HomeMy WebLinkAboutIndenture of Trust (1996) 13128-01 JHHW:BDQ:kla
INDENTURE OF TRUST
Dated as of July 1,1996
by and between
U.S.TRUST COMPANY OF CALIFORNIA,N.A.,
as trustee
and the
COUNTYWIDE PUBLIC FINANCING AUTHORITY
Authorizing the Issuance of
$27,725,000
Countywide Public Financing Authority
1996 Revenue Bonds
TABLE OF CONTENTS
Fagg
ARTICLE I'
DEFINITIONS;CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions 3
Section 1.02. Interpretation 10
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds 11
Section 2.02. Terms of the Bonds 11
Section 2.03. Transfer and Exchange of Bonds 12
Section 2.04. Book-Entry System 12
Section 2.05. Registration Books 13
Section 2.06. Form and Execution of Bonds 13
Section 2.07. Temporary Bonds 14
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen 14
Section 2.09. CUSIP Numbers 14
Section 2.10. Payment Procedure Pursuant to Municipal Bond Insurance Policy 15
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds 17
Section 3.02. Application of Proceeds of Sale of Bonds 17
Section 3.03. Establishment and Application of Costs of Issuance Fund 17
Section 3.04. Establishment and Application of Project Fund 17
Section 3.05. Validity of Bonds 18
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption 19
Section 4.02. Selection of Bonds for Redemption 19
Section 4.03. Notice of Redemption 19
Section 4.04. Partial Redemption of Bonds 20
Section 4.05. Effect of Redemption 20
Section 4.06. Purchase of Bonds 20
ARTICLE V
REVENUES;FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL
AND INTEREST
Section 5.01. Pledge and Assignment; Bond Fund 21
Section 5.02. Allocation of Revenues - 21
Section 5.03. Application of Interest Account 22
Section 5.04. Application of Principal Account 22
Section 5.05. Application of Reserve Account 22
Section 5.06. Application of Redemption Fund 23
Section 5.07. Insurance and Condemnation Fund 23
Section 5.08. Investments 24
Section 5.09. Valuation and Disposition of Investments 25
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ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment 26
Section 6.02. Extension of Payment of Bonds 26
Section 6.03. Against Encumbrances 26
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment 26
Section 6.05. Accounting Records 26
Section 6.06. No Additional Obligations 26
Section 6.07. Tax Covenants 27
Section 6.08. Collection of Amounts Due Under Lease Agreements 27
Section 6.09. Continuing Disclosure 27
Section 6.10. Waiver of Laws - 28
Section 6.11. Further Assurances 28
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default 29
Section 7.02. Remedies Upon Event of Default 29
Section 7.03. Application of Revenues and Other Funds After Default 30
Section 7.04. Trustee to Represent Bond Owners 30
Section 7.05. Bond Owners' Direction of Proceedings 31
Section 7.06. Limitation on Bond Owners' Right to Sue 31
Section 7.07. Absolute Obligation of Authority 31
Section 7.08. Termination of Proceedings 32
Section 7.09. Remedies Not Exclusive 32
Section 7.10. No Waiver of Default 32
Section 7.11. Parties Interested Herein 32
Section 7.12. Consent of Municipal Bond Insurer 32
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee 34
Section 8.02. Merger or Consolidation 35
Section 8.03. Liability of Trustee 35
Section 8.04. Right to Rely on Documents 37
Section 8.05. Preservation and Inspection of Documents 37
Section 8.06. Compensation and Indemnification 37
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01. Amendments Permitted 39
Section 9.02. Effect of Supplemental Indenture 40
Section 9.03. Endorsement of Bonds;Preparation of New Bonds 40
Section 9.04. Amendment of Particular Bonds 40
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture 41
Section 10.02. Discharge of Liability on Bonds 41
Section 10.03. Deposit of Money or Securities with Trustee 41
Section 10.04. Unclaimed Funds 42
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues 43
Section 11.02. Limitation of Rights to Parties and Bond Owners 43
Section 11.03. Funds and Accounts 43
Section 11.04. Waiver of Notice; Requirement of Mailed Notice 43
Section 11.05. Destruction of Bonds 43
Section 11.06. Severability of Invalid Provisions 43
Section 11.07. Notices 44
Section 11.08. Notices to be Given to the Municipal Bond Insurer 44
Section 11.09. Evidence of Rights of Bond Owners 45
Section 11.10. Disqualified Bonds 45
Section 11.11. Money Held for Particular Bonds 45
Section.11.12. Waiver of Personal Liability 46
Section 11.13. Successor Is Deemed Included in All References to Predecessor 46
Section 11.14. Execution in Several Counterparts 46
Section 11.15. Governing Law 46
EXHIBIT A: Form of Bond
EXHIBIT B: Members
EXHIBIT C: Description of Project
EXHIBIT D: Allocation of Principal to Each Member
EXHIBIT E: Members' Percentage of Annual Debt Service
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INDENTURE OF TRUST
This INDENTURE OF TRUST, made and entered into as of July 1, 1996, is by and
