Upon the transfer by the Trustee to the Reserve Fund of Local Obligations Delinquency Revenues of a Community Facilities District, such Revenues shall be allocated as follows:
30 4904-9633-4639v5/022042-0049
(A) First, to the Bond Insurer to reimburse it for all Policy Costs (as defined in Section 4.3(f)(iii) below) due as a result of a draw on the Reserve Surety Bond and reimbursement of amounts with respect to any other Reserve Credit Facility due as a result of delinquencies on the Local Obligations of such Community Facilities District with such reimbursements credited first to each Reserve Account for any series of Local Obligations, other than the Reserve Account to which such delinquent Revenues relate on a Proportionate Share basis if such reimbursements are owing as a result from draws due to delinquencies in the payment of scheduled debt service on that series of Local Obligations from which such delinquent Revenues were received.
Such reimbursements shall next be credited to the Reserve Account for the series of Local Obligations from which the delinquent Revenues were received; and (B) Second, to the Reserve Account for any Series of Local Obligations, other than the Reserve Account to which such Local Obligations Delinquency Revenues relate, that amount necessary to increase the amount on deposit in such account to the Reserve Requirement on a Proportionate Share basis if the deficiency in the amount on deposit in such account resulted from draws on such account due to delinquencies in the payment of scheduled debt service on that Series of Local Obligations from which the Local Obligations Delinquency Revenues were received. In the event that such Local Obligations Delinquency Revenues are insufficient to increase the amount on deposit in each of the applicable Reserve Accounts to their respective Proportionate Share of the Reserve Requirement, a Proportionate Share of such Local Obligations Delinquency Revenues shall be deposited in each such Reserve Account; (C) Third, after increasing the amount on deposit in each applicable Reserve Account to the Reserve Requirement pursuant to the second step above, to the Reserve Account for the Series of Local Obligations from which the Local Obligations Delinquency Revenues were received that amount necessary to replenish the amount on deposit in such Reserve Account to the applicable Reserve Requirement; and
(D) Fourth, to the Revenue Fund.
(d) On September 1 of each year, any interest earned on the investment of moneys on deposit in the Reserve Fund which would cause the amount therein to exceed the Reserve Requirement shall be applied as set forth in Section 4.5 hereof. (e) When amounts in a Reserve Account are sufficient to repay the remaining principal and interest due on the related Local Obligations that will be applied to the Bonds, such amounts will be transferred to the Interest Account and the Principal Account as a credit against the payments due on such Local Obligations, with the amount transferred from a Reserve Account being deposited first to the Interest Account as a credit on the interest due on such Local Obligations on such date and the balance being deposited to the Principal Account as a credit on the principal due on such Local Obligations on such date.
(f) As long as the Reserve Surety Bond shall be in full force and effect, the Authority and the Trustee agree to comply with the following provisions:
(i) In the event and to the extent that moneys on deposit in the Revenue Fund, plus all amounts on deposit in and credited to the Reserve Fund in excess of the amount of the Reserve Surety Bond, are insufficient to pay the amount of principal and interest coming due on the 2025 Bonds, then upon the later of: (1) one (1) Business Day after receipt by the Bond Insurer of a 31 4904-9633-4639v5/022042-0049
Notice of Nonpayment (as defined in the Reserve Surety Bond), duly executed by the Trustee certifying that payment due under this Indenture has not been made to the Trustee; or (2) the Interest Payment Date, the Bond Insurer will make a deposit of funds in an account with the Trustee or its successor sufficient for the payment to the Trustee of amounts which are then due to the Trustee under this Indenture up to but not in excess of the Policy Limit (as defined in the Reserve Surety Bond); provided, however, that in the event that the amount on deposit in, or credited to, the Reserve Fund, in addition to the amount available under the Reserve Surety Bond, includes amounts available under any other Reserve Credit Facility, draws on the Reserve Surety Bond and the other Reserve Credit Facility shall be made on a pro rata basis to fund the insufficiency. (ii) The Authority shall repay any draws under the Reserve Surety Bond and pay all related reasonable expenses incurred by the Bond Insurer. Interest shall accrue and be payable on such draws and expenses from the date of payment by the Bond Insurer at the Late Payment Rate. For purposes of this Section 4.3, “Late Payment Rate” means the lesser of: (1) the greater of: (A) the per annum rate of interest, publicly announced from time to time by JP Morgan Chase Bank at its principal office in the City of New York, as its prime or lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JP Morgan Chase Bank) plus 5%; and (B) the then applicable highest rate of interest on the 2025 Bonds; and (2) the maximum rate permissible under applicable usury or similar laws limiting interest rates.
The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event that JP Morgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the Bond Insurer shall specify. If the interest provisions of this Section 4.3(f) shall result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness created herein, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied as additional interest for any later periods of time when amounts are outstanding hereunder to the extent that interest otherwise due hereunder for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess shall be applied upon principal immediately upon receipt of such moneys by the Bond Insurer, with the same force and effect as if the Authority had specifically designated such extra sums to be so applied and the Bond Insurer had agreed to accept such extra payment(s) as additional interest for such later periods.
In no event shall any agreed-to or actual exaction as consideration for the indebtedness created herein exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection. (iii) Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, “Policy Costs”) shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw.
(iv) Amounts in respect of Policy Costs paid to the Bond Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the Bond Insurer on account of principal due, the coverage under the Reserve Surety Bond will be increased by a like amount, subject to the terms of the Reserve Surety Bond. The obligation to pay Policy Costs shall be secured by a valid lien on all Revenues (subject only to the priority of payment provisions set forth hereunder). 32 4904-9633-4639v5/022042-0049
(v) All cash and investments in the Reserve Fund or a Reserve Account therein shall be transferred to the Revenue Fund for payment of the principal of and interest on the 2025 Bonds before any drawing may be made on the Reserve Surety Bond or any other Reserve Credit Facility credited to such Reserve Account in lieu of cash. Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on the Reserve Surety Bond and any other Reserve Credit Facility on which there is available coverage shall be made on a pro-rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund or a Reserve Account therein. Payment of Policy Costs and reimbursement of amounts with respect to any other Reserve Credit Facility shall be made on a pro-rata basis prior to replenishment of any cash drawn from the Reserve Fund or a Reserve Account therein. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (vi) If the Authority shall fail to pay any Policy Costs in accordance with the requirements of Section 4.3 hereof, the Bond Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under this Indenture other than:
(i) acceleration of the maturity of the payments of principal of and interest on the Bonds; or (ii) remedies which would adversely affect Owners of the Bonds.
The Trustee shall ascertain the necessity for a claim upon the Reserve Surety Bond in accordance with the provisions of Section 4.3(f) hereof and provide notice to the Bond Insurer in accordance with the terms of the Reserve Surety Bond at least five (5) Business Days prior to an Interest Payment Date. Where deposits are required to be made by the Authority with the Trustee to the Revenue Fund for the payment of principal of and interest on the 2025 Bonds more often than semi-annually, the Trustee shall be instructed to give notice to the Bond Insurer of any failure of the Authority to make timely payment in full of such deposits within two Business Days of the date due.
Section 4.4 Surplus Fund. Any amounts transferred to the Surplus Fund pursuant to subsection 4.2 hereof shall no longer be considered Revenues and are not pledged to repay the Bonds. So long as Local Obligations are outstanding, on September 1 of each year after setting aside any amount specified in a Request of the Authority as necessary to pay Administrative Expenses, the remaining balance, if any, in the Surplus Fund shall (i) be transferred by the Trustee to the City for credit to the special tax fund for the Local Obligations, and each Community Facilities District shall be credited a percentage of the total amount available on each September 1 that is equal to the percentage which each series of its outstanding Local Obligation represents of all outstanding Local Obligations held by the Trustee as of the date of disbursement or (ii) as set forth in a Request of the City be applied to the redemption of Local Obligations pursuant to the terms of the Local Obligation Bond Indenture with each series of Local Obligations to be credited a percentage of the total amount available on each September 1 that is equal to the percentage which a series of outstanding Local Obligations represents of all outstanding Local Obligations held by the Trustee as of the date of disbursement. In the event that the Local Obligations have been redeemed or defeased in whole or in part, then such credit shall be applied among the Local Obligations based on a Certificate of an Independent Financial Consultant prepared at the direction of the Authorized Representative of the City. In the event all Community Facilities Districts are no longer obligated to levy Special Taxes to repay Local Obligations, then any amounts in the Surplus Fund may be used by the Authority for any lawful purpose, including, but not limited to, the payment of expenses of the Authority, the City or the Community Facilities Districts relating to the Bonds, the Local Obligations, the Community 33 4904-9633-4639v5/022042-0049
Facilities Districts, or any other purpose as specified in a Request of the Authority delivered to the Trustee.
On September 1 of the year preceding the year of the final maturity of the Bonds, the remaining balance in the Surplus Fund shall be credited by the Trustee on a proportionate basis, to the special tax fund established with respect to Local Obligations of the Community Facilities Districts. Such amounts shall be applied to reduce debt service payments on Local Obligations.
Section 4.5 Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted Investments, as directed pursuant to the Request of the Authority filed with the Trustee at least two (2) Business Days in advance of the making of such investments. The Trustee shall be entitled to conclusively rely on any such Request of the Authority and shall be fully protected in relying thereon. In the absence of any such Request of the Authority the Trustee shall hold such moneys uninvested. Permitted Investments purchased as an investment of moneys in any fund or account established pursuant to this Indenture shall be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposited in the fund or account from which such investment was made; provided, however, that all interest or gain derived from the investment of amounts in the accounts of the Reserve Fund shall, to the extent the balance in any account thereof exceeds, on September 1 of each year, its Proportionate Share of the Reserve Requirement as set forth in Section
4.3(a) hereof, be withdrawn by the Trustee on such September 1, commencing [September 1, 2025], and deposited to the special tax fund of the Community Facilities Districts to be applied to the payment of debt service on the applicable Local Obligations on the next Interest Payment Date.
For purposes of acquiring any investments hereunder, the Trustee may commingle moneys held by it in any of the funds and accounts held by it hereunder. 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 with 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 Trustee and its affiliates may act as advisor, sponsor, principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee and its affiliates may make any and all investments permitted herein through its own investment department. The Trustee shall incur no liability for losses arising from any investments made pursuant to this Section 4.5. The parties hereto acknowledge that the Trustee is not providing investment supervision, recommendations, or advice.
The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law. The Authority further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.
The Trustee will furnish the Authority periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder or brokers selected by the Authority.
Upon the Authority’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. 34 4904-9633-4639v5/022042-0049
Section 4.6 Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account, the value of Permitted Investments credited to such fund or account shall be valued at the original cost thereof (excluding any brokerage commissions and excluding any accrued interest) provided that the investment of any funds held in the Reserve Fund, shall be valued at fair market value and marked to market at least quarterly by the Authority.
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.1 Punctual Payment. The Authority shall punctually pay or cause to be paid the principal and interest and premium (if any) to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Revenues, and other assets pledged for such payment as provided in this Indenture.
Section 5.2 Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall have been so extended.
Nothing in this Section shall be deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 5.3 Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues, and other assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Bond Law, and reserves the right to issue other obligations for such purposes.
Section 5.4 Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues, the Local Obligations and other assets purported to be pledged and assigned, respectively, under this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and binding limited, special obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times, subject to the provisions of Article VI hereof and to the extent permitted by law, defend, preserve and protect said pledge and assignment of the Revenues, the Local Obligations and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.
Section 5.5 Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards in which complete and accurate entries shall be made of transactions made by it relating to the proceeds of Bonds, the Revenues, the Local Obligations and all funds and accounts established pursuant to this Indenture. Such books of record and account shall 35 4904-9633-4639v5/022042-0049
be available for inspection by the Authority and the Community Facilities Districts upon reasonable prior notice during regular business hours and under reasonable circumstances, in each case as agreed to by the Trustee.
Not later than 45 days following each Interest Payment Date, the Trustee shall prepare and file with the Authority a report in the Trustee’s standard statement format setting forth: (i) amounts withdrawn from and deposited into each fund and account maintained by the Trustee under this Indenture; (ii) the balance on deposit in each fund and account as of the date for which such report is prepared; and (iii) a brief description of all obligations held as investments in each fund and account.
Copies of such reports may be mailed to any Owner upon the Owner’s written request to the Trustee at the expense of such Owner at a cost not to exceed the Trustee’s actual costs of duplication and mailing.
Section 5.6 Conditions to Issuance of Additional Obligations. Except as set forth in this Section 5.6, the Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out of Revenues in whole or in part.
The Authority may issue Additional Bonds in such principal amount as shall be determined by the Authority, pursuant to a Supplemental Indenture adopted or entered into by the Authority but only for the purpose of refunding the 2025 Bonds or any Additional Bonds. Such Additional Bonds may be issued subject to the following conditions precedent:
(a) The Authority shall be in compliance with all covenants set forth in this Indenture and all Supplemental Indentures;
(b) The proceeds of such Additional Bonds shall be applied to accomplish a refunding of all or a portion of the Bonds or any Additional Bonds Outstanding. (c) The Supplemental Indenture providing for the issuance of such Additional Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable. (d) Prior to the delivery of any Additional Bonds, a written certificate must be provided to the Authority and the Trustee by an Independent Financial Consultant which certifies that following the issuance of the Series of Additional Bonds, the principal and interest generated from the Local Obligations is adequate to make the timely payment of principal and interest due on all Outstanding Bonds and the Series of Additional Bonds to be issued hereunder. (e) The Supplemental Indenture providing for the issuance of such Additional Bonds may provide for the establishment of separate funds and accounts. (f) No Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) shall have occurred and be continuing with respect to the Bonds or any of the Local Obligations unless such Event of Default shall be cured upon the issuance of the Additional Bonds.
(g) The Authority shall deliver to the Trustee a written Certificate of the Authority certifying that the conditions precedent to the issuance of such Additional Bonds set forth in subsections (a), (b), (c), (d) and (f) of this Section 5.6 above have been satisfied and that, upon the 36 4904-9633-4639v5/022042-0049
issuance of such Additional Bonds an amount equal to the Reserve Requirement, as adjusted (if necessary) to reflect the issuance of such Additional Bonds will be on deposit in the Reserve Fund.
Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in this Section 5.6, no such issuance may occur if the Reserve Fund is not fully funded at the Reserve Requirement.
So long as any Bonds remain outstanding or any amounts are owed to the Bond Insurer by the Authority, without the prior written consent of the Bond Insurer, the Authority shall not issue any Additional Bonds that bears interest at other than fixed rates or permits or requires the Owner to tender such indebtedness for purchase prior to the stated maturity thereof.
Section 5.7 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 will not be adversely affected for federal income tax purposes, the Authority 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:
(a) Private Activity. The Authority will not take or omit to take any action or make any use of the proceeds of the Bonds or of any other moneys or property which would cause the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code. (b) Arbitrage. The Authority will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take or omit to take any action which would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code. (c) Federal Guarantee. The Authority will make no use of the proceeds of the Bonds or take or omit to take any action that would cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
(d) Information Reporting. The Authority will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code. (e) Miscellaneous. The Authority will take no action inconsistent with its expectations stated in any Tax Certificate executed with respect to the Bonds and will comply with the covenants and requirements stated therein and incorporated by reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing contained herein shall be deemed to prevent the Authority from issuing Bonds the interest on which has been determined by the Board to be subject to federal income taxation.
Section 5.8 Rebate Fund
(a) Establishment. The Trustee shall establish a Rebate Fund, when needed, and shall maintain therein separate accounts (solely from amounts deposited by the Authority) designated the “Rebate Account” and the “Alternative Penalty Account.” Absent an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected, the Authority shall cause to be deposited in each such account of the Rebate Fund such amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate.
All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment 37 4904-9633-4639v5/022042-0049
to the United States Treasury. All amounts on deposit in the Rebate Fund shall be governed by this Section 5.8 and the Tax Certificate unless and to the extent that the Authority delivers to the Trustee an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected if such requirements are not satisfied.
Notwithstanding any other provision of this Indenture, the Trustee shall be deemed conclusively to have complied with this Section 5.8 and the Tax Certificate if it follows the directions set forth in any Request of the Authority or Certificate of the Authority and shall be fully protected in so doing. The Trustee shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the Authority with the terms of this Section 5.8 or the Tax Certificate. (b) Rebate Account. The following requirements shall be satisfied with respect to the Rebate Account:
(i)Annual Computation. Within 55 days of the end of each Bond Year, the Authority shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148 1(b) of the Rebate Regulations (the “Rebatable Arbitrage”). The Authority shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section 5.8. (ii)Annual Transfer. Within 55 days of the end of each applicable Bond Year, upon receipt of the Request of the Authority, an amount shall be deposited to the applicable Rebate Account by the Trustee from any Revenues specified by the Authority in the aforesaid Request of the Authority, if and to the extent required so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated in accordance with (i) of this Subsection (b). In the event that immediately following the transfer required by the previous sentence, the amount then on deposit to the credit of a Rebate Account exceeds the amount required to be on deposit therein, upon receipt of a Request of the Authority, the Trustee shall withdraw the excess from the applicable Rebate Account and then credit the excess to the Revenue Fund. (iii)Payment to the Treasury. The Trustee shall pay, as directed by Request of the Authority, to the United States Treasury, out of amounts in the Rebate Account, (A) Not later than 60 days after the end of (A) the fifth Bond Year, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage as set forth in a Certificate of the Authority delivered to the Trustee calculated as of the end of such Bond Year; and
(B) Not later than 60 days after the payment of all the Bonds, an amount equal to 100% of the Rebatable Arbitrage as set forth in a Certificate of the Authority delivered to the Trustee calculated as of the end of such applicable Bonds Year, and any income attributable to the Rebatable Arbitrage, as set forth in a Certificate of the Authority delivered to the Trustee computed in accordance with Section 148(f) of the Code.
38 4904-9633-4639v5/022042-0049
In the event that, prior to the time of any payment required to be made from a Rebate Account, the amount in such Rebate Account is not sufficient to make such payment when such payment is due, the Authority shall calculate or cause to be calculated the amount of such deficiency and deposit with the Trustee 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 (b) shall be made to the Internal Revenue Service Center, Ogden, Utah 84207 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 T (which form shall be completed and provided by the Authority to the Trustee), or shall be made in such other manner as provided under the Code, in each case as specified in a Request of the Authority delivered to the Trustee.
(c) Alternative Penalty Account.
(i)Six Month Computation. If the 1½% Penalty has been elected, within 85 days of each particular Six Month Period, the Authority 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 Authority shall obtain expert advice in making such determinations. (ii)Six Month Transfer. Within 85 days of the close of each Six Month Period, upon receipt of the Request of the Authority, the Trustee shall deposit in the Alternative Penalty Account from any source of funds (specified by the Authority in the aforesaid Request), if and to the extent required, so that the balance in the Alternative Penalty Account for a Series equals the amount of 1½% Penalty (as specified in such Request) due and payable to the United States Treasury determined by the Authority as provided in subsection (c)(i) above. In the event that immediately following the transfer provided in the previous sentence, the amount then on deposit to the credit of the Alternative Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (c)(iii) below, the Trustee, pursuant to a Certificate of the Authority, may withdraw the excess from the Alternative Penalty Account and credit the excess to the Revenue Fund.
(iii)Payment to the Treasury. The Trustee shall pay, as directed by Request of the Authority, to the United States Treasury, out of amounts in the Alternative Penalty Account, not later than 90 days after the close of each Six Month Period the 1½% Penalty (as specified by the Authority in the aforesaid Request), if applicable and payable, computed by the Authority in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from the Alternative Penalty Account, the amount in such account is not sufficient to make such payment when such payment is due, the Authority shall calculate the amount of such deficiency and deposit with the Trustee an amount received from any legally available source of funds equal to such deficiency for transfer into the Alternative Penalty Account prior to the time such payment is due. Each payment required to be made pursuant to this Subsection (c)(iii) shall be made to the Internal Revenue Service, Ogden, Utah 84207 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 T (which form shall be completed and provided by the Authority to the Trustee) or shall be made in such other manner as provided under the Code.
(d) Disposition of Unexpended Funds. Any funds remaining in the accounts of the Rebate Fund after redemption and payment of the Bonds and the payments of all amounts described in Subsection (b)(iii) or (c)(iii) (whichever is applicable) or provision made therefor satisfactory to the Trustee, including accrued interest and payment of all applicable fees to the Trustee, may, upon 39 4904-9633-4639v5/022042-0049
written request, be withdrawn by the Trustee and remitted to the Authority and utilized in any manner by the Authority.
(e) Survival of Defeasance. Notwithstanding anything in this Section to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance of the Bonds. (f) 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 conclusively to have complied with its obligations hereunder if it follows the written instructions of the Authority given pursuant to this Section.
Section 5.9 Local Obligations. Subject to the provisions of this Indenture (including Article VI), the Authority and the Trustee shall use reasonable efforts to collect all amounts due from the Community Facilities Districts pursuant to the Local Obligations and shall enforce, and take all steps, actions and proceedings which the Authority and Trustee determine to be reasonably necessary for the enforcement of all of the rights of the Authority thereunder and for the enforcement of all of the obligations and covenants of the City and the Community Facilities Districts thereunder. The Authority shall instruct the Community Facilities Districts to authenticate and deliver to the Trustee the Local Obligations registered in the name of the Trustee.
The Authority, the Trustee and a Community Facilities District may at any time consent to, amend or modify any of the Local Obligations of such Community Facilities District pursuant to the terms thereof, (a) with the prior consent of the Bond Insurer and the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, or (b) without the consent of any of the Owners or the Bond Insurer if such amendment or modification is for any one or more of the following purposes; provided, however, that any such amendment or modification which adversely affects the rights and interests of the Bond Insurer shall require the prior written consent of the Bond Insurer:
(a) to add to the covenants and agreements of the Community Facilities Districts contained in such Local Obligations, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power therein reserved to or conferred upon the Community Facilities Districts; or
(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in such Local Obligations, or in any other respect whatsoever as the Community Facilities District may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners of the Bonds in the opinion of Bond Counsel filed with the Trustee; or
(c) to amend any provision thereof to the extent necessary to comply with the Code, but only if and to the extent such amendment will not, in and of itself, adversely affect the exclusion from gross income of the interest on any Bonds under the Code theretofore issued on a tax-exempt basis, in the opinion of Bond Counsel filed with the Trustee.
Section 5.10 Sale of Local Obligations. Notwithstanding anything in this Indenture to the contrary, though subject to the prior consent of the Bond Insurer, the Authority may cause the 40 4904-9633-4639v5/022042-0049
Trustee to sell, from time to time, all or a portion of a Series of Local Obligations, provided that the Authority shall deliver to the Trustee:
(a) a certificate of an Independent Accountant certifying that, following the sale of such Local Obligations and the Revenues to be paid to the Authority (assuming the timely payment of amounts due thereon with respect to any Local Obligations not then in default), together with interest and principal due on any Defeasance Securities pledged to the repayment of the Bonds and the Revenues then on deposit in the funds and accounts established hereunder (valuing any Permitted Investments held hereunder at the then fair market value thereof), will be sufficient to pay the principal of and interest on the Bonds when due;
(b) if any Bonds are then rated by Standard & Poor’s a notification from Standard & Poor’s to the effect that such rating will not be withdrawn or reduced as a result of such sale of Local Obligations;
(c) an opinion of Bond Counsel that such sale of Local Obligations is authorized under the provisions of this Indenture and will not adversely affect the exclusion of interest on any Bonds theretofore issued on a tax-exempt basis from gross income for purposes of federal income taxation; and
(d) to provide for the issuance of an additional Series of Local Obligations subject to and in accordance with the provisions of the applicable Local Obligation Bond Indenture.
Upon compliance with the foregoing conditions by the Authority, the Trustee shall sell such Local Obligations in accordance with the Request of the Authority and disburse the proceeds of the sale of such Local Obligations to the Authority or upon the receipt of a Request of the Authority shall deposit such proceeds in the Revenue Fund.
Section 5.11 Continuing Disclosure Agreement. The Authority hereby covenants and agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure Agreement to be executed and delivered by the Authority in connection with the issuance of the Bonds. Notwithstanding any other provision of this Indenture, failure of the Authority to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this Section 5.11. For purposes of this Section, “Beneficial Owner” means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories and other intermediaries).
Section 5.12 Further Assurances. The Authority will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture.
Section 5.13 Pledged Revenues. The Authority represents it has not heretofore made a pledge of, granted a lien on or security interest in, or made an assignment or sale of the Revenues that ranks on a parity with or prior to the pledge granted under this Indenture. The Authority shall not 41 4904-9633-4639v5/022042-0049
hereafter make any pledge or assignment of, lien on, or security interest in the Revenues payable senior to or on a parity with the pledge of Revenues established under this Indenture.
ARTICLE VI
THE TRUSTEE
Section 6.1 Appointment of Trustee. Wilmington Trust, National Association, with a corporate trust office presently located in Costa Mesa, California, a national banking association organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority agrees that it will maintain a Trustee which is a trust company, association or bank of good standing located in or incorporated under the laws of the State, duly authorized to exercise trust powers, with a combined capital and surplus of at least Seventy-Five Million Dollars ($75,000,000), and subject to supervision or examination by federal or state authority, or otherwise approved by the Bond Insurer in writing, so long as any Bonds are Outstanding. If such bank, association or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section 6.1, the combined capital and surplus shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, to make regularly scheduled interest payments, and to cancel any Bond upon payment thereof.
Section 6.2 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except for the performance of such duties, and no implied covenants or obligations shall be read into this Indenture against the Trustee. In case an Event of Default hereunder has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill and diligence in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, but shall not be responsible for the acts of any agents, attorneys or receivers appointed by it unless such appointment was the result of negligence or willful misconduct. The Trustee may consult with and act upon the advice of counsel (which may be counsel to the Authority) and other professionals concerning all matters of trust and its duty hereunder and may conclusively rely upon and shall be wholly protected in reliance upon the advice or opinion of such counsel and other professionals in respect of any action taken or omitted by it in accordance herewith.
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(c) The Trustee shall not be responsible for any recital herein, or in the Tax Certificate or the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the validity, effectiveness or the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority hereunder or under Tax Certificate. The Trustee shall have no responsibility, opinion, or liability with respect to any information, statement, or recital in any offering memorandum, official statement, or other disclosure material prepared or distributed with respect to the issuance of the Bonds. Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the Authority or any of their directors, members, officers, agents, affiliates or employee, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee may assume performance by all such persons of their respective obligations. The Trustee shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other person.
(d) Except as provided in Section 3.2 hereof, the Trustee shall not be accountable for the use of any proceeds of sale of the Bonds delivered hereunder. The Trustee may become the Owner of Bonds secured hereby with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (e) The Trustee shall be entitled to request and receive written instructions from the Authority and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction thereof. The Trustee shall be protected and shall incur no liability in acting, or refraining from acting, without negligence, in reliance upon any notice, request, direction, consent, certificate, opinion, order, judgment, decree, affidavit, letter, telegram, facsimile, bond, debenture, note, other evidence of indebtedness (including any Bond) or other paper or document believed by it to be genuine and correct and to have been signed, sent or presented by the proper person or persons, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. Any action taken or omitted to be taken by the Trustee without negligence pursuant to this Indenture upon the written request or direction, authority or consent of any person who at the time of making such request or direction or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at such person’s request unless the ownership of such Bond by such person shall be reflected on the Bond Register. (f) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a Certificate of the Authority and/or opinion of counsel as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default hereunder of which the Trustee has been given notice or is deemed to have notice, as provided in Section 6.2(h) hereof, shall also be at liberty to accept a Certificate of the Authority and/or opinion of counsel to the effect that any particular dealing, transaction or action is necessary or expedient, and shall be fully protected in 43 4904-9633-4639v5/022042-0049
relying thereon, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure the same. (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and notwithstanding any other provision of this Indenture, the Trustee shall not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents.
(h) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except where a Responsible Officer has actual knowledge of such Event of Default and except for the failure by the Authority to make any of the payments to the Trustee required to be made by the Authority pursuant hereto, including payments on the Local Obligations, or failure by the Authority to file with the Trustee any document required by this Indenture to be so filed subsequent to the issuance of the Bonds, unless a Responsible Officer shall be specifically notified in writing of such default by the Authority or by the Owners of at least twenty five percent (25%) in aggregate principal amount of the Outstanding Bonds and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered to a Responsible Officer at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid. Delivery of a notice to the officer and address for the Trustee set forth in Section 9.12 hereof, as updated by the Trustee from time to time, shall be deemed notice to a Responsible Officer.
(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right fully to inspect all books, papers and records of the Authority pertaining to the Bonds, and to make copies of any of such books, papers and records such as may be desired but which is not privileged by statute or by law. (j) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the performance of its duties hereunder.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable by the Trustee in its sole discretion for the purpose of establishing the right of the Authority to the execution of any Bonds, the withdrawal of any cash, or the taking of any other action by the Trustee. (l) Before taking any action referred to in Sections 6.5, 8.2, or this Article, the Trustee may require that security or indemnity satisfactory to it in its sole and exclusive discretion be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any such action.
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(m) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds.
(n) Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Article VI.
(o) The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, war, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, loss or malfunctions of utilities, computer (hardware or software) or communications service, accidents, labor disputes, the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of supplies or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
(p) The Trustee agrees to accept and act upon facsimile or electronic transmission of written instructions and/or directions pursuant to this Indenture provided, however, that: (a) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (b) the Trustee shall have received a current incumbency certificate containing the specimen signature of such designated person. Any such instructions, directions and other communications furnished by electronic transmission shall be in the form of attachments in PDF format. (q) The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct.
Section 6.3 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement by the Authority for reasonable fees for its services rendered hereunder and all advances (including any interest on advances), counsel fees and expenses (including fees and expenses of outside counsel and the allocated costs of internal attorneys) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default with respect to a Series, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon the amounts held in Funds and accounts for such Series hereunder for the foregoing fees, charges and expenses incurred by it respectively. The Trustee’s right to payment of such fees and expenses shall survive the discharge and payment or defeasance of the Bonds and termination of this Indenture, and the resignation or removal of the Trustee.
Section 6.4 Notice to Bond Owners of Default. If an Event of Default hereunder occurs with respect to any Bonds of which the Trustee has been given, or is deemed to have notice, as provided in Section 6.2(h) hereof, then the Trustee shall promptly give written notice thereof to the 45 4904-9633-4639v5/022042-0049
Owner of each such Bond unless such Event of Default shall have been cured before the giving of such notice.
Section 6.5 Intervention by Trustee. In any judicial proceeding to which the Authority is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to Section 6.2(l) hereof, shall do so if requested in writing by the Owners of at least twenty five percent (25%) in aggregate principal amount of such Bonds then Outstanding.
Section 6.6 Removal of Trustee. With the consent of the Bond Insurer, the Owners of a majority in aggregate principal amount of the Outstanding Bonds may and the Authority may, so long as no Event of Default then exists, upon 30 calendar days’ prior written notice to the Trustee and the Bond Insurer, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and the Bond Insurer. Upon any such removal, the Authority shall appoint a successor or successors thereto; provided that any such successor shall be a bank, association or trust company meeting the requirements set forth in Section 6.1 hereof.
Section 6.7 Resignation by Trustee. The Trustee and any successor Trustee may at any time resign and be discharged from its duties and obligations hereunder by giving prior written notice of its intention to resign to the Authority, the Community Facilities Districts, the Bond Insurer and the City by registered or certified mail. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee to which the Bond Insurer consents. 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. Upon such acceptance, the Authority shall cause notice thereof to be sent to the Bond Insurer and the Bond Owners at their respective addresses set forth on the Bond Register.
Section 6.8 Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 6.6 or 6.7, respectively, the Authority shall promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to appoint a successor Trustee within thirty (30) calendar days following the delivery to the Trustee of the instrument described in Section 6.6 or within thirty (30) calendar days following the receipt of notice by the Authority, the Community Facilities Districts, the Bond Insurer and the City pursuant to Section 6.7, the Trustee may, at the expense of the Authority, petition any court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 6.1 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the Authority purporting to appoint a successor Trustee following the expiration of such thirty (30) calendar day period.
Section 6.9 Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements set forth in Section 6.1 hereof, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. The Trustee may assign its rights, duties 46 4904-9633-4639v5/022042-0049
and obligations hereunder in whole or in part, to an affiliate or subsidiary thereof, provided such Corporation, affiliate or subsidiary shall meet the requirements set forth in Section 6.1 hereof.
Section 6.10 Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment hereunder and to the predecessor Trustee an instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the successor Trustee serves as Trustee hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee’s successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the Authority be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.
Section 6.11 Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as a trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate co-trustee. The following provisions of this Section 6.11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable by either of the Trustee or separate or co-Trustee.
Should any instrument in writing from the Authority be required by the separate trustee or co-trustee so appointed by the Trustee or the Authority for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.
In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee.
