Resolution No. GPFFA 1994-03 | Refunding Bonds and Issuance of Authority Revenue Bonds - 1994 Authority Revenue Bonds | Adopted 03/21/1994RESOLUTION NO. 94 - 3
RESOLUTION AUTHORIZING PURCHASE OF CITY
REFUNDING BONDS AND ISSUANCE OF
AUTHORITY REVENUE BONDS
1994 AUTHORITY REVENUE BONDS
The Board of Directors of the Gilroy Public Facilities
Financing Authority resolves:
Section 1. Recitals. The City Council of the City of Gilroy
has heretofore levied reassessments and authorized the issuance of
refunding bonds (the "Refunding Bonds") in Consolidated Refunding
District No. 1994-1. The City Council has further ordered the sale
of the Refunding Bonds to this Authority pursuant to a trust
agreement (the "Trust Agreement") among the City of Gilroy, this
Authority and Union Bank, as Trustee (the "Trustee").
Section 2. Approval of Trust Agreement. The form of Trust
Agreement attached hereto as Exhibit A is hereby approved in
substance. Any Authorized Officer of the Authority (i.e., the
Chair, Vice Chair or Treasurer), upon the recommendation of Bond
Counsel, is authorized to approve changes and completions in the
Trust Agreement before closing of the transaction for the sale of
1994 Authority Revenue Bonds as herein provided, and to execute the
Trust Agreement on behalf of the Authority.
Section 3. Purchase of Refunding Bonds. The Board of
Directors hereby orders the purchase by the Authority of the
Refunding Bonds and the assignment of the Refunding Bonds to the
Trustee in accordance with the provisions of the Trust Agreement.
In consideration of the purchase of the Refunding Bonds, the
Authority will issue the 1994 Authority Revenue Bonds as herein
provided and will disburse the proceeds thereof as provided in the
Trust Agreement.
Section 4. Issuance of Revenue Bonds. The Board of Directors
hereby authorizes the issuance of its 1994 Authority Revenue Bonds
in the amount of $8,615,000.00. The Revenue Bonds shall be in the
form specified in the Trust Agreement and shall be issued by the
Authority and authenticated, delivered and subsequently
administered by the Trustee. Payment of principal of, and interest
on, the Revenue Bonds shall be made from payments to be made to the
RESOLUTION NO. 94 - 3
Trustee of principal and interest for the Refunding Bonds, all as
set forth in the Trust Agreement. The Refunding Bonds are hereby
pledged as security for the payment of the Revenue Bonds and shall
be held in safekeeping and in trust by the Trustee until the
Revenue Bonds are paid in full.
Section 5. Sale of Revenue Bonds. The Treasurer of the
Authority or other Authorized Officer is hereby authorized to sell
the 1994 Authority Revenue Bonds in accordance with the Purchase
Contract attached hereto as Exhibit B and by reference incorporated
herein. The Treasurer of the Authority is hereby authorized to
receive proposals for the purchase of the 1994 Authority Revenue
Bonds, to approve the maturity schedule and interest rates thereof
and to execute a purchase contract with a bond underwriter on
behalf of the Authority.
I hereby certify that the foregoing resolution was duly and
regularly adopted and passed by the Board of Directors of the
Giiroy Public Facilities Financing Authority, City of Gilroy,
California, at a regular meeting thereof held on the 21st day of
March, 1994, by the following vote of the members thereof:
AYES, and in favor, thereof, Boardmembers:GILROY, KLOECKER,
~RALES, ROGERS, ROWLISON, VALDEZ and GAGE.
NOES, Boardmembers: None
ABSENT, Boardmembers: None
APPR~D ~
President
465 California Street
Suite 600
San Francisco, CA 94104
MARK PRESSMAN ASSOCIATES
Investment Banking
EXHIBIT B
Tel: (415) 421-7300
(800) 273-6630
Fax: (415) 421-0755
March 25, 1994
The Honorable City Council
Gilroy Public Facilities Financing Authority
City of Gilroy
Gilroy, California
Re:
Bond Purchase Contract for 1994 Authority Revenue Bonds to be Issued by
Gilroy Public Facilities Financing Authority (the "AuthOrity"),
City of Gilroy, California
Dear Members of the Authority:
MARK PRESSMAN ASSOCIATES (MPA), as managing underwriter (the "Underwriter") of the
above referenced issue, hereby offers to purchase all, but not less than all, bonds to be offered by
the Gilroy Public Facilities Financing Authority (the "Authority") City of Gilroy, California
designated (the "Bonds"), being issued by the Authority pursuant to the laws of the State of
California (the "State") and particularly the Marks-Roos Local Bond Pooling Act of 1985, as
amended, constituting Article 4 (commencing with Section 6584), of Chapter 5, Division 7, Title
1 of the Government Code of the State (the "Bond Law"), for the purpose of acquiring the bonds
of the 1994-1 Consolidated Refunding District which will refund certain previously issued
bonds of the City which financed public improvements in the following districts:
Country Estates - Phase 1 Assessment District, Series 91-1;
Las Animas Technology Park Refunding District No. 2, Series No. 88-1;
East Ninth Street et al Assessment District, Series No. 87-1;
Ronan-Liman Avenues Assessment District, Series 82-2;
Amount of Bonds:
$8,615,000
Form of Bonds:
First Interest Payment
and Maturity Schedule:
Registered bonds to be issued serially. Bond denominations in
multiples of $5,000 or any integral thereof.
The first interest payment on the Bonds shall be September 2,
1994, with principal payments commencing September 2, 1994,
and annually thereafter as specified below:
1994 $35,000 2003 $585,000
1995 490,000 2004 630,000
1996 500,000 2005 665,000
1997 540,000 2006 695,000
1998 530,000 2007 335,000
1999 ~ 470,000 2008 360,000
2000 500,000 2009 380,000
2001 520,000 2010 405,000
2002 555,000 2011 420,000
Mailing Address: P.O. Box 26690, San Francisco, CA 94126
Board of Directors
Gilroy Public Facilities Financing Authority
March 25, 1994
Page Two
Price:
Term:
Net Interest Cost:
True Interest Cost:
Interest Rates:
$8,399,625
The last maturity shall be 2011.
6.6154051%
6.2876497%
1994 3.00% 2003 6.20%
1995 4.25 2004 6.30
1996 4.75 2005 6.40
1997 5.25 2006 6.50
1998 5.50 2007 6.60
1999 5.75 2008 6.70
2000 5.90 2009 6.75
2001 6.00 2010 6.80
2002 6.10 2011 6.80
Date of Bonds and
Closing Date:
Foreclosure Clause:
Reserve Fund:
Redemption Premium:
Trustee:
No Litigation:
Legal Opinion:
April 7, 1994.
As described in the Trust Agreement and the Official Statement.
The Authority shall establish a Reserve Fund in the amount of Eight
percent (8%) of the bond par value. In our view, it is reasonably required for
this issue, and vital to the marketing of the Bonds, that proceeds from the
investment of moneys in said reserve fund be credited to the Payment
Account to be applied to debt service.
As described in the Official Statement.
Union Bank, Los Angeles, California.
A no litigation certificate of the Authority shall accompany the Bonds at
closing.
The opinion of Sturgis, Ness, Brunsell & Assaf, Emeryville, California,
without qualification and without expense to the Underwriter as to the
legality of the proceedings leading to the issuance of the Bonds and as to the
federal and state tax status of the Bonds. Such opinion, dated as of the
Closing Date, to be printed on the Bonds when issued.
Board of Directors
Gilroy Public Facilities' Financing Authority
March 25, 1994
Page Three
Conditions Precedent:
The obligation of the Underwriter to accept delivery of and pay for the Bonds
on the Closing Date shall be subject, at the option of the Underwriter, to the
following additional conditions:
(a)
The Authority shall have delivered or caused to have been delivered to
the Underwriter prior to the execution of this Purchase Contract or the
first sale of the Bonds, whichever first occurs, copies of the Draft
Official Statement dated March 21, 1994, relating to the Bonds (the
"Draft Official Statement") deemed final by the Authority for purposes
of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule")
and to satisfy Municipal Securities Rulemaking Board (the "MSRB")
Rule G-32 or any other rules adopted by the MSRB, and approved for
distribution by resolution of the Authority. Within seven business days
from the date hereof, the Authority shall deliver to the Underwriter a
final Official Statement, executed on behalf of the Authority by an
authorized representative of the Authority and dated the date of
Closing thereof to the Underwriter, which shall include information
permitted to be omitted by paragraph (b)(1) of the Rule and with such
other amendments or supplements as shall have been approved by the
Authority and the Underwriter (the "Official Statement"). The Draft
Official Statement and the Official Statement, including the cover
pages, the appendices thereto and all information incorporated therein
by reference are hereinafter referred collectively to as the "Official
Statement." The Underwriter agrees that it will not confirm the sale of
any Bonds unless the confirmation of sale is accompanied or preceded by
the delivery of a copy of the Official Statement.
