HomeMy WebLinkAboutOB 2 LMTD OBLIG IMP BDS 9-6-88AG N-DA
DATE: AUGUST .88 Inter- Cum
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY MANAGER
RONALD A. NAULT, DIRECTOR OF FINANCE
RESOLUTION 88-97 AUTHORIZING THE ISSUANCE-OF NOT TO EXCEED
$81,400,000 CITY OF TUSTIN ASSESSMENT DISTRICT NO. 86-2
LIMITED OBLIGATION IMPROVEMENT BONDS AND OTHER RELATED
RECOMMENDATION:
Adopt Resolution No. 88-97 authorizing the issuance of not to
exceed $81,400,000 City of Tustin Assessment District No. 86-2
Limited Obligation Improvement Bonds and other related matters.
DISCUSSION:
The adoption of Resolution 88-97 is the final approval step prior
to the issuance of $81,400,000 of Improvement Bonds, the
proceeds of which will be used to provide the Infrastructure
Improvements as described in the Engineers Report approved bY the
City Council in a previous action.
Attached to the Resolution are Exhibits "A" thru "G", which are
the individual agreements between all involved parties that will
be working with the City for the life of these Bonds. Exhibit
"A" is the Indenture of Trust between the City and it's Trustee,
Citibank N.A.; Exhibit "B" is the Purchase Contract between the
City and Merrill Lynch Capital Markets as initial purchasers of
the Bonds; Exhibit "C" is the Remarketing Agreement between the
City and Merrill Lynch, Pierce, Fenner and Smith Incorporated,
who will remarket the Bonds while they are in the variable rate
mode; Exhibit "D" is the Preliminary Official Statement prepared
by Merrill, Lynch Capital Markets as the Primary Sales Document;
Exhibit "E" is the Reimbursement Agreement between the City and
.Tokai Bank, LTD., who will provide the Letter of Credit allowing
for liquidity while the Bonds are in the variable rate mode; and
Exhibit "F" is the Protocol Agreement between the City and the
Irvine Company that establishes the means of monitoring and
administering the Assessment District; Exhibit "G" is the
Reimbursement Agreement between the City and the Irvine Company
providing assurance of payment of construction costs in the.event
they exceed the Bond issue proceeds.
The Bond financing for AD 86-2 is set up exactly like our first
District, 85-1. The initial issuance will be in a variable rate
mode. When property is ultimately subdivided, and prior to
Page 2
August 30, 1988
Resolution 88-97
their assessment is for the remaining life of the bonds.
Representatives of the various parties will be available at the
meeting if the Council should have specific questions regarding
this financing.
ult
Director of Finance
RAN:is
Attachments
EXHIBIT A
Seventhl Draft !#17.1
8/30/88 !#17.2
#18
I_NDENTURE OF TRUST
#22
#24
CITY OF ~
#26
a_ d
#28
C__ITIBANK, N.A.
as Trustee
#30
#31
_Dated as of September 1, 1988
#33
#35
94691.9.2535.06:14 #16
T_ABLE OF CONTENTS
TITLE
PAGE
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~ection 1.01.
~ection 1.02.
~ection 1.03.
_ARTICLE I
Definitions; Equal Security
Definitions ............. 2
Authority for the Indenture ..... 21
Indenture to Constitute Contract . . .21
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_ARTICLE II
Conditions and Terms of Bonds
~ection 2.01. Authorization of Bonds ........ 22
~ection 2.02. Denominations, Medium, Method and
Place of Payment and Dating of
Bonds .......... 22
~ection 2.03. Payment of Principal a~d I~t~r~st
of Bonds ............... 23
~ection 2.04. Calculation and Payment of
Interest ............... 23
~ection 2.05. Determination of Adjusted Interest
Rates and Unit Pricing Int6rest
Periods . .24
· · . · . ·
~ection '2.06· Determination ~f Varia~l~ ~n~ere~t
Rate ............... 26
~ection 2.07. Determination ~f Fixed Interest
Rate ................. 27
~ection 2.08. Alternate Rate for Interest
Calculation ............. 28
~ection 2·09.
~ection 2.10.
~ection 2.11.
~ection 2.12.
~ection 2.13.
~ection 2.14.
~ection 2.15.
~ection 2.16.
Interest on Bank-Owned Bonds ..... 28
Changes in Mode ........... 29
Form of Bonds ...... 30
Execution and AuthentiCatiOn o~
Bonds ................ 31
Transfer and Exchange of Bonds .... 31
Registration Books .......... 31
Temporary Bonds ........... 32
Bonds Mutilated, Destroyed, Lost
or Stolen .............. 32
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SECTION
Section 3.01.
Section 3.02.
Section 3.03.
~ection 3.04.
~ection 3.05.
~ection 3.06.
~ection 3.07.
~ection 3.08.
~ection 3.09.
TABLE OF CONTENTS, Continued
TITLE
_ARTICLE III
Redemption of Bonds
Mandatory Redemption ......... 33
Optional Redemption of Unit
Pricing Bonds'. . .......... 37
Optional Redemption of Bonds in
the Demand Mode ........... 37
Optional Redemption of Bonds in
the Fixed Rate Mode ._ _ _ _ _ . .38
Extraordinary Mandatory RedemptiOn.. .38
Selection of Bonds for Redemption . .39
Notice of Redemption ......... 39
Partial Redemption of Bonds ..... 40
Effect of Redemption ......... 40
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Purchase of Bonds
~ection 4.01. Optional Tender of Unit Pricing
Bonds ................ 41
~ection 4.02. Optional Tender Of Bonds in the
Demand Mode ............. 41
~ection 4.03. Mandatory Purchase of Bonds ..... 42
~ection 4.04. Tender and Purchase of Bonds- .... 43
~ection 4.05. Mandatory Purchase Upon Expiration
or Termination of Letter of Credit . .45
~ection 4.06. Letter of Credit; Alternate Letter
of Credit ............. 46
~ection 4.07. No Sales After C~rtain Events .... 49
~ection 4.08. Purchase Fund ............ 49
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SECTION
TABLE OF CONTENTS, Continued
TITLE
PAGE
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_ARTICLE V
Pledge of the Indenture; Funds and Accounts
·
~ection 5.01.
~ection 5.02.
~ection 5.03.
~ection 5.04.
~ection 5.05.
~ection 5.06.
~ection 5.07.
S_ection 5.08.
~ection 5.09.
Pledge Effected By Indenture ..... 51
Pledge of Assessment Installments;
Assessment Fund ........... 52
Collection of Assessment
Installments ............. 52
Deposit of Moneys .......... 54
Conversion Costs Fund ........ 59
Construction Fund .......... 60
Interest Reserve Fund ........ 61
Investment Earnings Fund ....... 62
Investments ............. 63
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~ection 6.01.
~ection 6.02.
~ection 6.03.
~ection 6.04.
~ection 6.05.
~ection 6.06.
~ection 6.07.
~ection 6.08.
Covenants
Compliance with this Indenture .... 64
Observance of Laws and Regglations . .64
Other Liens. . . .......... 65
Prosecution of Suits ......... 65
Accounting Records and Statements . .65
Recordation and Filing ........ 65
Further Assurances .......... 65
Arbitrage Covenant .......... 66
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_ARTI C~.~. VII
Default, Failure to make timely Ass~
Installments, and Limitations of Liability
Section 7.01.
Section 7.02.
Section 7.03.
~ection 7.04.
~ection 7.05.
Section 7.06.
Events of Default .......... 66
Action on Failure to Make Timely
Assessment Installments ....... 67
Remedies of the Trustee ....... 69
Non-Waiver .............. 69
Remedies Not Exclusive ........ 70
No Liability by the City to the
Owners ................ 70
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SECTION
Section ?.07.
.
Section ?.08.
TABLE OF CONTENTS, Continued
TITLE
PAGE
No Liability by the Trustee to the
Owners ................ 70
Action by Owners ........... 70
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_ARTICLE VIII
The Trustee and the Remarketing Agent andthe
Paying Agent
~ection 8.01.
Section 8.02.
~ection 8.03.
~ection 8.04.
~ection 8.05.
~ection 8.06.
Employment and Duties of the
Trustee ............. 71
Removal and Resignation ~f t~e
Trustee ......... 71
CompensatiOn a~d I~d~m~ifica~ion
of the Trustee ............ 72
Protection of the Trustee ...... 73
Appointment of Remarketing Agent . . .74
Appointment of Paying Agent/Tender
Agent ................ 74
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_ARTICLE IX
Amendment of or Supplement to the Indenture
~ection 9.01.
Section 9.02.
Section 9.03.
~ection 9.04.
Amendment or Supplement by Consent
of Owners .............. 75
Disqualified Bonds .......... 76
Endorsement or Replacement of
Bonds After Amendment of
Supplement .............. 76
Amendment or Supplement by Mutual
Consent ............... 77
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SECTION
TABLE OF CONTENTS, Continued
TITLE
PAGE
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_ARTICLE X
Defeasance
~ection 10.01. Discharge of Bonds and Indenture . . .77
~ection 10.02. Unclaimed Money ........... 79
~ection 10.03. No Discharge ............. 79
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Miscellaneous
~ection 11.01. Benefits of this Indenture Limited
to Parties ............. 79
~ection 11.02. Successor Deemed Included in all
References to Predecessor ...... 80
~ection 11.03. Execution of Documents by Owners . . .80
~ection 11.04. Waiver of Personal Liability .... 80
~ection 11.05. Acquisition of the Bonds by City . . .81
~ection 11.06. Notice by Mail ............ 81
Section 11.07. Funds ................ 81
~ection 11.08. Article and Section Headings,
Gender and References ........ 81
~ection 11.09. Partial Invalidity ........... 81
~ection 11.10. California Law ............ 82
~ection 11.11. New York Time ............ 82
~ection 11.12. Notices ............... 82
~ection 11.13. Notices to Rating Agencies . .. .... 84
Section 11.14. Effective Date ............ 84
Exhibit A
Form of Improvement Bond ........ A-1
Kxhibit B
Form of Development Notice ....... B-1
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-V- #4053
I_NDENTURE OF TRUST #41
T_HIS INDENTURE OF TRUST dated as of September 1, 1988 by #44
and between the City of Tustin and Citibank, N.A., a national banking #45
association organized under the laws of the United States of America; #46
W I T N E S S E T H : #49
W_HEREAS, the City intends to finance the costs of certain #53
works and improvements through the issuance of Bonds under the Act; #54
and # ( 54 )
_WHEREAS, the City desires to provide for the securing of #56
the Bonds as Rrovided in this Indenture; #57
_WHEREAS, the Trustee has accepted t_he trust created and #59,6¢
established b_y this Indenture and i_n evidence thereof has joined i_n #61,62
the execution hereof; #(63)
NOW, THEREFORE, in consideration of the premises, of the #65,6~
acceptance by the Trustee of the trust hereby created, and of the # (67)
purchase-and acceptance of the Bonds by the'Owners thereof, a_nd for #68,6?
other valuable consideration, _the receipt of which is hereby acknowl- #70
edged, and to fix and declare the terms and conditions u_pon which _the #71,72
Bonds are to be issued, authenticated, delivered, secured and #74,75
accepted b_y all persons who shall from time to time be or become #76,77
Owners thereof, and to secure the payment of all the Bonds at any #78,79
time issued and Outstanding hereunder and t_he interest thereon #80
according to their tenor, purport and effect, and to secure the pay- #81
ment of amounts and performance obligations owing to the _Bank pursu- #82
ant to the Reimbursement Agreement to the extent payable in accor- #83
dance with the Indenture or the Act, and to secure the performance #84
and observance of all of the covenants, a_greements and conditions #85
contained in the Bonds and the Indenture, t_he City by these presents #86
does grant, bargain, sell, release, convey, assign, transfer and #87,88
pledge u_nto the Trustee all right, title and interest in and to _the #89,9C
Assessments and other funds to the extent described in Section 5.01 #92
of this Indenture, and any additional property _that may from time to #93,94
time, b_y delivery or by writing of any kind, b_e subjected to the lien #95,96
hereof by the City or by anyone on its behalf and the Trustee is #97,98
hereby authorized to receive the same at any time as additional s_ecu- #99
rity hereunder, s_ubject to such permitted encumbrances under this #100
Indenture as may be superior lby operation of law or otherwise) t_o #101,1
the lien hereof. #(103)
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To have and hold all of the above _unto the Trustee a_nd its #104,1
successors and assigns forever for the equal and ratable benefit of #108,1
the Owners from time to time o_f all the Bonds, if any, authenticated #111,1
hereunder and issued by the City and Outstanding without any 'priority #114,1
of any one Bond over any other except as expressly provided herein #116
u_pon the trusts and subject to the covenants and conditions hereinaf- #117
ter set forth. #118
·
N_OW, THEREFORE, KNOW ALL PEOPLE B_Y ~IESE PRESENTS, THIS # 120, ]_
INDENTURE OF TRUST _WITNESSETH: #122
_ARTICLE I # 123
DEFINITIONS; EQUAL SECURITY
#(123)
S_ECTION 1.01. Definitions. Unless the context otherwise #125
requires, the terms defined in this Section 1.01 shall for all put- #126
poses hereof and of any amendment hereof or s_upplement hereto and of #127
the Bonds and of any certificate, o_pinion, request or other document #128
mentioned herein or therein have the meanings defined herein, the #129
following definitions to be equally applicable to both the singular #130
and plural forms of any of the terms defined herein: #131
Act #133
"Act" means the Municipal Improvement Act of 1913 #(133)
(Division 12 of the California Streets and Highways Code), as #134
amended, and the Improvement Bond Act of 1915 IDivision 10 of the #135
California Streets and Highways Code), as amended. #(135)
Adjusted Interest Rate
#137
"Adjusted Interest Rate" means, for any Unit Pricing #(137)
Bond, that annual rate of interest, expressed as a percentage and #138
rounded to the nearest one thousandth of one percent determined by # (138)
the Remarketing Agent on a Rate Adjustment Date, which would, in the #139
judgment of the Remarketing Agent lhaving due regard to the prevail- #140
ing market conditions), enable such Bond to be sold at Dar in the #141
secondary market on such Rate Adjustment Date for the Unit Pricing #(141)
Interest Period commencing on such Rate Adjustment Date; provided, #142
however, that the Adjusted Interest Rate s_hall in no event exceed the #143
Maximum Rate with respect to Unit Pricing Bonds. # (143)
Affiliate
#145
"Affiliate" of any owner of real property in the District #(145)
means any entity which controls o_r is controlled by or is under #146
94691.9.2535.06:14
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#(38)
common control with such o_wner. F_or the purposes of this definition, #147,1
"Control" lincluding, with correlative meanings, the terms #149
'_'controlled by" and "under common control with"), as used with #150,1
respect to any owner or entity, shall mean ii) the ownership of a #152
majority of the voting securities of, or voting rights in, such owner #153
or entity, or iii) possession of the right to a majority of the e_am- #154,1
ings or profits of such owner or entity. #(155)
Alternate Letter of Credit
#157
"Alternate Letter of Credit" means a letter of credit or #(157)
other security ~evice issued in accordance with Section 4.06 hereof #158
which shall have a term of not l_ess than one year and shall have the #159
same material terms as t_he Letter of Credit. #160
Alternate Rate
#162
"Alternate Rate" means, for any Alternate Rate Calculation # (162)
Period, the rate per a_nnum specified in the index (the "Index") pub- #163
lished by the Indexing Agent and in effect for such Alternate Rate #164
Calculation Period. T_he Index shall be based upon yield evaluations #165,1
at par of bonds, the interest on which is excluded from gross income # (166)
for purposes of Federal income taxation,, of not less than five "high #167
grade" component issuers selected by the Indexing Agent which shall #168
include, without l_imitation, issuers of general obligation bonds. #169
The specific issuers included among the component issuers m_ay be #170,1
changed from time to time by the Indexing Agent in its discretion. #170.2
T_he bonds o_n which the Index is based shall not include any bonds the #170.2
interest on which is subject to a "minimum tax" or similar tax under #172
the Code, unless all tax-exempt bonds are subject to such tax. _When #173,1
Bond~ are in the Demand Mode or a Unit Pricing Mode with a Variable #(174)
Rate Interest Period or Unit Pricing Interest Period, respectively, #175
of 30 days or less, the yield evaluation period for the Index shall #(175)
be 30-day ~ield evaluations. W_hen Bonds are in a Unit Pricing Mode #176,1
with a Unit Pricing Interest Peric~ of greater than 30 days but less #176.2
than or equal to 180 days, the ~ield evaluation period for the Index #176.3
shall be 180-day yield evaluations. _When Bonds are in a Unit Pricing #176.4
Mode with a Unit Pricing Interest Period ~[reater than 180 days, the #176.(
yield evaluation period for t_he Index shall be yield evaluations #176.7
matching the term of the Unit Pricing Interest Period. #176.~
If the Indexing Agent no longer publishes an Index satisfy- #176. c.
ing t_he requirements of the preceding paragraph, the Alternate Rate #176.]
for a Variable Rate Interest Period or a Unit Pricing Interest Period #176.]
s-hall be the rate per a_nnum specified in the most recently published #176. ]
Index for a comparable Variable _Rate Interest Period or Unit Pricing #176. ]
Interest Period, respectively. # (176.
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Alternate Rate Calculation Period
#178
"Alternate Rate Calculation Period" means ii) for a Bond #179
in the Unit Pricing Mode, the period extending from.the first date of #(179)
calculation 9f such Alternate Rate to but not including the first #180
Business Day of the next calendar month 'and thereafter, ~rom. the #181
first Business Day of a calendar month to'but not including t_he first #182
Business Day of the next calendar month, a_nd (ii) for a Bond in the #183
Demand Mode, the period extending from the first date 9f calculation #184
of such Alternate Rate to but not including the next T_uesday and #185
thereafter, from each Tuesday to but not including t_he following #186
Tuesday. #(186)
Assessment #188
"Assessment" means the assessment levied by the City con- #(188)
stituting a first lien and charge upon the real property within the #189
District, excluding any administrative costs included within such #189.1
Assessment as authorized by Section 10312 of the Act. #(189.
Assessment Fund
#191
"Assessment Fund" means the fund by that name established # (191)
in Section 5.02 hereof. # (191)
Assessment Installments
#193
"Assessment Installments" means the Assessment install- #(193)
ments of principal, interest, premium, if any, and incidental #(193)
expenses to be. paid b_y the owners of property within the District. #194
Authorized Denominations
#196
"Authorized Denominations" means (i) with respect to Unit #(196)
Pricing Bonds with Unit Pricing Interest Periods of less than one #(196)
year, $100,000 and any integral multiple of $1,000 in excess of #197
$100,000; (ii) with respect to Unit Pricing Bonds with Unit Pricing #(197)
Interest Periods equal to or greater than one year, $5,000 and any #198
integral multiple thereof; liii) with respect to Bonds in the Demand #199
Mode, $100,000 and any integral multiple of $1,000 in excess of #(199)
$100,000; and (iv) with respect to Bonds in the Fixed Rate Mode, #(199)
$5,000 a_nd any integral multiple thereof, except that upon conversion #200
of Unit Pricing Bonds or Demand Bonds to Fixed Rate Bonds there may #200.1
b_e ~ne Bond in a denomination other than $5,000 or an integral multi- #200.2
ple thereof. # (200.
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#(38)
Automatic Conversion Date #202
"Automatic Conversion Date" means: each date described #203
in (i), (ii) or (iii) below: #(203)
Iii) with respect to $112,254,00--01 aggregate
principal amount of Unit Pricing Bonds or Demand
Bonds, February 1, 1989, which amount is approximately
equal to the Assessments on Lot numbers 1, 2, 9, 10,
13, 24, 25 and 27 of Tract number 12870;
!#205
!#206
#207
'#208
#(208)
iii) in accordance with the provisions of this
Indenture, February 1 and August 1 of each year if
each such date is a Business Day, and if not, _the next
succeeding date which is a Business Day; and
#210
#(210)
#211
#(211)
liii) September 2, 1998, or the next succeeding
day w_hich is a Business Day, provided, however, that
upon receipt of a Favorable Opinion of Bond Counsel
prior to July 15, 1998 (which opinion is not withdrawn
prior to the new Automatic Conversion Date h_ereafter
described), in the event the Expiration Date of the
Letter of Credit is extended, s_uch date shall be _the
fifth Business Day prior to the resulting Expiration
Date.
#213
#214
#214.1
#214.1
#214.1
#214.2
#214.2
#(214.
#(214.
Bank #216
"Bank" means The Tokai Bank, Ltd. Los Angeles Agency, a_nd #218
its successors and assigns or any issuer of an Alternate Letter of # (218)
Credit. # (218)
Bank Interest Rate
#220
"Bank Interest Rate" means the interest rate payable on #(220)
Bank-Owned Bonds and determined pursuant to ~he Reimbursement #221
Agreement but in no event shall such rate 9xceed the Maximum Rate #222
with respect to Bank-Owned Bonds. #(222)
Bank Mandatory Purchase Date
#224
"Bank Mandatory Purchase Date" means the date so speci- #(224)
fied in a notice from _the Bank with respect to a default described in #225
Section 7.1 of t_he Reimbursement Agreement and/or the Letter of #226
Credit. # (226)
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#(38)
Bank-Owned Bonds #228
"Bank-Owned Bonds" means any Unit Pricing Bonds or Demand #(228)
Bonds purchased ~or the ~enefft of the Bank with the proceeds of a #228.1
draw. on the. Letter of Credit or with funds provide~ by the Bank pur- #228.2
suant to ~ection 4.04 or Section 4.06(B).hereof. #229
Bond CoUnsel #231
"Bond Counsel" means any firm of nationally recognized #(231)
municipal bond attorneys selected by the City and experienced in the #(231)
issuance of municipal bonds and the exemption of the interest _thereon #232
from Federal income taxation. # (232)
Bonds #234
"Bonds" means the $81,400,000 principal amount of Bonds #(234)
issued pursuant hereto a_nd at any time Outstanding hereunder that are #235,2
authenticated a_nd delivered by the Paying Agent under and pursuant to #237
Article II hereof. #(237)
Business Day #239
"Business Day" means a day of the year on which the #(239)
Trustee, Paying Agent, Tender Agent, Remarketing Agent, the Bank and #240,2
banks or trust companies in New York, New York, or i_n California are, #242
or the New York Stock Exchange is, not authorized or required to #(242)
remain closed. # (242)
City #244
"City" means the City of Tustin, California, a municipal #(244)
corporation ~uly organized and existing under and by virtue of the #245
Constitution and laws of the State of California. #246
Code " #246.2
"Code" means the Internal Revenue Code of 1986, as #(246.
amended. #(246.
Construction Fund
#248
"Construction Fund" means the fund by that name estab- #(248)
lished in Section 5.06 hereof. #(248)
Contribution Account
#248.6
"Contribution Account" means the account by that name #(248.
created in Section 4.08 hereof. #248.C
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#(38)
Conversion Costs Fund
#248.2
"Conversion Costs Fund" means the fund by that name estab- #(248.
lished in Section 5.05 hereof. #(248.
Conversion Date
#250
"Conversion Date" means any date on which a Bond 40_egins to #251,
bear interest at a Fixed Interest Rate. #.(P-52)
Demand Bond #254
"Demand Bond" means a Bond in the Demand Mode.
#(254)
Demand Date #256
"Demand Date" means the Business Day on which a Demand #(256)
~ond begins to bear interest at the Variable Interest Rate. #257,2
Demand Mode #260
"Demand Mode" means that period of time during which a #(260)
Bond bears interest at the Variable I_nterest Rate in accordance with #261
Section 2.06 hereof. #(261)
Development Notice
#263
"Development Notice" means an executed notice in substan- #(263)
tially the form set forth in E_xhibit B attached hereto. #264
District #269
"District" means the City of Tustin Assessment District #(269)
No. 86-2. #(269)
Election Notice
#271
"Election Notice" means a telephonic notice to the #272
Remarketing Agent and the Tender Agent no later than 10:00 A.M. New #(272)
York City time o_n the Purchase Date, confirmed by a written notice to #273
the Tender Agent delivered on the Purchase Date, stating (i) the #(273)
principal amount of Unit Pricing Bonds t_o be purchased, £ii) the cer- #274,2
tificate number of each such Bond, liii) the name of the Owner of #276
each such Bond, and liv) the Purchase Date on which such Bonds are to #277
be purchased. # ( 2 7 7 )
94691.9.2535.06:14
-7-
#38
#(38)
Event of Default #279
"Event of Default" means any occurrence or event specified #(279)
in and defined by S_ection 7.01 hereof. #280
Excess Earnings Account
#280.2
"Excess Earnings Account" means the account by that name #(280.
established in ~ection 5.08 hereof. · #280.2
Expiration Date
#282
"Expiration Date" means the stated expiration date of the #(282)
Letter of Credit, or such stated expiration date a's it may be #(282)
extended from time to time as provided in the Letter of Credit. #283
Favorable Opinion of Bond Counsel
#285
"Favorable Opinion of Bond Counsel" means, with respect #(285)
to any action the occurrence of which requires such an opinion, an #286
unqualified opinion of Bond Counsel to the effect that such action is #287
permitted under the Act and this Indenture a_nd will not impair the #288
exclusion of interest on the Bonds from gross income for Federal #289
income tax purposes or the exemption of interest on the Bonds from # (289)
taxation under the laws of the State lsubject to the inclusion of any #290
exceptions contained in the opinion of Bond Counsel d_elivered upon #291
original .issuance of the Bonds). #(291)
Final Pricing Date
#293
"Final Pricing Date" means the fourth (4th) Business Day #(293)
following the Preliminary Pricing Date. #(293)
Final Scale #295
"Final Scale" means the Final Scale posted by the #(295)
Remarketing Agent at or before 1_1:30 A.M. on each Rate Adjustment #296
Date. # (296)
Finance Director
#296.2
City.
"Finance Director" means the Finance Director of the #(296.
#(296.
Fixed Interest Rate
#298
"Fixed Interest Rate" means the rate to be borne by a _Bond #299
on and after a Conversion Date with respect thereto, w_hich rate shall #300
be determined in accordance with Section 2.07 hereof. #(300)
94691.9. 2535.06: 14
#38
#(38)
#302
Fixed Rate Bond
"Fixed Rate Bond" means any Bond bearing interest at a #(302)
Fixed Interest Rate. #(302)
Fixed Rate Mode
#304
"Fixed Rate Mode" means that period of time during which a #(304)
Bond bears interest at a Fixed Interest Rate. #305
Fixed Rate Reserve Account
#307
"Fixed Rate Reserve Account" means the account by that #(307)
name created in Section 5.04 hereof. #(307)
Fixed Rate Reserve Requirement
#309
"Fixed Rate Reserve Requirement" means an amount equal to #(309)
one half of the maximum annual d_ebt service on the Bonds converted to #310,:
a Fixed Interest Rate and Outstanding. #(311)
Indenture #313
"Indenture" means this Indenture of Trust dated as of #(313)
September 1, 1988 by and between the City ._and the Trustee, a_s it may #314,~
from time to time be s_upplemented or amended pursuant to the provi- #317
sions hereof. #(317)
Indexing Agent
#317
"Indexing Agent" means Kenny Information Systems, a corpo- #(317.
ration duly organized and existing _under and by virtue of the laws of #317.C
the State of New York, and its successors _and assigns, except that if #317. C
such corporation shall be dissolved or liquidated o_r shall no longer #317.0
publish the indices referred to in the definition of Alternate Rate #317.0
herein, the term "Indexing Agent" shall mean any other entity pub- #317.C
lishing similar indices selected by the City and approved by the Bank #317.¢
and the Remarketing Agent Lneither of whom shall be under any liabil- #317. £
ity by reason of such approval). #(317.
Information Services
#317.2
"Information Services" means Financial Information, Inc. 's # (317.
"Daily Called Bond Service," 30 Montgomery Street, lOth Floor, Jersey #317.2
City, New Jersey 07302, Attention: Editor; Kenny Information #317.4
_ "55 Broad Street, 28th Floor, New #317 =
Services "Called Bond Service, --
"99 Church #317 (
York, New York 10004; Moody' s "Municipal and Government, ·
Street, 8_th Floor, New York, New York 10007, Attention: Municipal #317.7
" 25 #317 ~
News Reports; and Standard & Poor's "Called Bond Record, .
-9- #38
94691.9. 2535.06: 14 # ( 38 )
Broadway, ~rd Floor, New York, New York 10004; or such other #317.9
addresses ~nd/or such other services providing information with #317.1
respect to galled bonds as the City may designate. #317.1
Interest Account'
#319
"Interest Account" means the .account by that name created #(319)
in Section 5.04 hereof. #(319)
Interest Payment Date
#321
"Interest Payment Date" means (i) with respect to Unit #(321)
Pricing Bonds with Unit Pricing Interest Periods of less than #(321)
180 days: the Purchase Date thereof; iii) with respect to Unit #322
Pricing Bonds with Unit Pricing Interest Periods equal to or greater #(322)
than 180 days: each March 2 and September 2 prior to the Purchase #323
Date and the Purchase Date; (iii) with respect to Demand Bonds: _the !#324
first Wednesday of each calendar month (whether or not a Business !#(324
Day) or, with respect to Demand Bonds that are optionally tendered !#(324
pursuant to Section 4.02 hereof, the Optional Tender Date relating to !#324.
such optionally tendered Demand Bonds; and (iv) with respect to a !~324.
given Bond in the Fixed Rate Mode: each March 2 and September 2, !#325
commencing not later than the March 2 i_mmediately preceding the first #325.1
Principal Payment Date for such Fixed Rate Bond. "_Interest Payment #325.2
Date" shall also mean any Mandatory Tender Date. #326
Interest Reserve Fund
#328
"Interest Reserve Fund" means the fund by that name estab- #(328)
lished in Section 5.07 hereof. #(328)
Interest Reserve Fund Amount
#330
"Interest Reserve Fund Amount" means an amount equal to #(330)
the interest payable on the aggregate principal amount of Unit #(330)
Pricing Bonds and Demand Bonds then Outstanding for a period of #331
thirty-five (35) days at _the Maximum Rate with respect to Bonds other #332
than Fixed Rate Bonds. #(332)
Investment Earnings Account
#332.2~
"Investment Earnings Account" means the account by that #(332.
name established in Section 5.08 hereof. #(332.
Investment Earnings Fund
#332.4
"Investment Earnings Fund" means the fund by that name #(332.
established in Section 5.08 hereof. #(332.
94691.9.2535.06:14
-10-
#38
Letter of Credit #334
"Letter of Credit" means the irrevocable letter of credit #(334)
issued by the. Bank ~ontemporaneously with the original delivery of #335
the Bonds, except that upon the issuance of an Alternate Letter of #336
Credit in accordance with Section 4.06 hereof it shall mean such #337
~lternate Letter of Credit. #338
Letter of Credit Account #340
. .
"Letter of Credit Account" means the account by that name #(340)
created in Section 4.08 hereof. #(340)
Mandatorily Tendered Bonds
#342
"Mandatorily Tendered Bonds" means Bonds required to be #(342)
tendered for purchase on a ~andatory Tender Date. #345
Mandatory Tender Date
#347
"Mandatory Tender Date" means any Proposed Conversion #(347)
Date, any Automatic Conversion Date, any Demand Date, any Unit #(347)
Pricing Date, ~ny Substitution Date, any Bank Mandatory Purchase #348
Date, the fifth Business Day prior to the Termination Date and the #(348)
fifth Business Day prior to the Expiration Date. #(348)
Maturity Date
#350
"Maturity Date" means September 2,' 2013.
#(350)
Maximum Rate #352
"Maximum Rate" means, on any day, the lesser of (i) 12% or #(352)
such higher rate applicable to the Bonds o_n that day by Section 53531 #353
of the Government Code or other applicable provisions of law, which- #354
ever is greater, or (ii) the actual rate used to calculate _the size #355
of the portion of the Letter of Credit which is available t_o be drawn #356
for the payment of interest on the Bonds on such date, w_hich shall #357
initially be 12%; provided, however, that, if no _Letter of Credit is #358
then in effect, the Maximum Rate shall be the r_ate determined pursu- #359
ant to clause (i) of this definition. #(359)
Moody ' s
#368
"Moody's" means Moody's Investors Service, a corporation #(368)
duly organized and existing under and by virtue of the laws of the #369
State of Delaware, and its successors and assigns, except that if #370
such corporation shall be dissolved or liquidated or shall no longer #371
perform the functions of a securities rating agency, then the term #372
94691.9.2535.06:14
-11-
#38
"_Moody's" shall be deemed to refer to any other nationally r_ecognized #373,3
securities rating agency selected by the City and approved by the #375
Bank (who shall not be under any liability by.reason of such #376
approval) . .4 # (376)
Opinion of Counsel
#378
"Opinion of Counsel" means a written opinion of Bond #(378)
Counsel, appointed and paid by the City and, prior to the Expiration #379
Date or the Termination Date, satisfactory to and approved by t_he #379.1
Bank (who shall not be under any liability by reason of such #381
approval) . # (381)
Optional Tender Date
#383
"Optional Tender Date" means the day stated in the #(383)
Optional Tender Notice delivered by any Owner of a Bond to the Tender #(383)
Agent and to the Remarketing Agent with respect t_o a Bond, which day #384
(i) in the case of Demand Bonds, shall be the seventh calendar day #(384)
after the date of the delivery of the Optional Tender Notice (or the # (384)
first B_usiness Day thereafter, if such seventh calendar day is not a #385
Business Day), ~ii) in the case of Unit Pricing Bonds, shall be the #386
Purchase Date, and (iii) with respect to Bank-Owned Bonds, shall be #387
each B_usiness Day. #388
Optional Tender Notice
#390
"Optional Tender Notice" means the notice from any Owner #(390)
of a Bond to the Tender Agent and the Remarketing Agent of an #(390)
Optional Tender Date in accordance with the provisions hereof consti-# (390)
tuting the Tender Notice in the Demand Mode or an Election Notice i_n #391
the Unit Pricing Mode. #(391)
Outstandinq #394
"Outstanding," when used as of a particular time with ref- #(394)
erence to Bonds, ~eans (subject to the provisions of Section 9.02 #395
hereof) all Bonds ~elivered hereunder except: #396
il) Bonds cancelled by the Paying Agent or surren-
dered to the ~aying Agent for cancellation;
#398
#399
12) Bonds paid or deemed to have been paid within
the meaning of Section 10.01 hereof; and
#401
#402
13) Bonds in lieu of or in substitution for which
replacement _Bonds shall have been executed by the City
and delivered b_y the Paying Agent hereunder.
#404
#4O5
#406
94691.9.2535.06:14
-12-
#38
#(38)
Notwithstanding the foregoing, Bonds purchased for the #408,~.
benefit of the Bank with the proceeds of a_ draw on the Letter of #409.t
Credit pursuant to Section 4.04 hereof or Bonds pledged to the Bank #(409.
pu. rsuant to Section 4.06(B) shall remain _Outstanding while such Bonds #410,4
are pledged ~o the Bank until the Bank is paid all amounts due on #412
such Bonds. #(412)
Owner #415
"Owner" means the registered owner of a Bond.
#(415)
Paying Aqent #417
"Paying Agent" meahs Citibank, N.A., a national banking #(417)
corporation duly i_ncorporated and existing under and by virtue of the #418
laws of the United States of America, and having its corporate agency #419
office in New York, New York, or any other commercial bank or trust #420
company having an office i_n New York, New York, which may be substi- #421
tuted in its place as provided in Section 8.06 hereof. #422
Permitted Investments
#424
"Permitted Investments" means the investments allowed by #(424)
Section 53601 and Section 5922 of the California Government Code and #424. ]
including but not limited to any of the following, to the extent then #(424.
permitted by law: #(424.
il) United States of America Treasury notes,
bonds, bills or certificates of .indebtedness, for
which the faith and credit of the United States of
America are pledged for the t_imely payment of interest
and principal;
#426
#427
#428
#429
#(429)
12) Obligations issued by banks for cooperatives,
federal land banks, f_ederal intermediate credit banks,
federal home loan banks, t_he Federal Home Loan Bank
Board or the Tennessee Valley Authority or obliga-
tions, participations or other instruments of or
issued by, or fully guaranteed as to interest and
principal by, the Federal National Mortgage
Association, or guaranteed portions of S_mall Business
Administration notes, or obligations, participations
or other instruments of or issued by a federal agency
or a United States of America government-sponsored
enterprise;
#431
#432
#433
#434
#(434)
#435
#436
#437
#(437)
#438
#439
#(439)
-13-
#38
94691.9. 2535.06:14 #(38)
13) Bills of exchange or time drafts drawn on and
accepted by a c_ommercial bank (including the Bank, the
Paying Agent and the Trustee), otherwise known as
bankers acceptances, which are eligible for purchase
by members of the Federal Reserve System;
14) Commercial paper of the highest letter and
numerical rating as provided by Moody's or S&P, which
commercial pa~er is limited to issuing corporations
that are organized and operating within the United
States of America and that have total assets in excess
of five hundred million dollars ($500,000,000) and
that have an "_A" or higher rating for the issuer's
debentures, other than commercial paper, as provided
by Moody's or S&P; Rrovided that purchases of eligible
commercial paper m_ay not exceed two hundred seventy
(270) days' maturity or represent more than ten per-
cent (10%) of the outstanding commercial paper of an
issuing corporation;
15) Certificates of deposit issued by a state or
national bank lincluding the Paying Agent and the
Trustee) or savings and loan association or a
state-licensed branch of a foreign bank in which the
City is authorized by law to deposit its funds whose
deposits are insured by either the Federal Deposit
Insurance Corporation or the Federal Savings and Loan
Insurance C_orporation, as the case may be, and the
short-ter~ debt obligations of which have the highest
short-term rating or the debentures of which have an
"A" or higher rating or the Bank;
16) The Local Agency Investment Fund 9stablished
pursuant to Section 16429.1 of the _Government Code of
the State of California;
17) Interests in ~axable government money market
Rortfolios, restricted to obligations with maturities
of one ~ear or less, issued by or guaranteed as to
payment of principal and interest by, the United
States of America;
18) Repurchase agreements with any bank, trust
c_ompany or national banking association insured by _the
Federal Deposit Insurance Corporation, the Federal
Savings and Loan Insurance Corporation or the
Securities Investors Protection Corp. or with any
government bond dealer recognized as a primary d_ealer
by the Federal Reserve Bank of New York, w_hich
#441
#442
#443
#444
#(444)
#446,4
#448
#449
#45o
#(450)
#451
#452
#453
#454
#455
#456
#457
#(457)
#459
#460
#461
#462
#(462)
#(462)
#463
#464
#(464)
#465
#466
#468,4
#470
#(470)
#470.2
#470.4
#470.5
#470. ~
#(470.
#470.8
#470.9
#470.1
#470.1
#470.1
#470.1
#470.1
94691.9.2535.06:14
-14-
#38
#(38)
agreements are fully and continuously secured b_y a
valid and perfected priority security interest in
obligations described in paragraph (1) or (2) of t_his
definition, provided that either such bank, t_rust com-
pany or national banking association is rated "_Al" or
better by Moody's and "A+" or better by S&P;
#470.1
#470.1
#470.]
#470.1
#470.2
#(470.
19) I~vestment agreements with any corporation,
including banking or financial institutions, the cor-
porate debt of which is rated, at the time of invest-
"Al" or better by Moody's and "A+" or better by
ment, _
S&P;
#470.2
#470.2
#470.2
#470.2
#(470.
il0) Guaranteed investment contracts or similar
funding agreements issued by insurance companies, _the
corporate debt of which, at the time of i_nvestment, is
rated "Al" or better by Moody's and "_A+" or better by
S&P;
#470.2
#470.2
#470.2
#470.2
#(470.
ill) Tax-exempt obligations of any state of the
United States or any Rolitical subdivision thereof,
which at the time of investment are rated "Al/Pi" or
higher by Moody's and "_A" or higher by S&P, or if
short-term o_bligations, are rated in the highest pos-
sible category b_y Moody's and S&P; and
#470.2
#470.2
#470.2
#470.2
#470.3
#470.3
112) Interests in tax-exempt money market portfo-
lios having assets in excess of one billion dollars
£$1,000,000,000).
#470.4
#(470.
#470.4
Preliminary Interest Index
#472
"Preliminary Interest Index" means ~he annual interest #473
rate or rates which in the judgment 9f the Remarketing Agent will #474
enable the Bonds to be remarketed in accordance with Section 2.07 #(474)
hereof on ~ Conversion Date, but in no event greater than the Maximum #475
Rate ~ith respect to Fixed Rate Bonds. #476
Preliminary Pricinq Date #478
"Preliminary Pricing Date" means ~ date determined by the #479,4
Remarketing Agent which will be at least five (5) but no m_ore than #481
fifteen (15) Business Days prior to a Proposed Conversion Date or a_n #482
Automatic Conversion Date. #(482)
Preliminary Scale
#484
"Preliminary Scale" means the Preliminary Scale posted by #(484)
-15-
94691.9. 2535.06: 14 # (38)
the Remarketing Agent at or about 9:30 A.M. on each Rate Adjustment #(484)
Date. # (484)
Principal Account
#486
"Principal Account" means the account by that name created #(486)
in Section 5.04 hereof. #(486)
Principal Payment Date
#488
"Principal Payment Date" means September 2 of each year #(488)
~eginning (i) with respect to Unit Pricing Bonds and Demand B_onds, #489,4
September 1999 and (ii) with respect to a given Fixed Rate Bond, on #(489.
the ~irst September 2 subsequent to ~he twelve (12) month period #489.2
beginning on the ~onversion Date applicable to such Fixed Rate Bond, #489.3
~nd in each case ending on the Maturity Date. #489.4
Proposed Conversion Date
#491
"Proposed Conversion Date" means the Business Day indi- #(491)
cared in the written notice of the City given pursuant to Section #(491)
2.10 hereof on w_hich the City intends or is required to effect a con- #492
version of all or a portion of the Bonds to a Fixed Interest Rate. #493
Purchase Contract
#493.2
"Purchase Contract" means that certain Bond Purchase #(493.
Contract dated September 12, 1988 b_y and betwe, en the City and Merrill #493.'.
Lynch Capital Markets, Merrill Lynch, Pierce, Fenner & Smith #(493.
Incorporated. # ( 493.
Purchase Date
#495
"Purchase Date" means a Business Day determined by the #496
Remarketing Agent on a Rate A_djustment Date as the date on which a #497
Unit Pricing Bond may be tendered for purchase to the Tender A_gent, #498
which may include the maturity date thereof, but which may not be a # (498)
date subsequent to the fifth Business Day prior to the Expiration #(498)
Date, the fifth Business Day prior to the Termination Date, a Bank #499,5
Mandat~ry Purchase Date or a Conversion Date with respect to such #(500)~
Bond. # (500)
Qualified Conveyance
#5O2
"Qualified Conveyance" means the sale or ground lease of #(502)
all or a portion of real property ~ithin the District, the Assessment #503
on which bears interest at 9ther than a fixed interest rate, by the #504
owner thereof to an 9ntity which is not an Affiliate thereof. #505
94691.9.2535.06:14
-16-
#38
#(38)
Rate Adjustment Date #510
"Rate Adjustment Date" means a Business Day on which an #(510)
Adjusted Interest Rate and a Unit Pricing Interest Period for a Bond #(5.10)
in the-Unit Pricing Mode are determined by the R_emarketing Agent. #511
Record Date #513
"Record Date" means (i) with respect to Unit Pricing Bonds # (513)
·
if the Interest Payment Date is a Purchase Date: the close of busi- # (513)
ness on the Business Day prior to such Interest Payment Date; #514
(ii) with respect to Unit Pricing Bonds if the Interest Payment D_ate #515
is a September 2 or March 2 which is not a Purchase Date: the close #(515)
of business on the fifteenth (15th) day of the calendar month preced- #(515)
ing such Interest Payment Date; Rrovided that if a Rate Adjustment #516
Date is between the fifteenth L15th) day of such calendar month and #517,5
an Interest Payment Date, the Record Date s_hall be the close of busi- #519
ness on the Business Day immediately preceding such next Interest #520
Payment Date; liii) with respect to .Bonds in the D_emand Mode: the #521,_
close of business on the Business Day immediately preceding each #(522)
Interest Payment Date; and (iv) with respect to Bonds in the Fixed #523
Rate Mode: the close of business on the fifteenth (15th) day of the #(523)
c_alendar month preceding each Interest Payment Date. #524
Redemption Fund
#526
"Redemption Fund" means the "City of Tustin Assessment #527
District No. 86-2 Limited Obligation Improvement Bonds Redemption #(527)
Fund" ~onstituting the "redemption fund" required t_o be created by #528,5
Section 8671 of the I_mprovement Bond Act of 1915, as amended, and #530
9stablished in Section 5.04 hereof. #531
Redemption Account
#533
"Redemption Account" means the account by that name estab- #(533)
lished in Section 5.04 hereof. #(533)
Reimbursement Agreement
#535
"Reimbursement Agreement" m e a n s t h a t c e r t a i n #(535)~
Reimbursement Agreement dated as of S_eptember 1, 1988, by and between #536
the Bank and the City or, if an Alternate Letter of Credit has been #(536)
issued, the reimbursement agreement, if any, in connection with such #(536)
Alternate Letter of Credit. #537
Remaininq Interest Period
#539
"Remaining Interest Period" shall mean the number of days #(539)
94691.9.2535.06:14
-17-
#38
#(38)
between the date selected for redemption or purchase of a Unit #540
Pricing Bond and the Purchase Date for such Bond. #541
Remarketinq Agent
#543
"Remarketing Agent" means Merrill Lynch, Pierce Fenner & #(543)
Smith Incorporated, or any other i_nvestment banking firm which may at #544
any time be substituted in its place as provided in Section 8.05 #545
hereof. # (545)
·
·
Remarketing Agreement #547
"Remarketing Agreement" means that certain Remarketing #(547)
Agreement dated as of September 1, 1988, b_y and between the City and #548
the Remarketing Agent. # (548)
Remarketinq Cost Account
#550
"Remarketing Cost Account" means the account by that name #(550)
created in Section 4.08 hereof. #(550)
Remarketing Cost Account Requirement
#552
"Remarketing Cost Account Requirement" means an amount #(552)
equal to 4% of the aggregate principal amount of Unit Pricing B_onds, #553,5
Demand Bonds or Bank-Owned Bonds Outstanding; provided, h_owever, that # 555
if in the opinion of Bond Counsel the Maximum Rate with respect to #561,5
Bank-Owned Bonds exceeds 12% per annum _the R_emarketing Cost Account #563,_
Requirement shall be decreased by a corresponding percentage. #566
Remarketing Proceeds Account
#568
"Remarketing Proceeds Account" means the account by that #(568)
name created in ~ection 4.08 hereof. #569
S&P #573
"S&P" means Standard & Poor's Corporation, a corporation #(573)
duly organized and 9xisting under and by virtue of the laws of the #574
State of New York, ~nd its successors and assigns, except that if #575 ~
such corporation s_hall be dissolved or liquidated or shall no longer #576
perform t_he functions of a securities rating agency, then the term #577
"S&P" shall be deemed to refer to any other nationally [ecognized #578,5
securities rating agency selected by the City and, prior to the #(579)
Expiration Date or the Termination Date, approved by the Bank (whose #580
approval shall not be unreasonably withheld and who shall not be #(580)
under any liability b_y reason of such approval). #581
94691.9.2535.06:14
-18 -
#38
#(38)
Securities Depositories #583
"Securities Depositories:'-.~means The Depository Trust #(583)
Company, 711 Stewart Avenue, Garden City, N_ew York 11530, Fax: (516) #584-
227-4039 or' 227-4190; Midwest Securities Trust Company, Capital #584.1
Structures-Call Notification, 440 South LaSalle Street, Chicago, #584.2
Illinois 60605, Fax: (312) 663-2343; Philadelphia Depository Trust #584.
Company, Reorganization Division, 1900 Market Street, Philadelphia, #584.4
Pennsylvania 19103, Attention: Bond Department, Dex: (215) 496-5058;
or to such other addresses and/or such other securities depositories #584.~
as the City may designate. #(584.
Substitution Date
#586
"Substitution Date" means the date five Business Days #(586)
prior to the date upon which an ~lternate Letter of Credit is to be #587
substituted for the Letter of Credit then in effect. #(587)
Tender Aqent #589
"Tender Agent" means the Paying Agent.
#(589)
Tender Notice
#591
"Tender Notice" means a telephonic notice to the #592
Remarketing Agent and the Tender A_gent no later than 10:00 A.M. New #593
York City time o_n the seventh (Tth) calendar day prior to an Optional #594
Tender Date, immediately confirmed by written notice to the Tender #595
Agent s_tating (i) the principal amount of Demand Bonds to be pur- #596
chased, (ii) the certificate number of each such Bond, liii) the name #597
of the Owner of each such Bond, and (iv) the Optional Tender Date o_n #598
which such Bonds are to be purchased. # (598)
Tender Price
$600
..
"Tender Price" means (i) on any Optional Tender Date, 100% #(600)
of the principal amount of a Bond Dlus accrued and unpaid interest #601
thereon and (ii) on any Purchase Date or Mandatory T_ender Date, #602
(a) 100% of the principal amount thereof plus accrued and unpaid #(602)
interest thereon, if any, and (b) with respect to a Mandatorily #603
Tendered Bond in a Unit Pricing Mode Rurchased on a date other than #604
on the fifth Business Day prior to a Termination Date or the fifth #605
Business Day prior t_o the Expiration Date, 100% of the principal #606
amount thereof Dlus accrued and unpaid interest thereon plus a pre- #607,6
mium calculated as set forth in the first Raragraph of #609
Section 3.01(A) hereof. I_n no event shall a premium be paid with #610
respect to any Bank-Owned Bond. #611
94691.9.2535.06:14
-19-
#38
~(38)
Termination Date
#613
"Termination Date" means the date specified in a notice # (613)
from the Bank of termination of t_he Letter of Credit pursuant to _the #614,6
Letter of Credit. #(615)
Trustee .#617
"Trustee" means Citibank, N. A., a national banking asso- #618
ciation duly incorporated and existing under a_nd by virtue of the #619
laws of the United States of America, _and having its principal office #620,6
in New York, New York, or any other bank or trust company duly incor- #(621)
porated and existing under and by virtue of the laws of any state or #622
of the United States of America, w_hich may be substituted in its #623
place as provided in Section 8.02 hereof. #624
Unit Pricinq Bond
#626
Mode.
"Unit Pricing Bond" means any Bond while in a Unit Pricing #(626)
#(626)
Unit Pricinq Date
#628
"Unit Pricing Date" means a Business Day on which a Bond #(628)
begins to bear interest at the Adjusted Interest Rate. #(628)
Unit Pricinq Interest Period
#630
"Unit Pricing Interest Period" means, with respect to a #(630)
Unit Pricing Bond, that period of time beginning on a Rate Adjustment #(630)
Date and ending on _the day preceding the Purchase Date, determined by #631
the Remarketing Agent and selected by the purchaser of s_uch Bonds by #632
reference to the Preliminary Scale and Final Scale. N_o Unit Pricing #633
Interest Period shall exceed one year in length; provided that _the #634,~
Unit Pricing Interest Periods may exceed one year in length upon (i) #636
receipt by the City of a Favorable Opinion of Bond Counsel and #637
(ii) an increase in the amount of the Letter of Credit t_o cover any #638
additional premium to the extent such additional premium m_ay be #639
required. # ( 639 )
Unit Pricinq Mode #641
"Unit Pricing Mode" means that period of time during which # (641)
a Bond bears interest at an Adjusted Interest Rate in accordance with # (641)
the provisions of this Indenture. #(641)
94691.9. 2535.06: 14
-20-
#38
#(38)
Variable Interest Rate #643
"Variable Interest Rate" means that annual rate of inter- # (643)
est, expressed as a percentage and rounded to the nearest o_ne thou- #644
sandth of one percent, determined by the Remarketing Agent on the #(644)
Business Day preceding the Variable Rate Adjustment Date, w_hich, in #645
the judgment of the Remarketing Agent would be the interest rate nec- #(645)
essary to Rroduce as nearly as practicable a par bid (disregarding #646
any accrued interest) on.a Demand Bond on such Variable Rate #(646)'
Adjustment Date Rrovided that in no event shall the Variable Interest #647
Rate exceed the Maximum Rate with respect to Demand Bonds. #648
variable Rate Adjustment Date
#650
"Variable Rate Adjustment Date" means the first day of #(650)
each Variable Rate Interest Period. #(650)
Variable Rate Interest Period
#652
"Variable Rate Interest Period" during a Demand Mode #(652)
means (i) the period from and including a_ Demand Date a_nd continuing #653, ~
to, but not including, the next succeeding Wednesday and #655
(ii) thereafter, the period from and including a Wednesday and con- #656
tinuing to but not including t_he next succeeding Wednesday. #657
Variable Rate Reserve Account
#659
"Variable Rate Reserve Account" means the account by that #(659)
name established in Section 5.04 hereof. #(659)
Variable Rate Reserve Requirement
!#661
"Variable Rate Reserve Requirement" means- $14,884,0001 !#(661
less any amounts transferred to the Redemption Account pursuant to #662,6
Section 5.04(D)(ii) hereof and any amounts transferred to t_he Fixed #663
Rate Reserve Account pursuant to Section 5.04(D)(v) hereof. #664
S_ECTION 1.02. Authority for the I~e~fc%~. This Indenture #666
is authorized pursuant to the Act. #(666)
S_~CTION 1.03. Indenture to Con~-~itu~e Contract. In consid- #668
eration of the acceptance of the Bonds by the Owners, _this Indenture #669
shall be deemed to be and shall constitute a c_ontract among the City, #670
the Bank and the Owners to secure the full a_nd final payment of the #671
principal of and premium, if any, and interest on the Bonds or #672
amounts or obligations owing to the Bank Rursuant to the #673
Reimbursement Agreement to the extent payable in a_ccordance with this #674
Indenture or the Act, and the application of all moneys on deposit or #(674)
to be deposited in accordance herewith including but not limited to #675
94691.9. 2535.06:14
-21-
#38
#(38)
foreclosure proceeds, subject to the pledge made in this Indenture #676
and the conditions, covenants and _t_erms contained herein required to #677, (
be observed or performed by or o_n behalf of the City and the Trustee #679
shall be for the equal b_enefit, protection and security of all Owners #680
without distinction, preference or priority of any Bonds over any #681-,6
other Bonds by reason of the number or date thereof or the time of #683
authentication or d_elivery thereof or otherwise for any cause whatso- #684
ever, except as expressly provided herein. Subject to Section 6.08 #685,~
and Section 10.03 hereof, this Indenture s_hall remain in full force #687
and effect so long as any Bonds remain Outstanding. #688
_ARTICLE II #689
CONDITIONS AND TERMS OF BONE~
#(689)
SECTION 2.01. Authorization of Bonds. The issuance is #691
hereby authorized of Bonds in the aggregate principal amount of #692
eighty-one million four hundred thousand dollars ($81,400,000) to be #(692)
designated as "City of Tustin Assessment District No. 86-2 Limited %693
Obligation Improvement Bonds". T_here is hereby created, in the #694
manner and to the extent Rrovided herein, a continuous pledge and #695
lien to secure the full a_nd final payment of the principal of, premi- #696
urn, if any, and interest on the Bonds, other amounts due and payable #(696)
hereunder or amounts or obligations owing to the Bank pursuant to the #697
Reimbursement Agreement to the extent payable i_n accordance with this #698
Indenture-or the Act. T_he Bonds shall be limited obligations of the #699
City Rayable from the items pledged for the payment therefor Rursuant #700,7
to Section 5.01 hereof. T_he Paying Agent is hereby authorized to #702
authenticate and to deliver t_he Bonds u_pon (i) written direction of #703,7
the City, .(ii) the Trustee's receipt of the Letter of Credit, duly %705
executed by the Bank and (iii) the City's receipt of _the proceeds of #706
sale thereof. # (706)
S_ECTION 2.02. Denominations, Medium, Nethod and Place of #708
Payment ar~ Datir~ of Bonds. The Bonds shall be prepared in the form # (708)
of fully registered Bonds in Authorized Denominations. The interest #709
and principal and redemption premiums, if any, on the Bonds shall be #710
payable in lawful money of the United States of America. The inter- #711
est on the Bonds s_hall be payable on the Interest Payment Dates by #712 ~
check mailed ion such Interest Payment Dates) by the Paying Agent to #713
the respective Owners thereof at their addresses as they appear on #714
the Record Date in the books required to be kept b_y the Paying Agent #715
pursuant to the provisions of Section 2.14 hereof, e_xcept that (i) in #716
the case of an Owner of Bonds evidencing ~500,000 or more in aggre- #717
gate principal amount, upon the written request of such Owner to the #718
Paying Agent, specifying the account or accounts to which such #719
payment shall be made, and (ii) in the case of interest due to the #(719)
-22- #38
94691.9.2535.06:14 #(38)
Bank, payment shall be made by wire transfer of immediately available #720
funds on such Interest Payment Date. #(720)
The principal and redemption premiums, if any, of Bonds #721
other than Bank-Owned Bonds shall be payable o_n the Principal Payment #722
Date-- or on redemDtlon Drlor thereto u_Don ~urrender o~ the ~ond-- ~723
called for redemption at the corporate agency office of _the .Paying #724
Agent. The principal and redemption premiums, if any, of Bank-Owned #724.1
Bonds shall b_e payable by wire transfer of immediately available #724.2
funds upon s_urrender of the Bank-Owned Bonds at the corporate agency #724.3
office of the Paying Agent, provided, however, that such surrender #724.4
shall not be necessary for payment of principal and redemption premi- #724.5
urn, if any, of Bank-Owned Bonds held by the Trustee in its capacity #724.6
as Tender Agent for the account of the Bank. #724.7
The Paying Agent, the Tender Agent and the Trustee may #725,7
treat the Owner of a Bond as the absolute Owner of a Bond for all #727
purposes, whether or not such Bond shall be overdue, a_nd the Paying #728
Agent, the Tender Agent and the Trustee s_hall not be affected by any #729
knowledge or notice t_o the contrary; and payment of the Rrincipal of, #730,7
premium, if any, and interest on such _Bond s_hall be made only to such #732,7
Owner, which payments shall be valid and effectual to satisfy and #734
discharge the liability of such Bond t_o the extent of the sum or sums #735
so paid. All Bonds, other than Bonds deemed purchased by the Bank #736
pursuant to Section 4.06(B) hereof or deemed not paid pursuant to #736.1
Section 10.01(d) h_ereof, when paid pursuant to the provisions of this #736.~
Section 2.02, shall be c_ancelled by the Paying Agent and shall not be #737
redel ivered. # ( 737 )
T_he Bonds shall be dated the date of authentication thereof #738
and .shall bear interest from the Interest Payment Date to which #739
interest has been paid or provided for o_r if no interest has been #740,7
paid and such date of authentication is prior to t_he initial Record #743
Date for a Bond, from the date of original authentication and deliv- #744
ery of the Bonds. #(744)
$_ECTTON 2.03. Payllerlt of PTimci~al arid Inte~ of Bor~L~. #.746
The interest on the Bonds shall become due and payable on the #747
Interest Payment Dates in each year t_o and including t_he Maturity #748,7
Date, or on redemption prior thereto. T_he principal of the Bonds #750,%
shall become due and payable on the Maturity Date, o_r on redemption #752,7
prior thereto. # ( 753 )
S_ECTION 2.04. Calculation and Payment of Interest.
#754.1
iA) Interest on each Unit Pricing Bond s_hall be calculat- #757,7
ed, in the case of a Unit Pricing I_nterest Period less than or equal #759
to one year in length, on the basis of a 365/366 day year for the #760
actual number of days 9lapsed, and, in the case of a Unit Pricing #761
-23- #38
94691.9.2535.06:14 ~(38)
Interest Period ~[reater than one year in length, on the basis of a #762
360-day year composed of twelve 30-day months. I_nterest on each #763,7
Demand Bond shall be calculated on the basis of a 3'65/366 day zear #765,7
for the actual number o.f days elapsed. I_nterest o_n Fixed Rate Bonds #767,7
s_hall be calculated on the basis of a 360-day year c_omposed of twelve #769,7
30-day months. Notwithstanding any provision of this Indenture or #(770)
the Reimbursement Agreement to the contrary, at no time may the rate #771
of interest on a Bond exceed the Maximum Rate with respect to such #(771)
Bond. # (771)
· .
lB) The initially issued Bonds shall be in the Unit #773
Pricing Mode with initial U_nit Pricing Interest Periods and Adjusted #774,7
Interest Rates as set forth in Schedule 1 of the P~rchase Contract. # (775)
Thereafter, each Bond will bear interest at its applicable Adjusted #776,7
Interest Rate, Variable I_nterest Rate or Fixed Interest Rate, accord- #778
ing to the mode then in effect with respect to such Bond. All Bonds #779
in the Unit Pricing Mode may be converted to the Demand Mode and all #(779)
or a portion of the Bonds in the Unit Pricing Mode may be converted #780
to the Fixed Rate Mode. If Unit Pricing Bonds are converted to the #781
Demand Mode all such Bonds may be converted t_o the Unit Pricing Mode #782
and all or a portion of such Bonds may be converted to a Fixed Rate #783
Mode. A Fixed Interest Rate shall be in effect until the Maturity #784,7
Date, or redemption prior to the Maturity Date and no Fixed Rate Bond # (785)
may be converted to any other mode. P_rior to any conversion to a #786,7
Demand Mode, a Unit Pricing Mode or any Proposed Conversion Date, the #788
City must deliver to the Trustee a Favorable Opinion of Bond #789
Counsel. # ( 789 )
~otwithstanding the foregoing, Bank-Owned _Bonds shall bear #790,7
interest at the ~ank Interest Rate. #792
The determination by the Remarketing Agent of each Adjusted #793
Interest Rate, Variable Interest Rate and Fixed Interest Rate for any #794
Bond, if in accordance with the provisions hereof, shall _be conclu- #795,7
sive and binding upon the City, the Paying Agent, the Tender Agent, #797
t_he Trustee, the Bank and the Owners. #798
S_ECTION 2.05. Determination of Adjusted ~ Rates and #801
Unit Pricing Interest Periods. After the initial Unit Pricing #(801)
Interest Period with respect to each Bond, s_uch Unit Pricing Bond #802,~
shall bear interest at the Adjusted Interest Rate for i_ts applicable #804,8
Unit Pricing Interest Period, which is established as follows: #(806)
ia) At or about 9:30 A.M. New York City time, on each Rate #808
Adjustment Date, t_he R_emarketing Agent will post the Preliminary #809,S
Scale of Adjusted Interest Rates f_or such Rate Adjustment Date. _The #811,~
information in such Preliminary Scale shall be made available t_o any #814
prospective purchaser requesting such information. # (814)
-24- #38
94691.9. 2535.06: 14 # (38)
EXHIBIT B
/.DEVELOPMENT NOTICE ]
T_he undersigned owner* hereby certifies that:
il) [He is the owne~] [He was on the last succeed-
ing [February 1] or LAug~st 1] the owner] of the fol-
lowing real property which is located in the City of
Tustin Assessment District No. 86-2:
~4004
#4005
#4008
~4010
#4011
#4012
#(4o1~
£Description of real property]
.%4015
The assessment on such real property is
·
#4018
13) Pursuant to this notice the undersigned hereby
certifies that (A) he expects that b_etween the d_ate
forty (40) days prior to either F_ebruary 1 or August 1
next succeeding the date hereof and the date forty
(40) days prior to either t_he following August 1 or
February 1, whichever is applicable, ii)(a) the above
described property will be sold to another entity
which is not an Affiliate of t_he .present owner for
single family residential development or
(b) development of the above described property as
single family residential property by the Rresent
owner or an Affiliate thereof will commence; or
iii) the above described property will be the s_ubject
of a Qualified Conveyance (as such term i_s defined in
the Indenture of Trust dated as of September 1, 1988
by and between the City of Tustin and Citibank, N.A.
(the "Indenture")), or (B) the above described prop-
erty was the subject of a Qualified C_onveyance since
the date which is forty (40) days prior to the most
recent [February 1 if date of notice is after
.%4021
,%4022,
~4025
.%40.26
.%4027
.%4028
.%(4028
.%4029
#4030
.%(4030
#4031
.%(4031
#4032,
~4034
.%(4034
.%4035
.%4036
.%4037,
.%(4038
%(4038
.%4008.
*For purposes of this Development Notice, "owner" s_hall include the #4008.
~ransferor of real property located in Assessment District No. 86-2 .%4008.
if such transferor conveyed r_eal property between the fortieth day ~4008.
preceding a February 1 or August 1 and the following F_ebruary 1 or ~4008.
August 1, as the case may be, and, as of the fortieth day Dreceding .%4008.
such February 1 or August 1, such conveyance was not r_easonably fore- .%4008.
seen or anticipated by the transferor to _occur during the forty (40) ~4008.
day period prior to such F_ebruary 1 or August 1, as the case may be. ~4008.
-1- ~4008.
February i and prior to August 1] LAugust i if date of
notice is after August 1 and Rrior to February 1].
- LName of Owner]
£Title]
#4039
#4040
#4043
#4045
#4046
~4001
94691.9.2535.06:14 ~(4001
At the end of the remarketing period, if all the Unit #869
Pricing Bonds have not been sold in accordance with the foregoing, #870
and information of the nature described in the preceding sentence has #871
been noted by the Remarketing Agent, _then, i_n order to effect a corn- #872,8
plete remarketing of the Unit Pricing Bonds, the unremarketed Unit #(874)
Pricing Bonds shall be sold to those prospective purchasers who have #875
indicated a willingness to purchase such Unit Pricing Bonds _bearing #876
interest for Unit Pricing Interest Periods closest, in terms of basis # (876)
points, to the Adjusted Interest Rates indicated therefor in the #(876)
Preliminary Scale. In that event, the Remarketing Agent shall post #877
at or before 11:30 A.M., New York City time, on the Rate Adjustment #878
Date, a Final Scale w_hich will be the same as the Preliminary Scale #879,~
except that the Adjusted Interest Rate indicated for any Unit Pricing #882
Interest Period will be the highest Adjusted Interest Rate for such #883
Unit Pricing Interest P_eriod at which any Unit Pricing Bond was #884
remarketed in accordance with this paragraph. #885
T_he information on the Final Scale shall be made available #886
to any Rrospective purchaser requesting such information. All Unit #887
Pricing Bonds for which an Adjusted Interest Rate is determined on #888
the Rate Adjustment Date shall _bear interest at the Adjusted 'Interest #889
Rate indicated for the applicable U_nit Pricing Interest Period on-the #890
Final Scale even if the purchaser t_hereof had stated a willingness to #891
purchase Unit Pricing Bonds at a lower A_djusted Interest Rate for #892
such Unit Pricing Interest Period. #(892)
le) Upon selection of a Demand Date, a Proposed Conversion #894
Date, an Automatic Conversion Date, or upon notice of a Bank #895
Mandatory Purchase Date, a Termination Date'or a Substitution Date, #896
no Unit Pricing Interest Period shall be determined by the #897,S
Remarketing Agent which would, with respect to Unit Pricing Bonds #900
subject to purchase in connection therewith, extend beyond the Demand #(900)
Date, Proposed Conversion Date, Automatic Conversion Date, #901
Substitution Date, Bank Mandatory Purchase Date or t_he fifth Business #902
Day prior to the Termination Date so established. I_n no event shall #903,9
a Unit Pricing Interest Period extend beyond the fifth Business Day #905
prior to the Expiration Date of the Letter of Credit. #(905)
S_ECTION 2.06. Determination of Variable Interest Rate. ~907
Bonds in the Demand Mode shall bear interest at the Variable Interest #(907)~
Rate. The Variable Interest Rate shall be determined by the #908
Remarketing Agent prior to 3:00 P.M., New York City time, on 'the #909
Business Day next preceding the Variable R_ate Adjustment Date for #910
such Variable Rate I_nterest Period. _The Variable Interest Rate shall ~911,~
become effective on such Variable Rate Adjustment Date and shall be ~913
applicable through the following _Tuesday. On or before the Business #914
Day next succeeding the date on which the Variable Interest Rate for ~(914)
any Variable Interest Rate Period is determined by the Remarketing #915
Agent, the Remarketing Agent shall ~ive written notice to the Trustee ~916
-26- ~38
94691.9. 2535.06: 14 ~ (38)
of the Variable Interest Rate applicable to such Variable Rate #917
Interest Period. # ( 917 )
S_ECTION 2.07. Determination of Fixed Interest Rate. The #919
Trustee shall mail a written notice t_o all Owners of Bonds to be con- #920
vetted to t_he Fixed Rate Mode not later than the thirtieth calendar #921
day next preceding a Proposed Conversion Date or Automatic Conversion #922,~-
Date, as the case may be. Such notice shall specify the _Preliminary #924
Pricing Date and the Proposed Conversion Date or Automatic Conversion ~925
Date, as the case may be, indicate that s_uch Bonds are required to be #926
tendered for purchase to the Tender A_gent on the Proposed Conversion #927
Date or Automatic Conversion Date, as the case may be, at the Tender #928
Price and set forth t_he date by which notice of election to retain #929
must be subm.itted to the T_ender Agent, which date shall be two #930
Business Days after the Preliminary Pricing Date. T_he notice shall ~931,c~
also state that the Preliminary Interest Index w_ill be made available #932.1
on the Preliminary Pricing Date b_y the Remarketing Agent and that #932.2
s_uch conversion will be cancelled and a Bond will remain in the mode #933
t_hen in effect for such Bond in the e_vent that _any of the events set #934,9
forth in the last Raragraph of this Section 2.07 occur with respect #937
to F_ixed Rate Bonds. If such conversion is pursuant to #938,~
Section 2.10(C) hereof and is not upon direction of the Bank, s_uch #940
notice shall be accompanied by a copy of the Favorable Opinion of #941
Bond Counsel required by Section 2.10(C). _A~y such Bond which is not ~942
tendered on the Proposed Conversion Date or the Automatic Conversion ~(942)
Date, as the case may be, shall be deemed purchased and may be can- #943,S
celled by the Tender Agent. In the event that less than all Demand #945
Bonds or Unit Pricing Bonds are to be converted to a Fixed Interest #946
Rate on such Proposed Conversion Date or Automatic Conversion Date, #947
the Trustee shall cause to be converted first, Ba/%k~ed Bonds and #948
then ii) in the case of Demand Bonds, Demand Bonds b_y lot or (ii) in #949,~
the case of Unit Pricing Bonds, U_nit Pricing Bonds in order of their #951
Purchase Dates, and by lot among Unit Pricing Bonds with the same #952
Purchase Date. #(952)
On the Preliminary Pricing Date, the Remarketing Agent will #953
make available a Preliminary Interest Index. "or more than two #954,~.
B_usiness Days following the Preliminary Pricing Date, an Owner of a #956
Bond to be converted to the Fixed Rate Mode may notify t_he Tender #957,9
Agent by telephone (promptly confirmed by written notice to the #959
Tender Agent) if such Owner wishes to retain such Bond in the Fixed #(959)'
Rate Mode. #(959)
On the Final Pricing Date, t_he Remarketing Agent will ~960,
establish the Fixed Interest Rate which will be borne by such Bonds #962
after the Conversion D_ate. The Fixed Interest Rate will be an annual #963
rate of interest which in t_he sole judgment of the Remarketing Agent ~964
under the then prevailing market c_onditions will allow such Bonds to ~965
be sold at par; provided however, such Bonds may bear a Fixed ~(965)
-27- ~38
94691.9. 2535.06:14 ~(38)
Interest Rate w_hich results in a sale at less than par so long as #966
there is on deposit in the Contribution Account o_n such date cash or !.~967
other immediately available moneys equal to the difference between !#(967-
par and the actual price of the Bonds and so lonq .~as the Bank will be !~(967
immediately reimbursed from such cash or other immediately available- !~967.
moneys an amount equal to the.amount provided by the Bank under the !.~967.
Letter of Credit to pay such difference. !#967.
A conversion will be cancelled (i) as to all such Bonds if #968
(a) on. the Conversion Date there has not been d_eposited, as a result #969,9
of a transfer pursuant to Section 5.04(D)(v) or from any other #971
source, in the Fixed Rate Reserve Account, t_he Fixed Rate Reserve #972,.
Requirement with respect to such Bonds, Lb) the Fixed Interest Rate #974
would exceed t_he Maximum Rate with respect to Fixed Rate Bonds, lc) ~975,~
the amounts required to be deposited' pursuant to S_ection 4.06(C) #977
hereof are not on deposit, or (d) a Favorable Opinion of Bond Counsel #977.1
is not delivered, if required, a_nd (ii) with respect to any Bonds not #978
successfully r_emarketed on such Conversion Date. An Automatic ~979,9
Conversion will be cancelled upon the City's receipt from the land- #981
owner of a request for such cancellation made no later than the close # (981)
of business one B_usiness Day following the Final Pricing Date. S_uch #982,9
request, along with a Favorable Opinion o_f Bond Counsel, shall be #985
delivered to the Trustee. N_otice of such cancellation shall be sent #986
to the O_wners by the Trustee promptly and such Bonds shall continue #987
to be remarketed in accordance with this Indenture. I_n the event of #988, ~
a cancellation of a conversion the Remarketing Agent s_hall continue #990
to attempt to remarker Bonds w_ith respect to which the conversion was #991
cancelled. # ( 991 )
S_ECTION 2.08. Alternate Rate for ~ntere~c Calculation. In # 993
the event (i) the Remarketing Agent fails to determine the Adjusted #(993)
Interest Rate or the Variable Interest Rate or (ii) the method of #994
determining the A_djusted Interest Rate or the Variable Interest Rate #995
shall be held to be unenforceable b_y a court of law of competent #996
jurisdiction, such Unit Pricing Bonds or Demand Bonds shall there- .~(996)
upon, until such time as the Remarketing..Agent again makes such #997
determination or until there is delivered an opinion of Bond Counsel #998
to the effect that the method of determining such rate is enforce- #999
able, bear interest from the last date on which interest was legally #1000
paid, at the Alternate Rate for ~such-Alternate Rate Calculation %1001
Period. ~ (100~
SECTION 2. 09. Interest on Bank-Owned Bonds. ~1003
Notwithstanding anything to the contrary contained in S_ection 2.04 ~1004
hereof, each Bank-Owned Bond shall bear. interest on the outstanding #(1004
Rrincipal amount thereof at the Bank Interest Rate for each day from ~1005
and including the date such Bond is purchased for the benefit of the ~1006
Bank with the proceeds of a draw on the Letter of Credit to, but not #1006.
including, the date the Bank is reimbursed for such draw. ~1007
n28- #38
94691.9.2535.06:14 ~ (38)
I_~terest on Bank-Owned Bonds shall be payable o_n the first #1009,
Business Day of each week, and upon payment or r_edemption of all or ~1011
part of a Bank-Owned Bond and on the date of remarketing of such #1012
Bank-Owned Bonds. Interest on Bank-Owned Bonds shall not bear the #1013
Bank Interest Rate after such Bonds have been remarketed unless such #1014
Bonds shall become Bank-Owned Bonds. Interest on Bank-Owned Bonds #1015
shall be calculated based upon a 360 day year and actual days #(1015
elapsed. # (1015
S_ECTION 2.10. Chanqes in Mode.
