HomeMy WebLinkAboutCC Item No. 5CITY OF
LADE k LSINORT
DREAM EXTREME.
CITY OF LAKE ELSINORE
JOINT REPORT TO CITY COUNCIL, REDEVELOPMENT AGENCY,
AND PUBLIC FINANCING AUTHORITY
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
HONORABLE CHAIRWOMAN AND MEMBERS OF THE
REDEVELOPMENT AGENCY
HONORABLE CHAIRMAN AND MEMBERS OF THE PUBLIC
FINANCING
FROM: ROBERT A. BRADY
CITY MANAGER/EXECUTIVE DIRECTOR
DATE: JANUARY 25, 2011
SUBJECT: 1. PUBLIC HEARING RESOLUTIONS APPROVING THE
ISSUANCE OF LAKE ELSINORE PUBLIC FINANCING AUTHORITY
TAX ALLOCATION REVENUE BONDS (LAUNCH RAMP PROJECT),
2011 SERIES A, IN THE AGGREGATE PRINCIPAL AMOUNT NOT
TO EXCEED $6,000,000; APPROVING A BOND PURCHASE
CONTRACT, A PROJECT AREA NO. I LOAN AGREEMENT, A
CONTINUING DISCLOSURE AGREEMENT AND A PRELIMINARY
OFFICIAL STATEMENT; AND AUTHORIZING THE TAKING OF
CERTAIN OTHER ACTIONS RELATED THERETO;
2. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAKE ELSINORE, CALIFORNIA, MAKING FINDINGS
PURSUANT TO HEALTH AND SAFETY CODE SECTION
33445.1 RELATING TO PAYMENT OF ALL OR PART OF THE
COSTS OF THE BOAT LAUNCH PROJECT;
3. RESOLUTION OF THE REDEVELOPMENT AGENCY OF
THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,
CALIFORNIA, APPROVING THE FUNDING OF THE BOAT
LAUNCH PROJECT
AGENDA ITEM NO. 5
Page 1 of 142
Resolutions Re Bonds and Boat Launch Project Funding
January 25, 2011
Page 2
Background
The Lake is the centerpiece of the City's recreational resources and a valuable
contributor to the vitality and economic development of the community. Safe and
reliable access to the Lake is essential to maximizing its resource value.
The existing boat launch facility is in a dilapidated physical condition and provides
limited access to the Lake. The boat launch is currently under water and can be utilized
only when the Lake is at an elevation of approximately 1240-feet mean sea level (MSL)
which is below the optimal Lake level. The City has received a $3 million grant from the
State of California for the purpose of constructing a modern boat launch and related
ancillary facilities to be located at the City Campground (the "Boat Launch Project").
The Boat Launch Project will result in a usable launch up to elevation 1255 MSL, the
maximum normal level of the Lake.
The general items of work to be performed include dredging, earthwork, grading,
electrical, plumbing, AC & concrete pavement, stormwater drainage, landscaping, dock
pilings and compliance with environmental permit conditions for constructing the
following improvements:
• Demolition of old boat launch facility;
• Six lane boat launch ramp, with boat staging area;
• Vehicle and boat trailer parking lot with 270 spaces;
• Restroom facility with eight stalls;
• Entry kiosk;
• Two 400-foot long floating breakwater/dock system with anchor guide piles;
• Landscaped picnic area with lighting, and
• Fish Cleaning Station.
In order for the Boat Launch Project to move forward and utilize the State's grant,
additional funding is necessary.
Discussion
All of the Lake edge is within a redevelopment project area and improvements to and
around the Lake, including the proposed Boat Launch Project with greater access to the
Lake promotes both recreational and economic development opportunities benefitting
the project areas and the community as a whole.
The City's/Agency's Finance Team has been studying for several months the potential
sources for funding construction of the Boat Launch Project. Redevelopment Project
Area No. 1 has sufficient tax increment revenues available to pay debt service on
bonds, the proceeds of which can be used to assist in the funding of the Boat Launch
Project. Additional or alternative funding sources are simply not available.
Page 2 of 142
Resolutions Re Bonds and Boat Launch Project Funding
January 25, 2011
Page 3
The Boat Launch Project is consistent with and in furtherance of the goals and
objectives of the Amended and Restated Redevelopment Plan for the Rancho Laguna
Redevelopment Project Area No. 1 (the "Redevelopment Plan") and the Agency's
Redevelopment and Housing Implementation Plan for 2009-2014 (the "Implementation
Plan"). These include the elimination of blighting by providing for the planning,
development, re-planning, redesign, redevelopment, reconstruction and rehabilitation of
public improvements and facilities that are currently stagnant, improperly utilized and/or
inadequately served as may be appropriate or necessary in the interest of the general
welfare.
Consistent with the structure of recent bonds issuances, the proposed Bonds would be
issued by the Public Finance Authority and the proceeds then loaned to the
Redevelopment Agency. The Redevelopment Agency will then, in keeping with its
commitment to eliminate blight and assist in the economic redevelopment of Project
Area No. 1, contribute the net bond proceeds to the Boat Launch Project. The Agency
will pledge tax increment revenues from Project Area No. 1 in order to meet debt
service payments for the next 10 years.
The Bonds will be sized in an amount necessary to complete the funding of the Boat
Launch Project. Because of the uncertainty of interest rates, it is recommended that the
City and Agency authorize the issuance of the Bonds in an amount not to exceed
$6,000,000. This higher par amount allows for some flexibility in the final pricing of the
bonds.
Documents To Be Approved
Approval of the attached Resolutions will authorize the execution of the following
documents:
1. Indenture of Trust
2. Loan Agreements
3. Preliminary Official Statement
4. Continuing Disclosure
5. Bond Purchase Contract.
In addition to the Bond approval, Health and Safety Code Section 33445.1 requires that
the City make certain findings before the Redevelopment Agency commits funding for
public improvement projects. Those findings include:
1. The development of the Boat Launch Project is of primary benefit to the Project
Area.
2. The construction of the Boat Launch Project will help to eliminate blight in the
Project Area.
3. There are no other reasonable means of financing the Boat Launch Project
available to the community.
Page 3 of 142
Resolutions Re Bonds and Boat Launch Project Funding
January 25, 2011
Page 4
4. The payment of redevelopment funds is consistent with the Agency's
Redevelopment and Housing Implementation Plan for 2009-2014 adopted
pursuant to Health and Safety Code Section 33490.
5. The construction of recreational and replacement facilities like the Boat Launch
Project is provided for in the Redevelopment Plan.
A City resolution containing these findings is attached for the City Council's
consideration.
Finally, the Redevelopment Agency is obligated to make findings that assisting in the
funding of the Boat Launch Project will:
1. Assist in the elimination of blight
2. Effectuate the purposes of the Redevelopment Plan
3. Comply with the Agency's Redevelopment and Housing Implementation Plan for
2009-2014
An Agency resolution containing these findings is attached for the Agency Board's
consideration.
Fiscal Impact
The authorization will result in additional bonded indebtedness to the Redevelopment
Agency in an amount not to exceed $6,000,000.
Public Notice Process
The item has been noticed by way of a published notice of public hearing and through
the regular Agenda notification process.
Legal Review
Bond Counsel has reviewed the related financing documents and approved them as to
form.
Recommendation
City: Adopt City Resolution No. 2011-_ authorizing issuance of bonds and authorize
bond documents; and
Adopt City Resolution No. 2011-_ Making Findings Pursuant to Health and
Safety Code Section 33445.1.
Page 4 of 142
Resolutions Re Bonds and Boat Launch Project Funding
January 25, 2011
Page 5
RDA Adopt Agency Resolution No. 2011-_ authorizing issuance of bonds and
authorize bond documents; and
Adopt Agency Resolution No. 2011-_ authorizing the funding of the Boat
Launch Project.
PFA Adopt PFA Resolution No. 2011-_ authorizing issuance of bonds and authorize
bond documents.
Prepared by: James R. Rile
Director of Admi rative Services
Barbara Leibold
City Attorney/Agency General Counsel
Approved by: Robert A. Brady
City Manager/Executive Director
Page 5 of 142
RESOLUTION NO. 2011-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE
ELSINORE, CALIFORNIA, MAKING FINDINGS PURSUANT TO
HEALTH AND SAFETY CODE SECTION 33445.1 RELATING TO
PAYMENT OF ALL OR PART OF THE COSTS OF THE BOAT LAUNCH
PROJECT
WHEREAS, the Redevelopment Agency of the City of Lake Elsinore(the
"Agency"), a public body, corporate and politic, established pursuant to and existing
under the California Community Redevelopment Law (the "CRL"; Health and Safety
Code Section 33000 et seq.), was created by the City Council of the City of Lake
Elsinore (the "City"); and
WHEREAS, the Agency is undertaking activities necessary for the
implementation of the Redevelopment Plan (the "Redevelopment Plan") for the Lake
Elsinore Rancho Laguna Redevelopment Project Area No. I ("Project Area") approved
and adopted by the City Council of the City of Lake Elsinore (the "City Council"), by
Ordinance No. 607 and subsequently amended by Ordinance No. 624, Ordinance No.
987, Ordinance No. 1249 and Ordinance No. 1260; and
WHEREAS, the City desires to fund certain boat launch improvements at the
Lake Elsinore Campground located at 32040 Riverside Drive, Lake Elsinore (the
"Property") for purposes of constructing a modern boat launch facility and ancillary
improvements to serve boaters and other recreational uses utilizing Lake Elsinore along
with the surrounding beaches, parks and campgrounds (the "Boat Launch Project"); and
WHEREAS, the Property's existing boat launch was constructed approximately
40 years ago and is characterized by deteriorating and uneven surface materials,
potholes and slippery embankment areas; and
WHEREAS, the Property's existing boat launch is only usable in limited
circumstances when the Lake's elevation is below 1240-feet mean sea level (MSL)
whereas the Boat Launch Project will result in a usable launch up to elevation 1255
MSL, the maximum normal level of the Lake; and
WHEREAS, Lake Elsinore has been widely characterized as the community's
economic engine, attracting thousands of visitors each year to the largest natural
freshwater lake in Southern California. Because most boaters own vessels that are less
than 26-feet in length, Lake Elsinore is ideally suited to serve their needs, particularly as
regional drinking water reservoirs like Lake Perris and Diamond Valley become
increasingly restrictive to boaters; and
WHEREAS, CRL Section 33445.1 states that the Agency may, with the consent
of the City Council, pay all or a part of the value for construction of any building, facility
or structure, or other improvement which is publicly owned and is located outside and
Page 6 of 142
not contiguous to the Project Area, but is located within the community, if the City
Council makes certain findings; and
WHEREAS, the Property is located outside of the Project Area and the
development of the Boat Launch Project will to serve to expand and enhance the
public's recreational use of Lake Elsinore along with the public beaches, parks and
campgrounds consistent with the Redevelopment Plan and will aid in the elimination of
blight in Project Area; and
WHEREAS, the City Council and the Agency considered funding for the
proposed Boat Launch Project by the Agency at the regularly scheduled City Council
and Agency meeting on January 25, 2011.
THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA,
DOES HEREBY RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
SECTION 1. Based on the information presented in the staff report and at the
public hearing, the City Council hereby finds and determines that:
(1) The construction of the Boat Launch Project will be publically owned and is
of primary benefit to the Project Area;
(2) The construction of the Boat Launch Project will benefit the Project Area by
helping to eliminate blight within the Project Area; and
(3) No other reasonable means of financing the construction of the Boat Launch
Project is available to the community, including, but not limited to, general obligation
bonds, revenue bonds, special assessment bonds, or bonds issued pursuant to the
Mello-Roos Community Facilities Act of 1982. In determining whether other means of
financing are feasible, the City Council has taken into account the following relevant
factors, including:
(A) Legal factors, such as the eligibility of the improvements for funding
under the governing statutes;
(B) Economic factors, such as prevailing interest rates and market
conditions; and
(C) Political factors, such as the priority of commitments of other public
funding sources, the ability or willingness of property owners or taxpayers
to bear the cost of any special assessments, taxes, or other charges, and
the likelihood of obtaining voter approval, if required.
(4) The payment of funds for the cost of the Boat Launch Project is consistent
with the Agency's Implementation Plan for 2009-2014; and
Page 7 of 142
(5) The provision for park/recreation facilities and replacement facilities is
provided for in the Redevelopment Plan.
SECTION 3. The Acting City Clerk shall certify to the passage and adoption of
this resolution and the same shall thereupon take effect and be in force.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council
of the City of Lake Elsinore, California, this 25th day of January, 2011.
AMY BHUTTA, MAYOR
CITY OF LAKE ELSINORE
ATTEST:
ROBERT BRADY, CITY MANAGER
ACTING CITY CLERK
APPROVED AS TO FORM:
BARBARA LEIBOLD, CITY ATTORNEY
Page 8 of 142
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE }SS
I, ROBERT BRADY, Acting City Clerk of the City of Lake Elsinore, California,
hereby certify that Resolution No. 2011- _ was adopted by the City Council of the City
of Lake Elsinore, California, at a regular meeting held on the 25th day of January 2011,
and that the same was adopted by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ROBERT BRADY
ACTING CITY CLERK
Page 9 of 142
RESOLUTION NO. 2011-
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
LAKE ELSINORE, CALIFORNIA, RESOLUTION APPROVING THE
FUNDING OF THE BOAT LAUNCH PROJECT
WHEREAS, the Redevelopment Agency of the City of Lake Elsinore ("Agency")
is a pubic body, corporate and politic, organized and existing under the Community
Redevelopment Law of the State of California (Cal. Health & Safety Code 33000 et
seq.: "CRL"); and
WHEREAS, the Agency is undertaking activities necessary for the
implementation of the Redevelopment Plan (the "Redevelopment Plan") for the Lake
Elsinore Rancho Laguna Redevelopment Project Area No. I ("Project Area") approved
and adopted by the City Council of the City of Lake Elsinore (the "City Council'), by
Ordinance No. 607 and subsequently amended by Ordinance No. 624, Ordinance No.
987, Ordinance No. 1249 and Ordinance No. 1260; and
WHEREAS; in order to increase the economic, recreational and general public
benefits related to the use and vitality of the Lake Elsinore Campground and Recreation
Area and in furtherance of the goals and objectives of the Redevelopment Plan, the
Agency desires to assist in the funding of a modern boat launch facility at the
Campground (the "Boat Launch Project") by way of the Lake Elsinore Public Financing
Authority Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A, In The
Aggregate Principal Amount Not To Exceed $6,000,000 (the 'Bonds").
WHEREAS, the Agency has considered all terms and conditions of the proposed
Boat Launch Project, and has determined that the assistance in funding construction of
Boat Launch Project is in the best interests of the Agency and in accord with the public
purposes and provisions of applicable state and local laws.
NOW, THEREFORE, THE REDEVELOPMENT AGENCY BOARD DOES
HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS:
SECTION 1. Based on the information presented in the staff report and at the
public hearing, the Agency hereby finds and determines that the financial assistance of
the Boat Launch Project, pursuant to the Bonds, will assist in the elimination of blight
and is necessary to effectuate the purposes of the Redevelopment Plan.
SECTION 2. Based on the information presented in the staff report and at the
public hearing, the Agency hereby finds and determines that the financial assistance for
construction of the Boat Launch Project, in accordance with the terms and provisions of
the Bonds, complies with the Redevelopment and Housing Implementation Plan for
2009-2014 adopted by the Agency pursuant to Section 33490 of the CRL.
Page 10 of 142
Resolution No. 2011-_
Page 2 of 3
SECTION 3. The Agency hereby finds and determines that the Agency's
commitment of Agency funds for the Boat Launch Project is not an "approval" within the
meaning of the word set forth in CEQA Guidelines section 15352 and that the City has
previously conducted a meaningful environment review and adopted a mitigated
negative declaration with respect to the Boat Launch Project.
SECTION 4. The Acting Agency Secretary shall certify to the passage and
adoption of this resolution and the same shall thereupon take effect and be in force.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
Redevelopment Agency of the City of Lake Elsinore, California, this 25th day of January,
2011.
MELISSA MELENDEZ, CHAIRWOMAN
ATTEST:
ROBERT BRADY, EXECUTIVE DIRECTOR
ACTING AGENCY SECRETARY
APPROVED AS TO FORM:
BARBARA LEIBOLD, AGENCY GENERAL COUNSEL
Page 11 of 142
Resolution No. 2011-
Page 3 of 3
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE }SS
I, ROBERT BRADY, Acting Agency Secretary of the City of Lake Elsinore,
California, hereby certify that Resolution No. 2011- was adopted by the
Redevelopment Agency of the City of Lake Elsinore, California, at a regular meeting
held on the 25th day of January 2011, and that the same was adopted by the following
vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ROBERT BRADY
ACTING AGENCY SECRETARY
Page 12 of 142
Page 1 of 3
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE
ELSINORE, CALIFORNIA, APPROVING A PROJECT AREA NO. I
LOAN AGREEMENT TO BE ENTERED INTO BY THE
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE IN
CONNECTION WITH THE ISSUANCE OF THE LAKE ELSINORE
PUBLIC FINANCING AUTHORITY TAX ALLOCATION REVENUE
BONDS (LAUNCH RAMP PROJECT), 2011 SERIES A, IN THE
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $6,000,000;
AND AUTHORIZING THE TAKING OF CERTAIN OTHER ACTIONS
RELATED THERETO
WHEREAS, the Lake Elsinore Public Financing Authority (the "Authority") is a
joint exercise of powers authority duly organized and existing under and pursuant to that
certain Joint Exercise Powers Agreement by and between the City of Lake Elsinore (the
"City") and the Redevelopment Agency of the City of Lake Elsinore (the "Agency"),
under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter
5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act'),
and is authorized pursuant to Article 4 of the Act to borrow money for the purpose of
financing the acquisition of bonds, notes and other obligations to provide financing and
refinancing for capital improvements of member entities of the Authority; and
WHEREAS, for the purpose of assisting the Agency in the financing of certain
Lake Elsinore launch ramp improvements and related facilities (the "Facilities"), the
Authority has determined to issue its Tax Allocation Revenue Bonds (Launch Ramp
Project), 2011 Series A (the "Bonds'); and
WHEREAS, the proceeds of the Bonds will be loaned to the Agency pursuant to
a Project Area No. I Loan Agreement (the "Project Area No. I Loan Agreement") to be
repaid from certain tax increment revenues of the Agency derived from Project Area
No. I; and
WHEREAS, to that end, each of the Agency and the Authority have adopted a
resolution on the date hereof, approving said financing; and
WHEREAS, the City has heretofore held a public hearing pursuant to Section
6586.5 of the Act;
NOW, THEREFORE, the City Council of the City of Lake Elsinore, California,
does hereby resolve as follows:
Section 1. The City Council hereby approves the Agency entering into the
Project Area No. I Loan Agreement.
Page 13 of 142
CC Resolution No. 2011-
Page 2 of 3
Section 2. The City hereby finds and determines that (i) the Facilities are to be
located within the boundaries of the City and (ii) there are significant public benefits
arising from the Authority's issuance of the Bonds to assist the Agency in financing the
Facilities, including, but not limited to, employment benefits from undertaking the
acquisition of the Facilities in a timely fashion, as contemplated by Section 6586 of the
Act.
Section 3. Any one of the Authorized Officers, Bond Counsel, Disclosure
Counsel and the other consultants to and agents of the City, are each hereby
authorized and directed to do all things and take all actions necessary or desirable to
effectuate the transactions contemplated by this Resolution, and to execute such other
assignments, agreements, certificates, receipts, endorsements, orders, opinions and
other documents in connection with such transactions, including, without limitation,
closing documents in connection with the issuance of the Bonds, and all actions
heretofore taken by the officers, employees and agents of the City in connection with
the issuance of the Bonds are hereby ratified, approved and confirmed in every respect.
An Authorized Officer shall include the Mayor, the City Manager, the Director of
Administrative Service, and any designee of any of them.
Section 4. This Resolution shall become effective immediately upon adoption.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council
of the City of Lake Elsinore, California, this 25th day of January, 2011.
AMY BHUTTA, MAYOR
CITY OF LAKE ELSINORE
ATTEST:
[NAME]
CITY CLERK
APPROVED AS TO FORM:
BARBARA ZEID LEIBOLD
CITY ATTORNEY
2 Page 14 of 142
CC Resolution No. 2011-
Page 3 of 3
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE SS
CITY OF LAKE ELSINORE
I, [NAME], City Clerk of the City of Lake Elsinore, California, hereby certify that
Resolution No. was adopted by the City Council of the City of Lake
Elsinore, California, at a regular meeting held on the 25th day of January, 2011, and
that the same was adopted by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
[NAME]
CITY CLERK
3 Page 15 of 142
Page 1 of 5
RESOLUTION NO.
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY
OF LAKE ELSINORE APPROVING THE ISSUANCE OF LAKE
ELSINORE PUBLIC FINANCING AUTHORITY TAX ALLOCATION
REVENUE BONDS (LAUNCH RAMP PROJECT), 2011 SERIES A, IN
THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$6,000,000; APPROVING A BOND PURCHASE CONTRACT, A
PROJECT AREA NO. I LOAN AGREEMENT, A CONTINUING
DISCLOSURE AGREEMENT AND A PRELIMINARY OFFICIAL
STATEMENT; AND AUTHORIZING THE TAKING OF CERTAIN OTHER
ACTIONS RELATED THERETO
WHEREAS, the Lake Elsinore Public Financing Authority (the "Authority") is a
joint exercise of powers authority duly organized and existing under and pursuant to that
certain Joint Exercise Powers Agreement by and between the City of Lake Elsinore (the
"City") and the Redevelopment Agency of the City of Lake Elsinore (the "Agency'),
under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter
5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act'),
and is authorized pursuant to Article 4 of the Act to borrow money for the purpose of
financing the acquisition of bonds, notes and other obligations to provide financing and
refinancing for capital improvements of member entities of the Authority; and
WHEREAS, for the purpose of assisting the Agency in financing certain Lake
Elsinore launch ramp improvements and related facilities, the Authority has determined
to issue its Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A (the
"Bonds"); and
WHEREAS, the proceeds of the Bonds will be loaned to the Agency pursuant to
a Project Area No. ► Loan Agreement (the `Project Area No. I Loan Agreement") to be
repaid from certain tax increment revenues of the Agency derived from Project Area
No. I; and
NOW, THEREFORE, the Redevelopment Agency of the City of Lake Elsinore
does hereby resolve as follows:
Section 1. The Agency hereby approves the issuance of the Bonds in the
aggregate principal amount not to exceed $6,000,000.
Section 2. The Agency hereby approves the Project Area No. I Loan
Agreement in substantially the form on file with the Secretary of the Agency and
presented to the Board at this meeting. Any one of the Authorized Officers is hereby
authorized and directed, for and in the name and on behalf of the Agency, to execute
and deliver the Project Area No. I Loan Agreement, with such insertions and changes
1 Page,16 of 142
RDA Resolution No. 2011-_
Page 2 of 5
as may be approved by the Authorized Officer executing the same, subject to the
provisions of this Resolution, such approval to be conclusively evidenced by such
execution and delivery. An Authorized Officer shall include the Chairman, the Executive
Director and the Secretary of the Agency, and each of them, and any designee of any of
them.
Section 3. The Agency hereby approves the Bond Purchase Contract, in
substantially the form on file with the Secretary of the Agency and presented to the
Board at this meeting. Any one of the Authorized Officers is hereby authorized and
directed, for and in the name and on behalf of the Agency, to execute and deliver the
Bond Purchase Contract, with such insertions and changes as may be approved by the
Authorized Officer executing the same, subject to the provisions of this Resolution, such
approval to be conclusively evidenced by such execution and delivery. The
underwriter's discount for the Bonds specified in the Bond Purchase Contract shall not
exceed 2.0%, exclusive of original issue discount. The Bonds shall bear interest at a
rate or rates not to exceed 7.0% per annum.
Section 4. The Agency hereby approves the form of the Preliminary Official
Statement ( the "Preliminary Official Statement"), in substantially the form on file with
the Secretary of the Agency, with such changes and modifications as shall be
necessary or appropriate for completion to the satisfaction of the Executive Director of
the Agency, and approval by Fulbright & Jaworski L.L.P., the Authority's Disclosure
Counsel. The Executive Director is authorized and directed, on behalf of the Agency to
deem the Preliminary Official Statement "final" pursuant to Rule 15c2-12 under the
Securities and Exchange Act of 1934. The Agency further approves distribution of the
Preliminary Official Statement by the Underwriter to persons who may be interested in
purchasing the Bonds. The Board hereby approves the final Official Statement
describing the Bonds. Distribution of the final Official Statement by the Underwriter is
hereby approved. The Executive Director, subject to approval by the Authority's
Disclosure Counsel, is hereby authorized and directed to approve any changes in or
additions to the final form of the Official Statement to conform to the requirements of the
Bond Purchase Contract and the Indenture, as applicable.
Section 5. The Agency hereby approves the Continuing Disclosure Agreement
in substantially the form on file with the Secretary of the Agency and presented to the
Board at this meeting. Any one of the Authorized Officers is hereby authorized and
directed, for and in the name and on behalf of the Agency, to execute and deliver the
Continuing Disclosure Agreement, with such insertions and changes as may be
approved by the Authorized Officer executing the same, subject to the provisions of this
Resolution, such approval to be conclusively evidenced by such execution and delivery.
Section 6. The Authorized Officers, the other officers and employees of the
Agency, the members of the Agency's Governing Board, Bond Counsel, Disclosure
2 Page 17 of 142
RDA Resolution No. 2011-
Page 3 of 5
Counsel and the other consultants to and agents of the Agency, are each hereby
authorized and directed to do all things and take all actions necessary or desirable to
effectuate the transactions contemplated by this Resolution, and to execute such other
assignments, agreements, certificates, receipts, endorsements, orders, opinions and
other documents in connection with such transactions, including, without limitation,
closing documents in connection with the issuance of the Bonds, and all actions
heretofore taken by the officers, employees and agents of the Agency in connection
with the issuance of the Bonds are hereby ratified, approved and confirmed in every
respect.
Section 7. This Resolution shall become effective immediately upon adoption.
3 Page 18 of 142
RDA Resolution No. 2011-
Page 4 of 5
PASSED, APPROVED AND ADOPTED at a regular meeting of the
Redevelopment Agency of the City of Lake Elsinore, California, this 25th day of
January, 2011.
MELISSA A. MELENDEZ, CHAIRMAN
LAKE ELSINORE REVELOPMENT AGENCY
ATTEST:
[NAME]
AGENCY SECRETARY
APPROVED AS TO FORM:
BARBARA ZEID LEIBOLD
AGENCY COUNSEL
4 Page 19 of 142
RDA Resolution No. 2011-
Page 5 of 5
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE SS
CITY OF LAKE ELSINORE
I, [NAME], Agency Secretary of the Redevelopment Agency of the City of Lake
Elsinore, California, hereby certify that Resolution No. was adopted
by the Redevelopment Agency of the City of Lake Elsinore, California, at a regular
meeting held on the 25th day of January, 2011, and that the same was adopted by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
[NAME]
AGENCY SECRETARY
5 Page 20 of 142
Page 1 of 5
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE LAKE
ELSINORE PUBLIC FINANCING AUTHORITY APPROVING THE
ISSUANCE OF LAKE ELSINORE PUBLIC FINANCING AUTHORITY
TAX ALLOCATION REVENUE BONDS (LAUNCH RAMP PROJECT),
2011 SERIES A IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO
EXCEED $6,000,000; APPROVING AN INDENTURE OF TRUST, A
BOND PURCHASE CONTRACT, A PROJECT AREA NO.I LOAN
AGREEMENT AND A PRELIMINARY OFFICIAL STATEMENT; AND
AUTHORIZING THE TAKING OF CERTAIN OTHER ACTIONS
RELATED THERETO
WHEREAS, the Lake Elsinore Public Financing Authority (the "Authority") is a
joint exercise of powers authority duly organized and existing under and pursuant to that
certain Joint Exercise Powers Agreement by and between the City of Lake Elsinore (the
"City") and the Redevelopment Agency of the City of Lake Elsinore (the "Agency"),
under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter
5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"),
and is authorized pursuant to Article 4 of the Act to borrow money for the purpose of
financing the acquisition of bonds, notes and other obligations to provide financing and
refinancing for capital improvements of member entities of the Authority; and
WHEREAS, for the purpose of assisting the Agency in financing certain Lake
Elsinore launch ramp improvements and related facilities (the "Facilities"), the Authority
has determined to issue its Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A (the "Bonds"); and
WHEREAS, the proceeds of the Bonds will be loaned to the Agency pursuant to
a Project Area No. I Loan Agreement (the "Project Area No. I Loan Agreement") to be
repaid from certain tax increment revenues of the Agency derived from Project Area No.
I; and
WHEREAS, the City, one of the members of the Authority, has heretofore held a
public hearing pursuant to Section 6586.5 of the Act and in connection therewith has
approved the Authority assisting the Agency in financing the Facilities and has found
and determined that (i) the Facilities are to be located within the boundaries of the City
and (ii) there are significant public benefits arising from the Authority's issuance of the
Bonds to assist the Agency in financing the Facilities, including, but not limited to,
employment benefits from undertaking the acquisition of the Facilities in a timely
fashion, as contemplated by Section 6586 of the Act;
Page 21 of 142
PFA Resolution No. 2011-
Page 2 of 5
NOW, THEREFORE, the Board of Directors of the Lake Elsinore Public
Financing Authority does hereby resolve as follows:
Section 1. The foregoing recitals are true and correct and the Authority hereby
so finds and determines
Section 2. The Authority hereby approves the issuance of the Bonds in the
aggregate principal amount not to exceed $6,000,000 pursuant to the Indenture of
Trust, in substantially the form on file with the Secretary of the Authority and presented
to the Board at this meeting. Any one of the Authorized Officers is hereby authorized
and directed, for and in the name and on behalf of the Authority, to execute and deliver
the Indenture of Trust, with such insertions and changes as may be approved by the
Authorized Officer executing the same, subject to the provisions of this Resolution, such
approval to be conclusively evidenced by such execution and delivery. An Authorized
Officer shall include any member of the Board of Directors, the Chairman, the Executive
Director, the Treasurer, the Secretary, or any officer of the Authority designated by the
Chairman or the Executive Director as an Authorized Officer.
Section 3. The Authority hereby authorizes the sale of the Bonds to the
Underwriter pursuant to and in accordance with the Bond Purchase Contract, in
substantially the form on file with the Secretary of the Authority and presented to the
Board at this meeting. Any one of the Authorized Officers is hereby authorized and
directed, for and in the name and on behalf of the Authority, to execute and deliver the
Bond Purchase Contract, with such insertions and changes as may be approved by the
Authorized Officer executing the same, subject to the provisions of this Resolution, such
approval to be conclusively evidenced by such execution and delivery. The
underwriter's discount for the Bonds specified in the Bond Purchase Contract shall not
exceed 2.0%, exclusive of original issue discount. The Bonds shall bear interest at a
rate or rates not to exceed 7.0% per annum.
Section 4. The Authority hereby approves the form of the Preliminary Official
Statement, in substantially the forms on file with the Secretary of the Authority, with
such changes and modifications as shall be necessary or appropriate for completion to
the satisfaction of the Executive Director of the Authority, and approval by Fulbright &
Jaworski L.L.P., the Authority's Disclosure Counsel. The Executive Director is
authorized and directed, on behalf of the Authority to deem the Preliminary Official
Statement "final" pursuant to Rule 15c2-12 under the Securities and Exchange Act of
1934. The Authority further approves distribution of the Preliminary Official Statement
by the Underwriter to persons who may be interested in purchasing the Bonds. The
Board hereby approves the final Official Statement describing the Bonds. Distribution of
the final Official Statement by the Underwriter is hereby approved. The Executive
Director, subject to approval by the Authority's Disclosure Counsel, is hereby authorized
and directed to approve any changes in or additions to the final form of the Official
2 Page 22 of 142
PFA Resolution No. 2011-
Page 3 of 5
Statement to conform to the requirements of the Bond Purchase Contract and the
Indenture of Trust, as applicable.
Section 5. The Authority hereby approves the Project Area No. I Loan
Agreement in substantially the form on file with the Secretary of the Authority and
presented to the Board at this meeting. Any one of the Authorized Officers is hereby
authorized and directed, for and in the name and on behalf of the Authority, to execute
and deliver the Project Area No. I Loan Agreement, with such insertions and changes
as may be approved by the Authorized Officer executing the same, subject to the
provisions of this Resolution, such approval to be conclusively evidenced by such
execution and delivery.
Section 6. Any one of the Authorized Officers is hereby authorized and
directed, for and in the name and on behalf of the Authority, to evaluate and select one
or more municipal bond insurers for all or any portion of the Bonds and to execute and
deliver such contracts and agreements with such bond insurers as may be approved by
the Authorized Officer executing the same, subject to the provisions of this Resolution,
such approval to be conclusively evidenced by such execution and delivery.
Section 7. The Authorized Officers, the other officers and employees of the
Authority, the members of the Authority's Board of Directors, Bond Counsel, Disclosure
Counsel and the other consultants to and agents of the Authority, are each hereby
authorized and directed to do all things and take all actions necessary or desirable to
effectuate the transactions contemplated by this Resolution, and to execute such other
assignments, agreements, certificates, receipts, endorsements, orders, opinions and
other documents in connection with such transactions, including, without limitation,
closing documents in connection with the issuance of the Bonds, and all actions
heretofore taken by the officers, employees and agents of the Authority in connection
with the issuance of the Bonds are hereby ratified, approved and confirmed in every
respect.