between the COUNTYWIDE PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority duly organized and existing under and by virtue of the laws of the State of California
(the "Authority"), and U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking
association organized and existing under the laws of the United States of America with a
corporate trust office in Los Angeles, California, being qualified to accept and administer the
trusts hereby created (the "Trustee");
WITNESSETH :
WHEREAS, the Authority is a joint exercise of powers authority duly organized and
existing under and pursuant to that certain Joint Exercise of Powers Agreement,dated June 19,
1996, by and among the Cities of Brea, Buena Park, Fullerton, Garden Grove, Orange, Santa
Ana,Seal Beach, Stanton and Tustin (collectively, the "Members"), and under the provisions of
Articles 1 through 4 (commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of the
California Government Code (the "Act"), and is authorized pursuant to Article 4 (commencing
with section 6584) of the Act (the "Bond Law") to borrow money for the purpose of financing
the acquisition of bonds,notes and other obligations of, or for the purpose of making loans to,
public entities,including the Members,and to provide financing for public capital improvements
of public entities,including the Members;and
WHEREAS, the Members each wish to finance their proportionate share of the Orange
County Countywide 800 MHz communications system and to finance other capital
improvements within the geographic boundaries of the certain of the Members (collectively,the
"Project");
WHEREAS, for the purpose of providing financing for the Project, the Authority has
determined to issue its Countywide Public Financing Authority 1996 Revenue Bonds, in the
aggregate principal amount of $27,725,000 (the "Bonds"), all pursuant to and secured by this
Indenture in the manner provided herein;and
WHEREAS, in order to provide for the repayment of the Bonds, each Member has
agreed to lease certain real property and improvements to the Authority and to lease-back such
real property and improvements from the Authority pursuant to separate lease agreements,
each dated as of July 1, 1996, by and between the Authority, as lessor, and such Member, as
lessee,under which such Members,in the aggregate,have agreed to make certain lease payments
to the Authority which have been calculated to be sufficient to enable the Authority to pay the
principal of and interest and premium (if any) on the Bonds when due and payable;and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and
secured and to secure the payment of the principal thereof and interest and premium, if any,
thereon,the Authority has authorized the execution and delivery of this Indenture;
WHEREAS, all acts and proceedings required by law necessary to make the Bonds,
when executed by the Authority, authenticated and delivered by the Trustee, and duly issued,
the valid,binding and legal special obligations of the Authority,and to constitute this Indenture
a valid and binding agreement for the uses and purposes herein set forth in accordance with its
terms,have been done and taken,and the execution and delivery of the Indenture have been in
all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time
issued and outstanding under this Indenture, according to their tenor, and to secure the
performance and observance of all the covenants and conditions therein and herein set forth,
and to declare the terms and conditions upon and subject to which the Bonds are to be issued
and received, and in consideration of the premises and of the mutual covenants herein
contained and of the purchase and acceptance of the Bonds by the owners thereof, and for
other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does
hereby covenant and agree with the Trustee, for the benefit of the respective owners from time
to time of the Bonds, as follows:
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ARTICLE I
DEFINITIONS;CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section 1.01 shall, for all purposes of this Indenture and of any indenture supplemental hereto
and of any certificate, opinion or other document herein mentioned,have the meanings herein
specified, to be equally applicable to both the singular and plural forms of any of the terms
herein defined. In addition, all capitalized terms used herein and not otherwise defined in this
Section 1.01 shall have the respective meanings given such terms in the Lease Agreements.
"Additional Payments" means the additional payments to be made by the Members
pursuant to Section 4.7 of the Lease Agreements.
"Authority" means the Countywide Public Financing Authority, a joint exercise of
powers authority duly organized and existing under the laws of the State .
"Authority Continuing Disclosure Certificate" shall mean that certain Continuing
Disclosure Certificate executed by the Authority and dated the Closing Date, as originally
executed and as it may be amended from time to time in accordance with the terms thereof.
