City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council approve the resolutions and agreements
required for the refunding of the Wastewater Facilities Refunding Revenue Bonds,
1999 Series A.
BACKGROUND:
In 1999, the City issued $25 million in Revenue Bonds for the Wastewater (Sewer)
utility. These bonds primarily refunded prior debt, as well as provided about $6
million in additional funds used for capital improvements to the sewer system. The
1999 bonds had a ten year restriction on when they could be refunded, meaning
2009 is the first opportunity to refund the bonds.
We have worked closely with our financial advisors, Fieldman Rolapp & Associates,
to analyze the feasibility of refunding these bonds. Based on the current market
conditions, it is estimated the Sewer Fund could recognize up to approximately
$900,000 in net present value savings by refunding the bonds at this time. This is
an approximate savings of nearly $75,000 per year in debt service costs for the
Sewer Fund. These savings can be used to offset operational cost increases or
capital costs.
There is a general rule of thumb in the municipal finance sector that if a debt
refunding can achieve at least a 3% savings, it is worth pursuing. In this case, the
estimated savings based on the current market is 4.2%, which is beyond the 3%
threshold. Based on the current favorable interest rates in the bond market, it is
recommended that the 1999 Bonds be refunded. Staff believes that the fund
balance of the wastewater enterprise is sufficient for anticipated capital improvement
Meeting Date: 06/22/09 Item Number: C-8
AGENDA ITEM: Adoption of Resolutions and Approval of Agreements Needed for
Refunding of the 1999 Wastewater Facilities Refunding Revenue Bonds
Contact Person/Dept.: Jeff Muir, CFO Phone Number: 310-253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification:
Master E-Mail Notification List (6/17/09); Fieldman Rolapp via email (6/17/09); Richards
Watson Gershon via email (6/17/09); Stone & Youngberg via email (6/17/09)
Department Approval:
Jeff Muir (06/11/09)
City Attorney Approval:
Carol Schwab (by H. Baker) (06/17/09)
Chief Financial Officer Approval:
Jeff Muir (06/11/09)
City Manager Approval:
Mark Scott (06/18/09) City of Culver City, California
City Council Agenda Item Report
projects and does not recommend raising additional proceeds for capital through this
re-financing.
DISCUSSION:
Based on today’s bond market, Stone and Youngberg (the City’s Underwriter) and
Fieldman Rolapp & Associates (the City’s Financial Advisor) recommend issuing
approximately $21.2 million in Wastewater Facilities Refunding Revenue Bonds,
2009 Series A (the “Refunding Bonds”) to refund the 1999 Bonds to realize
economic savings. The Refunding Bonds will be paid over 20 years with the same
2029 final maturity as the 1999 Bonds. The Refunding Bonds will reduce the
annual debt payments from approximately $1.71 million to approximately $1.64
million; a decrease of approximately $70,000 per year. In today’s dollars, this
represents approximately $900,000 of savings. The operating revenues generated
from the City’s Wastewater Enterprise Fund will be the sole revenues pledged for
repayment of these bonds (no General Funds will be obligated).
Staff is recommending that City Council approve the issuance of up to $23 million of
Refunding Bonds. Council authorization of a maximum issuance of $23 million in
Refunding Bonds provides staff with the flexibility to capture optimum benefits from
the refinancing as interest rates continue to shift.
Moving forward with the issuance of these bonds will require the approval of a
Master Resolution and Supplemental Resolution by the City Council. These
resolutions authorize all of the necessary actions relating to the proposed bond
financing, including the approval of the various financing documents (available for
review at the City Clerk’s Office), and authorizing and directing City officials to
execute all of the related documents to successfully complete the transaction.
Attached separately is the draft Preliminary Official Statement (the bond
prospectus). The Preliminary Official Statement contains excerpts from various draft
bond documents along with a history of the operating revenues of the Wastewater
Enterprise Fund which are pledged for repayment of the bonds.
Also attached is the Continuing Disclosure Agreement, which details certain
information the City will provide on an annual basis to bondholders and interested
parties. The Escrow Agreement and Bond Purchase Agreement are also attached
for approval to complete the transaction.
City of Culver City, California
City Council Agenda Item Report
FISCAL ANALYSIS:
The fiscal impact of the issuance of the proposed $21.2 million of Refunding Bonds
by the City will result in refunding approximately $20.7 million in outstanding 1999
Bonds. The net operating revenues of the Wastewater Enterprise Fund will be
sufficient to support the repayment of the new bonds and shall be the sole revenues
pledged for repayment of the new bonds. The City shall not have any obligation to
pay these bonds from any other sources of revenues.
ATTACHMENTS:
1. Master Resolution
2. First Supplemental Resolution
3. Preliminary Official Statement
4. Continuing Disclosure Agreement
5. Escrow Agreement
6. Bond Purchase Agreement
MOTION:
That the City Council:
1. Adopt the Master Resolution and First Supplemental Resolution allowing the
refunding of the 1999 Wastewater Facilities Refunding Revenue Bonds; and,
2. Approve the Preliminary Official Statement for the 2009 Series A Wastewater
Facilities Refunding Revenue Bonds; and,
3. Approve the Continuing Disclosure Agreement, Escrow Agreement and Bond
Purchase Agreement allowing the refunding of the 1999 Wastewater Facilities
Refunding Revenue Bonds; and,
4. Authorize the City Attorney to review/prepare the necessary documents; and,
5. Authorize the Mayor, City Manager, and other appropriate City Officials to
execute such documents on behalf of the City.
MEETING DATE: 06/22/09
AGENDA ITEM: Approval of Resolutions and Agreements Needed for
Refunding of the 1999 Wastewater Facilities
Refunding Revenue Bonds
ATTACHMENTS
1. Master Resolution 1-58
2. First Supplemental Resolution 59-75
3. Preliminary Official Statement 76-123
4. Continuing Disclosure Agreement 124-131
5. Escrow Agreement 132-145
6. Bond Purchase Agreement 146-167
10220-0009\1134960v6.doc
CITY OF CULVER CITY, CALIFORNIA
RESOLUTION NO. _____
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CULVER CITY, CALIFORNIA, AUTHORIZING
THE ISSUANCE OF BONDS TO FINANCE COSTS OF
THE CITY’S WASTEWATER SYSTEM
(Adopted June 22, 2009)
i
10220-0009\1134960v6.doc
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS AND STATUTORY AUTHORITY ................................................ 1
SECTION 101. Definitions ................................................................................................ 1
SECTION 102. Authority for This Resolution .................................................................. 12
SECTION 103. Resolution to Constitute Contract ............................................................ 12
ARTICLE II. AUTHORIZATION AND ISSUANCE OF BONDS ............................................... 13
SECTION 201. Authorization of Bonds ............................................................................. 13
SECTION 202. General Provisions for Issuance of Bonds ................................................ 13
SECTION 203. 2009 Series A Bonds ................................................................................ 14
SECTION 204. Additional Bonds .................................................................................... 15
SECTION 205. Refunding Bonds .................................................................................... 16
ARTICLE III. GENERAL TERMS AND PROVISIONS OF BONDS ........................................ 17
SECTION 301. Medium of Payment; Form and Date; Letters and Numbers ....................... 17
SECTION 302. Legends .................................................................................................. 17
SECTION 303. Execution and Authentication ................................................................... 17
SECTION 304. Exchange, Transfer and Registration ...................................................... 18
SECTION 305. Regulations With Respect to Exchanges and Transfers ............................ 18
SECTION 306. Bonds Mutilated, Destroyed, Stolen or Lost .............................................. 18
SECTION 307. Temporary Bonds .................................................................................... 19
SECTION 308. Book-Entry System .................................................................................. 19
ARTICLE IV. REDEMPTION OF BONDS ................................................................................. 20
SECTION 401. Privilege of Redemption and Redemption Price ........................................ 20
SECTION 402. Redemption at the Election or Direction of the City .................................. 20
SECTION 403. Redemption Otherwise Than at City's Election or Direction ....................... 21
SECTION 404. Selection of Bonds to be Redeemed .......................................................... 21
SECTION 405. Notice of Redemption .............................................................................. 21
SECTION 406. Payment of Redeemed Bonds ..................................................................... 21
ARTICLE V. ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF .................... 22
SECTION 501. The Pledge Effected by the Resolution ....................................................... 22
SECTION 502. Funds and Accounts ................................................................................. 22
SECTION 503. Construction Funds ................................................................................ 23
SECTION 504. Allocation of Revenues and Refundable Credits ......................................... 23
SECTION 505. Debt Service Fund--Debt Service Account ................................................. 24
SECTION 506. Debt Service Fund--Reserve Account ......................................................... 25
SECTION 507. Subordinated Indebtedness Fund............................................................... 25
SECTION 508. Subordinated Indebtedness ...................................................................... 26
ARTICLE VI. DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS AND
INVESTMENT OF FUNDS ........................................................................................................... 27
SECTION 601. Depositaries ............................................................................................ 27 TABLE OF CONTENTS
(Continued)
Page
ii
10220-0009\1134960v6.doc
SECTION 602. Deposits .................................................................................................. 27
SECTION 603. Investment of Certain Funds ..................................................................... 28
SECTION 604. Valuation and Sale of Investments ............................................................. 29
ARTICLE VII. PARTICULAR COVENANTS OF THE CITY ................................................... 30
SECTION 701. Payment of Bonds ..................................................................................... 30
SECTION 702. Extension of Payment of Bonds ................................................................. 30
SECTION 703. Offices for Servicing Bonds ....................................................................... 30
SECTION 704. Further Assurance .................................................................................. 30
SECTION 705. Power to Issue Bonds and Pledge Net Revenues, Refundable Credits and
Other Funds ................................................................................................................. 30
SECTION 706. Creation of Liens; Sale and Lease of Property; Eminent Domain ............... 31
SECTION 707. Annual Budget ........................................................................................ 31
SECTION 708. Operation and Maintenance of the Enterprise .......................................... 32
SECTION 709. Rates, Fees and Charges; Enforcement ..................................................... 32
SECTION 710. Maintenance of Insurance; Reconstruction; Application of Insurance
Proceeds ....................................................................................................................... 33
SECTION 711. Accounts and Reports .............................................................................. 33
SECTION 712. Payment of Taxes and Charges ................................................................ 34
SECTION 713. No Diminution of Rights ........................................................................... 34
SECTION 714. Governmental Reorganization ................................................................... 34
SECTION 715. Tax Covenants ........................................................................................ 35
SECTION 716. Rights and Licenses ................................................................................ 35
SECTION 717. General ..................................................................................................... 36
SECTION 718. Notification to Rating Agency .................................................................. 36
SECTION 719. Refundable Credits .................................................................................. 36
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS ................... 36
SECTION 801. Events of Default .................................................................................... 36
SECTION 802. Accounting and Examination of Records After Default ............................ 37
SECTION 803. Application of Revenues and Other Moneys After Default ........................ 37
SECTION 804. Appointment of Receiver ........................................................................... 39
SECTION 805. Proceedings Brought by Trustee .............................................................. 39
SECTION 806. Restriction on Bondholder's Action ........................................................... 40
SECTION 807. Remedies Not Exclusive .......................................................................... 40
SECTION 808. Effect of Waiver and Other Circumstances .............................................. 40
SECTION 809. Notice of Default ....................................................................................... 40
ARTICLE IX. CONCERNING THE FIDUCIARIES ................................................................... 41
SECTION 901. Trustee; Appointment and Acceptance of Duties ...................................... 41
SECTION 902. Paying Agents; Appointment and Acceptance of Duties ............................ 41
SECTION 903. Responsibilities of Fiduciaries ................................................................... 41
SECTION 904. Evidence on Which Fiduciaries May Act ................................................... 42 TABLE OF CONTENTS
(Continued)
Page
iii
10220-0009\1134960v6.doc
SECTION 905. Compensation ........................................................................................... 42
SECTION 906. Certain Permitted Acts ............................................................................ 43
SECTION 907. Resignation of Trustee ............................................................................ 43
SECTION 908. Removal of Trustee ................................................................................... 43
SECTION 909. Appointment of Successor Trustee ............................................................. 43
SECTION 910. Transfer of Rights and Property to Successor Trustee .............................. 44
SECTION 911. Merger or Consolidation ........................................................................... 44
SECTION 912. Adoption of Authentication ....................................................................... 44
SECTION 913. Resignation or Removal of Paying Agent and Appointment of Successor .. 45
ARTICLE X. SUPPLEMENTAL RESOLUTIONS .................................................................... 45
SECTION 1001. Supplemental Resolutions Effective Upon Filing With the Trustee ........... 45
SECTION 1002. Supplemental Resolutions Effective With Consent of Bondholders ........... 46
SECTION 1003. General Provisions ................................................................................ 46
ARTICLE XI. AMENDMENTS ................................................................................................... 47
SECTION 1101. Mailing ................................................................................................... 47
SECTION 1102. Powers of Amendment ............................................................................. 47
SECTION 1103. Consent of Bondholders ........................................................................ 48
SECTION 1104. Modifications or Amendments by Unanimous Consent ............................. 49
SECTION 1105. Exclusion of Bonds ................................................................................. 49
SECTION 1106. Notation on Bonds ................................................................................ 49
ARTICLE XII. MISCELLANEOUS .......................................................................................... 49
SECTION 1201. Defeasance ............................................................................................. 49
SECTION 1202. Evidence of Signatures and Bondholders and Ownership of Bonds ........... 50
SECTION 1203. Moneys Held for Particular Bonds ........................................................... 51
SECTION 1204. Preservation and Inspection of Documents ............................................ 51
SECTION 1205. Parties Interested Herein ......................................................................... 51
SECTION 1206. No Recourse on the Bonds ....................................................................... 52
SECTION 1207. Unclaimed Moneys ................................................................................ 52
SECTION 1208. Severability of Invalid Provisions ............................................................. 52
SECTION 1209. Repeal of Inconsistent Resolutions ........................................................... 52
SECTION 1210. Saturdays, Sundays and Holidays .......................................................... 52
SECTION 1211. Notices .................................................................................................. 52
ARTICLE XIII. BOND FORMS AND EFFECTIVE DATE ......................................................... 53
SECTION 1301. Forms of Bonds and Trustee's Certificate of Authentication ..................... 53
SECTION 1302. Effective Date........................................................................................ 53
EXHIBIT A - ACCEPTANCE OF OFFICE OF TRUSTEE AND PAYING AGENT .............. A-1
10220-0009\1134960v6.doc |1010|RESOLUTION NO. _____
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CULVER CITY, CALIFORNIA, AUTHORIZING
THE ISSUANCE OF BONDS TO FINANCE COSTS OF
THE CITY’S WASTEWATER SYSTEM
WHEREAS, the City of Culver City (the “City”) is authorized to issue revenue
bonds pursuant to the provisions of the City Charter and Chapter 3.07 of the Culver City
Municipal Code incorporating the Revenue Bond Law of 1941, Title 5, Division 2, Part 1,
Chapter 6, of the Government Code of the State of California, as amended and supplemented
(the “Act”).
WHEREAS, the City Council of the City desires to adopt this Resolution (the
“Master Resolution”) to provide for the issuance of Bonds and other obligations to finance or
refinance a portion of the Cost of the Enterprise (as such terms are defined herein); and
WHEREAS, the Bonds will be issued and secured under this Master Resolution,
as supplemented by supplemental resolutions; and
WHEREAS, all acts and things have been done and performed which are
necessary to make the Bonds, when executed and issued by the City, authenticated by the
Trustee and delivered, the valid and binding legal obligations of the City in accordance with their
terms and to make this Master Resolution a valid and binding agreement for the security of
Bonds authenticated and delivered under the Master Resolution and any supplemental resolution;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CULVER CITY AS FOLLOWS:
ARTICLE I
DEFINITIONS AND STATUTORY AUTHORITY
SECTION 101. Definitions. The following terms shall, for all purposes of the
Resolution, have the following meanings:
Accreted Value shall mean, with respect to any Capital Appreciation Bonds, as of the
date of calculation, the initial amount thereof plus the interest accrued thereon to such date of calculation,
compounded from the date of initial delivery at the approximate interest rate thereof on each date
specified with respect thereto, as determined in accordance with the table of accreted values for any
Capital Appreciation Bonds prepared by the City at the time of sale thereof, assuming in any year that
such Accreted Value increases in equal daily amounts on the basis of a year of 360 days composed of 12
months of 30 days each.
Accreted Value Payment Date shall mean any Payment Date on which Accreted Value is
payable.
10220-0009\1134960v6.doc |1010| Accrued Debt Service shall mean, with respect to any period, an amount equal to the sum
of Debt Service with respect to all Bonds accrued and to accrue to the end of such period; provided that,
in calculating the amount of Accrued Debt Service, Accreted Value with respect to Capital Appreciation
Bonds shall be deemed to accrue over the 12-month period immediately preceding the scheduled
redemption date of such Capital Appreciation Bonds.
Act shall mean the Revenue Bond Law of 1941, Title 5, Division 2, Part 1, Chapter 6 of
the Government Code of the State of California, as amended and supplemented.
Additional Bonds shall mean Bonds authenticated and delivered on original issuance
pursuant to Section 204.
Annual Budget shall mean the annual budget of the Enterprise, as amended or
supplemented, adopted or in effect for a particular Fiscal Year as provided in Section 707.
Authorized Officer of the City shall mean the Mayor of the City, the City’s Chief
Administrative Officer, the City Clerk or any officer, employee or agent of the City authorized by
resolution filed with the Trustee to perform the act or sign the document in question.
Bond or Bonds shall mean any bond or bonds, as the case may be, authenticated and
delivered pursuant to Section 203, 204 or 205 hereof, together with bonds in lieu of or in substitution for
which other bonds shall have been authenticated and delivered pursuant to Article III or Section 406 or
Section 1106 hereof.
Bond Counsel shall mean an attorney-at-law, or a firm of such attorneys, of recognized
standing in matters pertaining to the tax-exempt nature of interest on obligations issued by states and their
political subdivisions, duly admitted to the practice of law before the highest court of any state of the
United States of America.
Bondholder or Holder shall mean any person who shall be the registered owner of any
Bond or Bonds.
Bond Payments shall mean the principal and interest payments scheduled to be paid by
the City on Bonds.
Bond Registrar shall mean the Trustee and any other bank or trust company organized
under the laws of any state or national banking association appointed by the City to perform the duties of
Bond Registrar enumerated in Section 304 and Section 703.
Bond Year shall mean each twelve-month period extending from September 2 in one
calendar year to September 1 of the succeeding calendar year, both dates inclusive; except that the first
Bond Year with respect to a Series of Bonds commences on the date of delivery of such Series of Bonds
and extends to and including September 1 in the year as shall be designated pursuant to the Supplemental
Resolution authorizing such Series of Bonds.
Business Day shall mean a day other than (a) a Saturday or Sunday, (b) a day on which
commercial banks in the city in which the Trustee maintains its principal corporate trust office are
authorized or required by law or executive order to close or (c) a day on which the New York Stock
Exchange is closed.
10220-0009\1134960v6.doc |1010| Capital Appreciation Bonds shall mean any Bonds described as such when issued.
Charter shall mean the Charter of the City.
City shall mean the City of Culver City, California.
Code shall mean the Internal Revenue Code of 1986, as amended.
Construction Fund shall mean any Construction Fund established pursuant to a
Supplemental Resolution.
Cost shall mean, with respect to any part of the Enterprise, the City’s costs and expenses
attributable or allocable to the study, determination of feasibility, planning, designing, acquiring,
constructing, installing and financing thereof, placing the same in operation, and obtaining all
governmental approvals, certificates, permits and licenses with respect thereto, including, but not limited
to, any good faith or other similar payment or deposits required in connection with the purchase of the
Enterprise or any part thereof, the cost of acquisition by or for the City of real and personal property,
whether tangible or intangible, or any interests therein, costs of physical construction and costs of the City
incidental to such construction or acquisition, the costs of capacity, the costs of any additions, repairs,
renewals, replacements, expansions, betterments, extensions and improvements to any part of the
Enterprise, the costs of the retiring from service or the disposal of any facilities, the cost of any indemnity
or surety bonds and premiums on insurance during construction, preliminary investigation, study,
feasibility and development costs, engineering fees and expenses, contractors’ fees and expenses, the
costs of labor, materials, equipment and utility services and supplies, legal and financial advisory fees and
expenses, financing costs, fees and expenses of the Fiduciaries, administration and general overhead
expenses and costs of keeping accounts and making reports required by the Resolution prior to or in
connection with the completion of construction, amounts, if any, required by the Resolution to be paid
into the Debt Service Fund to provide, among other things, for interest on the Bonds during construction
and for a reasonable period thereafter (such period not to exceed, however, 12 months) and to provide for
the Reserve Requirement or to be paid into the Sewer Enterprise Fund for any of the respective purposes
thereof upon the issuance of any Series, payments when due (whether at the maturity of principal or the
due date of interest or upon redemption) on any indebtedness of the City incurred for the Enterprise,
including Subordinated Indebtedness and other indebtedness, incurred in respect of any of the foregoing,
and initial working capital and reserves therefor, and shall include reimbursements to the City for any of
the above items theretofore paid by or on behalf of the City. It is intended that this definition be broadly
construed to encompass all costs, expenses and liabilities of the City related to the Enterprise which on
the date of the Resolution or in the future shall be permitted to be funded with the proceeds of Bonds
pursuant to the provisions of California law. The definition of Cost shall not include Operating Expenses.
Debt Service for any Bond Year, or other period, shall mean, as of any date of calculation
and with respect to any Series of Bonds, an amount equal to the sum of (a) interest payable during such
period on Bonds of such Series, assuming that all outstanding Bonds are retired as scheduled, and (b)
Principal Installments for such Series payable during such period provided that if any of such Bonds are
Capital Appreciation Bonds, the Accreted Value Payment shall be deemed due on the scheduled Accreted
Value Payment Date of such Bonds; and provided further that Debt Service shall not include interest on
Bonds which is to be paid from amounts constituting capitalized interest pursuant to a Supplemental
Resolution.
Debt Service Fund shall mean the Debt Service Fund established in Section 502(a).
10220-0009\1134960v6.doc |1010| Depositary shall mean the Depository Trust Company, New York, New York, and its
successors and assigns or any bank or trust company organized under the laws of any state of the United
States or any national banking association selected by the City as a depositary of moneys and securities
held under the provisions of the Resolution, and may include the Trustee.
Enterprise shall mean the entire wastewater system of the City now existing or hereafter
acquired by lease, contract, purchase or otherwise or constructed by the City, including any interest or
participation or rights of the City in any facilities used in whole or in part in connection with or for said
system, together with any additions, repairs, renewals, replacements, expansions, betterments, extensions
and improvements to said system or any part thereof hereafter constructed or acquired and together with
all lands, easements, interests in land, licenses and rights of way of the City and all other works, property,
structures, equipment of the City and contract rights and other tangible and intangible assets of the City
now or hereafter owned or used in connection with, or related to said system.
Event of Bankruptcy shall mean the filing of a petition commencing a case by the City
under the Federal Bankruptcy Code or any other applicable bankruptcy or similar law or proceeding for
the relief of creditors.
Event of Default shall have the meaning given to such term in Section 801.
Federal Bankruptcy Code shall mean the Bankruptcy Reform Act of 1978, as amended,
constituting Title 11, United States Code.
Fiduciary shall mean the Trustee, any Paying Agent, the Bond Registrar, any Depositary,
or any or all of them, as may be appropriate.
Fiscal Year shall mean the then current annual accounting period of the City for its
general accounting purposes.
Generally Accepted Accounting Principles shall mean the uniform accounting and
reporting procedures set forth in publications of the American Institute of Certified Public Accountants or
its successor, or by any other generally accepted authority on such procedures, and includes, as
applicable, the standards set forth by the Governmental Accounting Standards Board or its successor.
Information Services means Financial Information, Inc.’s “Daily Called Bond Service,”
30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information
Services’ “Called Bond Service,” 65 Broadway Street, 16th Floor, New York, New York 10006;
Moody’s “Municipal and Government,” 99 Church Street, 8th Floor, New York, New York 10007,
Attention: Municipal News Reports; Standard & Poor’s Corporation’s “Called Bond Record,” 25
Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other services providing
information with respect to called bonds as the City may identify in writing to the Trustee.
Interest Payment Date shall mean a Payment Date on which interest is payable pursuant
to a Supplemental Resolution authorizing a Series of Bonds.
Maximum Annual Debt Service shall mean the greatest total Debt Service payable in
any Bond Year commencing from the date of calculation through the final maturity date of all
Outstanding Bonds.
Moody’s shall mean Moody’s Investors Service, Inc. and its successors and assigns.
10220-0009\1134960v6.doc |1010| Net Revenues for any period shall mean the Revenues during such period less the
Operating Expenses during such period.
Nominee shall mean the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 308 hereof.
Operating Expenses shall mean all actual maintenance and operation costs of the
Enterprise incurred by the City in any particular Fiscal Year or period to which said term is applicable or
charges made therefor during such Fiscal Year or period, but only if such charges are considered
operating expenses in conformity with Generally Accepted Accounting Principles, including amounts
reasonably required to be set aside in reserves for items of Operating Expenses the payment of which is
not then immediately required.
Such Operating Expenses shall include, but are not limited to, payment of charges for
wastewater services pursuant to a contract with the City of Los Angeles, expenses for ordinary repairs,
renewals and replacements of the Enterprise, salaries and wages, employees’ health, hospitalization,
pension and retirement expenses, fees for services, materials and supplies, rents, administrative and
general expenses, insurance expenses, legal, engineering, accounting and financial advisory fees and
expenses and costs of other consulting and technical services, taxes (except as set forth in the following
paragraph), payments in lieu of taxes and other governmental charges and any other current expenses or
obligations required to be paid by the City under the provisions of the Resolution or by law, all to the
extent properly allocable to the Enterprise, and the fees and expenses of the Fiduciaries.
Such Operating Expenses do not include depreciation or obsolescence charges or reserves
therefor, amortization of intangibles or other bookkeeping entries of a similar nature, interest charges and
charges for the payment of principal, or amortization, of bonded or other indebtedness of the City, costs,
or charges made therefor, for capital additions, replacements, betterments, extensions or improvements to
or retirements from the Enterprise which under Generally Accepted Accounting Principles are properly
chargeable to the capital account or the reserve for depreciation, and do not include losses from the sale,
abandonment, reclassification, revaluation or other disposition of any properties of the Enterprise nor
such property items, including taxes and fuel, which are capitalized pursuant to the then existing
accounting practice of the City. Operating Expenses shall also not include any voluntary transfers to the
General Fund of the City.
Opinion of Counsel shall mean an opinion in writing signed by an attorney or firm of
attorneys (who may be counsel to the City) selected by the City.
Outstanding, when used with reference to Bonds, shall mean, as of any date of
calculation, Bonds theretofore or thereupon being authenticated and delivered under the Resolution
except:
(a) Bonds canceled by the Trustee at or prior to such date;
(b) Bonds (or portions of Bonds) for the payment or redemption of which
moneys, equal to the principal amount or Redemption Price thereof, as the case
may be, with interest to the date of maturity or redemption date, shall be held in
trust under the Resolution and set aside for such payment or redemption (whether
at or prior to the maturity or redemption date), provided that if such Bonds (or
portions of Bonds) are to be redeemed, notice of such redemption shall have been
10220-0009\1134960v6.doc |1010|given as in Article IV provided or provision satisfactory to the Trustee shall have
been made for the giving of such notice;
(c) Bonds in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered pursuant to Article III or Section 406 or 1106; and
(d) Bonds deemed to have been paid as provided in subsection (b) of Section
1201.
Participants shall mean those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Bonds as securities depository.
Paying Agent shall mean any bank or trust company organized under the laws of any
state of the United States or any national banking association designated as paying agent for the Bonds of
any Series, and its successor or successors hereafter appointed in the manner provided in the Resolution.
Payment Date shall mean any date on which Bond Payments are scheduled to be paid by
the City under and pursuant to any Bonds.
Permitted Investments mean any of the following obligations if and to the extent that
they are permissible investments of funds of the City:
(a) Direct obligations of the United States (including obligations issued or held in book-
entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations
the principal of and interest on which are unconditionally guaranteed by the United States.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by
any of the following federal agencies and provided such obligations are backed by the full faith
and credit of the United States (stripped securities are only permitted if they have been stripped
by the agency itself):
1. U.S. Export-Import Bank (“Eximbank”)
Direct obligations or fully guaranteed certificates of beneficial ownership
2. Farmers Home Administration (“FmHA”)
Certificates of beneficial ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures (“FHA”)
5. General Services Administration
Participation certificates
6. Government National Mortgage Association (“GNMA”)
GNMA—guaranteed mortgage-backed bonds
GNMA—guaranteed pass-through obligations (participation certificates) (not
acceptable for certain cash-flow sensitive issues)
7. United States Maritime Administration
Guaranteed Title XI financing
8. United States Department of Housing and Urban Development
Project Notes
Local Authority Bonds
10220-0009\1134960v6.doc |1010| New Communities Debentures
United States government guaranteed debentures
United States Public Housing Notes and Bonds
United States government guaranteed public housing notes and bonds
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by
any of the following non-full faith and credit United States government agencies (stripped
securities are only permitted if they have been stripped by the agency itself):
1. Federal Home Loan Bank System
Senior debt obligations
2. Federal Home Loan Mortgage Corporation (“FHLMC”)
Participation Certificates
Senior debt obligations
3. Federal National Mortgage Association (“FNMA”)
Mortgage-backed securities and senior debt obligations
4. Student Loan Marketing Association (“SLMA”)
Senior debt obligations
5. Resolution Funding Corporation obligations
6. Farm Credit System
Consolidated system-wide bonds and notes
(d) Money market funds registered under the Federal Investment Company Act of 1940,
whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P
of “AAAm-G,” “AAA-m” or “AA-m” and if rated by Moody’s rated “Aaa,” “Aa1” or “Aa2,”
including funds for which the Trustee or any of its affiliates (including any holding company,
subsidiaries, or other affiliates) provides investment advisory or other management services,
provided such funds satisfy the criteria herein contained.
(e) Certificates of deposit secured at all times by collateral described in (a) and/or (b)
above or by collateral that may be used by a national bank for purposes of satisfying its
obligations to collateralize pursuant to federal law. Such certificates must be issued by
commercial banks (including affiliates of the Trustee), savings and loan associations or mutual
savings banks.
(f) Certificates of deposit, savings accounts, deposit accounts or money market deposits
(including those of the Trustee and its affiliates) which are fully insured by FDIC, including Bank
Insurance Fund (“BIF”) and Savings Association Insurance Fund (“SAIF”).
(g) Investment agreements, including guaranteed investment contracts, forward purchase
agreements and reserve fund put agreements with a domestic or foreign bank or corporation the
long-term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the
case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor
is rated at least “AA” by S&P and “Aa” by Moody’s; provided that, by the terms of the
investment agreement:
A. Interest payments are to be made to the Trustee at times and in amounts as
necessary to pay debt service (or, if the investment agreement is for the Construction
Fund, Construction Fund draws) on the Bonds;
10220-0009\1134960v6.doc |1010|B. The invested funds are available for withdrawal without penalty or premium
for debt service payments and/or Construction Fund draws upon not more than seven
days’ prior notice;
C. The investment agreement shall state that the provider’s payment obligation
thereunder is the unconditional and general obligation of, and is not subordinated to any
other obligation of, the provider thereof or, if the provider is a bank, the agreement or the
opinion of counsel, shall state that the obligation of the provider to make payments
thereunder ranks pari passu with the obligations of the provider to its other depositors and
its other unsecured and unsubordinated creditors;
D. The City and the Trustee receives the opinion of domestic counsel (which
opinion shall be addressed to the City and the Trustee) that such investment agreement is
legal, valid, binding and enforceable upon the provider in accordance with its terms and
of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the
City and the Trustee;
E. The investment agreement shall provide that if during its term:
(I) the provider’s rating by either S&P or Moody’s falls below “AA-” or
“Aa3”, respectively, the provider shall, at its option, within 10 business days of
receipt of publication of such downgrade, either (A) collateralize the investment
agreement by delivering or transferring in accordance with applicable state and
federal laws (other than by means of entries on the provider’s books) to the City,
the Trustee or a third party acting solely as agent therefor (the “Holder of the
Collateral”) collateral free and clear of any third-party liens or claims the market
value of which collateral is maintained at levels of at least 104 percent and in the
form of securities described in (a), (b) or (c) above; (B) assign the investment
agreement to an entity acceptable to the City and the Trustee that is rated at least
“AA-” by S&P and “Aa3” by Moody’s, (C) provide a guaranty from a guarantor
acceptable to the City that is rated at least AA- by “S&P” and “Aa3” by
Moody’s; or (D) if the provider fails to perform either (A), (B) or (C) above,
repay the principal of and accrued but unpaid interest on the investment, and
(II) the provider’s rating by either S&P or Moody’s is withdrawn or
suspended or falls below “A-” or “A3”, respectively, the provider must, at the
direction of the City or the Trustee, within 10 business days of receipt of such
direction, repay the principal of and accrued but unpaid interest on the
investment, in either case with no penalty or premium to the City or Trustee,
F. The investment agreement shall state that there are is no prior lien on any
collateral pledged under the agreement (at any time) and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider under the terms
of the investment agreement, at the time such collateral is delivered, that the Holder of
the Collateral has a perfected security interest in the collateral, any substituted collateral
and all proceeds thereof (in the case of bearer securities, this means the Holder of the
Collateral is in possession);
G. the investment agreement must provide that if during its term:
(I) the provider shall default in its payment obligations and such
failure continues for one business day or more after the Trustee gives written
notice thereof to the provider, the provider’s obligations under the investment
agreement shall, at the direction of the City or the Trustee, be accelerated and
10220-0009\1134960v6.doc |10 10|amounts invested and accrued but unpaid interest thereon shall be repaid to the
City or Trustee, as appropriate, and
(II) the provider shall become insolvent, not pay its debts as they
become due, be declared or petition to be declared bankrupt, etc. (“event of
insolvency”), the provider’s obligations shall be accelerated and amounts
invested and accrued but unpaid interest thereon shall be repaid to the City or
Trustee, as appropriate.
(h) Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1”
or better by S&P.
(i) Bonds or notes issued by any state or municipality which are rated by Moody’s and
S&P in one of the two highest rating categories assigned by such agencies.
(j) Federal funds or bankers acceptances with a maximum term of one year of any bank
(including those of the Trustee and its affiliates) which has an unsecured, uninsured and
unguaranteed obligation rating of “Prime - 1” or “A3” or better by Moody’s and “A-1” or “A” or
better by S&P.
(k) Repurchase agreements which provide for the transfer of securities from a dealer
bank or securities firm (seller/borrower) to the City or the Trustee, and the transfer of cash from
the City or the Trustee to the dealer bank or securities firm with an agreement that the dealer bank
or securities firm will repay the cash plus a yield to the City or the Trustee in exchange for the
securities at a specified date, and
1. Repurchase agreements must be between the City or the Trustee and a dealer
bank or securities firm
A. Primary dealers on the Federal Reserve reporting dealer list which
are rated “A” or better by S&P and Moody’s, or
B. Banks rated “A” or above by S&P and Moody’s.
2. The written repurchase agreements contract must include the following:
A. Securities which are acceptable for transfer are:
(l) Direct United States governments, or
(2) Federal agencies backed by the full faith and credit of the United
States government (and FNMA & FHLMC)
B. The collateral must be delivered to the City, the Trustee (if trustee is
not supplying the collateral) or third party acting as agent for the
Trustee (if the Trustee is supplying the collateral)
before/simultaneous with payment (perfection by possession of
certificated securities).
C. Valuation of Collateral
(l) The securities must be valued weekly, marked-to-market at
current market price plus accrued interest
(2) The value of collateral must be equal to 104 percent of the
amount of cash transferred by the municipal entity to the dealer
bank or security firm under the repurchase agreement plus
accrued interest. If the value of securities held as collateral slips
below l04 percent of the value of the cash transferred by
10220-0009\1134960v6.doc
10
municipality, then additional cash and/or acceptable securities
must be transferred. If, however, the securities used as collateral
are FNMA or FHLMC, then the value of collateral must equal
105 percent.
(l) Local Agency Investment Fund of the State (“LAIF”).
(m) With respect to any fund or account relating to Bonds that are insured, such other
types investments as may be approved in writing by the applicable bond insurer.
Principal Installment shall mean, as of any date of calculation and with respect to any
Series, so long as any Bonds thereof are Outstanding, (a) the principal amount of Bonds of such Series
due on a certain future date for which no Sinking Fund Installments have been established, or (b) the
unsatisfied balance of any Sinking Fund Installments due on a certain future date for Bonds of such
Series, plus the amount of the sinking fund redemption premiums, if any, which would be applicable upon
redemption of such Bonds on such future date in a principal amount equal to said unsatisfied balance of
such Sinking Fund Installments, or (c) if such future dates coincide as to different Bonds of such Series,
the sum of the above, as applicable.
Prudent Utility Practice shall mean any of the practices, methods and acts which, in the
exercise of reasonable judgment, in the light of the facts, including but not limited to the practices,
methods and acts engaged in or approved by a significant portion of the wastewater industry prior thereto,
known at the time the decision was made, would have been expected to accomplish the desired result at
the lowest reasonable cost consistent with reliability, safety and expedition. It is recognized that Prudent
Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all
others, but rather is a spectrum of possible practices, methods or acts which could have been expected to
accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and
expedition.
Redemption Price shall mean, with respect to any Bond, the principal amount thereof
plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or the
Resolution.
Refundable Credits shall mean, with respect to a Series of Bonds: (i) the amounts which
are payable by the Federal government under Section 6431 of the Tax Code, which the City has elected to
receive under Section 54AA(g)(1) of the Tax Code with respect to “qualified bonds” issued as “Build
America Bonds,” or (ii) any other amounts payable by the Federal government to the City pursuant to a
future change in the Tax Code and pledged as security for the Bonds, which amounts are treated as a
credit equal to a percentage of the interest payable by the City on the Interest Payment Date with respect
to such Series of Bonds; provided however, that a written opinion of Bond Counsel must be obtained
prior to treating such amounts as a Refundable Credit for purposes of this Resolution.
Refunding Bonds shall mean all Bonds, whether issued in one or more Series,
authenticated and delivered on original issuance pursuant to Section 205, and any Bonds thereafter
authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section
406 or Section 1106.
Reimbursement Agreement shall mean an agreement between the City and a bank or
other financial institution providing for the issuance of a letter of credit, reserve fund insurance policy,
guaranty or surety bond for the purpose of making Bond Payments and requiring the City to make
payments to reimburse or compensate such bank or financial institution for draws under such instruments
from Net Revenues on a parity with all Bonds.
10220-0009\1134960v6.doc
11
Reimbursement Payments shall mean amounts payable by the City as compensation or
reimbursement for a draw on a letter of credit, reserve fund insurance policy, guaranty or surety bond for
the purpose of making Bond Payments in accordance with any Reimbursement Agreement.
Representation Letter shall mean a representation letter from the City or the Trustee to
the Depository, as described in Section 308 hereof.
Reserve Requirement shall mean, as of any date of calculation, an amount equal to the
least of (a) Maximum Annual Debt Service, (b) 125% of average annual Debt Service on all Outstanding
Bonds, and (c) 10% of the proceeds of all Outstanding Bonds; provided, however, that the City may at
any time elect to maintain the Reserve Requirement by obtaining a letter of credit, a surety bond, a policy
of insurance or any other security device (in each case rated in one of the two highest rating categories by
each rating agency which rates any of the Bonds at such time), in an amount which, together with any
funds on deposit in the Reserve Account, will guarantee to the City the full amount of the Reserve
Requirement at such times as all or any portion of the Reserve Requirement is needed for transfer to the
Debt Service Account.
Resolution shall mean this Resolution as from time to time amended or supplemented by
Supplemental Resolutions in accordance with the terms hereof.
Revenues shall mean (a) all revenues, fees, income, rents and receipts earned by the City
from or attributable to the ownership and operation of the Enterprise, including all revenues attributable to
the Enterprise or to the payment of the costs thereof received by the City under any contract for the sale of
any service from the Enterprise or any part thereof or any contractual arrangement with respect to the use
of the Enterprise or any portion thereof or the services or capacity thereof, but excluding connection
charges, (b) the proceeds of any insurance covering business interruption loss relating to the Enterprise,
and (c) interest earned on any moneys or investments held pursuant to the Resolution and required to be
paid into the Sewer Enterprise Fund, all as determined in accordance with Generally Accepted
Accounting Principles.
S&P shall mean Standard & Poor’s Corporation and its successors and assigns.
Securities Depositories means The Depository Trust Company, 711 Stewart Avenue,
Garden City, New York 11530, Fax (516) 227-4039 or 4190; Midwest Securities Trust Company, Capital
Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312)663-2343;
Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Bond Department, Dex (215)496-5058; and, in accordance with then
current guidelines of the Securities and Exchange Commission, such other addresses and/or such other
securities depositories as the City may identify in writing to the Trustee.
Series shall mean all of the Bonds authenticated and delivered on original issuance and
identified pursuant to this Resolution and the Supplemental Resolution authorizing such Bonds as a
separate Series of Bonds, or any Bonds thereafter authenticated and delivered in lieu of or in substitution
for such Bonds pursuant to Article III or Section 406 or 1106, regardless of variations in maturity, interest
rate, Sinking Fund Installments, or other provisions.
Sewer Enterprise Fund shall mean the Sewer Enterprise Fund described in Section 502.
10220-0009\1134960v6.doc
12
Sinking Fund Installment shall mean an amount so designated which is established
pursuant to clause (viii) of paragraph (3) of subsection (a) of Section 202.
Subordinated Indebtedness shall mean any evidence of debt referred to in, and
complying with, the provisions of Section 511.
Subordinated Indebtedness Fund shall mean the Subordinated Indebtedness Fund
established in Section 502(c).
Supplemental Resolution shall mean any resolution supplemental to or amendatory of
the Resolution, adopted by the City in accordance with Article X.
Tax Code means the Internal Revenue Code of 1986, as amended.
Trust Estate shall mean (a) the Net Revenues; (b) the moneys in the Funds established by
the Resolution including the investment income, if any, thereof; and (c) Refundable Credits, if any, with
respect to a Series of Bonds.
Trustee shall mean U.S. Bank National Association, and its successor or successors and
any other corporation or association which may at any time be substituted in its place pursuant to the
Resolution.
2009 Series A Bonds shall mean the Bonds authenticated and delivered pursuant to
Section 203 hereof.
Except where the context otherwise requires, words importing the singular number shall
include the plural number and vice versa, and words importing persons shall include firms, associations,
corporations, districts, agencies and bodies.
All references in the Resolution to Articles, Sections, and other subdivisions are to the
corresponding Articles, Sections or subdivisions of the Resolution, and the words herein, hereof,
hereunder and other words of similar import refer to the Resolution as a whole and not to any particular
Article, Section or subdivision of the Resolution. The headings or titles of the several articles and
sections of the Resolution, and any Table of Contents appended to copies of the Resolution, shall be
solely for convenience of reference and shall not affect the meaning, construction or effect of the
Resolution.
SECTION 102. Authority for This Resolution. This Resolution is adopted pursuant to
the provisions of the Charter and the Act.
SECTION 103. Resolution to Constitute Contract. In consideration of the purchase
and acceptance of any and all of the Bonds authorized to be issued hereunder by those who shall hold the
same from time to time, the Resolution shall be deemed to be and shall constitute a contract between the
City and the Holders from time to time of the Bonds; and the pledge and assignment made in the
Resolution and the covenants and agreements therein set forth to be performed on behalf of the City shall
be for the equal benefit, protection and security of the Holders of any and all of the Bonds, all of which,
regardless of the time or times of their authentication and delivery or maturity, shall be of equal rank
without preference, priority or distinction of any of the Bonds over any other thereof except as expressly
provided in or permitted by this Resolution.
10220-0009\1134960v6.doc
13
ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
SECTION 201. Authorization of Bonds. (a) This Resolution authorizes Bonds of the
City to be designated as “Wastewater Facilities Revenue Bonds.” The aggregate principal amount of the
Bonds which may be executed, authenticated and delivered under the Resolution is not limited except as
may hereafter be provided in the Resolution or as may be limited by law.
(b) The Bonds may, if and when authorized by the City pursuant to one or more
Supplemental Resolutions, be issued in one or more Series, and the designation thereof, in addition to the
name “Wastewater Facilities Revenue Bonds,” shall include such further appropriate particular
designation added to or incorporated in such title for the Bonds of any particular Series as the City may
determine. Each Bond shall bear upon its face the designation so determined for the Series to which it
belongs.
(c) Nothing contained in the Resolution shall be deemed to preclude or restrict the
consolidation pursuant to a Supplemental Resolution of any Bonds of any two or more separate Series
authorized pursuant to such Supplemental Resolution to be issued pursuant to any of the provisions of
Section 203, 204 or 205 into a single Series of Bonds for purposes of sale and issuance; provided that
each of the tests, conditions and other requirements contained in Sections 202, 203, 204 and 205 as
applicable to each such separate Series shall be met and complied with. Except as otherwise provided in
this subsection or in such Supplemental Resolution, such a consolidated Series shall be treated as a single
Series of Bonds for all purposes of the Resolution.
