HomeMy WebLinkAboutCC RES 86-102.w - ,
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RESOLUTION NO. 86-102
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RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA AUTHORIZING THE ISSUANCE OF NOT TO EXCEED
$50,650,000 AGGREGATE PRINCIPAL AMOUNT OF CITY OF TUSTIN
ASSESSMENT DISTRICT NO. 85-1 IMPROVEMENT BONDS AND
AUTHORIZING CERTAIN OTHER RELATED MATTERS
WHEREAS, .the City Council of the City of Tustin, California
(the "City"), has undertaken proceedings to issue its Improvement
Bonds under the Municipal Improvement Act of 1913, Division 12 of the
Streets and Highways Code of California, and the Improvement Bond Act
of 1915, Division 10 of the Streets and Highways Code of California
(the "Act");
WHEREAS, the City Council, by Resolution No. 86-81 adopted
June 16, 1986, resolved its intention to form City of Tustin
Assessment District No. 85-1 and to issue bonds to represent unpaid
assessments;
WHEREAS, the City Council by Resolution No. 86-93 adopted
July 21, 1986 has confirmed the assessments which were recorded on
July 24, 1986 in the office of the Superintendent of Streets and for
which a Notice of Assessment was filed in the office of the Orange
County Recorder on July 25, 1986;
WHEREAS, the unpaid assessments must be determined at the
end of the 30-day period for payment of assessments;
WHEREAS, a list of unpaid assessments must be filed with
the City Clerk before issuance of the Bonds; and
WHEREAS, the City intends to enter into an Indenture of
Trust, dated as of August 1, 1986, by and between the City and
Citibank, N.A., (the "Indenture") the proposed form of which is
attached as Exhibit B hereto, to effect the issuance of not to exceed
$50,650,000 aggregate principal amount of its City of Tustin
Assessment District No. 85-1 Improvement Bonds (the "Bonds");
WHEREAS, Merrill Lynch Capital Markets and Stone &
Youngberg (the "Underwriters") have submitted a Purchase Contract
dated August 21, 1986, by and between the City and the Underwriters
(the "Purchase Contract"), the proposed form of which is attached as
Exhibit C hereto, to purchase the Bonds;
WHEREAS, Merrill Lynch, Pierce, Fenner and Smith,
Incorporated has submitted a Remarketing Agreement, dated as of
August 1, 1986, by and between the City and Merrill Lynch, Pierce,
Fenner and Smith, Incorporated (the "Remarketing Agreement"), the
proposed form of which is attached hereto as Exhibit D;
WHEREAS, the Underwriters have submitted a Preliminary
Official Statement dated August 13, 1986 relating to the Bonds, for
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approval, confirmation and ratification, which Preliminary Official
Statement is attached hereto as Exhibit E;
WHEREAS, The Mitsubishi Trust and Banking Corporation, Los
Angeles Agency, has submitted a Reimbursement Agreement, dated as of
August 1, 1986, by and between the Bank and the City, with its
Irrevocable Letter of Credit attached thereto (the "Reimbursement
Agreement"), the proposed form of which is attached as Exhibit F
hereto, which Letter of Credit will secure the payment and purchase
of the Bonds;
WHEREAS, The Irvine Company, the primary landowner in
Assessment District No. 85-1, has submitted a Protocol Agreement
dated as of August 1, 1986, by and between the City and The Irvine
Company (the "Protocol Agreement), the proposed form of which is
attached as Exhibit G hereto.
BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY COUNCIL
OF THE CITY OF TUSTIN AS FOLLOWS:
SECTION 1. The City hereby authorizes the issuance of not
to exceed $50,650,000 aggregate principal amount of its City of
Tustin Assessment District No. 85-1 Improvement Bonds pursuant to the
Indenture.
SECTION 2. The City hereby authorizes the Treasurer to
determine the unpaid assessments at the conclusion of the 30 day col-
lection period or upon receipt of waivers thereof from the owners and
ground lessees of all real property located in Assessment District
No. 85-1.
SECTION 3. The Indenture is hereby approved and the Mayor
or Mayor Pro-Tem and City Clerk are hereby authorized on behalf of
the City to execute the Indenture with such additions, deletions and
clarifications as approved by the City, such execution being approval
by the City for such additions, deletions and clarifications.
SECTION 4. The Purchase Contract is hereby approved and
the Mayor or Mayor Pro-Tem is hereby authorized to execute the
Purchase Contract with such additions, deletions and clarifications
as approved by the City, such execution being approval of the City
for such additions, deletions or clarifications.
SECTION 5. The Remarketing Agreement is hereby approved
and the Mayor or Mayor Pro-Tem is hereby authorized to execute the
Remarketing Agreement with such additions, deletions and clarifica-
tions as approved by the City, such execution being approval of the
City for such additions, deletions or clarifications.
SECTION 6. The distribution of the Preliminary Official
Statement dated August 13, 1986 is hereby approved, confirmed and
ratified, and the City hereby authorizes an Official Statement in
substantially the form of the Preliminary Official Statement, with
such additions, deletions and clarifications as approved by the
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City. The Mayor or Mayor Pro-Tem are hereby authorized to execute
and deliver the final Official Statement, such execution being
approval of the City for such changes, additions, deletions and
clarifications.
SECTION 7. The Reimbursement Agreement is hereby approved
and the Mayor or Mayor Pro-Tem and City Clerk or her designees or
other appropriate officers of the City are hereby authorized to exe-
cute the Reimbursement Agreement with such additions, deletions and
clarifications as approved by the City, such execution being approval
of the City for such additions, deletions or clarifications.
SECTION 8. The Protocol Agreement is hereby approved and
the Mayor or Mayor Pro-Tem is hereby authorized to execute the
Purchase Contract with such additions, deletions and clarifications
as approved by the City, such execution being approval of the City
for such additions, deletions or clarifications.
SECTION 9. The Mayor, Finance Director, Treasurer, City
Clerk and other appropriate officers of the City are hereby further
authorized and directed to execute and deliver any and all documents
and instruments and to do and cause to be done any and all acts nec-
essary and proper to carry out the transactions contemplated by this
Resolution.
PASSED AND ADOPTED by the City Council of the City at a
regular meeting held on the 18th day of August, 1986.
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DONA J. SALTERELLI
MAYOR O THE CITY OF TUSTIN
ATTEST:
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CITY C OF THE CITY OF
TUSTIN
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INDSNTORE OF TRtTST
BY AND B8'1'f~1SBN
TH8 CITY OF TOS'MN
and
CITIBANH, N.A.
as Trustee
Dated as of August 1, 1986
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SECTI~i
Section 1.01.
Section 1.02.
Section 1.03.
TABLE OF CONTEI~1'S
TITLE
ARTICLB I
Definitions; Equal Security
Definitions 2
authority for the Indenture .18
Indenture to Constitute Contract .18
ARTICLE II
Conditions and Terms of Bonds
Section 2.01. Authorization of Bonds .18
Section 2.02. "Denominations, Medium, Method and
Place of Payment and Dating of
Bonds .18
Section 2.03. Payment of Principal and Interest
of Bonds .19
Section 2.04. calculation and Payment of
Interest .19
Section 2.05. ~,etermination of Adjusted Interest
Rates and Unit Pricing Interest
Periods .20
Section 2.06. Determination of Variable Interest
Rate .22
Section 2.07. Determination of Fixed Interest
Rate .23
Section 2.08. Alternate Rate fur Interest
Calculation .24
Section 2.09. Interest on Bank-Owned Bonas;
Additional Interest on Bank-Owned
Bonds .24
Section 2.10. changes in Mode .24
Section 2.11. Form of Bonds .26
Section 2.12. execution and Authentication of
Bonds .26
Section 2.13. Transfer and Exchange of Bonds .26
Section 2.14. Registration Books .27
Section 1.15. 'temporary Bonds .27
Section 2.16. Bonus Mu~ilated, Destroyed, Lost
or Stolen .27
PAGE
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TABLE OF CONTENTS, Continued
SECTIO~i TITLE
ARTICLE III
Redemption of Bonds
PAGE
Section 3.01. Mandatory Redemption .28
Section 3.02. Optional Redemption of Unit
Pricing Bonds .31
Section 3.03. Optional Redemption of Bonds in
she Demand Mode .32
Section 3.04. Optional Redemption of t3onds in
the Fixed Rate Mode .32
Section 3.05. Selection of Bonds for Redemption .32
Section 3.06. Notice of Redemption .33
Section 3.07. Partial Redemption of Bonds .33
Section 3.08. Etfect of Redemption .33
ARTICLE IV
Purchase of Bonds
Section 4.U1. Optional Tender of Unit Pricing
Bonds . 3 4
Section 4.02. Optional Tender Of Bonds in the
Demand Mode .3 4
Section 4.03. Mandatory Purchase of Bonds .35
Section 4.04. render and Purchase of Bonds .36
Section 4.05. Mandatory Purcnase Upon Expiration
or Termination of Letter of Credit .38
Section 4.06. Letter of Credit; Alternate Letter
of Credit .39
Section 4.07. ~ No Sales Arter Certain Defaults .41
Section 4.08. Purcnase Fund .41
ARTICLE V
Pledge of the indenture= Funds and Accounts
Section 5.01. Pleage Effected By Inden~ute .43
Section 5.02. rledge or Assessment Installments;
Assessment Fund .44
Section 5.03. Collection of Assessment
Installments .44
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TABLE OF CONTENTS, Continued
SECTION TITLE
Section 5.04. D~pos~t of Moneys .46
Section 5.05. xeserve Earnings Fund .51
Section 5.U6. Use of Money in the Const_u~t~on
Fund .51
Section 5.07. Interest Reserve Fund .52
Section 5.08. Investments .53
ARTICLE VI
Covenants
Section 6.U1. Compliance with this Inuenture .54
Section 6.02. ubservance of Laws and Regulations .54
Section 6.03. Other Liens .54
Section 6.U4. rrosecution of suits .54
Section 6.u5. Accounting Records and Statements .55
Section 6.06. Recordation and Filing .55
Section 6.07. Further Assurances .55
Section 6.08. Arbitrage covenant .55
ARTICLE VII
Default and Liaitations of Liability
Section 7.U1. Events of Default .56
Section 7.02. action on Default .56
Section 7.03. Remedies of the Trustee .58
Section 7.04. Non-Waiver .58
Section 7.05. Remedies Not Exclusive .59
Section 7.06. No Liability by the City to the
Owners .59
Section 7.07. No Liability by the Trust ee to the
Owners .59
Section 7.08. Action by Owners .59
PAGE
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TABLE OF CONTENTS, Continued
SECTION TITLE
ARTICLE.VIII
The Trustee and the Remarketing Agent and the
Paying Agent
Section 8.01. Employment and Duties of the
Trustee .60
Section 8.U2. Removal and Resignation of the
Trustee .60
Section 8.03. Compensation and Indemnification
of the Trustee .61
Section ts.u4. Protection of the Trustee .61
Section 8.05. Appointment of Remarketing Agent .62
Section 8.06. Appointment of Paying Agent .63
ARTICLE DC
Amendment of or Supplement to the Indenture
Section 9.01. Amendment of Supplement by Consent
of Owners .64
Section 9.02. llisqualified Bonds .65
Section 9.03. E~~dorse,uent or Replacement of
Bonds After Amendment of
Suppie,~ent .65
Section 9.04. hmendment or supplement by Mutual
Consent .65
ARTICLE %
Def easaace
Section 10.01. Discharge of Bonds and Indenture .65
Section 10.u2. Dnclaimed Money .67
Section 10.03. No Discharge .67
PAGE
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SECTION
TABLE OF CONTENTS, Continued
TITLE
PAGE
ARTICLE XI
Miscellaneous
Section 11.01.
Section 11.02.
Section ll.u3.
Section 11.04.
Section 11.05.
Section 11.06.
Section 11.07.
Section 11.08.
Section 11.09.
Section 11.10.
Section 11.11.
Section 11.12.
Section 11.13.
Section 11.14.
Exhibit A
Exhibit B
Benerits of this Indenture Limited
to Parties .68
Successor Deemed Included in all
References to Predecessor .68
Execution of Documents by Owners .68
Waiver of Personal Liability .69
Acquisition of the Bonds by City .6y
Notice by Mail .69
Funds .69
Article and Section Headings,
Gender a,~d References .69
rartial Invalidity .70
Cal if~r..ia Law .70
New YorK Time .70
Notices .70
Notices to Rating Agencies .72
Effective Date .72
Form of Improvement Bond .A-1
Form of Landowner Ele~t~on Notice .B-1
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST dated as of August 1, 1986 by and
between the City of u 'n and Citibank, N.A., a national banking
association incorporated under the laws of the United States of
America;
W I T N E S S E T H
WBSRBAS, the City intends to finance the costs of certain
works and improvements through the issuance of bonds under the Act;
and
WHBRS~iS, the City desires to provide for the securing of
the Bonds as provided in this Indenture;
WH$RSAS, the Trustee has accepted the trust created and
established by this Indenture and in evidence thereof has joined in
the execution hereof;
ROW, 'PH$REFORB, in consideration of the premises, of the
acceptance by the Trustee of the trust hereby created, and of the
purchase and acceptance of the Bonds by the owners thereof, and for
other valuable consideration, the receipt of which is hereby acknowl-
edged, and to fix and declare the terms and conditions upon which the
Bonds are to be issued, authenticated, delivered, secured and
accepted by all persons who shall from time to time be or become
owners thereof, and to secure the payment of all the Bonds at any
time issued and Outstanding hereunder and the interest thereon
according to their tenor and to secure the payment of amounts owing
to the Bank hereunder, purport and efrect, and to secure the per-
f ormance and observance of all of the covenants, agreements and con-
ditions therein and herein contained, the City by these presents does
grant, bargain, sell, release, convey, assign, transfer and pledge
unto the Trustee all right, title and interest in and to the
Assessments and other funds as more fully described in Section 5.01
of this Indenture, and any additional property that may from time to
time, by delivery or by writing of any kind, be subjected to the lien
hereof by the City or by anyone in its behalf and the Trustee is
hereby authorized to receive the same at any time as additional secu-
rity hereunder, subject to such permitted encumbrances under this
Indenture as may be superior (by operation of law or otherwise) to
the lien hereof.
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To have and hold all of the above unto the Trustee and its
successors and assigns forever for the equal and ratable benefit of
the owners from time to time of all the Bonds, if any, authenticated
hereunder and issued by the City and Outstanding without any priority
of any one Bond over any other except as expressly provided herein
upon the trusts and subject to the covenants and conditions hereinaf-
ter set forth.
NOW, '1'gEREFORS, HNOW ALL PEOPLE BY THBSB PRESBNTS, THIS
INDBNTQRE OF TROST WITNESSETS:
ARTICLE I
DEFINITIONS; BQDAL SECORITY
SECTIOB 1.01. Definitions. Unless the context otherwise
requires, the terms defined in this Section 1.01 shall for all pur-
poses hereof and of any amendment hereof or supplement hereto and of
the Bonds and of any certificate, opinion, request or other document
mentioned herein or therein have the meanings defined herein, the
following definitions to be equally applicable to both the singular
and plural forms of any of the terms defined herein:
"Act" means the Municipal Improvement Act of 1913
(Division 12 of Streets and Highways Code), as amended, and the
Improvement Bond Act of 1915 (Division 10 of the Streets and Highways
Code), as amended.
Adjusted Interest Rate
"Adjusted Interest Rate" means, for any Unit Pricing
Bond, 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 a Rate Adjustment Date, which would, in the
judgment of the Remarketing Agent (having due regard to the prevail-
ing 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.
A~~ ternate Lette of Cred~+-
°Alternate Letter of Credit" means a letter of credit or
other security device issued in accordance with Section 4.06 hereof
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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
"Alternate Rate" means as of the first day of any
Alternate Rate Calculation Period (i) during a Demand Mode, the
annual interest rate, not in excess of the Maximum Rate with respect
to Demand Bonds, equal to 68$ of the interest rate applicable to
90-day United States Treasury bills or (ii) during Unit Pricing Mode,
the annual interest rate, not in excess of the Maximum Rate with
respect to Unit Pricing Bonds, equal to 75$ of the interest rate
applicable to 90-day United States Treasury bills, determined on the
basis of the yield at which such 90-day Treasury bills shall have
been sold at the most recent Treasury auction conducted during the
preceding thirty (30) days, or if there shall have been no such auc-
tion within the preceding thirty (30) days, the rate of interest
borne by the Bonds for the immediately preceding Unit Pricing
Interest Period or Variable Rate Interest Period, as appropriate,
shall remain in effect for such Unit Pricing Interest Period or
Variable Rate Interest Period.
Alternate Rate Calculation Period
"Alternate Rate Calculation Period" means (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 calender 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
thereaf ter, from each Tuesday to but not including the following
Tuesday.
Assessment
"Assessment" means the assessment levied by the City con-
stituting a f first lien and charge upon the real property within the
District.
Assessment Fund
"Assessment Fund" means the fund by that name estat~lished
in Section 5.02 hereof.
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ss ssment Installments
"Assessment Installments" means the Assessment install-
ments of principal, interest, premium, if any, and incidental
expenses to be paid by the owners of property within the District.
Authorized Denominations
"Authorized Denominations" means (i) with respect to Unit
Pricing Bonds with Unit Pricing Interest Periods of less than one
year, 5100,000 and any integral multiple of 51,000 in excess of
5100,000; (ii) with respect to Unit Pricing Bonds with Unit Pricing
Interest Periods equal to or greater than one year, 55,000 and any
integral multiple thereof; (iii) with respect to Bonds in the Demand
Mode, 5100,000 and any integral multiple of 51,000 in excess of
5100,000; and (iv) with respect to Bonds in .the Fixed Rate Mode,
55,000 and any integral multiple thereof.
Automatic Conversion Date
"Automatic Conversion Date"
or of each year, or if
the next succeeding Business Day.
Bank
means the ,
such day is not a Business Day,
"Bank" means The Mitsubishi Trust and Banking Corporation,
Los Angeles Agency, and its successors and assigns or any issuer of
an Alternate Letter of Credit.
Bank Interest Rate
"Bank Interest Rate" means the interest rate payable on
Bank-Owned Bonds and determined pursuant to the Reimbursement
Agreement but in no event shall such rate exceed the Maximum Rate
with respect to Bank-Owned Bonds.
Bank-Owned Bonds
"Bank-Owned Bonds" means any Bonds purchased by the Bank
or with funds provided by the Bank pursuant to Section 4.04 hereof.
Bank Purchase Date
"Bank Purchase Date" means the date so specified in a
notice from the Bank pursuant to the Letter of Credit.
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Bond Counsel
"Bond Counsel" means any firm of nationally recognized
municipal bond attorneys selected. by the City and experienced in the
issuance of municipal bonds and the exemption of the interest thereon
from Federal income taxation.
"Bonds" means the 550,650,000 principal amount of Bonds
issued pursuant hereto and at any time Outstanding hereunder that are
authenticated and delivered by the Paying Agent under and pursuant to
Article II hereof.
Business Day
"Business Day" means a day of the year on which the
Trustee, Paying Agent, Tender Agent, Remarketing Agent and banks or
trust companies in New York, New York, or in California are not
authorized or required to remain closed.
Citv
"City" means 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.
Construction Fund
"Construction Fund" means the fund by that name estab-
lished in Section 5.07 hereof.
Conversion Date
"Conversion Date" means any date on which a Bond begins to
bear interest at a Fixed Interest Rate.
Demand Bond
"Demand Bond" means a Bond in the Demand Mode.
Demand Date
"Demand Date" means the Business Day on which a Bond
begins to bear interest at the Variable Interest Rate.
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Demand Mode
"Demand Mode" means that period of time during which a
Bond bears interest at the Variable Interest Rate in accordance with
Section 2.06 hereof.
Discount Account
"Discount Account" means the account by that name created
in Section 4.08 hereof.
District
No. 85-1.
"District" means the City of Tustin Assessment District
Election Notice
"Election Notice" means 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 cer-
tificate number of each such Bond, (iii) the name of the Owner of
each such Bond, and (iv) the Purchase Date on which such Bonds are to
be purchased.
"Event of Default" means any occurrence or event specified
in and defined by Section 7.01 hereof.
"Expiration Date" means the stated expiration date of the
Letter of Credit, or such stated expiration date as it may be
extended from time to time as provided in the Letter of Credit.
Favorable Opinion of Bond Counsel
"Favorable Opinion of Bond Counsel" means, 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 this Indenture and will not impair the
exemption of interest on the Bonds from Federal income taxation or
taxation under the laws of the State (subject to the .inclusion of any
exceptions contained in the opinion delivered upon original issuance
of the Bonds) .
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Final Pricina Date
"Final Pricing Date" means the fourth (4th) Business Day
following the Preliminary Pricing Date.
Final Scale
"Final Scale" means the Final Scale posted by the
Remarketing Agent at or before 11:30 A.M. on each Rate Adjustment
Date.
Fixed Interest Rate
"Fixed Interest Rate" means 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 Section 2.07 hereof.
Fixed Rate Bonds
"Fixed Rate Bonds" means any Bond bearing interest at a
Fixed Interest Rate.
Fixed Rate Mode
"Fixed Rate Mode" means that period of time during which a
Bond bears interest at a Fixed Interest Rate.
Fixed Rate Reserve Account
"Fixed Rate Reserve Account" means the account by that
-name created in Section 5.04 hereof.
Fixed Rate Reserve Requirement
"Fixed Rate Reserve Requirement" means an amount equal to
one half of the maximum annual debt service on the Bonds being con-
verted to a Fixed Interest Rate.
Indenture
"Indenture" means this Indenture of Trust dated as of
August 1, 1986 by and between the City and the Trustee, as it may
from time to time be supplemented or amended pursuant to the provi-
sions hereof.
Interest Account
"Interest Account" means the account by that name created
in Section 5.04 hereof.
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nterest Fund Reserve Amount
"Interest Fund Reserve Amount" means an amount equal to
the interest payable on the aggregate principal amount of Unit
Pricing 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.
interest Payment Date
"Interest Payment Date" means (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 September 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); and (iv) with respect to Bonds in the Fixed Rate Mode; each
March 2 and September 2. "Interest Payment Date" shall also mean any
Mandatory Tender Date.
Interest Reserve Fund
"Interest Reserve Fund" means the fund by that name estab-
lished in Section 5.07 hereof.
Landowner Election Notice
"Landowner Election Notice" means an executed notice in
substantially the form set f orth in Exhibit 8 attached hereto.
Letter of Credit
"Letter of Credit" means the irrevocable letter of credit
issued by the Bank contemporaneously with the original delivery of
the Bonds, except that upon the issuance of an Alternate Letter of
Credit in accordance with Section 4.06 hereof it shall mean such
Alternate Letter of Credit.
Letter of Credit Account
"Letter of Credit Account" means the account by that name
created in Section 4.08 hereof.
Mandatorily Tendered Bonds
"Mandatorily Tendered Bonds" means Bonds required to be
tendered for purchase on a Proposed Conversion Date, any Automatic
Conversion Date, any Substitution Date, any Demand Date, any Unit
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Pricing Date, any Bank Purchase Date, the fifth Business Day prior to
the Termination Date, .and the fifth Business Day prior to the
Expiration Date.
Mandatory Tender Date
"Mandatory Tender Date" means any Proposed Conversion
Date, any Automatic Conversion Date, any Demand Date, any Unit
Pricing Date, any Substitution Date, any Bank Purchase Date, the
fifth Business Day prior to the Termination Date and the fifth
Business Day prior to the Expiration Date.
Maturity Date
"Maturity Date" means September 2, 2011.
ximum Rat
"Maximum Rate" means (i) with respect to all Bonds other
than Bank-Owned Bonds, 128 per annum or such lower rate of interest
which is the maximum rate of interest the Bonds may bear under the
laws of the State at such time of calculation; or (ii) with respect
to Bank-Owned Bonds, the maximum rate of interest such Bank-Owned
Bonds may bear under the laws of the State at such time of
calculation.
Minimum Fixed Interest Rate
"Minimum Fixed Interest Rate" mean s 9 5 8 o f t h e
Preliminary Interest Index; provided, however, that in no event will
the Minimum Fixed Interest Rate exceed the Maximum Rate with respect
to Bonds which are not Bank-Owned Bonds.
Moody's
"Moody's" means 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
securities. 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
"Opinion of Counsel" means a written opinion of Bond
Counsel, appointed and paid by the City and satisfactory to and
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approved by the Bank (who shall not be under any liability by reason
of such approval) .
