FORM OF ESCROW AGREEMENT [(1998 REFUNDED BONDS)] [(2001 REFUNDED BONDS)][(2002 REFUNDED BONDS)] RELATING TO THE DEFEASANCE OF A PORTION OF
Fulbright & Jaworski L.L.P. – Draft 2/18/10
FORM OF ESCROW AGREEMENT [(1998 REFUNDED BONDS)] [(2001 REFUNDED BONDS)][(2002 REFUNDED BONDS)] RELATING TO THE DEFEASANCE OF A PORTION OF
CITY OF BURBANK, CALIFORNIA BURBANK WATER AND POWER
ELECTRIC REVENUE BONDS, SERIES OF [1998][2001][2002]
THIS ESCROW AGREEMENT ( Refunded Bonds), dated as of March 1, 2010 (this “Escrow Agreement”), by and between the City of Burbank, California (the “City”) and Wells Fargo Bank, National Association, as escrow agent hereunder (the “Escrow Agent”) and as successor trustee for the Bonds referred to below (the “Refunded Bonds Trustee”),
W I T N E S S E T H:
WHEREAS, pursuant to Article 12 of Chapter 4 of Title 2 (formerly Article 12 of Chapter 14) of the Municipal Code of the City, as amended, Resolution No. 26111 adopted by the City Council of the City on October 16, 2001 and a Burbank Water and Power Electric Revenue Bond Indenture, dated as of October 1, 1998, by and between the City and U.S. Bank Trust National Association (which has been succeeded as trustee by the Refunded Bonds Trustee), as trustee, as amended and supplemented, including by a Second Supplemental Burbank Water and Power Electric Revenue Bond Indenture, dated as of October 15, 2001, by and between the City and Wells Fargo Bank, National Association, as trustee (collectively, the “Indenture”), the City has heretofore issued [$ ,000 principal amount of its Burbank Water and Power Electric Revenue Bonds, Series of _] (the “Prior Bonds”); and
WHEREAS, pursuant to Article 12 of Chapter 4 of Title 2 (formerly Article 12 of Chapter 14) of the Municipal Code of the City, as amended, Resolution No. adopted by the City Council of the City on January 26, 2010 and the Indenture, as supplemented and amended by a Fourth Supplemental Electric Revenue Bond Indenture, dated as of March 1, 2010, by and between the City and Wells Fargo Bank, National Association, as trustee, the City has determined that $ aggregate principal amount of its Burbank Water and Power Electric Revenue/Refunding Bonds, Series of 2010A (the “2010 Bonds”), shall be issued for the purpose of refunding the $ principal amount of the outstanding Prior Bonds (the “Refunded Bonds”) (such Refunded Bonds as more particularly identified in the notice mailed by the Refunded Bonds Trustee in the form of Exhibit C hereto pursuant to Section 5 hereof), by providing [a portion of] the funds sufficient to redeem the outstanding Refunded Bonds on
, 20 (the “Redemption Date”) at a redemption price of % of the principal amount of the Refunded Bonds plus accrued interest to the Redemption Date; and
[WHEREAS, to obtain the remaining moneys needed for such purposes, in addition to issuing its 2010 Bonds, the City has authorized the transfer of and, concurrently with the delivery of this Escrow Agreement, is transferring certain moneys from the funds established to secure
85319457.6
the Refunded Bonds, which moneys shall be deposited in the Escrow Fund created hereunder, all as provided herein;]
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the City and the Escrow Agent agree as follows:
SECTION 1. Deposit of Moneys. The City hereby irrevocably deposits with the Escrow Agent $ in immediately available funds composed of (a) $_ representing a portion of the net proceeds of the sale of the 2010 Bonds and (b) $ representing [specify transfer of funds]; all to be held in irrevocable escrow by the Escrow Agent, separate and apart from other funds of the City and the Escrow Agent, in a fund hereby created and established to be known as the “Escrow Fund” and to be applied solely as provided in this Escrow Agreement. The moneys set forth above are at least equal to an amount sufficient to purchase Defeasance Securities (as defined in the Indenture and described in Exhibit A hereto) and otherwise satisfying the criteria set forth in Section 10.03 of the Indenture, the principal of and interest on which when due will provide moneys which, together with the other moneys deposited with the Escrow Agent at the time pursuant hereto, shall be sufficient to redeem the Refunded Bonds on the Redemption Date, at a redemption price of % of the principal amount of the Refunded Bonds plus accrued interest to the Redemption Date. The amounts required to be paid on the Refunded Bonds on the Redemption Date are shown on Schedule B hereto.
