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City of Palo Alto.
City Manager's Report --------
TO: HONORABLE CITY COUNClL
FROM: CITY MANAGER DEPARTMENT: FINANCE
. AGENDA DATE: JANUARY lJ, 1995 CMR:II3;9S
. SUBJECT:
REQUEST
ADOPTION OF RESOLUTION APPROVING AND
AUTHORIZING ISSUANCE OF $8,640,000 UTILITY REVENUE
BONDS 1995 SERIES A, AUTHOR1ZING Al'Io'D DIRECTING
EXECUTION OF THE SECOND SUPPLEMENTAL IND&.VfURE
OF TRUST. AND AWARDING SALE
The purpose of !his report is 10 request that Cooncil take the action oocessa')' 10 authorize
the Sale of City of Palo Aha UtiliI}' Revenue Bonds 10 finance stOrm drainage inffastnx.'lUI'e
;mprovemcn!s..
RECOMmNDAll0N
Staff recommends that Cooncil adopt the attached Resolution aU1horizfug issuance of
S8,640,OOO City of Palo Aho Utility Revenue Bonds, 1995 Series A, awarding the sale of
the bonds, and authoraing execution and approval of Ibe Second Supplcmen!allm!en!ure of
, Trust. In addition, staff recommends that Ilk, Council authorize the Mayor, City Manager,
and Director of F~ 10 make any <banges necessary 10 ~ documenls in «del to
wmplete Ibe financing. '. .
n'ECUfIYE SUMMARY
BaCkJrollDcI
On December 19, 1994, Cooncil adopled ~u600 No. 7473, authorizing the sale of
$9,45(),OOO Utility Revenue Bonds 10 finance storm drainage infrastructure improvements,
os rec<>mrnrode<l by the Master Plan Study (CMR:534:94; CMR:26J:94). Since that time
staff has reduced the required bond funding 10 58,640,000, A final list of expenditures,
including issuance costs 10 be financed through the proceeds of the bond issue, is included
in Attachment A, A 31 percent storm drainage fee increase was approved by Council
effective July 1, i 994, 10 pay deb! servke tOr these bonds (CMR:298:94).
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The Official Statement and Noli<>!: of Sale, containing derailed inforrnatk>o about Ihe bond
issue and inviting bids lOr Ille purchase of!he bonds. bas been distributed 10 security dealers
and financtal instil\!tioos. Bids lOr !he purcbase of!he t-oods will be ree"ived up 10 10;00
Lm., Monday, January 23, \995, ot!he offi<:e cflhe Cit)". boo<! t=el. Jones Hall Hill and
White. Tile sale oflhe bonds w-J1 be .warded 10 1."'-bidder offeri.ng Ihe loWes! net i"terest
cr.JSt 10 !he City. A memonmdilnl summarizing the winning bid, aloeg with all other b.ids
=ivcd,. will be prov;ded 10 Council Members at !heir places at !he January 23, 1995
meeting'.
The City will reeeive !he procte<ls li'om !be sale of :he bonds in February.
Bud RldnC
The bonds were ra!e<! "A." by Moody's and 'AA+' by Staodard and Poor's rating senices.
Bonds wbkb are rated at this level are coosidered 10 be of nigh quality ·by all standards.
There is ooIy a IwldfuI of Calitlxnia utility revtDoe 0000 issuers willi the firumcial
perfonrumce 10 wamml such a favO<1lhle rating. Stl!1\dard and Poors, in its publication
announcing !he City's rating, stated !hat t.ie rating reflects !he Pt.Io Alto utility system's
sIroIIg financial margins and reserves, rate competitiveness, uperatk>oal efficiency, and a
vibnmt local and regional economy.
firynd SuPl!lemeatsl "denma of Tnst
The Indenture of Trust is !he legal document wbicb provides fOr !he appointment of !he
Crustee; outrmes Ihe duties of !he lnistee, and Ihe ~ovenants of Ihe City.
Bank of America was \toe trustee fOr the 1m and 1992 ;';sucs. Since this 1995 issue win
Mve • pledge of revenues 00 • parity with !he 1990 and 1992 issues, and Bank of America
has submitted • reasonable bid fOr trustee services. staff recOOunends retainlng Bank of
America as trustee foe the 1995 boods.. IS il would be irupracticallo obtain • different trustee
10 manage !he 1995 issue.
hb!katioD
In I1CCO<dance with !he Oouncil·adopted R=>!utlon authorizing !he sale or bonds, the Notice
of Sale and Notice of !ntentioo 10 sale were to be pubflsbed by Jan",,-'Y 6, 1995. However,
the City's bond counsel, Jones Hall Hifl and "'bite, was DOl able to efk"CI pub1i<:ation until
the Janwuy 12, 1995 editioo of the Bond Buyer and !he January \I and 20, 1995 editions
of!he Palo AJto Wee!lJL respectiVely. The City Attorney has advised that, in the unlikely
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ev.nt Iha! a pro!r.sI "' lodged,· the C<lWlCil may waive the untimely pubfu:a6on as an
insubotBntiaI irregularity. because sufficient notice was given in the ~Buyer. the
pubIicaIioo. most likely 10 draw the interest of prospective bidden to the bonds.
Dst;AL IMPACT
StO<l!l <kalnage fees were i:l<::ruscd by ] , percent, etre<:tive July I. 1994, in order to support
!he initi.al three-year pbase of storm drainage improvements. Coosequently, ~ Stonn
Drainage FUIId revenue .. ill support !he deb! service payments fur the bonds.
ENVIRONMENTAL ASSESSMENT
The action her.:byapprovro does not constitute: a project WIder the California Envicoomenlal
Quality Act, and, th_tore. 00 environmental IISSelisment is needed.
A) Storm Drain Bood Issue EJ<pendirures
B) Resolutioo AUIborizing Issuance, Exeru60n of the Indenture of Trust, and Awarding
Sale
C) Second Supplementallndellture of Trust
PREPARED BY: Me!iss3 Cavallo, Assistant Finance Direc:1O<
DN'ARTMFNfHEADAPPROVAL~jla.l ,.0
EmilY Harrison .
Director of Finance
CITY MANAGER APPROVAL: ~4~ ] !eIlw,g ~
C _. aget
cc: nla
Related Staff Reports: CMR:263:94. 298:94. 479:94. and 534:94
CMIl:1Lk95
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AIT ACHMENT A
Storm DraiDage Bond Issue Es:peJlditares
Surety Bond In Lieu of Debt Senice Reserve
Underwriter DiscooGt (2%)
Bopd Counsel
Fmancw Advisor
Official Statement Printing
Cootingency
Total Baud Proceeds
$8.337,983
14,477
172.800
40,000
25,000
11,500
12,500
7,500
7,500
04()
$8,640,000
·Project funds .,ilI ""'" interest cstimakd 11 6 percent. bringing IOta! funds available foe
project expcndirures .., $9,093,000.
AHACHllEWl B
IlBSOLO'l'IO!l )10.
IlIS0Lt7TXOH OF THI COOIICIL or 'rIB CITY or PALO
ALTO APpaOVIHG AHD A~'rHORIZIRG THI ISSUANCE 07
$'.'~D.ODO PIlXRCIPAL AKOOHT OF UTILITY aEVENUE
20HDS, 1"5 SIIlII$ A. AIID AOTRORISIPG A)I~
DXRICTIH; IIS.COTIOR OF SICORI> SOPPL."iUI'lAL.
XHD •• TVaIl or TIlOST Jl.~'lI!lG THBRETO. AWAJlDI!lG
II'AL. OF SOCR B.RUS or BONDS. AHD AoraORUUIG
CFFlCIAL A~IO!l
The Coun-cil of the City· of Palo Alto does RESOL' .... E as follows:
SECTION 1. Bonds to be Issued. The City, aft.er due
investigation ar~ delibera.tion .. has determined-that it is in the
public interest of the City at this time to provide for the
issuan.ce of its City of Palo Alto Utility P.svenue Bonds, 1995
Series A (the "BondS·),. under the provisio-ns of Chapt.er 12.28
{commencing 'With. Section 11.~ B. 010J ·of the Palo Alto Municipal
Code [the -Law·) for tbe pur.pose of financin? certain improvem~~ts
to t.he sto.rm. and surface wate~ syst.em component of the City·s
tl·tility _ ~terprise;
SF.C:XfON 1. Indenture of Trust _ The Bonds are proposed to be
issued pursuant to an laden·ture of Trust dated as of Aug:lst 1,
1990 it-be -Indenture-) ~ by and between :the City and Bank of
.America" NTSA.-as successor to Security Pacific National 'Sank~ as
trustee (the -Trustee-) and a S.ecOD·d Supp"leme.n.tal lneenture of
Trus:t {the ·.second Supplement,.). dated as of February 1 .. 199.5 by-
and between the Ci ty and the Trustee; .
SECTION 3. Bond Bids ~ained. This Coun~il. through its
Financial Advisor and Bc.od Counsel~ has solicit-ed bids for th:=
purchase of tne Bonds lYJ publication as required by law and by
circulation of an Official Notice of sale and Official Statement
and bids have been duly received and presente-J t,~ this Co-un~il;
an-d
SECTION •• Actions t.o be Taken. The Council wishes at this
time to authorize the execut:ica and delivery of the Second
Supplement, to award sale cf the Bonds and t.he perfonn.s:n.ce of such
acts as Jf'.ay be necessary or desirable to effect. tbe issuance Gnd
sale of the Bonds as herein provided;
SKTIDN 5. Issuance of Bonds~ The CO'IJ.·ncil hereby' authorizes
and approves a series of Bonds~ to be knqsn ar~ designated as the
·City of Palo Alto Utility Revenue Bonds. 1995 Series A·, under
and pursuant t.o the Law and the Incenture and the Seccn-d
Supplement in the principal amount .of $·B, 640. O:i'D~
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SEllON 6. Purposes. The pUrp..?ses for l,ihich the Bonds are
proposed to be issued are to provide. funds. for the acquirin-9.
const~Jcting. improving and financir~ of additions~ better.ments,
ext~n5io-n'& to the existing storm and surface 'Water system
COIl'pOllent .of the City's utility Ente~ri5e. .
SeCTION 7. rndenture of Trust and Second Suppleffi€nt. Th~
Sonds shall be issued pursuant. to and secured IN the IndentUre and
the second Supplemen·t .. each of ..... hich is hereby referred co and
incorporaced herein by reference •
.sECTION B. Details4 The Bonds shall be dated~ sh311 bear
inter~st at the rate~.. shall mature on the dat.es., shall be i5SU~d
in t.he form .. shall be s·,iliject to redemption, C'lnd shall othe:rwise
be issued on _the terms and conditions., all as set forth in the
second Supplement. The Mayor and the Director of Finance are
here~ authorized and directed, for and in the name of the City*
-to execute the· Bonds by tbeir 1!ianual or facsimile signatures and
the City Clerk is hereby authorized and directed to attest said
signatures by :man·;al or facsimile signature and to affix the seal
of the City thereon, all in accordan~e with the provisions of the
second Supplement.
