HomeMy WebLinkAbout0034_4_CFD 2006-1 (IA HH) 2019 Bonds - Exhibit C Bond IndentureStradling Yocca Carlson & Rauth
Draft of 11/6/19
4841-5052-0996/022042-0030
BOND INDENTURE
Between
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO.2006-1
(SUMMERLY)
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
$__________
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO.2006-1 (SUMMERLY)
SPECIAL TAX BONDS, SERIES 2019
(IMPROVEMENT AREA HH)
Dated as of December 1, 2019
Table of Contents
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ARTICLE I
DEFINITIONS
Section 1.1.Definitions.....................................................................................................................1
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1.Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds..........................10
Section 2.2.Type and Nature of Bonds and Parity Bonds..............................................................10
Section 2.3.Equality of Bonds and Parity Bonds and Pledge of Net Taxes...................................11
Section 2.4.Description of Bonds; Interest Rates..........................................................................11
Section 2.5.Place and Form of Payment........................................................................................12
Section 2.6.Form of Bonds and Parity Bonds................................................................................13
Section 2.7.Execution and Authentication.....................................................................................13
Section 2.8.Bond Register..............................................................................................................14
Section 2.9.Registration of Exchange or Transfer.........................................................................14
Section 2.10.Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds.....................................14
Section 2.11.Validity of Bonds and Parity Bonds...........................................................................15
Section 2.12.Book-Entry System.....................................................................................................15
Section 2.13.Representation Letter..................................................................................................16
Section 2.14.Transfers Outside Book-Entry System.......................................................................16
Section 2.15.Payments to the Nominee...........................................................................................16
Section 2.16.Initial Depository and Nominee..................................................................................16
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1.Creation of Funds; Application of Proceeds...............................................................17
Section 3.2.Deposits to and Disbursements from Special Tax Fund.............................................18
Section 3.3.Administrative Expense Account of the Special Tax Fund........................................18
Section 3.4.Interest Account and Principal Account of the Special Tax Fund..............................19
Section 3.5.Redemption Account of the Special Tax Fund...........................................................19
Section 3.6.Reserve Account of the Special Tax Fund..................................................................20
Section 3.7.Rebate Fund................................................................................................................21
Section 3.8.Surplus Fund...............................................................................................................24
Section 3.9.Acquisition and Construction Fund............................................................................25
Section 3.10.Investments.................................................................................................................25
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1.Redemption of Bonds.................................................................................................27
Table of Contents
(continued)
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Section 4.2.Selection of Bonds and Parity Bonds for Redemption...............................................29
Section 4.3.Notice of Redemption.................................................................................................29
Section 4.4.Partial Redemption of Bonds or Parity Bonds............................................................30
Section 4.5.Effect of Notice and Availability of Redemption Money...........................................31
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1.Warranty.....................................................................................................................31
Section 5.2.Covenants....................................................................................................................31
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1.Supplemental Indentures or Orders Not Requiring Owner Consent...........................35
Section 6.2.Supplemental Indentures or Orders Requiring Owner Consent..................................35
Section 6.3.Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity
Bonds..........................................................................................................................36
ARTICLE VII
TRUSTEE
Section 7.1.Trustee.........................................................................................................................37
Section 7.2.Removal of Trustee.....................................................................................................38
Section 7.3.Resignation of Trustee................................................................................................38
Section 7.4.Liability of Trustee.....................................................................................................38
Section 7.5.Merger or Consolidation.............................................................................................41
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1.Events of Default........................................................................................................41
Section 8.2.Remedies of Owners...................................................................................................42
Section 8.3.Application of Revenues and Other Funds After Default...........................................42
Section 8.4.Power of Trustee to Control Proceedings...................................................................43
Section 8.5.Appointment of Receivers..........................................................................................43
Section 8.6.Non-Waiver.................................................................................................................43
Section 8.7.Limitations on Rights and Remedies of Owners........................................................44
Section 8.8.Termination of Proceedings........................................................................................44
Table of Contents
(continued)
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ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1.Defeasance..................................................................................................................45
Section 9.2.Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness................................................................................................................46
ARTICLE X
MISCELLANEOUS
Section 10.1.Cancellation of Bonds and Parity Bonds....................................................................48
Section 10.2.Execution of Documents and Proof of Ownership.....................................................48
Section 10.3.Unclaimed Moneys.....................................................................................................49
Section 10.4.Provisions Constitute Contract....................................................................................49
Section 10.5.Future Contracts..........................................................................................................49
Section 10.6.Further Assurances......................................................................................................49
Section 10.7.Severability.................................................................................................................49
Section 10.8.Notices........................................................................................................................50
Signatures ...................................................................................................................................S-1
EXHIBIT A FORM OF SPECIAL TAX BOND..........................................................................A-1
EXHIBIT B REQUISITION FOR DISBURSEMENT OF PROJECT COSTS...........................B-1
4841-5052-0996/022042-0030
BOND INDENTURE
THIS BOND INDENTURE dated as of December 1, 2019, by and between CITY OF LAKE
ELSINORE COMMUNITY FACILITIES DISTRICT NO.2006-1(SUMMERLY) (the “District”)
and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (the “Trustee”), governs the
terms of the City of Lake Elsinore Community Facilities District No.2006-1(Summerly) Special Tax
Bonds, Series 2019(Improvement Area HH)and any Parity Bonds issued in accordance herewith from
time to time.
RECITALS:
A.The City Council of the City of Lake Elsinore, located in the County of Riverside,
California (the “City Council”), has undertaken proceedings and declared the necessity to issue bonds
on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities
Act of 1982, as amended, being Chapter2.5, Part1, Division2, Title5, of the Government Code of
the State of California (the “Act”).
B.Based upon Resolution Nos.2014-017and 2014-018adopted by the City Council on
April 8, 2014and an election held on April 8, 2014authorizing the levy of a special tax and the issuance
of bonds, the District is authorized to issue bonds in one or more seriesfor Improvement Area HH(as
defined herein), pursuant to the Act, in an aggregate principal amount not to exceed $9,000,000.
C.Pursuant to Resolution No. 2019-___ adopted on November 12, 2019, by the City
Council, acting as the legislative body of the District, the District is authorized to issue the Bonds (as
defined herein)in an aggregate principal amount of $__________ to finance various Project Costs (as
defined herein);
D.The District has determined that all requirements of the Act for the issuance of the
Bonds have been satisfied.
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which
the 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 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 Bonds and any Parity Bonds (as defined herein) which may
be issued hereunder from time to time, as follows:
ARTICLE I
DEFINITIONS
Section 1.1.Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
Account. The term “Account” means any account created pursuant to this Indenture.
Act. The term “Act” means the Mello-Roos Community Facilities Act of 1982, as amended,
being Section53311 etseq.of the California Government Code.
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Acquisition and Construction Fund. The term “Acquisition and Construction Fund” means the
fund by that name established pursuant to Section3.1 hereof.
Administrative Expense Account. The term “Administrative Expense Account” means the
account by that name created and established in the Special Tax Fund pursuant to Section3.1 hereof.
Administrative Expenses. The term “Administrative Expenses” means the administrative costs
with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and
other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit
enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any
costs related to the District’s compliance with state and federal laws requiring continuing disclosure of
information concerning the Bonds and the District, and any other costs otherwise incurred by City staff
on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution
ofFormation and any obligation of the District hereunder.
Administrative Expenses Cap. The term “Administrative Expenses Cap” means $________
per BondYearincreasing at not more than 2% per year.
Alternate Penalty Account. The term “Alternate Penalty Account” means the account by that
name created and established in the Rebate Fund pursuant to Section3.1 hereof.
Annual Debt Service. The term “Annual Debt Service” means the principal amount of any
Outstanding Bonds or Parity Bonds payable in a Bond Year either at maturity or pursuant to a Sinking
Fund Payment and any interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year,
if the Bonds and any Parity Bonds are retired as scheduled.
Authorized Investments. The term “Authorized 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)For all purposes, including defeasance investments in refunding escrow accounts:
(a)cash;or
(b)obligations of, or obligations guaranteed as to principal and interest by, the U.S.
or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit
of the U.S., including U.S. treasury obligations, all director fully guaranteed obligations, Farmers
Home Administration, General Services Administration, guaranteed Title XI financing, Government
National Mortgage Association (GNMA) and State and Local Government Series; or
(c)obligations of government-sponsoredagencies that are not backed by the full
faith and credit of the U.S. Government: Federal Home Loan Mortgage Corporation (FHLMC) debt
obligations, Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks
and Banks for Cooperatives), Federal Home Loan Banks (FHL Banks), Federal National Mortgage
Association (FNMA) debt obligations, Financing Corp. (FICO) debt obligations, Resolution Funding
Corp. (REFCORP) debt obligations and U.S. Agency for International Development (U.S.A.I.D.)
guaranteed notes.
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(2)For all purposes other than defeasance investments in refunding escrow accounts:
(a)obligations of any of the following federal agencies, which obligations
represent the full faith and credit of the United States of America: Export-Import Bank, Rural
Economic Community Development Administration, U.S. Maritime Administration, Small Business
Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing
Administration and Federal Financing Bank;
(b)direct obligations of any of the following federal agencies, which obligations
are not fully guaranteed by the full faith and credit of the United States of America: senior debt
obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan
Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP) and
senior debt obligations of the Federal Home Loan Bank System;
(c)U.S. dollar denominated deposit accounts, federal funds and bankers’
acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which
have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by
S&P and “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on
holding companies are not considered as the rating of the bank);
(d)commercial paper which is rated at the time of purchase in the single highest
classification “A-1+” by S&P and “P-1” by Moody’s and which matures not more than 270days after
the date of purchase;
(e)investments in a money market fund rated “AAm,” “AAm-G” or better by
S&P, including funds for which the Trustee or its affiliates provide investment advisory or other
management services;
(f)pre-refunded municipal obligations defined as follows: any bonds or other
obligations of any state of the United States of America, or any agency, instrumentality or local
governmental unit of any such state, which are not callable at the option of the obligor prior to maturity
or as to which irrevocable instructions have been given by the obligor to call on the date specified in
the notice, and
(i)which are rated, based on irrevocable escrow account or fund (the
“escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or
(ii)(1)which are fully secured as to principal and interest and redemption
premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1)(b)
above, which escrow may be applied only to the payment of such principal of and interest and
redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof
or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and
(2)which escrow is sufficient, as verified by a nationally recognized independent certified public
accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other
obligations described in this paragraph on the maturity date or dates specified in the irrevocable
instructions referred to above, as appropriate;
(g)municipal obligations rated “Aaa/AAA” or general obligations of states with a
rating of at least “Aa2/AA” or higher by both Moody’s and S&P;
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(h)Investment Agreements (supportedby appropriate opinions of counsel); and
(i)the Local Agency Investment Fund of the State, created pursuant to
Section16429.1 of the California Government Code, to the extent the Trustee is authorized to register
such investment in its name.
The value of the above investments shall be determined as follows:
(a)for the purpose of determining the amount in any fund, all Authorized
Investments credited to such fund shall be valued at market value. The Trustee shall determine the
market value based on accepted industry standards, including the Trustee’s internal systems,and from
accepted industry providers. Accepted industry providers shall include, but are not limited to, pricing
services provided by Financial Times Interactive Data Corporation, Bank of America Merrill Lynch
or Salomon Smith Barney. Notwithstanding anything to the contrary herein, in making any valuation
of investments hereunder, the Trustee may utilize computerized securities pricing services that may be
available to it, including those available through its regular accounting system, and rely thereon;
(b)as to certificates of deposit and bankers acceptances: the face amount thereof,
plus accrued interest thereon; and
(c)as to any investment not specified above: the value thereof established by prior
agreement between the City and the Trustee.
Authorized Representative of the District. The term “Authorized Representative of the
District” means the Mayor, City Manager, Assistant City Manager, Finance Manager or City Clerk of
the City, or any other officer or employee authorized by the City Council of the City or by an
Authorized Representative of the Districtto undertake the action referenced in this Agreement as
required to be undertaken by an Authorized Representative of the District.
Bond Counsel. The term “Bond Counsel” means an attorney at law or a firm of attorneys
selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature
of interest on bonds issued by states and their political subdivisions duly admitted to the practice of
law before the highest court of any state of the United States of America or the District of Columbia.
Bond Register. The term “Bond Register” means the books which the Trustee shall keep or
cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds shall be
recorded.
Bonds. The term “Bonds” means the District’s Special Tax Bonds, Series 2019(Improvement
Area HH)issued on December __, 2019in the aggregate principal amount of $__________.
Bond Year. The term “Bond Year” means the twelve month period commencing on
September2 of each year and ending on September1 of the following year, except that the first Bond
Year for the Bonds or an issue of Parity Bonds shall begin on the Delivery Date and end on the first
September1 which is not more than 12 months after the Delivery Date.
Business Day. The term “Business Day” means a day which is not a Saturday or Sunday or a
day of the year on which banks in New York, New York, Los Angeles, California, or the city where
the corporate trust officeof the Trustee is located, are not required or authorized to remain closed.
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Certificate of an Authorized Representative. The term “Certificate of an Authorized
Representative” means a written certificate or warrant request executed by an Authorized
Representative of the District.
City. The term “City” means the City of Lake Elsinore, County of Riverside, State of
California.
City Council. The term “City Council” means the City Council of the City.
City Facilities Account. The term “City Facilities Account” means the account by that name
created and established in the Acquisition and Construction Fund pursuant to Section 3.1hereof.
Code. The term “Code” means the Internal Revenue Code of 1986, as amended, and any
Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United
States Treasury Department or Internal Revenue Service interpreting and construing it.
Continuing Disclosure Certificate. The term “Continuing Disclosure Certificate” means that
certain Continuing Disclosure Certificatedated as of December 1, 2019,as originally executedby the
Districtand as it may be from time to time amended or supplemented in accordance with its terms.
Costs of Issuance. The term “Costs of Issuance” means the costs and expenses incurred in
connection with the formation of the District and the issuance and sale of the Bonds or any Parity
Bonds, including the acceptance and initial annual fees and expenses of the Trustee and its counsel,
legal fees and expenses, costs of printing the Bonds and Parity Bonds and the preliminary and final
official statements for the Bonds and Parity Bonds, fees of financial consultants, costs of the appraisal
and all other related fees and expenses, including reimbursement to property owners within the District
for design, engineering and legal costs, as set forth in a Certificate of an Authorized Representative of
the District.
Costs of Issuance Account. The term “Costs of Issuance Account” means the account by that
name created and established in the Acquisition and Construction Fund pursuant to Section3.1 hereof.
Delivery Date. The term “Delivery Date” means, with respect to the Bonds and each issue of
Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial
purchasers thereof.