~1016.
iA) During any Unit Pricing Interest Period, the City may ~1019
~ive written notice at any time to t_he Bank, the R_emarketing Agent ~1020,
and the Trustee that it intends to effect a_ conversion of the inter- ~.1023
est rate on a_ll of t_he Unit Pricing Bonds to a Variable Interest Rate ~1024,
on the Demand Date or Dates specified in such written notice, the #1026
earliest of which _Demand Dates shall be n_ot less than forty (40) cal- '..~1027
endar days from the date of such notice. T_ogether with such notice, :#1029
the City shall also file with the Trustee a_ Favorable Opinion of Bond #1030,
Counsel lwhich opinion m_ay be based on a ruling or rulings of the #1032,
Internal Revenue Service). No change in the Variable Interest Rate ~1034,
shall become effective u_nless the City shall file, with the Trustee, #1041,
such an opinion dated the first such Demand Date. _The Trustee shall #1043,
give notice of such conversion to each Owner of Unit Pricing Bonds #1045
not later than the close of business of the thirtieth (30th) calendar # (1045
day Rreceding the relevant Demand Date w_hich notice shall specify the #1046,
Demand Date selected by the City and i_ndicate that such Bonds are ~1048
required to be tendered to the Tender Agmnt on the Demand Date for #1049
mandatory purchase at the Tender Price. #1050
lB) During any Demand Mode, the City may give. written #1052,
notice at any time to t_he Bank, the Remarketing Agent and the Trustee #1054,
that it intends to effect a c_onversion of the interest rate on a_ll of ~1056,
such Demand Bonds to a Unit Pricing Mode on the Unit Pricing Date #1058
specified in such written notice, which shall be not l_ess than #1059
forty (40) calendar days from the date of such notice. T_ogether with ~1060
such notice, the City shall file w_ith the Trustee a Favorable Opinion .~1061
of Bond Counsel lwhich opinion may be based on a ruling or _rulings of #1062,
the Internal Revenue Service). No change to the Unit Pricing Mode ~1069
shall become effective unless the City shall file, with the T_rustee, ~1070,
such an opinion dated the Adjusted Interest Date. _The Trustee shall #1072,
give notice of such conversion to the Owner of such Bonds n_ot later ~1074,
than the thirtieth (30th) calendar day next preceding the Unit ~1076,
Pricing Date. ~ ( 1077
lC) The City may give written notice, in conformity with #1079
Section 2.07 hereof, at any time Land shall give such notice with 31080
respect to Bank-Owned Bonds upon the direction of the Bank on any ~(108£
date after the ~ermination Date or Expiration Date and before the ~1081
~38
94691.9.2535.06:14 $(38)
fifth (Sth) anniversary of such _Termination Date or Expiration Date ~1082,
provided, however, that if the B_onds specified in such notice cannot #1084
be converted by the fifth (5th) anniversary of such Termination Date #1085
or Expiration Date, whichever is applicable, then the Bank may give #1086
such notice with respect to such Bonds at such time 'as the Bonds can .~1087
be converted), to the Bank, the Remarketing Agent and th'e Trustee #1088,
that it intends to effect a conversion of the interest _rate on all of #10.90,
the Bonds or a portion of the Bonds designated in such notice t_o a #1092
Fixed Interest Rate on the Proposed Conversion Date specified in such #1093
written notice, which Proposed Conversion Date s_hall be not less than '.#1094
forty (40) calendar days from the date of such notice. T_ogether with !#1095
such notice, unless such notice is upon direction of the Bank with #(1095
respect to Bank-Owned Bonds, the City shall file with the Trustee a #1096
Favorable Opinion of Bond Counsel lwhich opinion may be based on a #1097
ruling or r_ulings of the Internal Revenue Service). I No chanqe to !.%1098
the Fixed Rate Mode shall become effective unless the City shall '..~1100
file, with the Trustee, such an opinion dated the Conversion Date. I !~1101
In the event a portion of t_he Bonds is to be converted, the Trustee !#1104
shall first select for such conversion Bank-Owned Bonds, and then, !#1106
from all other O_utstanding Bonds. #1107
iD) On the Automatic Conversion Date described in clause #1113,
(i) of the definition of Automatic Conversion Date, U_nit Pricing o_r #1115,
Demand Bonds shall be automatically converted to the Fixed Interest #(1116
Rate in accordance with Section 2.07 hereof. #1117
On the Automatic Conversion Date d_escribed in clause (iii) #1118,
of the definition thereof, all unit Pricing Bonds and Demand Bonds #(1119
s_hall be automatically converted to the Fixed Interest Rate in accor- #1120
dance with Section 2.07 hereof. #1121
On each Automat-ic Conversion Date described in clause Lii) #1122,
of the definition thereof, a principal _amount of Bonds in Authorized #1124
Denominations, equal to the a_ggregate amount of Assessments set forth #1125
as item (2) in all Development Notices received by the Trustee since #1126
the last such Automatic Conversion Date and on or before the fortieth #(1126
i40th) day prior to such Automatic Conversion Date (rounded upward to #1126.
the nearest multiple of one thousand dollars ($1,000)), shall auto- #1127.
matically convert to a Fixed Interest Rate in accordance with #1128
Section 2.07 hereof. #(112~
S_ECTION 2.11. Form of Bonds. The Bonds and the assignment #1130
to appear thereon shall each be in substantially the forms respec- #1131
tively set forth in Exhibit A attached hereto and incorporated #1132
herein, with appropriate or necessary i_nsertions, omissions and vari- #1133
ations as permitted or required hereby; Rrovided, however, if use of ~1134
a book entry form of Bonds becomes feasible in the opinion of the ~.1135
City, Trustee, Paying Agent, Bank and the R_emarketing Agent, then the ~1136
-30- #38
94691.9. 2535.06:14 ~ (38)
appropriate Sections herein shall be deemed to permit the use of a #1137
book entry form of Bond without f_urther amendment of this Indenture. #1138
S_ECTION 2.12. Execution and Authentication of Bonds. The # 1140
Bonds shall be signed by facsimile signature by the T_reasurer of the #1141,
City and the City Clerk, and the City Clerk shall also affix by fac- #1143
simile t_he corporate seal of the City to the Bonds. _The Bonds shall #1144,
be authenticated by the Paying Agent or the Trustee by the manual #(114-=
signature of an authorized officer of the Paying Agent or Trustee. #1146
S_ECTION 2:13. Transfer and Exchanqe of Bonds. All Bonds #-1148
are transferable or exchangeable by the Owner thereof, i_n person or #1149
by the Owner's attorney duly authorized in writing, at the corporate #(1149
agency office of the Paying Agent in the books required to be kept by #1150
the Paying Agent pursuant to the provisions of Section 2.14 hereof, #1151
upon surrender of such Bonds accompanied by delivery of a duly exe- #1152
cured written instrument of transfer o_r exchange in a form approved #1153
by the Paying Agent. Whenever any Bond or _Bonds shall be surrendered #1154
for transfer or exchange, the Paying Agent s_hall execute and deliver #1155
a new Bond or Bonds of Authorized Denominations of the same aggregate #1156
principal amount, except that the Paying Agent may require the pay- #1157
ment by any Owner requesting such transfer or exchange of any tax or %1158
other governmental charge required to be paid with respect to such #1159
transfer or exchange. All Bonds surrendered pursuant to the provi- #1160
sions of this Section 2.13 s_hall be cancelled by the Paying Agent and #1161
shall not be'redelivered. Ail Bonds issued in exchange for Bonds #1162
pursuant to this Section 2.13 shall be in the s_ame mode as the Bonds #1163
in exchange for which such Bonds were issued. #(1162
The Paying Agent shall not be required to transfer or #1164
exchange any Bond selected for redemption in whole or in part from #1165
and after t_he date of mailing the notice .of redemption of such Bond ~1166
or Rortion thereof. #1167
S_ECTION 2.14..Reqistration Books. The Paying Agent will #1169
keep at its corporate agency office sufficient books for _the regis- #1170
tration of the ownership, transfer or exchange of the Bonds, which ~1171
books shall be available for inspection by _the City and _the Trustee #1172,
at reasonable hours and under reasonable conditions; a_nd upon presen- #1174,
ration for such purpose the Paying Agent shall, _under such reasonable %1176
regulations as it may prescribe, r_egister the ownership, transfer or #1177
exchange of the Bonds in such books as hereinabove provided. The ~1178,
ownership of any Bonds may be proved by the books required t_o be kept #1180
by the Paying Agent pursuant to the provisions of Section 2.14 ~(1180
hereof. ~ ( 1180
-31- ~38
'94691.9. 2535.06:14 ~(38)
S_ECTION 2.15. Temporary Bonds.. The Bonds may be initially #1182
delivered in temporary form exchangeable for definitive Bonds when ~1183
ready for delivery, which temporary Bonds shall be printed, litho- #1184
graphed or typewritten, shall be of such denominations as may be ..~1185
determined by the Trustee, shall be in fully registered form and ~1186
shall contain such reference to any of the provisions hereof as may #(118~
be appropriate. Every temporary Bond shall be authenticated and #1187,
delivered by the Paying Agent u_pon the same conditions and terms and #1189
in substantially the same manner as definitive Bonds. If t~e City #1190,
authenticates and delivers tempora.ry Bonds, t_he Paying Agent will .~1192
prepare and execute and the Paying Agent will authenticate definitive ~ (1191
Bonds without delay, a_nd in that case upon demand of the Owner of any #1193
temporary Bonds s_uch definitive Bonds shall be exchanged without cost #1194
to such Owner for temporary Bonds at the corporate agency office of .~1195
the Paying Agent upon surrender of such temporary Bonds, and until so #1196
exchanged such temporary Bonds s_hall be entitled to the same benefit, #1197
protection and security hereunder as the definitive Bonds executed #1198
and delivered hereunder. Ail temporary Bonds s_urrendered pursuant to #1199
the provisions of this Section 2.15 shall be cancelled b_y the Paying #1200
Agent and shall not be redelivered. #(120C
S_ECTION 2.16. Bonds Mutilated, De~, ~ or Stolen. #1202
If any Bond shall become mutilated, the Paying Agent shall authenti- # (1202
cate a_nd deliver a new Bond of like tenor and number in lieu of the #1203
mutilated Bond, but only upon surrender to the Paying Agent of the #1204
mutilated Bond, and every mutilated Bond surrendered to the Paying #1205
Agent shall be cancelled b_y it and shall not be redelivered. If any #1206,
Bond shall be destroyed, lost or stolen, evidence of such destruc- #(1207
tion, loss or theft may be submitted to the Paying Agent _and if such #1208,
evidence is satisfactory to the Paying Agent, and the Paying Agent #1210
receives indemnity satisfactory to it, the PaYing Agent shall authen- #(121C
ticate and deliver-a new Bond of like tenor and number in Substitu- #1211
tion for the destroyed, lost or stolen Bond. The Paying Agent may #1212
require payment o_f a sum not exceeding the actual cost of preparing #1213
each new Bond authenticated and delivered by it under this #1214
Section 2.16 and of the expenses which may be incurred by it under #1215
this Section 2.16. Any replacement Bond a_uthenticated and delivered #1216
under the provisions of this Section 2.16 hereof in lieu of or in #1217
substitution for any mutilated, destroyed, lost or stolen Bond s_hall #1218
be equally and proportionately entitled to the benefit, protection #(1218
and security hereof with all other Bonds executed and delivered here- #1219
under; and the Paying Agent shall not be required to treat both the #1220
original Bond and any replacement Bond as being Outstanding for the ~1221
purpose of determining the principal amount of Bonds which may be ~1222
authenticated _and delivered hereunder or for the purpose of determin- ~1223
ing any Rercentage of Bonds Outstanding hereunder, but both the orig- ~1224
inal and t_he replacement Bond shall be treated as one and the same. a1225
Notwithstanding _any other provision of this Section 2.16, rather than 81226,
authenticating and delivering a new Bond for a mutilated, destroyed, ~1228
-32- ~38
94691.9. 2535.06:14 ~(38)
lost or stolen Bond which has been called for redemption, the Paying #1229
Agent may make payment of the principal of such mutilated, destroyed, #1230
lost or stolen Bond d_irectly to the Owner thereof under such regula- #1231
tions as the Payin~ Agent m_ay prescribe. T_o the extent permitted by ,%1232,
law, the City agrees to indemnify a_nd .hold harmless the Paying Agent #1234
from and against any claims, d_amages and losses (including legal fees #1235
and expenses), arising out of payment-of principal of any stolen #1236
Bond. # ( 1236
_ARTIC~.~. III ~ 1237
REDEMPTION OF BOND~
.%(1237
S_ECTION 3.01. Mandatory Redemption.
#1238.
~A) Unit Pricing Bonds are subject to redemption on #1240
any Business Day 9~on notice as hereinafter provided, as a whole, or ~1241
in part in A_uthorized Denominations in order of t_he Purchase Dates of !#1242
such Bonds to the extent of moneys transferred from the Construction !# (124
Fund ~o the Redemption Account pursuant to Section 5.06 hereof, to !~1243
the extent of moneys derived from foreclosure under Section 7.02 !#(124
hereof or to the extent of. prepaid Assessment Installments _under the !%1245
circumstances and upon the conditions and terms prescribed h_erein at #1247
a redemption price ~alculated as ~et forth below plus accrued and %1248,
unpaid interest, if any: #(124~
If the Unit Pricing Period of such Bond is less than or equal to one ~1250
year, t_he redemption price will be calculatec~ as follows: (i) if the #1251
Remaining Interest Period is less than or equal to 30 days, t_he #1252,
redemption price will be 100% and (ii) if the Remaining I_nterest #1254
Period is more than 30 days _the Trustee will r_equest the Remarketing #1255,
Agent to provide an Adjustable Interest Rate for a Unit Pricing .%1257
Interest Period equal to the Remaining Interest Period, a_nd if such #1258
rate is greater than or equal to the A_djusted Interest Rate on the .~1259
Bond called for r_edemption, the redemption price will be 1_00%, b_ut if #1260,
such rate is less than the Adjusted Interest Rate on such Bond the #(1262
redemption price will be calculated by dividing the n_umber of days in .%1263,
the Remaining Interest Period by 365 or 366 days las applicable) a_nd #1265,
multiplying the quotient by the difference between the Adjusted .~(1267
Interest Rate on such Bond and such rate a_nd rounding the product to .%1268,
the nearest 1/100th and adding t_he result to 100, but in no event ,%1270
shall such redemption price exceed 101%. ~(127C
~f the Unit Pricing Interest Period for such Unit Pricing Bond ks #1271,
more than one year, the redemption price will be determined in a_ccor- #1273
dance with the following table: ~(127~
-33-
:~38
94691.9. 2535.06: 14 ~ (38)
Unit Pricin~ Interest Period
~ime from the most
r_ecent Rate
~djustment Date'to
Redemption Date
Price
#1277
f1278
~1279
#1280
~ore than 1 but less than or.
9qual to 3 years ............
~ore than 3 but less than or
~qual to 6 years ............
more than 6 but less than or
~qual to 10 years ...........
0 to 1 year
! to 2 years
A to 3 years
0 to 2 years
A to 3 years
~ to 4 years
after 4 years
0 to 4 years
4_ to 5 years
5_to 6 years
after 6 years
~1283
101 · % #1284
100 1/2 #1285
100 ~1286
#1287
101 1/2 #1288
101 #1289
100 1/2 ~1290
100 #1291
#1292
102 #1293
101 1/2 #1294
101 #1295
100 #1296
more than 10 years ..........
0 to 7 years 102 1/2 #1298
Z to 8 years 102 #1299
'~ to 9 years 101 #1300
after 9 years 100 #1301
For purposes of Section 8768 of the Act, Unit Pricing Bonds #1303.
have no "annual series" for purposes of selecting Unit Pricing Bonds #1303.
for redemption. # (1303
Demand Bonds are subject to redemption on any Interest ~1304,
Payment Date upon notice as hereinafter Rrovided, as a whole, or in #1306
part in Authorized _Denominations, to the extent of moneys transferred '.#1307
from the Construction Fund to t_he Redemption Account pursuant to !~130~
Section 5.06 hereof, to the extent of moneys derived from f_oreclosure '.#1309
under Section 7.02 hereof or to the extent ofl prepaid Assessment !~(13C
Installments under the circumstances and upon the conditions and #1310
terms prescribed herein at a redemption price equal to the sum of _the #1311,
principal amount of the Bonds redeemed plus accrued interest _thereon #1313
to the date fixed for redemption without redemption Rremium. For #1314
purposes of Section 8768 of the Act, Demand Bonds have no "annual ~1314.
series" for purposes of selecting Demand Bonds for redemption. .~(1314
lB) After conversion to a Fixed Interest Rate, a Bond #1316,
is subject to redemption in whole or in part o_n any Interest Payment #1318
Date, upon notice as hereinafter provided, i_n an integral multiple of ~1319
$5,000, from moneys transferred from the Construction Fund to the ~1320,
Redemption Account pursuant to Section 5.06 hereof, from m_oneys ~1322,
-34- ~38
94691.9. 2535.06: 14 ~ (38)
derived from foreclosures under Section 7.02 hereof or from prepaid #(1323
Assessment Installments, _under the circumstances _a_nd upon the condi- #1324,
tions and terms prescribed herein at a redemption price e_qual to #1326
10.'~%% of the Rrincipal amount thereof plus accrued and unpaid inter- #1327
est, if any. F_or purposes' of Section 8768 of the Act, the sinking #1327.
fund amounts of Bonds in a Fixed Rate Mode shall constitute "annual #1327.
series" for purposes of selecting Bonds in the Fixed Rate Mode for #1327.
redemption and each conversion to a Fixed Interest R_ate shall consti- #1327.
tute a separate "annual series" such that Bonds to be r_edeemed from #1327.
certain moneys derived from f_oreclosures under Section 7.02 hereof or #1327.
from prepaid Assessment Installments, shall be selected from only #1327.
those B_onds converted to a Fixed Interest Rate which relate t_o such #1327.
foreclosures or prepaid Assessment Installments. _The City Treasurer #1327.
shall select Fixed Rate Bonds for redemption' pursuant to this #1327.
Section 3.01(B) as follows: a pro rata 9ortion of Fixed Rate Bonds #1327.
from each sinking fund amount shall be determined by the City #1327.
Treasurer, and the City Treasurer s_hall select by lot in any manner #1327.
that the City Treasurer deems fair the Fixed Rate Bonds to be #1327.
redeemed within each sinking fund amount. _.The City Treasurer shall #1327.
promptly notify the Trustee of the Fixed Rate Bonds s_elected for #1327.
redemption. # ( 1327
lC) Unit Pricing Bonds or Demand Bonds are subject to #1329
mandatory redemption on September 2, 1999 and on each Principal #(132~.
Payment Date thereafter, upon notice as hereinafter provided, i_n part #1330,
in an integral multiple of the then minimum Authorized Denomination # (1331
of the Bonds, from Assessment Installments deposited in the Principal # 1332,
Account and upon the conditions and terms prescribed herein, at a #1334,
redemption price equal to the sum of the principal amount of the #(1335
Bonds c_alled plus accrued interest thereon to the date fixed for #1336
redemption, and in the years and principal amounts as follows: #1337
-35- #38
94691.9. 2535.06: 14 ~ (38)
~Final Maturity
principal #1341
~ear Amount #1342,
~999 $2,560,000 #1353
A000 2,820,000 #1354
~001 3,100,000 #1355
AO02 3,410,000 #1356
~003 . 3,750,000 #1357
~004 4,125,000 #1358
~005 4,540,000 #1359
~006 4,990,000 #1360
~007 5,495,000 #1361
~008 6,040,000 #1362
~009 6,645,000 #1363
[010 7,310,000 #1364
~011 8,040,000 #1365
[012 8,845,000 #1365.
[013 9,730,000* #1365.
#1368
%1369
N_otwithstanding the foregoing, in the event of conversions #1372
of all or a portion of the Bonds to a Fixed Interest R_ate pursuant to #1373
Section 2.10 hereof, the Finance Director is hereby directed to #1374
establish a separate schedule of redemptions (Year and Principal #1375
Amount) for such Bonds converted to a Fixed Interest Rate and to #(1375
select Bonds for such redemptions commencing o_n the Principal payment #1376,
Date followi.ng the first Interest Payment Date for such Bonds which, #1377.
as nearly as practicable, will result in d_ebt service with respect to #1378
such Bonds being equal in amount for each of the years following such #1379,
Conversion Date(s) to the Maturity Date. _The Finance Director will ~1381
also adjust the P_rincipal Amount column set forth above to reflect #1382
(i) the [eduction in principal amount of Unit Pricing Bonds or Demand #1383
Bonds Outstanding, giving effect to such reduction in the earliest #1384
year (or years, if applicable) appearing in the Principal Account #1384.
column set forth above, and (ii) the schedule hereby c_reated for the #1385
Fixed Rate Bonds. I_n determining such schedule, the Finance Director #1386,
shall apply a_mounts transferred from the Interest Reserve Fund Dursu- #1388,
ant to Section 5.07 and the moneys withdrawn from the Variable Rate .~ (1389
Reserve Account, as Rrovided in Section 5.04(D)(v). #1390
iD) In the event of redemption of Bonds pursuant to ~1392
paragraphs (A) or (B) of this Section 3.01 f_rcm moneys derived f_rom ~1393,
prepaid Assessments, the Construction Fund or the proceeds of fore- #(1394
closure under Section 7.02 hereof, as the case may be, t_he Finance #1395,
Director is hereby directed to annually adjust t_he amounts set forl=h #1397
-36- 338
94691.9.2535.06:14 ~(38)
above by deducting therefrom the amount of Bonds which would have ~1398
otherwise been redeemed had such redemptions or Rurchases not taken #1399
place, so as to maintain the same proportional relationship between #1400
t_he amount of Outstanding Bonds redeemed pursuant hereto a_nd the #1401,
amount of unpaid Assessments, as adjusted: Li) t_o deduct any portion #1403
of such prepaid Assessment which is credited t_oward the principal due #1404
on .the next Principal Payment Date as provided in Section 5.04(C) #1405
hereof; and iii) to round the amount due in any year to an integral #1406
multiple of the then minimum Authorized Benomination of the Bonds. #1407
The Finance Director shall promptly notify the Paying Agent and #1408,
Trustee of all such adjustments. In making the foregoing adjustments #1410
for such redemptions, t_he Finance Director shall adjust the amounts. #1411
of B_onds to be redeemed in accordance with the _above provisions only #1412,
with respect to amounts attributable to redemptions of such Bonds, if #1414
less than all of the Outstanding Bonds have been converted to the #1415
Fixed Rate Mode. #1416
S_ECTION 3.02. ODtional Redemption of Unit Pri¢i~q Bonds. # 1419
The Bonds in the Unit Pricing Mode a_re subject to optional redemption #1420
b_y the City, in whole or in part i_n Authorized Denominations, on any ~1421,
Business Day, at a redemption price calculated as set forth in the #(1422
first paragraph of Section 3.01(A) hereof, Rrovided, however, that #1423,
such redemption may only b_e effected in connection with the payment #1425
of such Bonds pursuant to Section 10.01(c) hereof. Notwithstanding #1426,
the foregoing, Bank-Owned Bonds shall be redeemed without premium. ~1428,
If such redemption is in part, Bank-Owned Bonds shall be #1430
selected for redemption by t_he Trustee prior to selecting any other #1431
Bonds, and thereafter U_nit Pricing B_onds shall be redeemed in the #1432,
order of their Purchase Dates, and by lot among those Unit Pricing #1434
Bonds with the same P_urchase Date. The amount of Bonds to be ~1435
redeemed shall, if required, be adjusted downward to the extent nec- #1436
essary to result in Bonds being redeemed only in Authoriz. ed #1437
Denominations. # ( 1437
S_ECTION 3.03. Optional Redemption of Bonds in the D~m~nd ~1439
Mode. Demand Bonds are subject to optional redemption by the City, #(143~
in whole or in part i_n Authorized Denominations, o_n any Variable Rate ~1440,
Adjustment Date, at a redemption price equal to 100% of the principal #1442
amount thereof being redeemed plus accrued interest to such redemp- #(1442
tion date, without premium; provided, however, that such redemption #1443
may only b_e effected in connection with the payment of such Bonds #144'4
Rursuant to Section 10.01(c) hereof. If such redemption is in part, ~1445
Bank-Owned Bonds shall be redeemed first, and all o_ther Bonds shall ~1446
be redeemed by lot in such manner as shall be determined by the
Trustee.
94691.9. 2535.06:14
-37-
~.38
S_ECTION 3.04. Optional Redemption of Bonds in the Fixed #1448
Rate Mode. The Bonds in the Fixed Rate Mode are subject to redemp- # (144~
tion b_y the City in the minimum principal amount of $5,000, in whole #1449,
on any date or in part on any I_nterest Payment Date, a_t a redemption #1451,
price of'102%% of the principal a_mount of Bonds called for redemp- ~1453
tion, plus accrued interest to the date fixed for redemption. #1454
S_-ECTION 3.05. Extraordinarv Mandatory Redemption. Upon #1454.
delivery to the Trustee of an Opinion of Counsel that such redemption #1454.
is lawful, the Bonds are subject to extraordinary mandatory redemp- #(1454
tion before maturity in the event of damage to or d_estruction of any #1454.
works of improvements relating to Assessment District No. 86-2 or #1454.
condemnation thereof, a_nd to the extent of, the net proceeds realized ~1454.
therefrom /including any net proceeds, whether or not r_eceived from ~1454.
such damage, destruction or condemnation, r_elating to moneys received # 1454.
for the benefit of Assessment District No. 86-2 f_rom proceedings or #1454.
actions relating to construction of the Eastern Transportation #1454.
Corridor or other highway transportation improvements). N_o such net #1454.
proceeds shall be applied to the redemption of Bonds to the extent #(1454
such net proceeds a_re applied to the repair, restoration or rehabili- '.%1454
ration of works of improvements relatinq to Assessment District !#1454
No. 86-2 to the condition they were in prior to such damage, d_estruc- #1454.
tion or condemnation. Any net proceeds applied to the extraordinary %1454.
mandatory redemption of Bonds shall be treated as a prepaid assess- #1454.
ment by owners of land within the District. N_et proceeds to be #1454.
applied to the redemption of Bonds shall be deposited in the #1454.
Redemption Account of the Redemption Fund. Not later than 30 days #1454.
after its receipt of s_uch net proceeds, the City shall notify the #1454.
Trustee either (i) that it will apply such net proceeds to repair, I !%1454
restore or rehabilitate..I works of improvementsl or Lii) that on the !#1454
next March 2 or September 2 occurring n_ot less than 30 days from the #1454.
date of the Trustee's receipt of such notice, which notice shall #1454.-
specify such redemption date, the City will request that the Trustee !%1454
redeem Bonds in an amount therein desiqnated. I If called for redemp- !%1454
tion,, s_uch Bonds shall be subject to redemption by the City at any !#1454
time on a day chosen b_y the City, i_n whole or in part, and if in !%1454
patti shall l redeem all Bank-Owned Bondsl and then redeem a pro rata !~1454
share of Fixed Rate Bonds Land pro rata among Fixed Rate Bonds of #1454.
each Conversion Date), U_nit Pricing Bonds and Demand Bonds, a_t the #1454.
principal amount thereof plus interest accrued thereon to the date ,%(1454
fixed for redemption, w_ithout premium. I_n the event net proceeds are ,% 1454.
not applied to repair, restore or rehabilitatel works of improvements !%1454
and cannot be used to redeem Bonds in accordance with this Section !~1454
3.05, such net proceeds shall be transferred (i) to the Fixed Rate ~1454.
Reserve Account and the Variable Rate Reserve Account t_o the extent ,%1454.
of any deficiencies therein and pro rata in the e_vent such net pro- ~1454.
ceeds are not sufficient to satisfy the deficiencies in both such ,%1454.
Accounts and thereafter (ii) to the Interest Account as a_ credit ~.1454.
against interest on Assessments. ~(1454
-38- ~38
94691.9 . 2535.06: 14 :~ (38)
S_ECTION 3.06. Selection of Bonds for Red--ion. For pur- #1455.
poses of Section 8768 of the Act, Unit Pricing Bonds and _Demand Bonds #1455.
selected for redemption pursuant to Section 3.02 and S_ection 3.03 #1455.
·
hereof, respectively, have no "annual series" 'for Rurposes of select- #1455.
lng such Bonds for redemption. For purposes of Section 8768 of the #1455.
Act, the sinking fund amounts of Bonds in a Fixed Rate Mode Shall #1455.
constitute "annual series" for purposes of selecting such Bonds for #1455,
redemption pursuant to Section 3.04 hereof, a_nd each conversion to a #1455.
Fixed Interest'Rate shall constitute a_ separate "annual series" such #1455.
that Bonds to be redeemed from certain moneys derived from foreclo- #1455.
sures under Section 7.02 hereof or from prepaid Assessment #1455.
Installments shall be selected from only those Bonds converted to a #1455.
Fixed Interest Rate which relate to such foreclosures or prepaid #1455.
Assessment Installments. # ( 145_=
If not otherwise provided in Sections 3.01, 3.02, 3.03, ~1456
3.04, or the first paragraph of this Section 3.06, w_henever less than #1457
all the Outstanding Bonds are to be redeemed on any one date, the #1458
Trustee shall select the Bonds to be redeemed in whole or in part #1459
from the Outstanding Bonds by lot in any manner t_hat the Trustee #1460
deems fair; provided, however, that if not otherwise provided in 3(146¢
Sections 3.01, 3.02, 3.03, 3.04, or t_he first paragraph of this #1460.
Section 3.06, if Bonds are to be redeemed from Rrepaid Assessments or #1461
from moneys derived from foreclosures under Section 7.02 hereof, the #1462
Trustee shall select for redemption Bonds bearing interest in the #(1462
same mode as such Assessment and, among Bonds of the same Mode, a #1463
Bond bearing a rate of interest equal to the rate of interest o_n such #1464,
Assessment and if Bonds are to be redeemed from m_oneys transferred #1466
from the Construction Fund to the R_edemption Account the Trustee #1467
shall use such m_oneys to redeem a pro rata s_hare of (i) Fixed Rate #1468,
Bonds (and pro rata among Fixed Rate Bonds of each Conversion Date) #1470
and (ii) Unit Pricing Bonds or Demand Bonds, in accordance with #1471
Section 3.01 hereof. _The Trustee shall promptly notify _the Bank, _the #1472,
City, the Remarketing Agent and the Paying Agent in writing of the #1475
numbers of the Bonds so selected for redemption in whole or in part #1476
on such date; provided, however, _that if on the date of selection, if #1477
there shall be any Bank-Owned _Bonds, such Bonds shall be selected for #1478
redemption b_y the Trustee prior to selecting any Unit Pricing Bonds ~1479,
or Demand Bonds. #(148£
S_ECTION 3.07. Notice of Redemption. Notice of redemption ~1482
shall be given by registered or certified mail by the Trustee t_o the #1483
Remarketing Agent, the Paying Agent, one or more Information #(1482
Services, and to the Owners of any Bonds designated for redemption in ~1484
whole or in part prior to the redemption date within ten (10) days #1485
after the Trustee has received notice of redemption from the City. ~1486
Notice of redemption shall also be given by telecopy or certified, #1486.
registered or overnight mail to the Securities Depositories t_wo (2) #1486.
days prior to the mailing of notice of redemption referred t_o in' the ~1486.
-39- ~38
94691.9. 2535.06: 14 ~ (38)
preceding sentence. E_ach notice of redemption shall state the #1487
redemption date, the redemption place and the redemption price, shall #1488
designate the numbers of the Bonds to be redeemed if less than all' #1489
the Bonds Outstanding are to be redeemed, s_hall (in the case of any #1490,
Bond called for redemption in part only) state the portion of the #1492
principal amount t_hereof which is to be redeemed, and shall state #1493
that the interest thereon o_r portions thereof designated for redemp- #1494
tion shall cease to accrue from and after such redemption date and #1495
that on such redemption date there will become due and payable on #1496
each of the Bonds or portions thereof designated for redemption the #1497
redemption price thereon. T_he failure of any Owner, Information #1498
Service or Securities Depository to receive such notice will not #(1498
affect the validity of the redemption of any Bonds. #1499
The Trustee shall give notice of redemption of any Bonds to #1500
be redeemed within ten (10) days of receipt of n_otice from the City #1501,
(which notice shall be given to the Trustee a_t least forty (40) cal- #1503
endar days prior to the date fixed for redemption). #(1503
S_ECTION 3.08. Partial Redemption of Bonds. Upon surrender # 1508
of any Bond redeemed in part only, the Paying Agent s_hall authenti- #1509
cate and deliver to the Owner thereof a new Bond or Bonds r_epresent- #1510
lng the unredeemed principal amount of the Bond so surrendered. #(151£
S_ECTION 3.09. Effect of Redemption. If notice of redemp- #1512
tion has been duly given as aforesaid and money for the payment of #1513
the redemption price of the Bonds or portions thereof t_o be redeemed #1514
is held by the Paying Agent, then on the redemption date d_esignated #1515
in such notice the Bonds or portions thereof so called for r_edemption #1516
shall become payable at the redemption price as specified in such #1517
notice; and from and after the date so designated interest _thereon or #1518
portions thereof 'so called for redemption shall cease to accrue, s_uch #1519
Bonds or portions thereof shall cease to be entitled to any benefit, #(1519
Rrotection or security hereunder and the Owners of such Bonds or Dor- #1520,
tions thereof shall have no rights in respect thereof except to #(1521
receive payment of the redemption price. T_o the extent moneys for #1522,
the payment of the r_edemption price of the Bonds or the portion #1524
thereof to _be redeemed is not held by the Paying A_gent on the redemp- #1525,
tion date, such redemption s_hall be cancelled and interest shall con- #1527
tinue to accrue. N_otwithstanding the foregoing, any Bank-Owned Bonds #1528
shall remain Outstanding _until the Bank is paid all amounts due under #1529,
such Bonds. _The Paying Agent shall, upon s_urrender for redemption of #1531,
any of the Bonds or portions thereof to be r_edeemed on their redemp- #1533
tion dates, pay such Bonds or portions thereof at the redemption #1534
price. U_pon payment to the Bank of all amounts due on Bank-Owned ~1535
Bonds the Bank shall cause the surrender of such Bonds to be made t_o ~1536,
the Paying Agent for cancellation. ~(1537
-4O-
94691.9. 2535.06:14 ~(38)
_ARTICLE IV ~1538
PURCHASE OF BONDS .-.~. #(153~
..
S_ECTION 4.01. Optional Ten.~_er.of U~it PF. icinq Bonds. The #1540
registered Owner of any Unit Pricing Bond m_ay demand that such Bond, #1541
or any portion thereof in a principal amount equal to an Authorized #1542
Denomination (so long. as the principal amount not purchased is an #1543
Authorized Denomination), be Rurchased in accordance with the terms #1544
of Section 4.04 hereof on any Purchase Date at _t. he Tender Price b_y '#1545,
(a) giving an Election Notice and Lb) delivering such Bond duly #1548,
endorsed in blank for transfer together with the confirmation of the #1551
Election Notice at the principal corporate trust office of the Tender #1552
Agent at or Rrior to 12:30 P.M., New York City time, on such Purchase #1553
Date. T_he right of any Owner to have Unit Pricing Bonds purchased #1554,
pursuant to this Section 4.01 shall terminate on the conversion of #1556
Unit Pricing Bonds to the Demand Mode or on a Conversion Date. #1557
T_he delivery of an Election Notice to the Tender Agent and #1558
the Remarketing Agent is irrevocable and binding on the Owner and #1559
cannot be withdrawn. Any Bond with respect to which an Election #1560
Notice is given but which is not tendered on the Purchase 'Date stated # (156£
in such Election Notice s_hall be deemed purchased and interest #1561
thereon s_hall cease to accrue. A new Bond shall be issued to the #1562
purchaser thereof. _The Owner of such a Bond shall be entitled solely #1563
to payment of the Tender Price for such Bond. _An Owner of a Bond who #1564,
gives an Election Notice with respect to s_uch Bond may repurchase #1566
such Bond if the Remarketing Agent agrees tO sell any such Bond so #(1566
tendered back to such Owner. I_n such event, the delivery requirement #1567
described above shall be waived. #(1567
SECTION 4.02. Optional Tender Of Bonds in the Demand #1569
Mode. The registered Owner of any Demand Bond m_ay demand that such #1570
Bond, or any portion thereof in a principal amount equal to an #(157C
A_uthorized Denomination (so long as the principal amount not put- #1571
chased is an Authorized Denomination), be Rurchased in accordance #1572,
with the terms of Section 4.04 hereof on any Optional Tender Date a_t #1574
the Tender Price b_y (a) giving a_ Tender Notice and Lb) delivering #1575,
such Bond duly endorsed i_n blank for transfer a_t the principal corpo- #1579,
rate trust office of the Tender Agent at or Rrior to 12:30 P.M., New #1581
York City time, on such Optional Tender Date. _The right of .any Owner #1582
to have Demand Bonds Rurchased pursuant to this Section' 4.02 shall #1583
terminate on the conversion of Demand _Bonds to the Unit Pricing Mode ~1584
or on a Conversion Date. #(1584
The delivery of a Tender Notice to the Tender Agent and the ~1585
Remarketing A_gent is irrevocable and binding on the Owner and cannot ~1586
be withdrawn. A_ny Bond with respect to which a Tender Notice is ~1587
given but which is not tendered on the Optional Tender Date stated in #(1587
-41- ,~38
94691.9. 2535.06: 14 ~ (38)
such Tender Notice shall be deemed purchased and interest thereon #1588
s_hall cease to accrue. A new Bond shall be issued to the purchaser #1589
thereof. T_he Owner of such a Bond shall be entitled solely to Ray- #1590,
ment of the Tender Price for such Bond. _An Owner of a Bond who gives #1592
a Tender Notice with respect to s_uch Bond may repurchase such Bond if ~1593
the Remarketing Agent agrees to sell any such Bond so tendered back #(1593
to such owner. In such event, the delivery requirement described #1594
above shall be waived. #(.1594
·
S_ECTION 4.03. Mandator~ Purchase of Bonds. Unit Pricing ~1596
Bonds and Demand Bonds are subject to mandatory tender and purchase #(159~
9n any Mandatory Tender Date at the Tender Price· #1597,
T_he Tender Agent shall provide written notice t_o Owners of #1599,
Unit Pricing Bonds and Demand Bonds subject to mandatory purchase #(1601
that s_uch Bonds will be subject to mandatory tender for Rurchase on #1602,
the applicable Mandatory Tender Date and of the rating which the #1604
Bonds will have f_rom Moody's or S&P if available (and, in the case of #1605
clause (i) below, such notice shall state that the then existing #1605.
rating or ratinqs on the Bonds to be converted to a Fixed Interest !~160-~
Rate Imay be lowered or withdrawn by Moody's or S&P in connection !#1605
with such conversion), (i) in the event of a conversion to the Fixed #(1605
Rate Mode not later than the thirtieth (30th) _calendar day next pre- #1606
ceding the Proposed Conversion Date or the Automatic Conversion Date, # (1606
as the case may be; iii) in the event of a change from the Unit #1607,
Pricing Mode to the Demand Mode, not later than the thirtieth (30th) #1609
calendar day n_ext preceding the Demand Date; liii) in the event of a #1610,
change from the Demand Mode t_o the Unit Pricing Mode, not later than #1612
the thirtieth (30th) calendar day next preceding the Unit Pricing #1613
Date; liv) in the event of thel Expiration Date or the Termination :#1614
Date, not later than t_he thirty-fifth (35th) calendar day next pre-'!#1615
ceding the l Expiration Date or the Termination Date= as the case may :.~ (161
be; (V) in the case of the Bank Mandatory Purchase Date, not later !~1615
than the tenth (10th) calendar day next precedinq the Bank Mandatory !~161-=
Purchase Date; and (vi) in the event of a Substitution Date, not !~1616
later than the fifteenth Business Day next Rreceding the Substitution !#1617
Date. # 1618
In the case of (i) a change from a D_emand Mode to a Unit #1619,
Pricing Mode or from a Unit Pricing Mode to a Demand Mode, (ii) a ~(162£
Substitution Date or (iii) conversion to a Fixed Interest Rate, such #(162£
notice m_ust state that the Owner may elect to retain such Bond b_y #1621,
giving written n_otice of such election to the Tender Agent, i_n case ~1624,
of clauses (i) and (ii) above, n_o later than the seventh (7th) calen- ~1626
dar day preceding such Mandatory Tender Date and in the case of ~1627
clause (iii) above, the second (2nd) Business Day after the r_elevant ~1628,
Preliminary Pricing Date. U_pon the filing of such notice such Bond ~1630
shall not be subject to optional tender pursuant to S_ection 4.01 or ~1631,
~.02 hereof on or prior to the D_emand Date, the Unit Pricing Date, ~1633
-42-
~38
94691.9.2535.06:14 ~(38)
the S_ubstitution Date or the Conversion Date, as the case may be. I_n #1634,
the case of a conversion to a Fixed Interest Rate, s_uch notice also !#163~
shall conform to the requirements of Section 2.07 hereof and shall !#(162
provide that the Owner acknowledqes that the then existinq ratinq o__r !.~163~
ratinqs on the Bonds to be converted to a Fixed Interest Rate may be !.~163{
lowered or withdrawn by Moody's or S&P in connection with such con- !.~163e
version and in the case of an Expiration Date or a Termination Date 1~ (16~
such .notice shall conform to Section 4.05 hereof. #1637
On any Mandatory Tender Date, unless the Owner thereof h_as #1638,
elected to retain ownership of a Unit Pricing Bond or Demand Bond, #(163c-
such Bond will be d_eemed to have been purchased, whether or n_ot actu- #1640,
ally delivered for purchase. Interest on such Bond will cease to #1642
accrue and s_uch _Bond shall no longer be entitled to the security Rro- ~1643,
vided by this Indenture. T_he Owner of such Bond shall be entitled #1646
only to receive the Tender Price, and may be paid solely from the #1647,
funds deposited pursuant to t_his Indenture for such purpose. #1650
S_ECTION 4.04. Tender and Purchase of Bonds. (A) Promptly #1652
upon its receipt of any written Optional Tender Notice, the Tender # (1652
Agent s_hall ~ive oral confirmation of such n_otice t_o the Remarketing #1653,
Agent. The Remarketing Agent shall use its best efforts to r_emarket #1657,
Bonds at a price of par plus accrued and unpaid interest; provided, $1659
however, that if there is on file with the Remarketing Agent, the #1660
Trustee and t_he Tender Agent a consent from the Bank, such Bonds may #1661
be remarketed at a price less than par if the Remarketing Agent cer- #1662
tifies that remarketing at less than par is necessary to remarket !#1662
such Bonds, l if cash or other immediately available moneys arel on !#(166
deposit i_n the Remarketinq Cost Account in-an amount sufficient roi !#1664
reimburse immediately the Bank t_he difference between par and thel !#1665
price at which such Bonds arel remarketedl and if t_he rate on the !#166(
remarketed Bonds is equal 'to or less than the Maximum Rate. # (166(
Bonds subject to purchase pursuant to Section 4.01, #1667
Section 4.02 or Section 4.03 shall be purchased from the Owners #1668,
thereof on any Optional Tender Date or any Mandatory T_ender Date, as #1670
the case may be, at the Tender Price which shall be ~ayable solely #1671
from the following sources in the order listed: %(1671
il) Amounts on deposit in the Remarketing Proceeds
Account; and
#1673
#1675
i2) Amounts on deposit in the L_etter of Credit
Account.
1677,
~(167&
lB) At or prior to 12:30 P.M. New York time, on each #1680,
Optional Tender Date and each Mandatory T_ender Date, the Remarketing ~1682
Agent (1) will cause to be delivered to the Tender Agent in ~1683
immediately available funds the proceeds of the remarketing, if any, ~(168~,
-43- ~38
94691.9. 2535.06: 14 = (38)
12) will deliver to the T_ender Agent instructions for delivery and #1684,
registration of the Bonds remarketed t_hereof in accordance with para- #1686,
graph (C) below, and (3) will give n_otice to the Tender Agent, speci- #1688
-lying t_he aggregate principal amount of any Bonds not.remarketed and !~1689
fpr wh%ch the Remarketinq Agent has not received proceeds from a !~169C
remarketing which must be Rurchased for the benefit of the Bank with !#1691
t_he proceeds of a drawing on the Letter of 'Credit on such date. If #1691.
such notice from the Remarketing Agent. indicates t_hat Bonds are #1693
required to be purchased for the benefit o~ the Bank with the Rro- #1693.
ceeds of a drawing on the Letter of Credit, t_he Tender Agent shall ~1694
give immediate notice to the Trustee, the Bank and the City at or #1695
prior to 12:45 P.M..New York City time on such date specifying the ~1696,
information set forth in t_he preceding sentence. The aggregate #1698
a_mount of Bonds specified in such direction to be Rurchased for the #1699,
benefit of the Bank shall not be reduced. #(170(
lC) On each Optional Tender Date and Mandatory Tender #1702
Date, all Bonds which (i) have been remarketed shall be delivered a_nd #1703,
registered as directed by _the Remarketing Agent or Lii) are required #1705,
to be purchased for the benefit of the Bank with the Rroceeds of a #1706.
drawing on the Letter of Credit s_hall be held by the Tender Agent for %1707
the benefit of the Bank. T_he Tender Agent s_hall not release remar- #1708,
keted Bank-Owned Bonds held by it until the Tender Agent receives #1714
written notice from the Bank that the Letter of Credit h_as been fully #1714.
reinstated with respect to such Bonds. # (171~.
iD) The Tender Agent shall take any action reasonably #1716
requested by the Remarketing Agent to facilitate the remarketing of #1717
Bonds lincluding without limitation Bank-Owned Bonds) on Optional #1718
Tender Dates and on Mandatory Tender Dates; provided, however, that .'~1719
the Tender Agent shall not allow the City to purchase any Unit .'.~1719
Pricing Bond or Demand Bond tendered for purchase unless the City !~171~c
first provides the Tender Agent with an Opinion of Counsel that the '..~171c.'
moneys to be used by the City to purchase such tendered Bond would !~171~
not be subject to recapture by a trustee in bankruptcy. !#1719
IE) The Tender Agent shall pay from the funds specified in #1721
Section 4.04(A) hereof, the Tender Price for each _Bond at or prior to #1722
4: O0 P.M. New York City time on the Optional T_ender Date or Mandatory #1723
Tender Date, as the case may be, only after receipt of s_uch Bond, #1724
properly endorsed either in blank o_r to the Tender Agent. Payment of ~1725
the Tender Price of any Bond tendered for purchase shall be made in ~1726
immediately a_vailable funds or in such manner as such Owner and the ~1727
Tender Agent s_hall agree. .~ 1728
iF) Notwithstanding any provision contained in this ~1730
Article IV, all Bank-Owned Bonds except Bonds pledged to the Bank #1731
pursuant to Section 4.06(B) hereof shall be deemed tendered to the ~(173]
R_emarketing Agent on each Business Day without the need for any ~1732
-44- #38
94691.9. 2535.06: 14 ~ (38)
Tender Notice or Election Notice or delivery of such Bonds. The ~1733
Remarketing Agent shall remarket such Bank-Owned Bonds on each #1734
B-~siness Day in accordance with this Indenture and the Remarketing #1735
Agreement; provided, however, that the Bank shall be deemed to repur- # 1736
chase such Bonds without any further payment therefor by the Bank on #(1736
each Business Day s_uch Bonds are not successfully remarketed, all in #1737
accordance with Section 4.08 hereof. #1738
SECTION 4.05. Mandatory Purchase Upon Expiration or #1739.
Termination of Letter of Credit. # (173c-
iA) On the 180th day prior to the Expiration Date, the #1741,
Trustee shall give written notice to the City, the R_emarketing Agent #1743
and the Bank that the Letter of Credit expires on the Expiration #1744
Date. Unless the term of the Letter of Credit shall have been #(1744
extended or there shall have been delivered an Alternate Letter of #1745
Credit in substitution therefor as provided in Section 4.06 hereof o_r #1746,
unless on or before the fifth Business Day prior to the Expiration #(1747
Date all Bonds shall have been converted to the Fixed Interest Rate #1748
as provided in Section 2.10 hereof, a_i1 Unit Pricing Bonds or Demand #1749,
~onds shall be purchased by the Tender Agent on t_he fifth Business #1751,
Day prior to the Expiration Date, at the Tender Price. #1753
lB) Unless there shall have been delivered an Alternate #1755
Letter of Credit as provided in Section 4.06 hereof or unless on or #1756
before the fifth Business Day prior to a Termination Date a_i1 Bonds #1757
have been converted to the Fixed Interest Rate as provided in Section ~1758
2.10 hereof, all Unit P_ricing Bonds or Demand Bonds shall be pur- #1759
chased by the Tender Agent on the fifth Business Day prior to such '.#176C
Termination Date at the Tender Price; provided, however, that if such !~(176
Termination Date is a Bank Mandatory Purchase Date, such Durchase '...~1760
shall occur as provided under Section 4.03 hereof. !#176C
lC) Notice of purchase of such Bonds pursuant to this #1762
Section 4.05 shall be ~iven by the Trustee by mail to all Owners of #1763
Demand Bonds or Unit Pricing Bonds at least thirty-five (35) days #(1762
prior to the E_xpiration Date or Termination Date. S_uch notice shall #1764,
ii ) speci fy the Expirat ion Date or Termination Date, as the case may # 1766
be, iii) specify, if applicable, the last times and dates prior to #1767
s_uch Expiration Date or Termination Date on which such Bonds must be #1768
delivered, or on which notice must be given, for the purchase of such #1769
Bonds pursuant to the Owner's option under Sections 4.01 and 4.02 #1770
hereof, iiii) state that after the fifth Business Day prior to the #1771
Expiration Date or the fifth Business Day prior to the Termination #(177]
Date such Bonds will no longer be purchased at the option of the #1772
Owner, and liv) state that such Bonds shall be subject to purchase by #1773
the Tender Agent at the Tender Price on the date specified i_n such #1774,
notice and the place at which the Bonds shall be tendered. O_n the #1776,
fifth B~siness Day prior to the Expiration Date orl the Termination !~177&
-45- ~38
94691.9. 2535.06:14 ~(38)
Date (and in the case of a Termination Date that is also a Bank !#177~_
Mandatory Purchase Date, then on such Bank Mandatory Purchase Datek, !~1778
as the case may be, the Trus.tee shall draw on the Letter of Credit, !~(177
in accordance with the terms'-:ther~of, a_~ amount equa.1 to the unpaid #17-79,
principal of all Outstanding Bonds ~other than 'Bank-Owned Bonds and #1781
Fixed Rate Bonds). All such Bonds purchased with a drawing on the #1782
Letter of Credit s_hall be deemed Bank-Owned Bonds as of the date of #1783
such purchase, and from and after such date the interest on such #1783.
Bank-Owned Bonds s_hall accrue solely for the benefit of the Bank and #1786
its assigns.. .. # (1786
If subsequent to the commencement of the giving of such #1789
notice, _t. he term of the Letter of Credit shall have been extended or #1790
there s_hall have been delivered an Alternate Letter of Credit in s_ub- #1791,
stitution therefor as provided in Section 4.06 hereof, then the #(179~
Trustee s_hall discontinue giving the aforementioned notice and shall #1793
give n_otice by mail to all Owners of such extension of the term of #1794
t_he Letter of Credit or the delivery of an Alternate Letter of #1795
Credit, which notice shall specify ii) that the giving of notice of #1796,
the expiration or termination of the _Letter of Credit has been corn- #1798
menced, iii) that subsequent to the commencement of the giving of #1799
such notice t_he term of the Letter of Credit has been extended or #1800
that an Alternate Letter of Credit has been delivered to the Trustee #1801
in accordance with this Indenture, liii) the rating of the Bonds by !#1802
Moody's and S&P by reason of such extension or delivery, liv) the !#1804
date that the term of the Letter of Credit or Alternate L_etter of #1806
Credit will expire if not extended, and iv) that the prior notice of #1807
purchase and any proposed conversion to a F~ixed Interest Rate are #1808
cancelled. S_uch notice that the term of the Letter of Credit has #1809
been extended or t_hat an Alternate Letter of Credit has been deliv- #1810
ered shall be ~[iven not more than five (5) days following such exten- #1811
sion or delivery and not less than five (5) days prior to such #1812
Mandatory Tender Date. # (1812
Notwithstanding the preceding paragraph of this Section #1812.
4.05, the provisions of Section 4.03 hereof, i_ncluding the provisions #1812.
thereof relating to the mandatory t_ender of Bonds for purchase in the #1812.
event an Alternate Letter of C_redit is substituted for the Letter of #1812.
Credit then in effect, s_hall remain applicable. #1812.
SECTION 4.06. Letter of Credit; Alternate Letter of ~1813.
Credit. # ( 1813
iA) On the last Business Day of each calendar month the ~1815,
Trustee shall by tested telex or by identifiable telecopied demand # (1816
given before 1_:00 P.M., New York City time on such day draw on the .~1817
Letter of Credit in accordance with the terms thereof so as to ~1818
receive thereunder by 3:00 P.M., New York City time, o_n the first ~1819
Business Day of the next c_alendar month an amount e_qual to ._the amount :.~182C
-46- #38
94691.9.2535.06:14 ~(38)
of interest accrued or to accrue on the Unit Pricing Bonds and the !#(182
~emand Bonds during the previous calendar month w_hether or not paid ~1823,
or due and payable. S_uch money shall be deposited in the Interest #1825
Reserve Fund and applied as provided in Section 5.07 hereof. #(1825
..
lB) On each Principal PaYment Date and each date Unit #1827
Pricing Bonds or Demand Bonds are redeemed pursuant to #1828
Sections 3.01(A), 3.01(C), 3.02, 3.03 and 3.05 hereof, the Trustee #1829
shall by tested telex or by identifiable telecopied-demand given #(1829
before l:00 p.m, New York City time, draw on the Letter of Credit in #1830
accordance w_ith the terms th~.reof so as to receive thereunder by 3:00 #1831
P.M., New York City time, o_n such date an amount sufficient to enable #1832
the Trustee to pay Rrincipal then payable on the Unit Pricing Bonds #1833
and Demand Bonds, whether at maturity or r_edemption thereof, in con- #1834
nection therewith; provided, however, the Trustee shall only make ~1835
such draw in the event of a redemption pursuant to S_ection 3.02 or ~1836
3.03 to t_he extent there is on deposit in the Redemption Account #1837
moneys in _an amount equal to such draw and available to reimburse _the #1838,
Bank for such draw; provided further, that if the Bank is not reim- #1840
bursed on the same day for such draws, Bonds which would otherwise #1841
have been redeemed or paid at maturity shall be deemed to be Bank- #1842
Owned Bonds, and such Bonds shall be deemed to be Outstanding not- #(1842
withstanding that such Bonds have been paid from such draws on the #1843
Letter of Credit. #(1843
lC) On each date Unit Pricing Bonds or Demand Bonds a_re #1845,
purchased pursuant to Sections 4.01, 4.02, 4.03, 4.05(A) or 4.05(B) #1848
hereof, the Trustee shall b_y tested telex or by identifiable tele- #1849
copied d_emand given before 1_:00 P.M., New York City time, _draw on the #1850,
Letter of Credit in accordance with the terms _thereof and after con- !~1852
sideration of the notice delivered by the Remarketin~ Aqent pursuant !~1854
to Section 4.04(B) hereo.f so as to receive thereunder by 3:00 !#(185
P.M. New York City time, on such date an amount s_ufficient to enable !#1855
the Tender Aqent to pay the Tender Price (except premium and !#(185
interest) in .connection therewith. The amount of such draw shall be '.~1856
deposited in the Letter of Credit Account of the Purchase Fund as '.~1856
provided in Section 4.08(B) hereof. :#185£
iD) On each date Unit Pricing _Bonds are redeemed pursuant #1858,
to Sections 3.01(A), 3.01(C) or 3.02 hereof and each date Unit #1860
Pricing Bonds a_re purchased pursuant to Section 4.01 and 4.03 hereof, #1861
the Trustee shall by tested telex or by identifiable telecopied #(1861
demand given before 1_:00 P.M., New York City time draw on the _Letter ,%1862,
of Credit in accordance with the terms thereof so as to r_eceive ,%1864
thereunder by 3:00 P.M., New York City time, on such date an amount ,%(1864
s_ufficient to enable the Trustee t_o pay premium, if any, required ~1865,
herein in connection therewith; provided, however, the Trustee shall ,%1867
only make such draw in the event o_f redemption pursuant to ,%1868
Section 3.02 to the extent there is on deposit in the Redemption ,%1869
-47-
94691.9. 2535.06: 14 ,% (38)
Account moH~'Ys in an amount equal to such draw and a_vailable to ~1870
reimburse the. Bank for such draw. # (1870
IE) Notwithstanding the foregoing paragraphs (A), (B), (C) #1872
and (D), t_he Trustee shall not draw on the Letter' of Credit-with ~1873
respect to any Rayments due or made in connection with Bank-Owned ~1874
Bonds. #(1874
iF) If there shall have been delivered to the Trustee ~1876
ii) an Alternate Letter of Credit in substitution for the Letter o_f #1877,
Credit then in effect, /.ii) an Opinion of Counsel stating' that the #1879
delivery of such Alternate Letter of Credit to the Trustee is autho- #1880
rized under this Indenture, will not adversely affect the exclusion #1881
from Federal income taxation of interest on the Bonds, and complies ~1882
with the terms of this Indenture, 'liii) written evidence from #1883,
Moody's, if the Bonds are rated by M_oody's, and S&P, if the Bonds are #1885
rated by S&P, in each case to the effect that such rating agency has #1886
reviewed the proposed A_lternate Letter of Credit and that the substi- #1887
tution of 'the proposed Alternate Letter of Credit for the Letter of #1888
Credit then in effect w_ill not, by itself, result in a reduction, #1889
suspension or withdrawal of the rating(s) of the Bonds from those #1890
which then prevail, and (iv) written evidence satisfactory to the #(189¢
Bank of the provision for payment to the Bank of the amount of all #1891
u_nreimbursed 'draws used to purchase Bank-Owned Bonds held by the #1891.
Tender Agent and payment of all amounts due the Bank under the #1892,
Reimbursement Agreement on or before the effective date of such ~1894
Alternate Letter of Credit, then the T_rustee shall accept such #1895
Alternate Letter of Credit on the Substitution Date and shall s_urren- #1896
der the Letter of Credit then in effect to the Bank on the fifth #1897
Business Day after the Substitution Date. #(1897
IG) If at any time there shall cease to be any Unit #1899
Pricin~ Bonds or Demand Bonds Outstanding h_ereunder, o_r in the event #1900,
that all Unit Pricing Bonds o_r Demand Bonds have been purchased on a #1902
Bank Mandatory Purchase Date and the T_rustee has received notice from #1903
t_he Bank of termination of the Letter of Credit as provided under the #1904
terms of the Letter of Credit, the Trustee shall thereafter surrender #1905
the Lette~ of Credit t_hen in effect to the Bank in accordance with #1906
the terms thereof for cancellation. #1907
£H) The Trustee shall not sell, assi.gn or otherwise trans- ~1909
fer the ~etter of Credit, e_xcept to a successor Trustee hereunder and #1910,
in accordance with the terms of the Letter of Credit and this ~1912
Indenture. ~ ( 1912
If at any time there shall be a redemption of Unit _Pricing #1912.
Bonds as provided in Section 3.01(A) herein and t_he applicable ~1912.
redemption price shall be in excess of 101% of the aggregate ~1912.
principal amount of the B_onds to be redeemed, the City shall not ~1912.
-48- ~38
94691.9.2535.06:14 3(38)
redeem and the Remarketing A_gent shall not remarker such Unit Pricing #1912.
Bonds unless the amount available under the Letter of Credit is suf- 41912.
ficient to c_o~er, any premi.um required to be paid pursuant to Section 41912.
3.01(A) . 4(1912
SECTION 4.07. No Sales After Certain Events. The 41914
Remarketing Agent may, but shall have no duty .to, remarker Bonds pur- 4 (1914
suant to Sections 4.01, 4.02 or 4.03 hereof if any A_ssessment 41915,
Installmen~ bearing interest a_t other than a fixed interest rate has ~1917
not been paid when due, and the Remarketing Agent shall not so 4(1917
remarker Bonds on or after a_ Bank Mandatory Purchase Date; Rrovided, 41918,
that if any such failure to pay Assessment Installments shall there- # (1919
after be cured, as evidenced by a certificate of the City s_atisfac- 41920,
tory to and approved by the Bank Lwhich shall not be under any 41922
liability by reason of such approval or disapproval), then the d_uty 41923,
of the Remarketing Agent to remarker Bonds Rursuant to Sections 4.01, 41925
4.02 or 4.03 hereof shall be reinstated. #(1925
SECTION 4.08. Purchase Fund. There is hereby established #1927
and there shall be maintained with the Tender Agent, a_s agent for the 41928
Trustee, a separate fund to be known as the "Purchase Fund." T_he 41929,
Tender Agent s_hall further establish a separate account within the #1931
Purchase Fund to be known as the "_Letter of Credit Account," a sepa- #1932,
rate account within _the Purchase Fund to be known as the "Remarketing #1935
"a separate account within the Purchase Fund to be #1936
Proceeds Account, _
known, as the "Remarketing Cost Account," and a separate account #1937
within the Purchase F_und to be known as the "Contribution Account." #1938
iA) Remarketinq Proceeds Account. U_10on receipt of the #1940,
Rroceeds of a remarketing of optionally Tendered Bonds on an Optional !#1942
Tender' Date or Mandatorily Tendered Bonds on a Mandatory Tender Date, !#1942
the Tender Agent shall deposit such proceeds in the Remarketing !#1944
Proceeds Account fo-r application to the Tender Price of the Bonds in #1945
accordance with Section 4.04 hereof. N_otwithstanding the foregoing, #1946,
upon t_he receipt of the proceeds of a remarketing of Bank-Owned 41948
Bonds, the Tender Agent s_hall immediately pay such proceeds to the #1949
Bank to the extent of any amount owing to the Bank. 41950
lB) Letter of Credit Account. U_pon r_eceipt of moneys from #1952,
the Bank for payment of all or a portion o_f the Tender Price for the #1955
Bonds, the Tender Agent s_hall deposit such money in the. Letter of #1956
Credit Account for application to the Tender Price of the Bonds t_o ~1957,
the extent that the moneys on deposit in the Remarketing. P_roceeds #1959
Account shall not be sufficient. _Any amounts d_eposited in the Letter #1960,
of Credit Account and not needed with respect to any Optional T_ender ~1962
Date or Mandatory Tender Date for the payment of the Tender Price f_or ~1963,
any Bonds shall be immediately returned to the Bank. ~(1964
-49-
~38
94691.9.2535.06:14 ~(38)
/~C) Contribution Account. U_pon receipt of moneys by the #1966,
Tender Agent from any person or entity, which moneys such Rerson or #1968
entity has designated to be used to pay t_he difference between par #1969
and the actual price' of Bonds converted to a fixed rate of interest #1969.
in accordance with Section 2.07 hereof, the Tender Agent shall #(1969
deposit such' amounts in the Contribution Account. On the r_elevant #1970,
Conversion Date the Trustee shall apply such amounts~ as provided in !~197~
Section 2.07 hereof, to reimburse immediately the Bank for draws on '.# (197
the Letter of Credit used for the payment of the Tender Price of the !#197'.
Mandatorily Tendered Bonds. #(1972
iD) Remarketinq Cost Account. .Moneys on deposit in the #1975,
Remarketing Cost Account shall be used for the purpose of paying, #1977
from time t_o time, remarketing costs relating to t_he sale of Bonds at #1978,
less than par, which sale at less than par is advised by the #(197~
R_emarketing Agent as necessary to remarker the Bonds pursuant to #1980
Section 4.04 (A) or pursuant to this Section 4.08(D). Payment of such ! #1981
costs l shall be made directly and immediately to the Bank b_y the !#1983
Trustee from money held in the Remarketing Cost Accountl upon the !.~1985
Bank providinq money under the Letter of C_redit to pay such differ- !~1985
ence between par and the Rrice at which the Bonds were remarketed. ~1985.
Payment of remarketing costs to the Bank shall be made in the amount #1986
required under the terms of the Reimbursement Agreement, which amount #1987
s_hall be computed by the Bank and confirmed by the Tender Agent. #1988
U_pon conversion of all or a portion of the Bonds to a Fixed #1989,
Interest Rate, the amount on deposit in the R_emarketing Cost Account #1991
i_n excess of the R_emarketing Cost Account Requirement after such con- #1992,
version s_hall be transferred from the Remarketing Cost Account and ~1994,
(i) deposited in the Fixed Rate Reserve Account t_o the extent neces- #1996
sary so that the amount t_ransferred to the Fixed Rate Reserve Account #1997
in connection with such conversion is equal to the Fixed _Rate Reserve #1998,'
Requirement with respect to such Bonds, thereafter (ii) deposited in #(1999
the Variable Rate Reserve Account to the extent necessary so that the #2000
amount on deposit in the Variable Rate Reserve Account is equal to ~2001
the Variable Rate Reserve Requirement and thereafter (iii) deposited #2002
in the Conversion Costs Fund. O_n the date no Unit Pricing Bonds or #2003
Demand Bonds or Bank-Owned Bonds are Outstanding, _the City m_ay apply # 2004,
amounts on deposit in the Remarketing Cost Account f_or any purpose #2007
permitted under the Indenture. I_n the event Assessments not bearing ~2008
interest at a fixed interest rate are prepaid, in whole or in part, #2009,
the a_mount of the prepayment shall be reduced by an amount equal to ~2011
t_he amount on deposit in the Remarketing Cost Account in excess of #2012,
the Remarketing Cost Account 'R_equirement immediately after such pre- #2014
payment lwithout such reduction). _An amount equal to such reduction ~2015,
shall be transferred from the Remarketing Cost Account to the ~2017,
Redemption Account. ~(201S
-5O- ~38
94691.9. 2535.06: 14 # (38)
U_pon written direction of the Bank, the Trustee shall #2019
transfer from t_he Remarketing Cost Account to the Fixed Rate Reserve #2020,
A_ccount an amount which together with moneys transferred pursuant to #2022
Section' 5.04(D)(v)-hereof equals the Fixed Rate Reserve Requirement #2023,
for Bonds being converted to a Fixed Interest Rate. Such transfers #(2024
shall be made even 'if such transfers r_esult in amounts on deposit in #2025
the Remarketing Cost Account being less than the Remarketing Cost #2026
Accoun-t Requirement. # (2026
·
Interest and earnings on amounts on deposit in the #2027,
Remarketing Cost Account shall remain on deposit in s_uch Account. If #2029,
on the first Business Day of any month the a_mount on deposit in the #2031
Remarketing Cost Account exceeds the R_emarketing Cost Account #2032
Requirement, such excess shall be transferred ia) to the Variable #2033,
Rate Reserve Account t_o the extent of any deficiency therein, t_here- #2035,
after, (b) to the Fixed Rate Reserve Account to the extent of any #2037
deficiency therein and t_hereafter (c) to the Conversion Costs Fund. #2038
IE) Investment. Amounts held in the Letter of Credit #2040,
Account, the R_emarketing Proceeds Account or the Contribution Account #2042
by the Tender Agent s_hall be held uninvested. A_mounts held in the #2043,
Remarketing Cost Account shall be invested in Permitted Investments #2045
as directed by the Bank. #(2045
_ARTI C~.~. V #2046
PLEDGE OF THE INDENTURE; FUNDS AND AC~OUNTS
#(2046
S_ECTION 5.01. Pledqe Effected By Indenture. Pursuant to #2048
this 'Indenture there is pledged for the payment of the principal of #2049
and redemption premium, if any, and interest on the Bonds in accor- #2050
dance with the terms and provisions of this Indenture, a_nd obliga- #2051,
tions owing to the Bank pursuant to the Reimbursement Agreement to #2053
the e_xtent payable in accordance with this Indenture or the Act, #2054
subject only to the provisions of this Indenture Rermitting the #2055,
application thereof for the purposes and on the terms _and conditions #2057
set forth in this Indenture, Li) all right, title and interest of the #2058
city in the Assessment Installments and foreclosure proceeds relating #2059
thereto, iii) the proceeds of the sale of the Bonds, Liii) to the #2060,
Fixed Rate Bonds, the Fixed Rate Reserve Account, liv) to the Unit #2062
Pricing Bonds and the Demand Bonds, the Variable Rate Reserve Account #(2062
and the Interest Reserve Fund and (v) all other funds, accounts and # (2062
sub-accounts, if any, c_reated hereunder (except the Purchase Fund and #2063
the Investment Earnings Fund) . .~ ( 2063
94691.9. 2535.06:14
-51-
#38
S_ECTION 5.02 . Pledae of Assessment Installments; Assessment ~ 2065
Fund. The Assessment Installments pledged pursuant to S_ec~ion 5.01 #2066
hereof shall be used for ~he punctual payment of ~he principal of and #206?
interest and redemption premiums, if any, on the Bonds, and the #2068
Assessment Installments shall not be used'-for any o~her purpose w_hile #2069,
any of the Bonds remain Outstanding. except as expressly provided #(207¢
herein. # ( 207 £
The City shall cause' all Assessment Installments, including .#2071
any penalties relating thereto, to be collected from the owners of #2072
real Rroperty within the District either through the real property #2073,
tax bills administered by the Orange County Tax Collector-Treasurer #2075
or by direct collection by the City or its agent; provided, however', #2076,
that following conversion of an Assessment to a fixed rate of inter- #2078
est t_he City shall only collect such Assessment I_nstallments on such #2079,
tax bills. All Assessment Installments received by the Trustee, #2081
s_hall be held in trust by the Trustee and shall be deposited by the #2081.
Trustee as and when received in the Assessment Fund, which fund the #2083
Trustee hereby agrees to establish and maintain so long as any Bonds #2084
are Outstanding. _Prior to conversion to Fixed Interest Rates of all #2085
the Bonds, not later than the first Business Day of each month, the #2086
Trustee shall determine _the amount of Assessment Installments due _and #2087,
payable for the preceding month with respect to Assessments bearing #2089
interest at other than a fixed interest rate a_nd shall give notice #2090,
that such amounts are immediately due and payable to the owners of #(209]
s_uch real property (or their designated agents) within the District. #2092
Notwithstanding the foregoing the Bank shall notify the Trustee of #2093
the Bank Interest Rate, and the Trustee shall determine the amount of #(2092
Assessment Installments representing interest due and payable on #2094
B_ank-Owned Bonds each week, and the Trustee shall give notice t_o the #2095,
owners of such real property (or their designated agents) _that such #2095.
amounts are immediately due and payable on the first Business Day of #(209(
such week. T_he City shall inform the Trustee of the names and #2098,
addresses of the persons to whom such notice s_hall be given. T_he ~2100,
Trustee shall have no further responsibility after ~iving such notice #2102
except to inform the City if _the amount due thereon is not collected ~2103
b_y the close of business on the first Business Day of such week. _The #2104,
Trustee shall have no duty to institute collection procedures. #(2105
S_ECTION 5.03. Collection of Assessment Installments. #2106.
iA) Collection of unpaid Assessments for principal and #2108
interest shall commence, (i) for Assessments bearing interest a_t a ~2109,
fixed rate, as soon after the Conversion Date ~ith respect to the #2111,
related Bonds to bear a Fixed Interest Rate a_s such Assessment can be ~2112.
included on the county tax rolls, ~nd (ii) for Assessments _bearing ~2113,
interest at other than a fixed interest rate, i_mmediately on the ~2115
first Interest Payment Date Qn which amounts on deposit in the ~2116
Interest ~ccount from the proceeds of the Bonds (including any ~2117
-52- ~38
94691.9.2535.06:14 ~(38)
available investments e_arnings thereon) will be insufficient to #2118
reimburse the Bank for a draw on the Letter of Credit described in #2119
Section 4.06(A) hereof. _During a Unit Pricing Mode or a Demand Mode, #2120,
~ssessment Installments. on real property with Assessments bearing #2122-,
~nterest at other t_han a fixed interest rate shall be paid directly #2124
to the Trustee in the amount of interest .accrued on such Bonds #2125
whether or not paid, less any applicable credits provided herein, ~2126,
including but not limited to, Section 5.07 h_ereof. I_n the event the ~2128,
City receives paYments of Assessment Installments b_earing interest at ~2128.
other than a fixed rate, the City shall immediately transfer the #2128.
amount of such Assessment Installments to the ~rustee for deposit in #2128.
the Assessment Fund as provided in Section 5.02 hereof. ~2128.
A_dditionally, Assessment Installments collected as provided above #2129,
shall also include the amount of Rrincipal, if any, to be paid on the #2132
Principal Payment Date lexcluding any prepaid Assessments) Rursuant #2133,
to this Indenture, l_ess any applicable credits provided herein, #2135
including but not limited to, Section 5.04(C), Section 5. 04 (D) ( ii) ~2136
and Section 5.04(E)(ii). #(2136
The City shall also cause to be collected _through the tax #2137,
bills or ~irect collections the continuing costs of or relating to #2139
the Bonds, including but not limited to the fees, c_osts and indemni- #2140,
fications due the Trustee, Paying Agent, City, and Tender Agent, and, #2142
to the extent allowed by the Act and not already on deposit in the #(2142
Conversion Costs Fund, t_he fees, expenses and other costs of the City .~2142.
incurred by 'the City in connection with a conversion of Bonds to a ~2142.
Fixed Interest Rate, which fees, indemnificat.ions, expenses and costs .~2142.
shall be allocated in-proportion to t_he Assessment levied against #2144
each parcel and collected wi.th A_ssessment Installments until the #2145
Assessment against such Rarcel is paid in full. #2146
The fees, costs and indemnifications of the Bank due and #2147
payable u~der the Reimbursement A_greement and of the Remarketing #2148
Agent due and payable under the Re. marketing Agreement i_n each case i_n #2149,
excess of the fees, costs and indemnifications paid from the #(215C
Conversion Costs Fund s_hall also be collected through the tax bill or #2151
direct collections as incidental expenses from owners of property #(2151
with Assessments bearing interest at other than a fixed interest #(2151
rate. Ail such moneys collected with respect to such fees, costs and ~2152
indemnifications shall be deposited in the Conversion Costs Fund a_nd ~2153,
disbursed in accordance with the provisions relating thereto. A_ll #2155
amounts due and payable hereunder shall be secured by the l_ien of the ~2156
Assessment and, if not Raid, collection shall be enforceable in _the #2157,
manner set forth in the Act and herein. #(2158
lB) Any Assessment may be prepaid at any time by paying ~2160
the unpaid amount thereof (together with any accrued penalties #2161
applicable thereto) less the amounts transferred to the Redemption ~(2161
Account (i) from the Variable Rate Reserve Account pursuant to %2162
·
-53 -
#38
94691.9.2535.06:14 ~ (38)
Section 5.04(D)(ii) hereof and from the Remarketing Cost Account #(2162
pursuant to S_ection 4.08(D) hereof, in each case, if _the Assessment #2163,
bears interest at a rate other than a fixed interest rate or...~(.2169
iii) from the Fixed' Rate Reserve Account pursuant' to '#2165
Section 5.04(E) (ii) hereof, .if the Assessment. bears interest at- a .#-2166
fixed interest rate, together with any redemption premium set forth #2167
in Section 3.01(A) or Section 3.01(B) hereof if applicable, a reason- #2168
able re.e, fixed by the City, for the cost of administering the pre- #2168.
payment and the redemption of Bonds, and t_he estimated amount of #2168.
interest to b~ paid to the d_ate of redemption of the Bonds represent- #2171
ing the portion of such Assessment which c_annot be applied for ~2172,
redemption on the next available redemption date, but not to exceed #2174
one year's interes~ on such portion of the prepaid Assessment at _the ~2175,
Maximum Rate with respect to Bonds other than Bank-Owned Bonds, which .~ (2176
amounts shall be deposited in t_he Redemption Account. #2177
LC) Ail unpaid Assessments shall bear interest at t_he #2179,
respective interest rates hereunder. T_he amount of delinquent #2181
Assessment Installments a_dvanced by the Trustee from the Variable #2182
Rate Reserve Account or the Fixed Rate Reserve Account shall be Ray- #2183
able and shall bear interest as provided from time to time in t_he #2184
Act, together with penalties as provided from time to time in the #(2184
A_ct. # 2185
S_ECTION 5.04. Deposit of Moneys. The proceeds received #2187
from the sale of the Bonds shall be deposited as follows: a_n amount #2188,
equal to the Variable Rate ~eserve Requirement s_hall be deposited in #2190
the Variable Rate Reserve Account; an amount equal to $7,326,000.00 #2191
representing t_he interest on the Bonds estimated to become payable #2192
Rrior to September 1, 1989, shall be deposited in the Interest #2193,
Account; an amount equal to t_he Interest Reserve Fund Amount #2195,
linitially $949,938.00) shall be deposited in the Interest Reserve #2196.
Fund; an amount equal to t_he Remarketing Cost Account Requirement #2197,
shall be deposited in the Remarketing Cost Account; an amount equal #2199
to ~2,442,000.00 representing costs of conversion and a~ amount equal #2199.
to $101,750.00 representing the first year's remarketing costs shall #2199.
be deposited in the Conversion Costs Fund; _and the remaining proceeds #2199.
shall be deposited by the City in the Construction Fund. #(220£
T_he City or Trustee, as the case may be, shall deposit the #2201
money contained in the Assessment Fund, _the Construction Fund and the-#2202
Conversion Costs Fund (to the extent a_uthorized by Section 5.0'5 #2202.
hereof), as appropriate, at the following respective times in the ~2203
Redemption Fund in the manner hereinafter provided, w_hich .fund and ~2204
the a_ccounts described below the Trustee hereby agrees to establish ~2205
and maintain so long as the Indenture is not discharged in a_ccordance #2206,
with Article ~ hereof and each such fund and account shall constitute ~ (2207
a trust fund for the benefit of the Owners of the Bonds _a~d the Bank, #2208,
-54-
~38
94691.9. 2535.06:14 ~ (38)
and the money in each such f_und and account shall be disbursed only ~2210
for the purposes and uses hereinafter authorized. %2211
iA) Interest Account. T_he Trustee, on-the first Business #2213,
Day of each calendar month in the case of Unit Pricing Bonds or #2215,
Demand. Bonds and on the second day of March and September of each #2217
year in the case of Fixed Rate Bonds lbeginning on the commencement #2218
of collection of Assessment Installments Rursuant to Section 5.03 #2219,
hereof), shall deposit in the Interest Account from money in the #2221
Assessment Fund t_he amount of interest collected in the preceding #2222
Assessment Installment, which deposit, together with _the amount of ~2223,
~ny required transfer from t_he Variable Rate Reserve Account or the ~2225
Fixed Rate Reserve Account, as the case may be, and the Conversion #2225.
Costs Fund (to .the extent authorized by Section 5.05 h_ereof), shall #2225.
be at least sufficient to pay (1) interest payable on Fixed Rate #2226
Bonds, and 12) all amounts of interest accrued, whether or not paid, #2227
on Unit Pricing Bonds and Demand Bonds during the previous calendar #2228
~onth Rursuant to a draw on the Letter of Credit by the Trustee Dur- #2229,
suant to t_he Letter of Credit. Notwithstanding the foregoing, the %2231,
Trustee shall deposit in t_he Interest Account from moneys in the #2233
Assessment Fund the amount of interest collected with respect to ~2234
Bank-Owned Bonds on the first Business Day of each week together with #2235
any amounts r_equired to be transferred from the Variable Rate Reserve ~2236
Account, s_ufficient to pay on such day such interest owed to the ~2237
Bank, for i_nterest payable on Bank-Owned Bonds. #2237.
So long as a Letter of Credit is in effect, money in the #2239
Interest Account shall be used and withdrawn by the Trustee on an #2240
Interest Payment Date solely for the purpose of (i) paying interest #2241
on Fixed Rate Bonds, (ii) making payments to the Bank as required #2242
under the terms of the R_eimbursement Agreement and (iii) paying #2243
interest on Bank-Owned _Bonds. F, ollowing expiration or termination of #2244,
the Letter of Credit or any Alternate Letter of Credit and the Day- #2246,
ment in full of all amounts due to the Bank h_ereunder, money in the #2248
Interest Account shall be used and withdrawn by the T_rustee on such #2249
Interest Payment Date solely for the payment of interest on the ~2250
O_utstanding Bonds. # 2251
lB) Principal Account. T_he Trustee, on each Principal ~2253,
Payment Date, s_hall deposit in the Principal Account from money in #2255
the Assessment Fund o_r, if moneys in the Assessment Fund are insuffi- ~2256
cient therefor, t_he Variable Rate Reserve Account or t_he Fixed Rate #2257,
Reserve Account, as the case may be, o_r, if moneys in the Assessment ~2258.
Fund, the Variable Rate Reserve A_ccount or the Fixed Rate Reserve ~2258.