Section 6.12 Indemnification; Limited Liability of Trustee. The Authority further covenants and agrees to indemnify and save the Trustee and its officers, officials, directors, agents 47 4904-9633-4639v5/022042-0049
and employees, harmless from and against any damages, loss, cost, claims, expense (including legal fees and expenses of its attorneys), and liabilities which it may incur arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability, but excluding any and all losses, expenses and liabilities which are due to the negligence or intentional misconduct of the Trustee, its officers, directors, agents or employees. In no event shall the Trustee be responsible or liable for any consequential, punitive, indirect, incidental, or special damages or loss of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. No provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of a majority (or any lesser amount that may direct the Trustee in accordance with the provisions of the Indenture) of the Owners of the principal amount of Bonds Outstanding or the Bond Insurer relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture. The Trustee shall not be liable for any actions taken or errors of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent or engaged in willful misconduct in ascertaining the pertinent facts. The rights of the Trustee and the obligations of the Authority under this Section 6.12 shall survive termination of this Indenture, discharge of the Bonds and resignation or removal of the Trustee.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.1 Amendment Hereof. This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture which shall become binding when the Owners of a majority in aggregate principal amount of the Bonds then Outstanding and the prior written consent of the Bond Insurer are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums, if any, at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without written consent of the Trustee, modify any of the rights or obligations of the Trustee.
This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds may also be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without consent of any Bond Owners, to the extent permitted by law but only for any one or more of the following purposes; provided, however, that any such amendment or modification which adversely affects the rights and interests of the Bond Insurer shall require the prior written consent of the Bond Insurer:
(a) to add to the covenants and agreements of the Authority contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers herein reserved to or conferred upon the Authority so long as such addition, limitation or surrender of such rights or powers shall not materially adversely affect the Owners of the Bonds; or
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(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the Authority may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners of the Bonds; or
(c) to amend any provision hereof relating to the Code as may be necessary or appropriate to assure compliance with the Code and the exclusion from gross income of interest on the Bonds theretofore issued on a tax-exempt basis, including, but not limited to, amending the procedures set forth in Section 5.8 hereof with respect to the calculation of Rebatable Arbitrage; or (d) to amend or clarify any provision hereof to provide for the issuance of any Additional Bonds on a parity with the Bonds for all purposes of this Indenture, including, but not limited to, for the purpose of exercising all rights and remedies hereunder; or (e) to amend the provisions of Section 4.4 hereof.
The Trustee shall be furnished, at the expense of the Authority, an opinion of Bond Counsel that any such Supplemental Indenture entered into by the Authority and the Trustee complies with the provisions of this Article VII and the Trustee may conclusively rely upon such opinion and shall be fully protected in relying thereon.
Section 7.2 Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of this Indenture for any and all purposes.
Section 7.3 Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that any affected Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of its Bond for that purpose at the Trust Office of the Trustee, a suitable notation as to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such Bond Owners’ action shall be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at the Trust Office of the Trustee, without cost to each Bond Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds.
Section 7.4 Amendment by Mutual Consent. The provisions of this Article VII shall not prevent any Bond Owner, with the Bond Insurer’s consent, from accepting any amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond. 49 4904-9633-4639v5/022042-0049
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 8.1 Events of Default. The following events shall be Events of Default hereunder.
(a) Default in the due and punctual payment of the principal of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise. (b) Default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable. (c) Default by the Authority in the observance of any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such default shall have continued for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not less than twenty five percent (25%) in aggregate principal amount of the Bonds at the time Outstanding, provided that such default (other than a default arising from nonpayment of the Trustee’s fees and expenses, which must be cured within such 30 day period) shall not constitute an Event of Default hereunder if the Authority shall with the written approval of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), commence to cure such default within said thirty (30) day period and thereafter diligently and in good faith shall cure such default within a reasonable period of time; or
(d) The filing by the Authority of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Authority, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property.
Section 8.2 Remedies; Rights of Bond Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture. Subject to Section 8.3, in the event of an Event of Default arising out of a nonpayment of Trustee’s fees and expenses, the Trustee may sue the Authority to seek recovery of its fees and expenses, provided, however, that such recovery may be made only from the funds of the Authority and not from Revenues.
If an Event of Default shall have occurred and be continuing and if requested to do so by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds, and, in each case, if indemnified as provided in Section 6.2(l), the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII and, as applicable, under the Local Obligations, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bond Owners.
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No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bond Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.
In no event shall the principal of the Bonds be accelerated.
Section 8.3 Application of Revenues and Other Funds After Event of Default. All amounts received by the Trustee with respect to the Bonds pursuant to any right given or action taken by the Trustee under the provisions of this Indenture relating to the Bonds shall be applied by the Trustee in the following order upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid – First, to the payment of the costs and expenses of the Trustee in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel (including outside counsel and the allocated costs of internal attorneys), and to the payment of all other outstanding fees and expenses of the Trustee; and Second, to the payment of the whole amount of interest on and principal of the Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied in the following order of priority; (a) first to the payment of all installments of interest on the Bonds then due and unpaid,
(b) second, to the payment of all installments of principal of the Bonds then due and unpaid, and
(c) third, to the payment of interest on overdue installments of principal and interest on Bonds.
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 or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, it may, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other such litigation and provided further that the Trustee 51 4904-9633-4639v5/022042-0049
shall have the right to decline to comply with such written request unless indemnification satisfactory to it has been provided. Any suit, action or proceeding which any Owner of Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds for the 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 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 of the Trustee and of the Bond Owners under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.
Section 8.6 Non Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the Bonds, shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as herein provided, out of the Revenues and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Bond Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds to exercise any right or power accruing upon any default 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 Bond Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the case may be.
Section 8.7 Rights and Remedies of Bond Owners. No Owner of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; 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 shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except 52 4904-9633-4639v5/022042-0049
in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest and premium (if any) on such Bond as herein provided or to institute suit for the enforcement of 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 the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the Authority, the Trustee and the Bond Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Limited Liability of Authority. Notwithstanding anything in this Indenture contained, the Authority shall not be required to advance any moneys derived from any source of income other than the Revenues or for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants herein contained (except to the extent any such covenants are expressly payable hereunder from the Revenues). The Authority may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the Authority for such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as in this Indenture provided. The general fund of the Authority is not liable, and the credit of the Authority is not pledged, for the payment of the interest and premium (if any) on or principal of the Bonds. The Owners of the Bonds shall never have the right to compel the forfeiture of any property of the Authority. The principal of and interest on the Bonds and any premiums upon the redemption of any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any property of the Authority or upon any of its income, receipts or revenues except the Revenues and other funds pledged to the payment thereof as in this Indenture provided.
Section 9.2 Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Authority, the Trustee, the Bond Insurer and the Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the Trustee, the Bond Insurer and the Owners of Bonds.
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Section 9.3 Discharge of Indenture. The Authority may pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and premium (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture and available for such purpose, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums; or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, Defeasance Securities in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture and available for such purpose, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.
Any Outstanding Bond or Bonds shall be deemed to have been paid and discharged under (b) or (c) above if (i) in the case of Bonds to be redeemed prior to the maturity thereof, notice of such redemption shall have been provided pursuant to Section 2.2(d) hereof or provision satisfactory to the Trustee shall have been made for the provision of such notice, (ii) the Authority shall have delivered an escrow agreement with respect to the deposits under (b) or (c) above (which shall be acceptable in form and substance to the Bond Insurer, so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy); (iii) with respect to a deposit under (c) above, a verification report of an Independent Accountant shall be delivered to the Trustee and the Bond Insurer, and (iv) an opinion of Bond Counsel shall be delivered to the Trustee and the Bond Insurer to the effect that the requirements of this Indenture have been satisfied with respect to such discharge of Bonds.
The Bond Insurer shall be provided with final drafts of the above-referenced documentation not less than five Business Days prior to the funding of the escrow. Upon a discharge of one or more Bonds as described above, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues, and other funds provided for in this Indenture with respect to such Bonds, as applicable, and all other pecuniary obligations of the Authority under this Indenture with respect to such Bonds, shall cease and terminate, except only the obligation of the Authority to comply with the covenants contained in Sections 5.7 and 6.12 hereof, and to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose. Any funds thereafter held by the Trustee, which are not required for said purposes, shall be paid over to the Authority or upon a Request of the Authority to the City or the Community Facilities Districts, as applicable.
Defeasance shall be accomplished only with an irrevocable deposit in escrow of cash and/or Defeasance Securities. Further substitutions of securities in the escrow are not permitted. The deposit in the escrow must be sufficient, without reinvestment, to pay all principal and interest as scheduled on the Bonds to and including the date of redemption.
This Indenture shall not be discharged until all amounts due or to become due to the Bond Insurer shall have been paid in full in accordance with Section 10.3. The Authority’s obligation to pay such amounts shall expressly survive payment in full of the payments of principal of and interest on the Bonds.
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Section 9.4 Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Authority is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Authority, that are presently vested in the Authority, and all the covenants, agreements and provisions contained in this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors whether so expressed or not.
Section 9.5 Content of Certificates. Every certificate by or on behalf of the Authority with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person or persons making or giving such certificate have read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, on information with respect to which is in the possession of the Authority, or upon the certificate or opinion of or representations by an officer or officers of the Authority, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous.
Section 9.6 Execution of Documents by Bond Owners. Any request, consent or other instrument required by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bond Owners in person or by agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Authority if made in the manner provided in this Section 9.6.
The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgements of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be conclusively proved by the Bond Register. Any request, consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call 55 4904-9633-4639v5/022042-0049
and hold a meeting of the Bond Owners upon such notice and in accordance with such rules and obligation as the Trustee considers fair and reasonable for the purpose of obtaining any such action.
Section 9.7 Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the Authority, the City or the Community Facilities Districts (but excluding Bonds held in any employees’ or retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded. Upon request, the Authority shall specify to the Trustee those Bonds disqualified pursuant to this Section 9.7 and the Trustee may conclusively rely upon such certificate.
Section 9.8 Waiver of Personal Liability. No officer, agent or employee of the Authority shall be individually or personally liable for the payment of the interest on or principal of the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the performance of any official duty provided by law.
Section 9.9 Entire Agreement; Partial Invalidity. This Agreement and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written. If any one or more of the covenants or agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the Trustee) to be performed should be contrary to law, then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and void and shall be deemed separable from the remaining covenants and agreements or portions thereof and shall in no way affect the validity of this Indenture or of the Bonds; but the Bond Owners shall retain all rights and benefits accorded to them under the Bond Law or any other applicable provisions of law. The Authority hereby declares that it would have entered into this Indenture and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any or more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 9.10 Destruction of Cancelled Bonds. Whenever in this Indenture provision is made for the surrender to the Authority or the Trustee of any Bonds which have been paid or cancelled pursuant to the provisions of this Indenture, the Trustee shall destroy such Bonds in accordance with the retention policy of the Trustee then in effect.
Section 9.11 Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Authority or the Trustee may be established and maintained in the accounting records of the Authority or the Trustee, as the case may be, either as a fund or an account, and may, for the purpose of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account. All such records with respect to all such funds and accounts held by the Authority shall at all times be maintained in accordance with generally accepted accounting principles and all such records with respect to all such funds and accounts held by the Trustee shall be at all times maintained in accordance with corporate trust industry practices; in each case with due regard for the protection of the security of the Bonds and the rights of every Owner thereof.
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Section 9.12 Notices. Any notice, request, complaint, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, or sent by fax or other electronic transmission, addressed as follows:
If to the Authority: Lake Elsinore Facilities Financing Authority c/o City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: Executive Director
If to the Community
Facilities Districts
(as applicable): [Name of Community Facilities District] c/o City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Manager
If to the Trustee: Wilmington Trust, National Association 650 Town Center Drive, Suite 800
Costa Mesa, CA 92626
Attention: Corporate Trust Department
Fax No.: (714) 384-4151
If to the Bond Insurer: [INSURER]
The Authority, the City, the Trustee and the Bond Insurer may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
Any such notice, certificates or other communications furnished by electronic transmission shall be in the form of attachments in PDF format.
In each case in which notice or other communication to the Bond Insurer refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel, and shall be marked to indicate “URGENT MATERIAL ENCLOSED.” Section 9.13 Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds which remain unclaimed for two (2) years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two (2) years after the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the Authority for the payment of such Bonds; provided, however, that before being required to make such payment to the Authority, the Trustee shall, at the expense of Authority, cause to be mailed to the Owners of all such Bonds, at their respective addresses appearing on the Bond Register, a notice that said moneys remain unclaimed and that, after a date in said notice, which date shall not be less 57 4904-9633-4639v5/022042-0049
than thirty (30) days after the date of mailing such notice, the balance of such moneys then unclaimed will be returned to the Authority.
Section 9.14 Payment Due on Other than a Business Day. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in the Indenture, is not a Business Day, such payment, with no interest accruing for the period after such nominal date, may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Indenture.
Section 9.15 Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California.
ARTICLE X
MUNICIPAL BOND INSURANCE POLICY AND RESERVE SURETY BOND Section 10.1 Rights of the Bond Insurer. As long as the Insurance Policy is in full force and effect, the Authority and the Trustee agree to comply with the following provisions, notwithstanding anything in this Indenture to the contrary. (a) The prior written consent of the Bond Insurer shall be a condition precedent to the deposit of any other Reserve Credit Facility, other than the Reserve Surety Bond, provided in lieu of a cash deposit into the Reserve Fund. Amounts on deposit in the Reserve Fund shall be applied solely to the payment of debt service due on Outstanding Bonds, and the Trustee shall draw on the Reserve Accounts of the Reserve Fund to pay debt service and exhaust amounts on deposit or otherwise available therein prior to making any claim on the Insurance Policy. (b) The Bond Insurer shall be deemed to be the sole holder of the 2025 Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the 2025 Bonds are entitled to take pursuant to this Indenture pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. In furtherance thereof and as a term of this Indenture and each 2025 Bond, the Trustee (solely with respect to the 2025 Bonds) and each Owner of a 2025 Bond appoint the Bond Insurer as their agent and attorney-in-fact and agree that the Bond Insurer may at any time during the continuation of any proceeding by or against the Authority or any Community Facilities District under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Trustee (solely with respect to the 2025 Bonds) and each Owner of a 2025 Bond delegate and assign to the Bond Insurer, to the fullest extent permitted by law, the rights of the Trustee and each Owner of a 2025 Bond in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners of 2025 Bonds shall expressly include mandamus.
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(c) Upon the occurrence of an optional redemption of 2025 Bonds in part, the selection of such 2025 Bonds to be redeemed shall be subject to the approval of the Bond Insurer; provided, however, that with respect to an optional redemption of 2025 Bonds in part resulting from the redemption of all outstanding maturities of a series of Local Obligations, such approval of the Bond Insurer shall not be required. The exercise of any provision of this Indenture which permits the purchase of 2025 Bonds in lieu of redemption shall require the prior written approval of the Bond Insurer if any 2025 Bond so purchased is not cancelled upon purchase. (d) The rights granted to the Bond Insurer under this Indenture or under the Local Obligation Bond Indentures to request, consent to or direct any action are rights granted to the Bond Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Bond Insurer of such rights is merely an exercise of the Bond Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Owners of the 2025 Bonds and such action does not evidence any position of the Bond Insurer, affirmative or negative, as to whether the consent of the Owners of the 2025 Bonds or any other person is required in addition to the consent of the Bond Insurer.
(e) Each of the Authority and the Trustee, to the extent directed by the Authority, at the expense of the Authority, covenants and agrees to take such action (including, as applicable, filing of UCC financing statements and continuations thereof) as is necessary from time to time to preserve the priority of the pledge of the Revenues under applicable law. (f) The Bond Insurer is hereby deemed a third party beneficiary to this Indenture.
Section 10.2 Payments under the Insurance Policy.
(a) If, on the third Business Day prior to the related scheduled interest payment date or principal payment date (“Payment Date”) there is not on deposit with the Trustee, after making all transfers and deposits required under this Indenture, moneys sufficient to pay the principal of and interest on the 2025 Bonds due on such Payment Date, the Trustee shall give notice to the Bond Insurer and to its designated agent (if any) (the “Insurer’s Fiscal Agent”) by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the 2025 Bonds due on such Payment Date, the Trustee shall make a claim under the Insurance Policy and give notice to the Bond Insurer and the Bond Insurer’s Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the 2025 Bonds and the amount required to pay principal of the 2025 Bonds, confirmed in writing to the Bond Insurer and the Bond Insurer’s Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy. (b) The Trustee shall designate any portion of payment of principal on 2025 Bonds paid by the Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of 2025 Bonds registered to the then current Owners of the 2025 Bonds, whether DTC or its nominee or otherwise, and shall issue a replacement 2025 Bond to the Bond Insurer, registered in the name of _____, in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee’s failure to so designate any payment or issue any 59 4904-9633-4639v5/022042-0049
replacement 2025 Bond shall have no effect on the amount of principal or interest payable by the Authority on any 2025 Bond or the subrogation rights of the Bond Insurer. (c) The Trustee shall keep a complete and accurate record of all funds deposited by the Bond Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any 2025 Bond. The Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee. (d) Upon payment of a claim under the Insurance Policy, the Trustee shall establish a separate special purpose trust account for the benefit of Owners of the 2025 Bonds referred to herein as the “Policy Payments Account” and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amount paid under the Insurance Policy in trust on behalf of Owners of the 2025 Bonds and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Owners of the 2025 Bonds in the same manner as principal and interest payments are to be made with respect to the 2025 Bonds under the sections hereof regarding payment of 2025 Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything herein to the contrary, the Authority agrees to pay to the Bond Insurer (i) a sum equal to the total of all amounts paid by the Bond Insurer under the Insurance Policy (the “Insurer Advances”); and (ii) interest on such Insurer Advances from the date paid by the Bond Insurer until payment thereof in full, payable to the Bond Insurer at the Late Payment Rate per annum (collectively, the “Insurer Reimbursement Amounts”). For purposes of this Section 10.2, “Late Payment Rate” means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in The City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the 2025 Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. The Authority hereby covenants and agrees that the Bond Insurer Reimbursement Amounts are secured by a lien on and pledge of the Revenues and payable from such Revenues on a parity with debt service due on Outstanding Bonds. (e) Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds remaining in the Policy Payments Account following an Interest Payment Date shall promptly be remitted to the Bond Insurer.
(f) The Bond Insurer shall, to the extent it makes any payment of principal of or interest on the 2025 Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Insurance Policy (which subrogation rights shall also include the rights of any such recipients in connection with any Insolvency Proceeding). Each obligation of the Authority to the Bond Insurer under this Indenture, the 2025 Bonds, the Local Obligations and the Local Obligation Bond Indentures (collectively, the “Transaction Documents”) shall survive discharge or termination of such Transaction Documents. (g) After payment of reasonable expenses of the Trustee, the application of funds realized upon default shall be applied to the payment of expenses of the Authority only after the 60 4904-9633-4639v5/022042-0049
payment of past due and current debt service on the 2025 Bonds and amounts required to restore the Reserve Fund to the Reserve Requirement.
(h) The Bond Insurer shall be entitled to pay principal or interest on the 2025 Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Authority (as such terms are defined in the Insurance Policy) whether or not the Bond Insurer has received a notice of Nonpayment or a claim upon the Insurance Policy.
Section 10.3 Amounts Paid by Insurer. Amounts paid by the Bond Insurer under the Insurance Policy and the Reserve Surety Bond shall not be deemed paid for purposes of this Indenture and the 2025 Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the Authority in accordance with this Indenture. This Indenture shall not be discharged unless all amounts due or to become due to the Bond Insurer have been paid in full or duly provided for.
Section 10.4 Reimbursement of Insurer Fees. The Authority shall pay or reimburse the Bond Insurer from Revenues any and all charges, fees, costs and expenses that the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Transaction Document; (ii) the pursuit of any remedies under this Indenture or any other Transaction Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Indenture or any other Transaction Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with this Indenture or any other Transaction Document or the transactions contemplated thereby, other than costs resulting from the failure of the Bond Insurer to honor its obligations under the Insurance Policy. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Indenture or any other Transaction Document.
Section 10.5 Provision of Information to Insurer. The Bond Insurer shall be provided with the following information by the Authority or the Trustee, as the case may be:
(a) Notice of any draw upon the Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; (b) Notice of any default known to the Trustee or the Authority within five Business Days after knowledge thereof;
(c) Prior notice of the redemption of any of the Bonds or the Local Obligations, including the principal amount, maturities and CUSIP numbers thereof; (d) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto;
(e) Notice of the commencement of any Insolvency Proceeding by or against the Authority or a Community Facilities District;
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(f) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds;
(g) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to the Transaction Documents; (h) All reports, notices and correspondence to be delivered to Bond Owners under the terms of the Transaction Documents; and
(i) All information furnished to Bond Owners pursuant to the Continuing Disclosure Agreement shall also be provided to the Bond Insurer, simultaneously with the furnishing of such information.
In addition, the Bond Insurer shall have the right to receive such additional information as it may reasonably request.
Section 10.6 Discussion of and Access to Information. The Authority shall permit the Bond Insurer to discuss the affairs, finances and accounts of the Authority or any information the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Authority and will use commercially reasonable efforts to enable the Bond Insurer to have access to the facilities, books and records of the Authority on any Business Day upon reasonable prior notice.
Section 10.7 Notice to Insurer by Trustee. The Trustee shall notify the Bond Insurer of any failure of the Authority or the Community Facilities Districts to provide notices, certificates and other information under the Transaction Documents of which a Responsible Officer of the Trustee has actual knowledge.
Section 10.8 Effect of Insurance Policy. In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under this Indenture would adversely affect the security for the Bonds or the rights of the Owners of the Bonds, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no Insurance Policy.
Section 10.9 Impairment of Insurer’s Rights. No contract shall be entered into or any action taken by which the rights of the Bond Insurer or security for or sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Bond Insurer.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Authority has caused this Indenture to be executed by the Executive Director of the Authority, attested by its Secretary, and the Trustee has caused this Indenture to be executed by one of its authorized officers, all as of the day and year first above written.
LAKE ELSINORE FACILITIES FINANCING
AUTHORITY
By:
Executive Director
ATTEST:
Secretary
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF SERIES 2025 BOND
R-__ $__________
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
AUTHORITY OR THE TRUSTEE FOR REGISTRATION OR TRANSFER,
EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
HEREIN.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
LAKE ELSINORE FACILITIES FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BOND, SERIES 2025
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NUMBER:
____% September 1, 20__ _____, 2025 _________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: AND NO/100 DOLLARS
The LAKE ELSINORE FACILITIES FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Revenues and other funds hereinafter referred to) to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above (subject to any right of prior redemption hereinafter mentioned), the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the fifteenth calendar day of the month preceding the month in which such Interest Payment Date occurs, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to [August 15, 2025], in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has previously been paid or A-2
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made available for payment), payable semiannually on September 1 and March 1 in each year, commencing [September 1, 2025] (each, an “Interest Payment Date”) until the Maturity Date stated above or date of redemption of this Bond. The Principal Amount hereof is payable upon presentation and surrender hereof at the Trust Office (as defined in the Indenture) of Wilmington Trust, National Association (the “Trustee”). Interest hereon is payable by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the address of the Registered Owner as it appears on the registration books of the Trustee as of the fifteenth calendar day of the month preceding the month in which such Interest Payment Date occurs; provided, however, that payment of interest may be made by wire transfer to an account in the United States of America to any registered owner of Bonds in the aggregate principal amount of $1,000,000 or more upon written instructions of any such registered owner filed with the Trustee in writing at least five (5) Business Days before the Record Date for such Interest Payment Date.
This Bond is one of a duly authorized issue of bonds of the Authority designated the “Lake Elsinore Facilities Financing Authority Local Agency Revenue Refunding Bonds, Series 2025” (the “Bonds”), limited in principal amount to __________ Dollars ($__________), secured by an Indenture of Trust dated as of June 1, 2025 (the “Indenture”), by and between the Authority and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and extent of the Revenues, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of the terms of the Indenture are hereby incorporated herein and constitute a contract between the Authority and the Registered Owner hereof, and to all of the provisions of which Indenture the Registered Owner hereof, by acceptance hereof, assents and agrees. Capitalized terms not defined herein shall have the meanings set forth in the Indenture.
This Bond is a limited obligation of the Authority, payable solely from the Revenues and funds pledged under the Indenture. This Bond is not a debt of the City of Lake Elsinore (the “City”) or the State of California (the “State”) or any of its political subdivisions (except the Authority and only to the extent set forth in the Indenture), and none of said City, the State or any of its political subdivisions is liable hereon. The Authority has no taxing power.
The Bonds are authorized to be issued pursuant to the provisions of the Marks-Roos Local Bond Pooling Act of 1985, as amended, constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”).
The Bonds are limited obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues and certain other funds held by the Trustee as provided in the Indenture. The Revenues and such other funds constitute a trust fund for the security and payment of the principal of and interest on the Bonds, except to the extent otherwise provided in the Indenture. The full faith and credit of the Authority is not pledged to the payment of the principal of or interest or redemption premiums (if any) on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Revenues and such other funds as provided in the Indenture.
The Bonds have been issued to provide funds to purchase certain obligations of various community facilities districts of the City (each a “Community Facilities District” and, collectively, the “Community Facilities Districts”) as identified in the Indenture (collectively, the “Local Obligations”). A Community Facilities District, in turn, will take the proceeds that it receives from the sale of the Local Obligations to the Authority to refund certain outstanding indebtedness of the A-3
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Community Facilities Districts, all as more particularly described in the Indenture. The obligations of the Community Facilities Districts to make payments of principal and interest on the Local Obligations are limited obligations secured only as set forth therein.
The Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to maturity. The Bonds maturing on or after September 1, 20__ may be redeemed at the option of the Authority, from any source of available funds, prior to maturity on any Interest Payment Date on or after September 1, 20__ as a whole, or in part from maturities of the Local Obligations simultaneously redeemed, if any redemption of Local Obligations is being made in conjunction with such optional redemption, and otherwise from such maturities as are selected by the Authority, and by lot within a maturity, at a redemption price equal to the par amount of the Bonds to be redeemed, together with accrued interest thereon to the date of redemption, without premium.
The Bonds are subject to special redemption on any Interest Payment Date from proceeds of early redemption of the Local Obligations from prepayments of Special Taxes (as such terms are defined in the Indenture), in whole or in part, from maturities corresponding proportionately to the maturities of the Local Obligations simultaneously redeemed, at the principal amount thereof, plus a premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Dates Redemption Prices
Any Interest Payment Date from March 1, 20__ through March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 2025 101
September 1,20__ and any Interest Payment Date thereafter 100 The Bonds maturing on September 1, 20__, September 1, 20__, September 1, 20__ and September 1, 20__ are subject to mandatory sinking fund redemption prior to maturity, in part on September 1, 20__, September 1, 20__, September 1, 20__ and September 1, 20__, respectively, and on each September 1 thereafter by lot, in accordance with the schedules of sinking fund payments set forth in the Indenture at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the redemption date, without premium.
In the event that Bonds maturing on September 1, 20__, September 1, 20__, September 1, 20__ and September 1, 20__ are redeemed pursuant to the optional or special redemption provisions described above, the sinking fund payments will be reduced as nearly as practicable on a proportionate basis in integral multiples of $5,000.
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 60 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books in accordance with the provisions of the Indenture provided, however, so long as the Bonds are registered in the name of the Nominee, notice of redemption shall be given in such manner as complies with the requirements of DTC. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners A-4
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of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.
Unless funds for the optional redemption of any Bonds are irrevocably deposited with the Trustee prior to rendering notice of redemption to the Bondowners, such notice shall state that such redemption is subject to the deposit of funds by the Authority. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Authority and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall send notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
The Bonds are issuable as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Bonds may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount and maturity of fully registered Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by its attorney duly authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange of any Bond (i) during the 15 days prior to selection of Bonds for redemption, or (ii) selected for redemption.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The Indenture and the rights and obligations of the Authority and of the owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee, all as more fully set forth in the Indenture.
It is hereby certified by the Authority that all things, conditions and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and by the Act, and that the amount of this Bond, A-5
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together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, the LAKE ELSINORE FACILITIES FINANCING AUTHORITY has caused this Bond to be executed in its name and on its behalf by the facsimile signature of its Chair and attested by the facsimile signature of its Secretary, all as of the date set forth above.
LAKE ELSINORE FACILITIES FINANCING
AUTHORITY
By:
Chair
Attest:
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture.
Date: _____, 2025 WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
[FORM OF LEGAL OPINION]
The attached is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, 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.
Secretary of the Board of Directors of Lake
Elsinore Facilities Financing Authority
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[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 guarantee shall be made by
a guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.
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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[FORM OF STATEMENT OF INSURANCE]
_____ (“_____”) has delivered its municipal bond insurance policy (the “Policy”) with respect to the scheduled payments due of principal of and interest on the Bonds to Wilmington Trust, National Association, or its successors, as trustee for the Bonds (the “Trustee”). Said Policy is on file and available for inspection at the principal office of the Trustee and a copy thereof may be obtained from _____ or the Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owners of the Bonds acknowledge and consent to the subrogation rights of _____ as more fully set forth in the Policy.
Stradling Yocca Carlson & Rauth
Draft of 5/7/25
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SECOND SUPPLEMENT TO BOND INDENTURE
Between
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) And
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Trustee
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) IMPROVEMENT AREA B 2025 SPECIAL TAX BONDS
Dated as of June 1, 2025
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FIRST SUPPLEMENT TO BOND INDENTURE
THIS FIRST SUPPLEMENT TO BOND INDENTURE dated as of June 1, 2025 (the “First Supplement”), governs the terms of the City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area B 2025 Special Tax Bonds, which are being issued as Parity Bonds in accordance with the Bond Indenture (the “Original Bond Indenture”) dated as of March 1, 2015, by and between City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) (the “District”) and MUFG Union Bank, N.A. (the “Original Trustee”), as trustee.
Wilmington Trust, National Association, as successor Trustee to the Original Trustee shall be referred to herein as the “Trustee.” The Original Bond Indenture, the First Supplement and this Second Supplement are hereinafter collectively referred to as the “Indenture.” R E C I T A L S :
WHEREAS, the City Council of the City of Lake Elsinore, located in Riverside County, California (hereinafter sometimes referred to as the “legislative body of the District”), has heretofore undertaken proceedings and declared the necessity to issue bonds of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”); and WHEREAS, based upon Resolution Nos. 2004-6 and 2004-7 adopted by the legislative body of the District on January 13, 2004 and an election held on January 13, 2004 authorizing the levy of a special tax and the issuance of bonds by the District for Improvement Area B, the District is now authorized to issue bonds in an aggregate principal amount not to exceed $24,000,000 for Improvement Area B; and
WHEREAS, the District previously issued its Special Tax Bonds (Improvement Area B) 2006 Series A (the “2006 Bonds”) in the aggregate principal amount of $20,570,000 to finance public improvements; and
WHEREAS, pursuant to the Original Bond Indenture, the District previously issued its Improvement Area B 2015 Special Tax Refunding Bonds (the “2015 Bonds”) in the aggregate principal amount of $25,795,000 to refund the outstanding 2006 Bonds and to finance additional public improvements; and
WHEREAS, pursuant to the Original Bond Indenture, the District previously issued its Improvement Area B 2017 Special Tax Bonds (the “2017 Bonds”) in the aggregate principal amount of $7,975,000 to finance additional public improvements; and WHEREAS, the legislative body of the District intends to refund the outstanding 2015 Bonds through the issuance of bonds in an aggregate principal amount of $_________ designated as the “City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area B 2025 Special Tax Bonds” (the “2025 Bonds”); and
WHEREAS, pursuant to Section 6.1(b) and (f) of the Original Bond Indenture, the District desires to amend the Original Bond Indenture as set forth herein in connection with the issuance of the 2025 Bonds; and
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WHEREAS, the District has determined all requirements of the Act for the issuance of the 2025 Bonds as Parity Bonds under the terms of the Original Bond Indenture have been satisfied; NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the 2025 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 2025 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 2015 Bonds, the 2017 Bonds, the 2025 Bonds and any additional Parity Bonds (as defined in the Original Bond Indenture) which may be issued under the Indenture from time to time, as follows:
ARTICLE I
DEFINITIONS
Section 1.1.Definitions. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Original Bond Indenture provided that the following definitions are added and, where applicable, shall supersede any different definition of the same capitalized term provided in the Original Bond Indenture:
“2025 Authority Bonds” means any bonds outstanding under the 2025 Authority Indenture, which are secured by payments made on the 2025 Bonds.
“2025 Authority Indenture” means that certain Indenture of Trust, dated as of June 1, 2025, by and between the Facilities Financing Authority and the 2025 Authority Trustee, pursuant to which the Authority Bonds are issued.
“2025 Authority Trustee” means Wilmington Trust, National Association, or any successor thereto appointed pursuant to the 2025 Authority Indenture. “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 Bonds and any Parity Bonds or 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, the District, and any other costs otherwise incurred by the City on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District under the Indenture. Administrative Expenses shall also include the administrative costs with respect to the collection of Delinquency Proceeds. “Authorized Representative of the City” 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 Officer to undertake the action referenced in the Indenture as required to be undertaken by an Authorized Representative of the City. “City Facilities Account” means the account by that name created and established in the Improvement Fund pursuant to Section 3.1 hereof.
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“Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the District, dated the date of issuance and delivery of the 2025 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “Costs of Issuance” shall have the meaning set forth in the 2025 Authority Indenture. “Facilities Financing Authority” means the Lake Elsinore Facilities Financing Authority. “Interest Payment Date” means each March 1 and September 1, with respect to the Bonds, commencing March 1, 2026, and the final maturity date of the Bonds and the 2025 Bonds; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date, and in the case of the final Interest Payment Date to and including such date, will be paid on the Business Day next preceding such date.
