HomeMy WebLinkAboutD-3 - Staff Report - POB Validation ProceedingsSCHEDULED ITEM
D-3
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: DECEMBER 16, 2019
SUBJECT: AUTHORIZATION TO FILE VALIDATION ACTION AND AUTHORIZATION OF
ISSUANCE OF PENSION OBLIGATION BONDS – “RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF AZUSA AUTHORIZING THE ISSUANCE OF BONDS
TO REFUND CERTAIN PENSION OBLIGATIONS OF THE CITY, APPROVING THE
FORM AND AUTHORIZING THE EXECUTION OF A TRUST AGREEMENT AND
PURCHASE CONTRACT, AUTHORIZING JUDICIAL VALIDATION PROCEEDINGS
RELATING TO THE ISSUANCE OF SUCH BONDS AND APPROVING
ADDITIONAL ACTIONS RELATED THERETO.”
BACKGROUND:
On December 2, 2019 the City Council retained UFI Financial Solutions as municipal advisor and Best
Best & Krieger to serve as bond counsel, disclosure counsel and litigation counsel in connection with
the proposed issuance of Pension Obligation Bonds (the “POBs”). The City Council has determined to
issue POBs as a measure to address the City’s $80.6 million unfunded accrued liability (“UAL”) for
employee pensions provided through the California Public Employees’ Pension System (“CalPERS”).
The first step required in the issuance of POBs is to obtain a judicial validation. California public entities
do not have specific authority to issue POBs. The California Constitution requires municipalities to
obtain a two-third approval of the electorate in order to issue debt obligations payable from the general
fund of the entity. However, the local agency refunding law authorizes all local public entities in
California to refund prior bonds or “other evidence of indebtedness.”
Obligations to the CalPERS pension system are treated as a “debenture”; and therefore, can be
refunded by Pension Obligation Bonds under the local agency refunding law.
In California, POBs have generally been designed to be valid without voter approval, under a judicially
created exception to the State Constitutional debt limitation. In order to obtain authorization to issue
POBs, the City is required to file a validation action with the Los Angeles County Superior Court.
APPROVED
CITY COUNCIL
12/16/2019
Initiate POB Validation Proceedings
December 16, 2019
Page 2
Unless challenged, the judicial validation proceedings are largely an administrative matter, which will
be handled by the City Attorney, Best Best & Krieger.
Before the validation action is filed, the City must first adopt a resolution: 1) authorizing the City to
issue Pension Obligation Bonds (POBs) to refund its CalPERS Unfunded Accrued Liability (UAL) and
to pay associated costs of issuance and 2) authorizing judicial validation proceedings related to the
issuance of such POBs.
The validation process and requirements for issuing the POBs are discussed further in the report.
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1) Adopt Resolution 2019-C64 authorizing the City to issue Pension Obligation Bonds to refund its
CalPERS Unfunded Accrued Liability in an amount not-to-exceed $82 million and to pay
associated costs of issuance, and authorizing the City to file judicial validation proceedings
related the issuance of such Pension Obligation Bonds.
ANALYSIS:
In order to authorize the sale of the bonds, staff must provide a not-to-exceed amount for the bonds. As
of the June 30, 2018 actuarial valuation, the City had a total UAL of $80.6 million, comprised of
approximately $41.975 million for Miscellaneous employees and approximately $38.614 million for
Safety employees. UFI and City staff will continue to work together to evaluate the most efficient and
beneficial approach to refunding all or a portion of the City’s UAL through issuance of the POBs. Prior
to finalizing issuance of POBs, the City Council will have the opportunity to review and approve the
structure of paying down the City’s UAL and issuance amount of the POBs.
Approval of Legal Documents—Trust Agreement and Bond Purchase Agreement.
Upon the successful solicitation of underwriting proposals, the POBs will be sold by the City to an
Underwriter, pursuant to a Bond Purchase Agreement in substantially the form attached. Upon the
pricing of the POBs, the Bond Purchase Agreement will be finalized to reflect the terms and conditions
upon which the POBs will be sold. The POBs will be issued pursuant to a Trust Agreement to be
entered between the City and Wilmington Trust, as Trustee, in substantially the form attached. The
Trust Agreement will be finalized following the pricing of the POBs and execution of the Bond
Purchase Agreement, to reflect the final terms of the POBs.
SB 450 Good Faith Estimates
In accordance with California Government Code Section 5852.1, good faith estimates with respect to the
POBs are set forth in an attachment to this Staff Report.
Initiate POB Validation Proceedings
December 16, 2019
Page 3
Validation Proceedings
The validation proceedings require a 7-step sequential process, which can take approximately 90 days or
more in Los Angeles County. The process and estimated timeline are outlined below:
1. City Council passes a resolution authorizing the sale of pension obligation bonds*
2. File Validation Action with LA County Superior Court
3. Receive Order for Publication of Summons from the Court – 1-2 weeks
4. Publication in San Gabriel Tribune for 21 consecutive days
5. Waiting period to file petition – minimum of 10 days, typically 2-3 weeks for LA County
6. Clerk enters hearing for a default judgement, schedules a hearing - 15 days
7. Hearing for default judgement
8. 30-day Appeal Period
*Legal documents must be in substantially final form and the City must determine a not-to-
exceed par value ($82 million).
Bonds can be sold after the 30-day Appeal Period has ended and the City Council approves the final
issuance of bonds.
Preliminary Official Statement
Assuming the City Council authorizes issuance of the POBs, the financing team and City staff will work
together concurrently with the prosecution of the validation proceeding to prepare a Preliminary Official
Statement (“POS”) for the POBs. The POS is the offering document with respect to the POBs and, if
the POBs will be sold by public offering, the POS must contain all material information to enable
investors to determine whether to purchase POBs. If the POBs will be sold by public offering, the POS
will likely be presented for approval by the City Council sometime in February or March 2020. If City
Council approval is given at that time, the POBs could be issued a few weeks afterwards.
Prepared by: Reviewed and Approved:
Talika M. Johnson Sergio Gonzalez
Director of Administrative Services City Manager
Attachments:
1) Resolution No. 2019-C64
2) Good Faith Estimates
3) Form of Trust Agreement
4) Form of the Bond Purchase Agreement
5) Bond Counsel Agreement
45635.01436\32552332.2 1
RESOLUTION NO. 2019-C64
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA
PROVIDING FOR THE ISSUANCE OF ONE OR MORE SERIES OF
CITY OF AZUSA TAXABLE PENSION OBLIGATION BONDS, AND
APPROVING THE FORMS OF AND AUTHORIZING THE EXECUTION
AND DELIVERY OF AN INDENTURE RELATING THERETO, AND
AUTHORIZING A VALIDATION ACTION AND AUTHORIZING
CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City Council of the City of Azusa (the “City Council” and the “City”,
respectively) adopted a retirement plan pursuant to the Public Employees’ Retirement Law,
commencing at Section 20000 of the Government Code of the State of California, as amended
(the “PERS Law”);
WHEREAS, among other things, the PERS Law obligates the City (1) to amortize the
unfunded accrued actuarial liability to the California Public Employees’ Retirement System
(including any successor system established by the State of California, (the “State Retirement
System”), with respect to pension benefits for its employees who are members thereof; and (2) to
make appropriate funds to provide annual contributions to the State Retirement System to fund
pension benefits for said employees;
WHEREAS, the obligation of the City to pay its unfunded accrued actuarial liability to
the State Retirement System and its normal annual contribution to the State Retirement System
(collectively, the “PERS Obligation”) is evidenced by a contract between the City and the State
Retirement System, dated as of December 20, 1948, as amended thereafter from time to time
(collectively, the “PERS Contract”);
WHEREAS, the City desires to authorize the issuance of its City of Azusa 2020 Taxable
Pension Obligation Bonds (the “Bonds”), in a principal amount not to exceed $82,000,000,
pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of
the California Government Code, commencing with section 53570 of said Code (the “Bond
Law”), for the purpose of refunding all or a portion of the City’s obligation to PERS, as
evidenced by the PERS Contract, to pay the unfunded accrued actuarial liability of the City with
respect to pension benefits under the Public Employees’ Retirement Law, and paying the costs of
issuance of the Bonds;
WHEREAS, the City desires to authorize the issuance of additional pension obligation
bonds (the “Additional Bonds”) for the purpose of refunding any additional PERS Obligations,
in the future from time to time;
WHEREAS, there has been presented to this meeting the form of an Indenture proposed
to be entered into by and between the City and Wilmington Trust National Association, as trustee
(the “Trustee”), relating to the Bonds (the “Indenture”);
WHEREAS, there has been presented to this meeting the form of a Bond Purchase
Agreement, proposed to be entered into by and between the City and an underwriter to be
selected at a later date, relating to the sale of the Bonds; and
ATTACHMENT 1
45635.01436\32552332.2 2
WHEREAS, this Council desires to authorize and direct the execution of certain
documents and the issuance of the Bonds; and
WHEREAS, the City has full legal right, power and authority under the Constitution and
the laws of the State of California to enter into the transactions hereinafter authorized;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY
THE CITY COUNCIL OF THE CITY OF AZUSA AS FOLLOWS:
Section 1. Recitals. The foregoing recitals are true and correct and this Council
hereby so finds and determines.
Section 2. Findings. The Council hereby finds and declares that the issuance of the
Bonds to refund the obligation of the City under the PERS Contract, paying the costs of issuance
for the Bonds, and the other actions contemplated hereby are in the best interests of the City and
are expected, based on investment and other assumptions, to result in significant savings to the
taxpayers of the City.
Section 3. Issuance of Bonds. The Council hereby authorizes and approves the
issuance of the Bonds to refund the obligation of the City under the PERS Contract and the
issuance of Additional Bonds from time to time to refund any additional PERS Obligations, and
the Council hereby authorizes and directs any of the Mayor, the Mayor Pro Tem, the City
Manager, and the Director of Administrative Services of the City (each, an “Authorized
Officer”) to execute the Bonds and the City Clerk of the City (the “City Clerk”) to attest the
signatures thereto and to cause the Bonds to be authenticated and delivered in accordance with
the Indenture; provided, that the aggregate principal amount of the Bonds (which in no event shall
exceed eighty two million dollars ($82,000,000) shall not exceed the sum of the unpaid principal
amount of the PERS Obligation, plus the underwriter’s discount on the Bonds, and plus the
original issue discount (if any) on the Bonds, and plus the costs of issuance of the Bonds
(including any bond insurance premiums and administrative cost related to the Bonds); and
provided further, that the interest rate on the Bonds shall not exceed five percent (5%); and
provided further, that the Bonds shall mature not later than thirty (30) years from their date of
issuance. The Bonds shall be in substantially the forms set forth in the Indenture, with such
changes therein, deletions therefrom and additions thereto as an Authorized Officer, or said
officer’s designee, shall approve as provided herein, such approval to be conclusively evidenced
by the execution and delivery of the Bonds. Any Bonds may (as determined by an Authorized
Officer or said officer’s designee), be issued as fixed rate bond, auction rate securities, variable
rate bonds, indexed notes, current interest bonds, deferred interest bonds, capital appreciation
bonds, convertible capital appreciation bonds, embedded cap bonds, equity participation bonds
or synthetic or hedged fixed rate bonds (or any combination of the foregoing) and may have
applicable call features, base rates, variable rate determination methods, index maturities,
spreads, spread multipliers, authorized denominations, payment date, applicable indexes and
other variable items related thereto and may use credit enhancement (including, but not limited
to, bond insurance, letters of credit and surety bonds). The City is obligated to satisfy its
obligations under the Bonds from any lawfully available funds of the City.
Section 4. The Indenture. The City is hereby authorized to enter into the Indenture
with the Trustee, and an Authorized Officer, or said officers, is hereby authorized and directed to
execute and deliver the Indenture on behalf of the City, which shall be in substantially the form
45635.01436\32552332.2 3
presented to this meeting, with such changes therein, deletions therefrom and additions thereto as
an Authorized Officer, or said officer’s designee, shall approve (but consistent with the authority
granted to an Authorized Officer, or said officer’s designee, in Section 3 hereof including, but
not limited to, additions necessary for the issuance of the types of bonds referred to in Section 3
hereof) in consultation with the City Attorney (“City Attorney”) and Best Best & Krieger LLP,
Bond Counsel for the Bonds, and such approval shall be conclusively evidenced by the execution
and delivery of the Indenture. Pursuant to the terms of the Indenture, any Additional Bonds shall
be issued pursuant to supplemental indentures, subject to the limitations contained herein and in
the Indenture.
Section 5. Bond Purchase Agreement. The City Council approves and authorizes
the issuance and sale of the Bonds by negotiation with the Underwriter pursuant to the Bond
Purchase Agreement between the City and the Underwriter in the form presented to the City
Council at the meeting at which this Resolution is adopted, together with any changes therein or
additions thereto which are deemed advisable by the authorized officers upon consultation with
Bond Counsel and the Municipal Advisor.
Section 6. Financing Participants. Urban Futures, Incorporated is hereby appointed
to act as municipal advisor for the Bonds. Best Best & Krieger LLP is hereby appointed as Bond
Counsel and Disclosure Counsel for the Bonds. The City will appoint an underwriter for the
Bonds after a review of proposals from various underwriting firms to be approved by the City
Council at a later date.
Section 7. Validation Action. The officers and agents of the City are, and each of
them hereby is, authorized and directed to do any and all things, including bringing, a validation
action under Section 860 of the California Code of Civil Procedure, and to execute and deliver
any and all documents which they or any of them deem necessary or advisable in order to
consummate the transactions contemplated by this resolution, the Indenture and the Bonds, the
Bonds Purchase Agreement, and otherwise to carry out, give effect to and comply with the terms
and intent of this resolution, and all such actions heretofore taken by such officers are hereby
ratified, confirmed and approved.
Section 8. Official Actions. The Authorized Officers and any and all other officers of
the City are hereby authorized and directed, for and in the name and on behalf of the City, to do
any and all things and take any and all actions, which they, or any of them, may deem necessary or
advisable in the issuance, sale and delivery of the Bonds. Whenever in this Resolution any officer
of the City is directed to execute or countersign any document or take any action, such execution,
countersigning or action may be taken on behalf of such officer by any person designated by such
officer to act on his or her behalf in the case such officer is absent or unavailable.
45635.01436\32552332.2 4
Section 9. Effective Date. This resolution shall take effect immediately upon its
passage.
PASSED AND ADOPTED this ___ day of December, 2019.
____________________________________
Joseph Romero Rocha, Mayor
APPROVED AS TO FORM:
______________________________________
Marco Martinez, City Attorney, BBK Law LLP
ATTEST:
______________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
45635.01436\32552332.2 5
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2019-C64 was duly adopted
by the City Council of Azusa at a regular meeting thereof, held on the ___ day of December,
2019, by the following vote of Council:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
______________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
SB 450 GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in
accordance with California Government Code Section 5852.1. Such good faith estimates have
been provided to the City by Urban Futures Inc, the City’s Municipal Advisor (the “Municipal
Advisor”).
Principal Amount. The Municipal Advisor has informed the City that, based on the
City’s financing plan and current market conditions, its good faith estimate of the aggregate
principal amount of the Bonds to be sold is $81,340,000 (the “Estimated Principal Amount”).
True Interest Cost of the Bonds. The Municipal Advisor has informed the City that,
assuming that the respective Estimated Principal Amount of the Bonds is sold, and based on
market interest rates prevailing at the time of preparation of such estimate, its good faith
estimate of the true interest cost of the Bonds, which means the rate necessary to discount the
amounts payable on the respective principal and interest payment dates to the purchase price
received for the Bonds, is 3.7%.
Finance Charge of the Bonds. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
finance charge for the Bonds, which means the sum of all fees and charges paid to third parties
(or costs associated with the Bonds), is $750,091.
Amount of Proceeds to be Received. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
amount of proceeds expected to be received by the City for sale of the Bonds, less the finance
charge of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded
with proceeds of the Bonds, is $80,589,909.
Total Payment Amount. The Municipal Advisor has informed the City that, assuming
that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates
prevailing at the time of preparation of such estimate, its good faith estimate of the total
payment amount, which means the sum total of all payments the City will make to pay debt
service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with
the respective proceeds of the Bonds, calculated to the final maturity of the Bonds, is
$117,113,766.
The foregoing estimates constitute good faith estimates only and are based on market
conditions prevailing at the time of preparation of such estimates. The actual principal amount
of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the
amount of proceeds received therefrom and total payment amount with respect thereto may
differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being
different than the date assumed for purposes of such estimates, (b) the actual principal amount
of Bonds sold being different from the respective Estimated Principal Amount, (c) the actual
ATTACHMENT 2
amortization of the Bonds being different than the amortization assumed for purposes of such
estimates, (d) the actual market interest rates at the time of sale of the Bonds being different
than those estimated for purposes of such estimates, (e) other market conditions, or
(f) alterations in the City’s financing plan, or a combination of such factors. The actual date of
sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City
based on various factors. The actual interest rates borne by the Bonds will depend on market
interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend,
in part, on market interest rates at the time of sale thereof. Market interest rates are affected by
economic and other factors beyond the control of the City.
45635.01436\32560729.1
______________________________________________________________________________
INDENTURE
by and between
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee,
and the
CITY OF AZUSA
for the
CITY OF AZUSA
TAXABLE PENSION FUNDING BONDS, SERIES 2020
Executed and Entered Into as of __________, 2020
______________________________________________________________________________
ATTACHMENT 3
TABLE OF CONTENTS
Page
45635.01436\32560729.1 -i-
ARTICLE I DEFINITIONS; EQUAL SECURITY ................................................................ 2
Section 1.01 Definitions.................................................................................................. 2
Section 1.02 Equal Security .......................................................................................... 16
ARTICLE II ISSUANCE OF THE SERIES 2020 BONDS; GENERAL BOND
PROVISIONS .................................................................................................... 16
Section 2.01 Authorization and Purpose of and Obligation Under the Series
2020 Bonds .............................................................................................. 16
Section 2.02 Assignment and Pledge for the Series 2020 Bonds ................................. 17
Section 2.03 Terms of the Series 2020 Bonds .............................................................. 17
Section 2.04 Redemption of the Series 2020 Bonds ..................................................... 18
Section 2.05 Procedure for the Issuance of the Series 2020 Bonds; Application
of Proceeds of the Series 2020 Bonds...................................................... 20
Section 2.06 Form of the Series 2020 Bonds ................................................................ 20
Section 2.07 Execution of the Bonds ............................................................................ 20
Section 2.08 Transfer and Payment of the Bonds; Transfer Restrictions ..................... 21
Section 2.09 Exchange of the Bonds ............................................................................ 21
Section 2.10 Bond Registration Books ......................................................................... 22
Section 2.11 Mutilated, Destroyed, Stolen or Lost Bonds ............................................ 22
Section 2.12 Temporary Bonds ..................................................................................... 22
Section 2.13 Validity of the Bonds ............................................................................... 23
Section 2.14 Book-Entry System for the Series 2020 Bonds ....................................... 23
Section 2.15 Bond Insurer Provisions. [To Come] ....................................................... 24
Section 2.16 [Bond Insurer as Third Party Beneficiary ................................................ 24
ARTICLE III ISSUANCE OF ADDITIONAL BONDS ......................................................... 25
Section 3.01 Conditions for the Issuance of Additional Bonds .................................... 25
Section 3.02 Procedure for the Issuance of Additional Bonds ..................................... 26
ARTICLE IV FUNDS AND ACCOUNTS .............................................................................. 26
Section 4.01 Deposits to Bond Fund ............................................................................ 26
Section 4.02 Allocation of Money in the Bond Fund ................................................... 27
Section 4.03 Deposit and Investments of Money in Accounts and Funds .................... 28
Section 4.04 Establishment of Deposit Fund and Transfers Therefrom ....................... 29
TABLE OF CONTENTS
(continued)
Page
45635.01436\32560729.1 -ii-
ARTICLE V COVENANTS OF THE CITY .......................................................................... 29
Section 5.01 Punctual Payment and Performance ........................................................ 29
Section 5.02 Extension of Payment of the Bonds ......................................................... 29
Section 5.03 Accounting Records and Reports ............................................................. 29
Section 5.04 Prosecution and Defense of Suits ............................................................ 30
Section 5.05 Continuing Disclosure ............................................................................. 30
Section 5.06 Waiver of Laws ........................................................................................ 30
Section 5.07 Further Assurances................................................................................... 30
Section 5.08 Reporting Requirements .......................................................................... 30
ARTICLE VI THE TRUSTEE ................................................................................................. 31
Section 6.01 The Trustee .............................................................................................. 31
Section 6.02 Liability of the Trustee ............................................................................. 32
Section 6.03 Compensation and Indemnification of the Trustee .................................. 35
ARTICLE VII AMENDMENT OF THE INDENTURE .......................................................... 35
Section 7.01 Amendment of the Indenture ................................................................... 35
Section 7.02 Disqualified Bonds................................................................................... 37
Section 7.03 Endorsement or Replacement of Bonds After Amendment .................... 37
Section 7.04 Amendment by Mutual Consent .............................................................. 37
Section 7.05 [Bond Insurer Notice and Consent ........................................................... 37
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF HOLDERS .......................... 38
Section 8.01 Events of Default ..................................................................................... 38
Section 8.02 Remedies for Events of Default ............................................................... 38
Section 8.03 Application of Funds Upon Acceleration ................................................ 39
Section 8.04 Institution of Legal Proceedings by the Trustee ...................................... 39
Section 8.05 Non Waiver .............................................................................................. 39
Section 8.06 Actions by the Trustee as Attorney in Fact .............................................. 40
Section 8.07 Remedies Not Exclusive .......................................................................... 40
Section 8.08 Limitation on Holders’ Right to Sue ........................................................ 40
Section 8.09 Absolute Obligation of the City ............................................................... 40
Section 8.10 [Rights of the Bond Insurer...................................................................... 41
ARTICLE IX DEFEASANCE ................................................................................................. 41
Section 9.01 Discharge of the Bonds ............................................................................ 41
TABLE OF CONTENTS
(continued)
Page
45635.01436\32560729.1 -iii-
Section 9.02 Unclaimed Money .................................................................................... 42
ARTICLE X MISCELLANEOUS .......................................................................................... 43
Section 10.01 Benefits of the Indenture Limited to Parties ............................................ 43
Section 10.02 Successor Is Deemed Included In All References To Predecessor .......... 43
Section 10.03 Execution of Documents by Holders ....................................................... 43
Section 10.04 Waiver of Personal Liability .................................................................... 43
Section 10.05 Acquisition of Bonds by the City............................................................. 43
Section 10.06 Notice to Holders ..................................................................................... 44
Section 10.07 Content of Certificates ............................................................................. 44
Section 10.08 Accounts and Funds; Business Days ....................................................... 44
Section 10.09 Addresses of Notice Parties ..................................................................... 44
Section 10.10 Article and Section Headings, Singular and Plural Forms, Gender
and References ......................................................................................... 45
Section 10.11 Partial Invalidity....................................................................................... 45
Section 10.12 Execution in Counterparts ........................................................................ 45
Section 10.13 Governing Law ........................................................................................ 46
APPENDIX A FORM OF STANDARD BOND .................................................................. A-1
APPENDIX B FORM OF CAPITAL APPRECIATION BOND ..........................................B-1
APPENDIX C FORM OF CONVERTIBLE CAPITAL APPRECIATION BOND .............C-1
APPENDIX D INTEREST RATE AND PAYMENT DATES, PRINCIPAL PAYMENT
DATES, MANDATORY AND OPTIONAL REDEMPTION
PROVISIONS FOR 2020 BONDS .............................................................. D-1
1
INDENTURE
The Indenture (the “Indenture”), executed and entered into as of __________, 2020, by
and between WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking
association duly organized and existing under the laws of the United States of America, as
Trustee (the “Trustee”), and the CITY OF AZUSA, California, a municipal corporation
organized and validly existing under the Constitution and laws of the State of California (the
“City”);
W I T N E S S E T H:
WHEREAS, the City is obligated by Sections 20000 et seq. of the California Government
Code (the “PERS Retirement Law”), to make payments to the California Public Employees’
Retirement System, or any successor system established by the State (“PERS”) relating to
pension benefits accruing to City employees who are PERS members;
WHEREAS, the City has entered into a contract with PERS dated December 20, 1948, as
heretofore and hereafter amended from time to time (the “PERS Contract”), evidencing the
City’s obligation to pay PERS the City’s unfunded accrued actuarial liability and its normal
annual contribution to PERS; and
WHEREAS, the City’s obligation to PERS as evidenced by the PERS Contract is a debt
obligation of the City imposed by law; and
WHEREAS, the City is authorized pursuant to Articles 10 and 11 (commencing with
Section 53570) of Chapter 3 of Division 2 of Title 5 of the Government Code of the State of
California (the “Act”) to issue refunding bonds for the purpose of refunding any evidence of
indebtedness of the City; and
WHEREAS, for the purpose of refunding the City’s obligations to PERS evidenced by
the PERS Contract, the City has determined to issue its City of Azusa Taxable Pension Funding
Bonds, Series 2020, in the aggregate principal amount of $__________ (the “Series 2020 Bonds”
and, together with Additional Bonds, the “Bonds”) under the Act in the form and manner
provided herein; and
WHEREAS, in order to provide for the execution, authentication and delivery of the
Bonds and to establish and declare the conditions and terms under which the Bonds will be
issued and to secure the payment of the principal, Accreted Value or redemption price of and the
interest on the Bonds, the City has authorized the execution and delivery of the Indenture; and
WHEREAS, the City has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the City and authenticated and delivered by the
Trustee hereunder, the legal, valid and binding obligations of the City payable in accordance
with their terms, and to constitute the Indenture a valid and binding agreement of the parties
hereto for the uses and purposes herein set forth in accordance with its terms, have been done
and taken, and the execution and delivery of the Indenture has been in all respects duly
authorized;
45635.01436\32560729.1 2
NOW, THEREFORE, THE INDENTURE WITNESSETH, that in order to secure the
payment of the principal, Accreted Value or redemption price of and the interest on all Bonds at
any time issued and outstanding hereunder according to their tenor, and to secure the
performance and observance of all agreements and covenants contained herein and therein, and
to declare the conditions and terms upon and subject to which the Bonds will be issued, delivered
and received, and in consideration of the premises and of the mutual covenants contained herein
and of the purchase and acceptance of the Bonds by the respective registered holders thereof, and
for other valuable consideration, the receipt of which is hereby acknowledged, the City hereby
agrees and covenants with the Trustee, for the benefit of the respective registered holders from
time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in
this section shall for all purposes hereof and of any supplemental indenture and of any certificate,
opinion, request or other document mentioned herein or therein have the meanings defined
herein:
Accreted Value
The term “Accreted Value” means with respect to any Capital Appreciation Bond or
Convertible Capital Appreciation Bond, as of any date of calculation, the sum of the Principal
Amount thereof and the interest accrued thereon to such date of calculation, compounded from
the date of initial issuance at, (i) in the case of Capital Appreciation Bonds, the stated yield to
maturity thereof, and (ii) in the case of Convertible Capital Appreciation Bonds, the stated yield
to the Conversion Date thereof, assuming in any such semiannual period that such Accreted
Value increases in equal daily amounts on the basis of a 360-day year comprised of twelve 30-
day months.
