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HomeMy WebLinkAbout0013_5_Exhibit D - First Supplemental IndentureFIRST SUPPLEMENT TO FISCAL AGENT AGREEMENT Between CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) And WILMINGTON TRUST, NATIONAL ASSOCIATION as Fiscal Agent CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) SPECIAL TAX BONDS, 2016 SERIES A (IMPROVEMENT AREA D) Dated as of August 1, 2016 FIRST SUPPLEMENT TO FISCAL AGENT AGREEMENT THIS FIRST SUPPLEMENT TO FISCAL AGENT AGREEMENT dated as of August 1, 2016 (the “First Supplement”), governs the terms of the City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) 2016 Series A Special Tax Bonds (Improvement Area D), which are being issued as Additional Bonds in accordance with the Fiscal Agent Agreement (the “Original Fiscal Agent Agreement”) dated as of January 1, 2014, by and between the District and Union Bank, N.A. (the (“Original Fiscal Agent”), as fiscal agent. Wilmington Trust, National Association, as successor fiscal agent to the Original Fiscal Agent shall be referred to herein as the “Fiscal Agent.” The Original Fiscal Agent Agreement and this First Supplement are hereinafter collectively referred to as the “Fiscal Agent Agreement.” R E C I T A L S : WHEREAS, the City Council of the City of Lake Elsinore, located in Riverside County, California (hereinafter sometimes referred to as the “legislative body of the District”), has heretofore undertaken proceedings and declared the necessity to issue bonds of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) (the “District”) pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”); and WHEREAS, based upon Resolution Nos. 2004-6 and 2004-7 adopted by the legislative body of the District on January 13, 2004 and an election held on January 13, 2004 authorizing the levy of a special tax and the issuance of bonds by the District for Improvement Area D, the District is now authorized to issue bonds in an aggregate principal amount not to exceed $24,000,000 for Improvement Area D; and WHEREAS, pursuant to the Original Fiscal Agent Agreement, the District previously issued its Special Tax Bonds, 2014 Series (Improvement Area D) (the “2014 Bonds”) in the aggregate principal amount of $7,505,000 to finance public improvements; and WHEREAS, the legislative body of the District intends to finance additional public improvements through the issuance of bonds in an aggregate principal amount of $__________ designated as the “City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Special Tax Bonds, 2016 Series A (Improvement Area D)” (the “2016 Bonds”); and WHEREAS, pursuant to Section 9.1(b) and (e) of the Original Fiscal Agent Agreement, the District desires to amend the Original Fiscal Agent Agreement as set forth herein in connection with the issuance of the 2016 Bonds; and WHEREAS, the District has determined all requirements of the Act for the issuance of the 2016 Bonds as Additional Bonds under the terms of the Original Fiscal Agent Agreement have been satisfied; NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the 2016 Bonds are to be issued, and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the 2016 Bonds by the Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby covenant and agree, for the benefit of the Owners of the 2014 Bonds, the 2016 Bonds and any Additional Bonds (as defined in the Original Fiscal Agent Agreement) which may be issued hereunder from time to time, as follows: 2 ARTICLE I DEFINITIONS Section 1.1.Definitions. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Original Fiscal Agent Agreement. The following definitions are added to or, if set forth in Section 1.1 of the Fiscal Agent Agreement, are revised to mean the following with respect to the 2016 Bonds: “City Facilities Account” means the account by that name created and established in the Improvement Fund pursuant to Section 3.1 hereof. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate dated as of __________, 2016, executed and delivered by the District together with any amendments thereto. “Interest Payment Date” means each March 1 and September 1, commencing [September 1, 2016]. “Reserve Account” means the account by that name established in the Bond Fund pursuant to Section 3.1(a) hereof. “Reserve Requirement” means the amount as of any date of calculation that is equal to the sum of the least of (i) 10% of the initial principal amount of the 2016 Bonds, (ii) Maximum Annual Debt Service on the then Outstanding 2016 Bonds, or (iii) 125% of Average Annual Debt Service on the then Outstanding 2016 Bonds. “Tax Certificate” means the certificate by that name to be executed by the District on the Closing Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code with respect to the 2016 Bonds. “Term Bonds” means the 2016 Bonds maturing on September 1, 20__. “Underwriter” means Stifel, Nicolaus & Company, Incorporated with respect to the 2016 Bonds. “Water Facilities Account” means the account by that name created and established in the Improvement Fund pursuant to Section 3.1 hereof. ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS Section 2.1.Amount, Issuance, Purpose and Nature of 2016 Bonds. Under and pursuant to the First Supplement, the 2016 Bonds in the aggregate principal amount of $__________ shall be issued as Additional Bonds governed by the terms of the Original Fiscal Agent Agreement, as supplemented by this First Supplement, for the purpose of financing additional public facilities within the District, funding a deposit to the Reserve Account of the Bond Fund and paying the costs of administration and issuance of the 2016 Bonds. Section 2.2.Description of Bonds; Interest Rates. The 2016 Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof within a single maturity. The 2016 Bonds shall be numbered as determined by the Fiscal Agent. 3 The 2016 Bonds shall be designated “CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) SPECIAL TAX BONDS, 2016 SERIES A (IMPROVEMENT AREA D).” The 2016 Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on [September 1, 2016] and each Interest Payment Date thereafter: Maturity Date (September 1)Principal Amount Interest Rate $ % Section 2.3.Form of 2016 Bonds; Execution and Authentication. The 2016 Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which forms are hereby approved and adopted as the forms of such 2016 Bonds and of the certificate of authentication. Notwithstanding any provision in the Fiscal Agent Agreement to the contrary, the District may, in its sole discretion, elect to issue the 2016 Bonds in book entry form. Only the 2016 Bonds bearing thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under the Fiscal Agent Agreement, and no 2015 Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Fiscal Agent. Section 2.4.Conditions to Issuance of 2016 Bonds. The 2016 Bonds shall not be issued unless and until the conditions for the issuance of the 2016 Bonds as Additional Bonds pursuant to 2.13 of the Original Fiscal Agent Agreement shall have been satisfied. Section 2.5.Amendment to Section 3.4(b) of the Original Fiscal Agent Agreement. Section 3.4(b) of the Original Fiscal Agent Agreement is hereby amended and restated as follows: “(b) Disbursements. After depositing an amount of Special Taxes budgeted for Administrative Expenses to the Administrative Expense Fund pursuant to written direction of the District no later than 4 ten 10 Business Days prior to each Interest Payment Date the Fiscal Agent shall withdraw from the Special Tax Fund and transfer to the Bond Fund as follows: (i)To the Interest Account of the Bond Fund an amount such that the balance in the Interest Account shall be equal to the installment of interest due on the Bonds on said Interest Payment Date. (ii)To the Principal Account of the Bond Fund an amount such that the balance in the Principal Account shall at least equal the principal payment including mandatory sinking fund payments if any due on the Bonds on said Interest Payment Date. (iii)To the Reserve Account of the Bond Fund and the Reserve Account of the Revenue Fund established under the Authority Indenture, without preference or priority and in the event of any insufficiency of such moneys ratably without any discrimination or preference, the amount, if any, necessary to cause the balance in the Reserve Account of the Bond Fund to the Reserve Requirement and the Reserve Account of the Revenue Fund established under the Authority Indenture to the reserve requirement with respect thereto. Notwithstanding the foregoing amounts shall be transferred to the Principal Account or the Interest Account from the Special Tax Fund and immediately be paid to the Owners of the Bonds in respect of past due payments on the Bonds.” Section 2.6.Amendment to Section 5.14 of the Original Fiscal Agent Agreement. Section 5.14 of the Original Fiscal Agent Agreement is hereby amended and restated as follows: “Reserve Account Replenishment. The District hereby covenants that to the extent there is draw upon the Reserve Account pursuant to the Authority Indenture, the Reserve Account of the Bond Fund, or any reserve fund established with respect to any Supplement Agreement as result of delinquency in the collection of Special Taxes the District shall cause the Treasurer to effect the next annual levy of Special Taxes in an amount sufficient to replenish such delinquency in addition to those required by Section 5.8 hereof and in addition to amounts that would be levied if there were no such delinquency provided however the amount of Special Taxes levied shall not exceed the maximum permitted by the RMA.” Section 2.7.Additional Bonds. Section 2.13 of the Original Fiscal Agent Agreement is hereby