SecTION 9-. Approval of Second Su,wleme!:l.t ~ The Second
SuWl emen·t,. :l!l substan·tially the form on file .. -ith the City Clerl:
and made a part hereof as though set forth in full herein, is
hereby approved by the -council.. The 'Mayor and t.he City -Clerk are
hereby authbrited and ~irected, for ar~ in the nd~~ of the City,.
to execute arid deliver tbe secor-.d SUpplerri€'r.:.t:. in: such forti!: t.ogether
with such changes .. inse-rtions and omissions as Inay be approved by
the City Attorney,. ~~d ~ounsel, and the officers executing ~he
second Supplement,. such execution to be c-onclusive evicence -of
such approval; and-tbe City Clerk-is hereby autooriz€-d and
directed to attest such Second Supplement aod affix the seal of
the Cit.y thereto. T"'ne Council hereb,t' autoori-zes t-he deliver.t' and
pe:rfoiIltlaDCe of th-e Secor.(l Suppl.ement_
SEC.,n.QtLl. .. Q· A ..... ard of sale. The proposal for the purc'l1ase of
the Bonds submitted. 1:::Iy {th-a -Origin.al Purchaser·}
is hereby accepted on the tern's and conditions set fort.h in the
proposal of the Original Purchaser aDd all bids received for the
purchase of the Bonos. excepting such bid of the Original
purchaser. are hereby rejected and the BoDds are hereby sold to
tl"le Original Purchaser .. said $ale to be subject to all of t.he
terms and conditions set forth in the Official ~~ice of Sale af
the Bones.
The Director of Finance is hereby directed to cause the Bonds
t.o be prepared..-execut.ed and to be delivered to the Trustee. for
authentication and celivery to the Original Purccaser on receipt
of tbe purchase price therefor and upon performance of the
conditions contained in the Official Notice of Sale-and the Second
Suppl err-.ent •
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·The Trustee is h~reby autt~ri,ed to authenticate and deliver
the Bonds tc't~ Original ~~rchaser.
$ECTIQN 11. Further Authority. The officers of the City are
hereby authorized ~d directed to execute all documents and take
such ec~iens as they may deem necessary ~r advisable in order to
carry out and perform the purposes of this Resolution~ ~r.d the
e...xecution or t.aking of such action. shall be. con.clusive evidence of
sucb necessity or advisability.
SfiCTION 12. Transcript~ The City Clerk is hereby authorized
(.0 cause to be prepared and furnished t.o. the Origic.al P"J.rchaser .of
t.he EoOds is!ued hereundel' and attorneys examining: the same a
c~lete set of certified copies of all ordinance3~ resolutions
6nd documents of the council and the City relating to the Bonds
~~ of all other proceedings and records of the Ccuncil s~~ing
the right~ pc~er a~ au~hority to issue tbe Bonds and to proyide
the security therefor~ and such certified copies and certificates
shall be deere~ representations of the Coun~il as to all facts
stated .therein.
SFrTION 13. C.E.Q.A: T'ne City Courx:il finds that the action
hereby approved does -not constitute a project under the California
Envixonmental Quality Act.
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IIITROOOCEI) AND PASSEl):
"AYES:
N:>ES:
ABS'I'E:N'I'IONS :
A'ITEST:
City Clerk
APPROVED AS 'J\) FORM
JCmS HALL HILL • WlI
A Professional ration
~~.~~~~f§~~====~-step-ben R~ asaleggio ...
Bond Counse 1
...
APPROVED:
)1ayor
City Manager
Director of Public ~orks
Director of Finan~e
Senior Assistant City Attorney
SSCOz..;D
SUPPLEMENT At INDENTURE OF TRLTST
by and ber..'een !he
CITY OF PAW ALID
and
BANK OF A.~ NATIONAL TRUST '" SA VIl\'GS ASSOCIATION'
San francisco, California
as Trustee
Dated as of February 1.1995
Relating 10
$
City of Pale Aha
UtIlity I!e\"enue Bonds
1991>Se."16 A
Table of Contents
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DEJ'lNIT1ONS; AtrrHORlZA TlON AND Pl.iRPOSE OF BONDS; EQUAL SEC{J"RITY
SECTION \.ot.
SECTION 1 J)2.
SECTION l.ra
S£Crl(N S.lJI.
SCCllON: 5.02.
SECTION 5. C3.
SECTION S.OC
SCCT1Ct>1 S.os.
S£Crl(N S.07.
S£Crl(N S1l8.
SECTION5m.
l:lrefinitions. .•••..•. _, ............ , ..••••.•...•. _, .....••.••..... _,< ••••••••••••••••••••••••••••••• _ ••••••••••••••••• 3
Rules 01 u.nstruction ........ __ ........... _ ............................................................ _ ...... 5
Au_Ii"" and Pwpose 011995 SerIes A 5onds. ...... ....:._ ... _ .... o"._ .. _._ ........ _ .. S
AR.11CL£.
ISSUANCf. OF 1995 SerIes A BONDS
Terms of 1995 5Eries A Bonds ... ~ ........... " .. _..:...._ ... _ .. __ ............. ~_ ... ~ .. _ .... _ ....... _ ... 6
~ernJfm ~ 991 ;:: .~ .. ~~.~~ •. ~:.~ ...• ::::::::: .. ~.~.:.~.:.:.~.::=~.~~-:-.:.~::::=:.:':.~:
Book ["try Only Sy."tem .................................................. ~ ........ _ ................... _ .. _e
ARj](J..Em
ISSUE Of 1995 SerIes A BONDS
Wuanct! of 1995 Series A &nds .. _._ ... _ ............... _._ .. __ ....... _._ .... _ .. _ ... _ ............ 10
~~:n.~~ .. '."..~.~~.995.~.~.~~~.::::::=:::::::::::::::::::::=::::::::::~
Validity 0/ Bond, _ ......... _ ...... , ........................................................................... _11
ARTKl.EN
RE1IENI.JES; FUNDS AND ACCOliNTS
Pledge Gl :Revenues • .Revenue Fund ........... _ ......... __ ._._ ...... _._ .. _ ....... _ ... _ ..... _._12
AdniiniJtraffon of I1.lnds and .Accounts .. ' .................................. ""'" .......•. ~ .....•....•. 12
AppriCa50n of Sinldng fund Account. H"" ..................... _: _ .... _ ...................... _ ••• _ 12"
paymem Froa!c!ure Pursuant II:> Surety Bond .......................................................... 13
ARTICI.E V
<'OVDIANTS Of TIlE CITY; SPECIAL TA.X CO\'ENANTS
No Arbitra~ .............. _ ..... _............................................................... .'0 •••• 1.
Robate Requirements. ................ _ ................. _ ................................ _ ................. _.l(
Federal Gt:IaTiu .. tee Pto!uDition ........ _ ........... __ ........................................ _ .. _ ........ _ 14
Private A.."'1ivity Bond 1JJnita50n ...... _ ........ _ ..... _ ........... ~ .... ~ ................. _ ... , ...... _ 14
Mainle1\ance of TalC-E_emption. .......... _ ............. _ ........................ _ ..... _ .... _ .......... _1(
Acquisition and Dispositio[l and Val'uatioc or rn'VeS!:tnenlS-.... __ .. __ . ____ .. ___ .. 14
ConfirtnaOOrs. of lndenrure_ .............................. _ .......... _ ...................... _ •.. _ ........... 14
Crnlinuing Disclosure. ...................... _ ........ _ .......................... _ ........ _ ................ 15
ARTlCLE\~
APPLJC.~BITJTY Of ~ "rtJRE
SE.C'llC:lf'ol6.Dl. i99S Series A Bonds ............ _ .......... _ .... _ ............................... _._ ... _ ................... _ 16-
SCCTICt'J 6..02. .No Trar.sfers fO£ 1983 Series A &nds_ ............. _ .... _ ......... __ . __ ..... _ .... _._ ... _ ._, ]6
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AA TJCJ..f VII
SURTI>' l'OND PROVISIONS
AMBAC Indemnily ............................................................................................... 17
Nooo..I0 be Givea IoAMBAC 1nd<nW1y ............................................................. 1'
FORM Of 19\1S 50_ A BOND
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SK'OND
5Vl'I'LEMfNTAL lNDENl1JRE OFTRUST
THlS SECOND SVPI'1..EMENT Al INDENTURE OF TRUST. 'nade and enraed inle as
of Febru.'Y I. 1995. by and between lI1i City 01 Palo A/!o •• c!\aJ1ered city and ",,,,,.idpal
CO<J>O"Ioon orsanIzed a.'1<I exlstir\g under 111. <on;ntution and laws oflhe Stafe of California
(the "Cily"), and BilAA of Americo National Trust" Sav!ng. Assodatiop. duly organized and
OldsIing under the laws 01 111. Umled Slat .. 01 Americo, with • corporae. trust ollke in San
Francisco. CalIfornia, and bet'lg qualified 10 "",opt and .dmlnisler the trusts hereby created
{the "Trustee");
WITNESSETH:
WHEREAs, the City I>as h.,..lof,ro authorized. issued and sold (i) $9.~50.000 principal
amount of its City of Palo Aho Utility !<evenue RefuMing Bonds 1990 Series A (the "1990
:Se..~ A Bonds") pu..rsuanl '0 an Indenture of Tr.J$t dated as of AUgus: 1 .. ]990· (tl~e
"WenluTe"), by and be1we6l the City .. '1<1 tn. Socurity Pacific National1!a"k as trust .. and lli)
$4,750,000 principal .",ount 01 its Oly of Palo AlIo Wily !<evenue Bond., 1992 Series A (the
-1992 Series A Bonds") p.usuantlo a First S'.ppl.menlal Indenture of T~ dated as 01 M..arc1l
I, 1992 (the "Fir.! s.,pp1eInentallndenture");
WHEREAS, lI1e City. after due illv_galioe and deliberation. ~ determined thaI iI is
in the Dlr:erests oithe Oty at this time 10 provide for the issuance of an additional series of its
revenue bonds under tlle Indenture for tEe ptupose of financing certain improvements to the
-storm and surfaco water system component Of the Enterprise, and to that end the City Cou.-.::il
!>as heretofo<. adopted its Resoiuoon No. . approving and authorizing lI1e issw;oce
oUts CiIy of Palo AlIo Utility Revenue 80nds. 1995 S€tks A (the "1995 Series A Bonds") fur
sucIIl'urposes;
WHEREAS. in order to provide for tl1e ~uthentkation and de1lveI)" of the 1995. Series A
Bonds, Ie es:ablisb and declare lI1e terms and conditions upon whlcll ti1e 1995 Series A Bonds
are 10 be issued .nd sec"Ufed and to secune 111. payll>!nt of the principal thereof an<! of lI1e
interest an<! premium. if any. thereon, the Council' has authorited ibe execution &lid deliverj of
this Second s.,pp1ernen!allndenture; >nd
WHEIliA5, ali acts and proceeding. required by law r.o<:essaTJ 10 mab the 1995.501105
A Bonds, when executed by the City, authenticated .nd delivered by the Trustee and duly
is",ed, !l>e ".lid, binding and legal .pedaI obng-dtfuus 01 the City. and lil consb",le this 50 :ond
Supplementalln&-nmre a valid' and binding agreement lor the uses i1nd pwpo5eS herein ~t
fo.rtl\~ in accordance ",itA its lerms~ have be-en done and talen,: and the exec-ution and delivery
of this Second Supplem<I1lallnclenrure havo been in all resp;rts duly aufroOrized;
NOW, THEREFORE, THIS SECOND SUPPlEMEr" At INDENTURE WITNESSETH.
that iII order 10 secure t.1'l.e paymeru of the principal of and the inter~ and premium (if any) on
all 1995 Series A Bond. at any time issued and Outstanding under lI1is Second Supplemental
lndenlure.. according to thcir ~nof" and \0 secure. the pe..'ionr,anc:e and obser(anC!: of a'B th~
covenants and condltions therein and herein set forth.. and 10 declare the terms :and conditions
upon and' subjecf to wruck tne 1995 5er"..es A Sands are to be issued and received, ar.d in
consider.J:oon of the premLoe;es an? of the mutua! covenants herein contained a.nd 01 the ~ase
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and a<toplanct 01 tlI. 199$ s.ne. A B<,m!. by u.. Owners thereol. and *'< othu valuable
~O:>5Id_fions, 1M re<:apt whe1eot Is 1>""oby ildnowledged, the City does 1>treby ,",venonl and
agree -.,jth the Trust ... lO< 1M benefit of 1M 16peclive Own .... from time t<> ilroe of the l~S
Serifs A Bonds. .. feDows, ,
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ARTICLE I
DEFlNlTJONS; AtlfHORlZA TION AND PURPOSE OF BONDS;
EQUAL SECIJRITY
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SECTION 1.01. l2rlinition.!. All lerms which are donned in Section 1.01 of t.~
Indenture shalIflave tile same meanings, respectively, in this Second Supplernentallndentwe as
sud lerms are given In said Section 1.01. U-nress the contat otherwise 'f'equiTes.. the additional
lmn.! defined in this SEction shaD for aD purposes ofllUs Second Supplemenlal L"1denlure and
of Ole 1995 Series A, Bonds and of oUly certi.5cate~ opinion.. request Cl' other documents herein mentioned flave tho meanings specified in the reo1als and in this s.ctlon 1.01 .