(b)
The Resolution shall be in full force and effect, and shall not have been
amended, modified or supplemented except as may have been agreed in
writing by the Underwriter, and there shall have been taken in
connection therewith, with the issuance of the Bonds and with the
transactions contemplated thereby and by this Purchase Contract, all
such actions as, in the opinion of Sturgis, Ness, Brunsell & Assaf,
Emeryville, California, Bond Counsel for the Authority, shall be
necessary and appropriate;
(c)
Between the date hereof and the Closing date, the market price or
marketability of the Bonds at the initial offering prices set forth in the
Official Statement shall not have been adversely affected in a material
way, in the judgment of the Underwriter (evidenced by a written notice
to the Authority terminating the obligation of the Underwriter to
accept delivery of and pay for the Bonds) by reason of any of the
following:
Board of Directors
Gilroy Public Facilities Financing Authority
March 25, 1994
Page Four
(1)
(2)
(3)
(4)
(5)
Legislation enacted (or resolution passed) by the Congress of the
United States of America or a decision rendered by a court
established under Article III of the Constitution of the United
States of America or by the Tax Court of the United States of
America, or an order, ruling, regulation (final, temporary or
proposed), press release or other form of notice issued or made by or
on behalf of the Treasury Department or the Internal Revenue
Service of the United States of America, with the purpose or effect,
directly or indirectly, of imposing federal income taxation upon the
interest as would be received by the owners of the Bonds;
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 other form of notice
issued or made by or on behalf of the Securities and Exchange
Commission, or any other govemmental agency having jurisdiction
of the subject matter, to the effect that obligations of the general
character of the Bonds, or the Bonds, including any or all
underlying arrangements, are not exempt from registration under or
other requirements of the Securities Act of 1933, as amended, or
that the Resolution 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, 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;
Any amendment to the Federal or California Constitution or action
by any Federal or California court, legislative body, or other
authority materially adversely affecting the tax status of the
Authority or the City, its property, income, securities (or interest
thereon), validity or enforceability of the assessment or the ability
of the Authority to acquire the Refunding Bonds as contemplated by
the Trust Agreement and the Official Statement;
Any event occurring, or information becoming known which, in the
judgment of the Underwriter makes untrue or misleading in any
material respect any statement or information contained in the
Official Statement concerning the Authority or the City, the
improvement projects, the landowners, or the property assessed; or
Any calamitous act of God such as flooding, land movement, or
other which directly or indirectly affects the value of the property
assessed and/or the security of the Bonds; or
Board of Directors
Gilroy Public Facilities Financing Authority
March 25, 1994
Page Five
(6)
The declaration of war or engagement in major military hostilities
by the United States or the occurrence of any other national
emergency or calamity relating to the effective operation of the
government or the financial community of the United States.
Closing Conditions:
(a) At or prior to the Closing, the Underwriter shall have received copies of
each of the following documents:
(1)
The Official Statement and each supplement or amendment, if any,
thereto;
(2)
The Resolutions and the Trust Agreement, certified on the date of
the Closing by an authorized officer of the Authority as having
been duly adopted and as being in full force and effect;
(3)
An unqualified opinion in substantially the form included as
EXHIBIT B to the Official Statement, dated the Closing Date and
addressed to the Authority, of Sturgis, Ness, Brunsell & Assaf,
Emeryville, California, together with a reliance letter of Sturgis,
Ness, Brunsell & Assaf, dated the Closing Date and addressed to
the Underwriter, to the effect that such opinion addressed to the
Authority may be relied upon by the Underwriter to the same
extent as if such opinion were addressed to it;
(4)
A certificate signed by an appropriate .Authority official to the
effect that (i) such official has reviewed the Official Statement
and on such basis certifies that the Official Statement does not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
and (ii) that the representations and warranties of the Authority
contained herein are true and correct in all material respects on and
as of the Closing Date with the same effect as if made on the
Closing Date; and (iii) the Authority and the City have complied
with all the agreements and satisfied all the conditions on its part
to be performed or satisfied under this Purchase Contract, the
Resolutions, the Trust Agreement and the Official Statement at or
prior to the Closing Date;
If the Authority shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to
accept delivery of and to pay for the Bonds contained in this Purchase Contract, or if the obligations of the
Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason
permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor
the City shall be under any further obligation hereunder. In the event that the Underwriter fails (other than
for a reason permitted by this Purchase Contract) to accept and pay for the Bonds at the closing, the amount of
one-quarter of one percent (1/4%) of the principal amount~ of the Bonds shall be full liquidated damages for such
failure and for any and all defaults hereunder on the part of the Underwriter, and the acceptance of such
amount shall constitute a full release and discharge of all claims and rights of the City against the
Underwriter.
Board of Directors
Gilroy Public Facilities Financing Authority
March 25, 1994
Page Six
Authority and
City Covenant:
Place of Closing:
Time of Closing:
Expiration:
The Authority and-the City shall covenant in the Resolution and the Trust
Agreement to take any action within its powers to maintain the tax-exempt status of
the Bonds.
To be arranged.
Not later than 48 hours after the Authority notifies the undersigned that the Bonds
are ready for delivery. If the subject Bonds are not available for delivery by 5:00 p.m.
on the aforementioned Closing date, the Underwriter reserves the right to
renegotiate the price and/or the rate of interest.
This offer expires at 5:00 p.m. on March 25, 1994.
Very truly yours,
MARK PRESSMAN ASSOCIATES
Mark Pressman
Managing Principal
Accepted by:
Authority Treasurer
TRUST AGREEMENT
by and among
CITY OF GILROY
and
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
and
UNION BANK
as Trustee
Dated as of March 21, 1994
TABLE OF CONTENTS
TRUST AGREEMENT
1994 AUTHORITY REVENUE BONDS
RECITALS
ARTICLE I
ARTICLE II
ARTICLE III
ARTICLE IV
ARTICLE V
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
1
GENERAL PROVISIONS ................ 2
THE TRUSTEE ................... 3
FUNDS AND ACCOUNTS ................ 6
9
THE BONDS ....................
COVENANTS; EVENT OF DEFAULT .......... 16
22
DEFINITIONS ..................
DEBT SERVICE SCHEDULE FOR
CONSOLIDATED REFUNDING DISTRICT NO. 1994-1 . . 28
DEBT SERVICE SCHEDULE FOR 1994 REVENUE BONDS . . 29
FORM OF REVENUE BOND ............. 30
TRUST AGREEMENT
THIS IS A TRUST AGREEMENT (the "Trust Agreement") among the
CITY OF GILROY, a municipal corporation of the State of California
(the "City"), the GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a
joint powers authority organized and existing pursuant to
Government Code Section 6500 et seq. (the "Authority") and Union
Bank as Trustee (the "Trustee"), entered into as of March 21, 1994.
RECITALS
The City has heretofore issued improvement bonds (the "Prior
Bonds") pursuant to the Improvement Bond Act of 1915 (Streets and
Highways Code Section 8500 et seq.) to represent unpaid special
assessments in four special assessment districts established
pursuant to the Municipal Improvement Act of 1913 (Streets and
Highways Code Section 10000 et seq.), to wit:
(a)
(b)
(c)
(d)
Country Estates Phase I Assessment District;
Las Animas Technology Park Refunding District No. 2;
East Ninth Street et al Refunding Assessment District; and
Ronan-Liman Avenues Assessment District No. 82-2.
Pursuant to the Refunding Act of 1984 for 1915 Improvement Act
Bonds (Streets and Highways Code Section 9500 et seq., the
"Refunding Act"), the City has created a reassessment district (the
"Reassessment District") to be named Consolidated Refunding
District No. 1994-1.
The City has issued refunding bonds (the "Refunding Bonds")
for the Reassessment District pursuant to the Refunding Act and has
sold the Refunding Bonds to the Authority.
To provide funds for the purchase of the Refunding Bonds, the
Authority has issued and sold bonds (the "Revenue Bonds") pursuant
to the Marks-Roos Local Bond Pooling Act of 1985 (Government Code
Section 6584 et seq.).
The City and the Authority wish to assign to the Trustee
certain of their rights with reference to this transaction, and the
Trustee is willing to accept the assignment and to perform the
duties set forth herein in consideration of the payment of monetary
compensation.
ARTICLE I
GENERAL PROVISIONS
Section 101. Definitions. Terms capitalized herein shall have
the definitions given herein or in Exhibit A hereof, unless the
context otherwise requires.
Section 102. Captions and Titles. The captions of sections
and the titles of articles in this Agreement are not a part of this
Agreement but are for reference only and shall not affect the
meaning of this Agreement.
Section 103. Exhibits. Each exhibit to this Agreement is
incorporated herein by reference and shall be deemed a part of the
Agreement.
Section 104. Rules of Construction. Gender-specific words
shall be deemed to apply to any gender appropriate to the context.
Unless the context otherwise requires, the word "person" means a
natural person, corporation, association or public agency. Where
the context permits, the singular may include the plural and the
plural, the singular. Terms of inclusion such as "herein",
"hereof", "hereunder" and the like refer to this Agreement as a
whole.
Section 105. Applicable Law. This Agreement has been entered
into and shall be construed in accordance with the laws of the
State of California. Any reference to an agreement, statute,
regulation or ordinance shall be deemed to include amendments now
or hereafter adopted.
Section 106. Severability. If any provision of this Agreement
is ruled contrary to law by a court of competent jurisdiction, that
provision shall be deemed severable from all other provisions of
this Agreement and the validity of those other provisions shall not
be affected by the ruling.
Section 107. Acts of Aqents. Any act required or permitted of
a party to this Agreement may be performed by an Authorized Officer
of that party, or, if not otherwise limited in this Agreement, by
any duly authorized agent of that party. Actions required of or
permitted to the City pursuant to this Trust Agreement may be as
principal or as agent of the Authority, as the context requires.
Section 108. Date of Performance or Condition. Any act
required to be performed or condition required to exist on a day
that is not a Business Day shall be deemed to have been performed
or to have existed on that day if the act is performed or the
condition exists on the next Business Day.
2
Section 109. Counterparts. This Agreement may be executed in
counterparts, and each counterpart shall be deemed to be the same
instrument.
Section 110. Notices. Unless otherwise specifically provided
in this Agreement, any notice required or permitted to be given to
any party hereof may be given by depositing the notice in the
United States mail, first-class, postage prepaid, addressed as
follows:
TO THE CITY:
City Clerk
City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020
TO THE AUTHORITY:
Gilroy Public Facilities
Financing Authority
c/o Director of Finance
City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020
TO THE TRUSTEE:
Union Bank
350 California Street
San Francisco, CA 94104
Attn: Corporate Trust Division
ARTICLE II
THE.TRUSTEE
Section 201. Appointment of Trustee. The Authority hereby
appoints the Trustee, and the Trustee hereby accepts the
appointment, to receive, hold and invest moneys in the Redemption
Fund and all accounts held thereunder and in the Prepayment Fund in
trust for the benefit of the Owners of the Revenue Bonds; to
authenticate and deliver the Revenue Bonds; to disburse the
Redemption Payments to the Owners of the Revenue Bonds; and to
perform certain other functions, all as hereinafter provided.
