11-0201_FIELDMAN, ROLAPP, AND ASSOCIATES_Personal Services AgreementPERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made, entered into, and shall become effective this 1St day
of February, 2011, by and between the City of San Juan Capistrano (hereinafter
referred to as the "City") and Fieldman, Rolapp and Associates (hereinafter referred to
as the "Consultant").
RECITALS:
WHEREAS, City desires to retain independent financial advisory service in
connection with funding related to the settlement of a judgment against the City (herein,
the "Project"); and
WHEREAS, City desires to retain professional and technical services of the
Consultant for the purposes of debt issuance (herein, the "Services").
WHEREAS, Consultant is well qualified to provide professional financial advice to
public entities such as the City.
NOW, THEREFORE, City and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by Consultant shall consist of those tasks as
set forth in Exhibit 'A," attached and incorporated herein by reference. To the extent
that there are any conflicts between the provisions described in Exhibit "A" and those
provisions contained within this Agreement, the provisions in this Agreement shall
control.
Section 2. Term.
The services provided under this agreement shall commence upon execution of
Agreement by all parties. The services provided under this Agreement shall be
completed on or before certificates are closed or the project is abandoned, whichever
occurs first.
Section 3. Compensation.
3.1 Amount.
Consultant contract billings may be submitted on the consultant's forms
and, at a minimum, should contain the following:
Title of project(s)
Total approved contract amount
Amount paid to date
1
Amount requested
Amount remaining on contract
Breakdown of amounts by project type or account number
Three copies of itemized bills, clearly indicating the monthly period for which the
billing is made, shall be submitted to: The City of San Juan Capistrano, Attention: Chief
Financial Officer, 32400 Paseo Adelanto, San Juan Capistrano, California 92675.
Total compensation for the services hereunder shall not exceed $39,500 plus a
not to exceed cap of $3,500 for expenses set forth in Exhibit B.
3.2 Method of Payment.
Subject to Section 3.1, Consultant shall be compensated pursuant to
Exhibit A, Section 3 and Exhibit B and Consultant's fee shall be contingent and payable
at the closing of the debt issue.
3.3 Records of Expenses.
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be
made available at reasonable times to City.
Section 4. Independent Contractor.
It is agreed that Consultant shall act and be an independent contractor and not
an agent or employee of City, and shall obtain no rights to any benefits which accrue to
City's employees.
Section 5. Limitations Upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for City to enter into this Agreement.
Consultant shall not contract with any other entity to perform the services required
without written approval of the City. This Agreement may not be assigned, voluntarily or
by operation of law, without the prior written approval of the City. if Consultant is
permitted to subcontract any part of this Agreement by City, Consultant shall be
responsible to City for the acts and omissions of its subcontractor as it is for persons
directly employed. Nothing contained in this Agreement shall create any contractual
relationships between any subcontractor and City. All persons engaged in the work will
be considered employees of Consultant. City will deal directly with and will make all
payments to Consultant.
F4
Section 6. Changes to Scope of Work.
For extra work not part of this Agreement, a written authorization from City is
required prior to Consultant undertaking any extra work. In the event of a change in the
Scope of Work provided for in the contract documents as requested by the City, the
Parties hereto shall execute an addendum to this Agreement setting forth with
particularity all terms of the new agreement, including but not limited to any additional
Consultant's fees.
Section 7. Familiarity with Work and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated
the work to be performed; (2) if applicable, it has investigated the work site(s), and is
aware of all conditions there; and (3) it understands the facilities, difficulties and
restrictions of the work to be performed under this Agreement. Should Consultant
discover any latent or unknown conditions materially differing from those inherent in the
work or as represented by City, it shall immediately inform the City of this and shall not
proceed with further work under this Agreement until written instructions are received
from the City.
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law: E -Verify.
9.1. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and
regulations of federal, state and local government.
9.2. E -Verify.
If Consultant is not already enrolled in the U.S. Department of Homeland
Security's E -Verify program, Consultant shall enroll in the E -Verify program within fifteen
days of the effective date of this Agreement to verify the employment authorization of
new employees assigned to perform work hereunder. Consultant shall verify
employment authorization within three days of hiring a new employee to perform work
under this Agreement. Information pertaining to the E -Verify program can be found at
http://www.uscis.gov, or access the registration page at https://www.vis-
dhs.com/emploverregistration. Consultant shall certify its registration with E -Verify and
provide its registration number within sixteen days of the effective date of this
Agreement. Failure to provide certification will result in withholding payment until full
compliance is demonstrated.
3
Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Copies of Work Product.
At the completion of the work, Consultant shall have delivered to City at least one
(1) copy of any final reports and/or notes or drawings containing Consultant's findings,
conclusions, and recommendations with any supporting documentation. All reports
submitted to the City shall be in reproducible format, or in the format otherwise
approved by the City in writing.
Section 12. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant
in connection with the performance of its services pursuant to this Agreement are
confidential to the extent permitted by law, and Consultant agrees that they shall not be
made available to any individual or organization without prior written consent of the City.
All such reports, information, data, and exhibits shall be the property of the City and
shall be delivered to the City upon demand without additional costs or expense to the
City. The City acknowledges such documents are instruments of Consultant's
professional services.
Section 13. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the City and its elective and appointive boards, officers, agents, and
employees from any and all claims, liabilities, expenses, or damages of any nature,
including attorneys' fees, for injury or death of any person, or damages of any nature,
including interference with use of property, arising out of, or in any way connected with
the negligence, recklessness and/or intentional wrongful conduct of Consultant,
Consultant's agents, officers, employees, subcontractors, or independent contractors
hired by Consultant in the performance of the Agreement. The only exception to
Consultant's responsibility to protect, defend, and hold harmless the City, is due to the
negligence, recklessness and/or wrongful conduct of the City, or any of its elective or
appointive boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
Section 14. Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the
duration of the agreement, and provide proof thereof that is acceptable to the City, the
insurance specified below with insurers and under forms of insurance satisfactory in all
respects to the City. Consultant shall not allow any subcontractor to commence work
on any subcontract until all insurance required of the Consultant has also been obtained
for the subcontractor. Insurance required herein shall be provided by Insurers in good
standing with the State of California and having a minimum Best's Guide Rating of A -
Class VII or better.
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full
force and effect Comprehensive General Liability coverage in an amount not less than
one million dollars per occurrence ($1,000,000.00), combined single limit coverage for
risks associated with the work contemplated by this agreement. If a Commercial
General Liability Insurance form or other form with a general aggregate limit is used,
either the general aggregate limit shall apply separately to the work to be performed
under this agreement or the general aggregate limit shall be at least twice the required
occurrence limit.
14.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full
force and effect Comprehensive Automobile Liability coverage, including owned, hired
and non -owned vehicles in an amount not less than one million dollars per occurrence
($1,000,000.00).
14.3 Worker's Compensation.
If Consultant intends to employ employees to perform services under this
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Worker's Compensation Employer's Liability Insurance in the statutory amount as
required by state law.
14.4 Proof of Insurance Requirements/Endorsement.
Prior to beginning any work under this Agreement, Consultant shall submit
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement naming City, its officers, employees, agents, and
volunteers as additional insureds as respects each of the following: Liability arising out
of activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or
5
borrowed by Consultant. The coverage shall contain no special limitations on the scope
of protection afforded City, its officers, employees, agents, or volunteers.
14.5 Errors and Omissions Coverage [FOR PROFESSIONS/WORK
EXCLUDED FROM GENERAL LIABILITY]
Throughout the term of this Agreement, Consultant shall maintain Errors
and Omissions Coverage (professional liability coverage) in an amount of not less than
One Million Dollars ($1,000,000). Prior to beginning any work under this Agreement,
Consultant shall submit an insurance certificate to the City's General Counsel for
certification that the insurance requirements of this Agreement have been satisfied.
14.6 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled,
nor the coverages reduced, until after thirty (30) days' written notice is given to City,
except that ten (10) days' notice shall be given if there is a cancellation due to failure to
pay a premium.
14.7 Terms of Compensation.
Consultant shall not receive any compensation until all insurance
provisions have been satisfied.
14.8 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
City has issued a written "Notice to Proceed" verifying that Consultant has complied
with all insurance requirements of this Agreement.
Section 15. Termination.
City shall have the right to terminate this Agreement without cause by giving
thirty (30) days' advance written notice of termination to Consultant.
In addition, this Agreement may be terminated by any party for cause by
providing ten (10) days' notice to the other party of a material breach of contract. If the
other party does not cure the breach of contract, then the agreement may be terminated
subsequent to the ten (10) day cure period.
E
Section 16. Notice.
All notices shall be personally delivered or mailed to the below listed addresses,
or to such other addresses as may be designated by written notice. These addresses
shall be used for delivery of service of process:
To City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Cindy Russell; Chief Financial Officer/City Treasurer
To Consultant: Fieldman, Rolapp and Associates
19900 MacArthur Blvd., Suite 1100
Irvine, CA 92612
Attn: James Fabian
Section 17. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs
and necessary disbursements in addition to any other relief to which he may be entitled.
Section 18. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration
under the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
CITY OF SAN JUAN CAPISTRANO
By:
J e Tait, ity Manager
UL T
CONSd' \��✓�--
By:
ATTE T
City Clerk
APPROVED AS TO FORM:
If, "11"TAM41�,�i�
0
EXHIBIT A
TO
PROFESSIONAL SERVICES AGREEMENT FOR FINANCIAL ADVISOR
BY AND BETWEEN
THE CITY OF SAN JUAN CAPISTRANO
AND
FIELDMAN, ROLAPP & ASSOCIATES
Scope of Services
A. General Services.
The Consultant shall perform all the duties and services specifically set forth herein and shall
provide such other services as it deems necessary or advisable, or are reasonable and necessary to
accomplish the intent of this Agreement in a manner consistent with the standards and practice of
professional financial advisors prevailing at the time such services are rendered to the City.
The City may, with the concurrence of Consultant, expand this Agreement to include any
additional services not specifically identified within the terms of this Agreement. Any additional
services may be described in an addendum to this Exhibit A and are subject to fees described in
Exhibit B to this Agreement.
B. Debt Issuance Services.
The Consultant shall assume primary responsibility for assisting the City in coordinating the
planning and execution of each debt issue relating to the Project. Insofar as the Consultant is
providing Services which are rendered only to the City, the overall coordination of the financing
shall be such as to minimize the costs of the transaction coincident with maximizing the City's
financing flexibility and capital market access. The Consultant's proposed debt issuance Services
may include, but shall not be limited to, the following:
• Establish the Financing Objectives
• Develop the Financing Schedule
• Monitor the Transaction Process
• Review the Official Statement, both preliminary and final
• Procure and Coordinate Additional Service Providers
• Provide Financial Advice to the City Relating to Financing Documents
• Compute Sizing and Design Structure of the Debt Issue
• Plan and Schedule Rating Agency Presentation and Investor Briefings
• Conduct Credit Enhancement Procurement and Evaluation
• Conduct Market Analysis and Evaluate Timing of Market Entry
• Recommend Award of Debt Issuance
• Provide Pre -Closing and Closing Assistance
CITY OF SAN JUAN CAPISTRANOIFIELDMAN, ROLAPP &. ASSOCIATES Exhibit A. Paee 1
EXHIBIT A
Specifically, Consultant will:
1. Establish the Financine Obiectives
At the onset of the financing transaction process for the Project, the Consultant shall
review the City's financing needs and in conjunction with the City's management, outline
the objectives of the financing transaction to be undertaken and its proposed form.
Unless previously determined, Consultant shall recommend the method of sale of debt
and outline the steps required to achieve efficient market access.
2. Develop the Financing Timetable.
The Consultant shall take the lead role in preparing a schedule and detailed description of
the interconnected responsibilities of each team member and update this schedule, with
refinements, as necessary, as the work progresses.
3. Monitor the Transaction Process.
The Consultant shall have primary responsibility for the successful implementation of the
financing strategy and timetable that is adopted for each debt issue relating to the Project.
The Consultant shall coordinate (and assist, where appropriate) in the preparation of the
legal and disclosure documents and shall monitor the progress of all activities leading to
the sale of debt. The Consultant shall prepare the timetables and work schedules
necessary to achieve this end in a timely, efficient and cost-effective manner and will
coordinate and monitor the activities of all parties engaged in the financing transaction.
4. Review the Official Statement
a. Generally, SEC, MSRB, and GFOA guidelines encourage full disclosure so
that potential investors have sufficient data to analyze each proposed
financing. Upon direction of the City, the Consultant shall take the lead in
review of the official statement for each debt issue relating to the Project to
insure that the City's official statement is compiled in a manner consistent
with industry standards, typically including the following matters:
• Legal Authority for the Financing
• Security for the Financing
• Restrictions on Additional Financings
• Purpose and Funds for which the Financing is Being Issued
• Governmental System
• Financial Management System
• Revenue Sources: Historic, Current and Projected
Outstanding Financings
• Planned Future Financings
• Labor Relations and Retirement Systems
• Economic Base
• Annual Financial Statements
• Legal Opinions Regarding Tax Exemption
• Such Other Matters as the Context May Require.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A, Page 2
b. The Consultant shall maintain and update the official statement on its word
processing system until such time as it is near final and suitable for transfer
to the financial printer, in order to minimize the costs of revisions made by
the printer.
5. Procure and Coordinate Additional Service Providers.
Should the City desire, the Consultant may act as City's representative in procuring the
services of financial printers for the official statement and related documents, and for the
printing of any securities. In addition, the Consultant may act as the City's representative
in procuring the services of trustees, paying agents, fiscal agents, feasibility consultants,
redevelopment consultants, or escrow verification agents or other professionals, if the
City directs.
6. Provide Financial Advice to the City Relating to Financing Documents.
Simultaneous with assisting in the preparation of official statements for each debt issue
relating to the Project, the Consultant shall assist the managing underwriters, bond
counsel and/or other legal advisors in the drafting of the respective financing resolutions,
notices and other legal documents. In this regard, the Consultant shall monitor document
preparation for a consistent and accurate presentation of the recommended business terms
and financing structure of each debt issue relating to the Project, it being specifically
understood however that the Consultant's services shall in no manner be construed as the
Consultant engaging in the practice of law.
7. Compute Sizing and Design Structure of Debt Issue.
The Consultant shall work with the City's staff to design a financing structure for each
debt issue relating to the Project that is consistent with the City's objectives, that
coordinates each transaction with outstanding issues and that reflects current conditions
in the capital markets.
8. Plan and Schedule Rating Agency Presentation and Investor Briefings.
The Consultant shall develop a plan for presenting the financing program to the rating
agencies and the investor community. The Consultant shall schedule rating agency visits,
if appropriate, to assure the appropriate and most knowledgeable rating agency personnel
are available for the presentation and will develop presentation materials and assist the
City officials in preparing for the presentations.
9. Conduct Credit Enhancement Evaluation and Procurement.
Upon the City's direction, the Consultant will initiate discussions with bond insurers,
letter of credit providers and vendors of other forms of credit enhancements to determine
the availability of and cost benefit of securing financing credit support.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A, Page 3
10. Conduct Market Analysis and Evaluate Timing of Market Entry.
The Consultant shall provide regular summaries of current municipal market conditions,
trends in the market and how these may favorably or unfavorably affect the City's
proposed financing.
Competitive Sales.
For all types of competitive sale of debt, the Consultant shall undertake such
activities as are generally required for sale of securities by competitive bid
including, but not limited to the following:
• Review and comment on terms of Notice of Sale Inviting Bids
• Provide advice on debt sale scheduling
• Provide advice on the use of electronic bidding systems
• Coordinate bid opening with the City officials
• Verify bids received and make recommendations for acceptance
• Provide confirmation of issue sizing, based upon actual bids received,
where appropriate
• Coordinate closing arrangements with the successful bidder(s)
11. Recommend Award of Debt Issuance.
Based upon activities outlined in task above, the Consultant will recommend
accepting or rejecting offers to purchase the debt issue. If the City elects to award the
debt issue, the Consultant will instruct all parties and help facilitate the actions
required to formally consummate the award.
12. Provide Pre -Closing and Closing Activities.
The Consultant shall assist in arranging for the closing of each financing. The
Consultant shall assist counsel in assuming responsibility for such arrangements as
they are required, including arranging for or monitoring the progress of bond
printing, qualification of issues for book -entry status, signing and final delivery of the
securities and settlement of the costs of issuance.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A, Page 4
EXHIBIT B
TO
FINANCIAL ADVISORY SERVICES AGREEMENT
BY AND BETWEEN
CITY OF SAN JUAN CAPISTRANO AND FIELDMAN, ROLAPP & ASSOCIATES
Fees and Expenses
Part]: Fee for Services
Financial Advisory Services performed pursuant to Section 1 of this Agreement, and as more
fully described in the Scope of Services set forth in Exhibit A, will be billed for at the amounts set
forth below:
Transaction Size Fees
$1 to $5,000,000 $39,500
$5,000,001 and above to be negotiated
Part 2: Other Services
Unless agreed to otherwise, financial advisory services performed pursuant to Section 2 of this
Agreement will be billed at the then current hourly rates. The table below reflects the rates in
effect as of the date of execution of this Agreement.
Personnel
Hourly Rate
Executive Officers............................................................
$300.00
Principals..........................................................................
$290.00
Senior Vice President.......................................................
$275.00
Vice Presidents.................................................................
$225.00
Assistant Vice President ...................................................
$195.00
Senior Associate...............................................................
$150.00
Associate.. .... .....................................
- $125.00
Analyst................................................................................
$85.00
Administrative Assistants ...................................................
$65.00
Clerical................................................................................
$35.00
Expenses
Expenses will be billed for separately and will cover, among other things, travel, lodging,
subsistence, overnight courier, posting of POS on internet, computer, and fax transmission
charges. Advances made on behalf of the City for costs of preparing, printing or distributing
disclosure materials or related matter whether by postal services or electronic means, may also be
billed through to the City upon prior authorization. Additionally, a surcharge of 6% of the net fee
amount is added to verifiable out-of-pocket costs for recovery of costs such as telephone, postage,
document reproduction and the like.
Limiting Terms and Conditions
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit B, Page 1
EXHIBIT B
The above fee is based on completion of work orders within six months of the City's
authorization to proceed, and assumes that the City will provide all necessary information in a
timely manner.
The fee shown above in Part 1 presumes attendance at up to 8 meetings in the City's offices or
such other location within a 25 -mile radius of the City place of business as the City may
designate. Preparation for, and attendance at City Council meetings on any basis other than "by
appointment' may be charged at our normal hourly rates as shown in Part 2, above.
Abandonment
If, once commenced, the services of the Consultant are terminated prior to completion of our final
report for any reason, we are to be reimbursed for professional services and direct expenses
incurred up to the time we receive notification of such termination at the standard hourly rates
shown in Part 2, subject to a minimum charge of 0.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit B, Page 2
RESOLUTION NO. 11-02-01-05
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
JUAN CAPISTRANO PROVIDING FOR THE ISSUANCE AND
SALE OF CITY OF SAN JUAN CAPISTRANO JUDGMENT
OBLIGATION BONDS AND AUTHORIZING AN INDENTURE, A
VALIDATION ACTION AND OTHER MATTERS RELATING
THERETO
WHEREAS, the City of San Juan Capistrano (the "City") is obligated pursuant to
the terms of a settlement agreement reached after entry of judgment in the case entitled
Scalzo v. City of San Juan Capistrano et. a/, Case No. 06CCO4179 (the "Judgment"),
filed in the Orange County Superior Court of California, to make a payment to the
Scalzo Family Trust (the "Judgment Obligee");
WHEREAS, for the purpose of refunding the City's obligations to the Judgment
Obligee evidenced by the Judgment and the Settlement Agreement reached with the
parties thereto, the City desires to issue, pursuant to Articles 10 and 11 (commencing
with Section 53570) of Chapter 3 of Division 2 of Title 5 of the California Government
Code, its City of San Juan Capistrano Judgment Obligation Bonds (the "Bonds"), in an
aggregate principal amount not exceeding the sum of (a) the amount payable to the
Judgment Obligee pursuant to the Judgment, (b) the costs of issuance of the Bonds
(including underwriter's or placement agent's fee), (c) fund a reserve fund and (d) any
original issue discount on the Bonds;
WHEREAS, in order to provide for the authentication and delivery of the Bonds
and to establish and declare the terms and conditions upon which the Bonds are to be
issued and secured, the City proposes to enter into an Indenture with a trustee
appointed thereto (such Indenture, in the form presented to this meeting, with such
changes, insertions and omissions as are made pursuant to this Resolution, being
referred to herein as the "Indenture'); and
WHEREAS, there has been prepared and submitted to this meeting a form of the
Indenture;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San
Juan Capistrano as follows:
Section 1. All of the recitals herein contained are true and correct and the City
Council of the City of San Juan Capistrano (the "City Council") so finds.
Section 2. The issuance of the Bonds, on the terms and conditions set forth in,
and subject to the limitations specified in, the Indenture, is hereby authorized and
approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on
the dates, shall be issued in the form and shall be as otherwise provided in the
Indenture, as the same shall be completed as provided in this Resolution.
2/1/2011 SD
Section 3. The form of the Indenture, on file with the City Clerk, is hereby
approved, and the City Manager or City Treasurer of the City, or the designees of such
officers (the "Authorized Officers"), each acting alone, is hereby authorized and
directed, for and in the name and on behalf of the City, to execute and deliver the
Indenture in substantially said form with such changes therein as any Authorized Officer
executing the same may require or approve, such approval to be conclusively
evidenced by the execution and delivery thereof; provided, however, that (a) the
aggregate principal amount of the Bonds (which in no event shall exceed $4,000,000)
shall not exceed the sum of the amount of the City's obligations to the Judgment
Obligee under the Judgment, plus the underwriter's or placement agent's fee on the
Bonds, plus any original issue discount on the Bonds, plus the amount required to be
deposited in the reserve fund, plus the costs of issuance of the Bonds, (b) the true
interest cost to the City on the Bonds shall not exceed 9.00%, and (c) the Bonds shall
mature not later than 41 years from the date of issuance thereof. The Bonds shall be
executed by the manual or facsimile signature of the Mayor of the City and attested by
the manual or facsimile signature of the City Clerk, in accordance with the Trust
Agreement, with such changes, insertions and omissions as the Mayor of the City may
require or approve, such requirement or approval to be conclusively evidenced by the
execution of the Bonds by the Mayor of the City.