Section 8. This Resolution shall become effective immediately upon adoption.
3 Page 23 of 142
PFA Resolution No. 2011-
Page 4 o
PASSED, APPROVED AND ADOPTED at a regular meeting of the Board of
Directors of the Lake Elsinore Public Financing Authority this 25th day of January, 2011.
DARYL HICKMAN
CHAIRMAN
ATTEST:
[NAME]
SECRETARY
APPROVED AS TO FORM:
BARBARA ZEID LEIBOLD
AUTHORITY COUNSEL
4 Page 24 of 142
PFA Resolution No. 2011-
Page 5 -of 5
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE SS
CITY OF LAKE ELSINORE
I, [NAME], Secretary of the Lake Elsinore Public Financing Authority, hereby
certify that Resolution No. was adopted by the Board of Directors of
the Lake Elsinore Public Financing Authority, at a regular meeting held on the 25th day
of January, 2011, and that the same was adopted by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
[NAME]
SECRETARY
5 Page 25 of 142
INDENTURE OF TRUST
by and between the
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
and
UNION BANK, N.A.
as Trustee
Dated as of February 1, 2011
Relating to
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds
(Launch Ramp Project), 2011 Series A
76981111.1 Page 26 of 142
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
2
Section 1.01
Definitions
2
Section 1.02
Rules of Construction
13
Section 1.03
Authorization and Purpose of Bonds
13
Section 1.04
Equal Security
13
ARTICLE II ISS
UANCE OF THE BONDS
13
Section 2.01
Terms of the Bonds
13
Section 2.02
Redemption of the Bonds
15
Section 2.03
Form of the Bonds
17
Section 2.04
Execution of Bonds
17
Section 2.05
Transfer of Bonds
18
Section 2.06
Exchange of Bonds
18
Section 2.07
Registration Books
18
Section 2.08
Bonds Mutilated, Lost, Destroyed or Stolen
18
Section 2.09
CUSIP® Numbers
19
Section 2.10
Use of Securities Depository
19
Section 2.11
Temporary Bonds
20
ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS
20
Section 3.01
Issuance of Bonds
20
Section 3.02
Application of Proceeds of Sale of Bonds and Other Amounts....
21
Section 3.03
Loan Fund
21
Section 3.04
Costs of Issuance Fund/Loan Costs of Issuance Fund
21
Section 3.05
Loan Disbursement Fund
21
Section 3.06
Reserve Fund
22
Section 3.07
Validity of Bonds
23
ARTICLE IV REVENUES; FLOW OF FUNDS
23
Section 4.01
Pledge of Revenues; Assignment of Rights
23
Section 4.02
Receipt, Deposit and Application of Revenues
23
Section 4.03
Investments
25
Section 4.04
Valuation and Disposition of Investments
25
ARTICLE V COVENANTS OF THE AUTHORITY
25
Section 5.01
Punctual Payment
25
Section 5.02
Extension of Payment of Bonds
26
Section 5.03
Against Encumbrances
26
Section 5.04
Power to Issue Bonds and Make Pledge and Assignment
26
Section 5.05
Accounting Records and Financial Statements
26
Section 5.06
No Additional Parity Debt
27
Section 5.07
Tax Covenants Relating to Bonds
27
76981111.1
-1-
Page 27 of 142
TABLE OF CONTENTS
(continued)
Page
Section 5.08
Loan Agreement
30
Section 5.09
Further Assurances
31
Section 5.10
Management and Operation of Properties
31
Section 5.11
Payments of Taxes and Other Charges
32
Section 5.12
Immunity
32
ARTICLE VI THE TRUSTEE 32
Section 6.01
Appointment of Trustee
Section 6.02
Acceptance of Trusts
Section 6.03
Fees, Charges and Expenses of Trustee
Section 6.04
Notice to Owners of Default
Section 6.05
Intervention by Trustee
Section 6.06
Removal of Trustee
Section 6.07
Resignation by Trustee
Section 6.08
Appointment of Successor Trustee
Section 6.09
Merger or Consolidation
Section 6.10
Concerning any Successor Trustee
Section 6.11
Appointment of Co-Trustee
Section 6.12
Indemnification; Limited Liability of Trustee
ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE 37
Section 7.01 Amendment Hereof 37
Section 7.02 Effect of Supplemental Indenture 38
Section 7.03 Endorsement or Replacement of Bonds After Amendment 38
Section 7.04 Amendment by Mutual Consent 39
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 39
Section 8.01
Events of Default
39
Section 8.02
Remedies Upon Event of Default
39
Section 8.03
Application of Revenues and Other Funds After Default
40
Section 8.04
Power of Trustee to Control Proceedings
41
Section 8.05
Appointment of Receivers
42
Section 8.06
Non-Waiver
42
Section 8.07
Rights and Remedies of Owners
42
Section 8.08
Termination of Proceedings
43
ARTICLE IX MIS
CELLANEOUS
43
Section 9.01
Limited Liability of Authority
43
Section 9.02
Benefits of Indenture Limited to Parties
43
Section 9.03
Discharge of Indenture
43
Section 9.04
Successor Is Deemed Included in All References to
Predecessor
44
Section 9.05
Content of Certificates
44
Section 9.06
Election of Documents by Owners
45
76981111.1
-ii-
Page 28 of 142
TABLE OF CONTENTS
(continued)
Page
Section 9.07
Disqualified Bonds
45
Section 9.08
Waiver of Personal Liability
45
Section 9.09
Partial Invalidity
45
Section 9.10
Destruction of Canceled Bonds
46
Section 9.11
Funds and Accounts
46
Section 9.12
Payment on Business Days
46
Section 9.13
Notices
46
Section 9.14
Unclaimed Moneys
47
Section 9.15
Governing Law
47
Section 9.16
Execution of Counterparts
47
Exhibit A - Form of Bond
A-1
76981111.1 -111-
Page 29 of 142
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this "Indenture") is made and entered into as of
February 1, 2011, by and between the LAKE ELSINORE PUBLIC FINANCING AUTHORITY,
a joint powers authority organized and existing under the laws of the State of California (the
"Authority"), and UNION BANK, N.A., a national banking association organized and existing
under the laws of the United States of America having a corporate trust office in Los Angeles,
California, and being qualified to accept and administer the trusts hereby created (the "Trustee");
WITNESSETH:
WHEREAS, the Authority is a joint exercise of powers agency duly organized and
existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated as of
July 25, 1989, by and between the City of Lake Elsinore (the "City") and the Redevelopment
Agency of the City of Lake Elsinore (the "Agency"), and under the provisions of Articles 1
through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the "Act"), and is authorized pursuant to Article 4
of the Act (the "Bond Law") to borrow money for the purpose of financing the acquisition of
bonds, notes and other obligations of, or for the purpose of making loans to, the City, the Agency
and any associate member to provide financing for public capital improvements of the City, the
Agency and any associate member; and
WHEREAS, the Agency is a public body, corporate and politic, duly established and
authorized to transact business and exercise powers under and pursuant to the provisions of
Part 1 of Division 24 of the Health and Safety Code of the State of California (the
"Redevelopment Law"), and has the power under Section 33601 of the Redevelopment Law to
borrow money for any of its corporate purposes; and
WHEREAS, the Agency has requested the Authority to make a loan (the "Loan") to the
Agency hereunder for the purpose of providing funds to finance certain Lake Elsinore launch
ramp improvements and related facilities all as provided herein, and the Agency hereby finds and
determines that there will be significant public benefits accruing from such borrowing, consisting
of demonstrable savings in effective interest rates and financing costs associated with the
issuance of bonds as described herein; and
WHEREAS, in order to raise the funds required to make the Loan, the Authority has
determined to issue its Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A in
the aggregate principal amount of $ (the "Bonds"), pursuant to and secured by this
Indenture in the manner provided herein; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and to
secure the payment of the principal thereof, premium (if any) and interest thereon, the Authority
has authorized the execution and delivery of this Indenture; and
WHEREAS, the Authority has found and determines, and hereby affirms, that all acts
and proceedings required by law necessary to make the Bonds, when executed by the Authority,
76981111.1 Page 30 of 142
authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special
obligations of the Authority, and to constitute this Indenture a valid and binding agreement for
the uses and purposes herein set forth in accordance with its terms, have been done and taken,
and the execution and delivery of this Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure
the payment of the principal of and the interest and premium (if any) on all Bonds at any time
issued and Outstanding under this Indenture, according to their tenor, and to secure the
performance and observance of all the covenants and conditions therein and herein set forth, and
to declare the terms and conditions upon and subject to which the Bonds are to be issued and
repaid, and in consideration of the premises and of the mutual covenants herein contained and of
the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Authority does
hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time
to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.01 shall for all purposes of this Indenture and of any Supplemental Indenture and
of the Bonds and of any certificate, opinion, request or other documents herein mentioned have
the meanings herein specified. In addition, all terms defined in Section 1.01 of the Loan
Agreement and not otherwise defined in this Section 1.01 shall have the respective meanings
given such terms in the Loan Agreement.
"Act" means Articles 1 through 4 (commencing with Section 6500) of Chapter 5,
Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or
as thereafter amended from time to time.
"Ageric 'means the Redevelopment Agency of the City of Lake Elsinore, a public body
corporate and politic organized under the laws of the State, and any successor thereto.
"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on
the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding
Bonds scheduled to be paid in such Bond Year, including from mandatory sinking fund
payments.
"Authority" means the Lake Elsinore Public Financing Authority, a joint powers
authority duly organized and existing under the Joint Exercise of Powers Agreement, dated as of
July 25, 1989, by and between the City and the Agency, together with any amendments thereof
and supplements thereto and under the laws of the State.
"Authority Reoresentafive" means the Chairman, Vice Chairman, Executive Director or
Treasurer of the Authority, or any other authorized representative of the Authority as evidenced
by a certificate of the Chairman or Executive Director.
76981111.1 2 Page 31 of 142
"Board" means the Board of Directors of the Authority.
"Bond Counsel" means any attorney or firm of attorneys appointed by or acceptable to
the Authority of nationally-recognized experience in the issuance of obligations the interest on
which is excludable from gross income for federal income tax purposes under the Code.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting
Article 4 of the Act (commencing with Section 6584), as in existence on the Closing Date or as
thereafter amended from time to time.
"Bond Year" means each twelve-month period beginning on September 2 of each year
and ending on September 1 of the following year, except that the first Bond Year shall begin on
the Closing Date and end on September 1, 2011.
"Bonds" means the Lake Elsinore Public Financing Authority Tax Allocation Revenue
Bonds (Launch Ramp Project), 2011 Series A authorized by and at any time Outstanding
pursuant to the Bond Law and this Indenture.
"Business Da v" means a day of the year, other than a Saturday or Sunday, on which
banks in New York, New York, Los Angeles, California, and San Francisco, California, are not
required or authorized to remain closed and on which The New York Stock Exchange is not
closed.
"Certificate" and "Written Request" of the Authority or Agency means, a written
certificate or written request signed in the name of the Authority or Agency, as applicable, by an
authorized representative. Any such certificate or request may, but need not, be combined in a
single instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument.
"City" means the City of Lake Elsinore, a political subdivision organized and existing
under the laws of the State.
"Closing Date" means 2011, being the date of delivery of the Bonds to the
original purchasers thereof.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the Bonds or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the date of issuance of the Bonds, together with applicable proposed,
temporary and final regulations promulgated, and applicable official public guidance published,
under the Code.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds, the making of the Loan pursuant to the Loan
Agreement, including but not limited to all compensation, fees and expenses (including but not
limited to fees and expenses for legal counsel) of the Agency, the Authority, the Trustee and the
Refunded Bonds Trustee, costs and fees relating to any bond insurance policy and any Qualified
Reserve Fund Credit Instrument, compensation to any financial consultants or underwriters, legal
76981111.1 3 Page 32 of 142
fees and expenses, filing and recording costs, rating agency fees, costs of preparation and
reproduction of documents and costs of printing.
"Costs of Issuance Fund" means the fund established and held by the Trustee pursuant to
Section 3.04.
"Defeasance Securities" means (a) cash, (b) direct obligations (other than an obligation
subject to variation in principal repayment) of the United States of America ("U.S. Treasury
Obligations"), (c) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by the United States of America, (d) obligations fully and unconditionally
guaranteed as to timely payment of principal and interest by any agency or instrumentality of the
United States of America when such obligations are backed by the full faith and credit of the
United States of America, or (e) evidences of ownership of proportionate interests in future
interest and principal payments on obligations described above held by a bank or trust company
as custodian, under which the owner of the investment is the real party in interest and has the
right to proceed directly and individually against the obligor and the underlying government
obligations are not available to any person claiming through the custodian or to whom the
custodian may be obligated.
Any security used for defeasance must provide for the timely payment of principal and
interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated
debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a
fixed dollar amount at maturity or call date).
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Event of Default" means any of the events described in Section 8.01.
"Excess Investment Earnings" means the amount of excess investment earnings
determined to be subject to rebate to the United States of America with respect to the investment
of the gross proceeds of the Bonds, determined pursuant to Section 148(f) of the Code.
"Federal Securities" means (a) any direct general obligations of the United States of
America (including obligations issued or held in book-entry form on the books of the
Department of the Treasury of the United States of America), the payment of principal of and
interest on which are unconditionally and fully guaranteed by the United States of America; and
(b) any obligations the principal of and interest on which are unconditionally guaranteed by the
United States of America.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month
period selected and designated by the Authority as its official fiscal year period and certified to
the Trustee in writing by an Authority Representative.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
76981111.1 4 Page 33 of 142
"Independent Accountant" means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority, and who, or each of whom (a) is in fact
independent and not under domination of the Authority, the City or the Agency; (b) does not
have any substantial interest, direct or indirect, in the Authority, the City or the Agency; and
(c) is not connected with the Authority, the City or the Agency as an officer or employee of the
Authority, the City or the Agency but who may be regularly retained to make annual or other
audits of the books of or reports to the Authority, the City or the Agency.
"Information Services" means the Electronic Municipal Market Access system (referred
to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at
www.emma.msrb.org; provided, however, in accordance with then current guidelines of the
Securities and Exchange Commission, Information Services shall mean such other organizations
providing information with respect to called Bonds as the Authority may designate in writing to
the Trustee.
"Interest Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(b)(i).
"Interest Payment Date" means March 1 and September in each year, beginning
September 1, 2011, and continuing thereafter so long as any Bonds remain Outstanding.
"Letter of Representations" means the letter of the Authority and the Trustee delivered to
and accepted by DTC (or such other applicable Securities Depository) on or prior to the issuance
of the Bonds in book-entry form setting forth the basis on which DTC (or such other applicable
Securities Depository) serves as depository for the Bonds issued in book-entry form, as
originally executed or as it may be supplemented or revised or replaced by a letter to a substitute
Securities Depository.
"Loan" means the loan made by the Authority to the Agency under and pursuant to the
Loan Agreement.
"Loan Agreement' means the Project Area No. I Loan Agreement, dated as of February
1, 2011, between the Agency and the Authority, as originally executed or as it may from time to
time be supplemented, modified or amended.
"Loan Costs of Issuance" means all expenses incurred in connection with the making of
the Loan pursuant to the Loan Agreement, including but not limited to all compensation, fees
and expenses (including, but not limited to, fees and expenses for legal counsel) of the Agency,
the Authority and the Trustee, compensation to any financial consultants or underwriters, legal
fees and expenses, filing and recording costs, rating agency fees, costs of preparation and
reproduction of documents and costs of printing.
"Loan Costs of Issuance Fund" means the fund established and held by the Trustee
pursuant to Section 3.04.
"Loan Fund" means the fund by that name established and held by the Trustee pursuant
to Section 3.03.
769811 i1.1 5 Page 34 of 142
"Maximum Annual Debt Service" means, as of the date of calculation, the maximum
amount obtained by totaling, for the current or any future Bond Year, the sum of (a) the
principal amount of all such Outstanding Bonds maturing in such Bond Year; (b) the aggregate
principal amount of all Outstanding Term Bonds scheduled to be redeemed by operation of
mandatory sinking fund deposits in such Bond Year, together with any premium thereon; and
(c) the interest which would be due during such Bond Year on the aggregate principal amount of
such Bonds which would be Outstanding in such period if such Bonds are retired as scheduled,
but deducting and excluding from such aggregate principal amount the aggregate principal
amount of such Bonds no longer Outstanding.
"Moody's" means Moody's Investors Service, its successors and assigns.
"Outstanding," when used as of any particular time with reference to Bonds, means all
Bonds theretofore executed, issued and delivered by the Authority under this Indenture except
(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation,
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.03, and (c) Bonds
in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered
pursuant to this hndenture or any Supplemental Indenture.
"Owner," when used with respect to any Bond, means the person in whose name the
ownership of such Bond shall be registered on the Registration Books.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
1. (a) cash, (b) direct obligations (other than an obligation subject to variation in
principal repayment) of the United States of America ("U.S. Treasury Obligations"), (c)
obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America, (d) obligations fully and unconditionally
guaranteed as to timely payment of principal and interest by any agency or
instrumentality of the United States of America when such obligations are backed by the
full faith and credit of the United States of America, or (e) evidences of ownership of
proportionate interests in future interest and principal payments on obligations described
above held by a bank or trust company as custodian, under which the owner of the
investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying government obligations are not
available to any person claiming through the custodian or to whom the custodian may be
obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government-sponsored agencies which are not backed by
the full faith and credit of the United States of America:
a) Federal Home Loan Mortgage Corporation (FHLMC) senior debt
obligations and participation certificates (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal amounts);
76981111.1 6 Page 35 of 142
b) Farm Credit System (formerly Federal Land Banks, Federal Intermediate
Credit Banks and Banks for Cooperatives) consolidated system-wide bonds and
notes;
c) Federal Home Loan Banks (FHL Banks) consolidated debt obligations;
and
d) Federal National Mortgage Association (FNMA) senior debt obligations
and mortgage-backed securities (excluded are stripped mortgage securities which
are purchased at prices exceeding their principal amounts).
4. Unsecured certificates of deposit, time deposits, and bankers' acceptances (having
maturities of not more than 365 days) of any bank the short-term obligations of which are
rated "A-1+" or better by S&P and "Prime-1" by Moody's.
5. Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation, in banks which have capital and surplus of at least $15 million.
6. Commercial paper (having original maturities of not more than 270 days) rated
"A-1+" by S&P and "Prime-1" by Moody's.
7. Money market funds rated "Aam" or "AAm-G" by S&P, or better and if rated by
Moody's rated "Aa2" or better (including any funds for which the Trustee or an affiliate
provides investment advice or other services).
8. "State Obligations," which means:
a) Direct general obligations of any state of the United States of America or
any subdivision or agency thereof to which is pledged the full faith and credit of a
state the unsecured general obligation debt of which is rated at least "A3" by
Moody's and at least "A-" by S&P, or any obligation fully and unconditionally
guaranteed by any state, subdivision or agency whose unsecured general
obligation debt is so rated.
b) Direct general short-term obligations of any state agency or subdivision or
agency thereof described in (a) above and rated "A-1+" by S&P and "MIG-1" by
Moody's.
c) Special Revenue Bonds (as defined in the United States Bankruptcy Code)
of any state or state agency described in (b) above and rated "AA-" or better by
S&P and "Aa3" or better by Moody's.
9. Pre-refunded municipal obligations, rated "AAA" by S&P and "Aaa" by
Moody's, meeting the following requirements:
a) (1) the municipal obligations are not subject to redemption prior to
maturity or (2) the Trustee for the municipal obligations has been given
irrevocable instructions concerning their call and redemption and the issuer of the
76981111.1 7 Page 36 of 142
municipal obligations has covenanted not to redeem such municipal obligations
other than as set forth in such instructions;
b) the municipal obligations are secured by cash or U.S. Treasury
Obligations which may be applied only to payment of the principal of, interest
and premium on such municipal obligations;
c) the principal of and interest on the U.S. Treasury Obligations (plus any
cash in the escrow) has been verified by the report of independent certified public
accountants to be sufficient to pay in full all principal of, interest, and premium, if
any, due and to become due on the municipal obligations ("Verification Report");
d) the cash or U.S. Treasury Obligations serving as security for the municipal
obligations are held by an escrow agent or trustee in trust for owners of the
municipal obligations;
e) no substitution of a U.S. Treasury Obligation shall be permitted except
with another U.S. Treasury Obligation and upon delivery of a new Verification
Report; and
f) the cash or U.S. Treasury Obligations are not available to satisfy any other
claims, including those by or against the trustee or escrow agent.
10. Repurchase agreements: with (1) any domestic bank, or domestic branch of a
foreign bank, the long-term debt of which is rated at least "A-" by S&P and "A3" by
Moody's; or (2) any broker-dealer with "retail customers" or a related affiliate thereof
which broker-dealer has, or the parent company (which guarantees the provider) of which
has, long-term debt rated at least "A-" by S&P and "A3" by Moody's, which broker-
dealer falls under the jurisdiction of the Securities Investors Protection Corporation; or
(3) any other entity rated at least "A-" by S&P and "A3" by Moody's (each an "Eligible
Provider"), provided that:
a) (i) permitted collateral shall include U.S. Treasury Obligations, or senior
debt obligations of GNMA, FNMA or FHLMC (no collateralized mortgage
obligations shall be permitted for these providers), and (ii) collateral levels must
be at least 102% of the total principal when the collateral type is U.S. Treasury
Obligations, 103% of the total principal when the collateral type is GNMA and
104% of the total principal when the collateral type is FNMA and FHLMC
("Eligible Collateral");
b) the Trustee or a third party acting solely as agent therefor or for the
Authority (the "Custodian") has possession of the collateral or the collateral has
been transferred to the Custodian in accordance with applicable state and federal
laws (other than by means of entries on the transferor's books) and such collateral
shall be marked-to-market;
C) the collateral shall be marked-to-market on a daily basis and the provider
or Custodian shall send monthly reports to the Trustee and the Authority setting
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forth the type of collateral, the collateral percentage required for that collateral
type, the market value of the collateral on the valuation date and the name of the
Custodian holding the collateral;
d) the repurchase agreement shall state and an opinion of counsel shall be
rendered at the time such collateral is delivered that the Custodian has a perfected
first priority security interest in the collateral, any substituted collateral and all
proceeds thereof, and
e) the repurchase agreement shall provide that if during its term the
provider's raring by either Moody's or S&P is withdrawn or suspended or falls
below "A-" by S&P or "A3" by Moody's, as appropriate, the provider must notify
the Authority and the Trustee within five (5) days of receipt of such notice.
Within ten (10) days of receipt of such notice, the provider shall either: (i) post
Eligible Collateral, or (ii) assign the agreement to an Eligible Provider. If the
provider does not perform a remedy within ten (10) business days, the provider
shall, at the direction of the Trustee, repurchase all collateral and terminate the
repurchase agreement, with no penalty or premium to the Authority or the
Trustee.
11. Investment agreements: with a domestic or foreign bank or corporation the long-
term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in
the case of a monoline financial guaranty insurance company, claims paying ability, of
the guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's (each an "Eligible
Provider"); provided that:
a) interest payments are to be made to the Trustee at times and in amounts as
necessary to pay debt service (or, if the investment agreement is for the
construction fund, construction draws) on the Bonds;
b) the invested funds are available for withdrawal without penalty or
premium, at any time upon not more than seven (7) days' prior notice; the
Authority and the Trustee hereby agree to give or cause to be given notice in
accordance with the terms of the investment agreement so as to receive funds
thereunder with no penalty or premium paid;
C) the provider shall send monthly reports to the Trustee and the Authority
setting forth the balance the Authority or Trustee has invested with the provider
and the amounts and dates of interest accrued and paid by the provider;
d) the investment agreement shall state that the obligation is an unconditional
and general obligation of the provider, and is not subordinated to any other
obligation of, the provider thereof or, if the provider is a bank, the agreement or
the opinion of counsel shall state that the obligation of the provider to make
payments thereunder ranks pari passu with the obligations of the provider to its
other depositors and its other unsecured and unsubordinated creditors;
76981111.1 9 Page 38 of 142
e) the Authority and the Trustee shall receive an opinion of domestic counsel
to the provider that such investment agreement is legal, valid, binding and
enforceable against the provider in accordance with its terms;
f) the Authority and the Trustee shall receive an opinion of foreign counsel
to the provider (if applicable) that (i) the investment agreement has been duly
authorized, executed and delivered by the provider and constitutes the legal, valid
and binding obligation of the provider, enforceable against the provider in
accordance with its terms, (ii) the choice of law of the state set forth in the
investment agreement is valid under that country's laws and a court in such
country would uphold such choice of law, and (iii) any judgment rendered by a
court in the United States would be recognized and enforceable in such country;
g) the investment agreement shall provide that if during its term:
i) the provider's rating by either S&P or Moody's falls below "AA-"
or "Aa3," the provider shall, at its option, within ten (10) days of receipt
of publication of such downgrade, either (i) post Eligible Collateral with
the Authority, the Trustee or a third party acting solely as agent therefor
(the "Custodian") free and clear of any third party liens or claims, (ii)
assign the agreement to an Eligible Provider, or (iii) repay the principal of
and accrued but unpaid interest on the investment; or
ii) the provider's rating by either S&P or Moody's is withdrawn or
suspended or falls below "A-" or "A3," the provider must, at the direction
of the Authority or the Trustee, within ten (10) days of receipt of such
direction, repay the principal of and accrued but unpaid interest on the
investment, in either case with no penalty or premium to the Authority or
Trustee;
i) in the event the provider is required to collateralize, permitted collateral
shall include U.S. Treasury Obligations, or senior debt obligations of GNMA,
FNMA or FHLMC (no collateralized mortgage obligations shall be permitted for
these providers) and collateral levels must be 102% of the total principal when the
collateral type is U.S. Treasury Obligations, 103% of the total principal when the
collateral type is GNMA and 104% of the total principal when the collateral type
is FNMA and FHLMC ("Eligible Collateral"). In addition, the collateral shall be
marked-to-market on a daily basis and the provider or Custodian shall send
monthly reports to the Trustee and the Authority setting forth the type of
collateral, the collateral percentage required for that collateral type, the market
value of the collateral on the valuation date and the name of the Custodian
holding the collateral;
j) the investment agreement shall state and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider under
the terms of the investment agreement, at the time such collateral is delivered, that
76981111.1 10 Page 39 of 142
the Custodian has a perfected first priority security interest in the collateral, any
substituted collateral and all proceeds thereof, and
k) the investment agreement must provide that if during its term: (i) the
provider shall default in its payment obligations, the provider's obligations under
the investment agreement shall, at the direction of the Authority or the Trustee, be
accelerated and amounts invested and accrued but unpaid interest thereon shall be
repaid to the Authority or Trustee, as appropriate, and (ii) the provider shall
become insolvent, not pay its debts as they become due, be declared or petition to
be declared bankrupt, etc. ("event of insolvency"), the provider's obligations shall
automatically be accelerated and amounts invested and accrued but unpaid
interest thereon shall be repaid to the Authority or Trustee, as appropriate.
12. The Local Agency Investment Fund of the State of California, created pursuant to
Section 16429.1 of the California Government Code.
13. Certificates of deposit, savings accounts, deposit accounts or money market
deposits (including those of the Trustee and its affiliates) which are fully insured by the
Federal Deposit Insurance Corporation. In addition to the authority to invest funds in
certificates of deposit, an investment in non-negotiable certificates of deposit made in
accordance with the following conditions is an authorized investment: (A) the financial
institution or trust company selected by the Authority arranges for the deposit of funds in
certificates of deposit in one or more federally insured depository institutions, wherever
located, for the account of the investing entity; (B) the full amount of the principal and
accrued interest of each of the certificates of deposit is insured by the United States or an
instrumentality of the United States; and (C) the financial institution or trust company
selected by the Authority acts as custodian for the investing entity with respect to the
certificates of deposit issued for the account of the investing entity.
"Principal Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(b)(ii).
"Project Area" means the redevelopment project area described in the Redevelopment
Plan for the Project Area No. I, as amended and supplemented from time to time.
"Qualified Reserve Fund Credit Instrument" means an irrevocable standby or direct-pay
letter of credit or surety bond issued by a commercial bank or insurance company and deposited
with the Trustee provided that all of the following requirements are met: (i) at the time of
delivery to the Trustee the long-term credit rating of such bank or insurance company is in the
highest rating category by Moody's and S&P, and, if rated by A.M. Best Company, the claims
paying ability of such insurance company is rated in the highest rating category by A.M. Best
Company; (ii) such letter of credit or surety bond has a term of at least twelve (12) months;
(iii) such letter of credit or surety bond has a stated amount at least equal to the portion of the
Reserve Requirement with respect to which funds are proposed to be released; and (iv) the
Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw
thereunder an amount equal to any deficiencies which may exist from time to time in the
amounts available to repay the principal of and interest on the respective Loan.
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"Rebate Account" means the account established and held by the Trustee pursuant to
Section 4.02(c).
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date.
"Registration Books" means the records maintained by the Trustee pursuant to
Section 2.07 for the registration and transfer of ownership of the Bonds.
"Reserve Fund" means the fund established and held hereunder by the Trustee pursuant
to Section 3.06.
"Reserve Requirement" means, as of any calculation date, an amount equal to the least of
(i) ten percent (10%) of the proceeds (within the meaning of section 148 of the Code) of that
portion of such Bonds then Outstanding with respect to which Annual Debt Service is calculated;
(ii) 125% of average Annual Debt Service as of the Closing Date; or (iii) Maximum Annual Debt
Service.
"Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02(a).
"Revenues" means: (a) all amounts payable by the Agency pursuant to the Loan
Agreement; (b) all moneys deposited and held from time to time by the Trustee in the funds and
accounts established hereunder for the Bonds, other than the Rebate Account; and (c) income
and gains with respect to the investment of amounts on deposit in the funds and accounts
established hereunder for the Bonds, other than the Rebate Account.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., its successors and assigns.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, New
York, New York 10041, Fax: (212) 855-1000 or 7320; and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other addresses and/or such other
securities depositories as the Authority may designate in a Certificate of the Authority delivered
to the Trustee.
"Serial Bonds" means all Bonds other than the Term Bonds.
"State" means the State of California.
"Supplemental Indenture" means any indenture, agreement or other instrument hereafter
duly executed by the Authority and the Trustee in accordance with the provisions of
Section 7.01.
"Tax Regulations" means temporary and permanent regulations promulgated under or
with respect to Section 103 and Sections 141 through 150, inclusive, of the Code.
"Term Bonds" means the Bonds maturing on September 1, 20
76981111.1 12 Page 41 of 142
"Trust Office" means the corporate trust office of the Trustee at the address set forth in
Section 9.13, provided, however for transfer, registration, exchange, payment and surrender of
Bonds means care of the corporate trust office of Union Bank, N.A. in Los Angeles, California
or such other office designated by the Trustee from time to time and such office as the Trustee
may designate in writing to the Authority from time to time as the place for transfer, registration,
surrender, exchange or payment of the Bonds.
"Trustee" means Union Bank, N.A. and its successors and assigns, and any other
corporation or association which may at any time be substituted in its place as provided in
Article VI.
Section 1.02 Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Indenture; and the words "herein," "hereof "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
Section 1.03 Authorization and Purpose of Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result
of such review, and hereby finds and determines that all things, conditions, and acts required by
law to exist, happen and be performed precedent to and in the issuance of the Bonds do exist,
have happened and have been performed in due time, form and manner as required by law, and
the Authority is now authorized under the Bond Law and each and every requirement of law, to
issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority
hereby authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the
purpose of providing funds to make the Loan to the Agency under the Loan Agreement.
Section 1.04 Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the
Authority, the Trustee and the Owners from time to time of the Bonds; and the covenants and
agreements herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
priority or distinction as to security or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
ARTICLE II
ISSUANCE OF THE BONDS
Section 2.01 Terms of the Bonds. The Bonds authorized to be issued by the Authority
under and subject to the Bond Law and the terms of this Indenture shall be designated the "Lake
Elsinore Public Financing Authority Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A" which shall be issued in the original aggregate principal amount of $
The principal of and interest and premium (if any) on the Bonds shall be payable in
lawful money of the United States of America.
76981111.1 13 Page 42 of 142
The Bonds shall be issued in fully registered form without coupons in denominations of
$5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity
date. The Bonds shall be initially registered in the name of Cede & Co., as nominee of The
Depository Trust Company, New York, New York, and shall be evidenced by one Bond for each
of the maturities in the principal amounts set forth below, and DTC is hereby appointed
depository for the Bonds and registered ownership may not thereafter be transferred except as set
forth in Section 2.05 hereof. The Bonds shall be dated the Closing Date. The Bonds shall
mature on September 1 in each of the years and in the amounts, and shall bear interest
(calculated on the basis of a 360-day year of twelve 30-day months) at the rates, as follows:
Maturity Date Principal Interest Rate
September 1 Amount Per Annum
Interest on the Bonds shall be payable on each Interest Payment Date to the person whose
name appears on the Registration Books as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date, such interest to be paid by check of the Trustee
mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owner at the
address of such Owner as it appears on the Registration Books as of the preceding Record Date;
provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate
principal amount of Outstanding Bonds filed with the Trustee prior to any Record Date, interest
on such Bonds shall be paid to such Owner on each succeeding Interest Payment Date by wire
transfer of immediately available funds to an account in the continental United States designated
in such written request. Any such written request shall remain in effect until rescinded in writing
by the Owner. Principal of and premium (if any) on any Bond shall be paid upon presentation
and surrender thereof, at maturity or the prior redemption thereof, at the Trust Office of the
Trustee. The principal of and interest and premium (if any) on the Bonds shall be payable in
lawful money of the United States of America.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (a) it is authenticated after a Record Date and on or before the
76981111.1 14 Page 43 of 142
following Interest Payment Date, in which event it shall bear interest from such Interest Payment
Date; or (b) it is authenticated on or before August 15, 2011, in which event it shall bear interest
from the Closing Date; provided, however, that if, as of the date of authentication of any Bond,
interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to
which interest has previously been paid or made available for payment thereon.