"Authorized Representative" means: (a) with respect to the Authority, its Chairman,
Secretary or Treasurer, or any other person designated as an Authorized Representative of the
Authority by a Written Certificate of the Authority signed by its Chairman and filed with the
Members and the Trustee; and (b) with respect to a Member, its Mayor, City Manager,Finance
Director, or any other person designated as an Authorized Representative of such Member by a
Written Certificate of such Member signed by its Mayor,City Manager or Finance Director and
filed with the Authority and the Trustee.
"Bond Counsel" means (a) Jones Hall Hill & White,A Professional Law Corporation, or
(b) any other attorney or firm of attorneys appointed by or acceptable to the Authority of
nationally-recognized experience in the issuance of obligations the interest on which is
excludable from gross income for federal income tax purposes under the Code.
"Bond Fund"means the fund by that name established and held by the Trustee pursuant
to Section 5.01.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting
Article 4 (commencing with section 6584) of Chapter 5, Division 7, Title 1 of the Government
Code of the State , as amended from time to time.
"Bond Year" means each twelve-month period extending from August 2 in one calendar
year to August 1 of the succeeding calendar year, both dates inclusive; except that the first
Bond Year shall commence on the Closing Date and extend to and including August 1,1997.
"Bonds" means the $27,725,000 aggregate principal amount of Countywide Public
Financing Authority 1996 Revenue Bonds authorized by and at any time Outstanding pursuant
to the Bond Law and this Indenture.
"Business Day" means a day (other than a Saturday or a Sunday) on which banks are
not required or authorized to remain closed in the city in which the Office of the Trustee is
located.
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"Closing Date" means July 31, 1996, being the date of delivery of the Bonds to the
Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or
(except as otherwise referenced herein) as it may be amended to apply to obligations issued on
the Closing Date, together with applicable proposed, temporary and final regulations
promulgated, and applicable official public guidance published,under such Code.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds,including but not limited to all compensation,fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority,
initial fees and expenses of the Trustee (including but not limited to fees and expenses for legal
counsel),title insurance premiums, appraisal fees, compensation to any financial consultants or
underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of
preparation and reproduction of documents and costs of printing.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"Defeasance Obligations"means:
(a) cash;
(b)non-callable Federal Securities (including State and Local Government Securities);
(c) direct obligations of the United States of America which have been stripped by the
Department of the Treasury of the United States of America;
(d)CATS, TIGRS and similar securities;
(e)bonds, debentures, notes or other evidence of indebtedness issued 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 : (i) direct obligations or fully guaranteed certificates
, of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership
of the Farmers Home Administration; (iii) obligations of the Federal Financing Bank; (iv)
participation certificates of the General Services Administration; (v) guaranteed Title XI
financings of the U.S. Maritime Administration; (vii) New Communities debentures; (vii) U.S.
government guaranteed public housing notes and bonds; and (viii) project notes and local
authority bonds of the U.S. Department of Housing and Urban Development; and
(f) pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P;
provided,however, pre-refunded municipal bonds rated by S&P only (i.e.,no Moody's rating)
are acceptable if such pre-refunded municipal bonds were pre-refunded with cash, direct U.S.
or U.S. guaranteed obligations or AAA rated pre-refunded municipal bonds.
"Event of Default" means any of the events specified in Section 7.01.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding)if the investment is traded
on an established securities.market (within the meaning of section 1273 of the Code) and,
otherwise,the term "fair market value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if(i) the investment is a certificate of deposit that is acquired
in accordance with applicable regulations under the Code, (ii) the investment is an agreement
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with specifically negotiated withdrawal or reinvestment provisions and a specifically
negotiated interest rate (for example, a guaranteed investment contract, a forward supply
contract or other investment agreement) that is acquired in accordance with applicable
regulations under the Code, (iii) the investment is a United States Treasury Security—State and
Local Government Series, that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State of California but only if at all times during which the investment is held its
yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable
direct obligation of the United States. The Trustee shall have no duty in connection with the
determination of Fair Market Value other than to follow the investment directions of a City
Representative in any written directions of a City Representative.
