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HomeMy WebLinkAboutCC Resolution 9771 (Refunding Bonds Reassessment District)A RESOLUTION NO. 9771 RESOLUTION AUTHORIZING ISSUANCE AND SALE OF REFUNDING BONDS REASSESSMENT DISTRICT NO. 1997-1 The City Council of the City of San Rafael resolves: Section 1. RECITALS. On January 6, 1997, the City Council of the City of San Rafael adopted its resolution of intention to conduct reassessment proceedings and issue refunding bonds in Reassessment District No. 1997-1, City of San Rafael, Marin County, California (the "Reassessment District"), under the provisions of the Refunding Act of 1984 for 1915 Improvement Act Bonds (the 111984 Act"). Proceedings taken under the 1984 Act led to the levy of reassessments by the City Council against parcels of land within the reassessment district. These reassessments will be recorded in the office of the County Recorder of Marin County, and thereupon will become a lien on each of the reassessment parcels. The refunding bonds are being issued in the amount of the total reassessment. This Council hereby finds and determines, on the basis of the Reassessment Report on file with the City Clerk and previously approved and confirmed by this Council in these reassessment proceedings as follows: a. The Reassessment Report contains the information required by Section 9523 of the 1984 Act; and b. As evidenced by the information set forth in said Reassessment Report, the conditions specified by Section 9525 of the 1984 Act are satisfied, and this Council therefore has legal authority to approve and confirm the Reassessment Report and levy the proposed reassessments and to authorize, issue and sell the proposed refunding bonds without public hearing. Section 2. ISSUANCE OF BONDS. The City Council hereby authorizes the issuance of refunding bonds under the provisions of the 1984 Act to be secured by the reassessments. The bonds shall be designated "Limited Obligation Refunding Bond, City of San Rafael, Reassessment District No. 1997-1, Series No. 1997-1." In all respects not specified in this resolution, the bonds shall be issued in the manner prescribed by the 1984 Act. A single registered bond shall be issued and shall be dated the date of delivery. Bonds shall mature in principal amounts and shall bear interest at the rates set forth in the schedule attached q 7-71 as Exhibit B to that certain trust agreement dated January 28, 1997, (the "Trust Agreement") among the City of San Rafael, the San Rafael Joint Powers Financing Authority (the "Authority") and Union Bank of California, N.A., as Trustee. Section 3. SALE OF BONDS. The refunding bonds for the Reassessment District are hereby sold to the Authority, in consideration of the mutual promises contained in the Trust Agreement. To provide funds for purchase of the refunding bonds, the Authority will issue and sell revenue bonds and will disburse the proceeds thereof in accordance with the Trust Agreement. Section 4. APPROVAL OF AGREEMENTS. The City Council hereby approves the form of Trust Agreement in substantially the form set forth as Exhibit A hereto. This Council also approves that certain Defeasance Escrow Agreement dated as of January 28, 1997, between the City of San Rafael and Union Bank of California, N.A., as Escrow Agent in substantially the form set forth as Exhibit B hereto. This Council authorizes the City Treasurer, on recommendation of Bond Counsel, to approve such changes and completions in the form of the Agreements as may be required before closing of the transaction, and to execute the Agreements. Section 5. FORM AND EXECUTION. Bonds shall be issued as fully registered bonds substantially in the form set forth as Exhibit C to this resolution. The bonds shall be signed by the City Treasurer and the City Clerk and the seal of the City shall be affixed. Section 6. ESTABLISHMENT OF SPECIAL FUND. For payment of interest and principal on the bonds, a fund should be established to be known as the redemption fund for Reassessment District No. 1997-1. The redemption fund shall be maintained by the City Treasurer. All payments of principal and interest installments on the reassessments, together with penalties, if any, shall be deposited in the redemption fund, which shall be a trust fund for the benefit of the bondowner. Payment of the bonds at maturity, or at redemption before maturity, and all interest on the bonds shall be made from the redemption fund. The Treasurer shall deposit into 2 the redemption fund an amount sufficient to pay the first payable interest on the bonds. Section 7. PAYMENT ON BONDS. The principal and interest on the bonds shall be remitted to the Trustee for deposit in the Payment Account in accordance with the provisions of the Trust Agreement. Section 8. COVENANTS. In the event of a default in the payment of any bond or any installment of interest thereon, bondholders shall have the remedies set forth in the 1984 Act. In addition, the City Council makes the following covenants, which shall constitute a contract with the Trustee and with the owners of the revenue bonds to be issued by the Authority: Section 8.1. FORECLOSURE OF LIENS. Not later than October 1 in any year, the City shall file an action in the Superior Court to foreclose the lien of each delinquent reassessment if the sum of uncured reassessment delinquencies for the preceding fiscal year exceeds five percent (5%) of the reassessment installments posted to the tax roll for that fiscal year. Section 8.2. ARBITRAGE. During the term of the bonds, the City will make no use of bond proceeds which, if such use had been reasonably expected at the date the bonds are issued, could have caused the bonds to be "arbitrage bonds" within the meaning of Section 148 of the United States Internal Revenue Code of 1986, and regulations of the Internal Revenue Service adopted thereunder, and further shall rebate to the United States any amounts actually earned as arbitrage in accordance with the provisions of that Code and those regulations. Section 8.3. MAINTENANCE OF TAX EXEMPTION. The City will take all reasonable actions required to maintain the status of interest on the bonds as excludable from gross income for federal income tax purposes and as exempt from the State of California personal income taxes. 4 I, JEANNE M. LEONCINI, Clerk of the City of San Rafael, California, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the Council of said City held on the 6th day of January, 1997, by the following vote, to wit: AYES: COUNCILMEMBERS: Miller, Phillips & Mayor B.oro NOES: COUNCILMEMBERS: None ABSENT / COUNCILMEMBERS: Cohen & Heller (due to conflict of interest) DISQUALIFIED: JEAN&E'M. LEONCINI, City Clerk 4 TRUST AGREEMENT by and among CITY OF SAN RAFAEL . SAN RAFAEL JOINT POWERS FINANCING AUTHORITY M= UNION BANK OF CALIFORNIA, N.A. as Trustee Dated as of January 28, 1997 EXHIBIT A TABLE OF CONTENTS TRUST AGREEMENT 1997 AUTHORITY REVENUE BONDS RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I GENERAL PROVISIONS . . . . . . . . . . . . . . . . 2 ARTICLE II THE TRUSTEE . . . . . . . . . . . . . . . . . . . 3 ARTICLE III FUNDS AND ACCOUNTS . . . . . . . . . . . . . . . . 6 ARTICLE IV THE BONDS . . . . . . . . . . . . . . . . . . . 10 ARTICLE V COVENANTS; EVENT OF DEFAULT . . . . . . . . . . 17 EXHIBIT A DEFINITIONS . . . . . . . . . . . . . . . . . . 22 EXHIBIT B DEBT SERVICE SCHEDULES FOR REASSESSMENT DISTRICT NO. 1997-1 . . . . . . . . 28 EXHIBIT C DEBT SERVICE SCHEDULE FOR 1997 AUTHORITY REVENUE BONDS . . . . . . . . . . 29 EXHIBIT D BOND FORM . . . . . . . . . . . . . . . . . . . 30 TRUST AGREEMENT THIS IS A TRUST AGREEMENT (the "Trust Agreement") among the CITY OF SAN RAFAEL, a municipal corporation of the State of California (the "City"), the SAN RAFAEL JOINT POWERS FINANCING AUTHORITY, a joint powers authority organized and existing pursuant to California Government Code Section 6500 et seq. (the "Authority") and Union Bank of California, N.A., as Trustee (the "Trustee"), entered into as of January 28, 1997. RECITALS The City has heretofore issued improvement bonds (the "Prior Bonds") pursuant to the Improvement Bond Act of 1915 (Streets and Highways Code Section 8500 et seq.) and the Refunding Act of 1984 for 1915 Improvement Act Bonds (Streets and Highways Code Section 9500 et seq., the "Refunding Act") to represent unpaid special assessments in special assessment districts established pursuant to the Municipal Improvement Act of 1913 (Streets and Highways Code Section 10000 et seq.), to wit: (a) Civic Center - Northgate Refunding Assessment District (b) Kerner Boulevard Refunding Assessment District (c) Sun Valley Open Space Assessment District Pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (Streets and Highways Code Section 9500 et seq., the "Refunding Act"), the City has created a reassessment district (the "Reassessment District") to be named Reassessment District No. 1997-1. The City has issued refunding bonds (the "Refunding Bonds") for the Reassessment District pursuant to the Refunding Act and has sold the Refunding Bonds to the Authority. To provide funds for the purchase of the Refunding Bonds, the Authority has issued and sold bonds (the "Revenue Bonds") pursuant to the Marks -Roos Local Bond Pooling Act of 1985 (Government Code Section 6584 et seq.). The City and the Authority wish to assign to the Trustee certain of their rights with reference to this transaction, and the Trustee is willing to accept the assignment and to perform the duties set forth herein in consideration of the payment of monetary compensation. 1 ARTICLE I GENERAL PROVISIONS Section 101. Definitions. Terms capitalized herein shall have the definitions given herein or in Exhibit A hereof, unless the context otherwise requires. Section 102. Captions and Titles. The captions of sections and the titles of articles in this Agreement are not a part of this Agreement but are for reference only and shall not affect the meaning of this Agreement. Section 103. Exhibits. Each exhibit to this Agreement is incorporated herein by reference and shall be deemed a part of the Agreement. Section 104. Rules of Construction. Gender -specific words shall be deemed to apply to any gender appropriate to the context. Unless the context otherwise requires, the word "person" means a natural person, corporation, association or public agency. Where the context permits, the singular may include the plural and the plural, the singular. Terms of inclusion such as "herein", "hereof", "hereunder" and the like refer to this Agreement as a whole. Section 105. Applicable Law. This Agreement has been entered into and shall be construed in accordance with the laws of the State of California. Any reference to an agreement, statute, regulation or ordinance shall be deemed to include amendments now or hereafter adopted. Section 106. Severabilitv,. If any provision of this Agreement is ruled contrary to law by a court of competent jurisdiction, that provision shall be deemed severable from all other provisions of this Agreement and the validity of those other provisions shall not be affected by the ruling. Section 107. Acts of Accents. Any act required or permitted of a party to this Agreement may be performed by an Authorized Officer of that party, or, if not otherwise limited in this Agreement, by any duly authorized agent of that party. Actions required of or permitted to the City pursuant to this Trust Agreement may be as principal or as agent of the Authority, as the context requires. Section 108. Date of Performance or Condition.. Any act required to be performed or condition required to exist on a day that is not a Business Day shall be deemed to have been performed or to have existed on that day if the act is performed or the condition exists on the next Business Day. Section 109. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall be deemed to be the same instrument. Section 110. Notices. Unless otherwise specifically provided in this Agreement, any notice required or permitted to be given to any party hereof may be given by depositing the notice in the United States mail, first-class, postage prepaid, addressed as follows: TO THE CITY: City Clerk City of San Rafael 1400 Fifth Avenue San Rafael, CA 94901 TO THE AUTHORITY: San Rafael Joint Powers Financing Authority c/o Treasurer City of San Rafael 1400 Fifth Avenue San Rafael, CA 94901 TO THE TRUSTEE: Union Bank of California, N.A. 350 California Street, Suite 1150 San Francisco, CA 94104 Attn: Corporate Trust Division ARTICLE II THE TRUSTEE Section 201. Appointment of Trustee. The Authority hereby appoints the Trustee, and the Trustee hereby accepts the appointment, to receive, hold and invest moneys in the Redemption Fund and all accounts held thereunder and in the Prepayment Fund in trust for the benefit of the Owners of the Revenue Bonds; to authenticate and deliver the Revenue Bonds; to disburse the Redemption Payments to the Owners of the Revenue Bonds; and to perform certain other functions, all as hereinafter provided. Section 202. Assianment of Refundina Bonds. The Authority hereby assigns in trust to the Trustee, and the Trustee hereby accepts the assignment of, all of the Authority's right, title and interest in and to the Refunding Bonds. The Trustee shall place the Refunding Bonds in safekeeping when received and shall exercise the rights of an owner of the Refunding Bonds for the benefit of the Owners of the Revenue Bonds as provided hereinafter. The duties of the Trustee with regard to the Refunding Bonds shall be limited as provided hereinafter. The Trustee shall cancel any 3 Refunding Bond that has been paid in full and shall deliver it to the City or its order. Section 203. Trustee: Duties, Removal and Resignation. a) Before an Event of Default and after every Event of Default has been cured, the Trustee shall perform only the duties specifically set out in this Trust Agreement, and no implied duties or obligations shall be read into this Agreement against the Trustee. After an Event of Default and before its cure, the Trustee shall use such of the rights and powers vested in it by this Trust Agreement, and with the same degree of care and skill, as a prudent person would use under the circumstances in the conduct of his own affairs. b) So long as no Event of Default has occurred and is continuing, by written notice to the Trustee the City may remove the initial Trustee and any successor thereto and may appoint a successor Trustee, but any successor shall be a bank or trust company subject to supervision or examination by state or federal authority. c) The Trustee may resign at any time by written notice mailed by first-class mail to the City and to the Owners at their addresses shown on the Bond Register. On receiving the notice of resignation, the City shall promptly appoint a successor Trustee in writing; if the City fails to do so within ninety (90) days after receiving the notice, the resigning Trustee at the expense of the City may petition the court having jurisdiction to appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. The City shall require a successor Trustee to provide a written notice of appointment to each Owner. d) Any company into which the Trustee is merged or converted or with which it is consolidated; or any company resulting from any merger, conversion or consolidation to which the Trustee shall be a party; or any company to which the Trustee sells or transfers all or part of its corporate trust business, shall be the successor to the Trustee without executing or filing any paper or taking any further action. Section 204. Compensation of the Trustee. From time to time on demand the City shall pay to the Trustee, within thirty (30) days after receipt of periodic billing, reasonable compensation and the fees and expenses of independent appraisers, accountants, consultants, legal counsel, and others employed by it in the performance of its duties hereunder. To secure payment the Trustee shall have a lien, superior to that of the Owners, on funds held by it under this Trust Agreement. 4 Section 205. Indemnification. The City shall indemnify the Trustee, its officers, directors, employees and agents against all cost, expense and liability resulting from the employment of the Trustee as Trustee and assignee of the Authority, except liability arising from the negligence or willful misconduct of the Trustee, its officers, employees or agents. This indemnification shall include all expenses arising from the Trustee's alleged liability, including legal fees and costs of defending against any claim. If the City is required to pay indemnity to the Trustee, the City shall be subrogated to the rights of the Trustee to recover its losses from any other person (excluding any insurer under any policy maintained by the Trustee in its individual capacity). Indemnification and the Trustee's right to fees and expenses shall survive the Trustee's resignation or removal and the final payment or defeasance of the Revenue Bonds. Section 206. Protection to the Trustee. The Trustee shall incur no liability in acting in good faith on any document or instrument that in good faith it believes to be genuine and to have been duly given. The Trustee shall have no duty to investigate or question the statements contained in any document or instrument, but may rely conclusively on them as true and accurate. Unless otherwise specifically provided herein, the Trustee is entitled to rely conclusively on the certificate of an Authorized Officer of the City or the Authority, but in its discretion the Trustee may require other or further evidence before acting or withholding action. The Trustee may buy, sell, own, hold and deal in any of the Revenue Bonds and as an Owner may join in any action which any Owner may be entitled to take with the same effect as if it were not the Trustee. The Trustee, either as principal or agent, may have an interest in any other transaction with the City and may act as depository, trustee or agent for any committee or body of Owners of Revenue Bonds or other obligations of the City or the Authority as freely as if it were not the Trustee. The Trustee may act hereunder through attorneys, agents, or receivers and shall be entitled to advice of counsel concerning its duties. The Trustee may rely upon an opinion of counsel as complete protection for any action taken or not taken by it. Both the request for an opinion of counsel and the response thereto must be in writing. The Trustee shall not be answerable for the default or misconduct of any attorney, agent, or receiver selected by it with reasonable care. The Trustee shall not be answerable for the exercise of any discretion or power under this Agreement or for the administration of the Accounts, except only for its own negligence or willful misconduct. 5 The Trustee shall not be liable for any action taken or omitted in good faith, at the direction of the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Revenue Bonds, as to the time, method and place of conducting a proceeding for any remedy available to the Trustee. The Trustee makes no representations about the validity or sufficiency of this Agreement or the Refunding Bonds or the Revenue Bonds or the sufficiency of security for the Refunding Bonds or the Revenue Bonds and shall not incur any responsibility therefor, except as expressly provided herein. The Trustee shall have no liability for the failure of performance by any other party to this Agreement, but shall be responsible solely for the performance of its own duties. The Trustee undertakes to perform only the duties specified in this Agreement, and no implied covenants or obligations, fiduciary or otherwise, shall be read into this Agreement against the Trustee. In accepting the trust hereby created the Trustee acts solely as Trustee for the Owners and not in its individual capacity. All persons, including without limitation the Owners and the City, having any claim against the Trustee arising from this Agreement shall look only to the Accounts for payment-except as otherwise provided herein. The Trustee shall not be liable in its individual capacity for the obligations evidenced by the Revenue Bonds. Section 207. No Obliaation of Trustee to Expend its Funds. The Trustee is not required to expend or risk its own funds or incur any financial liability in performing its duties or exercising its rights or powers, if repayment of funds or adequate indemnity against risk or liability is not assured to it. The Trustee shall be entitled to interest on any funds advanced by it in the performance of its duties at the maximum rate permitted by law. ARTICLE III FUNDS AND ACCOUNTS Section 301. Establishment of Funds and Accounts. There are hereby established with the Trustee three special trust funds: (1) The Redemption Fund, and within it the Payment Account, the Earnings Account and the Reserve Account; (2) The Prepayment Fund; and (3) The Delivery Cost Fund. The Trustee shall keep the funds and each of these accounts separate from all other funds and accounts held by it, and shall not withdraw, transfer or pay from any fund or account except as provided herein. Section 302. Initial Deposit. On the Closing Date the Trustee shall receive and place in safekeeping the Refunding Bonds, and shall receive, from the proceeds of the sale of the Revenue Bonds, the amount of $5,179,300.00 (the par amount of the bonds of $5,285,000.00 less a 2% discount of $105,700.00) as well as additional amounts to be transferred to the Escrow Agent from the reserve funds of $ and from the redemption funds of $ maintained by the City for the Prior Bonds, along with $441,074.65 from the December 1996 installment payments on the Prior Bonds, and these amounts shall be deposited as follows: (1) The amount of $6,235,793.25 shall be transferred to the Escrow Agent to be applied as provided in the Defeasance Escrow Agreement for the purpose of retiring the Prior Bonds on March 2, 1997. (2) The amount of $61,553.54 shall be transferred to the Reserve Account of the Revenue Bonds and shall be administered in accordance with Section 304 hereof. This amount shall be increased as additional funds from special assessments are available in the 1996-97 tax year to an amount of $255,546.46. The "Required Reserve" shall be $317,100.00. (3) $92,061.86 will be placed in the Delivery Cost Fund to be disbursed by the Trustee upon order of the City for the payment of Delivery Costs of the Revenue Bonds and the Refunding Bonds. All funds in the Delivery Cost Fund will be expended within thirty (30) days after the issuance of Refunding Bonds. At the end of thirty days, this fund is to be closed and any moneys in this fund after payment of all Delivery Costs shall be deposited in the Payment Fund. (4) As additional funds from special assessments are available in the 1996-97 tax year, $185,529.19 will be provided to the Trustee by the City to be placed in the Payment Account for payment of September 2, 1997 debt service on the Revenue Bonds. Section 303. Pavment Account. (a) The Trustee shall deposit in the Payment Account all payments of principal of and interest on the Refunding Bonds, to be received from the City in accordance with the schedules of payments set forth in Exhibit B hereof. The City shall remit all payments to the Trustee not less than five (5) days before their respective 7 payment dates. The Trustee shall maintain the Payment Account until all payments on the Revenue Bonds are made in full. (b) On each Interest Payment Date the Trustee shall withdraw from the Payment Account the amount due as principal of, and interest on, the Revenue Bonds and shall disburse it to the Owners of the Revenue Bonds. (c) As of December 1 of each year, the balance, if any, in the Payment Account following the disbursement pursuant to subsection (b) shall be transferred first to the Reserve Account to the extent that the amount in the Reserve