SECTION 202. General Provisions for Issuance of Bonds. (a) All (but not less than
all) the Bonds of each Series of Bonds shall be executed by the City for issuance under the Resolution and
delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered to the City
or upon its order, but only upon the receipt by the Trustee of the following moneys and documents, all
dated as of the date of such delivery:
(1) An Opinion of Counsel of recognized standing in the field of law relating to
municipal bonds to the effect that (i) the City has the right and power under the Charter
and the Act as amended to the date of such Opinion to adopt the Resolution, and the
Resolution has been duly and lawfully adopted by the City, is in full force and effect and
is valid and binding upon the City and enforceable in accordance with its terms, and no
other authorization for the Resolution is required; (ii) the Resolution creates the valid
pledge and assignment which it purports to create of the Trust Estate; and (iii) the Bonds
of such Series are valid and binding obligations of the City as provided in the Resolution
and enforceable in accordance with their terms, and entitled to the benefits of the
Resolution and of the Act as amended to the date of such Opinion, and such Bonds have
been duly and validly authorized and issued in accordance with law, including the Act as
amended to the date of such Opinion, and in accordance with the Resolution; provided,
that such Opinion may take exception for limitations imposed by or resulting from
bankruptcy, insolvency, moratorium, debt adjustment, reorganization or other laws
affecting creditors’ rights generally and may state that no opinion is being rendered as to
the availability of any particular remedy;
(2) A written order as to the authentication and delivery of such Bonds,
signed by an Authorized Officer of the City;
10220-0009\1134960v6.doc
14
(3) A copy of the Supplemental Resolution authorizing such Bonds, certified
by an Authorized Officer of the City, which shall, among other provisions, specify: (i)
the authorized principal amount, designation and Series of such Bonds; (ii) the purposes
for which such Series of Bonds is being issued, which shall be the purpose specified in
Section 203, one of the purposes specified in Section 204 or the refunding of Bonds as
provided in Section 205; (iii) the date, and the maturity date or dates, of the Bonds of
such Series; (iv) the interest rate or rates of the Bonds of such Series and the interest
payment dates therefor, provided that the interest rate shall be identical for all such Bonds
of like maturity; (v) the denominations of, and the manner of dating, numbering and
lettering, the Bonds of such Series, provided that such Bonds shall be denominations of
$5,000 or any multiple thereof as authorized by such Supplemental Resolution; (vi) the
Paying Agent or Paying Agents and the place or places of payment of the principal and
Redemption Price, if any, of, and interest on, the Bonds of such Series; (vii) the
Redemption Price or Prices, if any, and, subject to Article IV, the redemption terms, if
any, for the Bonds of such Series; (viii) the amount and due date of each Sinking Fund
Installment, if any, for Bonds of like maturity of such Series, provided that each Sinking
Fund Installment due date shall fall upon an interest payment date for such Bonds; (ix) if
so determined by the City, provisions for the sale of the Bonds of such Series; (x) the
amount (or the method of determining the amount), if any, to be deposited from the
proceeds of such Series of Bonds in the Debt Service Account in the Debt Service Fund
and provisions for the application thereof to the payment of all or a portion of the interest
on such Series of Bonds or any other Series of Bonds; (xi) the amount, if any, to be
deposited from the proceeds of such Series of Bonds in the Reserve Account; (xii) such
other terms and provisions as shall be determined by the City in connection with the
issuance and sale of any Series of Bonds; and (xiii) the forms of the Bonds of such Series
and of the Trustee’s certificate of authentication;
(4) Except in the case of the 2009 Series A Bonds, the amount, if any,
necessary for deposit in the Reserve Account in the Debt Service Fund so that such
Account shall equal the Reserve Requirement calculated immediately after the
authentication and delivery of such Series of Bonds;
(5) Except in the case of the 2009 Series A Bonds or Refunding Bonds, a
certificate of an Authorized Officer of the City stating that the City is not in default in the
performance of any of the covenants, conditions, agreements or provisions contained in
the Resolution; and
(6) Such further documents, moneys and securities as are required by the
provisions of Section 203, 204 or 205 or Article X or any Supplemental Resolution
adopted pursuant to Article X.
(b) All the Bonds of each Series of like maturity shall be identical in all respects,
except as to denominations and numbers. After the original issuance of Bonds of any Series, no Bonds of
such Series shall be issued except in lieu of or in substitution for other Bonds of such Series pursuant to
Article III or Section 406 or 1106.
SECTION 203. 2009 Series A Bonds. (a) There is hereby authorized a first Series of
Bonds, which shall be designated “2009 Series A,” for the purpose of refinancing the City’s Wastewater
10220-0009\1134960v6.doc
15
Facilities Refunding Revenue Bonds, 1999 Series A, originally issued in the aggregate principal amount
of $25,080,000.
(b) Proceeds of the 2009 Series A Bonds shall be applied simultaneously with the
delivery of such 2009 Series A Bonds, as shall be provided in the Supplemental Resolution authorizing
such 2009 Series A Bonds.
SECTION 204. Additional Bonds. (a) One or more Series of Additional Bonds may
be authenticated and delivered upon original issuance at any time, and from time to time for the purpose
of providing funds to pay all or any portion of the Cost of the Enterprise.
(b) Each Supplemental Resolution authorizing the issuance of a Series of Additional
Bonds shall specify the purpose for which the proceeds of such Series of Additional Bonds will be
applied, and the amount, if any, to be deposited from the proceeds of such Additional Bonds into the
Reserve Account; provided that the amount on deposit in the Reserve Account shall be increased at or
prior to the time such Additional Bonds become Outstanding in an amount at least equal to the Reserve
Requirement on all the Outstanding Bonds and such Additional Bonds, which amount shall be maintained
in the Reserve Account.
(c) Except as otherwise provided in this Section 204, each such Series of Additional
Bonds shall be authenticated and delivered by the Trustee upon original issuance upon receipt by the
Trustee (in addition to the documents set forth in Section 202) of a Certificate, dated as of the date of such
delivery, of an Authorized Officer of the City (together with supporting calculations prepared by the City)
to the effect that the Net Revenues, calculated on the basis of Generally Accepted Accounting Principles,
as shown by the books of the City for the last completed Bond Year prior to the date of the authentication
and delivery of such Additional Bonds as shown by an audit certificate or opinion of an independent
certified public accountant or fiscal consultant engaged by the City, plus, at the option of the City, either
or both of the allowances for earnings set forth in subsection (d) of this Section 204, shall have amounted
to at least 1.20 times the Maximum Annual Debt Service on all Bonds to be Outstanding immediately
subsequent to the issuance of such Additional Bonds. In computing the amount of Maximum Annual
Debt Service for purposes of this subsection (c), the amount of Debt Service coming due in any Bond
Year shall be reduced by the full amount of the Refundable Credits which the City expects to receive in
such Bond Year.
(d) For the purposes of the Certificate required by subsection (c) of this Section 204,
there may be added to the Revenues (1) an allowance for earnings arising from any increase in the
charges made for service from the Enterprise which has become effective prior to the issuance of such
Additional Bonds but which, during all or any part of said last completed Bond Year, was not in effect, in
an amount equal to 90% of the amount by which the Revenues would have been increased if such
increase in charges had been in effect during the whole of said last completed Bond Year, as shown by the
certificate or opinion of the City Engineer or of an independent certified public accountant or firm of
certified public accountants employed by the City or of an independent engineer of recognized standing
qualified to pass on questions related to the financial conditions of wastewater system operations; and (2)
an allowance for earnings from any additions to or improvements or extensions of the Enterprise to be
made with the proceeds of such Additional Bonds and also from any such additions, improvements or
extensions which have been made from moneys from any source but which, during all or any part of said
last completed Bond Year, were not in service, all in an amount equal to 90% of the estimated additional
average annual Revenues to be derived from such additions, improvements and extensions for the first 36-
month period in which each addition, improvement or extension is respectively to be in operation, all as
shown by a certificate or opinion of the City Engineer or of an independent engineer of recognized
10220-0009\1134960v6.doc
16
standing qualified to pass on questions relating to the financial conditions of wastewater system
operations.
(e) The proceeds, including accrued interest, of the Additional Bonds of each Series
shall be applied simultaneously with the delivery of such Bonds, as provided in the Supplemental
Resolution authorizing such Series.
SECTION 205. Refunding Bonds. (a) One or more Series of Refunding Bonds may
be authenticated and delivered upon original issuance to refund by exchange or otherwise all or any
portion of the Outstanding Bonds of one or more Series. Refunding Bonds shall be issued in a principal
amount sufficient, together with other moneys available therefor, to accomplish such refunding and to
make the deposits in the Funds and Accounts under the Resolution required by the provisions of the
Supplemental Resolution authorizing such Bonds but in no event in excess of the aggregate principal
amount permitted under the Act.
(b) Refunding Bonds of each Series issued to refund Bonds other than by exchange
shall be authenticated and delivered by the Trustee only upon receipt by the Trustee (in addition to the
documents required by Section 202) of the following documents, all dated as of the date of such delivery:
(1) Irrevocable instructions to the Trustee, satisfactory to it, to give due notice of
redemption of all the Bonds to be refunded on a redemption date or dates specified in
such instructions;
(2) If the Bonds to be refunded are not by their terms subject to redemption within the
next succeeding 60 days, irrevocable instructions to the Trustee, satisfactory to it, to mail
the notice provided for in Section 1201 to the Holders of the Bonds being refunded; and
(3) Either (i) moneys in an amount sufficient to effect payment at the applicable
Redemption Price of the Bonds to be refunded together with accrued interest on such
Bonds to the redemption date, which moneys shall be held by the Trustee or any one or
more of the Paying Agents in a separate account irrevocably in trust for and assigned to
the respective Holders of the Bonds to be refunded, or (ii) Permitted Investments in such
principal amounts, of such maturities, bearing such interest, and otherwise having such
terms and qualifications and any moneys, as shall be necessary to comply with the
provisions of subsection (b) of Section 1201, which Permitted Investments and moneys
shall be held in trust and used only as provided in said subsection (b).
(c) The proceeds, including accrued interest, of the Refunding Bonds of each Series
shall be applied simultaneously with the delivery of such Bonds for the purposes of making deposits in
such funds and accounts as shall be provided by the Supplemental Resolution authorizing such Series of
Refunding Bonds and shall be applied to the refunding purposes thereof in the manner provided in said
Supplemental Resolution.
(d) Refunding Bonds of each Series which will be used to refund by an exchange
shall be authenticated and delivered by the Trustee only upon receipt by the Trustee (in addition to the
documents required by Section 202) of:
(1) Irrevocable instructions from the City to provide for the exchange of such
Refunding Bonds for the Bonds being refunded thereby; and
10220-0009\1134960v6.doc
17
(2) Such further documents or evidences of the satisfaction of conditions as may
be required by provisions of the Supplemental Resolutions authorizing the Bonds being
refunded that provides for the refunding by such an exchange.
ARTICLE III
GENERAL TERMS AND PROVISIONS OF BONDS
SECTION 301. Medium of Payment; Form and Date; Letters and Numbers. (a) The
Bonds shall be payable, with respect to interest, principal and Redemption Price, in any coin or currency
of the United States of America which at the time of payment is legal tender for the payment of public
and private debts.
(b) The Bonds of each Series shall be issued only in the form of fully registered
Bonds without coupons unless otherwise authorized by a Supplemental Resolution.
(c) Each Bond shall be numbered as provided in the Resolution or the Supplemental
Resolution authorizing the Series of which such Bond is a part and so as to be distinguished from every
other Bond.
(d) The Bonds of each Series shall be dated as provided in the Supplemental
Resolution authorizing the Bonds of such Series. Except as otherwise provided herein, Bonds of each
Series shall bear interest from their date.
SECTION 302. Legends. The Bonds of each Series may contain or have endorsed
thereon such provisions, specifications and descriptive words not inconsistent with the provisions of the
Resolution as may be necessary or desirable to comply with custom, the rules of any securities exchange
or commission or brokerage board, or otherwise, as may be determined by the City prior to the
authentication and delivery thereof.
SECTION 303. Execution and Authentication. (a) The Bonds shall be executed in
the name of the City by the manual or facsimile signature of its Mayor and attested by the manual or
facsimile signature of the City Clerk of the City, or in such other manner as may be required or permitted
by law. In case any one or more of the officers who shall have signed any of the Bonds shall cease to be
such officer before the Bonds so signed shall have been authenticated and delivered by the Trustee, such
Bonds may, nevertheless, be authenticated and delivered as herein provided, and may be issued as if the
persons who signed such Bonds had not ceased to hold such offices. Any Bond of a Series may be signed
on behalf of the City by such persons as at the time of the execution of such Bonds shall be duly
authorized or hold the proper office in the City, although at the date borne by the Bonds of such Series
such persons may not have been so authorized or have held such office.
(b) The Bonds of each Series shall bear thereon a certificate of authentication, in the
form set forth in the Supplemental Resolution authorizing such Bonds, executed manually by the Trustee.
Only such Bonds as shall bear thereon such certificate of authentication, shall be entitled to any right or
benefit under the Resolution, and no Bond shall be valid or obligatory for any purpose until such
certificate of authentication shall have been duly executed by the Trustee. Such certificate of the Trustee
upon any Bond executed on behalf of the City shall be conclusive evidence that the Bond so authenticated
has been duly authenticated and delivered under the Resolution and that the Holder thereof is entitled to
the benefits of the Resolution.
10220-0009\1134960v6.doc
18
SECTION 304. Exchange, Transfer and Registration. (a) The Bonds shall be
transferable only upon the books of the City, which shall be kept for such purposes at the corporate trust
office of the Trustee as Bond Registrar, by the registered owner thereof in person or by his attorney duly
authorized in writing, upon surrender thereof together with a written instrument of transfer satisfactory to
the Bond Registrar duly executed by the registered owner or his duly authorized attorney. Upon the
transfer of any such Bond the City shall issue in the name of the transferee a new Bond or Bonds of the
same aggregate principal amount and Series and maturity as the surrendered Bond.
(b) The registered owner of any Bond or Bonds of one or more denominations shall
have the right to exchange such Bond or Bonds for a new Bond or Bonds of any denomination of the
same aggregate principal amount and Series and maturity of the surrendered Bond or Bonds. Such Bond
or Bonds shall be exchanged by the City for a new Bond or Bonds upon the request of the registered
owner thereof in person or by his attorney duly authorized in writing, upon surrender of such Bond or
Bonds together with a written instrument requesting such exchange satisfactory to the Bond Registrar
duly executed by the registered owner or his duly authorized attorney.
(c) The City and each Fiduciary may deem and treat the person in whose name any
Bond shall be registered upon the books of the City as the absolute owner of such Bond, whether such
Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal and
Redemption Price, if any, of and interest on such Bond and for all other purposes, and all such payments
so made to any such registered owner or upon his order shall be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City nor
any Fiduciary shall be affected by any notice to the contrary. The City agrees to indemnify and save each
Fiduciary harmless from and against any and all loss, cost, charge, expense, judgment or liability incurred
by it, acting in good faith and without negligence under the Resolution, in so treating such registered
owner.
SECTION 305. Regulations With Respect to Exchanges and Transfers. In all cases in
which the privilege of exchanging or transferring Bonds is exercised, the City shall execute and the
Trustee shall authenticate and deliver Bonds in accordance with the provisions of the Resolution. All
Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Trustee and
canceled or retained by the Trustee. For every such exchange or transfer of Bonds, whether temporary or
definitive, the City or the Bond Registrar may make a charge sufficient to reimburse it for any tax, fee or
other governmental charge required to be paid with respect to such exchange or transfer. Neither the City
nor the Bond Registrar shall be required (a) to exchange or transfer Bonds of any Series for a period of 15
days next preceding an interest payment date on the Bonds of such Series or next preceding any selection
of Bonds to be redeemed or thereafter until after the exchange or mailing of any notice of redemption; or
(b) to exchange or transfer any Bonds or portions thereof called for redemption.
SECTION 306. Bonds Mutilated, Destroyed, Stolen or Lost. If any Bond becomes
mutilated or is lost, stolen or destroyed, the City shall execute and the Trustee shall authenticate and
deliver a new Bond of like date of issue, maturity date, principal amount and interest rate per annum as
the Bond so mutilated, lost, stolen or destroyed, provided that (a) in the case of such mutilated Bond, such
Bond is first surrendered to the Trustee, (b) in the case of any such lost, stolen or destroyed Bond, there is
first furnished evidence of such loss, theft or destruction satisfactory to the Trustee and the City together
with indemnity satisfactory to the Trustee and the City, (c) all other reasonable requirements of the
Trustee and the City (provided that the City shall have advised the Trustee of any such requirements) are
complied with, and (d) expenses in connection with such transaction are paid by the Holder. Any Bond
surrendered for exchange shall be canceled. Any such new Bonds issued pursuant to this Section in
substitution for Bonds alleged to be destroyed, stolen or lost shall constitute original additional
10220-0009\1134960v6.doc
19
contractual obligations on the part of the City, whether or not the Bonds so alleged to be destroyed, stolen
or lost be at any time enforceable by anyone, and shall be equally secured by and entitled to equal and
proportionate benefits with all other Bonds issued under the Resolution, in any moneys or securities held
by the City or any Fiduciary for the benefit of the Holders of the Bonds.
SECTION 307. Temporary Bonds. (a) Until the definitive Bonds of any Series are
prepared, the City may execute, in the same manner as is provided in Section 303, and, upon the request
of the City, the Trustee shall authenticate and deliver, in lieu of definitive Bonds, but subject to the same
provisions, limitations and conditions as the definitive Bonds, one or more temporary Bonds substantially
of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, and with
such omissions, insertions and variations as may be appropriate to temporary Bonds. The City at its own
expense shall prepare and execute definitive Bonds and, upon the surrender of such temporary Bonds, the
Trustee shall authenticate and, without charge to the Holder thereof, deliver in exchange therefor, such
definitive Bonds of the same aggregate principal amount and Series and maturity as the temporary Bonds
surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same
benefits and security as definitive Bonds authenticated and issued pursuant to the Resolution.
(b) All temporary Bonds surrendered in exchange either for another temporary Bond
or Bonds or for a definitive Bond or Bonds shall be forthwith canceled by the Trustee.
SECTION 308. Book-Entry System. Prior to the issuance of any Series of Bonds
issued hereunder, the City may provide that such Series of Bonds shall be initially issued as Book-Entry
Bonds, in the form of a separate single fully registered Bond (which may be typewritten) for each of the
maturities of such Bonds. Upon initial delivery, the ownership of each such Bond shall be registered in
the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository.
Except as provided in this section, all of the Outstanding Bonds shall be registered in the registration
books kept by the Trustee in the name of the Nominee.
With respect to Bonds registered in the registration books kept by the Trustee in the name
of the Nominee, the City and the Trustee shall have no responsibility or obligation to any Participant or to
any person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the
immediately preceding sentence, the City and the Trustee shall have no responsibility or obligation with
respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect
to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person, other than
a Holder, as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds,
including any notice of redemption, (iii) the selection by the Depository and its Participants of the
beneficial interests in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the
payment to any Participant or any other person, other than a Holder as shown in the registration books
kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with
respect to the Bonds. The City and the Trustee may treat and consider the person in whose name each
Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such
Bond for the purpose of payment of principal, premium, if any, and interest with respect to such Bond, for
the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose
of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee
shall pay all principal of, premium, if any, and interest due with respect to the Bonds only to or upon the
order of the respective Holders, as shown in the registration books kept by the Trustee, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and
discharge fully the City’s obligations with respect to payment of the principal, premium, if any, and
interest due with respect to the Bonds to the extent of the sum or sums so paid. No person other than a
Holder, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the
10220-0009\1134960v6.doc
20
obligation of the City to make payments of principal, premium, if any, and interest pursuant to the
Resolution. Upon delivery by the Depository to the Trustee and the City of written notice to the effect
that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to
the provisions herein with respect to record dates, the word Nominee in this Resolution shall refer to such
new nominee of the Depository.
In order to qualify the Bonds for the Depository’s book-entry system, the City shall
execute and deliver to the Depository a Representation Letter. The execution and delivery of a
Representation Letter shall not in any way impose upon the City or the Trustee any obligation whatsoever
with respect to persons having interests in the Bonds other than the Holders, as shown on the registration
books kept by the Trustee. The Trustee agrees to take all action necessary to comply with all
representations made by it in its Representation Letter to the extent that such action is not inconsistent
with this Resolution. In addition to the execution and delivery of a Representation Letter, the Mayor, the
Chief Administrative Officer and all other Authorized Officers of the City are hereby authorized to take
any other actions, not inconsistent with this Resolution, to qualify the Bonds for the Depository’s book-
entry program.
In the event (a) the Depository determines not to continue to act as securities depository
for the Bonds, or (b) the City determines that the Depository shall no longer so act, then the City will
discontinue the book-entry system with the Depository. If the City fails to identify another qualified
securities depository to replace the Depository, then the Bonds so designated shall no longer be restricted
to being registered in the registration books kept by the Trustee in the name of the Nominee, but shall be
registered in whatever name or names persons transferring or exchanging Bonds shall designate, in
accordance with the provisions of Section 304 of the Master Resolution.
Notwithstanding any other provisions of this Resolution to the contrary, so long as any
Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any,
and interest due 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 or as otherwise instructed by the Depository.
The initial Depository under this Article shall be The Depository Trust Company, New
York, New York. The initial Nominee shall be Cede & Co., as Nominee of The Depository Trust
Company, New York, New York.
ARTICLE IV
REDEMPTION OF BONDS
SECTION 401. Privilege of Redemption and Redemption Price. Bonds subject to
redemption prior to maturity pursuant to this Resolution or a Supplemental Resolution shall be
redeemable, upon notice as provided in this Article IV, at such times, at such Redemption Prices and upon
such terms in addition to the terms contained in this Article IV as may be specified in the Resolution or in
the Supplemental Resolution authorizing such Series.
SECTION 402. Redemption at the Election or Direction of the City. In the case of
any redemption of Bonds at the election or direction of the City, the City shall give written notice to the
Trustee of its election or direction so to redeem, of the redemption date, of the Series, and of the principal
amounts of the Bonds of each maturity of such Series to be redeemed (which Series, maturities and
principal amounts thereof to be redeemed shall be determined by the City in its sole discretion, subject to
any limitations with respect thereto contained in the Resolution). Such notice shall be given at least 60
days prior to the redemption date or such shorter period as shall be acceptable to the Trustee. In the event
notice of redemption shall have been given as in Section 405 provided, there shall be paid prior to the
10220-0009\1134960v6.doc
21
redemption date to the appropriate Paying Agents an amount in cash which, in addition to other moneys,
if any, available therefor held by such Paying Agents, will be sufficient to redeem on the redemption date
at the Redemption Price thereof, plus interest accrued and unpaid to the redemption date, all of the Bonds
to be redeemed. The City shall promptly notify the Trustee in writing of all such payments by it to a
Paying Agent other than the Trustee.
SECTION 403. Redemption Otherwise Than at City’s Election or Direction.
Whenever by the terms of the Resolution the Trustee is required or authorized to redeem Bonds otherwise
than at the election or direction of the City, the Trustee shall select the Bonds to be redeemed, give the
notice of redemption for and on behalf of and at the expense of the City, and pay out of moneys available
therefor the Redemption Price thereof, plus interest accrued and unpaid to the redemption date, to the
appropriate Paying Agents in accordance with the terms of this Article IV and, to the extent applicable,
Section 505.
SECTION 404. Selection of Bonds to be Redeemed. If fewer than all of the Bonds of
like maturity of any Series shall be called for prior redemption, the particular Bonds or portions of Bonds
to be redeemed shall be selected by the Trustee in such manner as the Trustee in its discretion may deem
fair and appropriate; provided, however, that the portion of any Bond of a denomination of more than
$5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and that, in
selecting portions of such Bonds for redemption, the Trustee shall treat each such Bond as representing
that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such
Bond to be redeemed in part by $5,000.
SECTION 405. Notice of Redemption. When the Trustee shall receive notice from the
City of its election or direction to redeem Bonds pursuant to Section 402, and when redemption of Bonds
is authorized or required pursuant to Section 403, the Trustee shall give notice, in the name of, on behalf
of and at the expense of the City, of the Redemption of such Bonds, which notice shall specify the Series
and maturities of the Bonds to be redeemed, the CUSIP numbers, the redemption date and the place or
places where amounts due upon such redemption will be payable and, if fewer than all of the Bonds of
any like Series and maturity are to be redeemed, the letters and numbers or other distinguishing marks of
such Bonds so to be redeemed, and, in the case of Bonds to be redeemed in part only, such notice shall
also specify the respective portions of the principal amount thereof to be redeemed. Such notice shall
further state that on such date there shall become due and payable upon each Bond to be redeemed the
Redemption Price thereof, or the Redemption Price of the specified portions of the principal thereof in the
case of Bonds to be redeemed in part only, together with interest accrued to the redemption date, and that
from and after such date interest thereon shall cease to accrue and be payable. The Trustee shall give
such notice by mailing (by first class mail) such notice to all registered owners of the Bonds to be
redeemed at their addresses as they appear on the registration books maintained by the Trustee as bond
registrar, to the Securities Depositories and to one or more Information Services, at least 30 but not more
than 60 days prior to the redemption date. Failure to receive any such notice shall not affect the validity
of the proceedings for the redemption of Bonds.
SECTION 406. Payment of Redeemed Bonds. Notice having been given in the
manner provided in Section 405, the Bonds or portions thereof so called for redemption shall become due
and payable on the redemption date so designated at the Redemption Price, plus interest accrued and
unpaid to the redemption date, and, upon presentation and surrender thereof at the office specified in such
notice, such Bonds, or portions thereof, shall be paid at the Redemption Price, plus interest accrued and
unpaid to the redemption date. If there shall be drawn for redemption less than all of a Bond, the City
shall execute and the Trustee shall authenticate and the Paying Agent shall deliver, upon the surrender of
such Bond, without charge to the owner thereof, for the unredeemed balance of the principal amount of
10220-0009\1134960v6.doc
22
the Bonds so surrendered, Bonds of like Series and maturity in any of the authorized denominations. If,
on the redemption date, moneys for the redemption of all the Bonds or portions thereof of any like Series
and maturity to be redeemed, together with interest to the redemption date, shall be held by the Paying
Agents so as to be available therefor on said date and if notice of redemption shall have been mailed as
aforesaid, then, from and after the redemption date interest on the Bonds or portions thereof of such
Series and maturity so called for redemption shall cease to accrue and become payable. If said moneys
shall not be so available on the redemption date, such Bonds or portions thereof shall continue to bear
interest until paid at the same rate as they would have borne had they not been called for redemption.
ARTICLE V
ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF
SECTION 501. The Pledge Effected by the Resolution. (a) The Bonds shall be special
obligations of the City payable solely from and secured as to the payment of the principal and
Redemption Price thereof, and interest thereon, in accordance with their terms and the provisions of the
Resolution solely by the Trust Estate, and the Trust Estate hereby is pledged and assigned to the Trustee
for the benefit of the holders of the Bonds subject only to the provisions of the Resolution permitting the
application of the Trust Estate for the purposes and on the terms and conditions set forth in the
Resolution.
(b) The Bonds shall not constitute a general indebtedness or a pledge of the full faith
and credit of the City within the meaning of any constitutional or statutory provision or limitation of
indebtedness. No Bondholder shall ever have the right, directly or indirectly, to require or compel the
exercise of the ad valorem taxing power of the City or the forfeiture of any property of the City, including
the Enterprise, for the payment of the principal of or interest on the Bonds or the making of any payments
hereunder. The Bonds and the obligations evidenced thereby shall not be payable from, nor constitute a
lien on, any property or fund of the City, including the general fund of the City, other than the Trust
Estate as herein provided. The principal and redemption price of and interest on the Bonds are not a debt
of the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of the City’s property,
or upon any of its income, receipts, or revenues except the Trust Estate.
(c) Nothing contained in the Resolution shall be construed to prevent the City from
acquiring, constructing or financing through the issuance of its bonds, notes or other evidences of
indebtedness any facilities which do not constitute a part of the Enterprise for the purposes of the
Resolution or from securing such bonds, notes or other evidences of indebtedness by a mortgage of the
facilities so financed or by a pledge of, the revenues therefrom or any lease or other agreement with
respect thereto or any revenues derived from such lease or other agreement; provided that such bonds,
notes or other evidences of indebtedness shall not be payable out of or secured by the Trust Estate, and
neither the cost of such facilities nor any expenditure in connection therewith or with the financing
thereof shall be payable from the Trust Estate.
SECTION 502. Funds and Accounts. The City has previously established the Sewer
Enterprise Fund (“Sewer Enterprise Fund”), which the City will continue to hold and maintain. The
following additional Funds are hereby established:
(a) Debt Service Fund, to be held by the Trustee, consisting of a Debt Service
Account and a Reserve Account, and
(b) Subordinated Indebtedness Fund, to be held by the Trustee.
10220-0009\1134960v6.doc
23
SECTION 503. Construction Funds. The City shall establish a separate Construction
Fund, to be held and administered by the City, with respect to each Series of Bonds other than Refunding
Bonds. There shall be paid into the Construction Fund the amounts required to be so paid by the
provisions of this Resolution and any Supplemental Resolutions, and there may be paid into the
Construction Funds, at the option of the City, any moneys received for or in connection with the
Enterprise by the City from any other source, unless required to be otherwise applied as provided by the
Resolution. Amounts in the Construction Funds shall be applied to the Cost of the Enterprise in the
manner provided in this Section subject to the provisions of any Supplemental Resolution.
The City may establish one or more separate accounts within the Construction Fund,
including a separate account to facilitate the payment of those items of Cost which constitute the City’s
costs and expenses attributable or allocable to the issuance and sale of the Bonds.
SECTION 504. Allocation of Revenues and Refundable Credits. The City shall
deposit all Revenues when and as received by it in the Sewer Enterprise Fund. Immediately upon receipt,
the City shall deposit, or cause to be deposited, all Refundable Credits, if any, with respect to a Series of
Bonds, in the Debt Service Account of the Debt Service Fund.
The City shall pay all Operating Expenses (including amounts reasonably required to be
set aside in contingency reserves for maintenance and operation costs the payment of which is not then
immediately required) from the Sewer Enterprise Fund as they become due and payable, and all
remaining money on deposit in the Sewer Enterprise Fund shall be set aside and deposited or transferred
by the City, as the case may be, at the following times in the following order of priority:
(a) On or before the last Business Day of the month immediately preceding each
Interest Payment Date, the City shall transfer to the Trustee, for deposit in the Debt Service Fund (1) for
credit to the Debt Service Account, the amount, if any, required so that the balance in said Account shall
equal the Accrued Debt Service for the six-month period ending on such Interest Payment Date, plus a
sum equal to all Reimbursement Payments then due and payable; provided that no such deposit need be
made if amounts on deposit in the Debt Service Account equal the amount of Bond Payments due with
respect to all Bonds on the next succeeding Interest Payment Date (with respect to interest), Principal
Payment Date (with respect to principal) and Accreted Value Payment Date (with respect to Accreted
Value) for such Bonds, and the Reimbursement Payments then due and payable; (2) for credit to the
Reserve Account, the amount required for such account to equal the Reserve Requirement (and in the
event that there are insufficient moneys in the Sewer Enterprise Fund to make such required deposits, the
available moneys in the Sewer Enterprise Fund shall be allocated first to the Debt Service Account and
the balance to the Reserve Account); and
(b) After making the transfers required by subsections (a) of this Section, the City
shall transfer to the Trustee (or any other Fiduciary responsible therefore) for deposit in the Subordinated
Indebtedness Fund the amounts, if any, required to be deposited under or pursuant to the resolution
(including any Supplemental Resolution), indenture or other instrument securing Subordinate
Indebtedness.
In the event that a deposit or transfer for any calendar month as set forth above is less
than the amount required for that month because of lack of funds or for any other reason, the deficiency
shall be added to and become a part of the deposits or transfers required for the following calendar month.
At such time as the total amount held in the Debt Service Account and the Reserve
Account shall be sufficient to fully pay all Outstanding Bonds in accordance with their terms (including
10220-0009\1134960v6.doc
24
Principal Installments of, and interest thereon), no further deposits shall be required to be made into such
Accounts, and the Bonds shall no longer be deemed Outstanding pursuant to the Resolution.
SECTION 505. Debt Service Fund--Debt Service Account. (a) The Trustee shall pay
out of the Debt Service Account to the respective Paying Agents (1) on or before each Interest Payment
Date for any of the Bonds the amount required for the interest payable on such date; (2) on or before each
Principal Installment due date, the amount required for the Principal Installment payable on such due
date; and (3) on or before any redemption date for the Bonds, the amount required for the payment of
interest on the Bonds then to be redeemed. Such amounts shall be applied by the Paying Agents on and
after the due dates thereof. The Trustee shall also pay out of the Debt Service Account to the Paying
Agents the accrued interest included in the purchase price of Bonds purchased for retirement.
(b) Amounts accumulated in the Debt Service Account with respect to any Sinking
Fund Installment (together with amounts accumulated therein with respect to interest on the Bonds for
which such Sinking Fund Installment was established) may and, if so directed by the City, shall be
applied by the Trustee, on or prior to the 60th day preceding the due date of such Sinking Fund
Installment, to (1) the purchase of Bonds of the Series and maturity for which such Sinking Fund
Installment was established, or (2) the redemption at the applicable sinking fund Redemption Price,
pursuant to Article IV, of such Bonds, if then redeemable by their terms. After the 75th day but on or
prior to the 60th day preceding the due date of such Sinking Fund Installment, any amounts then on
deposit in the Debt Service Account (exclusive of amounts, if any, set aside in said Account which were
deposited therein from the proceeds of Bonds) may and, if so directed by the City, shall be applied by the
Trustee to the purchase of Bonds of the Series and maturity for which such Sinking Fund Installment was
established in an amount not exceeding that necessary to complete the retirement of the unsatisfied
balance of such Sinking Fund Installment. All purchases of any Bonds pursuant to this subsection (b)
shall be made at prices not exceeding the applicable sinking fund Redemption Price of such Bonds plus
accrued interest, and such purchases shall be made by the Trustee as directed by the City. The applicable
sinking fund Redemption Price (or principal amount of maturing Bonds) of any Bonds so purchased or
redeemed shall be deemed to constitute part of the Debt Service Account until such Sinking Fund
Installment Date, for the purpose of calculating the amount of such Account. As soon as practicable after
the 60th day preceding the due date of any such Sinking Fund Installment, the Trustee shall proceed to
call for redemption, by giving notice as provided in Section 405, on such due date Bonds of the Series and
maturity for which such Sinking Fund Installment was established (except in the case of Bonds maturing
on a Sinking Fund Installment date) in such amount as shall be necessary to complete the retirement of
the unsatisfied balance of such Sinking Fund Installment. The Trustee shall pay out of the Debt Service
Account to the appropriate Paying Agents, on or before such redemption date (or maturity date), the
amount required for the redemption of the Bonds so called for redemption (or for the payment of such
Bonds then maturing), and such amount shall be applied by such Paying Agents to such redemption (or
payment). All expenses in connection with the purchase or redemption of Bonds shall be paid by the City
from the Sewer Enterprise Fund pursuant to a schedule provided by the Trustee and by the Paying Agents
and approved by the City.
(c) The amount, if any, deposited in the Debt Service Account from the proceeds of
each Series of Bonds or transferred to the Debt Service Account from a Construction Fund pursuant to a
Supplemental Resolution shall be set aside and applied to the payment of interest on the Bonds of such
Series (or on the Refunding Bonds issued to refund such Bonds) as the same becomes due and payable.
(d) In the event of the refunding of Bonds, the Trustee shall, upon the written
direction of the City, withdraw from the Debt Service Account amounts accumulated therein with respect
to Debt Service on the Bonds being refunded and deposit such amounts with itself as Trustee to be held
10220-0009\1134960v6.doc
25
for the payment of the principal or Redemption Price, if applicable, and interest on the Bonds being
refunded; provided that such withdrawal shall not be made unless (1) immediately thereafter the Bonds
being refunded shall be deemed to have been paid pursuant to subsection (b) of Section 1201, and (2) the
amount remaining in the Debt Service Account after such withdrawal shall not be less than the
requirement of such Account pursuant to subsection (a) of Section 504.
SECTION 506. Debt Service Fund--Reserve Account. (a) If on any Interest Payment
Date the amount in the Debt Service Account shall be less than the amount required to be in such Debt
Service Account pursuant to paragraph (a) of Section 504 and there shall not be on deposit in the
Subordinated Indebtedness Fund available moneys to cure such deficiency, the Trustee shall apply
amounts from the Reserve Account to the extent necessary to cure the deficiency.
(b) Whenever the moneys on deposit in the Reserve Account shall exceed the
Reserve Requirement with respect to all Series of Bonds, such excess shall be transferred by the Trustee
to the City and deposited in the Sewer Enterprise Fund.
(c) Whenever the amount in the Reserve Account, together with the amount in the
Debt Service Account, is sufficient to pay in full all Outstanding Bonds in accordance with their terms
(including principal or applicable sinking fund Redemption Price and interest thereon), the funds on
deposit in the Reserve Account shall be transferred to the Debt Service Account.
SECTION 507. Subordinated Indebtedness Fund. (a) Subject to subsection (b) hereof,
the Trustee (or any other Fiduciary responsible therefor) shall apply amounts in the Subordinated
Indebtedness Fund (subject to the provisions of, and to the priorities and limitations and restrictions
provided in, the resolution, indenture or other instrument securing each issue of Subordinated
Indebtedness) to the payment of the amounts required to pay principal or sinking fund installments of and
interest on each issue of Subordinated Indebtedness and reserves therefor in accordance with the
provisions of, and subject to the priorities and limitations and restrictions provided in, the resolution,
indenture or other instrument authorizing or securing each issue of Subordinated Indebtedness.
(b) If at any time the amounts in the Debt Service Account, or the Reserve Account
shall be less than the current requirements of such accounts, respectively, pursuant to Section 504, then
the Trustee (or any other Fiduciary responsible therefor) shall withdraw from the Subordinated
Indebtedness Fund and deposit in the Debt Service Account or the Reserve Account in that priority, as the
case may be, the amount necessary (or all the moneys in said Fund, if less than the amount necessary) to
make up such deficiency.
(c) Subject to the provisions of, and to the priorities and limitations and restrictions
provided in, the resolution, indenture or other instrument securing each issue of Subordinated
Indebtedness, amounts in the Subordinated Indebtedness Fund which the City at any time determines to
be in excess of the requirements of such Fund, may, at the discretion of the City, be transferred to the
Sewer Enterprise Fund.
Notwithstanding any provision of this Resolution to the contrary, no Fiduciary shall be
deemed to have knowledge of the existence of any facts or conditions which would prohibit the making of
any deposit or transfer to or withdrawal or payment from the Subordinated Indebtedness Fund, unless and
until such Fiduciary shall have received written notice thereof from the City, any Bondholder, any other
Fiduciary or the holder or representative of any class of obligation senior to those who are to be paid from
the Subordinated Indebtedness Fund, and no Fiduciary shall be liable or responsible for accepting any
10220-0009\1134960v6.doc
26
such deposit or transfer or making any such payment or withdrawal unless and until it has been deemed to
have such knowledge.
SECTION 508. Subordinated Indebtedness. (a) To finance any Cost of the Enterprise,
the City may, at any time, or from time to time, issue Subordinated Indebtedness payable out of, and
which may be secured by a security interest in or pledge and assignment of such amounts in the
Subordinated Indebtedness Fund as may from time to time be available for the purpose of payment
thereof as provided in Section 507; provided, however, that any such security interest in or pledge and
assignment shall be, and shall be expressed to be, subordinate in all respects to the pledge and assignment
of the Trust Estate created by the Resolution as security for the Bonds. No such Subordinate
Indebtedness shall be issued unless an Authorized Officer of the City shall file with the Trustee a
certificate that the City is not in default under the Resolution.
(b) The resolution, indenture or other instrument, including any Supplemental
Resolution, securing each issue of Subordinated Indebtedness shall contain provisions (which shall be
binding on all holders of such Subordinated Indebtedness) not more favorable to the holders of such
Subordinated Indebtedness than the following;
(1) In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in connection
therewith, relative to the City or to its creditors, as such, or to its property, and in the
event of any proceedings for voluntary liquidation, dissolution or other winding up of the
City, whether or not involving insolvency or bankruptcy, the holders of all Bonds then
Outstanding shall be entitled to receive payment in full of all principal and interest due on
all such Bonds in accordance with the provisions of the Resolution before the holders of
the Subordinated Indebtedness are entitled to receive any payment from the Trust Estate
on account of principal (and premium, if any) or interest upon the Subordinated
Indebtedness.
(2) In the event that any issue of Subordinated Indebtedness is declared due
and payable before its expressed maturity because of the occurrence of an event of
default (under circumstances when the provisions of (1) above shall not be applicable),
the holders of all Bonds Outstanding at the time such Subordinated Indebtedness so
becomes due and payable because of such occurrence of such an event of default shall be
entitled to receive payment in full of all principal and interest on all such Bonds before
the holders of the Subordinated Indebtedness are entitled to receive any accelerated
payment from the Trust Estate of principal (and premium, if any) or interest upon the
Subordinated Indebtedness.
(3) If any Event of Default with respect to the Bonds shall have occurred and
be continuing (under circumstances when the provisions of (1) above shall not be
applicable), the holders of all Bonds then Outstanding shall be entitled to receive
payment in full of all principal and interest then due on all such Bonds before the holders
of the Subordinated Indebtedness are entitled to receive any payment from the Trust
Estate of principal (and premium, if any) or interest upon the Subordinated Indebtedness.
(4) No Bondholder shall be prejudiced in his right to enforce subordination
of the Subordinated Indebtedness by any act or failure to act on the part of the City.
10220-0009\1134960v6.doc
27
(5) The Subordinated Indebtedness may provide that the provisions (1), (2),
(3) and (4) above are solely for the purpose of defining the relative rights of the Holders
of the Bonds on the one hand, and the holders of Subordinated Indebtedness on the other
hand, and that nothing therein shall impair, as between the City and the holders of the
Subordinated Indebtedness, the obligations of the City, which are unconditional and
absolute, to pay to the holders thereof the principal thereof and premium, if any, and
interest thereon in accordance with its terms, nor shall anything therein prevent the
holders of the Subordinated Indebtedness from exercising all remedies otherwise
permitted by applicable law or thereunder upon default thereunder, subject to the rights
under (1), (2), (3) and (4) above of the holders of Bonds to receive cash, property or
securities otherwise payable or deliverable to the holders of the Subordinated
Indebtedness; and the Subordinated Indebtedness may provide that, insofar as a trustee or
paying agent for such Subordinated Indebtedness is concerned, the foregoing provisions
shall not prevent the application by such trustee or paying agent of any moneys deposited
with such trustee or paying agent for the purpose of the payment of or on account of the
principal (and premium, if any) and interest on such Subordinated Indebtedness if such
trustee or paying agent did not have knowledge at the time of such application that such
payment was prohibited by the foregoing provisions.
(c) Any issue of Subordinated Indebtedness may have such rank or priority with
respect to any other issue as may be provided in the resolution, indenture or other instrument, including
any Supplemental Resolution, securing such issue of Subordinated Indebtedness and may contain such
other provisions as are not in conflict with the provisions of the Resolution.
ARTICLE VI
DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS
AND INVESTMENT OF FUNDS
SECTION 601. Depositaries. (a) All moneys held by the Trustee under the provisions
of the Resolution shall be deposited with the Trustee, and the Trustee at the written request of an
Authorized Officer shall deposit such moneys with one or more Depositaries appointed by the City,
provided the Trustee receives a certificate of the City stating that such moneys are subject to the lien of
the Resolution. All moneys held by the City under the Resolution shall be deposited in one or more
Depositaries in trust for the City. All moneys deposited under the provisions of the Resolution with the
Trustee or any Depositary shall be held in trust and applied only in accordance with the provisions of the
Resolution, and each of the Funds established by the Resolution shall be a trust fund for the purposes
thereof.
(b) Each Depositary shall be a bank or trust company organized under the laws of
any state of the United States or a national banking association which is willing and able to accept the
office on reasonable and customary terms and authorized by law to act in accordance with the provisions
of the Resolution.
SECTION 602. Deposits. (a) The provisions of this Section 602 deal with moneys not
invested pursuant to Section 603. No moneys shall be deposited with any Depositary in any amount
exceeding 10% of the amount which an officer of such Depositary shall certify to the City and the Trustee
as the total of the paid-up capital and surplus of such Depositary.
10220-0009\1134960v6.doc
28
(b) All Revenues and other moneys held by any Depositary under the Resolution
may be placed on demand or time deposit, if and as directed by the City, provided that such deposits shall
permit the moneys so held to be available for use at the time when needed. The Depositary shall not be
liable for any loss or depreciation in value resulting from any investment made pursuant to the
Resolution. All such moneys deposited with a Fiduciary, acting as a Depositary, may be made in the
commercial banking department of any Fiduciary which may honor checks and drafts on such deposit
with the same force and effect as if it were not such Fiduciary. All moneys held by any Fiduciary, as
such, may be deposited by such Fiduciary in its banking department on demand or, if and to the extent
directed by the City and acceptable to such Fiduciary, on time deposit, provided that such moneys on
deposit be available for use at the time when needed. Such Fiduciary shall allow and credit on such
moneys such interest, if any, as it customarily allows upon similar funds of similar size and under similar
condition or as required by law.
(c) All moneys held under the Resolution by the Trustee or any Depositary shall be
(1) either (i) continuously and fully insured by the Federal Deposit Insurance Corporation, or (ii)
continuously and fully secured by lodging with the Trustee, as custodian, as collateral security, such
securities as are authorized by California law to secure deposits of public funds having a market value
(exclusive of accrued interest) not less than the amount of such moneys, and (2) in such other manner as
may then be required by applicable Federal or State of California laws and regulations and applicable
state laws and regulations of the state in which the Trustee or such Depositary (as the case may be) is
located, regarding security for, or granting a preference in the case of, the deposit of trust funds; provided,
however, that it shall not be necessary for the Fiduciaries to give security under this subsection (c) for the
deposit of any moneys with them held in trust and set aside by them for the payment of the principal or
Redemption Price of or interest on any Bonds, or for the Trustee or any Depositary to give security for
any moneys which shall be represented by obligations or certificates of deposit purchased as an
investment of such moneys.
(d) All moneys deposited with the Trustee and each Depositary shall be credited to
the particular Fund or Account to which such moneys belong.
SECTION 603. Investment of Certain Funds. (a) Moneys held in the Debt Service
Account and the Reserve Account shall be invested and reinvested by the Trustee to the fullest extent
practicable in Permitted Investments which mature not later than at such times as shall be necessary to
provide moneys when needed for payments to be made from such Accounts, and in the case of the
Reserve Account not later than the earlier of (a) five years from the date of purchase by the Trustee or (b)
the final maturity date of the Bonds; provided, however, that (i) an obligation which may be redeemed at
par at the option of the Trustee on the Business Day prior to each Interest Payment Date during which
such obligation is outstanding and (ii) an investment agreement which permits the Trustee to withdraw
invested amounts on any Business Day, on no more than seven Business Days’ notice, without penalty, to
be used as required by Section 5.06, may have any maturity. Subject to the terms of any resolutions,
indentures, or other instruments securing any issue of Subordinated Indebtedness, moneys in the
Subordinated Indebtedness Fund shall be invested and reinvested to the fullest extent practicable in
Permitted Investments which mature not later than such times as shall be necessary to provide moneys
when needed for payments to be made from said Fund. Moneys held in the Sewer Enterprise Fund and
the Construction Fund may be invested and reinvested in Permitted Investments which mature not later
than such times as shall be necessary to provide moneys when needed for payments to be made from such
Funds. The Trustee shall make all such investments of moneys held by it in accordance with written
instructions received from any Authorized Officer of the City. The City shall instruct the Trustee in
writing two Business Days in advance of making the investment to invest in any Permitted Investments
with moneys in any Fund or Account established under the Resolution, to combine such moneys with
10220-0009\1134960v6.doc
29
moneys in any other Fund or Account, but solely for purposes of making such investment in such
Permitted Investments. In the absence of instructions, the Trustee shall invest in any obligations
described in paragraphs (d) of the definition of “Permitted Investments” set forth in Section 101.
(b) Interest (net of that which represents a return of accrued interest paid in
connection with the purchase of any investment) and realized gains earned on any moneys or investments
in such Funds and Accounts, other than the Construction Fund and the Subordinated Indebtedness Fund,
shall be paid into the Sewer Enterprise Fund or into any Fund or Account established hereunder as
directed by an Authorized Officer of the City or by a resolution of the City. Interest earned on any
moneys or investments in a separate account in the Construction Fund shall be held in such account for
the purposes thereof. Subject to the terms of any resolutions, indentures or other instruments securing
any issue of Subordinated Indebtedness, net interest earned on any moneys or investments in the
Subordinated Indebtedness Fund shall be paid into the Sewer Enterprise Fund; provided, however, that,
subject to such terms, such interest earned prior to the date of commercial operation of any part of the
Enterprise such Subordinated Indebtedness was issued for shall be paid into the account in the
Construction Fund applicable to such part.
