Stradling Yocca Carlson & Rauth
Draft of 1/7/26
4912-2245-8242/022283-0620
FIRST SUPPLEMENTAL INDENTURE
Dated as of _____ 1, 2026
Amending and Supplementing the
INDENTURE
Dated as of July 1, 2024
by and among
LANCASTER FINANCING AUTHORITY
and
CITY OF LANCASTER
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
as Trustee
Relating to
$___________
LANCASTER FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2026A
i
4912-2245-8242/022283-0620
TABLE OF CONTENTS
Page
ARTICLE XII DEFINITIONS..............................................................................................................2 Section 12.01 Definitions ................................................................................................................. 2 ARTICLE XIII THE SERIES 2026A BONDS.....................................................................................4 Section 13.01 Authorization and Issuance of Series 2026A Bonds ................................................. 4 Section 13.02 Terms of the Series 2026A Bonds............................................................................. 4 Section 13.03 Form of Series 2026A Bonds .................................................................................... 6 ARTICLE XIV APPLICATION OF PROCEEDS; ESTABLISHMENT OF FUNDS ........................6 Section 14.01 Application of Proceeds of Sale of Series 2026A Bonds .......................................... 6 Section 14.02 Establishment and Application of Series 2026A Project Account of the Project Fund ...........................................................................................................................6 Section 14.03 Establishment and Application of Series 2026A Bonds Account of the Reserve Fund ...........................................................................................................................6 ARTICLE XV REDEMPTION OF SERIES 2026A BONDS..............................................................9 Section 15.01 Redemption of Series 2026A Bonds ......................................................................... 9 ARTICLE XVI THE SERIES 2026A INSURANCE POLICY..........................................................10 Section 16.01 Payment Procedure Under the Series 2026A Insurance Policy............................... 10 Section 16.02 Payments by the Insurer as a Result of Nonpayment .............................................. 12 Section 16.03 Insurer Rights .......................................................................................................... 12 Section 16.04 Control by the Insurer Upon Default....................................................................... 12 Section 16.05 Impairment of Insurer’s Rights................................................................................ 13 Section 16.06 Consent of the Insurer in Addition to Bondholder Consent .................................... 13 Section 16.07 Insurer Consideration .............................................................................................. 13 Section 16.08 Amounts Paid by Insurer ......................................................................................... 13 Section 16.09 Additional Payments................................................................................................ 13 Section 16.10 Provision of Information ......................................................................................... 14 Section 16.11 Lease or Transfer of the Property ............................................................................ 14 Section 16.12 Special Provisions for Insurer Default..................................................................... 14 Section 16.13 Defeasance of 2026A Bonds ................................................................................... 14 Section 16.14 Insurer as Third Party Beneficiary........................................................................... 15 Section 16.15 Impairment of Insurer’s Rights................................................................................ 15 ARTICLE XVII MISCELLANEOUS.................................................................................................15 Section 17.01 Tax Covenants ......................................................................................................... 15 Section 17.02 Continuing Disclosure ............................................................................................. 16 Section 17.03 Partial Invalidity ...................................................................................................... 16 Section 17.04 Waiver of Personal Liability.................................................................................... 16 TABLE OF CONTENTS (Continued)
Page
ii
4912-2245-8242/022283-0620
Section 17.05 Successor Deemed Included in all References to Predecessor................................ 17 Section 17.06 Execution in Counterparts ....................................................................................... 17 Section 17.07 Governing Law ........................................................................................................ 17 Signature Page ................................................................................................................................S-1 EXHIBIT A FORM OF SERIES 2026A BOND........................................................................A-1 TABLE OF CONTENTS (Continued)
Page
ii
4912-2245-8242/022283-0620
4912-2245-8242/022283-0620
FIRST SUPPLEMENTAL INDENTURE
This FIRST SUPPLEMENTAL INDENTURE, dated as of _____ 1, 2026 (the “First Supplemental Indenture”), is entered into by and among the LANCASTER FINANCING AUTHORITY, a joint exercise of powers entity duly organized and existing under the laws of the State of California (the “Authority”), the CITY OF LANCASTER, a municipal corporation and charter city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”) and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States, as Trustee (the “Trustee”), and supplements and amends the INDENTURE, dated as of July 1, 2024 (the “2024 Indenture”) by and among the Authority, the City and the Trustee.
WITNESSETH:
WHEREAS, the Authority previously issued its Lancaster Financing Authority Lease Revenue Bonds, Series 2024A (the “Series 2024A Bonds”) and the “Lancaster Financing Authority Lease Revenue Bonds Series 2024B (Federally Taxable) (the “Series 2024B Bonds”; and, together with the Series 2024A Bonds, the “Series 2024 Bonds”) pursuant to the 2024 Indenture to finance the costs of the acquisition, construction and installation of certain capital improvements, including but not limited to the Multi-Agency Regional Resiliency Center (the “MARRC Project”), the conversion of the existing minor league baseball stadium for use as a minor league soccer stadium, certain parks and recreation improvements within the City, certain public art projects located within the City, and other improvements, facilities and equipment; and
WHEREAS, in connection with the issuance of the Series 2024 Bonds, the City leased certain real property and the improvements located thereon (the “Existing Property”) to the Authority pursuant to a Ground Lease, dated as of July 1, 2024, and the City subleased the Existing Property back from the Authority to a Lease Agreement, dated as of July 1, 2024; and WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the costs of the acquisition, construction and installation of certain capital improvements of the City, including but not limited to additional funding of the MARCC Project, ___________, and other improvements, facilities and equipment (collectively, the “2026 Projects”) through the issuance by the Authority of the Series 2026A Bonds (as defined herein) as Additional Bonds (as defined in the 2024 Indenture) under the 2024 Indenture, which are payable from the Base Rental Payments (as defined in the 2024 Indenture) to be made by the City under the Lease Agreement (as defined herein); and WHEREAS, all rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of July 1, 2024; and
WHEREAS, the Authority and the City desire to provide for the issuance by the Authority of the Series 2026A Bonds, in the aggregate principal amount of $___________, in order to finance the 2026 Projects; and
WHEREAS, the Series 2024 Bonds and the Series 2026A Bonds will be payable equally and ratably from the Base Rental Payments; and
2 4912-2245-8242/022283-0620
WHEREAS, in order to provide for the authentication and delivery of the Series 2026A Bonds, to establish and declare the terms and conditions upon which the Series 2026A Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority and the City have authorized the execution and delivery of this First Supplemental Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows:
ARTICLE XII
DEFINITIONS
Section 12.01 Definitions. Except as otherwise provided in this Section 12.01, all terms used herein which are defined in the 2024 Indenture shall have the meanings assigned to them therein. All other capitalized terms used herein without definition shall have the meaning given to such terms in the Lease Agreement.