• Alternative frQject" means any project idenlifit>d by 1M Cit, pursuant 10 Section 3.04
of !he Indenture undertaken for tile parpvs< of improving, recort.<tructi!1g, enlarging, extending,
replacing, repairing, equipping, developing, embellishing 0< otIlen.;s" imp<oving an or any par:
of tile E..~IelJ>rise.
"AMBAC IndemnitY' means AMEAC Indemnity Corporation, • WlSConsin-domkUed
srock ir.su:r.a:nc:t company~
• Authorized Invesfments-means. \0 t11e extenl wm.itt~_ bv ~Wr anv of the fonOwing:
{i} ctrrect obligations of. Cf' ob~utions guaranteed as 1.9_prindpal and interest: by. the Unlled
-states or any agency or instrumentaDiy thereof when sud obligations are backed by the fun.
faitk and credit of the Lirilled Stales. w'hkh obligations include. but.a.--e not liml1ed fo. the
fol'lowin& 0) United Stales Treasury obligations. whiclt are direct or fully guaranfeed
obfiga~OO obligations, debentures. nores or other evk!ence ol indebtedness issued or
. guaranfeed by the Governmental Nationa! Mortgage Assoda 50n 01' the Federal Home Loan
1Aongage Corporation; (2) Federal Land Bank senior debt ob6gationsj (3) Federal National
¥ortgage Association~s f'FNMA? non-refundable.. non-redeemable senior debt: obligations; (4)
certificates of deposit. tim~ deposits. and banlm' aC(:ep[aIlCe5 Qt:r.nng ma~ of not more
than 365 dars} of any bank, includi."S the banking dE?¥tm~nI of the Tru~t«. the debt
obli~ations of which for. in tl'le case of the prindpaJ bank in a bank holding company. debt
cbIigaoons of the bank holding (orrrpaIry) have been rated in the tJ5hest short-tenn ratini!
cal.egOf! tior tne mafurily tbereoQ of the Rating Agency;j5J Commercial Paper ha .... ing.a
,!naturify d not more tJo,~ :va days wr.icB is rated in t"he highest rating Category of the Rating
Agency: (6) units in Ii taxable government money tr'I3.df!t portfO)DO rafed in the highest ratkt$
categOry by the RaMg Agency <otnposed solely of @-#K-aoons ~hown in "Or -"Q}" above,
includinlJ money lIIM'ket funds for whld. the Trustee. its affiliafes. parEnt: .or subsidiaries
provide inv~ advisorY Of' other management services..
"Cod'e'" meiU\S the Infernal Revenue Code cl1986 as in effect on the date 0( issuance of
the Bonds or (except as othentwise referenced herein) as it may be amend~ to apply to
obligations is5\led cn the dale of !ssuanc!' 01 U-,e Bonds. together with app1k:able proposed,
temporary and fbal regulations promulgated. and applicable offidal pubBc guid"""< published.
under !he Code.
"OTe" meam; the Dep05ilory Trust Compar.y. N'ew Yorl.. New Yxk~ and its SUCCe5=sono
.and assIgns.
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"Fair MorMt Value" means the price .t wJUdl • willilI$ bufO< w~ purdl.;se IN
investment from I willing •• neI in • bona fide, arm', """gth InNaction !d<lefmlned IS of 1M
d.tellle conUact 10 pu.rcl\a$e or..n !he inves!m<nl ~omes binding) tllht inv"!lnenI1s ~
on on established oecurilies market (withm 11-.. It><aIling of _. 1273 of !he Code" aNI.
otIIerwise,!he t.enn "Fair Market Value" _ tho acquisition pric.1n • bona Ade ....... Iength
transaction (as referenced above} if (i) tho inves!me."II is. cuti1;e. .. of depo<!t thai Is acquIird
in accorda.">CO with applicable regulatioru uroder the Cod ... Co) IlIe invesbnenl is an ~
with specifically negotiated withdrawal oc reinvestment pro visions and .. .pK:ifkaUy
negotiated interest rale (for exampret a guaranteed investmenf contract.. a forwW Ji,lPP{1
contract or otr.er investment agreement;) that is-acqutred in AC"on1ance witlt appbiaMe
regulations vllder the C~ (iii) IIle investment is • United Siales Tre.>sUr)l SecuriIy-Stote aNI
Local Government Series thai " acquired in accordance with .ppllcabfe regulations of the
Unlted States Bureau cl PubEc o.bI. or (iv) the inv .. tmer.t Is the Local Agencylnvestmenl
Fund of the State of Cat!omia bul only jJ al al! !bIes dunng which the investment Is !I<Id its
yield is reasonably expected 10 be equal 10 or grealer 11-. .. " the yield OD • reaoonably co"'p.!.b~
direct ""fig.5on of the Udled Stala
"Gl>ran!J AiTeemenl" mea. ... tl1e Guaranly Agree"",-ot dated as of the Closing Dale, by
and be",,,",,, tho City and AMBAC lndemnily. "
"In teres! r.y",,,,,t Dale" means. with respect to the 1995 Series A Bonds, June J .u>d
Docember I in eacll year, beginning June I, 1995 and confinuing 50 long as .ny 1m SerIos A
Bonds rfIllain Oulstonding,
".ws.~" means certain eldensions and improvements !o tile Of)"S storm and
surface waler sysIem tomponent of the Enterprise generally described as (i) stann water pump
SQlion lmp!ovements, (ji) IoatI stonn drainage improvements, (jli) storm drain computer I!IOdeI
caHbraliOn, (iv) sto<m draIn replacement/rehabilitation projects, (d Barron Park drainage
improvemenis, (vj} hastradero c.eole erosfon control project, (vii) Geograpllk Wo<mation
System (clSl developme% fuc) cooperative projects with Sanla Oara Yaney Wa1" Disfrlc\,
and {xl curb and gufler rept.,cemen~ an as more par!icularly c:!escrwed in the official ,la_
W. the 1995 Series A Boo,k
"1995 Projed Fund" mean; the fund by tl1a1 name esfablislled and held by the Direct ..
cl F>n .. -.:e pwsuanIlo this Second Supplemental Trust Indenture.
"j995 5000 A !Iond<" means the Bond, autl10rlzed by l1Ie Second Supplemenl.l Trust
Indenture and t."e &00 Law.
"Original PwrJuSfr" means the bidder 10 ""hom sale of the 1995 Series A Bonds is
awarded by l1Ie City Council
'Re<or~" means, ,.ith respect ID Ille 1995 Series A Bonds, the Meenth om
calendar day of the month immedlale!y preceding an Interest Payment Date,
11YL~ means tl1e sU"ely bond iss"ed by AMSAC Indemnity guaranteeing certain
payments inlo the Re;erve A ccoun! with respect 10 IlIe 1995 50nes A !lords as provided !herein
and subject to the limilalions set forth tl1erein.
'Term Bonds" me."., with respect 10 l1Ie 1995 Series A Bonds "'''luring on June I, 2020,
"TnJg Of&e" means.., with Tespect to the 1995 Series A Bonds~ t:he pr.n6pal co.'"POrate
trust office of the Trustee in San Francisco .. Ca1ifOCJlia~ or a~ such other -or additional offices oilS mar be spedlied 10 the CIty by 111. Trustee in wriling,
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"Trust Qf6 ... • l1\eOJ15, with respect 10 lI1e 1995 Series A Bond$, lI1e principal corporar.
Iru$t office 01 the Trust .. in San F<ancisco, California. or .r such oll1er or additional offices as
may be sped6ed to 1110 C-1Iy by til. TrusI .. in writing .
. SECTION 1.02. Rules of Co!l$!rocOOn All references in this 5e<ond Supplemental
Indenfllre k> • Artlcles; "Sections: and O'.her StJbdivislor.s are 10 t.ie couespon<ling Articles,
Sections « subdivisions ol frJs Secor..:! Supplem,n!al Indenture; .,.03 Ih. words "bereln,.
"bereof: "hereunder; and otI1er words of similar import refer 10 this Second Supplerr,enlal
lndenture as I wflo!e and rIot to any partieular Article, Se:tioD or S.Jbdivision hereof.
Words 01 tile ",asculin. gender sl!alI be deemed and construed 10 include cOtTelative
words vi !he feminine and neuler genders. Unless lI1e conlex! s!larr olherwlse illdkate, words
Imf>crting til. singular number sh..JI include tn. plu..'"3! number and vic. vena, and words
imponing persons <lIaIIl'ldud. cocporations and .ssocIa60 ... including public bodies, .5 well
as ,",!ural persoos.
SECTION 1.03-Authorization and Pu=", ofl99..s~rjes A Bonds. The City 11as
reviewed all proceedings !lere!ofore!am relative 10 111 •• ulhorizatlon of t,ie 1995 Series A
Bond. and !las found., .5 • result of sucb reviEw, and 11ereby find. and delermines l1>a! all
!lUngs, ccnWoons, and acf5 required by law 10 exist. toappeo arod! or be performed precedent to
and In Ihe issuonco 01 l1>e 1995 Series A Bonds do exis~ !lave bappened and "".e been
~ in due lime, form arod manner as required by raw, arod the CiIy is now autllor<.z.ed, as
an exercise oil!", municipal affair> power of tll. City as a cllariered city under the constitution
and laws of Ihe Stale arod pu<suar.t 10 tlle Bond law arod each and every requiremenl of law, 10
Issue !I>. 1995 Series A Bonds in the "'.anner arod form proVided in !his !">econd Suppkmenf?l
Indenture. Accordin~y, the Oty lIer.by .,,100,i26 11>. Issuance of the 1995 Series A Bonds
pursua.'\l to trn. BOlldlaw. the l~ arod this Second Supplem.nlal Indentur. for the
. purpose 0( providing funds 10 financE imp<ovemenls 10 1M Enletprise.