“Proportionate Share” means (i) with respect to the Bonds, the calculation set forth in Section
3.2(b)(4), as of the date of calculation, a fraction equal to (A) the principal amount of the Bonds Outstanding divided by (B) the sum of the principal amount of all of the Local Obligations (as defined in the Authority Indenture) Outstanding, (ii) with respect to the 2025 Bonds, as of the date of calculation, 100% of the Reserve Requirement and (iii) with respect to any additional Parity Bonds, such amount as set forth in a Supplemental Indenture.
“Reserve Account” means, with respect to the Bonds, the District’s Account of the Reserve Fund established under the Authority Indenture, with respect to the 2025 Bonds, the Reserve Fund established under the 2025 Authority Indenture, and with respect to any additional Parity Bonds, such fund or account as may be established under a Supplemental Indenture. “Reserve Requirement” with respect to the Bonds has the meaning set forth in the Authority Indenture, with respect to the 2025 Bonds, has the meaning set forth in the 2025 Authority Indenture, and with respect to any additional Parity Bonds, such amount as set forth in a Supplemental Indenture.
“Term Bonds” means, with respect to the Bonds, the Bonds maturing on September 1, 20__ and September 1, 20__ and, with respect to the 2025 Bonds, the 2025 Bonds maturing on September 1, 20__.
“Treasurer” means the person who is acting in the capacity as finance director or assistant city manager to the City.
“Water Facilities Account” means the account by that name created and established in the Improvement Fund pursuant to Section 3.1 hereof.
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1.Amount, Issuance, Purpose and Nature of 2025 Bonds. Under and pursuant to this First Supplement, the 2025 Bonds in the aggregate principal amount of $_________ shall be issued as Parity Bonds governed by the terms of the Original Bond Indenture, as supplemented by this First Supplement, for the purpose of financing additional public facilities within the District, funding a deposit to the Reserve Fund and paying the Costs of Issuance. 4 NG-U9ZQVMF2/4937-5827-2063v2/022042-0049
Section 2.2.Description of Bonds; Interest Rates. The 2025 Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof within a single maturity. The 2025 Bonds shall be numbered as determined by the Trustee.
The 2025 Bonds shall be designated “CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) IMPROVEMENT AREA B 2025 SPECIAL TAX BONDS.” The 2025 Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on March 1, 2026 and each Interest Payment Date thereafter:
Maturity Date
(September 1) Principal Amount Interest Rate
$ %
Section 2.3.Form of 2025 Bonds; Execution and Authentication. The 2025 Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which forms are hereby approved and adopted as the forms of such 2025 Bonds and of the certificate of authentication. Notwithstanding any provision in the Original Bond Indenture to the contrary, the District may, in its sole discretion, elect to issue the 2025 Bonds in book entry form.
Only the 2025 Bonds bearing thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under the Bond Indenture, and no 2015 Bond or 2017 Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee.
Section 2.4.Place and Form of Payment. The principal of the 2025 Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof 5 NG-U9ZQVMF2/4937-5827-2063v2/022042-0049
at the Principal Office of the Trustee, or at the designated office of any successor Trustee; provided that so long as the Facilities Financing Authority or the 2025 Authority Trustee on its behalf is the registered owner of all the 2025 Bonds, such presentment is not required.
Section 2.5.Conditions to Issuance of 2025 Bonds. The 2025 Bonds shall not be issued unless and until the conditions for the issuance of the 2025 Bonds as Parity Bonds pursuant to 9.2 of the Original Bond Indenture shall have been satisfied or will be satisfied upon the issuance of the 2025 Bonds.
Section 2.6.Amendment to Section 3.2(b)(4) of the Original Bond Indenture. Section
3.2(b)(4) of the Original Bond Indenture is hereby amended and restated in its entirety to read as follows:
“(4) transfer to the Authority Trustee and the 2025 Authority Trustee, without preference or priority and in the event of any insufficiency of such moneys ratably without any discrimination or preference, for deposit in the Reserve Account, the amount necessary to cause the balance on deposit therein to equal the District’s Proportionate Share of the Reserve Requirement.”
Section 2.7.Amendment to Section 3.2(b) of the Original Bond Indenture. Section
3.2(b) is hereby amended in part by restating the last sentence thereof to read as follows:
“The Trustee shall notify the Authority Trustee and the 2025 Authority Trustee at least five (5) Business Days prior to each Interest Payment Date if there is not on deposit with the Trustee, after making all of the transfers required hereunder, moneys sufficient to pay the principal of and interest on the Bonds and any Parity Bonds.”
Section 2.8.Amendment to Section 4.2 of the Original Bond Indenture. Section 4.2 of the Original Bond Indenture is hereby amended in part by adding the following as the last sentence thereto:
“If less than all of the Bonds, the 2025 Bonds and any additional Parity Bonds are to be redeemed, amounts allocated to the redemption thereof shall be applied as nearly as practicable on a pro rata basis among series as set forth in a Certificate of an Authorized Representative.” Section 2.9.Amendment to Section 9.2 of the Original Bond Indenture. Section 9.2 of the Original Bond Indenture is hereby amended and restated in its entirety to read as follows:
“Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the 2025 Bonds hereunder issue Parity Bonds payable from the Net Special Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Fund therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds, the 2025 Bonds and any other Parity Bonds theretofore issued hereunder or under any Supplemental Indenture; provided, however, that Parity Bonds may only be issued only for the purposes of refunding all or a portion of the Bonds, the 2025 Bonds or Parity Bonds then Outstanding subject 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 6 NG-U9ZQVMF2/4937-5827-2063v2/022042-0049
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 following the 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:
(i)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; (ii)the authorized principal amount of such Parity Bonds; (iii)the date and the maturity date or dates of such Parity Bonds; provided that:
(1) each maturity date shall fall on a September 1; (2) all such Parity Bonds of like maturity shall be identical in all respects, except as to number; (3) 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 (4) the maturity of such Parity Bonds shall not exceed the maturity of the Bonds being refunded;
(iv)the description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication;
(v)the denominations and method of numbering of such Parity Bonds; (vi)the amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds;
(vii)the amount, if any, to be deposited from the proceeds of such Parity Bonds in into a reserve fund for such Parity Bonds;
(viii)the form of such Parity Bonds; and
(ix)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):
(i)a certified copy of the Supplemental Indenture authorizing the issuance of such Parity Bonds;
(ii)a written request of the District as to the delivery of such Parity Bonds; (iii)an opinion of Bond Counsel and/or general counsel to the District to the effect that: (1) the District has the right and power under the Act to adopt this Indenture and the Supplemental Indentures relating to such Parity Bonds, and this Indenture and all such Supplemental Indentures have been duly and lawfully adopted by the District, are in full force and effect and are 7 NG-U9ZQVMF2/4937-5827-2063v2/022042-0049
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); (2) this Indenture creates the valid pledge which it purports to create of the Net Special Taxes and other amounts as provided in this Indenture, subject to the application thereof to the purposes and on the conditions permitted by this Indenture; and (3) 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 this Indenture and all Supplemental Indentures thereto and entitled to the benefits of this Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and this Indenture and all such Supplemental Indentures; 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;
(iv)a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; (v)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 than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and (vi)such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.”
ARTICLE III
APPLICATION OF PROCEEDS OF 2025 BONDS
Section 3.1.Creation of Funds and Application of Proceeds of Sale of 2025 Bonds (a)There is hereby established with respect to the 2025 Bonds, the City Facilities Account of the Improvement Fund, the Water Facilities Account of the Improvement Fund and the Rebate Fund. Unless otherwise specified herein, any reference in this First Supplement to any of such funds shall be deemed to be a reference to the funds established herein for the 2025 Bonds. (b)The net proceeds of the sale of the 2025 Bonds in the amount of $_________ (which amount is net of $_________ retained by the 2025 Authority Trustee for deposit in the Reserve Fund and $_________ retained by the 2025 Authority Trustee to be deposited in the Costs of Issuance Fund under the 2025 Authority Indenture) shall be received by the Trustee on behalf of the District and deposited and transferred as follows: $_________ shall be transferred to the City Facilities Account of the Improvement Fund and $_________ shall be transferred to the Water Facilities Account of the Improvement Fund to be applied in accordance with Section 3.7 of the Original Bond Indenture.
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The Trustee may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers.
ARTICLE IV
REDEMPTION OF 2025 BONDS
Section 4.1.Redemption of 2025 Bonds
(a)Optional Redemption. The 2025 Bonds maturing on or after September 1, 20__ may be redeemed, at the option of the District from any source of funds on any Interest Payment Date on or 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 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__ %
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and any Interest Payment Date thereafter For so long as the Facilities Financing Authority is the Owner of the 2025 Bonds, in connection with the calculation of such redemption price, the District shall receive a credit from the Facilities Financing Authority from the reduction in the Reserve Requirement resulting from the redemption of the 2025 Bonds and the 2025 Authority Bonds so redeemed in connection therewith.
In the event the District elects to redeem 2025 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 2025 Bonds to be redeemed. The notice to the Trustee shall be given at least 60 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the Trustee, in its sole discretion. So long as the 2025 Bonds are owned by the Facilities Financing Authority, the 2025 Bonds may be redeemed pursuant to this Section 4.1(a) only with the prior consent of the Facilities Financing Authority as set forth in the 2025 Authority Indenture. (b)Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the sinking fund payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of sinking fund payments set forth below. The Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
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2025 BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1)
Redemption
Amount
If the District purchases Term Bonds and delivers them to the Trustee at least 45 days prior to an applicable redemption date, the principal amount of the Term Bonds so purchased shall be credited to reduce the Sinking Fund Payment due on such redemption date for the applicable maturity of the Term Bonds. All Term Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 of the Original Bond Indenture.
In the event of a partial optional redemption or special mandatory redemption of Term Bonds, each of the remaining sinking fund payments for such Term Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis. (c)Extraordinary Redemption. The 2025 Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to Section 3.2 of the Original Bond Indenture 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 through March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and any Interest Payment Date thereafter For so long as the Facilities Financing Authority is the Owner of the 2025 Bonds, in connection with the calculation of such redemption price, the District shall receive a credit from the Facilities Financing Authority from the reduction in the Reserve Requirement resulting from the redemption of the 2025 Bonds and the 2025 Authority Bonds so redeemed in connection therewith.
Section 4.2.Notice of Redemption. So long as the Facilities Financing Authority or the 2025 Authority Trustee on the Facilities Financing Authority’s behalf is the registered owner of the 2025 Bonds, no notices set forth in Section 4.3 need be provided. 10 NG-U9ZQVMF2/4937-5827-2063v2/022042-0049
ARTICLE V
COVENANTS
Section 5.1.Federal Tax Covenants. Notwithstanding any other provision of the Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the 2025 Authority 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:
(a)Private Activity. The District will take no action or refrain from taking any action or make any use of the proceeds of the 2025 Bonds or of any other moneys or property which would cause the 2025 Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be “private activity bonds” within the meaning of Section 141 of the Code; (b)Arbitrage. The District will make no use of the proceeds of the 2025 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 2025 Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be “arbitrage bonds” within the meaning of Section 148 of the Code; (c)Federal Guaranty. The District will make no use of the proceeds of the 2025 Bonds or take or omit to take any action that would cause the 2025 Authority Bonds issued on a tax- exempt basis for federal income tax purposes to be “federally guaranteed” within the meaning of Section 149(b) of the Code;
(d)Hedge Bonds. The District will make no use of the proceeds of the 2025 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 2025 Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the 2025 Authority Bonds; and
(e)Other Tax Exempt Issues. The District will not use proceeds of other tax exempt securities to redeem any 2025 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 2025 Authority Bonds issued on a tax-exempt basis.
Section 5.2.Continuing Disclosure Certificate. The District hereby covenants and agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure Certificate to be executed and delivered by the District and SCG - Spicer Consulting Group, as dissemination agent, in connection with the issuance of the 2025 Authority Bonds. Notwithstanding any other provision of the Indenture, failure of the District to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Section 5.2. For purposes of this Section, “Beneficial Owner” means any person which has or shares 11 NG-U9ZQVMF2/4937-5827-2063v2/022042-0049
the power, directly or indirectly, to make investment decisions concerning ownership of any 2025 Authority Bonds (including persons holding 2025 Authority Bonds through nominees, depositories and other intermediaries).
ARTICLE VI
MISCELLANEOUS
Section 6.1.Provisions of Bond Indenture in Effect. Except as expressly modified herein, all of the provisions of the Original Bond Indenture shall remain in full force and effect.
Section 6.2.Notices to Authority and Authority Trustee. The Trustee shall provide the Facilities Financing Authority and the 2025 Authority Trustee with any notice that is required to be provided to the Authority and the Authority Trustee under the Original Bond Indenture.
Section 6.3.Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this First Supplement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this First Supplement. The District hereby declares that it would have entered into this First Supplement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the 2025 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Second Supplement may be held illegal, invalid or unenforceable.
Section 6.4.Execution in Counterparts. This Second Supplement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 6.5.Governing Law. This Second Supplement shall be construed and governed in accordance with the laws of the State of California applicable to contracts made and performed in such state.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the District and the Trustee have executed this First Supplement, effective the date first written above.
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2003-2 (CANYON
HILLS)
By:
Mayor of the City of Lake Elsinore, acting on
behalf of City of Lake Elsinore Community
Facilities District No. 2003-2 (Canyon Hills)
ATTEST:
City Clerk of the City of Lake Elsinore, acting
on behalf of City of Lake Elsinore Community
Facilities District No. 2003-2 (Canyon Hills)
The terms of this First Supplement relating to the Trustee are accepted by Wilmington Trust, National Association, as Trustee.
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF 2025 SPECIAL TAX BOND
No. __ $[PRINCIPAL AMOUNT]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) IMPROVEMENT AREA B 2025 SPECIAL TAX BOND
INTEREST RATE: MATURITY DATE: DATED DATE:
_________% September 1, 20__ _____, 2025
REGISTERED OWNER: Wilmington Trust, National Association, as Trustee under that certain Indenture of Trust dated as of June 1, 2025 by and between the Lake Elsinore Facilities Financing Authority and Wilmington Trust, National Association
PRINCIPAL AMOUNT: __________________________________ AND NO/100 DOLLARS CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) (the “District”) situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 and the final maturity date of the Bonds (each an “Interest Payment Date”), commencing March 1, 2026 at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. Except as otherwise provided in the Indenture, the principal of and premium, if any, on A-2
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this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the 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 Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Trustee (as defined below).
This Bond is one of a duly authorized issue of “City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area B 2025 Special Tax Bonds” (the “Bonds”) issued in the aggregate principal amount of $________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”) for the purpose of financing certain public facilities, funding a reserve fund and 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 28, 2017, and a Bond Indenture, dated as of March 1, 2015, as supplemented by the First Supplement to Bond Indenture dated as of December 1, 2017 and as supplemented by the Second Supplement to Bond Indenture dated as of June 1, 2025 (together, the “Indenture”), each by and between the District and Wilmington Trust, National Association, as successor trustee (the “Trustee”), executed in connection therewith, and this reference incorporates the Indenture herein, and by acceptance hereof the Registered 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 on a parity with the District’s 2017 Bonds, solely from the portion (the “Net Special Taxes”) of the annual special taxes authorized under the Act to be levied and collected within Improvement Area B of 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 Net Special Taxes pledged and collected, which include foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the 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 maturing on or after September 1, 20__ may be redeemed, at the option of the District from any source of funds on any Interest Payment Date on or 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 a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:
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Redemption Date Redemption Price
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and any Interest Payment Date thereafter
The Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from Sinking Fund Payments deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth in the Indenture at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account 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 through March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and any Interest Payment Date thereafter Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Notwithstanding the foregoing, so long as the Facilities Financing Authority or the Authority Trustee on the Facilities Financing Authority’s behalf is the registered owner of the Bonds, no such notices need be provided.
Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the 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 Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered 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 A-4
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denominations for the same 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 OBLIGATIONS OF THE CITY OF LAKE
ELSINORE OR OF THE DISTRICT FOR WHICH THE CITY OF LAKE ELSINORE OR 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 OF LAKE ELSINORE, THE STATE OF
CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the 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.
IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) has caused this Bond to be dated as of _______, 2025, to be signed on behalf of the District by the Mayor by his facsimile signature and attested by the facsimile signature of the City Clerk.
Mayor of the City of Lake Elsinore
ATTEST:
City Clerk of the City of Lake Elsinore
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[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.
Dated: _______, 2025 Wilmington Trust, National Association, as Trustee By:
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Lake Elsinore
[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 guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Trustee.
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.
Stradling Yocca Carlson & Rauth
Draft of 5/7/2025
4930-0172-4479v2/022042-0049
FOURTH SUPPLEMENT TO FISCAL AGENT AGREEMENT
Between
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) And
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Fiscal Agent
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) IMPROVEMENT AREA C 2025 SPECIAL TAX REFUNDING BONDS
Dated as of June 1, 2025
4930-0172-4479v2/022042-0049
FOURTH SUPPLEMENT TO FISCAL AGENT AGREEMENT
THIS FOURTH SUPPLEMENT TO FISCAL AGENT AGREEMENT dated as of June 1, 2025 (the “Fourth Supplement”), governs the terms of the City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area C 2025 Special Tax Refunding Bonds, which are being issued as Additional Bonds in accordance with the Fiscal Agent Agreement dated as of November 1, 2010 by and between the District and Union Bank, N.A., as fiscal agent, as supplemented and amended by the First Supplement to Fiscal Agent Agreement dated as of December 1, 2012 by and between the District and Union Bank, N.A., as fiscal agent, by the Second Supplement to Fiscal Agent Agreement dated as of July 1, 2014 by and between the District and Union Bank, N.A., as fiscal agent, by the Third Supplement to Fiscal Agent Agreement dated as of May 1, 2021 by and between the District and Wilmington Trust, National Association, as successor fiscal agent and by the Fourth Supplement to Fiscal Agent Agreement dated as of June 1, 2025 by and between the District and Wilmington Trust, National Association, as successor fiscal agent (together, the “Original Fiscal Agent Agreement”). Wilmington Trust, National Association, as successor fiscal agent to the Original Fiscal Agent shall be referred to herein as the “Fiscal Agent.” The Original Fiscal Agent Agreement and this Fourth Supplement are hereinafter collectively referred to as the “Fiscal Agent Agreement.”
R E C I T A L S :
WHEREAS, the City Council of the City of Lake Elsinore, located in Riverside County, California (hereinafter sometimes referred to as the “legislative body of the District”), has heretofore undertaken proceedings and declared the necessity to issue bonds of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) (the “District”) with respect to Improvement Area C pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”); and
WHEREAS, pursuant to the Original Fiscal Agent Agreement, the District previously issued its Special Tax Bonds, 2012 Series (Improvement Area C) (the “2012 Bonds”) in the aggregate principal amount of $5,345,000 and its Special Tax Bonds, 2014 Series (Improvement Area C) in the aggregate principal amount of $7,315,000 (the “2014 Bonds”) to finance and refinance public improvements; and
WHEREAS, pursuant to the Original Fiscal Agent Agreement, the District previously issued its Special Tax Bonds, 2021 Series (Improvement Area C) (the “2021 Bonds”) in the aggregate principal amount of $6,260,000 to finance public improvements; and WHEREAS, the legislative body of the District intends to defease and refund the Outstanding 2014 Bonds through the issuance of bonds in an aggregate principal amount of $________ designated as the “City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area C 2025 Special Tax Refunding Bonds” (the “2025 Bonds”); and WHEREAS, pursuant to Section 9.1(b) and (e) of the Original Fiscal Agent Agreement, the District desires to amend the Original Fiscal Agent Agreement as set forth herein in connection with the issuance of the 2025 Bonds; and
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WHEREAS, the District has determined all requirements of the Act for the issuance of the 2025 Bonds as Additional Bonds under the terms of the Original Fiscal Agent Agreement have been satisfied;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the 2025 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 2025 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 2012 Bonds, the 2014 Bonds, the 2021 Bonds and the 2025 Bonds and any Additional Bonds (as defined in the Original Fiscal Agent Agreement) which may be issued under the Fiscal Agent Agreement from time to time, as follows:
ARTICLE I
DEFINITIONS
Section 1.1.Definitions. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Original Fiscal Agent Agreement. The following definitions are added to or, if set forth in Section 1.1 of the Fiscal Agent Agreement, are revised to mean the following with respect to the 2025 Bonds:
“Additional Reserve Policy” means a letter of credit, insurance policy, surety bond or other such funding instrument other than the Reserve Policy which is approved by the Bond Insurer and delivered to the 2025 Authority Trustee for the purpose of providing a portion of any reserve requirement for 2025 Authority Bonds.
“Bond Insurer” means any municipal bond insurance company providing bond insurance under the 2025 Authority Indenture.
“CFD No. 2003-2 Improvement Area C Reserve Account” means the account by that name established by the 2025 Authority Indenture.
“Defeasance Securities” means “means any of the following: (a) non-callable direct obligations of the United States of America (“Treasuries”), (b) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (c) subject to the prior written consent of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively, and (d) subject to the prior written consent of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), securities eligible for “AAA” defeasance under then existing criteria of S&P. “Escrow Agent” means Wilmington Trust, National Association, acting as escrow agent pursuant to the Escrow Agreement.
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“Escrow Agreement” means that Escrow Agreement, dated as of June 1, 2025, between the District and the Escrow Agent relating to the defeasance and refunding of the 2014 Bonds and the Prior Lake Elsinore PFA Bonds.
“Insurance Policy” or “Policy” means the insurance policy issued by the Bond Insurer guaranteeing the scheduled payment of principal of and interest on the 2025 Authority Bonds when due.
“Interest Payment Date” means each March 1 and September 1, commencing March 1, 2026. “Policy Costs” means repayment of all amounts due under the Reserve Policy and all amounts due with respect to any Additional Reserve Policy resulting from a failure by the District to pay the principal of and interest on the 2025 Bonds when due. “Prior Lake Elsinore PFA Bonds” means the Lake Elsinore Public Financing Authority Local Agency Revenue Bonds (Canyon Hills IA C), 2014 Series C currently outstanding in the aggregate principal amount of $________.
“Proportionate Share” means, as of the date of calculation, the portion of the reserve requirement required under the 2025 Authority Indenture to be on deposit in the CFD No. 2003-2 Improvement Area C Reserve Account of the Reserve Fund, including any proportionate share of any Policy Costs.
“Redemption Revenues” means (a) prepayments of the Special Taxes, (b) amounts transferred from the Delinquency Management Fund for the redemption of Bonds, and (c) any amounts deposited for the special mandatory redemption of Bonds pursuant to the Agreement. “Reserve Policy” means the municipal bond debt service reserve insurance policy issued by the Bond Insurer on the date of issuance of the 2025 Bonds representing the reserve requirement established under the Authority Indenture.
“2025 Bonds Reserve Account” means the account by that name established in the Bond Fund pursuant to Section 3.1(a) hereof.
“Term Bonds” means the 2025 Bonds maturing on September 1, 20__ and on September 1, 20__.
“2025 Authority Bonds” means any bonds outstanding under the 2025 Authority Indenture, which are secured in part by payments made on the 2025 Bonds and which may be secured in part by any Additional Bonds.
“2025 Authority Indenture” means that certain Indenture of Trust, dated as of June 1, 2025, by and between the Authority and the 2025 Authority Trustee, pursuant to which the 2025 Authority Bonds are issued.
“2025 Authority Trustee” means Wilmington Trust, National Association or any successor thereto appointed pursuant to the 2025 Authority Indenture. 4 4930-0172-4479v2/022042-0049
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1.Amount, Issuance, Purpose and Nature of 2025 Bonds. Under and pursuant to this Fourth Supplement, the 2025 Bonds in the aggregate principal amount of $6,260,000 shall be issued as Additional Bonds governed by the terms of the Original Fiscal Agent Agreement, as supplemented by this Fourth Supplement, for the purpose of defeasing and refunding the Outstanding 2014 Bonds. The 2025 Bonds constitute Additional Bonds and shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent provided in the Fiscal Agent Agreement) of all of the Special Tax Revenues and Redemption Revenues and all moneys deposited in the Bond Fund and, until disbursed, as provided in the Fiscal Agent Agreement, in the Special Tax Fund, the Redemption Fund and the Delinquency Management Fund. Notwithstanding the foregoing, on and after the date on which no 2014 Bonds remain Outstanding under the Fiscal Agent Agreement, the 2025 Bonds shall no longer be secured by amounts on deposit in the Delinquency Management Fund.
Section 2.2.Description of Bonds; Interest Rates. The 2025 Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof within a single maturity. The 2025 Bonds shall be numbered as determined by the Fiscal Agent.
The 2025 Bonds shall be designated “CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) IMPROVEMENT AREA C 2025 SPECIAL TAX REFUNDING BONDS.” The 2025 Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on March 1, 2026 and each Interest Payment Date thereafter:
Maturity Date
(September 1) Principal Amount Interest Rate
$ %
Section 2.3.Form of 2025 Bonds; Execution and Authentication. The 2025 Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of such 2025 Bonds and of the certificate of 5 4930-0172-4479v2/022042-0049
authentication. Notwithstanding any provision in the Fiscal Agent Agreement to the contrary, the District may, in its sole discretion, elect to issue the 2025 Bonds in book entry form.
Only the 2025 Bonds bearing thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under the Fiscal Agent Agreement, and no 2025 Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Fiscal Agent.
Section 2.4.Conditions to Issuance of 2025 Bonds. The 2025 Bonds shall not be issued unless and until the conditions for the issuance of the 2025 Bonds as Additional Bonds pursuant to Section 2.13 of the Original Fiscal Agent Agreement shall have been satisfied.
Section 2.5.2025 Bonds Reserve Account Replenishment. The District hereby covenants that to the extent there is draw upon the 2025 Bonds Reserve Account, the District shall cause the Treasurer to effect the next annual levy of Special Taxes in an amount sufficient to replenish such delinquency in addition to those required by Section 5.8 of the Original Fiscal Agent Agreement in addition to amounts that would be levied if there were no such delinquency provided however the amount of Special Taxes levied shall not exceed the maximum permitted by the RMA.
Section 2.6.Amendment to Section 3.4(b) of the Original Fiscal Agent Agreement.
The following subparagraph (iv) is hereby added to Section 3.4(b) of the Original Fiscal Agent Agreement:
“(iv) To the Reserve Account under the Authority Indenture, the 2025 Bonds Reserve Account of the Bond Fund or any reserve account established in connection with the issuance of a series of Additional Bonds, without preference or priority and in the event of any insufficiency of such moneys ratably without any discrimination or preference, the amount, if any, necessary to cause the balance in the Reserve Account under the Authority Indenture to the Reserve Requirement and to pay the amounts required to be paid from the 2025 Bonds Reserve Account of the Bond Fund (including the payment of Policy Costs), and to replenish any additional reserve account established with respect to any Additional Bonds to the applicable reserve requirement.”
ARTICLE III
APPLICATION OF PROCEEDS OF 2025 BONDS
Section 3.1.Creation of Funds and Application of Proceeds of Sale of 2025 Bonds (a)There is hereby established with respect to the 2025 Bonds, the “2025 Bonds Reserve Account” of the Bond Fund. Unless otherwise specified herein, any reference in this Fourth Supplement to any of such funds shall be deemed to be a reference to the funds established herein for the 2025 Bonds.
(b)Proceeds from the sale of the 2025 Bonds in the amount of $__________ (which amount is net of $__________ retained by the Authority Trustee to pay the District’s share of the Costs of Issuance (as defined in the Authority Indenture) (including underwriter’s discount)) shall be received by the Fiscal Agent and deposited and transferred as follows:
(i)$__________ shall be transferred to the Escrow Agent for deposit in 6 4930-0172-4479v2/022042-0049
the escrow fund created under the Escrow Agreement.
(ii)$__________ shall be deposited to the Improvement Fund established under the Fiscal Agent Agreement.
(c)The Fiscal Agent may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers.
Section 3.2.2025 Bonds Reserve Account of the Bond Fund. Moneys in the 2025 Bonds Reserve Account shall be used solely for the purpose of (i) paying Policy Costs with respect to the Reserve Policy then due and payable, and (ii) paying Policy Costs with respect to any Additional Reserve Policy then due and payable. Amounts deposited to the 2025 Bonds Reserve Account to pay any Policy Costs due under the Reserve Policy or under any Additional Reserve Policy held by the 2025 Authority Trustee shall be transferred by the Fiscal Agent to the 2025 Authority Trustee to be applied in accordance with the 2025 Authority Indenture, and amounts deposited to the 2025 Bonds Reserve Account to pay Policy Costs with respect to any other Additional Reserve Policy shall be disbursed by the Fiscal Agent to the provider of such Additional Reserve Policy or as otherwise agreed to by such provider.
ARTICLE IV
REDEMPTION OF 2025 BONDS
Section 4.1.Redemption of 2025 Bonds
(a)Optional Redemption. The 2025 Bonds maturing on or after September 1, 20__ may be redeemed, at the option of the District from any source of funds on any date on or 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 a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium. For so long as the Authority is the Owner of the 2025 Bonds, in connection with the calculation of such redemption price, the District shall receive a credit from the Authority from the reduction in the District’s Proportionate Share resulting from the redemption of the 2025 Bonds and the Authority Bonds so redeemed in connection therewith.
Notwithstanding the foregoing, upon the occurrence of an optional redemption of 2025 Bonds in part, the selection of such 2025 Bonds to be redeemed shall be subject to the approval of the Bond Insurer.
In the event the District elects to redeem 2025 Bonds as provided above, the District shall give written notice to the Fiscal Agent of its election to so redeem, the redemption date and the maturity dates of the 2025 Bonds to be redeemed. The notice to the Fiscal Agent shall be given at least 45 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Fiscal Agent, in its sole discretion.
(b)Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth 7 4930-0172-4479v2/022042-0049
below. The Term Bonds so called for redemption shall be selected by the Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
2025 BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
$
(maturity)
The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Term Bonds so called for redemption shall be selected by the Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
2025 BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
$
If the District purchases Term Bonds and delivers them to the Fiscal Agent at least 45 days prior to an applicable redemption date, the principal amount of the Term Bonds so purchased shall be credited to reduce the sinking fund payment due on such redemption date for the applicable maturity of the Term Bonds. All Term Bonds purchased by the District and delivered to the Fiscal Agent pursuant to this subsection shall be cancelled pursuant to Section 10.3 of the Original Fiscal Agent Agreement.
In the event of a partial optional redemption or special mandatory redemption of Term Bonds, each of the remaining sinking fund payments for such Term Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis. (c)Special Mandatory Redemption from Prepayments. The 2025 Bonds are subject to redemption as a whole, or in part on a pro rata basis among maturities, and pro rata among each series of Bonds, on any Interest Payment Date on and after September 1, 2025 from the proceeds of the prepayment of the Special Taxes deposited in the Redemption Fund pursuant to the Fiscal Agent Agreement. Such extraordinary mandatory redemption of the 2025 Bonds shall be at 8 4930-0172-4479v2/022042-0049
the following redemption prices (expressed as percentages of the principal amount of the 2025 Bonds to be redeemed), together with accrued interest thereon to the date of redemption:
Redemption Dates Redemption
Prices
Any Interest Payment Date from September 1, 20__ through March 1, 20__ % September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and any Interest Payment Date thereafter Section 4.2.Selection of Bonds for Redemption. If less than all of the 2025 Bonds Outstanding are to be redeemed, the portion of any 2025 Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such 2025 Bonds for redemption, the Fiscal Agent will treat such 2025 Bonds, as applicable, as representing that number of 2025 Bonds of $5,000 denominations which is obtained by dividing the principal amount of such 2025 Bonds to be redeemed in part by $5,000. The Fiscal Agent will promptly notify the District in writing of the 2025 Bonds, or portions thereof, selected for redemption.
ARTICLE V
MISCELLANEOUS
Section 5.1.Amendments to Fiscal Agent Agreement. Notwithstanding any provision in the Fiscal Agent Agreement, any amendment or modification of the Fiscal Agent Agreement in accordance with Section 9.1 of the Original Fiscal Agent Agreement which requires the consent of the Owners or which adversely affects the rights and interests of the Bond Insurer shall require the prior written consent of the Bond Insurer.
Section 5.2.Events of Default. Notwithstanding any provision in the Fiscal Agent Agreement, no grace period for an event of default under the Fiscal Agent Agreement shall extend for more than thirty (30) days without the written approval of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy).
Section 5.3.Defeasance of 2025 Bonds. Notwithstanding any provision of the Original Fiscal Agent Agreement, (i) only cash and/or Defeasance Securities may be used to defease 2025 Bonds and (ii) in connection with a defeasance of 2025 Bonds under Section 10.3(c) of the Original Fiscal Agent Agreement, there shall be provided to the District and the Bond Insurer a verification report from an independent nationally recognized certified public accountant, stating its opinion as to the sufficiency of the moneys and securities deposited with the Fiscal Agent or the escrow bank to pay and discharge the principal of, premium, if any, and interest on the 2025 Bonds to be defeased, as and when the same shall become due and payable and an escrow agreement with respect to such deposits, which shall be acceptable in form and substance to the Bond Insurer, so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy). The Bond Insurer shall be provided with final drafts of the above-referenced documentation not less than five Business Days prior to the funding of the escrow.
The Fiscal Agent Agreement shall not be discharged until Policy Costs due to the Bond Insurer (to the extent the responsibility of the District as a result of the District’s failure to pay 9 4930-0172-4479v2/022042-0049
principal of, or interest on the 2025 Bonds when due) shall have been paid in full. The District’s obligation to pay such amounts shall expressly survive payment in full of the payments of principal of and interest on the 2025 Bonds.