Account are insufficient _therefor, the Conversion Costs Fund (to the ~2258.
exten~ authorized by Section 5.05 hereof), an amount equal to the ~2258.
principal becoming due on each P_rincipal Payment Date. #2259
-55-
,~38
94691.9. 2535.06: 14 # (38)
So long as a Letter of Credit is in effect money in the #2260
Principal--Account shall be used and withdrawn b__v the Trustee on each #2261
Principal Payment Date solely f_or the purpose of (!) paying the.prin- #2.262
cipal of Fixed Rate Bonds, (2) payment'of principal of Bank-Owned ~('2262
Bonds Rurchased pursuant to Section 4.04(B), and (3) reimbursing the #2263 ·
Bank for draws on the Letter of Credit with respect to principal. #2264
Following-expiration or termination of the Letter of Credit or any #2265
- Alternate Letter of Credit m_oney in the Principal Account shall be #2266
used and-Withdrawn by the Trustee on such Principal Payment Date #2267
solely".for the payment of the Rrincipal of Outstanding Bonds. #2268,
T_he amount of any prepaid Assessments transferred to the #2270
Principal Account pursuant to Section 5.04(C) hereof s_hall be used #2271,
for t_he payment of principal, on the next succeeding Principal #2273
Payment Date and the amount of any such transfers shall also be #2274,
applied as a credit against the amount of Rrincipal otherwise due on #2276
the Assessment Installment i_mmediately preceding such Principal #2277
Payment Date. . # ( 2277
lC) Redemption Account. T_he Trustee, on the redemption %2279,
date specified in a n_otice from the City filed with the Trustee at #2281
the time that any prepaid Assessment is paid to the City shall #2282
deposit in-t_he Redemption Account that amount of money constituting #2283
prepaid Assessments. ~ (2283
Money in the Redemption Account shall be u_sed and withdrawn #2284,
by the Trustee on such redemption d_ate solely for the purpose of (1) #2286
the redemption of Fixed Rate Bonds if the Assessment bore i_nterest at #2287
a fixed interest rate and (2) reimbursing the Bank for d_raws on the #2288
Letter of Credit with respect to redemption of _Bonds bearing interest #2289
at other than a fixed interest rate. Following the expiration or #2290,
termination of the Letter of Credit or Alternate L_etter of Credit .~2292
money in the Redemption Account shall be used and withdrawn by the #2293
Trustee solely for redemption of O_~tstanding Bonds. _The portion' of #2294,
any prepaid Assessment which is less _than an integral multiple of the #2296
then minimum Authorized _Denomination of the Bonds and which cannot be #2297
applied on the next available redemption date for the r_edemption of ~2298,
Bonds sh~ll be immediately transferred t_o the Principal Account and #2300
used as provided in Section 5.04(B) h_ereof. ~2301
iD) Variable Rate Reserve Account. T_he Variable Rate #2303,
Reserve Account and the amounts therein shall b_e maintained, u_sed, ~2305,
transferred, reimbursed and liquidated as follows: ~(2306
ii) Whenever there are insufficient funds in
the Interest Account or _Principal Account as a result
of a failure of an owner of property to pay an
Assessment bearing interest at other than a fixed
interest rate or the interest thereon to reimburse the
#2308
~2309
.~2310
~2311
~(2311
-56-
~38
94691.9. 2535.06: 14 ~ (38)
j~b) The registered Owner of any such Unit Pricing Bond who #816
does not elect to tender any portion of such Unit Pricing Bond for #817
purchase in accordance with Section 4.01 hereof shall have the right # (817)
to select a new Unit Pricing Interest Period by telephonic notice to #818
the .Remarketing Agent no later than 10:00 A.M., New York City time, #819
on the Rate Adjustment Date. In that event, f_rom and after such Rate #820,6
Adjustment Date, such Unit Pricing Bond shall have the Unit Pricing #(821)
Interest Period selected by the Owner of such Unit Pricing Bond. and #822
bear'interest at-the Adjusted Interest Rate indicated for such U_nit #823,$
Pricin-g Interest Period on the Preliminary Scale, subject to adjust- #(824)
ment as provided in paragraph (d) below. If the Owner of a Unit #825,8
Pricing Bond wishes to retain' such Bond as described above, such #827
Owner shall gi~e telephonic notice t_o the Tender Agent, who will pro- #828
vide such Owner with the new Purchase Date, t_he new A_djusted Interest #829,6
Rate and the new Unit Pricing Interest Period applicable to such #831
Owner's Bond or Bonds lthe information above confirmed by the #832
Remarketing Agent) in the form of a written statement. S_uch state- #833,6
ment shall be available from the Tender Agent between 3:00 P.M. New #835
York City time and close of business on each Rate A_djustment Date. #836,S
lc) In the event that on the Rate Adjustment Date the reg- #839
istered Owner of any such U_nit Pricing Bond neither tenders such Unit #840
Pricing Bond for purchase i_n accordance with Section 4.01 hereof nor #841
s_eleCts a new Unit Pricing Interest Period in accordance with para- #842
graph (b) a_bove, then, commencing with such Rate Adjustment Date, #843
such Unit Pricing Bond shall have a Unit Pricing Interest Period #844
~hich shall extend to but not include the n. ext succeeding Business #845
Day and shall bear interest at the Adjusted Interest Rate indicated #846
for such Unit-Pricing Interest Period o_n the Preliminary Scale, #847
subject to adjustment as provided in paragraph (d) below. #848
id) In the case of any Unit Pricing Bond which has been #850
tendered for purchase on. a Rate Adjustment Date pursuant to #851
Section 4.01 hereof and remarketed b_y the Remarketing Agent pursuant #852
to Section 4.04 hereof, such Unit Pricing Bond s_hall, commencing with #853
such Rate Adjustment Date, have the U_nit Pricing Interest Period #854
selected by the purchaser to whom the Unit Pricing Bond has been #855
remarketed and bear interest at the-Adjusted Interest Rate indicated #856
for such Unit Pricing Intere-st Period on the Preliminary Scale, #857
subject to a_djustment as herein provided. The first prospective Rur- #858,~
chasers willing to buy all or any of the Unit Pricing Bonds being #860
remarketed at any of the rates indicated on the Preliminary Scale #861
will be awarded such remarketed Unit Pricing Bonds. In the event #862
that a prospective Rurchaser selects a Unit Pricing Interest Period #863
for any U_nit Pricing Bond but indicates that it will purchase s_uch #864,6
Unit Pricing Bond only if such Unit Pricing Bond bears an interest #(865)
rate for such Unit Pricing Interest Period which is higher than the #866
rate indicated therefor in the Preliminary Scale, such information #867
will be noted by the Remarketing Agent. #868
94691.9. 2535.06: 14
-25- #38
~(38)
Bank for draws on _the Letter of Credit with respect to
inter~st or principal, as the case may be, or to Day
interest due and payable on Bank-Owned Bonds, o_r there
are insufficient funds in the Interest Reserve Fund to
make the payments required to be made pursuant to
Section 5.07 hereof, an amount necessary to pay such
deficiency shall be advanced from the Variable Rate
Reserve Account to such accounts or fund. T_he amounts
so advanced shall be reimbursed to the Variable Rate
Reserve Account from the proceeds of redemption or
sale of the parcels for which-Rayment of delinquent
Assessment Installments has been made from the
Variable Rate Reserve Account and such amount shall be
applied as provided in Section 7.02 hereof.
iii) In the event Assessments not bearing inter-
est at a fixed interest rate a_re prepaid, in whole or
in part, t_he amount of the prepayment shall be reduced
b_y an amount equal to (a) t_he balance on deposit in
the Variable Rate Reserve Account multiplied by (b)(1)
the unpaid principal amount of the Assessment or por-
tion thereof proposed to be prepaid, divided by (2)
t_he aggregate principal amount of unpaid Assessments
bearing interest at other than a_ fixed interest rate.
A_n amount equal to such reduction s_hall be transferred
from t_he Variable Rate Reserve Account to the
Redemption Account.
liii) If on the first Business'Day of each month,
commencing October 1, 1988, t_he amount on deposit in
t_he Variable Rate Reserve Account e_xceeds _the Variable
Rate Reserve Requirement, s_uch excess shall be trans-
ferred to the Investment Earnings Account of the
Investment Earnings Fund.
liv) If at any time _the amount on deposit in _the
Variable Rate Reserve Account, together with the
amount on deposit in the Remarketing Cost Account i_s
sufficient to retire all of t_he Unit Pricing Bonds and
Demand Bonds, whether by redemption or at maturity,
collection of t_he Assessment Installments n_ot bearing
interest at a fixed interest rate s_hall be discontin-
ued or reduced, as appropriate, and all amounts on
deposit in t_he Variable Rate Reserve Account s_hall be
transferred to the Principal Account and Interest
Account at the times and in the amounts required f_or
the payment of the principal of and interest on U_nit
Pricing Bonds and Demand Bonds.
#2312
#2313
#2313.
#2313.
.~2314
~2315
#2316
%(2316
#2317
~2318
#2319
#(231.c
#(231.c
~2321
#2322
#2323
#2324,
#2326
#(232(
#(232~
#2327,
#2329
#2330,
#2332,
#(2332
#2335
#2336,
#2338,
#2341
#2345
#(2345
~2350,
#(2352
#2353,
#2355
~2356
~2357,
~2360
~2361
~2362,
~2364
~2365,
~2367
~(2367
-57-
.~38
94691.9.2535.06:14 ~(38)
iv) Upon any conversion of all or any portion
9f the Bonds to a Fixed Interest Rate, the Trustee
s_hall transfer from the Variable Rate Reserve Account
and to the extent permitted by Section 4.08(D), f_rom
the Remarketing Cost Account, to the Fixed Rate
Reserve Account an amount equal to the Fixed Rate
Reserve Requirement for ~uch Bonds.
~2369
#2370
~2371
#2371.
#2374
~2375
~(2375
lvi) Upon the written direction of the Bank all
or a_ portion of the moneys on deposit in the Variable
Rate Reserve Account shall be transferred to the
Remarketing Cost Account to the extent moneys on
deposit in the Remarketing Cost A_ccount are less than
the Remarketing Cost Account Requirement. S_uch trans-
fer shall be made even if such transfer results' in
amounts on deposit in the Variable Rate Reserve
Account being less than the Variable Rate Reserve
Requirement.
~2375.
~2375.
~2375.
%2375.
#2375.
#2375.
#(2375
#2375.
#2375.
~(2375
IE) Fixed Rate Reserve Account. T_he Fixed Rate Reserve #2387,
Account and the amounts therein shall be maintained, used, trans- ~2389
letted, reimbursed, and liquidated as follows: #(2389
ii) Whenever there are insufficient funds in
the Interest Account or ._Principal-Account a_s a result
of a failure by an. owner of property to pay an
Assessment bearing a rate of interest equal to a Fixed
Interest Rate or the interest thereon t_o pay the next
maturing installment of the principal of or interest
on the Fixed Rate Bonds, an amount necessary to pay
such deficiency shall be advanced from the Fixed Rate
Reserve Account to such accounts. T_he amounts so
advanced shall be reimbursed to the Fixed Rate Reserve
Account from the proceeds of redemption or sale of the
parcels for which Rayment of delinquent Assessment
Installments has been made from _the Fixed Rate Reserve
Account a_nd such amounts shall be applied as provided
in Section 7.02 hereof.
~2391
~2392,
#2394
#(2394
#2395,
#2397
#(2397
#2398
#2399
~(2399
~2400
~2401
~2402
~2403
~(2403
iii) In the event Assessments bearing interest
at a Fixed Interest Rate are prepaid, in whole or in
part, t_he amount of such prepayment shall be reduced
b_y an amount equal to that portion of _the balance on
deposit in the Fixed Rate Reserve Account equal
to (a) the amount on deposit in the Fixed Rate Reserve
A_ccount multiplied by (b)(1) such amounts of moneys
initially deposited into the Fixed Rate Reserve
Account upon conversion of such _Assessments to a fixed
interest rate divided by (2) the amount of m_oneys
%2405
~(2405
~2406
~2407,
~2409
~. (2409
~2410
~2411
~2412
~2413
-58-
~38
94691.9. 2535.06: 14 ~ (38)
initially deposited into the Fixed Rate Reserve
Account upon conversion with respect to all
Assessments to a fixed interest rate. _An amount equal
to such reduction shall be transferred from t_he Fixed
Rate Reserve Account to the Redemption Account.
#(2413
#2414
#2415,
#2417
#2418
liii) If on the-first Business' Day of each month,
commencing October 1, 1988, t_he amount on deposit in
t_he Fixed Rate Reserve Account e_xceeds t_he Fixed Rate
Reserve Requirement, such excess shall be transferred
to the Investment Earnings Account of the Investment
Earnings Fund.
#2420
~2421,
#2423,
#2426
~2429
~(2429
liv) If at any time _the amount on deposit in _the
Fixed Rate Reserve Account i_s sufficient to retire all
of t_he Fixed Rate Bonds, whether by redemption or at
maturity, collection of t_he Assessment Installments
b_earing interest at a fixed interest rate s_hall be
discontinued or reduced, as appropriate, and all
amounts on deposit in t_he Fixed Rate Reserve Account
shall be transferred to t_he Principal Account and
Interest Account at the times and in the amounts
required f_or the payment of the principal of and
interest on the Fixed Rate Bonds.
#2432,
#2435
#2436,
#2438,
~2440,
#2442
#2443
#2444,
~2446
#2447
#2448
SECTION 5.O5. Conversion Costs Fund. There is hereby #2450
established and there shall be maintained by the Trustee a separate #2451
fund to be known as the Conversion Costs Fund. S_uch Fund shall con- #2452,
stitute a trust fund for the benefit of the _Owners .of the Bonds and #2454
the Bank. M_oney on deposit in the 'Conversion Costs Fund m_ay be with- ~2455,
drawn for t_he payment of fees, expenses, reimbursements and indemni- ~2457
fications of the Bank or the R_emarketing Agent upon receipt of bills #2458,
from the Bank or Remarketing Agent, in a_ccordance with the terms of #2460,
the Reimbursement Agreement and the Remarketing Agreement, as the #2462
case may be. Money on deposit i_n the Conversion Costs Fund _may also #2462.
be withdrawn to pay or reimburse the City for fees, expenses and #2462.
other costs incurred b_y the City in connection with a conversion of ~2462.
Bonds to a Fixed Interest Rate upon written certification by the City #2462.
to the Trustee. U_loon written notice from the City to the _Bank, the #2463,
Trustee and the Remarketing Agent that the City i_ntends to transfer #2463.
excess moneys from the Conversion Costs F_und in accordance with this ~2463.
Section 5.05 and stating the Rroposed date of such transfer (which #2463.
transfer shall be not sooner than ten (10) calendar days from the ~2463.
date of such notice) and upon (i) written certification by the City ~2463.
to the Trustee that the amount on deposit in the Conversion Costs ~2463.
Fund exceeds all reimbursements, f_ees, expenses, indemnifications and ~2463.
other costs expected to be paid from the Conversion Costs Fund or ~.2463.
(ii) conversion of all Bonds to a Fixed Interest _Rate or on the date ~2464
on which no Bonds are Outstanding and s_o long as all fees, expenses ~2465
·
-59- 338
94691.9.2535.06:14 ~(38)
and indemnifications of the Bank and the Remarketing Agent are paid #2466
and all fees, expenses and other costs of the City incurred in con- #2466.
nection with conversions of B_onds to Fixed Interest Rates are paid, #2466.
excess amounts on deposit, in the Conversion Costs Fund s_hall be #2466.
transferred first, to the Fixed Rate Reserve Account and the Variable #(2466
Rate Reserve Account to the extent of any deficiencies therein and ~2468.
pro r_ata in the event such amounts are not sufficient to satisfy the ~2468.
deficiencies in both such Accounts, and second, to the Interest #(2466
Account as a credit against interest on Assessments. M_oney on ~2469,
deposit in the Conversion Cost Fund may also be transferred t_o the #2469.
Interest Account or the Principal Account of the Redemption _Fund or #2469.
to the Interest Reserve Fund in the event that the amount on deposit ~ (246~
therein is not s_ufficient, together with any available moneys on #2469.
deposit in t_he Fixed Rate Reserve Account or the Variable Rate #2469.
Reserve Account, as the case may be, to pay principal of or interest #2469.
on the Bonds. #(246~
T_he City hereby agrees to certify to the Trustee a_t least #2469.
annually whether the amount on deposit in the C_onversion Costs Fund ~2469.
exceeds all reimbursements, fees, expenses, indemnifications and #2469.
other costs expected to be paid from the Conversion Costs Fund. #2469.
S_ECTION 5.06. Cons~_-n~-tion Fund. The City hereby agrees to #2471
establish and maintain a Construction Fund until t_he completion of #2472
the construction of the works of improvements within _t_he District. #2473
Ail moneys on deposit in the Construction Fund shall be #2474
held by or on behalf of the City in trust and shall be applied f_or #2475,
the payment of costs of the construction of the works of i_mprovements ~2477
within the District and expenses incidental thereto, including the ~2478
payment of the costs of the issuance and delivery of the Bonds and #2479
the fees, costs and expenses of the Paying Agent, t_he Trustee, #2480,
Moody's and S&P incurred prior to the completion of such works of #2482
improvement. Notwithstanding any of the other Rrovisions of this #2482.
Section 5.06, to the extent that other moneys are not available #2482.
therefor, a_mounts in the Construction Fund shall be applied to the #2482.
payment of principal of and interest on Bonds when due. ~2482.
W_hen the construction of the works of improvement have been ~ 2483
completed, or upon the decision of the City to terminate such con- #2484
struction, t_he City shall deliver to the Trustee and the Bank acer- ~2485,
tificate of the City stating the fact and date of such completion o_r ~2487
termination o_f such construction and stating that all the costs of ~2488
such construction and equipment and expenses incidental thereto h_ave ~2489
been determined and paid (or that all such costs and expenses h_ave ~2490
been paid less specified claims which are subject to dispute a_nd for ~2491
which a retention in the Construction Fund is to be maintained i_n the ~.2492
full amount of such claims until such dispute is resolved or that ~(2492
such costs are fees, costs or indemnifications of the Trustee or ~2493
-60- %38
94691 9 2535 06:14 ~
· . . .(38)
PaYing Agent). U_pon the delivery of such certificate, the City shall 32494,
transfer any remaining balance of money in the Construction Fu~d ~but #2496,
less the amount of any such retention or such fees, costs or #(2497
i_ndemnifications)' (i) to the Fixed Rate Reserve Account and V_ariable #2498,
Rate Reserve Account to the extent of any deficiencies therein and .%2500,
pro rata in the event such money is not sufficient to satisfy the .%(2501
deficiencies in both such Accounts and (ii) thereafter to the .%2502,
Redemption Account to be applied by the Trustee for the redemption of #(2504
B_onds. # 2505
Pending use of such moneys in the Redemption Account for ~2506
t_he redemption of Bonds, such moneys shall not be invested a_t a #2507,
yield, within the meaning of Treasury Regulations Section #2509
1.103-13(c), t_hat exceeds the yield on the Bonds. Notwithstanding #2510,
anything in this Section 5.06 to the contrary, s_uch moneys may be #2514
used and invested in any manner permitted b__v an Opinion of Counsel #2515
which provides that such use or investment will not affect the exclu- #2516
sion from Federal income taxes of interest on the Bonds. #(2516
S_ECTION 5.07; Interest Reserve Fund. The Trustee hereby #2518
agrees to establish and m_aintain, so long as any Bonds are #2519
Outstanding, the Interest Reserve Fund which fund shall constitute a #2520
trust f_und for the benefit of the Owners of the _Bonds and the Bank. ~2521,
T_he Trustee is hereby instructed to apply amounts on deposit in _the #2523,
Interest Reserve Fund on each Interest P_ayment Date to advance to #2525,
Owners of Unit Pricing Bonds and Demand B_onds interest due on such #2526.
Interest Payment Date. A_mounts on deposit in the Interest Reserve #2526.
Fund shall be reduced on the first Business Day of each c_alendar #2531
month following the r_edemption of Unit Pricing Bonds and Demand #2532
Bonds, so that t_he amount on deposit in the Interest R_eserve Fund #2533,
shall always be equal to 35 days interest at the Maximum Rate on all #2535
Bonds other than Fixed-Rate Bonds; provided, however, that such cal- #2536,
culation shall not take into account moneys on deposit in the #2538
Interest Reserve Fund which represent interest actually accrued b_ut #2539,
not yet payable to Owners of Unit Pricing or Demand _Bonds by the Bank #2541
under the terms of the Letter of Credit and such moneys shall not be .% (2541
transferred out u_pon such redemptions. _The amount of any such reduc- .%2542,
tion shall be transferred (i) to the Conversion Costs Fund i_n such #2543.
amount as the Finance Director c_ertifies in writing to the Trustee is #2543.
expected to be necessary, t_ogether with the amount already on deposit .%2543.
therein, to pay all fees, expenses, costs and indemnifications .%2543.
expected to be paid from _the Conversion Costs Fund, t_hen (ii) to the ~2543.
Fixed Rate Reserve Account and the Variable Rate Reserve Account to .~2543.
the extent of any deficiencies _therein and pro rata in the event such .%2543.
amount is not sufficient to satisfy the deficiencies in both such .%2543.
Accounts and then (iii) to the Interest Account to be applied as a .%2544
credit against the interest due in the immediately succeeding #(2544
Assessment Installments on Assessments bearing interest at a rate ~2545,
other than a fixed interest rate. 3(2546
-61- ~38
94691.9. 2535.. 06:14 ~(38)
U_pon conversion of all or a portion of the Bonds t_o a. Fixed #2547,
Interest Rate, the amount in excess of the Interest Reserve Fund #(2548
Amount shall be transferred f_rom the Interest Reserve Fund to (i) the ~2549
Convers ion Costs Fund the amount provided in the Rreceding paragraph # 2549.
of this Section 5.07, then (ii) to the Fixed Pate Reserve A_ccount and #2549.
the Variable Rate Reserve Account to the extent of any deficiencies #2549.
therein and pro rata in the. event s_uch amount is not sufficient to #2549.
satisfy the deficiencies in.both s_uch Accounts and then (iii) to the #2549.
Interest Account to be applied as provided in Section 3.01(C); mro- #2550,
vided, however, that the calculation of such excess amount shall not #(255]
take into account moneys on deposit in the Interest Reserve Fund #2552
which represent interest actually accrued but not yet payable and #2553
such moneys shall not be transferred o_ut upon such conversion. !#2554
I Any moneys held by the Trustee in the Interest Reserve !#2555
Fund s_hall be held uninvested unless instructed to be invested b_y the !#2556
City, in which case they shall be invested in direct obligations of #2558,
the United States of America Lwith maturity_lperiods Lnot exceeding .'#2561
thirty (30) days, and with a maturity datel o_n or before the dates i_n !#2568
which the moneys are anticipated to be required. On the first ~2570
Business Day of each month, a_ll investment earnings on amounts on #2571
deposit in the Interest Reserve Fund shall be transferred to the ~2572
Investment Earninas Account of the Investment Earninqs Fund. I !#2573
S_ECTION 5.08. Inve~c~ent Earninq~ Fund. The Trustee hereby #2573.
agrees to establish and maintain the Investment ~arnings Fund, which #2573.
Fund shall be held in trust but which s_hall not be for the benefit of #2573.
the Owners of the Bonds or the Bank. T_he Trustee shall administer !#2573
such Fund as provided in this Article V and in Section 6.08 hereof. !#257~_
Such Fund shall be maintained by the Trustee until the Finance #2573.
Director directs that it be closed. #(2573
T_he Trustee shall establish and maintain in the I_nvestment #2573.
Earnings Fund two separate accounts designated as t_he Investment #2573.
Earnings Account a_nd the Excess Earnings Account. A_Ii moneys in the #2573.
Investment Earnings Account a_nd the Excess Earnings Account shall b_e ~2573.
held by the Trustee in trust and shall be kept separate and apart #2573.
from all other funds and money held by the Trustee. P_ursuant to #2573.
Section 5.09 hereof, the Trustee and the City shall transfer all !~2573
interest on deposits and investments in all f_unds and accounts (other !#2573
than the Remarketing Cost Account) to t_he Investment Earnings #2573.
Account. _Amounts on deposit in the Investment Earnings Account s_hall #2573.
be transferred to the Excess Earnings Account Rursuant to written ~2573.
instructions from the Finance Director i_n accordance with the provi- #2573.
sions of t_he Tax and Non-Arbitrage Certificate and I_nstructions as to #2573.
Compliance with the Provisions of Section 103(a) of t_he Internal #2573.
Revenue Code of 1986 (the "Tax Certificate") d_elivered with respect #2573.
to the Bonds. F_ollowing each such transfer (or, if no such transfer #2573.
is required, then upon r_eceipt by the Trustee of written #2573.
94691.9.2535.06:14
-_62- #38
certificati'~n frbm the 'Finance Director that:~no s6ch transfer is ~2573.
required) ,..any amount remaining in t_he Investment Earnings Account or #2573.
any amount on deposit in the Excess Earnings Account which exceeds ~2573.
the amount required to be maintained therein Rursuant to the written #2573.
instructions from the Finance Director in accordance with _the provi- #2573.
sions of the Tax Certificate shall (i) prior to t_he completion of the ~2573.
works of improvements and the filing of the certificate of the City #(2573
as required bY Section 5.06 hereof, be deposited first to the Fixed !.~2573
Rate Reserve Account and the Variable Rate Reserve Account to the #2573.
extent of any deficiencies _therein and pro rata between such Accounts #2573.
in the event such amount is not sufficient to satisfy the deficien- ~ (2573
cies in both such Accounts and second be deposited to the .~2573.
Construction Fund and (ii) after receipt by the Trustee of such cer- #2573.
tificate, first be deposited to the Fixed Rate Reserve Account a_nd #2573.
the Variable Rate Reserve Account to the exWcent of any deficiencies #2573.
therein and pro rata between such Accounts i_n the event such amount #2573.
is not sufficient to satisfy the deficiencies in both such Accounts # (2572
and second, be deposited to the Interest Account as a credit against #2573.
interest on Assessments. Except as set forth in the preceding sen- ~2573.
tence, amounts on deposit in the Excess Earnings Account shall only #2573.
be applied to payments made to t_he United States i_n accordance with #2573.
written instructions of the City in accordance with the Tax ~2573.
Certificate. # ( 2573
S_ECTION 5.09. Investments. All moneys held by the Trustee #2575
in the Interest Reserve Fund and t_he Purchase Fund s_hall be invested #2576,
as set forth in Section 5.07 o_r Section 4.08 hereof, as the case may #2578
be. Any money held by or on behalf of the City in the Construction #2579
Fund or by the Trustee in t_he Assessment Fund, t_he Redemption Fund ~2580,
(other than the Variable Rate Reserve Account), t_he Conversion Costs #2583
Fund o_r the Investment Earnings Fund s_hall be held, without further #2583.
instruction, in demand or time deposits.'iincluding certificates of ~2585
deposi%) of any bank (including the Trustee) authorized to accept #2586,
deposits of public funds, and shall be secured at all times by such #2588
obligations as are required by law a_nd to the fullest extent required #2589
by law. Notwithstanding the foregoing, such moneys other than the ~2590
moneys in the Variable Rate Reserve Account, may be invested b_y the ~2591,
City or the Trustee, at the direction of the City, as the case may ~(2592
be, in Permitted Investments which will, as nearly as practicable, ~2593
mature on or before the dates on which such money i_s anticipated to ~2594
be needed for disbursement hereunder. Moneys in the Variable Rate ~2595
Reserve Account shall be invested in obligations described in ~2596
clause (1) of the definition of Permitted Investments which mature ~2597
not more than 30 days after the date of purchase thereof. ~2598
A_ii such money deposited or invested shall be deposited or %2599,
invested so as to obtain the yield or yields which the City deems ~(2600
Rracticable, taking into consideration, among other things, the ~2601,
rebate requirements imposed by the Code and after giving due regard ~.2602.
-63- ~38
9469t.9.2535.06:14 ~(38)
for the safety of such money, and the City or Trustee m_ay commingle #2603,
any of the money held by-it hereunder, except money derived from ~2605,
draws under the Letter of .Credit, on deposit in the Interest Reserve #(260~
Fund or on deposit in the Investment Earnings Fund s_hall not be corn- #2606.
mingled under any circumstances. _The City or Trustee may present for #2608
redemption or sell any' such deposit or investment whenever it shall #2609
be necessary in order to provide m_oney to meet any payment of the #2610
money so deposited or invested. T_he Trustee shall not be liable or #2611
responsible for any losses resulting from any such deposit or invest- ~2612
ment presented for redemption or sold. #(2612
Notwithstanding any other provision of this Section 5.09, '..~2612
I the City will not invest or instruct the Trustee to invest any !~2612
moneys at a yield ~[reater than the yield allowed in the Tax !#261~
Certificate. # (2612
Any interest on deposits and investments i_n all funds and ~2613,
accounts lother than the Remarketing Cost Account)' r_eceived by the ~2615,
City or the Trustee shall be deposited in the Investment Earnings #2617
Account of the Investment Earnings Fund. Any balance remaining in #2618
the Investment Earnings Account of t_he Investment Earnings Fund after #2619,
the transfer of moneys therein to _the Excess Earnings Account of _the #2621,
Investment Earnings Fund shall b_e transferred as provided in ~2622.
Section 5.08 hereof. #(2622
_ARTIC~.~. VI ~2623
COVENANTS #(2622
SECTION 6.01. Compliance with this Indentu_r__e. The City #2625
will faithfully observe and perform all the agreements, c_onditions, #2626,
covenants and terms contained herein required t_o be observed and per- #2628
formed by it. #(2628
S_ECTION 6.'02. Observance of Laws and Regulation. The City # 2630
will faithfully observe and perform all lawful a_nd valid obligations #2631
or regulations now or hereafter imposed on it b_y contract, or pre- #2632
scribed by any state or national law, o_r by any officer, board or #2633
commission having jurisdiction or control, a_s a condition of the con- ~2634
tinued enjoyment of each and every franchise, right or privilege now ~2635
owned or hereafter acquired by it, including its right to exist and ~2636
carry out its business, to the end that such franchises, rights and ~2637
privileges shall be maintained and preserved and shall not be aban- %2638
doned, forfeited or in any manner impaired. ~2639
-64- ~38
94691.9.2535.06:14 =(38)
S_ECTION 6.03. Other Liens. So long as the Indenture has ~2641
not been discharged in accordance with Article X hereof, t_he City #2642,
will not create or suffer to be created any pledge of or lien on the #2644
items set forth in Section 5.01 hereof o_ther than. the pledge and lien ~2645
hereof except a pledge for lien which is subordinate to the pledge #2646
and lien hereof. #(2646
S_ECTION 6.04. Prosecution of Suits, Except as provided in #2648
Section 7.02, the City will within sixty (60) days a_t the request of #2649
the Bank, the Trustee or any Owner, take such action from time to #2650,
time as may be necessary or proper to remedy or cure any default in #2652
the payment of A_ssessment Installments and will prosecute all #2653,
actions, suits or other proceedings as may be appropriate for such #2655
purposes, i_ncluding a judicial foreclosure'action as set forth in _the ~2656,
Act and Section 7.02 hereof. #(2657
S_ECTION 6.05. Accountinq Records and Statements. The City # 2659
will keep or cause to be kept proper accounting records ~n which corn- #2660
plete and correct entries shall be made of all transactions relating #2661
to the receipt, deposit and disbursement of t_he Assessment #2662
Installments, a_nd such accounting records shall be available for #2663
inspection by t_he Bank, the Trustee or any Owner or such Owner's #2664
agent d_uly authorized in writing at reasonable hours and under rea- #2665
sonable conditions. Not later than the twenty-fifth (25th) day of #2666
each month, commencing in October 1989 a_nd continuing so long as any #2667,
Bonds are Outstanding, t_he City will, upon request, furnish t_o the #2669,
Bank, the Trustee and any Owner lbut at the expense of such Owner) a #2671,
complete statement covering the receipts, deposits and disbursements #(2672
of the Assessment Installments for the preceding monthly period. #2673,
S_ECTION 6.06. Recordation a.nd Filiml. The City will file, #2676
record, register, renew, refile and record all such documents, #2677
including financing statements Lot continuation statements in connec- #2678.
tion therewith), as may be required by law in order to maintain at #2679
all times a_ security interest in t_he Assessment Installments under #2680,
and pursuant to this Indenture, a_ll in such manner, at such times and #2682
in such places a_s may be required in order to fully perfect, preserve #2683
and protect t_he benefit, protection and security of the Owners a_nd #2684,
the rights of the Trustee hereunder, and the City will do whatever #2686
else may be necessary or be reasonably required i_n order to perfect #2687
and continue the pledge and lien on t_he Assessment Installments a_s ~2688,
provided herein. ~(268c~
SECTION 6.07. Further As~urm~ce~. Whenever and so often as ~ 2691
requested to do so by the Trustee, t_he Bank or any Owner, the 'City #2692
will promptly execute and deliver or cause to be executed and deliv- ~2693
ered al 1 such other and further assurances, documents or instruments ~ 2694
and promptly do or cause to be done all such other and further things ~2695
as may be necessary or reasonably required in order to further a_nd #2696,
94691.9.2535.06:14
-65-
more fully vest in the Trustee and the Owners _the benefit, protection ~2698
and security conferred or intended to be conferred. #(269~
S_ECTION 6.08. Arbitraqe Covenant. The City shall no the #2700,
following with respect to the Bonds: #(270(
ia) The City shall comply with each applicable #2702
requirement of the C_ode necessary to maintain t_he exclusion of inter- #2703,
est on the Bonds from gross income for F_ederal income tax purposes. #2705
In furtherance of the covenant contained in the preceding sentence, #2706
t_he City agrees to comply with the provisions of the T_ax Certificate #2707,
executed by the City on the date of the initial issuance and d_elivery #2710.
of the Bonds, as such Tax Certificate may be amended from time to ~2710.
time, as a source of guidance for achieving compliance w_ith the ~2710.
Code. ~ (271£
Lb) The City shall make any and all payments required ~2710.
to be made to _the United States Department of the Treasury in connec- ~2710.
tion with the Bonds pursuant to Section 148(f) of the Code from #2710.
amounts on deposit in the funds and accounts established under the #2710.
Indenture or otherwise available therefor. #2710.
/c) Notwithstanding any other provision of the #2710.
Indenture.to the contrary, so long as necessary to maintain the #2710.
exclusion from ~ross income of interest on the Bonds for Federal #2710.
income tax Rurposes, the covenants contained in this Section 6.08 #2710.
shall survive t_he payment of the Bonds and the interest thereon, #2710.
including any payment or defeasance thereof pursuant to Section 10.01 #2710.
of this Indenture. #2710.
id) Notwithstanding any other provision of the #2710.
Indenture to the contrary, u_pon the City's failure to observe'or ~2710.
refusal to comply with the above c_ovenants of this Section 6.08, the #2710.
Owners of the Bonds, or the T_rustee acting on their behalf, shall be #2710.
entitled to the rights _and remedies provided to Owners of Bonds under #2710.
Article VII of t_his Indenture. #2710.
_ARTI C~.~. VII #2711
DEFAULT, FAILURE TO MAKE TIMELY ASSESSMENT ~ (271]
INSTAT.TWENTS, AND LIMITATIONS OF LIABILITY ~ ( 2711
S_ECTION 7.01. Events of Default. If any of the following ~2713
events occur, it is hereby declared to constitute an "Event of #2714
Default": ~ (2714
-66- ~38
94691.9. 2535.06:14 ~. (38)
ia) Default in the due and punctual payment of
interest on any Bond, whether at the stated Interest
Payment Date thereof, o_r upon proceedings for redemp-
tion thereof or upon purchase thereof pursuant to
Article IV hereof, which continues for a period of
five (5) Business Days; and'
.~2716
#2717
#2718
! #271c~
!~(27]
! #271c~
lb) Default in the due and punctual payment of
the principal of or premium, if any, on any Bond,
w_hether at the stated maturity thereof, o_r upon pro-
ceedings for redemption thereof, o_r upon purchase pur-
suant to Article IV hereof, which continues for a
period of five (5) Business Days.
'#2721
#2722
#2723,
#2725
$(2725
#(2725
S_ECTION 7.02. Action on Failure to Make Timely Assessment ~2730
Installments. (1) Upon _the failure by an owner of real property to #2731
pay when due an Assessment Installment, t_he City shall forthwith #2733
undertake foreclosure Rroceedings in the manner prescribed in S_ection #2734,
8830 et seq. of t_he Streets and Highways Code of California to col- ~2736
lect the amount of any delinquent Assessment Installment ii) within ~2737,
sixty (60) days if the Assessment b_ears interest at other than a #2739
fixed interest rate or (ii) if t_he Letter of Credit is in effect, #2740
within five (5) Business D_ays of receipt of actual knowledge of, but #2741
in no event later than one h_undred fifty (150) days or if the Letter #2742
of Credit is not in effect within one hundred and fifty (150) d_ays, #2743,
of the failure to pay w_hen due such Assessment Installment if the #2744.
Assessment Installment bears i_nterest at a fixed interest rate. U_pon ~2745,
the redemption or sale of the real propert, y responsible f_or such #2747
delin.quent Assessment Installment, or resale as provided below, ._the #2748
City shall deposit to the Fixed Rate Reserve Account if such #2749
Assessment bears interest at a fixed interest rate or to the Variable #2750
Rate ReserVe Account if the Assessment bears interest at other than a ~2751
fixed interest rate, t_he amount of any d_elinquency advanced therefrom ~2752,
to the Interest Account or Principal Account for payment of interest #2754
on or principal of Bonds. _Amounts so deposited in the Variable Rate #2754.
ReserVe Account s_hall be immediately paid over to the Bank to the #2755
extent' of any unreimbursed d_raws on the Letter of Credit for payment #2756
of principal or interest on the Bonds. _Amounts so deposited in the #2757
Fixed Rate Reserve Account shall b_e immediately paid over to the Bank .%2758
to the extent of any unpaid draw on the Letter of Credit resulting ~2759
from a pro rata distribution made by the Trustee pursuant to the #2760
second to the last paragraph o_f this Section 7.02. ~2761
12) In the event that real property w_ith an Assessment #2762
bearing interest at other than a fixed interest rate is neither ~2764
redeemed by the owner thereof n_or sold to a third party purchaser at ~2765
such foreclosure sale, _the City shall cause a credit bid on behalf of #2766
and in the name of t_he City and the Bank to be entered in the amount ~2767
due the City and/or the Bank and shall cause a sheriff's deed for ~276&
-67- ~38
94691.9.2535.06:14 # (38
said real property to be executed in the name of the City and/or the # (27' '
Bank, as appropriate. The proceeds from any resale of s_uch real #277'
property on which there is an Assessment bearing interest at other # (27''
than a_ fixed interest rate s_hall be applied first to any amounts due #277'
t'o the Bank hereunder or under the Reimbursement A_greement, and #277,
thereafter any excess shall be applied by the City i_n the' following .~277'
order: (i) to'make the deposits required pursuant to 7.02(1) hereof, #277'.
(ii) to restore the Variable Rate Reserve Account to.the Variable #(27TM-
Rate Reserve Requirement, liii) to restore the Fixed Rate Reserve #278,
· Account to the Fixed Rate Reserve Requirement, liv).to the payment of #278'
any continuing costs of the Bonds not provided by the deposits under
clause (i) of this sentence, a_nd (v) for redemption of Bonds pursuant
to Section 3.01(A) hereof with credit for such redemptions c_redited #278'.
pro rata against all Assessments bearing interest at other than a #278,
fixed interest rate.
In the event that real property with an Assessment bearing #278'
interest at a fixed interest rate is neither redeemed by the owner #278:
thereof nor sold to a third party purchaser at such foreclosure sale, #279~
t_he City shall cause a credit bid on behalf of and in the name of _the ~279'
City and the Bank to be entered in the amount due the City and/or the #(27:.
Bank a_nd s_hall cause a s_heriff's deed f_or said real propez-ty to be #279~
executed in the name of the City and/or the Bank, as appropriate. #(27'. ~
T_he proceeds from any resale of such real property on w_hich there is #279'
an Assessment bearing interest at a fixed interest rate s_hall be ~280,
applied in the following order: (i) to the Bank to the extent the
Bank remains unreimbursed for a draw on the Letter of Credit as a #280'
result of the default in Rayment of the Assessment on such property, #280~
(ii) to restore the Fixed Rate Reserve Account to the Fixed Rate #280~
Reserve Requirement, liii) to restore the Variable Rate Reserve #280,
Account to the Variable Rate Reserve Requirement, liv) to the .payment #280~
of any continuing costs of the Bonds, _and iv) for the redemption, of #280'
Bonds Rursuant to Section 3.01(B) hereof with credit for such redemp- #280:
tions credited pro rata a_gainst all Assessments bearing interest a_t a #280:
fixed interest rate. #(28,
In the event that the Treasurer and the City make the
determinations described in Sections 8770-8772 of the Improvement #281~
Bond Act of 1915, a_s amended, the City and the T_rustee shall take the #281,
actions required by Sections 8770-8784 of said Act and Owners of #281, ,
Bonds, including the Bank as Owner of Bonds deemed to be Outstanding #281;
pursuant to Section 4.06(a) hereof, s_hall be deemed to have consented ~281: ,
to d_o such things as are required by such Sections of O_wners of
Bonds.
-68-
94691.9 · 2535.06: 14 '~ (38
S_ECTION 7.03. Remedies of the Trustee... The Trustee shall.~.282,'
have the right' -- .%..(28~ ~
jla) by mandamus or other action or proceeding or
suit at law or in equity t_o enforce its rights against
the City or any supervisor, of rider or employee there-
of, a_n.d to compel the City or any such supervisor,
officer or employee thereof to observe or perform
their duties _under applicable law and the conditions,
covenants and terms contained herein required to be
observed or performed;
,%282'
#282'
#282;
#282~
#283,
#283.
~(28:
lb) by suit in equity to enjoin any acts or
things which are unlawful o_r violate the rights of the
Trustee; or
#283,
#283~
#(2s' :.
lc) by suit in equity upon the happening of any
default hereunder to require _the City and its supervi-
sors, officers and employees t_o account as the trustee
of an express trust.
#283'
#283;
#283'.
#(28' S
A_nything to the contrary contained herein notwithstanding, #284'
s_o long as the Letter of Credit is in effect, and the Bank is not in #284'
default under t_he'Letter of Credit, t_he Trustee shall not exercise #284' ,
any of the foregoing rights _which affect Unit Pricing Bonds o_r Demand #284~,
Bonds w_ithout the prior written consent of the Bank a_nd shall e_xer- #284' ,
cise all rights of the Trustee under Section 7.03 at the direction of #285.
the Bank. # (28; '
S_ECTION 7.04. Non-Waiver. A waiver of any default hereun- # 285'
der or breach of any obligation by t_he City or Trustee hereunder #285.
s_hall not affect any subsequent default hereunder o_r any subsequent #285',
breach of an obligation by t_he City or Trustee hereunder or i~pair #285'
any rights or remedies on any such subsequent default hereunder or #285;
breach of an obligation b_y the City or Trustee hereunder. N_o delay #285'. ,
or omission by the City, the Trustee or the Bank t_o exercise any #286
right or remedy accruing upon any default hereunder s_hall impair any #286'
such right or remedy or shall be construed to be a waiver of any such #286
default hereunder or an acquiescence therein, and every right o-r #286.
remedy conferred upon the City or Trustee b_y applicable law or by ,%286'
this article may be enforced and exercised f_rcm time to time and as ,%286,
often as shall be deemed expedient b_y the City and Trustee. ~286'
If any action, proceeding or suit to enforce any right or #286'
to exercise a_ny remedy is abandoned or determined adversely to the #286'
City or Trustee, t_he City and the Trustee shall be restored to their $287,
former positions, rights and remedies as if such action, proceeding ~287
or suit had not been brought or taken. ~287'
~69- ,%38
94691.9.2535.06:14 %(38
S_ECTION 7.05. Remedies Not Exclusive. No remedy conferred ~2874
herein upon or reserved herein to the City or Trustee i_s intended to #2875
be exclusive of any other remedy, and every such remedy shall be #2876
cumulative and shall be in addition t_o every other remedy given here- #2877
under or now or hereafter existing u_nder applicable' law or equity or #2878
by statute or otherwise and may be exercised without exhausting and #2879
without regard to 'any other remedy c_onferred by any other applicable #2880
law. # (288C
S_ECTION 7.06. No Liability by the City to the Owners. #2882
Except for the .collection of t_he Assessment Installments and the ~2883
observance and performance of the other conditions, covenants and #2884
terms contained herein or in the Act required to be observed or per- ~2885
formed by it, t_he City shall not have any obligation or liability to #2886
the Owners with respect to this Indenture or t_he preparation, authen- #2887,
tication, delivery, transfer, exchange or cancellation o_f the Bonds ~2889
or with respect to the performance by the Trustee of any obligation #2890
contained herein required to be performed by it. P_ursuant to #2891,
Resolution No. 88-61, the City has determined that no funds of the #2893
City will be available to pay principal of, premium, if any, or #2894
interest on the Bonds. I_n such Resolution the City has determined #2895
that pursuant to Section 8769 'of the Act., the City will not obligate #2896
itself to advance available funds from the City's treasury to cure #2897
any deficiency which may occur in the Redemption Fund. #2898
S_ECTION 7.07. No Liabilitv b~_ the Trustee to the Owners. # 2901
Except as expressly provided herein, the Trustee shall not have any #2902
obligation or liability to the Owners with respect to the collection #(2902
and payment, when due, of the Assessment Installments b_y the City, ,or #2903,
with respect to the observance or performance by the City of the #2905
other conditions, covenants and terms contained herein required t_o be ~2906
observed and performed by it. #(2906
SECTION 7.08. Action by Owners. In the event the Trustee ~2908
fails to take any action to eliminate an Event of Default under #2909
Section 7.01 hereof, the _Owners of a majority in aggregate principal #2910
amount of Outstanding' Bonds may (with the consent of the Bank if a #2911
Letter of Credit is outstanding, i_f _the Bank i_s not in default there- #2911.
'under and if such failure relates to Unit Pricing Bonds or Demand #2914
Bonds) institute any suit, action, m_andamus or other proceeding in ~2915
equity or at law for the protection or e_nforcement of any right under ~2916
this Indenture, b_ut only if such Owners have first made written #2917
request of the T_rustee after the right to exercise such powers or ~2918
r_ight of action shall have occurred, and shall have afforded the ~2919
Trustee a reasonable opportunity either to proceed t_o exercise the ~2920,
powers granted herein or granted under law o_r to institute such #2922
action, suit or proceeding in its name and _unless also, the Trustee ~2923
shall have been offered reasonable s_ecurity and indemnity against the ~2924
costs, expenses and liabilities to be incurred therein or thereby, ~2925
-70- ~38
94691.9. 2535.06:14 e (38)
and the Trustee shall have refused or neglected to comply with such #2926
request within a reasonable time. #2927
_ARTICLE VIII
·
THE TRUSTEE AND THE REMARKETING AGENT AND THE
PAYING AGENT
#2928
#(2928
#(292s
S_ECTION 8.01. Employment and Duties of the Trustee. The #2930
City hereby appoints and employs the Trustee to perform the o_bliga- #2931
tions contained herein; a_ll in the manner provided herein and subject #2932
to the conditions and terms hereof. #(2932
S_ECTION 8.02. Removal and Resignation of the Tzumtee. The # 2934
City may at any time direct the removal of the Trustee initially #(2934
appointed hereby and any successor thereto b_y giving written notice #2935,
of such removal to the Trustee and by giving notice by mail of such #2937
removal to the 0whets, a_nd the Trustee initially appointed hereby and # 2938
any successor thereto _may at any time resign by giving written notice #2939
of such resignation t_o the City and by giving notice by mail of such #2940
resignation t_o the Owners. U_pon giving any such notice of removal or #2941,
upon receiving any such notice of resignation, the City, with the #2943
consent of the Bank if Unit Pricing Bonds or Demand Bonds are #(2943
Outstanding (which consent s_hall not be unreasonably withheld), shall #2944
promptly appoint a successor Trustee b_y an instrument in writing; #2945
provided that in the event t_he City does not appoint a successor #2946
Trustee within sixty (60) days following the giving of any such #2947
notice of removal or t_he receipt of any such notice of resignation, #2948
the Trustee being removed or the resigning T_rustee may petition any #2949
appropriate court having jurisdiction to appoint a successor #2950
Trustee. A_ny successor Trustee shall be a bank or trust company #2951
doing business and having a principal corporate trust office in #2952,
either New York, New York or Los Angeles or San Francisco, #2954,
California, having a combined capital (exclusive of borrowed capital) #2957,
and surplus of at least fifty million dollars ($50,000,000) and ~2959,
subject to supervision or examination by state or national #(296]
authorities. F_or purposes of this Section 8.02, a bank or trust corn- #2961.
pany shall be c_onsidered to have a combined capital (exclusive of #2961.
borrowed capital) a_nd surplus of at least fifty million dollars ~2961.
($50,000,000) if it is a wholly-owned subsidiary of a corporation #2961.
having a combined capital £exclusive of borrowed capital) and surplus #2961.
of at least fifty million dollars ($50,000,000) and such corporation #2961.
guaranties in writing the ~erformance of such bank or trust company #2961.
of its obligations hereunder. #(2961
If such bank or trust company publishes a report of .~2962
condition at least annually, Rursuant to law or to the requirements %2963
of any supervising or examining authority _above referred to, then for #2964
-71- #38
94691.9.2535.06:14 #(38)
the purposes of this Section 8.02 t_he combined capital and surplus of #2965
such bank or trust company s_hall be deemed to be its combined capital #2966
and surplus as set forth in its most recent report of condition so #2967
published. # (2967
Any removal or resignation of a Trustee and appointment of ~2968
a successor Trustee s_hall become effective only upon the acceptance #2969
of the appointment by t_he successor Trustee. #2970
S_ECTION 8.03. Compensation and Indemnification of the ~2972
Trustee. The City shall from.time to time, subject to any agreement ~(2972
then in .effect with the Trustee, pay t_he Trustee compensation for its #2973,
services and reimburse the Trustee for all its advances and expendi- #2975
tures hereunder, including but not limited to advances to and fees #2976
and expenses of a_ccountants, agents, appraisers, consultants, counsel #2977
or other experts employed by it in the observance and performance of #2978
its rights and o_bligations hereunder; Rrovided that the Trustee shall #2979,
not have any lien for such compensation or reimbursement against any #2981
money held by it in any of the funds or accounts established hereun- #2982
der, although the Trustee may take whatever legal actions are avail- #2983
able to it directly against the City to recover such compensation or ~2984
reimbursement. # ( 2984
To the extent permitted by law, the City does hereby assume ~2985
liability for, and agrees to indemnify and hold harmless _the Trustee #2986,
from and against any and all claims, damages and losses Lincluding #2988
legal fees and expenses) arising out of ii) the condition, manage- #2989,
ment, maintenance or use of _o.r from any work done in connection with #2991
t_he works of improvement within ...the District, iii) any act of 'neg!i- #2992,
gence of the City.or of any of its agents, contractors, employees, #2995
invitees, licensees, officers or supervisors i_n connection with the #2996
works of improvement within _the District, o_r liii) the payment of any #2997,
costs or expenses of _the acquisition and construction of the works of #3000
improvement within the District; Rrovided, that no indemnification #3001,
will be made for willful misconduct or negligence hereunder by the #3003
Trustee. ~ ( 3003
The City also agrees to indemnify the Trustee for, a_nd to #3004,
hold it harmless against, any loss, liability or expense incurred #3006
without negligence or bad faith on the part of the Trustee, arising #3007,
out of or in connection with the acceptance o_r administration of the #3009
trust or trusts .hereunder, a_s well as the costs and expenses of #3010
defending itself a_gainst any claim or liability in accordance with .~3011
the exercise or performance of any of its powers or duties hereunder ~3012
performed without negligence or bad faith. ~(3012
-72- ~38
94691.9.2535.06:14 ~(38)
S_ECTION 8.04-. Protection of the TruStee. The Trustee shall %3014
be protected and shall incur no liability i_n acting or proce.eding in $3015
good faith upon any affidavit, bond, certificate, consent, notice, #3016
request, requisition, resolution, statement, telegram, voucher, #3017
waiver or other paper or document w_hich it shall in good faith #3018
believe to be genuine a_nd to have been adopted, executed or delivered #3019
by the proper party or Rursuant to any of the provisions hereof, a_nd #3020,
the Trustee shall be under no duty to make any investigation or #3022
inquiry as to any statements contained or matters referred to i_n any $3023
such instrument, but may accept and rely upon the same a_s conclusive #3024
evidence of the truth and accuracy of such statements. T_he Trustee #3025
may consult with counsel, who may be counsel to the City, w_ith regard #3026
to legal questions arising hereunder, a_nd the opinion of such counsel #3027
shal 1 be ful 1 and complete authorization a_nd protection in respect to # 3028
any action taken or suffered by it h_ereunder in good faith in accor- #3029
dance therewith. # ( 302 c~
W_henever in the observance or performance of its rights and #3030
obligations hereunder the Trustee shall deem it necessary or desir- #3031
able t_hat a matter be proved or established prior to taking or suf- #3032
feting a_ny action hereunder, such matter lunless other evidence in #3033,
respect thereof is herein specifically prescribed) _may be deemed to #3036
be conclusively proved and established by a certificate of the City, #3037
and such certificate shall be full warrant to the Trustee for any #3038
action taken or suffered under t_he provisions hereof upon the tell- #3039
ance thereon, b_ut in its discretion the Trustee may, in lieu thereof, #3040
accept other e_vidence of such matter or may require such additional ~3041
evidence as it believes reasonable. #3042
The Trustee shall only be responsible for the duties or #3043
obligations expressly provided herein, and no additional duties o_r #3044,
obligations shall be implied from the terms of this Indenture. #(3045
T_he Trustee may buy, sell, own, hold and deal in any of the #3046
Bonds and may join in any action which any Owner may be entitled to #3047
take with like effect as if it were not a party hereto. _The Trustee, #3048,
either as principal or agent, _may also engage in or be interested in #3050
any financial or other transaction with t_he City a_nd may act as ~3051,
agent, depositary or trustee for any committee or body o_f Owners or #3054
of owners of obligations of the City a_s freely as if it were not the ~3055
Trustee hereunder. ~ ( 3055
T_he Trustee shall not be answerable for the exercise of any ~3056
of its rights hereunder or for the performance of any of its obliga- %3057
tions hereunder or for anything whatsoever in connection with the ~3058
funds established hereunder, e_xcept .only for its own willful miscon- ~3059
duct or gross negligence. ~(3059
-73- ~38
94691.9. 2535.06:14 = (38)
S_ECTION 8.05. _ADpointment of Remarketinq. A~ent. The City #3061
hereby appoints the Remarketing Agent t_o remarker Bonds pursuant to ~3062
this Indenture hereof, _and to keep such books and records as shall be #3063
consistent with prudent i_ndustry practice and to make such books and #3064
records .available for inspection by the Bank, the City, the Paying #3065
Agent and the Trustee a_t all reasonable times, a_nd to give tele- #3066,
graphic or telephonic notice, oromptly confirmed' by a written notice, #3068
to the Trustee Lwho shall then promptly notify the Bank and the #306.9
Paying Agent), specifying (i) the principal amount of such Bonds, if #3070
any, remarketed by it as provided in this Indenture and (ii) the #3071,
interest rates on the remarketed Bonds a_s determined pursuant to and #3073
in accordance herewith. ~ (3073
The Remarketing Agent may at any time resign and be dis- #3074
·
charged of the duties and obligations created by this Indenture b_y #3075,
giving at least sixty (60) days' notice to the Bank, the Trustee, the #(3076
City, t_he Paying Agent and the Trustee. T_he Remarketing Agent may be #3077,
removed at any time, at the direction of _the Bank and the City, by an #3079
instrument filed with t_he Remarketing Agent and the Paying Agent. #3080
A_ny successor Remarketing Agent shall be selected by the City w_ith #3081,
the consent of the Bank (whose consent shall not be unreasonably #(3082
withheld and who shall be under no l_iability by reason of such #3083.
consent) and shall be a member of the National Association of #3084
Securities Dealers, Inc., shall have a capitalization of at least #3085
fifteen million dollars 1515,000,000) or have a line of credit with a #3086
commercial bank in the amount of at least fifteen million dollars #3087
1515,000,000), and shall be authorized by law to perform all the #3088
duties set forth in this Indenture. #3089
.S_ECTION 8.06. Appointment of Payinq Aqent/Tender Aqent. # 3091
The City hereby appoints the Paying Agent to authenticate and deliver ~3092
the Bonds as provided herein and to hold all Bonds delivered to it #3093,
Rursuant to this Indenture in trust for the benefit of _the respective ~3095,
Owners who shall have so delivered such Bonds u_ntil money represent- #3097
ing the purchase price of such Bonds s_hall have been delivered to or #3098
for the account of or to the order of s_uch Owners, t_o hold a_ll money #3099,
delivered to it for the purchase of Bonds i_n trust for the benefit of #3102
the person or entity which shall have s_o delivered such money until #3103
the Bonds purchased with such money s_hall have been delivered to or ~3104
for the account of such person or entity, t_o d_eliver to the Bank, the ~3105,
City, the Remarketing Agent and the Trustee a copy of each notice 33107
delivered to it in accordance with Section 4.01 h_ereof a_nd, immedi- 33108,
ately upon the delivery to it of Bonds in accordance with S_ection ~3110
4.01 hereof, to give telephonic or telegraphic notice to the City, ~(311C
the Remarketing Agent and the Trustee specifying the principal amount ~3111
of the Bonds so delivered to it. ~3112
T_he Paying Agent may at any time resign and be discharged #3113
of the duties and obligations set forth in this Indenture by giving ~3114.
-74- !38
94691.9 . 2535.06:14 i (38)
at least sixty (60) days' notice to the Bank (but only if Unit #3115
Pricing Bonds or Demand Bonds are Outstanding), the City, t_he #3115.
Remarketing Agent (but only if Unit Pricing Bonds or Demand Bonds are # (3116
Outstanding) and the Trustee. _The Paying Agent may be removed at any #3117
time, at the direction of the Bank (but On.ly if Unit Pricing Bonds or .%31'18
Demand Bonds are Outstanding) and the City,-by an instrument filed .%3119
with the Paying Agent and the Trustee. Any successor Paying Agent #3120
shall be a commercial bank o_r trust company doing business and having .%3121
an'office in New York, New York and shall be appointed by the City, #3122
with the consent of the Bank (whose consent shall not be unreasonably #3123
withheld and who shall not b_e under any liability by reason of such .%3124
consent) if Unit Pricing Bonds or Demand Bonds are Outstanding, i_n ~3125
the same manner provided in Section 8.02 hereof for appointment of a #3126
successor Trustee. .% (312{
_ARTICLE IX # 3127
AMENDMENT OF OR SUPPl. _~!~' TO TH~ INDENTURE
#(3127
SECTION 9.01. Amendment or SuDDlement by Consent of #3129
owners. This Indenture and the rights and obligations of the City, #(3129
the Trustee, _the Remarketing Agent, the Bank and the Owners hereunder #3130
may be amended or supplemented at any time b_y an amendment hereof or #3131,
supplement hereto w_hich shall become binding when the written con- .%3133
sents of t_he Owners of a majority in aggregate principal amount of #3134
t_he Bonds then Outstanding, exclusive of Bonds disqualified as pro- #3135,
vided in Section 9.02 hereof, and, if Unit Pricing Bonds or Demand #3137
Bonds are Outstanding, the written consent of the Bank (whose consent # (3137
shall not be unreasonably withheld), so long as the Bank is not in #3138
default on its Letter of Credit, are filed with the Trustee. N_o such #3139
amendment or supplement shall L1) reduce the rate of interest on any #3140
Bond or extend the time of payment thereof or reduce the amount of #3141
principal or redemption premiums, if any, o_n any Bond or extend the .%3142
Principal Payment Date. thereof without the prior written consent of #3143
the Owner of the Bond so affected, L2) reduce the percentage of #3144
Owners whose consent is required for the execution of any amendment ~3145
hereof or supplement hereto, or L3) modify any of the rights or obli- #3146
gations of the Trustee without its prior written consent thereto. ~3147
T_his Indenture and the rights and obligations of the City, ~3148
t_he Trustee, the Remarketing Agent, the Bank and the Owners hereunder .%3149
may also be amended or supplemented at any time by an amendment .%3150
hereof or supplement hereto w_~ich shall become binding upon execution #3151
without the written consent of a_ny Owners, but, if Unit Pricing Bonds ~3152
or Demand Bonds are Outstanding, with the written consent of the Bank ~(3152
(whose consent shall not be unreasonably withheld), b_ut only to the ~3153
extent permitted by law a_nd after receipt of a Favorable 0pinion of !~315~
Bond Counsel a_nd only for any one or more of the following purposes -
-75- 338
94691.9.2535.06:14 =(38)
ia) to add to the conditions, covenants and
terms contained herein required to be observed or per-
formed by the City, or o_ther .conditions, covenants and
terms hereafter to be observed or performed by the
City, or to. surrender any right reserved herein to or
conferred herein on the City, a_nd which in either case
shall not adversely affect the interests of t_he
Owners;
#3157
#3158
#3159
~3160
#3161
#3162
#3163
#(3163
lb) to make such provisions for the purpose of
curing any ambiguity or of c_orrecting, curing or sup-
plementing any defective provision c_ontained herein or
in regard to questions arising hereunder which the
City may deem desirable or necessary, _and which shall
not adversely affect the interests of the Owners; or
#3165
~3166
#3167
#3168
#3 li69
#(3169
]Lc) to comply with the requirements of Moody's
or S&P for the initial rating of the Bonds.
#3171
#3172
SECTION 9.O2. Disqualified Bonds. Bonds held for the #3175
account of the City £but excluding Bonds held in any pension or #3176
retirement fund of 'the City) s_hall not be deemed Outstanding for the #3177
purpose of any consent or other action or any calculation of #3178
Outstanding Bonds provided herein, _and shall not be entitled to con- #3179
sent to or take any other action provided h_erein, a_nd the Trustee may #3180,
adopt appropriate regulations to require each Owner, b_efore such #3182
Owner's consent provided for herein shall be deemed effective, to #3183
reveal if the Bonds as to which such consent is given a_re disquali- #3184
lied as provided in this Section 9.02. #(3184
SECTION 9.03. Endorsement or ReDlacement of Bonds After ~3186
Amendment of Supplement. After the effective date of any action #(3186
taken as hereinabove provided, t_he Trustee may determine that the #3187
Bonds may bear a notation b_y endorsement in form approved by the #3188
Trustee as to such action and in that case upon demand of the Owner #3189
of any Outstanding Bond and presentation of such Owner's Bond for #3190
such purpose at the office of the Trustee a suitable notation as to #3191,
such action shall be made on such Bond. If the Trustee shall so #3193
determine, new Bonds so modified as in the opinion of the Trustee ~3194
shall be necessary to conform to such action shall be prepared, a_nd #3195,
in that case upon demand of the Owner of any Outstanding Bonds s_uch ~3197
new Bonds shall be exchanged without cost to each Owner for Bonds #3198
then Outstanding at the corporate agency office of the Paying Agent ~ (319&
_ul0on surrender of such Outstanding Bond. A_ll Bonds surrendered to #3199,
the Paying Agent pursuant to the provisions of this Section 9.03 ~3201
shall be cancelled by the Trustee and shall not be redelivered. ~(3201
-76- #38
94691.9.2535.06:14 ~(38)
S_ECTION 9.04. Amendment or Su~Dl~byMutual Consent. ~3203
The provisions of this Article IX Shall not prevent any Owner from #(3202
accepting any amendment or supplement as to the particular Bonds #3204
owned by such Owner, Rrovided that due notation thereof is made on #3205
such Bonds. #(3205
·
· .
_ARTICLE X #3206
DEFEASANCE
S_ECTION 10.01. Discharge of Bonds and Indenture.
~3207.
~a) If the Trustee shall pay or cause to be paid
or there shall otherwise be paid t_o the Owners of all
Outstanding Bonds the interest, principal and redemp-
tion premiums, if any, a_t the times and in the manner
provided herein and therein, a_nd subject to the provi-
sions of Section 10.01(d) hereof, then such Owners
shall cease to be entitled to the pledge and lien
described in Section 5.01 hereof as provided herein,
and all agreements and covenants of the City and the
Trustee to such Owners hereunder shall thereupon
cease, t_erminate and become void and shall be dis-
charged and satisfied.
~3209
#3210
#3211
~3212
#3213
~(3212
~(3212
#3214,
.~3216
~3217
#3218
#(3218
lb) Outstanding Bonds or any portion thereof
shall on their Principal Payment Dates o_r their dates
of redemption prior thereto be deemed to have been
paid within the meaning of and with the effect
expressed in subsection (a) of this Section 10.01 if
there shall be on deposit with the Trustee money which
is sufficient to pay the interest and principal on
such Bonds Rayable on and prior to their Principal
Payment Date or their dates of redemption.
#3220
{3221
#3222
#(3222
#3223
%3224
#(3224
~3225
#3226
lc) Outstanding Bonds or any portion thereof
shall prior to their Principal Payment Dates o_r their
dates of redemption prior thereto b_e deemed to have
been paid within the meaning of and with the effect
expressed in subsection (a) of this Section 10.01 if
il) in case any of such Bonds are to be redeemed on
any date prior to t_heir Principal Payment Dates, the
City shall have given to the Trustee i_n form satisfac-
tory to it irrevocable instructions to give notice by
mail to the Owners of such Bonds of the redemption of
such Bonds on such redemption dates, £2) there shall
have been deposited with the Trustee either money in
an amount which shall be sufficient or United States
#3228
~3229
~3230
#(323C
~3231
~3232
~3233
~3234
{(3234
~3235
#3236
$(323(
~3237
-77-
~38
94691.9.2535.06:14 ~(38)
of America Treasury bills., notes, bonds or
certificates of indebtedness, or obligations for which
t_he 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 owner thereof Rrior to maturity lincluding any
such securities issued or held in book-entry form oD
the books of the Department of the Treasury of the
United States of America) _the interest on and princi-
pal of which when paid will provide money which,
together with money, if any, deposited with the
Trustee at the same time, shall be sufficient to pay
when due the interest e_videnced and represented by
such Bonds on and prior to their Principal Payment
Dates or their dates of redemption prior thereto, a_s
the case may be, and .the principal and redemption pre-
miums, if any, on such Bonds, 13) in the event such
Bonds are not by their terms subject to redemption
within the next succeeding sixty (60) days, _the City
shall have given the Trustee in form satisfactory to
it irrevocable instructions to give notice by mail to
the Owners of such Bonds _that the deposit required by
clause (2) above has been made with the Trustee and
that such Bonds are deemed to have been paid in accor-
dance with t_his Section 10.01 and stating their
Principal Payment Dates or redemption dates u_pon which
money is to be available for the payment of _the inter-
est and principal of such Bonds and (4) the Trustee
shall have received an opinion of Bond Counsel (which
Bond Counsel is experienced in applicable bankruptcy
laws) to the effect that the deposit of moneys and
securities referred to in (2) above shall n_ot consti-
tute avoidable preferences under any applicable bank-
ruptcy laws.
id) Notwithstanding anything in this
Section 10.01 to the contrary, Bonds shall not be
deemed to be paid in the event that the Bank remains
u_nreimbursed for draws on or fees due under its _Letter
of Credit. In the event the Bank is subsequently
reimbursed, or is o_therwise satisfied, the _Bonds shall
then be deemed to be paid pursuant to the terms of
this Section 10.01.
le) After the payment of the interest, redemp-
tion premium, if any, and principal on all Outstanding
Bonds as provided in this Section 10.01, t_he Trustee
shall execute and deliver to the City and the Bank all
such instruments as may be necessary or desirable to
-78-
#3238
~(3238
~3239
#3240
~3241
#3242,
#3244
#(3244
#3245
~(3245
#3246
~3247
#3248
#3249
#3250
#(325C
.~3251,
#(3252
#3253,
~(3254
#3255
~3256
~3257
~(3257
#32§8
~3259
#3260
#(3260
#3261
%3261.
%3262
~3263
~(3263
#(3263
%3265
#3266
~3267
~3268,
~3270
~3271,
~3273
~(3273
~3275
~(3275
~3276,
~(3277
~3278
~38
94691.9.2535.06:14 ~(38)
evidence the discharge and satisfaction of this
Indenture, and the Trustee shall pay over or deliver
to the City all money or d_eposits or investments held
by it pursuant hereto which are not required f_or the
payment of the interest and principal on such Bonds.
#3279
#3280
#3281
#3282
#(3282'
S_ECTION 10.02. _U.n¢laimed Money. Anything contained herein # 3284
to the contrary notwithstanding, any money held by the Trustee in #3285
trust for the payment and discharge of the interest or principal or #3286
redemption premiums, if any, of any Bonds which remains unclaimed for #3287
two (2) years after the date when the payments on such Bonds have #3288
become payable, if such money was held by the Trustee on such date, #3289
or for two (2) years after the date of deposit of such money if #3290
deposited with the Trustee after the date when the interest and prin- #3291
cipal on such Bonds have become payable, shall upon written notice #3292,
from the City be repaid by the Trustee to t_he City as its absolute ~3294
property free from trust, and the Trustee shall _thereupon be released #3295
and discharged with respect thereto and _the Owners shall look only to #3296
the City for the payment of t_he interest and principal and redemption #3297
premiums, if any, on such Bonds; Rrovided that before being required #3298
to make any such payment t_o the City, the Trustee shall, at the #3299
expense of t_he City, give notice by mail to the Owners of such Bonds #3300
that such money remains _unclaimed and that after a date named in such #3301
notice, w_hich date shall not be less than sixty (60) days after the #3302
date of giving s_uch notice, the balance of such money then unclaimed #3303
will be returned to the City. #3304
S_ECTION 1 ~. 03. N° Discharqe. Notwithstanding anything to # 3306
the contrary contained in this Indenture, t_he obligation of the City #3307
to undertake foreclosure proceedings and deposit f_oreclosure proceeds #3308
in the funds and accounts created hereunder, and the obligation of #(3308
the Trustee to apply such Rroceeds in accordance with Section 7.02 #3309
hereof shall not cease, t_erminate, become void, or be discharged or #3310,
satisfied until such time as all foreclosure sales, a portion of the #(3311
Rroceeds of which is to be applied as payment of obligations to _the #3312,
Bank resulting from unreimbursed draws on the Letter of Credit, s_hall #3314
have been completed. # (3314
_ARTICLE XI ~ 3315
MISCE?.TANEOUS
#(3315
S_ECTION 11.01. Benefits of this Indenture Limited to ~3317
Parties. Nothing contained herein, expressed or implied, i_s intended ~3318
to give to any person other than the Bank, t_he City, t_he Paying #3319,
Agent, the Remarketing Agent, the Trustee a_nd the Owners a_ny claim, ~3321,
remedy or right under or pursuant hereto, and any agreement, ~3325
condition, covenant or term contained herein r_equired to be observed #3326
-79- ~38
94691.9.2535.06:14 ~ (38)
or performed by or on behalf of the City shall.be for the sole and #3327
exclusive benefit of the Bank, the Paying Agent, the Remarketing .%3328,
Agent, t_he Trustee ~nd the Owners. '- .%3330,
S_ECTION 11.02. Successor 'Deemed Included in all References ~3333
to Predecessor. Whenever either the Bank, t_he City, t_he Paying .%3334,
Agent, the Remarketing Agent, t_he Trustee o_r any officer' thereof is .%3337,
named or referred to herein, such reference shall be deemed to .%3340
include the successor to t_he powers, duties and functions that are .%3341
presently vested in the Bank, the City, the Paying Agent, the .%3342,
Remarketing Agent o_r the Trustee o_r such officer, and all agreements, .%3346,
conditions, covenants and terms contained herein required to be .%3348
observed or performed b_y or on behalf of the Bank, t_he City, the #3349,
Paying Agent, the Remarketing Agent or the Trustee or any officer .%3352,
thereof shall bind and inure to the benefit of t_he respective succes- .%3355
sors thereof whether so expressed or not. .%(3355
S_ECTION 11.03. Execution of Documents k~ Owners. Any dec- .%3357
laration, request or other instrument which is permitted o_r required .%3358
herein to be executed by Owners m_ay be in one or more instruments of .%3359
similar tenor and may be executed by Owners in person o_r by their .%3360,
attorneys appointed in writing. _The fact and date of their execution #3362
by any Owner or such Owner's attorney of any declaration, request or .%3363
other instrument or of any writing appointing such attorney may be .%3364
proved b_y the certificate of any notary public or other officer .%3365
authorized to take acknowledgments of deeds to be recorded in the .%3366
state or territory i_n which such notary public or other officer pur- .%3367
ports to act that the person signing such declaration, request or .%3368
other instrument or writing acknowledged to such notary public' or .%(3368
other officer the execution thereof, o_r by an affidavit of a witness .%3369
of such execution duly sworn to before such notary public o_r other .%3370
officer, or by such other proof as the Trustee may accept w_hich it .%3371
may deem sufficient. .%(3371
Any declaration, request or other instrument in writing of .%3372
the Owner of any Bond shall bind all future Owners of such Bond with .%3373,
respect to anything done or suffered to be done b_y the City or the .%3375
Trustee in good faith and in accordance therewith. .% (3375
S_ECTION 11.04. Waiver of Personal Liability. No supervi- ~ 3377
sor, officer or employee of the City shall be i_ndividually or person- ~3378
ally liable for the payment of the interest o_r principal or redemp- ~3379
tion premiums, if any, on the Bonds, but nothing contained herein ~3380
shall relieve any supervisor, o_fficer or employee of the City from ~3381
the performance of any o_fficial duty provided by any applicable pro- #3382
vision of law or hereby. ~(3382
-80- ~38
94691.9.2535.06:14 ~(38)
S_ECTION 11.05. Acquisition of the Bo~ by. City. Ail Bonds ~3384
acquired by the City, w_hether by purchase or gift or otherwise, shall #3385
be surrendered to the Trustee for cancellation. #3386
S_ECTION 11.06. Notice by Mail. Any notice required to be #3388
g~ven hereunder by mail to the Owners shall be given by mailing a #3389
copy of such notice, first class postage prepaid, t_o the Owners of #3390
all the Bonds at their addresses appearing in the books r_equired to #3391
be kept by the Paying Agent pursuant to the provisions of Section .%3392
2.14 hereof not less than fifteen (15) days nor more than thirty (30) .%(3392
days following the action or prior to the event concerning which #3393
notice thereof is required to be given unless a different notice #3394
period is specified elsewhere herein; Rrovided that receipt of any .%3395,
such notice shall not be a condition mrecedent to the effect of such .%3397
notice and failure to receive any such notice shall not affect the ,%3398
validity of the proceedings taken in connection with the action or #3399
the event concerning which such notice was given. #(3399
S_ECTION 11.07. F~nds. Any fund required to be established #3401
and maintained herein b_y the Trustee may be established and main- #3402
rained in the accounting records of the Trustee either as an account #3403
or a fund, and may, for the' purpose of s_uch accounting records, any #3404
audits thereof and any reports or statements w_ith respect thereto, be #3405
treated either as an account or a fund.; b_ut all such records with ~3406
respect to all such funds shall at all times b_e maintained in accor- #3407
dance with sound accounting practice and with due regard for the pro- .%3408
tection of the security of the Bonds and the rights of the Owners. #3409
S_ECTION 11.08. Article and SeCtion Headings, Gender and ~3411
_References. The headings or titles of the several articles and sec- # (3411
tions hereof and the table of contents appended hereto s_hall be ~3412,
solely for convenience of reference a_nd shall not affect the meaning, #3414
construction or effect hereof, and words of any gender shall be #3415
deemed and construed to include all genders. _Ail references herein #3416
to "Articles," "Sections" and other subdivisions or_ clauses are to #3417
the corresponding articles, sections, subdivisions or clauses hereof; #3418
" "hereof " "hereto " "herewith " #3419
and the words "hereby," "herein, , , ,
"hereunder" and other words of similar import refer to this Indenture ~3420
as a whole and not to any particular article, section, subdivision o_r #3421,
clause thereof. .% (3422
S_ECTION 11.09. Partial Invalidity. If any one or more of .%3424
the conditions, covenants or terms contained herein r_equired herein #3425
to be observed or performed by or on the part of the City, _the Paying .%3426
Agent, the Trustee or the Remarketing Agent s_hall be contrary to law, .%3427
then such condition or conditions, s_uch covenant or covenants, or .%3428
such term or terms shall be null and void and shall be deemed ~3429
separable from the remaining conditions, covenants and terms hereof ~3430
and shall in no way affect the validity hereof or of the Bonds, a_nd .%3431,
-81-
94691.9.2535.06:14 ~(38)
the Owners shall retain all the benefit, protection and security #(3432
afforded to them hereunder and under all provisions of applicable #3433
law. T_he parties hereto declare that they would have .executed and #3434
delivered this Indenture, each and every other article, section, #3435
paragraph, subdivision, sentence, clause and phrase hereof and would #3436
have authorized the issuance and delivery of the Bonds pursuant #3437
hereto, irrespective of the fact t_hat any one or more of the arti- #3438
cles, sections,, paragraphs, s_ubdivisions, sentences, clauses or #3439
phrases hereof o_r the application thereof to any person or circum- #3440
stance m_ay be held to be unconstitutional, unenforceable or invalid. ~3441
SECTION 11.10. California Law. This Indenture shall be #3443
construed and governed in accordance with the laws of the State of #3444
California. # ( 3444
S_ECTION 11.11. New York Time. Unless otherwise expressly ~ 3446
stated, all times referred to in this Indenture s_hall be New York #3447
City time. #(3447
~ECTION 11.12. Notices. Ail written notices to be given #3449
hereunder shall be given by mail t_o the party entitled thereto at its #3450
address set forth below, or at such other address as such party may #3451
provide to the other parties h_ereinafter listed in writing from time #3452
to time, -namely: #(3452
If to the Trustee:
#3455
~itibank, N. A.
M_unicipal Trusts & Agency
~iticorp NAIB
~.O. Box 1005'Wall Street Station
kew York, New York 10268
~3458
#3459
~3460
#3461
#3461.
#3462
If to the Paying Agent:
~3465
~itibank, N. A.
M_unicipal Securities Processing Area
~§ Beaver Street
k7th Floor
kew York, New York 10043
#3468
~3469
#3470
~3470.
~3471
-82-
#38
94691.9. 2535.06:14 ~(38)
~f to the Tender Agent:
~itibank, N. A.
M_unicipal SecUrities Processing Area
~5 Beaver street
k7th Floor
~ew York., New York 10043
~f to the City:
~ity of Tustin
~00 C~ntennial Way
T_ustin, California 92680
~ttention: Finance Director
~f to the Remarketing Agent:
~errill'Lynch, Pierce Fenner & Smith
Incorporated
~errill Lynch World Headquarters
N_orth Tower
W_orld Financial Center
~th Floor
N_ew York, New York 10281
~ttention: Tax Exempt Money Markets
Department
~f to the Bank:
T_he Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
If to Moody's:
~oody's Investors Services
~9 Church Street
N_ew York, New York
~ttention: Municipal Department
Structural Finance Group
#3474
%3477
#3478
#3479
#3480
#3480.
#3483
#3486
#3487
~3488
#3489
#3492
#3495
#(3495
~3496
#3497
#3498
#3498.
#3499
~3500
#(350o
#3503
#3505.
#35O5.
#3507
#35O8
#3513
#3516
#3517
#3518
#3519
#3520
~f to S&P:
~tandard & Poor's Corporation
Broadway
#3521.
~3521.
~3521.
-83-
~38
94691.9.2535.06:14 ~(38)
~ew York, New York 10004
~ttention: Municipal Finance Department
#3521.
~3521.
~ECTION 11.13. Notices to Rati__nq Aqen¢ies. The Trustee ! #3523
shall give immediate notice to Moody's and S&P in the event: !#(352
replaced.
The Trustee or Remarketing Agent resigns or is #3524
'. #(3524
·
The Indenture is amended or supplemented.
~3525
3. The Reimbursement is amended or supplemented.
!~352_=
4. The Letter of Credit expires or is terminated or an !.~3526
Alternate Letter of Credit is substituted for the LetteF of Credit. !#3526
~. Ail or a portion of the Bonds are converted from one !#3527
mode to another mode. !#(352
S_ECTION 11.14. Effective Date. This Indenture shall become #3529
effective upon its execution and delivery by the parties hereof. #(3529
-84- ~38
94691.9.2535.06:14 ~(38)
I_N WITNESS WHEREOF, the City h~s caused these Rresents to #3532,
be signed in its name and on its behalf by its' ~ayor, and its corpo- #3534
rate seal to be hereunto affixed and attested by its City Clerk, #3535
thereunto duly authorized, and to evidence its acceptance of the #3536
trusts hereby =reared, the T_rustee has caused these presents t~ be #353'7
signed in its name a_nd on its behalf by its duly authorized officers', #3538
and its official seal to be hereunto affixed. #3539
~ayor of the City of Tustin
#3542
#3543
A_TTEST: #3545
~ity Clerk of the City of
Tustin
#3547
#3548
#(354~
~itibank, N.A.
#355O
#3551
A_TTEST:
#3553
~itle:
#3555
#3556
-85-
~38
94691.9.2535.06:14 ~(38)
~XHIBIT A
F_ORM OF LIMITED OBLIGATION IMPROVEMENT BOND
#3560
#3561
N_o.~ $~ #3564
IN THE EVENT THIS BOND IS IN THE UNIT PRICING MODE, A STATEMENT #3567,
SETTING FORTH INFORMATION APPLICABLE TO EACH UNI~f PRICING INTEREST #3569
PERIOD FOR THIS BOND, INCLUDING THE ADJUSTED I_NTEREST RATE AND THE #3570
PURCHASE DATE, WILL BE AVAILABLE AT CITIBANK, N.A., 65 BEAVER STREET, #3571
17TH FLOOR, NEW YORK, NEW YORK, 10043 BETWEEN 3:00 P.M. AND C_LOSE OF #3572
BUSINESS ON EACH RATE ADJUSTMENT DATE. SUCH STATEMENT SHOULD ACCOM- #3573
PANY THIS BOND DURING THE UNIT PRICING I_NTEREST PERIOD TO WHICH IT #3574
RELATES. PRESENTATION OF THIS BOND IS NOT REQUIRED IN ORDER TO #3575
OBTAIN SUCH S_TATEMENT OF INFORMATION; HOWEVER, REQUESTS FOR SUCH #3576
STATEMENT MUST I_NCLUDE THE CERTIFICATE NUMBER OF THIS BOND. #3577
CITY OF TUSTIN
A_SSESSMENT DISTRICT NO. 86-2
~IMITED OBLIGATION IMPROVEMENT BOND
#3580
#3581
#3582
U_PON THE OCCURRENCE OF CERTAIN EVENTS SPECIFIED IN THE INDENTURE, #3585
THE BONDS SHALL BE SUBJECT TO MANDATORY TENDER TO THE TENDER AGENT #3586
F_OR PURCHASE AND IF NOT SO TENDERED SHALL BE DEEMED TO BE TENDERED. #3587
BY ACCEPTANCE HEREOF THE REGISTERED OWNER OF THIS BOND HEREBY _CON- #3588,
SENTS TO SUCH PURCHASE AND SHALL TENDER TMIS BOND FOR PURCHASE U_PON #3590
SUCH MANDATORY TENDER AND ACKNOWLEDGES THAT SUCH REGISTERED O_WNER #3591
SHALL NOT BE ENTITLED TO ANY INTEREST ACCRUING ON THE BOND ON OR # (3591
AFTER SUCH MANDATORY TENDER DATE. #3592
D_UE: MODE:
~EPTEMBER 2, 2013
CUSIP NO. #3595
#3597
R_EGISTERED OWNER:
#3599
P_RINCIPAL SUM:
DOLLARS #3601
Under and by virtue of the Improvement Bond Act of 1915, #3603
Division 10 of the Streets and Highways Code of California, as %3604,
amended, and the Municipal Improvement Act of 1913, Division 12 of .~3606
the Streets and Highways Code of California, as amended ~(3606
£collectively, the "Act"), the City of Tustin, California £the #3607,
"City") will, out of the Assessment Fund for the payment of the bonds #3609
issued upon the Assessments made for the construction of improvements ~3610
in an assessment district designated "_City of Tustin Assessment ~3611
District No. 86-2", which said_ improvements and assessment district ~3612
are m_ore fully described in Resolution No. 88-61, adopted by the City #3613,
Council of the City on the 13th day of June, 1988, a_s amended, Day to ~3615,
A-1 ~3558
94691.9.2535.06:14 ~(3556
the registered owner of this Bond, subject to the terms o_f the #3617
Indenture of Trust entered into by and between _the City and Citibank, #3618
N.'A., dated as of September 1, 1988 (the "Indenture"), and any right. #3619
of redemption hereinafter provided for, on September 2, 2013 upon #3620
surrender of this Bond on the Principal Payment Date or on the date #3621
of redemption pr'ior thereto at the corporate agency office of #3622
Citibank, N.A., in New York, New York (the "Paying Agent"), the prin- #3623,
cipal sum specified above, and Day on each Interest Payment Date, #3625,
which is (i) for Unit Pricing Bonds with Unit Pricing Interest #3627
Periods of less' than 180 days: t_he Purchase Date thereof; £ii) for #3628,
Unit Pricing Bonds with Unit Pricing Interest Periods equal to or #3630
greater than 180 days: each March 2 and September 2 prior to the #3631
Purchase Date and the Purchase Date; liii) for Demand Bonds: the #3632
first Wednesday of each calendar m_onth (whether or not a Business .'#3632
Day) or, with respect to Demand Bonds that are optionally tendered !~3633
pursuant to the Indenture, the Optional Tender Date relatinq to such '.~3633
optionally tendered Demand Bonds; and liv) for a given Fixed Rate !#3634
Bond: March 2 and September 2 of each year, commencing not later #3635,
than the M_arch 2 immediately preceding t-he first Principal Payment #3636.