“Base Rental Payments” means any of the Series 2024A Base Rental Payments, the Series 2024B Base Rental Payments or the Series 2026A Base Rental Payments payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01 of the Lease Agreement. “Bonds” means the Series 2024 Bonds, the Series 2026A Bonds and any Additional Bonds issued under the Indenture.
“Closing Date” means, with respect to the Series 2026A Bonds, ______, 2026. “Continuing Disclosure Agreement” means the Continuing Disclosure Agreement executed by the City in connection with the issuance of the Series 2026A Bonds, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “First Amendment to Lease Agreement” means the First Amendment to Lease Agreement, dated as of _____ 1, 2026, by and between the Authority and the City. “Indenture” means this Indenture, as originally executed, as amended and supplemented by this First Supplemental Indenture, and as it may be further amended or supplemented from time to time by any Supplemental Indenture.
“Insurance Policies” means, collectively, the Series 2024A Insurance Policy, the Series 2024B Insurance Policy and the Series 2026A Insurance Policy. “Interest Payment Date” means, with respect to the Series 2026A Bonds, May 1 and November 1 of each year, commencing on _____ 1, 2026.
“Late Payment Rate” means, with respect to the 2026A Bonds, the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank, N.A., at its principal office in The City of New York, New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank, N.A.) plus 5%, and (ii) the then applicable highest rate of interest on the 2026A Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting 3 4912-2245-8242/022283-0620
interest rates. In the event JPMorgan Chase Bank, N.A., ceases to announce its Prime Rate, the Prime Rate shall be the prime or base lending rate of such other bank, banking association or trust company as BAM, in its sole and absolute discretion, shall designate. Interest at the Late Payment Rate on any amount owing to the Insurer shall be computed on the basis of the actual number of days elapsed in a year of 360 days.
“Lease Agreement” means the Lease Agreement, dated as of July 1, 2024, by and between the City and the Authority, as originally executed, as amended by the First Amendment to Lease Agreement, and as it may be from time to time further amended in accordance with the provisions thereof.
“Reserve Fund Requirement” means (a) with respect to the Series 2026A Bonds, the lesser of (i)125% of the average Annual Debt Service with respect to the Series 2026A Bonds, (ii) Maximum Annual Debt Service with respect to the Series 2026A Bonds, or (iii) 10% of the original principal amount of the Series 2026A Bonds (or, if the Series 2026A Bonds has more than a de minimis amount of original issue discount or premium, 10% of the issue price of the Series 2026A Bonds). “Series 2026A Base Rental Payments” means any of the Series 2026A Base Rental Payments payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01 of the Lease Agreement.
“Series 2026A Bonds” means the Lancaster Financing Authority Lease Revenue Bonds, Series 2026A issued pursuant to the Indenture.
“Series 2026A Bonds Account” means the account by that name established in accordance with Section 14.04 hereof.
“Series 2026A Insurance Policy” means the municipal bond policy No. _____ issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the 2026A Bonds when due.
“Series 2026A Project Account” means the account by that name established in accordance with Section 14.02 hereof.
“Series 2026A Reserve Surety Policy” means the municipal bond debt service reserve insurance policy No. _____ issued by the Insurer and deposited in the Series 2026A Bonds Account of the Reserve Fund to satisfy a portion of the Reserve Fund Requirement with respect to the Series 2026A Bonds.
“Tax Certificate” means, with respect to the Series 2026A Bonds, the Tax Certificate executed by the Authority and the City at the time of issuance of the Series 2026A Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may from time to time be amended in accordance with the provisions thereof.
“Term Bonds” means with respect to the Series 2026A Bonds, the Series 2026A Bonds maturing on May 1, 20__ and May 1, 20__.
4 4912-2245-8242/022283-0620
ARTICLE XIII
THE SERIES 2026A BONDS
Section 13.01 Authorization and Issuance of Series 2026A Bonds. Pursuant to Section
2.01 of the 2024 Indenture, the Authority may at any time issue Additional Bonds pursuant to a Supplemental Indenture. The Authority and the City have determined that all acts and proceedings required by law necessary to make the Series 2026A Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, have been done and taken, and the execution and delivery of this First Supplemental Indenture has been in all respects duly authorized. The Series 2026A Bonds are hereby designated the “Lancaster Financing Authority Lease Revenue Bonds, Series 2026A.” The Authority may, at any time, execute the Series 2026A Bonds for issuance hereunder and deliver the same to the Trustee. The Trustee shall authenticate the Series 2026A Bonds and deliver the Series 2026A Bonds to the original purchaser thereof upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor.
