HomeMy WebLinkAboutResolution 96-135 05/20/1996 .
-
~ Resolution No. 96-135 N.C.S.
of the City of Petaluma, California
RESOLUTION AUTHORIZING ISSUANCE AND SALE OF REFUNDING BONDS
REASSESSMENT DISTRICT NO. 1996-1
The City Council of the City of Petaluma resolves:
Section 1. RECITALS. On May 20, 1996, the City Council of
the City of Petaluma adopted its resolution of intention to conduct
reassessment proceedings and issue refunding bonds in Reassessment
District No. 1996-1, City of Petaluma, Sonoma County, California,
under the provisions of the Refunding Act of 1984 for 1915
Improvement Act Bonds (the "1984 Act"). Proceedings taken under
the 1984 Act led to the levy of reassessments by the City Council
against parcels of land within the reassessment district.
These reassessments will be recorded in the office of the
County Recorder of Sonoma County, and thereupon will become a lien
on each of the reassessment parcels. The refunding bonds are being
issued in the amount of the total reassessment.
This Council hereby finds and determines, on the basis of the
Reassessment Report on file with the City Clerk and previously
approved and confirmed by this Council in these reassessment
proceedings as follows:
a. The Reassessment Report contains the information required by
Section 9523 of the 1984 Act; and
b. As evidenced by the information set forth in said Reassessment
Report, the conditions specified by Section 9525 of the 1984
Act are satisfied, and this Council therefore has legal
authority to approve and confirm the Reassessment Report and
levy the proposed reassessments and to authorize, issue and
sell the proposed refunding bonds without public hearing.
Section 2. ISSUANCE OF BONDS. The City Council hereby
authorizes the issuance of refunding bonds under the provisions of
the 1984 Act to be secured by the reassessments. The bonds shall
be designated "Limited Obligation Refunding Bond, City of Petaluma,
Reassessment District No. 1996-1, Series No. 1996-1." In all
respects not specified in this resolution, the bonds shall be
issued in the manner prescribed by the 1984 Act.
96-135, Page 1 of 3 pages
a~,. rco..........._ cs.
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A,single registered ,bond shall be issued and shall be dated
the date of delivery., Bonds .shall mature'in principal amounts and
skull-bear interest at the rates set forth•in the schedule attached
as Exhib`f B to that certain trust-agreement dated May 20, 1996,
(the "Trust Agreement°) among the City of Petaluma, the Petaluma
Public ,'Financing Authority (the "Authority") and Union Bank, as
Trustee.
' Section 3. SALE OF BONDS. The refunding bonds for the
Reassessment District :are 'hereby sold to the Authority, in
consideration of the mutual promises contained in the Trust
Agreement. To provide funds for purchase of the refunding bonds.,
the Authority will.ssue and sell revenue-bonds and will disburse
the proceeds thereof in accordance with the Trust Agreement.
Section 4. APPROVAL OF AGREEMENTS. The City Council hereby
approves floe form of Trust Agreement'in.substantially the form set
forth as Exhibit A hereto.' This Council a-1 so approves that certain
. befeasance Escrow Agreement dated as of May 20, 1996, between the
City of`PetaTuma and Union Bank as Escrow Agent in substantially
the form set for-th as Exkikiit B hereto. This Council authorizes
the. City .Finance Director, on recommendation of Bond Counsel, to
approve-such changes and completions in the form of the Agreements
as may be required before closing of the transaction, and to
execute the Agreements.
Section 5. .FORM AND EXECUTION. Bonds shall be issued as
fully registered kionds substantially in the form set forth as
Exhibi-t C to this resolution. The bonds shall be signed by the
City Treasurer and the City Clerk and the seal of the City shall be
affixed.
Section 6. ESTABLISHMENT OF SPECIAL FUND. For payment of,
interest arid'prncipal on the bonds, a fund should be established
to be known as the redemption fund for .Reassessment District No.
1996-1. The redemption .fund shall be maintained by the 'Finance
Director. All payments of principal and interest installments on
the reassessments, together with penalties, if any, shall be
deposited in the redemption fund, which shall be a trusf fund for
the benef-it of the bon3owner. Payment of the bonds at maturity', or
at redemption before maturity, and all interest on the bonds shall ,
be made from the redemption.-fund. The Finance Director shall
deposit into. the redemption fund an amount sufficient to pay the
first payable interest on the bohds.
Section 7.. PAYMENT ON BONDS. The .principal. and interest on
the bonds §ha11 be remitted to the Trustee for deposit in the
.Payment Account in accordance with the provisions of the Trust
Agreement.
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' lieso. 96-13~ NCS Page 2 of 3 pages
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Section 8. COVENANTS. In the event of a default in the
payment of any bond or any installment of interest thereon,
bondholders shall have the remedies set forth in the 1984 Act. In
addition, the City Council makes the following covenants, which
shall constitute a contract with the Trustee and with the owners of
the revenue bonds to be issued by the Authority:
Section 8.1. FORECLOSURE OF LIENS. Not later than October 1
in any year, the City shall file an action in the Superior Court to
foreclose the lien of each delinquent reassessment if the sum of
uncured reassessment delinquencies for the preceding fiscal year
exceeds five percent (5%). of the reassessment. installments posted
to the tax roll for that fiscal year, and if the amount of the
special reserve fund is less than the Reserve Requirement.
Section 8.2. ARBITRAGE. During the term of the bonds, the
City will make no use of bond proceeds which, if such use. had been
reasonably expected at the date the bonds are issued, could have
caused the bonds to be "arbitrage bonds" within the meaning of
Section 148 of the United States Internal Revenue Code of 1986, and
regulations of the Internal Revenue Service adopted thereunder, and
further shall rebate to the United. States any amounts actually
earned as arbitrage in accordance with the provisions of that Code
and those regulations.
Section 8.3. MAINTENANCE OF TAX EXEMPTION. The City will take
all reasonable actions required to maintain the status of interest
on the bonds as excludable from gross income for federal income tax
purposes and as exempt from the State of California personal income
taxes.
Under thepower and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Approved as to
Couacil of the City of Petaluma at a (Regular) ~$(6~14~1) meeting form
on the .....2,I1.i17........... day of ...........A~I$y-.........._ 1996.., by the
following vote:
Attorney
AYES: Maguire, Hamilton, Stomps, Read, Shea, Vice Mayor Barlas, Mayor Hilligoss
NOES: None
ABSENT: None r / - `
ATTEST: C~..~/-L.:....~~.:....................~~~1.....
City Clerk Mayor
Gbimril Fila.._.___.._
CA 10-95 Res. No. ~.6.-13.5........ NAS.
J,,,
TRUST AGREEMENT
by and among
CITY OF PETALUMA
and
PETALUMA PUBLIC FINANCING AUTHORITY
and
UNION BANK
as Trustee
Dated as of May 20, 1996
EXHIBITA ~ o~~~
g;ESO.9 6 - 13 N C S
ii- .r-~
EXHIBIT A - TRUST AGREEMENT
EXHIBIT B - DEFEASANCE ESCROW AGREEMENT
EXHIBIT C - BOND FORM
Reso. 96-135 NCS Page~,of$'~
,
TABLE OF CONTENTS
TRUST AGREEMENT
1996 AUTHORITY REVENUE BONDS
RECITALS 1
ARTICLE I GENERAL PROVISIONS 2
ARTICLE II THE TRUSTEE 3
ARTICLE III FUNDS AND ACCOUNTS 6
ARTICLE IV THE BONDS 10
ARTICLE V COVENANTS; EVENT OF DEFAULT 16
EXHIBIT A .DEFINITIONS 22
EXHIBIT B DEBT SERVICE SCHEDULE FOR REASSESSMENT DISTRICT NO.
1996-1 28
EXHIBIT C DEBT SERVICE SCHEDULE FOR 1996 AUTHORITY REVENUE
BONDS 29
EXHIBIT D FORM OF AUTHORITY REVENUE BOND 30
DES®.96- 135NCS 30~ 5~
TRUST AGREEMENT
THIS IS A TRUST AGREEMENT (the "Trust Agreement") among the
CITY OF PETAI,UMA, a municipal corporation of the State of
California (the "City"), the PETALUMA PUBLIC FINANCING AUTHORITY, a
joint powers authority organized and existing pursuant to
California Government Code Section 6500 et seq. (the "Authority")
and Union Bank as Trustee (the."Trustee"), entered into as of May
20, 1996.
RECITALS
The City has heretofore issued improvement bonds (the "Prior
Bonds") pursuant to the Improvement Bond Act of 1915 (Streets and
Highways Code Section 8500 et seq.) to represent unpaid special
assessments in special assessment districts established pursuant to
the Municipal Improvement Act of 1913 (Streets and Highways Code
Section 10000 et seq.), to wit:
(a) Refunding Assessment District No. 10
(b) Refunding Assessment District No. 14
(c) North McDowell Boulevard Assessment District No. 17
(d) Petaluma Auto Plaza Assessment District No. 19
(e) Assessment District No. 20, Redwood Business Park 2
(f) Southpoint Business Park Assessment District No. 22,
Series A (only)
Pursuant to the Refunding Act of 1984 for 1915 Improvement Act
Bonds (Streets and Highways Code Section 9500 et seq., the
"Refunding Act"), the City has created a reassessment district (the
"Reassessment District") to be named Reassessment District No.
1996-1.
The City has issued refunding bonds (the "Refunding Bonds")
for the Reassessment District pursuant to the Refunding Act and has
sold the Refunding Bonds to the Authority.
To provide funds for the purchase of the Refunding Bonds, the
Authority has issued and sold bonds (the "Revenue Bonds").pursuant
to the Marks-Roos Local Bond Pooling Act of 1985 (Government Code
Section 6584 et seq.).
The City and the Authority wish to assign to the Trustee
certain of their rights with reference to this transaction, and the
Trustee is willing to accept the assignment and to perform the
duties set forth herein in consideration of the payment of monetary
compensation.
1 ~p ~ O-~ cJ
~~s®.9s-13~NCS J
ARTICLE I
GENERAL PROVISIONS
Section 101. Definitions. Terms capitalized herein shall have
the definitions given herein or in Exhibit A hereof, unless. the
context otherwise requires.
Section 102. Captions and Titles. The captions of sections
and the titles of articles in this Agreement are not a part of this
Agreement but are for reference only and shall not affect the
meaning of this Agreement.
Section 103. Exhibits. Each exhibit to this Agreement is
incorporated herein by reference and shall be deemed a part of the
Agreement.
Section 104. Rules of Construction. Gender-specific words
shall be deemed to apply to any gender appropriate to the context.
Unless the context otherwise requires, the word "person" means a
natural person, corporation, association or public agency. Where
the context permits, the singular may include the plural and the
plural, the singular. Terms of inclusion such as "herein",
"hereof", "hereunder" and the like refer to this Agreement as a
whole.
Section 105. Applicable Law. This Agreement has been entered
into and shall be construed in accordance with the laws of the
State of California. Any reference to an agreement, statute,
regulation or ordinance shall be deemed to include amendments now
or hereafter adopted.
Section 106. Severability. If any provision of this Agreement
is .ruled contrary to law by a court of competent jurisdiction, that
provision shall be deemed severable from. all other provisions of
this Agreement and the validity of those other provisions shall not
be affected by the ruling.
Section 107. Acts of Agents. Any act required or permitted of
a party to this Agreement may be performed by an Authorized Officer
of that party, or, if not otherwise limited in this Agreement, by
any duly authorized agent of that party. Actions required of or
permitted to the City pursuant to this Trust Agreement may be as
principal or as agent of the Authority, as the context requires.
Section 108. Date of Performance or Condition. Any act
required to be performed or condition required to exist on a day
that is not a Business Day shall be deemed to have been performed
or to have existed on that day if the act is performed or the
condition exists on the next Business Day.
2 5 of ~5~ f
EES®.96- I35NCS
Section 109. Counterparts. This Agreement may be executed in
counterparts, and each counterpart shall be deemed to be the same
instrument.