Account does not exceed the amount of $350,000.00 and any remaining balance shall be transferred to the Prepayment Fund for redemption of Revenue,Bonds, as directed by the Authority in writing. Section 304. Reserve Account. (a) The Trustee shall maintain the Reserve Account until the Revenue Bonds are paid in full. The amount in the Reserve Account may never exceed the least of the following amounts: (i) ten percent of the proceeds of the Bonds; (ii) maximum annual debt service on the Bonds, or; (iii)125% of the average annual debt service on the Bonds. (b) On any Interest Payment Date, if the amount in the Payment Account is less than the amount due the Owners of the Revenue Bonds on that date as principal and interest on the Revenue Bonds, the Trustee shall transfer from the Reserve Account to the Payment Account an amount sufficient to cover the deficiency, and within five (5) Business Days thereafter shall notify the City in writing of the amount and the date of transfer, the amount of the remaining balance in the Reserve Account and the amount of the Required Reserve. (c) On payment in full of the Revenue Bonds, the Trustee shall remit the amount in the Reserve Account to the City and shall close the account. (d) On any Interest Payment Date, if the amount due and payable on the Revenue Bonds exceeds the amount in the Payment Account after transfer from the Reserve Account pursuant to subsection (b), the Trustee shall apply the amount in the Payment Account in the following order of priority, prorating as necessary within the last category to which moneys can be applied: (1) To the payment of interest on all Outstanding Revenue Bonds; 8 (2) To the payment of the principal of unpaid Revenue Bonds that matured on an earlier Bond Payment Date, in order of maturity date; and (3) To the payment of the principal of Revenue Bonds maturing on the current Bond Payment Date. (e) On receiving a delinquent payment from the City for which an advance has been made from the Reserve Account, the Trustee shall deposit the payment: (1) First, to the Payment Account to the extent of the full amount remaining payable to Owners of the Revenue Bonds; and (2) Second, to the Reserve Account. Section 305. PreDavment Fund. The Trustee shall administer the Prepayment Fund in accordance with Article IV hereof. Section 306. Earnings Account; Investment of Fund and Account Balances. (a) The Trustee shall invest all moneys held in the funds and accounts hereunder in Permitted Investments -designated by the City in writing and received by the Trustee at least two (2) Business Days before the investment date. In the absence of instructions the Trustee shall invest in money market funds as defined in Exhibit A, "Permitted Investments", paragraph F. (b) The Trustee shall deposit investment earnings on all funds and accounts to the Earnings Account. Balances in the Earnings Account shall be applied first to the accrued costs of administering the Revenue Bonds, including: (1) Amounts required to be rebated to the United States pursuant to Section 148(f) of the Internal Revenue Code; (2) Fees and expenses of the Trustee; (3) All other costs incurred by the Authority in the administration of the Revenue Bonds; (4) Transfer to the Reserve Account to the extent that the amount in the Reserve Account is less than $350,000.00; and (5) At the direction of the Treasurer of the Authority in writing, transfer to the Payment Account to be applied as a pro rata credit upon the annual reassessment installments in Reassessment District No. 1997-1 or transfer to the Prepayment Fund for redemption of Revenue Bonds. If Revenue Bonds are called, a proportionate amount of Refunding Bonds are to be called and the City 2 shall provide to the Trustee a revised maturity schedule for the affected Refunding Bonds. (c) In its investment activities the Trustee acts only as agent of the City. The Trustee shall not be liable for investment losses, which shall be charged to the account for which the investment was made. (d) The Trustee shall give the City a monthly statement of account for each fund and account, including the balance thereof and the earnings, transfers and other transactions since the date of the previous statement. Section 307. Rebate of Arbitraae. Within ten (10) Business Days after receiving written instructions from the City, the Trustee shall disburse to the United States, from the Earnings Account, any amounts required to be rebated as arbitrage to the United States pursuant to Section 148 of the Internal Revenue Code. The Trustee may rely conclusively on the instructions and shall have no responsibility for compliance with those provisions of the Internal Revenue Code or regulations adopted thereunder. ARTICLE IV THE BONDS Section 401. Authentication of Revenue Bonds. On the written request of the City and the Authority the Trustee shall authenticate and deliver to the original purchaser thereof Revenue Bonds in an aggregate principal amount of not to exceed $5,285,000.00, secured by the pledge of revenues to be received by the City pursuant to the Refunding Bonds. The City and the Authority hereby certify that all conditions required by the Constitution and statutes of the State of California and this Trust Agreement precedent to the delivery of the Revenue Bonds have occurred or been duly performed. Section 402. Form: Denomination: Medium of Payment. The Revenue Bonds shall be delivered as fully registered bonds in the denomination of $5,000 or integral multiples thereof. The form of the Revenue Bonds shall be substantially as set forth in Exhibit D. The Revenue Bonds shall be payable in lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Section 403. Date of Revenue Bonds. Each Revenue Bond shall be dated as of the date of its authentication, except that each Revenue Bond delivered to the original purchaser shall be dated as of the Closing Date. Interest on each Revenue Bond shall be payable from the Interest Payment Date next preceding the date of its authentication, except that: 10 (1) If the Revenue Bond is authenticated as of an Interest Payment Date, or after the fifteenth (15th) day of a month preceding an Interest Payment Date and before that Interest Payment Date, interest shall be payable from that Interest Payment Date; or (2) If the Revenue Bond is authenticated on or before September 2, 1997, interest shall be payable from the Closing Date. In any event, if interest is in default on any Outstanding Revenue Bond as of the authentication date of a Revenue Bond, interest on that Revenue Bond shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Revenue Bonds. Section 404. Pavment of Principal and Interest. The Revenue Bonds shall be in serial.or term form, and their principal shall be payable from the principal payments on the Refunding Bonds on September 2 in each of the years and in the amounts set forth in Exhibit C. Interest on the Revenue Bonds shall be payable on September 2, 1997, and semiannually thereafter on September 2 and March 2 of each year to and including the date of principal payment or prepayment, whichever is earlier. Interest on the Revenue Bonds shall be payable from the interest paid on the Refunding Bonds and shall be computed at the rates set forth in Exhibit C on the basis of a 360 -day year of twelve 30 -day months. Section 405. Place of Pavment. The principal (together with a prepayment premium, if any) of the Revenue Bonds shall be payable at the Principal Office of the Trustee. Interest on the Revenue Bonds shall be payable by check of the Trustee mailed by first- class mail to the Owners on the Interest Payment Date; but the Owners shown on the Bond Register on the 15th day of the month preceding the Interest Payment Date shall be deemed to be Owners on the Interest Payment Date for the purpose of paying interest (except as otherwise described herein for interest paid to an account in the Continental United States of America by wire transfer as requested in writing no later than the applicable Record Date by certain owners of $1,000,000 or more in aggregate principal amount of Bonds). Section 406. Numbers; Legends. The Revenue Bonds may be numbered by a method selected by the Trustee. The Revenue Bonds may contain or have endorsed thereon provisions, specifications and descriptive words consistent with this Agreement, as determined by the City before delivery of the Revenue Bonds. Section 407. Authentication. The Revenue Bonds shall be authenticated by the Trustee, as trustee under this Trust Agreement, by the manual signature of an Authorized Officer or signatory of the Trustee. 11 Section 408. Transfer and Exchanqe of Revenue Bond. (a) Each Revenue Bond shall be transferable only on the Bond Register, which shall be kept at the Principal Office of the Trustee, on surrender of the Revenue Bond together with a written instrument of transfer satisfactory to the Trustee and duly executed by the Owner or his authorized attorney. On the surrender of the Revenue Bond and the registration of its transfer, the Trustee shall authenticate and deliver, in the name of the transferee, one or more new Revenue Bonds of the same aggregate principal amount of Authorized Denominations, Bond Payment Date and interest rate as the surrendered Revenue Bond. (b) One or more Revenue Bonds having the same Bond Payment Date may be exchanged at the Principal Office of the Trustee for the same aggregate principal amount of Revenue Bonds of other Authorized Denominations. On the surrender of any Revenue Bond together with a written request for exchange executed by the Owner or his authorized, attorney, the Trustee shall authenticate and deliver in the name of the Owner and shall register one or more new Revenue Bonds of the same aggregate principal amount of Authorized Denominations, Bond Payment Date, and interest rate as the Revenue Bond being exchanged. (c) The Trustee shall not be required to register a transfer or exchange during the period established by the Trustee for selection of Revenue Bonds for prepayment or redemption or for any Revenue Bond or portion thereof selected for prepayment or redemption pursuant to Section 413 of this Trust Agreement. Section 409. Reaulation with Respect to Exchanqe and Transfers. On the transfer or exchange of Revenue Bonds, the Trustee shall authenticate and deliver Revenue Bonds in accordance with this Article. The Trustee shall cancel Revenue Bonds surrendered in any transfer or exchange and shall destroy them. The City shall pay the cost of preparing new Revenue Bonds and any other expenses of the City or the Trustee in a transfer or exchange of Revenue Bonds, except for any tax, fee or other governmental charge not imposed by the City. Section 410. Bond Register. (a) The Trustee shall keep at its Principal Office a Bond Register, which shall be open to inspection by the City on reasonable notice and at reasonable times during normal business hours on any Business Day. (b) The Trustee shall deem the person in whose name any Outstanding Revenue Bond appears on the Bond Register as the absolute owner of the Revenue Bond. Payment made to an Owner or on his order shall satisfy and discharge the liability on the Revenue Bond to the extent of the amount paid, and neither the City nor the Trustee shall be affected by any notice to the contrary. 