Section 5.4.Tender of Bonds. So long as any 2025 Bonds remain outstanding or any amounts are owed to the Bond Insurer by the District, without the prior written consent of the Bond Insurer, the District shall not issue any Additional Bonds that permits or requires the Owner to tender such Additional Bonds for purchase prior to the stated maturity thereof without the prior written consent of the Bond Insurer.
Section 5.5.Additional Bonds. Notwithstanding any provision in the Fiscal Agent Agreement, the District shall not issue any Additional Bonds unless, upon the issuance of such Additional Bonds, the amount on deposit in the CFD No. 2003-2 Improvement Area C Reserve Account will be at least equal to the Proportionate Share.
Section 5.6.Insurer Rights. The Bond Insurer shall be deemed to be the sole holder of the 2025 Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the 2025 Bondowners are entitled to take pursuant to the Fiscal Agent Agreement pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Fiscal Agent. In furtherance thereof and as a term of the Fiscal Agent Agreement and each 2025 Bond, the Fiscal Agent and each 2025 Bond Owner of a 2025 Bond appoint the Bond Insurer as their agent and attorney-in-fact and agree that the Bond Insurer may at any time during the continuation of any proceeding by or against the District under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Fiscal Agent (solely with respect to the 2025 Bonds) and each Owner of a 2025 Bond delegate and assign to the Bond Insurer, to the fullest extent permitted by law, the rights of the Fiscal Agent and each Owner of a 2025 Bond in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners of the 2025 Bonds shall expressly include mandamus. The Bond Insurer is hereby deemed a third party beneficiary to the Fiscal Agent Agreement.
Section 5.7.Reimbursement of Insurer Fees. The District shall pay or reimburse the Bond Insurer from Special Taxes any and all charges, fees, costs and expenses that the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security under the Fiscal Agent Agreement or the 2025 Authority Indenture; (ii) the pursuit of any remedies under the Fiscal Agent Agreement or the 2025 Authority Indenture or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Fiscal Agent Agreement or the 2025 Authority Indenture whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Fiscal Agent Agreement or the 2025 Authority Indenture or the transactions contemplated hereby or thereby, other than costs resulting from the failure of the Bond Insurer to honor its obligations under the Insurance Policy. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing 10 4930-0172-4479v2/022042-0049
any amendment, waiver or consent proposed in respect of the Fiscal Agent Agreement or the 2025 Authority Indenture.
Section 5.8.Provision of Information to Bond Insurer. The Bond Insurer shall be provided with the following information by the District or the Fiscal Agent, as the case may be:
(a) On request by the Bond Insurer, the District will provide a certificate that the District is not aware of any Event of Default under the Fiscal Agent Agreement and will provide such information, data or reports as the Bond Insurer shall reasonably request from time to time; (b) Notice of the resignation or removal of the Fiscal Agent and the appointment of, and acceptance of duties by, any successor thereto; (c) Notice of any default known to the Fiscal Agent or the District within five Business Days after knowledge thereof;
(d) Prior notice of the redemption of any of the 2025 Bonds, including the principal amount and maturities thereof;
(e) Notice of the commencement of any Insolvency Proceeding by or against the Authority or the District;
(f) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the 2025 Bonds;
(g) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to the Fiscal Agent Agreement; and (h) All reports, notices and correspondence to be delivered to 2025 Bond Owners under the terms hereof.
In addition, the Bond Insurer shall have the right to receive such additional information as it may reasonably request.
Section 5.9.Discussion of and Access to Information. The District shall permit the Bond Insurer to discuss the affairs, finances and accounts of the District or any information the Bond Insurer may reasonably request regarding the security for the 2025 Bonds with appropriate officers of the District and will use commercially reasonable efforts to enable the Bond Insurer to have access to the facilities, books and records of the District on any Business Day upon reasonable prior notice.
Section 5.10.Notices to Bond Insurer. Any notices required to be given to the District with respect to the 2025 Bonds or the Fiscal Agent Agreement to the Bond Insurer shall be mailed, first class, postage prepaid, personally delivered or sent via facsimile or electronic (email) transmission (with a portable document format or similar attachment) to __________.
In each case in which notice or other communication to the Bond Insurer refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate “URGENT MATERIAL ENCLOSED.” 11 4930-0172-4479v2/022042-0049
Section 5.11.Provisions of Fiscal Agent Agreement in Effect. Except as expressly modified herein, all of the provisions of the Original Fiscal Agent Agreement shall remain in full force and effect.
Section 5.12.Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this Fourth Supplement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Fourth Supplement. The District hereby declares that it would have entered into this Fourth Supplement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the 2025 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Fourth Supplement may be held illegal, invalid or unenforceable.
Section 5.13.Execution in Counterparts. This Fourth Supplement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 5.14.Governing Law. This Fourth Supplement shall be construed and governed in accordance with the laws of the State of California applicable to contracts made and performed in such state.
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IN WITNESS WHEREOF, the District and the Fiscal Agent have executed this Fourth Supplement, effective the date first written above.
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2003-2 (CANYON
HILLS)
By:
City Manager of the City of Lake Elsinore, acting
on behalf of City of Lake Elsinore Community
Facilities District No. 2003-2 (Canyon Hills)
ATTEST:
City Clerk of the City of Lake Elsinore, acting
on behalf of City of Lake Elsinore Community
Facilities District No. 2003-2 (Canyon Hills)
The terms of this Fourth Supplement relating to the Fiscal Agent are accepted by Wilmington Trust, National Association, as Fiscal Agent.
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Fiscal Agent
By:
Authorized Officer
A-1
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EXHIBIT A
FORM OF 2025 SPECIAL TAX REFUNDING BOND
R-__ $_________________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) IMPROVEMENT AREA C 2025 SPECIAL TAX REFUNDING BOND
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
____% September 1, 20__ ______, 2025 ___
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
AND NO/100 DOLLARS
COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) OF CITY OF LAKE ELSINORE (the “District”), situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Fiscal Agent Agreement (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 (each an “Interest Payment Date”), commencing March 1, 2026, at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.
The principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Fiscal Agent (as such term is defined in the Fiscal Agent Agreement), A-2
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initially Wilmington Trust, National Association (the “Fiscal Agent”). Interest on this Bond shall be paid by check of the Fiscal Agent mailed, by first class mail, postage prepaid, or in certain circumstances described in the Fiscal Agent Agreement by wire transfer to an account within the United States of America, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent.
This Bond is one of a duly authorized issue of “City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area C 2025 Special Tax Refunding Bonds” (the “Bonds”) issued in the aggregate principal amount of $_________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”) for the purpose of refunding and defeasing the District’s Outstanding 2014 Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of City of Lake Elsinore, acting in its capacity as the legislative body of the District (the “Legislative Body”) on April 13, 2021 (the “Resolution of Issuance”), and a Fiscal Agent Agreement dated as of November 1, 2010, as supplemented by the First Supplement to Fiscal Agent Agreement dated as of December 1, 2012, the Second Supplement to Fiscal Agent Agreement dated as of July 1, 2014, the Third Supplement to Fiscal Agent Agreement dated as of May 1, 2021 (together, the “Original Fiscal Agent Agreement”), and the Fourth Supplement to Fiscal Agent Agreement dated as of June 1, 2025 (the “Fourth Supplement” and together with the Original Fiscal Agent Agreement, the “Fiscal Agent Agreement”), each by and between the District and the Fiscal Agent, executed in connection therewith, and this reference incorporates the Fiscal Agent Agreement herein; and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Resolution and the Fiscal Agent Agreement are adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Fiscal Agent Agreement, the principal of, premium, if any, and interest on this Bond are payable on a parity with the District’s 2021 Bonds, solely from the portion of the annual special taxes authorized under the Act to be levied and collected within Improvement Area C of the District (the “Net Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Fiscal Agent Agreement. Any amounts for the payment hereof shall be limited to the Special Tax Revenues and Redemption Revenues pledged and collected or foreclosure proceeds received following a default in payment of the Net Taxes and other amounts deposited to the Bond Fund, the Special Tax Fund, the Redemption Fund and the Delinquency Management Fund (to the extent set forth in the Fiscal Agent Agreement), established under the Fiscal Agent Agreement, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Fiscal Agent Agreement it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Net Special Tax installments levied for payment of principal and interest on the Bonds.
The Bonds maturing on or after September 1, 20__ may be redeemed, at the option of the District from any source of funds on any date on or 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 a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium. For so long as the Authority is the Owner of the Bonds, in connection with the calculation of such redemption price, the District shall receive a credit from the Authority A-3
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from the reduction in the District’s Proportionate Share resulting from the redemption of the Bonds and the Authority Bonds so redeemed in connection therewith.
The Term Bonds maturing on September 1, 20__ and on September 1, 20__, shall be called before maturity and redeemed from the sinking fund payments that have been deposited into the Principal Account, on September 1, 20__ and on September 1, 20__, respectively, and on each September 1 thereafter prior to maturity, in accordance with the schedule of sinking fund payments set forth in the Fourth Supplement. The Term Bonds so called for redemption shall be selected by the Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium.
The Bonds are subject to redemption as a whole, or in part on a pro rata basis among maturities, and pro rata among each series of bonds issued pursuant to the terms of the Fiscal Agent Agreement, on any Interest Payment Date on and after September 1, 20__ from the proceeds of the prepayment of the Special Taxes deposited in the Redemption Fund pursuant to the Fiscal Agent Agreement. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption:
Redemption Dates Redemption Prices
Any Interest Payment Date from September 1, 20__ through March 1, 20__ % September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20__ and any Interest Payment Date thereafter 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 60 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the Fiscal Agent on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Fiscal Agent may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Fiscal Agent Agreement. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Fiscal Agent, but only in the manner, subject to the limitations and upon payment of the charges provided in the Fiscal Agent Agreement, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
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The Fiscal Agent shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Fiscal Agent Agreement.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF CITY OF LAKE ELSINORE
OR OF THE DISTRICT FOR WHICH CITY OF LAKE ELSINORE OR THE DISTRICT IS
OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR NET TAXES, OTHER THAN THE NET TAXES REFERENCED HEREIN. THE BONDS ARE
LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE NET
TAXES AND OTHER AMOUNTS PLEDGED UNDER THE FISCAL AGENT AGREEMENT
BUT ARE NOT A DEBT OF CITY OF LAKE ELSINORE, THE STATE OF CALIFORNIA OR
ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
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IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) has caused this Bond to be dated as of ______, 2025, to be signed on behalf of the District by the Mayor of the City of Lake Elsinore by his facsimile signature and attested by the facsimile signature of the City Clerk of the City of Lake Elsinore hereon.
Mayor of the City of Lake Elsinore, acting on behalf
of City of Lake Elsinore Community Facilities
District No. 2003-2 (Canyon Hills)
ATTEST:
City Clerk of the City of Lake Elsinore, acting
on behalf of City of Lake Elsinore Community
Facilities District No. 2003-2 (Canyon Hills)
[FORM OF FISCAL AGENT’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Fiscal Agent Agreement.
Dated: ______, 2025
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Fiscal Agent
By:
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Lake Elsinore, acting on
behalf of City of Lake Elsinore Community Facilities
District No. 2003-2 (Canyon Hills)
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is ,
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: Signature(s) must be guaranteed by an
eligible guarantor institution.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any change
whatsoever.
Stradling Yocca Carlson & Rauth
Draft of 5/7/25
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BOND INDENTURE
Between
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. __________
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
$____________
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. __________
2025 SPECIAL TAX REFUNDING BONDS
Dated as of June 1, 2025
Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions ..................................................................................................................... 2
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds........................... 12 Section 2.2. Type and Nature of Bonds and Parity Bonds .............................................................. 13 Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes ...................... 13 Section 2.4. Description of Bonds; Interest Rates ........................................................................... 14 Section 2.5. Place and Form of Payment......................................................................................... 15 Section 2.6. Form of Bonds and Parity Bonds ................................................................................ 15 Section 2.7. Execution and Authentication ..................................................................................... 16 Section 2.8. Bond Register .............................................................................................................. 16 Section 2.9. Registration of Exchange or Transfer.......................................................................... 16 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ..................................... 17 Section 2.11. Validity of Bonds and Parity Bonds ............................................................................ 17
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 Fund ..................................................................................... 19 Section 3.4. Interest Account and Principal Account of the Special Tax Fund .............................. 20 Section 3.5. Reserve Account of the Special Tax Fund .................................................................. 20 Section 3.6. Redemption Account of the Special Tax Fund............................................................ 21 Section 3.7. Surplus Fund................................................................................................................ 22 Section 3.8. Improvement Fund ...................................................................................................... 23 Section 3.9. Investments.................................................................................................................. 23
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds .................................................................................................. 24 Section 4.2. Selection of Bonds and Parity Bonds for Redemption ................................................ 27 Section 4.3. Notice of Redemption.................................................................................................. 27 Section 4.4. Partial Redemption of Bonds or Parity Bonds............................................................. 28 Section 4.5. Effect of Notice and Availability of Redemption Money ........................................... 29
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty ...................................................................................................................... 29 Section 5.2. Covenants .................................................................................................................... 29 Table of Contents
(continued)
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ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent ................... 33 Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent .......................... 34 Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds ...........................................................................................................................35
ARTICLE VII
TRUSTEE
Section 7.1. Trustee ......................................................................................................................... 35 Section 7.2. Removal of Trustee ..................................................................................................... 36 Section 7.3. Resignation of Trustee................................................................................................. 36 Section 7.4. Liability of Trustee ...................................................................................................... 37 Section 7.5. Merger or Consolidation.............................................................................................. 39
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default ......................................................................................................... 40 Section 8.2. Remedies of Owners.................................................................................................... 40 Section 8.3. Application of Revenues and Other Funds After Default ........................................... 41 Section 8.4. Power of Trustee to Control Proceedings.................................................................... 41 Section 8.5. Appointment of Receivers ........................................................................................... 42 Section 8.6. Non-Waiver ................................................................................................................. 42 Section 8.7. Limitations on Rights and Remedies of Owners ......................................................... 42 Section 8.8. Termination of Proceedings......................................................................................... 43
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance................................................................................................................... 43 Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness ................................................................................................................45
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds..................................................................... 47 Section 10.2. Execution of Documents and Proof of Ownership...................................................... 47 Section 10.3. Unclaimed Moneys...................................................................................................... 48 Section 10.4. Provisions Constitute Contract .................................................................................... 48 Section 10.5. Insurer Rights .............................................................................................................. 48 Section 10.6. Reimbursement of Insurer Fees................................................................................... 49 Section 10.7. Provision of Information to Bond Insurer ................................................................... 49 Section 10.8. Discussion of and Access to Information .................................................................... 50 Table of Contents
(continued)
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Section 10.9. Future Contracts .......................................................................................................... 50 Section 10.10. Further Assurances ...................................................................................................... 50 Section 10.11. Entire Agreement; Severability ................................................................................... 50 Section 10.12. Notices ......................................................................................................................... 50 Signature Page ....................................................................................................................................S-1 EXHIBIT A FORM OF 2025 SPECIAL TAX REFUNDING BOND..........................................A-1 1 4896-6147-4111v2/022042-0049
BOND INDENTURE
THIS BOND INDENTURE dated as of June 1, 2025 (the “Indenture”), is made and entered into by the City of Lake Elsinore Community Facilities District No. __________ and Wilmington Trust, National Association, as trustee, and governs the terms of the Community Facilities District No. __________ 2025 Special Tax Refunding Bonds and any Parity Bonds issued in accordance herewith from time to time.
R E C I T A L S :
WHEREAS, the City Council of the City of Lake Elsinore, located in Riverside County, California (hereinafter sometimes referred to as the “legislative body of the District”), has heretofore undertaken proceedings to form the City of Lake Elsinore Community Facilities District No. __________ (the “District”) pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”); and
WHEREAS, the District has previously issued its Prior Bonds (as defined herein) to refinance certain public improvements; and
WHEREAS, on ______, 2025, the legislative body of the District adopted Resolution No. 2025-___ (the “Resolution”) authorizing the issuance and sale of special tax bonds for the District pursuant to this Indenture designated as the “City of Lake Elsinore Community Facilities District No. __________ 2025 Special Tax Refunding Bonds” (the “Bonds”); and WHEREAS, it is in the public interest and for the benefit of the District, the persons responsible for the payment of special taxes and the owners of the Bonds that the District enter into this Indenture to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the bonds, and the administration and payment of the Bonds; and
WHEREAS, all things necessary to cause the Bonds, when authenticated by the Trustee and issued as provided in the Act, the Resolution and this Indenture, to be legal, valid and binding and limited obligations in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Indenture and the creation, authorization, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized; 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 as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings:
“Account” means any account created pursuant to this Indenture. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311 et seq. of the California Government Code.
“Additional Reserve Policy” means a letter of credit, insurance policy, surety bond or other such funding instrument other than the Reserve Policy which is approved by the Bond Insurer and delivered to the Authority Trustee for the purpose of providing a portion of any reserve requirement for Authority Bonds.
“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 Bonds or 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, the District, and any other costs otherwise incurred by the City on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District hereunder. Administrative Expenses shall also include the administrative costs with respect to the collection of Delinquency Proceeds.
“Administrative Expense Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.
“Administrative Expense Requirement” means $[40,000], provided that at its option, the District may establish the Administrative Expense Requirement for any Bond Year subsequent to the initial Bond Year at any amount larger than $[40,000] that is not in excess of the lesser of (a) 102% of the Administrative Expense Requirement applicable in the immediately preceding Bond Year or (b) the remainder of (i) the sum of the Maximum Special Tax applicable to each Parcel of Taxable Property in the Fiscal Year that ends in such Bond Year minus (ii) 110% of Annual Debt Service for such Bond Year.
“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.
“Authority” means the Lake Elsinore Facilities Financing Authority. “Authority Bonds” means any bonds outstanding under the Authority Indenture, which are secured in part by payments made on the Bonds and which may be secured in part by any Parity Bonds.
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“Authority Indenture” means that certain Indenture of Trust, dated as of June 1, 2025, by and between the Authority and the Authority Trustee, pursuant to which the Authority Bonds are issued. “Authority Trustee” means Wilmington Trust, National Association or any successor thereto appointed pursuant to the Authority Indenture.
“Authorized Investments” means any of the following investments, if and to the extent the same are at the time legal for investment of the District’s funds (the Trustee is entitled to rely upon investment direction from the District as a certification that such investment is an Authorized Investment):
1. (a) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America (“United States Treasury Obligations”), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America:
(a) Federal Home Loan Mortgage Corporation (FHLMC)
(i) Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts)
(ii) Senior Debt obligations
(b) Farm Credit Banks (formerly: Federal Land Banks, Federal (i) Intermediate Credit Banks and Banks for Cooperatives) (ii) Consolidated system-wide bonds and notes
(c) Federal Home Loan Banks (FHL Banks)
(i) Consolidated debt obligations
(d) Federal National Mortgage Association (FNMA)
(i) Senior debt obligations
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(ii) Mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts)
(e) Financing Corporation (FICO)
(i) Debt obligations
(f) Resolution Funding Corporation (REFCORP)
(i) Debt obligations
4. Unsecured certificates of deposit, time deposits, demand deposits, and bankers’ acceptances (having maturities of not more than 30 days) of any bank (including the Trustee and any affiliate) the short-term obligations of which are rated “A-1” or better by Standard & Poor’s.
5. Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks (including the Trustee and any affiliate) which have capital and surplus of at least $5 million.
6. Commercial paper (having original maturities of not more than 270 days rated “A-1+” by Standard & Poor’s and “Prime-1” by Moody’s.
7. Money market funds rated “AAm” or “AAm-G” by Standard & Poor’s, or better (including those of the Trustee or its affiliates).
8. “State Obligations,” which means:
(a) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated “A3” by Moody’s and “A” by Standard & Poor’s, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated.
(b) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (A) above and rated “A-1+” by Standard & Poor’s and “Prime-l” by Moody’s.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (A) above and rated “AA” or better by Standard & Poor’s and “Aa” or better by Moody’s.
9. Pre-refunded municipal obligations rated “AAA” by Standard & Poor’s and “Aaa” by Moody’s meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to maturity or (2) the paying agent for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the 5 4896-6147-4111v2/022042-0049
municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions;
(b) the municipal obligations are secured by cash or United States Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations (“Verification”);
(d) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or paying agent in trust for owners of the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification; and
(f) the cash or United States Treasury Obligations are not available to satisfy any other claims, including those by or against the paying agent or escrow agent.
10. Repurchase agreements:
With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least “A” by Standard & Poor’s and Moody’s; or (2) any broker-dealer with “retail customers” or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the provider) of which has, long-term debt rated at least “A” by Standard & Poor’s and Moody’s, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corporation; or (3) any other entity rated “A” or better by Standard & Poor’s and Moody’s, provided that:
(a) The market value of the collateral is maintained at levels equal to 104% of the amount of cash transferred by the Trustee or the District to the provider of the repurchase agreement plus accrued interest with the collateral being valued weekly and marked-to-market at one current market price plus accrued interest; (b) The Trustee or a third party acting solely as agent therefor or for the District (the “Holder of the Collateral”) has possession of the collateral or the collateral has been transferred to the Holder of the Collateral in accordance with applicable state and federal laws (other than by means of entries on the transferor’s books);
(c) The repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted 6 4896-6147-4111v2/022042-0049
collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession);
(d) The repurchase agreement shall provide that if during its term the provider’s rating by either Moody’s or Standard & Poor’s is withdrawn or suspended or falls below “A ” by Standard & Poor’s or “A3” by Moody’s, as appropriate, the provider must, at the direction of Trustee or the District, within 10 days of receipt of such direction, repurchase all collateral and terminate the agreement, with no penalty or premium to the Trustee or the District.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with no evergreen provision), collateral levels need not be as specified in (a) above, so long as such collateral levels are 103% or better and the provider is rated at least “A” by Standard & Poor’s and Moody’s, respectively.
11. Investment agreements with a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long-term debt of which or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least “AA” by Standard & Poor’s and “Aa” by Moody’s; provided that, by the terms of the investment agreement:
(a) interest payments are to be made to the Trustee or the District at times and in amounts as necessary to pay debt service (or, if the investment agreement is for the Improvement Fund, construction draws) on the Bonds; (b) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days’ prior notice; the Trustee or the District hereby agrees to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid;
(c) the investment agreement shall state that is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof, or, in the case of a bank, that the obligation of the bank to make payments under the agreement ranks pari passu with the obligations of the bank to its other depositors and its other unsecured and unsubordinated creditors; (d) the Trustee or the District receives the opinion of domestic counsel (which opinion shall be addressed to Trustee or the District) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the Trustee or the District;
(e) the investment agreement shall provide that if during its term (i) the provider’s rating by either Standard & Poor’s or Moody’s falls below “AA-” or “Aa3”, respectively, the provider shall, at its option, within 10 days of receipt of publication of such downgrade, either (y) 7 4896-6147-4111v2/022042-0049
collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider’s books) to the District, the Trustee or a third party acting solely as agent therefor (the “Holder of the Collateral”) collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to Standard & Poor’s and Moody’s to maintain an “A” rating in an “A” rated structured financing (with a market value approach); or (z) repay the principal of and accrued but unpaid interest on the investment; and (ii) the provider’s rating by either Standard & Poor’s or Moody’s is withdrawn or suspended or falls below “A-” or “A3”, respectively, the provider must, at the direction of the Trustee or the District, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Trustee or District; and
(f) the investment agreement shall state and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement at the time such collateral is delivered, that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession);
(g) the investment agreement must provide that if during its term (i) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the Trustee or the District, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee or the District, and
(ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee or the District.
12. The State of California Local Agency Investment Fund. “Authorized Representative of the City” means the means the Mayor, City Manager, any Assistant City 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 Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Representative of the City. “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. 8 4896-6147-4111v2/022042-0049
“Bond Insurer” means any municipal bond insurance company providing bond insurance under the Authority Indenture.
“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. “Bondowner” or “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered.
“Bonds” means the $____________ City of Lake Elsinore Community Facilities District No. __________ 2025 Special Tax Refunding Bonds.
“Bond Year” means the twelve month period commencing on September 1 of each year and ending on September 1 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 September 1 which is not more than 12 months after the Delivery Date.
“Business Day” means a day which is not a Saturday or Sunday or a day of the year on which banks or trust companies in New York, New York, Wilmington, Delaware, Los Angeles, California, or the city where the corporate trust office of the Trustee is located, are not required or authorized by law, regulation or executive order to close or to remain closed. “Certificate of an Authorized Representative” means a written certificate or warrant request executed by an Authorized Representative of the City.
“CFD No. __________ Reserve Account” means the account by that name established by the Authority Indenture.
“City” means the City of Lake Elsinore, County of Riverside, California. “City Council” means the City Council of the City.
“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. “Costs of Issuance” shall have the meaning set forth in the Authority Indenture. “Defeasance Securities” means any of the following: (a) non-callable direct obligations of the United States of America (“Treasuries”), (b) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (c) subject to the prior written consent of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively, and (d) subject to the prior written consent of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), securities eligible for “AAA” defeasance under then existing criteria of S&P. 9 4896-6147-4111v2/022042-0049
“Delinquency Proceeds” means the amounts collected from the redemption of delinquent Special Taxes and from the sale of property sold as a result of the foreclosure of the lien of the Special Tax resulting from the delinquency in the payment of Special Taxes due and payable on such property.
“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. “Developed Property” has the meaning ascribed to it in the Rate and Method of Apportionment.
“District” means the City of Lake Elsinore Community Facilities District No. __________ established pursuant to the Act and the Resolution of Formation. “Escrow Agent” means Wilmington Trust, National Association, acting as escrow agent pursuant to the Escrow Agreement.
“Escrow Agreement” means that Escrow Agreement, dated as of June 1, 2025, between the District and the Escrow Agent relating to the defeasance and refunding of the Prior Bonds. “Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30.
“Gross Special Taxes” means the amount of all Special Taxes received by the District, together with the proceeds collected from the sale of property pursuant to the foreclosure provisions of this Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.
“Improvement Fund” means the funds by that name established pursuant to Section 3.1. “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 and not 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.
“Indenture” means this Bond Indenture, together with any Supplemental Indenture approved pursuant to Article 6 hereof.
“Insurance Policy” or “Policy” means the insurance policy issued by the Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Authority Bonds when due. 10 4896-6147-4111v2/022042-0049
“Interest Payment Date” means each March 1 and September 1, commencing [March 1, 2026], and the final maturity date of the Bonds; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date, and in the case of the final Interest Payment Date to and including such date, will be paid on the Business Day next preceding such date. “Maximum Special Tax” has the meaning ascribed to it in the Rate and Method of Apportionment.
“Moody’s” means Moody’s Investors Service, its successors and assigns. “Net Special Taxes” means Gross Special Taxes minus amounts set aside to pay Administrative Expenses.
“Ordinance” means Ordinance No. _____ adopted by the legislative body of the District on _________, providing for the levying of the Special Tax. “Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except:
(1) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.1 hereof;
(2) Bonds and Parity Bonds for payment or redemption of which moneys 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 (3) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10 hereof.
“Parcel” has the meaning ascribed to it in the Rate and Method of Apportionment. “Parity Bonds” mean bonds or other securities issued by the District and secured by a lien on the Net Special Taxes which is on parity with the lien thereon securing the Bonds. “Policy Costs” means repayment of all amounts due under the Reserve Policy and all amounts due with respect to any Additional Reserve Policy resulting from a failure by the District to pay the principal of and interest on the Bonds when due. “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 the District made in accordance with the Rate and Method of Apportionment.
“Principal Office of the Trustee” means the principal corporate trust office of the Trustee in Costa Mesa, California, provided that for purposes of payment, redemption, exchange, transfer, surrender and cancellation of Bonds and Parity Bonds, such term means the principal corporate trust office of the Trustee in Costa Mesa, California, or such other office as the Trustee may from time to time designate in writing to the District and the Owners. 11 4896-6147-4111v2/022042-0049
“Prior Bonds” means the District’s 2015 Special Tax Refunding Bonds currently outstanding in the aggregate principal amount of $_____.
“Prior Trustee” means Wilmington Trust, National Association, as fiscal agent under the Prior Fiscal Agent Agreement.
“Prior Indenture” means the Indenture dated as of _____, 20__ by and between the Prior Trustee and the District.
“Project” means those public facilities described in the Resolution of Formation which have been 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. “Proportionate Share” means, as of the date of calculation, the portion of the reserve requirement required under the Authority Indenture to be on deposit in the CFD No. __________ Reserve Account of the Reserve Fund, including any proportionate share of any Policy Costs. “Rate and Method of Apportionment” means that certain Rate and Method of Apportionment of Special Tax approved pursuant to the Resolution of Formation, as amended in accordance with the Act and this Indenture.
“Rating Agency” means Moody’s and Standard & Poor’s, or both, as the context requires. “Record Date” means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day.
“Regulations” means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code. “Reserve Account” means the account by that name established pursuant to Section 3.1 hereof.
“Reserve Fund” means the fund by that name established by the Authority Indenture. “Reserve Policy” means the municipal bond debt service reserve insurance policy issued by the Bond Insurer on the date of issuance of the Bonds representing the reserve requirement established under the Authority Indenture.
“Reserve Requirement” means zero with respect to the Bonds and with respect to any Parity Bonds the amount established by the District on the Delivery Date of such Parity Bonds. “Resolution of Formation” means Resolution No. _____ adopted by the City Council on _________, pursuant to which the City formed the District. “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 any annual sinking fund payment schedule to retire any Bonds or Parity Bonds which are designated as Term Bonds. 12 4896-6147-4111v2/022042-0049
“Special Tax Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.
“Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the __________ election in the District. “Standard & Poor’s” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns.
“Supplemental Indenture” means any supplemental indenture amending or supplementing this Indenture.
“Surplus Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.
“Taxable Property” has the meaning ascribed to it in the Rate and Method of Apportionment. “Term Bonds” means the Bonds maturing on September 1, 20__. “Treasurer” means the person who is acting in the capacity as finance director or administrative services director to the City.
“Trustee” means Wilmington Trust, National Association, a national banking association duly organized and existing under the laws of the United States of America, at its principal corporate trust office in Costa Mesa, California, and its successors or assigns, or any other bank, association or trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3 and any successor thereto.
“Value” means, for any Parcel or group of Parcels either (i) the fair market value, as of the date of value specified in the appraisal provided for below, of such Parcel or Parcels, including the value of the then existing improvements thereon, as estimated by an appraiser, who shall be a State of California certified general real estate appraiser selected and employed by the District, in an appraisal which specifies a date of value that is less than ninety (90) days preceding the date as of which such value is being applied by the District and which utilizes a methodology of valuation that is consistent with the City’s policy for appraisals, provided that a mass appraisal methodology may be utilized if so permitted in a Certificate of an Authorized Representative; or (ii) the full cash value of any or all of such Parcels, including the value of the improvements thereon as set forth on the last equalized assessment roll of the County Assessor of the County.
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 $____________ shall be issued for the purposes of (a) refunding and defeasing the Prior Bonds, (b) [utilizing a portion of the debt service saving achieved through the issuance of the Bonds to finance the Project] and (c) funding the District’s share of the Costs of Issuance.
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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 Special Taxes, no other taxes are pledged to the payment of the Bonds and 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, 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 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 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 Special Taxes and other amounts in the Special Tax Fund which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds and interest thereon and neither the members of the legislative body of the District or the City Council nor any persons executing the Bonds are liable personally on the 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 Special Taxes for the payment of the interest on or the principal of or premium on 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 legally available for such purpose.
Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes.
Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, in order to secure the payment of the principal of and interest on the Bonds and any Parity Bonds in accordance with their terms, the provisions of this Indenture and the Act, the District hereby pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Net Special Taxes and any other amounts held in the Special Tax Fund.
Said pledge shall constitute a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the District, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act. Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from the Net Special Taxes and other amounts in the Special Tax Fund, 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 Special Taxes and other amounts in the Special Tax Fund, which are hereby set aside for the payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund 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 14 4896-6147-4111v2/022042-0049
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 Special Taxes deposited in the Surplus Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Surplus Fund, the Improvement Fund or the Administrative Expense 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; (a) subject to the limitations herein, 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 (b) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Special 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. __________ 2025 SPECIAL TAX REFUNDING BONDS.” The Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on [September 1, 2025] and each Interest Payment Date thereafter:
Maturity Date
(September 1) Principal Amount Interest Rate
$ %
Interest shall be payable on each Bond and Parity Bond from the date established in accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum 15 4896-6147-4111v2/022042-0049
of that Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond 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; provided that so long as the Authority or the Authority Trustee on its behalf is the registered owner of all the Bonds, such presentment is not required. Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such 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 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 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; provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in default, interest on that 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 that Bond or Parity Bond, interest on that 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 on the applicable Interest Payment Date by first class mail, postage prepaid, to such Bondowner 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, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account designated by such Owner.
Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds shall be typewritten. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which forms are hereby approved and adopted as the forms of such Bonds and any Parity Bonds and of the certificate of authentication.
Notwithstanding any provision in this Indenture to the contrary, the District may, in its sole discretion, elect to issue the Bonds and any Parity Bonds in book entry form.
Until definitive Bonds or Parity Bonds 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, 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, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without 16 4896-6147-4111v2/022042-0049
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 and 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 behalf of the District by the manual or facsimile signature of the Mayor of the City and by the manual or facsimile signature of the City Clerk, or any duly appointed deputy clerk, in their capacity as officers of the District. In case any one or more of the officers who shall have signed or sealed any of 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 new Bonds or Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or Parity Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds or 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 had not ceased to hold such office.