Section 202. Assiqnment of Refundinq Bonds. The Authority
hereby assigns in trust to the Trustee, and the Trustee hereby
accepts the assignment of, all of the Authority's right, title and
interest in and to the Refunding Bonds. The Trustee shall place
the Refunding Bonds in safekeeping when received and shall exercise
the rights of an owner of the Refunding Bonds for the benefit of
the Owners of the Revenue Bonds as provided hereinafter. The
duties of the Trustee with regard to the Refunding Bonds shall be
limited as provided hereinafter. The Trustee shall cancel any
Refunding Bond that has been paid in full and shall deliver it to
the City or its order.
Section 203. Trustee: Duties, Removal and Resiqnation.
a) Before an Event of Default and after every Event of
Default has been cured, the Trustee shall perform only the duties
specifically set out in this Trust Agreement, and no implied duties
or obligations shall be read into this Agreement against the
Trustee. After an Event of Default and before its cure, the
Trustee shall use such of the rights and powers vested in it by
this Trust Agreement, and with the same degree of care and skill,
as a prudent person would use under the circumstances in the
conduct of his own affairs.
b) So long as no Event of Default has occurred and is
continuing, by written notice to the Trustee the City may remove
the initial Trustee and any successor thereto and may appoint a
successor Trustee, but any successor shall be a bank or trust
company subject to supervision or examination by state or federal
authority. The Trustee's rights to indemnity and to payment of its
fees and expenses shall survive Trustee's resignation or removal
and final payment or defeasance of the Revenue Bonds.
c) The Trustee may resign at any time by written notice
mailed by first-class mail to the City and to the Owners at their
addresses shown on the Bond Register. On receiving the notice of
resignation, the city shall promptly appoint a successor Trustee in
writing; if the City fails to do so within ninety (90) days after
receiving the notice, the resigning Trustee at the expense of the
city may petition the court having jurisdiction to appoint a
successor Trustee. Any resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee. The City shall
require a successor Trustee to provide a written notice of
appointment to each Owner.
d) Any company into which the Trustee is merged or converted
or with which it is consolidated; or any company resulting from any
merger, conversion or consolidation to which the Trustee shall be a
party; or any company to which the Trustee sells or transfers all
or part of its corporate trust business, shall be the successor to
the Trustee without executing or filing any paper or taking any
further action.
Section 204. Compensation of the Trustee. From time to time
on demand the City shall pay to the Trustee, within thirty (30)
days after receipt of periodic billing, reasonable compensation and
the fees and expenses of independent appraisers, accountants,
consultants, legal counsel, and others employed by it in the
performance of its duties hereunder. To secure payment the Trustee
shall have a lien, superior to that of the Owners, on funds held by
it under this Trust Agreement.
Section 205. Indemnification. The City shall indemnify the
Trustee, its officers, directors, employees and agents against all
cost, expense and liability resulting from the employment of the
Trustee as Trustee and assignee of the Authority, except liability
arising from the negligence or willful misconduct of the Trustee,
its officers, employees or agents.
This indemnification shall include all expenses arising from
the Trustee's alleged liability, including legal fees and costs of
defending against any claim. If the City is required to pay
indemnity to the Trustee, the city shall be subrogated to the
rights of the Trustee to recover its losses from any other person
(excluding any insurer under any policy maintained by the Trustee
in its individual capacity). Indemnification and the Trustee's
right to fees and expenses shall survive the Trustee's resignation
or removal and the final payment or defeasance of the Revenue
Bonds.
Section 206. Protection to the Trustee. The Trustee shall
incur no liability in acting in good faith on any document or
instrument that in good faith it believes to be genuine and to have
been duly given. The Trustee shall have no duty to investigate or
question the statements contained in any document or instrument,
but may rely conclusively on them as true and accurate.
Unless otherwise specifically provided herein, the Trustee is
entitled to rely conclusively on the certificate of an Authorized
Officer of the City or the Authority, but in its discretion the
Trustee may require other or further evidence before acting or
withholding action.
The Trustee may buy, sell, own, hold and deal in any of
the Revenue Bonds and as an Owner may join in any action which any
Owner may be entitled to take with the same effect as if it were
not the Trustee. The TrUstee, either as principal or agent, may
have an interest in any other transaction with the City and may act
as depository, trustee or agent for any committee or body of Owners
of Revenue Bonds or other obligations of the City or the Authority
as freely as if it were not the Trustee.
The Trustee may act hereunder through attorneys, agents, or
receivers and shall be entitled to advice of counsel concerning its
duties. The Trustee may rely upon an opinion of counsel as complete
protection for any action taken or not taken by it. The Trustee
shall not be answerable for the default or misconduct of any
attorney, agent, or receiver selected by it with reasonable care.
The Trustee shall not be answerable for the exercise of any
discretion or power under this Agreement or for the administration
of the Accounts, except only for its own negligence or willful
misconduct.
The Trustee shall not be liable for any action taken or
omitted in good faith, at the direction of the Owners of not less
5
than twenty-five percent (25%) in aggregate principal amount of the
Outstanding Revenue Bonds, as to the time, method and place of
conducting a proceeding for any remedy available to the Trustee.
The Trustee makes no representations about the validity or
sufficiency of this Agreement or the Refunding Bonds or the Revenue
Bonds or the sufficiency of security for the Refunding Bonds or the
Revenue Bonds and shall not incur any responsibility therefor,
except as expressly provided herein.
The Trustee shall have no liability for the failure of
performance by any other party to this Agreement, but shall be
responsible solely for the performance of its own duties. The
Trustee undertakes to perform only the duties specified in this
Agreement, and no implied covenants or obligations, fiduciary or
otherwise, shall be read into this Agreement against the Trustee.
In accepting the trust hereby created the Trustee acts solely
as Trustee for the Owners and not in its individual capacity. All
persons, including without limitation the Owners and the City,
having any claim against the Trustee arising from this Agreement
shall look only to the Accounts for payment except as otherwise
provided herein. The Trustee shall not be liable in its individual
capacity for the obligations evidenced by the Revenue Bonds.
Section 207. No Obliqation of Trustee to Expend its Funds.
The Trustee is not required to expend or risk its own funds or
incur any financial liability in performing its duties or
exercising its rights or powers, if repayment of funds or adequate
indemnity against risk or liability is not assured to it. The
Trustee shall be entitled to interest on any funds advanced by it
in the performance of its duties at the maximum rate permitted by
law.
ARTICLE III
FUNDS AND ACCOUNTS
Section 301. Establishment of Funds and Accounts. There are
hereby established with the Trustee three special trust funds:
(1) The Redemption Fund, and within it the Payment Account and
the Reserve Account;
(2) The Prepayment Fund; and
(3) The Delivery Cost Fund.
The Trustee shall keep the funds and each of these accounts
separate from all other funds and accounts held by it, and shall
6
not withdraw, transfer or pay from any fund or account except as
provided herein.
Section 302. Initial Deposit. On the Closing Date the Trustee
shall receive and place in safekeeping the Refunding Bonds, and
shall receive, from the proceeds of the sale of the Revenue Bonds,
the amount of $8,399,625.00 (the par amount of the bonds of
$8,615,000.00 less a 2.5% discount of $215,375.00), to be deposited
or otherwise disbursed as follows:
(1) The amount of $7,501,000.00 shall be transferred to the
Escrow Agent to be applied as provided in the Defeasance
Escrow Agreement, for the purpose of retiring the Prior Bonds
on July 2 and September 2, 1994.
(2) The amount of $689,200.00 (the "Required Reserve") shall
be deposited in the Reserve Account and shall be administered
in accordance with Section 304 hereof.
(3) The amount of $209,425.00 shall be deposited in the
Delivery Cost Fund and disbursed by the Trustee upon order of
the City as agent of the Authority for the payment of Delivery
Costs of the Revenue Bonds and the Refunding Bonds. The
Trustee shall administer the Delivery Cost Fund. All funds in
the Delivery Cost Fund will be expended within thirty (30)
days after the issuance of Revenue Bonds. At the end of
thirty days, the Fund is to be closed and any moneys in the
fund after payment of all Delivery Costs shall be deposited in
the Payment Fund.
The Trustee shall deposit the amount of $18,702.93 in the Payment
Account upon receipt of that amount from the City of Gilroy on or
about April 7, 1994. This amount represents capitalized interest
on the Refunding Bonds and shall be disbursed in accordance with
Section 303. The Trustee in its discretion may establish a
temporary account on its records to facilitate the foregoing
transfers.
Section 303. Payment Account.
(a) The Trustee shall deposit in the Payment Account all
payments of principal of and interest on the Refunding Bonds, to be
received from the City in accordance with the schedules of payments
set forth in Exhibit B hereof. The Trustee shall maintain the
Payment Account until all payments on the Revenue Bonds are made in
full.
(b) On each Interest Payment Date the Trustee shall withdraw
from the Payment Account the amount due as principal of, and
interest on, the Revenue Bonds and shall disburse it to the Owners
of the Revenue Bonds.
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(c) The balance, if any, in the Payment Account immediately
following the disbursement pursuant to subsection (b) shall be
transferred first to the Reserve Account to the extent that the
amount in the Reserve Account is less than the Required Reserve,
and any remaining balance shall be transferred to the Prepayment
Fund.
Section 304. Reserve Account.
(a) The Trustee shall maintain the Reserve Account until the
Revenue Bonds are paid in full.
(b) On any Interest Payment Date, if the amount in the Payment
Account is less than the amount due the Owners of the Revenue Bonds
on that date as principal and interest on the Revenue Bonds, the
Trustee shall transfer from the Reserve Account to the Payment ~
Account an amount sufficient to cover the deficiency, and within
five (5) Business Days thereafter shall notify the City in writing
of the amount and the date of transfer, the amount of the remaining
balance in the Reserve Account and the amount of the Required
Reserve.
(c) On payment in full of the Revenue Bonds, the Trustee shall
remit the amount in the Reserve Account to the City and shall close
the account.