12 Section 411. Mutilated. Lost. Destroved or Stolen Revenue Bonds. If any Revenue Bond is mutilated, the Trustee, at the expense of the Owner, shall authenticate and deliver a new Revenue Bond in the same principal amount of Authorized Denominations, Bond Payment Date, and interest rate, on surrender of the mutilated Revenue Bond. The Trustee shall cancel the mutilated Revenue Bond and destroy it. On submittal of evidence satisfactory to the Trustee that any Revenue Bond has been lost, destroyed or stolen, together with an indemnity satisfactory to the Trustee, the Trustee, at the expense of the Owner, shall authenticate and deliver a new Revenue Bond of the same principal amount of Authorized Denominations, Bond Payment Date, and interest rate, and numbered as the Trustee shall determine, in substitution for the lost, destroyed or stolen Revenue Bond. The Trustee may require payment of a fee for its expenses under this section. Any Revenue Bond delivered in lieu of a Revenue Bond alleged to be lost, destroyed or stolen shall be as much entitled to the benefits of this Trust Agreement as all other Outstanding Revenue Bonds. The Trustee shall not be required to treat both the original Revenue Bond and any replacement Revenue Bond as Outstanding, but both the original and replacement Revenue Bond shall be treated as one and the same. In lieu of delivering a new Revenue Bond for which principal has become due or has been called for prepayment or redemption, the Trustee may pay the Revenue Bond upon receipt of indemnity satisfactory to it. Section 412. Evidence of Sianatures of Owners and Ownership_ of Revenue Bonds. Any request, consent, revocation of consent, or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by the Owners or by their attorneys or agents appointed for that purpose by an instrument in writing. Any request or consent of an Owner shall bind every subsequent Owner of the same Revenue Bond or its replacement. The fact and date of the execution of any such instrument may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company within the United States of America, or of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in United States jurisdictions that the persons signing the instrument acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of the corporation, association or partnership, the certificate shall also constitute sufficient proof of his authority. 13 The fact of ownership of Revenue Bonds and the amount, Bond Payment Date, interest rate, numbering and date of ownership shall be proved by the Bond Register. The Trustee is not limited to the method of proof set forth in this Article, but may accept any other evidence deemed sufficient. Section 413. Advance Retirement of Refunding Bonds. (a) The City may provide to the Trustee from time to time a Notice of Advance Retirement of Refunding Bonds in accordance with the Improvement Bond Act of 1915. The Trustee shall thereupon select Revenue Bonds for prepayment on the Interest Payment Date for which the Notice of Advance Retirement is given. Revenue Bonds shall be selected for prepayment in the same principal amounts and of the same maturities as stated in the Notice of Advance Retirement for the Refunding Bonds. (b) On or before the March 2 or September 2 for which the Notice of Advance Retirement is given, the City shall transmit to the Trustee the amount of the principal of Refunding Bonds to be retired pursuant to the notice, together with the redemption premium, if any, thereon and interest thereon to the date of retirement specified in the notice. At the'same time the City shall provide to the Trustee a revised maturity schedule (Exhibit B) for the affected Refunding Bonds and a revised maturity schedule (Exhibit C) for the Revenue Bonds. (c) Amounts received by the Trustee pursuant to a Notice of Advance Retirement of Refunding Bonds shall be deposited in the Prepayment Fund and shall be disbursed for the optional prepayment of Revenue Bonds in accordance with Section 416. The Trustee shall endorse on the appropriate Refunding Bonds the date and amount of principal retired in advance of maturity. Section 414. Optional Prepayment of Revenue Bonds. (a) All or any portion of any Revenue Bond may be prepaid on any Interest Payment Date by paying to the Owner thereof the principal amount thereof, interest to the Interest Payment Date of prepayment and a prepayment premium of a percentage of the principal being prepaid as follows: Prepayment Date Premium September 2, 1997 to September 2, 2006 2.0% March 2, 2007 to September 2, 2007 1.0 March 2, 2008 and thereafter 0.0 (b) Revenue Bonds to be prepaid shall be selected by lot within each maturity in the manner determined by the Trustee. In making the selection the Trustee shall treat each Revenue Bond as representing a number of bonds obtained by dividing the Bond 14 principal amount by $5,000. Prepayment of a portion of any Revenue Bond shall be in the amount of $5,000 or any integral multiple thereof. Section 415. Notice of Prepavment. At the expense of the City the Trustee shall give notice to the affected Owners of the prepayment or redemption of their Revenue Bonds. The notice shall state: * That the whole or a specified portion of the Revenue Bonds is to be prepaid or redeemed; * The date of prepayment or redemption; * The place or places where the prepayment or redemption will be made; * The prepayment or redemption price; * The CUSIP numbers; * The numbers of the Revenue Bonds to be prepaid or redeemed, if fewer than all of the Outstanding Revenue Bonds; * The interest component and maturity date of each Revenue Bond to be prepaid or redeemed in whole or in part; and * That on the date of prepayment or redemption the principal of and accrued interest on each Revenue Bond or portion thereof to be prepaid or redeemed, together with a prepayment premium, if any, shall become due and payable, and that from and after the date of prepayment or redemption interest on each such Revenue Bond or portion thereof shall cease to accrue. The notice shall be mailed, first-class, postage prepaid, not less than thirty (30) nor more than sixty (60) days before the date of prepayment or redemption. The notice shall be mailed to the Owners of all Revenue Bonds to be prepaid or redeemed as the Owners' names and addresses appear on the Bond Register; to one or more of the Information Services; and by first-class mail, overnight courier or by facsimile transmission to the Securities Depositories. Failure to mail the notice, or any defect in the notice as mailed, shall not affect the validity of the proceedings for prepayment or redemption of the Revenue Bonds. Section 416. Pavment on Date of Prepavment. If the Prepayment Fund contains an amount sufficient for the prepayment of the Revenue Bonds selected for prepayment, the Revenue Bonds to be prepaid shall become due and payable on the date of prepayment, and on their presentation and surrender at the Principal Office, the Revenue Bonds shall be paid at their principal amount, together 15 with accrued and unpaid interest to the date of prepayment and any applicable prepayment premium. If moneys in the Prepayment Fund on the Interest Payment Date of prepayment are sufficient to prepay the Revenue Bonds selected for prepayment, interest on the Revenue Bonds selected for prepayment shall cease to accrue as of that date. If sufficient moneys are not available on the Interest Payment Date, interest on the Revenue Bonds shall continue to accrue, until paid, at the rates at which the Revenue Bonds were authenticated and delivered. Moneys held by the Trustee for the prepayment of particular Revenue Bonds shall be held in trust for the account of the Owners of those Revenue Bonds. Section 417. Partial Prepayment of Revenue Bond. On surrender of any Revenue Bond prepaid or redeemed in part only, the Trustee shall authenticate and deliver to the Owner, at the expense of the City, one or more new Revenue Bonds of Authorized Denomination equal in aggregate principal amount to the unprepaid portion of the Revenue Bond surrendered and of the same interest rate and the same Bond Payment Date. The City, the Authority and the Trustee shall be released and discharged from liability to the extent of the payment. Section 418. Non -Presentment of Revenue Bonds. If any Revenue Bond is not presented for payment when its principal becomes due, either at maturity or at the date fixed for prepayment or redemption, and money sufficient to pay the Revenue Bond has been deposited in the Payment Account or the Prepayment Fund, all liability of the City to the Owner for payment of the Revenue Bond shall be discharged, and it shall then be the duty of the Trustee to hold the money in a separate account, without liability for interest thereon to any person, for the benefit of the Owner. The Owner shall thereafter be restricted exclusively to that money for any claim under this Trust Agreement or on the Revenue Bond. Subject to applicable escheat laws, two (2) years after the money was due the Owners or after the City pays the money to the Trustee, whichever is later, the money shall be paid by the Trustee to the City free from the trusts created by this Trust Agreement, and thereafter Owners shall be entitled to look only to the City for payment and then only to the extent of the amount repaid by the Trustee. The City shall not be liable for any interest on money paid to it pursuant to this section and shall not be regarded as a trustee of the money. 16 ARTICLE V COVENANTS; EVENT OF DEFAULT Section 501. Compliance with Foreclosure Covenants. During any period in which the amount in the Reserve Account is less than ninety-five percent (95%) of the Required Reserve, the City shall provide reports in writing (the "Compliance Reports") to the Trustee of compliance with the Foreclosure Covenants. The reports shall be furnished semiannually not later than each Interest Payment Date and not earlier than thirty (30) days before each Interest Payment Date. Each Compliance Report shall state: (1) The date of filing each complaint in foreclosure, and the action number thereof; (2) A description, by special assessment and diagram number and by county assessor's parcel number, of the property addressed in the complaint; and (3) A brief description of the status of the action, including, if applicable, the existence of any injunction or stay order preventing prosecution of the action by the City. Section 502. Event of Default Defined. Either of the following shall constitute an Event of Default by the City under this Agreement: (1) A reduction of the Reserve Account to an amount less than the lesser of (i) eighty percent (80%) of the Required Reserve, or (ii) five percent (5%) of the principal amount of Revenue Bonds then Outstanding; or (2) At any time that the amount in the Reserve Account is less than ninety-five percent (95%) of the Required Reserve, the failure or refusal of the City to file Compliance Reports pursuant to Section 501 hereof or to institute and diligently prosecute the judicial foreclosure of property delinquent in the payment of reassessments securing the Refunding Bonds, pursuant to the Foreclosure Covenants. Section 503. Action on Default. The Trustee shall notify the City and the Owners in writing of the occurrence of an Event of Default within five (5) Business Days after the Trustee receives actual knowledge of its occurrence. The Trustee shall not be required to take any further action or seek any remedy pursuant to Section 504 hereof unless requested to do so by the Owners of at least twenty-five percent (250) in aggregate principal amount of the Outstanding Revenue Bonds and unless indemnified to its satisfaction from any liability or expense. 