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lSSUANCE OF 1995 SERlES A !>ONDIS
-SECTION 2.01. Tenns oIl99SSIlrin A BoOOs. The 1995 Series A Bonds aulhor<.zed 10
be Issued by tile 0Iy under ar4 subjed 10 1M BoOO Law ~.nd the lerms of Ibe Indenfure ar4
INs SecoOO Supplemonlallndenrure shall b. designaled L"" "City of Palo Alto Utility Revenue
8000 .. 1995 Series A·. an<! sI'.aII be Issued In the otigir.al principal amount of not 10 exceed
Elgllt Million SIx HWldred Forty Thousand Doll.!". ($SMO,ooo).
The 1995 Series A Bonds si1an be issued in fully rogistered fonn without coupons in
denominations of $5,000 or my InlegraJ !rnilliple thereol. so lOng as no 1995 Series A Bond .balI
l1a ve moi-e than DOE mahL.;ty dale.' The 1995 s.r,.,,; A Bonds shall ""'lure on June I in eadI of
!be yea" ar4 in tl1e omounts, ar4 shall bear Inlerest at the rates, as loDows:
Maturity Date
!hmtll
199&
1997
1998
1999
200tl
2001
2002
2003
2004
2005
2006
2007
2008
2OO'J
2020
h,leresl Rate
PerArITi'lIJ::\
In!erost on Ihe 1995 Series A Bonds si1a1l be payable On eaclI lnforest PoymeI1l Date to
Ibe petsOO whose nOIru! appears on the Bond Regisfl.tion Bcoks as the Own", thereolas of 1.""
Record Date Immedialely preceding eodl suclIlnleresl P'yment Date. sud! interest 10 be paid
by cl.ed: mailed by /irs! class mail on said lnwest raymenl Dat. 10 tl1e Owner or. al I."" option
of any OWlIer of at least $1,000,000 aggregate prindpaI amount of the Bonds ar4 "pon ..-ritten
notke received by the Trustee pr:io< to the Record Date. by wire tr.o. .. lSr.,.. al the address of such
Owner as it, appears on tl'Ie Bond .Registration 'Boob .. 01" to suCh: account as shaD ~ave been
klenfified by tho Owner In lb. notice requestlng peymenl by wire transfer. I'rindpal of ar4
premium !it any} on an,1995 Series A Bond shall be paid upon prosenration and surrender
thereof al til. Trust Office of the Trustee. Both the principal of and inlerest ar4 premium (if
any) on th. 1995 Seri<!s " Ilor.ds si1a1l be payable m lawful IIlOney of the United Stales of
America.
The n95 SeriEs A Bond> shan be dated Febm ary I, 1995 and b<.ar interest from the
Interest Payment Date next precedirlg the dale of authentication ther.eof. urJess said dale of
authentication is 2."\ Infe~est Payment Date~ in ¥I'hick e1renl such interest is payable from such
date of authentic:anon~ and unle'S~ said date of autnentication is prior \0 February 1, 1995 .. in
f
...
whidl event sud! Interest Is pay.!>le from June I, 1995; provided, however, ,tllal if, .. o! tile
date oE authentication of any 1995 Series A Sand .. ir.f£'l'est tbereon is i!I default, such 1995
Sen .. A Bo,ld ,han bear interest from tile date 10 which bteres! !las previcusly ~ paid or
made available for payment Ulereon ir. fulL
SECTKlN 2.02 Redemplino of 1995 SeM A ~
Caj Qp!icnaI P.e<Ie!np!ion. The 1995 Series A Bonds maturing on Ol before June 1,2004,
,h.1l not be subject 10 opoor.al redemption prior 10 maturity. Th~ 1995 Series A Bonds
mafuring on 0< after June 1, 2005, shall be su~ject 10 redomption prior 10 !iIeir respective
maturity da~ iilt the option of the City. ZS it whole on any date .. or irI part 'in Inverse order of
maturities a...rd by lot withirl ill !r.aturity on ;any Interest Payment Da~e Dl1 or after June 1 .. 2004,
from any 5OW'Ce of available funds, at tile 'o!lowing res"",;;ve Redemption Pric .. (expressed as .
. pe,<:entages of tile prindpal amount of Ule 1995 Se...,.,. A Bonds 10 be redeemed), plu, occrued
interest.thereon to the dare 01 red,p.mp60n:
!!edemplfun P~s
June I, 2004 through May 31, 200:;
June 1, 2005 througb May 31, 2D06
June I. 2D06 and tII",<afteT
RedempBon Prkes
102.0%
101.0'1
I()().O%
'Ilw:! City shall be reQUired to give the Trustee l'I<'1ittln I".voce of its intention to Ted~m
] 995 Series A Bonds u.'ld ... ihi.; subsec60n Cal. and ,!laD deposit an amounts required for such
redemption ... ith tile TIllS'" at ).east fo<1y-five f45) days prior 10 tile date fixed lor such
rede:np6on.
(bJ Special MandatO{)" Redemption From JrurulClocr 01' Condemnation Proceeds. The
·1995 Series A Borlds shan also be subject 10 redemption as 0 "'hole on ""Y d,\e 0< in part on
any In~ Payment Da~e prior 10 maf'urily, in lnver~ order of mah..ui::y and by lot wiL.'Un a
maturity. 10 tr .. _I of lI1e NO! Proceeds of b.uard insurance ncI used 10 repair or ,ebund lI1e
Enrerpr.se 0< the Net Proceeds of condemnatiOn. wards received with respect 10 Ule Ent~
·10 be used fo< sud! p'.lrpo.~ puts'.l<lnt 10 Sections 5.06 or 5.07 or tile Indenture, at • Redemp60n
PJice equal 10 !be pr<.ndpoI amounl of the 1995 Series A Bonds plus inleresl accrued lI1ere<>. 10
the dale fixed for nedempliOil. without premi'.mc
~) MandatO{)' SinkinG E!m:1.~ouru Redemption. The Term ]995 Serle< A Bonds sIlall
a<o be subject 10 reden:>ption in part by Io!, on June 1 in each year comme."1dng June 1, 201~"
from SIrJdng Fund l.".tollmen!> made by U.e Gty inlo tile Debt Servke Fund puzsuant 10 Section
4.03, at • RedempOOD Price equal 10 Ule princlpal amount Ulereol 10 be redeemed, ",i!boul
p!"enUum: ir. the aggregate respective prindpa1 amounts and on June 1 in the respet..-"1ive years as
set forth in !be ioilowing tables, or In lieu Ihereol shaJI be purcl1ased puzsua'" Eo Section 2.C2W
d l1\e fndenture; provided ... however. that if SOO'W! but nor an oC the Term ]99$ Series A Bonds
have beeR redeemed pursu;mf to subsections fa) {)f (n) above or purchased .as pro,,'ided in
Section 2.02W of the Indenture, tile kXaJ amount ofaG future SL'lIdng Fund lnseallmenl> with
respect 10 tile T=o t995 Series A Bond, or. partkular maturity s.;.1l be reduced ~y tile
aggreg>te principal amounl of Term 1995 Series A Bonds 01 such maturity ,0 red""med 0<
purchased. to be aliocated among suck Sinking Fund msta!lments OD a pro rata hasis in in1:egral
mu..ltiples of 55..000 as defennined by the Oty {written notice of whlcb determination sllall be
given by the City to the Trustee not later Utan L'\e 45th day pOor to the Prindpaj l:nstallment
Dale of eoclo Sinlcing Fund Insr.nment~ .
Tne SInking Fund Instanments applicable 10 the Term 1995 Series A Bonds maturIl1g June
1, 2020 are .as foDows::
·7-
-.. ,
sw;"g Fund ).ro)urJ
hdemp60D Date
01iJltll
2010
2011
2012-
2013
20H
2015
2016
2017
2018
2019
2O~O
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\d} AwJlgble Proyjsjons 01 the L'ldeIlture. AI 01 the pcovisions oI5ectioo 2()2(d) 10
0<), Inclusive, 01 the lndenrun are appliable 10 the 1995 Sen.s A Bonds.
SECTION 2Jl3_ Fpm! 011995 Seri .. A Bo"ds. The 1995 Series A Bonts, tlle Trustee',
certificAte oIauthen!kalion, and tl1e uslgnmom 10 appear tllereon, .!laD be subslanfiaJly In tll.
respective fonns set fortl> In ExIlibit A ._hed hereto and by tM. reference mcorponted
:her~ with nece:ssa!'J or apPf"~h! variations" om1s;:,iops and insertions., as permitted or
required by !his Second Supplelnen!al Ind .. !Ure.
SEC'IlON 204. !look En!rJ' Only SyS!em_ DTe.halI ad .s the initial Depository for
tile 1995 Series A Bonds. One 1995 Series A Bow for eaell .".turity 01 tll, 1995 Sen.. A
Bonds shall be L-u1:iall,. executed, auiJ,enticated, u.d delive:red as set fClrtb herein with i1
separate !u1ly registered corti.'icate On print 0< Iypewrilten fO'",}_ Upon initial o=ti<m,
autllenlkA!ion, and delivery, the ownersrup ollhe Bonds shaD be reglS!ered in Ihe Bow Jt.gisler
hpt by tl1e Trustee lot tl1e 1995 Series A Bonds iI1 the name 01 Cede " Co .• as Mmin .. of DTC
or ruch nomihee .. DTC shall appoiIllln writU1g_
1'lI<! Officers of the Gly .. d the Truslee are bereby autboriud 10 take any and ail
acHons .. may be neces..<ary and "oIlnconsislenl with !his Indenture 10 qualify the 1995 Series
A Bows lor Ille Depository'. book~ sy>tem, Including Ill. execulion 0I1lle Deposit"",},',
required reptsentaHon letter.
