HomeMy WebLinkAboutRESO 645426005-36 FINAL • K0188
CITY OF PALO ALTO
SANTA CLARA COUNTY, STATE OF CALIFORNIA
RESOLUTION NO. 6454
A SERIES RESOLUTION AUTHORIZING THE ISSUANCE OF A
PRINCIPAL AMOUNT Of $12,200,000
CITY OF PALO ALTO, CALIFORNIA
UTILITY REVENUE BONOS, 1985 SERIES A
{ADJUSTABLE CONVERTIBLE EXTENOABLE SECURITIES-ACESsm)
Adopted December 23, 1985
ORIGINAL
Section
CITY OF PALO ALTO
SANTA CLARA COUNTY
CALIFORNIA
RESOLUTION NO.
A SERIES RESCLUrION AUTHORIZING THE ISSUANCE OF A
PRINCIPAL AMOUNT OF $12,200,000
CITY OF PALO ALTO, CALIFORNIA
UTILITY REVENUE BONDS, 1985 SERIES A
(ADJUSTABLE CONVERTIBLE EXTENOABLE SECURITIES-ACESsm)
TABLE OF CONTENTS
ARTICLE I
AUTHORITY, PURPOSE AND DEFINITIONS
1.01. Authorization and Purpose............................................ 2
1.02. 1985 Series A Resolution .•.•..•..•.•..••.••..•..•.....•.•......... c.. 2
1.03. Definitions ........................................ .a.................. 2
ARTICLE II
AUTHORIZATION OF 1985 SERIES A BONDS
2.01. Principal Amount, Designation and Series............................. 9
2.02. Denominations, Medium,, Method and Place of
Payment and Dating of Bonds........................................ 9
2.03. Payment Dates of Bonds............................................... 9
2.04. Interest Rates ..• ~··············"········•ci••························ 9 2.05. Conversion to the Fixed Rate ••••••••••••••••••••••••.•••••••••••••••• 12
2.06. Interest Mc>des......................................................... 15
2.07. Purchase of Bonds •.•.••.••. ~········································· 24 2.08. Remarketing of Bonds ••••••..•..•..•••••.•••••.•...•..•.•••.•...•...•. 25
2.09. Ma~datory Purchase •••.••••......••••• ~······························· 27 2.10. Owner 1s Right to Retain Bonds Upon Mandatory Purchase •••••••••••••••• 28
2.11. Letter of Credit; Alternate Letter of Credit;
Alternate Security •••••••..•......•.•••••.••..•..•.•••••••...•....• 28
2.12. ~OrtP. of Bonds••••••••••••••••o••••••••••••••••••••••••••••••••••••••• 30 2.13. Execution and Authentication of Bonds •••••••••••••••••••••••••••••••• 31
2.14. Transfer and Exchange of Bonds •.•••••••••••••• o••••••················ 31
2.15. Bond Registration Books.~~··········································· 31 2.16. Temporary Bonds ........................................................ 31
2.17. Approval of U"derwriting Agreement •••••••••••••••••••••••••.••••••••• 31
2.18. Approval of Pre11m1nary Official Statement ••••••••••••••••••••••••••• 32
2.19. Approval of Remarketing Agreement ••••••••••••••••••••..•••••••••.•••• 32
2.20. Approval of Reimbursement Agreement; Tenn Note
and Demand Note •••••• e .......................................... , • • • 32
2.21. Prior Actions Ratified and Confirmed ••••••••••••..••••••••••••••••••• 32
2.22. Further Actions Authorized ••.•••••••••••••••••••••••.•••••••••••••••• 32
1
3.01.
3.02.
3.03.
4.01.
4.02.
4.03.
4.04.
4.05.
4.06.
5.01
5.02.
5.03.
5.04.
5.05.
6.01.
6.02.
6.03.
7.01.
7.02.
7 .03.
7.04.
ARTICLE III
PROCEEDS OF BONDS
•
Del 1very of Bonds .. o .................................................. .
Deposit of Proceeds of Bonds •••..••••••••••••••••••..•••.••••••••••••
Application of 1985 Series A Project Account ••.••••.••••...••••••.•••
ARTICLE IV
REDEMPTION OF BONDS
33
33
33
Terms of Red empt 1 on. • • • • • • • • • • • • • • • • • • • • • • • • • • . • .. . • . .. • . • . • • • . • • • • • • • . 34
Redemption Procedure •••••••••••.••.•••••.••••.•.••••••••••••••••••••• 37
Selection of Bonds for Redemption •••••••••••••..•.•.••••••••••••••••• 38
Notice of Redemption. . . . • . . . . • . . . . . . . . . • .. . . . . . . . . . . . . . . . . . . . . . . . • . . ... . 39
Part i a T Redemption of Bonds. • • • • • • • • • . • • • • • • • • • • • . • . . • • • • • • • • • • • • • . • • 39
Effect of Redemption ••••••••••••••••••••••••••••••••••••.•••••••••.•• 40
ARTICLE V
REVENUES, FUNDS ANO ACCOUNTS
Pledge of Revenues •••••••••••••••••••••••••••••••.•.••••.•••••••••••• 41
Allocation of Revenues •••••••••••••.••.•.•••.•.••••••••••.••••••••••• 42
Application of Interest Account •••••••••••.•••••••••••••••••••••••••• 43
Application of Sinking Fund Account •••••••.••••••.•.••••••••••••••••• 43
Application of Bond Reserve Account •••••••••••••••••••••••••••••••••••• 44
ARTICLE VI
COVENANTS
Compliance with 1985 Series A Resolution •••••••••••••••••••••••••••••
Arbitrage and No Industrial Development
Bond Status Covenants •.••..•....•••...•••.•.......•..... ~.~········
Conf1nnation of General Resolution •••••••••••••.••••.••••••••••••••••
ARTICLE VI I
DEFAULT AND LIMITATIONS OF LIABILITY
45
45
45
Events of Default •.•••.•••••••••••••••••••••••••••••••••••••••••••••• 46
Action on Default •............ ,. ...... .,, ....... .., . . • . . . . • . • . • . . .. . . • . . . • • . . . • .. 46
Application of Funds Upon Acce1eration •••••••••••.•.•••••••.•••••.•.••• 47
No Liability by the Fiscal Agent or the Paying Agent to
the Owners............................................................... 47
.; . • 1
8.01.
8.02.
8.03.
8.04.
8.05.
9.01.
9.02.
9.03.
ARTICLE VI I I
THE FISCAL AGENT, THE REMARKETER, THE RATE-SETTING
AGENT AND PAVING AGENT
Notices to Bank •••••••••.••••••••••••.•..•.••••.•..•••••••••••••.••.•
Appointment of Remarkf!ter •••••••••.••••••••••••••.•••••..••••••••...•
Appointment of Rate~Setting Agent •••...••••••••••••••••••••.••.••.••.
Appointment of Paying Agent ••.••••.••••••....•.•••.•..•••..•.••••....
Appointment of Fiscal Agent •••••••••••••••••.••••••••.••.••.•••.•••••
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO 1985
SERIES A RESOLUTION
Amendments Not Requiring Consent ~f Bondholders •..•••••••••••••••...•
Consent of Bank •••••••••••••••••••••••••••••••••••••••••••.•••.•..•••
Endorsement or Replacement of Bonds After Amendment
or Supplement ....•.•....•.....••............•.•...•...•............
~RTICLE X
DEFEASANCE
48
48
48
49
50
52
52
52
10.01. Discharge of Bonds and 1985 Series A Resolution •.••••••••••••••••• ,. 53
11.01.
11.02.
11.03.
11.04.
11.05.
11.06.
11.07.
ARTICLE XI
MISCELLANEOUS
Alternate Methods of Registration of Bonds •••••••••••••••••••••••.••
Partial Inva11dity ...•..••..........•......... c•••••••••••••••••c•••
Californ1a Law .....•.•.•..•......•.......•...•........•••.. ., ... " ...•
Notices .............................................................. .
Conflicting Resolutions Repealed •••.••••••••••••••••••••••••••••••••
Third Party Beneficiary ...•.•••••••••••..••.•••••..•••••••••••••••••
Effect 1 ve Date •........................................ e ............. .
54
54
54
54
55
55
55
Execut 1 on Page. • • • • • • • • • • • • • • • • . . • • • • • • • • • • • • .. . • • • • • • • • • • • • • • • . • • • • • • • • • • . . • 56
Appendix A •••••••••• ""....................................................... 57
i; i
RESOLUTION NO.
A SERIES RESOLUTION AUTHORIZING THE ISSUANCE OF A
PRINCIPAL AMOUNT OF $12,200,000
CITY OF PALO ALTO. CALIFORNIA
UTILITY REVENUE BONDS, 1985 SERIES A
(ADJUSTABLE CONVERTIBLE EXTENDABLE SECURITIES-ACESsm)
RESOLVED, by the Council of the City of Palo Alto, California that
WHEREAS, the Council of the City of Palo Alto, by Resolution No. 6111, "A
Resolution Authorizing the Issuance of City of Palo Alto Utility Revenue Bonds"
has authorized an issue of Bonds for the purposes therein set forth;
WHEREAS, said resolution authorizes the issuance of said Bonds in one or
more Series pursuant to Series Resolutions authorizing each such Series and, so
long as no event of def au 1 t has occurred and be continuing thereunder, the
issuance of bonds secured by a lien on net revenues which is subordinate to the
lien securing Bonds outstanding under said resolution; ·
WHEREAS, the City has heretofore authorized, issued and sold $4,765,000
of Utility Revenue and Refunding Bonds 1983 Se'ries A, of which $4,385,000 are
currently outstanding;
WHEREAS, the Cnunc i1 has detenni ned that it is necessary and required
that the City issue at this ti~ a Series of Bonds to be designated "City of
Palo Alto Utility Revenue Bonds, 1985 Series A" (Adjustable Convertible
Extendable Secur1ties-ACESsm) for the purposes herein set forth whf ch Seriec:. of
Bonds will be payable from the net revenues and secured by a lien thereon wn)ch
will initially be subordinate to the lien of the said outstanding Bonds but
which w111, at such time and 1n the event that certain events herein set forth
take place, be and become on a parity to said 11en, all as herein provided; and
WHEREAS, it is therefore the intention of this Council that said 1985
Series A Bonds be issued under this Resolution as a Series of Bonds pursuant to
and as authorized by said Resolution No. 6111, secured initially by a
subordinate lien on the net revenues but susceptible to convers1on to parity as
herein provided;
NOW, THEREFORE, IT IS ORDERED. as follows:
ARTICLE I
AUTHORITY, PURPOSE AND DEFINITIONS
SECTION 1.01. Authorization and Purpose.
(A} The Council has reviewed all proceedings heretofore taken relative
to the authorization of the 1985 Series A Bonds and has fcund, as a result of
such rev1ew, and hereby determines and declares that all conditions, things and
acts required by 1 aw to exist, happen or be perf armed precedent to and in the
issuance of the 1985 Series A Bonds do exist, have happened and have been
performed in due time, form and manner as required by law, and the Council is
now authorized, pursuant to each and every requirement of law, to issue the 1985
Series A Bonds in the manner and form provided in the General Reso1ution and in
this 1985 Series A Resolution.
(B} ThE purposes for which the 1985 Series A Bonds are to be issued are
to provide funds (together with other available funds) to pay the costs of the
acquisition and construction of the 1985 Series A Project, including payment of
costs incidental to or connected with such acquisition and construction. end to
pay the Costs of Issuance cf the 1985 Series A Bonds, and to satisfy the funding
requirements of the Reserve Account.
SECTION 1.02. 1985 Series A Resolution. This 1985 Series A Resolution
1s adopted 1n accordance with provisions of Article II and Article VIII of the
General Resolution and pursuant to the authority contained in the Bond Law.
SECTION 1.03. Oefinitfons.
(A) All terms which are defined in Article I of the Genera1 Resolut1on
shall have the same meanings, respectively, in this 1985 Series A Resolution as
such terms are given in said Article I of the General Resolution.
(B) In this 1985 Series A Resolu:ion9
(1) Act of Bankruptcy of the Bank means that the Bank shall become
insolvent or fa11 to pay its debts generally as such debts become due or shall
admit 1n writing its inabflity to pay any of its indebtedness or shall consent
to or petition for or apply to any authority for the appo1ntment of a receiver,
11qu1d1'ltor, trustee or similar offfcial for itself or for all of any substantial
part of 1ts properties or assets or any such trustee. receiver, liquidator or
similar official is othen1ise appointed or insolvency9 reorganization,
arrangement or liquidation proceedings (or similar proceedings) shall be
instituted by or against the Bank, irrespective of whether any of the foregoing
shall be commenced, instituted or prosecuted under the laws of the United States
of America or any State thereof or the laws of the sovereign nation which is the
dom1c1le or place of organization of the Bank.
(2) Adjusted Rate means the interest rate borne by the Bonds prior
to the Fixed Rate Conversion of such Bonds, determined for each Interest Mode as
provided 1n Section 2.04 hereof.
2
(3) Alternate Letter of Credit means an alternate Letter of Credit
issued 1n accordance with Section 2.11 hereof.
(4) Alternate Security means any credit facility, insurance policy,
guarantee or other credit support agreement or mechanism provided by the City in
accordance with Section 2 .11 hereof, as the same may from time to time be
supplemented, amended or extended in accordance with its terms.
(5) Bank means The Fujf Bank Limited, a banking corporation duly
organized and existing unde~ and by virtue of the laws of Japan, acting through
its Los Angeles Agency, as issuer of the Letter of Credit, or any other bank,
financial institution or insurance company providing an Alternate Letter of
Credit or an Alternate Security.
(6) Bank Bonds means Bonds held by the Bank pursuant to Sections
3.01, 3.02 or 7.02 of the Rei~bursement Agreement.
(7) Bank Rate means the interest rate borne by Bank Bonds pursuant
to Sections 3.01, 3.02 or 7.02, as applicable, of the Reimbursement Agreement.
(8) Bond Counsel means any attorney at law or firm of attorneys, of
nationally recognized standing in matters pertaining to the federal tdx
exemption of interest on bonds issued by states and political subdivisions, and
duly admitted to practice law before the highest court of any state of the
United States of America.
(9) Bond Reserve Requirement means, as of any date of calculation,
the maximum amount of the Principal Installments and interest payable in any
future Fiscal Vear on all Bonds Outstanding hereunder, using. in the case of
variable rate securities, a maximum annual rate of twelve percent (12i).
{10) Business Day meo.ns any day of the year on which each of the
Notice Parties (other than the City) is open for business.
(11) Daily Mode means an Interest Mode during which the interest
rate borne by the Bonds is determined on the Rate Determination Date as set
forth in Section 2.04(b) hereof.
(12) Daily Rate means the interest rate borne by the Bonds 1n a
Daily Mode.
(13) Demand Note means the Demand Note made by the City and payable
to the Bank or 1ts order and referred to in Section 3.01 of the Reimbursement
Agreement.
expires.
( 14) Expiration Date means the date on which the Letter of Credit
(15) Event of Default means an event so aescr1bed in Article X of
the General Reso1ut1on and in Section 7.01 hereof.
(16) Fixed Mode means an Interest Mode designated as such in a Mode
Adjustment Notice and extending from the Mode Adjustment Date to the maturity of
the Bonds.
3
{17} Fixed Rate means the interest rate borne by the Bonds in a Fixed
Mode.
(18) Fixed Rate Conversion means the conversio~ of the interest rate
to be borne by the Bo~ds to a Fixed Rate pursuant to Section 2.05 hereof.
(19) Fixed Rate Conversion Date means the date which has been
designated by the City as the date upon which th~ Bonds begin to bear interest
at the Fixed Rate as provided in Section 2.05 hereof, whether or not the Fixed
Rate Conversion actually occurs on such date.
{20) General Resolution means Resolution No. 6111, "A Resolution
Authorizing the Issuance cf City of Palo Alto Utility Revenue Bonds 11 , adopted by
the Council on April 25, 1983.
(21) Independent Financial Consultant means a financial consultant or
firm of financial consultants approved by the City and having no interest direct
or indirect, in or with the Paying Agent, the Remarketer, the Rate-Setting Agent
or City and, in the case of an individual, not being an officer or employee of
the Paying Agent1 the Remarketer, the Rate-Setting Agent or City and, in the
case of a firm, not having as a partner, director, owner, officer or employee,
an officer or employee of the Paying Agent, the Remarketer, the Rate-Setting
Agent or City, but, in the case of either an individual or firm, who may be
regularly retained by City.
(22) Initial Interest Mode or Initial Interest Period means the
period from and including the date of initial authentication and delivery of the
Bonds to but not including April 1, 1986.
(23) Initial Rate means 6-5/8% per annum.
{24) Interest Mode means a period of time relating to the frequency
with which the interest rate borne by the Bonds is determined pursuant to
Section 2. 04 hereof, which Interest Mode may be the Initial Interest Mode, a
Daily Mode, a Weekly Mode, a Monthly Mode, a Semiannual Mode, a long Mode or a
Fixed Mode.
{25) Interest Payment Date means April 1, 1986 and, as to any Bond in
a Da1ly Modet a Weekly Mode or a Monthly Mode, the first Business Day of each
calendar month; and as to any Bond in a Semiannual Mode, a long Mode or a Fixed
Mode, each July 1 and January 1.
(26) Interest Period means. with respect to the Bonds in any Interest
Mode, the period from and including each Interest Payment Date for such Interest
Mode to and including the day imediately preceding the fol lowing Interest
Payment Date for such Interest Mode; the Initial Interest Period sha11 be the
period from and including the date of original delivery of the Bonds to and
including the day 1nwnediately preceding April 1, 1986.
(27) Investment Company means an open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended.
4
(28) Letter of Credit means the irrevocable, direct-pay Letter of
Cred1t issued by the Bank contemporaneously with the original delivery of the
Bonds or extensions thereof, in accordance with Section 2.11 hereof, except that
upcn issuance of an Alternate Letter of Credit in accordance with Section 2.11
hareof, 1t shall mean such Alternate Letter of Credit.
{29) Long Mode means an Interest Mode during 't;hich the interest rate
borne by the Bonds is determined at twelve mont.,, intervals or an integral
multiple thereof.
(301 Mandatory Purchase Date ~eans any date on which the Bonds shall
be subject to mandatory purchase pursuant to Section 2.09 hereof.
( 31) Mini mum Rate means the interest rate to be determined by the
Rate-Setting Agent with respect to any Bonds in a Semiannual Mode, Long Mode or
Fixed Mode below which the Adjusted Rate for such Semiannual Mode or Long Mode
or the Fixed Rate may not be established, determined in accordance with Section
2.04(f) or Section 2.05 hereof.
(32) Mode Adjustment D~te means a date on which the Interest Mode of
the Bonds 1s adjusted and such date shall b~ an Interest Payment Date.
(33) Mode Adjustment Notic~ means the notice distributed to the Notfce Parties of a new Interest Mode with respect to the Bonds or, with respect
to Bonds 1n a Long Mode, the designation of a new Long Mode having a Rate Period
of a duration different from the preceding Rate Period.
(34) Monthly Mode means an Interest Mode during which the interest
rate borne by the Bonds is determined on the Rate Determination Date as set
forth in Section 2.04(d) hereof.
(35) Monthly Rate means the interest rate borne by the Bonds in a
Monthly Mode.
(36) Moody's means Moody 1 s Investors Service, a corporation duly
organized and existing under and by virtue of the laws of the State of Delaware,
and its successors or assigns, except that if such corporation shall be
dissolved or 11qu1dated or shall no longer perform the functions of a securities
rating agency, then the term "Moody's" sha11 be deemed to refer to any other
nationally recognized securities rating agency selected by the City and approved
by the Remarketer and the Fiscal Agent (each of whom shall be under no liability
by reason of such approval).
(37) 1985 Series A Bonds or Bonds means the Bonds authorized by
Article II hereo •
( 38) 1985 Seri es A ProJe~_ means the acqu f sit 1on and construct; on of
improvements to the City's wastewater d1sposa1 f ac1l ity and sanitary sewage
collection system and the construction of all work and the acquisition of all
property and rights auxi 1 iary to the abov-e and necessary to carry out such
acquisition and construction.
(39) 1983 Series A Bonds means the bonds authorized by the 1983
Series A Resolution.
5
(40) 1983 Series A Resolution means Resolution No. 6112, adopted by
the Council on April 25, 1983.
(41) 1985 Series A Resolution or Resolution or Series Resolution
means this resolution.
(42) Notice Parties means t~e City, the Fisr.al Agent, the Remarketer,
the Paying Agent, the Rate-Setting r1gent and the Bank; provided, that with
respect to any party which is giving or sending a required notice hereunder
"Notice Parties" shall not include the party giving or sending such notice.
(43) Obligations means all obligations, whether now existing or
hereafter incurred, pay ab 1 e by the City to the Bank under the Reimbursement
Agreement.
(44) Outstanding, when used with reference to Bonds, does not include
Undelivered Bonds.
(45) Owner means the registered owner of any Outstanding Bond as
shown on the registration books required to be kept by the Paying Agent in
accordance with Section 2.15 hereof.
(46) Owner Election Notice means a written instruction of the Owner
of any Bond, conforming to the requirements of this 1985 Series A Resolution,
delivered to the Paying Agent on or prior to a date upon which such dond is
subject to mandatory purchase or to Fixed Rate Conversion, evidencing such
Owner's electio~ to remain the Owner of such Bond subsequent to such date.
(47) Paying Agent means Chemical Bank, a banking corporation duly
organized and existing under and by virtue of the laws of the State of New York
and having its principal office in N~w York, New York, and its successors or
assigns.