(c) Nothing in the Resolution shall prevent any Permitted Investments acquired as
investments of funds held under the Resolution from being issued or held in book-entry form on the
books of the Department of the Treasury of the United States.
(d) Any Fund or Account required by this Resolution 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. Investments in any
and all such Funds or Accounts may be commingled for purposes of making, holding and disposing of
investments, notwithstanding provisions herein for transfer to or holding in a particular Fund or Account
amounts received or held by the Trustee hereunder, provided that the Trustee shall at all times account for
such investments strictly in accordance with the particular Fund or Account to which they are credited
and otherwise as provided in this Resolution.
The City acknowledges that to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security
transactions as they occur, the City specifically waives receipt of such confirmations to the extent
permitted by law. The Trustee will furnish the City periodic cash transaction statement which shall
include detail for all investment transactions made by the Trustee hereunder.
SECTION 604. Valuation and Sale of Investments. Obligations purchased as an
investment of moneys in any Fund created under the provisions of the Resolution shall be deemed at all
times to be a part of such Fund and any profit realized from the liquidation of such investment shall be
credited to such Fund and any loss resulting from the liquidation of such investment shall be charged to
the respective Fund.
In computing the amount in any Fund created under the provisions of the Resolution for
any purpose provided in the Resolution, obligations purchased as an investment of moneys therein shall
be valued at the amortized cost of such obligations, exclusive of accrued interest.
Except as otherwise provided in the Resolution, the Trustee shall sell at the best price
obtainable, or present for redemption, any obligation so purchased as an investment whenever it shall be
requested in writing by an Authorized Officer of the City so to do or whenever it shall be necessary in
10220-0009\1134960v6.doc
30
order to provide moneys to meet any payment or transfer from any Fund held by it. The Trustee shall not
be liable or responsible for making any such investment in the manner provided above or for any loss
resulting from any such investment.
ARTICLE VII
PARTICULAR COVENANTS OF THE CITY
The City covenants and agrees with the Trustee and the Bondholders as follows:
SECTION 701. Payment of Bonds. The City shall duly and punctually pay or cause to
be paid, but solely from the Trust Estate, the principal or Redemption Price of every Bond and the interest
thereon, at the dates and places and in the manner mentioned in the Bonds according to the true intent and
meaning thereof.
SECTION 702. 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 funding of such Bonds or claims for interest or by any other arrangement
and in case the maturity of any of the Bonds or the time for payment of any such claims for interest shall
be extended, such Bonds or claims for interest shall not be entitled, in case of any default under the
Resolution, to the benefit of the Resolution or to any payment out of Net Revenues, Refundable Credits or
Funds established by the Resolution, including the investments, if any, thereof, pledged under the
Resolution or the moneys (except moneys held in trust for the payment of particular Bonds or claims for
interest pursuant to the Resolution) held by the Fiduciaries, except subject to the prior payment of the
principal of all Bonds Outstanding the maturity of which has not been extended and of such portion of the
accrued interest on the Bonds as shall not be represented by such extended claims for interest. Nothing
herein shall be deemed to limit the right of the City to issue Refunding Bonds and such issuance shall not
be deemed to constitute an extension of maturity of Bonds.
SECTION 703. Offices for Servicing Bonds. The City shall at all times maintain one
or more agencies in Los Angeles or San Francisco, California, where Bonds may be presented for
payment and shall at all times maintain one or more agencies in Los Angeles or San Francisco, California,
where Bonds may be presented for registration or transfer, and where notices, demands and other
documents may be served upon the City in respect of the Bonds or of the Resolution. The City hereby
appoints the Trustee as the Bond Registrar to maintain the agency for the registration or transfer of Bonds,
and for the service upon the City of such notices, demands and other documents, and as Paying Agent.
SECTION 704. Further Assurance. At any and all times the City shall, as far as it
may be authorized by law, comply with any reasonable request of the Trustee to pass, make, do, execute,
acknowledge and deliver, all and every such further resolutions, acts, deeds, conveyances, assignments,
transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting,
pledging, assigning and confirming all and singular the rights, Net Revenues, Refundable Credits and
other moneys, securities and funds hereby pledged or assigned, or intended so to be, or which the City
may become bound to pledge or assign.
SECTION 705. Power to Issue Bonds and Pledge Net Revenues, Refundable Credits
and Other Funds. The City is duly authorized under all applicable laws to create and issue the Bonds
and to adopt the Resolution and to pledge the Net Revenues, Refundable Credits and other moneys,
securities and funds purported to be pledged by the Resolution in the manner and to the extent provided in
the Resolution. Except to the extent otherwise provided in the Resolution, the Net Revenues, Refundable
10220-0009\1134960v6.doc
31
Credits and other moneys, securities and funds so pledged are and will be free and clear of any pledge,
lien, charge or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge and
assignment created by the Resolution, and all corporate or other action on the part of the City to that end
has been and will be duly and validly taken. The Bonds and the provisions of the Resolution are and will
be the valid and legally enforceable obligations of the City in accordance with their terms and the terms of
the Resolution. The City shall at all times, to the extent permitted by law, defend, preserve and protect
the pledge of the Net Revenues, Refundable Credits and other moneys, securities and funds pledged under
the Resolution and all the rights of the Bondholders under the Resolution against all claims and demands
of all persons whomsoever.
SECTION 706. Creation of Liens; Sale and Lease of Property; Eminent Domain. (a)
The City shall not issue any bonds, notes, debentures, or other evidences of indebtedness of similar
nature, other than the Bonds, payable out of or secured by a pledge or assignment of the Net Revenues,
Refundable Credits or other moneys, securities or funds held or set aside by the City or by the Fiduciaries
under the Resolution and shall not create or cause to be created any lien or charge on the Net Revenues,
Refundable Credits or such moneys, securities or funds; provided, however, that nothing contained in the
Resolution shall prevent the City from issuing or incurring, if and to the extent permitted by law:
(1) evidences of indebtedness (i) payable out of moneys in the Construction
Fund as part of the Cost of the Enterprise, or (ii) payable out of, or secured by a pledge
and assignment of, Net Revenues to be received on and after such date as the pledge of
the Net Revenues provided in the Resolution shall be discharged and satisfied as
provided in Section 1201, or
(2) Subordinated Indebtedness as provided in Section 508.
(b) The Enterprise shall not be sold, leased, mortgaged or otherwise disposed of as a
whole or substantially as a whole unless such sale or other disposition shall be so arranged as to provide
for a continuance of payments into the Sewer Enterprise Fund sufficient in amount to permit payment
therefrom of the principal of and interest on and premiums, if any, due upon the call and redemption
thereof, of the Bonds, payment of which is required to be made out of the Net Revenues, and also to
provide for such payments into the funds and accounts as are required under the terms of the Resolution.
The City will not enter into any agreement which impairs the operation of the Enterprise or any part of it
necessary to secure adequate revenues to pay the principal of and interest on the Bonds or which
otherwise would impair the rights of the Holders with respect to the revenues or the operation of the
Enterprise. If any substantial part of the Enterprise is sold the payment therefor shall either be used for
the acquisition or construction of improvements and extensions of the Enterprise or shall be used to pay
or call and redeem Bonds in the manner provided in the Resolution.
Any amounts received as awards as a result of the taking of all or any part of the
Enterprise by the lawful exercise of eminent domain, if and to the extent that such right can be exercised
against such property, shall either be used for the acquisition or construction of improvements and
extensions of the Enterprise or shall be used to pay or call and redeem Bonds in the manner provided in
the Resolution.
SECTION 707. Annual Budget. For each Fiscal Year following delivery of any Bonds
hereunder the City shall prepare and adopt a budget for the Enterprise for the next ensuing Fiscal Year.
Any such Annual Budget may be amended from time to time by the City. Following adoption of such
budget, or any amendment thereof, the City shall file with the Trustee a certificate that such budget
provides adequate Revenues to discharge its obligations under the Resolution. If necessary, the City shall
10220-0009\1134960v6.doc
32
immediately increase rates if and when any such increase is required to produce budgeted anticipated
Revenues.
SECTION 708. Operation and Maintenance of the Enterprise. The City shall at all
times use its best efforts to operate or cause to be operated the Enterprise properly and in an efficient and
economical manner, as required by the Act and consistent with Prudent Utility Practice, and shall use its
best efforts to maintain, preserve, reconstruct and keep the same or cause the same to be so maintained,
preserved, reconstructed and kept, with the appurtenances and every part and parcel thereof, in good
repair, working order and condition, and shall from time to time make, or use its best efforts to cause to
be made, all necessary and proper repairs, replacements and renewals so that at all times the operation of
the Enterprise may be properly and advantageously conducted.
SECTION 709. Rates, Fees and Charges; Enforcement. (a) The City shall at all times
prescribe, revise and collect rates, fees and charges for the use or service of the Enterprise as provided in
the Act and so that in each twelve month period such rates, fees and charges, together with other
Revenues reasonably expected to be available during such period, are reasonably expected to yield Net
Revenues during such twelve month period sufficient for the payment of the sum of the following:
(1) An amount equal to the sum of 1.20 times the Maximum Annual Debt Service;
provided, however, that in computing the amount of Maximum Annual Debt Service for
purposes of this subsection (a)(1), the amount of Debt Service coming due in any Bond
Years shall be reduced by the full amount of the Refundable Credits which the City
expects to receive in such Bond Year.
(2) The amount, if any, to be paid during such twelve month period into the Reserve
Account in the Debt Service Fund (other than amounts required to be paid into such
Account out of the proceeds of Bonds); and
(3) All other charges or liens whatsoever payable out of Revenues during such
twelve month period, and, to the extent not otherwise provided for, all amounts payable
on Subordinated Indebtedness.
(b) Promptly upon any material change in the circumstances which were not
contemplated at the time such rates and charges were most recently reviewed, but not less frequently than
once in each Fiscal Year, the City shall review the rates and charges so established and shall promptly
revise such rates and charges as necessary to comply with the foregoing requirements, provided that such
rates and charges shall in any event produce moneys sufficient to enable the City to comply with all its
covenants under the Resolution.
(c) No free service or service otherwise than in accordance with the established
rates, fees and charges shall be furnished by the Enterprise, which rates, fees and charges shall not permit
the granting of preferential rates, fees or charges among the users of the same class of customers. If and
to whatever extent the City receives the services and facilities of the Enterprise, it shall pay for such
services and facilities according to the City’s established rate schedule, and the amounts so paid shall be
included in the amount of Revenues.
(d) The City shall compel the prompt payment of rates, fees, rentals and charges
imposed for service rendered by the Enterprise, and to that end will vigorously enforce all of the
provisions of any ordinance or resolution of the City having to do with wastewater charges and any other
Enterprise charges, and all of the rights and remedies permitted the City under law. The City by this
10220-0009\1134960v6.doc
33
Section expressly covenants and agrees to exercise and enforce every right and remedy legally available
to it to the end that such rates, fees, and charges will be enforced and promptly collected to the full extent
of the law.
SECTION 710. Maintenance of Insurance; Reconstruction; Application of Insurance
Proceeds. (a) The City shall provide protection for the Enterprise in accordance with Prudent Utility
Practice. Said protection may consist of insurance, self-insurance and indemnities. The City will keep, or
cause to be kept, the works, plants and facilities comprising the properties of the Enterprise insured, and
will carry such other insurance against fire and other risks, accidents or casualties at least to the extent
and of the kinds that insurance is usually carried by utilities operating like properties. Any insurance shall
be in the form of policies or contracts for insurance with insurers of good standing, shall be payable to the
City and may provide for such deductibles, exclusions, limitations, restrictions and restrictive
endorsements customary in policies for similar coverage issued to entities operating properties similar to
the properties of the Enterprise. Any self insurance shall be in the amounts, manner and of the type
provided by entities operating properties similar to the properties of the Enterprise. Within 150 days after
the close of each Fiscal Year the City will file with the Trustee a certificate (1) describing in reasonable
detail the insurance then in effect and any program of self insurance then in effect pursuant to the
requirements of this paragraph and stating whether such insurance complies in all respects with such
requirements, and (2) stating whether during such year the Enterprise has suffered damage or destruction
in an amount of more than $500,000 and, if so, the amount of insurance proceeds received on account of
such damage or destruction and specifying the reasonable and necessary cost of reconstruction or
replacement.
(b) In the event of any loss or damage to the Enterprise covered by insurance, the
City will, with respect to each such loss, promptly repair, reconstruct or replace the parts of the Enterprise
affected by such loss or damage to the extent necessary to the proper conduct of the operation of the
business of the Enterprise, shall cause the proceeds of such insurance to be applied for that purpose to the
extent required therefor, and pending such application shall hold the proceeds of any insurance policy
covering such damage or loss in trust to be applied for that purpose to the extent required therefor. Any
excess insurance proceeds received by the City shall be transferred to the Sewer Enterprise Fund.
(c) Notwithstanding the provisions of subsections (a) and (b) of this Section 710, the
City shall not be required to provide such protection with respect to the City’s interest in the Hyperion
Treatment Plant and related facilities which are under the management and control of The City of Los
Angeles.
SECTION 711. Accounts and Reports. (a) The City shall keep or cause to be kept
proper books of record and account (separate from all other records and accounts) in which complete and
correct entries shall be made of its transactions relating to the Enterprise and each Fund and Account
established under the Resolution and all other books and papers of the City, including insurance policies,
relating to the Enterprise, shall at all times be subject to the inspection of the Trustee and the Holders of
an aggregate of not less than 5% in principal amount of the Bonds then Outstanding or their
representatives duly authorized in writing.
(b) The Trustee shall advise the City in the account statements of the Trustee provided to
the City after the end of each calendar month of the transactions during such month period relating to
each Fund and Account held by it under the Resolution. The City shall advise the Trustee promptly after
the end of each fiscal quarter of transactions during such quarter relating to each Fund held by it under the
Resolution.
10220-0009\1134960v6.doc
34
(c) The City shall annually, within 150 days after the close of each Fiscal Year (the first
such report to be filed with respect to the Fiscal Year ending June 30, 2009), file with the Trustee, and
otherwise as provided by law, a financial statement in reasonable detail for the preceding Fiscal Year
showing the Revenues, all expenditures from the Revenues for operation and maintenance of the
Enterprise and other expenditures from the Revenues applicable to the Enterprise, together with a balance
sheet in reasonable detail reflecting the financial condition of the City, including the balances of all funds
relating to the Enterprise as of the end of such Fiscal Year, which financial statement and balance sheet
shall be accompanied by a Certificate of the Chief Financial Officer of the City. Such Certificate shall
also state whether or not, to the knowledge of the signer, the City is in default with respect to any of the
covenants, agreements or conditions on its part contained in the Resolution, and if so, the nature of such
default.
(d) The reports, statements and other documents required to be furnished to the Trustee
pursuant to any provisions of the Resolution shall be available for the inspection of Bondholders at the
office of the Trustee and shall be mailed to each Bondholder who shall file a written request therefor with
the City. The City may charge for such reports, statements and other documents, a reasonable fee to
cover reproduction, handling and postage.
SECTION 712. Payment of Taxes and Charges. The City will from time to time duly
pay and discharge, or cause to be paid and discharged, all taxes, assessments and other governmental
charges, or required payments in lieu thereof, lawfully imposed upon the properties of the City or upon
the rights, revenues, income, receipts, and other moneys, securities and funds of the City when the same
shall become due (including all rights, moneys and other property transferred, assigned or pledged under
the Resolution), and all lawful claims for labor and material and supplies, except those taxes, assessments,
charges or claims which the City shall in good faith contest if the City shall in all such cases have set
aside on its books reserves deemed adequate with respect thereto.
SECTION 713. No Diminution of Rights. The City will not enter into any contract or
arrangement, nor take any action, the results of which might impair or diminish the rights of the Holders
of the Bonds. The City shall not, without a certificate or opinion of the City Engineer, or of an
independent engineer of recognized standing qualified to pass on questions relating to the financial
conditions of wastewater system operations, stating that such action will not materially impair or diminish
the rights of the Holders of the Bonds, voluntarily give up any service area of the Enterprise, and the City
shall in good faith resist all efforts which may result in the diminution of such service area. The City
shall not surrender its power and authority to fix and maintain rates and conditions for services of the
Enterprise, and the City shall in good faith resist all efforts which may result in the abridgement or
diminution of any such power and authority.
SECTION 714. Governmental Reorganization. Notwithstanding any other provisions
of this Resolution, this Resolution shall not prevent any lawful reorganization of the governmental
structure of the City, including a merger or consolidation of the City with another public body or the
transfer of a public function of the City to another public body, provided that any reorganization which
affects the Enterprise shall provide that the Enterprise shall be continued as a single enterprise and that
any public body which succeeds to the ownership and operation of the Enterprise shall also assume all
rights, powers, obligations, duties and liabilities of the City under this Resolution and pertaining to all
Bonds. Except as permitted in this Section 714, the City shall not cause or permit its corporate existence
to be abolished and shall resist all attempts substantially to contract or diminish the territorial limits of the
City or the service area of the Enterprise.
10220-0009\1134960v6.doc
35
SECTION 715. Tax Covenants. (a) The City covenants that, in order to maintain the
exclusion from gross income for Federal income tax purposes of the interest on the Bonds, and for no
other purpose, the City will satisfy, or take such actions as are necessary to cause to be satisfied, each
provision of the Code necessary to maintain such exclusion. In furtherance of this covenant the City
agrees to comply with such written instructions as may be provided by Bond Counsel.
(b) The City covenants that no part of the proceeds of the Bonds shall be used,
directly or indirectly, to acquire any “investment property,” as defined in section 148 of the Code, which
would cause the Bonds to become “arbitrage bonds” within the meaning of section 148 of the Code, as in
effect from time to time, or under applicable Treasury regulations promulgated thereunder. In order to
assure compliance with the rebate requirements of section 148 of the Code, the City further covenants that
it will pay or cause to be paid to the United States Treasury Department the amounts necessary to satisfy
the requirements of section 148(f) of the Code, and that it will establish such accounting procedures as are
necessary to adequately determine, account for and pay over any such amount or amounts required to be
paid to the United States in a manner consistent with the requirements of section 148 of the Code, such
covenants to survive the defeasance of the Bonds.
(c) The City covenants that it will not take any action or omit to take any action,
which action or omission, if reasonably expected on the date of initial execution and delivery of the
Bonds, would result in a loss of exclusion from gross income for purposes of Federal income taxation,
under section 103 of the Code, of interest on the Bonds.
(d) The City covenants that it will not use or permit the use of any property financed
with the proceeds of the Bonds by any person (other than a state or local governmental unit) in such
manner or to such extent as would result in a loss of exclusion of the interest on the Bonds from gross
income for Federal income tax purposes under section 103 of the Code.
(e) Notwithstanding any provision of this Resolution, and except as provided below,
the City covenants that none of the moneys contained in any of the funds or accounts created pursuant to
the Resolution shall be: (1) used in making loans guaranteed by the United States (or any agency or
instrumentality thereof), (2) invested directly or indirectly in a deposit or account insured by the Federal
Deposit Insurance Corporation, National Credit Union Administration or any other similar Federally
chartered corporation, or (3) otherwise invested directly or indirectly in obligations guaranteed (in whole
or in part) by the United States (or any agency or instrumentality thereof); provided, however, that the
above restrictions do not apply to: (i) the investment of moneys held in the Debt Service Fund or any
other “bona fide debt service fund” as defined for purposes of Section 148 of the Code, (ii) investment in
direct obligations of the United States Treasury, (iii) investment in obligations guaranteed by the Federal
National Mortgage Association, Government National Mortgage Association, or the Federal Home Loan
Mortgage Corporation, (iv) investment in obligations issued pursuant to section 21B(d)(3) of the Federal
Home Loan Bank Act, as amended by section 511(a) of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, (v) investments permitted under regulations issued pursuant to section
149(b)(3)(B) of the Code, or (vi) such other investments permitted under the Resolution as, in the opinion
of Bond Counsel, do not jeopardize the exclusion from gross income for Federal income tax purposes of
interest on the Bonds.
SECTION 716. Rights and Licenses. The City shall at all times undertake reasonable
efforts to perfect, protect and maintain all rights, permits, licenses, exemptions and claims necessary for
the operation of the Enterprise.
10220-0009\1134960v6.doc
36
SECTION 717. General. (a) The City shall do and perform or cause to be done and
performed all acts and things required to be done or performed by or on behalf of the City under the
provisions of the Act and the Resolution.
(b) Upon the date of authentication and delivery of any of the Bonds, all conditions,
acts and things required by law and the Resolution to exist, to have happened and to have been performed
precedent to and in the issuance of such Bonds shall exist, have happened and have been performed and
the issue of such Bonds, together with all other indebtedness of the City, shall comply in all respects with
the applicable laws of the State of California.
SECTION 718. Notification to Rating Agency. The City hereby agrees to furnish to
any rating agency which shall have issued a rating on any Series of Bonds written notification of (a) any
change in the Trustee or (b) any material change in the Resolution.
SECTION 719. Refundable Credits. The City hereby agrees to submit all
documentation, and take all actions, as may be required to receive and collect the Refundable Credits, if
any, with respect to a Series of Bonds, when due, and to the extent permitted by the applicable provisions
of the Tax Code, the City shall direct that the payment of the Refundable Credits be made directly to the
Trustee by the federal government. Any Refundable Credits collected or received by the City shall be
deemed to be held, and to have been collected or received by the City as agent of the Trustee and shall
forthwith be paid by the City to the Trustee for deposit in the Debt Service Account of the Debt Service
Fund.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
SECTION 801. Events of Default. Each of the following events is hereby defined as
and declared to be and shall constitute an Event of Default:
(a) if default shall be made in the due and punctual payment of the principal or
Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity
or by call or proceedings for redemption, or otherwise;
(b) if default shall be made in the due and punctual payment of any installment of
interest on any Bond or the unsatisfied balance of any Sinking Fund Installment, when and as such
interest installment or Sinking Fund Installment shall become due and payable;
(c) if default shall be made by the City in the performance or observance of any
other of the covenants, agreements or conditions on its part in the Resolution or in the Bonds contained,
and such default shall have continued for a period of 60 days after written notice specifying such default
and requiring that it shall have been remedied is given to the City by the Trustee or to the City and to the
Trustee by the Holders of not less than 25% in principal amount of the Bonds Outstanding; or
(d) if the City shall commence a voluntary case under the Federal bankruptcy laws,
as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall, other than to secure the Bonds, consent to the appointment
of or taking possession by a custodian or receiver or liquidator or trustee or assignee or sequestrator (or
similar official) of it or of its property, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as such debts become due or shall take any action in furtherance of any
10220-0009\1134960v6.doc
37
of the foregoing; then, and in each and every such case, so long as such Event of Default shall not have
been remedied, unless the principal of all the Bonds shall have already become due and payable, either
the Trustee (by notice in writing to the City), or the Holders of not less than 25% in principal amount of
the Bonds Outstanding (by notice in writing to the City and the Trustee), may declare the principal of all
the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and
upon any such declaration the same shall become and be immediately due and payable, anything in the
Resolution or in any of the Bonds contained to the contrary notwithstanding. The right of the Trustee or
of the Holders of not less than 25% in principal amount of the Bonds to make any such declaration as
aforesaid, however, is subject to the condition that if, at any time after such declaration, but before the
Bonds shall have matured by their terms, all overdue installments of interest upon the Bonds, together
with interest on such overdue installments of interest to the extent permitted by law and the reasonable
and proper charges, expenses and liabilities of the Trustee, and all other sums then payable by the City
under the Resolution (except the principal of, and interest accrued since the next preceding interest date
on, the Bonds due and payable solely by virtue of such declaration) shall either be paid by or for the
account of the City or provision satisfactory to the Trustee shall be made for such payment, and all
defaults under the Bonds or under the Resolution (other than the payment of principal and interest due
and payable solely by reason of such declaration) shall be made good or be secured to the satisfaction of
the Trustee or provisions deemed by the Trustee to be adequate shall be made therefor, then and in every
such case the Holders of a majority in principal amount of the Bonds Outstanding, by written notice to the
City and to the Trustee, may rescind such declaration and annul such default in its entirety, or, if the
Trustee shall have acted itself, and if there shall not have been theretofore delivered to the Trustee written
direction to the contrary by the Holders of a majority in principal amount of the Bonds then Outstanding,
then any such declaration shall ipso facto be deemed to be rescinded and any such default and its
consequences shall ipso facto be deemed to be annulled, but no such rescission and annulment shall
extend to or affect any subsequent default or impair or exhaust any right or power consequent thereon.
Notwithstanding anything to the contrary expressed in this Resolution, the Trustee shall
not be deemed to have knowledge of any Event of Default hereunder unless and until it shall have actual
knowledge thereof, or shall have received written notice thereof, at its principal corporate trust office in
Los Angeles, California. Except as otherwise expressly provided herein, the Trustee shall not be bound to
ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or
agreements herein or of any of the documents executed in connection with the Bonds or as to the
existence of an Event of Default hereunder or thereunder.
SECTION 802. Accounting and Examination of Records After Default. (a) The City
covenants that if an Event of Default shall have occurred and shall not have been remedied, the books of
record and accounts of the City and all other records relating to the Enterprise shall at all times be subject
to the inspection and use of the Trustee and of its agents and attorneys.
(b) The City covenants that if an Event of Default shall have occurred and shall not
have been remedied, the City, upon demand of the Trustee, will account, as if it were the trustee of an
express trust, for all Revenues, Refundable Credits and other moneys, securities and funds pledged or
held under the Resolution for such period as shall be stated in such demand.
SECTION 803. Application of Revenues and Other Moneys After Default. (a) The
City covenants that if an Event of Default shall have occurred and shall not have been remedied, the City,
upon the demand of the Trustee, shall pay over or cause to be paid over to the Trustee (1) forthwith, all
moneys, securities and funds then held by the City in any Fund under the Resolution, and (2) all
Revenues and Refundable Credits as promptly as practicable after receipt thereof.
10220-0009\1134960v6.doc
38
(b) During the continuance of an Event of Default, the Trustee shall apply all
moneys, securities, funds, Revenues and Refundable Credits received by the Trustee pursuant to any right
given or action taken under the provisions of this Article as follows and in the following order:
(1) Fees and expenses of Fiduciaries--to the payment of the reasonable and proper
fees, charges, expenses and liabilities of the Fiduciaries;
(2) Operating Expenses--to the payment of the amounts required for reasonable and
necessary Operating Expenses and for the reasonable renewals, repairs and replacements
of the Enterprise necessary in the judgment of the Trustee (or its agent or agents which
are actively managing the Enterprise) to prevent a loss of Revenues. For this purpose the
books of record and accounts of the City relating to the Enterprise shall at all times be
subject to the inspection of the Trustee and its representatives and agents during the
continuance of such Event of Default;
(3) Principal or Redemption Price and Interest -- to the payment of the interest and
principal or Redemption Price then due on the Bonds, as follows:
(i) unless the principal of all of the Bonds shall have become due and
payable,
First: Interest--to the payment to the persons entitled thereto of all installments
of interest then due in the order of the maturity of such installments, together
with accrued and unpaid interest on the Bonds theretofore called for redemption,
and, if the amount available shall not be sufficient to pay in full any installment
or installments maturing 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: Principal or Redemption Price--to the payment to the persons entitled
thereto of the unpaid principal or Redemption Price of any Bonds which shall
have become due, whether at maturity or by call for redemption, in the order of
their due dates, and, if the amount available shall not be sufficient to pay in full
all the Bonds due on any date, then to the payment thereof ratably, according to
the amounts of principal or Redemption Price due on such date, to the persons
entitled thereto, without any discrimination or preference.
(ii) if the principal of all of the Bonds shall have become due and payable, to
the payment of the principal and interest then due and unpaid upon the Bonds
without preference or priority of principal over interest or of interest over
principal, or of any installment of interest over any other installment of interest,
or of any Bond over any other Bond, ratably, according to the amounts due
respectively for principal and interest, to the persons entitled thereto without any
discrimination or preference except as to any difference in the respective rates of
interest specified in the Bonds.
(c) If and whenever all overdue installments of interest on all Bonds, together with
the reasonable and proper fees, charges, expenses and liabilities of the Fiduciaries, and all other sums
payable by the City under the Resolution, including the principal and Redemption Price of and accrued
unpaid interest on all Bonds which shall then be payable, shall either be paid by or for the account of the
10220-0009\1134960v6.doc
39
City, or provision satisfactory to the Trustee shall be made for such payment, and all defaults under the
Resolution or the Bonds shall be made good or secured to the satisfaction of the Trustee or provision
deemed by the Trustee to be adequate shall be made therefor, the Trustee shall pay over to the City all
moneys, securities and funds then remaining unexpended in the hands of the Trustee (except moneys,
securities and funds deposited or pledged, or required by the terms of the Resolution to be deposited or
pledged, with the Trustee), and thereupon the City and the Trustee shall be restored, respectively, to their
former positions and rights under the Resolution. No such payment over to the City by the Trustee nor
such restoration of the City and the Trustee to their former positions and rights shall extend to or affect
any subsequent default under the Resolution or impair any right consequent thereon.
SECTION 804. Appointment of Receiver. The Trustee shall have the right to apply in
an appropriate proceeding for the appointment of a receiver of the Enterprise.
SECTION 805. Proceedings Brought by Trustee. (a) If an Event of Default shall have
occurred and shall not have been remedied, then and in every such case, the Trustee, by its agents and
attorneys, may proceed, and upon written request of the Holders of not less than 25% in principal amount
of the Bonds Outstanding shall proceed, to protect and enforce its rights and the rights of the Holders of
the Bonds under the Resolution forthwith by a suit or suits in equity or at law, whether for the specific
performance of any covenant herein contained, or in aid of the execution of any power herein granted or
any remedy granted under the Act, or for an accounting against the City as if the City were the trustee of
an express trust, or in the enforcement of any other legal or equitable right as the Trustee, being advised
by counsel, shall deem most effectual to enforce any of its rights or to perform any of its duties under the
Resolution.
(b) All rights of action under the Resolution may be enforced by the Trustee without
the possession of any of the Bonds or the production thereof at the trial or other proceedings, and any
such suit or proceedings instituted by the Trustee shall be brought in its name.
(c) The holders of not less than a majority in principal amount of the Bonds at the
time Outstanding may direct 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, provided that the
Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by
counsel that the action or proceeding so directed may not lawfully be taken, or if the Trustee in good faith
shall determine that the action or proceeding so directed would involve the Trustee in personal liability or
be unjustly prejudicial to the Bondholders not parties to such direction.
The Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in accordance with the provisions of this subsection (c).
(d) Upon commencing a suit in equity or upon other commencement of judicial
proceedings by the Trustee to enforce any right under the Resolution, the Trustee shall be entitled to
exercise any and all rights and powers conferred in the Resolution and provided to be exercised by the
Trustee upon the occurrence of any Event of Default.
(e) Regardless of the occurrence of an Event of Default, the Trustee shall have
power to, but unless requested in writing by the Holders of a majority in principal amount of the Bonds
then Outstanding, and furnished with reasonable security and indemnity, shall be under no obligation to,
institute and maintain such suits and proceedings as it may be advised shall be necessary or expedient to
prevent any impairment of the security under the Resolution by any acts which may be unlawful or in
10220-0009\1134960v6.doc
40
violation of the Resolution, and such suits and proceedings as the Trustee may be advised shall be
necessary or expedient to preserve or protect its interests and the interests of the Bondholders.
SECTION 806. Restriction on Bondholder’s Action. (a) No Holder of any Bond shall
have any right to institute any suit, action or proceeding at law or in equity for the enforcement of any
provision of the Resolution or the execution of any trust under the Resolution or for any remedy under the
Resolution, unless such Holder shall have previously given to the Trustee written notice of the happening
of an Event of Default, as provided in this Article, and the Holders of at least 25% in principal amount of
the Bonds then Outstanding shall have filed a written request with the Trustee, and shall have offered it
reasonable opportunity, either to exercise the powers granted in the Resolution or by the Act or by the
laws of California or to institute such action, suit or proceeding in its own name, and unless such Holders
shall have offered to the Trustee adequate security and indemnity against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee shall have refused to comply with such request
for a period of 60 days after receipt by it of such notice, request and offer of indemnity, it being
understood and intended that no one or more Holders of Bonds shall have any right in any manner
whatever by his or their action to affect, disturb or prejudice the pledge created by the Resolution, or to
enforce any right under the Resolution, except in the manner therein provided; and that all proceedings at
law or in equity to enforce any provision of the Resolution shall be instituted, had and maintained in the
manner provided in the Resolution and for the equal benefit of all Holders of the Outstanding Bonds,
subject only to the provisions of Section 702.
(b) Nothing in the Resolution contained shall affect or impair the obligation of the
City, which is absolute and unconditional, to pay at the respective dates of maturity and places therein
expressed the principal of and premium, if any, and interest on the Bonds to the respective Holders
thereof, or affect or impair the right of action, which is also absolute and unconditional, of any Holder to
enforce such payment of his Bond.
SECTION 807. Remedies Not Exclusive. No remedy by the terms of the Resolution
conferred upon or reserved to the Trustee or the Bondholders is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in addition to every other
remedy given under the Resolution or existing at law, including under the Act, or in equity or by statute
on or after the date of adoption of the Resolution.
SECTION 808. Effect of Waiver and Other Circumstances. (a) No delay or omission
of the Trustee or any Bondholder to exercise any right or power arising upon the happening of an Event
of Default shall impair any right or power or shall be construed to be a waiver of any such Event of
Default or be an acquiescence therein; and every power and remedy given by this Article to the Trustee or
to the Bondholders may be exercised from time to time and as often as may be deemed expedient by the
Trustee or by the Bondholders.
(b) The Holders of not less than 66-2/3% in aggregate principal amount of the Bonds
at the time Outstanding, or their attorneys-in-fact duly authorized, may on behalf of the Holders of all of
the Bonds waive any past default under the Resolution and its consequences, except a default in the
payment of interest on or principal of or premium, if any, on any of the Bonds. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon.
SECTION 809. Notice of Default. The Trustee shall, as soon as practicable after
receipt of knowledge of an Event of Default, mail written notice of the occurrence of any Event of
Default to each registered owner of Bonds then Outstanding at his address, if any, appearing on the
registration books of the City maintained by the Trustee as Bond Registrar; provided that notice may be
10220-0009\1134960v6.doc
41
withheld in the case of a non-monetary default if the Trustee deems such withholding to be in the interests
of the Holders
ARTICLE IX
CONCERNING THE FIDUCIARIES
SECTION 901. Trustee; Appointment and Acceptance of Duties. The Trustee shall
signify its acceptance of the duties and obligations imposed upon it by the Resolution and all other
agreements with the City by executing and delivering to the City a written acceptance thereof in the form
of Exhibit A hereto, and by executing such acceptance, the Trustee shall be deemed to have accepted such
duties and obligations with respect to all the Bonds thereafter to be validly issued, but only, however,
upon the terms and conditions set forth in the Resolution.
SECTION 902. Paying Agents; Appointment and Acceptance of Duties. (a) The City
shall appoint one or more Paying Agents for the Bonds of each Series, and may at any time or from time
to time appoint one or more other Paying Agents having the qualifications set forth in Section 913 for a
successor Paying Agent. The Trustee may be appointed a Paying Agent.
(b) Each Paying Agent shall signify its acceptance of the duties and obligations
imposed upon it by the Resolution by executing and delivering to the City and to the Trustee a written
acceptance thereof.
(c) Unless otherwise provided, the principal corporate trust offices of the Paying
Agents are designated as the respective offices or agencies of the City for the payment of the interest on
and principal or Redemption Price of the Bonds.
SECTION 903. Responsibilities of Fiduciaries. (a) The recitals herein and in the
Bonds contained shall be taken as the statements of the City, and no Fiduciary assumes any responsibility
for the correctness of the same. No Fiduciary makes any representation as to the validity or sufficiency of
the Resolution or of any Bonds issued thereunder or as to the security afforded by the Resolution, and no
Fiduciary shall incur any liability in respect thereof. The Trustee shall, however, be responsible for its
representation contained in its certificate of authentication on the Bonds. No Fiduciary shall be under any
responsibility or duty with respect to the application of any moneys paid by such Fiduciary in accordance
with the provisions of the Resolution to or upon the order of the City or to any other Fiduciary. No
Fiduciary shall be under any obligation or duty to perform any act which would involve it in expense or
liability or to institute or defend any suit in respect thereof, or to advance any of its own moneys, unless
properly indemnified. Subject to the provisions of subsection (b) of this Section 903, no Fiduciary shall
be liable in connection with the performance of its duties hereunder except for its own negligence or
misconduct. No Fiduciary shall be liable for any error of judgment, made in good faith, unless it is
proved that such Fiduciary was negligent in ascertaining the pertinent facts.
(b) The Trustee, prior to the occurrence of an Event of Default and after the curing
or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in the Resolution. In case an Event of Default has occurred (which
has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by the
Resolution, and use the same degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs. Any provision of the Resolution relating to
action taken or to be taken by the Trustee or to evidence upon which the Trustee may rely shall be subject
to the provisions of this Section 903.
10220-0009\1134960v6.doc
42
(c) The Trustee has no obligation or liability to the Bondholders for the payment of
interest, principal or Redemption Price with respect to the Bonds; but rather the Trustee’s sole obligations
are to administer, for the benefit of the City and the Bondholders, the various Funds and Accounts
established in the Resolution and held by the Trustee.
(d) The Fiduciaries may execute any of the trusts or powers hereof and perform the
duties required of them hereunder by or through attorneys, agents, or receivers, and shall be entitled to
advice of counsel concerning all matters of trust and their duties hereunder, and no Fiduciary shall be
answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with
reasonable care.
(e) No provision of this Resolution shall require any Fiduciary to expend or risk its
own funds or otherwise incur any financial liability in the performance or exercise of any of its duties
hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to
it.
(f) The permissive right of the Fiduciaries to do things enumerated in this Resolution
shall not be construed as a duty.
SECTION 904. Evidence on Which Fiduciaries May Act. (a) Each Fiduciary, upon
receipt of any notice, resolution, request, consent, order, certificate, report, opinion, bond, or other paper
or document furnished to it pursuant to any provision of the Resolution, shall examine such instrument to
determine whether it conforms to the requirements of the Resolution and shall be protected in acting upon
any such instrument believed by it to be genuine and to have been signed or presented by the proper party
or parties. Each Fiduciary may reasonably consult with counsel, who may or may not be of counsel to the
City, and the opinion of such counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by it under the Resolution in good faith and in accordance therewith.
(b) Whenever any Fiduciary shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering any action under the Resolution, such matter (unless
other evidence in respect thereof be therein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate of an Authorized Officer of the City, and such certificate shall be
full warrant for any action taken or suffered in good faith under the provisions of the Resolution upon the
faith thereof; but in its discretion the Fiduciary may in lieu thereof accept other evidence of such fact or
matter or may require such further or additional evidence as may seem reasonable to it.
(c) Except as otherwise expressly provided in the Resolution, any request, order,
notice or other direction required or permitted to be furnished pursuant to any provision thereof by the
City to any Fiduciary shall be sufficiently executed in the name of the City by an Authorized Officer of
the City.
SECTION 905. Compensation. Prior to its appointment, each Fiduciary shall file with
the City a negotiated schedule of anticipated fees and charges for services to be performed pursuant to the
Resolution. The City shall pay to each Fiduciary from time to time pursuant to such schedule reasonable
compensation for all services rendered under the Resolution, and also all reasonable expenses, charges,
counsel fees and other disbursements, including those of its attorneys, agents, and other persons not
regularly in is employ, incurred in and about the performance of their powers and duties under the
Resolution, and each Fiduciary shall have a lien therefor on any and all funds at any time held by it under
10220-0009\1134960v6.doc
43
the Resolution. Subject to the provisions of Section 903 and to the extent permitted by law, the City
further agrees to indemnify and hold harmless each Fiduciary and their officers, employees and agents
from and against any and all losses, claims, damages, liabilities or expenses, of every conceivable kind,
character and nature whatsoever, including, but not limited to, losses, claims, damages, liabilities, or
expenses arising out of, resulting from or in any way connected with (a) the Enterprise to be financed, or
the conditions, occupancy, use, possession, conduct or management of, or work done in or about, or from
the planning, design, acquisition, installation or construction of such facilities or any part thereof; (b) the
sale of any Bonds and the carrying out of any of the transactions contemplated by the Bonds or the
Resolution; (c) any untrue statement or alleged untrue statement of any material fact or omission or
alleged omission to state a material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading in any official statement or other disclosure
document utilized in connection with the issuance and sale of the Bonds; and (d) the acceptance and
performance of the duties and obligations of the Trustee under this Resolution. The City’s obligations
hereunder shall remain valid and binding notwithstanding maturity and payment of the Bonds.
SECTION 906. Certain Permitted Acts. Any Fiduciary may become the owner of any
Bonds, with the same rights it would have if it were not a Fiduciary. To the extent permitted by law, any
Fiduciary may act as depositary 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 Bondholders or to effect
or aid in any reorganization growing out of the enforcement of the Bonds or the Resolution, whether or
not any such committee shall represent the Holders of a majority in principal amount of the Bonds then
Outstanding.
SECTION 907. Resignation of Trustee. The Trustee may at any time resign and be
discharged from the duties and obligations created by the Resolution by giving not less than 60 days’
written notice to the City, and mailing notice thereof, specifying the date when such resignation shall take
effect, to the registered owners of the Bonds then Outstanding, and such resignation shall take effect upon
the day specified in such notice unless previously a successor shall have been appointed by the City or the
Bondholders as provided in Section 909, in which event such resignation shall take effect immediately on
the appointment of such successor.
SECTION 908. Removal of Trustee. The Trustee may be removed at any time by an
instrument or concurrent instruments in writing, filed with the Trustee, and signed by the Holders of a
majority in principal amount of the Bonds then Outstanding or their attorneys-in-fact duly authorized,
excluding any Bonds held by or for the account of the City. The City may remove the Trustee at any
time, except during the existence of an Event of Default, for cause.
SECTION 909. Appointment of Successor Trustee. (a) In case at any time the Trustee
shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or if a receiver, liquidator or conservator of the Trustee, or of its property, shall be appointed,
or if any public officer shall take charge or control of the Trustee, or of its property or affairs, a successor
may be appointed by the Holders of a majority in principal amount of the Bonds then Outstanding,
excluding any Bonds held by or for the account of the City, by an instrument or concurrent instruments in
writing signed and acknowledged by such Bondholders or by their attorneys-in-fact duly authorized and
delivered to such successor Trustee, notification thereof being given to the City and the predecessor
Trustee; provided, nevertheless, that unless a successor Trustee shall have been appointed by the
Bondholders as aforesaid, the City by a duly executed written instrument signed by an Authorized Officer
of the City shall forthwith appoint a Trustee to fill such vacancy until a successor Trustee shall be
appointed by the Bondholders as authorized in this Section 909. After such appointment of a successor
Trustee, the City shall mail notice of any such appointment by it or the Bondholders to the registered
10220-0009\1134960v6.doc
44
owners of the Bonds then Outstanding. Any successor Trustee appointed by the City shall, immediately
and without further act, be superseded by a Trustee appointed by the Bondholders.
(b) If in a proper case no appointment of a successor Trustee shall be made pursuant
to the foregoing provisions of this Section within 45 days after the Trustee shall have given to the City
written notice as provided in Section 907 or after a vacancy in the office of the Trustee shall have
occurred by reason of its inability to act, the Trustee or the Holder of any Bond may apply to any court of
competent jurisdiction to appoint a successor Trustee. Said court may thereupon, after such notice, if any,
as such court may deem proper, appoint a successor Trustee.
(c) Any Trustee appointed under the provisions of this Section in succession to the
Trustee shall be a bank or trust company or national banking association, having capital stock, surplus and
undivided earnings aggregating at least $50,000,000, if there be such a bank or trust company or national
banking association willing and able to accept the office on reasonable and customary terms and
authorized by law to perform all the duties imposed upon it by the Resolution.
SECTION 910. Transfer of Rights and Property to Successor Trustee. Any successor
Trustee appointed under the Resolution shall execute, acknowledge and deliver to its predecessor Trustee,
and also to the City, an instrument accepting such appointment, and thereupon such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all moneys, estates,
properties, rights, powers, duties and obligations of such predecessor Trustee, with like effect as if
originally named as Trustee; but the Trustee ceasing to act shall nevertheless, on the written request of the
City, or of the successor Trustee, execute, acknowledge and deliver such instrument of conveyance and
further assurance and do such other things as may reasonably be required for more fully and certainly
vesting and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee
in and to any property held by it under the Resolution, and shall pay over, assign and deliver to the
successor Trustee any money or other property subject to the trusts and conditions herein set forth.
Should any deed, conveyance or instrument in writing from the City be reasonably required by such
successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any
such estates, rights, power and duties, any and all such deeds, conveyances and instruments in writing
shall, on request, and so far as may be authorized by law, be executed, acknowledged and delivered by the
City. The City shall promptly notify the Paying Agents of the appointment of any such successor Trustee.
SECTION 911. Merger or Consolidation. Any company into which any Fiduciary
may be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which any Fiduciary
may sell or transfer all or substantially all of its corporate trust business, provided such company shall be
a bank or trust company organized under the laws of any state of the United States or a national banking
association and shall be authorized by law to perform all duties imposed upon it by the Resolution, shall
be the successor to such Fiduciary without the execution or filing of any paper or the performance of any
further act.
SECTION 912. Adoption of Authentication. In case any of the Bonds contemplated to
be issued under the Resolution shall have been authenticated but not delivered, any successor Trustee may
adopt the certificate of authentication of any predecessor Trustee so authenticating such Bonds and
deliver such Bonds so authenticated; and, in case any of the said Bonds shall not have been authenticated,
any successor Trustee may authenticate such Bonds in the name of the predecessor Trustee, or in the
name of the successor Trustee, and in all such cases such certificate shall have the full force which it is
anywhere in said Bonds or in the Resolution provided that the certificate of the Trustee shall have.
10220-0009\1134960v6.doc
45
SECTION 913. Resignation or Removal of Paying Agent and Appointment of
Successor. (a) Any Paying Agent may at any time resign and be discharged of the duties and
obligations created by the Resolution by giving at least 60 days’ written notice to the City, the Trustee,
and the other Paying Agents. Any Paying Agent may be removed at any time by an instrument filed with
such Paying Agent and the Trustee and signed by an Authorized Officer of the City. Any successor
Paying Agent shall be appointed by the City and shall be a bank or trust company organized under the
laws of any state of the United States or national banking association, having capital stock, surplus and
undivided earnings aggregating at least $5,000,000, and willing and able to accept the office on
reasonable and customary terms and authorized by law to perform all the duties imposed upon it by the
Resolution.
(b) In the event of the resignation or removal of any Paying Agent, such Paying
Agent shall pay over, assign and deliver any moneys held by it as Paying Agent to its successor, or if
there be no successor, to the Trustee. In the event that for any reason there shall be a vacancy in the
office of any Paying Agent, the Trustee shall act as such Paying Agent.