Wlth respect 10 tlle 1995 SP.ries A Bonds registered in tlle bow register in the,"""" 01
Cede" Co .. as nomlnee cl DIe., neither the Oty nor the Trus1ee shall have 3..'"lY responsibilHy or
obfigaHon io any brolcer-<lealer, bank 0< other fir.andal inslitulio" fo< whlcII OTC holds Bonds
as Depository from lime 10 tiut< Cthe"DTC Participants") 0< 10 any person for wbkh • DTC
p.,.tidpanf acquires .. inleres! iI1 Ille I99S Sen.s A Bonds (tl1e "BerIeliclal Owners. Withoul
fiIniting the immedialely precedir1g sen!ence. neither the Cit'f nor the Trustee shan have '"Y
responsil1i1ity 0.-obIIgalion with respect Ie 6.) the accuracy of the records of OTC. Cede " Coo.
or any DTC Partidpanf will> respect to ""1 OWI1ersrup Interesl in the 1995 Series A Bows. 00
the delivery 1<> ,ny DTC Parnc;panl, any Beneficial Owner, Of' any otller person, other than mc, or any notice with respect to tile 1m Se!ies A Bonds, indu<fulg any 1995 Series A Bonds
10 be redeemed in Ille ever>lllle City elects k> red..". lI1e 1995 Sen.s A Bonds in part. ruil the
selecIio. b~ tl1e Depository 01 the benelidaJ inlereslS in the 1995 Series A Bonds 10 be redeemed
in fh_e tveJ1t the City elects t.o redeem the Bonds in part. (iv) the payment to any Ole
Partklpa?f. ~nl Be~ O\vflefl Of any person. other than ore. of any amo~nt wi\l\ respect
to any pci1'ldpaI of or-wterest on the Bonds or " .. , and consent given or other action t.ahn by the
Depository as Owner 01 the 1995 Series A Bonds; excepl that so long as any 1995 Series A
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Bond Is reglsteTe<l In the """'e of Cede ~ C¢, as noznln .. of or C, lUIy S.nefidal o,.T.er of
$1,000,000 '" mor.1n awegate principal amount 01 any 5erles of 1995 Series A Bonds who}las
filed a Wri.'"ten requ~ to l'eceivt notices corrtaining 51lch BenefiLiaI Oo.mer·s name and addre-s5.
will> the Trust .. shaD be promed >dth all nC& .. relating 10 such 1995 Series A Bonds by the
Trustl?e
Excep! as set fortJot above, the Trustee ""'y tr ... : as and deem DIC 10 "" the absolute
Owner of .ach 1995 Seles A Bond, for which DTC is otting os Depository for the pul']>OSe of
payment of the prillclpal of and interest on .ucIIl995 Seties A l5onds, f"1l11e purpoSe of giving
1IOtic .. 01 pre~yment and otller "",tiers will> respecllo such 1995 Series A 8onds, {OJ: the
putpese 01 regiStering transfen will> respect 10 suc111995 Series A 8onds, and fof all purposes
",haJsoever. The TNStee ohall pay all principal of and in\erest on the 1995 Series A Bonds only
10 or upon lI1e Order of the Own.,. as shown 00 the J>:,nd reglsler, and all such payments shall
be valid and eHective to fully satisfy and discharge aD obUg.bollS wiIh respect 10 the pr.rlCipal
of and Inleres! on the 19955P.r'.es A Bonds to the extent of the sums or sums so pilid.
No person other than an ~'ner. as ShoW'iJ. on t.~ bond register. sl".all receive.l. physical
1995 Series A Bond. Upon delivery by OTC to the iroslee 01 wrilIen noike 10 the effect that
OTC has defermined 10 subsb1ute a Dew nominee ;., place of Cede a. Co., and subject to fr ..
transfer provisions in Section 2.02 of the Indenture, referel1ces to "Cede It Co.~" in this Section
2..04 s1".a11 reer to such new nominee of DTe _
OTC may derermIne 10 cfiscontinue providL"g its services with r~ to the Bonds at
any time by giving written notice 10 the Trustee during on} lime tIl.1 tile 1995 Series A Bonds
are Outsland'mg. and discJo.vging its "o,'-pon5l'billties wi!~ respect ther.to under applicable law.
The CitY. may termInale the senices !o OYC ><'.u. respeel 10 the 1995 Series A Bonds if it
determines that DTC Is unable 10 discharge lis respon;ibilities wilA respect 10 the 1995 Series A
Bonds or thaI conlinua60n oi the system oi bool-entry transfers through DTe Is nol in the best
interest of the IleneJkial Owners, and the City shaD mail notiCe 0/ suclI termination 10 the
Trustee.
Upon the tennina60n 0/ the services 01 DTe as promed in the previous paragrapll,
and if no ""_Ie DeposiIory willing 10 under!alo! 1M fu!lCtions hereunder can "" found.which
is willing and able 10 undertal<. suclI functiOns upon reason,able or CUSlomary terms, 01' if the
Oly delermin .. that it Is in the boot interest <>l tile Beneficia) Owners Qf the 1995 5P.r'.es A
Bonds that tIley be able 10 obtain certlfi<!d Bonds, tile 1995 Series A l50nds shall no longer be
_ted 10 being registered in the bond register o/!he Trust .. in lI1e DO"'" of Cede iI< Co., as
noll1Inee of DTC. but may be r~f':red in 1Wl1ah~yer na.me 01' name of the Owners shaD: designate-_
OIl that tL"'N!, in accordaJl(:f with Section 2.05 of the Indenture.
To Ihe extent that the Bond Owners are desigr,ed as the tr>nsferee by the Owner" in
actordance with Section 2.05 0/ the Indenture, 111. 1995 Series A Bonds will be delivered 10 sucII
Benefid;ol Owners. .
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ARTICLE lJI
ISSUE OF 1995 SE RJES A BONDS
SECTION 3.01. Issuance of 1995 $grie< It. Bor,ds. U""n the ex=tivn and delivery of
tNs Second Supplemenlallndenture, the City sl1aIl execute and denver 1995 Series A Bond. in
til, aggregale pri."ldpal amount <>f ,,01 10 exceed Eigh! Million Six Hundred Pour Hundred
Thousand DoDan ($8 .. 640,OOO) to th.e T1"'J5tee for authen6<:aoon and delivery to tbe Original
I'wc1>aser thereof upon the Request of th. City. •
SECTION 3,1)2. Awocation of Proc...,. of Sal. of 1995 Sene. A Bonds. Upon the
receipt of payment for the 1995 Series A Bond< on Ill. Closing Dale, l1>e Trustee sllall apply tile
proceeds of sale thereof (being $ ~ as foUo"",:
(a) The Tru.<lee .holl depos;iln 11>. Deb! Service Fund the amount of $ •
representing a.:crued interest from the cat. of the 1995 Series It. Bonds 10 tho date of deliVery
tl>ereo£
(b) The Truslee shaD deposit in Ill, Reserve Account the amount of 5 ____ 1 pay
tile amounl of , ____ '" AMBAC Indemnity as the premium foc the Surely Bond1
W The T"'-<tee .IlaD pay Ibe remainder of such proceeds (be'.ng 5 1 '0
!he OUa:t<ll' 01 F"mane. for deposit In tile 1995 P,oject Fund crealed p',rsuant to 5e<Eion 3.04-
SECTION 3.03-R .... rve AccounL On the Clos'-"8 Dal", the City will casue a depo<i110
l>e made as provided in Section 3.02 O>~ !On the Closing Date the QIy ,haD deliver the Surely
Bond 10 the Trustee for the account of the Reserve A«ount! An amount equal 10 the Reserve
. kquiremenl in the form of eil1>er "",11, Surety Sond oc other Qualified Sur~ Bond ""dPI
Sect;oo '-06(c) of Ibe Indenture 0< a letter of credit under Section 4.06{b1 of thelndenfUre lor the
accounl of the Resen"e hcount. shan be mainfained in the .Reserve Account at an times; any
deJX:i,oncy li>ereln ,!1OI1 be replenisbed from availabl. Net Reverues pursuant 10 Section 4.03(5)
of the Ind enIu1'e.
SECJlON 3.04. ~ There is meby created a "'parat. Fund 10 be
kneW>! as the "City of Palo Aho Utility Revenue Bonds 1995 Projocl Fund: .",em r.rened "'as
the '1995 Projed Fund: 10 be !IeJd in !rust by the Direclor of F":nan<e. The Direclor of FlZlanC.
shaD disbun;e mon.ys in the 1995 Project Fund for the purpose of paying or reimbursing the
payment of the Co<ts of /s..,ance, and the costs 0( acqulIing and constructing the 1995 Projoc~
including but not linu.'"'ti!d to an costs incidental to ()( c.onnected ,..,ith suc:1i acquisiticn and
construction; in either case upon receIpt by the Direcklr of rman<:e from time to tIme of a
Request of the City which: (a) identifies the IOOlI amount 0( such cOSls to be p';d "",ouant 10
sud. Request. including all items of cost in such d.tai1 as JruI y be avaUable 10 the Oty; (b) stales
with respect 10 sudI disbursement (j) the requisilior. number, (Ii) the amQU,1f [0 l>e disbursed for
payment of sudI COSls, and (iiI/that eaclt item of cos! identified U,,,,,,in has been properly
m:urrecl, and is • proper charge agaL'ISt tJ..e 1995 Project Fund and ru.s not been the basiS of
any pra-ious disbursetnent; and kl is accompanIed by an wvoit:e, if a...,y. Certify that there has
been compIi.ance-with Section 5.04 of this Second Supplementa11ndenrure.. rclating to the
Private Activity Soo<! Limita60n.
The City may apply any or aU of the moneys on deposit in tbe 1995 Pro}ect Fund to the
financing clany Artemative Project in prace of any component of t11e ]995 Pr(1jecl upon the
fili..i.g with ttle Director of Flnanc~ of it Certilica.tf' of the City staling thaI (i) S1.1Cb substitution
" .. ill not have any adverse efl'~ on tne secwily for t.1le 1995 Series A Bonds ... and (ii) the
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A1ternativ. Projecl Identified will be of benefit 10 lI>e Enlerprise. The Certilicale of flo •• City
s!IaII be ""companied 1>y an opinion of bond cc>,nse) sul>sl.tl1tially 10 11> •• flect lI>a! such
substitution wm :not adversely affect the e)Ujusion of interest on the &onds from gro:s income
for !ed.nlloo>me tax pwposes.
kiy a",,,,,,1Is remaining in lI>e 1995 Project fund after & .. dale of cOlrlpletion of L'le
1995 Projeclshall.. upon lI>e Iillng with lI>e Direclo< of FL'Wlce of • }(equesl of 11>, City. be
tr.o'15ferred by the Directar of f'Uwla 10 the Deb! Scvice Fund 10 be applied 10 Ibe I"'Y""'" of
!he principal of .ny Outslandmg 1995 Series A Bonds as tl'" same becomes due and payable.
All interest earnings and profits or losses on the L" vestment of ilIIIou.."lts. in tl'Ie 1995
Project fund sI1an be depc5ited m or charged lo the 1995 Proje<"t Fund and applied 10 the
purposes IIIereof.
SIlCllON 3.05. y'a!idlb' ol Bo!!d& The validity of the authorization and issuance of
the 1995 Series A Bond •• nall not be affected in ""y way by arty proceedi."SS hlell by lI1e City
for the acquisition or construction of the 1995 Project. or by any contracts made by the O!y in
cormoction ther,will>. and 111. redtal contained in the 1995 Series A Bonds that the ... me are
isSued pursuiUll to the "Bond Law shan be conclusive evidence of thEir valldity a...'"\d (If the
'eguJa.;ty of their isSua.'1C'.
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ARTICLE IV
REVENUES; FUNDS AND ACCOUNTS
SECT10N 4.0,1. Pie4ce 01 Revenues. Revenue Fund..", The C.ty}!,as heretofore-transferred;
rl"<ed. cnarge upOn, ... igned and set over 10 !he Trustee, for tho benefil: of the Owners, that
portion olthe Net Revenues whldl is necessary 10 pay the principal DC Redemp!ion Price ol and
Lnli!TeSl on the B<>nds (lncluding the 1m Series A Bonds) in any FlscaLY..,., together with all
moneys 0" def""if in the Deb! Service F\md, 10 the puocrual payment of the principal 0<
Redemplion Foco ol and Inleresl 00 tile Bonds (including the 1995 Series A Bonds).
SECTION 4.02. Administration of Fund$ and Accounts. A!l fund~ and accounts
created pursuant to the l.ndenture ~haII contlnue 10 be admir.1stered by the Tr.J.S~ee a...1'M.i the
Oirecto< of Fmance in !he r.anner p<ovided by the Indenture and this Second Supplemrntal
:I:n&:nture a:; if thert were .i. sing~ Issue ol80nds concurrenUy sold and delivered, lnduding
withoul !lmItation the provisions ol Sec-non 4.05 of the Indenture ,elating 10 the application of
the R'SeIVe Aocount and the paymenl procedure p"r>uanl to the Surery Bond.