Optional Tender Date
"Optional Tender Date" means 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) and (ii) in the case of Unit Pricing Bonds, the
Purchase Date, and (iii) with respect to Bank-Owned Bonds, each
Business Day.
Optional Tender Notice
"Optional Tender Notice" means 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 hereof consti-
tuting the Tender Notice in the Demand Mode or an Election Notice in
the Unit Pricing Mode.
Outstanding
"Outstanding," when used as of a particular time with ref-
erence to Bonds, means (subject to the provisions of Section 9.02
hereof) all Bonds delivered hereunder except --
(1) Bonds cancelled by the Paying Agent or sur-
rendered to the Paying Agent for cancellation;
(2) Bonds paid or deemed to have been paid
within the meaning of Section 10.01 hereof; and
(3) Bonds in lieu of or in substitution for
which replacement Bonds shall have been executed by
the Trustee and delivered by the Paying Agent
hereunder.
Notwithstanding the foregoing, Bonds purchased by the Bank
pursuant to Section 4.04 hereof or transferred to the Bank pursuant
to Section 4.06(B) shall remain Outstanding in the hands of the Bank
until the Bank is paid all amounts due on such Bonds.
Owner
"Owner" means the registered owner of a Bond.
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J y
Paying Agent
"Paying agent" means ^itibank, r1. 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 principal office
in New York, New York, or any other commercial bank or trust company
having an office in New York - *'ew °ork - which may he substituted in
its place as provided in Section 8-06 hereof.
Perm~t~ed investments
"Permitted Investments" means any of the following to the
extent then permitted by law:
(1) ~-nited States of America Treasury notes
bonds - bills or certificates of indebtedness, for
which the faith and credit of the nited States of
America are pledged for the payment of interest and
principal;
(2) ^bligations issued by banks for coopera-
tives, federal land banks, federal intermediate credit
banks, federal home loan banks, she Federal some Toan
Bank Board or the Tennessee Valley Authority or obli-
gations, ^articipations or other instruments of or
issued by, or fully guaranteed as to interest and
principal by '-he Federal "ational Mortgage
Association, or guaranteed portions of Small Business
Administration notes. ^r obligations participations
or other instruments of or issued by a federal agency
or a TTnited Gtates of "merica government-sponsored
enterprise;
(3 ) ' ill s of exchange or time draf is drawn on
and accepted by a commercial 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 -ystem;
(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 *'nited
states of America and that have total assets in excess
of five hundred million dollars (5500,000,000) end
that have an "A" or higher rating for the issuer's
debentures, other than commercial paper as provided
by Moody' s or S&P; pr,Qv~c~ that purchases of eligible
commercial paper may not exceed two hundred seventy
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0
(270) days' maturity nor represent more than ten
percent '10$) ^f the outstanding commercial caper of
an issuing corporation; and
(5) -ertificates of deposit issued by a state or
national bank (including the Paying Agent and the
Trustee) or savings and loan association whose depos-
its are insured by either the Federal Deposit
Insurance ^orporation or the Federal Savings and oan
Insurance Corporation, as the case may be, and the
short-term debt obligations of which have the highest
short-term rating or the debentures of which have an
"A" or higher rating or the Rank or a state-licensed
branch of a f oreign bank in which the City is autho-
rized by law to deposit its funds; and
(6) mhe Local Agency Investment Fund established
pursuant to Section X6429.1 ^f the government rode of
the State of California.
Preliminary Trtter~r~t_I,Ii~ex
"Preliminary nterest Index" ^^eans the annual interest
rate or rates which in the judgment of the Remarketing Agent and
Stone & Youngberg will enable the 'onds to be remarketed in accor-
dance with Section 2.07 hereof on a conversion Hate, but in no event
greater than the Maximum Date with respect to Fixed ^ate Ronds
Preliminary Pricing_ Date
"Preliminary 'ricing ^ate" means a date determined by the
Remarketing Agent which will be at least five (5) but no more than
fifteen ~ 15 ) ^us iness Days prior to a "roposed ~'onversion Date or an
Automatic Conversion Date.
Pie l im~na ~y_-c ~ e
"Preliminary kale" means the Preliminary -cafe posted by
the Remarketing Agent at or about 9:30 A.M. on each Rate Adjustment
Date
Princ~~ ncgQ,~.nt.
"Principal *ccount" means the account by that name created
in Section 5.04 hereof.
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Pri.nc~al Payment Hate
"Principal ^ayment Hate" ^+eans beginning in '992 and
ending on the Maturity Date) September 2 of each year.
Proposed_Cor~,yersio~ ^ate
"Proposed Conversion Hate" means the Business Day indi-
cated in the written notice of the City given pursuant to Section
2.10 hereof on which the ~'ity intends to effect a conversion of all
or a portion of the Bonds to a Fixed Interest Rate.
Purchases Date
"Purchase ^ate" means a Business nay Determined by the
Remarketing Agent on a Rate Adiustment Hate as the date on which a
Unit pricing Rond 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 Business Day prior to the Termination Date, Bank
Purchase ^ate or a c'~nversion Date with respect to such 'ond.
Rate Ad; ustment_Date
"Rate 'djustment ^ate" means a Business Day on which an
Adjusted Interest Rate and a Unit Pricing Interest Period for a Bond
in the Ttnit Pricing Mode is determined by the Remarketing Agent.
Record Date
"Record 'ate" means ' i1 •~•ith respect to TTnit Rricing ^onds
if the Interest Payment Date is a Purchase Hate: the close of busi-
ness on the Business Day prior to such Interest payment Hate;
(ii) with respect to Unit Pricing Bonds if the Interest Payment Date
is a September ~r March ': *he close of business on the fifteenth
day of the calendar month preceding such Interest Payment Date; pro-
vided that if a Tate adjustment Date is between the '5th day of the
calendar month and an Interest Payment Date, the Record Date shall be
the close of business on the 'usiness Day immediately preceding such
next Interest Payment Date; (iii) with respect to Bonds in the Demand
Mode: the close of business on the ^usiness Day immediately preced-
ing each Interest Payment Date; and (iv) with respect to Bonds in the
Fixed Rate Mode: the close of business on the fifteenth day of the
calendar month preceding each tnterest Payment Date.
Rede~ti~ Fwd
"Redemption Fund" means the "City of ustin 'ssessment
District No. 85-1 Improvement Bonds Redemption Fund" constituting the
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"redemption fund" required to be created by Section 8671 of the
Improvement ^ond Act of ~915.as amended. °nd established in
Section 5.04 hereof.
~gdem~t Qr~ , c~..~o~~t
"Redemption Account" means the account by that name estab-
lished in Section 5-04 hereof.
$g~mbu~se~~ .~,q~ge~ent
"Reimbursement Agreement" ~+ e a n s t h a t ^ e r t a i n
Reimbursement Agreement dated as of August 1. 1986, by and between
the Rank- and the amity or . if a*+ lternate T•etter of ^redit has been
issued, the reimbursement agreement, if any, in connection with such
Alternate r.etter of credit
Remaining Interest Period
"Remaining 'nterest Period" shall mean the number of days
between the date selected for redemption of a Unit Pricing Bond and
the Purchase Date for such °ond.
Remarket~,„ng Aclent
"Remarketing Agent" means Merrill Lynch fierce, enner &
Smith Incorporated- or any other investment banking firm which may at
any time be substituted in its place as provided in Section °.05
hereof.
Rema~~~ng *gree~gnt
"Remarketing 'greement" means that certain emarketing
Agreement dated as of August 1. 1986, by and between the City and the
Remarketing "gent
Remarketing Cc~s~ ~iccQunt
"Remarketing ^ost Account" means the account by that name
created in Section 4.08 hereof.
Rema~kg~igg. !'os~l~gol}1}~ °~q_u~e~pgnt
"Remarketing ~'ost Account ^equirement" m can s an amount
equal to 8$ of the aggregate principal amount of Unit Pricing Bonds
and Demand Ronds Outstanding; provided, rowever that if in the o~in-
ion of Bond Counsel the Maximum Rate with respect to Bank-Owned Bonds
is less than 28 ner annum the Remarketing most Account ^equirement
shall be increased by a corresponding percentage and if in the
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opinion of Bond Counsel the Maximum Rate with respect to Bank-Owned
Bonds exceeds '28 Her annum the "emarketing most Account °equirement
shall be decreased by a corresponding percentage.
Remarketing Droceed~ ~c~ou~t
"Remarketing -roceeds Account" means the account by that
name created in Section 4.08 hereof.
$e~e_rye ~'~ni~g~ Fwd
"Reserve 'arnings Fund" means the fund by that name estab-
lished in Section 5-05 hereof_
~& P
"S&P" means Standard & poor's ^orporation a corporation
duly organized and existing under and by virtue of the laws of the
State of New °ork. and its successors and assigns- except that if
such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, then the term
"S&P" shall be deemed to refer to any other nationally recognized
securities rating agency selected by the City and approved by the
Bank twho shall not be under any liability by reason of such
approval)_
Stone_& v_ounyberg
"Stone & "oungberg" means stone & Youngberg. a California
limited partnership, and its successors and assigns.
Subs~itu~~on, .~a~e
"Substitution Hate" means the date five usiness nays
prior to the date upon which an Alternate Vetter of Credit is to be
substituted for the T•etter of Credit then in effect.
Tender ~,clent
"Tender Agent" means the Paying -gent.
Tender Notice
"'render Notice" means a telephonic notice *o the
Remarketing Agent and the Tender Agent no later than 10:00 A-M. New
York pity time on t~+e seventh 7th) calendar date prior to an
Optional 'render Date. immediately confirmed by written notice to the
Tender Agent stating 'i) +•he principal amount of ^emand ponds to he
purchased, (ii) the certificate number of each such Bond. (iii) the
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name of the Owner of each such Bond, and (iv) the Optional Tender
Date on which such Ronds are to be purchased.
Tedder ~ ice
"Tender Price" means 'i) -n any ^ptional -ender Date- ~0$
of the principal amount of a Bond plus accrued and unpaid interest
thereon and iii) on any Purchase Hate or Mandatory Tender Date means
(a) 100 of the principal amount thereof plus accrued and unpaid
interest thereon, if a^v. and 'b) ••ith respect to a Mandatorily
Tendered Bond in a Unit Pricing Mode purchased on a date other than
on the fifth ^usiness nay prior to a '"ermination Hate or the fifth
Business Day prior to the Expiration Date plus a premium calculated
as set forth in the first paragraph of Section " - O1(A) '~ereof .
Termination Date
"Termination Hate" *^eans the date specified in a notice
from the Bank of termination of the Letter of Credit pursuant to the
Letter of Credit.
Trustee
"Trustee" means Citibank, *T. r a national banking asso-
ciation duly incorporated and existing under and by virtue of the
laws of t~+e United States of America and having its principal office
in New York, New York, or any other bank or trust company duly incor-
porated and existing under and by virtue of the laws of a^y state or
of the United States of America, which may be substituted in its
place as provided in Section R.02 hereof
Unit Pricing_ Bond
"Unit Pricing "ond" "+eans any Bond while in a TTnit pricing
Mode.
T~nit?ricing nee
"Unit pricing rate" ^^eans a Business Day on which a Rond
begins to bear interest at the Adjusted Interest Rate.
Unit Dric~i n9_T~ere~t~er~od
"Unit pricing Interest Period" means- 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 Hate- aetermined by
the Remarketing Aaent and selected by the purchaser of such Bonds by
reference to the Preliminary Scale and -final Scale -'o unit Dricing
Interest period shall exceed one year in length; provided that the
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Unit Pricing Interest periods may exceed one year in length upon (i)
receipt by the pity of a Favorable opinion of Rond counsel and
(ii) an increase in the size of Letter of Credit to cover additional
premium to the extent such additional premium may he required.
Unit Pricing_ Mode
"Unit pricing Mode" means
a Bond bears interest at an Adjusted
the provisions of this Indenture
that period of time during which
Interest Rate in accordance with
Variable Interest Rate
"Variable Interest Rate" ^^eans that annual rate of inter-
est, expressed as a percentage and rounded to the nearest one thou-
sandth of one percent. 'etermined by the Remarketing *gent on the
Business Day preceding the Variable Rate Adjustment Date. which, in
the judgment of the Remarketing Agent would be the interest rate nec-
essary to produce as nearly as practicable a par bid (disregarding
any accrued interest) ^n a ^emand "ond on such "ariable Rate
Adjustment Hate provided that in no event shall the Variable Interest
Rate exceed the Maximum Rate with respect to Demand ^onds
Variables R~t~ Adtstment Date
"Variable Rate Adjustment Hate" ^+eans the first day of
each Variable Rate Interest Period.
Var~able_R~~e_Tn~e~~ period
"Variable Rate Interest Period" du r i nq a emand Mode
means (i) the period f rom and including a Demand Date and continuing
to '~ut not including . ~-he next succeeding '°ednesday and
(ii) thereafter, the period from and including a Wednesday and con-
tinuing to but not including the next succeeding "ednesday
Variable Rate Reserve Account
----------------
"variable Rate Reserve 'ccount" means the account by that
name established in Section 5.04 hereof.
Variable ~i~e~~grLy~ R~q~remeDt
"Variable Rate Reserve "equirement" means _ _ _ _ _
less any amounts transferred to the Fixed Rate Reserve Account pursu-
ant to section 5 04 (D) (v) ~+ereof
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~`i
SECTION 1.02. Aut~iQr~ty for the Indenture. This
Indenture is authorized pursuant to the Act.
SECTION 1.03 . I1~d~~t~r~ tQ CQn$ti~ute ~on~ac~. I n c o n -
sideration of the acceptance of the Ronds by the owners- phis
Indenture shall be deemed to be and shall constitute a contract among
the City, }he Rank and the owners to secure the full and final pay-
ment of the principal of and premium, if any, and interest on the
Bonds and the application of all moneys on deposit or to be depos-
ited in accordance herewith including but not limited to foreclosure
proceeds subject to the pledge made in this Indenture and the condi-
tions. covenants and terms contained herein required to be observed
or performed by or on behalf of the pity and the Trustee shall be for
the equal benefit. protection and security of all Owners without dis-
tinction preference or priority of any ponds over any other Ronds by
reason of the number or date thereof or the time of authentication or
delivery thereof or otherwise for any cause whatsoever, °xcept as
expressly provided herein. Subject to Section 10.03 hereof, this
Indenture shall remain in full force and effect so long as any Bonds
remain Outstanding.
ARTICLE II
CONDITIONS AND TERMS OF BOI~ID.S
SECTION 2.01. A~~tQr~ ~~4~ Qf Binds . T h e i s s u a n c e i s
hereby authorized of Bonds in the aggregate principal amount of fifty
million six hundred fifty thousand dollars 'S50 650,000) to be desig-
nated as "City of Tustin Assessment nistrict No. 85-1 Improvement
Bonds" -here is hereby created. in the manner and to the extent
provided herein, a continuous pledge and lien to secure the full and
final payment of the principal of, ^remium- if any, and interest on
the Bonds and other amounts due and payable hereunder. The Bonds
shall be limited obligations of the ^ity payable from the items
pledged for the payment therefor pursuant to Section 5.01 hereof-
The Paying agent is hereby authorized to authenticate and t~ deliver
the Bonds upon (i) written direction of the City. (ii) the Trustee's
receipt of the Vetter of Credit, 'uly executed by the Bank and viii)
the City's receipt of the proceeds of sale thereof.
SECTION 2.02. Dgt1Qa~t~QDs~ Mg.~}]~ ,~1gt~Qd ~~, ?dace of
~ay~e$-t ~-~ ~~t~,gg o~ B~n~. The T~onds shall be prepared i n the
form of fully registered Bonds in Authorized nenominations. The
interest and principal and redemption premiums, if any- nn the 'ponds
shall be payable in lawful money of the United States of America
The interest on the ^onds shall be payable on the Interest payment
Dates by check mailed by the Paying Agent to the respective Owners
thereof at their addresses as they appear on the Record Hate in the
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books required to be kept by the Paying Agent pursuant to the
provisions of Section ~-14 hereof. ^xcept that in the case of an
Owner of Bonds evidencing 8500,000 or more in aggregate principal
amount- ~~pon the written request of such ^wner to the Paying agent
specifying the account or accounts to which such payment shall be
made ~ayment shall be made by wire transfer of in+mediately available
funds on such Interest Payment Date. The principal and redemption
premiums. if any. ^n the Bonds shall be payable on the Drincipal
Payment Dates or on redemption prior thereto upon surrender of the
Bonds called for redemption at the office of the paying Agent.
The Paying Agent, the Tender Agent and the Trustee may
treat the owner of a Rond as the absolute owner of a Bond for all
purposes, whether or not such Bond shall be overdue, and the Paying
Agent, +-he 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 ^ond to the extent of the sum or sums
so paid. All Bonds paid pursuant to the provisions of this Section
2.02 shall be cancelled by the paying 'gent and shall not be
redelivered.
The Bonds shall be dated the date of authentication thereof
and shall bear interest from the Interest Payment Date to which
interest has been paid or provided for or if such date of authentica-
tion is prior to the initial Record Hate for a Bond, from the date of
original authentication and delivery of the Roads
S$CTION
The interest on
Interest Payment
Date ^r on redei
shall become due
prior thereto-
2.03. Payingn~ off, $~nciQa~ aid Intgre$t of Bonds.
the Roads shall become due and payable on the
Dates in each year to and including the Maturity
option prior thereto. he principal of the ^onds
and payable on the Maturity Date, or on redemption
SBCTION 2.04. C~gy~~t~o~ a~c~ ~ay~$.t q,~~~re$t.
(A~ 'nterest on each *'nit pricing Rond shall be calculat-
ed, in the case of a Unit Pricing Interest Period less than or equal
to one year in length ^n the basis of a X65/366 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, ^n the basis of a
360 day year composed of twelve 30-day months. Interest on each
Demand 'ond shall be calculated on the basis of a 365/366 gay year
for the actual number of days elapsed. Interest on Fixed Rate Bonds
shall be calculated on the basis of a 360 gay year composed of twelve
30 day months. Notwithstanding any provision of this Indenture or
the tteimbursement Agreement to the contrary, at no time may the rate
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of interest on a Bond exceed the Maximum Rate with respect to such
Bond.
(B) he initially issued and shall be in the i1nit pricing
Mode with initial Unit Pricing .Interest Periods and Adjusted Interest
Rates as set forth in Annex ~f the Purchase Contract. hereafter,
each Bond will bear interest at its applicable Adjusted Interest
Rate- Variable Interest Rate or a Fixed Interest Rate, according to
the mode then in effect with respect to such Bond- All 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 be converted to the
Fixed Interest Mode.. If Unit pricing ^onds are converted to the
Demand Mode all such Bonds may be converted to the Unit Pricing Mode
and all or a portion of such " onds may be converted to a Fixed
Interest Mode. A Fixed Interest Rate shall be in effect until the
Maturity rate, ^r upon redemption prior to Maturity Hate and no Fixed
Rate Bond may be converted to any other mode. .Prior to any conver-
sion to a ^emand Mode, ~ unit Pricing Mode or any Proposed conversion
Date, the City must deliver to the Trustee a Favorable Opinion of
Bond Counsel.
Notwithstanding the foregoing- Bank-Owned Roads shall bear
interest at the Bank Interest Rate.
The determination by the Remarketing "gent of each adjusted
Interest Rate, variable Interest Rate and Fixed Interest Rate for any
Bond, if in accordance with the provisions hereof, ^hall be conclu-
sive and binding upon the City, the Paying Agent- the Tender Agent,
the Trustee, }he Rank and the ~wners_
SECTION 2.05 . Detg~n~n~~iQn Q~ ~l~jD~gi Il}tgrgs~t I~t~~ end
Onit P~,ic~g Ir~grg~~g~~s. After the initial nit Pricing
Interest Period with respect to each Bond, such Unit Pricing Bond
shall bear interest at the adjusted Interest Rate for such -'nit
Pricing Interest period, established as follows:
(a) ' t or about ° : 3~ a . M. New work ~'ity time on each Rate
Adjustment Date. the Remarketing Agent will post the Preliminary
Scale of Adjusted Interest Rates for such Rate Adjustment Hate- 't'he
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 tTnit pricing Rond for
purchase in accordance with Section 4-Ol hereof shall have the right
to select a new *Tnit 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
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Interest Period selected by the owner of such Unit Pricing Bond and
bear interest at the Adjusted Interest Rate indicated for such "nit
Pricing Interest period on the Preliminary Scale. subject to adjust-
ment as provided in paragraph 'd) `'elow f the Owner of a Unit
Pricing Bond wishes to retain such Bond as described above, such
Owner shall wive notice to the Tender Agent, who will provide such
Owner with the new Purchase Date. the new Adjusted Interest Rate and
the new -'nit pricing Interest Period applicable t~ such Owner's 'ond
or Bonds in the form of a written statement. Guch statement shall be
available from the Tender Agent between 3:00 P.M. *Tew "ork ^ity time
and close of business on each Rate Adjustment Date.
(c) -n the event that on the Rate adjustment Hate the reg-
istered owner of any such Unit Pricing Rond neither tenders such Unit
Pricing Rond for purchase in accordance with Section d.01 hereof nor
selects a new Unit pricing Interest period in accordance with para-
graph 'h) ^bove, }hen, ^oomencing with s~~ch Rate Adjustment Hate,
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 interest at the Adjusted interest Rate indicated
for such Unit Pricing Interest Period on the ^reliminary ^cale-
subject to adjustment as provided in paragraph (d) below-
(d~ In the case of any r~nit pricing ^ond which has been
tendered for purchase on a Rate Adjustment Date pursuant to
Section d-O1 hereof and remarketed by the Remarketing "gent pursuant
to Section 4.04 hereof. such Unit Pricing Bond shall, commencing with
such "ate Adjustment Hate- gave the *'nit 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 herein provided. -he first prospective pur-
chasers willing to buy all or any of the Unit Pricing Bonds being
remarketed at any of the rates indicated on the preliminary kale
will be awarded such remarketed Unit Pricing Bonds. In the event
that a prospective purchaser selects a snit pricing Interest Period
for any Unit Pricing Bond but indicates that it will purchase such
Unit pricing ^ond only if such rtnit Pricing °ond bears an interest
rate for such Unit Pricing Interest Period which is higher than the
rate indicated therefor in the Preliminary °cale- ^uch information
will be noted by the Remarketing Agent.
At the end of the remarketing period, ~f all the "nit
Pricing Bonds have not been sold in accordance with 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 com-
plete remarketing of the TTnit Dricing Bonds +-he unremarketed "nit
Pricing Bonds shall be sold to those prospective purchasers who have
indicated a willingness to purchase such Unit Pricing Bonds bearing
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interest f or Unit Pricing Interest Deriods closest. in terms of basis
points +-o the Adjusted Interest Rates indicated theref or in the
Preliminary Scale. In that event, the Remarketing Agent shall post
at or before '1:30 A.M.- New work ^ity time, ^n the Rate Adjustment
Date, a Final Scale which will be the same as the Preliminary Scale
except that the "djusted Interest Rate indicated for any TTnit Pricing
Interest Period will be the highest Adjusted Interest Rate for such
Unit Pricing Interest period at which any "nit Pricing "ond was
remarketed in accordance with this paragraph.
The information on the Final kale shall be made available
to any prospective purchaser requesting such information. All Unit
Pricing Bonds for which an nd-justed 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 purchaser thereof had stated a willingness to
purchase "nit Pricing Bonds at a lower Adjusted Interest Rate for
such Unit Pricing Interest Period.
(e) pop 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, ^o Unit pricing
Interest period shall be determined by the Remarketing Agent which
would- with respect to unit pricing Bonds subject to purchase in con-
nection therewith, extend beyond the Demand Date, Proposed conversion
Date, utomatic Conversion Date substitution Date, Bank purchase
Date or the fifth Business Day prior to the Termination Hate 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-
SECTION 2.06. ~.~~~n~~~4411 Q~y~iablg ~~tgrg~t Rafe.
Bonds in the nemand *"ode shall bear interest at the "ariable Interest
Rate. The Variable Interest Rate shall be determined by the
Remarketing Agent prior to '~:"0 P-M.. New York pity time. nn the
Business Day next preceding the Variable Rate Adjustment Date for
such variable Rate Interest Period 'he variable Interest Rate shall
become effective on such Variable Rate Adjustment Date and shall be
applicable through the following Tuesday. n 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 Tender Agent of
the Variable Interest Rate applicable to such "ariable Rate Interest
period.
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SECTION 2.07. Det~~natiQn Qf F~.xed Interest Rate.