ARTICLE X
SUPPLEMENTAL RESOLUTIONS
SECTION 1001. Supplemental Resolutions Effective Upon Filing With the Trustee.
For any one or more of the following purposes and at any time or from time to time, a Supplemental
Resolution of the City may be adopted, which, upon the filing with the Trustee of a copy thereof certified
by an Authorized Officer of the City, shall be fully effective in accordance with its terms:
(a) To expand the definition of “Enterprise” herein to include the storm drain system
of the City;
(b) To close the Resolution against, or provide limitations and restrictions in addition
to the limitations and restrictions contained in the Resolution on, the authentication and delivery of Bonds
or the issuance of other evidences of indebtedness;
(c) To add, to the covenants and agreements of the City in the Resolution, other
covenants and agreements to be observed by the City which are not contrary to or inconsistent with the
Resolution as theretofore in effect;
(d) To add, to the limitations and restrictions in the Resolution, other limitations and
restrictions to be observed by the City which are not contrary to or inconsistent with the Resolution as
theretofore in effect;
(e) To authorize Bonds of a Series and, in connection therewith, specify and
determine the matters and things referred to in Sections 201, 202, 203, 204 or 205 hereof, and also any
other matters and things relative to such Bonds which are required by the Resolution or are not contrary to
or inconsistent with the Resolution as theretofore in effect, or to amend, modify or rescind any such
authorization, specification or determination at any time prior to the first authentication and delivery of
such Bonds;
(f) To authorize, in compliance with all applicable law, Bonds of each Series to be
issued in the form of coupon bonds registrable as to principal only and, in connection therewith, specify
and determine the matters and things relative to the issuance of such coupon Bonds, including provisions
10220-0009\1134960v6.doc
46
relating to the timing and manner of provision of any notice required to be given hereunder to the Holders
of such coupon Bonds, which are not contrary to or inconsistent with the Resolution as theretofore in
effect, or to amend, modify or rescind any such authorization, specification or determination at any time
prior to the first authentication and delivery of such coupon Bonds;
(g) To authorize, in compliance with all applicable law, Bonds of each Series to be
issued in the form of Bonds issued and held in book-entry form on the books of the City or any Fiduciary
appointed for that purpose by the City and, in connection therewith, make such additional changes herein,
not materially adverse to the rights of the Holders of the Bonds, as are necessary or appropriate to
accomplish or recognize such book-entry form Bonds and specify and determine the matters and things
relative to the issuance of such book-entry from Bonds as are appropriate or necessary;
(h) To authorize Subordinated Indebtedness of a Series and, in connection therewith,
specify and determine such matters and things relative to such Subordinated Indebtedness which are not
contrary to or inconsistent with the Resolution as theretofore in effect, or to amend, modify or rescind any
such authorization, specification or determination at any time prior to the first authentication and delivery
of such Subordinated Indebtedness;
(i) To confirm, as further assurance, any pledge or assignment under, and the
subjection to, any security interest, pledge or assignment created or to be created by, the Resolution, of
the Revenues, Refundable Credits or of any other moneys, securities or funds;
(j) To cure any ambiguity, supply any omission, or cure or correct any defect or
inconsistent provision in the Resolution;
(k) To insert such provisions clarifying matters or questions arising under the
Resolution as are necessary or desirable and are not contrary to the Resolution as theretofore in effect; or
(l) To modify any of the provisions of the Resolution in any other respect whatever,
provided that (1) such modification shall be, and be expressed to be, effective only after all Bonds of each
Series Outstanding at the date of the adoption of such Supplemental Resolution shall cease to be
Outstanding, and (2) such Supplemental Resolution shall be specifically referred to in the text of all
Bonds of any Series authenticated and delivered after the date of the adoption of such Supplemental
Resolution and of Bonds issued in exchange therefor or in place thereof.
SECTION 1002. Supplemental Resolutions Effective With Consent of Bondholders.
At any time or from time to time, a Supplemental Resolution may be adopted subject to consent by
Bondholders in accordance with and subject to the provisions of Article XI, which Supplemental
Resolution, upon the filing with the Trustee of a copy thereof certified by an Authorized Officer of the
City and upon compliance with the provisions of said Article XI, shall become fully effective in
accordance with its terms as provided in said Article XI.
SECTION 1003. General Provisions. (a) Prior to the issuance and delivery of the
2009 Series A Bonds, the terms and conditions of the Resolution and the rights and obligations of the City
and the Bondholders may be modified or amended in any respect without the consent of any person, upon
the adoption by the City of one or more Supplemental Resolutions.
(b) After the issuance and delivery of the 2009 Series A Bonds, the Resolution shall
not be modified or amended in any respect except as provided in and in accordance with and subject to
the provisions of this Article X and Article XI. Nothing in this Article X or Article XI contained shall
10220-0009\1134960v6.doc
47
affect or limit the right or obligation of the City to adopt, make, do, execute, acknowledge or deliver any
resolution, act or other instrument pursuant to the provisions of Section 704 or the right or obligation of
the City to execute and deliver to any Fiduciary any instrument which elsewhere in the Resolution it is
provided shall be delivered to said Fiduciary.
(c) Any Supplemental Resolution referred to and permitted or authorized by Section
1001 may be adopted by the City without the consent of any of the Bondholders, but shall become
effective only on the conditions, to the extent and at the time provided in said Section. Except for a
Supplemental Resolution adopted pursuant to subsection (d) of Section 1001, the copy of every
Supplemental Resolution when filed with the Trustee shall be accompanied by an Opinion of Counsel
stating that such Supplemental Resolution has been duly and lawfully adopted in accordance with the
provisions of the Resolution, is authorized or permitted by the Resolution, and is valid and binding upon
the City in accordance with its terms.
(d) The Trustee is hereby authorized to accept the delivery of a certified copy of any
Supplemental Resolution referred to and permitted or authorized by Section 1001 or 1002 and to make all
further agreements and stipulations which may be therein contained, and the Trustee, in taking such
action, shall be fully protected in relying on an Opinion of Counsel that such Supplemental Resolution is
authorized or permitted by the provisions of the Resolution.
(e) No Supplemental Resolution shall change or modify any of the rights, liabilities
or obligations of any Fiduciary without its written assent thereto.
ARTICLE XI
AMENDMENTS
SECTION 1101. Mailing. Any provision in this Article for the mailing of a notice or
other paper to Bondholders shall be fully complied with if it is mailed postage prepaid only (a) to each
registered owner of Bonds then Outstanding at his address, if any, appearing upon the registration books
of the City and (b) to the Trustee.
SECTION 1102. Powers of Amendment. Any modification or amendment of the
Resolution and of the rights and obligations of the City and of the Holders of the Bonds thereunder, in
any particular, may be made by a Supplemental Resolution, with the written consent given as provided in
Section 1103, (a) of the Holders of not less than a majority in principal amount of the Bonds Outstanding
at the time such consent is given, and (b) in case less than all of the several Series of Bonds then
Outstanding are affected by the modification or amendment, of the Holders of not less than a majority in
principal amount of the Bonds of each Series so affected and Outstanding at the time such consent is
given, and (c) in case the modification or amendment changes the terms of any Sinking Fund Installment,
of the Holders of not less than a majority in principal amount of the Bonds of the particular Series and
maturity entitled to such Sinking Find Installment and Outstanding at the time such consent is given;
provided, however, that if such modification or amendment will, by its terms, not take effect so long as
any Bonds of any specified like Series and maturity remain Outstanding the consent of the Holders of
such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose
of any calculation of Outstanding Bonds under this Section. No such modification or amendment shall
permit a change in the terms of redemption or maturity of the principal of any Outstanding Bond or of any
installment of interest thereon or a reduction in the principal amount or the Redemption Price thereof or in
the rate of interest thereon without the consent of the Holder of such Bond, or shall reduce the
percentages or otherwise affect the classes of Bonds the consent of the Holders of which is required to
10220-0009\1134960v6.doc
48
effect any such modification or amendment, or shall change or modify any of the rights, liabilities or
obligations of any Fiduciary without its written assent thereto. For the purposes of this Section, a Series
shall be deemed to be affected by a modification or amendment of the Resolution if the same materially
adversely affects or diminishes the rights of the Holders of Bonds of such Series.
SECTION 1103. Consent of Bondholders. The City may at any time adopt a
Supplemental Resolution making a modification or amendment permitted by the provisions of Section
1102 to take effect when and as provided in this Section. A copy of such Supplemental Resolution (or
brief summary thereof or reference thereto), together with a request to Bondholders for their consent
thereto, shall be mailed by the City to Bondholders, (but failure to mail such copy and request shall not
affect the validity of the Supplemental Resolution when consented to as in this Section provided). Such
Supplemental Resolution shall not be effective unless and until (a) there shall have been filed with the
Trustee (1) the written consents of Holders of the percentages of Outstanding Bonds specified in Section
1102 and (2) an Opinion of Counsel stating that such Supplemental Resolution has been duly and
lawfully adopted and filed by the City in accordance with the provisions of the Resolution, is authorized
or permitted by the Resolution, and is valid and binding upon the City and enforceable in accordance with
its terms, and (b) a notice shall have been given as hereinafter in this Section 1103 provided. Each such
consent shall be effective only if accompanied by proof of the holding, at the date of such consent, of the
Bonds with respect to which such consent is given, which proof shall be such as is permitted by Section
1202. A certificate or certificates executed by the Trustee and filed with the City stating that it has
examined such proof and that such proof is sufficient in accordance with Section 1202 shall be conclusive
that the consents have been given by the Holders of the Bonds described in such certificate or certificates
of the Trustee. Any such consent shall be binding upon the Holder of the Bonds giving such consent and,
anything in Section 1202 to the contrary notwithstanding, upon any subsequent Holder of such Bonds and
of any Bonds issued in exchange therefor (whether or not such subsequent Holder thereof has notice
thereof) unless such consent is revoked in writing by the Holder of such Bonds giving such consent or a
subsequent Holder thereof by filing with the Trustee, prior to the time when the written statement of the
Trustee hereinafter in this Section 1103 provided for is filed, such revocation and, if such Bonds are
transferable by delivery, proof that such Bonds are held by the signer of such revocation in the manner
permitted by Section 1202. The fact that a consent has not been revoked may likewise be proved by a
certificate of the Trustee filed with the City to the effect that no revocation thereof is on file with the
Trustee. At any time after the Holders of the required percentages of Bonds shall have filed their
consents to the Supplemental Resolution, the Trustee shall make and file with the City a written statement
that the Holders of such required percentages of Bonds have filed such consents. Such written statements
shall be conclusive that such consents have been so filed. At any time thereafter, notice stating in
substance that the Supplemental Resolution (which may be referred to as a Supplemental Resolution
adopted by the City on a stated date, a copy of which is on file with the Trustee) has been consented to by
the Holders of the required percentages of Bonds and will be effective as provided in this Section 1103,
may be given to Bondholders by the City by mailing such notice to Bondholders (but failure to mail such
notice shall not prevent such Supplemental Resolution from becoming effective and binding as in this
Section 1103 provided). The City shall file with the Trustee proof of the mailing thereof. A record,
consisting of the certificates or statements required or permitted by this Section 1103 to be made by the
Trustee, shall be proof of the matters therein stated. Such Supplemental Resolution making such
amendment or modification shall be deemed conclusively binding upon the City, the Fiduciaries and the
Holders of all Bonds at the expiration of 40 days after the filing with the Trustee of the proof of the
mailing of such last-mentioned notice, except in the event of a final decree of a court of competent
jurisdiction setting aside such Supplemental Resolution in a legal action or equitable proceeding for such
purpose commenced within such 40 day period; provided, however, that any Fiduciary and the City
during such 40 day period and any such further period during which any such action or proceeding may
10220-0009\1134960v6.doc
49
be pending shall be entitled in its absolute discretion to take such action, or to refrain from taking such
action, with respect to such Supplemental Resolution as they may deem expedient.
SECTION 1104. Modifications or Amendments by Unanimous Consent. The terms
and provisions of the Resolution and the rights and obligations of the City and of the Holders of the
Bonds thereunder may be modified or amended in any respect upon the adoption and filing by the City of
a Supplemental Resolution and the consent of the Holders of all of the Bonds then Outstanding, such
consent to be given as provided in Section 1103 except that no notice to Bondholders shall be required;
provided, however, that no such modification or amendment shall change or modify any of the rights or
obligations of any Fiduciary without the filing with the Trustee of the written assent thereto of such
Fiduciary in addition to the consent of the Bondholders.
SECTION 1105. Exclusion of Bonds. Bonds owned or held by or for the account of
the City shall not be deemed Outstanding for the purpose of consent or other action or any calculation of
Outstanding Bonds provided for in this Article XI, and the City shall not be entitled with respect to such
Bonds to give any consent or take any other action provided for in this Article. At the time of any consent
or other action taken under this Article, the City shall furnish the Trustee a certificate of an Authorized
Officer of the City, upon which the Trustee may rely, describing all Bonds so to be excluded.
SECTION 1106. Notation on Bonds. Bonds authenticated and delivered after the
effective date of any action taken as in Article X or this Article XI provided may, and, if the Trustee so
determines, shall bear a notation by endorsement or otherwise in form approved by the City and the
Trustee as to such action, and in that case upon demand of the Holder of any Bond Outstanding at such
effective date and presentation of his Bond for the purpose at the corporate trust office of the Trustee or
upon any transfer or exchange of any Bond Outstanding at such effective date, suitable notation shall be
made on such Bond or upon any Bond issued upon any such transfer or exchange by the Trustee as to any
such action. If the City or the Trustee shall so determine, new Bonds so modified to conform to such
action shall be prepared, authenticated and delivered and upon demand of the Holder of any Bond then
Outstanding shall be exchanged, without cost to such Bondholder, for Bonds of the same Series and
maturity then Outstanding, upon surrender of such Bonds.
ARTICLE XII
MISCELLANEOUS
SECTION 1201. Defeasance. (a) If the City shall pay or cause to be paid, or there
shall otherwise be paid, to the Holders of all Bonds the principal or Redemption Price and interest due or
to become due thereon, at the times and in the manner stipulated therein and in the Resolution, then the
pledge of Net Revenues, Refundable Credits and other moneys and securities pledged under the
Resolution and all covenants, agreements and other obligations of the City to the Bondholders, shall
thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee
shall cause an accounting for such period or periods as shall be requested by the City to be prepared and
filed with the City and, upon the request of the City, shall execute and deliver to the City all such
instruments as may be desirable to evidence such discharge and satisfaction, and the Fiduciaries shall pay
over or deliver to the City all moneys or securities held by them pursuant to the Resolution which are not
required for the payment of principal or Redemption Price, if applicable, on Bonds not theretofore
surrendered for such payment or redemption. If the City shall pay or cause to be paid, or there shall
otherwise be paid, to the Holders of all Outstanding Bonds of a particular Series, or of a particular
maturity within a Series, the principal or Redemption Price and interest due or to become due thereon, at
the times and in the manner stipulated therein and in the Resolution, such Bonds shall cease to be entitled
to any lien, benefit or security under the Resolution, and all covenants, agreements and obligations of the
10220-0009\1134960v6.doc
50
City to the Holders of such Bonds shall thereupon cease, terminate and become void and be discharged
and satisfied.
(b) Bonds or interest installments for the payment or redemption of which moneys
shall have been set aside and shall be held in trust by the Paying Agents (through deposit by the City of
funds for such payment or redemption or otherwise) at the maturity or redemption date thereof shall be
deemed to have been paid within the meaning and with the effect expressed in subsection 1 of this
Section. All Outstanding Bonds of any Series, or of any maturity within a Series, shall prior to the
maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect
expressed in subsection (a) of this Section if (1) in case any of said Bonds are to be redeemed on any date
prior to their maturity, the City shall have given to the Trustee irrevocable written instructions to the
Trustee to mail as provided in Article IV notice of redemption of such Bonds on said date, (2) there shall
have been deposited with the Trustee either moneys in an amount which shall be sufficient, or Permitted
Investments (including any Permitted Investments issued or held in book-entry form on the books of the
Department of the Treasury of the United States) the principal of and the interest on which when due will
provide moneys which, together with the moneys, if any, deposited with the Trustee at the same time,
shall be sufficient, to pay when due the principal or Redemption Price and interest due and to become due
on said Bonds on or prior to the redemption date or maturity date thereof, as the case may be, and (3) in
the event said Bonds are not by their terms subject to redemption within the next succeeding 60 days, the
City shall have given the Trustee in form satisfactory to it irrevocable instructions to mail a notice to the
Holders of such Bonds that the deposit required by (2) above has been made with the Trustee and that
said Bonds are deemed to have been paid in accordance with this Section and stating such maturity or
redemption date upon which moneys are to be available for the payment of the principal or Redemption
Price on said Bonds. Neither Permitted Investments nor moneys deposited with the Trustee pursuant to
this Section nor principal or interest payments on any such Permitted Investments shall be withdrawn or
used for any purpose other than, and shall be held in trust for, the payment of the principal or Redemption
Price and interest on said Bonds; provided that any cash received from such principal or interest payments
on such Permitted Investments deposited with the Trustee, (A) to the extent such cash will not be required
at any time for such purpose, shall be paid over to the City as received by the Trustee, free and clear of
any trust, lien or pledge securing said Bonds or otherwise existing under the Resolution, and (B) to the
extent such cash will be required for such purpose at a later date, shall, to the extent practicable, be
reinvested in Permitted Investments maturing at times and in amounts sufficient to pay when due the
principal or Redemption Price and interest to become due on said Bonds on or prior to such redemption
date or maturity date thereof, as the case may be, and interest earned from such reinvestments shall be
paid over to the City, as received by the Trustee, free and clear of any trust, lien or pledge. For the
purposes of this Section, Permitted Investments shall mean and include only such securities as are direct
obligations of the United States or obligations for the payment of which the full faith and credit of the
United States is pledged, which shall not be subject to redemption prior to their maturity other than at the
option of the holder thereof. The mathematical computations of the adequacy of such Permitted
Investments to pay when due the principal or Redemption Price of and interest on said Bonds shall be
verified by the report of an independent certified public accountant or firm of certified public accountants
employed by the City.
SECTION 1202. Evidence of Signatures and Bondholders and Ownership of Bonds.
(a) Any request, consent, revocation of consent or other instrument which the Resolution may require or
permit to be signed and executed by the Bondholders may be in one or more instruments of similar tenor
and shall be signed or executed by such Bondholders in person or by their attorneys appointed in writing.
Proof of (1) the execution of any such instrument, or of an instrument appointing any such attorney, or (2)
the holding by any person of the Bonds shall be sufficient for any purpose of the Resolution (except as
otherwise therein expressly provided) if made in the following manner, or in any other manner
10220-0009\1134960v6.doc
51
satisfactory to the Trustee, which may nevertheless in its discretion require further or other proof in cases
where it deems the same desirable:
(i) The fact and date of the execution by any Bondholder or his attorney of such
instruments may be proved by a guarantee of the signature thereon by a bank or trust
company or member of the New York Stock Exchange or by the certificate of any notary
public or other officer authorized to take acknowledgments of deeds, that the person
signing such request 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. Where such execution is by an officer of a corporation or association or a
member of a partnership, on behalf of such corporation, association or partnership, such
signature guarantee, certificate or affidavit shall also constitute sufficient proof of his
authority.
(ii) The amount of Bonds transferable by delivery held by any person executing any
instrument as a Bondholder, the date of his holding such Bonds, and the numbers and
other identification thereof, may be proved by a certificate, which need not be
acknowledged or verified, in form satisfactory to the Trustee, executed by the Trustee or
by a member of a financial firm or by an officer of a bank, trust company, insurance
company, or financial corporation or other depositary wherever situated, showing at the
date therein mentioned that such person exhibited to such member or officer or had on
deposit with such depositary the Bonds described in such certificate. Such certificate
may be given by a member of a financial firm or by an officer of any bank, trust
company, insurance company or financial corporation or depositary with respect to
Bonds owned by it, if acceptable to the Trustee.
(b) The ownership of Bonds registered otherwise than to bearer and the amount,
numbers and other identification, and date of holding the same shall be proved by the registration books.
(c) Any request or consent by the owner of any Bond shall bind all future owners of
such Bond in respect of anything done or suffered to be done by the City or any Fiduciary in accordance
therewith.
SECTION 1203. Moneys Held for Particular Bonds. The amounts held by any
Fiduciary for the payment of the interest, principal or Redemption Price 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 Holders of the Bonds.
SECTION 1204. Preservation and Inspection of Documents. All documents received
by any Fiduciary under the provisions of the Resolution shall be retained in its possession and shall be
subject at all reasonable times to the inspection of the City, any other Fiduciary, and any Bondholder and
their agents and their representatives, any of whom may make copies thereof.
SECTION 1205. Parties Interested Herein. Nothing in the Resolution expressed or
implied is intended or shall be construed to confer upon, or to give to, any person or corporation, other
than the City, the Fiduciaries and the Holders of the Bonds any right, remedy or claim under or by reason
of the Resolution or any covenant, condition or stipulation thereof; and all the covenants, stipulations,
promises and agreements in the Resolution contained by and on behalf of the City shall be for the sole
and exclusive benefit of the City, the Fiduciaries, and the Holders of the Bonds.
10220-0009\1134960v6.doc
52
SECTION 1206. No Recourse on the Bonds. No member of the City Council and no
officer, agent or employee of the City shall be individually or personally liable for the payment of the
principal or Redemption Price or interest on the Bonds.
SECTION 1207. Unclaimed Moneys. Anything in this Resolution to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the
Bonds that remain unclaimed for two years after the date when such Bonds have become due and payable,
either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the
Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the
Trustee after said date when such Bonds become due and payable, shall, at the written request of the City,
be repaid by the Trustee to the City, as its absolute property and free from trust, and the Trustee shall
thereupon be released and discharged with respect thereto and the Bondholders shall look only to the City
for the payment of such Bonds; provided, however, that before being required to make any such payment
to the City, the Trustee shall, at the expense of the City, cause to be mailed to the Holders of all such
Bonds, at their respective addresses appearing on the registration books of the City, a notice that said
moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than 30
days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned
to the City.
SECTION 1208. Severability of Invalid Provisions. If any one or more of the
covenants or agreements provided in the Resolution on the part of the City or any Fiduciary to be
performed should be contrary to law, then such covenant or covenants or agreement or agreements shall
be deemed severable from the remaining covenants and agreements, and shall in no way affect the
validity of the other provisions of the Resolution.
SECTION 1209. Repeal of Inconsistent Resolutions. Any resolution of the City, and
any part of any resolution, inconsistent with the Resolution is hereby repealed to the extent of such
inconsistency.
SECTION 1210. Saturdays, Sundays and Holidays. In any case where the date for
any transfer to any Fund or Account established by the Resolution or for the payment of the principal of,
the Redemption Price of, or interest on any Bond shall not be a Business Day in the city in which such
transfer or payment is to be made, such transfer or payment in such city may be made on the next
succeeding Business Day with the same force and effect as if made on the date provided in the Resolution
and no additional interest shall be payable on any Bond by reason of the postponement of transfer or
payment through operation of this Section 1210.
SECTION 1211. Notices. Whenever any notice is required to be given hereunder, such
notice shall be mailed by first-class mail, postage prepaid, to the following parties at the following
addresses:
If to the City: 9770 Culver Boulevard
Culver City, California 90232
Attention: Chief Financial Officer
Fax: (310) 253-5880
If to the Trustee: U.S. Bank National Association
633 West Fifth Street, 24th floor
Los Angeles, California 90071
Attention: Corporate Trust Department
Fax: (213) 615-6199
10220-0009\1134960v6.doc
53
Unless otherwise required by the City or the Trustee, any notice required to be given
hereunder in writing may be given by any form of electronic notice capable of producing a written record.
Each such party shall file with the Trustee information appropriate to receiving such form of electronic
notice.
ARTICLE XIII
BOND FORMS AND EFFECTIVE DATE
SECTION 1301. Forms of Bonds and Trustee’s Certificate of Authentication.
Subject to the provisions of the Resolution, the forms of the Bonds of each Series, and the Trustee’s
Certificate of Authentication, shall be of substantially the tenor set forth in the Supplemental Resolution
authorizing the issuance of such Bonds.
SECTION 1302. Effective Date. This Resolution shall take effect immediately.
ADOPTED, SIGNED AND APPROVED this 22nd day of June, 2009.
ATTEST:
_____________________________
__________________________ Mayor
City Clerk
10220-0009\1134960v6.doc
A-1
EXHIBIT A
ACCEPTANCE OF OFFICE OF TRUSTEE AND PAYING AGENT
[Date]
City of Culver City
9770 Culver Blvd.
Culver City, California 90232
Re: [Name of Series of Bonds]
The undersigned hereby accepts the duties and obligations of Trustee imposed upon the
undersigned by Resolution No. ___ of the City Council of the City of Culver City, California (the “City”)
adopted June 22, 2009, as supplemented by Resolution No. ___ of said City Council adopted _____
(collectively, the “Resolution”).
The undersigned in its capacity as trustee hereby also accepts the duties and obligations
of Bond Registrar and Paying Agent for the ____ Bonds of the City imposed upon the undersigned by the
Resolution.
U.S. Bank National Association
By:____________________________________
Authorized Officer
10220-0009\1134957v4.doc
CITY OF CULVER CITY, CALIFORNIA
RESOLUTION NO. ___
FIRST SUPPLEMENTAL RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF CULVER CITY, CALIFORNIA, AUTHORIZING THE
ISSUANCE OF A SERIES OF BONDS DESIGNATED “WASTEWATER
FACILITIES REFUNDING REVENUE BONDS, 2009 SERIES A”
(ADOPTED JUNE 22, 2009)
10220-0009\1134957v4.doc
TABLE OF CONTENTS
PAGE
ARTICLE I AUTHORITY AND DEFINITIONS .................................................................. 2
Section 101. Supplemental Resolution; Master Resolution Remains in Effect ................ 2
Section 102. Authority for this First Supplemental Resolution ........................................... 2
Section 103. Definitions ........................................................................................................... 2
ARTICLE II SALE OF 2009 BONDS ....................................................................................... 3
Section 201. Purchase Agreement ........................................................................................ 3
Section 202. Final Terms of Sale of 2009 Bonds .................................................................. 3
Section 203. Official Statement ............................................................................................... 3
ARTICLE III TERMS OF 2009 BONDS ................................................................................ 4
Section 301. Authorization and Purpose .............................................................................. 4
Section 302. Terms of the 2009 Bonds .................................................................................. 4
Section 303. Form, Denomination, Numbers ...................................................................... 4
Section 304. Place of Payment .............................................................................................. 4
Section 305. Redemption Terms and Prices ........................................................................ 5
Section 306. Establishment of Cost of Issuance Fund ........................................................ 5
Section 307. Application of Proceeds of Sale of 2009 Bonds .............................................. 5
Section 308. Book-Entry System ............................................................................................. 6
Section 309. Form of 2009 Bonds ........................................................................................... 6
ARTICLE IV MISCELLANEOUS .......................................................................................... 6
Section 401. Escrow Agreement ............................................................................................. 6
Section 402. Continuing Disclosure Agreement .................................................................. 6
Section 403. Qualified Tax-Exempt Obligations ................................................................... 6
Section 404. Other Acts ........................................................................................................... 7
Section 405. Effective Date .................................................................................................... 7
EXHIBIT A – FORM OF BOND ..............................................................................................A-1
EXHIBIT B – FORM OF BOND PURCHASE AGREEMENT.................................................B-1
EXHIBIT C – FORM OF ESCROW AGREEMENT .................................................................C-1
EXHIBIT D – FORM OF CONTINUING DISCLOSURE AGREEMENT ...............................D-1
10220-0009\1134957v4.doc 1
RESOLUTION NO. _____
FIRST SUPPLEMENTAL RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF CULVER CITY, CALIFORNIA,
AUTHORIZING THE ISSUANCE OF A SERIES OF BONDS
DESIGNATED “WASTEWATER FACILITIES REFUNDING
REVENUE BONDS, 2009 SERIES A”
WHEREAS, the City of Culver City (the “City”) has heretofore issued its
Wastewater Facilities Refunding Revenue Bonds, 1999 Series A (the “1999 Bonds”) in the
principal amount of $25,080,000, of which $20,720,000 remains outstanding; and
WHEREAS, the City Council of the City has heretofore adopted its Resolution
No. ____ (the “Master Resolution”) to provide for the issuance of Bonds and other obligations to
finance or refinance a portion of the Cost of the Enterprise (as such terms are defined therein);
and
WHEREAS, the City desires to issue its Wastewater Facilities Refunding
Revenue Bonds, 2009 Series A (the “2009 Bonds”) in order to refund the outstanding 1999
Bonds; and
WHEREAS, the 2009 Bonds will be issued and secured under the Master
Resolution, as supplemented by this First Supplemental Resolution of the City Council of the
City of Culver City, California, Authorizing the Issuance of a Series of Bonds Designated
“Wastewater Facilities Refunding Revenue Bonds, 2009 Series A” (the “First Supplemental
Resolution”); and
WHEREAS, all acts and things have been done and performed which are
necessary to make the 2009 Bonds, when executed and issued by the City, authenticated by the
Trustee and delivered, the valid and binding legal obligations of the City in accordance with their
terms and to make this First Supplemental Resolution a valid and binding agreement for the
security of Bonds authenticated and delivered under the Master Resolution and this First
Supplemental Resolution;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CULVER CITY AS FOLLOWS:
10220-0009\1134957v4.doc 2
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 101. Supplemental Resolution; Master Resolution Remains in Effect.
This First Supplemental Resolution is supplemental to the Master Resolution. Save and except
as supplemented by this First Supplemental Resolution, the Master Resolution shall remain in
full force and effect.
Section 102. Authority for this First Supplemental Resolution. This First
Supplemental Resolution is adopted (i) pursuant to the provisions of the City Charter and the
Revenue Bond Law of 1941, Title 5, Division 2, Part 1, Chapter 6, of the Government Code of
the State of California, as amended and supplemented (the “Act”) and (ii) in accordance with the
Master Resolution.
Section 103. Definitions. Except as provided by this First Supplemental
Resolution, all terms which are defined in Section 101 of the Master Resolution shall have the
same meanings in this First Supplemental Resolution. The following additional terms shall, for
all purposes of the Resolution, have the following meanings:
Authorized Officers shall mean the Mayor, the City Manager or the Chief
Financial Officer of the City.
Bond Year shall mean each twelve-month period extending from September 2 in
one calendar year to September 1 of the succeeding calendar year, both dates inclusive; except
that the first Bond Year with respect to the 2009 Bonds commences on the date of delivery of the
2009 Bonds and extends to and including September 1, 2010.
Continuing Disclosure Agreement shall mean the Continuing Disclosure
Agreement to be delivered pursuant to Section 602 hereof, the form of which is attached hereto
as Exhibit D.
Escrow Agent shall mean U.S. Bank National Association.
Escrow Agreement shall mean the Escrow Agreement dated as of July 1, 2009,
by and between the City and the Escrow Agent, the form of which is attached hereto as Exhibit
C.
Escrow Fund shall mean the Escrow Fund established under the Escrow
Agreement.
Purchase Agreement shall mean the Bond Purchase Agreement by and between
the City and the Underwriter, the form of which is attached hereto as Exhibit B.
Underwriter shall mean Stone & Youngberg LLC.
10220-0009\1134957v4.doc 3
1999 Bonds shall mean the City of Culver City, Wastewater Facilities Refunding
Revenue Bonds, 1999 Series A, originally issued in the aggregate principal amount of
$25,080,000, of which $20,720,000 remain outstanding.
2009 Bonds shall mean the City of Culver City, Wastewater Facilities Refunding
Revenue Bonds, 2009 Series A, issued pursuant to the Master Resolution and this First
Supplemental Resolution.
ARTICLE II
SALE OF 2009 BONDS
Section 201. Purchase Agreement. The form of Purchase Agreement by and
between the City and the Underwriter and the sale of the 2009 Bonds pursuant thereto upon the
terms and conditions set forth therein are hereby approved. Subject to the parameters set forth in
Section 202 hereof, the Authorized Officers, acting singly, are hereby authorized and directed,
for and in the name and on behalf of the City, to execute and deliver the Purchase Agreement in
substantially said form, with such changes therein as such Authorized Officer executing the same
may require or approve, including such matters as are authorized by Section 202 hereof, such
approval to be conclusively evidenced by his or her execution and delivery thereof.
Section 202. Final Terms of Sale of 2009 Bonds. The Authorized Officers,
acting singly, are hereby authorized and directed to act on behalf of the City to establish and
determine (i) the aggregate principal amount of the 2009 Bonds, which amount shall not exceed
$23,000,000; (ii) the purchase price of the 2009 Bonds and the interest rates on the 2009 Bonds,
provided that the true interest cost on the 2009 Bonds shall not exceed 5.75% per annum; and
(iii) the Underwriter’s compensation with respect to the 2009 Bonds, which shall not exceed
0.50% of the principal amount thereof.
Section 203. Official Statement. The Preliminary Official Statement relating to
the 2009 Bonds, in the form on file with the City Clerk, is hereby approved. Each of the
Authorized Officers, acting singly, are hereby authorized and directed, for and in the name and on
behalf of the City, to cause the Preliminary Official Statement in substantially said form, with
such additions or changes therein as such authorized officer may approve, to be deemed final for
the purposes of Rule 15c2-12, promulgated pursuant to the Securities and Exchange Act of 1934,
as amended. The Underwriter is hereby authorized to distribute copies of the Preliminary
Official Statement to persons who may be interested in the purchase of the 2009 Bonds.
The Authorized Officers, acting singly, are hereby authorized and directed, for
and in the name and on behalf of the City, to cause the Preliminary Official Statement to be
brought into the form of a final Official Statement, and to execute the same for and in the name
and on behalf of the City, with such additions or changes therein as the Authorized Officer
executing the same may approve (such approval to be conclusively evidenced by such Authorized
Officer’s execution and delivery thereof). The distribution and use of the final Official Statement
by the Underwriter in connection with the sale of the 2009 Bonds is hereby approved.
10220-0009\1134957v4.doc 4
ARTICLE III
TERMS OF 2009 BONDS
Section 301. Authorization and Purpose. The 2009 Bonds were authorized
pursuant to, and are entitled to the benefit, protection and security of, the provisions of the
Resolution. The 2009 Bonds are issued for the purpose of refunding the outstanding 1999
Bonds.
Section 302. Terms of the 2009 Bonds. The 2009 Bonds authorized to be
issued by the City under and subject to the terms of the Resolution and the Act shall be
designated the “City of Culver City Wastewater Facilities Refunding Revenues bonds, 2009
Series A” and shall be in the aggregate principal amount set forth in the Purchase Agreement,
subject to the provisions of Section 202 hereof.
The 2009 Bonds shall be dated as of their delivery date, shall mature on
September 1 in each of the years and in the principal amounts, and shall bear interest from their
date at the rates per annum, as set forth in the Purchase Agreement and certified in writing by the
City to the Trustee. Interest on the 2009 Bonds shall be computed on the basis of a 360-day year
of twelve 30-day months.
Interest on the 2009 Bonds shall be payable semiannually on March 1 and
September 1 of each year, commencing on March 1, 2010. Each 2009 Bond shall bear interest
until the principal sum thereof has been paid; provided, however, that if at the maturity date of
any 2009 Bond or, if the same has been duly called for redemption, at the date fixed for
redemption, funds are available for the payment or redemption thereof in full accordance with
the terms of this First Supplemental Resolution and of the Master Resolution, such 2009 Bond
shall then cease to bear interest.
The 2009 Bonds shall bear interest from the Interest Payment Date next preceding
the date of authentication thereof, unless (i) such date of authentication is during the period from
the 16th day of the month next preceding an Interest Payment Date to and including such Interest
Payment Date, in which event they shall bear interest from such Interest Payment Date, or (ii)
such date of authentication is on or before the 15th day of the month next preceding the first
Interest Payment Date, in which event they shall bear interest from their dated date; provided,
however, that if, at the time of authentication of any 2009 Bond, interest is then in default on the
Outstanding 2009 Bonds, such 2009 Bond shall bear interest from the Interest Payment Date to
which interest previously has been paid or made available for payment on the Outstanding 2009
Bonds. Principal of and redemption premiums, if any, and interest on the 2009 Bonds shall be
paid in lawful money of the United States of America.
Section 303. Form, Denomination, Numbers. The 2009 Bonds shall be issued
in fully registered form in the denomination of $5,000 or any integral multiple of $5,000. The
2009 Bonds initially issued shall be numbered as determined by the Trustee.
Section 304. Place of Payment. The principal and redemption price of the 2009
Bonds shall be payable at the corporate trust office designated by the Trustee. Interest on the
10220-0009\1134957v4.doc 5
2009 Bonds shall be payable by check or draft of the Trustee mailed to the registered owner
shown on the registration records maintained by the Trustee as Bond Registrar as of the close of
business on the 15th day of the calendar month immediately preceding the Interest Payment Date
whether or not a business day; provided, however, that at the written request of the registered
owner of at least $1,000,000 in aggregate principal amount of outstanding 2009 Bonds filed with
the Trustee prior to the 15th day of the calendar month immediately preceding an Interest
Payment Date interest on such 2009 Bonds shall be paid to such registered owner on each
succeeding Interest Payment Date (unless such request has been revoked in writing) by wire
transfer of immediately available funds to an account in the continental United States designated
in such written request.
Section 305. Redemption Terms and Prices.
The Trustee shall give notice of redemption of 2009 Bonds in accordance with the
provisions of Section 405 of the Master Resolution.
(a) Optional Redemption. The 2009 Bonds may be redeemed prior to their
maturity at the option of the City from any source of funds, as a whole on any date or in part in
any order of maturity as determined by the City or, in the absence of direction by the City, pro
rata among maturities and by lot within a maturity on any Interest Payment Date, on the
redemption date(s) and at the redemption price(s) as set forth in the Purchase Agreement and
certified in writing by the City to the Trustee, plus accrued interest thereon to the redemption
date.
(b) Mandatory Sinking Fund Redemption. Any 2009 Bonds designated in the
Purchase Agreement as term bonds will be subject to mandatory sinking fund redemption in part
by lot from mandatory annual Sinking Fund Installments, at the principal amount thereof plus
accrued interest to the redemption date, without premium, in the aggregate principal amounts and
in the years as set forth in the Purchase Agreement and certified in writing by the City to the
Trustee.
Section 306. Establishment of Cost of Issuance Fund. The City hereby
establishes a separate fund to be known as the 2009 Bonds Cost of Issuance Fund (the “Cost of
Issuance Fund”), which shall be held and maintained by the Trustee. Moneys in the Cost of
Issuance Fund shall be applied by the Trustee to pay items of Cost attributable to the costs and
expenses of issuing and selling the 2009 Bonds. On November 1, 2009, or upon the earlier
written determination of the City, the amount, if any, remaining in the Cost of Issuance Fund
shall be transferred to the City to be used for any lawful purpose.
Section 307. Application of Proceeds of Sale of 2009 Bonds. The proceeds of
sale of the 2009 Bonds shall be received by the Trustee and applied, as more fully set forth in
written instructions signed by an Authorized Officer of the City, as follows:
(a) The Trustee shall deposit in the Debt Service Reserve Account of the Debt
Service Fund a sum sufficient to cause the balance therein to equal the Debt Service Reserve
Requirement.
10220-0009\1134957v4.doc 6
(b) The Trustee shall deposit in the Escrow Fund a sum sufficient to meet the
Refunding Requirements, as defined in the Escrow Agreement.
(c) The Trustee shall deposit the balance of the proceeds of the 2009 Bonds in the
Cost of Issuance Fund to pay the costs of issuing the 2009 Bonds.
Section 308. Book-Entry System. The 2009 Bonds shall be initially issued as
Book-Entry Bonds, in accordance with Section 308 of the Master Resolution.
Section 309. Form of 2009 Bonds. The form of the 2009 Bonds shall be
substantially in the form set forth in Exhibit A hereto, with necessary or appropriate variations,
omissions and insertions as permitted or required by this First Supplemental Resolution.
ARTICLE IV
MISCELLANEOUS
Section 401. Escrow Agreement. The form of the Escrow Agreement is hereby
approved and the Authorized Officers, acting singly, are hereby authorized and directed, for and
in the name and on behalf of the City, to execute and deliver the Escrow Agreement in
substantially the form hereby approved, with such additions or changes as the Authorized Officer
executing the same may approve, such approval to be conclusively evidenced by such
Authorized Officer’s execution and delivery thereof.
Section 402. Continuing Disclosure Agreement. The form of the Continuing
Disclosure Agreement is hereby approved and the Authorized Officers, acting singly, are hereby
authorized and directed, for and in the name and on behalf of the City, to execute and deliver at
the time of delivery of the 2009 Bonds the Continuing Disclosure Agreement in substantially the
form hereby approved, with such additions or changes as the Authorized Officer executing the
same may approve, such approval to be conclusively evidenced by such Authorized Officer’s
execution and delivery thereof.
Section 403. Qualified Tax-Exempt Obligations. The 2009 Bonds are hereby
designated by the City as “Qualified Tax-Exempt Obligations” for purposes of Section 265(b)(3)
of the Internal Revenues Code of 1986, as amended. In that connection, the City represents and
covenants that it, together with all its subordinate entities or entities that issue obligations on its
behalf, or on behalf of which it issues obligations, during the current calendar year, (i) has not
issued and will not issue tax-exempt obligations designated as Qualified Tax-Exempt
Obligations in an aggregate amount, including the 2009 Bonds, exceeding $30,000,000, and
(ii) has not issued, does not reasonably anticipate issuing, and will not issue, tax-exempt
obligations in an aggregate amount exceeding $30,000,000 (including the 2009 Bonds, but
excluding (a) private activity bonds that are not qualified 501(c)(3) Bonds and (b) current
refunding issues to the extent that the amount of the current refunding issue does not exceed the
outstanding amount of the prior issue), unless the City first obtains a written opinion of the bond
counsel approving the 2009 Bonds that such designation or issuance, as applicable, will not
adversely affect the status of the 2009 Bonds as Qualified Tax-Exempt Obligations. The City
represents and covenants that, during any time or in any manner as might affect the status of the
2009 Bonds as Qualified Tax-Exempt Obligations, no entity has been or will be formed or
10220-0009\1134957v4.doc 7
availed of in order to avoid the purposes of subparagraph (C) or (D) of Section 265(b)(3) of the
Internal Revenues Code of 1986, as amended. The City further represents that the 2009 Bonds
are not being issued as part of a direct or indirect composite issue that combines issues or lots of
tax-exempt obligations of different issuers.
Section 404. Other Acts. The officers of the City are hereby authorized and
directed, jointly and severally, to do any and all things (including, without limitation,
negotiations to obtain a municipal bond insurance policy), to execute, deliver and cause the
recordation of any and all documents which they may deem necessary or advisable in order to
consummate the issuance, sale and delivery of the 2009 Bonds, or otherwise to effectuate the
purposes of this First Supplemental Resolution and the documents approved hereby, and any
such actions previously taken by such officers are hereby ratified and confirmed.
Section 405. Effective Date. This First Supplemental Resolution shall take
effect immediately.
PASSED, APPROVED and ADOPTED this 22nd day of June, 2009.
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
10220-0009\1134957v4.doc A-1
EXHIBIT A
FORM OF BOND
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO
THE CITY OF CULVER CITY OR ITS AGENT 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.]
CITY OF CULVER CITY
WASTEWATER FACILITIES REFUNDING REVENUE BONDS
2009 SERIES A
No.R-______ $____
Interest Rate Dated Date Maturity Date CUSIP No.
% _____________, 2009 ___ 1, 20__
Registered Owner: CEDE & CO.
Principal Amount: _______ DOLLARS
The CITY OF CULVER CITY (the “City”), a charter city and political
subdivision of the State of California, acknowledges itself indebted to, and for value received
hereby promises to pay to the registered owner named above, or registered assigns, on the
Maturity Date stated above, but solely from the Trust Estate (as defined in the Resolutions
hereinafter mentioned) pledged therefor, upon presentation and surrender of this bond at the
principal corporate trust office (the “Office”) of U.S. Bank National Association, as Trustee (the
“Trustee”), in Los Angeles, California, or at such other office as the Trustee may designate, the
principal amount stated above in any coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts, and to pay to
such registered owner interest on such principal sum by check or draft of the Trustee mailed to
such owner at such owner’s address as shown on the registration books, at the rate of interest set
forth above, payable on the first day of March and September in each year, commencing on
March 1, 2010, until the City’s obligation with respect to the payment of such principal sum shall
be discharged. Such interest shall be payable from the interest payment date next preceding the
date of authentication of this bond (unless this bond is authenticated as of an interest payment
date, in which event it shall bear interest from such interest payment date, or unless the bond is
authenticated on or before February 15, 2010, in which event it shall bear interest from the Dated
Date stated above, or unless this bond is authenticated on a date between the 15th day of the
10220-0009\1134957v4.doc A-2
calendar month next preceding an interest payment date and such interest payment date, in which
event it shall bear interest from such interest payment date). The interest so payable on any
interest payment date will be paid to the person in whose name this bond is registered at the close
of business on the 15th day of the calendar month immediately preceding such interest payment
date whether or not a business day.
This bond is one of a duly authorized issue of bonds of the City designated as its
“Wastewater Facilities Refunding Revenue Bonds, 2009 Series A” (the “2009 Bonds”), in the
aggregate principal amount of $ issued pursuant to the provisions of the City Charter, and
the Revenue Bond Law of 1941, Title 5, Division 2, Part 1, Chapter 6, of the Government Code
of the State of California, as amended (the “Act”). The 2009 Bonds are all issued under and are
equally and ratably secured and entitled to the protection given by Resolution No. ____, duly
adopted by the City Council of the City on June 22, 2009 (the “Master Resolution”), as amended
and supplemented by Resolution No. ___, a First Supplemental Resolution duly adopted by the
City Council of the City on June 22, 2009 (the “Supplemental Resolution” and together with the
Master Resolution, the “Resolutions”). Copies of the Resolutions are on file at the office of the
City Clerk and reference is hereby made to the Resolutions and the Act and to all amendments
and supplements thereto for a description of the terms of the bonds, to all of which terms the
registered owner of this bond, by acceptance hereof, assents and agrees.
As provided in the Master Resolution, bonds of the City may be issued from time
to time pursuant to supplemental resolutions in one or more series, in various principal amounts,
may mature at different times, may bear interest at different rates and may otherwise vary as
provided in a supplemental resolution. The aggregate principal amount of bonds which may be
issued under the Master Resolution is not limited except as provided in the Master Resolution,
and all bonds issued and to be issued under the Master Resolution are and will be equally
secured by the pledge and assignment and covenants made therein, except as otherwise expressly
provided or permitted in the Master Resolution.
In the manner provided by the Resolutions, the provisions of the Resolutions, or
any resolution amendatory thereof or supplement thereto, may (with certain exceptions stated in
the Resolutions) be modified or amended by the City with the written consent of the owners of at
least a majority in principal amount of the bonds then outstanding.
The bonds are issuable in the form of registered bonds without coupons in the
denomination of $5,000 or any integral multiple thereof.
