floor
Los Angeles, California 90071
Any such notice, certificate, request or other
communication given to the Corporation shall specify whether the
same shall be retained by the Corporation and the length of time of
such retention.
Any of the foregoing persons may, by notice given under
this Section 11.06, designate any further or different addresses,
telephone numbers or telex numbers to which subsequent notices,
certificates, requests or other communications shall be directed.
SECTION 11.07. California Law. This Trust Agreement
shall be construed and governed in accordance with the laws of the
State of California.
SECTION 11.08. Binding on Successors. This Trust
Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
SECTION 11.09. Headings. Headings preceding the text of
the several Articles and Sections hereof, and the table of
contents, are solely for convenience of reference and shall not
constitute a part of this Trust Agreement or affect its meaning,
construction or effect.
SECTION 11.10. Execution in Counterparts. This Trust
Agreement may be executed in several counterparts, each of which
BATRSTAGR&DOC 50
shall be deemed an original, and all of which shall constitute but
one and the same instrument.
SECTION 11.11. Consent
or approval of any party to this
terms of this Trust Agreement,
party shall not be unreasonably
of Parties. Whenever the consent
Trust Agreement is required by the
the consent or approval of such
withheld.
ARTICLE %II
CERTIFICATE FORM
SECTION 12.01. Certificate Form. The 1993 Certificates
to be issued under this Trust Agreement, the form of assignment and
the provisions for registration are to be in substantially the
following form, respectively, with necessary and appropriate
variations, omissions and insertions as permitted or required by
this Trust Agreement:
B:\TRSTACR6.DOC 51
NO.
WATER SYSTEM
INTEREST RATE:
REGISTERED OWNER:
PRINCIPAL
CITY OF TUSTIN
REVENUE CERTIFICATE
1993 SERIES
MATURITY DATE -
OF PARTICIPATION
CDB
THIS IS TO CERTIFY that the registered owner (the
"Owner") named above, or registered assigns, of this Certificate of
Participation, one of an issue of the City of Tustin, Water System
Revenue Certificates of Participation, 1993 Series (the 111993
Certificates") -in an aggregate initial amount of $11,500,000, is
the Owner of a direct and proportionate interest in the right to
receive certain Purchase Payments (the "Purchase Payments") to be
made by the City of Tustin (the "City") pursuant to an Installment
Purchase Agreement dated as of April 1, 1993 (the "Installment
Purchase Agreement") between the City and the City of Tustin Water
Corporation (the "Corporation").
The Owner of this 1993 Certificate is entitled to
receive, subject to the terms of the Installment Purchase Agreement
and any rights of prepayment as set forth in the Trust Agreement
dated as of April 1, 1993 (the "Trust Agreement") among the
Corporation, the City and Bank of America National Trust and
Savings Association, as Trustee (the "Trustee") (i) upon surrender
of this 1993 Certificate to the Trustee on the maturity date
specified above or on the Prepayment Date, the principal component
specified above, representing the Owner's proportionate share of
the Purchase Payments designated and paid as principal (the
"Principal Component"), due and payable on the maturity date
specified above or on such Prepayment Date, and (ii) on each April
1 and October 1, commencing October 1, 1993, as set forth herein,
the interest component, representing the Owner's proportionate
share of each Purchase Payment designated and paid as interest due
and payable (the "Interest Component") to and including the date of
maturity or prepayment. Interest with respect to this 1993
Certificate will accrue from the April 1 or October 1 next
preceding the date of execution thereof unless (i) it is executed
on an April 1 or October 1, in which event interest will accrue
from the date of execution hereof; (ii) it is executed on or prior
to October 1, 1993, in which event interest will accrue from April
1, 1993, or (iii) it is executed after a Record Date and prior to
the next succeeding Interest Component Payment Date, in which case
9:\TRSTAGR6.DOC 52
interest will accrue from the next succeeding Interest Component
Payment Date; provided, however, that if, at the time of execution
of this 1993 Certificate, interest is in default on Outstanding
1993 Certificates, the Trustee will establish a special record date
for the payment of any interest in default under the Trust
Agreement, and interest with respect to such 1993 Certificate will
accrue from the date to which interest has previously been paid in
full or made available for payment on such Outstanding 1993
Certificates. The Interest Component will be payable by check or
draft mailed to the Owner of this 1993 Certificate at the address
shown on the registration records maintained by the Trustee as of
the Record Date. The Principal Component and prepayment premiums,
if any, due with respect to this 1993 Certificate shall be payable
by check or draft upon surrender thereof at the Corporate Trust
Office of the Trustee. All capitalized undefined terms used herein
which are defined in the Trust Agreement and the Installment
Purchase Agreement shall have the meanings specified in the Trust
Agreement and the Installment Purchase Agreement.
REFERENCE IS HEREBY MADE TO THE FURTHER
THIS 1993 CERTIFICATE SET FORTH ON THE REMAINING
WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
EFFECT AS IF SET FORTH HERE.
9:\TRSTAGR6.D0C 53
PROVISIONS OF
PAGES HEREOF,
HAVE THE SAME
IN WITNESS WHEREOF, this 1993 Certificate has been
executed by the manual signature of an authorized signatory of the
Trustee on the date set forth below.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
35
as Trustee
Dated: BY
Authorized Signatory
[Form of Back of 1993 Certificate]
This 1993 Certificate has been executed by the Trustee
pursuant to the terms of the Trust Agreement. Copies of the Trust
Agreement and the Installment Purchase Agreement are on file at the
Corporate Trust Office of the Trustee. Reference is made to the
Trust Agreement and the Installment Purchase Agreement and to any
and all amendments thereof and supplements thereto for a
description of the covenants securing the 1993 Certificates, for
the nature, extent and manner of enforcement of such covenants, for
the rights and remedies of the Owners of the 1993 Certificates with
respect thereto and for the other conditions and terms upon which
the 1993 Certificates are executed and delivered thereunder.
The 1993 Certificates, together with any additional
Certificates, are payable from Gross Revenues in the Qualified
Obligations Account and moneys held in certain funds and accounts
established pursuant to the Trust Agreement, subject to the
provisions of the Trust Agreement and the Installment Purchase
Agreement permitting the disbursement thereof for or to the
purposes and on the conditions and terms set forth therein. The
Purchase Payments and all other payments with respect to Qualified
Obligations shall be secured by a pledge, charge and lien upon the
Gross Revenues in the Qualified Obligations Account and shall be
paid from Gross Revenues in the Qualified Obligations Account
unless otherwise paid from other sources of legally available
funds. Purchase Payments and all other payments with respect to
Qualified Obligations shall be equally secured by the Gross
Revenues in the Qualified Obligations Account without priority for
number or date. The Gross Revenues in the Qualified Obligations
Account shall be held in trust by the Treasurer of the City for the
benefit of the Owners of the 1993 Certificates and any other
Qualified Obligations. The obligation of the City to make the
Purchase Payments and to pay Additional Purchase Payments is
absolute and unconditional, payable without any rights of set-off,
recoupment, abatement or counterclaim the City might have against
0:\TRSTAGR6.DOC 54
the Corporation, the Trustee or any other party or parties, except
that (i) the City will be obligated to make Purchase Payments and
to pay Additional Purchase Payments solely from the Gross Revenues
in the Qualified Obligations Account, and (ii) the obligation of
the City to make Purchase Payments and to pay Additional Purchase
Payments will not in any way be construed to be a debt of the City,
or the State of California, or any political subdivision thereof,
in contravention of any applicable constitutional or statutory
limitation or requirement concerning the creation of indebtedness
by the City, the State of California, or any political subdivision
thereof, nor will anything contained in the Installment Purchase
Agreement constitute a pledge of general revenues, funds or monies
of the City or an obligation of the City for which the City is
obligated to levy or pledge any form of taxation or for which the
City has levied or pledged any form of taxation.
The 1993 Certificates are authorized to be executed and
delivered in the form of fully registered Certificates in the
denomination of $5,000 or any integral multiple thereof upon the
terms -and subject to the conditions set forth in the Trust
Agreement. Subject to the conditions and terms of the Trust
Agreement, upon payment of the charges, if any, provided in the
Trust Agreement, 1993 Certificates may be exchanged for fully
registered 1993 Certificates of the same aggregate Principal
Component, tenor and maturity but of other authorized denominations
at the Corporate Trust Office of the Trustee.
The Interest Component represented by this 1993
Certificate will accrue at the rate set forth under "Interest
Rate". The Interest Component will be computed on the basis of a
360 -day year of twelve 30 -day months.
Interest with respect to each 1993 Certificate will
accrue on any overdue principal at the same rate borne by the
particular 1993 Certificate.
The 1993 Certificates maturing on or after April 1, 2004
are subject to prepayment at the option of the City in whole at any
time or in part on any Interest Component Payment Date in integral
multiples of $5,000, on or after April 1, 2003, at the principal
amount thereof together with any applicable premium and the related
Interest Component due on the date fixed for such prepayment, from
any source of funds, upon notice as provided in the Trust
Agreement. The prepayment price (expressed as a percentage of the
total principal amount prepaid) upon such prepayment is set forth
below:
B:\TRSTAGR6.D0C 55
Period During Which Prepaid Prepayment
(both dates inclusive) Price
April
1,
2003
through March 31, 2004
102%
April
1,
2004
through March 31, 2005
101
April
1,
2005
and thereafter
100
In the case of prepayment of less than all Outstanding
1993 Certificates, the Trustee will select the 1993 Certificates
representing the Principal Components to be prepaid in such manner
as it shall determine is reasonable, in conformance with the
Installment Purchase Agreement.
When prepayment of 1993 Certificates is to be made, the
Trustee will give notice of the prepayment of such Certificates,
which notice will specify the date of such notice, the Prepayment
Price, the Prepayment Date, the place or places of prepayment, the
CUSIP number, if any, of the maturity or maturities and, if less
than all of such maturity, the distinctive certificate numbers of
the 1993 Certificates of such maturity -to be prepaid and, in the
case of 1993 Certificates to be prepaid in part only, such notice
will also specify the respective portions of the Principal
Component represented thereby to be prepaid. Such notice will
further state that on such date there will become due and payable
with respect to each 1993 Certificate to be prepaid the Prepayment
Price thereof, or the Prepayment Price of the specified portions of
the Principal Component thereof in the case of 1993 Certificates to
be prepaid in part only, and that from and after such Prepayment
Date, the related Interest Component due with respect thereto will
cease to accrue and will require that such 1993 Certificates be
then surrendered at the address or addresses of the Trustee
specified in the prepayment notice. As provided in the Trust
Agreement, notice of prepayment will be given by mail, first class
postage prepaid, not less than 30 nor more than 60 days prior to
the Prepayment Date, to the respective Owners of any 1993
Certificates representing Principal Components which are to be
prepaid, at their addresses appearing upon the registration books.
Failure by the Trustee to mail notice of prepayment as specified in
the Trust Agreement to any one or more of the respective Owners of
any 1993 Certificates designated for prepayment will affect the
sufficiency of the proceedings for prepayment only with respect to
the Owner or Owners to whom such notice was not mailed.
If notice of prepayment has been duly given as aforesaid
and funds for the payment of the Prepayment Price of the 1993
Certificates to be prepaid are held by the Trustee on the
designated Prepayment Date, then on the Prepayment Date designated
in such notice, the Prepayment Price of the 1993 Certificates so
called for prepayment will become payable as specified in such
notice; and from and after the date so designated Interest
Components due with respect to the Principal Components of the 1993
B:\TRSTAG1t6.D0C 56
Certificates or portions thereof so called for prepayment shall
cease to accrue, such Certificates shall cease to be entitled to
any benefit, protection or security under the Trust Agreement and
the Owners of such Certificates shall have no rights in respect
thereof except to receive payment of the Prepayment Price. If a
1993 Certificate is prepaid in part only, the Trustee will execute
and deliver, upon the surrender of such Certificate, a new 1993
Certificate or Certificates representing Principal Components equal
to the unprepaid Principal Component of the 1993 Certificate
surrendered of the same maturity.
Additional terms and conditions and procedures governing
prepayments are specified in the Trust Agreement.
Upon compliance with certain terms and conditions set
forth in the Trust Agreement, the Trustee may execute and deliver
additional Certificates payable from Gross Revenues in the
Qualified Obligations Account.
This 1993 Certificate is transferable only upon the books
of the Trustee kept for that purpose at the Corporate Trust Office
of the Trustee by the Owner in person or by the owners's attorney
duly authorized in writing, upon surrender hereof together with a
written instrument of transfer satisfactory to the Trustee duly
executed by the Owner or the Owner's duly authorized attorney.
Upon the transfer of any 1993 Certificate the Trustee will execute
and deliver in the name of the transferee a new 1993 Certificate or
Certificates of the same Principal Component, tenor and maturity as
the surrendered 1993 Certificate. The Trustee may deem and treat
the person in whose name any 1993 Certificate is registered upon
the books of the Trustee as the absolute Owner of such 1993
Certificate, whether such 1993 Certificate is overdue or not, for
the purpose of receiving payment of, or on account of, the
Principal Component and premium, if any, and Interest Component
with respect to such 1993 Certificate and for all other purposes,
and all such payments so made to any such Owner or upon such
Owner's order will be valid and effectual to satisfy and discharge
the liability upon such 1993'Certificate to the extent of the sum
or sums so paid, and the Trustee will not be affected by any notice
to the contrary. The Trustee will not be required to transfer or
exchange (i) any 1993 Certificate in the fifteen days prior to
selection of 1993 Certificates for prepayment (whether or not such
Certificate is thereafter selected for prepayment) and (ii) any
1993 Certificate selected for prepayment in whole or part.
To the extent and in the manner permitted by the terms of
the Trust Agreement, the provisions of the Trust Agreement may be
modified or amended by the parties thereto, but no such
modification or amendment will (1) permit a change in the terms of
prepayment or maturity of the Principal Component represented
hereby or of any Interest Component represented hereby or a
reduction in the amount of the Principal Component or the
B:\TRSTAGR6.DOC 57
Prepayment Price represented hereby or in the rate of interest
represented hereby, without the prior written consent of the Owner
hereof, or (2) reduce the percentage of Owners of 1993 Certificates
whose consent is required to effect any modification or amendment
of the Trust Agreement, or (3) modify any rights or obligations of
the Trustee without its prior written consent thereto.
