HomeMy WebLinkAbout1994-09-06; City Council; 12850; Single Family Mortgage Revenue Bondsy ut- GAHL~~AU - nu
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DEPT.
DEPT* CITY ATTY HD?5 2 OF THE 1983 SINGLE FAMILY MORTGAGE REVENUE MTG. 09/06/94
TITLE: APPROVAL AND AUTHORIZATION OF THE REDEMPTION
AND APPROVAL OF ALL RELATED DOCUMENTS CITY MGR~ FIN BONDS AND THE SALE OF THE UNDERLYING MORTGAGES
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RECOMMENDED ACTION:
Adopt City of Carlsbad Resolution No. 9Y -2Sl authorizing the execution of an
asset purchase agreement, the redemption of the outstanding 1983 Single Family
Residential Mortgage Revenue Bonds, approving a supplemental indenture and
the delivery of all necessary and related documents and appointing the financing
team.
ITEM EXPLANATION:
In 1983, the City of Carlsbad issued $20,000,000 in Single Family Residential
Mortgage Revenue Bonds (the Bonds) to provide funds for a program under
which the Trustee, on behalf of the City, purchased mortgage loans from a
financial institution which were made to eligible persons. The purpose of this
program was to provide affordable housing to first time homebuyers with average
and below average income levels.
Under the program, the payments received from the mortgages would be used
to pay the bond proceeds. Any funds remaining after the bonds were paid off
would revert to the City. As of June 30, 1994, there were $715,000 in mortgages
outstanding under the program and $230,000 of Bonds outstanding. The
mortgages carry an interest rate of 10.2% with a remaining term of approximately
20 years while the Bonds have a coupon rate of 10%.
Staff is requesting authority to sell the remaining loans to a third party purchaser
and pay off the outstanding Bonds with the proceeds. Since the market rate for
these mortgages is still relatively attractive, the City would be able to recoup as
much or more money from the sale of the mortgages as it would if the program
was allowed to run its course. The sale of the mortgages would in no way effect
the rights of the mortgagors or change the terms of the mortgages themselves.
The only change that would be noticeable to the mortgagors is a possible change
in the mailing address for their mortgage payments.
By completing this transaction, the City would receive all proceeds from the sale
in excess of the amount needed to pay off the bonds and related fees. The net
proceeds to the City are estimated at $490,000. As the funds were generated
through an affordable housing program, Council may wish to reserve the
proceeds from the sale for future affordable hou,sing projects. This could be
accomplished by depositing the moneys in the Housing Trust Fund that has been
established by the City. The Housing Trust Fund was set up to receive all
housing in-lieu and impact fees and other housing-related receipts. The Trust
Fund can only be used for the purpose of providing funding assistance for the
provision of affordable housing units consistent with the policies and programs
contained in the Housing Element of the General Plan. The deposit of these
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PAGE TWO OF .AGENDA BILL NO:G.&~.~~%:~O
proceeds into this fund would provide much needed capital for the City to further
address its affordable housing needs.
If the City were not to sell the loans at this time, the trustee would continue to
' collect the mortgage payments, pay off the,bonds when funds were available and
then begin remitting excess payments to the City until the mortgages were paid.
This would occur over the next 20,years. The early redemption of the bonds
allows the City to put the funds to use now rather than waiting for receipt in the
future. In addition, it will. save on future trustee fees, audit fees and staff time.
The agreements which Council would be approving by adopting the attached
resolution are listed below. These documents are attached in substantial1.y the .
form in which they would be executed. The resolution gives the City Manager or
his designee, the authorization to make minor changes, if necessary, and to
execute the final documents.
b Asset Purchase Aareement
This agreement would be between the City and winning bidder when the
mortgages are sold. It will identify the mortgages being sold, state the
purchase price and all other ,terms of the sale including delivery instructions,
accrued interest standards, etc. as well as identifying the related fees and the
party responsible for payment.
b Supplemental Indenture
The original, indenture did not provide for the sale of the loans in connection
: with the redemption of the Bonds.. In ,addition, certain other provisions were.
ambiguous and inconsistent. The supplemental indenture is necessary to clear
up these ambiguities and omissions in the original indenture. This is allowable
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... , .under the terms of the original indenture, , ' ,.
b Proposal from Mudae Rose Guthrie Alexander & Ferdon, Leaal Counsel.
.This is the-proposal from bond counsel to perform the legal services required
to complete this transaction. The fee for their services is $30,000. This firm.
was selected due to their experience in dealing with this type of defeasance
situation and their .reputation for having extensive knowledge in the housing
field.
b Proposal from Par Marketina, Inc, Financial Advisor
We requested proposals from two firms which had experience in this type of
transaction and selected this firm as the most experienced and accessible.
They also proposed the lowest cost. We did talk to several other firms but
none had experience with this type of a transaction so proposals were not
requested. The fee proposed by Par Marketing is $30,000 which includes
copying and printing costs, certain trustee costs, and other miscellaneous
expenses as well as their own fees. Staff believes this fee is reasonable.
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PAGE THREE OF AGENDA BILL NO. 12 ;.& 50 . '.
FISCAL IMPACT:
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The amount of proceeds the City will receive from this transaction depends on the
price that is bid for .the mortgages. Current estimates -put the price of the
mortgages at 94% of par. At that rate, the City would receive' proceeds of
approximately $490,000 after expenses which include legal counsel and financial
advisor. The sale of the mortgages will be on a competitive basis. If the bids
received are not satisfactory, they may be rejected and either re-bid or 'the
transaction canceled. ..
Legal fees and financial advisory fees are quoted at $30,000 .each. Both fees are
contingent upon the successful sale of the mortgages. If the bids are not
acceptable, the sale will be canceled -and the City will not be liable for any
'expenses incurred or services provided by 'either legal counsel or the financial
advisor.
Upon the successful completion,of the sale of the loans and redemption of the
bonds, staff will report back to Council with the final results. At that time, staff will
also be requesting' direction as to the use of the proceeds. There are no
restrictions on the use of the proceeds; however, as they were generated through
an affordable housing program, Council may want to reserve them to be used for
future affordable housing projects. This could be accomplished by directing staff
.to deposit them to the Housing Trust Fund.
EXHIBITS:
1. Resolution No. 9 Y-dsl authorizing the execution of an asset purchase
agreement, the redemption of the outstanding 1983 Single Family Residential
Mortgage Revenue Bonds, approving a supplemental indenture and the
delivery of all necessary and related documents and appointing the financing
team.
2. Form of Asset Purchase Agreement
3. Form of Supplemental Indenture
4. Proposal from Mudge Rose Guthrie Alexander & Ferdon
5. Proposal from Par Marketing, Inc.
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RESOLUTION NO. 94-251
_+~ESOLUTION OF THE CITY COUNCIL. OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING THE EXECUTION
REDEMPTION OF ALL OF ITS.OUTSTANDING SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS, ISSUE OF 1983
(THE "BONDS), APPROVING A SUPPLEMENTAL INDENTURE,
MENTS IN CONNECTION WITH THE FOREGOING ACTIONS
.:AND DELIVERY OF AN ASSET PURCHASE AGREEMENT,
AND DELIVERY OF ALL NECESSARY AND RELATED DOCU-
WHEREAS, pursuant to a Trust Indenture, dated as of September 1,
1983, (the "Indenture"), by and between the City of Carlsbad (the "City") and Bank
of America National Trust and Savings Association, as successor in interest to
Security Pacific National Bank (the 'Trustee"), the City.has previously issued, sold
and delivered its Bonds in the original aggregate principal amount of $20,000,000
in order to provide funds for the acquisition of'home mortgage loans (the "Loans")
made to qualified persons and families through qualified lending institutions
pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of
California; and
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WHEREAS, Section 4.01 (b) of the Indenture provides that the Bonds
are subject to special mandatory redemption prior to' their respective stated
maturities, as a whole or in part, on any Interest Payment Date for moneys .