If this bond matures on or after September 1, 20__, it is redeemable in the manner
and subject to the terms and provisions, and with the effect, set forth in the Resolutions, at the
option of the City, on September 1, 20__ or thereafter prior to maturity, as a whole on any date
or in part, in any order of maturity as determined by the City or, in the absence of direction by
the City, pro rata among maturities and by lot within a maturity, on any interest payment date, at
a redemption price (expressed as a percentage of the principal of the bond) plus accrued interest
to the redemption date if redeemed at the following times:
Redemption Dates Redemption Price
10220-0009\1134957v4.doc A-3
If this bond matures on September 1, ____, it is subject to mandatory sinking fund
redemption in part by lot on September 1 in each year commencing September 1, ____ from
sinking fund installments, at the principal amount thereof plus accrued interest to the redemption
date, without premium, in the aggregate principal amounts and on the dates set forth in the
Resolutions.
The Trustee on behalf and at the expense of the City shall mail (by first class
mail) notice of any redemption to the respective owners of any bonds designated for redemption,
at their respective addresses appearing on the registration books maintained by the Trustee, to the
Securities Depositories and to one or more Information Services (as such terms are defined in the
Resolution), at least 30 but not more than 60 days prior to the redemption; provided, however,
that neither failure to receive any such notice so mailed nor any defect therein shall affect the
validity of the proceedings for the redemption of such bonds or the cessation of the accrual of
interest thereon. Such notice shall state the date of the notice, the redemption date, the
redemption place and the redemption price and shall designate the CUSIP numbers, the serial
numbers of each maturity or maturities (except that if the event of redemption is of all of the
bonds of such maturity or maturities in whole, the Trustee shall designate such maturities or the
maturity in whole without referencing each individual number) of the bonds to be redeemed, and
shall require that such bonds be then surrendered at the principal corporate trust office of the
Trustee for redemption at the redemption price, giving notice also that further interest on such
bonds will not accrue from and after the redemption date.
This bond, the interest thereon, and any premium payable upon the redemption
thereof are not a debt of the City nor a legal or equitable pledge, charge, lien or encumbrance
upon any of its property or upon any of its income, receipts or revenues, except the Trust Estate
(as defined in the Resolutions). This bond does not constitute an indebtedness within the
meaning of any constitutional or statutory debt limitation or restriction. Neither the members of
the City Council nor any persons executing this bond are liable personally on this bond by reason
of its issuance.
This bond is transferable as provided in the Resolutions, only upon the books of
the City kept for that purpose at the above-mentioned office of the Trustee, by the registered
owner thereof in person, or by his duly authorized attorney, upon surrender of this bond together
with a written instrument of transfer satisfactory to the Trustee duly executed by the registered
owner or his duly authorized attorney, and thereupon a new registered bond or bonds, without
coupons, and in the same aggregate principal amount, shall be issued to the transferee in
exchange therefor as provided in the Resolutions, and upon payment of the charges therein
prescribed. The City and the Trustee may deem and treat the person in whose name this bond is
registered as the absolute owner thereof for the purpose of receiving payment of, or on account
of, the principal or redemption price thereof and interest due thereon and for all other purposes.
The registered owner of this bond shall have no right to enforce the provisions of
the Resolutions or to institute action to enforce the covenants therein, or to take any action with
respect to any event of default under the Resolutions, or to institute, appear in or defend any suit
or other proceedings with respect thereto, except as provided in the Resolutions. In certain
events, on the conditions, in the manner and with the effect set forth in the Resolutions, the
principal of all the bonds issued under the Resolutions and then outstanding may become or may
10220-0009\1134957v4.doc A-4
be declared due and payable before the stated maturity thereof, together with interest accrued
thereon.
It is hereby certified and recited that all condition, acts and things required by law
and the Resolutions to exist, to have happened and to have been performed precedent to and in
the issuance of this bond exist, have happened and have been performed and that the series of
bonds of which this is one, together with all other indebtedness of the City, complies in all
respects with the applicable laws of the State of California, including, particularly, the Act.
This bond shall not be entitled to any benefit under the Resolutions or be valid or
become obligatory for any purpose until this bond shall have been authenticated by the manual
execution by the Trustee of the Trustee’s Certificate of Authentication hereto.
IN WITNESS WHEREOF, THE CITY OF CULVER CITY has caused this
Bond to be signed in its name and on its behalf by the manual or facsimile signature of its Mayor
and attested by the manual or facsimile signature of its City Clerk, as of ____, 2009.
ATTEST:
City Clerk
CITY OF CULVER CITY
BY:
Mayor
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the 2009 Bonds delivered pursuant to the within mentioned
Resolutions.
Date of Authentication: ______, 2009 U.S. BANK NATIONAL ASSOCIATION
as Trustee
BY:
AUTHORIZED SIGNATORY
10220-0009\1134957v4.doc A-5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
(Name, Address and Tax Identification or
Social Security Number of Assignee)
the within Bond of the City of Culver City and does hereby irrevocably constitute and appoint
attorney to transfer the said Bond on the books kept for registration thereof with
full power of substitution in the premises.
Dated:
Notice: The Signature of this assignment
and transfer must correspond with
the name as written upon the face
of this Bond in every particular,
without alteration or enlargement
or any change whatsoever.
Signature guaranteed by
Notice: Signature must be guaranteed by a
member of the National
Association of Securities Dealers, a
commercial bank, a trust company
or other eligible guarantor
institution.
10220-0009\1134957v4.doc B-1
EXHIBIT B
FORM OF BOND PURCHASE AGREEMENT
10220-0009\1134957v4.doc C-1
EXHIBIT C
FORM OF ESCROW AGREEMENT
10220-0009\1134957v4.doc D-1
EXHIBIT D
FORM OF CONTINUING DISCLOSURE AGREEMENT PRELIMINARY OFFICIAL STATEMENT DATED _____, 2009
11354.0003\1080916
NEW ISSUE - BOOK-ENTRY ONLY RATING: S&P: “AA”
BANK QUALIFIED See “CONCLUDING MATTERS – Rating.”
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law
(i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the
Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of
the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on the Bonds is exempt
from personal income taxation by the State of California. Interest on the bonds may be subject to certain federal taxes
imposed only on certain corporations including the corporate alternative minimum tax on a portion of that interest. For
a more complete discussion of the tax aspects, see “CONCLUDING MATTERS – Tax Matters” herein.”
[City Logo]
$21,175,000
*
CITY OF CULVER CITY
WASTEWATER FACILITIES REFUNDING REVENUE BONDS
2009 SERIES A
Dated: Delivery Date Due: September 1, as shown on the inside front
cover
The City of Culver City (the “City”) will issue its Wastewater Facilities Refunding Revenue Bonds, 2009 Series A (the
“Bonds”) pursuant to a Master Resolution, adopted by the City Council on June [22], 2009 (the “Master Resolution”), as
supplemented by Resolution No. ___, adopted by the City Council on June [22], 2009 (the “Supplemental Resolution” and
together with the Master Resolution, the “Resolutions”). Proceeds of the Bonds will be used to (i) current refund the City’s
outstanding Wastewater Facilities Refunding Revenue Bonds, 1999 Series A, originally issued in the aggregate principal amount
of $25,080,000, of which $20,720,000 is outstanding; (ii) fund the Reserve Account; and (iii) pay costs of issuance of the
Bonds. See “PLAN OF FINANCING.”
The Bonds will be payable from and secured by, a pledge of and first lien on, the Net Revenues of the City’s wastewater
enterprise (the “Enterprise”) and amounts on deposit in certain funds and accounts established pursuant to the Master
Resolution. See “SECURITY FOR THE BONDS.”
The Bonds are subject to optional and mandatory sinking fund redemption prior to their maturity as described herein.
The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of
The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the Bonds.
Individual purchases of the Bonds may be made in book-entry form only in integral multiples of $5,000. Purchasers will not
receive certificates representing their interest in the Bonds purchased. Principal of and interest on the Bonds will be paid directly
to DTC by the Trustee. Principal of the Bonds is payable on their maturity dates set forth on the inside cover. Interest on the
Bonds is payable on March 1 and September 1 of each year, commencing March 1, 2010. Upon its receipt of payments of
principal and interest, DTC is in turn obligated to remit such principal and interest to DTC participants for subsequent
disbursement to the beneficial owners of the Bonds as described herein.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM NET REVENUES OF THE
ENTERPRISE AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE MASTER RESOLUTION. 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. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY, STATE OR ANY OF ITS
POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATIONS.
MATURITY SCHEDULE
(see inside front cover)
This cover page contains information for quick reference only. It is not a summary of this issue. Potential purchasers
must read the entire Official Statement to obtain information essential to making an informed investment decision. See
the section of this Official Statement entitled “BONDOWNERS’ RISKS” for a discussion of certain of the risk factors
that should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the
Bonds.
The Bonds are offered, when, as and if issued, subject to the approval of Richards Watson & Gershon, A Professional Corporation,
Los Angeles, California, Bond Counsel. In addition, certain legal matters will be passed on for the City by Richards, Watson &
Gershon, A Professional Corporation, Los Angeles, California, as Disclosure Counsel. It is anticipated that the Bonds will be
available for delivery to DTC in New York, New York on or about July ___, 2009.
Stone & Youngberg
*
Preliminary, subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the dated
date of the Official Statement. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful.
Dated: ____ __, 2009
$21,175,000*
CITY OF CULVER CITY
WASTEWATER FACILITIES REFUNDING REVENUE BONDS
2009 SERIES A
MATURITY SCHEDULE*
$____
Serial Bonds
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
Yield
CUSIP
†
(Base:___)
%%
$____ ____% Term Bonds due September 1, 20__ Yield: ____% CUSIP†
$____ ____% Term Bonds due September 1, 20__ Yield: ____% CUSIP†
___________________________
*
Preliminary, subject to change.
†
CUSIP Copyright 2009, American Bankers’ Association. CUSIP data is provided by Standard & Poor’s CUSIP Service
Bureau, a division of The McGraw-Hill Companies. Inc. Neither the City nor the City guarantees the accuracy of the
CUSIP data.
CITY OF CULVER CITY, CALIFORNIA
CITY COUNCIL
Andrew Weissman, Mayor
Christopher Armenta, Vice Mayor
D. Scott Malsin, Councilmember
Micheál O’ Leary, Councilmember
Gary Silbiger, Councilmember
CITY STAFF
Jeff Muir, Chief Financial Officer
Mark Scott, City Manager
Martin Cole, City Clerk/Assistant City Manager
Charles Herbertson, Public Works Director
Carol Schwab, City Attorney
SPECIAL SERVICES
Bond Counsel
Richards Watson & Gershon
A Professional Corporation
Los Angeles, California
Disclosure Counsel
Richards, Watson & Gershon
A Professional Corporation
Los Angeles, California
Financial Advisor
Fieldman, Rolapp & Associates
Irvine, California
Trustee/Escrow Agent
U.S. Bank National Association
Los Angeles, California
Verification Agent
Causey Demgen & Moore Inc.
Denver, Colorado
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the
Bonds and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not
to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. Certain statements included or incorporated by reference in this Official
Statement and in any continuing disclosure by the City, any press release and in any oral statement made with the
approval of an authorized officer of the City or any other entity described or referenced herein, constitute “forward-
looking statements.” Certain statements included or incorporated by reference in this Official Statement constitute
“forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,”
“expect,” “anticipate,” “estimate,” “budget” or other similar words and include, but are not limited to, statements
under the caption “THE ENTERPRISE.” The achievement of certain results or other expectations contained in such
forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements described to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. While the City has
undertaken to provide certain on-going financial and other data pursuant to a continuing disclosure agreement (see
“CONCLUDING MATTERS – Continuing Disclosure” and APPENDIX F), the City does not plan to issue any
updates or revisions to those forward-looking statements if or when their expectations or events, conditions or
circumstances on which such statements are based change.
Preparation of this Official Statement. The information contained in this Official Statement has been
obtained from sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness.
The Underwriter has provided the following sentence for inclusion in this Official Statement: The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the City to give
any information or to make any representations in connection with the offer or sale of the Bonds other than those
contained in this Official Statement and if given or made, such other information or representation must not be relied
upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in
which it is unlawful for such person to make such an offer, solicitation or sale.
Information as of Dated Date of Official Statement. The information and expressions of opinions in this
Official Statement are subject to change without notice and neither delivery of this Official Statement nor any sale
made of the Bonds shall, under any circumstances, create any implication that there has been no change in the affairs
of the City or any other entity described or referenced in this Official Statement since the dated date shown on the
front cover. All summaries of the documents referred to in this Official Statement are made subject to the provisions
of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect
transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise
prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may
offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the
inside front cover and said public offering prices may be changed from time to time by the Underwriter.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES LAW OF ANY STATE.
i
TABLE OF CONTENTS
INTRODUCTION .......................................... 1
General .................................................... 1
Security for the Bonds ............................ 1
The City and the Enterprise .................... 2
Continuing Disclosure ............................ 3
Summaries of Documents ......................... 3
Other Information ..................................... 3
PLAN OF FINANCING ................................... 3
General .................................................... 3
Plan of Refunding ..................................... 3
Estimated Sources and Uses of
Funds ..................................................... 4
Annual Debt Service ................................. 4
THE BONDS .................................................. 5
General .................................................... 5
Redemption ............................................... 5
Book-Entry Only System ........................ 6
SECURITY FOR THE BONDS ....................... 7
Pledge of Net Revenues .......................... 7
Rate Covenant ........................................... 8
Reserve Account ....................................... 8
Additional Bonds .................................... 8
THE ENTERPRISE ........................................ 9
General .................................................... 9
Service Area ............................................ 9
Management and Employee
Relations ............................................... 9
Outstanding Indebtedness ....................... 10
Historical Number of Customers .......... 10
Top Ten Customers ................................. 11
Budget Process and Billing
Procedures ........................................... 11
Rates and Charges ................................... 12
Enterprise User Composition ................ 14
Connection Charges .............................. 15
Financial Statements ............................... 16
THE HYPERION SYSTEM ........................... 19
General .................................................. 19
Contracting Agencies and the
Sewage Disposal Contracts ................. 20
Regulatory Requirements ...................... 21
BONDOWNERS’ RISKS ............................... 21
Limited Obligations with Respect
to the Bonds ...................................... 22
Forecasts ................................................. 22
Wastewater System Expenses And
Collections ........................................... 22
Casualty Risk; Earthquakes ..................... 22
Additional Bonds and Future Rate
Increases ............................................ 23
Limitations on Remedies ......................... 23
Investment of Funds .............................. 23
Voter Initiatives -- State
Constitutional Amendment ................ 23
Loss of Tax Exemption .......................... 24
Secondary Market .................................. 24
CONSTITUTIONAL PROVISIONS
AFFECTING ENTERPRISE
REVENUES AND
EXPENDITURES ............................ 24
Article XIIIA and Article XIIIB ............ 24
Proposition 218: Article XIIIC and
Article XIIID ....................................... 25
CONCLUDING MATTERS ........................... 26
Absence of Litigation ............................ 26
Continuing Disclosure ............................. 26
Certain Legal Matters ............................ 27
Tax Matters ............................................ 27
Financial Advisor .................................. 28
Underwriting .......................................... 29
Qualified Tax-Exempt Obligations ........ 29
Rating....................................................... 29
Financial Statements .............................. 29
Miscellaneous ........................................ 29
APPENDIX A – CITY OF CULVER
CITY GENERAL INFORMATION ...... A-1
APPENDIX B – CITY OF CULVER
CITY COMPREHENSIVE ANNUAL
FINANCIAL REPORT FOR FISCAL
YEAR ENDED JUNE 30, 2008
(EXCERPTS) ............................................. B-1
APPENDIX C – FORM OF BOND
COUNSEL OPINION ............................... C-1
APPENDIX D – SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS .... D-1
APPENDIX E – DTC’S BOOK-ENTRY
ONLY SYSTEM ....................................... E-1
APPENDIX F – FORM OF
CONTINUING DISCLOSURE
AGREEMENT ........................................... F-1
[insert map]
1
$21,175,000
*
CITY OF CULVER CITY
WASTEWATER FACILITIES REFUNDING REVENUE BONDS
2009 SERIES A
INTRODUCTION
This introduction does not purport to be complete, and reference is made to the body of this
Official Statement, appendices and the documents referred to herein for more complete information with
respect to matters concerning the Bonds. Potential investors are encouraged to read the entire Official
Statement. Capitalized terms used and not defined in this Introduction shall have the meanings assigned
to them elsewhere in this Official Statement.
General
This Official Statement, including the cover page, inside cover page and appendices, is provided
to furnish information in connection with the sale by the City of Culver City (the “City”) of its
$21,175,000* aggregate principal amount of Wastewater Facilities Refunding Revenue Bonds, 2009
Series A (the “Bonds”). The Bonds are being issued pursuant to (i) the City Charter and Chapter 3.07 of
the Culver City Municipal Code incorporating the Revenue Bond Law of 1941, Title 5, Division 2, Part 1,
Chapter 6 of the Government Code (the “Act”), and (ii) Resolution No ___, adopted by the City Council
on June [22], 2009 (the “Master Resolution”), as supplemented by Resolution No. ___, adopted by the
City Council on June [22], 2009 (the “Supplemental Resolution” and together with the Master Resolution,
the “Resolutions”).
Proceeds from the sale of the Bonds will be used to (i) current refund the City’s outstanding
Wastewater Facilities Refunding Revenue Bonds, 1999 Series A, originally issued in the aggregate
principal amount of $25,080,000, of which $20,720,000 is outstanding (the “1999 Bonds”); (ii) fund the
Reserve Account; and (iii) pay costs of issuance of the Bonds. See “PLAN OF FINANCING.”
The Bonds will be dated their date of delivery and will mature on September 1 in the years and in
the amounts shown on the inside front cover of this Official Statement. Interest on the Bonds will be
calculated at the rates shown on the inside cover page of this Official Statement, payable semiannually on
March 1 and September 1 (each, an “Interest Payment Date”) in each year, commencing on March 1,
2010, by check mailed to the registered owners or upon the written request of the registered owner of
$1,000,000 or more in principal amount of Bonds, by wire transfer to an account in the United States
which shall be designated in such written request to U.S. Bank National Association, as trustee (the
“Trustee”) on or before the 15th day of the calendar month immediately preceding the Interest Payment
Date.
The Bonds will be executed and delivered as one fully-registered Bond for each maturity, in the
name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), as
registered owner of all Bonds. See “THE BONDS – Book-Entry Only System” and “APPENDIX E –
DTC’S BOOK-ENTRY ONLY SYSTEM.”
Security for the Bonds
Under the terms of the Master Resolution, the City has pledged net revenues (“Net Revenues”)
generated from the ownership and operation of the wastewater system (the “Enterprise”) and moneys in
certain funds and accounts established by the Resolution. Net Revenues generally include all revenues,
fees, income, rents and receipts earned by the City from its operation of the Enterprise, proceeds of
*
Preliminary, subject to change.
2
business interruption insurance and interest earnings from funds held under the Resolutions, less
maintenance and operation costs. See “SECURITY FOR THE BONDS.”
The City has covenanted in the Master Resolution that it shall at all times prescribe, revise and
collect rates, fees and charges for the use or service of the Enterprise as provided in the Act and so that in
each twelve month period such rates, fees and charges, together with other Revenues reasonably expected
to be available during such period, are reasonably expected to yield Net Revenues during such twelve
month period sufficient for the payment of the sum of the following: (1) an amount equal to the sum of
1.20 times the Maximum Annual Debt Service; (2) the amount, if any, to be paid during such twelve
month period into the Reserve Account in the Debt Service Fund (other than amounts required to be paid
into such Account out of the proceeds of Bonds); and (3) all other charges or liens whatsoever payable out
of Revenues during such twelve month period, and, to the extent not otherwise provided for, all amounts
payable on Subordinated Indebtedness. See “SECURITY FOR THE BONDS – Rate Covenant.”
A Reserve Account (the “Reserve Account”) will be established pursuant to the Master
Resolution and maintained by the Trustee. Upon issuance of the Bonds, the Trustee will deposit into the
Reserve Account from the sale proceeds of the Bonds, an amount equal to the initial Reserve Requirement
for the Bonds. “Reserve Requirement” is defined in the Master Resolution to mean, as of any date of
calculation, an amount equal to the least of (a) Maximum Annual Debt Service, (b) 125% of average
annual Debt Service on all Outstanding Bonds, and (c) 10% of the proceeds of all Outstanding Bonds.
Pursuant to the Master Resolution, money in the Reserve Account will be used by the Trustee to replenish
the Debt Service Account in the event of a deficiency in such account for payment of interest and/or
principal of the Bonds. See “SECURITY FOR THE BONDS” and “BONDOWNERS’ RISKS.”
Under the terms of the Master Resolution, the City may at any time issue Additional Bonds on a
parity with the Bonds, provided that the City complies with certain conditions under the Master
Resolution. See “SECURITY FOR THE BONDS – Additional Bonds.”
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM
NET REVENUES OF THE ENTERPRISE AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER
THE MASTER RESOLUTION. 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. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY, STATE
OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATIONS.
The City and the Enterprise
The City encompasses five square miles and is located in the western portion of Los Angeles
County. It is approximately 10 miles west of downtown Los Angeles and five miles inland of the Pacific
Ocean. The City is mostly surrounded by the City of Los Angeles, but also has a border with
unincorporated areas of Los Angeles County on its eastern side. The City was incorporated in 1917, and
became Charter City in 1947. The City operates under a Mayor/City Council-City Manager form of
government. The City is governed by a five-member City Council, elected at large to serve four-year
terms. As of January 1, 2009, the City had a population of approximately 40,657, according to California
Department of Finance estimates. See “APPENDIX A – CITY OF CULVER CITY GENERAL
INFORMATION” for more information about the City.
The City owns and operates the Enterprise. The Enterprise collects wastewater generated by the
residential, commercial, governmental and industrial members of the City and transports the wastewater
for treatment to the City of Los Angeles’ Hyperion Sewage Treatment Plant. The Enterprise serves the
City’s population through 11,841 residential, 1,263 commercial, 6 school and 57 industrial parcels. See
“THE ENTERPRISE” and “THE HYPERION SYSTEM.”
3
Continuing Disclosure
The City has covenanted in a Continuing Disclosure Agreement to prepare and deliver an annual
report and notices of certain material events to the Municipal Securities Rulemaking Board, via its
Electronic Municipal Market Access (“EMMA”) system. See “CONCLUDING MATTERS – Continuing
Disclosure” and “APPENDIX F – FORM OF CONTINUING DISCLOSURE AGREEMENT.”
Summaries of Documents
This Official Statement contains descriptions of the Bonds, the Resolutions and various other
agreements and documents. The descriptions and summaries of documents contained in this Official
Statement do not purport to be comprehensive or definitive, and reference is made to each such document
for the complete details of all terms and conditions. All statements herein are qualified in their entirety by
reference to each such document and, with respect to certain rights and remedies, to laws and principles of
equity relating to or affecting creditors’ rights generally. Capitalized terms not defined herein shall have
the meanings set forth in the Resolutions. Copies of the Resolutions are available for inspection during
business hours at the corporate trust office of the Trustee in Los Angeles, California.
Other Information
This Official Statement speaks only as of its date as set forth on the cover, and the information
and expressions of opinion are subject to change without notice, and neither the delivery of this Official
Statement nor any sale of Bonds shall under any circumstances create any implication that there has been
no change in the affairs of the City since the date of this Official Statement. Unless otherwise expressly
noted, all references to internet websites in this Official Statement, including without limitation, the City’s
website, are shown for reference and convenience only, and none of their content is incorporated by
reference in this Official Statement. The information contained within such websites has not been
reviewed by the City and the City makes no representation regarding such information.
PLAN OF FINANCING
General
The Bonds are being issued in order to: (i) refinance the City’s outstanding Wastewater Facilities
Refunding Revenue Bonds, 1999 Series A, which were originally issued in the aggregate principal
amount of $25,080,000, of which $20,720,000 remain outstanding (the “1999 Bonds”); (ii) fund a deposit
to the Reserve Account; and (iii) pay cost of issuance of the Bonds.
Plan of Refunding
The Bonds are being issued to current refund all of the remaining outstanding 1999 Bonds in the
amount of $20,720,000. Proceeds of the 1999 Bonds were used to refund the City’s outstanding
Wastewater Facilities Revenue Bonds, 1991 Series A and to finance certain improvements to the
Enterprise. A portion of the proceeds of the Bonds, together with certain other moneys to be released
from funds relating to the 1999 Bonds will be deposited in an escrow fund (the “Escrow Fund”) created
pursuant to an Escrow Agreement, dated as of July 1, 2009, by and between the City and U.S. Bank
National Association, as escrow bank. Moneys in the Escrow Fund, together with interest earnings
thereon, will be sufficient to pay all outstanding 1999 Bonds in full on September 1, 2009, at a
redemption price equal to 102% of the remaining principal amount to be redeemed, plus accrued interest
thereon to the date of redemption.
4
Estimated Sources and Uses of Funds
The following table shows the estimated sources and uses of the proceeds from the sale of the
Bonds:
Sources:
Par amount of the Bonds $
[Less/plus]: Original issue [discount/premium]
Less Underwriter’s discount
Transfer from prior Reserve Account
Transfer from prior Debt Service Account
Total Sources $
Uses: $
Escrow Fund
Reserve Account
(1)
Costs of Issuance Account
(2)
Total Uses $
____________________
(1) An amount equal to the initial Reserve Requirement.
(2) Costs of Issuance include fees and expenses for Bond Counsel, Disclosure Counsel, Financial Advisor,
Trustee, Verification Agent, printing expenses, rating fee and other costs.
Annual Debt Service
*
The following table shows the scheduled annual debt service for the Bonds:
Bond Year Ending
September 1
Principal* Interest*
(1)
Total Annual
Debt Service
*(1)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Total
*
Preliminary, subject to change.
(1)
Assumes a yield of ___%.
5
THE BONDS
General
The Bonds will be issued in the aggregate principal amount and will mature on the dates and bear
interest at the rates per annum as set forth on the inside front cover of this Official Statement. The Bonds
will be issued in integral multiples of $5,000 and will be dated their date of delivery. Interest on the
Bonds will be calculated on the basis of a 360-day year of twelve 30-day months and will be payable on
March 1 and September 1 of each year, commencing March 1, 2010 (each an “Interest Payment Date”),
until maturity or earlier redemption.
The Bonds will be initially delivered as one fully registered certificate for each maturity (unless
the Bonds of such maturity bear different interest rates, then one certificate for each interest rate among
such maturity) and will be delivered by means of the book-entry system of DTC. See “—Book-Entry
Only System” below.
Redemption
Optional Redemption.
*
The Bonds maturing on or prior to September 1, 20__ are not subject to
redemption prior to maturity. The Bonds maturing on or after September 1, 20__ may be redeemed, at the
option of the City, from any source of funds, on September 1, 20__ or thereafter prior to maturity, as a
whole on any date or in part, in any order of maturity as determined by the City or, in the absence of
direction by the City, pro rata among maturities and by lot within a maturity on any Interest Payment
Date, at [a redemption price equal to 100 percent of the principal amount to be redeemed, plus accrued
interest to the redemption date, without premium]/[the following redemption price (expressed as a
percentage of the principal amount thereof) plus accrued interest thereon to the redemption date if
redeemed at the following times:]
Redemption Dates
(September 1)
Redemption Price
%
Mandatory Term Bond Redemption.
*
The Bonds maturing on September 1, 20__ are subject to
mandatory sinking fund redemption in part by lot, from mandatory annual Sinking Fund Installments, in
the principal amounts hereinafter set forth, without premium, on September 1 of each year, commencing
on September 1, 20__ in each of the years and in the amounts as follows:
Term Bonds Maturing on September 1, 20___*
Redemption Date*
(September 1)
Principal Amount
to be Redeemed*
$
(Maturity)
Notice of Redemption. The Trustee shall give notice of the Redemption of such Bonds, which
notice shall specify the Series and maturities of the Bonds to be redeemed, the CUSIP numbers, the
redemption date and the place or places where amounts due upon such redemption will be payable and, if
fewer than all of the Bonds of any like Series and maturity are to be redeemed, the letters and numbers or
*
Preliminary, subject to change.
6
other distinguishing marks of such Bonds so to be redeemed, and, in the case of Bonds to be redeemed in
part only, such notice shall also specify the respective portions of the principal amount to be redeemed.
Such notice shall further state that on such date there shall become due and payable upon each Bond to be
redeemed the Redemption Price, or the Redemption Price of the specified portions of the principal thereof
in the case of Bonds to be redeemed in part only, together with interest accrued to the redemption date,
and that from and after such date interest thereon shall cease to accrue and be payable. The Trustee shall
give such notice by mailing (by first class mail) such notice to all registered owners of the Bonds to be
redeemed at their addresses as they appear on the registration books maintained by the Trustee as bond
registrar, to the Securities Depositories and to one or more Information Services, at least 30 but not more
than 60 days prior to the redemption date. Failure to receive any such notice shall not affect the validity
of the proceedings for the redemption of Bonds.
Selection of Bonds for Redemption. If fewer than all of the Bonds of like maturity of any Series
are called for prior redemption, the particular Bonds or portions of Bonds to be redeemed will be selected
by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate; provided,
however, that the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in
multiples of $5,000, and that, in selecting portions of such Bonds for redemption, the Trustee will treat
each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by
dividing the principal amount of such Bond to be redeemed in part by $5,000.
Effect of Redemption. If notice of redemption is given in the manner provided in the Master
Resolution, the Bonds or portions thereof so called for redemption will become due and payable on the
redemption date so designated at the Redemption Price, plus interest accrued and unpaid to the
redemption date, and, upon presentation and surrender at the office specified in such notice, such Bonds,
or portions thereof, shall be paid at the Redemption Price, plus interest accrued and unpaid to the
redemption date. If there shall be drawn for redemption less than all of a Bond, the City shall execute and
the Trustee shall authenticate and the Paying Agent shall deliver, upon the surrender of such Bond,
without charge to the owner, for the unredeemed balance of the principal amount of the Bonds so
surrendered, Bonds of like Series and maturity in any of the authorized denominations. If, on the
redemption date, moneys for the redemption of all the Bonds or portions thereof of any like Series and
maturity to be redeemed, together with interest to the redemption date, shall be held by the Paying Agents
so as to be available on said date and if notice of redemption shall have been mailed as described above,
then, from and after the redemption date interest on the Bonds or portions of the Bonds of such Series and
maturity so called for redemption shall cease to accrue and become payable. If said moneys shall not be
so available on the redemption date, such Bonds shall continue to bear interest until paid at the same rate
as they would have borne had they not been called for redemption.
Book-Entry Only System
The Bonds will be issued as one fully registered bond certificate without coupons for each
maturity (unless the Bonds of such maturity bear different interest rates, then one certificate for each
interest rate among such maturity) and, when issued, will be registered in the name of Cede & Co., as
nominee of DTC. DTC will act as securities depository of the Bonds. Individual purchases may be made
in book-entry form only, in integral multiples of $5,000. Purchasers will not receive certificates
representing their interest in the Bonds purchased. Principal and interest will be paid to DTC, which will
in turn remit such principal and interest to its participants for subsequent disbursement to the beneficial
owners of the Bonds. So long as DTC’s book-entry system is in effect with respect to the Bonds, notices
to Owners of the Bonds by the City or the Trustee will be sent to DTC. Notices and communication by
DTC to its participants, and then to the beneficial owners of the Bonds, will be governed by arrangements
among them, subject to then effective statutory or regulatory requirements. See “APPENDIX E – DTC’S
BOOK-ENTRY ONLY SYSTEM.”
In the event (a) DTC determines not to continue to act as securities depository for the Bonds, or
(b) the City determines that the DTC shall no longer so act, then the City will discontinue the book-entry
system with DTC. If the City fails to identify another qualified securities depository to replace DTC, then
7
the Bonds so designated shall no longer be restricted to being registered in the registration books kept by
the Trustee in the name of Cede & Co., but shall be registered in whatever name or names persons
transferring or exchanging Bonds shall designate, in accordance with the provisions of the Master
Resolution.
SECURITY FOR THE BONDS
Pledge of Net Revenues
Under the terms of the Master Resolution and the Act, the City has pledged the Net Revenues (as
defined below) to secure the payment of all Bonds issued under the Master Resolution. The City also has
pledged all moneys and securities held in the funds and accounts created under the Master Resolution.
Such pledge is for the equal and proportionate benefit and security of all Bonds issued under the terms of
the Master Resolution regardless of the time or times of their issuance or maturity, and all Bonds issued
under the terms of the Master Resolution will be of equal rank without priority over any other Bond.
Notwithstanding the foregoing, the Master Resolution permits the issuance of obligations secured by Net
Revenues on a subordinated basis. See “APPENDIX D — SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS.”
Moneys in the Sewer Enterprise Fund will be used and applied by the City as provided in the
Master Resolution. The City will, from the moneys in the Sewer Enterprise Fund, pay all Operating
Expenses (as defined below) as they become due and payable. All remaining moneys in the Sewer
Enterprise Fund (i.e., the Net Revenues) will be used and applied to pay Debt Service as defined in the
Master Resolution, including Debt Service on the Bonds and any Additional Bonds and to replenish all
reserve funds (including the Reserve Account) established for the Bonds or for other purposes of the City
permitted by law. See “APPENDIX A — Summary of Certain Provisions of the Principal Legal
Documents.”
“Revenues” are defined in the Resolutions to mean, for any particular Fiscal Year or period to
which such term is applied, (a) all revenues, fees, income, rents and receipts earned by the City from or
attributable to the ownership and operation of the Enterprise, including all revenues attributable to the
Enterprise or to the payment of the costs received by the City under any contract for the sale of any
service from the Enterprise or any contractual arrangement with respect to the use, services or capacity of
the Enterprise, but excluding connection charges, (b) the proceeds of any insurance covering business
interruption loss relating to the Enterprise, (c) interest earned on any moneys or investments held pursuant
to the Resolution and required to be paid into the Sewer Enterprise Fund, all as determined in accordance
with Generally Accepted Accounting Principles, and (d) Refundable Credits, if any, with respect to a
Series of Bonds.
“Operating Expenses” are generally defined in the Resolutions to mean all actual maintenance
and operation costs of the Enterprise incurred by the City in any particular Fiscal Year or period to which
said term is applicable or charges made during such Fiscal Year or period, but only if such charges are
considered operating expenses in conformity with Generally Accepted Accounting Principles, including
amounts reasonably required to be set aside in reserves for items of Operating Expenses the payment of
which is not then immediately required. Operating Expenses include the payment of charges for
wastewater services pursuant to the City’s contract with Los Angeles.
“Net Revenues” mean, for any period, the Revenues during such period less the Operating
Expenses during such period.
See “APPENDIX D - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -Definitions.”
8
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM
NET REVENUES OF THE ENTERPRISE AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER
THE MASTER RESOLUTION. 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. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY, STATE
OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATIONS.
Rate Covenant
The City has covenanted in the Master Resolution that it will at all times prescribe revise and
collect rates, fees and charges for the use or service of the Enterprise as provided in the Act and so that in
each twelve-month period such rates fees and charges together with other Revenues reasonably expected
to be available during such period are reasonable expected to yield Net Revenues during such twelve
month period sufficient for the payment of the sum of the following:
(i) An amount equal to 1.20 times the Maximum Annual Debt Service;
(ii) The amount if any to be paid during such twelve-month period into the Reserve Account in
the Debt Service Fund (other than amounts required to be paid into such Account out of the proceeds of
Bonds); and
(iii) All other charges or liens whatsoever payable out of Revenues during such twelve-month
period, and, to the extent not otherwise provided for, all amounts payable on Subordinated Indebtedness.
Reserve Account
A Reserve Account is established by the Master Resolution and is required to be funded in an
amount equal to the least of (i) Maximum Annual Debt Service, (ii) 125% of average annual Debt Service
on all Outstanding Bonds, and (iii) 10% of the proceeds of all Outstanding Bonds (the “Reserve
Requirement”). See “PLAN OF FINANCE — Estimated Sources and Uses of Funds.” Amounts in the
Reserve Account are to be used only for the payment of principal and interest with respect to the Bonds to
the extent amounts in the Debt Service Account are insufficient and moneys in certain other funds are not
available to restore the deficiency. See “APPENDIX D — SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS.” Amounts available and on deposit in the Reserve Account in excess of the Reserve
Requirement are to be transferred to the Sewer Enterprise Fund. Whenever the amount in the Reserve
Account together with the amount in the Debt Service Account is sufficient to pay in full all Outstanding
Bonds in accordance with their terms (including principal or applicable sinking fund redemption price and
interest thereon), the funds on deposit in the Reserve Account will be transferred to the Debt Service
Account.
The City may satisfy the Reserve Requirement by obtaining a policy of insurance a letter of
credit, a surety bond or any other security device meeting the requirements set forth in the Resolutions.
Additional Bonds
In addition to the Bonds, the City may authorize one or more other series of Additional Bonds
secured by the pledge of Revenues made under the Master Resolution equally and ratably with the Bonds,
provided the following conditions among others are met:
(i) The Trustee must receive a certificate of an Authorized Officer of the City (together
with supporting calculations prepared by the City) to the effect that the Net Revenues, calculated on the
basis of Generally Accepted Accounting Principles, as shown by the books of the City for the last
9
completed Fiscal Year prior to the date of the authentication and delivery of such Additional Bonds as
shown by an audit certificate or opinion of an independent certified public accountant or firm of certified
public accountants engaged by the City, plus, at the option of the City, either or both of the allowances for
earnings set forth in subsection (ii) below, shall have amounted to at least 1.20 times the Maximum
Annual Debt Service on all Bonds to be Outstanding immediately subsequent to the issuance of such
Additional Bonds.
(ii) For the purposes of the Certificate required above, there may be added to the
Revenues (1) an allowance for earnings arising from any increase in the charges made for service from
the Enterprise which has become effective prior to the issuance of such Additional Bonds but which,
during all or any part of said last completed Fiscal Year, was not in effect, as shown by the certificate or
opinion of the City Engineer or of an independent certified public accountant or firm of certified public
accountants employed b the City or of an independent engineer of recognized standing qualified to pass
on questions related to the financial conditions of Enterprise operations; and (2) an allowance for earnings
from any additions or to improvements of extensions of the Enterprise to be made with the proceeds of
such Additional Bonds and also from any such additions, improvements or extensions which have been
made from moneys from any source but which, during all or any part of said last completed Fiscal Year,
were not in service, all as shown by a certificate or opinion of the City Engineer or of an independent
engineer of recognized standing qualified to pass on questions relating to the financial conditions of
Enterprise operations.
(iii) The amount on deposit in the Reserve Account must be increased at or prior to the
time such Additional Bonds become Outstanding to an amount at least equal to the Reserve Requirement
on all Outstanding Bonds and such Additional Bonds.
THE ENTERPRISE
General
The Enterprise includes a collection system consisting of 86 miles of underground sewer lines
and seven sewer pumping stations located entirely within the City. This City has a contractual right to
wastewater treatment and disposal at the Hyperion Plant, pursuant to a sewage disposal contract executed
by the City and the city of Los Angeles in 1999. See “THE HYPERION SYSTEM - Contracting
Agencies and the Sewage Disposal Contracts.” The City is responsible for the operation and maintenance
of the local facilities constituting the Enterprise and Los Angeles is responsible for operation and
maintenance of the Hyperion System.
Service Area
The Enterprise serves the area defined by the boundaries of the City, representing approximately
five square miles. The Enterprise collects wastewater flows from approximately 12,728 parcels of land
representing approximately 18,058 residential, commercial, industrial and institutional units. The City is
located in the western portion of the County, approximately eight miles west from downtown Los
Angeles, five miles east of the Pacific Ocean and five miles north of Los Angeles International Airport.
The City has a population of approximately 40,657 and is substantially developed.
Management and Employee Relations
The City has 10.33 employees assigned directly to the Enterprise for Fiscal Year 2008-09. The
Public Works Director has overall responsibility for the Enterprise. The following are certain key
personnel responsible for the operation and maintenance of the Enterprise.
Charles Herbertson, Public Works Director. Mr. Herbertson has been the Public Works Director
and City Engineer for the City since 2004. In this capacity he is in overall charge of the Public Works
10
Department and oversees the activities of its four divisions: Administration, Engineering, Environmental
Programs and Operations, and Maintenance Operations. He came to the City from the city of Hawthorne
where he worked in various capacities since 1985, including as City Engineer and Airport Manager. In
1994, Mr. Herbertson became the Director of Public Works for the city of Hawthorne and was
subsequently promoted to Chief of General Services and Public Works in 1998. In this position he was
responsible for all public works construction in the City and supervised the three divisions of Public
Works: Engineering, Equipment, and Street and Facilities Maintenance. Between September 2002 and
January 2004, Mr. Herbertson served as Interim City Manager of the city of Hawthorne. Mr. Herbertson
received his Bachelor of Science degree in Civil Engineering from Old Dominion University in Norfolk,
Virginia. He also has a Master’s in Public Administration from the University of Southern California. He
is a licensed professional Civil Engineer and Land Surveyor in the State of California.
Mate Gaspar, Engineering Services Manager. Mr. Gaspar was appointed Manager of the
Engineering Division of Public Works in 2005. Mr. Gaspar has been with the City since 1999. He has
been the Engineering Services Manager of the Public Works Department - Engineering Division since
2004. In this capacity, he is responsible for the work activities of the division employees. Mr. Gaspar
worked for Charles Abbott Associates from 1994 to 1999. While employed with Charles Abbott he
worked in the City of Palos Verdes Estates, City of Rancho Palos Verdes, City of Apple Valley and city
of Moorpark under city engineering and planning consultant contracts. Mr. Gaspar worked for the city of
El Monte from 1991 to 1994 and supported general city engineering activities. Mr. Gaspar received a
Bachelor of Science in Civil Engineering from California State Polytechnic University, Pomona. Mr.
Gaspar is a certified Building Inspector.
Heustace Lewis, Maintenance Operations Manager. Mr. Lewis was appointed Manager of the
Maintenance Operations Division of Public Works in 2005. Mr. Lewis has been with the City since 1985.
He has been the Maintenance Operations Manager of the Public Works Department – Maintenance and
Operations Division since 2005. In his capacity he is responsible for the overall work activities of the
Division employees such as electrical, building, and sewer and street maintenance. Mr. Lewis was an
electrical supervisor from 1990 to 2005.
The City’s employees in general are represented by six bargaining units; the employees of the
Enterprise are represented by two of those units, whose contracts expire as follows:
Bargaining Unit Contract Expiration Date
General Service Workers December 2010
Management Employees October 2010
Outstanding Indebtedness
As of the date of the Official Statement, there is no outstanding bonded indebtedness of the
Enterprise, other than the 1999 Bonds (which will be defeased with proceeds of the Bonds).
Historical Number of Customers
The City’s customer base has remained relatively stable over the past five years. The following
table sets forth the average number of Enterprise customers during the last five fiscal years.
11
TABLE 1
City of Culver City
Enterprise
Historical Average Number of Customers
Fiscal Year Number of Customers
(1)
2003-04 18,040
2004-05 18,040
2005-06 18,050
2006-07 18,055
2007-08 18,060
_______________
Source: City of Culver City
(1)
The City’s customer base is very stable because the City is already built-out, other than the
occasional small scale multi-unit development project.
Top Ten Customers
The top ten customers, listed in the following table, accounted for approximately 12.67 percent of
the total Enterprise revenues for the fiscal year ending June 30, 2009.
TABLE 2
City of Culver City
Wastewater Enterprise
Top Ten Customers
(Fiscal Year 2008-09)
(1)
Customer Type of Use
Annual Flow
Hundred
Cubic Feet
(2)
Revenues
Percent of Total
Wastewater
Revenues
Fox Hills Canterbury Co Condominiums 43,642 $167,068 1.93%
Lot Inc. (subsidiary of Sony Pictures) Movie Studio/Offices 51,561 165,722 1.91
CRP Centinela LP Hotel 26,845 143,663 1.66
George Levy Laundromat 31,886 122,803 1.42
Culver Center Partners East 1 LP Shopping Center 20,515 119,760 1.38
Fox Hills Mall LLC Fox Hills Mall 24,455 102,620 1.18
Brotman Medical Center Inc Hospital 23,532 88,852 1.03
Maier Brewing Co Retail Market / Restaurant 11,471 75,163 0.87
DP Culver LLC (Sheraton) Hotel 11,746 62,883 0.73
Raintree Realty LLC Shopping Center 7,248 49,607 0.57
Total 252,901 $1,098,141 12.67%
Source: City of Culver City
(1) Based on the sewer user charge structure adopted by the City for the 2008-09 Fiscal Year.
(2) Annual flow data is the actual annual flow from the calendar year prior to the beginning of the fiscal year. Therefore, sewer
user charges for fiscal year 2008-09, which began on July 1, 2008, are based on the actual flow from calendar year 2007.
Budget Process and Billing Procedures
As an annual operating practice, the Engineering Division of the Public Works Department
provides estimates of revenues and expenditures for operations of the Enterprise (including expected
contract billings from Los Angeles for the treatment of effluent at the Hyperion Plant, which have
fluctuated over the past ten years) for the upcoming fiscal year by May of each year to an outside firm
(the “Consultant”). The Consultant prepares an analysis of the rates and charges necessary to provide
adequate revenues to the Enterprise. The recommendations of the Consultant are included in a report by
the City Engineer to the City Council by June of each year. The City Council conducts a review of the
proposed budget and makes such revisions as it deems desirable and adopts a budget by July 1. The City
12
reports the adopted sewer user charges to the County Tax Collector’s Office by August 10 of each fiscal
year for inclusion in the tax bills mailed to owners of property in the City. See “—Rates and Charges.”
Each Enterprise user pays sewer charges as a direct assessment billed on his or her property tax
bill. Property taxes are due on November 1 but are not delinquent if paid by December 10 (for the first
installment) and April 10 (for the second installment). The County remits sewer charge revenues to the
City in seven installments. Current payment practices by the County provide for payment to the City of
approximately 60% of the sewer charge revenues by February. By April, the County allocates
approximately 89% of sewer charge revenues to the City with the balance delivered by June. If a property
owner fails to pay the sewer charge portion of his or her property tax bill, the entire amount is considered
delinquent and remains subject to penalties and tax foreclosure procedures. If the property tax bill remains
unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by
the County Tax Collector for the delinquent amount. The current year property tax delinquency rate
within the City has averaged less than 2 percent over the past 10 years.
The following table summarizes payments made to Hyperion from Fiscal Year 1999-2000
through 2007-08.
TABLE 3
City of Culver City
Wastewater Enterprise
Hyperion Payments
Fiscal Year 1999-2000 through 2007-08
Fiscal Year Charges from Hyperion
Percent Change in
Annual Charges
1999-2000 $ 825,000 --
2000-01 1,665,000 101.8%
2001-02 2,155,000 29.4
2002-03 2,882,000 33.7
2003-04 1,881,000 -34.7
2004-05 2,108,000 12.1
2005-06
(1)
2,210,000 4.8
2006-07
(1)
2,940,000 33.0
2007-08
(1)
2,313,000 -21.3
______________________________
Source: City of Culver City
(1)
Hyperion is crediting back to the City in fiscal year 2008-09 approximately $3,000,000 for overpayments
charged by Hyperion in fiscal years 2005-06, 2006-07 and 2007-08.