(d) On any Interest Payment Date, if the amount due and
payable on the Revenue Bonds exceeds the amount in the Payment
Account after transfer from the Reserve Account pursuant to
subsection (b), the Trustee shall apply the amount in the Payment
Account in the following order of priority, prorating as necessary
within the last category to which moneys can be applied:
(1) To the payment of interest on all Outstanding Revenue
Bonds;
(2) To the payment of the principal of unpaid Revenue Bonds
that matured on an earlier Bond Payment Date, in order of
maturity date; and
(3) To the payment of the principal of Revenue Bonds maturing
on the current Bond Payment Date.
(e) On receiving a delinquent payment from the city for which
an advance has been made from the Reserve Account, the Trustee
shall deposit the payment:
(1) First, to the Payment Account to the extent of the full
amount remaining payable to Owners of the Revenue Bonds; and
(2) Second, to the Reserve Account.
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Section 305. Prepayment Fund. The Trustee shall administer
the Prepayment Fund in accordance with Section 417 hereof.
Section 306. Investment of Fund and Account Balances.
(a) The Trustee shall invest all moneys held in the funds and
accounts hereunder in Permitted Investments designated by the City
in writing and received by the Trustee at least two (2) Business
Days before the investment date. In the absence of instructions
the Trustee shall invest in money market funds as defined in
Exhibit A, ,,Permitted Investments", paragraph F.
(b) The Trustee shall deposit investment earnings on all funds
and accounts to the Reserve Account, to the extent that the amount
in the Reserve Account is less than the Required Reserve, and then
to the Payment Account.
(c) In its investment activities the Trustee acts only as
agent of the City. The Trustee shall not be liable for investment
losses, which shall be charged to the account for which the
investment was made.
(d) The Trustee shall give the City a monthly statement of
account for each fund and account, including the balance thereof
and the earnings, transfers and other transactions since the date
of the previous statement.
Section 307. Rebate of Arbitraqe. Within ten (10) Business
Days after receiving written instructions from the City, the
Trustee shall disburse to the United States, from the funds and
accounts specified by the City, any amounts required to be rebated
as arbitrage to the United States pursuant to Section 148 of the
Internal Revenue Code. The Trustee may rely conclusively on the
instructiOns and shall have no responsibility for compliance with
those provisions of the Internal Revenue Code or regulations
adopted thereunder.
ARTICLE IV
'THE BONDS
Section 401. Authentication of Revenue Bonds. On the written
request of the City and the Authority the Trustee shall
authenticate and deliver to the original purchaser thereof Revenue
Bonds in an aggregate principal amount of $8,665,000.00, secured by
the pledge of revenues to be received by the city pursuant to the
Refunding Bonds. The City and the Authority hereby certify that
all conditions required by the Constitution and statutes of the
State of California and this Trust Agreement precedent to the
delivery of the Revenue Bonds have occurred or been duly performed.
Section 402. Form: Denomination; Medium of Payment. The
Revenue Bonds shall be delivered as fully registered bonds in the
denomination of $5,000 or integral multiples thereof. The form of
the Revenue Bonds shall be substantially as set forth in Exhibit D.
The Revenue Bonds shall be payable in lawful money of the United
States of America which at the time of payment is legal tender for
the payment of public and private debts.
Section 403. Date of Revenue Bonds. Each Revenue Bond shall
be dated as of the date of its authentication, except that each
Revenue Bond delivered to the original purchaser shall be dated as
of the Closing Date. Interest on each Revenue Bond shall be
payable from the Interest Payment Date next preceding the date of
its authentication, except that:
(1) If the Revenue Bond is authenticated as of an Interest
Payment Date, or after the fifteenth (15th) day of a month
preceding an Interest Payment Date and before that Interest
Payment Date, interest shall be payable from that Interest
Payment Date; or
(2) If the Revenue Bond is authenticated on or before
September 2, 1994, interest shall be payable from the Closing
Date.
In any event, if interest is in default on any Outstanding Revenue
Bond as of the authentication date of a Revenue Bond, interest on
that Revenue Bond shall be payable from the Interest Payment Date
to which interest has previously been paid or made available for
payment on the Outstanding Revenue Bonds.
Section 404. Payment of Principal and Interest. The Revenue
Bonds shall be in serial form, and their principal shall be payable
from the principal payments on the Refunding Bonds on September 2
in each of the years and in the amounts set forth in Exhibit C.
Interest on the Revenue Bonds shall be payable on September 2,
1994, and semiannually thereafter on September 2 and March 2 of
each year to and including the date of principal payment or
prepayment, whichever is earlier. Interest on the Revenue Bonds
shall be payable from the interest paid on the Refunding Bonds and
shall be computed at the rates set forth in Exhibit C on the basis
of a 360-day year of twelve 30-day months.
Section 405. Place of Payment. The principal (together with
a prepayment premium, if any) of the Revenue Bonds shall be payable
at the Principal Office of the Trustee. Interest on the Revenue
Bonds shall be payable by check of the Trustee mailed by first-
class mail to the Owners on the Interest Payment Date; but the
Owners shown on the Bond Register on the 15th day of the month
preceding the Interest Payment Date shall be deemed to be Owners on
the Interest Payment Date for the purpose of paying interest
(except as otherwise described herein for interest paid to an
account in the Continental United States of America by wire
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transfer as requested in writing no later than the applicable
Record Date by certain owners of $1,000,000 or more in aggregate
principal amount of Bonds).
Section 406. Numbers; Legends. The Revenue Bonds may be
numbered by a method selected by the Trustee. The Revenue Bonds
may contain or have endorsed thereon provisions, specifications and
descriptive words consistent with this Agreement, as determined by
the City before delivery of the Revenue Bonds.
Section 407. Authentication. The Revenue Bonds shall be
authenticated by the Trustee, as trustee under this Trust
Agreement, by the manual signature of an Authorized Officer or
signatory of the Trustee.
Section 408. Transfer and Exchanqe of Revenue Bond.
(a) Each Revenue Bond shall be transferable only on the Bond
Register, which shall be kept at the Principal Office of the
Trustee, on surrender of the Revenue Bond together with a written
instrument of transfer satisfactory to the Trustee and duly
executed by the Owner or his authorized attorney. On the surrender
of the Revenue Bond and the registration of its transfer, the
Trustee shall authenticate and deliver, in the name of the
transferee, one or more new Revenue Bonds of the same aggregate
principal amount of Authorized Denominations, Bond Payment Date and
interest rate as the surrendered Revenue Bond.
(b) One or more Revenue Bonds having the same Bond Payment
Date may be exchanged at the Principal Office of the Trustee for
the same aggregate principal amount of Revenue Bonds of other
Authorized Denominations. On the surrender of any Revenue Bond
together with a written request for exchange executed by the Owner
or his authorized attorney, the Trustee shall authenticate and
deliver in the name of the Owner and shall register one or more new
Revenue Bonds of the same aggregate principal amount of Authorized
Denominations, Bond Payment Date, and interest rate as the Revenue
Bond being exchanged.
(c) The Trustee shall not be required to register a transfer
or exchange during the period established by the Trustee for
selection of Revenue Bonds for prepayment or redemption or for any
Revenue Bond or portion thereof selected for prepayment or
redemption pursuant to Section 415 of this Trust Agreement.
Section 409. Requlation with Respect to Exchange and
Transfers. On the transfer or exchange of Revenue Bonds, the
Trustee shall authenticate and deliver Revenue Bonds in accordance
with this Article. The Trustee shall cancel Revenue Bonds
surrendered in any transfer or exchange and shall destroy them.
The City shall pay the cost of preparing new Revenue Bonds and any
other expenses of the City or the Tr6stee in a transfer or exchange
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of Revenue Bonds, except for any tax, fee or other governmental
charge not imposed by the City.
Section 410. Bond Reqister.
(a) The Trustee shall keep at its Principal office a Bond
Register, which shall be open to inspection by the City or the
Owners on reasonable notice and at reasonable times during normal
business hours on any Business Day.
(b) The Trustee shall deem the person in whose name any
Outstanding Revenue Bond appears on the Bond Register as the
absolute owner of the Revenue Bond. Payment made to an Owner or on
his order shall satisfy and discharge the liability on the Revenue
Bond to the extent of the amount paid, and neither the City nor the
Trustee shall be affected by any notice to the contrary.
Section 411. Mutilated, Lost, Destroyed or Stolen Revenue
Bonds. If any Revenue Bond is mutilated, the Trustee, at the
expense of the Owner, shall authenticate and deliver a new Revenue
Bond in the same principal amount of Authorized Denominations, Bond
Payment Date, and interest rate, on surrender of the mutilated
Revenue Bond. The Trustee shall cancel the mutilated Revenue Bond
and destroy it.
On submittal of evidence satisfactory to the Trustee that any
Revenue Bond has been lost, destroyed or stolen, together with an
indemnity satisfactory to the Trustee, the Trustee, at the expense
of the Owner, shall authenticate and deliver a new Revenue Bond of
the same principal amount of Authorized Denominations, Bond Payment
Date, and interest rate, and numbered as the Trustee shall
determine, in substitution for the lost, destroyed or stolen
Revenue Bond.
The Trustee may require payment of a fee for its expenses
under this section. Any Revenue Bond delivered in lieu of a
Revenue Bond alleged to be lost, destroyed or stolen shall be as
much entitled to the benefits of this Trust Agreement as all other
Outstanding Revenue Bonds. The Trustee shall not be required to
treat both the original Revenue Bond and any replacement Revenue
Bond as Outstanding, but both the original and replacement Revenue
Bond shall be treated as one and the same.
In lieu of delivering a new Revenue Bond for which principal
has become due or has been called for prepayment or redemption, the
Trustee may pay the Revenue Bond upon receipt of indemnity
satisfactory to it.
Section 412. Evidence of Siqnatures of Owners and Ownership
of Revenue Bonds. Any request, consent, revocation of consent, or
other instrument in writing required or permitted by this Trust
Agreement to be signed or executed by Owners may be in any number
of concurrent instruments of similar tenor, and may be signed or
12
executed by the Owners or by their attorneys or agents appointed
for that purpose by an instrument in writing. Any request or
consent of an Owner shall bind every subsequent Owner of the same
Revenue Bond or its replacement.