amended, superseded and replaced to state as follows: “No Additional Bonds.The District covenants that it will not issue any additional bonds payable from the Net Taxes or from any other amounts in the Special Tax Fund on a parity with the 2014 Bonds and the 2016 Bonds except bonds issued to refund Outstanding 2014 Bonds and/or 2016 Bonds.” ARTICLE III APPLICATION OF PROCEEDS OF 2016 BONDS Section 3.1.Creation of Funds and Application of Proceeds of Sale of 2016 Bonds (a)There is hereby established with respect to the 2016 Bonds, the Reserve Account of the Bond Fund, the City Facilities Account of the Improvement Fund, the Water Facilities Account of the Improvement Fund and the Rebate Fund. Unless otherwise specified herein, any reference in this 5 First Supplement to any of such funds shall be deemed to be a reference to the funds established herein for the 2016 Bonds. (b)The net proceeds of the sale of the 2016 Bonds shall be received by the Trustee on behalf of the District and deposited and transferred as follows: (i)$_________ shall be transferred to the City Facilities Account of the Improvement Fund and $_______ shall be transferred to the Water Facilities Account of the Improvement Fund to be applied in accordance with Section 3.7 of the Original Fiscal Agent Agreement; (ii)$______ shall be transferred to the Reserve Account of the Bond Fund to fund the Reserve Requirement; and (iii)$________ shall be transferred to the Costs of Issuance Fund to be applied to pay Costs of Issuance of the 2016 Bonds in accordance with Section 3.8 of the Original Fiscal Agent Agreement. The Fiscal Agent may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers. Section 3.2.Reserve Account of the Bond Fund. Amounts in the Reserve Account shall be applied as follows: (a)Moneys in the Reserve Account shall be used solely for the purpose of paying the principal of, including sinking fund payments with respect to Term Bonds, and interest on the 2016 Bonds when due or in the event that the balance on deposit in the Interest Account or the Principal Account, as the case may be, is insufficient for such purpose and for the purpose of making any required transfer to the Rebate Fund pursuant to Section 3.3 below upon written direction from the District or any required transfer to the Redemption Fund as described below. If the amounts in the Interest Account or Principal Account, as the case may be, are insufficient to pay the principal of, including sinking fund payments, or interest on the 2016 Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Fiscal Agent shall withdraw from the Reserve Account for deposit in the Interest Account or the Principal Account, as the case may be, or the Rebate Fund, as applicable, moneys necessary for such purposes. (b)In connection with a redemption of 2016 Bonds pursuant to Section 4.1(a) or (c) hereof or a partial defeasance of 2016 Bonds in accordance with Section 10.3 of the Original Fiscal Agent Agreement, amounts in the Reserve Account may be applied to such redemption or partial defeasance if so provided in an Officer’s Certificate, so long as the amount on deposit in the Reserve Account following such optional redemption or partial defeasance equals the Reserve Requirement following such optional redemption or partial defeasance. (c)To the extent that the amount on deposit in the Reserve Account as of the first day of the final Bond Year for the 2016 Bonds equals or exceeds Debt Service for that Bond Year, amounts in the Reserve Account may be applied to pay the principal of and interest due on the 2016 Bonds, as applicable, in the final Bond Year for such issue, if so provided in an Officer’s Certificate. (d)The Fiscal Agent shall withdraw from the Reserve Account moneys in excess of the Reserve Requirement not transferred in accordance with the preceding provisions of this Section one Business Day before each March 1 and September 1, and transfer such moneys to the Interest Account of 6 the Special Tax Fund, unless prior to such date the Fiscal Agent is directed in an Officer’s Certificate to transfer such moneys to a different fund or account specified in such certificate. Section 3.3.Rebate Fund. All money at any time deposited in the Rebate Account of the Rebate Fund shall be held by the Fiscal Agent in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund with respect to the 2016 Bonds shall be governed by this Section and the Tax Certificate, unless the District delivers to the Fiscal Agent an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on the 2016 Bonds will not be adversely affected if such requirements are not satisfied. The Fiscal Agent shall not be responsible for calculating rebatable arbitrage or for the adequacy or correctness or any rebate report or rebate calculations. The Fiscal Agent shall be deemed conclusively to have complied with the provisions of this Fiscal Agent Agreement regarding calculation and payment of the rebatable arbitrage if the Fiscal Agent follows the directions of the District and the Fiscal Agent shall have no independent duty to review such calculations or enforce the compliance with such rebate requirements. (1)Rebate Account. The following requirements shall be satisfied with respect to each subaccount of the Rebate Account: (i)Annual Computation. Within 55 days of the end of each Bond Year, the District shall calculate or cause to be calculated the amount of rebatable arbitrage for the 2016 Bonds in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the “Rebatable Arbitrage”). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section. (ii)Annual Transfer. Within 55 days of the end of each Bond Year for which Rebatable Arbitrage must be calculated as required by the Tax Certificate the District shall transfer to the Fiscal Agent an amount to be deposited in the Rebate Account if and to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance with (i) of this Subsection (a)(1) with respect to the 2016 Bonds. In the event that immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in the Rebate Account exceeds the amount required to be on deposit therein, the Fiscal Agent shall withdraw the excess from the Rebate Account and then credit the excess to the Administrative Expense Fund. (iii)Payment to the Treasury. The District shall direct the Fiscal Agent to pay to the United States Treasury out of amounts in the Rebate Account, (X)Not later than 60 days after the end of (A) the fifth Bond Year for the 2016 Bonds, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the 2016 Bonds; and (Y)Not later than 60 days after the payment or redemption of all of the 2016 Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code. 7 In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this Subsection (a)(1) shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other manner as provided under the Code. (b)Disposition of Unexpended Funds. Any funds remaining in the accounts of the Rebate Fund after redemption and payment of the 2016 Bonds and after making the payments described in Subsection (a)(1)(iii) may be withdrawn by the District and utilized in any manner by the District. (c)Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Fiscal Agent Agreement to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance and final payment of the 2016 Bonds with respect to which an account has been created in the Rebate Fund. (d)Amendment Without Consent of Owners. This Section may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the 2016 Bonds. ARTICLE IV REDEMPTION OF 2016 BONDS Section 4.1.Redemption of 2016 Bonds (a)Optional Redemption. The 2016 Bonds may be redeemed, at the option of the District, from any source of funds, other than Special Tax prepayments, on any Interest Payment Date on or after _________ 1, 20__, in whole, or in part (in such amounts and maturities as may be designated by the District, with the particular Bonds of such maturities to be selected by the Fiscal Agent by lot), at the following redemption prices expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices In the event the District elects to redeem 2016 Bonds as provided above, the District shall give written notice to the Fiscal Agent of its election to so redeem, the redemption date and the maturity dates of the 2016 Bonds to be redeemed. The notice to the Fiscal Agent shall be given at least 45 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Fiscal Agent, in its sole discretion. (b)Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the sinking fund payments that 8 have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of sinking fund payments set forth below. The Term Bonds so called for redemption shall be selected by the Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: 2016 BONDS MATURING SEPTEMBER 1, 20__ Redemption Dates (September 1)Principal Amount (maturity) If the District purchases Term Bonds and delivers them to the Fiscal Agent at least 45 days prior to an applicable redemption date, the principal amount of the Term Bonds so purchased shall be credited to reduce the sinking fund payment due on such redemption date for the applicable maturity of the Term Bonds. All Term Bonds purchased by the District and delivered to the Fiscal Agent pursuant to this subsection shall be cancelled pursuant to Section 10.3 of the Original Fiscal Agent Agreement. In the event of a partial optional redemption or special mandatory redemption of Term Bonds, each of the remaining sinking fund payments for such Term Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis. (c)Special Mandatory Redemption from Prepayments. The 2016 Bonds are subject to redemption as a whole, or in part on a pro rata basis among maturities, and pro rata among