HomeMy WebLinkAboutESCROW AGREE 95-1 11-20-95ESCROW AGREEMENT (95-1)
by and between the
CITY OF TUSTIN
and
STATE STREET BANK AND TRUST COMPANY, N.A.,
as Escrow Bank
Dated as of ,1995
Reassessment District No. 95-1 (Tustin Ranch)
TABLE OF CONTENTS
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Definitions ......... . ........................................................... : ..................... 1
The Escrow Funds ..................... , ..................................... : .................. 1
Use and Investment of Moneys .......................................................... 2
Payment of Prior Bonds ..................................................................... 3
Irrevocable Instructions to Mail Notices ............................................ 4
Performance of Dudes ....................................................................... 4
Escrow Bank's Authority to Make Investments ................................ 4
Indemnity ........... : ............................................................................... 4
Responsibilities of Escrow Bank ....................................................... 5
Amendments ...................................................................................... 5
Term .................................................................................................... 6
Compensation ...................................................................................... 6
Severability .................... ; ............................................................... ," 6
Counterparts ............................................. ~ ......................................... 6
Governing Law .................................................................................. 6
Assignment ......................................................................................... 7
EXHIBIT 1- United States Treasury Securities- Fixed 85-1 Bonds ................... 1-1
EXHIBIT 2- United States Treasury Securities- Fixed 86-2 Bonds .................. 2-1
i
ESCROW AGREEMENT (95-1)
THIS ESCROW AGREEMENT (95-1) (this "Agreement"), is entered into as of
_, 1995, by and between the City of Tustin (the "City") and State Street Bank and
Trust Company, N.A., as escrow bank (the "Escrow Bank").
WITNESSETH:
WHEREAS, pursuant to an Indenture of Trust, dated as of August 1, 1986 (the "85-1
Indenture"), by and between the City and Citibank, N. A., as trustee, the City issued City of
Tustin Assessment District No. 85-1 Improvement Bonds (the "85-1 Bonds") in the original
principal amount of $50,650,000;
WHEREAS, pursuant to an Indenture of Trust, dated as of September 1, 1988 (the "86-2
Indenture"), by and between the City and Citibank, N. A., as trustee, the City issued City of
Tustin Assessment District No. 86-2 Limited Obligation Improvement Bonds (the "86-2 Bonds")
in the original principal amount of $81,400,000;
WHEREAS, State Street Bank and Trust Company, N.A., is the successor trustee under
the 85-1 Indenture and under the 86-2 Indenture;
WHEREAS, the City has determined .that ceixai'n savings and efficiencies may be
obtained by refunding the outstanding $ aggregate principal amount of 85-1 Bonds
that have been convened to a fixed interest rate pursuant to the 85-1 Indenture (the "Fixed 85-1
Bonds") and the outstanding $ aggregate principal amount of 86-2 Bonds that have
been convened to a fixed interest rate pursuant to the 86-2 Indenture (the "Fixed 85-2 Bonds"
and, together with the Fixed 85-1 Bonds, the "Prior Bonds");
WHEREAS, in order to provide a portion of the moneys 'required to refund the Prior
Bonds, the City has authorized the issuance of the City of Tustin' Limited Obligation
Improvement Bonds, Reassessment District No. 95:1 (Tustin Ranch) (the "Bonds"), in an
aggregate principal amount of $ ;
WHEREAS, the City has determined apply a portion of the proceeds of the Bonds,
together with other available moneys, to pay, when due, the interest on the outstanding Prior
Bonds on March 2, 1996 and to redeem the outstanding Prior Bonds on March 2, 1996 (the
"Redemption Date") at a redemption price (the "Redemption Price") equal to 102.5% of the
principal amount of such outstanding Prior Bonds; and
WHEREAS, the Prior Bonds are subject to redemption on the Redemption Date and the
City has determined to provide for the call for redemption on the Redemption Date of the Prior
Bonds outstanding on the Redemption Date;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the City and the Escrow Bank agree as follows:
Section 1. ~. The term "Fedei'al Securities" shall mean United States 'of
America Treasury bills, notes, bonds or certificates of indebtedness, or Obligations for which the
full faith and credit of the United States of America are pledged for the payment of interest and
principal, which are not subject to redemption except by the owners thereof prior to maturity
(including any such securities'issued or held in book-entry form on the books of the Department
of the Treasury of the United States of America).
