Norton Rose Fulbright US LLP draft 3/8//22
104436300.6
FISCAL AGENT AGREEMENT
BETWEEN
CITY OF RIALTO
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE)
AND
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
DATED AS OF APRIL 1, 2022
RELATING TO
$[PRINCIPAL AMOUNT]
CITY OF RIALTO
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE) SPECIAL TAX BONDS, SERIES 2022
TABLE OF CONTENTS
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104436300.6 i
ARTICLE I DEFINITIONS ......................................... .......................................................................... 1 Section 1.1. Definitions ...................................... ...................................................................... 1 ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS ............... .................................. 10 Section 2.1. Amount, Issuance, Purpose and Nature of Bonds .... ........................................... 10 Section 2.2. Type and Nature of Bonds ......................... ......................................................... 10 Section 2.3. Equality of Bonds and Pledge of Special Taxes .... ............................................. 11 Section 2.4. Description of Bonds; Interest Rates ............. ..................................................... 11 Section 2.5. Place and Form of Payment ........................ ........................................................ 12 Section 2.6. Form of Bonds .................................... ................................................................ 13 Section 2.7. Execution and Authentication ..................... ........................................................ 13 Section 2.8. Bond Register .................................... ................................................................. 13 Section 2.9. Registration of Exchange or Transfer ............. .................................................... 13 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds ...... ................................................. 14 Section 2.11. Validity of Bonds ............................... ................................................................. 14 Section 2.12. Book-Entry System ............................... .............................................................. 14 Section 2.13. Representation Letter ........................... ............................................................... 1 5 Section 2.14. Transfers Outside Book-Entry System ............. .................................................. 15 Section 2.15. Payments to the Nominee ......................... .......................................................... 15 Section 2.16. Initial Depository and Nominee .................. ........................................................ 16 Section 2.17. CUSIP Numbers ................................... .............................................................. 16 ARTICLE III CREATION OF FUNDS AND APPLICATION OF SPECIAL TAXES ....................... 16 Section 3.1. Creation of Funds; Application of Proceeds ....... ................................................ 16 Section 3.2. Deposits to and Disbursements from Special Tax Fun d ..................................... 17 Section 3.3. Administrative Expense Account of the Special Tax Fund ................................ 17 Section 3.4. Interest Account and Principal Account of the Spec ial Tax Fund ...................... 17 Section 3.5. Redemption Account of the Special Tax Fund ....... ............................................ 18 Section 3.6. Reserve Account of the Special Tax Fund .......... ................................................ 19 Section 3.7. Surplus Fund ..................................... .................................................................. 19 Section 3.8. Acquisition and Construction Fund .................................................................... 20 Section 3.9. Investments ...................................... ................................................................... 20 ARTICLE IV REDEMPTION OF BONDS ................................ ........................................................... 22 Section 4.1. Redemption of Bonds .............................. ........................................................... 22 Section 4.2. Selection of Bonds for Redemption ................ .................................................... 23 Section 4.3. Notice of Redemption ............................. ............................................................ 24 Section 4.4. Partial Redemption of Bonds ...................... ........................................................ 25 Section 4.5. Effect of Notice and Availability of Redemption Mo ney ................................... 25 ARTICLE V COVENANTS AND WARRANTY .............................. .................................................. 25 Section 5.1. Warranty ......................................... .................................................................... 25 Section 5.2. Covenants ........................................ ................................................................... 25 ARTICLE VI AMENDMENTS TO FISCAL AGENT AGREEMENT ............... ................................. 31 Section 6.1. Supplemental Fiscal Agent Agreements or Orders Not Requiring Bondowner Consent ............................................................................................ 31
TABLE OF CONTENTS
(continued)
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Section 6.2. Supplemental Fiscal Agent Agreements or Orders Req uiring Bondowner Consent ............................................................................................................... 31 Section 6.3. Notation of Bonds; Delivery of Amended Bonds ..... .......................................... 32 ARTICLE VII FISCAL AGENT ...................................... ....................................................................... 33 Section 7.1. Fiscal Agent ..................................... ................................................................... 33 Section 7.2. Removal of Fiscal Agent .......................... .......................................................... 33 Section 7.3. Resignation of Fiscal Agent ...................... .......................................................... 34 Section 7.4. Compensation a nd Liability of Fiscal Agent ...................................................... 34 Section 7.5. Merger or Consolidation .......................... ........................................................... 35 ARTICLE VIII EVENTS OF DEFAULT; REMEDIES ........................................................................... 35 Section 8.1. Events of Default ................................ ................................................................ 35 Section 8.2. Remedies of Owners ............................... ............................................................ 36 ARTICLE IX DEFEASANCE ......................................... ...................................................................... 37 Section 9.1. Defeasance ....................................... ................................................................... 37 Section 9.2. No Additional Bonds .............................. ............................................................ 38 ARTICLE X MISCELLANEOUS ....................................... ................................................................. 38 Section 10.1. Cancellation of Bonds ........................... .............................................................. 38 Section 10.2. Execution of Documents and Proof of Ownership ... .......................................... 38 Section 10.3. Unclaimed Moneys ................................ ............................................................. 39 Section 10.4. Provisions Constitute Contract .................. ......................................................... 39 Section 10.5. Future Contracts ................................ .................................................................. 40 Section 10.6. Further Assurances .............................. ............................................................... 4 0 Section 10.7. Severability .................................... ..................................................................... 40 Section 10.8. Notices ......................................... ....................................................................... 40 Section 10.9. General Authorization ........................... .............................................................. 41 Section 10.10. Execution in Counterparts and Electronic Executi on ......................................... 41 Section 10.11. Force Majeure .................................. ................................................................... 41 Section 10.12. U.S.A. Patriot Act ............................. .................................................................. 41
Exhibit A – Form of Bond ...................................................................................................................... A-1 Exhibit B – Requisition No. 1 .................................................................................................................. B-1
104436300.6
FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT, dated as of April 1, 2022, between the City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce) and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”) governs the t erms of the City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce) Special Tax Bonds, Series 2022.
R E C I T A L S :
WHEREAS, the City Council of the City of Rialto (the “Council”) , located in San Bernardino County, California, acting as the legislative body of the City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce) (the “CFD”), has heretofore undert aken proceedings and declared the necessity to issue bonds pursuant to the terms and provisions o f 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 qualified electors within the CFD have approved the levy of a special tax and the issuance of bonds by the CFD and the Council has authorized the issuance of bonds in one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $7,000,000; and WHEREAS, the Council intends to accomplish the financing of the purchase, construction, expansion or rehabilitation of cer tain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other governmental facilities (including related capital fees), which are necessary to meet increased de mands placed upon the City as a result of development or rehabilitation occurring within the CFD (collect ively, the “Facilities”) through the issuance of bonds in an aggregate principal amount of $[princip al amount] designated as the “City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruc e) Special Tax Bonds, Series 2022” (the “Bonds”); and
WHEREAS, all requirements of the Act for the issuance of the Bonds have been satisfied; NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premise s and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the O wners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the CFD does hereby covenant and agree, for the benefit of the Owners of the Bonds (as defined herein) whic h may be issued hereunder from time to time, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context requires, t he following terms shall have t he following meanings:
“Acquisition and Construction F und” means the fund by such name created and established pursuant to Section 3.1 hereof.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311 et seq. of the California Government Code.
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“Administrative Expense Account” means the account by such name in the Special Tax Fund created and established pursuant to Section 3.1 hereof. “Administrative Expense Requirement” means an amount equal to $ 30,000 per Bond Year and escalating 2% each Bond Year thereafter, commencing with the Bo nd Year ending September 1, 2022 or such lesser amount as may be designated in a Written Request of the CFD. “Administrative Expenses” means the administrative costs with r espect to the calculation and collection (including any foreclosure actions) of the Special T axes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Fiscal Agen t, including attorneys’ fees and expenses, any fees for credit enhancement for the Bonds which are not oth erwise paid as Costs of Issuance, any costs related to the CFD’s compliance with State and federal la ws requiring continuing disclosure of information concerning the Bonds and the CFD, and any other costs otherwise incurred by the City’s staff on behalf of the CFD in order to carry out the purposes of the CFD as set forth in the Resolution of Formation and any obligation of the CFD hereunder.
“Annual Debt Service” means the principal amount of any Outstan ding Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment a nd any interest payable on any Outstanding Bonds in such Bond Year, if the Bonds are retired as scheduled. “Authorized Investments” means any of the following which at th e time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) Direct obligations of the United States of America (including o bligations issued or held in book-entry form on the books of the Department of the Treasu ry, and CATS and TIGRS) or obligations the principal of a nd interest on which are uncondit ionally guaranteed by the United States of America (“Direct Obligations”).
(2) Bonds, debentures, notes or other evidence of indebtedness issu ed or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only perm itted if they have been stripped by the agency itself):
U.S. Export-Import Bank (“Eximbank”)
Direct obligations or fully guaranteed certificates of beneficial ownership Farmers Home Administration (“FmHA”)
Certificates of beneficial ownership
Federal Financing Bank
Federal Housing Administration Debentures (“FHA”)
General Services Administration
Participation certificates
Government National Mortgage Association (“GNMA” or “Ginnie Mae”) GNMA-guaranteed mortgage-backed bonds
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GNMA-guaranteed pass-through obligations
U.S. Maritime Administration
Guaranteed Title XI financing
U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds
(3) Bonds, debentures, notes or other evidence of indebtedness issu ed or guaranteed by any of the following non-full faith and credit U.S. government agen cies (stripped securities are only permitted if they have been stripped by the agency itself:
Federal Home Loan Bank System
Senior debt obligations
Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) Participation certificates
Senior debt obligations
Federal National Mortgage Association (“FNMA” or “Fannie Mae”) Mortgage-backed securities and senior debt obligations
Student Loan Marketing Association (“SLMA” or “Sallie Mae”) Senior debt obligations
Resolution Funding Corp. (“REFCORP”) obligations
Farm Credit System CM. - Consolidated system-wide bonds and notes (4) Money market mutual funds regis tered under the Federal Investme n t C o m p a n y A c t o f 1940, whose shares are registered under the Securities Act of 1 933, and having a rating by S&P of AAAm-G, AAAm or AAm, and, if rated by Moody’s, rated Aaa, Aal o r Aa2 (including such funds for which the Fiscal Agent and/or its affiliates provide investment advice or other services) but excluding those funds with a floating net asset value.
(5) Certificates of deposit secured at all times by collateral desc ribed in (1) and/or (2) above.
Such certificates must be issued by commercial banks, savings a nd loan associations or mutual savings
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banks. The collateral must be held by a third party and the Bo ndholders must have a perfected first security interest in the collateral.
(6) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by the FDIC or which are with a bank ra ted AA or better by S&P and Aa or better by Moody’s (including those of the Fiscal Agent and its affilia tes) or which are collateralized by Authorized Investments described in Section (1) above for amounts above FDIC insurance limits. (7) Investment Agreements with any corporation, including banking o r financial institutions, provided that
(a) the long-term debt of the provider of any such investment agree ment is rated, at the time of investment, at least “AA” and “Aa” by the Rating Ag ency (without regard to gradations of plus or minus within such category), and
(b) any such investment agreement is collateralized with United Sta tes Treasury or agency obligations which at least equal 102% of the principal amount invested thereunder, and (c) any such agreement shall include a provision to the effect that , in the event the long-term debt rating of the provi der of such agreement is down graded below “AA-” or below “Aa” by the applicable Rating Agency, the CFD has the right to withdraw or cause the Fiscal Agent to withdraw all funds invest ed in such agreement and ther eafter to invest such funds pursuant to this Fiscal Agent Agreement.
(8) Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1” or better by S&P.
(9) Bonds or notes issued by any state or municipality which are ra ted by Moody’s and S&P in one of the two highest rating categories assigned by such agencies. (10) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured or unguaranteed obligation ra ting of “Prime - 1” or “A3” or better by Moody’s and “A-1” or “A” or better by S&P.
(11) Repurchase agreements collateralized by Direct Obligations, GNM As, FNMAs or FHLMCs with any registered broker/dealer subject to the Securit ies Investors’ Protection Corporation jurisdiction or any commercial bank insured by the FDIC, if suc h broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated “P-1” or “A3” or be tter by Moody’s, and “A-1” or “A-” by S&P; provided:
(a) a master repurchase agreement or specific written repurchase ag reement governs the transaction; and
(b) the securities are held free and clear of any lien by the Fisca l Agent or an independent third party acting solely as agent (“Agent”) for th e Fiscal Agent, and such third party is (i) a Federal Reserve Bank, (ii) a bank which is a member of the Federal Deposit Insurance Corporation and which has combined capital, surplus and undivid ed profits of not less than $50 million, or (iii) a bank approved in writing for such purpose b y Financial Guaranty Insurance Company, and the Fiscal Agent shall have received written confi rmation from such third party that it holds such securities, free and clear of any lien, as agent for the Fiscal Agent; and
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(c) a perfected first security interest under the Uniform Commercia l Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created for the benefit of the Fiscal Agent; and
(d) the repurchase agreement has a term of 180 days or less, and th e collateral securities shall be valued no less frequently than weekly and t he Fiscal Agent or the Agent shall liquidate the collateral securiti e s i f a n y d e f i c i e n c y i n t h e r equired collateral percentage is not restored within two Business Days of such valuation; and (e) the fair market value of the collateral securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%. (12) Local Agency Investment Fund (“LAIF”) of the State of California. (13) Any other investment which the CFD is permitted by law to make. “Authorized Representative of the CFD” means the Mayor, City Ad ministrator/City Manager, Chief Financial Officer or any other person or persons designat ed by the Council and authorized to act on behalf of the CFD by a written certificate signed on behalf of the CFD by the Mayor or the City Administrator/City Manager and containing the specimen signature of each such person. “Bond Counsel” means an attorney at law or a firm of attorneys selected by the CFD of nationally recognized standing in matters per taining to the tax-exempt nat ure of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. “Bond Register” means the books which the Fiscal Agent shall ke ep or cause to be kept on which the registration and transfer of the Bonds shall be recorded. “Bondowner” or “Owner” means the person or persons in whose nam e or names any Bond is registered.
“Bond Proceeds Fund” means the Fund by such name created and es tablished by Section 3.1 hereof.