Act
The term “Act” means Articles 10 and 11 (commencing with Section 53570) of Chapter 3
of Part 1 of Division 2 of Title 5 of the Government Code of the State.
Actuary’s Report
The term “Actuary’s Report” means a report signed by an Independent Actuary.
Administrative Expense Account
The term “Administrative Expense Account” means the account by that name established
pursuant to Section 4.02.
Authorized Denominations
The term “Authorized Denominations” means (a) as to Bonds issued as Fixed Rate
Bonds, $5,000 principal amount or any integral multiple thereof; (b) as to Bonds issued as
45635.01436\32560729.1 3
Capital Appreciation Bonds, $5,000 Maturity Amount or any integral multiple thereof; (c) as to
Bonds issued as Convertible Capital Appreciation Bonds, $5,000 Conversion Date Amount or
any integral multiple thereof; and (d) any other principal amount or integral multiple thereof as
provided in a Supplemental Indenture.
Beneficial Owner
The term “Beneficial Owner” means, Cede & Co., as the beneficial owner of each such
Bond, determined under the rules of DTC.
Bond Counsel
The term “Bond Counsel” means Best Best & Krieger LLP or another attorney or firm of
attorneys of recognized national standing in the field of law relating to municipal securities
selected by the City.
Bond Fund
The term “Bond Fund” means the Bond Fund established in Section 4.02.
Bond Insurer
The term “Bond Insurer” means the issuer, if any, of the Insurance Policy on the Bonds,
but only so long as the Insurance Policy is then in effect.
Bonds, Series 2020 Bonds, Additional Bonds, Serial Bonds, Term Bonds
The term “Bonds” means the Series 2020 Bonds and all Additional Bonds.
The term “Series 2020 Bonds” means the Bonds designated the “City of Azusa Taxable
Pension Funding Bonds, Series 2020” authorized to be issued pursuant hereto and at any time
Outstanding hereunder that are executed, authenticated, issued and delivered in accordance with
Article II.
The term “Additional Bonds” means all Bonds of the City authorized to be issued
pursuant hereto and at any time Outstanding hereunder that are executed, authenticated, issued
and delivered in accordance with Article III.
The term “Serial Bonds” means Bonds for which no Sinking Fund Account Payments are
provided.
The term “Term Bonds” means Bonds which are payable on or before their specified
maturity date or dates from Sinking Fund Account Payments established for that purpose and
calculated to retire such Bonds on or before their specified maturity dates.
45635.01436\32560729.1 4
Bond Year
The term “Bond Year” means the twelve-month period ending on July 1 of each year to
which reference is made. The first Bond Year shall commence on the date the Series 2020
Bonds are originally delivered and shall end on July 1, ____.
Business Day
The term “Business Day” means any day other than (i) a Saturday or a Sunday, (ii) a day
on which banking institutions in the city in which the Corporate Trust Office of the Trustee is
located or banking institutions in New York, New York, are authorized or required by law to be
closed, or (iii) a day on which the New York Stock Exchange is closed.
Capital Appreciation Bonds
The term “Capital Appreciation Bonds” means those Bonds issued in Maturity Amounts
of $5,000 or any integral multiple thereof, which by their terms accrete interest on a compounded
basis payable, together with their Principal Amount, solely at maturity or on a Redemption Date,
if any.
Certificate of the City
The term “Certificate of the City” means an instrument in writing signed by a City
Representative.
City
The term “City” means the City of Azusa, a municipal corporation organized and validly
existing under the Constitution and laws of the State of California.
City Manager
The term “City Manager” shall mean the person who is the duly appointed and acting
City Manager of the City.
City Representative
The term “City Representative” means the Mayor, the Mayor Pro Tem, the City Manager,
the Director of Administrative Services, or any other person authorized by the City in a written
order or resolution to perform an act or sign a document on behalf of the City for the purposes
hereof.
Closing Date
The term “Closing Date” means the date on which the Bonds are initially delivered to the
Purchaser against payment by the Purchaser to the Trustee of the purchase price thereof.
45635.01436\32560729.1 5
Conversion Date
The term “Conversion Date” means the date set (a) in Appendix D hereto, with respect to
the Series 2020 Bonds, if any, that are Convertible Capital Appreciation Bonds, and (b) in the
corresponding exhibit of any Supplemental Indenture pursuant to which Convertible Capital
Appreciation Bonds are subsequently issued
Conversion Date Amount
The term “Conversion Date Amount” means the Accreted Value of any Convertible
Capital Appreciation Bond on its Convertible Conversion Date.
Convertible Capital Appreciation Bonds
The term “Convertible Capital Appreciation Bonds” means those Bonds constituting
convertible capital appreciation bonds issued as serial and term bonds with Accreted Values at
the Conversion Date for such Bonds in integral multiples of $5,000.
Corporate Trust Office
The term “Corporate Trust Office” means the principal corporate trust office of the
Trustee in Los Angeles, California; provided, that the Trustee may designate in writing to the
City and the Holders such other office or agency from time to time for purposes of registration,
transfer, exchange, payment or redemption of any of the Bonds.
Costs of Issuance
The Term “Costs of Issuance” means all items of expense directly or indirectly payable
by or reimbursable to the City and related to each Series of Bonds, including, but not limited to,
costs of preparation and reproduction of documents, costs of rating agencies and costs to provide
information required by rating agencies, filing and recording fees, initial fees and charges of the
Trustee, legal fees and charges, fees and disbursements of consultants and professionals, fees and
expenses of the underwriter, fees and charges for preparation, execution and safekeeping of the
related Series of Bonds, and any other cost, charge or fee in connection with the original issuance
of the related Series of Bonds.
Director of Administrative Services
The term “Director of Administrative Services” means the Director of Administrative
Services of the City.
DTC
The term “DTC” means The Depository Trust Company and any successor to it or any
nominee of it.
45635.01436\32560729.1 6
Event of Bankruptcy
The term “Event of Bankruptcy” means the filing of a petition in bankruptcy or the
commencement of a proceeding under the United States Bankruptcy Code or any other
applicable law concerning insolvency, reorganization or bankruptcy by or against the City.
Event of Default
The term “Event of Default” means an event described as such in Section 8.01.
Federal Securities
The term “Federal Securities” means
(1) Cash (insured at all times by the Federal Deposit Insurance Corporation),
(2) Obligations of, or obligations guaranteed as to principal and interest by,
the U.S. or any agency or instrumentality thereof, when such obligations are backed by
the full faith and credit of the U.S. If a Federal Security is used for defeasance of the
Bonds, it must provide for the timely payment of principal and interest and cannot be
callable or prepayable prior to maturity or earlier redemption of the Bonds (excluding
securities that do not have a fixed par value and/or whose terms do not promise a fixed
dollar amount at maturity or call date).
Fiscal Year
The term “Fiscal Year” means the twelve month period terminating on June 30 of each
year, or any other annual accounting period hereafter designated by the City as its Fiscal Year
under applicable law.
Fitch
The term “Fitch” means Fitch, Inc., a corporation duly organized and existing under the
laws of the State of New York, and its successors and assigns, except that if such entity shall be
dissolved or liquidated or shall no longer perform the services of a municipal securities rating
agency, then the term “Fitch” shall be deemed to refer to any other nationally recognized
municipal securities rating agency selected by the City and satisfactory to and approved by the
Bond Insurer.
Fixed Rate
The term “Fixed Rate” means a rate of interest that does not change during a specific
term, without adjustment, resetting or variation due to the effects of marketing, remarketing or
indices.
45635.01436\32560729.1 7
Fixed Rate Bonds
The term “Fixed Rate Bonds” means those Bonds which, by their terms, have been issued
in denominations of $5,000 Principal Amount or any integral multiple thereof, bear interest at
Fixed Rates, payable semiannually (except that the first interest period with respect thereto may
be less than six months but not more than twelve months following their Closing Date), and shall
include Standard Bonds.
Holder
The term “Holder” means any person who shall be the registered owner of any
Outstanding Bond, as shown on the registration books maintained by the Trustee under Section
2.10.
Indenture
The term “Indenture” means the Indenture executed and entered into under the Act as of
__________, 2020, by and between the Trustee and the City, as originally executed and as it may
from time to time be amended or supplemented by all Supplemental Indentures executed under
the provisions hereof.
Independent Actuary
The term “Independent Actuary” means a representative of PERS or any firm of actuaries
duly licensed and entitled to practice and practicing as such under the laws of the State,
appointed and paid by the City, and each of whom –
(1) is in fact independent and not under the domination of the City;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the City; and
(3) is not connected with the City as a director, officer or employee of the
City, but may be regularly retained to audit the accounting records of and make reports
thereon to the City.
Independent Certified Public Accountant
The term “Independent Certified Public Accountant” means any individual or firm of
certified public accountants duly licensed and entitled to practice and practicing as such under
the laws of the State, appointed and paid by the City, and who or each of whom --
(1) is in fact independent and not under the domination of the City;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the City; and
45635.01436\32560729.1 8
(3) is not connected with the City as a member of the City Council, officer or
employee of the City, but which individual or firm may be regularly retained to audit the
accounting records of and make reports thereon to the City.
Information Services
The term “Information Services” means the Electronic Municipal Market Access System
(referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board (at
http://emma.msrb.org) or, in accordance with then current guidelines of the Securities and
Exchange Commission, such other addresses and/or such other national information services
providing information with respect to called bonds as the City may designate to the Trustee.
Insurance Policy
The term “Insurance Policy” means the financial guaranty insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on a series of the
Bonds as provided therein.
Interest Account
The term “Interest Account” means the account by that name established pursuant to
Section 4.02.
Interest Accrual Date
The term “Interest Accrual Date” means each date established for the accrual and
compounding of interest on Capital Appreciation Bonds and Convertible Capital Appreciation
Bonds as may be set forth in a Supplemental Indenture.
Interest Payment Date
The term “Interest Payment Date” means each date upon which interest is due on the
Bonds (excepting Capital Appreciation Bonds and Convertible Capital Appreciation Bonds, prior
to the Conversion Date), as initially set forth in Appendix D hereto.
Maturity Amount
The term “Maturity Amount” means (i) the Accreted Value of any Capital Appreciation
Bond on its maturity date and (ii) the Conversion Date Amount.
Mode
The term “Mode” means the Principal Amount, Authorized Denomination, interest rate
and payment structure, including any methodology for the reset thereof, for any Series of Bonds.
The Indenture authorizes the issuance of Bonds in the following Modes: Fixed Rate Bonds,
Capital Appreciation Bonds, Convertible Capital Appreciation Bonds, and any other fixed or
variable rate Mode as set forth in a Supplemental Indenture.
45635.01436\32560729.1 9
Moody’s
The term “Moody’s” means Moody’s Investors Service, a corporation duly organized and
existing under the laws of the State of Delaware, and its successors and assigns, except that if
such entity shall be dissolved or liquidated or shall no longer perform the services of a municipal
securities rating agency, then the term “Moody’s” shall be deemed to refer to any other
nationally recognized municipal securities rating agency selected by the City and satisfactory to
and approved by the Bond Insurer.
Municipal Advisor
The term “Municipal Advisor” means Urban Futures, Inc. or any other entity designated
by the City in writing.
Opinion of Counsel
The term “Opinion of Counsel” means a written opinion of counsel of recognized
national standing in the field of law relating to municipal bonds, appointed and paid by the City
and satisfactory to and approved by the Bond Insurer (who shall be under no liability by reason
of such approval).
Outstanding
The term “Outstanding,” when used as of any particular time with reference to any
Bonds, means (subject to the provisions of Section 7.02) all Bonds executed by the City and
authenticated by the Trustee hereunder except:
(1) Bonds theretofore cancelled and destroyed by the Trustee or surrendered
to the Trustee for cancellation and destruction under Section 10.05;
(2) Bonds paid or deemed to have been paid under Section 9.01; and
(3) Bonds in lieu of or in substitution for which other Bonds shall have been
executed by the City and authenticated and delivered by the Trustee under Section 2.11.
Participant
The term “Participant” or “DTC Participant” has the meaning given to that term in
Section 2.14(b).
Payment Date
The term “Payment Date” means any Interest Payment Date, any Principal Payment Date
or any Redemption Date.
Permitted Investments
The term “Permitted Investments” means any of the following which at the time of
investment are legal investments under the laws of the State for the moneys proposed to be
45635.01436\32560729.1 10
invested therein, but only to the extent that the same are acquired at Fair Market Value (provided
the Trustee may rely upon any investment direction from the Agency as a certification to it that
such investment constitutes a Permitted Investment and the Trustee shall not be responsible to
determine Fair Market Value):
(a) Federal Securities;
(b) bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are
backed by the full faith and credit of the United States of America (stripped securities are
only permitted if they have been stripped by the agency itself): (i) direct obligations or
fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii)
certificates of beneficial ownership of the Farmers Home Administration; (iii) obligations
of the Federal Financing Bank; (iv) debentures of the Federal Housing Administration;
(v) participation certificates of the General Services Administration; (vi) guaranteed
mortgage-backed bonds or guaranteed pass-through obligations of the Government
National Mortgage Association; (vii) guaranteed Title XI financings of the U.S. Maritime
Administration; (viii) project notes, local authority bonds, new communities debentures
and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban
Development;
(c) bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit U.S. government agencies
(stripped securities are only permitted if they have been stripped by the agency itself): (i)
senior debt obligations of the Federal Home Loan Bank System; (ii) participation
certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation;
(iii) mortgaged-backed securities and senior debt obligations of the Federal National
Mortgage Association (excluding stripped mortgage securities which are valued greater
than par on the portion of unpaid principal); (iv) senior debt obligations of the Student
Loan Marketing Association; (v) obligations (but only the interest component of stripped
obligations) of the Resolution Funding Corporation; and (vi) consolidated system wide
bonds and notes of the Farm Credit System;
(d) money market funds (including funds of the Trustee or its affiliates)
registered under the Federal Investment Company Act of 1940, whose shares are
registered under the Federal Securities Act of 1933, and having a rating by S&P of
“AAAm-G”, “AAAm”, or, if rated by Moody’s, rated Aaa, Aa1 or Aa2, including funds
for which the Trustee, its affiliates or subsidiaries provide investment advisory or other
management services;
(e) certificates of deposit secured at all times by collateral described in (a) or
(b) above, which have a maturity of one year or less, which are issued by commercial
banks, including affiliates of the Trustee, savings and loan associations or mutual savings
banks, and such collateral must be held by a third party, and the Trustee on behalf of the
Bond Owners must have a perfected first security interest in such collateral;
45635.01436\32560729.1 11
(f) certificates of deposit, savings accounts, deposit accounts or money
market deposits (including those of the Trustee and its affiliates) which are fully insured
by the Federal Deposit Insurance Corporation;
(g) investment agreements, including guaranteed investment contracts,
approved by the Bond Insurer and which are general obligations of an entity whose long
term debt obligations, or claims paying ability, respectively, or which are collateralized
so as to be is rated in one of the two highest rating categories by Moody's or S&P or
which are collateralized so as to be rated in one of the two highest rating categories by
Moody's or S&P;;
(h) commercial paper rated, at the time of purchase, “Prime-1” by Moody's
and “A-1” or better by S&P;
(i) bonds or notes issued by any state or municipality which are rated by
Moody's and S&P in one of the two highest rating categories assigned by such agencies;
(j) federal funds or bankers acceptances with a maximum term of one year of
any bank which has an unsecured, uninsured and unguaranteed obligation rating of
“Prime-1” or “A3” or better by Moody's and “A-1” or “A” or better by S&P;
(k) repurchase agreements approved by the Bond Insurer and which are 30
days or less or, if longer, which provide for the transfer of securities from a dealer bank
or securities firm (seller/borrower) to the Trustee and the transfer of cash from the
Trustee to the dealer bank or securities firm with an agreement that the dealer bank or
securities firm will repay the cash plus a yield to the Trustee in exchange for the
securities at a specified date, which satisfy the following criteria:
(i) repurchase agreements must be between the Trustee and (A) a
primary dealer on the Federal Reserve reporting dealer list which falls under the
jurisdiction of the Securities Investors Protection Corporation and which are rated
“A” or better by Moody's and S&P, or (B) a bank rated “A” or better by Moody's
and S&P;
(ii) the written repurchase agreement contract must include the
following: (A) securities acceptable for transfer, which may be direct U.S.
government obligations, or federal agency obligations backed by the full faith and
credit of the U.S. government; (B) the term of the repurchase agreement may be
up to 30 days; (C) the collateral must be delivered to the Trustee or a third party
acting as agent for the Trustee simultaneous with payment (perfection by
possession of certificated securities); (D) the Trustee must have a perfected first
priority security interest in the collateral; (E) the collateral must be free and clear
of third-party liens and, in the case of a broker which falls under the jurisdiction
of the Securities Investors Protection Corporation, are not subject to a repurchase
agreement or a reverse repurchase agreement; (F) failure to maintain the requisite
collateral percentage, after a two day restoration period, will require the Trustee to
liquidate the collateral; (G) the securities must be valued weekly, marked-to-
45635.01436\32560729.1 12
market at current market price plus accrued interest and the value of collateral
must be equal to 104% of the amount of cash transferred by the Trustee to the
dealer bank or securities firm under the repurchase agreement plus accrued
interest (unless the securities used as collateral are obligations of the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation,
in which case the collateral must be equal to 105% of the amount of cash
transferred by the Trustee to the dealer bank or securities firm under the
repurchase agreement plus accrued interest). If the value of securities held as
collateral falls below 104% of the value of the cash transferred by the Trustee,
then additional cash and/or acceptable securities must be transferred; and
(iii) a legal opinion must be delivered to the Trustee to the effect that
the repurchase agreement meets guidelines under state law for legal investment of
public funds;
(l) pre-refunded municipal bonds rated “Aaa” by Moody's and “AAA” by
S&P; provided, however, pre-refunded municipal bonds rated by S&P only (i.e., no
Moody's rating) are acceptable if such pre-refunded municipal bonds were pre-refunded
with cash, direct U.S. or U.S. guaranteed obligations or AAA rated pre-refunded
municipal bonds; and
(m) the Local Agency Investment Fund of the State of California, created
pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee
is authorized to deposit and withdraw from such investment directly in its own name; and
PERS
The term “PERS” means the California Public Employees’ Retirement System, or any
successor retirement system established by the State.
PERS Contract
The term “PERS Contract” means the contract dated December 20, 1948, between the
City and PERS, as heretofore and hereafter amended from time to time.
PERS Retirement Law
The term “PERS Retirement Law” means Section 20000 et seq. of the California
Government Code.
Principal Account
The term “Principal Account” means the account by that name established pursuant to
Section 4.02.
45635.01436\32560729.1 13
Principal Amount
The term “Principal Amount” means (a) as to any Fixed Rate Bond, the principal amount
thereof; or (b) as to any Capital Appreciation Bond or Convertible Capital Appreciation Bond,
the Maturity Amount thereof.
Principal Payment Date
The term “Principal Payment Date” means a date on which principal is due on the Bonds
as set forth in Appendix E attached hereto.
Purchaser
The term “Purchaser” means the underwriter named in the bond purchase contract for the
Bonds, as original purchaser of the Bonds.