SECTION 4.03. hWllcation of Sinklne Fund Accounl,
(3) The Trustee sr.ali estabtsh and maintain a .separate hcount. sudI Ao;:oUi,11o be
designated "1995 Series A Sinking Fund Account".
(Ill On 0< before !.'Ie sixtieth day prior 10 eo<h Principal Installment Oat. on whlclt a
Slnking Fund InstanmerJ is payable, beginning April 2, 2010, tl!e OirectO< ol· Finance shall
ITansfa from the Revenue Fund to the Trustee for depo5lt in tl>e 1995 Series A Sinking Fund
.Account an amount equal 10 the aggregafe amounl of Principal InstaThnenfs becoming due and
payable on all Ou!sfandl.~g Term Bonds on tho next succeedlng Prindpallnstallment Dale.
{cl The Trusree .h<oH aWj moneys in the 1995 Series A Sinld:'g Fund AcCouni 10 the
purchase or the redemption of the Term Bonds in the !nanner provided in this Section and 10 the
payment of the principal thereof _I marurily. provided that no such !lvnds shall be so
purchased during the period of thirty (30) days next precedi....g the date ol. SinkIng Fund
lrulallment esrab6s,'\ed for such Bonds. The purchase price paid by the Trustee, at the direction
of the OIy (excluding ao:Ned interest (whicR shall be paid from the Debt Servlce Fund) but
L-rludlng any brokerage and other cnarges) for any Bond pw<based pursuant 10 this Section
shan oot exceed tl'Ie Red-emption Prke C>l sue. Bond applicable upon its redemption by
. operation of the 1m Series A Sinking Fund Account tI-.rough application ol the moneys
available for sud, purchase on the next date of. Sinking Fund Inslallmenl established for such
Bonds. Subject 10 1M limitatior.s hereinbefore set lo<th or referred 10 in this Section. the City
. may pur<:l\ase Term. &nds at such limes, fOr such pri::es. in such amo14,ts and in such manner
(whether after advertisement for-fenders or otherwise) as the CHy in its discretion may
~term.ine and as may be possible with the amounf of moners available therefor in the 1995
Sen.. A SInking Fund A.'CaunL If on any date there shaD be moneys L~ any such SinkIng Fund
AccO"..l11t and there shan be Outstanding noIW! DC the Bonds for whk1l. such kcount was
esf:ab!is...~ .. sud\ Sinking Fund Accounl snall be closed and the Trustee shall lrilIlSfer any
moneys therein to the Diredor 01 rmance for deposit irl the Revenue fund. The C"Xy shall iJ:~ the
time OfaDY such purchase, ~y 10 the Trustee for d eposa L~ tIle 1995 Series A SinkIng Fund
Accoun! the amoUJ"1f cI any Ufidency in sucil Account ",,"ruel! may be caused by sucb purc~ase.
id) .As SOOI1 as practicable after the for.:J-fl.fth and bE-fore the thirtieth day prior to the
Principal tnstannLerlt Date of ea.:h Sinking Fund Installment.. the Trustee 5-nall (aD for
redemptjon in the ma.nner provided in Artide II on the said Principal Il1sfarIment Da~e of said
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SinkIng Fund lr.stallment and by .ppli<aootl of said Sinking Fund lnstal1!I>ent $UC~ principal
omount of the Bonds entitled 10 said SinlJng Fund In,t.anment 1<,. su,h amounts of Bonds
purchased during o..e !welve (U) IfIonll\s prior to such ?r'.ncipal !J,stallmen. Dale pursuant to
."bsectlon (b) of this Se<:tion, ."d on such redemp&n cI.te tile Tr.l5le. shaD apply the money>
in sue. Sinking Fund Accounl 10 tile payment 01 tl>E Jledemplion 1'&, of !hi Bc·nds so called
to.: red€mption.
(0) All amounts in tile 1995 Series A Sinking Fund Account shan be used and
withdrawn by tile Trustee solely to pun:haso 0< redeem or p'Y a' tnalu..-lIy the T enn 1995 Series
A Bonds as provided herein .n<! in ll1e Indenture.
(f) Subject to the terms and conditions set lorth in the md<'nhU! and in this Section. !he
1995 Sa;" A Bonds ,hall be redeemed (0< paid a' ma~.mIJ, as the case ""1 be) by applkation
of SinlcUig Fund Installmenls in Ille amOunts and upon thi clates set fO<!h in Section 2.02«~
SfCl10N 4.0-1. payment Procedure Pursuant '0 Sure!;)' !'one!. As long as tile Sur.ty
Bond ,l>.11 be In full force and effect. tlle City and the Tru.<lee ogr •• 10 comply "ill'. ll1e
JolklwiP1.g pro\islons:
Ca) In the e\~en! and 10 th2 ~x[enI that moneys on deposil in the DeN Service Fund.. are
insuffidenllo pay t.'>e amount of princifal and interest coming du., then upen thel.ler of (i)
one (1) dOJ alW recoipt by til. Conera; Counsel of AMBAC of a demand lor paymenl in 0..
form .!!ached io ll1e SlL."ty Bene! :is Anadunenl I (the "Demand for P'y",ent"), duly eXECUted
l>ythe Tro.tee <ertifying tllall"yment due unci ... this Se<:ond SupplemenlallndenfuJ'e has not
beeR mad. 10 the Trustee; or (ji) 11;. payment date of tlt. 199, Sen.. .~ Bends as specified In
(h. Demond fur Payment p<esented by 11\. Trust"" '" thi General Counsel pf AMBAC, AMBAC
wiD.mal::!" ZI deposit 01 funds m an account 'Wl'Th ~ T.rusfef! or-its successor, in New York, New
YorJc.. suEfidenf f<w the paymen! Ie the Trusfee'" of amounts whidl are ther'l due 10 the Trus!ee
. under this Second Supp1emenlallne!enture Cas specilied in tile Detnand fo< Payment) up 10 but
not in r:xcess of the Surety Bond Coverage. as defined in tt,e So..l!efy BoncL provided, however ..
thar L"1 the event tllat the amounl on deposit in.. or credited to .. the hserve Acco~, in addition
10' the amoimt ~valla'ble under the Sunry Bond. includes amounts a: .... a.ilabte under i1i Jetter el
aedit insurarn policy, surety bone! 01' other such funding instrument Ctlte • Additional Funding
Ins.trwnent"l. draws on tile Surety Bond and tile Addilionall'undil>g Instrument sbaD be rnade
on a pro rata basis io fund (he Insuffidency.
(b} n. Trustee shall, after submitting 10 AMBAC Indernruly the Demand for P .. yment
as provided in {a} above, malce available 10 AM"BAC IndtIJ"'J\!ly an records relating to the Funds
and Aceour,,, maintained ender this Se<:ond SuppJemenblJndenture.
(c) The Trustee shaD, upon receipC of moneys received from the draw on tne Surefy
Bond, as specified in the Demand 101' Payment .. credit the Reserve Account 10 the extent of
moneys receh'ed pursuanllo sucA'Dell".and.
(d) The firs! Net Revenues iII~bte ilftu ar . .J draw on the Surety Bend shafi be applied
in thi foOowmg prioriI-r-ill principal and in!er"" on tile Surely Bond shall be paid from firs!
avalla.ble Net Revenues~ (ii) After all such atnO\U'\ts a:e paid in full, amounts necessary 10 fund
the Reserve Account to tlle reqtlired level. after taking into acCQI...rrtf: the amou.."'tts available under
thi Surely Bond. ,».alI be depesned /rOm next .vailable Net Revenues
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ARTICl.E V
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CO'.' ENANrS OF tHE CITY; Sl'EOAL r AX CO'.'El'lA.lII1'S
SECTION 5.01. No ~.roitr>~e. The City shall no! ~ nor pennit lIO< suffer 10 be "'ken
by the Trustee or otlu!rwise. ""y actk>n wllll respect 10 the p<oceeds of Ille Boros whidl, jf such
action ".ad ~n reascnabIy expected to have been take.."'I, or },ad been deliverately and
inlentionally tIken. OIl Ihe date of isSlWKe of the Bonds would lIave eaused Ill. Bonds to be
"aro.-:rage~. within Ille meaning of ~n loll! of the COO •..
SECilON 5.OL The C,,>, shall take ."y and aD KOOns necessary
10 ass.tiTe compli:mce COOE-" relating to the Uba!e oIl1!xcess investmenf
e=ing". If ""'y. lo the federal SOYernment, to the ex1ent tl\at 5\KlI &ectlon is applicable to Ill.
8cnds.
SEatoN 5.03. Feda'al GuaraIlNE' Probibition. Tht City shaD no{ take any action 01"
permit 01 suffer any action to be taken If the result of the same would be to aus.e Any of tl\e
Bonds 10 be "federaDy guaranteed" wl:hlrt tho meanL"S of section 149(1)) of the Cod •.
SECTION 5.04. Private A;:tiviQ' Bond Limi!a!!cn. Th. City shan "'sur. that the
procteds c4" th~ 'Sooos are not 500 used as to cause the Bonds to satisfy th~ private bu!>iness
b!sts of section HII'b) of the Code O!" Ille private loan financing test of "",oon 141«:) of the
Code.
SEC1lON 5.05. Maintenan<~ of Tal::~I?:emption. The oty s'ba!llake aD actions
necessary 10 assure th-e exdu...~n of interest OD 1M Bonds from the gross income of tne Owners
of ill. Bonds 10 til. same extent as suell inmost is pmru11ed 10 be excluded from gross incom •
. under the Code .,in effect on tl1e d.!, of Issuance cf ll1e Bonds.
. SECTION 5,1lII. Punctual Payment; Compliance with lJs;ruments. The CiIy hereby
covenants 10 pay or to cause 1c be paid" solely from the Net Revenues. timely to or on behalf of
AMBAC Ind,mnit; aD amounts pay.ble 10 or on behalf of AMBAC IndemrUly pursuanllo ll1e
Cu"""""'y Agreement 0< any other applkable docwnenL In addition, the City shaD nO! prepay
rjl. 1995 Series A Bonds or dlsdlarge au. Second Supplemental Indenture unl ... all amounts
tl>en payable 10 or on behalf of A.>,fiIAC Inde;nnity pu,'suanllo file Guaranty Agreement 0< ""y
other .ppllcable document have been paid m /ult
SECTION 5.07. Aq~Yisition and Disposition and Valuation of U,vesfJNnfs.
{.} E""e", as otherwise provided in subsection ChI of til. Section. tile City covenants
thal aD investmenf of amounts deposi1:ed in any lund or ac:ccunt creafi?d by or pursuauf to t.lUs
Second Supplemental Indenture, or othe",;.. <onWning gross proceeds of the Bonds (wi..Mn
the meaning cf section 148 of Ill. Code) snail be acquired. disposed of. a.'l<l valued (as of tI1e
da~ the vaIua!ion is required by this Indenture 0< tl\e Code) at Fair Market Value.
(bl Investments in funds or accounts \or por60ns thereol) that are subject to iii r..ekl
resbiction under applicable provisions of the Code and (unless valuation is undert.aken at least
iffinually) investments In the Reserve AcWunI &hall be valued .1 tI1elr pr<sent value (withln the
JrI6\!1lng of section 148 of fr.e Coee).