"Federal Securities" means direct general obligations of the United States of America
(including obligations issued or held in book entry form on the books of the Department of the
Treasury) or obligations the payment of principal of and interest on which are unconditionally
guaranteed by, the United States of America.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month
period selected and designated by the Authority as its official fiscal year period.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented,modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
"Independent Accountant" means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority or the Members, and who, or each of
whom (a) is in fact independent and not under domination of the Authority or the Member; (b)
does not have any substantial interest, direct or indirect, in the Authority or the Member; and
(c) is not connected with the Authority or the Members as an officer or employee of the
Authority or the Members but who may be regularly retained to make annual or other audits of
the books of or reports to the Authority or the Members.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service",
30 Montgomery Street, 10th Floor,Jersey City, NJ 07302, Attention: Editor;Kenny Information
Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, NY 10006; Moody's
5250 77 Centre Drive, Suite 150, Charlotte, NC 28217, Attention: Called Bonds Dept.; S&P's
"Called Bond Record," 25 Broadway, 3rd Floor, New York, NY 10004; and,in accordance with
then current guidelines of the Securities and Exchange Commission, such other addresses
and/or such other services providing information with respect to the redemption of bonds as
the Authority may designate in a Written Certificate of the Authority delivered to the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and held
by the Trustee pursuant to Section 5.07.
"Interest Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
"Interest Payment Date" means each February 1 and August 1, commencing February 1,
1997.
"Lease Agreements" means those certain Lease Agreements,each dated as of July 1, 1996,
by and between the Authority, as lessor, and each Member, as lessee, of the Leased Premises,
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as originally executed and as it may from time to time be supplemented, modified or amended
in accordance with the terms thereof and of this Indenture.
"Lease Payments"means the aggregate amount of all the payments required to be paid by
each Member pursuant to Section 4.3 of its respective Lease Agreement.
"Leased Premises" means the real property and improvements leased by the Authority to
each Member pursuant to its respective Lease Agreement.
"Members" means the Cities of Brea, Buena Park, Fullerton, Garden Grove, Orange,
Santa Ana, Seal Beach, Stanton and Tustin.
"Moody's"means Moody's Investors Service,New York,New York,or its successors.
"Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by
the Municipal Bond Insurer insuring the payment,when due, of the principal of and interest on
the Bonds.
"Municipal Bond Insurer"means the MBIA Insurance Corporation.
"Net Proceeds" means amounts derived from any policy of casualty insurance or title
insurance with respect to the Leased Premises, or the proceeds of any taking of the Leased
Premises or any portion thereof in eminent domain proceedings (including sale under threat of
such proceedings), to the extent remaining after payment therefrom of all expenses incurred in
the collection and administration thereof.
"Office" means, with respect to the Trustee, the corporate trust office of the Trustee at
515 South Flower Street, Suite 2700, Los Angeles, CA 90071; provided, however, that for the
purposes of maintenance of the Registration Books and presentation of Bonds for transfer,
exchange or payment such term shall mean the office of the Trustee at which it conducts its
corporate agency business, or at such other or additional offices as may be specified by the
Trustee in writing to the Authority and the Members.
"Original Purchaser" means Stone &Youngberg LLC, as original purchaser of the Bonds
upon their delivery by the Trustee on the Closing Date.
"Outstanding", when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to
which all liability of the Authority shall have been discharged in accordance with Section 10.02,
including Bonds (or portions thereof) described in Section 11.10; and (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner", whenever used herein with respect to a Bond, means the person in whose
name the ownership of such Bond is registered on the Registration Books.
"Participating Underwriter" shall have the meaning ascribed thereto in the Authority
Continuing Disclosure Certificate.