Depository. The term “Depository” means The Depository Trust Company, New York, New
York, and its successors and assigns as securities depository for the Bonds, or any other securities
depository acting as Depository under ArticleII hereof.
District. The term “District” means City of Lake Elsinore Community Facilities District
No.2006-1(Summerly) established pursuant to the Act and the Resolution of Formation.
Event of Default. The term “Event of Default” meansan event described in Section8.1 hereof.
Fiscal Year. The term “Fiscal Year” means the period beginning on July1 of each year and
ending on the next following June30.
Gross Taxes. The term “Gross Taxes” means the amount of all Special Taxes received by the
Districtfor Improvement Area HH, together with the proceeds collected from the sale of property
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pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all
costs related to such foreclosure actions.
Improvement Area HH. The term “Improvement Area HH” means Improvement Area HHof
the District, established pursuant to the Resolution of Formation.
Indenture. The term “Indenture” means this Bond Indenture, together with any Supplemental
Indenture approved pursuant to Article6 hereof.
Independent Financial Consultant. The term “Independent Financial Consultant” means a
financial consultant or firm of such consultants generally recognized to be well qualified in the
financial consulting field, appointed and paid by the District, who, or each of whom:(1)is in fact
independent andnot under the domination of the District or the City;(2)does not have any substantial
interest, direct or indirect, in the District or the City; and(3)is not connected with the District or the
City as a member, officer or employee of the District or the City, but who may be regularly retained to
make annual or other reports to the District or the City.
Interest Account. The term “Interest Account” means the account by that name created and
established in the Special Tax Fund pursuant to Section3.1 hereof.
Interest Payment Date. The term “Interest Payment Date” means March1, 2020and each
March1 and September1 thereafter; provided, however, that, if any such day is not a Business Day,
interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date.
Investment Agreement. The term “Investment Agreement” means one or more agreements for
the investment of funds of the District complying with the criteria therefor as set forth in subsection
(2)(h) of the definition ofAuthorized Investments herein.
Maximum Annual Debt Service. The term “Maximum Annual Debt Service” means the
maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity
Bonds by adding the following for each Bond Year:(1)the principal amount of all Outstanding Bonds
and Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment;
and(2)the interest payable on the aggregate principal amount of all Bonds and Parity Bonds
Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.
Moody’s. The term “Moody’s” means Moody’s Investors Service, Inc., its successors and
assigns.
Net Taxes. The term “Net Taxes” means Gross Taxes minus amounts set aside to pay
Administrative Expenses.
Nominee. The term “Nominee” means the nominee of the Depository, which may be the
Depository, as determined from time to time pursuant to Section 2.16 hereof.
Ordinance. The term “Ordinance” means Ordinance No.2014-1325adopted by the City
Council on April 22, 2014providing for the levying of the Special Tax.
Outstanding. The terms “Outstanding” or “Outstanding Bonds and Parity Bonds” means all
Bonds and Parity Bonds theretofore issued by the District, except:(i)Bonds and Parity Bonds
theretofore cancelled or surrendered for cancellation in accordance with Section10.1 hereof;(ii)Bonds
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and Parity Bonds for payment or redemption of which monies shall have been theretofore deposited in
trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds),
provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice
of such redemption shall have been given as provided in this Indenture or any applicable Supplemental
Indenture for Parity Bonds; and(iii)Bonds and Parity Bonds which have been surrendered to the
Trustee for transfer or exchange pursuant to Section2.9 hereof or for which a replacement has been
issued pursuant to Section2.10 hereof.
Owner. The term “Owner” means the person or persons in whose name or names any Bond or
Parity Bond is registered.
Parity Bonds. The term “Parity Bonds” means all bonds, notes or other similar evidences of
indebtedness hereafter issued, payable out of the Net Taxes and which, as provided in this Indenture
or any Supplemental Indenture, rank on a parity with the Bonds.
Participants. The term “Participants” means those broker-dealers, banks and other financial
institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities
depository.
Person. The term “Person” means natural persons, firms, corporations, partnerships,
associations, trusts, public bodies and other entities.
Prepayments. The term “Prepayments” means any amounts paid by the District to the Trustee
and designated by the District as a prepayment of Special Taxes for one or more parcels in
Improvement Area HHmade in accordance with the RMA.
Principal Account. The term “Principal Account” means the account by that name created and
established in the Special Tax Fund pursuant to Section3.1 hereof.
Principal Office of the Trustee. The term “Principal Office of the Trustee” means the office of
the Trustee located in Costa Mesa, California, or such other office or offices as the Trustee may
designate from time to time, or the office of any successor Trustee where it principally conducts its
business of serving as trustee under indentures pursuant to which municipal or governmental
obligations are issued.
Project. The term “Project” means those public facilities described in the Resolution of
Formation which are to be acquired or constructed within and outside of the District, including all
engineering, planning and design services and other incidental expenses related to such facilities and
other facilities, if any, authorized by the qualified electors within the District from time to time.
Project Costs. The term “Project Costs” means the amounts necessary to finance the Project,
to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with
the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee
and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation
of the District, and to pay any other “incidental expenses” of the District, as such term is defined in the
Act.
Rating Agency. The term “Rating Agency” means Moody’s orS&P, or both, as the context
requires.
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Rebate Account. The term “Rebate Account” means the account by that name created and
established in the Rebate Fund pursuant to Section3.1 hereof.
Rebate Fund. The term “Rebate Fund” means the fund by that name established pursuant to
Section3.1 hereof in which there are established the Accounts described in Section3.1 hereof.
Rebate Regulations. The term “Rebate Regulations” means any final, temporary or proposed
Regulations promulgated under Section148(f) of the Code.
Record Date. The term “Record Date” means the fifteenth day of the monthpreceding an
Interest Payment Date, regardless of whether such day is a Business Day.
Redemption Account. The term “Redemption Account” means the account by that name
created and established in the Special Tax Fund pursuant to Section3.1 hereof.
Regulations. The term “Regulations” means the regulations adopted or proposed by the
Department of Treasury from time to time with respect to obligations issued pursuant to Section103
of the Code.
Representation Letter. The term “Representation Letter” means the Blanket Letter of
Representations from the District to the Depository as described in Section2.13 hereof.
Reserve Account. The term “Reserve Account” means the account by that name created and
established in the Special Tax Fund pursuant to Section3.1 hereof.
Reserve Requirement. The term “Reserve Requirement” means that amount as of any date of
calculation equal to the lesser of: (i)10% of the initial principal amount of the Bonds and Parity Bonds,
if any; (ii)Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any;
(iii)125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bondsand (iv)
$_________, the initial Reserve Requirement.
Resolution of Formation. The term “Resolution of Formation” meanscollectively,Resolution
No.2006-30 adopted by the City Council on February 28, 2006,Resolution No. 2011-119 adopted by
the City Council on March 8, 2011 andResolution No. 2014-016 adopted by the City Council on April
8, 2014,pursuant to which the City Council formed the District, undertook certain change proceedings
with respect to the District and established Improvement Area HHtherein.
RMA. The term “RMA” means the Rate and Method of Apportionment of Special Tax for
Improvement Area HHapproved by the qualified electors of Improvement Area HHat the April 8,
2014election.
Sinking Fund Payment. The term “Sinking Fund Payment” means the annual payment to be
deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the
schedules set forth in Section4.1(b) hereof and any annual sinking fund payment schedule to retire
any Parity Bonds which are designated as Term Bonds.
Six-Month Period. The term “Six-Month Period” means the period of time beginning on the
Delivery Date of each issue of Bonds or Parity Bonds, as applicable, and ending six consecutive months
thereafter, and each six-month period thereafter until the latest maturity date of the Bonds and the
Parity Bonds (and any obligations that refund an issue of the Bonds or Parity Bonds).
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Special Tax Administrator. The term “Special Tax Administrator” means the individual or
entity appointed by the City to administer the calculation and collection of the Special Taxes.
Special Tax Requirement. The term “Special Tax Requirement”means that amount required
in any Fiscal Year for Improvement Area HHof the District to: (i) pay debt service on all Outstanding
Bonds and Parity Bonds due in the calendar year commencing in such Fiscal Year; (ii) pay periodic
costs on the Bonds and Parity Bonds, including but not limited to, credit enhancement and rebate
payments on the Bonds and Parity Bonds due in the calendar year commencing in such Fiscal Year;
(iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve
funds on all Outstanding Bonds and Parity Bonds; (v) pay for reasonable anticipated Special Tax
delinquencies; (vi) pay directly for acquisition or construction of facilities authorized under the Act
and the RMA to theextent that the inclusion of such amount does not increase the Special Tax levy on
Approved and Undeveloped Property (as such terms are defined in the RMA); less (vii) a credit for
funds available to reduce the annual Special Tax levy, as determined by the District pursuant to this
Indenture.
Special Tax Fund. The term “Special Tax Fund” means the fund by that name created and
established pursuant to Section3.1 hereof.
Special Taxes. The term “Special Taxes” means the taxes authorized to be levied by the
District on property within Improvement Area HHin accordance with the Ordinance, the Resolution
of Formation, the Act and the voter approval obtained at the April 8, 2014election in Improvement
Area HH, including any scheduled payments and any Prepayments thereof, the net proceeds of the
redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the
amount of said lien and penalties and interest thereon; provided that any delinquent Special Tax sold
to an independent third-party or to the City for 100% of the delinquent amount shall no longer be
pledged hereunder to the payment of the Bonds or Parity Bonds.
S&P. The term “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services
LLC business, its successors and assigns.
Subaccount. The term “Subaccount” means any subaccount created pursuant to this Indenture.
Supplemental Indenture. The term “Supplemental Indenture” means any supplemental
indenture amending or supplementing this Indenture.
Surplus Fund. The term “Surplus Fund” means the fund by that name created and established
pursuant to Section3.1 hereof.
Tax Certificate. The term “Tax Certificate” means the certificate by that name to be executed
by the District on a Delivery Date to establish certain facts and expectations and which contains certain
covenants relevant to compliance with the Code.
Tax-Exempt. The term “Tax-Exempt” means, with reference to an Authorized Investment, an
Authorized Investment the interest earnings on which are excludable from gross income for federal
income tax purposes pursuant to Section103(a) of the Code, other than one described in
Section57(a)(5)(C) of the Code.
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Term Bonds. The term “Term Bonds” means the Bonds maturing on September 1, 20__,
September 1, 20__and September 1, 20__and any term maturities of an issue of Parity Bonds as
specified in a Supplemental Indenture.
Trustee. The term “Trustee” means Wilmington Trust, National Association, anational
banking association duly organized and existing under the laws of the United States, at its principal
corporate trust office in Costa Mesa, California, and its successors or assigns, or any other bank or trust
company which may at any time be substituted in its place as provided in Sections7.2 or 7.3, and any
successor thereto.
Underwriter. The term “Underwriter” means,with respect to the Bonds, Stifel, Nicolaus &
Company, Incorporated,and with respect to each issue of Parity Bonds, the institution or institutions,
if any, with whom the District entersinto a purchase contract for the sale of such issue.
Water District. The term “Water District” means the Elsinore Valley Municipal Water District.
Water District Facilities Account. The term “Water District Facilities Account” means the
account by that name created and established in the Acquisition and Construction Fund pursuant to
Section 3.1 hereof.
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1.Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds. Under
and pursuant to the Act, the Bonds in the aggregate principal amount of $__________, together with
any Parity Bonds authorized by the City Council in accordance with Section9.2 hereof, shall be issued
for the purposes of financing and refinancing the Project, paying Costs of Issuance, funding the Reserve
Account and paying capitalized interest on the Bonds; provided that the aggregate principal amount of
the Bonds and any Parity Bonds shall not exceed the total indebtedness presently authorized or
subsequently authorized by the qualified electors within Improvement Area HHfor the District in
accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of the
District and shall be payable as to the principal thereof and interest thereon and any premiums upon
the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax Fund (other
than amounts in the Administrative Expense Account of the Special Tax Fund).
Section 2.2.Type and Nature of Bonds and Parity Bonds. Neither the faith and credit
nor the taxing power of the City, the State of California, or any political subdivision thereof other than
the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no
other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity
Bonds are not general or special obligations of the City nor general obligations of the District, but are
limited obligations of the District payable solely from certain amounts deposited by the District in the
Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein.
The District’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and
any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense
Account) is absolute and unconditional, free of deductions and without any abatement, offset,
recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may
compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the
City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity
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Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of
California or any of its political subdivisions within the meaning of any constitutional or statutory
limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge,
lien, or encumbrance upon any of the District’s property, or upon any of its income, receipts or
revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the
Administrative Expense Account) which are, under the terms of this Indenture and the Act, set aside
for the payment of the Bonds, any Parity Bonds and interest thereon, and neither the members of the
legislative body of the District or the members of the City Council nor any persons executing the Bonds
or any Parity Bonds are liable personally onthe Bonds or any Parity Bonds, by reason of their issuance.
Notwithstanding anything to the contrary contained in this Indenture, the District shall not be
required to advance any money derived from any source of income other than the Net Taxes for the
payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of
any covenants contained herein. The District may, however, advance funds for any such purpose,
provided that such funds are derived from a source legallyavailable for such purpose.
Section 2.3.Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to
the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from and secured
by a first pledge of and lien on the Net Taxes and other amounts in the Special Tax Fund (exclusive of
the Administrative Expense Account), without priority for number, date of the Bonds or Parity Bonds,
date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of
the Bonds and any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively
paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative
Expense Account) which are hereby set aside for the payment of the Bonds and any Parity Bonds;
provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of
the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity
Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein)
shall constitute a trust fund held for the benefit of the Owners to be applied to the payment of the
interest on and principal of the Bonds and any Parity Bonds and, so long as any of the Bonds and any
Parity Bonds or interest thereon remain Outstanding, shall not be used for any other purpose, except
as permitted by this Indenture or any Supplemental Indenture. Notwithstanding any provision
contained in this Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus
Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the
Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund or the Administrative Expense
Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude: (i)subject to the
limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject
to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds
issued under the Act as the same now exists or as hereafter amended, or under any other law of the
State of California; or (ii)the issuance, subject to the limitations contained herein, of Parity Bonds
which shall be payable from Net Taxes.
Section 2.4.Description of Bonds; Interest Rates. The Bonds and any Parity Bonds shall
be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. The
Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.
The Bonds shall be designated “City of Lake Elsinore Community Facilities District No.2006-
1(Summerly) Special Tax Bonds, Series 2019(Improvement Area HH).” The Bonds shall be dated
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as of their Delivery Date and shall mature and be payable on September1 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 March1, 2020and each Interest Payment Date thereafter:
Maturity Date
September1
Principal
Amount
Interest
Rate
$%
T
T Term Bonds.
