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ESCROW AGREEMENT
by and between the
CITY OF SANTA ANA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
Dated as of _________, 2024
Santa Ana Financing Authority
Water Revenue Bonds, Series 2014
(Payable Solely from Installment Payments
Secured by Water System Net Revenues)
EXHIBIT 4
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1 ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this “Escrow Agreement”), executed and entered into as of August 1, 2014, is by and between the CITY OF SANTA ANA (the “City”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as escrow agent (the “Escrow Agent”).
WITNESSETH:
WHEREAS, there are currently outstanding Santa Ana Financing Authority Water Revenue Refunding Bonds, Series 2014 (Payable Solely from Installment Payments Secured by Water System Net Revenues) (the “Prior Bonds”), in the original aggregate principal amount of $15,690,000;
WHEREAS, the Prior Bonds were issued under the Indenture, dated as of August 1, 2014 (as supplemented and amended, the “Prior Indenture”), by and between The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), and the Authority; WHEREAS, the Prior Bonds are payable from component installment payments (the “2014 Installment Payments”) payable by the City under the Master Installment Purchase Agreement, dated as of August 1, 2014 (the “Master Installment Purchase Agreement”), between the City and the Authority, and the First Supplement to Master Installment Purchase Agreement, dated as of August 1, 2014, between the City and the Authority (the “Prior Supplement” and together with the Master Installment Purchase Agreement, the “Prior Installment P urchase Agreement”) and pertaining to the City’s water system;
WHEREAS, the Escrow Agent is the trustee under the Prior Indenture; WHEREAS, the City has determined that a savings will be realized by exercising its option under the Prior Installment Purchase Agreement to prepay said component installment payments, thereby providing the funds necessary to pay, when due, the principal of and interest on the Prior Bonds to and including September 1, 2024 and to redeem the Prior Bonds on September 1, 2024 (the “Redemption Date”) at a redemption price (the “Redemption Price”) equal to ___% of the principal amount of the Prior Bonds plus the accrued but unpaid interest on the Prior Bonds, to the Redemption Date;
WHEREAS, in order to provide the funds necessary to exercise said option, the Authority has issued $________ aggregate principal amount of Water Revenue Bonds, Series 2024 (Payable Solely from Installment Payments Secured by Water System Net Revenues) (the “Bonds”) pursuant to the Indenture, dated as of ____________, 2024 (the “Indenture”), by and between the Trustee and the Authority;
WHEREAS, the Prior Bonds are subject to redemption on the Redemption Date and the City has determined to provide for the call for redemption on the Redemption Date of the Prior Bonds outstanding on the Redemption Date;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the City and the Escrow Agent agree as follows:
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2 Section 1. Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Prior Indenture or, if no meanings are ascribed thereto in the Prior Indenture, such terms shall have the meanings ascribed thereto in the Prior Installment Purchase Agreement.
Section 2. The Escrow Fund . (a) There is hereby established a fund (the “Escrow Fund”) to be held as an irrevocably pledged escrow by the Escrow Agent, which the Escrow Agent shall keep separate and apart from all other funds of the City and the Escrow Agent and to be applied solely as provided in this Escrow Agreement.
Pending application as provided in this Escrow Agreement, amounts on deposit in the Escrow Fund are hereby pledged and assigned solely to the payment of (i) the principal of and interest on the Prior Bonds coming due on and prior to the Redemption Date, and (ii) the Redemption Price on the Redemption Date, which amounts shall be held in trust by the Escrow Agent for the Owners of the Prior Bonds.
(b) Upon the execution and delivery of the Bonds, the Escrow Agent is hereby directed to deposit in the Escrow Fund $___________ received from the proceeds of the sale of the Bonds as provided in Section 5.02 of the Indenture, and to transfer $____________ from the funds and accounts under the Prior Indenture to the Escrow Fund. (c) Upon the deposit of moneys pursuant to Section 2(b), the moneys on deposit in the Escrow Fund will be at least equal to an amount sufficient to purchase the aggregate principal amount of defeasance securities permitted by Section 12.01 of the Prior Indenture (“ Defeasance Securities”) set forth in Exhibit A hereto (the “Exhibit A Securities”), which principal, together with all interest due or to become due on such Exhibit A Securities, and any uninvested cash held by the Escrow Agent in the Escrow Fund, will be sufficient to make the payments required by Section 4 hereof.