Section 110. Notices. Unless otherwise specifically provided
in this Agreement, any notice required or permitted to be given to
any party hereof may be given by depositing the notice in the
United States mail, first-class, postage prepaid,. addressed as
follows:
TO THE CITY: City Clerk
City of Petaluma
it English Street
Petaluma, CA 94952
TO THE AUTHORITY: Petaluma Public Financing
Authority
c/o Director of Finance
City of Petaluma
11 English Street
Petaluma, CA 94952
TO THE TRUSTEE: Union Bank
350 California Street
San Francisco, CA 94104
Attn: Corporate Trust Division
ARTICLE II
THE TRUSTEE
Section 201. Appointment of Trustee. The Authority hereby
appoints the Trustee, and the Trustee hereby accepts the
appointment, to receive, hold and invest moneys in the Redemption
Fund and all accounts held thereunder and ih the Prepayment Fund in
trust for the benefit of the Owners of the Revenue Bonds; to
authenticate and deliver the Revenue Bonds; to disburse the
Redemption Payments to the Owners of the Revenue Bonds; and to
perform certain other functions, all as .hereinafter provided.
Section 202. Assignment of Refunding Bonds. The Authority
hereby assigns in trust to the Trustee, and the Trustee hereby
accepts the assignment of, all of the Authority's right, title and
interest in and to the Refunding Bonds. The Trustee shall place
the Refunding Bonds in safekeeping when received and shall exercise
the rights of an owner of the Refunding Bonds for the benefit of
the Owners of the Revenue Bonds as provided hereinafter. The
duties of the Trustee with regard to the Refunding Bonds shall be
limited as provided hereinafter. The Trustee shall cancel any
~~~s~.9s-1~~NCS 1~q ~ °~5`~
Refunding Bond that has been paid in full and shall deliver it to
the City or its order.
Section 203. Trustee: Duties,. Removal and Resignation.
a) Hefore an Event of Default and after every Event of
Default has been cured, the Trustee shall perform only the duties
specifically set out in this Trust Agreement, and no implied duties
or obligations shall be read into this Agreement against the
Trustee. After an Event of Default and before its cure, the
Trustee shall use such of the rights and powers vested in it by
this Trust Agreement, and with the same degree of care and skill,
as a prudent person would use under the circumstances in the
conduct of his own affairs.
b) So long as no Event of Default has occurred and is
continuing, by written notice to the Trustee the City may remove
the initial Trustee and any successor thereto and may appoint a
successor Trustee, but any successor shall be a bank or trust
company subject to supervision or examination by state or federal
authority.
c) The Trustee may resign at any time by written notice
mailed by first-class mail to the City and to the owners at their
addresses shown on the Bond Register. On receiving the notice of
resignation, the City shall promptly appoint a successor Trustee in
writing; if the City fails to do so within ninety (9.0) days after
receiving the notice, the resigning Trustee at the expense of the
City may petition the court having jurisdiction to appoint a
successor Trustee. Any resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee. The City shall
require a successor Trustee to provide a written notice of
appointment to each Owner.
d) Any company into which the Trustee is merged or converted
or with which it is consolidated; or any company resulting from any
merger, conversion or consolidation to which the Trustee shall be a
party;- or any company to which the Trustee sells or transfers all
or part of its corporate trust business, shall be the successor to
the Trustee without executing or filing any paper or taking any
further action.
Section 204. Compensation of the Trustee. From time to time
on demand the City shall pay to the Trustee, within thirty (30)
days after receipt of periodic billing, reasonable compensation and
the fees and expenses of independent appraisers, accountants,
consultants, legal counsel, and others employed by it in the
performance of its duties hereunder. To secure payment the Trustee
shall have a lien, superior to that of the Owners, on funds held by
it under this Trust Agreement.
Section 205. Indemnification. The City shall indemnify the
Trustee, its officers, directors, employees and agents against all
cost, expense and liability resulting from the employment of the
Trustee as Trustee and assignee of the Authority, except liability
arising from the negligence or willful' misconduct of the Trustee,
its officers, employees or agents.
This indemnification shall include all expenses arising from
the Trustee's alleged liability, including legal fees and costs of
defending against any claim. If the City is required to pay
indemnity to the Trustee, the City shall be subrogated to the
rights of the Trustee to recover its losses from any other person
(excluding any insurer under any policy maintained by the Trustee
in its individual capacity). Indemnification and the Trustee's
right to fees and expenses shall survive the Trustee's resignation
or removal and the final payment or defeasance of the Revenue
Bonds.
Section 206. Protection to the Trustee. The Trustee shall
incur no liability in acting in good faith on any document or -
instrument that in good faith it believes to be genuine and to have
been duly given. The Trustee shall have no duty to investigate or
question the statements contained in any document or instrument,
but may rely conclusively on them as true and accurate.
Unless otherwise specifically provided herein, the Trustee is
entitled to rely conclusively on the certificate of an Authorized
Officer of the City or the'Authority, but in its discretion the
Trustee may require other or further evidence before acting or
withholding action.
The Trustee may buy, sell, own, hold and deal in any of
the Revenue Bonds and as an Owner may join in any action which any
Owner may be entitled to take with the same effect as if it were
not the Trustee. The Trustee, either as principal or agent, may
have an interest in any other transaction with the City and may act
as depository, trustee or agent for any committee or body of Owners
of Revenue Bonds or other obligations of the City or the Authority
as freely as if it were not the Trustee.
The Trustee may act hereunder through attorneys, agents, or
receivers and shall be entitled to advice of counsel concerning its
duties. The Trustee may rely upon an opinion of counsel as complete
protection for any action taken or not taken by it. The Trustee
shall not be answerable for the default or misconduct of any
attorney, agent., or receiver selected by it with reasonable care,
The Trustee shall not be answerable for the exercise of any
discretion or power under this Agreement or for the administration
of the Accounts, except only for its own negligence or willful
misconduct.
The Trustee shall not be liable for any 'action taken or
omitted in good faith, at the direction of the Owners of not less
~~~®•9~- 135NCS $ 0~ 5~
than twenty-five percent (25%) in aggregate principal amount of the
Outstanding Revenue Bonds, as to the time, method and place of
conducting a proceeding for any remedy available to the Trustee.
The Trustee makes no representations about the validity or
sufficiency of this Agreement or the Refunding Bonds or the Revenue
Bonds or the sufficiency of security for the Refunding Bonds or the
Revenue Sonds and shall not incur any responsibility therefor,
except as expressly provided herein.
The Trustee shall have no liability for the failure of
performance by any other party to this Agreement, but shall be
responsible solely for the performance of its own duties. The
Trustee undertakes to perform only the duties specified in this
Agreement, and no implied covenants or obligations, fiduciary or
otherwise, shall be read into this Agreement against the Trustee.
In accepting the trust hereby created the Trustee acts solely
as Trustee for the Owners and not in its individual capacity. All
persons, including without limitation the Owners and the City,
having any claim against the Trustee arising from this Agreement
shall look only to the Accounts for payment except as otherwise
provided herein. The Trustee shall not be liable in its individual
capacity for the obligations evidenced by the Revenue Bonds.
Section 207. No.ObliQation of Trustee to Expend its Funds.
The Trustee is not required to expend or risk its own funds or
incur any financial liability in performing its duties or
exercising its rights or powers, if repayment of funds or adequate
indemnity against risk or liability is not assured to it. The
Trustee shall be entitled to interest on any funds advanced by it
in the performance of its duties at the maximum rate permitted by
law.
ARTICLE III
FUNDS AND ACCOUNTS
Section 301. Establishment of Funds and Accounts. There are
hereby established with the Trustee three special trust funds:
(1) The Redemption Fund, and within it the Payment Account,
the Earnings Account and the Reserve Account;
(2) The Prepayment Fund; and
(3) The Delivery Cost Fund..
l~~`~~'gp~' 13~NCS
The Trustee shall keep the funds and. each of these accounts
separate from all other funds and accounts held by it, and shall
not withdraw, transfer or pay from any fund or account except as
provided herein.
Section 302. Initial Deposit. On the Closing Date the Trustee
shall receive and place in safekeeping the Refunding Bonds, and
shall receive, from the proceeds of the sale-of the Revenue Bonds,
the amount of $9,721,237.50 (the par amount of the bonds of
$9,945,000.00 less a 2.25$ discount of $223,762.50) to be deposited
or otherwise disbursed as follows:
(1) The amount of $9,219,000.00 shall be transferred to the
Escrow Agent to be applied as provided in the Defeasance
Escrow Agreement, for. the purpose of retiring the Prior Bonds
on September 2, 1996.
(2) The amount of $497,250.00 (the "Required Reserve") shall
be deposited in the Reserve Account and shall be administered
in accordance with Section 304 hereof.
(3) The amount of $178,886.92 shall be deposited in the
Delivery Cost Fund and disbursed by the Trustee upon order of
the City for the payment of Delivery Costs of the Revenue
Bonds and the Refunding Bonds. The Trustee shall administer
the Delivery Cost Fund. All funds in the Delivery Cost Fund
will be expended within thirty (30) days after the issuance of
Refunding Bonds. At the end of thirty days, the Fund is to be
closed and any moneys in the fund after payment of all
Delivery Costs shall be deposited in the Payment Fund.
The Trustee shall deposit the amount of $158,730.61 in the Payment
Account upon receipt of that amount from the City of Petaluma.
This amount represents debt service on the Revenue Bonds payable on
September 2, 1996, and thereafter until fully expended, and shall
be disbursed in accordance with Section 303. The Trustee in its
discretion may establish a temporary account on its records to
facilitate this transfer and any funds in this account shall be
invested at a yield not to exceed the yield on the Revenue Bonds.
Section 303. Payment Account.
(a) The Trustee shall deposit in the Payment Account all
payments of principal of and interest on the Refunding Bonds, to be
received from the City in accordance with the schedules of payments
set forth in Exhibit B hereof. The City shall remit all payments
to the Trustee not less than ten (10) days before their respective
payment dates. The Trustee shall maintain the Payment Account
until all payments on the Revenue Bonds are made in full.
~.:~i~. 9 5- Y 3 5 N C S ~J ~
(b) On each Interest Payment Date the Trustee shall withdraw
from the Payment Account the amount due as principal of, and
interest on, the Revenue Bonds and shall disburse it to the Owners
of the Revenue Bonds.
(c) As of September 2 of each year, the balance, if any, in
the Payment Account following the disbursement pursuant to
subsection (b) shall be transferred first to the Reserve Account to
the extent that the amount in the Reserve Account does not exceed
$696,150.00 and any remaining balance shall be transferred to the
Prepayment Fund.
Section 304. Reserve Account.
(a) The Trustee shall maintain the Reserve Account until the
Revenue Bonds are paid in full. The amount in the Reserve Account
may never exceed the least of the following amounts:
(i) ten percent of the proceeds of the Bonds;
(ii) maximum annual debt service on the Bonds, or;
(iii)125$ of the average annual debt service on the
Bonds.
(b) On any Interest Payment Date, if the amount in the Payment
Account is less than the amount due the Owners of the Revenue Bonds
on that date as principal and interest on the Revenue Bonds, the
Trustee shall transfer from the Reserve Account to the Payment
Account an amount sufficient to cover the deficiency, and within
five (5) Business Days thereafter shall notify the City in writing
of the amount and the date of transfer, the amount of the remaining
balance in the Reserve Account and the amount of the Required
Reserve.
(c) On payment in full of the Revenue Bonds; the Trustee shall
remit the amount in the Reserve Account to the City and shall close
the account.
(d) On any Interest Payment Date, if the amount due and
payable on the Revenue Bonds exceeds the amount in the Payment _
Account after transfer from the Reserve Account pursuant to
subsection (b), the Trustee shall apply the amount in the Payment
Account in the following order of priority, prorating as necessary
within the last category to which moneys can be applied:
(ij To the payment of interest on all Outstanding Revenue
Bonds;
(2) To the payment of the. principal of unpaid Revenue Bonds
that matured on an earlier Bond Payment Date, in order of
maturity date; and
(3) To the payment of the principal of Revenue Bonds maturing
on the current Bond Payment Date.
~~~~•96° 135NCS
(e) On receiving a delinquent payment from the City for which
an advance has been made from the Reserve Account, the Trustee
shall deposit the payment:
(1) First, to the Payment Account to the extent of the full
amount remaining payable to Owners of the Revenue Bonds; and
(2) Second, to the Reserve Account.
Section 305. Prepavment Fund.. The Trustee shall administer
the Prepayment Fund in accordance with Article IV hereof.
Section 306. Earnings Account; Investment of Fund and Account
Balances.