~CTJON 5.08. ConIirmiltion_oIlndenrun;: Ali covenanfs made i.~ this Article V of tnl:'
Indenture il!1!; hereby confirmed as Olwbcable 10 tl\e 1995 Series. A Bonds under Ous Second
Supplemenlallndenturl< -
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SECTION 5.09.' Co~tinlljnll i:yclosuTe. The C"1 will provide Wor.rootiM on tru.
fuIandaJ condJoo.. ofl1>e Ente."J'dse Io."y Bond Owner or 011> .. interested per><>n upon roquesl
, or.d wit], paymenl of flI. Oty-prescrit>ed l>andling cosl5 tllcreol. Suc/I Worm.otion will ~
limited 10 IInancial statements and sWf reports which have previously bee. distribllted 10 !he CiIJ Ccundl. AddlOOnaIly. flI. C>Iy will file annually "ilh the TlUSl ... copy ol lis audited
finandal rep.xts.
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AJmClEYl
APPLlCAlllUTY OF INDENTllRJ;
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AlmCLEVU
S;URETY BOND PROVISIONS
SECTION 7.Ql. AMMC Inck!!lllj.y.
(0' Consent q{ AMBAC Inde!!U!llJ'. MY p<o\i$ion of !hJs Second Supplemental
Indenture e><p<essly r«ognizlrIg 0< granting r.ghts in c< 10 AMBAC tndem.-uty may 00{ be
amended In any manner whldl affects I1>e rights of AMB."C Indemnity hereu.-.der without ille
prier ... -ritten consenl 0( AMBAC Indemruly. p<o\ided however no cor..sent 0< approval q{
AMllAC Indemnity shall beroquiTed for any purpose hereunder Ii AMBAC lndemnit1 is in .
-default e>f its obIigatiol\S.
(b' CgDsepl of AMBAC [ndemnity m A.ddition tp Bondho1de-~ ConsenL Unless
o!lt~ provided In Ihls Se:tiOn, AMSAC Inde=uly's consent shall be required in addition to
Bondhold..-consenl. when req-.fued. foe t."-!onawing ~: ill exerution and deli'''')' of
an)' 5uppI~menta1 lndento.lTe (iO removal of the Trusfee or selection and app<'intment or any
successor trusf~ and (iii) hu"!:iation or approval of any action not described in (i} or (ii) above
which requI. .... Bondholder consent.
SECTJON 7.02. Notices lobe GixOlllg !.MBAC !n&roru1y. While tile Surety Bond Is in
effect" 111. WAy or I1>e Trustee, as appropria.e. s.~all furnisb 10 AMBAC bldemnlIr.
(a) as soon a. prac!ica ble af'.er !he filing tIlereot • copy o('''Y finandal
. sta'ement 0( tile City and • copy of any audiO and annual report of lI1e City;
\bl a copy of any notic. 10 be giv ... to !h. Owners of 111. 1995 Seri .. A
Bonds and any certifical. rendered pw-suan! 10 this Second Supplemental
IndenEure rei_ling to I1>e securiIy foe tI10 ] 995 Series A Bond,; and. .
(Q sucIo additional information ft may reasonably request.
lr.e City will pennll AM3AC Indemruly 10 discusS the affairs, finances and accounls 0(
the City or any Wonnaoon AMBAC Ind.mruly may reasonably request regarding I1>e security
fOl" the 1995 Se".es A Bon~ will1 appropriate officers o(!he City. The T=t ... 0< City •• s
appropriate. will pennil AMllAC Inden-JUly to 1>_ •• access 10 and to make <op,es of all bocks
and records reta!ing 10 the 1995 Series A 50nds at any reasor-able time.
NotwitlIstandmg any ot"'" pro-..lsIDn of thls l.'>denhlre, 111. Trustee shall Immedial.ly
notify AMBAC lndo",,"'1y if at any time !here are insufficieIll money. 10 make any payments 0(
principal and ir.lerest as required and immediately "poD its actcal knowledge 0( tile occurrence
of ill any Event e>f Default hereunder O£ (ii) .ny paymenl default under any rela!ed securlI)'
agreemenL
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IN WITNESS WHEREOF, 0.. CIty 01 Palo AlIo has caused this Second Scpplemenfal
Indenlwl! 10 be signEd In its name by ib M. yo< and its ... 110 be affixed ~~r.'n and a!t .. ted 10
by lis City 0er1l. .• nd Bani of /,merle. Naffonal Tru..<! '" Savings Association, III Io~." 01 its
AC<.~ ofll .. trust created hefeunder, has "usee! !his Second Supp!e~ta! lndenlur. 10 be
signec! In its corporate r=ne by its officer identified bel.,,·, an .s of Ill. day and year first above vn!tten.
!SEAL!
AlTEST:
8y ____ ;;;;;:'-;;;:=-___ _
CilyClerJ<
CITYOFFA!"o.ALTO
By
BANI< OF AMERiCA NA TlONAl TRUST '" ~A V1NGS ASSOCIA TJON. as Truslee .
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JUiGISTERED OWNER:
PXlNCiPAL AMOUNT:
EXHIBITA
FORM OF BOND
UNITED STATES Of AI,,!ERJCA
STATE OF CALlFOFJ'<1A
COUNlY OF SANTA ClA.aA
CIJY OF PALO • ...r. TO
UI1UT¥ REVENUE BOND
1995 SERIES ....
$ __ _
MA TURfIY DATE DATED D.AI&..
february 1_ 1995
'Under and by virtue of Oap!er lUll of T>tIe 12 of !he Palo Alto Munidpal Code (tile
"Bond Law") the Ci!y of Palo Aho (!he 'City"), a municipal corporation operating under a
freeholders' charier in the County of San!> Clara. Stale 0( California. £0< value received will
(su1>jo<:1 10 .ny right of prior re:lemp60n hereinafter provided 10<), on the Malurily Date
specified .bove, pay 10 the R!gisIered Owner na.med above, ()f registered assigns {the "Owner"~.
th. Principal Amount slated above. in lawful money of the Uru1ed States 0( Amerb,. and pay
interest !hereon in like lawfulmor.ey from Ille lnteresl Payment Date (as hereinafter defined)
1IEXt precedIng !he dale of authentication of this Bond !unless liJ this Bond is authen6caled O'l.
an Interesl hymen: Dare. In whld! even! it shall bear In,.,.est from such date of authen6calion.
or (ii) this Sand is authen6ca!ed prior 10 February 1,1995, m wMd\ event it shall bear.lnlerest
from the Da!.cJ Date staled above; provided, however, that if at the time of authentication cl
this Sand, inteTeSI is in default on this Sand, this Bond shall bear interest from the Ir.terest
Payment Dite 10 whlch in!eresI has pneviousIy been pakl or made available for payment on this
8ond) until payment of such Principal Amounl in full, at the Interest Rate per annum staled
. ahove, payalJle on.ru. ... I and Decomber 1 in eaclI year, conunendng February I, 1995 (ead! an
"Int ..... Paymen! Date"), caJrulaled on the hasis of a 36G-day year comprised of twelve 3(H!ay
mon!lls. For the period during ,..Nch Depository Trust Company of New Yor~ New Yo<lo:
C'OTC") or any SUCCe5ror depository, is the .registered owner 01 this Bond~ principaL
redemption premium;. If any. and Interest sI1aD be paid by Ille Of)' 10 ore. 01" such soccess",
deposltory. by wire transfer. provided t~.t principal and redemption premlums. it any. shall be
F.aid upon surrender 10 the City. as th~ corporafe t.rust offke of t11e Bank of AmE-rlca National
Trust &: Savings Association,. as Tru.c..tee (the '7rustff"'), rn San Fra.n.dsco. California .... of .matured
bonds or bonds caned for r.cJemplion frio< 10 m.luriIJ. As 10 aJ1yltegistered Owner hereof
Exlubit A . ) .
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oIlu!r than DTC 0< ..... "Cesso< depository, the principal and redempOOD premiums, Wany, ,hall
be payable at the offic. of the Tl'IJSl .. specified above and !nleros! shal1 be paid by dleck,. draft
0< warranl mantel 10 OTC, (>I' any 5UCCeAA>< depository, 0< in the even! <Jllenninali~n of the
bool entry system, 10 llIe Reglsfered O ... ner hereof al the Registered Ownn's 06<'" ... as it
appears on (},e reCords of the Trustee, or at such address itS may have been fJed .nth. the
Trustee, for that ~ as of the 15tlo day of the calendar month Immediately prectding each
Inler"'" Poyment Dat ..
This Bond Is one of • cluJy authoriz tel Issue of Bond. of tll< Ply designafPd as its
"Utility Revenue Bonds" (the "Bonds") issued and to be issued in Varlcu s ~l'" under and
, pursuanllO I."" dwIe£ of the C>I)i and Ihe Bond La w and under and pur>'~anI 10">.T. Indenture
of Trust (the "Indenture") by and t>etween the City and the Trustee, d.led as of Au~ 1, 1990,
and approved by the QIy by Resolution No. 6921, adopted by the Council of lI1e G1y on July
23, 1990 tll1. "CeD6Ol Resoluti<lnj pursuanl 10 whkh 111,695,000 of rarity Bond. are
OUtslancflllg. '
This 50nd is one of .. series of Bonds of ,.-arious maturities designat~ as "Utility
Revenue Bond;;, 1995 Senes A" (the "1995 Sen .. A Bond$" ;,;.-ued in Ihe .ggreg.le prlndpal
amoWlt of $8,640,000, ali of IiI<e tena< ("""cp! fa< .. .xl> .. nation. if any, as rnay be required 10
d6lgnate varying numbers .. maturities, interest rates Of redemption provisions), and lsS1Jed
under the Indenture and • Second Supplemental lneenluT. of T r.J5l (lI1e "Second Supplement")
by and belween tne City and the Trustee, daled as of February 1,1995, and ,woved by Ibe
City by Resoluti<ln No, ~ adopted by the Council of the City on JanuaI}' 23, 1995, The
Jnden,luTr and the Second ~wle-ment are: here'.na..~M conectively l"~ferred 10 as the i.ndenture.. ..
Copies of the Indenture are on file al !he office of 111< City (Jerk and 01 the above-mentioned
offlce of lb. Trustee, and reference to the Indentu<e and any and all supplements !hereto .nd
",odificalions and amendments Ibereaf and 10 !he Bond Law is made for: • descript;cn of lI1e
terms en whkll me 1995 Series. A Bonds ar~ isslJed ... the provisi~1\S ~"\th. regard to the nature
and .,.Ien! of !he Net Revenues, as that term is defined in Ibe Indenture, and the rights of tI1e
Owness of the 1995 Serles A Bonds. All of lI1e le:ms of !he Indenture and ft .• Bond La.., are
~,ereby incoq><>raled her$ and co"roMe • contract between 1M Ci!y and lI1e Owner from ti!ne
10 time of \hiS 1995 Senes A Bond, and 10 alltne prcvmoo. lI1ereof the Owner of \hiS 1995
Selie; A Bond. by acceptance hereof. consents and agrees. EacIo!al<er and sul>sequenl Owner
hereof shall have r~ \<) ali of the provl£ioT\S of the Bond lAw and the Indenture and shall.
be bound by all of the terms and conditiOns llIereo£
li.EFER ENCE IS HEREBY MADE TO THE FURTHER J>ROVlSlONS OF THIS BOND
SH FORTrl ON THE REVERSE HEli.EOF, WHICH FURTHER PKOVlS!Oc'lS OF THIS BOND
SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT AS iF SET FORTH IN THIS'
PLACE.