Trustee shall mail a written notice to all owners of Ronds to be con-
verted to the Fixed Rate Mode not later than the thirtieth calendar
day next preceding a Proposed conversion Date or Automatic conversion
Hate, as the case may be. Such notice shall specify the Preliminary
Pricing ^ate and the Droposed conversion ^ate or "utomatic 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 ^onversion
Date or Automatic Conversion 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 of ter the preliminary ^ricing Hate. he notice shall
also state that such conversion will be cancelled and a Bond will
remain in the mode then in effect for such ^ond in the event that any
of the events set forth in the last paragraph of this Section 2-07
occur with respect to Fixed Date Ronds -f such conversion is pursu-
ant to Section 2-10(C) hereof and is not upon direction of the Bank.
such notice shall be accompanied by a copy of the Favorable Opinion
of Bond Counsel required by Section 2 10(C). Any such Bond which is
not tendered on the Proposed conversion Hate or the automatic
Conversion Date, as the case may be, shall be deemed purchased and
may be cancelled by the Tender Agent. 'n the event that less than
all Demand Bonds or Unit Pricing Bonds are to be converted to a Fixed
Interest Date on such proposed ^onversion Date or Automatic
Conversion Date, the Trustee shall cause to be converted first.
Bank-Owned Donds and then "i) ~n the case of remand Honda -errand
Bonds by lot or (ii) in-the case of Unit Pricing Bonds, Unit pricing
Bonds in order of their Purchase rates. and by lot among iTnit pricing
Bonds with the same Purchase Date.
On the Preliminary pricing Hate, *he ^emarketing Agent will
make available a preliminary Interest Index and Minimum Fixed
Interest Rate- "ot more than two Business nays following the
Preliminary Pricing Date, an owner of a Bond to be converted to the
Fixed "ate Mode may notify the "emarketing agent by telephone
(promptly confirmed by written notice to the Tender Agent) if such
Owner wishes to retain such Rond in the *~'ixed Date "ode.
On the Final Pricing Date, the Remarketing Agent will
establish the °ixed interest Rate which will be borne by such Ronds
after the Conversion Hate. The Fixed Interest Rate will be an annual
rate of interest which in the sole judgment of the ^emarketing Agent
under the then prevailing market conditions will allow such Bonds to
be sold at parj provided however Quch Bonds may hear a Fixed
Interest Rate which results in a sale at less than par so long as
there is on deposit in the viscount *ccount on such date an amount
equal to such discount.
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A conversion will be cancelled (i) as to all such Bonds if
(a).~n the ^onversion Date there has not been deposited, as a result
of a transfer pursuant to Section 5 - 04 (d) (vi) or from any other
source- in the Fixed Rate Reserve Account the "fixed °ate Reserve
Requirement with respect to such Bonds or (b) the Fixed Interest mate
would exceed the *~aximum state with respect to Fixed Rate Bonds and
(ii) with respect to any Bonds not successfully remarketed on such
Conversion Date. Notice of such cancellation shall be sent to the
Owners by the Trustee promptly.
SECTION 2.08. ~t~~n~~e~#,g_f4~ -~n~grg~ C~~c~~Qn.
In the event ~i) }he ^emarketing agent fails to determine the
Adjusted Interest Rate or the Variable Interest Rate or (ii) the
method of determining the *diusted Interest Rate or the "ariable
Interest Rate shall be held to be unenforceable by a court of law of
competent jurisdiction, Quch Unit Pricing Bonds or Demand Bonds shall
thereupon, until such time as the Remarketing Agent again makes such
determination or until there is delivered an opinion of Bond counsel
to the effect that the method of determining such rate is enforce-
able- bear interest from the last date on which interest was legally
paid, at the Alternate Rate for such Alternate Rate Calculation
Date.
SBCTIObi 2.09. In~e~gst on B~plc_~ngd $o~d~` ~c~~-t~Qpal
Intergs~ ~$ ~~~-~,pg~Bo~ls. Notwithstanding anything to the con-
trary contained in Section 2.04 hereof. each Bank-Owned Bond shall
bear interest on the outstanding principal amount thereof at the Rank
Interest Rate for each day from and including the date such Bond is
purchased to gut n^t including. the date such Rond is paid or is
remarketed.
Interest on Rank-Owned Ronda shall be payable on the first
Business Day of each week, and upon payment or redemption of all or
part of a Rank-Owned Rond and on the date of remarketing of such
Bank-Owned Bonds. Interest on Bank-Owned Bonds shall not bear the
Bank Interest Rate of ter such Bonds have been remarketed. 'nterest
shall be calculated based upon a 360 day year and actual days
elapsed.
SBCTIOH 2.1Q. ~~g~_i~}~ode-
(A) ' uring any ilnit Pricing Interest Period. she pity 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 inter-
est rate on all of the Unit Pricing Bonds to a variable Interest Rate
on the Remand Date or Dates specified in such written notice- the
earliest of which Demand Dates shall be not less than 40 days from
the date of such notice- ogether with such n^tice, }he ^ity shall
also file with the Trustee a Favorable Opinion of Bond Counsel (which
-24-
_ .. ....
~.
opinion may be based on a ruling or rulings of the Internal Revenue
Service) *o the effect that the conversion of such °onds to the
Variable Interest Rate on such Demand Date or Dates will not
adversely affect the validity of the °onds or the exemption of the
interest on the Bonds from Federal income taxation. No change in the
Variable Interest Rate shall become effective unless the pity 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 tendered to the '"ender
Agent on the Demand Date for mandatory purchase at the Tender Price.
tB) During any 'errand ""ode, 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 nit less than
forty t40) calendar days from the date of such notice. Together with
such notice. the amity 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 Gervice) to the effect that the conversion of
the Bonds to the Adjusted Interest Rate will not adversely affect the
validity of the Roods or the exemption of interest on the Bonds from
Federal income taxation- No change to the Unit Pricing Mode shall
become effective unless the City shall file. with the Trustee- much
an opinion dated the Adjusted Interest Date. The Trustee shall give
notice of such conversion to the owner of such Roods not later than
the thirtieth calendar day next preceding the Unit Pricing Date_
(C) he amity may give written notice- in conformity with
Section 2.07 hereof, at any time (and shall give such notice with
respect to ^ank-Owned Roods upon the direction of the yank on any
date after the Termination Date or Expiration Date and before the
fifth anniversary of such Termination Date or Expiration Date) }o
the Bank, the Remarketing Agent and the Trustee that it intends to
effect a conversion of the interest rate on all of the ^onds or a
portion of the Bonds designated in such notice to a Fixed Interest
Rate on the Proposed -onversion Hate specified in such written
notice, which Proposed Conversion Date shall be not less than
forty '40) days from the date of such notice "'ogether with such
notice unless such notice is upon direction of the Bank, the City
shall file with the "rustee a Favorable opinion of Bond Counsel
(which opinion may be based on a ruling or rulings of the Internal
Revenue service) to the effect that the conversion of the Roods to
the Fixed Interest Rate will not adversely affect the validity of the
Bonds or the exemption of interest on the °onds from ^ederal income
taxation. No change to the Fixed Rate Mode shall become effective
-25-
~IWLIIIIiY~w~ wrr+.~ ...._.._. .._.,~... _...,._.
1
unless the City shall file, with the Trustee. such an opinion dated
the Conversion Hate.
(D~ -n each Automatic Conversion Date- *he interest rate
on a principal amount of Bonds in Authorized nenominations equal to
the aggregate amount of Assessments set forth as item '~) 'n all
Landowner Election Notices received by the Trustee on or before the
fortieth day prior to such automatic ^onversion Date shall automati-
cally convert to a Fixed Interest Rate.
SECTION 2.11. Fo~~Qf $o~s. The Bonds and the assignment
to appear thereon shall each be in substantially the forms respec-
tively set forth in Exhibit A attached hereto and incorporated
herein, with appropriate or necessary insertions, omissions and vari-
ations as permitted or required hereby; provided. however if use of
a book entry form of Bonds becomes feasible in the opinion of the
City. Trustee- ^aying Agent Bank and the Remarketing "gent then the
appropriate Sections herein shall be deemed to permit the use of a
book entry form of Bond without further amendment of this Indenture
SECTION 2.12. Ezecgt,~c~ a~c~ $u~},~gt~q_a~i4n of Honds. The
Bonds shall be signed by facsimile signature by the Treasurer of the
City and the City Clerk, and the City Clerk shall also affix by fac-
simile the corporate seal of the pity to the "onds. ""he Bonds shall
be authenticated by the Paying Agent by the manual signature of an
authorized officer of the ^aying Agent-
SECTION 2.13 . Tran$fgr ~n~ ~~cc~ianae ~~ ~o~ic~. A 11 Bond s
are transferable or exchangeable by the owner thereof in person or
by the Owner's attorney duly authorized in writing, at the office of
the Paying Agent in the books required to be kept by the ^aying Agent
pursuant to the provisions of Section 2.14 hereof, upon surrender of
such ^onds accompanied by delivery of a duly executed written instru-
ment of transfer or exchange in a form approved by the Paying Agent.
Whenever 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 *'enominations of the same aggregate principal
amount, except that the Paying Agent may require the payment by any
Owner requesting such transfer or exchange of any tax or other gov-
ernmental charge required to be paid with respect to such transfer or
exchange. All Bonds surrendered p»rsuant to the provisions of this
Section 2.13 shall be cancelled by the Paying Agent and shall not be
redelivered. 'l1 Bonds issued in exchange for "onds 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 pond
or portion thereof.
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SECTION 2.14. Reg_i~t~ati,~on ~Qo~s. The Paying Agent .will
keep at- i~-s office sufficient books for the registration of the
ownership, transfer or exchange of the Bonds, which books shall be
available for inspection by the City and the "'rustee at reasonable
hours and under reasonable conditions; and upon presentation for such
purpose the paying Agent shall under such reasonable regulations as
it may prescribe, register the ownership, transfer or exchange of the
Bonds in such books as hereinabove provided. '"he ownership of any
Bonds may be proved by the books required to be kept by the Paying
Agent pursuant to the provisions of Section ".14 hereof-
SECTION 2.15. Te~npQ~a~~ $ond~. The Bonds may be initially
delivered in temporary form exchangeable for definitive Bonds when
ready for delivery, which temporary Bonds shall be printed, litho-
graphed or typewritten, hall be of such denominations as may he
determined by the Trustee, shall be in fully registered form and
shall contain such reference to any of the provisions hereof as may
be appropriate. Every temporary Bond shall be authenticated and
delivered by the "aying Agent upon the same conditions and terms and
in substantially the same manner as definitive Bonds. if the Paying
Agent authenticates and delivers temporary Bonds- the paying agent
will prepare and authenticate definitive Bonds without delay. and in
that case upon demand of the owner of any tPanporary Bonds such defin-
itive Bonds shall be exchanged without cost to such Owner for tempo-
rary ^onds at the off ice of the "aying Agent upon surrender of such
temporary Bonds, and until so exchanged such temporary Bonds shall be
entitled to the same benefit. ^rotection and security hereunder as
the definitive Bonds executed and delivered hereunder. All temporary
Bonds surrendered pursuant to the provisions of this Gection 2 15
shall be cancelled by the Paying Agent and shall not be redelivered.
SECTION 2.16 - B,Q~d~lg-t~],,~~ ~e,~t,IQye~ ~,Qs~ 4~ ~olgn.
If any Rond shall become mutilated- the ^aying Agent shall authenti-
cate and deliver a new Bond of like tenor and number in lieu of the
mutilated ^ond, gut only upon surrender to the Paying Agent of the
mutilated Bond, and every mutilated Bond surrendered to the Paying
Agent shall be cancelled by it and shall not be redelivered. 'f any
Bond shall be destroyed, lost or stolen, evidence of such destruc-
tion loss or theft may be s»bmitted to the paying 'gent and the
Paying Agent receives indemnity satisfactory to it, and if such evi-
dence is satisfactory to the Paying Agent- the Paying Agent shall
authenticate and deliver a new Bond of like tenor and number in sub-
stitution for the destroyed. lost or stolen Bond. '"he Paying Agent
may require payment of a sum not exceeding the actual cost of prepar-
ing each new Rond authenticated and delivered by it under this
Section 2.16 and of the expenses which may be incurred by it under
this "ection ^.16. Any replacement Rond authenticated and delivered
under the provisions of this Section 2 16 hereof in lieu of or in
substitution for any mutilated- destroyed. lost or stolen Bond shall
-27-
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be equally and proportionately entitled to the benefit, protection
and security hereof with all other Roads executed and delivered here-
under; and the paying Agent shall not be required to treat both the
original Bond and any replacement Rond as being Outstanding for the
purpose of determining the principal amount of Bonds which may be
authenticated and delivered hereunder or for the purpose of determin-
ing any percentage of Bonds Outstanding hereunder. but both the orig-
inal and the replacement Rond shall be treated as one and the same-
Notwithstanding any other provision of this Section 2-16, rather than
authenticating and delivering a new °ond for a mutilated- destroyed,
lost or stolen Bond which has been called for redemption, the Paying
Agent may make payment of the principal of such mutilated- aestroyed.
lost or stolen Bond directly to the Owner thereof under such regula-
tions as the paying Agent may prescribe. '"o the extent permitted by
law, the. City agrees to indemnify and hold harmless the Paying Agent
from and against any claims, damages and losses including legal fees
and expenses) . arising out of payment of principal of -any stolen
Bond.
ARTICLB 3II
RBDBMPTION OF BOBIDS
SBCTIO~T 3.01. M~d~fi~Q~y l~e~p~~on.
(A) "nit Pricing ponds are subject to redemption on any
Business Day upon notice as hereinafter provided. as a whole, or in
part in Authorized Denominations in order of the purchase Hates of
such Bonds f rom moneys transferred from the Construction Fund to the
Redemption Account pursuant to Section ~ 07 hereof, from moneys
derived from foreclosure under Section 7.02 hereof or from prepaid
Assessment Installments under the circumstances and upon the condi-
tions and terms prescribed herein 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 X00$; and iii) if the
Remaining Interest Period is more than 30 days the Trustee will
request the Remarketing agent to provide an Adjustable 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 'djusted
Interest Rate on the Bond called for redemption, the redemption price
will be 100$ but if s»ch 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 ''65 or 366
days (as applicable) and multiplying the quotient by the difference
-28-
,~
between the Adjusted Interest Rate on such Bond and such rate and
rounding the product to the nearest ~/100th and adding the result to
100 but in no .event shall such redemption price exceed 1018.
If the tTnit 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:
Oni.~~~icing ~Rtere$t ~eriQd
More than 1 but less than or
equal to ' ~=ears .... .
More than 3 but less than or
equal to ~ •=ears.....-......
More than 6 but less than or
equal to '0 years..... ._. .
More than 10 years.... ...
Time from the most
recent Rate
Adjustment Date to
Redemption Date Pricg
0 to 1 year 101
1 to 2 years 100 1/2
2 +-0 3 wears 100
0 *0 2 years 101 1/2
2 to 3 years 100
3 to 4 years 100 1/2
after 4 years 100
0 }0 4 years 102
4 to 5 years 101 1/2
5 to 6 years 101
after 6 years 100
0 to 7 years 102 1/2
7 to 8 years 102
8 to 9 years 101
after o years 100
Demand Bonds are subject to redemption on any Interest
Payment Hate uvon notice as hereinaf ter provided, as a whole. or in
part in Authorised Denominations, from moneys transferred from the
Construction Fund to the Redemption Account pursuant to Section 5.07
hereof,- from moneys derived from foreclosure under Section 7.02
hereof or-from prepaid Assessment Installments uncler the circum-
stances and upon the conditions and terms prescribed herein at a
redemption price equal to the s»m of the principal amount of the
Bonds redeemed plus accrued interest thereon to the date fixed for
redemption without redemption premium.
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(B) Af ter conversion to a Fixed Interest Rate. a Bond is
subject to --edemption in whole or in part on any Interest Payment
Date, upon notice as hereinafter provided, in an integral multiple of
55,000, from moneys transferred from the ^onstruction Fund to the
Redemption Account pursuant to Section 5.07 hereof, from moneys
derived from foreclosures under Section 7.02 hereof or from prepaid
Assessment Installments, under .the circumstances and upon the condi-
tions and terms prescribed herein at a redemption price equal to
102 1/2$ of the principal amount thereof plus accrued and unpaid
interest if any.
(C) ""nit Pricing Bonds or Demand Bonds are subject to man-
datory redemption on September 2. 1992 and on each Principal Payment
Date thereafter, ~~pon notice as hereinafter provided. 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 herein, 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 Drincipal amounts as follows:
principal
Year Amount
1992 5 990-000
1993 1,080,000
1994 1.175 -000
1995 1,285,000
1996 1,395 -000
1997 1.525,000
1998 1.660-000
1999 1.810 000
2000 1,970 000
2001 2,150,000
2002 2.345.000
2003 2,555,000
2004 2.785 -000
2005 3,035,000
2006 3 .310 -000
2007 3,605,000
2008 3,930-000
2009 4,285,000
2010 4.670 -000
201 5.090,000*
*Final Maturity
-30-
,,~
Notwithstanding the foregoing. in the event of conversions
of all or a portion of the °onds to a Fixed Interest Rate pursuant to
Section 2.10 hereof, the Finance nirector of the City is hereby
directed to establish a separate schedule of redemptions Year and
Principal Amount) for such Bonds commencing on the next such
Principal Dayment Date which is less than six '6) months following
such Conversion Date which, as nearly as practicable, will result in
debt service with respect to such Ronds being equal in amount for
each of the years following such Conversion Date(s) to the Maturity
Date. "'he Finance Director will also adjust the Drincipal amount
column set forth above to reflect the reduction in principal amount
of T'nit Pricing Ronds or Demand Bonds Outstanding and the schedule
hereby created for the Fixed Rate Bonds. In determining such sched-
ule. +-he "finance -irector of the amity shall credit amounts trans-
ferred from the Interest Reserve Fund pursuant to Section 5.07 and
the moneys withdrawn from the Variable Rate Reserve *ccount, as pro-
vided in section 5.04(ii).
(D) -n the event of redemption of Bonds pursuant to para-
ciraphs (A) or (B) of this Section 3.01 or purchase of Bonds pursuant
to Section ~-07 "hereof from moneys derived from prepaid 'ssessments,
the Construction Fund or the proceeds of foreclosure under
Section 7.02 hereof. as the case may he *-he Finance nirector of the
City is hereby directed to annually adjust the amounts set forth
above by Deducting therefrom the amount of Bonds which would have
otherwise been redeemed had such redemptions or purchases not taken
place. eo 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 uortion
of such prepaid Assessment which is credited toward the principal due
on the next Principal payment Date as provided in Section 5.04(c)
hereof; and (ii) to round the amount due in any year to an integral
multiple of the then minimum Authorized renomination of the Ronds
The Finance Director of the City shall promptly notify the Paying
Agent and "'rustee of all such adjustments Tn making the foregoing
adjustments for such redemptions, the Finance Director of the City
shall adjust the amounts of Ronds to be redeemed in accordance with
the above provisions only with respect to amounts attributable to
redemptions of -such Ronds - if less than all of the outstanding *~onds
have been converted to the Fixed Interest Mode-
SSCtIO~ 3.02. tional Redgapt~g~ of ~ni~t P~c~ng .
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 redemption price calculated as set forth in the
first paragraph of Section 3.01(A) hereof, provided, however, that
such redemption may only be effected in connection with the payment
of such Bonds pursuant to Section 10.01(c) hereof. Notwithstanding
the foregoing- Bank-Owned Bonds shall be redeemed without premium.
-31-
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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 TTnit Pricing
Bonds with the same Purchase Date. The amount of Bonds to be
redeemed shall. if required, '~e adjusted downward to the extent nec-
essary to result in Bonds being redeemed only in Authorized
Denominations.
SECTION 3.03. Optional Re~emp~io~ 4~, Bo.Nds_i+.~ tie Demand
l~.Qde. Demand T~onds are subject to optional redemption by the amity,
in whole or in part in Authorized Denominations. on any Variable Rate
Adjustment Date, at a redemption price equal to '008 of the principal
amount thereof being redeemed plus accrued interest to such redemp-
tion date, without premium; provided however that such redemption may
only be effected in connection with the payment of such Bonds pursu-
ant to Section 10 .O1 (c) ~+ereof. f 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 he determined by the
Trustee.
SECTION 3.04. Opt~o~a~l_Rg~e~,o~} ~ ~~~,~ ~ tag, gized
R~tg Mode. The Bonds in the Fixed Rate Mode are subject to redemp-
tion by the City in the minimum principal amount of $5.OOQ. in whole
on any gate or in part on any Interest payment Hate, ^ommencing on
the date as set forth below at a redemption price of 102 1/28 of the
principal amount of Bonds called for redemption, rlus accrued inter-
est to the date fixed for redemption.
SECTION 3.05. $electiQn~ of Bones ~4~ ~e~dp~t~on. I f no t
otherwise provided in Sections 3.01. 3-02. 3-03 or 3-04, 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 Ronds by lot in any manner that the
Trustee deems fair; provided, however, that if Bonds are to be
redeemed from prepaid Assessments or from moneys derived from fore-
closures under Section 7.02 hereof, the Trustee shall-select for
redemption T~onds 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 with different Fixed Interest Rates) and 'ii) unit Pricing
Bonds or Demand Bonds, in accordance with Section 3-01 hereof. The
Trustee shall promptly notify the Rank- the amity. 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, the Bank is the Owner of
-32-
any of the Bonds,-such Bonds shall be selected for redemption by the
Trustee prior to selecting any -"nit Pricing 'ponds or Demand Bonds.
SECTION 3.06. Notice Q~ 1~gdeNp~i~n. Notice of redemption
shall be given by mail by the Trustee to the Remarketing Agent- the
Paying Agent and to the Owners of any Bonds designated for redemption
in whole or in part prior to the redemption date within ten (10) days
after the Trustee has received notice of redemption from the City.
Each notice of redemption shall state the redemption date, }he
redemption place and the redemption price. shall designate the num-
bers of the ^onds to be redeemed if less than all the -onds
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 the
interest thereon or portions thereof designated for redemption shall
cease to accrue from and after such redemption date 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 failure of any Owner to receive such notice will
not affect the validity of the redemption of any Bonds.
The Trustee shall give notice of redemption of any Bonds to
be redeemed immediately upon receipt of notice from the City (which
notice shall be given t~ the 'trustee at least thirtg X30) calendar
days vrior to the date fixed for redemption; provided however that
notice of redemption from moneys derived from prepaid "ssessments
shall be given at least sixty (60) days prior to the date fixed for
redemption)_
S8C'rION 3.07 . Partia.~ Redemption ~ Bonds. Upon su r r en-
der of any Bond redeemed in part only, the Paying Agent shall authen-
ticate and deliver to the owner thereof a new Rond or Bonds repre-
senting the unredeemed principal amount of the Bond so surrendered.
SBCTION 3.08. $~.~gc~ g~~e~e~p~~o~n. If notice of redemp-
tion has been duly given as of oresaid and money for the payment of
the redemption price of the Bonds or portions thereof to be redeemed
is held by the Paying Aaent, then on the redemption date designated
in such notice the Aonds or portions thereof so called for redemption
shall become payable at the redemption price as specified in such
notice; and from and after the date so designated interest thereon or
portions thereof so called for red~nption shall cease to accrue. such
Bonds or portions thereof shall cease to be entitled to anv benefit,
protection or security hereunder and the Owners of such Bonds or por-
tions thereof shall have no rights in respect thereof except to
receive payment of the redemption price. To the extent moneys for
the payment of redemption price of the Bonds or a portion thereof to
be redeemed is not held by the Paying Agent on the redemption date.
such redemption shall he cancelled and interest shall continue to
-33-
r
• ~\.
accrue. Notwithstanding
remain ^utstanding until
Bonds. The Paying Agent
of the Ronds or portions
dates. pay such Bonds or
After payment to the -and
Bank shall surrender
cancellation-
the foregoing. any Bank-Owned Bonds shall
the Rank is paid all amounts due under such
shall. upon surrender for redemption of any
thereof to be redeemed on their redemption
portions thereof at the redemption price.
c of all amounts due on Rank-Owned ponds the
such bonds to the Paying Agent for
ARTICLE IV
PQRCHASS OF BONID~S
SBCTION -4.01. O~t~ona,~ Tend~r_of Ul}}~ P.~i~c~t~,q Bons. 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 Denomination)- ~e purchased in accordance with the terms
of Section 4-04 hereof on any Purchase Date at the Tender Price by
(a' Hiving an Election Notice and 'b) aelivering such Rond duly
endorsed in blank for transfer together with the confirmation of the
Election Notice at the principal corporate trust office of the 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 Ronds purchased
pursuant to this Section 4.01 shall terminate on the conversion of
Unit pricing Bonds to the nemand *"ode ~r on a Conversion Date.