(a) The Trustee shall invest all moneys held in the funds and
accounts hereunder in Permitted Investments designated by the City
in writing and received by the Trustee at least two (2)'Business
Days before the investment date. In the absence of instructions
the Trustee shall invest in money market funds as defined in
Exhibit A, "Permitted Investments", paragraph F.
(b) The Trustee shall deposit investment earnings on all Funds
and accounts to the Earnings Account. Balances in the Earnings
Account shall be applied first to the accrued costs of
administering the Revenue Bonds, including:
(1) Amounts required to be rebated to the United States
pursuant to Section 148(f) of the Internal Revenue Code;
(2) Fees and expenses of the Trustee;
(3) All other costs incurred by the Authority in the
administration of the Revenue Bonds;
(4) Transfer to the Reserve Account to the extent that
the amount in the Reserve Account is less than
$696,150.00; and
(6) Transfer to the respective Payment Account for
redemption of Revenue Bonds, if so directed by the
Authority.
(c) In its investment activities the Trustee acts only as
agent of the City. The Trustee shall not be liable for investment
losses, which shall be charged to the account for which the
investment was made.
(d) The Trustee shall give the City a monthly statement of
account for each fund and account, including the balance thereof
and the earnings, transfers and other transactions since the date
of the previous statement.
~~'~~•9C' 135NCS
Section 307. Rebate of Arbitrage. Within ten (10) Business
Days after receiving written instructions from the City, the
Trustee shall disburse to the United States, from the Earnings
Account, any amounts required to be rebated as arbitrage to the
United States pursuant to Section 148 of the Internal Revenue Code.
The Trustee may rely conclusively on the instructions and shall
have no responsibility for compliance with those provisions of the
Internal Revenue Code or regulations adopted thereunder.
ARTICLE IV
THE BONDS
Section 401. Authentication of Revenue .Bonds. On the written
request of the City and the Authority the Trustee shall
authenticate and deliver to the original purchaser thereof Revenue
Bonds in an aggregate principal amount of $9,.945,000.00, secured by
the pledge of revenues to be received by the City pursuant to the
Refunding Bonds. The City and the Authority hereby certify that
all conditions required by the Constitution and statutes of the
State of California and this Trust Agreement precedent to the
delivery of the Revenue Bonds have occurred or been duly performed.
Section 402. Form: Denomination; Medium of Payment. The
Revenue Bonds shall be delivered as fully registered bonds in the
denomination of $5,000 or integral multiples thereof. The form of
the Revenue Bonds shall be substantially as set forth in Exhibit D.
The Revenue Bonds shall be payable in lawful money of the United
States of America which at the time of payment is legal tender for
the payment of public and private debts.
Section 403. Date of Revenue Bonds. Each Revenue Bond shall
be dated as of the date of its authentication, except that each
Revenue Bond delivered to the original purchaser shall be dated as
of the Closing Date. Interest on each Revenue Bond shall be
payable from the Interest Payment Date next preceding the date of
its authentication, except that:
(1) If the Revenue Bond is authenticated as of an Interest
Payment Date, or after the fifteenth (15th) day of a month
preceding an Interest Payment Date and before that Interest
Payment Date, interest shall be payable from that Interest
Payment Date; or
(2) If the Revenue Bond is authenticated on or before
September 2, 1996, interest shall be payable from the Closing
Date.
In any event, if interest is in default on any Outstanding Revenue
Bond as of the authentication date of a Revenue Bond, interest on
to `i 9 13 o-F 5y..
that Revenue Bond shall be payable from the Interest Payment Date
to which interest has previously been paid or made available for
payment on the Outstanding Revenue Bonds.
Section 404. Payment of Principal and Interest. The Revenue
Bonds 'shall be in serial or term form, and their principal shall be
payable from the principal payments on the Refunding Bonds on
September 2 in each of the years and in the amounts set forth in
Exhibit C. Interest on the Revenue Bonds shall be payable on
September 2, 1996, and semiannually thereafter on September 2 and
March 2 of each year to and including the date of principal payment
or prepayment, whichever is earlier. Interest on the Revenue Bonds
shall be payable from the interest. paid on the Refunding Bonds and
shall be computed at the rates set forth in Exhibit C on the basis
of a 360-day year of twelve 30-day months.
Section 405. Place of Payment. The principal (together with
a prepayment premium, if any) of the Revenue Bonds shall be payable
at the Principal Office of the Trustee. Interest on the Revenue
Bonds shall be payable by check of the Trustee mailed by first-
class mail to the Owners on the Interest Payment Date; but the
Owners shown on the Bond Register on the 15th day of the month
preceding the Interest Payment Date shall be deemed to be Owners on
the Interest Payment Date for the purpose of paying interest
(except as otherwise described herein for interest paid to an
account in the Continental United States of America by wire
transfer as requested in writing no later than the applicable
Record Date by certain owners of $1,000,000 or more in aggregate
principal amount of Bonds).
Section 406. Numbers; Legends. The Revenue Bonds may be
numbered by a method selected by the Trustee. The Revenue Bonds
may contain or have endorsed thereon provisions, specifications and
descriptive words consistent with this Agreement, as determined by
the City before delivery of the Revenue Bonds.
Section 407. Authentication. The Revenue Bonds shall be
authenticated by the Trustee, as trustee under this Trust
Agreement, by the manual signature of an Authorized Officer or
signatory of the Trustee.
Section 408. Transfer and Exchange of Revenue Bond.
(a) Each. Revenue Bond shall be transferable only on the Bond
Register, which shall be kept at the Principal Office of the
Trustee, on surrender of the Revenue Bond together with a written
instrument of transfer satisfactory to the Trustee and duly
executed by the Owner or his authorized attorney. On the surrender
of the Revenue Bond and the registration of its transfer, the
Trustee shall authenticate and deliver, in the name of the
transferee, one or more new Revenue Bonds of the same aggregate
principal amount of Authorized Denominations, Bond Payment Date and
interest .rate as the surrendered Revenue Bond.
11
RES0.9fi-1`i5NCS ~~~-~5~
(b) One or more Revenue Bonds having the same Bond Payment
Date may be exchanged at the Principal Office of the Trustee for
the same aggregate principal amount of Revenue Bonds of other
Authorized Denominations. On the surrender of any Revenue Bond
together with a written request for exchange executed by the Owner
or his authorized 'attorney, the Trustee shall authenticate and
deliver in the name of the Owner and shall register one or more new
Revenue Bonds of the same aggregate principal amount of Authorized
Denominations, Bond Payment Date, and interest rate as the Revenue
Bond being exchanged.
' (c) The Trustee skull not be required to register a transfer
or exchange during the period established by the Trustee for
selection of Revenue Bonds for prepayment or redemption or for any
Revenue Bond or portion thereof selected for prepayment or
redemption pursuant to Section 413 of this Trust Agreement.
Section 409. Regulation with Respect to Exchange and
Transfers. On the transfer or exchange of Revenue Bonds, the
Trustee shall authenticate and deliver Revenue Bonds in accordance
with this Article. The Trustee shall cancel Revenue Honds
surrendered in any transfer or exchange and shall destroy them.
The City shall pay the cost of preparing new Revenue Bonds and any
other expenses of the City or the Trustee in a transfer or exchange
of .Revenue Bonds; except for any tax, fee or other governmental
charge not imposed by the City.
Section 410. Bond Register.
(a) The Trustee shall keep at its Principal Office a Bond
Register, which shall be open to inspection by the City on
reasonable notice and at reasonable times during normal business
hours on any Business Day.
' (b) The Trustee shall deem the person in whose name any
Outstanding Revenue Bond appears on the Bond Register as the
absolute owner of the Revenue Bond. Payment made to an owner or on
his order shall satisfy and discharge the liability on the Revenue
Bond to the extent of the amount paid, and neither the City nor the
Trustee shall be affected by any notice to the contrary.
Section 411. Mutilated, Lost, Destroyed or Stolen Revenue
Bonds. If any Revenue Bond is mutilated, the Trustee, at the
expense of the Owner, shall authenticate and deliver a new Revenue
Bond in the same principal amount of Authorized Denominations, Bond
Payment Date, and interest rate, on surrender of the mutilated
Revenue Bond. The Trustee shall cancel the mutilated Revenue Bond
and destroy it.
On submittal of evidence satisfactory to the Trustee that any
Revenue Bond has been lost, destroyed or stolen, together with an
indemnity satisfactory to the Trustee, the Trustee, at the expense
of the Owner, shall authenticate and deliver a new Revenue Bond of
12 ~ 15 0-~ 5~
RED®.96-1.S5NCS ~
the same principal amount of Authorized Denominations, Bond Payment
Date, and interest rate, and numbered as the Trustee shall
determine, in substitution for the lost, destroyed or stolen
Revenue Bond.
The Trustee may require payment of a fee for its expenses
under this section. Any Revenue Bond delivered in lieu of a
Revenue Bond alleged to be lost, destroyed or stolen shall be as
much entitled to the benefits of this Trust Agreement as all other
Outstanding Revenue Bonds. The Trustee shall not be required to
treat both the original Revenue Bond and any replacement Revenue
Bond as Outstanding., but both the original and replacement Revenue
Bond shall be treated as one and the same.
In lieu of delivering a new Revenue Bond for which principal
has become due or has been called for prepayment or redemption, the
Trustee may pay the Revenue Bond upon receipt of indemnity
satisfactory to it.
Section 412. Evidence of Signatures of Owners and Ownershio
of Revenue Bonds. Any request, consent, revocation of consent, or
other instrument in writing required or permitted by this Trust
Agreement to be signed or executed by Owners may be in any number
of concurrent instruments of similar tenor, and may be signed or
executed by the Owners or by their attorneys or agents appointed
for that purpose by an instrument in writing. Any request or
consent of an Owner shall bind every subsequent Owner of the same ,
Revenue Bond or its replacement.
The fact and date of the execution of any such instrument may
be proved by a certificate, which need not be acknowledged or
verified, of an officer of any bank or trust company within the
United states of America, or of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in
United States jurisdictions that the persons signing the instrument
acknowledged before him the execution thereof. Where any such
instrument is executed by an officer of a corporation or
association or a member of a partnership on behalf of the
corporation, association or partnership, the certificate shall also
constitute sufficient proof of his authority.
The fact of ownership of Revenue Bonds and the amount, Bond
Payment Date, interest rate, numbering and date of ownership shall
be proved by the Bond Register.
The Trustee is not limited to the method of proof set forth. in
this Article, but may accept any-other evidence deemed sufficient.
Section 413. Advance Retirement of Refunding Bonds.
(a) The City may provide to the Trustee from time to time a
Notice of Advance Retirement of Refunding Bonds in accordance with
the Improvement Bond Act of 1915. The Trustee shall thereupon
13 ~ l o ~ 5
RES®.96- 135NCS ~
select Revenue Bonds for prepayment. on the Interest Payment Date
for which the Notice of Advance Retirement is given. Revenue Bonds
shall be selected for prepayment in the same principal amounts and
of the same maturities as stated in the Notice of Advance
Retirement for the Refunding Bonds.
(b) On or before the March 2 or September 2 for which the
Notice of Advance Retirement is given, the City shall transmit to
the Trustee the amount of the principal of Refunding Bonds to be
retired pursuant to the notice, together with the redemption
premium, if any, thereon and interest thereon to the date of
retirement specified in the notice. At the same time the City
shall provide to the Trustee a revised maturity schedule (Exhibit
B) for the affected Refunding Bonds and a revised maturity schedule
(Exhibit C) for the Revenue Bonds.
(c) Amounts received by the Trustee pursuant to a Notice of
Advance Retirement of Refunding Bonds shall be deposited in the
Prepayment Fund and shall be disbursed for the optional prepayment
of Revenue Bonds in accordance with Section 416. The Trustee shall
endorse on the appropriate Refunding Bonds the date and amount of
principal retired in advance of maturity.
Section 414. Optional.Prepayment of Revenue Bonds.