“Bonds” means the $[principal amount] City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce) Special Tax Bonds, Series 2022, issued pursua nt to this Fiscal Agent Agreement, and any obligations of the CFD issued to refund the Bonds.
“Bond Year” means the twelve mont h period commencing on Septemb er 2 of each year and ending on September 1 of the following year, except that the fi rst Bond Year for the 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 in New York, New York, Los Angeles, California, or the ci ty where the Designated Corporate Trust Office of the Fiscal Agent is located, are not required or authorized to remain closed. “Certificate of Authorized Representative of the CFD” means a w ritten certificate or warrant request executed by an Authorized Representative of the CFD.
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“CFD” means the City of Rialto Community Facilities District No . 2019-2 (Foothill/Spruce) established pursuant to the Act and the Resolution of Formation. “City” means the City of Rialto, California.
“Code” means the Internal Revenue Code of 1986 and any Regulati ons, rulings, judicial decisions, and notices, announcements, and other releases of th e United States Treasury Department or Internal Revenue Service interpreting and construing it. “Continuing Disclosure Agreement” means the Continuing Disclosu re Agreement, dated as of April 1, 2022, by and between the CFD and Webb Municipal Finance LLC, as dissemination agent. “Costs of Issuance” means the costs and expenses incurred in co nnection with the issuance and sale of the Bonds, including the acceptance and initial annual fees and expenses of the Fiscal Agent and its counsel, legal fees and expenses, costs of printing the Bon ds and the preliminary and final official statements for the Bonds, fees of financial consultants and all other related fees and expenses, as set forth in a Certificate of Authorized Representative of the CFD. “Costs of Issuance Account” mean s the account by such name in t he Acquisition and Construction Fund created and established pursuant to Section 3.1 hereof. “Council” means the City Council of the City of Rialto. “Defeasance Securities” means any of the following:
(a) Cash
(b) United States Treasury Certificates, Notes and Bonds (including State and Local Government Series -- “SLGS”)
(c) Direct obligations of the U.S. T reasury which have been strippe d by the U.S.
Treasury itself, e.g., CATS, TIGRS and similar securities. (d) The interest component of Resolution Funding Corp. strips which have been stripped by request to the Federal Reserve Bank of New York and are in book-entry form. (e) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P. (f) Obligations issued by the followi ng agencies which are backed b y the full faith and credit of the United States:
U.S. Export-Import Bank - direct obligations or fully guaranteed certificates of beneficial ownership
Farmers Home Administration - certificates of beneficial ownership Federal Financing Bank
General Services Administration - participation certificates U.S. Maritime Administration - guaranteed Title XI financing
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U.S. Department of Housing and Urban Development (HUD) - Project Notes, Local Authority Bonds, New Communities Debentures - U.S. government guaranteed debentures, U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds.
“Delivery Date” means, with respect to the Bonds, the date on w hich the bonds of such issue were issued and delivered to the initial purchasers thereof. “Depository” shall mean The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Certifi cates, or any other securities depository acting as Depository under Article II hereof.
“Designated Corporate Trust Office” means the corporate trust o ffice of the Fiscal Agent at Los Angeles, California, or such other office designated from time to time by the Fiscal Agent in writing to the CFD.
“Fiscal Agent” means U.S. Bank Trust Company, National Associat ion, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, at its Designated Corporate Trust Office in Los Angeles, Califo rnia, and its successors or assigns, or any other bank or trust company which may at any time be substitute d in its place as provided in Sections 7.2 or 7.3 and any successor thereto.
“Fiscal Agent Agreement” means this Fiscal Agent Agreement, tog ether with any Supplemental Fiscal Agent Agreement approved pursuant to Article 6 hereof. “Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30.
“Independent Financial Consultant” means a municipal advisor or firm of such consultants generally recognized to be well qualified in the municipal advi sory business, appointed and paid by the CFD, who, or each of whom:
(1) is, in fact, independent and not under the domination of the CFD; (2) does not have any substantial interest, direct or indirect, in the CFD; and (3) is not connected with the CFD as a member, officer or employee of the CFD, but who may be regularly retained to make annual or other reports to the CFD. “Interest Account” means the account by such name created and e stablished in the Special Tax Fund pursuant to Section 3.1 hereof.
“Interest Payment Date” means each March 1 and September 1, com mencing September 1, 2022, provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date. “Investment Agreement” means one or more agreements for the inv estment of funds of the CFD complying with the criteria therefor as set forth in Subsection (7) of the definition of Authorized Investments herein.
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“Maximum Annual Debt Service” means the maximum sum obtained fo r any Bond Year prior to the final maturity of the Bonds by adding the following for each Bond Year:
(1) the principal amount of all Outstanding Bonds payable in such B ond Year either at maturity or pursuant to a Sinking Fund Payment; and
(2) the interest payable on the aggregate principal amount of all B onds Outstanding in such Bond Year if the Bonds are retired as scheduled.
“Moody’s” means Moody’s Investors Service and its successors or assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a municipal securities rating agency, then the term “Moody’s” shall be deem ed to refer to any other nationally recognized municipal securities rating agency selected by the CFD. “Nominee” shall mean the nominee of the Depository, which may b e the Depository, as determined from time to time pursuant to Section 2.16 hereof. “Outstanding” or “Outstanding Bonds” means all Bonds theretofore issued by the CFD, except:
(1) Bonds theretofore cancelled or surrendered for cancellation in accordance with Section
10.1 hereof;
(2) Bonds for payment or redemption of which monies shall have been theretofore deposited (whether upon or prior to the maturity or the redemption date o f such Bonds), provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Fiscal Agent Agreement;
(3) Bonds which have been surrendered to the Fiscal Agent for trans fer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10 hereof; (4) Bonds paid pursuant to the last sentence of Section 2.10 hereof; and (5) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the CFD pursuant to this Fisc al Agent Agreement or any Supplemental Fiscal Agent Agreement.
“Participants” shall mean those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as securities depository. “Person” means natural persons, firms, corporations, partnershi ps, associations, trusts, public bodies and other entities.
“Principal Account” means the account by such name in the Speci al Tax Fund created and established pursuant to Section 3.1 hereof.
“Project” means those public f acilities described in the Resol ution of Formation which are to be acquired or constructed within the CFD, including all engineering, planning and design services and other incidental expenses related to such facilities and other facili ties, if any, authorized by the qualified electors within the CFD from time to time.
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“Project Costs” means the amount s necessary to finance the Proj ect, to create and replenish any necessary reserve funds, to pay the initial and annual costs as sociated with the Bonds, including, but not limited to, remarketing, credit e nhancement, Fiscal Agent and o ther fees and expenses relating to the issuance of the Bonds and the formation of the CFD, and to pay any other “incidental expenses” of the CFD, as such term is defined in the Act.
“Rating Agency” means Moody’s and S&P, 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.
“Redemption Account” means the account by such name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.
“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. “Representation Letter” shall me an the Blanket Letter of Repres entations from the CFD to the Depository as described in Section 2.13 hereof.
“Reserve Account” means the account by such name created and es tablished in the Special Tax Fund pursuant to Section 3.1 hereof.
“Reserve Requirement” means, as of any date of calculation, an amount equal to the lowest of (1) 10% of the issue price of the Bonds (as defined pursuant to sec tion 148 of the Code), or (2) Maximum Annual Debt Service, or (3) 125% of the average Annual Debt Ser vice of the Outstanding Bonds.
Provided, however, the Reserve Requirement on any date of calcu lation shall not exceed the Reserve Requirement as of the Delivery Date.
“Resolution of Formation” means Resolution No. 7584 adopted by the Council on December 10, 2019 pursuant to which the Council formed the CFD.
“Responsible Officer of the Fiscal Agent” means any officer wit hin the corporate trust division (or any successor group or department of the Fiscal Agent) cust omarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, with responsibility for the administration of this Fiscal Agent Agreement.
“RMA” means Rate and Method of Apportionment approved by the qualified electors of the CFD at the December 10, 2019 election, as amended from time to time. “S&P” means S&P Global Ratings and its successors or assigns, e xcept that if such corporation shall be dissolved or liquidate d or shall no longer perform the functions of a municipal securities rating agency, then the term “S&P” shall be deemed to refer to any oth er nationally recognized municipal securities rating agency selected by the CFD.
“Sinking Fund Payment” means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the sc hedule set forth in this Fiscal Agent Agreement or as set forth in any Supplemental Fiscal Agent Agreement. “Special Taxes” means the Special Tax A (as defined in the RMA) authorized to be levied by the CFD on parcels within the CFD in accordance with the Resolution of Formation, the Act, change
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proceedings, if any, and the voter approval obtained at the Dec ember 10, 2019 election in the CFD, together with the proceeds collected from the sale of property pursuant to the foreclosure provisions of this Fiscal Agent Agreement for the delinquency of such Special Taxes remaining after the payment of all the costs related to such foreclosure actions, including, but n ot limited to, all legal fees and expenses, court costs, consultant and title insurance fees and expenses. “Special Tax Fund” means the fund by such name created and esta blished pursuant to Section 3.1 hereof.
“Supplemental Fiscal Agent Agreement” means any supplemental fi scal agent agreement amending or supplementing this Fiscal Agent Agreement.
“Surplus Fund” means the fund by such name created and establis hed pursuant to Section 3.1 hereof.
“Tax Certificate” means the certificate by that name to be exec uted by the CFD on a Delivery Date to establish certain facts a nd expectations and which cont ains certain covenants relevant to compliance with the Code.
“Term Bonds” means the Bonds maturing on September 1, 20__, Sep tember 1, 20__, and September 1, 20__, or any Term Bonds issued under a Supplemental Fiscal Agent Agreement. “Underwriter” means the institution or institutions, if any, wi t h w h o m t h e C F D e n t e r s i n t o a purchase contract for the sale of the Bonds.
“Written Request of the CFD” means a request in writing execute d by the Mayor, City Administrator/City Manager, Chief Financial Officer, or written designee, on behalf of the CFD.
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds. Under and pursuant to the Act, the Bonds in the aggregate principal amount of $[principal amount] shall be issued for the purpose of financing the Project, provided that the aggregate principal amount of the Bonds shall not exceed the total indebtedness presently authorized or subsequently authorized by the qualified electors of the CFD in accordance with the Act. The Bonds shall be and are limited ob ligations of the CFD and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Special Taxes and the other amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account).
Section 2.2. Type and Nature of 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 CFD is pledged to the payment of the Bonds. Except for the Special Taxes, no other t axes are pledged to the payment of the Bonds. The Bonds are not general or special obligations of the City nor general obligations of the CFD, but are limited obligations of the CFD payable solely from cert ain amounts deposited by the CFD in the Special Tax Fund (exclusive of amounts transferred to the Admin istrative Expense Account), as more fully described herein. The CFD’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds from amounts in the Special Tax Fund (exclusive of amounts transferred to the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, d iminution or set-off whatsoever . No Owner of the Bonds may compel
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the exercise of the taxing power by the CFD (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and inte rest on the Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the Sta te of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the CFD’s property, or upon any of its income, receipts or revenues, except the Special Taxes a nd other amounts in the Special Tax Fund (exclusive of amounts transferred to the Administrative Expense Account) which are, under the terms of this Fiscal Agent Agreement and the Act, set aside for the paym ent of the Bonds and interest thereon, and neither the members of the Council nor any persons executing th e Bonds are liable personally on the Bonds by reason of their issuance.
Notwithstanding anything to the contrary contained in this Fisc al Agent Agreement, the CFD shall not be required to advance any money derived from any sou rce of income other than the Special Taxes for the payment of the interest on or the principal of th e Bonds, or for the performance of any covenants contained herein. The CFD may, however, advance fund s 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 Pledge of Special Taxes. Pursuant to the Act and this Fiscal Agent Agreement, the Bonds shall be equally payable from the Special Taxes and other amounts in the Special Tax Fund (exclusive of amounts transferred to the A dministrative Expense Account) without priority for number, date of the Bonds, date of sale, date of e xecution, or date of delivery, and the payment of the interest on and principal of the Bonds and any p remiums upon the redemption thereof, shall be exclusively paid from the Special Taxes and other amou nts in the Special Tax Fund (exclusive of amounts transferred to the Administrative Expense Account), whi ch are hereby set aside for the payment of the Bonds. Amounts in the Special Tax Fund (exclusive of am ounts transferred to the Administrative Expense Account) shall constitute a trust fund held for the ben efit of the Owners to be applied to the payment of the interest on and principal of the Bonds and so lo ng as any of the Bonds or interest thereon remain Outstanding shall not be used for any other purpose, exc ept as permitted by this Fiscal Agent Agreement or any Supplemental Fis cal Agent Agreement. Notwiths tanding any provision contained in this Fiscal Agent Agreement to the contrary, Special Taxes tran sferred to the Administrative Expense Account of the Special Tax Fund and the Surplus Fund shall no l onger be considered to be pledged to the Bonds, and none of the Surplus Fund or the Administrative Expen se Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the Owners.
Nothing in this Fiscal Agent Agreement or any Supplemental Fisc al Agent Agreement shall preclude, subject to the limitati ons contained hereunder, the r edemption prior to maturity of any Bond subject to call and redemption a nd payment of said Bond from pr oceeds 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.
Section 2.4. Description of Bonds; Interest Rates. The Bonds shall be issued in fully registered form in denominations of $5,000 or any integral mult iple thereof. The Bonds of each issue shall be numbered consecutively from one upward.
The Bonds shall be designated “CITY OF RIALTO COMMUNITY FACILIT IES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE) SPECIAL TAX BONDS, SERIES 2022.” The Bonds shall be dated their Delivery Date and shall mature and be payable on Septembe r 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear intere st at the rates set forth in the table below payable on each Interest Payment Date.