deposited in the Redemption Fund; 'and
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0 WHEREAS, Section 10.01 of the Indenture provides that if. the City
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' pays or causes to be paid all sums payable under the Indenture, the Indenture
and the pledge of Revenues and other assets thereunder shall cease, terminate,
become void and be completely discharged and satisfied, and the Trustee shall
pay over, transfer, assign or deliver to the Issuer all moneys or securities or other
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property held by .it pursuant to'the Indenture which are not required for the
pa&% or redemption of Bonds not theretofore surrendered for such payment
or redemption; and
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WHEREAS, the sale of the Mortgages and redemption of the Bonds
pursuant to the Indenture will result in the release of excess moneys to the City
following the defeasance of the Indenture and provision for the redemption of the
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Bonds; and
WHEREAS, Section 9.01 (B)(2) of the Indenture provides that the
Indenture may be modified or amended at any time by a Supplemental Indenture,
which may become effective upon execution, without the consent of any Owners, -
for the purpose of curing any ambiguity, inconsistency or omission, or of curing
or correcting any defective provision contained in the Indenture, to the extent
deemed necessary or desirable by the Issuer, not inconsistent with the Indenture,
and to the extent such modification or amendment does not materially adversely
affect the interests of the owners of .the Bonds.
NOW, THEREFORE, 'BE IT RESOLVED by the City Council of the City
of Carlsbad, California, as follows:
Section 1. The Asset Purchase Agreement, dated as of August 1,
1994 (the "Asset Purchase Agreement"), by and between the City and the
Purchaser in substantially the form attached hereto as Exhibit 2 and presented to
thismeeting, is hereby approved. The City Manager, or any official of the City
designated by such officer, is hereby authorized to review the bids obtained by
the Financial Advisor with respect to the sale of the Loans and to award the loans
to the highest responsible bidder (the "Purchaser"). The City Manager, or any
other official of the City designated by such officer, is hereby authorized and
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directed, for and in the name and on behalf of the City, to execute and deliver the
Adpurchase Agreement in substantially the form attached hereto as Exhibit 2,
withsuch additions thereto or changes therein as such officer may require or
approve, such approval to be conclusively evidenced by the execution and
delivery of the Asset Purchase Agreement by such officer, or any official of the
City designated by such officer.
Section 2. The City Manager, or any official of the City designated by
such officer, is hereby authorized and directed, for and in the name and on behalf
of the City, to direct the Trustee to cause a notice of redemption of the
outstanding Bonds to be given as required by the Indenture and to redeem the
outstanding Bonds on or prior to maturity.
Section 3. The Supplemental Indenture, dated as of August 1, 1994,
by and between the City and the Trustee, in substantially the form attached hereto
as Exhibit 3 and presented to this meeting, is hereby approved. The City
Manager, or any official of the City .designated by such officer, is hereby
authorized and directed, for and in the name and on behalf of the City, to execute
dnd deliver the Supplemental Indenture in substantially the form attached hereto
as Exhibit 3,'with such additions thereto or changes therein as such officer may
require or approve, such approval to be conclusively evidenced by the execution
and delivery of the Supplemental Indenture by such officer, or any official of the
City designated by such officer.
Section 4. The City Manager, or any member of the City Council, or
any official of the City 'designated by such officer, is hereby authorized and
directed, jointly and severally, for and in the name and on behalf of the City, to
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execute and deliver any and all necessary and related documents and take all
oth&cessary and related actions to effectuate the actions described herein.
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I- .- Section 5. Mudge Rose Guthrie Alexander & Ferdon is hereby
appointed as Special Counsel ("Special Counsel") for the City in connection with
the preparation and negotiation of the Asset Purchase Agreement and the
redemption of the bonds. on the terms and conditions set forth in their letter to the
City dated August 2, 1994 (Exhibit 4).
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. ' Section 6. , PAR Marketing, Inc. is hereby appointed as Financial
Advisor for the City in connection with the negotiations of the Asset Purchase
Agreement and the redemption of the Bonds on the terms and conditions set forth . '
in its letter to 'the City regarding such appointments dated August 15, 1994
(Exhibit 5).
Section 7. This Resolution shall take effect immediately upon' its .
adoption.
PASSED, APPROVED AND ADOPTE,D at a regular meeting of the City
Council on the 6th day of SEPTEMBER-, 1994, by the following vote, to wit:
AYES: Council Members Lewis, Stanton, Kulchin, Nygaard, Finnila
NOES: None
ABSENT: None
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AlTEST:
' ALETHA L. RAME (SEAL)
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EXHIBIT 2
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ASSET PURCHASE AGREEMENT
Dated as of
August 1, 199.4
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By and Between
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the
CITY OF CARLSBAD
and
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Relating to
$20,000,000
CITY OF CARLSBAD
SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS
. ISSUE OF 1983 .. ...
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TABLE OF CONTENTS
Section 1.1. Certain Defined Terms ............. 2
Section 2.1. Representations. Warranties and Covenants of the Issuer ......................... 3
Section 2.2. Representations and Warranties of the
Purchaser ....................... 5
Section 3.1. Status of the Loans .............. 7
Section 3.2. Purchase and Sale of the Loans ......... 7
Section 3.3. Sale Without Recourse; No Warranties , ...... 7
Section 3.4. Other Obligations of the Purchaser ....... 8
Section 3.5. Other Obligations of the Issuer ........ 8
Section 4.1. Fees and Expenses ............... 9
Section 5.1. Conditions Precedent .............. 10
Section 6.1. Purchaser Not Agent of the Issuer ....... 11
Section 7.1. Miscellaneous Provisions ............ 11
EXHIBIT A - List of Loans. Principal Balances and Interest Rates ............... A-1
EXHIBIT B - Form of Certificate of Trustee ......... B-1
EXHIBIT C - Form of Opinion of Special Counsel ....... C-1
EXHIBIT D - Certificate and Request of the Issuer ...... D-1
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of August 1, 1994
(the vlAgreementgv) , is by and between the CITY OF CARLSBAD (the
"Issuervv), a public body, corporate and politic, duly organized and existing under the Constitution and laws of the State of
California, and having its principal place of business at - (the vlPurchaserlf) .
WITNESSETH
WHEREAS, pursuant to a Trust Indenture dated as of
September 1, 1983 (the "Original Indenturet1), as modified and amended by a Supplemental Indenture dated as of August 1, 1994 (the IvSupplemental Indenturevv and, together with the Original Indenture,
the vvIndenturelt), by and between the Issuer and Bank of America National Trust and Savings Association, as successor in interest to Security Pacific National Bank, as trustee (the vvTrusteevv), the
Issuer issued its $20,000,000 City of Carlsbad Single Family
Residential Mortgage Revenue Bonds, Issue of 1983 (the llBondsll) in
order to provide funds for the acquisition of home mortgage loans (the vvLoansvv) made to qualified persons and families through qualified lending institutions pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended (the vvAct@t) ; and
WHEREAS, pursuant to the Indenture, the Bonds are secured
by an irrevocable pledge of the Revenues, which consist of all
amounts received by the Issuer or the Trustee from or with respect
to any Loan, any Agreement, any Developer Agreement or any policy
of insurance on or with respect to any Loan, including, without
limiting the generality of the foregoing, scheduled payments of
principal of and interest required. pursuant to any Loan and paid
from any source (including both timely and delinquent payments),
Loan Principal Prepayments, and all interests, profits or other
income derived from the investment of amounts in any fund or
account established pursuant to the Indenture (except the Excess
Earnings Fund) , but do not include (1) Impound Payments, (2) any amount retained by any Lending Institution (other than the Issuer) as a servicing fee or other compensation, and (3) Excess Earnings; and
WHEREAS, Section 4.01(b) of the Indenture provides that
the Bonds are subject to special mandatory redemption prior to
their respective stated maturities, as a whole or in part, on any
Interest Payment Date, without premium, plus accrued interest, from
moneys deposited in the Redemption Fund; and
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WHEREAS, Section 6.10(D) (3) of the Indenture provides
that the Loans may be sold, assigned or otherwise disposed of by the Issuer or the Trustee in connection with the redemption of all Bonds pursuant to the Indenture; and
WHEREAS, Section 10.01 of the Indenture provides that if
the City pays or causes to be paid all sums payable under the Indenture, the Indenture and the pledge of Revenues and other
assets thereunder shall cease, terminate, become void and be
completely discharged and satisfied, and the Trustee shall pay
over, transfer, assign or deliver to the Issuer all moneys or
securities or other property held by it pursuant to the Indenture which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption; and
WHEREAS, pursuant to action by the Issuer on
Issuer's Interest in the Loans to the Purchaser and the Purchaser agrees to purchase the Issuer's Interest in the Loans from the Issuer upon the terms and conditions set forth herein;
-I 1994, and this Agreement, the Issuer agrees to sell the
NOW, THEREFORE, in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Defined Terms. Terms used in this
Agreement shall have the meanings set forth in this Section, unless
the context clearly otherwise requires. Any terms used herein
which are not defined in this Agreement shall have the meanings
given to such terms in the Indenture.