The Trustee has no obligation or liability to the Owner
to make payments of Principal Components, Interest Components or
premium with respect to the 1993 Certificates, except from amounts
on deposit for such purposes with the Trustee. The Trustee's sole
obligations are to administer for the benefit of the Owners the
various funds and accounts established under the Trust Agreement
and, to the extent provided in the Trust Agreement, to enforce its
rights under the Installment Purchase Agreement.
6:\TRSTAGR6.DDC 58
For value received, the undersigned do(es) hereby sell,
assign and transfer untothe within 1993
Certificate and do(es) hereby irrevocably constitute and appoint
attorney to transfer such Certificate on the
register of the Trustee, with full power of substitution in the
premises.
Dated:
Note: The signature(s) of this
Assignment must correspond with
name(s) as written on the face of
the within Certificate in every
particular, without alteration or
enlargement or any change
whatsoever.
B:\TRSTAGR6.DDC 59
IN WITNESS WHEREOF, the parties have executed and
attested this Trust Agreement by their officers thereunto duly
authorized as of the date and year first written above.
ATTEST:
Secretary
[SEAL]
ATTEST:
City Clerk
CITY OF TUSTIN WATER CORPORATION
By:
President
THE CITY OF TUSTIN
By
Mayor
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:_
Title:
B:\TRSTAGR6.DOC 6 0
EXHIBIT A
DELIVERY DATE DEPOSITS TO ACCOUNTS
Aggregate Principal Component ................
Less: Original Issue Discount ...............
Less: Underwriter's Discount ................
Plus: Accrued Interest Received .............
Plus: Balance from 1983 Reserve
Account ...............................
Proceeds of 1993 Certificates
and 1983 Reserve Account ................
Less Delivery Date Deposits:
Deposit to Purchase Payment Account..........
Deposit to Reserve Account ...................
Deposit to Construction Account ..............
Deposit to Escrow Account ....................
Total Deposits ..........................
B:\7RSTMM6.DDC 61
INSTALLMENT PURCHASE AGREEMENT
BY AND BETWEEN
CITY OF TUSTIN WATER CORPORATION,
as Seller
and
THE CITY OF TUSTIN,
as Purchaser
Dated as of April 1, 1993
1993 Certificates
o:\IvAa.00c
SECTION 1.1.
SECTION 1.2.
SECTION 1.3.
Table of Contents
Page
ARTICLE I
DEFINITIONS AND EXHIBITS
Definitions . . . . . 2
Content of Statements and Opinions . . . 5
Exhibits . . . . . . . . . . . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Representations and Warranties of the
City .. . . 6
SECTION 2..2. Representations, Warranties and Covenant
of the Corporation . . . . . . . . . . . 8
ARTICLE III
PURCHASE AND SALE OF THE PROJECT; AGENT; FUNDS AND ACCOUNTS;
FLOW OF REVENUES; SECURITY
SECTION
3.1.
Purchase and Sale of the Project . .
. . 10
SECTION
3.2.
Agent . . . . . . . . . . . . . .
. . 10
SECTION
3.3.
Purchase Payment Account . . . . . .
. . 11
SECTION
3.4.
Construction Account . . . . . . . .
. . 11
SECTION
3.5.
Reserve Account . . . . . . . . . .
. . it
SECTION
3.6.
Funds and Accounts . . . . . . . . .
. . 11
SECTION
3.7.
Flow of Gross Revenues . . . . . . .
. 12
SECTION
3.8.
Security for the Purchase Payments .
. . 12
ARTICLE IV
THE PROJECT; PROHIBITED USES; DISBURSEMENTS
SECTION 4.1. Acquisition and Construction of the
Project . . . . . . . 13
SECTION 4.2. Disbursements from the Construction
Account . . . . . . . . . . . . . . . . 13
D:\IPA{.DOC 1
ARTICLE V
EFFECTIVE DATE OF THIS AGREEMENT; DURATION; PAYMENT PROVISIONS;
LIABILITY
SECTION
5.1.
Effective Date of this Installment
. . 26
SECTION
6.1.
Purchase Agreement; Duration . . . . . .
14
SECTION
5.2.
Purchase Price; 1993 Purchase Payments
14
SECTION
5.3.
Additional Purchase Payments . . . . . .
15
SECTION
5.4.
Source for City Payments . . . . . . . .
17
SECTION
5.5.
Obligations of the City Unconditional;
20
SECTION
6.5.
Net Contract; Obligations of Corporation
Unconditional . . . . . . . . . . .
17
SECTION
5.6.
Prepayment of 1993 Purchase Payments
19
SECTION
5.7.
Termination of Installment Purchase
Agreement . . . . . . . . . . . . .
19
SECTION
5.8.
City's Liability . . . . . . . . . . . .
20
ARTICLE VI
ARTICLE VII
LLL,
SECTION 7.1. Maintenance and Operation of the Water
System . . . . . . . . . . . . . . . . . 25
SECTION 7.2. Insurance . . . . . . . . . . . . . . . . 25
ARTICLE VIII
NON -LIABILITY OF CORPORATION; EXPENSES; INDEMNIFICATION
SECTION
8.1.
PARTICULAR COVENANTS
. . 26
SECTION
6.1.
Limitation on Encumbrances; Against
. . 26
SECTION
8.3.
Sale . . . . . . . . . . . .
20
SECTION
6.2.
Accounting Records . . . . . . . . . . .
20
SECTION
6.3.
Rates and Charges . . . . . . . . . . .
20
SECTION
6.4.
Tax Covenants.
20
SECTION
6.5.
Provisions andRestrictions with Respect
to Defeasance . . . . . . . .
22
SECTION
6.6.
Limits on Bonds and Obligations . . . . .
23
ARTICLE VII
LLL,
SECTION 7.1. Maintenance and Operation of the Water
System . . . . . . . . . . . . . . . . . 25
SECTION 7.2. Insurance . . . . . . . . . . . . . . . . 25
ARTICLE VIII
NON -LIABILITY OF CORPORATION; EXPENSES; INDEMNIFICATION
SECTION
8.1.
Non -Liability of Corporation . . . .
. . 26
SECTION
8.2.
Expenses . . . . . . . . . . . .
. . 26
SECTION
8.3.
Indemnification . . . . . . . . . .
. . 26
SECTION
8.4.
Survive Termination . . . . . . . . .
. . 27
1X\WM.D0C ii
ARTICLE IX
DEFAULTS AND REMEDIES
SECTION
9.1.
Events of Default . . . . . . . . . . . .
27
SECTION
9.2.
Remedies on Default . . . . .
29
SECTION
9.3.
Remedies Not Exclusive; No Waiver of
30
SECTION
10.4.
Rights . .. . . . . .
29
SECTION
9.4.
Expenses on Default . . . . . .
30
SECTION
9.5.
Notice of Default . . . . . . . . . . . .
30
ARTICLE Y
MISCELLANEOUS
SECTION
10.1.
Further Assurances . . . . . . . . . . .
30
SECTION
10.2.
Notices . . . . . . . . . . . . . . . .
30
SECTION
10.3.
Governing Law . . . . . . . . . . . . .
30
SECTION
10.4.
Binding Effect . . . . . .
30
SECTION
10.5.
Severability of Invalid Provisions . . .
31
SECTION
10.6.
Article and Section Headings and
References . . . . . . . . . . . . . .
31
SECTION
10.7.
Amendments. . . . . . . . . .
31
SECTION
10.8.
Disclaimer ofwarranties . . . . . . . .
31
SECTION
10.9.
Claims; Warranties, etc . . . . . .
32
SECTION
10.10.
Waiver of Personal Liability . . . . . .
32
SECTION
10.11.
Termination of Lease. . . . . . . . .
32
SECTION
10.12.
Execution of Counterparts . . . . . . .
32
EXHIBIT
A -
DESCRIPTION OF PROJECT . . . . . . . . .
A-1
EXHIBIT
B -
SCHEDULE OF 1993 PURCHASE PAYMENTS . . .
B-1
b:\1vMAOC i i i
INSTALLMENT PURCHASE AGREEMENT
THIS INSTAIX NT PURCHASE AGREEMENT, dated as of April 1,
1993 (the "Installment Purchase Agreement"), by and between the
CITY OF TUSTIN WATER CORPORATION, a California nonprofit public
benefit corporation (hereinafter referred to as the "Corporation"),
as seller, and the CITY OF TUSTIN (hereinafter referred to as the
"City"), as purchaser.
W I T N E S 8 E T H:
WHEREAS, the Corporation was organized, among other
things, to assist the City in the financing of costs related to
capital improvements; and
WHEREAS, the City has the power to purchase real and
personal property; and
WHEREAS, the Corporation will assist the City by further
constructing and improving the Project; and
WHEREAS, the Corporation will sell the Project to the
City and the City will purchase the Project from the Corporation
and perform the other covenants contained herein; and
WHEREAS, the City will make Purchase Payments to the
Corporation (or its assignee) and Additional Purchase Payments
pursuant to this Installment Purchase Agreement; and
WHEREAS, the Corporation will establish a trust pursuant
to the Trust Agreement and direct the Trustee to execute and
deliver certificates of participation representing proportionate
interests in the Principal Components and Interest Components of
the Purchase Payments to be made by the City pursuant to this
Installment Purchase Agreement; and
WHEREAS, the Corporation will grant, assign and transfer
to the Trustee all of the right, title and interest of the
Corporation in and to the Purchase Payments and all rights to
enforce the payment of Purchase Payments under this Installment
Purchase Agreement; and
WHEREAS, the City and the Corporation have duly
authorized the execution and delivery of this Installment Purchase
Agreement; and
NOW, THEREFORE, for and in consideration of the premises
and the material covenants hereinafter contained, the parties
hereto mutually agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
SECTION 1.1. Definitions. The following terms shall,
for all purposes of this Installment Purchase Agreement, have the
respective meanings ascribed to them. Words in the singular shall
include the plural and words in the plural shall include the
singular where the context so requires. All capitalized terms used
herein which are defined in the Trust Agreement and not defined
herein shall have the meanings specified in the Trust Agreement.
*'Accountant'@ shall mean any independent certified public
accountant or firm of such accountants selected by the City.
#$Additional Purchase Payments9l shall mean the payments so
designated and required to be made by the City pursuant to Section
5.3 hereof.
ItAverage Annual Qualified. obligation Servicell shall mean,
as of any date, the average amount of Qualified Obligation Service
payable in the then current or in any subsequent Fiscal Year.
"Bondli shall mean any revenue bond, revenue note, warrant
or other evidence of indebtedness issued, incurred or delivered for
the financing or refinancing of extensions of, additions to,
repairs and replacements to, renewals of, and improvements of the
Water System, designated by the City at the initial delivery
thereof as payable from Gross Revenues in the Qualified Obligations
Account, to the extent the payments under such revenue bond,
revenue note, warrant or other evidence of indebtedness are payable
from Gross Revenues in the Qualified Obligations Account. "Bond"
shall not include any Obligation or 1993 Certificate.
IlCompletion Certificate" shall mean, with respect to the
Project, a certificate of an Authorized City Representative, (i)
stating that the acquisition of the Project has been completed and
all costs of such acquisition have been paid except as identified
in clause (iii), below, (ii) setting forth the Completion Date,
(iii) setting forth the amount, if any, required, in the opinion of
the signer or signers, for the payment of any remaining part of the
Cost of the Project and (iv) giving such further directions as
required by Section 5.04(e) of the Trust Agreement.
$'Completion Date" shall mean, with respect to the
Project, the date on which the Project has been completed.
11Cost11 shall mean all costs of acquisition or financing
of any component of the Project, whether incurred prior to or after
the date of this Installment Purchase Agreement, including, but not
limited to, (i) administrative costs and capital expenditures
relating to acquisition or financing, inspection costs, filing and
D:\IPA4.D0C 2
recording costs, printing costs, reproduction and binding costs,
fees and charges of the Trustee and its counsel pursuant to the
Trust Agreement, costs of financing documents, Costs of Issuance,
legal fees and charges, financial, accounting and other
professional consultant fees, costs of rating agencies or credit
ratings, and fees for the printing, execution, transportation and
safekeeping of the Certificates; (ii) all other costs which the
City or the Corporation shall be required to pay under the terms of
any contract or contracts for the acquisition or financing of the
Project, including, but not limited to the cost of insurance; (iii)
such other expenses not specified herein as may be necessary for or
incidental to any of the foregoing; and (iv) any sums required to
reimburse the City or the Corporation for advances made for any of
the above items. Cost as defined herein shall also include the
cost and expenses incurred by any agent of the City or the
Corporation for any of the above items.
('Delivery Datell shall mean the date on which the 1993
Certificates are delivered by the Trustee pursuant to the Trust
Agreement to the original purchaser or purchasers thereof.
INFiscal Yearn shall mean the twelve month fiscal period
of the City which commences on July 1 in every year and ends on
June 30 of the succeeding year, or any other twelve-month, or
fifty-two week, period hereafter selected and designated as the
official fiscal year period of the City.
11Gross Revenuesit shall mean all rates, fees and charges
for providing water service to persons and real property and all
other fees, rents and charges and other income derived by the City,
from the ownership, operation, use or services of the Water System.
'Maintenance and Operation Expensesit shall mean the
reasonable and necessary current expenses of maintaining, repairing
and operating the Water System, but excluding depreciation,
interest, amortization and interfund transfers from the Revenue
Fund to the City's General Fund, all computed in accordance with
sound accounting principles and consistent with existing accounting
practices of the City.
I'Moody's'l shall mean Moody's Investors Service, a
corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, or, if such corporation
shall be dissolved or liquidated or shall no longer perform the
functions of a statistical rating organization, any other
nationally recognized securities rating agency designated by the
City, with the approval of the Corporation by notice to the
Trustee.
_ OlNet Revenuesll shall mean the Gross Revenues less the
Maintenance and Operation Expenses.
b-.\ivM.DM 3
911993 Purchase Payments" shall mean the payments so
designated and required to be made by the City pursuant to Section
5.2 hereof.
ssobligation" shall mean any contract, instrument or other
agreement for the purchase, acquisition or lease of facilities,
properties, structures or equipment for the Water System,
designated by the City at the initial delivery thereof as payable
from Gross Revenues in the Qualified Obligations Account, to the
extent the payments under such contract, instrument or agreement
are payable from Gross Revenues in the Qualified obligations
Account, and the final payments under which are due more than one
year following the incurrence thereof. "Obligation" shall not
include any Bond.