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Maturity Date
(September 1) Principal Amount Interest Rate
Interest shall be payable on each Bond from the date establishe d in accordance with Section 2.5 below on each Interest Payment Date thereafter until the princi pal sum of that Bond has been paid; provided, however, that if at the maturity date of any Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) f unds are available for the payment or redemption thereof in full, in accordance with the terms of thi s Fiscal Agent Agreement, such Bonds shall then cease to bear interest. Interest due on the Bonds shall b e 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 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 any premiums due upon the redemption thereof shall be payable upon presentation and surrender ther eof at the Designated Corpo r a t e T r u s t O ff i c e , o r a t t h e d e s i g n a t ed office of any successor Fiscal Agent. Interest on any Bond sha ll be payable from the Interest Payment Date next preceding the date of authentication of that Bond, un less (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 Interes t 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, in which event interest shall be payable from the dated date of such Bond, as applicable; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on that 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, interest on that Bond shall be payabl e from its dated date. Interest on any Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond as of the close of business on the Record Date. Such inte rest shall be paid by check of the Fiscal Agent mailed on the 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 Fiscal Agent on or before the applicable Record Date from an Ow ner of $1,000,000 or more in principal amount of the Bonds, payment shall be made on the Interest Paym ent Date by wire transfer in immediately available funds to an account within the United States designated by such Owner.
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Section 2.6. Form of Bonds. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which f orms are hereby approved and adopted as the forms of such Bonds and of the certificate of authentication.
Notwithstanding any provision in this Fiscal Agent Agreement to the contrary, the CFD may, in its sole discretion, elect to issue the Bonds in book-entry form.
Until definitive Bonds shall be prepared, the CFD may cause to be executed and delivered in lieu of such definitive Bonds temporar y bonds in typed, printed, lit hographed or engraved form and in fully registered form, subject to the same provisions, limitations an d conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the CFD. Until exchanged for definitive Bonds, any temporary bond shall be entitled and subject to the same benefits and provisions of this Fiscal Agent Agreement as definitive Bonds. If the CFD issues temporary Bonds, it shall execute and furnish definitive Bonds, without unnecessary delay and the reupon any temporary Bond may be surrendered to the Fiscal Agent at the Designated Corporate Tru st Office, without expense to the Owner, in exchange for a definitive Bond of the same issue, maturity, interest rate and principal amount in any authorized denomination. All temporary Bonds so surrendered sh all be cancelled by the Fiscal Agent and shall not be reissued.
Section 2.7. Execution and Authentication. The Bonds shall be signed on behalf of the CFD by the manual or facsimile signature of the Mayor of the Ci ty, and attested by the signature of the City Clerk. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed have been authenticated and delivered by the Fiscal Agent (including new Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or to lost, stolen, destroyed or mutilated Bonds), s uch 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 as shall bear thereon such certificate of authen tication in the form set forth in Exhibit A hereto shall be entitled to any right or benefit unde r this Fiscal Agent Agreement, and no Bond shall be valid or obligatory for any purpose until such certifi cate of authentication shall have been duly executed by the Fiscal Agent.
Section 2.8. Bond Register. The Fiscal Agent will keep or cause to be kept, at its Design ated Corporate Trust Office, sufficient books for the registration a nd transfer of the Bonds which shall upon reasonable prior notice be open to inspection by the CFD during all regular business hours, and, subject to the limitations set forth in Section 2.9 below, upon presentati on for such purpose, the Fiscal Agent shall, under such reasonable regulations as shall then be standard and customary, register or transfer or cause to be transferred on said Bond Register, Bonds as herein provided.
The CFD and the Fiscal Agent may treat the Owner of any Bond wh ose name appears on the Bond Register as the absolute Owner of that Bond for any and al l purposes, and the CFD and the Fiscal Agent shall not be affected by any notice to the contrary. The CFD and the Fiscal Agent may conclusively 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 writte n notice to the Fiscal Agent 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 may, in a ccordance with its terms, be transferred upon the Bond Register by the person in whose name it is regist ered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellati on at the Designated Corporate Trust
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Office of the Fiscal Agent, accompanied by delivery of written instrument of transfer duly executed by the Bondowner or his or her duly authorized attorney.
Bonds may be exchanged at the Designated Corporate Trust Office of the Fiscal Agent for a like aggregate principal amount of Bonds for other authorized denomi nations of the same maturity and issue.
The Fiscal Agent shall not collect from the Owner any charge fo r any new Bond issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect t o such exchange or transfer. Whenever any Bonds shall be surrendered fo r registration of transfer or exchange, the CFD shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same issue and maturity, for a like aggregate principal amount; provided that the Fiscal Agent shal l not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preced ing any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption.
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become mutilated, the CFD shall execute, and the Fiscal Agent shall au thenticate and deliver, a new Bond of like tenor, date, issue and maturity in exchange and substitution fo r the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be cancelled by the Fiscal Agent pursuant to Section 10.1 hereof. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction o r theft may be submitted to the Fiscal Agent and, if such evidence is satisfactory to the Fiscal Agent and, if indemnity satisfactory to the CFD and the Fiscal Agent shall be given, the CFD shall execute and the Fisc al Agent shall authenticate and deliver, a new Bond, as applicable, of like tenor, maturity and issue, num bered and dated as the Fiscal Agent shall determine in lieu of and in substitution for the Bond so lost, destroyed or stolen. Any Bond issued in lieu of any Bond alleged to be mutilated, lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all other Bonds issued hereunder. The Fiscal Agent shall not treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds Outstanding here under, but both the original and replacement Bond shall be treated as one and the same. Notwith standing any other provision of this Section, in lieu of delivering a new Bond which has been mutila ted, lost, destroyed or stolen, and which has matured, the Fiscal Agent may, at the written direction of the CFD, make payment with respect to such Bonds.
Section 2.11. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any defect in any proceedin gs taken by the CFD, or by the invalidity, in whole or in part, of any contracts made by the CFD in connec tion therewith, and the recital contained in the Bonds that the same are issued pursuant to the Act and o ther applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance.
Section 2.12. Book-Entry System. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten ) for each of the maturities of the Bonds.
Upon initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee as nominee of th e Depository. Unless the CFD elects to discontinue the use of the book-entry system, all of the Outsta nding Bonds shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee.
With respect to Bonds registered in the registration books kept by the Fiscal Agent in the name of the Nominee, the CFD and the Fiscal Agent shall have no respons ibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the CFD and the Fiscal Agent shall have no responsibility or
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obligation with respect to (i) th e accuracy of the records of t he Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds , (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any notice with respect to the Bonds, including any notice of redem ption, (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds t o be redeemed in the event the Bonds are redeemed in part, or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Fiscal Agent, of an y amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. Th e CFD and the Fiscal Agent may treat and consider the Person in whose name each Bond is registered in th e registration books kept by the Fiscal Agent as the holder and absolute owner of such Bond for the pur pose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registeri ng transfers with respect to such Bond, and for all other purposes whatsoever. The Fiscal Agent shall pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of the resp ective Owner, as shown in the registration books kept by the Fiscal Agent, or their respective attorneys d uly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the CFD’s obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the regist ration books kept by the Fiscal Agent, shall receive a Bond evidencing the obligation of the CFD to ma ke payments of principal, premium, if any, and interest pursuant to this Fiscal Agent Agreement. Upo n delivery by the Depository to the Fiscal Agent and the CFD of written notice to the effect that the Depo sitory has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Fiscal Agent Agreement shall refer to such new nominee of the Depository.
Section 2.13. Representation Letter. In order to qualify the Bonds which the CFD elects to register in the name of the Nominee for the Depository’s book-e ntry system, an authorized representative of the CFD is hereby authorized to execute from time to time an d deliver to such Depository the Representation Letter. The execution and delivery of the Repre sentation Letter shall not in any way limit the provisions of Section 10.2 or in any other way impose upon the CFD or the Fiscal Agent any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Fiscal Agent. In a ddition to the execution and delivery of the Representation Letter, the Mayor and any Authorized Representat ive of the CFD are hereby authorized to take any other actions, not incons istent with this Fiscal Agent Agreement, to qualify the Bonds for the Depository’s book-entry program.
Section 2.14. Transfers Outside Book-Entry System. In the event (i) the Depository determines not to continue to act as securities depository for the Bonds, or (ii) the CFD determines that the Depository shall no longer so act, then the CFD will discon tinue the book-entry system with the Depository. If the CFD fails to identify another qualified sec urities depository to replace the Depository then the Bonds so designated shall no longer be restricted to b eing registered in the registration books kept by the Fiscal Agent in the name of the Nominee, but shall be registered in whatever name or names Persons transferring or exchanging Bonds shall designate in wri ting, in accordance with the provisions of Section 2.9 hereof.
Section 2.15. Payments to the Nominee. Notwithstanding any other provisions of this Fiscal Agent Agreement to the contrary, so long as any Bond is registe red in the name of the Nominee, all payments with respect to principal, premium, if any, and intere st due with respect to such Bond and all notices with respect to such Bond shall be made and given, resp ectively, as provided in the Representation Letter or as otherwise instructed by the Depository.
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Section 2.16. Initial Depository and Nominee. The initial Depository under this Article shall be The Depository Trust Company, New York, New York. The initi al Nominee shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.
Section 2.17. CUSIP Numbers. The Fiscal Agent shall not be liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in a ny redemption notice. The Fiscal Agent may, in its reasonable j udgment, include in any redemption notice a statement to the effect that the CUSIP numbers on the Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Bondholders and that t he Fiscal Agent shall not be liable for any inaccuracies in such numbers. The CFD will promptly notify the Fiscal Agent in writing of any change in the CUSIP numbers.
Section 2.18. No Additional Bonds Except for Refunding Purposes. Except for refunding purposes, the CFD shall not issue bonds, notes or other forms of indebtedness payable from Special 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 Bonds.
Section 2.19. No Acceleration. The principal of the Bonds shall not be subject to accelerati on hereunder. Nothing in this Section shall in any way prohibit t he prepayment or redemption of Bonds under Section 4.1 hereof, or the defeasance of the Bonds and di scharge of this Fiscal Agent Agreement under Article IX hereof.
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF SPECIAL TAXES
Section 3.1. Creation of Funds; Application of Proceeds. T h e r e i s h e r e b y c r e a t e d a n d established and shall be maintained by the Fiscal Agent the following funds and accounts:
(1) The Special Tax Fund (in which there shall be established and c reated an Interest Account, a Principal Account, a Redemption Account, a Reserve A ccount and an Administrative Expense Account);
(2) The Surplus Fund; and
(3) The Acquisition and Construction Fund (in which there shall be established a Costs of Issuance Account).
The amounts on deposit in the foregoing funds, accounts and sub accounts shall be held by the Fiscal Agent and the Fiscal Agent shall invest and disburse the amounts in such funds, accounts and subaccounts in accordance with the provisions of this Article I II and shall disburse investment earnings thereon in accordance with the provisions of Section 3.9 hereof . Except as required to be segregated into funds and accounts as described herein, money held by the Fiscal Agent hereunder need not be segregated from other funds except to the extent required by law.
At the Written Request of the CFD, the Fiscal Agent may create new funds, accounts or subaccounts, or may create additional accounts and subaccounts within any of the foregoing funds and accounts for the purpose of separately accounting for the proceeds of the Bonds.
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All proceeds of the sale of the Bonds, a total of $____________ , shall be received by the Fiscal Agent on behalf of the CFD, deposited in the Bond Proceeds Fund , which the Fiscal Agent shall establish hereunder and further deposited and transferred as follows:
(1) $______________ shall be deposited to the Costs of Issuance Acc ount of the Acquisition and Construction Fund established hereunder for disbursement in accordance with Section 3.8 below; (2) $____________ (which is equal to t he initial Reserve Requirement) shall be deposited in the Reserve Account to be disbursed in accordance with Section 3.6 below; and (3) $_______________ shall be deposited to the Acquisition and Cons truction Fund for disbursement in accordance with Section 3.8 below.
After making the foregoing deposits and transfers the Fiscal Ag ent shall close the Bond Proceeds Fund.
Section 3.2. Deposits to and Disbursements from Special Tax Fund. The CFD shall, on each date on which it receives Special Taxes, transfer the Spec ial Taxes to the Fiscal Agent for deposit in the Special Tax Fund to be held in accordance with the terms of this Fiscal Agent Agreement. The Fiscal Agent shall transfer the amounts 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:
(a) The Administrative Expense Account of the Special Tax Fund; (b) The Interest Account of the Special Tax Fund;
(c) The Principal Account of the Special Tax Fund;
(d) The Redemption Account of the Special Tax Fund;
(e) The Reserve Account of the Special Tax Fund; and
(f) The Surplus Fund.
At the maturity of all of the Bonds and, after all principal an d interest then due on the Bonds then Outstanding has been paid or provided for and any amounts owed to the Fiscal Agent have been paid in full, moneys in the Special Tax Fund and any accounts therein shall be transferred to the CFD and may be used by the CFD for any lawful purpose.
Section 3.3. Administrative Expense Account of the Special Tax Fund. Upon receipt of Special Taxes from the CFD for deposit in the Special Tax Fund, the Fiscal Agent shall transfer from the Special Tax Fund and deposit in the Administrative Expense Acco unt of the Special Tax Fund an amount equal to the Administrative E xpense Requirement for the Bond Ye ar, which shall be disbursed by the Fiscal Agent to pay Administrative Expenses, all as instructed by the CFD pursuant to a Written Request of the CFD. Moneys in the Administrative Expense Account of th e Special Tax Fund may be invested in any Authorized Investments as directed by an Authorized Representative of the CFD.
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. T h e principal of and interest due on the Bonds until maturity, othe r than principal due upon redemption, shall be paid by the Fiscal Agent 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 will
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be made when due, at least five Business Days prior to each Mar ch 1 and September 1, the Fiscal Agent shall make the following transfers from the Special Tax Fund fi rst to the Interest Account and then to the Principal Account; provided, however, that to the extent that d eposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provid ed, further, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall be made up by an immediate transfer from the Reserve Account:
(1) To the Interest Account, an amount such that the balance in the Interest Account five Business Days prior to each Interest Payment Date shall be equa l to the installment of interest due on the Bonds on said Interest Payment Date and any installment of inte rest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account shal l be used for the payment of interest on the Bonds as the same become due.
(2) To the Principal Account, an amount such that the balance in th e Principal Account five Business Days prior to September 1 of each year, commencing Sep tember 1, 2022 shall at least equal the principal payment due on the Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Princ ipal Account shall be used for the payment of the principal of such Bonds as the same become due at maturity.