Section 3. Investment of Moneys . The Escrow Agent shall not invest the moneys deposited in the Escrow Fund and such sum shall be held as cash in the Escrow Fund. The report of the Verification Agent stating that the moneys deposited into the Escrow Fund are calculated to be in an amount sufficient to pay the principal, redemption premium and interest on the Refunded Bonds and to redeem the Refunded Bonds on September 1, 2024. The Escrow Agent shall hold all such moneys in the Escrow Fund, and shall apply the same only for the purposes and in the manner provided in this Escrow Agreement.
Section 4. Payment of Prior Bonds. From the maturing principal of the Defeasance Securities held in the Escrow Fund and the investment income and other earnings thereon and any uninvested money then held in the Escrow Fund, the Escrow Agent shall apply such amounts, as follows:
(a) On each interest payment date for the Prior Bonds to and including the Redemption Date, the Escrow Agent shall pay interest on the Prior Bonds in accordance with the terms of the Prior Indenture.
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3 (b) On each principal payment date for the Prior Bonds to and including the Redemption Date, the Escrow Agent shall pay the principal of the Prior Bonds in accordance with the terms of the Prior Indenture.
(c) On the Redemption Date, the Escrow Agent shall pay the Redemption Price in accordance with the terms of the Prior Indenture.
To the extent that the amount on deposit in the Escrow Fund on the Redemption Date is in excess of the amount necessary to make the required payments with respect to the Prior Bonds, as shown in the then applicable escrow verification of the nationally recognized firm of independent certified public accountants, such excess shall be transferred to the Trustee for deposit in the Interest Account established under the Indenture.
Section 5. Irrevocable Instructions to Mail Notices . The City hereby irrevocably designates the Prior Bonds for prior redemption on the Redemption Date as indicated in Section 4 hereof and hereby irrevocably instructs the Escrow Agent to give, in accordance with Section 3.02 of the Prior Indenture, mailed notice of redemption of the Prior Bonds.
Section 6. Performance of Duties . The Escrow Agent agrees to perform the duties set forth herein and agree s that the irrevocable instructions to the Escrow Agent herein provided are in a form satisfactory to it.
Section 7. Escrow Agent’s Authority to Make Investments . The Escrow Agent shall have no power or duty to invest any funds held under this Escrow Agreement except as provided in Section 3 hereof. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of the moneys held hereunder except as provided in this Escrow Agreement.
Section 8. Indemnity. To the extent permitted by law, the City hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees and servants, from and aga inst any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees, expenses and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at any time (whether or not also indemnified against the same by the City or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out of the execution, delivery and performance of this Escrow Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of any securities to be purchased pursuant thereto, the retention of such se curities or the proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow Agent in accordance with the provisions of this Escrow Agreement; provided, however, that the City shall not be required to indemnify the Escrow Agent against the Escrow Agent’s own negligence or willful misconduct or the negligence or willful misconduct of the Escrow Agent’s respective successors, assigns, agents and employees or the material breach by the Escrow Agent of the terms of this Escrow Agreement. In no event shall the City or the Escrow Agent be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section.