Section 4. The Authorized Officers are each hereby authorized and directed to
apply for municipal bond insurance for the Bonds and to obtain such insurance if the
present value cost of such insurance is less than the present value of the estimated
interest savings with respect to the Bonds.
Section 5. The Authorized Officers are each hereby authorized and directed to
select a trustee for the Bonds.
Section 6. The Authorized Officers are authorized and directed, for and in the
name of the City, to cause a validation action to be brought under Section 860 of the
California Code of Civil Procedure to determine the legality and validity of the Bonds
and the other documents and proceedings authorized pursuant to this Resolution.
Section 7. The Authorized Officers are hereby authorized and directed, jointly
and severally, to do any and all things which they may deem necessary or advisable in
order to consummate the transactions herein authorized and otherwise to carry out, give
effect to and comply with the terms and intent of this Resolution, including but not
limited to entering into investment agreements and forward delivery agreements in
connection with the investment of funds held under the Indenture.
Section 8. All actions heretofore taken by the officers, employees and agents
of the City with respect to the transactions set forth above are hereby approved,
confirmed and ratified.
Section 9. This Resolution shall take effect immediately upon its adoption.
2 2/1/2011
APPROVED AND ADOPTED this 15t day of February 2011.
/ J
AM LLEVAT0, MAYOR
ATTEST:
C�i--�� �G� rlc�.�i�i✓C�
MARIA MORRIS, CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE
CITY OF SAN JUAN CAPISTRANO )
I, MARIA MORRIS, appointed City Clerk of the City of San Juan Capistrano, do hereby
certify that the foregoing Resolution No. 11-02-01-05 was duly adopted by the City
Council of the City of San Juan Capistrano at a Regular meeting thereof, held the 1st
day of February 1, 2011, by the following vote:
AYES: COUNCIL MEMBERS: Freese, Taylor, Kramer and Mayor Allevato
NOES: COUNCIL MEMBER: Reeve
ABSENT: COUNCIL MEMBER: None
4 '
(A�
MARIA MORRI , City Clerk
2/1/2011
2/1/2011
AGENDA REPORT Glc
TO: Joe Tait, City Manag&
FROM: Cindy Russell, Chief Financial Officer/City Treasurer
SUBJECT: Consideration of Authorization for the Issuance of Judgment Obligation
Bonds, Series 2011 to Facilitate the Financing of the Scalzo Family Trust
Settlement Obligation and Agreements for Bond Counsel and Financial
Advisor Services Related to this Financing. (Stradling, Yocca, Carlson and
Rauth and Fieldman, Rolapp and Associates)
RECOMMENDATION:
By Motion,
Adopt a resolution providing for the issuance and sale of City of San Juan
Capistrano Judgment Obligation Bonds, Series 2011 of a principal amount not to
exceed $4,000,000, and authorizing an indenture, a validation action and other
matters relating thereto; and,
2. Approve the Agreement with Stradling, Yocca, Carlson and Rauth for bond counsel
services for the Judgment Obligation Bonds, Series 2011; and,
3. Approve the Agreement with Fieldman, Rolapp and Associates for financial advisor
services for the Judgment Obligation Bonds, Series 2011; and,
4. Authorize the City Manager to execute these agreements
SITUATION:
On January 4, 2011, the City Council authorized staff to proceed with the issuance of
judgment obligation bonds to fund the remaining $3,175,000 payment due by June 30,
2011 related to the settlement of the Scalzo Family Trust case. The attached resolution
and draft indenture authorizes the use of Judgment Obligation Bonds as the legal structure
for the financing. The debt would remain an obligation of the City General Fund until the
bonds are retired.
As discussed previously, this type of financing requires a judicial validation procedure,
which would be handled by bond counsel. The judicial procedure entails the filing of a
superior court action and requesting a judgment validating the ability of the City to issue the
bonds to satisfy the Scalzo Family Trust judgment. Once the notice process is completed
and the court holds a hearing, the court is empowered to issue a judgment binding on all
Agenda report
Page 2 February 1, 2011
persons validating the transaction. This gives investors assurance that the bonds could not
be challenged in the future. This financing model has been used in other California
communities to satisfy legal judgments that are governmental obligations.
Bond Sizing, Length of Term and Call Provisions and Term
Two scenarios, a 10 -year and 20 -year term, have been prepared in relation to this debt
financing. Based on these projections, the True Interest Cost (TIC) of the 10 -year
obligation is 3.02% and the 20 -year obligation is 4.34%. The debt service on the 10 -year
obligation is projected at $394,000. Staff recommends the shorter term in order to keep
interest costs as low as possible. City Council also requested information regarding the
ability to provide a call provision on these bonds. Staff is still researching this provision
and anticipates having an update regarding the ability to include a call provision at
approximately 5 years and the impact to the projected rates based on this provision.
Bond Counsel and Financial Advisor Agreements
In order to facilitate the issuance of debt, the City needs to retain legal or bond counsel and
financial advisor services. The City and Agency have worked closely with Stradling, Yocca,
Carlson and Rauth (SYCR) and Fieldman, Rolapp and Associates (FRA) in the area of
debt financing for more than twenty years and have been very impressed with their
services and expertise. These firms have been instrumental in assuring that the City and
Agency information reviewed by the rating agencies achieves the best position possible for
the City/Agency. To that end, the City/Agency has received a AAA rating on its General
Obligation Bonds and a AA- on its Water Enterprise and Tax Allocation Bonds.
These firms are very familiar with the City and would provide the most conducive working
relationship with staff to move this process forward. Additionally, these firms have been
available at any time for information relating to these issues and other financing issues as
they arise to provide support to City and Agency staff. SYCR would also provide legal
services in support of the validation action.
The cost for bond counsel services, $55,100 is based on the 10 -year issue sizing. For this
bond issue, the bond counsel agreement (Attachment 4) also includes legal fees on an
hourly basis for the validation action. The validation action is estimated to cost
approximately $10,000-$15,000, assuming there is no answer to the complaint. The cost
of the independent financial advisor services (Attachment 5) is $43,000 including expenses
for a competitive sale. All costs including the estimated cost for the validation action have
been included in the cost of issuance calculations for determining the sizing of the debt.
The size of the bond is estimated at approximately $3.04 million including the cost of
issuance. The cost of issuance for this debt is estimated at approximately $175,000
including the cost above. Payment for all services rendered and expenses incurred in
conjunction with the agreements would be paid along with other costs of issuance from
debt proceeds at time of issuance. In the event of abandonment of the project, the City
would be required to pay a fee equal to the reasonable value of services rendered from the
date of the agreement to the date of abandonment.
Agenda report
Paae 3
FINANCIAL CONSIDERATIONS:
1.2011
As discussed previously, issuance of JOBs, would allow the City to:
• fund the cost of the settlement over a ten year period.
• provide the City's General Fund with an appropriate contingency reserve of
approximately 24% as opposed to 18%. The total available reserve would be at
approximately 32%.
• allow for the City to maintain a healthier financial position
NOTIFICATION:
Fieldman Rolapp & Associates
Stradling, Yocca, Carlson and Rauth
RECOMMENDATION:
By Motion,
Adopt a resolution providing for the issuance and sale of City of San Juan
Capistrano Judgment Obligation Bonds, Series 2011 of a principal amount not to
exceed $4,000,000, and authorizing an indenture, a validation action and other
matters relating thereto; and,
2. Approve the Agreement with Stradling, Yocca, Carlson and Rauth for bond counsel
services for the Judgment Obligation Bonds, Series 2011; and,
3. Approve the Agreement with Field man, Rolapp and Associates for financial advisor
services for the Judgment Obligation Bonds, Series 2011; and,
4. Authorize the City Manager to execute these agreements
Respectfully Submitted,
Cindy Russell
Chief Financial Officer/City Treasurer
Attachments:
Attachment 1 — Resolution Authorizing Issuance and Sale of Bonds
Attachment 2 — Indenture
Attachment 3 — Bond Sizing Summary/Detail
Attachment 4 — Bond Counsel Agreement — SYCR
Attachment 5 — Financial Advisor Services Agreement - FRA
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
JUAN CAPISTRANO PROVIDING FOR THE ISSUANCE AND SALE
OF CITY OF SAN JUAN CAPISTRANO JUDGMENT OBLIGATION
BONDS AND AUTHORIZING AN INDENTURE, A VALIDATION
ACTION AND OTHER MATTERS RELATING THERETO
WHEREAS, the City of San Juan Capistrano (the "City") is obligated pursuant to the terms
of a settlement agreement reached after entry of judgment in the case entitled Scalzo v. City of San
Juan Capistrano et. al, Case No. 06CCO4179 (the "Judgment"), filed in the Orange County Superior
Court of California, to make a payment to the Scalzo Family Trust (the "Judgment Obligee");
WHEREAS, for the purpose of refunding the City's obligations to the Judgment Obligee
evidenced by the Judgment and the Settlement Agreement reached with the parties thereto, the City
desires to issue,pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of
Division 2 of Title 5 of the California Government Code, its City of San Juan Capistrano Judgment
Obligation Bonds (the "Bonds"), in an aggregate principal amount not exceeding the sum of (a) the
amount payable to the Judgment Obligee pursuant to the Judgment, (b) the costs of issuance of the
Bonds (including underwriter's or placement agent's fee), (c) fund a reserve fund and (d) any
original issue discount on the Bonds;
WHEREAS, in order to provide for the authentication and delivery of the Bonds and to
establish and declare the terms and conditions upon which the Bonds are to be issued and secured,
the City proposes to enter into an Indenture with a trustee appointed thereto (such Indenture, in the
form presented to this meeting, with such changes, insertions and omissions as are made pursuant to
this Resolution, being referred to herein as the "Indenture"); and
WHEREAS, there has been prepared and submitted to this meeting a form of the Indenture;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Juan
Capistrano as follows:
Section 1. All of the recitals herein contained are true and correct and the City Council
of the City of San Juan Capistrano (the "City Council") so finds.
Section 2. The issuance of the Bonds, on the terms and conditions set forth in, and
subject to the limitations specified in, the Indenture, is hereby authorized and approved. The Bonds
shall be dated, shall bear interest at the rates, shall mature on the dates, shall be issued in the form
and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in
this Resolution.
Section 3. The form of the Indenture, on file with the City Clerk, is hereby approved,
and the City Manager or City Treasurer of the City, or the designees of such officers (the
"Authorized Officers"), each acting alone, is hereby authorized and directed, for and in the name and
on behalf of the City, to execute and deliver the Indenture in substantially said form with such
changes therein as any Authorized Officer executing the same may require or approve, such approval
to be conclusively evidenced by the execution and delivery thereof; provided, however, that (a) the
DOCSOC/ 1458939v2/022658-0033
ATTACHMENT 1
aggregate principal amount of the Bonds (which in no event shall exceed $4,000,000) shall not
exceed the sum of the amount of the City's obligations to the Judgment Obligee under the Judgment,
plus the underwriter's or placement agent's fee on the Bonds, plus any original issue discount on the
Bonds, plus the amount required to be deposited in the reserve fund, plus the costs of issuance of the
Bonds, (b) the true interest cost to the City on the Bonds shall not exceed 9.00%, and (c) the Bonds
shall mature not later than 41 years from the date of issuance thereof. The Bonds shall be executed
by the manual or facsimile signature of the Mayor of the City and attested by the manual or facsimile
signature of the City Clerk, in accordance with the Trust Agreement, with such changes, insertions
and omissions as the Mayor of the City may require or approve, such requirement or approval to be
conclusively evidenced by the execution of the Bonds by the Mayor of the City.
Section 4. The Authorized Officers are each hereby authorized and directed to apply for
municipal bond insurance for the Bonds and to obtain such insurance if the present value cost of such
insurance is less than the present value of the estimated interest savings with respect to the Bonds.
Section 5. The Authorized Officers are each hereby authorized and directed to select a
trustee for the Bonds.
Section 6. The Authorized Officers are authorized and directed, for and in the name of
the City, to cause a validation action to be brought under Section 860 of the California Code of Civil
Procedure to determine the legality and validity of the Bonds and the other documents and
proceedings authorized pursuant to this Resolution.
Section 7. The Authorized Officers are hereby authorized and directed, jointly and
severally, to do any and all things which they may deem necessary or advisable in order to
consummate the transactions herein authorized and otherwise to carry out, give effect to and comply
with the terms and intent of this Resolution, including but not limited to entering into investment
agreements and forward delivery agreements in connection with the investment of funds held under
the Indenture.
Section 8. All actions heretofore taken by the officers, employees and agents of the City
with respect to the transactions set forth above are hereby approved, confirmed and ratified.
Section 9.. This Resolution shall take effect immediately upon its adoption. PASSED
AND ADOPTED this, day of , 2011, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAIN: Councilmembers:.
APPROVED:
Sam Allevato, Mayor
DOCSOC/ 1458939v2/022658-003 3
CITY CLERK'S CERTIFICATE
I, the undersigned, duly appointed, qualified and acting City Clerk of the City of San Juan
Capistrano (the "City"), certify that attached is a full, true and correct copy of Resolution
No. , adopted 2011 during a meeting of the City Council of the City. Such
meeting was duly and legally held at the regular meeting place of the City Council. All of the
members of said council had due notice of such meeting and a majority thereof was present at such
meeting.
I have carefully compared the same with the original minutes of said meeting on file and of
record in my office, and the foregoing is a full, true and correct copy of such resolution adopted at
said meeting and entered in said minutes. Said resolution has not been amended, modified or
rescinded since the date of its adoption, and the same is now in full force and effect.
Dated:
0
City Clerk of the City of San Juan Capistrano
4
DOCSOC/ 1458939v2/022658-0033
INDENTURE
by and between
CITY OF SAN JUAN CAPISTRANO
and
AS TRUSTEE
Dated as of [June 1, 20111
$[ 1
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
DOCSOC/ 1458794v2/022658-0033
ATTACHMENT
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; EQUAL SECURITY...................................................................2
Section1.01.
Definitions...............................................................................................................2
Section1.02.
Equal Security.........................................................................................................7
ARTICLE II
THE BONDS... .......................................................................................................
8
Section 2.01.
Authorization of Bonds; Bonds Constitute Obligations Imposed by Law..............8
Section 2.02.
Terms of Bonds.......................................................................................................8
Section 2,03.
Transfer and Exchange of Bonds............................................................................9
Section 2.04.
Registration Books..................................................................................................9
Section2.05.
Form of Bonds........................................................................................................9
Section 2.06.
Execution of Bonds...............................................................................................10
Section 2.07.
Temporary Bonds..................................................................................................10
Section 2.08.
Bonds Mutilated, Lost, Destroyed or Stolen.........................................................10
Section 2.09.
Book -Entry Bonds................................................................................................
I 1
Section 2.10.
Redemption of Bonds...........................................................................................12
ARTICLE III
ISSUANCE OF BONDS......................................................................................13
Section 3.01.
Issuance of Bonds.................................................................................................13
Section 3.02.
Application of Proceeds of the Bonds...................................................................13
Section 3.03.
Costs of Issuance Fund.........................................................................................14
Section 3.04.
Refunding Fund....................................................................................................14
Section 3.05.
Reserve Fund........................................................................................................14
ARTICLE IV
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS ....................
14
Section4.01.
Pledge....................................................................................................................14
Section 4.02.
Judgment Obligation Fund....................................................................................14
Section4.03.
Bond Fund.............................................................................................................15
Section4.04.
Reserve Fund........................................................................................................16
Section4.05.
Rebate Fund..........................................................................................................16
Section 4.06.
Investment of Moneys...........................................................................................16
ARTICLE V
COVENANTS......................................................................................................17
Section 5.01.
Punctual Payment and Performance.....................................................................17
Section 5.02.
Extension of Payment of Bonds............................................................................17
Section 5.03.
Additional Obligations..........................................................................................17
i
DOCSOC/ 1458794v2/022658-0033
TABLE OF CONTENTS
(Continued)
Page
Section 5.04.
Power to Issue Bonds............................................................................................17
Section 5.05.
Prosecution and Defense of Suits.........................................................................17
Section5.06.
City Budgets..........................................................................................................18
Section5.07.
Tax Covenants......................................................................................................18
Section 5.08.
Continuing Disclosure..........................................................................................18
Section 5.09.
Further Assurances................................................................................................18
ARTICLEVI
THE TRUSTEE....................................................................................................18
Section 6.01.
Duties and Liabilities of Trustee...........................................................................18
Section 6.02,
Merger or Consolidation.......................................................................................20
Section 6.03.
Liability of Trustee...............................................................................................20
Section 6.04.
Right to Rely on Documents.................................................................................21
Section 6.05.
Accounting Records and Reports; Preservation and Inspection of Documents....
21
Section 6.06.
Compensation and Indemnification......................................................................21
ARTICLE VII
SUPPLEMENTAL INDENTURES.....................................................................22
Section 7.01.
Modifications and Amendments Permitted...........................................................22
Section 7.02.
Effect of Supplemental Indenture.........................................................................23
Section 7.03.
Endorsement of Bonds; Preparation of New Bonds.............................................23
Section 7.04.
Amendment of Particular Bonds...........................................................................23
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES.......................................................23
Section 8.01.
Events of Default..................................................................................................23
Section 8.02.
Remedies for Events of Default............................................................................24
Section 8.03.
Application of Funds Upon Acceleration.............................................................24
Section 8.04.
Power of Trustee to Enforce.................................................................................25
Section 8.05.
Bond Owners Direction of Proceedings................................................................25
Section 8.06.
Limitation on Bond Owners' Right to Sue............................................................25
Section 8.07.
Absolute Obligation..............................................................................................26
Section 8.08.
Termination of Proceedings..................................................................................26
Section 8.09.
Remedies Not Exclusive.......................................................................................26
Section 8.10.
No Waiver of Default............................................................................................26
ARTICLEIX
DEFEASANCE.....................................................................................................26
Section 9.01.
Discharge of Indenture..........................................................................................26
Section 9.02.
Bonds Deemed To Have Been Paid......................................................................27
ii
DOCSOCI1458794v21022658-0033
TABLE OF CONTENTS
(Continued)
Page
Section 9.03.
Payment of Bonds After Discharge of Indenture..................................................27
ARTICLEX
RESERVED..........................................................................................................28
ARTICLE X1
MISCELLANEOUS.............................................................................................28
Section 11.01.
Benefits of the Indenture Limited; Third -Party Beneficiary .................................28
Section 11.02.
Successor is Deemed Included in All References to Predecessor .........................28
Section 11.03.
Destruction of Bonds............................................................................................28
Section 11.04.
Waiver of Notice; Requirement of Mailed Notice................................................28
'Section 11.05.
Severability of Invalid Provisions.........................................................................28
Section11.06.
Notices..................................................................................................................28
Section 11.07.
Evidence of Rights of Bond Owners.....................................................................29
Section 11.08.
Disqualified Bonds................................................................................................29
Section 11.09.
Money Held for Particular Bonds.........................................................................30
Section 1 1.10.
Funds and Accounts..............................................................................................30
Section I LI 1.
Payment on Non -Business Days...........................................................................30
Section 11.12.
Waiver of Personal Liability.................................................................................30
Section11.13.
Interpretation.........................................................................................................30
Section 11.14.
Execution in Several Counterparts........................................................................30
Section 11.15.
Governing Law.....................................................................................................30
DOC SOC/ 1458794v2/022658-0033
INDENTURE
THIS INDENTURE (this "Indenture"), dated as of [June 1, 2011], is by and between the
CITY OF SAN JUAN CAPISTRANO, a municipal corporation of the State of California organized
and existing under and by virtue of the laws of the State of California (the "City"), and
[ ], a banking association organized and existing under the laws of the United States
of America, as Trustee (the "Trustee").
WITNESSETH:
WHEREAS, the City of San Juan Capistrano (the "City") is obligated pursuant to the terms
of a settlement agreement reached after entry of judgment in the case entitled Scalzo v. City of San
Juan Capistrano et. al, Case No. 06CCO4179 (the "Judgment"), filed in the Orange County Superior
Court of California, to make a payment to the Scalzo Family Trust (the "Judgment Obligee");
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 California Government Code (the "Act")
to issue refunding bonds for the purpose of refunding any evidence of indebtedness of the City;
WHEREAS, for the purpose of refunding the City's obligations to the Judgment Obligee
evidenced by the Judgment, the City has determined to issue its City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011 (the "Bonds"), in the aggregate principal amount of
WHEREAS, based upon the advice of Fieldman Rolapp, the financial advisor to the City for
the Bonds (the "Underwriter"), the City will be required to fund the Reserve Fund (as hereinafter
defined) in an amount equal to the Reserve Requirement (as hereinafter defined) in order to sell the
Bonds;
WHEREAS, in order to provide for the execution, authentication and delivery of the Bonds,
to establish and declare the conditions and terms upon which the Bonds are to be issued and to secure
the payment of the interest thereon and the principal thereof, the City has authorized the execution
and delivery of this 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, valid, binding and legal obligations of the City payable in accordance with their terms,
and to constitute this 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 this Indenture has been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the interest on and the principal of all Bonds at any time issued and outstanding
hereunder according to their tenor, and to secure the performance and observance of all the
agreements and covenants herein and therein set forth, and to declare the conditions and terms upon
and subject to which the Bonds are to be issued 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 owners thereof, and for other valuable considerations, the receipt whereof is
DOCS00 1458794v2l022658-0033
hereby acknowledged, the City does hereby agree and covenant with the Trustee, for the benefit of
the respective registered owners 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 of this Indenture and of any certificate, opinion or other document
herein or therein mentioned, have the meanings herein specified.