"Permitted Investments" means the following, but only to the extent that the same are
acquired at Fair Market Value:
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(a) Federal Securities;
(b)bonds, debentures, notes or other evidence of indebtedness issued 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 permitted if they have
been stripped by the agency itself): (i) certificates of beneficial ownership of the Farmers Home
Administration; (ii) debentures of the Federal Housing Administration; (iii) participation
certificates of the General Services Administration; (iv) guaranteed mortgage-backed bonds or
guaranteed pass-through obligations (participation certificates) of the Government National
Mortgage Association; (v) guaranteed Title XI financings of the U.S. Maritime Administration;
and (vi) project notes and local authority bonds of the U.S. Department of Housing and Urban
Development;
(c) bonds, debentures,notes or other evidence of indebtedness issued or guaranteed by
any of the following non-full faith and credit U.S. government agencies (stripped securities are
only permitted if they have been stripped by the agency itself): (i) senior debt obligations
(consolidated debt obligations) of the Federal Home Loan Bank System; (ii) participation
certificates (mortgage-backed securities) of the Federal Home Loan Mortgage Corporation; (iii)
mortgaged-backed securities and senior debt obligations of the Federal National Mortgage
Association (excluding stripped mortgage securities which are valued greater than par on the
portion of unpaid principal); (iv) senior debt obligations of the Student Loan Marketing
Association; (v) obligations (but only the interest component of stripped obligations) of the
Resolution Funding Corporation, and (v)consolidated systemwide bonds and notes of the Farm
Credit System;
(d) money market funds (including funds managed or advised by the trustee or its
affiliates) registered under the Federal Investment Company Act of 1940, whose shares are
registered under the Federal Securities Act of 1933,and having a rating by S&P of"AAAm-G,"
"AAAm" or "AAm" and, if rated by Moody's, having a rating by Moody's of"Aaa," "Aa1." or
"Aa2"•
(e) certificates of deposit secured at all times by collateral described in (a) or (b) above,
which have a maturity of one year or less,which are issued by commercial banks, savings and
loan associations or mutual savings banks whose short term obligations are rated "A-1+" or
better by S&P and "Prime-1" by Moody's (such collateral must be held by a third party and
Owners must have a perfected first security interest in such collateral;
(f) certificates of deposit, savings accounts, deposit accounts or money market deposits
which are fully insured by the Federal Deposit Insurance Corporation;
(g)Investment agreements,including guaranteed investment contracts, acceptable to the
Municipal Bond Insurer;
(h) commercial paper rated, at the time of purchase, "Prime-1"by Moody's and "A-1+"
or better by S&P;
(i) bonds or notes issued by any state or municipality which are rated by Moody's and
S&P in one of the two highest long term rating categories assigned by such agencies;
(j) federal funds or bankers acceptances with a maximum term of one year of any bank
which has an unsecured,uninsured and unguaranteed obligation rating of"Prime-1" or"A3" or
better by Moody's and "A-1+" or better by S&P;
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(k)repurchase agreements which provide for the transfer of securities from a dealer bank
or securities firm (seller/borrower) to the Trustee and the transfer of cash from the Trustee to
the dealer bank or securities firm with an agreement that the dealer bank or securities firm will
repay the cash plus a yield to the Trustee in exchange for the securities at a specified date,
which satisfy the following criteria (unless otherwise approved by the Municipal Bond Insurer):
(i) repurchase agreements must be between the Trustee and (A) a primary dealer
on the Federal Reserve reporting dealer list which falls under the jurisdiction of the
Securities Investors Protection Corporation and which are rated "A" or better by
Moody's and S&P, or (B) a bank rated "A" or better by Moody's and S&P;
(ii) the written repurchase agreement contract must include the following: (A)
securities acceptable for transfer, which may be direct U.S. government obligations, or
federal agency obligations backed by the full faith and credit of the U.S. government
(including the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation); (B) the term of the repurchase agreement may be up to 30 days;
(C) the collateral must be delivered to the Trustee or a third party acting as agent for the
Trustee before or simultaneous with payment (perfection by possession of certificated
securities); (D) the Trustee must have a perfected first priority security interest in the
collateral; (E) the collateral must be free and clear of third-party liens and,in the case of
a broker which falls under the jurisdiction of the Securities Investors Protection
Corporation, are not subject to a repurchase agreement or a reverse repurchase
agreement; (F) failure to maintain the requisite collateral percentage, after a two day
restoration period, will require the Trustee to liquidate the collateral; (G) the securities
must be valued weekly, marked-to-market at current market price plus accrued interest
and the value of collateral must be equal to 104% of the amount of cash transferred by
the Trustee to the dealer bank or securities firm under the repurchase agreement plus
accrued interest (unless the securities used as collateral are obligations of the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation, in
which case the collateral must be equal to 105% of the amount of cash transferred by the
Trustee to the dealer bank or securities firm under the repurchase agreement plus
accrued interest). If the value of securities held as collateral falls below 104% of the
value of the cash transferred by the Trustee, then additional cash and/or acceptable
securities must be transferred;and
(iii) a legal opinion must be delivered to the Trustee to the effect that the
repurchase agreement meets guidelines under state law for legal investment of public
funds;
(1) pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P;
provided,however,pre-refunded municipal bonds rated by S&P only (i.e.,no Moody's rating)
are acceptable if such pre-refunded municipal bonds were pre-refunded with cash, direct U.S..
or U.S. guaranteed obligations or AAA-rated pre-refunded municipal bonds; and
(m)any other investments permitted in writing by the Municipal Bond Insurer.
"Principal Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02(b).
"Project" means the project for a Member to be financed with a portion of the proceeds
of the Bonds,as more fully described in Exhibit C attached hereto.
"Project Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3.04.