(48) Purchase Date means the Business Day designated by the Owner of
any Bond in a Tender Notice as the date for purchase by the Paying Agent of such
Bond and which for the Interest Mode shall be the date set forth in Section
2~06(f) hereof, and any Mandatory Purchase Date with respect to which an Owner
has not submitted an Owner Election Notf ce.
( 49) Purchase Pr ice means 1 wf th respect to any Bond t!r.dered or
deemed tendered pursuant to Section 2.07 or 2.09 hereof, an amount eqt1al to 100%
of the prf ncipal amount of such Bond plus accrued and unpaid interest thereon to
but not including the Purchas~ Date.
(50) Purchaser means The First Boston Corporation, as underwriter and
purchaser of the Bonds under and pursuant to the Underwriting Agreement.
{ 51) Rate AdJus tment Date 1aeans with respect to any Bonds in a ( i)
Daily Mode, each Rate Determination Date, (if) Weekly Mod,:, each Tuesday, or if
any such Tuesday is not a Busine~s Day, the immed1ately succeeding Business Day,
(f 1i) Monthly Mode~ the first Business Day of each month, (iv) Semiannual Mode,
each July 1 and January 1. (v) Long Mode, the July 1 following the end of each
Rate Per1od specified by the City, and (vi) Fixed Mode, a Fixed Rate Conversion
6
Date; provided, however, that 1n the event of a conversion of the Interest Mode,
the first Rate Adjustment Date sha11 be the relevant Mode Adjustment Date.
(52) Rate Detenn1nation Date means, w1th respect to any Bonds 1n a
(1) Daily Mode, at or prfor to 9:30 a.m. New York City time on each Business Day
or non Business Day on which the Rate-Setting Agent and the Remarketer are open
for business, (ii) Weekly Mode, each Monday, or if such Monday is not a Business
Oay, the im.ediately succeeding Business Day, {iii) Monthly Mode, that date
designated by the Remarketer not earlier than 7 days prior to and not later than
an Interest Payment Date and (iv) during any other Interest Mode, that date
designated by the Remarketer occurring not earlier than 14 days prior to, and no
later than the last Business Day iMnediately preceding each Rate Adjustment
Date; provided, however, that in the event of conversion of the Interest Mode,
the first Rate Determination Date shall occur on a date designated by the
Remarketer, not earlier than 10 days prior to and no later than the relevant
Rate Adjustment Date, which date shall also be a Mods Adjustment Date6
(53) Rate Period means the period from a Rate Adjustment Date to but
not including the next succeeding Rate Adjustment Date.
(54) Rate-Setting Agent means The First Boston Corporation and its
successors or assigns, or any other firm which may be substituted in its place
as provided in Section 8.03 hereof.
(55) Record uate means. during a Daily Mode, a Weekly Mode or a
Monthly Mode, the close of business on the Business Day ii1111ediately preceding
an Interest Payment Date, and during a Semiannual Mode, a Long Mode and a Fixed
Mode, the date whf ch f s the fifteenth day of the calendar month next preceding
any Interest Paymenr Date.
(56) Redemption Date means (beginning July 1, 1988) .July 1 of each
year.
(57) Reimbursement Agreement means that certain Letter of Credit and
Reimbursement Agree111ent by and between the Bank and the City, executed and
entered 1nto as of December 1, 1985, as originally executed and as it may from
time to tilM! be amended, and any subsequent re1mbursement agreement executed and
entered into by and between the City and the Bank or any other bank or financial
1nst1tut1on with respect to any Alternate Letter of Credit or Alternate
Security.
(58) Remarketer means The First Boston Corporation and 1ts successors
or assigns, or any other ffna which may be substituted in fts place as provided
in Section 8.02 hereof.
( 59) Remark et 1 ng A1reement means that cert a 1 n Remarket i ng Agreement
by and among the City, the F seal Agent, the Paying Agent, the Remarketer and
Rate-Setting Agent, executed and entered 1 nto as of December 1, 1985, as
or1g1nally executed and as it aay from time to time be amended. and any
subseqYent remarketing agreement executed and entered into by and between the
City and any successor Remarketer or Rate-Setting Agent.
(60) S&P means Standard & Poor's Corporation, a corporation duly
organized and existing under and by virtue of the laws of the State of New York,
7
and 1ts successors or assigns, except that if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rat 1 ng agency, then the term 11 S&P" sha 11 be deemed to refer to any other
nationally recognized securities r4ting agency selected by the City and approved
by the Remarketer and the Fiscal Agent (each of whom shall be under no liability
by reason of such approval).
(61) Semiannual Mode means an Interest Mode during which the interest
rate borne by the Bonds is determined at six month intervals.
(62) Semiannual Rate means the interest rate borne by t~e Bonds in a
Semiannual Mode.
(63) Substitution Date means the Rate Adjustment Date on which the
C1ty (1) substitutes for the Letter of Credit. an Alternate Letter of Cred;t or
Alternate Security which results in a reduction, suspension or withdrawal of the
then prevailing rating of the Bonds by Moody's or S&P or (i1) terminates the
Letter of Credit without substituting therefor an Alternate Letter of Credit or
Alternate Security.
(64) Tender Notice means written notice of an Owner delivered to the
Pay1ng Agent or in the case of Bonds in a Daily Mode, irrevocable telephonic
Mt1ce by an Owner to the Remarketer at its principal office, promptly
confirmed in writing, evidencing an Owner's election to tender a Bonrl all 1n
accordance with Section 2. 07 hereof. A not 1 ce determined by the Pay 1 ng Agent
not to have been properly completed, executed and delivered is "ot a Tender
Notice.
(65) Term Note means the Tena Note made by the City and payable to
the Bank or its order and referred to in Section 3.02 of the Reimbursement
Agreement.
(66) Undelivered Bonds means (f) Bonds which are deemed to have been
purchased as prov1ded 1n Section 2.10 hereof or (11) Bonds for which a Tender
Notice has been received, but which, in either case, have not been delivered to
the Paying Agent.
(67) Underwriting Agreement means that certain Underwriting Agreement
by and among the PUrchaser and the City relating to all Bonds.
(68) Weekly Mode inea.ns an Interest Mode during which the interest
rate borne by the Bonds is determined on the Rate Determination Date as set
forth in Section 2.03(c) hereof.
\o9) Weekly Rate means the interest rate borne by the Bonds in a
Weekly Mode.
8
ARTICLE I I
AUTHORIZATION OF 1985 SERIES A BO~DS
SECTION 2.01. Principal Amount, Designation and Series. Purs1Jant to the
provisions of the General Resolution, a Series of Bonds is hereby authorized in
the aggregate principal amount of $12,200,000. Such Bonds shall be designated
as 11 City of Palo Alto Utility Revenue Bonds, 1985 Series A11 (Adjustable
Convertible Extendable Securities-ACESsm).
SECTlON 2.02. Denominations, Medium, Method and Place of Payment and
Dating of Bonds. The Bonds shall be prepared in the form of fully registered
Bonds in denominations of one hundred thousand dollars ($100,000) or any
i ntegra 1 mu 1 tip le thereof f except that ( i) if the Bonds are in a Semiannual
Mode, a Long Mode or the Fixed Mode such Bonds may be in denominations of five
thousand dollars ($5,COO) or any integral multiple thereof and (ii) following
the adjustment from a Semiannual Mode or a long Mode to a Daily Mode, a Weekly
Mode or a Monthly Mode the Bonds of ~ners who continue to own such Bonds after
the relevant Mode Adjustment Date may be in denominations of five thousand
dollars ($5,000) or any integral multiple thereof. The interest and principal
of the Bonds shall be ~ayable in lawful rrtoney of the Unfted States of America.
Interest on the Bonds shall be payab1e on their Interest Payment Oates by check
mailed by the Paying Agent to the respective Owners thereof at their addresses
as they appear in the books required to be kept by the Paying Agent pursuant to
the provtsions of Section 2.15 hereof on the Record Date with respect to each
Interest Payment Date; provided, that unless the Bonds are in a Fixed Mode, in
the case of an Owner of Bonds evidencing $1,000,000 or more in aggregate
principal amount, upon the written request of such Owner to the Paying Agent
five (5) days prior to any Interest Payment Date, ~pecifying full information,
acceptable to the Pay1ng Agent, regarding routing instructions and bank
accounts, such interest shall be paid to such Owner in inrnediately available
funds by wire transfer. The principal and premium, if any, on the Bonds shall
be payable on July 1, 2006, or on redemption prior thereto, upon surrender
thereof to the Paying Agent at its office located at 55 Water Street, in New
York, New York, Attention: Corporate Trust -Customer Services, or such other
office located in New York, New York as may be specified by the Paying Agent in
a notice g1ven to the Notice Parties and the Owners.
The Bonds sha11 be dated the date of their original authentication and
delivery.
SECTION 2.03. Payment Dates of Bonds. Interest on the Bonds shal 1
become due and payable on each Interest Payment Date from their date to and
including July 1, 2006, or on redemption prior thereto, or, with respect to Bank
Bonds, on the Expiration Date. The principal of the Bonds shall become due and
payable on July 1, 2006, or en redemption prior thereto, or, with respect to
Bank Bonds, on the Expiration Date.
SECTION 2.04. Interest Rates. (a) The interest rates payable en the
Bonds during the Initial Interest Period shall be the Init1al Rate, and
thereafter shall be an Adjusted Rate as provided in this Section 2.04 or a F1xed
Rate as provided in Section 2.05 hereof. fhe interest on the Bonds in a Daily
Mode, a Weekly Mode or a Monthly Mode sha 11 be payable on the app 11cab1 e
Interest Payment Date as herein described, computed on the basis of a 365 or
9
366-day year, as app 1icab1 e, for the number of days actua 11 y elapsed. The
interest on the Bonds in a Semiannual Mode, a Long Mode or a Fixed Mode shall be
payable semiannually on July l and January 1 of each year, computed on the basis
of a 360-day year, consisting of twelve 30-day mor.ths. The Bonds shal 1 bear
interest, commencing on each Rate Adjustment Date, at the rate determined by the
Rate-S~tting Agent for the applicable Rate Period.
(b) Qaily Mode. For any Bonds in a Oaily Mode, the interest rate shall
be determined in the following manner. On each Rate Determination ~ate for such
~a11y Mode the Rate-Setting Agent shall determine not later than 9:30 a.m., New
York City t1me, the interest rate to be borne by the Bonds for such day in
accordance with subparagraph (f} hereof. With respect to any day that is not a
Rate Determination Date, the interest rate shall be the same rate as th~
interest rate in effect for the i!Tllledi ately preceding day. The Rate-Setting
Agent shall promptly notify the Remarketer and the Paying ft.gent of the Daily
Rate, wh1ch shall be promptly confirmed in writing. The Paying Agent shallt not
later than the fifth day of each month, notify the Bank, the Fiscal Agent~ the
City and the Owners of each of the Daily Rates during the preceding month.
(c) Weekly Mode. For any Bonds in a Weekly Mode, the interest rate shall
be determined in the following manner. Not later than 2:00 p.m., New York City
time, on each Rate Determination Date for such Weekly Mode the Rate-Setting
Agent sha 11 detenni ne the interest rate to be borne by the Bonds during the
relevant Rate Period in accordance with subparagraph (f) hereof. The interest
rate so determined shall be effective as of the applicable Rate Adjustment Oate.
The Rate-Setting Agent shall promptly notify the Remarketer and the Paying Agent
of the Weekly Rate, which shall be promptly confirmed in writing. The Paying
Agent shall, not later than the fifth day of each month, notify the Bank, the
fiscal Agent, the City and the Owners of each of the Oaily Rates during the
preceding month.
(d) Monthly Mode. For any Bond in a Monthly Mode, the interest rate
shall be determined in the following manner. With respect to each calendar
month while the Bonds are in a Monthly Mode, the Rate-Setting Agent shall
determine, not later than the Rate Determination Oate, the interest rate to be
borne by the Bonds during the relevant Rate Period in accor·1ance with
subparagraph (f) hereof. The interest rate so determined shall be effective as
of the applicable Rate Adjustment Date. The Rate-Setting Agent shall promptly
notify the Remarketer and the Paying Agent of the Monthly Rate, which shall be
promptly confirmed in writing. The Paying Agent shall. not later than the fifth
day of each 1ROntht notify the Bank, the f1sca1 Agent, the City and the Owners of
each of the Daily Rates dur1ng the preceding month.
(e) Semiannual and Long Modes. For any Bonds in a Semiannual Mode or a
Long Mode, the interest rate shall be determined in the following manner. Not
less than 31 days nor more than 35 days prior to each Rate Adjustment Date. the
Rate-Setting Agent sha 11 determine the interest rate to be borr1e by the Bonds if
such date were the Rate Determination Date for the relevant Rate Period and
shall determine the Minimum Rate in accordance w1th subparagraph (f) hereof.
The Rate-Setting Agent shall provide notice of the Minimum Rate promptly to the
fiscal Agent, Paying Agent and the City. Not less than 30 days prior to such
Rate Adjustment Date, the Paying Agent shall mail to each Ow~er written notice
(1) the Interest Mode that w11 1 be in effect on the next Rate Date, (ii) the
Minimum Rate, (iii) the Rate Adjustment Date, {iv} that the interest rate an the
10
Bonds beginning on such Rate Adjustment Date w111 not be less than the Minimum
Rate, and (v} that promptly after the Rate Determination Date notice of the
1nter~st rate determined on that date will be mailed to each Owner. On the Rate
Oetern1natfon Date, the Rate-Setting Agent shall determine the Adjusted Rate for
the respectiv~Rate Period. 1n no event less than the Minimum Rate, effective on
the Rate Adjustment Date. The Rate-Setting Agent shall promptly notify the
Notice Parties of the Adjusted Rate. Promptly after such Rate Determindtion
Date the Paying Agent sha 11 ma i1 to a 11 Owners written notice of the Adj;•s ted
Rate.
(f) The Rate-Setting Agent, in consultation with an Independent Financial
Consultant, shall determine the Adjusted Rate on each Rate Determination Date as
that rate which, in the sole judgment of the Rate-Setting Agent, but subject to
such consultation, would equal (but not exceed) the interest rate necessary to
enable the Remarketer to sell each cf the relevant Bonds on such date at a price
equal to lOOI of the principal amount thereof plus accrued and unpaid interest,
if any, therein. In determining the Adjusted Rate, the Rate-Setting Agent, in
consultation with the Independent Financial Consultant, shall take into account
to the extent applicable (a) market interest rates for comparable securities
held by tax-exempt open-end municipal bond funds or other institutional or
private investors with substantial portfolios (1) with interest rate adjustment
periods and demand purchase options substantially identical to such Bonds, (ii}
bearing interest at 4 variable rate intended to maintain a value equal to 100%
of the principal amount thereof, and (ili) rated by a national credit rating
agency in the same category as such Bonds; (b) other financial market rates and
indices which may have a bearing on the Adjusted Rate (including but not limited
to rates borne by co11111erc i a 1 paper, tax-exempt commercial paper, HUD project
notes, Treasury Bins, commercial bank prime rates, certificates of deposit
rates, federal funds rates, the London Interbank Offered Rate, indices
maintained by The Bond Buyer, and other publicly available tax-exempt interest
rate indices); (c) general financial market conditions (inc1uding current
forward supply); and {d) industry, economf c or financial conditions wh -~ may
affect or be relevant to such Bonds. The Rate-Setting Agent, in cons1.1 ... ation
with the Independent Financial Consultant, shall establish the Minimum Rate by
making a determination of the Adjusted Rate as if such Adjusted Rate were being
calculated on such date. The Minimum Rate shall be not less than 80% of the
Adjusted Rate as so determined. In addition, in determining the Adjusted Rate
or the Minimum Ratet the Rate-Setting Agent shal 1, in consultation with the
Independent Financial Consultant. base such rate on marketing efforts with, or
solicitations of proposals from, not less than three institutional or money fund
investors or other entities or individuals {other than the Rate-Setting Agent or
the City) who customarily purchase tax-exempt securities comparable to such
Bonds.
(g) The determination by the Rate-Setting Agent. made in consultation
with the Independent Financial Consultant, as above provided, in accordance with
this Section 2.04, of Adjusted Rates and Minimum Rates to be borne by the Bonds
shall be conclusive and binding on the Owners of the Bonds and the other Notice
Parties. Faflure by the Paying Agent to gtve any notice required hereunder, or
any defect therein, shall not affect the 1nt~rest rate borne by the Bonds or the
rights of the Owners pursuant to Section 2.07 hereof.
(h) If for any reason the position of the Rate-Setting Agent is vacant or
the Rate-Sett 1ng Agent fails to act on the Rate Oetermi nation Date or date a
11
Minimum Rate is to be establ 1 shed. the Adjusted Rate or Minimum Rate shall be
determined by an Independent Financial Consultant. The Independent Financial
Consultant shall calculate the Adjusted ~ate, which rate shall be equal to 1001,
97%, 93%, 86% or soi of the 11-Bond Index for the most recent period (as
published in The dond Buyer) if the length of the relevant Rate Period equals or
exceeds fifteen, thirteen, ten, seven or five years, respectively, and if the
length of such Rate Period is less than five years and equal to or greater thiln
two yearsJ the interest rate for such Rate Period sha11 be 70% of such 11-Bond
Index. If the length of the relevant Rate Period is less than two years but
greater than or equal to 180 days, the interest rate for the relevant Rate
Period shall be 65% of the 11-Bond Index. If the Bonds are in a Daily Mode,
Weekly Mode or Monthly Mode and the length of the relevant Rate Period is 180
days or less, the interest rate for such ~ate Period shall be 110\ of The Bond
Buyer Tax-Exempt Prime Co11111erci al Paper Rate ( 30 days) for the most recent
period.
If, on any Rate Oeter·mination Date or date a Minimum Rate is to be
established, the Rate-Setting Agent is the beneficial owner of more than 15~ of
the principal amount of the Bonds for which an Adjusted Rate or Minimum Rate is
to be established, such Adjusted Rate or Minimum Rate shall not be less than 80%
nor more than 120% of the applicable rate set forth in the preceding paragraph;
provided, that each Adjusted Rate shall be not less than the relevant Minimum
Rate, if any.
( i} Notwithstanding the above, during such time as any Bonds are Bank
Bonds, the interest rate borne by such Bonds shall be the applicable Bank Rate.
(j) Anything herein or in the Bonds to the contrary notwithstanding, no
payment constituting interest on the Bonds shall be required to the extent that
{i) it exceeds 12% per annum (except with respect to Bank Bonds), or (ii) the
receipt of such payment by the Owner of any Bond would be controry to the
provisions of law applicable to such Owner wh1ch limit the maximum interest rate
which may be charged or collected by such Owner~
SECTION 2.05. Conversion to the Fixed Rate. (a) At the option of the
City, the interest rate payable on the Bo~ds shall be permanently converted from
an Adjusted Rate to a Fixed Rate. A Fixed Rate Conversion Date shall be any Rate
Adjustment Date for which the applicable notices described in subparagraph (d}
hereof shall have been given. In order to exercise its Fixed Rate Conversion
option, the City shall deliver a Mode Adjustment Notice directing such Fixed
Rate Conversion. The Mode Adjustment Notice shall specify (i) the Fixed Rate
Conversion Date, which shall be an Interest Payment Date at least thirty-five
(35) days following the receipt by the Notice Parties of the Mode Adjustment
Notice, (i1) whether the Letter of Credit will cont1nue in effect following the
Fixed Rate Convers1on Date and (iii) if not, the Alternate Letter , Cre:Jit or
Alternate Security, if any, that w111 be in effect follow1ng Fixed Rate
Conversion.
(b) No Fixed Rate shall be established unless, on or before thfrty-five
(35} days prior to the Fixed Rate Conversion Oate, an Opinion of Bond Counsel
has been delivered to the F1. '\l Agent to the effect that the Fixed Rat~
Conversion in accordance w1th ttt~ provisions of this Resolution is permitted
under applicable law, and hereby, and will not adversely affect the exemption of
interest on the Bonds from federal income taxation. Such Opinion of Bend
12
Counsel shall be confirmed by such counsel on the Fixed Rate Conversion Date.
Unless and until the conditions for Fixed Rate Conversion set forth in this
Section 2.05 are satisfied, the Bonds shall continue to bear interest at the
Adjusted Rat~ as provided in Section 2.04 hereof.
(c) The Rate-Setting Agent shall, in consultation with an Independ~nt
Financial Consultant, between thirty-five (35) and thirty-one (31) days prior to
a Fixed Rate Conversion Date, establish a Minimum Rate by making a determination
of the Fixed Rate as if such Fixed Rate were being calculated on such date
pursuant to this Section 2.05. The Minimum Rate shall be no less than 80% of
the F1xed Rate as so determined by the Rate-Setting Agent on such date. The
Rate-Setting Agent shall give prompt notice of such Minimum Rate to the Notice
Parties.
(d) Unless the City exercises its option not to convert as described in
subparagraph (e) below, the Paying Agent shall mail a Mode Adjustment Notice to
each Owner of Bornis to be converted to the Fixed Rate not less than (30) days
prfor to the Fixed Rate Date stating:
Rate;
(1) that the interest rate on the Bonds may be converted to a Fixed
(2) the Fixed Rate Conversion Date;
(3) the period during which a Fixed Rate shall be determined;
(4) the Minimum Rate at which a Fixed Rate may be established;
(5) that after Fixed Rate Conversion the Owners of Bonds wil 1 no
longer have the right to tender Bonds to the Paying Agent for purchase,
specifying the last times and dates prior to the fixed Rate Conversion Date on
which such Bonds must be delivered for purchase~ and upon which notice must be
given;
(6) that all Bonds will be purchased pursuant to Section 2.09 hereof
on the Fixed Rate Conversion Date except Bonds the Owners of which shall have
directed the Paying Agent not to so purchase as provided in Section 2.10 hereof;
and
(7) whether the letter of Credit will continue to be in effect
following the Fixed Rate Conversion Date, and, if not, the Alternate Letter of
Credit or Alternate Security with respect to the Bonds, if any, to be in effect
following Fixed Rate Conversion and 1f such Alternate Letter of Credit or
Alternate Security is in effect, that the rating on the Bonds may be subject to
reduction, suspension or withdrawal, if applicable.