17 Section 504. Remedies on Default. (a) On the occurrence of an Event of Default, if the default is not cured within thirty (30) days after notice given by the Trustee to the City pursuant to Section 503, the Trustee may apply to a court of competent jurisdiction for one or more of the following remedies: (1) A writ of mandate or other judicial order compelling the City to comply with the Foreclosure Covenants; (2) An accounting of amounts posted to the City tax roll and amounts received on account of reassessments securing the Refunding Bonds; (3) Intervention in any foreclosure action instituted pursuant to the Foreclosure Covenants, or in any action challenging the validity of the Refunding Bonds or the reassessments securing them; the City hereby consents to any such intervention; (4) Application for dissolution of any injunction or stay order preventing the City's compliance with the Foreclosure Covenants; and (5) Any other remedy at law or in equity reasonably expected to assist in the protection of the rights and security of the Owners of the Revenue Bonds. (b) On an Event of Default, if the Trustee has taken any judicial or other action at its own discretion or on the request of Owners, the Trustee shall have full power, in the exercise of its discretion for the best interests of the Owners, to continue, discontinue, withdraw, compromise, settle or otherwise dispose of the action. (c) All reasonable fees and all costs of the Trustee, its employees, agents and counsel in the pursuit of these remedies shall be paid to the Trustee by the City within thirty (30) days after billing. Section 505. Rights of Owners of Revenue Bonds. No Owner shall have the right to institute any judicial action for any remedy under this Agreement, unless: * The Owner has first given the Trustee written notice of the occurrence of an Event of Default; and * The Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Revenue Bonds have requested the Trustee in writing to exercise the powers hereinbefore granted or to institute the action in its own name; and 18 * The Owners have tendered indemnity satisfactory to the Trustee against the Trustee's expenses and liabilities to be incurred in complying with their request; and * The Trustee has refused or omitted to comply with the request for a period of sixty (60) days after the written request has been received by, and the tender of indemnity made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are conditions precedent to the exercise by an Owner of any remedy hereunder. No one or more Owners shall have the power to enforce any right under this Agreement, except in the manner herein provided. Judicial proceedings resulting from an Event of Default shall be for the equal benefit of all Owners of the Outstanding Revenue Bonds. Section 506. Non -Waiver. A delay or omission by the Trustee to exercise a right or power arising on an Event of Default shall not impair that right or power or be construed as a waiver of, or acquiescence in, the Event of Default. Every power and remedy possessed by the Trustee may be exercised from time to time and as often as deemed expedient by the Trustee. Section 507. Remedies Not Exclusive. All remedies afforded to the Trustee by law or by this Agreement are cumulative: the exercise of a remedy shall not impair the right of the Trustee to exercise any other remedy, at the same time or from time to time. Section 508. No Obliaation by City to Owners. Except for the payment of amounts due under the Refunding Bonds and the performance of other City covenants contained in the proceedings for issuance of the Refunding Bonds and in this Agreement, the City shall have no obligation or liability to any other party or to the Owners arising from this Trust Agreement, the performance of the Trustee, the terms, execution, delivery or transfer of the Revenue Bonds, or the distribution of payments to the Owners by the Trustee. Section 509. No Liabilitv to Owners for Pavment. Except as provided herein the Trustee shall have no obligation nor liability to the Owners for the City's payments under the Refunding Bonds or the City's performance of any other covenant of this Agreement. Section 510. Tax Covenants. (a) Neither the City nor the Authority shall take or permit any action that would cause interest on the Revenue Bonds or the Refunding Bonds to be included in the gross income of recipients thereof for purposes of federal income taxation. 19 (b) Neither the City nor the Authority shall take or permit any action that would cause any of the Revenue Bonds or the Refunding Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. ARTICLE VI AMENDMENT; DEFEASANCE; ADMINISTRATIVE PROVISIONS Section 601. Amendment. This Trust Agreement may be amended in writing by a supplemental agreement among all of the parties: * Without the consent of the Owners, to add to the rights and privileges of the Trustee, or to cure a defective provision or settle a question arising from an uncertainty, ambiguity, or omission in this Trust Agreement without adversely affecting the interests of the Owners; or * With the written consent of the Owners of a majority in aggregate principal amount of Outstanding Revenue Bonds, to make any other amendment. This section does not authorize an amendment that causes the interest on the Revenue Bonds to become subject to California personal income tax or to be included in the gross income of the Owners for federal income tax purposes. The parties may rely on the opinion of Bond Counsel in the application of this section. Section 602. No Impairment of Securitv. The City shall not reduce any reassessment securing the Refunding Bonds or enter into any settlement of a claim or dispute respecting the Refunding Bonds or the reassessments securing them, except upon the written consent of the Trustee. Such consent may be based on an opinion of counsel or certificate of the City or the Authority and the Trustee shall be completely protected in relying thereon. This section shall not be construed to prevent the City from dividing reassessments to conform with the division of assessed parcels as provided by the Improvement Bond Act of 1915. Section 603. Defeasance. Upon defeasance of the Revenue Bonds, even though all Revenue Bonds have not been presented for payment, all obligations of the Authority, the Trustee and the City hereunder shall end, except only the obligation of the City to compensate and indemnify the Trustee and the obligation of the Trustee to pay all amounts due to the Owners. Defeasance will have occurred when all Outstanding Revenue Bonds are paid and discharged: (a) By paying the principal of and interest on all Outstanding Revenue Bonds as they become due and payable; or 20 (b) By prepayment of all Outstanding Revenue Bonds; or (c) By irrevocably depositing with the Trustee cash which, together with amounts then on deposit in the Payment Account, Prepayment Fund, and Reserve Account are sufficient to pay the principal of and interest on all Outstanding Revenue Bonds; or (d) By irrevocably depositing with the Trustee Federal Securities which, together with moneys then on deposit in the Payment Account, Prepayment Fund, and Reserve Account, together with interest to be received thereon, will be sufficient to pay the principal or and interest on all Outstanding Revenue Bonds at or before their respective Interest Payment Dates, in the written opinion of an independent certified public accountant given to the Trustee. Section 604. Recordina and Filina. The Trustee shall not be responsible for recording or filing this Agreement or supplemental instruments or documents. Section 605. Trustee to Keep Records. The Trustee shall keep books and records of all money received and disbursed by it under this Trust Agreement. They shall be available for inspection upon reasonable advance notice and at reasonable times during normal business hours on Business Days, by the City, the Authority or Owners representing five percent (5%) in aggregate principal amount of Outstanding Revenue Bonds, or their respective designees. IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement the day and year first above written. CITY OF SAN RAFAEL, a municipal corporation of the State of California By SAN RAFAEL JOINT POWERS FINANCING AUTHORITY By Chairman UNION BANK OF CALIFORNIA, N.A., as Trustee By Authorized Officer 21 EXHIBIT A DEFINITIONS Accounts. The term "Accounts" means the funds and accounts established by Section 301 of this Trust Agreement. Authoritv. The term "Authority" means the San Rafael Joint Powers Financing Authority, a joint powers authority of the City of San Rafael and the Redevelopment Agency of San Rafael, formed pursuant to Article 1 (Section 6500 et seq.) of Chapter 5 of Division 7 of Title 1 of the California Government Code. Authorized Denominations. The term "Authorized Denominations" means the authorized denominations of the Bonds, which shall be $5,000 or any integral multiple thereof. Authorized Officer. The term "Authorized Officer", when used with reference to the Authority, means its Chairman, its Vice Chairman, Secretary or its Treasurer; when used with reference to the City, means the Mayor of the City Council, City Manager, City Clerk, City Treasurer or their respective deputies or assistants or any other City officer or employee designated by the City Manager as an Authorized Officer for purposes of this agreement; when used with reference to the Trustee means any officer within the Corporate Trust Department (or any vice president, assistant vice president, assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively), and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom the matter is referred by the Trustee because of that officer's knowledge of and familiarity with the particular subject. Bond Counsel. The term "Bond Counsel" means an attorney or a firm of attorneys, acceptable to the City, of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States of America. Bond Pavment Date. The term "Bond Payment Date" means September 2 of each year during the term of the Bonds commencing September 2, 1997. Bond Reaister. The term "Bond Register" means the books for registration of the Bonds maintained by the Trustee pursuant to Section 410 of this Trust Agreement. Bonds. The term "Bonds" means the Revenue Bonds as defined herein. 22 Business Day. The term "Business Day" means any day on which banks in San Francisco and Los Angeles, California, are open for business, except Saturday, Sunday or a legal holiday. City. The term "City" means the City of San Rafael, a municipal corporation of the State of California. Closina Date. The term "Closing Date" means the date on which the Bonds are authenticated by the Trustee and delivered to the first purchaser thereof. Compliance Report. The term "Compliance Report" means the report described in Section 501 of this Trust Agreement, by which the City reports to the Trustee the institution and progress of judicial foreclosure proceedings against property delinquent in the payment of reassessments securing the Refunding Bonds. Defeasance Escrow Aareement.. The term "Defeasance Escrow Agreement" means the Defeasance Escrow Agreement dated as of January 28, 1997, between the City and Union Bank of California, N.A. Delivery Cost Fund. The term "Delivery Cost Fund" means the fund from which Delivery Costs shall be paid. Delivery Costs. The term "Delivery Costs" means all costs of payment or reimbursement for execution, sale and delivery of the Refunding Bonds and the Revenue Bonds, including without limitation costs paid or incurred by the City, the Authority or the Trustee for filing, preparation, printing, distribution, reproduction and binding of disclosure documents, initial fees and charges of the Trustee and its counsel, financing discounts, computer analysis, legal and regulatory fees, charges and reimbursements, financial and other professional ratings, insurance and fees for authentication, registration, transportation and safekeeping of bonds. Event of Default. The term "Event of Default" means an event of default as defined in Section 502 of this Trust Agreement. Federal Securities. The term "Federal Securities" means United States Treasury notes, bonds, bills or certificates of indebtedness or obligations for which the full faith and credit of the United States are pledged for the timely payment of principal and interest. Fiscal Year. The term "Fiscal Year" means the one-year period beginning on July 1 and ending on June 30. Foreclosure Covenant. The term "Foreclosure Covenant" means a covenant made by the City for the benefit of the owners of the Refunding Bonds, by which the City agrees to institute and 23 diligently prosecute judicial foreclosure proceedings against property delinquent in the payment of reassessment installments securing the Refunding Bonds. Information Services. The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, Floor 10, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service", 55 Broad Street, Floor 28, New York, New York 10004; Moody's Investors Service "Municipal and Government", 99 Church Street, Floor 8, New York, New York 10007, Attention: Municipal News Reports; Standard and Poor's Corporation "Called Bond Record", 25 Broadway, Floor 3, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds as the City may designate in a written request of the City delivered to the Trustee. Interest Pavment Dates. The term "Interest Payment Dates" means March 2 and September 2 of each year during the term of the Bonds commencing with September 2, 1997. Notice of Advance Retirement. The term "Notice of Advance Retirement" means the notice required by Section 8751 of the California Streets and Highways Code (being a part of the Improvement Bond Act of 1915) by which the City may advance the maturity of any Refunding Bond. Outstandina. The term "Outstanding" when used with reference to the Revenue Bonds as of a particular date means all Bonds theretofore delivered except: (a) all Bonds cancelled by the Trustee on or before that date; (b) all Bonds in substitution for which other Bonds have been delivered pursuant to this Trust Agreement, and (c) Bonds defeased under Section 603 of this Trust Agreement. Owner. The term "Owner", when used with reference to the Revenue Bonds, means the owner of any Outstanding Bond as shown on the Bond Register. Pavment Account. The term "Payment Account" means the account by that name, within the Redemption Fund, established by Section 301 of this Trust Agreement Permitted Investments. The term "Permitted Investments" means: A. Federal Securities. 