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"Rating Category" means, with respect to any Permitted Investment, one of the generic
categories of rating by Moody's and S&P applicable to such Permitted Investment, without
regard to any refinement or graduation of such rating category by a plus or minus sign or a
numeral.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date,whether or not such day is a
Business Day.
"Redemption Fund" means the fund by that name established pursuant to Section 5.06.
"Registration Books" means the records maintained by the Trustee pursuant to Section
2.05 for the registration and transfer of ownership of the Bonds.
"Reserve Account" means the account by that name in the Bond Fund established
pursuant to Section 5.02(c).
"Reserve Requirement" means, as of the date of calculation, the maximum amount
obtained by totaling, for the current or any future Bond Year, the sum of: (a) the principal
amount of all Outstanding Bonds maturing in such Bond Year; and (b)the interest scheduled to
become payable during such Bond Year on the aggregate principal amount of Bonds which
would be Outstanding in such period if the Bonds are retired as scheduled.
"Revenues" means: (a) all amounts received by the Authority or the Trustee pursuant to
or with respect to the Lease Agreements, including, without limiting the generality of the
foregoing, all of the Lease Payments (including both timely and delinquent payments,any late
charges, and whether paid from any source), prepayments and insurance proceeds, but
excluding any Additional Payments; and (b) all interest, profits or other income derived from
the investment of amounts in any fund or account established pursuant to this Indenture.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies,Inc.,New York,New York,or its successors.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, NY 11530, Fax (516) 227-4171 or 4190; Philadelphia Depository Trust Company,
Reorganization Division, 1900 Market Street, Philadelphia, PA 19103, Attention: Bond
Department, Fax (215) 496-5058; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other securities
depositories as the Authority may designate in a Written Certificate of the Authority delivered
to the Trustee.
"State" means the State of California.
"Supplemental Indenture" means any indenture hereafter duly authorized and entered
into between the Authority and the Trustee, supplementing, modifying or amending this
Indenture; but only if and to the extent that such Supplemental Indenture is specifically
authorized hereunder.
"Trustee" means U.S. Trust Company of California,N.A.,a national banking association
organized and existing under the laws of the United States of America, or its successor, as
Trustee hereunder as provided in Section 8.01.
9
"Written Certificate", "Written Request"and "Written Requisition" of the Authority or the a
Member mean,respectively,a written certificate,request or requisition signed in the name of the
Authority or such Member by its Authorized Representative. Any such instrument and
supporting_opinions_or representations, if any, but.need_not, be combined_ina_single
instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument.
Section 1.02.Interpretation.
(a) Unless the context otherwise indicates,words expressed in the singular shall include
the plural and vice versa and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
(c) All references herein to "Articles", "Sections" and other subdivisions are to the
corresponding Articles,Sections or subdivisions of this Indenture;the words"herein", "hereof",
"hereby", "hereunder" and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof.
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ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds. The Authority hereby authorizes the issuance of
the Bonds, which shall constitute special obligations of the Authority, for the purpose of
providing funds to provide funding for the Project. The Bonds are hereby designated the
"Countywide Public Financing Authority 1996 Revenue Bonds." The aggregate principal amount
of Bonds initially issued and Outstanding under this Indenture shall equal twenty-seven million
seven hundred twenty-five thousand dollars ($27,725,000). The principal amounts allocable to
each Member is set forth in Exhibit D attached hereto. This Indenture constitutes a continuing
agreement with the Trustee and the Owners from time to time of the Bonds to secure the full
payment of the principal of and interest and premium (if any) on all the Bonds, subject to the
covenants,provisions and conditions herein contained.
Section 2.02. Terms of the Bonds. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Bond shall have more than one maturity date. The Bonds shall mature on August 1 in each of
the years and in the amounts, and shall bear interest (calculated on the basis of a 360-day year
of twelve 30-day months) at the rates, as follows:
Maturity Date Principal Interest Maturity Date Principal Interest
(August 1) Amount Rate (August 1) Amount Rate
1997 $2,025,000 4.10% 2005 $2,905,000 5.25%
1998 2,115,000 4.10 2006 3,060,000 5.30
1999 2,200,000 4.30 2007 500,000 5.40
2000 2,300,000 4.60 2008 530,000 5.50
2001 2,405,000 4.75 2009 560,000 5.60
2002 2,515,000 4.90 2010 585,000 5.70
2003 2,640,000 5.00 2011 620,000 5.75
2004 2,765,000 5.10
Interest on the Bonds shall be payable semiannually on each Interest Payment Date,
calculated based on a 360-day year of twelve (12) thirty-day months, to the person whose
name appears on the Registration Books as the Owner thereof as of the Record Date
immediately preceding each such Interest Payment Date,such interest to be paid by check of the
Trustee mailed by first class mail to the Owners at the respective addresses of such Owners as
they appear on the Registration Books; provided however, that payment of interest may be by
wire transfer in immediately available funds to an account in the United States of America to
any Owner of Bonds in the aggregate principal amount of$1,000,000 or more who shall furnish
written wire instructions to the Trustee at least five (5) days before the applicable Record Date. _
Principal of any Bond and any premium upon redemption shall be paid by check of the Trustee
upon presentation and surrender thereof at the Office of the Trustee, except as provided in
Section 2.04. Principal of and interest and premium (if any) on the Bonds shall be payable in
lawful money of the United States of America.