Section 2.02 Redemption of the Bonds.
(a) Mandatory Redemption from Optional Loan Prepayments. The Bonds
maturing on or after September 1, 2015 are subject to redemption on any date on or after
September 1, 2014, as a whole or in part on a pro rata basis and by lot within a maturity, from
prepayments of the Loan at the option of the Agency pursuant to Section 2.04 of the Loan
Agreement, at the redemption price equal to the principal amount of the Bonds to be redeemed,
plus accrued interest thereon to the date of redemption, without premium.
(b) Mandatory Sinking Fund Redemption. The Term Bonds maturing on
September 1, 20 shall be subject to mandatory redemption in part by lot, on September 1 in
each year commencing September 1, 20_ from mandatory sinking payments made by the
Authority into the Principal Account pursuant to Section 4.02(b)(ii), at a redemption price equal
to the principal amount thereof to be redeemed, without premium, plus accrued interest to the
date of redemption in the aggregate respective principal amounts and on September 1 in the
respective years as set forth in the following table; provided, however, that (i) in lieu of
redemption thereof on September 1 in any year, all or a portion of such Term Bonds may be
purchased by the Authority and tendered to the Trustee for cancellation not later than the
preceding July 15, and (ii) if some but not all of such Term Bonds have been redeemed pursuant
to subsection (a) above or subsection (c) below, the total amount of all future sinking fund
payments with respect to such Term Bonds shall be reduced by the aggregate principal amount
of the Bonds so redeemed, to be allocated among such sinking payments on a pro rata basis (as
nearly as practicable) in integral multiples of $5,000 as determined by the Authority and
specified in writing to the Trustee.
Term Bonds Maturine September 1, 20
Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be Redeemed
or Purchased
76981111.1 15 Page 44 of 142
(c) Mandatory Redemption Upon Acceleration of Loan. The Bonds shall also
be subject to mandatory redemption on any date, from amounts credited towards the payment of
principal of the Loan coming due and payable solely by reason of an event of default and
acceleration of the Loan pursuant to Section 5.01 of the Loan Agreement, at a redemption price
equal to the principal amount of the Bonds to be redeemed, without premium, together with
accrued interest thereon to the redemption date. The Bonds shall be subject to redemption under
this subsection (c) solely from amounts credited towards the payment of principal of the Loan
which has become due and payable by reason of such event of default and acceleration only.
(d) [Reserved]
(e) Notice of Redemption. The Trustee on behalf and at the expense of the
Authority shall mail (by first-class mail) notice of any redemption to the respective Owners of
any Bonds designated for redemption at their respective addresses appearing on the Registration
Books, to the Securities Depositories and to one or more Information Services, at least thirty (30)
but not more than sixty (60) days prior to the date fixed for redemption. Neither failure to
receive any such notice so mailed nor any defect therein shall affect the validity of the
proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon.
Such notice shall state the date of the notice, the redemption date, the redemption place and the
redemption price and shall designate the CUSIP® numbers, the Bond numbers (but only if less
than all of the Outstanding Bonds are to be redeemed) and the maturity or maturities (in the
event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to
be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the
Trustee for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date.
If at the time of mailing of any notice of redemption from optional prepayments under the
Loan Agreement there shall not have been deposited with the Trustee moneys sufficient to
redeem all the Bonds called for redemption, such notice shall state that it is subject to the deposit
of the redemption moneys with the Trustee not later than the opening of business on the
redemption date and will be of no effect unless such moneys are so deposited.
The Authority shall have the right to rescind redemption from optional prepayment under
the Loan Agreement by written notice to the Trustee on or prior to the date fixed for redemption.
Any notice of such redemption shall be cancelled and annulled if for any reason funds will not be
or are not available on the date fixed for redemption for the payment in full of the Bonds then
called for redemption, and such cancellation shall not constitute an Event of Default hereunder.
The Authority and the Trustee shall have no liability to the Owners or any other party related to
or arising from such rescission of redemption. The Trustee shall mail notice of such rescission
of redemption in the same manner as the original notice of redemption was sent.
In addition to the foregoing notice, further notice shall be given by the Trustee in said
form by first-class mail to any Owner whose Bond has been called for redemption but who has
failed to tender his Bond for payment by the date which is sixty (60) days after the redemption
date, but no defect in said further notice nor any failure to give all or any portion of such further
notice shall in any manner defeat the effectiveness of a call for redemption.
76981111.1 16 Page 45 of 142
Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP®
number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such
check or other transfer.
(f) Selection of Bonds for Redemption. Except as otherwise set forth in this
Indenture, whenever provision is made in this Indenture for the redemption of less than all of the
Bonds of any maturity, the Trustee shall select the Bonds to be redeemed from all Bonds of such
maturity not previously called for redemption, by lot in any manner which the Trustee in its sole
discretion shall deem appropriate. For purposes of such selection, all Bonds shall be deemed to
be comprised of separate $5,000 portions and such portions shall be treated as separate Bonds
which may be separately redeemed.
(g) Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption, then upon surrender of such Bond the Authority shall execute and the
Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a
new Bond or Bonds of the same series and maturity date, of authorized denominations in
aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
(h) Effect of Redemption. From and after the date fixed for redemption, if
funds available for the payment of the principal of and interest (and premium, if any) on the
Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease
to be entitled to any benefit under this Indenture other than the right to receive payment of the
redemption price, and no interest shall accrue thereon from and after the redemption date
specified in such notice. All Bonds redeemed pursuant to this Section 2.02 shall be canceled and
destroyed.
Section 2.03 Form of the Bonds. The Bonds, the form of Trustee's certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the form
set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or
appropriate variations, omissions and insertions, as permitted or required by this Indenture.
Section 2.04 Execution of Bonds. The Bonds shall be signed in the name and on behalf
of the Authority with the manual or facsimile signatures of its Chairperson and attested with the
manual or facsimile signature of its Executive Director or any assistant duly appointed by the
Board, and shall be delivered to the Trustee for authentication by it. In case any officer of the
Authority who shall have signed any of the Bonds shall cease to be such officer before the Bonds
so signed shall have been authenticated or delivered by the Trustee or issued by the Authority,
such Bonds may nevertheless be authenticated, delivered and issued and, upon such
authentication, delivery and issue, shall be as binding upon the Authority as though the
individual who signed the same had continued to be such officer of the Authority. Also, any
Bond may be signed on behalf of the Authority by any individual who on the actual date of the
execution of such Bond shall be the proper officer although on the nominal date of such Bond
such individual shall not have been such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A manually executed by the Trustee, shall be valid or
76981111.1 17 Page 46 of 142
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the
Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.05 Transfer of Bonds. Subject to Section 2.10, any Bond may, in accordance
with its terms, be transferred, upon the Registration Books, by the person in whose name it is
registered, in person or by his duly authorized attorney, upon surrender of such Bond for
cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to
the Trustee, duly executed. Whenever any Bond or Bonds shall be surrendered for transfer, the
Authority shall execute and the Trustee shall authenticate and deliver to the transferee a new
Bond or Bonds of like maturity and aggregate principal amount of authorized denominations.
The Trustee shall not be required to transfer, pursuant to this Section, either (a) all Bonds during
the period established by the Trustee for the selection of Bonds for redemption, or (b) any Bonds
selected for redemption pursuant to Section 2.02. The cost of printing Bonds and any services
rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the
Authority.
Section 2.06 Exchange of Bonds. The Bonds of any series may be exchanged at the
Trust Office of the Trustee for a like aggregate principal amount of Bonds of the same series of
other authorized denominations and of the same maturity. The Trustee shall not be required to
exchange, pursuant to this Section, either (a) all Bonds during the period established by the
Trustee for the selection of Bonds for redemption, or (b) any Bonds selected for redemption
pursuant to Section 2.02. The cost of printing Bonds and any service rendered or expenses
incurred by the Trustee in connection with any exchange shall by paid by the Authority.
Section 2.07 Registration Books. The Trustee will keep or cause to be kept at its Trust
Office sufficient records for the registration and transfer of the Bonds which shall at all
reasonable times during regular business hours be open to inspection by the Authority with
reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such
reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on said records Bonds as hereinbefore provided.
Section 2.08 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like series, tenor and authorized
denomination in exchange and substitution for the Bond so mutilated, but only upon surrender to
the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall
be cancelled by it and destroyed. If any Bond issued hereunder shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence
be satisfactory to the Trustee and indemnity for the Trustee and the Authority satisfactory to the
Trustee shall be given, the Authority, at the expense of the Owner, shall execute, and the Trustee
shall thereupon authenticate and deliver, a new Bond of like series and tenor in lieu of and in
substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or
shall have been called for redemption, instead of issuing a substitute Bond the Trustee may pay
the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The
Trustee may require payment of a fee for preparing and authenticating each new Bond issued
under this Section. Any Bond issued under the provisions of this Section in lieu of any Bond
76981111.1 18 Page 47 of 142
alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the
part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen be at any
time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of
this Indenture with all other Bonds secured by this Indenture.
Section 2.09 CUSIP® Numbers. The Trustee and the Authority shall not be liable for
any defect or inaccuracy in the CUSIP® number that appears on any Bond or in any redemption
notice. The Trustee may, in its discretion, include in any redemption notice a statement to the
effect that the CUSIP® numbers on the Bonds have been assigned by an independent service and
are included in such notice solely for the convenience of the Owners and that neither the Trustee,
or the Authority shall be liable for any inaccuracies in such numbers.
Section 2.10 Use of Securities Depository. (a) The Bonds shall be initially registered
as provided in Section 2.01. Registered ownership of the Bonds, or any portion thereof, may not
thereafter be transferred except:
(i) to any successor of Cede & Co., as nominee of DTC, or its nominee, or to
any substitute depository designated pursuant to clause (ii) of this Section (a "substitute
depository"); provided, that any successor of Cede & Co., as nominee of DTC or a
substitute depository, shall be qualified under any applicable laws to provide the services
proposed to be provided by it;
(ii) to any substitute depository upon (1) the resignation of DTC or its
successor (or any substitute depository or its successor) from its functions as depository,
or (2) a determination by the Authority to substitute another depository for DTC (or its
successor) because DTC or its successor (or any substitute depository or its successor) is
no longer able to carry out its functions as depository; provided, that any such substitute
depository shall be qualified under any applicable laws to provide the services proposed
to be provided by it; or
(iii) to any person as provided below, upon (1) the resignation of DTC or its
successor (or substitute depository or its successor) from its functions as depository, or
(2) a determination by the Authority to remove DTC or its successor (or any substitute
depository or its successor) from its functions as depository.
(b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection
(a) hereof, upon receipt of the Outstanding Bonds by the Trustee, together with a Written
Request of the Authority to the Trustee, a new Bond for each maturity shall be authenticated and
delivered in the aggregate principal amount of the Bonds then Outstanding, registered in the
name of such successor or such substitute depository, or their nominees, as the case may be, all
as specified in such Written Request of the Authority.
(c) In the case of any transfer pursuant to clause (iii) of subsection (a) hereof,
upon receipt of the Outstanding Bonds by the Trustee, together with a Written Request of the
Authority to the Trustee, new Bonds shall be authenticated and delivered in such denominations
numbered in the manner determined by the Trustee and registered in the names of such persons
as are requested in such a Written Request of the Authority, subject to the limitations of
76981111.1 19 Page 48 of 142
Section 2.01 hereof; provided, the Trustee shall not be required to deliver such new Bonds within
a period less than sixty (60) days from the date of receipt of such a Written Request of the
Authority. After any transfer pursuant to this subsection, the Bonds shall be transferred pursuant
to Section 2.05.
(d) The Authority and the Trustee shall be entitled to treat the person in whose
name any Bond is registered as the Owner thereof for all purposes of the Indenture and any
applicable laws, notwithstanding any notice to the contrary received by the Trustee or the
Authority; and the Authority and the Trustee shall have no responsibility for transmitting
payments to, communication with, notifying, or otherwise dealing with any beneficial owners of
the Bonds, and neither the Authority nor the Trustee will have any responsibility or obligations,
legal or otherwise, to the beneficial owners or to any other party, including DTC or its successor
(or substitute depository or its successor), except for the Owner of any Bonds
(e) So long as the Outstanding Bonds are registered in the name of Cede &
Co. or its registered assigns, the Authority and the Trustee shall cooperate with Cede & Co., as
sole registered Owner, or its registered assigns in effecting payment of the principal of and
interest on the Bonds by arranging for payment in such manner that funds for such payments are
properly identified and are made immediately available on the date they are due.
(f) Notwithstanding anything to the contrary contained herein, so long as the
Bonds are registered as provided in this Section 2. 10, payment of principal of and interest on the
Bonds shall be made in accordance with the Letter of Representations delivered to DTC with
respect to the Bonds.
Section 2.11 Temporary Bonds. The Bonds may be initially delivered in temporary
form exchangeable for definitive Bonds when ready for delivery, which temporary Bonds shall
be printed, lithographed or typewritten, shall be of such denominations as may be determined by
the Trustee, shall be in fully-registered form and shall contain such reference to any of the
provisions hereof as may be appropriate. Every temporary Bond shall be authenticated and
delivered by the Trustee upon the same conditions and terms and in substantially the same
manner as definitive Bonds. If the Trustee authenticates and delivers temporary Bonds, it will
register and authenticate definitive Bonds, and in that case, upon demand of the Owner of any
temporary Bonds, such definitive Bonds shall be exchanged by the Trustee at its Trust Office,
without cost to such Owner for temporary Bonds upon surrender of such temporary Bonds, and
until so exchanged such temporary Bonds shall be entitled to the same benefit, protection and
security hereunder as the definitive Bonds executed and delivered hereunder. All temporary
Bonds surrendered pursuant to the provisions of this Section shall be canceled by the Trustee and
shall not be redelivered.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS
Section 3.01 Issuance of Bonds. Upon the execution and delivery of this Indenture, the
Authority shall execute and deliver Bonds in the aggregate principal amount of
76981111.1 20 Page 49 of 142
Dollars to the Trustee for authentication and delivery to the
original purchaser thereof upon the Written Request of the Authority.
Section 3.02 Application of Proceeds of Sate of Bonds and Other Amounts. Upon
the receipt of payment for the Bonds on the Closing Date, the Trustee shall apply the proceeds of
sale thereof as follows:
(i) The Trustee shall deposit the amount of $ in the Loan Fund which
amount constitutes the aggregate principal amount of the Loan of $ less the
purchaser's discount of $
(ii) The Trustee shall deposit the amount of $ in the Reserve Fund.
(iii) The Trustee shall deposit the amount of $ in the Costs of
Issuance Fund.
Section 3.03 Loan Fund. The Trustee shall establish and maintain a separate fund to be
known as the "Loan Fund" into which shall be deposited a portion of the proceeds of sale of the
Bonds in the amount set forth in Section 3.02(i). The Trustee shall disburse all amounts in the
Loan Fund on the Closing Date to the Loan Disbursement Fund established under Section 2.02
of the Loan Agreement. The Trustee shall further make disbursements from the Loan
Disbursement Fund as set forth in Section 2.02 of the Loan Agreement.
Section 3.04 Costs of Issuance Fund/Loan Costs of Issuance Fund. There is hereby
established a fund to be held by the Trustee known as the "Costs of Issuance Fund" into which
shall be deposited the amount set forth in Section 3.02(iv). The moneys in the Costs of Issuance
Fund shall be used to pay Costs of Issuance from time to time upon receipt of a Written Request
of the Authority. On the date which is sixty (60) days following the Closing Date or upon the
earlier receipt by the Trustee of a Written Request of the Authority stating that all Costs of
Issuance have been paid, the Trustee shall transfer all remaining amounts in the Costs of
Issuance Fund to the Revenue Fund. The Authority may at any time file a Written Request
requesting that the Trustee retain a specified amount in the Costs of Issuance Fund and transfer
to the Revenue Fund all remaining amounts, and the Trustee shall comply with such request.
There is also hereby established a fund to be held by the Trustee known as the "Loan
Costs of Issuance Fund" into which shall be deposited a portion of the proceeds of the Loan in
the amount of $ . The moneys in the Loan Costs of Issuance Fund shall be used to pay
Loan Costs of Issuance from time to time upon receipt of a Written Request of the Authority.
On the date which is sixty (60) days following the Closing Date or upon the earlier receipt by the
Trustee of a Written Request of the Authority stating that all Loan Costs of Issuance have been
paid, the Trustee shall transfer all remaining amounts in the Loan Costs of Issuance Fund to the
Revenue Fund. The Authority may at any time file a Written Request requesting that the Trustee
retain a specified amount in the Loan Costs of Issuance Fund and transfer to the Revenue Fund
all remaining amounts, and the Trustee shall comply with such request.
Section 3.05 Loan Disbursement Fund. There is established under Section 2.02 of the
Loan Agreement separate fund to be held by the Trustee, each known as the "Loan Disbursement
76981 111.1 21 Page 50 of 142
Fund," which shall be held and disposed of by the Trustee as provided in Sections 2.02 of the
Loan Agreement.
Section 3.06 Reserve Fund.
(a) Establishment of Reserve Fund. There is hereby established a separate
fund to be known as the "Reserve Fund" which shall be held by the Trustee in trust for the
benefit of the Owners of the Bonds. The amount on deposit in the Reserve Fund shall be
maintained at the Reserve Requirement at all times prior to the payment of the Bonds in full,
except to the extent required for the purposes set forth in this Section 3.06.
(b) Transfers to Principal Account and Interest Account. hr the event that the
Agency shall fail to deposit with the Trustee the full amount required to be deposited pursuant to
Section 3.03(a) of the Loan Agreement, the Trustee shall withdraw from the Reserve Fund the
difference between the amount required to be deposited pursuant to a Loan Agreement and the
amount actually deposited by the Agency, for transfer to the Interest Account and the Principal
Account in the Revenue Fund under this Indenture.
(c) Transfers of Excess Over Reserve Requirement. In the event that the
amount on deposit in the Reserve Fund on any Interest Payment Date exceeds the Reserve
Requirement, the Trustee shall withdraw from the Reserve Fund and deposit to the Interest
Account of the Revenue Fund all amounts in excess of the Reserve Requirement, and credit such
amounts to payments due under the Loan.
(d) Alternative Funding of Reserve Requirement. The Authority may fund all
or a portion of the Reserve Requirement with one or more Qualified Reserve Fund Credit
Instruments. Upon deposit of any Qualified Reserve Fund Credit Instrument with the Trustee,
the Trustee shall pay to the Agency from amounts in the Reserve Fund an amount equal to the
principal of the Qualified Reserve Fund Credit Instrument.
In any case where the Reserve Fund is funded with a combination of cash and a Qualified
Reserve Fund Credit Instrument, the Trustee shall deplete all cash balances before drawing on
the Qualified Reserve Fund Credit Instrument. With regard to replenishment, any available
moneys provided by the Agency shall be used first to reinstate the Qualified Reserve Fund Credit
Instrument and second, to replenish the cash in the Reserve Fund.
In the event the Qualified Reserve Fund Credit Instrument will lapse or expire, the
Trustee shall draw upon such Qualified Reserve Fund Credit Instrument prior to its lapsing or
expiring, and the Authority shall cause the Agency to pay to the Trustee from available Tax
Revenues the amount required to be deposited into the Reserve Fund to increase the amount on
deposit therein to the Reserve Requirement or shall substitute such Qualified Reserve Fund
Credit Instrument with a Qualified Reserve Fund Credit Instrument that satisfies the
requirements of this subsection (d).
Prior to the redemption of Bonds pursuant to Section 2.02(a) hereof or the termination of
this Indenture, the provider of the Qualified Reserve Fund Credit Instrument shall have been paid
all amounts owing thereunder.
76981111.1 22 Page 51 of 142
Section 3.07 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any proceedings taken by the Agency with respect to
the application of the proceeds of the Loan, and the recital contained in the Bonds that the same
are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the
regularity of their issuance.
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.01 Pledge of Revenues; Assignment of Rights. The Bonds shall be secured
by a first lien on and pledge (which shall be effected in the manner and to the extent hereinafter
provided) of all of the Revenues and a pledge of all of the moneys in the Interest Account and
the Principal Account of the Revenue Fund and in the Reserve Fund, including all amounts
derived from the investment of such moneys. The Bonds shall be equally secured by a pledge,
charge and first lien upon the Revenues and such moneys without priority for number, date of
Bonds, date of execution or date of delivery; and the payment of the interest on and principal of
the Bonds and any premiums upon the redemption of any thereof shall be and are secured by an
exclusive pledge, charge and first lien upon the Revenues and such moneys. So long as any of
the Bonds are Outstanding, the Revenues and such moneys shall not be used for any other
purpose; except that out of the Revenues there may be apportioned such sums, for such purposes,
as are expressly permitted by Section 4.02.
The Authority hereby transfers in trust and assigns to the Trustee, for the benefit of the
Owners from time to time of the Bonds, all of the Revenues and all of the right, title and interest
of the Authority (but not the obligations) in the Loan Agreement (other than the rights of the
Authority under Sections 4.10 and 5.04 thereof). The Trustee shall be entitled to and shall
receive all of the Revenues, and any Revenues collected or received by the Authority shall be
deemed to be held, and to have been collected or received, by the Authority as the agent of the
Trustee and shall forthwith be paid by the Authority to the Trustee. The assignment to the
Trustee is solely in its capacity as Trustee under this Indenture and in accepting such assignment
and taking any actions with respect to the Loan Agreement, the Trustee shall be entitled to all the
indemnities, protections, immunities and limitations from liability afforded it as Trustee under
this Indenture. The Trustee also shall be entitled to and, subject to the provisions hereof, shall
take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either
jointly with the Authority or separately, all of the rights of the Authority and all of the
obligations of the Agency under the Loan Agreement.
Section 4.02 Receipt, Deposit and Application of Revenues.
(a) Deposit of Revenues; Revenue Fund. All Revenues described in clause
(a) of the definition thereof in Section 1.01 shall be promptly deposited by the Trustee upon
receipt thereof in a special fund designated as the "Revenue Fund which the Trustee shall
establish, maintain and hold in trust hereunder.
(b) Application of Revenues: Special Accounts. On or before each Interest
Payment Date, the Trustee shall transfer from the Revenue Fund and deposit into the following
76981111.1 23 Page 52 of 142
respective accounts (each of which the Trustee shall establish and maintain within the Revenue
Fund), the following amounts in the following order of priority, the requirements of each such
account (including the making up of any deficiencies in any such account resulting from lack of
Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied
before any transfer is made to any account subsequent in priority:
(i) Interest Account. On or before each Interest Payment Date, the Trustee
shall deposit in the Interest Account an amount required to cause the aggregate amount
on deposit in the Interest Account to equal the amount of interest becoming due and
payable on such Interest Payment Date on all Outstanding Bonds. No deposit need be
made into the Interest Account if the amount contained therein is at least equal to the
interest becoming due and payable upon all Outstanding Bonds on such Interest Payment
Date. All moneys in the Interest Account shall be used and withdrawn by the Trustee
solely for the purpose of paying the interest on the Bonds as it shall become due and
payable (including accrued interest on any Bonds redeemed prior to maturity).
(ii) Principal Account. On or before each date on which the principal of the
Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount
required to cause the aggregate amount on deposit in the Principal Account to equal the
aggregate amount of principal coming due and payable on such date on the Bonds
pursuant to Section 2.01, or the redemption price of the Bonds (consisting of the principal
amount thereof and any applicable redemption premiums) required to be redeemed on
such date pursuant to any of the provisions of Section 2.02. All moneys in the Principal
Account shall be used and withdrawn by the Trustee solely for the purpose of (A) paying
the principal of the Serial Bonds at the maturity thereof, (B) paying the principal of the
Term Bonds upon the mandatory sinking fund redemption or maturity thereof pursuant to
Section 2.02(b), or (C) paying the principal of and premium (if any) on any Bonds upon
the redemption thereof pursuant to Section 2.02(a).
(iii) Surplus. All amounts on deposit in the Revenue Fund on September 2 of
each year, to the extent not required to pay any interest on or principal of any
Outstanding Bonds then having come due and payable, shall be credited to the
replenishment of the Reserve Fund in an amount to maintain the Reserve Requirement
therein, including interest on amounts advanced under any Qualified Reserve Fund Credit
Instrument, in the order of replenishment described under Section 3.06(d) herein, if
necessary; and then for any lawful purpose of the Authority including payment of debt
service on other obligations of the Authority issued to finance redevelopment activities of
the Agency.
(c) Rebate Account. The Trustee shall deposit in the Rebate Account from
time to time, from payments made by the Agency for such purpose pursuant to Sections 4.11 of
the Loan Agreement, an amount determined by the Authority to be subject to rebate to the
United States of America in accordance with Section 5.07(h). Amounts in the Rebate Account
shall be applied and disbursed by the Trustee solely for the purposes and at the times set forth in
Written Requests of the Authority filed with the Trustee pursuant to Section 5.07(h). The
Trustee shall not be responsible for calculating rebate amounts or for the adequacy or correctness
of any rebate report or rebate calculations. The Trustee shall be deemed conclusively to have
76981111.1 24 Page 53 of 142
complied with the provisions of the Indenture and any other agreement relating to the Bonds
regarding calculation and payment of rebate if it follows the directions of the Authority and it
shall have no independent duty to review such calculations or enforce the compliance with such
rebate requirements by the Authority or the Agency.
Section 4.03 Investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture or the Loan Agreement shall be invested by the Trustee
solely in Permitted Investments pursuant to the written direction of the Authority given to the
Trustee in advance of the making of such investments. Each such written direction shall contain
the representation of the Authority that the investments identified therein constitute Permitted
Investments hereunder upon which the Trustee may conclusively rely. In the absence of any
such direction from the Authority, the Trustee shall invest any such moneys in clause (7) of the
definition of Permitted Investments. Obligations purchased as an investment of moneys in any
fund shall be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the fund or account from which such
investment was made. For purposes of acquiring any investments hereunder, the Trustee may
commingle funds held by it hereunder upon the Written Request of the Authority. The Trustee
or its affiliate may (but shall not be obligated to) act as principal or agent in the acquisition of
any investment and shall be entitled to its customary fees therefor. The Trustee shall incur no
liability for losses arising from any investments made pursuant to this Section.
The Authority acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Authority the right to receive brokerage
confirmations of security transactions as they occur, the Authority specifically waives receipt of
such confirmations to the extent permitted by law. The Trustee will furnish the Authority
periodic cash transaction statements which include detail for all investment transactions made by
the Trustee hereunder.
The Trustee or any of its affiliates may act as sponsor, advisor or manager or provide
administrative services in connection with any Permitted Investments.
Section 4.04 Valuation and Disposition of Investments. The Authority covenants that
all investments of amounts deposited in any fund or account created by or pursuant to this
Indenture shall be acquired, disposed of, and valued at least annually at market value.
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.01 Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal, interest and premium (if any) to become due in respect of all the Bonds, in strict
conformity with the terms of the Bonds and of this Indenture, according to the true intent and
meaning thereof, but only out of Revenues and other assets pledged for such payment as
provided in this Indenture.
76981111.1 25 Page 54 of 142
Section 5.02 Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the
Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance
shall not be deemed to constitute an extension of maturity of the Bonds.
Section 5.03 Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the
pledge and assignment created by this Indenture. Subject to this limitation, the Authority
expressly reserves the right to enter into one or more other indentures for any of its corporate
purposes, including other programs under the Bond Law, and reserves the right to issue other
obligations for such purposes.
Section 5.04 Power to Issue Bonds and Make Pledge and Assignment. The Authority
is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to
pledge and assign the Revenues, the Loan Agreement and other assets purported to be pledged
and assigned, respectively, under this Indenture in the manner and to the extent provided in this
Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and
binding special obligations of the Authority in accordance with their terms, and the Authority
and the Trustee, subject to the provisions of this Indenture, shall at all times, to the extent
permitted by law, defend, preserve and protect said pledge and assignment of Revenues and
other assets and all the rights of the Owners under this Indenture against all claims and demands
of all persons whomsoever.
Section 5.05 Accounting Records and Financial Statements. The Trustee shall at all
times keep, or cause to be kept, proper books of record and account, prepared in accordance with
industry standards, in which complete and accurate entries shall be made of all transactions made
by the Trustee relating to the proceeds of Bonds, the Revenues and all funds and accounts
established by the Trustee pursuant to this Indenture or the Loan Agreement. Such books of
record and account shall be available for inspection by the Authority and the Agency, during
regular business hours with reasonable prior notice.
Not later than 45 days following each Interest Payment Date, the Trustee shall prepare
and file with the Authority a report setting forth: (i) amounts withdrawn from and deposited into
each fund and account maintained by the Trustee under the Indenture; (ii) the balance on deposit
in each fund and account as of the date for which such report is prepared; and (iii) a brief
description of all obligations held as investments in each fund and account. Copies of such
reports may be mailed to any owner of at least 50% aggregate principal amount of Bonds
Outstanding, upon the owner's written request at a cost not to exceed the Trustee's actual costs
of duplication and mailing. Said reports may be in the form of the Trustee's regular semiannual
statements.
76981111.1 26 Page 55 of 142
Section 5.06 No Additional Parity Debt. Except for the purposes of refunding the
Bonds, the Authority covenants that no additional bonds, notes or other indebtedness shall be
issued or incurred which are payable out of the Revenues in whole or in part.
Section 5.07 Tax Covenants Relating to Bonds.
(a) Special Definitions. When used in this Section, the following terms have
the following meanings:
"Code" means the Internal Revenue Code of 1986.
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the
Tax Regulations (referring to sales, investment and transferred proceeds), and any
replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the
Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Nonpurpose Investment" means any investment property, as defined in section
148(b) of the Code, in which Gross Proceeds of the Bonds are invested and that is not
acquired to carry out the governmental purposes of that series of Bonds.
"Rebate Amount" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Tax Regulations" means the United States Treasury Regulations promulgated
pursuant to sections 103 and 141 through 150 of the Code, or section 103 of the 1954
Code, as applicable.
"Yield" of any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and of any issue of governmental obligations has the meaning set forth in
section 1.148-4 of the Tax Regulations.
(b) Not to Cause Interest to Become Taxable. The Authority covenants that it
shall not use, and shall not permit the use of, and shall not omit to use Gross Proceeds or any
other amounts (or any property the acquisition, construction or improvement of which is to be
financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted,
respectively, could cause the interest on any Bond to fail to be excluded pursuant to
section 103(a) of the Code from the gross income of the owner thereof for federal income tax
purposes. Without limiting the generality of the foregoing, unless and until the Trustee receives
a written opinion of Bond Counsel to the effect that failure to comply with such covenant will
not adversely affect such exclusion of the interest on any Bond from the gross income of the
owner thereof for federal income tax purposes, the Authority shall comply with each of the
specific covenants in this Section.
76981111.1 27 Page 56 of 142
(c) Private Use and Private Payments. Except as would not cause any Bond
to become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations, the Authority shall take all actions necessary to assure that the Agency at all times
prior to the final cancellation of the last of the Bonds to be retired:
(1) exclusively owns, operates and possesses all property the
acquisition, construction or improvement of which is to be financed or refinanced directly
or indirectly with Gross Proceeds of the Bonds and not use or permit the use of such
Gross Proceeds (including through any contractual arrangement with terms different than
those applicable to the general public) or any property acquired, constructed or improved
with such Gross Proceeds in any activity carried on by any person or entity (including the
United States or any agency, department and instrumentality thereof) other than a state or
local government, unless such use is solely as a member of the general public; and
(2) does not directly or indirectly impose or accept any charge or other
payment by any person or entity (other than a state or local government) who is treated as
using any Gross Proceeds of the Bonds (other than of the Second Refunding Bonds) or
any property the acquisition, construction or improvement of which is to be financed or
refinanced directly or indirectly with such Gross Proceeds.
(d) No Private Loan. Except as would not cause any Bond to become a
"private activity bond" within the meaning of section 141 of the Code and the Tax Regulations
and rulings thereunder, the Authority shall not use or permit the use of Gross Proceeds of the
Bonds to make or finance loans to any person or entity other than a state or local government.
For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a
person or entity if. (i) property acquired, constructed or improved with such Gross Proceeds is
sold or leased to such person or entity in a transaction that creates a debt for federal income tax
purposes; (ii) capacity in or service from such property is committed to such person or entity
under a take-or-pay, output or similar contract or arrangement; or (iii) indirect benefits of such
Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or
improved with such Gross Proceeds, are otherwise transferred in a transaction that is the
economic equivalent of a loan.