24 B. obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export - Import Bank Rural Economic & Community Development General Services Administration U.S. Maritime Administration Small Business Administration Government National Mortgage Association (GNMA) U.S. Department of Housing & Urban Development (PHA's) Federal Housing Administration; Tennessee Valley Authority C. Bonds, notes or other evidences of indebtedness rated "AAA" by Standard & Poor's Corporation and "Aaa" by Moody's Investors Service issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with remaining maturities not exceeding three years; D. U.S. dollar denominated deposit accounts, federal funds and banker's acceptances with domestic commercial banks (including the Trustee) which have a rating on their short term certificates of deposit on the date of -purchase of "A-1" or "A-1+" by Standard & Poor's and "P-1" by Moody's and maturing no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank) ; E. Commercial paper which is rated at the time of purchase in the single highest classification, "A-1+1' by Standard & Poor's and 11P-1" by Moody's Investors Service and which matures not more than 270 days after the date of purchase; F. Investments in a money market fund rated "AAAm" or "AAAm-G" or better by Standard & Poor's Corporation, including such funds for which the Trustee or an affiliate acts as investment advisor or provides other services; G. Pre -refunded Municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and which are rated, based on the escrow, in the highest rating category of Standard & Poor's Corporation and Moody's Investors Service, Inc. or any successors thereto; H. Investment agreements, guaranteed investment contracts, funding agreements, or any other form of corporate note 25 representing the unconditional obligations of entities: (a) the unsecured long-term debt obligations or claims -paying ability ratings of which are rated in the top two rating categories of Moody's Investors Service, Inc. or Standard & Poor's Corporation, or (b) the short-term debt obligation rated in the two highest categories of either of such rating agencies; and I. Repurchase agreements with financial institutions insured by the FDIC or FSLIC, or any broker-dealer with "retail customers" which falls under the jurisdiction of the Securities Investors Protection Corporation (SIPC), provided that (a) the over -collateralization is at one hundred two percent (102%), computed weekly, consisting of such securities as described in A through E above; (b) a third party custodian, the Trustee or the Federal Reserve Bank shall have possession of such obligations; (c) the Trustee shall have perfected a first priority security interest in such obligations; and (d) failure to maintain the requisite collateral percentage will require the Trustee to liquidate the collateral. Person. The term "Person" means a natural person, corporation, association or public agency. Prebavment Fund. The term "Prepayment Fund" means the fund by that name established by Section 301 of this Trust Agreement. Principal Office. The term "Principal Office" means the corporate trust office of the Trustee at which it conducts its corporate trust business in Los Angeles, California or any other office of the Trustee designated by the Trustee for the purpose from time to time, including for registration, transfer, exchange and payment of Revenue Bonds. Prior Bonds. The term "Prior Bonds" means improvement and refunding bonds issued by the City of San Rafael as follows: (a) Civic Center - Northgate Refunding Assessment District (b) Kerner Boulevard Refunding Assessment District (c) Sun Valley Open Space Assessment District Record Date. The term "Record Date" means the close of business on the fifteenth day of the month preceding each Interest Payment Date, whether or not the fifteenth day is a Business Day. Redemption Fund. The term "Redemption Fund" means the fund of that name established by Section 301 of this Trust Agreement, containing within it the Payment Account, Earnings Account and the Reserve Account. 26 Redemption Pavments. The term "Redemption Payments" means payments of principal of and interest on the Refunding Bonds, made by the City to the Trustee as assignee of the Authority. Refunding Bonds. The term "Refunding Bonds" means bonds issued by the City pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds and secured by reassessments in Reassessment District No. 1997-1. Required Reserve. The term "Required Reserve" means the amount stated and defined as such in Section 302 of this Trust Agreement. Reserve Account. The term "Reserve Account" means the account by that name, within the Redemption Fund, established by Section 301 of this Trust Agreement. Revenue Bonds. The term "Revenue Bonds" means bonds of the Authority authorized on January 6, 1997 to be issued pursuant to the Marks -Roos Local Bond Pooling Act of 1985 (Section 6584 et seq., California Government Code) for the purpose of purchasing the Refunding Bonds. Securities Depositories. The term "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax (516) 227-4039 or -4190; Midwest Securities Trust Company, Capital Structures -Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312) 663-2843; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19203, Attention: Bond Department, Fax (215) 496-5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, other addresses that these depositories may specify and/or other securities depositories designated in a written request of the City delivered to the Trustee. Trust Agreement. The term "Trust Agreement" means this Trust Agreement dated as of January 28, 1997, among the Trustee, the City and the Authority. Trustee. The term "Trustee" means Union Bank of California, N.A., acting as Trustee under this Trust Agreement. 27 EXHIBIT B DEBT SERVICE SCHEDULES FOR REASSESSMENT DISTRICT NO. 1997-1 EXHIBIT C DEBT SERVICE SCHEDULE FOR 1997 AUTHORITY REVENUE BONDS REGISTERED V;= EXHIBIT D BOND FORM 1997 AUTHORITY SAN RAFAEL JOINT POWERS MARIN COUNTY, Rate of Interest: REGISTERED OWNER: PRINCIPAL AMOUNT: Maturity Date: REGISTERED REVENUE BOND FINANCING AUTHORITY CALIFORNIA Bond Date Cusip: January 28, 1997 ID16301fA THIS IS TO CERTIFY that, subject to the provisions hereof for prepayment, the registered owner stated above or registered assigns (the "Owner") is entitled to receive on the maturity date stated above (the "Bond Payment Date"), the principal amount stated above. This Bond has been authorized for issuance by resolution (the "Resolution") of the San Rafael Joint Powers Financing Authority (the "Authority") pursuant to the provisions of the Marks -Roos Local Bond Pooling Act of 1985 of the State of California. This Bond (the "Bond") evidences a direct interest in amounts received by the Authority as payments of the principal of, and interest on, certain refunding bonds (the "Refunding Bonds") issued by the City of San Rafael, Marin County, California (the "City") and held by the Authority. The payments on the Refunding Bonds have been assigned to Union Bank of California, N. A., as Trustee (the "Trustee") having a corporate trust office (the "Principal Office") at Los Angeles, California, pursuant to a trust agreement dated as of January 28, 1997 (the "Trust Agreement") among the Authority, the City and the Trustee. The aforesaid principal amount is payable subject to the terms of the Trust Agreement and represents a portion of the payments on the Refunding Bonds coming due on and before the Bond Payment Date. The Owner is also entitled to receive, subject to the terms of the Trust Agreement, on September 2, 1997, and semiannually thereafter on March 2 and September 2 of each year (the "Interest Payment Dates") to and including the Bond Payment Date or the date of prepayment, whichever is earlier, semiannual interest on the principal of this Bond at the per annum rate of interest stated above. The principal and redemption premiums, if any, are payable at the Principal Office of Trustee, or its successor, as Trustee. Said amounts are payable in lawful money of the United States of America. Amounts representing principal are payable at the Principal Office; amounts representing interest are payable by check of the Trustee mailed by first-class mail on each Interest Payment Date to the Owner of record on the fifteenth day of the month preceding the Interest Payment Date (the "Record Date") (except as otherwise described herein for interest paid to an account in the Continental United States of America by wire transfer as requested in writing no later than the applicable Record Date by certain owners of $1,000,000 or more in aggregate principal amount of Bonds). REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THE BOND SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE. The Trustee has no obligation or liability to the Owners to make payments of principal or interest with respect to the Bonds. The Trustee's sole obligations are to administer, for the benefit of the Owners, the various funds and accounts established under the Trust Agreement. The Trustee does not warrant the recitals of fact herein. The City and the Authority have covenanted that all conditions precedent to the delivery of the Bonds, whether required by law or by the Trust Agreement, have occurred or been performed, and that the Bonds are within every limit prescribed by law. This Bond shall not be entitled to any benefit under the Trust Agreement or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee. IN WITNESS WHEREOF, the Authority has caused this Bond to be signed by its Chairman and its Secretary as of the 28th of January, 1997. San Rafael Joint Powers Financing Authority Chairman of the Authority Secretary of the Authority CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is one of the Bonds described in the within -mentioned Trust Agreement, which has been authenticated and registered on UNION BANK OF CALIFORNIA, N.A. as Trustee (Authorized signatory) (REVERSE OF BOND) 1997 AUTHORITY REVENUE BOND SAN RAFAEL JOINT POWERS FINANCING AUTHORITY MARIN COUNTY, CALIFORNIA This Bond has been authenticated by the Trustee pursuant to the terms