"Act" means Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of
Division 2 of Title 5 of the California Government Code.
"Annual Debt Service" means, for any Fiscal Year or twelve (12) calendar month period, the
payment of the interest on and the principal of all Bonds required to be made under this Indenture in
such Fiscal Year or twelve (12) calendar month period.
"Average Annual Debt Service" means the sum of the Annual Debt Service for the
remaining Fiscal Years to the last Fiscal Year in which any payment of the interest on and the
principal of all Bonds are due under this Indenture divided by the number of such Fiscal Years.
"Authorized Representative" means, with respect to the City, the City Manager of the City,
the Finance Director of the City, and any other person designated as an Authorized Representative in
a Written Certificate of the City filed with the Trustee.
'Bond Counsel' means Stradling Yocca Carlson & Rauth or any other firm of nationally
recognized bond counsel selected by the City and acceptable to the Trustee.
"Bond Fund" means the fund by that name established and held by the Trustee pursuant to
Section 4.03 hereof.
"Bonds" means the City of San Juan Capistrano Judgment Obligation Bonds, Series 2011
issued hereunder.
"Book -Entry Bonds" means the Bonds registered in the name of the nominee of DTC, or
any successor securities depository for the Bonds, as the registered owner thereof pursuant to the
terms and provisions of Section 2.09 hereof.
"Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which banking
institutions in the city or cities in which the principal corporate trust office of the Trustee is located
are authorized or required by law to be closed, or (c) a day on which the New York Stock Exchange
is closed.
"Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of DTC
with respect to the Bonds.
"Closing Date" means f , 2011].
"Code" means the Internal Revenue Code of 1986.
DOCSOC/ 1458794v2/022658-0033
"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as
of the date hereof, by and between the City and the Trustee, as originally executed and as it may from
time to time be amended in accordance with the provisions thereof.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the City relating to the authorization, issuance, sale and delivery of the Bonds,
including but not limited to printing expenses, rating agency fees, bond insurance premiums (if any),
filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel (including
the Trustee's first annual administrative fee), fees, charges and disbursements of attorneys, financial
advisors, underwriters, placement agents, accounting firms, consultants and other professionals, fees
and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or
fee in connection with the original issuance of the Bonds.
"Costs of Issuance Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3.03 hereof.
"City" means the City of San Juan Capistrano, California, a municipal corporation organized
and existing under its charter and the Constitution of the State of California.
"DTC" means The Depository Trust Company, a limited -purpose trust company organized
under the laws of the State of New York, and its successors as securities depository for the Bonds,
including any such successor appointed pursuant to Section 2.09 hereof.
"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" means an event described as such in Section 8.01 hereof.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
succeeding June 30, or any other annual accounting period hereafter designated by the City as its
Fiscal Year in accordance with applicable law.
"Indenture" means this Indenture, dated as of [June 1, 2011], by and between the City and
the Trustee, as originally executed or as it may from time to time be amended or supplemented by
any Supplemental Indenture.
"Interest Payment Date" means February I and August I of each year, commencing,
February 1, 2010, so long as any Bonds remain Outstanding.
"Judgment" means the amount payable pursuant to Section I of the Memorandum for
Settlement, dated as of 2011, by and between the City and Martin E. and Marion E.
Scalzo Family Trust, Frederick T. Scalzo, Co -Trustee, reached in Martin E. and Marion E. Scalzo
Family Trust v. City of San Juan Capistrano et. al, Case No. 06CC04I 79, filed in the Orange County
Superior Court of California.
"Judgment Obligation Fund" means the fund by that name established and held by the
Trustee pursuant to Section 4.02 hereof.
DOCSOC/ 1458794v2/022658-0033
"Judgment Obligee" means the [Martin E. and Marion E. Scalzo Family Trust, Frederick T.
Scalzo Co -Trustee] [CONFIRM].
"Maximum Annual Debt Service" means the largest Annual Debt Service during the period
from the date of such determination through the final -maturity date of the Bonds.
"Office of the Trustee" means the principal corporate trust office of the Trustee in
[ ], California; [provided, however, that for purposes of payment, exchange, transfer,
surrender and cancellation of Bonds, such tern means the principal corporate trust office of the
Trustee in Los Angeles, California, or such other office as may be specified to the City by the
Trustee in writing.]
"Outstanding" when used as of any particular time with reference to Bonds, means (subject
to the provisions of Section 11.08 hereof) all Bonds except (a) Bonds theretofore canceled and
destroyed by the Trustee or surrendered to the Trustee for cancellation and destruction, (b) Bonds
paid or deemed to have been paid within the meaning hereof, and (c) 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 pursuant hereto.
"Owner" means, with respect to a Bond, the Person in whose name such Bond is registered
on the Registration Books.
"Participant" means any entity which is recognized as a participant by DTC in the book -
entry system of maintaining records with respect to Book -Entry Bonds.
"Participating Underwriter" has the meaning ascribed thereto in the Continuing Disclosure
Agreement.
"Permitted Investments" means any of the following obligations if and to the extent that, at
the time of making such investment, they are permitted by applicable law:
A. The following obligations are Permitted Investments for all purposes, including
defeasance investments in refunding escrow accounts.
(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. including:
• U.S. treasury obligations
• All direct or fully guaranteed obligations
• Farmers Home Administration
• General Services Administration
Guaranteed Title XI financing
• Government National Mortgage Association (GNMA)
• State and Local Government Series
4
DOC SOC/ 1458794v2/022658-0033
Any security used for defeasance must provide for the timely payment of principal and
interest and cannot be callable or prepayable prior to maturity or earlier redemption of the
rated debt (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).
B. The following obligations are Permitted Investments for all purposes other than
defeasance investments in refunding escrow accounts.
(1) Obligations of any of the following federal agencies which obligations
represent the full faith and credit of the United States of America, including:
-Export-Import Bank
-Rural Economic Community Development Administration
-U.S. Maritime Administration
-Small Business Administration
-U.S. Department of Housing & Urban Development (PHAs)
-Federal Housing Administration
-Federal Financing Bank
(2) Direct obligations of any of the following federal agencies which obligations
are not fully guaranteed by the full faith and credit of the United States of
America:
-Senior debt obligations issued by the Federal National Mortgage Association
(FNMA) or Federal Home Loan Mortgage Corporation (FHLMC).
-Obligations of the Resolution Funding Corporation (REFCORP)
-Senior debt obligations of the Federal Home Loan Bank System
(3) U.S. dollar denominated deposit accounts, federal funds and bankers'
acceptances with domestic commercial banks which have a rating on their
short term certificates of deposit on the date of purchase of "A-1" or "A-1+"
by S&P and maturing not more than 360 calendar days after the date of
purchase. (Ratings on holding companies are not considered as the rating of
the bank);
(4) Commercial paper which is rated at the time of purchase in the single highest
classification, "A-1+" by S&P, and which matures not more than 270
calendar days after the date of purchase;
(5) Investments in a money market fund rated "AAAm" or "AAAm-G" or better
by S&P, including funds for which the Trustee or an affiliate provides
investment advice or other services;
(6) Pre -refunded 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
DOCSOC/ 1458794v2/022658-0033
(A) which are rated, based on an irrevocable escrow account or fund (the
"escrow"), in the highest rating category of S&P or any successor
thereto; or
(B) (i) which are fully secured as to principal and interest and redemption
premium, if any, by an escrow consisting only of cash or obligations
described in paragraph A(2) above, which escrow may be applied
only to the payment of such principal of and interest and redemption
premium, if any, on such bonds or other obligations on the maturity
date or dates thereof or the specified redemption date or dates
pursuant to such irrevocable instructions, as appropriate, and
(ii) which escrow is sufficient, as verified by a nationally recognized
independent certified public accountant, to pay principal of and
interest and redemption premium, if any, on the bonds or other
obligations described in this paragraph on the maturity date or dates
specified in the irrevocable instructions referred to above, as
appropriate.
(7) municipal obligations rated "AAA" or general obligations of States with a
rating of "A" or higher by S&P; and
(8) Local Agency Investment Fund or similar pooled fund operated by or on
behalf of the State of California and which is authorized to accept
investments of moneys held in any of the funds or accounts established
pursuant to this Trust Agreement.
C. The value of the above investments shall be determined as follows:
(a) For the purpose of determining the amount in any fund, all Permitted
Investments credited to such fund shall be valued at fair market value. The
Trustee shall determine the fair market value based on accepted industry
standards and from accepted industry providers. Accepted industry providers
shall include but are not limited to pricing services provided by Financial
Times Interactive Data Corporation or Citigroup Global Markets Inc.
(b) As to certificates of deposit and bankers' acceptances: the face amount
thereof, plus accrued interest thereon; and
(c) As to any investment not specified above: the value thereof established by
prior agreement between the City and the Trustee.
"Person" means an individual, corporation, firm, association, partnership, limited liability
company, trust, or other legal entity or group of entities, including a governmental entity or any
agency or political subdivision thereof.
"Rebate Fund" means the fund by that name established and held by the Trustee pursuant to
Section 4.05 hereof.
"Rebate Requirement" has the meaning ascribed thereto in the Tax Certificate.
DOCSOCI 1458794v21022658-0033
"Record Date" means the 15th calendar day of the month preceding each Interest Payment
Date, whether or not such day is a Business Day.
"Refunding Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3.04 hereof.
"Reserve Fund" means the fund established in Section 3.05 hereof.
"Reserve Requirement" means, as of any date of determination, the least of (a) ten per cent
(10%) of the amount of the Bonds, or (b) the Maximum Annual Debt Service on the Bonds, or
(c) one hundred twenty-five per cent (125%) of the Average Annual Debt Service on the Bonds, all
as computed by the City under the Code and specified in writing to the Trustee. As of the date of
issuance of the Bonds, the Reserve Requirement is equal to $[ �.
"Registration Books" means the records maintained by the Trustee for the registration of
ownership and registration of transfer of the Bonds pursuant to Section 2.04 hereof.
"Representation Letter" means the Letter of Representations from the City to DTC, or any
successor securities depository for the Bonds, in which the City makes certain representations with
respect to issues of its securities for deposit by DTC or such successor depository.
"S&P" means Standard & Poor's Ratings Services, a division of McGraw- Hill, Inc., a
corporation organized and existing under the laws of the State of New York, its successors and
assigns except that if such entity shall no longer perform the functions of a securities rating agency
for any reason, the term "S&P" shall be deemed to refer to any other nationally recognized securities
rating agency selected by the City and specified to the Trustee in writing.
"State" means the State of California.
"Supplemental Indenture" means any supplemental indenture amendatory of or
supplemental to this Indenture, but only if and to the extent that such Supplemental Indenture is
specifically authorized hereunder.
"Tax Certificate" means the Tax Certificate executed by the City at the time of issuance of
the Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it
may from time to time be amended in accordance with the provisions thereof.
"Trustee" means [ , a banking association organized and existing under the laws
of the United States of America, or any successor thereto as Trustee hereunder, appointed as
provided herein.
"Written Certificate" and "Written Request" of the City mean, respectively, a written
certificate or written request signed in the name of the City by its Authorized Representative. Any
such certificate or request may, but need not, be combined in a single instrument with any other
instrument, opinion or representation, and the two or more so combined shall be read and construed
as a single instrument.
Section 1.02. Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the City,
the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered
DOCSOC/] 458794v2/022658-0033
hereunder and then Outstanding to secure the full and final payment of the principal of and interest
on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder,
subject to the agreements, conditions, covenants and provisions contained herein; and all agreements
and covenants set forth herein to be performed by or on behalf of the City shall be for the equal and
proportionate benefit, protection and security of all Owners 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, sale, execution, issuance or delivery thereof or
for any cause whatsoever, except as expressly provided herein or therein.
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds; Bonds Constitute Obligations Imposed by Law.
The City hereby authorizes the issuance of the Bonds under and subject to the terms of this
Indenture, the Act and other applicable laws of the State of California for the purpose of satisfying
the City's payment obligations under the Judgment.
The obligations of the City under the Bonds, including the obligation to make all payments of
the interest on and the principal of the Bonds when due are obligations of the City imposed by law
and are absolute and unconditional, without any right of set-off or counterclaim. The 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 Bonds nor
the obligation of the City to make payment of the interest on or the principal of the Bonds constitutes
an indebtedness of the City or the State, or any of its political subdivisions, in contravention of any
constitutional or statutory debt limitation or restriction.
Section 2.02. Terms of Bonds. (a) The Bonds shall be designated "City of San Juan
Capistrano Judgment Obligation Bonds, Series 2011." The aggregate principal amount of Bonds that
may be issued and Outstanding under this Indenture shall not exceed $� �, except as may
be otherwise provided in Section 2.08 hereof.
(b) The Bonds shall be issued in fully registered form without coupons in
denominations of $5,000 or any integral multiple thereof, so long as no Bond shall have more than
one maturity date. The Bonds shall be dated as of the Closing Date, shall mature on August 1 of
each year and shall bear interest (calculated on the basis of a 360 -day year comprised of twelve 30 -
day months) at the rates per annum as follows:
Maturity Date Principal Interest
(August 1) Amount Rate
(c) Interest on the Bonds shall be payable from the Interest Payment Date next
preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest
Payment Date and after the close of business on the preceding Record Date, in which event it shall
bear interest from such Interest Payment Date; (ii) a Bond is authenticated on or before the first
Record Date, in which event interest thereon shall be payable from the Closing Date; or (iii) interest
DOC SOC/ 1458794v2/022658-0033
on any Bond is in default as of the date of authentication thereof, in which event interest thereon shall
be payable from the date to which interest has been paid in full or made available for such payment,
payable on each Interest Payment Date. Interest shall be paid in lawful money of the United States
on each Interest Payment Date to the Persons in whose names the ownership of the Bonds is
registered on the Registration Books at the close of business on the immediately preceding Record
Date, except as provided below. Interest shall be paid by check of the Trustee mailed by first class
mail, postage prepaid, on each Interest Payment Date to the Owners at their respective addresses
shown on the Registration Books as of the close of business on the preceding Record Date, except
that in the case of an Owner of $1,000,000 or more in aggregate principal amount of Bonds, upon the
written request of such Owner to the Trustee, received at least ten days prior to a Record Date,
specifying the account or accounts to which such payment shall be made, payment of interest shall be
made by wire transfer of immediately available funds on the following Interest Payment Date. Any
such request shall remain in effect until revoked or revised by such Owner by an instrument in
writing delivered to the Trustee,
(d) The principal of the Bonds shall be payable in lawful money of the United
States of America upon presentation and surrender thereof upon maturity at the Office of the Trustee.
Payment of principal of any Bond shall be made only upon presentation and surrender of such Bond
at the Office of the Trustee.
Section 2.03. Transfer and Exchanee of Bonds. Any Bond may, in accordance with its
terms, be transferred upon the Registration Books by the Person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to
the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute
and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same maturity in a
like aggregate principal amount, in any authorized denomination. The Trustee shall require the
Owner requesting such transfer to pay any tax or other governmental charge required to be paid with
respect to such transfer.
The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal
amount of Bonds of the same maturity of other authorized denominations. The Trustee shall require
the payment by the Owner requesting such exchange of any tax or other governmental charge
required to be paid with respect to such exchange.
Section 2.04. Reeistration Books. The Trustee will keep or cause to be kept, at the Office
of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which
shall be open to inspection during regular business hours and upon reasonable notice by the City;
and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it
may prescribe, register or transfer or cause to be registered or transferred, on such records, the
ownership of the Bonds as hereinbefore provided.
Section 2.05. Form of Bonds. The Bonds shall be in substantially the form set forth in
Exhibit A hereto, with appropriate or necessary insertions, omissions and variations as permitted or
required hereby. Only such of the Bonds as shall bear thereon a certificate of authentication
substantially in the form set forth in Exhibit A hereto, manually executed by the Trustee, shall be
valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been
9
00CS00 1458794v2/02265$-0033
duly executed, authenticated and delivered hereunder and are entitled to the benefits of this
Indenture.
Section 2.06. Execution of Bonds. The Bonds shall be executed in the name and on behalf
of the City with the manual or facsimile signature of the Mayor of the City, and attested by the
manual or facsimile signature of the City Clerk. The City's seal, or a facsimile thereof, may be
reproduced, imprinted or impressed on the Bonds. The Bonds shall then be delivered to the Trustee
for authentication by it. In case any of the officers who shall have signed or attested any of the
Bonds shall cease to be such officer or officers of the. City before the Bonds so signed or attested
shall have been authenticated or delivered by the Trustee, or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue,
shall be as binding upon the City as though those who signed and attested the same had continued to
be such officers of the City, and also any Bonds may be signed and attested on behalf of the City by
such Persons as at the actual date of execution of such Bonds shall be the proper officers of the City
although at the nominal date of such Bonds any such Person shall not have been such officer of the
City.
Section 2.07. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be printed,
lithographed or typewritten, shall be of such authorized denominations as may be determined by the
City, shall be in fully registered form without coupons and may contain such reference to any of the
provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the
City and authenticated by the Trustee upon the same conditions and in substantially the same manner
as the definitive Bonds. If the City issues temporary Bonds it shall execute and deliver definitive
Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds may be surrendered,
for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in
exchange for such temporary Bonds a like aggregate principal amount of definitive Bonds of the
same maturity in authorized denominations. Until so exchanged, the temporary Bonds shall be
entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered
hereunder.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the
Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated
Bond so surrendered to the Trustee shall be destroyed by it. 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 and indemnity satisfactory to the Trustee shall be given, the City, at the expense of the
Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like
tenor in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall
have matured, instead of issuing a replacement Bond, the Trustee may pay the same without
surrender thereof). The City may require payment by the Owner of a sum not exceeding the actual
cost of preparing each replacement Bond issued under this Section and of the expenses which may be
incurred by the City and the Trustee. Any Bond issued under the provisions of this Section in lieu of
any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual
obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen be
at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other
Bonds secured by this Indenture.
10
DOCSOC/1458794v2/022658-0033
Section 2.09. Book -Entry Bonds. (a) Except as provided in subsection (c) of this Section,
the registered Owner of all of the Bonds shall be DTC and the Bonds shall be registered in the name
of Cede & Co., as nominee for DTC. Notwithstanding anything to the contrary contained in this
Indenture, payment of interest with respect to any Bond registered as of each Record Date in the
name of Cede & Co. shall be made by wire transfer of same-day funds to the account of Cede & Co.
on the payment date for the Bonds at the address indicated on the Record Date for Cede & Co. in the
Registration Books or as otherwise provided in the Representation Letter.
(b) The Bonds shall be initially issued in the form of separate single fully
registered Bonds in the amount of each separate stated maturity of the Bonds. Upon initial issuance,
the ownership of such Bonds shall be registered in the Registration Books in the name of Cede &
Co., as nominee of DTC. The Trustee and the City may treat DTC (or its nominee) as the sole and
exclusive Owner of the Bonds registered in its name for the purposes of payment of the principal or
interest with respect to the Bonds, giving any notice permitted or required to be given to Owners of
Bonds under this Indenture, registering the transfer of Bonds, obtaining any consent or other action to
be taken by Owners of 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, any person claiming a beneficial ownership interest in
the Bonds under or through DTC or any Participant, or any other person which is not shown on the
Registration Books as being an Owner, with respect to the accuracy of any records maintained by
DTC or any Participant; the payment by DTC or any Participant of any amount in respect of the
principal or interest with respect to the Bonds; any notice which is permitted or required to be given
to Owners of Bonds under this Indenture; or any consent given or other action taken by DTC as
Owner of Bonds. The Trustee shall pay all principal and interest with respect to the Bonds, only to
DTC, and all such payments shall be valid and effective to fully satisfy and discharge the City's
obligations with respect to the principal and interest with respect to the Bonds to the extent of the
sum or sums so paid. Except under the conditions of (c) below, no person other than DTC shall
receive an executed Bond for each separate stated maturity. 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 Cede &
Co., and subject to the provisions herein with respect to record dates, the term "Cede & Co." in this
Indenture shall refer to such new nominee of DTC.
(c) In the event (i) DTC, including any successor as securities depository for the
Bonds, determines not to continue to act as securities depository for the Bonds; or (ii) the City
determines that the incumbent securities depository shall no longer so act, and delivers a written
certificate to the Trustee to that effect, then the City will discontinue the book -entry system with the
incumbent securities depository for the Bonds. If the City determines to replace the, incumbent
securities depository for the Bonds with another qualified securities depository, the City shall prepare
or direct the preparation of a new single, separate fully registered Bond for the aggregate outstanding
principal amount of Bonds of each maturity, registered in the name of such successor or substitute
qualified securities depository, or its nominee, or make such other arrangement acceptable to the
City, the Trustee and the successor securities depository for the Bonds as are not inconsistent with
the terms of this Indenture. If the City fails to identify another qualified successor securities
depository of the Bonds to replace the incumbent securities depository, then the Bonds shall no
longer be restricted to being registered in the Registration Books in the name of the incumbent
securities depository or its nominee, but shall be registered in whatever name or names the
incumbent securities depository for the Bonds, or its nominee, shall designate. In such event the
Trustee shall authenticate and deliver a sufficient quantity of Bonds as to carry out the transfers and
I1
DOC SOC/ 1458794 v2/022658-0033
exchanges provided in Sections 2.03, 2.07 and 2.08. All such Bonds shall be in fully registered form
in denominations authorized by this Indenture.