Section 3.5. Redemption Account of the Special Tax Fund. (1) On each September 1 on which a Sinking Fund Payment is due, aft er the deposits have been made to the Interest Account and the Principal Account of the Special Tax Fund as required by Section 3.4 hereof, the Fiscal Agent shall next transfer into t he Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the ba lance in the Redemption Account five Business Days prior to each September 1 equal to the Sinking Fu nd Payment due on any Outstanding Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall be m ade up by an immediate transfer from the Reserve Account, if funded, pursu ant to Section 3.6 below. Mon eys so deposited in the Redemption Account shall be used and applied by the Fiscal Agent to call a nd redeem Term Bonds in accordance with the Sinking Fund Payment schedule set forth in Section 4.1 hereof. (2) After making the deposits to the Interest Account and the Princ ipal Account of the Special Tax Fund pursuant to Section 3.4 above and to the Redem ption Account for Sinking Fund Payments then due pursuant to s ubparagraph (1) of this Section, and in accordance with the CFD’s election to call Bonds for optional redemption as set forth in Section 4.1(1) hereof, and in connection with special mandatory redemption fro m special tax prepayments as se t forth in Section 4.1(2) hereof, the Fiscal Agent shall transfer from the Special Tax Fund and depos it in the Redemption Account moneys available for the purpose and sufficient to pay the interest, t he principal and the premiums, if any, payable on the Bonds called for optional or special mandatory redemption; provided, however, that amounts in the Special Tax Fund (exclusive of amounts transferred to the Admin istrative Expense Account) may be applied to optionally redeem Bonds only if immediately followin g such redemption the amount in the Reserve Account will equal the Reserve Requirement.
(3) All prepayments of Special Taxes shall be deposited in the Rede mption Account to be used to redeem Bonds on the next date for which notice of redemption can timely be given. (4) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and shall be app lied on or after the redemption date to the payment of the principal of and premium, if any, on the Bonds to be redeemed upon presentat ion and surrender of such Bonds and in
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the case of an optional redemption to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemp tion, moneys deposited in the Re demption Account as set forth above may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds may be made by the CFD at public or private sale as and w hen and at such prices as the CFD may in its discretion determine but only at prices (including broke rage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside fo r an optional redemption, the premium applicable at the next followi ng call date according to the pre mium schedule established pursuant to Section 4.1(1) hereof. The CFD shall provide written direction to Fiscal Agent to purchase such Outstanding Bonds at the purchase price specified by the CFD fr om moneys in the Redemption Account.
Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of int erest on the next following Interest Payment Date.
Section 3.6. Reserve Account of the Special Tax Fund. There shall be maintained in the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The amounts in the Reserve Account shall be applied as follows:
(1) Moneys in the Reserve Account shall be used solely for the purp ose of paying the principal of, including Sinking Fund Payments, and interest on any Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds when due, the Fiscal Ag ent shall withdraw from the Reserve Account for deposit in the Interest Account, the Principal Acco unt or the Redemption Account of the Special Tax Fund, as applicable, moneys necessary for such purposes. (2) Whenever moneys are withdrawn from the Reserve Account, after m aking the required transfers referred to in Sections 3.4 and 3.5 above, the Fiscal Agent shall transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any othe r legally available funds which the CFD elects to apply to such purpose, the amount needed to restore t he amount of such Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be d eemed available for transfer to the Reserve Account only if the Fiscal Agent determines that such a mounts will not be needed to make the deposits required to be made to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund. If amounts in the Special Tax Fund or ot herwise transferred to replenish the Reserve Account are inadequate to restore the Reserve Account t o the Reserve Requirement, then the CFD shall include the amount necessary fully to restore the Res erve Account to the Reserve Requirement in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates. (3) In connection with any redemption of the Bonds, or a partial de feasance of the Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Acco unt may, upon written direction of the CFD to the Fiscal Agent, be applied to such redemption or parti al defeasance so long as the amount on deposit in the Reserve Account following such redemption or par tial 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 the Bonds, amounts in the Reserve Accou nt may, upon written direction of the CFD to the Fiscal Agent, be applied to pay the principal of and interest due on the Bonds in the final Bond Year for such issue. Moneys in the Reserve Account in exc ess 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 a nd September 1 and transferred to the Acquisition and Construction Fund until the Fiscal Agent receiv es a Certificate of Authorized
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Representative of the CFD that all Project Costs have been fund ed and, thereafter, to the Interest Account of the Special Tax Fund.
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, the Fiscal Agent shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, other than amounts in the Special Tax Fund which the CFD directs the Fiscal Agent by Written Request of the CFD to retain because the CFD has included such funds as being available in the Special Tax Fund in calcul ating the amount of the levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(2) hereof. Moneys deposited in the Surplus Fund shall be transferred by the Fiscal Agent at the written direction of the CFD to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative E xpense Account of the Special Ta x Fund are insufficient to pay Administrative Expenses or, upon the Written Request of the CFD , may be disbursed to the CFD to be expended for any other lawful purpose of the CFD.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds. In the event that the CFD reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds, upon the written direction of the CFD, t he Fiscal Agent 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 CFD in Author ized Investments the interest on which is excludable from gross income under Section 103 of the Code (oth er than bonds the interest on which is a tax preference item for purposes of computing the alternative m inimum tax of individuals and corporations under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of 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 excl usion from gross income for federal income tax purposes of interest on the Bonds which were issued on a ta x-exempt basis for federal income tax purposes.
Section 3.8. Acquisition and Construction Fund.
(1) The moneys in the Acquisition and Construction Fund shall be ap plied exclusively to pay the Project Costs and Costs of Issuance. Amounts for Project C osts and Costs of Issuance shall be disbursed by the Fiscal Agent from the account in the Acquisiti on and Construction Fund designated therefor in a requisition signed by an Authorized Representativ e of the CFD, substantially in the form of Exhibit B hereto, which must be submitted in connection with each requested disbursement. (2) Upon receipt of a Certificate of Authorized Representative of t he CFD that all or a specified portion of the amount remaining in the Acquisition an d Construction Fund is no longer needed to pay Project Costs or Costs of Issuance, the Fiscal Agent sha ll redeem Bonds, if so requested in such Certificate, or transfer all or such specified portion of the m oneys remaining on deposit in one or more of the accounts in the Acquisition and Construction Fund to the Sp ecial Tax Fund, or to the Surplus Fund if requested in the Certificate and if there shall have been delivered to the Fiscal Agent 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 which were issued on a tax-exempt basis for federal income tax purposes. Upon transfer of the final amounts on deposit in the Acquisition and Co nstruction Fund, as directed, such accounts and fund shall be closed.
Notwithstanding the foregoing, any amount remaining in the Cost s of Issuance Account of the Acquisition and Construction Fund on the date 180 days from the Delivery Date shall be transferred to the Acquisition and Construction Fund and such account shall be closed.
104436300.6 21
Section 3.9. Investments. Moneys held in any of the funds and accounts under this Fisca l Agent Agreement shall be invested at the Written Request of the CFD, such Written Request to specify which Authorized Investment is to be invested in, in accordance with the limitations set forth below only in Authorized Investments which shall be deemed at all times to be a part of such funds and accounts.
Any loss resulting from such Authorized Investments shall be cr edited or charged to the fund or account from which such investment was made, and any investment earnings on a fund or account shall be applied as follows: (i) investment earnings on all amounts deposited in the Special Tax Fund (exclusive of amounts transferred to the Reser ve Account), Surplus Fund, Acqu isition and Construction Fund and each Account therein shall be deposite d in those respective funds an d accounts, and (ii) all other investment earnings shall be deposited in the Interest Account of the Spec ial Tax Fund; provided, however, to the extent moneys in the Reserve Account exceed the Reserve Require ment, such excess amounts shall be deposited and transferred pursuant to Section 3.6(3) hereof. Moneys in the funds and accounts held under this Fiscal Agent Agreement shall be invested by the Fiscal Age nt at the Written Request of the CFD received at least 2 Business Days prior to the investment date, from time to time, in Authorized Investments subject to the following restrictions:
(1) Moneys in the Interest Account, the Principal Account and the R edemption Account of the Special Tax Fund shall be invested only in Authorized Inves tments which will by their terms mature, or in the case of an Investment Agreement are available for wit hdrawal 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.
(2) Moneys in the Acquisition and Construction Fund shall be invest ed 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 CFD es timates the moneys represented by the particular investment will be needed for withdrawal from the Ac quisition and Construction Fund.
Notwithstanding anything herein to the contrary, amounts in the Acquisition and Construction Fund on the Delivery Date for the Bonds shall not be invested at yields greater than those set forth in the Tax Certificate.
(3) One-half of the amount in the Reserve Account of the Special Ta x Fund may be invested only in Authorized Investments which mature not later than two years from their date of purchase by the Fiscal Agent, and one-half of the amount in the Reserve Account may be invested only in Authorized Investments which mature not more than three years from the dat e of purchase by the Fiscal Agent; provided that such amounts may be invested in an Investment Agr eement to the final maturity of the Bonds so long as such amounts may be withdrawn at any time, wit hout penalty, for application in accordance with Section 3.6 hereof; and provided that no such A uthorized Investment of amounts in the Reserve Account allocable to the Bonds shall mature later than the final maturity date of the Bonds. (4) In the absence of Written Request of the CFD providing investme nt directions, the Fiscal Agent shall invest solely in Authorized Investments specified in clause (4) of the definition thereof.
The Fiscal Agent shall sell at the best price obtainable by it, or present for redemption, any Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer to such Funds and Accounts or from such Fun ds and Accounts. For the purpose of determining at any given time the balance in any such Funds and Accounts, any such investments constituting a part of such Funds and Accounts shall be valued at their cost, except that amounts in the Reserve Account shall be valued at the fair market value thereo f and marked to market at least annually.
Notwithstanding anything herein to the contrary, the Fiscal Age nt shall not be responsible for any losses, fees, taxes or other charges from investments, reinvestments, l iquidation of investments, sales or transfers undertaken in accordance with the provisions of this Fiscal Age nt Agreement. The Fiscal Agent or an
104436300.6 22
affiliate may act as principal or agent in connection with the acquisition or disposition of any Authorized Investments and shall be entitled to its customary fees therefo r. Any Authorized Investments that are registrable securities shall be registered in the name of the F iscal Agent. The Fiscal Agent 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 Fiscal Agent or for any third person or dealing as principal for its own account.
The CFD acknowledges that to the extent regulations of the Comp troller of the Currency or other applicable regulatory entity gra nt the CFD the right to receive brokerage confirmations of security transactions as they occur, the CFD specifically waives receipt of such confirmations for securities transactions effected by the Fiscal Agent as they occur to the extent permitted by law. The CFD further understands that trade confirmations for securities transaction s effected by the Fiscal Agent will be available upon request and at no additional cost and other trad e confirmations may be obtained from the applicable broker. The Fiscal A gent will furnish the CFD period ic cash transaction statements which include detail for all investment transactions effected by the Fiscal Agent hereunder or brokers selected by the CFD. Upon the CFD’s election, such statements will be d elivered via the Fiscal Agent’s online service and upon electing such service, paper statements will b e provided only upon request. The Fiscal Agent or any of its affiliates may act as sponsor, advisor or m anager in connection with any investments made by the Fiscal Agent hereunder.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.1. Redemption of Bonds.
(1) Optional Redemption. The Bonds maturing on or after September 1, 2030 are subject to redemption prior to maturity at the option of the CFD on any da te, on or after September 1, 2029, as a whole or in part, by lot, from any available source of funds at the following redemption prices (expressed as a percentage of the principal amount of Bonds to be redeemed ), together with accrued interest thereon to the date fixed for redemption:
Redemption Dates Redemption Prices
September 1, 2029 through August 31, 2030 103%
September 1, 2030 through August 31, 2031 102%
September 1, 2031 through August 31, 2032 101%
September 1, 2032 and thereafter 100%
(2) Special Mandatory Redemption from Special Tax Prepayments. The Bonds are subject to mandatory redemption prior to maturity on any Interest Payme nt Date, on or after September 1, 2022, as a whole or in part, in a manner determined by the CFD from p repayments of Special Taxes at the following redemption prices (expressed as a percentage of the p rincipal amount of Bonds to be redeemed), together with accrued interest thereon to the date fixed for redemption:
Redemption Dates Redemption Prices
September 1, 2022 and each March 1 and September 1 through and including March 1, 2030
103%
September 1, 2030 and March 1, 2031 102%
September 1, 2031 and March 1, 2032 101%
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September 1, 2032 and each March 1 and September 1 thereafter 1 00% In connection with such redemption, the CFD may also apply amou nts in the Reserve Account which will be in excess of the Reserve Requirement as a result of such Special Tax prepayment to redeem Bonds as set forth above.
In the event the CFD elects to redeem Bonds as provided above i n (1) or (2), the CFD shall give written notice to the Fiscal Agen t of its election to so redeem , the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notic e to the Fiscal Agent shall be given at least 45 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the Fiscal Agent.
(3) Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 20__, on September 1, 20__ and on September 1, 20__ are subject to ma ndatory redemption, in part by lot, on September 1 in each year commencing September 1, 20__ with resp ect to the Term Bonds maturing on September 1, 20__, commencing September 1, 20__ with respect to the Term Bonds maturing on September 1, 20__, and commencing September 1, 20__ with respec t to the Term Bonds maturing on September 1, 20__, from the Sinking Fund Payments that have bee n deposited into the Redemption Account at a redemption price equal to the principal amount the reof to be redeemed, without premium, plus accrued interest thereon to the date of redemption as set forth in the following schedule; provided, however, that (i) in lieu of redemption thereof, the Term Bonds may be purchased by the CFD and tendered to the Fiscal Agent, and (ii) if some but not all of t he Term Bonds have been redeemed pursuant to Sections 4.1(1) and (2) above, the total amount of all futur e sinking payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking payments on a pro rata basis (as nearly as practicable) in integral multiples of $5,000 as determined by the CFD in a written notice to the Fiscal Agent.
Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1) Principal Amount
(maturity)
Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1)
Principal Amount
(maturity)
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Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1) Principal Amount
(maturity)
Section 4.2. Selection of Bonds for Redemption. If less than all of the Bonds Outstanding are to be redeemed, the Bonds to be redeemed shall be selected by lot and the portion of any 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 for redemption, the Fiscal Agent shall treat such Bonds as representing that number of Bonds of $5,000 denom inations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5 ,000. The Fiscal Agent shall promptly notify the CFD in writing of the Bonds, or portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds are due for redemption under Section 4.1 above, the Fiscal Agent shall give notice, in the name of the C FD, of the redemption of such Bonds provided, however, that a notice of a redemption to be made fro m other than from Sinking Fund Payments shall be conditioned on there being on deposit on the redemption date sufficient money to pay the redemption price of the Bonds to be redeemed. Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dat es of the Bonds selected for redemption, except that where all of the Bonds of a maturity are subject to redemption, or all the Bonds of one maturity, are to be redeemed, the bond numbers of such issue ne ed not be specified; (b) state the date fixed for redemption and surrende r of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; ( f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds being redeemed as shall be specified by the Fiscal Agent. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond, or portion thereof called for red emption, the principal thereof, together with any premium, and interest a ccrued 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 60 days prior to the redemption date, the Fiscal Agent shall mail a copy of such not ice, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on t he Bond Register. The actual receipt by the Owner of any Bond or the original purchaser of any Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the failure to r eceive nor any defect in such notice shall affect the validity of the proceed ings for the redemption of su ch Bonds, or the cessation of interest on the redemption date. A certificate by the Fiscal Agent that notice of such redemption has been given as herein provided shall be conclus ive as against all parties and the Owner shall not be entitled to show that he or she failed to receive notice of such redemption.
If at the time of mailing of any notice of optional redemption there shall not have been deposited with the Fiscal Agent moneys su fficient to redeem all the Bonds called for redemption, such notice shall state that it is subject to the deposit of the redemption money s with the Fiscal Agent not later than the opening of business on the redemption date and will be of no effect unless such moneys are so deposited.
The CFD shall have the right to rescind any notice of optional redemption by written notice to the Fiscal Agent at least one Business Day prior to the date fixed for redemption. Any notice of such
104436300.6 25
redemption shall be cancelled a nd annulled if for any reason fu nds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default hereunder . The CFD and the Fiscal Agent shall have no liability to the Owners or any other party related to or ari sing from such rescission of redemption. The Fiscal Agent shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
In addition to the foregoing notice, further notice shall be gi ven by the Fiscal Agent as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for rede mption if notice thereof is given as above prescribed.
Each further notice of redemption shall be sent on or before th e date notice of redemption is mailed to the Bondowners pursuant to the first paragraph of thi s Section to the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Boa rd, maintained on the Internet at http://emma.msrb.org, or to such other organizations providing notice of redemption of obligations such as the Bonds.
Upon the payment of the redemption price of any Bonds being red eemed, each check or other transfer of funds issued for such purpose shall to the extent p racticable bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed wi th the proceeds of such check or other transfer.
Section 4.4. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the CFD shall execute and the Fiscal Agent shall aut henticate and deliver to the Bondowner, at the expense of the CFD, a new Bond or Bonds of authorized denom inations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity.
Section 4.5. Effect of Notice and Availability of Redemption Money. N o t i c e o f redemption having been duly given, as provided in Section 4.3 h ereof, and the amount necessary for the redemption having been made available for that purpose and bein g available therefor on the date fixed for such redemption:
(1) The Bonds, or portions thereof, designated for redemption shall , on the date fixed for redemption, become irrevocably due and payable at the redemption price thereof as provided in this Fiscal Agent Agreement, anything in this Fiscal Agent Agreement or in the Bonds to the contrary notwithstanding;
(2) Upon presentation and surrender thereof at the Designated Corpo rate Trust Office of the Fiscal Agent, the redemption price of such Bonds shall be paid to the Owners thereof; (3) As of the redemption date the B onds, or portions thereof so des ignated for redemption shall be deemed to be no longer Outstanding and such Bonds, or portions thereof, shall cease to bear further interest; and
(4) As of the date fixed for redemption no Owner of any of the Bond s, or portions thereof so designated for redemption, shall be entitled to any of the bene fits of this Fiscal Agent Agreement or any Supplemental Fiscal Agent Agreement, or to any other rights, ex cept with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.
104436300.6 26
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The CFD shall preserve and protect the security pledged hereu nder to the Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds issued hereunder are Outstanding and unpaid, the CFD makes the following covenants with the Bondowners under the provisions of the Act and this Fiscal Agent Agreement (to be performed by the CFD or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and tend to make them more marketable; provided, however, that said covenants do not requi re the CFD to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:
(1) Punctual Payment; Against Encumbrances. The CFD hereby covenan ts that it will receive all Special Taxes in trust and will immediately deposit such amounts with the Fiscal Agent, and the CFD shall have no beneficial right or interest in the amoun ts so deposited except as provided by this Fiscal Agent Agreement. All such Special Taxes shall be disbur sed, 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 CFD.
The CFD covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond issued hereunder, together with the prem ium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and in accordanc e with this Fiscal Agent Agreement to the extent that Special Taxes are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with t he terms of the Bonds and this Fiscal Agent Agreement, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Fiscal Agent Agreement and all Supplementa l Fiscal Agent Agreements and of the Bonds issued hereunder.
The CFD will not mortgage or otherwise encumber, pledge or plac e any charge upon any of the Special Taxes except as provided in this Fiscal Agent Agreement , and will not issue any obligation or security having a lien or charge upon the Special Taxes superio r to the Bonds. Nothing herein shall prevent the CFD from issuing or incurring indebtedness which is payable from a pledge of Special Taxes which is subordinate in all respects to the pledge of Special Taxes to repay the Bonds. (2) Levy of Special Tax. So long as any Bonds issued under this Fi scal Agent Agreement are Outstanding, the CFD hereby covenants to levy the Special T ax 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 when due, (2) the Administrative E xpenses, and (3) any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement. (3) Commence Foreclosure Proceedings. The CFD hereby covenants for the benefit of the Owners of the Bonds that it will determine or cause to be deter mined, no later than March 1 and August 1 of each year, whether or not any owner of the property within t he CFD are delinquent in the payment of Special Taxes and, if such delinquencies exist, the CFD will or der and cause to be commenced no later than April 15 (with respect to the March 1 determination date) or September 1 (with respect to the August 1 determination date), foreclos ure proceedings and thereafter d iligently prosecute, an action in the superior court to foreclose the lien of any Special Taxes or in stallment thereof not paid when due, provided, however, that the CFD shall not be required to order the commencement of foreclosure proceedings if (i) the total Special Tax delinquency in the CFD for such Fiscal Year is less than five
104436300.6 27
percent (5%) of the total Special Tax levied in such Fiscal Yea r, (ii) the amount in the Reserve Account is equal to the Reserve Requirement, or (iii) the CFD shall have e stablished from any source of lawfully available funds (other than Special Taxes) an escrow fund to pr ovide for the payment of principal of and interest on the Bonds. Notwithstanding the foregoing, if the C FD determines that any single property owner in the CFD is delinquent in excess of three thousand doll ars ($3,000) in the payment of the Special Tax, then it will diligently institute, prosecute and pursue fo reclosure proceedings against such property owner. Commencement of any judicial foreclosure proceedings inc ludes the CFD’s efforts to collect the delinquent Special Taxes by sending subsequent notice of delinq uency and a demand for immediate payment thereof.
The City Attorney is hereby authorized to employ counsel to con duct any such foreclosure proceedings. The fees and expenses of any such counsel and cos ts and expenses of the City Attorney (including a charge for City or District staff time) in conduct ing foreclosure proceedings will be an Administrative Expense. The District may treat any delinquent S pecial Taxes sold to an independent third-party or to any funds of the City for at least 100% of th e delinquent amount as having been paid.
Proceeds of any such sale up to 100% of the delinquent amount s hall be deposited in the Special Tax Fund. The District covenants that it will deposit the net proce eds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment o f Administrative Expenses to make current payments of principal and interest on the Bonds, to bri ng the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds.
Notwithstanding any provision of the Act or other law of the St ate to the contrary, in connection with any foreclosure related to delinquent Special Taxes:
(a) The CFD is hereby expressly authorized to credit bid at any for eclosure sale, without any requirement that funds be set aside in the amount s o credit bid, in the amount specified in Section 53356.5 of the Act, or such lesser amount as determined under clause (b) below or otherwise under Section 53356.6 of the Act.
(b) The CFD is hereby expressly authorized to use amounts in the Su rplus Fund to pay costs of foreclosure of delinquent Special Taxes.
(4) Payment of Claims. The CFD 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 Special Taxes or; other funds in the Special Tax Fund (exclusive of amounts transferred to the Administrative Expense Account), or which might impair the security of the Bonds then Outstandin g; provided that nothing herein contained shall require the CFD to make any such payments so long as the CFD in good faith shall contest the validity of any such claims.
(5) Books and Accounts. The CFD will keep proper books of records and accounts, separate from all other records and accounts of the CFD, in which complete and correct entries shall be made of all transactions relating to the levy of the Special Tax and the de posits to the Special Tax Fund. Such books of records and accounts shall at all times during business hour s be subject to the inspection of the Fiscal Agent or of the Owners of the Bonds then Outstanding or their representatives authorized in writing. (6) Tax Covenants.
(a) Special Definitions. When used in this subsection, the followi ng terms have the following meanings:
104436300.6 28
“Code” means the Internal Revenue Code of 1986.
“Computation Date” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Gross Proceeds” means any proceeds as defined in section 1.148 -1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds), and any replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds. “Investment” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Nonpurpose Investment” means any investment property, as defin ed in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and tha t is not acquired to carry out the governmental purposes of that series of Bonds.
“Rebate Amount,” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Tax Regulations” means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code, or section 103 of the 1954 Code, as applicable. “Yield” of any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations; and of any issue of governmental obligations has the meaning se t forth in section 1.148-4 of the Tax Regulations.
(b) Not to Cause Interest to Become Taxable. The CFD covenants tha t it shall take all actions necessary in order that interest on the Bonds be an d remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes, and that it shall not use or invest, and shall not pe rmit the use or investment of, and shall not omit to use or invest Gross Proceeds or any other amo unts (or any property the acquisition, construction or impr ovement of which is to be fina nced directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respective ly, could cause the interest on any Bond to fail to be excluded pursuant to section 103(a) of the C ode from the gross income of the owner thereof for federal income tax purposes. Without limitin g the generality of the foregoing, unless and until the CFD receives a written opinion of Bond Counsel to the effect that compliance with such covenant is not necessary to, or that failure to comp ly with such covenant will not adversely affect, the exclusion of the interest on any Bond fro m the gross income of the owner thereof for federal income tax purposes, the CFD shall comply w ith each of the specific covenants in this subsection.
(c) Private Use and Private Payments. Except as would not cause an y Bond to become a “private activity bond” within the meaning of section 141 of the Code and the Tax Regulations, the CFD shall take all actions necessary to assure that the CFD at all times prior to the final cancellation of the last of the Bonds to be retired:
(i) exclusively owns, operates and possesses all property the acqui sition, construction or improvement of which is to be financed or refin anced directly or indirectly with Gross Proceeds of the Bonds and not use or perm it the use of such Gross Proceeds (including through any contractual arrangement with te rms different than those applicable to the general public) or any property acquired, con structed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality the reof) other than a state or local government, unless such use is solely as a member of the general public; and
104436300.6 29
(ii) does not directly or indirectly impose or accept any charge or other payment by any person or entity (other than a state or local government) who is treated as using any Gross Proceeds of the Bonds or any property the acqui sition, construction or improvement of which is to be financed or refinanced directly o r indirectly with such Gross Proceeds.
(d) No Private Loan. Except as would not cause any Bond to become a “private activity bond” within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the CFD shall not use or permit the use of Gross Pr oceeds of the Bonds to make or finance loans to any person or entity other than a state or loc al government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be “loaned” to a person or entity if: (i) property acquired, constructed or improved with such Gross Proc eeds is sold or leased to such person or entity in a transaction that creates a debt for feder al income tax purposes; (ii) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. (e) Not to Invest at Higher Yield. Except as would not cause the B onds to become “arbitrage bonds” within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the CFD shall not (and shall not permit any person to), at any time prior to the final cancellation of the last Bond to be retired, directly or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any Investment acquired with Gross Proceeds, whether then held or previously disposed of, would ma terially exceed the Yield of the Bonds within the meaning of said section 148.
(f) Not Federally Guaranteed. Except to the extent permitted by se ction 149(b) of the Code and the Tax Regulations and rulings thereunder, the CFD shall take or omit to take (and shall not permit any person to take or omit to take) any action that would cause any Bond to be “federally guaranteed” within the meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder.
(g) Information Report. The CFD shall timely file any information required by section 149(e) of the Code with respect to Bonds with the Secre tary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitrage Profits. Except to the extent otherwise pr ovided in section 148(f) of the Code and the Tax Regulations:
(i) The CFD shall account for all Gross Proceeds (including all rec eipts, expenditures and investments thereof) on its books of account s eparately and apart from all other funds (and receipts, expenditures and investments the reof) and shall retain all records of accounting for at least six years after the day on w hich the last Bond is discharged. However, to the extent permitted by law, the CFD m ay commingle (and may allow the CFD to commingle) Gross Proceeds of Bonds with its ot her monies, provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith.
(ii) Not less frequently than each Computation Date, the CFD shall c alculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and rulings thereunder. The CFD shall main tain a copy of the
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calculation with its official transcript of proceedings relatin g to the issuance of the Bonds until six years after the final Computation Date.
(iii) In order to assure the excludability pursuant to 3(a) of the Co de of the interest on the Bonds from the gross income of the owners there of for federal income tax purposes, the CFD shall pay to the United States the amount tha t when added to the future value of previous rebate payments made for the Bonds equ als (i) in the case of the Final Computation Date as defi ned in section 1.148-3(e)(2) of t he Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and ( ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amou nt on such date. In all cases, such rebate payments shall be made by the CFD at the tim es and in the amounts as are or may be required by section 148(f) of the Code and the Ta x Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such oth e r f o r m s a n d information as is or may be required by section 148(f) of the C o d e a n d t h e T a x Regulations and rulings thereunder for execution and filing by the CFD.