ttAdministratorll shall mean Investors Mortgage Financial
Services, Inc., administrator under the Mortgage Sale and Servicing Agreement dated as of September 1, 1983, by and among the Lender, the Administrator, the Trustee and the Issuer.
IlClosing Date" shall mean , 1994.
ltIssuerl@ shall mean the City of Carlsbad.
"Issuer's Interest in the Loans" shall mean and include the Issuer's right, title and interest in the Loans and in the Agreement, subject to the Issuer's continued right to
indemnification, reimbursement and recovery of costs, expenses and
liabilities as provided therein.
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"Lendertt means Wells Fargo Mortgage Company and its
successors and assigns under the Mortgage Sale and Servicing Agreement dated as of September 1, 1983, by and among the Lender, the Administrator, the Trustee and the Issuer.
"Purchase Price" shall have the meaning set forth in Section 3.2.
"Redemption Date" shall mean September 1, 1994, with
respect to all outstanding Bonds except for one Bond in the amount
of $5,000 with respect to which the term "Redemption Date" shall
mean September 1, 2017.
"Special Counselg1 shall mean Mudge Rose Guthrie Alexander
& Ferdon.
ARTICLE I1
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations, Warranties and Covenants of
the Issuer. As of the Closing Date, the Issuer represents and
warrants to the Purchaser that:
(a) Oruanization and Authorization. The Issuer is a public body, corporate and politic, duly organized and validly existing under the Constitution and the laws of
the State of California.
(b) Authority to Adopt Documents. The Issuer had, as of the date of the adoption of the Indenture, full
power and authority to adopt the Indenture, and has full
power and authority to execute, deliver and perform this Agreement, and to execute, deliver and perform all other
agreements and instruments executed and delivered pursuant to or in connection with this Agreement.
(c) Obliaations Lesal, Valid and Bindinq. This Agreement has been duly and validly authorized, executed and delivered by the Issuer and constitutes the legal, valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms, except insofar as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors'
rights and remedies generally, and by general principles
of equity, whether applied by a court of law or equity.
(d) Compliance With Law. The Issuer is in
compliance with and not in default under any laws of the State of California which would adversely affect the
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Issuer's existence or its powers and authority referred
to in 2.l(b).
(e) No Legal Bar. The adoption of the Indenture and the execution, delivery and performance by the Issuer of this Agreement and all other agreements and instruments relating to this Agreement executed and delivered by the Issuer in connection herewith and therewith, (i) do not
violate any provision of the laws of the State of California or any other applicable law, regulation, order, writ, judgment or decree of any court, arbitrator or governmental authority, and (ii) do not violate any provision of, constitute a default under, or result in the creation or imposition of any lien on any of the assets of the Issuer pursuant to the provisions of, any mortgage, resolution, indenture, contract, agreement or other undertaking with respect to the Issuer to which the Issuer is a party or which purports to be binding on the
Issuer or on any of its assets.
(f) Consents. The Issuer has obtained, or will obtain on or before the Closing Date, all consents, permits, licenses and approvals of, and has made all filings, registrations and declarations with, governmental authorities required under law, to authorize the execution, delivery and performance of this Agreement and all other agreements to be delivered in connection with any thereof, and all such consents, permits,
licenses, approvals, filings, registrations and
declarations remain in full force and effect.
(g) Litiuation. To the best of the Issuer's knowledge, there is no action, suit, investigation or
proceeding pending or threatened against or affecting the
Issuer, the result of which could have a material adverse
affect on the ability of the Issuer to perform its obligations hereunder.
(h) Transfer of Assets. The Issuer has all requisite power and authority to transfer title to the Loans free and clear of any liens or encumbrances created by the Indenture.
(i) Ownershiw BY Issuer. The Issuer has the power to transfer to the Purchaser all right, title and interest in the Loans, free and clear of liens, claims and encumbrances, and subject to no agreement between the Issuer and any other party. Following the transfer of the Loans to the Purchaser, the Loans will not be subject to any provision of the Indenture, including, without limitation, any provision requiring forgiveness of all or
any portion of principal and/or interest on such Loans
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and the'Issuer has not and will not'direct or authorize the forgiveness of principal or interest with respect to any of the Loans, nor shall the Issuer direct the redemption of the Bonds on dates other than as provided herein.
(j) Sale of Loans. The Issuer has taken all actions necessary to achieve the maximum obtainable Purchase Price with respect to the Loans.
Section 2.2. Representations and Warranties of the
Purchaser. As of the Closing Date, the Purchaser represents and warrants to the Issuer that:
(a) Oruanization and Authorization. The Purchaser is a corporation, duly organized and validly existing under the laws of the State of
(b) Authority to Ado& Documents. The .Purchaser has full power and authority to execute, deliver and perform this Agreement, and to execute, deliver and perform allother agreements and instruments executed and delivered pursuant to or in connection with this Agreement.
(c) Obliqations Leqal, Valid and Bindinq. This Agreement has been duly and validly authorized, executed and delivered by the Purchaser and constitutes the legal, valid and binding obligation ofthe Purchaser enforceable against the Purchaser in accordance with its terms, except insofar as enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights and remedies generally, and by general principles of equity, whether applied by a court of law or equity. ,'
(d) Compliance With Law. The Purchaser is in compliance with and not in default under any laws which would adversely affect the Purchaser's existence or its powers and authority referred to in 2.2(b).
(e) No Leqal Bar. The execution, delivery and performance by the Purchaser of this Agreement and all other agreements and instruments relating to this Agreement executed and delivered by the Purchaser in connection herewith and therewith, (i) do not violate any provision of the laws of the State of or any other applicable law, regulation, order, writ, judgment or decree of any court, arbitrator or governmental authority, and (ii) do not violate any provision of, constitute a default under, or result in
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the creation or imposition of any lien on any of the assets of the Purchaser pursuant to the provisions of, any mortgage, resolution, indenture, contract, agreement or other undertaking with respect to the Purchaser to which the Purchaser is a party or which purports to be
binding on the Purchaser or on any of its assets.
(f) Consents. The Purchaser has obtained, or will
obtain on or before the Closing Date, all consents,
permits, licenses and approvals of, and has made all
filings, registrations and declarations with, governmental authorities required under law, to authorize the execution, delivery and performance ofthis Agreement and all other agreements to be delivered in connection with any thereof, and all such consents, permits,
licenses, approvals, filings, registrations and
declarations remain in full force and effect.