Qualified Swap Agreement
The term “Qualified Swap Agreement” or “Swap Agreement” means (i) any ISDA
Master Swap Agreement, by and between the City and a Qualified Swap Provider, which
includes Schedule A thereto and the applicable Commitment, (a) which is entered into by the
City with an entity that is a Qualified Swap Provider at the time the arrangement is entered into;
(b) which provides that the City shall pay to such entity an amount based on the interest accruing
at a Fixed Rate on an amount equal to the Principal Amount of Outstanding Bonds covered by
such Swap Agreement, if any, and that such entity shall pay to the City an amount based on the
interest accruing on a principal amount equal to the then-Outstanding Principal Amount of the
affected Bonds, at a variable rate of interest computed according to a formula set forth in the
Swap Agreement or that one shall pay to the other any net amount due under such arrangement;
and (c) which has been designated in writing to the Trustee in a Certificate of the City as a
Qualified Swap Agreement with respect to the affected Bonds; provided, that any Qualified
Swap Agreement shall be subject to the prior written approval of the Bond Insurer; and provided
further, that the City shall have notified each Rating Agency of the proposed Swap Agreement
and shall have determined that the execution of the Swap Agreement would not cause the
reduction or withdrawal of the current rating from such Rating Agencies on the Bonds.
Qualified Swap Provider
The term “Qualified Swap Provider” means with respect to the counterparty under any
other Swap Agreement meeting the requirements of the definition thereof, a financial institution
approved by the City and the Bond Insurer, (A) the long-term, unsecured and unsubordinated
obligations of which are rated at the time of execution of the related Qualified Swap Agreement
by at least two Rating Agencies as: (i) at least “A3” by Moody’s, “A-” by S&P or “A-” by Fitch;
or (B) the obligations of which under the particular Qualified Swap Agreement and any Swap
Policy related thereto are unconditionally guaranteed by a bank or non-bank financial institution,
the long-term, unsecured and unsubordinated obligations of which are rated at the time of
execution of the Qualified Swap Agreement by at least two Rating Agencies as: (i) at least “A3”
by Moody’s, “A-” by S&P or “A-” by Fitch.
45635.01436\32560729.1 14
Rating Agencies
The term “Rating Agencies” means Fitch, Moody’s and Standard & Poor’s, but in each
case only to the extent that any of them is then rating the Bonds at the request of the City.
Record Date
The term “Record Date” means, with respect to (a) Fixed Rate Bonds, the fifteenth day
(whether or not such day is a Business Day) of the month immediately preceding each Interest
Payment Date, (b) Capital Appreciation Bonds, the first day (whether or not such day is a
Business Day) of the month immediately preceding the maturity thereof, (c) Convertible Capital
Appreciation Bonds, the first day (whether or not such day is a Business Day) of the month
immediately preceding the Conversion Date, and after such Conversion Date, the first day
(whether or not such day is a Business Day) of the month immediately preceding each Interest
Payment Date.
Redemption Date
The term “Redemption Date” means a date on which any of the Bonds is called for
redemption prior to the Principal Payment Date of such Bonds.
Refunding Fund
The term “Refunding Fund” means the City of Azusa 2020 Pension Obligation
Refunding Fund established and maintained by the Trustee under Section 2.05(a).
Reported Rate
The term “Reported Rate” means the rate that appears on Telerate Page 3750 or a
successor reporter of such rates, selected by the Calculation Agent and acceptable to the City.
Representation Letter
The term “Representation Letter” means the letter of representation to The Depository
Trust Company from the City and the Trustee relating to the Bonds.
Securities Depository
The term “Securities Depository” means, initially, DTC, and its successors and assigns,
and any replacement securities depository appointed under the Indenture.
Series
The term “Series” means all of the Bonds designated as being within a certain series, as
indicated on the inside cover hereof, regardless of variations in maturity date, interest rate (but
within the same Mode), redemption and other provisions, and any Bonds thereafter issued in
transfer or exchange for such Bonds pursuant to the Indenture.
45635.01436\32560729.1 15
Sinking Fund Account, Series 2020 Sinking Fund Account
The term “Sinking Fund Account” means any subaccount established for the Term Bonds
of any Series and maturity within the Principal Account, as more particularly designated as
provided in Section 4.02.
The term “Series 2020 Sinking Fund Account” means the Sinking Fund Account
established for the Series 2020 Bonds pursuant to Section 2.03.
Sinking Fund Account Payment
The term “Sinking Fund Account Payment” means the amount of money required hereby
or by any Supplemental Indenture to be deposited by the Trustee in any Sinking Fund Account
on any Sinking Fund Account Payment Date for the redemption of the Term Bonds of any Series
and maturity.
Sinking Fund Account Payment Date
The term “Sinking Fund Account Payment Date” means any date on which any Sinking
Fund Account Payments for the Term Bonds of any Series and maturity are required to be
deposited in the Sinking Fund Account for the Bonds of such Series and maturity.
Standard Bonds
The term “Standard Bonds” means those Fixed Rate Bonds issued in Authorized
Denominations of $5,000 and any integral multiple thereof.
Standard & Poor’s or “S&P”
“Standard & Poor’s” or “S&P” means Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Companies, Inc., a corporation duly organized and existing under the laws of
the State of New York, and its successors or assigns, except that if such entity shall be dissolved
or liquidated or shall no longer perform the functions of a municipal securities rating agency,
then the term “Standard & Poor’s” shall be deemed to refer to any other nationally recognized
municipal securities rating agency selected by the City and satisfactory to and approved by the
Bond Insurer.
State
The term “State” means the State of California.
Supplemental Indenture
The term “Supplemental Indenture” means any indenture then in full force and effect
which has been duly executed and delivered by the Trustee and the City amendatory hereof or
supplemental hereto, but only if and to the extent that such Supplemental Indenture is
specifically authorized hereunder.
45635.01436\32560729.1 16
Swap Payments
The term “Swap Payments” means any of the periodic payments due from the City
pursuant to the terms of a Qualified Swap Agreement.
Tranche
The term “Tranche” means the designated portion of a Series of Bonds sharing a
particular Mode, and other characteristics, designated as such on the inside cover hereof. Each
Tranche of Bonds within a Series of Bonds must be within the same Mode.
Trustee
The term “Trustee” means Wilmington Trust, National Association, a national banking
association duly organized and existing under the laws of the United States of America, or any
other bank with trust powers or trust company which may at any time be substituted in its place
as provided in Section 6.01.
Written Request of the City
The term “Written Request of the City” means an instrument in writing signed by a City
Representative.
Section 1.02 Equal Security. In consideration of the acceptance of the Bonds by the
Holders thereof, the Indenture shall be deemed to be and shall constitute a contract by and
among the City, the Trustee and the Holders from time to time of all Bonds authorized, executed,
authenticated and delivered hereunder and then Outstanding to provide for the payment of the
principal, Accreted Value or redemption price of and the interest on all Bonds which may from
time to time be authorized, executed, authenticated and delivered hereunder, subject to the
agreements, conditions, covenants and provisions contained herein; and all agreements and
covenants set forth herein required to be performed by or on behalf of the City shall be for the
equal and proportionate benefit, protection and security of all Holders of the Bonds without
distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds
by reason of the number or date thereof or the time of authorization, execution, authentication or
delivery thereof or for any cause whatsoever, except as expressly provided herein or therein.
ARTICLE II
ISSUANCE OF THE SERIES 2020 BONDS; GENERAL BOND PROVISIONS
Section 2.01 Authorization and Purpose of and Obligation Under the Series 2020
Bonds. The City has reviewed all proceedings heretofore taken relative to the authorization of
the Series 2020 Bonds and has found, as a result of such review, and hereby finds and determines
that all acts, conditions and things required by law to exist, to have happened and to have been
performed precedent to the issuance of the Series 2020 Bonds do exist, have happened and have
been performed in due time, form and manner as required by law, that the City is duly
authorized, pursuant to each and every requirement of the Act, to execute and enter into the
Indenture and to issue the Series 2020 Bonds in the form and manner and for the purpose
provided herein, that the Series 2020 Bonds shall be entitled to the benefit, protection and
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security of the provisions hereof, that the Series 2020 Bonds will be legal, valid and binding
obligations of the City payable in accordance with their terms, that the City is obligated to satisfy
its obligations under the Series 2020 Bonds from any lawfully available funds of the City. The
Series 2020 Bonds do not constitute an obligation of the City for which the City is obligated to
levy or pledge any form of taxation or for which the City has levied or pledged any form of
taxation, and neither the Series 2020 Bonds nor the obligation of the City to make payment of the
principal, Accreted Value or redemption price of or the interest on the Bonds constitutes an
indebtedness of the City, the State or any of its political subdivisions within the meaning of any
constitutional or statutory debt limitation or restriction.
Section 2.02 Assignment and Pledge for the Series 2020 Bonds. The City hereby
irrevocably assigns and pledges to the Trustee, in trust for the security of the Holders upon the
terms hereof, all the City’s rights, title and interest in and to all money and securities for deposit
in, or deposited in, the Bond Fund, and all investment earnings thereon, and all collateral security
for, and all proceeds of, any of the foregoing. The Trustee shall hold all such rights, title and
interest received by it under this section and all money and securities (exclusive of money to
which the Trustee is entitled in its own right as a fee, indemnity, reimbursement or otherwise)
received from the City or derived from the exercise of the City’s powers hereunder in trust for
the security of the Holders in accordance with the provisions hereof, and the City shall from time
to time execute, deliver, file and record such instruments as the Trustee may reasonably require
to confirm or maintain the security created hereby and the assignment and pledge hereby of the
rights, title and interest assigned and pledged by the City to the Trustee hereunder.
Section 2.03 Terms of the Series 2020 Bonds. The Series 2020 Bonds shall be
designated the “City of Azusa Taxable Pension Funding Bonds, Series 2020” and shall be further
designated as set forth in the definitions hereof, in the Modes, Series and Tranches and with the
maturities set forth thereon.
Sinking Fund Account Payments are hereby established for the mandatory redemption
and payment of the Series 2020 Bonds (the “Series 2020 Term Bonds”), which payments shall
become due prior to maturity for each Tranche of Bonds, during the years ending on the dates
and in the amounts set forth (a) in Appendix D, with respect to the Series 2020 Bonds (except
that if any Series 2020 Term Bonds have been optionally redeemed pursuant to Section 2.04, the
amounts of such Sinking Fund Account Payments shall be reduced proportionately by the
Principal Amount of all such Series 2020 Term Bonds so optionally redeemed as provided
therein), and (b) in the corresponding exhibit of any Supplemental Indenture pursuant to which
Additional Bonds are subsequently issued.
All such Sinking Fund Account Payments shall be deposited in a subaccount in the
Redemption Account to be known as the “Series 2020 Sinking Fund Account,” which is hereby
created and which the Trustee hereby agrees and covenants to cause to be maintained so long as
any Series 2020 Term Bonds are Outstanding. All money in the Series 2020 Sinking Fund
Account on January 1 of each year indicated in Appendix D hereto, commencing on January 1,
20__, shall be used and withdrawn by the Trustee on such January 1 for the mandatory
redemption or payment of the Series 2020 Term Bonds; and the Trustee hereby agrees and
covenants with the Holders of the Series 2020 Term Bonds to call and redeem in accordance
herewith or pay such Series 2020 Term Bonds from such Sinking Fund Account Payments
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deposited in the Series 2020 Sinking Fund Account pursuant to this section whenever on January
1 of each year indicated in Appendix D hereto, there is money in the Series 2020 Sinking Fund
Account available for such purpose.
The Principal Amount of the Series 2020 Bonds shall be payable in lawful money of the
United States of America at the Corporate Trust Office of the Trustee. Payment of the principal,
Accreted Value or redemption price of the Series 2020 Bonds shall be made upon the surrender
thereof at maturity or on redemption prior to maturity at the Corporate Trust Office of the
Trustee.
The Series 2020 Bonds shall mature on the dates and in the Principal Amounts and bear
or accrete interest at the rates (based on a 360-day calendar year of twelve 30-day months),
payable on Interest Payment Dates as set forth in Appendix D. The Series 2020 Bonds shall bear
interest from the Interest Payment Date next preceding the date of authentication thereof, unless
such date of authentication is an Interest Payment Date or during the period from the Record
Date preceding an Interest Payment Date to such Interest Payment Date, in which event they
shall bear interest from such Interest Payment Date, or unless such date of authentication is prior
to the first Record Date, in which event they shall bear interest from the date of original delivery;
provided, that if at the time of authentication of any Series 2020 Bond interest is then in default
on the Outstanding Series 2020 Bonds, such Series 2020 Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment
on the Outstanding Series 2020 Bonds. Payment of interest on the Series 2020 Bonds due on or
before the maturity or prior redemption thereof shall be made to the person whose name appears
in the Series 2020 Bonds registration books kept by the Trustee pursuant to Section 2.10 as the
registered owner thereof as of the close of business on the Record Date for each Interest Payment
Date, such interest to be paid by check mailed by first class mail to such registered owner at the
address as it appears in such books; provided, that upon the written request of a Holder of one
million dollars ($1,000,000) or more in aggregate principal amount of Series 2020 Bonds
received by the Trustee prior to the applicable Record Date, interest shall be paid by wire
transfer in immediately available funds.
Section 2.04 Redemption of the Series 2020 Bonds. The Series 2020 Bonds are subject
to optional redemption by the City prior to their respective stated maturities as set forth in
Appendix D hereto. Notice of optional redemption shall be given by the City to the Trustee not
less than 45 days prior to any optional redemption date (unless such notice is waived by the
Trustee).
Any Series 2020 Term Bonds subject to mandatory redemption by the City as set forth in
Appendix D hereto shall be redeemed prior to their stated maturity in part on January 1 of each
year indicated in Appendix D hereto, pro rata among the Holders, solely from Sinking Fund
Account Payments in the amounts and on the dates set forth in Appendix D, upon mailed notice
as hereinafter provided, at a redemption price equal to the sum of the Principal Amount thereof
plus accrued interest thereon to the redemption date, without premium. For the purposes of such
selection, the Series 2020 Bonds selected for redemption shall be deemed to be composed of
$5,000 portions and any such portion may be separately prepaid. The Trustee shall promptly
notify the City in writing of the Series 2020 Bonds so selected for redemption. So long as there
is a securities depository for the Series 2020 Bonds, there will only be one Holder and neither the
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City nor the Trustee will have responsibility for pro rating partial redemptions among Beneficial
Owners of Series 2020 Bonds.
Notice of redemption of any Series 2020 Bonds or any portions thereof shall be given by
first class mail not less than fifteen (15) days nor more than thirty (30) days before the
redemption date of such Series 2020 Bonds or portions thereof to the respective Holders thereof
as their names and addresses appear on the registration books maintained by the Trustee pursuant
to Section 2.10 and to the Information Services. Each notice of redemption shall state the date of
such notice, the Series 2020 Bonds to be redeemed, the date of issue of such Series 2020 Bonds,
the redemption date, the redemption price, the place of redemption (including the name and
appropriate address), the CUSIP number (if any) and ISIN number (if any) of the maturity or
maturities, and, if less than all of any such maturity are to be redeemed, the distinctive numbers
of the Series 2020 Bonds of such maturity to be redeemed and, in the case of Series 2020 Bonds
to be redeemed in part only, the respective portions of the principal amount thereof to be
redeemed. Each such notice shall also state that on such redemption date there will become due
and payable on each of such Series 2020 Bonds the redemption price thereof or of the specified
portion of the principal amount thereof in the case of a Series 2020 Bond to be redeemed in part
only, together with interest accrued thereon to the redemption date, and that from and after such
redemption date interest thereon shall cease to accrue, and shall require that such Series 2020
Bonds be then surrendered at the address of the Trustee specified in the redemption notice;
provided, that failure by the Trustee to give notice pursuant to this section to any one or more of
the Information Services, or the insufficiency of any such notice or the failure of any Holder to
receive any redemption notice mailed to such Holder or any immaterial defect in the notice so
mailed shall not affect the sufficiency of the proceedings for the redemption of any Series 2020
Bonds; and provided further, that any such notice of redemption may be cancelled and annulled
by a Written Request of the City given to the Trustee prior to the date fixed for redemption,
whereupon the Trustee shall forthwith give appropriate notice of such cancellation and
annulment to all the recipients of such notice of redemption.
In lieu of any such redemption, the City may, from lawfully available funds, direct the
Trustee to purchase the Series 2020 Bonds at public or private sale, as and when and at such
prices (including brokerage and other charges, but excluding accrued interest) as may be directed
by the City prior to the selection of Series 2020 Bonds for redemption, and such purchased
Series 2020 Bonds shall be cancelled.
Upon surrender of any Series 2020 Bond redeemed in part only, the City shall execute
and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the City, a
new Series 2020 Bond or Bonds of Authorized Denominations equal to the aggregate Principal
Amount, of the unredeemed portion of the Series 2020 Bond surrendered and of the same
maturity.
From and after the date fixed for redemption of any Series 2020 Bonds or any portions
thereof, if notice of such redemption shall have been duly given and funds available for the
payment of such redemption price of the Series 2020 Bonds or such portions thereof so called for
redemption shall have been duly provided, no interest shall accrue on such Series 2020 Bonds or
such portions thereof from and after the redemption date specified in such notice.
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All Series 2020 Bonds redeemed or purchased pursuant to the provisions of this section
shall be destroyed by the Trustee and the Trustee shall deliver a certificate of destruction to the
City.
Section 2.05 Procedure for the Issuance of the Series 2020 Bonds; Application of
Proceeds of the Series 2020 Bonds. At any time after the sale of the Series 2020 Bonds in
accordance with the Act, the City shall execute the Series 2020 Bonds for issuance hereunder, in
accordance with the provisions as to Mode, Series and other provisions as set forth on the inside
front cover hereof and in Appendix D hereto, and shall deliver them to the Trustee, and
thereupon the Series 2020 Bonds shall be authenticated and delivered by the Trustee to the
Purchaser thereof upon the Written Request of the City and upon receipt of the net purchase
price of the Bonds from the Purchaser thereof as provided in such Written Request; and upon
receipt of payment of the net purchase price of the Bonds from the Purchaser thereof, the Trustee
shall set aside and deposit the net proceeds received from such sale (which includes the original
issue premium of $__________, and excludes the Purchaser’s discount of $__________, and
excludes the amount of $__________ wired by the Purchaser to the Bond Insurer) in the
following order of priority:
(a) The Trustee shall deposit the amount of $__________ in the Refunding
Fund, designated the “City of Azusa 2020 Pension Obligation Refunding Fund,” which
fund the Trustee hereby agrees to establish and maintain until the PERS Contract has
been refunded as provided herein, which sum shall be used for refunding the PERS
Contract in accordance with and subject to the terms thereof.
(b) The Trustee shall deposit $__________ in the 2020 Costs of Issuance
Fund, which fund is hereby created and which fund the City hereby agrees to maintain
with the Trustee until __________ [six months from the date of delivery of the Series
2020 Bonds]. All money in the Costs of Issuance Fund shall be used and withdrawn by
the City to pay the Costs of Issuance of the Series 2020 Bonds upon receipt of a Written
Request of the City filed with the Trustee, each of which shall be sequentially numbered
and shall state the person to whom payment is to be made, the amount to be paid, the
purpose for which the obligation was incurred and that such payment is a proper charge
against said fund. On __________ or upon the earlier Written Request of the City, any
remaining balance in the 2020 Costs of Issuance Fund shall be transferred to the City.
(c) The Trustee shall transfer from amounts on deposit in the 2020 Refunding
Fund as follows:
(i) an amount equal to $__________ to PERS for the public safety
plan.
Section 2.06 Form of the Series 2020 Bonds. The Series 2020 Bonds and the certificate
of authentication and the form of assignment and other details to appear thereon shall be
substantially in one or more of the forms set forth in Appendix A, Appendix B, or Appendix C
hereto attached and by this reference incorporated herein.
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Section 2.07 Execution of the Bonds. Any of the Mayor, Mayor Pro Tem or the City
Manager are hereby authorized and directed to execute each of the Bonds on behalf of the City
by his or her manual or facsimile signature and the City Clerk is hereby authorized and directed
to countersign each of the Bonds on behalf of the City by his or her manual or facsimile
signature; provided, that in case any officer whose signature appears on the Bonds shall cease to
be such officer before the delivery of the Bonds to the Purchaser thereof, such signature shall
nevertheless be valid and sufficient for all purposes as if such officer had remained in office until
the delivery of the Bonds.
Only those Bonds bearing thereon a certificate of authentication in the form hereinabove
recited, executed manually and dated by the Trustee, shall be entitled to any benefit, protection
or security hereunder or be valid or obligatory for any purpose, and the execution of such
certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been
duly authorized, executed and delivered hereunder and are entitled to the benefit, protection and
security hereof.
Section 2.08 Transfer and Payment of the Bonds; Transfer Restrictions. Any Bond
may, in accordance with its terms, be transferred in the books required to be kept pursuant to the
provisions of Section 2.10 by the person in whose name it is registered, in person or by such
person’s duly authorized attorney, upon surrender of such Bond for cancellation at the Corporate
Trust Office of the Trustee accompanied by delivery of a duly executed written instrument of
transfer in a form acceptable to the Trustee; provided, that the Trustee shall require the payment
by the Holder requesting such transfer of any tax or other governmental charge required to be
paid with respect to such transfer as a condition precedent to the exercise of such privilege; and
provided further, that the Trustee may refuse to transfer any Bonds during the fifteen (15) day
period prior to the date established by the Trustee for the selection of Bonds for redemption, or to
transfer any Bonds selected by the Trustee for redemption. Whenever any Bond shall be
surrendered for transfer, the City shall execute and the Trustee shall authenticate and deliver to
the transferee a new Bond or Bonds of the same Series of Bonds and maturity of Authorized
Denominations equal to the Principal Amount or, with respect to Capital Appreciation Bonds,
the Accreted Value and with respect to Convertible Capital Appreciation Bonds prior to the
Conversion, the Conversion Date Amount of the Bond surrendered.
The City and the Trustee may deem and treat the Holder of any Bond as the absolute
owner of such Bond for the purpose of receiving payment thereof and for all other purposes,
whether such Bond shall be overdue or not, and neither the City nor the Trustee shall be affected
by any notice or knowledge to the contrary, and payment of the principal, Accreted Value or
redemption price of and the interest due on such Bond shall be made only to such Holder, which
payments shall be valid and effectual to satisfy and discharge liability on such Bond to the extent
of the sum or sums so paid.
The cost of preparing the Bonds and any services rendered or expenses incurred by the
Trustee in connection with any transfer of the Bonds shall be paid by the City.
Section 2.09 Exchange of the Bonds. Any Bond may, in accordance with its terms, be
exchanged at the Corporate Trust Office of the Trustee for a new Bond or Bonds of the same
Series of Bonds and maturity of Authorized Denominations equal to the Principal Amount or,
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with respect to Capital Appreciation Bonds, the Accreted Value of the Bond surrendered;
provided, that the Trustee shall require the payment by the Holder requesting such exchange of
any tax or other governmental charge required to be paid with respect to such exchange as a
condition precedent to the exercise of such privilege; and provided further, that the Trustee may
refuse to exchange any Bonds during the fifteen (15) day period prior to the date established by
the Trustee for the selection of Bonds for redemption, or to exchange any Bonds selected by the
Trustee for redemption.