(e) The City shall have the option, to be exercised prior to the
thirtieth {30th) day pr1or to the fixed Rate Conversion Oate, to elect not to
convert the interest on the Bonds to a Fixed Rate. The City shall give any such
notice to the Notice Parties in writing. If the C1ty elects ~ot to convert the
interest on the Bonds to a Fixed Rate, the interest on the Bonds shall continue
in the current Interest Mode and continue at the Adjusted Rate as provided in
Section 2.04 hereof.
13
(f) Promptly after the Rate Determination Date for the Fixed Rate
Conversion Date for which the Mode Adjustment Notice was given, the Paying Agent
sha 11 give not ice to each Owner of the Bonds who has delivered an Owm?r Elect ion
Notice which shall state the Fixed Rate.
(g) During the perfod stated in a Fixed Rate Conversion notice for
determination of a Fixed Rate, the Rate-Setting Agent shall, in consultation
with an Independent Financial Consultant, determine the Fixed Rate as that
interest rate which, in the sole determination of the Rate-Setting Agent, but
subject to such consultation woulo result as nearly as practicable in the market
value of the Bonds to be converted to the Fixed Rate on the Fixed Rate
Conversion Date being equal to lOOi of the principal amount thereof. In
determining the Fixed Rate pursuant to this Section 2.05, the Rate-Setting
Agent, in consultation wfth the Independent Financial Consultant, shal 1 take
into account to t~e extent applicable (1) market i~terest rates for comparable
secur1ties which are held by institutional and private investor~ with
substantial portfolios (a) with a term equal to the period to maturity remaining
on such Bonds, (b) the interest on which is exempt from federa1 income taxation,
(c) rated, if such Bonds are rated, by Moody 1 s and S&P in the same rating
category as such Bonds will be rated following conversion to a Fixed Mode, and
{d) with redemption provisions similar to those of such Bonds; {2) other
financial market rates and indices whtch have a bearing on the Fixed Rate
(including but n"t limited to rates br,rne by industrial development bonds,
pollution control revenue bonds, public power bonds, housing bonds, other
revenue bonds, general ohligation bonds, certificates of participation, United
States Treasury obligations, co11111ercial b~nk prime rates, certificate of deposit
rates, federal funds rates, indices maintained by The Bond Buyer and other
publicly available tax-exempt interest rate indices); (3) general financial
market conditions (including current forward supply}; a~d (4) industry, economic
or financial conditions which may affect or be relevant to such Bonds. In
addition, in determining the Fixed Rate, the Rate-Setting Agent, in consultation
with the Independent Financial Consultant, sha11 base such rat~ on marketing
efforts with, or solicitations of proposals from, not less than three
institutional or money funds investors or other entities or individuals (other
than the Rate-Setting Agent or the City) who customarily purchase tax-exempt
securities comparable to such Bonds. Upon the date stated in the Fixed Rate
Conversion notice as the Fixed Rate Conversion Date. the Fixed Rate shal 1 be
effective and shall be equal to the rate so determined by the Rate-Setting
Agent. The Rate-Setting Agent shall promptly notify the Notice Parties of the
f1 xed Ra. te.
(h) The determination of the Minimum Rate and the Fixed Rate by the Rate-
Setting Agent~ made 1n consultation with the Independent F1nancia1 Consultant,
as above provided, in accordance with this Section 2.05 shall be conclus1ve and
birw!1ng on the OWners of the Bonds and the other Notice Parties.
(i) If for any reason the position of Rate-Setting Agent 1s vacant or the
Rate-Setting Agent fails to act by the Fixed Rate Conversion Date. the fixed
Rate shall be determined by an Independent Financial Consultant and slia11 be
equal to the interest rate computed by multiplying (a) the 11-Bond Municipal
Bond I nde" as reported in the most recent ; s sue of The Bond Buyer (or any
successor publication thereto) by (b) the percentage shown fn the table below
applicable as of the date of computation of the Fixed Rate:
14
Computation Oates
Inclusive
Date of Jrig1nal delivery of
the Bonds to Nove~ber 30, 1991
January 1, 1991 to December 31, 1993
January 1, 1993 to December 31, 1996
January 1, 1996 to December 31, 1999
January 1, 1999 to December 31, 2001
January 1, 2001 and thereafter
Applicable
Percentag~
100~
97
93
86
80
70
If on the day the Minimum Rate or the Fixed Rate are to be determined and
the Rate-Setting Agent is the beneficial owner of more that 15~ of the principal
amount represented by the Bonds to be converted to the Fixed Rate, the Minimum
Rate or the Fixed Rate shall not be less than 80% nor more than 120~ of the
app11cable rate set forth fn the preceding paragraph; provided, that the Fixed
Rate shall not be less than the Minimum Rate.
(j) Upon any Fixed Rate Conversion as provided in this Section 2.05~ the
Bonds to be converted to the Fixed Rate shall be subject to ~andatory purchase
in accordance with Section 2. 09 hereof, and the Owners of such Bonds sha 11 be
notified of the f1xed Rate Conversion as provided herein and therein and shall
have the right to continue to own such Bonds subject to such tender for purchase
as provided in Section 2.10 hereof. No Bonds converted to the Fixed Rate (other
than Bonds remarketed at the Fixed Rate) shall be remarketed by the Remarketer
subsequent to the date of notice of Fixed Rate Conversion unless the Remarketer
has received an acknowledgment from the purchasers of such remarketed Bonds of
receipt of notice of the Fixed Rate Conversion. The Bends with respect to the
Bonds to be converted to the Fixed Rate which are not to be purchased on the
Fixed Rate Conversion Date following notice of Fixed Rate Conversion pursuant to
Section 2.10 hereof shall bear interest at the Fixed Rate determined as orovided
in subparagraphs (g) or (1) of this Section 2.05; all other Bonds to be
converted to the Fixed Rate shall be deemed purchased and shall be delivered to
the Remarketer for remarketing in accordance with Section 2.08 hereof.
SECTION 2.06. Interest Modes. (a) The Interest Mode from the date of
original delivery of the Bonds until further designated by the City or the Rate-
Setting Agent as provided herein, will be the Initial Interest Mode,
corresponding to the Initial Interest Period. Hereafter, the Rate-Setting
Agent may designate a change from a Daily Mode, a Weekly Mode~ a Monthly Mode or
a Semiannual Mode to a Daily Mode, a Weekly Mode, a Monthly Mode or a
Semiannual Mode· upon a determination by it that a change in the Interest Mode
w111 result In a lower interest cost to the City over a term of 180 days and the
City may designate a change from any Interest Mode to a Long Mode or a Fixed
Mode or from a Long Mode to a Daily Mode, a Weekly Mode, a. Monthly Mode or a
Semiannual Mode. The initial Rate Period for Bonds 1n a Long Mede may be any
number of months duration, and the 1n1t1al Rate Period for Bonds in a Semiannual
Mode may be shorter than s1x months in duration. To effectuate a change in
Interest Mode, the Rate-Setting Agent or the City, as the case may be, must
provide a Mode Adjustment Notice stating (i) the Mode Adjustment Date, which
date shall be an Intetest Payment Date at least 35 days, in the case of a change
to a Semiannual Mode, long Mode or Fixed Mode, and at least 20 days, in the case
of a change to a Daily Mode, a weekly Mode or a Monthly Mode after the date on
which the Mode Adjustment Notice is received by the Notice Parties, and {ii) the
15
Interest Mode that will be effective on such Mode Adjustment Date, and if a Long
Mode, the length of the respective Rate Period. In determining whether a change
in the Interest !-!ode will result in a lower-interest cost to the C1ty over a
term of 180 days, the Rate-Setting Agent shall, in consultation with an
Independent Financial Consultant, take into account the following factors: (i)
estimated transaction costs and administrative costs, (;1} existing and expected
short-term taiable and tax-exempt market rates and indices of such short-term
rates, {iii) existing and expected market supply and demand for short-term
taxable and tax-exempt securities in both the new issue and the secondary
market, (iv) existing yield curves for short-term and long-term tax-exempt
securities for obligations of credit quality comparable to the Bonds, {v)
general economic and financial conditions, (vi) industry economic and financial
conditions that may affect or be relevant to the Bonds, {vii} general
desirabii1ty of diversified Interest Modes so as to minimize the risk of
unforeseen temporary shifts in interest rates, and {viii) such other facts,
circumstances and conditions as the Rate-Setting Agent in its sole discretion.
but subject to such consultation, determines to be relev~nt; prov·ided, however,
that in determining whether the Bond'> shall be changed to a Daily Mode, a Weekly
Mode, a Monthly Mode, or a Sem1annua1 Mode, the Rate-Setting Agent shall
exercise 1ts independent judgment and expertise and9 except as otherwise
provided her'?in, shall neither consult with nor accept advice from the City.
The City hereby covenants that it will not advise or instruct the Rate-Setting
Agent with respect to the designation of any new Interest Mode by the Rate-
Setting Agent. If (i) the new Interest Mode is designated by the City~ {ii) the
current Interest Mode is not a Long Mode and the new Interest Mode is a Long
Mode or the Fixed Mode or {iii} the current Interest Mode is a long Mode and the
new Interest Mode is not a Long Mode or is a Long Mode having a Rate Period of
different duration, such Mode Adjustment Notice sha1 l be accompanied by an
Opinion of Bond Counsel addressed to the Fiscal Agent, the Paying Agent and the
City stating that the cha~ge in interest Mode or change ~n Rate Period, as the
case may be, is permitted under applicable law and hereby and will not adversely
affect the exemption of interest on the Bonds from federal income taxation or
State of Ca 1 if orni a persona 1 income taxes and the Fi seal Agent and the Paying
Agent shall receive a confirmation of such opinion on the Mode Adjustment Date.
{b) Not later than 5 days following receipt by the Paying Agent of a Mode
Adjustment Notice, the Paying Agent shal 1 mail to each Owner and the Bank a
notice containing the same information as that contained in the Mode Adjustment
Notice.
( c} The Owners, by the 1r acceptance of the Bonds, agree, subject to
Section 2.10 hereof, to tender their Bords to the Paying Agent for purchase on &
Mode Adjustment Date prior to maturity at the Purcha$e Price thereof, and to
surrender their Bonds properly endorsed for transfer in blank, as more
specifically provided for in Sections 2.07 and 2.09 hereof.
(d) from the date on which {i) the City gives notice to the Fiscal Agent
of its election to redee~ the principal of the Bonds pursuant to Section 4.01
hereof, (ii) the Paying Agent gives the notice of a mandatory purchase pursuant
to Section 2.09 hereof, or (iii) the City or the Rate-Setting Agent gives a Mode
Adjustment Notice. to the day en which such redemption, purchase or Interest
Mode adjustment is scheduled to occur. the City and the Rate-Setting Agent may
not designate a new Interest Mode. The Remarketer shall, upon the designation
of a Mode Adjustment Date or Fixed Rate Conv~rsion Date only remarket Bonds for
16
del1very on or prior to such Mode Adjustment Date or Fixed Rate Conversion Date
or upon receipt of an acknowledgment from the purchasers of such remarketed
Bonds of receipt of notice of sue~ Mode Adjustment or Fixed Rate Conversion.
(e) In the event that, for any reason, the interest rate on the Bonds is
not converted to bear interest in a different Interest Mode (or from a Long Mode
to a new Long Mode with a Rate Period of d1fferent duration) pursuant to the
prov is ioils hereof on the proposed Mode Adjustment Date, the Owners and the
Notice Parties shall be restored to their original positions, to the same effect
as if such Mode Adjustment Notice had not been given. In such event, any Bonds
held by the Paying Agent pursuant to subparagraph (c) hereof shall be returned
to the owners thereof at the office of the Paying P.gent and the Bonds shall
continue to bear interest in the then current Interest Mode. In no event shali
the failure of a conversion in Interest Mode for ar.y reason be deemed to be a
default or Event of Def~ult under this 1985 Series A Resolution.
{f) For each Interest Mode, the frequency of each Interest Payment Date
and the method for computing the amount of accrued interest, if any, the Record
Date, the date on which the Mode Adjustment Notice must be given, the Owner
Election Notice, Tender Notice, Purchase Date, Rate Determination Date, Rate
Adjustment Date and Notice of Adjusted Rate or Fixed Rate shall be determined,
to the exte1lt not inconsistent with other provision of this 1985 Series A
Resolution, in accordance with the schedule set forth upon the following pages:
17
Interest Payment
Date and Calcula-
tion Method:
Record Date:
Mode Adjustment
Notice:
Owner Election
Notice:
Tender Notice:
Purchase Date:
Rate Oetennina-
t ion Date:
Rate Adjustment
Date:
Notice of
Adjusted Rate or
Fixed Rate:
DAILY MODE
First Business Jay of month; on actual days
over 365/366 day year
Business Day preceding Interest Payment Date
Paying Agent to mail notice to Owner not
later than 15 days preceding Mode
Adjustment Date
Owner may elect to retain Bonds
8 days prior to Mandatory Purchase Date; if
switch is to Semiannual, Long or Fixed
Mode, election must occur 15 days pl'ior to
Mandatory Purchase Date
Irrevocable telephonic Tender Notice
to the Remarketer on any Business Day, not
later than 10:30 a.m. New York City time,
promptly confirmed in writing to the
Remarketer
On the Business Day of receipt of
Tender Notice
At or prior to 9:30 a.m. hew York City
time on each Business Day or each non-Business
Day, on which the Rate-Setting Agent and the
Remarketer are open for bus1ness
Each Rate Determination Date. effective for each
day thereafter until reset by Rate-Setting
Agent
Paying Agent to mail Owner monthly
confirmation statement promptly after
Interest Payment Date
18
Interest Payment
Date and Calcula-
tion Method:
Record Date:
Mode Adjustment
Notice:
Owner Election
Notice:
Tender Notice:
Purchase Date:
Rate Determina-
tion Date:
Rate Adjustment
Date:
Notice of
Adjust~d Rate or
fixed Rate:
W(EKLY MOOE
first ~usiness Day of month; on actual days
over 365/366 day year
Business Day preceding Interest Payment Date
Paying Agent to mail notice to Owner not
later than 15 days preceding Mode
Adjustment. Date
Owner may elect to retain Bonds
8 days prior to Mandatory Purchase Date; if
switch is to Semiannual, Long or Fixed
Mode, election must occur 15 days prior to
Mandatory Purchase Date
Irrevocable written Tender Notice to the Paying Agent
not later than 3:00 p.m. New York City
time on any Business Day seven days prior to
Purchase Date, which date shall be set forth
in the Tender Notice
On the seventh day (which day must be a
Business Day} following receipt of Tender
Notice
fach Monday or if Monday is not a Business
Day, immediately succeeding Business Day
Tuesday of each week or the Business Day
117111ediately succeeding the Rate Determination
D~te, effective through the illlTlediately succeeding
Rate Determination Date (1)
Paying Agent to mail Owner monthly
confirmation statement promptly after
Interest Payment Date
(1) An initial Rate Period may be for an interim period and have a Rate
Adjustment Date not coinciding with the times stated.
19
Interest Payment
Date and Calcula-
tion Method:
Record Date:
Mode Adjustment
Notice:
owner Election
Notice:
Tender Notice:
Purchase Date:
Rate Determina-
tion Oate:
Rate Adjustment
Date:
Notice of
Adjusted Rate or
fixed Rate:
MONTHLY MODE
First Business Day of month; on actual days
over 365/366 day year
Business Day preceding Ir.terest Payment Date
Paying Agent to mai1 notice to Owner not
later than 15 days preceding Mode
Adjustment Date
Owner may elect to retain Bonds 8 days prior to
Mandatory Purchase Date; if switch is to Semiannual,
Long or Fixed Mode, election must occur 15 days
prior to Mandatory Purchase Date
Irrevocable written Tender Notice to the Paying
Agent not later than 3:00 p.m. New ~ork City time
on any Business Day seven days prior to
Interest Payment Date, which date shall
be set forth in the Tender Notice
On the seventh day (which day must be an
Interest Payment Date) following rec~ipt
of Tender Notice
Not later than the first Business Day pri~r to
Interest Payment Date
First Business Day of each calendar month,
effective through the day immediately
preceding the first Business Day of next
calendar month (1)
Paying Agent to mail Owner notice of
Monthly Rate promptly after Rate
Determination Date
(1) An initial Rate Period may be for an interim period and have a Rate
Adjustment Date not coinciding with the times stated.
20
Interest Payment
Date a~d Calcula-
tion Method:
Record Date:
Mode Adjustment
Notice:
Owner Election
Notice:
Tender Notice:
Purchase Date:
Rate Determina-
tion Date:
Rate Adjustment
Date:
Notice of
Adjusted Rate or
Fixed Rate:
• •
SEMIANNUAL MODE
Semi-annually on July 1 and January 1; on
360 day year of 12 30-day months
15th day of month preceding each Interest
Payment Date
Paying Agent to mail notice to Owner not
later than 30 days preceding Mode
Adjustment Date
Owner may elect to retain Bonds 15
days prior to Mandatory Purchase Date
Irrevocable written Tender Notice and Bonds
delivered to the Paying Agent between 30
days and 3:00 p.m. New York City time on
the Business Day 15 days prior to
Purchase Date (1)
The i11111ediate1y succeeding July l or January
1 which is the Rate Adjustment Date
Minimum Rate determined between 31 and 35
days prior to Rate Adjustment Date.
Adjusted Rate determined by last Business
Day prior to Rate Adjustment Date
The July 1 or January 1 i11111ediately
following Rate Determination Date ili'ITiediately
following Rate Determination Date effective
through day irmiediately preceding the next
Rate Adjustment Date {2)
Paying Agent to mail owner notice of
M1n1mum Rate and Semiannual Rate promptly
after determination thereof
(1) See Section 2.07{d) for special provisions relating to an Investment
Company.
(2) An initial Rate Period may be for an interim period and have a Rate
Adjustment Date not coinciding with the times stated.
21
Interest Payment
Date and Calcula-
tion Method:
Record Date:
Mode Adjustment
Notice:
owner Election
Notice:
Tender Notice:
Purchase Date:
Rate Oetermina-
t ion Date:
Rate Adjustment
Date:
Notice of
Adjusted Rate or
Fixed Rate:
LONG MOOE (1)
Semi-annually on July 1, and January l;
on 360 day year of 12 30-day months
15th day of month preceding each Interest
Payment Date
Paying Agent to mail notice to Owner not
later than 30 days preceding Mode
Adjustment Date
O'flner may elect to retain Bonds 15
days prior to Mandato~y Purchase Date
Irrevocable written Tender Notice and Bonds
delivered to the Paying Agent between
30 days and 3:00 p.m. New York City
time on the Business Day 15 days prior
to Purchase Oate (2)
The July 1 which is the Rate Adjustment
Date
Minimum Rate determined between 31 and 35
days prior to Rate Adjustment Date.
Adjusted Rate determined by last Business
Day prior to Rate Adjustment Date
The July 1 il'llllediately following Rate
Determination Date effective through day
immediately preceding the next Rate Adjustment
Date (3)
Paying Agent to mail owner notice of
Minimum Rate and Long Rate promptly after
the determination thereof
(1) For purposes of this table, if the Long Mode 1s for a period of more
than one year, the Mods Adjustment Notice, Owner Election Notice, Tender Noticet
Purchase Date, Rate Determination Date, Rate Adjustment Date and Notice of
Adjusted/Fixed Rate sha11 be made at the end of the mu1tip1e ~ear period.
(2) See Section 2.07{d) for special provisions relating to an Investment
Company.
(3) An 1nitial Rate Period may be for an interim period and have a Rate
Adjustment Date not co1ncid1ng with the times stated.
22
Interest Payment
Date and Calcula-
tion Method:
Record Date:
Mode Adjustment
Notice:
Owner Election
Notice:
Tender Notice:
Purchase Date:
Rate Determina-
tion Date:
Rate Adjustment
Date:
Not1ce of
Adjusted Rate or
Fixed Rate:
FIXED MODE
Semi-annually on July 1 and January l; on
360 day year of 12 30-day months
15th day of month preceding each Interest
Payment Date
Paying Agent to mail notice to owner not later
than 30 days preceding Fixed Rate Conversion Date
One time election by Owner to retain
Bonds 15 days prior to Fixed Rate
Conversion Date
None
One time mandatory purchase on Fixed
Rate Conversion Date
Minimum Rate determined between 31 and 35
day~ prior to Fixed Rate Conversion Date.