Only the Bonds or Parity Bonds as shall bear thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond or Parity 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 Section 2.9 below, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, with reasonable notice, 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 Bondowner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Trustee of any change in the Bondowner’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 form acceptable to the Trustee and duly executed by the Bondowner 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 Bondowner requesting such exchange or 17 4896-6147-4111v2/022042-0049
transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer or exchange shall be paid by the District. 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 to the Trustee of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee shall be cancelled by the Trustee pursuant to Section 10.1 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 and deliver, 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 issued in 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 or 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, the refunding of the Prior Bonds, 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.
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds. (a) There is hereby created and established and shall be maintained by the Trustee the following funds and accounts:
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(1) The Community Facilities District No. __________ Special Tax Fund (the “Special Tax Fund”) (in which there shall be established and created an Interest Account, a Principal Account, a Reserve Account and a Redemption Account); (2) The Community Facilities District No. __________ Administrative Expense Fund (the “Administrative Expense Fund”);
(3) The Community Facilities District No. __________ Improvement Fund (the “Improvement Fund”); and
(4) The Community Facilities District No. __________ Surplus Fund (the “Surplus Fund”).
The amounts on deposit in the foregoing funds and accounts shall be held by the Trustee on behalf of the District and shall be invested and disbursed in accordance with the provisions of this Article 3. The investment earnings thereon shall be disbursed in accordance with the provisions of Section 3.9 hereof.
(b) Proceeds from the sale of the Bonds in the amount of $_________ (which amount is net of $_________ paid or retained by the Authority Trustee to pay the District’s share of the Costs of Issuance (as defined in the Authority Indenture) (including underwriter’s discount) and net of $_________ retained by the Authority Trustee as the cash-funded portion of the District’s Proportionate Share of the Reserve Fund), shall be received by the Trustee and deposited and transferred as follows:
(1) $_________ shall be transferred to the Escrow Agent for deposit in the escrow fund created under the Escrow Agreement; and (2) $_________ shall be deposited in the Improvement Fund. (c) The Trustee may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers.
Section 3.2. Deposits to and Disbursements from Special Tax Fund. (a) The Trustee shall deposit Gross Special Taxes representing Delinquency Proceeds as follows:
(1) the amount specified by the District as representing past due interest on the Bonds shall be deposited to the Interest Account of the Special Tax Fund; and (2) the amount specified by the District as representing past due principal of the Bonds shall be deposited to the Principal Account of the Special Tax Fund. (b) Except for the portion of any Prepayment to be deposited to the Redemption Account, the District shall, as soon as practicable transfer the Special Taxes received by the District to the Trustee for deposit in the Special Tax Fund to be held by the Trustee 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:
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(1) the Administrative Expense Fund an amount equal to the Administrative Expense Requirement or, if the Trustee receives written direction from the District to transfer a lesser amount, then such lesser amount, provided that not more than one-half of the Administrative Expense Requirement shall be so transferred in any Fiscal Year prior to the date on which the balance on deposit in the Interest Account of the Special Tax Fund is at least equal to the interest payable on the Bonds on March 1;
(2) the Interest Account of the Special Tax Fund the amount necessary to cause the balance on deposit therein to be equal to the interest on the Bonds and any Parity Bonds payable on the next succeeding Interest Payment Date;
(3) the Principal Account of the Special Tax Fund the amount necessary to cause the balance on deposit therein to be equal to the principal amount of the Bonds and any Parity Bonds and/or the Sinking Fund Payment payable on the next succeeding September 1; provided that not more than one-half of the principal amount and/or the Sinking Fund Payment payable on the next succeeding September 1 shall be deposited in the Principal Account prior to March 1 until (i) the balance on deposit in the Administrative Expense Fund equals the Administrative Expense Requirement, or such lesser amount directed by the District in writing to the Trustee, and (ii) the balance on deposit in the Interest Account equals the interest payable on the Bonds and any Parity Bonds through September 1;
(4) the Reserve Account the amounts necessary to fund and pay the amounts as set forth in Section 3.5 hereof;
(5) the Redemption Account of the Special Tax Fund; and (6) the Surplus Fund.
At least ten (10) Business Days prior to each Interest Payment Date, the Trustee shall notify the District in writing the amount of Special Taxes required to pay the principal of and interest on the Bonds and any Parity Bonds on the next succeeding Interest Payment Date and the amount necessary to cause the balance on deposit in the Reserve Account to equal the District’s Proportionate Share and to cause the balance in the Reserve Account to equal the Reserve Requirement, if any. The Trustee shall notify the Authority Trustee at least five (5) Business Days prior to each Interest Payment Date if there is not on deposit with the Trustee, after making all of the transfers required hereunder, moneys sufficient to pay the principal of and interest on the Bonds and any Parity Bonds.
Section 3.3. Administrative Expense Fund. The Trustee shall transfer from the first available Special Taxes in the Special Tax Fund to the Administrative Expense Fund an amount such that the total amounts so transferred in any Bond Year do not exceed the Administrative Expense Requirement. In the event Administrative Expenses exceed the Administrative Expense Requirement in any Bond Year, the total amount transferred in a Bond Year shall not exceed the Administrative Expense Requirement 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, to restore the Reserve Account to the Reserve Requirement and to restore the CFD No. __________ Reserve Account to the Proportionate Share. Notwithstanding the foregoing, at the direction of the District, amounts in excess of the Administrative Expense Requirement may be transferred to the Administrative Expense Fund prior to the transfers to the Interest Account, the 20 4896-6147-4111v2/022042-0049
Principal Account and the Redemption Account pursuant to Sections 3.4 and 3.5 below to the extent necessary to collect delinquent Special Taxes. Following the required transfers pursuant to Sections
3.4 and 3.5 below of amounts sufficient to pay the interest and principal on all Bonds and Parity Bonds due in a Bond Year, to restore the Reserve Account to the Reserve Requirement and to restore the CFD No. __________ Reserve Account to the Proportionate Share, an Authorized Representative of the City may direct the Trustee, in writing, to transfer additional amounts from the Special Tax Fund to the Administrative Expense Fund. Moneys in the Administrative Expense Fund may be held uninvested or invested in any Authorized Investments.
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 Section 3.3, at least five Business Days prior to each March 1 and September 1, the Trustee shall make the following transfers from the 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, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made. At least fifteen (15) days prior to an Interest Payment Date, the Trustee shall notify the Authority and the Authority Trustee if there are insufficient funds to provide for the payment of principal and interest due on the Bonds and any Parity Bonds on such Interest Payment Date.
Section 3.5. Reserve Account of the Special Tax Fund. After making the deposits required by Section 3.4 above, the Trustee shall next transfer to the Reserve Account the amount, if any, necessary to (i) pay Policy Costs with respect to the Reserve Policy then due and payable, (ii) pay Policy Costs with respect to any Additional Reserve Policy then due and payable, and (iii) cause the amount in the Reserve Account, taking into account the amounts then on deposit in the Reserve Account, to be equal to the Reserve Requirement. Amounts deposited to the Reserve Account to pay any Policy Costs due under the Reserve Policy or under any Additional Reserve Policy held by the Authority Trustee shall be transferred by the Trustee to the Authority Trustee to be applied in accordance with the Authority Indenture, and amounts deposited to the Reserve Account to pay Policy Costs with respect to any other Additional Reserve Policy shall be disbursed by the Trustee to the provider of such Additional Reserve Policy or as otherwise agreed to by such provider. If subsequent to the issuance of the Bonds a Reserve Requirement is established by the District, thereafter there shall be maintained in the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement to 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 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 and for the purpose of making any required transfer to a rebate fund established in connection with the issuance of Parity Bonds upon written direction from the District. If the amounts in the Interest Account, the Principal 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 any 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 a 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 Section 3.4 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 needed to restore the amount of such Reserve Account to the Reserve Requirement; provided, however, that such amount so deposited shall be on a pro rata basis with any amounts necessary to pay Policy Costs. 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 Interest Account or the Principal Account of the Special Tax Fund in accordance with Section 3.4 above. If amounts in the Special Tax Fund or otherwise 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.
In connection with an optional redemption of Parity Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Parity Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may be applied to such optional redemption or partial defeasance so long as the amount on deposit in the Reserve Account following such optional redemption or partial defeasance equals the Reserve Requirement. To the extent that the Reserve Account is at the Reserve Requirement as of the first day of the final Bond Year for an issue of Parity Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on an issue of Parity Bonds 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 paragraph shall be withdrawn from the Reserve Account on the fifth Business Day before each March 1 and September 1 and transferred to the Interest Account of the Special Tax Fund.
Section 3.6. Redemption Account of the Special Tax Fund. (a) After making the transfers and deposits required by Sections 3.4 and 3.5 above, and in accordance with the District’s election to call Bonds for optional redemption as set forth in Section 4.1(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 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 and the amount in the CFD No. __________ Reserve Account will equal the Proportionate Share.
(b) Prepayments deposited to the Redemption Account shall be applied on the redemption date established pursuant to Section 4.1(c) hereof for the use of such Prepayments to the payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments.
(c) 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 an extraordinary redemption from Prepayments to pay the interest thereon; provided, however, 22 4896-6147-4111v2/022042-0049
that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account, other than Prepayments, 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, the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.1(a) hereof, 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 3.7. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5 and 3.6 hereof, as soon as practicable after each September 1, and in any event prior to each October 1, 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 Section 5.2(b) hereof. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an Authorized Representative of the City (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 are insufficient therefor, (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement, (iii) to the CFD No. __________ Reserve Account to restore the CFD No. __________ Reserve Account to the Proportionate Share and to pay Policy Costs, (iv) to the Administrative Expense Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Fund are insufficient to pay Administrative Expenses, (v) 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 will notify the Trustee in a Certificate of an Authorized Representative and the Trustee will segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of 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 Section 103 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.
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Section 3.8. Improvement Fund.
(a) The moneys in the Improvement Fund shall be applied exclusively to pay for the Project and shall be disbursed by the Trustee, as directed by the District, in accordance with a Certificate of an Authorized Representative.
(b) Upon receipt of a Certificate of an Authorized Representative of the City stating that all or a specified portion of the amount remaining in the Improvement Fund is no longer needed to pay for the Project, the Trustee shall: (i) transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Improvement Fund to the Interest Account, the Principal Account or Redemption Account of the Special Tax Fund 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 Improvement Fund.
Section 3.9. Investments. Moneys held in any of the Accounts under this Indenture shall be invested by the Trustee or the District, as applicable, 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 Accounts. Any loss resulting from such Authorized Investments shall be credited or charged to the Account from which such investment was made, and any investment earnings on amounts deposited in the Special Tax Fund, and each Account therein, and of the Surplus Fund shall be deposited in those respective Funds and Accounts. Moneys in the Accounts held under this Indenture may be invested by the District or the Trustee as directed in writing by the District, as applicable, from time to time, in Authorized Investments subject to the following restrictions:
(a) 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 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 as the same become due. (b) Moneys in the Improvement Fund shall 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 Improvement Fund.
Notwithstanding anything herein to the contrary, the District shall instruct the Trustee that amounts in the Improvement Fund three years after the Delivery Date for the Bonds shall be invested only in Authorized Investments the interest on which is excluded from gross income under Section 103 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, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds from being included in gross income for federal income tax purposes.
(c) In the absence of written directions from the District, the Trustee shall hold such moneys uninvested.
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The District or the Trustee, as applicable, 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 Accounts or from such Accounts to which such Authorized Investments is credited. For the purpose of determining at any given time the balance in any such Accounts, any such investments constituting a part of such Accounts shall be valued at the lower of the cost or the market value thereof, exclusive of accrued interest, at least semiannually. In making any valuations hereunder, the District or the Trustee, as applicable, may utilize such computerized securities pricing services as may be available to it, including, without limitation, those available through its regular accounting system, and conclusively rely thereon. Notwithstanding anything herein to the contrary, the District or the Trustee, as applicable, shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of this Indenture.
The Trustee or the District, as applicable, may act as principal or agent in the making or disposing of any investment. The Trustee or the District, as applicable, may sell, or present for redemption, any Authorized Investment so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Authorized Investment is credited, and, subject to the provisions of Section 7.4, the Trustee or the District, as applicable, shall not be liable or responsible for any loss resulting from such investment. For investment purposes, the Trustee or the District, as applicable, may commingle the funds and accounts established hereunder, but shall account for each separately.
The District acknowledges that, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, the District specifically waives receipt of such confirmations to the extent permitted by law. The District further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. The Trustee will furnish the District periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder or brokers selected by the District. Upon the District’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. The Trustee and its affiliates may act as sponsor, advisor, depository, principal or agent in the holding, acquisition or disposition of any investment. The parties hereto acknowledge that the Trustee is not providing investment supervision, recommendations, or advice.
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption.
The Bonds maturing on or after September 1, 20__ may be redeemed, at the option of the District from any source of funds on any date on or 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 a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium. For so long as the Authority is the Owner of the Bonds, in connection with the calculation of such redemption price, the District shall receive a credit from the Authority 25 4896-6147-4111v2/022042-0049
from the reduction in the District’s Proportionate Share resulting from the redemption of the Bonds and the Authority Bonds so redeemed in connection therewith.
Notwithstanding the foregoing, upon the occurrence of an optional redemption of Bonds in part, the selection of such Bonds to be redeemed shall be subject to the approval of the Bond Insurer. (b) Mandatory Sinking Fund Redemption.
The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__
20__ (maturity)
The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 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 Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__
20__ (maturity)
The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from a Sinking Fund Payment that has been deposited into the Principal Account, on September 1, 20___, in accordance with the schedule of Sinking Fund Payments set forth below.
The 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 Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
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BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__ (maturity)
The Term Bonds maturing on September 1, 20__ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 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 Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__
20__
20__ (maturity)
If the District purchases Term Bonds and delivers them to the Trustee at least 45 days prior to an applicable redemption date, the principal amount of the Term Bonds so purchased shall be credited to reduce the Sinking Fund Payment due on such redemption date for the applicable maturity of the Term Bonds. All Term Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1.
In the event of a partial optional redemption or extraordinary mandatory redemption of Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis. (c) Extraordinary Redemption.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to Section 3.2 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 Dates Redemption Prices
Any Interest Payment Date from March 1, 20__ through
March 1, 20__
%
September 1, 20__ and March 1, 20__
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September 1, 20__ and March 1, 20__
September 1, 20___ and any Interest Payment Date
thereafter
For so long as the Authority is the Owner of the Bonds, in connection with the calculation of such redemption price, the District shall receive a credit from the Authority from the reduction in the Proportionate Share of the Reserve Requirement resulting from the redemption of the Bonds and the Authority Bonds so redeemed in connection therewith. (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 Section 4.1 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; provided, however, that a notice of optional redemption may be conditioned on there being on deposit on the redemption date sufficient money to pay the redemption price of the Bonds or Parity Bonds to be redeemed. Such notice of redemption shall (a) 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 the Bonds or Parity Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds or Parity Bonds are to be redeemed; (e) 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; (f) state the date of issue of the Bonds or Parity Bonds as originally issued; (g) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds or Parity Bonds being redeemed as shall be specified by the Trustee. 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 send a copy of such notice to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of the Bonds or Parity Bonds, as applicable. The actual receipt by the Owner of any Bond or Parity Bond or the original purchaser 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 28 4896-6147-4111v2/022042-0049
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. Notwithstanding the foregoing, so long as the Authority or the Authority Trustee on the Authority’s behalf is the registered owner of the Bonds, no such notices need be provided.
In addition to the foregoing notice, further notice shall be given by the Trustee as set out below if the Bonds or Parity Bonds are not owned by the Authority at the time the notice of redemption is given pursuant to this Section 4.3, provided that 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 at least two days before notice of redemption is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or certified mail, overnight delivery service or any other means acceptable to the registered securities depository listed below and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and Parity Bonds as shall be specified by the Trustee and to any national information services that disseminate notice of redemption of obligations such as the Bonds and Parity Bonds as determined by the Trustee:
Registered Securities Depositories
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: Redemption Area
Telecopy: (212) 855-7232 or (212) 855-7233
Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under this Indenture. The District and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
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.
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 Bondowner, 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 Section 4.3 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; provided that so long as the Authority or the Authority Trustee on the Authority’s behalf is the registered owner of the Bonds no such presentment is required;
(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 cease to 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 Bondowners 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 cause to be deposited 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.
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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 Special Taxes and other amounts pledged hereunder are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with 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 Special Taxes except as provided in this Indenture, and will not issue any obligation or security having a lien or charge upon the Net Special 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 Special Taxes which is subordinate in all respects to the pledge of Net Special Taxes to repay the Bonds and the Parity Bonds. (b) Levy of Special Tax. So long as any Bonds or Parity Bonds issued under this Indenture are Outstanding, the legislative body of the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due, (2) the Administrative Expenses, (3) any amounts required to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement, (4) any amounts required to replenish the CFD No. __________ Reserve Account to the Proportionate Share and pay all Policy Costs resulting from the delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds, and (5) any amounts due to the Bond Insurer not included in (1) through (4) above. 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 (i) will commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due and (ii) will commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 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) will 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 and the amount in the CFD No. __________ Reserve Account is at least equal to the District’s Proportionate Share. 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 and the CFD No. __________ Reserve Account. The District may treat any delinquent Special Tax sold to an independent third-party or to any funds of 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 and any other Delinquency Proceeds in the Special Tax Fund and will apply such proceeds remaining after 31 4896-6147-4111v2/022042-0049
the payment of Administrative Expenses to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds, to make current payments of principal and interest on the Bonds and any Parity Bonds and to replenish any draw on the Reserve Account and the CFD No. __________ Reserve Account, and to pay its proportionate share of Policy Costs resulting from the delinquency in the payment of scheduled debt service on the Bonds or 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 Special Taxes or other funds in the Special Tax Fund, or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided 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.
(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 of not less than 10% of the principal amount of the Bonds or the Owners of not less than 10% 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 Authority 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 moneys or property which would cause the Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be “private activity bonds” within the meaning of Section 141 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 Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be “arbitrage bonds” within the meaning of Section 148 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 Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be “federally guaranteed” within the meaning of Section 149(b) of the Code;
(4) 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 Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with 32 4896-6147-4111v2/022042-0049
the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the Authority Bonds; and (5) 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 Authority Bonds issued on a tax-exempt basis. (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.
For this reason, the District hereby determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels in the District below the levels provided in this Section 5.2(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 the District, unless, in connection therewith, (i) the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the District as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied on then existing Developed Property (as defined in the Rate and Method of Apportionment then in effect in the District) in each Bond Year for any Bonds and Parity Bonds Outstanding will equal at least 110% of the sum of the estimated Administrative Expenses and gross debt service in each Bond Year on all Bonds and Parity Bonds to remain Outstanding after the reduction is approved, (ii) the District finds that any reduction made under such conditions will not adversely affect the interests of the Owners of the Bonds and Parity Bonds, and (iii) no Policy Costs or amounts under the Insurance Policy are due and payable to the Bond Insurer and (iv) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. For purposes of estimating Administrative Expenses for the foregoing calculation, the Independent Financial Consultants shall compute the Administrative Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year. (h) Covenants to Defend. The District covenants that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the minimum or the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the Special Taxes for the purposes set forth in Section 5.2(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 it will not adopt any policy pursuant to Section 53344.1 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 Special Tax revenues to pay the principal of and interest on the Bonds and Parity Bonds when due.
(j) 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 33 4896-6147-4111v2/022042-0049
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 and any Parity Bonds of the rights and benefits provided in this Indenture.
(k) Subordinate Debt. Any indebtedness of the District evidenced by any subordinated debt and any renewals or extensions thereof (herein called “Subordinated Indebtedness”), shall at all times be wholly subordinate and junior in right of payment to any and all indebtedness of the District under this Indenture (herein called “Superior Indebtedness”). Following an event of default under this Indenture, no Subordinated Indebtedness shall be paid prior to any Superior Indebtedness in any fiscal year of the District. If the holder of the Subordinated Indebtedness is a commercial bank, savings bank, savings and loan association or other financial institution which is authorized by law to accept and hold deposits of money or issue certificates of deposit, such holder must agree to waive any common law or statutory right of setoff with respect to any deposits of the District maintained with or held by such holder. (l) Pledged Net Special Taxes. The District represents it has not heretofore made a pledge of, granted a lien on or security interest in, or made an assignment or sale of the Net Special Taxes that ranks on a parity with or prior to the pledge granted under this Indenture. The District, except as may be provided otherwise in this Indenture, shall not hereafter make any pledge or assignment of, lien on, or security interest in the Net Special Taxes payable senior to or on a parity with the pledge of Net Special Taxes established under this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District may from time to time, and at any time, without notice to or consent of any of the Bondowners, adopt Supplemental Indentures for any of the following purposes provided, however, that any such amendment or modification which adversely affects the rights and interests of the Bond Insurer shall require the prior written consent of the Bond Insurer:
(a) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other 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 Bondowners; (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 34 4896-6147-4111v2/022042-0049
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; or
(e) to modify, alter or amend the rate and method of apportionment of the Special Taxes in any manner so long as such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than 110% of the sum of estimated Administrative Expenses and principal and interest 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 Bondowners.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, 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 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 Bondowners, 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 Bondowners at their addresses as they appear in the Bond Register (if the Authority or the Authority Trustee on the Authority’s behalf is the owner of all the Bonds, such amendment may be delivered by other communication methods). 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 Bondowners. The failure of any Bondowners 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 35 4896-6147-4111v2/022042-0049
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 to be, 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.
The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture authorized by Sections 6.1 and 6.2 which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
Notwithstanding the foregoing, so long as the Insurance Policy is in full force and effect, any amendment, supplement, modification to, or waiver of, this Indenture pursuant to this Section 6.2 shall be subject to the prior written consent of the Bond Insurer.
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 or any 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 his 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 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.
ARTICLE VII
TRUSTEE
Section 7.1. Trustee. Wilmington Trust, National Association, shall be the Trustee for the Bonds and any Parity Bonds unless and until another Trustee is appointed by the District hereunder. The District may, at any time, appoint a successor Trustee satisfying the requirements of Section 7.2 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; provided, however, that the Trustee shall be at all times the same entity as the Authority Trustee.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest payments to the Bondowners, 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 36 4896-6147-4111v2/022042-0049
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 Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including, but not limited to, advances to and fees, costs 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, officials, directors, employees and agents, harmless from and against any losses, costs, damages, claims, expenses and liabilities, including, without limitation fees, costs and expenses of its attorneys, not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties hereunder. In no event shall the Trustee be responsible or liable for any consequential, punitive, indirect, incidental or special damages or loss of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The foregoing obligation of the District to indemnify the Trustee shall survive the removal or resignation of the Trustee and the discharge of the Bonds.
Section 7.2. Removal of Trustee. The District may at any time at its sole discretion 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; provided that any such successor shall be a bank, association or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $75,000,000, 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, association or trust company appointed as a successor publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this section the combined capital and surplus of such bank, association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 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 being sent by the successor Trustee to the Bondowners of the successor Trustee’s identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign and discharged from its duties and obligations hereunder by giving written notice to the District and by giving to the Owners notice of such resignation, which notice shall be sent to the Owners at their addresses appearing in the registration books in the office of the Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in Section
7.2 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 and have accepted appointment within 37 4896-6147-4111v2/022042-0049
thirty (30) calendar days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Owner (on behalf of itself and all other Owners) may, at the sole expense of the District, petition any court of competent jurisdiction for the appointment of a successor Trustee and for other appropriate relief, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee and grant such other relief.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility for the correctness of the same and makes no representations as to the validity or sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other than in connection with its 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 be under no 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 negligence or willful misconduct. The Trustee shall not be liable for any action taken or omitted by it or any of its officers, employees or agents in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. The Trustee shall not be liable for any action taken or error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall be entitled to request and receive written instructions from the District and/or Owners and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction of any such party. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of an Owner and/or the District, pursuant to the provisions of this Indenture, unless such party shall have offered to the Trustee security or indemnity (satisfactory to the Trustee in its sole and absolute discretion) against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction.
Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the District or any of its directors, members, officers, agents, affiliates or employee, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee may assume performance by all such persons of their respective obligations. The Trustee shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other person. The Trustee shall be conclusively protected in acting upon any notice, resolution, request, direction, consent, order, judgment, decree, certificate, opinion, report, bond, debenture, note, other evidence of indebtedness (including any Bond or Parity Bond) or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper person or persons, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. The Trustee may consult with counsel, who may be counsel to 38 4896-6147-4111v2/022042-0049
the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered hereunder in good faith and in accordance therewith.
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 satisfactorily established, if disputed.
Whenever in the administration of its duties 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, the Trustee may, at the expense of District, request, rely on and act in accordance with written certificates of the District and/or opinions of counsel, and 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/or opinion of counsel, and such certificate or opinion 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, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
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 shall actually receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance 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 (A) any events of other information, or (B) any default or event of default until an officer at the Trustee’s corporate trust officer 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 not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay (“unavoidable delay”) in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, war, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, loss or malfunctions of utilities, computer (hardware or software) or communications service, accidents, labor disputes, the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of supplies or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
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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, and, with respect to such permissive rights, the Trustee shall not be answerable for other than its negligence or willful misconduct.
The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or consulted by the Trustee. The Trustee may execute any of the trusts or powers hereof and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care.
The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds with 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.
These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except for the performance of such duties, and no implied covenants or obligations shall be read into this Indenture against the Trustee.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Owners pursuant to the provisions of this Indenture unless such Owners shall have offered to the Trustee security or indemnity satisfactory to the Trustee in its sole and exclusive direction against the costs, expenses and liabilities which may be incurred therein or thereby.
The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.
The Trustee agrees to accept and act upon facsimile or electronic transmission of written instructions and/or directions pursuant to this Indenture provided, however, that: (a) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (b) the Trustee shall have received a current incumbency certificate containing the specimen signature of such designated person. Any such instructions and directions furnished by electronic transmission shall be in the form of attachments in PDF format.
Notwithstanding anything to the contrary herein, the Trustee shall have no duty to prepare or file any Federal or state tax report or return with respect to any funds held pursuant to this Indenture or any income earned thereon, except for the delivery and filing of tax information reporting forms required to be delivered and filed with the Internal Revenue Service.
Section 7.5. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee 40 4896-6147-4111v2/022042-0049
may sell or transfer all or substantially all of its 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 (a) or (b), default shall be made 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, and such default shall have continued for a period of 30 days after the District shall have been given notice in writing of such default by the Trustee or the Owners of 25% in aggregate principal amount of the Outstanding Bonds and Parity Bonds; provided, however, that if in the reasonable opinion of the District the default stated in the notice can be corrected, but not within such thirty (30) day period, and corrective action is instituted by the District, with the written approval of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), within such thirty (30) day period and diligently pursued in good faith until the default is corrected, such default shall not be an Event of Default hereunder.
The Trustee agrees to give notice to the Owners immediately upon the occurrence of an event of default under (a) or (b) above and within 30 days of the Trustee’s knowledge of an event of default under (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal of, 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 its 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. 41 4896-6147-4111v2/022042-0049
If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount Outstanding Bonds and Parity Bonds and is indemnified to its satisfaction, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Trustee or 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.
The Bonds and any Parity Bonds are not subject to acceleration prior to maturity.
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 Trustee 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 fees, costs and expenses of the Trustee in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and
Second, 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 such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:
(a) first to the payment of all installments of interest on the 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 or otherwise, pursuant to its duties 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 the exercise 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 42 4896-6147-4111v2/022042-0049
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 of the Trustee and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net Special 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 Article VIII or 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 provided, out of the Net Special 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 Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be.
Section 8.7. 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 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 shall have been received by, and said tender of indemnity shall have been made to, the Trustee. 43 4896-6147-4111v2/022042-0049
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds 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 the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the 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 Trustee shall continue as if no such proceedings had been taken.
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 Special 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; 44 4896-6147-4111v2/022042-0049
(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 Fund) 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 on and prior to the maturity date or redemption date thereof, as applicable; or (c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, Defeasance Securities, 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 Fund) 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 on and prior to the maturity date or redemption date thereof, as applicable; 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. 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 and the Bond Insurer 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 Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, an escrow agreement with respect to the deposits under (b) and (c) above (which shall be acceptable in form and substance to the Bond Insurer, so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture. The Bond Insurer shall be provided with final drafts of the above-referenced documentation not less than five Business Days prior to the funding of the escrow.
The Bonds shall be deemed Outstanding under this Indenture unless and until they are in fact paid and retired or the above criteria are met.
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, send a notice to the Bondowners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred.
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This Indenture shall not be discharged until Policy Costs due to the Bond Insurer (to the extent the responsibility of the District as a result of the District’s failure to pay principal of, or interest on the Bonds when due) shall have been paid in full. The District’s obligation to pay such amounts shall expressly survive payment in full of the payments of principal of and interest on the Bonds.
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 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 purpose of refunding all or a portion of the Bonds or Parity Bonds then Outstanding subject 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 following the 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 September 1, (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number, and (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; (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 to increase the amount therein to the Reserve Requirement or to the CFD No. __________ Reserve Account to increase the amount therein to the Proportionate Share, 46 4896-6147-4111v2/022042-0049
provided that if the interest on such Parity Bonds is intended by the District to be excluded from the gross income of the recipients thereof for federal income tax purposes, such amount shall not exceed the maximum amount of proceeds that, in the opinion of Bond Counsel, can be so deposited without causing the interest on such Parity Bonds to be included in the gross income of the recipients thereof for federal income tax;
(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 accept any of such documents bearing a prior date):
(1) a certified copy of the Supplemental Indenture 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 to the District to the effect that (i) the District has the right and power under the Act to adopt the Supplemental Indenture relating to such Parity Bonds, and the Supplemental Indenture has been duly and lawfully adopted by the District, is in full force and effect and is valid and binding upon the District and enforceable in accordance with its terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights); (ii) the Indenture creates the valid pledge which it purports to create of the Net Special Taxes and other amounts as provided in the Indenture, subject to the application thereof to the purposes and on the conditions permitted by the Indenture; 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 the Indenture and all Supplemental Indentures thereto and are entitled to the benefits of the Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture and all such Supplemental Indentures; 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;
(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 47 4896-6147-4111v2/022042-0049
following the issuance of the Parity Bonds proposed to be issued is less than the 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 for the issuance of Parity Bonds.
(d) So long as any Bonds remain outstanding or any amounts are owed to the Bond Insurer by the District, without the prior written consent of the Bond Insurer, the District shall not issue any Parity Bonds that permits or requires the Owner to tender such Parity Bonds for purchase prior to the stated maturity thereof without the prior written consent of the Bond Insurer.
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 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 Bondowners may be in any number of concurrent instruments of similar tenor 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 the order 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 48 4896-6147-4111v2/022042-0049
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of 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 in trust at such date, or for two years after the date of deposit of such money if deposited with the Trustee in trust 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 written request of the District or the Authority Trustee shall, at the expense of the District, 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 Bondowners 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 Bondowners or the Trustee, then the District, the Trustee and the Bondowners 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. Insurer Rights. The Bond Insurer shall be deemed to be the sole holder of the Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Bondowners are entitled to take pursuant to this Indenture pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. In furtherance thereof and as a term of this Indenture and each Bond, the Trustee and each Bond Owner of a Bond appoint the Bond Insurer as their agent and attorney-in-fact and agree that the Bond Insurer may at any time during the continuation of any proceeding by or against the District under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of 49 4896-6147-4111v2/022042-0049
adjustment. In addition, the Trustee (solely with respect to the Bonds) and each Owner of a Bond delegate and assign to the Bond Insurer, to the fullest extent permitted by law, the rights of the Trustee and each Owner of a Bond in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners of the Bonds shall expressly include mandamus. The Bond Insurer is hereby deemed a third party beneficiary to this Indenture.
Section 10.6. Reimbursement of Insurer Fees. The District shall pay or reimburse the Bond Insurer from Special Taxes any and all charges, fees, costs and expenses that the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security under this Indenture or the Authority Indenture; (ii) the pursuit of any remedies under this Indenture or the Authority Indenture or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Indenture or the Authority Indenture whether or not executed or completed, or (iv) any litigation or other dispute in connection with this Indenture or the Authority Indenture or the transactions contemplated hereby or thereby, other than costs resulting from the failure of the Bond Insurer to honor its obligations under the Insurance Policy. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Indenture or the Authority Indenture.
Section 10.7. Provision of Information to Bond Insurer. The Bond Insurer shall be provided with the following information by the District or the Trustee, as the case may be:
(a) On request by the Bond Insurer, the District will provide a certificate that the District is not aware of any Event of Default under this Indenture and will provide such information, data or reports as the Bond Insurer shall reasonably request from time to time; (b) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto;
(c) Notice of any default known to the Trustee or the District within five Business Days after knowledge thereof;
(d) Prior notice of the redemption of any of the Bonds, including the principal amount and maturities thereof;
(a) Notice of the commencement of any Insolvency Proceeding by or against the Authority or the District;
(e) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds;
(f) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to this Indenture;
(g) All reports, notices and correspondence to be delivered to Bond Owners under the terms hereof; and
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In addition, the Bond Insurer shall have the right to receive such additional information as it may reasonably request.