The cost of preparing the Bonds and any services rendered or expenses incurred by the
Trustee in connection with any exchange shall be paid by the City.
Section 2.10 Bond Registration Books. The Trustee will keep at its Corporate Trust
Office sufficient books for the registration and transfer of the Bonds which shall during normal
business hours with reasonable notice be open to inspection by the City, and upon presentation
for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register
or transfer the Bonds in such books as hereinabove provided.
Section 2.11 Mutilated, Destroyed, Stolen or Lost Bonds. If any Bond shall become
mutilated, the Trustee, at the expense of the Holder, shall thereupon authenticate and deliver a
new Bond or Bonds of the same Series of Bonds and maturity of Authorized Denominations
equal in aggregate Principal Amount or, with respect to Capital Appreciation Bonds, Accreted
Value and with respect to Convertible Capital Appreciation Bonds prior to the Conversion Date,
the Conversion Date Amount to the Bond so mutilated in exchange and substitution for the Bond
so mutilated, but only upon surrender to the Trustee of the Bond so mutilated, and every
mutilated Bond so surrendered to the Trustee shall be cancelled.
If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft
may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and
indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Holder,
shall thereupon authenticate and deliver a new Bond of the same Series of Bonds and maturity of
authorized denominations equal in aggregate Principal Amount or, with respect to Capital
Appreciation Bonds, Accreted Value to the Bond so lost, destroyed or stolen in lieu of and in
substitution for the Bond so lost, destroyed or stolen.
The Trustee may require payment of a reasonable sum for each new Bond delivered
under this section and of the expenses which may be incurred by the City and the Trustee in the
premises. Any Bond delivered under the provisions of this section in lieu of any Bond alleged to
be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof
with all other Bonds secured hereby, and neither the City nor the Trustee shall be required to
treat both the original Bond and any replacement Bond as being Outstanding for the purpose of
determining the principal amount of Bonds which may be issued hereunder or for the purpose of
determining any percentage of Bonds Outstanding hereunder, but both the original and
replacement Bond shall be treated as one and the same.
Section 2.12 Temporary Bonds. The Bonds issued hereunder may be initially issued in
temporary form exchangeable for definitive Bonds when ready for delivery, which temporary
Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be
45635.01436\32560729.1 23
determined by the City, shall be in fully registered form and may contain such reference to any
of the provisions hereof as may be appropriate. Every temporary Bond shall be executed and
authenticated as authorized by the City in accordance with the terms hereof. If the City issues
temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the
temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Corporate
Trust Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds
definitive Bonds. Until so exchanged, the temporary Bonds shall be entitled to the same benefits
hereunder as definitive Bonds delivered hereunder.
Section 2.13 Validity of the Bonds. The recital contained in the Bonds that the same
are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their validity
and of the regularity of their issuance, and all Bonds shall be incontestable from and after the
definitive Bonds (or any temporary Bonds exchangeable therefor) shall have been delivered to
the Purchaser and the proceeds of sale thereof received by the Trustee as provided herein.
Section 2.14 Book-Entry System for the Series 2020 Bonds.
(a) Except as otherwise provided in subsections (b) and (c) of this section, the Series
2020 Bonds shall initially be issued in the form of a single authenticated fully registered bond for
each Principal Payment Date of the Series 2020 Bonds, and shall be registered in the name of
Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), or
such other nominee as DTC shall request pursuant to the Representation Letter. Payment of the
interest on any Series 2020 Bond registered in the name of Cede & Co. shall be made on each
Interest Payment Date for such Series 2020 Bonds to the account, in the manner and at the
address indicated in or pursuant to the Representation Letter.
(b) The Trustee and the City may treat DTC (or its nominee) as the sole and exclusive
owner of the Series 2020 Bonds registered in its name for the purposes of payment of the
principal, Accreted Value or redemption price of and the interest on such Series 2020 Bonds,
selecting the Series 2020 Bonds or portions thereof to be redeemed, giving any notice permitted
or required to be given to Holders hereunder, registering the transfer of the Series 2020 Bonds,
obtaining any consent or other action to be taken by Holders of the Series 2020 Bonds and for all
other purposes whatsoever, and neither the Trustee nor the City shall be affected by any notice to
the contrary. Neither the Trustee nor the City shall have any responsibility or obligation to any
Participant (which shall mean, for purposes of this section, securities brokers and dealers, banks,
trust companies, clearing corporations and other entities, some of whom directly or indirectly
own DTC), any person claiming a beneficial ownership interest in the Series 2020 Bonds under
or through DTC or any Participant, or any other person which is not shown on the registration
records as being a Holder, with respect to (i) the accuracy of any records maintained by DTC or
any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the
principal, Accreted Value or redemption price of or the interest on any of the Series 2020 Bonds,
(iii) any notice which is permitted or required to be given to Holders of Series 2020 Bonds
hereunder, or (iv) any consent given or other action taken by DTC as Holder of Series 2020
Bonds. The Trustee shall pay the principal, Accreted Value or redemption price of and the
interest on the Series 2020 Bonds only at the times, to the accounts, at the addresses and
otherwise in accordance with the Representation Letter, and all such payments shall be valid and
effective to satisfy fully and discharge the City’s obligations with respect to the Series 2020
45635.01436\32560729.1 24
Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written
notice to the effect that DTC has determined to substitute a new nominee in place of its then
existing nominee, the Series 2020 Bonds will be transferable to such new nominee in accordance
with subsection (f) of this section.
(c) In the event that the City determines that it is in the best interests of the Beneficial
Owners of the Series 2020 Bonds that they be able to obtain definitive Series 2020 Bonds, the
Trustee shall, upon receipt of a Written Request of the City, so notify DTC, whereupon DTC
shall notify the Participants of the availability through DTC of definitive Series 2020 Bonds, and
in such event the Series 2020 Bonds shall be transferable in accordance with subsection (f) of
this section. DTC may determine to discontinue providing its services with respect to the Series
2020 Bonds at any time by giving written notice of such discontinuance to the Trustee or the
City and discharging its responsibilities with respect thereto under applicable law, and in such
event the Series 2020 Bonds shall be transferable in accordance with subsection (f) of this
section. Whenever DTC requests the Trustee or the City to do so, the Trustee and the City will
cooperate with DTC in taking appropriate action after reasonable notice to arrange for another
securities depository to maintain custody of all certificates evidencing the Series 2020 Bonds
then Outstanding, and in such event the Series 2020 Bonds shall be transferable to such securities
depository in accordance with subsection (f) of this section, and thereafter, all references in the
Indenture to DTC or its nominee shall be deemed to refer to such successor securities depository
and its nominee, as appropriate.
(d) Notwithstanding any other provision hereof to the contrary, so long as all Series
2020 Bonds Outstanding are registered in the name of any nominee of DTC, all payments with
respect to the principal, Accreted Value or redemption price of and the interest on each such
Series 2020 Bond and all notices with respect to each such Series 2020 Bond shall be made and
given, respectively, to DTC as provided in the Representation Letter.
(e) The Trustee and the City are each hereby authorized and requested to execute and
deliver the Representation Letter and, in connection with any successor nominee for DTC or any
successor depository, enter into comparable arrangements, and shall have the same rights with
respect to its actions thereunder as it has with respect to its actions hereunder.
(f) In the event that any transfer or exchange of Series 2020 Bonds is authorized
under subsection (b) or (c) of this section, such transfer or exchange shall be accomplished upon
receipt by the Trustee from the registered owner thereof of the Series 2020 Bonds to be
transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all
in accordance with the applicable provisions of Sections 2.08 and 2.09. In the event that
definitive Series 2020 Bonds are issued to Holders other than Cede & Co., its successor as
nominee for DTC as Holder of all the Series 2020 Bonds, another securities depository as holder
of all the Series 2020 Bonds, or the nominee of such successor securities depository, the
provisions of Sections 2.08 and 2.09 shall also apply to, among other things, the registration,
exchange and transfer of the Series 2020 Bonds and the method of payment of the principal,
Accreted Value or redemption price of and the interest on the Series 2020 Bonds.
Section 2.15 Bond Insurer Provisions. [To Come]
45635.01436\32560729.1 25
Section 2.16 [Bond Insurer as Third Party Beneficiary. To the extent this Indenture
confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by
reason of this Indenture, the Bond Insurer is hereby explicitly recognized as being a third-party
beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or
granted hereunder.]
ARTICLE III
ISSUANCE OF ADDITIONAL BONDS
Section 3.01 Conditions for the Issuance of Additional Bonds. The City may at any
time issue Additional Bonds on a parity with the Series 2020 Bonds, but only subject to the
following specific conditions, which are hereby made conditions precedent to the issuance of any
such Additional Bonds:
(a) The City shall be in compliance with all agreements and covenants
contained herein.
(b) The issuance of such Additional Bonds shall have been authorized
pursuant to the Act, have the appropriate judicial validation, and shall have been provided
for by a Supplemental Indenture which shall specify the following:
(i) The purpose for which such Additional Bonds are to be issued;
provided, that such Additional Bonds shall be applied solely for (A) the purpose
of satisfying any obligation to make payments to PERS pursuant to the PERS
Retirement Law relating to pension benefits accruing to PERS members and their
beneficiaries, and/or for payment of all costs incidental to or connected with the
issuance of Additional Bonds for such purpose (including funded interest and/or
(B) the purpose of refunding any Bonds then Outstanding, including payment of
all costs incidental to or connected with such refunding (including funded
interest);
(ii) The authorized principal amount and designation of such
Additional Bonds;
(iii) The interest payment dates and principal payment dates for such
Additional Bonds;
(iv) Whether such Additional Bonds are fixed rate bonds, variable rate
bonds, indexed notes, current interest bonds, deferred interest bonds, capital
appreciation bonds, convertible capital appreciation bonds, embedded cap bonds,
equity participation bonds or synthetic or hedged fixed rate bonds or such other
Mode as may be set forth in a Supplemental Indenture;
(v) The denomination or denominations of and method of numbering
such Additional Bonds;
(vi) The redemption premiums, if any, and the redemption terms, if
any, for such Additional Bonds;
45635.01436\32560729.1 26
(vii) The amount, if any, to be deposited from the proceeds of sale of
such Additional Bonds in the Interest Account; and
(viii) Such other provisions (including the requirements of a book entry
Bond registration system, if any) as are necessary or appropriate and not
inconsistent herewith.
Section 3.02 Procedure for the Issuance of Additional Bonds. At any time after the sale
of any Additional Bonds in accordance with the Act, the City shall execute such Additional
Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon such
Additional Bonds shall be delivered by the Trustee to the Purchaser thereof upon the Written
Request of the City, but only upon receipt by the Trustee of the following documents or money
or securities, all of such documents dated or certified, as the case may be, as of the date of
delivery of such Additional Bonds by the Trustee:
(a) An executed copy of the Supplemental Indenture authorizing the issuance
of such Additional Bonds;
(b) A Written Request of the City as to the delivery of such Additional Bonds;
(c) An Opinion of Counsel to the effect that (1) the City has executed and
delivered the Supplemental Indenture, and the Supplemental Indenture is valid and
binding upon the City and (2) such Additional Bonds are valid and binding obligations of
the City entitled to the benefits of the Act and hereof, and such Additional Bonds have
been duly and validly issued in accordance with the Act and herewith;
(d) A Certificate of the City containing such statements as may be reasonably
necessary to show compliance with the conditions for the issuance of such Additional
Bonds contained herein; and
(e) Such further documents, money or securities as are required by the
provisions of the Supplemental Indenture providing for the issuance of such Additional
Bonds.
The City shall deliver to the Bond Insurer a copy of the disclosure document, if any,
circulated with respect to such Additional Bonds.
ARTICLE IV
FUNDS AND ACCOUNTS
Section 4.01 Deposits to Bond Fund.
(a) The City agrees and covenants that, not later than January 1 of each Fiscal Year, it
will transfer to and deposit with the Trustee the amount of the City’s obligations on the Bonds in
the then current Bond Year.
45635.01436\32560729.1 27
(b) All amounts payable by the City hereunder shall be promptly deposited by the
Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which fund is
hereby created and shall be held in trust by the Trustee.
Section 4.02 Allocation of Money in the Bond Fund. On each Interest Payment Date,
the Trustee shall transfer from the Bond Fund, in immediately available funds, for deposit into
the following respective accounts (each of which is hereby created and which the Trustee shall
maintain in trust separate and distinct from the other accounts and funds established hereunder)
the following amounts in the following order of priority, the requirements of each such account
(including the making up of any deficiencies in any such account resulting from lack of funds
sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any
deposit is made to any account subsequent in priority:
First: Interest Account,
Second: Principal Account, and
Third: Administrative Expense Account.
All money in each of such accounts shall be held in trust by the Trustee and shall be
applied, used and withdrawn only for the purposes hereinafter authorized in this section.
(a) Interest Account. On each Interest Payment Date, the Trustee shall set
aside from the Bond Fund and deposit in the Interest Account that amount of money
which is equal to the amount of interest becoming due and payable on all Outstanding
Bonds on such Interest Payment Date.
No deposit need be made in the Interest Account if the amount contained therein
is at least equal to the aggregate amount of interest becoming due and payable on all
Outstanding Bonds on such Interest Payment Date.
All money in the Interest Account shall be used and withdrawn by the Trustee
solely for the purpose of paying the interest on the Bonds as it shall become due and
payable (including accrued interest on any Bonds purchased or redeemed prior to
maturity).
(b) Principal Account. On each Principal Payment Date, the Trustee shall set
aside from the Bond Fund and deposit (i) in the Principal Account an amount of money
equal to the Principal Amount of all Outstanding Serial Bonds maturing on such Principal
Payment Date and (ii) into the respective Sinking Fund Accounts for all Outstanding
Term Bonds (established below) the amount of all Sinking Fund Account Payments
required to be made on such Sinking Fund Account Payment Date.
No deposit need be made in the Principal Account if the amount contained therein
is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds
maturing by their terms on such Principal Payment Date plus the aggregate amount of all
Sinking Fund Account Payments required to be made on such Sinking Fund Account
Payment Date for all Outstanding Term Bonds.
45635.01436\32560729.1 28
The Trustee shall establish and maintain within the Principal Account a separate Sinking
Fund Account for the Term Bonds of each series and maturity, designated as the “_____ Sinking
Fund Account,” inserting therein the series and maturity (if more than one such account is
established for such series) designation of such Bonds. With respect to each Sinking Fund
Account, on each Sinking Fund Account Payment Date established for such Sinking Fund
Account in Appendix D attached hereto, the Trustee shall apply the Sinking Fund Account
Payment required on that date to the redemption (or payment at maturity, as the case may be) of
Term Bonds of the series and maturity for which such Sinking Fund Account was established,
upon the notice and in the manner set forth herein or in the Supplemental Indenture providing for
the issuance of such Term Bonds; provided, that, at any time prior to giving such notice of such
redemption, the Trustee may, upon the Written Request of the City, apply moneys in such
Sinking Fund Account to the purchase for cancellation of Term Bonds of such series and
maturity for which such Sinking Fund Account was established at public or private sale as and
when and at such prices (including brokerage and other charges, but excluding accrued interest,
which is payable from the Interest Account) as may be directed by the City, except that the
purchase price (excluding accrued interest) shall not exceed the redemption price that would be
payable for such Term Bonds upon redemption by application of such Sinking Fund Account
Payment. If, during the twelve month period immediately preceding any Sinking Fund Account
Payment Date the Trustee has purchased Term Bonds of such series and maturity for which such
Sinking Fund Account was created with money in such Sinking Fund Account, such Term Bonds
so purchased shall be applied (to the extent of the full Principal Amount thereof) to reduce such
Sinking Fund Account Payment.
All money in the Principal Account shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal, Accreted Value or redemption price of the Bonds as they
shall become due and payable, whether at maturity or prior redemption, except that any money in
any Sinking Fund Account shall be used and withdrawn by the Trustee only to purchase or to
redeem or to pay Term Bonds for which such Sinking Fund Account was created.
(c) Administrative Expense Account. Following the deposits set forth above,
any money remaining in the Bond Fund shall be deposited by the Trustee in the
Administrative Expense Account. All money deposited in the Administrative Expense
Account shall be transferred by the Trustee to or upon the order of the City, as specified
in a Written Request of the City. Any moneys remaining in the Administrative Expense
Account at the end of any Bond Year shall be transferred to the Interest Account. Any
moneys remaining in the Administrative Expense Account after final payment of the
Bonds is made shall be returned to the City.
Section 4.03 Deposit and Investments of Money in Accounts and Funds. All money
held by the Trustee in any of the accounts or funds established pursuant hereto shall be invested
in Permitted Investments at the Written Request of the City. If no Written Request of the City is
received, the Trustee shall invest funds held by it in Permitted Investments described in clause
(6) of the definition thereof. Such investments shall, as nearly as practicable, mature on or
before the dates on which such money is anticipated to be needed for disbursement hereunder.
All interest or profits received on any money so invested shall be deposited in the Bond Fund.
Trustee may act as principal or agent in the acquisition or disposition of investments. For
investment purposes, the Trustee may, in its discretion, commingle the funds and accounts
45635.01436\32560729.1 29
hereunder, but shall account for each separately. The Trustee shall not be liable for any loss
from such investments.
The City acknowledges that to the extent regulations of the Comptroller of the Currency
or other applicable entity grant the City the right to receive brokerage confirmations of security
transactions as they occur, the City will not receive such confirmations to the extent permitted by
law. The Trustee will furnish the City periodic cash transaction statements which include detail
for all investment transactions made by the Trustee hereunder.
Section 4.04 Establishment of Deposit Fund and Transfers Therefrom. The following
Section shall apply in the event the City were to elect to enter into a Qualified Swap Agreement,
with the consent of the Bond Insurer. The Trustee shall establish a special fund designated as the
“City of Azusa Deposit Fund, Series 2020” (the “Deposit Fund”). The Deposit Fund shall be
funded and applied solely in accordance with this section; it is intended for the proper matching
of debt service payments on the Bonds, which may bear interest at variable rates under a
supplemental indenture, if any, that are covered by Qualified Swap Agreements, with the related
Swap Payments and the required netting of such payments in order to assure full and timely
payments to the Holders of the variable rate Bonds affected by such Qualified Swap Agreements
(collectively, “Swapped Bonds”); provided, that in the absence of any Qualified Swap
Agreements, the Deposit Fund shall remain unfunded.
On or before the date that is two (2) Business Days prior to each Interest Payment Date or
such other date that may be established for Swapped Bonds, the City shall transfer to the Trustee
for deposit into the Deposit Fund the portion of the City’s debt service prepayment obligation (as
set forth in Section 4.01) on deposit in the Bond Fund that is necessary in order to make Swap
Payments for all Swapped Bonds.
ARTICLE V
COVENANTS OF THE CITY
Section 5.01 Punctual Payment and Performance. The City will punctually pay the
principal, Accreted Value or redemption price of and the interest on every Bond issued
hereunder in strict conformity with the terms hereof and of the Bonds, and will faithfully observe
and perform all the agreements and covenants required to be observed or performed by the City
contained herein and in the Bonds.
Section 5.02 Extension of Payment of the Bonds. The City will not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
Event of Default hereunder, to the benefits hereof, except subject to the prior payment in full of
the Principal Amount of all of the Bonds then Outstanding and of all claims for interest thereon
which shall not have been so extended; provided, that nothing in this section shall be deemed to
limit the right of the City to issue bonds for the purpose of refunding any Outstanding Bonds,
and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
45635.01436\32560729.1 30
Section 5.03 Accounting Records and Reports. The City will keep or cause to be kept
proper books of record and accounts in which complete and correct entries shall be made of all
transactions relating to the receipts, disbursements, allocation and application of all money on
deposit in the funds established hereunder, which such books shall be available for inspection by
the Trustee and the Bond Insurer upon reasonable notice at reasonable times and under
reasonable conditions. Not more than two hundred ten (210) days after the close of each Fiscal
Year, the City shall furnish to the Trustee and the Bond Insurer copies of the audited financial
statements of the City for such Fiscal Year, including a balance sheet as of the end of such Fiscal
Year and such accompanying statements for such Fiscal Year as are required by generally
accepted accounting principles, with each such statement and balance sheet prepared in
accordance with generally accepted accounting principles consistently applied and audited by a
firm of Independent Certified Public Accountants; provided, that the Trustee shall have no duty
to review or examine any such financial statements.
Section 5.04 Prosecution and Defense of Suits. The City will defend against every suit,
action or proceeding at any time brought against the Trustee upon any claim to the extent
involving the failure of the City to fulfill its obligations hereunder; provided, that the Trustee or
any Holder at its election may appear in and defend any such suit, action or proceeding.
Section 5.05 Continuing Disclosure. The City will comply with and carry out all of the
provisions of the Continuing Disclosure Certificate executed by the City and dated the Closing
Date, as originally executed and as it may be amended from time to time in accordance with the
terms thereof, and notwithstanding any other provision hereof, failure of the City to comply with
such Continuing Disclosure Certificate shall not be considered an Event of Default hereunder;
provided, that any Holder may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the City to comply with its
obligations thereunder.
Section 5.06 Waiver of Laws. Except as provided by the California Tort Claims Act
(Division 3.6 (commencing with Section 810) of Title 1 of the Government Code of the State of
California), and to the extent permitted by law, the City shall not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law
now or at any time hereafter in force that may affect the agreements and covenants contained
herein or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly
waived by the City to the extent permitted by law.
Section 5.07 Further Assurances. Whenever and so often as reasonably requested to do
so by the Trustee , the Bond Insurer or any Holder, the City will promptly execute and deliver or
cause to be executed and delivered all such other and further assurances, documents or
instruments, and promptly do or cause to be done all such other and further things as may be
necessary or reasonably required in order to further and more fully vest in the Trustee, the Bond
Insurer and the Holders all rights, interests, powers, benefits, privileges and advantages conferred
or intended to be conferred upon them hereby.
Section 5.08 Reporting Requirements. The City will furnish, or cause to be furnished,
to the Bond Insurer:
45635.01436\32560729.1 31
(a) the fiscal year budget of the City prior to the beginning of each fiscal year;
(b) annual audits of the City prepared by an independent certified public
accountant, within one hundred eighty (180) days of the completion of the City’s fiscal
year;
(c) prior to the City issuing additional parity debt, any disclosure document or
financing agreement pertaining to such additional parity debt, which disclosure document
or financing agreement shall include, without limitation, the applicable maturity
schedule, interest rate or rates, redemption and security provisions pertaining to any such
additional parity debt;
(d) within thirty (30) days following any litigation or investigation that may
have a material adverse affect on the financial position of the City or the PERS Contract,
notice of such litigation or investigation; and
(e) Any other additional information as it may reasonably request regarding
the security for the Bonds with appropriate officers of the City, and will use its best
efforts to enable the Bond Insurer to have access to the facilities, books and records of the
City on any business day upon reasonable prior notice.
The Trustee shall notify the Bond Insurer of any failure of the City to provide notices,
certificates and other information under this Indenture.