One time determination of Fixed Rate by
last Business Day preceding Fixed Rate
Conversion Date
Fixed Rate Conversion Date, effective
until redemption or final maturity of
Bonds
Paying Agent to mail Owner notice of
Minimum Rate and Fixed Rate promptly after
the determination thereof
23
SECTION 2.07. Purchase of Bonds. (a) During such tfme as the Bonds are
in a Daily Mode, a Weekly Mode, a Monthly Mode, a Semi annual Mode or a Long
Mode, any Bond shall be purchased by the Paying Agent in accordance with Section
2 .06(f) hereof on any Purchase Date at the Purchase Price thereof upon the
demand of the Owner thereof. As a condition precedent to the purchase of Bond~
on any Purchase Date, the Owner must deliver to the Paying Agent (or, with
respect to Bonds in a Daily Mode, the Remarketer), (i) a Tender Notice not later
than the time specified in Section 2.06(f) hereof and (ii} the Bonds, together
with an appropriate registration form executed in blank, during such times as
the Bonds are in a Daily Mode, Weekly Mode or Monthly Mode, not later than 12:00
noon, New York City time, on the Purchase Date, or, during such times as the
Bonds are in a Semiannual Mode or a Long Mode, not later than 3:00 p.m., New
York City time on the Business Day 15 days prior to the Purchase Date. An
Tender Notices must state the Bond number, the name of the Owner, the principal
amount or portion thereof to be purchac.;ed and the Putchase Date. The Remarketer
shall co111T1unicate a copy of any Tender Notice rece1ved with respect to Bonds 1n
a Daily Mode to the Paying Agent immediateiy upon its receipt from the Owner. by
telephone, promptly confirmed in writing. Owners delivering Bonds to the Paying
Agent on the Purchase Date after 12:00 noon, New York C1ty time, shall not be
entitled to receive payment from the Paying Agent until the Business Day
following the Purchase Date. Pending any such purchase, the Paying Agent {or,
with respect to Bonds in a Daily Mode, the Remarketer), shall hold in trust, for
the benefit of the Owners thereof, any Bonds delivered to it for purchase in
accordance herewith.
An improperly completed notice shall be promptly returned to the person
submitting the same. The Paying Agent's determination of whether a notice is
properly completed, executed and delivered and is a Tender Notice shall be
Mnding on the City and the owner of the Bonds tendered for purchase pursuant
thereto.
Provided the Tender Notice 1s delivered by the times and in the manner
specified herein, tendered Bonds shall be purchased by the Paying Agent on the
Purchase Date which shall be (i) in the case of a tender during such time as
such Bonds are in a Daily Mode, on the Business Day of receipt of the Tender
Notice, (ii) in the case of a tender during such time as such Bonds are in a
Weekly Mode, on the Business Day specified in the Tender Notice at least se~en
(7) days prior to the Purchase Date, and (iii) in the case of a tender during
such time as such Bonds are in a Monthly Mode, on any Interest Payment Date,
(iv) in the case of a tender during such timE: as such Bonds are 1n a Semiannual
Mode each July l and January 1 and (v) in the case of a Long Mode each July l
which is the Rate Adjustment Date, but solely with funds from the following
sources in the order of priority indicated, with neither the City nor the Pay1ng
Agent having any obligation to use funds from any other source:
( i) Proceeds of the sa 1 e of such Bonds pursuant to Sect f on 2. 08
hereof; and
(ii) Funds representing moneys received by the Paying Agent from a
draw made under the Letter of Credit (or Alternate letter of Credit or Alternate
Security, if applicable).
24
(b) Any Tender Notice received by the Paying Agent (or, with respect to
Bonds 1n a Daily Mede, the Remarketer}, pursuant to this Section 2.07 shall be
effective upon receipt and shall be irrevocable.
{c) It is the express intention of the parties hereto that any purchase.
sale or transfer of Bonds, as provided in this Section 2.07. shall not
constitute or be construed to be the extinguishment of any Bonds or the
obligation represented thereby or the reissuance of any Bonds.
(d) With respect to any Bonds in a Semiannual Mode or a Long Mode, an
Investment Company may deliver its Bonds for purchase to tne Paying Agent on the
Purchase Date if it irrevocably notifies the Paying Agent during the period
co11111encing 30 days prior to such Purchase Date and end1ng 15 days prior to such
Purchase Date that it will deliver such Bonds on such Purchase Date. Any such
Tender Notice delivered in accordance with the foregoing sentence shall be
irrevocable with respect to the purchase for which such Tender Notice was
delivered and such purchase shall occur on the Purchase Date.
(e) Anything in the 1985 Series Resolution to the contrary
notwithstanding, there shall be no purchases or sales of Bonds pursuant to this
Section 2.07 or Section 2.09 hereof if there shall have occurred and be
continuing an Event of Default and an acceleration of the maturity date of the
principal amount of the Bonds described in Section 7.01 hereof.
{f) In purchasing Bonds he~eunder, the Paying Agent shall be acting as a
conduit and shall not be purchasing Bonds for its own account and in the absence
of written notice from the City, the Fiscal Agent or the Bank, shall be entitled
to assume that any Bond tendered to it, or deemed tendered to it for purchase is
entitled under this Resolution to be so purchased.
(g) The Remarketer shall notify the Paying Agent of the amount of the
accrued interest portion of the Purchase Price prior to the purchase of any
Bonds by the Paying Agent.
SECTION 2.08. Remarketing of Bonds~ {a} Upon the tender of any Bonds in
accordance with Sect i 011 2. 07 or 2. 09 hereof, the Reinarketer sha 11 , pursuant to
Section 8.05 he~eof and the Remarket~ng Agreement, offer for sale and use its
best efforts to sell such Bonds (or portions thereof} on any Purchase Date for
such Bonds at a price equal to 10~ of the principal amount of such Bonds plus
accrued and unpaid interest. 1f any, evidenced and represented thereby.
(b) The Remarketer shall not remarket any Bonds pursuant to this Section
2.08 (i) if an Event of Default and an acceleration of the maturity date of the
principal a.mount of the Bonds descrfbed 1n Section 7.01 hereof shall have
occurred and be continuing or (ii) except in compliance with Section 2.06(d)
hereof. The Remarketer may. but shall not be required to, remarket Bonds
pursuant to this Section 2.08 if an Event of Default and an acceleration of the
maturity date of the principal amount of the Bonds described in Section 7 .01
hereof shall have occurred and be co.itinu1ng.
(c) Bonds delivered to the Paying Agent for purchase and so1d by the
Remarketer pursuant to this Section 2.08 shall be registered and made available
for delivery at the Principal Office of the Paying Agent to or upon the order of
the purchasers thereof. Bo~ds de11vered to the Paying Agent and purchased with
25
moneys received from a draw made under the Le~ter of Credit (or Alternate
Security. ff applicable) sha.11 be registered and del fvered at the Principal
Off ice of the Paying Agent to or upon the order of the B~nk.
(d} The Paying Agent shall hold funds provided for the purchase of Bonds
pursuant to Section 2.07 or 2.09 hereof in trust for the person who tendered
such Bonds for purchase and shall deliver such funds to such person. The Paying
Agent shall hold funds provided for the purchase of Bank Bonds in trust for the
Bank and shall deliver such funds to the Bank.
(e} The Remarketer will give notice by telephone, telex or telegraph to
the City, the Paying Agent, the Bank, and the Fiscal Agent by 2:00 p.m., New
York City time, on the Business Day next preceding each applicable Purchase
Date, and with respect to a Daily Mode by 12:30 p.m., New York City time, on the
applicable Purchase Date, specifying: (i) the aggregate principal amount of the
Bonds for wh1ch the Remarketer has not found purchasers by such date, and (ii)
the aggregate principal amount of the Bonds for which the Remarketer has found
purchasers by such date and the denomi nat 1ons of the Bonds to be ae livered to
each such purchaser, and (to the extent avai 1ab1e) the names, addresses and
taxpayer identification numbers of such purchasers.
(f) The Remarkete.,. wi 11 instruct such purchasers to de1 iver ti) it, no
later than the appl icab1e Purchase Date, in i111nediately available funds, the
amount required to purchase the aggregate principa1 amount of Bonds to be
delivered to such purchasers plus accrued interest thereon (the "Remarketed
Bonds"). Upon receipt by the applicable Purchase Date of such amount from such
purchasers, the Remarketer wi 11 transfer such funds to the Paying Agent and
instruct the Paying Agent to register the transfer of ownership of such
Remarketed Bonds to the respective purchasers thereof.
(g) In the event that any purchaser which shall have been identified by
the Remarketer to the City, the Bank, the Paying Agent and the Fiscal Agent
shall fail by 9:00 a.m., New York City time, (and with respect to a Daily Mode,
by 12:30 p.m •• New York City time), on the applicable Purchase Date to pay to it
in i11111ediately available funds the amount necessary to purchase such purchaser's
Remarketed Bonds, the Remarketer shall notify the City, the Paying Agent, the
Bank and the Fi sea 1 Agent prompt 1 y of such fa fl ure and the Remark et; ng Agent
shall use its best efforts to cause such purchaser to deliver such amount, but
in no event except as provided below shall the Remarketer be required to itself
provide funds for the purchase or carrying of Remarketed Bonds.
{h) With respect to Bonds purchased with moneys drawn under the Letter of
Credit, the Remarketer will give such notice by telephone, telex, or telegraph
to the City, the Paying Agent, the Bankj and the Fiscal Agent by 12:30 p.m. on
the applicable Purchase Date, specifying; (i) the aggregate principal amount of
the Bonds held by the Bank for which the Remarketer has found purchasers and the
denominations of the Bonds to be delivered to each such purchaser, and (to the
extent avanable) the names, addresses and taxpayer identificat1cn numbers of
such purchasers, and (ii) the date (which must be a Business Day) on wh1ch the
purchase will take place.
( i) The Remarketer wi 11 instruct such purchasers to de 1 iver to it, no
later than the relevant Purchase Date, in 1mmediate1y available funds, the
amount reQu1red to purchase the aggregate principal amount of Bonds to be
26
delivered to such purchasers. Upon rece1pt by the relevant Purchase Date of
such amount from such purchasers, the Remarketer will transfer sJch funds to the
Paying Agent and wi 11 instruct the Paying Agent to regi st•?r the transfer of
ownersr1p of such Remarketed Bonds to the respective purchasers thereof provided
that reinstatement of the interest commitment of the Letter of Credit pursuant
to the terms thereof has occurred.
SECTION 2.09. Mandatory Purchase. {a) The Bonds shall be sutject to
mandatory purchase prior to maturity at the Purchase Price thereof (1) on April
1, 1986, (2) on the Mode Adjustment Date beginning (i) any Semiannual Mode or
Long Mode or (ii} any Daily Mode, Weekly Mode or Monthly Mode immediately
following a Semiannual Mode or Long Mode, (3) on a Fixed Rate Conversion Date,
(4) on the Expiration Date of the Letter of Credit as provided in Section 2.11
hereof and (5) on a Substitution Date as provided in Section 2.11 hereof;
except that there shall not be so purchased (w) Bank Bonds (x) Bonds as to which
the Owner has submitted an Owner Election Notice, (y) Bonds issued in exchange
for or upon the registration of transfer of Bonds referred to in clause (x)
above, and (z) portions of the princ1pal amount of Bonds in authorized
denominations or integral multiples thereof referred to in clauses (x) and (y)
above. The Paying Agent shall purchase such Bonds solely with funds from the
following sources in the order of priority indicated, with neither the City nor
the Paying Agent having any obligation to use funds from any other source:
( i) Proceeds of the sale of such Bonds pursuant to Sect ion 2. 08 hereof; and
(ii) Funds representing moneys received by the Paying Agent from a
draw made under the letter of Credit (or Alternate letter of Credit or Alternate
Security, if applicable).
(b) The Paying Agent shall, prior to a Fixed Rate Conversion Date, give
notice to each Owner pursuant to Section 2.05(d) hereof.
{c) In connection with any mandatory purchase of Bonds upon a Mode
Adjustment Date the Paying Agent shall, not later than 5 days following receipt
of the Mode Adjustment Notice from the Rate-Setting Agent or the City pursuant
to Section 2.06(a) hereof, mail a notice of mandatory purchase to each Owner
which in substance shall state the following:
(1) the Mode Adjustment Date as set forth in Section 2.06 hereof;
{2) the Minimum Rate at which the Semiannual Rate or the Long Rate
may be established, if applicable;
(3) the period during which the Rate-Setting Agent wi 11 determine
the actual Adjusted Rate as set forth in Section 2.05 hereof;
(4) that all Owners of Bonds who have not executed an Owner Election
Notice as provided in Section 2.10 hereof shall be deemed to have tendered their
Bonds for purchase on the relevant Mode Adjustment Date.
{d) In connection with any mandatory purchase of Bonds on the Expiration
Date of the Letter of Credit or on a Substitution Date, the Paying Agent shal 1
mail notices as provided in Section 2.ll(e) hereof.
27
SECTION 2.10. Owner's Right to Reta.in Bonds Upon Mandatory Purchase.
(a) Any Owner who elects to continue to own such Owner's Bonds after the
Mandatory Purchase Date must deliver to the Paying .A.gent, at the offices of the
Paying Agent as identified in the notice of purchase by the time set forth in
Section 2.06{f) hereof, an irrevocable Owner Election Notice stating in
substance the following:
{l) that the Owner acknowledges the matters ~et forth in the notice
of purchase delivered pursuant to Section 2.05(d} or 2.09(c) hereof, as the ca~e
may be;
{2) that the Owner has decided to continue to own such Owner's Bonds
or portions thereof so cal led for purchase, and identifying such Bonds or
portions thereof by number and denomination;
(3) that the Paying Agent is directed not to purchase such Bonds or
portions thereof; and
(4) that such instrument delivered by the Owner is binding on
subsequent Owners of such Bonds (or the applicable portion thereof}.
(b) Owners of Bonds not providing the Paying Ag-ent with the Owner
Election Notice described above shal 1 be required to tender their Bonds for
purchase at the Purchase Price. Any Undelivered Bonds on the Mandatory Purchase
Date for which there has been irrevocably deposited in trust with the Paying
Agent amowits sufficient to pay the Purchase Price of the Undelivered Bonds,
shal 1 be deemed to have been tendered in accordance with the provisions of
Section 2.09 hereof. In the event of a failure by an Owner (other than an Owner
who has delivered an Owner Election Notice) to tender such Owner's Bonds on or
prior to the Mandatory Purchase Oatet such Owner shall not be entitled to any
payment ( 1 nclud i ng any interest accrued subsequent to thP ~andatory Purchase
Date) other than the Purchase Prf ce fo... such Unde 1 tvered Bonds, and any
Unde 1 i vered Bonds sha 11 no 1 onger be ent it 1 ed to the benefits of the Genera 1
Resolution and this 1985 Series A Resolution, except for the purpose of payment
of the Purchase Price therefor and interest thereon to the Mandatory Purchase
Date.
(c) Any Owner Election Notice delivered to the Paying Agent in accordance
with this Section 2.10 shall be irrevocable with respect to the Bonds for which
such instrument is delivered and shall be binding upon subsequent Owners of such
Bonds; but any such instrument shall have no effect upon any subsequent
redemption of Bonds.
SECTION 2.11. Letter of Credit; Alternate Letter of Credit; Alternate
Ser.urfty.
(a} On the Business Day prior to any Interest Payment Date or Redemption
Date the Paying Agent shal1 draw upon the Letter of Credit by the times and in
accordance with the terms thereof, in an amount suffic1ent to pay all interest
or principal due on any such date. On the Business Day prior to any scheduled
redemption date esta.b lished pursuant to Sect ion 4.01 hereof, the Paying Agerit
sha 11 draw upon the Letter of Credit at the t; mes and in accordance with the
terms thereof, 1n an 41110unt sufficient to pay the principal of and accrued
interest en the Bonds to be redeemed. If on any Purchase Date or Mandatory
28
Purchase Date, the Paying Agent shall not have received proceeds of any
remarketing of the Bonds in an amount sufficient to pay the Purchase Prf ce of
the Bonds to be purchased on such date, the Paying Agent sha 11 draw upon the
Letter of Credit in accordance with its terms. in an amount sufficient to pay
such Purchase Price and at such time as is necessarY. to receive the proceeds of
such draw on the Purchase Date. A 11 Bonds or port ions thereof purchased with
moneys drawn on the Letter of Credit shall be registered and delivered to or
upon the order of the Bank. A 11 amounts drawn under the Letter of Credit to
purchase Bonds or to pay principal of and interest on the Bonds which are not
used for such purposes or required to be held by the Paying Agent for such
purposes sha 11 be remitted by the Paying Agent to the Bank on the date such
moneys are received by the Paying Agent. Notwithstanding anything to the
contrary contained herein, the Paying Agent shall at all times hold amounts
received from the Bank pursuant to draws on the Letter of Credit separate and
apart from all other funds and shall not commingle such funds with any other
amounts received by the Paying Agent from other sources. The Paying Agent shall
give te 1 ephoni c notice on the date the draw is made, prompt 1y confirmed in
writing, of all draws on the Letter of Credit to the Fiscal Agent.
(b) If at any time there shall have been delivered to the Paying Agent
(i} an Alternate Letter of Credit or an Alternate Security in substitution for
the Letter of Credit then in effect, (ii) an Opinion of Bond Coun5el stating
that the delivery of such Alternate Letter of Credit or Alternate Security to
the Paying Agent is authorized under the 1985 Series A Reso1uticn, will not
adversely affect the exemption from federal income taxation of interest on the
Bonds and complies with the terms of the 1985 Series A Resolution (iii) written
evidence from Moody 1s, if the Bonds are rated by Moody's, and S&P, if the Bonds
are rated by S&P, in each case to the effect that such rating agency has
reviewed the proposed Alternate letter of Credit or Alternate Security and that
the substitution of the proposed Alternate Letter of Credit or Alternate
Security for the letter of Credit then in effect will not result in a reduction,
suspension or withdrawal of its ratings of the Bonds from those which then
prevail and (iv) with respect to an Alternate Security, the Fiscal Agent shall
have determined that the substitution of such Alternate Security for the Letter
of Credit then in effect will not materially adversely affect the interests of
the Owners. then the Paying Agent shall accept such Alternate Letter of Credit
or Alternate Security and promptly surrender the Letter of Credit then in effect
to the Bank in accordance with its terms for cancellation.
If at any time there shall cease to be any Bonds Outstanding hereunder,
the Paying Agent shall thereafter surrender the letter of Credit then in effect
to the Bank in accordance with the terms thereof for cancellation.
(c) The Paying Agent shall not se11, assign or otherwise transfer the
Letter of Credit (or Alternate letter of Credit or Alternate Security), except
to a successor Paying Agent hereunder and in accordance with the terms of the
letter of Credit (or A 1 te rna te Letter of Credit or A 1 tern ate Security) or the
1985 Series A Resolution as the case may be.
(d) Unless the term of the Letter of Credit shall have been extended or
there shal 1 have be~n dei ivered an Alternate Letter of Credit or Alternate
Security in substitut1on therefor as provided in subparagraph (b) above~ all
Bonds (except Bonds which have been called for redemption and Bank Bonds) shall
be purchased by tne Paying Agent on the Purchase Date which is the Interest
29
Payment Date 1nvned1ately preced1ng the Expirat1on Date of the Letter of Credit
or an Alternate Lett~r of Credit or Alternate Security, as the case may be, at
the Purchase Price thereof, except Bonds with respect to which the Paying Agent
shall have received written directions not to purchase the same from the Owner
th@reof in accordance with Section 2.10 hereof.
(e) The Paying Agent shall give notice of purchase of the Bonds pursuant
to Section 2.ll{d) by mail to all Owners (with a copy to the Bank) at least
thirty (30) days prior to the Purchase Date. Such not1ce shall (i} specify the
Expiration Date of the Letter of Credit or an Alternate Letter of Credit or a
Substitution Date and the Purchase Date, {ii) specify, if applicable, the last
times and dates pr1or to such Expiration Date on which Bonds must be delivered,
or on which an Owner Election Notice must be executed under Section 2.10 hereof,
(iii) state that any rating of the Bonds by Moody 1 s or S&P may be withdrawn~
suspended or reduced from such ratings as then prevail, (iv) state (if
applicable) that after the Purchase Date the Bonds will no longer be purchased
hereunder at the demand of the Owner thereof, {v) specify the rights that Owners
may have to direct the Paying Agent not to purchase Bonds owned by them, (vi}
state that the Bonds sha 11 be subject to purchase by the Paying Agent at the
Purchase Price thereof on the Purchase Date specified in such notice {and where
the Bonds shal 1 be tendered), except those Bonds with respect to which the
Paying Agent or Remarketer, ~s the case may be, has received an Owner Election
Notice and (vii) ff there is to be a Fixed Rate Con~ersion state the information
specified in clauses (1) through (7) of subparagraph (d) of Section 2.05 hereof
(except that a fixed Rate Conversion Date must be on the Purchase Date).
If, subsequent to the giving of such notice, the term of the Letter of
Credit shall have been extended, or there shall ~ave been delivered an Alternate
Letter of Credit or Aiternate Security in substitution therefor as provided in
subparagraph (b), then the Paying Agent shall discontinue giving the
aforementioned notice and shall give notice by mail to all Owners of such
ex tens ion of the Letter of Credit or the deli very of an Alternate Letter of
Credit or Alternate Security, which notice shail specify (i) that subsequent to
the commencement of the giving of notice of the exoiration of the Letter of
Credit the letter of Credit has been extended or an Alternate Letter of Credit
or Alternate Security has been de 1 i vered to the Paying Agent in accordance
nerewith, {ii) the rating of the Bonds by Moody's or S&P by reason of such
extensior1 or delivery, (iii) the date that the Letter of Credit or Alternate
Letter of Credit or Alternate Security wil 1 expire; and (iv) that the prior
notice of purchase is cancelled. Such notice that the Letter of Cred1t has been
extended or that an Alternate Letter of Credit or Alternate Security has been
delivered shall be given not more than five (5) days following such extension or
delivery.