Date for such Fixed Rate Bond lthe "Interest Payment Dates"), t_he #3636.
interest payable hereon (which is interest from the last Interest #3638
Payment Date to w_hich interest has been paid or if no interest h_as #3639,
been paid with respect to the Bonds, from the date of original #3641
authentication and delivery of the Bonds) to and including t_he #3642,
Principal Payment Date or the date of redemption prior thereto, by #3644
check mailed lot upon certain conditions by wire transfer) to t_he #3645,
registered owner as of the Record Date o_n such dates. A_i1 capital- #3647,
ized terms used herein and not defined herein s_hall have the meanings #3649
ascribed thereto in the Indenture. #(364~-
REFERENCE IS MADE TO THE -FURTHER PROVISIONS OF THIS BOND #3651
~ET FORTH ON THE REVERSE HEREOF WMICH SHALL FOR ALL PURPOSES _HAVE THE #3652,
SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN. #(3653
T_his Bond shall not be entitled to any benefits under the #3654
Act or the proceedings or become valid or obligatory for any Rurpose, #3655,
until the Paying Agent's Certificate of Authentication and #3657
Registration hereon endorsed shall have been dated and signed by an #3658
authorized officer of the Paying Agent. #(3658
T_his Bond is one of the duly authorized Bonds aggregating #3659
~81,400,000 principal amount (the "Bonds") authenticated b_y the ~3660,
Paying Agent under and pursuant to the terms of the Act and the #3662
Indenture for the purpose of providing the means for paying for the #(3662
work and improvements described in the Indenture, and is secured by ~3663
the m_oneys in the Redemption Fund, by the unpaid portion of said ~3664
Assessments made for the payment of. said work and improvements, and #3665,
certain other funds and accounts c_reated under the Indenture. This ~3667
Bond i_s payable exclusively out of said Redemption Fund, except as ~3668,
A-2 ~3558
94691.9.25'35.06:14 ~ (3556
provided hereinbelow and in the Indenture. The City will not #3670,
obligate itself to advance available funds from the City treasury to #3670.
cure any deficiency which may occur in the Redemption Fund. P_ayment #3670.
of principal and redemption price of and interest o_n Bonds not con- #3672
verted to a Fixed Interest Rate is payable from m_oneys received from #3673
draws on a Letter of Credit issued to the T_rustee by The Tokai Bank, #3674.
Ltd. Los Angeles Agency, which expires on September 15, 1998. C_opies ~3675,
of the Indenture are on file at the Corporate .Trust Department of #(3676
Citibank, N.A., a_s Trustee under the Indenture, i_n New York, New York #3677,
and reference is hereby m_ade to the Indenture and to any and all #3680
a_mendments thereof and supplements thereto for a description of _the #3681,
conditions, covenants and terms securing the _Bonds, for the nature, #3683
extent and manner of enforcement of such conditions, covenants a_nd #3684,
terms, for the rights and remedies of the registered owners of the #3686
Bonds with respect t_hereto and for the other conditions, covenants #3687
and terms upon which the Bonds-are executed and delivered #3688
thereunder. # ( 3688
F_rom and after the initial Unit Pricing Interest Period, ~3689
the interest rate borne by a Unit Pricing Bond during each Unit #3690,
Pricing Interest Period will be the Adjusted Interest R_ate determined #3692
on each Rate Adjustment Day by the Remarketing Agent, initially #3693
Merrill Lynch, Pierce Fenner & Smith Incorporated, _which shall be the #3694
minimum rate of interest per annum which would, in the judgment of #3695
the R_emarketing Agent (having due regard to the prevailing m_arket #3696,
conditions), enable such Bond to be sold at par in the secondary #3698
market on such Rate Adjustment Date for th~ Unit Pricing Interest #3699
Period commencing on such Rate Adjustment Date; provided, however, #3700
that in no event shall such rate exceed the Maximum Rate w_ith resp.ect #3701
to Unit Pricing Bonds. #(3701
If the Bonds are converted to a Demand Mode in accordance #3702
with the Indenture, t_he interest' rate borne by the Bonds will be the #3703
Variable Interest Rate determined weekly by the Remarketing Agent #3704
which in the judgment of the R_emarketing Agent would be the interest #3705
rate necessary to produce as nearly as practicable a par bid #3706
(disregarding any accrued interest) o_n a Demand Bond on such Variable #3707
Rate Adjustment Date; provided, however, _that in no event shall the #3708
Variable Interest Rate exceed the M_aximum Rate with respect to Demand ~3709
Bonds. # (370
Bank-Owned Bonds shall bear interest at the Bank Interest ~3710
Rate as defined in the Indenture. #3711
T_he City may convert the Bonds from the Unit Pricing Mode #3712
to the Demand Mode and from the Demand Mode to the Unit Pricing Mode, %3713
as described in the Indenture. U_pon an Automatic Conversion Date or ~3714,
a Proposed Conversion Date, all or a portion of the Bonds will be .~3716
converted to a Fixed Interest Rate. T_he terms of such conversions, $3717
A-3 ~3558
94691.9.2535.06:14 ~(3556
the details of the determination of the Fixed Interest Rate and the #3718
terms and conditions upon which a registered owner of a Bond may #3719
elect to' retain such Bond are ..~et forth in .the Indenture. U_pon the #3720
date stated in such written notice as the date of determination of #3721
such Fixed Ihterest Rate, the'Remarketing Agent shall determine _the #3722
Fixed Interest Rate, which shall be the annual rate of interest which # (3722
in the sole judgment of the Remarketing Agent under the then prevail- $3.723
ing market c_onditions will allow the Bonds so converted to be sold at #3724
par; provided, however, such Bonds may bear a Fixed Interest Rate #3725
which results in a sale a_t less than par under certain conditions as #3726
described in the Indenture. # (3726
P_rior to conversion to a Fixed Interest Rate, any Unit #3727
Pricing Bond or Demand Bond, other than Bank-Owned Bonds, shall be #3728
purchased, on the demand of the registered owner thereof, at a pur- #3729
chase price equal to o_ne hundred per cent (100%) of the principal #3730
amount thereof plus accrued i_nterest thereon, if any, to the redemp- %3731
tion date upon the performance b_y the registered owner of the follow- #3732
ing acts: (i) telephonic notice to the R_emarketing Agent and the #3733
Tender Agent on a Business Day at their principal offices in New #3734
York, New York, at or before 10:00 A.M., New York City time, o_n a #3735
Purchase Date for Unit Pricing Bonds, or on the seventh (Tth) calen- #(3735
dar d_ate prior to the Optional Tender Date for Demand Bonds, _that the #3736,
registered owner elects to have such Bond purchased, confirmed b_y a #3738
written notice to the Tender Agent delivered on the Purchase Date in #(3738
the case of Unit Pricing Bonds, and confirmed immediately by written #3739
notice to the Tender Agent in the case of Demand Bonds, of (a) the ~3740
principal amount of such Bond to be purchased, lb) the certificate #3741
number of each such Bond, (c) the name of the registered owner of #3742
such Bond, and (d) the Purchase Date (in the case of Unit Pricing ~(3742
Bonds) or the Optional Tender Date (in the case of D_emand Bonds, ~3743,
which shall be the seventh (7th) calendar day a_fter the date of #3745
delivery of the Optional Tender Notice or the first Business Day ~3746
thereafter if such day is not a Business Day and with respect to #3747
Bank-Owned Bonds, each B_~siness Day) and (ii) delivery to the Tender .~3748
Agent at or before 12:30 P.M., New York City time., of the Bond or #3749
Bonds to be purchased duly endorsed for transfer (together with _writ- #3750,
ten confirmation as set forth above in the case of Unit P_ricing #3752
Bonds), and otherwise in compliance with the Indenture. _Any notice ~3753
of election once made is irrevocable; provided, however, that a reg- #3754
istered owner who tenders any 'Bond for Rurchase as herein set forth #3755
may repurchase the Bond so tendered if the Remarketing Agent agrees ~. 3756
to sell such Bond to such registered owner. _The right of any regis- ~3757,
tered owner to have unit Pricing Bonds purchased s_hall terminate on ~3759
the conversion of such Bonds to Demand Mode o_r on a Conversion Date ~3760
with respect to such Bond. T_he right of any Owner to have Demand ~3761
Bonds purchased shall t_erminate on the conversion of such Bond to #3762
Unit Pricing B_onds or on a Conversion Date with respect to such ~3763
Bond. ~ (3763
A-4 ~3558
94691.9. 2535.06:14 ~ (3556
Unit Pricing Bonds and Demand Bonds are subject to manda- ,%3764
tory tender and purchase on any Proposed Conversion Date, A_utomatic ~3765,
Conversion Date, any Demand Date, any Unit Pricing D_ate, or any Bank #3767
Purchase Date (all of which are "Mandatory Tender Dates"), upon #3768
notice as provided in the Indenture a_t a price equal to one hundred #3769
per cent (100%) of the principal amount thereof plus accrued 'and #3770
unpaid interest thereon, if any, and with respect to Unit Pricing #3771 · '
Bonds, a premium as calculated below in the description of mandatory #3772
redemption of Unit Pricing Bonds. On any Mandatory Tender Date, ~3773,
unless the registered owner has elected to retain _ownership, the Bond #3775
will be deemed to have been purchased, interest o_n the Bond will #3776
cease to accrue and the security of the Indenture s_hall no longer be #3777
afforded. The registered owner shall thereupon only be entitled to #3778
an amount equal to one hundred per cent (100%) of the principal #3779
amount plus accrued a_nd unpaid interest, if any. #3780
Unless the Letter of Credit shall have been extended or #3781
t_here shall have been delivered an Alternate Letter of Credit i_n sub- #3782,
stitution therefor as provided in the Indenture or unless _there shall #3784
be a conversion to a Fixed Interest Rate as set forth a_bove, all #3785
Bonds shall be purchased by the Tender Agent on a date w_hich is not #3786
less than five (5) Business Days prior to expiration of the term of #3787
the Letter of Credit or Alternate Letter of Credit, a_s the case may #3788
be, or the Termination Date at a purchase price _equal to one hundred #3789
per cent (100%) of the principal amount thereof plus accrued and #3790
unpaid interest, if any. #(3790
A_ii Bonds shall be purchased by the Tender Agent on the #3791
Substitution Date and on the date of a Conversion from the unit #3792
Pricing Mode to the Demand Mode or from the Demand Mode to the Unit #3793
Pricing Mode a_t a purchase price equal to one hundred per cent (100%) #3794
of the Rrincipal amount thereof plus accrued and unpaid interest, if #3795.
any, and in the case of Unit Pricing Bonds, a premium as calculated #3796
below in the description of mandatory redemption of U_nit Pricing #3797,
Bonds. # (3798
UPON THE OCCURRENCE OF CERTAIN EVENTS SPECIFIED IN THE #3799
INDENTURE, T_HE BONDS SHALL BE SUBJECT TO MANDATORY TENDER TO THE #3800
TENDER AGENT F_OR PURCHASE AND IF NOT SO TENDERED SHALL BE DEEMED TO #3801
BE TENDERED. BY ACCEPTANCE HEREOF THE REGISTERED OWNER OF THIS BOND #3802
HEREBY C_ONSENTS TO SUCH PURCHASE AND SHALL TENDER THIS BOND FOR PUR- # 3803
CHASE U_PON SUCH MANDATORY TENDER AND ACKNOWLEDGES THAT SUCH REGIS- #3804
TERED O_WNER SHALL NOT BE ENTITLED TO ANY INTEREST ACCRUING ON THE #3805
BOND O_N OR AFTER SUCH MANDATORY TENDER DATE. #3806
T_o the extent and in the manner permitted by the t_erms of #3807,
the Indenture, the provisions of the Indenture may be amended or ~3809
supplemented by further resolution of the City, b_ut no such amendment ~3810
or supplement shall (1) reduce the rate of interest borne by this ~3811
A-5 #3558
94691.9. 2535.06: 14 % (3556
Bond or extend the time of payment hereof or reduce the amount of #3812
principal or redemption premiums, if any, hereof or extend the #(3812
Principal Payment Date hereof-without the' prior written consent of #3813~,'
the registered owner hereof, i2) reduce the percentage ,of registered #3815.
owners of Bonds whose c_onsent is required for the execution of any #3816
amendment of or s_upplement to the Indenture, or i3) modify any of the #3817,
rights or obligations of the Trustee without i_ts prior written con- #3819
sent thereto. #(~819
T_he Bonds are authorized to be authenticated and delivered #3820
in the form of fully registered bonds in Authorized Denominations and #3821
are transferable or exchangeable by the registered owner, in person #3822
or by his attorney duly authorized in writing, at the corporate #3823
agency office of the Paying Agent in New York, New York, but only in #3824
the manner, subject to the limitations and upon payment of the #3825
charges provided in the Indenture, a_nd upon surrender of this Bond #3826
for cancellation accompanied by delivery of a duly executed written #3827
instrument of transfer or exchange in a form approved by the Paying #3828
Agent. U_pon such transfer or exchange, a new Bond or Bonds of autho- #3829
rized d_enominations equal to the principal amount hereof will be #3830
authenticated a_nd delivered by the Paying Agent to the registered #3831
owner thereof i_n exchange or transfer herefor. ~he Paying Agent may #3832,
treat, the registered owner hereof as the absolute owner hereof for #3834
all purposes, whether or not this Bond shall be overdue, and the #3835
Paying Agent shall not be affected b_y any knowledge or notice to the #3836
contrary and payment of t_he interest and principal on this Bond shall #3837
be made only to such registered owner, which payments shall be valid #3838
and effectual to satisfy and discharge the liability evidenced by #3839
this Bond to the extent of the sum or sums so paid. #3840
U_nit Pricing Bonds are subject to mandatory redemption, 'i_n #3841,
whole or in part in Authorized Denominations, on any Business Day, #(3842
u_pon notice as hereinafter described, as a whole or in part, in o_rder #3843,
of Purchase Dates, from (i) prepaid Assessments, (ii) moneys t_rans--.#3845
ferred from the Construction Fund to the Redemption Fund and Liii) #3846
certain moneys derived from foreclosures, under the circumstances a_nd #3847
upon the conditions and terms described in the Indenture, at a #(3847
redemption price calculated in accordance with the following Leach #3848,
price being stated as a percentage of the principal to be redeemed, #(384~
to be paid on the redemption date together with interest accrued t_o #38.50,
the redemption date) plus accrued and unpaid interest, if any: ~(385]
I_f the Unit Pricing Interest Period is less than or equal ~3852
to one year, _the redemption price will be calculated as follows: £i) #3853,
if the number of days between the date selected for redemption _and #3855
the Purchase Date for such Bond (the "Remaining Interest Period") i_s #3856
less than or equal to 30 days, the redemption price will be 100% a_nd #3857
(ii) if the Remaining Interest Period is more than 30 days the #(3857
Trustee will request the Remarketing Agent to provide an Adjustable #3858
A-6 ~3558
94691.9 . 2535.06: 14 ~ (3556
Interest Rate for a Unit Pricing Interest Period equal to the #3859
Remaining Interest Period, and if such rate is greater than or equal #3860
to the Adjusted Interest Rate on the Bond called for redemption, _the #3861,
redemption price will be 100%, but if such rate is less t_han the #3863
Adjusted Interest Rate on such Bond, the redemption price will be #3864
calculated by dividing the number of days in the Remaining I_nterest #3865
Period by 365 or 366 days (as applicable) and multiplying _the quo- #3866
tient by the difference between the Adjusted Interest Rate on s_uch #3867
Bond and such rate and rounding the product to the nearest 1/100th #(3867
and adding the result to 100, but in no event shall the redemption #3868
Rrice exceed 101%. .%3869
If the Unit Pricing Interest Period for such Unit Pricing #3870
Bond is more than one year, the redemption price will be determined #3871
in accordance with the following table: .%3872
Unit Pricinq Interest Period
~ime from the
m_ost recent
R_ate Adjustment
D_ate to
Redemption Date
#3876
#3877
.%3878
#3879
Price .%38
M_ore than 1 but less than or equal
to 3 years
M_ore than 3 but less than or equal
to 6 years
More than 6 but less than or equal
to 10 years
0 to i year
! to 2 years
A to 3 years
· 0 to 2 years
A to 3 years
~ to 4 years
after 4 years
0 to 4 years
~ to 5 years
~'to 6 years
after 6 years
.%3883
101 % .%38
100 1/2 #2
100 #3885
#3886
101 1/2 #3
101 #3887
100 1/2 .%3
100 #3889
.%3890
102 #3890.
101 1/2 .%3
101 .%3892
100 .%3893
~ore than 10 years
0 to 7 years
7_ to 8 years
8_ to 9 years
after 9 years
102 1/2 .%3
102 .%3895
101 .%3896
100 #3897
Demand Bonds are subject to redemption on any Interest .%3900
Payment Date u_pon notice as provided in the Indenture as a whole, or .%3901
in part i_n Authorized Denominations, from (i) prepaid Assessment #3902
Installments, Lii) moneys transferred from the Construction Fund to .%3903
the Redemption Fund, and £iii) certain moneys derived from .%3904,
foreclosures under the circumstances and upon the conditions and #3906
terms described herein at a redemption Rrice equal to the sum of the .%3907
A-7 ~3558
94691.9.2535.06:14 ~(3558
9 a'693' ' 9 · 1535' 06" ~
B_onds in the Fixed Rate Mode are subject to redemption by ~3949
the City i_n the minimum principal amount of $5,000, in whole on any #3950
date or in part on any Interest Payment Date, commencing on the d_ate .%3951,
as set forth in the Indenture at a redemption price of 1_02%% of the ~3953
principal amount of Bonds called for redemption, Rlus accrued inter- #3954
est to the.date fixed for redemption. -#(3954
U_pon delivery to the Trustee of an Opinion of Counsel that #3954.
such redemption is lawful, the Bonds are subject to extraordinary #(3954
mandatory redemption before m_aturity in the event of damage to or ~3954.
destruction of any works of improvements or condemnation thereof, a_nd .~3954.
to the extent of, the net proceeds realized t_herefrcm (including any #3954.
net proceeds, whether or not received from such damage, destruction #3954.
or condemnation, relating to m_oneys received for the benefit of #3954.
Assessment District No. 86-2 f_rom proceedings or actions relating to #3954.
certain highway transportation i_mprovements), u_nless the City noti- #3954.
lies the Trustee t_hat it will use such net proceeds to repair, #3954.
restore or rehabilitate the works of improvements. If called for #3954.
redemption, the Bonds will be subject to redemption b__v the City, in #3954.
whole or in part, and if in part, first from Bonds held by the Bank #3954.
and second from all other Bonds as provided in the Indenture, a_t the #3954.
principal amount thereof plus interest accrued thereon t_o the date #3954.
fixed for redemption, without premium. #(3954
As provided in the Indenture, notice of redemption hereof #3955
s_hall be mailed by the Trustee, by registered or certified mail, n_ot ~3956,
less than 30 days before the redemption date, t_o the registered owner #3960'
of this Bond at his address as it appears i_n the registration books #3961
maintained by the Paying Agent, but failure' t_o receive any such #3962
notice shall not affect the validity of the Rroceedings for the #3963
redemption of this Bond. If this Bond is called for redemption and #3964
payment is duly provided herefor as specified in the Indenture, the ~3965
interest hereon shall cease to accrue from and after the dated fixed #3966
for such redemption. #(3966
In the event that the Treasurer and the City make the .%3967
determination d_escribed in Sections 8770-8772 of the Improvement Bond #3968
Act of 1915, as amended, the City and the Trustee shall take the #3969
actions requir-ed b_y Sections 8770-8784 thereof and the registered #3970
owner hereof hereby consents t_o take such actions as are required by ~3971
such Sections of registered owners of Bonds. ~3972
A-9
~3558
94691.9. 2535.06:14 =. (3558
IN WITNESS WHEREOF, said-City of Tustin has caused this #3974
Bond-t_o be. signed in facsimile by the Treasurer of the City and by.#3975,.
the City Clerk and has caused said City Clerk to affix hereto its #3977
corporate seal in facsimile. #(3977
.- B_y #3980
ISeal ) CITY TREASURER # 3981
B_y #3983
CITY CLERK # 3984
A-10
~3558
94691.9.2535.06:14 ~(355~
£FORM OF ASSIGNMENT]
#3987
~OR VALUE RECEIVED, the undersigned do(es) hereby sell, #3990
assign ~nd transfer unto the within Bond and #3991
do(es) hereby irrevocably constitute and appoint #3992
attorney to transfer ~uch Bond on the. register of the Paying Agent, #3993
with full power of ~ubstitUtion in the premises. #3994
~ated: #3995
[ signature ]
#3998
#(3998
94691.9.2535.06:14
A_-i1
#3558
#(355~
CITY OF TUSTIN
.ASSESSMENT DISTRICT NO. 86-2
LIMITED OBLIGATION IMPROVEMENT BONDS
EXHIBIT B
PURCHASE CONTRACT
· September 12, 1988
City Council
City of Tustin
300 Centennial Way
Tustin, California 92680
Dear Members of the City Council:
The undersigned, Merrill Lynch Capital Markets, Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Underwrit-
er''), offers to enter into the following agreement with the
City of Tustin (the "City") which, upon the City's accep-
tance of this offer, will be binding upon the City and upon
the Underwriter. This offer is made subject to the City's
acceptance of this Purchase Contract on or before 7:30 p.m.
Los Angeles time on September 12, 1988, and, if not so
accepted, will be subject to withdrawal by the Underwriter
upon written notice delivered to the City at any time prior
to the acceptance hereof by the City.
1. Upon the terms and conditions, and upon the
basis of representations set forth herein, the Underwriter
hereby agrees to purchase from the City, and the City hereby
agrees to sell and deliver to the Underwriter, $81,400,000
aggregate principal amount of the City of Tustin Assessment
District No. 86-2 Limited Obligation Improvement Bonds (the
"Bonds"). The Bonds shall be dated the date of Closing (as
hereinafter defined) and shall mature on September 2, 2013.
The Bonds shall initially bear interest at the Adjusted
Interest Rate determined as set forth in the hereinafter
defined Indenture. The Adjusted Interest Rate or Rates
borne by the Bonds as of the date of Closing, the initial
interest periods, and the respective principal amount of
Bonds bearing such rates for such periods are set forth in
Schedule 1 hereto. The purchase price for the Bonds shall
be 99.645% of the aggregate principal amount of the Bonds.
Payment for and delivery of the Bonds, and the other actions
contemplated hereby to take place at the time of such
payment and delivery, are herein sometimes called the
"Closing."
2. The Bonds shall be as described in the Offi-
cial Statement dated. September 12, 1988 relating to the
Bonds' (the "Official Statement") and-shall be issued and.-
secured under the provisions of an Indenture of Trust (the
"Indenture"), dated as of September 1, 1988, between the
City and Citibank, N.A., as trustee (the "Trustee"),
authorizing the issuance of the Bonds. The Bonds and
interest thereon will be payable in accordance with the
Indenture from unpaid assessments (the "Assessments,,) levied
and collected with interest, and from other monies as
provided for in the Indenture. Proceeds of the sale of the
Bonds will be used by the City in accordance with the terms
of the Indenture.
3. The Indenture, the Resolution of Intention (the
"Resolution of Intention") relating to the establishment of
the City of Tustin Assessment District No. 86-2 (the "Dis-
trict'') and the levying of the Assessments, and all actions,
agreements and proceedings related thereto (collectively,
the "Proceedings,,) were or will be taken pursuant to the
Municipal Improvement Act of 1913, as amended (the "1913
Act"), the Improvement Bond Act of 1915, as amended (the
"Bond Law"), and all other applicable laws.
4. Any action under this Purchase Contract taken
by the Underwriter, including payment for and acceptance of
the Bonds and delivery and execution of any receipt for the
Bonds and any other instruments in connection with 'the
Closing, shall be valid and sufficient for all purposes and
binding upon the Underwriter, provided that any such action
shall not impose any obligation or liability upon the
Underwriter other than as may arise as expressly set forth
in this Purchase Contract.
5. It shall be a condition to the City's obliga-
tion to sell and deliver the Bonds to the Underwriter, and
to the obligations of the Underwriter to purchase, to accept
delivery of and to pay for the Bonds, that the entire
$81,400,000 aggregate principal amount of the Bonds author-
ized by the Indenture shall be sold and delivered by the
City, and purchased, accepted and paid for by the Underwrit-
er, at the Closing. The Underwriter agrees to make a bona
fide public offering of all of the Bonds at a price of par.
6. The City has authorized the Official Statement
and the information and documents therein contained or
described to be used by the Underwriter in connection with
the public offering and sale of the Bonds. The City has
ratified and confirmed the use by the Underwriter prior to
the date hereof of the Preliminary Official Statement
relating to the Bonds dated August 26, 1988, in connection
with the public offering of the Bonds.
·
2K181732
os/~9/ss 2
Purchase Contract
7. The City represents and warrants to the
Underwriter that: ·
(a) The City is a general law city duly
organized and existing under the Constitution and laws
of the State of California, and has, and at the date of
the Closing will have, full legal right, power and
authority (i) to execute, deliver and enter into this
Purchase Contract, (ii) to execute, deliver and enter
into the Indenture, the Remarketing Agreement dated as
of September 1, 1988 (the "Remarketing Agreement").
between the City and the Underwriter as remarketing
agent, and the Reimbursement Agreement dated as of
September 1, 1988 (the "Reimbursement Agreement")
between the City and The Tokai Bank, Ltd., Los Angeles
Agency (the "Bank") pursuant to which the Bank will
issue its letter of credit (the "Letter of Credit") on
the date of the Closing to support payments on the
Bonds prior to their conversion to fixed interest
rates, (iii) to issue, sell and deliver the Bonds to
the Underwriter as provided herein, (iv) to undertake.
the Proceedings, and (v) to carry out and consummate
the transactions contemplated by this Purchase
Contract, the Resolution of Intention, the Indenture
and the Official Statement;
(b) The City has complied, and will at the
Closing be in compliance in all respects, with the
Indenture, the 1913 Act, the Bond Law and all other
applicable law;
(c) By official action of the City prior to
or concurrently with the acceptance hereof, the City
has duly adopted the Resolution of Intention, has duly
authorized and approved the Preliminary Official
Statement and the Official Statement', has duly author-
ized and approved the execution and delivery of, and
the performance by the City of the obligations con-
tained in, the Bonds, the Indenture, the Remarketing
Agreement, the Reimbursement Agreement and this Pur-
chase Contract, and has duly authorized and approved
the performance of its obligations contained in the
Proceedings and the consummation by it of all other
transactions contemplated by the Official Statement,
including, without limitation, the levy and collection
of the Assessments, and the Assessments constitute
valid and binding liens on the properties on which they
have been levied;
(d) The execution and delivery of this
Purchase Contract, the Indenture, the Remarketing
Agreement, the Reimbursement Agreement, and the Bonds,
2K181732
08/29/88
Purchase Contract
the adoption of the Proceedings relating to the issu-
ance of the Bonds, the levy and collection of the
Assessments, and the. establishment'of the District, and
compliance with the provisions of each thereof will not
conflict with-or constitute a brea~h of'or a default
under any applicable law or administrative regulation
-of the State Of California or the United. States, or any
applicable judgment, decree, agreement or other instru-
ment to which the City is a party or is otherwise
subject;
(e) Promptly after the Official Statement is
available in final form, the City shall deliver or
cause to be delivered to the Underwriter two copies of
the Official Statement manually signed by the Mayor of
the City. The Underwriter shall furnish or cause to be
furnished to the City, as soon as available, copies of
the Official Statement, and all amendments and supple-
ments thereto, in such quantities as the City may
reasonably request;
(f) At the time of the City's acceptance
hereof and at all times subsequent thereto up to and
including the time of the Closing, the Official State-
ment (excluding the information therein under the
""The Letter of Credit,
captions "The Bank, "and "The
Remarketing Agent" as to which no view need be
expressed) does not and will not contain any untrue
statement of a material fact or omit to state a materi-
al fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made not mislead-
lng; '
(g) There is no action, suit, proceeding or
investigation before or by any court, public board or
body pending or, to the best knowledge of the City,
threatened, wherein an unfavorable decision, ruling or
finding would (i) affect the creation, organization,
existence or powers of the City or the District, or the
titles of its Council members and officers, (ii) enjoin
or restrain the issuance, sale and-delivery of the
Bonds, the levy and collection of'the Assessments or
any other monies or properties pledged or to be pledged
under the Indenture for the payment of the Bonds, (iii)
in any way question or affect any of the rights,
powers, duties or obligations of the City with respect
to the monies pledged or to be pledged to pay the
principal of, premium, if any, or interest on the
Bonds, (iv) in any way question or affect any authority
for the issuance of the BondS, or the validity or
enforceability of the Bonds or the Indenture, or (v) in
2K181732
08/29/88
Purchase Contract
any way question or affect this Purchase Contract or
the transactions contemplated by this Purchase Con-
tract,'the. Official Statement, the documents referred
to in the Official Statement, or any other agreement or
instrument to which the City is a party relating to the
Bonds;
(h) The City will furnish such information,
execute such. instruments and take such other action in
cooperation with the Underwriter as the Underwriter may
reasonably request to qualify the Bonds for offer and
sale under the Blue Sky or other securities laws and
regulations of such states and other jurisdictions of
the United States as the Underwriter may designate, and
will assist, if necessary therefor, in the continuation
of such qualifications in effect as long as required
for the distribution of the Bonds; provided, however,
that the City shall not be required to qualify as a
foreign corporation or to file any general consents to
service of process under the laws of any state;
(i) The City has not been notified of any
listing or proposed listing by the Internal Revenue
Service to the effect that the City is a bond issuer
whose arbitrage certifications may not be relied upon;
(j) Any certificate signed by any official of
the City authorized to do so shall be deemed a repre-
sentation and warranty by the City to the Underwriter
as to the statements made therein; and
(k) The City shall apply the proceeds of the
Bonds, including the investment earnings thereon, in
accordance with the Indenture and the Resolution of
Intention and as described in the Official Statement.
8. The City covenants and agrees with the Under-
writer that it will advise the Underwriter promptly of any
proposal to amend or supplement the Official Statement or
any part thereof. If between the date of this Purchase
Contract and the date ninety (90) days after the Closing an
event occurs which is materially adverse to the purpose for
which the Official Statement is to be used which is not
disclosed in the Official Statement, the City shall notify
the Underwriter; and if in the opinion of the Underwriter
such event requires a supplement or amendment to the Offi-
cial Statement, the City shall supplement or amend the
Official Statement in a form and in a manner approved by the
Underwriter and counsel to the Underwriter.
9. By 9:00 a.m., Los Angeles time, on Septem-
ber 13, 1988, or at such other time or on such other date as
2K18173Z
08129188 5
Purchase Contract
is mutually agreed by the City and'the Underwriter, the City
shall, deliver the Bonds to the Underwriter in definitive
form, duly executed and authenticated, together with the
other documents hereinafter mentioned, and, subject to the
terms and-conditions hereof, the Underwriter shall accept
such delivery and pay the purchase price of the Bonds' as set
forth in 9ar~graph 1 hereof by Wire of immediately available
federal funds or by certified or bank cashier's check or
checks payable in immediately available 'federal funds to the
order of "City of Tustin, California." Delivery and payment,
as aforesaid, shall be made at th~ offices of Mudge Rose
Guthrie Alexander & Ferdon, Los Angeles, Califor- nia, or
such other place as shall have been mutually agreed
upon by the City and the Underwriter. The Bonds shall be
printed or lithographed on steel engraved borders, shall
bear CUSIP numbers and shall be prepared and delivered as
fully registered Bonds without coupons in authorized denomi-
nations specified by the Underwriter at 'least twenty-four
hours before the Closing for purposes of inspection and
packaging; provided, however, that the Underwriter shall not
reject delivery of the Bonds solely because the Bonds do not
bear CUSIP numbers. In lieu of definitive bonds in the form
set forth above, the City may deliver temporary bonds which
may be printed, lithographed or typed; proved, however, that
if such temporary bonds are delivered the City shall
promptly execute and cause the Trustee to authenticate bonds
in definitive form as set forth above for delivery in
exchange for said temporary bonds as soon as reasonably
possible.
10. The Underwriter has entered into this Pur-
chase Contract in reliance upon the representations, warran-
ties and agreements of the City contained herein and to be
contained in the documents and instruments to be delivered
at the Closing, and upon the performance by the City of its
obligations hereunder, both as of the date hereof and as of
the date of the Closing. Accordingly, the Underwriter's
obligations under this Purchase Contract to purchase, to
accept delivery of and to pay for the Bonds shall be subject
to the performance by the City of its obligations to be
performed hereunder and under such documents and instruments
at or prior to the Closing, and shall also be subject to the
following conditions
(a) The representations and warranties of the
City contained herein shall be true, complete and
correct on the date hereof and on and as of the date of
the Closing, as if made on the date of the Closing;
(b) At the time of the Closing the proceed-
ings relating to the authorization and issuance of the
Bonds and the establishment of the District (including
08/29/88
bu= not limited to the. PrOceedings) shall be in. full
force..and.effect,.and shall.not, have been amended,
modifieR.or, supplemented, and the Official Statement
shall not have been amended, modified or supplemented,
except in either case as may have been agreed to in
writing by the Underwriter;
(c) At the time of the Closing, there shall
have been taken all such actions as, in the opinion of
Mudge Rose Guthrie Alexander-& Ferdon, and Rourke & '
Woodruff (collectively "Bond Counsel"), shall be
necessary or appropriate in connection with the levying
of the Assessments, the formation of the District, or
of the issuance of the Bonds, and the transactions
contemplated hereby;
(d) The Underwriter shall have the right to
terminate the Underwriter,s obligations under this
purchase Contract to purchase, to accept delivery of
and to pay for the Bonds by notifying the City of its
election to do so if, after the execution hereof and
prior to the Closing (i) the arketablllty of the Bonds
~ ' .
or the market price thereof, in the opinion of the
Underwriter, has been materially and adversely affected
by any decision issued by a court of the United States
'(including the United States Tax Court) or of the State
of California, by any ruling or regulation (final, tem-
porary or proposed) issued by or on behalf of the
Department of the Treasury of the United States, the
Internal Revenue Service, or other governmental agency
of the United States, or any governmental agency of the
State of California, or by a tentative decision or
announcement by any member of the House Ways and Means
Committee, the Senate Finance Committee, or the Confer-
ence Committee with respect to contemplated legisla-
tion, or by legislation enacted by, pending in, or
favorably reported to either the House of Representa-
tives or the Senate of the United States, or either
House of the Legislature of the State of California, or
formally proposed to the Congress of the United States
by the President of the United States or to the Legis-
lature of the State of California by the Governor of
the State of California in an executive communication,
affecting the tax status of the City, its property or
income, its bonds (including the Bonds) or the interest
thereon, or any tax exemption granted or authorized by
the Bond Law; (ii) the United States shall have become
engaged in hostilities which have resulted in a decla-
ration of war or a national emergency, or there shall
have occurred any other outbreak of hostilities, or a
local, national or international calamity or crisis,
financial or otherwise, the effect of such outbreak,
2K181732
08129188
Purchase Contract
calamity or crisis being such as,-in the reasonable
.opinion of the Underwriter~ would affect materially and
adversely the ability of the Underwriter to market the
Bonds (it being agreed by the Underwriter that there is
no outbreak, calamity or crisis of such a character as
of the date hereof); (iii) there shall have occurred a
general suspension of trading on the New York Stock
Exchange or the declaration of a general banking
moratorium by the United States, New York State'or
California State authorities or any other authority
having jurisdiction over the Bank; (iv) there shall
have occurred a withdrawal or downgrading of any rating
assigned to (a) any securities of the City or (b) any
debt instruments of the Bank, by a national municipal
bond rating agency; (v) any of the proposed develop-
ments described in the Official Statement shall have
been repudiated by the applicable developer, or any
litigation or proceedings shall be pending or threat-
ened questioning proposed developments or seeking to
enjoin the development thereof, or the City shall have
received notice from the applicable developer that it
will be unable to proceed with the development as
described in the Official Statement; (vi) any federal
or California court:, authority or regulatory body shall
take action materially and adversely affecting the
ability of a developer to proceed with the development
as contemplated by the Official Statement; or (vii) an
event occurs which in the opinion of the Underwriter
requires a supplement or amendment to the Official
Statement, and such supplement or amendment is not
prepared by the City; and
(e) At or prior to the Closing, .the Under-
writer shall have received each of the following
documents
(1) The Official Statement, executed on
behalf of the City by its Mayor, as well as
executed copies of the Indenture, the Remarketing
Agreement, the Reimbursement Agreement and the
Letter of Credit, with only such amendments,
modifications or supplements as may have been
agreed to by the Underwriter;
(2) An opinion of Bond Counsel, in
substantially the form attached to the Official
Statement;
(3) A supplemental opinion, dated the
date of the Closing and addressed to the Under-
writer, of Bond Counsel to the effect that (i)
this Purchase Contract, the Reimbursement
2K181732
08~29~88
Agreement and the. Remarketing Agreement have been
duly authorized, executed and delivered by the
City, and, assuming due authorization, execution
and delivery by the other parties thereto,
constitute legal, valid and binding agreements of
the City enforceable in accordance with their
respective terms, except as such enforceability
'may be limited by fha application of equitable
principles if equitable remedies are sought; (ii)
the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as
amended, and the Indenture is exempt from
qualification under the Trust Indenture Act of
1939, as amended; (iii) the Bonds conform as to
form and tenor to the description thereof
contained under the caption "The Bonds" in the
Official Statement, and the statements contained
therein under the captions "The Bonds"; "Summary
of Indenture"; "Introduction',; and "Federal and
State Income Taxes", insofar as such statements
purport to summarize certain provisions of the
1913 Act, the Bond Law, the Bonds, the Indenture,
the Resolution of Intention, and the Proceedings
and to describe statutory provisions relating to
the exclusion from gross income for purposes of
federal income taxes and the exemption from
California personal income taxes of interest on
the Bonds, present a fair and accurate summary of
such provisions;
(4) A certificate dated the date of the Closing,
addressed to the Underwriter and signed by the Mayor of
the City and by the Finance Director of the City to the
effect that:
(i) The representations and warranties
of the City contained herein are true and correct
in all material respects on and as of the date of
the Closing as if made on the date of the Closing;
(ii) The City has complied with all
agreements, covenants and arrangements, and
satisfied all conditions, on its part to be
complied with or satisfied at or prior to the
Closing; and
(iii) To the best of their knowledge, no
event affecting the City has occurred since the
date of the Official Statement which should be
disclosed in the Official Statement in order to
make the statements therein not misleading in any
respect;
2K181732
08129188
Purchase Contract
(5) An opinion, dated the date of Closing and
addressed to the Underwriter, of James G. Rourke, as
City Attorney, to the effect that there is no action,
suit, proceeding or investigation before or by any
court, public board or body pending o.r, to the.best of
their knowledge, threatened, wherein an unfavorable
decision, ruling or finding would (i) affect the -
creation, organization, existence of powers of the
District Or the City, or the titles of its Council
members and officers; (ii) enjoin or restrain the
issuance, sale and delivery of the Bonds, the collec-
tion Of any other monies or property pledged or to be
pledged under the Indenture for the Bonds; (iii) in any
way question or affect any of the rights, powers,
duties or obligations of the City with respect to the
Assessments or the monies and assets pledged or to be
pledged to pay the principal of, premium, if any, or
interest on the Bonds; (iv) in any way question or
affect any authority for the issuance of the Bonds, or
the validity or enforceability of the Bonds; or (v) in
any way question or affect this Purchase Contract, the
Official Statement or the documents referred to in the
Official Statement;
(6) A Certificate .dated the date of Closing,
addressed to the Underwriter and signed by Gary L. Vogt
M.A.I. (the "Appraiser"), to the effect that the
Appraisal Report prepared by him with respect to the
property within the District fairly and accurately
describes the minimum or "not less than" market values
of the properties subject to the Assessment as of the
date of such Appraisal Report, and that nothing has
come to his attention since the date of such Appraisal
Report which would materially and adversely affect his
conclusions in such Appraisal Report;
(7) A Certificate dated the date of Closing
addressed to the Underwriter and signed by the "Engi-
neer'' named in the Resolution of Intention to the
effect that the statements and information in the
Official Statement as set forth under the caption "The
District" and in Appendix A thereto entitled "Assess-
ment Diagram" and Appendix B thereto entitled "Descrip-
tion of Work and Method of Assessment," fairly and
accurately describe the matters intended to be de-
scribed therein;
(8) A Certificate dated the date of closing,
addressed to the Underwriter and signed by an author-
ized officer of the Bank, to the effect that the
information contained in the Official Statement under
2K181732
08/29/88
10
Purchase Contract
the heading "The Bank" is true and correct in all
material respects; ~
..
..
(9) An opinion or opinions, dated the date of
Closing and addressed to the Underwriter, of Brown &
Wood; United States counsel for the Bank, substantially
in the forms attached hereto as Exhibits A and B, with
any deviations therefrom in form and substance
satisfactory to the Underwriter and its counsel;
(10) An opinion, dated the date of Closing and
addressed to the Underwriter, of Naoe, Asai & Yamamori,
Japanese counsel for the Bank, substantially in the
form attached hereto as Exhibit C, with any deviation
H therefrom in 'form and substance satisf
Underwriter and its counsel;
(11) Evidence satisfactory to the Underwriter that
the Bonds have been given the "Aa/VMIG 1" rating by
Moody's Investors Service, or the "AA/A-l+" rating by
Standard & Poor's Corporation and that no such rating
has been withdrawn or lowered;
(12) An opinion of O'Melveny & Myers, dated the
date of Closing and addressed to the Underwriter, as to
such matters as the Underwriter shall reasonably
request;
(13) A Certificate of The Irvine Company, with
respect to its ownership of land within the District;
(14) A Certificate of the Trustee With respect to
its execution and delivery of the Indenture and its
acceptance of the duties of trustee and paying agent
thereunder; and
(15) Such additional legal opinions, certificates,
instruments and documents as the Underwriter may
reasonably request to evidence the truth and accuracy,
as of the date hereof and as of the date of the Clos-
ing, of the City's representations and warranties
contained herein and of the statements and information
contained in the Official Statement and the due perfor-
mance or satisfaction by the City on or prior to the
date of the Closing of all agreements then to be
performed and all conditions then to be satisfied by
the City.
In addition to the foregoing, the City shall provide
copies of the Proceedings relating to the authorization and
issuance of the Bonds and the establishment of the District
and the levying of the Assessments certified by authorized
2K181732
08/29188
11
Put=base Con=tact
having been adopted or executed (as applicable), with only
such amendments, modifications or supplements as may have
been agreed to by the Underwriter.
Ail of the opinions, letters, certificates, instruments
and' other documents mentioned above or elsewhere in this
Purchase Contract shall be deemed to be in compliance with
the provisions hereof if, but only if, they are in form and
substance satisfactory to,he Underwriter. Receipt of, and
payment for, the Bonds sha'll constitute evidence of the
satisfactory nature of such as to the Underwriter. The
performance of any and all obligations of the City hereunder
and the performance of any and all conditions contained
herein for the benefit of the Underwriter may be waived by
the Underwriter in its sole discretion.
If the City shall be unable to satisfy the conditions
to the obligations of the Underwriter to purchase, accept
delivery of and pay for the Bonds contained in this Purchase
Contract, or if the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds shall be
terminated for any reason permitted by this Purchase Con-
tract, this Purchase Contract shall terminate, and neither
the Underwriter nor the City shall be under further obliga-
tion hereunder, except that the respective obligations of
the City and the Underwriter set forth in paragraphs 11 and
13 hereof shall continue in full force and effect.
11. (a) The Underwriter shall be under no obligation
to pay, and the City shall pay the following expenses
incident to the performance of the City's obligations
hereunder: (i) the cost .of the preparation and printing of
the Bonds, the Preliminary Official Statement and the
Official Statement (including any amendments or supplements
thereto prepared or distributed within 90 days after the
original delivery of the Bonds); (ii) the fees and
disbursements of attorneys, accountants, advisers and of any
other experts or consultants retained by the City, including
the fees and expenses of Bond Counsel, the Engineer
responsible for the preparation of the Report relating to
the District, the Financial Consultants to the City and the
Appraiser; (iii) the fees and disbursements of the Bank and
any counsel, consultants or experts retained by the Bank.
(b) The Underwriter shall pay all expenses (in-
cluding out-of-pocket expenses and regulatory expenses
including, but not limited to, expenses related to the
qualification of the Bonds under any applicable blue sky
laws) incurred by them in connection with the public offer-
ing and distribution of the Bonds, including the fees and
disbursements of counsel retained by them.
2K181732
08/29/88
12
12. Any notice or other communication to be given to
the City under this Purchase Contract may be given by.
delivering the same in writing at the City's address set
forth above, and any notice or other communication to be
given to the Underwriter under this Purchase Contract may be
given by delivering the same in writing to Merrill Lynch
Capital Markets, Municipal Securities Division, 400 South
Hope Street, Suite 2020, Los Angeles, California 90071-2821,
Attention: Samuel B. Corliss, Jr.
·
13. This Purchase Contract is made solely for the
benefit of the City and the Underwriter (including their
successors and assigns), and no other person shall acquire
or have any right hereunder or by virtue hereof. Ail of the
City's representations,.warranties and agreements contained
in this Purchase Contract shall remain operative and in full
force and effect regardless of (i) any investigations made
by or on behalf of the Underwriter or (ii) delivery of and
payment for the Bonds pursuant to this Purchase Contract.
The agreements contained in this paragraph and in paragraph
11 shall survive any termination of this Purchase Contract.
14. This Purchase Contract shall be governed by the
laws of the State of California, and may be executed in
several counterparts, each of which shall be regarded as an
original and all of which shall constitute but one and the'
same instrument.
15. This Purchase Contract shall become effective upon
the execution of the acceptance hereof by an authorized
officer of the City, and shall be valid and enforceable as
of the time of such acceptance.
Very truly yours,
MERRILL LYNCH CAPITAL MARKETS
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:
Accepted:
This 12th day of September, 1988
CITY OF TUSTIN
By:
Mayor
2K181732
08/29188 13
Purchase
SCH~DUL~ 1
Principal
'Amount
Initial
Interest
Adjusted
Interest
Rate
2K181732
08/29/88
Purchase Contract
[Form of O~inion of Brown & Wood
Regarding Enforceability]
EXHIBIT A
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Citibank, N.A.
Municipal Trusts & Agency
Citicorp NARB
55 Water Street
New York, New York 10043
City of Tustin ~.
300 Centennial Way
Tustin, California 92680
Moody's Investors Service
99 Church Street
New York, New York 10007
Standard & Poor's Corporation
25 Broadway
New York, New York 10004
Gentlemen:
We have acted as counsel to The Tokai Bank, Ltd., acting
through its Los Angeles Agency ("The Tokai Bank, Ltd. Los
Angeles Agency' is hereinafter referred to as the "Bank") in
connection with the execution by the Bank of Letter of Credit
No. ( )- - issued by the Bank on September 9, 1988 in the
aggregate principal amount of $83,299,334 (the "Letter of
Credit") and the Reimbursement Agreement, dated as of
September 1, 1988, by and between the Bank and the City of
Tustin (the Reimbursement Agreement with all Exhibits attached
thereto is herein referred to as the "Reimbursement Agreement")
in connection with the issuance by the City of Tustin of its'
$81,400,00a:City of Tustin Assessment District NO. 86-2 Limited
Obligation Improvement Bonds.
Based upon the foregoing and such other documents as we
consider necessary to render this opinion, it is our opinion
that:
(i) the Bank holds a license to conduct its business
in, and is in good standing under the' laws of, the State of
California, with full legal right, power and authority to
enter into and perform under the Letter of Credit;
(ii) the Letter of Credit has been duly authorized,
executed and delivered by the Bank and is valid and binding
upon and enforceable against the Bank in accordance with its
terms ~ and
(iii) as regards the opinion set forth in (ii) above, we
note that the enforceability of the Letter of Credit may be
limited by moratorium, bankruptcy, reorganization, insol-
vency, debt arrangement or other similar laws affecting
creditors' rights generally as the same may apply to The
Tokai Bank, Ltd. in the event of its bankruptcy, reorganiza-
tion, insolvency, debt arrangement or a moratorium appli-
cable to The Tokai Bank, Ltd.. We also express no opinion
as to whether a court might temporarily restrain or
preliminarily enjoin payments under the Letter of Credit or
any particular remedy available to persons seeking to
enforce the Letter of Credit.
We express no opinion as to matters'governed by laws other
than the laws of the State of California and the federal law of
the United States of America. We are not members of the bar of
Japan and for matters pertaining to laws of Japan, we have
relied on the separate opinion of Japanese Counsel for The Tokai
Bank, Ltd., a copy of which is provided herewith, and we have
made no investigation to determine the accuracy or completeness
of such opinion.
Very truly yours,
.[~orm of Opinion'of Brown & Wood
Regarding Registration and Disclosure]
EXHIBIT B
· ·
Merrill Lynch Pierce Fenner & Smith
400 South Hope Street - Suite 2020
Los Angeles, California 90071-1821
Re:
$81,400,000 Cit~ of Tustin
Assessment District No. 86-2-
Limited Obliaation Improvement BOn~
Ladies and Gentlemen:
We have acted as counsel to The Tokai Bank, Ltd. Los
Angeles Agency (the "Bank") in connection with the issuance by
the Bank of the Irrevocable Direct-Pay Letter of Credit No. (
)- - , dated September 9, 1988 (the 'Letter of Credit'),
pursuant to the terms of the Reimbursement Agreement, dated as
of September 1, 1988 (the 'Reimbursement Agreement'), between
the Bank and the City of Tustin. The Letter of Credit will be
issued to provide liquidity and credit support for the
above-referenced bond issue (the 'Bonds").
You have requested an opinion from us to the effect
that the Letter of Credit is exempt from registration under the
Securities Act of 1933, as amended (the 'Act').
..
We have assumed, for the purposes of this opinion, that
apart from any effect caused by the Letter of Credit, the Bonds
will be exempt from registration under the Act by virtue of the
exemption provided therein for securities issued by a political
subdivision or public instrumentality of a state of the United
States. We have examined the Reimbursement Agreement, the
Letter of Credit and such records, certificates and other
documents and instruments, certified or otherwise, identified to
our satisfaction, as we considered necessary for the purposes of
this opinion. In addition, we have examined Release
No. 33-666I, issued by. the Securities and. Exchange Commission on
September ~3, *1986.
The Bank is duly*'licensed by the California State
Banking Department and qualified to do business as a foreign
agency of a foreign bank in the State of California. In
reliance on the release referred to above and based upon our
analysi.s of. the supervision and regulation of the Bank under the
statutes and regulations of the United States and the State of
California pertinent to this opinion., we are of the opinion that
the Letter of Credit is exempt from registration under t~e Act.
We are further of the opinion that the statements in
the Official Statement relating to the Bonds contained under the
caption 'The Letter of Credit', insofar as they purport to
summarize certain provisions of the Letter of Credit, present an
accurate summary of such provisions.
This opinion is furnished to you by us as counsel to
the Bank. This opinion may not be used or relied upon by or
published or communicated to any party other than the addressee
hereof for any purpose whatsoever without our prior written
approval in each instance.
Respectfully submitted,
[Form of Opinion of Naoe,'Asai &
Yamamori Regarding Enforceability]
.
EXHIBIT C
City of Tustin
300 Centennial Way
Tustin, California 92680
Merrill Lynch Pierce Fenner & Smith
400 South Hope Street - Suite 1020
Los Angeles, California 90071-2821
Brown & Wood
555 California Street
San Francisco, California 94104
Citibank, N.A.
as Trustee (the "Trustee")
Municipal Trusts & Agency
Citicorp NARB
55 Water Street
New York, New York 10043
Re:
$81,400,000 City of Tustin
Assessment District No. 86-2
Limited Obliaation Improvement Bond~
Gentlemen:
We have acted as Japanese counsel to'The Tokai Bank, Limited
(the "Bank") in connection with the issuance by its Los Angeles
Agency of its Irrevocable, Transferable Letter of Credit
No. L/C ( )- - dated September 9, 1988 (the "Letter of
Credit") pursuant to the Reimbursement Agreement dated as of
September 1, 1988 (the "Reimbursement Agreement"), between the
Bank and the City of Tustin (the "City"), in favor of the
Trustee for the holders of the above-captioned bonds (the
"Bonds") of the City. The Bonds are issued under an Indenture
2978010/6
of Trust dated as of September 1, 1988 between, the City and the
Trustee.
The Reimbursement Agreement has been entered into for the
purpose of providing the Trustee with funds for the payment of
the principal of, interest on and purchase price of the 'Bonds.
We have examined signature pages t. elecopied to us of the
executed counterparts of the Letter of Credit 'and the
Reimbursement Agreement delivered by the Bank.
Based on the foregoing, and upon our examination of such
other matters of fact and law as we deem appropriate to the
opinion expressed herein, we are of the opinion that:
(1) Organization, Standing, Etc. -- The Bank is a
corporation duly organized, validly existing and in gOod
standing under the laws of Japan and has full right, power
and authority to carry on its business as now conducted;
(2) Power, Authority, Etc. -- The Bank has full right,
power and authority to execute and deliver the Letter of
Credit and the Reimbursement Agreement, and to perform the
Bank's obligations thereunder; and the execution and deliv-
ery by the Los Angeles Agency of the Bank of the Letter of
Credit and the Reimbursement Agreement do not, nor will the
performance of the Bank's obligations thereunder contravene,
any provision of any treaty, law, rule or administrative
regulation of Japan, nor, to the best of our knowledge and
belief: (i) violate any order, decree, writ, judgment or
injunction of any court or governmental authority of or in
Japan, or any political subdivision thereof, applicable to
the Bank, or (ii) violate any covenant, indenture or agree-
ment of or binding on the Bank or any of its assets or
properties;
(3) Letter of Credit -- The Letter of Credit and
Reimbursement' Agreement have each been duly authorized,
executed and delivered by the Bank and, (i) assuming execu-
tion and delivery by the proper officers of the Los Angeles
Agency of the Bank, (ii) assuming the due authorization,
execution and delivery of the Reimbursement Agreement by the
City and (iii) assuming that the Letter of Credit and the
Reimbursement Agreement are legal, valid and binding
'obligations of the Los Angeles Agency of the Bank under
California law by which they are governed, they constitute
legal, valid and binding obligations of the Bank enforceable
against the Bank in accordance with their respective terms,
except (i) that the enforcement thereof may be limited by
bankruptcy, reorganization, insolvency, moratorium and other
2978010/6
laws of general application relating to or affecting the
enforcement of creditors' rights as such laws would apply in
the event of the bankruptcy, reorganization, insolvency of,
or similar, occurrence with respect to the Bank and (ii) that
no opinio~ is expressed as to equitable remedies, including
specific performance and injunctive relief to the party
seeking enforcement of. the Letter of Credit or the
Reimbursement Agreement;
(4) Approvals -- No consent, license, authorization,
registration, declaration, writ, approval or permit (the
'Approvals') of any governmental authority, agency or
instrumentality of or in Japan is required in connection
with the validity of, or the execution, delivery, perform-
ance or enforceability of the Letter of Credit or the
Reimbursement Agreement, including without limitation any
Approvals necessary to insure the transfer and payment of
amounts payable under the Letter of Credit in the currencies
and funds called for therein, free and clear of any withhold-
ings or deductions on the terms and at the place of payment
called for therein;
(5) No Immunity-- The Bank is subject to commercial
law in Japan and is generally subject to suit and neither it
nor any of its properties or revenues enjoys any right of
immunity from any judicial proceeding in Japan;
(6) Proceedings, Etc. -- To the best of our knowledge,
no litigation or proceedings are pending or threatened which
would have a materially adverse effect on the financial con-
dition or operations of the Bank or challenge or adversely
affect the good standing of the Bank or the power of the
Bank to carry out the transactions contemplated by the
Letter of Credit and the Reimbursement Agreement, or the
validity of, or the execution, delivery or performance by
the Bank of the terms and provisions of the Letter of Credit
and the Reimbursement Agreement;
(7) Taxes, Etc. -- There is no income or stamp or
other tax, duty or similar impost of the government of Japan
or any subdivision or instrumentality or agency thereof,
imposed on or applicable to any payment to be made by the
Bank to the Trustee under the Letter of Credit or which is
imposed on or by virtue of the execution and delivery
outside Japan of the Letter of Credit or the Reimbursement
Agreement;
(8) Choice of Law -- The choice of law provisions of
the Reimbursement Agreement and the Letter of Credit are
legally valid under the laws of Japan and would be
recognized by the courts of Japan;
2978010/6
(9) Access to Courts -- There are nO le~al impediments
to access by the Trustee to the courts of Japan; nor shall
the Trustee be required to qualify under any statute or law
or pay any franchise tax, stamp tax or similar fee to gain .
such access, whether in respect of a direct suit on the
Letter of Credit, or a proceeding for recognition of a
judgment obtained.by the Trustee before a court in the
United States, except for such fees as would be required of
plaintiffs, both resident and non-resident in seeking access
to .the courts of Japan (provided, that, if requested by the
defendant, a non-resident plaintiff may be required to post
a deposit with the court to secure court costs); nor will
the Trustee be resident, domiciled, carrying on business or
otherwise subject to taxation in Japan by reason only of the
execution, delivery, or performance by the Bank or the
enforcement by the Trustee of the Letter of Credit;
(10) Enforceability of Judgments -- Any final and
conclusive judgment obtained against the Bank in any court
in the United States of competent jurisdiction based on a
service of process other than by means of public notice or
procedure similarly unfavorable to the Bank, in respect of
any sum payable by it under the Letter of Credit would be
recognized and enforced by the courts of Japan without
re-examination of the issues insofar as such judgment is not
contrary to the public order or good morals in Japan and
there is reciprocity as to the recognition of a judgment
obtained in Japan by the courts in the United States. The
transaction contemplated by the Letter of Credit and the
Reimbursement Agreement is not contrary to the public order
or good morals in Japan;
(11) Rank of Obligations -- Under Japanese law, the
obligations of the Bank under the Letter of Credit and
Reimbursement Agreement rank ~ari Dassu in priority of
payment and in all other respects with all other unsecured
obligations of the Bank subject only to mandatory preferred
obligations under applicable law.
The opinions expressed above are limited to the laws of
Japan as currently in effect and we do not express any opinion
herein concerning any other law.
2.978010/6
You are hereby authorized to furnish copies of' this opinion
to Moody's:Investors Service and Standard & Poor's Corporation
who shall be entitled to rely thereon as though it were
addressed to them. No other person or firm shall be entitled tO
rely on this opinion.
Very truly yours,
Naoe, Asai & Yamamori
By
Takahisa Naoe
Attorney at Law
2978010/6
EXHIBIT B
£DEVELOPMENT NOTICE]
~he undersigned owner* hereby certifies that:
il) [He is the owner] [He was on the last succeed-
ing [February 1] or LAugust 1] t_he owner] of the fol-
lowing real property which is located in the City of
Tustin Assessment District No. 86-2:
#4004
#4005
#4008
#4010
#4011
#4012
#(4012
LDescription of real property]
#4015
The assessment on such real property is
.
#4018
# (401~
13) Pursuant to this notice the undersigned hereby
c_ertifies that (A) he expects that between the date
forty (40) days prior to either February 1 or AuguSt 1
next succeeding the date h_ereo~ and the date forty
(40) days prior to either t_he following August 1 or
February 1, whichever is applicable, ii)(a) the above
described property will be sold to another entity
which is not an Affiliate of t_he.present owner for
single family residential development or
(b) development of the above described property as
single family residential property by the Rresent
owner or an Affiliate thereof will commence; or
iii) the above described property will be the subject
of a Qualified Conveyance (as such term is defined in
the Indenture of Trust dated as of September 1, 1988
b_y and between the City of Tustin and Citibank, N.A.
(the "Indenture")), or (B) the above described prop-
erty was the subject of a Qualified C_onveyance since
the date which is forty (40) days prior to the most
recent [February 1 if date of notice is after
#4021
#4022,
#4025
#4026
#4027
#4028
#(4028
#4029
#4030
#(4030
#4031
#(4031
#4032,
#4034
#(4034
#4035
#4036
#4037,
~(4038
~(4038
#4008.
*_For purposes of this Development Notice, "owner" s_hall include the #4008.
transferor of real property located in Assessment District No. 86-2 #4008.
if such transferor conveyed real property between the fortieth day ~4008.
preceding a February 1 or August 1 and the following F_ebruary 1 or #4008.
August 1, as the case may be, and, as of the fortieth day preceding #4008.
such February 1 or August 1, such conveyance was not reasonably fore- ~4008.
seen or anticipated by the transferor to occur during the forty (40) ~4008.
day period prior to such F_ebruary 1 or August 1, as the case may be. #4008.
-_l- #4008.
February I and prior to August 1] LAugust 1 if date of
notice is after August 1 and Rrior to February 1].
LName of Owner]
LTitle]
#4039
#4040
#4043
#4045
#4046
~4001
94691.9. 2535.06: 14 # (4001
EXHIBIT C
$81,400,000
CITY OF TUSTIN
" ASSESSMENT DISTRICT NO. 86-2
LIMITED OBLIGATION IMPROVEMENT BONDS
REMARKETING AGREEMENT
BETWEEN
THE CITY OF TUSTIN
AND
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Dated as of September 1, 1988
TABLE OF CONTENTS
SECTION
Parties
Recitals
Section 1.1.
ARTICLE I
GENERAL
Remarketing Agent ...........................
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
ARTICLE II
REMARKETING AGENT
Representations, Warranties and Covenants ...
Duties and Obligations of Remarketing Agent .
Disclosure to Purchaser of Tendered Bonds
and Repurchased Bonds and Qualification
of the Bonds ...........................---
Conditions to Remarketing Agent's
Obligation ...... ~;~.~ .... [ .....
Remarketing A~ B~s i~d o .......
Events of Default ...........................
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
ARTICLE III
MISCELLANEOUS
3.1. Remarketing Agent Not Acting as Underwriter .
3.2. Removal of Remarketing Agent ..................
3.3. Resignation of a Remarketing Agent ..........
3.4. Appointment of Successor Remarketing Agent ..
3.5. Remarketing Agent Compensation ..............
3.6. Remarketing by the Issuer ...................
3.7. Amendments ..................................
3.8. Governing Law ...............................
3.9. Notices .....................................
3.10. Miscellaneous ...............................
3.11. Counterparts .................................
4
5
5
5
5
5
5
6.
'6
6
6
Exhibit A
Addresses for the Giving of Notice
REMARKETING AGREEMENT
THIS REMARKETING AGREEMENT, dated as of
September 1, 1988, is made and entered into between Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Remarketing
Agent"), and the City of Tustin, California (the "Issuer"),
in connection with the City of Tustin Assessment District
No. 86-2 Limited Obligation Improvement Bonds (the "Bonds")
authorized pursuant to an Indenture of Trust (the "Inden-
ture'') dated as of September 1, 1988 between the issuer and
Citibank, N.A., as trustee (the "Trustee").
RECITALS:
WHEREAS, the Issuer has issued and sold the Bonds
in order to better provide financing for certain improve-
ments; and
WHEREAS, the Remarketing Agent has agreed to
accept the duties and responsibilities as the Remarketing
Agent under the Indenture and this Remarketing Agreement;
NOW, THEREFORE, in consideration of the premises,
the Issuer and the Remarketing Agent do hereby covenant and
agree as follows:
Ail terms not otherwise defined herein shall have
their respective meanings as provided in the Indenture.
ARTICLE I
GENERAL
SECTION 1.1. Remarketinq Agent. Merrill Lynch,
Pierce, Fenner & Smith Incorporated is hereby appointed by
the Issuer as the initial Remarketing Agent as'provided for
in the Indenture. Successor Remarketing Agents, if any, are
to be appointed as provided for in the Indenture. In
addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated
shall be appointed as remarketing agent with respect to the
remarketing of Bonds, from time to time, upon each conver-
sion of all or a portion of the Bonds to a fixed interest
rate in accordance with the terms of the Indenture. The
terms and conditions, and the representations of the
remarketing agent in connection with each such remarketing
will be set forth and established at or prior to the time of
each conversion of all or a portion of the Bonds to a fixed
interest rate.
ARTICLE II
REMARKETING AGENT
SECTION 2.1. Representations, Warranties and
Covenant~. The Remarketing Agent hereunder represents,
warrants and covenants as follows:
' (a) Such firm is a member of the National Associ-
ation of Securities Dealers, Inc. (the "NASD");
(b) Such firm is authorized by law to perform all
of the duties imposed upon it by the Indenture and this
Remarketing Agreement;
(c) Such firm will comply with the federal
securities laws, state Blue Sky laws (to the extent
applicable) and the rules and regulations of the NASD
in performing its duties hereunder; provided, however,
that the Remarketing Agent may rely solely upon the
advice of its counsel as to the application of such
laws, rules and regulations; and
(d) The Remarketing Agent has been duly incorpo-
rated and is validly existing and in good standing
under the laws of the State of Delaware; has full power
and authority to enter into and perform its obligations
under this Agreement; and this Agreement constitutes
the legal, valid and binding obligation of the
Remarketing Agent enforceable against the Remarketing
Agent in accordance with its terms, except as the
enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the enforcement of
creditors' rights generally and by general principles
of equity.
SECTION 2.2. Duties and ObliGations of
Remarketinq AGent. The Remarketing Agent has received and
reviewed a copy of the Indenture and hereby accepts, subject
to Section 2.4 of this Agreement and only so long as this
Agreement shall remain in full force and effect, all the
duties and obligations specified in the Indenture.
Notwithstanding anything herein or in the Inden-
ture to the contrary, with respect to its duties hereunder
and under the Indenture the Remarketing Agent shall not be
liable for any action, failure to act or error of judgment
made in good faith by ~any of its officers or employees
unless it is established that the Remarketing Agent was
grossly negligent with respect to such action, failure to
act or judgment.
2K181731
08/29/88 2
Remarketing Agmt
SECTION 2.3. Disclosure to Purchaser of Tendered
Bonds and Repurchased Bonds and Qualification of the Bonds.
(a) The Remarketing Agent, upon advice of its
counsel and in view of the circumstances and laws in effect
at the time of remarketing, may in its sole discretion
determine what disclosure documents, if any, are to be
prepared in connection with the remarketing of Bonds in the.
Demand Mode or the Unit Pricing Mode tendered for purchase
to the Trustee ("Tendered Bonds"), and whether and to what
extent the remarketing of such Bonds in the manner contem-
plated hereunder and under the Indenture requires registra-
tion under the Securities Act of 1933 or other federal or
state securities laws. If for whatever reason the
Remarketing Agent shall determine that it is unable to
obtain the information concerning the Issuer, the Bank, the
owner or owners of property within the District (collective-
ly, the "Owners") or other parties or circumstances neces-
sary to prepare appropriate disclosures, if any, or if the
Remarketing Agent shall be unable to procure the necessary
cooperation of the Issuer, the Owners or the Bank in order
to comply with applicable law, including federal or state
securities laws in connection with the marketing of Tendered
Bonds, then this Agreement shall terminate and the
Remarketing Agent shall be under no obligation to perform
any of its duties under this Agreement other than to return
any Tendered Bonds or funds for the purchase thereof to the
appropriate parties. The Remarketing Agent shall have no
obligation to bear the cost of obtaining such information
but shall be only required to notify the parties which it
believes have such information that such information is
required. In addition, if, at any time during the term of
this Agreement, any event-known to the Issuer relating to or
affecting the Issuer, the Indenture, the Reimbursement
Agreement, the Letter of Credit, the Bank, the Owners, this
Agreement or the Bonds shall occur which might affect the
correctness or completeness when made of any statement of a
material fact contained in the Official Statement, the
Issuer shall promptly notify the Remarketing Agent in
writing of the circumstances and details of such event.
(b) The Issuer shall cooperate with the
Remarketing Agent in the qualification of the Bonds for
offering and sale and the determination of the eligibility
of the Bonds for investment under the laws of such jurisdic-
tions as the Remarketing Agent shall designate and shall use
its best efforts to continue any such qualification in
effect so long as required for the distribution of the Bonds
by the Remarketing Agent, provided that the Issuer shall not
be required to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which
2K181731
08/29/88 3
Remarketing Agmt
would
subject it to general service of process in any jurisdiction
where it is not now so subject.
SECTION 2.4. Conditions to Remarketing Agent's
0bliqations. Notwithstanding any provision of this Agree-
ment or the Indenture to the contrary, the Remarketing Agent
may, but shall have no duty to, remarket Tendered Bonds
pursuant to this Agreement in the event there shall have
occurred (i) a default in the due and punctual payment of an
Assessment Installment relating to Bonds in the Unit Pricing
Mode or in the Demand Mode and such default shall continue
for a period of at least 5 business days, or (ii) a default
in the due and punctual payment of principal or interest on
a Bond in the Unit Pricing Mode or in the Demand Mode. In
the event that the Remarketing Agent determines, after
consultation with such persons as it deems advisable, that
it has no obligation to remarket Tendered Bonds pursuant to
this Section 2.4, the Remarketing Agent will immediately
provide written notice to that effect to the Bank, the
Issuer, and the Trustee.
SECTION 2.5. Remarketinq Aqent Books and Records.
The Remarketing Agent agrees to keep such books and records
as shall be consistent with prudent industry practice and to
make such books and records available for inspection by the
Issuer, the Initial Owner (as defined in Exhibit A hereto),
the Paying Agent and the Trustee at all reasonable times.
SECTION 2.6. Events of Default. The failure by
the Issuer to make any payment required by this Remarketing
Agreement when due shall'constitute an "event of default"
hereunder and shall entitle the parties hereto to take what
ever action at law or in equity, including specific perfor-
mance, that is necessary or desirable to collect the amounts
then due and thereafter to become due to them or to enforce
observance or performance of any covenant, condition or
agreement of the Issuer hereunder.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Remarketinq Agent Not Acting as
Underwriter. It is understood and agreed upon by all the
parties hereto that the Remarketing Agent is only obligated
hereunder to act as agent for the Issuer. The Issuer agrees
that, while this Agreement is in effect, the Remarketing
Agent shall be the exclusive remarketing agent for the
Tendered Bonds. The Remarketing Agent is in no way
obligated to advance its own funds to purchase any Bonds.
2K181731
08~29~88 4
Remarketing Agmt
SECTION 3.2. Removal of Remarketinq Aqent. The
Remarketing Agent may be removed at any time by an instru-
ment, signed by the Issuer and filed with the Remarketing
Agent, the Paying Agent, the Bank and the Trustee. Such
removal shall be effective immediately upon receipt of such
instrument by the Remarketing Agent.
In the event of the removal of the Remarketing
Agent, the Trustee shall give notice thereof by mail to all
Bondholders and the'Remarketing Agent shall pay over, assign
and deliver this Agreement to its successor.
SECTION 3.3. Resiqnation of a Remarketinq Aqent.
The Remarketing Agent may at any time resign and be dis-
charged of all duties and obligations hereunder and under
the Indenture by giving notice, in writing, 60 days prior to
the date set for resignation, to the Bank, the Issuer, the
Trustee and the Paying Agent.
SECTION 3.4. Appointment of successor Remarketinq
Agent. If the Remarketing Agent shall resign pursuant to
Section 3.3, or be removed pursuant to Section 3.2, the
Issuer shall appoint a successor Remarketing Agent in
accordance with the Indenture.
SECTION 3.5. Remarketinq Agent Compensation. For
Bonds in the Unit Pricing Mode with Unit Pricing Interest
Periods of one year or less and for Bonds in the Demand
Mode, the Issuer will pay to the Remarketing Agent a quar-
terly fee payable in arrears on the 1st business day of
January, April, July, and October commencing on January 2,
1989 of each year equal to one thirty-second of one percent
(0.03125%) of the principal amount of such Bonds outstanding
as of 5:00 P.M., New York City Time, on the day preceding
each such date. For Bonds in the Unit Pricing Mode with
Unit Pricing Interest Periods over one year such fee shall
be negotiated between the Remarketing Agent and the Issuer.
Notwithstanding anything herein to the contrary, the
Issuer's obligation to pay the compensation due to the
Remarketing Agent hereunder shall be limited to amounts on
deposit in the Conversion Costs Fund and amounts received
from Assessment Installments as incidental expenses.
SECTION 3.6. Remarketing by the Issuer. The
Issuer shall have no right to remarket any Bonds except
pursuant to the terms and conditions imposed on the
Remarketing Agent under this Agreement and the Indenture.
SECTION 3.7. Amendments. This Agreement may be
amended from time to time by an instrument in writing
executed by the parties hereto, so long as such amendment is
not inconsistent with the Indenture, without the consent of
2~181731
o8/29/aa 5
Remarketing Agmt
the Bondholders, unless such consent is required under the
Indenture.
SECTION 3.8. Governinq Law. This Agreement shall
be governed by the laws of the State of California.
SECTION 3.9. Notices. Any notices, requests,
directions, instruments or other communications given or
made hereunder or pursuant thereto shall be in writing and
shall be deemed to have been validly given or made when
delivered personally or by courier or mailed by registered
or certified mail, return receipt requested, postage pre-
paid, to the respective addresses set forth on Exhibit A
hereto, or if addressed to any other party at such other
address as such party shall hereafter furnish to the parties
hereto in writing. All such notices, requests or other
communications may be made by telephone promptly confirmed
by writing.
SECTION. 3.10. Miscellaneous. Nothing herein
shall be construed to make any party an employee of the
other or to establish any fiduciary relationship between the
parties except as expressly provided herein.
SECTION 3.11. Counterparts. This Agreement may
be executed in several counterparts, each of which shall be
regarded as an original and all of which shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the Issuer and the Remarketing
Agent have caused this Agreement to be executed in their
respective names all as of the date first above written.
CITY OF TUSTIN, CALIFORNIA
By:
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
2K181731
o8/~9/88 6
Remarketing Agmt
EXHIBIT A
If to the Issuer:
If to the Initial Owner:
If to the Remarketing Agent:
City of Tustin, California
300 Centennial Way
Tustin, California
Attn: City Treasurer
with a copy to:
James Rourke
City Attorney
Rourke & Woodruff
701 S. Parker St., Suite 700
Orange, California 92668
The Irvine Company
550 Newport Center Drive
Newport Beach, California 92660
Attn: Richard E. Moran Jr.
Vice President and Treasurer
with a copy to:
John Murphy
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Merrill Lynch, Pierce, Fenner
& Smith Incorporated Inc.
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Attn: Tax-Exempt Money
Markets Department
2K181731
08/29188
Remarketing Agmt
EXHIBIT D
'/$323 PGCOV ,I SorB Prmtin8 Company ~. ./.6 26.AUG-SS
(~ i.~sr.b Ca.hi CIty ur Tusth---O.~ Covet
/ ~ '~f 6 ~ OFFICIAL STA~ DATED A FA,
· - Standard &
NEW ISSUE (S~ *'brings ~in)
UPDA~m, '
.... Limited Obhgat on Improvement Bonds Orange unty, California
Da~ ~ de~~ breh ~ice: 1~% Dura ~tem~r ~ ~13
(Division 12of the C.a_'~o. rnm 5?~.u..ano~rt].g..nwa_._ys ~.q~2_°_~_n_a~mCu~=C~'.'~'.'-,..'~'~--.~. end~) and an l~dcnture of Trust dated a~ of
Bond Act of 1915 (Division Ju o! the t~atuorrtm 3ti-~t~ a~m [s,~-weT~ ~'q~-, ""-~ em ,
September I, 1988, between thc City of Tustin and Citibank, N.A., as TFustec.
The Bonds will initially be issued in the Unit Pricing Mode. Each Bond in the Unit Prichg Mode will bear interest at thc Adjusted
lnte~at P, ate determined for such Bond, as ofthe time of its most recent Rate Adjustment Date. The Remarketing ,&Bent is to determine
each such Adjusted Interest Rate, on the basis of market condition.% as described herein. The Purchase Date for a Bond m thc umt
Pr~.h8 Mode is also thc lnterut Payment Date for such Bond. Bonds in thc Unit Pricing Mode may be tendered for purchase to
Cithnk, N.A~ New York, New York, in its ~ ns Tender Agent, by 12:30 p.m., New York City time., on the Purchase Dat~
established with respect to erich Bond at the time of the Mt Fecent Rate Adjustment Date of each such Bond. Bonds in thc Urm
Pricing Mode so tendered for purchase will be purchased at · price equal ~ the p~rinc~'_~al amount thereof. The determination of thc
Adjusted Interest Rate, Unit Pricin~ Interest Period and Pur~JLue Date mr em:n ~ona in the Unit Pricin~ Mode may bc made
independently of' such dctcrmimtion for any other Bond in the Unit Pricins Mode. Ali of the Bonds in the Unit Pricin~ Mode may
be converted to thc Demand Mode or aH or a portion of thc Bonds in thc Unit Pricing Mode may, and under c~rtam circumsLanccs
wiLl, be converted to the Fixed Rate Mode, all as described hercia.
Bonds in thc Demand Mode will bear interest at thc Varhbk Interest Rate determined wee]dy by the RemlrkctinB Agent in
acconhnce with the terms of the Indenture, and as further desc~ herein. When in the Demand Mode, Bonds may bc tendered
for purchase on thc Oplionai Tender Date which is the seventh calendar day (or if such day is not a Business Day, the next Business
Duy) next succ_A~l~_ing the delivery of a Tender Notice to thc Tender ,&Bent and to thc Remarkctin~ AgenL, as more ~uHy described
herein. Each Bond in thc Demand Mode tendered for purchase will bc purchncd at a price of IMf plus a~:rued interest to (but not
includins) thc OlXioml Tender Date. Ali of the Bonds in the Demand Mode may be converted to the Unit Pricing Mode and all
or a portion of the Bonds in the Demand Mode may, and under c~rtam circumstances will, be converted to thc Fixed Rate Modc,
all as descrbed herein. Prospective purchasers of Bonch in tim ~ Rate Mode are cautioned not to rely on this ~ Statement
with rupe~ to thc purchase of such Bonds.