(e) Not to Invest at Higher Yield. Except as would not cause the Bonds to
become "arbitrage bonds" within the meaning of section 148 of the Code and the Tax
Regulations and rulings thereunder, the Authority shall not (and shall not permit any person to),
at any time prior to the final cancellation of the last Bond to be retired, directly or indirectly
invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any
Investment acquired with Gross Proceeds, whether then held or previously disposed of, would
materially exceed the Yield of the Bonds within the meaning of said section 148.
(f) Not Federally Guaranteed. Except to the extent permitted by section
149(b) of the Code and the Tax Regulations and rulings thereunder, the Authority shall not take
or omit to take (and shall not permit any person to take or omit to take) any action that would
cause any Bond to be "federally guaranteed" within the meaning of section 149(b) of the Code
and the Tax Regulations and rulings thereunder.
76981111.1 28 Page 57 of 142
(g) Information Re o~rt. The Authority shall timely file any information
required by section 149(e) of the Code with respect to Bonds with the Secretary of the Treasury
on Form 8038-G or such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in
section 148(f) of the Code and the Tax Regulations:
(1) The Authority shall account (or shall cause the Agency to account)
for all Gross Proceeds (including all receipts, expenditures and investments thereof) on
its books of account separately and apart from all other funds (and receipts, expenditures
and investments thereof) and shall retain all records of accounting for at least six years
after the day on which the last Bond is discharged. However, to the extent permitted by
law, the Authority may commingle (and may allow the Agency to commingle) Gross
Proceeds of Bonds with its other moneys, provided that it separately accounts for each
receipt and expenditure of Gross Proceeds and the obligations acquired therewith.
(2) Not less frequently than each Computation Date, the Authority
shall calculate, or shall cause the Agency to calculate (and to report to the Authority the
results of such calculation, including the basis therefor, in sufficient detail and on a
timely basis in order that the Authority be able to comply with its covenants herein), the
Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the
Tax Regulations and rulings thereunder. The Authority shall maintain a copy of the
calculation with its official transcript of proceedings relating to the issuance of the Bonds
until six years after the final Computation Date.
(3) In order to assure the excludability pursuant to section 103(a) of
the Code of the interest on the Bonds from the gross income of the owners thereof for
federal income tax purposes, the Authority shall pay to the United States the amount that
when added to the future value of previous rebate payments made for the Bonds equals
(i) in the case of the Final Computation Date as defined in section 1.148-3(e)(2) of the
Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and
(ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate
Amount on such date. Upon the Written Request of the Authority, the Trustee shall pay
over to the Authority amounts in the Rebate Account for such purpose. In all cases, such
rebate payments shall be made by the Authority at the times and in the amounts as are or
may be required by section 148(f) of the Code and the Tax Regulations and rulings
thereunder, and shall be accompanied by Form 8038-T or such other forms and
information as is or may be required by section 148(f) of the Code and the Tax
Regulations and rulings thereunder for execution and filing by the Authority.
Notwithstanding the foregoing, and provided that the Authority takes all steps available
to it to cause the provision of such amounts, the monetary obligation of the Authority
under this paragraph (3) shall be limited to amounts provided to it for such purpose by the
Agency.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section
148 of the Code and the Tax Regulations and rulings thereunder, the Authority shall not and
shall not permit any person to, at any time prior to the final cancellation of the last of the Bonds
76981111.1 29 Page 58 of 142
to be retired, enter into any transaction that reduces the amount required to be paid to the United
States pursuant to paragraph (h) of this Section because such transaction results in A smaller
profit or a larger loss than would have resulted if the transaction had been at arm's length and
had the Yields on the Bonds not been relevant to either party.
0) Bonds Not Hedge Bonds.
(1) The Authority represents that none of the Bonds is or will become
a "hedge bond" within the meaning of section 149(g) of the Code.
(2) Without limitation of paragraph (1) above: the Authority believes
(upon appropriate investigation) (A) that on the date of issuance of the Bonds the
Authority reasonably expected that at least 85% of the spendable proceeds of the Bonds
will be expended within the three-year period commencing on such date of issuance, and
(B) no more than 50% of the proceeds of the Bonds will be invested in Nonpurpose
Investments having a substantially guaranteed yield for a period of four years or more.
(k) Elections. The Authority hereby directs and authorizes any Authority
Representative to make elections permitted or required pursuant to the provisions of the Code or
the Tax Regulations, as such Representative (after consultation with Bond Counsel) deems
necessary or appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or
similar or other appropriate certificate, form or document.
(1) Closing Certificate. The Authority agrees to execute and deliver in
connection with the issuance of the Bonds a Tax Certificate as to Arbitrage and the Provisions of
Sections 103 and 141-150 of the Internal Revenue Code of 1986, or similar document containing
additional representations and covenants pertaining to the exclusion of interest on the Bonds
from the gross income of the owners thereof for federal income tax purposes, which
representations and covenants are incorporated as though expressly set forth herein.
Section 5.08 Loan Agreement. The Trustee, as assignee of the Authority rights
pursuant to Section 4.01, shall (subject to the provisions of this Indenture) promptly collect all
amounts due from the Agency pursuant to the Loan Agreement and, subject to the provisions
hereof, shall enforce, and take all steps, actions and proceedings reasonably necessary for the
enforcement of all of the rights of the Authority thereunder and for the enforcement of all of the
obligations of the Agency thereunder.
The Authority and the Agency may at any time amend or modify the Loan Agreement
pursuant to the applicable provisions thereof, but only: (a) if the Authority, the Agency or the
Trustee first obtains the written consent of the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding; provided, however, that no such amendment or
modification shall (i) extend the maturity of or reduce the amount of interest or principal
payments on the Loan, or otherwise alter or impair the obligation of the Agency to pay the
principal, interest or prepayment premiums on the Loan at the time and place and at the rate and
in the currency provided herein, without the express written consent of the Owner of each
affected Bond, (ii) reduce the percentage of Bonds required for the written consent to any such
modification or amendment thereof or hereof, or (iii) without its written consent thereto, modify
76981111.1 30 Page 59 of 142
any of the rights or obligations of the Trustee; or (b) without the consent of any of the Owners, if
such amendment or modification is for any one or more of the following purposes
(i) to add to the covenants and agreements of the Agency contained in such
Loan Agreement other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power therein reserved to or conferred upon the Agency so long
as such limitation or surrender of such rights or powers shall not materially adversely
affect the Owners of the Bonds;
(ii) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in such Loan
Agreement, or in any other respect whatsoever as the Agency may deem necessary or
desirable, provided under any circumstances that such modifications or amendments shall
not materially adversely affect the interests of the Owners of the Bonds;
(iii) to make such additions, deletions or modifications as may be necessary or
desirable to assure exemption from federal income taxation of interest on the Bonds;
(iv) to provide for the issuance of Parity Debt as defined in and under and in
accordance with the provisions of such Loan Agreement; or
(v) to provide for a Qualified Reserve Fund Credit Instrument for amounts
held in a Reserve Fund under this Indenture, as permitted by Section 3.06 herein.
Nothing in this Section 5.08 shall prevent the Agency and the Authority from entering
into any amendment or modification of the Loan Agreement which solely affects a particular
Bond or Bonds all of the Owners of which shall have consented to such amendment or
modification. The Trustee shall be entitled to rely upon the opinion of Bond Counsel stating that
the requirements of this Section 5.08 have been met with respect to any amendment or
modification of a Loan Agreement.
The Authority may sell a Loan Agreement upon written direction to the Trustee, so long
as the proceeds of such sale are placed in an appropriate fund to pay debt service on the Bonds,
and such proceeds are sufficient to discharge all of the Authority's obligations on the portion of
the Bonds represented by such Loan Agreement in the manner set forth in Section 9.03.
Section 5.09 Further Assurances. The Authority will adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably necessary
or proper to carry out the intention or to facilitate the performance of this Indenture, and for the
better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in
this Indenture.
Section 5.10 Management and Operation of Properties. The Authority shall require
the Agency to manage and operate all properties owned by the Agency and comprising any part
of the Project Area in a sound and businesslike manner, and will keep such properties insured at
all times in conformity with sound business practice.
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Section 5.11 Payments of Taxes and Other Charges. The Authority shall cause the
Agency to pay and discharge or cause to be paid and discharged, all taxes, service charges,
assessments and other governmental charges which may hereafter be lawfully imposed upon the
Agency or the properties then owned by the Agency in the Project Area when the same shall
become due. Nothing herein contained shall require the Agency to make any such payments so
long as the Agency in good faith shall contest the validity of any such taxes, assessments or
charges. The Authority shall cause the Agency to duly observe and conform with all valid
requirements of any governmental authority relative to the Project Area or any part thereof.
Section 5.12 Immunity. The Authority is not entitled to any immunity, sovereign or
otherwise, from any legal proceedings to enforce or collect upon this Indenture or the Bonds. To
the extent that the Authority has or hereafter may acquire any right to immunity, the Authority
hereby waives such rights for itself in respect of its obligations arising under this Indenture and
the Bonds.
ARTICLE VI
THE TRUSTEE
Section 6.01 Appointment of Trustee. Union Bank, N.A. in Los Angeles, California, is
hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be
deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this
Indenture. The Authority agrees that it will maintain a Trustee having a corporate trust office in
the State, with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000),
and subject to supervision or examination by federal or State authority, so long as any Bonds are
Outstanding. If such bank or trust company publishes a report of condition at least annually
pursuant to law or to the requirements of any supervising or examining authority above referred
to, then for the purpose of this Section 6.01 the combined capital and surplus of such bank or
trust company shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and redemption
premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption
or purchase prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall
keep accurate records of all funds administered by it and of all Bonds paid and discharged.
Section 6.02 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed
upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the
following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after
curing of all Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an Event of Default
hereunder has occurred (which has not been cured or waived), the Trustee may exercise such of
the rights and powers vested in it by this Indenture, and shall use the same degree of care and
skill and diligence in their exercise, as a prudent person would use in the conduct of its own
affairs.
76981111.1 32 Page 61 of 142
(b) The Trustee may execute any of the trusts or powers hereof and perform
the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be
entitled to advice of counsel concerning all matters of trust and its duty hereunder. The Trustee
may conclusively rely on an opinion of counsel as full and complete protection for any action
taken or suffered by it hereunder.
(c) The Trustee shall not be responsible for any recital herein, in the Loan
Agreement or in the Bonds, or for any of the supplements hereto or thereto or instruments of
further assurance, or for the sufficiency of the security for the Bonds issued hereunder or
intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions or agreements on the part of the
Authority hereunder.
(d) The Trustee may become the Owner of Bonds secured hereby with the
same rights which it would have if not the Trustee; may acquire and dispose of other bonds or
evidences of indebtedness of the Authority with the same rights it would have if it were not the
Trustee; and may act as a depository for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights
of Owners of Bonds, whether or not such committee shall represent the Owners of the majority
in aggregate principal amount of the Bonds then Outstanding.
(e) The Trustee shall be protected in acting, in good faith, upon any notice,
request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed
by it to be genuine and correct and to have been signed or sent by the proper person or persons.
Any action taken or omitted to be taken by the Trustee in good faith pursuant to this Indenture
upon the request or authority or consent of any person who at the time of making such request or
giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon
all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place
thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to
take any action at his request unless the ownership of such Bond by such person shall be
reflected on the Registration Books.
(f) As to the existence or non-existence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a
Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the
occurrence of an Event of Default hereunder of which the Trustee has been given notice or is
deemed to have notice, as provided in Section 6.02(h) hereof, shall also be at liberty to accept a
Certificate of the Authority to the effect that any particular dealing, transaction or action is
necessary or expedient, but may at its discretion secure such further evidence deemed by it to be
necessary or advisable, but shall in no case be bound to secure the same.
(g) The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty and it shall not be answerable for other than its
negligence or willful misconduct. The immunities and exceptions from liability of the Trustee
shall extend to its officers, directors, employees and agents.
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(h) The Trustee shall not be required to take notice or be deemed to have
notice of any Event of Default under the Loan Agreement or hereunder except failure by the
Agency to make any of the payments to the Trustee required to be made by the Agency pursuant
to the Loan Agreement or failure by the Authority or the Agency to file with the Trustee any
document required by this Indenture or the Loan Agreement to be so filed subsequent to the
issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default
by the Authority or by the Owners of at least twenty-five percent (25%) in aggregate principal
amount of the Bonds then Outstanding and all notices or other instruments required by this
Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Trust
Office of the Trustee, and in the absence of such notice so delivered the Trustee may
conclusively assume there is no Event of Default hereunder except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right (but not the duty) fully to
inspect all books, papers and records of the Authority pertaining to the Bonds, and to make
copies of any of such books, papers and records such as may be desired but which is not
privileged by statute or by law.
6) The Trustee shall not be required to give any bond or surety in respect of
the execution of the said trusts and powers or otherwise in respect of the premises hereof.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing
the right of the Authority to the execution of any Bonds, the withdrawal of any cash, or the
taking of any other action by the Trustee.
(1) Before taking the action referred to in Section 8.02, the Trustee may
require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses to
which it may be put and to protect it against all liability, except liability which is adjudicated to
have resulted from its negligence or willful default in connection with any such action.
(m) All moneys received by the Trustee shall, until used or applied or invested
as herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(n) The Trustee shall have no responsibility or liability with respect to any
information, statements or recital in any offering memorandum or other disclosure material
prepared or distributed with respect to the issuance of the Bonds.
Section 6.03 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
payment and reimbursement for reasonable fees for its services rendered hereunder and all
advances, counsel fees (including expenses) and other expenses reasonably and necessarily made
or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of
Default hereunder, but only upon an Event of Default, the Trustee shall have a first lien with
76981111.1 34 Page 63 of 142
right of payment prior to payment of any Bond upon the amounts held hereunder for the
foregoing fees, charges and expenses incurred by it respectively. The Trustee's right to payment
of its fees and expenses shall survive the discharge and payment or defeasance of the Bonds and
termination of the Indenture, and the resignation or removal of the Trustee.
Section 6.04 Notice to Owners of Default. If an Event of Default hereunder occurs
with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as
provided in Section 6.02(h) hereof, then the Trustee shall promptly give written notice thereof by
first-class mail to the Owner of each such Bond, unless such Event of Default shall have been
cured before the giving of such notice; provided, however, that unless such Event of Default
consists of the failure by the Authority to make any payment when due, the Trustee may elect not
to give such notice to the Owners if and so long as the Trustee in good faith determines that such
Event of Default does not materially adversely affect the interests of the Owners or that it is
otherwise not in the best interests of the Owners to give such notice.
Section 6.05 Intervention by Trustee. In any judicial proceeding to which the
Authority is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing
on the interests of Owners of any of the Bonds arising under this Indenture, the Trustee may
intervene on behalf of such Owners, and subject to Section 6.02(1) hereof, shall do so if
requested in writing by the Owners of at least twenty-five percent (25%) aggregate principal
amount of such Bonds then Outstanding.
Section 6.06 Removal of Trustee. The Owners of a majority in aggregate principal
amount of the Outstanding Bonds may at any time, or the Authority may (and the Authority, at
the request of the Agency shall) so long as no Event of Default shall have occurred and then be
continuing, remove the Trustee initially appointed, and any successor thereto, by an instrument
or concurrent instruments in writing delivered to the Trustee at least thirty (30) days prior to the
effective date of each removal, whereupon the Authority or such Owners, as the case may be,
shall appoint a successor or successors thereto; provided that any such successor shall be a bank
or trust company meeting the requirements set forth in Section 6.01.
Section 6.07 Resignation by Trustee. The Trustee and any successor Trustee may at
any time give thirty (30) days' written notice of its intention to resign as Trustee hereunder, such
notice to be given to the Authority and the Agency by registered or certified mail. Upon
receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee.
Section 6.08 Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, with the prior written
consent of the Agency, the Authority shall promptly appoint a successor Trustee. In the event
the Authority shall for any reason whatsoever fail to appoint a successor Trustee within ninety
(90) days following the delivery to the Trustee of the instrument described in Section 6.06 or
within ninety (90) days following the receipt of notice by the Authority pursuant to Section 6.07,
the Trustee may apply to a court of competent jurisdiction for the appointment of a successor
Trustee meeting the requirements of Section 6.01 hereof. Any such successor Trustee appointed
by such court shall become the successor Trustee hereunder notwithstanding any action by the
Authority purporting to appoint a successor Trustee following the expiration of such ninety-day
period.
76981111.1 35 Page 64 of 142
Any resignation or removal of the Trustee pursuant to Section 6.06 or Section 6.07 and
appointment of a successor Trustee shall become effective upon written acceptance of
appointment by the successor Trustee. Upon such acceptance, the Authority shall cause notice
thereof to be given by first-class mail, postage prepaid, to the Owners at their respective
addresses set forth on the Registration Books.
Section 6.09 Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided that
such company shall meet the requirements set forth in Section 6.01, shall be the successor to the
Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
Section 6.10 Concerning any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an
instrument in writing accepting such appointment hereunder and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor
shall, nevertheless, on the Written Request of the Authority, or of the Trustee's successor,
execute and deliver an instrument transferring to such successor all the estates, properties, rights,
powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as the Trustee hereunder to its successor. Should any
instrument in writing from the Authority be required by any successor Trustee for more fully and
certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended
to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request,
be executed, acknowledged and delivered by the Authority.
Section 6.11 Appointment of Co-Trustee. It is the purpose of this Indenture that there
shall be no violation of any law of any jurisdiction (including particularly the law of the State)
denying or restricting the right of banking corporations or associations to transact business as
Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint an additional
individual or institution as a separate or co-trustee. The following provisions of this Section 6.11
are adopted to these ends.
In the event that the Trustee appoints an additional individual or institution as a separate
or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested
in or conveyed to the Trustee with respect thereto shall be exercisable by and vested in such
separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to
76981111.1 36 Page 65 of 142
exercise such powers, rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Authority be required by the separate trustee
or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming
to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Authority. In case any
separate trustee or co-trustee, or a successor to either, shall become incapable of acting, resign or
be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee.
Section 6.12 Indemnification; Limited Liability of Trustee. The Authority further
covenants and agrees to indemnify and save the Trustee and its officers, directors, agents and
employees, harmless against any loss, costs, claims, expense and liabilities which it may incur
arising out of or in the exercise and performance of its powers and duties hereunder or under any
Loan Agreement, including the costs and expenses of defending against any claim of liability,
but excluding any and all losses, costs, claims, expenses and liabilities which are due to the
negligence or willful misconduct of the Trustee, its officers, directors, agents or employees. No
provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise
incur any financial liability hereunder if it is not assured to its satisfaction that repayment of such
funds or adequate indemnity against such liability or risk is not assured to it. The Trustee shall
not be liable for any action taken or omitted to be taken by it in accordance with the direction of
the Owners of a majority in aggregate principal amount of Bonds Outstanding relating to the
time, method and place of conducting any proceeding or remedy available to the Trustee under
this Indenture. The obligations of the Authority under this paragraph shall survive the
resignation or removal of the Trustee under this Indenture or any defeasance of the Bonds.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.01 Amendment Hereof. This Indenture and the rights and obligations of the
Authority and of the Owners of the Bonds may be modified or amended at any time by a
Supplemental Indenture which shall become binding upon execution by the Authority and the
Trustee, without consent of any Owners, to the extent permitted by law but only for any one or
more of the following purposes:
(a) to add to the covenants and agreements of the Authority contained in this
Indenture, other covenants and agreements hereafter to be observed, to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or power
herein reserved to or conferred upon the Authority;
(b) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained in this
Indenture, or in any other respect whatsoever, as the Authority may deem necessary or desirable,
76981111.1 37 Page 66 of 142
provided that such modification or amendment does not materially adversely affect the interests
of the Owners in the opinion of Bond Counsel;
(c) to modify, amend or supplement the Indenture in such manner as to permit
the qualification of this Indenture under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect, and to add such other terms, conditions and provisions
as may be permitted by said act or similar federal statute:
(d) to make such additions, deletions or modifications as may be necessary or
desirable to assure exemption from federal income taxation of interest on the Bonds: or
(e) to facilitate the issuance of additional obligations of the Agency pursuant
to a Loan Agreement.
Except as set forth in the preceding paragraph of this Section 7.01, this Indenture and the
rights and obligations of the Authority and of the Owners of the Bonds may only be modified or
amended at any time by a Supplemental Indenture which shall become binding when the written
consents of the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding are filed with the Trustee. No such modification or amendment shall (a) extend the
maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of
the Authority to pay the principal, interest or premiums (if any) at the time and place and at the
rate and in the currency provided therein of any Bond without the express written consent of the
Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any
such amendment or modification, or (c) without its written consent thereto, modify any of the
rights or obligations of the Trustee.
The Trustee shall be provided an opinion of Bond Counsel that any such Supplemental
Indenture entered into by the Authority and the Trustee complies with the provisions of this
Article VII and the Trustee may conclusively rely upon such opinion.
Section 7.02 Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may
be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to
such modification and amendment, and all the terms and conditions of any Supplemental
Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Section 7.03 Endorsement or Replacement of Bonds After Amendment. After the
effective date of any action taken as hereinabove provided, the Authority may determine that the
Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner of any Bond Outstanding at such effective
date and presentation of his Bond for that purpose at the Trust Office of the Trustee, a suitable
notation as to such action shall be made on such Bond. If the Authority shall so determine, new
Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such
Owners' action shall be prepared and executed, and in that case upon demand of the Owner of
76981111.1 38 Page 67 of 142
any Bond Outstanding at such effective date such new Bonds shall be exchanged at the Trust
Office of the Trustee, without cost to each Owner, for Bonds then Outstanding, upon surrender
of such Outstanding Bonds.
Section 7.04 Amendment by Mutual Consent. The provisions of this Article VII shall
not prevent any Owner from accepting any amendment as to the particular Bond held by him,
provided that due notation thereof is made on such Bond.
ARTICLE VIII
EVENTS OF DEFAULT AND
Section 8.01 Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of any Bond
when and as the same shall become due and payable, whether at maturity as therein expressed,
by proceedings for redemption, by acceleration or otherwise.
(b) Default in the due and punctual payment of any installment of interest on
any Bond when and as such interest installment shall become due and payable.
(c) Failure by the Authority to observe and perform any of the covenants,
agreements or conditions on its part in this Indenture or in the Bonds contained, other than as
referred to in the preceding clauses (a) and (b), for a period of thirty (30) days after written
notice, specifying such failure and requesting that it be remedied has been given to the Authority
by the Trustee, or to the Authority and the Trustee by the Owners of the Bonds of not less than
twenty-five percent (25%) in the aggregate principal amount of the Bonds at that time
outstanding; provided, however, that if in the reasonable opinion of the Authority the failure
stated in such notice can be corrected, but not within such thirty (30) day period, such failure
shall not constitute an Event of Default if corrective action is instituted by the Authority within
such thirty (30) day period and diligently pursued until such failure is corrected.
(d) The filing by the Authority of a petition or answer seeking reorganization
or arrangement under the federal bankruptcy laws or any other applicable law of the United
States of America, or if a court of competent jurisdiction shall approve a petition, filed with or
without the consent of the Authority, seeking reorganization under the federal bankruptcy laws
or any other applicable law of the United States of America, or if, under the provisions of any
other law for the relief or aid of debtors, any court of competent jurisdiction shall assume
custody or control of the Authority or of the whole or any substantial part of its property.
Section 8.02 Remedies Upon Event of Default. If any Event of Default shall occur,
then, and in each and every such case during the continuance of such Event of Default, the
Trustee may, and, at the written direction of the Owners of a majority in aggregate principal
amount of the Bonds at the time Outstanding, shall, upon notice in writing to the Authority and
the Agency, declare the principal of all of the Bonds then Outstanding, and the interest accrued
thereon, to be due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this Indenture or in the Bonds
76981111.1 39 Page 68 of 142
contained to the contrary notwithstanding. Notice of the occurrence of any Event of Default
shall be given by the Trustee to the Owners if and to the extent required pursuant to Section 6.04
and indemnification is provided to the Trustee pursuant to Section 6.12 hereof.
Any such declaration is subject to the condition that if, at any time after such declaration
and before any judgment or decree for the payment of the moneys due shall have been obtained
or entered, the Authority or the Agency shall deposit with the Trustee a sum sufficient to pay all
the principal of and installments of interest on the Bonds payment of which is overdue, with
interest on such overdue principal at the rate borne by the Bonds to the extent permitted by law,
and the charges and expenses of the Trustee and its counsel, and any and all other Events of
Default known to the Trustee (other than in the payment of principal of and interest on the Bonds
due and payable solely by reason of such declaration) shall have been made good or cured to the
satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been
made therefor, then, and in every such case, the Owners of not less than a majority in aggregate
principal amount of the Bonds then Outstanding, by written notice to the Authority, the Agency
and the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such
declaration and its consequences and waive such Event of Default; but no such rescission and
annulment shall extend to or shall affect any subsequent Event of Default, or shall impair or
exhaust any right or power consequent thereon.
In addition, upon the occurrence and during the continuance of an Event of Default, the
Trustee may pursue any available remedy at law or in equity to enforce the payment of the
principal of and interest and premium (if any) on the Bonds, and to enforce any rights of the
Trustee under or with respect to this Indenture.
If an Event of Default shall have occurred and be continuing, and if requested so to do by
the Owners of a majority in aggregate principal amount of Outstanding Bonds, and indemnified
as provided in Section 6.02(1), the Trustee shall be obligated to exercise such one or more of the
rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to
the Owners) is intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver of any such Event of
Default or acquiescence therein; such right or power may be exercised from time to time as often
as may be deemed expedient.
Section 8.03 Application of Revenues and Other Funds After Default. All amounts
received by the Trustee pursuant to any right given or action taken by the Trustee under the
provisions of this Indenture shall be applied by the Trustee in the following order upon
presentation of the several Bonds, and the stamping thereon of the amount of the payment if only
partially paid, or upon the surrender thereof if fully paid:
76981111.1 40 Page 69 of 142
First, to the payment of the fees, costs and expenses of the Trustee in declaring
such Event of Default and in carrying out the provisions of this Article VIII, including
reasonable compensation to its agents, attorneys and counsel and any outstanding fees
and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the
Bonds then due and unpaid, with interest on overdue installments of principal and interest
to the extent permitted by law at the net effective rate of interest then home by the
Outstanding Bonds; provided, however, that in the event such amounts shall be
insufficient to pay in full the full amount of such interest and principal, then such
amounts shall be applied in the following order of priority:
and unpaid,
(a) first, to the payment of all installments of interest on the Bonds then due
(b) second, to the payment of principal of all installments of the Bonds then
due and unpaid,
(c) third, to the payment of the redemption price (including principal and
interest accrued to the redemption date, but excluding any premium) of the Bonds to be
redeemed pursuant to this Indenture, and
(d) fourth, to the payment of interest on overdue installments of principal and
interest on the Bonds.
Section 8.04 Power of Trustee to Control Proceedings. In the event that the Trustee,
upon the happening of an Event of Default, shall have taken any action, by judicial proceedings
or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the
request of the Owners of at least a majority in aggregate principal amount of the Bonds then
Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the
Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise,
settlement or other disposal of such action; provided, however, that the Trustee shall not, unless
there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or
otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed
with it a written request signed by the Owners of a majority in aggregate principal amount of the
Outstanding Bonds, opposing such discontinuance, withdrawal, compromise, settlement or other
disposal of such litigation. Any suit, action or proceeding which any Owner of Bonds shall have
the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the
equal benefit and protection of all Owners of Bonds similarly situated and the Trustee is hereby
appointed (and the successive respective Owners of the Bonds issued hereunder, by taking and
holding the same, shall be conclusively deemed so to have appointed it) the true and lawful
attorney-in-fact of the respective Owners of the Bonds for the purpose of bringing any such suit,
action or proceeding and to do and perform any and all acts and things for and on behalf of the
respective Owners of the Bonds as a class or classes, as may be necessary or advisable in the
opinion of the Trustee as such attorney-in-fact.
76981111.1 41 Page 70 of 142
Section 8.05 Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to
enforce the rights of the Trustee and of the Owners under this Indenture, the Trustee shall be
entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and
other amounts pledged hereunder, pending such proceedings, with such powers as the court
making such appointment shall confer.
Section 8.06 Non-Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds, shall affect or impair the obligation of the Authority, which is
absolute and unconditional, to pay the interest on and principal of the Bonds to the respective
Owners of the Bonds at the respective dates of maturity, as herein provided, out of the Revenues
and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall
not affect any subsequent default or breach of duty or contract, or impair any rights or remedies
on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of
any of the Bonds to exercise any right or power accruing upon any default or breach shall impair
any such right or power or shall be construed to be a waiver of any such default or breach or an
acquiescence therein; and every power and remedy conferred upon the Trustee or Owners by the
Bond Law or by this Article VIII may be enforced and exercised from time to time and as often
as shall be deemed expedient by the Trustee or the Owners, as the case may be.
Section 8.07 Rights and Remedies of Owners. No Owner of any Bond issued
hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for
any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to
the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority
in aggregate principal amount of all Bonds then Outstanding shall have made written request
upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity
reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request; (d) the Trustee shall have refused or omitted to comply with such
request for a period of sixty (60) days after such written request shall have been received by, and
said tender of indemnity shall have been made to, the Trustee; and (e) no direction inconsistent
with such written request has been given to the Trustee during such sixty (60) day period by the
Owners of a majority in aggregate principal amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any
remedy hereunder; it being understood and intended that no one or more Owners of Bonds shall
have any right in any manner whatever by his or their action to enforce any right under this
Indenture, except in the manner herein provided, and that all proceedings at law or in equity to
enforce any provision of this Indenture shall be instituted, had and maintained in the manner
herein provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest
and premium (if any) on such Bond as herein provided or to institute suit for the enforcement of
76981111.1 42 Page 71 of 142
any such payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
Section 8.08 Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the Authority, the Trustee and the Owners
shall be restored to their former positions and rights hereunder, respectively, with regard to the
property subject to this Indenture, and all rights, remedies and powers of the Trustee shall
continue as if no such proceedings had been taken.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Limited Liability of Authority. Notwithstanding anything in this
Indenture contained, the Authority shall not be required to advance any moneys derived from
any source of income other than the Revenues for the payment of the principal of or interest on
the Bonds, or any premiums upon the redemption thereof, or for the performance of any
covenants herein contained (except to the extent any such covenants are expressly payable
hereunder from the Revenues or otherwise from amounts payable under the Loan Agreement).
The Authority may, however, advance funds for any such purpose, provided that such funds are
derived from a source legally available for such purpose and may be used by the Authority for
such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other
funds as in this Indenture provided. The general fund of the Authority is not liable, and the
credit of the Authority is not pledged, for the payment of the interest and premium (if any) on or
principal of the Bonds. The Owners of the Bonds shall never have the right to compel the
forfeiture of any property of the Authority. The principal of and interest on the Bonds, and any
premiums upon the redemption of any thereof, shall not be a legal or equitable pledge, charge,
lien or encumbrance upon any property of the Authority or upon any of its income, receipts or
revenues except the Revenues and other funds pledged to the payment thereof as in this
Indenture provided.
Section 9.02 Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee, the
Agency and the Owners of the Bonds, any right, remedy or claim under or by reason of this
Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by
and on behalf of the Authority shall be for the sole and exclusive benefit of the Trustee, the
Agency and the Owners of the Bonds.
Section 9.03 Discharge of Indenture. If the Authority shall pay and discharge any or
all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of, and the
interest and premium (if any) on, such Bonds as and when the same become due and payable;
76981111.1 43 Page 72 of 142
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
money which, together with the available amounts then on deposit in the funds and accounts
established with the Trustee pursuant to this Indenture and the Loan Agreement, is fully
sufficient to pay such Bonds, including all principal, interest and premiums (if any); or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust,
Defeasance Securities in such amount as an Independent Accountant shall determine will,
together with the interest to accrue thereon and available moneys then on deposit in the funds
and accounts established with the Trustee pursuant to this Indenture and the Loan Agreement, be
fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal,
interest and redemption premiums) at or before their respective maturity dates; and if such Bonds
are to be redeemed prior to the maturity thereof notice of such redemption shall have been
mailed pursuant to Section 2.02(e) or provision satisfactory to the Trustee shall have been made
for the mailing of such notice, then, at the Written Request of the Authority, and notwithstanding
that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues
and other funds provided for in this Indenture with respect to such Bonds, and all other pecuniary
obligations of the Authority under this Indenture with respect to all such Bonds, shall cease and
terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners of
such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such
purpose as aforesaid, and all expenses and costs of the Trustee, and any amounts owing under the
Qualified Reserve Fund Credit Instrument to the provider thereof. Any funds held by the Trustee
following any payments or discharge of the Outstanding Bonds pursuant to this Section 9.03,
which are not required for said purposes, shall be paid over to the Authority.