SECTION 2. Investment of Moneys. The Escrow Agent acknowledges receipt of the moneys described in Section 1 hereof and agrees immediately to invest such moneys in the Defeasance Securities set forth in Schedule A hereto, to deposit such Defeasance Securities in the Escrow Fund, and to reinvest the proceeds of any Defeasance Securities as may be set forth in Schedule A hereto. All other amounts held in the Escrow Fund shall be held as cash except as provided in Section 3 or 4 herein.
SECTION 3. Investment of Any Remaining Moneys. If the Escrow Agent shall receive
(i) any cash payment not required for the initial purchase of Defeasance Securities set forth in Schedule A hereto, or (ii) any payment of principal or interest from the Defeasance Securities prior to the date on which such payment is required for the purposes set forth herein and the reinvestment of which payment is not directed pursuant to Section 2 and Schedule A hereto, then, at the written direction of the City, the Escrow Agent shall reinvest the amount of such payment, or any portion thereof, in noncallable Defeasance Securities maturing in an amount at least equal to the purchase price thereof and maturing not later than the date on which such payment or portion thereof is required for the purposes set forth in Section 5, as verified in a report (a “Verification Report”) prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions (a “Verification Agent”) and provided the City has obtained and delivered to the Escrow Agent an unqualified opinion of nationally recognized bond counsel that such reinvestment will not adversely affect the exclusion from gross income of interest payable on the 2010 Bonds or the Refunded Bonds for purposes of federal income taxation. The Escrow Agent shall monitor compliance with the foregoing requirements. Any investment income resulting from investment or reinvestment of moneys pursuant to this Section 3 which are not required for the purposes set forth in this Section 3 or in Section 5, as verified in the letter
(the “Letter”) of , certified public accountants, originally obtained by the City with respect to the refunding of the Refunded Bonds and attached as Exhibit B hereto or in any other Verification Report, shall be paid to the City upon the written direction of the City.
SECTION 4. Substitution of Securities. Upon the written request of the City, and subject to the conditions and limitations herein set forth, the Escrow Agent shall sell, redeem or otherwise dispose of the Defeasance Securities, provided that there are substituted therefor from the proceeds of the Defeasance Securities, other Defeasance Securities (as defined in the Indenture and described in Exhibit A hereto) satisfying the criteria set forth in Section 10.03 of the Indenture, but only after the City has obtained and delivered to the Escrow Agent (i) an unqualified opinion of nationally recognized bond counsel that such reinvestment will not adversely affect the exclusion from gross income of interest payable on the 2010 Bonds or the Refunded Bonds for purposes of federal income taxation, and (ii) a report by a Verification Agent to the effect that such reinvestment will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay when due the principal or redemption price of and interest on the Refunded Bonds on the Redemption Date specified herein. The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof.
SECTION 5. Payment of Refunded Bonds.
(a) Payment. From the maturing principal of the Defeasance Securities and the investment income and other earnings thereon and other moneys on deposit in the Escrow Fund, the Escrow Agent shall, on Redemption Date apply the amounts on deposit in the Escrow Fund to redeem the Refunded Bonds at a redemption price of % of the principal amount of the Refunded Bonds plus accrued interest to the Redemption Date. THE CITY IRREVOCABLY WAIVES ITS RIGHTS TO REDEEM THE REFUNDED BONDS ON ANY OTHER DATE. Any moneys remaining in the Escrow Fund after payment of the principal of and interest on the Refunded Bonds in full as provided herein shall be repaid by the Escrow Agent to the City.
(b) Irrevocable Instructions to Provide Notice. [Adjust section depending on bonds called for redemption/defeasance]
(i) The City hereby irrevocably instructs the Escrow Agent to mail a notice to the Owners of the Refunded Bonds substantially in the form of Exhibit C hereto in accordance with Sections 4.01 and of the Indenture of the redemption of the Refunded Bonds to be redeemed.
(ii) The Refunded Bonds Trustee is hereby further instructed to deliver a copy of the notice the form of which is attached as Exhibit C hereto to (A) the Securities Depositories (as hereinafter defined) by facsimile and by first-class mail, and
(B) the Information Services (as hereinafter defined) by first-class mail.
“Securities Depositaries” means The Depository Trust Company, 55 Water Street, New York, New York 10041, Fax-(212) 855-1000 or 7320; or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other securities depositaries, or no
such depositaries, as the City may indicate in a certificate of the City delivered to the Escrow Agent.
“Information Services” means the Electronic Municipal Market Access System (“EMMA”), a facility of the Municipal Securities Rulemaking Board, at www.emma.msrb.org; provided, however, in accordance with then current guidelines of the Securities and Exchange Commission, Information Services shall mean such other organizations providing information with respect to called bonds, or no such services, as the City may indicate in a certificate of the City delivered to the Escrow Agent.