of the Trust Agreement. Copies of the Trust Agreement are on file in the offices of the Authority and the City and at the Principal Office; reference is made to the Trust Agreement and any amendments thereto for a description of the covenants of the Authority securing the payments on this Bond, the nature, extent and manner of enforcement of the covenants, the rights and remedies of the Owners and the terms and conditions on which the Bonds are delivered thereunder. To the extent and in the manner permitted by the terms thereof, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the Owners of at least a majority in principal amount of the Bonds then outstanding, or without that consent for an amendment not adversely affecting the interests of the Owners. The registration of this Bond shall be transferable only on the Bond Register, which shall be kept at the Principal Office, on surrender hereof together with a written instrument of transfer satisfactory to the Trustee executed by the Owner or his duly authorized attorney. Thereupon the Trustee shall provide one or more new registered Bonds of the same aggregate principal amount, Bond Payment Date and interest rate as the surrendered Bond, registered in the name of the transferee. The Bonds are delivered in the form of registered Bonds in denominations of $5,000 each or any integral multiple thereof, and on surrender thereof at the Principal Office with a written request for exchange executed by the Owner or his attorney duly authorized in writing, may be exchanged for an equal aggregate principal amount of Bonds of any other authorized denominations, of the same Bond Payment Date, and with the same interest rate as the surrendered Bond. All or a portion of any Bond is subject to prepayment on any Interest Payment Date by paying to the Owner thereof the principal amount thereof, interest to the Interest Payment Date of prepayment and a prepayment premium of a percentage of the principal being prepaid as follows: Prepavment Date Premium September 2, 1997 to September 2, 2006 2.0% March 2, 2007 to September 2, 2007 1.0 March 2, 2008 and thereafter 0.0 The Trustee shall determine the manner of prepayment by lot; but the portion of any Bond to be prepaid shall be in the principal amount of $5,000 or an integral multiple thereof, and in selecting portions of Bonds for prepayment, the Trustee shall treat each Bond as representing the number of Bonds obtained by dividing its principal amount by $5,000. Notice of prepayment shall be mailed by first-class mail to the affected Owners, postage prepaid, not less than thirty (30) nor more than sixty (60) days before the date of prepayment. Failure to mail the notice, or any defect in the notice as mailed, shall not affect the validity of the proceedings for prepayment of the Bonds. The obligation of the City to make payments on the Refunding Bonds is a limited obligation, subject to the receipt of installment payments of reassessments securing the Refunding Bonds. The obligation of the Authority to make payments on the Bonds is limited to amounts deposited with the Trustee in the Payment Account and the Reserve Account, all as specified in the Trust Agreement. The obligations of the Authority and the City under the Trust Agreement constitute neither a debt nor a pledge of the faith and credit of the City, the Authority, the Trustee, the State of California or any other political subdivision of the State. I hereby certify that the following is a correct copy of the signed legal opinion of STURGIS, NESS, BRUNSELL & ASSAF, a professional corporation, Emeryville, California, on file in my office. Secretary of the Authority 33 DEFEASANCE ESCROW AGREEMENT between the CITY OF SAN RAFAEL and UNION BANK OF CALIFORNIA, N.A. as Escrow Agent Dated as of January 28, 1997 TABLE OF CONTENTS Page Section 1. Appointment of Escrow Agent; Definitions ....3 Section 2. Establishment of Escrow Fund ................4 Section 3. Deposit into Escrow Fund ....................4 Section 4. Investment of Deposit in Escrow Fund ........4 Section 5. Instructions as to Application of Deposit ...4 Section 6. Remaining Moneys ............... ............4 Section 7. Substitution of Federal Securities ..........5 Section 8. Notice of Redemption ........................5 Section 9. Successor Escrow Agent ............. ..... ..6 Section 10. Compensation to Escrow Agent; Indemnity and Hold Harmless Protection for Escrow Agent ...6 Section 11. Limitations on Responsibility of Escrow Agent.....................................6 Section 12. Protection of Escrow Agent ..................7 Section 13. Evidence of Matters .........................7 Section 14. Notices....................................7 Section 15. California Law ..............................8 Section 16. Severability................................8 Section 17. Execution in Counterpart ....................8 EXHIBIT A - ESCROWED FEDERAL SECURITIES .................9 EXHIBIT B - SCHEDULE OF REDEMPTION PAYMENTS ON PRIOR BONDS........................................10 2 DEFEASANCE ESCROW AGREEMENT This Defeasance Escrow Agreement (the "Agreement") is made as of the 28th day of January, 1997, between the CITY OF SAN RAFAEL, a municipal corporation of the State of California (the "City"), and UNION BANK OF CALIFORNIA, N.A., having a corporate trust office in San Francisco, California (the "Escrow Agent"). RECITALS First Trust of California (formerly Bank of America National Trust and Savings Association) by contract with the City acts as the City's registrar, paying agent and fiscal agent for the payment of principal of, and interest on, certain improvement bonds (the "Prior Bonds") issued pursuant to the California Improvement Bond Act of 1915 (Streets and Highways Code Section 8500 et seq.), to wit: (a) Civic Center - Northgate Refunding Assessment District (b) Kerner Boulevard Refunding Assessment District (c) Sun Valley Open Space Assessment District The City proposes to make a deposit of moneys and Federal Securities from the proceeds of the Refunding Bonds and to appoint the Escrow Agent as its agent for the purpose of applying said deposit to the payment and redemption of the Prior Bonds and the Escrow Agent desires to accept said appointment. The Escrow Agent has full powers to act with respect to the irrevocable escrow created herein and to perform the duties and obligations to be undertaken pursuant to this Defeasance Escrow Agreement. NOW, THEREFORE, in consideration of the above premises and of the mutual promises herein contained, the parties hereto agree as follows: Section 1. Appointment of Escrow Aqent; Definitions. The City hereby appoints the Escrow Agent as escrow agent for this Defeasance Escrow Agreement (the "Agreement"), and the Escrow Agent hereby accepts the appointment. The Escrow Agent shall exercise the rights and perform the duties specifically set forth herein, and no implied covenants or obligations shall be read into this Agreement against the Escrow Agent. 3 All capitalized terms used in this Agreement shall have the meanings assigned by that certain trust agreement, dated as of January 28, 1997, by and among the City, the City of San Rafael Joint Powers Financing Authority and Union Bank of California, N.A., as Trustee, (the "Trust Agreement") unless clearly assigned a different meaning by this Agreement. Section 2. Establishment of Escrow Fund. There is hereby created an irrevocable escrow designated the "City of San Rafael 1997 Refunding Escrow Fund" (the "Escrow Fund"). All moneys and Federal Securities in the Escrow Fund are hereby irrevocably transferred to the Escrow Agent, as security for payment of the redemption price of the Prior Bonds, to be held by the Escrow Agent in trust for the benefit of the owners of the Prior Bonds, except as specified in Section 6 and Section 7 hereof. If the Escrow Agent shall receive actual written notice that the moneys and Federal Securities in the Escrow Fund will not be sufficient to make any payment required by Section 5 hereof, the Escrow Agent shall notify the City of such fact and the City shall immediately cure the deficiency. Section 3. Deposit into Escrow Fund. Concurrently with the delivery of the Refunding Bonds, the City shall cause the amount of $6,235,793.25, including $5,027,000 from proceeds of the Refunding Bonds and $1,208,793.25 from funds maintained by the City for the Prior Bonds, to be transferred to the Escrow Agent. Section 4. Investment of Deposit in Escrow Fund. The Escrow Agent shall invest the moneys deposited into the Escrow Fund pursuant to the preceding section in the Federal Securities set forth in Exhibit A attached hereto and by this reference incorporated herein (the "Escrowed Federal Securities"). The Escrowed Federal Securities shall be deposited with and held by the Escrow Agent in the Escrow Fund solely for the uses and purposes set forth herein. Section 5. Instructions as to Application of Deposit. The City hereby instructs the Escrow Agent as its agent to apply the moneys and Escrowed Federal Securities deposited in the Escrow Fund pursuant to Section 3 hereof to pay the redemption price of the Prior Bonds on March 2, 1997 in the amounts set forth in Exhibit B attached hereto and by this reference incorporated herein. Section 6. Remaininu Monevs; Unclaimed Monevs. The Escrow Agent shall hold uninvested money, if any, remaining in the Escrow Fund until needed for payment of the redemption price of the Prior Bonds. Such moneys may be invested or reinvested as directed in writing by an Authorized Officer of the City, but only if those directions are accompanied by an opinion of Bond Counsel that investment in accordance with the directions will not affect the 4 exclusion from gross income, for purposes of federal income taxes, of the interest payable with respect to the Refunding Bonds or payable with respect to the Prior Bonds. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section shall be paid to the City as soon as practicable but only after the payment and redemption in full of the Prior Bonds. After payment and redemption in full of the Prior Bonds, any excess funds are to be transferred to the Redemption Fund of the Revenue Bonds. The Escrow Agent shall thereupon be released and discharged with respect to those amounts. Section 7. Substitution of Federal Securities. The City at any time may direct the Escrow Agent in writing to substitute Federal Securities then issued by the United States of America for any Federal Securities then deposited in the Escrow Fund, provided that: (1) as used in this Agreement, the term "Federal Securities" shall be restricted to direct non -callable obligations of the United States of America or securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, and to which the full faith and credit of the United States of America has been pledged; and (2) any direction to substitute Federal Securities shall be accompanied by the certificate of an independent certified public accountant of favorable national reputation experienced in the refunding of obligations of political subdivisions that the Federal Securities in the Escrow Fund after substitution, together with interest to be derived therefrom, shall be sufficient to make the payments specified in Section 5 hereof and, further to be accompanied with an opinion of Bond Counsel that the substitution will not affect the exclusion from gross income, for purposes of federal income taxes, of the interest payable with respect to the Refunding Bonds or payable with respect to the Prior Bonds. If after substitution the Escrow Fund contains an amount in excess of an amount sufficient to make the payments required by Section 5 hereof, the excess shall be paid to the City as soon as practicable after the Escrow Agent receives written instructions from the City. Section 8. Notice of Redemption. The City shall take all steps required to redeem all Prior Bonds on March 2, 1997, at a redemption price equal to the