The fact and date of the execution of any such instrument may
be proved by a certificate, which need not be acknowledged or
verified, of an officer of any bank or trust company within the
United States of America, or of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in
United States jurisdictions that the persons signing the instrument
acknowledged before him the execution thereof. Where any such
instrument is executed by an officer of a corporation or
association or a member of a partnership on behalf of the
corporation, association or partnership, the certificate shall also
constitute sufficient proof of his authority.
The fact of ownership of Revenue Bonds and the amount, Bond
Payment Date, interest rate, numbering and date of ownership shall
be proved by the Bond Register.
The Trustee is not limited to the method of proof set forth in
this Article, but may accept any other evidence deemed sufficient.
Section 413. Advance Retirement of Refundinq Bonds.
(a) The City may provide to the Trustee from time to time a
Notice of Advance Retirement of Refunding Bonds in accordance with
the Improvement Bond Act of 1915. The Trustee shall thereupon
select Revenue Bonds for prepayment on the Interest Payment Date
for which the Notice of Advance Retirement is given. Revenue Bonds
shall be selected for prepayment in the same principal amounts and
of the same maturities as stated in the Notice of Advance
Retirement for the Refunding Bonds.
(b) On or before the March 2 or September 2 for which the
Notice of Advance Retirement is given, the City shall transmit to
the Trustee the amount of the principal of Refunding Bonds to be
retired pursuant to the notice, together with the redemption
premium, if any, thereon and interest thereon to the date of
retirement specified in the notice. At the same time the City
shall provide to the Trustee a revised maturity schedule (Exhibit
B) for the affected Refunding Bonds and a revised maturity schedule
(Exhibit C) for the Revenue Bonds.
(c) Amounts received by the Trustee pursuant to a Notice of
Advance Retirement of Refunding Bonds shall be deposited in the
Prepayment Fund and shall be disbursed for the optional prepayment
of Revenue Bonds in accordance with Section 417. The Trustee shall
endorse on the appropriate Refunding Bonds the date and amount of
principal retired in advance of maturity.
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Section 414. optional Prepayment of Revenue Bonds.
(a) Ail or any portion of any Revenue Bond may be prepaid on
any Interest Payment Date by paying to the Owner thereof the
principal amount thereof, interest to the Interest Payment Date of
prepayment and a prepayment premium of a percentage of the
principal being prepaid as follows:
Prepayment Date
Premium
September 2, 1994 to September 2, 2003 2.00
March 2, 2004 to September 2, 2004 1.50
March 2, 2005 to September 2, 2005 1.00
March 2, 2006 to September 2, 2006 0.50
March 2, 2007 and thereafter 0.00
(b) Revenue Bonds to be prepaid shall be selected by lot
within each maturity in the manner determined by the Trustee. In
making the selection the Trustee shall treat each Revenue Bond as
representing a number of bonds obtained by dividing the Bond
principal amount by $5,000. Prepayment of a portion of any Revenue
Bond shall be in the amount of $5,000 or any integral multiple
thereof.
Section 415. Notice of Prepayment. At the expense of the
city the Trustee shall give notice to the affected Owners of the
prepayment or redemption of their Revenue Bonds. The notice shall
state:
* That the whole or a specified portion of the Revenue Bonds
is to be prepaid or redeemed;
* The date of prepayment or redemption;
* The place or places where the prepayment or redemption will
be made;
* The prepayment or redemption price;
* The CUSIP numbers;
* The numbers of the Revenue Bonds to be prepaid or redeemed,
if fewer than all of the Outstanding Revenue Bonds;
* The interest component and maturity date of each Revenue
Bond to be prepaid or redeemed in whole or in part; and
*.That on the date of prepayment or redemption the principal
of and accrued interest on each Revenue Bond or portion
thereof to be prepaid or redeemed, together with a prepayment
premium, if any, shall become due and payable, and that from
and after the date of prepayment or redemption interest on
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each such Revenue Bond or portion thereof shall cease to
accrue.
The notice shall be mailed, first-class, postage prepaid, not less
than thirty (30) nor more than sixty (60) days before the date of
prepayment or redemption. The notice shall be mailed to the Owners
of all Revenue Bonds to be prepaid or redeemed as the Owners' names
and addresses appear on the Bond Register; to one or more of the
Information Services; and by first-class mail, overnight courier or
by facsimile transmission to the Securities Depositories. Failure
to mail the notice, or any defect in the notice as mailed, shall
not affect the validity of the proceedings for prepayment or
redemption of the Revenue Bonds.
Section 416. Payment on Date of Prepayment. If the
Prepayment Fund contains an amount sufficient for the prepayment of
the Revenue Bonds selected for prepayment, the Revenue Bonds to be
prepaid shall become due and payable on the date of prepayment, and
on their presentation and surrender at the Principal Office, the
Revenue Bonds shall be paid at their principal amount, together
with accrued and unpaid interest to the date of prepayment and any
applicable prepayment premium.
If moneys in the Prepayment Fund on the Interest Payment Date
of prepayment are sufficient to prepay the Revenue Bonds selected
for prepayment, interest on the Revenue Bonds selected for
prepayment shall cease to accrue as of that date. If sufficient
moneys are not available on the Interest Payment Date, interest on
the Revenue Bonds shall continue to accrue, until paid, at the
rates at which the Revenue Bonds were authenticated and delivered.
Moneys held by the Trustee for the prepayment of particular Revenue
Bonds shall be held in trust for the account of the Owners of those
Revenue Bonds.
Section 417. Partial Prepayment of Revenue Bond. On
surrender of any Revenue Bond prepaid or redeemed in part only, the
Trustee shall authenticate and deliver to the Owner, at the expense
of the City, one or more new Revenue Bonds of Authorized
Denomination equal in aggregate principal amount to the unprepaid
portion of the Revenue Bond surrendered and of the same interest
rate and the same Bond Payment Date. The City, the Authority and
the Trustee shall be released and discharged from liability to the
extent of the payment.
Section 418. Non-Presentment of Revenue Bonds. If any
Revenue Bond is not presented for payment when its principal
becomes due, either at maturity or at the date fixed for prepayment
or redemption, and money sufficient to pay the Revenue Bond has
been deposited in the Payment Account or the Prepayment Fund, all
liability of the City to the Owner for payment of the Revenue Bond
shall be discharged, and it shall then be the duty of the Trustee
to hold the money in a separate account, without liability for
interest thereon to any person, for the benefit of the Owner. The
15
Owner shall thereafter be restricted exclusively to that money for
any claim under this Trust Agreement or on the Revenue Bond.
Subject to applicable escheat laws, two (2) years after the money
was due the Owners or after the City pays the money to the Trustee,
whichever is later, the money shall be paid by the Trustee to the
City free from the trusts created by this Trust Agreement, and
thereafter Owners shall be entitled to look only to the City for
payment and then only to the extent of the amount repaid by the
Trustee. The City shall not be liable for any interest on money
paid to it pursuant to this section and shall not be regarded as a
trustee of the money.
ARTICLE V
COVENANTS; EVENT OF DEFAULT
Section 501. Compliance with Foreclosure Covenants. During
any period in which the amount in the Reserve Account is less than
ninety-five percent (95%) of the Required Reserve, the City shall
provide reports in writing (the "Compliance Reports") to the
Trustee of compliance with the Foreclosure Covenants. The reports
shall be furnished semiannually not later than each Interest
Payment Date and not earlier than thirty (30) days before each
Interest Payment Date. Each Compliance Report shall state:
(1) The date of filing each complaint in foreclosure, and the
action number thereof;
(2) A description, by special assessment and diagram number
and by county assessor's parcel number, of the property
addressed in the complaint; and
(3) A brief description of the status of the action,
including, if applicable, the existence of any injunction or
stay order preventing prosecution of the action by the City.
Section 502. Event of Default Defined. Either of the
following shall constitute an Event of Default by the City under
this Agreement:
(1) A reduction of the Reserve Account to an amount less than
the lesser of (i) eighty percent (80%) of the Required
Reserve, or (ii) eight percent (8%) of the principal amount of
Revenue Bonds then Outstanding; or
(2) At any time that the amount in the Reserve Fund is less
than ninety-five percent (95%) of the Required Reserve, the
failure or refusal of the City to file Compliance Reports
pursuant to Section 501 hereof or to institute and diligently
prosecute the judicial foreclosure of property delinquent in
16
the payment of reassessments securing the Refunding Bonds,
pursuant to the Foreclosure Covenants.
Section 503. Action on Default. The Trustee shall notify the
City and the Owners in writing of the occurrence of an Event of
Default within five (5) Business Days after the Trustee receives
actual knowledge of its occurrence. The Trustee shall not be
required to take any further action or seek any remedy pursuant to
Section 504 hereof unless requested to do so by the Owners of at
least twenty-five percent (25%) in aggregate principal amount of
the Outstanding Revenue Bonds and unless indemnified to its
satisfaction from any liability or expense.
Section 504. Remedies on Default.
(a) On the occurrence of an Event of Default, if the default
is not cured within thirty (30) days after notice given by the
Trustee to the City pursuant to Section 503, the Trustee may ~apply
to a court of competent jurisdiction for one or more of the
following remedies:
(1) A writ of mandate or other judicial order compelling the
City to comply with the Foreclosure Covenants;
(2) An accounting of amounts posted to the City tax roll and
amounts received on account of reassessments securing the
Refunding Bonds;
(3) Intervention in any foreclosure action instituted pursuant
to the Foreclosure Covenants, or in any action challenging the
validity of the Refunding Bonds or the reassessments securing
them; the City hereby consents to any such intervention;
(4) Application for dissolution of any injunction or stay
order preventing the City's compliance with the Foreclosure
Covenants; and
(5) Any other remedy at law or in equity reasonably expected
to assist in the protection of the rights and seCurity of the
Owners of the Revenue Bonds.
(b) On an Event of Default, if the Trustee has taken any
judicial or other action at its own discretion or on the request of
Owners, the Trustee shall have full power, in the exercise of its
discretion for the best interests of the Owners, to continue,
discontinue, withdraw, compromise, settle or otherwise dispose of
the action.