ARTICLE VI
THE TRUSTEE
Section 6.01 The Trustee. Wilmington Trust, National Association is hereby appointed
the Trustee for the Bonds issued hereunder for the purpose of receiving all money which the City
is required to deposit with the Trustee hereunder and for the purpose of allocating, applying and
using such money as provided herein, with the rights and obligations provided herein, and the
City agrees that it will at all times so long as any Bonds are Outstanding maintain a Trustee
having the qualifications required hereby.
The City, with the prior written consent of the Bond Insurer, may at any time (unless
there exists any Event of Default hereunder), and shall at the written request of the Bond Insurer,
remove the Trustee initially appointed and any successor thereto and may appoint a successor or
successors thereto by an instrument in writing; provided, that any such successor shall be a state
or national bank or corporation with trust powers or a trust company having (or in the case of a
corporation, bank or trust company included in a bank holding company system, the related bank
holding company shall have) a combined capital (exclusive of borrowed capital) and surplus of
at least one hundred million dollars ($100,000,000) and shall be subject to supervision or
examination by federal or state authority; and if such bank, corporation or trust company
publishes a report of condition at least annually, pursuant to law or to the requirements of any
supervising or examining authority above referred to, then for the purpose of this section the
combined capital and surplus of such bank, corporation or trust company shall be deemed to be
its combined capital and surplus as set forth in its most recent report of condition so published.
The Trustee may at any time resign by giving written notice of such resignation to the City and
45635.01436\32560729.1 32
the Bond Insurer and by mailing notice of such resignation under Section 10.06 to the Holders,
and upon receiving such notice of resignation, the City shall promptly appoint a successor
Trustee by an instrument in writing. Any removal or resignation of a Trustee and appointment of
a successor Trustee shall become effective only after a successor Trustee acceptable to the Bond
Insurer shall have been appointed and upon the acceptance of appointment by such successor
Trustee; provided, that if, within thirty (30) days after notice of the removal or resignation of the
Trustee no successor Trustee shall have been appointed and shall have accepted such
appointment, the removed or resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee, which court may thereupon, after such notice, if any,
as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee
having the qualifications required hereby. The Trustee may be removed at any time, at the
request of the Bond Insurer, for any breach of its obligations and duties set forth herein.
Any bank, corporation or trust company into which the Trustee may be merged or
converted or with which it may be consolidated or any bank, corporation or trust company
resulting from any merger, conversion or consolidation to which it shall be a party or any bank,
corporation or trust company to which the Trustee may sell or transfer all or substantially all of
its corporate trust business shall become the successor Trustee without the execution or filing of
any paper or any further act, anything herein to the contrary notwithstanding; provided, that such
bank, corporation or trust company shall be eligible under this section.
The Trustee is hereby authorized to pay the principal, Accreted Value or redemption
price of the Bonds when duly presented for payment on their Principal Payment Dates or their
Redemption Dates as provided herein and to pay the interest on the Bonds on their Interest
Payment Dates as provided herein. The Trustee shall cancel all Bonds upon payment thereof on
their Principal Payment Date or on their Redemption Date or upon the surrender thereof to the
Trustee by the City, and the Trustee shall destroy all such cancelled Bonds and shall deliver a
certificate of destruction to the City and shall keep accurate records of all Bonds paid and
discharged and cancelled and destroyed by it.
The Trustee shall, prior to an Event of Default, and after the curing of all Events of
Default that may have occurred hereunder, perform such duties, and only such duties, as are
specifically set forth herein, and no implied duties or obligations shall be read herein. The
Trustee shall, during the existence of any Event of Default hereunder that has not been cured,
exercise such of the rights and powers vested in it hereby, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the circumstances in the
conduct of such person’s own affairs.
Section 6.02 Liability of the Trustee. The recitals of facts, agreements and covenants
contained herein and in the Bonds shall be taken as recitals of facts, agreements and covenants of
the City, and the Trustee shall not assume any responsibility for the correctness of the same and
does not make any representation as to the sufficiency, validity or priority hereof or of the
Bonds, and shall not incur any responsibility in respect thereof other than in connection with the
rights or obligations assigned to or imposed upon it herein, in the Bonds or in law or equity. The
Trustee shall not be liable in connection with the performance of its duties hereunder except for
its own negligence or willful misconduct, and the Trustee shall not be liable for any error of
45635.01436\32560729.1 33
judgment made in good faith unless it shall be proved that the Trustee was negligent in
ascertaining the relevant facts.
The Trustee shall not be bound to recognize any person as the Holder of a Bond unless
and until such Bond is submitted for inspection, if required, and such Holder’s title thereto
satisfactorily established, if disputed.
The Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Holders of not less than a majority in
aggregate principal amount of all Outstanding Bonds or the Bond Insurer relating to the time,
method and place of conducting any proceeding for any remedy available to the Trustee, or the
exercise of any trust or power conferred upon the Trustee hereunder.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it hereby at the request, order or direction of any of the Holders or the Bond Insurer pursuant to
the provisions hereof unless such Holders or the Bond Insurer shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby. The Trustee shall have no obligation or liability to the Holders for the
payment of the principal, Accreted Value or redemption price of or the interest on the Bonds
from its own funds; but rather the Trustee’s obligations shall be limited solely to the performance
of its duties hereunder.
The Trustee shall not be deemed to have knowledge of any Event of Default hereunder
unless and until an officer of the Trustee at its Corporate Trust Office responsible for the
administration of its duties hereunder shall have actual knowledge thereof or shall have received
written notice thereof, and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any of the agreements, conditions, covenants or terms contained
herein or of any of the documents executed in connection with the Bonds, or as to the existence
of an Event of Default hereunder but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the City, personally or by agent or attorney.
The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through attorneys in fact, agents or receivers, and shall not be
answerable for the negligence or misconduct of any such attorney in fact, agent or receiver if
such attorney-in-fact, agent or receiver was selected by the Trustee with due care. The Trustee
shall be entitled to advice of counsel and other professionals concerning all matters of trust and
its duty hereunder, but the Trustee shall not be answerable for the professional malpractice of
any attorney at law or certified public accountant in connection with the rendering of his
professional advice in accordance with the terms hereof if such attorney at law or certified public
accountant was selected by the Trustee with due care.
The Trustee shall not be concerned with or accountable to anyone for the subsequent use
or application of any money or securities which shall be released to the City in accordance with
the provisions hereof.
45635.01436\32560729.1 34
Whether or not therein expressly so provided, every provision hereof or of any related
documents relating to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this article.
The Trustee shall be protected in acting upon any bond, certificate (including any
Certificate of the City), consent, email or facsimile transmission, notice, opinion, order, report,
request (including any Written Request of the City), requisition, resolution or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party
or parties. The Trustee may consult with counsel, who may be counsel of or to the City, with
regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith.
Whenever in the administration of its rights and obligations hereunder the Trustee shall
deem it necessary or desirable that a matter be established or proved prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by a Certificate of the City, which certificate shall be full
warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith
thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such matter
or may require such additional evidence as it may deem reasonable.
No provision hereof shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance or exercise of any of its duties hereunder, or in
the exercise of its rights or powers.
The Trustee shall have no responsibility, opinion, or liability with respect to any
information, statements or recital in any offering memorandum or other disclosure material
prepared or distributed with respect to the issuance of the Bonds.
The Trustee shall not be considered in breach of or in default with respect to any
obligation created hereunder in the event of any enforced delay in the performance of such
obligation due to unforeseeable causes beyond its control and without its fault or negligence,
including, but not limited to, acts of God, or of the public enemy, acts of a government, acts of
the City, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes,
explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor,
equipment, facilities, sources of energy, material or supplies in the open market, litigation or
arbitration involving a party or others relating to zoning or other governmental action or inaction,
malicious mischief, condemnation and unusually severe weather or delays of supplies or
subcontractors due to such causes or any similar event and/or occurrences beyond the control of
the Trustee.
No permissive power, right or remedy conferred upon the Trustee hereunder shall be
construed to impose a duty to exercise such power, right or remedy.
All moneys received by the Trustee, until used or applied or invested as provided in this
Indenture, shall be held in trust and such moneys need not be segregated from other moneys
45635.01436\32560729.1 35
except to the extent required by law or as provided in this Indenture. The Trustee shall not
otherwise be under liability for interest on any moneys received under this Indenture except such
as may be agreed upon.
The Trustee may become the Holder of Bonds with the same rights it would have if it
were not Trustee and, to the extent permitted by law, may act as depositary for and permit any of
its offices or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the rights of Holders, whether or not such committee shall represent
the Holders of a majority in principal amount of the Bonds then Outstanding.
The Trustee agrees to accept and act upon facsimile transmission of written instructions
and/or directions pursuant to this Indenture; provided, however, that: (a) subsequent to such
facsimile transmission of written instructions and/or directions the Trustee shall forthwith
receive the originally executed instructions and/or directions, (b) such originally executed
instructions and/or directions shall be signed by a person as may be designated and authorized to
sign for the party signing such instructions and/or directions, and (c) the Trustee shall have
received a current incumbency certificate containing the specimen signature of such designated
person.
Section 6.03 Compensation and Indemnification of the Trustee. The City covenants to
pay to the Trustee from time to time, and the Trustee shall be entitled to, receive reasonable
compensation for all services rendered by it in the exercise and performance of any of the powers
and duties hereunder, and the City will pay or reimburse the Trustee upon its request for all
expenses, disbursements and advances incurred or made by the Trustee in accordance with any
of the provisions hereof (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ) except any such
expense, disbursement or advance that may arise from its negligence or willful misconduct,
including the negligence or willful misconduct of any of its directors, officers or employees. The
City, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee,
including its directors, officers and employees, against any loss, damages, liability or expense
incurred without negligence or willful misconduct on the part of the Trustee arising out of or in
connection with the acceptance or administration of the trusts created hereby, including costs and
expenses (including attorneys’ fees) of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers hereunder; provided, that the
Trustee shall make payments on the Bonds when due, shall cause the acceleration of the Bonds
and shall cause the mandatory redemption of the Bonds in accordance herewith prior to seeking
any indemnity hereunder. The rights of the Trustee and the obligations of the City under this
section shall survive the discharge of the Bonds and the Indenture and the resignation or removal
of the Trustee.
ARTICLE VII
AMENDMENT OF THE INDENTURE
Section 7.01 Amendment of the Indenture.
(a) Amendment with Written Consent of Holders. The Indenture and the rights and
obligations of the City and of the Holders may be amended at any time (with the prior written
45635.01436\32560729.1 36
consent of the Bond Insurer and after one (1) week’s prior written notice to the Rating Agencies
without the City receiving any objection thereto) by a Supplemental Indenture which shall
become binding when the written consents of the Holders of a majority in aggregate principal
amount of the Outstanding Bonds, exclusive of Bonds disqualified as provided in Section 7.02,
are filed with the Trustee (except that so long as the Insurance Policy is in effect, only the
consent of the Bond Insurer shall be required to any such amendment) and after receipt of an
approving Opinion of Counsel that such amendment is authorized hereunder. No such
amendment shall (1) extend the maturity of or reduce the interest rate on or amount of interest on
or principal, Accreted Value or redemption price of any Bond without the express written
consent of the Holder of such Bond, or (2) reduce the percentage of Bonds required for the
written consent to any such amendment.
Notwithstanding any other provision hereof, the Bond Insurer shall be deemed to be the
Holder of any Bond insured by the Bond Insurer for purposes of granting consent to any
amendment so long as the Insurance Policy remains in full force and effect.
(b) Amendment without Written Consent of Holders. The Indenture and the rights
and obligations of the City and of the Holders may also be amended at any time for any purpose
that will not materially adversely affect the interests of the Holders (with the prior written
consent of the Bond Insurer and after one (1) week’s prior written notice to the Rating Agencies
without the City receiving any objection thereto) by a Supplemental Indenture which shall
become binding without the consent of any Holders, but only to the extent permitted by law and
after receipt of an approving Opinion of Counsel that any such amendment is authorized
hereunder, including (without limitation) for any one or more of the following purposes --
(i) to add to the agreements and covenants required herein to be
performed by the City other agreements and covenants thereafter to be performed
by the City, to pledge or assign additional security for the Bonds (or any portion
thereof) or to surrender any right or power reserved herein to or conferred herein
on the City;
(ii) to make such provisions for the purpose of curing any ambiguity or
of correcting, curing or supplementing any defective provision contained herein
and in any Supplemental Indenture or in regard to questions arising hereunder
which the City may deem desirable or necessary and not inconsistent herewith;
(iii) to modify, amend or add to the provisions herein or in any
Supplemental Indenture to permit the qualification hereof or thereof under the
Trust Indenture Act of 1939, as amended, or any similar federal statutes hereafter
in effect, and to add such other terms, conditions and provisions as may be
permitted by such statute or any similar statute;
(iv) to modify, amend or add to the provisions herein to provide for the
establishment of different interest rate modes, tender or purchase provisions in
connection with the Bonds or to adjust any Mode provided for to the
specifications for such Mode generally used by the remarketing agent, broker-
45635.01436\32560729.1 37
dealer or similar firm which has agreed with the City to handle the marketing,
remarketing or auctioning of the Bonds to which such Mode applies;
(v) to modify, amend or add to the provisions herein to provide for
credit facilities, liquidity facilities or other financial products agreements in
connection with the Bonds; or
(vi) to make any amendments necessary or appropriate to preserve or
protect the exemption of interest on the Bonds from State personal income taxes.
The Trustee shall not be required to enter into or consent to the execution of any
Supplemental Indenture which, in the sole judgment of the Trustee, might adversely affect the
rights, obligations, powers, privileges, indemnities, or immunities provided the Trustee herein.
Section 7.02 Disqualified Bonds. Bonds owned or held by or for the account of the
City shall not be deemed Outstanding for the purpose of any consent or other action or any
calculation of Outstanding Bonds provided in this article, and shall not be entitled to consent to
or take any other action provided in this article; provided, that the Trustee shall not be deemed to
have knowledge that the City owns any such Bonds unless the City is a Holder or the Trustee has
received written notice that the City is a Holder.
Section 7.03 Endorsement or Replacement of Bonds After Amendment. After the
effective date of any action taken as hereinabove provided, the City may determine that the
Bonds may bear a notation by endorsement (in a form approved by the City) as to such action,
and in that case upon demand of the Holder of any Outstanding Bond and presentation of his
Bond for such purpose at the Corporate Trust Office, a suitable notation as to such action shall be
made on such Bond; provided, that if the City shall so determine, new Bonds so modified as, in
the opinion of the City, shall be necessary to conform to such action shall be prepared and
executed, and in that case upon demand of the Holder of any Outstanding Bond a new Bond or
Bonds shall be exchanged at the Corporate Trust Office without cost to each Holder for his Bond
or Bonds then Outstanding upon surrender of such Outstanding Bond or Bonds.
Section 7.04 Amendment by Mutual Consent. The provisions of this article shall not
prevent any Holder from accepting any amendment as to the particular Bonds held by such
Holder, provided, that due notation thereof is made on such Bonds.
Section 7.05 [Bond Insurer Notice and Consent. With respect to amendments or
supplements to this Indenture described in Section 7.01(b), the Bond Insurer must be given
notice of any such amendments or supplements. With respect to amendments or supplements to
this Indenture described in Section 7.01(a), the Bond Insurer’s prior written consent is required.
Additionally, any provision in this Indenture expressly recognizing or granting rights in or to the
Bond Insurer may not be amended in any manner that affects the rights of the Bond Insurer
without the prior written consent of the Bond Insurer. Copies of any amendments or
supplements to this Indenture which are consented to by the Bond Insurer shall be sent to the
Rating Agencies. Notwithstanding any other provision of this Indenture, in determining whether
the rights of Holders will be adversely affected by any action taken pursuant to the terms and
provisions of this Indenture, the Trustee shall consider the effect on the Holders as if there were
45635.01436\32560729.1 38
no Insurance Policy; provided, that for purposes of Section 7.01(b), any amendment approved in
writing by the Bond Insurer shall be deemed to not materially adversely affect the interests of the
Holders so long as the Insurance Policy is in full force and effect at the time of the amendment.]
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF HOLDERS
Section 8.01 Events of Default. If any of the following events occur, they shall
constitute Events of Default hereunder, namely:
(a) If default shall be made by the City in the due and punctual payment of the
interest due on any Bond when and as the same shall become due and payable;
(b) If default shall be made by the City in the due and punctual payment of the
principal, Accreted Value or redemption price of any Bond when and as the same shall
become due and payable, whether at maturity as therein expressed or by proceedings for
redemption;
(c) If default shall be made by the City in the performance of any of the
agreements or covenants not otherwise described in (a) or (b) above, required herein to be
performed by the City, and such default shall have continued for a period of thirty (30)
days after the City shall have been given notice in writing of such default by the Trustee
or the Bond Insurer or the Holders of not less than twenty five per cent (25%) in
aggregate Principal Amount of the Outstanding Bonds, specifying such default and
requiring the same to be remedied; provided, if the default stated in the notice can be
corrected, but not within the applicable period, the Trustee and such Holders shall not
unreasonably withhold their consent to an extension of such time if corrective action is
instituted by the City within the applicable period and diligently pursued until the default
is corrected; or
(d) If an Event of Bankruptcy shall occur, or if under the provisions of any
other law for the relief or aid of debtors any court of competent jurisdiction shall assume
custody or control of the City or of the whole or any substantial part of its property.
Section 8.02 Remedies for Events of Default. If an Event of Default occurs hereunder
and is continuing, the Trustee shall (upon written direction of the Bond Insurer), by written
notice to the City, declare the Principal Amount of all Bonds then Outstanding and the interest
accrued thereon to be due and payable immediately, whereupon the same shall become
immediately due and payable without any further action or notice; provided, that if at any time
after such acceleration and before any judgment or decree for the payment of money with respect
thereto has been entered all amounts payable to the Trustee hereunder on the Bonds subject to
acceleration under this paragraph (except principal or Accreted Value of or the interest on the
Bonds which is due solely by reason of such acceleration) shall have been paid or payment shall
have been duly provided for by deposit with the Trustee and all existing Events of Default
hereunder shall have been cured or waived, then the Bond Insurer may annul such acceleration
and its consequences by written notice to the City and the Trustee, which such annulment shall
be binding upon the City and the Trustee and all of the Holders, but no such annulment shall
45635.01436\32560729.1 39
extend to or affect any subsequent Event of Default hereunder or impair any right or remedy
consequent thereon.
Section 8.03 Application of Funds Upon Acceleration. All money in the funds
provided in Sections 4.01 and 4.02 upon the date of the declaration of acceleration by the Trustee
as provided in Section 8.02 and any amounts thereafter received by the City hereunder shall be
transmitted to the Trustee and shall be applied by the Trustee in the following order --
First, to the payment of the fees, costs and expenses of the Trustee, if any, in carrying out
the provisions of this article, including payment of reasonable compensation to its accountants
and counsel and any outstanding fees and expenses of the Trustee, and then 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 and counsel;
Second, upon presentation of the several Bonds, and the stamping thereon of the amount
of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of
the whole amount then owing and unpaid upon the Bonds for the principal or Accreted Value
thereof and the interest thereon, with interest on the overdue principal or Accreted Value and
interest at the rate borne by such Bonds, and in case such money shall be insufficient to pay in
full the whole amount so owing and unpaid upon the Bonds, then to the payment of such
principal or Accreted Value, interest and (to the extent permitted by law) interest on overdue
principal or Accreted Value and interest without preference or priority among such principal or
Accreted Value, interest and interest on overdue principal or Accreted Value and interest ratably
to the aggregate of such principal or Accreted Value, interest and interest on overdue principal or
Accreted Value and interest, and then to the payment of fees and expenses or other amount due
the Bond Insurer and remaining unpaid.
Section 8.04 Institution of Legal Proceedings by the Trustee. If an Event of Default
hereunder shall happen and be continuing, the Trustee may, and upon the written request of the
Holders of a majority in Principal Amount of the Outstanding Bonds, and upon being
indemnified to its satisfaction therefor, shall (with prior written consent of the Bond Insurer)
proceed to protect or enforce its rights or the rights of the Holders of the Bonds hereunder by a
suit in equity or action at law, either for the specific performance of any agreement or covenant
contained herein or in aid of the execution of any power herein granted, or by mandamus or other
appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee
shall deem most effectual in support of any of its rights and duties hereunder.
Section 8.05 Non Waiver. Nothing in this article or in any other provision hereof or in
the Bonds shall affect or impair the obligation of the City, which is absolute and unconditional,
to pay the principal, Accreted Value or redemption price of and the interest on the Bonds to the
respective Holders of the Bonds on the respective Payment Dates as provided herein, or shall
affect or impair the right of such Holders, which is also absolute and unconditional, to institute
suit to enforce such payment by virtue of the contract embodied herein and in the Bonds.
A waiver of any default or breach of duty or contract by the Trustee or any Holder shall
not affect any subsequent default or breach of duty or contract or impair any rights or remedies
on any such subsequent default or breach of duty or contract. No delay or omission by the
45635.01436\32560729.1 40
Trustee or any Holder to exercise any right or remedy accruing upon any default or breach of
duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any
such default or breach of duty or contract or an acquiescence therein, and every right or remedy
conferred upon the Holders by the Act or by this article may be enforced and exercised from
time to time and as often as shall be deemed expedient by the Trustee or the Holders.
If any action, proceeding or suit to enforce any right or exercise any remedy is
abandoned, the Trustee, the City, the Bond Insurer and any Holder shall be restored to their
former positions, rights and remedies as if such action, proceeding or suit had not been brought
or taken.
Section 8.06 Actions by the Trustee as Attorney in Fact. Any action, proceeding or suit
which any Holder shall have the right to bring to enforce any right or remedy hereunder may be
brought by the Trustee for the equal benefit and protection of all Holders, whether or not the
Trustee is a Holder, and the Trustee is hereby appointed (and the successive Holders, by taking
and holding the Bonds issued hereunder, shall be conclusively deemed to have so appointed it)
the true and lawful attorney in fact of the Holders for the purpose of bringing any such action,
proceeding or suit and for the purpose of doing and performing any and all acts and things for
and on behalf of the Holders as a class or classes as may be advisable or necessary in the opinion
of the Trustee as such attorney in fact.
Section 8.07 Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Holders is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise and may be exercised without exhausting
and without regard to any other remedy conferred by the Act or by any other law.
Section 8.08 Limitation on Holders’ Right to Sue. No Holder of any Bond shall have
the right to institute any suit, action or proceedings, at law or equity, for any remedy hereunder
unless (a) such Holder shall have previously given to the Trustee written notice of the occurrence
of an Event of Default; (b) the Holders of at least a majority in aggregate Principal Amount of all
Outstanding Bonds and the Bond Insurer shall have made written request upon the Trustee to
exercise the powers hereinabove granted or to institute such suit, action or proceeding in its own
name; (c) such Holders shall have tendered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities to be incurred by it in compliance with such request;
and (d) the Trustee shall have refused or omitted to comply with such request for a period of
sixty (60) days after such request shall have been received by, and such tender of indemnity shall
have been made to, the Trustee; provided, that this limitation shall not apply to the Bond Insurer.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of
any remedy hereunder; it being understood and intended that no one or more Holders of Bonds
shall have any right in any manner whatever by his or their action to enforce any right hereunder
except in the manner herein provided, and that all proceedings at law or in equity to enforce any
provision hereof shall be instituted and maintained in the manner herein provided and for the
equal benefit of the Holders of all Outstanding Bonds.