principal amount thereof, plus accrued interest represented thereby to the redemption date, plus the premium required by the Prior Bonds. Section 9. Successor Escrow Aaent. The Escrow Agent may resign at any time, effective on the appointment of a successor Escrow Agent. On receiving notice of resignation the City shall 5 promptly appoint a successor Escrow Agent. If the City fails to appoint a successor Escrow Agent within thirty (30) days after receiving notice, the resigning Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent. The City at any time may remove the Escrow Agent initially appointed and any successor thereto and may appoint a successor in writing. Upon removal the predecessor Escrow Agent shall deliver all cash, deposits, investments and other items in its possession to the successor Escrow Agent. Section 10. Compensation to Escrow Aqent; Indemnitv and Hold Harmless Protection for Escrow Agent,. The City shall indemnify and hold harmless the Escrow Agent for out-of-pocket costs such as mailing costs, redemption expenses, legal fees and other costs and expenses relating hereto and, in addition, fees, costs and expenses relating to the purchase of any Federal Securities and reimburse the Escrow Agent for all its advances and expenditures of independent accountants, counsel and engineers or other experts employed by it in the exercise and performance of its rights and obligations hereunder, and indemnify and save the Escrow Agent harmless against liabilities, costs or claims either (a) arising from the Escrow Agent's exercise and performance of its rights and obligations hereunder, except for the Escrow Agent's negligence or willful misconduct, or (b) arising out of breach by the City of any covenants, conditions or other obligations to be performed or observed by the City hereunder. Under no circumstances shall amounts deposited in the Escrow Fund be deemed to be available for the purpose of indemnification. The Escrow Agent shall be paid its annual administration fees and out-of-pocket expenses within thirty (30) days upon the City's receipt of such billing. Section 11. Limitations on Responsibilitv of Escrow Aqent. The statements, agreements, conditions, covenants and terms contained in the proceedings for issuance of the Prior Bonds or the Refunding Bonds shall be taken as statements, agreements, conditions, covenants and terms of the City, and the Escrow Agent does not assume any responsibility for the correctness of the same or for the observance or performance by the City of the same and does not make any representation as to the sufficiency or validity of the Prior Bonds or the Refunding Bonds or the adequacy of the escrowed Federal Securities to pay the amounts due on the Prior Bonds. The Escrow Agent shall not incur any responsibility in respect hereof other than in connection with the rights and obligations assigned to or imposed upon it herein, and as respects such rights and obligations shall not be liable in connection with the performance thereof except for its own negligence or willful misconduct. The Escrow Agent shall have no responsibility to see to the deposit with the Escrow Agent of amounts to be deposited by others under this Agreement. The Escrow Agent may conclusively rely on the written instructions, representations and calculations received n by it from the City or from any officer or agent of the City and the Escrow Agent shall be entitled to receive written instructions from the City with regard to any deposits or other matters. Section 12. Protection of Escrow Aaent. The Escrow Agent shall incur no liability in acting in good faith on any document that it believes to be genuine and to have been duly given. The Escrow Agent shall have no duty to investigate or question the statements contained in any document, but may rely on them as truthful and accurate. The Escrow Agent may consult with counsel, who may be counsel to the City or Bond Counsel, with regard to legal questions, and the opinion of counsel shall provide full and complete authorization and protection in respect of any action taken or permitted hereunder in good faith. The Escrow Agent shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Escrow Agent was negligent in ascertaining the pertinent facts. The Escrow Agent shall not be required to expend or risk its own funds or incur any financial liability in the performance of its duties hereunder, or in the exercise of any of its rights or powers. The Escrow Agent shall not be accountable for the use or application by the City of the Refunding Bonds or the proceeds thereof. Section 13. Evidence of Matters. The Escrow Agent is entitled to rely on the certificate of an Authorized Officer of the City, but in its discretion the Escrow Agent may require other or further evidence before acting or withholding action. Section 14. Notices. All written notices to be given under this Agreement shall be given by mail to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other parties in writing from time to time. If to the City: City of San Rafael c/o Treasurer 1400 Fifth Avenue San Rafael, CA 94901 If to Escrow Agent: Union Bank of California, N.A. 350 California Street, Suite 1150 San Francisco, CA 94104 Att: Corporate Trust Division Section 15. California Law. This Agreement shall be construed and governed in accordance with the laws of the State of California. Section 16. Severabilitv. Any provision of this Agreement found to be prohibited by law shall be ineffective only to the 7 extent of such prohibition, and shall not invalidate the remainder of this Agreement. Section 17. Execution in Counterpart. This Agreement may be executed in counterparts, and each counterpart shall be deemed to be an original. All counterparts shall be deemed to be one and the same instrument. IN WITNESS WHEREOF, the Escrow Agent and the City have each caused this Agreement to be executed by their duly authorized officers all as of the date first above written. CITY OF SAN RAFAEL, a municipal corporation of the State of California By Treasurer UNION BANK OF CALIFORNIA, N.A. as Escrow Agent By Authorized Officer EXHIBIT A ESCROWED FEDERAL SECURITIES Prior Bonds Civic Center - Northgate Kerner Sun Valley TOTAL EXHIBIT B REDEMPTION PAYMENTS DEFEASANCE ESCROW ACCOUNTS Principal Interest Premium Total $2,825,000. $104,623.75 $ 84,750. $3,014,373.75 $2,785,000 111,400.00 139,250. 3,035,650.00 $ 195,000 8,209.25 9,750. 212,959.25 $5,805,000 $224,233.00 $233,750. $6,262,983.00 10 REGISTERED Number R-1 United States of America State of California County of Marin LIMITED OBLIGATION REFUNDING BOND CITY OF SAN RAFAEL REASSESSMENT DISTRICT NO. 1997-1 SERIES NO. 1997-1 REGISTERED INTEREST RATE MATURITY DATE BOND DATE (see attached) (see attached) January 28, 1997 REGISTERED OWNER: SAN RAFAEL JOINT POWERS FINANCING AUTHORITY c/o City of San Rafael 1400 Fifth Avenue San Rafael, CA 94901 ID No. PRINCIPAL SUM: Under and by virtue of the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11.5 of the Streets and Highways Code (the "Act"), the City of San Rafael, County of Marin, State of California (the "City"), will, out of the redemption fund for the payment of the bonds issued upon the unpaid portion of reassessments made for the refunding of all outstanding 1915 Act bonds in: (a) Civic Center - Northgate Refunding Assessment District (b) Kerner Boulevard Refunding Assessment District (c) Sun Valley Open Space Assessment District more fully described in the Resolution of Intention adopted by the City Council of the City of San Rafael on the 6th day of January, 1997, pay to the registered owner stated above or registered assigns, on the maturity date stated above, the principal sum stated above, in lawful money of the United States of America and in like manner will pay interest from the interest payment date next preceding the date on which this Bond is authenticated, unless this Bond is authenticated and registered as of an interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated and registered prior to September 2, 1997, in which event it shall bear interest from its date, until payment of such principal sum shall have been discharged, at the rate per annum stated above, payable semiannually on March 2 and September 2 in each year commencing on September 2, 1997. Both the principal hereof and redemption premium hereon are payable at the office of Treasurer of the City of San Rafael (the "City"), or its successor, as Transfer Agent, Registrar and Paying Agent, in San Rafael, California, and the interest hereon is payable by check or draft mailed to the owner hereof at the owner's address as it appears on the registration books of the City, or at such address as may have been filed with the City for that purpose, as of the fifteenth day of the month preceding each interest payment date. This Bond will continue to bear interest after maturity at the rate above stated, provided, it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay same. If it is not presented at maturity, interest thereon will run until maturity. EXHIBIT C This Bond is one of several annual series of bonds of like date, tenor and effect, but differing in amounts, maturities and interest rates, issued by the City of San Rafael under the 1984 Act and the Resolution Authorizing Issuance and Sale of Refunding Bonds (the "Resolution of Issuance"), for the purpose of refunding bonds described in said proceedings, and is secured by the moneys in said redemption fund and by the unpaid portion of said reassessments and, including principal and interest, is payable exclusively out of said fund. This Bond is transferable by the registered owner hereof, in person or by the owner's attorney duly authorized in writing, at said office of the City, subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond or Bonds, of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership or a trust. The City shall not be required to make such exchange or registration of transfer of bonds during the period commencing with the fifteenth day of the month preceding any interest payment date and ending on said interest payment date. The City will not obligate itself to advance available funds from the City treasury to cure any deficiency which may occur in said redemption fund. A determination not to obligate itself shall not prevent the City from, in its sole discretion, so advancing funds. The City may treat the registered owner hereof as the absolute owner for all purposes, and the City shall not be affected by any notice to the contrary. This Bond or any portion of it in the amount of $1,000 or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second day of March or September in any year by giving at least 30 days' notice by registered or certified mail, or by personal service to the registered owner hereof at such owner's address as it appears on the registration books of the City, and by paying principal and accrued interest. The redemption premium is the percent of principal amount of the bonds to be redeemed shown below: Prepavment Date Premium This Bond shall not be entitled to any benefit under the Act or the Resolution of Issuance, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the City. IN WITNESS WHEREOF, said City of San Rafael has caused this Bond to be signed in facsimile by the Treasurer of said City and by its Clerk, and has caused its corporate seal to be reproduced in facsimile hereon all as of the 28th day of January, 1997. CITY OF SAN RAFAEL Clerk Treasurer (SEAL) Certificate of Authentication and Registration This is one of the Bonds described in the within mentioned Resolution of Issuance, which has been authenticated and registered on CITY OF SAN RAFAEL, as Transfer Agent, Registrar and Paying Agent By Authorized Officer I hereby certify that the following is a correct copy of the signed legal opinion of STURGIS, NESS, BRUNSELL & ASSAF a professional corporation, Emeryville, California, on file in my office. City Clerk