It is hereby certili«i thaI all of !he L'Ungs, conditions and acts .equired to Wst. '0 !lave
!lappened 0< 10 have been perfonned precedent 10 and in lI1e issuance of &$ Bo.'1d do exist,
!o.a'Ye l\a~ 01' have been peOOrmed in du~ and regular time and manner as ~ed by the
laws oft'he: Slate of California and tl1at the amO\.L'"\t of thIs :e.ond .. together-with aD other
lnd_s of tne Q1y, do;,s nel exceed any limit prescribed by any laws c{ the Stale of
California, .and is nO« in excess of u'e amount 01 Bonds permitted ~o be issued under the
L'1denture.
This Bo!Id sl\aIl not becomE valid or obligal Dry 10£ ar y puroose oc be entitled 10 tn.e:
benefits of the !nde~fuTe nntiI the certificate CJI autllenticaoon 2nd registration hereon shan have
been m.muoOy sizned by an aufhoriz«i :>fficer Of'sizna10<)' of tl1e TruslEe.
E>lubit A
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, .
IN WITh'ESS WHEREOF. the Oty oll'alo Alto !>as caused Ihls 1995 SerIes A Bond 10
be execuled In lts ~ ..,.od on lis beIIaJ( with 1M facsimile s'.gno tur., 01 its Mayo< ar>eI Direck>r
oll'lnatlce ar>eI its seal I. be reproduced hereo, and attested by !Ile lac.iIru1. sigtl.!u '" 01 its
ayDerll,aD os oflhe 1st diy 01 febtulU)'.l99S.
CfIYOFPALOALTO
By
By
ATTEST:
By --70', . ,Cltyae.::;k:------
EJdu'bit A.
-3-
Mayor
Direc10r of Finance .
[FORM OF T1tUSTEE'S CERTIFJCA TE OF AtlfHENTICA TION
AND REGlSfRA TION!
ThIs is one of the Bonds described in the withln-mentkma:! Indenture.
Date of Authentialtion:_~-,-__
.. Trustee
By
Exhibtt A
.~ .
Aulhoriza:! Signal"')'
. .
, ,
..
o
!FORM OF REVERSE SIDE OF ALL BONOS}
. The 1995 Series A Bond< "-'v. been issued by the CoW>dl of the O!y fur the purpos< of
financing additions,. bettennents~ extensions or .Improvements 10 LJw!. stornl and su.rfac~ water
system component of an Enterprise :OO\Sisfirlg of the ""'''ater .. 5el\-"err gas .. storm and :Su..'"face wa~er
and ele<:tric systoms of the City. The 1995 Series A !lend< are special obligations of the O!y
and are payahle.. as fo intuest thereon, principal froe.recf and any premIu.ms upon the
redemption of ""y tlterool, from the "Or rev,"ues of fr .. Enlerprise as redeliJ>ed in the General
Resoluoon and the Indenture 10 !ncIude the ...mace and stonn waf.,. system of the O!y (whlch
net rev""ues, as m<><e particularly redefined in the Get1eral Reso~~50n and the Jndenrur. are
therein and _ called the "Net Rev,"ues"). All of the Bonds are equally secured by a pledge
at, and charge and lien upon. all of Ille Net ~enues, and the Net Re vorues conshrub! • trust
lund for the securl!y and payment of the interest 0<1 and p<lncipal of an redemption pren-Jums,
if any. on all 01 the Bonds.. Additional series of Bonds payable from tne Net Revenues may be
jssued (>n a parny wiL" the 1995 Series A Bond< of this aolhorized issue, but only subject 10 L~
ccmditions and lim,itations (ontlined i.., the Inde..~e.
The interest OD and prind~I of ;md redemption premiums, .if arly~ on the Bvnds are
payable solely from the Net Revenues pled.1ted fur the payment lhereol; a.'ld the City is rot
obligaled 10 P"Y the Bonds excep! from tn. Net Revenues. The generu fund of the O!y is rot
liable. and the tun faith and credit or taxing power of the City is not pledged, for the payment
of the interest on 0< pdIldpal of or redempti<ln pc",ruurns, if .ny, on the Bond<. The Bonds are
not secu;ed by • legal 0< equllabJe pledge of, 0< charge, lien 0< encumbr.mce upo<1, any of the
property of tbe City or any of its inccme -or receipts. except the Net REvenues..
The City covenants that.. so long as any 01 the Bonds are out;tanding, it -v..'ill m ...
prescribe and coDect rates" f.ees and dwges in connection with tne services, fudliti6 ... water, gas
and elecl!ic energy furnIshed by the Enterprise so as 10 yield Net Revenues ., least eqyallO the
amounls Illereol prescnCed by the Indenture and suffidenllo pay the interesl on and pdndpal
of and redemption premiums. if "'y, on the Bond. In accordance with the provisions of the
lnderuure.
The 1995 Series A Eond. are $Ubject 10 mandatory red<mption itS a whole on 'my dal.
ar in part on any Interest P.ayment Dafe in iJ'Iverse order of matur..ly and ~y lot within a
.maturity~ to the extent of the Net Proceeds ~ hazard insu.~1? nol used to iIr.ptoV2, repair or
rebund the Enterprise ~ the Net Proceeds of condetnnation ilJ\-lUds received \\oith respect to the
Enterprise ., • redemption price equal 10 the prlncipal arnoun! of the 1995 Series A !lends plus
interesl accrued thereon to tlIe date fixed for redemption. witilout premium.
The 1995 Serlos A Bond, ma!urtng on or befo<e June I, 2004. are not otherwise subject 10
optional redempoon prior 10 maturity. The 1995 Series A Bonds maturing on or after 1=e I,
2OQ5.. are subject to redemption prior to theU': respective mafun"ty dafes, at the option 01 the
City. from any source of availahle funds,.as a whole on any date, Of' in part in inverse order of
maturities and by k:l« within.ill matu.!1ty"''Jn any Interest Payment [}-dfe OD or after June 1, 2004,.
al the following 10Sj.'fc"five redemption prices (expressed as perc""ta;;es of the pdndpal amount
of the 1995 Series A Bonds to be redeemed). plus accrued in~erC?St u'ereon to the date of
redemption:
E.rubit A
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r
......... :
.' --:
&>;!PQljl!Ion Periods
" June I, ~ tlu"ougll J.!.>y 31, 2005
1'.me 1,2005 tlu"ougll May)], :1{;%
Jun. I, 2006 a."ld tl>ere • .!ter
, '.
kdemp!ion Prkes
102.091>
1(;1"0
100.0
":,.'" :
" J
",.0::;
The ]995 Series It. Bonds "",turing on Jun. I, 2020, are subjecl to mand.lo:y redemption
In part, by 10\. OD June I, 2010, '00 on 0adI}un< I Iher~, al the yrindpal allY.>unt thereof
plus 3<crued Inlerest to tho dale of redemption thereof. .. .;thou' pcemium. from ma."ldalo:y
_, fund lNIalIm."ts wlUdl are required 10 be mad. in"atJ1Ounts Su£IXieru 10 redeem on june
J "of ",do y .. r the pri.'>Cipal .",.un! of such Bor.d. spedfied for each of the years below;
provided, however, L""I in reu of redemp!lon thereof sud> Bands rna, be purcIwed by the CiIy
pwsuanllo n.. lndtnfure,
2010
2011
2012
2013-
201C
2015
2016
2017
2011
2019
2020 (Maturllyi
. As provided in the Ind""lur~ rw!lco of redernpOOr. ,nall be mailed by III '" class mail no
less than thirty (3(l} nor more than sixJy (60) doy' prio< 10 11>. redemption date 10 Ille
respective OWIler of ,;my Bonds designated for .redemption at their address appearing on the
Band regislratiOn books malnfained by the Trustee, but failure 10 mail or !o receive sud> nooc..
or ally a.recl in the notice 50 Jnailed, ,!laD not affect Ihe suflicienq of the proceeds for
redemption.
" If this Band is called /or redemp600 and paymenl is duJy provided therefor as spedfied
in the Indenfl.l1e. inferest shall cease f;) acrrlole hereon from and after the date lixed fOf'
redemplion.
The 1995 SerIes A Bonds are issuable as luDy registered IIonds, wlthoul coupons, in
deooJ1'jnations of 55,000 or any integral multiple tnereci. Subject Co the liIru"'"tafions and
conditions and upon paymenl of the cl>arges, if any, as provided in Ill. Indentur., Band. ",ay
be _.hanged fo< ~ Hk. aggregate principal amount of 1995 Series A Bands of other auu.or.zed
denominations and ofille same maturity.
This &nd Is transferal>le by the Owner hereof. in person. 0< by "is attorney duly
aufl'lOrlzed in -wniting.. at said office 0( ~e Trustee in . California.. but only in the
"""",er and 5ubject 10 the limitations provided in the Ind enluTe, and "POD surrender and
cancellation of Ws 8ond" Upon registration of such transfer a new &nd or Bands, of .ny
auffioriZed denomination or denominations,. for tlle same aggregate ptircipa! aID01lJ'J and 01 the
same maturity will be issued 10 the transferee in exchange herefo<.
The City and the frus! .. may Ireat the Owner her· f os !he absolute OWD€r !I,reo{ for
all purposes, and the City and the Trustee .b.1 no! be affected by any noticE 10 rhe contrary.
E'du""bit A
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: .....
1M Indenture ""1 be iunended "it.~out the COl'.;;e.">I ol. tile Owr,ers ol th. Sonds 10 th.
~nl sellorth in the Inden~
. ABBREVlA noNS
The foDowinS abbreviations, when US<d in the Ir.scrip&n on Ill. face ol!he .. i!hin Bond,
shall be construed .5 o,ough they were writteu out in full accordin~ 10 applicable laws 0<
regWa6ons:
TEN COM
TENENT
IT TEN
COlI1IDOn
as tenants In c~nunon
as tenants by the entiroeties
as join! tefl.ants .,"'iU\ right of survivorshlp and not as tu.ants in
lJNlFGIFT MIN ACT -Cll stodian
(Cu.t) (Minor)
undo> Uniform Gifts 10 M1,.,,.. Art
(State)
UN1F 11lANS MIN ACI ~ Clls1od.ian
!Cust) (Mi."cc)
lIDder Uniform Transfers to Minors Art
\Slate'
ADDITIONAL ABBREVIATIONS MAY AlSO BE USED TrlOl!CH NOT IN THE LIST
ABOVE.
Exhibit A
-7 -
•
> .
for" value recand the undersigned lIen?by sens, assigns and tr.al'lsfers unto
(Name. .Addreos and Tax Ident!licaoon Of Social Security Number of Assignee} the within
regfshred Bond and llereby ine70<:,I'b1y c.ollstHutefs) and appolnt(s)
attorney ...
I" tr2nsfor the .. me on the bond reg;w.tion books of 11>. Trusl.e wi!h fun power of
suboIltuoon In the premlses. .
Doted:
Note.; The signature(:.) on this A5sign..--neru: must
con-esponcI with the r.ame\sl as _ on !he !a<e
of the within Bond in every partiallar without
.7ienDon or enIarg-ement or .any changi!
w'hatsoever~
E"}u"b~ A
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