Notwithstanding the foregoing, and provided that the CFD takes all steps available to it to cause the provision of such amounts, the monetary obligation of the CFD under this paragraph (3) shall be limited to amounts provided to it for such purpose by the CFD. (i) Not to Divert Arbitrage Profits. Except to the extent permitte d by section 148 of the Code and the Tax Regulations and rulings thereunder, the CF D shall not and shall not permit any person to, at any time prior to the final cancellation of t he last of the Bonds to be retired, enter into any transaction that r educes the amount required to be paid to the United States pursuant to paragraph (h) of this subsection because such trans action results in a smaller profit or a larger loss than would have resulted if the transaction had b een at arm’s length and had the Yields on the Bonds not been relevant to either party.
(j) Bonds Not Hedge Bonds.
(i) The CFD represents that none of the Bonds is or will become a “ hedge bond” within the meaning of section 149(g) of the Code. (ii) Without limitation of paragraph (i) above: (A) the CFD reasona bly expects that at least 85% of the spendable proceeds of the Bond s will be expended within the three-year period commencing on the date of issuance of the Bonds; and (B) no more than 50% of the proceeds of the Bonds will be invested in Nonpu rpose Investments having a substantially guaranteed yield for a period of four years or more. (k) Elections. The CFD hereby directs and authorizes any CFD Autho rized Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such representative (after consultation with Bond Counsel) deems necessary or appropriate in conn ection with the Bonds, in the C ertificate as to Tax Exemption or similar or other appropriate certificate, form or document. (l) Closing Certificate. The CFD agrees to execute and deliver in connection with the issuance of the Bonds a Tax Certificate as to Arbitrage and the Provisions of Sections 103 and 141-150 of the Internal Revenue C ode of 1986, or similar docume nt containing additional representations and covenants pert aining to the exclusion of in terest on the Bonds from the gross income of the owners thereof for federal income tax purposes, w hich representations and covenants are incorporated herein by reference as though expressly set forth herein.
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(7) Reduction of Maximum Special Taxes. The CFD hereby finds and d etermines that, historically, delinquencies in the payment of special taxes aut horized pursuant to the Act in community facilities districts in Southern California have from time to t ime been at levels requiring the levy of special taxes at the maximum aut horized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community faci lities districts. For this reason, the CFD hereby determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels in the CFD below the levels provided in this Section 5.2(7) would interfere with the timely retirement of the Bonds. The CFD determines it to be necessary in order to prese rve the security for the Bonds to covenant, and, to the maximum extent that the law permits it to do so, the CFD hereby does covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates for the CFD, unless, in connection therewith, (i) the CFD receives a certificate from o ne or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the CFD as of the J uly 1 preceding the reduction, t he maximum amount of the Special Tax which may be levied on then existing Developed Property (as def ined in the RMA) in each Bond Year for any Bonds Outstanding will equal at least 110% of the sum on the estimated Administrative Expenses and gross debt service in that Bond Year on all Bonds to remain Out standing after the reduction is approved, and (ii) the CFD hereby finds t hat any reduction made under suc h conditions will not adversely affect the interests of the Owners of the Bonds. For purposes of estimati ng Administrative Expenses for the foregoing calculation, the Independent Financial Consultant sha ll compute the Administrative Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year. (8) Covenants to Defend. The CFD hereby covenants that in the even t that any initiative is adopted by the qualified electors in the CFD which purports to reduce the maximum Special Tax below the levels specified in Section 5.2(7) above or to limit the po wer of the CFD to levy the Special Taxes for the purposes set forth in Section 5.2(2) above, it will commenc e and pursue legal action in order to preserve its ability to comply with such covenants.
(9) Limitation on Right to Tender Bonds. The District hereby covenants that it will not adopt any policy pursuant to Section 53341.1 of the Act permitting th e tender of 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 when due. (10) Annual Reports to CDIAC. Not later than October 30 of each yea r, commencing October 30, 2022 and until the October 30 following the final m aturity of the Bonds, the CFD shall cause the City to supply the information required by Section 53359.5( b) or (c) of the Act to CDIAC (on such forms as CDIAC may specify).
(11) Accountability Measures. The District shall comply with the re quirements of Section 53410 and 53411 of the C alifornia Government Code and will caus e the appropriate officer of the City to file a report with the City Counc il no later than each January 1 with respect to the amount of funds collected and expended with respect to the District.
(12) Continuing Disclosure. The CFD hereby covenants to comply with t h e t e r m s o f t h e Continuing Disclosure Agreement executed by it with respect to the Bonds. Notwithstanding any other provision of this Fiscal Agent Agreement, failure of the CFD to comply with the Continuing Disclosure Agreement shall not be considered a default hereunder; however, any Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be n ecessary and appropriate to compel performance by the CFD of its obligations under this Section 5. 2(10), including seeking mandate or specific performance by court order.
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ARTICLE VI
AMENDMENTS TO FISCAL AGENT AGREEMENT
Section 6.1. Supplemental Fiscal Agent Agreements or Orders Not Requiring Bondowner Consent. The CFD may from time to time, and at any time, without notic e to or consent of any of the Bondowners, adopt Supplemental Fiscal Agent Agreements for any of the following purposes:
(1) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provi sion herein, or to make any ot her provision with respect to matters or questions arising under this Fiscal Agent Agreement or in any a dditional resolution or order, provided that such action is not materially adverse to the interests of the Bondowners; (2) to add to the covenants and agre ements of and the limitations a nd the restrictions upon the CFD contained in this Fiscal Agent Agreement, other covenan ts, agreements, limitations and restrictions to be observed by the CFD which are not contrary t o or inconsistent with this Fiscal Agent Agreement as theretofore in effect or which further secure Bond payments; (3) to modify, amend or supplement this Fiscal Agent Agreement in s uch manner as to permit the qualification hereof under the Trust Indenture Act o f 1939, as amended, or any similar federal statute hereafter in effect, or to comply with the Code or regu lations issued thereunder, and to add such other terms, conditions and provis ions as may be permitted by s aid act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds then Outstanding; or (4) 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 CFD to an amount which is less than that permitted under Section 5.2(7) hereof; or
(5) to modify, alter, amend or supplement this Fiscal Agent Agreeme nt in any other respect which is not materially adverse to the Bondowners.
Section 6.2. Supplemental Fiscal Agent Agreements or Orders Requiring Bondow ner Consent. Exclusive of the Supplemental Fiscal Agent Agreements describ ed in Section 6.1, the Owners of not less than a majority in aggregate principal amount of th e Bonds Outstanding shall have the right to consent to and approve the adoption by the CFD of such Suppleme ntal Fiscal Agent Agreements as shall be deemed necessary or desirable by the CFD for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Fiscal Agent Agreement; 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, (b) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon, (c) a preference or priority of any Bond over any other Bond, o r (d) a reduction in the aggregate principal amount of the Bonds the Owners of which are required to consent to such Supplemental Fiscal Agent Agreement, without the consent of the Owners of all Bonds then Outstanding.
If at any time the CFD shall desire to adopt a Supplemental Fis cal Agent Agreement, which pursuant to the terms of this Section shall require the consent of the Bondowners, the CFD shall so notify the Fiscal Agent in writing and shall deliver to the Fiscal Age nt a copy of the proposed Supplemental Fiscal Agent Agreement. The Fiscal Agent shall, at the expense of the CFD, cause notice of the proposed Supplemental Fiscal Agent Agreement to be mailed, by first clas s mail, postage prepaid, to all Bondowners at their addresses as they appear in the Bond Regist er. Such notice shall be prepared by the
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CFD and shall briefly set forth the nature of the proposed Supplemental Fiscal Agent Agreement and shall state that a copy thereof is on file at the Designated Corporat e Trust Office of the Fiscal Agent for inspection by all Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of such Supplemental Fiscal Agent Agreement when consented to and approved by the Owners of not less than a majority in aggregate principal amount of the B onds Outstanding as required by this Section. Whenever at any time within one year after the date of the first mailing of such notice, the Fiscal Agent shall receive an instrument or instruments purporting to be executed by the Owners of a majority in aggregate principal amount of the Bonds Outstanding, which inst rument or instruments shall refer to the proposed Supplemental Fiscal Agent Agreement described in such notice, and shall specifically consent to and approve the adoption thereof by the CFD substantially in the form of the copy referred to in such notice as on file with the Fiscal Agent, such proposed Suppleme ntal Fiscal Agent Agreement, when duly adopted by the CFD, shall thereafter become a part of the proce edings for the issuance of the Bonds. In determining whether the Owners of a majority of the aggregate p rincipal amount of the Bonds have consented to the adoption of any Supplemental Fiscal Agent Agre ement, Bonds which are owned by the CFD or by any person directly or indirectly controlling or cont rolled by or under the direct or indirect common control with the CFD sha ll be disregarded and shall be t reated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Fiscal Agent Agreement and the receipt of consent to any such Supplemental Fiscal Agent A greement from the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds in instances where su ch consent is required pursuant to the provisions of this Section, this Fiscal Agent Agreement shall b e, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Fiscal Agent Agreement of the CFD and all Owners of Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments.
Section 6.3. Notation of Bonds; Delivery of Amended Bonds. After the effective date of any action taken as hereinabove provided, the CFD may determine that the Bonds may bear a notation, by endorsement in form approved by the CFD, as to such action, and in that case upon demand of the Owner of any Outstanding Bond at such effective date and presentation of his Bond for the purpose at the Designated Corporate Trust Office of the Fiscal Agent or at suc h additional offices as the Fiscal Agent may select and designate for that purpose, a suitable notation as to such action shall be made on such Bonds. If the CFD shall so determine, new Bonds so modified as , in the opinion of the CFD, shall be necessary to conform to such action shall be prepared and execu ted, and in that case upon demand of the Owner of any Outstanding Bond at s uch effective date such new B onds shall be exchanged at the Designated Corporate Trust Office of the Fiscal Agent or at suc h additional offices as the Fiscal Agent may select and designate for that purpose, without cost to each Owner of Outstanding Bonds, upon surrender of such Outstanding Bonds.
ARTICLE VII
FISCAL AGENT
Section 7.1. Fiscal Agent. U.S. Bank Trust Company, National Association, a national banking association shall be the Fiscal Agent for the Bonds unl ess and until another Fiscal Agent is appointed by the CFD hereunder. The CFD may, at any time, prov ided that no Event of Default has occurred and is continuing, appoint a successor Fiscal Agent sa tisfying the requirements of Section 7.2 below for the purpose of receiving all money which the CFD is r equired to deposit with the Fiscal Agent hereunder and to allocate, use and apply the same as provided in this Fiscal Agent Agreement.
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The Fiscal Agent is hereby authorized to and shall mail by firs t class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest pa yments to the Bondowners, to select Bonds for redemption, and to maintain the Bond Register. The Fiscal Agent is hereby authorized to pay the principal of and premium, if any, on the Bonds when the same ar e duly presented to it for payment at maturity or on call and redemption, to provide for the registra tion of transfer and exchange of Bonds presented to it for such purposes, to provide for the cancellat ion of Bonds all as provided in this Fiscal Agent Agreement, and to provide for the authentication of Bonds , and shall perform all other duties assigned to or imposed on it as provided in this Fiscal Agent A greement; provided, however, that the Fiscal Agent undertakes to perform such duties and only such du ties as are set forth in this Fiscal Agent Agreement, and no duties of the Fiscal Agent shall be implied h ereunder. Discretionary rights of the Fiscal Agent under this Fiscal Agent Agreement shall not be con strued as duties. The Fiscal Agent may execute any of the powers hereunder or perform any duties hereu nder either directly or by or through agents or attorneys, and the Fiscal Agent shall not be responsi ble for any misconduct or negligence on the part of any agent or attorney appointed by it with due care her eunder. The Fiscal Agent shall keep accurate records of all funds administered by it and all Bonds paid, discharged and cancelled by it. The Fiscal Agent may establish such funds and accounts as shall be necessary to perform its obligations hereunder.
The Fiscal Agent is hereby authorized to redeem the Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Fiscal Agent shall cancel all Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.
Section 7.2. Removal of Fiscal Agent. Provided that no Event of Default has occurred and is continuing, the CFD may at any time at its sole discretion remo ve the Fiscal Agent initially appointed, and any successor thereto, by deli vering to the Fiscal Agent a written notice of its decision to remove the Fiscal Agent and may appoint a successor or successors thereto; provided that any such successor, other than the Fiscal Agent, shall be a bank or trust com pany havi ng (or if such bank or trust company is a member of a bank holding company system its bank holding compan y has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, and s ubject to supervision or examination by federal or state Authority. Any removal shall become effective only upon acceptance of appointment by the successor Fiscal Agent. If any bank or trust company appoi nted as a successor publishes a report of condition at least annually, pursuant to law or to the requirem ents of any supervising or examining authority above referred to, then for the purposes of this Sect ion the combined capital and surplus of such bank or trust company shall be deemed to be its combined capita l and surplus as set forth in its most recent report of condition so published. Any removal of the Fi scal Agent and appointment of a successor Fiscal Agent shall become effective only upon acceptance of app ointment by the successor Fiscal Agent and notice being sent by the successor Fiscal Agent to the Bond owners of the successor Fiscal Agent’s identity and address.
Section 7.3. Resignation of Fiscal Agent. The Fiscal Agent may at any time resign by giving written notice to the CFD and by giving to the Owners no tice of such resignation, which notice shall be mailed to the Owners at their addresses appearing in t he registration books in the Designated Corporate Trust Office of the Fiscal Agent. Upon receiving suc h notice of resignation, the CFD shall promptly appoint a successor Fiscal Agent satisfying the criter ia in Section 7.2 above by an instrument in writing. Any resignation or removal of the Fiscal Agent and ap pointment of a successor Fiscal Agent shall become effective only upon acceptance of appointment by t he successor Fiscal Agent provided, however, that in the event the CFD does not appoint a successor Fiscal Agent within 30 days following receipt of such notice of resignation, the resigning Fiscal Age nt may, at the expense of the CFD, petition the appropriate court having jurisdiction to appoint a successor Fiscal Agent.