Bonds in the Unit Prich~ Mode and Bonds in the Demand Mode (coiJectivcly, the 'Adjustable Rate Bonds"), arc secured by
tn irrevocable dirm~y letter of cred~ (the 'Letter of Credit') and certain other moneys pledged therefor. Thc letter of CredU
permit the Trustee to draw ccrlmn amounts eq,,sl to thc principal of, premium on and up to 40 days of' interest on thc Adjus~bic
Rate Bonds at thc MLxbnum Ral~, as described bemm. The Let~r of Credit will expire on September 15, 1998, unJms earlier termimu:d
or ~ed and will be issued b~
The Tokai Bank, Ltd., Los Angeles Agency
lqeJtber tim faith and etedJt nor the taxing power of the CItT, the ~ of Cnlifumb or any polJtJeM mld~'sion thereof ~ pledged
to tim payment of tim Bonds.
The Bond~ a~e offe~l ~en. ~ and if b~ed and delivered M the Underw~e~. ~ubj~et m the approval of ~'~ali:~ by Mud~e ~
Guthrie dley, ander & Fenion. I~ ~4ngelea California and Rourke & Woodruff. Omnf~. California, Co. Bond Counzel. and certain other
conditionx Certain legal ma,em ,viii be pasr~ upon for the Und~r~ by O'Mei~eny & Myers. and for the Bank by Brown & #'ood.
California It b expecfwl t~at ~e ~ona~ in aefmiti~ejorm MU O~ amuuo,c'.A,-- .... .~ ..... w .... N ep .
198~
Merrill Lynch Capital Markets
Dined: Septexnber , 1988
* UPDATESTM is · service mark of Merrill Lynah & Co., Inc.
No dealer, broker, salesman or other person has been
authorized by the City, the Bank or the Underwriter to give any
information or to make any representations other than those
contained in this Official Statement, and, if ~iven or made,
such other information or representations must not be relied
upon as having been authorized by any of the" foregoing. This
Official Statement does not constitute an offer 2o sell or the
solicitation of an offer to buy, nor shall there be any sale of
the Bonds by any person in any ~urisdiction in Which it is
unlawful for such person to make such offer, solicitation or
sale. The information set forth herein has been obtained from
the City and other sources which are believed to be reliable,
but it is not guaranteed as to accuracy or completeness and is
not to be construed as a representation by the Underwriter. The
information and expressions of opinion herein are subject to
change without notice, and neither the delivers.of this Official
Statement nor any sale made hereunder, under any circumstances,
shall create any implication that there has been no change in
the affairs of the Bank or any other party described herein
subsequent to the date as of which such information is present-
ed.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE BONDS OFFERED ~EREBY AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABI-
LIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
P~GE
Summary Statement .................. iv
Introduction ........... ~.~.[~~ .... ~.[~...~...~ 1
The Bonds ....................................... 2
Authority for Issuance ......... [.[[...[..[ ......... 2
General Provisions ............................... 3
Calculation of Interest [ [ 3
Determination of Adjuste~ ......................... Interest Rates and
Unit Pricing Interest Periods ................. 4
Determination of Variable Interest Rate .~ ........ ]~ 7
Determination of Fixed Interest Rate.. .......... 7
Alternate Rate for Interest Calculation .[[..[.[ .... 8
Changes in Hode ............................. 9
Transfer and Exchange of Bonds .[..[ .... [[.[..~[ .... 10
Redemption of Bonds ............................ · 11
Mandatory Redemption ................ ].'...~..~ ..... 11
Extraordinary Mandatory Redemption ................ ' 14
Optional Redemption of Unit Pricing Bonds ..........
Optional Redemption of Demand Bonds ................
Optional Redemption of Fixed Rate Bonds ............
Purchase of Bonds ................ ~ ..... ~---~-~
Optional. Tender of Demand Bonds ............ ';'. ......
Purchase of Bonds
Mandatory ........................
Security for the Bonds .............................
General
Obligation of the City Upon Delinquency ..........
Covenant to Commence Superior Court Foreclosure
The Bank .............................................
The Letter of Credit .................................
The Remarketing Agent ................................
Summary of Indenture .................................. Definitions ........................................
Redemption; Tender and Purchase ....................
Selection of Bonds for Redemption' ' '''' ' '' ' ........
Notice of Redemption ...............................
Effect of Redemption ...............................
Tender and Purchase of Bonds .......................
Mandatory Purchase Upon Expiration or
Termination of Letter of Credit ..................
Letter of Credit; Alternate Letter of Credit .......
No Sales After Certain Defaults ....................
Purchase Fund ....................... 11-1-11--1
ooou , ....
Pledge Effected by Indenture .......................
Pledge of Assessment Installments; Assessment
Fund
Collection of Assessment Installments ..............
Deposit of Moneys ........................
Conversion Costs Fund .....................
Use of Money in the Construction Fund ....
Interest Reserve Fund ....................
Investment Earnings Fund .................
Investments ..............................
Arbitrage Covenant ...~ ................
ity '
Default and Limitations Liabil .....
Events of Default ..........................
Action on Failure to Make Timely Assessment
Installments .............................
Remedies of the Trustee ....................
Non-Waiver .................................
Remedies Not Exclusive
................ :":
No Liability by the to the Owners . ..
No Liability by the Trustee to the Owners ..
Action by Owners ...........................
Amendment of or Supplement to the Indenture ..
Amendment or Supplement by Consent of Owners
Defeasance .......................... :--: .....
Discharge of Bonds and Indenture .........
--:-:--:-:
tt · II ·
®oeo®oil
· · i* o o · t ·
· · · · · · · ·
· · o o · o o ·
· " :' ::::. .
t · ·
: .... :-:
· · · · ·
15
16
16
16
16
17
18
-19
19
20
21
22
23
26
27
27
42
42
42
43
44
46
47
5O
5O
52
52
53
53
55
60
61
62
64
65
66
67
67
67
69
7O
7O
70
71
71
72
72
73
73
ii
Unclaimed Money ...........................
No Discharge .......................
The ImproVement Project ..... ~...~...~]..~].
Description ...............................
Estimated Improvement Project Costs .......
The District ................................
Property Ownership .........................
The Financial Advisor .......................
Legal Opinion ...............................
Federal and State Income Taxes ..............
Certain Legal Matters .......................
Ratings ....................................
Underwriting ~
Additional Information
Appendix A: Assessment Diagram (~ndex Map)
Appendix B: Description of Work and Method o
Assessment
Appendix C: Proposed Form Legal Opinion
74
75
75
76
75
76
76
77
77
77
79
79
79
79
A-1
B-1
C-1
iii
STATEMENT
THIS SUMMARY STATEMENT IS SUBJECT IN ALL RESPECTS TO
THE MORE COMPLETE INFORMATION IN THIS OFFICIAL STATEHENT AND
THE OFFERING OF THE"BONDS TO 'POTENTIAL INVESTORS IS MADE ONLY
BY MEANS OF THE ENTIRE OFFICIAL STATEMENT.
...
f .
P~rposo .......... Proceeds from the $81,400,000 principal
amount of City of Tustin Assessment Dis-
trict No. 86-2 Limited Obligation Improve-
ment Bonds (the "Bonds"), will be used to
finance the construction and acquisition of
certain public improvements as more fully
described herein.
Security for
the Bonds ........ The Bonds are issued upon and secured by
the unpaid Assessments together with
interest thereon. The unpaid Assessments
represent liens on the lots and parcels
assessed. Assessments do not constitute
personal indebtedness of the respective
owners of said lots and parcels. If the
lots and parcels are transferred to another
owner, the ability of the new owner to meet
assessment obligations therefor will become
relevant. The information under the
Section herein entitled ,,Property Owner-
ship" should be considered in light of this
fact.
Payment of the assessment together with
interest thereon (the "Assessment Install-
ments'') sufficient to meet debt service
payments of the Bonds and to pay other
incidental expenses will be billed to the
owners of the proper~y within Assessment
District No. 86-2 (the "District").
Assessments bearing interest at a rate of
interest other than a fixed rate (the
"Adjustable Rate Assessment") will be
billed directly to the owners of the
property subject to the Adjustable Rate
Assessments. Assessment Installments
bearing interest at a fixed interest rate
(the "Fixed Rate Assessments") will be
included on the regular county tax bills to
all owners of property subject to the Fixed
Rate Assessments.
iv
Each Adjustable Rate Assessment represents
a pro rata share of the debt service coming
due with respect to the Adjustable Rate
Bonds and incidental expenses related
thereto,, based on the percentage which the
unpaid Adjustable Rate Assessments against
that property bears to the total of unpaid
Adjustable Rate Assessments levied to repay
the Adjustable Rate Bonds. The Assessment
Installments collected by the City or its
agent are to be paid into an Assessment
Fund, which will be held by the Trustee.
Amounts on deposit therein will be trans-
ferred to the Principal and Interest
Accounts for the payment of principal and
interest, respectively, on the Bonds;
provided, however, that to the extent that
draws on the Letter of Credit are used to
pay debt service on the Adjustable Rate
Bonds, such moneys shall be used to reim-
burse the Bank for such draws. In the
event insufficient moneys are on deposit in
the Principal, Interest and Reserve
Accounts, the owners of the Bonds shall be
entitled to a pro rata portion of the
moneys on deposit in such accounts;
provided, however, that to the extent draws
on the Letter of Credit are used to pay
debt service on the Adjustable Rate Bonds,
the Bank, rather than owners of Adjustable
Rate Bonds, shall receive a pro rata
Portion of such moneys.
Assessment Installments due but not paid
shall be .enforced by ~oreclosure on the
real property so assessed. The City has
covenanted, so long as the Letter of Credit
is outstanding, to institute judicial
foreclosure proceedings within 60 days of
the nonpayment of any Adjustable Rate
Assessment and within 5 Business Days of
receipt of actual knowledge (but in no
event later than 150 days) of the nonpay-
ment of a Fixed Rate Assessment and to
prosecute all such proceedings diligently
to completion.
A Variable Rate Reserve Account will be
established from Bond proceeds to secure
payment of Adjustable Rate Bonds. Amounts
in the Variable Rate Reserve Account,
however, are subject to application at the
v
FOLm of Bonds...
Redemption
and Kandatory
Purchase ........
direction of the Bank for purposes in
addition to ~he payment of delinquent
Adjustable Rate Assessments and at any
given time there may be no moneys on
deposit therein.
The Variable Rate Reserve Account should
not be relied upon by owners of Adjustable
Rate Bonds as security for the Payment of
the Adjustable Rate Bonds.
Debt service on the Adjustable Rate Bonds
will be payable from an irrevocable
direct-pay Letter of Credit issued by The
Tokai Bank, Ltd., Los Angeles Agency, in
the manner and upon tho terms and condi-
tions set forth therein. The Letter of
Credit will expire on September 15, 1998
unless otherwise terminated or extended as
described herein. See "The Letter of
Credit" herein.
The City has by resolution determined not
to obligate itself to advance any of its
available funds to cure any deficiency
which may occur in the Principal or Inter-
est Accounts. See teThe Bonds -- Security
of the Bonds."
Fully registered form in minimum denomina-
tions of $100,000-or any integral multiple
of $1,000 in excess thereof for Bonds in
the Unit Pricing Mode with Unit Pricing
Interest Periods of less than one year and
for Bonds in the Demand Mode; Bonds in the
Unit Pricing Mode with Unit Pricing Inter-
est Periods equal to or greater than one
year and Bonds in the Fixed Rate Mode may
be issued in denominations of $5,000 or
integral multiples thereof.
The Bonds are subject to optional and
mandatory redemption and mandatory purchase
as described herein.
vi
The D~str~ct ....
The C~ty .......
Assessment District No. 86-2 is comprised
of approximately 2,260 gross acres of which
approximately 1,440 acres are located in
the northeastern portion of the City. The
remaining approximately 820 acres are
located primarily in an uninco.rporated area
of the County of Orange to the.northeast of
~he City, with a small por~io~ within the
southeastern border of the City of Orange.
There are currently 56 assessed parcels"
within the District. Substantially all of
the assessable land in the District is
currently owned by The Irvine Company, a
privately owned land development corpora-
tion.
The City of Tustin is located in the
central par~ of Orange County, about 40
miles southeast of the City of Los Angeles
and about 80 miles north of the City of San
Diego. Tustin includes over 11 square
miles and is adjacent to the Cities of
Orange, Santa Aha and Irvine. The State of
California Department of Finance estimates
the City's February 1, 1988 population at
45,750, which represents approximately a
42% increase since 1980.
vii
,r '.
I~YOR ~tND CITY COUNCIL ~.'-
~onald B. Hoestere¥ .......... ~ayor
Ursula E. Kennedy ..........
Richard B. Edqar ..........
John Kelly .......... Councilmember
Earl J. Prescott .......... Councilmember
Robert S.
Ronald A.
CITY STAFF
William A. Huston .......... City Manager
James G. Rourke .......... City Attorney
Mary E. Wynn .......... City Clerk
Ledendecker .......... Director of Public Works and
Superintendent of Streets
Nault .......... Director of Finance/City Treasurer
PROFESSIONAL
CO-BOND COUNSEL ................
ASSESSMENT ENGINEER ............
TRUSTEE/P~YINg ~GENT/TENDER
AGENT ..........................
FINP~NCI~L ~%DVISOR ..............
SERVICES
Mudge Rose Guthrie
Alexander & Ferdon
Los Angeles, California
Rourke & Woodruff
Orange, California
Willdan Associates
Anaheim, California
Citibank, N.A.
New York, New York
Battle Wells Associates
San Francisco, California
viii
[This page intentionally left blank.]
OFFICIAL STATEMENT
681~400~000
CITY OF TUSTZN
JLSSESSMENT DISTRICT NO. 86-2"
LIMITED OBLIGATION IMPROVEMENT BONDS
ZNTRODUCTZON
The City of Tustin (the "City") is located in the
central paz~c of Orange County (the "County"), about 40 miles
southeast of Los Angeles and about 80 miles north of San
Diego. Tustin covers over 11 square miles and adjoins the
Cities of Orange, Santa Ana, and Irvine. The State of
California Department of Finance estimates the City's
February 1, 1988 population at 45,750, which represents
approximately a 42 percent increase since 1980.
Assessment District No. 86-2 (the "District")
comprises approximately 2,260 gross acres of which approxi-
mately 1,440 acres are located in' the northeastern portion
of the City. The remaining approximately 820 acres are
located primarily in an unincorporated area of the County to
the northeast of the City, with a small portion of the
District falling within the southeastern border of the City
of Orange. The District is bounded generally by Browning
Avenue, Irvine Boulevard, Jamboree Road (formerly Myford
Road) and the area near Range View Drive in the unincorpo-
rated Cowan Heights community. There are currently 56
assessed parcels within the District. The City expects that
about 670 net developable acres of the District will be
developed for residential use. In addition to such use, a
planned golf course will cover about 150 acres, and about 30
acres will be commercial and retail development.
Proceeds of the issue will be used to fund the
design, construction, inspection, and administration of
public improvements within the District. The improvements
include infrastructure to provide for traffic access and
control, drainage and utility service for the properties.
Appendix A hereto shows the configuration of the District
and the various assessed parcels, and indicates the location
of the public improvements to be constructed. For a more
detailed description of the improvement project, including a
description of the methodology used by the Assessment
Engineer to appoz~cion the assessment, refer to Appendix B
hereto.
Substantially all of the assessed land in the
District is currently owned and being developed by The
Irvine Company. The Irvine Company is the largest landowner
in Orange County, and is responsible for significant resi-
dential, commercial, and office development in Orange
County. The Irvine Company's land holdings 'extend along the
coast from Newport Beach to Laguna Beach, and inland approx-
imately 22 miles to the Riverside County line.
Assessment Installments sufficient to make debt
service payments on the Adjustable Rate Bonds and to pay
other incidental expenses will be billed directly to the
owners of property subject to the Adjustable Rate Assess-
ments. Fixed Rate Assessments will be included on the
regular county tax bills sent to owners of property subject
to the Fixed Rate Assessments. The Assessment Installments
collected by the City or its agent are to be paid into an
Assessment Fund, which will be held by the Trustee. Amounts
on deposit therein will be transferred to the Principal and
Interest Accounts for the payment of principal and interest,
respectively, on the Bonds; provided, however, that to the
extent that draws on the Letter of Credit are used to pay
debt service on the Adjustable Rate Bonds, such moneys shall
be used to reimburse the Bank for such draws. The principal
of and interest on the Adjustable Rate Bonds and premium, if
any, with respect to Unit Pricing Bonds will be payable, to
the extent hereinafter described, from an irrevocable
direct-pay letter of credit issued by The Tokai Bank, Ltd.,
Los Angeles Agency. See "The Letter of Credit" and "The
Bank" herein.
Pursuant to the Remarketing Agreement, dated as of~
September 1, 1988, by and between the City and Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), Merrill Lynch will initially serve as th~ Remarket-
ing Agent for the remarketing of the Adjustable Rate Bonds.
THE BONDS
Authority for Issuance
The improvement proceedings for the City of Tustin
Assessment District No. 86-2 have been conducted pursuant to
the Municipal Improvement Act of 1913, as amended (the "1913
Act"). The Bonds, which represent the unpaid Assessment
Installments levied against property in the District, are
issued pursuant to the provisions of the Improvement Bond
Act of 1915, as amended (the "Bond Law") and an Indenture of
Trust (the "Indenture") dated as of September 1, 1988
between the City and Citibank, N.A., as trustee (the "Trust-
ee''). Unless otherwise defined herein, all capitalized
terms used herein shall have the meaning set forth in the
-Summary of the Indenture -- Definitions."
General Provisions
The Bonds are in ~he form of fully registered
Bonds in Authorized Denominations. The interest and princi-
pal and premiums, if any, on the Bonds shall be payable in
lawful money of the United States of America. The interest
on the Bonds shall be payable on the Interest Payment Dates
by check mailed (on such Interest Payment Dates) by the
Paying Agent to the respective Owners thereof at their
addresses as they appear on the Record Date in the books
required to be kept by the Paying Agent, except that in the
case of an Owner of Bonds evidencing $500,000 or more in
aggregate principal amount, upon the written request of such
Owner to the Paying Agent, specifying the account or ac-
counts to which such payment shall be made, payment shall be
made by wire transfer of immediately available funds on such
Interest Payment Date. The principal and premiums, if any,
on the Bonds shall be payable on the Principal Payment Dates
or on redemption prior thereto upon surrender of the Bonds
called for redemption at the corporate agency office of the
Paying Agent.
The Paying Agent, the Tender Agent and the Trustee
may treat the Owner of a Bond as the absolute Owner of a
Bond for all purposes, whether or not such Bond shall be
overdue, and the Paying Agent, the Tender Agent and the
Trustee shall not be affected by any knowledge or notice to
the contrary; and payment of the principal of, premium, if
any, and interest on such Bond shall be made only to such
Owner, which payments shall be valid and effectual to
satisfy and discharge the liability of such Bond to the
extent of the sum or sums so paid. Ail Bonds paid shall be
cancelled by the Paying Agent and shall not be redelivered.
The Bonds shall be dated the date of authentica-
tion thereof and shall bear interest 'from the Interest
Payment Date to which interest has been paid or provided for
or if such date of authentication is prior to the initial
Record Date for a Bond, from the date of original authenti-
cation and delivery of the Bonds.
Calculation of Interest
Interest on each Unit Pricing Bond shall be
calculated, in the case of a Unit Pricing Interest Period
less than or equal to one year in length, on the basis of a
365/366 day year for the actual number of days elapsed, and,
in the case of a Unit Pricing Interest Period greater than
one year in length, on the basis of a 360-day year composed
of twelve 30-day months. Interest on each Demand Bond shall
be calculated on the basis of a 365/366 day year for the
actual number of days elapsed. Interest on Fixed Rate Bonds
shall be calculated on the basis of a 360-day year composed
of twelve 30-day months. Notwithstanding any provision of
the Indenture or the Reimbursement Agreement to the con-
trary, at no time may the rate of interest on a Bond exceed
the Maximum Rate with respect to such Bond.
The Bonds shall be initially issued in the Unit
Pricing Mode with Adjusted Interest Rates and Unit Pricing
Interest Periods as determined by the Indenture. There-
after, each Bond 'will bear interest at its applicable
Adjusted Interest Rate, Variable Interest Rate or Fixed
Interest Rate, according to the mode then in effect with
respect to such Bond. Ail Bonds in the Unit Pricing Mode
may be converted to the Demand Mode and all or a portion of
the Bonds in the Unit Pricing Mode may, and under certain
circumstances will, be converted to the Fixed Rate Mode. If
Unit Pricing Bonds are converted to the Demand Mode all such
Bonds may be converted to the Unit Pricing Mode and all or a
portion of such Bonds may, and under certain circumstances
will, be converted to a Fixed Rate Mode. A Fixed Interest
Rate shall be in effect until the Maturity Date, or-upon
redemption prior to the Maturity Date, and no Fixed Rate
Bond may be converted to any other mode. Prior to any
conversion to a Demand Mode, a Unit Pricing Mode or a Fixed
Rate Mode, other than on an Automatic Conversion Date, the
City must deliver to the Trustee a Favorable Opinion of Bond
Counsel.
The determination by the Remarketing Agen~ of each
Adjusted Interest Rate, Variable Interest Rate and Fixed
Interest Rate for any Bond, if in accordance .with the
provisions of the Indenture, shall be conclusive and binding
upon the City, the Paying Agent, the Tender Agent, the
Trustee, the Bank and the Owners.
Determination of Adjusted Interest Rates and Unit Pricing
Interest Periods
After the initial Unit Pricing Interest Period
with respect to each Bond, such Unit Pricing Bond shall bear
interest at the Adjusted Interest Rate for such Unit Pricing
Interest Period, established as follows:
(a) .At or about 9:30 A.M. New York City time, on
each Rate Adjustment Date, the Remarketing Agent will
post.the Preliminary Scale of Adjusted Interest Rates
for such Rate Adjustment Date. The information in such
Preliminary Scale shall be made available to any
prospective purchaser requesting such information.-
(b) The registered owner of any such Unit Pricing
Bond who does not elect to tender any portion of such
Unit Pricing Bond for purchase in accordance with the
Indenture shall have the right to select' a new Unit
Pricing Interest Period by telephonic., notice to the
Remarketing Agent no later than .10:00 A-M., New York
City time, on the Rate Adjustment Date. In that event,
from and after such Rate Adjustment Date, such Unit
Pricing Bond shall have the Unit Pricing Interest
Period selected by'the Owner of such Unit Pricing Bond
and bear interest at the Adjusted Interest Rate indi-
cated for such Unit Pricing Interest Period on the
Preliminary Scale, subject to adjustment as described
in paragraph (d) below. If the Owner of a Unit Pricing
Bond wishes to retain such Bond as described above,
such Owner shall give telephonic notice to the Tender
Agent, who will provide such Owner with the new Pur-
chase Date, the new Adjusted Interest Rate and the new
Unit Pricing Interest Period .applicable to such Owner's
Bond or Bonds in the form of a written statement. Such
statement shall be available from the Tender Agent
between 3:00 P.M. New York City time and close of
business on each Rate Adjustment Date.
(c) In the event that on the Rate Adjustment Date
the registered Owner of any such Unit Pricing Bond
neither tenders such Unit Pricing Bond for purchase in
accordance with the Indenture nor selects a new Unit
Pricing Interest Period in accordance with paragraph
(b) above, then, commencing with such Rate Adjustment
Date, such Unit Pricing Bond shall have a Unit Pricing.
Interest Period which shall extend to but not include
the next succeeding Business Day and shall bear inter-
est at the Adjusted Interest Rate indicated for such
Unit Pricing Interest Period on the Preliminary Scale,
subject to adjustment as described in paragraph (d)
below.
(d) In the case of any Unit Pricing Bond which
has been tendered for purchase on a Rate Adjustment
Date and remarketed by the Remarketing Agent, such Unit
Pricing Bond shall, commencing with such Rate Adjust-
ment Date, have the Unit Pricing Interest Period
selected by the purchaser to whom the Unit Pricing Bond
has been remarketed and bear interest at the Adjusted
Interest Rate indicated for such Unit Pricing Interest
Period on the Preliminary Scale, subject to adjustment
as provided in the Indenture. The first prospective
purchasers willing to buy all or any of the Unit
Pricing Bonds being remarketed at any of the rates
indicated on the Preliminary Scale will be awarded such
remarketed Unit Pricing Bonds. In the event that a
prospective purchaser selects a Unit Pricing Interest
Period for any Unit Pricing Bond but indicates that it
will purchase such Unit Pricing Bond only if such Unit
Pricing Bond bears an interest rate for such Unit
.Pricing Interest Period which is higher than the rate
indicated therefor in the Preliminary Scale, such
information will be noted by the Remarketing Agent.
·
At the end of the remarketing period, £f all the
Unit Pricing Bonds have not been sold in accordance
wi~h the foregoing, and information of the nature
described in the preceding sentence has been noted by
the Remarketing Agent, then, in order to effect a
complete remarketing of the Unit Pricing Bonds, the
unremarketed Unit Pricing Bonds shall be sold to those
prospective purchasers who have indicated a willingness
to purchase such Unit Pricing Bonds bearing interest
for Unit Pricing Interest Periods closest, in terms of
basis points, to the Adjusted Interest Rates indicated
therefor in the Preliminary Scale. In that event, the
Remarketing Agent shall post at or before 11:30 A.M.,
New York City time, on the Rate Adjustment Date, a
Final Scale which will be the same as the Preliminary
Scale except that the Adjusted Interest Rate indicated
for any Unit Pricing Interest Period will be the
highest Adjusted Interest Rate for such Unit Pricing
Interest Period at which any Unit Pricing Bond was
remarketed.
The information on the Final Scale shall be made
available to any prospective purchaser requesting such
information. Ail Unit Pricing Bonds for which an
Adjusted Interest Rate is determined on the Rate
Adjustment Date shall bear interest at the Adjusted
Interest Rate indicated for the applicable Unit Pricing
Interest Period on the Final Scale even if the purchas-
er thereof had stated a willingness to purchase Unit
Pricing Bonds at a lower Adjusted Interest Rate for
such Unit Pricing Interest Period.
(e) upon selection of a Demand Date, a Proposed
Conversion Date, an Automatic Conversion Date, or upon
notice of a Bank Purchase Date, a Termination Date or a
Substitution Date, no Unit Pricing Interest Period
shall be determined by the Remarketing Agent which
would, with respect to Unit Pricing Bonds subject to
purchase in connection therewith, extend beyond the
Demand Date, Proposed Conversion Date, Automatic
Conversion Date, Bank Purchase Date, Substitution Date
or the fifth Business Day prior to the Termination Date
so established. In no event shall a Unit Pricing
Interest Period extend beyond the fifth Business Day
prior to the Expiration Date of the Letter of Credit.
Determination o£ Variable Interest Rate
Bonds in the Demand Mode shall bear interest at
the Variable Interest Rate. The Variable Interest Rate
shall be determined by the Remarketing Agent prior to 3:00
P.M., New York City time, on the Business Day next preceding
the Variable Rate Adjustment Date for.-such Variable Rate
Interest Period. The Variable Interest Rate shall become
effective on such Variable Rate Adjustment Date and shall be
applicable through the following Tuesday. On or before the
Business Day next succeeding the date on which the Variable
Interest Rate for any Variable Interest Rate Period is
determined by the Remarketing Agent, the Remarketing Agent
shall give notice to the Trustee of the Variable Interest
Rate applicable to such Variable Rate Interest Period.
Determination o£ Fixed Interest Rate
The Trustee shall mail a written notice to all
Owners of Bonds to be converted to the Fixed Rate Mode not
later than the thirtieth calendar day next preceding_ a
Proposed Conversion Date or Automatic Conversion Date, as
the case may be. Such notice shall specify the Preliminary
Pricing Date and the Proposed Conversion Date or Automatic
Conversion Date, as the case may be, indicate that such
Bonds are required to be tendered for purchase to the.Tender
Agent on the Proposed Conversion Date or Automatic Conver-
sion Date, as the case may be, at the Tender Price and set
forth the date by which notice of election to retain must be'
submitted to the Tender Agent, which date shall be two
Business Days after the Preliminary Pricing Date. The
notice shall also state that the Preliminary Interest Index
will be made available on the Preliminary Pricing Date by
the Remarketing Agent and that such conversion will be
cancelled and a Bond will remain in the mode then in effect
for such Bond in the event that any of the events set forth
below occur with respect to Fixed Rate Bonds. If such
conversion is on a Proposed Conversion Date and is not upon
direction of the Bank, such notice shall be accompanied by a
copy of the Favorable Opinion of Bond Counsel in connection
therewith. Any such Bond which is not tendered on the
Proposed Conversion Date or the Automatic Conversion Date,
as the case may be, shall be deemed purchased and may be
cancelled by the Tender Agent. In the event that less than
all Demand Bonds or Unit Pricing Bonds are to be converted
to a Fixed Interest Rate on such Proposed Conversion Date or
Automatic Conversion Date, the Trustee shall cause to be
converted first, Bank-Owned Bonds and then' (i) in the case
of Demand Bonds, Demand Bonds by lot or (ii) in the case of
Unit Pricing Bonds, Unit Pricing Bonds in order of their
Purchase Dates, and by lot among Unit Pricing Bonds with the
same Purchase Date.
On the Preliminary Pricing Date,..the Remarketing
Agent will make available a Preliminary Interest Index. Not
more than two Business Days following the- Preliminary
Pricing Date, an Owner of a Bond to be' converted to the
Fixed Rate Mode may notify the Tender Agent by telephone
(promptly confirmed by a written notice to the Tender Agent)
if such Owner wishes to retain such Bond in the Fixed Rate
Mode.
On the Final Pricing Date, the Remarketing Agent
will establish the Fixed Interest Rate which will be borne
by such Bonds after the Conversion Date. The Fixed Interest
Rate will be an annual rate of interest which in the sole
judgment of the Remarketing Agent under the then prevailing
market conditions will allow such Bonds to be sold at par;
provided, however, such Bonds may bear a Fixed Interest Rate
which results in a sale at less than par so long as there is
on deposit in the Contribution Account on such date cash or
other immediately available moneys sufficient to reimburse
the Bank for the difference between par and the actual price
of the Bonds.
A conversion will be cancelled (i) as to all such
Bonds if (a) on the Conversion Date there has not been
deposited, as a result of a transfer pursuant to the Inden-
ture or from any other source, in the Fixed Rate Reserve
Account, the Fixed Rate Reserve Requirement with respect to
such Bonds, (b) the Fixed Interest Rate would exceed the
Maximum Rate with respect to Fixed Rate Bonds, (c) the
amounts required to be deposited pursuant to the Indenture
from a draw upon the Letter of Credit are not on deposit, or
(d) a Favorable Opinion of Bond Counsel is not delivered, if
required, and (ii) with respect to any such Bonds not
successfully remarketed on such Conversion Date. An Auto-
matic Conversion will be cancelled upon the City's receipt
from the landowner of a request for such cancellation made
no later than the close of business one Business Day follow-
ing the Final Pricing Date and accompanied by a Favorable
Opinion of Bond Counsel. Notice of such cancellation shall
be sent to the Owners promptly by the Trustee.
Alternate Rate for Interest Calculation
In the event (i) the Remarketing Agent fails to
determine the Adjusted Interest Rate or the Variable Inter-
est Rate or (ii) the method of determining the Adjusted
Interest Rate or the Variable Interest Rate shall be held to
be unenforceable by a court of law of competent
jurisdiction, such Unit Pricing Bonds or Demand Bonds shall
thereupon, until such t%me as the Remarketing Agent again
ma~es such determinatioh"or until there is delivered an
opinioD of Bond Counsel .to the effect that the method of'
determining'such'rate is enforceable, bear interest from the
last date on which interest was legally pai~,.at the Alter-
nate Rate for such Alternate Rate Calculation Period.
Changes in Mode
(A) During any Unit Pricing Interest Period, the
City may give written notice at any time to the Bank, the
Remarketing Agent and the Trustee that it intends to effect
a conversion of the interest rate on all of the Unit Pricing
Bonds to a Variable Interest Rate on the Demand Date or
Dates specified in such written notice, the earliest of
which Demand Dates shall be not less than forty (40) calen-
dar days from the date of such notice. Together with such
notice, the City shall also file with the Trustee a Favor-
able Opinion of Bond Counsel (which opinion may be based on
a ruling or rulings of the Internal Revenue Service). No
change in the Variable Interest Rate shall become effective
unless the City shall file, with the Trustee, such an
opinion dated the first such Demand Date. The Trustee shall
give notice of such conversion to each Owner of Unit Pricing
Bonds not later than the close of business of the thirtieth
(30th) calendar day preceding the relevant Demand Date,
which notice shall specify the Demand Date selected by the
City and indicate that such Bonds are required to be ten-
dered to the Tender Agent on the Demand Date for mandatory
purchase at the Tender Price.
(B) During any Demand Mode, the City may give
written notice at any time to the Bank, the Remarketing
Agent and the Trustee that it intends to effect a conversion
of the interest rate on all of such Demand Bonds to a Unit
Pricing Mode on the Unit Pricing Date specified in such
written notice, which shall be not less than forty (40)
calendar days from the date of such notice. Together with
such notice, the City shall file with the Trustee a Favor-
able Opinion of Bond Counsel (which opinion may be based on
a ruling or rulings of the Internal Revenue Service). No
change to the Unit Pricing Mode shall become effective
unless the City shall file, with the Trustee, such an
opinion dated the Adjusted Interest Date. The Trustee shall
give notice of such conversion to the Owner of such Bonds
not later than the thirtieth (30th) calendar day next
preceding the Unit Pricing Date.
(C) The City may give written notice, in confor-
mity with the Indenture, at any time, to the Bank, the
Remarketing Agent and the Trustee that it intends to effect
a conversion of the interest rate on all of the Bonds or a
portion of the Bonds designated in such notice to a Fixed
Interest Rate on the Proposed Conversion Date specified in-
such written notice, which Proposed Cohversion Date shall be
not less than forty (40) calendar days from the date of such
notice. Together with such notice, unless"such notice is
upon direction of the Bank with respect to Bank~Owned Bonds,
the City shall file with the Trustee a Favorable Opinion of
Bond Counsel (which opinion may be based on a ruling or
rulings of the Internal Revenue Service). No change to the
Fixed Rate Mode shall become effective unless the City shall
file, with the Trustee, such an opinion dated the Conversion
Date. In the event a portion of the Bonds is to be con-
vetted, the Trustee shall first select for such conversion
Bank-Owned Bonds, and then, from all other Outstanding
Bonds.
(D) On each Automatic Conversion Date, Unit
Pricing or Demand Bonds shall be automatically converted to
the Fixed Interest Rate in accordance with the Indenture.
On the Automatic Conversion Date five (5) Business
Days prior to the Expiration Date of the Letter of Credit,
all Unit Pricing Bonds and Demand Bonds shall be automati-
cally converted to a Fixed Interest Rate in accordance with
the Indenture.
On each Automatic Conversion Date which is Febru-
ary I or August i of each year, as applicable, a principal
amount of Bonds in Authorized Denominations equal to the
aggregate amount of Assessments set forth as item (2) in all
Development Notices received by the Trustee since the last
such Automatic Conversion Date and on or before the fortieth
(40th) day prior to such Automatic Conversion Date (rounded
upward to the nearest multiple of $1,000), shall automati-
cally convert to a Fixed Interest Rate in accordance with
the Indenture.
THIS OFFICIAL STATEMENT HAS BEEN PREPARED TO
ASSIST PROSPECTIVE INVESTORS TO MAKE AR INVESTMENT DECISION
WITH RESPECT TO ADJUSTABLE RATE BONDS. PROSPECTIVE INVES-
TORS SHOULD NOT RELY ON THE INFORMATION CONTAINED IN THIS
OFFICIAL STATEMENT WHEN MAKING AN INVESTMENT DECISION WITH
RESPECT TO BONDS BEARING INTEREST AT A FIXED INTEREST RATE.
Transfer and Exchange of Bonds
Ail Bonds are transferable or exchangeable by the
Owner thereof, in person or by the Owner's attorney duly
authorized, in writing, at the corporate agency office of the
Paying Agent, upon surrender of such Bonds accompanied by
delivery of a duly executed written instrument of transfer
10
or exchange in a.form approved by the Paying Agent. Whenev-
er any Bond or Bonds shall be surrendered for transfer or
exchange, the Paying Agent shall execute and deliver a new
Bond or Bonds of Authorized Denominations of the same
aggregate principal amount, except that' the Paying Agent may
require the payment by any Owner requesting ~uch transfer or
exchange of any tax or other governmental charge require~ to
be paid with respect to such transfer or exchange. Ail
Bonds surrendered pursuant to the provisions of the Inden-
ture shall be cancelled by the Paying Agent and shall not be
redelivered. Ail Bonds issued in exchange for Bonds shall
be in the same mode as the Bonds in exchange for which such
Bonds were issued.
The Paying Agent shall not be required to transfer
or exchange any Bond selected for redemption in whole or in
part from and after the date of mailing the notice of
redemption of such Bond or portion thereof.
REDEMPTION OF BONDS
Mandator~ Redemption
(A) Unit Pricing Bonds are subject to redemption
on any Business Day upon notice as provided in the Inden-
ture, as a whole, or in part in Authorized Denominations in
order of the Purchase Dates of such Bonds from moneys
transferred from the Construction Fund to the Redemption
Account in accordance with the Indenture, from certain
moneys derived from foreclosure in accordance with the
Indenture or from prepaid Assessment Installments under the
circumstances and upon the conditions and terms prescribed
in' the Indenture at a redemption price calculated as set
forth below plus accrued and unpaid interest, if any:
If the Unit Pricing Period of such Bond is less
than or equal to one year, the redemption price will be
calculated as follows: (i) if the Remaining Interest Period
is less than or equal to 30 days, the redemption price will
be 100% and (ii) if the Remaining Interest Period is more
than 30 days the Trustee will request the Remarketing Agent
to provide an Adjusted Interest Rate for a Unit Pricing
Interest Period equal to the Remaining Interest Period, and
if such rate is greater than or equal to the Adjusted
Interest Rate on the Bond called for redemption, the redemp-
tion price will be 100%, but if such rate is less than the
Adjusted Interest Rate on such Bond the redemption price
will be calculated by dividing the number of days in the
Remaining Interest Period by 365 or 366 days (as applicable)
and multiplying the quotient by the difference between the
Adjusted Interest Rate on such Bond and such rate and
11
rounding the product to the nearest 1/100th and adding the
result to 100 but in no event shall such redemption price
exceed 101%.
If the Unit Pricing Interest Period for such Unit
Pricing Bond is more than one year, the redemption price
will be determined in accordance with the following table:
Unit Priclnq Interest period
Time from the most
'recent Rate
Adjustment Date to
, Redemption Date
More than I but less than or
equal to 3 years ............
More than 3 but less than or
equal to 6 years ............
More than 6 but less than or
equal to 10 years ............
0 to i year
I to 2 years
2 to 3 years
0 to 2 years
2 to 3 years
3 to 4 years
after 4 years
0 to 4 years
4 to 5 years
5 to 6 years
after 6 years
More than 10 years ............
0 to 7 years
7 to 8 years
8 to 9 years
after 9 years
Demand Bonds are subject to redemption on any
Interest Payment Date upon notice as provided in the Inden-
ture, as a whole, or in part in Authorized Denominations,
from moneys transferred from the Construction Fund to the
Redemption Account in accordance with the Indenture, from
certain moneys derived from foreclosure in accordance with
the Indenture or from prepaid Assessment Installments under
the circumstances and upon the conditions and terms pre-
scribed in the Indenture at a redemption price equal to the
sum of the principal amount of the Bonds redeemed plus
accrued interest thereon to the date fixed for redemption
without redemption premium.
(B) After conversion to a Fixed Interest Rate, a
Bond is subject to redemption in whole or in part on any
Interest Payment Date, upon notice as provided in the
Indenture, in an integral multiple of $5,000, from moneys
transferred from the Construction Fund to the Redemption
Account in accordance with the Indenture, from certain
Price
101%
100-1/2
100
00- /2
100
102
01- /2
101
100
02- /2
102
101
100
12
moneys derived from foreclosures in accordance with the
Indenture or from prepaid Assessment Installments, under the
circumstances and upon the conditions and terms prescribed
in the Indenture at a redemption price equal to 102-1/2% of
~he principal amount thereof plus accrued and unpaid inter-
est, if any. Bonds to be redeemed from"-¢ertain moneys
derived from foreclosures under the Indenture or from
prepaid Assessment Installments shall be selected from only
those Bonds conver~ed to a Fixed Interest Rate which relate
to such foreclosures or prepaid Assessment Installments. In
the event of such a redemption, the City Treasurer shall
select by lot a pro rata portion of Fixed Rate Bonds to be
redeemed from each sinking fund amount in any manner that
the City Treasurer deems fair.
(C) Unit Pricing Bonds or Demand Bonds are
subject to mandatory redemption on September 2, 1999, and on
each Principal Payment Date thereafter, upon notice as
provided in the Indenture, in part in an integral multiple
of the then minimum Authorized Denomination of the Bonds,
from Assessment Installments deposited in the Principal
Account and upon the conditions and terms prescribed in the
Indenture, at a redemption price equal to the sum of the
principal amount of the Bonds called plus accrued interest
thereon to the date fixed for redemption, and in the years
and principal amounts as follows=
Principal
Year ~mount*
1999 ....................... $2,560,000
2000 ....................... 2,820,000
2001 ....................... 3,100
2002 ....................... 3,410
2003 ....................... 3,750
2004 ....................... 4,125
2005 ....................... 4,540
2006 ....................... 4,990
2007 ....................... 5,495
2008 ....................... 6,040
2009 ....................... 6,645
2010 ....................... 7,310
2011 ....................... 8,040
2012 .......................
2013 .......................
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
8,845,000
9,730,000**
*Preliminary, subject to change
**Final Maturity
Notwithstanding the foregoing,
conversions of all or a portion of the
in the event of
Bonds to a Fixed
13
Interest Rate, the Finance Director will establish a sepa-
rate schedule of redemptions (Year and Principal Amount) for
such Bonds converted to a Fixed Interest Rate and will
select Bonds for such redemptions commencing on the Princi- -
pal Payment Date following the first Interest Payment Date
for such Bonds which, as nearly as practicable,, will result
in debt service with respect to such Bonds being equal in
amount for each of the years following such Conversion
Date(s) to the Maturity Date. The Finance Director will
also adjust the Principal Amount column set forth above to
reflect (i) the reduction in principal amount of Unit
Pricing Bonds or Demand Bonds Outstanding giving effect to
such reduction in the earliest year or years appearing in
the above Principal Amount column, and (ii) the schedule
created for the Fixed Rate Bonds. In determining such
schedule, the Finance Director shall apply amounts trans-
ferred from the Interest Reserve Fund and the moneys with-
drawn from the Variable Rate Reserve Account, as provided in
the Indenture.
(D) In the event of redemption of Bonds as
described in paragraphs (A) or (B) above from moneys derived
from prepaid Assessments, the Construction Fund or the
proceeds of foreclosure, as the case may be, the Finance
Director will annually adjust the amounts set forth in (C)
above by deducting therefrom the amount of Bonds which would
have otherwise been redeemed had such redemptions or
purchases not taken place, so as to maintain the same
proportional relationship between the amount of Outstanding
Bonds redeemed pursuant hereto and the amount of unpaid
Assessments, as adjusted: (i) to deduct any portion of such
prepaid Assessment which is credited toward the principal
due on the next Principal Payment Date; and (ii) to round
the amount due in any year to an integral multiple of the
then minimum Authorized Denomination of the Bonds. The
Finance Director shall promptly notify the Paying Agent and
Trustee of all such adjustments. In making the foregoing
adjustments for such redemptions, the Finance Director shall
adjust the amounts of Bonds to be redeemed in accordance
with the above provisions only with respect to amounts
attributable to redemptions of such Bonds, if less than all
of the Outstanding Bonds have been converted to the Fixed
Rate Mode.
Extraordinar~ Mandatory Redemption
Upon delivery to the Trustee of an Opinion of
Counsel that such redemption is lawful, the Bonds are
subject to extraordinary mandatory redemption before maturi-
ty in the event of damage to or destruction of any works of
improvements relating to the District or condemnation
thereof, and to the extent of, the net proceeds realized
14
therefrom (including any net proceeds, whether or not
received from such damage, destruction or condemnation,
relating to.moneys received for the benefit of the District
from proceedings or actions relating to construction of the
Eastern Transportation Corridor or other highway transporta--
tion improvements). No such net proceeds Shall be applied
to the redemption of Bonds to the extent such .net proceeds
are applied to the-repair, restoration or rehabilitation of
the works of improvements relating to the DistriCt to the
condition they were in prior to such damage, destruction or
condemnation. Any net proceeds applied to the extraordinary
mandatory redemption of Bonds shall be treated as a prepaid
assessment by owners of land within the District. Net
proceeds to be applied to the redemption of Bonds shall be
deposited in the Redemption Account of the Redemption Fund.
Not later than 30 days after its receipt of such net pro-
ceeds, the City shall notify the Trustee either (i) that it
will apply such net proceeds to repair, restore or rehabili-
tate the works of improvements or (ii) that on the next
March 2 or September 2 occurring not less than 30 days from
the date of the Trustee's receipt of such notice, which
notice shall specify such redemption date, the City will
request that the Trustee redeem an amount of Bonds therein
designated. If called for redemption, such Bonds shall be
subject to redemption by the City at any time on a day
chosen by the City, in whole or in part, and if in part the
Trustee shall first redeem all Bank-Owned Bonds and then
redeem a pro rata share of Fixed Rate Bonds (and pro rata
among Fixed Rate Bonds of each Conversion Date), Unit
Pricing Bonds and Demand Bonds, at the principal amount
thereof plus interest accrued thereon to the date fixed for
redemption, without premium. In the event net proceeds are
not applied to repair, restore or rehabilitate the works of
improvements and cannot be used to redeem Bonds in accor-
dance with the Indenture, such net proceeds shall be trans-
ferred (i) to the Fixed Rate Reserve Account and the Vari-
able Rate Reserve Account to the extent of any deficiencies
therein and pro rata in the event such net. proceeds are not
sufficient to satisfy the deficiencies in both such Accounts
and thereafter (ii) to the Interest Account as a credit
against interest on Assessments.
Optional Redemption of Unit Pricing Bonds
The Bonds in the Unit Pricing Mode are subject to
optional redemption by the City, in whole or in part in
Authorized Denominations, on any Business Day, at a redemp-
tion price calculated as set forth in paragraph (A) under
the caption -Redemption of Bonds -- Mandatory Redemption";
provided, however, that such redemption may only be effected
in connection with the refunding of such Bonds.
15
Notwithstanding the foregoing, Bank-Owned Bonds shall be
redeemed without premium.
If such redemption is in part, Bank-Owned Bonds
shall be selected for redemption by the Trustee prior to
selecting any other Bonds, and thereafter Unit Pricing Bonds
shall be redeemed in the order of their Purchase Dates, and
by lot among those Un£t Pricing Bonds with the same Purchase
Date. The amount of Bonds to be redeemed shall, if re-
quired, be adjusted downward to the extent necessary to
result in Bonds being redeemed only in Authorized Denomina-
tions.
Optional Redemption of Demand Bonds
Demand Bonds are subject to optional redemption by
the City, in whole or in part in Authorized Denominations,
on any Variable Rate Adjustment Date, at a redemption price
equal to 100% of the principal amount thereof being redeemed
plus accrued interest to such redemption date, without
premium; provided, however, that such redemption may only be
effected in connection with the refunding of such Bonds. If
such redemption is in part, Bank-Owned Bonds shall be
redeemed first, and all other Bonds shall be redeemed by lot
in such manner as shall be determined by the Trustee.
optional Redemption of Fixed Rate Bonds
The Bonds in the Fixed Rate Mode are subject to
redemption by the City in the minimum principal amount of
$5,000, in whole on any date or in part on any Interest
Payment Date, at a redemption price of 102-1/2% of the
principal amount of Bonds called for redemption, plus
accrued interest to the date fixed for redemption.
PURCHASE OF BONDS
optional Tender of Unit Pricing Bonds
The registered Owner of any Unit Pricing Bond may
demand that such Bond, or any portion thereof in a principal
amount equal to an Authorized Denomination (so long as the
principal amount not purchased is an Authorized Denomina-
tion), be purchased in accordance with the terms of the
Indenture on any Purchase Date at the Tender Price by (a)
giving an Election Notice and (b) delivering such Bond duly
endorsed in blank for transfer together with the confirma-
tion of the Election Notice at the principal corporate trust
office of Tender Agent at or prior to 12:30 P.M., New York
City time, on such Purchase Date. The right of any Owner to
have Unit Pricing Bonds purchased shall terminate on the
16
conversion of Unit Pricing Bonds to the Demand Mode or on a
Conversion Date.
The delivery of an Election Notice to the Tender
Agent and the Remarketing Agent is irrevocable and--binding
on the Owner and cannot be withdrawn. Any Bond with respect
to which an Election Notice is given but "which is not
tendered on the Purchase Date stated in such Election Notice
shall be deemed purchased and interest thereon shall cease
to accrue. A new Bond shall be issued to the purchaser
thereof. The Owner of such a Bond shall be entitled solely
to payment of the Tender Price for such Bond. An Owner of a
Bond who gives an Election Notice with respect to such Bond
may repurchase such Bond if the Remarketing Agent agrees to
sell any such Bond so tendered back to such Owner. In such
event, the delivery requirement described above shall be
waived.
optional Tender of Demand Bonds
The registered Owner of any Demand Bond may demand
that such Bond, or any portion thereof in a principal amount
equal to an Authorized Denomination (so long as the princi-
pal amount not purchased is an Authorized Denomination), be
purchased in accordance with the terms of the Indenture on
any Optional Tender Date at the Tender Price by (a) giving a
Tender Notice and (b) delivering such Bond duly endorsed in
blank for transfer at the principal corporate trust office
of the Tender Agent at or prior to 12:30 P.M., New York City
time, on such Optional Tender Date. The right of any Owner
to have Demand Bonds purchased shall terminate on the
conversion of Demand Bonds to the Unit Pricing Mode or on a
Conversion Date.
The delivery of a Tender Notice to the Tender
Agent and the Remarking Agent is irrevocable and binding on
the Owner and cannot be withdrawn. Any Bond with respect.to
which a Tender Notice is given but which is not tendered on
the Optional Tender Date stated in such Tender Notice shall
be deemed purchased and interest thereon shall cease to
accrue. A new Bond shall be issued to the purchaser there-
of. The Owner of such a Bond shall be entitled solely to
payment of the Tender Price for such Bond. An Owner of a
Bond who gives a Tender Notice with respect to such Bond may
repurchase such Bond if the Remarking Agent agrees to sell
any such Bond so tendered back to such Owner. In such
event, the delivery requirement described above shall be
waived.
17
Handatoz-q~' Purchase o£ Bonds
Unit Pricing Bonds and Demand Bonds are subject to
mandatory tender and purchase on any Mandatory Tender Date
at the Tender Price. The Tender Price for Unit Pricing
Bonds subject to mandatory tender shalli' under certain
circumstances, include a premium tO be calculated in the
same manner as the premium payable with respect to the Unit
Pricing Bonds subject to Mandatory Redemption (see "Redemp-
tion of Bonds - Mandatory Redemption"). The Tender Price
with respect to Unit Pricing Bonds subject to mandatory
tender as a result of the occurrence of a Termination Date
or the Expiration Date shall not include any premium.
The Tender Agent shall provide written notice to
Owners of Unit Pricing Bonds and Demand Bonds subject to
mandatory purchase that such Bonds will .be subject to
mandatory tender for purchase on the applicable Mandatory
Tender Date and of the rating which the Bonds will have from
Moody's or S&P if available (and, in the case of clause (i)
below, such notice shall state that the then existing rating
or ratings on the Bonds to be converted to a fixed rate of
interest may be lowered or withdrawn by Moody's or S&P in
connection with such conversion), (i) in the event of a
conversion to the Fixed Rate Mode not later than the thirti- '
eth (30th) calendar day next preceding the Proposed Conver-
sion Date or the AutOmatic Conversion Date, as the case may
be; (ii) in the event of a change from the Unit Pricing Mode
to the Demand Mode, not later than the thirtieth (30th)
calendar day next preceding the Demand Date; (iii) in the
event of a change from the Demand Mode to the Unit Pricing
Mode, not later than the thirtieth (30th) calendar day next
preceding the Unit Pricing Date; (iv) in the event of the
Expiration Date or the Termination Date, not later than the
thirty-fifth (35th) calendar day next preceding the
Expiration Date or the Termination Date, as the case may be;
(v) in the event of the Bank Mandatory Purchase Date, not
later than the tenth (10th) calendar day next preceding the
Bank Mandatory Purchase Date; and (vi) in the event of a
Substitution Date, not later than the fifteenth (15th)
Business Day next preceding the Substitution Date.
In the case of (i) a change from a Demand Mode to
a Unit Pricing Mode or from a Unit Pricing Mode to a Demand
Mode, (ii) a Substitution Date or (iii) conversion to a
Fixed Interest Rate, such notice must state that the Owner
may elect to retain such Bond by giving written notice of
such election to the Tender Agent, in case of clauses (i)
and (ii) above, no later than the seventh (7th) calendar day
preceding such Mandatory Tender Date and in the case of
clause (iii) above, the second (tnd) Business Day after the
relevant Preliminary Pricing Date. Upon the filing of such
18
notice such Bond shall not be subject to optional tender on
or prior to the Demand Date, the Unit Pricing Date, the
Substitution Date or the Conversion. Datm, as the case may
be. In the case of a conversion to a Fixed Interest Rate,
such notice also shall conform to certain additional
requirements of the Indenture and in the case of an
Expiration Date or a Termination Date such 'notice shall
conform to certain other additional requirements of the
Indenture.
.
On any Mandatory Tender Date, unless the Owner
thereof has elected to retain ownership of a Unit Pricing
Bond or Demand Bond, such Bond will be deemed to have been
purchased, whether or not actually delivered for purchase.
Interest on such Bond will cease to accrue and such Bond
shall no longer be entitled to the security provided by the
Indenture. The Owner of such Bond shall be entitled only to
receive the Tender Price, and may be paid solely from the
funds deposited pursuant to the Indenture for such purpose.
SECURITY FOR THE BONDS
General
The Bonds are limited obligations of the City and
are issued upon and and are secured by the Assessments
together with interest thereon (the "Assessment Install-
ments"). The Assessments constitute a trust fund for the
payment of the principal or redemption price of the Bonds
and the interest thereon. Ail of the-Bonds are secured by
the moneys in the Assessment Fund and Redemption Fund
(including the Principal Account, the Interest Account and
the Redemption Account therein). Payments of the principal
of and interest on Fixed Rate Bonds are payable from moneys
on deposit in the Principal Account and Interest Account
which have been transferred from the Assessment Fund and
from any moneys transferred to such Accounts from the Fixed
Rate Reserve Account. The principal of and interest on the
Adjustable Rate Bonds are payable from draws on the Letter
of Credit and from moneys in the Interest Reserve Fund. To
the extent that draws on the Letter of Credit are used to
pay principal and accrued interest on the Adjustable Rate
Bonds, however, the Bank shall be entitled to reimbursement
for such drawings from any moneys in the Principal Account
and Interest Account and from moneys transferred to such
Accounts from the Variable Rate Reserve Account.
Upon issuance of the Bonds, there will be deliv-
ered to the Trustee an irrevocable direct-pay Letter of
Credit issued by The Tokai Bank, Ltd. Los Angeles Agency.
During the term of the Letter of Credit, the Trustee will
19
draw amounts in accordance with ~he terms thereof to pay the
principal of, premium, if any and up to 40 days interest on
the Adjustable Rate Bonds at the Maximum Rate.
The City will establish a Variable Rate Reserve
Account out of Bond proceeds which will .'be a source of
moneys to advance to the Principal and Interest Accounts in
the event of delinquent Adjustable Rate Assessments.
Amounts in the Variable Rate Reserve Account, however, may
also be used for other purposes upon direction of the Bank.
Owners of Bonds should not rely upon the Variable Rate
Reserve Account as security for the payment of principal and
interest on the Adjustable Rate Bonds. In addition, as
Adjustable Rate Bonds are converted to a Fixed Interest
Rate, an amount equal to one half of the maximum annual debt
service on the Bonds to be conver~ed will be transferred
from the Variable Rate Reserve Account to the Fixed Rate
Reserve Account.
The unpaid assessments constitute liens on the
lots and parcels assessed, but do not constitute a personal
indebtedness of the respective owners of said lots and
parcels. There is no assurance that the owners will be
financially able to pay the Assessment Installments or that
they will pay such Assessment Installments even though
financially able to do so.
Failure by owners of the parcels to pay Adjustable
Rate Assessments when due, depletion of the Variable Rate
Reserve Account and the inability of the City to sell
parcels which have been subject to foreclosure proceedings
for amounts sufficient to cover the delinquent Adjustable
Rate Installments levied against such parcels could, in the
event the Bank failed to honor a draw under the Letter of
Credit, result in the inability of owners of Adjustable Rate
Bonds to receive full and punctual payments of principal and
interest on the Adjustable Rate Bonds.
Obligation of the Cit~ Upon Delinquenc~
If a delinquency occurs in the payment of any
Adjustable Rate Assessment, the Trustee has the duty to
transfer the amount of such delinquent Assessment Install-
ment from the Variable Rate Reserve Account into the Princi-
pal and Interest Accounts.
The City's duty to levy and collect a special tax
(in an amount necessary to meet delinquencies) if funds are
not available to cover delinquencies was effectively re-
pealed by the enactment of Article XIIIA of the California
Constitution and subsequent legislative enactments. The
City has by resolution~determined not to obligate itself to
20
advance any of its available funds to cure any deficiency
which may occur in the Principal or Xnterest Accounts.
Covenant to Commence Superior Court Foreclosure
The Bond Law provides ~hat in'"the event any
Assessment Installment or any interest thereon, is not paid
when due, ~he City may covenant to order the institution of
an action in the Superior Cour~ of ~he State of California
to foreclose the lien of the unpaid Assessment Installment.
In such action the real proper~y subject to the unpaid
Assessment Installment may be sold at a court: foreclosure
sale. Such cour~ foreclosure sale procedure is not mandato-
ry. The City has covenanted in the Indenture, however, so
long as the Letter of Credit is outstanding, to commence
foreclosure proceedings no later than 60 days after an
occurrence of a delinquency corresponding to an Adjustable
Rate Bond and within five Business Days of receipt of actual
knowledge of (but in no event later than 150 days) a
delinquency corresponding to a Fixed Rate Bond and to
diligently prosecute the foreclosure to final judgment and
sale. See "Summary of Indenture - Default and Limitations
of Liability - Events of Default" and "- Ac=ion on Default."
A judgment debtor (property owner) has at least
140 days from the service of the notice of levy to redeem
the proper~y to be sold. If a proper~cy owner fails =o so
redeem and the property is sold, his only remedy is an
action to set aside the sale which must be brought within
six months of the date of sale. If, as a result of such an
action, a foreclosure sale is set aside, the judgment is
revived and the judgment creditor is entitled to interest on
the revived judgment as if the sale had not been made.
(Section 701.680 of the Code of Civil Procedure of the State
of California.) The constitutionality of such legislation
(which repeals the one-year-redemption period) has not been
tested and there can be no assurance that, if tested, such
legislation will be upheld.
If any landowner files bankruptcy, there could be
a delay in payment of Assessment Installments, as such
bankruptcy filing could delay the foreclosure proceedings.
In addition, amounts received upon foreclosure sales may not
be sufficient to fully repay delinquent Assessment Install-
ments. In either event, however, moneys from draws on the
Letter of Credit in accordance with its terms would be
available to pay principal and interest on the Adjustable
Rate Bonds. See "The Letter of Credit."
21
THE BANK
. The Bank is the sixth largest o.f the 77 commercial
banks in Japan (comPrised of 13 "cit~' banks" and 64 "region.-
al banks") in terms of .deposits. ·
, ..
The Bank traces its roots back to 1877, when the
Eleventh National Bank, which later became Aichi Bank, was
established as a private bank with its head office in
Nagoya. The Bank was created on June 9, 1941 by the merger
of three banks located in Nagoya: Aichi Bank, Itoh Bank and
Nagoya Bank. In the 1950's, the Bank established its first
representative office in New York and, later, one in London.
The Bank has subsequently established nine branches, one
agency, 21 representative offices, and nine subsidiaries and
has acquired shareholdings in six-affiliated financial
institutions, all outside Japan.
On September 30, 1987, the Bank had total assets
of 26,212 billion yen ($178,862,000,000), total loans and
bills discounted outstanding of 13,593 billion yen
($92,755,000,000) and deposits of 19,898 billion yen
($135,777,000,000) (146.55 yen ~ $1). There has been no
material adverse change in the figures set forth herein
since September 30, 1987.
The Bank is publicly owned and its shares are
listed on the Tokyo and Nagoya Stock Exchanges and the Osaka
Securities Exchange.
The Bank is incorporated under the Commercial Code
of Japan and operates as a city bank under the Banking Law
of Japan. The Bank's headquarters are at 21-24, Nishiki
3-Chome, Naka-ku, Nagoya City, Japan. At September 30,
1987, the Bank carried on its operation through a network of
267 domestic branches, 21 representative offices as well as
nine subsidiaries and six affiliated Borrowers. At such
date, the Bank had 12,795 employees.
Domestically, the Bank offers a full range of
commercial banking services including current, ordinary
deposit and time deposit accounts, foreign currency ac-
counts, loans, domestic money transfers and securities
custody and proxy services..
The Bank also acts as a trustee for certain
secured debenture issues for domestic issuers and as a
"commissioned bank" and paying agent in connection with
yen-dominated bond issues made in Japan by foreign borrow-
ers; the Bank also acts as a paying agent for the Japanese
Government and for various governmental agencies in Japan.
22
The Bank's Tokyo-based international activities
are centered around the financing of the overseas projects
and trade of its client companies and foreign exchange
operations. Its agencies, branches and subsidiary banks
primarily carry on commercial banking operations in North
America, Europe and Asia, and affiliated companies provide
these services in Asia, Europe, Australia and North America.
The Bank is an authorized .foreign exchange bank under
Japanese law.
THE LETTER OF CREDIT
The following is a brief outline of certain
provisions of the Letter of Credit ~ssued by the Bank and is
not considered a full statement pertaining thereto. Refer-
ence is made to the Letter of Credit for the full text
thereof. Copies of said document are available from the
City.
Upon issuance of and receipt of payment for the
Bonds, the Bank shall issue and deliver the Letter of Credit
to the Trustee for the account of the City. The Letter of
Credit will be an irrevocable obligation of the Bank to pay
to the Trustee in accordance with the terms and conditions
set forth in the Letter of Credit, in an aggregate amount
not exceeding $83,299,334, of which an aggregate amount not
exceeding $81,400,000 may be drawn with respect to principal
of the Adjustable Rate Bonds (other than Bank-Owned Bonds)
and of which an aggregate amount not exceeding $1,085,334
may be drawn upon with respect to interest on the Adjustable
Rate Bonds (other than Bank-Owned Bonds) and $814,000, which
represents a 1% premium on Unit Pricing Bonds, under certain
circumstances may be drawn upon with respect to premium on
the Unit Pricing Bonds (other than Bank-Owned Bonds).
The Letter of Credit will permit the Trustee to
draw certain amounts for the payment of the principal and,
under certain circumstances, premium on the Adjustable Rate
Bonds (other than Bank-Owned Bonds), as described in the
Indenture. The Trustee is also entitled to draw on the
Letter of Credit to pay the Tender Price of Adjustable Rate
Bonds tendered for payment and not remarketed. In addition,
the Letter of Credit will also permit the Trustee to draw,
on the last Business Day of each month, an amount equal to
the total amount of interest that has accrued (whether or
not paid) during such calendar month on the Adjustable Rate
Bonds, for deposit into the Interest Reserve Fund. The
Letter of Credit may be substituted with an Alternate Letter
of Credit, subject to the terms and conditions set forth in
23
the Indenture. See "Summary of the Indenture - Letter of
Credit; Alternate Letter of Credit."
The Letter of Credit will expire at the close of
business of the Bank on the date which is the earliest of
(a) September 15, 1998, unless extended at. the request of
the City by the Bank in its sole discretion, (b) the date on
which the payment or provision for payment of all Outstand-
ing Adjustable Rate Bonds (excluding Bank-Owned Bonds) shall
be certified to by the Trustee, (c) the date of certifica-
tion by the Trustee of delivery to the Trustee of an Alter-
nate Letter of Credit as permitted by the Indenture, (d) at
the sole discretion of the Bank, at least 40 days following
receipt of written notice by the Trustee that the Bank
intends to terminate the Letter of Credit because there are
insufficient funds in the Remarketing Cost Account to pay
the Bank and the Bank has not received adequate assurance
that sufficient funds will be available to pay remarketing
costs, or (e) at the sole option of the Bank, at least 40
days following receipt of notice by the Trustee that there
has been an event of default pursuant to the Reimbursement
Agreement with respect to Adjustable Rate Bonds and that the
Bank intends to terminate the Letter of Credit; provided,
however, that in the case of a Bank Mandatory Purchase Date
the notice referred to in this clause (e) shall take effect
5 days after such Bank Mandatory Purchase Date. Upon each
principal or purchase payment of Adjustable Rate Bonds or
upon the conversion thereof to a Fixed Interest Rate, the
amount available to be drawn under the Letter of Credit in
respect of principal will be reduced accordingly and the
interest and premium available to be drawn will be reduced
proportionately. Such amounts will be reinstated if Bonds
purchased by the Bank with the proceeds of a draw under the
Letter of Credit are remarketed or transferred to a
substitute letter of credit bank and.the Bank is reimbursed
with the proceeds of such remarketing or transfer. The
amount of interest available to be drawn under the Letter of
Credit will also be reduced following any draw thereunder to
pay interest on the Adjustable Rate Bonds and will be
automatically reinstated on the day of such draw.
The occurrence of any of the following constitutes
an event of default under the Reimbursement Agreement:
(a) any law, rule or regulation, or any order of
any court, governmental agency or regulatory body, or
any indenture or loan or credit agreement (including
the hereinafter defined Financing Documents), or any
other agreement or instrument, applicable to the City
or to the Bonds which impairs the ability of the City
to perform its obligations under the Reimbursement
Agreement or any of the Financing Documents; or
24
(b) default in the payment when due of principal
of or premium owing or interest on any Bond which
continues for a period of five (5) Business Days
(except to the extent that such default is solely
attributable to the wrongful failure by the Bank to
honor a conforming Draw made under"the Letter of
Credit) or default in the payment when. due of any
amount owing by the City under the Reimbursement
Agreement or under the Indenture; or
(c) any representation or warranty on the part of
the City contained in any Financing Document shall at
any time prove to have been incorrect in any material
respect when made or when effective or when reaffirmed,
as the case may be; or
(d) the City shall default in the performance or
observance of any term, covenant, condition or agree-
ment on its part to be performed or observed under the
Reimbursement Agreement or under the Indenture (and not
constituting an event of default under any other clause
of the Reimbursement Agreement), and such default shall
continue unremedied for thirty (30) days after written
notice thereof shall have been given to the City by the
Bank; or
(e) any material provision of the Reimbursement
Agreement or any Financing Document shall at any time
or for any reason cease (other than due to any action
by the Bank) to be in full force and effect or valid
and binding on the City, or shall be declared null and
void and the ability of the City to perform its obliga-
tions under the Reimbursement Agreement shall be
adversely affected thereby; or the validity or enforce-
ability of the Reimbursement Agreement shall be con-
tested by the City or the City shall deny that it has
any further liability or obligation under the Reim-
bursement Agreement; or
(f) the City shall be generally not paying its
debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of
creditors; or any petition shall be filed by or against
the City under the Federal bankruptcy laws, or any
other proceeding shall be instituted by or against the
City seeking to adjudicate it a bankrupt or insolvent,
or seeking dissolution, liquidation, winding up,
reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or
relief of debts, or seeking the entry of an order for
25
relief or the appointment of a receiver, trustee,
custodian or other similar official for the City or for
any substantial part of its property; or the City shall
take any action to authorize or effect any of the
actions set forth above in this paragraph (f) and as a
result of the occurrence of any of the foregoing events
specified in paragraphs (a) through (f)~. the City's
ability to perform its obligations under the
Reimbursement Agreement shall be adversely affected.
The Reimbursement Agreement defines "Financing
Documents" to mean the Reimbursement Agreement, the Letter
of Credit and all annexes thereto, the Bonds, the Indenture,
the Remarketing Agreement, the Purchase Contract, certain
other documents executed by The Irvine Company relating to
the foregoing, and any other document or instrument required
or stated to be delivered under any of the foregoing in
connection with the sale and delivery of the Bonds.
THE REMARKETING AGENT
The initial Remarketing Agent with respect to
Adjustable Rate Bonds will be Merrill Lynch, Pierce, Fenner
& Smith Incorporated. Merrill Lynch's principal office is
at Merrill Lynch World Headquarters, North Tower, World
Financial Center, New York, New York 10281. The Remarketing
Agent must use its best efforts to remarker Adjustable Rate
Bonds tendered for purchase pursuant to the terms of the
Indenture. The Remarketing Agent may, upon 60 days written
notice to the City, the Bank, the Trustee and the Paying
Agent, resign as the Remarketing Agent. In addition, the
Remarketing Agent shall have no obligation to remarket
Adjustable Rate Bonds tendered for purchase in the event of
(i) a default in the payment of an Adjustable Rate Assess-
ment and such default shall continue for a period of five
Business Days, (ii) a default in the payment of principal or
interest on an Adjustable Rate Bond, or (iii) the
Remarketing Agent determines that it is unable to obtain the
information necessary to prepare adequate disclosure docu-
ments with respect to the Adjustable Rate Bonds.
Merrill Lynch has also been appointed the
Remarketing Agent with respect to the remarketing of any
Bonds in connection with a conversion of any Bonds in the
Demand Mode or in the Unit Pricing Mode to the Fixed Rate
Mode. The terms and conditions, and the representations of
the Remarketing Agent in connection with each such
remarketing of Bonds, shall be mutually agreed upon and
established by the Remarketing Agent and the City prior to
each such remarketing.
26
~~Y OF INDENTURE
The following is a general summary of certain
provisions contained in the Indenture. This summary is not
to be .consider. ed a full statement of the Indenture and,
accordingly, ~s qualified by reference ..thereto and is
subject to the full text thereof. A copy of the Indenture
is availabl~ at the office of the City Clerk.
·
DEFINITIONS
The following are definitions in summary form of
certain items contained in the Indenture and used in this
Official Statement.
act: The Municipal Improvement Act of 1913
(Division 12 of the California Streets and Highways Code),
as amended, and the Improvement Bond Act of 1915 (Division
10 of the California Streets and Highway Code), as amended·
adjusted Interest Rate: For any Unit Pricing
Bond, that annual rate of interest, expressed as a percent-
age and rounded to the nearest one thousandth of one percent
determined by the Remarketing Agent on a Rate Adjustment
Date, which would, in the judgment of the Remarketing Agent
(having due regard to the prevailing market conditions),
enable such Bond to be sold at par in the secondary market
on such Rate Adjustment Date for the Unit Pricing Interest
Period commencing on such Rate Adjustment Date; provided,
however, that the Adjusted Interest Rate shall in no event
exceed the Maximum Rate with respect to Unit Pricing Bonds·
affiliate: Of any owner of real property in the
District means any entity which controls or is controlled by
or is under common control with such owner. For the purpos-
es of this definition, "control" (including, with correla-
tive meanings, the terms "controlled by" and "under common
control with"), as used with respect to any owner or entity,
shall mean (i) the ownership of a majority of the voting
securities of, or voting rights in, such owner or entity, or
(ii) possession of the right to a majority of the earnings
or profits of such owner or entity.
Alternate Letter of Credit: A letter of credit or
other security device issued in accordance with the Inden-
ture which shall have a term of not less than one year and
shall have the same material terms as the Letter of Credit.
alternate Rate: For any Alternate Rate Calcula-
tion Period, the rate per annum specified in the index (the
"Index") published by the Indexing Agent and in effect for
such Alternate Rate Calculation Period. Th? Index shall be
27
based upon yield evaluations at par of bonds, the interest
on which is excluded from gross income for purposes of
Federal income taxation, of not less than five "high grade"
component issuers selected by the Indexing Agent which shall
include, without limitation, issuers of general obligation
bonds. The specific issuers included among ~the component
issuers may be changed from time to time by. the Indexing
Agent in its discretion. The Bonds on which the Index is
based shall not include any bonds the interest on which is
subject to a "minimum tax" or similar tax under the Code,
unless all tax-exempt bonds are subject to such tax. When
Bonds are in the Demand Mode or a Unit Pricing Mode with a
Variable Rate Interest Period or Unit Pricing Interest
Period, respectively, of 30 days or less, the yield evalua-
tion period for the Index shall be 30-day yield evaluations.
When Bonds are in a Unit Pricing Mode with a Unit Pricing
Interest Period of greater than 30 days but less than or
equal to 180 days, the yield evaluation period for the Index
shall be 180-day evaluations. When Bonds are in a Unit
Pricing Mode with a Unit Pricing Interest Period greater
than 180 days, the yield evaluation period for the Index
shall be yield evaluations matching the term of the Unit
Pricing Interest Period.
If the Indexing Agent no longer publishes an Index
satisfying the requirements of the preceding paragraph, the
Alternate Rate for a Variable Rate Interest Period or a Unit
Pricing Interest Period shall be the rate per annum speci-
fied in the most recently published Index for a comparable
Variable Rate Interest Period or Unit Pricing Interest
Period, respectively.
Alternate Rate Calculation Per~od: (i) For a Bond
in the Unit Pricing Mode, the period extending from the
first date of calculation of such Alternate Rate to but not
including the first Business Day of the next calendar month
and thereafter, from the first Business Day of a calendar
month to but not including the first Business Day of the
next calendar month, and (ii) for Bonds in the Demand Mode,
the period extending from the first date of calculation of
such Alternate Rate to but not including the next Tuesday
and thereafter, from each Tuesday to but not including the
following Tuesday.
Assessment: The assessment levied by the City
constituting a first lien and charge upon the real property
within the District, excluding any administrative costs
included within such Assessment as authorized by Section
10312 of the Act.
Assessment F~nd: The fund by that name estab-
lished under the terms of the Indenture.
28
Assessment Installments: The Assessment install-
ments of principal, interest, premium, if any, and inciden-
tal expenses to be paid by the owners of proper~y within the
District.
Authorized Denominations= (i) With respect to
unit Pricing Bonds with Unit Pricing Ineere~e Period= of
less than one year, $100,000 and any integral'multiple of
$1,000 in excess of $100,000; (ii) with respect to Unit
Pricing Bonds with Unit Pricing Interest Periods equal to or
greater than one. year, $5,000 and any integral multiple
thereof; (iii) with respect to Bonds in the Demand Mode,
$100,000 and any integral multiple of $1,000 in excess of
$100,000; and (iv) with respect to Bonds in the Fixed Rate
Mode, $5,000 and any integral multiple thereof, except that
upon conversion of Unit Pricing Bonds or Demand Bonds to
Fixed Rate Bonds there may be one Bond in a denomination
other than $5,000 or an integral multiple thereof.
Automatic Conversion Date: Each date described in
(i), (ii) or (iii) below:
(i) with respect to $12,254,000 aggregate princi-
pal amount of Unit Pricing Bonds or Demand Bonds,
February 1, 1989 which amount is approximately equal to
the Assessments on Lot numbers 1, 2, 9, 10, 13, 24, 25
and 27 of Tract number 12870;
(ii) in accordance with the provisions of this
Indenture, February i and August i of each year if each
such date is a Business Day, and if not, the nex~
succeeding date which is a. Business Day; and'
(iii) September 2, 1998, or thenext succeeding day
which is a Business Day, provided, however, .that upon
receipt of a Favorable Opinion of Bond Counsel prior to
July 15, 1998 (which opinion is not withdrawn prior to
the new Automatic Conversion Date hereafter described),
in the event the Expiration Date 'of the Letter of
Credit is ex,:ended, such date shall be the fifth
Business Day prior to the resulting Expiration Date.
Bank: The Tokai Bank, Ltd., Los Angeles Agency
and its successors and assigns or any issuer of an Alternate
Letter of Credit.
Bank Interest Rate= The interest rate payable on
Bank-Owned Bonds and determined pursuant to the Reimburse-
ment Agreement but in no event shall such rate exceed the
Maximum Rate with respect to Bank-Owned Bonds.
29
Bank Mandator~ Put=base Date: The date so speci-
fied in a notice from the Bank pursuant to the Reimbursement
Agreement and/or the Letter of Credit.
Ban~-Owned Bonds: Any Unit Pricing Bonds or
Demand Bonds purchased for the benefit of the Bank with the
proceeds of a draw on the Letter of Credit .or with funds
provided by the Bank under the terms of the Indenture.
·
Bond Counsel: Any firm of nationally recognized
municipal bond attorneys selected by the City and experi-
enced in the issuance of municipal bonds and the exemption
of the interest thereon from federal income taxation.
Bonds~ The $81,400,000 principal amount of Bonds
authorized by the Indenture and at any time Outstanding
under the terms of the Indenture that are authenticated and
delivered by the Paying Agent under and pursuant to the
Indenture.
Business Day: A day of the year on which the
Trustee, Paying Agent, Tender Agent, Remarketing Agent or
banks or trust companies in New York, New York, or in
California are, or the New York Stock Exchange is, not
authorized or required to remain closed.
City: The City of Tustin, California, a municipal
corporation duly organized and existing under and by virtue
of the Constitution and laws of the State of California.
Code:
amended.
The Internal Revenue Code of 1986, as
Construotion Fund= The fund b~ that name estab-
lished in accordance with the terms of the Indenture.
Contribution Ac=ount= means the account by that
name created in accordance with the terms of the Indenture.
Conversion Costs Fund: means the fund by that
name established in accordance with the terms of the Inden-
ture.
Conversion Date= Any date on which a Bond begins
to bear interest at a Fixed Interest Rate.
Demand Bond: A Bond in the Demand Mode.
Demand Date: The Business Day on which a Demand
Bond begins to bear interest at the Variable Interest Rate.
30
Demand Mo~e: That period of time during which a
Bond bears interest at the Variable Interest Rate in accor-
dance with the Indenture.
Development Notice: An executed notice in sub-
stantially the form set forth in Exhibit B attached hereto.
Discount Account:
created in the Indenture.
The account by that name
District: The City of Tustin Assessment District
No. 86-2.
Election Notice: A telephonic notice to the
Remarketing Agent and the Tender Agent no later than 10:00
A.M. New York City time on the Purchase Date, confirmed by a
written notice to the Tender Agent delivered on the Purchase
Date, stating (i) the principal amount of Unit Pricing Bonds
to be purchased, (ii) the certificate number of each such
Bond, (iii) the name of the Owners of such Bonds, and (iv)
the Purchase Date on which such Bonds are to be purchased.
Event of Default: Any occurrence or event speci-
fied in and defined by the Indenture.
Excess Earnings Account: means the account by
that name established in accordance with the terms of the
Indenture.
Expiration Date: The stated expiration date of
the Letter of Credit, or such stated expiration date as it
may be ex~ended from time to time as provided in the Letter
of Credit.