Section 9.04 Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to,
such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in
this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
Section 9.05 Content of Certificates. Every certificate with respect to compliance with
a condition or covenant provided for in this Indenture shall include (a) a statement that the
person or persons making or giving such certificate have read such covenant or condition and the
definitions herein relating thereto; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such certificate
are based; (c) a statement that, in the opinion of the signers, they have made or caused to be
made such examination or investigation as is necessary to enable them to express an informed
opinion as to whether or not such covenant or condition has been complied with; and (d) a
statement as to whether, in the opinion of the signers, such condition or covenant has been
complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar
as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with respect to the matters
upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of
76981111.1 44 Page 73 of 142
reasonable care should have known that the same were erroneous. Any such certificate or
opinion or representation made or given by counsel may be based, insofar as it relates to factual
matters, on information with respect to which is in the possession of the Authority, or upon the
certificate or opinion of or representations by an officer or officers of the Authority, unless such
counsel knows that the certificate or opinion or representations with respect to the matters upon
which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in
the exercise of reasonable care should have known that the same were erroneous.
Section 9.06 Election of Documents by Owners. Any request, consent or other
instrument required by this Indenture to be signed and executed by Owners may be in any
number of concurrent writings of substantially similar tenor and may be signed or executed by
such Owners in person or by their agent or agents duly appointed in writing. Proof of the
execution of any such request, consent or other instrument or of a writing appointing any such
agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and of the Authority if made in the manner provided in this Section 9.06.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof
to take acknowledgments of deeds, certifying that the person signing such request, consent or
other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request,
consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and
the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done
or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or
vote. In lieu of obtaining any demand, request, direction, consent or waiver in writing, the
Trustee may call and hold a meeting of the Owners upon such notice and in accordance with
such rules and obligations as the Trustee considers fair and reasonable for the purpose of
obtaining any such action.
Section 9.07 Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent
or waiver under this Indenture, Bonds which are owned or held by or for the account of the
Agency or the Authority (but excluding Bonds held in any employees' retirement fund) shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination,
provided, however, that for the purpose of determining whether the Trustee shall be protected in
relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee
knows to be so owned or held shall be disregarded.
Section 9.08 Waiver of Personal Liability. No officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the interest on or principal
of the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from
the performance of any official duty provided by law.
Section 9.09 Partial Invalidity. If any one or more of the covenants or agreements, or
portions thereof, provided in this Indenture on the part of the Authority (or of the Trustee) to be
76981111.1 45 Page 74 of 142
performed should be contrary to law, then such covenant or covenants, such agreement or
agreements, or such portions thereof, shall be null and void and shall be deemed separable from
the remaining covenants and agreements or portions thereof and shall in no way affect the
validity of this Indenture or of the Bonds; but the Owners shall retain all rights and benefits
accorded to them under the Bond Law or any other applicable provisions of law. The Authority
hereby declares that it would have entered into this Indenture and each and every other section,
paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the
issuance of the Bonds pursuant hereto irrespective of the fact that any one or more sections,
paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application
thereof to any person or circumstance may be held to be unconstitutional, unenforceable or
invalid.
Section 9.10 Destruction of Canceled Bonds. Whenever in this Indenture provision is
made for the surrender to the Authority of any Bonds which have been paid or canceled pursuant
to the provisions of this Indenture, the Trustee shall destroy such Bonds and furnish to the
Authority a certificate of such destruction.
Section 9.11 Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Authority or the Trustee may be established and maintained
in the accounting records of the Authority or the Trustee, as the case may be, either as a fund or
an account, and may, for the purpose of such records, any audits thereof and any reports or
statements with respect thereto, be treated either as a fund or as an account. All such records
with respect to all such funds and accounts held by the Authority shall at all times be maintained
in accordance with generally accepted accounting principles and all such records with respect to
all such funds and accounts held by the Trustee shall be at all times maintained in accordance
with industry practices; in each case with due regard for the protection of the security of the
Bonds and the rights of every Owner thereof. Any fund or account required by this Indenture to
be established and maintained by the Authority or the Trustee may be established and maintained
in the form of multiple funds, accounts or sub-accounts therein.
Section 9.12 Payment on Business Days. Whenever in this Indenture any amount is
required to be paid on a day which is not a Business Day, such payment shall be required to be
made on the Business Day immediately following such day, provided that interest shall not
accrue from and after such day.
Section 9.13 Notices. Any notice, request, complaint, demand or other communication
under this Indenture shall be given by first-class mail or personal delivery to the party entitled
thereto at its address set forth below, or by telecopy or other form of telecommunication, at its
number set forth below. Notice shall be effective either (a) upon transmission by telecopy or
other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage
prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority,
the Agency or the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
76981111.1 46 Page 75 of 142
If to the Authority: Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, California 92530
Attention: Executive Director
(951) 674-3124
(951) 674-2392 Fax
If to the Agency: Redevelopment Agency of the City
of Lake Elsinore
130 S. Main Street
Lake Elsinore, California 92530
Attention: Executive Director
(951) 674-3124
(951) 674-2392 Fax
If to the Trustee: Union Bank, N.A.
120 S. San Pedro Street, 4th Floor
Los Angeles, California 90012
Attention: Corporate Trust Department
(213) 972-5677
(213) 972-5694 Fax
Section 9.14 Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, subject to the laws of the State, any moneys held by the Trustee in trust for the
payment and discharge of any of the Bonds which remain unclaimed for two (2) years after the
date when such Bonds or any interest thereon have become due and payable, either at their stated
maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such
date, or for two (2) years after the date of deposit of such moneys if deposited with the Trustee
after said date when such Bonds become due and payable, shall be repaid by the Trustee to the
Agency, as its absolute property and free from trust, and the Trustee shall thereupon be released
and discharged with respect thereto and the Owners shall look only to the Agency for the
payment of such Bonds; provided, however, that before being required to make any such
payment to the Agency, the Trustee shall, at the expense of the Agency, cause to be mailed to the
Owners of all such Bonds, at their respective addresses appearing on the Registration Books, a
notice that said moneys remain unclaimed and that, after a date named in said notice, which date
shall not be less than thirty (30) days after the date of mailing of such notice, the balance of such
moneys then unclaimed will be returned to the Agency.
Section 9.15 Governing Law. This Indenture shall be construed and governed in
accordance with the laws of the State of California.
Section 9.16 Execution of Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall for all purposes be deemed to be an original and all
of which shall together constitute but one and the same instrument.
76981111.1 47 Page 76 of 142
IN WITNESS WHEREOF, the LAKE ELSINORE PUBLIC FINANCING
AUTHORITY has caused this Indenture to be signed in its name and UNION BANK, N.A., in
token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its
corporate name by its officer identified below, all as of the day and year first above written.
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
By
Executive Director
UNION BANK, N.A., as Trustee
By
Authorized Officer
76981111.1 48 Page 77 of 142
EXHIBIT A
FORM OF BOND
No. R-
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AS DEFINED IN THE INDENTURE OF TRUST) TO THE TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
TAX ALLOCATION REVENUE BOND (LAUNCH RAMP PROJECT), 2011 SERIES A
RATE OF INTEREST MATURITY DATE DATED DATE: CUSIP®
September 1, 1 2011
REGISTERED OWNER: Cede & Co.
PRINCIPAL AMOUNT:
The LAKE ELSINORE PUBLIC FINANCING AUTHORITY, a joint powers authority
organized and existing under the laws of the State of California (the "Authority"), for value
received, hereby promises to pay (but only out of the Revenues and other moneys and securities
hereinafter referred to) to the Registered Owner identified above or registered assigns (the
"Registered Owner"), on the Maturity Date identified above, the Principal Amount identified
above in lawful money of the United States of America; and to pay interest thereon at the Rate of
Interest identified above in like money from the Interest Payment Date (as hereinafter defined)
next preceding the date of authentication of this Bond (unless this Bond is authenticated on or
before an Interest Payment Date and after the first calendar day of the month in which such
Interest Payment Date occurs, in which event it shall bear interest from such Interest Payment
Date, or unless this Bond is authenticated on or prior to August 15, 2011, in which event it shall
bear interest from the Dated Date identified above; provided, however, that if, at the time of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from
the Interest Payment Date to which interest hereon has previously been paid or made available
for payment), payable semiannually on March 1 and September 1 in each year, commencing
September 1, 2011 (each, an "Interest Payment Date") until payment of such Principal Amount
76981111.1 Page 78 of 142
in full. The Principal Amount hereof is payable upon presentation here of at the principal
corporate trust office (the "Trust Office") of Union Bank, N.A. in Los Angeles, California (the
"Trustee") or such other place as designated by the Trustee. Interest hereon is payable by check
of the Trustee mailed by first-class mail on each Interest Payment Date to the Registered Owner
hereof at the address of the Registered Owner as it appears on the Registration Books of the
Trustee as of the first calendar day of the month in which such Interest Payment Date occurs;
except that at the written request of the owner of at least $1,000,000 in aggregate principal
amount of outstanding Bonds filed with the Trustee prior to the fifteenth calendar day of the
month preceding any Interest Payment Date, interest on such Bonds shall be paid to such owner
on such Interest Payment Date by wire transfer of immediately available funds to an account in
the continental United States designated in such written request. Notwithstanding any other
provision herein to the contrary, so long as this Bond shall be registered in book-entry-only form,
the payment of the principal of, and redemption premium, if any, and interest on, this Bond shall
be paid in immediately available funds in such manner as determined by the Authority, the
Trustee and the Owner.
It is hereby certified that all things, conditions and acts required to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California and by the Act, and that the amount of this
Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed
by the Constitution or statutes of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon shall have been
manually signed by the Trustee.
This Bond is one of a duly authorized issue of bonds of the Authority designated the
"Lake Elsinore Public Financing Authority Tax Allocation Revenue Bonds (Launch Ramp
Project), 2011 Series A" (the "Bonds"), limited in principal amount to $ , secured by an
Indenture of Trust, dated as of February 1, 2011 (the "Indenture"), by and between the Authority
and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental
thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and
extent of the Revenues (as that term is defined in the Indenture), of the rights, duties and
immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of
the terms of the Indenture are hereby incorporated herein and constitute a contract between the
Authority and the Registered Owner hereof, and to all of the provisions of which Indenture the
Registered Owner hereof, by acceptance hereof, assents and agrees.
The Bonds are authorized to be issued pursuant to the provisions of the Marks-Roos
Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of
Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act").
The Bonds are special obligations of the Authority and, as and to the extent set forth in the
Indenture, are payable solely from and secured by a first lien and pledge of the Revenues and
certain other moneys and securities held by the Trustee as provided in the Indenture. All of the
Bonds are equally secured by a first pledge of, and charge and lien upon, all of the Revenues and
such other moneys and securities, and the Revenues and such other moneys and securities
76981111.1 A-2 Page 79 of 142
constitute a trust fund for the security and payment of the principal of and interest and premium
(if any) on the Bonds. The full faith and credit of the Authority is not pledged for the payment of
the principal of or interest or redemption premiums (if any) on the Bonds. The Bonds are not
secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the
property of the Authority or any of its income or receipts, except the Revenues and such other
moneys and securities as provided in the Indenture.
The Bonds have been issued to provide funds to make a loan (the "Loan") to the
Redevelopment Agency of the City of Lake Elsinore (the "Agency") all as more particularly
described in the Indenture. The Loan has been and will be made by the Authority to the Agency
pursuant to a Loan Agreement, dated as of February 1, 2011 (the "Loan Agreement"), by and
between the Agency and the Authority. Certain amounts payable by the Agency under the Loan
Agreement have been assigned to the Trustee under the Indenture, and such amounts constitute
the principal source of Revenues which are pledged to the payment of the Bonds. The Agency
may issue its bonds, notes or other obligations on a panty with the Loan, subject to the terms and
conditions of the Loan Agreement.
The Bonds maturing on or after September 1, 2015, are subject to redemption on any date
on or after September 1, 2014, as a whole or in part on a pro rata basis and by lot within a
maturity, from prepayments of the Loan at the option of the Agency pursuant to the Loan
Agreement, at the redemption price equal to the principal amount of the Bonds to be redeemed,
plus accrued interest thereon to the date of redemption, without premium.
The Term Bonds maturing on September 1, 20, shall be subject to mandatory
redemption in part by lot, on September 1 in each year commencing September 1, 20___, from
mandatory sinking payments made by the Authority into the Principal Account pursuant to the
Indenture, at a redemption price equal to the principal amount thereof to be redeemed, without
premium, plus accrued interest to the date of redemption in the aggregate respective principal
amounts and on September 1 in the respective years as set forth in the following table; provided,
however, that (i) in lieu of redemption thereof on September 1 in any year, all or a portion of
such Term Bonds may be purchased by the Authority and tendered to the Trustee for
cancellation not later than the preceding July 15, and (ii) if some but not all of such Term Bonds
have been redeemed pursuant to the Indenture, the total amount of all future sinking fund
payments with respect to such Term Bonds shall be reduced by the aggregate principal amount
of the Bonds so redeemed, to be allocated among such sinking payments on a pro rata basis (as
nearly as practicable) in integral multiples of $5,000 as determined by the Authority and
specified in writing to the Trustee.
76981111.1 A-3 Page 80 of 142
Term Bonds Maturing September 1, 20
Sinking Fund
Principal Amount
Redemption Date
to be Redeemed
(September 1)
or Purchased
The Bonds shall also be subject to mandatory redemption on any date, from amounts
credited towards the payment of principal of the Loan coming due and payable solely by reason
of an event of default and acceleration of the Loan pursuant to the Loan Agreement, at a
redemption price equal to the principal amount of the Bonds to be redeemed, without premium,
together with accrued interest thereon to the redemption date. The Bonds shall be subject to
redemption under this paragraph solely from amounts credited towards the payment of principal
of the Loan which has become due and payable by reason of such event of default and
acceleration only.
The Trustee on behalf and at the expense of the Authority shall mail (by first-class mail)
notice of any redemption to the respective owners of any Bonds designated for redemption, at
their respective addresses appearing on the registration books maintained by the Trustee, to the
Securities Depositories and to one or more Information Services (as such terms are defined in the
Indenture), at least thirty (30) but not more than sixty (60) days prior to the redemption;
provided, however, that neither failure to receive any such notice so mailed nor any defect
therein shall affect the validity of the proceedings for the redemption of such Bonds or the
cessation of the accrual of interest on the Bonds to be redeemed from and after the date fixed for
redemption. Such notice shall state the date of the notice, the redemption date, the redemption
place and the redemption price and shall designate the CUSIP® numbers, the serial numbers of
each maturity or maturities (except that in the event of redemption of all of the Bonds of any
maturity, the Trustee shall designate such maturity without referencing each individual Bond
number) of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at
the Trust Office of the Trustee for redemption at the redemption price, giving notice also that
further interest on such Bonds will not accrue from and after the redemption date.
If at the time of mailing of any notice of redemption from optional prepayments under the
Loan Agreement there shall not have been deposited with the Trustee moneys sufficient to
redeem all the Bonds called for redemption, such notice shall state that it is subject to the deposit
76981111.1 A-4 Page 81 of 142
of the redemption moneys with the Trustee not later than the opening of business on the
redemption date and will be of no effect unless such moneys are so deposited.
The Authority shall have the right to rescind redemption from optional prepayment under
the Loan Agreement by written notice to the Trustee on or prior to the date fixed for redemption.
Any notice of such redemption shall be cancelled and annulled if for any reason funds will not be
or are not available on the date fixed for redemption for the payment in full of the Bonds then
called for redemption, and such cancellation shall not constitute an Event of Default under the
Indenture. The Authority and the Trustee shall have no liability to the Owners or any other party
related to or arising from such rescission of redemption. The Trustee shall mail notice of such
rescission of redemption in the same manner as the original notice of redemption was sent.
The Bonds are issuable as fully-registered Bonds without coupons in denominations of
$5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the
charges, if any, provided in the Indenture, Bonds may be exchanged at the Trust Office of the
Trustee for a like aggregate principal amount and maturity of Bonds of other authorized
denominations.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Trust Office of the Trustee, or such other place as designated
by the Trustee, but only in the manner, subject to the limitations and upon payment of the
charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such
transfer a new Bond or Bonds, of authorized denomination or denominations, for the same
aggregate principal amount and of the same maturity will be issued to the transferee in exchange
herefor. The Authority and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any
notice to the contrary.
The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any
Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or
redemption premiums at the time and place and at the rate and in the currency provided therein
of any Bond without the express written consent of the owner of such Bond, (b) reduce the
percentage of Bonds required for the written consent to any such amendment or modification, or
(c) without its written consent thereto, modify any of the rights or obligations of the Trustee, all
as more fully set forth in the Indenture.
76981111.1 A-5 Page 82 of 142
IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name
and on its behalf by the manual signatures of its Chairperson and Executive Director as of the
Dated Date identified above.
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
By
Chairperson
Attest:
Executive Director
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture and registered on
the registration books of the Trustee.
Dated: 2011 UNION BANK, N.A., as Trustee
Authorized Signatory
76981111.1 A-6 Page 83 of 142
FORM OF ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and hereby irrevocably constitute(s) and appoints(s)
, attorney, to transfer the same on the registration
books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Signature:
Note: Signature(s) must be guaranteed Note: The signature(s) on this
by an eligible guarantor Assignment must correspond with
institution. the name(s) as written on the face
of the within-registered Bond in
every particular without alteration
or enlargement or any change
whatsoever.
76981111.1 A-7 Page 84 of 142
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A
BOND PURCHASE CONTRACT
12011
Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, California 92530
Redevelopment Agency of the City of Lake Elsinore
130 S. Main Street
Lake Elsinore, California 92530
Ladies and Gentlemen:
O'Connor & Company Securities, Inc. (the "Underwriter") hereby offers to enter
into the following agreement (the "Bond Purchase Contract") with the Lake Elsinore Public
Financing Authority (the "Authority") and the Redevelopment Agency of the City of Lake
Elsinore (the "Agency") which, upon acceptance of this offer by the Authority and the Agency,
will be binding upon the Authority, the Agency and the Underwriter. This offer is made subject
to the written acceptance hereof by the Authority and the Agency, and withdrawal by the
Underwriter upon written or oral notice given to the Authority or to the Agency at any time prior
to the acceptance hereof by the Authority and the Agency. All capitalized terms not otherwise
defined herein shall have the meanings prescribed in the Indenture (defined below).
The Authority and the Agency acknowledge and agree that: (i) the purchase and
sale of the Bonds (as defined below) pursuant to this Bond Purchase Contract is an arm's-length
commercial transaction among the Authority, the Agency and the Underwriter; (ii) in connection
with such transaction, the Underwriter is acting solely as a principal and not as an agent or a
fiduciary of the Authority or the Agency; (iii) the Underwriter has not assumed (individually or
collectively) a fiduciary responsibility in favor of the Authority or the Agency with respect to:
(x) the offering of the Bonds or the process leading thereto (whether or not any Underwriter, or
any affiliate of the Underwriter, has advised or is currently advising the Authority or the Agency
on other matters); or (y) any other obligation to the Authority or the Agency except the
obligations expressly set forth in this Bond Purchase Contract; and (iv) the Authority and the
Agency have consulted with their own legal and financial advisors to the extent they deemed
appropriate in connection with the offering of the Bonds.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of
the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to
purchase from the Authority at the Closing Time on the Closing Date (both as defined herein),
and the Authority hereby agrees to sell and deliver to the Underwriter, $ aggregate
Page 85 of 142
76981126.1
principal amount of its Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A
(the "Bonds").
The Bonds shall be dated 2011, the date of their initial delivery,
shall mature on the dates, shall accrue interest at the rates and shall be subject to mandatory
sinking fund redemption as shown on Exhibit A hereto. Interest on the Bonds shall be payable
on each March 1 and September 1, commencing September 1, 2011.
The purchase price for the Bonds shall be $ being the aggregate
principal amount thereof, less an Underwriter's discount of $ less net original issue
discount of $ The date of such payment and delivery is referred to herein as the
"Closing Date," the hour and date of such delivery and payment is referred to herein as the
"Closing Time," and the other actions contemplated hereby to take place at the time of such
payment and delivery being herein sometimes called the "Closing."
2. The Bonds. The Bonds shall be described in, and shall be issued and
secured pursuant to, the provisions of the Constitution and the laws of the State of California
including the provisions of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article
4 of Chapter 5 (commencing with Section 6584), of Division 7 of Title 1 of the Government
Code of the State of California (the "Bond Law"), and an Indenture of Trust, dated as of
February 1, 2011 (the "Indenture"), between the Authority and Union Bank, N.A. (the "Trustee")
authorizing the issuance of the Bonds. The Bonds are being issued for the purpose of making a
loan to the Agency (the "Loan") pursuant to a Project Area No. I Loan Agreement, dated as of
February 1, 2011 (the "Project Area No. I Loan Agreement"), by and between the Authority and
the Agency.
The Bonds are secured by Revenues (as defined in the Indenture). Herein, the
Project Area No. I Loan Agreement, the Continuing Disclosure Agreement, dated as of February
1, 2011 (the "Continuing Disclosure Agreement"), by and between the Agency and Union Bank,
N.A., as dissemination agent, and this Bond Purchase Contract are referred to collectively as the
"Agency Documents." The Indenture, the Project Area No. I Loan Agreement and this Bond
Purchase Contract are referred to collectively herein as the "Authority Documents."
The Bonds shall be payable and shall be subject to redemption as provided in the
Indenture and shall be as described in the Preliminary Official Statement of the Authority, dated
, 2011 (the "Preliminary Official Statement"), and the Official Statement of the
Authority dated of even date herewith. Such Official Statement, including the cover page and
the appendices thereto, relating to the Bonds, as amended to conform to the terms of this Bond
Purchase Contract and with such changes and amendments thereto as have been mutually agreed
to by the Authority, the Agency and the Underwriter, are hereinafter referred to as the "Official
Statement."
3. Offering by the Underwriter. It shall be a condition to the Authority's
obligations to sell and to deliver the Bonds to the Underwriter and to the Underwriter's
obligation to purchase, to accept delivery of and to pay for the Bonds that the entire principal
amount of the Bonds shall be issued, sold and delivered by the Authority and purchased,
accepted and paid for by the Underwriter at the Closing. It is understood that the Underwriter
Page 86 of 142
76981126.1 2
proposes to offer the Bonds for sale to the public (which may include selected dealers and special
purchasers) at prices or yields as set forth in Exhibit A hereto and on the inside cover page of the
Official Statement. Concessions from the public offering price may be allowed to selected
dealers and special purchasers. It is understood that the initial public offering price and
concessions set forth in the Official Statement may vary after the initial public offering. It is
further understood that the Bonds may be offered to the public at prices other than the par value
thereof. The net premium on the sale of the Bonds to the public, if any, shall accrue to the
benefit of the Underwriter.
4. Official Statement, Delivery of Other Documents, Use of Documents.
(a) The Authority and the Agency hereby authorize the use by the
Underwriter of the Preliminary Official Statement and the Official Statement (including
any supplements or amendments thereto) and the Authority Documents and the
information therein contained, in connection with the public offering and sale of the
Bonds.
(b) The Authority shall deliver to the Underwriter, within seven business days
from the date hereof, such number of copies of the Official Statement executed on behalf
of and approved for distribution by the Authority as the Underwriter may reasonably
request in order for the Underwriter to comply with the rules of the Municipal Securities
Rulemaking Board (the "MSRB") and Rule 15c2-12(b)(4) under the Securities Exchange
Act of 1934.
(c) As soon as practicable following receipt thereof, the Underwriter shall
deliver the Official Statement, and any supplements or amendments thereto, to the MSRB
through the Electronic Municipal Market Access System ("EMMA").
5. Representations, Warranties and Agreements of the Authority. The
Authority represents, warrants and agrees as follows:
(a) The Authority is a joint exercise of powers agency duly organized and
validly existing under the Constitution and laws of the State of California.
(b) The Authority has, and at the date of Closing, will have, full legal right,
power and authority (i) to enter into the Authority Documents, (ii) to adopt all necessary
resolutions and proceedings relating to the Bonds, (iii) to sell, issue and deliver the Bonds
to the Underwriter as provided herein, and (iv) to carry out and consummate the
transactions on its part contemplated by the Authority Documents and the Official
Statement.
(c) By all necessary official action, the Authority has duly authorized and
approved the execution and delivery of the Authority Documents, has duly authorized
and approved the Preliminary Official Statement and the Official Statement, has duly
authorized and approved the execution and delivery of, and the performance by the
Authority of the obligations in connection with the issuance of the Bonds on its part
contained in the Bonds and the Authority Documents, and the consummation by it of all
Page 87 of 142
76981126.1 3
other transactions contemplated by the Authority Documents in connection with the
issuance of the Bonds.
(d) To the best of its knowledge, the Authority is not in any material respect
in breach of or default under any applicable constitutional provision, law or
administrative regulation of any state or of the United States, or any agency or
instrumentality of either, or any applicable judgment or decree, or any loan agreement,
indenture, bond, note, resolution, agreement (including, without limitation, the Indenture)
or other instrument to which the Authority is a party which breach or default has or may
have an adverse effect on the ability of the Authority to perform its obligations under the
Indenture, and no event has occurred and is continuing which with the passage of time or
the giving of notice, or both, would constitute such a default or event of default under any
such instrument; and the execution and delivery of the Bonds and the Authority
Documents, and compliance with the provisions on the Authority's part contained
therein, will not conflict in any material way with or constitute a material breach of or a
material default under any constitutional provision, law, administrative regulation,
judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other
instrument to which the Authority is a party nor will any such execution, delivery,
adoption or compliance result in the creation or imposition of any lien, charge or other
security interest or encumbrance of any nature whatsoever upon any of the property or
assets of the Authority or under the terms of any such law, regulation or instrument,
except as provided by the Bonds and the Indenture.
(e) Except as described in or contemplated by the Official Statement, all
authorizations, approvals, licenses, permits, consents and orders of any governmental
authority, legislative body, board, agency or commission having jurisdiction of the matter
which are required for the due authorization by, or which would constitute a condition
precedent to or the absence of which would materially adversely affect the due
performance by the Authority of its obligations in connection with the issuance of the
Bonds under the Authority Documents have been duly obtained, except for such
approvals, consents and orders as may be required under the "Blue Sky" or securities
laws of any state in connection with the offering and sale of the Bonds.
(f) The Bonds when issued will conform to the descriptions thereof contained
in the Official Statement under the captions "INTRODUCTORY STATEMENT" and
"THE BONDS;" and the Authority Documents when executed and delivered will
conform to the descriptions thereof contained in the Official Statement under the captions
"INTRODUCTORY STATEMENT," "THE BONDS" and "SOURCES OF PAYMENT
FOR THE BONDS."
(g) The Bonds, when issued, authenticated and delivered in accordance with
the Indenture, and sold to the Underwriter as provided herein, will be validly issued and
outstanding obligations of the Authority, entitled to the benefits of the Indenture, and
upon such issuance and delivery, the Indenture will provide, for the benefit of the owners
from time to time of the Bonds, the legally valid and binding pledge of and lien and
security interest it purports to create.
Page 88 of 142
76981126.1 4
(h) As of the date hereof, there is no action, suit, proceeding, inquiry or
investigation, notice of which has been served on the Authority, at law or in equity before
or by any court, government agency, public board or body, pending against the Authority,
affecting the existence of the Authority or the titles of its officers to their respective
offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery
of the Bonds or the pledge and lien on the Revenues pursuant to the Indenture, or
contesting or affecting as to the Authority the validity or enforceability of the Bond Law,
the Bonds or the Authority Documents, or contesting the tax-exempt status of interest on
the Bonds, or contesting the completeness or accuracy of the Preliminary Official
Statement or the Official Statement, or contesting the powers of the Authority for the
issuance of the Bonds, or the execution and delivery or adoption by the Authority of the
Authority Documents, or in any way contesting or challenging the consummation of the
transactions contemplated hereby or thereby, wherein an unfavorable decision, ruling or
finding would materially adversely affect the validity of the Bond Law, as to the
Authority, or the authorization, execution, delivery or performance by the Authority of
the Bonds or the Authority Documents.
(i) The Authority will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriter as the Underwriter may
reasonably request in order (i) to qualify the Bonds for offer and sale under the "Blue
Sky" or other securities laws and regulations of such states and other jurisdictions of the
United States as the Underwriter may designate, (ii) to determine the eligibility of the
Bonds for investment under the laws of such states and other jurisdictions, and will use
its best efforts to continue such qualifications in effect so long as required for the
distribution of the Bonds; provided, however, that the Authority shall not be required to
execute a general or special consent to service of process or qualify to do business in
connection with any such qualification or determination in any jurisdiction, provided, that
the Underwriter shall bear all costs in connection with the Authority's action under (i)
and (ii) herein, and (iii) to assure or maintain the tax-exempt status of the interest on the
Bonds.
0) As of the date thereof, the Preliminary Official Statement did not, except
for the omission of certain information permitted to be omitted in accordance with Rule
15c2-12 (as defined herein), contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein with respect to the
Authority, in light of the circumstances under which they were made, not misleading.
(k) At the time of the Authority's acceptance hereof, and (unless an event
occurs of the nature described in paragraph (m) of this Section 5) at all times subsequent
thereto up to and including the date of the Closing, the Official Statement does not and
will not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that these representations and warranties
of the Authority shall apply only to the information contained in the Official Statement
relating to the Authority.
Page 89 of 142
76981126.1 5
(1) If the Official Statement is supplemented or amended pursuant to
paragraph (m) of this Section 5, at the time of each supplement or amendment thereto and
(unless subsequently again supplemented or amended pursuant to such paragraph) at all
times subsequent thereto up to and including the date of the Closing, the Official
Statement as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that these representations and warranties of the Authority shall apply only to the
information contained in the Official Statement relating to the Authority.
(m) If between the date of this Bond Purchase Contract and that date which is
25 days after the end of the underwriting period (as determined in accordance with
Section 14 hereof) any event known to the Authority shall occur affecting the Authority
which might adversely affect the marketability of the Bonds or the market prices thereof,
or which might cause the Official Statement, as then supplemented or amended, to
contain any untrue statement of a material fact or to omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they were
made, not misleading, the Authority shall notify the Underwriter thereof, and if in the
opinion of the Underwriter such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the Authority will at its expense
prepare and furnish to the Underwriter a reasonable number of copies of such supplement
to, or amendment of, the Official Statement in a form and in a manner approved by the
Underwriter.
(n) The Authority will refrain from taking any action, or permitting any action
to be taken, with regard to which the Authority may exercise control, that results in the
loss of the tax-exempt status of the interest on the Bonds.
(o) Any certificate signed by any officer of the Authority and delivered to the
Underwriter pursuant to the Authority Documents or any document contemplated thereby
shall be deemed a representation and warranty by the Authority to the Underwriter as to
the statements made therein.
(p) The Authority will cause the proceeds from the sale of the Bonds to be
paid to the Trustee for the purposes specified in the Indenture and the Official Statement.
So long as any of the Bonds are outstanding and except as may be authorized by the
Indenture, the Authority will not issue or sell any bonds or other obligations, other than
the Bonds sold thereby, the interest on and premium, if any, or principal of which will be
payable from the payments to be made under the Indenture.
(q) The Authority shall honor all other covenants on its part contained in the
Indenture, which are incorporated herein and made a part of this Bond Purchase Contract.
Page 90 of 142
76981126.1 6
6. Representations, Warranties and Agreements of the Agency. The
Agency represents, warrants and agrees as follows:
(a) The Agency is a redevelopment agency duly organized and validly
existing under the laws of the State of California.
(b) The Agency has full legal right, power and authority (i) to enter into the
Agency Documents; and (ii) to carry out and consummate the transactions on its part
contemplated by the Agency Documents, the Preliminary Official Statement and the
Official Statement.
(c) By all necessary official action, the Agency has duly authorized and
approved the execution and delivery of the Agency Documents, has duly authorized and
approved the execution and delivery of, and the performance by the Agency of the
obligations in connection with the issuance of the Bonds on its part contained in the
Agency Documents and the consummation by it of all other transactions contemplated by
the Agency Documents in connection with the issuance of the Bonds.
(d) To the best of its knowledge, except as disclosed in the Official Statement,
the Agency is not in any material respect in breach of or default under any applicable
constitutional provision, law or administrative regulation of any state or of the United
States, or any agency or instrumentality of either, or any applicable judgment or decree,
or any loan agreement, indenture, bond, note, resolution, agreement (including, without
limitation, the Project Area No. I Loan Agreement) or other instrument to which the
Agency is a party which breach or default has or may have an adverse effect on the
ability of the Agency to perform its obligations under the Agency Documents, and no
event has occurred and is continuing which with the passage of time or the giving of
notice, or both, would constitute such a default or event of default under any such
instrument; and the execution and delivery of the Agency Documents, and compliance
with the provisions on the Agency's part contained therein, will not conflict in any
material way with or constitute a material breach of or a material default under any
constitutional provision, law, administrative regulation, judgment, decree, loan
agreement, indenture, bond, note, resolution, agreement or other instrument to which the
Agency is a parry nor will any such execution, delivery, adoption or compliance result in
the creation or imposition of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the property or assets of the Agency or under the
terms of any such law, regulation or instrument, except as provided by the Agency
Documents.
(e) Except as described in or contemplated by the Official Statement, all
authorizations, approvals, licenses, permits, consents and orders of any governmental
authority, legislative body, board, agency or commission having jurisdiction of the matter
which are required for the due authorization by, or which would constitute a condition
precedent to or the absence of which would materially adversely affect the due
performance by the Agency of its obligations in connection with the Agency Documents,
have been duly obtained, except for such approvals, consents and orders as may be
Page 91 of 142
76981126.1 7
required under the "Blue Sky" or securities laws of any state in connection with the
offering and sale of the Bonds.