Section 10.8. Discussion of and Access to Information. The District shall permit the Bond Insurer to discuss the affairs, finances and accounts of the District or any information the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the District and will use commercially reasonable efforts to enable the Bond Insurer to have access to the facilities, books and records of the District on any Business Day upon reasonable prior notice.
Section 10.9. 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 Special 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 Special Taxes and other amounts pledged hereunder.
Section 10.10. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture.
Section 10.11. Entire Agreement; Severability. This Agreement and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any 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 Bondowners shall retain all valid rights and benefits accorded to them under the laws of the State of California.
Section 10.12. 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 City Manager of the City, 130 South Main Street, Lake Elsinore, CA 92530, and all notices to the Trustee shall be sent via courier or fax or electronic transmission or mailed, first class, postage prepaid, or personally delivered to the Trustee, Wilmington Trust, National Association, 650 Town Center Drive, Suite 800, Costa Mesa, CA, Attention Corporate Trust Services. Any such notices or other communications furnished by electronic transmission shall be in the form of attachments in PDF format. Any notices required to be given to the Bond Insurer with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, personally delivered or sent via facsimile or electronic (email) transmission (with a portable document format or similar attachment) to Assured Guaranty Municipal Corp., 1633 Broadway, New York, NY 10019, Attention: Managing Director – Surveillance, Re: Policy No. __________; (212) 974-0100.
In each case in which notice or other communication to the Bond Insurer refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate “URGENT MATERIAL ENCLOSED.” 51 4896-6147-4111v2/022042-0049
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IN WITNESS WHEREOF, CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. __________ has caused this Bond Indenture to be signed by its City Manager and Clerk, and WILMINGTON TRUST, NATIONAL ASSOCIATION in token of its acceptance of the duties of the Trustee created hereunder, has caused this Bond Indenture to be signed in its corporate name by its officer identified below, all as of the day and year first above written.
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. __________
By:
City Manager of the City of Lake Elsinore,
acting as the legislative body of City of Lake
Elsinore Community Facilities District No.
__________
ATTEST:
City Clerk of the City of Lake Elsinore, acting
as the legislative body of City of Lake
Elsinore Community Facilities District
No. __________
[SIGNATURES CONTINUED ON NEXT PAGE.]
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[SIGNATURE PAGE CONTINUED.]
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF 2025 SPECIAL TAX REFUNDING BOND
No. __ $[PRINCIPAL AMOUNT]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. __________
2025 SPECIAL TAX REFUNDING BOND
INTEREST RATE: MATURITY DATE: DATED DATE:
_________% September 1, 20__ _____, 2025
REGISTERED OWNER: WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee under that certain Indenture of Trust dated as of June 1, 2025 by and between the Lake Elsinore Facilities Financing Authority and Wilmington Trust, National Association
PRINCIPAL AMOUNT: __________________________________ AND NO/100 DOLLARS CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. __________ (the “District”) situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 and the final maturity date of the Bonds (each an “Interest Payment Date”), commencing [September 1, 2025] at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. Except as otherwise provided in the Indenture, the principal of and premium, if any, on this Bond are payable A-2
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to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the 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 Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of “City of Lake Elsinore Community Facilities District No. __________ 2025 Special Tax Refunding Bonds” (the “Bonds”) issued in the aggregate principal amount of $____________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”) for the purpose of refinancing outstanding special tax bonds of the District, [utilizing a portion of the debt service saving achieved through the issuance of the Bonds to finance the Project] and 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 _____, 2025, and a Bond Indenture, dated as of June 1, 2025, by and between the District and the Trustee, executed in connection therewith (the “Indenture”), and this reference incorporates the Indenture herein, and by acceptance hereof the Registered 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. Capitalized terms not defined herein shall have the meanings set forth in the Indenture.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion (the “Net Special Taxes”) of the annual special taxes authorized under the Act to be levied and collected within 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 Net Special Taxes pledged and collected, which include foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law.
The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the 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 maturing on or after September 1, 20__ may be redeemed, at the option of the District from any source of funds, on any date on or 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 a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium.
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 Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for A-3
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each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__
20__ (maturity)
The Term 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 Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 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:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__
20__ (maturity)
The Term Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from a Sinking Fund Payment that has been deposited into the Principal Account, on September 1, 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 redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__(maturity)
The Term 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 Principal Account, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 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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BONDS MATURING SEPTEMBER 1, 20__
Redemption Dates
(September 1) Principal Amount
20__ $
20__
20__ (maturity)
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account 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 Dates Redemption
Prices
Any Interest Payment Date from March 1, 20__ through March 1, 20__ % September 1, 20__ and March 1, 20__
September 1, 20__ and March 1, 20__
September 1, 20___ and any Interest Payment Date thereafter Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Notwithstanding the foregoing, so long as the Authority or the Authority Trustee on the Authority’s behalf is the registered owner of the Bonds, no such notices need be provided. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the 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 Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered 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 aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
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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 OBLIGATIONS OF THE CITY OF LAKE
ELSINORE OR OF THE DISTRICT FOR WHICH THE CITY OF LAKE ELSINORE OR 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 OF LAKE ELSINORE, THE STATE OF
CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the 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.
IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No. __________ has caused this Bond to be dated as of _____, 2025, to be signed on behalf of the District by the Mayor by his facsimile signature and attested by the facsimile signature of the City Clerk.
Mayor of the City of Lake Elsinore
ATTEST:
City Clerk of the City of Lake Elsinore
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[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.
Dated: _______, 2025 WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Lake Elsinore
[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 guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Trustee.
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.
$___________
LAKE ELSINORE FACILITIES FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2025A
BOND PURCHASE AGREEMENT
___________, 2025
Lake Elsinore Facilities Financing Authority
130 South Main Street
Lake Elsinore, California 95965
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the Lake Elsinore Facilities Financing Authority (the “Authority”), which upon acceptance will be binding upon the Underwriter and the Authority. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Authority purchasing all of the obligations set forth in Exhibit C hereto (collectively, the “Local Obligations”), and upon the Authority satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Authority’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 P.M., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon written notice delivered to the Authority at any time prior to the acceptance hereof by the Authority. All capitalized terms used herein, which are not otherwise defined herein, shall have the meaning provided for such terms in the Official Statement (hereinafter defined) or the Indenture of Trust, dated as of June 1, 2025 (the “Indenture”), by and between the Authority and Wilmington Trust, National Association (“Wilmington Trust”), as trustee. The Local Obligations are being issued pursuant to nine separate Bond Indentures, each by and between the applicable Community Facilities District and Wilmington Trust, National Association, as trustee (collectively, the “Local Obligations Security Documents”).
1. Purchase, Sale and Delivery of the Bonds.
Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the Authority and the Authority hereby agrees to sell to the Underwriter all (but not less than all) of the $___________ aggregate principal amount of the Lake Elsinore Facilities Financing Authority Local Agency Revenue Refunding Bonds, Series 2025A (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto.
The purchase price for the Bonds shall be $_______ (being 100% of the aggregate principal amount thereof plus an original issue premium of $________ and less an Underwriter’s discount of $_______). From the proceeds of the Bonds, the Authority agrees to purchase each 2 of the Local Obligations pursuant to the terms of the Local Obligations Purchase Agreement, dated [BPA Date] (the “Local Obligations Purchase Agreement”), among the Authority and the Community Facilities Districts.
The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, shall be subject to redemption, and shall be payable from the Revenues as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Marks-Roos Local Bond Pooling Act of 1985, as amended, being Article 4, Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Bond Law”). The issuance of the Bonds has been duly authorized by the Authority pursuant to Resolution No. FFA 2025-__ (the “Authority Resolution”) adopted by the Board of Directors of the Authority on _______, 2025. The Bonds are being issued to purchase the Local Obligations.
The Local Obligations shall each be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from special taxes pledged thereto as provided in each of the Local Obligations Security Documents.
The Local Obligations are each being issued under the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Community Facilities District Act”). The issuance of the Local Obligations have been duly authorized by the Community Facilities Districts, pursuant to nine separate resolutions (collectively, the “Districts Resolutions”) adopted by the City Council of the City of Lake Elsinore, acting as legislative body of each Community Facilities District (the “City Council”).
The net proceeds of the Local Obligations, along with other available funds, will be used to: (i) make deposits into nine separate escrow funds to be held by Wilmington Trust, National Association, as escrow agent (the “Escrow Agent”) pursuant to nine separate Escrow Agreements, each dated as of June 1, 2025 (collectively, the “Escrow Agreements”) for the purpose refunding and redeeming each series of the Prior Bonds (as defined in the Official Statement) and the Prior Lake Elsinore PFA Bonds (as defined in the Official Statement); (ii) purchase a municipal bond insurance policy (the “Policy”) issued by ________ (the “Insurer”) for the purpose of paying the principal of and interest on the Bonds when due; (iii) purchase a reserve policy issued by the Insurer to be credited to the Reserve Fund for the Bonds (the “Reserve Policy”) to satisfy 75% of the initial Reserve Requirement; (iv) fund a cash deposit to the Reserve Fund for the remaining 25% of the initial Reserve Requirement; (v) apply a portion of the debt service savings achieved through the refunding of the Prior Bonds to finance additional public facilities benefitting the property within the Community Facilities Districts; and (vi) pay the costs of issuing the Bonds.
A. The Authority acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations and agreements made by the Authority herein and by the Community Facilities Districts in the Local Obligation Purchase Agreement, and the Authority shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation or agreement made by the Authority herein is incorrect in any material respect.
The Authority acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Authority and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the 3 Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Authority or the Community Facilities Districts with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Authority or the Community Facilities Districts on other matters); (iv) the Underwriter has financial and other interests that differ from those of Authority and the Community Facilities Districts; and (v) the Authority and the Community Facilities Districts have consulted their own legal, financial and other advisors to the extent that they have deemed appropriate. Nothing in the foregoing paragraph is intended to limit the Underwriter’s obligations of fair dealing under MSRB Rule G- 17 of the Municipal Securities Rulemaking Board (the “MSRB”).
The Authority acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the MSRB and acknowledges that it has engaged Urban Futures, Inc., as its municipal advisor (as defined in Securities and Exchange Commission Rule 15Ba1) (the “Municipal Advisor”) and will rely solely on the Municipal Advisor for financial advice with respect to the Bonds.
B. Pursuant to the authorization of the Authority, the Underwriter has distributed copies of the Preliminary Official Statement dated _______, 2025, relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” The Authority agrees to execute and deliver a final official statement relating to the Bonds (the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth LLP, as Bond Counsel (“Bond Counsel”) and as Disclosure Counsel (“Disclosure Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth in Section 2(P) hereof. The Authority hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Authority further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Local Obligations Security Documents, this Purchase Agreement, the Escrow Agreements, the Local Obligations Purchase Agreement, and all information contained herein, and all other documents, certificates and written statements furnished by or on behalf of the Authority or the Community Facilities Districts to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
C. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”), the Authority will undertake pursuant to a Continuing Disclosure Agreement dated as of June 1, 2025 (the “Continuing Disclosure Agreement”), between the Authority and Spicer Consulting Group, LLC, as dissemination agent, in the form attached to the Official Statement, to provide annual reports and notices of certain enumerated events.
D. Except as the Underwriter and the Authority may otherwise agree, the Authority will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Authority, the documents hereinafter mentioned; and the Authority will deliver to the Underwriter through the facilities of The Depository Trust Company (“DTC”) in New York, New York, the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Authority 4 and authenticated by Wilmington Trust in the manner provided for in the Indenture and the Bond Law at 8:30 a.m. California time, on [Closing Date] (the “Closing Date”), and the Underwriter will accept such delivery and remit the net amount described in the second paragraph of this Section 1 by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the “Closing”) to Wilmington Trust as contemplated by the Indenture. The Bonds shall be in fully registered book-entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.
E. The Underwriter agrees to make an initial public offering of all of the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto.
Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices.
1. The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
2. Except as otherwise set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
3. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a 5 price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
a. the close of the fifth (5th) business day after the sale date; or
b. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the Authority promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
4. The Underwriter confirms that:
a. any selling group agreement and any third-party
distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
b. any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. 6 5. The Authority acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds.
6. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
a. “public” means any person other than an underwriter or a related party;
b. “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public);
c. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
d. “sale date” means the date of execution of this Purchase Agreement by the Underwriter and the Authority.
7 2. Representations and Covenants of the Authority. The Authority represents and covenants to the Underwriter that:
A. The Authority is a joint exercise of powers authority, duly organized and existing under the Constitution and laws of the State of California (the “State”), and formed pursuant to Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code (the “JPA Act”), with full right, power and authority to: (i) execute and deliver this Purchase Agreement, the Local Obligations Purchase Agreement, the Continuing Disclosure Agreement and the Indenture; (iii) adopt the Authority Resolution; (iv) issue, sell and deliver the Bonds to the Underwriter as provided herein; (v) purchase the Local Obligations; and (vi) carry out and consummate the transactions on its part contemplated by this Purchase Agreement, the Indenture and the Official Statement.
The Indenture, the Bonds, the Continuing Disclosure Agreement, the Local Obligations Purchase Agreement and this Purchase Agreement are collectively referred to herein as the “Authority Documents.”
B. By all necessary official action of the Authority, the Authority has duly authorized and approved the execution and delivery by the Authority of, and the performance by the Authority of the obligations on its part contained in, the Authority Documents, and has approved the use by the Underwriter of the Preliminary Official Statement and the Official Statement and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable upon the Authority in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium, reorganization or other laws of equitable principles of general application, or of application to municipalities or political subdivisions such as the Authority, affecting remedies or creditors’ rights generally, and to the exercise of judicial discretion in appropriate cases. The Authority has complied, and will at the Closing Date be in compliance in all material respects, with the terms of the Authority Documents that are applicable to the Authority.
C. The information in the Preliminary Official Statement and in the Official Statement relating to the Authority and the Bonds (other than statements pertaining to DTC or the book-entry system, the Insurer, the Policy, the Reserve Policy, or any information provided by the Underwriter, as to which no view is expressed), does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.
D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of 8 the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be a written notice delivered to the Authority at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” E. As of the time of acceptance hereof and as of the Closing Date, except as otherwise disclosed in the Official Statement, the Authority is not, and as of the Closing Date, will not be in any material respect that would affect the Authority’s compliance with or performance under the Authority Documents, in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority is a party or is otherwise subject; and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute in any material respect a default or event of default under any such instrument; which breach, default or event could have an adverse effect on the Authority’s ability to perform its obligations under the Authority Documents; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the Authority Documents and compliance by the Authority with the provisions of each of such agreements or instruments does not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the Authority Documents.
F. At the time of acceptance hereof there is not, and as of the Closing Date, there will not be any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending (notice of which has been served on the Authority) or to the knowledge of the Authority threatened, in which any such Action: (i) in any way questions the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Revenues (as defined in the Indenture) or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Authority Documents or the consummation of the transactions on the part of the Authority contemplated thereby; (iii) contests the exclusion of the interest on the Bonds from federal or state income taxation or contests the powers of the Authority which may result in any material adverse change relating to the financial condition of the Authority; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and, as of the time of 9 acceptance hereof, there is not, and as of the Closing Date, there will not be any basis known to the Authority for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.
G. The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter, at the sole expense of the Underwriter as the Underwriter may reasonably request in order: (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds, provided; however, that the Authority will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction.
H. The Authority Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement. The Authority represents that the Bonds, when issued, executed and delivered in accordance with the Indenture and sold to the Underwriter as provided herein, will be validly issued and outstanding obligations of the Authority, entitled to the benefits of the Indenture. The Indenture creates a valid pledge of the moneys in certain funds and accounts established pursuant to the Indenture, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein.
I. The Authority has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Authority is a bond issuer whose arbitrage certifications may not be relied upon.
J. Any certificate signed by any authorized officer of the Authority and delivered to the Underwriter in connection with the issuance and sale of the Bonds shall be deemed to be a representation and covenant by the Authority to the Underwriter as to the statements made therein.
K. The Revenues constituting the security for the Bonds have been duly and lawfully authorized and may be pledged under the Bond Law and other applicable laws of the State.
L. The Authority will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Official Statement.
M. Between the date of this Purchase Agreement and the Closing Date, the Authority will not offer or issue any bonds, notes or other obligations for borrowed money secured by the Revenues not previously disclosed to the Underwriter.
N. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Authority will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture. 10 O. The Authority has covenanted to comply with the Internal Revenue Code of 1986, as amended, with respect to the Bonds; and the Authority shall not knowingly take or omit to take any action that, under existing law, may adversely affect the exclusion from gross income for federal income tax purposes, or the exemption from any applicable State tax, of the interest on the Bonds.
P. The Preliminary Official Statement was deemed final by a duly authorized officer of the Authority prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The Authority hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Authority shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G- 15, G-32 and G-36 of the MSRB.
The Authority hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date.
The Authority hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained herein, and all other documents, certificates and written statements furnished by the Authority to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
The execution and delivery of this Purchase Agreement by the Authority shall constitute a representation by the Authority to the Underwriter that the representations contained in this Section 2 are true as of the date hereof.
3. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations on the part of the Authority contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Authority made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Authority of its obligations to be performed hereunder at or prior to the Closing Date and, to the following additional conditions:
A. At the Closing Date, the Authority Documents, the Authority Resolution, the Districts Resolutions, the Local Obligations Security Documents, the Local Obligations Purchase Agreement, and the Local Obligations shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the Local Obligations, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.
B. At the Closing Date, except as described in the Preliminary Official Statement, the Authority shall not be, in any respect material to the transactions referred to 11 herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound, and the performance by the Authority of its obligations under the Authority Documents and the Authority Resolution, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound, in any manner that would materially and adversely affect the performance by the Authority of its obligations under the Authority Documents or the Authority Resolution.
C. The information contained in the Official Statement (other than statements pertaining to DTC or the book-entry system, the Insurer, the Policy, the Reserve Policy, or any information provided by the Underwriter, as to which no view is expressed), will be, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and will not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
D. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the inside cover page of the Official Statement, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice to the Authority terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
1. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof;
2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds or the Local Obligations, including any or all underlying 12 arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture or the Local Obligations Security Documents are not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds or the Local Obligations, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect;
3. Any state Blue Sky or securities commission or other governmental agency or body shall have withheld registration, exemption or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto;
4. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction;
5. The introduction, proposal or enactment of any amendment to the Federal or California Constitution or any action by any Federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Authority, the Community Facilities Districts or their property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Authority to purchase the Local Obligations;
6. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
7. There shall have occurred any materially adverse change in the affairs or financial condition of the Authority or the Community Facilities Districts;
8. Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds, the Local Obligations or obligations of the general character of the Bonds or the Local Obligations, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter;
9. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
10. The purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; 13 11. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation or interest rates) or the extension of credit by, or a charge to the net capital requirements of credit by, or a charge to net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States of America, or by Executive Order;
12. A decision by a court of the United States of America shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended;
13. The withdrawal or downgrading or the placing on credit watch with negative outlook of any rating on the Bonds by a national rating agency;
14. A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred;
15. The commencement of any Action, as set forth in Section 2(F) hereof;
16. There shall have occurred any national or international calamity or crisis in the financial markets or otherwise of the United States or elsewhere; or
17. Any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Commission against the Community Facilities Districts or the Authority.
E. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:
1. The Official Statement, executed on behalf of the Authority by its Executive Director or other authorized officer;
2. The Authority Documents, duly executed and delivered by all parties thereto;
3. The Authority Resolution, together with a certificate of the Secretary of the Authority, dated as of the Closing Date, to the effect that such resolution is a true, correct and complete copy of the resolution duly adopted by the Board of Directors of the Authority;
4. The Districts Resolutions, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Districts Resolutions are true, correct and 14 complete copies of the resolutions duly adopted by the City Council, acting as the legislative body of the Community Facilities Districts;
5. The Local Obligations Security Documents;
6. An approving opinion for the Bonds, dated the Closing Date and addressed to the Authority, of Bond Counsel, in substantially the form included as an appendix to the Official Statement, together with a letter from such counsel, dated the Closing Date and addressed to the Underwriter and Wilmington Trust, to the effect that the foregoing opinion addressed to the Authority may be relied upon by the Underwriter and Wilmington Trust to the same extent as if such opinion were addressed to them;
7. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the following effect:
(i)This Purchase Agreement has been duly authorized, executed and delivered by the Authority, and constitutes the legal, valid and binding obligation of the Authority, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, moratorium or other laws affecting enforcement of creditors’ rights, or by the application of equitable principles if equitable remedies are sought; (ii)The Authority is duly organized and validly existing under the Joint Powers Act;
(iii)The Bonds conform as to form and tenor to the description thereof contained under the captions “INTRODUCTION,” and “THE BONDS” in the Official Statement, and the statements contained in the Official Statement under the captions “THE BONDS,” “SECURITY FOR THE BONDS,” “LEGAL MATTERS – Tax Matters,” “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” in Appendix B of the Official Statement and “FORM OF BOND COUNSEL OPINION” in Appendix E of the Official Statement are accurate in all material respects insofar as such statements purport to summarize certain provisions of the Act, the Bonds, the Indenture, the applicable provisions of the United States Internal Revenue Code or Bond Counsel’s opinion with respect to the Bonds; and
(iv)The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended;
8. An opinion, dated the Closing Date and addressed to the Authority, the Underwriter, and Wilmington Trust, of Bond Counsel, as to the effective defeasance of the Prior Bonds in form and substance acceptable to the Underwriter;
9. A certificate, dated the Closing Date and signed by the Chair of the Authority or other authorized officer, to the effect that: (i) the representations of the Authority contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Authority has in all material respects complied with the agreements and 15 satisfied the conditions on its part to be performed or satisfied under the Authority Documents and the Authority Resolution at or prior to the Closing Date;
10. An opinion of counsel to the Authority, dated the date of Closing and addressed to the Underwriter and the Authority, to the effect that:
(i) The Authority is a joint powers authority, duly organized and validly existing under the laws of the State of California; (ii) The Authority Resolution was duly adopted at a regular meeting of the governing body of the Authority, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Authority Resolution is in full force and effect and has not been modified, amended, rescinded or repealed since the date of its adoption; and (iii) Except as may be stated in the Official Statement, there is no action, suit, proceeding or investigation against the Authority before or by any court, public board or body pending (notice of which has been served on the Authority) or, to the best of such counsel’s knowledge, threatened wherein an unfavorable decision, ruling or finding would:
(a) affect the creation, organization, existence or powers of the Authority, or the titles of its members and officers to their respective offices; (b) enjoin or restrain the issuance, sale and delivery of the Bonds, the collection of the Revenues or the pledge thereof; (c) in any way question or affect any of the rights, powers, duties or obligations of the Authority with respect to the Revenues or the moneys and assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Bonds; (d) in any way question or affect any authority for the issuance of the Bonds, or the validity or enforceability of the Bonds; or (e) in any way question or affect the Authority Documents, the Official Statement or the transactions contemplated by the Authority Documents, the Official Statement, or any activity regarding the Bonds;
11. A letter or letters from Disclosure Counsel, dated the Closing Date and addressed to the Authority and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the City, the Authority, the Community Facilities Districts, the Special Tax Consultant (as defined below), Wilmington Trust and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement as of its date and as of the Closing Date contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial statements or other financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals, absorption, archeological or environmental matters, or any information about the Insurer, the Policy, the Reserve Policy, The Depository Trust Company or the book-entry-only system);
12. A transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds and the Local Obligations, including certified copies of the Indenture, the Local Obligations Security Documents and the resolutions of the Community Facilities Districts and the Authority relating thereto; 16 13. A certificate dated the Closing Date from Spicer Consulting Group, LLC (the “Special Tax Consultant”) for the Community Facilities Districts to the effect that: (i) with respect to each Taxing Jurisdiction (as defined in the Official Statement), the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes for the Taxing Jurisdiction (the “Taxing Jurisdiction RMA”) as of the Closing Date would generate at least 110% of the annual debt service payable with respect to the Local Obligations of the Taxing Jurisdiction, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Official Statement provided by Special Tax Consultant concerning the Special Taxes and each Taxing Jurisdiction RMA and all information supplied by it for use in the Official Statement as of the date of the Official Statement and as of the Closing Date did not and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
14. A certificate of the Municipal Advisor in form and substance satisfactory to Bond Counsel and the Underwriter, that nothing has come to the attention of the Municipal Advisor which would lead it to believe that the Preliminary Official Statement as of its date and as of the date of this Purchase Agreement and the Official Statement as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading;
15. Certified copies of the general resolution of Wilmington Trust authorizing the execution and delivery of certain documents by certain officers of Wilmington Trust, which resolution authorizes the execution of the Indenture, the Local Obligations Security Documents, the Escrow Agreements and the authentication of the Bonds and the Local Obligations;
16. A certificate of Wilmington Trust, addressed to the Underwriter, the Authority and the Community Facilities Districts dated the Closing Date, to the effect that:
(i) Wilmington Trust is authorized to carry out corporate trust powers, and have full power and authority to perform its duties under the Indenture, the Local Obligations Security Documents and the Escrow Agreements; (ii) Wilmington Trust is duly authorized to execute and deliver the Indenture, the Local Obligations Security Documents and the Escrow Agreements, to accept the obligations on its part created by the Indenture, the Local Obligations Security Documents and the Escrow Agreements and to authenticate the Bonds and the Local Obligations pursuant to the terms of the Indenture and the Local Obligations Security Documents, respectively; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over Wilmington Trust that has not been obtained is or will be required for the authentication of the Bonds or the Local Obligations or the consummation by Wilmington Trust of the other transactions contemplated to be performed by Wilmington Trust in connection with the authentication of the Bonds and the Local Obligations and the acceptance and performance of the obligations on its part created by the Indenture, the Local Obligations Security Documents and the Escrow Agreements; and (iv) to the best of its knowledge, compliance with the terms of the Indenture, the Local Obligations Security Documents and the Escrow Agreements will not conflict in any material respect with, or result in a violation or breach of, or constitute a default under any material agreement or material instrument to which Wilmington Trust is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over Wilmington Trust or any of its activities or properties;
17 17. An opinion of counsel to Wilmington Trust, dated the Closing Date, addressed to the Underwriter, the Authority and the Community Facilities Districts to the effect that Wilmington Trust is a national banking association duly organized and validly existing under the laws of the United States having full power and being qualified to enter into, accept and agree to the provisions of the Indenture, the Local Obligations Security Documents and the Escrow Agreements, and that each of such documents has been duly authorized, executed and delivered by Wilmington Trust and, assuming due execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of Wilmington Trust enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought;
18. An opinion of Kutak Rock LLP, counsel for the Underwriter, dated the date of the Closing, addressed to the Underwriter in form and substance acceptable to the Underwriter;
19. A tax certificate, duly executed and delivered by the Authority;
20. A copy of the Report of Proposed Debt Issuance and Report of Final Sale for the Bonds required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code;
21. A letter addressed to the Underwriter, the Authority and Bond Counsel, dated the date of the Closing, from ___________ (the “Verification Agent”), verifying the accuracy of the mathematical computations concerning the adequacy of the moneys to be deposited with the Escrow Agent to pay when due, the principal, whether at maturity or upon prior redemption, interest and redemption premium requirements of the Prior Bonds;
22. Evidence that any ratings described in the Official Statement are in full force and effect as of the Closing Date;
23. The executed Insurance Policy for Bonds, and the executed Reserve Policy issued by the Insurer;
24. A certificate of the Insurer as to the accuracy of the information in Official Statement relating to the Insurer, the Policy and the Reserve Policy;
25. An opinion of counsel to the Insurer, dated as of the date of Closing, addressed to the Underwriter and the Authority in form and substance acceptable to the Underwriter, substantially to the effect that: (i) the Insurer has been duly incorporated and is validly existing and in good standing under the laws of the state of its incorporation; and (ii) the Policy and the Reserve Policy constitute the legal, valid and binding obligations of the Insurer enforceable in accordance with their terms, subject to enforcement, bankruptcy, insolvency, reorganization, rehabilitation and other similar laws of general applicability relating to or affecting creditors’ and/or claimants’ rights against insurance companies and to general equity principles;
26. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations of the Authority 18 contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Authority and the Community Facilities Districts at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Authority and the Community Facilities Districts in connection with the transactions contemplated hereby and by the Local Obligations Security Documents, the Indenture and the Official Statement.
If the Authority shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Authority nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Authority set forth in Section 5 hereof shall continue in full force and effect.
4. Conditions to the Obligations of the Authority.
A. The obligations of the Authority shall be subject to the satisfaction of the conditions contained in Section 3.E. of this Purchase Agreement and to the satisfaction by the Community Facilities Districts of their obligations to the Local Obligations Purchase Agreement.
B. If the Authority shall be unable to satisfy the conditions to the obligations of the Authority to purchase, accept delivery of and pay for the Local Obligations contained in the Local Obligations Purchase Agreement, or if the obligations of the Authority to purchase, accept delivery of and pay for the Local Obligations shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and the Authority shall not be under any further obligation hereunder, except that the obligations set forth in Section 5 hereof shall continue in full force and effect.
5. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay (except as provided in the paragraph below), and the Authority shall pay only from the proceeds of the Bonds, or cause the Community Facilities Districts to pay out of the proceeds of the Local Obligations or any other legally available funds of the Community Facilities Districts or the Authority, but only as the Authority and such other party providing such services may agree, all expenses and costs of the Authority incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, initial fees of the Wilmington Trust, including fees and disbursements of its counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel, the Municipal Advisor, and other professional advisors employed by the Authority, and costs of preparation, printing, signing, transportation, delivery and safekeeping of the Bonds.
The Underwriter shall pay all out-of-pocket expenses of the Underwriter, including, without limitation, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including fees of its counsel. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction- related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter’s discount.
19 6. Notices. Any notice of other communication to be given to the Authority under this Purchase Agreement may be given by delivering the same in writing at its address set forth above; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Ste. 2150, Los Angeles, California 90067, Attention: Public Finance Department.
7. Parties In Interest. This Purchase Agreement is made solely for the benefit of the Authority and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
8. Survival of Representations. The representations of the Authority under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Authority and regardless of delivery of and payment for the Bonds.
9. Entire Agreement. This Purchase Agreement, when accepted by the Authority, shall constitute the entire agreement among the Authority and the Underwriter and is made solely for the benefit of the Authority and the Underwriter (including the successors or assigns of any Underwriter). Except for Bond Counsel, no other person shall acquire or have any right hereunder by virtue hereof. All the Authority’s representations, warranties and agreements in this Purchase Agreement shall remain operative and in full force and effect, regardless of (a) any investigation made by or on behalf of the Underwriter, (b) delivery of and payment for the Bonds hereunder, and (c) any termination of this Purchase Agreement.
10. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
11. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Authority and shall be valid and enforceable as of the time of such acceptance.
12. Reliance on Representations and Warranties. The Authority hereby acknowledges that the Underwriter, in executing this Purchase Agreement and in paying for the Bonds as provided herein, is relying upon the representations and warranties of the Authority set forth herein.
13. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Purchase Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.
14. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Authority.
20 15. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California applicable to contracts made and performed in California. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
S-1
16. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Authority and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
By:
Its: Authorized Officer
The foregoing is hereby agreed to and accepted as of the date first above written:
LAKE ELSINORE FACILITIES
FINANCING AUTHORITY
By:
Authorized Signatory
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT]
A-1
EXHIBIT A
LAKE ELSINORE FACILITIES FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2025A
MATURITY SCHEDULE
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Used
Hold the
Offering
Price Rule
Used
2025
2026
2027
2028
2029
2030
2031
2032
2033
20__(T)
20__(T)
20__(T)
20__(T)
__________________
(T) Term Bond.
(C) Priced to the optional redemption date of September 1, 20__ at [par]. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.
B-1
EXHIBIT B
$___________
LAKE ELSINORE FACILITIES FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2025A
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).
1.Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2.Defined Terms.
(a)General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b)Issuer means the Lake Elsinore Facilities Financing Authority. (c)Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(d)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e)Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
3.Bond Insurance. The present value of the amounts paid to obtain the Insurance Policy and the Reserve Policies (as such terms are defined in the Purchase Agreement) is less than the present value of the interest reasonably expected to be saved as a result of having such Insurance Policy and Reserve Policies, using the yield on the Bonds (including fees for the Insurance Policy and Reserve Policies) as the discount factor for this purpose The representations set forth in this certificate are limited to factual matters only.
Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, B-2
and by Stradling Yocca Carlson & Rauth LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
By:
Name:
Dated: [Closing Date]
B-3
SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
(Attached)
C-1
EXHIBIT C
THE LOCAL OBLIGATIONS
(a) City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area A 2025 Special Tax Refunding Bonds;
(b) City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area B 2025 Special Tax Refunding Bonds;
(c) City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area C 2025 Special Tax Refunding Bonds;
(d) City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) Improvement Area No. 1 2025 Special Tax Refunding Bonds; (e) City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) Improvement Area No. 2 2025 Special Tax Refunding Bonds; (f) City of Lake Elsinore Community Facilities District No. 2005-1 (Serenity) 2025 Special Tax Refunding Bonds;
(g) City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) Improvement Area A 2025 Special Tax Refunding Bonds;
(h) City of Lake Elsinore Community Facilities District No. 2005-6 (City Center Townhomes) 2025 Special Tax Refunding Bonds; and
(i) City of Lake Elsinore Community Facilities District No. 2006-2 (Viscaya) 2025 Special Tax Refunding Bonds.