(g) Review of Loans. The Purchaser has conducted
its own review of the Loans and is not relying upon any representation of the Issuer in connection with the Loans in entering into this Agreement, except as set forth in
Section 2.1 of this Agreement.
(h) Investigation of Loans. The Issuer has made available tothe Purchaser the opportunityto investigate
(including through inquiry to the Trustee and the Lender)
the Loans and all matters relating thereto, and to obtain additional information relating thereto which said parties possess.
(i) Soghisticated Investor. The Purchaser is a "sophisticated investorm1 and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of ownership of the Loans.
(j) Due Diliaence. The Purchaser confirms that it has taken such steps as the Purchaser deems appropriate with respect to (i) conducting due diligence with respect to the status and quality of the Loans; (ii) assignment of ownership of the Loans; (iii) eligibility for
insurance benefits; and (iv) the perfection of all
related security interests related thereto, and that the
Issuer has made no representation, except as otherwise
provided in this Agreement, with respect to the Loans.
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ARTICLE I11
PURCHASE AND SALE OF LOANS
Section 3.1. Btatus of the Loans. The Purchaser has conducted a review of the Loans and, based upon such review, the
Purchaser hereby agrees that as of , 1994, the aggregate outstanding principal balance of the Loans subject to purchase by the Purchaser under this Agreement is $
rate is set forth on Exhibit A. The Purchaser confirms and accepts the amounts and interest rates set forth on Exhibit A as conclusive
and waives any right it may have to the reevaluation of such
amounts.
- . Each Loan with its loan number, principal balance and interest
Section 3.2. Purchase and Bale of the Loans. The Purchaser hereby agrees to purchase on the Closing Date, and the
Issuer agrees to sell, all of the Issuer's Interest in the Loans
shown on Exhibit A, for a purchase price of $ as adjusted pursuant to the second paragraph of this Section 3.2 (the
"Purchase Price") which is % of the aggregate outstanding
principal balance of the Loans, plus accrued interest to the
Closing Date ($ ), payable to the Issuer in immediately
available funds on the Closing Date.
The Purchaser shall not be obligated to pay accrued interest on any Loan that is more than 90 days past due.
All interest in this subsection shall be calculated at a rate equal to the rate of interest on the applicable Loans of
10.20% per annum, less 0.-% per annum (representing the servicing
and administration fees), based on a 360-day year as set forth in
Exhibit A.
The Issuer shall, on the Closing Date, cause the Trustee
and the Lender to take all necessary action and to execute and
deliver all necessary instruments to confirm the sale of the Loans
to the Purchaser and to vest title to the Loans in the Purchaser.
Each promissory note evidencing a Loan shall bear an
endorsement and each deed of trust shall be assigned in a form acceptable to the Purchaser and the Issuer, assigning the interest therein to the Purchaser.
Section 3.3. Sale Without Recourse; No Warranties. The
Purchaser hereby agrees that the purchase by it of the Loans from the Issuer as provided in Section 3.2 above shall be without any
recourse whatsoever to the Issuer. Upon delivery of the Loans
against payment therefor, sale of the Loans shall be absolute and
final.
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THE ISSUER MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS, IMPLIED OR OTHERWISE, WITH RESPECT TO THE CONDITION OF ANY OF THE PROPERTIES SUBJECT TO THE LOANS, THE ACCURACY OR ENFORCEABILITY OF ANY OF THE DOCUMENTATION EVIDENCING THE LOANS,
THE PAYMENT STATUS OF THE LOANS, THE STATUS OR TRANSFERABILITY OF ANY INSURANCE WITH RESPECT TO THE LOANS, OR ANY OTHER MATTER
RELATED TO OR ARISING FROM THE LOANS.
The Purchaser acknowledges that it is purchasing the Loans hereunder based upon its own review of the Loan documents and certificates of parties other than the Issuer, and the Purchaser is not relying upon any statements of or documentation provided by the Issuer in connection therewith.
Section 3.4. Other Obligations of the Purchaser. In addition to any other obligations of the Purchaser hereunder, the Purchaser hereby undertakes the following obligations:
(A) The Purchaser hereby agrees to work with the Trustee and the Lender to ensure the orderly transfer of Loan documentation from the Trustee and the Lender to the Purchaser on the Closing
Date. From and after the Closing Date and upon the delivery of the
Loans to the Purchaser, all documentation related to the Loans
shall be the sole responsibility of the Purchaser.
(B) On the Purchase Date, the Purchaser shall deliver to the Issuer an opinion of its counsel satisfactory in form and substance to the Issuer , and Special Counsel, as to the enforceability of this Agreement against the Purchaser and as to the matters set forth in Section 2.2 hereof.
(C) On the Purchase Date, the Purchaser shall deliver or
cause to be delivered to the Issuer and the Trustee such
documentation in its possession or control as the Issuer shall
reasonably require to evidence the satisfaction by the Purchaser of
its obligations under Section 5.1 hereof.
(D) The Purchaser shall apply all amounts in impound
accounts with respect to the Loans and shall otherwise service the
Loans in a manner consistent with the notes, the deeds of trust
securing the Loans and applicable law. The Purchaser hereby agrees
to hold the Issuer harmless from any and all liability resulting
from the application of amounts on deposit in such impound accounts
or other servicing of the Loans following the delivery of the Loans
to the Purchaser.
Section 3.5. Other Obligations of the Issuer. In addition to any other obligation of the Issuer hereunder, the Issuer undertakes the following obligations:
(AA) Upon purchase of the Loans by the Purchaser
hereunder, the Issuer shall transfer or cause to be transferred all
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Loan documentation in its possession or control to the Purchaser or its designee. The Issuer agrees to cause the Trustee and the Lender to surrender all Loan files pertaining to the Loans to the
Purchaser.
(BB) If requested by the Purchaser or pursuant to the direction of the Purchaser, the Issuer shall take all action within its power to transfer all interest of the Issuer in, and to make the Purchaser or its designee the vested loss payee of, each title
policy, mortgage guaranty insurance policy, hazard insurance policy and each other insurance policy constituting a portion of any Loan
file, and the Issuer further agrees to resign forthwith any
trusteeship under any deed of trust securing a Loan or to procure
for the Purchaser, if requested and to the extent it is legally
able to do so, the resignation of any person who may be named as
trustee under any such deed of trust.
With respect to Loans in foreclosure on the Closing Date, the Issuer shall take all action within its power as the Purchaser shall reasonably request to recognize Purchaser's interest in such foreclosure proceedings.
The Issuer shall pay or cause to be paid to the Purchaser all payments on Loans received from the Trustee or the Lender on or
after , 1994 representing interest accruing and/or principal to the extent collected on the Loans referred to in Section 3.1 hereon and any moneys collected from any other source, i.e., insurance proceeds, and penalties, fees and late payments collected from mortgagors on the Loans to the extent they are not required to be paid to the Lender or the Trustee as fees or in reimbursement of expenses.
In performing the above-listed obligations, the Issuer
shall act solely pursuant to written instructions of the Purchaser
reasonably acceptable to the Issuer.
Section 4.1. Fees and Expenses.
(A) Whether or not the purchase or sale of the Loans is
consummated as provided herein, the Purchaser shall pay all of its
costs and expenses in connection with the preparation and execution
of this Agreement and any other documents related hereto.
(B) Subject to the sale of the Loans as provided herein, the Issuer shall pay all fees and expenses of Special Counsel in connection with the preparation and execution of this Agreement and the Defeasance of the Indenture in the amount of $30,000, and the
fees of the Financial Advisor in the amount of $ I by
depositing said amounts with the Trustee for transfer to'said
parties.