(f) As of the date hereof, there is no action, suit, proceeding, inquiry or
investigation, notice of which has been served on the Agency, at law or in equity before
or by any court, government agency, public board or body, pending against the Agency,
affecting the existence of the Agency or the titles of its officers to their respective offices,
or affecting or seeking to prohibit, restrain or enjoin the execution and delivery of the
Agency Documents, or contesting the completeness or accuracy of the descriptions of the
Agency contained in the Preliminary Official Statement or the Official Statement, or the
execution and delivery or adoption by the Agency of the Agency Documents, or in any
way contesting or challenging the consummation of the transactions contemplated hereby
or thereby, wherein an unfavorable decision, ruling or finding would materially adversely
affect the authorization, execution, delivery or performance by the Agency of the Agency
Documents.
(g) As of the date thereof, the Preliminary Official Statement did not, except
for the omission of certain information permitted to be omitted in accordance with Rule
15c2-12, contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein with respect to the Agency, in light of the
circumstances under which they were made, not misleading.
(h) At the time of the Agency's acceptance hereof, and (unless an event
occurs of the nature described in paragraph 0) of this Section 6) at all times subsequent
thereto up to and including the date of the Closing, the Official Statement did not and will
not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that these representations and warranties
of the Agency shall apply only to the information contained in the Official Statement
relating to the Agency.
(i) If the Official Statement is supplemented or amended pursuant to
paragraph 0) of this Section 6, at the time of each supplement or amendment thereto and
(unless subsequently again supplemented or amended pursuant to such paragraph) at all
times subsequent thereto up to and including the date of the Closing, the Official
Statement as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that these representations and warranties of the Agency shall apply only to the
information contained in the Official Statement relating to the Agency.
0) If between the date of this Bond Purchase Contract and that date which is
25 days after the end of the underwriting period (as determined in accordance with
Section 14 hereof) any event known to the Agency shall occur affecting the Agency
which might adversely affect the marketability of the Bonds or the market prices thereof,
or which might cause the Official Statement, as then supplemented or amended, to
contain any untrue statement of a material fact or to omit to state a material fact necessary
Page 92 of 142
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to make the statements therein, in light of the circumstances under which they were
made, not misleading, the Agency shall notify the Underwriter thereof, and if in the
opinion of the Underwriter such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the Agency will, in conjunction with
and at the expense of the Authority, prepare and furnish to the Underwriter a reasonable
number of copies of such supplement to, or amendment of, the Official Statement in a
form and in a manner approved by the Underwriter.
(k) The Agency will refrain from taking any action, or permitting any action
to be taken, with regard to which the Agency may exercise control, that results in the loss
of the tax-exempt status of the interest on the Bonds.
(1) Any certificate signed by any officer of the Agency and delivered to the
Underwriter pursuant to the Agency Documents or any document contemplated thereby
shall be deemed a representation and warranty by the Agency to the Underwriter as to the
statements made therein.
(m) At or prior to the Closing, the Agency shall have duly authorized,
executed and delivered the Continuing Disclosure Agreement on behalf of each obligated
person for which financial and/or operating data is presented in the Official Statement.
The Continuing Disclosure Agreement shall comply with the provisions of Rule 15c2-
12(b)(5) and shall be substantially in the form attached as Appendix E to the Official
Statement.
7. Closing. At 8:00 a.m., Los Angeles time, on , 2011, or on such
earlier date or as soon thereafter as practicable, as may be mutually agreed upon by the
Authority, the Agency and the Underwriter, the Authority will, subject to the terms and
conditions hereof, cause the Trustee to deliver to The Depository Trust Company ("DTC") in
New York, New York, on behalf of the Underwriter, the Bonds, in definitive form duly executed
by the Trustee, together with the other documents hereinafter mentioned; and the Underwriter
will accept such delivery to DTC and will pay the purchase price of the Bonds in Los Angeles,
California as set forth in Section 1 hereof by delivering federal or other immediately available
funds in the amount of such purchase price to the Trustee. The Bonds shall be prepared in
fully-registered form without coupons in authorized denominations and registered in the name of
or at the direction of the Underwriter.
8. Closing Conditions. The Underwriter has entered into this Bond
Purchase Contract in reliance upon the representations and warranties of the Authority and the
Agency contained herein, and in reliance upon the representations and warranties to be contained
in the documents and instruments to be delivered at the Closing and upon the performance by the
Authority and the Agency of their respective obligations hereunder, both as of the date hereof
and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Bond
Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be
conditioned upon the performance by the Authority and the Agency of their obligations to be
performed hereunder and under such documents and instruments at or prior to the Closing, and
shall also be subject to the following additional conditions:
Page 93 of 142
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(a) The representations and warranties of the Authority and the Agency
contained herein shall be true, complete and correct on the date hereof and on and as of
the date of the Closing, as if made on the date of the Closing;
(b) At the time of the Closing, the Indenture shall be in full force and effect in
accordance with its terms and shall not have been amended, modified or supplemented
and the Official Statement shall not have been supplemented or amended, except in any
such case as may have been agreed to by the Underwriter;
(c) At the time of the Closing, all necessary official action of the Authority,
the Agency and of the other parties to the Authority Documents relating thereto shall
have been taken and shall be in full force and effect and shall not have been amended,
modified or supplemented in any material respect;
(d) Subsequent to the date hereof, there shall not have occurred any change in,
or affecting particularly, the Authority, the Agency or the Bonds, as the foregoing matters
are described in the Official Statement, which in the reasonable opinion of the
Underwriter materially impairs the investment quality of the Bonds;
(e) At or prior to the Closing, the Underwriter shall have received copies of
each of the following documents:
(1) The Official Statement and each supplement or amendment, if any,
thereto, executed by a designated officer of the Authority,
(2) An executed copy of the Indenture relating to the Bonds;
(3) An executed copy of the Joint Exercise of Powers Agreement of
the Authority;
(4) An executed copy of the Project Area No. I Loan Agreement;
(5) A copy of this Bond Purchase Contract, executed by the Authority,
the Agency and the Underwriter;
(6) An executed copy of the Continuing Disclosure Agreement
substantially in the form presented as Appendix E to the Official Statement;
(7) Certificates of the Authority and the Agency, respectively, with
respect to the matters described in Sections 5 and 6 and in paragraphs (a), (b), (c)
and (d) of this Section 8;
(8) An opinion (the "Final Approving Legal Opinion"), dated the date
of the Closing and addressed to the Authority, of Fulbright & Jaworski L.L.P.,
Los Angeles, California, Bond Counsel, substantially in the form attached to the
Official Statement as Appendix G;
Page 94 of 142
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(9) A supplemental opinion, dated the date of the Closing and
addressed to the Underwriter and the Trustee of Bond Counsel, in substantially
the form attached hereto as Exhibit B;
(10) An opinion, dated the date of the Closing and addressed to the
Underwriter of the City Attorney of the City of Lake Elsinore acting as counsel
for the Agency, in substantially the form attached hereto as Exhibit C;
(11) An opinion, dated the date of the Closing and addressed to the
Underwriter of the City Attorney of the City of Lake Elsinore acting as counsel
for the Authority, in substantially the form attached hereto as Exhibit D;
(12) An opinion, dated the date of the Closing and addressed to the
Authority and the Underwriter of Fulbright & Jaworski L.L.P., Disclosure
Counsel, in substantially the form attached hereto as Exhibit E;
(13) Transcripts of all proceedings relating to the authorization and
issuance of the Bonds certified by the Secretary or an Assistant Secretary of the
Authority;
(14) An opinion of counsel to the Trustee, to the effect that:
(i) Due Organization and Existence - the Trustee has been
duly organized and is validly existing and in good standing, with full
corporate power to undertake the trust duties and obligations under the
Indenture;
(ii) Corporate Action - the Trustee has duly authorized,
executed and delivered the Indenture, and by all proper corporate action
has authorized the acceptance of the duties and obligations of the Trustee
under the Indenture and to authorize in such capacity the authentication
and delivery of the Bonds; and
(iii) Due Authorization, Execution and Delivery - assuming due
authorization, execution and delivery by the Authority, the Indenture is the
valid, legal and binding agreement of the Trustee, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law);
(15) The general resolutions of the Trustee authorizing the execution
and delivery of certain documents by certain officers of the Trustee, which
resolution authorizes the execution and delivery of the Indenture;
Page 95 of 142
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(16) A certificate of the Trustee, dated the date of Closing, certifying
that, subject to the limitations provided herein, the Trustee represents and
warrants and agrees with the Underwriter that as of the date of Closing:
(i) Due Organization and Existence - the Trustee is duly
organized and existing as a national banking association in good standing
under the laws of the United States having the full power and authority to
enter into and perform its duties under the Indenture and to authenticate
and deliver the Bonds to the Underwriter pursuant to the terms of the
Indenture;
(ii) No Conflict - to the best of the knowledge of the Trustee,
after due investigation, the execution and delivery by the Trustee of the
Indenture and the authentication and delivery by the Trustee of the Bonds,
and compliance with the terms thereof will not, in any material respect,
conflict with, or result in a violation or breach of, or constitute a default
under, any loan agreement, indenture, bond, note, resolution or any other
agreement or instrument to which the Trustee is a party or by which it is
bound, or any law or any rule, regulation, order or decree of any court or
governmental agency or body having jurisdiction over the Trustee or any
of its activities or properties, or result in the creation or imposition of any
lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the property or assets of the Trustee, which
conflict, breach, violation or default would materially impair the ability of
the Trustee to perform its obligations under the Indenture; and
(iii) No Liti ag tion - to the best of the knowledge of the Trustee,
there is no litigation pending or threatened against or affecting the Trustee
to restrain or enjoin the Trustee's participation in, or in any way contesting
the powers of the Trustee with respect to the transactions contemplated by
the Indenture; and
(17) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the date of the Closing, of the Authority's
and the Agency's representations and warranties contained herein and of the
statements and information contained in the Official Statement and the due
performance or satisfaction by the Authority and the Agency on or prior to the
date of the Closing of all the agreements then to be performed and conditions then
to be satisfied by it.
All the opinions, letters, certificates, instruments and other documents mentioned
above or elsewhere in this Bond Purchase Contract shall be deemed to be in compliance with the
provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel and
the Underwriter. The opinions and certificates referred to in paragraphs (8), (9), (10), (11), (12),
(13) and (15) of this Section 8(e) shall be deemed satisfactory provided they are substantially in
the forms attached as exhibits to the Official Statement or this Bond Purchase Contract.
Page 96 of 142
76981126.1 12
If the Authority and the Agency shall be unable to satisfy the conditions to the
obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds
contained in this Bond Purchase Contract, or if the obligations of the Underwriter to purchase, to
accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this
Bond Purchase Contract, this Bond Purchase Contract shall terminate and neither the
Underwriter nor the Authority nor the Agency shall be under any further obligation hereunder.
9. Termination. The Underwriter shall have the right to terminate the
Underwriter's obligations under this Bond Purchase Contract to purchase, to accept delivery of
and to pay for the Bonds by notifying the Authority and the Agency in writing or by telegram, of
their election to do so, if, after the execution hereof and prior to the Closing: (a) the United
States has become engaged in hostilities which have resulted in a declaration of war or a national
emergency; (b) there shall have occurred the declaration of a general banking moratorium by any
authority of the United States or the States of New York or California; (c) an event shall have
occurred or been discovered as described in paragraph (m) of Section 5 and paragraph 0) of
Section 6 hereof which in the opinion of the Underwriter requires the preparation and publication
of disclosure material or a supplement or amendment to the Official Statement; (d) any
legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any
governmental body, department or agency in the State of California, or a decision by any court of
competent jurisdiction within the State of California shall be rendered which, in the
Underwriter's reasonable opinion, materially adversely affects the market price of the Bonds; (e)
legislation shall be introduced, by amendment or otherwise, or be enacted by the House of
Representatives or the Senate of the Congress of the United States, or a decision by a court of the
United States shall be rendered, or a stop order, ruling, regulation or official statement by or on
behalf of the Securities and Exchange Commission or other governmental agency having
jurisdiction of the subject matter shall be made or proposed, to the effect that the issuance,
offering or sale of obligations of the general character of the Bonds, or the Bonds, as
contemplated hereby or by the Official Statement, is or would be in violation of any provision of
the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of
1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as
then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale
of obligations of the general character of the Bonds, as contemplated hereby or by the Official
Statement; (f) additional material restrictions not in force as of the date hereof shall have been
imposed upon trading in securities generally by any governmental authority or by any national
securities exchange; (g) the New York Stock Exchange, or other national securities exchange or
association or any governmental authority, shall impose as to the Bonds, or obligations of the
general character of the Bonds, any material restrictions not now in force, or increase materially
those now in force, with respect to the extension of credit by or the charge to the net capital
requirements of broker-dealers; (h) trading in securities on the New York Stock Exchange or the
American Stock Exchange shall have been suspended or limited or minimum prices have been
established on either such exchange; or (i) any action shall have been taken by any government
in respect of its monetary affairs which, in the reasonable opinion of the Underwriter, has a
material adverse effect on the United States securities market.
If this Bond Purchase Contract shall be terminated pursuant to Section 8 or this
Section 9, or if the purchase provided for herein is not consummated because any condition to
the Underwriter's obligation hereunder is not satisfied or because of any refusal, inability or
Page 97 of 142
76981126.1 13
failure on the part of the Authority or the Agency to comply with any of the terms or to fulfill
any of the conditions of this Bond Purchase Contract, or if for any reason the Authority or the
Agency shall be unable to perform all of their respective obligations under this Bond Purchase
Contract, neither the Authority nor the Agency shall be liable to the Underwriter for damages on
account of loss of anticipated profits arising out of the transactions covered by this Bond
Purchase Contract.
10. Payment of Costs and Expenses.
(a) The Authority shall pay from the proceeds of the Bonds all costs and
expenses incident to the sale and delivery of the Bonds to the Underwriter, including, but
not limited to: (i) the fees and expenses of the Authority and its Counsel and other
consultants; (ii) the fees and expenses of the Agency, its Counsel and other consultants;
(iii) the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter's
Counsel; (iv) all costs and expenses incurred in connection with the preparation and
printing of the Bonds; (v) all expenses in connection with the preparation, printing,
distribution and delivery of the Preliminary Official Statement, the Official Statement and
any amendment or supplement thereto; (vi) CDIAC fees, CUSIP® Bureau charges, fees of
Securities Industry and Financial Markets Association, and Municipal Securities
Rulemaking Board fees; and (vii) the fees and expenses of the Trustee and its counsel.
(b) The Underwriter shall pay all advertising expenses in connection with the
public offering of the Bonds and all other expenses incurred by it in connection with its
public offering and distribution of the Bonds.
11. Representations, Warranties and Agreements to Survive Delivery.
The representations, warranties, indemnities, agreements and other statements of the Authority,
the Agency and the Underwriter or their officers or partners set forth in, or made pursuant to, this
Bond Purchase Contract will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Authority, the Agency or the Underwriter or any
controlling person and will survive delivery of and payment for the Bonds.
12. Notices. Any notice or other communication to be given under this Bond
Purchase Contract may be given by delivering the same in writing:
To the Authority: Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, California 92530
Attention: Executive Director
To the Agency: Redevelopment Agency of the City of Lake Elsinore
130 S. Main Street
Lake Elsinore, California 92530
Attention: Executive Director
Page 98 of 142
76981126.1 14
To the Underwriter: O'Connor & Company Securities, Inc.
250 Newport Center Drive, Suite 303
Newport Beach, California 92660
Attention: Tony Wetherbee
13. Parties in Interest. This Bond Purchase Contract is made solely for the
benefit of the Authority, the Agency and the Underwriter (including the successors or assigns of
the Underwriter) and no other person shall acquire or have any right hereunder or by virtue
hereof. All of the Authority's and the Agency's representations, warranties and agreements
contained in this Bond Purchase Contract shall remain operative and in full force and effect,
regardless of (i) any investigations made by or on behalf of the Underwriter; (ii) delivery of and
payment for the Bonds pursuant to this Bond Purchase Contract; and (iii) any termination of this
Bond Purchase Contract.
14. Determination of End of the Underwriting Period. For purposes of this
Bond Purchase Contract, the "End of the Underwriting Period" for the Bonds shall mean the
earlier of (a) the day of the Closing unless the Authority and the Agency have been notified in
writing by the Underwriter, on or prior to the day of the Closing, that the "end of the
underwriting period" for the Bonds for all purposes of Rule 15c2-12 of the Securities and
Exchange Commission promulgated under the Securities Exchange Act of 1934 (the "Rule") will
not occur on the day of the Closing, or (b) the date on which notice is given to the Authority and
the Agency by the Underwriter in accordance with the following sentence. In the event that the
Underwriter has given notice to the Authority and the Agency pursuant to clause (a) above that
the "end of the underwriting period" for the Bonds will not occur on the day of the Closing, the
Underwriter agrees to notify the Authority and the Agency in writing as soon as practicable
following the "end of the underwriting period" for the Bonds for all purposes of the Rule.
15. Effectiveness. This Bond Purchase Contract shall become effective upon
the execution of the acceptance by the designee of the Authority and the Agency and shall be
valid and enforceable at the time of such acceptance.
16. Headings. The headings of the sections of this Bond Purchase Contract
are inserted for convenience only and shall not be deemed to be a part hereof.
17. Governing Law. This Bond Purchase Contract shall be construed in
accordance with the laws of the State of California.
18. Counterparts. This Bond Purchase Contract may be executed in any
number of counterparts.
Page 99 of 142
76981126.1 15
If the foregoing is in accordance with your understanding of the Bond Purchase
Contract, please sign and return to us the enclosed duplicate copies hereof, whereupon it will
become a binding agreement among the Authority, the Agency and the Underwriter in
accordance with its terms.
Accepted:
This day of 2011
Very truly yours,
O'CONNOR & COMPANY SECURITIES, INC.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
By:
Executive Director
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
Executive Director
Page 100 of 142
76981126.1 - 16
Exhibit A
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A
Maturity
(September 1) Principal Amount Coupon Yield
Page 101 of 142
76981126.1 A-1
Exhibit B
Supplemental Opinion of Fulbright & Jaworski L.L.P.
Addressed to the Underwriter and the Trustee
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A
[dated the Closing Date]
O'Connor & Company Securities, Inc.
250 Newport Center Drive, Suite 303
Newport Beach, California 92660
Union Bank, N.A.
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Ladies and Gentlemen:
We have this day released to the Lake Elsinore Public Financing Authority (the
"Issuer") and the Redevelopment Agency of the City of Lake Elsinore (the "Agency") our final
approving legal opinion with respect to the subject bonds (the "Bonds"). You are authorized to
rely on such opinion as if the same were addressed to you.
In connection with rendering the above-described opinion, we examined the
record of proceedings submitted to us relative to the issuance of the Bonds and such other
documents as are in our opinion necessary to enable us to express an informed opinion with
respect to the following matters. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Official Statement of the Issuer, dated 2011,
relating to the Bonds.
Based upon the foregoing, in our opinion:
1. The Issuer has the right and power to perform all of its obligations under
the Bond Purchase Contract, dated , 2011 (the "Purchase Contract"), among the
Issuer, the Agency and O'Connor & Company Securities, Inc. (the "Underwriter"). The Issuer
has duly authorized the Purchase Contract, and assuming due authorization, execution and
delivery by the other parties thereto, as necessary, the Purchase Contract constitutes the legal,
valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its
terms, except as the enforceability thereof may be limited by applicable bankruptcy, moratorium,
insolvency, reorganization or other similar laws affecting creditors' rights generally or as to the
availability of any particular remedy.
Page 102 of 142
76981126.1 B-1
2. The Bonds are not required to be registered under the Securities Act of
1933, as amended.
3. The Indenture is exempt from qualification as indentures pursuant to the
Trust Indenture Act of 1939, as amended.
4. The statements contained in the Official Statement relating to the Bonds
(including the cover page and the Appendices thereto, but excluding any statements relating to
financial or statistical information), insofar as such statements purport to summarize the
provisions of the Bonds, the Indenture, the Project Area No. I Loan Agreement, the Bond Law
and federal tax law, fairly and accurately summarize the information presented therein.
We are furnishing this letter to the addressees at the request of the Issuer, and this
letter may not be relied upon for any purpose other than in connection with the issuance of the
Bonds. This letter shall not extend to, and may not be used, circulated, quoted, referred to, or
relied upon by, any other person, firm, corporation or other entity without our prior written
consent.
Very truly yours,
Page 103 of 142
76981126.1 B-2
Exhibit C
Opinion of City Attorney of the City of Lake Elsinore acting as Counsel for the Agency
Addressed to the Agency and the Underwriter
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A
[dated the Closing Date]
Redevelopment Agency of the City of Lake Elsinore
130 S. Main Street
Lake Elsinore, California 92530
O'Connor & Company Securities, Inc.
250 Newport Center Drive, Suite 303
Newport Beach, California 92660
Ladies and Gentlemen:
We are counsel to the Redevelopment Agency of the City of Lake Elsinore (the
"Agency") in connection with the issuance of the above-referenced Bonds and in such capacity,
we have examined the original, certified copies, or copies otherwise identified to our satisfaction
as being true copies of such resolutions, documents, certificates, and records as we have deemed
relevant and necessary (except as we have specifically limited the scope of our investigation
herein) as the basis for the opinions set forth herein (collectively, the "Documents") relying on
such examination and pertinent law and subject to the limitations and qualifications hereinafter
set forth, we are of the opinion that:
1. The Agency is a duly organized and validly existing public body,
corporate and politic, organized under the laws of the State of California acting pursuant to the
Redevelopment Law (as such term is defined in the Official Statement respecting the Bonds)
with full legal right, power and authority to perform all of its obligations under the Bond
Purchase Contract, dated 2011 (the "Bond Purchase Contract"), among the Lake
Elsinore Public Financing Authority (the "Authority"), the Agency and O'Connor & Company
Securities, Inc. (the "Underwriter") and the Agency Documents (as defined in the Bond Purchase
Contract). The Agency has duly authorized, executed and delivered the Agency Documents and
the other Documents relating to the Bonds to which it is a party, and assuming due authorization,
execution and delivery by the other parties thereto, as necessary, the Agency Documents
constitute legal, valid and binding agreements of the Agency enforceable against the Agency in
accordance with their terms, except as the enforceability thereof may be limited by bankruptcy,
moratorium, insolvency, equitable remedies and other laws affecting creditors' rights or
remedies.
Page 104 of 142
76981126.1 C-1
2. To the best of our knowledge, there is no action, suit or proceeding before
or by any court, public board or body pending or threatened wherein an unfavorable decision,
ruling or finding would (a) affect the creation, organization, existence or powers of the Agency
or the titles of its officers to their respective offices, (b) in any way question or affect the validity
or enforceability of the Agency Documents, or (c) find illegal, invalid or unenforceable the
Agency Documents or the transactions contemplated thereby, or any other agreement or
instrument related to the issuance of the Bonds to which the Agency is a parry.
3. The execution and delivery of the Agency Documents and the other
instruments contemplated by any of such documents to which the Agency is a party, and
compliance with the provisions of each thereof, will not conflict with or constitute a breach of or
default under any applicable law or administrative rule or regulation of the State of California,
the United States or any department, division, agency or instrumentality of either thereof, or any
applicable court or administrative decree or order or any loan agreement, note, resolution,
indenture, contract, agreement or other instrument to which the Agency is a party or is otherwise
subject or bound in a manner which would materially adversely affect the Agency's performance
under the Agency Documents.
4. All approvals, consents, authorizations, elections and orders of or filings
or registrations with any governmental authority, board, agency or commission having
jurisdiction which would constitute a condition precedent to, or the absence of which would
materially adversely affect, the performance by the Agency of its obligations under the Agency
Documents have been obtained and are in full force and effect.
This letter is famished by us as counsel to the Agency. Other than the Agency, no
attorney-client relationship has existed or exists between our firm and you in connection with the
Bonds or by virtue of this letter. Our engagement with respect to the Bonds has terminated as of
the date hereof, and we disclaim any obligation to update this letter. This letter is delivered to
you, is solely for your benefit 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, and may
not, be relied upon by owners of the Bonds.
Respectfully submitted,
Page 105 of 142
76981126.1 C-2
Exhibit D
Opinion of City Attorney of the City of Lake Elsinore acting as Counsel for the Authority
Addressed to the Authority and the Underwriter
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A
[dated the Closing Date]
Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, California 92530
O'Connor & Company Securities, Inc.
250 Newport Center Drive, Suite 303
Newport Beach, California 92660
Ladies and Gentlemen:
We are counsel to the Lake Elsinore Public Financing Authority (the "Authority")
in connection with the issuance of the above-referenced Bonds and in such capacity, we have
examined the original, certified copies, or copies otherwise identified to our satisfaction as being
true copies of such resolutions, documents, certificates, and records as we have deemed relevant
and necessary (except as we have specifically limited the scope of our investigation herein) as
the basis for the opinions set forth herein (collectively the "Documents") relying on such
examination and pertinent law and subject to the limitations and qualifications hereinafter set
forth, we are of the opinion that:
1. The Authority is a joint exercise of powers authority organized and validly
existing under the laws of the State of California with full legal right, power and authority to
perform all of its obligations under the Bond Purchase Contract, dated , 2011 (the
"Bond Purchase Contract"), among the Authority, the Redevelopment Agency of the City of
Lake Elsinore (the "Agency") and O'Connor & Company Securities, Inc. (the "Underwriter")
and the Authority Documents (as defined in the Bond Purchase Contract). The Authority has
duly authorized, executed and delivered the Official Statement (as defined in the Bond Purchase
Contract), the Authority Documents and the other Documents relating to the Bonds to which it is
a party, and assuming due authorization, execution and delivery by the other parties thereto, as
necessary, the Authority Documents constitute legal, valid and binding agreements of the
Authority enforceable against the Authority in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, moratorium, insolvency, equitable remedies
and other laws affecting creditors' rights or remedies.
2. The execution and delivery by the Authority of the Authority Documents,
the Official Statement and the other instruments contemplated by any of such documents to
Page 106 of 142
76981126.1 D-1
which the Authority is a party, and compliance with the provisions of each thereof, will not
conflict with or constitute a breach of or default under any applicable law or administrative rule
or regulation of the State of California, the United States or any department, division, agency or
instrumentality of either thereof, or any applicable court or administrative decree or order or any
loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the
Authority is a party or is otherwise subject or bound in a manner which would materially
adversely affect the Authority's performance under the Authority Documents.
3. To the best of our knowledge, there is no action, suit or proceeding before or
by any court, public board or body pending or threatened wherein an unfavorable decision, ruling
or finding would (a) affect the creation, organization, existence or powers of the Authority or the
titles of its officers to their respective offices, (b) in any way question or affect the validity or
enforceability of the Authority Documents, or (c) find illegal, invalid or unenforceable the Basic
Documents or the transactions contemplated thereby, or any other agreement or instrument
related to the issuance of the Bonds to which the Authority is a party.
4. All approvals, consents, authorizations, elections and orders of or filings or
registrations with any governmental authority, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would materially
adversely affect, the performance by the Authority of its obligations under the Authority
Documents have been obtained and are in full force and effect.
This letter is furnished by us as counsel to the Authority. Other than the
Authority, no attorney-client relationship has existed or exists between our firm and you in
connection with the Bonds or by virtue of this letter. Our engagement with respect to the Bonds
has terminated as of the date hereof, and we disclaim any obligation to update this letter. This
letter is delivered to you, is solely for your benefit 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, and may not, be relied upon by owners of the Bonds.
Respectfully submitted,
Page 107 of 142
76981126.1 D-2
Exhibit E
Opinion of Fulbright & Jaworski L.L.P. acting as Disclosure Counsel
Addressed to the Authority and the Underwriter
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project),
2011 Series A
[dated the Closing Date]
Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, California 92530
O'Connor & Company Securities, Inc.
250 Newport Center Drive, Suite 303
Newport Beach, California 92660
Ladies and Gentlemen:
We have acted as Disclosure Counsel ("Disclosure Counsel") to the Lake Elsinore
Public Financing Authority (the "Issuer") with respect to the issuance of the above-captioned
bonds (the "Bonds"). The Bonds are being issued pursuant to the provisions of the Constitution
and the laws of the State of California, including the provisions of the Marks-Roos Local Bond
Pooling Act of 1985, constituting Article 4 of Chapter 5 (commencing with Section 6584), of
Division 7 of Title 1 of the Government Code of the State of California, as in existence on the
Closing Date or as thereafter amended from time to time. The Bonds shall be issued and secured
pursuant to an Indenture of Trust, dated as of February 1, 2011 (the "Indenture"), between the
Issuer and Union Bank, N.A., as trustee (the "Trustee"), authorizing the issuance of the Bonds.
The Bonds are more fully described in the Official Statement of the Issuer dated
2011 (the "Official Statement"). The Bonds are being purchased pursuant to the
provisions of a Bond Purchase Contract, dated , 2011 (the "Purchase Contract"), by
and among the Underwriter, the Issuer and the Redevelopment Agency of Lake Elsinore (the
"Agency"). Capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Official Statement or in the Indenture.
In rendering this opinion, we have reviewed such records, documents, certificates
and opinions, and made such other investigations of law and fact as we have deemed necessary
or appropriate.
76981126.1 E-I
Page 108 of 142
This opinion is limited to matters governed by the federal securities law of the
United States, and we assume no responsibility with respect to the applicability or effect of the
laws of any other jurisdiction.
In our capacity as Disclosure Counsel to the Issuer, we have rendered certain legal
advice and assistance to you in connection with the preparation of the Official Statement.
Rendering such legal advice and assistance involved, among other things, discussions and
inquiries concerning various legal matters, review of certain records, documents and
proceedings, and participation in conferences with, among others, your representatives and
representatives of the Issuer, the Agency, the Fiscal Consultant and their counsel, if any, and
other consultants at which conferences the contents of the Official Statement and related matters
were discussed. On the basis of the information made available to us in the course of the
foregoing (but without having undertaken to determine or verify independently, or assuming any
responsibility for, the accuracy, completeness or fairness of any of the statements contained in
the Official Statement), no facts have come to the attention of the personnel in our firm directly
involved in rendering legal advice and assistance in connection with the preparation of the
Official Statement which cause us to believe that the Official Statement as of its date (excluding
therefrom financial, engineering and statistical data; forecasts, projections, estimates,
assumptions and expressions of opinions; statements relating to the treatment of the Bonds or the
interest, discount or premium related thereto for tax purposes under the law of any jurisdiction;
and the statements contained in the Official Statement under the caption "LEGAL MATTERS -
TAX MATTERS," and in the Appendices thereto, as to all of which we express no view)
contained any untrue statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
During the period from the date of the Official Statement to the date of this
opinion, except for our review of the certificates and opinions regarding the Official Statement
delivered on the date hereof, we have not undertaken any procedures or taken any actions which
were intended or likely to elicit information concerning the accuracy, completeness or fairness of
any of the statements contained in the Official Statement.
We are furnishing this opinion to the Issuer and to the Underwriter, as Disclosure
Counsel to the Issuer, pursuant to the Purchase Contract, solely for your benefit as Issuer and
Underwriter, respectively, of the Bonds. This opinion is rendered in connection with the
transaction described herein, and may not be relied upon by you for any other purpose. This
opinion shall not extend to, and may not be used, circulated, quoted, referred to, or relied upon
by, any other person, firm, corporation or other entity without our prior written consent. Our
engagement with respect to this matter terminates upon the delivery of this opinion to you at the
time of the closing relating to the Bonds, and we have no obligation to update this opinion.
Very truly yours,
76981126.1
E-2
Page 109 of 142
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement'), dated as of February 1,
2011, is executed and delivered by the Redevelopment Agency of the City of Lake Elsinore (the
"Agency") and Union Bank, N.A., as dissemination agent hereunder (the "Dissemination Agent") in
connection with the issuance of the $ Lake Elsinore Public Financing Authority Tax
Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A (the "Bonds"). The Bonds are being
issued pursuant to an Indenture of Trust, dated as of February 1, 2011 (the "Indenture"), by and between
the Lake Elsinore Public Financing Authority and Union Bank, N.A., as trustee (the "Trustee"). The
Agency and the Dissemination Agent covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Agency for the benefit of the Beneficial Owners of the Bonds and in order
to assist the Participating Underwriter in complying with the Rule (as defined herein).
SECTION 2. Definitions. In addition to the defmitions set forth in the Indenture, which apply
to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for
federal income tax purposes.
"Disclosure Representative" shall mean the Executive Director of the Agency or his or her
designee, or such other officer or employee as the Agency shall designate in writing to the Dissemination
Agent (if other than the Agency) from time to time.
"Dissemination Agent" shall mean Union Bank, N.A., acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the Agency and which
has filed with the Agency a written acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"MSRB" shall mean the Municipal Securities Rulemaking Board established pursuant to Section
1513(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the
Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated
by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through
the Electronic Municipal Marketplace Access (EMMA) website of the MSRB, currently located at
http://emma.msrb.org.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
76981127.1 Page 110 of 142
SECTION 3. Provision of Annual Reports.
(a) The Agency shall, or shall cause the Dissemination Agent to, not later than
February 15 of each year, commencing February 15, 2012, provide to the MSRB and the Participating
Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure
Agreement. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4 of this
Disclosure Agreement. If the Agency's fiscal year changes, it shall give notice of such change in the
same manner as for a Listed Event under Section 5(f).