As set forth in Section 5.01 of the 2024 Indenture, subject only to the provisions of the 2024 Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein and herein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Capitalized Interest Fund, the Principal Fund, the Redemption Fund and the Reserve Fund (provided, however, that only amounts in the Series 2024 Bonds Account of the Reserve Fund shall secure the Series 2024 Bonds and only amounts in the Series 2026A Bonds Account of the Reserve Fund shall secure the Series 2026A Bonds) are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge shall constitute a first lien on such assets.
Section 13.02 Terms of the Series 2026A Bonds.
(a) The Series 2026A Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Series 2026A Bond shall have more than one maturity date. The Series 2026A Bonds shall initially be issued as Book-Entry Bonds. The Series 2026A Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $___________, shall mature on May 1 of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum as follows:
5 4912-2245-8242/022283-0620
Maturity Date
(May 1) Principal Amount Interest Rate
$ %
I Insured Bond.
* Term Bond.
(b) Interest on the Series 2026A Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2026A Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a Series 2026A Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the dated date thereof, or (iii) interest on any Series 2026A Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the Series 2026A Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Except as otherwise provided in Section 2.10(a) of the 2024 Indenture, interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Series 2026A Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date or by wire transfer to Owners of more than $1,000,000 in principal amount of Series 2026A Bonds who have provided account information and wiring instructions satisfactory to the Trustee.
6 4912-2245-8242/022283-0620
(c) The principal and premium, if any, of the Series 2026A Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.
Section 13.03 Form of Series 2026A Bonds. The Series 2026A Bonds shall be in substantially the form set forth in Exhibit A hereto, with appropriate or necessary insertions, omissions and variations as permitted or required by the 2024 Indenture and hereby.
ARTICLE XIV
APPLICATION OF PROCEEDS; ESTABLISHMENT OF FUNDS
Section 14.01 Application of Proceeds of Sale of Series 2026A Bonds. On the Closing Date, the net proceeds of the sale of the Series 2026A Bonds received by the Trustee, $_____ (being the $_____ purchase price for the Series 2026A Bonds, less $_______ paid directly to the Insurer by the underwriter of the Series 2026A Bonds representing the premiums for the Series 2026A Insurance Policy and the Series 2026A Reserve Surety Policy), shall be deposited by the Trustee as follows:
(a) The Trustee shall deposit the amount of $______ in the Costs of Issuance Fund, and
(b) The Trustee shall deposit the amount of $_______ in the Series 2026A Project Account of the Project Fund.
The Trustee may establish one or more temporary funds or accounts in its records to record and facilitate such deposits and transfers.
Section 14.02 Establishment and Application of Series 2026A Project Account of the Project Fund. The Trustee shall establish and maintain an account within the Project Fund designated as the “Series 2026A Project Account.” The moneys in the Series 2026A Project Account shall be disbursed by the Trustee on behalf of the City as specified in a Written Request of the City in the form attached hereto as Exhibit B to the 2024 Indenture. Each Written Request of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On the date on which the City determines that amounts in the Series 2026A Project Account are no longer necessary for payment of the cost of the Project, the City shall submit a Written Request to the Trustee to transfer any remaining balance in the Series 2026A Project Account not needed for Series 2026A Project Account purposes, at the City’s sole discretion, either (a) to the Base Rental Payment Fund for application in accordance with Section 5.02 of the 2024 Indenture, or (b) to the City for use on eligible capital facilities, and the Series 2026A Project Account shall be closed.
Section 14.03 Establishment and Application of Series 2026A Bonds Account of the Reserve Fund.
(a) The Trustee shall establish and maintain an account within the Reserve Fund designated as the “Series 2026A Bonds Account.” Amounts in the Series 2026A Account of the Reserve Fund shall be used solely for the purpose of funding the Interest Fund or the Principal Fund, in that order, in the event of any deficiency in either of such accounts with respect to the Series 2026A Bonds on an Interest Payment Date.
7 4912-2245-8242/022283-0620
(b) As long as the Series 2026A Reserve Surety Policy shall be in full force and effect the Authority, the City and the Trustee agree to comply with the following provisions:
(i) In the event and to the extent that moneys on deposit in the Base Rental Payment Fund, plus all amounts on deposit in and credited to the Series 2026A Account of the Reserve Fund in excess of the amount of the Series 2026A Reserve Surety Policy are insufficient to pay the amount of principal and interest coming due on the Series 2026A Bonds, then upon the later of: (i) the Interest Payment Date on which such principal and interest becomes due and (ii) the first Business Day following the Business Day on which the Insurer shall have received a completed Notice of Nonpayment (as defined in the Series 2026A Reserve Surety Policy) in a form reasonably satisfactory to it, the 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 Series 2026A Reserve Surety Policy); provided, however, that in the event that the amount on deposit in, or credited to, the Series 2026A Account of the Reserve Fund, in addition to the amount available under the Series 2026A Reserve Surety Policy, includes amounts available under a letter of credit, insurance policy, Series 2026A Reserve Surety Policy or other such funding instrument (an “Alternative Credit Instrument”), draws on the Series 2026A Reserve Surety Policy and any Alternative Credit Instrument shall be made on a pro rata basis to fund the insufficiency.
(ii) The Authority shall repay from Base Rental Payments any draws under the Series 2026A Reserve Surety Policy and pay all related reasonable expenses incurred by the Insurer. Interest shall accrue and be payable on such draws and expenses from the date of payment by the Insurer at the Late Payment Rate.
If the interest provisions of this Section 5.05(c)(ii) 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 Insurer, with the same force and effect as if the Authority had specifically designated such extra sums to be so applied and the 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 (as calculated by the Authority and certified to the Trustee in writing) related to such draw.