(a) All or any portion of any Revenue Bond may be prepaid on
any Interest Payment Date by paying to the Owner thereof the
principal amount thereof, interest to the Interest Payment Date of
prepayment and a prepayment premium of a percentage of the
principal being prepaid as follows:
Pre~avment Date Premium
September 2, 1996 to September 2, 1997 2.0%
March 2, 1998 to September 2, 1998 2.0
March 2, 1999 to September 2, 1999 2.0
March 2, 2000 to September 2, 2000 2.0
March 2, 2001 to September 2, 2001 2.0
March 2, 2002 to September 2, 2002 2.0
March 2, 2003 to September 2, 2003 2.0
March 2, 2004 to September 2, 2004 2.0
March 2, 2005 to September 2, 2005 2.0
March 2, 2006 to September 2, 2006 1.5
March 2, 2007 to September 2, 2007 1.0
March 2, 2008 to September 2, 2008 0.5
March 2, 2009 and thereafter 0.0
(b) Revenue Bonds to be prepaid. shall be selected by lot
within each maturity in the manner determined by the Trustee. In
making the selection the Trustee shall treat each Revenue Bond as
representing a.number of bonds obtained by dividing the Bond
principal amount by $5,000. Prepayment of a portion of any Revenue
14 ~ 1~ o~ 5~
~~s®.96- 135NCS ~
. f
Bond shall be in the amount of $5,000 or any integral multiple
thereof.
Section 415. Notice of Prepayment. At the expense of the
City the Trustee shall give notice to the affected Owners of the
prepayment or redemption of their Revenue Bonds. The notice shall
state:
* That the whole or a specified portion of the Revenue Bonds
is to be prepaid or redeemed;
* The date of prepayment or redemption;
* The place or places where the prepayment or redemption will
be made;
* The prepayment or redemption price;
* The CUSIP numbers;
The numbers of the Revenue Bonds to be prepaid or redeemed,
if fewer than all of the Outstanding Revenue Bonds;
* The interest component and maturity date of each Revenue
Bond to be prepaid or redeemed in whole or in part.; and
* That on the date of prepayment or redemption the principal
of and accrued interest on each Revenue Bond or portion
thereof to be prepaid or redeemed, together with a prepayment
premium, if any, shall become due and payable, and that from
and after the date of. prepayment or redemption interest on
each such Revenue Bond or portion thereof shall cease to
accrue.
The notice shall be mailed, first-class, postage prepaid, not less
than thirty (30) nor more than sixty (60) days before the date of
prepayment or redemption. The notice shall be mailed to the Owners
of all Revenue Bonds to be prepaid or redeemed as the Owners' names
and addresses appear on the Bond Register; to one or more of the
Information Services; and by first-class mail, overnight courier or
by facsimile transmission to the Securities Depositories. Failure
to mail the notice, or any defect in the notice as mailed, shall
not affect the validity of the proceedings for prepayment or
redemption of the Revenue Bonds.
Section 416. Payment on Date of Preoayment. If the
Prepayment Fund contains an amount sufficient for the prepayment of
the Revenue Bonds selected for prepayment, the Revenue Bonds to be
prepaid shall become due and payable on the date of prepayment, and
on their presentation and surrender at the Principal Office, the
Revenue Bonds shall be paid at their principal amount, together
with accrued and unpaid interest to the date of prepayment and any
applicable prepayment premium.
15 ~ ~0 ~ S~
R~~®.96- 135NC$ 5
If moneys in the Prepayment Fund on the Interest Payment Date
of prepayment are sufficient to prepay the Revenue Bonds selected
for prepayment, interest on the Revenue Bonds selected for
prepayment shall cease to accrue as of that date. If sufficient '
moneys are not available on the Interest Payment Date, interest on
the Revenue Bonds shall continue to accrue, until paid, at the
rates at which the Revenue Bonds were authenticated and delivered.
Moneys held by the Trustee for the prepayment of particular Revenue
Bonds shall be held in trust for the account of the Owners of those
Revenue Bonds.
Section 417. Partial Prepayment of Revenue Bond. On
surrender of any Revenue Bond prepaid or redeemed in part only, the
Trustee shall authenticate and deliver to the Owner, at the expense
of the City, one or more new Revenue Bonds of Authorized
Denomination equal in aggregate principal amount to the unprepaid
portion of the Revenue Bond surrendered and of the same interest
rate and the same Bond Payment Date. The City, the Authority and
the Trustee shall be released and discharged from liability to the
extent of the payment.
Section 418. Non-Presentment of Revenue Bonds. If any
Revenue Bond is not 'presented for payment when its principal
becomes due, either at maturity or at the date fixed for prepayment
or redemption, and money sufficient to pay the Revenue Bond has
been deposited in the Payment Account or the Prepayment Fund, all
liability of the City to the Owner for payment of the Revenue Bond
shall be discharged, and it shall then be the duty of the Trustee
to hold the money in a separate account, without liability for
interest thereon to any person, for the benefit of the Owner. The
Owner shall thereafter be restricted exclusively to that money ..for
any claim under this Trust Agreement or on the Revenue Bond.
Subject to applicable escheat laws, two (2) years after the money
was due the Owners or after the City pays the money to the Trustee,
whichever is later, the money shall be paid by the Trustee to the
City free from the trusts created by this Trust Agreement, and
thereafter Owners shall be entitled to look only to the City for
payment and then only to the extent of the amount repaid by the
Trustee. The City shall not be liable for any interest on money
paid to it pursuant to this section and shall not be regarded as a
trustee of the money.
ARTICLE V
COVENANTS; EVENT OF DEFAULT
Section 501. Comoliance with Foreclosure Covenants. During
any period in which the amount in the Reserve Account is less than
ninety-five. percent (95$) of the Required Reserve, the City shall
provide reports in writing (the "Compliance Reports") to the
Trustee of compliance with the Foreclosure Covenants. The reports
16 ~ I ~ O~ 5
RESO.96- 135NCS
shall be furnished semiannually not later than each Interest
Payment Date and not earlier than thirty (30) days before each
Interest Payment Date. Each Compliance Report shall state:
(1) The date of filing each complaint in foreclosure, and the
action number thereof;
(2) A description, by special assessment and diagram number
and by county assessor's parcel number, of the property
addressed in the complaint; and
(3) A brief description of the status of the action,
including, if applicable, the existence of any injunction or
stay order preventing prosecution of the action by the City.
Section 502. Event of Default Defined. Either of the
following shall constitute an Event of Default by the City under
this Agreement:
(1) A reduction of the Reserve Account to an amount less than
the lesser of (i) eighty percent (80~) of the Required
Reserve, or (ii) five percent (5$) of the principal amount of
Revenue Bonds then Outstanding; or
(2) At any time that the amount in the Reserve Fund is less
than ninety-five percent (95%) of the Required Reserve, the
failure or refusal of the City to file Compliance Reports.
pursuant to Section 501 hereof or to institute and diligently
prosecute the judicial foreclosure of property delinquent in
the payment of reassessments securing the Refunding Bonds,
pursuant to the Foreclosure Covenants.
Section 503. Action on Default. The Trustee shall notify the
City and the Owners in writing of the occurrence of an Event of
Default within five (5) Business Days after the Trustee receives
actual knowledge of its occurrence. The Trustee shall not be
required to take any further action or seek any remedy pursuant to
Section 504 hereof unless requested to do so by the Owners of at
least twenty-five percent (25%) in aggregate principal amount of
the Outstanding Revenue Bonds and unless indemnified to its
satisfaction from any liability or expense.
Section 504. Remedies on Default.
(a) On the occurrence of an Event of Default, if the default
is not cured within thirty (30) days after notice given by the
Trustee to the City pursuant to Section 503, the Trustee may apply
to a court of competent jurisdiction for one or more of the
following remedies:
(1) A writ of mandate or other judicial order compelling the
City to comply with the Foreclosure Covenants;
17 ~ G p o~ 5y-
RESO.gg- 135NCS
(2) An accounting of amounts posted to the City tax roll and
amounts received on account of reassessments securing the
Refunding Bonds;
(3) Intervention in any foreclosure action instituted pursuant
to the Foreclosure Covenants, or in any action challenging the
validity of the Refunding Bonds or the reassessments securing
them; the City hereby consents to any such intervention;
(4) Application for dissolution of any injunction or stay
order preventing the City's compliance with the Foreclosure
Covenants; and
(5) Any other remedy at law or in equity reasonably expected
to assist in the protection of the rights and security of the
Owners of the Revenue Bonds.
(b) On an Event of Default, if the Trustee has taken any
judicial or other action at its own discretion or on the request of
Owners, the Trustee shall have full power, in the exercise of its
discretion for the best interests of the Owners, to continue,
discontinue, withdraw, compromise, settle or otherwise dispose of
the action.
(c) All reasonable fees and all costs of the Trustee, its
employees, agents and counsel in the pursuit of these remedies
shall be paid to the Trustee by the City within thirty (30) days
after billing.
Section 505. Rights of Owners of Revenue Bonds. No Owner
shall have the right to institute any judicial action for any
remedy under this Agreement, unless:
* The Owner has first given the Trustee written notice of the
occurrence of an Event of Default; and
* The Owners of at least twenty-five percent (250) in
aggregate principal amount of Outstanding Revenue Bonds have
requested the Trustee in writing to exercise the powers
hereinbefore granted or to institute the action in its own
name; and
* The Owners-have tendered indemnity satisfactory to the
Trustee against the Trustee's expenses and liabilities to be
incurred in complying with their request; and
* The Trustee has refused or omitted to comply with the
request for a period of sixty (60) days after the written
request has been received by, and the tender of indemnity made
to, the Trustee.
Such notification, request, tender of indemnity and refusal or
omission are conditions precedent to the exercise by an Owner of
18 ~ ~-I ~f 5~}
~a~s®.96-135NCS
1
any remedy hereunder. No one or more Owners shall have the power
to enforce any right under this Agreement, except in the manner
herein provided. Judicial proceedings resulting from an Event of
Default shall be for the equal benefit of all Owners of the
Outstanding Revenue Bonds.
Section 506. Non-Waiver. A delay or omission by the Trustee
to exercise aright or power arising on an Event of Default shall
not impair that right or power or be construed as a waiver of, or
acquiescence in, the Event of Default. Every power and remedy
possessed by the Trustee may be exercised from time to time and as
often as deemed expedient by the Trustee.
Section 507. Remedies Not Exclusive. All remedies afforded
to the Trustee by law or by this Agreement are cumulative: the
exercise of a remedy shall not impair the right of the Trustee to
exercise any other remedy, at the same time dr from time to time.
Section 508. No Obligation by City to Owners. Except for the
payment of amounts due under the Refunding Bonds and the
performance of other City covenants contained in the proceedings
for issuance of the Refunding Bonds and in this Agreement, the City
shall have no obligation or liability to any other party or to the
Owners arising from this Trust Agreement, the performance of the ,
Trustee, the terms, execution, delivery or transfer of the Revenue
Bonds, or the distribution of payments to the Owners by the
Trustee.
Section 509. No Liability to Owners for Payment. Except as
provided herein the Trustee shall have no obligation nor liability
to the Owners for the City's payments under the Refunding Bonds or
the City's performance of any other covenant of this Agreement.
Section 510. Tax Covenants.
(a) Neither the City nor the Authority shall take or permit
any action that would cause interest on the Revenue Bonds.or the
Refunding Bonds to be included in the gross income of recipients
thereof for purposes of federal income taxation.
(b) Neither the City nor the Authority shall take or permit
any action that would cause any of the Revenue Bonds or the
Refunding Bonds to be an "arbitrage bond" within. the meaning of
Section 148 of the Internal Revenue Code of 1986, as amended.
19 ~q a~ a r 5 ~-I'
?~~~~.96- 135NCS ~J
. C,
ARTICLE VI
AMENDMENT; DEFEASANCE; ADMINISTRATIVE PROVISIONS
Section 601. Amendment. This Trust Agreement may be amended
in writing by a supplemental agreement among all of the parties:
* Without the consent of the Owners, to add to the rights and
privileges of the Trustee, or to cure a defective provision or
settle a question arising from an uncertainty, ambiguity, or
omission in this Trust Agreement without adversely affecting
the interests of the Owners; or
* With the written consent of the Owners of a majority in
aggregate principal amount of Outstanding Revenue Bonds, to
make any other amendment.
This section does not authorize an amendment that causes the
interest on the Revenue Bonds to become subject to California
personal income tax or to be included in the gross income of the
Owners for federal income tax purposes. The parties may rely on
. the opinion of Bond Counsel in the application of this section.