Interest shall be payable on each Bond and Parity Bond from the date established in accordance
with Section2.5 below on each Interest Payment Date thereafter until the principal sum of such Bond
or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity
Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for
redemption) funds are available for the payment or redemption thereof in full, in accordance with the
terms of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on
the Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve
30-day months.
Section 2.5.Place and Form of Payment. The Bonds and Parity Bonds shall be payable
both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money
of the United States of America. The principal of the Bonds and Parity Bonds and any premiums due
upon the redemption thereof shall be payable upon presentation and surrender thereof at the Principal
Office of the Trustee, or at the designated office of any successor Trustee. If the Nominee of the Bonds
is registered to Cede & Co., payment of principal and any premiums shall be made without
presentment. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date
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next preceding the date of authentication of such Bond or Parity Bond, unless: (i)such date of
authentication is an Interest Payment Date, in whichevent interest shall be payable from such date of
authentication; (ii)the date of authentication is after a Record Date but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment
Dateimmediately succeeding the date of authentication; or (iii)the date of authentication is prior to
the close of business on the first Record Date occurring after the issuance of such Bond or Parity Bond,
in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable;
provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in
default, interest on such Bond or Parity 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 on such Bond or Parity Bond, interest on such Bond or Parity Bond shall be
payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person whose
name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of
business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class
mail, postage prepaid, to such Owner at his or her address as it appears on the Bond Register. In
addition, upon a request in writing received by the Trustee on or before the applicable Record Date
from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds,
payment shall be made on the Interest Payment Date by wire transfer in immediately available funds
to an account within the United States of America designated by such Owner.
Section 2.6.Form of Bonds and Parity Bonds. The definitive Bonds may be printed from
steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of
authentication shall be substantially in the form attached hereto as ExhibitA, which form is hereby
approved and adopted as the form of such Bonds and of the certificate of authentication. Each issue
of Parity Bonds and the certificate of authentication therefor shall be in the form provided in the
Supplemental Indenture for such issue of Parity Bonds.
Until definitive Bonds or Parity Bonds, as applicable, shall be prepared, the District may cause
to be executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed,
printed, lithographed or engraved form and in fully registered form, subject to the same provisions,
limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except that
they may be in any denominations authorized by the District. Until exchanged for definitive Bonds or
Parity Bonds, as applicable, any temporary bond shall be entitled and subject to the same benefits and
provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary
bonds or Parity Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable,
without unnecessary delay and thereupon any temporary bond or Parity Bond may be surrendered to
the Trustee at its office, without expense to the Owner, in exchange for a definitive Bond or Parity
Bond of the same issue, maturity, interest rate and principal amount in any authorized denomination.
All temporary bonds or Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be
reissued.
Section 2.7.Execution and Authentication. The Bonds and Parity Bonds shall be signed
on behalfof the District by the manual or facsimile signature of the Mayor of the City and
countersigned by the manual or facsimile signature of the Clerk of the City, or any duly appointed
Deputy Clerk, in their capacity as officers of the District, and the seal of the City or the District (or a
facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and
attested by the signature of the Clerk of the City. In case any one or more of the officers who shall
have signed or sealed anyof the Bonds or Parity Bonds shall cease to be such officer before the Bonds
or Parity Bonds so signed and sealed have been authenticated and delivered by the Trustee (including
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new Bonds or Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer
and exchange of Bonds or Parity Bonds or lost, stolen, destroyed or mutilated Bonds or Parity Bonds),
such Bonds and Parity Bonds shall nevertheless be valid and may be authenticated and delivered as
herein provided, and may be issued as if the person who signed or sealed such Bonds or Parity Bonds
had not ceased to hold such office.
Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in
ExhibitA attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond
shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly
executed by the Trustee.
Section 2.8.Bond Register. The Trustee will keep or cause to be kept, at its office,
sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon
reasonable prior notice be open to inspection by the District during all regular business hours, and,
subject to the limitations set forth in Section2.9 below, upon presentation for such purpose, the Trustee
shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be
transferred on said Bond Register, Bonds and any Parity Bonds as herein provided.
The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name
appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all
purposes and the District and the Trustee shall not be affected by any notice to the contrary. The
District and the Trustee may rely on the address of the Owner as it appears in the Bond Register for
any and all purposes. It shall be the duty of the Owner to give written notice to the Trustee of any
change in the Owner’s address so that the Bond Register may be revised accordingly.
Section 2.9.Registration of Exchange or Transfer. Subject to the limitations set forth in
the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms,
be transferred upon the Bond Register by the person in whose name it is registered, in person or by his
or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the
office of the Trustee, accompanied by delivery of written instrument of transfer in a formacceptable
to the Trustee and duly executed by the Owner or his or her duly authorized attorney.
Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate
principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity
and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond
issued upon any exchange or transfer, but shall require the Owner requesting such exchange or transfer
to pay any tax or other governmental charge required to be paid with respect to such exchange or
transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or
exchange, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds
or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate
principal amount; provided that the Trustee shall not be required to register transfers or make
exchanges of: (i)Bonds or Parity Bonds for a period of 15 days next preceding any selection of the
Bonds or Parity Bonds to be redeemed; or (ii)any Bonds or Parity Bonds chosen for redemption.
Section 2.10.Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond
or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate
and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and
substitution for the Bond or Parity Bond so mutilated, but only upon surrender tothe Trustee of the
Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee
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shall be cancelled by the Trustee pursuant to Section10.1 hereof. If any Bond or Parity Bond shall be
lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee
and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the Trustee
shall be given, the District shall execute and the Trustee shall authenticate anddeliver a new Bond or
Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the Trustee shall
determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen. Any
Bond or Parity Bond issuedin lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed
or stolen shall be equally and proportionately entitled to the benefits hereof with all other Bonds and
Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or Parity Bond and
any replacement Bond or Parity Bond as being Outstanding for the purpose of determining the principal
amount of Bonds or Parity Bonds which may be executed, authenticated and delivered hereunder or
for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding hereunder, but
both the original and replacement Bond or Parity Bond shall be treated as one and the same.
Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity Bond
which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make
payment with respect to such Bonds or Parity Bonds.
Section 2.11.Validity of Bonds and Parity Bonds. The validity of the authorization and
issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any
proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in
part, of any contracts made by the District in connection therewith, and shall not be dependent upon
the completion of the financing of the Project or upon the performance by any Person of his obligation
with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same
are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of
their validity and of the regularity of their issuance.
Section 2.12.Book-Entry System. The Bonds shall be initially delivered in the form of a
separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds. Upon
initial delivery, the ownership of each such Bond shall be registered in the registration books kept by
the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in
Section2.14 hereof, all of the Outstanding Bonds shall be registered in the registration books kept by
the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be
issued as book-entry bonds registered in the name of the Nominee as provided herein, in which case
the references in Sections 2.12 through 2.15 to “Bonds” shall be applicable to such Parity Bonds.
With respect to Bonds registered in the registration books kept by the Trustee in the name of
the Nominee, the District and the Trustee shall have no responsibility or obligation to any such
Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds.
Without limiting the immediately preceding sentence, the District and the Trustee shall have no
responsibility or obligation with respect to: (i)the accuracy of the records of the Depository, the
Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii)the delivery to
any Participant or any other Person, other than an Owner as shown in the registration books kept by
the Trustee, of any notice with respect to the Bonds, including any notice of redemption; (iii)the
selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed
in the event that the Bonds are redeemed in part; or (iv)the payment to any Participant or any other
Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount
with respect to principal of, premium, if any, or interest due with respect to the Bonds. The District
and the Trustee may treat and consider the Person in whose name each Bond is registered in the
registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose
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of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond, for the purpose of registering
transfers with respect to such Bond and for all other purposes whatsoever. The Trustee shall pay all
principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective
Owner, as shown in the registration books kept by the Trustee, or their respective attorneys duly
authorizedin writing, and all such payments shall be valid and effective to satisfy and discharge fully
the District’s obligations with respect to payment of the principal, premium, if any, and interest due on
the Bonds to the extent of the sum or sums so paid. NoPerson other than an Owner, as shown in the
registration books kept by the Trustee, shall receive a Bond evidencing the obligation of the District to
make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery
by the Depository to the Trustee and the District of written notice to the effect that the Depository has
determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein
with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of
the Depository.
Section 2.13.Representation Letter. In order to qualify the Bonds and any Parity Bonds
which the District elects to register in the name of the Nominee for the Depository’s book-entry system,
an AuthorizedRepresentative of the Districtis hereby authorized to execute from time to time and
deliver to such Depository the Representation Letter. The execution and delivery of the Representation
Letter shall not in any way limit the provisions of Section2.12 or in any other way impose upon the
District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds
other than the Owners, as shown on the registration books kept by the Trustee. The Districtagrees to
take all action necessary to continuously comply with all representations made by it in the
Representation Letter. In addition to the execution and delivery of the Representation Letter, the
Authorized Representatives of the District are hereby authorized to take any other actions, not
inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
Section 2.14.Transfers Outside Book-Entry System. In the event that: (i)the Depository
determines not to continue to act as securities depository for the Bonds; or (ii)the District determines
that the Depository shall no longer so act, then the District will discontinue the book-entry system with
the Depository. If the District fails to identify another qualified securities depository to replace the
Depository then the Bonds so designated shall no longer be restricted to being registered in the
registration books kept by the Trustee in the name of the Nominee, but shall be registered in whatever
name or names Persons transferring or exchanging Bonds shall designate, in accordance with the
provisions of Section2.9 hereof.
Section 2.15.Payments to the Nominee. Notwithstanding any other provisions of this
Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments
with respect to principal, premium, if any, and interest due with respect to such Bond and all notices
with respect to such Bond shall be made and given, respectively, as provided in the Representation
Letter or as otherwise instructed by the Depository.
Section 2.16.Initial Depository and Nominee. The initial Depository under this Indenture
shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede&
Co., as Nominee of The Depository Trust Company, New York, New York.
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ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1.Creation of Funds; Application of Proceeds.
(a)There arehereby created and established and shall be maintained by the Trustee the
following funds and accounts:
(1)The City of Lake Elsinore Community Facilities District No.2006-1
(Summerly) Improvement Area HHSpecial Tax Fund (the “Special Tax Fund”) (in which there shall
be established and created an Interest Account, a Principal Account, a Redemption Account, a Reserve
Account, and an Administrative Expense Account).
(2)The City of Lake Elsinore Community Facilities District No.2006-1
(Summerly) Improvement Area HHRebate Fund (the “Rebate Fund”) (in which there shall be
established a Rebate Account and an Alternate Penalty Account).
(3)The City of Lake Elsinore Community Facilities District No.2006-1
(Summerly) Improvement Area HHAcquisition and Construction Fund (the “Acquisition and
Construction Fund”) (in which there shall be established a Costs of Issuance Accountanda City
Facilities Account).
(4)The City of Lake Elsinore Community Facilities District No.2006-1
(Summerly) Improvement Area HHSurplus Fund (the “Surplus Fund”).
The amounts on deposit in the foregoing funds, accounts and subaccounts shall be held by the
Trustee. The Trustee shall investand disburse the amounts in such funds, accounts and subaccounts
in accordance with the provisions of this ArticleIIIand shall disburse investment earnings thereon in
accordance with the provisions of Section3.10 hereof.
In connection with the issuanceof any Parity Bonds, which may be issued only for the purpose
of refunding the Bonds as described in Section 9.2, the Trustee, at the direction of an Authorized
Representative of the District, may create new funds, accounts or subaccounts, or may create additional
accounts and subaccounts within any of the foregoing funds and accounts for the purpose of separately
accounting for the proceeds of the Bonds and any Parity Bonds.
(b)The proceeds of the sale of the Bonds shall be received by the Trustee on behalf of the
District and deposited and transferred as follows:
(1)$__________shall be transferred to the Costs of Issuance Account of the
Acquisition and Construction Fund to pay the Costs of Issuance of the Bonds;
(2)$__________shall be transferred to the Reserve Account of the Special Tax
Fund to fund the Reserve Requirement;
(3)$__________shall be transferred to the Interest Account to pay a portion of
the interest on the Bonds due on March1, 2020;
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(4)$__________ shall be transferred to the City Facilities Account of the
Acquisition and Construction Fund; and
(5)$__________shall be transferred to the Water DistrictFacilities Account of
the Acquisition and Construction Fund.
The Trustee may, in its discretion, establish temporary funds or accounts in its books and
records to facilitate such transfers.
Section 3.2.Deposits to and Disbursements from Special Tax Fund.
(a)Except for Prepayments, which shall be deposited to the Redemption Account of the
Special Tax Fund, the Trustee shall, on each date on which the Special Taxes are received from the
District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The
Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the
amounts set forth in the following Sections, in the following order of priority, to:
(1)the Administrative Expense Account of the Special Tax Fund up to the
Administrative Expenses Cap;
(2)the Interest Account of the Special Tax Fund;
(3)the Principal Account of the Special Tax Fund;
(4)the Redemption Account of the Special Tax Fund;
(5)the Reserve Account of the Special Tax Fund;
(6)the Administrative Expense Account of the Special Tax Fund to the extent that
Administrative Expenses exceed or are expected to exceed the Administrative Expense Cap;
(7)the Rebate Fund; and
(8)the Surplus Fund.
(b)At maturity of all of the Bonds and Parity Bonds and, after all principal and interest
then due on the Bonds and Parity Bonds then Outstanding have been paid or provided for and any
amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts
therein may be used by the District for any lawful purpose.
Section 3.3.Administrative Expense Account of the Special Tax Fund. The Trustee
shall transfer from the Special Tax Fund and deposit in the Administrative Expense Account of the
Special Tax Fund from time to time amounts necessary to make timely payment of Administrative
Expenses as set forth in a Certificate of an Authorized Representative of the District; provided,
however, that, except as set forth in the following sentence, the total amount transferred with respect
to a Bond Year shall not exceed the Administrative Expenses Cap until such time as there has been
deposited to the Interest Account and the Principal Account an amount, together with any amounts
already on deposit therein, that is sufficient to pay the interest and principal on all Bonds and Parity
Bonds due in such Bond Year and to restore the Reserve Account to the Reserve Requirement.
Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be
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transferred to the Administrative Expense Account to the extent necessary to collect delinquent Special
Taxes. Moneys in the Administrative Expense Account of the Special Tax Fund may be invested in
any Authorized Investments as directed in writing by an Authorized Representative of the District and
shall be disbursed as directed in a Certificate of an Authorized Representative.