The delivery of an Election Notice to the Tender Agent and
the Remarketing 'gent is irrevocable and binding on the ^wner and
cannot be withdrawn. Any Bond with respect to which an Election
Notice is given but which is not tendered on the "urchase Date stated
in such Election Notice shall be deemed purchased and interest
thereon shall cease to accrue. "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 pond who
gives an Election Notice with respect to such Bond may revurchase
such Rond if the Remarketing Agent agrees to sell any such Rond so
tendered back to such owner. In such event, the delivery requirement
described above shall be waived.
S$CTIOB 4.02. ~tiona~l Ten~7er~ Bi~~-~~l~ine.
The registered owner of any "errand Bond may demand that s::ch pond or
any portion-thereof-in a principal amount equal to an Authorized
Denomination (Qo long as the principal amount not purchased is an
Authorized Denomination}. be purchased in accordance with the terms
of erection a.04 hereof on any ^ptional "'ender Hate 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
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J
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 pursuant to this Section 4.02 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
Remarketing 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. Anew Bond shall be issued to the purchaser
thereof. The owner of such a Bond shall be entitled solely to pay-
ment 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 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.
SECTION 4.03. Mandatory Purchase of 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 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, (i) in the event of a conversion
to the Fixed Rate Mode not later than the thirtieth calendar day next
preceding the Proposed Conversion 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 calen-
dar 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 calendar day next preceding the Unit Pricing Date;
(iv) in the event of the Bank Purchase Date, the Expiration Date or
the Termination Date, not later than the 35th day next preceding the
Bank Purchase Date, the Expiration Date or the Termination Date as
the case may be; and (v) in the event of a Substitution Date, not
later than the fifteenth 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
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clause (i) above, the second (2nd) Business Day after the relevant
Preliminary Pricing Date. Upon the filing of such notice such Bond
shall not be subject to optional tender pursuant to Section 4.01 or
4.02 hereof on or prior to the Demand Date or the Unit Pricing Date,
as the case may be, the Substitution Date or the Conversion Date. In
the case of a conversion to a Fixed Interest Rate, such notice also
shall conform to the requirements of Section 2.07 hereof and in the
case of an Expiration Date or a Termination Date such notice shall
conform to Section 4.05 hereof.
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 actu-
ally delivered for purchase. Interest on such Bond will cease to
accrue and such Bond shall no longer be entitled to the security pro-
vided by this 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 this Indenture for such purpose.
SSCTIOH 4.04. Tender and Purchase of Bonds. (A) Promptly
upon its receipt of any written Optional Tender Notice, the Tender
Agent shall give oral confirmation of such notice to the Remarketing
Agent. The Remarketing Agent shall use its best efforts to remarket
Bonds covered by any Optional Tender Notice 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 remarket such Bonds, if amounts on deposit
in the Remarketing Cost Account are sufficient to pay to the owner of
such Bond the difference between par and the discount price and if
the rate on the remarketed Bonds is equal to the Maximum Rate.
Bonds subject to purchase pursuant to Section 4.01,
Section 4.02 or Section 4.03 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 the following sources in the order listed:
(1) Amounts on deposit in the Remarketing
Proceeds Account and in the case of a Conversion Date,
the Discount Account, if necessary; and
(2) Amounts on deposit in the Letter of Credit
Account.
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t
(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 immedi-
ately 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 thereof in accordance with para-
graph (C) below, and (3) will give notice to the Tender Agent, speci-
fying the aggregate principal amount of Bonds not remarketed which
must be purchased by the Bank on such date, if any. If such notice
from the Remarketing Agent indicates that Bonds are required to be
purchased by the Bank, the Tender Agent shall give immediate notice
to the Trustee, the Bank and the City at or prior to 1:00 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 by 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 by the Bank .shall be immediately registered in the
name of the Bank. The Tender Agent shall deliver all such Bank-Owned
Bonds in accordance with the instructions of the Bank; in the absence
of such instructions Bank-Owned Bonds will be delivered to
(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 from the funds specified in
Section 4.04(A) hereof, 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 this
Article IV, all Bank-Owned Bonds 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 remarket 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 repur-
chase such Bonds without any further payment therefor by the Bank on
each Business Day such Bonds are not successfully remarketed, all in
accordance with Section 4.08 hereof.
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SBCTION 4.05. Mandatory Purchase OpQn Bxpiration or
Teraination 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
extended or there shall have been delivered an Alternate Letter of
Credit in substitution therefor as provided in Section 4.06 hereof or
unless on or before five days prior to the Expiration Date all Bonds
shall have been converted to the Fixed Interest Rate as provided in
Section 2.10 hereof, 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 as provided in Section 4.06 hereof or unless on or
before the fifth Business Day prior to a Termination Date all Bonds
have been converted to the Fixed Interest Rate as provided in Section
2.10 hereof, all Unit Pricing Bonds or Demand Bonds shall be pur-
chased by the Tender Agent on the fifth Business Day prior to such
Termination Date at the Tender Price.
(C) Notice of purchase of such Bonds pursuant to this
Section 4.05 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, (ii) specify, if
applicable, the last times and dates prior to such expiration on
which such Bonds must be delivered, or on which notice must be given,
for the purchase of such Bonds pursuant to the Owner's option under
Sections. 4.01 and 4.02 hereof, (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 where the Bonds shall be
tendered). On the fifth Business Day prior to the Expiration Date or
on the Termination 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 all Outstanding Bonds (other
than Bank-Owned Bonds). All such Bonds purchased with a drawing on
the Letter of Credit shall be deemed purchased by the Trustee on
behalf of the Bank on such date, and from and after such date the
interest on such Bonds so purchased shall accrue solely for the bene-
fit of the Bank and its assigns as owner of such Bonds.
If subsequent to the commencement of the giving of such
notice, the term of the Letter of Credit shall have been extended or
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r
there shall have been delivered an Alternate Letter of Credit in
substitution therefor as provided in Section 4.06 hereof, 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 com-
menced, (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 this Indenture, (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, and (v) that the prior notice of purchase and any pro-
posed 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 given not more
than five (5) days following such extension or delivery and not less
than five (5) days prior to such Mandatory Tender Date.
SSCTIOP 4.06. Letter of Credit; Alternate Letter of Credit.
(A) On the last Business Day of each calendar month the
Trustee shall by telex or telegraphic demand given before 1:00 P.M.,
New York City time on such day draw on the Letter of Credit in accor-
dance 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 cal-
endar 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
Sections 3.01(A), 3.01(C), 3.02 and 3.03 hereof, the Trustee shall by
telex or telegraphic 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 prin-
cipal 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, that if the Bank is not
reimbursed on the same day for such draws the Trustee shall register
Bonds redeemed in the name of the Bank, and such Bonds shall be
deemed to be Outstanding notwithstanding that such Bonds have been
paid from such draws on the Letter of Credit.
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C
(C) On each date Unit Pricing Bonds or Demand Bonds are
purchased pursuant to Sections 4.01, 4.02, 4.03, 4.05(A) or 4.05(B)
hereof, the Trustee shall by telex or telegraphic demand given before
1:00 P.M., New York City time, draw on the Letter of Credit in accor-
dance 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) in connection
therewith; provided, however, the Trustee shall only make such draw
in the event of a redemption pursuant to Section 3.02 or 3.03 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.
(D) On each date Unit Pricing Bonds are redeemed pursuant
to Sections 3.01(A), 3.01(C) or 3.02 hereof and each date Unit
Pricing Bonds are purchased pursuant to Section 4.01 or 4.04 hereof,
the Trustee shall by telex or telegraphic 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 required herein in connection therewith.
(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 connection with Bank-Owned
Bonds.
(F) If at any time there shall have been delivered to the
Trustee (i) an Alternate Letter of Credit in substitution for the
Letter of Credit then in effect, (ii) an Opinion of Counsel stating
that the delivery of such Alternate Letter of Credit to the Trustee
is authorized under this Indenture, will not adversely affect the
exemption from Federal income taxation of interest on the Bonds, and
complies with the terms of this 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 satisfactory
to the Bank of the provision for purchase from the Bank of all Bonds
held by it 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 shall surrender the Letter of Credit
then in effect to the Bank on the fifth Business Day after the
Substitution Date.
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(G) If at any time there shall cease to be any Unit
Pricing Bonds or Demand Bonds Outstanding hereunder, or in the event
that all Unit Pricing Bonds or Demand Bonds have been purchased by
the Bank pursuant to Section 4.06(B) hereof or in the event that all
Unit Pricing Bonds or Demand Bonds have been purchased on a Bank
Purchase Date, 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 otherwise trans-
f er the Letter of Credit, except to a successor Trustee hereunder. and
in accordance with the terms of the Letter of Credit and this
Indenture.
SECTION 4.07. No Sales After Certain Defaults. The
Remarketing Agent shall have no duty to remarket Bonds pursuant to
Sections 4.01, 4.02 or 4.03 hereof if there shall have occurred and
be continuing an Event of Default described in Section 7.01 (c)
hereof and shall not so remarket Bonds on or after a Bank Purchase
Date to the extent that such Event of Default is as a result of the
failure of a property owner to pay Assessments bearing interest at
other than a fixed interest rate; provided, that if any such Event of
Default shall thereafter be cured, as evidenced by a certificate of
the City satisfactory 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 remarket Bonds pursuant to
Sections 4.01, 4.02 or 4.03 hereof shall be reinstated.
SECTION 4.08. Purchase Fund. There is hereby established
and there shall be maintained with the Tender Agent, as agent for the
Trustee, a separate fund to be known 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 sepa-
rate 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 "Discount Account."
(A) Remarketing 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
accordance with Section 4.04 hereof. 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.
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.. .._._---.. _. - -_-_- r~.._---. ......~ _.._.. .rrr.a w~
' F
(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 needed with respect to any Optional Tender
Date or Mandatory Tender Date for the payment of the Tender Price for
any Bonds shall be immediately returned to the Bank.
(C) Discount 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 discount in accordance with
Section 2.07 hereof, the Tender Agent shall deposit such amounts in
the Discount Account. On the relevant Conversion Date the Trustee
shall apply such amounts to reimburse the Bank for draws on the
Letter of Credit used for the payment of the Tender Price of the
Mandatorily Tendered Bonds.
(D) Remarketing Cost Account. Moneys on deposit in the
Remarketing Cost Account shall be used for the purpose of paying,
from time to time, remarketing costs consisting of discounts on the
sale of Bonds at less than par, which discount sale is advised by the
Remarketing Agent as necessary to remarket the Bonds. Payment of
such costs, upon such advisement, shall be made directly to the Bank,
in the case of Bank-Owned Bonds or the Owner of Bonds in the event
Bonds are remarketed at less than par pursuant to Section 4.04 hereof
by the Tender Agent from money held in the Remarketing Cost Account.
Payment of remarketing costs to the Bank shall be made in the amount
required under the terms of the Letter of Credit, 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 con-
version shall be transferred from the Remarketing~Cost Account and
(i) deposited in the Fixed Rate Reserve Account to the extent neces-
sary so that the amount transferred to the Fixed Rate Reserve Account
in connection with 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 (iii) thereafter to the
Reserve Earnings Account. On the date no Unit Pricing Bonds or
Demand Bonds (including 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
-42-
M
V\
equal to the amount on deposit in the Remarketing Cost Account in
excess of the Remarketing Cost Account Requirement 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
Section 5.04(D)(v) hereof 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, there-
after (b) to the Fixed Rate Reserve Account to the extent of any
deficiency therein and thereafter (c) to the Reserve Earnings Fund.
(E) Investment. Amounts held in the Letter of Credit
Account, the Remarketing Proceeds Account or the Discount 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.
AR?ICLS V
PLBDG$ OF THB INDBNTORB; FIINDS A~iD AOC~S
SBCTIOa 5.01. Pledge $ffected By Indenture. Pursuant to
this Indenture there is pledged for the payment of the principal of
and redemption premium, if any, and interest on the Bonds, and obli-
gations owing to the Bank in accordance with their terms and the pro-
visions of this Indenture, subject only to the provisions of this
Indenture permitting the application thereof for the purposes and on
the terms and conditions set forth in this 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 the Interest Reserve Fund and (v)
all other funds, accounts and sub-accounts, if any created hereunder
(except the Purchase Fund).
-43-
SECTION 5.02. Pledge of Assessoent
Fund. The Assessment Installments pledged p
hereof shall be used for the punctual payment
interest and redemption premiums, if any,
Assessment Installments shall not be used for
any of the Bonds remain Outstanding except
herein.
jngta77nwnt8: Asse88IDent
ursuant to Section 5.01
of the principal of and
on the Bonds, and the
any other purpose while
as expressly provided
The City shall cause all Assessment Installments to be col-
lected from the owners of real property within the District either
through the real property tax bills administered by the Orange County
Tax Collector-Treasurer or by direct collection 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 Installments on such tax bills. All 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 hereby agrees to estab-
lish 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 other than a
fixed interest rate and shall give notice that such amounts are imme-
diately due and payable to the owners of such real property (or their
designated agents) within the District. Notwithstanding the forego-
ing the Trustee shall determine the amount of Assessment Installments
representing interest due and payable on Bank-Owned Bonds each week,
and the Trustee shall give notice that such amounts are immediately
due and payable on the first Business Day of such week to the owners
of such real property (or their designated agents).
SECTION 5.03. Collection of Assessment Installsents.
(A) Collection of unpaid Assessments shall commence imme-
diately on the first Interest Payment Date on which amounts on
deposit in the Interest Account from the proceeds of the Bonds
(including the investments earnings thereon) will be insufficient to
reimburse the Bank for a draw on the Letter of Credit described in
Section 4.06(A) hereof. During a Unit Pricing Mode or a Demand Mode,
Assessment Installments on real property with Assessments bearing
interest at other than a fixed interest rate, shall be paid directly
to the Trustee in the amount of interest accrued on such Bonds
whether or not paid, less any applicable credits provided herein,
including but not limited to, Section 5.04(E)(ii) and Section 5.07
hereof. Additionally, commencing on and after September 2, 1992, the
Assessment Installment shall also include the amount of principal, if
any, to be paid on such Principal Payment Date (excluding any prepaid
Assessments) pursuant to this Indenture, less any applicable credits
-44-
provided herein, including but not limited to, Section 5.04(C),
Section 5.04(D) (ii) and Section 5.04(E) (ii) .
The City shall also cause to be collected through the tax
bills or direct collections the continuing costs of the Bonds includ-
ing but not limited to the fees, costs and indemnifications due the
Trustee, Paying Agent, City, and Tender Agent, which 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 Reserve
Earnings Fund shall also be collected through the tax bill or direct
collections as incidental expenses from owners of property with
Assessments bearing interest at other than a fixed interest rate.
All moneys collected with respect to such fees, costs and indemnifi-
cations shall be deposited in the Reserve Earnings Fund and disbursed
in accordance with the provisions relating thereto. All amounts due
and payable hereunder 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 herein.
(B) Any Assessment may be prepaid at any time by paying
the unpaid amount thereof less the amounts transferred to the
Redemption Account (i) f rom the Variable Rate Reserve Account pursu-
ant to Section 5.04(D)(ii) hereof and from the Remarketing Cost
Account pursuant to Section 4.08(D) hereof if the Assessment bears
interest at a rate other than the fixed interest rate or (ii) from
the Fixed Rate Reserve Account pursuant to Section 5.04(E)(ii)
hereof, if the Assessment bears interest at a fixed interest rate,
together with the redemption premium set forth in Section 3.01(A) or
(B) hereof if applicable and the estimated amount of interest to be
paid to the date of redemption of the Bonds representing the portion
of such Assessment which cannot be applied for redemption on the next
available redemption date, but not to exceed one year's interest on
such portion of the prepaid Assessment at the Maximum Rate with
respect to Bonds other than Bank-Owned Bonds, which amounts shall be
deposited in the Redemption Account.
(C) All unpaid Assessments shall bear interest at the
respective interest rates hereunder. The amount of delinquent
Assessment Installments advanced by the City from the Variable Rate
Reserve Account or the Fixed Rate Reserve Account shall be payable
and shall bear interest as provided from time to time in the Act,
together with penalties as provided from time to time in the Act.
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SECTION 5.04. Devosit of Monevs. 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
representing the interest on the Bonds estimated to become payable
prior to August 1, 1987, shall be deposited in the Interest Account,
an amount equal to the Interest Reserve Fund Amount shall be depos-
ited in the Interest Reserve Fund, and an amount equal to the
Remarketing Cost Account Requirement which shall be deposited in the
Remarketing Cost Account and the remaining proceeds shall be depos-
ited 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 and in the Construction Fund,
as appropriate, at the following respective times in the Redemption
Fund in the manner hereinafter provided, which fund and the accounts
described below the Trustee hereby agrees to establish and maintain
so long as the Indenture is not discharged in accordance with Article
X hereof 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 hereinafter authorized.
(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 pursuant to Section 5.03
hereof), shall deposit in the Interest Account from money in the
Assessment Fund the amount of interest collected 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, 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 in fulfillment of its obligations
pursuant to the Letter of Credit. Notwithstanding 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, (ii) making payments to the Bank as required
under the terms of the Letter of Credit or (iii) to pay interest on
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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 hereunder, 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 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, an
amount equal to the principal 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 prin-
cipal of Fixed Rate Bonds and (2) 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 principal of Outstanding Bonds.
The amount of any prepaid Assessments transferred to the
Principal Account pursuant to Section 5.04(C) hereof 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 Installment immediately 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 City 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 f fixed interest rate and (2) reimbursing the Bank for draws on the
Letter of Credit with respect to mandatory redemption if the
Assessment bears 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
Outstanding Bonds. The portion of any prepaid Assessment which is
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less than an integral multiple of the then minimum Authorized
Denomination of the Bonds and which cannot be applied on the next
available redemption date for the redemption of Bonds shall be imme-
diately transferred to the Principal Account and used as provided in
Section 5.04(B) hereof.
(D) Variable Rate Reserve Account. The Variable Rate
Reserve Account 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 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
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, 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 reim-
bursed to the Variable Rate Reserve Account froaa 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 amount shall be applied as provided in
Section 7.02 hereof.
(ii) In the event Assessments not bearing inter-
est 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) unpaid principal amount of the the Assessment
or portion thereof proposed to be prepaid,
and (2) divided by the aggregate principal amount of
unpaid Assessments bearing interest at other than a
fixed interest rate. An amount equal to such reduc-
tion shall be transf erred from the Variable Rate
Reserve Account to the .Redemption Account.
(iii) If on the first Business Day of each month,
commencing the amount on deposit in the
Variable Rate Reserve Account exceeds the Variable
Rate Reserve Requirement, such excess shall be trans-
ferred (a) first, to the Remarketing Cost Account to
the extent the amount on deposit therein is less than
the Remarketing Cost Account Requirement, (b) second,
to the Fixed Rate Reserve Account to the extent the
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amount on deposit therein
Reserve Requirement and
Earnings Fund.
..~,
is less than the Fixed Rate
(c) third, to the Reserve
(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 f fixed interest rate shall be discontin-
ued or reduced, as appropriate, and all amounts on
deposit in the Variable Rate Reserve Account shall be
transf erred 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.
(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
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-
f er 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 shall be maintained, used, transferred, reimbursed, and liq-
uidated 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
Assessment bearing a rate of interest equal to a Fixed
Interest Rate or the interest thereon to pay the next
maturing installment of the principal of or interest
on the Fixed Rate Bonds, an amount necessary to pay
such def iciency shall be advanced from the Fixed Rate
Reserve Account to such accounts. The amounts so
advanced shall be reimbursed to the Fixed Rate Reserve
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Account from the proceeds of redemption or sale of the
parcels for which payment of delinquent Assessment
Installments has been made from the Fixed Rate Reserve
Account and such amounts shall be applied as provided
in Section 7.02 hereof.
(ii) In the event Assessments bearing interest
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 ini-
tially deposited into the Fixed Rate Reserve Account
upon conversion with respect to all Assessments to a
fixed interest rate. An amount equal to such reduc-
tion shall be transferred from the Fixed Rate Reserve
Account to the Redemption Account.
(iii) If on the first Business Day of each month,
commencing the amount on deposit in the
Fixed Rate Reserve Account exceeds the Fixed Rate
Reserve Requirement, such excess shall be transferred
(a) first, to the Remarketing Cost Account if the
amount on deposit therein is less than the Remarketing
Cost Account Requirement and (b) second, to the
Interest Account as a credit against interest on
Assessments bearing interest at a fixed interest
rate.
(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 in deposit in the Fixed Rate Reserve Account
shall be transf erred 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.
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SECTION 5.05 . Be$erve Earnings Fund. T her e i s h e r e b y
established and there shall be maintained by the Trustee a separate
fund to be known as the "Reserve Earnings Fund." Such fund shall
constitute a trust fund for the benefit of the Owners of the Bonds
and the Bank. Money on deposit in the Reserve Earnings Fund shall be
withdrawn solely for the payment of fees, expenses and indemnifica-
tions 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. Upon conversion of all Bonds. to a Fixed Interest Rate or on the
date on which no Bonds are Outstanding and so long as all fees,
expenses and indemnifications of the Bank and the Remarketing Agent
are paid, amounts on deposit in the Reserve Earning Fund shall be
transferred to the Interest Account as a credit against interest on
Assessments.
SECTION 5.06. Use of Monev in the Construction Fund. The
City hereby agrees to establish and maintain a Construction Fund
until the completion of the construction of the works of improvements
within the District.
All 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 Paying Agent, the Trustee,
Moody's and S&P incurred prior to the completion of such works of
improvement.
When the construction of the works of improvement have been
completed, or upon the decision of the City to terminate such con-
struction the City shall deliver to the Trustee and the Bank a cer-
tif icate of the City stating the fact and date of such completion or
termination of such construction and stating that all the costs of
such construction and equipment and expenses incidental thereto have
been determined and paid (or that all such costs and expenses 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 or 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) ti) to the Fixed Rate Reserve Account and Variable
Rate Reserve Account to the extent of any deficiencies therein and
pro rata in the event of deficiencies in both such accounts
and (ii) thereafter to the Redemption Account to be applied by the
Trustee for the redemption of Bonds.
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Pending use of such moneys in the Redemption Account for
the redemption or purchase 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 anything in this Section 5.06 to the contrary, 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 exemption from Federal income taxes of interest on the Bonds.
SECTION 5.07. Interest Reserve Fund. The Trustee hereby
agrees 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 is hereby 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 amounts owed to such
Owners by the Bank pursuant to the Letter of Credit. Amounts on
deposit in the Interest Reserve Fund shall be reduced on the first
Business Day of each calendar month following the redemption 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 Honds and Demand Bonds; provided
however that such calculation shall not take into account moneys on
deposit in the Interest Reserve Fund which represent interest actu-
ally accrued but not yet payable to Owners of Unit Pricing or Demand
Bonds by the Bank and such moneys shall not be transferred out upon
such redemptions. The amount of any such reduction shall be applied
as a credit against the interest due in the immediately succeeding
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, there shall be transferred from the Interest Reserve
Fund to the Interest Account to be applied as a credit as provided in
Section 3.01(C) 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 repre-
sent interest actually accrued but not yet payable and such moneys
shall not be transferred out upon such redemptions. Following con-
version of all Bonds to the Fixed Interest Rate, the amount on
deposit in the Interest Reserve Fund shall be reduced to zero and the
entire amount of the reduction shall be transferred to the Interest
Account and applied as a credit against the interest due on the imme-
diately succeeding Assessment Installment.
Any moneys held by the Trustee in the Interest Reserve Fund
shall be held uninvested unless instructed to be invested by the City
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in which case they shall be invested in direct obligations of the
United States of America or invested in repurchase agreements with
any bank or trust company organized .under the laws of any state of
the United States of America or any national banking association
(including the Trustee) or government bond dealer reporting to, trad-
ing with, and recognized as a primary dealer by the Federal Reserve
Bank of New York, which agreement is secured by any one or more of
the securities described above, in each case so that such investment
which will mature on or before the 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 Reserve Earnings Fund.
SECTION 5.08. Investments. All moneys held by the Trustee
in the Interest Reserve Fund and the Purchase Fund shall be invested
as set forth in Section 5.07 or Section 4.08 hereof, as the case may
be. Any money held by the City in the Construction Fund, or by the
Trustee in the Assessment Fund, the Redemption Fund (other than the
Variable Rate Reserve Account) or the Reserve 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 forego-
ing, 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 hereunder. Moneys
in the Variable Rate Reserve Account shall be invested in obligations
described in clause (1) of the definition of permitted investments
which mature not more than 30 days after the date of purchase
thereof.