(d) Notwithstanding any other provision of this Indenture to the contrary, so long
as any Bond is registered in the name of DTC, or its nominee, all payments with respect to the
principal and interest with respect to such Bond and all notices with respect to such Bond shall be
made and given, respectively, as provided in the Representation Letter.
(e) In connection with any notice or other communication to be provided to
Owners of Book -Entry Bonds pursuant to this Indenture by the City or the Trustee with respect to
any consent or other action to be taken by Owners, the City or the Trustee, as the case may be, shall
establish a record date for such consent or other action and give DTC notice of such record date not
less than 15 calendar days in advance of such record date to the extent possible.
Section 2.10. Redemption of Bonds.
(a) Optional Redemption. The Bonds maturing on or after [August 1, are
subject to redemption prior to their respective stated maturities at the written direction of the City,
from any moneys deposited by the City, as a whole or in part on any date (in such maturities as are
designated in writing by the City to the Trustee) on or after [August 1, _ 1 at a redemption price
of 100% of the principal amount of Bonds called for redemption, together with accrued interest to the
date fixed for redemption.
(b) Mandatory Sinking Fund Redemption. The Bonds maturing on [August 1,
upon notice as hereinafter provided, shall also be subject to mandatory sinking fund
redemption prior to maturity, in part on August 1, of each year on and after [August 1, _�, by lot,
from and in the amount of the mandatory sinking account payments set forth in Section 4.03 at a
redemption price equal to the sum of the principal amount thereof plus accrued interest thereon to the
redemption date, without premium.
(c) Mandatory Sinking Fund Redemption. The Bonds maturing on [August 1,
upon notice as hereinafter provided, shall also be subject to mandatory sinking fund
redemption prior to maturity, in part on August 1 of each year on and after [August 1, ], by lot,
from and in the amount of the mandatory sinking account payments set forth in Section 4.03 at a
redemption price equal to the sum of the principal amount thereof plus accrued interest thereon to the
redemption date, without premium.
(d) Notice of Redemption. Notice of redemption shall be mailed by first-class
mail by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to the redemption
date to (i) the respective Owners of the Bonds designated for redemption at their addresses appearing
on the registration books of the Trustee, (ii) the Municipal Securities Rulemaking Board, (iii) the
Securities Depositories and (iv) one or more Information Services. Notice of redemption to the
Securities Depositories and the Information Services shall be given by registered mail, electronic
mail or overnight delivery or facsimile transmission. Each notice of redemption shall state the date
of such notice, the redemption price, if any, (including the name and appropriate address of the
Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such
maturity is to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be
redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the
principal amount to be redeemed.
12
DOCSOC/ 1458794v2/022658-0033
Each such notice shall also state that on said date there will become due and payable
on each of said Bonds the redemption price, if any, thereof and in the case of a Bond to be redeemed
in part only, the specified portion of the principal amount to be redeemed, 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 Bonds be then surrendered at the address of the
Trustee specified in the redemption notice. In addition, each notice for optional redemption: (i) shall
state that the proposed redemption is conditioned on there being money on deposit in the applicable
fund or account on the redemption date sufficient to pay the full redemption price of the Bonds to be
redeemed, or (ii) be sent only if sufficient money to pay the full redemption price of the Bonds to be
redeemed is on deposit in the Principal Account. Failure to receive such notice shall not invalidate
any of the proceedings taken in connection with such redemption.
In the event of redemption of Bonds (other than sinking fund redemptions), the
Trustee shall mail a notice of redemption upon receipt of a Written Request of the City, received by
the Trustee sixty (60) days prior to the redemption date but only after the City shall file a Written
Certificate of the City with the Trustee stating that on or before the date set for redemption, the City
shall have deposited with or otherwise made available to the Trustee for deposit in the Principal
Account the money required for payment of the redemption, price, including accrued interest, of all
Bonds then to be called for redemption.
(e) Effect of Redemption. If notice of redemption has been duly given as
aforesaid and money for the payment of the redemption price of, together with interest accrued to the
date fixed for redemption, the Bonds called for redemption is held by the Trustee, then on the
redemption date designated in such notice Bonds so called for redemption shall become due and
payable, and from and after the date so designated interest on such Bonds shall cease to accrue, and
the Owners of such Bonds shall have no rights in respect thereof except to receive payment of the
redemption price thereof.
ARTICLE III
ISSUANCE OF BONDS
Section 3.01. Issuance of Bonds. The City may, at any time, execute the Bonds and
deliver the same to the Trustee. The Trustee shall authenticate the Bonds and deliver the Bonds to
the original purchaser upon receipt of a Written Request of the City and upon receipt of the purchase
price therefor.
Section 3.02. Application of Proceeds of the Bonds. On the Closing Date, the proceeds of
the sale of the Bonds shall be paid to the Trustee and said amounts shall be deposited by the Trustee
as follows:
(a) The Trustee shall deposit the amount of $[ ) in the Costs of
Issuance Fund.
(b) The Trustee shall deposit the amount of $[ �, being the Reserve
Requirement, into the Reserve Fund.
(c) The Trustee shall deposit the amount of $[ 1 in the Refunding
Fund, constituting the remainder of said proceeds.
13
DOC SOC/ 1458794v2/022658-0033
Section 3.03. Costs of Issuance Fund. There is hereby established a separate fund to be
known as the "Costs of Issuance Fund," which shall be held by the Trustee in trust. On the Closing
Date, the Trustee shall deposit in the Costs of Issuance Fund the amount specified in Section 3.02(a).
The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from
time to time to pay the Costs of Issuance upon submission of a Written Request of the City stating
(a) the Person to whom payment is to be made, (b) the amount to be paid, (c) the purpose for which
the obligation was incurred, (d) that such payment is a proper charge against the Costs of Issuance
Fund, and (e) that such amounts have not been the subject of a prior disbursement from the Costs of
Issuance Fund; in each case together with a statement or invoice for each amount requested
thereunder. On ( , all amounts remaining in the Costs of Issuance Fund shall be
withdrawn therefrom by the Trustee and transferred to the Bond Fund and the Costs of Issuance Fund
shall be closed.
Section 3.04. Refundin¢ Fund. There is hereby established a separate fund to be known as
the "Refunding Fund," which shall be held by the Trustee in trust. On the Closing Date, the Trustee
shall deposit in the Refunding Fund the amount specified in Section 3.02(c).
On the Closing Date, the City shall deliver to the Trustee a Written Request of the City
stating (a) that the amount in the Refunding Fund shall be paid to the Judgment Obligee, and
(b) instructions as to how such payment or payments are to be made and if such payments are to be
made by wire transfer the Trustee may rely on the payment instructions included in such Written
Request with no duty to investigate or inquire as to the authenticity of such payment instructions.
The Trustee shall make such payment or payments on the Closing Date and, after such payment or
payments have been made, the Refunding Fund shall be closed.
Section 3.05. Reserve Fund. There is hereby established a separate fund to be known as
the 'Reserve Fund," which shall be held by the Trustee in trust. On the Closing Date, the Trustee
shall deposit in the Reserve Fund the amount specified in Section 3.02(b). Moneys in the Reserve
Fund shall be applied only as provided in Section 4.04.
ARTICLE IV
SECURITY FOR BONDS; FLOW OF FUNDS;
INVESTMENTS
Section 4.01. Pledge. Subject only to the provisions of this Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth herein, all of the
amounts held in the Judgment Obligation Fund and the Bond Fund are hereby pledged by the City to
secure the payment of the principal of and interest on the Bonds in accordance with their terms, the
provisions of this Indenture and the Act. Said pledge'shall constitute a first lien on such assets.
Section 4.02. Judgment Obligation Fund. (a) The Trustee shall establish, maintain and
hold in trust a special fund designated the "Judgment Obligation Fund." The City agrees and
covenants that not later than January 15 of each Fiscal Year, commencing January 15, 2012, it will
transfer to the Trustee an amount equal to the interest on the Bonds due on the succeeding February 1
and that not later than July 15 of each Fiscal Year, commencing July 15, 2012, it will transfer to the
Trustee an amount which, together with the amount then on deposit in the Judgment Obligation
14
DOCSOC/ 1458794v2/022658-0033
Fund, will equal the amount of the principal of and interest on the Bonds due on the succeeding
August 1. The Trustee shall, upon receipt, deposit such amount in the Judgment Obligation Fund.
(b) On the last Business Day immediately preceding each Interest Payment Date,
the Trustee shall withdraw from the Judgment Obligation Fund and deposit in the Bond Fund in
immediately available funds an amount which, together with the amount then on deposit in the Bond
Fund, will equal the principal, if any, of and interest due on the Bonds on such Interest Payment
Date.
(c) - On the Business Day following the last Interest Payment Date of each Fiscal
Year, any moneys remaining in the Judgment Obligation Fund shall be first transferred to the
Reserve Fund to the extent the amount on deposit therein is less than the Reserve Requirement and
any remaining funds shall be transferred by the Trustee to or upon the order of the City, as specified
in a Written Request of the City.
Section 4.03. Bond Fund. (a) The Trustee shall establish, maintain and hold in trust a
special fund designated the 'Bond Fund." The Trustee shall deposit in the Bond Fund the amounts
required to be deposited therein pursuant to Section 4.02 hereof.
(b) On or before each Interest Payment Date, the Trustee shall withdraw from the
Bond Fund for payment to the Owners of the Bonds the principal, if any, of and interest then due and
payable on the Bonds. If there are insufficient funds in the Bond Fund to pay the principal, if any, of
and interest on the Bonds, the Trustee shall apply the available funds first to the payment of interest
on the Bonds, then to the payment of principal of the Bonds.
(c) The Trustee shall establish and maintain within the Bond Fund a Sinking
Account for the Term Bonds maturing on [August 1, 1. Subject to the terms and conditions set
forth in this Section and Section 2. 10, the Term Bonds maturing on [August 1, , shall be
redeemed (or paid at maturity, as the case may be) by application of mandatory sinking account
payments in the amounts and upon the dates as follows:
[ Term Bonds Sinking Account
Mandatory Sinking Account Mandatory Sinking
Payment Date (August 1) Account Payments
*
*Maturity
(d) The Trustee shall establish and maintain within the Bond Fund a Sinking
Account for the Tenn Bonds maturing on [August 1, . Subject to the terms and conditions set
forth in this Section and Section 2.10, the Term Bonds maturing on [August 1, , shall be
redeemed (or paid at maturity, as the case may be) by application of mandatory sinking account
payments in the amounts and upon the dates as follows:
15
DOC SOC/ 1458794v2/022658-0033
I 1 Term Bonds Sinking Account
Mandatory Sinking Account Mandatory Sinking
Payment Date (August I) Account Payments
*
*Maturity
Section 4.04. Reserve Fund. The City shall deposit in the Reserve Fund on the Closing
Date an amount equal to the Reserve Requirement. Any withdrawal from the Reserve Fund shall be
replenished within one year from the date of withdrawal. All investment earnings on amounts on
deposit in the Reserve Fund and any amounts on deposit in the Reserve Fund in excess of the
Reserve Requirement shall be transferred by the Trustee to the Judgment Obligation Bond Fund on
the Business Day following the last Interest Payment Date of each Fiscal Year. All amounts in the
Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of (i) paying
principal of and interest on the Bonds in the event moneys in the Judgment Obligation Fund are
insufficient therefor, (ii) for the payment or redemption of the Bonds upon a Written Order of the
City (but only to the extent that after such redemption, the amount on deposit in the Reserve Fund
will equal the Reserve Requirement taking into account such redemption) or (iii) for the payment of
all or any portion of the final principal and interest payment on the Bonds.
Section 4.05. Rebate Fund. (a) The Trustee shall establish and maintain a special fund
designated the "Rebate Fund." There shall be deposited in the Rebate Fund such amounts as are
required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of
the City. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to
the extent required to satisfy the Rebate Requirement, for payment to the United States of America.
Notwithstanding defeasance of the Bonds pursuant to Article IX hereof or anything to the contrary
contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be
governed exclusively by this Section and by the Tax Certificate (which is incorporated herein by
reference). The Trustee shall be deemed conclusively to have complied with such provisions if it
follows the written directions of the City, and shall have no liability or responsibility to enforce
compliance by the City with the terms of the Tax Certificate.
(b) Any funds remaining in the Rebate Fund after payment in full of all of the
Bonds and after payment of any amounts described in this Section, shall be withdrawn by the Trustee
and shall be transferred to the City to be expended for any lawful purpose of the City.
Section 4.06. Investment of Moneys. Except as otherwise provided herein, all moneys in
any of the funds or accounts established pursuant to this Indenture shall be invested by the Trustee
solely in Permitted Investments, as directed in a Written Request of the City received no later than
two Business Days prior to the making of such investment. Moneys in all funds and accounts shall
be invested in Permitted Investments maturing not later than the date on which the City estimates that
such moneys will be required for the purposes specified in this Indenture. Absent timely written
direction from the City, the Trustee shall invest any funds held by it in Permitted Investments
described in clause B(5) of the definition thereof.
16
DOCSOC/ 1458794v2/022658-0033
Subject to the provisions of Section 5.07, all interest, profits and other income received from
the investment of moneys in any fund or account established pursuant to this Indenture shall be
retained therein.
Permitted Investments acquired as an investment of moneys in any fund established under
this Indenture shall be credited to such fund. All investments of amounts deposited in any fund or
account created by or pursuant to this Indenture shall be acquired, disposed of, and valued at fair
market value.
The Trustee or an affiliate thereof may act as principal or agent in the making or disposing of
any investment and shall be entitled to its reasonable and customary fee therefor. Upon the Written
Request of the City, the Trustee shall sell or present for redemption any Permitted Investments so
purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer,
withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the
Trustee shall not be liable or responsible for any loss resulting from any investment made or sold
pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of
the funds and accounts established hereunder.
ARTICLE V
COVENANTS
Section 5.01. Punctual Payment and Performance. The City shall punctually pay the
interest on and principal of every Bond issued hereunder in strict conformity with the terms hereof
and of the Bonds, and shall 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 Bonds. The City shall 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 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.
Section 5.03. Additional Obligations. The City expressly reserves the right. to issue or
incur other obligations for any of its corporate purposes.
Section 5.04. Power to Issue Bonds. The City is duly authorized to issue the Bonds and to
enter into this Indenture. The Bonds and the provisions of this Indenture are and will be the legal,
valid and binding obligations of the City in accordance with their terms. The Bonds constitute
obligations imposed by law.
Section 5.05. Prosecution and Defense of Suits. The City shall defend against every suit,
action or proceeding at any time brought against the City upon any claim to the extent involving the
17
DOC SOC/ 1458794v2/022658-003 3
failure of the City to fulfill its obligations hereunder; provided, however, that the Trustee or any
Owner at its election may appear in and defend any such suit, action or proceeding.
Section 5.06. City Budgets. The City shall in each Fiscal Year include in its budget a
provision to provide funds in an amount sufficient to pay the principal of and interest on the Bonds
coming due in such Fiscal Year.
Section 5.07. Tax Covenants. (a) The City shall not take any action, or fail to take any
action, if such action or failure to take such action would adversely affect the exclusion from gross
income of interest on the Bonds under Section 103 of the Code. Without limiting the generality of
the foregoing, the City shall comply with the requirements of this Section and the Tax Certificate,
which is incorporated herein as if fully set forth herein. Except as set forth in the Tax Certificate, this
covenant shall survive payment in full or defeasance of the Bonds.
(b) In the event that at any time the City is of the opinion that for purposes of this
Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held
by the Trustee in any of the funds or accounts established hereunder, the City shall so instruct the
Trustee in writing, and the Trustee shall act in accordance with such instructions.
(c) Notwithstanding any provisions of this Section, if the City shall provide to the
Trustee an opinion of Bond Counsel to the effect that any specified action required under this Section
hereof is no longer required or that some further or different action is required to maintain the
exclusion from federal income tax of interest on the Bonds, the Trustee may conclusively rely on
such opinion in complying with the requirements of this Section and of the Tax Certificate, and the
covenants hereunder shall be deemed to be modified to that extent.
Section 5.08. Continuing Disclosure. Each of the City and the Trustee shall comply with
and cavy out all of the provisions of the Continuing Disclosure Agreement applicable to it.
Notwithstanding any other provision of this Indenture, failure of the City or the Trustee to comply
with the Continuing Disclosure Agreement shall not be considered an Event of Default; provided,
however, that the Trustee may (and, at the written direction of any Participating Underwriter or the
holders of at least 25% of the aggregate principal amount of Outstanding Bonds, shall upon receipt of
indemnification for its costs and fees reasonably acceptable to it) or any holder or beneficial owner of
the Bonds may, take such actions as may be necessary and appropriate to compel performance,
including seeking mandate or specific performance by court order.
Section 5.09. Further Assurances. Whenever and so often as reasonably requested to do
so by the Trustee or any Owner, the City shall 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 and the Owners all rights, interests, powers, benefits,
privileges and advantages conferred or intended to be conferred upon them hereby.
ARTICLE VI
THE TRUSTEE
Section 6.01. Duties and Liabilities of Trustee. (a) Duties of Trustee Generally. The
Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may
18
DOC SOC/ 1458794v2/022658-0033
have occurred, perform such duties and only such duties as are expressly and specifically set forth in
this Indenture. The Trustee shall, during the existence of any Event of Default which has not been
cured, exercise such of the rights and powers vested in it by this Indenture, 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 his or her own affairs.
(b) Removal of Trustee. The City may upon 30 days' prior written notice remove
the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and
the City shall remove the Trustee if at any time requested to do so by an instrument or concurrent
instruments in writing signed by the Owners of not less than a majority in aggregate principal amount
of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the
Trustee shall cease to be eligible in accordance with subsection (e) of this Section, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its
property shall be appointed, or any public officer shall take control or charge of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by
giving written notice of such removal to the Trustee and thereupon shall appoint a successor Trustee
by an instrument in writing.
(c) Resignation of Trustee. The Trustee may at any time resign by giving written
notice of such resignation by first class mail, postage prepaid, to the City, and to the Owners at the
respective addresses shown on the Registration Books. Upon receiving such notice of resignation,
the City shall promptly appoint a successor Trustee by an instrument in writing. The Trustee shall
not be relieved of its duties until such successor Trustee has accepted appointment.
(d) Appointment of Successor Trustee. Any removal or resignation of the
Trustee and appointment of a successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee; provided, however, that under any circumstances the
successor Trustee shall be qualified as provided in subsection (e) of this Section. If no qualified
successor Trustee shall have been appointed and have accepted appointment within 45 days
following giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any
Owner (on behalf of himself and all other Owners) may petition any court of competent jurisdiction
for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any,
as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this
Indenture shall signify its acceptance of such appointment by executing and delivering to the City
and to its predecessor Trustee a written acceptance thereof, and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights,
powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally
named Trustee herein; but, nevertheless at the Written Request of the City or the request of the
successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of
conveyance or further assurance and do such other things as may reasonably be required for more
fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest
of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over,
transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts
and conditions herein set forth. Upon request of the successor Trustee, the City shall execute and
deliver any and all instruments as may be reasonably required for more fully and certainly vesting in
and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts,
duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this
subsection, the City shall mail or cause the successor Trustee to mail, by first class mail postage
prepaid, a notice of the succession of such Trustee to the trusts hereunder to the Owners at the
19
DOCSOC/ 1458794v2/022658-0033
addresses shown on the Registration Books. If the City fails to mail such notice within 15 days after
acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to
be mailed at the expense of the City.
(e) Qualifications of Trustee. The Trustee shall be a trust company or bank
having the powers of a trust company, having (or if such bank or trust company is a member of a
bank holding company system, its parent bank holding company shall have) a combined capital and
surplus of at least $75,000,000, and subject to supervision or examination by federal or state agency.
If such bank or trust company publishes a report of condition at least annually, pursuant to law or to
the requirements of any supervising or examining agency above referred to, then for the purpose of
this subsection the combined capital and surplus of such bank 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.
In case at any time the Trustee shall cease to be eligible in accordance with the provisions of
this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in
this Section.
Section 6.02. Mercer or Consolidation. Any bank or trust company into which the
Trustee may be merged or converted or with which it may be consolidated or any bank or trust
company resulting from any merger, conversion or consolidation to which it shall be a party or any
bank or trust company to which the Trustee may sell or transfer all or substantially all of its corporate
trust business, provided such bank or trust company shall be eligible under subsection (e) of
Section 6.01 shall be the successor to such Trustee, without the execution or filing of any paper or
any further act, anything herein to the contrary notwithstanding.
Section 6.03. Liability of Trustee. (a) The recitals of facts herein and in the Bonds
contained shall be taken as statements of the City, and the Trustee shall not assume responsibility for
the correctness of the same, or make any representations as to the validity or sufficiency of this
Indenture or of the Bonds or shall incur any responsibility in respect thereof, other than as expressly
stated herein in connection with the respective duties or obligations herein or in the Bonds assigned
to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in
its certificate of authentication on the Bonds. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of any Bonds, or in respect of the security afforded by this
Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under
no responsibility or duty with respect to (i) the issuance of the Bonds for value, (ii) the application of
the proceeds thereof except to the extent that such proceeds are received by it in its capacity as
Trustee, or (iii) the application of any moneys paid to the City or others in accordance with this
Indenture except as the application of any moneys paid to it in its capacity as Trustee. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for its own
negligence or willful misconduct. The Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture. The Trustee and its officers and employees may become the
Owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent
permitted by law, may act as depository for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights of
Bond Owners, whether or not such committee shall represent the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding.
20
DOCSOC/ 1458794v2/022658-0033
(b) The Trustee shall not be liable for any error of judgment made in good faith
by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) 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 Owners of not less than a majority
in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee under this Indenture.
(d) No provision of this Indenture shall require the Trustee to risk or expend its
own funds in the performance of its rights and duties hereunder.