Rates and Charges
The City increased its sewer user charges in 2007 in compliance with Proposition 218, after
providing mailed notice at least 45 days prior to a public hearing. See “CONSTITUTIONAL
PROVISIONS AFFECTING ENTERPRISE REVENUES AND EXPENDITURES.”
The City Council approved the current Enterprise charges on [June 22, 2009]. For single family
residences, the billing rate formula includes a minimum, or base charge (by distributing the customer
service cost equally among all single family users), a flow credit (based upon a prorated average flow for
a single family residence), a unit excess wastewater flow surcharge, and an adjustment factor to
compensate for exterior water use. The average annual single family sewer charge for Fiscal Year 2008-
09 is $380.20; the multi-family sewer charge is set at 75% of the single family rate. The following table
provides a summary of the City’s Enterprise charges.
13
TABLE 4
City of Culver City
Wastewater Enterprise
History of Single Family Sewer Rates
Fiscal
Year Sewer User Charge Rate
(2)
Percent Change
in Rates
(3)
Average Annual
Charge
Percent Change in
Annual Charges
(4)
2000-01 $0.34 + $2.39(.58W – 0.13) -- $201.38 --
2001-02 $0.34 + $2.39(.58W – 0.13) 0.0% 200.40 -0.5%
2002-03 $0.34 + $2.39(.58W – 0.14) -1.7 220.55 10.1
2003-04
(1)
$30.27 + (.85W X $2.75) -- 267.93 21.5
2004-05 $33.30 + (.85W X $3.03) 10.0 289.87 8.2
2005-06 $34.97 + (.85W X $3.18) 5.0 306.74 5.8
2006-07 $38.47 + (.85W X $3.50) 10.0 317.69 3.6
2007-08 $42.32 + (.85W X $3.85) 10.0 365.49 15.0
2008-09 $42.32 + (.85W X $3.85) 0.0 380.20 4.0
_______________
(1) City Council approved new formula.
(2) Where W equals the actual water meter use in the calendar year prior to the beginning of the respective fiscal year, measured
in 100 cubic feet increments.
(3) Pure Rate Change holds W constant to measure the increase in rate only.
(4) Percentage Change for Average Annual Charge varies from the Percentage Change for Sewer User Charge Rate due to the
increase or decrease in W (i.e. Water Consumption) by Users from year to year.
The table below provides a comparison of the average annual single-family residential customer’s
usage charge for the City and neighboring communities for fiscal year 2007-08:
TABLE 5
City of Culver City
Wastewater Enterprise
Comparison of Average Annual Single-Family Residential Customers Charges
(Fiscal Year 2007-08)
City
Average Annual Charges
per Single Family Unit
Beverly Hills
(1)(3)
$234.00
Burbank
(1)(3)
328.08
Culver City
(2)(3)
365.49
Glendale
(2)(4)
204.00
Los Angeles
(2)(3)
336.12
Manhattan Beach
(2)(3)(5)
149.28
San Fernando
(1)(4)(6)
249.60
Santa Monica
(2)(3)
240.24
_______________
Source: Wastewater User Charge Survey Report FY 2007-2008, dated May 2008, California Environmental
Protection Agency, State Water Resources Control Board, Division of Financial Assistance
(1) Single Family Residence Rate is a fixed charge.
(2) User fees for Single Family Residence are variable based on water use.
(3) User fee includes debt service cost.
(4) No debt service fee included in user fee.
(5) Manhattan Beach data from Fiscal Year 2006-07.
(6) San Fernando data from Fiscal Year 2005-06.
14
The following table sets forth sewer charge collection history for the Enterprise for the last five
fiscal years.
TABLE 6
City of Culver City
Enterprise
Historical Collection of Sewer Charges
Fiscal
Year
Amount
Billed
Current Amount
Collected
Current Amount
Collected as a
Percentage of Billings
Prior Years’
Delinquent
Collections
(1)
Total Collections as
Percentage of
Amount Billed
2003-04 $6,406,348 $6,585,942 102.80% $ 50,323 103.59%
2004-05 6,873,260 6,682,384 97.22 97,692 98.64
2005-06 7,157,128 7,157,194 100.00 262,965 103.68
2006-07 7,539,361 7,433,405 98.59 36,604 99.08
2007-08 8,655,481 8,654,674 99.99 36,372 100.41
Totals $6,406,348 $6,585,942 102.80% $ 50,323 103.59%
_______________
Source: City of Culver City
(1)
Includes current year late payments, current year penalties, and prior year adjustments for late payment and penalties.
Enterprise User Composition
As summarized in the tables below, as of fiscal year 2007-08, the Enterprise served
approximately 16,726 residential units in the City, including 5,766 single-family residences and 10,960
multi-family units. Residential dwellings represent approximately 62.04% of sewer user charge revenues,
with commercial and industrial users representing 28.69%. Since sewer user charges are incorporated in
the County’s annual property tax billing, usage calculations are based on the water consumption for 2006-
07.
TABLE 7
City of Culver City
Wastewater Enterprise
Wastewater Revenue Allocation by User Classification
Fiscal Year 2007-08
User Classification
No. of
Units
Customer
Service Cost
Volume
Cost
Total
Revenues
Percent of Total
Revenues
Group I
Single Family 5,766 $244,017 $1,861,964 $2,105,981 24.25%
Multi Family 10,960 463,827 2,817,337 3,281,164 37.79
Total Group I 16,726 707,844 4,679,301 5,387,145 62.04
Group II Users (Commercial) 982 41,558 1,735,653 1,777,211 20.47
Group III Users (Comm./Indus.) 126 5,332 708,157 713,489 8.22
Group IV Users (Institutions) 48 2,032 198,494 200,526 2.31
Group V Users (Schools) 4 169 4,952 5,121 0.06
Group VI Users (Large Volume) 15 635 599,213 599,848 6.91
Total 17,901$757,570 $7,925,770$8,683,340 100.0%
_______________
Source: City of Culver City
15
Connection Charges
Connection charges are paid to the City directly by developers or property owners for any change
of business use at the time of the issuance of a building permit by the Building and Safety Division of the
City’s Community Development Department to connect to the Enterprise. The charge is determined by
the Engineering Division of the City’s Public Works Department. The City passes on approximately half
of the connection charges it receives to the City of Los Angeles to pay for the expansion of the Hyperion
Plant. Income from connection charges is not included in the pledge for the Bonds.
The table below set forth a schedule of one-time sewer facilities charges for fiscal years 1998-99
through 2007-08.
TABLE 8
City of Culver City
Wastewater Enterprise
History of Connection Charges
Fiscal Year
Total Connection Fees
Collected
1998-99 $ 175,000
1999-00 64,017
2000-01 43,570
2001-02 35,935
2002-03 23,850
2003-04 154,901
2004-05 287,683
2005-06 1,278,169
(1)
2006-07 230,621
2007-08 632,233
(2)
_______________
Source: City of Culver City
(1)
Increase in fees collected in fiscal year 2005-06 is due primarily to a one-time sewer facility
connection fee from a large development project (i.e., Symantec Corp.).
(2)
Increase in fees collected in fiscal year 2007-08 is due primarily to a one-time sewer facility
connection fee from a large development project (i.e., Westfield Mall renovation).
16
Financial Statements
Set forth in the following tables are the statements of net assets and statements of revenues,
expenditures and changes in fund net assets with respect to the Sewer Enterprise Fund derived from
City’s audited financial statements for the Fiscal Years 2003-04 through 2007-08. The City’s audited
financial statements for the Fiscal Year ended June 30, 2008 are included as APPENDIX B to this
Official Statement. The following table should be read in conjunction with the information and related
footnotes contained in APPENDIX B.
Table 9
CITY OF CULVER CITY
Sewer Enterprise Fund
Statements of Net Assets
(Fiscal Years Ending June 30)
(Dollars in Thousands)
2003-04 2004-05 2005-06 2006-07 2007-08
Assets
Current:
Cash and investments $16,430 $18,338 $20,222 $22,238 $22,044
Accounts receivable 127 119 -- -- --
Accrued interest receivable 163 219 226 284 284
Due from other governments -- -- 693 142 228
Unamortized debt issuance costs 1,686 1,594 1,503 1,408 1,313
Restricted assets: Cash with fiscal agent 1,710 1,710 1,710 1,710 1,710
Total Current Assets $20,116 $21,980 $24,354 $25,782 $25,579
Noncurrent:
Fixed assets-net of accumulated depreciation 35,751 34,591 33,476 33,252 35,293
Total Noncurrent Assets 35,751 34,591 33,476 33,252 35,293
Total Assets 55,867 56,571 57,830 59,034 60,872
Liabilities
Current:
Accounts payable 358 620 65 1,009 599
Accrued payroll 27 5 5 -- 15
Accrued vacation and sick leave 27 25 22 18 46
Accrued interest payable 419 413 406 398 391
Deposits payable 66 66 66 66 66
Current portion of bonds note and loans payable 445 -- 485 505 --
Total Current Liabilities $1,342 $1,129 $1,049 $1,996 $1,117
Noncurrent:
Bonds, notes and capital leases 22,705 22,705 21,760 21,255 21,255
Total Noncurrent Liabilities 22,705 22,705 21,760 21,255 21,255
Total Liabilities $24,047 $23,834 $22,809 $23,251 $22,372
Net assets
Invested in capital assets, net of related debt 12,601 11,886 11,231 11,492 14,038
Unrestricted 19,219 20,851 23,790 24,291 24,462
Total Net Assets 31,820 32,737 35,021 35,783 38,500
Total Liabilities and Net Assets $55,867 $56,571 $57,830 $59,034 $60,872
_____________
Source: City of Brea audited financial statements for fiscal years 2003-04 through 2007-08.
17
Table 10
City of Culver City
Enterprise
Historical Operating Results
(Fiscal Years Ending June 30)
(Dollars in Thousands)
(1)
Audited
2003-04
Audited
2004-05
Audited
2005-06
Audited
2006-07
Audited
2007-08
Operating Revenues:
Sales and service charges $6,669 $6,844 $7,431 $7,527 $8,716
Sewer connection fees 155 288 1,278
(2)
231 632
(3)
Miscellaneous 1 -- 2 2 --
Total Operating Revenues $6,825 $7,132 $8,711 $7,760 $9,348
Operating Expenses:
Salaries and benefits 317 392 438 572 651
Supplies 59 80 113 347 446
Charges from Hyperion System
(4)
1,881 2,108 2,210 2,940 2,313
Repairs and maintenance 37 113 161 67 114
Insurance 7 7 12 13 89
Claims and settlements -- -- -- -- 6
Administrative services 517 598 599 546 543
Rent and lease expenses 407 406 406 406 360
Consulting and contractual services 231 198 190 506 439
Depreciation and amortization 1,404 1,417 1,415 1,392 1,419
Total Operating Expenses $4,860 $5,319 $5,544 $6,789 $6,380
Operating Income (Loss) $1,965 $1,813 $3,167 $ 971 $2,968
Nonoperating Revenues (Expenses):
Interest revenue 214 559 433 1,132 1,066
Interest expense (1,354) (1,455) (1,316) (1,300) (1,277)
Total Nonoperating Revenues
(Expenses)
$(1,140) $(896) $(883) $(168) $(211)
Income (Loss) Before transfers 825 917 2,284 803 2,756
Transfers:
Transfers in -- -- -- -- --
Transfers out -- -- -- (41) (40)
Changes in Net Assets $ 825 $ 917 $2,284 $ 762 $2,716
Net Assets:
Net assets (deficit): beginning of fiscal year 30,995 31,820 32,737 35,021 35,784
Net assets (deficit): end of fiscal year $31,820 $32,737 $35,021 $35,783 $38,500
_______________
Source: City of Culver City Comprehensive Annual Financial Reports and City of Culver City
(1) Numbers may not add due to rounding.
(2) Increase in sewer connection fees in fiscal year 2005-06 is due primarily to a large development project (i.e.,
Symantec Corp.).
(3) Increase in sewer connection fees in fiscal year 2007-08 is due primarily to a large development project (i.e.,
Westfield Mall renovation).
(4) Primarily represents payments to the City of Los Angeles for wastewater treatment costs.
18
The table below sets forth the historical Net Revenues and debt service coverage of the Enterprise
for fiscal year 2003-04 through 2007-08.
TABLE 11
City of Culver City
Wastewater Enterprise
Historical Net Revenues and Debt Service Coverage
(Fiscal Years Ending June 30)
2003-04 2004-05 2005-06 2006-07 2007-08
Operating Revenues:
Charges for Services
(1)
$6,670,741$6,844,378$7,432,712 $7,529,392 $8,716,475
Interest Income
(2)
212,576 559,271 432,926 1,132,252 1,065,496
Total Operating Revenues $6,883,317 $7,403,649 $7,865,638 $8,661,644 $9,781,971
Operating Expenses:
Total Operating Expenses
(3)
$3,456,000 $3,902,000 $4,129,000 $5,397,000 $4,961,174
Net Revenues $3,427,317 $3,501,649 $3,736,638 $3,264,644 $4,820,797
1999 Bonds Debt Service
(4)
$1,700,000$1,692,000$1,688,000 $1,692,000 $1,690,000
Coverage 2.02x 2.07x 2.21x 1.93x 2.85x
Net Revenues after Debt Service $1,727,317 $1,809,649 $2,048,638 $1,572,644 $3,130,797
_______________
Source: Fieldman, Rolapp & Associates based on information provided by the City and the City’s audited financial statements
(1) Sales and Service Charges.
(2) Includes investment income.
(3) Includes salaries and benefits, supplies, repair and maintenance, insurance, claims and settlements, administrative services,
rent and lease expenses, consulting and contract services. Does not include depreciation.
(4) Annual debt service on the 1999 Bonds rounded to the nearest thousand to reconcile to the city’s audited financial
statements.
19
The table below sets forth the projected revenues, expenditures and debt service coverage of the
Enterprise for fiscal years 2008-09 through 2013-14.
TABLE 12
City of Culver City
Wastewater Enterprise
Projected Revenues, Expenses and Coverage
*
(Fiscal Years Ending June 30)
Estimated
2008-09
Projected
2009-10
Projected
2010-11
Projected
2011-12
Projected
2012-13
Projected
2013-14
Operating Revenues:
Charges for services
(1)
$8,668,401 $8,203,000 $8,367,060 $8,534,401 $8,705,089 $8,879,191
Interest Income
(2)
350,000 350,000 350,000 350,000 350,000 350,000
Total Operating Revenues $9,018,401 $8,553,000 $8,717,060 $8,884,401 $9,055,089 $9,229,191
Operating Expenses:
Salaries and benefits
(3)
$1,096,332 $1,140,185 $1,162,989 $1,186,249 $1,209,974 $1,234,173
Hyperion O&M
(4)
37,000 1,331,600 1,409,300 1,462,000 1,517,300 1,572,000
Hyperion capital costs
(4)
0 1,312,300 1,691,600 1,691,200 1,080,000 903,800
Administration, Insurance, Rent
(5)
1,891,025 1,947,756 2,006,188 2,066,374 2,128,365 2,192,216
Total Operating Expenses $3,024,357 $5,731,841 $6,270,077 $6,405,823 $5,935,639 $5,902,189
Net Revenues $5,994,044 $2,821,159 $2,446,983 $2,478,578 $3,119,450 $3,327,002
1999 Bonds Debt Service
(6)
$1,708,844 $1,134,617 -- -- -- --
2009 Bonds Debt Service* -- $ 519,024 $1,553,588 $1,551,838 $1,554,413 $1,552,313
Coverage
(7)
* 3.51x 1.71x 1.58x 1.60x 2.01x 2.14x
Remaining revenues* $4,285,200 $1,167,518 $ 893,395 $ 926,740 $1,565,037 $1,774,689
_______________
Source: City of Culver City Comprehensive Annual Financial Reports and Fieldman, Rolapp & Associates.
(1)
Projected revenues reflect (a) an estimated 6% decrease in fiscal year 2009-10 water consumption in the City over fiscal year
2008-09 projections and thereafter, no changes in water consumption through 2013-14, and (b) a planned 2% increases in
sewer user charge fees charged by the City in Fiscal Years 2010-11 through 2013-14.
(2)
Interest earnings reflect amount budgeted in Fiscal Year 2008-09 and remain constant. Assumes interest rate of 1.5%
applied to projected year end fund balance.
(3)
Reflects the amount budgeted for Fiscal Year 2008-09. Salary and benefit figures for subsequent years incorporate a 4%
increase in Fiscal Year 2009-10 per expiring bargaining unit contract and a 2% increase thereafter.
(4)
Figures for the City’s projected Hyperion payments are derived from information provided by the city of Los Angeles, which
provides a five-year forecast of operating and capital costs. The actual amount charged to the City in Fiscal Year 2008-09
will be approximately $37,000, which is significantly less than the budgeted amount of $3,677,243 because Hyperion is
giving the City credit for over-payments in prior fiscal years.
(5)
Reflects the amount budgeted for Fiscal Year 2008-09. Administrative and related costs reflect a 3% annual increase factor.
Excludes Depreciation.
(6)
For Fiscal Year 2009-10, debt service on the 1999 Bonds is a September 1, 2009 payment to be made from the Escrow Fund.
(7)
Equals Net Revenues divided by total debt service.
THE HYPERION SYSTEM
General
As described in “Contracting Agencies” below, the City conveys wastewater from the City to the
Hyperion Plant for treatment and disposal. The Hyperion Plant is a major component in the wastewater
treatment and disposal system operated by Los Angeles, which serves an area of approximately 600
square miles in the Los Angeles Basin (the “Hyperion System”). The Hyperion Plant serves the central
coastal area of the Los Angeles Basin and portions of the San Fernando Valley. Three inland plants along
the Los Angeles River (the Tillman Water Reclamation Plant, the Burbank Plant and the Los Angeles-
Glendale Water Reclamation Plant) also treat wastewater flows; however, sludge from these three
*
Preliminary, subject to change.
20
facilities is discharged into interceptor sewers and the Hyperion Plant for additional treatment and
disposal.
The Hyperion System consists of a series of approximately 6,000 miles of local, collector and
interceptor sewers terminating at the Hyperion Plant. Five major sewers collect and convey wastewater to
the Hyperion Plant: (i) the Central Outfall Sewer, (ii) the North Outfall Replacement Sewer, (iii) the
North Outfall Sewer, (iv) the North Central Outfall Sewer, and (v) the Coastal Interceptor Sewer. The
Enterprise has access to the Hyperion Plant through the latter four sewers. The existing Hyperion Plant,
designed for an average flow of 450 mgd, currently treats to a secondary treatment standard an average
dry weather flow of approximately 322 million gallons per day and has a total wet weather flow capacity
of 850 million gallons per day. The Hyperion Plant receives wastewater flow from the central, western
and northern areas of the City of Los Angeles.
Certain information about the City of Los Angeles, its wastewater system and the Hyperion Plant
is set forth in an Official Statement, dated March 18, 2009, relating to the bonds captioned “$454,785,000
City of Los Angeles Wastewater System Revenue Bonds, Refunding Series 2009-A” (the “Los Angeles
Bonds”). The City of Los Angeles has also entered into various continuing disclosure agreements,
including one with respect to the Los Angeles Bonds, pursuant to which it is contractually obligated to
file annual reports, notices of certain material events as defined under Rule 15c2-12 of the Exchange Act
(“Rule 15c2-12”) and annual audited financial statements with the Municipal Securities Rulemaking
Board. The Official Statement relating to the Los Angeles Bonds and Los Angeles’ annual reports should
be reviewed for information pertaining to the Hyperion Plant. The information in the Official Statement
relating to the Los Angeles Bonds is not incorporated by reference in this Official Statement.
THE CITY OF LOS ANGELES HAS NOT ENTERED INTO ANY CONTRACTUAL
COMMITMENT WITH THE CITY, THE TRUSTEE, THE UNDERWRITER OR THE OWNERS OF
THE BONDS TO PROVIDE INFORMATION ABOUT THE LOS ANGELES BONDS, THE CITY OF
LOS ANGELES OR THE HYPERION PLANT TO THE CITY OR THE OWNERS OF THE BONDS.
ALTHOUGH THEY BELIEVE LOS ANGELES TO BE A RELIABLE SOURCE OF INFORMATION
WITH RESPECT TO THE HYPERION PLANT, NEITHER THE CITY NOR THE UNDERWRITER
ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OF SUCH INFORMATION.
Contracting Agencies and the Sewage Disposal Contracts
Los Angeles currently provides sewer transportation and treatment on an area-wide basis for 29
agencies (the “Contracting Agencies”) pursuant to certain contracts executed and in force with each
agency (the “Sewage Disposal Contracts”). Of the 29 Contracting Agencies, the five largest (Beverly
Hills, Los Angeles County Sanitation District Number 4, Glendale, Santa Monica and the City) account
for approximately 78 percent of the Contracting Agencies’ total flow of effluent.
The Sewage Disposal Contracts between Los Angeles and the Contracting Agencies, including
the City’s (which was executed in 1999), include the following key provisions:
• Los Angeles is recognized as the sole owner and sole operating authority of the Hyperion
System.
• Discharge entitlements will be eliminated and all unused capacity in the Hyperion System
will be available to any Contracting Agency in return for proportionally shared future
sewer facility charges and capital costs for upgrade of existing facilities and construction
of new facilities.
• Treatment and disposal charges will be based on actual discharge by measuring discharge
in terms of flow and strength.
• Conveyance charges will be based on actual flow and distance.
21
• There will be no limitation on the wastewater that a Contracting Agency can discharge to
the Hyperion System.
• Los Angeles and the Contracting Agency will share the connection fee income paid by
new customers discharging to the Hyperion System.
• Interest and penalties will be added to late payments by the Contracting Agencies.
• Each Agency may have access to a share of the reusable water produced by Los
Angeles’s water reclamation plants.
• Federal or state liability, whether relating to water or air, including fines, penalties,
increased costs due to increased regulations and the costs of any alternative project,
including third party liability, including compensatory damages and liability arising from
operator error, negligence, sewage spills or other discharges, but not including liability
arising from gross negligence and/or willful and/or intentional acts by Los Angeles, will
be borne by the Contracting Agencies on a proportional basis.
• Contracting Agencies will not be responsible for liability arising from construction and
operation of Los Angeles’s wastewater system and Los Angeles will not be responsible
for liability arising from construction and operation of the wastewater system of the
Contracting Agencies.
• The new contracts will have thirty-year terms, except that the parties may initiate
renegotiations after ten years for certain changed conditions.
• Contracting Agencies will reimburse Los Angeles for certain capital improvements and
related engineering and contract administration costs.
Regulatory Requirements
The Hyperion System is subject to regulatory requirements relating to the Federal Water Pollution
Control Act as amended. The regulatory requirements are administered by the United States
Environmental Protection Agency (“EPA”) through the State Water Resources Control Board
(“SWRCB”). Regulations of these agencies deal primarily with the quality of effluent which may be
discharged from the Hyperion Plant, the disposal of sludge, the discharge of pollutants into the
groundwater, and the nature of waste material (particularly industrial waste) discharged into the Hyperion
System. As a condition of having received federal EPA grant funds under the Clean Water Act for
planning, design and construction of various wastewater projects, Los Angeles is subject to additional
requirements. Among the grant-related requirements are guidelines which must be followed concerning
planning methodologies, design criteria, procurement, construction activities, and financing of facilities.
To comply with federally mandated effluent quality and disposal criteria, Los Angeles must
operate the Hyperion System according to discharge limitations and reporting requirements set forth in
National Pollutant Discharge Elimination System (NPDES) discharge permits. At the present time the
Hyperion Plant is in compliance with the requirements of its NPDES permits.
In addition to federal requirements, the Hyperion System must comply with State requirements.
The primary State law concerned with the control of water quality is the Porter Cologne Water Quality
Control Act of 1969 as amended.
BONDOWNERS’ RISKS
INVESTMENT IN THE BONDS INVOLVES ELEMENTS OF RISK. THE FOLLOWING
SECTION DESCRIBES CERTAIN SPECIFIC RISK FACTORS AFFECTING THE PAYMENT AND
SECURITY OF THE BONDS. THE FOLLOWING DISCUSSION OF RISKS IS NOT MEANT TO BE
22
AN EXHAUSTIVE LIST OF THE RISKS ASSOCIATED WITH THE PURCHASE OF THE BONDS
AND THE ORDER OF DISCUSSION OF SUCH RISKS DOES NOT NECESSARILY REFLECT THE
RELATIVE IMPORTANCE OF THE VARIOUS RISKS. POTENTIAL INVESTORS ARE ADVISED
TO CONSIDER THE FOLLOWING FACTORS ALONG WITH ALL OTHER INFORMATION IN
THIS OFFICIAL STATEMENT IN EVALUATING THE BONDS. THERE CAN BE NO
ASSURANCE THAT OTHER RISK FACTORS NOT DISCUSSED UNDER THIS CAPTION WILL
NOT BECOME MATERIAL IN THE FUTURE.
Limited Obligations with Respect to the Bonds
The Bonds are special obligations of the City payable solely from, and secured by, a pledge of
Net Revenues of the Enterprise and any funds and accounts held under the Resolutions. See “SECURITY
FOR THE BONDS.” If, for any reason, the Net Revenues are not sufficient to pay debt service on the
Bonds, the City will not be obligated to utilize any other of its funds, other than moneys on deposit in the
Reserve Account and the other funds and accounts established under the Resolutions. 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.
Forecasts
Although the City believes that the projections of future operating results of the Enterprise
contained in this Official Statement are reasonable, there can be no assurance that actual operating results
will match the projections due to changes in general economic conditions and similar factors, including
defaults in the payment of property taxes. In addition, the Enterprise and economic development within
the service area of the City are subject to federal, State and local regulations. There can be no assurance
that the Enterprise will not be adversely affected by future economic conditions, governmental policies or
other factors beyond the control of the City.
Wastewater System Expenses And Collections
There can be no assurance that the Operating Expenses for the Enterprise will remain at the levels
described in this Official Statement. Changes in Hyperion charges to the City, technology, energy or
other expenses could reduce the Net Revenues and could require substantial increases in rates or charges.
Given the requirements of Proposition 218, the City can give no assurance that any such increase in sewer
charges would not be precluded by a majority protest. See “CONSTITUTIONAL PROVISIONS
AFFECTING ENTERPRISE REVENUES AND EXPENDITURES” below. Additionally, any such rate
increases could increase the likelihood of nonpayment by customers of the Enterprise, which may have an
adverse impact on the City’s ability to pay debt service on the Bonds.
Casualty Risk; Earthquakes
Any natural disaster or other physical calamity, including earthquake, may have the effect of
reducing sewer revenues through damage to the Enterprise and/or adversely affecting the economy of the
surrounding area. The City currently maintains insurance or self-insurance, but only if and to the extent
available at reasonable cost from reputable insurers. No assurance can be given that property insurance
will continue to be maintained at such levels in the future, depending upon factors such as cost and
availability.
The State of California is a seismically active region. There are several geological faults in the
area, which have the potential to cause serious earthquakes and damage to the Enterprise. According to
the City’s General Plan, the two most probable major earthquake sources for the City are the San Andreas
Fault Zone, which is located 45 miles from the City at its closest point, and the Newport-Inglewood Fault
Zone, a portion of which is located within the City. The City is also in proximity to the Overland and
Charnock faults, but movement along those faults is not anticipated because evidence suggest those faults
23
are no longer active. The City does not carry earthquake insurance. Loss of components of the Enterprise
may have an adverse impact on the City’s ability to pay debt service on the Bonds.
Additional Bonds and Future Rate Increases
The Master Resolution permits the incurrence of additional obligations secured by Net Revenues
on a parity basis with the Bonds, upon the City’s compliance with certain conditions. Such additional
Parity Bonds would increase debt service payable from Net Revenues and could adversely affect debt
service coverage with respect to the Bonds. Although the rate covenant of the City under the Master
Resolution will remain in effect, the City can give no assurance that any required increase in sewer rates
pursuant to the rate covenant would not be precluded by a majority protest. See “SECURITY FOR THE
BONDS,” “THE ENTERPRISE – Rates and Charges” and “CONSTITUTIONAL PROVISIONS
AFFECTING ENTERPRISE REVENUES AND EXPENDITURES.”
Limitations on Remedies
Remedies available to the Owners may be limited by a variety of factors and may be inadequate
to assure the timely payment of principal of and interest and premium, if any, on the Bonds or to preserve
the tax-exempt status of interest on the Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and the Resolutions to
the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of
creditor’s rights, by equitable principles and by the exercise of judicial discretion. The lack of availability
of certain remedies or the limitation of remedies may entail risks of delay in the exercise of, or limitations
on or modifications to, the rights of the Owners.
Enforceability of the rights and remedies of the Owners of the Bonds, and the obligations
incurred by the City, may become subject to the federal bankruptcy code and applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of
creditor’s rights generally, now or hereafter in effect, equity principles which may limit the specific
enforcement under State law of certain remedies, the exercise by the United States of America of the
powers delegated to it by the Constitution, the reasonable and necessary exercise, in certain exceptional
situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the
interest of serving a significant and legitimate public purpose and the limitations on remedies against
governmental entities in the State.
Investment of Funds
The Reserve Account and all other funds held under the Resolutions are required to be invested in
Permitted Investments as provided under the Master Resolution. See “APPENDIX D - SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS.” All investments, including Permitted Investments, authorized by
law from time to time for investments by the City contain a certain degree of risk. Such risks include, but
are not limited to, a lower rate of return than expected, decline in market value and loss or delayed receipt
of principal. The occurrence of these events with respect to amounts held under the Resolutions could
have a material adverse effect on the security for the Bonds.
Voter Initiatives -- State Constitutional Amendment
California’s voter initiative process allows measures which qualify for the ballot to be approved
or disapproved by voters in a State of California statewide election. From time to time initiative measures
could be adopted which adversely affect the ability of the City to pay debt service on the Bonds. In recent
years, several initiative measures have been proposed or adopted which affect the ability of local
governments to increase taxes and rates. There is no assurance that the electorate or the State legislature
24
will not at some future time approve additional limitations that would affect the ability of the City to
implement rate increases, which could reduce Net Revenues and adversely affect the security for the
Bonds.
Loss of Tax Exemption
In order to maintain the exclusion from gross income for federal income tax purposes of the
interest on the Bonds, the City has covenanted to comply with the applicable requirements of Section 148
and certain other sections of the Internal Revenue Code of 1986, as amended, relative to arbitrage and
avoidance of characterization as private activity bonds, among other things. The interest on the Bonds
could become includable in gross income for purposes of federal income taxation retroactive to the date
of issuance of the Bonds as a result of acts or omissions of the City in violation of their covenants.
Should such an event of taxability occur, the Bonds are not subject to redemption or any increase in
interest rates and may remain Outstanding until maturity or until redeemed under one of the redemption
provisions contained in the Resolutions. See “CONCLUDING MATTERS – Tax Matters.”
Secondary Market
There can be no assurance that there will be a secondary market for the Bonds, or if a secondary
market exists, that such Bonds can be sold for any particular price. Occasionally, because of general
market conditions or because of adverse history or economic prospects connected with a particular issue,
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, pricing of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could substantially differ from the original purchase price.
CONSTITUTIONAL PROVISIONS AFFECTING
ENTERPRISE REVENUES AND EXPENDITURES
Article XIIIA and Article XIIIB
Pursuant to California law, any fee that exceeds the reasonable cost of providing the service for
which the fee is charged is a “special tax,” which under Article XIIIA of the California Constitution must
be authorized by a two-thirds vote of the electorate. This requirement may be applicable to rates for water
and sewer service and capacity charges, to the extent that such rates and charges exceed the reasonable
costs of providing service. In addition, the California courts have determined that fees imposed as a
condition of approval of a development project, such as impact fees for water or sewer service, will not be
special taxes if the fees approximate the reasonable cost of constructing the related improvements
contemplated by the local agency imposing the fee. Such court determinations have been codified in
California Government Code Section 66005.
On November 6, 1979, California voters approved Proposition 4, the “Gann Initiative,” which
added Article XIIIB to the California Constitution. Under Article XIIIB, state and local governmental
entities have an annual “appropriations limit” and are not permitted to spend certain moneys that are
called “appropriations subject to limitation” (consisting of tax revenues, state subventions, and certain
other funds) in an amount higher than the “appropriations limit.” Article XIIIB does not affect the
appropriations of moneys that are excluded from the definition of “appropriations subject to limitation,”
including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded
indebtedness subsequently approved by the voters. In general terms, the “appropriations limit” is to be
based on certain 1978-79 expenditures and is to be adjusted annually to reflect changes in consumer
prices, populations, and services provided by these entities. Among other provisions of Article XIIIB, if
these entities’ revenues in any tax year exceed the amounts permitted to be spent, the excess would have
to be returned by revising tax rates or fee schedules over the subsequent two years. Certain expenditures
are excluded from the appropriation limit, including payments of indebtedness existing or legally
authorized as of January 1, 1979, or of bonded indebtedness thereafter approved by voters and payments
25
required to comply with court or federal mandates which without discretion required an expenditure for
additional services or which unavoidably make the providing of existing services more costly.
The City believes that its rates and charges for water and sewer service do not exceed the costs
the City reasonably bears in providing existing such services, and are presently in compliance with Article
XIIIA and Article XIIIB.
Proposition 218: Article XIIIC and Article XIIID
General. On November 5, 1996, California voters approved Proposition 218, “the Right to Vote
on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the California Constitution, providing
certain voter approval requirements and other limitations on the imposition of new or increased taxes,
assessments, and property-related fees and charges.
Article XIIIC. Article XIIIC provides that a local government may not impose, extend, or
increase local taxes until such taxes are submitted to the electorate for approval. General taxes, imposed,
extended, or increased for general governmental purposes of the city, require a majority vote and special
taxes, imposed, extended, or increased for specific purposes, require a two-thirds vote. In addition,
Article XIIIC provides that the constitutional initiative power shall not be prohibited or otherwise limited
in matters of reducing or repealing any local taxes, assessments, fees, and charges. This provision with
respect to the initiative power is not limited to taxes, assessments, fees, and charges imposed on or after
November 6, 1996, the effective date of Proposition 218. No assurance can be given that the voters of the
City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or
charges, including a reduction of all or any portion of the customer charges for wastewater services
securing the Bonds. The use of the initiative power is arguably limited in the case of levies directly
pledged to bonded indebtedness, such as the City’s charges for wastewater services. Although the City
expects that the impairment of contracts clause of the federal Constitution would likely invalidate a rate-
reduction initiative that violated a rate covenant in existing revenue bond agreements, it is possible that
courts deciding the issue could determine otherwise. If an initiative to reduce the City’s charges for
wastewater service is the subject of a challenge, no guarantee can be made that the courts will agree with
such interpretation.
Article XIIID. Article XIIID imposes various procedural and substantive requirements on local
governments that levy an “assessment,” “fee,” or “charge.” Article XIIID defines “fees” or “charges” as
“any levy other than an ad valorem tax, a special tax, or an assessment imposed by a [local government]
upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a
property related service.” “Property related service” means a public service having a direct relationship to
property ownership (property ownership includes tenancies where tenants are directly liable to pay the fee
or charge). In particular, a fee or charge (i) may not exceed the funds required to provide the “property
related service,” (ii) may not be used for any purpose other than that for which the fee or charge was
imposed, (iii) may not exceed the proportional cost of the service attributable to the parcel, (iv) may not
be imposed for a service unless that service is actually used by, or is immediately available to, the owner
of the property in question, and (v) may not be imposed for general governmental services.
In addition, before any property related fee or charge may be imposed or increased, the local
government agency must provide mailed notice 45 days in advance of a hearing regarding the proposed
imposition or increase, and if written protests against the proposal are presented by a majority of the
owners of the identified parcels, the local government agency may not impose or increase the fee or
charge. Moreover, except for fees or charges for water, wastewater, and refuse collection services (or fees
for electrical and gas service, which are expressly exempted from Proposition 218), no property related
fee or charge may be imposed or increased without a majority approval by the property owners subject to
the fee or charge or, at the option of the local agency, two-thirds approval by those residing in the affected
area and voting at the election. Article XIIID states that, beginning July 1, 1997, all fees or charges must
comply with its provisions.
26
The ability of the City to comply with the covenants in the Resolutions in connection with the
levy and collection of wastewater service charges, including the rate covenant described under
“SECURITY FOR THE BONDS – Rate Covenant,” could be adversely affected by actions taken or not
taken by voters, property owners or other persons obligated to pay wastewater service charges.
In July 2006, the California Supreme Court decided Bighorn-Desert View Water Agency v. Verjil
(“Bighorn”) and held that fees and charges for ongoing water service through an existing connection were
fees and charges for a property related service and were therefore imposed on a person as an incident of
property ownership for purposes of Article XIIID. As the California Courts continue to interpret
Proposition 218, charges for wastewater services could also be found to be fees or charges as defined by
Proposition 218. The City believes that it has complied with the requirements of Proposition 218 in all
material respects with respect to the adoption of the City’s current charges for the Enterprise.
The general financial condition of the City may be affected by provisions of Article XIIIC and
Article XIIID, including (A) provisions of Article XIIIC (i) requiring taxes for general governmental
purposes to be approved by a majority vote and taxes for specific purposes, even if deposited into the
General Fund, to be approved by two-thirds vote, (ii) requiring any general purpose tax which the City
imposed, extended or increased, without voter approval, after December 31, 1994, to be approved by
majority vote on November 5, 1998, (iii) subjecting all taxes, assessments, fees and charges to reduction
or repeal at any time through the initiative process; and (B) provisions of Article XIIID that could reduce
the ability of the City to fund certain services or programs that it may be required or choose to fund, such
as provisions (1) adding requirements making it generally more difficult to levy and maintain
assessments, (2) requiring the City to hold a noticed public hearing at which a majority of the owners of
property subject to any new or increased fee or charge may protest and prevent the City from imposing
the new or increased fee or charge, and (3) requiring any imposition or increase of fees or charges other
than for sewer, water and refuse collection services or fees for electrical or gas service (which are not
treated as property related for purposes of Article XIIID) to be approved by “majority of the property
owners” subject to the fee or charge or, at the option of the local government, two-thirds vote of the
electorate residing in the affected area.
The foregoing discussion of Article XIIIC and Article XIIID should not be considered an
exhaustive or authoritative treatment of the issues. The City does not expect to be in a position to control
the consideration or disposition of these issues and cannot predict the timing or outcome of any judicial or
legislative activity in this regard. Interim rulings, final decisions, legislative proposals and legislative
enactments may all affect the impact of Article XIIIC and Article XIIID on the Bonds as well as the
market for the Bonds. Legislative and court calendar delays and other factors may prolong any
uncertainty regarding the effects of Article XIIIC and Article XIIID.
CONCLUDING MATTERS
Absence of Litigation
To the City’s knowledge, there is no litigation pending or threatened to restrain or enjoin the
issuance, execution or delivery of the Bonds, to contest the validity of the Bonds, the Resolutions, or any
proceedings of the City with respect thereto. In the opinion of the City and its counsel, there is no lawsuit
or claim pending against the City which will materially impair the City’s ability to enter into the
Resolutions or restrain or enjoin the collection of Revenues or the payment of the Bonds as contemplated
therein.
Continuing Disclosure
The City has undertaken for the benefit of holders and beneficial owners of the Bonds to provide
certain financial information relating to the Enterprise and other data by not later than March 31 of each
27
year, commencing March 31, 2010 with the report for the 2008-2009 fiscal year (the “Annual Report”),
and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report
and notices of material events will be filed by the City or U.S. Bank National Association, as the
Dissemination Agent on behalf of the City, with the Municipal Securities Rulemaking Board, via its
Electronic Municipal Market Access (“EMMA”) system. The specific nature of the information to be
contained in the Annual Report or the notices of material events is set forth in “APPENDIX F – FORM
OF CONTINUING DISCLOSURE AGREEMENT.” This undertaking has been made in order to assist
the Underwriter in complying with Rule 15c2-12(b)(5) (the “Rule”) promulgated by the Securities and
Exchange Commission under the Securities and Exchange Act of 1934, as amended.
A failure by the City to comply with the provisions of the Continuing Disclosure Agreement is
not an event of default under the Resolutions (although the holders and beneficial owners of the Bonds do
have remedies at law and in equity). However, a failure to comply with the provisions of the Continuing
Disclosure Agreement must be reported in accordance with the Rule and must be considered by any
broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds.
Therefore, a failure by the City to comply with the provisions of the Continuing Disclosure Agreement
may adversely affect the marketability of the Bonds on the secondary market.
Certain Legal Matters
The legality of the issuance of the Bonds is subject to the approval of Richards Watson &
Gershon, A Professional Corporation, Los Angeles, Bond Counsel. Bond Counsel’s opinions with respect
to the Bonds will be substantially in the forms set forth in APPENDIX C of this Official Statement. In
addition, certain other legal matters will be passed on by Richards, Watson & Gershon, A Professional
Corporation, Los Angeles, California, as Disclosure Counsel. Fees payable to Bond Counsel and
Disclosure Counsel are contingent upon successful sale and delivery of the Bonds.
Tax Matters
The Internal Revenue Code of 1986, as amended (the “Code”) establishes certain requirements
which must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and
remain excluded from gross income for Federal income tax purposes. Noncompliance with such
requirements could cause interest on the Bonds to be included in gross income for Federal income tax
purposes retroactive to their date of issue. These requirements include, but are not limited to, provisions
which limit how the proceeds of the Bonds may be spent and invested, and generally require that certain
investment earnings be rebated on a periodic basis to the United States of America. The City has made
certifications and representations and has covenanted to maintain the exclusion of the interest on the
Bonds from gross income for Federal income tax purposes pursuant to Section 103(a) of the Code.
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under
existing law and, assuming the accuracy of such certifications and representations by the City and
compliance with such covenants, (i) interest on the Bonds is excluded from gross income for Federal
income tax purposes under Section 103 of the Code, and (ii) the Bonds are not “specified private activity
bonds” within the meaning of Section 57(a)(5) of the Code and, therefore, interest on the Bonds is not a
preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the
Code. Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California
personal income taxes.
A portion of the interest on the Bonds earned by certain corporations may be subject to a federal
corporate alternative minimum tax. In addition, interest on the Bonds may be subject to a federal branch
profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax
imposed on excess net passive income of certain S corporations. The exclusion of interest from gross
income for federal income tax purposes may have certain adverse federal income tax consequences on
items of income, deduction or credit for certain taxpayers, including financial institutions, certain
28
insurance companies, recipients of Social Security and Railroad Retirement benefits, those deemed to
incur indebtedness to acquire tax-exempt obligations, and individuals eligible for the earned income tax
credit. Bond Counsel will express no opinion regarding these and other such consequences.
Bond Counsel has not undertaken to advise in the future whether any circumstances or events
occurring after the date of issuance of the Bonds may affect the tax status of interest on the Bonds. No
assurance can be given that future legislation, or amendments to the Code, if enacted into law, will not
contain provisions which could eliminate, or directly or indirectly reduce the benefit of the exclusion of
interest on the Bonds from gross income for Federal income tax purposes. Certain requirements and
procedures contained or referred to in relevant documents may be changed and certain actions may be
taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon
the advice or with the approving opinion of nationally recognized bond counsel. Bond Counsel expresses
no opinion as to any Bond, or the interest thereon, if any such change occurs or action is taken upon the
advice or approval of bond counsel other than Richards, Watson & Gershon, A Professional Corporation.
If the issue price of a Bond (the first price at which a substantial amount of the bonds of a
maturity are to be sold to the public) is less than the stated redemption price at maturity of such Bond, the
difference constitutes original issue discount, the accrual of which is excluded from gross income for
Federal income tax purposes to the same extent as interest on the Bonds. Further, such original issue
discount accrues actuarially on a constant yield method over the term of each such Bond and the basis of
each Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the
amount of such accrued original issue discount. The accrual of original issue discount may be taken into
account as an increase in the amount of tax-exempt income for purposes of determining various other tax
consequences of owning such Bonds. Purchasers who acquire Bonds with original issue discount are
advised that they should consult with their own independent tax advisors with respect to the state and
local tax consequences of owning such Bonds.
If the issue price of a Bond is greater than the state redemption price at maturity of such Bond, the
difference constitutes original issue premium, the amortization of which is not deductible from gross
income for Federal income tax purposes. The amount of amortizable Bond premium for a taxable year is
determined actuarially on a constant interest rate basis over the term of each such Bond, or in the case of a
callable bond, possibly on a more accelerated basis. For purposes of determining gain or loss on the sale
or other disposition of such Bond, the purchaser is required to decrease such purchaser’s adjusted basis in
such Bond annually by the amount of amortizable Bond premium for the taxable year.
Prospective purchasers of the Bonds should consult their own independent tax advisers regarding
pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of
the Bonds at other than their original issuance at the respective prices indicated on the cover of this
Official Statement should also consult their own tax advisers regarding other tax considerations such as
the consequences of market discount, as to all of which Bond Counsel expresses no opinion.
The Internal Revenue Service has established a program to audit issues of tax-exempt bonds in
order to determine whether, in its view, interest should instead be included in gross income of the
Bondholders for purposes of federal income taxation. It cannot be predicted whether or not the Bonds
will be subjected to such an audit. If such an audit is undertaken, it could adversely affect the market
value of the Bonds until the audit is concluded, regardless of the ultimate outcome of the audit.
Financial Advisor
Fieldman, Rolapp & Associates has acted as financial advisor to the City concerning the Bonds.
As financial advisor, Fieldman, Rolapp & Associates will receive compensation contingent upon the sale
and delivery of the Bonds.
29
Underwriting
The Underwriter has agreed, subject to certain conditions, to purchase the Bonds at a purchase
price of $_____ (equal to the principal amount of the Bonds, less a net original issue discount of $_____
and less an underwriter’s discount of $_____). The Underwriter intends to offer the Bonds to the public
initially at the prices set forth on the inside cover page of this Official Statement, which prices may
subsequently change without any requirement of prior notice.
Qualified Tax-Exempt Obligations
The Bonds have been designated “qualified tax-exempt obligations” pursuant to Section
265(b)(3) of the Code. Such section provides an exception to the prohibition against the ability of a
“financial institution” (as defined in the Code) to deduct any of its interest expense allocable to tax-
exempt interest and instead generally subjects certain financial institutions to a prohibition against
deducting 20 percent of its interest expense allocable to interest on the Bonds.
Rating
Standard & Poors (“S&P”), is expected to assign an underlying rating of “AA” to the Bonds.
Such rating reflects only the views of such organization and any desired explanation of the significance of
such rating may be obtained from S&P. Generally, a rating agency bases its rating on the information and
materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance
such rating will continue for any given period of time or that such rating will not be revised downward or
withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so
warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the
market price of the Bonds.
Financial Statements
Excerpts of the City’s Comprehensive Annual Financial Report for fiscal year ended June 30,
2008, which include the City’s 2007-08 financial statements and the Independent Auditor’s Report issued
by Mayor Hoffman McCann P.C., Certified Public Accountants, Irvine, California, (the “Auditor”)
regarding such financial statements, are set forth in Appendix B. The Auditor was not requested to
consent to the inclusion of its report in Appendix B and it has not undertaken to update financial
statements included in Appendix B. No opinion is expressed by the Auditor with respect to any event
subsequent to its report.