All such money deposited or invested shall be deposited or
invested so as to obtain the highest yield which the City deems prac-
ticable, having due regard for the safety of such money, and the City
or Trustee may commingle any of the money held by it hereunder,
ex money derived from draws under the Letter of Credit and on
deposit in the Interest Reserve Fund, which 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 nec-
essary in order to provide money to meet any payment of the money so
deposited or invested. The Trustee shall not be liable or responsi-
ble for any losses resulting from any such deposit or investment
presented for redemption or sold.
Any interest or prof its on deposits and investments in such
funds received by the City or the Trustee (other than interest or
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profits on the Variable Rate Reserve Account or the Fixed Rate
Reserve Account which shall be retained therein except as provided in
Section 5.04 and Section 5.05 hereof, respectively) shall be depos-
ited in the Interest Account as a credit against interest on
Assessments, except that prior to completion of the works of improve-
ment and the filing of the certificate of the City as required by
Section 5.07 hereof, all interest or profits on investments of moneys
held in the Construction Fund shall remain in said Fund.
ARTICLE VI
COVENANTS
SECTION 6.01. ~Q~pliance With this Indenture. T h e Cit y
will faithfully observe and perform all the agreements, conditions,
covenants and terms contained herein required to be observed and per-
formed by it.
SECTION 6.OZ. Observance of LaMS and Regulations. The
City will faithfully observe and perform all lawful and valid obliga-
tions or regulations now or hereafter imposed on them by contract, or
prescribed by any-state or national law, or by any officer, board or
commission having jurisdiction or control, as a condition of the con-
tinued enjoyment of each and every franchise, right or privilege now
owned or hereafter acquired by them, including their right to exist
and carry out their respective businesses, to the end that such fran-
chises, rights and privileges shall be maintained and preserved and
shall not be abandoned, forfeited or in any manner impaired.
SECTION 6.03. Other Liens. So long as the Indenture has
not been discharged in accordance with Article X hereof, the City
will not create or suffer to be created any pledge of or lien on the
items set forth in Section 5.01 hereof other than the pledge and lien
hereof except a pledge for lien which is subordinate to the pledge
and lien hereof.
SECTION 6.04. Prosecution of Suits. The City will within
sixty (60) days of the request of the Bank, the Trustee or any Owner,
take such action from time to time as may be necessary or proper to
remedy or cure any default in the payment of Assessment Installments
and will prosecute all actions, suits or other proceedings as may be
appropriate for such purposes, including a judicial foreclosure
action as set forth in the Act and Section 7.02 hereof.
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SBCTION 6.05. Accounting Records and Statements. The
City will keep or cause to be kept proper accounting records in which
complete and correct entries shall be made of all transactions relat-
ing to the receipt, deposit and disbursement of the Assessment
Installments, and such accounting records shall be available for
inspection by the Bank, the Trustee or any Owner or such Owner's
agent duly authorized in writing at reasonable hours and under rea-
sonable conditions. Not later than the twenty-fifth (25th) day of
each month, commencing on September 2, 1987 and continuing so long as
any Bonds are Outstanding, the City will, upon request, furnish to
the Bank, the Trustee and any Owner (but at the expense of such
Owner) a complete statement covering the receipts, deposits and dis-
bursements of the Assessment Installments for the preceding monthly
period.
SECTION 6.06. Recordation and Filing. The City will file,
record, register, renew, refile and record all such documents,
including financing statements_(or continuation statements in connec-
tion therewith), as may be required by law in order to maintain at
all times a security interest in the Assessment Installments under
and pursuant to .this Indenture, all in such manner, at such times and
in such places as may be required in order to fully perfect, preserve
and protect the benefit, protection and security of the Owners and
the rights of the Trustee hereunder, and the City will do whatever
else may be necessary or be reasonably required in order to perfect
and continue the pledge and lien on the Assessment Installments as
provided herein.
SECTION 6.07. Further Assurances. Whenever and so often
as requested to do so by the Trustee, the Bank or any Owner, the City
will promptly execute and deliver or cause to be executed and deliv-
ered all such other and further assurances, documents or instruments
and promptly do or cause to be done all such other and further things
as may be necessary or reasonably required in order to further and
more fully vest in the Trustee and the Owners the benef it, protection
and security conferred or intended to be conferred.
SSCTIOH 6.08. Arbitrage Covenant. T h e C i t y s h a 11 n o t
make, direct, or give its consent to, any use of the proceeds of the
Bonds or of any moneys on deposit to the credit of any fund or
account established under the Indenture which may be deemed to be the
proceeds of the Bonds pursuant to Section 103(c) of the Internal
Revenue Code of 1954, as amended, and the applicable regulations
thereunder which would cause any of the Bonds to become "arbitrage
bonds" within the meaning of said Section 103 (c) and the applicable
regulations thereunder.
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ARTICLE VII
DEFAOLT AND LIMITATIONS OF LIABILITY
SECTION 7.01. Events of Default. If any of the following
events occur, it is hereby declared to constitute 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 to redemp-
tion thereof or upon purchase thereof pursuant to
Article IV hereof;
(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 pur-
suant to Article IV hereof;
(c) Default in the due and punctual payment of
any Assessment Installment due hereunder.
SECTION 7.02. Action on Default. (1) Upon the occurrence
of an Event of Default under Section 7.01(c) and upon notice given by
the Trustee, the City shall forthwith undertake foreclosure proceed-
ings in the manner prescribed in Section 8830 gt seg= of the Streets
and Highways Code to collect the amount of any delinquent Assessment
Installment (i) within sixty (60) days if the Assessment bears inter-
est at other than a f fixed interest rate or ( ii) if the Letter of
Credit is in effect, within five (5) Business Days of receipt of
actual knowledge of, but in no event later than one hundred fifty
(150) days or if the Letter of Credit is not in effect within one
hundred and fifty (150) days, of such Event of Default if the
Assessment Installment bears interest at a fixed interest rate. Upon
the redemption or sale of the real property responsible for such
delinquent Assessment Installment, or resale as provided below, the
City shall deposit to the Fixed Rate Reserve Account if such
Assessment bears interest at a fixed interest rate or to the Variable
Rate Reserve Account if the Assessment 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 reimbursement in the Letter of Credit
-56-
resulting from a pro rata distribution made by the Trustee pursuant
to the last paragraph of this Section 7.02.
(2) In the event that real property bearing interest at
other than a fixed interest rate is neither redeemed by the owner
thereof or 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 ne
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 rirst to any amounts due to the Bank hereunder or
uncaer the Reimbursement Agreement, and thereafter any excess 5ha11 be
applied by the_City in the following order: ti) to make the deposit
required pursuant to 7.02(1) Hereof, (ii) to restore the Variable
Rate Reserve Account to the Variable Rate Reserve Requirement tiff)
to restore the Fixed Rate Reserve Account to the Fixed xate Reserve
Requirement, (iv) to the payment of any continuing costs of the
Bonds, and (v) for redemption of Bonds pursuant to Section 3.01(A)
hereof 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 bearing interest at a fixed
interest rate is neither redeemed by the owner thereof or 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 affixed interest rate shall be applied in the following
order: (i) to restore the Fixed Rate Reserve Account to the Fixed
Rate Reserve Requirement, tii) to restore the Variable Rate Reserve
Accaunt to the Variable Rate Reserve Requirement, (iii) to the pay-
ment of any continuing costs of the Bonds, and (iv) as a pro rata
credit against the unpaid principal of the Assessments and for
redemption of Bonds pursuant to Section 3.01 (a) , (b) or tc) hereof .
In the event that the Treasurer and the City makes the
determinations described in Section 8770-8772 of the Improvement Bond
Act of 1915, as amended, the City and the Trustee shall take the
actions required by Section 8770-8784 of said Act and Owners of
Bonds, including the Bank as owner of Bonds aeemed to be Outstanding
pursuant to Section 4.06(a) hereof, shall be deemed to have consented
to do such things as are required by such Section of Owners of
Bonds.
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SECTION 7.03. Remedies of the Trustee. Tne Trustee shall
have the right --
(a) Dy mandamus or other action or proceeding or
suit at law or in equity to enforce its 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,
covenants and terms contained herein 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 hereunder to require the City and its supervi-
sors, officers and employees to account as the trustee
of an express trust.
Anything to the contrary contained herein notwithstanding,
so long as the Letter of Credit is in effect, and the Bank is not in
default under the Letter of Credit, the Trustee shall not exercise
any of the ,.oregoing rights which affect Unit Pricing Bonds or Demand
Bonds without the prior written consent of the Bank and shall, upon
t~~e Bank's offer to the Trustee of reasonable security and indemnity
against costs, expenses and liabilities to be incurred by it, exer-
cise all rights of the Trustee under Section 7.03 at the direction of
the Bank.
SECTION 7.04. Non-Waiver. A waiver of any default hereun-
der or breach of any obligation by the City or Trustee Hereunder
shall not affect any subsequent default hereunder or any subsequent
breach of an obligation by the City or Trustee hereunder or impair
any rights or remedies on any such subsequent default hereunder or
preach of an ob~igation by the City or Trustee hereunder. No delay
or omission by the city or Trustee to exercise any right or remedy
accruing upon any default nereunaer shall impair any such right or
remedy or shall be construed to be a waiver of any such default here-
under or an acquiescence therein, and every right or remedy con erred
upon the City or Trustee by applicable law or by this article may be
enforced and exercised from time to time and as orten 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 tiie Trustee sha~.l be rest~rect to their
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f ormer positions, rignts and remedies as if such action, ~,roceeding
or suit had not been brought or taken.
SECTION 7.05. Remedies Not Ezclusive. No remedy conferred
herein upon or reserved herein to the city or 'trustee 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 here-
under or now or hereafter existing under applicable law or equity or
by statute or otherwise and may be exercised without exhausting and
without regard to any ocher remedy conferred by any other applicable
law.
SECTION 7.06. No Liability by the City to the Owners.
Except for the collection of the Assessment Installments and the
observance and performance of the other conditions, covenants and
terms contained herein or in the Act required to be observed or per-
torm~d by it, the City shall not have any obligation or liability to
the owners with respect to this Indenture or the preparation, authen-
tication, delivery, t~ans~er, exchange or cancellation of the Bonds
or with respect to the performance by the Trustee of any obligation
contained Herein required to be performed by it. Pursuant to
Resolution No. 86-81, the City has determined that no tunds of the
City will be available to pay principal of, premium, if any, or
interest on the Bonds. The City intends that in the event legisla-
tion is enacted to permit the City to elect not to use available
funds to maKe such payments said Resolution and this Section 7.06
shall act as such election to the fullest extent possible under the
Act and the laws of the State of California.
SECTION 7.07. NQ_Liability by the Trustee to the Owners.
Except as expressly provided herein, 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 herein required to be
observed and Yerfurmed by it.
SECTION 7.08. diction by Owners. In the event the Trustee
fails to take any action to eliminate an Event of Default under
Section i.01 Hereof, 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, the Bank is not in default thereun-
der and to the extent such failure relates to Unit Pricing Bonds or
Demand Bonds, institute any suit, action, mandamus or other proceed-
ing in equity or at law for the protection or enforcement of dny
right under this Indenture, but only if such Owners have first made
written request of the Trustee aster the right to exercise such
powers or right of action shall have occurred, and shall have
afforded the Trustee a reasonable opportunity either to proceed to
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exercise ti,e powers granted therein or granted under law or to
institute such action, suit or proceeding in its name and unless
also, tiie Trustee shall nave been ofrered reasonable security and
indemnity against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee shall have refused or neglected
to comply with such request within a reasonable time.
ARTICLE VIII
THE TROSTBB AND THE RE!lAR1CETING AGENT AND THE
PAYING AGENT
SECTION 8.01. ~.~ovment and Duties of the Trustee. The
City hereby appoints and employs the Trustee to perform the obliga-
tions contained herein; all in the manner provided herein and subject
to the conditions and terms ~,ereof.
SECTION 8.02. Resoval and Resignation of the Trustee.
The City may at any time direct the removal of the Trustee initially
appoi,~ted ~~ereby and any successor Thereto by giving written notice
of such removal to the Trustee and by giving notice by mail of such
removal to the Owners, and the Trustee initially appointed hereby and
any successor thereto may at any time resign by giving written notice
of such resignation to the City and by giving notice by mail of such
resignation to the Owners. upon giving any such notice of removal or
upon receiving any such notice of resignation, the City, with the
consent of the Hank (which consent shall not be unreasonably
wi~hheld), snarl promptly appoint a successor Trustee by an instru-
ment in writing; provided that in the event the City does not appoint
a successor Trustee within sixty (60) days following the giving of
any such notice of removal or the receipt of any such notice of res-
ignation, the removed or resigning Trustee may petition any appropri-
ate court having jurisdiction to appoint a successor Trustee. Any
successor Trustee shall be a bank or trust company doing business and
having a principal corporate trust office in either New York, New
York or Los Angeles, or San Francisco, California, having a combined
capital (exclusive of borrowed capital) and surplus of at least fifty
million dollars (550,000,000) and subject to supervision or examina-
tion by state or national authorities. If such bank or trust company
publishes a report of .:ondition at least annually, puLsuant to law or
to the requirements of any supervising or examining authority above
ref erred to, then for the purposes of this Section s.u2 the combined
capital and surplus of such bank or trust company shall be deemed to
be its combined capital and surplus as set =orth in its most recent
report of condition so published.
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Any removal or resignation of a Trustee and appointment of
a successor Trustee shall become effective only upon the acceptance
of the appointment by the successor Trustee.
SECTION 6.03. Coapensation and Indemnif~cat~on of the
Trustee. The City shall from time to time, subject to any agreement
then in effect with the Trustee, pay the Trustee compensation for its
services and reimburse the Trustee for all its advances and expendi-
tures hereunder, including but ~,ot limited to advances to and gees
and expenses of accountants, agents, appraisers, consultants, counsel
or other experts employed by it in the onservance and performance of
its rights and obligations hereunder; provided that the Trustee shall
not have any lien for such compensation or reimbursement against any
money held by it in any of the funds established hereunder, although
the Trustee may take whatever legal actions are available to it
directly against the pity to recover such compensation or
reimbursement.
To the extent permitted by law, the City does hereby assume
liability for, and agrees to indemnify and hold harmless the Trustee
from and against any and all claims, damages and losses (including
legal fees and expenses) arising out of (i) the condition, manage-
ment, maintenance or use of or from any work done in connection with
the works of improvement within the District, (ii) any act of negli-
gence of the City or of any of its agents, contractors, employees,
invitees, licensees, uff icers or supervisors in connection with the
works of improvement within the District, or (iii) the payment of any
costs or ex~,enses of the acquisition and construction ur the works of
improvement within the District; provided, that no indemnification
will be made for willful misconduct or negligence hereunder by the
Trustee.
The City also agrees to indemnify the Trustee for, and to
hold it harmless against, any loss, liability or expense incurred
without negligence or nad faith on the part of the Trustee, arising
out of or in connection with the acceptance or administration of the
trust or trusts hereunder, as well as the costs and expenses of
defending itself against any claim or liability in accordance with
the exercise or perf ormance of any of its powers or duties
hereunder.
S8C?ION 8.04. Protection of the Trustee. T h e T r u s t e e
shall be protected and shall incur no liability in acting or proceed-
ing in good faith upon any affidavit, pond, certificate, consent,
notice, request, requisition, resolution, statement, telegram, vouch-
er, waiver or other paper or document which it shall in good faith
believe to be genuine and to have r~een adopted, executed or delivered
by the proper Yarty or pursuant to any of the provisions hereof, and
the Trustee shall be under no duty to make any investigation or
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inquiry as to any statements contained or matters reLerred to in any
such instrument, but may accept and rely upon the same as conclusive
evidence of the truth and accuracy of such statements. The Trustee
may consult with counsel, who may be counsel to the City, with regard
to legal questions arising hereunder, and the opinion of such counsel
shall be ru11 and complete authorization and protection in respect to
any action taken or suffered by it hereunder in good raith in accor-
dance therewith.
Whenever in the observance or performance of its rights and
obligations Hereunder the Trustee shall aeem it necessary or desir-
able that a matter be proved or established prior to taking or suf-
rering any action hereunder, such matter (unless other evidence in
respect thereof oe herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate of the City,
and such certificate shall be full warrant to the Trustee for any
action taken or suf~ered unuer the provisions hereof upon the raith
thereof, but in its discretion the Trustee may, in lieu thereof,
accept other evidence of such matter or may require such additional
evidence as to it may seem reasonable.
Tne Trustee shall only be responsible for the duties or
obligations expressly provided herein, and no additional duties or
obligations shawl be implied from the terms of this Indenture.
Tne Trustee may buy, sell, own, hold and deal in any of the
Bongs and may join in any action which any Owner ,uay be entitled to
take with like effect as if it were not a party hereto. The Trustee,
either as principal or agent, may also engage in or be interested in
any financial or other transaction with the City and may act as
agent, dCpos~tary or trustee for any committee or body of Owners or
of owners of obligations of the city as freely as if it were not the
Trustee hereunder.
The Trustee shall not be answerable for the exercise of any
of its rights hereunder or for the performance of any of its obliga-
tions hereunder or for anything whatsoever in connection with the
funds established hereunder, except only for its own willful miscon-
duct or gross negligence.
SBC?IOH 8.05. 1l~~ointaent of Remartetiggyent. The city
hereby appoints the Remarketing Agent to remarket Bongs pursuant to
this Indenture hereof, and 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 Bank, the City, the Paying
Agent and the Trustee at all reasonable times, and prompt~y conrirmed
by a written notice to the Trustee, who shall then promptly notify
the Bank and perform all other duties required hereunder and in the
Remarketing Agreement.
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The Remarketing Agent may at any time resign and be dis-
charged of the duties and obligations created by this Indenture by
giving at east sixty t60) days' notice to the Bank, the Trustee, the
City, the Paying Agent and the Trustee. The Remarketing Agent may be
removed at any time, at the direction of the Bank and the City, by an
instrument filed with the Remarketing Agent and the Paying Agent.
Any successor Remarketing Agent snarl be selected by the City with
the consent of the Bank (who shall be under no liability by reason of
such consent) and bhall be a ,uember of the National Association of
Securities Dealers, Inc., shall have a capitalization of at least
fifteen million dollars (S15,000,Ot)0) or have a line of credit with a
commercial bank in the amount of at least fifteen million dollars
($15,u00,uU0), and shall be authorized by law to perform all the
duties set forth in this Indenture.
SBCTIOH 8.06. A~voint~ent of Payina~gent. T h e C i t y
hereby appoints the Paying Agent to authenticate and dCliver the
Bonds as provided herein and to hold all Bonds delivered to it pursu-
ant to this Indenture in trust for the benefit of the respective
Owners who shall have so delivered such Bonds until money represent-
ing the purchase price of such Bonds shall have been delivered to or
for the account of or to the order of such Owners, to hold all money
delivered to it for the purchase ~f Bonds in trust for the nenerit of
the person or entity which shall have so delivered such money until
the Bonds purchased with such money shall have been delivered to or
for the account of such person or entity, to deliver to the Bank, the
City, the Remarketing Agent and the Trustee a copy of each notice
delivered to it in accordance with Section 4.01 Hereof and, immedi-
ately upon the delivery to it of Bonds in accordance with Section
4.01 hereof, to give telephonic or telegraphic notice to the City,
the Remarketing Agent and the Trustee specifying the principal amount
of the Bonds so delivered to it.
The Paying Agent may at any time resign and be discharged
of the duties and obligations set =orth in this Indenture by giving
at least sixty (60~ days' notice to the Bank, the City, the
Remarketing Agent and she Trustee. The Paying Agent may be removed
at any time, at the direction of the Bank and the City, by an instru-
ment filed with the Paying Agent and the.Trustee. Any successor
Paying Agent shall be a commercial bank or trust company doing busi-
ness and having an ofrice in New York, New York and snail be
appointed by the pity, with the consent of the Bank (who shall not be
under any liability by reason of such consent), in the same manner
provided in Section 8.02 hereof for appointment of a successor
Trustee.
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ARTICLE IX
A!lENDMENT OF OR SIIPPLElSSNT TO THE INDBrT1tJRB
SECTION 9.01. a-mpnr~nt of Suo~lement by Consent of Owners.
This Indenture and the rights and obligations of the City, the
Trustee, the Remarketing Agent and she Owners hereunder may be
amended or supplemented at any time by an amendment hereof or supple-
ment Hereto 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 provided in
Section 9.02 hereof, and the written consent of the Bank, 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 tl) reduce the
rate of interest on any Bond or extend the tune of payment thereof or
reduce the amount of principal or redemption premiums, if any, on any
Bond or extend she Principal Payu-ent Date thereof without the prior
written consent of the Owner of the Bond so affected, or ~2) reduce
the percentage of Owners whose consent is required for the execution
of any amendment hereof or supplement hereto, or c3) modify any of
the rights or obligations of the Trustee w~t~.out its prior written
consent thereto.
This Indenture and the rights and obligations of the City,
the Ti us wee, the Remarketing Agent and the Owners hereunder may also
be amended or supplemented at any time by an amendment hereof or sup-
plement hereto which shall become bindiny upon execution without the
written consent of any Owners, but with the written consent of the
Bank, but only to the extent permitted by law and after receipt of an
approving Opinion of Counsel and only for any one or more of the fol-
lowing purposes -
(a) ~o add to the conditions, covenants and
germs contained Herein required to be observed or per-
formed by the City, or other conditions, covenants and
terms thereafter to be observed or Performed by the
City, or to surrender any right reserved herein to or
conferred herein on the City, and which in either case
shall not adversely affect the interests of the
Owners; or
(v) to make such provisions for the purpose of
curing any ambiguity or of correcting, curing or sup-
plementing any aefective provision contained herein or
in regard to questions arising hereunder which the
City may deem desirable or necessary and not inconsis-
tent herewith, and which shall not adversely affect
the interests of the cnvners.
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SECTION 9.02. Disqualified Bonds. B o n d s h e l d f o r t h e
account of the City (but excluding Bonds held in any pension or
retirement fund of the City) shall not be ueemed Outstanding for the
purpose of any consent or other action or any calculation of
Outstanding Bonds provided herein, and shall not be entitled to con-
sent to or take any other action provided herein, and the Trustee may
auopt appropriate reyu~ations to require each Owner, ~e=ore such
Owner's consent provided for herein shall be deemed effective, to
reveal if the Binds as to which such consent is given are disquali-
fied as provided in this Section 9.02.
SECTION 9.03. Endorsement or Replacement of Bonds After
Amendment of Supplement. After the effective date of any action
taken as hereinabove provided, the Trustee may determine that the
Bonds may bear. a notation by endorsement in form approved by the
Trustee as to such action and in that case upon demand of the Owner
of any Outstanding Bond and presentation of such Owner's Bond for
such purpose at the .,tf ice of the Trustee a suitable notation as to
such action shall be made on such Bond. If the Trustee shall so
determine, new Bonds so modiried as in the opinion or the Trustee
shall be necessary to conform to such action shall be prepared, and
in that case upon demand of the Owner of any Outstanding Bonds such
new Bonds shall be exchanged without cost to each Owner for Bonds
then Outstanding at the office of the Paying Agent upon surrender of
such Outstanding Bond. All Bonds surrendered to the Paying Agent
pursuant to she provisions of this Section 9.03 shall be cancelled by
the Trustee and shall not be redelivered.
SECTION 9.04. Amendment or Supplement by Mutual Consent.
Tne provisions of this Article IX shall not prevent any Owner from
accepting any amendment or supplement as to the particular Bonds
owned by such Owner, provided that due notation thereof is made on
such Bonds.
ARTICLE %
DEFEASANCB
SECTION 10.01. Discharge of Bonds and Inde~ure.
(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 redemp-
tion premiums, if any, at the times and in the manner
provided herein and therein, 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
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to such Owners hereunder shall thereupon cease,
terminate and become void and shall Ae discharged and
satisfied.
(b) Any Outstanding Bonds shall on their
Principal Payment Dates or their dates of reue~up~ion
prior thereto be deemed to have been paid within the
meaning of and with the effect expressed in sub~evtion
(a) of this Section 10.01 if there shall be on deposit
with she Trustee money which is sufficient to pay the
interest and principal on such Bonds payable on and
prior to thCir Principal Payment Date or their sates
of redemption.