each series of Bonds, on any Interest Payment Date on and after ________ 1, 20__ from the proceeds of the prepayment of the Special Taxes deposited in the Redemption Fund pursuant to the Fiscal Agent Agreement and amounts transferred from the Reserve Account of the Bond Fund in connection with such prepayment. Such extraordinary mandatory redemption of the 2016 Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the 2016 Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Dates Redemption Prices ARTICLE V MISCELLANEOUS Section 5.1.Provisions of Fiscal Agent Agreement in Effect. Except as expressly modified herein, all of the provisions of the Original Fiscal Agent Agreement shall remain in full force and effect. Section 5.2.Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this First Supplement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this First Supplement. The District hereby declares that it 9 would have entered into this First Supplement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the 2016 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this First Supplement may be held illegal, invalid or unenforceable. Section 5.3.Execution in Counterparts. This First Supplement 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. Section 5.4.Governing Law. This First Supplement shall be construed and governed in accordance with the laws of the State of California applicable to contracts made and performed in such state. S-1 IN WITNESS WHEREOF, the District and the Fiscal Agent have executed this First Supplement, effective the date first written above. CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) By: Its: Mayor of the City of Lake Elsinore, acting on behalf of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) ATTEST: City Clerk of the City of Lake Elsinore, acting on behalf of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) The terms of this First Supplement relating to the Fiscal Agent are accepted by Wilmington Trust, National Association, as Fiscal Agent. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Fiscal Agent By: Its: Authorized Officer A-1 EXHIBIT A FORM OF 2016 SERIES A SPECIAL TAX BOND R-__$_________________ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE FISCAL AGENT AGREEMENT IDENTIFIED HEREIN) TO THE FISCAL AGENT 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 THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), 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. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF RIVERSIDE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) 2016 SERIES A (IMPROVEMENT AREA D) SPECIAL TAX BOND INTEREST RATE:MATURITY DATE:DATED DATE:CUSIP: ____%September 1, 20_________, 2016 ___ REGISTERED OWNER:CEDE & CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) OF CITY OF LAKE ELSINORE (the “District”), situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Fiscal Agent Agreement (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in A-2 default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 (each an “Interest Payment Date”), commencing [September 1, 2016], at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. The principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Fiscal Agent (as such term is defined in the Fiscal Agent Agreement), initially Wilmington Trust, National Association (the “Fiscal Agent”). Interest on this Bond shall be paid by check of the Fiscal Agent mailed, by first class mail, postage prepaid, or in certain circumstances described in the Fiscal Agent Agreement by wire transfer to an account within the United States of America, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent. This Bond is one of a duly authorized issue of “City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Special Tax Bonds, 2016 Series A (Improvement Area D)” (the “Bonds”) issued in the aggregate principal amount of $__________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”) for the purpose of (i) financing certain public facilities, (ii) funding a reserve account and (iii) paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of City of Lake Elsinore, acting in its capacity as the legislative body of the District (the “Legislative Body”) on _______, 2016, Resolution No. ________ (the “Resolution of Issuance”), and a Fiscal Agent Agreement dated as of January 1, 2014 (the “Original Fiscal Agent Agreement”), as supplemented by the First Supplement to Fiscal Agent Agreement dated as of August 1, 2016 (the “First Supplement” and together with the Original Fiscal Agent Agreement, the “Fiscal Agent Agreement”), each by and between the District and the Fiscal Agent, executed in connection therewith, and this reference incorporates the Fiscal Agent Agreement herein; and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Resolution and the Fiscal Agent Agreement are adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Act and the Fiscal Agent Agreement, the principal of, premium, if any, and interest on this Bond are payable on a parity with the District’s 2014 Bonds, solely from the portion of the annual special taxes authorized under the Act to be levied and collected within Improvement Area D of the District (the “Net Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Fiscal Agent Agreement. Any amounts for the payment hereof shall be limited to the Special Tax Revenues and Redemption Revenues pledged and collected or foreclosure proceeds received following a default in payment of the Net Taxes and other amounts deposited to the Bond Fund, the Special Tax Fund, the Redemption Fund and the Delinquency Management Fund, established under the Fiscal Agent Agreement, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Fiscal Agent Agreement it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Net Special Tax installments levied for payment of principal and interest on the Bonds. (a)The 2016 Bonds may be redeemed, at the option of the District, from any source of funds, other than Special Tax prepayments, on any Interest Payment Date on or after _________ 1, 20__, in whole, or in part (in such amounts and maturities as may be designated by the District, with the A-3 particular Bonds of such maturities to be selected by the Fiscal Agent by lot), at the following redemption prices expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed from the sinking fund payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of sinking fund payments set forth in the First Supplement. The Term Bonds so called for redemption shall be selected by the Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. The Bonds are subject to redemption as a whole, or in part on a pro rata basis among maturities, and pro rata among each series of bonds issued pursuant to the terms of the Fiscal Agent Agreement, on any Interest Payment Date on and after ________ 1, 20__ from the proceeds of the prepayment of the Special Taxes deposited in the Redemption Fund pursuant to the Fiscal Agent Agreement and amounts transferred from the Reserve Account in connection with such prepayment. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Dates Redemption Prices Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the Fiscal Agent on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds. This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Fiscal Agent may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary. The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Fiscal Agent Agreement. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly A-4 authorized in writing, at the Principal Office of the Fiscal Agent, but only in the manner, subject to the limitations and upon payment of the charges provided in the Fiscal Agent Agreement, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor. The Fiscal Agent shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Fiscal Agent Agreement. THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF CITY OF LAKE ELSINORE OR OF THE DISTRICT FOR WHICH CITY OF LAKE ELSINORE OR THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR NET TAXES, OTHER THAN THE NET TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE NET TAXES AND OTHER AMOUNTS PLEDGED UNDER THE FISCAL AGENT AGREEMENT BUT ARE NOT A DEBT OF CITY OF LAKE ELSINORE, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be 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 law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California. A-5 IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) has caused this Bond to be dated as of _________, 2016, to be signed on behalf of the District by the Mayor of the City of Lake Elsinore by his facsimile signature and attested by the facsimile signature of the City Clerk of the City of Lake Elsinore hereon. Mayor of the City of Lake Elsinore, acting on behalf of of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) ATTEST: City Clerk of the City of Lake Elsinore, acting on behalf of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) [FORM OF FISCAL AGENT’S CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within-defined Fiscal Agent Agreement. Dated: June ___, 2016 WILMINGTON TRUST, NATIONAL ASSOCIATION, as Fiscal Agent By: Its: Authorized Officer A-6 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. City Clerk of the City of Lake Elsinore, acting on behalf of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) [FORM OF ASSIGNMENT] For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is , the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises. Dated: Signature guaranteed: NOTE: Signature(s) must be guaranteed by an eligible guarantor institution. NOTE: The signatures(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.