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Section 7.4. Compensation and Liability of Fiscal Agent. T h e C F D s h a l l f r o m t i m e t o time, subject to any agreement between the CFD and the Fiscal A gent then in force, pay to the Fiscal Agent compensation for its services, reimburse the Fiscal Agent for all of its advances and expenditures, including, but not limited to, advances to and reasonable fees and expenses of independent accountants and counsel and agents employed by it in the exercise and perfo rmance of its powers and duties hereunder. The CFD agrees to indemnify the Fiscal Agent, inclu ding its officers, directors, employees and agents for, and hold it harm less against, any loss, claim, liability or expense incurred which does not arise from its own negligence or willful misconduct, arising ou t of or in connection with the administration of this Fiscal Agent Agreement, including the co sts and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Fiscal Agent shall not be liable for any error in judgment made in good faith by a reasonable officer, unless it shall be proved that the Fiscal A gent was negligent in ascertaining the pertinent facts. Whether or not therein expressly so provided, every provision of this Fiscal Agent Agreement relating to the conduct of or affecting the liability of or affording protection to the Fiscal Agent (acting in its capacity as Fiscal Agent), its officers, d irectors, employees and agents, shall be subject to the provisions of this Section 7.4.
The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any offering documents pertaining to the Bonds shall be taken as statements, promises, covenants and agreements of the CFD, and the Fiscal Agent assumes no responsi bility for the correctness of the same and makes no representations as to the validity or sufficiency of this Fiscal Agent Agreement or the Bonds, and shall incur no responsibility in respect thereof, ot her than in connection with its duties or obligations specifically set forth herein, in the Bonds, or in the certificate of authentication assigned to or imposed upon the Fiscal Agent. The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the Bonds for value.
The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, Bond or other paper or document believed b y it to be genuine and to have been signed or presented by the proper party or parties. The Fiscal Agent may consult with counsel of its selection, 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 hereu nder in good faith and in accordance therewith.
The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and h is or her title thereto satisfactorily established, if disputed. The Fiscal Agent may become the owne r or pledgee of Bonds, and may otherwise deal with the CFD with the same rights it would have if it were not the Fiscal Agent.
Whenever in the administration of its duties under this Fiscal Agent Agreement the Fiscal 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 willful misconduct on the part of the Fi scal Agent, be deemed to be conclusively proved and established by a written certificate of the CFD, and such certificate shall be full warrant to the Fiscal Agent for any action take n or suffered under the provisi ons of this Fiscal Agent Agreement upon the faith thereof, and the Fiscal Agent shall not be bound to make an investigation into the facts or matters stated therein, but the Fiscal Agent may, in lieu thereof, acce pt other evidence of such matter or may require such additional evidence as shall be reasonable.
The Fiscal Agent shall have no dut y or obligation whatsoever to enforce the collection of Special Taxes or other funds to be depos ited with it hereunder, or as t o 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
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provision in this Fiscal Agent Agreement shall require the Fisc al Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of a ny of its duties hereunder, or in the exercise of its rights or powers.
The Fiscal Agent makes no representations with respect to any i nformation, statement, or recital in, and shall have no liability with respect to, any official s tatement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
In no event shall the Fiscal Agent be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Fiscal Agent has been advised of th e likelihood of such loss or damage and regardless of the form of action.
The rights, privileges, protections, immunities and benefits gi ven to the Fiscal Agent, including, without limitation, its right to be indemnified, are extended t o, and shall be enforceable by, the Fiscal Agent in each of its capacities hereunder, and each agent, cust odian and other Person employed to act hereunder.
All rights and indemnities of the Fiscal Agent pursuant to this Section 7.4 shall survive the removal or resignation of the Fiscal Agent, the discharge of th e Bonds, or the amendment or assignment of this Fiscal Agent Agreement.
Section 7.5. Merger or Consolidation. Any company into which the Fiscal 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 Fiscal Agent may sell or transfer all or substantially all of its corporate trus t business, shall be the successor to the Fiscal Agent without the execution or filing of any paper or further a ct, 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 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 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 C F D i n t h e observance of any of the agreements, conditions or covenants on its part contained in this Fiscal Agent Agreement or the Bonds, and such default shall have conti nued for a period of 30 days after the CFD shall have been given notice in writing of such d efault by the Fiscal Agent or the Owners of 25% in aggregate principal amount of the Outstanding Bonds.
The CFD agrees to give written notice to the Fiscal Agent immed iately upon the occurrence of an event of default under (a) or (b) above and within 30 days of t he CFD’s knowledge of an event of default
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under (c) above. The Fiscal Agent shall not be deemed to have knowledge of any event of default described in Section 8.1(c) unless a Responsible Officer of the Fiscal Agent shall have actual knowledge thereof or a Responsible Officer of the Fiscal Agent shall have received written notice at its Designated Corporate Trust Office.
Section 8.2. Remedies of Owners. Following the occurrence of an event of default, any Owner shall have the right for the equal benefit and protection of all Owners similarly situated:
(1) By mandamus or other suit or proceeding at law or in equity to enforce his or her rights against the CFD and any of the members, officers and employees of the CFD, and to compel the CFD or any such members, officers or employees to perform and carry ou t their duties under the Act and their agreements with the Owners as provided in this Fiscal Agent Agreement; (2) By suit in equity to enjoin any actions or things which are unl awful or violate the rights of the Owners; or
(3) By a suit in equity to require the CFD and its members, officer s and employees to account as the fiscal agent of an express trust.
Nothing in this Article or in any other provision of this Fisca l Agent Agreement or the Bonds shall affect or impair the oblig ation of the CFD, which is abso lute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners thereof at the respective dates of maturity, as herein provided, out of the Special Taxes and other amounts pledged for such payment, or affect or impair the right of action, which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and in this Fiscal Agent Agreement.
A waiver of any default or breach of duty or contract by any Ow ner 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 by any Owner to exerci se any right or power accruing upon any default shall impair any such right or power or shall be constr ued to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon t h e O w n e r s b y t h e A c t o r b y t h i s article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exerc ise any remedy is abandoned or determined adversely to the Owners, the CFD and the Owners shal l be restored to the ir former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
No remedy herein conferred upon or reserved to the Owners is in tended 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 hereaf ter existing, at law or in equi ty or by statute or otherwise, and may be exercised without exhausting and without regard to any other re medy conferred by the Act or any other law.
In case the moneys held by the Fiscal Agent after an event of d efault pursuant to Section 8.1(a) or (b) shall be insufficient to pay in full the whole amount so ow ing and unpaid upon the Outstanding Bonds, then all available amounts shall be applied to the payme nt of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest.
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ARTICLE IX
DEFEASANCE
Section 9.1. Defeasance. If the CFD shall pay or cause to be paid, or there shall othe rwise be paid, to the Owner of an Outstanding Bond the interest due ther eon and the principal thereof, at the times and in the manner stipulated in this Fiscal Agent Agreement or any Supplemental Fiscal Agent Agreement, then the Owner of su ch Bond shall cease to be entitl ed to the pledge of Special Taxes, and, other than as set forth below, all covenants, agreements and ot her obligations of the CFD to the Owner of such Bond under this Fiscal Agent Agreement shall thereupon cea se, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds pursuant to this Section, the Fiscal Agent shall execute and deliver to the CFD all such instruments as may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the CFD’s general fund all money or securities held by it pursuant to thi s Fiscal Agent Agreement which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds.
Any Outstanding Bond shall be deemed to have been paid within t he meaning expressed in the first paragraph of this Section if such 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 a ny, and interest on such Bond, as and when the same become due and payable; (b) by depositing with the Fiscal Agent or another escrow bank appo inted by the CFD at or before maturity, money which, together with the amoun ts then on deposit in the Special Tax Fund (exclusive of amounts transferred to the Admin istrative Expense Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; or (c) by depositing with the Fiscal Agent or another escrow bank appo inted by the CFD noncallable Defeasance Securities, in which the CFD may lawfully invest its money, in such amount as will be sufficient, together with the interest to acc rue thereon and moneys then on deposit in the Special Tax Fund (exclusive of amounts transferr ed to the Administrative Expense Account) and available for such purpose, together with the inte rest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on su ch Bond, as and when the same shall become due and payable;
then, at the election of the CFD , and notwithstanding that any Outstanding Bonds shall not have been surrendered for payment, all obligations of the CFD under this Fiscal Agent Agreement and any Supplemental Fiscal Agent Agreement with respect to such Bond shall cease and terminate, except for the obligation of the Fiscal Agent t o pay or cause to be paid to th e Owners of any such Bond not so surrendered and paid, all sums due thereon and except for the c ovenants of the CFD contained in Section
5.2(6) or any covenants in a Supplemental Fiscal Agent Agreemen t relating to compliance with the Code.
Notice of such election shall be filed with the Fiscal Agent no t less than ten days pr ior to the proposed defeasance date, or such shorter period of time as may be accep table to the Fiscal Agent. In connection with a defeasance under (c) above, there shall be provided to t he CFD a verification report from an independent nationally recogni zed certified public accountant s tating its opinion as to the sufficiency of the moneys or securities deposited with the Fiscal Agent or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable , and with respect to defeasance under (b) or (c) above an opinion of Bond Counsel (it being understoo d that the Fiscal Agent may conclusively rely upon the opinion of the certified public accountant) to th e effect that the Bonds being defeased have
104436300.6 39
been legally defeased in accordan ce with this Fiscal Agent Agre ement and any applicable Supplemental Fiscal Agent Agreement. If a forward supply contract is employ ed in connection with an advance refunding to be effected under (c) above, (i) such verification report shall expressly state that the adequacy of the amounts deposited with the bank under (c) above to accomplish the refunding relies solely on the initial escrowed investments and the maturity pri ncipal thereof and interest income thereon and does not assume performance under or compliance with the fo rward supply contract, and (ii) the applicable escrow agreement execu ted to effect an advance refun ding in accordance with (c) above shall provide that, in the event of any discrepancy or difference bet ween the terms of the forward supply contract and the escrow agreement, the terms of the escrow agreement shall be controlling.
Upon a defeasance, the Fiscal Agent, upon the written request o f the CFD, shall release the rights of the Owners of such Bonds which have been defeased under this Fiscal Agent Agreement and any Supplemental Fiscal Agent Agreement and execute and deliver to the CFD 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, the Fiscal Agent shall pay over or deliver t o the CFD any funds held by the Fiscal Agent at the time of a defeasance, which are not required for t he purpose of paying and discharging the principal of, premium, if any, or interest on the Bonds when du e. The Fiscal Agent shall, at the written direction of the CFD, mail, first class, postage prepaid, a not ice to the Bondowners whose Bonds have been defeased, in the form directed by the CFD, stating that the defeasance has occurred.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent for payment upon maturity or for redemption shall be upon payment therefor, and any Bond purchased by the CFD as authorized herein and delivered to the Fiscal Agent for such pu rpose shall be, cancelled forthwith and shall not be reissued. The Fiscal Agent shall dispose of such Bonds in accordance with its then customary procedures, as provided by law, and furnish to the CFD a certificate of such disposal.
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 Fiscal Agent Agreement to be signed or executed by Bondowners may be in any number of concurrent instruments of similar tenor may be signed or ex ecuted by such Owners in perso n or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust c ompany or other depository for such Bonds.
Proof of the execution of any such instrument, or of any instru ment appointing any such attorney, and of the ownership of Bonds shall be sufficient for the purposes of this Fiscal Agent Agreement (except as otherwise herein provided), if made in the following manner:
(1) The fact and date of the execution by any Owner or his or her a ttorney 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 or other eligible guarantor locate d within the United States of America.
Where any such instrument is executed by an officer of a corpor ation or association or a member of a partnership on behalf of such corporation, association or partn ership, such signature guarantee shall also constitute sufficient proof of his Authority.
(2) As to any Bond, the person in whose name the same shall be regi stered in the Bond Register shall be deemed and regarded as the absolute owner the reof for all purposes, and payment of or on account of the principal of any such Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner th ereof or his or her legal repre sentative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond and the interest thereon to the extent of
104436300.6 40
the sum or sums to be paid. Neither the CFD nor the Fiscal Age nt shall be affected by any notice to the contrary.
Nothing contained in this Fiscal Agent Agreement shall be const rued as limiting the Fiscal Agent or the CFD to such proof, it being intended that the Fiscal Age nt or the CFD may accept any other evidence of the matters herein stated which shall be sufficient . Any request or consent of the Owner of any Bond shall bind every future Owner of the same Bond in resp ect of anything done or suffered to be done by the Fiscal Agent or the CFD in pursuance of such request or consent.
Section 10.3. Unclaimed Moneys. To the extent permitted by law, anything in this Fiscal Agent Agreement to the contrary notwithstanding, any money held by the Fiscal Agent for the payment and discharge of any of the Outstanding Bonds which remain uncl aimed for a period ending at the earlier of two Business Days prior to the date such funds would escheat to the State or two years after the date when such Outstanding Bonds have become due and payable, if such money was held by the Fiscal Agent at such date, or for a period ending at the earlier of two Busi ness Days prior to the date such funds would escheat to the State or two years after the date of deposit of such money if deposited with the Fiscal Agent after the date when such Outstanding Bonds become due and payab le, shall be repaid by the Fiscal Agent to the CFD, as its absolute property, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners shall look only to the CFD for t he payment of such Outstanding Bonds; provided, however, that, before being required to make any such payment to the CFD, the Fiscal Agent at the written request of the CFD and, at the expense of the CFD, cause to be mailed by first-class mail, postage prepaid, to the registere d Owners of such Outstanding B onds at their addresses as they appear on the registration books of the Fiscal Agent a notice that said m oney 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 return ed to the CFD. The Fiscal Agent shall not be liable to the CFD or any Owner for interest on uninveste d funds held by it for the payment and discharge of the principal, premium or interest on any of the Bonds to any Owner.
Section 10.4. Provisions Constitute Contract. The provisions of this Fiscal Agent Agreement shall constitute a cont ract between the CFD and the B ondowners 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 abandon ed, or be determined adversely to the Bondowners or the Fiscal Agent, then the CFD, the Fiscal Agent and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, ac tion or proceeding had not been brought or taken.
After the issuance and delivery of the Bonds this Fiscal Agent Agreement shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Fiscal Agent Agreement, but to no greater extent and in no other manner.
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the CFD from making contracts or creating bonded or ot her indebtedness payable from a pledge of the Special Taxes which is subordinate to the pledge hereund er, or which is payable from the general fund of the CFD or from taxes or any source other than the Spec ial Taxes and other amounts pledged hereunder.
Section 10.6. Further Assurances. The CFD 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 Fisc al Agent Agreement, and for the better
104436300.6 41
assuring and confirming unto the Own ers of the Bonds the rights and benefits provided in this Fiscal Agent Agreement.