(f) Any Owner may direct the Paying Agent not to purchase any Bonds owned
by such Owner required to be purchased pursuant to paragraph (d) in connection
with the expiration of the Letter of Credit or the provision of an Alternate
Letter of Credit or an Alternate Security in accordance with Section 2 .10
hereof.
SEC rION 2.12. Form of Bonds. The Bonds and the assigr.ment to appear
thereon shall be in substantially the forms set forth in Appendix A hereto, with
appropriate or necessary insertions, omissions and variations as permitted or
required hereby.
30
' SECTION 2.13. Execution and Authentication of Bonds. The Bonds shall be
executed by the persons and in the manner provided in the General Resolution.
The Oonds shall be authenticated and delivered by the Paying Agent as the agent
of the Fiscal Agent in the 1nanner provided in the General Resolution upon
receipt by the Fiscal Agent of the documents, mone) and securities required by
Section 205 of the General Resolution and receipt of the Letter of Cred1t by the
Paying Agent.
SECTION 2.14. Transfer and Exchange of Bonds. All Bonds are
transferable and exchangeable by the Owner thereof, in person or by his attorney
duly authorized in wr~ting, at the principal office of the Paying Agent in New
York, New York, in th~ books required to be kept by the Paying Agent pursuant to
the provisions of Section 2.15 hereof, upon surrender of such Bonds accompanied
by delivery of a duly executed written instrument of transfer or exchange in a
form approved by the Paying Agent. Whenever any Bond or Bonds shall be
surrendered for transfer er exchange, the City shal 1 execute and the Paying
Agent as agent of the Fiscal Agent ~hall authenticate and deliver a new Bond or
Bonds of authorized denominations representing the same aggregate principal
amount, except that the Paying Agent shall require the payment by any Owner
requesting such transfer or exchange of any tax or other governmental charge
required to be paid with respect to such transfer or exchange. All Bonds
surrendered pursuant to the provisions of this section shall be cancelled by the
Paying Agent {with notice to the Fiscal Agent of such cancella'.;ion) and shall
not be redelivered. The Paying Agent shall not be required to transfer or
exchange any Bond selected for redemption from and after the date of mailing a
notice of redemption of such Bond.
SECTION 2.15. Bond Registration Books. The Paying Agent wil 1 keep at
its principal office in New York, New York, sufficient books for the
registration of the ownership, transfer and exchange of the Bonds, which books
shall be available for inspection by the Fiscal Agent, the City, the Bank or any
Owner or his agent duly authorized in writing at reasonable hours and under
reasonable conditions; and upon presentation for such purpose the Paying Agent
shall, under such reasonable regulations as it may prescribet register the
ownership, transfer or exchange of the Bonds in such books as hereinabove
provided. The ownership of any Bonds may be proved by the books required to be
kept by the Paying Agent pursuant to the provisions of this Section.
SECTION 2.16. Temporary Bonds. The Bonds may be initially delivered in
temporary form exchangeable for definitive Bonds when ready for delivery, in the
manner provided in the General Resolution.
SECTION 2 .17. Approval of Underwriting Agreement. The off er, sa 1 e and
delivery of the Bonds to the Underwriter is hereby authorized and the Mayor is
hereby authorized and directed to execute and the City Clerk is hereby
authorized and directed to attest the Mayor 1 s signature and to deliver the
Underwriting Agreement in substantially the form presented to this meeting or
with such change~ as the Mayor may approve. his execution thereof to constitute
conclusive evidence of his approval of all changes from the form of Underwriting
Agreement presented to this meeting, which form of Underwriting Agreement is
hereby, in all respects, approved and incorporated by reference and made a part
hereof.
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SECTION 2.18. Approval of PrelimindQ' Official Statement. The
Preliminary Official Statement pertaining to the offer and sale of the Bonds and
its use by the Underwriter in the offer and sale of the Bonds are hereby
approved and the Mayor is hereby authorized and directed to execute and deliver
the Preliminary Official Statement in substantially tne form presented to this
meeting or with such changes as he may approve, his execution thereof to
constitute conclusive evidence of his approval of all changes from the form of
Preliminary Official Statement presented to this meeting which form of
Preliminary Official Statement is hereby, in all respects, approved and
incorporated by reference and made a part hereof.
The Mayor is further authorized and directed to execute the Official
Statement when it becomes available, provided that such Official Statement is
consistent with the transaction described herein.
SECTION 2.19. Approval of Remarketing Agreement. The Remarketing
Agreement is hereby approved, and the Mayor is hereby authorized and directed to
execute and the City Clerk is hereby authorized and directed to attest the
Mayor's signature and to deliver the Remarketing Agreement with The First Boston
Corporation as Remarketer and Bank of America National Trust and Savings
Association, as Fiscal Agent in substantially the form presented to this meeting
or with such changes as the Mayor may approve, his execution thereof to
constitute conclusive evidence of this approval of all changes from the form of
Remarketing Agreement presented to this meeting, which form of Remarketing
Agreement is hereby, in all respects, approved and incorporated by reference and
made a part hereof.
SECTION 2.20. Approval of Reimbursement Agreement, Term Note and Demanq
Note. The Reimbursement Agreement, the Term Note and the Demand Note are
hereby approved and the Mayor is hereby authorized and directed to execute and
the City C1erk is hereby authorized and directed to attest the Mayor's signature
and to deliver the Reimbursement Agreement, the Term Note and the Demand Note
with The Fuji Bank, Limited, acting through its Los Angeles Agency, in
substantially the forms presented to this meeting or with such changes as the
Mayor may approve, his execution thereof to constitute conclusive evidence of
his approval of all changes from the forms of Reimbursement Agreement, the Term
Note and the Demand Note are presented to this meeting, which forms of
Reimbursement Agreement, the Term Note and the Demand Note are hereby, in all
respects, approved and incorporated by reference and made a part hereof.
SECTION 2.21. Prior Actions Ratified and Confirmed. The actions of the
City Manager, City Attorney, Director of Finance, Financial Planning
Administrator, Director of Utilities or any other officer of the City in doing
any and a11 acts necessary in connection with the issuance and sale of the Bonds
are hereby ratified and confirmed.
SECTION 2. 22. Further Actions Authorized. The City Manager, City
Attorney, Director of Finance, Financial Planning Administrator and Director of
Utilities and other proper officers, agents and employees of the City are hereby
authorized, empowered ~nd directed to do all such acts and things and to execute
and deliver all such documents as may be necessary in connectfon with the
issuance. sale and delivery of the Bonds.
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ARTICLE I I I
PROCEEDS OF BONDS
SECTION 3.01. Delivery of Bonds. The Mayor and City Clerk are hereby
authorized to execute the Bonds and to affix the corporate seal of the City to
the Bonds in the manner provided in the General Resolution and the Paying Agent,
as the agent of the Fiscal Agent, is hereby authorized to authenticate the Bonds
and deliver the Bonds tc the Purchaser pursuant to the Underwriting Agreement,
upon receipt of the proceeds of sale thereof.
SECTION 3.02. De osit of Proceeds of Bonds. The proceeds received from
the sale of the Bonds except for an amount necessary to bring the amount on
deposit in the Bond Reserve Account up to an amount equa1 to the Bend Reserve
Requirement, which shall be deposited in the Bond Reserve Account, and an amount
equal to $962,077, representing interest on that portion of the proceeds to be
applied to the cost of construction of the proposed enlargement of the
wastewater treatment facility of the City from the date of the Bonds to January
1. 1988, computed at the rate of eight and one-half percent (8.5i) per annum,
which shall be deposited in the 1985 Series A Interest Account) shall be
transferred by the Fiscal Agent to the City and shall be deposited by the City
in the 1985 Series A Project Account (which account is hereby created and which
shall be held by the Treasurer as a separate account distinct from all other
fund~ of the City).
SECTION 3.03. Application of 1985 Series A Project Account. The money
in the 1985 Series A Project Account shall be used in the manner provided by law
for the purpose of paying costs of the acquisition and construction of the 1985
Series A Project (or for making reimbursements to the City for such costs
theretofore paid by it), including al 1 costs incidental to or connected with
such acquisition and construction, together with engineering, appraisal,
inspection, legal and Fiscal Agent's fees, and Costs of Issuance of the 1985
Series A Bonds. Any balance remaining in the 1985 Series A Project .A.ccount
after the completion of such acquisition and construction shall be transferred
to the Revenue Fund.
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ARTICLE IV
REDEMPTION OF BONDS
SECTION 4.01. Terms of Redemption.
(a) Redemption from Ne~ Proceeds of Insurance or Eminent Domain. The
City shall hav~ the right, on any Interest Payment Date, to redeem the Bonds in
the manner hereinafter provided in Section 4.02(a)(i), as a whole or in part by
lot if less than all of the Bonds be redeemed, from the Net Proceeds of
insurance or the Net Proceeds of eminent domain proceedings, upon the terms and
conditions of, and as provided for in, Sections 707 and 713 respectively, of the
General Resolution, at the principal amount thereof and accrued interest thereon
to the date fixed for redemption ~ithout premium.
(b) Optionai Redemption of Bonds in Other than Long Mode or Fixed Mode.
Any Bonds in a Dai1y Mode, a Weekly Mode, a Monthly Mode or a Semiannual Mode
are subject to optional redemption on any Interest Payment Date after January 1,
1987, in the manner hereinafter provided in Section 4.02(a){i), as a whole or in
part in an integral multiple of the then authorized minimum denomination of such
Bonds by lot, from moneys paid to the Fiscal Agent by the City and deposited in
the Redemption Account in the Revenue Fund (which account is hereby credted and
shall be held by the Fiscal Agent as a separate account, distinct from all other
funds of the City) under the circumstances and upon the conditions and terms
prescribed herein, at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon to the date fixed for
redemption.
(c) Optional Redemption of Bonds in Lonq Mode or Fixed Mode. Any Bonds
in a long Mode or a f i xecl Mode are subject to opt i ona 1 redemption on any
Interest Payment Date, after the period referred to below under the column
heading 11 Redemption Protection." in the manner hereinafter provided in Section
4.02 (a){ii), as a whole or in part in an integral multiple of the then
authorized minimum denomination of such Bonds by lot, from moneys paid to the
Fiscal Agent by the City and deposited in the Redemption Account, under the
circumstances and upon the conditions and terms prescribed herein, at the
redemption price (expressed as a percentage of principal amount thereof) set
forth below, p'lus accrued and unpaid interest thereon to the date fixed for
redemption:
34
Length of
Rate Period
Expressed in Years
greater than 18
less than or equal to 18
and greater than 13
less than or equal to 13
and greater than 10
less than or equal to 10
and greater than 7
less than or eQual to 7
and greater than 4
less than or equal to 4
and greater than 2
less than or equal to 2
and greater than 1
equal to 1
Optional Redemption Ourin_g
a Long Mode
Redemption prices as a percentage
of principal amount (measured
from and including first Redemption
day of such rema1ning period) Protection
after 10 years at 102% declining 10 years
1/2% per 12 months to 100%
after 8 y~ars at 102% declining 8 years
1/2% per 12 months to 100%
after 5 years at 102% declining 5 years
1/2% per 12 months to 100%
after 3 years at 101-1/2% 3 years
declining 1/2% per 12 months to 100%
after 3 years at 101% declining 3 years
1/2% per 12 months to 100%
after 2 years at 101% declining 2 years
1/2% per 6 months to 100%
after 1 year at 100-1/2% declining l year
1/2% per 6 months to 100~
after 6 months at 100-1/8% 6 months
35
Length of Remaining
Term to Maturity
Expressed in Years*
greater than 18
less than or equal to 18
and greater than 13
less than or equal to 13
and greater than 10
less than or equal to 10
and greater than 7
less than or equal to 7
and greater than 4
less than or equal to 4
Optional Redemption During
a Fixed Mode
Redemption Prices as a percentage
of principal amount (measured
fr~m and including first day of Redemption
suc_h remaining term to maturity)** Protection***
after 10 years at 102% declining 10 years
1/2% per 12 m,mths to 100%
after 8 years at 102% declining 8 years
1/2% per 12 months to 100%
after 5 years at 102% declining 5 years
1/2% per 12 months to 100%
after 3 years at 101-1/2% 3 years
declining 1/2% per 12 months to 100%
after 3 years at 101% declining 3 years
1/2~ per 12 months to 100%
non-redeemable
* Length of perfod from the Interest Payment Date immediately succeeding a
Fixed Rate Conversion Dute to the date for prepayment.
** Measured from the Interest Payment Date immediately succeeding a Fixed Rate
Conversion Date.
*** Length of t1me (measured from the Interest Payment Date immediately
succeeding a Fixed Rate Conversion Date) before Certificates may be prepaid.
36
(d) The Bonds are subject to mandatory redeTipt ion on any Redemption
Date prior to July 1, 2006, in the manner hereinafter provided in Section
4.02(a)(iii), in part in integral multiples of the then authorized minimum
denomination of the Bonds by lot, from Sinking Fund Instanments made by the
City and deposited in the 1S85 Series A Sinking Fund Account, which account is
hereby established, to be held by the Fiscal Agent pursuant to the terms of the
General Resolution and this 1985 Series A Resolution, at a redemption price
equal to lOoi of the principal amount thereof plus accrued and unpaid interest
thereon to the date fixed for redemption.
{e) The Bonds are subject to mandatory redemption on any day after the
expiration of five (5) days after notice of redemption by mail pursuant to
Secthm 4.04, in whole, 11pon receipt by the Paying Agent and the Fiscal Agent of
written notice from the Bank cf an event of default under Section 70l(j) of the
Reimbursement Agreement, under Section 7.0l{d), at a redemption price equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon to
the date fixed for redemption.
SECTION 4.02. Redemption Procedure
{a) Prior to Expiration Date. During any period within which the Letter
of Credit is held by the Paying Agent and enforceable by its terms, redemption
shall be accomplished in the following manner:
fi) Redemption Under Sections 4.0l(a) and 4.0l(b). If the Fiscal
Agent dt!termines, pursuant to either Section 707 or Section 713 of the
General Resolutio!1~ that the funds paid to the Fiscal Agent by the City
pursuant to either of said Sections shall be applied to the prior
redemption of Bonds, as provided in Section 4.0l(a), or if the Fiscal Agent
has received funds from the City and deposited them in the Redemption
Account pursuant to Section 4.0l(b), the Fiscal Agent shall give notice to
the Paying Agent and the Bank (A) stating either its determination under
Section 4.0l(a) or the City•s determination under Section 4.0l(b) to redeem
Bonds and the principal amount thereof, (B) stating the fact that it has
rec~ived the funds necessary to redeem the Bonds in such principd1 amount
and is holding said funds for the account of the Bank, (C) stating the
Interest Payment Date on which the Bonds are to be redeemed and instructing
the Paying Agent to select the Bonds to be redeemed and to give notice of
redemption pursuant to Section 4.03 and (0) directing the Paying Agent to
make a draw on the letter of Creriit on the Business Day prior to said
Interest Payment Date; and on said Interest Payment Date, the Paying Agent
shall apply the proceeds of the draw to the red€mpt ion of the Bonds
described in said notice and the Fiscal Agent shall pay to the Bank from
the Redemption Account by 11:00 a.m. {Pacific Coast Time) on the Business
Day before payment under the Letter of Credit the amounts to be drawn on
the Letter of Credit by the Paying Agent for the purpose of redeeming the
Bonds.
(ii} Red em ti on Under Sect ion 4. 01 c . If the City determines to
redeem Bonds under Section 4.0 c , it shall, no later than 95 days prior
to the desired redemption date. pay to the Fiscal Agent for deposit in the
Seasoned Funds Account in the Revenue Fund (which account is hereby created
and shall be held by the Fiscal Agent as a separate account, distinct from
all other funds of the City) ar. amount equal to the premium payable on
37
redemption of the Bonds desired by the City to be re~eemed, calculated as
provided in Section 4.0l(c).
The Fiscal Agent shall thereupon give notice to the Paying Agent and
the Bank (A) stating that the City has determined to redeem Bonds and the
principal amount thereof, (B) stating that the premium has been received
and the amount thereof and the Interest Payment Date on which the Bond~ are
to be redeemed and instructing the Paying Agent to select the Bonds to be
redeemed and to give notice of redemption pursuant to Section 4.03. The
Paying Agent shall, upon giving said notice of redemption, so advise the
Fiscal Agent the City and the Bank whereupon the City, no later than five
days prior to the proposed redemption date, shall pay to the Fiscal Agent
for deposit in the Redemption Account for the account of the Bank, the
a.mount necessary, when added to the premium held in the Seasoned Funds
Account, to redeem the Bonds on the proposed redemption date.
Upon receipt of said funds from the City, the Fiscal Agent shall
give notice to the Paying Agent and the Bank (A} stating the fact of such
receipt and (B) directing the Paying Agent to make a draw on the Letter of
Credit on the Business Day prior to the proposed redemption date; and on
said redemption date* the Fiscal Agent shd11 pay to the Paying Agent from
the Seasoned Funds Account the amount of the premium. the Paying Agent
shall apply the proceeds of the draw and the premium to the redemption of
the Bonds, and the Fiscal Agent sha11 pay to the Bank from the Reaemption
Account by 11:00 a.m. (Pacific Coast Time) on the Bustness Day before
payment under the Letter of Credit the amounts to be drawn on the Letter of
Credit for the purpose of such redemption.
(ifi) Redemption Under Section 4.0l(d). Upon receipt of a Sinking
Fund Installment from the City, the Fiscal Agent shall give notice of such
payment to the Paying Agent and direct the Paying Agent to select the Bonds
to be redeemed and to give notice of redemption of Bonds pursuant to
Section 4.03. On the Business Day prior to the Principal Installment Date
set forth in such notice, the Paying Agent shal 1 draw on the Letter of
Credit in the amount necessary to ·redeem the Bonds; on said redemption
date, the Paying Agent shall apply the proceeds of the draw to the
redemption of the Bonds and the Fiscal Agent shall pay to the Bank from the
Sinking Fund Account by 11:00 a.m. (Pacific Coast Time) on the day on which
payment is made under the Letter of Credit the amounts drawn on the letter
of Credit for the purposes of such redemption.
{b) After Expiration Date. During periods within which no Letter of
Credit is outstanding, redemption shall be accomplished by direct payments to
the Owners from the Redemption Account and the Sinking Fund Account after notice
pursuant to Section 4.04.
SECTION 4.03. Selection of Bonds for Redemption. Whenever less than all
the Outstanding Bonds are to be redeemed on any date, the Pay f ng Agent sha 11
select the Bonds to be redeemed in whole or in part by lot in any manner that
the Paying Agent deems fair; provided 9 however, that with respect ~o a
redemption made pursuant to Section 4.0l(b) or (c) hereof, the Paying Agent
shall select the Bonds to be redeemed in whole or in part first from any Bends
designated by the City for redemption and then by lot in any manner that the
Paying Agent deems fair. The Paying Agent shali promptly notify the Fiscal
38
Agent, the City and the Bank in writ'ng of the numbers of the Bonds so selected
for redemption in whole or in part on such date.
SECTION 4.04. Notice of Redemption. The Paying Agent shall give notice
of redemption by mail only to the respective Owners of all Bonds cesignated for
redemption in whole or in part at their addresses appearing in the books
required to be kept by the Paying Agent pursuant to the provisions of Section
2.15 hereof. Each notice of redemption shall state the redemption date, the
redemption place and the redemption price and shall state that the interest on
the Bonds designated for redemption in whole or in part shall cease to accrue
from and after s~ch redemption date and that on such redemption date there wil1
become due and payable on each of the Bonds designated for redemption in whole
or in part the redemption price evidenced and repres~nted thereby. Notice with
respect to any Bond shal 1 be deemed given if such notice is provided to the
Owner of such Bond at the time of such notice.
Such notice shali be given by the Paying Agent by mail not less than five
(5) nor more than twenty (20) days (or, with respect to B~nds in a Semiannual
Mode, Long Mode or Fixed Mode, not less than twenty (20} nor more than sixty
(60) days) prior to the date fixed for redemption; provided, that in the event
of redemption pursuant to Section 4.0l{e). such notice ~hall be given no 1ater
than nine (9) days after receipt by the Paying Agent of ~otice from the Bank
thereunder. Notice by publication need not be given.
The Paying Agent shall give notice of redemption of any Bonds to be
redeemed in whole or in part upon receipt of a Written Request of the City
(which request shall be given to the Fiscal Agent and the Paying Agent at least
thirty (30) days prior to the date fixed for redemption}, but only after the
City shall have made a payment to the Fiscal Agent which has been deposited in
the Redemption Account or the Sinking Fund Account, as the case may be, as
provided in Section 4.02~ and the Fiscal Agent shall have determined that such
deposit is sufficient to provide for the payment of the redemption price on all
Bonds to be redeemed in whole or in part (or the Fiscal Agent determines that
such payment will be timely made and available to it for deposit in the
Redemption Account or the Sinking Fund Account, as the case may be, which wi11
be sufficient to provide for such purpose}, together with the estimated expense
of giving such notice.