Section 3.4.Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal
due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Account
of the Special Tax Fund, respectively.
For the purpose of assuring that the payment of principal of and interest on the Bonds and any
Parity Bonds will be made when due, after making the transfer required by Section3.3, at least one
Business Day prior to each March1 and September1, the Trustee shall make the following transfers
fromthe Special Tax Fund first to the Interest Account and then to the Principal Account; provided,
however, that to the extent that deposits have been made in the Interest Account or the Principal
Account from the proceeds of the sale of an issue of the Bonds or any Parity Bonds, or otherwise, the
transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the
Special Tax Fund (exclusive of the Reserve Accountand the Administrative Expense Account) are
inadequate to make the foregoing transfers, then any deficiency shall be made up by transfers from the
Reserve Account:
(a)To the Interest Account, an amount such that the balance in the Interest Account one
Business Day prior to each Interest Payment Date shall be equal to the installment of interest due on
the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on
a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account shall be used
for the payment of interest on the Bonds and any Parity Bonds as the same become due.
(b)To the Principal Account, an amount such that the balance in the Principal Account
one Business Day prior to September1 of each year, commencing September1, 2020, shall equal the
principal payment due on the Bonds and any Parity Bonds maturing on such September1 and any
principal payment due on a previous September1 which remains unpaid. Moneys in the Principal
Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same
become due at maturity.
Section 3.5.Redemption Account of the Special Tax Fund.
(a)With respect to each September1 on which a Sinking Fund Payment is due, after the
deposits have been made to the Administrative ExpenseAccount, the Interest Account and the
Principal Account of the Special Tax Fund as required by Sections3.3 and 3.4 hereof, the Trustee shall
next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the
amount needed to make the balance in the Redemption Account one Business Day prior to each
September1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any
Outstanding Bonds and Parity Bonds on such September1; provided, however, that, if amounts in the
Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall be made
up by an immediate transfer from the Reserve Account, if funded, pursuant to Section3.6 below.
Moneys so deposited in the Redemption Account shall be used and applied by the Trustee to call and
redeem Term Bonds in accordance with the Sinking Fund Payment schedules set forth in Section4.1(b)
hereof, and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the
Supplemental Indenture for such Parity Bonds.
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(b)After making the deposits to the Administrative Expense Account, the Interest Account
and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4 above and to the
Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of this Section,
and in accordance with the District’s election to call Bonds for optional redemption as set forth in
Section4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any Supplemental
Indenture for Parity Bonds, the Trustee shall transfer from the Special Tax Fund and deposit in the
Redemption Account moneys available for the purpose and sufficient to pay the principal and the
premiums, if any, payable on the Bonds or Parity Bonds called for optional redemption; provided,
however, that amounts in the Special Tax Fund (other than the Administrative Expense Account
therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following
such redemption the amount in the Reserve Account will equal the Reserve Requirement.
(c)Prepayments deposited to the Redemption Account shall be applied on the redemption
date established pursuant to Section4.1(c) hereof to the payment of the principal of, premium, if any,
and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments.
(d)Moneys set aside in the Redemption Account shall be used solely for the purpose of
redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to the payment
of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation
and surrender of such Bonds or Parity Bonds, and, in the case of an optional redemption or a special
mandatory redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu
or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be
used to purchase Outstanding Bonds or Parity Bonds in the manner hereinafter provided. Purchases
of Outstanding Bonds or Parity Bonds may be made by the District at public or private sale as and
when and at such prices as the District may in its discretion determine but only at prices (including
brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set
aside for an optional redemption or a special mandatory redemption, the premium applicable at the
next following call date according to the premium schedule established pursuant to Section4.1(a) or
4.1(c) hereof, as applicable, or in the case of Parity Bonds the premium established in any Supplemental
Indenture. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid
from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest
on the next following Interest Payment Date.
Section 3.6.Reserve Account of the Special Tax Fund. There shall be maintained in the
Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The 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, and interest on the Bonds and any Parity Bonds when
due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax
Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are
insufficient to make a Sinking Fund Payment when due and for the purpose of making any required
transfer to the Rebate Fund pursuant to Section3.7 hereof upon written direction from the District. If
the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special
Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any
Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the
Rebate Fund when required, the Trustee shall withdraw from the Reserve Account for deposit in the
Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the
Rebate Fund, as applicable, moneys necessary for such purposes.
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(b)Whenever moneys are withdrawn from the Reserve Account, after making the required
transfers referred to in Sections3.3, 3.4 and 3.5 above, the Trustee shall transfer to the Reserve Account
from available moneys in the Special Tax Fund, or from any other legally available funds which the
District elects to apply to such purpose, the amount neededto restore the amount of such Reserve
Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed available for
transfer to the Reserve Account only if the Trustee determines that such amounts will not be needed to
make the deposits required to be made to the Administrative Expense Account, the Interest Account,
the Principal Account or the Redemption Account of the Special Tax Fund on or before the next
September1. If amounts in the Special Tax Fund together with any other amounts transferred to
replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve
Requirement, then the District shall include the amount necessary to restore the Reserve Account to
the Reserve Requirement in the next annual Special Tax levy to the extent of the maximum permitted
Special Tax rates.
(c)In connection with a redemption of Bonds pursuant to Section4.1(a) or 4.1(c) or Parity
Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Bonds or Parity
Bonds in accordance with Section9.1 hereof, amounts in the Reserve Account may be applied to such
redemption or partial defeasance so long as the amount on deposit in the Reserve Account following
such redemption or partial defeasance equals the Reserve Requirement. The District shall set forth in
a Certificate of an Authorized Representative the amount in the Reserve Account to be transferred to
the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially
defease Bondsor Parity Bonds, and the Trustee shall make such transfer on the applicable redemption
or defeasance date, subject to the limitation in the preceding sentence.
(d)To the extent that the Reserve Account is at the Reserve Requirement as of the first
day of the final Bond Year for the Bonds or an issue of Parity Bonds, amounts in the Reserve Account
may be applied to pay the principal of and interest due on the Bonds and Parity Bonds, as applicable,
in the final Bond Year for such issue. Moneys in the Reserve Account in excess of the Reserve
Requirement not transferred in accordance with the preceding provisions of this Section shall be
withdrawn from the Reserve Account on the Business Day before each March1 and September1 and
shall be transferred to theAcquisition and Construction Fund, as directed by an Authorized
Representative of the District,until all amounts have been disbursed from the Acquisition and
Construction Fund (or such fund is closed) and thereafter to the Interest Account of the SpecialTax
Fund.
Section 3.7.Rebate Fund.
(a)The Trusteeshall establish and maintain a fund separate from any other fund
established and maintained hereunder designated as the Rebate Fund and shall establish a separate
Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate
Account or the Alternate Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for
payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate
PenaltyAccount shall be established for the Bonds and each issue of Parity Bonds the interest on which
is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate
Fund with respect to the Bonds or an issue of Parity Bondsshall be governed by this Section3.7 and
the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the
exclusion from gross income for federal income tax purposes of interest payments on the Bonds and
Parity Bonds will not be adversely affected if such requirements are not satisfied.
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(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,
theDistrict shall calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds
and each issue of Parity Bonds to which this Section3.7 is applicable, in accordance with
Section148(f)(2) of the Code and Section1.148-3 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 Section148(f)(4)(B) and (C)
of the Code), and taking into account whether the election pursuant to Section148(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 Section1.148-1(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 for each issue, upon
the written direction of an Authorized Representative of the District, an amount shall be deposited to
each subaccount of the Rebate Account by the Trustee from any funds so designated by the District 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 clause (i)of this
subsection(a)(1) with respect to the Bonds and each issue of Parity Bonds to which this Section3.7 is
applicable. 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 to the credit of the applicable subaccount of the Rebate Account exceeds the amount
required to be on deposit therein, upon written instructions from an Authorized Representative of the
District, the Trustee shall withdraw the excess from the appropriate subaccount of the Rebate Account
and then credit the excess to the Special Tax Fund.
(iii)Payment to the Treasury. The Trustee shall pay, as directed in writing
by an Authorized Representative of the District, to the United States Treasury, out of amounts in each
subaccount of the Rebate Account:
(X)not later than 60 days after the end of: (A)the fifth Bond Year
for the Bonds and each issue of Parity Bonds to which this Section3.7 is applicable; 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 Bonds and each issue of Parity Bonds, as applicable;
and
(Y)not later than 60 days after the payment or redemption of all of
the Bonds or an issue of Parity Bonds, as applicable, 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 Section148(f) of the Code.
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 calculateor 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
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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.
(2)Alternate Penalty Account.
(i)Six-Month Computation. If the 1½% Penalty has been elected for the
Bonds or an issue of Parity Bonds, within 85 days of each particular Six-Month Period, the District
shall determine or cause to be determined whether the 1½% Penalty is payable (and the amount of such
penalty) as of the close of the applicable Six-Month Period. The District shall obtain expert advice in
making such determinations.
(ii)Six-Month Transfer. Within 85 days of the close of each Six-Month
Period, the Trustee, at the written direction of an Authorized Representative of the District, shall
deposit an amount in the appropriate subaccounts of the Alternate Penalty Account from any source of
funds held by the Trustee pursuant to this Indenture and designated by the District in such written
directions or provided to it by the District, if and to the extent required, so that the balance in each
subaccount of the Alternate Penalty Account equals the amount of 1½% Penalty due and payable to
the United States Treasurydetermined as provided in subsection (a)(2)(i) above. In the event that
immediately following any transfer provided for in 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 a
subaccount of the Alternate Penalty Account exceeds the amount required to be on deposit therein to
make the payments required by subsection (iii) below, the Trustee, at the written direction of an
Authorized Representative of the District, may withdraw the excess from the applicable subaccount of
the Alternate Penalty Account and credit the excess to the Special Tax Fund.
(iii)Payment to the Treasury. The Trustee shall pay, as directed in writing
by an Authorized Representative of the District, to the United States Treasury, out of amounts in a
subaccount of the Alternate Penalty Account, not later than 90 days after the close of each Six-Month
Period the 1½% Penalty, if applicable and payable, computed with respect to the Bonds and any issue
of Parity Bonds in accordance with Section148(f)(4) of the Code. In the event that, prior to the time
of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount
in such subaccount is not sufficient to make such payment when such payment is due, the District shall
calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal
to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the
Trustee pursuant to this Indenture and designated by the District in such written directions prior to the
time such payment is due. Each payment required to be made pursuant to this subsection(a)(2) shall
be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such
payment is due, and shall be accompanied by Internal Revenue Service Form8038-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 with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue
and after making the payments described in subsections (a)(1)(iii) or (a)(2)(iii) (whichever is
applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any
manner by the District.
(c)Survival of Defeasance and Final Payment. Notwithstanding anything in this Section
or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall
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survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which an
Account has been created in the Rebate Fund.
(d)Amendment Without Consent of Owners. This Section3.7 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
Bonds and any issue of Parity Bonds issued on a tax-exempt basis.
(e)Trustee. The Trustee shall have no responsibility to monitor or calculate any amounts
payable to the U.S. Treasury pursuant to this Section and shall be deemed constructively to have
complied with its obligations hereunder if it follows the written instructions of the District given
pursuant to this Section.
Section 3.8.Surplus Fund. After making the transfers required by Sections3.3, 3.4, 3.5,
3.6 and 3.7 hereof, as soon as practicable after each September1, the Trustee shall transfer all
remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has
received a Certificate of an Authorized Representative directing that certain amounts be retained in the
Special Tax Fund because the District has included such amounts as being available in the Special Tax
Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to
Section5.2(b) hereof. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the
direction of an Authorized Representative of the District: (i)to the Interest Account, the Principal
Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking
Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the
event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are
insufficient therefor; (ii)to the Reserve Account in order to replenish the Reserve Account to the
Reserve Requirement; (iii)to the Administrative Expense Account of the Special Tax Fund to pay
Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense
Account of the Special Tax Fund are insufficient to pay Administrative Expenses; (iv)to the
Acquisition and Construction Fund to pay Project Costs; or (v)after all Project Costs have been paid,
to the District, for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity
Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably
expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding
Bonds or Parity Bonds, the District shall notify the Trustee in a Certificate of an Authorized
Representative and the Trustee shall segregate such amount into a separate subaccount and the moneys
on deposit in such subaccountof the Surplus Fund shall be invested at the written direction of the
District in Authorized Investments the interest on which is excludable from gross income under
Section103 of the Code (other than bonds the interest on which is a tax preference item for purposes
of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments
at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are
to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely
affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any
Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Suchamounts
shall be disbursed as directed by an Authorized Representative.
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Section 3.9.Acquisition and Construction Fund.
(a)The moneys in the Costs of Issuance Account shall be disbursed by the Trustee
pursuant to a Certificate of an Authorized Representative of the District, and any balance remaining
therein after 180 daysshall be transferred by the Trustee to an Account within theAcquisition and
Construction Fundas directed in writing by an Authorized Representative of the District. Following
such transfer to the Acquisition and Construction Fund, the Costs of Issuance Account shall be closed.
(b)The moneys in the Acquisition and Construction Fund and the Accounts therein (other
than the Costs of Issuance Account) shall be applied exclusively to pay the Project Costs. Amounts
for Project Costs shall be disbursed by the Trustee from the Acquisition and Construction Fundor the
Accounts therein (other than the Costs of Issuance Account), as specified in a Request for
Disbursement of Project Costs, substantially in the formof ExhibitB-1 attached hereto. A properly
executed Request for Disbursement of Project Costs must be submitted in connection with each
requested disbursement and the Trustee may rely thereon without investigating the accuracy thereof.
Amounts in an Account of the Acquisition and Construction Fund may be transferred to another
Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District.
(c)Upon receipt of a Certificate of an Authorized Representative of the Districtstating
that all or a specified portion of the amount remaining in the Acquisition and Construction Fundor the
Accounts therein (other than the Costs of Issuance Account) is no longer needed to pay Project Costs,
the Trustee shall: (i) transfer all or such specified portion, as applicable, of the moneys remaining on
deposit in the Acquisition and Construction Fundor the Accounts therein (other than the Costs of
Issuance Account) to the Interest Account, the Principal Account or Redemption Account of the
Special Tax Fund, to the Costs of Issuance Account or to the Surplus Fund, as directed in such
certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there
shall have been delivered to the Trustee with such certificate an opinion of Bond Counsel to the effect
that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for
federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a
tax-exempt basis for federal income tax purposes; and (ii) thereafter, close the Acquisition and
Construction Fund.