$'opinion of Counsel's shall mean a written opinion of
counsel selected by the City. If and to the extent required by the
provisions of Section 1.2 hereof, each Opinion of Counsel shall
include the statements provided for in Section 1.2 hereof.
IlPerson'l shall mean an individual, corporation, firm,
association, partnership, trust, or other legal entity or group of
entities, including a governmental entity or any agency or
political subdivision thereof.
'@Project, shall mean the improvements and facilities
described in Exhibit A attached hereto, as said Exhibit A may be
revised from time to time in accordance with Section 4.1(a) hereof.
IsPurchase Payments" shall mean all payments made or to be
made by the City to the Corporation under this Installment Purchase
Agreement, excluding Additional Purchase Payments.
"Purchase Payment Dates's shall mean the dates on which
the Purchase Payments are required to be made as provided in this
Installment Purchase Agreement, such dates being each April 1 and
October 1, commencing -October 1, 1993.
ItPurchase Prices' shall mean the amount to be paid by the
City to the Corporation for the Project as specified in Section 5.2
hereof.
OuQualified obligationses shall mean, without duplication,
(i) 1993 Purchase Payments; and (ii) Bonds and Obligations which at
the time of initial delivery thereof satisfy the covenant set forth
in Section 6.6 hereof.
nQualified obligation Service" shall mean, with respect
to any period, the amount of principal and interest or other
payments accrued or to accrue in such period with respect to all
outstanding Qualified Obligations (excluding the amount of proceeds
of Qualified Obligations held in any fund or account for the
bAIPA4.DOC 4
payment of Qualified Obligation Service accrued or to accrue during
such period). For purposes of accrual under this definition, all
payments with respect to Qualified Obligations due in a calendar
month shall be deemed due on the first day of such calendar month.
"8&P" shall mean Standard & Poor's Corporation, a
corporation organized and existing under the laws of the State of
New York, its successors and their assigns, or, if such corporation
shall be dissolved or liquidated or shall no longer perform the
functions of a statistical rating organization, any other
nationally recognized securities rating agency designated by the
City, with the approval of the Corporation, by notice to the
Trustee.
"Statement," "Request," "Requisition" or "Order" of the
Corporation or the City shall mean, respectively, a written
statement, request, requisition or order signed in the name of the
Corporation or the City by an Authorized Representative of the
Corporation or the City, as the case may be. Any such instrument
and supporting opinions or representations, if any, may, but need
not, be combined in a single instrument with any other instrument,
opinion or representation, and the two or more so combined shall be
read and construed as a single instrument. If and to the extent
required by Section 1.2 hereof, each such instrument shall include
the statements provided for in Section 1.2 hereof.
"Tax Certificate" shall mean the Tax and Non -Arbitrage
Certificate and Instructions as to Compliance with the Provisions
of Section 103(a) of the Internal Revenue Code of 1986, executed
and delivered by the City, on the Delivery Date, as amended or
supplemented from time to time.
"Treasurer" shall mean the Treasurer of the City.
"Trustee" shall mean Bank of America National Trust and
Savings Association, a national banking association, organized and
existing under the laws of the United States, having its principal
corporate trust office in San Francisco, California, or its
successor, as trustee under the Trust Agreement, and any Co -Trustee
appointed under the Trust Agreement.
"Water System" shall mean the entire water system of the
Corporation hereby acquired by the City pursuant to this
Installment Purchase Agreement, including the Project and all
improvements later constructed or acquired.
SECTION 1.2. Content of Statements and Opinions. Every
statement or opinion provided for in this Installment Purchase
Agreement with respect to compliance with any provision hereof
_ shall include (1) a statement that the person making or giving such
statement or opinion has read such provision and the definitions
herein relating thereto; (2) a brief statement as to the nature and
b:\IPA4.DM 5
scope of the examination or investigation upon which the statement
or opinion is based; (3) a statement (a) that, in the opinion of
such person, he or she has made or caused to be made such
examination or investigation as is necessary to enable him or her
to express an informed opinion with respect to the subject matter
or (b) that he or she has made or caused to be made his or her
examination or investigation with respect to the subject matter in
accordance with specified professional standards; and (4) a
statement as to whether, in the opinion of such person, such
provision has been complied with.
Any such statement or opinion made or given by an officer
of the Corporation or the City may be based, insofar as it relates
to legal, accounting or City matters, upon a statement or opinion
of or representation by counsel or an Accountant, unless such
officer knows, or in the exercise of reasonable care should have
known, that the statement, opinion or representation with respect
to the matters upon which such statement or statements may be
based, as aforesaid, is erroneous. Any such statement or opinion
made or given by counsel or an Accountant may be based, insofar as
it relates to factual matters (with respect to which information is
in the possession of the Corporation or the City, as the case may
be) upon a statement or opinion of or representation by an officer
of the Corporation or the City, unless such counsel or accountant
knows, or in the exercise of reasonable care should have known,
that the statement or opinion or representation with respect to the
matters upon which such person's statement or opinion or
representation may be based, as aforesaid, is erroneous. The same
officer of the Corporation or the City, or the same counsel or
Accountant, as the case may be, need not certify to all of the
matters required to be certified under any provision of this
Installment Purchase Agreement, but different officers, counsel or
Accountants may certify to different matters, respectively.
SECTION 1.3. Exhibits. The following Exhibits are
attached to and by this reference made a part of this Installment
Purchase Agreement:
Exhibit A: Description of the Project.
Exhibit B: Schedule of 1993 Purchase Payments.
ARTICLE II
AND WARRANTIES
SECTION 2.1. Representations and Warranties of the City.
The City makes the following representations and warranties to the
Corporation as of the date of the execution and delivery of this
Installment Purchase Agreement and as of the Delivery Date (such
representations and warranties to remain operative and in full
force and effect regardless of delivery of the Certificates or any
b-.\IPA4.D0C
investigations by or on behalf of the Corporation or the results
thereof):
(i) The City is a municipal corporation duly
organized and existing, has full legal right, power and
authority to enter into this Installment Purchase
Agreement and the Trust Agreement, and to carry out and
consummate all transactions contemplated by this
Installment Purchase Agreement and the Trust Agreement,
and by proper action has duly authorized the execution
and delivery of this Installment Purchase Agreement and
the Trust Agreement.
(ii) The officers of the City executing this
Installment Purchase Agreement and the Trust Agreement
are duly and properly in office and fully authorized to
execute the same.
(iii) Each of this Installment Purchase Agreement
and the Trust Agreement has been duly authorized,
executed and delivered by the City, and constitutes a
legal, valid and binding agreement of the City
enforceable against the City in accordance with its
terms.
(iv) The execution and delivery of this Installment
Purchase Agreement and the Trust Agreement, the
consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with
the terms and conditions hereof and thereof, will not in
any material respect conflict with or constitute a
violation or breach of or default (with due notice or the
passage of time or both), under statutory law or any
indenture, mortgage, deed of trust, agreement, lease,
contract or other agreement or instrument to which the
City is a party or by which it or its properties are
otherwise subject or bound, or any applicable law or
administrative rule or regulation, or any applicable
court or administrative decree or order, or any trust
agreement, mortgage, deed of trust, loan agreement,
lease, contract or other agreement to which the City is
a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition
of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the
City, which conflict, violation, breach, default, lien,
charge or encumbrance might have consequences that would
materially and adversely affect the consummation of the
transactions contemplated by this Installment Purchase
Agreement or the Trust Agreement, or the financial
condition, assets, properties or operations of the City.
b:\1vA4.00c 7
(v) No consent or approval of any trustee or holder
of any indebtedness of the City or any other Person, and
no consent, permission, authorization, order or license
of, or filing or registration with, any governmental
authority is necessary in connection with the execution
and delivery of this Installment Purchase Agreement or
the Trust Agreement, or the consummation of any
transaction herein or therein contemplated, or the
fulfillment of or compliance with the terms and
conditions hereof or thereof, except as have been
obtained or made and as are in full force and effect and
except such other permits as the City contemplates
obtaining in due course.
(vi) There are no easements, encumbrances or
interests with respect to the Project which prohibit or
materially impair the execution, delivery and performance
of this Installment Purchase Agreement or the acquisition
or use of the Project.
SECTION 2.2. Representations, Warranties and Covenant of
the Corporation. (a) The Corporation makes the following
representations and warranties to the City as of the date of the
execution and delivery of this Installment Purchase Agreement and
as of the Delivery Date (such representations and warranties to
remain operative and in full force and effect regardless of
delivery of the Certificates or investigations by or on behalf of
the City or the results thereof):
(i) The Corporation is a nonprofit public benefit
corporation duly organized and existing under and
pursuant to the laws of the State of California, has full
legal right, power and authority to enter into this
Installment Purchase Agreement, the Assignment Agreement
and the Trust Agreement and to carry out and consummate
all transactions contemplated by this Installment
Purchase Agreement, the Assignment Agreement and the
Trust Agreement, and by proper action has duly authorized
the execution and delivery of this Installment Purchase
Agreement, the Assignment Agreement and the Trust
Agreement.
(ii) The officers of the Corporation executing this
Installment Purchase Agreement, the Assignment Agreement
and the Trust Agreement are duly and properly in office
and fully authorized to execute the same.
(iii) Each of this Installment Purchase Agreement,
the Assignment Agreement and the Trust Agreement has been
duly authorized, executed and delivered by the
Corporation, and constitutes a legal, valid and binding
b:\IP^4.DM 8
agreement of the Corporation enforceable against the
Corporation in accordance with its terms.
(iv) The execution and delivery of this Installment
Purchase Agreement, the Assignment Agreement and the
Trust Agreement, the consummation of the transactions
herein and therein contemplated and the fulfillment of or
compliance with the terms and conditions hereof and
thereof, will not in any material respect conflict with
or constitute a violation or breach of or default (with
due notice or the passage of time or both), under the
Articles of Incorporation of the Corporation or the
Bylaws of the Corporation or any indenture, mortgage,
deed of trust, agreement, lease, contract or other
agreement or instrument to which the Corporation is a
party or by which it or its properties are otherwise
subject or bound, or any applicable law or administrative
rule or regulation, or any applicable court or
administrative decree or order, or any trust agreement,
mortgage, deed of trust, loan agreement, lease, contract
or other agreement to which the Corporation is a party or
by which it or its properties are otherwise subject or
bound, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon
any of the property or assets of the Corporation, which
conflict, violation, breach, default, lien, charge or
encumbrance might have consequences that would materially
and adversely affect the consummation of the transactions
contemplated by this Installment Purchase Agreement, the
Assignment Agreement or the Trust Agreement, or the
financial condition, assets, properties or operations of
the Corporation.
(v) No consent or approval of any trustee or holder
of any indebtedness of the Corporation or any other
Person, and no consent, permission, authorization, order
or license of, or filing or registration with, any
governmental authority is necessary in connection with
the execution and delivery of this Installment Purchase
Agreement, the Assignment Agreement or the Trust
Agreement, or the consummation of any transaction herein
or therein contemplated, or the fulfillment of or
compliance with the terms and conditions hereof or
thereof, except as have been obtained or made and as are
in full force and effect and except such other permits as
the City or the Corporation contemplates obtaining in due
course.
(vi) There are no easements, encumbrances or
interests with respect to the Project which prohibit or
materially impair the execution, delivery and performance
of this Installment Purchase Agreement, the Assignment
b:\IPM.DOC 9
Agreement or the Trust Agreement or the acquisition or
use of the Project.
(vii) The Corporation has determined that (i) it is
necessary and proper for the Corporation to assist the
City in financing the Project in the manner provided for
in this Installment Purchase Agreement in order to
provide, among other things, water facilities for the
City and (ii) this Installment Purchase Agreement, the
Assignment Agreement and the Trust Agreement and the
transactions contemplated hereby and thereby are just and
reasonable as to the Corporation.
(b) The Corporation covenants that it will not
intentionally take or consent to be taken any action which results
in the interest paid on the Interest Components of the Purchase
Payments being included in the gross income of the recipient
thereof for purposes of federal or state income taxation.
ARTICLE III
PURCHASE AND SALE OF THE PROJECT; AGENT; FUNDS AND ACCOUNTS;
FLOW OF REVENUES; SECURITY
SECTION 3.1. Purchase and Sale of the Project. (a) The
Corporation agrees to sell, and hereby sells, to the City, and the
City agrees to purchase, and hereby purchases, from the
Corporation, the Project at the Purchase Price (payable in
installments) specified in Section 5.2 hereof and otherwise in the
manner and in accordance with the provisions of this Installment
Purchase Agreement. The Corporation hereby transfers and assigns
to the City all of the Corporation's right, title and interest to
all or any portion of the Project; provided, that, title to all or
any portion of the Project shall pass whenever the City takes
physical possession thereof.
(b) From time to.time, at the request of the City, the
Corporation shall promptly deliver to the City any instruments
necessary to confirm the rights of the City to the Project.
SECTION 3.2. Agent. The Corporation hereby appoints the
City as its agent for the purpose of acquisition and construction
of the Project, and the City hereby agrees to enter into such
contracts as may be necessary, as agent for the Corporation, to
provide for the complete acquisition and construction of the
Project. The City hereby agrees that as such agent it will cause
the acquisition and construction of the Project to be diligently
completed. Notwithstanding the foregoing, it is hereby expressly
understood and agreed that the Corporation shall be under no
liability of any kind or character whatsoever for the payment of
any costs or expenses incurred by the City for the acquisition and
construction of the Project and that all such costs and expenses
b:\IPM.DOC 10
shall be paid by the City, regardless of whether the funds
deposited in the Construction Account are sufficient to cover all
such costs.
SECTION 3.3. Purchase Payment Account. The Corporation
shall create, or cause to be created, under the Trust Agreement a
Purchase Payment Account into which it shall deposit or cause to be
deposited on the Delivery Date the amount specified in Exhibit A to
the Trust Agreement with respect to the Purchase Payment Account.
The Corporation shall cause the Trustee to make deposits to and
payments from the Purchase Payment Account in accordance with the
terms of this Installment Purchase Agreement and the Trust
Agreement.