(iv) Amounts in respect of Policy Costs paid to the 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 Insurer on account of principal due, the coverage under the Series 2026A 8 4912-2245-8242/022283-0620
Reserve Surety Policy will be reinstated by a like amount, subject to the terms of the Series 2026A Reserve Surety Policy.
(v) All cash and investments in the Series 2026A Account of the Reserve Fund shall be transferred to the Base Rental Payment Fund for payment of the principal of and interest on the Series 2026A Bonds and the before any drawing may be made on the Series 2026A Reserve Surety Policy or any Alternative Credit Instrument. Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Alternative Credit Instruments (including the Series 2026A Reserve Surety Policy) on which there is available coverage shall be made on a pro- rata basis (calculated by reference to the coverage then available under each such Alternative Credit Instrument) after applying all available cash and investments in the Series 2026A Account of the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Alternative Credit Instruments shall be made on a pro-rata basis prior to replenishment of any cash drawn from the Series 2026A Account of the Reserve Fund. 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 or the City shall fail to pay any Policy Costs in accordance with the requirements of Sections 5.05(c)(ii)-(v) hereof, the Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under this Indenture, the Ground Lease and the Lease Agreement other than: (A) acceleration of the maturity of the payments of principal of and interest on the Series 2026A Bonds; or (B) remedies which would adversely affect Owners of the Series 2026A Bonds.
(vii) The Trustee shall ascertain the necessity for a claim upon the Series 2026A Reserve Surety Policy in accordance with the provisions of Sections 5.05(c)(i)-(v) hereof and provide notice to the Insurer in accordance with the terms of the Series 2026A Reserve Surety Policy at least five (5) Business Days prior to an Interest Payment Date. Where deposits are required to be made by the City with the Trustee to the Base Rental Payment Fund for the payment of principal of and interest on the Series 2026A Bonds more often than semi-annually, the Trustee shall be instructed to give notice to the Insurer of any failure of the City to make timely payment in full of such deposits within two Business Days of the date due.
(viii) The obligation to pay Policy Costs shall be secured by a valid lien on the Base Rental Payments, subject to the priority of payments set forth in this Indenture. (ix) So long as the Series 2026A Reserve Surety Policy is in full force and effect, future deposits of an Alternative Credit Instrument in the Series 2026A Account of the Reserve Fund shall require the prior written consent of the Insurer. Notwithstanding anything in this Indenture to the contrary, amounts on deposit in the Series 2026A Account shall be applied solely to the payment of principal of and interest on the Series 2026A Bonds. (x) Draws on the Series 2026A Reserve Surety Policy may only be used to make payments on the Series 2026A Bonds (and for the avoidance of doubt, not any other obligations of the Authority, whether issued on parity with the Series 2026A Bonds, or otherwise). 9 4912-2245-8242/022283-0620
(xi) The Series 2026A Reserve Surety Policy shall expire on the earlier of the date the Series 2026A Bonds are no longer Outstanding and the final maturity date of the Series 2026A Bonds.
(c) Neither this Indenture, the Ground Lease, the Lease Agreement nor the Assignment Agreement shall be discharged until all Policy Costs owing to the Insurer as issuer of the Series 2026A Reserve Surety Policy have been paid in full. The City’s obligation to pay such amounts shall expressly survive payment in full of the Series 2026A Bonds.
ARTICLE XV
REDEMPTION OF SERIES 2026A BONDS
Section 15.01 Redemption of Series 2026A Bonds.
(a) Extraordinary Redemption. The Series 2026A Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of:
(i) Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to Sections 5.03 and 5.04 of the 2024 Indenture, and (ii) eminent domain proceeds received pursuant to Section 8.01 of the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2026A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.
(b) Optional Redemption. The Series 2026A Bonds maturing on or after May 1, 20__, shall be subject to optional redemption, in whole or in part, on any date on or after May 1, 20__, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 4.01 of the First Amendment to Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2026A Bonds to be redeemed, plus accrued interest thereon to the date of redemption.
(c) Mandatory Sinking Fund Redemption. The Series 2026A Bonds with a stated maturity on May 1, 2049 are subject to mandatory sinking fund redemption in part (by lot) on each May 1 on and after May 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(May 1)
Principal
Amount
* Maturity.
The Series 2026A Bonds with a stated maturity on May 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each May 1 on and after May 1, 20__ in integral multiples 10 4912-2245-8242/022283-0620
of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(May 1)
Principal
Amount
* Final Maturity.
In the event of a partial optional redemption or extraordinary mandatory redemption of any of the Term Bonds, each of the remaining mandatory sinking fund payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis in the amount of $5,000 or any integral multiple thereof as directed by an Authorized City Representative, which direction shall include a revised schedule of the remaining mandatory sinking fund payments.
ARTICLE XIV
THE SERIES 2026A INSURANCE POLICY
Section 14.01 Payment Procedure Under the Series 2026A Insurance Policy. In the event that principal and/or interest due on the Series 2026A Bonds shall be paid by the Insurer pursuant to the Series 2026A Insurance Policy, the Series 2026A Bonds shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Authority, the assignment and pledge of the trust estate and all covenants, agreements and other obligations of the Authority to the registered Owners shall continue to exist and shall run to the benefit of the Insurer, and the Insurer shall be subrogated to the rights of such registered owners.
In the event that on the second (2nd) Business Day prior to any Interest Payment Date on the Series 2026A Bonds, the Trustee has not received sufficient moneys to pay all principal of and interest on the Series 2026A Bonds due on such payment date, the Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or electronic mail, of the amount of the deficiency. If any deficiency is made up in whole or in part prior to or on the payment date, the Trustee shall so notify the Insurer or its designee.