(e) The Trustee shall not be deemed to have knowledge of an Event of Default as
described in Section 8.01 hereof (other than an Event of Default described in Section 8.01(a) or (b)
hereof) unless and until the Trustee has received written notice of such Event of Default at the Office
of the Trustee.
Section 6.04. Right to Rely on Documents. The Trustee shall be protected in acting upon
any notice, resolution, request, consent, order, certificate, report, opinion, bonds 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 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;
provided, however, the Trustee shall in no event delay any payment with respect to the Bonds in
anticipation of any such opinion.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the
City, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered
in good faith under the provisions of this Indenture in reliance upon such Written Certificate, 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.
Section 6.05. Accounting Records and Reports; Preservation and Inspection of
Documents. The Trustee 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 accounts and funds established hereunder,
which such books shall be available for inspection by the City at reasonable hours and under
reasonable conditions.
All documents received by the Trustee under the provisions of this Indenture shall be retained
in its possession and shall be subject during business hours and upon 24 hours' notice to the
inspection of the City, the Owners and their agents and representatives duly authorized in writing.
Section 6.06. Compensation and Indemnification. The City shall pay to the Trustee from
time to time all reasonable compensation for all services rendered under this Indenture, and also all
21
DOCSOC/ 1458794v2/022658-0033
reasonable expenses, charges, legal and consulting fees and other disbursements and those of its
attorneys, agents and employees, incurred in and about the performance of their powers and duties
under this Indenture. The City further agrees, to the extent permitted by law, to indemnify, defend
and save the Trustee harmless against any liabilities which it may incur in the exercise and
performance of its powers and duties hereunder and under any related documents, including the
enforcement of any remedies and the defense of any suit, and which are not due to its negligence or
its willful misconduct. The duty of the City to indemnify and compensate the Trustee shall survive
the termination and discharge of this Indenture and the resignation or removal of the Trustee.
ARTICLE VII
SUPPLEMENTAL INDENTURES
Section 7.01. Modifications and Amendments Permitted. (a) This Indenture and the
rights and obligations of the City, the Owners of the Bonds and the Trustee may be modified or
amended from time to time and at any time by a Supplemental Indenture, which the City and the
Trustee may enter into with the written consent of the Owners of a majority in aggregate principal
amount of all Bonds then Outstanding, which shall have been filed with the Trustee. No such
modification or amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of
principal thereof, or reduce the interest rate home thereby, or extend or accelerate the time of
payment thereof, without the consent of the Owner of each Bond so affected, or (ii) reduce the
aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such
modification or amendment, without the consent of the Owners of all of the Bonds then Outstanding.
It shall not be necessary for the consent of the Owners to approve the particular form of any
Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof.
(b) This Indenture and the rights and obligations of the City, the Trustee and the
Owners of the Bonds may also be modified or amended from time to time and at any time by a
Supplemental Indenture, which the City and the Trustee may enter into without the consent of any
Bond Owners for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City in this Indenture
contained, other covenants and agreements thereafter to be observed, to pledge or assign additional
security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to
or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision contained in this
Indenture;
(iii) to modify, amend or supplement this Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar
federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be
permitted by said act or similar federal statute;
(iv) to modify, amend or supplement this Indenture in such manner as to
cause interest on the Bonds to be excludable from gross income for purposes of federal income
taxation by the United States of America; and
22
DOCSOC/1458794v2/022658-0033
(v) in any other respect whatsoever as the City may deem necessary or
desirable, provided that such modification or amendment does not materially adversely affect the
interests of the Owners hereunder.
(c) Promptly after the execution by the City and the Trustee of any Supplemental
Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the
City), by first class mail postage prepaid, setting forth in general terms the substance of such
Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the
Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such Supplemental Indenture.
Section 7.02. Effect of Suoolemental Indenture. Upon the execution and delivery of any
Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the City, the Trustee and all Owners of Bonds Outstanding shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to
be part of the terms and conditions of this Indenture for any and all purposes.
Section 7.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after
the execution of any Supplemental Indenture pursuant to this Article may, and if the City so
determines shall, bear a notation by endorsement or otherwise in form approved by the City and the
Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in
that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and
presentation of his Bonds for the purpose at the Office of the Trustee a suitable notation shall be
made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to
conform, in the opinion of the City and the Trustee, to any modification or amendment contained in
such Supplemental Indenture, shall be prepared and executed by the City and authenticated by the
Trustee, and upon demand of the Owners of any Bonds then Outstanding shall be exchanged at the
Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender
for cancellation of such Bonds, in equal aggregate principal amount of the same interest rate and
maturity.
Section 7.04. Amendment of Particular Bonds. The provisions of this Article shall not
prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such
Owner.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
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 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 of any Bond when and as the same shall become due and payable at maturity;
23
DOCSOC/ 1458794v2/022658-003 3
(c) If default shall be made by the City in the performance of any of the other
agreements or covenants required herein to be performed by the City, and such default shall have
continued for a period of 30 days after the City shall have been given notice in writing of such
default by the Trustee or the Owners of not less than 5% in aggregate principal amount of the
Outstanding Bonds, specifying such default and requiring the same to be remedied; provided,
however, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but
not within such 30 day period, such failure shall not constitute an Event of Default if corrective
action is instituted by the City within such 30 day period and the City shall thereafter diligently and
in good faith cure such failure in a reasonable period of time; 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 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 and is
continuing, the Trustee may and, upon the written direction of the Owners of not less than 25% in
aggregate principal amount of the Outstanding Bonds, shall, by written notice to the City, declare
immediately due and payable the principal of all Outstanding Bonds and the accrued interest thereon,
whereupon the same shall become immediately due and payable without any further action or notice;
provided, however, 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 interest on or principal
of the Bonds which are due solely by reason of such acceleration) shall have been paid or provided
for by deposit with the Trustee and all existing Events of Default shall have been cured or waived,
then the Owners of not less than 25% in aggregate principal amount of the Outstanding Bonds may
annul such acceleration and its consequences by written notice to the City and the Trustee, which
annulment shall be binding upon the City, the Trustee and all of the Owners, but no such annulment
shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent
thereon.
Section 8.03. Application of Funds Upon Acceleration. All money in the Judgment
Obligation Fund and the Bond Fund upon the date of the declaration of acceleration by the Trustee as
provided in Section 8.02 hereof and all amounts thereafter received by the Trustee hereunder shall be
applied by the Trustee in the following order—
(a) To the payment of any expenses necessary in the opinion of the Trustee to
protect the interests of the Owners and payment of reasonable fees, charges and expenses of the
Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the
performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due with respect to the
Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only
partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture, as
follows:
First: To the payment to the Persons entitled thereto of all installments of
interest then due in the order of the maturity of such installments and, if the amount
available shall not be sufficient to pay in full any installment or installments maturing
24
DOCSOC/ 1458794v2/022658-0033
on the same date, then to the payment thereof ratably, according to the amounts due
thereon, to the Persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the Persons entitled thereto of the unpaid
principal of any Bonds which shall have become due, whether at maturity, with
interest on the overdue principal at the rate borne by the respective Bonds on the date
of maturity, and, if the amount available shall not be sufficient to pay in full all the
Bonds, together with such interest, then to the payment thereof ratably, according to
the amounts of principal due on such date to the Persons entitled thereto, without any
discrimination or preference.
(c) Any remaining funds shall be transferred by the Trustee to the Judgment
Obligation Fund.
Section 8.04. Power of Trustee to Enforce. All rights of action under this Indenture or the
Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of
the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and
protection of the Owners of such Bonds, subject to the provisions of this Indenture.
Section 8.05. Bond Owners Direction of Proceedino. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and
delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to
direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided
that such direction shall not be otherwise than in accordance with law and the provisions of this
Indenture, and that the Trustee shall have the right to decline to follow any such direction which in
the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction.
Section 8.06. Limitation on Bond Owners' Rieht to Sue. No Owner of any Bonds shall
have the right to institute any suit, action or proceeding at law or in equity, for the protection or
enforcement of any right or remedy under this Indenture, the Act or any other applicable law with
respect to such Bonds, unless (a) such Owner shall have given to the Trustee written notice of the
occurrence of an Event of Default, (b) the Owners of a majority in aggregate principal amount of the
Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name, (c) such Owner
or said Owners shall have tendered to the Trustee indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request, and (d) the Trustee shall have refused or omitted to
comply with such request for a period of 60 days after such written request shall have been received
by, and said tender of indemnity shall have been made to, the Trustee.
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 Owner of Bonds of any remedy
hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall
have any right in any manner whatever by his or their action to affect, disturb or prejudice the
security of this Indenture or the rights of any other Owners of Bonds, or to enforce any right under
the Bonds, this Indenture, the Act or other applicable law with respect to the Bonds, except in the
manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be
25
DOC SOC/ 1458794v2/022658-0033
instituted, had and maintained in the manner herein provided and for the benefit and protection of all
Owners of the Outstanding Bonds, subject to the provisions of this Indenture.
Section 8.07. Absolute Obligation. Nothing in any provision of this Indenture or in the
Bonds contained shall affect or impair the obligation of the City, which is absolute and
unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the
Bonds at their respective dates of maturity, as herein provided, or affect or impair the right of such
Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract
embodied in the Bonds.
Section 8.08. Termination of Proceedings. In case any proceedings taken by the Trustee
or any one or more Owners on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Owners, then
in every such case the City, the Trustee and the Owners, subject to any determination in such,
proceedings, shall be restored to their former positions and rights hereunder, severally and
respectively, and all rights, remedies, powers and duties of the City, the Trustee and the Owners shall
continue as though no such proceedings had been taken.
Section 8.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or
remedies, and each and every such remedy, to the extent permitted by law; shall be cumulative and in
addition to any other remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.
Section 8.10. No Waiver of Default. No delay or omission of the Trustee or of any Owner
to exercise any right or power arising upon the occurrence of any default shall impair any such right
or power or shall be construed to be a waiver of any such default or an acquiescence therein, and
every power and remedy given by this Indenture to the Trustee or to the Owners may be exercised
from time to time and as often as may be deemed expedient.
ARTICLE IX
DEFEASANCE
Section 9.01. Discharge of Indenture. If the City shall pay or cause to be paid or there
shall otherwise be paid to the Owners of all Outstanding Bonds the principal 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 Owners of such Bonds hereunder shall thereupon cease,
terminate and become void and be discharged and satisfied. 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 of and
interest on such Bonds.
Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid
and if, at the time of such payment, the City shall have kept, performed and observed all of the
covenants and promises in such Bonds and in this Indenture required or contemplated to be kept,
performed and observed by the City or on its part on or prior to that time, then this Indenture shall be
considered to have been discharged in respect of such Bonds and such Bonds shall cease to be
26
DOC SOC/ 1458794v2/022658-0033
entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations
of the City hereunder shall cease, terminate become void and be completely discharged as to such
Bonds.
Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this
Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the
Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of
mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non -
presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall
remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee
shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for
the payment of the principal of and interest on the Bonds, to pay to the Owners of Bonds the funds so
held by the Trustee as and when such payment becomes due.
Section 9.02. Bonds Deemed To Have Been Paid. If moneys shall have been set aside
and held by the Trustee for the payment of any Bonds and the interest thereon at the maturity thereof,
such Bonds shall be deemed to have been paid within the meaning and with the effect provided in
Section 9.01. Any Outstanding Bonds shall prior to the maturity date thereof be deemed to have
been paid within the meaning of and with the effect expressed in Section 9.01 if (a) there shall have
been deposited with the Trustee either (i) money in an amount which shall be sufficient, or
(ii) obligations of the type described in clause (A) of the definition of Permitted investments that are
not subject to redemption other than at the option of the holder thereof, the interest on and principal
of which when paid will provide money which, together with the money, if any deposited with the
Trustee at the same time, shall be sufficient to pay when due the interest to become due on such
Bonds on and prior to the maturity date thereof and the principal of such Bonds, which sufficiency
shall be verified in a report of an independent firm of nationally recognized certified public
accountants, and (b) in the event such Bonds are not by their terms subject to payment within the
next succeeding 60 days, the City shall have given the Trustee in form satisfactory to it irrevocable
instructions to mail as soon as practicable, a notice to the owners of such Bonds that the deposit
required by clause (a) 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 maturity date upon which money is to be
available for the payment of the principal of such Bonds.
Section 9.03. Payment of Bonds After Discharee of Indenture. Notwithstanding any
provisions of this Indenture, to the extent permitted by law, any moneys held by the Trustee in trust
for the payment of the principal of or interest on, any Bonds and remaining unclaimed for two years
after the date of deposit of such moneys, shall be repaid to the City free from the trusts created by
this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease;
provided, however, that before the repayment of such moneys to the City as aforesaid, the Trustee
may (at the cost of the City) first mail, by first class mail postage prepaid, to the Owners of Bonds
which have not yet been paid, at the respective addresses shown on the Registration Books, a notice,
in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and
not presented and with respect to the provisions relating to the repayment to the City of the moneys
held for the payment thereof.
27
DOCSOC/ 1458794v2/022658-0033
ARTICLE X
RESERVED
ARTICLE XI
MISCELLANEOUS
Section 11.01. Benefits of the Indenture Limited, Third -Party Beneficiary. Nothing
contained herein, expressed or implied, is intended or shall be construed to confer upon, or to give or
grant to any Person or entity other than the Trustee, the City and the Owners any right and remedy or
claim under or by reason hereof, and any covenant, condition or stipulation hereof, and all covenants,
stipulations, promises and agreements in this Indenture contained by and on behalf of the City shall
be for the sole and exclusive benefit of the Trustee and the Owners.
Section 11.02. Successor is Deemed Included in All References to Predecessor.
Whenever herein either the City or any officer or employee 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
or employee thereof or the Trustee shall bind and inure to the benefit of the respective successors
thereof whether so expressed or not.
Section 11.03. Destruction of Bonds. Whenever in this Indenture provision is made for the
cancellation by the Trustee and the delivery to the City of any Bonds, the Trustee shall, in lieu of
such cancellation and delivery, destroy such Bonds.
Section 11.04. Waiver of Notice, Requirement of Mailed Notice. Whenever in this
Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be
waived in writing by the Person entitled to receive such notice and in any such case the giving or
receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance
upon such waiver. Whenever in this Indenture any notice shall be required to be given by mail, such
requirement shall be satisfied by the deposit of such notice in the United States mail, postage prepaid,
by first class mail.
Section 11.05. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from the
remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability
shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein. The City hereby
declares that it would have entered into this Indenture and each and every other Section, subsection,
paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant
thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences,
clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
Section 11.06. Notices. Any written notice, statement, demand, consent, approval,
authorization, offer, designation, request or other communication to be given hereunder shalt be
given to the party entitled thereto at its address set forth below, or at such other address as such party
may provide to the other parties in writing from time to time, namely:
28
DOCSOC/ 1458794v2/022658-0033
If to the City: City of San Juan Capistrano
501 Main Street
San Juan Capistrano, CA 94019
Attention: City Manager
If to the Trustee: I 1
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if personally sewed or delivered, upon delivery, (b) if given by electronic
communication, whether by telex, telegram or telecopier, upon the sender's receipt of an appropriate
answerback or other written acknowledgment, (c) if given by registered or certified mail, return
receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is
deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid,
24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at
the address specified in this Section.
Section 11.07. Evidence of Rights of Bond Owners. Any request, consent or other
instrument required or permitted by this Indenture to be signed and executed by Owners may be in
any number of concurrent instruments of substantially similar tenor and shall be signed or executed
by such Owners in Person or by an agent or agents duly appointed in writing. Proof of the execution
of any such request, consent or other instrument or of a writing appointing any such agent, or of the
holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this
Indenture and shall be conclusive in favor of the Trustee and the City if made in the manner provided
in this Section.
The fact and date of the execution by any Person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of any
jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the
Person signing such request, consent or other instrument acknowledged to him 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 Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind
every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in
lieu thereof, in respect of anything done or suffered to be done by the Trustee or the City in
accordance therewith or reliance thereon.
Section 11.08. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or
waiver under this Indenture, Bonds which are known by the Trustee to be owned or held by or for the
account of the City, or by any other obligor on the Bonds, or by any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with, the City or any other
29
DOC SOC/ 1458794v2/022658-0033
obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any
such determination.
Section 11.09. Money Held for Particular Bonds. The money held by the Trustee for the
payment of the interest or principal due on any date with respect to particular Bonds shall, on and
after such date and pending such payment, be set aside on its books and held in trust by it for the
Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 9.03 hereof but
without any liability for interest thereon.
Section 11.10. Funds and Accounts. Any fund or account required by this Indenture to be
established and maintained by the Trustee may be established and maintained in the accounting
records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any
audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an
account; but all such records with respect to all such funds and accounts shall at all times be
maintained in accordance with prudent corporate trust industry standards to the extent practicable,
and with due regard for the requirements hereof and for the protection of the security of the Bonds
and the rights of every Owner thereof. The Trustee may establish any such additional funds or
accounts as it deems necessary to perform its obligations hereunder.
Section 11.11. Payment on Non -Business Days. In the event any payment is required to be
made hereunder on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day with the same effect as if made on such non -Business Day.
Section 11.12. Waiver of Personal Liability. No member, officer, agent or employee of the
City or the City shall be individually or personally liable for the payment of the principal of or
interest on the Bonds or be subject to any personal liability or accountability by reason of the
issuance thereof; but nothing herein contained shall relieve any such officer, agent or employee from
the performance of any official duty provided by law or by this Indenture.
Section 11.13. Interpretation. Unless the context otherwise indicates, words expressed in
the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine
gender is for convenience only and shall be deemed to include the neuter, masculine or feminine
gender, as appropriate.
Headings of articles and sections herein and the table of contents hereof are solely for
convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
All references herein to "Articles," "Sections" and other subdivisions are to the corresponding
Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof," "hereby,"
"hereunder" and other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or subdivision hereof,
Section 11.14. Execution in Several Counterparts. This 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 shall together constitute but one and the same instrument.
Section 11.15. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State.
30
DOCSOC/] 458794v2/022658-0033
IN WITNESS WHEREOF, the City has caused this Indenture to be signed in its name by one
of its duly authorized officers, and the Trustee, in token of its acceptance of the trusts created
hereunder, has caused this Indenture to be signed in its name by one of its duly authorized officers,
all as of the day and year first above written.
CITY OF SAN JUAN CAPISTRANO
Lm
City Manager
I 1, AS TRUSTEE
Authorized Officer
31
DOC SOC/ 1458794v2/022658-0033
No.
INTEREST
RATE
APPENDIX A
FORM OF BOND
CITY OF SAN JUAN CAPISTRANO
JUDGMENT OBLIGATION BOND, SERIES 2011
REGISTERED OWNER:
PRINCIPAL AMOUNT:
MATURITY DATED
DATE DATE
CUSIP
The City of San Juan Capistrano (the "City"), for value received, hereby promises to pay to
the Registered Owner identified above or registered assigns (the 'Registered Owner"), on the
Maturity Date identified above, the Principal Amount identified above in lawful money of the United
States of America; and to pay interest thereon at the Rate of Interest identified above in like lawful
money from the date hereof, payable semiannually on February 1 and August 1 in each year,
commencing February 1, 2012 (the "Interest Payment Dates"), until payment of such Principal
Amount in full. This Bond is issued pursuant to an Indenture, dated as of [June 1, 2011] (the
"Indenture"), by and between the City and [ , as trustee. Capitalized undefined
terms used herein shall have the meanings ascribed thereto in the Indenture.
This Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date
and after the fifteenth calendar day of the month preceding such Interest Payment Date, whether or
not such day is a business day, in which event it shall bear interest from such Interest Payment Date,
or unless this Bond is authenticated on or prior to [ , in which event it shall bear interest
from the Dated Date identified above; provided, however, that if, at the time of authentication of this
Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date
to which interest hereon has previously been paid or duly provided for). The Principal Amount
hereof is payable upon surrender hereof upon maturity at the principal corporate trust office of
[ ], as trustee, or any successor trustee under the Indenture (the "Trustee"), in
[provided, however, that for purposes of payment, exchange, transfer, surrender and
cancellation of Bonds, such term means the principal corporate trust office of the Trustee in Los
Angeles, California, or such other office as may be specified to the City by the Trustee in writing (the
"Office of the Trustee").] Interest hereon is payable by check of the Trustee, mailed by first class
mail on each Interest Payment Date to the Registered Owner hereof at the address of the Registered
Owner as it appears on the Registration Books of the Trustee as of the close of business on the
fifteenth calendar day of the month preceding such Interest Payment Date.
A-1
DOC SOC/ 1458794v2/022658-0033
This Bond is one of a duly authorized issue of bonds of the City designated as the "City of
San Juan Capistrano Judgment Obligation Bonds, Series 2011" (the "Bonds") in the aggregate
principal amount of $f all of which Bonds are of like tenor and date (except for such
variations as may be required to designate varying numbers, denominations, maturities or interest
rates), 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 California Government Code 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 Office of the Trustee).
The Bonds are being issued for the purpose of satisfying the City's payment obligations under
the Judgment. The Bonds are obligations imposed by law payable from funds to be appropriated by
the City. Reference is hereby made to the Act and to the Indenture and any and all amendments
thereof for a description of the terms on which the Bonds are issued, for the rights of the Owners of
the Bonds, for the security for payment of the Bonds, for the. remedies upon default and limitations
thereon and for the provisions for the amendment of the Indenture (with or without consent of the
Owners of the 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.
The obligations of the City under the Bonds, including the obligation to make all payments of
the interest on and the principal of the Bonds when due are obligations of the City imposed by law
and are absolute and unconditional, without any right of set-off or counterclaim. The 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 Bonds nor
the obligation of the City to make payment of the interest on or the principal of the Bonds constitutes
an indebtedness of the City or the State of California, or any of its political subdivisions, in
contravention of any constitutional or statutory debt limitation or restriction.