SECTION 3.4. Construction Account. (a) The Corporation
shall create, or cause to be created, under the Trust Agreement, a
Construction Account into which it shall deposit or cause to be
deposited on the Delivery Date the amount specified in Exhibit A to
the Trust Agreement with respect to the Construction Account.
(b) On and after the Delivery Date, the Treasurer shall
make payments from the Construction Account to pay the Cost of an
item of the Project upon the receipt of a requisition signed by an
Authorized City Representative conforming to the requirements of
Section 5.04(c) of the Trust Agreement.
(c) Within thirty days after the Completion Date, an
Authorized City Representative shall file a Completion Certificate
with respect to the Project with the Treasurer.
(d) Following delivery of the Completion Certificate for
the Project, any moneys remaining in the Construction Account shall
be applied by the Treasurer as provided in the Trust Agreement.
SECTION 3.5. Reserve Account. The Corporation shall
create, or cause to be created, under the Trust Agreement, a
Reserve Account into_ which it shall deposit or cause to be
deposited on the Delivery Date, the amount specified in Exhibit A
to the Trust Agreement with respect to the Reserve Account. The
Corporation shall cause the Trustee to make deposits to and
payments from the Reserve Account in accordance with the terms of
this Installment Purchase Agreement and the Trust Agreement.
SECTION 3.6. Funds and Accounts. The following funds
and accounts are hereby created, each of which is to be held by the
Treasurer:
(i) Water System Revenue Fund (the
"Revenue Fund");
(ii) Water System Maintenance and
Operation Account (the "M & O Account");
b:\IPA4.DOC 11
(iii) Qualified Obligations Account (the
"Qualified Obligations Account"); and
(iv) Water System Surplus Revenue Fund
(the "Surplus Revenue Fund").
SECTION 3.7. Flow of Gross Revenues. The Treasurer
shall deposit the Gross Revenues of the Water System as received in
the Revenue Fund. On or before the twentieth day of each calendar
month, the Finance Director of the City shall withdraw the entire
amount on deposit in the Revenue Fund and shall allocate and
deposit such amount in the indicated priority to the following
accounts and funds:
First, so long as any of the Certificates are
Outstanding, there shall be transferred to the M & O Account an
amount sufficient for the payment of Maintenance and Operation
Expenses as said expenses become due and payable;
Second, so long as any of the Certificates are
Outstanding, there shall be transferred to the Qualified
Obligations Account the amount of Qualified Obligation Service with
respect to such calendar month (to the extent not already
transferred to such Account in such month), or the entire amount of
Gross Revenues then• available for transfer to the Qualified
Obligations Account, whichever is less; and
Third, all remaining Gross Revenues remaining in the
Revenue Fund after the above transfers have been made shall be
transferred to the Surplus Revenue Fund. Moneys in the Surplus
Revenue Fund at any time may be used for any lawful purpose of the
City, Provided. that, moneys remaining on deposit in the Surplus
Revenue Fund at any time shall be transferred as needed, to the
Qualified Obligations Account, in the amount necessary (or all
available moneys in the Surplus Revenue Fund if less than the
amount necessary) to make up any deficiency therein.
SECTION 3.8. Security for the Purchase Payments. The
Purchase Payments and all other payments with respect to Qualified
Obligations shall be secured by a pledge, charge and lien upon the
Gross Revenues in the Qualified Obligations Account and shall be
paid from Gross Revenues in the Qualified Obligations Account
unless otherwise paid from other sources of legally available
funds. Purchase Payments and all other payments with respect to
Qualified Obligations shall be equally secured by the Gross
Revenues in the Qualified Obligations Account without priority for
number or date of incurrence of such Qualified Obligations. The
Gross Revenues in the Qualified Obligations Account shall be held
in trust by the Treasurer of the City for the benefit of the
holders of the Certificates and any other Qualified Obligations.
b:\IPA4.D0C 12
ARTICLE IV
THE PROJECT; PROHIBITED USES; DISBURSEMENTS
SECTION 4.1. Acquisition and Construction of the
Project.
(a) The Project, as constituted on the Delivery Date
(including the design and improvements financed from the proceeds
of the 1993 Certificates), is described in Exhibit A to this
Installment Purchase Agreement. The City, as agent of the
Corporation, shall have the right to make any changes to the
composition and description of the Project or of any component
thereof, whenever the City deems such changes to be necessary and
appropriate; provided, however, that any such change shall not
alter the essential nature of the Project, or impair the ability of
the City to make Purchase Payments under this Installment Purchase
Agreement; and provided further that, prior to expending any moneys
from the Construction Account with respect to any changes to the
Project, the City shall file -with -the Corporation and the Trustee
a revised Exhibit A reflecting such change and a certificate of an
Authorized City Representative certifying that such change (i) is
necessary and appropriate, (ii) does not impair the essential
nature of the Project, and (iii) does not impair the ability of the
City to make Purchase Payments.
(b) The City agrees that from and after the Delivery
Date, it will be responsible for the letting of contracts for the
acquisition and construction of the improvements financed from the
proceeds of the 1993 Certificates and supervising the acquisition
and construction thereof. The City agrees that it will use its best
efforts to cause the design work and improvements financed from the
proceeds of the 1993 Certificates (which work and improvements are
designated as such in Exhibit A hereto) to be completed and
acquired on or before November 1, 1994.
SECTION 4.2-. Disbursements from the Construction
Account. Disbursements will be made from the Construction Account
established for the Project to pay the Cost of the Project, in the
manner and subject to the terms and conditions set forth in the
Trust Agreement. In the event that amounts in the Construction
Account are not sufficient to pay the Cost of the Project in full,
the City nevertheless shall pay all Costs of the Project in excess
of the amounts available in the Construction Account from its own
funds, without diminution or postponement of amounts due to the
Corporation or the Trustee, including any Purchase Payment or
Additional Purchase Payment, and without any right of reimbursement
from the Corporation.
D.\IPM.DOC 13
EFFECTIVE DATE OF THIS AGREEMENT; DURATION; PAYMENT PROVISIONS;
LIABILITY
SECTION 5.1. Effective Date of this Installment Purchase
Agreement; Duration. This Agreement shall become effective upon
its execution and delivery, and shall expire on such date as shall
be determined in accordance with Section 5.7 hereof.
SECTION 5.2. Purchase Price; 1993 Purchase Payments. (a)
The City agrees to pay the Purchase Price for the Project by making
installment payments, referred to herein as 111993 Purchase
Payments," in the respective amounts and at the times shown in
Exhibit B hereto, which the City agrees to pay to the Trustee, as
assignee of the Corporation, for deposit in the Purchase Payment
Account held by the Trustee and which, in the aggregate, shall be
in an amount sufficient for the payment in full of all obligations
to the Owners of the 1993 Certificates from time to time
Outstanding under the Trust Agreement, including (i) the total
Interest Components due and payable with respect to the 1993
Purchase Payments, (ii) the total Principal Components of such 1993
Purchase Payments, and (iii) the prepayment premiums, if any, that
shall be payable on the prepayment of the 1993 Certificates prior
to their respective stated payment dates; less the amount of other
funds available for such payment as provided in the Trust
Agreement. The Purchase Price is payable over a period of 20
years, subject to prepayment. In lieu of making all or part of any
1993 Purchase Payment due on any Purchase Payment Date, the City
may deliver to the Trustee for cancellation (not less than 45 days
in advance of such Purchase Payment Date) 1993 Certificates
representing an interest in the subject 1993 Purchase Payment. The
amount of such 1993 Purchase Payment shall be reduced by the
aggregate amount of the Principal Component and Interest Component
represented by the 1993 Certificates so delivered to the Trustee.
For purposes of income taxation, any original issue discount
arising as a result of -this. Installment Purchase Agreement and the
sale of certificates of'participation herein shall be construed to
be interest for the purposes of, and to the extent permitted under,
such income tax law.
In addition, as the balance of the Purchase Price for the
Project, the City agrees to apply $ from the proceeds of
the 1993 Certificates toward the refunding or payment at maturity
of the Corporation's $3,675,000 outstanding City of Tustin Water
Corporation Lease Revenue Bonds, Series A.
(b) On or before the Business Day immediately preceding
the last Business Day of March and September in each year, the City
shall transfer from the Qualified Obligations Account to the
Trustee for deposit in the Purchase Payment Account the amount of
the 1993 Purchase Payments due on the next succeeding April 1, and
b.\IPM.DOC 14
October 1, respectively. Any amount required to be so transferred
for any period shall be reduced by the amount, if any, with respect
to that period set forth in Exhibit B to the Trust Agreement.
(c) Each 1993 Purchase Payment hereunder shall be paid
by the City in funds available on the due date in lawful money of
the United States of America to the Trustee at its Corporate Trust
Office, and held, invested, disbursed and applied as provided in
the Trust Agreement. In the event the City fails to make any of
the payments required by paragraph (a) of this Section 5.2, the
installment so in default shall continue as an obligation of the
City payable from Gross Revenues until the amount in default shall
have been fully paid with interest thereon at a rate of interest
equal to the highest rate of interest applicable to any then unpaid
Principal Component.
(d) The City shall make other Purchase Payments as and
when required by any amendment to this Installment Purchase
Agreement executed in accordance with Section 9.08 of the Trust
Agreement.
For purposes of determining the amount to be deposited
into the Qualified Obligations Account with respect to the 1993
Certificates in any month, (i) each Principal Component of Purchase
Payments shall accrue ratably over the twelve (12) months
immediately preceding the Principal Component Payment Date on which
such Principal Component is due and (ii) each Interest Component of
Purchase Payments shall accrue ratably over the six (6) months
immediately preceding the Interest Component Payment Date on which
such Interest Component is due.
SECTION 5.3. Additional Purchase Payments. (a) In
addition to 1993 Purchase Payments, the City shall also pay to the
Corporation, the Trustee or to the United States Treasury
Department, as the case may be, "Additional Purchase Payments," as
follows:
(i) All taxes and assessments of any
type or character charged to the Corporation
or to the Trustee affecting the amount
available to the Corporation or the Trustee
from payments to be received hereunder or in
any way arising due to the transactions
contemplated hereby (including taxes and
assessments assessed or levied by any public
agency or governmental authority of whatsoever
character having power to levy taxes or
assessments) but excluding franchise taxes
based upon the capital and/or income of the
Trustee and taxes based upon or measured by
the net income of the Trustee; provided,
however, that the City shall have the right to
b:\PAu.DOC 15
protest any such taxes or assessments and to
require the Corporation or the.Trustee, at the
City0s expense, to protest and contest any
such taxes or assessments levied upon them and
the City shall have the right to withhold
payment of any such taxes or assessments
pending disposition of any such protest or
contest unless such withholding, protest or
contest would adversely affect the rights or
interests of the Corporation or the Trustee;
(ii) Any taxes which may be imposed on
the sale, resale, use, possession or ownership
of the Project pursuant to this Installment
Purchase Agreement;
(iii) All reasonable fees, charges and
expenses of the Trustee, as and when the same
become due and payable;
(iv) The reasonable fees and expenses of
such accountants, consultants, attorneys and
other experts as may be engaged by the
Corporation or the Trustee to prepare audits,
financial statements, reports, opinions or
provide such other services required under
this Installment Purchase Agreement or the
Trust Agreement;
(v) The reasonable costs and expenses of
the Corporation as provided herein in
connection with this Installment Purchase
Agreement, the Certificates or the Trust
Agreement, including any and all expenses
incurred in connection with the authorization,
sale and delivery of any such Certificates or
in connection with any litigation which may at
any time be instituted involving this
Installment Purchase Agreement, the
Certificates or the Trust Agreement or any of
the other documents contemplated hereby or
thereby; and
(vi) Any amount required to be paid to
the United States Treasury Department pursuant
to Section 6.4 hereof.
(b) Such Additional Purchase Payments to the Corporation
or the Trustee shall be billed to the City by the Corporation or
the Trustee, as the case may be, from time to time, together with
a statement certifying that the amount billed has been incurred or
paid by the Corporation or the Trustee, for one or more of the
b:\IPM.DOC 16
above items. After such a demand, amounts so billed shall be paid
by the City within thirty (30) days after receipt of the bill by
the City.
SECTION 5.4. Source for City Payments. (a) The City
shall be obligated to make Purchase Payments hereunder solely from
the Gross Revenues in the Qualified obligations Account.
(b) Notwithstanding Section 5.4(a) hereof, 1993 Purchase
Payments shall not be made from Gross Revenues in the Qualified
Obligations Account to the extent (i) the proceeds of the sale of
the 1993 Certificates deposited in the Purchase Payment Account, in
the amounts, and at the times set forth in Exhibit B to the Trust
Agreement, or (ii) other moneys transferred to or deposited in, the
Purchase Payment Account pursuant to Section 5.02 of the Trust
Agreement.
(c) The City shall be obligated to make Additional
Purchase Payments hereunder solely from the Gross Revenues in the
Surplus Revenue Fund.
Subject to the foregoing provisions of this Section 5.4,
nothing herein shall preclude the City from making Purchase
Payments and Additional Purchase Payments from other lawfully
available moneys of the City.
SECTION 5.5. Obligations of the City Unconditional; Net
Contract; Obligations of Corporation Unconditional. (a) Subject to
Section 5.4 hereof, the obligations of the City to make the
Purchase Payments and Additional Purchase Payments required
hereunder and to perform and observe the other agreements on its
part contained herein shall be absolute and unconditional, and
shall not be abated, rebated, set-off, reduced, abrogated,
terminated, waived, diminished, postponed or otherwise modified in
any manner or to any extent whatsoever, while any Purchase Payments
or Additional Purchase Payments remain unpaid, regardless of any
contingency, act of God, event or cause whatsoever, including,
without limiting the generality of the foregoing, any acts or
circumstances that may constitute failure of consideration,
eviction or constructive eviction, the taking by eminent domain or
destruction of or damage to the Project, commercial frustration of
purpose, any change in the tax or other laws of the United States
of America or of the State or any political subdivision of either
or in the rules or regulations of any governmental authority, or
any failure of the Corporation or the Trustee to perform and
observe any agreement, whether express or implied, or any duty,
liability or obligation arising out of or connected with this
Installment Purchase Agreement or the Trust Agreement.