SECTION 4.05. Partial Redemption of Bonds. Upon surrender of any Bond
redeemed in part only, the City shall execute and the Fiscal Agent or the Paying
Agent, as agent to the Fiscal Agent, shall authenticate and deliver to the Owner
thereof a new Bond or Bonds equal to the unredeemed principal amount of the Bond
surrendered. The Owner of any Bond redeemed in part only may, in l i eu of
surrendering such Bond for a new Bond or Bonds, endorse on the reverse of such
Owner 1 s Bond a notation of such part i a 1 redemption in such farm as may be
satisfactory to the Paying Agent and under such conditions as the Paying Agent
may approve, which such partial redemption shall be valid upon payment of the
amount required thereby to be paid to such Owner; and the City, the Fiscal
Agent, the Paying Agent and the Bank shall be released and discharged from all
liability to the extent of such redemption, irrespective of whether such
endorsement shall or shall not have been made upon the reverse of such Bond by
such Owner and irrespective of any error or omission in such endorsement~
39
SECTION 4.06. Effect of Redemption. If notice of redemption has been
duly gi~en as aforesaid and funds for the payment of the redemption price on the
Bonds to be redeemed in whole or in part are held by the Fiscal Agent or the
Paying Agent on the designated redemption date, then on the red empt ion date
designated in such notice the Bonds or the portions thereof to be redeemed so
called for redemption shall become payable at the redemption price specified in
such notice; and from and after the date so designated interest on the Bonds so
ca 11 ed for redemption or the port ions thereof to be redeemed sha 11 cease to
accrue, such B lnds or the port i ans thereof to be redeemed sha 11 cease to be
entitled to an} benefit, protection or security hereunder and the Owners of such
Bonds or the portions thereof to be redeemed shall have no rights in respect
+;.hereof except to receive payment of the redemption price evidenced and
represented thereby. The Paying Agent shal 1, upon surrender for payment on
their redemption date, pay such Bonds or the portions thereof to be redeemed at
the redemption price applicable thereto.
A11 Bonds redeemed in whole or in part pursuant to the provisions of this
article shall be cancelled by the Paying Agent, who shall give notice of such
cancellation to the Fiscal Agent, and such Bonds shall not be redelivered;
p~ovided, however, that Bonds redeemed with the proceeds cf a drawing under the
Letter of Credit shall not be cancelled but shall be registered in the name of
the Bank or its nominee to the extent that the Bank has not been reimbursed for
the full amount of such drawing as provided in Subsection 4.0l(a) hereof.
40
ARTICLE V
REVENUES, FUNDS ANO ACCOUNTS
SECTlOH 5.01 Pledge of Revenues.
The City hereby transfers, places a charge upon, assigns and sets over to
the Fiscal Agent all of the Net Revenues and all of the Net Revenues are hereby
~rrevocably pledged to the punctual payment of (i) the principal or Redemption
Price of and interest on the Bonds, and (ii} the Obligations. Said pledge shall
constitute a charge and 1 ien on the Net Revenues for the payment cf the Bonds
and the Obligations in accordance with the terms thereof, subject only to the
prior lien securing the 1983 Series A Bonds; the lien of the pledge for the
security and benefit of t~e Bondholders shall be on a parity with the lien of
the pledge for the security and benefit of the Bank, and is valid and binding
from the time when made, except that the lien of the pledge to secure the
repayment of the Obligations shall be junior and subordinate to the 1ien of the
pledge given to secure the Bonds to the extent and only to the extent necessary
ta repay that portion of the Obligations representing interest in excess of
twelve percent (12%) per annum; provided, however that the lien of the foregoing
pledge to secure the Bonds and the Obligations sha11 be and become, {subject to
the foregoing exception} without further action by the City, the Fiscal Agent or
any other person. or'! a parity with the 1 ien securing the 1983 Series A Bonds
upon the happening o~ all of the following events;
(1) The City shal 1 have prepared and filed with the Fiscal Agent
the audited statement for the Fiscal Year 1984-85 required by Section 708
(B) of the General Resolution;
(2) A Certificate of an lndependent Public Accountant stating that
the audited Net Revenues for the Fiscal Year 1984-85 have produced a sum
equal to at least 1.25 times the maximum amount of Principal Installments
and interest payable in any future Fiscal Year after the issuance of the
Bonds (with interest on the Bonds computed at the rate of twehe percent
(12%) per annum) shall have been filed with the Fiscal Agent in accordance
with Section 203 of the General Resolution;
(3) The Certificate of the City required by Section 202(a) of the
General Resolution shall have been filed with tne Fiscal Agent;
( 4) An Opinion of Bord Counse 1 sha 11 have been filed with the
fi seal Agent to the effect that the lien of the pledge made under the
provisions of this Section is legal, va1id and binding and is, from and
after the date therein set forth, on a parity with the iien of the pledge
securing the 1983 Series A Bonds; and
(5) A letter from Band Counsel has been filed with the Bank and the
Fiscal Agent stating that the Bank and the Fiscal Agent may each rely on
the opinion provided pursuant to paragraph (3).
Tt1e City expects to and represents that it w111 cause the foregoing
events to take place prior to Maren 17, 1986.
41
The City convenants that 1t wi 11 not issue bonds or incur any other
obligation, however denominated~ payable from the Net Revenues and secured by a
lien thereon ~hich is on a parity w1th or superior to the lien established for
the security of the 1983 Series A Bonds in the General Resolution unless and
until such time as the lien of the pledge securing the 1985 Series A Bonds
achieves parity with the lien of the pledge securinq the 1983 Series A Bonds, as
above provided.
SECTION 5.02. Allocation of Revenues. On or before the second Business
Day il'TITIE!diately preceding each Interest Payment Date, commencing in February,
1986 and at the same time as (o~, during the period within which the Bonds are
secured by a subordinate lien pursuant to Section 5.01 before) any payments are
made into any oi the accounts to pay principal of or interest on the 1985 Series
A Bonds ~nd until such time as the 1983 Series A Bonds and the interest thereon
and premiums, if any, are paid in full or provision made for such payment in
accordance with the General Resolution and the 1983 Series A Resolution, the
Treasurer shall set aside in a special account within the Revenue Fund, from the
Net Revenues, an amount equal to one-sixth (l/6th) of the amount of the
Principal Installments and interest payable on the 1983 Series A Bonds on the
next succeeding July 1 or January 1. That portion of the amounts so accumulated
in said special account as may be necessary tn pay the Principal Installments
and interest due and payable on said dates shall be paid to the Fisca1 Agent for
deposit in the Bond Account established pursuant to Section 503 of the General
Resolution at the times and in the manner required by the General Resolution and
the 1993 Series A Resolution.
The foregoing transfers to and accumulations in such a. specidl account
shall not be required during periods within which the Bonds are in a Semiannual
Mode, Long Mode or Fixed Mode, provided that all payments of principal. interest
and Redemption Prices on the 1983 Series A Bonds shall be made prior to any such
payments on the 1985 Series A Bonds during the period within which the 1985
Series A Bonds are secured by a subordinate lien pursuant to Section 5.01 and at
the same time thereafter.
During each successive six-month period after making each of the
foregoing transfers, and on or before the second Business Day imnediately
preceding each Interest Payment Date, the Treasurer shail pay to the Fiscal
Agent from the Revenue fund for deposit by the Fiscal Agent into the following
respective accounts (each of which the Fiscal Agent shall establish and maintain
within the Revenue Fund), the fol1owing amounts, in the following order of
priority, the requirements of each such account {including the making up of any
deficiencies in any such acrount resulting from lack of Net Revenues sufficient
to make any earlier required deposit) at the time of deposit to be satisfied
before any transfer is made to any account of low~r priority:
First: to the 1985 Series A Interest Account which ts hereby
established within the Revenue Fund, without preference or priority. the
aggregate amount of 1nterest becoming due and payable on the next succeeding
Interest Payment Date on the Bonds then Outstanding;
Second: commencing the second Business Oay immediately preceding July
1, 1987 and thereafter on the second Business Day inrnediately preceding the next
Principal Installment Date, to the 1985 Series A Sinking Fund Account which 1s
hereby established within the Revenue Fund, without preference or priority, an
42
amount equal to the Sinking Fund Installment payable on the next succeeding
Principal Installment Date with respect to the Bonds then Outstand1ng;
Third: the first available moneys shall be transferred to the Bond
ReserV"e Account, without preference or priority. for the purpose of makirig up
any deficiency in any of the aforesaid Accounts; provided that no deposit need
be made into any of the Bond Reserve Account so long as the balance in said
account shall be at least equal to the Bond Reserve Requirement.
Section 5.03. Application of Interest Account. All amounts in the
Interest Account shali be used and withdrawn by the Fiscal Agent solely for the
purpose of paying interest on the Bonds as it sha 1 l become due and pay ab 1 e
(including accrued interest en any Bonds purchased or redeemed prior to maturity
pursuant to this Resolution) or, during any period within which the Letter of
Credit or Alternate Security is held by the Paying Ager.t and enforceable by its
terms, of paying the Bank amounts due under the Reimbursement Agreement for
drawings under the letter of Credit to pay interest on the Bonds pursuant to
Section 2.11 hereof.
Section 5.04. Application of Sinking Fund Account.
{A) All amounts in the Sinking Fund Account snal1 be used and withdrawn
by the Fiscal Agent solely to purchase or redeem or pay at maturity the Bonds as
provided herein, or, so long as a Letter of Credit or Alternate Security is held
by the Paying Agent and enforceable by its terms, to pay the Bank amounts due
under the Reimbursement Agreement for drawings under the Letter of Credit or
Alternate Security to pay principal of the Bonds pursuant to Section 2.11 and
Sections 4.0l(d) dTid 4.02(a)(iii) hereof.
(B) Subject to the terms and conditions set forth in this Section. the
Series 1985 A Bonds shall be redeemed (or paid at maturity, as the case may be)
by application of Sinking Fund Installments in the following amounts and upon
the following dates:
43
Sinking Fund Sinking Fund
Installment Dates Installments
Ju1y 1. 1987 $ 100,000
.July 1, 1988 300,000
July 1' 1989 300,000
July 1, 1990 300,000
July l, 1991 300,000
July 1, 1992 400,000
J:.:ly 1 t 1993 400,000
July 1, 1994 400,000
July 1 1995 400,000 .. ' July 1, 1996 600,000
July 1, 1997 600,000
July 1, 1998 600,000
July 1, 1999 700,000
July 1, 2000 700,000
July 1, 2001 800,000
July 1, 2002 900,000
July 1, 2003 1,000,000
July 1, 2004 1,000,000
July 1, 2005 1,200,000
July 1, 2006 1,200,000
SECTION 5.05. Application of Bond Reserve Account. If, so long as the
Letter of Credit continues in effect and Obligations are owed to the Bank by the
City under the Reimbursement Agreement, at any time there shall not be a
sufficient amount in the Bond Account, the 1985 Series A Sinking Fund Account,
the 1985 Series A Interest Account or the Redemption Account to reimburse the
Bank for moneys paid to the Paying Agent under the letter of Credit as provided
in Articles IV and V hereof, the F;scal Agent shall withdraw from the Bond
Reserve Account and pay to the Bank the amount of the deficiency.
44
ARTICLE VI
COVENANTS
SECTION 6.01. Compliance with 1985 Series A Resolution. The City will
not execute and the Fiscal Agent and Paying Agent will not authenticate or
deliver any Bonds in any manner other thar. in accordtl.nce with the provisions
hereof, and the City will not suffer or permit any default by them to occur
hereunder, but will faithfully comply with, keep, observe and perform all the
agreements, conditions, covenants and terms herecf required to be complied with,
kept, observed and performed by them.
SECTION 6.02. Arbitrage and No Industrial Development Bond Status
Covenants. The City will not Jse or permit the use of any proceeds of Bonds or
any other funds of the City, directly or indirectly, to acquire any securities
or obligations, and shall not use or permit the use of any Revenues received by
the City~ the Fiscal Agent or the Paying Agent with respect to the l985 Series A
Resolution or the Letter of Credit in any manner, and shall not take or permit
to be taken any other action or actlons, which wc•J1d cause any Bonds to be
"arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue
Code of 1954, as amended {in this Sect. ion ca 11ed the 11 Code"). If at any time
the City is of the opinion that for purposes of this subsection it is necessary
to restrict or limit the yie1d on the investment of any moneys he1d by the
Treasurer or the Fiscal Agent under this Resolution. the City sha1l so instruct
the Treasurer or the Fiscal Agent and the Paying Agent in writing, and the
Treasurer or the Fiscal Agent or the Paying Agent shall take such action as may
be necessary in accordance ~ith such instructions.
The City will not use or permit the use of the 1985 Series A Project or
any part thereof by any person who is not an "exempt person" within the meaning
of Section 103(b}(3) of the Code~ or by such an °exempt person11 in an °unrelated
trade or businesc;" within the meaning of Section 513(d) of the Code, in such
manner or to such extent as would result in the loss of exemption from federal
income taxes of the interest on the Bonds under Section 103{a) of the Code.
SECTION 6.03. Confi!"mation of General Resolution. All covenants made in
Article VII of the General Resolution are hereby confirmed as applicable to the
Bonds under this 1985 Ser1es A Resolution.
45
ARTICLE VII
DEFAULT AND LIMITATIONS OF Li.ABILITY
SECTION 7.01. Events of Default. The following events, in addition to
those set forth in the General Resolution, shall constitute events of default:
(a} failure to pay the Purchase Price of any Bond tendered pursudnt
to Sections 2.07 and 2.09 hereof when such payment is due;
(b) the occurrence of an Act of Bankruptcy of the Bank;
(c) receipt by th Paying Agent, following a drawing under the
Letter of Credit to pay interest on the Bonds on an Interest Payment Date.,
of notice from the Bank that the Letter of Credit will not be reinstated to
an amount which at least equals 210 days interest on the Outstanding
principal amount computed at twelve percent (12%) per annum; or
(d) receipt by the Paying Agent and the Fi sca1 Agent of written
notice from the Bank of the occurrence and continuance of an "Event of
Default" under and as defined in the Reimbursement Agreement. which notice
shall direct the Paying Agent to call all Bonds for purchase pursuant to
the Series Resolution.
If at the time of occurrence of iny such Event of Default the Letter of
Credit is in effect, the Paying Agent shall call all Outstanding Bonds (other
than Bank Bonds) for mandatory purchase and shall immediately draw upon the
Letter of Credit in an amount sufficient to pay the purchase price of all such
Bonds and within the time necessary to receive the proceeds of such draw on the
Purchase Date; provided. that if the Event of Default is under clause (d} above
and based on an event of default under Section 7 .Ol(j) of the Reimbursement
Agreementt the Paying Agent shall call all of the outstanding Bonds for
mandatory purchase pursuant to Section 4.0l(e).
SECTION 7.02. Action on Default. If an Event of Default shall happen,
then such Event of Default shall constitute a der1ult event hereunder, and in
each and every such case during the continuance of such Event of Default the
Fiscal Agent or the Owners of not less than a majority in aggregate principal
amount represented by the Bonds at thP. time Outstanding, with the consent of the
Bank (so long as the Letter of Credit is in effect with respect to all of the
Bonds Outstanding), may, and upon written instructions from the Bar.k shall, upon
notice in writing to the City, the Paying Agent and the Bank, exercise the
remedies pro~ided in the General Resolution.
In the event the entire pri nc i pal amount of the unpa 1 d Bonds and the
accrued interest thereon shall be declared due and payable pursuant to Section
1001 of the General Resolution, the Fiscal Agent shall declare the principal and
interest evide~ced by all Bonds i111nediately due and payable and such principal
and interest shall thereupon be due and payable i1m1ediately. The Fiscal Agent
shall instruct the Paying Agent to draw under the letter of Credit, in
accordance with its terms, an amount sufficient to enable it to pay such amounts
to the Owners.
46
Immediately after the Bank honors the Paying Agent 1s draw on the Letter
of Credit, the Fiscal Agent and the City shall transfer a11 moneys then on
depos 1 t in a 11 of the Funds and Accounts to the Bank in an amo1.mt not exceeding
the amounts due and payable to the Bank under the Reimbursement Agreement. All
Bonds acquired with the proceeds of such a draw upon the Letter of Credit shall
be Bank Bonds and shall be registered in the name of the Bank or its nominee and
all principal and interest on such Bonds shall be immediately due and payable in
accordance with this Section 7.0Z.
SECTION 7.03. Application of Funds Upon Acceleration. All of the
Revenues and all sums in all of the Funds and Accounts provided for in Articles
IV and V hereof upon the date cf the declaration of acceleration by the Fiscal
Agent as provided in Section 7.0Z~ and all Revenues thereafter received by the
City hereunder, shall be transmitted to the Fiscal Agent (other than proceeds of
a draw upon the Letter of Credit which sha 11 be paid to the Paying Agent and
shall be used only to redeem Bonds as provided in Section 7 .OZ) and shall be
applied by the Fiscal Agent in the following order:
FIRST, to the payment of the Operating Expenses of the Enterprise;
SECOND, to the payment of the costs and expenses of the Holders in
providing for the declaration of such event of default, including reasonable
compensation to their accountants, counsel and engineers, and to the payment of
the costs and expenses of the Fiscal Agent, if any, in carrying out the
provisions of this article. including reasonable compensation to its accountant,
counsel and engineers;
THIRD, upon presentation of the several Bonds {including Bank Bonds) and
the stamping thereon of the amount of the payment if only partially paid, or
upon the surrender thereof if fully pa id, to the payment of the who 1 e amount
then owing and unpaid upon the Bonds for interest and principal, with interest
on the overdue interest and pr inc i pa 1 at the rate of seven percent ( 7%) per
annum (except that interest pay ab 1 e in respect to the Bank Bonds sha 11 be as
provided in the Reimbursement A.greement) t and in case such moneys sha1 l be
insufficient to pay in fu11 the whole amount so owing and unpaid upon the Bonds,
then to the payment of such interest, principal and interest on overdue interest
and principal without preference or priority among such interest, principal and
interest on overdue interest and prinr:ipal, ratable tc the aggregate of such
interest, principal and interest on overdue interest and principal: and
FOURTH, to the Bank for payment of a 11 other Ob 11 gat ions owing by the
City to the Bank pursuant to the Reimbursement Agreement, the Term Note or the
Demand Note.
SECTION 7.04. No Liability by the Fiscal Agent or the Paying Agent to
the Owners. Except as expressly provided herein, the Fiscal Agent or the Paying
Agent shall not have any obligation or liability to the Owners with respect to
the payment when due of the Bonds or the interest thereon b:· the City, or with
respect to the performance by the City of the other agreements and co~enants
required to be performed by it contained in the Generai Resolution or herein.
47
e
ARTICLE VI I I
THE FISCAL AGENT, THE REMARKETER, THE
RAT£-SETTCNG AGENT AND PAYING AGENT
SECTION 8.01. Notices to Bank. A copy of all notices regarding the
Fiscal Agent or Paying Agent in Article VI of the General Resolution shall be
given to the Bank.
SECTION 8.02. Appointment of Remarketer. The City hereby appoints the
Remarketer lo perform the duties of the Remarketer set forth in the Remarketing
Agreement.
The Remarketer may at any time resign and be discharged of the duties a~d
obligations created neretiy by giving at last sixty (60) days' notice to the
Notice Parties. The Remarketer may be removed, effective on the first Business
Day of any .July or January, at the direction of the City, after consultation
with the Bank, by an instrument filed with the Notice Parties. Any successor
Remarketer shall be selectf!d by the City. after consultation with the Bank,
shal 1 be eligible to serve as Remarketer pursuant to Section of the
Remarketing Agreement and shall be authorized by law to perform all the duties
imposed upon it hereby and by the Remarketing Agreement.
The City shall from time to time, subject to the Remarketing Agreement or
any other agreement then in effect with the Remarketer, pay the Rerr.arketer
compensation for its services and reimburse the Remarketer for all its advances
and expenditures hereunder; provided, that the Remarketer hall not have any lien
for such compensation or reimbursement against any money held in any of the
funds or accounts established hereunder, although the Remarketer may take
whatever legal actions are lawfully available to it directly against the City to
recover such compensation or reimbursement.
SECTION 8.03. Appointment of Rate-Setting Agent. The City hereby
appoints the Rate-Setting Agent to perform the duties of the Rate-Setting Agent
set forth in the Remarketing Agreement.
Th2 Rate-Setting Agent may at any time resign and be discharged of ttie
duties and obligations created hereby by giving at least sixty (60) days• notice
to the Notice Parties. The Rate-Setting .Agent may be remo11ed 1 effective on the
first Business Day of any July or January, at the direction of the City, after
consultation with the Bank, by an instrument filed with the Notice Parties. Any
successor Rate-Setting Agent shall be selected by the City, after consultation
with the Bank, and shall be authorized by law to perform all of the duties
imposed upon it hereby and by the Remarketing Agreement.
The City shall from time to time, subject to the Remarketing Ag~eement or
any other agreement then in effect with the Rate-Setting Agent. pay the Rate-
Setting Agent compensation for its services an reimburse the Rate-Setting Agent
for its advances and expenditures hereunder; providede that the Rate-Setting
Agent shall not have any lien for such compensation or reimbursement against any
money held in any of the funds or accounts established hereunder, although the
Rate-Setting Agent may take whatever legal actions are lawful1y available to it
directly against the City to recover such compensation or reimbursement.
48
SECTION 8.04. ~ointment of Paying Agent. The City shall at all times
appoint and maintain a Paying Agent upon such terms and conditions as may be
mutually agreed upon by the Fiscal Agent, the City and tlie Paying Agent. The
Paying Agent. or any successor Paying Agent, shall be a bank or trust company
with a principal office in New York, New York, and shall be subject to
superv1sion or examination by federal or state authorities. The City shall
enter into such arrangements with the Paying Agent as sha 11 be necessary and
desirable to enable the Paying Agent to carry out the duties of its office.
The City or the Fiscal Agent may remove the Paying Agent at any time by
giving written notice of such removal to the Paying Agent, the Remarketer, the
Bank and the City or the Fiscal Agent, as the case may be. The Paying Agent may
at any time resign by giving at least thirty (30) days• notice of such
resignation to the City, Fiscal Agent, the Remarketer and the Bank and by giving
the Owners of the Bonds notice of s~ch resignation or removal by mailing a copy
to each Owner. In the event of the resignation or removal of the Paying Agent,
the Paying Agent shall pay over, trdnsfer, assign and deliver any moneys held by
it to its successor or to the Fi seal Agent and sha 11 be di scha:--ged from its
duties hereunder.