(c) Ail reasonable fees and all costs of the Trustee, its
employees, agents and counsel in the pursuit of these remedies
shall be paid to the Trustee by the City within thirty (30) days
after billing.
17
Section 505. Riqhts of Owners of Revenue Bonds. No Owner
shall have the right to institute any judicial action for any
remedy under this Agreement, unless:
* The Owner has first given the Trustee written notice of the
occurrence of an Event of Default; and
* The Owners of at least twenty-five percent (25%) in
aggregate principal amount of Outstanding Revenue Bonds have
requested the Trustee in writing to exercise the powers
hereinbefore granted or to institute the action in its own
name; and
* The Owners have tendered indemnity satisfactory to the
Trustee against the Trustee's expenses and liabilities to be
incurred in complying with their request; and
* The Trustee has refused or omitted to comply with the
request for a period of sixty (60) days after the written
request has been received by, and the tender of indemnity made
to, the Trustee.
Such notification, request, tender of indemnity and refusal or
omission are conditions precedent to the exercise by an Owner of
any remedy hereunder. No one or more Owners shall have the power
to enforce any right under this Agreement, except in the manner
herein provided. Judicial proceedings resulting from an Event of
Default shall be for the equal benefit of all Owners of the
Outstanding Revenue Bonds.
Section 506. Non-Waiver. A delay or omission by the Trustee
to exercise a right or power arising on an Event of Default shall
not impair that right or power or be construed as a waiver of, or
acquiescence in, the Event of Default. Every power and remedy
possessed by the Trustee may be exercised from time to time and as
often as deemed expedient by the Trustee.
Section 507. Remedies Not Exclusive. Ail remedies afforded
to the Trustee by law or by this Agreement are cumulative: the
exercise of a remedy shall not impair the right of the Trustee to
exercise any other remedy, at the same time or from time to time.
Section 508. No Obligation by City to Owners. Except for the
payment of amounts due under the Refunding Bonds and the
performance of other City covenants contained in the proceedings
for issuance of the Refunding Bonds and in this Agreement, the City
shall have no obligation or liability to any other party or to the
Owners arising from this Trust Agreement, the performance of the
Trustee, the terms, execution, delivery or transfer of the Revenue
Bonds, or the distribution of payments to the Owners by the
Trustee.
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Section 509. No Liability to Owners for Payment. Except as
provided herein the Trustee shall have no obligation nor liability
to the Owners for the City's payments under the Refunding Bonds or
the city's performance of any other covenant of this Agreement.
Section 510. Tax Covenants.
(a) Neither the City nor the Authority shall take or permit
any action that would cause interest on the Revenue Bonds or the
Refunding Bonds to be included in the gross income of recipients
thereof for purposes of federal income taxation.
(b) Neither the City nor the Authority shall take or permit
any action that would cause any of the Revenue Bonds or the
Refunding Bonds to be an "arbitrage bond" within the meaning of
Section 148 of the Internal Revenue Code of 1986, as amended.
ARTICLE VI
AMENDMENT; DEFEASANCE; ADMINISTRATIVE PROVISIONS
Section 601. Amendment. This Trust Agreement may be amended
in writing by a supplemental agreement among all of the parties:
* Without the consent of the Owners, to add to the rights and
privileges of the Trustee, or to cure a defective provision or
settle a question arising from an uncertainty, ambiguity, or
omission in this Trust Agreement without adversely affecting
the interests of the Owners; or
* With the written consent of the Owners of a majority in
aggregate principal amount of Outstanding Revenue Bonds, to
make any other amendment.
This section does not authorize an amendment that causes the
interest on the Revenue Bonds to become subject to California
personal income tax or to be included in the gross income of the
Owners for federal income tax purposes. The parties may rely on
the opinion of Bond Counsel in the application of this section.
Section 602. No Impairment of Security. The City shall not
reduce any reassessment securing the Refunding Bonds or enter into
any settlement of a claim or dispute respecting the Refunding Bonds
or the reassessments securing them, 'except upon the written consent
of the Trustee. Such consent may be based on an opinion of counsel
or certificate of the city or the Authority and the Trustee shall
be completely protected in relying thereon. This section shall not
be construed to prevent the City from dividing reassessments to
19
conform with the division of assessed parcels as provided by the
Improvement Bond Act of 1915.
Section 603. Defeasance. Upon defeasance of the Revenue
Bonds, even though all Revenue Bonds have not been presented for
payment, all obligations of the Authority, the Trustee and the City
hereunder shall end, except only the obligation of the City to
compensate and indemnify the Trustee and the obligation of the
Trustee to pay all amounts due to the Owners. Defeasance will have
occurred when all Outstanding Revenue Bonds are paid and
discharged:
(a) By paying the principal of and interest on all
Outstanding Revenue Bonds as they become due and payable; or
(b) By prepayment of all Outstanding Revenue Bonds; or
(c) By irrevocably depositing with the Trustee cash which,
together with amounts then on deposit in the Payment Account,
Prepayment Fund, and Reserve Account are sufficient to pay the
principal of and interest on all Outstanding Revenue Bonds; or
(d) By irrevocably depositing with the Trustee Federal
Securities which, together with moneys then on deposit in the
Payment Account, Prepayment Fund, and Reserve Account, together
with interest to be received thereon, will be sufficient to pay the
principal or and interest on all Outstanding Revenue Bonds at or
before their respective Interest Payment Dates, in the written
opinion of an independent certified public accountant given to the
Trustee.
Section 604. Recordinq and Filinq. The Trustee shall not be
responsible for recording or filing this Agreement or
supplemental instruments or documents.
Section 605. Trustee to Keep Records. The Trustee shall keep
books and records of all money received and disbursed by it under
this Trust Agreement. They shall be available for inspection upon
reasonable advance notice and at reasonable times during normal
business hours on Business Days, by the City, the Authority or
Owners representing five percent (5%) in aggregate principal amount
of Outstanding Revenue Bonds, or their respective designees.
20
IN WITNESS WHEREOF, the parties hereto have executed this
Trust Agreement the day and year first above written.
CITY OF GILROY, a municipal
corporation of the State of California
Noble Shaw, Director of Finance
GILROY PUBLIC FACILITIES
FINANC~By ~/j~AUTHORITY
Chairman
UNION BANK, as Trustee
By
Authorized Officer
21
EXHIBIT A
DEFINITIONS
Accounts. The term "Accounts" means the funds and accounts
established by Section 301 of this Trust Agreement.
Authority. The term "Authority" means the Gilroy Public
Facilities Financing Authority, a joint powers authority of the
City of Gilroy and the Community Redevelopment Agency of the City
of Gilroy, formed pursuant to Article 1 (Section 6500 et seq.) of
Chapter 5 of Division 7 of Title 1 of the California Government
Code.
Authorized Denominations. The term "Authorized Denominations"
means the authorized denominations of the Bonds, which shall be
$5,000 or any integral multiple thereof.
Authorized Officer. The term "Authorized Officer", when used
with reference to the Authority, means its Chair, its Vice Chair or
its Treasurer; when used with reference to the City, means the
Mayor of the City Council, city Manager, City Treasurer, City
Director of Finance or their respective deputies or assistants or
any other City officer or employee designated by the City Manager
as an Authorized Officer for purposes of this agreement; when used
with reference to the Trustee means any officer within the
Corporate Trust Department (or any vice president, assistant vice
president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such
officers, respectively), and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee
to whom the matter is referred by the Trustee because of that
officer's knowledge of and familiarity with the particular subject.
Bond Counsel. The term "Bond Counsel" means an attorney or a
firm of attorneys, acceptable to the City, of nationally recognized
standing in matters pertaining to the tax-exempt nature of interest
on bonds issued by states and their political subdivisions, duly
admitted to the practice of law before the highest court of any
state of the United States of America.
Bond Payment Date. The term "Bond Payment Date" means
September 2 of each year during the term of the Bonds commencing
September 2, 1994.
Bond Reqister. The term "Bond Register" means the books for
registration of the Bonds maintained by the Trustee pursuant to
Section 410 of this Trust Agreement.
22
Bonds.
herein.
The term "Bonds" means the Revenue Bonds as defined
Business Day. The term "Business Day" means any day on which
banks in San Francisco and Los Angeles, California, are open for
business, except Saturday, Sunday or a legal holiday.
city. The term "city" means the City of Gilroy, a municipal
corporation of the State of California.
Closinq Date. The term "Closing Date" means the date on which
the Bonds are authenticated by the Trustee and delivered to the
first purchaser thereof.
Compliance Report. The term "Compliance Report" means the
report described in Section 501 of this Trust Agreement, by which
the City reports to the Trustee the institution and progress of
judicial foreclosure proceedings against property delinquent in the
payment of reassessments securing the Refunding Bonds.
Defeasance Escrow Aqreement. The term "Defeasance Escrow
Agreement" means the Defeasance Escrow Agreement dated as of March
21, 1994, between the City and Union Bank.
Delivery Costs. The term "Delivery Costs" means all costs of
payment or reimbursement for execution, sale and delivery of the
Refunding Bonds and the Revenue Bonds, including without limitation
costs paid or incurred by the city, the Authority or the Trustee
for filing, preparation, printing, distribution, reproduction and
binding of disclosure documents, initial fees and charges of the
Trustee and its counsel, financing discounts, computer analysis,
legal and regulatory fees, charges and reimbursements, financial
and other professional ratings, insurance and fees for
authentication, registration, transportation and safekeeping of
bonds.
Event of Default. The term "Event of Default" means an event
of default as defined in Section 502 of this Trust Agreement.
Federal Securities. The term "Federal Securities" means
United States Treasury notes, bonds, bills or certificates of
indebtedness or obligations for which the full faith and credit of
the United States are pledged for the timely payment of principal
and interest.
Fiscal Year. The term "Fiscal Year" means the one-year period
beginning on July 1 and ending on June 30.