Miscellaneous
All of the preceding description and summaries of the Bonds and the Resolutions, other
applicable agreements, legislation and other documents are made subject to the provisions of such
documents respectively and do not purport to be complete statements of any or all of such provisions.
Reference is hereby made to such documents on file with the City for further information in connection
therewith.
This Official Statement does not constitute a contract with the purchasers of the Bonds. Any
statements made in this Official Statement involving matters of opinion or of estimates, whether or not so
expressly stated, are set forth as such and not as representations of fact, and no representation is made that
any of the estimates will be realized.
30
The City has duly authorized the execution and delivery of this Official Statement by their duly
authorized officers.
CITY OF CULVER CITY
By:
City Manager
A-1
APPENDIX A
CITY OF CULVER CITY GENERAL INFORMATION
This Appendix is included solely to provide background and demographic information regarding
the City. The City’s obligation to pay debt service on the Bonds is a special obligation limited solely to
the Net Revenues of the Enterprise. No other funds or property of the City shall be liable for the payment
of the Bonds or any other amounts payable under the Resolutions.
General
The City encompasses five square miles and is located in the western portion of Los Angeles
County. It is approximately 10 miles west of downtown Los Angeles and five miles inland of the Pacific
Ocean. The City is mostly surrounded by the City of Los Angeles, but also has a border with
unincorporated areas of Los Angeles County on its eastern side.
Municipal Government
The City was incorporated in 1917, and adopted a City Charter in 1947. The City operates under
a Mayor/City Council-City Manager form of government. The City is governed by a five-member City
Council, elected at large to serve four-year terms. The City Council selects from among its members a
Mayor and Vice Mayor, to serve in those positions for a period of one year. The City Council appoints
the City Manager, City Attorney, Police Chief and Fire Chief. Other department heads are appointed by
the City Manager. As of June 30, 2008 the City had 695 full-time employees.
The current members of the City Council are as follows:
Name and Office Current Term Expires
Andrew Weissman, Mayor April 2012
Christopher Armenta, Vice Mayor April 2012
D. Scott Malsin, Council Member April 2010
Micheál O’Leary, Council Member April 2012
Gary Silbiger, Council Member April 2010
Population
The following table shows a summary of population data for the City, Los Angeles County (the
“County”) and the State of California (the “State”) for the years shown.
CITY OF CULVER CITY
City, County and State Population
Calendar Years 1980, 1990, 2000, 2005 & 2009
Calendar Year City County State
1980 38,139 7,447,421 23,782,000
1990 39,550 8,832,500 29,558,000
2000 38,716 9,477,651 33,721,583
2005 40,603 10,158,409 36,676,931
2009 40,657 10,393,185 38,292,687
_____________
Source: State of California Department of Finance estimates as of January 1 of each year.
A-2
City’s Taxable Valuation
A summary of the City’s taxable valuation for fiscal years 2003-04 through 2007-08 is set forth
below. These figures are presented for historical comparison, with reference only to the time frame of the
years shown.
CITY OF CULVER CITY
Assessed Valuations
Fiscal Years 2003-04 through 2007-08
Fiscal Year
Secured
Property
Unsecured
Property
Total Taxable
Assessed Value
Growth Rate
2003-04 $4,417,537,522 $392,953,627 $4,811,667,938 --
2004-05 4,719,905,822 322,647,260 5,053,794,455 5.03%
2005-06 5,053,722,604 366,616,923 5,420,774,502 7.26
2006-07 5,455,470,578 357,449,547 5,813,305,100 7.24
2007-08 5,999,920,641 379,698,875 6,380,004,491 9.75
__________________________________
Source: City of Culver City Comprehensive Annual Financial Report for fiscal year ended June 30, 2008.
Tax Levies and Delinquencies
Taxes are levied by the County for each fiscal year on taxable real and personal property which is
situated in the County as of the preceding January 1. Secured property tax bills are mailed in October, the
first installment of the secured tax levy is due November 1 and the second installment is due February 1,
but the entire bill may be paid when paying the first installment. If the first installment of the property tax
bill is not paid by December 10, then the taxes becomes delinquent and a ten percent delinquent penalty is
added to the amount due. If the second installment of the property tax bill is not paid by April 10, then it
becomes delinquent and a ten percent delinquent penalty is added to the amount due and an administrative
charge of $10 is added. Unsecured taxes become delinquent if unpaid on August 31.
Property owners who fail to pay either or both installments by June 30, will have their properties
tax defaulted. Properties may be redeemed under an installment plan of redemption that allows property
owners to make payments on defaulted taxes over a five-year period. To open an installment plan, the
property owner must pay a $75 non-refundable application fee, make a minimum payment of 20 percent
of the total tax amount including penalty and interest charges, and pay any current year’s taxes and
penalties on or before April 10. Interest accrues at 1.5 percent per month on the unpaid balance once the
account has been opened. If no payments have been made on delinquent taxes at the end of five fiscal
years for residential property and three years for non-residential property, the properties then become
subject to the County Treasurer and Tax Collector’s power of sale as provided by law.
Each Enterprise user pays sewer charges as a direct assessment billed on his or her property tax
bill. The County remits sewer charge revenues to the City in seven installments. Current payment
practices by the County provide for payment to the City of approximately 60% of the sewer charge
revenues by February. By April, the County allocates approximately 89% of sewer charge revenues to
the City with the balance delivered by June. If a property owner fails to pay the sewer charge portion of
his or her property tax bill, the entire amount is considered delinquent and remains subject to the penalties
and tax foreclosure procedures described in the preceding paragraph. If the property tax bill remains
unpaid for a period of five years or more, the property is subject to sale by the County Tax Collector for
the delinquent amount. The current year property tax delinquency rate within the City has averaged less
than 2 percent over the past 10 years.
A-3
Construction Activity
The following is a summary of the construction permits issued by the City from calendar years
2004 through 2008.
City of Culver City
Building Permits Issued and Values for Permits Issued
Calendar Years 2004 through 2008
Valuation of Permits Issued
Calendar
Year
Total
Permits
Commercial
and Office
Residential
Single
Residential
Multi-Units
All Other
Total
2004 818 $22,937,027 $10,660,683 $1,661,038 $ 212,700 $ 35,471,448
2005 813 25,983,553 13,022,004 3,395,961 94,400 42,495,918
2006 809 121,810,523 15,501,358 7,340,421 142,200 144,794,502
2007 813 45,509,397 14,143,216 3,021,992 4,146,261 66,820,866
2008 822 162,128,515 13,780,064 3,087,327 12,669,300 191,665,206
Source: City of Culver City.
Employment
According to the State of California Employment Development Department, the March 2009
preliminary, estimated unemployment rate for the City was 7.8 percent, and that for the County was 11.3
percent. The following table shows certain employment statistics for the City and the County for calendar
years 2004 through 2008.
CITY OF CULVER CITY
City and County Employment Statistics
Calendar Years 2004 through 2008
(1)
City County State
Year
Labor Force Employed
Unemployment
Rate
Unemployment
Rate
Unemployment
Rate
2004 24,100 23,000 4.4% 6.5% 6.2%
2005 24,400 23,500 3.6 5.3 5.4
2006 24,600 23,800 3.2 4.8 4.9
2007 24,900 24,100 3.4 5.1 5.4
2008 25,000 23,700 5.1 7.5 7.2
_____________
(1) Not seasonally adjusted. Figures represent the 12-month average for each such year.
Source: State of California, Employment Development Department.
A-4
The following table lists the principal employers in the City.
City of Culver City
Principal Employers
as of June 30, 2008
Name of Company
Product/Service
Employees
% of Total City
Employment
Sony Pictures Entertainment movie studio 2,020 8.38%
Westfield Shoppingtown-Fox Hills shopping center 1,500 6.22
Brotman Medical Center hospital 900 3.73
Symantec Corp. software company 800 3.32
City of Culver City government 688 2.85
Metric Products clothing manufacturer 650 2.70
Culver City Unified School District school 575 2.39
Radisson Hotel hotel 300 1.24
Kaiser Permanente hospital 275 1.14
West L.A. College college 250 1.04
Total 7,958 33.02
Source: City of Culver City Comprehensive Annual Financial Report for fiscal year ended June 30, 2008 and City of Culver City.
The following table summarizes the civilian labor force in the County for the calendar years 2004
through 2008. These figures are county-wide statistics and may not necessarily accurately reflect
employment trends in the City.
LOS ANGELES COUNTY
Annual Average Industrial Employment
(1)
Calendar Years 2004-2008
Industry 2004 2005 2006 2007 2008
Private, non-farm
Goods producing:
Natural resources and mining 3,800 3,700 4,000 4,400 4,400
Construction 140,200 148,700 157,500 157,600 145,100
Manufacturing – durable goods 267,800 263,400 257,300 250,900 242,900
Manufacturing – non-durable goods 215,800 208,300 204,400 198,300 191,000
Service Providing:
Wholesale trade 215,100 219,300 225,700 227,000 224,500
Retail trade 405,400 414,400 423,300 426,000 417,400
Transport., warehousing and utilities 161,100 161,700 165,200 165,600 162,000
Information 211,900 207,600 205,600 209,800 211,300
Financial activities 241,600 244,000 248,800 246,000 235,400
Professional and business services 562,400 576,100 598,900 605,400 584,100
Educational and health services 467,000 471,300 478,700 490,500 501,500
Leisure and hospitality 372,800 377,800 388,600 397,900 399,500
Other services 144,700 144,300 145,200 147,100 146,500
Subtotal
Government 587,100 583,700 589,400 595,700 603,700
Farm 7,600 7,400 7,600 7,500 6,900
Total 4,004,100 4,031,600 4,100,100 4,129,600 4,076,200
________________________
(1)
Employment reported by place of work; does not include persons involved in labor-management disputes. Figures are rounded
to the nearest hundred. Columns may not add due to rounding. Figures represent the 12-month average for each such year.
Not seasonally adjusted.
Source: State of California, Employment Development Department.
A-5
Per Capita Personal Income
The following table shows the annual per capita personal income for the Los Angeles-Long
Beach-Glendale Metropolitan Division, the State and the United States from 1998 through 2007.
Los Angeles-Long Beach-Glendale Metropolitan Division, the State and the United States
Per Capita Personal Income
(1)
Calendar Years 1998 through 2007
Calendar
Year
Los Angeles-Long Beach-Glendale
Metropolitan Division
State of
California
United
States
1998 27,220 28,374 26,883
1999 27,973 29,828 27,939
2000 29,238 32,467 29,847
2001 30,541 32,901 30,582
2002 30,924 32,870 30,838
2003 31,611 33,620 31,530
2004 33,167 35,531 33,157
2005 35,147 37,418 34,690
2006 37,991 40,020 36,794
2007 39,794 41,805 38,615
________________
(1)
Per capita personal income is calculated as the personal income of residents of a given area divided by
the resident population of the area. In computing per capita personal income, the Bureau of Economic
Analysis uses the U.S. Census Bureau’s annual midyear population estimates.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
Commercial Activity
The following table summarizes the annual volume of taxable transactions within the City for
calendar years 2003 through 2007.
CITY OF CULVER CITY
Taxable Transactions
Calendar Years 2003 through 2007
(in
Thousands of Dollars)
2003 2004 2005 2006 2007
Retail Outlets
Apparel store $80,107 $85,481 $93,844 $94,355 $91,747
General merchandise stores 334,386 352,410 367,295 383,975 385,075
Food stores 35,725 33,631 39,824 46,503 45,315
Eating & drinking places 88,669 100,252 105,274 116,730 123,440
Home furn. & appliances 47,007 52,343 62,461 75,407 74,951
Bldg. material and farm impl. 63,662 73,362 84,752 83,682 67,430
Auto dealers & supplies 223,441 247,720 213,938 195,141 178,594
Service stations 45,592 51,764 62,834 67,742 72,092
Other retail stores 223,926 236,209 243,875 253,741 267,816
Subtotal 1,142,515 1,233,172 1,274,097 1,317,276 1,306,460
All Other Outlets 262,404 264,856 278,990 310,374 312,925
All Outlets $1,404,919 $1,498,028 $1,553,087 $1,627,650 $1,619,385
________________________
Source: Compiled from data published by State of California Board of Equalization.
A-6
Transportation
The City is well served by area transportation routes and offers access to several airports. The
San Diego Freeway (Interstate 405), is a major north-south interstate highway that crosses through the
City. The City is also within minutes of the Santa Monica Freeway (Interstate 10), a major east-west
interstate highway which runs from the Pacific Ocean to California’s border with Arizona, and the Marina
Freeway (State Route 90) which crosses Interstate 405 and connects the City to the unincorporated area of
Marina del Rey. The City is served by Los Angeles International Airport, which is located approximately
seven miles south of the City. The City operates the Culver CityBus, which serves residents in the City
and surrounding communities. Phase 1 of the Expo Line, a light rail line that will travel from downtown
Los Angeles to a terminal station in the City, started in 2006. The Expo Line will be approximately 8.6
miles in length, traveling parallel to the Santa Monica Freeway, and will allow passengers to travel
between downtown Los Angeles and the City in 30 minutes. Phase 1 is currently estimated to open in the
summer of 2010. The proposed extension of the Expo Line for Phase 2 involves extending the Expo Line
from the City to the beach. Environmental studies for Phase 2 are expected to be completed by January
2010.
Education
The City’s students are served by the Culver City Unified School District presided over by a
separately elected board. The system includes five elementary schools, one middle school, one high
school, a continuation school, an adult school, an independent study school, and a children’s center. The
City also has several private elementary schools and the Culver City Academy of Visual & Performing
Arts. Antioch University Los Angeles, which offers a bachelors and various masters degree programs is
located in the City and West Los Angeles College, a two-year community college is located just east of
the City. Other nearby higher education opportunities are available within easy freeway access at UCLA
(five miles northwest of the City) and USC (nine miles east of the City).
Community Facilities and Services
The City is a full service city, and the services provided by the City include police, fire, general
maintenance, public improvements, planning and zoning, refuse collection, municipal bus lines,
recreation and community services, and general administrative services. Medical facilities include
Brotman Medical Center and Kaiser Permanente’s Playa Vista Medical Offices. The City offers a wide
variety of neighborhood parks for leisure activities, including a dog park and a skate park. The City
maintains a teen center and a senior citizen’s center which provides a variety of educational, recreational
and social services for seniors, residents with disabilities and members of the general community.
B-1
APPENDIX B
CITY OF CULVER CITY COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR FISCAL YEAR ENDED JUNE 30, 2008 (EXCERPTS)
C-1
APPENDIX C
FORM OF OPINION OF BOND COUNSEL
Upon issuance and delivery of the Bonds, Richards Watson & Gershon, A Professional Corporation,
Bond Counsel, proposes to render its final approving opinion in substantially the following form:
D-1
APPENDIX D
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
E-1
APPENDIX E
DTC’S BOOK-ENTRY ONLY SYSTEM
The information in this Appendix concerning DTC and DTC’s book-entry system has been
obtained from sources that the City believes to be reliable and the City takes no responsibility for the
accuracy thereof. The City give no assurances that (i) DTC, the Direct and Indirect Participants or
others will distribute payments of principal, premium (if any) or interest with respect to the Bonds paid to
DTC or its nominee as, the registered owner, to the Beneficial Owners, (ii) such entities will distribute
redemption notices or other notices, to the Beneficial Owners, or (iii) an error or delay relating thereto
will not occur.
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository
for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative
of DTC. One fully-registered certificate will be issued for the each maturity of the Bonds, each in the
aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New
York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York
Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market
instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC.
DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-entry transfers and pledges
between Direct Participants’ accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a
number of Direct Participants of DTC and Members of the National Securities Clearing Corporation,
Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and
EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American
Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system
is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest
rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual
purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
E-2
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTCs partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose
accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium (if any) and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to
credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information
from the City or the Trustee, on payable date in accordance with their respective holdings shown on
DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its
nominee, the City or the Trustee, subject to any statutory or regulatory requirements as may be in effect
from time to time. Principal, premium (if any) and interest payments with respect to the Bonds to Cede &
Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered in
accordance with the provisions of the Resolutions.
F-1
APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
F-1
APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and
delivered by the City of Culver City (the “City”) and U.S. Bank National Association, as
dissemination agent (the “Dissemination Agent”) in connection with the issuance by the City of its
$[principal amount] aggregate principal amount of Wastewater Facilities Refunding Revenue Bonds,
2009 Series A (the “Bonds”). The Bonds are being issued pursuant to a Master Resolution, adopted
by the City Council of the City on ___, 2009 (the “Master Resolution”), as supplemented by a First
Supplemental Resolution, adopted by the City Council of the City on ___, 2009 (the “Supplemental
Resolution” and together with the Master Resolution, the “Resolution”), by and among the City and
U.S. Bank National Association, as trustee (the “Trustee”). The City covenants and agrees as
follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the City and the Dissemination Agent for the benefit of the holders and
beneficial owners of the Bonds in order to assist the Participating Underwriter in complying with the
Rule (as defined below).
Section 2. Definitions. In addition to the definitions set forth in the Resolution, which
apply to any capitalized term used in this Disclosure Agreement, unless otherwise defined, the
following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as
described in Sections 3 and 4 of this Disclosure Agreement.
“Dissemination Agent” shall mean U.S. Bank National Association, or any successor
Dissemination Agent designated in writing by the City and which has filed with the City and the
Trustee a written acceptance of such designation.
“EMMA” shall mean the Electronic Municipal Market Access system located at
http://www.emma.msrb.org, which is the centralized on-line repository for municipal disclosure
documents to be filed with the MSRB pursuant to the Rule.
“Implementation Date” means July 1, 2009, or any later date set by the Securities and
Exchange Commission for implementation of the EMMA continuing disclosure service.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure
Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board.
“Official Statement” shall mean the final Official Statement relating to the Bonds.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time. F-2
Section 3. Provisions of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than
March 31 of each year, commencing March 31, 2010 with the report for the 2008-2009 fiscal year,
provide to the MSRB, via EMMA, in an electronic format accompanied by identifying information
as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4
of this Disclosure Agreement. The Annual Report may be submitted as a single document or as
separate documents comprising a package, and may include by reference other information as
provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of
the City may be submitted separately from the balance of the Annual Report, and later than the date
required above for the filing of the Annual Report if not available by that date. If the City’s fiscal
year changes, it shall give notice of such change in the same manner as for a Listed Event under
Section 5(c).
(b) Not later than fifteen (15) Business Days prior to the date specified in
subsection (a) above for providing the Annual Report to the MSRB, the City shall provide the
Annual Report to the Dissemination Agent (if other than the City). If by such date, the
Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall
contact the City to determine if the City is in compliance with the first sentence of this subsection (b).
The City shall provide a written certification with each Annual Report furnished to the Dissemination
Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished
by it hereunder.
(c) If the Dissemination Agent is unable to verify that an Annual Report has been
provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a
notice to the MSRB, via EMMA, in substantially the form attached as Exhibit A.
(d) The Dissemination Agent (if other than the City) shall, if and to the extent,
the City has provided an Annual Report in final form to the Dissemination Agent for dissemination,
file a report with the City certifying that the Annual Report has been provided to the MSRB, via
EMMA, pursuant to this Disclosure Agreement, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or
incorporate by reference the following:
(a) Audited financial statements of the City prepared in accordance with
generally accepted accounting principles as promulgated to apply to governmental entities from time
to time by the Governmental Accounting Standards Board. If the City’s audited financial statements
are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the Official Statement, and the audited financial statements shall be filed in
the same manner as the Annual Report when they become available.
(b) The following financial information and operating data set forth in the
Official Statement:
(i) To the extent not contained in the audited financial statements filed
pursuant to the preceding subsection (a) by the date required by Section 3 hereof, updates of
Tables ___ set forth in the Official Statement. F-3
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities, which
have been available to the public on the MSRB’s internet web site or filed with the Securities and
Exchange Commission. The City shall clearly identify each such other document so included by
reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be
given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
(i) Principal and interest payment delinquencies.
(ii) Non-payment related defaults.
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties.
(iv) Unscheduled draws on credit enhancements reflecting financial difficulties.
(v) Substitution of credit or liquidity providers, or their failure to perform.
(vi) Adverse tax opinions or events affecting the tax-exempt status of the security.
(vii) Modifications to rights of security holders.
(viii) Bond calls.
(ix) Defeasances.
(x) Release, substitution, or sale of property securing repayment of the securities.
(xi) Rating changes
(b) The Dissemination Agent shall, as soon as reasonably practicable after
obtaining knowledge of the occurrence of any of the Listed Events, inform the City of such event and
request that the City promptly notify the Dissemination Agent in writing whether or not to report the
event pursuant to subsection (c).
(c) Whenever the City obtains knowledge of the occurrence of a Listed Event,
the City shall as soon as possible determine if such event would be material under applicable Federal
securities law. If the City determines that knowledge of the occurrence of a Listed Event would be
material under applicable Federal securities law, the City shall, or shall cause the Dissemination
Agent to, promptly file a notice of such occurrence with the MSRB, via EMMA, in an electronic
format accompanied by identifying information as prescribed by the MSRB. Notwithstanding the
foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under
this subsection any earlier than the notice (if any) of the underlying event is given to holders of
affected Bonds pursuant to the Resolution.
Section 6. Termination of Reporting Obligation. The City’s obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full F-4
of all the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall
give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 7. Dissemination Agent.
(a) The City hereby appoints and engages U.S. Bank National Association as the
Dissemination Agent to assist it in carrying out is obligations under this Disclosure Agreement. The
Dissemination Agent shall not be responsible in any manner for the content of any notice or report
prepared by the City pursuant to this Disclosure Agreement. The City may replace the
Dissemination Agent with or without cause. If at the time there is no designated Dissemination
Agent appointed by the City, the City shall be the Dissemination Agent and undertake or assume its
obligations hereunder.
Any company succeeding to all or substantially all of the Dissemination Agent’s
corporate trust business shall be the successor to the Dissemination Agent hereunder without the
execution or filing of any paper or any further act. The Dissemination Agent may resign its duties
hereunder by giving 30-days written notice to the City.
(b) The Dissemination Agent shall be paid compensation by the City for its
services provided hereunder in accordance with its schedule of fees agreed to between the
Dissemination Agent and the City from time to time and for all expenses, legal fees and advances
made or incurred by the Dissemination Agent in the performance of its duties hereunder. The
Dissemination Agent shall have no duty or obligation to review any information provided to it by the
City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, holders or
beneficial owners or any other party. The Dissemination Agent may rely and shall be protected in
acting or refraining from acting upon any direction from the City or an opinion of nationally
recognized bond counsel.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the City may amend this Disclosure Agreement, and any provision of this Disclosure
Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or
5(a), it may only be made in connection with a change in circumstances that arises from a change in
legal requirements, change in law, or change in the identity, nature, or status of an obligated person
with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at
the time of the primary offering of the Bonds, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the
Bonds in the manner provided in the Resolution for amendments to the Resolution with the consent
of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair
the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof, the first annual financial information filed pursuant F-5
hereto containing the amended operating data or financial information shall explain, in narrative
form, the reasons for the amendment and the impact of the change in the type of operating data or
financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which the
change is made shall present a comparison between the financial statements or information prepared
on the basis of the new accounting principles and those prepared on the basis of the former
accounting principles. The comparison shall include a qualitative discussion of the differences in the
accounting principles and the impact of the change in the accounting principles on the presentation of
the financial information, in order to provide information to investors to enable them to evaluate the
ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be
quantitative. A notice of the change in the accounting principles shall be sent to the MSRB in the
same manner as for a Listed Event under Section 5(c).
No amendment to this Agreement which modifies the duties or rights of the Dissemination
Agent shall be made without the prior written consent of the Dissemination Agent.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event, in
addition to that which is required by this Disclosure Agreement. If the City chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that which
is specifically required by this Disclosure Agreement, the City shall have no obligation under this
Disclosure Agreement to update such information or include it in any future Annual Report or notice
of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the City to comply with any provision of
this Disclosure Agreement, any Participating Underwriter or any holder or beneficial owner of the
Bonds may take such actions as may be necessary and appropriate, including seeking mandate or
specific performance by court order, to cause the City to comply with its obligations under this
Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of
Default under the Resolution, and the sole remedy under this Disclosure Agreement in the event of
any failure of the City to comply with this Disclosure Agreement shall be an action to compel
performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Agreement, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which it may incur
arising out of or in the exercise or performance of its powers and duties hereunder, including the
costs and expenses (including attorneys fees) of defending against any claim of liability, but
excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The
Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any
direction from the City or an opinion of nationally recognized bond counsel. The obligations of the
City under this Section shall survive resignation or removal of the Dissemination Agent and payment
of the Bonds. F-6
Section 12. Alternative Filing Location. Prior to the Implementation Date, any filing
under this Disclosure Agreement may be made solely by transmitting such filing to (a) the Texas
Municipal Advisory Council (“Texas MAC”) as provided at http://www.disclosureusa.org, unless the
Securities and Exchange Commission has withdrawn its interpretive advice letter to Texas MAC,
dated September 7, 2004, or (b) such other “Central Post Office” designated and accepted by the
Securities and Exchange Commission.
Section 13. Notices. Any notices or communications to or among any of the parties to
this Disclosure Agreement may be given as follows:
To the City: City of Culver City
9770 Culver Blvd.
Culver City, California 90232
Attention: Jeff Muir, Chief Financial Officer
Fax: (310) 253-5880
To the Dissemination Agent: U.S. Bank National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Julia Hommel
Fax: (213) 615-6199
Section 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of
the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners
from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 15. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of
the date written below.
Dated: _______, 2009 CITY OF CULVER CITY
[title]
U.S. Bank National Association
as Dissemination Agent
Authorized Officer
F-7
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING
BOARD OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Culver City
Name of Bond Issue: $[principal amount] Wastewater Facilities Refunding Revenue Bonds, 2009
Series A
Date of Issuance: _______, 2009
NOTICE IS HEREBY GIVEN that the City of Culver City (the “City”) has not provided an
Annual Report with respect to the above-named Bonds as required by the Master Resolution, adopted
by the City Council of the City on ___, 2009, as supplemented by a First Supplemental Resolution,
adopted by the City Council of the City on ___, 2009. [The City anticipates that the Annual Report
will be filed by __________________.]
Date: , 20__ U.S. Bank National Association
as Dissemination Agent
By:
Title:
cc: Jeff Muir, Chief Financial Officer of the City
10000-0259\1135472v1.doc
ESCROW AGREEMENT
by and between
CITY OF CULVER CITY
and
U.S. BANK NATIONAL ASSOCIATION
as Escrow Agent
Dated as of July 1, 2009
Pertaining to the refunding of
City of Culver City
Wastewater Facilities Refunding Revenue Bonds,
1999 Series A
10000-0259\1135472v1.doc i
TABLE OF CONTENTS
Page
SECTION 1. Definitions. 2
SECTION 2. Purpose of Agreement; Acceptance of Duties. 2
SECTION 3. Escrow Fund. 2
SECTION 4. Deposits to Escrow Fund. 2
SECTION 5. Maintenance of Escrow Fund. 3
SECTION 6. Payment of Refunding Requirements. 3
SECTION 7. Verification. 4
SECTION 8. Compliance with Prior Resolution. 4
SECTION 9. Tax Covenant. 4
SECTION 10. Notices. 4
SECTION 11. Defeasance of 1999 Bonds. 4
SECTION 12. Nature of Lien. 5
SECTION 13. Amendments. 5
SECTION 14. Compensation of Escrow Agent. 5
SECTION 15. Resignation or Removal of Escrow Agent; Appointment of Successor. 5
SECTION 16. Limitation of Powers and Duties. 7
SECTION 17. Indemnification. 7
SECTION 18. Limitation of Liability. 7
SECTION 19. Termination. 8
SECTION 20. Governing Law. 8
SECTION 21. Severability. 8
SECTION 22. Agreement Binding on Successors. 8
SECTION 23. Counterparts. 8
SCHEDULE A Refunding Requirements
SCHEDULE B Escrow Securities
EXHIBIT A Form of Defeasance Notice
10000-0259\1135472v1.doc 1
ESCROW AGREEMENT
This Escrow Agreement (this “Agreement”), is made and entered into as of July 1, 2009,
by and between the City of Culver City, a charter city duly organized and existing pursuant to
and under the laws of the State of California (the “City”), and U.S. Bank National Association, a
national banking association duly organized and existing under the laws of the United States of
America, as Escrow Agent (the “Escrow Agent”).
W I T N E S S E T H:
A. The City is a charter city duly organized and existing pursuant to and under the
laws of the State of California, and is authorized pursuant to the provisions of the City Charter
and the Revenue Bond Law of 1941, Title 5, Division 2, Part 1, Chapter 6, of the Government
Code of the State of California, as amended and supplemented (the “Act”) to issue revenue
bonds and to refund outstanding bonds of the City.
B. The City has heretofore issued its $25,080,000 aggregate principal amount of
Wastewater Facilities Refunding Revenue Bonds, 1999 Series A, of which $20,720,000 are
currently outstanding (the “1999 Bonds”).
C. The 1999 Bonds were issued pursuant to Resolution No. 99-R093, as
supplemented by Resolution No. 99-R094, each adopted by the City Council of the City on
November 8, 1999 (collectively, the “Prior Resolution”).
D. The City proposes to sell and issue its $___ aggregate principal amount of
Wastewater Facilities Refunding Revenue Bonds, 2009 Series A (the “2009 Bonds”) to be issued
and secured pursuant to Resolution No. ___ adopted by the City Council of the City on _______,
2009, as supplemented by Resolution No. ____ of said City Council adopted on _______, 2009
(collectively, the “Resolution”).
E. A portion of the proceeds of the 2009 Bonds will be used to the refund all of the
outstanding 1999 Bonds on September 1, 2009.
F. In accordance with the Resolution, if the City shall deposit, or cause to be
deposited, with the Escrow Agent, in trust, funds, which when added to other funds on hand with
respect to the 1999 Bonds, shall be sufficient pay to the holders of the 1999 Bonds, the principal
of, interest on, and premium, if any, to become due on the 1999 Bonds, then the 1999 Bonds
shall be deemed discharged and the pledge of the Trust Estate (as defined in the Prior
Resolution) thereupon will cease and terminate; and
G. Pursuant to this Agreement, a portion of the proceeds derived from the sale of the
2009 Bonds will be deposited, together with certain other available moneys, in escrow with the
Escrow Agent and applied to the purchase of Investment Securities to effect the refunding of the
1999 Bonds; and
H. In order to provide for the proper and timely application of the moneys deposited
in said escrow to the payment of the 1999 Bonds, it is necessary to enter into this Escrow
Agreement;
10000-0259\1135472v1.doc 2
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the following
meanings:
“Code” means the Internal Revenue Code of 1986, as amended, together with regulations
promulgated, and official public guidance published, thereunder.
“Escrow Agent” means U.S. Bank National Association., in its capacity as the escrow
agent under this Agreement, and its successors and assigns.
“Escrow Fund” means the “Escrow Fund” established and held by the Escrow Agent
pursuant to Section 3.
“Escrow Securities” means the Investment Securities set forth in Schedule B hereto.
“Investment Securities” means noncallable direct obligations of the United States of
America, or bonds or other obligations which are noncallable and the payment of principal and
interest of which are unconditionally and fully guaranteed by the United States of America, to
mature or be withdrawable, as the case may be, not later than the time when needed for the
payment or redemption of the 1999 Bonds in order to discharge the pledge and lien securing the
1999 Bonds, as specified and defined in the Prior Resolution.
“Refunding Requirements” means an amount sufficient to pay all installments of
principal, interest and redemption premium on the 1999 Bonds, on September 1, 2009, as set
forth in Schedule A attached hereto.
SECTION 2. Purpose of Agreement; Acceptance of Duties. The City and the Escrow
Agent are entering into this Agreement for the benefit of the holders of the 1999 Bonds to
provide for the refunding of all of the remaining outstanding 1999 Bonds in the manner
contemplated in Section 1201 of the Prior Resolution. The Escrow Agent hereby accepts its
duties and obligations hereunder and agrees that the irrevocable instructions to the Escrow Agent
provided herein are in a form satisfactory to it. The applicable and necessary provisions of the
Prior Resolution, including particularly the defeasance and redemption provisions thereof, are
incorporated herein by reference. Reference herein to, or citation herein of, any provisions of
Prior Resolution shall be deemed to incorporate the same as a part hereof in the same manner
and with the same effect as if the same were fully set forth herein.
SECTION 3. Escrow Fund. There is created and established with the Escrow Agent a
special and irrevocable trust fund designated the “Escrow Fund” to be held by the Escrow Agent
separate and apart from all other funds of the City or the Escrow Agent and used only for the
purposes and in the manner provided in this Agreement.
SECTION 4. Deposits to Escrow Fund. The City shall cause to be deposited with the
Escrow Agent in the Escrow Fund, to be held in irrevocable trust by the Escrow Agent and to be
applied solely as provided in this Escrow Agreement, (i) $_______, representing a portion of the
proceeds of the 2009 Bonds and (ii) $_______ of excess moneys from the funds and accounts
10000-0259\1135472v1.doc 3
under the Prior Resolution and the City hereby directs the Escrow Agent in its capacity as
Trustee to effectuate such transfers.
SECTION 5. Maintenance of Escrow Fund. The Escrow Agent upon receipt of the
moneys described in Section 4, shall immediately (i) invest $_______ of such proceeds in the
Escrow Securities set forth in Schedule B, (ii) deposit such securities in the Escrow Fund, and
(iii) deposit the remaining $_________ in the Escrow Fund to be held uninvested. All proceeds
received upon the maturity of the Escrow Securities, including interest earnings thereon, shall be
retained in the Escrow Fund.
Notwithstanding the foregoing or any other provision of this Agreement to the contrary,
at the written request of the City and upon compliance with the conditions hereinafter set forth,
the Escrow Agent shall have the power to sell, transfer, request the redemption of or otherwise
dispose of some or all of the Escrow Securities in the Escrow Fund and to substitute Investment
Securities. The foregoing may be effected only if: (a) the substitution of Investment Securities
for the substituted Escrow Securities occurs simultaneously; (b) the amounts of and dates on
which the anticipated transfers from the Escrow Fund to the Trustee for the payment of the
Refunding Requirements will not be diminished or postponed thereby, as shown in the
certification (described below) of an independent certified public accountant; (c) the Escrow
Agent shall receive the unqualified opinion of nationally recognized bond counsel to the effect
that (i) such disposition and substitution would not cause any of the 1999 Bonds or the 2009
Bonds to be an “arbitrage bond” within the meaning of Section 148 of the Code and the
regulations thereunder in effect on the date of such disposition and substitution and applicable to
obligations issued on the respective issue dates of the 1999 Bonds and the 2009 Bonds, such
disposition or substitution would not be inconsistent with the City’s tax covenants contained in
the Resolution and that the conditions of this Section as to the disposition and substitution have
been satisfied and (ii) the City has the right and power to effect such disposition and substitution;
and (d) the Escrow Agent shall receive from an independent certified public accountant a
certification that, immediately after such transaction, the principal of and interest on the
Investment Securities in the Escrow Fund will, together with other moneys available for such
purpose, be sufficient to pay the Refunding Requirements.
Upon the written direction of the City, but subject to the conditions and limitations herein set
forth, any moneys received from the maturing principal of or interest or other investment income
on any Escrow Securities held in the Escrow Fund, or the proceeds from any sale, transfer,
redemption or other disposition of Escrow Securities pursuant to Section 5 not required for the
purposes of Section 6, as shall be certified to the Escrow Agent by a nationally recognized firm
of independent certified public accountants or such other qualified firm selected by the City,
shall be paid by the Escrow Agent to the City, free and clear of any trust, lien, pledge or
assignment securing the 1999 Bonds or otherwise existing hereunder, after provision for
payment of amounts due the Escrow Agent pursuant to Section 14 hereof. Once the 1999 Bonds
have been redeemed and paid in full, all amounts remaining in the Escrow Fund shall be paid to
the City and the Escrow Fund shall be closed.
SECTION 6. Payment of Refunding Requirements. On September 1, 2009, as set
forth in Schedule A, the Escrow Agent shall transfer an amount sufficient to pay the Refunding
Requirements from the Escrow Fund to the Trustee. Such amounts shall be applied to the
10000-0259\1135472v1.doc 4
payment of the Refunding Requirements for the equal and ratable benefit of the holders of the
1999 Bonds.
SECTION 7. Verification. The City has caused schedules to be prepared relating to the
sufficiency of the anticipated receipts from the Escrow Securities to pay the Refunding
Requirements. The City herewith furnishes the Escrow Agent with the report of Causey Demgen
& Moore Inc., verifying the mathematical accuracy of the computations contained in such
schedules.
SECTION 8. Compliance with Prior Resolution. The City hereby directs and the
Escrow Agent hereby agrees that the Escrow Agent in its capacity as Trustee under the Prior
Resolution will take all the actions required to be taken by it under the Prior Resolution,
including the timely transfer of moneys, in order to effectuate this Agreement. The liability of
the Escrow Agent for the payment of the Refunding Requirements, pursuant to Section 6 shall be
limited to the application, in accordance with this Agreement, of moneys in the Escrow Fund
(including interest earnings thereon, if any).
SECTION 9. Tax Covenant. Notwithstanding any other provision of this Agreement,
the City hereby covenants that no part of the proceeds of the 2009 Bonds or of the moneys or
funds held by the Escrow Agent hereunder shall be used, and that the City shall not direct the
Escrow Agent to use any of such moneys or funds at any time, directly or indirectly, in a manner
that would cause any of the 2009 Bonds to be an “arbitrage bond” under Section 148 of the
Code, as the same shall be in effect at the time of such use and applicable to obligations issued
on the date of issuance of the 2009 Bonds. Neither the City nor the Escrow Agent shall, except
as permitted by Section 5 hereof, invest moneys in the Escrow Fund, except that the Escrow
Agent may effectuate the transfer of such moneys to a successor escrow agent in accordance
with the provisions of Section 15 relating to the transfer of rights and property to successor
escrow agents.
SECTION 10. Notices. As soon as practicable, upon receipt of the deposit of moneys
in the Escrow Fund pursuant to Section 4, the Escrow Agent shall mail to the registered owners
Prior Resolution) a notice substantially in the form set forth in Exhibit A attached hereto. In
addition, the Escrow Agent is hereby instructed to send, not less than 30 nor more than 60 days
before the redemption date, notices of redemption to the registered owners of the 1999 Bonds,
the Securities Depositories and Information Services (as defined in the Prior Resolution), all as
provided in the Prior Resolution.
SECTION 11. Defeasance of 1999 Bonds. The City hereby gives notice, pursuant to
the Prior Resolution, that by entering into this Agreement, it is electing to defease all of the
remaining outstanding 1999 Bonds, notwithstanding that such 1999 Bonds shall not have been
surrendered for payment. Concurrently with the initial deposit of Escrow Securities in the
Escrow Fund pursuant to Section 4 hereof, the 1999 Bonds shall no longer deemed to be
outstanding within the meaning and with the effect expressed in the Prior Resolution and the
pledge of the “Trust Estate” and other funds provided for such 1999 Bonds under the Prior
Resolution shall cease and terminate.
10000-0259\1135472v1.doc 5
SECTION 12. Nature of Lien. The trust hereby created shall be irrevocable and the
holders of the 1999 Bonds shall have an express lien on all moneys and Escrow Securities in the
Escrow Fund, including the interest earnings thereon, until paid out, used and applied in
accordance with this Agreement.
SECTION 13. Amendments. This Agreement is made pursuant to and in furtherance
of the Prior Resolution and for the benefit of the City and the holders from time to time of the
1999 Bonds and it shall not be repealed, revoked, altered, amended or supplemented without the
written consent of all such holders and the written consent of the Escrow Agent and the City;
provided, however, that the City and the Escrow Agent may, without the consent of, or notice to,
such holders, enter into such agreements supplemental to this Agreement as shall not adversely
affect the rights of such holders and as shall not be inconsistent with the terms and provisions of
this Agreement, for any one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in this Agreement;
(b) to grant to, or confer upon, the Escrow Agent for the benefit of the holders
of the 1999 Bonds, any additional rights, remedies, powers or City that may lawfully be
granted to, or conferred upon, such holders or the Escrow Agent; and
(c) to transfer to the Escrow Agent and make subject to this Agreement
additional funds, securities or properties.
The Escrow Agent shall be entitled to rely exclusively upon an unqualified opinion of
nationally recognized bond counsel with respect to compliance with this Section, including the
extent, if any, to which any change, modification or addition affects the rights of the holders of
the 1999 Bonds, or that any instrument executed hereunder complies with the conditions and
provisions of this Section.
SECTION 14. Compensation of Escrow Agent. In consideration of the services
rendered by the Escrow Agent under this Agreement, the City agrees to and shall pay to the
Escrow Agent its proper fees and expenses in accordance with the agreement therefor reached by
the Escrow Agent and the City, including all reasonable expenses, charges, counsel fees and
other disbursements incurred by it or by its attorneys, agents and employees in and about the
performance of their powers and duties hereunder, from any moneys of the City lawfully
available therefor and the Escrow Agent shall have no lien whatsoever upon any of the moneys
in the Escrow Fund for the payment of such proper fees and expenses.
SECTION 15. Resignation or Removal of Escrow Agent; Appointment of
Successor. Notwithstanding anything to the contrary in Prior Resolution, the Escrow Agent
agrees to abide by this Section 15 with respect to its duties under this Agreement. The Escrow
Agent at the time acting hereunder may at any time resign and be discharged from the trusts
hereby created by giving not less than 60 days’ written notice to the City, but no such resignation
shall take effect unless a successor Escrow Agent shall have been appointed by the holders of the
1999 Bonds or by the City as hereinafter provided and such successor Escrow Agent shall have
accepted such appointment, in which event such resignation shall take effect immediately upon
the appointment and acceptance of a successor Escrow Agent.
10000-0259\1135472v1.doc 6
The Escrow Agent may be removed at any time by an instrument or concurrent
instruments in writing, delivered to the Escrow Agent and the City and signed by the holders of a
majority in principal amount of the 1999 Bonds. The Escrow Agent may also be removed at any
time by the City with prior written notice.
In the event the Escrow Agent shall resign or be removed, or be dissolved, or shall be in
the course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in
case the Escrow Agent shall be taken under the control of any public officer or officers, or of a
receiver appointed by a court, a successor escrow agent may be appointed by the holders of a
majority in principal amount of the 1999 Bonds, by an instrument or concurrent instruments in
writing, signed by such holders, or by their attorneys in fact, duly authorized in writing;
provided, nevertheless, that in any such event, the City shall appoint a temporary escrow agent to
fill such vacancy until a successor escrow agent shall be appointed by the holders of a majority
in principal amount of the 1999 Bonds, and any such temporary escrow agent so appointed by
the City shall immediately and without further act be superseded by the escrow agent so
appointed by such holders.
In the event that no appointment of a successor escrow agent or a temporary successor
escrow agent shall have been made by such holders or the City pursuant to the foregoing
provisions of this Section within 60 days after written notice of the removal or resignation of the
Escrow Agent has been given to the City, the holder of any of the 1999 Bonds or any retiring
escrow agent may apply to any court of competent jurisdiction for the appointment of a
successor escrow agent, and such court may thereupon, after such notice, if any, as it shall deem
proper, appoint a successor escrow agent.
No successor escrow agent shall be appointed unless such successor escrow agent shall
be a corporation or association with trust powers organized under the banking laws of the United
States or any State, and shall have at the time of appointment capital and surplus of not less than
$75,000,000.
Every successor escrow agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to the City, an instrument in writing accepting such appointment
hereunder and thereupon such successor escrow agent without any further act, deed or
conveyance, shall become fully vested with all the rights, immunities, powers, trusts, duties and
obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of
such successor escrow agent, the City execute and deliver an instrument transferring to such
successor escrow agent all the estates, properties, rights, powers and trusts of such predecessor
hereunder; and every predecessor escrow agent shall deliver all securities and moneys held by it
to its successor. Should any transfer, assignment or instrument in writing from the City be
required by any successor escrow agent for more fully and certainly vesting in such successor
escrow agent the estates, rights, powers and duties hereby vested or intended to be vested in the
predecessor escrow agent, any such transfer, assignment and instrument in writing shall, on
request, be executed, acknowledged and delivered by the City.
Any entity into which the escrow agent, or any successor to it in the trusts created by this
Agreement, may be merged or converted or with which it or any successor to it may be
consolidated, or any corporation resulting from any merger, conversion, consolidation or tax-free
10000-0259\1135472v1.doc 7
reorganization to which the Escrow Agent or any successor to it shall be a party, shall, if it meets
the qualifications set forth in the fifth paragraph of this Section and if it is otherwise satisfactory
to the City, be the successor escrow agent under this Agreement without the execution or filing
of any paper or any other act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 16. Limitation of Powers and Duties. The Escrow Agent shall have no
power or duty to invest any funds held under this Agreement except as provided in Sections 5
and 9 hereof. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of
the moneys held hereunder except as provided in this Agreement.
SECTION 17. Indemnification. To the extent permitted by law, the City hereby
assumes liability for, and hereby agrees (whether or not any of the transactions contemplated
hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and
its respective successors, assigns, agents, employees and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and disbursements) of whatsoever kind and
nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at any time
(whether or not also indemnified against the same by the City or any other person under any
other agreement or instrument, but without double indemnity) in any way relating to or arising
out of the execution, delivery and performance of this Agreement, the establishment hereunder
of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of
any securities to be purchased pursuant thereto, the retention of such securities or the proceeds
thereof and any payment, transfer or other application of moneys or securities by the Escrow
Agent in accordance with the provisions of this Agreement; provided, however, that the City
shall not be required to indemnify the Escrow Agent against the Escrow Agent’s own negligent
or intentional act or omission or the negligent or intentional act or omission of the Escrow
Agent’s employees or the material breach by the Escrow Agent of the terms of this Agreement.
In no event shall the City or the Escrow Agent be liable to any person by reason of the
transactions contemplated hereby other than to each other as set forth in this Section. The
indemnities contained in this Section shall survive the termination of this Agreement.
SECTION 18. Limitation of Liability. The Escrow Agent and its respective
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in
tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys deposited therein, the
sufficiency of the moneys held hereunder to accomplish the redemption of the 1999 Bonds, or
any payment, transfer or other application of moneys by the Escrow Agent in accordance with
the provisions of this Agreement or by reason of any non-negligent act, non-negligent omission
or non-negligent error of the Escrow Agent made in good faith in the conduct of its duties. The
recitals of fact contained in the “Whereas” clauses herein shall be taken as the statements of the
City and the Escrow Agent assumes no responsibility for the correctness thereof. The Escrow
Agent makes no representation as to the sufficiency of the moneys to accomplish the redemption
of the 1999 Bonds pursuant to the Prior Resolution or to the validity of this Agreement as to the
City and, except as otherwise provided herein, the Escrow Agent shall incur no liability in
respect thereof. The Escrow Agent shall not be liable in connection with the performance of its
duties under this Agreement except for its own negligence or willful misconduct and the duties
10000-0259\1135472v1.doc 8
and obligations of the Escrow Agent shall be determined by the express provisions of this
Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the
City, and in reliance upon the written opinion of such counsel shall have full and complete
authorization and protection in respect of any action taken, suffered or omitted by it in good faith
in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a
matter be proved or established prior to taking, suffering, or omitting any action under this
Agreement, such matter (except the matters set forth herein as specifically requiring a certificate
of a nationally recognized firm of independent certified public accountants or an opinion of
nationally recognized bond counsel) may be deemed to be conclusively established by a written
certification of the City. Whenever the Escrow Agent shall deem it necessary or desirable that a
matter specifically requiring a certificate of a nationally recognized firm of independent certified
public accountants or an opinion of nationally recognized bond counsel be proved or established
prior to taking, suffering, or omitting any such action, such matter may be established only by
such a certificate or such an opinion.