Section 3.10.Investments. Moneys held in any of the Funds, Accounts and Subaccounts
under this Indenture shall be invested at the written direction of the District upon at least two (2)
Business Days’ notice in accordance with the limitations set forth below only in Authorized
Investments which shall be deemed at all times to be a part of such Funds, Accounts and Subaccounts.
Any loss resulting from such Authorized Investments shall be credited or charged to the Fund, Account
or Subaccount from which such investment was made, and any investment earnings on a Fund, Account
or Subaccount shall be applied as follows: (i)investment earnings on all amounts deposited in the
Acquisition and Construction Fund (including the Accountstherein), the Special Tax Fund, the Surplus
Fund and the Rebate Fund and each Account therein (other than the Reserve Account of the Special
Tax Fund) shall be deposited in those respective Funds, Accounts and Subaccounts; and (ii)investment
earnings on all amounts deposited in the Reserve Account shall be deposited therein to be applied as
set forth in Section3.6. Moneys in the Funds, Accounts and Subaccounts held under this Indenture
may be invested by the Trustee as directed in writing by the District, from time to time, in Authorized
Investments subject to the following restrictions(provided that the Trustee is not required to verify
compliance with such restrictions and may rely on the District’s written instructions as evidence of
such compliance):
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(a)Moneys in the Acquisition and Construction Fundand the Accounts thereinshall be
invested in Authorized Investments which will by their terms mature, or in the case of an Investment
Agreement are available without penalty, as close as practicable to the date the District estimates the
moneys represented by the particular investment will be needed for withdrawal from the Acquisition
and Construction Fundor the Accounts therein. Notwithstanding anything herein to the contrary,
amounts in the Acquisition and Construction Fundor the Accounts thereinthree years after the
Delivery Date for the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt
basis which are remaining on deposit thereinon the date which is three years following the date of
issuance of such issue of Parity Bonds shall be invested by the District only in Authorized Investments
the interest on which is excluded from gross income under Section103 of the Code (other than bonds
the interest on which is a tax preference item for purposes of computing the alternative minimum tax
of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the
issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the opinion of Bond
Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which
were issued on a tax-exempt basis for federal income tax purposes from being included in gross income
for federal income tax purposes.
(b)Moneys in the Interest Account, the Principal Account, and the Redemption Account
of the Special Tax Fund shall be invested only in Authorized Investments which will by their terms
mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on
such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and
any Parity Bonds as the same become due.
(c)Moneys in the Reserve Account of the Special Tax Fund may be invested only in
Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the
definition thereof) which, taken together, have a weighted average maturity not in excess of five years;
provided that such amounts may be invested in an Investment Agreement to the later of the final
maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at any time,
without penalty, for application in accordance with Section3.6 hereof; and provided that no such
Authorized Investment of amounts in the Reserve Account allocable to the Bonds or an issue of Parity
Bonds shall mature later than the respective final maturity date of the Bonds or the issue of Parity
Bonds, as applicable.
(d)Moneys in theRebate Fund shall be invested only in Authorized Investments of the
type described in clause (1) of the definition thereof which by their terms will mature, as nearly as
practicable, on the dates such amounts are needed to be paid to the United States Government pursuant
to Section3.7 hereof or in Authorized Investments of the type described in clause (2)(e) of the
definition thereof.
(e)In the absence of written investment directions from the District, the Trustee shall hold
the funds uninvested.
The Trustee shall sell, or present for redemption, any Authorized Investment whenever it may
be necessary to do so in order to provide moneys to meet any payment or transfer to such funds and
accounts or from such funds and accounts, employing, in the case of a sale, any commercially
reasonable method of effecting the same. Notwithstanding anything herein to the contrary, the Trustee
shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with
the provisions of this Indenture. Any Authorized Investments that are registrable securities shall be
registered in the name of the Trustee.
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The Trustee may act as principal or agent in the making or disposing of any investment and
shall be entitled to its customary fee for making such investment. For investment purposes, the Trustee
may commingle the funds and accounts established hereunder, but shall account for each separately.
The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section,
to deal with itself (in its individual capacity) or which any one or more of its affiliates, whether it or
such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its
own account.
The District acknowledges that, to the extent that regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the District the right to receive brokerage
confirmations of security transactions as they occur, the District specifically waives receipt of such
confirmations to the extent permitted by law. The Trustee will furnish the District periodic cash
transaction statements which include detail for all investment transactions made by the Trustee
hereunder.
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1.Redemption of Bonds.
(a)Optional Redemption. The Bonds may be redeemed at the option of the District from
any source of funds on any Interest Payment Dateon andafter September 1,20__,in whole or in part,
from such maturities as are selected by the District and by lot within a maturity, 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 Date Redemption Price
September 1, 20__and March 1, 20__103%
September 1, 20__and March 1, 20__102
September 1, 20__and March 1, 20__101
September 1, 20__and any Interest Payment Date thereafter 100
In the event thatthe District elects to redeem Bonds as provided above, the District shall give
written notice to the Trustee of its election to so redeem, the redemption date and the principal amount
of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least 30but
no more than 60days prior to the redemption date, or by such later date as is acceptable to the Trustee.
(b)Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__(the
“20__Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payment
that hasbeen deposited into the Redemption Account established hereunder, on September1, 20__in
accordance with the schedule of Sinking Fund Paymentset forth below. The 20__Term Bonds so
called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption
price for each redeemed 20__Term Bond equal to the principal amount thereof, plus accrued interest
to the redemption date, without premium, as follows:
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Term Bonds Maturing September1, 20__
Sinking Fund Redemption Date
(September1)Sinking Fund Payments
$
*
_____________
* Maturity.
The Bonds maturing on September 1, 20__ (the “20__Term Bonds”) shall be called before
maturity and redeemed, from the Sinking Fund Paymentthat hasbeen deposited into the Redemption
Account established hereunder, on September1, 20__in accordance with the schedule of Sinking Fund
Payments set forth below. The 20__Term Bonds so called for redemption shall be selected by the
Trustee by lot and shall be redeemed at a redemption price for each redeemed20__ Term Bond equal
to the principal amount thereof, plus accrued interest to the redemption date, without premium, as
follows:
Term Bonds Maturing September1, 20__
Sinking Fund Redemption Date
(September1)Sinking Fund Payments
$
*
_____________
* Maturity.
The Bonds maturing on September 1, 20__(the “20__Term Bonds”) shall be called before
maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption
Account established hereunder, on September1, 20__, and on each September1 thereafter prior to
maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__Term
Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a
redemption price for each redeemed 20__Term Bond equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September1, 20__
Sinking Fund Redemption Date
(September1)Sinking Fund Payments
$
*
_____________
* Maturity.
If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the
sinking fund redemption dates specified above, the District shall notify the Trustee at least 45 days
prior to the redemption date as to the principal amount purchased, and the amount purchased shall be
credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to
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the extent of the full principal amount of the purchase. All Bonds purchased pursuant to this subsection
shall be cancelled pursuant to Section10.1 hereof.
In the event of a partial optional redemption or special mandatory redemption of the Term
Bonds, each of the remaining Sinking Fund Payments for such Term Bonds shall be reduced, as nearly
as practicable, on a pro rata basis.
(c)Special Mandatory Redemption. The Bonds are subject to special mandatory
redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on
any Interest Payment Dateon and after March 1, 2020, and shall be redeemed by the Trustee, from
Prepayments deposited to the Redemption Account pursuant to Section3.2, plus amounts transferred
from the Reserve Account pursuant to Section3.6(c), at the following redemption prices, expressed as
a percentage of the principalamount to be redeemed, together with accrued interest to the redemption
date:
Redemption Date Redemption Price
Any Interest Payment Date from March 1, 2020through March 1, 20__103%
September 1, 20__and March 1, 20__102
September 1, 20__and March 1, 20__101
September 1, 20__and any Interest Payment Date thereafter 100
(d)The redemption provisions for Parity Bonds shall be set forth in a Supplemental
Indenture.
Section 4.2.Selection of Bonds and Parity Bonds for Redemption. If less than all of the
Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond of a
denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an
integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the
Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds or
Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such
Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity
Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity
Bonds. The Trustee shall promptly notify the District in writing of the Bonds or Parity Bonds, or
portions thereof, selected for redemption.
Section 4.3.Notice of Redemption. When Bonds or Parity Bonds are due for redemption
under Section4.1 above or under another redemption provision set forth in a Supplemental Indenture
relating to any Parity Bonds, the Trustee shall give notice, in the name of the District, of the redemption
of such Bonds or Parity Bonds. Such notice of redemption shall: (i)specify the CUSIP numbers (if
any), the bond numbers and the maturity date or dates of the Bonds or Parity Bonds selected for
redemption,except that where all of the Bonds or all of an issue of Parity Bonds are subject to
redemption, or all of the Bonds or Parity Bonds of one maturity are to be redeemed, the bond numbers
of such issue need not be specified; (ii)state the date fixed for redemption and surrender of the Bonds
or Parity Bonds to be redeemed; (iii)state the redemption price; (iv)state the place or places where the
Bonds or Parity Bonds are to be redeemed; (v)in the case of Bonds or Parity Bonds to be redeemed
only in part, state the portion of such Bond or Parity Bond which is to be redeemed; (vi)state the date
of issue of the Bonds or Parity Bonds as originally issued; (vii)state the rate of interest borne by each
Bond or Parity Bond being redeemed; and (viii)state any other descriptive information needed to
identify accurately the Bonds or Parity Bonds being redeemed as shall be specified by the Trustee.
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Such notice shall further state that on the date fixed for redemption, there shall become due and payable
on each Bond, Parity Bond or portion thereof called for redemption, the principal thereof, together with
any premium, and interest accrued to the redemption date, and that from and after such date, interest
thereon shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the
redemption date, the Trustee shall mail a copy of such notice of redemption, by first class mail, postage
prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the
original purchaser of any Bonds or Parity Bonds; provided, however, so long as the Bonds and Parity
Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies
with the requirements of the Depository. The actual receipt by the Owner of any Bond or Parity Bond
of notice of such redemption shall not be a condition precedent to redemption, and neither the failure
to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption
of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A certificate by the
Trustee that notice of such redemption has been given as herein provided shall be conclusive as against
all parties and the Owner shall not be entitled to show that he or she failed to receive notice of such
redemption.
In addition to the foregoing notice, further notice shall be given by the Trustee as set out below,
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 if notice thereof is given as above
prescribed.
Each further notice of redemption shall be sent not later than the date that notice of redemption
is givento the Owners pursuant to the first paragraph of this Section by first class mail or facsimile to
the Depository and to any other registered securities depositories then in the business of holding
substantial amounts of obligations of types comprising the Bonds and ParityBonds as determined by
the Trustee and to one or more of the national information services that the Trustee determines are in
the business of disseminating notice of redemption of obligations such as the Bonds and Parity Bonds.
Upon the payment of the redemption price of any Bonds and Parity 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 and Parity Bonds being redeemed with
the proceeds of such check or other transfer.
With respect to any notice of optional redemption of Bondsor Parity Bonds, such notice may
state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date
fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest
on such Bonds or Parity Bonds to be redeemed and that, if the Districtdetermines that such moneys
will not be received on the redemption date, said notice shall be of no force and effect and the Trustee
shall not be required to redeem such Bondsor Parity Bonds. In the event that such notice of redemption
contains such a condition and the District determines that such moneys will not be received, the
redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in
the manner in which the notice of redemption was given, that such moneys were not so received.
Section 4.4.Partial Redemption of Bonds or Parity Bonds. Upon surrender of any Bond
or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall authenticate
and deliver to the Owner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or
Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed
portion of the Bonds surrendered, with the same interest rate and the same maturity or, in the case of
surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations.
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Section 4.5.Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section4.3 hereof, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date
fixed for such redemption:
(a)the Bonds and Parity Bonds, or portions thereof, designated for redemption shall, on
the date fixed for redemption, become due and payable at the redemption price thereof as provided in
this Indenture or in any Supplemental Indenture with respect to any Parity Bonds, anything in this
Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding;
(b)upon presentation and surrender thereof at the office of the Trustee, the redemption
price of such Bonds and Parity Bonds shall be paid to the Owners thereof;
(c)as of the redemption date the Bonds or the Parity Bonds, or portions thereof so
designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity
Bonds, or portions thereof, shall ceaseto bear further interest; and
(d)as of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds or
portions thereof so designated for redemption shall be entitled to any of the benefits of this Indenture
or any Supplemental Indenture, or to any other rights, except with respect to payment of the redemption
price and interest accrued to the redemption date from the amounts so made available.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1.Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
Section 5.2.Covenants. So long as any of the Bonds or Parity Bonds issued hereunder are
Outstanding and unpaid, the District makes the following covenants with the Owners under the
provisions of the Act and this Indenture (to be performed by the District or its proper officers, agents
or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and
tend to make them more marketable; provided, however,that said covenants do not require the District
to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special
Tax Fund:
(a)Punctual Payment; Against Encumbrances. The District covenants that it will receive
all Special Taxes in trust for the Owners and will deposit all Special Taxes with the Trustee
immediately upon their apportionment to the District, and the District shall have no beneficial right or
interest in the amounts so deposited except as provided by this Indenture. All such Special Taxes shall
be disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be
accounted for separately and apart from all other money, funds, accounts or other resources of the
District.
The District covenants that it will duly and punctually pay or cause to be paid the principal of
and interest on every Bond and Parity Bond issued hereunder, together with the premium, if any,
thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in
accordance with this Indenture to the extent that Net Taxes and other amounts pledged hereunder are
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available therefor, and that the payments into the Funds and Accounts created hereunder will be made,
all in strict conformitywith the terms of the Bonds, any Parity Bonds, and this Indenture, and that it
will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture
and all Supplemental Indentures and of the Bonds and any Parity Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge upon any of
the Net Taxes except as provided in this Indenture, and will not issue any obligation or security having
a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other than Parity Bonds.
Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from
a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds
and the Parity Bonds, subject to compliance with the District’s bonded indebtedness limit.
(b)Levy of Special Tax. Beginning in Fiscal Year 2020-21and so long as any Bonds or
Parity Bonds issued under this Indenture are Outstanding, the Districtcovenants to levy the Special
Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay:
(1)the principal of and interest on the Bonds and any Parity Bonds when due; (2)the Administrative
Expenses; and (3)any amounts required to replenish the Reserve Account of the Special Tax Fund to
the Reserve Requirement. The District further covenants that it will take no actions that would
discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the
Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
(c)Commence Foreclosure Proceedings. The District covenants for the benefit of the
Owners of the Bonds and any Parity Bonds that it will: (i)commence judicialforeclosure proceedings
against parcels with delinquent Special Taxes in excess of $5,000 by the October1 following the close
of each Fiscal Year in which such Special Taxes were due; and (ii)commence judicial foreclosure
proceedings against all parcelswith delinquent Special Taxes by the October1 following the close of
each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total
Special Tax levied; and (iii)diligently pursue such foreclosure proceedings until the delinquent Special
Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure
proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve
Requirement. The District may, but shall not be obligated to, advance funds from any source of legally
available funds in order to maintain the Reserve Account. The District may treat any delinquent
Special Tax sold to an independent third-party or to the City for at least 100%of the delinquent amount
as having been paid. Proceeds of any such sale up to 100% of the delinquent amount will be deposited
in the Special Tax Fund.