This Installment Purchase Agreement shall be deemed and
_ construed to be a "net contract," and the City shall pay absolutely
net the Purchase Payments, Additional Purchase Payments and all
b:\IPM.DOC 17
other payments required hereunder, regardless of any rights of
set-off, recoupment, abatement or counterclaim that the City might
otherwise have against the Corporation or the Trustee or any other
party or parties.
The Corporation and the City understand, agree and intend
that the obligation of the City to make Purchase Payments and to
pay Additional Purchase Payments hereunder shall not in any way be
construed to be a debt of the City, or the State of California, or
any political subdivision thereof, in contravention of any
applicable constitutional or statutory limitation or requirement
concerning the creation of indebtedness by the City, the State of
California, or any political subdivision thereof, nor shall
anything contained herein constitute a pledge of general revenues,
funds or moneys of the City or an obligation of the City for which
the City is obligated to levy or pledge any form of taxation or for
which the City has levied or pledged any form of taxation.
(b) The City covenants to take such action as may be
necessary to include and maintain the applicable Purchase Payments
and Additional Purchase Payments due hereunder in its budget for
the appropriate Fiscal Year or pursuant to separate resolution of
the City Council and further shall make the necessary
appropriations for all such Purchase Payments and Additional
Purchase Payments required herein. The covenant on the part of the
City contained in this subsection (b) shall be deemed to be and
shall be construed to be ministerial duties and it shall be the
ministerial duty of each and every public official of the City to
take such action and do such things as are required by law in the
performance of such official duty of such officials to enable the
City to carry out and perform such covenant.
(c) The obligation of the Corporation to perform and
observe the agreements on its part contained herein shall be
absolute and unconditional and, until such time as all of the
Purchase Payments shall have been fully paid (or provision for the
payment thereof shall have been made in accordance with Article VII
of the Trust Agreement), the Corporation (i) will perform and
observe all of its agreements contained in this Installment
Purchase Agreement and (ii) will not terminate this Installment
Purchase Agreement for any cause including, without limiting the
generality of the foregoing, any acts or circumstances that may
constitute failure of consideration, destruction of or damage to
the Project, commercial frustration of purpose, any change in the
tax or other laws of the United States of America or of the State
or any political subdivision of either or in the rules or
regulations of any governmental authority or any failure of the
City to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or
connected with this Installment Purchase Agreement.
D:\IPA4.DOC 18
Nothing contained in this Section 5.5(c) shall be
construed to release the City from the performance of any of the
agreements on its part herein contained; and in the event the City
should fail to perform any such agreement, the Corporation may
institute such action against the City as the Corporation may deem
necessary to compel performance or recover its damages for
nonperformance so long as such action shall not violate the
agreements of the Corporation contained in the first paragraph of
this Section 5.5(c).
SECTION 5.6. Prepayment of 1993 Purchase Payments. 1993
Purchase Payments are subject to prepayment as provided in this
Section 5.6. All prepayments of 1993 Purchase Payments shall be
made in funds immediately available on the Prepayment Date.
(a) Optional Prepayment. The City shall have the option
to prepay, with respect to 1993 Certificates, remaining Principal
Components of 1993 Purchase Payments at any time (in the principal
amount of $5,000, or any integral multiple thereof), on or after
April 1, 2003, by paying the Prepayment Price with respect thereto
on or before the Prepayment Date. The City shall give the Trustee
written notice of its intention to exercise its option to prepay
not more than ninety (90) and not less than forty-five (45) days in
advance of the date of such prepayment.
(b) Effect of Prepayment. In the event that the City
prepays the 1993 Purchase Payments with respect to the 1993
Certificates in whole, the amount paid shall be applied to the
prepayment in full of the Principal Components and Interest
Components with respect to the 1993 Certificates in accordance with
the Trust Agreement. In the event that the City prepays the 1993
Purchase Payments with respect to the 1993 Certificates in part but
not in whole, such prepayment shall be applied to the prepayment of
the 1993 Purchase Payments as follows: (i) the City shall
designate which Principal Components are being prepaid, and to what
extent, and the Principal Component of each remaining 1993 Purchase
Payment shall be reduced accordingly, in each case in integral
multiples of $5,000; and (ii) the Interest Component of each
remaining 1993 Purchase Payment shall be reduced by the aggregate
corresponding amount of interest which would otherwise be payable
with respect to the 1993 Certificates thereby prepaid pursuant to
the Trust Agreement.
SECTION 5.7. Termination of Installment Purchase
Agreement. Except as otherwise specifically provided herein, this
Installment Purchase Agreement shall terminate upon the earlier of
the following events:
(i) the payment by the City of all remaining
Purchase Payments as provided in Section 5.2 hereof and
all other amounts to be paid by the City hereunder
(including any Additional Purchase Payments which are
W\IPACDOC 19
then due or will become due) and the retirement of all
Certificates; or
'(ii) all Certificates have been paid, or deemed
paid, in accordance with Section 7.01 of the Trust
Agreement.
SECTION S.S. CityPS Liability. As between the
Corporation and the City, the City assumes liability for all risks
of loss during the construction and acquisition of the Project.
ARTICLE VI
PARTICULAR COVENANTS
SECTION 6.1. Limitation on Encumbrances; Against Sale.
The City covenants and agrees that it will not create, assume or
suffer to exist any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including the
charge upon property purchased under conditional sales or other
title retention agreements) upon the Water System which impairs the
ability of the City to comply with its covenant set forth in
Section 6.3 hereof. The City covenants that the Project shall not
be sold, leased or disposed of as a whole or substantially as a
whole if such sale, lease or disposal would impair the ability of
the City to comply with its covenant set forth in Section 6.3
hereof.
SECTION 6.2. Accounting Records. The City covenants and
agrees at all times to keep, or cause to be kept, proper books of
record and account, prepared in accordance with generally accepted
accounting principles, in which complete and accurate entries shall
be made of all transactions of or in relation to the business,
properties and operations of the Water System. Such books of
record and account shall be available for inspection by the Trustee
at reasonable hours and under reasonable circumstances.
SECTION 6.3. Rates and Charges. The City shall
prescribe, revise and collect such charges for the services and
facilities of the Water System so that, in each Fiscal Year, the
Net Revenues shall at least equal the sum of:
(i) 1.20 times the amount of Qualified Obligation
Service with respect to such Fiscal Year; and
(ii) 1.00 times all other payments required to be
made from Gross Revenues in such Fiscal Year.
SECTION 6.4. Tax Covenants. (a) The Corporation and the
City each covenant that, in order to maintain the exclusion from
gross income for federal income tax purposes of the Interest
Components of the Purchase Payments, and for no other purpose, each
W\IPMAOC 20
will satisfy, or take such actions as may be necessary to cause to
be satisfied, each provision of the Code necessary to maintain such
exclusion. In furtherance of this covenant, the Corporation and
the City each covenant to comply with the Tax Certificate as a
source of guidance with the requirements of the Code.
(b) The Corporation and the City each covenant that no
part of the proceeds of the Certificates shall be used, directly or
indirectly, to acquire any "investment property", as defined in
Section 148 of the Code, and it shall not take or permit to be
taken any other action or actions, which would cause the obligation
represented by this Installment Purchase Agreement to be an
"arbitrage bond" within the meaning of Section 148 of the Code, as
in effect from time to time, or under applicable Treasury
regulations promulgated thereunder. In order to assure compliance
with the rebate requirements of Section 148 of the Code, the
Corporation and the City each further covenant that it will pay or
cause to be paid to the United States Treasury Department the
amounts necessary to satisfy the requirements of Section 148(f) of
the Code, as required in the Tax Certificate, and that it will
establish such accounting procedures as are necessary to adequately
determine, account for and pay over any such amount or amounts
required to be paid to the United States in a manner consistent
with the requirements of Section 148 of the Code, such covenant to
survive the termination of this Installment Purchase Agreement
pursuant to Section 5.7 hereof and the expiration of the Trust
Agreement pursuant to Section 7.01 thereof.
(c) The Corporation and the City each covenant that it
will not take any action or omit to take any action, which action
or omission, if reasonably expected on the date of initial
execution and delivery of the Certificates, would result in a loss
of exclusion from gross income for purposes of Federal income
taxation, under Section 103(a) of the Code, of Interest Components
paid by the City and received by the Owners of the Certificates.
(d) The Corporation and the City each covenant that it
will not use or permit the use of the Project by any person (other
than the City or other state or local governmental unit) in such
manner or to such extent as would result in a loss of exclusion of
the Interest Components of Purchase Payments from gross income for
Federal income tax purposes under Section 103(a) of the Code.
(e) Notwithstanding any provision of this Installment
Purchase Agreement, and except as provided below, the Corporation
and the City each covenant that none of the moneys contained in any
of the funds or accounts created pursuant to the Trust Agreement
shall be: (i) used in making loans guaranteed by the United States
(or any agency or instrumentality thereof), (ii) invested directly
_ or indirectly in a deposit or account insured by the Federal
Deposit Insurance Corporation, National Credit Union Administration
or any other similar Federally chartered corporation, or (iii)
b:\IPM.DOC 21
otherwise invested directly or indirectly in obligations guaranteed
(in whole or in part) by the United States (or any agency or
instrumentality thereof); provided, however, that the above
restrictions do not apply to: (i) the investment of moneys held in
the Purchase Payment Account or any other "bona fide debt service
fund" as defined in the Tax Certificate, and in the Reserve
Account, (ii).investments in direct obligations of the United
States Treasury, (iii) investments in obligations guaranteed by the
Federal National Mortgage Association, Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation, (iv)
investments permitted under regulations issued pursuant to Section
149 (b)(3)(B) of the Code, or (v) sudh other investments as, in the
opinion of Special Counsel, are investments permitted under the
Trust Agreement which do not jeopardize the exclusion from gross
income for Federal income tax purposes of the Interest Components
with respect to the Certificates.
SECTION 6.5. Provisions and Restrictions with Respect to
Defeasance. (a) In the event the City shall seek, prior to the
date of payment or provision for payment thereof, to pay or cause
to be paid, within the meaning and with the effect expressed in
Section 7.01 of the Trust Agreement, all Purchase Payments and the
provisions of Section 6.4 herein shall then be of any force or
effect, then, notwithstanding the provisions of Section 7.01 of the
Trust Agreement, such Purchase Payments shall not be deemed to have
been paid within the meaning and with the effect expressed in
Section 7.01 of the Trust Agreement unless, in addition to all
other requirements of Section 7.01 of the Trust Agreement hereof:
(i) The City shall have delivered to the Trustee a
certificate of an Authorized City Representative to the effect
that:
(A) the City is then in compliance with
Section 6.4 herein;
(B) the City has, irrevocably deposited with
the Trustee such moneys, securities,
documents and other things and issued
such irrevocable instructions to the
Trustee so that any remaining and
continuing applicable requirements of the
Code, with respect to the Purchase
Payments, from compliance with which the
City has not theretofore been relieved
under the provisions of Section 7.01 of
the Trust Agreement, are ministerial and
reportorial in nature; and
(C) the City has irrevocably authorized the
Trustee, and delegated to the Trustee the
authority, to perform such remaining and
D:\IPA/.DM 22
continuing applicable requirements on the
City's behalf, and such Trustee has
undertaken so to do.
(ii) There shall have been delivered to the Trustee an
opinion of special Counsel to the effect that based upon the
matters set forth in the certificate described in (i) above
and assuming compliance by the Trustee with its undertaking
described in (i)(C) above, no further action by or on the part
of the City will be required under the applicable requirements
of the Code to maintain the Federal income tax exclusion from
gross income of the Interest Component of the Purchase
Payments.
(b) In the event the City shall seek, prior to the date
of payment or provision for payment thereof, to pay or cause to be
paid, within the meaning and with the effect expressed in this
Installment Purchase Agreement, less than all of the Purchase
Payments, and the provisions of Section 6.4 hereof shall then be of
any force or effect, then, notwithstanding the provisions of
Section 7.01 of the Trust Agreement, the Purchase Payments which
the City then seeks to pay or cause to be paid shall not be deemed
to have been paid within the meaning and with the effect expressed
in Section 7.01 of the Trust Agreement unless there shall have been
delivered to the Trustee an opinion of a nationally recognized bond
counsel firm to the effect that either (i) noncompliance thereafter
with the applicable provisions of the Code will not change the then
current Federal income tax status of the Interest Component of the
Purchase Payments, or (ii) there are no provisions of the Code
which must thereafter be complied with by the City in order to
maintain the Federal income tax exclusion from gross income of the
Interest Component of the Purchase Payments.
SECTION 6.6. Limits on Bonds and Obligations. (a) After
the Delivery Date, no Bond or Obligation shall be issued, incurred
or delivered unless, at the initial delivery thereof, (i) the Net
Revenues calculated on -sound accounting principles, as shown by the
books of the City for the most recently audited Fiscal Year prior
to the adoption of the resolution approving the delivery of such
Bonds or Obligations (as shown by an audit certificate or opinion
of an independent certified public accountant or firm of certified
public accountants employed by the City or by a certificate or
opinion of an independent engineer or of an independent financial
advisor employed by the City), plus, at the option of the City, the
allowance for earnings hereinafter set forth in subparagraph (c) of
this Section 6.6, shall have amounted to at least 1.20 times the
Average Annual Qualified Obligation Service on all Qualified
Obligations to be outstanding immediately subsequent to the initial
delivery of such Bond or Obligation or (ii) the estimated Net
Revenues calculated on sound accounting principles for the first
Fiscal Year following the estimated completion date of the portion
of the Project to be financed with the proceeds of such Bonds or
W\IPACDOC 23
Obligations, plus, at the option of the City, an allowance for
estimated earnings for such Fiscal Year arising from any increase
in the rates and charges made for service from the Water System,
shall amount to at least 1.20 times the Average Annual Qualified
Obligation Service on all Qualified obligations to be outstanding
immediately subsequent to the initial delivery of such Bond or
obligation.