Section 602. No Impairment of Security. The City shall not
reduce any reassessment securing the Refunding Bonds or enter into
any settlement of a claim or dispute respecting the Refunding Bonds
or the reassessments securing them, except upon the written consent
of the Trustee. Such consent may be based on an opinion of counsel
or certificate of the City or the Authority .and the Trustee shall
be completely protected in relying thereon. This section shall not
be construed to prevent the City from dividing reassessments to
conform with the division of assessed parcels as provided by the
Improvement Bond Act of 1915.
Section 603. Defeasance. Upon defeasance of the Revenue
Bonds, even though all Revenue Bonds have not been presented for'
payment, all obligations of the Authority, the Trustee and the City
hereunder shall end, except only the obligation of the City to
compensate and indemnify the Trustee and the obligation of the
Trustee to pay all amounts due to the Owners. Defeasance will have
occurred when all Outstanding Revenue Bonds are paid and
discharged:
(a) By paying the principal of and interest on all.
Outstanding Revenue Bonds as they become due and payable; or
(b) By prepayment of all Outstanding Revenue Bonds; or
(c) By irrevocably depositing with the Trustee cash which,
together with amounts then on deposit in the Payment Account,
Prepayment Fund, and Reserve Account are sufficient to pay the
principal of and interest on all Outstanding Revenue Bonds; or
20
a3 0~5~-
ItESO.g6- 135NCS
(d) By irrevocably depositing with the Trustee Federal
Securities which, together with moneys then on deposit in the
Payment Account, Prepayment Fund, and Reserve Account, together
with interest to be received thereon, will be sufficient to pay the
principal or and interest on all Outstanding Revenue Bonds at or
before their respective Interest Payment Dates., in the written
opinion of an independent certified public accountant. given to the
Trustee.
Section 604. Recordincx and Filing. The Trustee shall not be
responsible for recording or filing this Agreement or
supplemental instruments or documents.
Section 605. Trustee to .Keep Records. The Trustee shall keep
books and records of all money received and disbursed by it under
this Trust Agreement. They shall be available for inspection upon
reasonable advance notice and at reasonable times during normal
business hours on Business Days, by the City, the Authority or
Owners representing five percent (5%) in aggregate principal amount
of Outstanding Revenue Bonds, or their respective designees.
ZN WITNESS WHEREOF, the parties hereto have executed this
Trust Agreement the day and year first above written.
CITY OF PETALUMA, a municipal
corporation of the State of California
By
PETALUMA PUBLIC FINANCING AUTHORITY
By
Chairman
UNION BANK, as Trustee
By
Authorized Officer
21
Res®. s s - a.~ °-F- 5~
135NCS
EXHIBIT A
DEFINITIONS
Accounts. The term "Accounts" means the funds and accounts
established by Section 301 of this Trust Agreement.
Authority. The term "Authority" means the Petaluma Public
Financing Authority, a joint powers authority of the City of
Petaluma and the Petaluma Community Development Commission, formed
pursuant to Article 1 (Section 6500 et seq.) of Chapter 5 of
Division 7 of Title 1 of the California Government Code.
Authorized Denominations. The term "Authorized Denominations"
means the authorized denominations of the Bonds, which shall be
$5,000 or any integral multiple thereof.
Authorized Officer. The term "Authorized Officer", when used
with reference to the Authority, means its Chairman, its Vice
Chairman or its Treasurer; when used with reference to the City,
means the Mayor of the City Council, City Manager, City Treasurer,
City Director of Finance or their respective deputies or assistants
or any other City officer or employee designated by the City
Manager as an Authorized Officer for purposes of this agreement;
when used with reference. to the Trustee means any officer within
the Corporate Trust Department (or any vice president, assistant
vice president, assistant secretary or any other officer or
assistant officer of the Trustee customarily performing functions
similar to those performed by the persons who at the time shall be
such officers, respectively), and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee
to whom the matter is referred by the Trustee because of that
officer's knowledge of and familiarity with the particular subject.
Bond Counsel. The term "Bond Counsel" means an attorney or a
firm of attorneys, acceptable to the City, of nationally recognized
standing .in matters pertaining to the tax-exempt nature of interest
on bonds issued. by states and their political subdivisions, duly
admitted to the practice of law before the highest court of any
state of the United States of America.
Bond Payment Date. The term "Bond Payment Date" means
September 2 of each year during the term of the Bonds commencing
September 2, 1996.
Bond Register. The term "Bond Register" means the books for
registration of the Bonds maintained by the Trustee pursuant to
Section 410 of this Trust Agreement.
Bonds. The term "Bonds" means the Revenue Bonds as defined
herein.
22
RESO.g6-13SNCS ~q~ ~ 5~
Business Dav. The term "Business Day" means any day on which
banks in San. Francisco and Los Angeles, California, are open for
business, except Saturday, Sunday or a legal holiday.
City. The term "City" means the City of Petaluma, a municipal
corporation of the State of California.
Closing Date. The term "Closing Date" means the date on which
the Bonds are authenticated by the Trustee and delivered to the
first purchaser thereof.
Compliance Report. The term "Compliance Report" means the
report described in Section 50l of this Trust Agreement, by which
the City reports to the Trustee the institution and progress of
judicial foreclosure proceedings against property delinquent in the
payment of reassessments securing the Refunding Bonds.
Defeasance Escrow Agreement. The term "Defeasance Escrow
Agreement" means the Defeasance Escrow Agreement dated as of May
20, 1996, between the City and Union Bank.
Delivery Cost Fund. The term "Delivery Cost Fund" means the
fund from which Delivery Costs shall be paid.
Delivery Costs. The term "Delivery Costs" means all costs of
payment or reimbursement for execution, sale and delivery of the
Refunding Bonds and the Revenue Bonds, including without limitation
costs paid or incurred by the City, the Authority or the Trustee
for filing, preparation, printing, distribution, reproduction and
binding of disclosure documents, initial fees and charges of the
Trustee and its counsel, financing discounts, computer analysis,
legal and regulatory fees, charges and reimbursements, financial
and other professional ratings, insurance and fees for
authentication, registration, transportation and safekeeping of
bonds.
Event of Default. The term "Event of Default"means an event
of default as defined in Section 502 of this Trust Agreement.
Federal Securities. The term "Federal Securities" means
United States Treasury notes, bonds, bills or certificates of
indebtedness or obligations for which the full faith and credit of
the United States are pledged for the timely payment of principal.
and interest.
Fiscal Year. The term "Fiscal Year" means the one-year period
beginning on July 1 and ending on June 30.
Foreclosure Covenant. The term "Foreclosure Covenant" means a
covenant made by the City for the benefit of the owners of the
Refunding Bonds, by which the City agrees to institute and
diligently prosecute judicial foreclosure proceedings against
23
RESO.9 1i - 13 5 N C S a(P o~-jt~
property delinquent in the payment of reassessment installments
securing the Refunding Bonds.
Information Services. The term "Information Services" means
Financial Information, Inc.'s "Daily Called Bond Service", 30
Montgomery Street, Floor 10, Jersey City, New Jersey 07302,
Attention: Editor; Kenny Information Services' "Called Bond
Service", 55 Broad Street, Floor 28, New York, New York 10004;
Moody's Investors Service "Municipal and Government", 99 Church
Street, Floor 8, New York, New York 10007, Attention: Municipal
News Reports; Standard and Poor's Corporation "Called Bond Record",
25 Broadway, Floor 3, New York, New York 10004; and, in accordance
with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other services
providing information with respect to called bonds as the City may
designate in a written request of the City delivered to the
Trustee.
Interest Payment Dates. The term "Interest Payment Dates"
means March 2 and September 2 of each year during the term of the
Bonds commencing with September 2, 1996.
.Notice of. Advance Retirement. The term "Notice of Advance
Retirement" means the notice required by Section 8751 of the
California Streets and Highways Code (being a part of the
Improvement Bond Act of 1915) by which the City may advance the
maturity of any Refunding Bond.
Outstanding. The term "Outstanding" when used with reference
to the Revenue Bonds as of a particular date means all Bonds
theretofore delivered except: (a) all Bonds cancelled by the
Trustee on or before that date; (b) all Bonds in substitution for
which other Bonds have been delivered pursuant to this Trust
Agreement, and (c) Bonds defeased under Section 603 of this Trust
Agreement.
Owner. The term "Owner", when used with reference to the
Revenue Bonds, means the owner of any Outstanding Bond as shown on
the. Bond Register.
Payment Account. The term "Payment Account" means the account
by that name, within the Redemption Fund, established by Section
301 of this Trust Agreement
Permitted Investments. The term "Permitted Investments"
means:
A. Federal Securities.
B. Obligations of any of the following federal agencies which
obligations represent full faith and credit of the United
States of America, including:
24
RES®. 9 6- 13 5 N C S ~g a1 0~ 5~
Export - Import Bank
Rural Economic & Community Development
General Services Administration
U.S. Maritime Administration
Small Business Administration
Government National Mortgage Association (GNMA)
U.S. Department of Housing & Urban Development (PHA's)
Federal Housing Administration;
Tennessee Valley Authority
C. Bonds, notes or other evidences of indebtedness rated "AAA"
by Standard & Poor's Corporation and "Aaa" by Moody's
Investors Service issued by the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation with
remaining maturities not exceeding three years;
D. U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks (including
the Trustee) which have a rating on their short term
certificates of deposit on the date of purchase of "A-1" or
"A-1+" by Standard & Poor's and "P-1" by Moody's and maturing
no more than 360 days after the date of purchase. (Ratings on
holding companies are not considered as the rating of the
bank);
E. Commercial paper which is rated at the time. of purchase in
the single highest classification, "A-1+" by Standard & Poor's
and "P-1" by Moody's Investors Service and which matures not
more than 270 days after the date of purchase;
F. Investments in a money market fund rated "AAAm" or "AAAm-G"
or better by Standard & Poor's Corporation, including such
funds for which the Trustee or an affiliate acts as investment
advisor or provides other .services;
G. Pre-refunded Municipal Obligations defined as follows: Any
bonds or other obligations of any state of the United States
of America or of any agency, instrumentality or local
governmental unit of any such state which are not callable at
the option of the obligor prior to maturity or as to which
irrevocable instructions have been given by the obligor to
call on the date specified in the notice; and which are rated.,
based on the escrow, in the highest rating category of
Standard & Poor's Corporation and Moody's Investors Service,
Inc. or any successors thereto;
H. Investment agreements, guaranteed investment contracts,
funding agreements, or any other form of corporate note
representing the unconditional obligations of entities: (a)
the unsecured long-term debt obligations or claims-paying
ability ratings of which are rated in the top two rating
categories of Moody's Investors Service, Inc. or Standard &
Poor's Corporation, or (b) the short-term debt obligation
zs _ _ a.$ 5y~
R~S0.9G- 135NCS
rated in the two highest categories of either of such rating
agencies; and
I. Repurchase agreements faith financial institutions insured
by the FDIC or FSLIC, or any broker-dealer with "retail
customers" which falls under the jurisdiction of the
Securities Investors Protection Corporation (SIPC), provided
that (a) the over-collateralization is at one hundred two
percent (1020 , computed weekly, consisting of such securities
as described in A through E above; (b) a third party
custodian, the Trustee or the Federal Reserve Bank shall have
possession of such obligations; (c) the Trustee shall have
perfected a first priority security interest in such
obligations; and (d) failure to maintain the requisite
collateral percentage will require the Trustee to liquidate
the collateral..
Person. The term "Person" means a natural person,
corporation, association or public agency.
Prepavment Fund. The term "Prepayment Fund" means the fund by
that name established by Section 301 of this Trust Agreement.
Principal Office. The term "Principal Office" means the
corporate trust office of the Trustee at which it conducts its
corporate trust business in Los Angeles, California or any other
office of the Trustee designated by the Trustee for the purpose
from time to time, including for registration, transfer, exchange
and payment of Revenue Bonds.
Record Date. The term "Record Date" means the close of
business on the fifteenth day of the month preceding each Interest
Payment Date, whether or not the fifteenth day is a Business Day.
Redemption Fund. The term "Redemption Fund" means the fund of
that name established by Section 301 of this Trust Agreement,
containing within it the Payment Account, Earnings Account and the
Reserve Account.
Redemption Payments. The term "Redemption Payments" means
payments of principal of and interest on the Refunding Bonds, made
by the City to the Trustee'as assignee of the Authority. .