In addition, if the Trustee has notice that any holder of the Series 2026A Bonds has been required to disgorge payments of principal of or interest on the Series 2026A Bonds pursuant to a final, non-appealable order by a court of competent jurisdiction that such payment constitutes an avoidable preference to such holder within the meaning of any applicable bankruptcy law, then the Trustee shall notify the Insurer or its designee of such fact by telephone or electronic mail, or by overnight or other delivery service as to which a delivery receipt is signed by a person authorized to accept delivery on behalf of the Insurer.
The Trustee shall irrevocably be designated, appointed, directed and authorized to act as attorney-in-fact for Owners of the Series 2026A Bonds as follows:
11 4912-2245-8242/022283-0620
(a) If there is a deficiency in amounts required to pay interest and/or principal on the Series 2026A Bonds, the Trustee shall: (i) execute and deliver to the Insurer, in form satisfactory to the Insurer, an instrument appointing the Insurer as agent and attorney-in-fact for such Owners of the Series 2026A Bonds in any legal proceeding related to the payment and assignment to the Insurer of the claims for interest on the Series 2026A Bonds; (ii) receive as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Series 2026A Insurance Policy payment from the Insurer with respect to the claims for interest so assigned; (iii) segregate all such payments in a separate account hereby established pursuant to this provision and held by the Trustee (the “Insurer 2026A Policy Payment Account”), to be used only to make scheduled payments of principal of and interest on the Series 2026A Bonds; and (iv) disburse the same to such Owners of the Series 2026A Bonds.
(b) If there is a deficiency in amounts required to pay principal of the Series 2026A Bonds, the Trustee shall: (i) execute and deliver to the Insurer, in form satisfactory to the Insurer, an instrument appointing the Insurer as agent and attorney-in-fact for such holder of the Series 2026A Bonds in any legal proceeding related to the payment of such principal and an assignment to the Insurer of the Series 2026A Bonds surrendered to the Insurer; (ii) receive as designee of the respective Owners of Insured the Series 2026A Bonds (and not as Trustee) in accordance with the tenor of the Series 2026A Insurance Policy payment therefor from the Insurer; (iii) segregate all such payments in the Insurer 2026A Policy Payment Account to only be used to make scheduled payments of principal of and interest on the Series 2026A Bonds; and (iv) disburse the same to such Owners of the Series 2026A Bonds.
The Trustee shall designate any portion of payment of principal on Series 2026A Bonds paid by the 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 Series 2026A Bonds registered to the then current Owner, whether DTC or its nominee or otherwise, and shall issue a replacement Series 2026A Bond to the Insurer, registered in the name directed by the Insurer, 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 replacement Series 2026A Bonds shall have no effect on the amount of principal or interest payable by the Authority on any Series 2026A Bond or the subrogation or assignment rights of the Insurer.
Payments with respect to claims for interest on and principal of Series 2026A Bonds disbursed by the Trustee from proceeds of the Series 2026A Insurance Policy shall not be considered to discharge the obligation of the Authority with respect to such Series 2026A Bonds, and the Insurer shall become the owner of such unpaid Series 2026A Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of the preceding paragraphs or otherwise. This Indenture, the Ground Lease, the Lease Agreement and the Assignment Agreement shall not be discharged or terminated unless all amounts due or to become due to the Insurer have been paid in full or duly provided for.
Irrespective of whether any such assignment is executed and delivered, the Authority, the City and the Trustee agree for the benefit of the Insurer that:
(1) They recognize that to the extent that the Insurer makes payments directly or indirectly (e.g., by paying through the Trustee), on account of principal of or interest on the Series 2026A Bonds, the Insurer will be subrogated to the rights of such Owners to receive the amount of 12 4912-2245-8242/022283-0620
such principal and interest from the Authority, with interest thereon, as provided and solely from the sources stated in this Indenture, the Lease Agreement and the Series 2026A Bonds. (2) They will accordingly pay to the Insurer the amount of such principal and interest, with interest thereon as provided in the transaction documents and the Series 2026A Bonds, but only from the sources and in the manner provided therein for the payment of principal of and interest on the Series 2026A Bonds to Owners, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest.
Section 16.02 Payments by the Insurer as a Result of Nonpayment. The Insurer shall be entitled to pay principal or interest on the 2026A 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 Series 2026A Insurance Policy), whether or not the Insurer has received a claim upon the Series 2026A Insurance Policy.
Section 16.03 Insurer Rights. The Insurer shall be deemed to be the sole holder of the Series 2024 Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Series 2024 Bond Owners 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 Series 2024 Bond, the Trustee (solely with respect to the Series 2024 Bonds) and each Series 2024 Bond Owner appoint the Insurer as their agent and attorney-in-fact and agree that the Insurer may at any time during the continuation of any proceeding by or against the Authority or the City 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 and each Owner of the Series 2024 Bonds delegate and assign to the Insurer, to the fullest extent permitted by law, the rights of the Trustee and each Owner of the Series 2024 Bonds 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 shall expressly include mandamus. Any reorganization or liquidation plan with respect to the Authority or the City must be acceptable to the Insurer, so long as the Insurance Policies are in full force and effect and the Insurer has not defaulted on its obligations thereunder.