Foreclosure Covenant. The term "Foreclosure Covenant" means a
covenant made by the City for the benefit of the owners of the
Refunding Bonds, by which the City agrees to institute and
diligently prosecute judicial foreclosure proceedings against
23
property delinquent in the payment of reassessment installments
securing the Refunding Bonds.
Information Services. The term "Information Services" means
Financial Information, Inc.'s "Daily Called Bond Service", 30
Montgomery Street, Floor 10, Jersey City, New Jersey 07302,
Attention: Editor; Kenny Information Services' "Called Bond
Service", 55 Broad Street, Floor 28, New York, New York 10004;
Moody's Investors Service "Municipal and Government", 99 Church
Street, Floor 8, New York, New York 10007, Attention: Municipal
News Reports; Standard and Poor's Corporation "Called Bond Record",
25 Broadway, Floor 3, New York, New York 10004; and, in accordance
with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other services
providing information with respect to called bonds as the City may
designate in a written request of the City delivered to the
Trustee.
Interest Payment Dates. The term "Interest Payment Dates"
means March 2 and September 2 of each year during the term of the
Bonds commencing with September 2, 1994.
#
Notice of Advance Retirement. The term "Notice of Advance
Retirement" means the notice required by Section 8751 of the
California Streets and Highways Code (being a part of the
Improvement Bond Act of 1915) by which the City may advance the
maturity of any Refunding Bond.
Outstandinq. The term "Outstanding" when used with reference
to the Revenue Bonds as of a particular date means all Bonds
theretofore delivered except: (a) all Bonds cancelled by the
Trustee on or before that date; (b) all Bonds in substitution for
which other Bonds have been delivered pursuant to this Trust
Agreement, and (c) Bonds defeased under Section 603 of this Trust
Agreement.
Owner. The term "Owner", when used with reference to the
Revenue Bonds, means the owner of any Outstanding Bond as shown on
the Bond Register.
Payment Account. The term "Payment Account" means the account
by that name, within the Redemption Fund, established by Section
301 of this Trust Agreement
Permitted Investments.
means:
The term "Permitted Investments"
A. Federal Securities.
B. Obligations of any of the following federal agencies which
obligations represent full faith and credit of the United
States of America, including:
24
Export - Import Bank
Farmers Home Administration
General Services Administration
U.S. Maritime Administration
Small Business Administration
Government National Mortgage Association (GNMA) U.S.
Department of Housing & Urban Development (PHA's)
Federal Housing Administration;
Tennessee Valley Authority
C. Bonds, notes or other evidences of indebtedness rated "AAA"
by Standard & Poor's Corporation and "Aaa" by Moody's
Investors Service issued by the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation with
remaining maturities not exceeding three years;
D. U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks (including
the Trustee) which have a rating on their short term
certificates of deposit on the date of purchase of "A-i" or
"A-l+" by Standard & Poor's and "P-i" by Moody's and maturing
no more than 360 days after the date of purchase. (Ratings on
holding companies are not considered as the rating of the
bank);
E. Commercial paper which is rated at the time of purchase in
the single highest classification, "A-l+" by Standard & Poor's
and "P-i" by Moody's Investors Service and which matures not
more than 270 days after the date of purchase;
F. Investments in a money market fund rated "AAAm" or "AAAm-G"
or better by Standard & Poor's Corporation, including such
funds for which the Trustee or an affiliate acts as investment
advisor or provides other services;
G. Pre-refunded Municipal Obligations defined as follows: Any
bonds or other obligations of any state of the United States
of America or of any agency, instrumentality or local
governmental unit of any such state which are not callable at
the option of the obligor prior to maturity or as to which
irrevocable instructions have been given by the obligor to
call on the date specified in the notice; and which are rated,
based on the escrow, in the highest rating category of
Standard & Poor's Corporation and Moody's Investors Service,
Inc. or any successors thereto;
H. Investment agreements, guaranteed investment contracts,
funding agreements, or any other form of corporate note
representing the unconditional obligations of entities: (a)
the unsecured long-term debt obligations or claims-paying
ability ratings of which are rated in the top two rating
categories of Moody's Investors Service, Inc. or Standard &
Poor's Corporation, or (b) the short-term debt obligation
25
rated in the two highest categories of either of such rating
agencies; and
I. Repurchase agreements with financial institutions insured
by the FDIC or FSLIC, or any broker-dealer with "retail
customers" which falls under the jurisdiction of the
Securities Investors Protection Corporation (SIPC), provided
that (a) the over-collateralization is at one hundred two
percent (102%), computed weekly, consisting of such securities
as described in A through E above; (b) a third party
custodian, the Trustee or the Federal Reserve Bank shall have
possession of such obligations; (c) the Trustee shall have
perfected a first priority security interest in such
obligations; and (d) failure to maintain the requisite
collateral percentage will require the Trustee to liquidate
the collateral.
Person. The term "Person" means a natural person,
corporation, association or public agency.
Prepayment Fund. The term "Prepayment Fund" means the fund by
that name established by Section 301 of this Trust Agreement.
Principal Office. The term "Principal office" means the
corporate trust office of the Trustee at which it conducts its
corporate trust business in Los Angeles, California or any other
office of the Trustee designated by the Trustee for the purpose
from time to time, including for registration, transfer, exchange
and payment of Revenue Bonds.
Record Date. The term "Record Date" means the close of
business on the fifteenth day of the month preceding each Interest
Payment Date, whether or not the fifteenth day is a Business Day.
Redemption Fund. The term "Redemption Fund" means the fund of
that name established by Section 301 of this Trust Agreement,
containing within it the Payment Account and the Reserve Account.
Redemption Payments. The term "Redemption Payments" means
payments of principal of and interest on the Refunding Bonds, made
by the City to the Trustee as assignee of the Authority.
Refundinq Bonds. The term "Refunding Bonds" means bonds
issued by the City pursuant to the Refunding Act of 1984 for 1915
Improvement Act Bonds and secured by reassessments in Consolidated
Refunding District No. 1994-1.
Required Reserve. The term "Required Reserve" means the
amount stated and defined as such in Section 302 of this Trust
Agreement.
26
Reserve Account. The term "Reserve Account" means the account
by that name, within the Redemption Fund, established by Section
301 of this Trust Agreement.
Revenue Bonds. The term "Revenue Bonds" means bonds of the
Authority'authorized on March 21, 1994 to be issued pursuant to the
Marks-Roos Local Bond Pooling Act of 1985 (Section 6584 et seq.,
California Government Code) for the purpose of purchasing the
Refunding Bonds.
Securities Depositories. The term "Securities Depositories"
means: The Depository Trust Company, 711 Stewart Avenue, Garden
City, New York 11530, Fax (516) 227-4039 or -4190; Midwest
Securities Trust Company, Capital Structures-Call Notification, 440
South LaSalle Street, Chicago,' Illinois 60605, Fax (312) 663-2343;
Philadelphia Depository Trust Company, Reorganization Division,
1900 Market Street, Philadelphia, Pennsylvania 19203, Attention:
Bond Department, Fax (215) 496-5058; and, in accordance with then
current guidelines of the Securities and Exchange Commission, other
addresses that these depositories may specify and/or other
securities depositories designated in a written request of the City
delivered to the Trustee.
Trust Aqreement. The term "Trust Agreement" means this Trust
Agreement dated as of March 21, 1994, among the Trustee, the City
and the Authority.
Trustee. The term "Trustee" means Union Bank acting as
Trustee under this Trust Agreement.
27
EXHIBIT B
YR
DEBT SERVICE SCHEDULE
GILROY
Consolidated Refunding District No. 1994-1
03/23/94
PRINCIPAL RATE* INTEREST DEBT SERVICE OUTSTANDING EFF%*
95 396,000.00 7.030 791,903.55 1,187,903.55 7,501,000.00 7.526
96 417,000.00 7.030 536,686.50 953,686.50 7,105,000.00 7.554
97 458,000.00 7.030 507,371.40 965,371.40 6,688,000.00 7.586
98 453,000.00 7.030 475,174.00 928,174.00 6,230,000.00 7.627
99 397,000.00 7.530 443,328.10 840,328.10 5,777,000.00 7.674
00 430,000.00 7.530 413,434.00 843,434.00 5,380,000.00 7.685
01 451,000.00 7.530 381,055.00 832,055.00 4,950,000.00 7.698
02 491,000.00 7.530 347,094.70 838,094.70 4,499,000.00 7.715
03 521,000.00 7.530 310,122.40 831,122.40 4,008,000.00 7.738
04 570,000.00 7.530 270,891.10 840,891.10 3,487,000.00 7.769
05 608,000.00 7.530 227,970.10 835,970.10 2,917,000.00 7.815
06 645,000.00 7.530 182,187.70 827,187.70 2,309,000.00 7.890
07 287,000.00 8.030 133,619.20 420,619.20 1,664,000.00 8.030
08 310,000.00 8.030 110,573.10 420,573.10 1,377,000.00 8.030
09 332,000.00 8.030 85,680.10 417,680.10 1,067,000.00 8.030
10 359,000.00 8.030 59,020.50 418,020.50 735,000.00 8.030
11 376,000.00 8.030 30,192.80 406,192.80 376,000.00 8.030
7,501,000.00 5,306,304.25 12,807,304.25
* "Rate" Is on Bonds Maturing Each Year. "Eff%" Is on Ail Outstanding Bonds.
Bond Date: 04/07/94 Yield-to-Maturity:7.646140%
Denomination: $1,000 or Multiples Net Rate(with Discount) :7.680141%
Bonds Mature on September 2 Average Interest Rate:7.680141%
Weighted Average Maturity:9.211 Years Advance Redemption Premium: Varies
First Interest Payment on 09/02/94 Is $227,378.25,Representing
145 Days or 0.40278 Years of Accrued Interest.
Interest of $18,702.93 Has Been Capitalized or Otherwise Funded.