The Bonds are subject to redemption prior to maturity on the dates, at the redemption prices,
and upon such notice as set forth in the Indenture.
If an Event of Default, as that term is defined in the Indenture, shall occur, the principal of all
Bonds 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.
The Bonds are issuable as fully registered Bonds without coupons in denominations of
$5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges,
if any, provided in the Indenture, Bonds may be exchanged at the Office of the Trustee for a like
aggregate principal amount and maturity of Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly
authorized in writing, at the Office of the Trustee, but only in the manner, subject to the limitations
and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of
this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or
denominations, for the same aggregate principal amount and of the same maturity will be issued to
the transferee in exchange herefor. The City and the Trustee may treat the Registered Owner hereof
as the absolute owner hereof for all purposes, and the City and the Trustee shall not be affected by
any notice to the contrary.
FAW
DOCSOC/ 1458794v2/022658-0033
The Indenture and the rights and obligations of the City, the owners of the Bonds and the
Trustee may be modified or amended from time to time and at any time in the manner, to the extent,
and upon the terms provided in the Indenture; provided that no such modification or amendment shall
(a) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof, or reduce the
interest rate borne thereby, or extend or accelerate the time of payment thereof, without the consent
of the owner of each Bond so affected, or (b) reduce the percentage of Bonds the consent of the
owners of which is required to effect any such amendment or modification, without the consent of
the owners of all outstanding Bonds.
The Indenture contains provisions permitting the City to make provision for the payment of
interest on, and the principal of any of the Bond so that such Bonds shall no longer be deemed to be
outstanding under the terms of the Indenture.
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.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC'), to the Trustee for registration of transfer, exchange, or
payment, and any Bond 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.
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 the Bonds do exist, have
happened and have been performed in due time, form and manner as required by law.
IN WITNESS WHEREOF, the City of San Juan Capistrano 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, all as of the Dated Date identified above.
CITY OF SAN JUAN CAPISTRANO
Mayor
Countersigned:
City Clerk
A-3
DOCSOC/ 1458794v2/022658-0033
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within -mentioned Indenture and registered on the
Registration Books.
Date:
[ , AS TRUSTEE
Authorized Officer
A-4
DOC SOC/ 1458794v2/022658-0033
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax
identifying number is the within -mentioned Bond and hereby
irrevocably constitute(s) and appoint(s) attorney, to transfer the
same on the registration books of the Trustee with full power of substitution in the premises. .
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
DOCSOC/ 1458794v2/022658-0033
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.
A-5
CITY OF SAN JUAN CAPISTRANO
Judgment Obligation Bonds, Series 2011
(Debt Sizing Summary)
Amount
Par Amount
$3,040,000
$3,205,000
Total Debt Service
$3,929,000
$5,074,000
Average Annual
Debt Service
$394,000
$254,000
True Interest Cost (TIC)
3.02%
4.34%
Term (years)
10
20
Nate:
Assumes COI of $175,000, UD of $10/$1,000 and no DSR.
Prepared by Fieldman, Rolapp & Associates January 10, 2011
ATTACHMENT
Jan 10, 2011 3:26 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of:JOB-2011_A) Page 1
SOURCES AND USES OF FUNDS
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
rti##fifY\rtrtrtrt##i\iMk#Yrt\tlkt###rtYlOrt#k#kt\i!\skkfiMitt###4#k#Ytt\k#####fi\lNtY4#ilii\ififkktkt\irtt#kY
(I0 -rear Repayment Term)
#k###\ttirtiifi#iY\irtk##k#iii####Yfill#ik###Yfiii\#krt##fi\!F\####fifit\grtk#ikiii\i##i#fiFR\it#kki4Mli\Yk#Yi
Sources:
Bond Proceeds:
Par Amount
3,040,000.00
Premium
341,547.20
3,381,547.20
Uses:
Project Fund Deposits:
Project Fund
3,175,000.00
Delivery Daze Expenses:
Cost of Issuance
175,000.00
Underwriter's Discount
30,400.00
205,400.00
Odrer Uses of Fonds:
Additional Proceeds
1,147.20
3,381,547.20
Note: Assumes San Francisco 00 scalc as of 12/1/10 plus 50bps.
Jan 10, 2011 3:26 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of:JOB-2011_A) Page 2
BOND SUMMARY STATISTICS
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
R4t4ktlRR4i}iiti4}t##Wtt4#it##iW4#iittW##iit!##tktiii44t#ki#ii444}tkit4t}4ikiRt#l4kiitiY4t#ikiit#iit
(10 -Year Repayment Term)
WWWWitltk44kFRtk4W#i4iit#iiRWR}4ltitR44t4iiitt}}#}iii!#4lkk}iitl44Wtii4tliWiiiM4Rkk}itli4#WttlRt#Wk
Dated Date
06/15/2011
Delivery Date
06/15/2011
Last Maturity
06/01/2021
Arbitrage Yield
2.844362%
True Interest Cost (TIC)
3.021127%
Net Interest Cost (NIC)
3.232738%
All -In TIC
- 4.084568%
Average Coupon
4.974710%
Average Life (years)
5.876
Duration of Issue (years)
5.176
Par Amount
3,040,000.00
Bond Proceeds
3,381,547.20
Total Interest
888,571.67
Net Interest
577,424.47
Total Debt Service
3,928,571.67
Maximum Annual Debt Service
396,750.00
Average Annual Debt Service
394,390.91
Underwriter's Fns (per $1000)
Average Takedown
341,547.20
Other Fee
10.000000
Total Underwriter's Discount 10.000000
Bid Price 110.235105
Par Average Average
Bond Component Value Price Coupon Life
Serial Bond 3,040,000.00 111.235 4.975% 5.876
3,040,000.00 5.876
All -In
Arbitrage
TIC
TIC
Yield
Par Value
3,040,000.00
3,040,000.00
3,040,000.00
+ Accrued Interest
+ Premium (Discount)
341,547.20
341547.20
341,54720
- Underwriter's Discount
-30,400.00
-30,400.00
- Cost of Issuance Expense
-175,000.00
- Other Amounts
Target Value
3,351,147.20
3,176,147.20
3,381,547.20
Target Date
06/15/2011
06/152011
06/15/2011
Yield
3.021127%
4.084568%
2.844362%
Jan 10, 2011 3:26 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of.JOB-2011_A) Page 3
BOND PRICING
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
RRi#rtrtW}Wiiitikkk##iWRRRt#hMki#tittRikk#W}ktWtktirtWW#Ytt#itt}kW}WWbHRii###rtttiitkttithrt#kWHtRi##i
(10 -Year Repayment Term)
Maturity
Bond Component Date
Amount
Rate
Yield
Price
Serial Bond:
06/012012
235,000
3.000%
0.9000%
102.004
06/012013
255,000
5.0000%
1.290°/#
107.161
06/012014
265,000
5.00001,
1.5700/.
109.885
06/012015
280,000
5.000°1,
1.920%
111.693
06/012016
295,000
5.000%
2.1400%
113.392
06/012017
310,000
5.000%
2.370%
114.539
06/012018
325,000
5.000%
2.750%
114.165
06/012019
340,000
5.000%
3.130%
113.086
06/012020
360,000
5.0000%
3.420%
112.104
06/012021
375,000
5.000%
3.680%
110.923
3,040,000
Dated Date
Delivery Date
First Coupon
Par Amount
Premium
Production
Underwriter's Discount
Purchase Price
Accrued Interest
Net Proceeds
06/152011
06/152011
12/012011
3,040,000.00
341,547.20
3,381,547.20 111.235105%
-30,400.00 -1.000000%
3,351,147.20 110.235105%
3,351,147.20
Jan 10, 2011 3:26 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of.JOB-2011_A) Page 4
BOND DEBT SERVICE
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
t##R###tp»##WWtr###r#iir###tk»R##i#tir}#RWt##r»kWtrrttR###kri44##rrirk###kiWWitiY#t#ixii#kkktiit##i
(10 -Year Repayment Term)
itrtkkrtrrrtt#krgt»rttsxit###rrt»Ytk#WrrtfRrx#p»»RMxrt##»####rr»#fitrr#»R»W»rrt##»W#rtttW#»»»qr}»»»x
Period
Ending
Principal
Coupon
Interest
Debt Service
06/01/2012
235,000
3.000%
141,571.67
376,571.67
06/01/2013
255,000
5.000%
140,250.00
395,250.00
06/01/2014
265,000
5.0000/0
127,500.00
392,500.00
06/01/2015
280,000
5.000%
114,250.00
394,250.00
06/01/2016
295,000
5.0000/0
100,250.00
395,250.00
06/0(/2017
310,000
5.000%
85,500.00
395,500.00
06/01/2018
325,000
5.0000/0
70,000.00
395,000.00
06/01/2019
340,000
5.0000/0
53,750.00
393,750.00
06/01/2020
360,000
5.000%
36,750.00
396,750.00
06/01/2021
375,000
5.0000/1
18,750.00
393,750.00
' 3,040,000
888,571.67
3,928,571.67
Jan 10, 2011 3:27 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of:JOB-2011_B) Page 1
SOURCES AND USES OF FUNDS
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
rrt»ssatwrsrrisriirarsW;»Wtrrrr»riirrrprrr;»ii»rrrrrtrWtititrstR;WWMt»wast;;rliwr»»p»strrrtrtttrrsaW
(20 -Year Repayment Term)
RMWWrtiitt;iR;litttttVtR!!#rltittrtlilts»iRt!!!!rti»Wiil4R!#i#i»Witt#ttta;rtrtlittitWtR;R#rtlWttttrrk!!it!
Sources:
Bond Proceeds:
Par Amount 3,205,000.00
Net Premium 177,886.95
Uses:
Project Fund Deposits:
Project Fund
Delivery Date Expenses:
Cost of Issuance
Underwriter's Discount
Other Uses of Funds:
Additional Proceeds
Note: Assumes San Francisco GO scale as of 12/1/10 plus 50bps.
3,382,886.95
3,175,000.00
175,000.00
32.050.00
207,050.00
836.95
3,382,886.95
Jan 10, 2011 3:27 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of'.JOB-201113) Page 2
BOND SUMMARY STATISTICS
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
/t#kiyttrt}rtyi}}ii}y!#iyi}4}tt4y/ytk}tttt4ytW4lk4kt4liky}/4}}t}444}}itlkltM/tk}}itt}iy/yitk4t/##WittW
(20 -Year Repayment Term)
#}t#itW}yttirtftiit4Wit###yk##Wi##yW4it#rt4y#iyyiii/rt4/iii44iitrtM#y/i##}}//#rt}yi#i4#W4ii##/WiY#}#4/i#t
Dated Date
06/15/2011
Delivery Data
06/152011
Last Maturity
06/012031
Arbitrage Yield
4.233152%
True Interest Cost (TIC)
4.341589%
Net Interest Cost (NIC)
4.470373%
All -In TIC
4.961642%
Average Coupon
4.848822%
Average Life (years)
12.024
Duration of Issue (yestra)
8.950
Par Amount
3,205,000.00
Bond Proceeds
3,382,886.95
Total Interest
1,868,511.18
Net Interest
1,722,674.23
Total Debt Service
5,073,511.18
Maximum Annual Debt Service
257,112.50
Average Annual Debt Service
254,169.78
Underwriter's Fees (per 81000)
+ Accrued Interest
Average Takedown
Other Fee
10.000000
Total Underwriter's Discount 10.000000
Bid Price
104.550295
Par
Average
Average
Bond Component -
Value
Price Coupon
Life
Serial Bond
3,205,000.00
105.550 4.849%
12.024
3,205,000.00
12.024
All -In
Arbitrage
TIC
TIC
Yield
Paz Value
3,205,000.00
3,205,000.00
3,205,000.00
+ Accrued Interest
+ Premium (Discount)
177,886.95
177,886.95
177,886.95
- Underwriter's Discount
-32,050.00
-32,050.00
- Cost of Issuance Expense
-175,000.00
- Other Amounts
Target Value
3,350,836.95
3,175,836.95
3,382,886.95
Target Date
06/15/2011
06/15/2011
06/15/2011
Yield
4.341589%
4.961642%
4.233152%
Jan 10, 2011 3:27 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of:JOB-2011_B) Page 3
BOND PRICING
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
l4Ri##i}R###RYi4R4!#i!#tY#WW4}R#!R#44i#4RWRlWYM4#W#W}#YRYW#ti#WRY!##!#WW4#}R!!RY#WYW4#4itRRYtIWYi##!
(20 -Year Repayment Term)
!!k####rtY#i#rtt#RR####rt}#f#llRW4#rtRi}iitYY4#t#iWRIY##i#k##rtM##RRi#W#rtrtilWRRtY#Rt#i#i}i}iRY#rti##4##R#!
Maturity
Bond Component Date
Amount Rate
Yield
Price
Serial Bond:
06/01/2012
95,000 3.000%
0.9001ya
102.004
06/012013
100,000 5.00001.
1.290%
107.161
06/012014
110,000 5.000%
1.570%
109.885
06/012015
115,000 5.000'/o
1.920%
111.693
06/012016
120,000 5.00001*
2.140%
113.392
- 06/01/2017
125,000 5.000#/0
2.370%
114.539
06/012018
130,000 5.000%
2.750%
114.165
06/012019
135,000 5.000°10
3.130%
113.086
06/012020
145,000 5.000%
3.420%
112.104
06/012021
150,000 5.000%
3.6800%
110.923
06/012022
160,000 5.000%
3.910%
109.640
06/012023
165,000 5.000%
4.100%
108.440
06J41/2024
175,000 5.000%
4.240%
107.516
06/012025
185,000 5.000%
4.400%
106.207
06/012026
195,000 4.000%
4.600% -
93.560
06/012027
200,000 5.00000%
4.650%
103.910
06/012028
210,000 5.00001.
4.750%
102.887
06/012029
220,000 5.000%
4.850%
101.782
06/012030
230,000 4.375%
5.000%
92.398
06/012031
240,000 5.000%
5.050%
99.373
3,205,000
Dated Date
06/152011
Delivery Date
06/152011
First Coupon
12/012011
Par Amount
3,205,000.00
Premium
177,886.95
Production
3,382,886.95
105.550295%
Underwriter's Discount
-32,050.00
-1.000000%
Purchase Price
3;350,836.95
104.550295%
Accrued Interest
Net Proceeds
3,350,836.95
Jan 10, 2011 3:27 pm Prepared by Fieldman, Rolapp & Associates (Finance 6.019 San Juan Capistrano, City of:JOB-2011_B) Page 4
BOND DEBT SERVICE
City of San Juan Capistrano
Judgment Obligation Bonds, Series 2011
rtrrrtrtwtrrw+rtrrsrtwrrssrtwrtwwwwtrswwrtrtrrs+rtrr+wrtrrsart+rrrsprrrsrrtwrrsswrtrrr•srwrsrrr++rrrss+rssssttr
(20 -Year Repayment Term)
rssst++srs+rrrr+++rrr+wrst+rs+a.rts++++trr++rtrt++++ssgtrtr+tsrr+tr+rr+»rrr+t++rrt++t+sr+++rrrr+++rrr
Period
Ending
Principal
Coupon
Interest
Debt Service
0610112012
95,000
3.000%
148,936.18
243,936.18
06/01/2013
100,000
5.000%
152,112.50
252,112.50
06/01/2014
110,000
5.000%
147,112.50
257,112.50
06/01/2015
115,000
5.000%
141,612.50
256,612.50
06/01/2016
120,000
5.000%
135,862.50
255,862.50
06/01/2017
125,000
5.000010
129,862.50
254,862.50
06/01/2018
130,000
5.000%
123,612.50
253,612.50
06/01/2019
135,000
5.000%
117,112.50
252,112.50
06/01/2020
145,000
5.000%
110,362.50
255,362.50
06/01/2021
150,000
5.000%
103,112.50
253,112.50
06/01/2022
160,000
5.000•/
95,612.50
255,612.50
06/01/2023
165,000
5.000%
87,612.50
252,612.50
06/01/2024
175,000
5.100%
79,362.50
254,362.50
06/01/2025
185,000
5.000°/a
70,612.50
255,612.50
06/01/2026
195,000
4.000%
61,362.50
256,362.50
06/01/2027
200,000
5.000%
53,562.50
253,562.50
06/01/2028
210,000
5.000°/a
43,562.50
253,562.50
06/01/2029
220,000
5.00001,
33,062.50
253,062.50
06/01/2030
230,000
4.375%
22,062.50
252,062.50
06/01/2031
240,000
5.00001*
12,000.00
252,000.00
3,205,000
1,868,511.18
5,073,511.18
PERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this 15t day of February, 2011 by
and between the City of San Juan Capistrano, hereinafter referred to as "City," and
Stradling, Yocca, Carlson & Rauth, a Professional Corporation hereinafter referred to as
"Consultant."
RECITALS:
WHEREAS, City requires professional consulting services for legal matters in
connection with the execution and delivery of judgment obligation bonds for the purpose
of fulfilling the City's obligation pursuant to the Scalzo Settlement described as follows:
2011 Judgment Obligation Bonds (for convenience of reference the "Bonds"); and
WHEREAS, City desires to retain Consultant to do the necessary legal work
hereinafter outlined, upon the terms and conditions hereinafter set forth, for financing
the acquisition and construction of said facilities; and
WHEREAS, Consultant represents that it is ready, willing and able to perform
said legal work;
NOW, THEREFORE, City and Consultant, for the consideration hereinafter
named, agree as follows:
SECTION 1. GENERAL.
The considerations of work on the project shall be governed by the conditions
contained herein. In general, the tasks delineated herein are to be performed with
minimum direction and assistance from City.
All work performed by Consultant, however, shall be subject to review and
approval of the City by its City Manager or its designee at all times.
SECTION 2. SCOPE OF TASKS BY CONSULTANT.
Subject to the terms and conditions of this Agreement, Consultant shall perform
the tasks as set forth in Exhibit A, attached and incorporated herein by reference.
During performance of the above tasks, Consultant shall have access to existing
data in City files, and City shall provide copies of any such data Consultant requests at
no cost to Consultant.
SECTION 3. TIME OF BEGINNING AND COMPLETION OF SERVICES.
The services provided under this Agreement shall begin upon execution of this
Agreement by all parties. The services provided under this Agreement shall be
completed on or before Bonds are closed or the project is abandoned, whichever occurs
DOCSOC/ 1459847v3/022658-0033
ATTACHMENT4
first.
SECTION 4. PAYMENT FOR CONSULTANT'S SERVICES.
Consultant contract billings may be submitted on the consultant's forms and, at a
minimum, should contain the following:
Title of project(s)
Purchase order number
Total approved purchase order amount
Amount paid to date
Amount requested
Amount remaining on purchase order
Breakdown of amounts by project type or account number
Bills for bond counsel services shall be submitted at the closing of the Bonds for
immediate payment through the Certificate Trustee subject to approval of invoice by the
City.
Payment shall be made pursuant to Exhibit A attached hereto.
SECTION 5. COVENANT AGAINST CONTINGENT FEES.
Consultant warrants that Stradling, Yocca, Carlson & Rauth has not employed or
retained any company or person, other than a bona fide employee working for
Consultant, to solicit or secure this Agreement, that Stradling, Yocca, Carlson & Rauth
has not paid or agreed to pay any company or person, other than a bona fide employee,
any fee, commission, percentage, brokerage fee, gift or any other consideration,
contingent upon or resulting from the award or making of this Agreement. For breach or
violation of this warranty, City shall have the right to annul this Agreement without
liability, or, at its sole discretion, to deduct from the Agreement price or consideration, or
otherwise recover the full amount of such fee, commission, percentage, brokerage fee,
gift or contingent fee.
SECTION 6. EXPENSES.
Consultant acknowledges City is under no obligation to compensate Consultant
for services rendered or expenses accrued under this Agreement in excess of the
maximum compensation specified in Section 4.
SECTION 7. OWNERSHIP OF DOCUMENTS.
All tracings, plans, specifications, maps or other documents prepared or obtained
under the terms of this Agreement shall be delivered to, and become the property of
City, and basic survey notes and sketches, charts, computations and other data
prepared or obtained under this Agreement shall be made available upon request to
City without restriction or limitation on their use.
2
DOCSOC/ 1459847v3/022658-0033
SECTION 8. CONFLICT OF INTEREST.
The designs, plans, reports, investigation, materials and documents prepared or
acquired by Consultant pursuant to this Agreement (including any duplicate copies kept
by Consultant) shall not be shown to any other public or private person or entity, except
as authorized by City. Consultant shall not disclose to any other public or private
person or entity any information regarding the activities of City, except as authorized by
City.
SECTION 9. CONFLICT OF INTEREST.
For the duration of this Agreement, Consultant shall not act as consultant or
perform services of any kind for any person or entity in regard to this project without the
prior written consent of City.
SECTION 10. CHANGES IN SCOPE OF CONSULTANT'S SERVICES.
No additional fee shall be paid by City for additional consultant services not
included in this Agreement without the written approval of the City prior to undertaking
such work. In the event of suspension of project by City, Consultant shall have the right
to renegotiate fees if delay is greater than six (6) months.
SECTION 11. TERMINATION.
City may, without cause, terminate this Agreement at any time prior to completion
by Consultant of any of the services required hereunder. Notice of termination of this
Agreement shall be given in writing to Consultant, and shall be sufficient to complete
when same is deposited in the U.S. mail, first class postage prepaid.
In the event this Agreement is terminated by City, Consultant shall be paid the
value of services performed by it pursuant to this Agreement prior to the date of
termination thereof, such value to be the total to which it shall have become entitled, as
determined by the City, less the amount of any payments previously made, but in no
event exceeding the maximum contract amount stated in Section 4.
SECTION 12. DISPUTES.