45635.01436\32560729.1 41
Section 8.09 Absolute Obligation of the City. Nothing contained herein or in the Bonds
shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the
principal, Accreted Value or redemption price of and the interest on the Bonds to the respective
Holders of the Bonds on their respective Payment Dates as provided herein.
Section 8.10 [Rights of the Bond Insurer. Anything in this Indenture to the contrary
notwithstanding, upon the occurrence and continuation of an Event of Default, the Bond Insurer
shall be entitled to control and direct the enforcement of all rights and remedies granted
hereunder to the Holders, or to the Trustee for the benefit of the Holders, including but not
limited to rights and remedies granted pursuant to Sections 8.04 and 8.08 and including but not
limited to the right to approve all waivers of any Events of Default. In the event of any
Bankruptcy of the City, any reorganization or liquidation plan with respect to the City shall be
subject to the approval of the Bond Insurer, and the Bond Insurer shall have the right to vote on
behalf of the Holders. The rights granted to the Bond Insurer under this Indenture shall be
deemed terminated and shall not be exercisable by the Bond Insurer during any period during
which the Bond Insurer shall be in default under the Insurance Policy.]
ARTICLE IX
DEFEASANCE
Section 9.01 Discharge of the Bonds.
(a) If the City shall pay or cause to be paid or there shall otherwise be paid to the
Holders of all Outstanding Bonds the principal, Accreted Value or redemption price thereof and
the interest thereon at the times and in the manner stipulated herein and therein, then all
agreements, covenants and other obligations of the City to the Holders of such Bonds hereunder
shall thereupon cease, terminate and become void and be discharged and satisfied, and in such
event the Trustee shall execute and deliver to the City all such instruments as may be necessary
or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver
to the City all money or securities held by it pursuant hereto which are not required for the
payment of the principal, Accreted Value or redemption price of and the interest on such Bonds.
(b) Any Outstanding Bonds shall prior to the Payment Dates or Redemption Dates
thereof be deemed to have been paid within the meaning of and with the effect expressed in
subsection (a) of this section if (1) there shall have been deposited with the Trustee either (A)
money or (B) Federal Securities which are not subject to redemption prior to maturity (including
any such Federal Securities issued or held in book entry form on the books of the Treasury of the
United States of America), the interest on and principal of which when paid will provide money,
which, together with other money, if any, deposited with the Trustee at the same time, shall be
sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the
principal, Accreted Value or redemption price of and the interest on such Bonds on and prior to
the Payment Dates or Redemption Dates thereof, as the case may be, and (2) the City shall have
given the Trustee in form satisfactory to it irrevocable instructions to mail to the Holders in
accordance with Section 10.06 and to the Information Services notice that the deposit required
by clause (1) above has been made with the Trustee and that such Bonds are deemed to have
been paid in accordance with this section and stating the Payment Dates or Redemption Dates on
45635.01436\32560729.1 42
which money is to be available for the payment of the principal, Accreted Value or redemption
price of and the interest on such Bonds.
The escrow agreement shall further provide that:
(i) Any substitution of securities shall require a verification by an
independent certified public accountant and the prior written consent of the Bond Insurer.
(ii) The City will not exercise any optional redemption of Bonds secured by
the escrow agreement or any other redemption other than mandatory sinking fund
redemptions unless (a) the right to make any such redemption has been expressly
reserved in the escrow agreement and such reservation has been disclosed in detail in the
official statement for the refunding bonds, and (b) as a condition of any such redemption
there shall be provided to the Bond Insurer a verification of an independent certified
public accountant as to the sufficiency of escrow receipts without reinvestment to meet
the escrow requirements remaining following such redemption.
(iii) The City shall not amend the escrow agreement or enter into a forward
purchase agreement or other agreement with respect to rights in the escrow without the
prior written consent of the Bond Insurer.
(iv) The escrow agreement shall be accompanied with an opinion addressed to
the Trustee and the Bond Insurer as to the validity and enforceability of the escrow
agreement as to the City.
(c) Notwithstanding anything in this Indenture to the contrary, in the event that the
principal and/or interest due on the Bonds shall be paid by the Bond Insurer pursuant to the
Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or
otherwise satisfied and not be considered paid by the City, and all covenants, agreements and
other obligations of the City to the Holders shall continue to exist and shall run to the benefit of
the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such Holders.
Section 9.02 Unclaimed Money. Anything contained herein to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of the
Bonds or the interest thereon which remains unclaimed for two (2) years after the date when such
Bonds or interest thereon shall have become due and payable, if such money was held by the
Trustee at such date, or for two (2) years after the date of deposit of such money if deposited
with the Trustee after the date when such Bonds and interest shall have become due and payable,
shall be repaid by the Trustee to the City as its absolute property free from trust, and the Trustee
shall thereupon be released and discharged with respect thereto and the Holders shall not look to
the Trustee for the payment of such Bonds; provided, that before being required to make any
such payment to the City, the Trustee may, and at the request of the City shall, at the expense of
the City, mail to the Holders in accordance with Section 10.06 and to the Information Services a
notice that such money remains unclaimed and that, after a date named in such notice, which
date shall not be less than thirty (30) days after the date of mailing such notice, the balance of
such money then unclaimed will be returned to the City.
45635.01436\32560729.1 43
ARTICLE X
MISCELLANEOUS
Section 10.01 Benefits of the Indenture Limited to Parties. Nothing contained herein,
expressed or implied, is intended to give to any person other than the Trustee, the City, the
Holders and the Bond Insurer any right, remedy or claim under or by reason hereof, and any
agreement, condition, covenant or term contained herein required to be observed or performed
by or on behalf of the City or any officer or employee thereof shall be for the sole and exclusive
benefit of the Trustee, the Holders and the Bond Insurer, and to the extent that the Indenture
confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by
reason hereof, the Bond Insurer is hereby explicitly recognized as being a third party beneficiary
hereunder and may enforce any such right, remedy or claim conferred, given or granted
hereunder.
Section 10.02 Successor Is Deemed Included In All References To Predecessor.
Whenever herein either the City or any officer thereof or the Trustee is named or referred to,
such reference shall be deemed to include the successor or assigns thereof, and all agreements
and covenants required hereby to be performed by or on behalf of the City or any officer thereof
or the Trustee shall bind and inure to the benefit of the respective successors thereof whether so
expressed or not.
Section 10.03 Execution of Documents by Holders. Any declaration, request or other
instrument which is permitted or required herein to be executed by Holders may be in one or
more instruments of similar tenor and may be executed by Holders in person or by their attorneys
appointed in writing. The fact and date of the execution by any Holder or such Holder’s attorney
of any declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to make
acknowledgments of deeds to be recorded in the state or territory in which such person purports
to act that the person signing such declaration, request or other instrument or writing
acknowledged to such person the execution thereof, or by an affidavit of a witness of such
execution duly sworn to before such notary public or other officer. The ownership of any Bonds
and the amount, maturity, number and date of holding the same may be proved by the
registration books for the Bonds maintained by the Trustee under Section 2.10.
Any declaration, request, consent or other instrument or writing of the Holder of any
Bond shall bind all future Holders of such Bond with respect to anything done or suffered to be
done by the Trustee or the City in good faith and in accordance therewith.
Section 10.04 Waiver of Personal Liability. No officer of the City shall be individually
or personally liable for the payment of the principal, Accreted Value or redemption price of or
the interest on the Bonds by reason of their issuance, but nothing herein contained shall relieve
any officer of the City from the performance of any official duty provided by the Act or any
other applicable provisions of law or hereby.
Section 10.05 Acquisition of Bonds by the City. All Bonds acquired by the City shall be
surrendered to the Trustee for cancellation.
45635.01436\32560729.1 44
Section 10.06 Notice to Holders. Any notice required to be given by the Trustee
hereunder by mail to any Holders of Bonds shall be given by mailing a copy of such notice, first
class postage prepaid, or by giving such notice by telecopy or by an overnight delivery service,
to the Holders of such Bonds at their addresses appearing in the registration books maintained by
the Trustee pursuant to Section 2.10 not less than thirty (30) days nor more than forty -five (45)
days following the action or prior to the event concerning which notice thereof is required to be
given; provided, that receipt of any such notice shall not be a condition precedent to the effect of
such notice and neither failure of any Holder to receive any such notice nor any immaterial
defect contained therein shall affect the validity of the proceedings taken in connection with the
action or the event concerning which such notice was given.
Section 10.07 Content of Certificates. Every Certificate of the City with respect to
compliance with any agreement, condition, covenant or provision provided herein shall include
(a) a statement that the person or persons making or giving such certificate have read such
agreement, condition, covenant or provision and the definitions herein relating thereto; (b) a brief
statement as to the nature and scope of the examination or investigation upon which the
statements contained in such certificate are based; (c) a statement that, in the opinion of the
signers, they have made or caused to be made such examination or investigation as is necessary
to enable them to express an informed opinion as to whether or not such agreement, condition,
covenant or provision has been complied with; and (d) a statement as to whether, in the opinion
of the signers, such agreement, condition, covenant or provision has been complied with.
Any Certificate of the City may be based, insofar as it relates to legal matters, upon an
Opinion of Counsel unless the person making or giving such certificate knows that the Opinion
of Counsel with respect to the matters upon which his certificate may be based, as aforesaid, is
erroneous, or in the exercise of reasonable care should have known that the same was erroneous.
Any Opinion of Counsel may be based, insofar as it relates to factual matters information with
respect to which is in the possession of the City, upon a representation by an officer or officers of
the City unless the counsel executing such Opinion of Counsel knows that the representation
with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous, or in
the exercise of reasonable care should have known that the same was erroneous.
Section 10.08 Accounts and Funds; Business Days. Any account or fund required
hereby to be established and maintained by the Director of Finance or the Trustee may be
established and maintained in the accounting records of the Director of Finance or the Trustee, as
the case may be, either as an account or a fund, and may, for the purposes of such accounting
records, any audits thereof and any reports or statements with respect thereto, be treated either as
an account or a fund; but all such records with respect to all such accounts and funds shall at all
times be maintained in accordance with sound accounting practice and with due regard for the
protection of the security of the Bonds and the rights of the Holders. Any action required to
occur hereunder on a day which is not a Business Day shall be required to occur on the next
succeeding Business Day.
Section 10.09 Addresses of Notice Parties. All written notices to be given hereunder
shall be given by mail to the party entitled thereto (with copy to the Bond Insurer) at its address
set forth below, or at such other address as such party may provide to the other party in writing
from time to time, namely:
45635.01436\32560729.1 45
If to the City:
City of Azusa
Azusa City Hall
213 E. Foothill Boulevard
Azusa, CA 91702-1395
Attention: Director of Finance
If to the Trustee:
Wilmington Trust, National Association
650 Town Center Drive, Suite 600
Costa Mesa, CA 92626
FAX:
Attention:
If to the Bond Insurer:
[To Come]
Section 10.10 Article and Section Headings, Singular and Plural Forms, Gender and
References. The headings or titles of the several articles and sections hereof and the table of
contents appended hereto shall be solely for convenience of reference and shall not affect the
meaning, construction or effect hereof, and the singular and plural forms of words shall be
deemed interchangeable, and words of any gender shall be deemed and construed to include all
genders, and all references herein to “Articles,” “Sections” and other subdivisions or clauses are
to the corresponding articles, sections, subdivisions or clauses hereof; and the words “hereby,”
“herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to
the Indenture as a whole and not to any particular article, section, subsection, paragraph,
subparagraph or clause in which such word appears.
Section 10.11 Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof required hereby to be performed by or on the part of the Trustee or the City shall
be contrary to law, then such agreement or agreements, such covenant or covenants or such
portions thereof shall be null and void and shall be deemed separable from the remaining
agreements and covenants or portions thereof and shall in no way affect the validity hereof or of
the Bonds, and the Holders shall retain all the benefit, protection and security afforded to them
under the Act or any other applicable provisions of law. The Trustee and the City hereby declare
that they would have executed and delivered the Indenture and each and every other article,
section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized
the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more articles,
sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof
to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 10.12 Execution in Counterparts. The Indenture may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed to be an original;
and all such counterparts, or as many of them as the Trustee and the City shall preserve
undestroyed, shall together constitute but one and the same instrument.
45635.01436\32560729.1 46
Section 10.13 Governing Law. The Indenture shall be governed by and construed in
accordance with the laws of the State.
(Signature page follows)
S-1
IN WITNESS WHEREOF, Wilmington Trust, National Association in token of its
acceptance of the trusts created hereunder, has caused the Indenture to be signed in its name by
one of its duly authorized officers, and the City of Azusa has caused the Indenture to be signed in
its name by the City Manager of the City, all as of the day and year first above written.
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By: _____________________________________
Authorized Officer
CITY OF AZUSA
By: _____________________________________
Sergio Gonzalez
City Manager
-Signature Page-
Indenture
45635.01436\32560729.1 A-1
APPENDIX A
FORM OF STANDARD BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF AZUSA
TAXABLE PENSION FUNDING BOND, SERIES 2020
No. R-__ $__________
Interest
Rate
Maturity
Date
Original
Issue Date
CUSIP
__________, 2020
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: DOLLARS
THE OBLIGATIONS OF THE CITY HEREUNDER, INCLUDING THE OBLIGATION TO
MAKE ALL PAYMENTS WHEN DUE, ARE OBLIGATIONS OF THE CITY IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT ANY RIGHT OF SET-
OFF OR COUNTERCLAIM. THIS BOND DOES NOT CONSTITUTE AN OBLIGATION OF
THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM
OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF
TAXATION, AND NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO
MAKE PAYMENTS ON THE BONDS CONSTITUTE AN INDEBTEDNESS OF THE CITY,
THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN
THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
The City of Azusa, a municipal corporation organized and validly existing under the
Constitution and laws of the State of California (the “City”), for value received hereby promises
to pay in lawful money of the United States of America to the registered owner specified above,
or registered assigns, on the maturity date specified above (subject to any right of prior
redemption hereinafter provided for) the principal sum specified above, together with interest on
such principal sum from the interest payment date next preceding the date of authentication of
this Bond (unless this Bond is authenticated as of an interest payment date or during the period
from the Record Date (as that term is defined in the Indenture hereafter defined, and herein a
“Record Date”) preceding an interest payment date to such interest payment date, in which event
it shall bear interest from such interest payment date, or unless this Bond is authenticated prior to
the first interest payment date, in which event it shall bear interest from the original issue date
specified above) until the principal hereof shall have been paid at the interest rate per annum
45635.01436\32560729.1 A-2
specified above, payable on July 1, ____, and thereafter on January 1 and July 1 of each year.
Interest due on or before the maturity or prior redemption hereof shall be payable only by check
mailed by first class mail to the registered owner hereof by Wilmington Trust, National
Association, as trustee (the “Trustee”); provided, that upon the written request of the registered
owner of one million dollars ($1,000,000) or more in aggregate principal amount of Bonds
received by the Trustee prior to the applicable Record Date, interest shall be paid by wire
transfer in immediately available funds. The principal hereof and redemption premium, if any,
hereon is payable in lawful money of the United States of America at the Corporate Trust Office
(as that term is defined in the Indenture hereinafter defined, and herein “Corporate Trust Office”)
of the Trustee.
This Bond is one of a duly authorized issue of bonds of the City designated as its
“Taxable Pension Funding Bonds, Series 2020,” further designated “Series 2020” and issued as
Fixed Rate Bonds (the “2020 Bonds” or the “Bonds”) in the aggregate principal amount of
$__________ all of like tenor and date (except for such variations, if any, as may be required to
designate varying numbers, maturities and interest rates and modes), and is issued under and
pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570) of Chapter 3
of Division 2 of Title 5 of the Government Code of the State of California and all laws
amendatory thereof or supplemental thereto (the “Act”) and is issued under and pursuant to the
provisions of an Indenture dated as of __________, by and between the Trustee and the City (the
“Indenture”) (copies of which are on file at the Corporate Trust Office of the Trustee).
Under the Indenture, the obligation of the City under the 2020 Bonds, including the
obligation to make all payments of the principal of and the interest on the 2020 Bonds on their
respective Payment Dates (as that term is defined in the Indenture), is exempt from the debt
limitations of the California Constitution, the City is obligated, to the extent permitted by law, to
satisfy its obligations under the 2020 Bonds from any lawfully available funds of the City.
Reference is hereby made to the Act and to the Indenture and to any and all amendments thereof
for a description of the terms on which the 2020 Bonds are issued, for the rights of the registered
owners of the 2020 Bonds, for the security for payment of the 2020 Bonds, for the remedies
upon default and the limitations thereon and for the provisions for the amendment of the
Indenture (with or without consent of the registered owners of the 2020 Bonds); and all the terms
of the Indenture are hereby incorporated herein and constitute a contract between the City and
the registered owner of this Bond, to all the provisions of which the registered owner of this
Bond, by acceptance hereof, agrees and consents. Under the Indenture, additional bonds may be
issued on a parity with the 2020 Bonds, but only subject to the conditions and upon compliance
with the procedures set forth in the Indenture.
The Bonds are subject to redemption on the dates, at the redemption prices and pursuant
to the terms set forth in the Indenture. Notice of redemption of any Bonds or any portions
thereof shall be given as set forth in the Indenture. Failure by the Trustee to give notice pursuant
to the Indenture to any one or more of the Information Services, or the insufficiency of any such
notice or the failure of any registered owner to receive any redemption notice mailed to such
registered owner or any immaterial defect in the notice so mailed shall not affect the sufficiency
of the proceedings for the redemption of any Bonds; provided, that any such notice of
redemption may be cancelled and annulled by a Written Request of the City (as that term is
defined in the Indenture) given to the Trustee at least five (5) days prior to the date fixed for
45635.01436\32560729.1 A-3
redemption, whereupon the Trustee shall forthwith give appropriate notice of such cancellation
and annulment to all the recipients of such notice of redemption.
If an Event of Default (as that term is defined in the Indenture) shall occur, the Principal
Amount of all Bonds (and any additional bonds authorized by the Indenture) may be declared
due and payable upon the conditions, in the manner and with the effect provided in the
Indenture; provided, that the Indenture provides that in certain events such declaration and its
consequences may be rescinded under the circumstances as provided therein.
This Bond is transferable only on a register to be kept for that purpose at the above
mentioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Indenture and upon surrender of
this Bond, together with a written instrument of transfer satisfactory to the Trustee duly executed
by the registered owner or his duly authorized attorney, and thereupon a new fully registered
Bond or Bonds of the same maturity in the same aggregate principal amount of authorized
denominations will be issued to the transferee in exchange therefor. The Trustee and the City
may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of
receiving payment of the interest hereon and principal hereof and for all other purposes, whether
or not this Bond shall be overdue, and neither the Trustee nor the City shall be affected by any
notice or knowledge to the contrary; and payment of the principal, Accreted Value or redemption
price of and interest on this Bond shall be made only to such registered owner, which payments
shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum
so paid.
This Bond shall not be entitled to any benefit, protection or security under the Indenture
or become valid or obligatory for any purpose until the certificate of authentication and
registration hereon endorsed shall have been executed and dated by an authorized signatory the
Trustee.
It is hereby certified that all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required 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 Indenture.
(Balance of this page intentionally left blank)
45635.01436\32560729.1 A-4
IN WITNESS WHEREOF, the City of Azusa has caused this Bond to be executed in its
name and on its behalf by the signature of the Mayor of the City and countersigned by the
signature of the City Clerk, who has caused this Bond to be dated as of the original issue date
specified above.
CITY OF AZUSA
By: _____________________________________
Joseph Romero Rocha
Mayor
Countersigned:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
45635.01436\32560729.1 A-5
DTC ENDORSEMENT
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof Cede & Co., has an interest herein.
45635.01436\32560729.1 A-6
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within mentioned Indenture which has been
authenticated on ____________________.
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By: _____________________________________
Authorized Signatory
45635.01436\32560729.1 A-7
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
______________________________________________________________________________
______________________________________________________________________________
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within- mentioned Bond and hereby irrevocably constitutes and appoints
_____________________, attorney, to transfer the same on the Bond register of the Trustee with
full power of substitution in the premises.
Dated:
Note: The signature(s) on 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.
Signature Guaranteed:
Note: Signature guarantee shall be made by
a guarantor institution participating in the Securities
Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.
45635.01436\32560729.1 B-1
APPENDIX B
FORM OF CAPITAL APPRECIATION BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF AZUSA
TAXABLE PENSION FUNDING BOND, SERIES 2020
No. R-____ $________
Yield to Maturity Maturity Date Dated Date CUSIP
__________, 2020
REGISTERED OWNER:
INITIAL PRINCIPAL AMOUNT:
MATURITY AMOUNT:
THE OBLIGATIONS OF THE CITY HEREUNDER, INCLUDING THE OBLIGATION TO
MAKE ALL PAYMENTS OF ACCRETED VALUE WHEN DUE, ARE OBLIGATIONS OF
THE CITY IMPOSED BY LAW AND ARE ABSOLUTE AND UNCONDITIONAL,
WITHOUT ANY RIGHT OF SET-OFF OR COUNTERCLAIM. THIS BOND DOES NOT
CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED
TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS
LEVIED OR PLEDGED ANY FORM OF TAXATION, AND NEITHER THE BONDS NOR
THE OBLIGATION OF THE CITY TO MAKE PAYMENTS ON THE BONDS
CONSTITUTES AN INDEBTEDNESS OF THE CITY, THE STATE OF CALIFORNIA OR
ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
The City of Azusa, a municipal corporation organized and validly existing under the
Constitution and laws of the State of California (the “City”), for value received hereby promises
to pay in lawful money of the United States of America to the registered owner specified above,
or registered assigns, the Maturity Amount set forth above, on the Maturity Date set forth above.
Interest on this Bond with respect to the Principal Amount hereof will accrue at the Interest Rate
per annum shown above from the Dated Date shown above and will be compounded thereafter
on June 1 and December 1 of each year until maturity, computed using a year of 360 days
comprised of twelve 30-day months and shall be payable only at maturity as part of the Maturity
Amount. The Accreted Value hereof is payable at the corporate trust office of the Trustee,
Wilmington Trust, National Association. (the “Trustee”), located in Los Angeles, California, or
such other place as may be designated by the Trustee, acting as Trustee under that certain
Indenture, by and between the City and the Trustee, dated as of __________ (the “Indenture”).
45635.01436\32560729.1 B-2
This Bond is one of a duly authorized issue of bonds of the City designated as its
“Taxable Pension Funding Bonds, Series 2020,” further designated “Series 2020” and issued as
Fixed Rate Bonds (the “2020 Bonds” or the “Bonds”) in the aggregate principal amount of
$____________, all of like tenor and date (except for such variations, if any, as may be required
to designate varying numbers, maturities and interest rates and modes), and is issued under and
pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570) of Chapter 3
of Division 2 of Title 5 of the Government Code of the State of California and all laws
amendatory thereof or supplemental thereto (the “Act”) and is issued under and pursuant to the
provisions of Articles 10 and 11 (commencing with Section 53570) of Chapter 2, Division 2,
Title 5 of the Government Code of the State of California, and all laws amendatory thereof or
supplemental thereto (the “Act”) and under and pursuant to the provisions of the Indenture
(copies of which are on file at the Corporate Trust Office of the Trustee).