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If the sale of the Loans is consummated as provided
herein, Issuer shall pay the following expenses:
Cost of recording assignments of
Attorneys fees incurred to the deeds of trust
Purchase Date on any Mortgage Loans in foreclosure Servicing termination fees
Mortgage Pool and/or Primary Insurance Advance
Trustee Fees
Escrow Verification Fees
Foreclosure Fees (to be paid in accordance
Payments
with the Agreement)
Section 5.1. Conditions Precedent. The obligation of the Issuer to sell the Loans to the Purchaser as provided in Section
3.2 hereof shall be subject to the satisfaction of each of the .following conditions on the Closing Date:
(A) The representations and warranties of the Purchaser
in Sections 2.2 and 3.1 hereof shall be true and correct as of the
date of execution hereof and as of the Closing Date, and the Purchaser shall have delivered to Issuer on the Closing Date a
certificate to that effect.
(B) The Issuer shall have received the opinion of counsel to the Purchaser described in Section 3.4(B) hereof.
(C) All actions to be performed hereunder by the
Purchaser prior to the sale of the Loans to the Purchaser hereunder
shall have occurred.
(D) Defeasance shall have occurred.
If any of the foregoing conditions have not been met by
the earlier of the date provided therefor or the Closing Date, the
Issuer shall be under no obligation hereunder, except that the
provisions of Section 4.1 hereof shall be effective in any event.
The Issuer may, in its sole discretion waive any of such
'conditions in whole or in part. In the event that one or more of
the foregoing conditions have not been met (or waived by the
Issuer) as aforesaid, the Purchaser shall promptly return to the Issuer or to the Trustee, as appropriate, any Loan documentation belonging to the Issuer or the Trustee.
The obligation of the Purchaser to purchase the Loans as
provided in Section 3.2 shall be subject to the satisfaction of each of the following conditions on the Closing Date:
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(AA) The representations and warranties of the Issuer in Section 2.1 hereof shall be true and correct as of the date of execution hereof and as of the Closing Date.
(BB) The Purchaser shall have received a certificate of
.the Trustee in substantially the form of Exhibit B hereto.
(CC) The Purchaser shall have received an opinion of
Special Counsel, in substantially the form of Exhibit C hereto.
(DD) All rights of the Lender with respect to servicing of the Loans shall terminate upon the sale of the Loans to the
Purchaser hereunder, subject to compliance with all applicable laws
and regulations pertaining to the transfer of servicing.
(EE) All actions to be performed hereunder by the Issuer prior to the purchase of the Loans by the Purchaser hereunder shall have occurred.
If any of the foregoing conditions have not been met by the earlier of the date provided therefor or the Closing Date, the Purchaser shall be under no obligation hereunder, except that the provisions of Section 4.1 hereof shall be effective in any event.
The Purchaser may, in its sole discretion waive any of such conditions in whole or in part. In the event that one or more of the foregoing conditions have not been met (or waived by the Purchaser) as aforesaid, the Purchaser shall promptly return to the Issuer or to the Trustee, as appropriate, any Loan documentation belonging to the Issuer or the Trustee.
Section 6.1. Purchaser Not Agent of the Issuer. Nothing
in this Agreement shall in any way cause the Purchaser to be an agent of the Issuer for any purpose whatsoever. The Purchaser is
acting hereunder for its own account and not for the benefit of any
other party. All representations,' warranties and covenants of the Issuer hereunder are for the sole and exclusive benefit of the Purchaser, and no other party.shal1 be entitled to rely thereon or derive any rights with respect thereto. No party, other than the Issuer and the Purchaser and their permitted successors and assigns, is intended to be a beneficiary of any provision of'this
Agreement.
If the Purchaser incurs any loss on the resale or
servicing of any Loan upon or after the Closing Date, the Issuer
and the Trustee shall not bear such loss.
Section 7.1. Miscellaneous Provisions.
(A) This .Agreement shall be governed by the laws of the 'State of California.
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(B) This Agreement constitutes the entire agreement of
the parties hereto with respect to the matters described herein;
all previous agreements, both written and oral, with respect
thereto are hereby superseded by this Agreement.
(C) This Agreement may be amended only by written
amendment executed by both parties hereto.
(D) The parties hereto agree that time is of the
essence.
(E) All obligations of any party to this Agreement shall
also be binding upon its successors and assigns.
(F) The several headings and captions contained herein are for ease of reference only and shall in no way define or limit the provisions hereof.
(G) Any notice or instrument required or permitted by this Agreement to be given or delivered shall be effective upon receipt or seventy-two hours following deposit of the same in any
United States Post Office in California, registered or certified
mail, postage prepaid, addressed as follows: ,-
Issuer: City of Carlsbad
1200 Carlsbad Village Drive Carlsbad, California 92008-1981 Attention:
Telephone:
Telecopy:
Purchaser:
Attention:
Telephone:
Telecopy:
Each party may change its address for delivery of notice
by delivering written notice of such change of address to the other
party.
(H) If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
(I) Any and all obligations of the Issuer arising out of
or related to this Agreement are the special and limited
obligations of the Issuer payable only from amounts paid by the
Purchaser hereunder or from other funds of the Issuer derived under
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the Indenture to the extent such may become available. In no event shall the Issuer be obligated to advance. any of its own funds hereunder. No member, officer, employee or agent of the Issuer shall incur any liability hereunder in their individual capacities by reasons of their actions hereunder or execution hereof.
(J) This' Agreement may be executed in counterparts, each
of which shall be deemed an original.
(K) Each party shall take such actions and execute and deliver such further documents and instruments before or after the sale of the Loans hereunder as may be reasonably requested by the other party in order to carry out the purposes of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their respective officers as of the date set forth above.
CITY OF CARLSBAD, as Issuer
ATTEST : By : Name:
Title:
City Clerk
Approved as to form
City Attorney
I as Purchaser
By : Name : Title:
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EXHIBIT A
List of Loans, Principal Balances
and Interest Rates
LOAN
NUMBER
PRINCIPAL '
BALANCE INTEREST RATES ON ALL LOANS
%
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EXHIBIT B
Form of Certificate of Trustee
Bank of America National Trust and Savings Association, as successor in interest, to Security Pacific National Bank, as trustee (the **Trustee*t) under the Indenture (the llIndenture*l) ,
dated as of September 1, 1983 by and between City of Carlsbad ("the
Issuerll) and the Trustee, relating to the $20,000,000 City of
Carlsbad Single Family Residential Mortgage Revenue Bonds, Issue of
1983 (the l*Bondsll), hereby represents, warrants and certifies to the Issuer and I as Purchaser (the *@Purchaser") under that certain Asset Purchase
Agreement, dated as of August 1, 1994, between the Issuer and the
Purchaser, as follows:
1. All of, the mortgage loans originated with the proceeds of the Bonds (the l*Loansll) were acquired by or have been assigned to the undersigned as Trustee.
2. The Trustee makes no representation or warranty as to legal title to or encumbrances upon the Loans, or as to the condition of any of the properties subject to the Loans, the
accuracy or enforceability of any of the documentation evidencing the Loans, the payment status of the Loans, the status or transferability of any insurance with respect to the Loans, or any ,other matter related to or arising from the Loans, other than (a) that the Trustee has not, in its individual capacity, taken any
action which would create a lien senior in right to the deed of trust (each a *IMortgagel1) evidencing each Loan and (b) as otherwise
expressly set forth in this Certificate.
3. Upon compliance with the applicable terms of the
Indenture, the Trustee has full corporate power and authority to
assign the Loans to the Purchaser, provided, however, that the
Trustee makes no representation, warranty or certification as to
the matters referred to in the opinion, of even date herewith, of
Mudge Rose Guthrie Alexander & Ferdon, Special Counsel to the Issuer, addressed to the Issuer, the Purchaser and the Trustee, which opinion the Trustee has relied upon in connection with the
transactions contemplated by the Asset Purchase Agreement.