Unless otherwise specified herein, any dispute over a question of fact arising
under this Agreement which cannot be resolved by agreement between the parties may
be, by mutual consent of the parties, submitted to a 'Board of Arbitration" consisting of
three (3) arbitrators having expertise relating to this contract subject matter, one of
whom shall be selected by each of the parties, and the third by the two members
selected by the parties.
Each of the parties shall pay the member selected by it, and the compensation of
the third member shall be paid equally by the parties. The parties shall be bound by the
decision of the Board of Arbitration.
3
DOCSOC/ 1459847v3/022658-003 3
SECTION 13. NO ASSIGNMENTS.
Neither any part nor all of this Agreement may be assigned or subcontracted,
except as otherwise specifically provided herein, or to which City, in its sole discretion,
consents to in advance thereof in writing. Any assignment or subcontracting in violation
of this provision shall be void.
SECTION 14. ENDORSEMENT ON PLANS, ETC.
Consultant shall endorse all plans, data and other documentation submitted to
City pursuant to this Agreement.
SECTION 15. MAINTENANCE OF RECORDS.
Consultant shall maintain all books, documents, papers, employee time sheets,
accounting records and other evidence pertaining to costs incurred and shall make such
materials available at their respective offices at all reasonable times during the contract
period and for three (3) years from the date of final payment under this Agreement for
inspection by City, and copies thereof shall be furnished if requested.
SECTION 16. INDEPENDENT CONTRACTOR.
At all times during the term of this Agreement, Consultant shall be an
independent contractor and shall not be an employee of the City. City shall have the
right to control Consultant only insofar as the results of Consultant's services rendered
pursuant to this Agreement; however, City shall not have the right to control the means
by which Consultant accomplishes services rendered pursuant to this Agreement.
All persons employed to provide services under this Agreement shall be
employees or contractors of Consultant and shall not be deemed employees of City for
any reason or purpose. Consultant shall be responsible for providing worker's
compensation insurance coverage for all persons employed to perform services under
this Agreement.
SECTION 17. INDEMNITY.
Consultant maintains as of the date hereof, and shall continue to maintain
throughout the term of this Agreement, a policy of professional liability insurance which
insures Consultant against claims which it is legally obligated to pay, in a maximum
policy amount of no less than $25,000,000. No indemnity is provided by Consultant to
City, but rather Consultant agrees to maintain the foregoing insurance throughout the
term of Consultant's engagement with respect to the project described herein.
SECTION 18. INSURANCE REQUIREMENTS.
1) Comprehensive General Liability. Consultant shall maintain in full force
and effect comprehensive general liability coverage, including premises operations,
products/completed operations, broad form property damage and blanket contractual
4
DOCSOC/ 1459847v3/022658-0033
liability in the following minimum amounts:
$500,000 property damage;
$500,000 injury to one person/any one occurrence/not limited to
contractual period;
$1,000,000 injury to more than one person/any one occurrence/not limited
to contractual period.
DOCSOC/ 1459847 v3/022658-0033
2) Comprehensive Automobile Liability. Consultant shall maintain in full
force and effect comprehensive automobile liability coverage, including owned, hired
and non -owned vehicles in the following minimum amounts:
$500,000 property damage;
$500,000 injury to one person/anyone occurrence/not limited to
contractual period;
$1,000,000 injury to more than one person/any one occurrence/not limited
to contractual period.
3) Errors and Omissions Coverage. Consultant shall maintain in full force
and effect professional errors and omissions coverage in a minimum amount of
$500,000.
4) Worker's Compensation. If Consultant employs employees to perform
services under this Agreement, Consultant shall obtain and maintain, during the life of
this Agreement, Worker's Compensation Employer's Liability Insurance in the statutory
amount as required by state law.
These policies shall not terminate, nor shall they be cancelled nor the coverage
reduced until after 30 days' written notice is given to the City.
Prior to beginning work, Consultant shall provide to City certificates of insurance
establishing that the required insurance coverages have been secured by Consultant.
Consultant shall provide an endorsement to City establishing that City has been legally
added as an additional insured to the insurance policies required under this Agreement.
SECTION 19. TIME FOR SUBMITTING PROOF OF INSURANCE.
Consultant shall submit proof of insurance requirements under this Agreement to
the City Clerk's office prior to beginning any work under this Agreement.
Consultant shall not receive any compensation until all insurance provisions have
been satisfied.
SECTION 20. LICENSES, PERMITS, ETC.
Consultant represents and warrants to City that it has all licenses, permits,
qualifications and approvals of whatever nature that are legally required to practice its
profession. Consultant represents and warrants to City that Consultant shall, at its sole
cost and expense, keep in effect at all times during the term of this Agreement, any
license, permit or approval which is legally required for Consultant to practice its
profession.
DOCSOC/i 459847v310226 5 8-003 3
SECTION 21. CONSULTANT NOT AN AGENT.
Except as City may specify in writing, Consultant shall have no authority, express
or implied, to act on behalf of the City in any capacity as an agent. Consultant shall
have no authority, express or implied, pursuant to this Agreement, to bind City to any
obligation.
SECTION 22. PERSONNEL.
Consultant agrees to assign the following person/persons to perform the tasks
set forth in the Agreement: E. Kurt Yeager, Allison Burns and Carol L. Lew.
Consultant shall not unilaterally alter the assignment of the above personnel
without the authorization of the City.
City shall have the unrestricted right to order the removal of any person/persons
assigned by Consultant by giving oral or written notice to Consultant to such effect.
SECTION 23. NON -DISCLOSURE REQUIREMENTS/CONFLICTS OF
INTEREST.
Pursuant to Council policy, it has been determined that the services to be
rendered under the provisions of this Agreement are excluded by the requirement of
filing a Financial Disclosure Statement by California Administrative Code Section
18700(2)(A) and (B).
Consultant certifies that to the best of its knowledge, no City or City employee or
office of any public agency interest in this Agreement has any pecuniary interest in the
business of Consultant and that no person associated with Consultant has any interest
that would conflict -in any manner or degree with the performance of this Agreement.
Consultant represents that, other than representation by Consultant from time to time of
underwriting firms which may purchase the Bonds, it presently has no interest and shall
not acquire any interest, direct or indirect, which could conflict in any manner or degree
with the faithful performance of this Agreement. Consultant is familiar with the
provisions of Government Code Section 87100 and following, and it certifies that it does
not know of any fact which constitute a violation of said provisions. Consultant will
advise the City if a conflict arise.
DOC SOC/ 1459847v3/022658-0033
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first hereinabove written.
CITY OF SAN JUAN CAPISTRANO
0
STRADLING, YOCCA, CARLSON & RAUTH,
A PROFESSIONAL CORPORATION,
CONSULTANT
0
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
DOCSOC/ 1459847v3/022658-0033
EXHIBIT A
SCOPE OF WORK
1. SERVICES
The City retains Consultant to provide, and Consultant agrees to provide,
legal services in connection with the execution and delivery of Bonds (hereinafter
referred to as the "Bonds") to fulfill the City's obligation pursuant to the Scalzo
Settlement. Such services will be divided into two phases: (a) development of a
financing plan; and (b) implementation of the financing plan.
In the first phase -- the planning stage -- we would expect:
(i) to research applicable laws including federal and state tax laws,
securities laws and other laws that may be applicable to the
financing structure currently proposed;
(ii) to attend conferences and consult with the City/City staff (including
the City Finance Director and counsel) regarding such laws, to
participate with any financial advisors, underwriters, developers,
lenders and other experts retained by the City in structuring the
financing; and
(iii) to consult with other firms active in the bond practice when
necessary to ensure that any novel approaches being considered
would be generally accepted in the bond community,
(iv) Prepare, file, serve, prosecute to judgment and manage a
validation action validating the propriety of the Bonds and, in
particular, the characterization of the Scalzo Settlement as an
obligation or liability imposed by law.
In the second phase -- the implementation stage -- we would expect:
(i) to supervise and prepare documentation of all steps to be taken
through the execution and delivery of the Bonds including:
a. drafting all resolutions of the City and all other basic
documents relating to the security of the Bonds, in
consultation with the City, its counsel and financial advisors,
underwriters and other experts;
b. preparing the record of proceedings for the authorization,
sale and delivery of the Bonds;
A-1
DOC SOC/ 1 4 5984701022658-003 3
EXHIBIT A
C. preparing documents relating to the financing, including the
indenture and related resolutions;
d. preparing the official statement or placement memorandum
for the Bonds;
e. reviewing the Bond purchase contracts or the bidding
documents and participating in the related negotiations;
f. attending information meetings and other conferences
scheduled by the City, the financial advisors or the
underwriters;
g. consulting with counsel to the City concerning any legislation
or litigation during the course of the financing;
h. consulting with the trustee and counsel to the trustee;
i. preparing the form of the Bonds, and supervising their
production or printing, signing, authentication and delivery;
and
j. rendering any necessary collateral legal opinions as to the
inapplicability of the registration requirements of federal
securities laws and other matters related to the execution
and delivery of the Bonds and City authority with respect to
the financing generally.
(ii) to render a final legal opinion pertaining to the Bonds to the effect
that:
a. the Bonds have been properly authorized and issued and
are valid and binding obligations;
b. the essential sources of security for the Bonds have been
legally provided; and
C. all interest with respect to the Bonds is excludable from
gross income for federal income tax purposes and exempt
from California personal income taxation, as applicable.
(iii) deliver a letter to the City and upon request, provide the principal
purchaser of the Bonds, regarding the scope of disclosure
counsel's review of the official statement in their customary form of
such disclosure's counsel letter.
A-2
DOCSOC/ 1459847x3/022658-0033
2. INDIVIDUAL RESPONSIBLE FOR PROVIDING SERVICES
The City agrees to accept and Consultant agrees to provide the aforementioned
services through E. Kurt Yeager, Brian Forbath, Allison Burns and Carol L. Lew.
Should the above attorneys be unable to provide such services due to death,
disability, or similar event, Consultant reserves the right to substitute, with City's
consent, another of its attorneys to provide such services, and such substitution shall
not alter or affect in any way Consultant's other obligations under this agreement.
A-3
DOC SOC/ 1459847v3/022658-0033
BOND FEE
Basic Bond Counsel Fee: The fee for the services described in this Agreement
shall be based upon the total principal amount of Bonds authorized and sold and will be
computed in accordance with the following schedule:
Principal Amount of Bonds
$1,000,000 or less
$1,000,001 to $5,000,000
$5,000,001 or more
Fee
$25,000
$25,000 plus 1/4 of 1 % of the
excess over $1,000,000
$37,500 plus 1/10 of 1% of
the excess over $5,000,000,
in no event to exceed
$58,000
Additionally, for the service of preparing the Official Statement for the Bonds, the
City agrees to pay Bond Counsel for each issue of Bonds a fee of $25,000. Except as
provided in Section 4 below, Consultant fees are to be billed upon the execution and
delivery of the Bonds and will be payable from Bond proceeds. In the event a refunding
of obligations other than the Scalzo Judgment is included, the fee described above will
be modified to reflect the increased scope of work.
Out -of -Pocket Expenses: In addition to the Basic Fee, Bond Counsel shall be
reimbursed for out-of-pocket expenses incurred pursuant to this Agreement and hourly
fees incurred pursuant to Section 4 of the Agreement.
Payment of the Basic Bond Counsel Fee and Out -of -Pocket Expenses is entirely
contingent upon the successful sale of the Bonds, and payment thereof is to be made
from the proceeds of the Bonds.
Validation Action: For the service of preparing, filing and managing the validation
action, the City agrees to pay Bond Counsel at the hourly rates as set forth in Exhibit B.
Such fees will be billed monthly and shall be payable within thirty (30) days following the
receipt of each invoice.
4. FOLLOW-UP SERVICES
Bond counsel agrees to provide without additional cost normal follow-up
consultation and related services following the sale of the Bonds. Should the City
require Consultant to provide extraordinary services after the sale of the Bonds, such
services shall be provided at an additional fee to be agreed upon at a later date.
A-4
DOC SOC/ 1459847v3/022658-003 3
PERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made, entered into, and shall become effective this 1St day
of February, 2011, by and between the City of San Juan Capistrano (hereinafter
referred to as the "City") and Fieldman, Rolapp and Associates (hereinafter referred to
as the "Consultant").
RECITALS:
WHEREAS, City desires to retain independent financial advisory service in
connection with funding related to the settlement of a judgment against the City (herein,
the "Project"); and
WHEREAS, City desires to retain professional and technical services of the
Consultant for the purposes of debt issuance (herein, the "Services").
WHEREAS, Consultant is well qualified to provide professional financial advice to
public entities such as the City.
NOW, THEREFORE, City and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by Consultant shall consist of those tasks as
set forth in Exhibit 'A," attached and incorporated herein by reference. To the extent
that there are any conflicts between the provisions described in Exhibit "A" and those
provisions contained within this Agreement, the provisions in this Agreement shall
control.
Section 2. Term.
The services provided under this agreement shall commence upon execution of
Agreement by all parties. The services provided under this Agreement shall be
completed on or before certificates are closed or the project is abandoned, whichever
occurs first.
Section 3. Compensation.
3.1 Amount.
Consultant contract billings may be submitted on the consultant's forms
and, at a minimum, should contain the following:
Title of project(s)
Total approved contract amount
Amount paid to date
1
ATTACHMENT 5
Amount requested
Amount remaining on contract
Breakdown of amounts by project type or account number
Three copies of itemized bills, clearly indicating the monthly period for which the
billing is made, shall be submitted to: The City of San Juan Capistrano, Attention: Chief
Financial Officer, 32400 Paseo Adelanto, San Juan Capistrano, California 92675.
Total compensation for the services hereunder shall not exceed $39,500 plus a
not to exceed cap of $3,500 for expenses set forth in Exhibit B.
3.2 Method of Payment.
Subject to Section 3.1, Consultant shall be compensated pursuant to
Exhibit A, Section 3 and Exhibit B and Consultant's fee shall be contingent and payable
at the closing of the debt issue.
3.3 Records of Expenses.
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be
made available at reasonable times to City.
Section 4. Independent Contractor.
It is agreed that Consultant shall act and be an independent contractor and not
an agent or employee of City, and shall obtain no rights to any benefits which accrue to
City's employees.
Section 5. Limitations Upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for City to enter into this Agreement.
Consultant shall not contract with any other entity to perform the services required
without written approval of the City. This Agreement may not be assigned, voluntarily or
by operation of law, without the prior written approval of the City. If Consultant is
permitted to subcontract any part of this Agreement by City, Consultant shall be
responsible to City for the acts and omissions of its subcontractor as it is for persons
directly employed. Nothing contained in this Agreement shall create any contractual
relationships between any subcontractor and City. All persons engaged in the work will
be considered employees of Consultant. City will deal directly with and will make all
payments to Consultant.
ICA
Section 6. Changes to Scope of Work.
For extra work not part of this Agreement, a written authorization from City is
required prior to Consultant undertaking any extra work. In the event of a change in the
Scope of Work provided for in the contract documents as requested by the City, the
Parties hereto shall execute an addendum to this Agreement setting forth with
particularity all terms of the new agreement, including but not limited to any additional
Consultant's fees.
Section 7. Familiarity with Work and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated
the work to be performed; (2) if applicable, it has investigated the work site(s), and is
aware of all conditions there; and (3) it understands the facilities, difficulties and
restrictions of the work to be performed under this Agreement. Should Consultant
discover any latent or unknown conditions materially differing from those inherent in the
work or as represented by City, it shall immediately inform the City of this and shall not
proceed with further work under this'Agreement until written instructions are received
from the City.
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law; E -Verify.
9.1. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and
regulations of federal, state and local government.
9.2. E -Verify.
If Consultant is not already enrolled in the U.S. Department of Homeland
Security's E -Verify program, Consultant shall enroll in the E -Verify program within fifteen
days of the effective date of this Agreement to verify the employment authorization of
new employees assigned to perform work hereunder. Consultant shall verify
employment authorization within three days of hiring a new employee to perform work
under this Agreement. Information pertaining to the E -Verify program can be found at
http://www.uscis.gov, or access the registration page at https://www.vis-
dhs.com/emploverregistration. Consultant shall certify its registration with E -Verify and
provide its registration number within sixteen days of the effective date of this
Agreement. Failure to provide certification will result in withholding payment until full
compliance is demonstrated.
3
Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Copies of Work Product.
At the completion of the work, Consultant shall have delivered to City at least one
(1) copy of any final reports and/or notes or drawings containing Consultant's findings,
conclusions, and recommendations with any supporting documentation. All reports
submitted to the City shall be in reproducible format, or in the format otherwise
approved by the City in writing.
Section 12. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant
in connection with the performance of its services pursuant to this Agreement are
confidential to the extent permitted by law, and Consultant agrees that they shall not be
made available to any individual or organization without prior written consent of the City.
All such reports, information, data, and exhibits shall be the property of the City and
shall be delivered to the City upon demand without additional costs or expense to the
City. The City acknowledges such documents are instruments of Consultant's
professional services.
Section 13. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the City and its elective and appointive boards, officers, agents, and
employees from any and all claims, liabilities, expenses, or damages of any nature,
including attorneys' fees, for injury or death of any person, or damages of any nature,
including interference with use of property, arising out of, or in any way connected with
the negligence, recklessness and/or intentional wrongful conduct of Consultant,
Consultant's agents, officers, employees, subcontractors, or independent contractors
hired by Consultant in the performance of the Agreement. The only exception to
Consultant's responsibility to protect, defend, and hold harmless the City, is due to the
negligence, recklessness and/or wrongful conduct of the City, or any of its elective or
appointive boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
S
Section 14, Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the
duration of the agreement, and provide proof thereof that is acceptable to the City, the
insurance specified below with insurers and under forms of insurance satisfactory in all
respects to the City. Consultant shall not allow any subcontractor to commence work
on any subcontract until all insurance required of the Consultant has also been obtained
for the subcontractor. Insurance required herein shall be provided by Insurers in good
standing with the State of California and having a minimum Best's Guide Rating of A -
Class VII or better.
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full
force and effect Comprehensive General Liability coverage in an amount not less than
one million dollars per occurrence ($1,000,000.00), combined single limit coverage for
risks associated with the work contemplated by this agreement. If a Commercial
General Liability Insurance form or other form with a general aggregate limit is used,
either the general aggregate limit shall apply separately to the work to be performed
under this agreement or the general aggregate limit shall be at least twice the required
occurrence limit.
14.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full
force and effect Comprehensive Automobile Liability coverage, including owned, hired
and non -owned vehicles in an amount not less than one million dollars per occurrence
($1,000,000.00).
14.3 Worker's Compensation.
If Consultant intends to employ employees to perform services under this
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Worker's Compensation Employer's Liability Insurance in the statutory amount as
required by state law.
14.4 Proof of Insurance Requirements/Endorsement.
Prior to beginning any work under this Agreement, Consultant shall submit
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement naming City, its officers, employees, agents, and
volunteers as additional insureds as respects each of the following: Liability arising out
of activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or
6'1
borrowed by Consultant. The coverage shall contain no special limitations on the scope
of protection afforded City, its officers, employees, agents, or volunteers.
14.5 Errors and Omissions Coverage [FOR PROFESSIONS/WORK
EXCLUDED FROM GENERAL LIABILITY]
Throughout the term of this Agreement, Consultant shall maintain Errors
and Omissions Coverage (professional liability coverage) in an amount of not less than
One Million Dollars ($1,000,000). Prior to beginning any work under this Agreement,
Consultant shall submit an insurance certificate to the City's General Counsel for
certification that the insurance requirements of this Agreement have been satisfied.
14.6 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled,
nor the coverages reduced, until after thirty (30) days' written notice is given to City,
except that ten (10) days' notice shall be given if there is a cancellation due to failure to
pay a premium.
14.7 Terms of Compensation.
Consultant shall not receive any compensation until all insurance
provisions have been satisfied.
14.8 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
City has issued a written "Notice to Proceed" verifying that Consultant has complied
with all insurance requirements of.this Agreement.
Section 15. Termination.
City shall have the right to terminate this Agreement without cause by giving
thirty (30) days' advance written notice of termination to Consultant.
In addition, this Agreement may be terminated by any party for cause by
providing ten (10) days' notice to the other party of a material breach of contract. If the
other party does not cure the breach of contract, then the agreement may be terminated
subsequent to the ten (10) day cure period.
R
Section 16. Notice.
All notices shall be personally delivered or mailed to the below listed addresses,
or to such other addresses as may be designated by written notice. These addresses
shall be used for delivery of service of process:
To City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Cindy Russell, Chief Financial Officer/City Treasurer
To Consultant: Fieldman, Rolapp and Associates
19900 MacArthur Blvd., Suite 1100
Irvine, CA 92612
Attn: James Fabian
Section 17. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs
and necessary disbursements in addition to any other relief to which he may be entitled.
Section 18. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration
under the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ATTEST:
City Clerk
APPROVED AS TO FORM:
OwAv
City Attorne
CITY OF SAN JUAN CAPISTRANO
M
Joe Tait, City Manager
CONSULTANT � �� ,✓�--^
By:
H.
EXMIT A
TO
PROFESSIONAL SERVICES AGREEMENT FOR FINANCIAL ADVISOR
BY AND BETWEEN
THE CITY OF SAN JUAN CAPISTRANO
AND
FIELDMAN, ROLAPP & ASSOCIATES
Scope of Services
A. General Services.
The Consultant shall perform all the duties and services specifically set forth herein and shall
provide such other services as it deems necessary or advisable, or are reasonable and necessary to
accomplish the intent of this Agreement in a manner consistent with the standards and practice of
professional financial advisors prevailing at the time such services are rendered to the City.
The City may, with the concurrence of Consultant, expand this Agreement to include any
additional services not specifically identified within the terms of this Agreement. Any additional
services may be described in an addendum to this Exhibit A and are subject to fees described in
Exhibit B to this Agreement.