The District covenants that it will deposit the net proceeds of any foreclosure in the Special
Tax Fundand will apply such proceeds remaining after the payment of Administrative Expenses to
make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the
amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent
installments of principal or interest due on the Bonds and any Parity Bonds.
(d)Payment of Claims. The District will pay and discharge any and all lawful claims for
labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or
other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which
might impair the security of the Bonds or any Parity Bonds then Outstanding; provided, however, that
nothing herein contained shall require the District to make any such payments so long as the District
in good faith shall contest the validity of any such claims.
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(e)Books and Accounts. The District will keep proper books of records and accounts,
separate from all other records and accounts of the District, in which complete and correct entries shall
be made of all transactions relating to the Project, the levy of the Special Tax and the deposits to the
Special Tax Fund. Such books of records and accounts shall at all times during business hours be
subject to the inspection of the Trustee or of the Owners or the Owners of any issue of Parity Bonds
then Outstanding or their representatives authorized in writing.
(f)Federal Tax Covenants. Notwithstanding any other provision of this Indenture, absent
an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds and any
Parity Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely
affected for federal income tax purposes, the District covenants to comply with all applicable
requirements of the Code necessary to preserve such exclusion from gross income and specifically
covenants, without limiting the generality of the foregoing, as follows:
(1)Private Activity. The District will take no action or refrain from taking any
action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other monies or
property which would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal
income tax purposesto be “private activity bonds” within the meaning of Section141 of the Code.
(2)Arbitrage. The District will make no use of the proceeds of the Bonds or any
Parity Bonds or of any other amounts or property, regardless of the source, or take any action or refrain
from taking any action which will cause the Bonds or any Parity Bonds issued on a tax-exempt basis
for federal income tax purposes to be “arbitrage bonds” within the meaning of Section148 of the Code.
(3)Federal Guaranty. The District will make no use of the proceeds of the Bonds
or any Parity Bonds or take or omit to take any action that would cause the Bonds or any Parity Bonds
issued on a tax-exempt basis for federal income tax purposes to be “federally guaranteed” within the
meaning of Section149(b) of the Code.
(4)Information Reporting. The District will take or cause to be taken all necessary
action to comply with the informational reporting requirement of Section149(e) of the Code.
(5)Hedge Bonds. The District will make no use of the proceeds of the Bonds or
any Parity Bonds or any other amounts or property, regardless of the source, or take any action or
refrain from taking any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt
basis for federal income tax purposes to be considered “hedge bonds” within the meaning of
Section149(g) of the Code unless the District takes all necessary action to assure compliance with the
requirements of Section149(g) of the Code to maintain the exclusion from gross income for federal
incometax purposes of interest on the Bonds and any applicable Parity Bonds.
(6)Miscellaneous. The District will take no action or refrain from taking any
action inconsistent with its expectations stated in the Tax Certificate executed on the Delivery Date by
the District in connection with the Bonds and any issue of Parity Bonds and will comply with the
covenants and requirements stated therein and incorporated by reference herein.
(7)Other Tax-Exempt Issues. The District will not use proceeds of other
tax-exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written opinion
of Bond Counsel that doing so will not impair the exclusion from gross income for federal income tax
purposes of interest on the Bonds and any Parity Bonds issued on a tax-exempt basis.
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(8)Subsequent Opinions. If the District obtains a subsequent opinion of Bond
Counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation, where such opinion
is required in connection with a change or amendment to this Indenture or the procedures set forth in
the Tax Certificate, it will obtain an opinion substantially to the effect originally delivered by Stradling
Yocca Carlson & Rauth, a Professional Corporation, that interest on the Bonds is excluded from gross
income for federal income tax purposes.
(g)Reduction of Maximum Special Taxes. The District hereby finds and determines that,
historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community
facilities districts in Southern California have from time to time been at levels requiring the levy of
special taxes at the maximum authorized rates in order to make timely payment of principal of and
interest on the outstanding indebtedness of such community facilities districts. Forthis reason, the
District hereby determines that a reduction in the maximum Special Tax rates authorized to be levied
on parcels in Improvement Area HHbelow the levels provided in this Section5.2(g) would interfere
with the timely retirement of the Bonds and Parity Bonds. The District determines it to be necessary
in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to the maximum
extent that the law permits it to do so, the District hereby does covenant, that it shall not initiate
proceedings to reduce the maximum Special Tax rates for Improvement Area HH, unless, in connection
therewith, the District receives a certificate from one or more Independent Financial Consultants
which, when taken together, certify that: (i)suchchanges do not reduce the maximum Special Taxes
that may be levied in each year on property within Improvement Area HHto an amount which is less
than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding
future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such
proposed reduction; and (ii)the District is not delinquent in the payment of the principal of or interest
on the Bonds or any Parity Bonds.
(h)Covenants to Defend. The District covenants that, in the event that any initiative is
adopted by the qualified electors in Improvement Area HHwhich purports to reduce the maximum
Special Tax below the levels specified in Section5.2(g) above or to limit the power of the District to
levy the Special Taxes for the purposes set forth in Section5.2(b) above, it will commence and pursue
legal action in order to preserve its ability to comply with such covenants.
(i)Limitation on Right to Tender Bonds. The District hereby covenants that itwill not
adopt any policy pursuant to Section53344.1 of the Act permitting the tender of Bonds or Parity Bonds
in full payment or partial payment of any Special Taxes unless the District shall have first received a
certificate from an Independent Financial Consultant that the acceptance of such a tender will not result
in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity
Bonds when due.
(j)Continuing Disclosure. The District covenants to comply with the terms of the
Continuing Disclosure Certificateand with the terms of any agreement executed by the District with
respect to any Parity Bonds to assist the Underwriter in complying with Rule 15c2-12 adopted by the
Securities and Exchange Commission; provided, however, that a failure to comply shall not be
considered an event of default hereunder and the Owners shall be limited to enforcing the terms thereof
in accordance with the terms of the Continuing Disclosure Certificate.
(k)Further Assurances. The District shall make, execute and deliver any and all such
further agreements, 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
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unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in this
Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1.Supplemental Indentures or Orders Not Requiring Owner Consent. The
District may from time to time, and at any time, without notice to or consent of any of the Owners,
adopt Supplemental Indentures for any of the following purposes:
(a)to cure any ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provision herein, or to make anyother provision with respect to matters or
questions arising under this Indenture or in any additional resolution or order, provided that such action
is not materially adverse to the interests of the Owners;
(b)to add to the covenants and agreements of and the limitations and the restrictions upon
the District contained in this Indenture other covenants, agreements, limitations and restrictions to be
observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in
effect or which further secure Bond or Parity Bond payments;
(c)to provide for the issuance of any Parity Bonds, and to provide the terms and conditions
under which such Parity Bonds may be issued, subject to and in accordance with the provisions of this
Indenture;
(d)to modify, amend or supplement this Indenture in such manner as to permit the
qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute
hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add such other
terms, conditions and provisions as may be permitted by said act or similar federal statute, and which
shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then
Outstanding;
(e)to modify, alter or amend the RMA in any manner, so long as the Trustee receives a
certificate of an Independent Financial Consultant stating that: (i)such changes do not reduce the
maximum Special Taxes that may be levied in each year on property within Improvement Area HHto
an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service
due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding
as of the date of such amendment; and (ii)based on the current development plan for parcels within
Improvement Area HH, do not reduce the maximum Special Taxes which could be levied upon taxable
property within Improvement Area HHto an amount which is less than the Administrative Expense
Cap plus110% of the Annual Debt Service due in each corresponding future Bond Year with respect
to the Bonds and Parity Bonds Outstanding as of the date of such amendment; or
(f)to modify, alter, amend or supplement this Indenture in any other respect which is not
materially adverse to the Owners.
Section 6.2.Supplemental Indentures or Orders Requiring Owner Consent. Exclusive
of the Supplemental Indentures described in Section6.1, the Owners of not less than a majority in
aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the right to consent
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to and approve the adoption by the District of such Supplemental Indentures as shall be deemed
necessary or desirable by the District for the purpose of waiving, modifying, altering, amending, adding
to or rescinding, in any particular, any of the terms or provisions contained in this Indenture; provided,
however, that nothing herein shall permit, or be construed as permitting: (a)an extension of the
maturity date of the principal, or the payment date of interest on, any Bond or Parity Bond; (b)a
reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate
of interest thereon; (c)a preference or priority of any Bond or Parity Bond over any other Bond or
Parity Bond; or (d)a reduction in the aggregate principal amount of the Bonds and Parity Bonds the
Owners of which are required to consent to such Supplemental Indenture, without the consent of the
Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to the
terms of this Section shall require the consent of the Owners, the District shall so notify the Trustee
and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee shall, at
the expense of the District, cause notice of the proposed Supplemental Indenture to be mailed, by first
class mail, postage prepaid, to all Owners at their addresses as they appear in the Bond Register. Such
notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a
copy thereof is on file at the office of the Trustee for inspection by all Owners. The failure of any
Owners to receive such notice shall not affect the validity of such Supplemental Indenture when
consented to and approved by the Owners of not less than a majority in aggregate principal amount of
the Bonds and Parity Bonds Outstanding as required by this Section. Whenever at any time within one
year after the date of the first mailing of such notice, the Trustee shall receive an instrument or
instruments purporting to be executed by the Owners of not less than a majority in aggregate principal
amount of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall refer to the
proposed Supplemental Indenture described in such notice, and shall specifically consent to and
approve the adoption thereof by the District substantially in the form of the copy referred to in such
notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the
District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any Parity
Bonds. In determining whether the Owners of a majority of the aggregate principal amount of the
Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or
Parity Bonds which are owned by the District or by any person directly or indirectly controlling or
controlled by or under the direct or indirect common control with the District, shall be disregarded and
shall be treated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the
provisions of this Section, this Indenture shall be, and shall be deemed tobe, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Indenture of the
District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined,
exercised and enforced hereunder,subject in all respects to such modifications and amendments.
Section 6.3.Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity
Bonds. After the effective date of any action taken as hereinabove provided, the District may
determine that the Bonds orany Parity Bonds may bear a notation, by endorsement in form approved
by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond
or Parity Bond at such effective date and presentation of such Owner’s Bond or Parity Bond for the
purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate
for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity Bonds. If
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the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion of the District,
shall be necessary to conform to such action shall be prepared and executed, and in that case upon
demand of the Owner of any Outstanding Bond or Parity Bond at such effective date such new Bonds
or Parity Bonds shall be exchanged at the office of the Trustee or at such additional offices as the
Trustee may select and designate for that purpose, without cost to each Owner of Outstanding Bonds
or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.
The Trustee shall have the right to require such opinions of counsel as it deems necessary
concerning:(i) the lack of material adverse effect of the amendment on Owners;and (ii) the fact that
the amendment will not affect the tax status of interest with respect to the Bonds.
ARTICLE VII
TRUSTEE
Section 7.1.Trustee. Wilmington Trust, National Associationshall be the Trustee for the
Bonds and any Parity Bonds unless and until another Trustee is appointed by the District hereunder.
The Trustee represents that it has (or is a member of a bank holding company system whose bank
holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least
$100,000,000. The District may, at any time, appoint a successor Trustee satisfying the requirements
of Section7.2 below for the purpose of receiving all money which the District is required to deposit
with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire
transfer in accordance with Section2.5 above, interest payments to the Owners, to select Bonds and
Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby authorized to
pay the principal of and premium, if any, on the Bonds and Parity Bonds when the same are duly
presented to it for payment at maturity or on call and redemption, to provide for the registration of
transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to provide for the
cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to provide for the
authentication of Bonds and Parity Bonds, and shall perform all other duties assigned to or imposed
on it as provided in this Indenture. The Trustee shall keep accurate records of all funds administered
by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
The Trustee is hereby authorized to redeem the Bonds and Parity Bonds when duly presented
for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and
Parity Bonds upon payment thereof in accordance with the provisions of Section10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the
Trustee then in force, timely pay to the Trustee following demand therefor compensation for its
services, reimburse the Trustee for all its advances and expenditures,including, but not limited to,
advances to and fees and expenses of independent accountants or counsel employed by it in the exercise
and performance of its powers and duties hereunder, and indemnify and save the Trustee, its officers,
directors, employees and agents, harmless against costs, claims, expenses and liabilities, including,
without limitation, fees and expenses of its attorneys (not arising from its own gross negligence or
willful misconduct) which it may incur in the exercise and performance of its powers and duties
hereunder. The foregoing obligation of the District to indemnify the Trustee shall survive the removal
or resignation of the Trustee or the discharge of the Bondsand Parity Bonds.
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Section 7.2.Removal of Trustee. The District may at any time at its sole discretion, upon
30 days’ notice,remove the Trustee initially appointed, and any successor thereto, by delivering to the
Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors
thereto; providedthat any such successor shall be a bank or trust company having (or whose parent
bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least
$100,000,000, and subject to supervision or examination by federal or state authority. Any removal
shall become effective only upon acceptance of appointment by the successor Trustee. If any bank or
trust company appointed as a successor publishes a report of condition at least annually, pursuant to
law or to the requirementsof any supervising or examining authority above referred to, then for the
purposes of this Section 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 reportof condition so
published. Any removal of the Trustee and appointment of a successor Trustee shall become effective
only upon acceptance of appointment by the successor Trustee and notice of the successor Trustee’s
identity and address being sent by the successor Trustee to the Owners.
Section 7.3.Resignation of Trustee. The Trustee may at any time resign by giving written
notice to the District. Upon receiving such notice of resignation, the District shall promptly appoint a
successor Trustee satisfying the criteria in Section7.2 above by an instrument in writing. Any
resignation or removal of the Trustee and appointment of a successor Trustee shall become effective
only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have
been appointed by the District within thirty (30) days of giving such notice or removal or resignation,
then the Trustee, or any Owner may petition, at the expense of the District, a court of competent
jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice
(if any) as it may deem proper, appoint a successor Trustee under the Indenture.