(c) any Outstanding Bonds shall prior to their
Principal Pay,uent Dates or their dates of reae,~p~ion
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 ~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
tcie 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, c2) there shall have been deposited
with the Trustee either ,coney in an amount which shall
be sufficient or United States of America Treasury
bills, notes, bonds or cer~if icates of indebtedness,
or obligations for which the full faith and credit of
the United States of America are pledged for the pay-
ment of interest and principal, which are not subject
to redemption 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 pro-
vide money which, together with money, if any, depos-
ited with the Trustee at the same time, shall be suf-
ficient 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, she City snarl 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
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with the Trustee and that such Bonds are deemed to
have been paid in accordance with this Section 10.01
and stating t~,eir Principal Payment Dates or redemp-
tion dates upon which money is to be available for the
payment of the interest and principal of such Bonds
and (3) if the Trustee shall have received an opinion
of Bond Counsel to the effect that the deposit of
moneys and securities referred to in t2) above shall
not constitute avoidable preferences under any appli-
cable bankruptcy laws.
(d) After the payment of the interest, redemp-
tion premium, if any, and principal on a~.l Outstanding
Bonds as provided in this Section 10.01, the Trustee
shall execute and deliver to the City all such instru-
ments as may be necessary or desirable to evidence the
discharge and satisfaction of this Indenture, and the
Trustee shall pay over or deliver to the City all
money or dCposits or in~est,~ents Held by it pursuant
hereto which are not required for the payment of the
interest and Yr~ncipal on such Bonds.
SSC?IOli 10.02. Dnclaiaed llonev. Anything contained herein
to the contrary notwithstanding, any money held by the Trustee in
trust for the payment and discharge of the interest or principal or
redemption premiums, if any, of any Bonds which remains unclaimed for
two ~2) years after the date when the payments on such Bonds have
become payable, if such money was held by the Trustee on such uate,
or for two (2) years after the date of deposit of such money if
deposited with the Trustee arter the date when the interest and prin-
cipal on such Bonds have become payable, shall upon written notice
from the City be repaid by the Trustee zo the City as its absolute
property free from trust, and the ~rrustee 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 she 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 (6u) days after the date of
giving such notice, the valance of such money then unclaimed will be
returned to the City.
SBC?IOH 10.03. No Diacharae. Notwithstanding anything to
she contrary ..ontained in this Indenture, the obligation of the City
to undertake foreclosure proceedings and deposit foreclosure proceeds
in the funds and accounts created hereunder, and the obligation of
the Trustee to apply such proceeds in accordance with Section 7.02
hereof ehall not cease, terminate, become void, or be discharged or
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satisried until such time as all forec~osure 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.
ARTICLE %I
MISCSLLANEOOS
SECTION 11.01. Benef its of this Indenture Liaited to
Parties. Nothing contained herein, expressed or implied, is intended
to give to any person other than the Bank, the City, the Paying
Agent, the Remarketing Agent, the Trustee and the Owners any claim,
remedy or right under or pu..suant hereto, and any agreement, condi-
tion, covenant or term contained herein required to be observed or
performed by or on nehalf of the City shall be for the sole and
exclusive benefit of the Bank, the Paying Agent, the Remarketing
Agent and the Trustee and the Owners.
SECTION 11.02. Successor Deeaed Included in all References
to Predecessor. Whenever either the Bank, the City, the Paying
Agent, the Remarketing Agent, the Trustee or any officer thereof is
named or ref erred to herein, such reference shall be deemed to
include the successor to the powers, duties and functions that are
presently vested in the Bank, the City, the Paying Agent, the
Remarketing Agent or the Trustee or such o=ficer, and all agreements,
conditions, covenants and terms contained herein required to be
observed or performed by or on behalf of the Bank, the City, the
Paying Agent, the Remarketing Agent or the Trustee or any officer
thereof shall bind and inure to the benefit of the r~spec;tive succes-
sors thereof whether so expressed or not.
SECTION 11.03. B~ecution of Documents by Owners. Any
declaration, request or other instrument which is permitted or
required herein to be executed by Owners may be in one or wore
instruments of similar tenor and may be executed by Owners in person
or by their attorneys appointed in writing. The fact and date of
their execution by any owner or such Owner's attorney of any declara-
tion, request or other instrument or of any writing appointing such
attorney may be proved by the certificate of any notary public or
other officer authorized to take acknowledgments of deeds to be
recorded in the state or territory in which such notary public or
other orricer purports to act that the Person signing such declara-
tion, request or other instrument or writing acknowledged to such
notary public or other officer the execution thereof, or by an affi-
davit of a witness of such execution duly sworn to before such notary
public or other officer, or by such other proof as the Trustee may
accept which it may deem sufficient.
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Any declaration, request or other instrument in writing of
the owner of any Bond shall bind all future owners of such Bond with
respect to anything done or suf~ered to be done by the City or the
Trustee in good faith and in accordance therewith.
SECTION 11.04. i~Iaiver of Personal Liability. No supervi-
sor, officer or employee of the City shall be individually or person-
ally liable for she payment of the in~erest or principal or redemp-
tion premiums, if any, on the Bonds, nut nothing contained herein
shall relieve any supervisor, officer or employee of the City from
the performance of any official duty provided by any applicable pro-
vision of law or Hereby.
SECTION 11.05. Acquisition of the Bonds. bv_~y. All
Bonds acquired by the City, whether ny purchase or gift or otherwise,
shall ne surrendered to the ~rrustee for cancellation.
SECTION 11.06. Notice by Mail. Any notice required to be
given hereunder ny mail to the Owners shall be given by mailing a
copy of such notice, first class postage prepaid, to the Owners of
all the Bonds at their addresses appearing in the books required to
be kept by the Paying Agent pursuant to the provisions of SCC~lon
2.14 hereof not less than fifteen (15) nays nor more than thirty (30)
days following the action or prior to the eve~-t concerning which
notice thereof is required to be given unless a different notice
period is specified elsewhere herein; provided that receipt of any
such notice shall not be a condition precedent to the effect of such
notice and ..allure to receive any such notice shall not affect the
validity of the proceedings taken in connection with the action or
the event concerning which such notice was given.
SECTION 11.07. Funds. Any fund required to be established
and maintained herein by the Trustee may be established and main-
tained in the accounting records of the Trustee either as an account
or a fund, a~,d may, for the purpose of such accounting records, any
audits thereof and any reports or statements with respect thereto, be
treated either as an account or a fund; but all such records with
respect to all such funds shall at all times be maintained in accor-
aance with sound accounting practice and with aue regard for the pro-
tection of the security of the Bonds and the rights of the Owners.
SBC?ION 11.08. Article and Section Headin4s. Gender and
References. The headings or titles of the several articles and sec-
tions hereof and the table of .:ontents appended hereto shall be
solely for convenience of reference and shall not affect the meaning,
construction or effect hereof, and words of any gender shall be
deemed and construed to include all genders. All references herein
to "Articles," "Sections" and other sub..ivis~ons or clauses are to
the corresponding articles, sections, subdivisions or clauses hereof;
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and the words "hereby," "herein," "hereof," "hereto," "herewith,"
"hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular article, section, subdivision or
clause thereof.
SECTION 11.09. Partial Invalidity. If any one or more of
the conditions, covenants or terms ~onta~ned herein required nerein
to be observed or performed by or on the part of the City, the Paying
Agent or the Trustee shall be contrary to law, then such condition or
conditions, such covenant or covenants, or such term or terms shall
be null and void and shall be deemed separable from the remaining
conditions, covenants and terms hereof and shall in no way affect the
validity hereof or of the Bonds, and the Owners shall retain all the
benefit, protection and security afforded to them hereunder and under
all provisions of applicable law. The parties hereto declare that
they would have executed and delivered this Indenture each and every
other article, section, paragraph, subdivision, sentence, clause and
phrase hereof and woula have authorized the issuance and delivery of
the Binds pursuant hereto irrespe..tive of the fact that any one or
more of the articles, sections, paragraphs, subdivisions, sentences,
clauses or phrases hereof or the application thereof to any person or
circumstance may be held to be unconstitutional, unenforceable or
invalid.
SECTION 11.10. California Law. This Indenture shall be
construed and governed in accoruance with the laws of the State of
California.
SECTION 11.11. New Yor k Time. Unless otherwise expressly
stated, all times referred to in this Indenture shall be New York
City time.
SECTION 11.12. Notices . All written notices to be given
hereunde r shall be given by mail to the ~-arty entitled thereto at its
address set torth below, or at such other address as such party may
provide to the other parties he reinafter listed in writing ~r.,m time
to time, namely:
If to the Trustee:
Citibank, N. A.
120 Wall Street, Nineteenth Floor
Sort 850
New York, New York 10043
-~0-
,.
w
If to the Paying Agent:
Citibank, N. A.
111 Wall Street, Firth Floor
Sort 850
New York, New York 10043
If to Lhe Tenser Ayent:
Citibank, N. A.
111 Wall Street, r~i~th F~oor
Sort 850
New York, New Yorx 10043
If to the City:
City of Tustin
3u0 Centennial Way
Tustin, California 92680
Attention: Finance Director
If to the Remarketing Agent:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10181
Attention: ~rax Exempt Money Markets
Department
If to she Bank:
The Mitsubishi Trust and Banking Corporation
Los Angeles Agency
911 Wilshire Blvd., Suite 1650
Los Angeles, Caii=ornia 90u17
Attention: Manager, Finance and Investments
_ -71-
~.Il...l.ll..l~.lr./+.r n. mm~r.^
I, • ~
k
r
If to Moody's:
Moody's Investors Services
y9 Church Street
New York, New York
Atten~~on: Municipal Department
Structural Finance Group
SECTION 11.13 . Notices to Rating Agencies. T h e T L u s t e e
shall give immediate notice to Moody's in the event:
1. The TLustee or RemarKeLing Agent resigns or is
replaced.
2. The Indenture is amended or supplemented.
3. The Letter of Credit expires or is terminated.
4. All or a portion of the Bonds are converted from one
mode to another mode.
SECTION 11.14. Effective Date. Tnis Indenture shall
become effective upon its execution and delivery by the parries
hereof.
-72-
~r~rr~~Mr~rr srr •1 ..
~ ~ ~...,.,a,..
E.
IP WITNESS WHEREOF, the City has caused these presents to
be signed in its name and on its behalf ny its Mayor, and its corpo-
rate seal to be Hereunto a=fixed and attested by its City Clerk,
thereunto duly authorized, and to evidence its acceptance of the
t,.usts Hereby created, the Trustee has caused these presents to be
signed in its name and on its behalf by its duly authorized officers,
and its official seal to be hereunto affixed.
Mayor of the City of Tustin
ATTEST:
City Clerk of she City of
Tustin
ATTEST:
[Trustee]
[Trustee]
-73-
~'~
EXHIBIT A
EXHIBIT A
[FORM OF IMPROV~M~N'1' BOND]
A-1
_-~,
t
.~
C
:~
EXHIBIT B
[LANDOWNER ELECTION NOTICE]
The undersigned hereby cer~iries Lhat:
(1) He is the owner of the following real prop-
erty which is la:ated in Lhe City of Tustin Assessment
District No. 85-1:
[Description of real property]
(2) The absessment on such real property is
S
Pursuant to this notice the undersigned hereby elects to
convert the assessment on such real property to a Fixed Interest Rate
(as such term is defined in the Indenture of Trust dated as of
August 1, 1986 by and between Lhe City of Tustin and Citibank,
N. A. (the "Indenture") on , 19_; Provided, However,
that such conversion snail not occur unless the requirements of
Section 2.10(D) are met. Upon the requirements of Section 2.10(D)
Having been met, this notice shall be irrevocable.
[Name of Ownerl
gy.
[Tit.le]
B-1
C
$50,650,000
CITY OF TUSTIN
IMPROVEMENT BONDS
ASSESSMENT DISTRICT NO. 85-1
REMARKETING AGREEMENT
BETWEEN
THE CITY OF TUSTIN
AND
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Dated as of August 1, 1986
TABLE OF CONTENTS
SECTION
PAGE
Parties .................................................... 1
Recitals ................................................... 1
ARTICLE I
GENERAL
Section 1.1. Remarketing Agent ........................... 1
ARTICLE II
REMAR~:ETING AGENT
Section 2.1. Representations, Warranties and Covenants ... 2
Section 2.2. Duties and Obligations of Remarketing Agent 2
Section 2.3. Disclosure to Purchaser of Tendered Bonds
and Qualification of Bonds ................ 3
Section 2.4. Conditions to Remarketing Agents'
Obligation ................................ 4
Section 2.5. Remarketing Agent Books and Records ......... 4
Section 2.6. Events of Default ........................... 4
ARTICLE III
MISCELLANEOUS
Section 3.1. Remarketing Agent Not Acting as Underwriter 5
Section 3.2. Removal of Remarketing Agent ................ 5
Section 3.3. Resignation of a Remarketing Agent .......... 5
Section 3.4. Appointment of Successor Remarketing Agent .. 5
Section 3.5. Remarketing Agent Compensation .............. 5
Section 3.6. Remarketing by the Issuer ................... 5
Section 3.7. Amendments .................................. 5
Section 3.8. Governing Law ............................... 6
Section 3.9. Notices ..................................... 6
Section 3.10. Miscellaneous ............................... 6
Exhibit A Addresses for the Giving of Notice
i
REMARKETING AGREEMENT
THIS REMARKETING AGREEMENT, dated as of August 1,
1986, 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 Improvement Bonds Assessment District
No. 85-1 (the "Bonds") authorized pursuant to an Indenture
(the "Indenture") dated as of August 1, 1986 between the
Issuer and Citibank, N.A., as trustee (the "Trustee").
R E C I T A L S:
WHEREAS, the Issuer has issued
in order to better provide financing for
ments; and
WHEREAS, the Remarketing Agent
the duties and responsibilities as the R~
under the Indenture and this Remarketing
and sold the Bonds
certain improve-
has agreed to accept
'marketing Agent
Agreement;
NOW, THEREFORE, in consideration of the premises,
the Issuer and the Remarketing Agent do hereby covenant and
agree as follows:
All terms not otherwise defined herein shall have
their respective meanings as provided in the Indenture.
ARTICLE I
GENERAL
SECTION 1.1. Remarketing 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 addi-
tion, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Stone & Youngberg shall be appointed as co-remarketing agents
with respect to the remarketing of Bonds, from time to time,
upon each conversion of all or a portion of the Bonds to a
fixed interest rate in accordance with the terms of the In-
denture. The terms and conditions, and the representations
of the remarketing agents in connection with each such remar-
keting 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
Covenants. The Remarketing Agent hereunder represents, war-
rants and covenants as follows:
(a) Such firm is a member of the National Associa-
tion 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 securi-
ties laws, state Blue Sky laws (to the extent applica-
ble) 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
Rgent enforceable against the Remarketing Agent in ac-
cordance with its terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insol-
vency, 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 Remarket-
ing 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 Indenture
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.
2
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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 deter-
mine what disclosure documents, if any, are to be prepared in
connection with the remarketing of Bonds in the Demand Mode
tendered for purchase to the Trustee ("Tendered Bonds") and
Bonds in the Unit Pricing Mode tendered for repurchase to the
Trustee ("Repurchased Bonds"), and whether and to what extent
the remarketing of such Bonds in the manner contemplated
hereunder and under the Indenture requires registration under
the Securities Act of 1933 or other federal or state securi-
ties laws. If for whatever reason the Remarketing Agent
shall determine that it is unable to obtain the information
concerning the Owner, the Issuer, the Bank or other parties
or circumstances necessary to prepare appropriate disclo-
sures, if any, or if the Remarketing Agent shall be unable to
procure the necessary cooperation of the Issuer, the Owner or
the Bank in order to comply with applicable law, including
federal or state securities laws in connection with the mar-
keting of Tendered Bonds and Repurchased 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, Repur-
chased Bonds or funds for the purchase thereof to the appro-
priate 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 be-
lieves have such information that such information is re-
quired. In addition, if, at any time during the term of this
Agreement, any event known to the, Issuer relating to or af-
fecting the Issuer, the Indenture, the Reimbursement Agree-
ment, the Letter of Credit, the Bank, this Agreement or the
Bonds shall occur which might affect the correctness or com-
pleteness when made of any statement of a material fact con-
tained 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 Remar-
keting 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 jurisdictions as
the Remarketing Agent shall designate and shall use their
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 would
3
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subject it to general service of process in any jurisdiction
where it is not now so subject.
SECTION 2.4. Conditions to Remarketing Agents'
Obligations. Notwithstanding any provision of this Agreement
or the Indenture to the contrary, there shall be no duty of
the Remarketing Agent to remarket Tendered Bonds or Repur-
chased Bonds pursuant to this Agreement unless 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, and (ii) a
default in the due and punctual payment of principal or in-
terest 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 or Re-
purchased 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. Remarketing Agent 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 Owner, the Payinq 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. Remarketing 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 Ten-
dered Bonds and the Repurchased Bonds. The Remarketing Agent
is in no way obligated to advance its own funds to purchase
any Bonds.
4
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SECTION 3.2. Removal of Remarketing Agent. 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. Resignation of a Remarketing Agent.
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 Trus-
tee and the Paying Agent.
SECTION 3.4. Appointment of Successor Remarket-
ing Agent. If the Remarketing Agent shall resign pursuant to
Section 3.3, or be removed pursuant to Section 3.2, the Issu-
er shall appoint a successor Remarketing Agent in accordance
with the Indenture.
SECTION 3.5. Remarketing 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 quarterly fee
payable in arrears on the 1st business day of January, April,
July, and October commencing on January 2, 1987 of each year
equal to 1/32 of 1 percent 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 Re-
marketing Agent hereunder shall be limited to amounts on
deposit in the Reserve Earnings Fund and amounts received
from Assessment Installments as incidental expenses.
SECTION 3.6. Remarketing by the Issuer. The Issu-
er 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 execut-
ed by the parties hereto, so long as such amendment is not
inconsistent with the Indenture, without the consent of the
5
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Bondholders, unless such consent is required under ,the
Indenture.
SECTION 3.8. Governing 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 prepaid, to the re-
spective addresses set forth on Exhibit A hereto, or if ad-
dressed to any other party at such other address as such
party shall hereafter furnish to the parties hereto in writ-
ing. 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.
6
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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:
Mayor
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
Vice-President
Acknowledged and Agreed to:
STONE & YOUNGBERG
By:
Title:
7
,-.
EXHIBIT A
If to the Issuer: .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
If to the Owner: The Irvine Company
550 Newport Center Drive
Newport Beach, California 92660
Attn: Richard E. Moran, Jr.
Treasurer
with a copy to:
If to the Remarketing Agent: 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
C
CITY OF TUSTIN IMPROVEMENT BONDS
ASSESSMENT DISTRICT N0. 85-1
PURCHASE CONTRACT
August 1986
City Council
City of Tustin
300 Centennial Way
Tustin, California 92680
Dear Members of the City Council:
The undersigned, Merrill Lynch Capital Markets,
Group, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Stone & Youngberg (collectively, the "Underwriters"), offer
to enter into the following agreement with the City of Tustin
(the "City"), which, upon the City's acceptance of this of-
fer, will be binding upon the City and upon the Underwriters.
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
August 1986, and, if not so accepted, will be subject to
withdrawal by the Underwriters 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 Underwriters,
jointly and severally, hereby agree to purchase from the
City, and the City hereby agrees to sell and deliver to the
Underwriters, $50,650,000 aggregate principal amount of the
City of Tustin Improvement Bonds, Assessment District
No. 85-1 (the "Bonds"). The Bonds shall be dated and shall
mature as set forth in Schedule 1 hereto. The Bonds shall
initially bear interest at the Adjusted Interest Rate deter-
mined as set forth in the hereinafter defined Indenture. The
Adjusted Interest Rate for each Bond as of the date of sale
of the Bonds for the initial interest period, is also set
forth in Schedule 1 hereto. The purchase price for the Bonds
shall be 99.5% 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 August 1986 relating to the Bonds
_,~
C
(the "Official Statement") and shall be issued and secured
under the provisions of an Indenture (the "Indenture"), dated
as of August 1, 1986, 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. 85-1 (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 Munici-
pal 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. Underwriters, or either of them, including payment for
and acceptance of the Bonds, and delivery and execution of
any receipt for the Bonds and any other instruments in con-
nection with the Closing, shall be valid and sufficient for
all purposes and binding upon each of the Underwriters, pro-
vided that any such action shall not impose any obligation or
liability upon the Underwriters 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 Underwriters, and
to the obligations of the Underwriters to purchase, to accept
delivery of and to pay for the Bonds, that the entire
$50,650,000 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-
ers, at the Closing. The Underwriters agree 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 de-
scribed to be used by the Underwriters in connection with the
public offering and sale of the Bonds. The City has ratified
and confirmed the use by the Underwriters prior to the date
hereof of the Preliminary Official Statement relating to the
Bonds dated August 1986, in connection with the public
offering of the Bonds.
575560-024MS1/CONTRTUSTIN/6
08/14/86 2
7. The City represents and warrants to each of
the Underwriters that:
(a) The City is a general law city duly or-
ganized 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 (iii) to issue, sell and deliver the Bonds to
the Underwriters 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 In-
denture, the 1913 Act, the Bond Law and all other appli-
cable 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 au-
thorized and approved the Preliminary Official Statement
and the Official Statement, has duly authorized and
approved the execution and delivery of, and the perfor-
mance by the City of the obligations contained in the
Bonds, the Indenture and this Purchase Contract, and has
duly authorized and approved the performance of its
obligations contained in the Proceedings and the consum-
mation by it of all other transactions contemplated by
the Official Statement, including, without limitation,
the levy and collection of the Assessments and the As-
sessments constitute valid and binding liens on the
properties on which they have been levied;
(d) The execution and delivery of this Pur-
chase Contract, the Indenture, the Remarketing Agent
Agreement (as hereinafter defined) the Reimbursement
Agreement (as hereinafter defined) and the Bonds, the
adoption of the Proceedings relating to the issuance of
the Bonds, the levy and collection of the Assessment,
and the establishment of the District, and compliance
with the provisions of each thereof will not conflict
with or constitute a breach 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 instrument to which
the City is a party or is otherwise subject;
575560-024MS1/CONTRTUSTIN/6
08/14/86 3
C
(e) Promptly after the Official Statement is
available in final form, the City shall deliver or cause
to be delivered to the Underwriters two copies of the
Official Statement manually signed by the Mayor of the
City. The Underwriters 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 rea-
sonably 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 with respect to the information therein other than
the information therein under the captions "The Bank,"
"The Reimbursement Agreement," "The Letter of Credit,"
"The Remarketing Agreement" and "The Remarketing Agent"
does not and will not contain any untrue statement of a
material fact or omit to state a material 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 misleading;
(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 any way question or
affect this Purchase Contract or the transactions con-
templated by this Purchase Contract, the Official State-
ment, 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 Underwriters, as the Underwriters
may reasonably request, to qualify the Bonds for offer
and sale under the Blue Sky or other securities laws and
575560-024MS1/CONTRTUSTIN/6
08/14/86 4
C
regulations of such states and other jurisdictions of
the United States as the Underwriters 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 represen-
tation and warranty by the City to the Underwriters 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 each of the
Underwriters that it will advise the Underwriters promptly of
any proposal to amend or supplement the Official Statement or
any part thereof. If between the date of this Purchase Con-
tract 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 dis-
closed in the Official Statement, the City shall notify the
Underwriters; and if in the opinion of the Underwriters such
event requires a supplement or amendment to the Official
Statement, the City shall supplement or amend the Official
Statement in a form and in a manner approved by the Under-
writers and counsel to the Underwriters.
9. At 9:00 a.m., Los Angeles time, on August
_, 1986, or at such other time or on such other date as is
mutually agreed by the City and the Underwriters, the City
shall deliver the Bonds to the Underwriters in definitive
form, duly executed and authenticated, together with the
other documents hereinafter mentioned, and, subject to the
terms and conditions hereof, the Underwriters shall accept
such delivery and pay the purchase price of the Bonds as set
forth in paragraph 1 hereof 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 the offices of
Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, Califor-
nia, or such other place as shall have been mutually agreed
575560-024MS1/CONTRTUSTIN/6
08/14/86 5
~~ ;~.. w...~.._...
upon by the City and the Underwriters. 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 denominations
specified by the Underwriters at least two (2) business days
before the Closing for purposes of inspection and packaging;
provided, however, that the Underwriters shall not reject
delivery of the Bonds solely because the Bonds do not bear
CUSIP numbers.