4. The Trustee has not: modified the outstanding Mortgages or the related Mortgage notes (the "Mortgage Notest1) in any material respect; satisfied, cancelled or subordinated the outstanding Mortgages or Mortgage Notes in whole or part; released the mortgaged property in whole or part from the lien of any outstanding Mortgages; or executed any instrument of release, cancellation, modification or satisfaction with respect to any outstanding Mortgages or Loans unless such release, cancellation,
modification or satisfaction does not adversely affect the value of
the Mortgages and is contained in the related Mortgage file;
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provided, however, that the actions of any institution acting as a
servicer of any Loan shall not be considered actions of the
Trustee.
5. To the best knowledge of the Trustee, all payment of
principal and interest on the Loans received by the Trustee have
been deposited and administered in accordance with the terms of the Indenture, except as disclosed to the'Issuer in writing.
6. The Trustee has been given no actual notice that
there exists under the Indenture an Event of Default, as defined
therein, or a default which, with the giving of notice, the passage of time or both, would become an Event of Default under the Indenture.
7. The Trustee acknowledges receipt from the Issuer of written notice to the effect that the Issuer has sold the Issuer's interest in the Loans to the Purchaser, and directing the Trustee to transfer and deliver to the Purchaser the Loans. The Trustee hereby agrees to effect the delivery of the Loans in accordance
with the Asset Purchase Agreement.
8. The Trustee agrees to provide notice of redemption of the Outstanding Bonds in accordance with the Indenture and to redeem $ principal amount of the Outstanding Bonds on September 1, 1994, representing all of the outstanding principal amount of the Bonds except for one Bond in the amount of
$5,000 with respect to which the Trustee agrees to provide notice of redemption in accordance with the Indenture and to redeem on
September 1, 2017.
9. The Trustee has not received any direction or instructions to direct or authorize the forgiveness of principal or interest with respect to any of the Loans in the Asset Purchase Agreement.
IN WITNESS WHEREOF, the Trustee has caused its authorized and duly appointed officer to execute this Certificate of the Trustee as of the date set forth below.
Dated: , 1994 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
By :
Its:
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EXHIBIT C
Form of Special Counsel Opinion
[Dated the Closing Date]
City of Carlsbad,
1200 Carlsbad Village Drive
Carlsbad, California 92008-1981
as Issuer
I as .Purchaser
Bank of America'National Trust and Savings Association,
Los Angeles, California as Trustee
$20,000,000 City of Carlsbad
Single Family Residential Mortgage Revenue Bonds Issue of 1983
Ladies and Gentlemen:
We have acted as Special Counsel to the City of Carlsbad
(the llIssuerll) with respect to the defeasance of the above-
referenced bonds (the llBondsll), and the sale by the Issuer to - , (the llPurchaserlv) , pursuant to an Asset Purchase Agreement, dated as of August 1, 1994 (the IIAsset Purchase Agreement") , between the Issuer and the Purchaser, of the Loans (as defined in the Asset Purchase Agreement). The Bonds were issued pursuant to an Indenture dated as of September 1, 1983 (as supplemented by the Supplemental Indenture, the llIndenturell) by and between the Issuer and Bank of America National Trust and Savings
Association, as successor in interest to Security Pacific National
Bank, as trustee (the ltTrusteell) .
We are informed that the Issuer desires to amend the Indenture by means of a Supplemental Indenture (the IISupplemental Indenture") dated as of August 1, 1994, by and between the Issuer and the Trustee.
In our capacity as Special Counsel, we have reviewed the
Indenture, the Supplemental Indenture, the .Asset Purchase
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Agreement, the Certificate and Request of the Issuer, dated the
date hereof, relating to the redemption of the Bonds and the
discharge of the lien of the Indenture, and the Trustee's Certificate with respect thereto (the Certificate and Request of the Issuer and the Trustee's Certificate collectively, the "Defeasance Documentstt) , an opinion of counsel to the Purchaser,
certificates of the Issuer, the Purchaser, the Trustee, and such
other documents, opinions, and matters to the extent we deemed
necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or
events are taken or do occur. We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof. We have also assumed that the Issuer and the Trustee will comply with the Defeasance Documents. In addition., we call attention to the fact that the rights and obligations under the Asset Purchase Agreement
and the Indenture are subject to bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium and
other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies in the State of California. We express no opinion. with respect to the state or quality of title to any real or personal
property described in the Asset Purchase Agreement or the
Indenture, including the Loans, or the accuracy or sufficiency of
the description of any such property contained therein.
Based on and subject to the foregoing, and in reliance
thereon, as of the date hereof, we are of the following opinions or
conclusions:
1. The Supplemental Indenture has been entered into in
accordance with the provisions of the Indenture, and the
Supplemental Indenture does not constitute a -violation of any covenant to the Bondholders contained in the Indenture.
2. The Asset Purchase Agreement has been duly executed and delivered by the Issuer and (assuming due execution and delivery by and validity and enforceability against the Purchaser)
is a valid and binding agreement of the Issuer.
3. The lien of the Indenture with respect to the Loans has been discharged in accordance with Section 10.01 of the Indenture and all assets held under the Indenture (except amounts
,LAO1 \6253\16392.3 c-2 - 10238.1
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in the Redemption Fund), including the Loans, may be delivered to
or at the direction of the Issuer free and clear of the lien of the
'Indenture.
4. The sale of the Loans pursuant to the Asset Purchase Agreement is authorized by the terms of the Indenture. Pursuant to the terms of the Indenture and the Loans, discharge of the lien of
the Indenture with respect to the Loans and the redemption of the
Bonds as contemplated in the Asset Purchase Agreement will not
discharge the obligation of mortgagors to make principal and
interest payments with respect to the Loans. Neither the Issuer, the Trustee nor the Purchaser is required, in connection with or as a result of such discharge or the transactions contemplated by the Asset Purchase Agreement, to forgive the indebtedness on the Loans
pursuant to the terms and conditions of the Indenture or the
instruments evidencing the Loans.
5. On , 1983, delivered their
opinion to the effect that, under the statutes, regulations, rulings and court decisions then in existence, the interest on the Bonds was exempt from Federal income taxes and from personal income taxes of the State of California. You have informed us that since the date of its delivery, such opinion has not been withdrawn or
modified.
In order for the interest on the Bonds to remain exempt from Federal income taxation subsequent to the issuance of the Bonds, it is necessary that the provisions of Section 103(b)(4)(A) of the Internal Revenue Code of 1954 prior to amendment by the provisions of the Tax Reform Act of 1986 (the "1954 Codell) be complied with on a continuous basis. We have made no independent investigation as to whether there has been such compliance in the present case and, accordingly, we express no opinion whatsoever as to whether interest on the Bonds is exempt from Federal income
taxation as of the date of this opinion nor do we express any
opinion as to whether interest on the Bonds is presently exempt from State of California personal income taxation.
Furthermore, the Internal Revenue Code of 1986 (the
"Codett) sets forth certain requirements which must be met subsequent to the amendment of the Indenture for interest on the Bonds to be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in gross income
retroactive to the date of amendment of the Indenture. The Issuer
has covenanted in the Indenture to comply with each applicable
requirement of the Code necessary to maintain the exclusion of the
interest on the Bonds from gross income for Federal income tax purposes.
In our opinion, under existing law, and assuming
compliance with the aforementioned covenant, the execution and
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delivery of the Supplemental Indenture will not impair the exclusion from gross income for Federal income tax purposes of the interest on the Bonds. We are further of the opinion that the execution and delivery of the Supplemental Indenture will not cause the Bonds to become "specified private activity bonds" within the meaning of section 57 (a) (5) of the Code and, therefore, that the Supplemental Indenture will not cause the interest on the Bonds to be treated as a preference item for purposes of computing the Federal alternative minimum tax imposed by section 55 of the Code. However, we note that for taxable years beginning after
December 31, 1986, a portion of the interest on Bonds owned by
corporations may be subject to the Federal alternative minimum tax,
which is based in part on adjusted net book income or adjusted
current earnings.