Section 16.04 Control by the Insurer Upon Default. Anything herein or in the Lease Agreement to the contrary notwithstanding, so long as the Insurance Policies are in full force and effect and the Insurer has not defaulted on its obligations thereunder, upon the occurrence and continuance of an event of default hereunder or under the Lease Agreement; (a) the Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the holders of the Series 2024 Bonds or the Trustee for the benefit of the holders of the Series 2024 Bonds hereunder or to the Trustee for the benefit of the Owners of the Series 2024 Bonds; (b) no event of default may be waived without the Insurer’s written consent; and (c) the Insurer shall be deemed to be the sole Owner of the Series 2024 Bonds for all purposes hereunder and under the Lease Agreement, including, without limitations, for purposes of exercising remedies and approving amendments. 13 4912-2245-8242/022283-0620
Section 16.05 Impairment of Insurer’s Rights. No contract shall be entered into or any action taken by which the rights of the Insurer or security for or source of payment of the 2026A Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer.
Section 16.06 Consent of the Insurer in Addition to Bondholder Consent.
Notwithstanding anything to the contrary set forth herein or in the Lease Agreement, whenever any provision hereof requires the consent of Owners of 2026A Bonds, the Insurer’s consent shall also be required so long as the Series 2026A Insurance Policy is in full force and effect and the Insurer has not defaulted on its obligations thereunder. In addition, any amendment, supplement, modification to, or waiver of, any provision hereof that adversely affects the rights or interests of the Insurer shall be subject to the prior written consent of the Insurer.
Section 16.07 Insurer Consideration. The rights granted to the Insurer under this Indenture to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Series 2026A Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the 2026A Bonds Owners and such action does not evidence any position of the Insurer, affirmative or negative, as to whether the consent of the 2026A Bonds Owners or any other person is required in addition to the consent of the Insurer.
Section 16.08 Amounts Paid by Insurer. Amounts paid by the Insurer under the Series 2026A Insurance Policy and the Series 2026A Reserve Surety Policy shall not be deemed paid for purposes of this Indenture and the 2026A Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the City and the Authority in accordance with this Indenture. This Indenture shall not be discharged unless all amounts due or to become due to the Insurer have been paid in full or duly provided for.
Section 16.09 Additional Payments. The City agrees unconditionally that it will pay or reimburse the Insurer on demand any and all reasonable charges, fees, costs, losses, liabilities and expenses that the Insurer may pay or incur, including, but not limited to, fees and expenses of the Insurer’s agents, attorneys, accountants, consultants, appraisers and auditors and reasonable costs of investigations, in connection with any Administrative Costs. For purposes of the foregoing, costs and expenses shall include a reasonable allocation of compensation and overhead attributable to the time of employees of the Insurer spent in connection with the actions described in the preceding sentence.
The City agrees that failure to pay any Administrative Costs on a timely basis will result in the accrual of interest on the unpaid amount at the Late Payment Rate, compounded semi-annually, from the date that payment is first due to the Insurer until the date the Insurer is paid in full. Notwithstanding anything herein to the contrary, the City agrees to pay to the Insurer (i) a sum equal to the total of all amounts paid by the Insurer under the Series 2026A Insurance Policy (the “2026A Insurer Policy Payment”); and (ii) interest on such 2026A Insurer Policy Payments from the date paid by the Insurer until payment thereof in full by the City, payable to the Insurer at the Late Payment Rate per annum (collectively, the “2026A Insurer Reimbursement Amounts”) compounded semi-annually. Notwithstanding anything to the contrary, including without limitation the post default application of revenue provisions, the 2026A Insurer Reimbursement Amounts shall be, and the City hereby covenants and agrees that the 2026A Insurer Reimbursement Amounts are, payable from and secured by a lien on and pledge of the same revenues and other collateral pledged to the 2026A Bonds on a parity with debt service due on the 2026A Bonds.
14 4912-2245-8242/022283-0620
Section 16.10 Provision of Information. So long as the Insurer is not in default on any obligation under the Series 2026A Insurance Policy and such default is not continuing, the Insurer shall be provided with the following information by the Authority, the City or 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 the 2026A Bonds; (b) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto; and
(c) All notices and other information that the City is obligated to provide to the 2026A Bond Owners (i) under its Continuing Disclosure Certificate and (ii) to the Owners of the 2026A Bonds or the Trustee herein.
Section 16.11 Lease or Transfer of the Property. Other than the release of Property in accordance with Section 10.04 of the Lease Agreement, so long as the Series 2026A Bonds are outstanding or any amounts are due and payable to the Insurer, the Authority and the City shall not sell, lease, transfer, encumber or otherwise dispose of the Property or any material portion thereof, except upon obtaining the prior written consent of the Insurer.
Section 16.12 Special Provisions for Insurer Default. If an Insurer Default shall occur and be continuing, then, notwithstanding anything herein or in the Lease Agreement to the contrary: (a) if at any time prior to or following an Insurer Default, the Insurer has made payment under the Series 2026A Insurance Policy, to the extent of such payment the Insurer shall be treated like any other Owner of the Series 2026A Bonds for all purposes, including giving of consents; and (b) if the Insurer has not made any payment under the Series 2026A Insurance Policy, the Insurer shall have no further consent rights until the particular Insurer Default is no longer continuing or the Insurer makes a payment under the Series 2026A Insurance Policy, in which event, the foregoing clause (a) shall control.
Section 16.13 Defeasance of 2026A Bonds. At least three (3) Business Days prior to any defeasance with respect to the 2026A Bonds, the Authority shall deliver to the Insurer draft copies of an escrow agreement, an opinion of Bond Counsel regarding the validity and enforceability of the escrow agreement and the defeasance of the 2026A Bonds and a Verification Report regarding the sufficiency of the escrow fund. Such opinion and Verification Report shall be addressed to the Insurer and shall be in form and substance satisfactory to the Insurer. In addition, the escrow agreement shall provide that any substitution of securities following the execution and delivery of the escrow agreement shall require the delivery of: (I) a Verification Report; (II) an opinion of Bond Counsel that such substitution will not adversely affect the exclusion from gross income of the holders of the 2026A Bonds of the interest on the 2026A Bonds for federal income tax purposes; and (III) the prior written consent of the Insurer, which consent will not be unreasonably withheld.