(b) Subparagraph (a) of this Section 6.6 notwithstanding,
Bonds or Obligations may be issued to refund outstanding Qualified
Obligations if, after giving effect to the application of the
proceeds thereof, either (i) total Qualified Obligation Service
will not be increased in any Fiscal Year in which Qualified
Obligations (outstanding on the date of issuance or incurrence of
such refunding Bonds or Obligations, but excluding such refunding
Bonds or Obligations) not being refunded are outstanding, or (ii)
the Net Revenues, calculated on sound accounting principles, as
shown by the books of the City for the most recently audited Fiscal
Year prior to the adoption of the resolution approving the delivery
of such Bonds or Obligations (as shown by an audit certificate or
opinion of an independent certified public accountant or firm of
certified public accountants employed by the City or by a
certificate or opinion of an independent engineer or of an
independent financial advisor employed by the City), plus, at the
option of the City, the allowance for earnings hereinafter set
forth in subparagraph (c) of this Section 6.6, shall have amounted
to at least 1.20 times total Qualified Obligation Service in the
Fiscal Year next succeeding the Fiscal Year in which such Bond or
Obligation is initially delivered.
(c) The following may be added to the Net Revenues of the
Water System for the purpose of applying the restrictions contained
in this Section 6.6:
An allowance for earnings arising from any increase
in the charges made for service from the Water System
which has become effective prior to the initial delivery
of such Bond or Obligation but which, during all or any
part of said most recently audited Fiscal Year, was not
in effect, in an amount equal to 95% of the amount by
which the Net Revenues would have been increased if such
increase in charges had been in effect during the whole
of said most recently audited Fiscal Year, as shown by
the certificate or opinion of an independent certified
accountant or firm of certified public accountants
employed by the City or by the certificate or opinion of
an independent engineer or independent financial advisor
employed by the City.
(d) The City further covenants that the Net Revenues
shall not be mortgaged, encumbered, sold, leased, pledged, any
b:\IPM.DOC 24
charge placed thereon, or disposed of or used except as authorized
by the terms of this Installment Purchase Agreement.
ARTICLE VII
AND INSURANCE
SECTION 7.1. Maintenance and Operation of the Water
System. The City covenants and agrees that it will operate and
maintain the Water System in accordance with all governmental laws,
ordinances, approvals, rules, regulations and requirements
including, without limitation, such zoning, sanitary, pollution and
safety ordinances and laws and such rules and regulations
thereunder as may be binding upon the City. The City further
covenants and agrees that it will maintain and operate the Water
System, and all machinery, apparatus, fixtures, fittings and
equipment of any kind in or that shall be placed in any building or
structure now or hereafter at any time constituting part of the
Water System in good repair, working order and condition, and that
it will from time to time make or cause to be made all necessary
and proper replacements, repairs, renewals and improvements
thereto.
SECTION 7.2. Insurance. The City covenants that it
shall at all times maintain with responsible insurers all such
insurance on the Water System as is customarily maintained by
similar water systems with respect to works and properties of like
character against accident to, loss of or damage to such works or
properties and against loss of revenues. If any useful part of the
Water System shall be damaged or destroyed such part shall be
restored to use. The money collected from insurance against
accident, loss or damage shall be used for repairing or rebuilding
the lost, damaged or destroyed works and properties, and to the
extent not so applied, shall be applied to the retirement of
outstanding Qualified Obligations and for such purpose paid into
the appropriate funds or accounts. The money collected from any
loss of revenues insurance shall be deposited in the Revenue Fund.
The City shall also maintain with responsible insurers
worker's compensation insurance and insurance against public
liability and property damage to the extent reasonably necessary
and obtainable.
Notwithstanding the foregoing, the City may provide any
insurance required by this covenant through a self-insurance
program or it may provide such insurance as part of any blanket
coverages maintained by the City.
b.\IPA4.00c 25
ARTICLE VIII
NON -LIABILITY OF CORPORATION; EXPENSES; INDEMNIFICATION
SECTION 8.1. Non -Liability of Corporation. The
Corporation shall not be obligated to pay Purchase Payments or the
Principal Component, and premium, if any, and Interest Component
with respect to the Certificates. Neither the faith and credit nor
the taxing power of the State or any political subdivision thereof
is pledged to the payment of the Principal Component or premium or
Interest Component with respect to the Certificates.
The City hereby agrees that if the payments to be made
hereunder shall ever prove insufficient to pay all Principal
Components, and premium, if any, and Interest Components with
respect to the Certificates as the same shall become due (whether
by maturity, prepayment or otherwise), then upon notice from the
Trustee, the City shall, subject to Section 5.4 hereof, pay such
amounts as are required from time to time to prevent any deficiency
or default in the payment of such Principal Components, premium or
Interest Components, including, but not limited to, any deficiency
caused by acts, omissions, nonfeasance or malfeasance on the part
of the Trustee, the City, the Corporation or any third party.
The City, the Trustee and/or the Owners shall have no
right to compel the Corporation to pay Principal. Components or
Interest Components of Purchase Payments or prepayment premiums, if
any.
SECTION 8.2. Expenses. The City covenants and agrees to
pay and to indemnify, defend and hold harmless the Corporation and
the Trustee against all costs and charges, including reasonable
fees of attorneys, accountants, consultants and other experts,
incurred in good faith or arising out of or in connection with this
Installment Purchase Agreement, the Assignment Agreement, the
Certificates or the Trust Agreement. The City shall have the right
to select any attorneys employed pursuant to this Section 8.2;
provided, however, that if the City fails to select attorneys
pursuant to this Section 8.2 after notice from the Trustee, the
Trustee may select such attorneys.
SECTION 8.3. Indemnification. The City agrees, to the
extent permitted by law, to indemnify, defend and hold harmless the
Corporation and its directors, officers, employees and agents from
and against any and all losses, claims, damages, liabilities or
expenses, of every conceivable kind, character and nature
whatsoever, including, but not limited to, losses, claims, damages,
liabilities, or expenses arising out of, resulting from or in any
way connected with (1) the Project or the condition, use,
possession, conduct or management of, or work done in or about, or
from the acquisition of such Project or any part thereof; (2) the
execution and delivery of any Certificates and the carrying out of
b:\IPM.DOC 26
any of the transactions contemplated by this Installment Purchase
Agreement or the Trust Agreement; or (3) any untrue statement or
alleged untrue statement of any material fact or omission or
alleged omission to state a material fact necessary to make the
statements made, in light of the circumstances under which they
were made, not misleading in any official statement or other
offering circular utilized in connection with the sale of the
Certificates. The City further agrees, to the extent permitted by
law, to pay or to reimburse the Corporation and its officers,
employees and agents for any and all costs, reasonable attorneys
fees, liabilities or expenses incurred in connection with
investigating, defending against or otherwise in connection with
any such losses, claims, damages, liabilities, expenses or actions.
However, the City shall not hold harmless or indemnify the
Corporation, its directors and officers for any losses which are
caused by the bad faith or willful misconduct of the Corporation,
its directors or officers.
SECTION 8.4. Survive Termination. Notwithstanding
Section 5.7 hereof, the provisions of this Article VIII shall
survive payment in full of the Purchase Payments and the
Certificates, the expiration of the Trust Agreement and the
termination of this Installment Purchase Agreement.
ARTICLE I%
DEFAULTS AND REMEDIES
SECTION 9.1. Events of Default. Each of the following
events shall be an "Event of Default":
(a) If the City shall fail to pay in full any
Purchase Payment pursuant to Section 5.2 hereof,
Additional Purchase Payment or other payment required to
be paid hereunder at the time and in the manner specified
herein;
(b) If the City shall fail to observe or perform any
covenant, condition, agreement or provision in this
Installment Purchase Agreement on its part to be observed
or performed, other than as referred to in subsection (a)
of this Section 9.1, or shall breach any warranty by the
City herein contained, for a period of sixty (60) days
after written notice, specifying -such failure or breach
and requesting that it be remedied, has been given to the
City by the Corporation or the Trustee; except that, if
such failure or breach can be remedied but not within
such sixty (60) day period and if the City has taken all
action reasonably possible to remedy such failure or
breach within such sixty (60) day period, such failure or
breach shall not become an Event of Default for so long
as the City shall diligently proceed to remedy same in
W\IPMAOC 27
accordance with and subject to any directions or
limitations of time established by the Corporation or the
Trustee, as the case may be;
(c) Failure by the City to perform or observe any
other covenant, agreement or obligation on its part
contained in the Trust Agreement, which failure shall
have continued for a period of sixty (60) days after
written notice given to the City by the Trustee,
specifying the failure or default and requesting the same
to be remedied, which notice shall be given by the
Trustee upon the written request of the Owners of
Outstanding Certificates representing not less than
twenty-five percent (258) of the aggregate unpaid
Principal Component; provided that the Trustee may agree
in writing to a reasonable extension of such period prior
to the expiration of such sixty (60) day period; provided
further, however, that if the City shall proceed to take
curative action which, if begun and prosecuted with due.
diligence, cannot be completed within such a period of
sixty (60) days, then such period shall be increased
without such written extension to such extent as shall be
necessary to enable the City to diligently complete such
curative action;
(d) If the City files a petition in voluntary
bankruptcy, for the composition of its affairs or for its
corporate reorganization under any state or federal
bankruptcy or insolvency law, or makes an assignment for
the benefit of creditors, or admits in writing to its
insolvency or inability to pay debts as they mature, or
consents in writing to the appointment of a trustee or
receiver for itself or for the whole or any substantial
part of the Water System;
(e) If a court of competent jurisdiction shall enter
an order, judgment or decree declaring the City an
insolvent, or adjudging it bankrupt, or appointing a
trustee or receiver of the City or of the whole or any
substantial part of the Water System, or approving a
petition filed against the City seeking reorganization of
the City under any applicable law or statute of the
United States of America or any state thereof, and such
order, judgment or decree shall not be vacated or set
aside or stayed within sixty (60) days from the date of
the entry thereof; or
(f) If, under the provisions of any other law for
the relief or aid of debtors, any court of competent
jurisdiction shall assume custody or control of the City,
and such custody or control shall not be terminated
b:\IPA4.DOC 28
within sixty (60) days from the date of assumption of
such custody or control.
SECTION 9.2. Remedies on Default. If an Event of
Default specified in Section 9.1 hereof shall occur, then, and in
each and every case during the continuance of such Event of
Default:
(i) The Corporation or the Trustee may
take whatever action, at law or in equity, as
may appear necessary or desirable to collect
the Purchase Payments, Additional Purchase
Payments and any other payments then due and
thereafter to become due under this
Installment Purchase Agreement or to enforce
the performance and observance of any
obligation, covenant, agreement or provision
contained in this Installment Purchase
Agreement or the Trust Agreement to be
observed or performed by the City; and
(ii) The Corporation or the Trustee may
take whatever other legal action may appear
necessary or desirable to enforce their rights
and the rights of the Owners of the
Certificates.
SECTION 9.3. Remedies Not Exclusive; No Waiver of
Rights. No remedy herein conferred upon or reserved to the
Corporation or the Trustee is intended to be exclusive of any other
available remedy or remedies, but each�and every such remedy, to
the extent permitted by law, shall be cumulative and shall be in
addition to every other remedy given under this Installment
Purchase Agreement or now or hereafter existing at law or in equity
or otherwise. In order to entitle the Corporation or the Trustee
to exercise any remedy, to the extent permitted by law, reserved to
it or contained in this Installment Purchase Agreement, it shall
not be necessary to give any notice, other than such notice as may
be herein expressly required. Such rights and remedies as are
given to the Corporation hereunder shall also extend to the
Trustee, and the Trustee may exercise any rights under this
Installment Purchase Agreement, and the Trustee and the Owners of
the Certificates issued under the Trust Agreement shall be deemed
third party beneficiaries of all covenants and conditions herein
contained.
No delay in exercising or omitting to exercise any right
or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver of any such default or
an acquiescence therein, and every such right and power may be
exercised from time to time and as often as may be deemed
expedient.
b:\IPM.DM 29
SECTION 9.4. Expenses on Default. In the event the City
should default under any of the provisions of this Installment
Purchase Agreement and the Corporation or the Trustee should employ
attorneys or incur other expenses for the collection of the
payments due hereunder, the City agrees that it will on demand
therefor pay to the Corporation or the Trustee the fee of such
attorneys and such other expenses so incurred by the Corporation or
the Trustee.
SECTION 9.5. Notice of Default. The City agrees that,
as soon as is practicable, and in any event within ten (10) days,
the City will furnish the Trustee notice of any event which is an
Event of Default pursuant to Section 9.1 hereof (other than an
Event of Default pursuant to Sections 9.1(d), 9.1(e) or 9.1(f)
hereof) which has occurred and is continuing on the date of such
notice, which notice shall set forth the nature of such event and
the action which the City proposes to take with respect thereto.
ARTICLE B
M 14 IF -lei DO 0) hill 4
SECTION 10.1. Further Assurances. The City agrees that
it will execute and deliver any and all such further agreements,
instruments, financing statements or other assurances as may be
reasonably necessary or requested by the Corporation or the Trustee
to carry out the intention or to facilitate the performance of this
Installment Purchase Agreement, including, without limitation, to
perfect and continue the security interests herein intended to be
created.
SECTION 10.2. Notices. All notices or communications
herein required or permitted to be given shall be in writing and,
if to the City, mailed or delivered to it as follows: Treasurer,
City of Tustin, 15222 Del Amo Avenue, Tustin, California 92680 and,
if to the Corporation, mailed or delivered to it as•follows: City
of Tustin, 15222 Del Amo. Avenue, Tustin, California 92680,
Attention: Secretary, City of Tustin Water Corporation; and if to
the Trustee, mailed or delivered to it as provided in the Trust
Agreement. A duplicate copy of each notice or communication given
hereunder by either the Corporation or the City to the other shall
also be given to the Trustee. The Corporation, the City and the
Trustee may, by notice given hereunder, designate any further or
different address to which subsequent notices, certificates and
other communications shall be sent.
SECTION 10.3. Governing Law. This Agreement shall be
construed in accordance with and governed by the Constitution and
laws of the State.
SECTION 10.4. Binding Effect. This Agreement shall
inure to the benefit of and shall be binding upon the Corporation,
b:\IPA4.DOC 30
the City and their respective successors and assigns, subject,
however, to the limitations contained herein.
SECTION 10.5. Severability of Invalid Provisions. If
any one or more of the provisions contained in this Installment
Purchase Agreement shall for any reason be held to be invalid,
illegal or unenforceable in any respect, then such provision or
provisions shall be deemed severable from the remaining provisions
contained in this Installment Purchase Agreement and such
invalidity, illegality or unenforceability shall not affect any
other provision of this Installment Purchase Agreement, and this
Installment Purchase Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been
contained herein. The Corporation and the City each hereby
declares that it would have entered into this Installment Purchase
Agreement and each and every other Section, paragraph, sentence,
clause or phrase hereof irrespective of the fact that any one or
more Sections, paragraphs, sentences, clauses or phrases of this
Installment Purchase Agreement may be held illegal, invalid or
unenforceable.