The indemnities contained in this Section shall survive the termination of this Escrow Agreement. 55394.00068\42304978.2
4 Section 9. Responsibilities of Escrow Agent . The Escrow Agent and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract, or otherwise, in connection with the execution and delivery of this Escrow Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or any securities deposited therein, the purchase of the securities to be purchased pursuant hereto, the retention of such securities or the proceeds thereof, the sufficiency of the securities or any uninvested moneys held hereunder to accomplish the redemption of the Prior Bonds, or any payment, transfer or other application of moneys or securities by the Escrow Agent in accordance with the provisions of this Escrow Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent made in good faith in the conduct of its duties. The recitals of fact contained in the “Whereas” clauses herein shall be taken as the statements of the City, and the Escrow Agent assumes no responsibility for the correctness thereof The Escrow Agent makes no representation as to the sufficiency of the securities to be purchased pursuant hereto and any uninvested moneys to accomplish the redemption of the Prior Bonds pursuant to the Prior Indenture or to the validity of this Escrow Agreement as to the City and, except as otherwise provided herein, the Escrow Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in connection with the performance of its duties under this Escrow Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent shall be determined by the express provisions of this Escrow Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the City, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection in respect of any act ion taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Agreement, such matter (except the matters set forth herein as specifically requiring a certificate of a nationally recognized firm of independent certified public accountants or an opinion of counsel of recognized standing in the field of law relating to municipal bonds) may be deemed to be conclusively established by a written certification of the City. Whenever the Escrow Agent shall deem it necessary or desirable that a matter specifically requiring a certificate of a nationally recognized film of independent certified public accountants or an opinion of counsel of recognized standing in the field of law relating to municipal bonds be proved or established prior to taking, suffering, or omitting any such action, such matter may be established only by a certificate signed by a nationally recognized film of certified public accountants or such opinion of counsel of recognized standing in the field of law relating to municipal bonds.
No provision of this Escrow Agreement shall require the Escrow Agent to expend or ri sk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers.
If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public Debt will not, for any reason, accept a subscription of Securities that is to be submitted pursuant to this Escrow Agreement, the Escrow Agent shall promptly request alternative written investment instructions from the City with respect to escrowed funds which were to be invested in securities.
The Escrow Agent shall follow such instructions and, upon the maturity of any such alternative investment, the Escrow Agent shal l hold funds uninvested and without liability for interest until receipt of further written instructions from the City. In the absence of investment instructions from the City, the Escrow Agent shall not be responsible for the investment of such funds or interest 55394.00068\42304978.2
5 thereon. The Escrow Agent may conclusively rely upon the City’s selection of an alternative investment as a determination of the alternative investment's legality and suitability and shall not be liable for any losses related to the alternative i nvestments or for compliance with any yield restriction applicable thereto.
Section 10. Amendments. The City and the Escrow Agent may (but only with the consent of the Owners of all of the Prior Bonds and the Bond Insurer, if any, for the Prior Bonds) amend this Escrow Agreement or enter into agreements supplemental to this Escrow Agreement.
Section 11. Term. This Escrow Agreement shall commence upon its execution and delivery and shall terminate on the date upon which the Prior Bonds have been paid in accordance with this Escrow Agreement.
Section 12. Compensation. The City shall from time to time pay or cause to be paid to the Escrow Agent the agreed upon compensation for its services to be rendered hereunder, and reimburse the Escrow Agent for all of its reasonable advances in the exercise and performance of its duties hereunder; provided, however, that under no circumstances shall the Escrow Agent be entitled to any lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services rendered or expenses incurred by the Escrow Agent under this Escrow Agreement or otherwise.
Section 13. Severability. if any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the City or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement.
Section 14. Counterparts. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original but all of which shall constitute and be but one and the same instrument.
Section 15. Governing Law . This Escrow Agreement shall be construed under the laws of the State of California.
(Signature page follows)
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S-1
IN WITNESS WHEREOF, the parties hereto have executed and attested this Escrow Agreement by their officers thereunto duly authorized as of the day and year first written above.
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., AS ESCROW
AGENT
By:
Authorized Officer
ATTEST:
Secretary
APPROVED AS TO FORM:
Authority Counsel
CITY OF SANTA ANA
By:
City Manager
ATTEST:
Clerk of the Council
APPROVED AS TO FORM:
City Attorney
-Signature Page-
Escrow Agreement