10. The Underwriters have 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 Underwriters' obli-
gations 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 fol-
lowing conditions:
(a) The representations and warranties of the
City contained herein shall be true, complete and cor-
rect 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
but not limited to the Proceedings) shall be in full
force and effect, and shall not have been amended, modi-
fied 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 Underwriters;
(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 neces-
sary or appropriate in connection with the levying of
the Assessment, the formation of the District, or of the
issuance of the Bonds, and the transactions contemplated
hereby;
(d) The Underwriters shall have the right to
terminate the Underwriters' obligations under this Pur-
chase Contract to purchase, to accept delivery of and to
pay for the Bonds by notifying the City of their
575560-024MS1/CONTRTUSTIN/6
08/14/86 6
C
election to do so if, after the execution hereof and
prior to the Closing: (i) the marketability of the Bonds
or the market price thereof, in the opinion of the Un-
derwriters, 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 De-
partment 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 an-
nouncement by any member of the House Ways and Means
Committee, the Senate Finance Committee, or the Confer-
ence Committee with respect to contemplated legislation,
or by legislation enacted by, pending in, or favorably
reported to either the House of Representatives (other
than H.R. 3838 in the form adopted by the House of Rep-
resentatives on December 17, 1985) or the Senate of the
United States (other than H. R. 3838 in the form adopted
by the Senate on June 24, 1986), 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 Legislature 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 declaration 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 other-
wise, the effect of such outbreak, calamity or crisis
being such as, in the reasonable opinion of the Under-
writers, would affect materially. and adversely the abil-
ity of the Underwriters to market the Bonds (it being
agreed by the Underwriters that there is no outbreak,
calamity or crisis of such a character as of the date
hereof); (iii) there shall have occurred a general sus-
pension of trading on the New York Stock Exchange or the
declaration of a general banking moratorium by the Unit-
ed States, New York State or California State authori-
ties; (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 developments described in the Official State-
ment shall have been repudiated by the applicable devel-
oper, or any litigation or proceedings shall be pending
or threatened questioning proposed developments or
575560-024MS1/CONTRTUSTIN/6
08/14/86 7
_.
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 abil-
ity 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 Underwriters
requires a supplement or amendment to the Official
Statement, and such supplement or amendment is not pre-
pared by the City; and
(e) At or prior to the Closing, the Under-
writers shall have received each of the following
documents:
(1) The Official Statement, executed on
behalf of the City by its Mayor;
(2) An opinion of Bond Counsel, in the
form attached to the Official Statement;
(3) A supplemental opinion, dated the
date of the Closing and addressed to the Under-
writers, of Bond Counsel to the effect that (i)
this Purchase Contract, the Reimbursement Agreement
and the Remarketing Agreement have been duly au-
thorized, 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 enforce-
able in accordance with their respective terms,
except as such enforceability may be limited by the
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 ex-
empt from qualification under the Trust Indenture
Act of 1939, as amended; (iii) the Bonds conform as
to form and tenor to the description thereof con-
tained under the caption "The Bonds" in the Offi-
cial Statement, and the statements contained
therein under the captions "The Bonds"; "Summary of
Indenture"; "Introduction"; "Pending Federal Tax
Legislation"; and "Tax Exemption" insofar as such
statements purport to summarize certain provisions
of the 1913 Act, the Bond Law, the Bonds, the In-
denture, the Resolution of Intention, the Proceed-
ings present a fair and accurate summary of such
provisions; and, (iv) the information under the
caption "Pending Federal Tax Legislation" in the
575560-024MS1/CONTRTUSTIN/6
08/14/86 8
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Official Statement, as of the date of closing did
not contain any untrue statement of material fact
or omit to state any material fact necessary in
order to make the statements made therein, in the
light of the circumstances under which they were
made, not misleading;
(4) A certificate dated the date of the Clos-
ing, addressed to the Underwriters and signed by
the Mayor of the City and by the Finance Director
of the City to the effect that:
(i) The representations and warran-
ties 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;
(5) An opinion, dated the date of Closing and
addressed to the Underwriters, of James G. Rourke,
as City Attorney, that there is no action, suit,
proceeding or investigation before or by any court,
public board or body pending or, 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 col-
lection 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 princi-
pal 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
575560-024MS1/CONTRTUSTIN/6
08/14/86 9
C
question or affect this Purchase Contract or Con-
tract, the Official Statement or the documents
referred to in the Official Statement;
(6) A Certificate dated the date of
Closing, addressed to the Underwriters and signed
by Gary L. Vogt M.A.I., to the effect that the
Appraisal Report prepared by him with respect to
the property within the District fairly and accu-
rately 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 mate-
rially and adversely affect his conclusions in such
Appraisal Report.
(7) A Certificate dated the date of
Closing, addressed to the Underwriters and signed
by the "Engineer" named in the Resolution of Inten-
tion to the effect that the statements and informa-
tion in the Official Statement as set forth under
the caption "The District" and in Appendix A there-
to - "Assessment Diagram" and Appendix B thereto -
"Description of Work and Method of Assessment,"
fairly and accurately describe the matters intended
to be described therein.
(8) A Certificate dated the date of
closing, addressed to the Underwriters and signed
by an authorized officer of The Mitsubishi Trust
and Banking Corporation, Los Angeles Agency (the
"Bank"), to the effect that the information con-
tained in the Official Statement under the headings
"The Bank" and "The Letter of Credit" fairly and
accurately summarize the information purported to
be presented or summarized therein and that such
information is included in the Official Statement
with the consent of the Bank and that, in connec-
tion with his participation in the preparation of
the Official Statement, he has no reason to believe
that the information under the caption "The Bank"
in the Official Statement, as of the date of
Closing, contained any untrue statement of a
material fact or omitted to state any material fact
necessary in order to make the statements contained
therein, in the light of the circumstances under
which they were made, not misleading;
(9) An opinion, dated the date of Clos-
ing and addressed to the Underwriters, of Graham &
575560-024MS1/CONTRTUSTIN/6
08/14/86 10
~~,
James, counsel for the Bank, to the effect that (A)
the Bank is validly licensed to operate a non-
depositary agency under the laws of the State of
California, (B) the Bank has the power to execute
and deliver the Reimbursement Agreement (the "Reim-
bursement Agreement") and the Letter of Credit (the
"Letter of Credit") referred to in the Official
Statement, (C) the execution and delivery of the
Reimbursement Agreement and the issuance of the
Letter of Credit have been duly authorized by, and
the Reimbursement Agreement and Letter of Credit
have been duly executed and delivered by the Bank,
(D) the Reimbursement Agreement and the Letter of
Credit constitute the legal, valid and binding
obligations of the Bank enforceable against the
Bank in accordance with their respective terms,
except as such enforceability may be limited by
applicable insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar
proceedings of or affecting the Bank, and (D) the
Letter of Credit is not subject to the registration
requirements of the Securities Act of 1933, as
amended;
(10) An opinion, dated the date of Clos-
ing and addressed to the Underwriters, of Nagashima
& Ohno, counsel for the Bank, to the effect that
(A) the Bank has the power to execute and deliver
the Reimbursement Agreement and the Letter of Cred-
it, (B) the execution and delivery of the Reim-
bursement Agreement and the issuance of the Letter
of Credit have been duly authorized by the Bank,
(C) when executed and delivered for the Bank, the
Reimbursement Agreement and the Letter of Credit
will have been duly executed and delivered by the
Bank, (D) were the Reimbursement Agreement and the
Letter of Credit governed by the laws of Japan, the
Reimbursement Agreement and the Letter of Credit,
when duly executed and delivered by the Bank, would
constitute the legal, valid and binding obligations
of the Bank enforceable against it in accordance
with their respective terms except as such enforce-
ability may be limited by applicable insolvency,
reorganization, liquidation, moratorium, readjust-
ment of debt or other similar laws affecting the
enforcement of creditor's rights generally, as such
laws may be applied in the event of an insolvency,
reorganization, liquidation, moratorium, readjust-
ment of debt or other similar proceedings of or
affecting the Bank, (E) when duly executed and
delivered by the Bank, the Reimbursement Agreement
and the Letter of Credit (assuming that such
575560-024MS1/CONTRTUSTIN/6
08/14/8.6 11
a
instruments are legal, valid and binding under the
laws of the State of California to which they are
expressed to be subject and, to the extent they may
be applicable, under the laws of the United States)
shall constitute the legal, valid and binding obli-
gations of the Bank enforceable against it in ac-
cordance with their respective terms except as such
enforceability may be limited by applicable insol-
vency, reorganization, liquidation, moratorium,
readjustment of debt or other similar laws affect-
ing the enforcement of creditor's rights generally,
as such laws may be applied in the event of any
insolvency, reorganization, liquidation, moratori-
um, readjustment of debt or other similar proceed-
ings of or affecting the Bank; and (F) under
Japanese law, the obligations of the Bank under the
Reimbursement Agreement and the Letter of Credit
rank pari assu in priority of payment and in all
other respects with all other unsecured obligations
of said Bank subject only to mandatorily preferred
obligations under applicable law of which the only
material preferred obligations are its liability
for national and local taxes and said Bank's em-
ployees' rights for wages and other claims arising
from employment relations;
(11) Evidence satisfactory to the Under-
writers that the Bonds have been given the
"Aaa/VM1G 1" rating by Moody's Investors Service,
or the "NR/A-1+" rating by Standard & Poor's Corpo-
ration 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
Underwriters, as to such matters as the Underwrit-
ers shall reasonably request;
(13) A Certificate of The Irvine Company,
with respect to its ownership of land within the
District; and
(14) Such additional legal opinions,
certificates, instruments and documents as the
Underwriters may reasonably request to evidence the
truth and accuracy, as of the date hereof and as of
the date of the Closing, of the City's representa-
tions and warranties contained herein and of the
statements and information contained in the Offi-
cial Statement and the due performance or satisfac-
tion by the City on or prior to the date of the
575560-024MS1/CONTRTUSTIN/6
08/14/86 12
,3 ~.r ,x
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 pro-
vide the Proceedings relating to the authorization and issu-
ance of the Bonds and the establishment of the District and
the levying of the Assessment certified by authorized offi-
cers of the City under its seal as true copies and as having
been adopted or executed (as applicable), with only such
amendments, modifications or supplements as may have been
agreed to by the Underwriters.
All of the opinions, letters, certificates, instru-
ments 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 the Underwriters. Receipt of,
and payment for, the Bonds shall constitute evidence of the
satisfactory nature of such as to the Underwriters. The
performance of any and all obligations of the City hereunder
and the performance of any and all conditions contained here-
in for the benefit of the Underwriters may be waived by the
Underwriters in their sole discretion.
If the City shall be unable to satisfy the condi-
tions to the obligations of the Underwriters to purchase,
accept delivery of and pay for the Bonds contained in this
Purchase Contract, or if the obligations of the Underwriters
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 Underwriters nor the City shall be under further obliga-
tion hereunder, except that the respective obligations of the
City and the Underwriters set forth in paragraphs 11 and 13
hereof shall continue in full force and effect.
11. (a) The Underwriters shall be under no obliga-
tion to pay, and the City shall pay the following expenses
incident to the performance of the City's obligations hereun-
der: (i) the cost of the preparation and printing of the
Bonds Preliminary Official Statement and the Official State-
ment; (ii) the fees and disbursements of accountants, advis-
ers and of any other experts or consultants retained by the
City, including the fees and expenses of the Engineer respon-
sible for the preparation of the Report relating to the Dis-
trict, the Financial Consultants to the City and the
Appraiser.
(b) The Underwriters shall pay all expenses (in-
cluding out-of-pocket expenses and regulatory expenses in-
cluding, but not limited to, expenses related to the qualifi-
cation of the Bonds under any applicable blue sky laws)
575560-024MS1/CONTRTUSTIN/6
08/14/86 13
,~~'°
:a
incurred by them in connection with the public offering and
distribution of the Bonds, including the fees and disburse-
ments of counsel retained by them.
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 Underwriters 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 and to Stone & Youngberg, One
California Street, Suite 2800, San Francisco, California,
Attention: David Hartley.
13. This Purchase Contract is made solely for the
benefit of the City and the Underwriters (including their
successors and assigns), and no other person shall acquire or
have any right hereunder or by virtue hereof. All 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 Underwriters 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 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
STONE & YOUNGBERG
MERRILL LYNCH CAPITAL MARKETS
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By
Vice President
575560-024MS1/CONTRTUSTIN/6
08/14/86 14
,.f
STONE & YOUNGBERG
By
Accepted:
This day of ,
1986
CITY OF TUSTIN
By
Mayor
575560-024M51/CONTRTUSTIN/6
08/14/86 15
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CITY OF TUSTIN
as Account Party
and
THE MITSUBISHI TRUST AND BANKING CORPORATION,
LOS ANGELES AGENCY
as Issuing Bank
REIMBURSEMENT AGREEMENT
Dated as of August 1, 1986 -
U.S.$51,822,583
Relating to the $50,650,000 City of Tustin
Assessment District No. 85-1 Improvement Bonds
Draft No. 5
8/15/86
Graham & James
MTRS 2.101
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TABLE OF CONTENTS
Page No.
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS..... 2
Section l.l. Definitions .......................... 2
Section 1.2. Accounting Terms ..................... 6
ARTICLE II. ISSUANCE OF LETTER OF CREDIT AND
OTHER PAYMENTS ....................... 6
Section 2.1. Issuance of Letter of Credit......... 6
Section 2.2. Reimbursements and Other Payments.... 7
(a) Reimbursements .................. 7
(b) Advance Deposits for certain
Draws ............ .............. 8
(c) The Letter of Credit Fees....... 8
(d) Manner of Payments .............. 9
(e) Late Payments ................... 9
(f) Obligations Unconditional....... 9
(g) Waivers, Etc .................... 10
(h) Increased Costs ................. 11
Section 2.3. Certain Provisions with Respect
to Bank Bonds ....................... 12
(a) Purchase of Bonds ............... 12
(b) Interest and Discount........... 12
(c) Principal ....................... 13
(d) Prepayments ..................... 13
(e) Sale of Bank Bonds .. ........... 13
(f) Bank as Owner of Bonds.......... 13
(g) Custodial Arrangement........... 14
(h) Rate and Price Notification..... 14
(i) Penalties ....................... 14
(j) Remarketing of Bank Bonds...... 14
ARTICLE III. LETTER OF CREDIT OPERATIONS.......... 15
Section 3.1 Changes in Stated Amount of Letter
of Credit ............................ 15
Section 3.2. Separate Purchase Arrangement;
Usury ................................ 15
Section 3.3 Payment of Drawings on Letter
of Credit ............................ 15
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Page No.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES....... 16
Section 4.1 Representations and Warranties of
the City ............................. 16
(a) Existence ....................... 16
(b) Power and Authorization......... 16
(c) No Legal Bar .................... 16
(d) Consents ........................ 17
(e) Litigation ...................... 17
(f) Enforceability .................. 17
(g) Changes in Law .................. 17
(h) Disclosure of Information....... 17
(i) The Assessment District,
Liens and Installments.......... 18
ARTICLE V. COVENANTS ............................ 18
Section 5.1 Covenants of the City ................ 18
(a) Compliance with this Agreement
and the Other Financing
Documents......... .......... 18
(b) Laws, Permits and Obligations... 19
(c) Use of Proceeds ................. 19
(d) Maintenance of Existence........ 19
(e) Financial Statements............ 19
(f) Visitation and Examination...... 19
(g) Maintenance of Tax-Exempt
Status of the Bonds ............. 19
(h) Enforcement of Irvine
Company Agreements .............. 20
(i) Agreement to Market Fixed
Rate Bonds ......... ............ 20
(j) No Change in Financing
Documents.... .......... .....
~
~ 20
(k) Collection and
Payment of
Assessments .................... 20
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Page No.
ARTICLE VI. CONDITIONS TO ISSOANCE OF LETTER
OF CREDIT ............................ 20
Section 6.1 Conditions To Issuance and Delivery
of Letter of Credit .................. 20
(a) The Financing Documents......... 21
(b) The Indenture ................... 21
(c) City Proceedings, etc........... 21
(d) Certificate .... ................ 21
(e) City's Attorney's Legal
Opinion ............... ......... 22
(f) Bond Counsel's Legal Opinion..... 22
(g) The Irvine Company Counsel's
Legal Opinion .................. 22
(h) Representation and Warranties
True; No Default ................ 22
(i) Other Requirements .............. 22
(j) Restrictive Covenants.......... 22
ARTICLE VII. EVENTS OF DEFAULT .................... 23
Section 7.1. Def inition of Events ................. 23
Section 7.2. Not ice of Events ..................... 24
ARTICLE VIII. irlISCELLANEOOS ........................ 24
Section 8.1 No Waiver; Modifications in Writing.. 24
Section 8.2. Payment on Non-Business Days......... 25
Section 8.3. Further Assurances ................... 25
Section 8.4. Survival of Representations and
Warranties ........................... 25
Section 8.5. Notices, etc ......................... 25
Section 8.6. Costs, Expenses and Taxes............ 26
Section 8.7. Execution in Counterparts............ 27
Section 8.8. Binding Effect; Assignment........... 27
Section 8.9. Governing Law ........................ 27
Section 8.10. Severability of Provisions........... 27
Section 8.11. Headings ............................. 28
Section 8.12. Right of Setoff ...................... 28
Section 8.13. Actions Relating to the Financing
Documents; Indemnity ................. 28
Section 8.14. Limited Liability of City............ 31
Section 8.15. Security ............................. 32
Section 8.16. Successor Trustee .................... 32
Section 8.17. Extension of Term .................... 32
Section 8.18 Right to Submit Bid ........ ........ 32
Section 8.19 Rights and Remedies Cumulative...... 33
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REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of August 1,
1986, is made by the City of Tustin, California (the "City"),
in favor of The Mitsubishi Trust and Banking Corporation, Los
Angeles Agency (the "Bank").
R E C I T A L S:
WHEREAS, to obtain funds for the construction and
acquisition of certain public improvements in the City of
Tustin Assessment District No. 85-1 (which improvements and
assessment district are described in Resolution No. 86-93
adopted by the City Council of the City on July 21, 1986 (the
"Resolution")), to meet debt service for construction of
those improvements, the City proposes to issue and sell not
to exceed U.S.$50,650,000 aggregate principal amount of its
Assessment District No. 85-1 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:
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ARTICLE I.
DEFINITIONS AND ACCOUNTING TERIrI.S
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 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 owned by the Bank
acquire~c 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
and (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 Bon s 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, (i) 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
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amount of accrued interest (without regard to the Bank
Interest Rate) on the Bonds to the Hank 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 sixty (60) days that a Bond is a Bank
Bond the Bond shall bear interest at a rate per annum
equal to the Federal Funds Rate for such day plus three-
eighths of one percent (3/8$);
(2) with respect to Put Bonds,
otherwise provided in clauses (3) and (4)
each day following the 60-day period prow
above that a Bond is a Bank Bond the Bond
interest at a rate per annum equal to the
such day;
except as
below, for
ided in (1)
shall bear
Prime Rate for
(3) except as otherwise provided in clause
(4) below, for each day that any sum due to the Bank on
any Bank Hond remains unpaid, such Bond shall bear
interest at a rate per annum 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 index 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 Trustee.
"Bonds" shall mean the City of Tustin Assessment
District No. 85-1 Improvement Bonds in the aggregate
principal amount of $50,650,000 issued by the City pursuant
to the Indenture, other than Fixed Interest Rate Bonds.
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"City Attorney" shall mean James G. Rourke or any
successor to the position of City Attorney to the City.
"Effective Date" shall mean the date on which the Letter
of Cre it is issued by the Bank.
"Event of Default" shall have the meaning set forth in
Section 7.1 hereof.
"Federal Funds Rate" shall mean, for any day to the
next succeding Business Day, the average daily rate charged
to the Bank for such day to the next succeding Business Day
on overnight federal funds transactions with member banks of
the Federal Reserve System arranged by federal funds brokers,
as determined by the Bank; or if the Bank shall not have
engaged in such a transaction on a particular day, then the
average overnight federal funds rate published by the Federal
Reserve Bank of New York for such day.
"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).
"Indenture" shall mean that certain Trust Indenture
relating to the Bonds, dated as of August 1, 1986, 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 Com an A reements" shall mean that certain
Agreement or Payment of Costs for Infrastructure
Improvements East Tustin Assessment District 85-1
dated made and entered into between the City
and The Irvine Company, as the same may be amended or
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supplemented or extended from time to time (the "Costs
Agreement") and the Protocol Agreement, dated ,
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
rate announced publicly
Los Angeles Agency offi~
change on and as of the
"prime rate".
mean, for any day, the fluctuating
by the Bank from time to time at its
ce as its "prime rate", said rate to
date of any change in the announced
"Princi al Draw" shall mean any payment by the Bank with
respect to a raw ni g by the Trustee under the Letter of
Credit other than an Interest Draw or an Unpaid Drawing.
"Purchase Contract" shall mean the agreement between the
City and Merrill Lynch, Pierce Fenner & Smith Incorporated
and Stone & Youngberg, relating to the purchase and sale of
the City of Tustin Assessment District No. 85-1 Improvement
Bonds upon issuance thereof.
"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.
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"Reimbursement Account" shall mean the Bank's account
with Security Paci is National Bank in Los Angeles,
California or such other account as may be designated by the
Agent in writing to the City and the Trustee.
"Stated Amount" shall mean the maximum aggregate amount
available to be alrawn under the Letter of Credit, which
initially shall be $51,822,583, as from time to time
decreased and/or increased in accordance with the terms of
this Agreement and the Letter of Credit.
"Termination Date" shall mean the tenth (10th)
anniversary date of the issuance of the Letter of Credit, as
such date may be extended pursuant to an amendment to the
Letter of Credit, or any earlier date on which the Letter of
Credit shall terminate, expire or be cancelled.
"Unpaid Put Bond Drawings" 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 to the extent not reimbursed by the City pursuant to
the terms of this Agreement.
Section 1.2. Accounting Terms. All 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
$51,582,583, 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
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exceed $666,083 available for 40 days interest accrued on the
Bonds at an annual interest rate equal to the lesser of 12$
or the Maximum Rate at or before the Termination Date, and
(3) an amount not to exceed $506,500, available for payment
of premium upon redemption or purchase of the Bonds. The
Letter of Credit shall be issued for a term expiring on the
tenth (10th) anniversary date of the Effective Date, subject
to extension or earlier cancellation or termination as
provided in this Agreement, the Indenture and/or 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
August 22, 1986.
Section 2.2. Reimbursements and Other Payments.
(a) Reimbursements. Except as otherwise provided
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 for each other payment
(other than an Unpaid Put Bond Drawing) under the Letter of
Credit no later than the close of business of the banking
office where the Reimbursement Account is then maintained, on
the day such Interest Draw, Principal Draw or other payment
(other than an Unpaid Put Bond Drawing) is honored. The City
shall reimburse the Bank for each Unpaid Put Hond Drawing 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 Termination Date. The Bank shall be the Owner of each
Bond purchased or paid with moneys drawn under the Letter of
Credit. Whenever, pursuant to an Interest Drawing, the Bank
pays interest on Bonds not owned by it, 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 the Hank
is the owner of Bonds 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 notwithstanding any provision in the
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Indenture to the contrary. Except as otherwise provided 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.
(c) The Letter of Credit Fees. Except as
otherwise provi ed 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 (i) at the rate of three-tenths of one percent
(.3$) per annum during the first five years after the
Effective Date, (ii) at the rate of four-tenths of one
percent (.4$) per annum during the second five-year period _
following the Effective Date to August 21, 1996, and (iii)
thereafter on each January 1, April 1, July 1, and October 1
to the Termination Date at the rate agreed by the parties
upon any 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) (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
October 1, 1986 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
Termination Date), the actual Letter of Credit Fee for the
payment period ending on such date shall be calculated and
(i) if the amount paid for such payment period exceeded the
actual Letter of Credit Fee payable, the excess (at the
direction of the Bank) shall be repaid to the City by the
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Bank or 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 (at the direction of the Bank) shall
be paid by the City to the Bank or added to the Letter of
Credit Fee payable for the next payment period. Except as
otherwise provided in Section 8.14 hereof, the City shall, in
addition to the Letter of Credit Fee, pay to the Bank for its
own account within two (2) Business Days following each
drawing on the Letter of Credit a fee of $250 for each such
drawing. In addition, the City shall pay to the Bank (i) a
fee of $10,000 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 Interest 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.
(d) Manner of Payments. All payments to be made
by or on behalf of 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
considered made until received, in U.S. dollars in the
Reimbursement Account in immediately available funds. All
such payments shall be made to the Bank not later than the
close of business of the banking office where the Reimburse-
ment Account is then maintained, on the date due.