Under the Indenture, the obligation of the City under the 2020 Bonds, including the
obligation to make all payments of the principal, Accreted Value or redemption price of and the
interest on the 2020 Bonds on their respective Payment Dates (as that term is defined in the
Indenture), is exempt from the debt limitations of the California Constitution, the City is
obligated to satisfy its obligations under the 2020 Bonds from any lawfully available funds of the
City. Reference is hereby made to the Act and to the Indenture and to any and all amendments
thereof for a description of the terms on which the 2020 Bonds are issued, for the rights of the
registered owners of the 2020 Bonds, for the security for payment of the 2020 Bonds, for the
remedies upon default and the limitations thereon and for the provisions for the amendment of
the Indenture (with or without consent of the registered owners of the 2020 Bonds); and all the
terms of the Indenture are hereby incorporated herein and constitute a contract between the City
and the registered owner of this Bond, to all the provisions of which the registered owner of this
Bond, by acceptance hereof, agrees and consents. Under the Indenture, additional bonds may be
issued on a parity with the 2020 Bonds, but only subject to the conditions and upon compliance
with the procedures set forth in the Indenture.
This Bond is subject to redemption prior to its maturity date as set forth in the Indenture.
This Bond is transferable only on a register to be kept for that purpose at the
abovementioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Indenture and upon surrender of
this Bond, together with a written instrument of transfer satisfactory to the Trustee duly executed
by the registered owner or his duly authorized attorney, and thereupon a new fully registered
Bond or Bonds in the same aggregate principal amount of authorized denominations will be
issued to the transferee in exchange therefor. The City and the Trustee may deem and treat the
registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the
interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be
overdue, and neither the City nor the Trustee shall be affected by any notice or knowledge to the
contrary; and payment of the interest on and principal of this Bond shall be made only to such
registered owner, which payments shall be valid and effectual to satisfy and discharge liability
on this Bond to the extent of the sum or sums so paid.
This Bond shall not be entitled to any benefit, protection or security under the Indenture
or become valid or obligatory for any purpose until the certificate of authentication and
45635.01436\32560729.1 B-3
registration hereon endorsed shall have been executed and dated by an authorized signatory of
the Trustee.
It is hereby certified that all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required 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 Indenture.
(Balance of this page intentionally left blank)
45635.01436\32560729.1 B-4
IN WITNESS WHEREOF, the City of Azusa has caused this Bond to be executed in its
name and on its behalf by the signature of the Mayor of the City and countersigned by the
signature of the City Clerk, who has caused this Bond to be dated as of the original issue date
specified above.
CITY OF AZUSA
By: _____________________________________
Joseph Romero Rocha
Mayor
Countersigned:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
45635.01436\32560729.1 B-5
DTC ENDORSEMENT
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof Cede & Co., has an interest herein.
45635.01436\32560729.1 B-6
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture which has been
authenticated on ___________________________.
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By: _____________________________________
Authorized Signatory
45635.01436\32560729.1 B-7
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
______________________________________________________________________________
______________________________________________________________________________
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within- mentioned Bond and hereby irrevocably constitutes and appoints
_____________________, attorney, to transfer the same on the Bond register of the Trustee with
full power of substitution in the premises.
Dated:
Note: The signature(s) on 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.
Signature Guaranteed:
Note: Signature guarantee shall be made by
a guarantor institution participating in the Securities
Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.
45635.01436\32560729.1 B-8
STATEMENT OF INSURANCE
[TO COME]
45635.01436\32560729.1 C-1
APPENDIX C
FORM OF CONVERTIBLE CAPITAL APPRECIATION BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF AZUSA
TAXABLE PENSION FUNDING BOND, SERIES 2020
No. R-____ $________
Reoffering
Yield
Yield to
Maturity
Maturity
Date
Conversion
Date
Dated Date CUSIP ISIN
% ___% ________
_, ____
_________,
____
Date of
Delivery
________
___
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CONVERSION DATE AMOUNT:
THE OBLIGATIONS OF THE CITY HEREUNDER, INCLUDING THE OBLIGATION TO
MAKE ALL PAYMENTS WHEN DUE, ARE OBLIGATIONS OF THE CITY IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT ANY RIGHT OF SET-
OFF OR COUNTERCLAIM. THIS BOND DOES NOT CONSTITUTE AN OBLIGATION OF
THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM
OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF
TAXATION, AND NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO
MAKE PAYMENTS ON THE BONDS CONSTITUTES AN INDEBTEDNESS OF THE
CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATION OR RESTRICTION.
The City of Azusa, a municipal corporation organized and validly existing under the
Constitution and laws of the State of California (the “City”), for value received hereby promises
to pay in lawful money of the United States of America to the registered owner specified above,
or registered assigns, the Conversion Date Amount set forth above, on the Conversion Date set
forth above. Interest on this Bond with respect to the Principal Amount hereof will accrue at the
Interest Rate per annum shown above from the Dated Date shown above and will be
compounded thereafter on __________ and ____________ of each year until the Conversion
Date, computed using a year of 360 days comprised of twelve 30-day months and shall be
payable only at maturity as part of the Maturity Amount. Thereafter, interest on this bond shall
accrue at the interest rate shown above on January 1 and July 1 of each year until the Maturity
45635.01436\32560729.1 C-2
Date, computed using a year of 360 days comprised of twelve 30-day months. The Conversion
Date Amount hereof is payable at the corporate trust office of the Trustee, Wilmington Trust,
National Association (the “Trustee”), located in Los Angeles, California, or such other place as
may be designated by the Trustee, acting as Trustee under that certain Indenture, by and between
the City and the Trustee, dated as of __________ (the “Indenture”).
This Bond is issued under and pursuant to the provisions of Articles 10 and 11
(commencing with Section 53570) of Chapter 2, Division 2, Title 5 of the Government Code of
the State of California, and all laws amendatory thereof or supplemental thereto (the “Act”) and
under and pursuant to the provisions of the Indenture (copies of which are on file at the
Corporate Trust Office of the Trustee). The Bonds are issued on a parity under the Indenture
with $______ aggregate principal amount of the City’s Taxable Pension Funding Bonds, 2020
Series ___, ___ and ___ (collectively with the Bonds, the “2020 Bonds”).
Under the Indenture, the obligation of the City under the 2020 Bonds, including the
obligation to make all payments of the principal, Conversion Date Amount of and the interest on
the 2020 Bonds on their respective Payment Dates (as that term is defined in the Indenture), is
exempt from the debt limitations of the California Constitution, the City is obligated to satisfy its
obligations under the 2020 Bonds from any lawfully available funds of the City. Reference is
hereby made to the Act and to the Indenture and to any and all amendments thereof for a
description of the terms on which the 2020 Bonds are issued, for the rights of the registered
owners of the 2020 Bonds, for the security for payment of the 2020 Bonds, for the remedies
upon default and the limitations thereon and for the provisions for the amendment of the
Indenture (with or without consent of the registered owners of the 2020 Bonds); and all the terms
of the Indenture are hereby incorporated herein and constitute a contract between the City and
the registered owner of this Bond, to all the provisions of which the registered owner of this
Bond, by acceptance hereof, agrees and consents. Under the Indenture, additional bonds may be
issued on a parity with the 2020 Bonds, but only subject to the conditions and upon compliance
with the procedures set forth in the Indenture.
[This Bond is subject to redemption prior to its maturity date as set forth in the
Indenture.]
This Bond is transferable only on a register to be kept for that purpose at the
abovementioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Indenture and upon surrender of
this Bond, together with a written instrument of transfer satisfactory to the Trustee duly executed
by the registered owner or his duly authorized attorney, and thereupon a new fully registered
Bond or Bonds in the same aggregate principal amount of authorized denominations will be
issued to the transferee in exchange therefor. The City and the Trustee may deem and treat the
registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the
interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be
overdue, and neither the City nor the Trustee shall be affected by any notice or knowledge to the
contrary; and payment of the interest on and principal of this Bond shall be made only to such
registered owner, which payments shall be valid and effectual to satisfy and discharge liability
on this Bond to the extent of the sum or sums so paid.
45635.01436\32560729.1 C-3
This Bond shall not be entitled to any benefit, protection or security under the Indenture
or become valid or obligatory for any purpose until the certificate of authentication and
registration hereon endorsed shall have been executed and dated by an authorized signatory of
the Trustee.
It is hereby certified that all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required 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 Indenture.
(Balance of this page intentionally left blank)
45635.01436\32560729.1 C-4
IN WITNESS WHEREOF, the City of Azusa has caused this Bond to be executed in its
name and on its behalf by the signature of the Mayor of the City and countersigned by the
signature of the City Clerk, who has caused this Bond to be dated as of the original issue date
specified above.
CITY OF AZUSA
By: _____________________________________
Joseph Romero Rocha
Mayor
Countersigned:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
45635.01436\32560729.1 C-5
DTC ENDORSEMENT
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof Cede & Co., has an interest herein.
45635.01436\32560729.1 C-6
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture which has been
authenticated on ___________________________.
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By: _____________________________________
Authorized Signatory
45635.01436\32560729.1 C-7
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
__________________________ (Taxpayer Identification Number: ________________) the
within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney
to transfer the within bond on the books kept for registration thereof, with full power of
substitution in the premises.
______________________________________
Dated: ________________
Note: The signature to this Assignment must correspond with the name as written on the face of
the Bond in every particular, without alteration or enlargement or any change whatever.
Signature Guaranteed: __________________________________________________________
Notice: Signature(s) guarantee should be made by a guarantor institution
participating in the Securities Transfer Agents Medallion Program.
45635.01436\32560729.1 C-8
STATEMENT OF INSURANCE
45635.01436\32560729.1 D-1
APPENDIX D
INTEREST RATE AND PAYMENT DATES, PRINCIPAL PAYMENT DATES,
MANDATORY AND OPTIONAL REDEMPTION PROVISIONS FOR 2020 BONDS
$__________
CITY OF AZUSA
TAXABLE PENSION FUNDING BONDS
SERIES 2020
Series 2020 Bonds
Maturity Schedule
$__________ Principal Amount
Series 2020 Current Interest Bonds
Maturity Dates
(January 1)
Initial
Principal
Interest
Rate
Interest Payment Dates
Interest Payment Dates for Series 2020 Current Interest Bonds shall be January 1 and
July 1, commencing on July 1, ____.
Redemption Provisions
(a) Optional Redemption. The Bonds maturing on or before January 1, ____, are not
subject to optional redemption prior to their respective stated maturities. The Bonds maturing
after January 1, ____, are subject to optional redemption from any source of available funds of
the City, prior to their respective maturities, in whole or in part among maturities as specified by
City, and by lot within a maturity, on any date on or after January 1, ____, at a redemption price
equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued interest
thereon to the date of redemption, without premium.
The City must give the Trustee written notice of its intention to redeem Bonds under this
subsection (a), and the manner of selecting such Bonds for redemption from among the
45635.01436\32560729.1 D-2
maturities thereof, in sufficient time to enable the Trustee to give notice of such redemption in
accordance with subsection (c) of this Section.
(b) Sinking Fund Redemption.
(i) The Bonds maturing January 1, ____, are subject to mandatory redemption
from mandatory Sinking Account payments, in part, by lot, on January 1, ____, and on
each January 1 thereafter to and including January 1, ____, from money on hand in the
Sinking Account at a redemption price equal to the principal amount thereof, plus
accrued interest thereon to the redemption date, without premium, as set forth below
(subject to modification in the event of an optional redemption mentioned above):
Redemption Date
(January 1)
Principal
Amount
(ii) The Bonds maturing January 1, ____, are subject to mandatory redemption
from mandatory Sinking Account payments, in part, by lot, on January 1, ____, and on
each January 1 thereafter to and including January 1, ____, from money on hand in the
Sinking Account at a redemption price equal to the principal amount thereof, plus
accrued interest thereon to the redemption date, without premium, as set forth below
(subject to modification in the event of an optional redemption mentioned above):
Redemption Date
(January 1)
Principal
Amount
45635.01436\32555248.1 1
$__________
CITY OF AZUSA
TAXABLE PENSION FUNDING BONDS
SERIES 2020
BOND PURCHASE AGREEMENT
[__________, 20__]
City of Azusa
213 East Foothill Boulevard
Azusa, California
Ladies and Gentlemen:
[To Come] (the “Underwriter”), hereby offers to purchase pursuant to this bond purchase
agreement (the “Purchase Agreement”) with the City of Azusa (the “City”), all (but not less than all) of
$__________ City of Azusa Taxable Pension Funding Bonds, Series 2020 (the “Bonds”) subject to the
following conditions:
1.The Bonds shall be issued pursuant to that certain Indenture, dated as of __________ (the
“Indenture”), by and between the City and Wilmington Trust, National Association, as trustee (the
“Trustee”). The issuance of the Bonds shall be authorized pursuant to a resolution adopted by the City
Council (the “Resolution”). The Bonds are being issued to fund certain pension obligations of the City as
more fully described in the hereinafter mentioned Official Statement. The City Council of the City will
be obligated to make appropriations to pay the Bonds from any source of legally available funds of the
City. The City Council will be obligated in each fiscal year to appropriate all amounts from such funds as
may be required to pay the aggregate amount of the principal of and interest on the Bonds coming due
and payable in such fiscal year.
The Bonds shall be issued and secured pursuant to Articles 10 and 11 (commencing with
Section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the
“Refunding Law”) and the Indenture. The Bonds shall be payable and shall be subject to redemption as
provided in the Trust Agreement and shall be as described in an Official Statement relating to the Bonds,
dated the date hereof, as described herein. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Indenture.
The City is a member of the California Public Employees’ Retirement System (“PERS”), and as
such, is obligated by the Public Employees’ Retirement Law, constituting Part 3 of Division 5 of Title 2
of the California Government Code (the “Retirement Law”), and the contract between the Board of
Administration of PERS and the City Council of the City, effective December 20, 1948, as amended, to
make contributions to PERS to (a) fund pension benefits for its employees who are members of PERS, (b)
amortize the unfunded actuarial liability with respect to such pension benefits, and (c) appropriate funds
for the purposes described in (a) and (b). The Bonds are being issued to (i) fund the City’s unfunded
accrued actuarial liability to PERS for the benefit of the City’s employees in an amount equal to
$__________, and (ii) pay certain costs related to the issuance of the Bonds.
2.The Bonds shall be payable and shall be subject to redemption as provided in the
Indenture and shall be as described in the Preliminary Official Statement of the City dated __________
and the Official Statement of the City dated of even date herewith. Such Preliminary Official Statement,
including the cover page, the inside cover and the appendices thereto, relating to the Bonds, as amended
to include the terms of this Purchase Agreement with respect to pricing and interest rates and with such
ATTACHMENT 4
45635.01436\32555248.1 2
changes and amendments thereto as have been mutually agreed to by the City and the Underwriter, is
hereinafter referred to as the “Official Statement.” [Payment of the principal of and interest on the Bonds
and accreted value will be insured by [__________] (the “Bond Insurer”), which will issue its municipal
bond insurance policy (the “Insurance Policy”) guaranteeing such payment.]
3. The Bonds shall be initially issued in denominations of $5,000 or in any integral multiple
thereof as may be requested by the Underwriter. All Bonds shall be issued in registered form in
accordance with instructions to be determined by the Underwriter prior to closing.
4. The Bonds shall be dated the date of issuance and delivered on __________, or such
other date as mutually agreed upon by the City and the Underwriter (the “Closing Date”).
5. The City Manager or other Authorized City Officer shall execute this Purchase
Agreement at or prior to 11:59 p.m., Pacific Standard Time, on the date hereof. The term “Authorized
City Officer” shall include, but not limited to, the City Manager, the Director of Administrative Services,
or deputies thereof. Upon acceptance and execution hereof this Purchase Agreement shall be in full force
and effect in accordance with its terms and shall be binding upon the parties hereto.
6. The purchase price for the Bonds shall be $__________ (representing the par amount of
the Bonds, [plus original issue premium/less original issue discount] of $__________, and less an
underwriter’s discount of $__________ and shall be paid in full upon delivery to the Underwriter of the
Bonds. Payment for the Bonds shall be by immediately available funds. The City shall be responsible for
all bond and official statement printing and delivery fees, bond counsel fees, fees of other consultants
retained by the City, rating agency fees, bond insurance fee (if any), fees for the Trustee, fees and costs
with respect to any judicial proceedings for validation of the Indenture and the Bonds, and other
miscellaneous expenses including out-of-state travel.
7. The City will undertake pursuant to the Indenture and a Continuing Disclosure
Certificate, dated __________ (the “Disclosure Certificate”), and executed by the City, to provide certain
annual information and notices of the occurrence of certain events, if material. A description of the
undertaking is set forth in the Preliminary Official Statement (as defined below) and will also be set forth
in the Official Statement (as defined below).
8. The City hereby ratifies the use by the Underwriter of the Preliminary Official Statement,
dated _________, ____ relating to the Bonds (together with the cover page and all appendices thereto,
and any supplements thereof, the “Preliminary Official Statement”), and authorizes the Underwriter to use
and distribute the Preliminary Official Statement, the Official Statement (as defined below), the
Indenture, and all information contained therein, and all other documents, certificates and statements
furnished by the City to the Underwriter in connection with the offer and sale of the Bonds by the
Underwriter. The City has heretofore “deemed final” the Preliminary Official Statement within the
meaning of Rule 15c2 12.
The City will undertake pursuant to the Continuing Disclosure Certificate to provide certain
annual financial and operating information and notices of the occurrence of certain events. A description
of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final
Official Statement. This undertaking will be entered into in order to assist the Underwriter in complying
with the Rule.
9. The Underwriter agrees to offer all the Bonds to the public initially at the prices (or
yields) set forth on the cover page of the Official Statement of the City pertaining to the Bonds, dated
________, ____ (the “Official Statement,” together with all appendices thereto, and with such changes
therein and supplements thereto and as are consented to in writing by the Underwriter, and with the
Preliminary Official Statement, are herein called the “Official Statement”). Subsequent to the initial
45635.01436\32555248.1 3
public offering of the Bonds, the Underwriter reserves the right to change the public offering prices (or
yields) as it deems necessary in connection with the marketing of the Bonds. “Public Offering” shall
include an offering to a representative number of institutional investors or registered investment
companies, regardless of the number of such investors to which the Bonds are sold. The Underwriter
agrees that prior to the time the final Official Statement relating to the Bonds is available, the Underwriter
will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of
the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first
class mail or electronic distribution (or other equally prompt means) not later than the first business day
following the date upon which each such request is received.
10. The City represents and warrants to the Underwriter that:
(a) The City is a municipal corporation and general law city duly organized and
existing pursuant to the Constitution and laws of the State of California and has all necessary
power and authority to enter into and perform its duties under the Bonds, the Indenture, a contract
between the City and PERS dated as of December 20, 1948 as amended thereafter from time to
time (as amended, the “PERS Contract”) evidencing the City’s unfunded accrued actuarial
liability as of the date of the Bonds, Indenture, the Continuing Disclosure Certificate and this
Purchase Agreement (collectively, the “City Documents”), and, when executed and delivered by
the respective parties thereto, the City Documents will constitute legally valid and binding
obligations of the City, enforceable in accordance with their respective terms.
(b) By all necessary official action, the City has duly authorized and approved the
execution and delivery of, and the performance by the City of the obligations on its part contained
in, the City Documents, and has approved the use by the Underwriter of the Preliminary Official
Statement and the Official Statement (as such terms are defined herein) and, as of the date hereof,
such authorizations and approvals are in full force and effect and have not been amended,
modified or rescinded.
(c) The execution and delivery of the City Documents, and compliance with the
various provisions thereof, will not conflict with, or constitute a breach of or default under, the
City’s duties under said documents or any material law, administrative regulation, court decree,
resolution, charter, bylaws or other agreement to which the City is subject or by which it is
bound.
(d) Except as may be required under the securities or blue sky laws of any state,
there is no consent, approval, authorization or other order of, filing with, or certification required
by, any regulatory authority having jurisdiction over the City for the consummation by the City of
the transactions contemplated by the Resolution and the City Documents
(e) To the best of the City’s knowledge and belief, other than as disclosed in the
Official Statement, there is no action, suit, proceeding or investigation at law or in equity before
or by any court or governmental agency or body pending, or threatened, against the City, nor to
the best knowledge and belief of the City is there any basis therefor, to restrain or enjoin the
payment of the Bonds as described in the Official Statement as security for the Bonds, or in any
way contesting or affecting the validity of any of the City Documents, or contesting the powers of
the City to enter into or perform its obligations under any of the foregoing.
(f) The City agrees to cooperate with the Underwriter in endeavoring to qualify the
Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the
United States as the Underwriter may request; provided, however, that in no event shall the City
be required to take any action which would subject it to general or unlimited service of process in
any jurisdiction in which it is not now so subject.
45635.01436\32555248.1 4
(g) The information with respect to the City and the Bonds contained in the Official
Statement is, and at all times subsequent to the date of the Official Statement up to and including
the Closing Date will be, true and correct in all material respects, and such information does not
and will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) The City will advise the Underwriter promptly of any proposal to amend or
supplement the Official Statement and will not effect or consent to any such amendment or
supplement without the consent of the Underwriter, which consent will not be unreasonably
withheld. The City will advise the Underwriter promptly of the institution of any proceedings
known to it by any governmental agency prohibiting or otherwise affecting the use of the Official
Statement in connection with the offering, sale or distribution of the Bonds.
(i) As of the date thereof and at all times subsequent thereto to and including the
date which is 25 days following the End of the Underwriting Period (as such term is hereinafter
defined) for the Bonds, the Official Statement (excluding information concerning DTC and the
book-entry system as to which no representation is made) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading. If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which might or would cause the
information contained in the Official Statement (other than information concerning DTC or the
book-entry system), as then supplemented or amended, to contain an untrue statement of a
material fact or to omit to state a material fact required to be stated therein or necessary to make
such information therein, in light of the circumstances under which it was presented, not
misleading, the City will notify the Underwriter, and, if in the opinion of the City, the
Underwriter or their respective counsel, such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the City will forthwith prepare and furnish to
the Underwriter (at the expense of the City) a reasonable number of copies of an amendment of or
supplement to the Official Statement (in form and substance satisfactory to the Underwriter)
which will amend or supplement the Official Statement so that it will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time the Official Statement is
delivered to prospective purchasers, not misleading. For the purposes of this subsection, between
the date hereof and the date which is 25 days after the End of the Underwriting Period for the
Bonds, the City will furnish such information with respect to itself as the Underwriter may from
time to time reasonably request. As used herein and for the purposes of the foregoing, the term
“End of the Underwriting Period” for the Bonds shall mean the earlier of (i) the Closing Date
unless the City shall have been notified in writing to the contrary by the Underwriter on or prior
to the Closing Date, or (ii) the date on which the End of the Underwriting Period for the Bonds
has occurred under Rule 15c2-12; provided, however, that the City may treat as the End of the
Underwriting Period for the Bonds the date specified as such in a notice from the Underwriter
stating the date which is the End of the Underwriting Period.