Stradling Yocca Carlson & Rauth
Draft of 5/7/25
4914-7512-1215/022042-0049
LOCAL OBLIGATIONS PURCHASE AGREEMENT
This LOCAL OBLIGATIONS PURCHASE AGREEMENT (this “Purchase Agreement”), dated June __, 2025, is by and among the following parties:
(i)City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) (“CFD No. 2004-3”), a community facilities district organized and existing under the Mello-Roos Act Community Facilities Act of 1982, (the “Mello-Roos Act”) with respect to its Improvement Area 1; (ii)CFD No. 2004-3, a community facilities district organized and existing under the Mello-Roos Act with respect to its Improvement Area 2;
(iii)City of Lake Elsinore Community Facilities District No. 2005-6 (City Center Townhomes) (“CFD No. 2005-6”), a community facilities district organized and existing under the Mello-Roos Act;
(iv)City of Lake Elsinore Community Facilities District No. 2005-1 (Serenity) (“CFD No. 2005-1”), a community facilities district organized and existing under the Mello-Roos Act; (v)City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) (“CFD No. 2005-2”), a community facilities district organized and existing under the Mello-Roos Act; (vi)City of Lake Elsinore Community Facilities District No. 2006-2 (Viscaya) (“CFD No. 2006-2”), a community facilities district organized and existing under the Mello-Roos Act; (vii)City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) (“CFD No. 2003-2” together with CFD No. 2004-3, CFD No. 2005-6, CFD No. 2005-1, CFD No. 2005-2, CFD No. 2006-2, CFD No. 2003-2-A and CFD No. 2003-2-C, the “CFDs”), a community facilities district organized and existing under the Mello-Roos Act with respect to its Improvement Area A;
(viii)CFD No. 2003-2, a community facilities district organized and existing under the Mello-Roos Act with respect to its Improvement Area B; and (ix)CFD No. 2003-2, a community facilities district organized and existing under the Mello-Roos Act with respect to its Improvement Area C;
WITNESSETH:
WHEREAS, the Authority is a joint exercise of powers authority duly organized and existing under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 (the “Bond Law”) to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing or refinancing for public capital improvements of member entities of the Authority and other local agencies within the State of California; WHEREAS, the CFDs are issuing the following bonds (each referred to herein as a series of “CFD Bonds” and together as the “Local Obligations”) pursuant to the following Bond Indentures 2 4914-7512-1215/022042-0049
(each, a “Local Obligations Bond Indenture,” and collectively, the “Local Obligations Bond Indentures,”) to refund the following outstanding bonds (the “Prior Bonds”):
(a) $_________ of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area A 2025 Special Tax Refunding Bonds (the “CFD No. 2003-2 Improvement Area A Bonds”) are being issued by CFD No. 2003-2 to finance additional facilities and refund the outstanding City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Special Tax Bonds, Series 2014 (Improvement Area A) pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2003-2 and Wilmington Trust, National Association; (b) $_________ of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area B 2025 Special Tax Refunding Bonds (the “CFD No. 2003-2 Improvement Area B Bonds”) are being issued by CFD No. 2003-2 to refund the outstanding City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area B, 2015 Special Tax Refunding Bonds pursuant to a Second Supplemental Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2003-2 and Wilmington Trust, National Association; (c) $_________ of City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Improvement Area C 2025 Special Tax Refunding Bonds (the “CFD No. 2003-2 Improvement Area C Bonds”) are being issued by CFD No. 2003-2 to refund the outstanding City of Lake Elsinore Community Facilities District No. 2003-2 (Canyon Hills) Special Tax Bonds, Series 2014 (Improvement Area C) pursuant to a Fourth Supplemental Fiscal Agent Agreement, dated as of June 1, 2025, by and between CFD No. 2003-2 and Wilmington Trust, National Association; (d) $_________ of City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) Improvement Area No. 1 2025 Special Tax Refunding Bonds (the “CFD No. 2004- 3 Improvement Area 1 Bonds”) are being issued by CFD No. 2004-3 to refund the outstanding City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) Improvement Area No. 1, 2015 Special Tax Refunding Bonds pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2004-3 and Wilmington Trust, National Association; (e) $_________ of City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) Improvement Area No. 2 2025 Special Tax Refunding Bonds (the “CFD No. 2004- 3 Improvement Area 2 Bonds”) are being issued by CFD No. 2004-3 to finance additional facilities and to refund the outstanding City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon) Improvement Area No. 2, 2015 Special Tax Refunding Bonds pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2004-3 and Wilmington Trust, National Association;
(f) $_________ of City of Lake Elsinore Community Facilities District No. 2005-1 (Serenity) 2025 Special Tax Refunding Bonds (the “CFD No. 2005-1 Bonds”) are being issued by CFD No. 2005-1 to finance additional facilities and to refund the outstanding City of Lake Elsinore Community Facilities District No. 2005-1 (Serenity), 2015 Special Tax Refunding Bonds pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2005-1 and Wilmington Trust, National Association;
(g) $_________ of City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) 2025 Special Tax Refunding Bonds (the “CFD No. 2005-2 Improvement Area A Bonds”) are being issued by 2005-2 to finance additional facilities and to refund the outstanding City 3 4914-7512-1215/022042-0049
of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) Improvement Area A, 2015 Special Tax Refunding Bonds and to refund the City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) Improvement Area A 2019 Special Tax Refunding Bonds pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2005-2 and Wilmington Trust, National Association;
(h) $_________ of City of Lake Elsinore Community Facilities District No. 2005-6 (City Center Townhomes) 2025 Special Tax Refunding Bonds (the “CFD No. 2005-6 Bonds”) are being issued by CFD No. 2005-6 to refund the outstanding City of Lake Elsinore Community Facilities District No. 2005-6 (City Center Townhomes), 2015 Special Tax Refunding Bonds pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2005-6 and Wilmington Trust, National Association;
(i) $_________ of City of Lake Elsinore Community Facilities District No. 2006-2 (Viscaya) 2025 Special Tax Refunding Bonds (the “CFD No. 2006-2 Bonds”) are being issued by CFD No. 2006-2 to refund the outstanding City of Lake Elsinore Community Facilities District No. 2006-2 (Viscaya), 2015 Special Tax Refunding Bonds pursuant to a Bond Indenture, dated as of June 1, 2025, by and between CFD No. 2006-2 and Wilmington Trust, National Association; WHEREAS, the Authority has authorized the issuance of its Lake Elsinore Facilities Financing Authority Local Agency Revenue Refunding Bonds Series 2025A (the “Authority Bonds”), under an Indenture of Trust dated as of June 1, 2025 (the “Authority Bond Indenture”), by and between the Authority and Wilmington Trust, National Association, as trustee (the “Trustee”) and under the Bond Law for the purpose of providing the funds required to acquire the Local Obligations; and WHEREAS, the Authority and the CFDs desire to enter into this Local Obligations Purchase Agreement providing for the purchase and sale of the Local Obligations by the CFDs to the Authority and containing the other agreements herein set forth.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Authority and the CFDs agree as follows:
1. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the CFDs hereby commit to sell to the Authority and do hereby sell to the Authority, and the Authority hereby commits to purchase from the CFDs and does hereby purchase from the CFDs with the proceeds of the Authority Bonds all of the $_________ aggregate principal amount of the Local Obligations. The Local Obligations will bear the annual interest rates and mature at the times set forth in Exhibit A attached hereto and hereby made a part hereof. The aggregate purchase price of the Local Obligations is set forth below and the individual purchase price of each issue of the Local Obligations shall be as set forth in Exhibit A.
2. All terms not herein defined shall have the meanings given such terms in the Authority Bond Indenture.
3. The CFDs confirm that there are no substantial conditions precedent to the issuance by the CFDs and to the sale (as provided herein) and the delivery to the Authority of the Local Obligations. 4 4914-7512-1215/022042-0049
4. The parties hereto hereby specify June __, 2025, as the date of closing of the purchase of the Local Obligations hereunder (the “Closing Date”). The Local Obligations shall be registered in the name of the Trustee, as assignee of the Authority. On the Closing Date, the CFDs shall issue and deliver the Local Obligations to the Trustee upon payment by the Trustee of the purchase price of the Local Obligations in the aggregate amount of $_________ (being the aggregate principal amount of $_________, [plus/less] original issue [premium/discount] of $__________, and less Underwriter’s discount of $__________). Said purchase price shall be paid from the proceeds of sale of the Authority Bonds, and shall be paid by the Trustee from the Purchase Fund established under the Authority Bond Indenture.
5. The Local Obligations shall be as described in the Official Statement dated as of the date hereof relating to the Authority Bonds (the “Official Statement”) and shall be issued and secured under the provisions of the various resolutions adopted by the CFDs (collectively, the “CFD Resolutions,” as more specifically defined below) and the Local Obligations Bond Indentures. The Local Obligations and interest thereon will be payable from Special Taxes levied and collected in accordance with the CFD Resolutions and the Local Obligations Bond Indentures.
A portion of the proceeds of the Local Obligations will be used to refund the Prior Bonds in accordance with [three] Escrow Agreements, each dated as of June 1, 2025 (each, an “Escrow Agreement” and collectively the “Escrow Agreements”), by and among the CFDs, the Lake Elsinore Public Facilities Financing Authority (as applicable) and Wilmington Trust, National Association, as escrow agent (the “Escrow Agent”).
6. Any action under this Purchase Agreement taken by the Authority, including payment for and acceptance of the Local Obligations, and delivery and execution of any receipt for the Local Obligations and any other instruments in connection with the closing on the Closing Date, shall be valid and sufficient for all purposes and binding upon the Authority, provided that any such action shall not impose any obligation or liability upon the Authority other than as may arise as expressly set forth in this Purchase Agreement.
7. It is a condition to the CFDs’ sale and delivery of the Local Obligations to the Authority, and to the Authority’s purchase of the Local Obligations and the obligations of the Authority to accept delivery of and to pay for the Local Obligations, that the entire aggregate principal amount of the Local Obligations set forth in Exhibit A shall be delivered by the CFDs, and accepted and paid for by the Authority, on the Closing Date.
8. The CFDs have furnished some, but not all, of the information contained in the Official Statement and hereby authorize the use of that information by the Authority in connection with the public offering and sale of the Authority Bonds.
9. Each of the CFDs represents and warrants to the Authority that:
(a) It is a community facilities district formed under the Mello-Roos Community Facilities Act of 1982, duly organized and existing under the Constitution and laws of the State of California, and has, and on the Closing Date will have, full legal right, power and authority (i) to enter into this Purchase Agreement, the Escrow Agreement relating to its Prior Bonds and the Local Obligations Bond Indenture relating to its CFD Bonds (the Local Obligations Bond Indentures, this Purchase Agreement and the Escrow Agreements are referred to collectively herein as the “CFD Documents”), (ii) to adopt or enter into the resolution relating to its CFD Bonds (each, a “CFD 5 4914-7512-1215/022042-0049
Resolution,” and, together for all CFDs, the “CFD Resolutions”), (iii) to issue, sell and deliver its CFD Bonds to the Authority as provided herein, and (iv) to carry out and consummate the transactions contemplated by its CFD Documents, its CFD Resolution and the Official Statement; (b) It has complied, and will on the Closing Date be in compliance in all respects, with the CFD Documents to which it is a party and its CFD Resolution; (c) By official action of the City Council of the City of Lake Elsinore (the “City”), as legislative body of the CFD, it has duly adopted its CFD Resolution, has duly authorized and approved the execution and delivery of, and the performance of its obligations contained in, its CFD Bonds and the CFD Documents to which it is a party, and the consummation by it of all other transactions contemplated by the Official Statement;
(d) The execution and delivery of the CFD Documents to which it is a party and its CFD Bonds and compliance with the provisions of each thereof, and the carrying out and consummation of the transactions contemplated by the Official Statement, will not conflict with or constitute a breach of or a default under any applicable law or administrative regulation of the State of California or the United States, or any applicable judgment, decree, agreement or other instrument to which it is a party or are otherwise subject;
(e) To its knowledge, at the time of its acceptance hereof and at all times subsequent thereto up to and including the Closing Date, with respect to information describing the CFD, its CFD Resolution, the CFD Documents to which it is a party and the Official Statement does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(f) Except as described in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending or, to its knowledge, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect its creation, organization, existence or powers or the titles of its members and officers to their respective offices, (ii) enjoin or restrain the issuance, sale and delivery of its CFD Bonds, the levy and receipt of the Special Taxes which secure its CFD Bonds, or the pledge thereof, (iii) in any way question or affect any of its rights, powers, duties or obligations with respect to the moneys pledged or to be pledged to pay the principal of, premium, if any, or interest on its CFD Bonds, (iv) in any way question or affect any authority for the issuance of its CFD Bonds, or the validity or enforceability of its CFD Bonds, its CFD Resolution or the CFD Documents to which it is a party, or (v) in any way question or affect this Purchase Agreement or the transactions contemplated by the CFD Documents to which it is a party, the Official Statement, its CFD Resolution, the other documents referred to in the Official Statement, or any other agreement or instrument to which it is a party relating to its CFD Bonds; (g) It will furnish such information, execute such instruments and take such other action in cooperation with the Authority, as the Authority may reasonably request, to qualify the Authority Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Authority may designate, and will assist, if necessary therefor, in the continuance of such qualifications in effect as long as required for the distribution of the Authority Bonds; provided, however, that it shall not be required to qualify as a foreign corporation or to file any general consents to service of process under the laws of any state; 6 4914-7512-1215/022042-0049
(h) The issuance and sale of its CFD Bonds is not subject to any transfer or other documentary stamp taxes of the State of California or any political subdivision thereof; and (i) Any certificate signed by any official of the City authorized to do so on its behalf shall be deemed a representation and warranty by the CFD to the Authority as to the statements made therein.
10. If between the date of this Purchase Agreement and the date ninety (90) days after the Closing Date an event occurs which is materially adverse to the purpose for which the Official Statement is to be used which is not disclosed in the Official Statement, the CFDs shall notify the Authority of such fact.
11. At [8:30 a.m.], Pacific Time, on the Closing Date, or at such other time or on such other date as is mutually agreed by the City and the Authority, (a) the CFDs will deliver the Local Obligations to the Trustee in definitive form, duly executed, together with the other documents hereinafter mentioned, (b) subject to the terms and conditions hereof, the Trustee solely from moneys held under the Authority Bond Indenture will accept such delivery and pay the purchase price of the Local Obligations as referenced in paragraph 1 hereof by wire transfer or other funds which are good funds on the Closing Date and (c) the Escrow Agent shall deposit into the Escrow Funds established under the Escrow Agreements the amounts described in the Escrow Agreements. Delivery and payment, as aforesaid, shall be made at such place as shall have been mutually agreed upon by the City, the Escrow Agent and the Authority.
12. The Authority has entered into this Purchase Agreement in reliance upon the representations, warranties and agreements of the CFDs contained herein and to be contained in the documents and instruments to be delivered on the Closing Date, and upon the performance by the CFDs of their respective obligations hereunder, both as of the date hereof and as of the Closing Date.
Accordingly, the Authority’s obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Local Obligations shall be subject to the performance by the CFDs of their respective obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, and shall also be subject to the following conditions:
(a) The representations and warranties of the CFDs contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date;
(b) On the Closing Date, the CFD Resolutions and the CFD Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, and the Official Statement shall not have been amended, modified or supplemented, except in either case as may have been agreed to by both the Authority and the Underwriter; (c) As of the Closing Date, all official action of the CFDs relating to the Local Obligations, including but not limited to the CFD Resolutions, shall be in full force and effect, and there shall have been taken all such actions as, in the opinion of Stradling Yocca Carlson & Rauth LLP (“Bond Counsel”), shall be necessary or appropriate in connection therewith, with the issuance of the Authority Bonds and the Local Obligations, and with the transactions contemplated hereby, all as described in the Official Statement;
7 4914-7512-1215/022042-0049
(d) The Authority shall have the right to terminate the Authority’s obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Local Obligations by notifying the CFDs of its election to do so if, after the execution hereof and prior to the Closing:
(i) either the marketability of the Authority Bonds or the market price of the Authority Bonds, in the opinion of the Authority, has been materially and adversely affected by any decision issued by a court of the United States (including the United States Tax Court) or of the State of California, by any ruling or regulation (final, temporary or proposed) issued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State of California, or by a tentative decision with respect to legislation reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or by legislation enacted by, pending in, or favorably reported to either the House of Representatives or the Senate of the Congress of the United States or either house of the Legislature of the State of California, or formally proposed to the Congress of the United States by the President of the United States or to the Legislature of the State of California by the Governor of the State of California in an executive communication, affecting the tax status of the Authority or the City, their property or income, their bonds (including the Authority Bonds) or the interest thereon, or any tax exemption granted or authorized by the Bond Law; (ii) the United States shall have become engaged in: hostilities which have resulted in a declaration of war or national emergency, or there shall have occurred any other outbreak of hostilities, or a local, national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis being such as, in the reasonable opinion of the Authority, would affect materially and adversely the ability of the Authority to market the Authority Bonds (it being agreed by the Authority that there is no outbreak, calamity or crisis of such a character as of the date hereof); (iii) there shall have occurred a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by the United States, New York State or California State authorities; (iv) there shall have occurred a withdrawal or downgrading of any rating assigned to the Authority Bonds; (v) an event described in paragraph (d) hereof occurs which in the opinion of the Authority requires a supplement or amendment to the Official Statement, and such supplement or amendment is not agreed to by the City; and (e) On or prior to the Closing Date, the Authority shall have received each of the following documents:
(1) All documents and opinions required to be received by the Trustee prior to the application of proceeds of the Authority Bonds to the purchase of the Local Obligations; (2) Opinions, in form and substance satisfactory to the City and the Authority, dated as of the Closing Date, of Bond Counsel, approving, without qualification, the validity of the Local Obligations;
(3) A letter of Bond Counsel, dated the date of the Closing and addressed to the Authority and the Underwriter, to the effect that the opinion referred to in the preceding subparagraph (2) may be relied upon by the Authority to the same extent as if such opinion were addressed to it;
(4) A supplemental opinion, dated the date of the Closing and addressed to the Authority and the Underwriter, of Bond Counsel to the effect that this Purchase Agreement has been duly authorized, executed and delivered by, and, assuming due authorization, execution and delivery by the Authority, constitutes a legal, valid and binding agreement of the CFDs enforceable in accordance with its terms, except as such enforceability may be limited by the application of equitable 8 4914-7512-1215/022042-0049
principles if equitable remedies are sought, and that the statements contained in the Official Statement (including the cover page and the Appendices thereto), insofar as such statements purport to summarize certain provisions of the Local Obligations, the CFD Documents or the CFD Resolutions, are accurate in all material respects;
(5) A certificate dated the Closing Date, addressed to the Authority and the Underwriter, signed by an official of the CFDs having knowledge of the facts, to the effect that:
(i) The representations and warranties of the CFDs contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date;
(ii) Except as described in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending or threatened, wherein an unfavorable decision, ruling or finding would: (A) affect the creation, organization, existence or powers of the CFDs, or the titles of its members and officers to their respective offices, (B) enjoin or restrain the issuance, sale and delivery of the Local Obligations, the levy or collection of the Special Taxes or any other moneys or property pledged or to be pledged under the CFD Resolutions or the Local Obligations Bond Indentures, or the pledge thereof, (C) in any way question or affect any of the rights, powers, duties or obligations of the CFDs with respect to the moneys and assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Local Obligations, (D) in any way question or affect any authority for the issuance of the Local Obligations, or the validity or enforceability of the Local Obligations, the CFD Resolutions or the CFD Documents, or (E) in any way question or affect this Purchase Agreement or the transactions contemplated by the CFD Resolutions, the CFD Documents, the Official Statement or the documents referred to in the Official Statement;
(iii) The CFDs have complied with all agreements, covenants and arrangements, and satisfied all conditions, on its part to be complied with or satisfied on or prior to the Closing Date; and
(iv) To the best of its knowledge, no event affecting the City or the CFDs has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is necessary to disclose therein in order to make the statements not misleading in any respect;
(6) An opinion, dated the date of Closing and addressed to the Authority and the Underwriter, of the City Attorney, as counsel to the CFDs, to the effect that (A) the CFD Documents have been duly authorized, executed and delivered by the CFDs, and, assuming due authorization, execution and delivery by the other parties thereto, constitute the legal, valid and binding agreements of the CFDs enforceable in accordance with their terms, except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought, (B) the CFD Resolutions have been duly adopted, are in full force and effect and have not been modified, amended or rescinded, and (C) except as described in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending or threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the CFDs, or the authority of the City Council as the legislative body for the CFDs; (ii) enjoin or restrain the issuance, sale and delivery of the Local Obligations, the receipt of any other moneys or property pledged or to be pledged under the CFD Resolutions or the Local Obligations Bond Indentures 9 4914-7512-1215/022042-0049
or the pledge thereof; (iii) in any way question or affect any of the rights, powers, duties or obligations of the CFDs with respect to the moneys and assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Local Obligations; (iv) in any way question or affect any authority for the issuance of the Local Obligations, or the validity or enforceability of the Local Obligations, the CFD Resolutions or the CFD Documents; (v) in any way question or affect this Purchase Agreement or the transactions contemplated by the CFD Documents, the Official Statement or the documents referred to in the Official Statement and (vi) the statements in the Official Statements relating to the CFDs are true and accurate;
(7) Such additional legal opinions, certificates, instruments and documents as the Authority or the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the CFDs’ representations and warranties contained herein and of the statements and information contained in the Official Statement; (8) Executed copies of the Escrow Agreements and the Local Obligations Bond Indentures;
(9) Any opinions or certificates required by the authorizing documents relating to the Prior Bonds to demonstrate defeasance of the Prior Bonds including without limitation an escrow verification report of Causey Demgen & Moore, P.C. (the “Verification Agent”); and (10) The CFD Resolutions, certified by authorized officers as true copies and/or as having been adopted or executed (as applicable), with only such amendments, modifications or supplements as may have been agreed to by the Authority and the Underwriter.
All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Authority and the Underwriter, but the approval of the Authority and the Underwriter shall not be unreasonably withheld. Receipt of, and payment for, the Local Obligations shall constitute evidence of the satisfactory nature of such as to the Authority and the Underwriter. The performance of any and all obligations of the CFDs hereunder and the performance of any and all conditions contained herein for the benefit of the Authority and the Underwriter may be waived by the Authority and the Underwriter in their sole discretion.
If the CFDs shall be unable to satisfy the conditions to the obligations of the Authority to purchase, accept delivery of and pay for the Local Obligations contained in this Purchase Agreement, or if the obligations of the Authority to purchase, accept delivery of and pay for the Authority Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate, and neither the Authority nor the CFDs shall be under further obligation hereunder, except that the respective obligations of the CFDs and the Authority set forth in paragraphs 13 and 14 hereof shall continue in full force and effect.
13. The Authority shall be under no obligation to pay, and the CFDs shall pay their allocable portions of the expenses incurred in connection with issuance of the Authority Bonds and the Local Obligations.
14. This Purchase Agreement is made solely for the benefit of the Underwriter, the CFDs and the Authority (including their successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. All of the CFDs’ representations, warranties and agreements 10 4914-7512-1215/022042-0049
contained in this Purchase Agreement shall remain operative and in full force and effect regardless of:
(i) any investigations made by or on behalf of the Authority and the Underwriter or (ii) delivery of and payment for the Authority Bonds pursuant to the Authority Bond Indenture. The agreements contained in this paragraph shall survive any termination of this Purchase Agreement.
15. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
16. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
17. The validity, interpretation and performance of this Purchase Agreement shall be governed by the laws of the State of California.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
S-1
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IN WITNESS WHEREOF, the Authority and the CFDs have each caused this Purchase Agreement to be executed by their duly authorized officers all as of the date first above written.
LAKE ELSINORE FACILITIES FINANCING
AUTHORITY
By
Authorized Officer
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS)
By
City Manager of the City of Lake Elsinore, on behalf of Community Facilities District No. 2003-2 (Canton Hills)
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2004-3 (ROSETTA
CANYON)
By
City Manager of the City of Lake Elsinore, on behalf of Community Facilities District No. 2004-3 (Rosetta Canyon)
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2005-1 (SERENITY)
By
City Manager of the City of Lake Elsinore, on behalf of Community Facilities District No. 2005-1 (Serenity)
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2005-2 (ALBERHILL
RANCH)
By
City Manager of the City of Lake Elsinore, on behalf of Community Facilities District 2005-2 (Alberhill Ranch)
S-2
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CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2005-6 (CITY CENTER
TOWNHOMES)
By
City Manager of the City of Lake Elsinore, on behalf of Community Facilities District No. 2005-6 (City Center
Townhomes)
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2006-2 (VISCAYA)
By
City Manager of the City of Lake Elsinore, on behalf of Community Facilities District No. 2006-2 (Viscaya)
A-1
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EXHIBIT A
MATURITY SCHEDULE
CFD NO. 2003-2 IMPROVEMENT AREA A BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-2
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MATURITY SCHEDULE
CFD NO. 2003-2 IMPROVEMENT AREA B BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-3
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MATURITY SCHEDULE
CFD NO. 2003-2 IMPROVEMENT AREA C BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-4
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MATURITY SCHEDULE
CFD NO. 2004-3 IMPROVEMENT AREA 1 BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-5
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MATURITY SCHEDULE
CFD NO. 2004-3 IMPROVEMENT AREA 2 BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-6
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MATURITY SCHEDULE
CFD NO. 2005-1 BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-7
4914-7512-1215/022042-0049
MATURITY SCHEDULE
CFD NO. 2005-2 IMPROVEMENT AREA A BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-8
4914-7512-1215/022042-0049
MATURITY SCHEDULE
CFD NO. 2005-6 BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
A-9
4914-7512-1215/022042-0049
MATURITY SCHEDULE
CFD NO. 2006-2 BONDS
Purchase Price: $_________
Maturity Date
(September 1)
Principal
Maturity Interest Rate Yield Price
$
Stradling Yocca Carlson & Rauth
Draft Dated May 7, 2025
4937-1666-6933v2/022042-0049
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
ESCROW AGREEMENT
This ESCROW AGREEMENT (the “Escrow Agreement”), made and entered into as of June 1, 2025, by and among the Lake Elsinore Public Financing Authority (the “Authority”), Community Facilities District No. 2003-2 (Canyon Hills) of the City of Lake Elsinore (“CFD No. 2003-02”), Community Facilities District 2004-3 (Rosetta Canyon) of the City of Lake Elsinore (“CFD No. 2004-03”), Community Facilities District No. 2005-1 (Serenity) of the City of Lake Elsinore (“CFD No. 2005-1”), Community Facilities District 2005-2 (Alberhill Ranch) of the City of Lake Elsinore (“CFD No. 2005-2”), Community Facilities District 2005-6 (City Center Townhomes) of the City of Lake Elsinore (“CFD No. 2005-6”) and Community Facilities District No. 2006-2 (Viscaya) of the City of Lake Elsinore (“CFD No. 2006-2” and, collectively, the “Districts”) and Wilmington Trust, National Association (the “Escrow Agent”), a national banking association organized and existing under the laws of the United States of America and being qualified to accept and administer the escrow hereby created, W I T N E S S E T H :
WHEREAS, the Authority has heretofore issued its $108,845,000 Local Agency Revenue Refunding Bonds, Series 2015 (the “Prior Authority Bonds”) pursuant to the terms of that certain Indenture of Trust dated as of March 1, 2015 (the “Prior Authority Indenture”), by and between the Authority and Wilmington Trust, National Association, as successor trustee (the “Prior Trustee”); and
WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2003-2 previously issued the $25,795,000 City of Lake Elsinore Community Facilities District No. 2002- 02 (Canyon Hills) Improvement Area B 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2003-2-B Bonds”) pursuant to the terms of that certain Bond Indenture dated as of March 1, 2015 (the “Prior CFD No. 2003-2-B Indenture”), by and between CFD No. 2003-2 and Wilmington Trust, National Association, as successor trustee thereunder; WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2004- 03 previously issued the $21,005,000 City of Lake Elsinore Community Facilities District No. 2002-04 (Rosetta Canyon) Improvement Area 1 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2004-03-1 Bonds”) pursuant to the terms of that certain Bond Indenture dated as of March 1, 2015 (the “Prior CFD No. 2004-03-1 Indenture”), by and between CFD No. 2004-03 and Wilmington Trust, National Association, as successor trustee thereunder; WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2004- 03 previously issued the $23,115,000 City of Lake Elsinore Community Facilities District No. 2004-03 (Rosetta Canyon) Improvement Area 2 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2004-03-2 Bonds”) pursuant to the terms of that certain Bond Indenture dated as of 2 4937-1666-6933v2/022042-0049
March 1, 2015 (the “Prior CFD No. 2004-03-2 Indenture”), by and between CFD No. 2004-03 and Wilmington Trust, National Association, as successor trustee thereunder; WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2005-1 previously issued the $8,165,000 City of Lake Elsinore Community Facilities District No. 2005-1 (Serenity) 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2005-1 Bonds”) pursuant to the terms of that certain Bond Indenture dated as of March 1, 2015 (the “Prior CFD No. 2005-1 Indenture”), by and between CFD No. 2005-1 and Wilmington Trust, National Association, as successor trustee thereunder;
WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2005-2 previously issued the $21,095,000 City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) Improvement Area A 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2005-2-A Bonds”) pursuant to the terms of that certain Bond Indenture dated as of March 1, 2015 (the “Prior CFD No. 2005-2-A Indenture”), by and between CFD No. 2005-2 and Wilmington Trust, National Association, as successor trustee thereunder; WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2005-6 previously issued the $2,815,000 City of Lake Elsinore Community Facilities District No. 2005-6 (City Center Townhomes ) 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2005-6 Bonds”) pursuant to the terms of that certain Bond Indenture dated as of March 1, 2015 (the “Prior CFD No. 2005-6 Indenture”), by and between CFD No. 2005-6 and Wilmington Trust, National Association, as successor trustee thereunder;
WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2006-2 previously issued the $5,825,000 City of Lake Elsinore Community Facilities District No. 2006-2 (Viscaya) 2015 Special Tax Refunding Bonds (the “Prior CFD No. 2006-2 Bonds” and, together with the Prior CFD No. 2003-2-B Bonds, the Prior CFD No. 2004-03-1 Bonds, the Prior CFD No. 2004-03-2 Bonds, the Prior CFD No. 2005-1 Bonds, the Prior CFD No. 2005-2-A Bonds, the Prior CFD No. 2005-6 Bonds, the “Prior District Bonds”) pursuant to the terms of that certain Bond Indenture dated as of March 1, 2015 (the “Prior CFD No. 2006-2 Indenture” and, together with the Prior CFD No. 2003-2-B Indenture, the Prior CFD No. 2004-03-1 Indenture, the Prior CFD No. 2004-03-2 Indenture, the Prior CFD No. 2005-1 Indenture, the Prior CFD No. 2005-2-A Indenture, the Prior CFD No. 2005-6 Indenture, the “Prior Indentures”), by and between CFD No. 2006-2 and Wilmington Trust, National Association, as successor trustee thereunder; WHEREAS, in order to discharge and redeem the outstanding Prior Authority Bonds, the Districts have each determined to cause the issuance and sale of its respective 2025 Special Tax Refunding Bonds (together, the “CFD Bonds”), in connection with the issuance of the Lake Elsinore Facilities Financing Authority Local Agency Revenue Refunding Bonds, Series 2025A (the “Authority Bonds”), the proceeds of which will provide moneys to the Prior Trustee under the Prior Indentures, which will be sufficient (when combined with moneys held under the Prior Indentures and the Prior Authority Indenture) to redeem the Prior District Bonds to effect a simultaneous redemption of the Prior Authority Bonds on September 1, 2025 (the “Redemption Date”) at a redemption price equal to 100% of the principal amount to be redeemed plus 3 4937-1666-6933v2/022042-0049
accrued and unpaid interest to the Redemption Date (the “Redemption Price”) as set forth in Schedule III hereto; and
WHEREAS, pursuant to Section 2 of this Escrow Agreement, the Districts will cause a prescribed portion of the proceeds of each series of CFD Bonds to be set aside with the Escrow Agent, together with certain funds held by the Prior Trustee with respect to its Prior District Bonds and the Prior Authority Bonds, respectively, such proceeds and funds to be deposited in an escrow fund to be created hereunder to be known as the Escrow Fund to be maintained by the Escrow Agent (the “Escrow Fund”) which moneys will be used to purchase securities as described on Schedule II hereto (the “Federal Securities”), the principal of and interest on which when paid will provide money which, together with the moneys deposited with the Escrow Agent at the same time pursuant to this Escrow Agreement, will be sufficient to pay when and as due the Redemption Price of the Prior District Bonds, and accordingly, the Prior Authority Bonds;
NOW, THEREFORE, the Districts, the Authority and the Escrow Agent hereby agree as follows:
SECTION 1. Establishment and Maintenance of Escrow Fund. The Escrow Agent agrees to establish and maintain, until the Prior Authority Bonds have been paid in full, a fund designated as the “Escrow Fund,” and to hold the moneys therein at all times as a special and separate escrow fund (wholly segregated from all other securities, investments or moneys on deposit with the Escrow Agent). All moneys in the Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to secure the payment when due of the Redemption Price of the Prior Authority Bonds.
SECTION 2. Funding of the Escrow Fund.