(e) Late Payments. Except as otherwise provided
in Section 8.14 hereof, for each day that any sum due 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) Obligations Unconditional. Except as
otherwise provided in Section 8.14 hereof, the City's
obligation to reimburse the Bank for each payment made under
the Letter of Credit honoring any drawing made by the Trustee
thereon and all of its other obligations under this
Agreement, except as provided in this paragraph, shall be
absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to
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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 failure of any drawing on the Letter of Credit by the
Trustee to conform to the terms of the Letter of Credit or
based on invalidity, inaccuracy, 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 drawing on the Letter of Credit was made by the
Trustee or any non-application or misapplication by the
Trustee of the proceeds of such drawing, 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 non-
perfection of any collateral securing the Bonds or the
obligations of the City hereunder or any expiration of the
Letter of Credit; provided, however, 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. To the full extent permitted by
law: (i) the City here y waives (a) presentment, demand,
notice of demand, protest, notice of protest, notice of
dishonor and notice of non-payment; (b) except as provided in
and subject to the Indenture, the right, if any, to the
benefit of, or to direct application of, any security
hypothecated to the Bank until all obligations of the City to
the Hank 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
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understood that this clause (ii) does not confer upon the
Bank any right or remedy it would not have otherwise); and
(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. Except as otherwise provided
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 the
letter of credit issued or participated in by, or assets held
by, or deposits in or for the account of the Bank or any
Participant, (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 or (iii) subject the Bank or any
Participant to any tax, charge, fee, deduction or any
withholding of any kind whatsoever, and the result of any
event referred to in clause (i), (ii) or (iii) above shall be
to increase the cost to the Bank or any Participant of
issuing, participating in or maintaining the Letter of Credit
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 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
as to such increased costs incurred or reduced receipts
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suffered by any of them as a result of any event mentioned in
clause (i), (ii) or (iii) 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 and
each Participant shall exercise reasonable efforts to
minimize such increased costs or reduced receipts. The
participation 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
pro iv sions of this Agreement and to these provisions:
(a) Purchase of Bonds. The Bank will purchase
with funds drawn under the Letter of Credit, on the terms and
conditions contained in this Agreement and the Indenture, 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.
(b) Interest and Discount. 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. The Bank
Interest Rate shall be computed on the basis of a 360-day
year and actual days elapsed. Interest received by the Bank
on any Bank Bond with respect to which there has been an
Interest Draw shall be credited against the City's
obligations to the extent of such Interest Draw under Section
2.2. In addition, the Bank shall be entitled to discount
with respect to its purchase of Put Bonds as provided in
Sections 4.08(D) and of the Indenture.
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Interest and discount 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 shall be due and payable
on the date an Interest Drawing is honored by the Bank, and
the City, in accordance with the Indenture, will immediately
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. No discount shall be paid on Bank
Bonds which are not Put Bonds.
(c) Principal. All 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, as owner of such Bonds, the
principal amount of such Bonds plus interest and penalties,
if any, accrued to the date of payment as such Bonds. All
such payments received by the Bank with respect to which
there has been a Principal Draw shall be credited against the _
City's obligations to the extent of such Principal Draw under
Section 2.2. On the fifth anniversary of the Termination
Date the full principal amount of all Put Bonds then held by
the Bank plus accrued and unpaid interest thereon to the date
of payment shall be due and payable.
(d) Prepayments. The City in accordance with the
Indenture may prepay without premium or penalty any Bank Bond
at any time. Principal 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 o 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 as Owner of Bonds. Upon its purchase of
any Bond pursuant hereto, an for so long as it shall
continue to hold such Bond, the Bank shall be the owner of
such Bond for all purposes.
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(g) Custodial Arrangement. The Bank shall be
entitled to make any custodial arrangement at any time with
respect to Bank Bonds.
(h) Rate and Price Notification. By 1:00 p.m. New
York City time on any ay 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 Hank 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. Except as otherwise provided in
Section 8.14, with respect to unreimbursed Principal Drawings
(other than Unpaid Put Hond Drawings), unreimbursed Interest
Drawings, 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, the Bank shall be entitled to a
penalty in-an amount equal to the Base-Rate minus the lesser
of the Base Rate and the Maximum Rate on all amounts which
are not paid to the Bank on the date such amounts are due 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) Remarketing 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 in
the Reimbursement Account, 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, Hank Bonds shall not be subject
to remarketing on or after a Bank Purchase Date and prior to
cure of the default which resulted in a Bank Purchase Date,
unless otherwise agreed in writing by the Bank.
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ARTICLE III.
LETTER OF CREDIT OPERATIONS
Section 3.1. Changes in Stated Amount of Letter of
Credit. The Stated Amount of the Letter o Credit shall be
e~ creased and increased as provided in the Letter of
Credit. In no event shall any such increase cause the sum of
(i) Unpaid Put Bond Drawings (ii) unreimbursed Principal
Draws, (iii} 40 days interest on outstanding Bonds other than
Bank Bonds and Fixed Rate Bonds at a rate per annum equal to
the lesser of 12~ or the Maximum Rate, and (iv) the principal
amount of Outstanding Bonds other than Bank Bonds and Fixed
Rate Bonds, to exceed $51,822,583.
Section 3.2. Separate Purchase Arrangement; Usury.
The Hank shall have the option -in lieu o purchasing any
Bonds hereunder, to arrange to loan the purchase price of
such Bonds to a third party which shall purchase, hold and
tender such Bonds as Hank 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 the
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 Paying Agent of (a) such
purchase, (b) the identity of the Bonds so purchased, and
(c) the identity of the third party purchasing the Bonds.
Section 3.3. Payment of Drawin s on Letter of
Credit. The Bank agrees that (a) drawings on the Letter of
Cre it 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.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the
C~it~ 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 an 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 Legal 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
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, which default, violation or conflict
could materially adversely affect the transactions
contemplated in this Agreement, the Indenture and each of the
other Financing Documents.
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(d) Consents. The City has obtained all consents,
permits, licenses and approvals of, and has made all
registrations and declarations with, governmental authorities
required under law to authorize the sale and issuance of the
Bonds and the execution, delivery and performance by the City
of this Agreement and the Indenture.
(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,
investigation or proceeding to which the City is a party and
which is pending or, to the best knowledge of the City,
threatened 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 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) Changes in Law. There is not pending any
change of law which, if enacted or adopted, could have an
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 containe in any O ficial Statement
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
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correct and does not contain an untrue statement of a
material-fact or omit to state a material fact necessary to
make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
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.
(i) The Assessment District, Liens and
Installments. Assessment District No. 85-1 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. 85-1, 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
Installments (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.
Each representation and warranty on the part of the City
contained in any Financing Document shall be deemed to be
reaffirmed by the City on each drawing on the Letter of
Credit.
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 Hank shall have any liability under or in
respect of the Letter of Credit:
(a) Com liance with this A reement and the Other
Financing Documents. The City will observe an perform each
term, covenant, condition and agreement on its part to be
performed or observed under this Agreement and/or the other
Financing Documents.
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sal!'',
(b) Laws, Permits and Obligations. The City will
comply with all valid acts, rules, regulations, orders and
directions of any legislative, executive, administrative or
judicial body applicable to 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 each of the Assessment
Fund, Reserve Fund, Construction Fund, Principal Fund,
Interest Fund, Fixed Rate Reserve Fund, Interest Reserve
Fund, Reserve Earnings Fund, Purchase Fund and Redemption
Fund.
(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 of the City Council, and make
copies thereof or extracts therefrom, and to discuss the
affairs, finances and accounts of the City with its principal
officials, all at such reasonable times and as often as the
Bank may reasonably request, to the extent such information
and material relate to the transactions contemplated by the
Financing Documents.
(g) Maintenance of Tax-Exempt Status of the
Bonds. The City will not take any action or omit to take any
a tc ion which, if taken or omitted, would adversely affect the
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exemption of interest on the Bonds from federal income
taxation or from State of California personal income taxes.
(h) Enforcement of Irvine Company 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 and Stone & Youngberg 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 Change in Financing Documents. The City
shall not cancel, terminate, amend, supplement, modify or
waive any of the provisions of the Indenture or, if material
to the Bank, 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 and pay 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 Deliver of
Letter of Credit. The obligation of the Bank to issue an
deliver the Letter of Credit to the Trustee shall be subject
to the fulfillment, at or before the issuance of the Letter
of Credit, of each of the following conditions:
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(a) The Financin Documents. The Financing
Documents shall have been my 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) The Indenture. The Indenture shall have been
duly authorized, executed and delivered by the City and the
Trustee and shall be in full force and effect on and as of
the Effective Date.
(c) Cit Proceedings, etc. The Bank shall have
received a certi ied copy o~ 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 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. -
(d) 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) through (c) of this Section 6.1, and to the
further effect that (i) the City has obtained all consents,
permits, licenses and approvals of, and has made all
registrations and declarations with, governmental authorities
required under law to authorize the issuance and sale of the
Bonds and the execution, delivery and performance by the City
of .this Agreement; (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, investigation or proceeding to which the City
is a party and which is pending or, to the best knowledge of
the City, threatened (A) in connection with any of the
transactions contemplated by the Indenture or this Agreement
or (B) 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.
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(e) City Attorney's Legal Opinion. The Bank shall
have received an opinion of the City Attorney dated the
Effective Date in form and substance satisfactory to the
Hank.
(f) Bond Counsel's Legal Opinion. The Bank shall
have received an opinion of Bond Counsel dated the Effective
Date in form and substance satisfactory to the Bank.
(g) The Irvine Company Counsel's Legal Opinion.
The Bank shall have received an opinion of counsel to The
Irvine Company dated the Effective Date in form and substance
satisfactory to the Bank.
(h) 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
later be determined not to have been satisfied on the
Effective Date.
(i) 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.
(j) Restrictive Covenants. The Bank shall have
received evidence sates actory to it that the City shall have
recorded a notice and valid and enforceable restrictive
covenants, in form and substance reasonably satisfactory to
the Bank, with the Orange County Recorder, to the effect that
no residential property within Assessment District No. 85-1
may be conveyed to a residential user, including a lessor,
thereof while an Assessment on such property secures payment
of any Bond covered by the Letter of Credit.
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ARTICLE VII.
EVENTS OF DEFAIILT
Section 7.1. Definition of Events. 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
any of the Financing Documents; or
(b) default in the payment when due of principal
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 drawing 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) an "Event of Default" under Section 7.01(a),
(b) or (d) of the Indenture (as such term is defined in the
Indenture) shall have occurred and be continuing, except to
the extent that such "Event of Default" is solely
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attributable to the wrongful failure by the Bank to honor a
conforming drawing made by the Trustee under the Letter of
Credit (for the purpose of this provision the Indenture shall
be deemed to continue in full force and effect
notwithstanding any earlier termination thereof so long as
any obligation of the City under this Agreement shall remain
unpaid);
then, in any such event, the Bank may, at the same or
different times, so long as such Event of Default is
continuing, (i) at the sole option of the Bank solely with
respect to an Event of Default pursuant to Section 7.1(d)
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.
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.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. No Waiver; Modifications in Writing. 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
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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. Payment on Non-Business Days. Unless
otherwise provided herein, whenever any payment shall be
stated to be due on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation and payment of the amount due.
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 Re resentations and
Warranties. All representations an 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. All 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 telecopier, telex, TWX or telegram (with messenger
delivery specified in the case of a telegram) and shall be
deemed to be given for purposes of this Agreement on the day
that such writing is delivered to the intended recipient
thereof in accordance 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
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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 Mitsubishi Trust and Banking Corporation
Los Angeles Agency
911 Wilshire Boulevard
Los Angeles, California 90017
Attention: Manager, Finance and Investment
Tel. No. (213) 488-9003
Telex No. 677187
Telecopier No.-(213) 687-4631 -
With a copy to:
Graham & James
725 South Figueroa St.
34th Floor
Los Angeles, California 90017
Attention: MTRS 2.101
Tel. No. (213) 624-2500
Telecopier No. (213) 622-8221 (Rapicom 6100)
Telex No. 69-1383
If to the Trustee:
Citibank N.A.
120 Wall Street
New York, New York 10043
Attention:
Tel. No. ( )
Telex No. ( )
Telecopier No.
Section 8.6. Costs, Expenses and Taxes. Except as
otherwise provided in Section 8.14, the City agrees to pay
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all costs and expenses of the Bank not to exceed $25,000 in
connection with the negotiation, preparation, execution,
delivery, administration and enforcement of this Agreement
and any amendments or modifications hereof (or supplements
hereto), including the fees and out-of-pocket expenses of
Graham & James, counsel to the Bank, or such other counsel
may be appointed by the Bank, and independent public
accountants and other outside experts retained by the Bank
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.
as
in
Section 8.7. Execution in Counter arts. This
Agreement may be execute 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. Bindin Effect; Assi nment. This
Agreement shall be bin ing 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. Governin Law. This Agreement shall be
deemed to be a contract ma a 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. Severabilit of Provisions. Any provision
of this Agreement which is prohibite or unen orceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
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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.
Section 8.11. Headings. 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 to the fullest extent
permitted by law; provided, however, that the Bank hereby
irrevocably waives such right of setoff or banker's lien in
order to appropriate and apply to the payment of Unpaid Put
Bond Drawings, Principal Draws, Interest Draws and interest
thereon any balances, credits, deposits, accounts or moneys
of the City at any time with the Bank when and if there shall
be a drawing under the Letter of Credit during the pendency
of any proceedings by or against the City,. seeking relief in -
respect of the City under the Bankruptcy Law; provided
further, however, that the Bank may exercise such right of
setoff or banker's lien if (a) it is determined by a court of
competent jurisdiction that such exercise would not lead to
the Bank being released, prevented or restrained from or
delayed in fulfilling its obligations under the Letter of
Credit, and (b) the exercise or existence of such right of
setoff or banker's lien would not constitute any payment
(including pursuant to the Letter of Credit) to holders of
the Bonds in respect of amounts payable thereunder a voidable
preference payment under the Bankruptcy Law.
Section 8.13. Actions Relating to the Financing
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
Hank shall be protected in relying upon a duly executed
instrument of transfer in the form attached as Annex 5 to the
Letter of Credit.
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(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 and 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 in connection therewith,
(iv) failure of the Trustee to comply with the terms of the
Letter 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, and (viii) for any other
consequences arising from causes beyond the Hank'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 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,
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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; provide 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 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 Hank's wilful
or grossly negligent failure to pay under the Letter of
Credit after the presentation to it by the Trustee of a
demand strictly complying with the terms and conditions of
the Letter of Credit. Nothing in this Section is intended to
limit the obligations 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 of them 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 Section 8.14 hereof, the City
agrees to indemnify 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
-30-
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 and in conformity with information furnished in writing
to the City by the Banks. 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 Termination Date. If indemnification pursuant to
this Section 8.13(f) shall be found to be unlawful or invalid
for any reason, then the City and each Indemnitee shall make
contributions in payment of any liabilities incurred pursuant _
to the above-referenced issuance, sale and distributions and
statements or omissions in accordance with the respective
fault of the City and each Indemnitee.
Section 8.14. Limited Liability of City. All amounts
payable under this Agreement shall be payable only from the
proceeds from the sale of the Bonds, the Assessment
Installments collected by or for the City pursuant to the
Indenture, either as due or by collection by foreclosure of
the delinquency, 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 a
result of a default in the payment of an Assessment
Installment, 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.
-31-
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 o 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 Agent 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 be ore 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
Termination 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
any other terms to extend the term of this Agreement and the
Termination 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 4.01 or 4.02 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.
-32-
<A°"",
1"'"""~*
Section 8.19. Rights and Remedies Cumulative. All
rights and remedies of the Bank under this Agreement are in
addition to all rights and remedies of the Bank as an owner
of Bonds and under the Indenture.
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
Mayor
ATTEST:
City Clerk of the City of Tustin
THE MITSUBISHI TRUST AND
BANKING CORPORATION,
LOS ANGELES AGENCY
By
64/JAC/586
-33-
Appendix "A" Calculation Pursuant to Clause (b)
of Definition of "Bank Purchase Price"
Exhibit "A" Form of Irrevocable Letter of Credit
-iv-
~""""~~
APPENDIX A
Calculation Pursuant to Clause (b) of
Definition o "Bank Purchase Price"
Amount under Clause (b) 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 Hank 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) _ $1,001,333.66667
B = ($1,001,000) +
($1,001,000 x 1/360 x .14) _ $1,001,389.27778
C = ($1,001,000) x
($1,001,333.66667/$1,001,389.27778) _ $1,000,944.41
~.
Exhibit A
IRREVOCABLE LETTER OF CREDIT
The Mitsubishi Trust and
Banking Corporation,
Los Angeles Agency
911 Wilshire Boulevard
Suite 1650
Los Angeles, California 90017
Irrevocable Letter of
Credit No.
Citibank N.A.
as Trustee under the
dated as of August 1,
Tustin, California
Ladies and Gentlemen:
August 21, 1986
Trust Indenture
1986 by the City of
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 Trust Indenture (the
"Indenture") By and Between Citibank N.A. and the City of
Tustin, California dated as of August 1, 1986 relating to
$50,650,000 City of Tustin Assessment District No. 85-1
Improvement Bonds (the "Bonds") this irrevocable letter of
credit in the initial aggregate amount of Fifty One Million
Eight Hundred Twenty-Two Thousand Five Hundred Eighty-Three
United States Dollars (U.S.$51,822,583) (the "Stated
Amount"), of which $50,650,000 (the "Principal Portion") is
available with respect to principal of, $666,083 (the
"Interest Portion") is available with respect to interest on,
and $506,500 (the "Premium Portion") is available with
respect to premium on, the Bonds. The Stated Amount
available to be drawn hereunder, and each of the Principal
Portion, Interest Portion and Premium Portion, are subject to
reduction and reinstatement as provided below.
Draft No. 5
8/15/86
Graham & James
MTRS 2.101
Citibank N.A.
_, 1986
Page 2
This Letter of Credit is established pursuant to a
Reimbursement Agreement (the "Agreement") dated as of
August 1, 1986 by and between the City and us. Unless
otherwise provided or defined herein or the context otherwise
requires, capitalized terms used in this Letter of Credit
shall have the meaning set forth in the Agreement or the
Indenture.
Funds shall be available hereunder to make any payment
to the owners of outstanding Bonds with respect to
(i) interest on Bonds, other than Hank Bonds and Fixed Rate
Bonds, accrued during each calendar month to a maximum amount
calculated as forty (40) days interest at the lesser of
twelve percent (12$) per annum or the Maximum Rate on the
then-outstanding Bonds other than Bank Bonds and Fixed Rate
Bonds, upon one or more telecopy, telegraphic or telex
demands by you in the form of Annex 1 hereto on the first
Business Day of each calendar month; (ii) 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(8) (to the extent
a drawing hereunder is required by Section 4.06(C)) of the
Indenture upon presentation of one or more telecopy, telex or
telegraphic demands by you in the form of Annex 2 hereto;
(iii) 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 or the principal amount of
the purchase or acquisition price of the Bonds purchased or
acquired pursuant to Sections 2.03, 3.01(A), 3.01(C), 3.02 or
3.03 (to the extent a drawing is required pursuant to Section
4.06(8)) of the Indenture upon presentation of one or more
telecopy, telegraphic 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), 3.02 or 3.03 or purchased pursuant to
Section 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(8) or 4.06(C) of the
Indenture upon presentation of one or more telecopy,
telegraphic or telex demands by you in the form of Annex 4
hereto, all of the foregoing Annexes to be completed and in
compliance with the instructions in brackets in each
respective Annex. Each presentation shall be made at the
office of The Mitsubishi Trust and Banking Corporation, Los
Draft No. 5
8/15/86
Graham & James
MTRS 2.101
.,,,
',,,~
~..J
Citibank N.A.
_, 1986
Page 3
Angeles Agency, presently located at 911 Wilshire Boulevard,
Suite 1650, Los Angeles, California, 90017.
Each such presentation must be made on or before the
close of business on a Business Day prior to the expiration
or termination of this Letter of Credit. This Letter of
Credit shall expire at the close of business of the Los
Angeles Agency of the Bank on August 21, 1996, and shall
terminate on the earliest of (a) the date on which the
Trustee certifies to us that all Outstanding Bonds (other
than Bonds owned by the Bank and Fixed Rate Bonds) have been
paid or will be paid with funds deposited with the Trustee,
(b) the date on which the Trustee certifies to us that it has
received an Alternate Letter of Credit meeting the
requirements of the Indenture, (c) at the sole option of the
Bank, 40 days after the Hank gives notice to the Trustee that
the Bank intends to terminate the Letter of Credit because
funds in the Remarketing Cost Account are equal to or less
than 10.96 percent of the Remarketing Cost Account _
Requirement and the Bank has not otherwise received adequate
assurance that sufficient funds will be available for payment
of discount, or (d) at the sole option of the Bank, 40 days
after the Bank gives notice to the Trustee that there has
been an event of default pursuant to Section 7.1(d) 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 after a Bank Purchase Date
the notice referred to in (d) above shall take effect
immediately. For purposes of this paragraph, notices by the
Bank to the Trustee shall be given and received in the manner
set forth in Section 8.5 of the Reimbursement Agreement.
The amount of each telecopy, telex or telegraphic demand
honored hereunder will be the amount inserted in numbered
paragraph (3) of said telecopy, telex or telegraphic demand
presented hereunder.
We hereby agree with you that each telecopy, telex or
telegraphic demand presented hereunder in the form of Annex
1, Annex 2, Annex 3 or Annex 4 hereto in full compliance 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 on the day such demand is presented as aforesaid
if such presentation is made at or before 10:00 a.m. Los
Angeles time or (b) no later than 12:00 noon Los Angeles time
on the Business Day next succeeding the day such demand is
Draft No. 5
8/15/86
Graham b James
MTRS 2.101
:.~.
.,
Citibank N.A.
_, 1986
Page 4
presented as aforesaid, if such presentation is made after
10:00 a.m. Los Angeles time. You shall give telephonic
notice to us no later than one-half hour prior to the
deadlines set forth above for presenting telecopy, telex or
telegraphic 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.
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 lesser of twelve percent
(12g) per annum and the Maximum Rate in effect from time to
time. The Premium Portion shall be calculated to equal one
percent (1$) of the Principal Portion in effect from time to
time.
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. 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 proportionately. Upon any
remarketing of Hank Bonds by the Remarketing Agent pursuant
to Section 4.04(F) of the Indenture and receipt by us of the
full purchase price thereof, 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 2 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 increased upon, and to the extent of, our being reimbursed
for that payment; in any event, the Interest Portion shall be
reinstated automatically and irrevocably by the amount of
that payment on the close of business on the date of such
payment. The Interest Portion shall be decreased
proportionately upon any decrease in the Maximum Rate.
Draft No. 5
8/15/86
Graham & James
MTRS 2.101
~.,«,
,:
Citibank N.A.
_, 1986
Page 5
The Premium Portion shall be decreased upon, and to the
extent of, each payment hereunder with respect to premium
pursuant to a demand in the form of Annex 4 hereto.
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 telex or telecopier, but no
failure to confirm an increase or decrease shall affect the
validity of such change.
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.
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 compliance with the
terms and conditions of the Indenture governing such
transfer. Transfers may be effected only upon presentation
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 U.S.$1,500. Any transfer of this Letter of Credit
as aforesaid must be endorsed by The Mitsubishi Trust and
Draft No. 5
8/15/86
Graham & James
MTRS 2.101
_ _ _ __
f r .;~, '.e..
Citibank N.A.
_, 1986
Page 6
Banking Corporation, Los Angeles Agency on the reverse hereof
and may not change the time or place of expiration specified
above or any other term hereof.
Faithfully yours,
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY
By
[64/JAC/586LTR]
Draft No. 5
8/15/86
Graham 6 James
MTRS 2.101
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF TUSTIN )
MARY E. WYNN, City Clerk and ex-officio Clerk of the City Council of the City of
Tustin, California, does hereby certify that the whole number of the n~mbers of
the City Council of the City of Tustin is five; that the above and foregoing
Resolution No. 86-102 was duly and regularly introduced, passed and adopted at a
regular meeting '6f the City Council held on the 18th day of .Au. gust, 1986, by the
fol 1 owing vote'
AYES · COUNCILPERSONS' Edgar, Hoesterey,. Kelly, Kennedy, Saltarell i
NOES · COUNCILPERSONS' None
ABSENT' COUNC ILPERSONS' None
MA'RY E. WY~N~, .... ~-i-l~y Cll~rk ....
C i ty of Td's-~ i n, C a 1 i f~rni a