(j) The City will deliver all opinions, certificates, letters and other instruments and
documents reasonably required by the Underwriter and this Purchase Agreement.
(k) Any certificate of the City delivered to the Underwriter shall be deemed a
representation and warranty by the City to the Underwriter as to the statements made therein.
(l) Between the date of this Purchase Agreement and the date of Closing, the City
will not, without the prior written consent of the Underwriter, and except as disclosed in the
45635.01436\32555248.1 5
Official Statement, offer or issue any bonds, notes or other obligations for borrowed money, or
incur any material liabilities, direct or contingent payable from the funds pledged under the
Indenture.
(m) The City is not presently and as a result of the execution of the City Documents
and the sale of the Bonds will not be in violation of any debt limitation, appropriation limitation
or any other provision of the California Constitution or statutes or any additional debt or similar
provision of any bond, note, contract or other evidence of indebtedness to which the City is a
party or to which the City is bound.
(n) The City will not knowingly take or omit to take any action, which action or
omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner
other than as provided in the City Documents.
(o) Based on a review of its previous undertakings, the City has not, in the last five
years, failed to comply in any material respect in its obligations under any continuing disclosure
undertaking entered into pursuant to Rule 15c2 12 except as disclosed in the Official Statement.
The City will undertake, pursuant to the Continuing Disclosure Certificate to provide annual
reports and notices of certain events in accordance with the requirements of Rule 15c2 12. A
form of the Continuing Disclosure Certificate is set forth as Appendix F to the Official Statement.
11. The Underwriter has entered into this Purchase Agreement in reliance upon the
representations, warranties and agreements of the Authority and the City contained herein, and the
opinions of Bond Counsel, Counsel to the Trustee, and City Attorney required hereby. The Underwriter’s
obligations under this Purchase Agreement are and shall be subject to the following further conditions:
12. The City will deliver or cause to be delivered to the Underwriter on or before the Closing
Date in forms acceptable to the Underwriter:
(a) The legal opinion of Best Best & Krieger LLP, Riverside, California, Bond
Counsel in the form attached to the Official Statement, dated the Closing Date and addressed to
the City, and a reliance letter addressed to the Underwriter.
(b) A supplemental opinion of Bond Counsel, dated the Closing Date and addressed
to the Underwriter, substantially to the effect that (i) the Purchase Agreement and the Continuing
Disclosure Certificate have been duly executed and delivered by the City and are valid and
binding upon the City, subject to laws relating to bankruptcy, insolvency, reorganization or
creditors’ rights generally and to the application of equitable principles; (ii) the Bonds are not
subject to the registration requirements of the Securities Act of 1933, as amended, and the
Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended, and
(iii) the statements contained in the Official Statement in the sections thereof entitled “THE
SERIES 2020 BONDS,” “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS,”
“TAX MATTERS,” “VALIDATION, “APPENDIX E – SUMMARY OF THE INDENTURE”
and “APPENDIX C – PROPOSED FORM OF BOND COUNSEL OPINION” (insofar as such
statements purport to summarize certain provisions of the Resolution, the Bonds, the Indenture
and the tax status of the Bonds) are accurate in all material respects.
(c) A no-litigation certificate of the City, dated the Closing Date, to the effect that,
other than as disclosed in the Official Statement, there is no action, suit, proceeding or
investigation at law or in equity before or by any court or governmental agency or body pending,
or threatened, against the City, nor to the best knowledge and belief of the City is there any basis
therefor, to restrain or enjoin the application by the City of its funds as described in the Official
Statement as security for the Bonds, or in any way contesting or affecting the validity of any of
45635.01436\32555248.1 6
the City Documents, or contesting the powers of the City to enter into or perform its obligations
under any of the foregoing.
(d) Negative assurance letters, dated the Closing Date and addressed to the City and
the Underwriter of Best Best & Krieger LLP, as Disclosure Counsel.
(e) An opinion of Best Best & Krieger LLP, as City Attorney, dated the Closing
Date and addressed to the Underwriter, to the effect that: (i) the City is a municipal corporation
and general law city duly organized and validly existing under the Constitution and laws of the
State of California; (ii) the Resolution approving the City Documents and the Official Statement
was fully adopted at one or more meetings of the City Council, which were called and held
pursuant to law and with all public notice required by law and at which a quorum was present and
acting throughout; (iii) to the best of such counsel’s knowledge and belief, other than as disclosed
in the Official Statement, there is no action, suit, proceeding or investigation at law or in equity
before or by any court, public board or body, pending or threatened against or affecting the City,
to restrain or enjoin the application of the City’s funds as described in the Official Statement or in
any way contesting or affecting the validity of any of the City Documents wherein an unfavorable
decision, ruling or finding would adversely affect the validity and enforceability of the City’s
obligations hereunder or under any of the other City Documents; and (iv) the representations and
warranties of the City as set forth in the City Documents are, as to all matters of law and after
reasonable investigation, true and accurate on and as of the Closing Date as though made on such
date, and such representation and warranties are, as to all other matters, true and accurate to the
best knowledge and belief of such counsel on and as of the Closing Date as though made on such
date, except that the City Attorney shall not be required to render any opinion regarding the
financial condition of the City.
(f) An opinion of counsel to the Underwriter ina form acceptable to the Underwriter.
(g) A certificate of the Authorized Officer or other designated official of the City,
dated the Closing Date, to the effect that nothing has come to such officer’s attention which
would lead such officer to believe that, the information with respect to the City and the Bonds
contained in the Official Statement contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, said certificate otherwise
being in form and substance acceptable to Bond Counsel and to the Underwriter.
(h) An opinion of counsel to the Trustee, dated the Closing Date and addressed to the
Underwriter, to the effect that: (i) the Trustee is a national banking association duly organized
and validly existing under the laws of the United States of America, having full power and being
qualified to enter into and to perform its duties as Trustee under the Indenture; (ii) the Indenture
has been duly authorized, executed and delivered by the Trustee and assuming due authorization,
execution and delivery by the other party thereto, constitutes the legal, valid and binding
obligation of the Trustee enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles relating to or limiting creditors’ rights generally.
(i) A certificate of the Trustee dated the Closing Date, signed by a duly authorized
officer of the Trustee, in form and substance satisfactory to the Underwriter, to the effect that:
(i) the Trustee is a national banking association duly organized and in good standing under the
laws of the United States of America and has all necessary power and authority to enter into and
perform its duties under the Indenture; (ii) the Trustee is duly authorized to enter into the
Indenture and to authenticate and deliver the Bonds to the Underwriter pursuant to the terms of
the Indenture; (iii) the Bonds have been duly authenticated and delivered by the Trustee to the
45635.01436\32555248.1 7
Underwriter pursuant to the Indenture; (iv) the Trustee is not in breach of or default under any
law or administrative rule or regulation of the State of California or the United States of America,
or of any department, division, agency or instrumentality thereof, or any applicable court or
administrative decree or order, or any other instrument to which the Trustee is a party or is
otherwise subject or bound and which would materially impair the ability of the Trustee to
perform its obligations under the Indenture; (v) the execution and delivery of the Indenture and
authentication and delivery of the Bonds will not conflict with or constitute a breach of or default
under the Trustee’s duties under such documents, or any law, administrative regulation, court
decree, resolution, charter, bylaws or other agreement to which the Trustee is subject or by which
it is bound; (vi) the representations and agreements of the Trustee in the Indenture are true and
correct in all material respects as of the Closing Date; and (vii) there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental
agency, public board or body, served on, or, to the best knowledge of such officer, threatened
against, the Trustee, affecting the existence of the Trustee or the titles of its officers to their
respective offices, or in any way contesting or affecting the validity or enforceability of the
Indenture against the Trustee, or contesting the power of the Trustee or its authority to enter into,
adopt or perform its obligations under the Indenture, wherein an unfavorable decision, ruling or
finding would materially adversely affect the validity or enforceability of the Indenture against
the Trustee or the authentication and delivery of the Bonds.
(j) A copy of the Insurance Policy issued by the Bond Insurer, which policy
guarantees the payment when due of the principal and interest on the Bonds, as described in the
Official Statement.
(k) An opinion of counsel to the Bond Insurer addressed to the City and the
Underwriter, dated the Closing Date to the effect that (a) the Insurance Policy described in the
Official Statement is a legal, valid and binding obligation of the Bond Insurer enforceable in
accordance with its terms, and (b) the statements in the Official Statement under the caption
“BOND INSURANCE POLICY” accurately reflect and fairly present the information purported
to be shown therein.
(l) A certificate of the Bond Insurer dated the Closing Date, signed by a duly
authorized officer of the Bond Insurer, in form and substance satisfactory to the Underwriter and
its counsel.
(m) Evidence satisfactory to the Underwriter that the Bonds have been assigned a
long-term rating of “AAA” by both Standard & Poor’s, a division of The McGraw-Hill
Companies, Inc., based on the issuance of the Insurance Policy by the Bond Insurer.
(n) Fully executed copies of the City Documents, and a certified copy of the
Resolution.
(o) Complete and accurate information regarding the City, including information
concerning any current or pending litigation in any way affecting the City, for inclusion in the
Official Statement.
(p) A certificate of the City, dated the date of the Preliminary Official Statement,
signed by a duly authorized representative of the City, to the effect that:
(i) the Preliminary Official Statement distributed in connection with the
Bonds is “deemed final” within the meaning of Securities and Exchange Commission
Rule 15c2-12 (“Rule 15c2-12”);
45635.01436\32555248.1 8
(ii) the City will cooperate with the Underwriter in transforming the
Preliminary Official Statement into a final Official Statement; and
(iii) the City will cause a sufficient quantity of final Official Statements to be
delivered to the Underwriter within seven (7) business days after the execution of this
Purchase Agreement so as to allow the Underwriter to comply with its continuing
obligations under said Rule 15c2-12.
(q) A letter of PERS’ actuary with the estimated unfunded accrued actuarial liability
of the City with respect to the contributions to PERS to fund pension benefits for certain City
employees; and
(r) At least one copy of the Official Statement manually executed on behalf of the
City by a duly authorized officer of the City, and such reasonable number of certified or
conformed copies of the foregoing as the Underwriter may request.
(s) A certified copy of the Default Judgment entered by the Superior Court of the
County of Los Angeles in connection with the validity of the Bonds and related matters.
(t) Such additional legal opinions, certificates, instruments and other documents as
the Underwriter or Bond Counsel may reasonably request to evidence compliance by the City
with legal requirements, the truth and accuracy, as of the Closing Date, of the representations of
the City herein and in the Official Statement and the due performance or satisfaction by the City
on or prior to such time of all agreements then to be performed and all conditions then to be
satisfied by the City.
13. The Underwriter hereby enters into this Purchase Agreement in reliance upon the
representations and warranties of the City contained herein and in reliance upon the representations and
warranties contained in the documents and instruments to be delivered on the Closing Date and upon the
performance by the City of its obligations hereunder, both on the date hereof and as of the Closing Date.
Accordingly, the Underwriter’s obligations under this Purchase Agreement to purchase, to accept delivery
of and to pay for the Bonds shall be conditioned upon the performance by the City of its obligations to be
performed hereunder and under such documents and instruments on or prior to the Closing Date, and shall
also be subject, at the option of the Underwriter, to the following additional conditions:
(a) The representations and warranties of the City contained herein shall be true,
complete and correct on the Closing Date, as if made on and as of the Closing Date.
(b) On the Closing Date, the City Documents shall have been executed and
delivered, shall be in full force and effect and shall not have been amended, modified or
supplemented except as may have been agreed to in writing by the Underwriter; and there shall be
in full force and effect such resolutions as, in the opinion of Bond Counsel, shall be necessary in
connection with the transactions contemplated hereby.
(c) Between the date hereof and the Closing Date, the market price or marketability
of the Bonds at the initial offering prices shall not have been materially adversely affected in the
judgment of the Underwriter (evidenced by a written notice to the City terminating the
obligations of the Underwriter to accept delivery of and pay of the Bonds) by reason of any of the
following:
(1) Legislation enacted (or resolution passed) by the Congress of the United
States of America, or an order, decree or injunction issued by any court of competent
jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or
45635.01436\32555248.1 9
other form of notice issued or made by or on behalf of the Securities and Exchange
Commission, or any other governmental agency having jurisdiction of the subject matter,
to the effect that obligations of the general character of the Bonds or the Insurance Policy,
or the Bonds or the Insurance Policy, including any or all underlying arrangements, are
not exempt from registration under other requirements of the Securities Act of 1933, as
amended, or that the Indenture is not exempt from qualification under or other
requirements of the Trust Indenture Act of 1939, as amended, or that the issuance,
offering or sale of obligations of the general character of the Bonds, or of the Bonds,
including any or all Underwriting arrangements or the issuance of the Insurance Policy,
as contemplated hereby or by the Official Statement or otherwise, is or would be in
violation of the federal securities laws as amended and then in effect.
(2) The withdrawal or downgrading of any rating of any securities of the
City or any rating of the financial strength of the Bond Insurer by a national municipal
bond rating agency.
(3) Any amendment to the United States or California Constitution or action
by any United States or California court, legislative body, regulatory body or other
authority materially adversely affecting the tax status of the City, its property, income
securities (or interest thereon), the validity or enforceability of the Indenture or the
Continuing Disclosure Certificate, the State personal income tax exemption of interest on
the Bonds or the ability of the City to issue Bonds as contemplated by the Indenture and
the Official Statement.
(4) Any event occurring, or information becoming known which, in the
reasonable judgment of the Underwriter makes untrue or misleading in any material
respect any statement or information contained in the Official Statement concerning the
City.
(5) Any outbreak or escalation of hostilities or other national or international
calamity or crisis, the effect of such outbreak, escalation, calamity or crisis on the
financial markets of the United States being such as in the reasonable judgment of the
Underwriter, would make it impracticable for the Underwriter to market or enforce
contracts for the sale of the Bonds, or (i) there shall be in force a general suspension of
trading on the New York Stock Exchange or minimum or maximum prices for trading
shall have been fixed and be in force, or maximum ranges for prices for securities shall
have been required and be in force on the New York Stock Exchange, whether by virtue
of a determination by that Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having appropriate jurisdiction, or (ii) a
general banking moratorium shall have been declared by either federal, California or
New York authorities having jurisdiction, or (iii) there shall be established any new
restriction on transactions in securities materially affecting the free market for securities
(including the imposition of any limitation on interest rates) or the extension of credit by,
or the charge to the net capital requirements of, underwriters established by the New
York Stock Exchange, the Securities and Exchange Commission, any other federal
agency of the Congress of the United States, or by Executive Order, or any agency of the
State of California having appropriate jurisdiction.
(6) Any adverse event affecting the City or the Bond Insurer occurs which,
in the reasonable judgment of the Underwriter, requires or has required a supplement or
amendment to the Official Statement.
45635.01436\32555248.1 10
14. The Underwriter shall be under no obligation to pay, and the City shall pay or cause to be
paid out of the proceeds of the Bonds, all expenses incident to the performance of the City’s obligations
hereunder, including but not limited to: the cost of photocopying and delivering the Bonds to the
Underwriter; the cost of preparing, printing (and/or word processing and reproducing), distributing and
delivering the City Documents, and the cost of printing, distributing and delivering the Preliminary
Official Statement and the Official Statement in such reasonable quantities as requested by the
Underwriter; [the premiums with respect to the Policy and the Surety]; and the fees and disbursements of
Bond Counsel, Disclosure Counsel, any accountants, financial advisors or other experts or consultants the
City has retained in connection with the Bonds and expenses (included in the expense component of the
Underwriter’s spread) incurred on behalf of the City officers or employees which are incidental to
implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging, and
entertainment of those officers or employees.
(b) Whether or not the Bonds are delivered to the Underwriter as set forth herein, the
City shall not be under any obligation to pay, and the Authority and City shall not pay, any
expenses incurred by the Underwriter in connection with its public offering and distribution of the
Bonds (except those specifically enumerated in subsection (a) of this section), including any
advertising expenses and the fees of the California Debt and Investment Advisory Commission,
the cost of preparation of any “blue sky” or legal investment memoranda and the fees and
disbursements of Underwriter’s Counsel.
15. Any notice or other communication to be given to the Underwriter may be given by
delivering the same to ___________________ ___________________, California ______; Attention:
___________. Any notice or other communication to be given to the City may be given by delivering the
same to addresses initially provided herein, Attention: City Manager with respect to the City. The
approval of the Underwriter when required hereunder or the determination of satisfaction as to any
document referred to herein shall be in writing signed by the Underwriter and delivered to you.
16. This Purchase Agreement may be executed by the parties hereto in separate counterparts,
each of which such counterparts shall together constitute but one and the same instrument.
17. This Purchase Agreement is made solely for the benefit of the City and the Underwriter
(including the successors or assigns of the Underwriter) and no other persons, partnership, association or
corporation shall acquire or have any right hereunder or by virtue hereof. All covenants and
representations of the City in this Purchase Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of
and payment for the Bonds.
18. This Purchase Agreement shall be governed by the laws of the State of California
applicable to contracts made and performed in such State.
19. The primary role of the Underwriter, as underwriter, is to purchase the Bonds for resale
to investors in an arms-length commercial transaction among the City, the Authority and the Underwriter.
The Underwriter, as underwriter, has financial and other interests that differ from those of the Authority
and the City.
20. This Purchase Agreement shall become effective and binding upon the respective parties
hereto upon the execution of the acceptance hereof by the City, the Authority and the Underwriter and
shall be valid and enforceable as of the time of such acceptance.
21. This Purchase Agreement shall be governed by the laws of the State of California. This
Purchase Agreement shall not be assigned by either party hereto.
45635.01436\32555248.1 11
22. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and
understandings between the parties hereto in relation to the sale of Bonds by the Authority and the City
and represents the entire agreement of the parties as to the subject matter herein.
Respectfully submitted,
[UNDERWRITER TO COME]
By:__________________________________________
Title:_________________________________________
Approved and accepted by the
City of Azusa
By:_____________________________________
City Manager
45635.01436\32555248.1 A-1
EXHIBIT A
$__________
City of Azusa
Taxable Pension Funding Bonds
Series 2020
Optional and Mandatory Redemption
Indian Wells
(760) 568-2611
Irvine
(949) 263-2600
Los Angeles
(213) 617-8100
Manhattan Beach
(310) 643-8448
Ontario
(909) 989-8584
Sacramento
(916) 325-4000
San Diego
(619) 525-1300
Walnut Creek
(925) 977-3300
Washington, DC
(202) 785-0600
3390 University Avenue, 5th Floor, P.O. Box 1028, Riverside, CA 92502
Phone: (951) 686-1450 | Fax: (951) 686-3083 | www.bbklaw.com
45635.01436\32552646.1
Kim A. Byrens
(951) 826-8273
kim.byrens@bbklaw.com
File No. 45635.01434
December 10, 2019
Sergio Gonzalez
City of Azusa
213 East Foothill Blvd
Azusa, CA 91702
Re: Bond Counsel and Disclosure Counsel Services to City of Azusa for
proposed Taxable Pension Obligation Bonds
Dear Sergio:
We are pleased to submit this letter to you in connection with our services as bond
counsel and disclosure counsel to the City of Azusa (the “City”) relating to the proposed
issuance of the Agency’s above-captioned Taxable Pension Obligation Bonds (the “Bonds”)
which will fund all or a portion of the unfunded pension liability of the City’s retirement plan.
The firm of Best Best & Krieger LLP will serve as bond counsel and disclosure counsel on this
matter and proposes to perform the following services on the basis set forth in this letter.
As bond counsel we will confer and consult with City staff on all matters relating to the
financing. We will assist the City in identifying the most advantageous method of financing
based upon our experience and we will attend all meetings of the City’s staff, consultants and
financial advisor at which financing methods are to be discussed and analyzed for successful
completion of the financing.
With respect to the Bonds, our services will include the preparation of all agreements,
resolutions, notices, bond forms and all other legal documents required by California law for the
execution, sale and delivery of the Bonds. We will attend all meetings in which the Bonds will
be discussed or any action in connection with the proceedings is to be taken.
Subject to completion of the financing to our satisfaction, Best Best & Krieger LLP will
issue its approving legal opinion to the purchasers of the Bonds to the effect that all proceedings
have been legally undertaken for the authorization, execution, sale and delivery of the Bonds, or
other transactions relating to the financing. Our services as bond counsel also include a
comprehensive analysis of the use of proceeds and sources of repayment for the bonds. At the
conclusion of the transaction we will render our opinion that interest paid with respect to the
ATTACHMENT 5
Sergio Gonzalez
City of Azusa
December 10, 2019
Page 2
45635.01436\32552646.1
Bonds is exempt from State of California personal income tax. We will also issue appropriate
supplemental opinions and certificates as may be necessary or appropriate.
As disclosure counsel, we will confer and consult with the City’s staff, bond insurers and
the City’s municipal consultant on all matters relating to the preparation of an official statement
describing the terms of issuance of the Bonds. Our services will include the preparation of a
preliminary and final official statement, and a continuing disclosure agreement, in order for the
City to comply with Rule 15c2-12. If the Agency chooses to sell the Bonds through a negotiated
sale, we will review the Bond Purchase Agreement prepared on behalf of the underwriter for the
Bonds
Subject to completion of the financing to our satisfaction, Best Best & Krieger LLP will
issue its legal opinion with respect to the matters discussed in the official statement.
Based on our current understanding of the issuance of the Bonds and the involvement of
Best Best & Krieger LLP attorneys in drafting documents relating to the issuance of the Bonds
and delivering our legal opinion, our fee, including reimbursement for costs, would be
$65,000.00 for bond counsel, and $35,000.00 for disclosure counsel, payable upon the
successful completion of the financing There will be no additional charge for our opinion as
City Attorney. Our fee assumes a bond issuance size of approximately $82,000,000 which
would close in 2020. If the transaction is not completed within the estimated schedule or our
involvement differs significantly from our expectations, we would expect to be paid a fee that
we mutually agree would reflect reasonable compensation for legal services rendered based upon
our hourly rates. By your signature and return of this letter, you agree to pay our fees and
expenses as set forth in this paragraph.
Additionally, we will charge the Agency for out-of-pocket expenses which would
include, the costs of duplicating and mailing, transportation, long distance telephone calls,
messenger and courier service and the preparation of transcripts of the financing, which includes
transcripts on CD-ROM. This expense is not expected to exceed $2,500.
If this arrangement is satisfactory to you, please authorize our employment according to
the terms of this letter by having this letter executed by you or your agent.
Sergio Gonzalez
City of Azusa
December 10, 2019
Page 3
45635.01436\32552646.1
We look forward to working with you and the staff o f the City of Azusa in order to bring
this matter to a successful conclusion.
Sincerely,
Kim A. Byrens
of BEST BEST & KRIEGER LLP
cc: Marco Martinez, City Attorney
TERMS OF PAYMENT OF FEES AND EXPENSES
OF BOND AND DISCLOSURE COUNSEL APPROVED
THIS _____ DAY OF ______________, 2019.
Authorized Signatory