Refunding Bonds. The tern; "Refunding Bonds" means bonds
issued by the City pursuant to the Refunding Act of 1984 for 1915
Improvement Act Bonds and secured by reassessments in Reassessment
District No. 1996-1.
Required Reserve. The term "Required Reserve" means the
amount stated and defined as such in Section 302 of this Trust
Agreement.
26 ~ o~
ItESO.9 6- 13 5 N C S
Reserve Account. The term "Reserve Account" means the account
by that name, within the Redemption Fund, established by Section
3.01 of this Trust Agreement.
Revenue Bonds. The term "Revenue Bonds" means bonds of the
Authority authorized on May 20, .1996 to be issued pursuant to the
Marks-Roos Local Bond Pooling Act of 1985 (Section 6584 et seq.,
California Government Code) for the purpose of purchasing the
Refunding Bonds.
Securities Depositories. The term "Securities Depositories"
means: The Depository Trust Company, 711 Stewart Avenue, Garden
City, New York 11530, .Fax (516) 227-4039 or -4190; Midwest.
Securities Trust Company, Capital Structures-Call Notification, 440
South LaSalle Street, Chicago, Illinois 60605, Fax (312) 663-2343;
Philadelphia Depository Trust Company, Reorganization Division,
1900 Market Street, Philadelphia, Pennsylvania 19203, Attention:
Bond Department, Fax (215) 496-5058; and, in accordance with then
current guidelines of the Securities and Exchange Commission, other
addresses that these depositories may specify and/or other
securities depositories designated in a written request of the City
delivered to the Trustee.
Trust Agreement. The term "Trust Agreement" means this Trust
Agreement dated as of May 20, 1996, among the Trustee, the City and
the Authority.
Trustee. The term "Trustee" means Union Bank acting as
Trustee under this Trust Agreement.
27 51I-
RES®. g 6- 13 5 N C S
EXHIBIT B
DEBT SERVICE SCHEDULES FOR
CONSOLIDATED REFUNDING DISTRICT NO.
SERIES NO.
3 ~ o-F 5~-
RES®•96- 135NCS
1~1.
EXHIBIT C
DEBT SERVICE SCHEDULE FOR
1996 AUTHORITY REVENUE BONDS
RES®. 9 6- 13 5 N C S 3a. of 5~
1~
EXHIBIT D
FORM OF REVENUE BOND
REGISTERED REGISTERED
R--- $
1996 AUTHORITY REVENUE BOND
PETALUMA PUBLIC FINANCING AUTHORITY
CITY OF PETALUMA, SONOMA COUNTY, CALIFORNIA
Rate of Interest: Maturity Date: Bond Date Cusip:
$ September 2, June 4, 1996
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THIS IS TO CERTIFY that, subject to the provisions hereof for
prepayment, the registered. owner stated above or registered assigns
(the "Owner") is entitled to receive on the maturity date stated
above (the "Bond Payment Date"), the principal amount stated above.
This Bond has been authorized for issuance by resolution (the
"Resolution"j of the Petaluma Public Financing Authority (the
"Authority") pursuant to the provisions of the Marks-Roos Local
Bond Pooling Act of 1985 of the State of California..
This Bond (the "Bond") evidences a direct interest in amounts
received by the Authority as payments of the principal of, and
interest on, certain refunding bonds (the "Refunding Bonds") issued
by the City of Petaluma, Sonoma County, California (the "City") and
held by the Authority. The payments on the Refunding Bonds have
been assigned to Union Bank, as Trustee (the "Trustee") having a
corporate trust office (the "Principal Office") at Los Angeles,
California, pursuant to a trust agreement dated as of May 20, 1996
(the "Trust Agreement") among the Authority, the City and the
Trustee. The aforesaid principal amount is payable subject to the
terms of the Trust Agreement and represents a.portion of the
payments on the Refunding Bonds coming due on and before the Bond
Payment Date. The Owner is also entitled to .receive, subject to
the terms of the Trust Agreement, on September 2, 1996, and
semiannually thereafter on March 2 and September 2 of each year
(the "Interest Payment Dates") to :and including the Bond Payment
Date or the date of prepayment, whichever is earlier, semiannual
interest on the principal of this Bond at the per annum rate of
interest stated above. The principal and redemption premiums, if
any, are payable at the Principal Office of Trustee, or its
successor, as Trustee.
~tES®.96-135NCS ~~J.3 5~
Said. amounts are payable in lawful money of the United States of
America. Amounts representing principal are payable at the
Principal Office; amounts representing interest are payable by
check of the Trustee mailed by first-class mail on each Interest
Payment Date to the Owner of record on the fifteenth day of the
month preceding the Interest Payment Date (except as otherwise
described herein for interest paid to an account in the Continental
United States of America by wire transfer as requested in writing
no later than the applicable Record Date by certain owners of
$1,000,000 or more in aggregate principal amount of Bonds).
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THE BOND SET
FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.
The Trustee has no obligation or liability to the Owners to make
payments of principal or interest with respect to the Bonds. The
Trustee's sole obligations are to administer, for the benefit of
the Owners, the various funds and accounts established under the
Trust Agreement. The Trustee does not warrant the recitals of fact
herein.
The City and the Authority have covenanted that all conditions
precedent to the delivery of the Bonds, whether required by law or
by the Trust Agreement, have occurred or been performed, and that
the Bonds are within every limit prescribed by law.
This Bond shall not be entitled to any benefit under the Trust
Agreement or become valid or obligatory for any purpose until the
certificate of authentication and registration hereon endorsed
shall have been dated and signed by the Trustee.
IN WITNESS WHEREOF, the Authority has caused this Bond to be signed
by its Chairman and its Secretary and has caused its corporate seal
to be affixed, all as of the 4th day of June, 1996.
PETALUMA PUBLIC FINANCING AUTHORITY
(SEAL)
Chairman of the Authority
Secretary of the Authority
CERTIFICATE OF AUTHENTICATION .AND REGISTRATION
This is one of the Bonds described in the within-mentioned Trust
Agreement, which has been authenticated and registered on
UNION BANK
as Trustee
(Authorized signatory)
RES®.96-135NCS ~~31 ~
(REVERSE OF BOND)
19.96 AUTHORITY REVENUE BOND
PETALUMA PUBLIC FINANCING AUTHORITY
CITY OF PETALUMA, SONOMA COUNTY, CALIFORNIA
This Bond has been authenticated by the Trustee pursuant to the
terms of the Trust Agreement. Copies of the Trust Agreement are on
file in the offices of the Authority and the City and at the
Principal Office; reference is made to the Trust Agreement and any
amendments thereto for a description of the covenants of the
Authority securing the payments on this Bond, the nature, extent
and manner of enforcement of the covenants, the rights and remedies
of the Owners and the terms and conditions on which the Bonds are
delivered thereunder. To the extent and in the manner permitted by
the terms thereof, the provisions of the Trust Agreement may be
amended by the parties thereto with the written consent of the
Owners of at least a majority in principal amount of the Bonds then
outstanding, or without that consent for an amendment not adversely
affecting the interests of the Owners.
The registration of this Bond shall be transferable only on the
Bond Register, which shall be kept at the Principal Office, on
surrender hereof together with a written instrument of transfer
satisfactory to the Trustee executed by the Owner or his duly
authorized attorney. Thereupon the Trustee shall provide. one or
more new registered Bonds of the same aggregate principal amount,
Bond Payment Date and interest rate as the surrendered Bond,
registered in the name of the transferee..
The Bonds are delivered in the form of registered Bonds in
denominations of $5,000 each or any integral multiple thereof, and
on surrender thereof at the Principal Office with a written request
for exchange executed by the Owner or his attorney duly authorized
in writing, may be exchanged for an equal aggregate principal
amount of Bonds of any other authorized denominations, of the same
Bond Payment Date, and with the same .interest rate as the
surrendered Bond.
All or a portion of any Bond is subject to prepayment on any
Interest Payment Date by paying to the Owner thereof the principal
amount thereof, interest to the Interest Payment Date of prepayment
and a prepayment premium of a percentage of the principal being
prepaid as follows:
- - ~ 35 0~ 5~{
RCS®. 9 6° 13 5 N C S
Prepayment Date Premium
September 2, 1996 to September 2, 1997 2.0%
March 2, 1998 to September 2, 1998 2.0
March 2, 1999 to September 2, 1999 2.0
March 2, 2000 to September 2, 2000 2.0
March 2, 2001 to September 2, 2001 2.0
March 2, 2002 to September 2, 2002 2.0
March 2, 2003 to September 2, 2003 2.0
March 2, 2004 to September 2, 2004 2.0
March 2, 2005 to September 2, 2005 2.0
March 2, 2006 to September 2, 2006 1.5
March 2, 2007 to September 2, 2007 1.0
March 2, 2008 to September 2, 2008 0.5
March 2, 2009 and thereafter 0.0
The Trustee shall determine the manner of prepayment ,by lot; but
the portion of any Bond to be prepaid shall be in the principal
amount of $5,000 or an integral multiple thereof, and in selecting
portions of Bonds for prepayment, the Trustee shall treat each Bond
as representing the number of Bonds obtained by dividing its
principal amount by $5,000.
Notice of prepayment shall.be mailed by first-class mail to the
affected Owners, postage prepaid, not less than thirty (30) nor _
more than sixty (60) days before the date of prepayment. Failure
to mail the notice, or any defect in the notice as mailed, shall
not affect the validity of the proceedings for prepayment of the
Bonds.
The obligation of the City to make payments on the Refunding Bonds
is a limited obligation, subject to the receipt of installment
payments of reassessments securing the Refunding Bonds. The
obligation of the Authority to make payments on the Bonds is
limited to amounts deposited with the Trustee in the Payment
Account and the Reserve Account, all as specified in the Trust
Agreement.
The obligations of the Authority and the City under the Trust
Agreement constitute neither a debt nor a pledge of the faith and
credit of the City, the Authority, the Trustee, the State of
California or any other political subdivision. of the State.
The term bonds maturing in the year are subject to mandatory
advance redemption, by lot, without premium, on September 2, on or
after September 2, in accordance with the following schedule:
Amount to be Amount to be
Year Redeemed. Year Redeemed
_ - - ~ . 3co o f S~-
ItES®. 9 6- 13 5 N C S
I hereby certify that the following is a correct copy of the
signed legal opinion of STURGIS,,.NESS, BRUNSELL & ASSAF, a
professional corporation, Emeryville, California, on file in my
office.
Secretary of the Authority
34 3~ 0~ 5~{"
- -
~~s®• 9 s- 13 5 N C S
DEFEASANCE ESCROW AGREEMENT
between the
CITY OF PETALUMA
and
UNION BANK
as Escrow Agent
Dated as of May 20, 1996
~~:e
t~~Bl' 6 3$ o-~ 5y-
RESO.9 6 - 13 5 N C ~
TABLE OF CONTENTS
Page
Section 1. Appointment of Escrow Agent; Definitions ....3
Section 2. Establishment of .Escrow Fund ................4
Section 3. Deposit into Escrow Fund .4
Section 4. Investment of Deposit in Escrow Fund ....4
Section 5. Instructions as to Application of Deposit ...4
Section 6. Remaining Moneys ............4
Section 7. Substitution of Federal Securities ..........5
Section 8. Notice of Redemption .....5
Section 9. Successor Escrow Agent .......6
Section 10. Compensation to Escrow Agent; Indemnity and
Hold Harmless Protection for Escrow Agent ...6
Section il. Limitations on Responsibility of Escrow
Agent ..........6
Section 12. Protection of Escrow Agent ..................7
Section 13. Evidence of Matters .........................7
Section 14. Notices ...................................7
Section 15. California Law ..............................8
Section 16. Severability ................................8
Section 17. Execution in Counterpart ....................8
EXHIBIT A - ESCROWED FEDERAL SECURITIES .................9
EXHIBIT B - SCHEDULE OF REDEMPTION PAYMENTS ON PRIOR
BONDS ........10
2
+~~39.of5~f
RES0.g6-135NCS
DEFEASANCE ESCROW .AGREEMENT
This Defeasance Escrow Agreement (the "Agreement") is made as
of the 20th day of May, 1996, between the CITY OF PETALUMA, a
municipal corporation of the State of California (the "City"), and
UNION BANK, a state banking corporation, having a corporate trust
office in San Francisco, California (the "Escrow Agent").