6. The sale of the Loans to the Purchaser by the Issuer
pursuant to the Asset Purchase Agreement will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes.
Thisletter is furnished by us as Special Counsel to the
Issuer. . We disclaim any obligation to update this letter. This
letter is delivered to the addressees, is solely for the benefit of the addressees and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to be relied upon by owners of the Bonds.
Very truly yours,
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EXHIBIT D
Certificate and Request of the Issuer
The City of Carlsbad (the 181ssuertt) hereby requests and
directs that Bank of America National Trust and Savings Association, as successor in interest to Security Pacific National Bank, as trustee (the lgTrusteenl) under the Indenture, dated as of September 1, 1983 (the l@Indenturelt), by and between the Issuer and the Trustee, take the .following actions with respect to the
Indenture, the Bonds issued thereunder (the ttBondsgt) , and the Asset
Purchase Agreement, dated as of August 1, 1994 (the tlAgreementtt),
by and between the Issuer and (the "Purchasertg) :
1. You shall deliver the items set forth in the Asset Purchase Agreement to the Purchaser on the Closing Date, upon your receipt of (i) a fully executed copy of the Asset Purchase
Agreement; (ii) an approving opinion of Special Counsel; and (iii) payment of the Trustee's fees and expenses.
2. You shall cause a notice of redemption of the outstanding Bonds to be given as required by the Indenture and you shall redeem all of the outstanding Bonds on September 1, 1994 except for one Bond in the amount of $5,000 which you shall redeem
on September 1, 2017.
3. The direction of the Issuer set forth in this
Certificate and Request of the Issuer is irrevocable and binding on
the Issuer. No further consents or approvals are required in
connection with the delivery of the Loans to the Purchaser.
4. You shall be entitled to rely upon additional
directions or certificates received fromthe Purchaser which relate to the transfer of the Loans with the full force and effect as if such direction or certificate were included herein.
5. You shall release surplus moneys to the Issuer as
soon as available and you are hereby instructed to pay the fees of Mudge Rose Guthrie Alexander & Ferdon, Special Counsel, in the amount of $30,000 on the Closing Date, and to pay the fees of the
Financial Advisor in an amount of $ on the Closing Date
from moneys released from the lien of the Indenture. The indemnification provisions of Section 8.02 of the Indenture shall
survive the defeasance of the Bonds.
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6. The Issuer has not and will not direct or authorize
the forgiveness of principal or interest with respect to any of the
Loans, nor shall the Issuer direct the redemption of the Bonds on
dates other than as provided in the Asset Purchase Agreement.
7. The Issuer intends to discharge the Indenture and all outstanding Bonds.
8. The Issuer has relied upon the opinions of Special
Counsel and Purchaser's Counsel dated the date hereof and issued in
connection herewith.
Dated:
CITY OF CARLSBAD
By:
Title:
ATTEST :
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EXHIBIT 3
CITY OF’ CARLSBAD
Issuer
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Trustee
SUPPLEMENTAL INDENTURE
Dated as of August 1, 1994
$20,000,000 City of Carlsbad Si.ngle Family Residential Mortgage Revenue Bonds-
Issue of 1983
..
..
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SUPPLEMENTAL INDENTURE
This Supplemental Indenture, dated as of August 1, 1994,
.by 'and between the City of Carlsbad, a public body corporate and
'. politic, duly organized and existing under the Constitution and
laws of the State of California (the *lIssuer*l) and Bank of America
National Trust and Savings Association, as successor in. interest to
Security Pacific National Bank, as trustee (the "Trustee") ;
WITNESSETH
WHEREAS, Section 9.01 (B) (2) of the Trust Indenture, dated
as. of September '1, 1983, by and, between the Issuer and the Trustee,
relating to the $20,000,000 City. of^ Carlsbad Single Family
Residential Mortgage Revenue Bonds, Issue of 1983 (the
"Indenture") ,' provides' that the Indenture and the rights and
obligations of the Issuer and of the Owners of' the Bonds may be modified or amended by a Supplemental Indenture, which -shall become effective upon execution (or such later date as may be specified in such Supplemental Indenture), without the consent of any Owners, but only to the extent permitted by law and only for any one or more of the purposes listed in Section 9.01(B), including to make such provisions for the .purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective- provision, contained in the Indenture, or in regard to matters or questions arising under the Indenture, as the Issuer 'may deem
necessary or desirable, and not inconsistent with the. .Indenture,
and which shall not materially adversely affect the Interests of
the Owners of the Bonds; and
WHEREAS, the stated intent of the Indenture is to provide . for forgiveness of any indebtedness on the Loans only to the extent that such forgiveness is required by Section 103 (a) (i) of the Code;
and
WHEREAS, the Indenture makes no provision for the ,sale of
the Loans in connection with a redemption of all Bonds pursuant to Section 4.01 of the .Indenture; and
WHEREAS,. certain other of the provisions of the Indenture
are ambiguous and inconsistent in regard to matters or questions
arising under the Indenture;
WHEREAS, the Issuer deems it necessary and desirable to- amend the Indenture to correct certain ambiguities and inconsistencies and to clarify that the Loans shall be forgiven only to the extent required by the Code; and
WHEREAS, Section -11.03 of the 1ndenture.provides that the rights and benefits of the Indenture are for the sole and exclusive benefit of the Issuer, the Trustee and the Owners of the Bonds;
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NOW, THEREFORE, the parties to this Supplemental.
Indenture agree as follows:
Section 1.. Tax Covenants. Section 6.08 (E) of the
Indenture is hereby amended to read, in its entirety, as follows:
(E): It is the intention of the Issuer that the Mortgagors be indebted by reason of their respective Loans to the full extent allowed by the Code.
Accordingly, upon the redemption of the last Outstanding
Bond, and after paying to the Issuer an amount equal to
the future value from the date of issuance of the Bonds
to the date of such redemption (calculated on the basis
of semiannual compounding at an interest rate equal to
the Yield on the Bonds) of $350,000, ,or any greater
amount that may be permitted. by the Code, the Trustee
shall forgive any and all indebtedness of principal and
interest, due and payable subsequent to such redemption,
on the Loans which are then held by the Trustee for the
benefit of the Program. The Trustee is hereby authorized and directed to exe'cute any and all documents necessary to effect such discharge of indebtedness. For the purposes of making the aforesaid payment to the Issuer, the Trustee shall accumulate all Revenues in the Revenue
Fund, any provisions herein to the contrary notwithstanding, and shall pay to the ,Issuer such funds
only at the time such ac'cumulated Revenues equal the
amount so payable.. Should accumulated Revenues be
insufficient at the time the Loans are paid off in full,
the Issuer shall be entitled only .to the amount
accumulated to the date such Loans are paid in full;
provided, however, that the 1ssuer.may waive any or all of its' rights to receive the amount so accumulated to such date of waiver. The Trustee shall be entitled to
1 charge against such Revenues on a semiannual basis .its
reasonable fee for such services..
..
Section '2. Proaram Covenants. Section 6.10 (D) of the
,Indenture is hereby amended to read, in its entirety, as follows:
.(D) No Loan shall be sold, assigned. or otherwise
disposed of by the Issuer or the Trustee, except (1)
pursuant to a covenant to repurchase contained in the
appropriate Developer Agreement or' Agreement or (2) in
connection with any action or proceedings taken in the event of default on any Loan or (3) in connection with
the redemption of all or' part. of. the Bonds pursuant to Section, 4 . 01 of the Indenture. Subject to the provisions of this subsection, any Loan may be sold, assigned or otherwise disposed bf, and such Loan shall be released
from the, assignment made by this Indenture and the Issuer
and the Trustee shall take all. necessary action and
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execute and deliver all necessary instruments to confirm
any such sale, assignment or disposition and to vest
title to the Loan in the purchaser, assignee or other
recipient thereof.