Each Bond shall be dated as of the date of authentication thereof and shall bear interest
from the Interest Payment Date next preceding the date of authentication thereof,unless (a) it is
authenticated after a Record Date and on or before the following Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (b) unless it is
authenticated on or before January 15, 1997, in which event it shall bear interest from the
Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest
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thereon is in default, such Bond shall bear interest from the Interest Payment Date to which
interest has previously been paid or made available for payment thereon.
Section 2.03. Transfer and Exchange of Bonds. Any Bond may, in accordance with its
terms,be transferred on the Registration Books by the person in whose name it is registered,in
person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer, duly executed in a form approved
by the Trustee. Transfer of any Bond shall not be permitted by the Trustee during the period
established by the Trustee for selection of Bonds for redemption or if such Bond has been
selected for redemption pursuant to Article IV. Whenever any Bonds or Bonds shall be
surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and
shall deliver a new Bond or Bonds for a like aggregate principal amount and of like maturity.
The Trustee may require the Bond Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer.
Any Bond may be exchanged at the Office of the Trustee for a like aggregate principal
amount of Bonds of other authorized denominations and of like maturity. Exchange of any
Bond shall not be permitted during the period established by the Trustee for selection of Bonds
for redemption or if such Bond has been selected for redemption pursuant to Article IV. The
Trustee may require the Bond Owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange.
Section 2.04. Book-Entry System. Notwithstanding any provision of this Indenture to the
contrary:
(a) At the request of the Original Purchaser,the Bonds shall be initially issued registered
in the name of "Cede & Co.," as nominee of The Depository Trust Company, the depository
designated by the Original Purchaser,and shall be evidenced by one certificate maturing on each
of the maturity dates set forth in Section 2.02 hereof to be in a denomination corresponding to
the total principal therein designated to mature on such date. Registered ownership of such
Bonds, or any portions thereof,may not thereafter be transferred except:
(i) to any successor of The Depository Trust Company or its nominee, or of any
substitute depository designated pursuant to paragraph (ii) of this subsection (a)
("substitute depository"); provided that any successor of The Depository Trust
Company or substitute depository shall be qualified under any applicable laws to
provide the service proposed to be provided by it;
(ii) to any substitute depository designated in a written request of the Authority,
upon (i) the resignation of The Depository Trust Company or its successor (or any
substitute depository or its successor) from its functions as depository or (ii) a
determination by the Authority that The Depository Trust Company or its successor is
no longer able to carry out its functions as depository;provided that any such substitute
depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it; or
(iii) to any person as provided below, upon (A) the resignation of The
Depository Trust Company or its successor (or any substitute depository or its
successor) from its functions as depository or (B) a determination by the Authority that
The Depository Trust Company or its successor is no longer able to carry out its
functions as depository; provided that no substitute depository which is not objected to
by the Authority and the Trustee can be obtained.
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(b) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection
(a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee, together with a
written request of an Authorized Representative of the Authority to the Trustee, a single new
Bond shall be issued, authenticated and delivered for each maturity of such Bond then
outstanding, registered in the name of such successor or such substitute depository or their
nominees, as the case may be, all as specified in such written request of an Authorized
Representative of the Authority . In the case of any transfer pursuant to paragraph (iii) of
subsection (a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee
together with a written request of an Authorized Representative of the Authority, new Bonds
shall be issued, authenticated and delivered in such denominations and registered in the names
of such persons as are requested in a written request of the Authority provided the Trustee shall
not be required to deliver such new Bonds within a period less than sixty (60) days from the
date of receipt of such a written request of an Authorized Representative of the Authority.