The City shall from time to time, subject to any agreement then in effect
with the Paying Agent, pay the Paying Agent compensation for its services and
reimburse the Paying Agent or all its advances and expenditures hereunder;
provided, that the Paying Agent shall not have any lien for such compensation or
reimbursement against moneys held in any of the funds or accounts established
hereunder, although the Paying Agent may take whatever legal actions are
lawfully available to it directly against the City to recover such compensation
or reimbursement.
In performing its duties and obligations hereunder, and under the General
Resolution, the Paying Agent shall not be liable except for its own gross
neg1ig~nce and willful misconduct. The Paying Agent undertakes to perform such
duties and only such duties as are specifically set forth herein and in the
General Resolution and no implied covenants shall be read into this Supplemental
Resolution against the Paying Agent. The provisions stated in Article VI of the
General Resolution (each of which is incorporated herein by reference), apply to
Paying Agent•s performance of the duties and functions assigned to it under this
Series Resolution, except as modified herein.
All references to the Paying Agent in this Section 8.04 shall include
references to the Paying Agent acting in its capacity as Registrar and
Authenticating Agent. The Paying Agent shall have no responsibility to maintain
a complete record of the registered holders of the Bonds. The Fisca1 Agent wi11
deliver to the Paying Agent such records as it may request as needed to enable
it to perform its duties as Registrar.
The rights, duties, obligations, i11111unities and the standard of care of
the Paying Agent in the performance of its role hereunder shall be governed by
and construed in accordance with the laws of the jur1sd1ction in ~hich is
located its principal off ice.
The City agrees to indemnify and hold the Paying Agent and its respective
officers, members, directors, employees and agents harmless from any lawsuits,
costs, charges, expenses (including reasonable attorney's fees and
49
disbursements), judgments and liabilities incurred by it or them, as the case
may be, in connection with any action, suit or proceeding instituted or
threatened in connect ion with the transact ions contemplated by this Series
Resolution and the General Resolution so long as the Paying Agent has acted in
good faith to carry out the transactions contemplated by this Series Resolution
and the General Resolution. The City also releases the Paying Agent and agrees
to indemnify the Paying Agent from any liability from any 1oss or damage to
property or any injury to or death of any person that may be occasioned by any
cause whatsoever arising out of the construction or operation of the Project.
The foregoing indemnification provisions shall survive the payment in full of
the Bonds and the interest thereon and the defeasance of this Series Resolution.
If the City shall default under any of the provisions of this Series
Resolution and the General Resolution and the Paying Agent shall employ
attorneys or incur other expenses for the collection of payments due under this
Series Resolution or the General Resolution or further enforcement of
performance or observance of any obligation or agreement on the part of the City
contained in this Series Resolution or the General Resolution, the City will on
demand therefor reimburse the reasonable fees of such attorneys and such other
reasonable disbursements so incurred.
Under no circi..:mstances shal 1 the Paying Agent be required to make any
transfers of funds if it has not received such funds from the Remarketer, the
City or pursuant to the Letter of Credit, and the Paying Agent shall have no
obligations to advance its own funds in connection with the performance of its
duties a~d obligations hereunder.
The Paying Agent shal 1 not be required to take or be deemed to have
notice of any Event of Default or of any event which with the lapse of time or
giving of notice, or both, would constitute an Event of Default, unless an
officer in its corporate trust department shall have received written not ice
thereof from the City or the Fiscal Agent.
SECTION 8.05. ~intment of Fisc~ent. The City hereby appoints
Bank of America Natfona.l Trust and Savings Association to act as Fiscal .A.gent
under this Series Reso1ution. The Fiscal Agent shall perform Sl.lch duties and
only such duties as are specifically and expressly st.ited in thfs Reso1ution,
and no implied covenants or obligations shall be read into this Resolution
against the Fiscal Agent. The fo11cw1ng provisions! and the provisions stated
in Article VI of the General Resolution (eac~ of which is incorporated herein by
reference), apply to Fiscal Agent 1 s performance of the duties and functions
assigned to it under this Series Resolution:
(a) Investments in an1 and all funds and accounts may be commingled
in a separate fund or funds for purposes of making, holding and disposing
of investments, notw1thstandf ng prcvi sf ans 1n this Series Resolution "or
transfer to or holding f n or to the credft of particular funds or accounts
of amounts received tJr held by the Fiscal Agent under the Series
Resolution; provided that the fiscal Agent shall at a11 times account for
such investments strictly in accordance with the Funds and Accounts to
which they are credited and otherwise as prov1ded in this Series
Resolution; and provided further, that all investments made or renewed by
the Fiscal Agent during any perfod within which the Letter of Credit is
50
held by the Paying Agent and is enforceable by its terms, shall be limited
to Investment Securities (as that term Is defined in the Letter of Credit}.
{b) Fiscal Agent shall ~~11 at the best price reasonably
obtainable, or present for redemption, any Permitted Investment whenever it
shall be necessary to provide moneys to meet any required payment,
transfer, withdrawal or disbursement from the fund or account to which such
Perm1tted Investment is credited and Fiscal Agent sha11 no~ be liable or
responsible for any loss resulting from the acquisition or dis~osftion of
such Permitt~j Investment in accordance herewith.
(c) ~o investment direction by the City shall impose any duty upon
Fiscal Agent which is inconsistent with its fiduciary obligations.
{d) The Fiscal Agent shall not be deemed to have knowledge of any
event of default here~nder unless and until it shall have actual knowledge
that an event of default as such exists, or shall have received written
notice that an event of default as such exists, at its principal corporate
trust office in San Francisco. The Fiscal Agent shall not be bound to
ascertain or inquire as to the performance or observance by any other party
of any of the terms, conditions. covenants or agreements herein or in any
of the documents executed in connection with the Bonds.
51
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO
1985 SERIES A RESOLUTION
SECTION 9.01. Amendments Not Requiring Consent of Bondholders. In
additio~ to the Amendments authorized by Section 801 of the General Resolution,
this Resolution and the rights and obligations of the City, the Bondholders and
the f ~scal Agent and Paying Agent may also be modified or amended at any time by
a Supplemental Resolution, without the consent of any Bondholders, upon receipt
of the consent of the Bank, which shall not be unreasonably withheld, which
amendment shall became effective upon exec~tion (or such later date as may be
specified in such Supplemental Resolution), but only to the extent permitted by
law and only for the purpose of modifying, amending or supplementing this
Resolution in such manner as to obtain from S&P a rating on the Bonds at least
as high as tht most recent rating assigned by S&P to other securities co:nparable
to the Bonds secured by letters of credit issued by the Bank.
SECT ION 9. 02. Consent of Bank. No Amendment of or Supplement to this
1985 Series A Resolution may be made pursuant to Articles VIII or IX of the
General Resolution without the consent of the Bank.
SECTION 9.03. Endorsement or Replacement of Bonds After Amendment or
Supplement. After the effective date of any action taken pursuant to Articles
VIII or IX of the General Resolutiont as hereinabove provided, the Fiscal Agent
may determine that the Bonds may bear a notation by endorsement in form approved
by the Paying Agent as to such action, and in that ca~e upon demand of the Owner
of any Outstanding Bond and pre sen tat ion of his Bond for such purpose at the
principal office of the Paying Agent in New York, New York, a suitable notation
as to such act ion sha 11 be made on such Bond. If the Fi sea 1 Agent sha 11 so
determine, new Bonds so modified as in the opinion of the Fiscal Agent shall be
necessary to conform to such action shal 1 be prepared, and in that case upon
demand of the Owner of any Outstanding Bonds such new Bonds shall be exchanged
at the principal office of the Paying Agent in New York, New York, without cost
to each Owner for Bonds then Outstanding upon surrender of such Outstanding
Bonds.
52
ARTICLE X
OEFEASANCE
SECTION 10.01. Discharge of Bonds and 1985 Ser1es A Resolution.
After the payment of all the 1nterest and principal represented by all
Outstanding Bonds as provided in Article XII of the General Resolution, the
Fiscal Agent shall surrender the Letter of Credit then in effect to the Bank in
accordance w1th the terms thereof for cancellation.
Notwithstanding any other provision of tl'lis ~::;f~ction, the 1985 Series A
Resolution shall not be discharged and satisfied by the payment of the Bonds
hereunder unless and until the Fisca1 Agent shall have first received an opinion
from a nationally recognized bankruptc1 counsel that the prior payments of the
interest and principal and redemption premiums on the Bonds and the payments of
the money used to defease the Bonds do not then constitut~ a voidable preference
under applicable bankruptcy laws.
53
ARTICLE X:I
Mf SCELLANEOUS
SECTION 11.01. Alternate Methods of Registrat1on of Bonds.
Notw1thstanding any other provision herein, the Bonds may be registered pursuant
to a modified book-entry system or as uncertified securities, but only with the
prior written consent of the City, the Paying Agent, the Remarketer, the Bank
and the Fiscal Agent (which consent shall be given on1y if, in the opinion of
the Fiscal Agent, such change will not materially adversely affect the interests
of the Owners) and if an Opinion of Counsel has been delivered to the City and
the Fiscal Agent to the effect that the proposed change is permitted hereby and
under applicable law and will not adversely affect the exemption of interest on
the Bonds from federal income taxation.
SECTION 11.02. Partial Invalidit_x. If any one or more of the
agreements, conditions, covenants or terms contained herein required to be
observed or performed by or on the ·part of the CHy, the Fiscal Agent or the
Paying Agent shall be contrary to law, then such agreement or agreements, such
condition or conditions, such covenant or covenants or such term or terms shall
be null and void and shall be deemed separable from the remaining agreement~,
conditions, covenants an terms hereof an shall in no way affect the validity
hereof or of the Bonds, and the Owners shall retain all the benefit, protection
and security afforded to them under any applicable provisions of 1 aw. The City,
the Fiscal Agent and the Paying Agent hereby declare that they would have
executed the 1985 Series A Resolution, and each and every other article,
section, paragraph, subdivision, sentence, clause and phrase hereof and would
have authorized the execution and delivery of th~ Bonds pursuant hereto
i rrespect 1 ve of the fact that any one or more art i c 1 es, sections, paragraphs,
subdivisions, sentences, clauses or phrases hereof or the application thereof to
any person or circumstance may be held to be unconstitutional, unenforceable or
inval1d.
SECTION 11.03. California law. The 1985 Series A Resolution shall be
construed and governed in accordance with the laws of the State of California.
SECTION 11.04. Notices. All written notices to be given hereunder shall
be given by mail. courier, facs imi1e or other receipted corrmuni cation to the
party entitled thereto at its address set forth below, or at such other address
as such party may provide to the other parties in writing from time to time,
namely:
If to the Fiscal Agent:
If to the Paying Agent:
Bank of America National Trust
and Savings Association
201 Mission Street, 15th Floor
San Francisco, CA 94105
Attention: Corporate Trust
Administration 19528
Chemical Bank
55 Water Street, Room 505
New York, New York 10041
54
If to the C1ty:
If to the Bank:
If to the Remarketer:
with a copy to:
If to the Rate-Setting
Agent:
City of Palo Alto
Z~O Hamilton Avenue
Palo Alto, CA 94303
Attention: City Manager
The Fuji Bank, Limited
Los Angeles Agency
333 South Grand Avenue
Los Ang~les, California 90071
Attention: Manager, Corporate Bank Group
The First Boston Corporation
Park Avenue Plaza
55 East 52nd St., 6th Floor
New York, New York 10055
Attn: Tax Exempt Trading Desk
The First Boston Corporation
101 California Street, Suite 4300
San Francisco, California 94111
Attn: Municipal Finance Department
The First Boston Corporation
Park Avenue Plaza
55 East 52nd St., 6th Floor
New York, Hew York-10055
Attn: Tax Exempt Trading Desk
SECTION 11.05. Conflicting Resolutions Repealed. All resolutions or
parts thereof in conflict herewith, to the extent of such conflict, are hereby
repealed; in the event of conflict between the provisions of this Series
Resolution and the General Resolution, this Series Resolution shall control.
SECTION 11.06. Third Party Beneficiary. This Series Resolution is
adopted for the benefit of, and may be enforced by. the Paying Agent as well as
by the parties hereto.
SECTION 11.07. Effecti11e Date. The 1985 Series A Resolution shall
become effective upon its adoption.
55
**********
The foregoing Resolution was duly and regularly adopted at a regular
meeting of the Council of the City of Palo Alto held on the 23rd day of
December , 1985, by the fol~owing vote:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
Bechtel, Cobb, Fletcher, Klein, Levy, Patitucci, Renzel 1 Sutorius, Woolley
None
None
None
APPROVED:
Jones Hall Hill & White, a Professional Law Corporation
/Bond ~l _
~~
APPROVED
,.
56
No.
Bond Payment Date
July 19 2006
APPENDIX A
[FORM OF FACE OF BONO]
CITY OF PALO ALTO, CALIFORNIA
UTILITY REVENUE BOND
1985 SERIES A
(AOJUSiABLE CONVERTIBLE
EXTENDABLE SECURITIES -ACESsm)
$
CUSIP
The City of Palo Alto, a municipal corporation du~y organized and existing
under its charter and the laws cf the State of California {herein called the
"City"), for value received, hereby promises to pay to the registered owner or
registered assigns of this Uti 1 ity Revenue Bond (the 11 6ond 11 ) the principal sum
set forth above on the Bond Payment Date set forth abo~e (or, in the event this
Bond becomes and continues to be held as a Bank Bond, the Expiration Date of the
Letter of Credit) and to pay on each Interest Payment Date from the date hereof
{which date shall be the date of authentication of this Bond) to and including
the Bond Payment Date or the date of prior redemption (or, in the event this
Bond becomes and continues to be held as a Bank Bond, the Expiration Date of the
Letter of Credit) whichever is earlier, by check mailed to the registered owner
at the address shown on the books required to be kept by Chemical Bank in New
York, New York (the "Paying Agent11 ) on the Record Date for such Interest Payment
Date, the interest thereon becoming due and payable en such Interest Payment
Date; provided, that unless the Bonds are in the Fixerl Mode, in the case of a
registered owner of Bonds evidencing $1,000,000 or more in aggregate principal
amount, upon the written request of such owner to the Paying Agent ff ve days
prior to any Interest Payment Date specifying full information acceptable to the
Paying Agent regarding routing instructions and bank accounts, such interest
shall be pai~ in i11111ediate1y available funds by wire transfer. The amount of
such interest shall be as set forth in the Series Resoiution hereinafter
referred to. The principal and premium, if any, on the Bonds shall be payable
on the Bond Payment Date. or on redemption prior thereto, upon surrender thereof
to the Paying Agent at his office in New York. New York. The interest and
57
principal of the ao~ds shall be payable in lawful money of the United States of
America.
REFERENCE IS HfREBY MADE TO THE FURTHER PROVISIONS OF THIS 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 rights and obligations of the City and of the owners of the Bonds may
be modified or amended at any time in the manner, to the extent and upon the
terms provided in the General Resolution and the Series Resolution hereinafter
referred to. No such modifications or amendment sha 11 permit a change in the
terms of redemption or maturity of the principal of any outstanding Bond or of
any installment of interest thereon or a reduction in the principal amount or
the redemption price thereof or in the rate of interest thereon without the
consent of the owner of such Bond, or shall reduce the percentages or otherwise
affect the classes of Bonds the consent of the owners of which is required to
effect any such modification or amendment. all as more fully set furth in the
General Resolution and the Series Resolution.
All capitalized terms used in this Bond which are defined in the General
Resolution and the Series Resolution are used in this Bond as so defined.
It is hereby certified that ali of the conditions, things and acts required
to exist to have happened or to have been performed precedent to and in the
issuance of this Bond do exist have happened or have been performed in due time,
form and manner as req1Jired by law and that the amount of this Bond, together
with all other indebtedness of the City~ does not exceed any limit prescribed by
the Constitution or laws of the State of California, and is not in excess of the
amount of Bonds permitted to be issued under the Resolutions hereinafter
ref erred to.
58
IN WITNESS WHEREOF, the City of Palo Alto has caused this Bond to be
executed in its name and on its behalf with the manual or facsimile signature of
its Mayor and its seal to be reproduced hereon and attested by the manual or
facs1m11e signature of its City Clerk, all as of the date of authentication as
set forth below.
{SEAL)
PAVING AGENT'S CERTIFICATE OF AUTHENTICATION
This is orie of the Bonds described in the within mentioned Series
Resolution.
CHE~ICAL BANK, as Paying Agent
By~~~~--_,...~_,.._,.....,,.....,,..,~_,...~~~~ Authorized Officer
59
[FORM OF BACK OF BOND]
This Bond is one of a duly authorized issue of bonds of the City designated
as its 11 Utility Revenue Bonds" {the "Bonds") issued and to be issued in various
series under and pursuant to the charter of the City and Ordinance No. 3083,
adopted by the Council of the City on October 2, 1978, (the 11 Bond Law") and
under and pursuant to Resolution No. 6111, adopted by the Council of the City on
April 25, 1983 (the "General Resolution"), and a series resolution authorizing
each such series.
This Bond is one of a series of Bonds designated as "Utility Revenue Bonds,
1985 Series A {Adjustable Convertible Extendable Securities -ACESsm)11 issued in
the aggregate principal amount of $12,200,000, all of like tenor (except for
such variations, if any, as may be required to designate varying numbers,
interest rates or redemption provisions}, and issued under the General
Resolution and a series resolution of the City, adopted by the Council of the
City on December 23, 1985 (the "Series Resolution11 )1 which resolutions are
herei~ collectively called the "Resolutions.11 Copies of the Resolutions are on
file at the office of the City Clerk and at the principal corporate trust office
of Bank of America National Trust and Savings Association, Fiscal Agent of the
City, in San Francisco, California and reference to the Resolutions and any and
all supp1ements thereto 3nd m0difications and amendments thereof and to the Bond
Law is made for a description of the terms on which the Bonds are issued, the
provisions with regard to the nature and extent of the Net Revenues, as that
term is defined in the General Resolution, and the right of the regf stered
owners of the Bonds. All the terms of the Reso1utions and the Bond Law are
hereby incorporated herein and constitute a contract between the City and the
registered owner from time to time of this Bond, and to al 1 the provisions
thereof the registered owner of this Bond, by his acceptance hereof, consents
and agrees. Each taker and subsequent owner hereof sha11 have recourse to all
of the provisions of the Bond Law and the Resolutions and shall be bound by all
of the terms and conditions thereof.
The Bonds are issued to provide funds for the acquisition and construction
of additions, betterments, extensions or improvements to an Enterprise
consisting of the water, sewer, gas and electric systems of the City, as ir.ore
particularly described in the Resolutions. The Bonds are special obligations of
the City and are pa)able, as to interest thereon, principal thereof and any
premiums upon the redemption of any thereof, from the net revenues of said
Enterprise (which net revenues, as more particularly defined in the General
Resolution are therein and h~rein called the "Net R~venues") and from drawings
on the Letter of Credit. Ail of the Bo~ds are equally secured by a pledge of,
and charge and 1 i en upon, a 11 of the Net Revenues, and the Net Revenues
constitute a trust fund for the security and payment of the interest on and
principal of and redemption premiums, if any, on all of the Bonds. The lien of
the pledge is initially junior and subordinate to the lien of the pledge given
to secure the 1983 Series A Bonds but win be and become, automatically and
without further action by the City, the Fiscal Agent or any other person, on a
parity with said lien securing the 1983 Series A Bonds upon the happening of
certain events set forth in the Series Resolution. Additional series of Bonds
payable from the Net Revenues may be issued on a parity with the Bonds of this
60
authoriz~d issue, but on1y after the happening of said events and subject to the
conditions and limitations contained in the General Resolution.
The interest on and principal of and redemptior. premiums, if any, on the
Bonds are payable solely from the Net Revenues pledged for the payment thereof,
and from drawings on the Letter of Credit and the City is not obligated to pay
the Bonds except from the Net Revenues and from said drawings. The general fund
of the City is not liable, and the full faith and credit or taxing power of the
City is not pledged, for the payment of the interest on or principal of or
redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal
or equitable pledge of, or charge, lien or encumbrance upon, any of the property
of the City or any of its income or receipts, except the Net Revenues and said
drawings.
The City covenants that, so long as any of the Bonds are outstanding, it
will fix, prescribe and collect rates, fees and charges in connection with the
services, facilities, water, gas and electric energy furnished by said
Enterprise so as to yield Net Revenues at least equal to the amounts thereof
prescribed by the General Resolution and sufficient to pay the interest on and
principal of and redemption premiums, if any, on the Bonds fn accordance with
the provisions of the General Resolution.
The interest rate payable on the Bonds <luring the InHial Interest Period
sha 11 be the !nit i a 1 Rate, and thereafter sha 11 be an Adjusted Rate or the
Fixed Rate as provided in the Ser1es Resolution. The interest on the Bonds in
the Initia~ Interest Mode and thereafter, in a Daily Mode, a Weekly Mode, or a
Monthly Mode shall be payable on the applicable Interest Payment Date, computed
on the basis of a 365 or 366-day year, as applicable, for the number of days
actually elapsed. The interest on tt;e Bonds in a Semiann,Jal Mode, Long Mode or
the Fixed Mode shall be payable semiannually on January 1 and July l of each
year, computed on the basis of a 360-day year, consisting of twelve 30-day
months. The Bonds shall bear interest, conrnencing on each Rate Adjustment Date,
at the rate determined by the Rate-Setting Agent for the applicable Rate Period.