The Authority will not exercise any prior optional redemption of 2026A Bonds secured by the escrow agreement or any other redemption other than mandatory sinking fund redemptions unless: (1) the right to make any such redemption has been expressly reserved in the escrow agreement and such reservation has been disclosed in detail in the official statement, if any, for the refunding bonds; and (2) as a condition to any such redemption there shall be provided to the Insurer a Verification Report as to the sufficiency of escrow receipts without reinvestment to meet the escrow requirements remaining following any such redemption.
15 4912-2245-8242/022283-0620
The City and the Authority shall not amend the escrow agreement or enter into a forward purchase agreement or other agreement with respect to rights in the escrow without the prior written consent of the Insurer.
This Indenture shall not be discharged with respect to the 2026A Bonds until all 2026A Policy Costs and 2026A Insurer Reimbursement Amounts and any other amounts due to the Insurer payable pursuant to Sections 14.04(b) and 16.09 hereof have been paid. The obligation to pay such amounts shall expressly survive the payment in full of the 2026A Bonds.
Section 16.14 Insurer as Third Party Beneficiary. he Insurer is intended as a third party beneficiary to this First Supplemental Indenture and may enforce the provisions of this First Supplemental Indenture as if it were a party hereto.
Section 16.15 Impairment of Insurer’s Rights. No contract shall be entered into or any action taken by which the rights of the Insurer or security for or source of payment of the 2026A Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer.
ARTICLE XVII
MISCELLANEOUS
Section 17.01 Tax Covenants. Notwithstanding any other provision of the Indenture, absent an Opinion of Counsel that the exclusion from gross income of the interest on the Series 2026A Bonds will not be adversely affected for federal income tax purposes, the City and the Authority covenant to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income with respect to the Series 2026A Bonds and specifically covenant, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The City and the Authority will not take any action or refrain from taking any action or make any use of the proceeds of the Series 2026A Bonds or of any other moneys or property which would cause the Series 2026A Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
(b) Arbitrage. The City and the Authority will make no use of the proceeds of the Series 2026A Bonds or of any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action which would cause the Series 2026A Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code; (c) Federal Guarantee. The City and the Authority will make no use of the proceeds of the Series 2026A Bonds and will not take or omit to take any action that would cause the Series 2026A Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (d) Information Reporting. The City and 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 necessary to preserve the exclusion of interest on the Series 2026A Bonds pursuant to Section 103(a) of the Code;
16 4912-2245-8242/022283-0620
(e) Hedge Bonds. The City and the Authority will make no use of the proceeds of the Series 2026A Bonds or any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action that would cause the Series 2026A Bonds to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the City and the Authority take all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the Series 2026A Bonds for federal income tax purposes; and
(f) Miscellaneous. The City and the Authority will not take any action or refrain from taking any action inconsistent with its expectations stated in the Tax Certificate 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 City and the Authority from causing the Trustee to issue revenue bonds or to execute and deliver contracts payable on a parity with the Series 2026A Bonds, the interest with respect to which has been determined by an Opinion of Counsel to be subject to federal income taxation.
Section 17.02 Continuing Disclosure. The City will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not constitute an event of default hereunder; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate principal amount of Outstanding Series 2026A Bonds, and upon being indemnified to its reasonable satisfaction therefor, shall) or any holder or beneficial owner of the Series 2026A Bonds may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Section 17.03 Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law.
The Authority, the City and the Trustee hereby declare that they would have executed this First Supplemental Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Series 2026A Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 17.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Series 2026A Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby. 17 4912-2245-8242/022283-0620
Section 17.05 Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Section 17.06 Execution in Counterparts. This First Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.
Section 17.07 Governing Law. This First Supplemental Indenture shall be construed and governed in accordance with the laws of the State of California. 17 4912-2245-8242/022283-0620
S-1
4912-2245-8242/022283-0620
IN WITNESS WHEREOF, the Authority and the City have caused this First Supplemental Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this First Supplemental Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
LANCASTER FINANCING AUTHORITY
By:
Treasurer
ATTEST:
Secretary
CITY OF LANCASTER
By:
Finance Director
ATTEST:
City Clerk
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By:
Authorized Officer
S-1
4912-2245-8242/022283-0620
A-1
4912-2245-8242/022283-0620
EXHIBIT A
FORM OF SERIES 2026A BOND
No. ____ $___________
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE FOR REGISTRATION OF 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.
LANCASTER FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2026A
INTEREST RATE MATURITY DATE DATED DATE CUSIP
______% May 1, 20__ _____, 2026
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: _________________________ DOLLARS
The LANCASTER FINANCING AUTHORITY (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) and amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”); on the Maturity Date identified above or on any earlier redemption date, 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 lawful money from the date hereof payable semiannually on May 1 and November 1 in each year, commencing _____ 1, 2026 (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to _____ 15, 2026 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, interest on this Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by wire or check of U.S. Bank Trust Company, National Association, as Trustee (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 shown on the Registration Books at the close of business on the fifteenth calendar day of the month A-2
4912-2245-8242/022283-0620
next preceding such Interest Payment Date; or by wire transfer to Owners of more than $1,000,000 in principal amount of Series 2026A Bonds (as defined below) who have provided account information and wiring instructions satisfactory to the Trustee. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City of Lancaster (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing.