(c) Unclaimed Moneys. Subject to applicable law, any moneys which remain unclaimed for two (2) years after the date when such moneys have become due and payable, shall be repaid by the Escrow Agent to the City as its absolute property free from trust, and the Escrow Agent shall thereupon be released and discharged with respect thereto and the owners of Refunded Bonds shall look only to the City for the payment thereof; provided, however, that before being required to make any such payment to the City, the Escrow Agent shall, at the expense of the City, cause to be mailed to the Owners (as defined in the Indenture) of any Refunded Bonds that remain unpaid at the addresses shown on the registration books maintained by the Trustees, a notice with respect to the Refunded Bonds so payable and not presented and that said moneys remain unclaimed and that, after a date named in said notice, which date shall be not less than thirty (30) days after the date of the mailing of such notice, the balance of such moneys then unclaimed will be returned to the City.
(d) Priority of Payments. The owners of the Refunded Bonds shall have a lien on moneys and securities in the Escrow Fund which are allocable and sufficient to pay such Refunded Bonds, in accordance with this Escrow Agreement verified by the Letter, until such moneys and such securities are used and applied as provided in this Escrow Agreement.
SECTION 6. Application of Certain Terms of the Indenture. All of the terms of the Indenture relating to the making of payments of principal and interest on the Refunded Bonds are incorporated in this Escrow Agreement as if set forth in full herein. The procedures set forth in the Indenture relating to the resignation and removal of the Refunded Bonds Trustee are also incorporated in this Escrow Agreement as if set forth in full herein and shall be the procedures to he followed with respect to any resignation or removal of the Escrow Agent hereunder.
SECTION 7. Performance of Duties. The Escrow Agent agrees to perform only the duties set forth herein and shall have no responsibility to take any action or omit to take any action not set forth herein.
SECTION 8. Escrow Agent's Authority to Make Investments. Except as provided in Sections 2, 3 and 4 hereof, the Escrow Agent shall have no power or duty to invest any funds held under this Escrow Agreement or to sell, transfer or otherwise dispose of the moneys or Defeasance Securities held hereunder.
SECTION 9. Indemnity. 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 whatever 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 Escrow Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of the Defeasance Securities, the retention of the Defeasance 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 Escrow Agreement; provided, however, that the City shall not be required to indemnify the Escrow Agent against the Escrow Agent's own negligence or willful misconduct or the willful breach by the Escrow Agent of the terms of this Escrow 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 Escrow Agreement.
SECTION 10. Responsibilities of Escrow Agent. The Escrow Agent and its employees, 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 Escrow Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein, the purchase of the Defeasance Securities, the retention of the Defeasance Securities or the proceeds thereof, the sufficiency of the Defeasance Securities to pay the Refunded Bonds or any payment, transfer or other application of moneys or obligations by the Escrow Agent in accordance with the provisions of this Escrow 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 Defeasance Securities to accomplish the refunding of the Refunded Bonds or to the validity of this Escrow 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 Escrow Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent shall be determined by the express provisions of this Escrow 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 Escrow Agreement, such matter may he deemed to he conclusively established by a certificate signed by an officer of the City.
SECTION 11. Amendments. This Escrow Agreement is made for the benefit of the City and the owners from time to time of the Refunded Bonds and it shall not be repealed, revoked, altered or amended without the written consent of all such owners, the Escrow Agent and the City; provided, however, that the City and the Escrow Agent may, without the consent of, or
notice to, such owners, amend this Escrow Agreement or enter into such agreements supplemental to this Escrow Agreement as shall not adversely affect the rights of such owners and as shall not he inconsistent with the terms and provisions of this Escrow Agreement or the Indenture, for any one or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this Escrow Agreement; and (ii) to include under this Escrow Agreement additional funds, securities or properties. The Escrow Agent shall be entitled to rely conclusively upon an unqualified opinion of nationally recognized municipal bond attorneys with respect to compliance with this Section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the owners of the Refunded Bonds or that any instrument executed hereunder complies with the conditions and provisions of this Section.
SECTION 12. Term. This Escrow Agreement shall commence upon its execution and delivery and shall terminate on the later to occur of either (i) the date upon which the Refunded Bonds have been paid in accordance with this Escrow Agreement; or (ii) the date upon which no unclaimed moneys remain on deposit with the Escrow Agent pursuant to Section 5(c) of this Escrow Agreement.
SECTION 13. Compensation. The Escrow Agent shall receive its reasonable fees and expenses as previously agreed to by the Escrow Agent and the City; provided, however, that under no circumstances shall the Escrow Agent be entitled to any lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services rendered or expenses incurred by the Escrow Agent under this Escrow Agreement.