For any Bonds in a Oa11y Mode, on each Business Day or each other day on
which the Rate-Setting Agent and the Remarketer are open for business, the Rate-
Setting Agent shall determine at or prior to 9:30 a.m., New York City time. the
interest rate to be borne by the Bonds for such day.
For any Bonds in a Weekly Mode, no later than 2:00 p.m., New York City
time. on each Monday or the next succeeding Business Day, 1f such Monday is not
a Business Day, the Rate-Sett1ng Agent shall determine the interest rate to be
borne by the Bonds durfog the relevant Rate Period. The interest rate so
determined shall be effect1ve as of the next succeeding Business Day.
For Bonds in a Monthly Mode, the Rate-Setting Agent shall determine, not
earlier than 7 days pr1or to and not later than the first Business Day prior to
an Interest Payment Date, the Interest Rate to be borne by the Bonds during the
relevant Rate Period. The interest rate so determined shall be effective as of
the first Business Day of the calendar month.
For any Bonds in a Semiannual Mode, or a Long Mode, the Rate-Setting Agent
shall determine not less than 31 days nor more than 35 days prior to each Rate
Adjustment Date the Minimum Rate for such Rate Adjustment Date as provided in
61
the Ser1es Resolution. Not less than 30 days prior to such Rate Adjustment
Date, the Paying Agent shall mail to each Owner of such Bonds written notice of
such rate as provided in the Series Resolution. On the Rate Determination Date,
the Rate-Setting Agent shall determine the interest rate to be borne by the
Bonds for the respective Rate Period, in no event less than the Minimum Rate,
effective on the Rate Adjustment Date.
The Rate-Settfng Agent, in consultation with an Inaependent Financial
Consu1tant, shall determine the Adjusted Rate on each Rate Determination Date as
that rate whf ch, in the sole judgment of the Rate-Setting Agent, but subject to
such consultation, would equal (but not exceed) the interest rate necessary to
enable the Remarketer to sell each of the relevant Bonds on such date at a price
equal to lOOI of the principal amount thereof, plus actrued and unpaid interest,
if any, thereon. In determining the Adjusted Rate, the Rate-Setting Agent,
shall, in cr:msu1tation with an Independent Financia1 Consultant, take into
account the factors enumerated in the Series Resolution. The Rate-Setting
Agent shall establish the Minimum Rate by making a determination of the Adjusted
Rate as if such Adjusted Rate were being calculated on such date. The Minimum
Rate sha11 not be less than Soi cf the Adjusted Rate, as so determined.
The determination by the Rate-Setting Agent of Adjusted Rates and Minimum
Rates to be borne by the Bonds shall be conclusive and binding on the owners of
the Bonds. Failure by the Paying Agent to give any notice required hereunder,
or any defect therein11 shall not effect the interest rate borne by the Bonds or
the rights of the Owners.
Notwithstanding the above, during such time as any Bonds are held by the
Bank, the interest rate borne by such Bonds shall be the Bank Rate.
Anything in the Series Resolution to the contrary notwithstanding, no
payment of interest on the Bonds sha 11 be required to the extent that ( i) it
exceeds 12% per annum {except with respect to Bank Bonds) or {ii) the receipt of
such payment by the Owner of any Bonds would be contrary to the provisions of
law applicable to such Owner which limit the maximum rate of interest which may
be charged or collected by such Owner.
The Interest Mode from the date of original delivery and authentication of
the Bonds until further designated by the City or the Rate-Setting Agent will be
the Initial Interest Mode. Thereafter, the Rate-Setting Agent shall designate a
change from the Initfal Interest Mode to a Daily Mode, a Weekly Mede, a Monthly
Mode or a Semiannual Mede as provided in the Series Resolution. If (i) the new
Interest Mode is designated by the City, (ii) the current Interest Mode is not a
Long Mode and the new interest Mede is a long Mode and the new Interest Mode~ or
(iii) the current Interest Mode is a Long Mode and the new Interest Mode is not
a Long Mode or is a Long Mode having a Rate Period of different duration* such
Mode Adjustment Notice sha1i be accompanied by an Opinion of Bond Counsel
stating that the change in Interest Mode or change ir. Rate Period, as the case
may be, is permitted under applicable law and by the Series Resolution and will
not adversely affect the exemption of interest on the Bonds from federal income
taxation, and such opinion must be confirmed on the Mode Adjustment Date.
The Owners, by their acceptance of the Bonds, agree to tender their Bonds
to the Paying Agent on a Mode Adjustment Date for purchase prior to maturity at
62
the Purchase Price thereof, and upon such purchase, to surrender their Bonds
properly endorsed for transfer in blank.
In the event that, for any reason, the Bonds are not converted to a
diffel"ent Interest Mode (or from a Long Mode to a new '..ong Mode with a Rate
Period of different duration) on the proposed Mode Adjustment Date, the Own~rs
and t:he Notice Part1es shall be restore(, to their original positions, to the
same effect as if a Mode Adjustment Notice had not been given. I~ sue~ event,
any Bonds held by the Paying Agent pursuant to the Mode Adjustment Notice shall
be returned to the Owners thereof and the Bonds sha 11 continue in the then
current Interest Mode. In no event shall the failure of a conversion in
Interest Mode for any reason be deemed to be a default or Event of Default under
the Series Resolution.
During such time as Bonds are in a Daily Mode, a Weekly Mode, a Monthly
Mode, a Semiannual Mode or a Long Mode, any such Bond shall be purchased by the
Paying Agent on any Purchase Date at the Purchase Price thereof upon the demand
of the Owner thereof. While any Bonds are in a Fixed Mode, the Owner thereof
shall have no right of purchase on demand of such Bond. As a condit·ion
precedent to the purchase of Bonds on any Purchase Date, the Owner must deliver
to the Paying Agent (or, with respect to Bonds in a Daily Mode, the Remarketer),
(i) a Tender Notice not later than the time specified in the Series Resolution
and (ii) the Bonds, together with an appropriate registration f~rm executed in
blank, during such times as the Bonds are in a Daily Mode, Weekly Mode or
Monthly Mode, at or prior to 12:00 noon New York City time, on the Purchase
Date, or, during such times as the Bo"lds are> in a Semiannual Mode or a Long
Mode, not later than 3:00 p.m., New York City time, on the Business Day 15 days
prior to the Purchase Date. Owners delivering Bands to the Paying Agent on the
Purchase Date after 12:00 noon New York City time, shall be entitled to receive
payment from the Paying Agent until the Business Day following the Purchase
Date. Pending any such purchase, the Paying Agent (or, with respect to Bonds in
a Daily Mode, the Remarketer) shall hold in trust, for the benefit of the Owners
thereof. any Bonds delivered to it for purchase in accordance with the Series
Resolution. If a Tender Notice has been delivered by the times and in the
manner specified in the Series Resolution tendered Bonds shall be purchased by
the Paying Agent on the Purchase Date which shall be (i) in the case of a tender
during such time as such Bonds are in a Daily Mode, on the Business Day of
receipt of the Tender Notice, (ii) in the case of a tender during such time as
such Bonds are in a Weekly Mode, on the Business Day specified in the Tender
Notice at least seven (7) days prior to the Purchase Date and {ii1) in the case
of a tender during such time as such Bonds are in a Monthly Mode, on any
Interest Payment Date, (iv) in the case of a tender during such time as such
Bonds are in a Semiannua1 Mode, each July 1 and January 1, and (v) in the case
if a tender during such t1me as Bonds are in Long Mode, each January 1 which is
wii.:hin the Rate Adjustment Date Period. Any Tender Notice received by the
Tender Agent (or, with respect to Bonds in a Oa11y Mode, the Remarketer) shall
be effective upon receipt and shall be irrevocable. With respect to Bonds fn a
Semiannual Mode or a Long Mode, an Investment Company may deliver its Bonds for
purchase to the Paying Agent on the Purchase Date if it irrevocably notifies the
Paying Agent (or, with respect to Bonds in a Daily Mode, the Remarketer) during
the period commencing 30 days prior to such Purchase Date and ending 15 clays
prior to such Purchase Date that it wi l1 deliver such Bonds on such Purchase
Date. Any such Tender Notice delivered in accordance w1th the foregoing
63
sentence shall be irrevocable with respect to the purches~ for which such Tender
Notice was delivered and such purchase shall occur on the Purchase Date.
At the option of the City. the rate of interest payable on the Bonds may be
permanently converted from an Adjusted Rate to a Fixed Rate, as provided in the
Series Resolution. [n order to exercise it5 Fixed Rate Conversion option, the
City shall deliver a Mode Adjustment Notice directing such Fixed Rate Conversion
on a Fixed Rate Conversion Date. No Fixed Rate shall be established unless, on
or before thirty-five (35) days prior to the Fixed Rate Conversion Date, an
Opinion of Bond Counsel shall have been delivered to the effect that the Fixed
Rate Conversion is permitted under appiicable law and the Series Resolution will
not adversely affect the exemption of interest frcm Federal income taxation.
Such Option of Bond Counsel shall be confirmed by such counsel on the Fixed Rate
Conversion Date. Unless and until the conditions for Fixed Rate Conversion are
satisfiedt the Bonds shall continue to bear interest at the Adjusted Rate.
The Rate-Setting Agent shall, between thirty-five (35) and thirty-one (31)
days prior to a Fixed Rate Conversion Date, establish a Minimum Rate by making a
determination of the Fixed Rate as if such Fixed Rate were being calculated on
such date. The Minimum Rate shall be no less than 80~ of the Ffxed Rate as so
determined by the Rate-Setting Agent. The City shall have the option, to be
exercised prior to the thirtieth (30th) day prior to the Fixed Rate Conversion
Date, to elect not to convert the Interest on the Bonds to a Fixed Rate. If the
City elects not to convert the interest on the Bonds to a Fixed Rate, the
interest on such Bonds shall continue in the current Interest Mode and continue
at the Adjusted Rate. During the period stated in the Fixed Rate Conversion,
notice for determination of the Fixed Rate, the Rate-Setting Agent shall, in
consultation with an Independent financial Consultant, determine the fixed Rate
as that interest rate which, in the sole determination of the Rate-Setting
Agent, but subject to such consultation, would result as nearly as practicable
in the market value of the Bonds to be converted to the Fixed Rate on the Fixed
Rate Conversion Date being equal to 100% of the principal amount thereof. On
the Fixed Rate Conversion Date, the Fixed Rate shall be effective and shall be
equal to the rate so determined by the Rate-Setting Agent. Promptly after the
Rate Determination Date for the Fixed Rate Conversion Date for which the Notice
was given, the Paying Agent shall give notice to ~ach Owner of the Bonds who has
delivered an Owner Election Notice which shall state the Fixed Rate Period. The
determination of the Minimum Rate and the Fixed Rate by the Rate-s~tting Agent
shall be conclusive and binding on the Owners of the Bonds and the other Notice
Parties. Upon any Fixed Rate Conversion, the Bonds to be converted to a Fixed
Rate shall be subject to Mandatory Purchase and the Owners of such Bonds shall
be notified of the Fixed Rate Conversion and shall have the right to continue to
own such Bonds subject to such mandatory purchase. The Bonds to be converted to
a Fixed Rate which are not to be purchased on the Fixed Rate Conversiori Date
following notice of Fixed Rate Conversion shall bear interest at at Fixed Rate
and all other Bonds to be converted to the fixed Rat~ shall be deemed purchased
and shall be delivered to the Remarketer for remarketing.
Anything in the Series Resolution to the contrary notwithstanding, their
shall be no purchases or sales of Bonds if there she.11 have occurred and be
continuing an Event of Default and the Bonds and interest accrued and unpafd
thereon shall have been declared immediately due and payable.
64
The Bonds shall be subject to mandatory purchase prior to maturity at the
Purchase Pr fee thereof {1) on April 1, 1986; (2) on the Mode Adjustment Date
beginning (1) any Semiannuai Mode or Long Mode or (ii) any Daily Mode, Weekly
Mode, or Monthly ~ode immediately following a Semiannual Mode or Long Mode, (3)
on the Fixed Rate Conversion Date, (4) on expiration of the Letter of Credit and
(5) on the Substitution Date; except that there shall not be so purchased (w}
Bank Bonds, (x) Bonds as to which the Owner has submitted an Owner Election
Noticet {y) Bonds issued in exch~nge for or upon the registration of transfer of
Bonds referred to in clause (x) above, and (z) portions of principal amount of
Bonds in authorized denominations or integral multiples thereof referred to in
clauses (x) and (y) above. Any Owner who decides to continue to own such Bonds
after the Mandatory Pur'chase Date must deliver to the Paying Agent at its
principal office eight (8} days (or fifteen (15} days with respect to a
Semiannual Mode or Long Mode or with respect to a change to a Semiannu~l Mode,
Long Mode or Fixed Mode) prior to the Mandatory Purchase Date, an irrevocable
Owner Election Notice stating in substance the fol lowing: (1) that the Owner
acknowledges the matters set forth in the notice of purchase; (2) that the Owner
has decided to continue to own such Bonds or portions thereof, and identifying
such Bonds or portions thereof by Series, numbe~ .:r-d denomination; (3) that the
Paying Agent is directed not to purchase such Bonds or portions thereof; and {4)
that such instrument delivered by the Gwner is binding on subseq~ent Owners of
such Bonds (or the applicable portion thereof). Any Bonds not delivered on the
Mandatory Purchase Date for which there has been irrevocably deposited in trust
amounts sufficient to pay the Purchase Price of such undelivered Bonds shall be
deemed to have been tendered for purchase by the Paying Agent. In the event of
a failure by an Owner {other than an Owner who has delivered an Ow~er Election
Notice) to tender such Owner 1s Bonds on or prior to the Mandatory Purchase Date,
such Owner shall not be entitled to any payment (including any interest accrued
subsequent to the Mandatory Purchase Date) other than the Purchase Price for
such undeiivered Bonds and any undelivered Bonds shall no longer be entitled to
the benefits of the Resolutions, except for the purpose of payment of the
Purchase Price ther~for on the Mandatory Purchase Date. Any instrument
delivered to the Paying Agent sha11 be irrevocable with respect to the Bonds for
which such instrument is delivered and shall be binding upon subsequent Owners
of such Bonds, but such instrument shall have no effect upon any subsP.quent
mandatory purchase of Bonds.
To the extent provided in the Series Resolution, principal and interest on
the Bonds will be paid from draws on a direct pay irrevocable Letter of Credit
initially provided by The Fuji Bank. Limited, Los Angeles Agency. If on any
Purchase Date or Mandatory Purchase Date the Paying Agent does not have proceeds
of a remarketing of the Bonds sufficient to pay the Purchase Price of the Bonds
to be purchased, the Paying Agent sha11 draw on the Letter of Credit in an
amount sufficient to pay such Purchase Price. All Bonds or portions thereof so
purchased sha 11 be de 1 i vered to or upon order of the Bank. Under certain
circumstances an Alternate Security or Alternate Letter of Credit may be
substituted for the Letter of Credit. If the Letter of Credit expires and is
not extended, and no Alternate Security or Alternate Letter of Credit is
delivered, all Bonds (except as otherwise provided in the Series Resolution)
shall be mandatorily purchased by the Paying Agent.
The Bonds are authorized to be executed and delivered in the form of ful1y
registered Bonds in denominations of one hundred thousand dollars ($100sCOO) or
any integral multiple thereof, except that if the Bonds are in a Semiannual
65
Mode, a Long Mode or the Fixed Mode, they may be in denominations of five
thousand dollars ($5,000) or any integral multiple thereof and except that
following the adjustment of Bonds from a Semiannual Mode or a Long Mode to a
Daily Mode, a Weekly Mode or a Monthly Mode, the Bonds of Owners who continue to
own such Bonds after the relevant Mode Adjustment Date may be in denominations
of $5,000 or any integral multiple thereof.
This Bond is transferable or exchangeable by the registered owner hereof,
in person or by his attorney duly authorized in writing, at the principal office
of the Paying Agent, but only in the manner and subject to the iimitations and
upon payment of the charges provided in the Series Re$Olution, and upon
surrender of this Bond for cancel 1ation accompanied by delivery of a duly
executed written instrument of transfer or exchange in a form approved by the
Paying Agent. Upon such transfer or exchange, a new Bond or Bonds of authorized
denominations equal to t!ie pri11cipal amount hereof will be executed by the City
and authenticated and delivered by the Paying Agent to the registered owner
thereof in exchange herefor, except that the Paying Agent shall require the
payment by any Owner requesting such transfer or exchange of any tax or other
goverlllllental charge required to be paid. The City and the Paying Agent may
treat the registered owner hereof as the absolute owner hereof for al1 purposes~
and the City and the Paying Agent shall not be dffected by any knowledge or
notice to the contrary; and payment of the interest and principal on this Bond
shall be made only to suc:h registered owner as of the Record Date~ which
payments shall i:le valid and effectual to SCJtisfy and discharge the liabil·~ty
evidenced by this Bond to the extent of the sum or sums sc paid.
The Bonds are subject to mandatory redemption on any Redemption Date prier
to July 1, 2006 from payments made by the City and deposited in the Sinking Fund
Account as provided in the Series Resolution. The Bonds are subject to
redemption, at the option of the City, on any Interest Payment Date, to redeem
Bonds from the Net Proceeds of insurance or eminent domain at 100% of the
principal amount thereof and accrued interest thereon to the redemption date,
without premium.
The Bonds in a Daily Mode, a Weekly Mode, a Monthly Mode, or a Semiannual
Mode, are subject to optional redemption on any Interest Payr.11?nt Date after
January 1, 1987, 1n any integral multiple of the then authorized minimum
denomination of the Bonds by lot~ from payments made by the City and deposited
in the Redemption Account created under the Series Resolution under the
circumstances and upon the conditions and terms prescribed in the Series
Resolution, at a redemption price equal to 100% of the principa1 amount thereof,
plus accrued and unpaid 1~terest thereon, to the date ffxed for redemption.
Bonds in a long Mode or Fixed Mode are subject to optional redemption on
any Interest Payment Date, after the period referred to below under the heading
11Prepayment Protection,11 upon notice as he-reinafter provided, as a whole or in
part in an integral multiple of the then authorized minimal denomination of such
Bonds by lot, from payments made by the City and deposited in the Redemption
Account, under the circumstances and upon the con11tions and terms prescribed in
the Series Resolution at the Redemption Price (expressed as a percentage of
principal amount thereof) set forth below plus accrued and unpaid interest
thereon to the date fixed for redemption:
66
Optional Redemption During A Long Mode
Leng;:h of
Rate Period
Expressed in Years
greater than 18
less than or equal to 18
and greater than 13
less than or equal to 13
and greater than 10
less than or equal to 10
and greater than 7
less than or equal to 7
and greater than 4
less than or equal to 4
and greater than 2
less than or equal to 2
and greater than 1
equal to l
Redemption prices as a percentage
of principal amount (measured
from and including first Redemption
day of such Rate period) Protection
after 10 years at 102% declining 10 years
1/2% per 12 months to 100%
after 8 years at 102% declining 8 years
1/2% per 12 months to 100%
after 5 years at 102% declining 5 years
1/21 per 12 months to 100%
after 3 years at 101-1/2% 3 years
declining 1/21 per 12 months to 1003
after 3 years at 101% declining 3 years
1/21 per 12 months to 100~
after 2 years at 101~ declining 2 years
1/21 per 6 months to 100%
after 1 year at 100-1/2% declining 1 year
1/2% per 6 months to 100%
after 6 months at 100-1/Si 6 months
67
Optfonal Redemption Curing a Fixeo Mode
Length of Remaining
Term to Maturity
Expressed in Years*
greater than 18
less than or equal to
and greater than 13
less than or equal to
and greater than 10
less than or equal to
and greater than 7
less than or equal to
and greater than 4
18
13
10
7
less than or equal to 4
Redemption Prices as a percentage
of principal amount (measured
from and including first day of
such remaining term to maturity)**
after 10 years at 102% declining
1/2~ per 12 months to 100%
after 8 years at 102% declining
1/2% per 12 months to 100%
after 5 years at 102% declining
1/2% per 12 months to 100%
after 3 years at 101-1/2%
declining 1/2% per 12 months to 100%
after 3 years at 101% declining
1/21: per 12 months to 100%
Redemption
Protection***
10 years
8 years
5 years
3 years
3 yea':"'s
non-callable
* length of period from the Interest Payment Date inwnediate1y succeeding a
Fixed Rate Conversion Date to the date of redemption.
** Measured from the Interest Payment Date ill'lllediately succeeding the Fixed
Rate Conversion Date.
*** Lt;;.191..;1 of time (measured from the Interest Payment Date immediately
suc,·eeding the Fixed Rate Conversion Date) before Bonds may be redeemed.
The Paying Agent shall give notice of prepayment ty man to the respective
Owners of all Bonds designated for prepayment in who1e or in part at their
addresses appearing in the registration oaks required to be kept by the Paying
Agent as provided in the Sedes Resolution. Notice with respect t0 any Bond
shall be deemed given if such notice is required to the Owner of s~ch Bond at
the time of such notice.
68
•
(FORM OF ASSIGNM[NT]
For value received, the undersigned do(es) hereby sell, assign and transfer unto
hereby irrevocably constitute and
attorney, to transfer such
the register of the Paying Agent with ~ull powe~ of substitut~on
premises.
Bond and do(es) within
the
appoint
Bond on
in the
Dated:
NOTE: The signature(s) to this Assignment
must correspond with the name(s} as
written on the face of the within Bond in
every particular without alteration or
enlargement or any change whatsoever.
69