Section 3. Effective Date. This Supplemental Indenture
shall become effective upon execution.
Section 4. Execution in CounterDarts. This Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and
the same iqstrument.
Section 5. Amlicabie Law., This Supplemental Indenture ' ' shall be governed by and construed-in accordance with the laws of
the State of California..
Section 6.' Indenture to Remain in Effect. Except as
provided in this Supplemental Indenture,.,the Indenture shall remain in full force and effect.
Section 7. Capitalized' Terms. Capitalized terms used
and not defined herein shall have the meanings ascribed.to them in the Indenture. ..
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IN WITNESS WHEREOF, the parties’hereto have caused this .
Supplemental Indenture to be executed and attested by their proper
officers thereunto duly. authorized, as of the day and year first
above written.
,. eITY OF CARLSBAD,
as Issuer
ATTEST:
By:
Name:
Title:
Dated:
City Clerk
BANK OF AMERICA NATIONAL TRUST
as Trustee .. AND SAVINGS.ASSOCIATION,
By:
Name:
Title:
Dated:
..
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- City of Carlsbad
CITY OF CARLSBAD .
REDEMPTION OF BOND ISSUE
1983 SINGLE FAMILY MORTGAGE REVENUE BONDS ..
I, Raymond R. Patchett, City Manager,. pursuant to the-authority invested in me
under Resolution No. 94-251 of the City Council of the City of Carlsbad, California, do
. . hereby designate^ James F. Elliott, Financial Management Director, to execute and
deliver, .in my absence, any and all :necessary documents related to the redemption of ~
the outstanding 1983 Single Family Mortgage Revenue Bonds as further described in
Resolution No. 94-251.
\
b City .Minager
I.
I,
1200 Carlsbad Village Drive - Carlsbad, California 92008-1 989 - (61 9) 434-2821
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. 0 PAR MARKETING, INCORPORATED
Secondary Marketing
EXHIBIT 5 '
August 15, 1994
' ,Ms. Lisa Hildabrand, Finance Director
City Of Carlsbad Redevelopment Agency
1200 Carlsbad Village Drive ,.
Carlsbad, CA 92008
cl h mi+ AI.IC 1.9911 (3.1
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RE: City of Carlsbad, CA Redevelopment Issue, Series of 1983
Dear Ms. Hildabrand:
We are pleased to submit the following proposal as financial advisor for the sale of the
residual assets of the above-referenced'issue. PAR Marketing, Inc. would be pleased to serve this
lunclion in connection with this matter and proposes to perform the following services on the basis
. set forth in this letter.
PAR Marketing, Inc. will consult with the city's staff, with the Special Counsel, with the trustce bank and [he purchaser on all matters relating to the above-referenced matter.
PAR Marketing, Tnc. will collect and distribute the pertinent documents to attract the
highest bid for the City of Carlsbad. This endeavor will include copying loan files, the servicing
agreement,, the official statement, the trust indenture, pay histories and other relevant data that the
potential purchaser would need in order to bid the outstanding mortgages to ultimately become the
owner and servicer of the issue.
Our services will include scheduling the sale, selecting the highest bid from the 6 (six)
principle bidders and scheduling the closing date that co-ordinates with the city's schedule.
PAR Marketing, Inc., will be responsible for the tiustee's efforts in calling the bonds and randomly selecting one bond to be held until its' stated maturity. We will assist the trustee in
acquiring the United States Treasury Bonds that will collateralize the outstanding bond. We will
also be responsible for that collaterals' independent authentication.
Par Marketing, Inc., will schedule the events that permit the signing of the resolution, the
actual sale of the assets, the selection of the purchaser, the closing, the transfer of mortgages to the
purchaser, the calculation of accrued interest and fees to be paid, the transfer of the surplus to the city, the notification of the call and the actual redemption of the bonds, the escrow for the
collateralized outstanding bond and the delivery of the governments that secure that one bond.
The fee for the foregoing services with respect of the sale of the residual assets will be
$30,000. Such fees shall be payable from moneys received by the City from the purchasers of the residualassets. In the event that the residual assets are not sold, the city shall not be liable for any services provided or costs incurred by Par Marketing, Inc.
' TELEPHONE 310/545-0048 MOBILE 310/990-3948 FAX 310/545-4849
232 28th Street Manhattan Beach, CA 90266
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Ms. Lisa Hildabrand
August.,l5, 1994 Page 2 , ,
If this agreement is satisfactory to you, please return to us a copy of this letter executed by as authorized officer.of the City
Sincerely, . ~,.Q($J&L~~
R. G. (Jerry) Parham, Jr. President, PAR'Marketing, Inc.
RpJli ' ' '
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Attach ents (3)
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0, EXHIBIT.4
MUDGE ROSE GUTHNE ALEXANDER & FERDON
2 IST FLOOR, 333 SOUTH GRAND AVENUE
LOS ANGELES. CA 9007 1-1525
213-613-1 I12
FACSIMILE 2 13-680-1 350
LOS ANG-ELES
NEW YORK
PARIS
c
August 2, 1994
Ms. Lisa Hildabrand Finance Director City of Carlsbad
Finance Department
1200 Carlsbad Village Drive Carlsbad, California i 92008-1981
PARSIPPANY
TOKYO
WASHINGTON, D.C.
WEST PALM BEACH
,Re: Proposal r for Special Counsel Services for the City of Carlsbad Sale of Residual Assets in Connection With the City'of Carlsbad Single Family Residential Mortgage Revenue Bonds, Issue. of 1983
Dear Ms. Hildabrand :
We are pleased to submit the following proposal 'for
special counsel services in connection with the sale by the City of Carlsbad (the ttCitygt) of the residual assets (the IIResidual . . Assets.!) held pursuant to the Trust Indenture dated as. of September
1, 198'3 by and between the City and Bank of America National Trust
And Savings Association, as successor in interest to Security
Pacific National Bank, as Trustee, in connection with the' City of
Carlsbad Single Family Residential Mortgage Revenue Bonds, Issue of
1983. The firm of Mudge Rose Guthrie Alexander. & Ferdon, Los
Angeles, California would be pleased to serve as special counsel in
connection with this matter and proposes to perform the following
services on the basis set forth in this letter.
We will confer and consult with the City's staff and
Financial Advisor and purchasers of the Residual Assets on all matters relating to the above-referenced matter.
Our services will include the preparation of all
connection. with the sale of the Residual Assets. ,We will also
review any documents prepared by the purchasers on behalf of the City and, at your request, attend all meetings'in which any action
'agreements, resolutions, notices, and other documents required in . .
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Ms. Lisa Hildabrand August 2, 1994 Page. 2
in connection with the proceedings 'is to be taken.
Subject to completion of the financing to our satisfaction, Mudge Rose.Guthrie Alexander & Ferdon will issue its approving legal opinion to the purchasers of the Residual Assets .to the effect that all proceedings have been .legally undertaken for the authorization and sale of the Residual Assets, and that the
Sale of the Residual Assets will not' adversely affect the exclusion
of the 'interest on the Bond's from gross income for Federal and State income tax purposes. We will.issue appropriate supplemental opinions and certificates as may be necessary or'appropriate.
The fee' for the foregoing legal services with respect to the sale of the Residual Assets will be $30,000, including out of pocket expenses and disbursements. Such fees shall be payable from moneys received by the City from the purchasers of the Residual Assets. In the event that the Residual Assets are not sold, the City shall not.be liable for any legal services provided or costs incurred by the firm.
If this arr'angement is satisfactory to you, please return to us a copy of this letter executed. by an authorized officer of the City. L
Respectfully submitted,
MUDGE ROSE GUTHRIE ALEXANDER & FERDON
By: / "3 - -?5*7 fo / "."
,c 4:. TJ.4.. ,
Donald L. 'Hunt, Partner
TERMS OF SPECIAL COUNSEL EMPLOYMENT
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