SECTION 10.6. Article and Section Headings and
References. The headings or titles of the several Articles and
Sections hereof, and any table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not
affect the meaning, construction or effect of this Installment
Purchase Agreement. All references herein to "Articles,"
"Sections" and other subsections are to the corresponding Articles,
Sections or subsections of this Installment Purchase Agreement; the
words "herein," "hereof," "hereby," "hereunder" and other words of
similar import refer to this Installment Purchase Agreement as a
whole and not to any particular Article, Section or subsection
hereof; and words of the masculine gender shall mean and include
words of the feminine and neuter genders.
SECTION 10.7. Amendments. This Agreement may not be
effectively amended, changed, modified, altered or terminated
except by the written agreement of the City and the Corporation and
the concurring written consent of the Trustee, given in accordance
with the provisions of the Trust Agreement.
SECTION 10.8. Disclaimer of Warranties. The Corporation
makes no warranty or representation, either express or implied, as
to the value, design, condition, merchantability or fitness for any
particular purpose or fitness for the use contemplated by the City
of the Project, or any portion thereof, or any other representation
or warranty with respect to the Project, or any portion thereof.
In no event shall the Corporation be liable for incidental,
indirect, special or consequential damages, in connection with this
Installment Purchase Agreement or the existence, furnishing or
functioning of the Project, or the City's or the Corporation's or
any other person's use of the Project, except such damages as may
b:\IP^4.DOC 31
arise by reason of the Corporation's breach of this Installment
Purchase Agreement.
SECTION 10.9. Claims; Warranties, etc. The Corporation
irrevocably appoints the City as its agent and attorney-in-fact, so
long as the City shall not be in default hereunder, to assert from
time to time whatever claims and rights, including warranties with
respect to any portion of the Project, which the Corporation may
have against the manufacturer, supplier or contractor of such
portion of the Project. As between the Corporation and the City,
the City's sole remedy for the breach of any warranty,
indemnification or representation shall be against the
manufacturer, supplier or contractor of any portion of the Project,
and not against the Corporation, nor shall such matter have any
effect whatsoever on the rights of the Corporation with respect to
this Installment Purchase Agreement, including the rights to
receive full and timely payments hereunder. The City expressly
acknowledges that neither the Corporation nor the Trustee makes, or
has made, any representation or warranty whatsoever as to the
existence or availability of such warranties of the manufacturer,
supplier or contractor with respect to any item of the Project.
SECTION 10.10. Waiver of Personal Liability. No
director, officer, agent or employee of the Corporation or member,
director, officer, agent or employee of the City shall be
individually or personally liable for the payment of Purchase
Payments or any other sum hereunder or be subject to any personal
liability or accountability by reason of the execution and delivery
of this Installment Purchase Agreement; but nothing herein
contained shall relieve any such director, member, officer, agent
or employee from the performance of any official duty provided by
law or by this Installment Purchase Agreement.
SECTION 10.11. Termination of Lease. The City and the
Corporation hereby agree and acknowledge that upon the execution
and delivery of the 1993 Certificates and the deposit of a portion
of the proceeds of the 1993 Certificates into the Escrow Account as
provided in the Trust Agreement, the Lease between the City and the
Corporation, dated as of October 1, 1983, shall terminate
immediately in accordance with Article 22 of the Lease.
SECTION 10.12. Execution of Counterparts. This
Agreement may be executed in any number of counterparts, each of
which shall for all purposes be deemed to be original and all of
which shall together constitute but one and the same instrument.
b:\IPA{.DM 32
IN WITNESS WHEREOF, the Corporation and the City have
caused this Installment Purchase Agreement to be executed in their
respective names by their duly authorized representatives, all as
of the date first above written.
Attest:
By.
THE CITY OF TUSTIN
By.
Mayor
City Clerk
CITY OF TUSTIN WATER CORPORATION
By
President
Secretary
D.\IPM.DOC 33
EXHIBIT A
DESCRIPTION OF PROJECT
At the Delivery Date, the Project consists of the water
system operated by the City of Tustin Water Corporation (the
"Corporation") as in existence at the time the City takes physical
possession thereof in accordance with Section 3.1 of this
Installment Purchase Agreement, including, without limitation, all
of the real and personal property of the Corporation; all land,
easements, rights of way and other rights in land; buildings,
plants, wells, pumping structures, reservoirs, appurtenances and
other improvements to or on land; transmission and distribution
pipelines and mains, hydrants, meters and services; machinery and
equipment; trucks, cars and other vehicles; tools, supplies, spare
parts and other shop, garage and electrical equipment; and
miscellaneous office furniture, equipment, and supplies.
The Project also consists of the improvements (and design
and engineering relating thereto) to be financed from the proceeds
of the 1993 Certificates, including, without limitation (i) design
and construction of water mains and related distribution
facilities; (ii) design, planning, and commencement of construction
of the Main Street reservoir; (iii) design and construction of
improvements at the Rawlings reservoir; (iv) structural analysis
and site evaluation at the Foothill reservoir; (v) structural
analysis and site planning at the Simon reservoir; (vi) site
evaluation, design, and construction of the Zone II booster
station; and (vii) acquisition of portable generator at the
Columbus Tustin well.
D:\IPA4.D0C A-1
EXHIBIT B
SCHEDULE OF 1993 PURCHASE PAYMENTS
Interest
Principal
Date Component
Component
10/1/93 $
$
04/1/94
275,000
10/1/94
04/1/95
300,000
10/1/95
04/1/96
325,000
10/1/96
04/1/97
350,000
10/1/97
04/1/98
375,000
10/1/98
04/1/99
400,000
10/1/99
04/1/00
425,000
10/1/00
04/1/01
450,000
10/1/01
'
04/1/02
500,000
10/1/02
04/1/03
525,000
10/1/03
04/1/04
550,000
10/1/04
04/1/05
600,000
10/1/05
04/1/06
625,000
10/1/06
04/1/07
675,000
10/1/07
04/1/08
725,000
10/1/08
04/1/09
775,000
10/1/09
04/1/10
825,000
10/1/10
04/1/11
875,000
10/1/11
04/1/12
925,000
10/1/12
04/1/13
1,000,000
10/1/13
D:\IPM.DM B-1
Total
1993 Purchase
Payments
ESCROW AGREEMENT
by and among
THE CITY OF TUSTIN
and
THE CITY OF TUSTIN WATER CORPORATION
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Dated as of April 1, 1993
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ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into as of April 1, 1993, by and among
the City of Tustin (the "City"), the City of Tustin Water Corporation (the "Corporation") and Bank
of America National Trust and Savings Association, as Escrow Bank (the "Escrow Bank").
Capitalized terms used herein and not otherwise defined shall have the meanings provided for in
Section 1 hereof.
WITNESSETH:
WHEREAS, there are currently outstanding, under an Indenture, dated as of
October 1, 1983, by and between the Corporation and Bank of America National Trust and Savings
Association, as successor to Security Pacific National Bank, as Trustee (the "1983 Trustee") (the
"Indenture") $3,675,000 aggregate principal amount of City of Tustin Water Corporation Lease
Revenue Bonds, Series A (the "Refunded Bonds"); and
WHEREAS, the City has determined that a savings in payments will be realized
through the issuance of $11,500,000 aggregate principal amount of City of Tustin, Water System
Revenue Certificates of Participation, 1993 Series (the "Refunding Certificates"), evidencing
proportionate interests of the owners thereof in Installment Payments to be made by the City
pursuant to an Installment Purchase Agreement, dated as of April 1, 1993, between the City and
_ the Corporation, for the purpose of providing a portion of the funds necessary to pay, when due,
the principal and interest with respect to the Refunded Bonds to and including October 1, 1993 and
to redeem the remaining outstanding Refunded Bonds on October 1, 1993 (the "Redemption Date")
at the respective redemption price expressed as a percentage of the principal amount thereof (the
"Redemption Price") set forth below for the speed maturity of the Refunded Bonds:
Refunded Bonds
maturing
Redemption
October 1
Price
1994
100.25%
1995
100.50
1996
100.75
1997
101.00
1998
101.25
1999
101.50
2000
101.75
2001
102.00
2002
102.00
2003
102.00
WHEREAS, in order to obtain the remaining portion of the moneys needed for such
purpose, in addition to the funds available from the proceeds of the sale of the Refunding
Certificates, the City and the Corporation have authorized the transfer, on the date of execution
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and delivery of the Refunding Certificates, of moneys from the Reserve Fund established by the
Indenture (the "Original Reserve Fund"), which moneys shall be deposited in the Escrow Account;
and
WHEREAS, the Refunded Bonds are subject to payment or redemption, as the case
may be, on the Redemption Date, and the City and the Corporation have determined to provide
for the call for redemption on the Redemption Date of the remaining Refunded Bonds outstanding
on the Redemption Date; and
WHEREAS, upon the deposit of moneys in the Escrow Account and the initial
investment thereof as provided herein, the rights of the owners of the Refunded Bonds under the
Indenture will be discharged except for the right to receive payment from the Escrow Account which
the City and the Corporation have caused to be established hereunder; and
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the City, the Corporation and the Escrow Bank agree as follows:
Section 1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Trust Agreement, dated as of April
1, 1993 (the "Trust Agreement"), among the City, the Corporation and Bank of America National
Trust and Savings Association, as trustee, a copy of which shall be provided to the Escrow Bank.
Section 2. The Escrow Account.
(a) There is hereby established an account (the "Escrow Account") to be held in an
irrevocably pledged escrow by the Escrow Bank which the Escrow Bank shall keep separate and
apart from all other funds and accounts of the City, the Corporation and the Escrow Bank and to
be applied solely as provided in this Agreement. The Escrow Account is 'an irrevocable escrow
account.
Pending application as provided in this Agreement, amounts on deposit in the
Escrow Account are hereby pledged and assigned solely to the payment of (i) the principal of and
accrued interest on the Refunded Bonds coming due on the Redemption Date and (ii) the
Redemption Price on the Redemption Date, which amounts shall be held in trust by the Escrow
Bank for the owners of the Refunded Bonds. Upon the deposit of moneys in the Escrow Account
in accordance with the terms of this Agreement, the City and the Corporation shall be obligated
to make payments with respect to the Refunded Bonds solely from amounts on deposit in the
Escrow Account.
(b) Upon the execution and delivery of the Refunding Certificates, there shall be
deposited in the Escrow Account the following:
(i) $ received from the proceeds of the sale of the Refunding
Certificates; and
(ii) $ transferred from the Original Reserve Fund.
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(c) Upon the deposit of moneys pursuant to Section 2(b), the moneys on deposit in
the Escrow Account will be at least equal to an amount sufficient to purchase the aggregate
principal amount of direct noncallable obligations of the United States of America (the
"Government Obligations") set forth in Exhibit I hereto (the "Exhibit 1 Securities"), which principal,
together with all interest due or to become due on such Exhibit I Securities, and any uninvested
cash held by the Escrow Bank in the Escrow Account, will be sufficient in time and amount to make
the payments required by Section 4 hereof.
Section 3. Use and Investment of Escrow Account Moneys.
(a) The Escrow Bank hereby acknowledges receipt of the moneys described in
Section 2(b) and agrees to invest $ of such moneys in the Exhibit 1 Securities upon
receipt of certification by a nationally recognized firm of independent certified public accountants
that the Exhibit 1 Securities will mature in such principal amounts and earn interest in such
amounts and, in each case, at such times, so that sufficient moneys will be available from maturing
principal and interest on the Exhibit 1 Securities, together with any uninvested moneys then held
by the Escrow Bank in the Escrow Account, to make all payments required by Section 4 hereof.
Except as provided in Section 3(b) or Section 3(c), the balance of the moneys described in Section
2 or otherwise held by the Escrow Bank under this Agreement shall be held uninvested in the
Escrow Account.
(b) Upon the written request of an Authorized City Representative, but subject to
the conditions and limitations herein set forth, the Escrow Bank shall purchase substitute
Government Obligations for the Government Obligations then held hereunder with the proceeds
derived from the sale, transfer or other disposition of Government Obligations then on deposit in
the Escrow Account and any uninvested money then held by the Escrow Bank hereunder in
accordance with the provisions of this Section 3(b). Such sale, transfer or other disposition of
Government Obligations then on deposit in the Escrow Account and substitution of other
Government Obligations shall be effected by the Escrow Bank upon the written request of an
Authorized City Representative but only by a simultaneous transaction and only upon receipt of:
(i) certification by a nationally recognized firm of independent certified public accountants that the
Government Obligations to be substituted, together with the Government Obligations which will
continue to be held in the Escrow Account, will mature in such principal amounts and earn interest
in such amounts and, in each case, at such times so that, without taking into account any
reinvestments earned thereon, sufficient moneys will be available from maturing principal and
interest on such Government Obligations held in the Escrow Account, together with any uninvested
moneys, to make all payments required by Section 4 hereof which have not previously been made;
and (il) receipt by the Escrow Bank of an opinion of independent counsel to the effect that the sale,
transfer or other disposition and substitution of Government Obligations will not adversely affect
the exclusion of interest on any Refunded Bonds or Refunding Certificates from gross income for
purposes of federal income taxation.
(c) Upon the written request of an Authorized City Representative, but subject to
the conditions and limitations herein set forth, the Escrow Bank will apply any moneys received
from the maturing principal of or interest or other investment income on any Government
Obligations held in the Escrow Account, or the proceeds from any sale, transfer or other disposition
of Government Obligations pursuant to Section 3(b), as follows: (i) to the extent such moneys will
not be required at any time for the purpose of making a payment required by Section 4 hereof, as
c:\1080\tustin\escrow5.doc
certified by a nationally recognized firm of independent certified public accountants delivered to
the Escrow Bank, such moneys shall be paid over to the City upon the written request of an
Authorized City Representative as received by the Escrow Bank, free and clear of any trust, lien,
pledge or assignment securing the Refunded Bonds or otherwise existing hereunder; and (ii) to the
extent such moneys will be required for such purpose at a later date, shall, to the extent practicable,
be invested or reinvested in Government Obligations maturing at times and in amounts sufficient
to make such payment required by Section 4 hereof provided that the amount of the funds to be
realized from time to time from such investment or reinvestment shall be certified by a nationally
recognized firm of independent certified public accountants delivered to the Escrow Bank by the
City and provided that the City shall deliver to the Escrow Bank an opinion of independent counsel
to the effect that such investment or reinvestment will not adversely affect the exclusion of interest
on any Refunded Bonds or Refunding Certificates from gross income for purposes of federal
income taxation, and interest earned from such investments or reinvestments shall be paid over to
the City upon the written request of an Authorized City Representative as received by the Escrow
Bank, free and clear of any trust, lien, pledge or assignment securing the Refunded Bonds or
otherwise existing hereunder.