(b) Not later than fifteen (15) Business Days prior to the date specified in
subsection (a) for providing the Annual Report to the MRSB, the Agency shall provide the Annual Report
to the Dissemination Agent (if other than the Agency). The Agency shall provide, or cause the preparer
of the Annual Report to provide, a written certificate with each Annual Report furnished to the
Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be
furnished to it hereunder. The Dissemination Agent may conclusively rely upon such certification of the
Agency and shall have no duty or obligation to review such Annual Report.
(c) If the Dissemination Agent is unable to provide to the MSRB an Annual Report
by the date required in subsection (a), the Agency shall send a notice to the MSRB in substantially the
form attached as Exhibit A.
(d) The Dissemination Agent shall, to the extent information is known to it, file a
report with the Agency certifying that the Annual Report has been provided pursuant to this Disclosure
Agreement, stating the date it was provided.
SECTION 4. Content of Annual Reports. The Annual Report shall contain or include by
reference the following:
(a) The audited financial statements of the Agency, prepared in accordance with
generally accepted accounting principles in effect from time to time. If any of such audited financial
statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a),
the Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the Official Statement, and the audited financial statements shall be filed in the
same manner as the Annual Report when they become available.
(b) An update of tabular information relating to the Agency and Project Area No. I
of the kind presented in the section of the Official Statement entitled:
"REDEVELOPMENT PROJECT NO. I - Assessed Values by Land Use"
"REDEVELOPMENT PROJECT NO. I - Top Ten Taxable Property Owners"
"TAX INCREMENT REVENUES - TAXABLE VALUATIONS - Historical Taxable
Valuations"
"TAX INCREMENT REVENUES - ASSESSMENT APPEALS"
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the Agency or related public entities, which are available to
the public on the MSRB's Internet Web site or filed with the Securities and Exchange Commission.
76981127.1 2 Page 111 of 142
SECTION 5. Reporting of Listed Events.
(a) Pursuant to the provisions of this section, upon the occurrence of any of the
following events (in each case to the extent applicable) with respect to the Bonds, the Agency shall give,
or cause to be given by so notifying the Dissemination Agent in writing and instructing the Dissemination
Agent to give, notice of the occurrence of such event, in each case, pursuant to Section 5(c) hereof:
1. principal or interest payment delinquencies;
2. non-payment related defaults, if material;
3. modifications to the rights of the Bondholders, if material;
4. optional, contingent or unscheduled calls, if material, and tender offers;
5. defeasances;
6. rating changes;
7. adverse tax opinions or the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
TEB) or other material notices or deterniinations with respect to the tax status of
the Bonds or other material events affecting the tax status of the Bonds;
8. unscheduled draws on the debt service reserves reflecting financial difficulties;
9. unscheduled draws on the credit enhancements reflecting financial difficulties;
10. substitution of the credit or liquidity providers or their failure to perform;
11. release, substitution or sale of property securing repayment of the Bonds, if
material;
12. bankruptcy, insolvency, receivership or similar proceedings of the Agency,
which shall occur as described below;
13. appointment of a successor or additional trustee or the change of name of a
trustee, if material, or;
14. the consummation of a merger, consolidation, or acquisition involving the
Agency or the sale of all or substantially all of the assets of the Agency other
than in the ordinary course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive agreement relating to
any such actions, other than pursuant to its terms, if material.
For these purposes, any event described in item 12 of this Section 5(a) is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the
Agency in a proceeding under the United States Bankruptcy Code or in any other proceeding under state
or federal law in which a court or governmental authority has assumed jurisdiction over substantially all
of the assets or business of the Agency, or if such jurisdiction has been assumed by leaving the existing
governing body and officials or officers in possession but subject to the supervision and orders of a court
or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or
76981127.1 3 Page 1.12 of 142
liquidation by a court or governmental authority having supervision or jurisdiction over substantially all
of the assets or business of the Agency.
(b) Upon receipt of notice from the Agency and instruction by the Agency to report
the occurrence of any Listed Event, the Dissemination Agent shall provide notice thereof to the MSRB in
accordance with Section 5(c) hereof. In the event the Dissemination Agent shall obtain actual knowledge
of the occurrence of any of the Listed Events, the Dissemination Agent shall, immediately after obtaining
such knowledge, contact the Disclosure Representative, inform such person of the event, and request that
the Agency promptly notify the Dissemination Agent in writing whether or not to report the event
pursuant to Section 5(c). For purposes of this Disclosure Agreement, "actual knowledge" of the
occurrence of such Listed Event shall mean actual knowledge by the Dissemination Agent, if other than
the Trustee, and if the Dissemination Agent is the Trustee, then by the officer at the corporate trust office
of the Trustee with regular responsibility for the administration of matters related to the Indenture. The
Dissemination Agent shall have no responsibility to determine the materiality, if applicable, of any of the
Listed Events.
(c) The Agency, or the Dissemination Agent, if the Dissemination Agent has been
instructed by the Agency to report the occurrence of a Listed Event, shall file a notice of such occurrence
with the MSRB in a timely manner not more than ten business days after the occurrence of the event.
SECTION 6. Termination of Reporting Obligation. The Agency's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall
give notice of such termination in the same manner as for a Listed Event under Section 5(f).
SECTION 7. Dissemination Agent. The Agency may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.
The Dissemination Agent shall not be responsible in any manner for the content of any notice or report
prepared by the Agency pursuant to this Disclosure Agreement. If at any time there is not any other
designated Dissemination Agent, the Agency shall be the Dissemination Agent. The Dissemination
Agent may resign by providing thirty days written notice to the Agency and the Trustee. The
Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination
Agent be responsible for filing any report not provided to it by the Agency in a timely manner and in a
form suitable for filing.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Agency may amend this Disclosure Agreement, and any provision of this Disclosure
Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature or status of an obligated person with respect
to the Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the
time of the original execution and delivery of the Bonds, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances;
(c) The amendment or waiver either (i) is approved by the Beneficial Owners in the
same manner as provided in the Indenture for amendments to the Indenture with the consent of Beneficial
76981127.1 4 Page 113 of 142
Owners, or (ii) does not, in the opinion of a nationally recognized bond counsel, materially impair the
interests of the Beneficial Owners; and
(d) Any amendment that modifies or increases the duties or obligations of the
Dissemination Agent shall be agreed to in writing by the Dissemination Agent.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a
narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case
of a change of accounting principles, on the presentation) of financial information or operating data being
presented by the Agency.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the Agency from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the Agency chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the Agency shall have no obligation under this Agreement to update such
information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. hi the event of a failure of the Agency to comply with any provision of
this Disclosure Agreement, the Dissemination Agent (at the written request of any Participating
Underwriter or the Beneficial Owners of at least 25% aggregate principal amount of Outstanding Bonds,
shall, but only to the extent funds in an amount satisfactory to the Dissemination Agent have been
provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or
additional charges and fees of the Dissemination Agent whatsoever, including, without limitation, fees
and expenses of its attorneys), or any Beneficial Owner may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the Agency to
comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement
shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure
Agreement in the event of any failure of the Agency to comply with this Disclosure Agreement shall be
an action to compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. Article VI of the
Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were
(solely for this purpose) contained in the Indenture and the Dissemination Agent shall be entitled to the
protections, limitations from liability and indemnities afforded the Trustee thereunder. The Dissemination
Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only
such duties as are specifically set forth in this Disclosure Agreement, and the Agency agrees to indemnify
and save the Dissemination Agent and the Trustee, their officers, directors, employees and agents,
harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys'
fees) of defending against any claim of liability, but excluding liabilities due to the respective parties'
gross negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the
Agency for its services provided hereunder in accordance with its schedule of fees as amended from time
to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the
performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review
any information provided to them hereunder and shall not be deemed to be acting in any fiduciary
capacity for the Agency, the Beneficial Owners, or any other party. Neither the Trustee nor the
Dissemination Agent shall have any liability to the Beneficial Owners or any other party for any monetary
damages or financial liability of any kind whatsoever related to or arising from this Agreement. The
75981127.1 5 Page 114 of 142
obligations of the Agency under this Section shall survive resignation or removal of the Dissemination
Agent and payment of the Bonds.
SECTION 12. Filings with the MSRB. All financial information, operating data, financial
statements, notices, and other documents provided to the MSRB in accordance with this Disclosure
Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied
by identifying information as prescribed by the MSRB.
SECTION 13. Notices. Any notices or communications to the Agency or the Dissemination
Agent may be given as follows:
To the Agency: Redevelopment Agency of the City of Lake Elsinore
130 South Main Street
Lake Elsinore, California 92530
Attention: Executive Director
(951) 674-3124
(951) 674-2392 Fax
To the Dissemination Agent: Union Bank, N.A.
120 South San Pedro Street, 4"' Floor
Los Angeles, California 90012
Attention: Corporate Trust Department
(213) 972-5677
(213) 972-5694 Fax
Any person may, by written notice to the other persons listed above, designate a different address
or telephone number(s) to which subsequent notices or communications should be sent.
SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Agency, the Dissemination Agent, the Participating Underwriter and Beneficial Owners, and shall create
no rights in any other person or entity.
SECTION 15. Governing Law. This Disclosure Agreement shall be construed and governed in
accordance with the laws of the State of California.
SECTION 16. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
76981127.1 6 Page 115 of 142
IN WITNESS WHEREOF, the parties hereto have caused this Continuing Disclosure Agreement
to be duly executed and delivered by their respective officers as of the date first above written.
REDEVELOPMENT AGENCY OF THE CITY OF
LAKE ELSINORE
By
Executive Director
UNION BANK, N.A., as Dissemination Agent
By
Authorized Officer
76981127.1 7 Page 116 of 142
EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: Redevelopment Agency of the City of Lake Elsinore
Name of Bonds: Lake Elsinore Public Financing Authority Tax Allocation Revenue
Bonds (Launch Ramp Project), 2011 Series A
Date of Delivery: _'2011
NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect
to the above-captioned Bonds as required by the Continuing Disclosure Agreement, dated as of
February 1, 2011, with respect to the Bonds. [The Agency anticipates that the Annual Report will be filed
by
Dated:
cc: Agency and Underwriter
UNION BANK, N.A.
By
76981127.1 Page 117 of 142
PROJECT AREA NO. I LOAN AGREEMENT
by and between the
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
and the
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
Dated as of February 1, 2011
Relating to
Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A
76981124.1 Page 118 of 142
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
2
Section 1.01
Definitions
2
Section 1.02
Rules of Construction
4
ARTICLE H THE LOAN; APPLICATION OF LOAN PROCEEDS; PARITY DEBT
5
Section 2.01
Authorization
5
Section 2.02
Disbursement and Application of Loan Proceeds and Other Moneys......
5
Section 2.03
Repayment of Loan
5
Section 2.04
Optional Prepayment of the Loan
6
Section 2.05
Parity Debt
6
Section 2.06
Issuance of Subordinate Debt
7
Section 2.07
Validity of Loan
7
ARTICLE III PLEDGE AND APPLICATION OF TAX REVENUES 7
Section 3.01
Pledge of Tax Revenues
7
Section 3.02
Special Fund; Deposit of Tax Revenues
8
Section 3.03
Transfer of Tax Revenues From Special Fund
8
Section 3.04
Investment of Moneys; Valuation of Investments
9
ARTICLE IV OTHER
COVENANTS OF THE AGENCY
9
Section 4.01
Punctual Payment; Extension of Payments
9
Section 4.02
Limitation on Additional Indebtedness
10
Section 4.03
Payment of Claims
10
Section 4.04
Books and Accounts; Financial Statements
10
Section 4.05
Protection of Security and Rights
10
Section 4.06
Payments of Taxes and Other Charges
10
Section 4.07
Taxation of Leased Property
10
Section 4.08
Disposition of Property
11
Section 4.09
Maintenance of Tax Revenues
11
Section 4.10
Payment of Expenses; Replenishment of Reserve Fund;
Indemnification
11
Section 4.11
Tax Matters
12
Section 4.12
Continuing Disclosure
15
Section 4.13
Redevelopment of Project Area
15
Section 4.14
Reporting Requirements
15
Section 4.15
Further Assurances
15
ARTICLE V EVENTS OF DEFAULT AND REMEDIES 16
Section 5.01 Events of Default and Acceleration of Maturities 16
Section 5.02 Application of Revenues and Other Funds After Default 17
Section 5.03 No Waiver 17
Section 5.04 Remedies Not Exclusive 18
ARTICLE VI MISCELLANEOUS 18
Section 6.01 Benefits Limited to Parties 18
Section 6.02 Successor is Deemed Included in All References to Predecessor 18
Section 6.03 Discharge of Loan Agreement 18
76981124.1
i
Page 119 of 142
TABLE OF CONTENTS
(continued)
Page
Section 6.04
Amendment
19
Section 6.05
Waiver of Personal Liability
19
Section 6.06
Payment on Business Days
19
Section 6.07
Notices
......................19
Section 6.08
Partial Invalidity
20
Section 6.09
Article and Section Headings and References
20
Section 6.10
Execution of Counterparts
20
Section 6.11
Governing Law
20
Section 6.12
No Additional Trustee Duties
20
Section 6.13
Assignment
20
EXHIBIT A - SCHEDULE OF LOAN PAYMENTS....
A-1
76981124.1 11
Page 120 of 142
PROJECT AREA NO. I LOAN AGREEMENT
THIS PROJECT AREA NO. I LOAN AGREEMENT (the "Loan Agreement") is made
and entered into as of February 1, 2011, by and between the REDEVELOPMENT AGENCY OF THE
CITY OF LAKE ELSINORE, a public body, corporate and politic, duly organized and existing under the
laws of the State of California (the "Agency"), and the LAKE ELSINORE PUBLIC FINANCING
AUTHORITY, a joint powers authority organized and existing under the laws of the State of California
(the "Authority");
WITNESSETH:
WHEREAS, the Agency is a public body, corporate and politic, duly established and
authorized to transact business and exercise powers under and pursuant to the provisions of Part 1 of
Division 24 of the Health and Safety Code of the State of California (the "Redevelopment Law"), and has
the power under Section 33601 of the Redevelopment Law to borrow money for any of its corporate
purposes; and
WHEREAS, a redevelopment plan for a redevelopment project known and designated as
the "Project Area No. I" (the "Project Area No. I") has heretofore been adopted and approved and all
requirements of law for, and precedent to, the adoption and approval of said plan have been duly
complied with; and
WHEREAS, the Agency has requested the Authority to make a loan (the "Loan") to the
Agency hereunder for the purpose of providing funds to finance redevelopment activities within or of
benefit to the Project Area No. I, including, without limitation, the financing of certain Lake Elsinore
launch ramp improvements and related facilities, all as provided herein, and the Agency hereby finds and
determines that there will be significant public benefits accruing from such borrowing, consisting of
demonstrable savings in effective interest rates and financing costs associated with the issuance of bonds
as described herein; and
WHEREAS, the Agency has previously borrowed amounts pursuant to a Project Area
No. I Loan Agreement, dated as of November 1, 2010, by and between the Agency and the Authority,
(the "Senior Loan Agreement") which the Authority funded with a portion of the proceeds of its
$29,435,000 aggregate principal amount of Lake Elsinore Public Financing Authority Tax Allocation
Revenue Bonds (1999 Series A Refunding), 2010 Series C (the "Senior Bonds"); and
WHEREAS, concurrently with the execution and delivery of this Loan Agreement the
Authority has issued its $ aggregate principal amount of Lake Elsinore Public Financing
Authority Tax Allocation Revenue Bonds (Launch Ramp Project), 2011 Series A (the "Bonds") for the
purpose of, among other things, making the Loan hereunder; and
WHEREAS, the Senior Loan Agreement funded with a portion of the proceeds of the
Senior Bonds established a lien on, security interest in and pledge of the Tax Revenues (as hereinafter
defined) which is superior to the pledge of and lien on the Tax Revenues securing repayment of the loan
pursuant to this Loan Agreement funded with a portion of the Bonds as provided herein; and
WHEREAS, in order to establish and declare the terms and conditions upon which the
Loan is to be made and secured, the Agency and the Authority wish to enter into this Loan Agreement;
and
76981124.1 Page 121 of 142
WHEREAS, all acts and proceedings required by law necessary to make this Loan
Agreement, when executed by the Agency and the Authority, the valid, binding and legal obligations of
the Agency and the Authority, and to constitute this Loan Agreement a valid and binding agreement for
the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the
execution and delivery of this Loan Agreement have been in all respects duly authorized;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Loan Agreement shall have the respective meanings
which such terms are given in Section 1.01 of the Indenture. In addition, the following terms defined in
this Section 1.01 shall, for all purposes of this Loan Agreement, have the respective meanings herein
specified.
"Annual Loan Payments" means, for any Bond Year, the total amount of principal and
interest payable on the Loan in such Bond Year.
`Business Inventory Tax Subvention" means all amounts payable by the State to the
Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2
(commencing with Section 16110) of the Government Code of the State.
"County' means the County of Riverside, California.
"Event of Default" means any of the events described in Section 5.01.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period
selected and designated by the Agency as its official fiscal year period pursuant to a Written Certificate of
the Agency filed with the Trustee.
"Housing Loan" means any loan made by the Authority to the Agency under and
pursuant to the Housing Loan Agreement.
"Housing Loan Agreement" means any Housing Fund Loan Agreement pursuant to
which a Housing Loan is made, the repayment of which is secured by amounts held in the Low and
Moderate Income Housing Fund, as originally executed or as it may from time to time be amended,
modified or supplemented.
"Housing Loan Payment Account" means the account by that name established or
continued under the Housing Loan Agreement.
"Indenture" means the Indenture of Trust, dated as of February 1, 2011, by and between
the Authority and the Trustee, authorizing the issuance of the Bonds, as originally executed or as it may
from time to time be supplemented, modified or amended.
76981124.1 2 Page 122 of 142
"Loan" means the loan made by the Authority to the Agency in the aggregate principal
amount of $ pursuant to Section 2.01 hereof.
"Loan Agreement" means this Project Area No. I Loan Agreement by and between the
Agency and the Authority, as originally executed or as it may from time to time be amended, modified or
supplemented.
"Loan Disbursement Fund" means the fund by that name established and held by the
Trustee pursuant to Section 2.02 hereof.
"Loan Interest Payment Date" means March 1 and September 1 of each year, beginning
September 1, 2011, and continuing thereafter so long as any Bonds remain Outstanding.
"Loan Principal Payment Date" means September 1 of each year.
"Low and Moderate Income Housing Fund" means the fund of the Agency established
pursuant to Section 33334.3 of the Redevelopment Law.
"Maximum Annual Loan Payments" means, as of the date of calculation, the largest
amount obtained by totaling, for the current or any future Bond Year, the sum of (a) the amount of
interest payable on the Loan and all outstanding Parity Debt in such Bond Year, assuming that principal
thereof is paid as scheduled and that any mandatory sinking fund payments are made as scheduled, and
(b) the amount of principal payable on the Loan and on all outstanding Parity Debt in such Bond Year,
including any principal required to be prepaid or redeemed by operation of mandatory sinking fund
payments.
"Parity" means the 2010A Loan and any loans, bonds, notes, advances or
indebtedness payable from Tax Revenues on a parity with the Loan issued or incurred pursuant to and in
accordance with Section 2.05 hereof.
"Parity Debt Instrument" means any resolution, indenture of trust, trust agreement or
other instrument authorizing the issuance of any Parity Debt.
"Plan Limitations" means the limitations contained or incorporated in the Redevelopment
Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues which may be
outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the
Agency pursuant to the Redevelopment Plan, (c) the period of time for establishing or repaying
indebtedness payable from Tax Revenues, (d) the term of the effectiveness of the Redevelopment Plan
and (e) the time limit to receive Tax Revenues from the Project Area.
"Project Area" means Project Area No. I, the area of the Redevelopment Project as
described in the Redevelopment Plan.
"Project Area No. 11 Special Fund" means the Special Fund established or continued
pursuant to a loan agreement relating to Project Area No. 11.
"Project Area No. III Special Fund" means the Special Fund established or continued
pursuant to a loan agreement relating to Project Area No. III.
76981124.1 3 Page 123 of 142
"Redevelopment Law" means the Community Redevelopment Law of the State,
constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts amendatory
thereof and supplemental thereto.
"Redevelopment Plan' means the Redevelopment Plan for the Project Area, together with
any further amendments thereof at any time duly authorized pursuant to the Redevelopment Law.
"Redevelopment Project" means the undertaking of the Agency pursuant to the
Redevelopment Plan and the Redevelopment Law for the redevelopment of the Project Area.
"Special Fund" means the fund continued and held hereunder by the Agency pursuant to
Section 3.02 hereof.
"Subordinate Debt" means any loans, advances or indebtedness issued or incurred by the
Agency in accordance with the requirements of Section 2.06, which are either: (a) payable from, but not
secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax
Revenues which is subordinate to the pledge of and lien upon the Tax Revenues hereunder for the
security of the Loan and any Parity Debt.
"Tax Revenues" means all taxes annually allocated and paid to the Agency with respect
to the Project Area following the Closing Date pursuant to Article 6 of Chapter 6 (commencing with
Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State
and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if
any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax
rate limitations, but excluding (a) amounts payable to entities other than the Agency under and pursuant
to the Tax Sharing Agreements, (b) any statutory pass-through payments, (c) SB 2557 County
Administrative fees and collection charges, and (d) all amounts of such taxes required to be deposited into
the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to
Section 33334.3 of the Redevelopment Law.
"Tax Sharing Agreements" means those certain agreements relating to the payment of
certain amounts which would otherwise constitute Tax Revenues.
"Trustee" means Union Bank, N.A., a national banking association organized and
existing under the laws of the United States of America, and its successors and assigns acting as trustee
under the Indenture.
"Undertaking To Provide Continuing Disclosure" shall mean the agreement described in
Section 4.12 hereof, by the Agency.
"Written Request of the Agency" or "Certificate of the Agency" means a request or
certificate, in writing, signed by the Chair, Vice Chair, Executive Director or Treasurer of the Agency, or
by any other officer of the Agency duly authorized by the Agency for that purpose.
"2010A Loan" shall mean such loan evidenced by the Project Area No. I Loan
Agreement, dated as of February 1, 2010, by and between the Authority and the Agency relating to the
Lake Elsinore Public Financing Authority Tax Allocation Revenue Bonds (1999 Series C Refunding),
2010 Series A.
Section 1.02 Rules of Construction. All references herein to "Articles," "Sections"
and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan
76981124.1 4 Page 124 of 142
Agreement, and the words "herein," "hereof "hereunder" and other words of similar import refer to this
Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE H
THE LOAN; APPLICATION OF LOAN PROCEEDS; PARITY DEBT
Section 2.01 Authorization. The Authority hereby agrees to lend to the Agency,
from a portion of the proceeds of sale of the Bonds, the aggregate principal amount of
Dollars ) under and subject to the terms of this Loan Agreement, the Bond Law and the
Redevelopment Law. This Loan Agreement constitutes a continuing agreement with the Authority to
secure the full and final payment of the Loan, subject to the covenants, agreements, provisions and
conditions herein contained.
Section 2.02 Disbursement and Application of Loan Proceeds and Other Moneys.
On the Closing Date of the Bonds, the Authority shall cause to be deposited into the Loan Disbursement
Fund, which fund is hereby created, the amount of $ (which amount constitutes Loan proceeds of
$ less loan discount of which shall be held by the Trustee and which shall be
disbursed as follows:
(a) The Trustee shall transfer the amount of $ to the Loan Costs of
Issuance Fund held under the Indenture.
(b) Except as otherwise provided herein, all remaining moneys in the Loan
Disbursement Fund shall, upon Written Request of the Agency (which may be in the form of a facsimile
promptly confirmed by first class mail thereof) stating the name of the person to whom payment is to be
made, the amount to be paid and that such payment is a proper charge against the Loan Disbursement
Fund, be used solely for the purposes of financing the purpose for which the Loan was incurred or such
other uses allowed by law.
Section 2.03 Repayment of Loan. The Agency shall repay the principal of the Loan
in installments on September 1 in each of the years and in the amounts, and shall pay interest on the
unpaid principal balance of the Loan on each Loan Interest Payment Date and in the amounts, as set forth
in Exhibit A attached hereto and by this reference incorporated herein, which amounts shall be equal to
the Proportionate Share of the corresponding payments of principal of and interest on the Bonds. Any
installment of principal or interest which is not paid when due shall continue to accrue interest at the net
effective rate of interest then borne by the Loan from and including the date on which such principal or
interest is payable to but not including the date of actual payment.
In the event that the Tax Revenues and other moneys pledged for the payment of the
Loan are insufficient to pay the principal and interest on the Loan coming due on any Loan Interest
Payment Date, the Agency agrees to make an interfund loan to the Special Fund from (i) all amounts in
the Project Area No. 11 Special Fund available therefor, (ii) all amounts in the Project Area No. III Special
Fund available therefor, and (iii) all amounts in the Housing Loan Payment Account available therefor, to
the extent required to make up any deficiency in the amounts available for payment of principal and
interest on the Loan coming due on such Loan Interest Payment Date. Such interfund loan shall be repaid
to the Project Area No. II Special Fund, to the Project Area No. III Special Fund, and to the Housing Loan
Payment Account out of any moneys of the Agency available therefor, semiannually, on each March 2
and September 2, with interest at the rate on the Bonds.
76981124.1 Page 125 of 142
In the event the unpaid principal installments of the Loan shall be prepaid in whole or in
part pursuant to Section 2.04, or in the event the Bonds shall be redeemed pursuant to Section 2.02 of the
Indenture, the schedule of principal installments set forth in Exhibit A hereto shall be reduced on a pro
rata basis in integral multiples of $5,000 corresponding to the principal amount of the Bonds redeemed
pursuant to the Indenture. The Authority shall provide the Trustee with a new payment schedule.
Principal of and interest on the Loan shall be payable by the Agency to the Trustee, as
assignee of the Authority under the Indenture, in immediately available funds which constitute lawful
money of the United States of America. Payment of such principal and interest shall be secured, and
amounts for the payment thereof shall be deposited with the Trustee at the times, as set forth in Article III.
Notwithstanding the foregoing provisions of this Section 2.03, in lieu of payment of any installment of
principal of the Loan coming due and payable on September 1 in any year in which the Bonds are subject
to mandatory sinking fund redemption under the Indenture, the Agency shall have the right to purchase
any of the Bonds in an amount not exceeding the amount thereof which is subject to mandatory sinking
fund redemption on such September 1, and tender such Bonds to the Trustee for cancellation, provided
that such tender shall be made before the preceding July 15.
Section 2.04 Optional Prepayment of the Loan. The Agency shall have the right to
prepay the unpaid principal installments of the Loan, in whole or in part in any integral multiple of
$5,000, on any date on which the Bonds are subject to optional redemption pursuant to Section 2.02(a) of
the Indenture, by depositing with the Trustee in the Revenue Fund an amount sufficient to redeem a like
aggregate principal amount of Bonds pursuant to Section 2.02(a) of the Indenture, together with the
amount of accrued interest and premium (if any) required to be paid upon such redemption. The
Authority agrees that upon payment by the Agency to the Trustee of such amount, the Authority shall take
or cause to be taken any and all steps required under the Indenture to redeem such Outstanding Bonds on
the redemption date designated pursuant to a Written Request of the Agency filed with the Authority and
the Trustee; provided, however, that such date shall be a date of redemption of Bonds for which notice
has been timely given pursuant to the Indenture.
Section 2.05 Parity Debt. hi addition to the Loan, the Agency may issue or incur
Parity Debt in such principal amount as shall be determined by the Agency. The Agency may issue and
deliver any Parity Debt subject to the following specific conditions which are hereby made conditions
precedent to the issuance and delivery of such Parity Debt issued under this Section:
(a) No Event of Default shall have occurred and be continuing, and the Agency shall
otherwise be in compliance with all covenants set forth in this Loan Agreement and in the Senior Loan
Agreement; provided that the requirements of this subsection (a) will not apply to any issue of Parity
Debt, all of the available proceeds of which will be applied to refund the Loan or any other Parity Debt in
whole or in part.
(b) The Tax Revenues for the then current Fiscal Year, as set forth in a Written
Certificate of the Agency, based on assessed valuation of property in the Project Area as evidenced in the
written records of the County, shall be at least equal to one hundred fifty percent (150%) of the sum of
Maximum Annual Loan Payments (including the Parity Debt to be issued) and maximum annual debt
service with respect to the loan made under the Senior Loan Agreement; provided that (i) the
requirements of this subsection (b) will not apply to any issue of Parity Debt, all of the available proceeds
of which will be applied to refund the Loan or other Parity Debt in whole or in part, and (ii) debt service
on any Parity Debt, the proceeds of which are deposited into an escrow fund meeting the requirements of
subsection (d) below, will be disregarded for purposes of measuring maximum annual debt service.
76981124.1 6 Page 126 of 142
(c) The related Parity Debt Instrument shall provide that:
(i) interest on such Parity Debt shall be payable on March 1 and September 1 in
each year of the term of such Parity Debt except the first twelve-month period, during which interest may
be payable on any March 1 or September 1; and
(ii) the principal of such Parity Debt shall not be payable on any date other than
September 1 in any year.
(d) The proceeds of such Parity Debt may be deposited into an escrow fund to be
held by a trustee, from which amounts may not be released to the Agency unless the Tax Revenues for the
most recent Fiscal Year (as evidenced in the written records of the County) at least equal one hundred
fifty percent (150%) of Maximum Annual Loan Payments (including the Parity Debt to be issued) and
maximum annual debt service with respect to the loan made under the Senior Loan Agreement and
portion of Parity Debt to be released and any then outstanding Parity Debt.
(e) For purposes of calculation of Tax Revenues under this Section 2.05, Tax
Revenues shall be calculated by using the most recent assessed values as evidenced in the written records
of the County and a 1% tax rate (without regard to overrides).
(f) The issuance of such Parity Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
(g) The Agency shall file with the Trustee a Written Certificate of the Agency
certifying that all of the foregoing conditions to the issuance of such Parity Debt have been satisfied.
Other than for the purpose of refunding the Senior Loan Agreement, the Agency
covenants that it will not issue or incur any debt or obligation payable from the Tax Revenues and secured
by a lien and charge upon the Tax Revenues senior to the lien and charge securing the Loan.
Section 2.06 Issuance of Subordinate Debt. In addition to the Loan and any Parity
Debt, from time to time the Agency may issue or incur Subordinate Debt in such principal amount as
shall be determined by the Agency, provided that the issuance of such Subordinate Debt shall not cause
the Agency to exceed any applicable Plan Limitations.
Section 2.07 Validity of Loan. The validity of the Loan shall not be dependent upon
the completion of the Redevelopment Project or upon the performance by any person of its obligation
with respect to the Redevelopment Project.
ARTICLE III
PLEDGE AND APPLICATION OF TAX REVENUES
Section 3.01 Pledge of Tax Revenues. Subject in all respects to the obligations of the
Agency under the Senior Loan Agreement, the Loan and all Parity Debt shall be equally secured for the
benefit of the Authority and the Owners of the Bonds by a pledge of, security interest in and lien on all of
the Tax Revenues and all of the moneys on deposit in the Special Fund, without preference or priority for
series, issue, number, dated date, sale date, date of execution or date of delivery, subject only to the senior
pledge of and lien on the Tax Revenues securing payment of the Senior Loan Agreement. Subject in all
respects to the obligations of the Agency under the Senior Loan Agreement, the Tax Revenues and the
Special Fund are hereby allocated to the payment of the principal and interest on the Loan. Except for the
76981124.1 7 Page 127 of 142
Tax Revenues and the Special Fund, no funds or properties of the Agency shall be pledged to, or
otherwise liable for, the payment of principal of or interest or premium (if any) on the Loan.
Section 3.02 Special Fund; Deposit of Tax Revenues. There is hereby continued a
special fund to be known as the "Special Fund," which shall be held by the Agency in a separate bank
account as a separate fund apart from all other funds and accounts of the Agency. The Agency shall
deposit all Tax Revenues received in any Bond Year in the Special Fund promptly upon the receipt
thereof. Except as provided in any other Parity Debt Instruments, and only after the Agency has received
a letter from the Trustee stating that amounts on deposit in the Special Fund equal the aggregate amounts
required to be transferred to the Trustee pursuant to Section 3.03 hereof, the excess amounts shall be
released from the pledge and lien hereunder and be used for any lawful purposes of the Agency, including
the payment of any Subordinate Debt.
Prior to the payment in full of the principal of and interest and prepayment premium (if
any) on the Loan and all Parity Debt and the payment in full of all other amounts payable hereunder and
under any Parity Debt Instruments, the Agency shall not have any beneficial right or interest in the
moneys on deposit in the Special Fund, except only as provided in this Loan Agreement and in any Parity
Debt Instruments, and such moneys shall be used and applied as set forth herein and in any Parity Debt
Instruments.
Section 3.03 Transfer of Tax Revenues From Special Fund. In addition to the
transfers required to be made pursuant to any Parity Debt Instruments, the Agency shall withdraw from
the Special Fund and transfer to the Trustee, to the Project Area No. 11 Special Fund, to the Project Area
No. III Special Fund, or to the Housing Loan Payment Account the following amounts at the following
times and in the following order of priority:
(a) Interest and Principal Deposits.