Favorable Opinion of Bond Counsel: With respect
to any action the occurrence of which requires such an
opinion, an unqualified opinion of Bond Counsel to the
effect that such action is permitted under the Act and the
Indenture and will not impair the exclusion of interest on
the Bonds from gross income for Federal income tax purposes
or the exemption of interest on the Bonds from taxation
under the laws of the State (subject to the inclusion of any
exceptions contained in the opinion of Bond Counsel deliv-
ered upon original issuance of the Bonds).
Final Pricing Date: The fourth (4th) Business Day
following the Preliminary' Pricing Date.
Final Scale: The Final Scale posted by the
Remarketing Agent at or before 11:30 A.M. on each Rate
Adjustment Date.
31
Finance Director: The Finance Director of the
City.
Fixed IntereSt Rate: The rate to be borne by a
Bond on and after a Conversion Date with respect thereto,
which rate shall be determined in accordance with the terms
of the Indenture·
Fixed Rate Bond: Any Bond bearing interest at a
Fixed Interest Rate.
Fixed Rate Mode: That period of time during which
a Bond bears interest at a Fixed Interest Rate.
Fixed Rate Reserve Aacount: The account by that
name created in the Indenture·
Fixed Rate Reserve Requirement: An amount equal
to one half of the maximum annual debt service on the Bonds
converted to a Fixed Interest Rate and Outstanding·
Indenture: The Indenture of Trust dated as of
September 1, 1988 by and between the City and the Trustee,
as it may from time to time be supplemented or amended
pursuant to the provisions thereof.
Indexing Agent: Kenny Information Systems, a
corporation duly organized and existing under and by virtue
of the laws of the State of New York, and its successors and
assigns, except that if such corporation shall be dissolved
or liquidated or shall no longer publish the indices re-
ferred to in the definition of Alternate Rate herein, the
term "Indexing Agent" shall be deemed to refer to any other
entity publishing similar indices selected by the City of
Tustin and approved by the Bank and the Remarketing Agent
(neither of whom shall be under any liability by reason of
such approval)·
Information Services: Financial Information,
· " 30 Montgomery Street,
Inc's "Daily Called Bond Service,
10th Floor, Jersey City, New Jersey 07302, Attention:
Editor; Kenny Information Services "Called Bond Service," 55
Broad Street, 28th Floor, New York, New York 10004; Moody's
"Municipal and Government," 99 Church Street, 8th Floor, New
York, New York 10007, Attention: Municipal New Reports; and
Standard & Poor's "Called Bond Record," 25 Broadway, 3rd
Floor, New York, New York 10004; or such other addresses
and/or such other services providing information with
respect to called bonds as the City may designate.
Interest Account:
created in the Indenture·
The account by that name
32
Interest Payment Date: (i) With respect to Unit
Pricing Bonds with Unit Pricing Interest Periods of less
than 180 days: the Purchase Date thereof; (ii) with respect
to Unit Pricing Bonds with Unit Pricing Interest Periods
equal to or greater than 180 days: each March 2 and Septem-
ber 2 prior to the Purchase Date and the. Purchase Date;
(iii) with respect to Demand Bonds: the first.'Wednesday of
each calendar month (whether or not a Business Day) or, with
respect to Demand Bonds that are optionally tendered, the
Optional Tender Date relating to such 'optionally tendered
Demand Bonds; and (iv) with respect to Bonds in the Fixed
Rate Mode; each March 2 and September 2 commencing not later
than the March 2 immediately preceding the first Principal
Payment Date for such Fixed Rate Bond. "Interest Payment
Date" shall also mean any Mandatory Tender Date.
Interest Reserve Fun4:
established in the Indenture.
The fund by that name
Interest Reserve Fund amount: An amount equal to
the interest payable on the aggregate principal amount of
Unit Pricing Bonds and Demand Bonds then Outstanding for a
period of thirty-five (35) days at the Maximum Rate with
respect to Bonds other than Fixed Rate Bonds.
Investment Earnings a==ount: means the account by
that name established in accordance with the terms of the
Indenture.
Investment Earnings Fund: means the fund by that
name established in accordance with the terms of the Inden-
ture.
Letter of Credit: The irrevocable letter of
credit issued by the Bank contemporaneously with the origi-
nal delivery of the Bonds, except that upon the issuance of
an Alternate Letter of Credit in accordance with the terms
of the Indenture it shall mean such Alternate Letter of
Credit.
Letter of Credit &c=ount: The account by that
name created in the Indenture.
Mandatorily Tendered Bonds: Bonds required to be
tendered for purchase on a Mandatory Tender Date.
Mandatory Tender Date: Any Proposed Conversion
Date, any Automatic Conversion Date, any Demand Date, any
Unit. Pricing Date, any Substitution Date, any Bank Mandatory
Purchase Date, the fifth Business Day prior to the Termina-
tion Date, and the fifth Business Day prior to the Expira-
tion Date.
33
Maturity Date: September 2, 2013.
Maximum Rate: On any day, the lesser of (i) 12%
or such higher rate applicable to the Bonds on that day by
Section 53531 of the Government Code or other applicable
provisions of law, whichever is greater, or.'(ii) the actual
rate used to calculate the size of the portion-of the Letter
of Credit which is available to be drawn for the payment of
interest on the Bonds on such date, which shall initially be
12%; provided, however, that, if no Letter of Credit is then
in effect, the Maximum Rate shall be the rate determined
pursuant to clause (i) of this definition.
Moody,s: Moody's Investors Service, a corporation
duly organized and existing under and by virtue of the laws
of the State of Delaware, and its successors and assigns,
except that if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a
securities rating agency, then the term "Moody's" shall be
deemed to refer to any other nationally recognized securi-
ties rating agency selected by the City and approved by the
Bank (who shall not be under any liability by reason of such
approval).
opinion of Counsel: A written opinion of Bond
Counsel appointed and paid by the City and, prior to the
Expiration Date or the Termination Date, satisfactory to and
approved by the Bank (who shall not be under any liability
by reason of such approval).
Optional Tender Date: The day stated in the
Optional Tender Notice delivered by any Owner of a Bond to
the Tender Agent and to the Remarketing Agent with respect
to a Bond, which day (i) in the case of Demand Bonds shall
be the seventh calendar day after the date of the delivery
of the Optional Tender Notice (or the first Business Day
thereafter, if such seventh calendar day is not a Business
Day), (ii) in the case of Unit Pricing Bonds, shall be the
Purchase Date, and (iii) with respect to Bank-Owned Bonds,
shall be each Business Day.
optional Tender Notice: The notice from any Owner
of a Bond to the Tender Agent and the Remarketing Agent of
an Optional Tender Date in accordance with the provisions of
the Indenture constituting the Tender Notice in the Demand
Mode or an Election Notice in the Unit Pricing Mode.
Outstanding: When used as of a particular time
with reference to Bonds, means all Bonds delivered under the
terms of the Indenture except -
34
(1) Bonds cancelled by the Paying Agent or
surrendered to the Paying Agent for cancellation;
(2) Bonds paid or deemed to have been paid within
the meaning of the terms of the Indenture; and
(3) Bonds in lieu of or in substitution for which
replacement Bonds shall have been executed by the City
and delivered by the Paying Agent under the terms of
the Indenture.
Notwithstanding the foregoing, Bonds purchased for
the benefit of the Bank with the proceeds of a draw on the
Letter of Credit or pledged to the Bank pursuant to the
terms of the Indenture shall remain Outstanding while such
Bonds are pledged to the Bank until the Bank is paid all
amounts due on such Bonds.
Owner: The registered owner of a Bond.
P&ying Agent: Citibank, N.A., a national banking
corporation duly incorporated and existing under and by
virtue of the laws of the United States of America, and
having its corporate agency office in New York, New York, or
any other commercial bank or trust company having an office
in New York, New York, which may be substituted in its
place.
Permitted Investments: The investments allowed by
Section 53601 and Section 5922 of the California Government
Code and including but not limited to any of the following,
to the extent then permitted by law:
(1) United States of America Treasury notes,
bonds, bills or certificates of indebtedness, for which
the faith and credit of the United States of America
are pledged for the payment of interest and principal;
(2) Obligations issued by banks for cooperatives,
federal land banks, federal intermediate credit banks,
federal home loan banks, the Federal Home Loan Bank
Board or the Tennessee Valley Authority or obligations,
participations or other instruments of or issued by, or
fully guaranteed as to interest and principal by, the
Federal National Mortgage Association, or guaranteed
portions of Small Business Administration notes, or
obligations, participations or other instruments of or
United States of
issued by a federal agency or a
America government-sponsored enterprise;
(3) Bills of exchange or time drafts drawn on and
accepted by a commercial bank (including the Bank, the
35
Paying Agent and the Trustee), otherwise known as
bankers acceptances, which are eligible for purchase'by
members of the Federal Reserve System~
(4) Commercial paper of the highest letter and
numerical rating as provided by Moody's or S&P, which
commercial paper is limited to issuing .corporations
that are organized and- operating within the United
States of America and that have total assets in excess
of five hundred million dollars ($500,000,000) and that
have an "A" or higher rating for the issuer's deben-
tures, other than commercial paper, as provided by.
Moody's or S&P~ provided that purchases of eligible
commercial paper may' not exceed two hundred seventy
(270) days' maturity nor represent more than ten
percent (10%) of the outstanding commercial paper of an
issuing corporation~ and
(5) Certificates of deposit issued by a state or
national bank (including the Paying Agent and the
Trustee) or savings and loan association or a
state-licensed branch of a foreign bank in which the
City is authorized by law to deposit its funds whose
deposits are insured by either the Federal Deposit
Insurance Corporation or the Federal Savings and Loan
Insurance Corporation, as the case may be, and the
shor~-term debt obligations of which have the highest
shor~-term rating or the debentures of which have an
"A" or higher rating or the Bank~
(6) The Local Agency Investment Fund established
pursuant to Section 16429.1 of the Government Code of
the State-of California;
(7) Interests in taxable government money market
portfolios, restricted to obligations with maturities
of one year or less, issued by or guaranteed as to
payment of principal and interest by, the United States
of America~
(8) Repurchase agreements with any bank, trust
company or national banking association insured by the
Federal Deposit Insurance Corporation, the Federal
Savings and Loan Insurance Corporation or the Securi-
ties Investors Protection Corp. or with any government
bond dealer recognized as a primary dealer by the
Federal Reserve Bank of New York, which agreements are
fully and continuously secured by a valid and perfected
priority security interest in obligations described in
paragraph (1) or (2) of this definition, provided ~hat
either such bank, trust company or national banking
36
association is rated "Al" or better by Moody's and "A+"
or better by S&P;
(9) Investment agreements with any corporation,
including banking or financial institutions, the
corporate debt of which is rated, at ~he time of
investment, "Al" or better by Moody's .and "A+" or
better by saP;
(10) Guaranteed investment contracts or similar
funding agreements issued by insurance companies, the
corporate debt of which, at the time of investment, is
rated "Al" or better by Moody's and "A+" or better by
saP;
(11) Tax-exempt obligations of any state of the
United States or any political subdivision thereof,
which at the time of investment are rated "A1/PI" or
higher by Moody's and "A" or higher by S&P, or if
short-term obligations, are rated in the highest
possible category by Moody's and S&P; and
(12) Interests in tax-exempt money market portfo-
lios having assets in excess of one billion dollars
($1,000,000,000).
Preliminar~ Interest Index: The annual interest
rate or rates which in the judgment of the Remarketing Agent
will enable the Bonds to be remarketed on a Conversion Date,
but in no event greater than the Maximum Rate with respect
to Fixed Rate Bonds.
Preliminar~ Pricing Date: A date determined by
the Remarketing Agent which will be at least five (5) but no
more than fifteen (15) Business Days prior to a Proposed
Conversion Date or an Automatic Conversion Date.
Preliminar~ Scale: The Preliminary Scale posted
by the Remarketing Agent at or about 9:30 A.M. on each Rate
Adjustment Date.
Principal Account: The account by that name
created in accordance with the terms of the Indenture.
Principal Payment Date: September 2 of each year
beginning (i) with respect to Unit Pricing Bonds and Demand
Bonds, September 1999 and (ii) with respect to Fixed Rate
Bonds, on the first September 2 subsequent to the twelve
(12) month period beginning on the Conversion Date applica-
ble to such Fixed Rate Bond, and in each case ending on the
Maturity Date.
37
Proposed Conversion Date: The Business Day
indicated in the written notice of the City given pursuant
to the Indenture on which the City intends to effect a
conversion of all or a portion of the Bonds to a Fixed
Interest Rate.
~.,
Purchase Contract: That certain Bond Purchase
Contract dated September 12,' 1988 by a~d between .the City
and Merrill Lynch Capital Markets, Merrill Lynch, Pierce
Fenner & Smith Incorporated.
Purchase Date= A Business Day determined by the
Remarketing Agent on a Rate Adjustment Date as the date on
which a Unit Pricing Bond may be tendered for purchase to
the Tender Agent, which may include the maturity date
thereof, but which may not be a date subsequent to the fifth
Business Day prior to the Expiration Date, the fifth Busi-
ness Day prior to the Termination Date, a Bank Mandatory
Purchase Date or a Conversion Date with respect to such
Bond.
Qualified Conveyance= The sale or ground lease of
all or a portion of real property within the District, the
Assessment on which bears interest at other than a fixed
interest rate, by the owner thereof to an entity which is
not an Affiliate thereof.
Rate Adjustment Date= A Business Day on which an
Adjusted Interest Rate and a Unit Pricing Interest Period
for a Bond in the Unit Pricing Mode are determined by the
Remarketing Agent.
Record Date= (i) With respect to Unit Pricing
Bonds if the Interest Payment Date is a Purchase Date: the
close of business on the Business Day prior to such Interest
Payment Date~ (ii) with respect to Unit Pricing Bonds if the
Interest Payment Date is a September 2 or March 2 which is
not a Purchase Date: the close of business on the fifteenth
(15th) day of the calendar month preceding such Interest
Payment Date~ provided that if a Rate Adjustment Date is
between the fifteenth (15th) day of such calendar month and
an Interest Payment Date, the-Record Date shall be the close
of business on the Business Day immediately preceding such
next Interest Payment Date~ (iii) with respect to Bonds in
the Demand Mode: the close of business on the Business Day
immediately preceding each Interest Payment Date~ and (iv)
with respect to Bonds in the Fixed Rate Mode: the close of
business on the fifteenth (15th) day of the calendar month
preceding each Interest Payment Date.
Redemption Account= The account by that name
established in the Indenture.
Redemption Fund: The "City of Tustin Assessment
District No. 86-2 Limited Obligation Improvement Bonds
Redemption Fund" constituting the "redemption fund" required
to be created by Section 8671 of the.Improvement Bond Act of
1915, as amended, and established in accpFdance with the
terms of the Indenture.
i ·
Reimbursement Agreement: That certain Reimburse-
ment Agreement dated as of September 1, 1988, by and between
the Bank and the City or, if an Alternate Letter of Credit
has been issued, the reimbursement agreement, if any, in
connection with such Alternate Letter of Credit.
Remaining Interest Period: The number of days
between the date selected for redemption of a Unit Pricing
Bond and the Purchase Date for such Bond.
Remarketing Agent: Merrill Lynch, Pierce, Fenner
& Smith Incorporated, or any other investment banking firm
which may a~ any time be substituted in its place as provid-
ed in the Indenture.
Remarketing Agreement: That certain Remarketing
Agreement dated as of September 1, 1988, by and between the
City and the Remarketing Agent.
Remarketing Cost A=count:
name created in the Indenture.
The account by that
Remarketing Cost account Requirement: The amount
equal to 4% of the aggregate principal amount of Unit
Pricing Bonds and Demand Bonds Outstanding; provided,
however, that if in the opinion of Bond Counsel the Maximum
Rate with respect to Bank-Owned Bonds exceeds 12% per annum,
the Remarketing Cost Account Requirement shall be decreased
by a corresponding percentage.
Remarket~ng Proceeds account: The account by that
name created in the Indenture.
Reserve Earnings Fund:
established in the Indenture.
The fund by that name
SaP: Standard & Poor's Corporation, a corporation
duly organized and existing under and by virtue of the laws
of the State of New York, and its successors and assigns,
except that if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a
securities rating agency, then the term "S&P" shall be
deemed to refer to any other nationally recognized securi-
ties rating agency selected by the City and, prior to the
Expiration Date or the Termination Date, approved by the
39
Bank (whose approval shall not be unreasonably withheld and
who shall not be under any liability by reason of such
approval).
Securities Depositories: The ~epository Trust
Company, 711 Stewart Avenue, Garden City, New York 11530,
Fax: (516) 227-4039 or 227-4190~ Midwest Securities Trust
Company, Capital Structures-Call Notification, 440 South
LaSalle Street, Chicago, Illinois 60605, Fax: (312)
663-2343~ Philadelphia Depository Trust Company, Reorganiza-
tion Division, 1900 Market Street, Philadelphia, Pennsylva-
nia 19103, Attention: Bond Department, Dex: (215) 496-5058~
or to such other addresses and/or such other securities
depositories as the City may designate.
Substitution Date= The date five Business Days
prior to the date upon which an Alternate Letter of Credit
is to be substituted for the Letter of Credit then in
effect.
Tender Agent: The Paying Agent.
Tender Notice:- A telephonic notice to the
Remarketing Agent and the Tender Agent no later than
10:00 A.M. New York City time on the seventh (Tth) calendar
date prior to an Optional Tender Date, immediately confirmed
by written notice to the Tender Agent stating (i) the
principal amount of Demand Bonds to be purchased, (ii) the
certificate number of each such Bond, (iii) the name of the
Owners of each such Bond, and (iv) the Optional Tender Date
on which such Bonds are to be purchased.
Tender Price: (i) On any Optional Tender Date,
100% of the principal amount of a Bond plus accrued and
unpaid interest thereon and (ii) on any Purchase Date or
Mandatory Tender Date, (a) 100% of the principal amount
thereof plus accrued and unpaid interest thereon, if any,
and (b) with respect to a Mandatorily Tendered Bond in a
Unit Pricing Mode purchased on a date other than on the
fifth Business Day prior to a Termination Date, the fifth
Business Day prior to the Expiration Date, 100% of the
principal amount thereof plus accrued and unpaid interest
thereon, plus a premium calculated as described under the
caption "Redemption of Bonds -- Mandatory Redemption." In
no event shall premium be paid with respect to any
Bank-Owned Bond.
Termination Date: The date specified in a notice
from the Bank of termination of the Letter of Credit pursu-
ant to the Letter of Credit.
40
Trustee= Citibank, N.A., a national banking
association duly incorporated and existing under and by
virtue of the laws of the United States of America, and
having its principal office in New York, New York, or any
other bank or trust company duly incorporated and existing
under and by virtue of the laws of any state or the United
States of America which may be substituted in".:its place as
provided in the Indenture.
~nit Pricing Bond: Any Bond while in a Unit
Pricing Mode.
Unit Pricing Date: A Business Day on which a Bond
begins to bear interest at the Adjusted Interest Rate.
Unit Pricing Interest Period: With respect to a
Unit Pricing Bond, that period of time beginning on a Rate
Adjustment Date and ending on the day preceding the Purchase
Date, determined by the Remarketing Agent and selected by
the purchaser of such Bonds by reference to the Preliminary
Scale and Final Scale. No Unit Pricing Interest Period
shall exceed one year in length; provided that the Unit
Pricing Interest Periods may exceed one year in length upon
(i) receipt by the City of a Favorable Opinion of Bond
Counsel, and (ii) an increase in the amount of the Letter of
Credit to cover any additional premium to the extent such
additional premium may be required.
Unit Pricing Mode: That period of time during
which a Bond bears interest at an Adjusted Interest Rate in
accordance with the provisions of the Indenture.
Variable Interest Rate: That annual rate of
interest, expressed as a percentage and rounded to the
nearest one thousandth of one percent, determined by the
Remarketing Agent on the Business Day preceding the Variable
Rate Adjustment Date, which, in the judgment of the
Remarketing Agent would be the interest rate necessary to
produce as nearly as practicable a par bid (disregarding any
accrued interest) on a Demand Bond on such Variable Rate
Adjustment Date provided that in no event shall the Variable
Interest Rate exceed the Maximum Rate with respect to Demand
Bonds.
Variable Rate ~djustment Date: The first day of
each Variable Rate Interest Period.
Variable Rate Interest Period: During a Demand
Mode, (i) the period .from and including a Demand Date and
continuing to, but not including, the next succeeding
Wednesday and (ii) thereafter, the period from and including
41
a Wednesday and continuing to but not including the nex~
succeeding Wednesday.
Variable Rate Reserve Account= The account by
that name established in accordance with the terms of the
Indenture.
Variable Rate Reserve Requirement: $4,884,000
less any amounts transferred therefrom to the Redemption
Account or the Fixed Rate Reserve Account pursuant to the
terms of =he 'Indenture.
(Section 1.01)
REDEMPTION; TENDER ~ND PURChaSE
Selection of Bonds for Redemption
Except as otherwise provided in the Indenture
whenever less than all the Outstanding Bonds are to be
redeemed on any one date, the Trustee shall select the Bonds
to be redeemed in whole or in part from the Outstanding
Bonds by lot in any manner that the Trustee deems fair;
provided, however, that if Bonds are to be redeemed from
prepaid Assessments or from certain moneys derived from
foreclosures under the Indenture, the Trustee shall select
for redemption Bonds bearing interest in the same mode as
such Assessment and, among Bonds of the same Mode, a Bond
bearing a rate of interest equal to the rate of interest on
such Assessment and if Bonds are to be redeemed from moneys
transferred from the Construction Fund to the Redemption
Account the Trustee shall use such moneys to redeem a pro
rata share of (i) Fixed Rate Bonds (and pro rata among Fixed
Rate Bonds of each Conversion Date) and (ii) Unit Pricing
Bonds or Demand Bonds. The Trustee shall promptly notify
the Bank, the City, the Remarketing Agent and the Paying
Agent in writing of the numbers of the Bonds so selected for
redemption in whole or in part on such date; provided,
however, that if on the date of selection, there shall be
any Bank-Owned Bonds, such Bonds shall be selected for
redemption by the Trustee prior to selecting any Unit
Pricing Bonds or Demand Bonds.
(Section 3.06)
Notice of Redemption
Notice of redemption shall be given by registered
or certified mail by the Trustee to the Remarketing Agent,
the Paying Agent, one or more Information Services, and to
42
the Owners of any Bonds designated for redemption in whole
or in par~ prior to the redemption date within ten (10) days
after the Trustee has received notice of Redemption from the
City. Notice of redemption shall also be given by telecopy
or certified, registered or overnight mail to the Securities
Depositories two (2) days prior to the maiI~ng.of notice of
redemption referred to in the preceding sentence. Each
notice of redemption shall state the redemption .date, the
redemption place and the redemption price, shaI1 designate
the numbers of the Bonds to be redeemed if less than all the
Bonds Outstanding are to be redeemed, shall (in the case of
any Bond called for redemption in part only) state the
portion of the principal amount thereof which .is to be
redeemed, and shall state that ~he /m=.erest thereon or
portions thereof designated for redem~i~n shall cease to
accrue from and after such redemption da~e and that on such
redemption date there will become due and payable on each of
the Bonds or portions thereof designated for redemption the
redemption price thereon. The ~ailure of any Owner, Infor-
mation Service or Securities Depository to receive such
-notice will not affect the vali~/t¥ of the redemption of any
Bonds.
The Trustee shall give no, ice of redemption of any
Bonds to be redeemed within ten (10) days of receipt of
notice from the City (whic~ notic~ shall be given to the
Trustee at least forty (40) calendar days prior to the date
fixed for redemption).
(Section 3.07)
Effect of Redemption
If notice of redemption has Been duly given as
aforesaid and money for the paTment of the redemption price
of the Bonds or portions thereof to be redeemed is held by
the Paying Agent, then on the redempticm date designated in
such notice the Bonds or portions tbe~reof so called for
redemption shall become pa~-~ble at the .redemption price as
specified in such notice; and from azm~ after the date so
designated interest thereon or portiorm thereof so called
for redemption shall cease to accrue, such Bonds or portions
thereof shall cease to be entitled to any benefit, protec-
tion or security hereunder and the Owners of such Bonds or
portions thereof shall have no rights in respect thereof
except to receive payment of the redemption price. To the
extent moneys for the payment of the redemption price of the
Bonds or the portion thereof to be redeemed is not held by
the Paying Agent on the redemption date, such redemption
shall be cancelled and interest shall continue to accrue.
Notwithstanding the foregoing, any Bank-Owned Bonds shall
43
remain Outstanding until the Bank is paid all amounts due
under such Bonds. The Paying Agent shall, upon surrender
for redemption of any of the Bonds or portions thereof-to be
redeemed on their redemption'dates, pay such Bonds or
portions thereof at the redemption price. Upon payment to
~he Bank of all amounts due on' Bank-Owned'"Bonds the Bank
shall cause the surrender of such Bonds to be. made to the
Paying Agent for cancellation.
'..
. ·
(Section 3.09)
Tender and Purchase of Bonds
(A) Promptly upon its receipt of any written
Optional Tender Notice, t,he Tender Agent shall give oral
confirmation of such receipt to the Remarketing Agent. The
Remarketing Agent shall use its best efforts to remarker
Bonds at a price of par plus accrued and unpaid interest;
provided, however, that if there is on file with the
Remarketing Agent, the Trustee and the Tender Agent a
consent from the Bank, such Bonds may be remarketed at a
price less than par if the Remarketing Agent certifies that
remarketing at less than par is necessary to remarker such
Bonds, if cash or other immediately available moneys are on
deposit in the Remarketing Cost Account in an amount
sufficient to reimburse immediately the Bank the difference
between par and the price at which such Bonds are remarketed
and if the rate on the remarketed Bonds is equal to or less
than the Maximum Rate.
Bonds subject to purchase pursuant to the terms of
the Indenture shall be purchased from the owners thereof on
any Optional Tender Date or any Mandatory Tender Date, as
the case may be, at the Tender Price which shall be payable
solely from ~he following 'sources in the order listed:
(1) Amounts on deposit in the Remarketing
Proceeds Account ~ and
(2) Amounts on deposit in the Letter of
Credit Account.
(B) At or prior to 12:30 P.M. New York time, on
each Optional Tender Date and each Mandatory Tender Date,
the Remarketing Agent (1) will cause to be delivered to the
Tender Agent in immediately available funds the proceeds of
the remarketing, if any, (2) will deliver to the Tender
Agent instructions for delivery and registration of the
Bonds remarketed ~hereof as described in paragraph (C)
below, and (3) will give notice to the Tender Agent, speci-
fying the aggregate principal amount of Bonds not remarketed
44
which must be purchased for the benefit of the Bank with the
proceeds of a drawing on the Letter of Credit on such date.
If such notice, from the Remarketing Agent indicates that
Bonds are required to be purchased for the benefit of the
Bank with the proceeds of a drawing on the Letter of Credit,
the Tender Agent shall give immediate notice'to the Trustee,
the Bank and' the City at or prior to 12:45 P.'.M.· New York
City time on such date specifying the information set forth
in the preceding sentence. The aggregate amount' of Bonds
specified in such direction to be purchased for the benefit
of the Bank shall not be reduced.
(C) On each Optional Tender Date and Mandatory
Tender Date, all Bonds which (i) have been remarketed shall
be delivered and registered as directed by the Remarketing
Agent or (ii) are required to be purchased for the benefit
of the Bank with the proceeds of a drawing on the Letter of
Credit shall be held by the Tender Agent for the benefit of
the Bank. The Tender Agent shall not release remarketed
Bank-Owned Bonds until the Tender Agent receives written
notice from the Bank that the Letter of Credit has been
fully reinstated with respect to such Bonds.
(D) The Tender Agent shall take any action
reasonably requested by the Remarketing Agent to facilitate
the remarketing of Bonds (including without limitation
Bank-Owned Bonds) on Optional Tender Dates and on Mandatory
Tender Dates.
(E) The Tender Agent shall pay the Tender Price
for each Bond at or prior to 4:00 P.M. New York City time on
the Optional Tender Date or Mandatory Tender Date, as the
case may be, only after receipt of such Bond, properly
endorsed either in blank or to the Tender Agent. Payment of
the Tender Price of any Bond tendered for purchase shall be
made in immediately available funds or in such manner as
such Owner and the Tender Agent shall agree.
(F) Notwithstanding any provision contained in
the Indenture, all Bank-Owned Bonds except Bonds pledged to
the Bank pursuant to (B), above, shall be deemed tendered to
the Remarketing Agent on each Business Day without the need
for any Tender Notice or Election Notice or delivery of such
Bonds. The Remarketing Agent shall remarker such Bank-Owned
Bonds on each Business Day in accordance with the Indenture
and the Remarketing Agreement; provided, however, that the
Bank shall be deemed to repurchase such Bonds without any
further payment therefor by the Bank on each Business Day
such Bonds are not successfully remarketed, all in accor-
dance with the Indenture.
(Section 4.04)
45
Mandatory Purchase Upon Expiration or Termination of Letter
of Credit
(A) On the 180th day .prior to the Expiration
Date, the Trustee shall give written notice to the City, the
Remarketing Agent and the Bank that the Letter of Credit
expires on the Expiration Date. Unless the'.term of the
Letter of Credit shall have been ex~ended or there shall
have been delivered an Alternate Letter of Credit in substi-
tution therefor as provided in the Indenture or unless on or
before the fifth Business Day prior to the Expiration Date
all Bonds shall have been converted to the Fixed Interest
Rate as provided in the Indenture, all Unit Pricing Bonds or
Demand Bonds shall be purchased by the Tender Agent on the
fifth Business Day prior to the Expiration Date, at the
Tender Price.
(B) Unless there shall have been delivered an
Alternate Letter of Credit or unless on or before five
Business Days prior to a Termination Date all Bonds have
been converted to the Fixed Interest Rate as provided in the
Indenture, all Unit Pricing Bonds or Demand Bonds shall be
purchased by the Tender Agent on the fifth Business Day
prior to such Termination Date at the Tender Price~
provided, however, that if such Termination Date is a Bank
Mandatory Purchase Date, such purchase shall occur as
described above under "The Bonds - Purchase of Bonds -
Mandatory Purchase of Bonds."
(C). Notice of purchase of such Bonds shall be
given by the Trustee by mail to all Owners of Demand Bonds
or Unit Pricing Bonds at least thirty-five (35) days prior
to the Expiration Date or Termination 'Date. Such notice
shall (i) specify the Expiration Date or Termination Date,
as the case may be, (ii) specify, if applicable, the last
times and dates prior to such Expiration Date or Termination
Date on which such Bonds must be delivered, or on which
notice must be given, for the purchase of such Bonds pursu-
ant to the Owner's option under the Indenture, (iii) state
that after the fifth Business Day prior to the Expiration
Date or the fifth Business Day prior to the Termination Date
such Bonds will no longer be purchased at the option of the
Owner, and (iv) state that such Bonds shall be subject to
purchase by the Tender Agent at the Tender Price on the date
specified in such notice and the place at which the Bonds
shall be tendered. On the fifth Business Day prior to the
Expiration Date or on the fifth Business Day prior to the
Termination Date (and in the case of a Termination Date that
is also a Bank Mandatory Purchase Date, then on such Bank
Mandatory Purchase Date), as the case may be, the Trustee
shall draw on the Letter of Credit, in accordance with the
terms thereof, an amount equal to the unpaid principal of
46
all Outstanding Bonds (other than Bank-Owned Bonds and Fixed
Rate Bonds). All such Bonds purchased with a drawing on the
Letter of Credit shall be deemed Bank-Owned Bonds as of the
date of such purchase, and from and after such date the
interest on such Bank-Owned Bonds shall accrue solely for
the benefit of the Bank and its assigns. "" -'..
If subsequent to the commencement of the giving of
such notice, the term of the Letter of Credit shall have
been extended or there shall have been delivered an Alter-
nate Letter of Credit in substitution therefor as provided
in the Indenture, then the Trustee shall discontinue giving
the aforementioned notice and .shall give notice by mail to
all Owners of such extension of the term of the Letter of
Credit or the delivery of an Alternate Letter of Credit,
which notice shall specify (i) that the giving of notice of
the expiration or termination of the Letter of Credit has
been commenced, (ii) that subsequent to the commencement of
the giving of such notice the term of the Letter of Credit
has been extended or that an Alternate Letter of Credit has
been delivered to the Trustee in accordance with the Inden-
ture, (iii) the rating of the Bonds by Moody's or S&P by
reason of such extension or delivery, (iv) the date that the
term of the Letter of Credit or Alternate Letter of Credit
will expire if not extended, and (v) that the prior notice
of purchase and any proposed conversion to a Fixed Interest
Rate are cancelled. Such notice that the term of the Letter
of Credit has been extended or that an Alternate Letter of
Credit has been delivered shall be g~ven not more than five
(5) days following such extension or delivery and not less
than five (5) days prior to such Mandatory Tender Date.
(Section 4.05)
Letter of Credit; alternate Letter of Credit
(A) On the last Business Day. of each calendar
month the Trustee shall by tested telex or by identifiable
telecopied demand given before 1:00 P.M., New York City time
on such day draw on the Letter of Credit in accordance with
the terms thereof so as to receive thereunder by 3:00 P.M.,
New York City time on the first Business Day of the next
calendar month an amount equal to the amount of interest
accrued on the unit Pricing Bonds and the Demand Bonds
during the previous calendar month whether or not paid or
due and payable. Such money shall be deposited in the
Interest Reserve Fund.
(B) On each Principal Payment Date and each date
Unit Pricing Bonds or Demand Bonds are redeemed pursuant to
the terms of the Indenture, the Trustee shall by tested
47
telex or by identifiable telecopied demand given before
1:00 P.M., New York City time, draw on the Letter of Credit
in accordance with the terms thereof so as to receive
thereunder by 3:00 P.M., New York City time, on such date an
amount sufficient to enable the Trustee to pay principal
then payable on the Unit Pricing Bonds and Demand Bonds,
whether at maturity or redemption thereof, and premium, if
any, in connection therewith) provided, however, the Trustee
shall only make such draw with respect to optional redemp-
tions to the extent there is on deposit in the Redemption
Account moneys in an amount equal to such draw and available
to reimburse the Bank for such draw provided further, that
if the Bank is not reimbursed on the same day for such
draws, Bonds which would otherwise have been redeemed or
paid at maturity shall be deemed to be Bank-Owned Bonds, and
such Bonds shall be deemed to be Outstanding notwithstanding
that such Bonds have been paid from such draws on the Letter
of Credit.
(C) On each date Unit Pricing Bonds or Demand
Bonds are purchased pursuant to the terms of the Indenture,
the Trustee shall by tested telex or by identifiable
te~ecopied demand given before 1:00 P.M., New York City
time, draw on the Letter of Credit in accordance with the
terms thereof so as to receive thereunder by 3:00 P.M., New
York City time, on such date an amount sufficient to enable
the Trustee to pay the Tender Price (except premium and
interest) in connection therewith.
(D) On eac~ date Unit Pricing Bonds are redeemed
pursuant to the terms of the Indenture and each date Unit
Priging Bonds are purchased pursuant to the terms of the
Indenture, the Trustee shall by tested telex or by identifi-
able telecopied demand given before 1:00 P.M., New York City
time, draw on the Letter of Credit in accordance with the
terms thereof so as to receive thereunder by 3:00 P.M., New
York City time, on such date an amount sufficient to enable
the Trustee to pay premium, if any, required in connection
therewith; provided, however, the Trustee shall only make
such a draw with respect to an optional redemption of Unit
Pricing Bonds to the extent there is on deposit in the
Redemption Account moneys in an amount equal to such draw
and available to reimburse the Bank for such draw.
(E) Notwithstanding the foregoing paragraphs (A),
(B), (C) and (D) the Trustee shall not draw on the Letter of
Credit with respect to any payments due or made in connec-
tion with Bank-Owned Bonds.
(F) If at any time there shall have been deliv-
ered to the Trustee (i) an Alternate Letter of Credit in
substitution for the Letter of Credit then in effect,
48
(ii) an. Opinion of Counsel stating that the delivery of such
Alternate Letter of Credit to the Trustee is authorized
under the Indenture, will not adversely affect the exclusion
from Federal income taxation of interest on the Bonds, and
complies with ~he ~erms of ~he Indenture~ (iii) written
evidence from Moody's, if the Bonds are rated by Moody's,
and S&P, if the Bonds are rated by S&P, in each case to the
effect that such rating agency has reviewed the proposed
Alternate Letter of Credit and that the substitution of the
proposed Alternate Letter of Credit for the Letter of Credit
then in effect will not, by itself, result in a reduction,
suspension or withdrawal of the rating(s) of the Bonds from
those which then prevail, and (iv) written evidence satis-
factory to the Bank of the provision for payment~ the Bank
of the amount of all unreimbursed draws used purchase
Bank-Owned Bonds held by the Tender Agent and payment of all
amounts due it under the Reimbursement Agreement on or
before the effective date of such Alternate Letter of
Credit, then the Trustee shall accept such Alternate Letter
of Credit on the Substitution Date and surrender the Letter
of Credit then in effect to the Bank on the fifth Business
Day after the Substitution Date.
(G) If at any time there shall cease to be any
Unit Pricing Bonds or Demand Bonds Outstanding, or in the
event that all Unit Pricing Bonds or Demand Bonds have been
purchased on a Bank Mandatory Purchase Date and the Trustee
has received notice from the Bank of termination of the
Letter of Credit as provided under the terms of the Letter
of Credit, the Trustee shall thereafter surrender the Letter
of Credit then in effect to the Bank in accordance with the'
terms thereof for cancellation.
(H) The Trustee shall not sell, assign 'or other-
wise transfer the Letter of Credit, except to a successor
Trustee hereunder and in accordance with the terms of the
Letter of Credit and the Indenture.
If at any time there shall be a redemption of Unit
Pricing Bonds as provided in the Indenture and the applica-
ble redemption price shall exceed 101 percent of the aggre-
gate principal amount of the Bonds to be redeemed, the City
shall not redeem and the Remarketing Agent shall not
remarker such Unit Pricing Bonds unless the amount available
under the Letter of Credit is sufficient to cover any
premium to be paid pursuant to the Indenture.
(Section 4.06)
49
Ho Sa~es A~er certain ~e~au~ts
The Remarketing Agent may, but shall have no duty
to, remarker Bonds pursuant to the Indenture if any Assess-
ment Installment bearing interest at other than a fixed
interest rate has not been paid when'"due, and the
Remarketing Agent shall not so remarker Bonds"°n or after a
Bank Mandatory Purchase Date; provided, that if any such
failure to pay Assessment Installments shall thereafter be
cured, as evidenced by a certificate of ~he City satisfacto-
ry to and approved by the Bank (which shall not be under any
liability by reason of such approval or disapproval), then
the duty of the Remarketing Agent to remarker Bonds pursuant
to the Indenture shall be reinstated.
(Section 4.07)
Purchase Fund
There is established and there shall be maintained
with the Tender Agent, as agent for the Trustee, a separate
fund to be k~own as the "Purchase Fund." The Tender Agent
shall further establish a separate account within the
Purchase Fund to be known as the "Letter of Credit Account,"
a separate account within the Purchase Fund to be known as
the "Remarketing Proceeds Account, a separate account
within the Purchase Fund to be known as the "Remarketing
Cost Account," and a separate account within the Purchase
Fund to be known as the "Contribution Account."
(A) ~emarket%nq Proceeds, Account. Upon receipt
of the proceeds of a remarketing of Optionally Tendered
Bonds on an Optional Tender Date or mandatorily tendered
Bonds on a Mandatory Tender Date, the Tender Agent shall
deposit such proceeds in the Remarketing Proceeds Account
for application to the Tender Price of the Bonds in accor-
dance with the Indenture. Notwithstanding the foregoing,
upon the receipt of the proceeds of a remarketing of
Bank-Owned Bonds, the Tender Agent shall immediately pay
such proceeds to the Bank to the extent of any amount owing
to the Bank.
(B) Letter of Credit Account. Upon receipt of
moneys from the Bank for payment of all or a portion of the
Tender Price for the Bonds, the Tender Agent shall deposit
such money in the Letter of Credit Account for application
to the Tender Price of the Bonds to the extent that the
moneys on deposit in the Remarketing Proceeds Account shall
not be sufficient. Any amounts deposited in the Letter of
Credit Account and not applied on any Optional Tender Date
50
~0
or Mandatory Tender Date for the payment of the Tender Price
for any Bonds shall be immediately returned to the Bank.
(C) gontribution'Account. Upon receipt of moneys
by the Tender Agent from any._person or entity, which moneys
such person or entity has designated to be"used to pay the
difference between par and the actual price .of Bonds con-
verted to a fixed rate of' interest in accordance with the
terms of the Indenture, the Tender Agent shall deposit such
amounts in the Contribution Account. On the relevant
Conversion Date the Trustee shall apply such amounts as
provided in the Indenture to reimburse immediately the Bank
for draws on the Letter of Credit used for the payment of
the Tender Price of the Mandatorily Tendered Bonds.
(D) ~emarketin~ COSt ACcoun%. Moneys on deposit
in the Remarketing Cost Account shall be used solely for the
purpose of paying, from time to time, remarketing costs
relating to the sale of Bonds at less than par, which sale
at less than par is advised by the Remarketing Agent as
necessary to remarker the Bonds. Payment of such costs
shall be made directly and immediately to the Bank by the
Trustee from money held in the Remarketing Cost Account upon
the Bank providing money under the Letter of Credit to pay
such difference between par and the price at which the Bonds
were remarketed. Payment of remarketing costs to the Bank
shall be made in the amount required under the terms of the
Reimbursement Agreement, which amount shall be computed by
the Bank and confirmed by the Tender Agent.
Upon conversion of all or a portion of the Bonds
to a Fixed Interest Rate, the amount on deposit in the
Remarketing Cost Account in excess of the Remarketing Cost
Account Requirement after such conversion shall be trans-
ferred from the Remarketing Cost Account and (i) deposited
in the Fixed Rate Reserve Account to the extent necessary so
that the amount transferred to the Fixed Rate Reserve
Account with respect to such conversion is equal to the
Fixed Rate Reserve Requirement with respect to such Bonds,
thereafter, (ii) deposited in the Variable Rate Reserve
Account to the extent necessary so that the amount on
deposit in the Variable Rate Reserve Account is equal to the
Variable Rate Reserve Requirement and thereafter
(iii) deposited in the Conversion Costs Fund. On the date
no Unit Pricing Bonds, Demand Bonds or Bank-Owned Bonds are
Outstanding, the City may apply amounts on deposit in the
Remarketing Cost Account for any purpose permitted under the
Indenture. In the event Assessments not bearing interest at
a fixed interest rate are prepaid, in whole or in part, the
amount of the prepayment shall be reduced by an amount equal
to the amount on deposit in the Remarketing Cost Account in
excess of the Remarketing Cost Account Requirement
51
immediately after such prepayment-(without such reduction).
An amount equal to such reduction shall be transferred from
the Remarketing Cost Account to the Redemption Account.~
Upon written direction of the Bank, the Trustee
shall transfer from the Remarketing Cost"Account to the
Fixed Rate Reserve Account an amount which together with
moneys transferred pursuant to the terms of the Indenture
equals the Fixed Rate Reserve Requirement for Bonds being
converted to a Fixed Interest Rate. Such transfers shall be
made even if such transfers result in amounts on deposit in
the Remarketing Cost Account being less than the Remarketing
Cost Account Requirement.
Interest and earnings on amounts on deposit in the
Remarketing Cost Account shall remain on deposit in such
Account. If on the first Business Day of any month the
amount on deposit in the Remarketing Cost Account exceeds
the Remarketing Cost Account Requirement, such excess shall
be transferred (a) to the Variable Rate Reserve Account to
the extent of any deficiency therein, thereafter (b) to the
Fixed Rate Reserve Account to the extent of any deficiency
therein and thereafter (c) to the Conversion Costs Fund.
(E) Investment. Amounts held in the Letter of
Credit Account, the Remarketing Proceeds Account or the
Contribution Account by the Tender Agent shall be held
uninvested. Amounts held in the Remarketing Cost Account
shall be invested in Permitted Investments as directed by
the Bank.
(Section 4.08)
PLEDGE OF THE INDENTURE; FUNDS AND ACCOUNTS
Pledge Effected By Indenture
Pursuant to the Indenture there'is pledged for the
payment of the principal of and redemption premium, if any,
and interest on the Bonds in accordance with the terms and
provisions of the Indenture, and obligations owing to the
Bank pursuant to the Reimbursement Agreement to the extent
payable in accordance with the Indenture or the Act, subject
only to the provisions of the Indenture permitting the
application thereof for the purposes and on the terms and
conditions set forth in the Indenture, (i) all right, title
and interest of the City in the Assessment Installments and
foreclosure proceeds relating thereto, (ii) the proceeds of
the sale of the Bonds, (iii) to the Fixed Rate Bonds, the
Fixed Rate Reserve Account, .(iv) to the Unit Pricing Bonds
and the Demand Bonds, the Variable Rate Reserve Account and
52
the Interest Reserve Fund and (v) all other funds, accounts
and sub-accounts,-if any, created under the terms of the
Indenture (exCept ~he Purchase Fund and the Investment
Earnings Fund).
. .
(Section 5.01)
Pledge. of assessment Installments; Assessment Fund
The Assessment Installments pledged pursuant to
the terms of the Indenture shall be used for the punctual
payment of the principal of and interest and redemption
premiums, if any, on the Bonds, and the Assessment Install-
meats shall not be used for any other purpose while any of
the Bonds remain Outstanding except as expressly provided in
the Indenture.
The City shall cause all Assessment Installments,
including any penalties relating ~hereto, to be collected
from the owners of real proper~y within the District either
through the real proper~y tax bills administered by the
Orange County Tax Collector-Treasurer or by direct collec-
tion by the City or its agent; provided, however, that
following conversion of an Assessment to a fixed rate of
interest the City shall only collect such Assessment In-
stallments on such tax bills. Ail Assessment Installments
received by the Trustee shall be held in trust by the
Trustee and shall be deposited by the Trustee as and when
received in the .Assessment Fund, which fund the Trustee has
agreed to establish and maintain so long as any Bonds are
Outstanding. Prior to conversion to Fixed Interest Rates of
all the Bonds, not later than the first Business Day of each
month, the Trustee shall determine the amount of Assessment
Installments due and payable for the preceding month with
respect to Assessments bearing interest at a rate other than
a fixed rate of interest and shall give notice that such
amounts are immediately due and payable, to the owners of
such real proper~y (or their designated agents) within the
District. The Trustee shall have no duty to institute
collection procedures.
(Section 5.02)
Collection'of ~ssessment Installments
(A) Collection of unpaid Assessments of principal
and interest shall commence (i) for Assessments bearing
interest at other than a fixed interest rate, immediately on
the first Interest Payment Date on which amounts on deposit
in the Interest Account from the proceeds of the Bonds
53
(including any available investnnent earnings thereon) will
not be'sufficient to reimburse the Bank for a draw on the
.Letter of Credit; and (ii) for Assessment~..bearing interest
at a fixed interest rate, as soon after the Conversion Date
with respect to the' 'r~lated Bonds to be' bearing a Fixed
Interest Rate as such Assessment can be included on the
County tax rolls.~ During a Unit Pricing Mode. or a Demand
Mode, Assessment Installments on real property with Assess-
ments bearing interest at other than a fixed interest rate,
shall be paid directly to the Trustee in the amount of
interest accrued on the Bonds whether or not paid, less any
applicable credits provided in the Indenture. In the event
the City receives payments of Assessment Installments
bearing interest at other than a fixed rate, the City shall
immediately transfer the same to the Trustee for deposit in
the Assessment Fund as provided in the Indenture. Each
Assessment Installment collected as provided above shall
include the amount of principal, if any, to be paid on such
Principal Payment Date (excluding any prepaid Assessments)
pursuant to the Indenture, less any applicable credits
provided therein.
The City shall also cause to be collected through
the tax bills or direct collections the continuing costs of
or relating to the Bonds, including but not limited to the
fees, costs and indemnifications due the Trustee, Paying
Agent, City, and Tender Agent, and, to the extent allowed by
the Act and not already on deposit in the Conversion Costs
Fund, the fees, expenses and other costs of the City in-
curred by the City in connection with a conversion of Bonds
to a Fixed Interest Rate, which fees, indemnifications,
expenses and costs shall be allocated in proportion to the
Assessment levied against each parcel and collected with
Assessment Installments until the Assessment against such
parcel is paid in full.
The fees, costs and indemnifications of the Bank
due and payable under the Reimbursement Agreement and of the
Remarketing Agent due and payable under the Remarketing
Agreement in each case in excess of the fees, costs and
indemnifications paid from the Conversion Costs Fund shall
also be collected through the tax bill or direct collections
as incidental expenses from owners of property with Assess-
ments bearing interest at other than a fixed interest rate.
Ail such moneys collected with respect to such fees, costs
and indemnifications shall be deposited in the Conversion
Costs Fund and disbursed in accordance with the provisions
relating thereto. Ail amounts due and payable under the
Indenture shall be secured by the lien of the Assessment
and, if not paid, collection shall be enforceable in the
manner set forth in the Act and the Indenture.
54
(B) Any Assessment may be prepaid_at any time
penalties applicable thereto) less ~ne .amoun=s
Account and from the Remarketing Cos= ACCOUnt L£ =ne asses -
merit bears interest at a rate o~her ~han t~e fixed interest
rate or (ii) from the Fixed Rate Reserve AccoUnt pursuant
the Indenture, if the Assessment bears interest at a fixed
interest rate, together with any redemption premium set
forth in ~e Indenture, if applic~l~,, a reasonable fee,
fixed by the City, for =he cos= of a~lnLstering the prepay-
ment and =he redemption of Bonds, and ~he es=imaged amount
of interest =o be paid to ~e date of redemption of the
Bonds representing the potion of such Assessmen~ which
ca~o~ be applied for redemption on ~e next available
redemption da~e, but not to exceed one year's interes~ on
such portion of the prepaid Assessment at ~he Maxim~ Ra~e
wi~ respect to Bonds other ~han Ba~-O~ed Bonds, which
amours shall be deposited in the Redemption Account.
(C) All unpaid Assessments shall bear in~eres~
~e respective in~eres~ rates under ~he Indenture. The
amount of delin~en~ Assessmen~ Installments advanced by =he
T~s~ee from ~he Variable Rate Rese~e Account or =he Fixed
Rate Rese~e Accoun~ shall be payable and shall bear in~er-
es~ as provided from ~ime ~o time in =he Ac~, ~ogether wi~h
penalties as provided from time to ~ime in ~he
(Sec=ion 5.03)
Deposit of Moneys
The proceeds received from the sale of the Bonds
shall be deposited as follows: an amount equal to the
Variable Rate Reserve Requirement shall be deposited in the
Variable Rate Reserve Account~ an amount equal to $7,326,000
representing the interest on the Bonds estimated to become
payable prior to ~eptember 1, 1989 shall be deposited in the
Interest Account, an amount equal to the Interest Reserve
Fund Amount shall be deposited in the Interest Reserve .Fund~
and an amount equal to the Remarketing Cost Account Require-
ment which shall be deposited in the Remarketing Cost
Account~ an amount equal to costs of conversion and an
amount equal to the first year's remarketing costs shall be
deposited in the Conversion Costs Fund~ and the remaining
proceeds shall be deposited by the City in the Construction
Fund.
The City or Trustee, as the case may be, shall
deposit the money contained in the Assessment Fund, the
Construction Fund and the Conversion Costs Fund (to the
55
extent authorized by the Indenture), as appropriate, at the
following respective times in the Redemption Fund in the
manner provided in the Indenture, which fund and the ac-
counts described below the Trustee has agreed to establish
and maintain so long as the Indenture is not discharged in
accordance with the terms of the Indentur~ and each such
fund and account shall constitute a trust "fund for the
benefit of the Owners of the Bonds and the Bank, and the
money in each such fund and account shall be disbursed only
for the purposes and uses authorized in the Indenture.
(A) Interest Account. The Trustee, on the first
Business Day of each calendar month in the case of Unit
Pricing Bonds or Demand Bonds and on the second day of March
and September of each year in the case of Fixed Rate Bonds
(beginning on the commencement of collection of Assessment
Installments), shall deposit in the Interest Account from
money in the Assessment Fund the amount of interest collect-
ed in the preceding Assessment Installment, which deposit,
together with the amount of any required transfer from the
Variable Rate Reserve Account or the Fixed Rate Reserve
Account, as the case may be, and the Conversion Costs Fund
(to the extent authorized by the Indenture), shall be at
least sufficient to pay (1) interest payable on Fixed Rate
Bonds, and (2) all amounts accrued, whether or not paid, on
Unit Pricing Bonds and Demand Bonds during the previous
calendar month pursuant to a draw on the Letter of Credit by
the Trustee pursuant to the Letter of Credit. Notwithstand-
ing the foregoing, the Trustee shall deposit in the Interest
Account from moneys in the Assessment Fund the amount of
interest collected with respect to Bank-Owned Bonds on the
first Business Day of each week together with any amounts
required to be transferred from the Variable Rate Reserve
Account, sufficient to pay on such day such interest owed to
the Bank, interest payable on Bank-Owned Bonds.
So long as a Letter of Credit is in effect, money
in the Interest Account shall be used and withdrawn by the
Trustee on an Interest Payment Date solely for the purpose
of (i) paying interest on Fixed Rate Bonds and (ii) making
payments to the Bank as required by the Reimbursement
Agreement or (iii) paying interest on Bank-owned Bonds.
Following expiration or termination of the Letter of Credit
or any Alternate Letter of Credit and the payment in full of
all amounts due to the Bank under the Indenture, money in
the Interest Account shall be used and withdrawn by the
Trustee on such Interest Payment Date solely for the payment
of interest on the Outstanding Bonds.
(B) Principal Account. The Trustee, on the
Business Day preceding each Principal Payment Date, shall
deposit in the Principal Account from money in the
56
Assessment Fund or, if moneys in the Assessment Fund are
insufficient therefor, the variable Rate Reserve Account or
the Fixed Rate Reserve Account, as the case may be, or, if
moneys in the Assessment Fund, the Variable Rate Reserve
Account or the Fixed Rate Reserve Account are insufficient
~herefor, the Conversion Costs Fund (to th~ extent author-
ized by the Indenture), an amount equal to the princiDal
becoming due on each Principal Payment Date.
So long as a Letter of Credit is in effect money
in the Principal Account shall be used and withdrawn by the
Trustee on each PrinCipal Payment Date solely for the
purpose of (1) paying the principal of Fixed Rate Bonds,
(2) paying the principal of Bank-Owned Bonds purchased by
the Bank under the Indenture, and (3) reimbursing the Bank
for draws on the Letter of Credit with respect to principal.
Following expiration or termination of the Letter of Credit
or any Alternate Letter of Credit money in the Principal
Account shall be used and withdrawn by the Trustee on such
Principal Payment Date solely for the payment of the princi-
pal of Outstanding Bonds.
The amount of any prepaid Assessments transferred
to the Principal Account pursuant to the terms of the
Indenture shall be used for the payment of principal, on the
next succeeding Principal Payment Date and the amount of any
such transfers shall also be applied as a credit against the
amount of principal otherwise due on the Assessment Install-
ment preceding such Principal Payment Date.
(C) Redemption Account. The Trustee, on the
redemption date specified in a notice from the City filed
with the Trustee at the time that any prepaid Assessment is
paid to the Trustee shall deposit in the Redemption Account
that amount of money constituting'prepaid Assessments.
Money in the Redemption Account shall be used and
withdrawn by the Trustee on such redemption date solely for
the purpose of (1) the redemption of Fixed Rate Bonds if the
Assessment bore interest at a fixed interest rate and
(2) reimbursing the Bank for draws on the Letter of Credit
with respect to redemptions of Bonds bearing interest at
other than a fixed interest rate. Following the expiration
or termination of the Letter of Credit or Alternate Letter
of Credit money in the Redemption Account shall be used and
withdrawn by the Trustee solely for redemption of Outstand-
ing Bonds.
(D) Variable Rate ReseFve Account. The Variable
Rate Reserve Account and the amounts therein shall be
maintained, used, transferred, reimbursed and liquidated as
follows:
57
(i) Whenever there are insufficient funds in
the Interest Account or Principal Account as a result
of a failure of an owner of property to pay an Assess-
ment beariDg interest at other than a fixed interest
rate or the interest thereon to reimburse the Bank for
draws on the Letter of Credit with respect to interest
or principal, as the case may be, or to .pay interest
due and payable on Bank-Owned Bonds, or there are
insufficient funds in the Interest Reserve Fund to make
the payments required therefrom under the Indenture, an
amount necessary to pay such deficiency shall be
advanced from the Variable Rate Reserve Account to such
accounts. The amounts so advanced shall be reimbursed
to the Variable Rate Reserve Account from the proceeds
of redemption or sale of the parcels for which payment
of delinquent Assessment Installments has been made
from the Variable Rate Reserve Account and such amounts
shall be applied as provided in the Indenture.
(ii) In the event Assessments not bearing
interest at a fixed interest rate are prepaid, in whole
or in part, the amount of the prepayment shall be
reduced by an amount equal to (a) the balance on
deposit in the Variable Rate Reserve Account multiplied
by (b)(1) the unpaid principal amount of the Assessment
or portion thereof proposed to be prepaid, (2) divided
by the aggregate principal amount of unpaid Assessments
bearing interest at other than a fixed interest rate.
An amount equal to such reduction shall be transferred
from the Variable Rate Reserve Account to the Redemp-
tion Account.
(iii) If on the first Business Day of each
month, commencing October 1, 1988, the amount on
deposit in the Variable Rate Reserve Account exceeds
the Variable Rate Reserve Requirement, such excess
shall be transferred to the Investment Earnings Account
of the Investment Earnings Fund.
(iv) If at any time the amount on deposit in
the Variable Rate Reserve Account, together with the
amount on deposit in the Remarketing Cost Account is
sufficient to retire all of the Unit Pricing Bonds and
Demand Bonds, whether by redemption or at maturity,
collection of the Assessment Installments not bearing
interest at a fixed interest rate shall be discontinued
or reduced, as appropriate, and all amounts on deposit
in the Variable Rate Reserve Account shall be trans-
ferred to the Principal Account and Interest Account at
the times and in the amounts required for the payment
of the principal of and interest on Unit Pricing Bonds
and Demand Bonds.
58
(v) Upon any conversion of all or any
portion of the Bonds to a Fixed Interest Rate, the
Trustee shall transfer from the Variable Rate Reserve
Account and to the extent permitted by the Indenture,
from the Remarketing Cost Account, to the Fixed Rate
Reserve Account an amount equal to 'the Fixed Rate
-Reserve Requirement for such Bonds.
(vi) Upon the written direction of' the Bank
all or a portion of the moneys on deposit in the
Variable Rate Reserve Account shall be transferred to
the Remarketing Cost Account to the extent moneys on
deposit in the Remarketing Cost Account are less than
the Remarketing Cost Account Requirement. Such trans-
fer shall be made even if such transfer results in
amounts on deposit in the Variable Rate Reserve Account
being less than the Variable Rate Reserve Requirement.
(E) Fixed Rate Reserve Account. The Fixed Rate
Reserve Account and the amounts therein shall be maintained,
used, transferred, reimbursed, and liquidated as follows:
(i) Whenever there are insufficient funds in
the Interest Account or Principal Account as a result
of a failure by an owner of property to pay an Assess-
ment bearing a rate of interest -equal to a Fixed
Interest Rate or the interest thereon to pay the nex~
maturing installment of the principal of or interest on
the Fixed Rate Bonds, an amount necessary to pay such
deficiency shall be advanced from the Fixed Rate
Reserve Account to such accounts. The amounts so
advanced shall be reimbursed to the Fixed Rate Reserve
Account from the proceeds of redemption or sale of the
parcels for which payment of delinquent ~ssessment
Installments has been made from ~he Fixed Rate Reserve
Account and such amounts applied as provided in the
Indenture.
(ii) In the event Assessments bearing inter-
est at a Fixed Interest Rate are prepaid, in whole or
in part, the amount of such prepayment shall be reduced
by an amount equal to that portion of the balance on
deposit in the Fixed Rate Reserve Account equal to
(a) the amount on deposit in the Fixed Rate Reserve
Account multiplied by (b)(1) such amounts of moneys
initially deposited into the Fixed Rate Reserve Account
upon conversion of such Assessments to a fixed interest
rate divided by (2) the amount of moneys initially
deposited into the Fixed Rate Reserve Account upon
conversion with respect to all Assessments to a fixed
interest rate. An amount equal to such reduction shall
59
be transferred from the Fixed Rate Reserve Account to
the Redemption Account.
(iii) If on the first Business Day of each
month, commencing October 1, 1988 the amount on deposit
in the Fixed Rate Reserve Account exceeds the Fixed
Rate Reserve Requirement, such excess shall be trans-
ferred to the Investment Earnings Account of the
Investment Earnings Fund.
(iv) If at any time the amount on deposit in
the Fixed Rate Reserve Account is sufficient to retire
all of the Fixed Rate Bonds, whether by redemption or
at maturity, collection of the Assessment Installments
bearing interest at a fixed interest rate shall be
discontinued or reduced, as appropriate, and all
amounts on deposit in the Fixed Rate Reserve Account
shall be transferred to the Principal Account and
Interest Account at the times and in the amounts
required for the payment of the principal of and
interest on the Fixed Rate Bonds.
(Section 5.04)
Conversion Costs Fund
Pursuant to the Indenture the Trustee shall
establish and maintain a separate fund to be known as the
Conversion Costs F~nd. Such Fund shall constitute a trust
fund for the benefit of the Owners of' the Bonds and the
Bank. Money on deposit in the Conversion Costs Fund may be
withdrawn for the payment of fees, expenses, reimbursements
and indemnifications of the Bank or the Remarketing Agent
upon receipt of bills from the Bank or Remarketing Agent, in
accordance with the terms of the Reimbursement Agreement and
the Remarketing Agreement, as the case may be. Money on
deposit in the Conversion Costs Fund may. also be withdrawn
to pay or reimburse the City for fees, expenses and other
costs incurred by the City in connection with a conversion
of Bonds to a Fixed Interest Rate upon written certification
by the City to the Trustee. Upon written notice from the
City to the Bank, the Trustee and the Remarketing Agent that
the City intends to transfer excess moneys from the Conver-
sion Costs Fund and stating the proposed date of such
transfer (which transfer shall be not sooner than ten (10)
calendar days from the date of such notice) and upon
(i) written certification by the City to the Trustee that
the amount on deposit in the Conversion Costs Fund exceeds
all reimbursements, fees, expenses, indemnifications and
other costs expected to be paid from the Conversion Costs
Fund or (ii) conversion of all Bonds to a Fixed Interest
6O
Rate or on =he date on which no Bonds are Outstanding and so
long as all fees, expenses and indemnifications of ~he Bank
and the Remarketing Agent are paid and all fees, expenses
and other costs of the City incurred in connection with
conversions of Bonds to. Fixed Interest Rates are paid,
excess amounts on deposit in the Conversion.~osts Fund shall
be transferred first, to the Fixed Rate Reserve Account and
the Variable Rate Reserve Account to the extent of any
deficiencies therein and pro rata in the event such amounts
are not sufficient to satisfy the deficiencies in both such
Accounts, and second, to the Interest Account as a credit
against interest on Assessments. Money on deposit in the
Conversion Costs Fund may also be transferred to the
Interest Account or the Principal Account of the Redemption
Fund or to the Interest Reserve Fund in the event that the
amount on deposit therein is not sufficient, together with
any available moneys on deposit in the Fixed Rate Reserve
Account or the Variable Rate Reserve Account, as the case
may be, to pay principal of or interest on the Bonds.
The City has agreed to certify to the Trustee at
least annually whether the amount on deposit in the Conver-
sion Costs Fund exceeds all reimbursements, fees, expenses,
indemnifications and 'other costs expected to be paid from
the Conversion Costs Fund.
(Section 5.05)
Use of Money in the Construction Fund
The City has agreed to establish and maintain a
Construction Fund until the completion of the construction
of the works of improvements within the District.
Ail moneys on deposit in the Construction Fund
shall be held by the City in trust and shall be applied by
the City for the payment of costs of the construction of the
works of improvements within the District and expenses
incidental thereto, including the payment of the costs of
the issuance and delivery of the Bonds and the fees, costs
and expenses of the Bank, the Paying Agent, the Remarketing
Agent, the Trustee, Moody's and S&P incurred prior to the
completion of such works of improvement. To the extent that
other moneys are not available therefor, amounts in the
Construction Fund will be applied to the payment of princi-
pal of and interest on the Bonds when due.
When the construction of the works of improvement
have been completed, or upon the decision of the City to
terminate such construction the City shall deliver to the
Trustee and the Bank 'a certificate of the City stating the
61
fact and date of such completion or termination of such
construction and stating that all the costs of such con-
struction and equipment and expenses incidental thereto have
been determined and paid (or ~hat all such costs and expens-
es have been paid less specified claims which are subject to
dispute and for which a retention in the Construction Fund
is to be maintained-in the full amount of such"claims until
such dispute is resolved oT that such costs are fees, costs
or indemnifications of the Trustee or Paying Agent). Upon
the delivery of such certificate, the City shall transfer
any remaining balance of money in the Construction Fund (but
less the amount of any such retention or such fees, costs or
indemnifications)' (i) to the Fixed Rate Reserve Account and
Variable Rate Reserve Account to the extent of any deficien-
cies therein and pro rata in the event such money is not
sufficient to satisfy the deficiencies in both such accounts
and (ii) thereafter to the Redemption Account to be applied
by the Trustee for the redemption of Bonds.
Pending use of such moneys in the Redemption
Account for the redemption of Bonds, such moneys shall not
be invested at a yield, within the meaning of Treasury
Regulations Section 1.103-13(c), that exceeds the yield on
the Bonds. Investment income from such moneys may be used
to pay interest on the Bonds or to pay the redemption or
purchase price of such Bonds. Notwithstanding the above,
such moneys may be used and invested in any manner permitted
by an Opinion of Counsel which provides that such use or
investment will not affect the exclusion from Federal income
taxes of interest on the Bonds.
(Section 5.06)
Interest Reserve Fund
The Trustee has agreed to establish and maintain,
so long as any Bonds are Outstanding, the Interest Reserve
Fund which fund shall constitute a trust fund for the
benefit of the Owners of the Bonds and the Bank. The
Trustee has been instructed to apply amounts on deposit in
the Interest Reserve Fund on each Interest Payment Date to
advance to Owners of Unit Pricing Bonds and Demand Bonds
interest due on such Interest Payment Date. Amounts on
deposit in the Interest Reserve Fund shall be reduced on the
first Business Day of a calendar month following the redemp-
tion of Unit Pricing Bonds and Demand Bonds, so that the
amount on deposit in the Interest Reserve Fund shall always
be equal to 35 days interest at the Maximum Rate on all Unit
Pricing Bonds and Demand Bonds; provided, however, that such
calculation shall not take into account moneys on deposit in
the Interest Reserve Fund which represent interest a~tually
62
accrued but not yet payable to Owners of Unit Pricing or
Demand Bonds by the Bank under the terms of the Let=er of
Credit and such moneys shall not be transferred out upon
such redemptions. The amount of any such reduction shall be
transferred (i) to the Conversion Costs Fund in'such amount
as the Finance Director certifies in writing to the Trustee
is expected to be necessary, together with the amount
already on deposit therein, to pay all fees, expenses, costs
and indemnifications expected to be paid from the Conversion
Costs Funds, then (ii) to the Fixed Rate Reserve Account and
the Variable Rate Reserve Account to the extent of any
deficiencies therein and pro rata in the event such amount
is not sufficient to satisfy the deficiencies in both such
Accounts and then to the Interest Account to be applied as a
credit against the interest due in the immediately succeed-
ing Assessment Installments on Assessments bearing interest
at a rate other than a fixed interest rate.
Upon conversion of all or a portion of the Bonds
to a Fixed Interest Rate, the amount in excess of the
Interest Reserve Fund Amount shall be transferred from the
Interest Reserve Fund to (i) the Conversion Costs Fund in
the amount provided in the preceding paragraph, then (ii) to
the Fixed Rate Reserve Account and the Variable Rate Reserve
Account to the extent of any deficiencies therein and pro
rata in the event such amount is not sufficient to satisfy
the deficiencies in both such Accounts and then (iii) to the
Interest Account to be applied as a credit a pro rata share
of amounts in the Interest Reserve Fund; provided, however,
that such calculation shall not take into account moneys on
deposit in the Interest Reserve Fund which represent inter-,
est actually accrued but not yet payable and such moneys
shall not be transferred out upon such conversions.
Any moneys held by the Trustee in the Interest
Reserve Fund shall be held uninvested unless instructed to
be invested by the City, in which case they shall be invest-
ed in direct obligations of the United States of America
with maturity periods not exceeding 30 days and with a
maturity date on or before t. he dates in which the moneys are
anticipated to be required. On the first Business Day of
each month, all investment earnings on amounts on deposit in
the Interest Reserve Fund shall be transferred to the
Investment Earnings Account of the Investment Earnings Fund.
(Section 5.07)
63
~nvest~ent E&rn~n~s Fund
The Trustee has agreed to establish and maintain
the Investment Earnings Fund, which Fund shall be held in
trust but which shall not be for the benefit of the Owners
of the Bonds or the Bank. The Trustee shall"administer such
Fund as provided 'in the Indenture. Such Fund shall be
maintained by the Trustee until the Finance Director directs
that it be closed.
The Trustee shall establish and maintain in the
Investment Earnings Fund two separate accounts designated as
the Investment Earnings Account and the Excess Earnings
Account. Ail moneys in the Investment Earnings Account and
the Excess Earnings Account shall be held by the Trustee in
trust and shall be kept separate and apart from all other
funds and money held by the Trustee. Pursuant to the
Indenture, the Trustee and the City shall transfer all
interest on deposits and investments in all funds and
accounts (other than the Remarketing Cost Account) to the
Investment Earnings Account. Amounts on deposit in the
Investment Earnings Account shall be transferred to the
Excess Earnings Account pursuant to written instructions
from the Finance Director in accordance with the provisions
of 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 (the "Tax Certificate,,)
delivered with respect to the Bonds. Following each such
transfer (or, if no such transfer is required, then upon
receipt by the Trustee of written certification from the
Finance Director that no such transfer is required), any
amount remaining in the Investment Earnings Account or any
amount on deposit in the Excess Earnings Account which
exceeds the amount required to be maintained therein
pursuant to the written instructions from the Finance
Director in accordance with the provisions of the Tax
Certificate shall (i) prior to the completion of the works
of improvements and the filing of t_he certificate of the
City as to completion of construction, of the works of
improvement required by the Indenture, be deposited first to
the Fixed Rate Reserve Account and the Variable Rate Reserve
Account to the extent of any deficiencies therein and pro
rata between such Accounts in the event such amount is not
sufficient to satisfy the deficiencies in both such Accounts
and second be deposited to the Construction Fund and
(ii) after receipt by the Trustee of such certificate, first
be deposited to the Fixed Rate Reserve Account and the
Variable Rate Reserve Account to the extent of any
deficiencies therein and pro rata between such Accounts in
the event such amount is not sufficient to satisfy the
deficiencies in both such Accounts and second, be deposited
to the Interest Account as a credit against interest on
Assessments. Except as set forth in the preceding sentence,
64
amounts on deposit in the Excess Earnings Account shall only
be applied to payments made to the United States in
accordance with written instructions of the City in
accordance with the Tax Certificate.
"(~Section 5.0S)
Investments
Ail moneys held by the Trustee in the Interest
Reserve Fund and ~he Purchase Fund shall be invested as
described above under the headings "Summary of
Indenture-Purchase Fund" or "Summary of Indenture-Pledge of
the Indenture~ Funds and Accounts-Interest Reserve Fund".
Any money held by or on behalf of the City in the Construc-
tion Fund, or by the Trustee in the Assessment Fund, the
Redemption Fund (other than the Variable Rate Reserve
Account), the Conversion Costs Fund or the Investment
Earnings Fund shall be held, without further instruction, in
demand or time deposits (including certificates of deposit)
of any bank (including the Trustee) authorized to accept
deposits of public funds, and shall be secured at all times
by such obligations as are required by law and to the
fullest extent required by law. Notwithstanding the
foregoing, such moneys, other than the moneys in the
Variable Rate Reserve Account, may be invested by the City
or the Trustee, at the direction of the City, as the case
may be, in Permitted Investments which will, as nearly as
practicable, mature on or before the dates on which such
money is anticipated to be needed for disbursement under the
terms of the Indenture. Moneys in the Variable Rate Reserve
Account shall be invested as directed in the Indenture.
Ail such money deposited or invested shall be
deposited or invested so as to obtain the yield or yields
which the City deems practicable, taking into consideration,
among other things, the rebate requirements imposed by the
Code and after giving due regard for the safety of such
money, and the City or Trustee may commingle any of the
money held by it under the terms of the Indenture, except
money derived from draws under the Letter of Credit, on
deposit in the Interest Reserve Fund or on deposit in the
Investment Earnings Fund shall not be commingled under any
circumstances. The City or Trustee may present for redemp-
tion or sell any such deposit or investment whenever it
shall be necessary in order to provide money to meet any
payment of the money so deposited or invested. The Trustee
shall not be liable or responsible for any losses resulting
from any such deposit or investment presented for redemption
or sold.
65
Notwithstanding any other provision of the Inden-
ture, the City will not invest or instruct the Trustee to
invest any moneys at a yield greater than the yield allowed
in the Tax .Certificate..
Any interest on deposits and investments in all
funds and accounts (other than the Remarketing Cost Account)
received by the City or 'the Trustee shall be 'deposited in
the Investment Earnings Account of the Investment Earnings
Fund. Any balance remaining in the Investment Earnings
Account of the Investment Earnings Fund after the transfer
of moneys therein to the Excess Earnings Account of the
Investment Earnings Fund shall be transferred as provided in
the Indenture.
(Section 5.09)
Arbitrage Cuvenant
The City has covenanted to do the following with
respect to the Bonds:
(a) The City shall comply with each applicable
requirement' of the Code necessary to maintain the
exclusion of interest on the Bonds from gross income
for Federal income tax purposes. In furtherance of the
covenant contained in the preceding sentence, the City
has agreed to comply with the provisions of the Tax
Certificate as to Arbitrage and Instructions as to
Compliance with the Provisions of Section 103(a) of the
Internal Revenue Code of 1986 (the "Tax Certificate")
executed by the City on the date of the initial issu-
ance and delivery of the Bonds, as such Tax Certificate
may be amended from time to time, as a .source of
guidance for achieving compliance with the Code.
(b) The City shall make any and all payments
required to be made to the United States Department of.
the Treasury in connection with the Bonds pursuant to
Section 148(f) of the Code from amounts on deposit in
the funds and accounts established under the Indenture
or otherwise available therefor.
(c) Notwithstanding any other provision of the
Indenture to the contrary, so long as necessary to
maintain the exclusion from gross income of interest on
the Bonds for Federal income tax purposes, these
covenants shall survive the payment of the Bonds and
the interest thereon, including any payment or defea-
sance thereof pursuant to the Indenture.
66
(d) Notwithstanding any other provision of the
Indenture to the contrary, upon ~he City's failure to
observe or refusal to comply with ~he above covenants,
the Owners of the Bonds., or the Trustee acting on their
behalf, shall be entitled to the rights and remedies
provided to Owners of Bonds under the I~den=ure.
(s ction 6.08)
DEFAULT ~ LIMITATIONS OP"LIABILITY
Events of Default
If any of the following events occur, it shall consti-
tute an "Event of Default":
(a) Default in the due and punctual payment of
interest on any Bond, whether at the stated Interest
Payment Date thereof, or upon proceedings for redemp-
tion thereof or upon purchase ~hereof as provided in
the Indenture, which continues for a period of five (5)
Business Days~ and
(b) Default in the due and punctual payment of
the principal of or premium, if any, on any Bond,
whether at the stated maturity thereof, or upon pro-
ceedings for redemption thereof or upon purchase
thereof as provided in the Indenture, which continues
for a period of five (5) Business Days.
(Section 7.01)
Action on Failure to Hake Timely Assessaent Installments
(1) Upon the failure by an owner of real proper~y
to pay when due an Assessment Installment, the City shall
forthwith undertake foreclosure proceedings in the manner
prescribed in Section 8830 e~ sea. of the Streets and
Highways Code of California to collect the amount of any
delinquent Assessment Installment (i) within sixty (60) days
if the Assessment bears interest at other than a fixed
interest rate and (ii) if the Letter of Credit is in effect,
within five (5) Business Days of receipt of actual knowledge
of, ~ut in no event later than one hundred fifty (150) days,
or, if the Letter of Credit is not in effect then within one
hundred fifty (150) days, of the failure to pay when due
such Assessment Installment if the Assessment Installation
bears interest at a fixed interest rate. Upon the redemp-
tion or sale of the real proper~:y responsible for such
delinquent Assessment Installment, or resale as provided
67
below, the City shall deposit to the Fixed Rate Reserve
Account if such Assessment bears interest at a fixed inter-
est rate or to the Variable Reserve Account .if the Assess-
.
ment bears interest at other than a fixed interest rate, the
amount of anY delinquency advanced therefrom to the Interest
Account or Principal Account for payment of"interest on or
principal of Bonds. Amounts so deposited in .the Variable
Rate Reserve Account shall be immediately paid over to the
Bank to the extent of any unreimbursed draws on the Letter
of Credit for payment of principal or interest on the Bonds.
Amounts so deposited in the Fixed Rate Reserve Account shall
be immediately paid over to the Bank to the extent of any
unpaid draw on the Letter of Credit resulting from a pro
rata distribution made by the Trustee pursuant to the terms
of the Indenture.
(2) In the event that real property with an
Assessment bearing interest at other than a fixed interest
rate is neither redeemed by the owner thereof nor sold to a
third party purchaser at such foreclosure sale, the City
shall cause a credit bid on behalf of and in the name of the
City and the Bank to be entered in the amount due the City
and/or the Bank and shall cause a sheriff's deed for said
real property to be executed in the name of the City and/or
the Bank, as appropriate. The proceeds from any resale of
such real property on which there is an Assessment bearing
interest at other than a fixed interest rate shall be
applied first to any amounts due to the Bank under the
Indenture or under the Reimbursement Agreement, and thereaf-
ter any excess shall be applied by the City in the following
order: (i) to make the deposit described in Paragraph (1)
above, (ii) to restore the Variable Rate Reserve Account to
the Variable Rate Reserve Requirement, (iii) to restore the
Fixed Rate Reserve Account to the Fixed Rate Reserve Re-
quirement, (iv) to the payment of any continuing costs of
the Bonds not provided by the deposits under clause (i) of
this sentence, and (v) for redemption of Bonds in accordance
with the Indenture with credit for such redemptions credited
pro rata against all Assessments bearing interest at other
than a fixed interest rate.
In the event that real property with an Assessment
bearing interest at a fixed interest rate is neither re-
deemed by the owner thereof nor sold to a third party pur-
chaser at such foreclosure sale, the City shall cause a
credit bid on behalf of and in the name of the City and the
Bank to be entered in the amount due the City and/or the
Bank and shall cause a sheriff's deed for said real property
to be executed in the name of the City and/or the Bank, as
appropriate. The proceeds from any resale of such real
property on which there is an Assessment bearing interest at
a fixed interest rate shall be applied in the following
68
order= (i) to the Bank to the extent the Bank remains
unreimbursed for a draw on the Letter of Credit as a result
of the default in payment of the Assessment on such proper-
ty, (ii) t~-'restore the Fixed Rate Reserve Account to the
Fixed Rate Reserve Requirement, (iii) to restore the Vari-
able Rate Reserve Account to the Variable Rate Reserve
Requirement, (iv) to the payment of any continUing costs of
the Bonds, and (v) for redemption of Fixed' Rate Bonds
pursuant to the terms of the Indenture with a credit for
such redemptions credited pro rata against all Assessments
bearing interest at a fixed interest rate.