(a) The Districts agree that, not later than June __, 2025 (the “Closing Date”), the Districts will cause to be transferred to the Escrow Agent for deposit in the Escrow Fund:
(i) from Wilmington Trust, National Association, as trustee (the “2003-2-B Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2003-2-B and the 2003-2-B Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2003-2-B, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No. 2003-2-B Indenture; (ii) from Wilmington Trust, National Association, as trustee (the “2004-03-1 Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2004-03-1 and the 2004-03-1 Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2004-03-2, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No 2004-03-1 Indenture; (iii) from Wilmington Trust, National Association, as trustee (the “2004-03-2 Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 4 4937-1666-6933v2/022042-0049
2004-03-2 and the 2004-03-2 Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2004-03-2, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No. 2004-03-2 Indenture; (iv) from Wilmington Trust, National Association, as trustee (the “2005-1 Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2005-1 and the 2005-1 Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2005-1, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No. 2005-1 Indenture;
(v) from Wilmington Trust, National Association, as trustee (the “2005-2-A Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2005-2-A and the 2005-2-A Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2005-2-A, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No. 2005-2-A Indenture; (vi) from Wilmington Trust, National Association, as trustee (the “2005-6 Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2005-6 and the 2005-6 Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2005-6, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No. 2005-6 Indenture;
(vii) from Wilmington Trust, National Association, as trustee (the 2006-2 Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2006-2 and the 2005-6 Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2006-2, and from the Prior Trustee the amount of $__________ held in the funds and accounts under the Prior CFD No. 2006-2 Indenture; and
(viii) from the Prior Trustee the sum of $__________, from amounts held under the Prior Authority Indenture on account of the Prior Authority Bonds. (b) The Authority and the Districts hereby direct the Escrow Agent to immediately apply $___________ of such amounts to acquire, on the Closing Date, the Federal Securities set forth in Schedule II and to hold $__________ uninvested as cash.
SECTION 3. Investment of Moneys. The Escrow Agent acknowledges receipt of the moneys described in Section 2 and agrees immediately to invest such moneys in the Federal Securities listed on Schedule II hereto and to deposit such Federal Securities in the Escrow Fund. The Escrow Agent shall be entitled to rely upon the conclusion of Causey Public Finance LLC (the “Verification Agent”), that the Federal Securities listed on Schedule II hereto mature and bear interest payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will be sufficient to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date.
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SECTION 4. Investment of Any Remaining Moneys. At the written direction of the Authority, the Escrow Agent shall reinvest any other amount of principal and interest, or any portion thereof, received from the Federal Securities prior to the date on which such payment is required for the purposes set forth herein, in noncallable Federal Securities maturing not later than the date on which such payment or portion thereof is required for the purposes set forth in Section 6, at the written direction of the Authority, as verified in a report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date, and provided that the District has obtained and delivered to the Escrow Agent an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes or of the interest with respect to the Prior Authority Bonds or the Authority Bonds. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 4 which is not required for the purposes set forth in Section 6, as verified in the letter of the Verification Agent originally obtained by the Authority with respect to the refunding of the Prior District Bonds and the Prior Authority Bonds or in any other report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of tax-exempt obligations of political subdivisions, shall be paid to the Authority promptly upon the receipt of such interest income by the Escrow Agent. The determination of the Authority as to whether an accountant qualifies under this Escrow Agreement shall be conclusive.
SECTION 5. Substitution of Securities. Upon the written request of the Authority, and subject to the conditions and limitations herein set forth and applicable governmental rules and regulations, the Escrow Agent shall sell, redeem or otherwise dispose of the Federal Securities, provided that there are substituted therefor from the proceeds of the Federal Securities other Federal Securities, but only after the Authority has obtained and delivered to the Escrow Agent:
(i) an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, to the effect that the substitution of securities is permitted under the legal documents in effect with respect to the Prior District Bonds and the Prior Authority Bonds and that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest with respect to the Prior Authority Bonds or the Authority Bonds; and (ii) a report by a firm of independent certified public accountants to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date. The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof.
SECTION 6. Payment and Redemption of the Prior Authority Bonds. The Districts and the Authority hereby request and irrevocably instruct the Escrow Agent to transfer, subject to the provisions of Section 2 hereof, all moneys deposited in the Escrow Fund, to the Prior 6 4937-1666-6933v2/022042-0049
Trustee to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date.
Upon payment in full of the Prior Authority Bonds, the Escrow Agent shall transfer any moneys remaining in the Escrow Fund to the Authority and, after provision for payment of amounts due to the Prior Trustee and the Escrow Agent pursuant to Section 6 and 11 hereof, this Escrow Agreement shall terminate. The Escrow Fund cash flow for the Escrow Fund is set forth in Schedule III attached hereto.
The Districts and the Authority hereby agree that the Prior District Bonds shall be deemed defeased concurrently with the defeasance of the Prior Authority Bonds.
SECTION 7. Notices of Defeasance and Redemption of the Prior Authority Bonds. The Authority hereby instructs the Escrow Agent to mail, first class, postage prepaid, a notice to the owners of the Prior Authority Bonds in the form attached hereto as Schedule I-A stating that the defeasance of the Prior Authority Bonds has occurred. The Authority hereby acknowledges and confirms that it has previously mailed, first class, postage prepaid, by not later than 30 days prior to the Redemption Date a notice in substantially the form attached hereto as Schedule I-B of redemption with respect to the Prior Authority Bonds in accordance with the procedures set forth in Section 2.2 of the Prior Authority Indenture.
The Authority hereby waives any notice requirement with respect to the redemption and defeasance of the Prior District Bonds under the Prior Indentures.
SECTION 8. Notice of Possible Deficiencies. If at any time the Escrow Agent has actual knowledge that the moneys and securities in the Escrow Fund will not be sufficient to make all payments required by Section 6 hereof, the Escrow Agent shall notify the Authority in writing as soon as is reasonably practicable, of such fact, the amount of such deficiency and if known, the reason therefor; provided, however, that the Authority and the Districts shall have no liability for any such deficiency.
SECTION 9. Fees and Costs. The Escrow Agent’s fees and costs for all duties to be carried out by it under the Escrow Agreement have been included in its fees and costs as trustee for the Authority Bonds. The parties hereto agree that the duties and obligations of the Escrow Agent shall be as expressly provided herein, and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. The fees of and the costs incurred by the Escrow Agent shall in no event be deducted or payable from, or constitute a lien against, the Escrow Fund.
SECTION 10. Merger or Consolidation. Any company into which the Escrow Agent 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 Escrow Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under this Escrow Agreement, shall be the successor of such Escrow Agent without the execution or filing of any paper or any further act, notwithstanding anything herein to the contrary.
7 4937-1666-6933v2/022042-0049
SECTION 11. Severability. If any section, paragraph, sentence, clause or provision of this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provisions shall not affect any of the remaining provisions of this Escrow Agreement.
SECTION 12. Execution of Counterparts. This Escrow Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument.
SECTION 13. Applicable Law. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of California.
SECTION 14. Indemnification. The Authority agrees to indemnify, hold harmless and defend the Escrow Agent, its officers, employees, directors, and agents, to the extent permitted by law from and against any and all losses, damages, claims, actions, liabilities, costs and expenses of whatever nature, kind or character (including, without limitation, attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) which may be imposed on, or incurred by or asserted against the Escrow Agent directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or action commenced or threatened as a result of the execution by the Escrow Agent of this Escrow Agreement, the performance of its obligations hereunder, or of the payment of the Prior Authority Bonds; provided, however, that this indemnification shall not cover any losses or expenses incurred by the Escrow Agent as a result of its negligence or willful misconduct.
The agreements of the Authority and the Districts hereunder shall survive the discharge of the Prior Authority Indenture and the Prior Indentures and the payment of the Redemption Price and the resignation or removal of the Prior Trustee.
SECTION 15. Immunities and Liability of Escrow Agent.
(a) The Escrow Agent undertakes to perform only such duties as are expressly and specifically set forth in this Escrow Agreement, and no implied duties or obligations shall be read into this Escrow Agreement against Escrow Agent. (b) The Escrow Agent shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable for any special, indirect or consequential damages, even if the Escrow Agent or the Authority knows of the possibility of such damages. The Escrow Agent shall have no duty or responsibility under this Escrow Agreement in the case of any default in the performance of the covenants or agreements contained in the resolutions and trustee agreements relating to the Prior Authority Bonds or the Prior District Bonds. The Escrow Agent is not required to resolve conflicting demands to money or property in its possession under this Escrow Agreement. (c) The Escrow Agent may consult with counsel of its own choice, and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action hereunder in accordance with such opinion of counsel. 8 4937-1666-6933v2/022042-0049
(d) The Escrow Agent shall not be responsible for any of the recitals or representations contained herein.
(e) The Escrow Agent may become the owner of, or acquire any interest in, any of the Prior Authority Bonds with the same rights that it would have if it were not the Escrow Agent and may engage or be interested in any financial or other transaction with the Authority.
(f) The Escrow Agent shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys and securities deposited with it to pay the prescribed Prior Authority Bonds.
(g) The Escrow Agent shall not be liable for any action or omission of the Authority or the Districts under this Escrow Agreement. (h) Whenever in the administration of this Escrow Agreement the Escrow Agent 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, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be deemed to be conclusively proved and established by a certificate of any authorized representative of the Authority, and such certificate shall, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered in good faith by it under the provisions of this Escrow Agreement.
(i) The Escrow Agent may conclusively rely, as to the truth and accuracy of the statements and correctness of the opinions and the calculations provided to it in connection with this Escrow Agreement and shall be protected in acting, or refraining from acting, upon any written notice, instruction, request, certificate, document or opinion furnished to the Escrow Agent in compliance with this Escrow Agreement and reasonably believed by the Escrow Agent to have been signed or presented by the proper party, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion. (j) The Escrow Agent shall incur no liability for losses arising from any investment made pursuant to this Escrow Agreement.
(k) No provision of this Escrow Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. (l) The liability of the Escrow Agent to make the payments required by this Escrow Agreement shall be limited to the moneys and securities in the Escrow Fund.
SECTION 16. Termination and Modification of Agreement. Upon final payment in full of the principal of and interest on the Prior Authority Bonds pursuant to this Escrow 9 4937-1666-6933v2/022042-0049
Agreement, all obligations of the Escrow Agent under this Escrow Agreement shall cease and terminate, except for the obligation of the Escrow Agent to pay or cause to be paid to the owners of the Prior Authority Bonds not presented for payment all sums due thereon and the obligation of the Authority to pay to the Escrow Agent any amounts due and owing to the Escrow Agent hereunder. This Escrow Agreement may not be amended or modified in any manner which is materially adverse to the Owners of the Prior Authority Bonds without the unanimous prior written consent of the Owners of the Prior Authority Bonds.
IN WITNESS WHEREOF, the Authority, Facilities Authority and Wilmington Trust, National Association, as Escrow Agent, have caused this Escrow Agreement to be executed each on its behalf by duly authorized officers as of the day and year first above written. [SIGNATURES ON FOLLOWING PAGE.]
S-1
4937-1666-6933v2/022042-0049
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
Treasurer of the Authority
WILMINGTON TRUST, NATIONAL ASSOCIATION,
AS ESCROW AGENT
By:
Its: Authorized Officer
ATTEST:
Secretary of the Board of Directors of the
Authority
SCHEDULE I-A
4937-1666-6933v2/022042-0049
SCHEDULE I-A
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE OF
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
Notice is hereby given to the holders of the outstanding $27,270,000 Local Agency Revenue Refunding Bond, Series 2015 (collectively, the “Refunded Bonds”) (i) that there has been deposited with Wilmington Trust, National Association, as Escrow Agent (the “Escrow Agent”), moneys under the Escrow Agreement, dated as of June 1, 2025 (the “Escrow Agreement”), which shall be sufficient and available redeem the Refunded Bonds on September 1, 2025 (the “Redemption Date”) at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest to the Redemption Date; (ii) that the Escrow Agent has been irrevocably instructed to redeem on such Refunded Bonds on the Redemption Date; and (iii) that the Refunded Bonds are deemed to be paid in accordance with Section 9.3 of the Trust Indenture dated as of March 1, 2015, by and between the Lake Elsinore Public Financing Authority and Wilmington Trust, National Association, as successor trustee, pursuant to which the Refunded Bonds were issued.
Dated this day _____of _____ 2025.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Escrow Agent
SCHEDULE I-B
4937-1666-6933v2/022042-0049
SCHEDULE I-B
FORM OF NOTICE OF REDEMPTION
Notice is hereby given to the holders of the outstanding $27,270,000 Local Agency Revenue Refunding Bond, Series 2015 (collectively, the “Refunded Bonds”) that such Refunded Bonds have been called for redemption prior to maturity on September 1, 2025 (the “Redemption Date”) in accordance with their terms at a redemption price equal to 100% of the principal amount thereof plus interest accrued to the Redemption Date. The source of the funds to be used for such redemption is moneys and securities deposited with Wilmington Trust, National Association, as Escrow Agent.
Maturity Date
(September 1) Principal Amount Interest Rate CUSIP
Redemption
Price
2025 $3,685,000 5.000% 509632MT9 100%
2026 3,895,000 5.000 509632MU6 100
2027 4,245,000 5.000 509632MV4 100
2028 4,615,000 5.000 509632MW2 100
2029 4,985,000 4.000 509632MX0 100
2030 5,405,000 4.000 509632MY8 100
2031 5,845,000 4.125 509632MZ5 100
The redemption price of the Refunded Bonds shall become due and payable on the Redemption Date and after the Redemption Date interest on such Refunded Bonds shall cease to accrue and be payable.
This notice is conditional upon the receipt by the Escrow Agent on or prior to the date fixed for redemption of the Refunded Bonds of moneys sufficient to pay the principal of, premium, if any, and interest on such Refunded Bonds to be redeemed and, if such moneys are not so received, this notice shall be of no force and effect and the Refunded Bonds shall not be so redeemed.
Owners of the Refunded Bonds will receive payment of the redemption price to which they are entitled upon presentation and surrender thereof at the principal corporate trust office of Wilmington Trust, National Association, Costa Mesa, California.
SCHEDULE I-B
4937-1666-6933v2/022042-0049
Dated this _____ day of _____, 2025.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Escrow Agent
SCHEDULE II
4937-1666-6933v2/022042-0049
SCHEDULE II
FEDERAL SECURITIES
Security Maturity
Principal
Amount
Interest
Rate Price
SCHEDULE II
4937-1666-6933v2/022042-0049
SCHEDULE III
ESCROW CASH FLOW
Dates
Principal
Redeemed Interest Premium Cash Balance
Stradling Yocca Carlson & Rauth
Draft Dated May 7, 2025
4928-1011-2565v2/022042-0049
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BONDS, (CANYON HILLS IMPROVEMENT AREAS A AND C REFUNDING), 2014 SERIES B
ESCROW AGREEMENT
This ESCROW AGREEMENT (the “Escrow Agreement”), made and entered into as of June 1, 2025, by and between the Lake Elsinore Public Financing Authority (the “Authority”), and Wilmington Trust, National Association (the “Escrow Agent”), a national banking association organized and existing under the laws of the United States of America and being qualified to accept and administer the escrow hereby created, W I T N E S S E T H :
WHEREAS, the Authority has heretofore issued its $18,210,000 Local Agency Revenue Bonds (Canyon Hills Improvement Areas A and C Refunding), 2014 Series B (the “Prior Authority Bonds”) pursuant to the terms of that certain Indenture of Trust dated as of July 1, 2014 (the “Prior Authority Indenture”), by and between the Authority and Wilmington Trust, National Association, as successor trustee (the “Prior Trustee”); and WHEREAS, in connection with the issuance of the Prior Authority Bonds, Community Facilities District No. 2003-2 (Canyon Hills) of the City of Lake Elsinore (the “District”) previously issued the $10,895,000 City of Lake Elsinore Community Facilities District No. 2002-02 (Canyon Hills) 2014 Special Tax Bonds (Improvement Area A) (the “Prior CFD No. 2003-2-A Bonds”) pursuant to the terms of that certain Fiscal Agent Agreement dated as of July 1, 2014 (the “Prior CFD No. 2003-2-A Fiscal Agent Agreement”), by and between CFD No. 2003-2 and Wilmington Trust, National Association, as successor fiscal agent thereunder; WHEREAS, in connection with the issuance of the Prior Authority Bonds, CFD No. 2003-2 previously issued the $7,315,000 City of Lake Elsinore Community Facilities District No. 2002-02 (Canyon Hills) 2014 Special Tax Bonds (Improvement Area C) (the “Prior 2003-2-C Bonds” and, together with the Prior CFD No. 2003-2-A Bonds, the “Prior District Bonds ”) pursuant to the terms of that certain Fiscal Agent Agreement dated as of July 1, 2014 (the “Prior 2003-2-C Fiscal Agent Agreement” and, together with the Prior 2003-2-A Fiscal Agent Agreement, the “Prior Fiscal Agent Agreements”), by and between CFD No. 2003-2 and Wilmington Trust, National Association, as successor fiscal agent thereunder;
WHEREAS, in order to discharge and redeem the outstanding Prior Authority Bonds, the District has determined to cause the issuance and sale of its respective 2025 Special Tax Refunding Bonds (together, the “CFD Bonds”), in connection with the issuance of the Lake Elsinore Facilities Financing Authority Local Agency Revenue Refunding Bonds, Series 2025A (the “Authority Bonds”), the proceeds of which will provide moneys to Wilmington Trust, National Association (the “Prior Fiscal Agent”) as successor fiscal agent under the Prior Fiscal Agent Agreements, which will be sufficient (when combined with moneys held under the Prior 2 4928-1011-2565v2/022042-0049
Fiscal Agent Agreements and the Prior Authority Indenture) to redeem the Prior District Bonds to effect a simultaneous redemption of the Prior Authority Bonds on September 1, 2025 (the “Redemption Date”) at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest to the Redemption Date (the “Redemption Price”) as set forth in Schedule III hereto; and
WHEREAS, pursuant to Section 2 of this Escrow Agreement, the District will cause a prescribed portion of the proceeds of each series of CFD Bonds to be set aside with the Escrow Agent, together with certain funds held by the Prior Fiscal Agent and the Prior Trustee with respect to its Prior District Bonds and the Prior Authority Bonds, respectively, such proceeds and funds to be deposited in an escrow fund to be created hereunder to be known as the Escrow Fund to be maintained by the Escrow Agent (the “Escrow Fund”) which moneys will be used to purchase securities as described on Schedule II hereto (the “Federal Securities”), the principal of and interest on which when paid will provide money which, together with the moneys deposited with the Escrow Agent at the same time pursuant to this Escrow Agreement, will be sufficient to pay when and as due the Redemption Price of the Prior District Bonds, and accordingly, the Prior Authority Bonds;
NOW, THEREFORE, the Authority and the Escrow Agent hereby agree as follows:
SECTION 1. Establishment and Maintenance of Escrow Fund. The Escrow Agent agrees to establish and maintain, until the Prior Authority Bonds have been paid in full, a fund designated as the “Escrow Fund,” and to hold the moneys therein at all times as a special and separate escrow fund (wholly segregated from all other securities, investments or moneys on deposit with the Escrow Agent). All moneys in the Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to secure the payment when due of the Redemption Price of the Prior Authority Bonds.
SECTION 2. Funding of the Escrow Fund.
(a) The District agrees that, not later than June __, 2025 (the “Closing Date”), the District will cause to be transferred to the Escrow Agent for deposit in the Escrow Fund:
(i) from Wilmington Trust, National Association, as trustee (the “2003-2-B Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2003-2-B and the 2003-2-B Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2003-2-B, and from the Prior Fiscal Agent the amount of $__________ held in the funds and accounts under the Prior CFD No. 2003-2-B Fiscal Agent Agreement; (ii) from Wilmington Trust, National Association, as trustee (the “2003-2-C Trustee”) under the Bond Indenture dated as of June 1, 2025, between CFD No. 2003-2-C and the 2003-2-C Trustee, the amount of $ _____ from the proceeds of sale of the CFD Bonds of CFD No. 2003-2-C, and from the Prior Fiscal Agent the amount of $__________ held in the funds and accounts under the Prior CFD No. 2003-2-C Fiscal Agent Agreement; and 3 4928-1011-2565v2/022042-0049
(iii) from the Prior Fiscal Agent the sum of $__________, from amounts held under the Prior Authority Indenture on account of the Prior Authority Bonds. (b) The Authority and the District hereby direct the Escrow Agent to immediately apply $___________ of such amounts to acquire, on the Closing Date, the Federal Securities set forth in Schedule II and to hold $__________ uninvested as cash.
SECTION 3. Investment of Moneys. The Escrow Agent acknowledges receipt of the moneys described in Section 2 and agrees immediately to invest such moneys in the Federal Securities listed on Schedule II hereto and to deposit such Federal Securities in the Escrow Fund. The Escrow Agent shall be entitled to rely upon the conclusion of Causey Public Finance LLC (the “Verification Agent”), that the Federal Securities listed on Schedule II hereto mature and bear interest payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will be sufficient to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date.
SECTION 4. Investment of Any Remaining Moneys. At the written direction of the Authority, the Escrow Agent shall reinvest any other amount of principal and interest, or any portion thereof, received from the Federal Securities prior to the date on which such payment is required for the purposes set forth herein, in noncallable Federal Securities maturing not later than the date on which such payment or portion thereof is required for the purposes set forth in Section 6, at the written direction of the Authority, as verified in a report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date, and provided that the District has obtained and delivered to the Escrow Agent an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes or of the interest with respect to the Prior Authority Bonds or the Authority Bonds. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 4 which is not required for the purposes set forth in Section 6, as verified in the letter of the Verification Agent originally obtained by the Authority with respect to the refunding of the Prior District Bonds and the Prior Authority Bonds or in any other report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of tax-exempt obligations of political subdivisions, shall be paid to the Authority promptly upon the receipt of such interest income by the Escrow Agent. The determination of the Authority as to whether an accountant qualifies under this Escrow Agreement shall be conclusive.
SECTION 5. Substitution of Securities. Upon the written request of the Authority, and subject to the conditions and limitations herein set forth and applicable governmental rules and regulations, the Escrow Agent shall sell, redeem or otherwise dispose of the Federal Securities, provided that there are substituted therefor from the proceeds of the Federal Securities other 4 4928-1011-2565v2/022042-0049
Federal Securities, but only after the Authority has obtained and delivered to the Escrow Agent:
(i) an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, to the effect that the substitution of securities is permitted under the legal documents in effect with respect to the Prior District Bonds and the Prior Authority Bonds and that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest with respect to the Prior Authority Bonds or the Authority Bonds; and (ii) a report by a firm of independent certified public accountants to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date. The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof.
SECTION 6. Payment and Redemption of the Prior Authority Bonds. The District and the Authority hereby request and irrevocably instruct the Escrow Agent to transfer, subject to the provisions of Section 2 hereof, all moneys deposited in the Escrow Fund, to the Prior Fiscal Agent to pay the Redemption Price of the Prior Authority Bonds on the Redemption Date.
Upon payment in full of the Prior Authority Bonds, the Escrow Agent shall transfer any moneys remaining in the Escrow Fund to the Authority and, after provision for payment of amounts due to the Prior Trustee and the Escrow Agent pursuant to Section 6 and 11 hereof, this Escrow Agreement shall terminate. The Escrow Fund cash flow for the Escrow Fund is set forth in Schedule III attached hereto.
The District and the Authority hereby agree that the Prior District Bonds shall be deemed defeased concurrently with the defeasance of the Prior Authority Bonds.
SECTION 7. Notices of Defeasance and Redemption of the Prior Authority Bonds. The Authority hereby instructs the Escrow Agent to mail, first class, postage prepaid, a notice to the owners of the Prior Authority Bonds in the form attached hereto as Schedule I-A stating that the defeasance of the Prior Authority Bonds has occurred. The Authority hereby acknowledges and confirms that it has previously mailed, first class, postage prepaid, by not later than 30 days prior to the Redemption Date a notice in substantially the form attached hereto as Schedule I-B of redemption with respect to the Prior Authority Bonds in accordance with the procedures set forth in Section 2.2 of the Prior Authority Indenture.
The Authority hereby waives any notice requirement with respect to the redemption and defeasance of the Prior District Bonds under the Prior Fiscal Agent Agreements.
SECTION 8. Notice of Possible Deficiencies. If at any time the Escrow Agent has actual knowledge that the moneys and securities in the Escrow Fund will not be sufficient to make all payments required by Section 6 hereof, the Escrow Agent shall notify the Authority in writing as soon as is reasonably practicable, of such fact, the amount of such deficiency and if known, the reason therefor; provided, however, that the Authority and the District shall have no liability for any such deficiency.
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SECTION 9. Fees and Costs. The Escrow Agent’s fees and costs for all duties to be carried out by it under the Escrow Agreement have been included in its fees and costs as trustee for the Authority Bonds. The parties hereto agree that the duties and obligations of the Escrow Agent shall be as expressly provided herein, and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. The fees of and the costs incurred by the Escrow Agent shall in no event be deducted or payable from, or constitute a lien against, the Escrow Fund.
SECTION 10. Merger or Consolidation. Any company into which the Escrow Agent 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 Escrow Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under this Escrow Agreement, shall be the successor of such Escrow Agent without the execution or filing of any paper or any further act, notwithstanding anything herein to the contrary.
SECTION 11. Severability. If any section, paragraph, sentence, clause or provision of this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provisions shall not affect any of the remaining provisions of this Escrow Agreement.
SECTION 12. Execution of Counterparts. This Escrow Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument.
SECTION 13. Applicable Law. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of California.
SECTION 14. Indemnification. The Authority agrees to indemnify, hold harmless and defend the Escrow Agent, its officers, employees, directors, and agents, to the extent permitted by law from and against any and all losses, damages, claims, actions, liabilities, costs and expenses of whatever nature, kind or character (including, without limitation, attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) which may be imposed on, or incurred by or asserted against the Escrow Agent directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or action commenced or threatened as a result of the execution by the Escrow Agent of this Escrow Agreement, the performance of its obligations hereunder, or of the payment of the Prior Authority Bonds; provided, however, that this indemnification shall not cover any losses or expenses incurred by the Escrow Agent as a result of its negligence or willful misconduct.
The agreements of the Authority and the District hereunder shall survive the discharge of the Prior Authority Indenture and the Prior Fiscal Agent Agreements and the payment of the Redemption Price and the resignation or removal of the Prior Fiscal Agent.
SECTION 15. Immunities and Liability of Escrow Agent.
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(a) The Escrow Agent undertakes to perform only such duties as are expressly and specifically set forth in this Escrow Agreement, and no implied duties or obligations shall be read into this Escrow Agreement against Escrow Agent. (b) The Escrow Agent shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable for any special, indirect or consequential damages, even if the Escrow Agent or the Authority knows of the possibility of such damages. The Escrow Agent shall have no duty or responsibility under this Escrow Agreement in the case of any default in the performance of the covenants or agreements contained in the resolutions and trustee agreements relating to the Prior Authority Bonds or the Prior District Bonds. The Escrow Agent is not required to resolve conflicting demands to money or property in its possession under this Escrow Agreement. (c) The Escrow Agent may consult with counsel of its own choice, and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action hereunder in accordance with such opinion of counsel. (d) The Escrow Agent shall not be responsible for any of the recitals or representations contained herein.
(e) The Escrow Agent may become the owner of, or acquire any interest in, any of the Prior Authority Bonds with the same rights that it would have if it were not the Escrow Agent and may engage or be interested in any financial or other transaction with the Authority.
(f) The Escrow Agent shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys and securities deposited with it to pay the prescribed Prior Authority Bonds.
(g) The Escrow Agent shall not be liable for any action or omission of the Authority or the District under this Escrow Agreement.
(h) Whenever in the administration of this Escrow Agreement the Escrow Agent 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, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be deemed to be conclusively proved and established by a certificate of any authorized representative of the Authority, and such certificate shall, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered in good faith by it under the provisions of this Escrow Agreement.
(i) The Escrow Agent may conclusively rely, as to the truth and accuracy of the statements and correctness of the opinions and the calculations provided to it in connection with this Escrow Agreement and shall be protected in acting, or refraining from 7 4928-1011-2565v2/022042-0049
acting, upon any written notice, instruction, request, certificate, document or opinion furnished to the Escrow Agent in compliance with this Escrow Agreement and reasonably believed by the Escrow Agent to have been signed or presented by the proper party, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion. (j) The Escrow Agent shall incur no liability for losses arising from any investment made pursuant to this Escrow Agreement.
(k) No provision of this Escrow Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. (l) The liability of the Escrow Agent to make the payments required by this Escrow Agreement shall be limited to the moneys and securities in the Escrow Fund.
SECTION 16. Termination and Modification of Agreement. Upon final payment in full of the principal of and interest on the Prior Authority Bonds pursuant to this Escrow Agreement, all obligations of the Escrow Agent under this Escrow Agreement shall cease and terminate, except for the obligation of the Escrow Agent to pay or cause to be paid to the owners of the Prior Authority Bonds not presented for payment all sums due thereon and the obligation of the Authority to pay to the Escrow Agent any amounts due and owing to the Escrow Agent hereunder. This Escrow Agreement may not be amended or modified in any manner which is materially adverse to the Owners of the Prior Authority Bonds without the unanimous prior written consent of the Owners of the Prior Authority Bonds.
IN WITNESS WHEREOF, the Authority and Wilmington Trust, National Association, as Escrow Agent, have caused this Escrow Agreement to be executed each on its behalf by duly authorized officers as of the day and year first above written. [SIGNATURES ON FOLLOWING PAGE.]
S-1
4928-1011-2565v2/022042-0049
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
Treasurer of the Authority
WILMINGTON TRUST, NATIONAL ASSOCIATION,
AS ESCROW AGENT
By:
Its: Authorized Officer
ATTEST:
Secretary of the Board of Directors of the
Authority
SCHEDULE I-A
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SCHEDULE I-A
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE OF
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BONDS, (CANYON HILLS IMPROVEMENT AREAS A AND C REFUNDING), 2014 SERIES B
Notice is hereby given to the holders of the outstanding $10,780,000 Local Agency Revenue Bonds (Canyon Hills Improvement Areas A and C Refunding), 2014 Series B (collectively, the “Refunded Bonds”) (i) that there has been deposited with Wilmington Trust, National Association, as Escrow Agent (the “Escrow Agent”), moneys under the Escrow Agreement, dated as of June 1, 2025 (the “Escrow Agreement”), which shall be sufficient and available redeem the Refunded Bonds on September 1, 2025 (the “Redemption Date”) at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest to the Redemption Date; (ii) that the Escrow Agent has been irrevocably instructed to redeem on such Refunded Bonds on the Redemption Date; and (iii) that the Refunded Bonds are deemed to be paid in accordance with Section 9.03 of the Trust Indenture dated as of July 1, 2014, by and between the Lake Elsinore Public Financing Authority and Wilmington Trust, National Association, as successor trustee, pursuant to which the Refunded Bonds were issued.
Dated this day _____of _____ 2025.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Escrow Agent
SCHEDULE I-B
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SCHEDULE I-B
FORM OF NOTICE OF REDEMPTION
Notice is hereby given to the holders of the outstanding $10,780,000 Local Agency Revenue Bonds (Canyon Hills Improvement Areas A and C Refunding), 2014 Series B (the “Refunded Bonds”) that such Refunded Bonds have been called for redemption prior to maturity on September 1, 2025 (the “Redemption Date”) in accordance with their terms at a redemption price equal to 100% of the principal amount thereof plus interest accrued to the Redemption Date. The source of the funds to be used for such redemption is moneys and securities deposited with Wilmington Trust, National Association, as Escrow Agent.
Maturity
Date
(September
1) Principal Amount Interest Rate CUSIP
Redemption
Price
2025 $765,000 3.75% 509632KX2 100%
2026 805,000 3.500 509632KYO 100
2027 845,000 3.625 509632KZ7 100
2028 890,000 3.750 509632LA1 100
2029 935,000 4.000 509632LB9 100
2030 1,000,000 5.000 509632LC7 100
2031 1,045,000 5.000 509632LD5 100
2032 1,115,000 5.000 509632LE.3 100
2033 1,180,000 5.000 509632LFO 100
2034 1,255,000 5.000 509632LG8 100
2035 455,000 4.250 509632LH6 100
2036 490,000 4.250 509632LJ2 100
The redemption price of the Refunded Bonds shall become due and payable on the Redemption Date and after the Redemption Date interest on such Refunded Bonds shall cease to accrue and be payable.
This notice is conditional upon the receipt by the Escrow Agent on or prior to the date fixed for redemption of the Refunded Bonds of moneys sufficient to pay the principal of, premium, if any, and interest on such Refunded Bonds to be redeemed and, if such moneys are not so received, this notice shall be of no force and effect and the Refunded Bonds shall not be so redeemed.
Owners of the Refunded Bonds will receive payment of the redemption price to which they are entitled upon presentation and surrender thereof at the principal corporate trust office of Wilmington Trust, National Association, Costa Mesa, California.
SCHEDULE I-B
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Dated this _____ day of _____, 2025.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Escrow Agent
SCHEDULE II
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SCHEDULE II
FEDERAL SECURITIES
Security Maturity
Principal
Amount
Interest
Rate Price
SCHEDULE II
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SCHEDULE III
ESCROW CASH FLOW
Dates
Principal
Redeemed Interest Premium Cash Balance
Stradling Yocca Carlson & Rauth
Draft Dated May 7, 2025
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