Section 2. The 85-1 Escrow Fund. (a) There is hereby established a fund (the "85-1
Escrow Fund") to be held as an irrevocably pledged escrow by the Escrow Bank, which the
Escrow Bank shall keep separate and apart from all other funds of the City and the Escrow Bank
and which shall be applied solely as provided in this Agreement. Pending application as
provided in this Agreement, mounts on deposit in the 85-1 Escrow Fund are hereby pledged and
assigned solely to the payment of (i) the accrued interest on the Fixed 85-1 Bonds coming due on
the Redemption Date, and (ii) the Redemption Price of the Fixed 85-1 Bonds on the Redemption
Date, Which amounts shall be held in trust by the Escrow Bank for the owners of the Fixed 85-1
Bonds.
(b) Upon the issuance and delivery of the Bonds, there shall be deposited in the 85-1
Escrow Fund the following:
(i) $
Indenture;
transferred from the
Fund established under the 85-1
(ii). $
Indenture;
transferred from the
Fund established under the 85-1
(iii) $,
Indenture; and
transferred from the
Fund established under the 85-1
(iv)
received from the proceeds of the sale of the Bonds.
(c) The city acknowledges that, upon the deposit of moneys pursuant to Section 2(b), the
moneys on deposit in the 85-1 Escrow Fund will, based upon the certification provided for in
Section 4(a) hereof, be at least equal to an amount sufficient to purchase the aggregate principal
amount of the Federal Securities set forth in Exhibit 1 hereto (the "Exhibit 1 Securities"), which
principal, together with all interest due or to become due on such Exhibit 1 Securities, and any
uninvested cash held by the Escrow Bank in the 85-1 Escrow Fund, will be sufficient to make the
payments required by Section 5(a) hereof.
Section 3. The ~6-2 Escrow Fund. (a) There is hereby established a fund (the "86-2
Escrow Fund'' and, together with the 85-1 Escrow Fund, the "Escrow Funds") to be held as an
irrevocably pledged escrow by the Escrow Bank, which the Escrow Bank shall keep separate and
apart from all other funds of the City and the Escrow Bank and which shall be applied solely as
provided in this Agreement. Pending application as provided in this Agreement, amounts on
deposit in the 86-2 Escrow Fund are hereby pledged and assigned solely to the payment of (i) the
accrued interest on the Fixed 86-2 Bonds coming due on the Redemption Date, and (ii) the
Redemption Price of the Fixed 86-2 Bonds on the Redemption Date, which amounts shall be
held in trust by the Escrow Bank for the owners of the Fixed 86-2 Bonds.
(b) Upon the issuance and delivery of the Bonds, there shall be deposited in the 86-2
Escrow Fund the following:
(i) $.
Indenture;
transferred from the
Fund established under the 86-2
(ii) $
Indenture;
transferred from the
Fund established under the 86-2
(iii) $
Indenture; and
transferred from the
Fund established under the 8.6-2
(iv) $
received from the proceeds of the sale of the Bonds.
(c) The City acknowledges that, upon the deposit of moneys pursuant to Section 3(b), the
moneys on deposit in the 86-2 EscroTM Fund will, based upon the certification provided for in
Section 4(b) hereof, be at least equal to an amount sufficient to purchase the' aggregate principal
amount of the Federal Securities set forth in Exhibit 2 hereto (the "Exhibit 2 Securities"), which
principal, together with all interest due or to become due on such Exhibit 2 Securities, and any
uninvested cash held by the Escrow .Bank in the 86-2 Escrow Fund, will be sufficient to make the
payments required by Section 5(b) hereof.
Section 4. Use and Investment of Moneys. (a) The Escrow Bank hereby acknowledges
receipt of the moneys described in Section 2(b) hereof 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 85-1
Escrow Fund, to make all payments required by Section 5(a) hereof. Except as provided in
Section 4(c) or Section 4(d) hereof, the balance of the moneys described' in Section 2(b) hereof
shall be held uninvested in the 85-1 Escrow Fund.
(b) The Escrow Bank hereby acknowledges receipt of the moneys described in
Section 3(b) hereof and agrees to invest $ of such moneys in the Exhibit 2
Securities upon receipt of certification by a nationally recognized firm of independent certified
public accountants that the Exhibit 2 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 2 Securities, together with any
uninvested moneys then held by the Escrow Bank in the 86-2 Escrow Fund, to make all
payments required by Section 5(b) hereof. Except as provided in Section 4(c) or Section 4(d)
hereof., the balance of the moneys described in Section 3(b) hereof shall be held uninvested in the
86-2 Escrow Fund.