This Bond is one of a series of a duly authorized issue of bonds issued for the purpose of financing the acquisition, construction and/or installation of the Projects (as defined in the Indenture), and is one of the series of bonds designated “Lancaster Financing Authority Lease Revenue Bonds, Series 2026A” (the “Series 2026A Bonds”) in the aggregate principal amount of $___________. The Series 2026A Bonds are issued pursuant to the Indenture, dated as of July 1, 2024, as supplemented by the First Supplemental Indenture, dated as of ______ 1, 2026 (collectively, the “Indenture”), each by and among the Authority, the City and the Trustee. This reference incorporates the Indenture herein and by acceptance hereof the owner of this Bond assents to said terms and conditions of the Indenture.
The Series 2026A Bonds are secured by a lien on the Base Rental Payments and certain funds and accounts described below on a parity with the lien securing the Series 2024 Bonds. Pursuant to and as more particularly provided in the Indenture, additional bonds (“Additional Bonds”), may be issued by the Authority secured by a lien on the Base Rental Payments and certain funds and accounts described below on a parity with the lien securing the Series 2024 Bonds and the Series 2026A Bonds. The Series 2024 Bonds, the Series 2026A Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Marks-Roos Local Bond Pooling Act of 1985 (the “Act”) and the laws of the State of California.
Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of July 1, 2024, as supplemented and amended by the First Amendment to Lease Agreement, dated as of _____ 1, 2026 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned without recourse by the Authority to the Trustee. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Capitalized Interest Fund, the Principal Fund, the Redemption Fund and the Reserve Fund (provided, however, that only amounts in the Series 2024 Bonds Account of the Reserve Fund shall secure the Series 2024 Bonds and only amounts in the Series 2026A Bonds Account of the Reserve Fund shall secure the Series 2026A Bonds) established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act.
Said pledge constitutes a first lien on such assets.
The Series 2026A Bonds are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”).
The Series 2026A Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any: (i) Net Insurance Proceeds received with respect to all or a portion of the property leased under the Lease Agreement, to the extent such moneys A-3
4912-2245-8242/022283-0620
are not used by the City for repair or replacement purposes as permitted by the Indenture, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof and (ii) eminent domain proceeds received under the Lease Agreement, that have been deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2026A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.
The Series 2026A Bonds maturing on or after May 1, 20__, shall be subject to optional redemption, in whole or in part, on any date on or after May 1, 20__ in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease, at a Redemption Price equal to the principal amount of the Series 2026A Bonds to be redeemed, plus accrued interest thereon to the date of redemption.
The Series 2026A Bonds with stated maturities on May 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each May 1 on and after May 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(May 1)
Principal
Amount
* Maturity.
The Series 2026A Bonds with a stated maturity on May 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each May 1 on and after May 1, 20__ in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(May 1)
Principal
Amount
2050 $3,165,000
2051 3,325,000
2052 3,490,000
2053 3,665,000
2054* 3,850,000
* Maturity.
Notice of redemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date (i) as to Bonds not registered in the name of a Securities Depository or its nominee, to the respective Owners of the Bonds designated for redemption at their addresses appearing on the Registration Books, (ii) as to Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository for such Bonds, and (iii) the Information Services. Notice of redemption to the Owners pursuant to (i) above shall be given by mail at their addresses appearing on A-4
4912-2245-8242/022283-0620
the Registration Books, or any other method agreed upon by such Owner and the Trustee. Notice of redemption to the Securities Depositories pursuant to (ii) above and the Information Services pursuant to (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee.
Neither failure to receive any such notice so given, nor any defect therein, shall affect the validity of the proceedings for the redemption of such Series 2026A Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2026A Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2026A Bonds, interest on such Series 2026A Bonds will cease to accrue and become payable.
Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2026A Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2026A Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, 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 Series 2026A Bond or Series 2026A Bonds, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary.
The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds, the Insurer and 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 fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected, or, (b) eliminate the consent of the Insurer as set forth in the Indenture or reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the Owners of all Bonds then outstanding.
The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture.
All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.
A-5
4912-2245-8242/022283-0620
IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chair and Secretary, all as of the Dated Date identified above.
LANCASTER FINANCING AUTHORITY
By:
Chair
Attest:
Secretary
A-5
4912-2245-8242/022283-0620
A-6
4912-2245-8242/022283-0620
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]
This is one of the Series 2026A Bonds described in the within-mentioned Indenture and registered on the Registration Books.
Date: ________, 2026 U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Signatory
A-6
4912-2245-8242/022283-0620
A-7
4912-2245-8242/022283-0620
[STATEMENT OF INSURANCE]
Build America Mutual Assurance Company (“BAM”), New York, New York, has delivered its municipal bond insurance policy (the “Policy”) with respect to the scheduled payments due of principal of and interest on the Series 2026A Bonds to U.S. Bank Trust Company, National Association, Los Angeles, California, or its successor, as trustee for the Series 2026A 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 BAM or the Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. By its purchase of the Series 2026A Bonds, the owner acknowledges and consents (i) to the subrogation and all other rights of BAM as more fully set forth in the Policy and (ii) that upon the occurrence and continuance of a default or an event of default under the Indenture or this Bond, BAM shall be deemed to be the sole owner of the 2026A Bonds for all purposes and shall be entitled to control and direct the enforcement of all rights and remedies granted to the owners of the 2026A Bonds or the Trustee, paying agent, registrar or similar agent for the benefit of such owners under the Indenture, at law or in equity.
A-7
4912-2245-8242/022283-0620
A-8
4912-2245-8242/022283-0620
[FORM OF LEGAL OPINION]
The following 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 Lancaster Financing Authority
A-8
4912-2245-8242/022283-0620
A-9
4912-2245-8242/022283-0620
[FORM OF ASSIGNMENT]
For value, received the undersigned hereby sells, assigns and transfers unto ____________________________________________ whose address and social security or other tax identifying number is ______________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated: ____________________
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
Note: The signature(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.