(d) All Government Obligations purchased pursuant to this Section 3 shall be
deposited in and held for the credit of the Escrow Account. Except as provided in this Section 3,
no moneys or Government Obligations deposited with the Escrow Bank pursuant to this Agreement
nor principal of, or interest payments or other investment income on, any such Government
Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for,
the payment of the principal, interest and Redemption Price with respect to the Refunded Bonds
as provided by Section 4 hereof.
(e) The owners of the Refunded Bonds shall have a first lien on the moneys and
Government Obligations in the Escrow Account until such moneys and Government Obligations are
used and applied as provided in this Agreement.
(f) The Escrow Bank shall not be held liable for investment losses resulting from
compliance with the provisions of this Agreement.
Section 4. Payment of Refunded Bonds. From the maturing principal of the
Government Obligations held in the Escrow Account and the investment income and other earnings
thereon and any uninvested money then held in the Escrow Account, the Escrow Bank shall on the
Redemption Date, pay (i) principal and interest due on the Refunded Bonds on said Redemption
Date and (ii) the Redemption Price for the then remaining outstanding Refunded Bonds to the
1983 Trustee in accordance with the terms of the Indenture; provided, however, that, to the extent
that the amount on deposit in the Escrow Account on the Redemption Date is in excess of the
amount necessary to make all such required payments with respect to the Refunded Bonds, as
shown in the then applicable escrow verification of the nationally recognized firm of independent
certified public accountants, such excess shall be transferred to the City.
Section S. Irrevocable Instructions to Publish Notices and Mail Notice. The
Corporation hereby irrevocably designates the Refunded Bonds maturing on and after October 1,
1994 for prior redemption on the Redemption Date and hereby irrevocably instructs Bank of
America National Trust and Savings Association, as 1983 Trustee under the Indenture, to publish
notice of redemption, not less than 30 calendar days nor more than 60 calendar days prior to the
c:\1080\tustin\escrow5.doc 4
Redemption Date, as provided in Section 4.02 of the Indenture. The form of the notice required
to be published pursuant to Section 4.02 of the Indenture is attached hereto as Exhibit 2. The
Corporation also hereby irrevocably instructs Bank of America National Trust and Savings
Association, as 1983 Trustee under the Indenture, to mail notice of such redemption to each owner
of the Refunded Bonds to be redeemed, as provided in Section 4.02 of the Indenture.
The Corporation hereby irrevocably instructs Bank of America National Trust and
Savings Association, as 1983 Trustee under the Indenture, to publish, as soon as practicable, a
notice to the owners of the Refunded Bonds, in substantially the form attached hereto as Exhibit 3.
Such instructions constitute the provisions for the notice that moneys are available for the payment
of the Refunded Bonds, as required by Section 10.02 of the Indenture.
Section 6. Performance of Duties. The Escrow Bank agrees to perform the duties
set forth herein and agrees that the irrevocable instructions to the Escrow Bank herein provided
are in a form satisfactory to it.
Section 7. Escrow Bank's Authority to Make Investments. The Escrow Bank shall
have no power or duty to invest any funds held under this Agreement except as provided in Section
3 hereof. The Escrow Bank shall have no power or duty to transfer or otherwise dispose of the
moneys held hereunder except as provided in this Agreement.
Section & Indemnity. To the extent permitted by law, the City hereby assumes
liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are
consummated) to indemnify, protect, save and keep harmless the Escrow Bank and its respective
successors, assigns, agents, employees and servants, from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements
(including reasonable legal fees, expenses and disbursements) of whatsoever kind and nature
(collectively, the "Liabilities") which may be imposed on, incurred by, or asserted against, the Escrow
Bank at any time (whether or not also indemnified against the same by the City or any other person
under any other agreement or instrument, but without double indemnity) in any way relating to or
arising out of the execution, delivery and performance of this Agreement, the establishment
hereunder of the Escrow Account, the acceptance of the funds and securities deposited therein, the
purchase of any securities to be purchased pursuant hereto, the retention of such securities or the
proceeds thereof and any payment, transfer or other application of moneys or securities by the
Escrow Bank in accordance with the provisions of this Agreement; provided, however, that the City
shall not be required to indemnify the Escrow Bank against liabilities attributable to the Escrow
Bank's own negligence or willful misconduct or the material breach by the Escrow Bank of the terms
of this Agreement. In no event shall the City or the Escrow Bank be liable to any person by reason
of the transactions contemplated hereby other than to each other as set forth in this Section 8. The
indemnities contained in this Section shall survive the termination of this Agreement.
Section 9. Responsibilities of Escrow Bank. The Escrow Bank and its respective
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort,
contract, or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Account, the acceptance of the moneys or any securities deposited
therein, the purchase of the, securities to be purchased pursuant hereto, the retention of such
securities or the proceeds thereof, the sufficiency of the securities or any uninvested moneys held
hereunder to accomplish the payment or redemption of the Refunded Bonds, as the case may be,
c:\1080\tustin\escrow5.doc
or any payment, transfer or other application of moneys or securities by the Escrow Bank in
accordance with the provisions of this Agreement or by reason of any non -negligent act, non -
negligent omission or non -negligent error of the Escrow Bank made in good faith in the conduct
of its duties. The recitals of fact contained in the "Whereas" clauses herein shall be taken as the
statements of the City and the Corporation, and the Escrow Bank assumes no responsibility for the
correctness thereof. The Escrow Bank makes no representation as to the sufficiency of the
securities to be purchased pursuant hereto and any uninvested moneys to accomplish the payment
or redemption of the Refunded Bonds, as the case may be, pursuant to the Indenture or to the
validity of this Agreement as to the City or the Corporation and, except as otherwise provided
herein, the Escrow Bank shall incur no liability in respect thereof. The Escrow Bank shall not be
liable in connection with the performance of its duties under this Agreement except for its own
negligence, willful misconduct or default, and the duties and obligations of the Escrow Bank shall
be determined by the express provisions of this Agreement. The Escrow Bank may consult with
counsel, who may or may not be counsel to the City, and in reliance upon the written opinion of
such counsel shall have full and complete authorization and protection in respect of any action
taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank
shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering,
or omitting any action under this Agreement, such matter (except the matters set forth herein in
specifically requiring a certificate of a nationally recognized firm of independent certified public
accountants or an opinion of independent counsel) may be deemed to be conclusively established
by a written certification of the City. Whenever the Escrow Bank shall deem it necessary or
desirable that a matter specifically requiring a certificate of a nationally recognized firm of
independent certified public accountants or an opinion of independent counsel be proved or
established prior to taking, suffering or omitting any such action, such matter may be established
only by a certificate signed by a nationally recognized firm of certified public accountants or such
opinion of independent counsel.
Section 10. Amendments. The City, the Corporation and the Escrow Bank may,
without the consent of, or notice to, such owners, amend this Agreement or enter into such
agreements supplemental to this Agreement as shall not adversely affect the rights of the owners
of the Refunded Bonds and as shall not be inconsistent with the terms and provisions of this
Agreement or the Indenture, for any one or more of the following purposes: (i) to cure any
ambiguity or formal defect or omission in this Agreement; (ii) to grant to, or confer upon, the
Escrow Bank for the benefit of the owners of the Refunded Bonds any additional rights, remedies,
powers or authority that may lawfully be granted to, or conferred upon, such owners or the Escrow
Bank; and (iii) to include under this Agreement additional funds, securities or properties. The
Escrow Bank shall be entitled to rely conclusively upon an opinion of independent counsel with
respect to compliance with this Section, including the extent, if any, to which any change,
modification, addition or elimination affects the rights of the owners of the Refunded Bonds or that
any instrument executed hereunder complies with the conditions and provisions of this Section.
Prior written notice of any amendment to this Agreement and drafts of legal documents in
connection with any such amendment shall be delivered to Moody's Investors Service and Standard
& Poor's Corporation. Notices and documents required to be delivered hereunder to Moody's
Investors Service shall be sent to Moody's Investors Service, 99 Church Street, New York, New
York 10007, Attn: Public Finance Rating Desk/ Refunded Bonds. Notices and documents required
to be delivered hereunder to Standard & Poor's Corporation shall be sent to Standard & Poor's
Corporation, 25 Broadway, New York, New York, 10004, Attn: Refunded Bonds.
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Section 11. Term. This Agreement shall commence upon its execution and delivery
and, except as provided in Section 8 hereof, shall terminate on the date upon which the Refunded
Bonds have been paid in full in accordance with this Agreement.
Section 12. Compensation. The City shall, upon the execution hereof by the City,
the Corporation and the Escrow Bank will pay or cause to be paid to the Escrow Bank the agreed
upon compensation for its services to be rendered hereunder, if any. The City shall from time to
time, on demand, reimburse the Escrow Bank for all of its reasonable advances in the exercise and
performance of its duties hereunder; provided, however, that under no circumstances shall the
Escrow Bank be entitled to any lien whatsoever on any moneys or obligations in the Escrow
Account for the payment of fees and expenses for services rendered or expenses incurred by the
Escrow Bank under this Agreement, under the Trust Agreement, or otherwise.
Section 13. Discharge of Obligations. The Escrow Bank, as 1983 Trustee under
the Indenture, acknowledges the discharge of the Corporation's obligations under the Indenture and
the Refunded Bonds except for obligations under Article II of the Indenture in respect of the
transfer, exchange, registration and replacement of Refunded Bonds.
Section 14. Severability. If any one or more of the covenants or agreements
provided in this Agreement on the part of the City, the Corporation or the Escrow Bank to be
performed should be determined by a court of competent jurisdiction to be contrary to law, such
covenants or agreements shall be null and void and shall be deemed separate from the remaining
covenants and agreements herein contained and shall in no way affect the validity of the remaining
provisions of this Agreement. The City shall notify Moody's Investors Service and Standard &
Poor's Corporation in the event of such severability.
Section 15. Counterparts. This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as an original but all of which
shall constitute and be but one and the same instrument.
Section 16. Governing Law. This Agreement shall be construed under the laws of
the State of California.
Section 17. Assignment. This Agreement shall not be assigned by the Escrow Bank
or any successor thereto without the prior written consent of the City and the Corporation.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers and attested as of the date first above written.
CITY OF TUSTIN
Mayor
CITY OFTUSTIN WATER CORPORATION
President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Escrow Bank
Tide:
EXHIBIT 1
SECURITIES TO BE DEPOSITED
IN THE ESCROW ACCOUNT
[UNITED STATES TREASURY NOTES AND I
Principal Purchase
Maturily Amount Price
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EXHIBIT 2
NOTICE OF REDEMPTION
CITY OF TUSTIN
WATER CORPORATION LEASE REVENUE BONDS, SERIES A
Maturing on and after October 1, 1994 and bearing the following CUSIP Numbers:
NOTICE IS HEREBY GIVEN to the owners of the above-mentioned bonds (the
"Refunded Bonds") that such Bonds have been called for redemption, prior to maturity, on October
1, 1993, at the respective redemption price expressed as a percentage of the principal amount
thereof (the "Redemption Price") set forth below for the specified maturity of the Refunded Bonds:
Refunded Bonds
maturing Redemption
October 1 Price
1994
100.25%
1995
100.50
1996
100.75
1997
101.00
1998
101.25
1999
101.50
2000
101.75
2001
102.00
2002
102.00
2003
102.00
On October 1, 1993 there shall become due and payable upon presentation and
surrender of such Bonds at the office of Bank of America National Trust and Savings Association,
located at , California, the Redemption Price of said Bonds, together with
accrued interest thereon. FROM AND AFTER THE REDEMPTION DATE, ALL INTEREST
REPRESENTED ON THE REFUNDED BONDS WILL CEASE TO ACCRUE AND BE PAYABLE.
To avoid a 20% backup withholding tax required by the Interest and Dividend Tax Compliance Act
of 1983, Bond owners must submit with their Refunded Bonds a completed IRS Form W-9.
DATED this
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day of 1993.
EXHIBIT 3
NOTICE OF REDEMPTION
CITY OF TUSTIN
WATER CORPORATION LEASE REVENUE BONDS, SERIES A
NOTICE IS HEREBY GIVEN to the owners of the City of Tustin Water Corporation
Lease Revenue Bonds, Series A (the "Bonds"), that there has been deposited with Bank of America
National Trust and Savings Association, as Trustee under the Indenture, dated as of October 1, 1983
between the City of Tustin Water Corporation and Bank of America National Trust and Savings
Association, as successor to Security Pacific National Bank (the 'Trustee") (the "Indenture"),
obligations of or guaranteed as to principal and interest by the United States of America (the
"Government Obligations"), the principal and interest on which when due will provide moneys
which, together with the moneys; if any, deposited with the Escrow Bank at the same time, shall be
sufficient and available (i) to pay when due the principal of and interest with respect to the Bonds
to and including October 1, 1993 and (ii) to redeem the remaining outstanding Bonds on October
1, 1993, at the respective redemption price expressed as a percentage of the principal amount
thereof (the "Redemption Price") set forth below for the specified maturity of the Bonds:
Bonds
maturing Redemption
October 1 Price
1994
100.25%
1995
10050
1996
100.75
1997
101.00
1998
101.25
1999
10150
2000
101.75
2001
102.00
2002
102.00
2003
102.00
The Government Obligations and moneys, if any, are being held for the payment of all
Bonds, including the Bonds maturing on or after October 1, 1994 which will be redeemed on
October 1, 1993. The Bonds are deemed to have been paid under Section 10.02 of the Indenture.
DATED this _ day of , 1993.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Trustee and Escrow Bank