SECTION 14. Severability. If any one or more of the covenants or agreements provided in this Escrow 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 covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement.
SECTION 15. Counterparts. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original but all of which shall constitute and be but one and the same instrument.
SECTION 16. Governing Law. THIS ESCROW AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 17. Insufficient Funds. If at any time the moneys and investments in the Escrow Fund, including the anticipated proceeds of and earnings thereon, will not be sufficient to make all payments required by this Escrow Agreement, the Escrow Agent shall notify the City in writing, immediately upon becoming aware of such deficiency, of the amount thereof and the reason therefor to the extent known to it. The Escrow Agent shall have no responsibility regarding any such deficiency.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed by their duly authorized officers and attested as of the date first above written.
CITY OF BURBANK
APPROVED AS TO FORM:
By: Title:
Senior Assistant City Attorney
ATTEST:
City Clerk
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
Authorized Officer
SCHEDULE A DEFEASANCE SECURITIES
Type | Maturity Date | Par Amount | Price | Cost |
SCHEDULE B REQUIREMENTS OF THE REFUNDED BONDS
Date | Interest | Principal | Redemption Premium | Total Requirements |
Exhibit A
DEFINITION OF DEFEASANCE SECURITIES
Pursuant to that certain Burbank Water and Power Electric Revenue Bond Indenture, dated as of October 1, 1998, by and between the City of Burbank, California and U.S. Bank Trust National Association (which has been succeeded by Wells Fargo Bank, National Association), as trustee, as amended and supplemented, including by that certain _ Supplemental Burbank Water and Power Electric Revenue Bond Indenture, dated as of
, 20 , the term “Defeasance Securities” is defined as set forth below: “Defeasance Securities” means any of the following:
(i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of the Federal National Mortgage Association, the Government National Mortgage Association, Federal Home Loan Banks and Federal Home Loan Mortgage Corporation to the extent unconditionally guaranteed by the United States of America;
(ii) any certificates, receipts, securities or other obligations evidencing ownership of, or the right to receive, a specified portion of one or more interest payments or principal payments, or any combination thereof, to be made on any bond, note, or other obligation described above in clause (i) including, but not limited to, REFCORP interest strips; or
(iii) any bonds or other obligations of any state of the United States of America or any political subdivision thereof (a) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (b) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described above in clause (i) or (ii) which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the interest payment dates and the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, (c) as to which the principal of and interest on the bonds and obligations of the character described above in clause (i) or
(ii) which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay the principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (iii) on the interest payment dates and the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (a) of this clause (iii), as appropriate, and
(d) which have been rated not lower than their respective ratings on the Bonds by Moody's (if Moody's is then rating the Bonds) and Standard & Poor's (if Standard & Poor's is then rating the Bonds).
Exhibit B (See attached)
Exhibit C
NOTICE OF REDEMPTION
CITY OF BURBANK, CALIFORNIA BURBANK WATER AND POWER
ELECTRIC REVENUE BONDS, SERIES OF
NOTICE IS HEREBY GIVEN to the owners of the above-captioned bonds (the “Bonds”) of the City of Burbank, California (the “City”) in accordance with that certain Burbank Water and Power Electric Revenue Bond Indenture, dated as of October 1, 1998, by and between the City and U.S. Bank Trust National Association (which has been succeeded as trustee by Wells Fargo Bank, National Association), as trustee, as amended and supplemented, including by that certain Supplemental Burbank Water and Power Electric Revenue Bond Indenture, dated as of , 20 (collectively, the “Indenture”), with respect to the above-referenced Bonds, that the $ principal amount of Bonds [maturing on June 1, 20 ] have been called for redemption on , 20 (the “Redemption Date”). The Bonds so called for redemption shall be numbered and maturing as set forth below:
Maturity | Principal | Interest Rate | Bond Number | CUSIP |
Owners of the Bonds should surrender said Bonds on the Redemption Date at the following address:
In Person: By Mail:
[To Come] [To Come] Any questions may be directed to:
[To Come]
On , 2010, the redemption price ( _% of the principal amount thereof plus accrued interest to such date) of the Bonds to be redeemed will become due and payable. From and after , 2010, interest on the Bonds redeemed will cease to accrue.
IMPORTANT NOTICE. Under the Interest and Dividend Compliance Act of 1983, as amended by the Energy Policy Act of 1992, 31% will be withheld if tax identification number is not properly certified.
The Trustee shall not be held responsible for the selection or use of the CUSIP number, nor is any representation made as to its correctness indicated in this Redemption Notice. It is included solely for convenience of the owners of the Bonds.
DATED: (date of notice generation)
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By: Authorized Officer