Section 7.4.Liability of Trustee. The recitals of fact and all promises, covenants and
agreements contained herein and in the Bonds andany Parity Bonds shall be taken as statements,
promises, covenants and agreements of the District, and the Trustee assumes no responsibility or
liability for the correctness of the same and makes no representations whatsoever as to the validity or
sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility or
liability in respect thereof, other than in connection with its express duties or obligations specifically
set forth herein, in the Bonds and any Parity Bonds, or in the certificate of authentication assigned to
or imposed upon the Trustee. The Trustee shall not have nor be under any responsibility or duty with
respect to the issuance of the Bonds or any Parity Bonds for value. The Trustee shall not be liable in
connection with the performance of its duties hereunder, except for its own gross negligence or willful
misconduct.
The Trustee shall be conclusively protected in acting upon any notice, resolution, request,
consent, order, certificate, report, Bond, Parity Bond or other paper or document signed or presented
by the proper party or parties as provided hereunder. The Trustee may consult with counsel, who may
be counsel to the District, with regard to legal questions, and the opinion of such counsel shall be full
and complete authorization and protection to the Trustee in respect of any action taken or suffered
hereunder in good faith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity Bond
unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title thereto
is satisfactorily established to the Trustee, if disputed.
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Whenever in the administration of its express obligations under this Indenture the Trustee shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering any
action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a written certificate of the
District, and such certificate shall be full warrant to the Trustee for any action taken or suffered under
the provisions of this Indenture upon the faith thereof, but in its discretion the Trustee may but shall
not be obligated to accept other evidence of such matter or may require such additional evidence as to
it may seem reasonable. It is understood and agreed that no such act shall broaden or imply the
Trustee’s acceptance of a broadening of the scope of the Trustee’s duties and obligations hereunder
unless the Trustee shall provide written acceptance thereof.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special
Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received,
but its liability shall be limited to the proper accounting for such funds as it actually receives. No
provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur
any financial liability in theperformance of any of its duties hereunder, or in the exercise of its rights
or powers.
The Trustee shall not be deemed to have knowledge of any default or event of default until an
officer at the Trustee’s corporate trust office responsible for the administration of its duties hereunder
shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its
corporate trust office.
The Trustee shall have no responsibility with respect to any information, statement, or recital
in any official statement, offering memorandum or any other disclosure material prepared or distributed
with respect to the Bonds.
Before taking any action under ArticleVIII hereof the Trustee may require indemnity and
security satisfactory to the Trustee be furnished to it for and from any expenses and liabilities and to
protect it against any liability it may incur hereunder.
The immunities extended to the Trustee also extend to its directors, officers, employees and
agents (including its counsel).
The Trustee shall not be liable for any action taken or not taken by it in accordance with the
direction of the Owners of 25% (or other percentage provided for herein) in aggregate principal amount
of Bondsand Parity BondsOutstanding relating to the exercise of any right, power or remedy available
to the Trustee. In the event of conflicting instructions hereunder, the Trustee shall have the right to
decide the appropriate course of action and will be protected in so doing.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be
construed as a duty or in any way expand or impliedly expand the scope of the Trustee’s duties
hereunder.
The Trustee may execute any of the trusts or powers hereof and perform any of its duties
throughattorneys, agents and receivers and shall not be answerable for the conduct of the same if
appointed by it with reasonable care.
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The Trustee may become the Owner or pledgee of the Bondsand Parity Bondswith the same
rights it would have if it were not Trustee.
The Trustee shall perform such duties and only such duties as are specifically set forth in this
Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee.
The District shall, to the extent permitted by law, indemnify and save the Trustee and its
officers, directors, agents, and employees harmless from and against (whether or not litigated) all
claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of:
(i) the use, maintenance, condition or management of, or from any work or thing done on, the Project;
(ii) any breach or default on the part of the District in the performance of any of its obligations under
this Indenture and any other agreement made and entered into for purposes of the Bondsand Parity
Bonds; (iii) any act of the City, the District or of any of its agents, contractors, servants, employees or
licensees with respect to the Project; (iv) any act of any assignee of, or purchaser from, the City, the
District or of any of its or their agents, contractors, servants, employees or licensees with respect to the
Project; (v) the construction or acquisition of the Project or the expenditure of Project Costs;(vi) the
exercise and performance by the Trustee ofits powers and duties hereunder or any related document;
(vii) the sale of the Bonds and Parity Bonds and the carrying out of any of the transactions contemplated
by the Bonds,and Parity Bondsor this Indenture;or (viii) any untrue statement or alleged untrue
statement of any material fact or omission or alleged omission to state a material fact necessary to
make the statements made in light of the circumstances in which they were made, not misleading in
any official statement or other disclosure document utilized in connection with the sale or marketing
of the Bondsand Parity Bonds. The indemnification set forth in this Section shall extend to the
Trustee’s officers, agents, employees, successors and assigns. No indemnification will be made under
thisSection or elsewhere in this Indenture or other agreements for willful misconduct or negligence by
the Trustee, its officers, agents, employees, successors or assigns. The District’sobligations hereunder
shall remain valid and binding notwithstanding maturity and payment of the Bondsand Parity Bonds,
or the resignation or removal of the Trustee.
In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not
in its individual capacity, and all persons, including, withoutlimitation, the Owners, the District and
the City, having any claim against the Trustee arising from thisIndenture shall look only to the funds
and accounts held by the Trustee hereunder for payment, except as otherwise provided herein. Under
no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by
the Bonds.
THE TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS
OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE
DISTRICT OF THE PROJECT, OR ANY PORTION THEREOF. In no event shall the Trustee be
liable for incidental, indirect, special or consequential damages, in connection with or arising out of
the Project or this Indenture for the existence, furnishing, functioning or use and possession of the
Project.
The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder
if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force
majeure” means an occurrence that is beyond the control of the Trustee and could not have been
avoided by exercising due care. Force majeure shall include,but not limited to,acts of God, terrorism,
war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
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The Trustee shall have the right to accept and act upon directions given pursuant to this
Indenture and delivered using electronic notice; provided, however, that the District shall provide to
the Trustee an incumbency certificate listing each Authorized Representative of the District with the
authority to provide such directions and containing specimen signatures of such authorized officers,
which incumbency certificate shall be amended whenever a person is to be added or deleted from the
listing. If the District elects to give the Trustee directions using electronic notice and the Trustee in its
discretion elects to act upon such directions, the Trustee’s understanding of such directions shall be
deemed controlling. The District understand and agree that the Trustee cannot determine the identity
of the actual sender of such directions and that the Trustee shall conclusively presume that directions
that purport to have been sent by an authorized officer listed on the incumbency certificate provided to
the Trustee have been sent by such Authorized Representative of the District. The District shall be
responsible for ensuring that only an Authorized Representative of the District shall transmit such
directions to the Trustee and that each Authorized Representative of the District treat applicable user
and authorization codes, passwords and/or authentication keys with extreme care. The Trustee shall
not be liable for any losses,costs or expenses arising directly or indirectly from the Trustee’s reliance
upon and a compliance with such directions, notwithstanding such directions conflict or are
inconsistent with a subsequent written direction. The District agrees (i) to assume all risks arising out
of the use of electronic notice to submit directions to the Trustee, including, without limitation, the risk
of the Trustee acting on unauthorized directions, and the risk of interception and misuse by third
parties; (ii) that it is fully informed of the protections and risks associated with the various methods of
transmitting directions to the Trustee and that there may be more secure methods of transmitting
directions than the method(s) selected by the District; and (iii) that the security procedures (if any) to
be followed in connection with its transmission of directions provide to it a commercially reasonable
degree of protection in light of its particular needs and circumstances.
Section 7.5.Merger or Consolidation. Any company into which theTrustee 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 ofits corporate trust business, shall be the successor to the Trustee
without the execution or filing of any paper or further act, anything herein to the contrary
notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1.Events of Default. Any one or more of the following events shall constitute
an “Event of Default”:
(a)default in the due and punctual payment of the principal of or redemption premium, if
any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at
maturity as therein expressed, by declaration or otherwise;
(b)default in the due and punctual payment of the interest on any Bond or Parity Bond
when and as the same shall become due and payable; or
(c)except as described in subsections (a) or (b), default by the District in the observance
of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds or
any Parity Bonds, which default continues for a period of 30 days after the District has been given
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notice in writing of such default by the Trustee or the Owners of twenty-five percent (25%) in aggregate
principal amount of the Outstanding Bonds and Parity Bonds.
The Trustee agrees to give notice to the Owners as soon as practicable upon the occurrence of
an Event of Default under subsections (a) or (b) above and within 30 days of the Trustee’s actual
knowledge of an Event of Default under subsection (c) above.
Section 8.2.Remedies of Owners. Upon the occurrence of an Event of Default, any Owner
may pursue any available remedy at law or in equity to enforce the payment of the principal of,
premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any rights of
the Trustee under or with respect to this Indenture, including:
(a)by mandamus or other suit or proceeding at law or in equity to enforce his rights against
the District and any of the members, officers and employees of the District, and to compel the District
or any such members, officers or employees to perform and carry out their duties under the Act and
their agreements with the Owners as provided in this Indenture;
(b)by suit in equity to enjoin any actions or things which are unlawful or violate the rights
of the Owners; or
(c)by a suit in equity to require the District and its members, officers and employees to
account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested and directed so
to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding
Bonds and Parity Bonds and if indemnified to its satisfaction, the Trustee shall be obligated to exercise
such one or more of the rights and powers conferred by this ArticleVIII, as the Trustee, being advised
by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Owners 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 Act or any
other law.
Section 8.3.Application of Revenues and Other Funds After Default. All amounts
received by the Trustee pursuant to any right given or action taken by the Owners under the provisions
of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in the following
order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the costs, fees and expenses of the Trustee in declaring such Event of
Default and in performing its duties and obligations hereunder, including reasonable compensation to
its agents, attorneys and counsel;
Second, to the payment of the fees, costs and expenses of the Owners in declaring such Event
of Default and in carrying out the provisions of this ArticleVIII, including reasonable compensation
to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of
the Trustee; and
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Third, to the payment of the whole amount of interest on and principal of the Bonds and Parity
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 borne by the Outstanding Bonds and Parity
Bonds; provided, however, that in the event that such amounts shall be insufficient to pay 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 Bonds and Parity Bonds then
due and unpaid on a pro rata basis based on the total amount then due and owing;
(b)second, to the payment of all installments of principal, including Sinking Fund
Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total
amount then due and owing; and
(c)third, to the payment of interest on overdue installments of principal and interest on the
Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing.
Section 8.4.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 orotherwise,
pursuant to its obligations hereunder, whether upon its own discretion or upon the request of the
Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds
then Outstanding, it shall have full power, in theexercise of its discretion for the best interests of the
Owners of the Bonds and Parity 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 and Parity Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement
or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity 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 and Parity Bonds similarly situated and the
Trustee is hereby appointed (and the successive respective Owners of the Bonds and Parity 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 and Parity Bonds for the
purposes 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 and Parity Bonds as a class or classes,
as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.
Section 8.5.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 and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be
entitled, as a matter of right to which the District expressly agrees, to the appointment of a receiver or
receivers of the Net Taxes and other amounts pledged hereunder, pending such proceedings, with such
powers as the court making such appointment shall confer.
Section 8.6.Non-Waiver. Nothing in this ArticlevIIIor in any other provision of this
Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District,
which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds
to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein
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provided, or to pay the Trustee its fees and expenses as provided in Section8.3 hereof, out of the Net
Taxes 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 or Parity Bonds 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 or the Owners by the Act or by this ArticleVIII
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 8.7.Limitations on Rights and Remedies of Owners. No Owner of any Bond or
Parity 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 the Bonds and Parity 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
and security reasonably acceptable to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request; and (d)the Trustee shall have refused or omitted to comply
with such request for a period of sixty (60) days after such written request shallhave been received by,
and said tender of indemnity and security shall have been made to, the Trustee.
Such notification, request, tender of indemnity and security and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity
Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of
Bonds and Parity 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 and Parity
Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of
and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit
for the enforcement of 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 8.8.Termination of Proceedings. In case any Owner 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 District,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 Owners shall continue as if no such proceedings
had been taken.
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ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1.Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and
the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental
Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net
Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District
to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental Indenture
relating to such Parity Bond shall thereupon cease, terminate and become void and be discharged and
satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to this
Section, the Trustee shall execute and deliver to the District all such instruments as may be desirable
to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District’s
general fund all money or securities held by it pursuant to this Indenture which are not required for the
payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning
expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or more
of the following ways:
(a)by paying or causing to be paid the principal of, premium, if any, and interest on such
Bond or Parity Bond, as and when the same become due and payable;
(b)by depositing with the Trustee, in trust, at or before maturity, money which, together
with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense
Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if any,
and interest on such Bond or Parity Bond, as and when the same shall become due and payable; or
(c)by depositing with the Trustee or another escrow bank appointed by the District, in
trust, federal securities described in subparagraph (1) of the definition of Authorized Investments, in
which the District may lawfully invest its money, in such amount as will be sufficient, together with
the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the
Administrative Expense Account) and available for such purpose, together with the interest to accrue
thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity
Bond, as and when the same shall become due and payable.
If paid as provided above, then, at the election of the District, and notwithstanding that any
Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of
the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity
Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to
the Owners of any such Bond or Parity Bond not so surrendered and paid all sums due thereon, and
except for the covenants of the District contained in Section5.2(f) or any covenants in a Supplemental
Indenture relating to compliance with the Code. Notice of such election shall be filed with the Trustee
not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be
acceptable to the Trustee. In connection with a defeasance under(c) above, there shall be provided to
the District a verification report from an independent nationally recognized certified public accountant
stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the
escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding
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Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall
become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the
certified public accountant) to the effect thatthe Bonds or Parity Bonds being defeased have been
legally defeased in accordance with this Indenture and any applicable Supplemental Indenture.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the
Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any
Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable
to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all
Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any funds
held by the Trustee at the time of a defeasance, which are not required for the purpose of paying and
discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee shall, at
the written direction of the District, mail, first class, postage prepaid, a notice to the Owners whose
Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the
defeasance has occurred.
Section 9.2.Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder
issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund
(other than in the Administrative Expense Account therein) and secured by a lien and charge upon such
amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds
theretofore issued hereunder or under any Supplemental Indenture; provided, however, that Parity
Bonds may only be issued for the purposeof refunding all or a portion of the Bondsor Parity Bonds
then Outstandingsubject to the following specific conditions, which are hereby made conditions
precedent to the issuance of any such Parity Bonds:
(a)The District shall be in compliance with all covenants set forth in this Indenture and
any Supplemental Indenture then in effect and a certificate of the District to that effect shall have been
filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the
District is not in compliance with all such covenants so long as immediately followingthe issuance of
such Parity Bonds the District will be in compliance with all such covenants.