(i) No later than the fifth (5th) Business Day preceding each Loan Interest
Payment Date, the Agency shall withdraw from the Special Fund and transfer to the Trustee for
deposit into the Revenue Fund an amount which, together with the amounts then held on deposit
in the Interest Account, is equal to the aggregate amount of interest on the Loan coming due on
such Loan Interest Payment Date.
(ii) No later than the fifth (5th) Business Day preceding each Loan Principal
Payment Date, an amount which when added to the amounts then on deposit in the Principal
Account will equal the principal payment coming due on such Loan Principal Payment Date.
In lieu of depositing cash with the Trustee as payment of any installment of principal of
the Loan coming due on September 1 of any year pursuant to Section 2.02 hereof, the Agency
shall have the option to tender to the Trustee for cancellation Bonds maturing on September 1 in
such year. Such Bonds may be purchased by the Agency with any source of available moneys
(including but not limited to Tax Revenues not required to be deposited with the Trustee pursuant
to this Section), at public or private sale as and when and at such prices as the Agency may in its
discretion determine. The par amount of any Bonds so purchased by the Agency and tendered to
the Trustee in any twelve-month period ending on July 15 in any calendar year shall be credited
towards and shall reduce the payment required to be made pursuant to this subsection (a) on the
fifth (5th) Business Day preceding September 1 in such year.
(b) Interfund Loan. To the extent permitted by law, the Agency shall make an
interfund loan to the Project Area No. II Special Fund, to the Project Area No. III Special Fund, or to the
76981124.1 6 Page 128 of 142
Housing Loan Payment Account in amounts necessary to make up any actual or projected deficiency in
the amounts available for payment of principal and interest on the Project Area No. II Loan, the Project
Area No. III Loan, or the Housing Loan as such payments become due and payable.
(c) Credit Against Deposits. The Agency shall receive a credit against the deposits
required above as follows:
(i) There shall be a credit for earnings on the Reserve Fund which have been
transferred to and are then held by the Trustee in the Revenue Fund under the Indenture, such
credit to be made semiannually on the Business Day prior to the date for making the transfers
described in subsections (a) and (b) of this Section 3.03; and
(ii) After the credit in (i) above, there shall also be a credit for any remaining
moneys on deposit in the Revenue Fund under the Indenture.
Section 3.04 Investment of Moneys; Valuation of Investments. All moneys in the
Special Fund shall be invested by the Agency in any investments authorized for the investment of Agency
funds under the laws of the State. Obligations purchased as an investment of moneys in any fund or
account established hereunder shall be credited to and deemed to be part of such fund or account. The
Agency may commingle any amounts in any of the funds and accounts held hereunder with any other
amounts held by the Agency for purposes of making any investment, provided that the Agency shall
maintain separate accounting procedures for the investment of all funds and accounts held hereunder.
All interest, profits and other income received from the investment of moneys in any fund
or account established hereunder shall be deposited in such fund or account. Notwithstanding anything to
the contrary contained in this paragraph, an amount of interest received with respect to any investment
equal to the amount of accrued interest, if any, paid as part of the purchase price of such investment shall
be credited to the fund from which such accrued interest was paid.
Except as otherwise provided in the next sentence, the Agency covenants that all
investments of amounts deposited in any fund or account created by or pursuant to this Loan Agreement,
or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code)
shall be acquired, disposed of, and valued (as of the date that valuation is required by this Loan
Agreement or the Code) at fair market value. Investments in funds or accounts (or portions thereof) that
are subject to a yield restriction under applicable provisions of the Code shall be valued at their present
value (within the meaning of section 148 of the Code).
ARTICLE IV
OTHER COVENANTS OF THE AGENCY
Section 4.01 Punctual Payment; Extension of Payments. The Agency will
punctually pay or cause to be paid the principal of and interest and prepayment premium (if any) on the
Loan in strict conformity with the terms of this Loan Agreement, and it will faithfully observe and
perform all of the conditions, covenants and requirements of this Loan Agreement. The Agency shall not
directly or indirectly extend or assent to the extension of the maturity of any installment of principal of or
interest or premium (if any) on the Loan, and in case the principal of or interest or premium (if any) on
the Loan or the time of payment of any such claims therefor shall be extended, such principal, interest,
premium or claims for interest shall not be entitled, in case of any Event of Default hereunder, to the
benefits of this Loan Agreement except for payment of all amounts which shall not have been so
extended.
76981124.1 9 Page 129 of 142
Section 4.02 Limitation on Additional Indebtedness. The Agency hereby covenants
that it shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur
any indebtedness, which is in any case payable from all or any part of the Tax Revenues, excepting only
the Loan, any Parity Debt and any Subordinate Debt, and any obligations entered into pursuant to
Section 4.09.
Section 4.03 Payment of Claims. The Agency will pay and discharge, or cause to be
paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might
become a lien or charge upon the Tax Revenues or any part thereof, or upon any funds in the hands of the
Trustee, or which might impair the security of the Loan. Nothing herein contained shall require the
Agency to make any such payment so long as the Agency in good faith shall contest the validity of said
claims.
Section 4.04 Books and Accounts; Financial Statements. The Agency will keep, or
cause to be kept, proper books of record and accounts, separate from all other records and accounts of the
Agency and the City, in which complete and correct entries shall be made of all transactions relating to
the Redevelopment Project, the Tax Revenues and the Special Fund. Such books of record and accounts
shall at all times during business hours be subject, upon prior written request, to the reasonable inspection
of the Authority, the Trustee and the Owners of not less than ten percent (10%) in aggregate principal
amount of the Bonds then Outstanding, or their representatives authorized in writing.
The Agency will cause to be prepared within one hundred and eighty (180) days after the
close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial
statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements from the
Special Fund and the financial condition of the Redevelopment Project, including the balances in all funds
and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year, which statement
shall be accompanied by a Certificate of the Agency stating that the Agency is in compliance with its
obligations under this Loan Agreement. The Agency will furnish a copy of such statements, upon
reasonable request, to any Bond Owner.
Section 4.05 Protection of Security and Rights. The Agency will preserve and
protect the security of the Loan and the rights of the Trustee and the Bond Owners with respect to the
Loan. From and after the Closing Date, the Loan shall be incontestable by the Agency. The Loan and the
provisions of this Loan Agreement are and will be the legal, valid and binding special obligations of the
Agency in accordance with their terms, and the Agency shall at all times, to the extent permitted by law,
defend, preserve and protect all the rights of the Trustee and the Bond Owners under this Loan Agreement
against all claims and demands of all persons whomsoever.
Section 4.06 Payments of Taxes and Other Charges. The Agency will pay and
discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other
governmental charges which may hereafter be lawfully imposed upon the Agency or the properties then
owned by the Agency in the Project Area, when the same shall become due. Nothing herein contained
shall require the Agency to make any such payment so long as the Agency in good faith shall contest the
validity of said taxes, assessments or charges. The Agency will duly observe and comply with all valid
requirements of any governmental authority relative to the Redevelopment Project or any part thereof.
Section 4.07 Taxation of Leased Property. All ad valorem property taxes derived
by the Agency pursuant to Section 33673 of the Redevelopment Law with respect to the lease of property
for redevelopment shall be treated as Tax Revenues for all purposes of this Loan Agreement.
76981124.1 10 Page 130 of 142
Section 4.08 Disposition of Property. The Agency shall not, without the prior
written consent of the Insurer, participate in the detachment or disposition of any land or real property in
the Project Area which will result in such property becoming exempt from taxation because of public
ownership or use or otherwise (except property dedicated for public right-of-way and except property
planned for public ownership or use by the Redevelopment Plan in effect on the date of this Loan
Agreement) if the effect of such detachment(s) or disposition(s) shall, when taken together with other
such dispositions, in the aggregate exceed ten percent (10%) of the assessed value of property in the
Project Area.
Section 4.09 Maintenance of Tax Revenues. The Agency shall comply with all
requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues,
including without limitation the timely filing of any necessary statements of indebtedness with
appropriate officials of the County and (in the case of supplemental revenues and other amounts payable
by the State) appropriate officials of the State. The Agency will not enter into any agreement with the
City or any other governmental unit which would have the effect of reducing the amount of Tax Revenues
available to the Agency for payment of the Loan. The Agency represents, covenants and agrees that it has
not and will not incur any loans, obligations or indebtedness repayable from Tax Revenues such that the
total aggregate debt service on said loans, obligations or indebtedness incurred from and after the date of
adoption of the applicable Redevelopment Plan, when added to the total aggregate Loan Payments on any
Parity Debt and the Loan, will exceed the maximum amount of Tax Revenues to be divided and allocated
to the Agency pursuant to such Redevelopment Plan. Subject to the preceding sentences, nothing in this
Loan Agreement is intended or shall be construed in any way to prohibit or impose any limitations on the
entering into by the Agency of any such agreement, amendment or supplement which by its term is
subordinate to the payment of the Loan, as provided in Section 2.06 hereof.
Section 4.10 Payment of Expenses; Replenishment of Reserve Fund;
Indemnification. The Agency shall pay to the Trustee from time to time all compensation for all services
rendered under this Loan Agreement and a Proportionate Share of such compensation for all services
rendered under the Indenture in connection with the Bonds, including but not limited to all reasonable
expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and
employees, incurred in and about the performance of its powers and duties hereunder and thereunder.
Upon the occurrence of an Event of Default, the Trustee shall have a first lien on the funds held by it
under the Indenture and hereunder to secure the payment to the Trustee of all fees, costs and expenses,
including reasonable compensation to its experts, attorneys and counsel incurred in declaring such Event
of Default and in exercising the rights and remedies set forth in Article V hereof.
The Agency shall pay to the Trustee from time to time a Proportionate Share of such
amount necessary to replenish the Reserve Fund held under the Indenture to the Reserve Requirement.
The Agency further covenants and agrees to indemnify and save the Trustee and its
officers, directors, agents and employees, harmless against any losses, costs, claims, expenses and
liabilities whatsoever which it may incur arising out of or in connection with the exercise and
performance of its powers and duties hereunder, and under the Indenture including the costs and expenses
of defending against any claim of liability, but excluding any and all losses, expenses and liabilities which
are due to the negligence or intentional misconduct of the Trustee, its officers, directors, agents or
employees. The obligations of the Agency under this paragraph shall survive the resignation or removal
of the Trustee under the Indenture or this Loan Agreement and payment of the Loan and the discharge of
this Loan Agreement.
76981124.1 11 Page 131 of 142
Section 4.11 Tax Matters.
(a) Special Definitions. When used in this Section, the following terms have the
following meanings:
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax
Regulations (referring to sales, investment and transferred proceeds), and any replacement
proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Rebate Amount" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Tax Regulations" means the United States Treasury Regulations promulgated pursuant
to sections 103 and 141 through 150 of the Code, or section 103 of the 1954 Code, as applicable.
"Yield"
(i) of any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and
(ii) of any issue of governmental obligations has the meaning set forth in
section 1.148-4 of the Tax Regulations.
(b) Not to Cause interest to Become Taxable. Neither the Agency nor the Authority
shall use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the
acquisition, construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner that if made or omitted, respectively, could cause the interest on any Bond to fail to
be excluded pursuant to section 103(a) of the Code from the gross income of the owner thereof for federal
income tax purposes. Without limiting the generality of the foregoing, unless and until the Agency or the
Authority receives a written opinion of Bond Counsel to the effect that failure to comply with such
covenant will not adversely affect such exclusion of the interest on any Bond from the gross income of
the owner thereof for federal income tax purposes, the Agency and the Authority, respectively, shall
comply with each of the specific covenants in this Section.
(c) Private Use and Private Payments. Except as would not cause any Bond to
become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations,
the Agency shall at all times prior to the final cancellation of the last of the Bonds to be retired:
(i) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with
Gross Proceeds of the Bonds, and not use or permit the use of such Gross Proceeds (including
through any contractual arrangement with terms different than those applicable to the general
public) or any property acquired, constructed or improved with such Gross Proceeds in any
76981124.1 12 Page 132 of 142
activity carried on by any person or entity (including the United States of America or any agency,
department and instrumentality thereof) other than a state or local government, unless such use is
solely as a member of the general public; and
(ii) not directly or indirectly impose or accept any charge or other payment
by any person or entity (other than a State or local government) who is treated as using any Gross
Proceeds of the Bonds or any property the acquisition, construction or improvement of which is
to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of
general application within its jurisdiction.
(d) No Private Loan. Except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings
thereunder, neither the Agency nor the Authority shall use Gross Proceeds of the Bonds to make or
finance loans to any person or entity other than a state or local government. For purposes of the foregoing
covenant, such Gross Proceeds are considered to be "loaned' to a person or entity if. (i) property
acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction that creates a debt for federal income tax purposes; (ii) capacity in or service from such
property is committed to such person or entity under a take-or-pay, output or similar contract or
arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of
any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a
transaction that is the economic equivalent of a loan.
(e) Not to Invest at Higher Yield. Except as would not cause the Bonds to become
"arbitrage bonds" within the meaning of section 148 of the Code and the Tax Regulations and rulings
thereunder, neither the Agency nor the Authority shall, at any time prior to the final cancellation of the
last Bond to be retired, directly or indirectly invest Gross Proceeds in any Investment, if as a result of
such investment the Yield of any Investment acquired with Gross Proceeds, whether then held or
previously disposed of, would materially exceed the Yield of the Bonds within the meaning of said
section 148.
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Tax Regulations and rulings thereunder, neither the Agency nor the Authority shall take
or omit to take any action that would cause any Bond to be "federally guaranteed" within the meaning of
section 149(b) of the Code and the Tax Regulations and rulings thereunder.
(g) Information Report. The Authority shall timely file any information required by
section 149(e) of the Code with respect to Bonds with the Secretary of the Treasury on Form 8038-G or
such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in
section 148(f) of the Code and the Tax Regulations, with respect to the Bonds:
(i) The Agency and Authority, as the case may be, shall account for all
Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of
account separately and apart from all other funds (and receipts, expenditures and investments
thereof) and shall retain all records of accounting for at least six years after the day on which the
last Bond of the series is discharged. However, to the extent permitted by law, each of the
Agency and the Authority may commingle Gross Proceeds of Bonds with its other moneys,
provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
76981124.1 13 Page 133 of 142
(ii) Not less frequently than each Computation Date, the Agency shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and
the Tax Regulations and rulings thereunder. The Agency promptly shall report to the Authority
the results of such calculation, including the basis therefor, in sufficient detail and on a timely
basis in order that the Authority be able to comply with its covenants herein. The Authority shall
maintain a copy of the calculation with its official transcript of proceedings relating to the
issuance of the Bonds until six years after the final Computation Date.
(iii) In order to assure the excludability, pursuant to section 103(a) of the
Code of the interest on the Bonds from the gross income of the owners thereof for federal income
tax purposes, the Agency shall pay to the Trustee for deposit into the Rebate Account established
pursuant to the hidenture an amount sufficient to permit the Authority timely to pay to the United
States of America the amount that when added to the future value of previous rebate payments
made for the Bonds equals (A) in the case of the Final Computation Date as defined in section
1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate Amount on such
date; and (B) in the case of any other Computation Date, ninety percent (90%) of the Rebate
Amount on such date. In all cases, such rebate payments shall be made by the Authority at the
times and in the amounts as are or may be required by section 148(f) of the Code and the Tax
Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other
forms and information as is or may be required by section 148(f) of the Code and the Tax
Regulations and rulings thereunder for execution and filing by the Authority.
(iv) The Agency shall exercise reasonable diligence to assure that no errors
are made in the calculations and payments required by paragraphs (b) and (c), and if an error is
made, to discover, report to the Authority and promptly correct such error within a reasonable
amount of time thereafter (and in all events within one hundred eighty (180) days after discovery
of the error), including payment to the United States of America of any additional Rebate Amount
owed to it, interest thereon, and any penalty imposed under section 1.148-3(h) or other provision
of the Tax Regulations.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Tax Regulations and rulings thereunder, neither the Agency nor the Authority shall, at
any time prior to the final cancellation of the last of the Bonds to be retired, enter into any transaction that
reduces the amount required to be paid to the United States of America pursuant to paragraph (h) of this
Section because such transaction results in a smaller profit or a larger loss than would have resulted if the
transaction had been at arm's length and had the Yields on the Bonds not been relevant to either party.
0) Bonds Not Hedge Bonds.
(i) Each of the Authority and the Agency represents that none of the Bonds
is or will become a "hedge bond" within the meaning of section 149(g) of the Code.
(ii) Without limitation of paragraph (i) above: each of the Authority and the
Agency believe (upon appropriate investigation) (A) that on the date of issuance of the Bonds the
Authority and the Agency reasonably expected that at least 85% of the spendable proceeds of the
Bonds will be expended within the three-year period commencing on such date of issuance, and
(B) no more than 50% of the proceeds of the Bonds will be invested in Nonpurpose Investments
having a substantially guaranteed yield for a period of four years or more.
(k) Elections. The Agency hereby directs and authorizes any Authority
Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax
76981124.1 14 Page 134 of 142
Regulations, as such Representative (after consultation with Bond Counsel) deems necessary or
appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or similar or other
appropriate certificate, form or document.
(1) Closing Certificate. Each of the Agency and the Authority agrees to execute and
deliver in connection with the issuance of the Bonds a Tax Certificate as to Arbitrage and the Provisions
of Sections 103 and 141-150 of the Internal Revenue Code of 1986, or similar document containing
additional representations and covenants pertaining to the exclusion of interest on the Bonds from the
gross income of the owners thereof for federal income tax purposes, which representations and covenants
are incorporated as though expressly set forth herein.
Section 4.12 Continuing Disclosure. The Agency hereby covenants and agrees that
it will comply with and carry out all of the provisions of its Undertaking To Provide Continuing
Disclosure with respect to the Bonds, as originally executed and as it may be amended from time to time
in accordance with the terms thereof. All information furnished pursuant to such Undertaking To Provide
Continuing Disclosure shall also be provided to the Insurer, simultaneously with the furnishing of such
information. Notwithstanding any other provision of this Loan Agreement, failure of the Agency to
comply with such Undertaking to Provide Continuing Disclosure shall not be considered an Event of
Default; however, any Owner may take such actions, as provided in such Undertaking to Provide
Continuing Disclosure, as may be necessary and appropriate to cause the Agency to comply with its
obligations under such Undertaking To Provide Continuing Disclosure.
Section 4.13 Redevelopment of Project Area. The Agency shall ensure that all
activities undertaken by the Agency with respect to the redevelopment of the Project Area are undertaken
and accomplished in conformity with all applicable requirements of the Redevelopment Plan and the
Redevelopment Law. The Agency shall manage and operate all properties owned by the Agency and
comprising any part of the Redevelopment Project in a sound and business-like manner and in conformity
with all valid requirements of any governmental authority, and will keep such properties insured at all
times in conformity with sound business practice.
Section 4.14 Reporting Requirements. The Agency will furnish, or cause to be
furnished, to the Insurer:
(a) the fiscal year budget of the Agency prior to the beginning of each fiscal year;
(b) annual audits of the Agency prepared by an independent certified public
accountant, within one hundred eighty (180) days of the completion of the Agency's fiscal year;
(c) prior to the Agency issuing additional parity debt, any disclosure document or
financing agreement pertaining to such additional parity debt, which disclosure document or financing
agreement shall include, without limitation, the applicable maturity schedule, interest rate or rates,
redemption and security provisions pertaining to any such additional parity debt;
(d) within thirty (30) days following any litigation or investigation that may have a
material adverse affect on the financial position of the Agency or the Project Area, notice of such
litigation or investigation; and
(e) immediate notice of any draw on the Reserve Fund.
Section 4.15 Further Assurances. The Agency will adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper
76981124.1 15 Page 135 of 142
to carry out the intention or to facilitate the performance of this Loan Agreement and for the better
assuring and confirming unto the Trustee, the Authority and the Owners of the Bonds of the rights and
benefits provided in this Loan Agreement.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.01 Events of Default and Acceleration of Maturities. The following
events shall constitute Events of Default hereunder:
(a) Failure by the Agency to pay the principal of or interest or prepayment premium
(if any) on the Loan or any Parity Debt when and as the same shall become due and payable.
(b) Failure by the Agency to observe and perform any of the covenants, agreements
or conditions on its part contained in this Loan Agreement, other than as referred to in the preceding
clause (a), for a period of thirty (30) days after written notice specifying such failure and requesting that it
be remedied has been given to the Agency by the Trustee; provided, however, that if in the reasonable
opinion of the Agency the failure stated in such notice can be corrected, but not within such thirty (30)
day period, such failure shall not constitute an Event of Default if corrective action is instituted by the
Agency within such thirty (30) day period and thereafter is diligently pursued until such failure is
corrected.
(c) The filing by the Agency of a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law of the United States of
America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent
of the Agency, seeking reorganization under the federal bankruptcy laws or any other applicable law of
the United States of America, or if, under the provisions of any other law for the relief or aid of debtors,
any court of competent jurisdiction shall assume custody or control of the Agency or of the whole or any
substantial part of its property.
If an Event of Default has occurred and is continuing, the Trustee may (a) declare the
principal of the Loan, together with accrued interest on all unpaid installments thereof, to be due and
payable immediately, and upon any such declaration the same will become immediately due and payable,
anything in this Loan Agreement to the contrary notwithstanding, and (b) subject to receipt of satisfactory
indemnity, exercise any other remedies available to the Trustee in law or equity arising hereunder.
hnmediately upon becoming aware of the occurrence of an Event of Default under this Loan Agreement,
the Trustee shall give notice of such Event of Default to the Agency by telephone, telecopier or other
telecommunication device, promptly confirmed in writing. This provision, however, is subject to the
condition that if, at any time after the principal of the Loan has been so declared due and payable, and
before any judgment or decree for the payment of the moneys due has been obtained or entered, the
Agency will deposit with the Trustee a sum sufficient to pay all installments of principal of the Loan
matured prior to such declaration and all accrued interest thereon, with interest on such overdue
installments of principal and interest at the net effective rate then borne by the Outstanding Bonds, and
the reasonable fees and expenses of the Trustee, and any and all other defaults known to the Trustee
(other than in the payment of principal of and interest on the Loan due and payable solely by reason of
such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision
deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the
Trustee may, by written notice to the Authority and the Agency, rescind and annul such declaration and
its consequences. However, no such rescission and annulment shall extend to or shall affect any
subsequent default, or shall impair or exhaust the right or power consequent thereon.
76981124.1 16 Page 136 of 142
Section 5.02 Application of Revenues and Other Funds After Default. All
amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the
provisions of this Article V, or otherwise held by the Trustee upon the occurrence of an Event of Default,
shall be applied by the Trustee in the following order:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such
Event of Default and in carrying out the provisions of this Article V, including reasonable
compensation to its agents, attorneys and counsel and any outstanding fees and expenses of the
Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Loan and
any Parity Debt then due and unpaid, with interest on overdue installments of principal and
interest to the extent permitted by law at the net effective rate of interest then borne by the Loan
and such Parity Debt; provided, however, that in the event such amounts shall be insufficient to
pay in full the full amount of such interest and principal, then such amounts shall be applied in
the following order of priority:
(a) first, to the payment of all installments of interest on the Loan and any
Parity Debt then due and unpaid, on a pro rata basis in the event that the available
amounts are insufficient to pay all such interest in full;
(b) second, to the payment of all installments of principal of the Loan and
any Parity Debt then due and payable, on a pro rata basis in the event that the available
amounts are insufficient to pay all such principal in full;
(c) third, to the payment of the prepayment price (including principal and
interest accrued to the prepayment date, but excluding any premium) of the Loan and any
Parity Debt to be redeemed pursuant to this Loan Agreement, on a pro rata basis in the
event that the available amounts are insufficient to pay all such prepayment price in full;
and
(d) fourth, to the payment of interest on overdue installments of principal
and interest, on a pro rata basis in the event that the available amounts are insufficient to
pay all such interest in full.
Section 5.03 No Waiver. Nothing in this Article V or in any other provision of this
Loan Agreement, shall affect or impair the obligation of the Agency, which is absolute and unconditional,
to pay from the Tax Revenues and other amounts pledged hereunder, the principal of and interest and
premium (if any) on the Loan and any Parity Debt to the Trustee when due, as herein provided, or affect
or impair the right of action, which is also absolute and unconditional, of the Trustee to institute suit to
enforce such payment by virtue of the contract embodied in this Loan Agreement.
A waiver of any default by the Trustee at the direction of the Owners of the Bonds
pursuant to Section 5.01 shall not affect any subsequent default or impair any rights or remedies on the
subsequent default. No delay or omission of the Trustee to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver of any such default or an
acquiescence therein, and every power and remedy conferred upon the Trustee by the Redevelopment
Law or by this Article V may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Trustee.
76981124.1 17 Page 137 of 142
If a suit, action or proceeding to enforce any right or exercise any remedy shall be
abandoned or determined adversely to the Trustee, the Agency and the Trustee shall be restored to their
former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
Section 5.04 Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee is intended to be exclusive of any other remedy. Every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in
equity or by statute or otherwise, and may be exercised without exhausting and without regard to any
other remedy conferred by the Redevelopment Law or any other law.
ARTICLE VI
MISCELLANEOUS
Section 6.01 Benefits Limited to Parties. Nothing in this Loan Agreement,
expressed or implied, is intended to give to any person other than the Agency, the Insurer, the Trustee and
the Authority, any right, remedy or claim under or by reason of this Loan Agreement. All covenants,
stipulations, promises or agreements in this Loan Agreement contained by and on behalf of the Agency
shall be for the sole and exclusive benefit of the Authority, the Insurer and the Trustee acting as trustee
for the benefit of the Owners of the Bonds. The Insurer is explicitly recognized as being a third-party
beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted
hereunder.
Section 6.02 Successor is Deemed Included in All References to Predecessor.
Whenever in this Loan Agreement either the Agency, the Authority or the Trustee is named or referred to,
such reference shall be deemed to include the successors or assigns thereof, and all the covenants and
agreements in this Loan Agreement contained by or on behalf of the Agency, the Authority or the Trustee
shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed
or not.
Section 6.03 Discharge of Loan Agreement. If the Agency shall pay and discharge
the indebtedness on the Loan or any portion thereof in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and
prepayment premiums (if any) on the Loan or such portion thereof, as and when the same become due
and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, cash in
an amount which, together with the available amounts then on deposit in any of the funds and accounts
established pursuant to the Indenture or this Loan Agreement, is fully sufficient in the opinion of Bond
Counsel or an Independent Accountant to pay all principal of and interest and prepayment premiums (if
any) on the Loan or such portion thereof, or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust,
Defeasance Securities in such amount as an Independent Accountant shall determine will, together with
the interest to accrue thereon and available moneys then on deposit in the funds and accounts established
pursuant to the Indenture or a Supplemental Indenture or this Loan Agreement, be fully sufficient in the
opinion of Bond Counsel or any Independent Accountant to pay and discharge the indebtedness on the
Loan or such portion thereof (including all principal, interest and prepayment premiums) at or before
maturity;
76981124.1 18 Page 138 of 142
then, at the election of the Agency, but only if all other amounts then due and payable hereunder shall
have been paid or provision for their payment made, the pledge of and lien upon the Tax Revenues and
other funds provided for in this Loan Agreement and all other obligations of the Trustee, the Authority
and the Agency under this Loan Agreement with respect to the Loan or such portion thereof shall cease
and terminate, except only the obligation of the Agency to pay or cause to be paid to the Trustee, from the
amounts so deposited with the Trustee or such other fiduciary, all sums due with respect to the Loan or
such portion thereof, and to pay all expenses and costs of the Trustee when and as such expenses and
costs become due and payable. Notice of such election shall be filed with the Authority and the Trustee.
In the case of a discharge of the entire indebtedness on the Loan, any funds thereafter held by the Trustee
hereunder, which are not required for said purpose, shall be paid over to the Agency.
Notwithstanding the foregoing provisions of this Section 6.03, this Loan Agreement and
the obligations of the Agency hereunder shall not be discharged under this Section 6.03 unless and to the
extent that the Bonds shall have been discharged in whole or in part pursuant to the provisions of
Section 10.03 of the Indenture.
Section 6.04 Amendment. With the prior written consent of the Insurer, this Loan
Agreement may be amended by the parties hereto, but only under the circumstances set forth in, and in
accordance with, the provisions of Section 7.01 of the Indenture. The Authority covenants that the
Indenture shall not be amended, nor shall the Authority agree or consent to any amendment of the
Indenture, without the prior written consent of the Agency (except that such consent shall not be required
in the event that an Event of Default shall have occurred and be continuing hereunder).
Section 6.05 Waiver of Personal Liability. No member, officer, agent or employee
of the Agency shall be individually or personally liable for the payment of the principal of or interest on
the Loan; but nothing herein contained shall relieve any such member, officer, agent or employee from
the performance of any official duty provided by law.
Section 6.06 Payment on Business Days. Whenever in this Loan Agreement any
amount is required to be paid on a day which is not a Business Day, such payment shall be required to be
made on the Business Day immediately following such day, provided that interest on such payment shall
not accrue from and after such day.
Section 6.07 Notices. Any notice, request, complaint, demand or other
communication under this Loan Agreement shall be given by first-class mail or personal delivery to the
party entitled thereto at its address set forth below, or by telecopy or other form of telecommunication, at
its number set forth below. Notice shall be effective either (a) upon transmission by telecopy or other
form of telecommunication, (b) upon actual receipt after deposit in the United States mail, postage
prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the
Agency or the Trustee may, by written notice to the other parties, from time to time modify the address or
number to which communications are to be given hereunder.
If to the Authority: Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, California 92530
Attention: Executive Director
If to the Agency: Redevelopment Agency of the City of Lake Elsinore
130 S. Main Street
Lake Elsinore, California 92530
Attention: Executive Director
76981124.1 19 Page 139 of 142
If to the Trustee: Union Bank, N.A.
120 S. San Pedro Street, 4th Floor
Los Angeles, California 90012
Attention: Corporate Trust Department
Section 6.08 Partial Invalidity. If any Section, paragraph, sentence, clause or phrase
of this Loan Agreement shall for any reason be held illegal, invalid or unenforceable, such holding shall
not affect the validity of the remaining portions of this Loan Agreement. The Agency hereby declares
that it would have adopted this Loan Agreement and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the Loan irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses, or phrases of this Loan Agreement may be held illegal, invalid or
unenforceable.
Section 6.09 Article and Section Headings and References. The headings or titles
of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be
solely for convenience of reference and shall not affect the meaning, construction or effect of this Loan
Agreement. All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Loan Agreement; the words "herein," "hereof,"
"hereby," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not
to any particular Article, Section or subdivision hereof, and words of the masculine gender shall mean
and include words of the feminine and neuter genders.
Section 6.10 Execution of Counterparts. This Loan Agreement may be executed in
any number of counterparts, each of which shall for all purposes be deemed to be an original and all of
which shall together constitute but one and the same instrument.
Section 6.11 Governing Law. This Loan Agreement shall be construed and governed
in accordance with the laws of the State of California.
Section 6.12 No Additional Trustee Duties. Nothing contained herein shall in any
way be construed to impose any duties upon the Trustee beyond those contained in the Indenture. All
immunities, indemnities, exceptions from liability and other provisions of the Indenture insofar as they
relate to the Trustee shall apply to this Loan Agreement. The immunities of the Trustee also extend to its
directors, officers, employees and agents.
Section 6.13 Assignment. Pursuant to Section 4.01 of the Indenture, the Authority
has assigned its right, title and interest (but not its duties or obligations) in this Loan Agreement (other
than its rights under Section 4.10 and 5.04 hereof) to the Trustee, for the benefit of the Owners from time
to time of the Bonds. The Agency hereby consents to such assignment.
The Agency shall not assign its interest in this Loan Agreement without the prior written
consent of the Authority and the Trustee.
The assignment of this Loan Agreement to the Trustee is solely in its capacity as Trustee
under the Indenture and the duties, powers and liabilities of the Trustee in acting hereunder shall be
subject to the provisions of the Indenture, including, without limitation, the provisions of Article VI
thereof.
The Trustee shall be considered a third-party beneficiary for the purpose of enforcing its
own rights hereunder.
76981124.1 20 Page 140 of 142
IN WITNESS WHEREOF, the REDEVELOPMENT AGENCY OF THE CITY OF
LAKE ELSINORE and the LAKE ELSINORE PUBLIC FINANCING AUTHORITY have caused this
Project Area No. I Loan Agreement to be signed by their respective officers all as of the day and year first
above written.
REDEVELOPMENT AGENCY OF
THE CITY OF LAKE ELSINORE
By
Executive Director
LAKE ELSINORE PUBLIC
FINANCING AUTHORITY
By
Executive Director
76981124.1 21 Page 141 of 142
EXHIBIT A
SCHEDULE OF LOAN PAYMENTS
Date of Principal Interest Aggregate
Loan Pavment Installment Installment Loan Pavment
09/01/2011
03/01/2012
09/01/2012
03/01/2013
09/01/2013
03/01/2014
09/01/2014
03/01/2015
09/01/2015
03/01/2016
09/01/2016
03/01/2017
09/01/2017
03/01/2018
09/01/2018
03/01/2019
09/01/2019
03/01/2020
09/01/2020
03/01/2021
09/01/2021
76981124.1 A-1 Page 142 of 142