(c) Upon the written request of the City, but subject to the conditions and limitations
herein set forth, the Escrow Bank shall purchase substitute Federal Securities for the Federal
Securities then held in an Escrow Fund with the proceeds derived from the sale, transfer,
redemption or other disposition of Federal Securities then on deposit in such Escrow Fund and
any uninvested money then held by the Escrow Bank in such Escrow Fund in accordance with
the provisions of this Section 4(c). Such sale, transfer, redemption or other disposition of
Federal Securities then on deposit in an Escrow Fund and substitution of other Federal Securities
shall be effected by the Escrow Bank upon the written request of the City but only by a
simultaneous transaction and only upon receipt of: (i) certification by a nationally recognized
fmu of independent certified public accountants that the Federal Securities to be substituted,
together with the Federal Securities which will continue to be held in 'such Escrow Fund,'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 such
Federal Securities held in such Escrow Fund, together with any uninvested moneys, to make all
payments required by Section 5(a) or Section 5(b) hereof, as applicable, which have not
previously been made, and (ii)receipt by the Escrow Bank of an opinion of counsel of-
recognized standing in the field of law relating to municipal bonds to the effect that the sale,
transfer, redemption or other disposition and substitution of Federal Securities will not adversely
affect the exclusion of interest on any Bonds or Prior Bonds from gross income for purposes of
federal income taxation.
(d) Upon the written request of the City, 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 Federal Securities held in an Escrow Fund, or the
proceeds from any sale, transfer, redemption or other disposition of Federal Securities held in an
Escrow Fund pursuant to Section 4(c) not required for the purposes of said Section, 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 5 hereof, as 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 the City as received by the Escrow Bank, free and clear of any
trust, lien, pledge or assignment securing the Prior 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 Federal Securities maturing at times and in amounts
sufficient to make such payment required by Section 5 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 finn 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
counsel of recognized standing in the field of law relating to municipal bonds to the effect that
such investment or reinvestment will not adversely affect the exclusion of interest on any Bonds
or Prior Bonds 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
the City, as received by the Escrow Bank, free and clear of any trust, lien, pledge or assignment
securing the Prior Bonds or otherwise existing hereunder.
(e) All Federal Securities purchased pursuant to this Agreement shall be deposited in and
held for the credit of the appropriate Escrow Fund. Except as provided in this Section 4, no
moneys or Federal Securities deposited with the Escrow Bank pursuant to this Agreement nor
principal of, or interest payments or other investment income on, any such Federal Securities
shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment
of the interest and Redemption Price with respect to the Fixed 85-1 Bonds or the Fixed 86-2
Bonds, as applicable, as provided by Section 5 hereof.
(f) The owners of the Fixed 85-1 Bonds shall have a lien on the moneys and Federal
Securities in the 85-1 Escrow Fund until such moneys and Federal Securities are used and
applied as provided in this Agreement. The owners of the Fixed 86-2 Bonds shall have a lien on
the moneys and Federal Securities in the 86-2 Escrow Fund until such moneys and Federal
Securities are used and applied as provided in this Agreement.
(g) The Escrow Bank shall not be held liable for investment losses resulting from
compliance with the provisions of this Agreement.
Section 5. Payment of Prior Bond,,;. (a)From the maturing principal of the Federal
Securities held in the 85-1 Escrow Fund and the investment income and other earnings thereon
and any uninvested money then held in the 85-1 Escrow Fund. the Escrow Bank shall transfer
and apply the amounts at the times as follows:
(i) On March 2, 1996, the Escrow Bank shall pay the interest on the Fixed 85-1 Bonds
then due in accordance with the terms of the 85-1 Indenture; and
(ii) On the Redemption Date, the Escrow Bank shall pay the Redemption Price of the
Fixed 85-1 Bonds in accordance with the terms of the 85-1 Indenture.
To the extent that the amount on deposit in the 85-1 Escrow Fund on the Redemption
Date is in excess of the amount necessary to make the required payments with respect to the
Fixed 85-1 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 Redemption Fund established under the Fiscal Agent Agreement, dated as of
1995 (the "Fiscal Agent Agreement"), by and I>etween the City and State Street Bank and Trusi
Company of California, N.A. as trustee, relating to the Bonds.
(b) From the maturing principal of the Federal Securities held in the 86-2 Escrow Fund
and the investment income and other earnings thereon and any uninvested money then held in the "'
86-2 Escrow Fund, the Escrow Bank shall transfer and apply the amounts at the times as follows:
On March 2, 1996, the Escrow Bank shall, pay the interest on the Fixed 86-2 Bonds
then duein accordance with the terms of the 86-2 Indenture; and
(ii). On the Redemption Date, the Escrow Bank shall pay 'the Redemption Price of the
Fixed 86-2 Bonds in accordance with the terms of the 86-2 Indenture.