RECITALS
First Trust of California. (formerly Bank of America National
Trust and Savings Association) by contract with the City acts as
the City's registrar, paying agent and fiscal agent for the payment
of principal of, and interest on, certain improvement bonds (the
"Prior Bonds") issued pursuant to the California Improvement Bond
Act of 1915 (Streets and Highways Code Section 8500 et seq.), to
wit:
(a) Refunding Assessment District No. 10
(b) Refunding Assessment District No. 14
(c) North McDowell Boulevard Assessment District No. 17
(d) Petaluma Auto Plaza Assessment District No. 19
(e) Assessment District No. 20, .Redwood Business Park 2
(f) Southpoint Business Park Assessment District No. 22,
Series A (only)
The City proposes to make a deposit of moneys and Federal
Securities from the proceeds of the Refunding Bonds and to appoint
the Escrow Agent as its agent for the purpose of applying said
deposit to the payment and redemption of the Prior Bonds and the
Escrow Agent desires to accept said appointment.
The Escrow Agent has full powers to act with respect to the
irrevocable escrow created herein and to perform the duties and
obligations to be undertaken pursuant to this Defeasance Escrow
Agreement.
NOW, THEREFORE, in consideration of the above premises and of
the mutual promises herein contained,, the parties hereto agree as
follows:
Section 1. Appointment of Escrow Agent• Definitions. The
City hereby appoints the Escrow Agent as escrow agent for this
Defeasance Escrow Agreement (the "Agreement"), and the Escrow Agent
hereby accepts the appointment. The Escrow Agent shall exercise
the rights and perform the duties specifically set forth herein,
3
~~s®. 1 3 5 N C S ~
and no implied covenants or obligations shall be read into this
Agreement against the Escrow Agent.
All capitalized terms used in this Agreement shall have the
meanings assigned by that certain trust agreement, dated as of -May
20, 1996, among the City, the Petaluma Capital Improvements
Authority and Union Bank, as Trustee, (the "Trust Agreement")
unless clearly assigned a different meaning by this Agreement.
Section 2. Establishment of Escrow Fund. There is hereby
created an irrevocable escrow designated the "City of .Petaluma 1996
Refunding Escrow Fund" (the "Escrow Fund"). All moneys and Federal
Securities in the Escrow Fund are hereby irrevocably transferred to
the Escrow Agent, as security for payment of the redemption price
of the Prior Bonds, to be held by the Escrow Agent in trust for the
benefit of the owners of the. Prior Bonds, except as specified in
Section 6 and Section 7 hereof. If the Escrow Agent shall receive
actual written notice that the moneys and Federal Securities in the
Escrow Fund will not. be sufficient to make any payment required by
Section 5 hereof, the Escrow Agent shall notify the City of such
fact and the City shall immediately cure the deficiency.
Section 3. Deposit into Escrow Fund. Concurrently with the
delivery of the Refunding Bonds, the City shall cause the amount of
$11,537,617.34., including $9,219,000 from proceeds of the Refunding
Bonds and $2,318,617.34 from the reserve and redemption funds for
the Prior Bonds, in cash and Federal Securities, to be transferred
to the Escrow Agent from the proceeds of the Refunding Bonds and
from funds maintained by the City for the Prior Bonds.
Section 4. Investment of Deposit in Escrow Fund. The Escrow
Agent shall invest the moneys deposited into the Escrow Fund
pursuant to the preceding section in the Federal Securities set
forth in Exhibit A attached hereto and by this reference
incorporated herein (the "Escrowed Federal Securities"). The
Escrowed Federal Securities shall be deposited with and held by the
Escrow Agent in the Escrow Fund solely for the uses and purposes
set forth herein.
Section 5. Instructions as to Application of Deposit. The
City hereby instructs the Escrow Agent as its agent to apply the
moneys and Escrowed Federal Securities deposited in the Escrow Fund
pursuant to Section 3 hereof to pay the redemption price of the
Prior Bonds on September 2, 1996 in the amounts set forth in
Exhibit B attached hereto and by this reference incorporated
herein.
Section 6. Remaining Moneys; Unclaimed Monevs. The Escrow
Agent shall hold uninvested money, if any, remaining in the Escrow
Fund until needed for payment of the redemption price of the Prior
Bonds. Such moneys may be invested or reinvested as directed in
writing by an Authorized Officer of the City, but only if those
4
~ ~
i3SNCS
directions are accompanied by an opinion of Bond Counsel that
investment in. accordance with the directions will not affect the
exclusion from gross income, for purposes of federal income taxes,
of the interest payable with respect to the Refunding Bonds or
payable with respect to the Prior Bonds. Any interest income
resulting from investment or reinvestment of moneys pursuant to
this Section shall be paid to the City as soon as practicable but
only after the payment and redemption in full of the Prior Bonds.
After payment and redemption in full of the Prior Bonds, any excess
funds are to be transferred to the Redemption Fund of the Revenue
Bonds. The Escrow Agent shall thereupon be released and discharged
with respect to those amounts.
Section 7. Substitution of Federal Securities. The City at
any time may direct the Escrow Agent in writing to substitute
Federal Securities then issued by the United States of America for
any Federal Securities then deposited in the Escrow Fund, provided
that:
(1) as used in this Agreement, the term "Federal. Securities"
shall be restricted to direct non-callable obligations of the
United States of America or securities fully and
unconditionally guaranteed as to the timely payment of
principal and interest by the United States of America, and to
which the full faith and credit of the United States of
America has been pledged; and
(2) any direction to substitute Federal Securities shall be
accompanied by the certificate of an independent certified
public accountant of favorable national reputation experienced
in the refunding of obligations of political. subdivisions that
the Federal Securities in the Escrow Fund after substitution,
together with .interest to be derived therefrom, shall be
sufficient to make the payments specified in Section 5 hereof
and, further to be accompanied with an opinion of Bond Counsel
that the substitution will not affect the exclusion from gross
income, for purposes of federal income taxes, of the interest
payable with respect to the Refunding Bonds or payable with
respect to the Prior Bonds.
If after substitution the Escrow Fund contains an amount in excess
of an amount sufficient to make the payments required by Section 5
hereof, the excess shall be paid to the City as soon as practicable
after the Escrow Agent receives written instructions from the City.
Section 8. Notice of Redemption. The City shall take all
steps required to redeem all Prior .Bonds on September 2, 1996, at a
redemption price equal to the principal amount thereof, plus
accrued interest represented thereby to the redemption date, plus
the premium required by the Prior Bonds.
5
t~ESO.9 6- 1 3 5 N C S
Section 9. Successor Escrow Agent. The Escrow Agent may
resign at any time, effective on the appointment of a successor
Escrow Agent. On receiving notice of resignation the City shall
promptly appoint a successor Escrow Agent. If the City fails to
appoint a successor Escrow Agent within thirty (30) days after
receiving notice, the resigning Escrow Agent may petition any court
of competent jurisdiction for the appointment of a successor Escrow
Agent. The City at any time may remove the Escrow Agent initially
appointed and any successor thereto and may appoint a successor in
writing. Upon removal the predecessor Escrow Agent shall deliver
all cash, deposits, investments and other items in its possession
to the successor Escrow Agent.
Section 10. Compensation to Escrow Aaent; Indemnity and Hold
Harmless Protection for Escrow Aaent. The City shall indemnify and
hold harmless the Escrow Agent for out-of-pocket costs such as
mailing costs, redemption expenses, legal fees and other costs and
expenses relating .hereto and, in addition, fees, costs and expenses
relating to the purchase of any Federal Securities and reimburse
the Escrow Agent for all its advances and expenditures of
independent accountants, counsel and engineers or other experts
employed by it in the exercise and performance of its rights and
obligations hereunder, and indemnify and save the Escrow Agent
harmless against liabilities., costs or claims either (a) arising
from the Escrow Agent's exercise and performance of its rights and
obligations hereunder, except for the Escrow Agent's negligence or
willful misconduct, or (b) arising out of breach by the City of any
covenants, conditions or other obligations to be performed or
observed by the City hereunder. Under no circumstances shall
amounts deposited in the Escrow Fund be deemed to be available for
the purpose of indemnification. The Escrow Agent shall be paid its
annual administration fees and out-of-pocket expenses within thirty
(30) days upon the City's receipt of such billing.
Section 11. Limitations on Responsibility of Escrow Agent.
The statements, agreements., conditions, covenants and terms
contained in the proceedings for issuance of the Prior Bonds or the
Refunding Bonds shall be taken as statements, agreements,
cond-itons, covenants and terms of the City, and the Escrow Agent
does not assume any responsibility for the correctness of the same
or for the observance or performance by the City of the same and
does not make any representation as to the sufficiency or validity
of the Prior Bonds or the Refunding Bonds or the adequacy of the
escrowed Federal Securities to pay the amounts due on the Prior
Bonds. The Escrow Agent shall not incur any responsibility in
respect hereof other than in connection with the rights and
obligations assigned to or imposed upon it herein, and as respects
such rights and obligations shall not be liable in connection with
the performance thereof except for its own negligence or willful
misconduct.
6
ens®.9s-135NCS `~3 a~5~(-
The Escrow Agent shall have no responsibility to see to the
deposit with the Escrow Agent of amounts to be deposited by others
under this Agreement. The Escrow Agent may conclusively rely on
the written instructions, representations and calculations received
by it from the City or from any officer or agent of the City and
the Escrow Agent shall be entitled to receive written instructions
from the City with regard to any deposits or other matters.
Section 12. Protection of Escrow Agent. The Escrow Agent
shall incur no liability in acting in good faith on any document
that it believes to be genuine and to have been duly given. The
Escrow Agent shall have no duty to investigate or question the
statements contained in any document, but may rely on them as
truthful and accurate. The Escrow Agent may consult with counsel,
who may be counsel to the City or Bond Counsel, with regard to
legal questions, and the opinion of counsel shall provide full and
complete authorization and protection in respect of any action
taken or permitted hereunder in good faith.
The Escrow Agent shall not be liable for any error of judgment
made in good faith by a responsible officer, unless it shall be
proved that the Escrow Agent was negligent in ascertaining the
pertinent facts. The Escrow Agent shall not be required to expend
or risk its own funds or incur any financial liability in the
performance of its duties hereunder, or in the exercise of any of
its rights or powers. The Escrow Agent shall not be accountable
for the use or application by the City of the Refunding Bonds or
the proceeds thereof.
Section. l3. Evidence of Matters.. The Escrow Agent is
entitled to rely on the certificate of an Authorized Officer of the
City, but in its discretion the Escrow Agent may require other or
further evidence before acting or withholding action.
Section 14. Notices. All written notices to be given under
this Agreement shall be given by mail to the party entitled thereto
at its address set forth below, or at such address as the party may
provide to the other parties in writing from time to time.
If to the City: City of Petaluma
c/o Director of Finance
11 English Street
Petaluma, CA 95942
If to Escrow Agent: Union Bank
350 California Street
San Francisco, CA 94104
Att: Corporate Trust Division
7
~ES~.gs-135NCS
Section 15. California Law. This Agreement shall be
construed and governed in accordance with the laws of the State of
California.
Section 16. Severability. Any provision of this Agreement
found to be prohibited by law shall be ineffective only to the
extent of such prohibition, and shall not invalidate the remainder
of this Agreement.
Section 17. Execution in Counterpart. This Agreement may be
executed in counterparts, and each counterpart shall be deemed to
be an original. All counterparts shall be deemed to be one and the
same instrument.
IN WITNESS WHEREOF, the Escrow Agent and the City have each
caused this Agreement to be executed by their duly authorized
officers all as of the date first above written.