28
EXHIBIT C
DEBT SERVICE SCHEDULE
GILROY PUB.FAC.FIN.AUTHORITY
1994 Authority Revenue Bonds
YR PRINCIPAL RATE* INTEREST DEBT SERVICE
03/24/94
OUTSTANDING
EFF%*
94 35,000.00 3.000 207,986.39 242,986.39 8,615,000.00 5.994
95 490,000.00 4.250 515,330.00 1,005,330.00 8,580,000.00 6.006
96 500,000.00 4.750 494,505.00 994,505.00 8,090,000.00 6.113
97 540,000.00 5.250 470,755.00 1,010,755.00 7,590,000.00 6.202
98 530,000.00 5.500 442,405.00 972,405.00 7,050,000.00 6.275
99 470,000.00 5.750 413,255.00 883,255.00 6,520,000.00 6.338
00 500,000.00 5.900 386,230.00 886,230.00 6,050,000.00 6.384
01 520,000.00 6.000 356,730.00 876,730.00 5,550,000.00 6.428
02 555,000.00 6.100 325,530.00 880,530.00 5,030,000.00 6.472
03 585,000.00 6.200 291,675.00 876,675.00 4,475,000.00 6.518
04 630,000.00 6.300 255,405.00 885,405.00 3,890,000.00 6.566
05 665,000.00 6.400 215,715.00 880,715.00 3,260,000.00 6.617
06 695,000.00 6.500 173,155.00 868,155.00 2,595,000.00 6.673
07 335,000.00 6.600 127,980.00 462,980.00 1,900,000.00 6.736
08 360,000.00 6.700 105,870.00 465,870.00 1,565,000.00 6.765
09 380,000.00 6.750 81,750.00 461,750.00 1,205,000.00 6.784
10 405,000.00 6.800 56,100.00 461,100.00 825,000.00 6.800
11 420,000.00 6.800 28,560.00 448,560.00 420,000.00 6.800
8,615,000.00 4,948,936.39 13,563,936.39
* "Rate" Is on Bonds Maturing Each Year. "Eff%" Is on Ail Outstanding Bonds.
Bond Date: 04/07/94 Yield-to-Maturity:6.287650%
Denomination: $5,000 or Multiples Net Rate(with Discount):6.615405%
Bonds Mature on September 2 Average Interest Rate:6.339513%
Weighted Average Maturity:9.062 Years Advance Redemption Premium: Varies
First Interest Payment on 09/02/94 Is $207,986.39,Representing
145 Days or 0.40278 Years of Accrued Interest.
No Capitalized Interest Has Been Budgeted.
29
EXHIBIT D
FORM OF REVENUE BOND
REGISTERED
REGISTERED
1994 AUTHORITY REVENUE BOND
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
CITY OF GILROY, SANTA CLARA COUNTY, CALIFORNIA
SERIES NO. 1994
Rate of Interest: Maturity Date:
% September 2,
Bond Date
April 7, 1994
REGISTERED OWNER:
Cusip:
PRINCIPAL AMOUNT:
DOLLARS
THIS IS TO CERTIFY that, subject to the provisions hereof for
prepayment, the registered owner stated above or registered assigns
(the "Owner") is entitled to receive on the maturity date stated
above (the "Bond Payment Date"), the principal amount stated above.
This Bond has been authorized for issuance by resolution (the
"Resolution") of the Gilroy Public Facilities Financing Authority
(the "Authority") pursuant to the provisions of the Marks-Roos
Local Bond Pooling Act of 1985 of the State of California.
This Bond (the "Bond") evidences a direct interest in amounts
received by the Authority as payments of the principal of, and
interest on, certain refunding bonds (the "Refunding Bonds") issued
by the City of Gilroy, Santa Clara County, California (the "City")
and held by the Authority. The payments on the Refunding Bonds
have been assigned to Union Bank, as Trustee (the "Trustee") having
a corporate trust office (the "Principal office") at Los Angeles,
California, pursuant to a trust agreement dated as of March 21,
1994 (the "Trust Agreement") among the Authority, the City and the
Trustee. The aforesaid principal amount is payable subject to the
terms of the Trust Agreement and represents a portion of the
payments on the Refunding Bonds coming due on and before the Bond
Payment Date. The Owner is also entitled to receive, subject to
the terms of the Trust Agreement, on September 2, 1994, and
semiannually thereafter on September 2 and March 2 of each year
(the "Interest Payment Dates") to and including the Bond Payment
Date or the date of prepayment, whichever is earlier, semiannual
interest on the principal of this Bond at the per annum rate of
interest stated above. The principal and redemption premiums, if
any, are payable at the Principal Office of Trustee, or its
successor, as Trustee.
30
Said amounts are payable in lawful money of the United States of
America. Amounts representing principal are payable at the
Principal office; amounts representing interest are payable by
check of the Trustee mailed by first-class mail on each Interest
Payment Date to the Owner of record on the fifteenth day of the
month preceding the Interest Payment Date (except as otherwise
described herein for interest paid to an account in the Continental
United States of America by wire transfer as requested in writing
no later than the applicable Record Date by certain owners of
$1,000,000 or more in aggregate principal amount of Bonds).
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THE BOND SET
FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.
The Trustee has no obligation or liability to the Owners to make
payments of principal or interest with respect to the Bonds. The
Trustee's sole obligations are to administer, for the benefit of
the Owners, the various funds and accounts established under the
Trust Agreement. The Trustee does not warrant the recitals of fact
herein.
The City and the Authority have covenanted that all conditions
precedent to the delivery of the Bonds, whether required by law or
by the Trust Agreement, have occurred or been performed, and that
the Bonds are within every limit prescribed by law.
This Bond shall not be entitled to any benefit under the Trust
Agreement or become valid or obligatory for any purpose until the
certificate of authentication and registration hereon endorsed
shall have been dated and signed by the Trustee.
IN WITNESS WHEREOF, the Authority has caused this Bond to be signed
by its Chair and its Secretary and has caused its corporate seal to
be affixed, all as of the 7th day of April, 1994.
(SEAL)
GILROY~J.~LIC FAC L TIES FINANCING AUTHORITY
Chair of the aut~it~ .l
Secretary of the Authority ~j'
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within-mentioned Trust
Agreement, which has been authenticated and registered on
UNION BANK
as Trustee
(Authorized signatory)
31
(REVERSE OF BOND)
1994 AUTHORITY REVENUE BOND
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
CITY OF GILROY, SANTA CLARA COUNTY, CALIFORNIA
SERIES NO. 1994
This Bond has been authenticated by the Trustee pursuant to the
terms of the Trust Agreement. Copies of the Trust Agreement are on
file in the offices of the Authority and the city and at the
Principal office; reference is made to the Trust Agreement and any
amendments thereto for a description of the covenants of the
Authority securing the payments on this Bond, the nature, extent
and manner of enforcement of the covenants, the rights and remedies
of the Owners and the terms and conditions on which the Bonds are
delivered thereunder. To the extent and in the manner permitted by
the terms thereof, the provisions of the Trust Agreement may be
amended by the parties thereto with the written consent of the
Owners of at least a majority in principal amount of the Bonds then
outstanding, or without that consent for an amendment not adversely
affecting the interests of the Owners.
The registration of this Bond shall be transferable only on the
Bond Register, which shall be kept at the Principal Office, on
surrender hereof together with a written instrument of transfer
satisfactory to the Trustee executed by the Owner or his duly
authorized attorney. Thereupon the Trustee shall provide one or
more new registered Bonds of the same aggregate principal amount,
Bond Payment Date and interest rate as the surrendered Bond,
registered in the name. of the transferee.
The Bonds are delivered in the form of registered Bonds in
denominations of $5,000 each or any integral multiple thereof, and
on surrender thereof at the Principal office with a written request
for exchange executed by the Owner or his attorney duly authorized
in writing, may be exchanged for an equal aggregate principal
amount of Bonds of any other authorized denominations, of the same
Bond Payment Date, and with the same interest rate as the
surrendered Bond.
Ail or a portion of any Bond is subject to prepayment on any
Interest Payment Date by paying to the Owner thereof the principal
amount thereof, interest to the Interest Payment Date of prepayment
and a prepayment premium of a percentage of the principal being
prepaid as follows:
32
Prepayment Date
Premium
September 2, 1994 to September 2, 2003 2.00
March 2, 2004 to September 2, 2004 1.50
March 2, 2005 to September 2, 2005 1.00
March 2, 2006 to September 2, 2006 0.50
March 2, 2007 and thereafter 0.00
The Trustee shall determine the manner of prepayment by lot.; but
the portion of any Bond to be prepaid shall be in the principal
amount of $5,000 or an integral multiple thereof, and in selecting
portions of Bonds for prepayment, the Trustee shall treat each Bond
as representing the number of Bonds obtained by dividing its
principal amount by $5,000.
Notice of prepayment shall be mailed by first-class mail to the
affected Owners, postage prepaid, not less than thirty (30) nor
more than sixty (60) days before the date of prepayment. Failure
to mail the notice, or any defect in the notice as mailed, shall
not affect the validity of the proceedings for prepayment of the
Bonds.
The obligation of the City to make payments on the Refunding Bonds
is a limited obligation, subject to the receipt of installment
payments of reassessments securing the Refunding Bonds. The
obligation of the Authority to make payments on the Bonds is
limited to amounts deposited with the Trustee in the Payment
Account and the Reserve Account, all as specified in the Trust
Agreement.
The obligations of the Authority and the City under the Trust
Agreement constitute neither a debt nor a pledge of the faith and
credit of the City, the Authority, the Trustee, the State of
California or any other political subdivision of the State.
I hereby certify that the following is a correct copy of the
signed legal opinion of STURGIS, NESS, BRUNSELL & ASSAF, a
professional corporation, Emeryville, California, on file in my
office.
Secretary of the Authority
33
(Form of Assignment)
ASSIGNMENT
For value received
the undersigned do(es) hereby sell, assign and transfer unto
the within registered Bond and hereby irrevocably constitute(s) and
appoint(s)
to transfer the same on the Bond
register of the Trustee with full power of substitution in the
premises.
Dated:
Signature:
Note: The signature(s) on this Assignment must correspond with the
name(s) as written on the face of the within registered Bond in
every particular without alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
Note: This signature must be guaranteed by an eligible gurantor.
34