To the extent that the amount on deposit in the 86-2 Escrow Fund on the Redemption
Date is in excess of the amount necessary to make the required payments with respect to the
Fixed 86-2 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 Redemption Fund established under the Fiscal Agent Agreement.
Section 6. Irrevocable Instructions to Mail Notice~ (a) The City hereby irrevocably
designates the Fixed 85-1 Bonds for prior redemption on the Redemption Date as indicated in
Section 5(a) hereof, and hereby irrevocably instructs the Escrow Bank, as trustee under the 85-1
Indenture, to give the mailed notice of redemption with respect thereto, as provided in
Section 3.06 of the 85-1 Indenture.
(b) The City hereby irrevocably designates the Fixed 86-2 Bonds for prior redemption on
the Redemption Date as indicated in Section 5(b) hereof, and hereby irrevocably instructs the
Escrow Bank, as trustee under the 86-2 Indenture, to give the mailed notice of redemption with
respect thereto, as provided in Section 3.07 of the 86-2 Indenture.
Section 7. Performance of Duties, The Escrow Bank agrees to perform only 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 8. Escrow Bank's Authority to Make Investments: The Escrow Bank shall
have no power or duty to invest any funds field under this Agreement except as provided in
Section 4 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 9. IndemniW, 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
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 Funds, the acceptance of the funds and securities deposited therein, the purchase of
any securities to be purchased pursuant thereto, 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 the Escrow Bank's own negligence or
willful misconduct or the negligence or willful misconduct of the Escrow Bank's respective
successors, assigns, agents and employees 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. The indemnities contained in this Section shall survive the termination of this
Agreemeni.
Section 10. Resvonsibilities of Escrow Bank, The Escrow Bank and its respective
successors, assigns, agen~ 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 Funds, 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 redemption of the Prior Bonds, 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 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 redemption of the Prior Bonds or to the validity of this
Agreement as to the City 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 and willfuI
misconduct, 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 as specifically requiring a certificate
of a nationally recognized firm of independent certified public accountants or an opinion of
counsel of recognized standing in the field of law relating to municipal bonds) 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 counsel
of. recognized standing in the field of law relating to municipal bonds be proved or established
pnor 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 counsel of recognized standing in the field of law relat/ng to municipal bonds.
Section 11. Amendments. The City and the Escrow' Bank may, without the consent of,
or notice to, the owners of the Prior Bonds, amend this Agreement or enter into such agreements
supplemental to this Agreement as shall not adversely affect the rights of such owners and as
shall not be inconsistent with the terms and provisions of this Agreement or of the 85-1 Indenture
or 86-2 Indenture, as applicable, 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 Prior 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 counsel of recognized
standing in the field of law relating to municipal 'bonds with respect tO compliance with this
Section, including the extent, if any, to which any change, modification, addition o~ elimination
affects the rights of the owners of the Prior Bonds or that any instrument executed hereunder
complies with the conditions and provisions of this Section.
Section 12. Term. This Agreement shall commence upon its execution and delivery and
shall terminate on the date upon which the Prior Bonds have been paid in accordance with this
Agreement and the 85-1 Indenture or 86-2 Indenture, as applicable.
Section 13. Compensation. The City shall from time to time, on demand, pay the
Escrow Bank the agreed upon compensation for its services to be rendered hereunder and
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 either Escrow Fund for the
payment of fees and expenses for services rendered or expenses incurred by the Escrow Bank
under this Agreement or otherwise.
Section 14. Severability. If any one or more of the covenants or agreements proVided in
this Agreement on the pan of the City 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.
Section 15. Counterparts. This Agreement may be eXecuted in several counterparts, ~
or any of which shall be rega3ded for all purposes as an original but all of which shall constitute
and be but one and the same instrument.
Section 16. Governing La~y. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement a.s of the
date first written above.
STATE STREET BANK AND TRUST
COMPANY, N.A., as Escrow Bank
By:
Authorized Officer
CITY OF TUSTIN
By:.
EXHIBIT 1
UNITED STATES TREASURY SECURITIES
Fixed 85-1 Bonds.
Tvr)e
Maturity
Principal Interest Accrued
Amount Rate Price Interest
Purchase
Pric~
· Exhibit 1-1
EXHIBIT 2
UNITED STATES TREASURY SECURITIES
FIXED 86-2 BONDS
Type
Matufi _ty
Principal Interest Accrued
Amount Rate Price Interest
Purchase
Price
Exhibit 2-1