CITY OF PETALUMA,
a municipal corporation
of the State of California
By
UNION BANK
as Escrow Agent
By
Authorized Officer
8
RESO. g ~ - 13 5 lV C
EXHIBIT A
ESCROWED FEDERAL SECURITIES
Yield Price Principal Interest Net Amount Due
RES0.96- 13 SI~C~
EXHIBIT B
REDEMPTION PAYMENTS
DEFEASANCE ESCROW ACCOUNTS
Account Principal Interest Premium Total.
iiESO. g 6- 13 5 K C S~
E%HIBIT C
United States of America
State of California
County of Sonoma
REGISTERED REGISTERED
Number R-1 $
LIMITED OBLIGATION REFUNDING BOND
CITY OF PETALUMA
REASSESSMENT DISTRICT NO. 1996-1
SERIES NO. 1996-1
INTEREST RATE MATURITY DATE BOND DATE
(see attached) (see attached) June 4, 1996
REGISTERED OWNER: PETALUMA PUBLIC FINANCING AUTHORITY
c/o City of Petaluma
11 English Street
Petaluma, CA 94952
ID No. 94-6000392
PRINCIPAL SUM: DOLLARS
Under and by virtue of the Refunding Act of 1984 for 1915
Improvement Act Bonds, Division 11.5 of the Streets and Highways
Code (the "Act"), the City of Petaluma, County of Sonoma, State of
California (the "City"), will, out of the redemption fund for the
payment of the bonds issued upon the unpaid portion of
reassessments made for the refunding of all outstanding 1915 Act
bonds in:
(aj Refunding Assessment District No. 10
(b) Refunding Assessment District No_ 14
(c) North McDowell Boulevard Assessment District No. 17
(d) Petaluma Auto P1aza.Assessment District No. 19
(e) Assessment District No. 20, Redwood Business Park 2
(f) Southpoint Business Park Assessment District No. 22,
Series A (only)
more fully described in the Resolution of Intention adopted by the
City Council of the City of Petaluma on the 20th day of May, 1996,
pay to the registered owner stated above or registered assigns, on
o~ 5~
ItES0.96-135NCS
the maturity date stated above, the principal sum stated above, in
lawful money of the United States of America and in like manner
will pay interest from the interest payment date next preceding the
date on which this Bond is authenticated, unless this Bond is
authenticated and registered as of an interest payment date, in
which event it shall bear interest from such interest payment date,
or unless this Bond is authenticated and registered prior to
September 2, 1996, in which event it shall bear interest from its
date, until payment of such principal sum shall have been
discharged, at the rate per annum stated above, payable
semiannually on March 2 and September 2 in each year commencing on
September 2, 1996. Both. the principal hereof and redemption
premium hereon are payable at the office of Director of Finance of
the City of Petaluma (the "City"), or its successor, as Transfer
Agent, Registrar and Paying Agent, in Petaluma, California, and the
interest hereon is payable by check or draft mailed to the owner
hereof at the owner's address as it appears on the registration
books of the City, or at such address as may have been filed with
the City for that purpose, as of the fifteenth day of the month
preceding each interest payment date.
This Bond will continue to bear interest after maturity at the rate
above stated, provided, it is presented at maturity and payment
thereof is refused upon the sole ground that there are not
sufficient moneys in said redemption fund with which to pay same.
If it is not presented at maturity, interest thereon will run until
maturity.
This Bond is one of several annual series of bonds of like date,
tenor and effect, but differing in amounts, maturities and interest
rates, issued by the City of Petaluma under the 1984 Act and the
Resolution Authorizing Issuance and Sale of Refunding Bonds (the
"Resolution of Issuance"), for the purpose of refunding bonds
described in said proceedings, and is secured by the moneys in said
redemption fund and by the unpaid portion of said reassessments
and, including principal and interest, is payable exclusively out
of said fund.
This Bond is transferable by the registered owner hereof, in person
or by the owner's attorney duly authorized in writing, at said
office of --the City, subject to the terms and conditions provided in
the Resolution of Issuance, including the payment of certain
charges, if any, upon surrender and cancellation of this Bond.
Upon such transfer, a new registered Bond or Bonds, of any
authorized denomination or denominations, of the same maturity, for
the same aggregate principal amount, will be issued to the
transferee in exchange therefor.
z y-~6 o-F 5 ~
~E~®• 9~- i~ 5 N C S
Bonds shall be registered only in the name of an individual
(including joint owners), a corporation, a partnership or a trust.
The City shall not be required to make such exchange or
registration of transfer of bonds during the period commencing with
the fifteenth day of the month preceding any interest payment date
and ending on said interest payment date.
The City will not obligate itself to advance available funds from
the City treasury to cure any deficiency which may occur in said
redemption fund. A determination not to obligate itself shall not
prevent the City from, in its sole discretion, so advancing funds.
The City may treat the registered owner hereof as the absolute
owner for all purposes, and the City shall not be affected by any
notice to the contrary.
This Bond or any portion of it in the amount of $1,000 or any
integral multiple thereof, may be redeemed and paid in advance of
maturity upon the second day of March or September in any year by
giving at least 30 days' notice by registered or certified mail,
or by personal service to the registered owner hereof at such
owner's address as it appears on the registration books of the
City, and by paying principal and accrued interest.. The redemption
premium is the percent of principal amount of the bonds to be
redeemed shown below:
Prepayment Date Premium
September 2, 1996 to September 2, 1997 4.0%
March 2, 1998 to September 2, 1998 3.5
March 2, 1999 to September 2, 1999 3.0
March 2, 2000 to September 2, 2000 2.5
March 2, 2.001 to September 2, 2001 2.0
March 2, 2002 to September 2, 2002 1.5
March 2, 2003 to September 2, 2003 1.0
March 2, 2004 to September 2, 2004 0.5
March 2, 2005 and thereafter 0.0
This Bond shall not be entitled to any benefit under the Act or the
Resolution of Issuance, or become valid or obligatory for any
purpose, until the certificate of authentication and registration
hereon endorsed shall have been dated and signed .by the City.
REST. g 6- 13 S N C S 9 0~ 5
IN WITNESS WHEREOF, said City of Petaluma has caused this Bond to
be signed in facsimile by the Treasurer of said City and by its
Clerk, and has caused its corporate seal to be reproduced in
facsimile hereon all as of the 4th day of June, 1996.
CITY OF PETALUMA
Clerk Treasurer
(SEAL)
Certificate of Authentication and Registration
This is one of the Bonds described in the within mentioned
Resolution of Issuance, which has been authenticated and registered
on
CITY OF PETALUMA,
as Transfer Agent, Registrar and Paying Agent
By
Authorized Officer
I hereby certify that the following is a correct copy of the signed
legal opinion of STURGIS, NESS, BRUNSELL & ASSAF a professional
' corporation, Emeryville, California, on file in my office.
' City Clerk
~tES®. 9 6- 13 5 N C S H o f 5~
United States of America
State of California
County of Sonoma
REGISTERED REGISTERED
Number R-1 $9.,129,000.00
LIMITED OBLIGATION REFUNDING BOND
CITY OF PETALUMA
REASSESSMENT DISTRICT NO. 1996-1
SERIES NO. 1996-1
INTEREST RATE MATURITY DATE BOND DATE
(see attached) (see attached) June 11, 1996
REGISTERED OWNER: PETALUMA PUBLIC FINANCING AUTHORITY
c/o City of Petaluma
11 English Street
Petaluma, CA 94952
ID No. 94-6000392
PRINCIPAL SUM: NINE MILLION ONE HUNDRED TWENTY-NINE THOUSAND
DOLLARS ($9,129,000.00)
Under .and by virtue of the Refunding Act of 1984 for 1915 _
Improvement Act Bonds, Division 11.5 of the Streets and Highways
Code (the "Act"), the City of Petaluma, County of Sonoma, State of
California (the "City"), will,, out of the redemption fund for the
payment of the bonds issued upon the unpaid portion of .
reassessments made for the refunding of all outstanding 1915 Act
bonds in:
(a) Refunding Assessment District No. 10
(b) ..Refunding Assessment District No. 14
(c) North McDowell Boulevard Assessment District No. 17
(d) Petaluma Auto Plaza Assessment District No. 19
(e) Assessment District No. 20, Redwood Business Park 2
(f) Southpoint Business Park Assessment District No. 22,
Series A (only)
more fully described in the Resolution of Intention adopted by the
City Council of the City of Petaluma on the 20th day of May, 1996,
pay to the registered owner stated above or registered assigns, on
51 o f 5~
Reso. 96-135 NCS ~~~DA~ C
. ~
the maturity date stated above, the principal sum stated above, in
lawful money of the United States of America and in like manner
will pay interest from the interest payment date next preceding the
date on which this Bond is authenticated, unless this Bond is
authenticated and registered as of an interest payment date, in
which event it shall bear interest from such interest payment date,
or unless this Bond is authenticated and registered prior to
September 2, 1996, in which event it shall bear interest from its
date, unti'1 payment of such principal sum shall have been
discharged, at the rate per annum stated above, payable
semiannually on March 2 and September 2 in each year commencing on
September 2, 1996. Both the principal hereof and redemption
premium hereon are payable at the office of Director of Finance of
the City of Petaluma (the "City"), or its successor, as Transfer
Agent, Registrar and Paying Agent, in Petaluma, California, and the
interest hereon is payable by check or draft mailed to the owner
hereof at the owner's address as it appears on the registration
books of the City, or at such address as may have been filed with
the City for that purpose, as of the fifteenth day of the month
preceding each interest payment date.
This Bond will continue to bear interest after maturity at the rate
above stated, provided, it is presented at maturity and payment
thereof is refused upon the sole ground that. there are not
sufficient moneys in said redemption fund with which to pay same.
If it is not presented at maturity, interest thereon will run until
' maturity.
This Bond is one of several annual series of bonds of like date,
tenor and effect, but differing in amounts, maturities and interest
rates, issued by the City of Petaluma under the 1984 Act and the
Resolution Authorizing Issuance and Sale of Refunding Bonds (the _
"Resolution of Issuance"), for the purpose of refunding bonds
described in said proceedings, and is secured by the moneys in said
redemption fund and by the unpaid portion of said reassessments
and, including principal and interest, is payable exclusively out
of said fund.
This Bond is transferable by the registered owner hereof, in person
or by the owner's attorney duly authorized in writing, at said
office of the City, subject to the terms and conditions provided in
the Resolution of Issuance, including the payment of certain
charges, if any, upon surrender and cancellation of this Bond.
Upon such transfer, a new registered Bond or Bonds, of any
authorized denomination or denominations, of the same maturity, for
the same aggregate principal amount, will be issued to the
transferee in exchange therefor.
Reso. 96-135 NCS Page-6-e€'d
Bonds shall be registered only in the name of an individual
(including joint owners), a corporation, a partnership or a trust.
The .City shall not be required to make such exchange or
registration of transfer of bonds during the period commencing with
the fifteenth day of the month preceding any interest payment date
and ending on said interest payment date.
The City will not obligate itself to advance available funds from
the City treasury to cure any deficiency which may occur in said
redemption fund. A determination not to obligate itself shall not
prevent the City from, in its sole discretion, so advancing funds.
The City may treat the registered owner hereof as the absolute
owner for all purposes, and the City shall not be affected by any
notice to the contrary.
This Bond or any portion of it in the amount of $1,000 or any
integral multiple thereof, may be redeemed and paid in advance of
maturity upon the second day of March or September in any year by
giving at least 30 days' notice by registered or certified mail,
or by personal service to the registered owner hereof at such
owner's address as it appears on the registration books of the
City, and by paying principal and accrued interest. The redemption
premium is the percent of principal amount of the bonds to be
redeemed shown below:
Preoavment Date ~ Premium
September 2, 1996 to September 2,..1997 4.0%
March 2, 1998 to September 2, 7998 3.5
March 2, 1999 and thereafter 3.0
This Bond shall not be entitled to any benefit under the Act or the
Resolution of Issuance, or become valid or obligatory for any
purpose, until the certificate of authentication and registration
hereon endorsed shall have been dated and signed by the City.
53 of 54
Reso. 96-135 NCS Axe-e~8
IN WITNESS WHEREOF, said City of Petaluma has caused this Bond to
be signed in facsimile by the Treasurer of said City and by its
Clerk, and has caused its corporate seal to be reproduced in
facsimile hereon all as of the 11th day of June, 1996.
CITY OF PETALUMA
Clerk Treasurer
(SEAL)
Certificate of Authentication and Registration .
This is one of the Bonds described in the within mentioned
Resolution of Issuance, which has been authenticated and registered
on
CITY OF PETALUMA,
as Transfer Agent, Registrar and. Paying Agent
By
Authorized Officer
I hereby certify that the following is a correct copy of the signed
legal opinion of STURGIS, NESS, BRUNSELL & ASSAF a professional
corporation, Emeryville, California, on file in my office.
City Clerk
Reso. 96-135 NCS 8