(b)The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act
and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a
Supplemental Indenture duly adopted by the District which shall specify the following:
(1)the purpose for which such Parity Bonds are to be issued and the fund or funds
into which the proceeds thereof are to be deposited;
(2)the authorized principal amount of such Parity Bonds;
(3)the date and the maturity date or dates of such Parity Bonds; provided that:
(i)each maturity date shall fall on a September1; (ii)all such Parity Bonds of like maturity shall be
identical in all respects, except as to number; (iii)fixed serial maturities or Sinking Fund Payments, or
any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on
or before their respective maturity dates;and (iv) the maturity of such Parity Bonds shall not exceed
the maturity of the Bonds being refunded;
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(4)the description of the Parity Bonds, the place of payment thereof and the
procedure for execution and authentication;
(5)the denominations and method of numbering of such Parity Bonds;
(6)the amount and due date of each mandatory Sinking Fund Payment, if any, for
such Parity Bonds;
(7)the amount, if any, to be deposited from the proceeds of such Parity Bonds in
the Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve
Requirement;
(8)the form of such Parity Bonds; and
(9)such other provisions as are necessary or appropriate and not inconsistent with
this Indenture.
(c)The District shall have received the following documents or money or securities, all of
such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds
by the Trustee (unless the Trustee shall be directed by the District to accept any of such documents
bearing a prior date):
(1)a certified resolution of the City Council, acting as the legislative body of the
District, authorizing the issuance of such Parity Bonds;
(2)a written request of the District as to the delivery of such Parity Bonds;
(3)an opinion of Bond Counsel and/or general counsel to the District to the effect
that: (i) the District has the right and power under the Act to execute and deliver the Supplemental
Indenture relating to such Parity Bonds, and such Supplemental Indenture hasbeen duly and lawfully
executed by the District, and the Indenture and such Supplemental Indenture are in full force and effect
and are valid and binding upon the District and enforceable in accordance with their terms (except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating
to the enforcement of creditors’ rights); (ii) thisIndenture creates the valid pledge which it purports to
create of the Net Taxes and other amounts as provided in thisIndenture, subject to the application
thereof to the purposes and on the conditions permitted by thisIndenture; and (iii) such Parity Bonds
are valid and binding limited obligations of the District, enforceable in accordance with their terms
(except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar
laws relating to the enforcement of creditors’ rights) and the terms of thisIndenture and the
Supplemental Indenture executed and delivered in connection with such Parity Bonds and are entitled
to the benefits of thisIndenture and such Supplemental Indenture, and such ParityBonds have been
duly and validly authorized and issued in accordance with the Act (or other applicable laws) and this
Indenture and such Supplemental Indenture; and a further opinion of Bond Counsel to the effect that,
assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will
not adversely affect the exclusion from gross income for federal income tax purposes of interest on the
Bonds and any Parity Bonds theretofore issued on a tax-exempt basis, or the exemption from State of
California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore
issued;
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(4)a certificate of the District containing such statements as may be reasonably
necessary to show compliance with the requirements of this Indenture;
(5)a certificate of an Independent Financial Consultant certifying that in each
Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following
the issuance of the Parity Bonds proposed to be issued is less thanthe Annual Debt Service on the
Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and
(6)such further documents, money and securities as are required by the provisions
of this Indenture and the Supplemental Indenture providing forthe issuance of such Parity Bonds.
ARTICLE X
MISCELLANEOUS
Section 10.1.Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds
surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment
therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to
the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall
destroy such Bonds and Parity Bonds, as provided by law, and, upon request of the District, furnish to
the District a certificate of such destruction.
Section 10.2.Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
to be signed or executed by Owners may be in any number of concurrent instruments of similar tenor
and may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such
attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this
Indenture (except as otherwise herein provided), if made in the following manner:
(a)The fact and date of the execution by any Owner or his or her attorney of any such
instrument, and of any instrument appointing any such attorney, may be proved by a signature
guarantee of any bank or trust company located within the United States of America. Where any such
instrument is executed by an officer of a corporation or association or a member of a partnership on
behalf of such corporation, association or partnership, such signature guarantee shall also constitute
sufficient proof of his authority.
(b)As to any Bond or Parity Bond, the person in whose name the same shall be registered
in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of or on account of the principal of any such Bond or Parity Bond, and the interest thereon,
shall be made only to or upon theorder of the registered Owner thereof or his or her legal
representative. All such payments shall be valid and effectual to satisfy and discharge the liability
upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to be paid.
Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to
such proof, it being intended that the Trustee or the District may accept any other evidence of the
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of
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the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity Bond
in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such
request or consent.
Section 10.3.Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the
Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such
Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the
Trustee at such date, or for two years after the date of deposit of such money if deposited with the
Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall
be repaid by the Trustee to the District, 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
District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before
being required to make any such payment to the District, the Trustee, at the expense of the District,
shall cause to be mailed by first-class mail, postage prepaid, to the registered Owners of such
Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the
Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which
date shall not be less than 30 days after the date of the mailing of such notice, the balance of such
money then unclaimed will be returned to the District.
Section 10.4.Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District and the Owners and the provisions hereof shall be construed
in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely
to the Owners or the Trustee, then the District, the Trustee and the Owners shall be restored to their
former positions, rights and remedies as if such suit, action or proceeding had not been brought or
taken.
After the issuance and delivery of the Bonds, this Indenture shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5.Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the
general fund of the District or from taxes or any source other than the Net Taxes and other amounts
pledged hereunder.
Section 10.6.Further Assurances. The District willadopt, 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 or any Parity Bonds the rights and benefits provided in
this Indenture.
Section 10.7.Severability. If any covenant, agreement or provision, or any portion thereof,
contained in this Indenture, or the application thereof to any personor circumstance, is held to be
unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any
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such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be
deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any Parity Bonds
issued pursuant hereto shall remain valid and the Owners shall retain all valid rights and benefits
accorded to them under the laws of the State of California.
Section 10.8.Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the
Assistant City Managerof the City of Lake Elsinore, 130 South Main Street,Lake ElsinoreCalifornia
92530, all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid,
or personally delivered to the Trustee, Wilmington Trust, National Association,650 Town Center
Drive, Suite 600Costa Mesa, California92626.
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IN WITNESS WHEREOF, CITY OF LAKE ELSINORE COMMUNITY FACILITIES
DISTRICT NO.2006-1(SUMMERLY) has caused this Indenture to be signed by an Authorized
Representative of the District and Wilmington Trust, National Associationin token of its acceptance
of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officers
identified below, all as of the day and year first above written.
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO.2006-1 (SUMMERLY)
By:
City Managerof the City of Lake Elsinore, acting
as the legislative body of City of Lake Elsinore
Community Facilities District No.2006-1
(Summerly)
ATTEST:
City Clerk of the City of Lake Elsinore,
acting asthe legislative body of City of
Lake Elsinore Community Facilities
District No. 2006-1 (Summerly)
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
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EXHIBIT A
FORM OF SPECIAL TAX BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE DISTRICT OR 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.
R-____$___________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO.2006-1(SUMMERLY)
SPECIAL TAX BOND, SERIES 2019
(IMPROVEMENT AREA HH)
INTEREST RATE:MATURITY DATE:DATED DATE:CUSIP:
_____%September1, 20____December __, 2019 50963N___
REGISTERED OWNER:CEDE & CO.
PRINCIPAL AMOUNT:__________________ DOLLARS
CITY OF LAKE ELSINORECOMMUNITY FACILITIES DISTRICT NO.2006-1
(SUMMERLY) (the “District”) which was formed by the City of Lake Elsinore(the “City”) and is
situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises
to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the 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.
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Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in 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, 2020and each March 1 and September 1 thereafter (each an “Interest Payment Date”), at
the Interest Rate set forth above, until the Principal Amount hereof is paid or made availablefor
payment.
The principal of and premium, if any, on this Bond are payable to the Owner hereof in lawful
money of the United States of America upon presentation and surrender of this Bond at the Principal
Office of the Trustee (as such term is defined inthe Indenture), initially Wilmington Trust, National
Association(the “Trustee”). Interest on this Bond shall be paid by check of the Trustee mailed, by
first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer
to an account within the United States of America, to the 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 Owner’s address as it appears on the registration books maintained by the
Trustee.
This Bond is one of a duly authorized issue of “City of Lake ElsinoreCommunity Facilities
District No.2006-1(Summerly) Special Tax Bonds, Series 2019(Improvement Area HH)” (the
“Bonds”) issued in the aggregate principal amount of $__________pursuant to the Mello-Roos
Community Facilities Act of 1982, as amended, being Section 53311 etseq.of the California
Government Code (the “Act”) for the purpose of financing public improvements, funding a reserve
account, funding capitalized interest on the Bondsand 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 the City,acting in its capacity as the legislative body of the
District (the “Legislative Body”), on November 12, 2019, and a Bond Indenture executed in connection
therewith dated as of December 1, 2019(the “Indenture”), by and between the District and the Trustee,
and this reference incorporates the Indenture herein, and by acceptance hereof the Owner of this Bond
assents to said terms and conditions. The Indenture is 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 Indenture, the principal of, premium, if any, and interest on this
Bond are payable solely from the annual special taxes authorized under the Act to be levied and
collected within Improvement Area HHof the District(the “Special Taxes”) and certain other amounts
pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment
hereof shall be limited to the NetTaxes pledged and collected or foreclosure proceedsreceived
following a default in payment of the Special Taxes and other amounts deposited to the Special Tax
Fund (other than the Administrative Expense Account therein) established under the Indenture, except
to the extent that other provision for paymenthas 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 Indenture it will commence and diligently pursue to completion
appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied
for payment of principal and interest on the Bonds.
The Bonds may be redeemed at the option of the District from any source of funds on any
Interest Payment Date on and after September 1, 20__, in whole or in part, from such maturities as are
selected by the District and by lot within a maturity, at the following redemption prices, expressed as
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a percentage of the principal amount to be redeemed, together with accrued interest to the date of
redemption:
Redemption Date Redemption Price
September 1, 20__ and March 1, 20__103%
September 1, 20__and March 1,20__102
September 1, 20__and March 1, 20__101
September 1, 20__and any Interest Payment Date thereafter 100
The Bonds maturing on September 1, 20__(the “20__Term Bonds”) shall be called before
maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption
Account established by theIndenture, on September1, 20__, and on each September1 thereafter prior
to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__
Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at
a redemption price for each redeemed 20__Term Bond equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September1, 20__
Sinking Fund Redemption Date
(September1)Sinking Fund Payments
$
*
_____________
* Maturity.
The Bonds maturing on September 1, 20__(the “20__Term Bonds”) shall be called before
maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption
Account established hereunder, on September1, 20__, and on each September1 thereafter prior to
maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__Term
Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a
redemption price for each redeemed 20__Term Bond equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September1, 20__
Sinking Fund Redemption Date
(September1)Sinking Fund Payments
$
*
_____________
* Maturity.
The Bonds maturing on September 1, 20__(the “20__Term Bonds”) shall be called before
maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption
Account established by the Indenture, on September1, 20__, and on each September1 thereafter prior
to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__
Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at
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a redemption price for each redeemed 20__Term Bond equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September1, 20__
Sinking Fund Redemption Date
(September1)Sinking Fund Payments
$
*
_____________
* Maturity.
The Bonds are subject to special mandatory redemption as a whole, or in part on a pro rata
basis among maturities and by lot within a maturity, on any Interest Payment Dateon and after March
1, 2020, andshall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account
plus amounts transferred from the Reserve Account in connection with such transfers, at the following
redemption prices, expressed as a percentage of the principal amount to be redeemed, together with
accrued interest to the redemption date:
Redemption Date Redemption Price
Any Interest Payment Date from March 1, 2020through March 1, 20__103%
September 1, 20__ and March 1, 20__102
September 1, 20__and March 1, 20__101
September 1, 20__and any Interest Payment Date thereafter 100
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 byfirst class mail,
postage prepaid, to the addresses set forth in the registration books; provided, however, so long as the
Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies
with the requirements of the Depository. Neither a failure of the 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 Trustee 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 Owner hereof, as to both principal and interest,
and the District and the Trustee may treat the Owner hereof as the absolute owner for all purposes and
shall not be affected by any notice to thecontrary.
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 asmore fully set forth in the Indenture.
This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing,
at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon
payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon
such transfer, a new registered Bond of authorized denomination or denominations for the same
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aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange
therefor.
The Trustee 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 Indenture.
THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY OR OF
THE DISTRICT. NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO LEVY OR
PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN
THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS
OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER
AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY, 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 Trustee.
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.
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IN WITNESS WHEREOF, City of Lake ElsinoreCommunity Facilities DistrictNo.2006-1
(Summerly) has caused this Bond to be dated the Dated Date, to be signed on behalf of the District by
the Mayor of the City by his facsimile signature and attested by the facsimile signature of the Clerk of
the City Council of the City.
Mayor of the City of Lake Elsinore, acting as the
legislative body of City of Lake Elsinore Community
Facilities District No.2006-1 (Summerly)
ATTEST:
City Clerk of the City of Lake Elsinore, acting
as the legislative body of City of Lake Elsinore
CommunityFacilities District No. 2006-1
(Summerly)
[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.
Dated: ____________WILMINGTON TRUST, NATIONAL
ASSOCIATIONas Trustee
By:
Authorized Signatory
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[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.
Clerk of the City Council of the City
[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 Trustee 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.
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EXHIBIT B-1
FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS
$__________
SPECIAL TAX BONDS, SERIES 2019
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO.2006-1(SUMMERLY)
(IMPROVEMENT AREA HH)
Wilmington Trust, National Association(the “Trustee”), is hereby requested to pay from the
City Facilities Accountof the City of Lake Elsinore Community FacilitiesDistrict No.2006-1
(Summerly) Improvement Area HHAcquisition and Construction Fund, established by the Bond
Indenture, dated as of December 1, 2019, by and between the Trustee and City of Lake Elsinore
Community Facilities District No.2006-1(Summerly)(the “District”), the amount specified to the
payee named below for payment of the Project Costs set forth in Attachment No.1 hereto.
Payee:
Address:
Purpose:
Amount:$
The amount is due and payable under purchase order, contract or other authorization and has
not formed the basis of any prior request for payment. The conditions for the release of this amount
from the Account, including those conditions in Section3.9(b) of the Indenture have been satisfied.
There has not been filed with nor served upon the District notice of any lien, right to lien or
attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified
above which has not been released or will not be released simultaneously with the payment of such
amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.
Dated: CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO.2006-1(SUMMERLY)
By:
Name:
Title:_____________________________________