SECTION 19. Termination. This Agreement shall terminate when moneys have been
withdrawn from the Escrow Fund in a sufficient amount to satisfy all of the Refunding
Requirements and pay all 1999 Bonds In accordance with Section 6 of this Agreement. Upon
such termination, all moneys remaining in the Escrow Fund, after payment of amounts due to the
Escrow Agent, shall be released to the City.
SECTION 20. Governing Law. This Agreement shall be governed by the laws of the
State of California.
SECTION 21. Severability. If any one or more of the covenants or agreements
provided in this Agreement on the part of the City or the Escrow Agent to be performed should
be determined by a court of competent jurisdiction to be contrary to law, such covenant or
agreement shall be deemed and construed to be severable from the remaining covenants and
agreements herein contained and shall in no way affect the validity of the remaining provisions
of this Agreement.
SECTION 22. Agreement Binding on Successors. All the covenants, promises and
agreements in this Agreement contained by or on behalf of the City or the Escrow Agent shall
bind and inure to the benefit of their respective successors and assigns, whether so expressed or
not.
SECTION 23. Counterparts. This Agreement may be executed in several
counterparts, all of which shall be regarded as one original and shall constitute and be but one
and the same instrument.
[Remainder of Page Intentionally Left Blank]
10000-0259\1135472v1.doc 9
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed by their duly authorized signatories and appointed or elected officials as of the date first
above written.
CITY OF CULVER CITY
By________________________________
City Manager
ATTEST:
By_______________________________
City Clerk
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent
By________________________________
Authorized Officer
10000-0259\1135472v1.doc
SCHEDULE A
REFUNDING REQUIREMENTS
City of Culver City
Wastewater Facilities Refunding Revenue Bonds,
1999 Series A
Redemption Date
Principal
Interest
Redemption Premium
(2%)
Total
September 1, 2009 $ $ $ $
10000-0259\1135472v1.doc
SCHEDULE B
ESCROW SECURITIES
Type of Security Maturity Date Par Amount Rate
10000-0259\1135472v1.doc
EXHIBIT A
FORM OF DEFEASANCE NOTICE
Adelanto Public Utility City
County of San Bernardino, California
Notice to the Holders of
City of Culver City
Wastewater Facilities Refunding Revenue Bonds,
1999 Series A
(CUSIP Nos. _______)
NOTICE IS HEREBY GIVEN on behalf of the City of Culver City (the “City”),
that pursuant to Section 1201 of Resolution No. 99-R093, as supplemented by Resolution No.
99-094, each adopted by the City Council of the City on November 8, 1999 (collectively, the
“Prior Resolution”), pertaining to the above-captioned bonds (the “1999 Bonds”), the lien of the
Prior Resolution has been discharged through the irrevocable deposit in escrow of cash and
Escrow Securities (as defined in the Escrow Agreement). The 1999 Bonds are deemed to have
been paid in accordance with Section 1201 of the Prior Resolution, and will be redeemed on
September 1, 2009 at a redemption price equal to 102% of the principal amount thereof.
DATED this ___ day of ___________, 2009
_________________________________,
as Escrow Agent and Trustee
10000.0259\1135489.1
$[principal amount]
City of Culver City
Wastewater Facilities Refunding Revenue Bonds
2009 Series A
BOND PURCHASE AGREEMENT
[pricing date], 2009
City of Culver City
9770 Culver Boulevard
Culver City, California 90232
Ladies and Gentlemen:
The undersigned, ___________, (the “Underwriter”), hereby offers to enter into
this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Culver City (the
“City”). Upon the acceptance of this Purchase Agreement by the City, this offer will be binding
upon the City and the Underwriter. This offer is made subject to (i) the acceptance by the City,
by execution of this Purchase Agreement and its delivery to the Underwriter prior to 5:00 p.m.,
California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the
Underwriter upon written notice delivered to the City at any time prior to the acceptance of this
Purchase Agreement by the City.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of
the representations, warranties and agreements set forth in this Purchase Agreement, the City
hereby agrees to sell and deliver to the Underwriter all but not less than all, of the aggregate
principal amount of the City’s $[principal amount] Wastewater Facilities Refunding Revenue
Bonds, 2009 Series A (the “2009 Bonds”). The 2009 Bonds shall be dated their delivery date,
shall mature on the dates, and shall bear interest at the rates per annum shown on Exhibit A
hereto. Interest on the 2009 Bonds shall be payable on March 1 and September 1 of each year,
commencing March 1, 2010. The price at which the Underwriter is to purchase the 2009 Bonds
shall be $_________ in immediately available funds (being the aggregate principal amount
thereof, [less/plus] a net original issue [discount/premium] of $_________ and less an
Underwriter’s discount of $_________). (The date of such payment and delivery is referred to
herein as the “Closing Date,” the hour and date of such delivery and payment is referred to
herein as the “Closing Time,” and the other actions contemplated hereby to take place at the time
of such payment and delivery are sometimes referred to herein as the “Closing”).
2. The 2009 Bonds. The 2009 Bonds shall be issued and secured pursuant to
the provisions of the City Charter and the Revenue Bond Law of 1941, Title 5, Division 2, Part
10000.0259\1135489.1 2
1, Chapter 6, of the Government Code of the State of California, as amended and supplemented
(the “Act”), and Resolution No. ___ adopted by the City Council of the City on _______, 2009,
as supplemented by Resolution No. ____ of said City Council adopted on _______, 2009
(collectively, the “Resolutions”). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Resolutions. The 2009 Bonds are being issued to (i) refund the
City’s remaining outstanding Wastewater Facilities Refunding Revenue Bonds, 1999 Series A
(the “1999 Bonds”), (ii) fund a debt service reserve account for the 2009 Bonds, and (iii) pay
costs of issuance of the 2009 Bonds.
Optional Redemption. The 2009 Bonds maturing on or prior to September 1,
20__ are not subject to redemption prior to maturity. The Bonds maturing on or after September
1, 20__ may be redeemed, at the option of the City, from any source of funds, on September 1,
20__ or thereafter prior to maturity, as a whole on any date or in part, in any order of maturity as
determined by the City or, in the absence of direction by the City, pro rata among maturities and
by lot within a maturity on any Interest Payment Date, at [a redemption price equal to 100
percent of the principal amount to be redeemed, plus accrued interest to the redemption date,
without premium]/[the following redemption price (expressed as a percentage of the principal
amount thereof) plus accrued interest thereon to the redemption date if redeemed at the following
times:]
Redemption Dates
(September 1)
Redemption Price
%
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1,
20__ are subject to mandatory sinking fund redemption in part by lot, from mandatory annual
Sinking Fund Installments, in the principal amounts hereinafter set forth, without premium, on
September 1 of each year, commencing on September 1, 20__ in each of the years and in the
amounts as follows:
Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1)
Principal Amount
to be Redeemed
$
(Maturity)
The 2009 Bonds shall be payable as provided in the Resolutions and shall be as
described in the Preliminary Official Statement of the City dated [date of POS], 2009 and the
Official Statement of the City dated as of even date herewith. Such Preliminary Official
Statement, including the cover page, the inside front cover and the appendices thereto, relating to
the 2009 Bonds, as amended to include the terms of this Purchase Agreement with respect to
10000.0259\1135489.1 3
pricing and interest rates and with such changes and amendments thereto as have been mutually
agreed to by the City and the Underwriter, is hereinafter referred to as the “Official Statement.”
The City will enter into an Escrow Agreement, dated as of ___ 1, 2009 (the
“Escrow Agreement”), with U.S. Bank National Association, as escrow agent (the “Escrow
Agent”), in order to provide for the refunding of the City’s Wastewater Facilities Revenue
Refunding, 1999 2009 Bonds. The City will also enter into a Continuing Disclosure Agreement,
dated as of ______ 1, 2009 (the “Continuing Disclosure Agreement”), by and between the City
and U.S. Bank National Association, as dissemination agent (the “Dissemination Agent”), in
order to assist the Underwriter in complying with the requirements of Rule 15c2-12(b)(5) of the
Securities Exchange Act of 1934 (“Rule 15c2-12”). Herein, the Resolutions, this Purchase
Agreement, the Official Statement, the Escrow Agreement and the Continuing Disclosure
Agreement are referred to as the “City Documents.”
3. Offering by the Underwriter. It shall be a condition to the City’s
obligations to sell and to deliver the 2009 Bonds to the Underwriter, and to the Underwriter’s
obligation to purchase, to accept delivery of and to pay for the 2009 Bonds that the entire
principal amount of the 2009 Bonds shall be issued, sold and delivered by the City to the
Underwriter, and purchased, accepted and paid for by the Underwriter at the Closing. It is
understood that the Underwriter proposes to offer the 2009 Bonds for sale to the public (which
may include selected dealers and special purchasers) at the yield (or price) as set forth in Exhibit
A hereto and on the inside front cover of the Official Statement. Concessions from the public
offering price may be allowed to selected dealers and special purchasers. It is understood that
the initial public offering price and concessions set forth in the Official Statement may vary after
the initial public offering. It is further understood that the 2009 Bonds may be offered to the
public at prices other than the prices set forth in Exhibit A hereto. The Underwriter hereby
represents that it has the full right, power and authority to enter into this Purchase Agreement.
4. Delivery of Official Statement; Use of Documents. (a) The City hereby
authorizes the use by the Underwriter of the Preliminary Official Statement and the Official
Statement (including any supplements or amendments thereto), the Resolutions and the
Continuing Disclosure Agreement and the information therein contained, in connection with the
public offering and sale of the 2009 Bonds. ”). The City hereby certifies that such Preliminary
Official Statement is deemed final as of its date for purposes of Rule 15c2-12, except for certain
omissions with respect to the pricing of the Bonds permitted to be omitted therefrom by Rule
15c2-12, and has executed and delivered a certificate, dated [date of POS], 2009, in substantially
the form attached hereto as Exhibit D.
(b) The City shall deliver to the Underwriter, within seven business days from
the date hereof, such number of copies of the final Official Statement executed on behalf of and
approved for distribution by the City as the Underwriter may reasonably request in order for the
Underwriter to comply with the rules of the Municipal Securities Rulemaking Board and Rule
15c2-12.
5. Representations, Warranties and Agreements of the City. The City
represents, warrants and agrees as follows:
10000.0259\1135489.1 4
(a) The City is a charter city duly organized and existing pursuant to and
under the laws of the State of California.
(b) The City has full legal right, power and authority to (i) enter into, execute
and deliver the City Documents; (ii) sell, issue and deliver the 2009 Bonds as provided in this
Purchase Agreement; and (iii) carry out and consummate the transactions on its part
contemplated by the City Documents.
(c) By all necessary official action, the City has duly authorized and
approved the execution and delivery of the City Documents and the performance by the City of
the obligations in connection with the issuance of the 2009 Bonds on its part contained in the
Resolutions and this Purchase Agreement, and the consummation by it of all other transactions
contemplated by the City Documents in connection with the issuance of the 2009 Bonds.
(d) As of the date hereof, to the best of its knowledge, the City is not in any
material respect in breach of or default under any applicable constitutional provision, law or
administrative regulation of any state or the United States, or any agency or instrumentality of
either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the City is a party which breach or default has
or may have an adverse effect on the ability of the City to perform its obligations under the
Resolutions, this Purchase Agreement, or the Continuing Disclosure Agreement and no event has
occurred and is continuing which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default under any such instrument; and the execution and
delivery of the City Documents, and compliance with the provisions on the City’s part contained
in the Resolutions, this Purchase Agreement and the Continuing Disclosure Agreement, will not
conflict in any material way with or constitute a material breach of or a material default under
any constitutional provision, law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor
will any such execution, delivery, adoption or compliance result in the creation or imposition of
any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of
the property or assets of the City or under the terms of any such law, regulation or instrument,
except as provided by the 2009 Bonds and the Resolutions.
(e) To the best of the City’s knowledge, all authorizations, approvals,
licenses, permits, consents and orders of any governmental authority, legislative body, board,
agency or commission having jurisdiction of the matter which are required for the due
authorization by, or which would constitute a condition precedent to or the absence of which
would materially adversely affect the due performance by, the City of its obligations under the
Resolutions, this Purchase Agreement or the Continuing Disclosure Agreement or in connection
with the issuance of the 2009 Bonds as contemplated in this Purchase Agreement or the
Resolutions have been duly obtained, except for such approvals, consents and orders as may be
required under the Blue Sky or securities laws of any state in connection with the offering and
sale of the 2009 Bonds.
(f) The Resolutions, the Continuing Disclosure Agreement and the 2009
Bonds when issued, will conform to the descriptions thereof contained in the Official Statement
under the captions “INTRODUCTION,” “THE BONDS,” “SECURITY FOR THE BONDS,”
10000.0259\1135489.1 5
“APPENDIX D – SUMMARY OF THE RESOLUTIONS” and “APPENDIX F – FORM OF
CONTINUING DISCLOSURE AGREEMENT.”
(g) The 2009 Bonds, when issued, authenticated and delivered in accordance
with the Resolutions will be validly issued and outstanding obligations of the City, entitled to the
benefits of the Resolutions, and upon such issuance and delivery, the Resolutions will provide,
for the benefit of the owners from time to time of the 2009 Bonds, the legally valid and binding
pledge of and lien and security interest they purport to create.
(h) As of the date hereof, to the best of the City’s knowledge, there is no
action, suit, proceeding, inquiry or investigation, at law or in equity before or by any court,
government agency, public board or body, pending and notice of which has been received by the
City or, threatened against the City, affecting the existence of the City or the titles of its officers
to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance
or delivery of the 2009 Bonds or the pledge and lien on the Net Revenues or any other monies
pledged to the payment of the 2009 Bonds pursuant to the Resolutions, or contesting or affecting
as to the City the validity or enforceability of the Act, the 2009 Bonds, this Purchase Agreement,
the Resolutions, the Continuing Disclosure Agreement or contesting the tax-exempt status of the
2009 Bonds, or contesting the completeness or accuracy of the Preliminary Official Statement or
the Official Statement, or contesting the powers of the City for the issuance of the 2009 Bonds,
or the execution and delivery by the City of the City Documents, or in any way contesting or
challenging the consummation of the transactions contemplated thereby or challenging the rights
of the City to collect Net Revenues pledged to the payment of the 2009 Bonds; nor, to the best
knowledge of the City, is there any basis for any such action, suit, proceeding, inquiry or
investigation, wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity of the Act, the issuance of the 2009 Bonds, or the authorization, execution,
delivery or performance by the City of the City Documents.
(i) The City will furnish such information, execute such instruments and take
such other action in cooperation with the Underwriter as the Underwriter may reasonably request
in order to (i) qualify the 2009 Bonds for offer and sale under the Blue Sky or other securities
laws and regulations of such states and other jurisdictions of the United States as the Underwriter
may designate, (ii) determine the eligibility of the 2009 Bonds for investment under the laws of
such states and other jurisdictions, and will use its best efforts to continue such qualifications in
effect so long as required for the distribution of the 2009 Bonds; provided, however, that the City
shall not be required to execute a general or special consent to service of process or qualify to do
business in connection with any such qualification or determination in any jurisdiction, and
provided, further, that the Underwriter shall bear all costs in connection with the City’s action
under (i) and (ii) above, and (iii) assure or maintain the tax-exempt status of the interest on the
2009 Bonds.
(j) As of the date of the Preliminary Official Statement, the descriptions in
the Preliminary Official Statement pertaining to the City, the 2009 Bonds and the City
Documents do not, except for the omission of certain information permitted to be omitted in
accordance with Rule 15c2-12, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.
10000.0259\1135489.1 6
(k) At the time of the City’s acceptance of this Purchase Agreement, and at all
times subsequent thereto up to and including the Closing Date, the descriptions in the Official
Statement pertaining to the City, the 2009 Bonds and the City Documents do not and will not
contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not
misleading, except as the Official Statement may be supplemented or amended pursuant to
paragraph (m) of this Section 5.
(l) If the Official Statement is supplemented or amended pursuant to
paragraph (m) of this Section 5, at the time of each supplement or amendment thereto and
(unless subsequently again supplemented or amended pursuant to such paragraph) at all times
subsequent thereto up to and including the Closing Date, the Official Statement as so
supplemented or amended, to the best of the City’s knowledge, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.
(m) If between the date of this Purchase Agreement and that date which is 25
days after the end of the underwriting period (as determined in accordance with Section 14), any
event affecting the City and known to the City shall occur which might adversely affect the
marketability or the market prices of the 2009 Bonds, or which might cause the Official
Statement, as then supplemented or amended, to contain any untrue statement of a material fact
or to omit to state a material fact necessary to make the statements in the Official Statement, in
light of the circumstances under which they were made, not misleading, the City shall notify the
Underwriter of such event, and if in the opinion of the Underwriter such event requires the
preparation and publication of a supplement or amendment to the Official Statement, the City
will at its expense prepare and furnish to the Underwriter a reasonable number of copies of such
supplement to, or amendment of, the Official Statement in a form and in a manner approved by
the Underwriter.
(n) The City will refrain from taking any action, or permitting any action to be
taken, with regard to which the City may exercise control, that results in the loss of the tax-
exempt status of the interest on the 2009 Bonds.
(o) Any certificate signed by any officer of the City and delivered to the
Underwriter pursuant to the Resolutions, this Purchase Agreement or any document
contemplated thereby shall be deemed a representation and warranty by the City to the
Underwriter as to the statements made therein.
(p) The City will cause the proceeds from the sale of the 2009 Bonds to be
paid to the Trustee for the purposes specified in the Resolutions and the Official Statement. So
long as any of the 2009 Bonds are outstanding and except as may be authorized by the
Resolutions, the City will not issue or sell any bonds or other obligations, other than the 2009
Bonds sold by this Purchase Agreement, the interest on and premium, if any, or principal of
which will be payable senior to or on a parity with the 2009 Bonds from the Net Revenues
securing the payments to be made under the Resolutions.
(q) At or prior to the Closing, the City shall have duly authorized, executed
and delivered the Continuing Disclosure Agreement which complies with the provisions of Rule
10000.0259\1135489.1 7
15c2-12 and which shall be substantially in the form presented as Appendix F to the Official
Statement.
6. Closing. At 8:00 a.m., California time, on [closing date], 2009, or on such
earlier date or as soon thereafter as practicable, as may be mutually agreed upon by the City and
the Underwriter, the City will deliver (i) the 2009 Bonds in definitive form, registered in the
name of Cede & Co., as the nominee of The Depository Trust Company (“DTC”), to the Trustee
(so that the 2009 Bonds may be authenticated by the Trustee and credited to the account
specified by the Underwriter under DTC’s Fast Automated Securities Transfer procedures), and
(ii) the closing documents hereinafter mentioned at the offices of Richards, Watson & Gershon,
A Professional Corporation (“Bond Counsel”), in Los Angeles, California or another place to be
mutually agreed upon by the City and the Underwriter. The Underwriter will accept such
delivery and pay the purchase price of the 2009 Bonds as set forth in Section 1 of this Purchase
Agreement in immediately available funds to the order of the Trustee. The 2009 Bonds will be
made available to the Underwriter for inspection not less than 24 hours prior to the Closing.
7. Closing Conditions. The Underwriter has entered into this Purchase
Agreement in reliance upon the representations and warranties of the City contained in this
Purchase Agreement, and in reliance upon the representations and warranties to be contained in
the documents and instruments to be delivered at the Closing and upon the performance by the
City of its obligations hereunder, both as of the date hereof and as of the Closing Date.
Accordingly, the Underwriter’s obligations under this Purchase Agreement to purchase, to accept
delivery of and to pay for the 2009 Bonds shall be conditioned upon the performance by the City
of its obligations to be performed under this Purchase Agreement and under such documents and
instruments at or prior to the Closing, and shall also be subject to the following additional
conditions:
(a) The representations and warranties of the City contained in this Purchase
Agreement shall be true, complete and correct on the date hereof and on and as of the Closing
Date, as if made on the Closing Date;
(b) At the time of the Closing, the City Documents shall be in full force and
effect as valid and binding agreements between or among the various parties thereto and the City
Documents shall not have been amended, modified or supplemented except as may have been
agreed to by the Underwriter;
(c) At the time of the Closing, all necessary official action of the City and of
the other parties thereto relating to this Purchase Agreement and the Resolutions shall have been
taken and shall be in full force and effect and shall not have been amended, modified or
supplemented in any material respect;
(d) Subsequent to the date hereof, there shall not have occurred any change
affecting particularly the City or the 2009 Bonds, as the foregoing matters are described in the
Official Statement, which in the reasonable opinion of the Underwriter materially impairs the
investment quality of the 2009 Bonds;
(e) At or prior to the Closing, the Underwriter shall have received copies of
each of the following documents:
10000.0259\1135489.1 8
(1) A copy of Resolution No. __, Resolution of the City Council of the
City of Culver City, California, Authorizing the Issuance of Bonds to Finance
Costs of the City’s Wastewater System, adopted by the City Council of the City
on _____, 2009, certified by the City Clerk or a Deputy City Clerk;
(2) A copy of Resolution No. ____, First Supplemental Resolution of
the City Council of the City of Culver City, California, Authorizing the Issuance
of a Series of Bonds Designated “Wastewater Facilities Refunding Revenue
Bonds, 2009 Series A”, adopted by the City Council of the City on _____, 2009,
certified by the City Clerk or a Deputy City Clerk;
(3) The Official Statement and each supplement or amendment, if any,
thereto, executed by the City;
(4) A copy of the Continuing Disclosure Agreement, executed by the
City and the Dissemination Agent;
(5) A certificate, dated the Closing Date, signed by a duly authorized
official of the City satisfactory in form and substance to the Underwriter to the
effect that the representations and warranties of the City contained in this
Purchase Agreement are true and correct in all material respects as of the Closing
Date;
(6) The final approving legal opinion of Bond Counsel, dated the
Closing Date and addressed to the City, in substantially the form included as
Appendix C to the Official Statement, accompanied by a reliance letter from
Bond Counsel to the effect that such opinion may be relied upon by the
Underwriter with the same effect as if such opinion were addressed to the
Underwriter (which reliance letter may be incorporated in the supplemental
opinion to be delivered pursuant to Item (7) below);
(7) A supplemental opinion of Bond Counsel, dated the Closing Date
and addressed to the Underwriter, in substantially the form attached hereto as
Exhibit B;
(8) An opinion, dated the Closing Date and addressed to the
Underwriter and the City, of Richards, Watson & Gershon, A Professional
Corporation, as Disclosure Counsel, in substantially the form attached hereto as
Exhibit C;
(9) An opinion, dated the Closing Date and addressed to the
Underwriter, of the City Attorney of the City, as counsel to the City, to the effect:
(i) The City is a charter city duly organized and validity
existing under the laws of the State of California;
(ii) The resolution of the City approving and authorizing the
execution and delivery of the City Documents was duly adopted at a
10000.0259\1135489.1 9
meeting of the governing body of the City which was called and held
pursuant to law, with all public notice required by law and at which a
quorum was present and acting throughout and the resolution is now in
full force and effort; and
(iii) There are no judgments, actions, suits, proceedings,
inquiries or investigations at law or in equity by or before any court,
governmental agency, public board or body pending or to the best of such
counsel’s knowledge, threatened against the City in any way contesting or
affecting the validity of the 2009 Bonds or the City Documents or the
transactions described in and contemplated thereby wherein an
unfavorable decision, ruling or finding would adversely affect the validity
and enforceability of the 2009 Bonds or the City Documents or in which a
final adverse decision could materially adversely affect the operations of
the City;
(iv) to the best of legal counsel’s current, actual knowledge
without duty of inquiry, the information and statements contained in the
Official Statement under the captions “THE ENTERPRISE,” “THE
HYPERION SYSTEM,” and “CONCLUDING MATTERS – Absence of
Litigation” (but only to the extent such information relates to the City) do
not contain any untrue statement of a material fact required to be stated
therein or necessary to make the statement therein, in light of the
circumstances under which they are made, not misleading in any material
respect;
(10) A certificate of U.S. Bank National Association (“U.S. Bank”), in
form and substance satisfactory to the City and the Underwriter, dated the Closing
Date, that as of the Closing Date:
(i) U.S. Bank is a national banking association organized and
existing under and by virtue of the laws of the United States of America;
(ii) U.S. Bank has the full power and has been duly authorized
to (a) authenticate the 2009 Bonds, (b) enter into and deliver the
Acceptance of Office of Trustee, Paying Agent and Escrow Agent
pursuant to which the U.S. Bank shall be deemed to have accepted such
duties and obligations set forth in the Resolutions, the Escrow Agreement
and the Continuing Disclosure Agreement (together, the “U.S. Bank
Documents”) and (c) perform its duties under the U.S. Bank Documents;
(iii) U.S. Bank has on the Closing Date authenticated and
delivered the 2009 Bonds and executed and delivered the U.S. Bank
Documents;
(iv) To the best of U.S. Bank’s knowledge, after due inquiry, no
consent, approval, authorization or other action by any governmental or
regulatory authority having jurisdiction over U.S. Bank that has not been
10000.0259\1135489.1 10
obtained by U.S. Bank is or will be required for the execution and delivery
of the U.S. Bank Documents or the performance by U.S. Bank of its duties
and obligations under the U.S. Bank Documents;
(v) To the best of U.S. Bank’s knowledge, the execution and
delivery by U.S. Bank of the U.S. Bank Documents, the authentication and
delivery of the 2009 Bonds, and compliance with the terms of the U.S.
Bank Documents do not, in any material respect, conflict with, or result in
a violation or breach of, or constitute a default under, the Articles of
Association or Bylaws of U.S. Bank or any loan agreement, indenture,
bond, note, resolution or any other agreement or instrument to which U.S.
Bank is a party or by which it is bound, or any law or any rule, regulation,
order or decree of any court or governmental agency or body having
jurisdiction over U.S. Bank or any of its activities or properties, or result
in the creation or imposition of any lien, charge or other security interest
or encumbrance of any nature whatsoever upon any of the property or
assets of U.S. Bank; and
(vi) To the best of the knowledge of the U.S. Bank officer
signing the certificate, after due inquiry, there is no action, suit,
proceeding, inquiry or investigation in law or in equity, before or by any
court, governmental agency, public board or body, nor is any such action
or other proceeding threatened against U.S. Bank, affecting the existence
of U.S. Bank, or the titles of its officers to their respective offices or
seeking to prohibit, restrain, or enjoin the execution and delivery of any of
the U.S. Bank Documents or the collection of revenues to be applied to
pay the principal, premium, if any, and interest with respect to the 2009
Bonds, or the pledge thereof, or in any way contesting or affecting the
validity or enforceability of the U.S. Bank Documents or contesting the
powers of U.S. Bank or its authority to enter into, adopt or perform its
obligations under any of the foregoing to which it is a party, wherein an
unfavorable decision, ruling or finding would materially adversely affect
the validity or enforceability of the U.S. Bank Documents or the power
and authority of U.S. Bank to enter into the U.S. Bank Documents and
perform its duties under the U.S. Bank Documents and to authenticate and
deliver the 2009 Bonds;
(11) A copy of the general resolution (or excerpt of bylaws or other
similar instrument) of U.S. Bank authorizing the execution and delivery of certain
documents by certain officers of U.S. Bank, which resolution authorizes the
authentication of the 2009 Bonds and the execution and delivery of the U.S. Bank
Documents;
(12) An opinion of counsel to the U.S. Bank, dated the Closing Date
and addressed to the City and the Underwriter, in form and substance satisfactory
to the City and Underwriter, to the effect that:
10000.0259\1135489.1 11
(i) U.S. Bank has been duly organized and is validly existing and in
good standing as a national banking association under the laws of the
United States of America with full corporate power to perform its
obligations under the Resolutions;
(ii) U.S. Bank has duly authorized, executed and delivered the U.S.
Bank Documents, and by all proper corporate actions has authorized the
authentication and delivery of the 2009 Bonds in its capacity as Trustee
under the Resolutions and the acceptance of the duties and obligations of
U.S. Bank as Trustee, Dissemination Agent and Escrow Agent under the
respective U.S. Bank Documents;
(iii) Assuming due authorization, execution and delivery by the other
parties thereto, the U.S. Bank Documents are valid, legal and binding
agreements of U.S. Bank, enforceable in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors’
rights in general and by general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law);
(iv) Exclusive of federal or state securities laws and regulations, to
the best of such counsel’s knowledge after reasonable inquiry and
investigation, other than routine filings required to be made with
governmental agencies in order to preserve the U.S. Bank’s authority to
perform a trust business (all of which routine filings such counsel believes,
after reasonable inquiry and investigation, to have been made), no consent,
approval, authorization or other action by any governmental or regulatory
authority having jurisdiction over U.S. Bank is or will be required for the
execution and delivery by U.S. Bank of the U.S. Bank Documents or the
authentication and delivery of the 2009 Bonds; and
(v) To the best of such counsel’s knowledge, there is no litigation
pending or threatened against or affecting U.S. Bank to restrain or enjoin
U.S. Bank’s participation in, or in any way contesting the powers of U.S.
Bank with respect to the transactions contemplated by the 2009 Bonds,
and the U.S. Bank Documents;
(13) Verification report;
(14) Evidence that the 2009 Bonds have been assigned the rating(s)
specified on the cover of the Official Statement;
(15) Certificate Regarding Compliance with Certain Tax Matters,
executed by the City; and
(16) Such additional legal opinions, certificates, instruments and other
documents as Bond Counsel or the Underwriter may reasonably request to
evidence the truth and accuracy, as of the date hereof and as of the Closing Date,
of the City’s representations and warranties contained in this Purchase Agreement
10000.0259\1135489.1 12
and of the statements and information contained in the Official Statement and the
due performance or satisfaction by the City on or prior to the Closing Date of all
the agreements then to be performed and conditions then to be satisfied by it.
All the opinions, letters, certificates, instruments and other documents mentioned
above or elsewhere in this Purchase Agreement shall be deemed to be in compliance with the
provisions of this Purchase Agreement if, but only if, they are in form and substance satisfactory
to Bond Counsel and the Underwriter. The opinions and certificates presented as Exhibits hereto
or as Appendices to the Official Statement shall be deemed satisfactory provided they are
substantially in the forms of such exhibits or appendices.
If the City shall be unable to satisfy the conditions to the obligation of the
Underwriter to purchase, to accept delivery of and to pay for the 2009 Bonds contained in this
Purchase Agreement, or if the obligation of the Underwriter to purchase, to accept delivery of
and to pay for the 2009 Bonds shall be terminated for any reason permitted by this Purchase
Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor the City
shall be under any further obligation under this Purchase Agreement.
9. Termination. The Underwriter shall have the right to terminate the
Underwriter’s obligations under this Purchase Agreement to purchase, to accept delivery of and
to pay for the 2009 Bonds by notifying the City, in writing or by telegram, of their election to do
so, if, after the execution of this Purchase Agreement and prior to the Closing:
(a) The United States has become engaged in hostilities which have resulted
in a declaration of war or a national emergency affecting the normal operation of the government
of, or in the financial community in, the United States of America in a manner that makes it
impracticable for the Underwriter to market the 2009 Bonds or enforce the contracts for sale of
the 2009 Bonds;
(b) There shall have occurred the declaration of a general banking moratorium
by any authority of the United States or the States of New York or California;
(c) An event shall have occurred or been discovered as described in paragraph
(m) of Section 5 of this Purchase Agreement which, in the reasonable opinion of the
Underwriter, requires the preparation and publication of disclosure material or a supplement or
amendment to the Official Statement, and (i) the City refuses to prepare and furnish such
disclosure material, or supplement or amendment to the Official Statement, or (ii) in the
reasonable judgment of the Underwriter, the occurrence or discovery of such event materially
and adversely affects the marketability of the 2009 Bonds or renders the enforcement of
contracts for sale of the 2009 Bonds impracticable;
(d) Any legislation, ordinance, rule or regulation shall be introduced in, or be
enacted by any governmental body, department or agency in the State of California, or a decision
by any court of competent jurisdiction within the State of California shall be rendered which, in
the Underwriter’s reasonable opinion, materially adversely affects the market price of the 2009
Bonds;
10000.0259\1135489.1 13
(e) Legislation shall be introduced, by amendment or otherwise, or be enacted
by the House of Representatives or the Senate of the Congress of the United States, or a decision
by a court of the United States shall be rendered, or a stop order, ruling, regulation or official
statement by or on behalf of the Securities and Exchange Commission or other governmental
agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the
issuance, offering or sale of the 2009 Bonds or obligations of the general character of the 2009
Bonds as contemplated hereby or by the Official Statement, is or would be in violation of any
provision of the Securities Act of 1933, as amended and as then in effect, or the Securities
Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as
amended and as then in effect, or with the purpose or effect of otherwise prohibiting the
issuance, offering or sale of the 2009 Bonds or obligations of the general character of the 2009
Bonds, as contemplated hereby or by the Official Statement;
(f) Additional material restrictions not in force as of the date hereof shall have
been imposed upon trading in securities generally by any governmental authority or by any
national securities exchange;
(g) The New York Stock Exchange, or other national securities exchange or
association or any governmental authority, shall impose as to the 2009 Bonds, or obligations of
the general character of the 2009 Bonds, any material restrictions not now in force, or increase
materially those now in force, with respect to the extension of credit by or the charge to the net
capital requirements of broker dealers;
(h) Trading in securities on the New York Stock Exchange or the American
Stock Exchange shall have been suspended or limited or minimum prices have been established
on either such exchange; or
(i) Any action shall have been taken by any government in respect of its
monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse
effect on the United States securities market, rendering the marketing and sale of the 2009
Bonds, or enforcement of sale contracts with respect thereto impracticable.
If this Purchase Agreement shall be terminated pursuant to Section 8 or this
Section 9, or if the purchase provided for in this Purchase Agreement is not consummated
because any condition to the Underwriter’s obligation hereunder is not satisfied or because of
any refusal, inability or failure on the part of the City to comply with any of the terms or to fulfill
any of the conditions of this Purchase Agreement, or if for any reason the City shall be unable to
perform all of its obligations under this Purchase Agreement, the City shall not be liable to the
Underwriter for damages alleged as loss of anticipated profits arising out of the transactions
covered by this Purchase Agreement.
10. Payment of Costs and Expenses. (a) Subject to Sections 5(i) and 10(b),
the Underwriter shall be under no obligation to pay and the City shall pay or cause to be paid the
expenses incident to the performance of the obligations of the City hereunder including but not
limited to: (i) the fees and expenses of the City and City Attorney; (ii) the fees and expenses of
Bond Counsel and Disclosure Counsel; (iii) the fees of any rating agencies in connection with
obtaining at the City’s request ratings on the 2009 Bonds; (iv) all costs and expenses incurred in
connection with the preparation and printing of the 2009 Bonds; (v) all expenses in connection
10000.0259\1135489.1 14
with the preparation, printing, distribution and delivery of the Preliminary Official Statement, the
Official Statement and any amendment or supplement thereto; and (vi) the fees and expenses of
the Trustee.
(b) The Underwriter shall pay, and the City shall be under no obligation to
pay, all expenses incurred by the Underwriter in connection with the public offering and
distribution of the 2009 Bonds, including but not limited to CDIAC, DTC, MSRB, CUSIP
Bureau, California Public Securities Association and SIFMA fees, if any, and all advertising
expenses in connection with the public offering of the 2009 Bonds.
11. Representations, Warranties and Agreements to Survive Delivery.
The representations, warranties, agreements and other statements of the City and the Underwriter
or their officers or partners set forth in, or made pursuant to, this Purchase Agreement will
remain operative and in full force and effect regardless of any investigation made by or on behalf
of the City or the Underwriter or any controlling person and will survive delivery of and payment
for the 2009 Bonds.
12. Notices. Any notice or other communication to be given under this
Purchase Agreement may be given by delivering the same in writing:
To the City: City of Culver City
9770 Culver Boulevard
Culver City, California 90232
Attention: City Manager
To the Underwriter: Stone & Youngberg LLC
One Ferry Building, Suite 275
San Francisco, California 94111
Attention: Jim Cervantes, Managing Director
13. Parties in Interest. This Purchase Agreement is made solely for the
benefit of the City and the Underwriter (including the successors or assigns of the Underwriter)
and no other person shall acquire or have any right under or by virtue of this Purchase
Agreement. All of the City’s representations, warranties and agreements contained in this
Purchase Agreement shall remain operative and in full force and effect, regardless of: (i) any
investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the 2009
Bonds pursuant to this Purchase Agreement; and (iii) any termination of this Purchase
Agreement.
14. Determination of End of the Underwriting Period. For purposes of this
Purchase Agreement, the end of the Underwriting Period for the 2009 Bonds shall mean the
earlier of (a) the day of the Closing unless the City has been notified in writing by the
Underwriter, on or prior to the day of the Closing, that the “end of the underwriting period” for
the 2009 Bonds for all purposes of Rule 15c2-12 will not occur on the day of the Closing, or (b)
the date on which notice is given to the City by the Underwriter in accordance with the following
sentence. In the event that the Underwriter has given notice to the City pursuant to clause (a)
above that the “end of the underwriting period” for the 2009 Bonds will not occur on the day of
the Closing, the Underwriter agrees to notify the City in writing as soon as practicable following
10000.0259\1135489.1 15
the “end of the underwriting period” for the 2009 Bonds for all purposes of Rule 15c2-12;
provided, that the End of the Underwriting Period shall in no event extend beyond 90 days after
the Closing.
15. Effectiveness. This Purchase Agreement shall become effective upon the
execution of the acceptance by the designees of the City, and shall be valid and enforceable at
the time of such acceptance.
16. Headings. The headings of the sections of this Purchase Agreement are
inserted for convenience only and shall not be deemed to be a part of this Purchase Agreement.
17. Governing Law. This Purchase Agreement shall be construed in
accordance with the laws of the State of California.
18. Counterparts. This Purchase Agreement may be executed in any number
of counterparts.
10000.0259\1135489.1 16
If the foregoing is in accordance with your understanding of the Purchase
Agreement please sign and return to us the enclosed duplicate copies of this Purchase
Agreement, whereupon it will become a binding agreement between the City and the
Underwriter in accordance with its terms.
________________________
By:______________________________
Principal
Accepted as of the date first stated above:
CITY OF CULVER CITY
By:___________________________
City Financial Officer
10000.0259\1135489.1 A-1
Exhibit A
Maturity Schedule
$[principal amount]
City of Culver City
Wastewater Facilities Refunding Revenue Bonds
2009 Series A
Maturity Date
(September 1) Principal Amount Interest Rate
Price or Yield
10000.0259\1135489.1 C-1
Exhibit B
Supplemental Opinion of Bond Counsel
Addressed to the Underwriter
[closing date], 2009
Stone & Youngberg LLC
San Francisco, California
Supplemental Opinion of Bond Counsel
with reference to
$[principal amount]
City of Culver City
Wastewater Facilities Refunding Revenue Bonds
2009 Series A
Ladies and Gentlemen:
We have this day released to the City of Culver City (the “City”) our final approving
legal opinion with respect to the above-captioned bonds (the “Bonds”). You are authorized to
rely on such opinion as if the same were addressed to you.
In connection with rendering the above-described opinion, we examined the record of
proceedings submitted to us relative to the issuance of the Bonds and such other documents as
are in our opinion necessary to enable us to express an informed opinion with respect to the
following matters. Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Bond Purchase Agreement, dated [pricing date], 2009 (the “Purchase
Agreement”), relating to the Bonds.
The opinions expressed herein are based on an analysis of existing law and cover certain
matters not directly addressed thereby. Such opinions may be affected by actions taken or
omitted or events occurring after the date hereof, and we have not undertaken to determine, or to
inform any person, whether any such actions or events are taken or do occur. We have assumed
the genuineness of all documents and signatures presented to us. We have not undertaken to
verify independently, and have assumed, the accuracy of the factual matters represented,
warranted or certified in such documents. Furthermore, we have assumed compliance with all
agreements and covenants contained in such documents.
Based upon the foregoing, in our opinion:
1. The Purchase Agreement has been duly authorized, executed and delivered by the
City and, assuming due authorization, execution and delivery by the Underwriter,
constitutes the legal, valid and binding agreement of the City, enforceable in
accordance with its terms, except to the extent that enforceability may be limited
by moratorium, bankruptcy, reorganization, insolvency or other similar laws
11354-0003\1086784 C-2
affecting creditors’ rights generally or by the exercise of judicial discretion in
accordance with general principles of equity or otherwise in appropriate cases.
2. The Bonds are not subject to the registration requirements of the Securities Act of
1933, as amended, and the Resolutions are exempt from qualification under the
Trust Indenture Act of 1939, as amended.
3. The statements contained in the Official Statement with respect to the Bonds
under the captions “THE BONDS,” “SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS” and “CONCLUDING MATTERS – Tax
Matters” and in Appendices C and D to the Official Statement, insofar as such
statements purport to summarize certain provisions of the Bonds, the Resolutions
and Bond Counsel’s final opinion, are accurate in all material respects; provided
that we do not express any opinion with respect to any financial, statistical or
numerical information contained therein.
This letter is furnished by us as Bond Counsel to the City. No attorney-client
relationship has existed or exists between our firm and you in connection with the Bonds or by
virtue of this letter. Our engagement with respect to the Bonds has terminated as of the date
hereof, and we disclaim any obligation to update this letter. This letter is delivered to the
addressee, is solely for the benefit of the addressee and is not to be used, quoted or otherwise
referred to or relied upon for any other purpose or by any other person. This letter is not
intended to, and may, not, be relied upon by owners of the Bonds.
Respectfully submitted,
10000.0259\1135489.1 C-1
Exhibit C
Opinion of Richards, Watson & Gershon, A Professional Corporation,
Disclosure Counsel
[closing date], 2009
City of Culver City
Culver City, California
Opinion of Disclosure Counsel
with reference to
$[principal amount]
City of Culver City
Wastewater Facilities Refunding Revenue Bonds
2009 Series A
Ladies and Gentlemen:
We have acted as Disclosure Counsel with respect to the above-captioned Bonds (the
“Bonds”). This opinion is rendered to pursuant to the Bond Purchase Agreement, dated [pricing
date], 2009 (the “Purchase Agreement”), by and between the City of Culver City (the “City”)
and Stone & Youngberg LLC (the “Underwriter”). All capitalized terms used and not otherwise
defined herein have the meanings ascribed to them in the Purchase Agreement, and if not in the
Purchase Agreement, in the Official Statement, dated [pricing date], 2009, relating to the Bonds
(the “Official Statement”).
In rendering this opinion, we have reviewed such records, documents, certificates and
opinions, and made such other investigations of law and fact as we have deemed necessary or
appropriate. This opinion is limited to matters governed by the federal securities law of the
United States, and we assume no responsibility with respect to the applicability or effect of the
laws of any other jurisdiction.
In our capacity as Disclosure Counsel, we have participated in the preparation of the
Official Statement. Such participation included, among other things, discussions and inquiries
concerning various legal matters, review of certain documents and proceedings, and participation
in conferences with, among others, representatives of the City, the Underwriter, Fieldman,
Rolapp & Associates, as financial advisor, Causey Demgen & Moore Inc., as verification agent,
at which conferences the contents of the Official Statement and related matters were discussed.
On the basis of the information made available to us in the course of the foregoing (but without
having undertaken to determine or verify independently, or assuming any responsibility for, the
accuracy, completeness or fairness of any of the statements contained in the Official Statement),
no facts have come to the attention of the personnel in our firm directly involved in rendering
legal advice and assistance in connection with the preparation of the Official Statement which
11354-0003\1086784 C-2
cause us to believe that the Official Statement as of its date (excluding therefrom financial
statements, and any other financial, engineering and statistical data; forecasts, projections,
estimates, assumptions and expressions of opinions, including but not limited to those relating to
the finances and operation of the City and its water system; information about the Depository
Trust Company and the book-entry only system; statements relating to the treatment of the
Bonds or the interest, discount or premium related thereto for tax purposes under the law of any
jurisdiction; and without limiting the foregoing, the statements contained in the Official
Statement under the captions “THE BONDS – Book-Entry Only System,” “CONCLUDING
MATTERS – Tax Matters” and Appendices A, B, C, D and E; as to all of which we express no
view herein) contained any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
During the period from the date of the Official Statement to the date of this opinion,
except for our review of the certificates and opinions regarding the Official Statement delivered
on the date hereof, we have not undertaken any procedures or taken any actions which were
intended or likely to elicit information concerning the accuracy, completeness or fairness of any
of the statements contained in the Official Statement.
This opinion is furnished by us as Disclosure Counsel to the City. No attorney-client
relationship has existed or exists between our firm and the Underwriter in connection with the
Bonds or by virtue of this letter. This opinion is rendered in connection with the transaction
described herein, and may not be relied upon for any other purpose. This opinion shall not
extend to, and may not be used, quoted, referred to, or relied upon by any other person, firm,
corporation or other entity without our prior written consent. Our engagement with respect to
this matter terminates upon the delivery of this opinion to you at the time of the closing relating
to the Bonds, and we have no obligation to update this opinion.
Very truly yours,
10000.0259\1135489.1 D-1
Exhibit D
FORM OF
S.E.C. RULE 15c2-12 CERTIFICATE
with reference to
$[principal amount]
City of Culver City
Wastewater Facilities Refunding Revenue Bonds
2009 Series A
[date of POS], 2009
With reference to the above-captioned bonds (the “Bonds”), the undersigned
hereby certifies and represents as follows:
(1) The person setting his or her signature below is the duly appointed and acting
Chief Financial Officer of the City of Culver City (the “City”) and, as such is authorized to
execute and deliver this Certificate on behalf of the City.
(2) This Certificate is being delivered in order to enable Stone & Youngberg
LLC, as the initial underwriter for the Bonds, to comply with the Securities and Exchange
Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”).
(3) In connection with the offering and sale of the Bonds, there has been prepared
a Preliminary Official Statement, dated [date of POS], 2009, setting forth information concerning
the Bonds, the Enterprise and the City (the “Preliminary Official Statement”).
(4) The Preliminary Official Statement is, except for Permitted Omissions
(defined below), deemed final within the meaning of the Rule.
As used herein, “Permitted Omissions” shall mean the offering price(s), interest
rate(s), selling compensation, aggregate principal amount, principal amount per maturity,
delivery dates and other terms of the Bonds depending on such matters, all with respect to the
Bonds.
CITY OF CULVER CITY
By:_______________________________
Name: Jeff Muir
Title: Chief Financial Officer