In the event that the Treasurer and the City makes
t_he determinations described in Sections 8770-8772 of the
.Improvement Bond Act of 1915, as amended, the City and the
Trustee shall take the actions required by Sections
8770-8784 of said Act and Owners of Bonds shall be deemed to
have consented to do such things as are required by such
Sections of Owners of Bonds.
(Section 7.02)
aeme~ies of t~e Trustee
The Trustee shall have the right -
) by mandamus or other actio~ or proceeding or
suit law or in equity to enforce xts rights against
the City or any supervisor, officer or employee there-
of, and to compel the City or any such supervisor,
officer or employee thereof to observe or perform their
duties under applicable law and the conditions, cove-~
nants and terms contained in the Indenture required to
be observed or performed;
~ (b) by suit in equity to enjoin any acts or
things which are unlawful or violate the rights of the
Trustee; or
(c) by suit in equity upon the happening of any
default under the Indenture to require the City and its
supervisors, officers and employees to account as the
trustee of an express trust.
Anything to the contrary contained in the Inden-
ture notwithstanding, so long as the Letter of Credit is in
effect, and the Bank is not default under the Letter of
Credit, the Trustee shall not exercise any of the foregoing
rights which affect Unit Pricing Bonds or Demand Bonds
without the prior written consent of the Bank and shall
69
exercise all rights of the Trustee under the Indenture at
the direction of the Bank.
.(Section 7.03)
Non'Waiver ..
A waiver of any default under the Indenture or
breach of any obligation by the City or Trustee under the
Indenture shall not affect any subsequent default or any
subsequent breach of an obligation by the City or Trustee or
impair any rights or remedies on any such subsequent default
or breach of an obligation by the City or Trustee. No delay
or omission by the City, the Trustee or the Bank to exercise
any right or remedy accruing upon any default shall impair
any such right or remedy or shall be construed to be a
waiver of any such default under the Indenture or an acqui-
escence therein, and every right or remedy conferred upon
the City or Trustee by applicable law or by the Indenture
may be enforced and exercised from time to time and as often
as shall be deemed expedient by the City and Trustee.
If any action, proceeding or suit to enforce any
right or to exercise any remedy is abandoned or determined
adversely to the City or Trustee, the City and the Trustee
shall be restored to their former positions, rights and
remedies as if such action, proceeding or suit had not been
brought or taken.
(Section 7.04)
Remedies Not Exclusive
No remedy conferred upon or reserved to the City
or Trustee by the Indenture is intended to be exclusive of
any other remedy, and every such remedy shall be cumulative
and shall be in addition to every other remedy given under
the Indenture or now or hereafter existing under applicable
law or equity or by statute or otherwise and may be exer-
cised without exhausting and without regard to any other
remedy conferred by any other applicable law.
(Section 7.05)
No Liability by the City to the Owners
Except for the collection of the Assessment
Installments and the observance and performance of the other
70
conditions, covenants and terms contained in the Indenture
or .in the Act required to be observed or performed by it,
the City shall not have any obligation or liability =o the
Owners with respect to-the Indenture or the preparation,
authentication, delivery, transfer, exchange or cancellation
of the Bonds or with respect to the performance by the
Trustee of any obligation required to be perf.~rmed by it.
Pursuant to Resolution No. 86-61, the City has determined
that no funds of ~he City will be available to pay' principal
of, premium, if any, or interest on the Bonds. In such
Resolution the City has determined that pursuant to Section
8769 of the Act, the City will not obligate itself to
advance available funds from the City's treasury to =ute any
deficiency which may occur in the Redemption Fund.
(Section 7.06)
No Liability by the Trustee to the Owners
Except as expressly provided in the Indenture, the
Trustee shall not have any obligation or liability to the
Owners with respect to the collection and payment, when due,
of the Assessment Installments by the City, or with respect
to the observance or performance by the City of the other
conditions, covenants and terms contained in the Indenture
required to be observed and performed by it.
(Section 7.07 )
Action by Owners
In'the event the Trustee fails to take any action to
eliminate an Event of Default under the Indenture, the
Owners of a majority in aggregate principal amount of
Outstanding Bonds may, with the consent of the Bank if a
Letter of Credit is outstanding, if the Bank is not in
default thereunder, and to the extent such failure relates
to Unit Pricing Bonds or Demand Bonds, institute any suit,
action, mandamus or other proceeding in equity or aC law for
the protection or enforcement of any right under the Inden-
ture, but only if such Owners have first made written
request of the Trustee after the right to exercise 'such
powers of right of action shall have occurred, and shall
have afforded the Trustee a reasonable opportunity either to
proceed to exercise the powers granted in the Indenture or
granted under 'law or to institute such action, suit or
proceeding in its name and unless also, the Trustee shall
have been offered reasonable security and indemnity against
the costs, expenses and liabilities to be incurred therein
71
or thereby, and the Trustee shall have refused or neglected
to comply with such request within a reasonable time.
(Section 7.08)'
AMENDMENT OF OR SUPPLEMENT TO TH~ INDENTURE
Amendment or Supplement by Consent of Owners
The Indenture and the rights and obligations of
the City, the Trustee, the Remarketing Agent, the Bank and
the Owners thereunder may be amended or supplemented at any
time by an amendment thereof or supplement thereto which
shall become binding when the written consents of the Owners
of a majority in aggregate principal amount of the Bonds
then Outstanding, exclusive of Bonds disqualified as provid-
ed in the Indenture, and if Unit Pricing Bonds or Demand
Bond are Outstanding, the written consent of the Bank (whose
consent shall not be unreasonably withheld), so long as the
Bank is not in default on its Letter of Credit, are filed
with the Trustee. No such amendment or supplement shall (1)
reduce the rate of interest on any Bond or extend the time
of payment thereof or reduce the amount of principal or
redemption premiums, if any, on any Bond or extend the
Principal Payment Date thereof without the prior written
consent of the Owner of the Bond so affected, (2) reduce the
percentage of Owners whose consent is required for the
execution of any amendment thereof or supplement hereto, or
(3) modify any of the rights or obligations of the Trustee
without its prior written consent thereto.
The Indenture and the rights and obligations of
the City, the Trustee, the Remarketing Agent, the Bank and
the Owners under the terms of the Indenture may also be
amended or supplemented at any time by an amendment thereof
or supplement thereto which shall become binding upon
execution without the written consent of any Owners, but, if
Unit Pricing Bonds or Demand Bonds Outstanding, with the
written consent of the Bank (whose consent shall not be
unreasonably withheld), but only to the extent permitted by
law and after receipt of a Favorable Opinion of Bond Counsel
and only for any one or more of the following purposes -
(a) to add to the conditions, covenants and terms
contained therein required to be observed or performed
by the City, or other conditions, covenants and terms
hereafter to be observed or performed by the City, or
to surrender any right reserved therein to or conferred
therein on the City, and which in either case shall not
adversely affect the interests of the Owners;
72
(b) to make such provisions for the purpose of
curing any ambiguity or of correcting, curing or
supplementing any defective provision contained therein
or in regard to questions arising thereunder which the
City may deem desirable or necessary and which shall
not adversely affect the interests of ~he Owners; or
(c) to comply with the requirements of Moody's or
S&P for the initial rating of the Bonds. '.
(Section 9.01)
DBFBA~CB
Discharge of BonUs an4 InSenture
(a) If the Trustee shall pay or cause to be paid
or there shall otherwise be paid to the Owners of all
Outstanding Bonds the interest, principal and redemption
premiums, if any, at the times and in the manner provided in
the Indenture and therein, then such Owners shall cease to
be entitled to the pledge and lien described in the Inden-
ture as provided therein, and all agreements and covenants
of the City and the Trustee to such Owners thereunder shall
thereupon cease, terminate and become void and shall be
discharged and satisfied.
(b) Outstanding Bonds or any portion thereof
shall on their Principal Payment Dates or their dates of
redemption prior thereto be deemed to have been paid within
the meaning of and with the effect expressed above if there
shall be on deposit with the Trustee money which is suffi-
cient to pay the interest and principal on such Bonds
payable on and prior to their Principal Payment Date or
their dates of redemption.
(c) Outstanding Bonds or any portion thereof
shall prior to their dates of redemption prior thereto be
deemed to have been paid within the meaning of and with the
effect expressed above if (1) in case any of such Bonds are
to be redeemed on any date prior to their Principal Payment
Dates, the City shall have given to the Trustee in form
satisfactory to it irrevocable instructions to give notice
by mail to the Owners of such Bonds of the redemption of
such Bonds on such redemption dates, (2) there shall have
been deposited with the Trustee either money in an amount
which shall be sufficient or United States of America
Treasury bills, notes, bonds or certificates of indebted-
ness, 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
73
except by the Owner 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) the interest on and principal of which when paid
will provide money which, together with money, if any,
deposited with the Trustee at the same "time, shall be
sufficient to pay when due the interest evidenced and
represented by such Bonds .on and prior to their Principal
Payment Dates or their dates of redemption prior thereto, as
the case may be, and the principal and redemption premiums,
if any, on such Bonds, and (3) in the event such Bonds are
not by their terms subject to redemption within the next
succeeding sixty (60) days, the City shall have given the
Trustee in form satisfactory to it irrevocable instructions
to give notice by mail to the Owners of such Bonds that the
deposit required by clause (2) above has been made with the
Trustee and that such Bonds are deemed to have been paid and
stating their Principal Payment Dates or redemption dates
upon which money is to be available for the payment of the
interest and principal of such Bonds and (4) if the Trustee
shall have received an opinion of Bond Counsel (which Bond
Counsel is experienced in applicable bankruptcy laws) to the
effect that the deposit of moneys and securities referred to
in (2) above shall not constitute avoidable preferences
under any applicable bankruptcy laws.
(d) Notwithstanding anything in the Indenture to
the contrary, Bonds shall not be deemed to be paid in the
event that the Bank remains unreimbursed for draws on or
fees due under its Letter of Credit. In the event the Bank
is subsequently reimbursed, or is otherwise satisfied, the
Bonds shall then be deemed to be paid pursuant to the terms
of the Indenture.
(e) After the payment of the interest, redemption
premium, if any, and principal on all Outstanding Bonds as
provided above, the Trustee shall execute and deliver to the
City all such instruments as may be necessary or desirable
to evidence the discharge and satisfaction of this Inden-
ture, and the Trustee shall pay over or deliver to the City
all money or deposits or investments held by it pursuant
thereto which are not required for the payment of the
interest and principal on such Bonds.
(Section 10.01)
Un=laimed Money
Anything contained in the Indenture to the con-
trary notwithstanding, any money held by the Trustee in
74
trust for the payment and discharge of the interest or
principal or ~edemption premiums, if any, of any Bonds which
remains unclaImed for two (2) years after ~he date when the
payments on such Bonds have become payable, if such money
was held by ~he Trustee on such date, or for two (2) years
after the date of deposit of such money if deposited with
the Trustee after .the date when the interest and principal
on such Bonds have become payable, shall upon written notice
from the City be repaid by the Trustee to the city as its
absolute proper~y 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 the interest and principal and redemption premiums, if
any, on such Bonds; provided that before being required to
make any such payment to the City, the Trustee shall, at the
expense of the City, give notice by mail to the Owners that
such money remains unclaimed and that after a date named in
such notice, which date shall not be less than sixty (60)
days after the date of giving such notice, the balance of
such money then unclaimed will be returned to the City.
(Section 10.02)
Notwithstanding anything to the contrary contained
in the Indenture, the obligation of the City to undertake
foreclosure proceedings and deposit foreclosure proceeds in
the funds and accounts created thereunder, and the obliga-
tion' of the Trustee to apply such proceeds in accordance
with the Indenture shall not cease, terminate, become void,
or be discharged or satisfied until such time as all fore-
closure sales, a portion of the proceeds of which are to be
applied as payment of obligations to the Bank resulting from
unreimbursed draws on the Letter of Credit, shall have been
completed.
(Section 10.03)
THE IMPROVEMENT PROJECT
Description
Proceeds of the issue will be used to fund the
design, construction, inspection, and administration of
public facilities which will provide for traffic access and
control, drainage, and utility service for properties in the
District. The improvements are located within and adjacent
to the District. For a more detailed description of the
Improvement Project, including a description of the method
75
used by the Assessment Engineer to spread the assessment,
refer to Appendix B herein entitled "Description of Work and
Method of Assessment." Appendix A herein entitled "Assess-
ment Diagram" shows the configuration of the District and
various assessment parcels and indicates the location of the
public improvements to be constructed under,..the Improvement
Project.
Estimate~ Improvement Projeot Costs
The following are the estimated Improvement
Project Costs as set forth in the Engineer's Report.
Estimated Construction Costs...
Estimated Incidental Costs
and Expenses .................
Total Estimated Cost ......
Less Contributions and Earned
Interest .....................
Bond Reserve, Capitalized
Interest and Bond Issuance
Costs*
..o...................
Assessment Amount
$55,357,918.81
11.743,325.91
67,101,244.72
( 4,949,902.72)
19.248,658.00
$81,400f000.00
*Includes estimated costs of conversion of all Adjustable
Rate Bonds to Fixed Rate Bonds.
THE DISTRICT
Property Ownership
The Assessment Installments are not personal
obligations of the property owners within the District. The
Irvine Company is currently the major owner of the land
within the District. The Irvine Company has sold certain of
the property in the District and expects to sell certain
other property within the District. The Irvine Company is
not obligated in any manner to continue to own any of the
land it presently owns within the District.
The Irvine Company is a privately held corporation
founded by James Irvine in 1876, 12 years after he assembled
the Irvine Ranch through purchase of Spanish and Mexican
land grant ranchos. The Irvine Company is engaged in the
long-term, economic utilization of its 65,000 acre land
resource in central. Orange County. The Irvine Company is
developing its property into a series of urban communities
which include centers of employment -- office, research,
industrial and retail -- and a diversity of residential
opportunities for sale and for rent. Within this urban
76
environment, The Irvine Company is developing high quality
income producing properties which it owns and operates.
Land not currently planned for development is being farmed.
THE PIN~NCIAL ADVISOR "" ....
~ .
Bar~le Wells Associates is the Financial Advisor
to the City of Tustin for the issuance of the 'Bonds. A
California Corporation, Bar~le Wells Associates is an
independent municipal consulting firm providing financial
advisory services to public agencies since 1964. The firm
has experience in other financing tools in addition to the
issuance of bonds, including shor~ term borrowing and the
use of cash reserves.
LEGAL OPINION
Legal matters incident to the authorization and
issuance of the Bonds are subject to the unqualified approv-
ing opinion of Mudge Rose Guthrie Alexander & Ferdon and
Rourke & Woodruff, Co-Bond Counsel. The opinion will be
substantially in the form attached hereto as .Appendix C.
Certain legal matters will be passed upon for the Underwrit-
er by O'Melveny & Myers, and for the City by James G.
Rourke, as City Attorney, and for the Bank by Brown & Wood,
United States Counsel and Naoe, Asai & Yamamori, Japanese
Counsel.
FEDERAL AND STATE INCOME TAXES
The Internal Revenue Code of 1986, as amended,
(the "Code") establishes certain requirements which must be
met subsequent to the issuance and delivery of the Bonds for
interest thereon to be and remain excluded from gross income
for Federal income tax purposes. Noncompliance with such
requirements could cause the interest on the Bonds to be
included in gross income for Federal income tax purposes
retroactive to the date of issue of the Bonds. These
requirements include, but are not limited to, provisions
which prescribe yield and other limits within which the
proceeds of the Bonds are to be invested and require, under
certain circumstances, that certain investment earnings on
the foregoing be rebated on a periodic basis to the Treasury
Department of the United States of America. The City has
covenanted in the Indenture to comply with each applicable
requirement of the Code necessary to maintain the exclusion
of the interest on the Bonds from gross income for Federal
income tax purposes.
77
In the opinion'of Co-Bond Counsel, under existing
law, interest on the Bonds is exempt from personal income
taxes of the State of California and, assuming compliance
with the aforementioned covenant, the interest on the Bonds
is excluded from gross income for Federal income tax purpos-
es. Co-Bond Counsel are also of the opinion that the Bonds
are not "specified private activity bonds'"'-within the
meaning of Section 57(a)(5) of the Code and, therefore, the
interest on the Bonds will not be treated as a preference
item for purposes of computing the alternative minimum tax
imposed by Section 55 of the Code.
However, interest on the Bonds owned by corpora-
tions will be taken into account: (1) in determining the
alternative minimum tax imposed by Section 55 of the Code on
one-half (75 percent after 1989) of the excess of adjusted
net book income (adjusted current earnings after 1989) over
alternative minimum taxable income (determined without
regard to this adjustment and the alternative tax net
operating loss deduction); (2) in calculating the environ-
mental tax equal to 0.12 percent of a corporation's modified
alternative minimum taxable income in excess of a certain
amount (generally $2 million) imposed by Section 59 A of the
Code; and (3) in determining the foreign branch profits tax
imposed on the effectively connected earnings and profits
(with adjustments) of United States branches of foreign
corporations by Section 884 of the Code.
Co-Bond Counsel have not undertaken to advise in
the future whether any events after the date of issuance of
the Bonds may affect the tax status of interest on the
Bonds. Certain requirements and procedures contained or
referred to in the Indenture and other relevant documents
may be changed and certain actions may be taken, under the
circumstances and subject to the terms and conditions set
forth in such documents, upon the advice or with the approv-
ing opinion, of nationally recognized bond counsel. Co-Bond
Counsel express no opinion as to any Bond, or the interest
thereon, if any such change occurs or action is taken upon
the advice or approval of bond counsel other than Co-Bond
Counsel.
Although Co-Bond Counsel have rendered an opinion
that interest on the Bonds is excluded from gross income for
Federal income tax purposes, an Owner's Federal tax liabili-
ty may otherwise be affected by the ownership or disposition
of the Bonds. The nature and extent of these other tax
consequences will depend upon the Owner's other items of
income or deductions. Co-Bond Counsel have expressed no
opinion regarding any such other tax consequences.
78
CERTaiN LEG~.~ I~TTE~
According to James G. Rourke, City Attorney, there
is no controversy or litigation of any nature now pending to
restrain or enjoin the. issuance, sale, execution or delivery
of the Bonds or in any way contesting or ,affecting the
validity of the Bonds, the proceedings of the City taken
with respect to the issuance or sale thereof, the. existence
or powers of the City or the title of any officers of the
City to their respective positions.
Moody's Investors Service and Standard & Poor's
Corporation have assigned their municipal bond ratings of
# # and # ,- respectively, to the Bonds. Such
ratings reflect only the views of such organizations, and an
explanation of the significance of each such rating may be
obtained from the respective rating agencies. There is no
assurance that either such rating will continue for any
given period of time or that either such rating will not be
revised downward or withdrawn entirely by such rating
agency, if in the judgment of such rating agency circum-
stances so warrant. Neither the City, the Underwriter nor
the Bank has undertaken any responsibility to bring to the
attention of the Owners of the Bonds any proposed change in
or withdrawal of any rating or to oppose any such proposed
revision or withdrawal. Any such downward revision or
withdrawal of such rating may have an adverse effect on the
market price of the Bond~.
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Underwriter"), expects to purchase the Bonds from the
City at a price of $ . The Underwriter will purchase
all the Bonds if any are purchased. The obligation of the
Underwriter to make such purchase is subject to certain
terms and conditions set forth in the Contract of Purchase.
/%DDITIONAL INFORMATION
Any statements in this Official Statement involv-
ing matters of opinion, whether or not expressly so stated,
are intended as such and not as representations of fact.
This Official Statement is not to be construed as a contract
or agreement between the City and the purchasers or Owners
of any of the Bonds.
79
The execution and delivery of this Official
Sta. tement by the Mayor of the Ci.~y has been duly authorized
by the City.
. .
By
Mayor
Dated: September , 1988
80
· ,X A:
ASSE~$ME~'T DIAGRAM (IN'D' ~kP)
DIAGRAM '"' '
&l' I ~ ii*edt.4
ASSESSMENT DISTRICT NO. 86-2 ,~.-.,-.,.-----,-.,.,,--..
,r"
·
/ ORANGE
)FU~NGE
COUNTY
OF
IIQ/OSIO ASSASSMmIT O~SI'ImCI' IQUlIMIT
cTrT M TUITIVGITT Q/MiAIl~ ~
AI&ISMI/T PIACII. llIIIn
OF
ORAN~
mot
~ TNIIOUGN 20
TUSTIN
c,~
.,
TIBACY mO.
i
ORIGINAL LARGE HAPS ARE IN THE ENGINEERING DEPARTHENT.
A-1
OF
ORANGE
[This page intentionally left blank.]
DESCRZ~TiON OF WORK ~kND METHOD OF /~SEB~MENT
The following information concerning the
description of the work and the method of assessment within
the · District has been taken from the Final Engineer's
Report, Assessment District No. S6-2, City of Tustin, dated
July 18, 19S8 (the ,Engineer's Report"), prepared by Willdan
Associates, Anaheim, California. The following represents
only certain portions of such Engineer' s Report and,
accordingly, is qualified by reference thereto and is
subject to the full text thereof. A copy of the Engineer's
Report is available at the office of the City Clerk.
Description of Work:
Ae
The design and construction of certain grading, paving,
base, curbs and gutters, parkway, drainage, intersec-
tion work, street lights, signing, striping, landscap-
ing, water, sewer, reclaimed water, gas, electric,
telephone and cable television utilities, together with
appurtenances and appurtenant work for the following
roadways:
le
·
gitv of Tustin
Irvine Boulevard - the improvement of Irvine
Boulevard to its ultimate street section along the
north side from 650+ feet westerly of Tustin Ranch
--.
Road to Jamboree Road.
Tustin Ranch Road - the improvement of Tustin
Ranch Road to its ultimate street section between
Irvine Boulevard and Jamboree Road.
·
·
·
Tustin Ranch Road Interchange at the I-5 Freeway -
funding for 28 percent of the total interchange
construction project and right-of-way acquisition.
Portola Parkway - the improvement of Portola
Parkway to its ultimate street section between
Jamboree Road and Tustin Ranch Road·
La Colina Drive - the improvement of La Colina
Drive to its ultimate street section between
Tustin Ranch Road and the western City boundary.
Jamboree Road - the improvement to ultimate width
of the west side (three southbound lanes) and
improvement o f the east side (two northbound
B-1
B.
C.
lanes) between Irvine Boulevard and Tustin Ranch
Road including a bridge at Peters Canyon Wash.
Jamboree Road - the improvement of a four-lane
roadway between Tustin Ranch Road ..and the Northern
Tustin City limits. ~.-
City of Ora~_~ ~.
Jamboree Road - the improvement of a four-lane
roadway between the Tustin City limits and Canyon
View Avenue.
.
Jamboree Road - the improvement of a four-lane
roadway between Canyon View Avenue and existing
Chapman Avenue in the City of Orange. Assessment
District No. 86-1, City of Orange, will contribute
funds to this project.
The construction of traffic signal improvements at
major intersections and proposed project entry streets:
City of TUst~n
Jamboree Road
Tustin Ranch Road
Irvine Boulevard
- Portola Parkway
City of oranqe
8 full signals
5 full signals
I full signal, 3 half
signals
I full signal
- Jamboree Road
Flood Control Facilities
following master planned
City of Tustin:
2 full signals, I half
signal
- the improvement of the
drainage facilities in the
Lower Peters Canyon Retarding Basin.
Jamboree West storm drain from Jamboree Road to
Peters Canyon Wash Eastern Inlet storm drain.
Peters Canyon Wash Eastern Inlet storm drain
between Jamboree Road and Peters Canyon Retarding
Basin.
B-2
De
E.
The grading of an access road and storm drain
installation between Tustin Ranch Road and Lower
Peters Canyon Retarding Basin.
Regional Trail in the City of Tustin -..the improvement
of a regional bicycle, equestrian, and.'hiking trail
from Peters Canyon Regional Park along- Lower Lake
Drive, Tustin Ranch Road and Portola Parkway' through
its 'crossing of Jamboree Road at Peters Canyon Wash.
Proposed Acquisition Items in the City of Tustin:
Clearing and tree removal along Jamboree Road from
Tustin Ranch Road to existing Chapman Avenue.
Grading for Assessment District street improve-
ments within Tract No. 12870: Tustin Ranch Road;
La Colina Road; Portola Parkway; Jamboree Road to
Tustin Ranch Road.
Method of Assessment=
The law requires that assessments levied pursuant
to the Municipal Improvement Act of 1913 be based on the
benefit properties receive from the works of improvement.
The law does not specify the method or formula that should
be used to apportion the assessments in special assessment
district proceedings.
It is necessary to identify the benefit that the
works of improvement will render to t_he properties within
the District. It is also necessary that the properties
receive a special and direct benefit as distinguished from
benefits to the general public.
The responsibility rests with the assessment
engineer who is appointed for the purpose of analyzing the
facts and determining the method .or formula for
apportionment (spread) of the assessment obligation to the
benefited properties. For these proceedings, the City has
retained the firm of Willdan Associates as the Engineer of
Work (the ,'Assessment Engineer").
The Assessment Engineer makes his recommendation
at the public hearing on the District, and the final
authority and action rest with the City Council after
hearing all testimony and evidence presented at the public
hearing. Upon conclusion of the public hearing, the City
must make the final action in determining whether or not the
assessment spread has been made in direct proportion to the
benefits received.
B-3
The works of improvement within the District
consist of the backbone facilities which provide traffic
access and control, drainage, utility services for the
properties, flood control retarding basin, and a regional
recreational trail. These improvements ate necessary for
the orderly development of the properties'., within the
District to full potential consistent with~.the City's
General Plan, the adopted East Tustin Specific Plan, and the
adopted City of Orange Upper Peters Canyon General Plan
Amendment. Additionally, these improvements are necessary
and required as a condition of approved tentative and final
tract maps. Therefore, the improvements are of direct and
special benefit to the properties within the District.
The improvements which are more fully described
under Description of Work fall into the following
categories:
Streets and Highways
Drainage Facilities
Utilities
Regional Trail
The parcels within the boundary of the District
are large unsubdivided parcels except for the area of Tract
Map No. 12870. The land uses and densities, although
generally described by the various plans that govern
development of the area, are not finally determined on all
parcels. Since some of the parcels are in an unsubdivided
condition and are under a single ownership, the initial
assessment is to the entire area of' all the unsubdivided
parcels in the District as if they were one parcel.
Therefore, that single landowner is assess one large
assessment on those unsubdivided parcels. However,
assessments are levied on each parcel within Tract 12870.
The improvements that fall within the City of
Tustin boundaries are assessed to the properties within the
City. Similarly, the District improvements that fall
outside the City of Tustin boundaries are assessed to the
properties within the City of Orange and the County of
Orange. The allocation of improvement costs to the
respective jurisdictions is discussed in more detail under
the section which covers apportionments for streets and
highways.
Within the City of Tustin area of the District,
the costs are assigned to the area encompassed by Tract
12870 and to the remaining area northerly thereof based on
the land uses and areas contained in the approved East
Tustin Specific Plan using the apportionment method
described herein. Upon apportionment to these two areas
using the
B-4
specific spread method for the four improvement cost
categories, ie. street and highways, drainage facilities,
utilities, and Regional Trail, the costs within Tract 12870
have been further apportioned and assigned to the respective
lots in the Tract based on the land uses and maximum
development densities shown for the pr6pe.rties in the
Specific Plan and the subdivided acreages· ~'
' Upon subdivision of the development areas or lots
and establishment of entitlements, the assessment will be
apportioned as described below.
Apportionments
A. Streets and Hiahwavs
The land use within the Assessment District is
primarily residential, of varying densities, with a small
amount of mixed-use. The East Tustin Specific Plan
specifies the land uses for the area within the City of
Tustin. The City of Orange General Plan Amendment, adopted
in 1979, specifies the land uses for the area within the
City of Orange sphere of influence·
The utility of streets and highways is a function
of the number of vehicle trips per day generated by the land
uses served by the streets or highways. Traffic engineers
have developed traffic generation factors which are related
to development density and type of land use. Therefore,
traffic generation factors are an appropriate basis for the
apportionment of the street and highway related improvement
costs among the benefited parcels. The traffic generation
factors deemed appropriate- for the area were identified in
the East Tustin Specific Plan and the Upper Peters Canyon
General Plan Amendment and are liSted below:
· Residential
estate density - 10·8 trips per dwelling unit per
day
low density - 10 trips per dwelling unit per day
medium-low density 8.6 trips per dwelling unit per
day
medium-density - 8.6 trips per dwelling unit per
day
medium-high density - 7.1 trips per dwelling unit
per day
B-5
Retail/Commercial
550 trips per acre per day
General/Commercial
7-62 trips per acre per day
·
Golf Course
6.0 trips per acre per day
The residential trip factors have been converted to a per
acre factor using the maximum per acre densities for the
East Tustin Specific Plan. Those densities are:
· East Tustin Specific Plan
estate density - 2 dwelling units per acre
low density - 5 dwelling units per acre
medium-low density - 10 dwelling Units per acre
medium density - 18 dwelling units per acre
medium-high density - 25 dwelling units per acre
In apportioning the benefit, each tract or
development area is assigned an appropriate trip generation
factor and the street and highway costs allocated pro rata
to the respective tract or development areas. Within a
tract, the improvement cost is apportioned equally based on
the number of similar lots or condominium units.
Included in the street and highway cost spread are
normal improvement costs for the construction of a street or
highway section consisting of grading, paving, curb and
gutter, landscaped median islands, sidewalk, street lights,
and appurtenant work. Also included are the traffic
signals, the bridge at Peters Canyon Wash, and the
I-5/Tustin Ranch Road freeway interchange and overcrossing.
While the I-5/Tustin Ranch Road Freeway
Interchange and overcrossing is outside the boundaries of
the District, it was a condition of approval for the East
Tustin Specific Plan applicable to these properties and
there is a direct and special benefit to the properties in
the District.
B-6
The interchange and overcrossing will provide
access to and from t~he freeway, as well as access over =he
freeway barrier for properties within ~he District, as well
as other proper~y to the south within =he East Tustin
Specific Plan area. While ~he existing development in the
surrounding area will have access to the freeway interchange
and the overcrossing, such access is currently being
provided by the Myford Road and Redhill Avenue interchanges.
The Tustin Ranch Road interchange is needed to relieve the
traffic burden that would otherwise be placed on the
existing interchanges in the area by the development of the
East Tustin Specific Plan area. Therefore, the primary
benefit for the interchange accrues to the area within the
East Tustin Specific Plan.
The traffic report prepared for the East Tustin
Specific Plan EIR provided traffic share data for the
respective development areas that will use the interchange.
According to that data, the development area southerly of
Irvine Boulevard within Assessment District No. 85-1
contributes 72 percent and the area within the Specific Plan
northerly of Irvine Boulevard contributes 28 percent of the
total Specific Plan area traffic that will use the
interchange. Therefore, the allocation of costs for the
interchange and overcrossing has been established as 72
percent for Assessment District NO. 85-1 with 28 percent of
the cost to be contributed by Assessment District No. 86-2,
but allocated only to the properties within the East Tustin
Specific Plan area.
Traffic signal improvements have been included in
the cost of the street and highway costs. The improvement
costs of new traffic signals on the boundary streets of the
District have been included in the District on the basis of
the number of quadrants of each traffic signal intersection
within the boundaries of the District where it is likely
that the street will be extended to create a four way
intersection in the future. The landowner is contributing
funds for the ineligible portion of the costs.
B-7
The traffic signals at intersections on the
boundary of the District and the ineligible share are listed
below:
Intersection
Ineligible
Percentage
t
Jamboree Road/"H"' Street (Champion Way) 50%
Jamboree Road/Portola Parkway 50%
Jamboree Road/"G" Street (Robinson Drive) 50%
Jamboree Road/Canyon View Avenue 50%
Jamboree Road/Santiago Canyon 75%
Jamboree Road/Lot 20 50%
Traffic signals at T-intersections are eligible in their
entirety.
Jamboree Road is along the eastern boundary of the
District for most of its length. It also passes through
various jurisdictions, the City of Tustin, the City of
Orange and the County of Orange. Portions of Jamboree Road
are committed to be constructed to the south of this
District boundary by City of Tustin Assessment district No.
85-1 and to the north by City of Orange Assessment District
No. 86-1. In recognition of the fact that the roadway will
be passing through three jurisdictions within this District
and the fact that other segments to date have been assessed
to properties Within the respective jurisdictional
boundaries, the roadway improvement cost for the reach
within each jurisdiction is assigned directly to the
properties within that corresponding jurisdiction. In other
words, the portion within the City of Tustin is assessed to
properties in Tustin, the portion to the north is assessed
jointly to the City of Orange and the County of Orange.
This spread method gives recognition to the roadway as being
a main north-south arterial for the adjoining lands and
opens the area for development.
Even though most of Jamboree Road in the City of
Tustin is bordered on the east by undeveloped land in the
County of Orange, the assessment is limited to the
properties within the District in the City of Tustin. The
number of travel lanes being improved are required to
provide access and circulation for the area being developed
in the City of Tustin and were included as a condition of
approval for development of the properties. Therefore,
there is a direct and special benefit to these properties.
Moreover, the easterly side of the roadway bordering the
County.of Orange is not being fully improved. There remains
to be constructed the build out of pavement, curb and
gutter, sidewalk and street lights. It is assumed that the
build out of these improvements will become the
B-8
responsibility of t_he adjoining property in the County of
Orange at the time of its development and, therefore, that
property will be contributing to ~he cost of improving the
roadway.
..
B. Flood Control and DrainaGe Facilities '"~ .
The storm drain and flood control improvements,
which are backbone facilities, intercept the storm runoff
from the properties'and convey the flows through the area in
a controlled manner providing flood protection. Since storm
runoff is a function of area, the total cost of these
improvements shall be apportioned to the respective tracts
or developable lot on a gross acreage basis net of arterial
or collector streets. However, within a tract, the drainage
improvement cost shall be apportioned based on the number of
similar lots or condominium units in the tract such that
each lot or unit is assessed an equal amount.
The golf course is not assessed since it does not
contribute drainage flows that are much different in its
developed condition than it did as undeveloped land. The
clubhouse parcel is not assessed either since it drains into
the golf course and does not discharge into drains improved
by the District.
C. Utilities
The utility improvements consist of underground
electric, telephone, CATV, gas, water, reclaimed water, and
sewer facilities. They provide the backbone utility service
to the area from which line extensions can be made to
provide service connections to each developed lot. Each
property is afforded an equal opportunity for utility
service and, therefore, the total cost of the improvements
shall be apportioned to each tract on the basis of gross
acreage net of arterial and collector streets. However,
within a tract, the improvement cost of utilities shall be
apportioned based on the number of similar lots or
condominium units such that each lot or unit is assessed an
equal amount.
The golf course is not assessed for electrical,
telephone, CATV, gas, and domestic or reclaimed water
utility costs since these improvements are of no benefit to
the golf course playing area. However, the clubhouse parcel
is assessed for these items.
D. Reqional Trail
The Regional Trail passes through the development
areas in the City of Tustin portion of the Assessment
B-9
District and forms part of a larger trail system. Each
development area in the Cityof Tustin will be afforded
access to the 'trail system which is intended to provide a
linkage between the local parks and open. space in the
development area. The improvement of the Regional Trail was
a condition of approval for development of the area. The
properties in the East Tustin Specific Plan receive a direct
and special benefit and are assessed on an acreage basis.
The golf course and clubhouse parcels are not
assessed nor is .the commercial property.
E. Nonassessed ProDert~e~
Property under the ownership of the Irvine Ranch
Water District is not assessed since it is public property.
Public school, open space and public/private park
sites have been designated in the areas for development.
Any of these properties conveyed or committed to be conveyed
to public ownership are not assessed. Should any such
property be approved in the future for development in a
private.use, the fair share of the Assessment District costs
should then be apportioned to the property based on the
foregoing assessment spread methodology and any credits
applied to previously assessed properties as appropriate.
It is recommended that the City require the apportionment to
occur concurrent with development approval.
Within Tract 12870, Lots 6 and 15 are designated
for school sites, Lots 16, 17 and 23 for public parks and
Lots 31 and 32 for private parks. None of these parcels are
assessed. However, since Lots 31 and 32 are designated as
private park sites which relate Only to the adjoining lots
and will be maintained by a master homeowner's association
for their respective development areas, they are treated as
if they are a part of those adjoining lots. In addition,
there are other non-buildable parcels within the Tract which
are not assessed.
B-10
Upon delivery of the Bonds in definitive form,
Mudge Rose Guthrie A/exander & Ferdon,' ~.s Angeles, Califor-
nia, and Rourke & Woodruff, Orange, California, Co-Bond
Counsel, propose to render their final approving opinion
with respect to the Bonds in substantially the following
form:
City Council
City of Tustin
300 Centennial Way
Tustin, California 92680
Members of =he City Council:
We have examined a record of proceedings relating
to the issuance of $81,400,000 aggregate principal amount of
City of Tustin Assessment District No. 86-2 Limited Obliga-
tion Improvement Bonds (the "Bonds") of the City of Tustin
(the "City"), a municipal corporation of the State of
California, and such other matters of law as we have deemed
necessary to enable us to render the opinions expressed
herein.
The Bonds are issued pursuant to Resolution of
Intention No. 88-61 of the City, adop=ed June 13, 1988,
relating to the City of Tustin Improvement District No. 86-2
(the "District"); the Municipal Improvement Act of 1913,
Division 12 of the Streets and Highways Code of California,
as amended, and the Improvement Bond Act of 191§, Division
10 of the Streets and Highways Code of California, as
amended (collectively, the "Act"); and Resolution No. 88-81
of the City, adopted July 18, 1988; and under and pursuant
to the Indenture of Trust dated as of September 1, 1988, by
and between the City and Citibank, N.A.', as Trustee (the
"Indenture"). The Bonds are issued for the purpose of
providing funds to finance works of improvements in the
District as described in the Final Engineer's Repor~ dated
July 18, 1988 relating to the District (the "Improvements")
and for the purpose of making deposits in certain funds and
accounts created under the Indenture. Capitalized terms
used herein and not otherwise defined shall have the
respective meanings given such terms in the Indenture.
The Bonds are dated September , 1988 and shall
mature on September 2, 2013. The Bonds are subject to
optional, mandatory and extraordinary mandatory redemption
and mandatory purchase prior to maturity in the manner and
upon the terms set forth in the Indenture.
C-1
Initially the Bonds are in the Unit Pricing Mode
and shall bear interest at an Adjusted Interest Rate as
provided in the Indenture.. The intmrest rate on the Bonds
is subject to conversion to a Variable Interest Rate or a.
·
Fixed Interest Rate under certain conditions.. Each Bond in
the Unit Pricing Mode will bear interest at.-an Adjusted
Interest Rate per annum from its date of initial issuance
and delivery. On any Purchase Date thereafter prior to the
Conversion Date or conversion of the Bond to the Demand
Mode, Owners of Bonds in the Unit Pricing Mode will have the
right to require the Bonds to be purchased at a price equal
to the principal amount plus accrued and unpaid interest
thereof subject to the terms and provisions of the
Indenture.
The Owner of any Bond in the Demand Mode may
require such Bonds to be purchased on any Optional Tender
Date prior to conversion to the Demand Mode or a Conversion
Date. The Owner shall receive a price equal to the princi-
pal amount of the Bond to be purchased plus accrued and
unpaid interest thereof subject to the terms and provisions
of the Indenture.
The Tokai Bank, Ltd. Los Angeles Agency (the
"Bank"), has issued concurrently herewith its Letter of
Credit for the benefit of the Trustee for the Bonds. Under
the terms of the Reimbursement Agreement with the Bank, the
City is obligated to reimburse the Bank for all Drawings
under the Letter of Credit in accordance with the terms
thereof and the Indenture.
We are of the opinion that:
1. The City is duly created and validly existing
as a municipal corporation under the Constitution and
laws of the State of California and has good right and
lawful authority under the Act to acquire and construct
the Improvements.
2. The City has the right and power under the
Act to enter into the Indenture, and the Indenture has
been duly and lawfully authorized by the City, is in
full force and effect in accordance with its terms and
is valid and binding upon the City and enforceable in
accordance with its terms, and no other authorization
for the Indenture is required. The Indenture creates
the valid pledge which it purports to create of (i) all
right, title and interest of the City in the Assessment
Installments and foreclosure proceeds relating thereto,
(ii) the proceeds of the Bonds, (iii) with respect to
Bonds in the Fixed Rate Mode, the Fixed Rate Reserve
Account, (iv) with respect to Bonds in the Unit Pricing
C-2
Mode and the Demand Mode, the Variable Rate Reserve
Account and the Interest Reserve Fund, and (v) all
· other funds and.accOunts, if any, created under the
Indenture (other. than the Purchase Fund' and the Invest-
ment Earnings Fund); subject to the provisions of the
Indenture permitting the application thereof for the
purposes and on the terms and conditions 'set forth in
the Indenture.
3. The Bonds are secured by valid and enforce-
able liens upon those lots and parcels of land within
Assessment District No. 86-2.
4. The City is duly authorized and entitled to
issue the Bonds, and the Bonds have been duly and
validly authorized and issued by the City in accordance
with the Constitution and statutes of the State of
California, including the Act, and the Indenture. The
Bonds constitute valid and binding obligations of the
City as provided in the Indenture, are enforceable in
accordance with their terms and the terms of the
Indenture, and are entitled to the benefits of the Act
and the Indenture.
5. The Internal Revenue Code of 1986, as amended
(the "Code") sets forth certain requirements which must
be met subsequent to the issuance and delivery of the
Bonds for interest thereon to be and remain excluded
from gross income for Federal income tax purposes.
Noncompliance with such requirements could cause the
interest on the Bonds to be included in gross income
retroactive to the date of issue of the Bonds. The
City has covenanted in the Indenture to comply with
each applicable requirement of the Code necessary to
maintain the exclusion of interest on the Bonds from
gross income for Federal income tax purposes.
In our opinion, under existing law, interest
on the Bonds is exempt from personal income taxes of
the State of California and, assuming compliance with
the aforementioned covenant, is excluded from gross
income for Federal income tax purposes. The Bonds are
not ,,specified private activity bonds" within the
meaning'of section 57(a)(5) of the Code and, therefore,
the interest on the Bonds will not be treated as a
preference item for purposes of computing the Federal
alternative minimum tax imposed by section 55 of the
Code. However, we note that a portion of the interest
on Bonds owned by corporations may be subject to the
Federal alternative minimum tax, which is based in part
on adjusted net book income or adjusted current
earnings.
C-3
Certain requirements and procedures contained
or referred to in the Indent-ute and other relevant
documents may be changed and certain actions may be
taken, under the circumstances-and subject to the terms
and conditions set forth in such documents, upon the
advice or wi~h the approving opinion Df nationally
recognized bond counsel. We express no Opinion as to
any Bond, or the interest thereon, if any change occurs
or action is taken upon the advice or approval of other
bond counsel.
Except as stated in the preceding three para-
graphs, we express no opinion as to any Federal or
state tax consequences of the ownership or disposition
of ~he Bonds.
The opinions expressed in paragraphs 2, 3 and 4
hereof are qualified to the extent that the enforceability
of the Indenture and the Bonds, respectively, may be limited
by any applicable bankruptcy, insolvency, debt adjustment,
moratorium, reorganization or other similar laws affecting
creditors' rights generally or as to the availability of any
particular remedy.
We have examined the executed Bond i and in our
opinion the form of such Bond and its execution are regular
and proper.
Very tru. l y yours,
C-4
EXHIBIT E
B&W
Draft #4
August 26, 1988
CITY OF TUSTIN
as Account Party
and
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
as Issuing Bank
REIMBURSEMENT AGREEMENT
Dated as of September 1, 1988
U.S.$83,299,334
Relating to the $81,400,000 City of Tustin
Assessment District No. 86-2
Limited Obligation Improvement Bonds
TABLE OF CONTENTS
Section
1.1.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Definitions .....................................
Accounting Terms ............... ~ ................
Page
2.1,
2.3 ·
ARTICLE II
ISSUANCE OF LETTER OF CREDIT AND OTHER PAYMENTS
Issuance of Letter
Reimbursements and Other Payments
(a) Reimbursements ........
(b) Advance Deposits ~ ~%ain
(c) The Letter of Credit Fees ..
(d) Manner of Payments ..........
(e) Late Payments .........................
(f) Obligations Unconditional
(g) Waivers, Etc ..........................
(h) Increased Costs ....... ~o
Certain Provisions with ~~%
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
of Credit ..............
.....,,..
ilelllllll
Draws
.,........
Purchase of Bonds ........
Interest and Discount ....
Principal ................
Prepayments ..............
Sale of Bank Bonds ..........
Bank Bonds ..................
Custodial Arrangement .......
Rate and Price Notification ..
Penalties ............
Remarketing o~ ~i~ ~ds
5
6
6
6
7
8
8
8
9
10
11
11
12
12
12
13
13
13
13
13
14
3.1,
3.2.
3.3.
ARTICLE III
LETTER OF CREDIT OPERATIONS
Changes in Stated Amount of Letter of Credit ....
Separate Purchase Arrangement; Usury ............
Payment of Drawings' on Letter of Credit .........
14
14
15
2978010/1
Section Page
4,1,
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of the Ci
(a) Existence ....................
(b) Power and i~rization .
(c)
(d)
(e)
(f)
(g)
(h)
(i)
No Legal Bar ............ . ..................
Consents ................. - .................
Litigation .............................
Enforceabili~
Changes in Law ............................
Disclosure of Information ....
The Assessment District, Liens
(j)
Instal lments ....................
Representations ~ ~ ~i~
15
15
15
15
16
16
16
17
17
17
17
5.1.
ARTICLE V
COVENANTS
Covenants of the City ...........................
(a) Compliance with this Agreement and the
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
Other Financing Documents ................
Laws, Permits and Obligations ..............
Use of Proceeds ............................
Maintenance of Existence
Financial Statements .......................
Visitation and Examination .....
Maintenance of Tax-Exempt Status ~ %~
Bonds .......................
Enforcement ~ ~rvine ~i~ ~eements
Agreement to Market Fixed Rate Bonds .......
No Change in Financing Documents ...........
Collection and Payment of Assessments ......
18
18
18
18
18
18
18
19
19
19
19
19
6,l,
ARTICLE VI
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
Conditions to Issuance and Delivery of Letter of Credit .....................................
(a) The Financing Documents .. ·
(b) The Indenture ...........................
(c) City Proceedings, etc ...................
(d) Certificate .............................
(e) City's Attorney's Legal O~inion .........
(f) Bond Counsel's Legal Opinion ............
19
20
20
20
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2978010/1
ii
Section Page
(g)
(h)
(j)
(k)
(1)
(m)
The Irvine Company Counsel's Legal Opinion ·
Represent.~tion'and Warranties True; No
Default .... ................................
Trustees Certificate .......................
Trustees Certificate .......................
Payment of Fees .......................
The Irving Company 6~i~icate
Other Requirements .........................
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22
2-2
22
22
7.1.
ART I CLE VI I
EVENTS OF DEFAULT
Definition of Events of Default .................
Notice of Events ................................
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24
8.1,
8.2.
8.3.
8.4.
8.5.
8.6
8.7.
8.8.
8.9.
8.10.
8.11
8.12
8.13
8.14.
8.15.
8.16.
8.17.
8.18.
8.19.
8.20.
8.21.
ARTICLE VIII
MISCELLANEOUS
No Waiver; Modifications in Writing ...........
Consents ......................................
Further Assurances ........................
Survival of Representations i~ Warranties
Notices, etc ............................
Costs, Expenses i~ Taxes .
Execution in Counterparts ................
Binding Effect; Assignment ...............
Governing Law ...........................
Severability o~ Provisions ...............
Headings ...........................
..
Actions Relating ~g ~ Financing Documents,
Indemnity ......................
Limited Liabi{i~ ;~ ~i~ ......
Security ...............................
Successor Trustee .....................
Extension of'Term .....................
Right to Submit Bid ..............
Rights. and Remedies Cumu{[tive ....
Bank Reliance ......................
Attorney's Fees ....................
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APPENDIX A
EXHIBIT A
Calculation Pursuant to Clause
of "Bank Purchase Price"
Form of Irrevocable Letter of
(b) of Definition
Credit
2978010/1
iii
RE IMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of September 1,
1988, is made by the City of Tustin,· California (the "City"),
in favor of The Tokai Bank, Ltd. Los Angeles Agency (the
"Bank" ). .
RECITALS:
WHEREAS, to obtain funds for the construction and
acquisition of certain public improvements in the City of
Tustin Assessment District No. 86-2 (which improvements and
assessment district are described in Resolution No. 88-81
adopted by the City Council of the City on July 18, 1988, which
together with Resolution of Intention No. 88-61 adopted
June 13, 1988 and Resolution No. adopted September 6,
1988 are hereinafter collectively referred to as the
"Resolution"), to meet debt service for construction of those
improvements, the citY proposes to issue and sell not to exceed
U.S.$81,400,000 aggregate principal amount of its Assessment
District No. 86-2 Improvement Bonds; and
WHEREAS, in order to provide funds for redemptions prior to
maturity of the Bonds (as hereinafter defined), to provide
funds for the purchase of Bonds tendered and not remarketed
pursuant to the Indenture (as hereinafter defined) and to
insure the timely payment of the principal of, premium if any,
and interest on the Bonds, the City is requesting the Bank to
issue to the Trustee under the Indenture for the account of the
City a letter of credit (the "Letter of Credit"); and
WHEREAS, the parties hereto, by all necessary action, have
duly authorized the execution and delivery of this Agreement;
NOW, THEREFORE, in order to provide for and to evidence the
obligation of the City to reimburse any drawings under the
Letter of Credit, and in consideration of the premises and of
the commitments made hereunder and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Definitions. Unless otherwise defined herein
or the context otherwise requires, certain capitalized terms
used herein shall have the meaning set forth in Section 1.01 of
2978010/1
the Indenture. In addition, the following terms as used in
this Agreement shall have the following meanings, unless the
context otherwise requires. These definitions shall be equally
applicable to both the singular and the plural forms of the
terms so defined.
"Agreement" shall'mean this Reimbursement Agreement, as the
same may be amended or supplemented from time to time. .
"Bank Bonds" shall mean all Bonds pledged to the Bank
pursuant to the terms of Articles III or IV of the Indenture.
"Bank Interest Rate" shall mean, at any date of
determination, the lesser of (i) the Base Rate then in effect
or (ii) the Maximum Rate in effect from such date of
determination to the next succeeding Business Day.
"Bank Purchase Date" shall mean any Business Day on which
Bonds are purchased pursuant to Section 2.3(a) hereof.
"Bank Purchase Price" shall mean, with respect to Bonds to
be purchased on any Bank Purchase Date under Section 2.3(a)
hereof:
(1) if, on such Bank Purchase Date, the Base Rate is
less than or equal to the Maximum Rate, (1) accrued
interest (without regard to the Bank Interest Rate) on the
Bonds to be purchased to the Bank Purchase Date, plus (ii)
the principal amount of the Bonds to be purchased; or
(2) if, on such Bank Purchase Date, the Base Rate is
greater than the Maximum Rate, the-amount calculated with
respect to such purchase in accordance with Appendix A
hereto (using the Bank Interest Rate and the Base Rate in
effect on such Bank Purchase Date, the amount of accrued
interest (without regard to the Bank Interest Rate) on the
Bonds to the Bank Purchase Date and the number of days
until the next succeeding Business Day);
"Base Rate" shall mean the following:
(1) with respect to Put Bonds, except as otherwise
provided in clauses (3) and (4) below, for each of the
first ninety (90) days that a Bond is a Bank Bond such Bond
shall bear interest at a rate per annum equal to the Prime
Rate for such day;
(2) with respect to Put Bonds, except as otherwise
provided in clauses (3) and (4) below, for each day
following the 90-day period provided in clause (1) above
2978010/1
that a Bond is a Bank Bond such Bond shall bear interest at
a rate per annum equal to the Prime Rate plus one quarter
of one percent (1/4%) for such day;
(S) except as otherwise provided in clause (4) below,
for each day that any sum due to the Bank on any Bank Bond
remains unpaid, such Bond-shall bear interest at a rate per
ann~m equal 'to the Prime Rate for such day plus two percent
(2%); and
(4) in no event shall the Base Rate be less than the
then prevailing average rate applicable to thirty (30) day
tax-exempt commercial paper as reported by the Munifacts
Wire System Inc., or, if such rate is no longer reported, a
substitute approximating as closely as possible such rate,
as selected in good faith by the Bank and approved by the
City, or, if the City shall fail to act, by the Remarketing
Agent.
"Bonds" shall mean the City of Tustin Assessment District
No. 86-2 Limited Obligation Improvement Bonds in the aggregate
principal amount of $81,400,000 issued by the City pursuant to
the Indenture, other than Fixed Rate Bonds.
"Business Day" shall mean any day of the year on which the
Trustee, the Paying Agent, the Tender Agent, the Remarketing
Agent, the Bank and banks or trust companies in New York, New
York or in California are, or the New York Stock Exchange is,
not authorized or required to remain closed.
"City Attorney" shall mean James G. Rourke or any successor
to the position of City Attorney to the City.
"Draw" shall mean an Interest Draw, Principal Draw or
Purchase Draw, as the context may require.
"Effective Date" shall mean the date on which the Letter of
Credit is issued by the Bank.
"Event of Default" shall have the meaning set forth in
Section 7.1 hereof.
"Expiration Date" shall have the meaning set forth in
Paragraph 4 of the Letter of Credit.
"Financing Documents" shall mean this Agreement, the Letter
of Credit and all Annexes thereto, the Bonds, the Indenture,
the Remarketing Agreement, the Purchase Contract, the Irvine
Company Agreements, and any other document or instrument
required or stated to be delivered hereunder or thereunder at
the Closing (as defined in the Purchase Contract).
2978010/1
"Indenture" shall mean that certain Trust Indenture
relating to the Bonds, dated as of September 1, 1988, by and
between Citibank, N.A. and the City, as the same may be amended
or supplemented from time to time. _
"Interest Draw" shall mean a payment with respect to
interest made by the Bank pursuant'to a demand.under the Letter
of Credit in the form of Annex 1.
"Irvine Company Agreements" shall mean that certain
Agreement for Payment for Costs for Infrastructure Improvements
City of Tustin Assessment District 86-2 dated December 15,
1986, as amended September 6, 1988, made and entered into
between the City and The Irvine Company, as the same may be
amended or supplemented or extended from time to time (the
"Costs Agreement") and the Protocol Agreement, dated as of
September 1, 1988, made and entered into between the City and
The Irvine Company, as the same may be amended or supplemented
or extended from time to time (the "Protocol Agreement").
"Issuer" shall mean the City.
"Letter of Credit" shall mean the letter of credit issued
pursuant to Section 2.1 hereof, as the same may be amended from
time to time.
"Letter of Credit Fee" shall mean all fees set forth in
Section 2.2 hereof.
"Participant" shall mean a person or entity that acquires a
participation interest in the Bank's rights and/or obligations
under this Agreement and the Letter of Credit.
"Prime Rate" shall mean, for any day, the fluctuating rate
announced publicly by the Bank from time to time at its Los
Angeles Agency office as its "prime rate", said rate .t.o change
on and as of the date of any change in the announced prime
rate" .
"Principal Draw" shall mean a payment with respect to the
principal portion of the Bonds by the Bank pursuant to a demand
presented by the Trustee under the Letter of Credit in the form
of Annex 2.
"Purchase Contract" shall mean the agreement between the
City and Merrill Lynch, Pierce Fenner & Smith Incorporated
relating to the purchase and sale of the City of Tustin
Assessment District No. 86-2 Limited Obligation Improvement
Bonds upon issuance thereof.
2978010/1
"Purchase Draw" shall mean a payment with respect to the
principal portion of the purchase price of the Bonds and the
.premium, if any, by the Bank pursuant to a demand presented by
the Trustee' under the Letter of Credit in the form of Annex 3
or Annex 4.
"Put Bonds" shall mean any Bonds put pursuant to
Sections 4.01, 4.02, 4.03, 4.05(A) or 4.05(B) of the Indenture.
"Scheduled Expiration Date" shall mean September 15, 1998.
"Stated Amount" shall mean the maximum aggregate amount
available to be drawn under the Letter of Credit, which
initially shall be $83,299,334, as from time to time decreased
and/or reinstated in accordance with the terms of this
Agreement and the Letter of Credit.
"Unreimbursed Put Bond Amount" shall mean, at any time, the
aggregate amount of payments made by the Bank pursuant to
demands under the Letter of Credit for the purchase of Put
Bonds which payment amounts have not been reimbursed by the
City pursuant to the terms of this Agreement.
SECTION 1.2. Accountinq Terms. Ail accounting terms not
specifically defined herein shall be construed in accordance
with generally accepted accounting principles consistently
applied, except as may be otherwise stated herein.
ARTICLE II
ISSUANCE OF LETTER OF CREDIT AND OTHER PAYMENTS
SECTION 2.1. Issuance of Letter of Credit. At the request
and for the account of the City, the Bank hereby agrees, on the
terms and subject to the conditions hereinafter set forth, to
issue to the Trustee a Letter of Credit (in the form of
Exhibit A hereto) dated the date of issuance thereof in the
initial amount of $83,299,334, which shall create the
obligation of the Bank to honor drawings in accordance with the
terms of the Letter of Credit in amounts subject to reduction
and reinstatement as provided herein and in the Letter of
Credit equal to: (1) the principal amount of the Bonds, (2) an
amount not to exceed $1,085,334 available for 40 days interest
accrued on the Bonds calculated on the basis of a 360 day year
at an annual interest rate equal to the lesser of 12% or the
Maximum Rate at or before the Expiration Date, and (3) an
amount not to exceed $814,000, available for payment of premium
upon redemption or purchase of the Bonds. The Letter of Credit
shall expire on the Scheduled Expiration Date, subject to
2978010/1
extension or earlier cancellation or termination as provided in
the Letter of Credit. The Banks' obligation to issue the
Letter of Credit shall expire at 4.:00 p.m., Los Angeles time,
on September 13, 1988.
SECTION 2.2. Reimbursements and Other Payments.
(a) Reimbursements. Subject to the limitations set
forth in Section 8.14 hereof, the City agrees to reimburse
the Bank, at the times, in the manner and otherwise as
provided in this Agreement and the Indenture, for each
payment made under the Letter of Credit honoring any
drawing made by the Trustee thereon. The City shall
reimburse the Bank for each Interest Draw, Principal Draw
and Purchase Draw under the Letter of Credit no later than
the close of business on the day such Interest Draw,
Principal Draw, or Purchase Draw is honored.
The City shall reimburse the Bank for each
Unreimbursed Put Bond Amount Draw no later than the close
of business on the date on which the principal owing with
respect to such Put Bond is due and payable pursuant to the
terms~of the Indenture, whether pursuant to repurchase of
such Bond, redemption, maturity, or otherwise, or, if
earlier, the date five (5) years following the Expiration
Date. Each Bond purchased or paid with moneys drawn under
the Letter of Credit shall be pledged to the Bank.
Whenever, the Bank pays interest on Bonds other than
Bank Bonds, pursuant to an Interest Draw, the Bank shall be
subrogated to the rights of the owners of such Bonds to
payment of interest and penalties, if any, and foreclosure
proceeds as provided in the Indenture. So long as Bank
Bonds remain Outstanding or there remains any unsatisfied
obligations owing to the Bank pursuant to this Agreement or
the Indenture, (1) the Bank shall be entitled to all of the
rights, benefits and protections of the Indenture with
respect to each such Bond and all such unsatisfied
obligations, and (2) the Indenture shall continue in full
force and effect with respect to such Bonds. Subject to
the limitations set forth in Section 8.14, all obligations
owing to the Bank pursuant to this Agreement and the
Indenture shall be satisfied upon payment in full thereof.
(b) Advance Deposits for Certain Draws. Prior to any
draw under the Letter of Credit with respect to (i) any
optional redemption pursuant to Section 3.02 or 3.03 of the
Indenture, or (ii) any premium whatsoever, the City shall
pay or cause to be paid to the Trustee, and the Trustee
shall have in its possession, immediately available funds
in an amount equal to such draw.
2978010/1
(c) The Letter of Credit Fees. The City agrees to
pay to the Bank on the Effective Date, a commitment fee of
five one hundredths of one percent (.05%) of the Stated
Amount of the Letter of Credit on such date (the
"Commitment Fee"). Subject to the limitations set forth in
Section 8.14 hereof, the City shall pay to the Bank in
advance on-the Effective Date and on each January 1,
April 1, July 1 and OctOber 1 thereafter a Letter of Credit
Fee at the rate of three-tenths of one percent (.30%) of
the Stated Amount per annum to the Scheduled Expiration
Date. If the Scheduled Expiration Date shall be extended
the Letter of Credit Fee shall be payable on each
January 1, April 1, ~uly 1, and October 1 to the Expiration
Date at the rate agreed at the time of the extension of the
Letter of Credit pursuant to Section 8.17 hereof (computed
on the basis of a 360-day year and actual days elapsed at
the Maximum Rate) (each such date, a "Fee Payment Date") on
the average daily Stated Amount during the period beginning
on such Fee Payment Date and ending on the date next
preceding the next Fee Payment Date thereafter (each such
period, a "Payment Period"). The Letter of Credit Fee
payable on the Effective Date for the Payment Period ending
September 30, 1988 shall be based on the assumption that
the average daily Stated Amount for that Payment Period
will be the Stated Amount on the Effective Date, and the
Letter of Credit Fee for each Payment Period thereafter
shall be calculated based on the assumption that the
average daily Stated Amount for such Payment Period will be
the Stated Amount on the date which is thirty (30) days
prior to such Fee Payment Date. On the last Business Day
of each Payment Period (in the case of the last Payment
Period, the Expiration Date), the actual Letter of Credit
Fee for the Payment Period ending on such date shall be
calculated by the City and verified by the Bank and (i) if
the amount paid for such Payment Period exceeded the actual
Letter of Credit Fee payable, the excess shall be credited
against the Letter of Credit Fee payable for the next
Payment Period and (ii) if the amount paid for-such Payment
Period was less than the actual Letter of Credit Fee
payable, the deficiency added to the Letter of Credit Fee
payable for the next Payment Period. In addition, the City
shall pay to the Bank (i) a fee of $1,500 upon the
substitution of a letter of credit for the Letter of Credit
pursuant to Section 4.06 of the Indenture or upon early
termination of the Letter of Credit accompanied by
cancellation of all Outstanding Bonds other than Fixed Rate
Bonds; and (ii) a transfer fee of $1,500 with respect to
each transfer of the Letter of Credit pursuant to the terms
of Section 4.06 of the Indenture.
2978010/1
(d) Manner of Payments. Interest payable hereunder
shall be computed on the basis of a 360-day year and actual
days elapsed. The City covenants and agrees to deposit or
cause to be deposited all amounts due the Bank with respect
to any Draws made under the Letter of Credit with the
Trustee in accordance with the Indenture. Subject to the
lim%tations set forth in Section 8.14, all payments to be
made by or on behalfJof the City or the Trustee to the Bank
on account of amounts at any time owing hereunder or in
connection herewith shall be made, and shall not be con-
sidered made until received, in U.S. dollars in immediately
available funds at the Federal Reserve Bank of Los Angeles
for the account of The Tokai Bank, Ltd. Los Angeles Agency,
at its account number 090-002030 with Tokai Bank of
California, ABA Code 122034268 Credit No. ,
Attention: Manager or by delivery of payment, in
immediately available funds, to The Tokai Bank, Ltd.
Los Angeles Agency, 534 West Sixth Street, Los Angeles,
California 90014, Attention: Manager or to such other
account, place or officer as the Bank may designate in
writing. All such payments shall be made to the Bank not
later than the close of business on the date due. If any
amount payable hereunder shall fall due on a day that is
not a Business Day, then such due date shall be extended to
the next succeeding Business Day and interest shall
continue to accrue on such amount during such extension.
(e) Late Payments. Subject to the limitations set
forth in Section 8.14 hereof, for each day that any sum due
and payable to the Bank hereunder or under the Indenture
remains unpaid such sum shall bear interest and/or
penalties, if applicable, at an aggregate rate per annum
equal to the Prime Rate for such day plus two percent (2%)
(computed on the basis of a 360-day year and actual days
elapsed).
(f) Obliqations Unconditional. Subject to the
limitations set forth in Section 8.14 hereof and except as
provided in this paragraph, the City's obligation to reim-
burse the Bank for each payment made under the Letter of
Credit honoring any Draw made by the Trustee thereunder and
all of its other obligations under this Agreement shall be
absolute and uncOnditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to
payment which the City may have against the Bank or against
any beneficiary of the Letter of Credit (or any other
person for whom such beneficiary may be acting), or any
other person, including, without limitation, any defense
.based on the Trustee's failure to submit any Draw on the
Letter of Credit in strict conformance with the terms of
2978010/1
the Letter of Credit or based on-the invalidity, inaccura-
cy, falsity, or lack of genuineness, whether by forgery,
fraud or otherwise, of any document, demand, or statement
presented under the Letter of Credit or any failure of the
City to receive all or any part of the proceeds of the sale
of any Bonds with respect to which such Draw on the Letter
of Credit was made by the Trustee or any non-application or
misapplication by the Trustee of the proceeds of such Draw~
and irrespective of the legality, validity, regularity or
enforceability of all or any of the Financing Documents,
and notwithstanding any amendment or waiver of (other than
an amendment or waiver explicitly reciting the~release or
discharge of any such obligation), or any consent to
departure from, all or any of the Financing Documents or
any exchange, release, or nonperfection of any collateral
securing the Bonds or the obligations of the City hereunder
or any expiration of the Letter of Credit; provided, how-
ever, that the City shall not be obligated to reimburse the
Bank for any wrongful payment or disbursement made under
the Letter of Credit as a result of acts or omissions
constituting wilful misconduct or gross negligence on the
part of the Bank or any of its officers, employees, or
agents.
(g) Waivers, Etc.
law:
To the full extent permitted by
(i) the City hereby waives (a) presentment,
demand, notice of demand, protest, notice of protest,
notice of dishonor and notice of non-payment; (b) ex-
cept as provided in and subject to the Indenture, the
right, if any, to the benefit of, or to direct applica-
tion of, any security hypothecated to the Bank until
all obligations of the City to the Bank hereunder,
howsoever arising, shall have been paid; (c) the right
to require the Bank to proceed against the City
hereunder, or against any person under any guaranty or
similar arrangement, or to pursue any other remedy in
its power; (d) all statutes of limitation; and (e) any
defense arising out of the election by the Bank to
foreclose on any security by one or more non-judicial
or judicial sales;
(ii) the Bank may exercise any other right or
remedy, even though any such election operates to
impair or extinguish the City's right to reimbursement
from, or any other right or remedy it may have
against, any person, or any security (it being
understood that this clause (ii) does not confer upon
the Bank any right or remedy it would not have
otherwise); and
·
2978010/1
(iii) the City agrees that the Bank may proceed
against the City or any person directly and
independently of any other, and that any forbearance,
change of rate of interest, or acceptance, release or
substitution of any security, guaranty, or loan or
change of any term or condition hereunder or under the
Letter of Credit or any Financing Document shall not
in any way affect the liability of the City hereunder.
(h) Increased Costs. Subject to the limitations set
forth in Section 8.14, if any change in any law or
regulation, domestic or foreign, in the interpretation
thereof by any court or administrative or governmental
authority charged with the administration thereof, or in
any generally accepted regulatory or accounting principles
on or after the date hereof shall (i) impose, modify or
deem applicable any reserve, special deposit or similar
requirement against letters of credit, issued or partici-
pated in by, or assets held by, or deposits in or for the
account of the Bank or any Participant, or require the
inclusion of the Letter of Credit in calculations related
to the Bank's capitalization, (ii) impose on the Bank or
any Participant any other condition or requirement
regarding this Agreement or the Letter of Credit or any
participation therein or any collateral therefor,
(iii) affect the amount of any deduction that the Bank may
take for purposes of federal, state or local income taxes
with respect to costs, including but not limited to,
interest costs, of maintaining the Letter of Credit or the
reimbursement obligations of the City hereunder or (iv) sub-
ject the Bank or any Participant to any tax, charge, fee,
duty or any withholding of any kind whatsoever, and the
result of any event referred to in clause (i), (ii), (iii)
or (iv) above shall be to increase the cost to the Bank or
any Participant of issuing, participating in or maintaining
the Letter of Credit, the reimbursement obligation of the
City hereunder or of holding any collateral therefor or
reduce the amount of any fee or any other amount receivable
by the Bank or any Participant with respect to the Letter
of Credit or this Agreement or any participation therein
(which increase in cost or reduction in fee or other
receipt, as the case may be, shall be determined by the
Bank's or Participant's reasonable allocation of the
aggregate of such cost increases or fee reductions
resulting from such events), then, upon demand by the Bank,
the Letter of Credit Fee set forth in Section 2.2(b) hereof
shall immediately be increased by the additional amounts
that are reasonably necessary to compensate the Bank or
such Participant for such increased costs incurred or
reduced receipts suffered thereby, provided that the
2978010/1
10
participation of one or more Participants shall not cause
the Letter of Credit Fee to exceed the amount it would have
been without the participation of such Participant or
Participants. A certificate of the Bank or any Participant
~s to such increased costs incurred or reduced receipts
suffered by any of them as a result of any event mentioned
in clause (i), (ii), (iii) or (iv) above submitted to the
City specifying the event causing such increased cost or
reduced receipt and setting forth in reasonable detail the
calculation made to determine the amount of such increased
cost or reduced receipt shall be presumptively correct as
to the amount thereof, absent demonstrable error. The Bank
will, with respect to the delivery of any Bank certificate
stating an increased cost occasioned by the inclusion of
the Letter of Credit in calculations related to the Bank's
capitalization, deliver a certificate of a nationally
recognized accounting firm stating that: (1) such costs
are directly related to the Bank's maintaining letters of
credit, including the Letter of Credit, and this
Reimbursement Agreement, (2) that the amount of such
increased costs is in an amount reasonably necessary to
preserve the 30 basis points per annum fee after deducting
such increased costs, and (3) that any allocation of
increased capital costs to the Letter of Credit and this
Reimbursement Agreement reflects a reasonable allocation of
the average costs of the capital required under any such
change in capitalization requirements. The Bank and each
Participant shall exercise reasonable efforts to minimize
such increased costs or reduced receipts. The participa-
tion of one or more Participants shall not reduce or alter
the Bank's obligations under this Agreement or affect in
any way the rights or obligations of the City hereunder or
under the Bonds and the City shall have the right to
continue to deal solely with the Bank, and no such
participation shall cause any national rating agency to
lower, its rating on the Bonds.
SECTION 2.3. Certain Provisions with Respect to Bank
Bonds. Bank Bonds shall be subject to all applicable
provisions of this Agreement and to these provisions:
(a) Purchase of Bonds. The Bank will cause the
purchase, with funds drawn under the Letter of Credit on
the terms and conditions contained in this Agreement and
the Indenture, of all Bonds other than Fixed Rate Bonds
(i) that are Put Bonds purchased and not resold by the
Remarketing Agent by 12:30 p.m. New York City time on the
same day, at the applicable Bank Purchase Price, and
(ii) that become due, whether by maturity, redemption or
otherwise, at par.
2978010/1
11
(b) Interest and Remarketinq Price. Each Bank Bond
shall bear interest at a rate per annum equal to the Bank
Interest Rate on the outstanding principal amount thereof
for each day from and including the date such Bond is
purchased to but not including the date such Bond is paid
in full at maturity or upon redemption, or it is remarketed
at par or less than par to the extent permitted by the
Indenture. The Bank Interest Rate shall be computed on the
basis of a 360-day year and actual days elapsed. In
addition, if it is necessary to remarker P~t Bonds at less
than par as permitted under Sections 4.04 and 4.08(D) of
the Indenture~ the Bank shall be entitled to receive the
difference between the purchase price of the remarketed Put
Bonds and the Bank Purchase Price at any time during which
the Bank Purchase Price shall exceed such remarketing price
all as determined in accordance with the formula set forth
on Appendix A hereto.
Interest on Bank Bonds which are Put Bonds shall be
paid in arrears to the Bank on the first Business Day of
each week and on each other date on which interest on such
Bonds is payable pursuant to the Indenture. Interest on
Bank Bonds which are not Put Bonds and Remarketing Costs
payable with respect to Put Bonds shall be due and payable
on the date an Interest Draw is honored by the Bank, and
the City, in accordance with the Indenture, will immediate-
ly pay, or cause to be paid, to the Bank interest at the
Bank Interest Rate and penalties, if any, accrued to the
date of payment on such Bonds and such Remarketing Costs;
provided however that if the Bank is reimbursed for such
Interest Draw on the date of such Draw no interest shall
accrue. No Remarketing Costs shall be paid on Bank Bonds
which are not Put Bonds.
(c) Principal. Ail Bank Bonds shall be subject to
payment, redemption and purchase pursuant to the
Indenture. In addition, Bank Bonds other than Put Bonds
shall be due and payable on the date of purchase by the
Bank, and the City, in accordance with the Indenture, will
immediately pay, or cause to be paid, to the Bank, the
principal amount of such Bonds plus interest and penalties,
if any, accrued to the date of payment on such Bonds. On
the fifth anniversary of the Expiration Date the full
principal amount of all Bank Bonds plus accrued and unpaid
interest thereon to the date of payment shall be due and
payable. Bank Bonds may be prepaid at any time as provided
in paragraph (d) below.
(d) Prepayments. The City in accordance with the
Indenture may prepay without premium or penalty (other than
2978010/1
12
any penalty that may be owed to the Bank relating to the
failure of the City to timely reimburse the Bank for the
Draw made with respect to t-~e purchase of such Bank Bond)
any Bank Bond that is a Put Bond at any time. Prin. cipal
prepayments shall be accompanied by interest accrued
thereon to the date of prepayment.
(e) Sale of Bank Bonds. Any sums received by the
Bank on account of any sale or other transfer of Bank Bonds
to a third party (whether by reason of termination of the
Letter of Credit and substitution of an Alternate Letter of
Credit, remarketing of the Bank Bonds, or otherwise) shall
reduce, in an equal sum, the obligation of the City
hereunder.
(f) Bank Bonds. Upon the purchase of any Bond for
the benefit of the Bank with the proceeds of a Draw on the
Letter of Credit pursuant to the Indenture, and until the
Bank shall have been fully reimbursed in the amount of such
Draw, together with any interest on penalties that may be
due the Bank with respect to such Draw, the Bank Bonds
shall be pledged to the Bank and the Bank shall have a
security interest in all right, title and interest in and
to such Bonds for all purposes.
(g) Custodial Arranqement. The Bank shall be
entitled to make any custodial arrangement at any time with
respect to Bank Bonds. The Bank does hereby appoint
Citibank, N.A. in its capacity as Tender/Paying Agent under
the Indenture, as its agent to hold all Bank Bonds which
Bonds shall be held for the benefit of the Bank in such
name as the Bank shall direct in writing and the City
hereby acknowledges such appointment.
(h) Rate and Price Notification. By 1:00 p.m. New
York City time on any day on which the Bank holds Put Bonds
or is requested to purchase Put Bonds pursuant to
Section 4.04 of the Indenture, the Bank shall notify the
Remarketing Agent of the Prime Rate, Base Rate and Bank
Purchase Price then in effect. The Bank will inform the
City of the Prime Rate, BaSe Rate and Bank Purchase Price
from time to time as requested by the City.
(i) Penalties· Subject to the limitations set forth
in Section 8.14, with respect to unreimbursed Principal
Draws (other than Draws representing Unreimbursed Put Bond
Amounts), unreimbursed Interest Draws, or a default in the
payment of principal or interest on Bank Bonds which are
Put Bonds, in addition to interest at the Bank Interest
Rate on all amounts which are due and payable to the Bank,
2978010/1
13
the Bank shall be entitled to a penalty in an amount equal
to the Base Rate minus the lesser of (i) the Base Rate or
(ii) the Maximum Rate on all amounts which are not paid to
the Bank on the date such amounts are du~ to the Bank
pursuant to this Agreement or the Indenture, for each day
from and including the date that payment for such amount
was to be made to but not including the date the Bank
receives payment of such amount in full.
(j) Remarketinq of Bank Bonds. Bank Bonds which are
Put Bonds shall be subject to remarketing pursuant to
Section 4.04(F) of the Indenture. The Bank shall deliver
or cause to be delivered any such Bonds, and a due-bill
check if required, at the direction of the Trustee against
receipt, as provided in Section 2.2(d) hereof, of the
principal amount of, and any accrued interest on, such
Bonds. Bank Bonds which are not Put Bonds shall not be
remarketed. In addition, Bank Bonds shall not be subject
to remarketing on or after a Bank Mandatory Purchase Date
and prior to cure of the default which resulted in a Bank
Mandatory Purchase Date, unless otherwise agreed in writing
by the Bank.
ARTICLE III
LETTER OF CREDIT OPERATIONS
SECTION 3.1. ChanGes in Stated Amount of Letter of
Credit. The Stated Amount of the Letter of Credit shall be
reduced and reinstated as provided in the Letter of Credit. In
no event shall the sum of all Unreimbursed Put Bond Amounts and
all Principal Draws, presented and honored under the Letter of
Credit exceed the Stated Amount of the Letter of Credit on the
Effective Date.
SECTION 3.2. Separate Purchase Arranqement; Usury. The
Bank'shall have the option, in lieu of causing the purchase of
any Bonds hereunder by the Tender Agent, to arrange to loan the
purchase price of such Bonds to a third party which shall
purchase, hold and tender such Bonds as Bank Bonds on the terms
and conditions provided herein and in the Indenture; provided
that no such arrangement shall in and of itself reduce in any
respect the Bank's obligations under this Agreement or the
Letter of Credit or affect in any way the rights or obligations
of the City hereunder or under the Bonds or the Trustee's
rights under the Letter of Credit, that the City and the
Trustee shall have the right to continue to deal solely with
the Bank and that no such arrangement shall cause any national
rating agency to lower, withdraw or suspend the rating on ~he
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14
Bonds. No such arrangement shall result in a reduction of the
Stated Amount. In no event shall any purchaser of Bonds
hereunder be entitled to receive.payments hereunder in excess
of those permitted by any usury or similar law applicable to
it. If any third party purchases any Bonds pursuant to an
arrangement contemplated in this Section, the Bank shall
promptly notify the Trustee and' the Tender Agent of (a) such
purchase, (b) the identifying numbers and amount of the Bonds
so purchased, and (c) the identity of the third party
purchasing the Bonds.
SECTION 3.3. Payment of Draws under the Letter of Credit.
The Bank agrees that (a) Draws under the Letter of Credit will
be paid from funds of the Bank and not directly or indirectly
from funds or collateral on deposit with or for the account of,
or pledged with or for the account of the Bank by the City and
(b) the Bank will seek reimbursement for each payment under the
Letter of Credit only after such payment has been made to the
Trustee.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1.. Representations and Warranties of the City.
The City represents and warrants to the Bank as follows:
(a) Existence. The City is a municipal corporation
duly organized, validly existing and in good standing under
and by virtue of the Constitution and laws of the State of'
California.
(b) Power and Authorization. The City has all
requisite power and authority (i) to execute, deliver and
perform its obligations under the Financing Documents to
which the City is a party and (ii) to issue and sell the
Bonds in the manner and for the purposes contemplated by
the Indenture and this Agreement. The City has taken all
necessary action to authorize the issuance and sale of the
Bonds and to authorize the execution, delivery and
performance of the Financing Documents to which the City is
a party.
(c) No Leqal Bar. The City is not in'default under
any of the provisions of the laws of the State of
California which would affect its existence or its powers
referred to in the preceding paragraph (b). The execution,
delivery and performance by the City of this Agreement, the
adoption and performance by the City of the Indenture, the
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15
issuance and the sale of the Bonds in the manner and for
the purposes contemplated by this Agreement and the
Indenture, and the execution, delivery and performance by
the City of all other Financing Documents to which the City
is a party will not constitute a default under, violate, or
conflict with, any provision of any applicable law or
regulation or of any order, writ, judgment or decree of any
court, arbitrator or governmental authority, or any
contract to which the City is a party or is bound and to
which Assessment District No. 86-2 is subject, which
default, violation or conflict could materially adversely
affect the transactions contemplated in this Agreement, the
Indenture and each of the other Financing Documents.