B. Debt Issuance Services.
The Consultant shall assume primary responsibility for assisting the City in coordinating the
planning and execution of each debt issue relating to the Project. Insofar as the Consultant is
providing Services which are rendered only to the City, the overall coordination of the financing
shall be such as to minimize the costs of the transaction coincident with maximizing the City's
financing flexibility and capital market access. The Consultant's proposed debt issuance Services
may include, but shall not be limited to, the following:
• Establish the Financing Objectives
• Develop the Financing Schedule
• Monitor the Transaction Process
• Review the Official Statement, both preliminary and final
• Procure and Coordinate Additional Service Providers
• Provide Financial Advice to the City Relating to Financing Documents
• Compute Sizing and Design Structure of the Debt Issue
• Plan and Schedule Rating Agency Presentation and Investor Briefings
• Conduct Credit Enhancement Procurement and Evaluation
• Conduct Market Analysis and Evaluate Timing of Market Entry
• Recommend Award of Debt Issuance
• Provide Pre -Closing and Closing Assistance
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A. Paee 1
EXHIBIT A
Specifically, Consultant will:
1. Establish the Financing Obiectives
At the onset of the financing transaction process for the Project, the Consultant shall
review the City's financing needs and in conjunction with the City's management, outline
the objectives of the financing transaction to be undertaken and its proposed form.
Unless previously determined, Consultant shall recommend the method of sale of debt
and outline the steps required to achieve efficient market access.
2. Develop the Financing Timetable.
The Consultant shall take the lead role in preparing a schedule and detailed description of
the interconnected responsibilities of each team member and update this schedule, with
refinements, as necessary, as the work progresses.
3. Monitor the Transaction Process.
The Consultant shall have primary responsibility for the successful implementation of the
financing strategy and timetable that is adopted for each debt issue relating to the Project.
The Consultant shall coordinate (and assist, where appropriate) in the preparation of the
legal and disclosure documents and shall monitor the progress of all activities leading to
the sale of debt. The Consultant shall prepare the timetables and work schedules
necessary to achieve this end in a timely, efficient and cost-effective manner and will
coordinate and monitor the activities of all parties engaged in the financing transaction.
4. Review the Official Statement
a. Generally, SEC, MSRB, and GFOA guidelines encourage full disclosure so
that potential investors have sufficient data to analyze each proposed
financing. Upon direction of the City, the Consultant shall take the lead in
review of the official statement for each debt issue relating to the Project to
insure that the City's official statement is compiled in a manner consistent
with industry standards, typically including the following matters:
• Legal Authority for the Financing
• Security for the Financing
• Restrictions on Additional Financings
• Purpose and Funds for which the Financing is Being Issued
• Governmental System
• Financial Management System
• Revenue Sources: Historic, Current and Projected
• Outstanding Financings
• Planned Future Financings
• Labor Relations and Retirement Systems
• Economic Base
• Annual Financial Statements
• Legal Opinions Regarding Tax Exemption
• Such Other Matters as the Context May Require.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A, Page 2
b. The Consultant shall maintain and update the official statement on its word
processing system until such time as it is near final and suitable for transfer
to the financial printer, in order to minimize the costs of revisions made by
the printer.
5. Procure and Coordinate Additional Service Providers.
Should the City desire, the Consultant may act as City's representative in procuring the
services of financial printers for the official statement and related documents, and for the
printing of any securities. In addition, the Consultant may act as the City's representative
in procuring the services of trustees, paying agents, fiscal agents, feasibility consultants,
redevelopment consultants, or escrow verification agents or other professionals, if the
City directs.
6. Provide Financial Advice to the City Relating to Financing Documents.
Simultaneous with assisting in the preparation of official statements for each debt issue
relating to the Project, the Consultant shall assist the managing underwriters, bond
counsel and/or other legal advisors in the drafting of the respective financing resolutions,
notices and other legal documents. In this regard, the Consultant shall monitor document
preparation for a consistent and accurate presentation of the recommended business terms
and financing structure of each debt issue relating to the Project, it being specifically
understood however that the Consultant's services shall in no manner be construed as the
Consultant engaging in the practice of law.
7. Compute Sizing and Design Structure of Debt Issue.
The Consultant shall work with the City's staff to design a financing structure for each
debt issue relating to the Project that is consistent with the City's objectives, that
coordinates each transaction with outstanding issues and that reflects current conditions
in the capital markets.
8. Plan and Schedule Rating Agency Presentation and Investor Briefings.
The Consultant shall develop a plan for presenting the financing program to the rating
agencies and the investor community. The Consultant shall schedule rating agency visits,
if appropriate, to assure the appropriate and most knowledgeable rating agency personnel
are available for the presentation and will develop presentation materials and assist the
City officials in preparing for the presentations.
9. Conduct Credit Enhancement Evaluation and Procurement.
Upon the City's direction, the Consultant will initiate discussions with bond insurers,
letter of credit providers and vendors of other forms of credit enhancements to determine
the availability of and cost benefit of securing financing credit support.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A, Page 3
10. Conduct Market Analysis and Evaluate Timing of Market Entry.
The Consultant shall provide regular summaries of current municipal market conditions,
trends in the market and how these may favorably or unfavorably affect the City's
proposed financing.
Competitive Sales.
For all types of competitive sale of debt, the Consultant shall undertake such
activities as are generally required for sale of securities by competitive bid
including, but not limited to the following:
• Review and comment on terms of Notice of Sale Inviting Bids
• Provide advice on debt sale scheduling
• Provide advice on the use of electronic bidding systems
• Coordinate bid opening with the City officials
• Verify bids received and make recommendations for acceptance
• Provide confirmation of issue sizing, based upon actual bids received,
where appropriate
• Coordinate closing arrangements with the successful bidder(s)
11. Recommend Award of Debt Issuance.
Based upon activities outlined in task above, the Consultant will recommend
accepting or rejecting offers to purchase the debt issue. If the City elects to award the
debt issue, the Consultant will instruct all parties and help facilitate the actions
required to formally consummate the award.
12. Provide Pre -Closing and Closing Activities.
The Consultant shall assist in arranging for the closing of each financing. The
Consultant shalt assist counsel in assuming responsibility for such arrangements as
they are required, including arranging for or monitoring the progress of bond
printing, qualification of issues for book -entry status, signing and final delivery of the
securities and settlement of the costs of issuance.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit A, Page 4
EXIIIBIT B
TO
FINANCIAL ADVISORY SERVICES AGREEMENT
BY AND BETWEEN
CITY OF SAN JUAN CAPISTRANO AND FIELDMAN, ROLAPP & ASSOCIATES
Fees and Expenses
Part 1: Fee for Services
Financial Advisory Services performed pursuant to Section 1 of this Agreement, and as more
fully described in the Scope of Services set forth in Exhibit A, will be billed for at the amounts set
forth below:
Transaction Size Fees
$1 to $5,000,000 $39,500
$5,000,001 and above to be negotiated
Part 2: Other Services
Unless agreed to otherwise, financial advisory services performed pursuant to Section 2 of this
Agreement will be billed at the then current hourly rates. The table below reflects the rates in
effect as of the date of execution of this Agreement.
Personnel
Hourly Rate
Executive Officers............................................................
$300.00
Principals..........................................................................
$290.00
Senior Vice President.......................................................
$275.00
Vice Presidents.................................................................
$225.00
Assistant Vice President ...................................................
$195.00
Senior Associate...............................................................
$150.00
Associate...........................................................................
$125.00
Analyst................................................................................
$85.00
Administrative Assistants ...................................................
$65.00
Clerical................................................................................
$35.00
Expenses
Expenses will be billed forseparately and will cover, among other things, travel, lodging,
subsistence, overnight courier, posting of POS on intemet, computer, and fax transmission
charges. Advances made on behalf of the City for costs of preparing, printing or distributing
disclosure materials or related matter whether by postal services or electronic means, may also be
billed through to the City upon prior authorization. Additionally, a surcharge of 6% of the net fee
amount is added to verifiable out-of-pocket costs for recovery of costs such as telephone, postage,
document reproduction and the like.
Limiting Terms and Conditions
CITY OF SAN JUAN CAPISTRANOIFIELDMAN, ROLAPP & ASSOCIATES Exhibit B, Page 1
The above fee is based on completion of work orders within six months of the City's
authorization to proceed, and assumes that the City will provide all necessary information in a
timely manner.
The fee shown above in Part 1 presumes attendance at up to 8 meetings in the City's offices or
such other location within a 25 -mile radius of the City place of business as the City may
designate. Preparation for, and attendance at City Council meetings on any basis other than "by
appointment" may be charged at our normal hourly rates as shown in Pad 2, above.
Abandonment
If, once commenced, the services of the Consultant are terminated prior to completion of our final
report for any reason, we are to be reimbursed for professional services and direct expenses
incurred up to the time we receive notification of such termination at the standard hourly rates
shown in Part 2, subject to a minimum charge of 0.
CITY OF SAN JUAN CAPISTRANO/FIELDMAN, ROLAPP & ASSOCIATES Exhibit B, Page 2
32400 PA5EO ADELANTO
SAN JUAN CAPISTRANO, CA 92675
(949) 493.1171
(949) 493-1 C53 FAX
x•frw,srrl�ileuNcnpts•trxno.nrs�
MEMBERS OF TIfE CITY COUNCIL
NOTIFICATION OF MEETING OF POTENTIAL INTEREST
OF THE SAN JUAN CAPISTRANO CITY COUNCIL
SAMALLEVATO
IAURAFREESE
THOMAS W. NRIBAR
MARK NIELSEN
DR LONDRES USO
The City Council of San Juan Capistrano will meet at 6:00 p.m. on Tuesday, February 1,
2011, in the City Council Chamber in City Hall, to consider: "Consideration of
Authorization for the Issuance of Judgment Obligation Bonds, Series 2011 to
Facilitate the Finacing of the Scalzo Family Trust Settlement Obligation and
Agreements for Bond Counsel and Financial Advisor Services Related to this
Financing. (Stradiling, Yocca, Carlson and Rauth and Fieldman, Rolapp and
Associates)" — Item No. G2c.
If you have specific thoughts or concerns regarding this item, you are encouraged to
participate in this decision making process. You can communicate with the City Council
through correspondence addressed to the Council and/or by attending the meeting and
speaking to the Council during the public meeting.
Correspondence related to this item must be received at the City Clerk's office by 5:00 p.m.
on Monday, January 31, 2011, to allow time for the Council to consider its content.
If you would like to speak at the meeting, please complete a yellow "Request to Speak"
form found inside the entrance to the Council Chamber. This form is turned in at the staff
table, just in front of the Council dais. You will be called to speak by the Mayor when the
item is considered.
You have received this notice at the request of the City staff member Cindy Russell, Chief
Financial Officer/Treasurer. You may contact that staff member at (949) 443-6301 with any
questions.
The agenda, including agenda reports, is available to you on our web site:
www.sanivancapistrano.org. If you would like to subscribe to receive a notice when
agendas are posted to the web site, please make that request by sending an e-mail to:
citvclerk .sanjuancapistrano.or.g.
Maria Morris, CMC
City Clerk
cc: Stradiling, Yocca, Carlson and Rauth; Fieldman, Rolapp and Associates
Sart Juaf1 Capistr(nuo. Pre.wrvinS the Post to Fnhanoe the Future
2/1/2011
Kristen Lewis Glc
From: Kim Lefner
Sent: Monday, January 31, 20114:33 PM
To: City Clerk Scanstation
Cc: Joe Tait
Subject: CC Agenda item #2c - proposed loan to pay off the lawsuit judgement
Attachments: 11 -0201_CC_G2c[1 j. pdf
Dear Mayor Allevato and Council members,
In regards to Agenda item #2c on tomorrow's CC agenda, I appreciate the opportunity to express my concern about this
latest borrowing proposed by City CFO Cindy Russell.
The CFO acknowledges that the interest rate to borrow money to pay the Scalzo judgement might be as high as 10% (or
$400,000) which, given the nature of the loan and the amount, is a likely scenario. This does not even include the bond
counsel fees and court costs, estimated at an additional $175,000.
This latest proposal is akin to paying off debt with a credit card.
How much financial trouble is this city in that you must borrow money and pay interest to settle a $3.1 million judgement?
Please ask your CFO why she doesn't have the money in the city coffers to pay this debt without jeopardizing our
reserves (if we even have any)? How does adding to the debt get us any closer to paying it off?
It's bad enough that a town our size has debt of over $140 million, but to now increase that debt is the height of
irresponsibility.
Instead of allowing the CFO to continue to use what amounts to a high interest rate credit card, please ask her to explain
why she keeps papering over debt with more debt - and how she proposes to get us out of the financial mess that we're in
(without borrowing)?
Please do not continue to allow this CFO indebt us, by the time she comes up with her next "bond issuance proposal" of
$18 million for the water enterprise (which she has already proposed) we will be in debt over $160 million.
It's up to you to put a stop to this insane borrowing and debt spending.
Thank you,
Kim Lefner
San Juan Capistrano
Information from ESET Smart Security, version of virus signature database 5835 (2011013 1)
The message was checked by ESET Smart Security.
http://www.eset.com
Information from ESET Smart Security, version of virus signature database 5835 (2011013 1)
b. STAFF DIRECTED TO PROCEED WITH ISSUANCE OF INDEBTEDNESS
RELATED TO THE SETTLEMENT OF THE SCALZO JUDGMENT (340.20)
Cindy Russell, Chief Financial Officer/City Treasurer, provided a staff report and
responded to questions.
Council Comments:
• Felt that it was necessary to proceed with the issuance of judgment bond in
order not to lower the City's reserves.
Council Motion: Moved by Council Member Freese, seconded by
Council Member Taylor, and carried 4-1 with Council Member Reeve opposed to'
direct staff to proceed with issuance of judgment obligation bonds to fund the
remaining $3,175,000 payment due by June 30, 2011, related to the settlement
of the Scalzo Family Trust case.
ROLL CALL:
AYES: COUNCIL MEMBER: Freese, Taylor, Kramer and Mayor Allevato
NOES: COUNCIL MEMBER: Reeve
ABSENT: COUNCIL MEMBER: None
G2, POLICE SERVICES
a. CONSIDERATION OF INTRODUCTION OF A PROPOSED ORDINANCE ADDING
CHAPTER 32 TO TITLE 5 OF THE SAN JUAN CAPISTRANO MUNICIPAL CODE
ESTABLISHING A CURFEW FOR MINORS — ITEM CONTINUED TO A FUTURE
MEETING — (585.10)
Public Correspondence:
• Kim McCarthy, City resident, submitted an e-mail on January 3, 2011,
expressing her opposition to the proposed curfew law for minors.
• Jim Reardon, City resident, submitted an e-mail on January 3, 2011,
opposed to the proposed curfew for minor ordinance.
Lt. Daniel P. Dwyer, Chief of Police, provided a staff report and responded to
questions. Lt. John Meyer, responded to questions.
Public Comments:
• Steve Cotygno, City resident, spoke against the proposed curfew for minors
ordinance, and left a copy of a 1997 resolution passed by the Orange County
Board of Education against daytime curfews.
• Jim Reardon, City resident, spoke. in opposition the ordinance, and felt that
truancy is a school district matter not a civic matter.
7 1/4/2011
1/4/2011
AGENDA REPORT G 1 b
TO: Joe Tait, City ManageO
FROM: Cindy Russell, Chief Financial Officer/City Treasurer
SUBJECT: Consideration of Authorization for Staff to Proceed with Issuance of
Indebtedness Related to the Settlement of the Scalzo Judgment
RECOMMENDATION:
By motion, authorize staff to proceed with the issuance of judgment obligation bonds to
fund the remaining $3,175,000 payment due by June 30, 2011 related to the settlement
of the Scalzo Family Trust case.
SITUATION:
On December 15, 2010, the City Council agreed to a global settlement of the $9.41
million judgment in the Scalzo Family Trust (SFT) case. The settlement requires a
payment to the SFT of $6.35 million. One-half of the settlement was due and paid by
December 31, 2010. The remainder amount of $3,175,000 is due within 180 days or
June 30, 2011.
The City's General Fund reserves as of June 30, 2010 were as follows:
% of
General Fund Available
Description Amount Expenditures Reserves
Reserve for LT Receivables
Reserve for Encumbrances/Reappropriations
Available Reserves:
Reserve for City Hall Replacement
Reserve for Capital Improvement Projects
Reserve for Contingencies
Total General Fund Reserves
$2,070,402
9.75%
$1,979,631
9.32%
$1,600,000
7.53%
$300,140
1.41%
$8,072,158
38.01% 46.95%
$14,022,331 66.02%
Based on the FY 2010/11 budget, the projected "available reserves" for June 30, 2011
are projected to be approximately $10.1 million or 47.64% of general fund expenditures.
The December 31, 2010 payment reduced this amount to $6.925 million or 32.6%.
Agenda Report
Page 2 January 4, 2011
Payment of the remainder settlement amount from available reserves would further
reduce the City's contingency reserve to $3.75 million or 17.68% of general fund
expenditures.
The City's guidelines for general fund contingency reserve have been no less than 25%
and a targeted amount of 50%. Issuance of judgment obligation bonds for the
remainder payment of $3,175,000 would allow the City's general fund reserve for
contingencies to be a projected 23.99% and total available reserves to be a projected
32.49%
The City's General Fund reserves at June 30, 2011 based on issuance of these bonds
would be as follows:
% of
General Fund Available
Description Amount Expenditures Reserves
Reserve for LT Receivables
Reserve for Encumbrances/Reappropriations
Available Reserves:
Reserve for City Hall Replacement
Reserve for Capital Improvement Projects
Reserve for Contingencies
Total General Fund Reserves
$2,070,402 9.75%
$0 0.00%
$1,600,000
7.53%
$205,140
0.97%
$5,095,292
23.99%
$8,970,834 42.24%
32.49%
The City's contingency reserves are used to provide the City with resources to respond
to unforeseen contingencies, emergencies and economic downturns without materially
affecting the City's delivery of services to the community. By reducing available
reserves to this level, the City would be in a precarious position should the City's
General Fund be hit with unforeseen emergency response costs such as the recent
storm damage or other unanticipated costs that may or may not be recoverable.
Staff recommends the City Council authorize staff to proceed with the issuance of
judgment obligation bonds to fund the remaining $3,175,000 payment due by June 30,
2011 related to the settlement of the Scalzo Family Trust case
FINANCIAL CONSIDERATIONS:
The annual debt service cost for the judgment obligation bonds over a ten-year period
would be approximately $420,000-$450,000. Additionally, staff recommends the budget
reflect a commitment towards recovering the $3.175 million already paid related to the
settlement.
Agenda Report
Page 3
January 4, 2011
By issuing JOBS, the City would be able to
• fund the cost of the settlement over a ten year period.
• provide the City's General Fund with an appropriate contingency reserve
• allow for the City to maintain a healthier financial position
By motion, authorize staff to proceed with the issuance of judgment obligation bonds to
fund the remaining $3,175,000 payment due by June 30, 2011 related to the settlement
of the Scalzo Family Trust case.
Respectfully submitted,
Cindy Ru ell
Chief Financial Officer/City Treasurer
Christy Jakl
From: Christy Jakl
Sent: Tuesday, February 08, 2011 1:48 PM
To: Lori Fuentes
Subject: Scalzo Agreements
I'm so sorry...
I am also looking for the agreements approved on 2/1/11 with Straddling and Feldman related to
Scalzo.
Thank you!
Chrisl� Jakl
Deputy City Clerk
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
(949)443-6310 1 (949)493-1053 fax
From: Christy Jakl
Sent: Tuesday, February 08, 2011 1:37 PM
To: Lori Fuentes
Subject: RE: SMWD & RMV Interconnect Agreement
Hey Lori,
I have one more to add. The Agreement for Operating Covenants with Chrysler Group. What is the
status?
Thank you!
Cl-irisl-� Jakl
Deputy City Clerk
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
(949) 443-6310 1 (949) 493-1053 fax
From: Christy Jakl
Sent: Tuesday, February 08, 2011 11:28 AM
To: Lori Fuentes
Subject: SMWD & RMV Interconnect Agreement
Hi Lori,
I'm following up on some pending documents within our office and discovered that we are still
waiting for the Agreement approved on 12/7/10. The agreement is concerning the Intent to
Construct Wastewater Interconnect with SMWD and RMV. Would you be able to find out the status
of this agreement.
Thank you for your help!
Christi RM
Deputy City Clerk
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
(949) 443-6310 1 (949)493-1053 fax
F]
32400 PASEO ADEI.ANTO
SAN JUAN CAPISTRANO, CA 92675
(949) 4931171
(949) 4931053 FAX
www.sanjuancapistrano.org
TRANSMITTAL
TO:
Fieldman, Rolapp and Associates
Attn: James Fabian
19900 MacArthur Blvd, Suite 1100
Irvine, CA 92612
DATE: February 15, 2011
FROM: Christy Jakl, Deputy City Clerk (949) 443-6310
MEMBERS OF THE CIN COUNCIL
RE: Personal Services Agreement — Independent Financial Advisory Services
SAM ALLEVATO
LAURA FREESE
LARRY KRAMER
DEREK REEVE
JOHN TAYLOR
Thank you for maintaining documentation confirming compliance with the terms of the
agreement related to insurance.
Please keep in mind this documentation must remain current with our office during the term of
this agreement. If you have questions related to insurance requirements, please call me at
(949) 443-6310.
If you have questions concerning the agreement, please contact Cindy Russell, Chief Financial
Officer/Treasurer at (949) 443-6301.
An original agreement is enclosed for your records.
Cc: Cindy Russell, Chief Financial Officer/Treasurer
San Juan Capistrano: Preserving the Past to Enhance the Future
0 Pnnted on 100% recycled paper