Section 10.7. Severability. If any covenant, agreement or provision, or any portion there of, contained in this Fiscal Agent Agreement, or the application th ereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the rema inder of this Fiscal Agent Agreement and the application of any such covenant, agreement or provision, o r portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affec ted thereby, and this Fiscal Agent Agreement, the 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 10.8. Notices. Any notice, request, complaint, demand or other communication under this Fiscal Agent Agreement shall be given by first-class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile or othe r form of electronic communication, at its number or email address set forth b e l o w . N o t i c e s h a l l b e e f f e ctive either (a) upon transmission by telecopy or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The CFD or the Fiscal Agent may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the CFD: City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce)
c/o City of Rialto
150 South Palm Avenue
Rialto, CA 92376
Attention: City Manager
Telephone: (909) 820-2689
E-mail: [email protected]
If to the Fiscal Agent: U.S. Bank Trust Company, National Assoc iation 633 West 5th Street,
Los Angeles, CA 90071
Attention: Corporate Trust Department
Telephone: (213) 615 - 6081
E-mail: [email protected]
Disbursement of funds request to:
Facsimile: _____________
Or online via the Message Center Function
The Fiscal Agent shall not be liable for any losses, costs or e xpenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inc onsistent with a subsequent wri tten instruction. The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Fiscal Agent, includi ng without limitation the risk of the Fiscal Agent acting on unauthorized instructions, and the risk of interception and misuse by third parties.
Section 10.9. General Authorization. The Mayor, City Manager and the Finance Director are hereby respectively authorized to do and perform from time to t ime any and all acts and things consistent with this Fiscal Agent Agreement necessary or appropriate to carry the same into effect.
104436300.6 42
Section 10.10. Execution in Counterparts and Electronic Execution. This Fiscal Agent Agreement may be executed in any number of counterparts and eac h of such counterparts shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Fiscal Agent A greement and of signature pages by facsimile or PDF transmission shall constitute effective execut ion and delivery of this Fiscal Agent Agreement as to the parties hereto and may be used in lieu of t he original Fiscal Agent Agreement and signature pages for all purposes. Each party agrees that the e lectronic signatures, whether digital or encrypted, of the parties included in this Fiscal Agent Agreeme nt are intended to authenticate this writing and to have the same force and effect as manual signatures. El ectronic signature means any electronic sound, symbol, or process attached to or logically associated w ith a record and executed and adopted by a party with the intent to sign such record, including facsimile or email electronic signatures.
Section 10.11. Force Majeure. In no event shall the Fiscal Agent be responsible or liable f or any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limit ation, strikes, work stoppages, pandemics, epidemics, recognized public emerg encies, quarantine restrictio ns, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, or, as a result of the foregoing, and interruptions, loss or malfunctions of utilities , communications or computer (software and hardware) services; it being understood that the Fiscal Agent s hall use reasonable efforts which are consistent with accepted practices in the banking industry to r esume performance as soon as practicable under the circumstances.
Section 10.12. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Fiscal Agent, like a ll financial institutions and in order to help fight the funding of terrorism and money laundering, is require d to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Fiscal Agent. The parties to this Fiscal Agent Agreement agree that they will provide the Fiscal Agent with such information as it may request in order for the Fiscal Agent to satisfy the requirements of the U.S.A. Patriot Act.
104436300.6 S-1
I N W I T N E S S W H E R E O F , t h e C I T Y C O UNCIL OF THE CITY OF RIALTO, act ing as the legislative body of CITY OF RIALTO COMMUNITY FACILITIES DISTRIC T NO. 2019-2 (FOOTHILL/SPRUCE) , has caused this Fiscal Agent Agreement to b e signed by its Mayor and U.S.
BANK TRUST COMPANY, NATIONAL ASSOCIATION, in token of its accep tance of the agency created hereunder, has caused this Fiscal Agent Agreement to be signed in its corporate name by its officer identified below, all as of the day and year first above written.
CITY OF RIALTO COMMUNITY FACILITIES
DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE)
By:______________________________________
Mayor of the City of Rialto, acting in its
capacity as the legislative body of City of
Rialto Community Facilities District No.
2019-2 (Foothill/Spruce)
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
By:_____________________________________
Its: Authorized Officer
104436300.6 A-1
EXHIBIT A
FORM OF BOND
No. _____ $__________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO
CITY OF RIALTO
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE) SPECIAL TAX BOND, SERIES 2022
INTEREST RATE MATURITY DATE DATED DATE CUSIP NO.
________% September 1, ____ April __, 2022 _________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: ______________________ __ AND NO/100 DOLLARS CITY OF RIALTO COMMUNITY FACILITIES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE) (the “CFD”) situated in the County of San Ber nardino, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amo unts held under the Fiscal Agent Agreement (as hereinafter define d), to the Registered Owner nam ed 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 A mount 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 pa yable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinaft er 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 I nterest 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 of each year (each, an “Interest Payment Date”), commencing September 1, 2022, 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 Designated Corporate Trust Office of U.S. Bank Trust Company, N ational Association, a national banking 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 circ umstances described in the Fiscal Agent
104436300.6 A-2
Agreement by wire transfer to an account within the United Stat es, to the Registered Owner hereof as of the close of business on the fifteenth day of the month precedi ng the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s addr ess as it appears on the registration books maintained by the Fiscal Agent. Interest due on the Bond s shall be calculated on a basis of a 360- day year comprised of twelve 30-day months.
This Bond is one of a duly authorized issue of “City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce) Special Tax Bonds, Series 2022” (the “Bonds”) issued in the aggregate principal amount of $[principal amount] pursuant to the Mello-Roos Commun ity Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Gover nment Code (the “Act”) for the purpose of financing the acquisition of certain capital facilities in t he CFD, as defined within the Funding Agreement, dated December 10, 2019, financing certain capital i mpact fees of the City, funding a reserve account, and paying certain costs related to the issuance of th e Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution a dopted by the City Council of the City of Rialto, acting in its capacity as the legislative body of the C FD (the “Council”) on March 22, 2022 and a Fiscal Agent Agreement dated as of April 1, 2022 (the “Fiscal A gent Agreement”), between the CFD and the Fiscal Agent, and this reference incorporates the Fiscal Ag ent Agreement herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Fiscal Agent Agreement is executed under a nd this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Any amounts for the payment hereof shall be limited to the Spec ial Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (exclusive of amounts transfe rred to the Administrative Expense Account) established under the Fisc al Agent Agreement. The CFD 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 forecl osure 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, 2030 are subject to redemption prior to maturity at the option of the CFD on any date on or after September 1, 2029 , as a whole or in part, by lot, from any available source of funds at the following redemption prices (e xpressed as a percentage of the principal amount of Bonds to be redeemed), together with accrued interest thereon to the date fixed for redemption:
Redemption Dates Redemption Prices
September 1, 2029 through August 31, 2030 103%
September 1, 2030 through August 31, 2031 102%
September 1, 2031 through August 31, 2032 101%
September 1, 2032 and thereafter 100%
104436300.6 A-3
The Bonds are subject to mandatory redemption prior to maturity on any Interest Payment Date, on or after September 1, 2022, as a whole or in part, in a mann er determined by the CFD from prepayments of Special Taxes at the following redemption prices (expressed as a percentage of the principal amount of Bonds to be redeemed), together with accrue d interest thereon to the date fixed for redemption:
Redemption Dates Redemption Prices
September 1, 2022 and each March 1 and September 1 through and including March 1, 2030
103%
September 1, 2030 and March 1, 2031 102%
September 1, 2031 and March 1, 2032 101%
September 1, 2032 and each March 1 and September 1 thereafter 1 00% In connection with such redemption, the CFD may also apply amou nts in the Reserve Account which will be in excess of the Reserve Requirement as a result of such Special Tax prepayment to redeem Bonds as set forth above.
The Term Bonds maturing on September 1, 20__, on September 1, 2 0__ and on September 1, 20__ are subject to mandatory redemption, in part by lot, on Se ptember 1 in each year commencing September 1, 20__ with respect t o the Term Bonds maturing on Se ptember 1, 20__, commencing September 1, 20__ with respect to the Term Bonds maturing on Se ptember 1, 20__, and commencing September 1, 20__ with respect to the Term Bonds maturing on Se ptember 1, 20__, from the Sinking Fund Payments that have been de posited into the Redemption Acco unt at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest thereon to the date of redemption as set forth in the following schedule; provided, ho wever, that (i) in lieu of redemption thereof, the Term Bonds may be purchased by the CFD and tendere d to the Fiscal Agent, and (ii) if some but not all of the Term Bonds have been optionally redeemed or redeemed due to prepayment of Special Taxes, the total amount of all future sinking payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinki ng payments on a pro rata basis (as nearly as practicable) in integral multiples of $5,000 as deter mined by the CFD in a written notice to the Fiscal Agent.
Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1)
Principal Amount
(maturity)
104436300.6 A-4
Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1) Principal Amount
(maturity)
Term Bonds Maturing on September 1, 20__
Redemption Date
(September 1)
Principal Amount
(maturity)
Notice of redemption with respect to the Bonds to be redeemed s hall 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 redemp tion will cease to accrue interest on the specified redemption date; provided that funds for the redempti on 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.
If at the time of mailing of any notice of optional redemption there shall not have been deposited with the Fiscal Agent moneys su fficient to redeem all the Bonds called for redemption, such notice shall state that it is subject to the deposit of the redemption money s with the Fiscal Agent not later than the opening of business on the redemption date and will be of no effect unless such moneys are so deposited.
The CFD shall have the right to rescind any notice of optional redemption by written notice to the Fiscal Agent on or prior to the date fixed for redemption. Any notice of such redemption shall be cancelled and annulled if for any reason funds will not be or a re not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default hereunder. The CFD and the Fiscal Agent shall have no liability to the Owners or any other party related to or arising from such resci ssion of redemption. The Fiscal Agent shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
This Bond shall be registered in the name of the Registered Own er hereof, as to both principal and interest, and the CFD and the Fiscal Agent may treat the Re gistered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
104436300.6 A-5
The Bonds are issuable only in fully registered form in the den omination of $5,000 or any integral multiple thereof and may be exchanged for a like aggre gate 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 h ereof, in person or by his attorney duly authorized in writing, at the Designated Corporate Trust Office of the Fiscal Agent in Los Angeles, California, but only in the manner, subject to the limitations and upon payment of the charges provided in the Fiscal Agent Agreement, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
The Fiscal Agent shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bon ds to be redeemed, or (ii) any Bonds chosen for redemption.
The rights and obligations of the CFD and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the cons ent of the registered owners, to the extent and upon the terms provided in the Fiscal Agent Agreement.
The Fiscal Agent Agreement contains provisions permitting the C FD to make provision for the payment of the interest on, and the principal and premium, if a ny, of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Fiscal Agent Agreement.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF RIALTO ( THE “CITY”) OR OF THE CFD FOR WHICH THE CITY OR THE CFD IS OBLIGATE D TO LEVY OR
PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTH ER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGAT IONS OF THE
CFD PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER AMO UNTS
PLEDGED UNDER THE FISCAL AGENT AGREEMENT BUT ARE NOT A DEBT OF THE CITY,
THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WI THIN 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, con ditions 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 perfo rmed in due time, form and man ner as required by law, and that the amount of this Bond, together with all other indebtedness of th e CFD, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
104436300.6 A-6
IN WITNESS WHEREOF, City of Rialto Community Facilities Distric t No. 2019-2 (Foothill/Spruce) has caused this Bond to be dated as of the D ated Date, to be signed on behalf of the CFD by the Mayor of the City of Rialto, acting as the legislati ve body of the City of Rialto Community Facilities District No. 2019-2 (Foothill/Spruce) by her manual signature and attested by the manual signature of the City Clerk of the City of Rialto and has cause d the seal of the City to be reproduced hereon.
[SEAL]
By:______________________________________
Mayor of the City of Rialto , acting as the
legislative body of City of Rialto Community
Facilities District No. 2019-2 (Foothill/Spruce)
ATTEST:
_________________________________________
City Clerk of the City of Rialto, acting as the
legislative body of City of Rialto Community
Facilities District No. 2019-2 (Foothill/Spruce)
104436300.6 A-7
[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: April __, 2022 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Fiscal Agent
By:______________________________________
Its: Authorized Signatory
104436300.6 A-8
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
(NAME, ADDRESS, AND TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER OF ASSIGNEE) the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) _____________________ ____________________________________________ attorney, to trans fer the same on the registration 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 signature(s) on this Assignment must
correspond with the names as written on the face of the within Bond in every particular without alteration or
enlargement or any change whatsoever.
104436300.6 B-1
EXHIBIT B
REQUISITION NO. [ ]
CITY OF RIALTO
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE)
REQUISITION FOR DISBURSEMENT OF PROJECT COSTS/COSTS OF ISSUANCE U.S. Bank Trust Company, National Association is hereby directe d to disburse from [the Costs of Issuance Account of the] Acquis ition and Construction Fund of t he Community Facilities District No. 2019-2 (Foothill/Spruce), established by the Fiscal Agent Agree ment dated as of April 1, 2022, between the Fiscal Agent and City of Rialto Community Facilities Distri ct No. 2019-2 (Foothill/Spruce), to the payee, designated on Exhibit A attached hereto and by this refe rence incorporated herein, at the address set forth below such payee name, the respective sums set forth opposite such payees, in payment for the obligation described on said Exhibit “A.”
Each obligation shown on Exhibit A has been properly verified and approved by the CFD and is a proper charge against the Acquisition and Construction Fund.
The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditi ons to the release of this amount from the Community Facilities District No. 2019-2 (Foothill/Spruce) Acqu isition and Construction Fund are satisfied.
There has not been filed with nor served upon the CFD notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simul taneously with the payment of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.
Payments shall be made by check or wire transfer in accordance with the payment instructions set forth in Exhibit “A” attached or in the attached invoices submi tted in accordance therewith and the Fiscal Agent may rely on such payment instructions though given by the CFD with no duty to investigate or inquire as to the authenticity of the attached invoice or the payment instructions contained therein.
Dated: _____________________ CITY O F RIALTO COMMUNITY FACILITIES DISTRICT NO. 2019-2 (FOOTHILL/SPRUCE)
By:______________________________________
Authorized Representative