(d) Consents. The City has obtained all consents,
permits, licenses and approvals of, and has made all
registrations and declarations with, any governmental
authorities, legislative bodies, boards, agencies or
commissions required under law which would constitute a
condition precedent to the authorization of the sale and
issuance of the Bonds (except as may be required under the
Blue Sky or securities laws of any state) or the absence of
which would materially adversely affect the execution,
delivery and performance by the City of its obligations
under this Agreement, the Indenture and the other Financing
Documents to which it is a party.
(e) Litigation. Except as disclosed in the Official
Statement of the City delivered in connection with the
offering of the Bonds, there is no action, suit, inquiry,
investigation or proceeding to which the City is a party at
law or in equity, before or by any court, government
agency, public board or body and which is pending or, to
the best knowledge of the City, threatened, affecting the
corporate existence of the City or the titles of its
representatives to their respective offices, or affecting
or seeking to prohibit, restrain or enjoin the execution or
delivery of this Agreement or in any way contesting or
affecting the validity or enforceability of the Financing
Documents, or contesting the exclusion from gross income
for federal income tax purposes of interest on the Bonds,
or contesting the powers of the City, in connection with
any of the transactions contemplated by this Agreement, the
Indenture and each of the other Financing Documents, the
result of which could, if decided adversely to the City,
have a materially adverse effect on the City's ability to
perform its obligations under the Financing Documents.
(f) Enforceability. This Agreement and the Indenture
have each been duly executed and delivered by the City and
2978010/1
16
constitute, and, when executed by the City and
authenticated (where required) and delivered by the
Trustee, the Bonds, and each other Financing Document. to
which the City is a party will each constitute, the legal,
valid and binding obligation of the City, enforceable -
against the City in accordance with its terms (except as
such enforceability may be limited by bankruptcy,
moratorium or other similar laws affecting creditors'
rights generally and provided that the application of
equitable remedies is subject to the application of
equitable principles).
(g) Chanqes in Law. There is not pending any change
of law which, if enacted or adopted, could have a material
adverse effect on the City's ability to perform its
obligations under the Financing Documents.
(h) Disclosure of Information. The information
relating to the City contained in the Official Statement
(as defined in the Purchase Contract) issued by the City in
relation to the issuance of the Bonds, which information
was supplied in writing by the City for inclusion in the
Official Statement, including any exhibits, appendices or
attachments thereto, as such statements may be amended or
supplemented from time to time, is true and correct and
does not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the state-
ments contained therein, in light of the circumstances
under which they were made, not misleading.
(i) The Assessment District, Liens and Installments.
Assessment District No. 86-2 is duly formed and validly
existing. The Bonds and the obligations owing to the Bank
pursuant to this Agreement and the Indenture are secured by
valid and enforceable liens upon the lots and parcels of
land within Assessment District No. 86-2, which constitute
a first lien and charge against such properties (including
all present and future improvements thereon comprising part
of such properties) coequal with the lien securing real
property taxes. The Indenture validly and enforceably
pledges, in Section 5.01 thereof, the Assessment Install-
ments (as defined in the Indenture) to the payment of all
amounts due under the Bonds and this Agreement and such
pledge constitutes a first lien and charge against such
Assessment Installments.
(j) Each representation and warranty on the part of
the City contained in any Financing Document is hereby
expressly incorporated herein by this reference and shall
be deemed to be reaffirmed by the City at the time of each
Draw under the Letter of Credit.
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ARTICLE V
COVENANTS
SECTION 5.1. Covenants of the City. The City covenants
· and agrees that so long as any Bond or any obligation of the
City under this Agreement shall remain unpaid or the Bank shall
have any liability under or in respect of the Letter of Credit:
. .
(a) Compliance with this Aqreement and the Other
Financinq Documents. The City will observe and perform
each term, covenant, condition and agreement on its part to
be performed or observed under this Agreement and/or the
other Financing Documents.
(b) Laws, Permits and Obliqations. The City will
comply with all valid acts, rules, regulations, orders and
directions of any legislative, executive, administrative or
judicial body applicable to the Financing Documents,
violations of which could have a material adverse effect on
the City's ability to perform its obligations under the
Financing Documents.
(c) Use of Proceeds. The City will use or cause to
be used the proceeds of the sale of the Bonds in accordance
with the provisions of the Indenture and this Agreement and
in accordance with the statements pertaining thereto in the
Official Statement of the City delivered in connection with
the offering of the Bonds.
(d) Maintenance of Existence. The City will at all
times use its best efforts to maintain its existence and
good standing under the laws of the State of California.
(e) Financial Statements. The City shall furnish to
the Bank as soon as available but in no event later than
thirty-one (31) days after the end of each fiscal quarter,
a financial statement with respect to the Assessment Fund,
Reserve Fund, Construction Fund, Investment Earnings Fund,
Purchase Fund, Redemption Fund and Conversion Costs Fund
and each of the subaccounts established within such Funds.
(f) Visitation and Examination. Unless otherwise
prohibited by law, the City will permit any person
designated by the Bank to visit any of the offices of the
City to examine the books and financial records, including
without limitation minutes of meetings at the City Council,
and make copies thereof or extracts therefrom, and to
discuss the affairs, finances and accounts of the City with
its principal officials, all at such reasonable times and
2978010/1
18
as often as the Bank may reasonably request, to the extent
such information and material relate to the transactions
contemplated by the Financing .Documents..
(g) Maintenance of Tax-Exempt Status of the Bonds.
The City will not take any action or omit to take any
action which, if taken or omitted, would adversely affect
the exclusion of interest on the Bonds from gross income
for federal income tax purposes or the exemption of
interest on the Bonds from State of California personal
income taxes.
(h) Enforcement of Irvine ComDany Agreements. The
City shall take such action to enforce the Irvine Company
Agreements as the Bank may reasonably direct.
(i) Agreement to Market Fixed Rate Bonds. Prior to
any conversion of Bonds to a Fixed Interest Rate, the City
shall enter into an agreement with Merrill Lynch, Pierce,
Fenner & Smith Incorporated or other national firm or firms
reasonably acceptable to the Bank for the sale of such
Bonds upon conversion to Fixed Rate Bonds on a "firm
commitment" basis. Such agreement shall name the Bank as a
third-party beneficiary.
(j) No Chanqe in Financinq Documents. The City shall
not cancel, terminate, amend, supplement, modify or waive
any of the provisions of the Indenture, the Irvine Company
Agreements or any of the other Financing Documents and will
not consent to any such cancellation, termination,
amendment, supplement, modification or waiver, without the
prior written consent of the Bank. Without limiting the
materiality of any other term in any of the Financing
Documents, the City acknowledges that every provision in
the Protocol Agreement to which the Bank is a third party
beneficiary is material.
(k) Collection and Payment of Assessments. The City
shall collect or cause the collection of and deposit with
the Trustee for payment to the Bank when due the Assessment
Installments either as due or by collection by foreclosure
of the delinquency in accordance with the Indenture.
ARTICLE VI
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
SECTION 6.1. Conditions To Issuance and Delivery of Letter
of Credit. The obligation of the Bank to issue and deliver the
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19
Letter of Credit to the Trustee shall be subject to the
condition precedent that each of the following events shall
have occurred or, in the case of documentation, that there
shall hav~ been delivered to the Bank, such documentation in
form and substance satisfactory to the Bank and the Bank's
counsel, at or before the issuance of the Letter of Credit:
(a) The Financinq Documents.. The Financing Documents
shall have been duly executed and delivered by each of the
respective parties thereto and shall not have been
modified, amended or rescinded, shall be in full force and
effect on and as of the Effective Date and executed
original or certified copies of each thereof shall have
been delivered to the Bank.
(b) City Proceedings, etc. The Bank shall have
received a certified copy of all proceedings taken by the
City authorizing the transactions hereunder and the
execution, delivery and performance of this Agreement, the
Indenture, and the Bonds, together with appropriate
certificates of incumbency and such other certifications as
to matters of fact as shall be reasonably requested by the
Bank, all in form and substance satisfactory to the Bank.
(c) Certificate. The Bank shall have received a
certificate signed by an authorized representative of the
City, dated the Effective Date, to the same effect as
paragraphs (a) and (b) of this Section 6.1, and to the
further effect that except as may be disclosed in the
Official Statement (i) the City has obtained all consents,
permits, licenses and approvals of, and has made all
registrations and declarations with, governmental
authorities, legislative bodies, boards, agencies or
commissions required under law which would constitute a
condition precedent to the authorization of the issuance
and sale of the Bonds (except as may be required under the
Blue Sky or securities laws of any state), or the absence
of which would materially adversely affect the execution,
delivery and performance by the City of its obligations
under this Agreement, the Indenture and the other Financing
Documents to which the City is a party; (ii) to the best
knowledge of the City, no Event of Default or event which,
with the giving of notice, the passage of time, or both,
would constitute an Event of Default, has occurred or is
continuing; and (iii) there is no action, suit, inquiry,
investigation or proceeding to which the City is a party at
law or in equity, before or by any court, government
agency, public board or body and which is pending or, to
the best knowledge of the City, threatened, affecting the
corporate existence of the City or the titles of its
2978010/1
20
representatives to their respective offices, or affecting
or seeking to prohibit, restrain or enjoin the execution or
delivery of this Agreement or in any way contesting or
affecting the validity or enforceability of the Bonds, the
Financing Documents or this Agreement, or contesting the
tax exempt status of the interest on the Bonds, or
contesting th~ powers of the City, in connection with any
of the transactions contemplated by the Indenture or this
Agreement or against or ~affecting the City, the result of
which could have a materially adverse effect on the City's
ability to perform its obligations under the Financing
Documents.
(d) City Attorney's Legal Opinion. The Bank shall
have received the opinion of the City Attorney addressed to
the Bank or a reliance letter with respect to such opinion,
dated the Effective Date, in form and substance
satisfactory to the Bank.
(e) Bond Counsel's Legal Opinion. The Bank shall
have received an opinion of Bond Counsel addressed to the
Bank, or a reliance letter with respect to such opinion
dated the Effective Date, to the effect that the Bonds have
been duly and validly issued and the interest thereon is
(i) excludable from gross income for purposes of federal
income taxation and (ii) exempt from California personal
income taxes; and the supplemental opinion of Bond Counsel
addressed to the Bank or a reliance letter with respect to
such opinion, dated the Effective Date, in form and
substance satisfactory to the Bank.
(f) The Irvine Company Counsel's Legal Opinion. The
Bank shall have received an opinion of counsel to The
Irvine Company addressed to the Bank or a reliance letter
with respect to such opinion, dated the Effective Date, in
form and substance satisfactory to the Bank.
(g) Representations and Warranties True; No Default.
The Bank shall be satisfied that on the Effective Date each
representation and warranty on the part of the City
contained in any Financing Document is true and correct in
all material respects and no Event of Default, or event
which, with the giving of ~notice, passage of time, or both,
would constitute an Event of Default, has occurred and is
continuing; provided, however, that issuance of the Letter
of Credit shall not be deemed to constitute a determination
by the Bank that this condition has been satisfied or to
constitute waiver of, or estoppel, to the Bank's right to
enforce remedies as provided herein should such conditions
2978010/1
21
later be determined not to have been satisfied on the
Effective Date.
(h) Trustee's Certificate. A certificate of the
Trustee, dated the Effective Date as to the authority,
incumbency and signature specimens of officials of the
Trustee authorized to make Draws, to execute and present
certificates under the Letter of Credit and otherwise to
communicate with the Bank regarding the Letter of Credit,
upon which the Bank may rely until it receives a new such
certificate.
(i) Paying Agent's Certificate. A certificate of the
Tender Agent/Paying Agent, dated the Effective Date, to the
effect that the Paying Agent has full power and authority
to perform its responsibilities under the Indenture.
(j) Payment of Fees. The Bank shall have received
payment of the Letter of Credit Fee and the Commitment Fee
due as provided in Section 2.2(c) of this Agreement.
(k) The Irvine Company Certificate. A certificate of
an officer of The Irvine Company, acceptable to the Bank,
dated the Effective Date, to the effect that: (i) the
representations and warranties made by the Irvine Company
in the Financing Documents are true and correct as of such
date and (ii) all of the Financing Documents to which it is
a party have been duly and validly authorized, executed and
delivered by The Irvine Company and, assuming due authoriza-
tion by the other parties thereto constitute legal, valid
and binding obligations of the Irvine Company enforceable
in accordance with the terms thereof, subject to the
provisions of bankruptcy or other similar laws affecting
creditors' rights generally.
(1) Underwriter' s Counsel Legal Opinion. The Bank
shall have received the opinion of counsel to the
Underwriter, addressed to the Bank or a reliance letter
with respect to such opinion, dated the Effective Date, in
form and substance satisfactory to the Bank.
(m) Other Requirements. The Bank shall have received
such other certificates, approvals, opinions and documents
as shall be reasonably requested by the Bank, all in form
and substance satisfactory to the Bank.
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ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. Definition of Events of Default. If any of
the following events, acts or occurrences (herein called
"Events of Default") shall occur:
(a) any law, rule or regulation, or any order of any
court, governmental agency or regulatory body, or any
indenture or loan or credit agreement (including the
Financing Documents), or any other agreement or instrument,
applicable to the City or to the Bonds which impairs the
ability of the City to perform its obligations hereunder or
under any of the Financing Documents; or
(b) default in the payment when due of principal of
or premium owing or interest on any Bond which continues
for a period of five (5) Business Days (except to the
extent that such default is solely attributable to the
wrongful failure by the Bank to honor a conforming Draw
made under the Letter of Credit) or default in the payment
when due of any amount owing by the City under this
Agreement or under the Indenture; or
(c) any representation or warranty on the part of the
City contained in any Financing Document shall at any time
prove to have been incorrect in any material respect when
made or when effective or when reaffirmed, as the case may
be; or
(d) the City shall default in the performance or
observance of any term, covenant, condition or agreement on
its part to be performed or observed hereunder or under the
Indenture (and not constituting an Event of Default under
any other clause of this Section 7.1), and such default
shall continue unremedied for thirty (30) days after
written notice thereof shall have been given to the City by
the Bank; or
(e) any material provision of this Agreement or any
Financing Document shall at any time or for any reason
cease (other than due to any action by the Bank) to be in
full force and effect or valid and binding on the City, or
shall be declared null and void and the ability of the City
to perform its obligations under this Agreement shall be
adversely affected thereby; or the validity or enforceabi-
lity of this Agreement shall be contested by the City or
the City shall deny that it has any further liability or
obligation under this Agreement; or
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23
(f) the City shall be generally not paying its debts
as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any
petition ~hall be filed by or against the City under, the
Federal bankruptcy laws, or any other proceeding shall be
instituted by or against the City seeking to adjudicate it
a bankrupt or insolvent, or seeking dissolution, liquida-
tion, winding up, reorganization, a~rangement, adjustment,
protection, relief or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganiza-
tion or relief of debts, or seeking the entry of an order
for relief or the appointment of a receiver, trustee,
custodian or other similar official for the City or for any
substantial part of its property; or the City shall take
any action to authorize or effect any of the actions set
forth above in this subsection (f) and as a result of the
occurrence of any of the foregoing events specified in
paragraphs (a) through (f) the Bank shall fail. to receive
amounts due hereunder.
then, in any such event, the Bank may, at the same or
different times, so long as such Event of Default is continu-
ing, (i) at the sole option of the Bank solely with respect to
an Event of Default pursuant to this Section 7.1 relating to
Bonds which are not Fixed Rate Bonds, notify the Trustee of
such Event of Default, (ii) exercise any one or more of the
rights and remedies available to the Bank under the Financing
Documents, applicable law or otherwise, and/or (iii) exercise
any other right or power provided to the Trustee in the
Indenture to the extent provided in the Indenture, including
without limitation those set forth in Section 7.03(a) of the
Indenture; provided, however, that no Event of Default
hereunder shall affect the Bank's rights and obligations under
the Letter of Credit except as expressly provided in the Letter
of Credit. Notwithstanding the foregoing, the Bank will not
exercise any of its remedies upon the occurrence of an Event of
Default so long as the Bank shall continue to receive, at the
times and in the manner herein provided, payment of amounts due
the Bank under this Agreement.
SECTION 7.2. Notice of Events. The City shall give notice
to the Bank of the occurrence of any Event of Default, or event
which with the giving of notice, the passage of time, or both
would constitute an Event of Default, in each case within two
(2) days after becoming aware thereof.
2978010/1
24
ARTICLE VIII
MI SCELLANEOUS
SECTION 8.1. No Waiver; Modifications in Writinq. No
failure or delay on the part of the Bank in exercising any
right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the Bank at
law or in equity or otherwise. No amendment, modification,
supplement, termination or waiver of or to any provision of
this Agreement, nor consent to any departure by the City
therefrom, shall be effective unless the same shall be in
writing and signed by or on behalf of the Bank. Any amendment,
modification or supplement of or to any provision of this
Agreement, and any consent to any departure by the City from
the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific
purpose for which made or given. No notice to or demand on the
City in any case shall entitle the City to any other or further
notice or demand in similar or other circumstances. The Bank
shall notify the Trustee of each amendment to this Agreement.
SECTION 8.2. Consents. The Bank and the City hereby agree
that to the extent the consent of either party is required
under this Agreement, such consent will not be unreasonably
.withheld.
SECTION 8.3. Further Assurances. The City agrees to do
such further acts and things and to execute and deliver to the
Bank such additional certificates, powers-and instruments as
the Bank may reasonably require or deem advisable to carry into
effect the purposes of this Agreement or to better assure and
confirm unto the Bank its rights, powers, and remedies
hereunder.
SECTION 8.4. Survival of Representations and Warranties.
All representations and warranties made in this Agreement and
in any certificates delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the issuance and
delivery of the Letter of Credit.
SECTION 8.5. Notices, Etc. Ail notices, demands,
instructions and other communications required or permitted to
be given to or made upon any party hereto or any other person
shall be in writing and shall be personally delivered or sent
by registered or certified mail, postage prepaid, or by prepaid
2978010/1
25
identifiable telecopier, tested telex, TWX or telegram (with
messenger delivery specified in the case of a telegram) and
shall be deemed to 'be given for purposes.~-f th~s Agreement on
the day that such writing is delivered to the intended
recipient thereof in'adcordance with the'Provisions of this
Section 8.5. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this
Section 8.5, notices, demands, instructions and other
communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to
their respective telecopier, telex or TWX numbers) indicated
below:
If to the City:
City of Tustin
300 Centennial Way
Tustin, California 92680
Attention: Finance Director
Tel. No. (714) 544-8890
If to the Bank:
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Attention: Letter of Credit Department
Tel. No. (213) 972-0319
Telex No.
Telecopier No. (213) 972-0154
If to the Trustee:
.o
Citibank, N.A.
Municipal Trusts & Agency
Citicorp NAIB
55 Water Street
New York, New York 10268
Attention: Alice Shaw
Tel. No. (212) 968-4790
Telex No. 420-392 NYMMK
Telecopier No. (212) 968-5800
SECTION 8.6. Costs, Expenses and Taxes. Subject to the
limitations set forth in Section 8.14, the City agrees to pay
all legal fees of the Bank in connection with the initial
negotiation, preparation, execution and delivery of the Letter
of Credit on the Effective Date in an amount not to exceed
$48,000, including the fees and out-of-pocket expenses of
2978010/1
~26
Brown & Wood and Naoe, Asai & Yamamori, counsel to the Bank, or
such other counsel as may be appointed by the Bank. In
addition the City, subject to the limitations set forth in
Section 8.14, also agrees to pay the fees and expenses of the
Bank in connection with any amendments or modifications-of this
Agreement (or supplements hereto), including fees and expenses
of counsel appointed bY the Bank and independent public
accountants and other outside experts retained by the Bank in
connection with any of the foregoing, any and all present stamp
or documentary taxes or any other present excise or property
taxes, charges or similar levies which arise from any payment
made hereunder or under the Letter of Credit or any other
instrument delivered hereunder or from the execution, delivery
or registration of, or otherwise with respect to, this
Agreement or the Letter of Credit or any other instrument
delivered hereunder and the City, subject to the limitations
set forth in Section 8.14, agrees to hold the Bank harmless
from and against any and all liabilities with respect to or
resulting from any delay by the City in paying or omission to
pay such taxes and fees.
SECTION 8.7. Execution in Counterparts. This Agreement
may be executed in counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one
and the same Agreement.
SECTION 8.8. Bindinq Effect; Assiqnment. This Agreement
shall be binding upon, and inure to the benefit of, the City
and the Bank and their respective successors and assigns;
provided, however, that the City may not assign its rights or
obligations hereunder (except to the Trustee, provided that
such assignment will not affect the City's primary liability
therefor) without ~the prior written consent of the Bank and the
Trustee. This Agreement shall not be construed so as to confer
any right or benefit upon any person other than the parties to
this Agreement, and their respective successors or assigns.
SECTION 8.9. Governinq Law. This Agreement shall be
deemed to be a contract made under the laws of the State of
California and for all purposes shall be construed in
accordance with the laws of said State, without regard to
principles of conflicts of law.
SECTION 8.10. Severability of Provisions. Any provision
of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
2978010/1
27
SECTION 8.11. Headinqs. Article and Section headings used
in this Agreement are for convenience of reference only and
shall not affect the construction of this Agreement.
..
SECTION 8.12. Right of Setoff. In addition to any other
right or remedy that the Bank may have by operation of law or
otherwise, the Bank shall be entitled to exercise its right of
setoff or banker's lien without notice to the City (any such
notice being expressly waived to the extent permitted by law)
to the fullest extent permitted by law in order to appropriate
and apply to the payment of Principal Draws, Interest Draws,
Purchase Draws applied to the purchase of Put Bonds represent-
ing Unreimbursed Put Bond Amounts and interest thereon and any
other indebtedness of the City now or hereafter existing under
this Agreement, any balances, credits, deposits, accounts or
moneys of the City at any time with the Bank. The rights of
the Bank under this Section are in addition to other rights and
remedies which the Bank may have.
SECTION 8.13. Actions Relatinq to the Financinq Documents;
Indemnity.
(a) Any action taken or omitted by the Bank under or
in connection with the Financing Documents, if taken or
omitted in good faith, shall be binding upon the City and
shall not put the Bank under any resulting liability to the
City. Without limiting the generality of the foregoing,
the Bank shall be protected in relying upon a duly executed
instrument of transfer in the form attached as Annex 5 to
the Letter of Credit.
(b) The Bank may, under the Letter of Credit,
receive, accept and pay any demands or other documents and
instruments signed by, or issued to, the receiver, trustee
in bankruptcy, custodian, executor, administrator, guardian
or conservator of anyone named in the Letter of Credit as
the person by whom demands and other documents and
instruments are to be made or issued.
(c) The Bank shall not have any liability to the
City, and, except for the gross negligence or wilful
misconduct of the Bank, the City assumes all risk and
responsibility for (i) the form, sufficiency, correctness,
validity, genuineness, falsification and legal effect of
any demands and other documents, instruments and other
papers relating to the Letter of Credit, (ii) the general
and particular conditions stipulated therein, (iii) the
good faith acts of any person whosoever, including but not
limited to the Trustee and the Tender Agent (except when
the Tender Agent shall~be acting with respect to Bank Bonds
2978010/1
28
at the direction of the Bank)., in connection therewith,
(iv) failure of the Trustee to comply with the terms of the
Le~er of Credit; (v) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by
mail, cable, telex,, telegraph, wireless or otherwise,
whether or not they be in code, (vi) errors in translation
or errors in interpretation of technical terms, (vii) any
failure or inability by the Bank or anyone else to perform
in accordance with the foreign laws, customs or regulations
or by reason of any control or restriction rightfully or
wrongfully exercised by any government or group asserting
or exercising governmental or~ paramount powers, (viii) the
validity or sufficiency of any instrument transferriong or
assigning or purporting to transfer or assign the Letter of
Credit or the rights or benefits thereunder or proceeds
thereof which may prove to be invalid or ineffective for
any reason and (ix) for any other consequences arising from
causes beyond the Bank's control.
(d) The City waives any right to object to any
payment made under the Letter of Credit against a demand
and accompanying documents as provided in the Letter of
Credit varying in punctuation, capitalization, spelling, or
similar matters of form. The Bank may accept any demands
and other documents that appear on their face to be in
order in accordance with the procedures for presentation
set forth in the Letter of Credit, without responsibility
for further investigation, regardless of any notice or
information to the contrary.
(e) Subject to the limitations set forth in
Section 8.14 hereof and to the full extent permitted by
law, the City agrees at all times to protect, indemnify and
save harmless the Bank to the full extent lawful from and
against any and all claims, actions, suits and other legal
proceedings, and from and against any and all losses,
claims, demands, liabilities, damages, costs, charges,
counsel fees and other expenses which it may, at any time,
sustain or incur by reason of or in consequence of or
arising out of the issuance of the Letter of Credit or the
purchase and sale of Bonds as contemplated in this
Agreement, all of which risks are hereby assumed by the
City, including, without limitation, any and all risks of
the acts or omissions, whether rightful or wrongful, of any
present or future de jure or de facto government or
governmental authority (all such acts and omissions herein
called "Governmental Acts"); provided that the City shall
not be required to indemnify the Bank for any claims,
damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (i) the wilful
2978010/1
29
misconduct or gross negligence of the Bank in determining
whether a demand or statement presented under the Letter of
Credit complied with the terms of the Letter of Credit or
(ii) the Bank's wilful or grossly negligent failure to pay
under the Letter of Credit after the presentation to it by
the Trustee of a demand in strict conformance with the
terms and conditions of the Letter of Credit. Nothing in
this Section is intended to limit t~e obligatioDS of the
City contained in Sections 2.2 and 2.3 hereof.' The Bank
shall not be liable to the City for any failure by the Bank
or anyone else to pay any draft under the Letter of Credit
as a result of any Governmental Acts or any.other cause
beyond the control of the Bank. The obligations of the
City hereunder shall survive cancellation or expiration of
the Letter of Credit and payment of the Bonds.
(f) Recognizing that transactions such as the
issuance and sale of the Bonds sometimes result in
threatened or actual litigation and that the Bank's role
under the Financing Documents is limited to acting solely
as the issuer of the Letter of Credit to enhance the credit
quality of the Bonds and to provide for an efficient
mechanism for the payment of principal and interest thereon
and the purchase price thereof, subject to the limitations
set forth in Section 8.14 hereof, the City agrees to indem-
nify the Bank (and its agents, employees and controlling
persons) (the Bank and its agents, employees and
controlling persons being hereinafter collectively referred
to in this paragraph (f) as the "Indemnitees") to the full
extent lawful against any and all claims, losses and
expenses incurred (including all reasonable fees and
disbursements of the Indemnitees' legal counsel and all of
the Indemnitees' reasonable travel and other out-of-pocket
expenses incurred in connection with investigation of and
preparation for any such pending or threatened claims and
any litigation and other proceedings arising therefrom)
arising out of or based upon the issuance, sale and
distribution of the Bonds, including without limitation,
the inclusion of any untrue statement or alleged untrue
statement of a material fact contained in any offering
statement made available to purchasers of the Bonds, or any
amendments or supplements thereto, or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein, in light of circumstances under which they were
made, not misleading, except insofar as any such claims,
losses and expenses arise out of or are based on an untrue
statement or alleged untrue statement in, or omission or
alleged omission from, such offering statement (or any
amendments or supplements thereto) made in reliance upon
2978010/1
30
and in conformity with information furnished in writing to
the City by the Bank. The obligations of the City under
this Section 8.13(f) shall be in addition to any rights
that 'any Indemnitee may have at common law or otherwise and
shall survive the Expiration Date. If indemnification
pursuant to this Section 8.13(f) shall be found to be
unlawful or invalid for any reason, then, to the full
extent allowed by law, the City, subject t~ the limitations
set forth in Section 8.14, and each Indemnitee shall make
contributions in payment of any liabilities incurred pursu-
ant to the above-referenced issuance, sale and distribu-
tions and statements or omissions in accordance with the
respective fault of the City and. each Indemnitee. Subject
to the limitations set forth in Section 8.14, if any action
shall be brought against the Bank in respect of which
indemnity may be sought asainst the City, the Bank shall
promptly notify the City in writing, and the City shall
promptly assume the defense thereof, including the employ-
ment of counsel (the selection of which shall have been
approved by the Bank and such approval shall not be
unreasonably withheld), the payment of all expenses and the
right to negotiate and consent to settlement. In the event
that the Bank shall be advised by counsel experienced in
matters of banking or securities laws that the Bank has
defenses or causes of action separate from that of the
City, the Bank shall have the right to employ counsel to
defend such action and to participate in the defense
thereof, and, subject to the limitations set forth in
Section 8.14, the fees and expenses of such counsel shall
be at the expense of the City. The City, shall not be
liable for any settlement of any such action effected
without its consent by the Bank, but if settled with the
consent of the City, or if there be a final judgment for
the plaintiff in any such action against the City or the
Bank, with or without the consent of the City, the City,
subject to the limitations set forth in Section 8.14,
agrees to indemnify and hold harmless the Bank to the
extent provided herein.
SECTION 8.14. Limited Liability of City. Ail amounts
payable under this Agreement shall be payable only from the
proceeds from the sale of the Bonds, the Assessment Install-
ments collected by or for the City pursuant to the Indenture,
either as due or by collection by foreclosure of the delinquen-
cy, the moneys on deposit in the funds and accounts established
under the Indenture, to the extent provided in the Indenture,
except the Purchase Fund, the Fixed Rate Reserve Account and
the Investment Earnings Fund and all interest earnings on the
foregoing amounts. It is acknowledged that in the event of a
default in the payment of amounts due to the Bank hereunder as
2978010/1
31
a result of a default in the payment of an Assessment Install-
ment, unless such default is otherwise cured, all of the
foreclosure proceeds from all foreclosure proceedings required
to be initiated pursuant to the terms of the Indenture which
are payable to the Bank pursuant to the Indenture in connection
with such default shall constitute payment in full of the
amounts owed to-the Bank with respect to such default when
received by the Bank.
SECTION 8.15. Security. The security interest granted to
the Bank pursuant to the terms of the Indenture is hereby
incorporated herein by this reference, and shall extend to and
secure all obligations of the City to the Bank hereunder,
notwithstanding any termination or discharge of the Indenture
and shall survive until all sums owing hereunder are paid in
full. The City shall not grant to the Bank, and it shall not
accept, any additional security interest in or lien on any
collateral for the City's obligations under this Agreement
unless such lien and/or security interest is for the pari passu
benefit of the holders of the Bonds.
SECTION 8.16. Successor Trustee. Promptly following the
appointment and qualification of any successor Trustee pursuant
to the Indenture, the Bank shall effect a transfer of the
Letter of Credit to such successor Trustee upon presentation to
the Bank of a duly executed instrument of transfer in the form
of Annex 5 attached to and otherwise as set forth in the Letter
of Credit and upon receipt of the transfer fee set forth in
Section 2.2 above. The Bank may conclusively rely upon an
executed instrument of transfer in the form of said Annex 5 in
connection with any such transfer of the Letter of Credit.
SECTION 8.17. Extension of Term. At the request of the
City at any time within 90 days before the eighth anniversary
of the Effective Date and within 90 days before the end of each
subsequent one year period, while the Letter of Credit is
outstanding, the parties hereto may in their discretion agree
to extend the term of this Agreement and the Expiration Date of
the Letter of Credit for an additional one year. This
provision is not intended to limit the ability of the parties
hereto to agree at any other time or upon any other terms to
extend the term of this Agreement and the Expiration Date of
the Letter of Credit.
SECTION 8.18. Right to Submit Bid. The City shall give 30
days written notice to the Bank of its intention to solicit
bids for a letter of credit in connection with a refunding
pursuant to Section 3.01 or 3.02 of the Indenture. The Bank
shall have the right to submit a bid for the issuance of a
letter of credit with respect to any such refunding.
2978010/1
32
SECTION 8.19. Rights and Remedies Cumulative. Ail rights
and remedies of the Bank under this Agreement are in addition
to all rights and remedies of the~Bank as a bondholder under
the Indenture.
SECTION 8.20. Bank Reliance. It is specifically
understood by the City that all statements, representations and
warranties made by the City in this Agreement and any other
Financing Document to which the City is a party shall be deemed
to have been relied upon by the Bank as an inducement to enter
into this Agreement and the other agreements contemplated
hereby and that if any such statements, representations and
warranties were materially incorrect at the time they were
made, the Bank may consider any such misrepresentation or
breach an Event of Default hereunder. There are no facts that
the City has failed to disclose to the Bank that, individually
or in the aggregate, could have a materially adverse effect on
the City's ability to perform its obligations under any of the
Financing Documents.
SECTION 8.21. Attorneys' Fees. Subject to the limitations
set forth in Section 8.14, in the event that any party hereto
shall incur legal fees and costs in connection with the actual
or threatened breach of any provision hereof, or to enforce any
right or remedy hereunder, such party shall be entitled to
recover such fees and costs from the breaching party. Subject
to limitations set forth in Section 8.14, in the event that an
action is brought in connection with this Agreement the
prevailing party shall be entitled to recover from the losing
party in addition to any money judgment or other relief, such
attorneys' fees, disbursements and costs as may be incurred by~
the prevailing party instituting or defending such litigation
and as are allowed by the court.
2978010/1
33
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as-of the date first above written.
CITY OF TUSTIN
By
Ronald B. Hoesterey,
.Mayor
ATTEST:
Mary E. Wynn,
City Clerk of the City of Tustin
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By
2978010/1
APPENDIX A
Calculation Pursuant to Clause (2) of
Definition of "Bank Purchase Price"
Amount under Clause (2) of definition of "Bank Purchase Price"
=-C-- ((P + a) x (A/B))
where:
A = (P + a) + ((P + a) x n/360 x i))
B = (P + a) + ((P + a) x n/360 x I))
P = principal amount of Bonds being purchased
a = accrued interest to the Bank Purchase Date
n = number of days from Bank Purchase Date to next succeeding
Business Day
i = Bank Interest Rate in effect on Bank Purchase
Date
I = Base Rate in effect on Bank Purchase Date
Example:
Let P = $1,000,000; a = $1,000; n = 1; i = 12%; I = 14%.
then: A = ($1,001,000) +
($1,001,000 x 1/360 x .12) =
B : ($1,001,000) +
($1,001,000 x 1/360 x .l&) =
C : ($1,001,000) x
($1,001,333.66667/$1,001,389.27778) = $1,000,944.41
$1,001,333.66667
$1,001,389.27778
App A- 1
Exhibit A
IRREVOCABLE LETTER OF CREDIT
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Irrevocable Letter of
Credit No.
Citibank, N.A. as
Trustee under the Indenture of Trust
dated as of September 1, 1988 by the
City of Tustin, California
September 13, 1988
Ladies and Gentlemen:
1. At the request and for the account of the City of
Tustin, California (the "City"), we hereby establish in your
favor as Trustee under that certain Indenture of Trust (the
"Indenture") by and between Citibank, N.A. and the City of
Tustin, California dated as of September 1, 1988 relating to
$81,400,000 City of Tustin Assessment District No. 86-2 Limited
Obligation Improvement Bonds (the "Bonds") this irrevocable
letter of credit in the initial aggregate amount of Eighty
Three Million Two Hundred Ninety-Nine Thousand Three Hundred
Thirty-Four United States Dollars (U.S. $83,299,334) (the
"Stated Amount"), of which $81,400,000 (the "Principal
Portion") is available with respect to principal of, $1,085,334
(the "Interest Portion") is available with respect to interest
on, and $814,000 (the "Premium Portion") is available with
respect to premium on, the Bonds. The Stated Amount available
to be drawn hereunder, and each of the Principal Portion,
Interest Portion and Premium Portion, are subject to reduction
and reinstatement as provided below.
2. This Letter of Credit is established pursuant to a
Reimbursement Agreement (the "Agreement") dated as of
September 1, 1988 by and between the City and us. The
following capitalized terms used in this Letter of Credit shall
have the following meanings: "Bank Bonds" means Bonds
purchased for the benefit of the Bank with proceeds of a draw
under this Letter of Credit; "Fixed Rate Bonds" means any Bond
bearing interest at a fixed interest rate; "Maximum Rate" means
A-1
the actual rate used to calculate the size of the portion of
the Letter of Credit which is available to be drawn for the
payment of interest on the Bonds on such date, which shall
initially be 12%; "Remarketing Agent" means Merrill Lynch
Pierce Fenner & Smith Incorporated or any other firm
substituted in its place in accordance with the Indenture;
"Remarketing Costs" means the difference between the purchase
pric~ of the remarketed Put Bonds and the Bank Purchase Price
as defined and determined in accordance with the provisions of
the Reimbursement Agreement; "Reimbursement Agreement" means
the reimbursement agreement dated as of September 1, 1988
between the City and the Bank; "Business Day" means a day of
the year on which the Trustee, the Paying Agent, the Tender
Agent, the Remarketing Agent, the Bank and banks or trust
companies in New York, New York or in California are, or the
New York Stock Exchange is, not authorized or required to
remain closed; and "Draw(s)" means an Annex 1, Annex 2, Annex 3
and/or Annex 4 draw as the context requires.
3. Funds shall be available hereunder to make any payment
to the owners of outstanding Bonds with respect to (i) interest
on Bonds, other than Bank Bonds and Fixed Rate Bonds, accrued
during each calendar month to a maximum amount calculated as
forty (40) days' interest at the lesser of twelve percent (12%)
per annum or the Maximum Rate on the then-outstanding Bonds
other than Bank Bonds and Fixed Rate Bonds upon presentation of
one or more telecopy or telex demands by you in the form of
Annex 1 hereto; (ii) the principal amount of Bonds, other than
Bank Bonds and Fixed Rate Bonds, on any date on which such
Bonds are to be redeemed or paid at maturity pursuant to
Sections 2.03, 3.01(A), 3.01(C), 3.02, 3.03 or 3.05 (to the
extent a drawing is required pursuant to Section 4.06(B)) of
the Indenture upon presentation of one or more telecopy or
telex demands by you in the form of Annex 2 hereto; (iii) the
principal amount of the purchase price of Bonds, other than
Bank Bonds and Fixed Rate Bonds, on any date on which such
Bonds are put and not resold by the Remarketing Agent pursuant
to Sections 4.01, 4.02, 4.03, 4.05(A) or 4.05(B) (to the extent
a drawing hereunder is required by Section 4.06(C)) of the
Indenture upon presentation of one or more telecopy or telex
demands by you in the form of Annex 3 hereto; and (iv) the
amount of premium on any date on which Bonds, other than Bank
Bonds and Fixed Rate Bonds, are to be redeemed from the owners
thereof pursuant to Sections 3.01(A), 3.01(C), or 3.02 or
purchased pursuant to Section 4.01 or 4.03 other than a
purchase upon the expiration or termination of the Letter of
Credit (to the extent a drawing hereunder is required by
Section 4.06(B), 4.06(C) or 4.06(D) of the Indenture) upon
presentation of one or more telecopy, or telex demands by you
in the form of Annex 4 hereto, all of the foregoing Annexes to
A-2
be completed and in compliance with the instructions in
brackets in each respective Annex. Each presentation shall be
made at the office of The Tokai Bank, Ltd. Los Angeles Agency,
presently located at 534 West Sixth Street, Los Angeles,
California, 90014 and must be made on or before the close of
business on a Business Day prior to the Expiration Date, as
defined in paragraph 4 below.
4. This Letter of Credit shall expire at the close of
business of the Los Angeles Agency of the Bank on the date (the
"Expiration Date") which .is the earliest of: (i) September 15,
1998, unless extended at the request of the City, by us in our
sole discretion (the "Scheduled Expiration Date"), (ii) the
date on which the Trustee certifies to us that all Outstanding
Bonds (other than Bank Bonds and Fixed Rate Bonds) have been
paid or will be paid with funds deposited with the Trustee,
(iii) the date on which the Trustee certifies to us that it has
received an Alternate Letter of Credit meeting the requirements
of the Indenture, (iv) at the sole option of the Bank, 40 days
after the Trustee receives notice from the Bank that the Bank
intends to terminate the Letter of Credit because there are
insufficient funds in the Remarketing Cost Account to pay the
Bank and the Bank has not otherwise received adequate assurance
that sufficient funds will-be available for payment of
Remarketing Costs, or (v) at the sole option of the Bank, 40
days after the Trustee receives notice from the Bank that there
has been an event of default pursuant to Section 7.1 of the
Reimbursement Agreement relating to Bonds which are not Fixed
Rate Bonds and that the Bank intends to terminate the Letter of
Credit; provided, however, that in the case of a Bank Mandatory
Purchase Date the notice referred to in this clause (v) shall
take effect five days after such Bank Mandatory Purchase Date.
For purposes of this paragraph, notices by the Bank to the
Trustee shall be given and received in the manner set forth in
Paragraph 10 of this Letter of Credit.
5. The amount of each telecopy or telex demand honored
hereunder will be the amount inserted in numbered paragraph (3)
of said telecopy or telex demand presented hereunder. Payment
under this Letter of Credit will be made by wire transfer of
federal funds into any account at the office of the Trustee or
the Paying Agent designated in writing by you. The Bank agrees
to honor all Draws under this Letter of Credit with its own
funds and not with any funds of the City.
6. We hereby agree with you that each telecopy or telex
demand presented hereunder in the form of Annex 1 hereto in
strict conformance with the terms hereof will be duly honored
by payment to you in immediately available funds (a) no later
than 12:00 noon Los Angeles time (3:00 p.m. New York City time)
A-3
on the first Business Day of the next calendar month if such
presentation is made on or before 10:00 a.m. Los Angeles time
(1:00 p.m. New York City time) on the last Business Day of the
preceding calendar month or (b) no later than 12:00 noon Los
Angeles time (3:00 p.m. New York City time) on the second
Business Day of the calendar month if such demand is presented
after 10:00 a.m. Los Angeles time (1:00 p.m. New York City
time).
We hereby agree with you that each identifiable
telecopy or telex demand presented hereunder in the form of
Annex 2, Annex 3 or Annex 4 hereto in strict conformance with
the terms hereof will be duly honored by payment to you in
immediately available funds (a) no later than 12:00 noon Los
Angeles time (3:00 p.m. New York City time) on the day such
demand is presented as aforesaid if such presentation' is made
on or before 10:00 a.m. Los Angeles time (1:00 p.m. New York
City time) or (b) no later than 12:00 noon Los Angeles time
(3:00 p.m. New York City time) on the Business Day next succeed-
ing the day such demand is presented as aforesaid, if such
presentation is made after 10:00 a.m. Los Angeles time
(1:00 p.m. New York City time). You shall give telephonic
notice to us no later than one-half hour prior to the deadlines
set forth above for presenting telecopy or telex demands, but
your failure to do so shall not relieve us of the duty to honor
a demand otherwise conforming to the terms and conditions of
this Letter of Credit.
7. Demands for payment hereunder honored by us shall not,
in the aggregate, exceed the Stated Amount, as the Stated
Amount may have been reduced or reinstated by us as herein
provided. The Stated Amount is comprised of the Principal
Portion, the Interest Portion and the Premium Portion, as they
may vary from time to time. The Interest Portion shall be
calculated to equal 40 days' interest on the Principal Portion
at a rate per annum equal to the Maximum Rate in effect from
time to time. The Premium Portion shall be calculated to equal
one percent (1%) of the Principal Portion of the Stated Amount
of the Letter of Credit.
8. Upon each payment hereunder with respect to principal
of the Bonds, the Principal Portion shall be decreased by the
amount of such payment and the Interest Portion and the Premium
Portion shall be decreased proportionately (but in no event
shall the Premium Portion be decreased by an amount less than
each payment hereunder pursuant to a demand in the form of
Annex 4 hereto). Upon each conversion of a Bond to a Fixed
Rate Bond, the Principal Portion shall be decreased by the
principal amount of each such Fixed Rate Bond and the Interest
Portion and the Premium Portion shall be decreased proportion-
ately. Upon any remarketing of any Bonds, including Bank Bonds
A-4
by the Remarketing Agent pursuant to the Indenture and receipt
by the Trustee of the remarketing proceeds plus, if the Bonds
shall have been remarketed at a remarketing price of less than
par, the amount on deposit in the Remarketing Cost Account or
Contribution Account, as applicable, equal to the difference
between the remarketed price and the par amount of such Bonds,
the Principal Portion, the Interest Portion and the Premium
Portion shall be automatically reinstated by the amounts by
which they were decreased at the time of payment by us pursuant
to a demand in the form of Annex 1, Annex 3 or Annex 4 hereto.
The Interest Portion shall be decreased upon, and to the
extent of, each payment hereunder with respect to interest
pursuant to a demand in the form of Annex 1 hereto and shall be
automatically reinstated on the date of such payment. The
Interest Portion shall be decreased proportionately upon any
decrease in the Maximum Rate.
Any change in the Principal Portion, the Interest Portion
or the Premium Portion may be confirmed in an amendment to this
Letter of Credit issued by us and delivered to the Trustee in
person or by tested telex or identifiable telecopier, but no
failure to confirm reinstatement or reduction shall affect the
validity of such change.
9. Only the Trustee may make a Draw under this Letter of
Credit. Upon the payment to you, your account, your designee
or the account of your designee of the amount demanded pursuant
to presentation of Draw certifications, we shall be fully
discharged of our obligation under this Letter of Credit with
respect to payment of the amount demanded and we shall not
thereafter be obligated to make any further payments under this
Letter of Credit in respect of such demand for payment to you
or any other person who may have made to you or makes to you a
demand for payment of principal of, premium, if any, purchase
price of, or interest on, any Bond. By paying to you an amount
demanded in accordance herewith, we make no representation as
to the correctness of the amount demanded or your calculations
and representations on the Draw certificates required of you by
this Letter of Credit.
If your Draw demand is not, in any instance, in strict
conformance with the terms and conditions of this Letter of
Credit, we shall give you prompt notice that the purported
negotiation was not effected in accordance with this Letter of
Credit, stating the reasons therefor and that we are holding
any documents at your disposal or are returning them to you, as
we may elect. Upon being notified that the purported
negotiation was not effected in conformity with this Letter of
Credit, you may attempt to correct any such nonconforming Draw
A-5
certificate if, and to the extent that, you are entitled
(without regard to the provisions of this sentence) and able to
do so.
10. Ail Draw certificates to b~ presented to the Bank
hereunder, as well as all communications to the Bank in respect
of this Letter of Credit, shall be in writing and shall be
timely delivered in writing or by tested telex or identifiable
telecopy confirmed in writing to ~the address shown at the foot
hereof or at such other address in the City of Los Angeles,
California as may be designated by us in a written notice to
you and shall make.specific reference to The Tokai Bank, Ltd.
Los Angeles Agency Irrevocable Direct-Pay Letter of Credit
No. , Attention: Manager, Letter of Credit
Department.
11. Except as otherwise provided herein, this Letter of
Credit shall be governed by and construed in accordance with
the Uniform Customs and Practice for Documentary Credits (1983
Revision), International Chamber of Commerce Publication
No. 400 (the "UCP") and, to the extent not inconsistent
therewith, the laws of the State of California. Anything to
the contrary in Article 45 of the UCP notwithstanding, this
Letter of Credit is intended to remain in full force and effect
until it expires or terminates in accordance with its terms.
Any failure by the Trustee or any successor trustee to draw
upon this Letter of Credit with respect to an interest payment
on, or purchase price of, the Bonds in accordance with the
terms and conditions of the Indenture shall not cause this
Letter of Credit to be unavailable for any future drawing in
accordance with the terms and conditions of the Indenture.
12. Notwithstanding anything in the UCP to the contrary,
particularly Article 54, thereof this Letter of Credit may be
transferred on one or more occasions but only in the amount of
the full unutilized balance hereof to any single transferee who
has succeeded you as trustee under the Indenture and in compli-
ance with the terms and conditions of the Indenture governing
such transfer. Transfers may be effected only upon presenta-
tion to us of a duly executed instrument of transfer in the
form attached hereto as Annex 5 and payment of our transfer fee
in the sum of $1500 United States Dollars. Any transfer of
this Letter of Credit as aforesaid must be endorsed by The
Tokai Bank, Ltd. Los Angeles Agency on the reverse hereof and
may not change the time or place of expiration specified above
or any other term hereof.
13. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein (including
A-6
without limitation, the Bonds), except only the Draw
certificates referred to herein; and any such reference shall
not be deemed to-¥incorporate herein by reference any document,
instrument or agreement except for such Draw certificates.
Very truly yours,
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By:
Title:
Delivery Address:
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Attention: Manager, Letter of
'Credit Department
TELECOPY NO: (213) 972-0154
A-7
ANNEX 1 to
The Tokai Bank, Ltd.
Los Angeles Agency
Irrevocable Letter of
Credit No.
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Interest Payment Draw
Citibank, N.A. (the "Trustee") hereby certifies with
respect to Irrevocable Letter of Credit No. issued by
The Tokai Bank, Ltd. Los Angeles Agency (the "Letter of
Credit") that:
(1) The Trustee is the trustee under the Indenture for the
owners of the Bonds and the person executing this Annex on
behalf of the Trustee is a duly authorized officer of the
Trustee;
(2) The Trustee is making demand for payment under the
Letter of Credit to make a deposit to the Interest Reserve Fund
pursuant to and to the extent required by Section [4.02 or
4.06(A)]* of the Indenture and in satisfaction of the
obligation to make payments required by Section 2.04 of the
Indenture;
(3) The aggregate amount required to be drawn pursuant to
Section 4.06(A) of the Indenture is $[insert amount], which is
the amount hereby demanded under the Letter of Credit. The
Trustee has not heretofore made demand under the Letter of
Credit for such amount or any portion thereof;
(4) The Amount determined hereby does not include any
amount in respect of the purchase of any Bonds registered in
the name of the City or held by the Paying Agent for the
benefit of the Bank;
(5) Upon our receipt of the amount demanded under the
Letter of Credit we will deposit such amount in the Interest
Reserve Fund under the Indenture and apply such amounts in
accordance with Section 5.07 of the Indenture.
(6) The amount demanded hereby does not'exceed the amount
which the Trustee is required to draw hereunder pursuant to
Section 4.06(A) of the Indenture.
Annex 1-1
Terms defined in the Letter of Credit are used in this
Annex as therein defined, unless otherwise defined in this
Annex.
CITIBANK, N.A.
as Trustee
By:
Title:
Annex 1-2
ANNEX 2 to
The Tokai Bank, Ltd.
Los Angeles Agency
Irrevocable Letter of
Credit
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Principal Draw - Maturity, Optional or Mandatory Redemption
(SAME DAY DRAW)
Citibank, N.A. (the "Trustee") hereby certifies with
respect to irrevocable Letter of Credit No. issued by
The Tokai Bank, Ltd. Los Angeles Agency (the "Letter of
Credit") that:
(1) The Trustee is the trustee under the Indenture for the
owners of the Bonds and the person executing this Annex on
behalf of the Trustee is a duly authorized officer of the
Trustee;
(2) The Trustee is making demand for payment under the
Letter of. Credit drawn upon pursuant to Section 4.06(B) of the
Indenture to pay principal due and payable upon [insert one of
the following: payment, at maturity of Bonds other than Fixed
Rate Bonds and Bank Bonds pursuant to Section 2.03 of the
Indenture, mandatory redemption of Bonds other than Fixed Rate
Bonds and Bank Bonds pursuant to Section 3.01(A) of the
Indenture, optional redemption of Bonds other than Fixed Rate
Bonds and Bank Bonds pursuant to Section 3.02 of the Indenture,
or optional redemption of Bonds other than Fixed Rate Bonds and
Bank Bonds pursuant to Section 3.03 of the Indenture or
extraordinary mandatory redemption of Bonds other than Fixed
Rate Bonds and Bank Bonds pursuant to Section 3.05 of the
Indenture]* of one or more of the Bonds on [insert the relevant
principal payment date or redemption date];
(3) The aggregate amount of principal owing or the
principal portion of the purchase price to be paid on account
of said Bonds on said date is $[insert amount], which is the
amount hereby demanded under the Letter of Credit. The Trustee
as not heretofore made demand under the Letter of Credit for
such amount or any portion thereof;
Annex 2-1
(4) The Amount determined hereby does not include any
amount in respect of the payment or redemption of any Bonds
registered in the name of the City or held .by the Paying Agent
for the benefit of the Bank;
(5) Upon our receipt of the amount demanded under the
Letter of Credit we will hold'the same in trust for the benefit
of the owners and we will apply the same exclusively to the
payment of the principal amount owing or redemption price to be
paid in respect of the Bonds referred to in numbered
paragraph (2) above as provided in the Indenture and no portion
of said amount shall be (i) deposited by us in any account main-
tained by or for the account of the City, (ii) applied by us
for any purpose other than to pay the amount of principal owing
on account of such Bonds or (iii) commingled with other funds
held by us; and
(6) The amount demanded hereby does not exceed the amount
the Trustee is required to draw hereunder pursuant to
Section 4.06(B) of the Indenture for the purpose stated above.
[Insert the following for optional redemptions pursuant to
Section 3.02 or 3.03 of the Indenture:
(7) An amount equal to the amount hereby demanded has been
deposited with the Trustee and is being held by the Trustee in
trust for you in immediately available funds.]
Terms defined in the Letter of Credit are used in this
Annex as therein defined, unless otherwise defined in this
Annex.
CITIBANK, N.A.,
as Trustee
By:
Title:
* Strike inapplicable language.
Annex 2-2
ANNEX 3 to
The Tokai Bank, Ltd.
Los Angeles Agency
Irrevocable Letter of
Credit No.
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Purchase Draw-Put Bonds
(SAME DAY DRAW)
Citibank, N.A. (the "Trustee") hereby certifies with
respect to Irrevocable Letter of Credit No. issued by
The Tokai Bank, Ltd. Los Angeles Agency (the "Letter of
Credit") that:
(1) The Trustee is the trustee under the Indenture for the
owners of the Bonds and the person executing this Annex on
behalf of the Trustee is a duly authorized officer of the
Trustee;
(2) The Trustee is making demand for payment under the
Letter of Credit pursuant to Section 4.06(C) of the Indenture
to pay the principal portion of the purchase price due and
payable on the Bonds on the purchase date to the owners of the
Bonds, pursuant to [insert Section 4.01. 4.02, 4.03, 4.05(A) or
4.05(B)]* of the Indenture, of one or more of the Bonds on
[insert relevant purchase date];
(3) The aggregate amount of the principal portion of the
purchase price to be paid on account of said Bonds on said date
is $[insert amount], which is the amount hereby demanded under
the Letter of Credit. The Trustee has not heretofore made
demand under the Letter of Credit for such amount or any
portion thereof;
(4) The Amount determined hereby does not include any
amount in respect of the purchase of any Bonds registered in
the name of the City or held by the Paying Agent for the
benefit of the Bank;
Annex 3-1
(5) Upon our receipt of the amount demanded under the
Letter of Credit we will hold the same in trust for the benefit
of the owners and we will apply the same exclusively to.the
payment of the prindipal portion of the purchase price to be
paid in respect of the Bonds referred to in numbered
paragraph (2) above as provided in the Indenture, and no
portion of said amount shall be (i) deposited by us in any
account maintained by or for the account of the City,
(ii) applied by us for any purpose other than to pay the amount
of the portion of the purchase price to be paid on account of
such Bonds or (iii) commingled with other funds held by us; and
(6) The amount hereby demanded does not exceed the amount
the Trustee is required to draw under the Letter of Credit
pursuant to Section 4.06(C) of the Indenture.
[Insert the following when Bonds have been remarketed at
less than par pursuant to Section 4.04 of the Indenture:
(7) There is on deposit in the Remarketing Cost Account an
amount equal to at least the difference between par and the
discount price for all Bonds being remarketed at less than par
for which a draw is being made hereunder. ]*
[Insert the following when Bonds are being converted to a
fixed rate of interest pursuant to Section 2.07 of the
Indenture:
(8) There is no deposit in the Contribution Account an
amount equal to the difference between par and the price of the
Bonds converted to a fixed rate of interest for which a draw is
being made hereunder. ]*
Terms defined in the Letter of Credit are used in this
Annex as therein defined, unless otherwise defined in this
Annex.
CITIBANK, N.A.,
as Trustee
By:
Title:
* Strike inapplicable language.
Annex 3-2
ANNEX4to
The Tokai Bank, Ltd.
Los Angeles Agency
Irrevocable Letter of
Credit No.
The Tokai Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
Purchase Draw-Premium
(SAME DAY DRAW)
Citibank, N.A. (the "Trustee") hereby certifies with
respect to irrevocable Letter of Credit No. issued by
The Tokai Bank, Ltd. Los Angeles Agency (the "Letter of
Credit") that:
(1) The Trustee is the trustee under the Indenture for the
owners of the Bonds and the person executing this Annex on
behalf of the Trustee is a duly authorized officer of the
Trustee;
(2) Simultaneous with the submission of this Draw
certificate, the Trustee is making demand for payment under the
Letter of Credit pursuant to Section [4.06(B) or 4.06(C) of the
Indenture to pay the principal portion of the purchase price
due and payable on the purchase from the owners of the Bonds,
pursuant to [insert Sections 3.01(A), 3.01(C), 3.'02, 4.01 or
4.03]* of the Indenture, of one or more of the Bonds on [insert
relevant purchase date];
(3) The aggregate amount of the premium to be paid on
account of said Bonds on said date is $[insert amount], which
is the amount hereby demanded under the Letter of Credit. The
Trustee has not heretofore made demand under the Letter of
Credit for such amount or any portion thereof;
(4) The Amount determined hereby does not include any
amount in respect of the purchase of any Bonds registered in
the name of the City or held by the Paying Agent for the
benefit of the Bank;
Annex 4-1
(5) Upon our receipt of the amount demanded under the
Letter of Credit we will hold the same in trust for the benefit
of the owners and we will apply the same exclusively to the
payment of the premium to be paid in respect of the Bonds
referred to in numbered paragraph (2) above as provided in the
Indenture, and no portion of said amount shall be (i) deposited
by Ds in any account maintained by or for the account of the
City, (ii) applied by us for any purpose other than to pay the
amount of the'portion of the purchase price to be paid on
account of such Bonds or (iii) commingled with other funds held
by us;
(6) The amount hereby demanded does not exceed the amount
the Trustee is required to draw under the Letter of Credit
pursuant to [insert Section 4.06(D)]* of the Indenture; and
(7) An amount equal to the amount hereby demanded has been
deposited with the Trustee and is being held by the trustee in
trust for you in immediately available funds.
Terms defined in the Letter of Credit are used in this
Annex as therein defined, unless otherwise defined in this
Annex.
CITIBANK, N.A.,
as Trustee
By:
Title:
* Strike inapplicable language.
Annex. 4-2
ANNEX 5 to
The Tokai Bank, Ltd.
Los Angeles Agency
Irrevocable Letter of
Credit No.
The Tokai.Bank, Ltd.
Los Angeles Agency
534 West Sixth Street
Los Angeles, California 90014
SUBJECT: Letter of Credit No. issued by The
Tokai Bank, Ltd. Los Angeles Agency
Ladies and Gentlemen'
For value received, we hereby irrevocably assign and
transfer all of our rights under the above-captioned Letter of
Credit, as heretofore and hereafter amended, extended or
increased, to:
Name of Transferee
Address of Transferee
By this transfer, all of our rights in the Letter of Credit
are transferred to the transferee, and the transferee shall
have sole rights as beneficiary under the Letter of Credit,
including sole rights relating to any amendments, and whether
now existing or hereafter made. The Letter of Credit may
hereafter be amended, extended or increased without our consent
or notice to us and you will give notice thereof directly to
the transferee.
Annex 5-1
By its signature below the undersigned transferee
(i) acknowledges that it has duly succeeded to , as
trustee under that certain Indenture of Trust relating to those
certain Limited Obligation Improvement Bonds, Assessment
District No. 86-2 in the aggregate principal amount of
$81,400,000 issued by the City of Tustin, California, which
Indenture is dated as of September 1, 1988 and entered into by
and between Citibank N.A. and the City of Tustin, California as
amended or supplemented from time to time (the "Indenture") and
(ii) consents and agrees to perform and comply with all the
terms, covenants and conditions on its part to be performed or
complied with under the Indenture.
The original Letter of Credit is hereby returned with all
amendments to this date accompanied by payment to you of your
transfer-fee in the sum of US$1,500. Please notify the trans-
feree in such form as you deem advisable of this transfer and
of the terms and conditions of the Letter of Credit, including
amendments, as transferred. A copy of this instrument of
transfer has been furnished to the City of Tustin for its
information.
Very truly yours,
[Insert Name of Transferor]
By
[Insert Name and Title]
Acknowl edged:
[Insert Name of Transferee]
By
[Insert Name and Title]
Annex 5-2
PROTOCOL AGREEMENT
EXHIBIT F
THIS PROTOCOL AGREEMENT (the "Agreement") is made as
of September 1, 1988, by and between the City of Tustin, a
municipal corporation of the State of California (the "City"),
and The Irvine Company, a Michigan corporation (the "Company").
RECITALS
A. Pursuant to proceedings under the Municipal
Improvement Act of 1913, the City has formed Assessment
District No. 86-2 for the purpose of constructing and financing
the costs of certain public improvements (the "Improvements").
The Improvements will be financed with the proceeds of the sale
of bonds (the "Bonds") which will be issued pursuant to the
Trust Indenture (the "Indenture") dated as of September 1, 1988
by and between the City and Citibank, N.A. (the "Trustee").
All capitalized terms used in this Agreement shall be defined
as provided in the Indenture unless otherwise defined herein.
B. The Bonds will be repaid from Assessments imposed
on designated benefited land substantially all of which at
present is owned by the Company. The Company anticipates that
it will continue to own a substantial portion of the land
subject to such Assessments. In light of these facts, the
parties recognize that the Company is materially affected by
the manner in which the City exercises its rights and
obligations under the Indenture.
C. The parties have cooperated in efforts to provide
for the Improvements in the most expeditious', efficient and
cost-effective manner available. The parties wish to continue
those efforts by entering into this Agreement to provide a
cooperative means of dealing with certain ongoing aspects of
monitoring and administering the aforesaid financing.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION of the above recitals
and the promises contained herein, the parties agree as follows:
1. Improvements. The parties will cooperate with
respect to the design of the Improvements, the content and
specifications of the contracts for the construction of the
Improvements, the timing and sequence of such construction, and
all schedules and financial reports relating thereto. The City
will exercise its best efforts to take such steps as may be
reasonably required to award one or more contracts for the
construction of the Improvements and to cause such contracts to
be diligently completed; provided, however, that the City shall
not be required to enter into any such contract if the amount
of Bond proceeds and earnings thereon then available to the
City will be inadequate to make the payments required pursuant
thereto.
2. Alternate Letter of Credit. Section 4.06(F) of
the Indenture provides that the Trustee shall accept an
Alternate Lette~.of Credit upon satisfaction of certain
conditions stated therein. In the event that the Company
delivers a written request to the City that an Alternate Letter
of Credit be presented to the Trustee, the City and the Company
will enter into an agreement whereby the Company agrees to pay
all costs and expenses incurred in connection with the
satisfaction of the conditions set forth in said Section
4.06(F) and any termination fee payable to the Bank as a result
thereof. Upon execution of such agreement by the Company, the
City will promptly take such action as may be reasonably
required to obtain such Alternate Letter of Credit, to present
the same to the Trustee, and to satisfy the conditions set
forth in said Section 4.06(F); provided, however, that the City
shall not be required to enter into any agreement with the
issuer of the Alternate Letter of Credit which differs from the
Reimbursement Agreement in any material respect adverse to the
City. The provisions of this section shall expire and be of no
further force or effect at such time as the Company no longer
owns, directly or indirectly, and/or no longer is required,
pursuant to agreements with other owners of land within the
District (evidence of which requirement shall have been
delivered to the City), to pay the Assessment Installments
applicable to, a majority,' by area, of the property within the
District with Assessments bearing interest at rates other than
a Fixed Interest Rate.
3. Information and Notices. Under various
provisions of the Indenture and the Reimbursement Agreement the
City may receive or give notices for various purposes specified
therein. The City agrees to provide the Company with copies of
all such notices (specifically including, but not limited to,
the notice referred to in Section 4.05(A) of the Indenture)
promptly upon the receipt or sending thereof, as the case may
be. Various provisions of the Indenture permit the City to
request and obtain specified information from various parties
described therein. The City hereby agrees to provide the
Company with copies of such information promptly upon its
receipt by the City. In addition, the City shall supply to the
Company such information available to the City pursuant to the
Indenture as the Company may from time to time reasonably
request.
4. Investment of Funds. The parties understand and
agree that the City shall have the sole responsibility for
investing or directing the investment of all funds held by it
or on its behalf under the Indenture. The City will invest or
direct the investment of such funds in Permitted Investments
which will mature on or before the dates on which such funds
are expected t01 be needed for purposes of the District.
Section 5.07 of the Indenture provides that any
moneys .held by the Trustee in the Interest Reserve Fund shall
be held-uninvested unless directed to be invested by the City,
in which case such moneys are to be invested in direct
obligations of the United States of America or in certain
repurchase agreements, in each case as described in said
Section 5.07. Inasmuch as the earnings, if any, from the
investment of the moneys held in the Interest Reserve Fund will
affect the amount of the Assessment Installments which the
Company will be required to pay, the City will provide such
instructions to the Trustee concerning the investment of said
moneys in Permitted Investments as the Company may from time to
time request; and the City shall have no liability for any
losses incurred as the result of any such investment made in
accordance with the Company's request. The Company
acknowledges that earnings from the investment of the moneys
held under the Indenture at a yield greater than the yield on
the Bonds may be required to be rebated to the federal
government.
The Bank is hereby expressly recognized as a
third-party beneficiary of this section.
5. Remarketinq Aqent. Pursuant to the provisions of
Section 8.05 of the Indenture, the City has reserved the right
to remove the Remarketing Agent and to appoint a successor
thereto. Inasmuch as the effectiveness of the Remarketing
Agent in performing its duties directly affects the interest
payments required to be made by the Company, the City agrees
that (i) it will not remove the Remarketing Agent without the..
prior written consent of the Company (which consent shall not
be unreasonably withheld), (ii) if requested to do so by
written notice from the Company setting forth the Company's
reasons for so requesting, it will remove the Remarketing Agent
(subject to the consent of the Bank), and (iii) it will meet
and consult with the Company concerning the appointment of any
successor to the Remarketing Agent.
6. Financial Information. The City will make
available to the Company monthly reporting of fund and account
balances relating to the District including but not limited
to: (i) construction funds and accounts and related cost
accounting information and (ii) to the extent available from
the Trustee, reports showing bond principal outstanding and
interest disbursements as well as reports on all funds and
accounts held by the Trustee. The City will also make
available to the Company copies of all materials furnished by
the City to the Bank pursuant to Section 5.1(e) of the
Reimbursement Agreement.
7. Changes in Indenture or Reimbursement Aqreemeht.
Except to the extent required in the Opinion of Counsel in
order to maintain the tax-exempt status of interest on the
Bonds, the City will not enter into any amendment of or
supplement to the Indenture or the Reimbursement Agreement
without the prior written consent of the Company (which consent
shall not be unreasonably withheld). The provisions of this
section shall expire and be of no further force or effect at
such time as the Company no longer owns, directly or
indirectly, and/or no longer is required, pursuant to
agreements with other owners of land within the District
(evidence of which requirement shall have been delivered to the
City), to pay the Assessment Installments applicable to, a
majority, by area, of the property with Assessments bearing
interest at rates other than a Fixed Interest Rate.
8. Prohibition Against Certain Transfers. At the
time of their issuance the Bonds will bear interest at one or
more Adjusted Interest Rates, and the Assessments will bear
interest at a rate equal to the composite of such Adjusted
Interest Rates. Such an arrangement would not be desirable for
any property within the District from and after the date on
which such property is first occupied as a single family
residence. Accordingly, the Company will not sell, transfer or
otherwise convey any parcel within the District for occupancy
as a single family residence unless and until either (i) the
interest rate applicable to the Assessment upon such parcel has
been converted so as to correspond to a Fixed Interest Rate, or
(ii) the Assessment on such parcel has been paid. The
foregoing provision is not intended, and shall not be
construed, to prevent the Company from (i) entering into a
contract for the sale, transfer or other conveyance of a parcel
for such purpose if such sale, transfer or conveyance is
contingent upon either the conversion of the interest rate
applicable to the Assessment upon such parcel so as to
correspond to a Fixed Interest Rate or the payment of such
Assessment, or (ii) selling, transferring, or otherwise
conveying any property within the District to one or more
developers or merchant builders (each, a "Developer") for the
development thereof for single family residential purposes.
However, if the Company does sell, transfer or otherwise convey
any property within the District to a Developer for development
thereof for single family residential purposes, and if prior to
such sale, transfer or conveyance the interest rate applicable
to the Assessment upon such property has not been converted so
as to correspond to a Fixed Interest Rate or such Assessment
has not been paid, the Company will require that such Developer
enter into an agreement with the City substantially similar to
the agreement set forth in this section and such agreement
shall name the Bank as a third-party beneficiary thereof.
-4-
Except as hereinafter provided, the City will use
its best efforts to include as a condition of its approval of
all tract maps covering land within the District (both
tentative and final and both "A" and "B") a requirement that no
building permit will be issued for construction of a single
family residence upon any lot upon which there is an unpaid
Assessment unless and until the interest rate applicable to
such AsseSSment has been converted so as to correspond to a
Fixed Interest Rate and satisfactory proof thereof has been
furnished to the City. The City will not impose such a
requirement upon any tract map applicable to Lots 1, 2, 9, 10,
13, 24, 25 or 27 of Tract 12870 or in any case in which the
City determines that as a result of unusual or unexpected
circumstances the withholding of building permits would impose
an undue hardship (as, for example, in the case of property
with respect to which a Development Notice has been filed with
the Trustee and satisfactory proof thereof has been furnished
to the City but the interest rate applicable to the Assessment
upon such property has not yet been converted so as to
correspond to a Fixed Interest Rate), provided that no
certificate of occupancy will be issued with respect thereto
unless and until the interest rate applicable to the Assessment
upon the property in question has been fixed so as to
correspond to a Fixed Interest Rate or such Assessment has been
paid.
The Bank is hereby expressly recognized as a
third-party beneficiary of this section.
9. Automatic Conversion to Fixed Rate Bonds. On or
before June 15 and December 15 of each year, commencing
December 15, 1988, the Company will file with the Trustee an
executed Development Notice setting forth the information
called for in the form of such notice which is set forth in
Exhibit B to the Indenture.
The Bank is hereby expressly recognized as a
third-party beneficiary of this section.
10. Optional Conversion to Fixed Rate Bonds.
Pursuant to Section 2.10 (C) of the Indenture the City may give
notice to the Trustee that it intends to effect a conversion of
the interest rate on some or all of the Bonds to a Fixed
Interest Rate. Unless such notice is given upon the direction
of the Bank with respect to Bank-Owned Bonds, the City will not
give any such notice without the prior written approval of the
Company if as a result of .such notice the interest rate
applicable to any Assessment payable by the Company would be
converted so as to correspond to a Fixed Interest Rate.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CITY OF TUSTIN
By:
Mayor
ATTEST:
THE IRVINE COMPANY
By:
Richard E. Moran Jr.
Vice President and Treasurer
City Clerk
APPROVED AS TO FORM:
City Attorney
08/22/88
0668n/2495/020
-6-
EXHIBI~ G
SECOND AMENDMENT TO
AGREEMENT FOR PAYMENT OF COSTS FOR
INPRASTRUC~ IMPROVEMENTS
EAST TUSTIN ASSESSMENT DISTRICT 86-2
mmmmmm~mmmmmmmmw~mmmmm~--mmmm~m~--~ ~mm
THIS AMENDMENT TO AGaEEMENT FOR PAYMENT OF COSTS FOR
INI~RASTRUCTURE IMPROVEMENTS, EAST TUSTIN ASSESSMENT DISTRICT 86-2
(the "Amendment") is entered into by and between The Irvine Company,
a Michigan corporation ("Company") and The City of Tustin, a
municipal corporation ("City") as of this 'day of September,
1988.
!~._CITALS
WHEREAS, City and Company have previously entered into that
certain "Agreement for Payment of Costs for Infrastructure
Improvements, East Tustin Assessment District 86-2", dated as of
December 15', 1986 (the "Agreement"), providing for the pa. yment and
reimbursement of certain costs to be incurred with respect to
certain public improvements to serve all or a portion of the area of
the City known as East Tustin, and the formation of East Tustin
Assessment District 86-2 ("ETAD 86-2"); and
WHEREAS, City and Company have heretofore entered into an
Amendment to Agreement for Payment of Costs for Infrastructure
Improvements, East Tustin Assessment District 86-2, dated as of
_ _, 1988; and
W~ER~AS, City and Company now have more accurate cost estimates
for the work to be performed under the Agreement; and
WHo. PICAS, Company wishes to provide assurance to City that
Company will, at its sole cost and expense, pay for the completion
of. the Improvements undertaken after the sale of Bonds for ETAD 86-
2, in the event the proceeds 'of such Bonds are insufficient to cover
the costs of said Improvements; and
NOW, T~EREFORE, in consideration of the above and other good
. .
and valuable consideration, City and Company hereby agree to amend
the Agreement as follows:
1. Paragraph i(D) is hereby added to the Agreement to read as
follows:
"D. If the proceeds of the initial
Assessment District Bonds are not sufficient
to pay for the Improvements, City will use
its best efforts to issue additional Bonds or
Bond Anticipation Notes. If City is unable,
after using its best efforts, to issue such
·
additional Bonds or Bond Anticipation Notes,
Company shall pay to City an amount of money
equal to the difference between the remaining
funds from Bond proceeds and an amount
adequate to complete the Improvements."
Paragraph 6 is hereby amended to read as follows:
"6. Maximum Costs Prior to Formation o.f
_ETAD 86-~ and Receipt of Bond Proceeds.
It is understood that the costs
identified in Exhibit 'C' attached hereto are
· the best available estimated costs for the
Improvements. Company and City agree that,
notwithstanding the estimated costs
identified in Exhibit 'C' , the actual
payments by Company for such work and
improvements shall be. based upon actual
project costs for the Improvements c. ompleted
prior to formation of ETAD 86-2 and the
receipt of proceeds from the sale of ~TAD 86-
2 Bonds; provided, however, that the
Company.s total payments, whether the
Improvements are constructed by City or
Company, shall not exceed $4,653,000 without
express prior written authorization from the
Company. This maximum cost 'is expected to
cover all improvement, engineering and
assessment district formation costs incurred
under this Agreement prior to formation of
the ~TAD 86-2 and the receipt of proceeds
from the sale of ETAD 86-2 Bonds. Upon
completion of the Contracts, City will
provide Company with an accounting of all
sums expended in the Contracts. Prior to
adoption of the Resolution Of Intention,
Company shall provide City with all costs of
the Company Improvements and the Company
Engineering Work. Nothing in this Paragraph
6 shall be construed to relieve Company or to
limit Company's obligation as set forth in
Paragraph i(D) to complete the Improvements
at Company's sole cost and expense in the
event the proceeds from the sale of ETAD 86-2
Bonds are insufficient to cover the costs of
the Improvements."
3. 8xhibits "B" and "C" attached hereto are-hereby
substituted in place of Exhibits "B" and .'C. attached to the
Agreement.
4. Except as amended above, the Agreement continues
unchanged, and as amende4, it continues in full force and effect.
IN WITNESS WHEREOF, City and Company have executed this
Amendment as of the date first written above.
CITY OF TUSTIN, a municipal
corporation
THE IRVINE COMPANY, a
Michigan corporation
By: By..
ItS:
ATTEST: By:
"City ~l~k ,- City of Tustin
Its:
APPROVED AS TO FORM:
'City Attorney, Ci'~y Of Tustin
(C2081)
D:06/20/88
R:08/24/88
R:08/30/88
_Descri_~tlon of
a~
The design and construction of-certain grading, paving,
base, curbs and gutters, parkway, drainage', intersection
work, street lights, signing, striping, landscaping, water,
sewer, reclaimed water, gas, electric, telephone and cable
television utilities, together with appurtenances and
appurtenant work for the following roadways:
_C_itv o.f.. TUStin:
·
Irvine Boulevard-The improvement of Irvine Boulevard
to its ultimate street section along the north side
from 650 +_ feet westerly of Tustin Ranch Road to
Jamboree Road.
·
Tustin Ranch Road- The improvement of Tustin Ranch
Road to its ultimate street section between Irvine
Boulevard and Jamboree Road.
Tustin Ranch Road Interchange at the I-5 Freeway -
Funding for 28 percent of the total interchange
construction project and right-of-way acquisition.
·
Portola Parkway - The improvement of Portola Parkway to
its ultimate s~reet section between Jamboree Road and
Tustin Ranch Road.
·
La Colina Drive - The improvement of La Colina Drive to
its ultimate street section between Tustin Ranch Road
and the western City boundary.
·
Jamboree Road - The improvement to ultimate width of
the west side (three southbound lanes) and improvement
of the east side (two northbound lanes) between Irvine
Boulevard and Tustin Ranch Road, including a bridge at
Peters Canyon Wash.
·
Jamboree Road - The improvement of a four-lane roadway
between Tustin Ranch Road and the northern Tustin city
limits.
City of
Jamboree Road- The improvement of a four-lane roadway
between the Tustin city limits and Canyon View Avenue.
·
Jamboree Road - The improvement of a four-lane roadway
between Canyon View Avenue and existing Chapman Avenue
in the City of Orange. Assessment District No. 86-1,
City of Orange, will contribute funds to this project.
The construction .of traffic signal improvements at major
intersections and proposed project entry streets:
City o_f Tustin_:
Jamboree Road
Tustin Ranch Road
Irvine Boulevard
- POrtola Parkway
City of O£anq~:
8 full signals
·
5 full signals
1 full signal, 3 half
signals
1 full signal
C~
D.
- Jamboree Road 2 full signals, 1 half
signal
Flood Control Facilities- The improvement of the following
master planned drainage facilities in the City of Tustin:
- Lower Peters Canyon Retarding Basin.
- Jamboree West storm drain from Jamboree Road to Peters
Canyon Wash Eastern Inlet storm drain.
Peters Canyon Wash Eastern Inlet storm drain between
Jamboree Road and Peters Canyon Retarding Basin.
The grading of an access road and storm drain
installation between Tustin Ranch Road and Lower Peters
Canyon Retarding Basin.
Regional Trail in the City of Tustin - The improvement of a
regional bicycle, equestrian, and hiking trail from Peters
Canyon Regional Park along Lower Lake Drive, Tustin Ranch
Road and Portola Parkway through its crossing of jamboree
Road at Peters Canyon Wash.
Proposed Acquisition Items in the City of Tustin:
Clearing and tree removal along Jamboree Road from
Tustin Ranch Road to existing Chapman Avenue.
Grading for Assessment District street improvements
within Tract No. 12870; Tustin Ranch Road; La Colina
Road; Portola Parkway; Jamboree Road to Tustin Ranch
Road.
(C2081A)
/3o/8s
Project
10
11
(C2081B)
/30/8
ASSRS~$NENT DISTR!.CT .~6-2
~scription
North 1/2
Tustin Ranch Road
Jamboree Road
Pot tola Parkway
La Colina
Peter's Canyon Wash
Peter's Canyon Wash
Regional Trails
Traffic Signalization
Not Used
Acqui si ti OhS
Tustin Ranch Road Interchange
of Irvine Boulevard
(Phase I)
(Phase II)
TOTAL IMPROVEMENTS:
Contingency ?
Design, fees,
etc. ?
Total COSt
$ 1,376,180.00
$ 6,274,548.10
$30 , 902,177.47
$ 530,228.69
$ 460,682.19
$ 5,410,378.06
$ 2,000,570.00
$ 679,770.00
$ 2,341,320.00
937,064;30
.
,445,000.00
$55,357,918.81