(c) In the case of partial prepayment or an advance refunding of any Bonds evidencing
all of the principal maturing in a particular year, The Depository Trust Company shall, at the
Authority's expense, deliver the Bonds to the Trustee for cancellation and re-registration to
reflect the amounts of such reduction in principal.
(d) The Authority and the Trustee shall be entitled to treat the person in whose name
any Bond is registered as the absolute Owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary received by the Trustee or the
Authority; and the Authority and the Trustee shall have no responsibility for transmitting
payments to, communication with,notifying or otherwise dealing with any beneficial owners of
the Bonds. Neither the Authority nor the Trustee will have any responsibility or obligations,
legal or otherwise, to the beneficial owners or to any other party including The Depository Trust
Company or its successor (or substitute depository or its successor), except for the registered
owner of any Bond.
(e) So long as all outstanding Bonds are registered in the name of Cede & Co. or its
registered assign, the Authority and the Trustee shall reasonably cooperate with Cede&Co.,as
sole registered Owner, or its registered assign in effecting payment of the principal and
prepayment premium, if any, and interest due with respect to the Bonds by arranging for
payment in such manner that funds for such payments are properly identified and are made
immediately available on the date they are due.
(f) So long as all Outstanding Bonds are registered in the name of Cede & Co. or its
registered assigns (hereinafter, for purposes of this paragraph(f), the "Owner"):
(i) All notices and payments addressed to the Owners shall contain the Bonds'
CUM'number.
(ii) Notices to the Owner shall be forwarded in the manner set forth in the form
of blanket issuer letter of representations (prepared by The Depository Trust Company)
executed by the Authority and received and accepted by The Depository Trust
Company.
Section 2.05. Registration Books. The Trustee will keep or cause to be kept, at the Office
of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds,
which shall at all reasonable times upon reasonable prior notice be open to inspection during
regular business hours by the Authority and the Members; and, upon presentation for such
purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or
transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as
hereinbefore provided.
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Section 2.06. Form and Execution of Bonds. The Bonds shall be signed in the name and
on behalf of the Authority with the facsimile signature of its Chairman and attested with the
facsimile signature of its Secretary, under the printed seal of the Authority, and shall be
delivered to the Trustee for authentication by it. In case any officer of the Authority who shall
have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall
have been authenticated or delivered by the Trustee or issued by the Authority,such Bonds may
nevertheless be authenticated,delivered and issued and,upon such authentication,delivery and
issue,shall be as binding upon the Authority as though the individual who signed the same had
continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the
Authority by any individual who on the actual date of the execution of such Bond shall be the
proper officer although on the nominal date of such Bond such individual shall not have been
such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A,manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.07. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by
the Authority,shall be in fully registered form without coupons and may contain such reference
to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall
be executed by the Authority and authenticated by the Trustee upon the same conditions and in
substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds
it will execute and deliver definitive Bonds as promptly thereafter as practicable, and
thereupon the temporary Bonds may be surrendered, for cancellation, at the Office of the
Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an
equal aggregate principal amount of definitive Bonds of authorized denominations. Until so
exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bonds authenticated and delivered hereunder.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and
delivered to, or upon the order of,the Authority. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Authority and the Trustee
and,if such evidence be satisfactory to them and indemnity satisfactory to them shall be given,
the Authority, at the expense of the Owner of such lost, destroyed or stolen Bond,shall execute,
and the Trustee shall thereupon authenticate and deliver,a new Bond of like tenor in lieu of and
in substitution for the Bond so lost,destroyed or stolen (or if any such Bond shall have matured
or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee may
pay the same without surrender thereof).The Authority may require payment by the Owner of a
sum not exceeding the actual cost of preparing each new Bond issued under this Section 2.08
and of the expenses which may be incurred by the Authority and the Trustee in the premises.
Any Bond issued under the provisions of this Section 2.08 in lieu of any Bond alleged to be lost,
destroyed or stolen shall constitute an original additional contractual obligation on the part of
the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time
enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other
Bonds secured by this Indenture.
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Section 2.09. CUSIP Numbers. The Trustee, the Authority and the Members shall not be
liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any
redemption notice. The Trustee may, in its discretion, 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 Owners
and that neither the Trustee,the Authority nor the Members shall be liable for any inaccuracies
in such numbers.
Section 2.10. Payment Procedure Pursuant to Municipal Bond Insurance Policy.
(a) In the event that, on the second Business Day, and again on the Business Day, prior
to each Interest Payment Date, the Trustee has not received sufficient moneys to pay all
principal and interest due with respect to the Bonds due on the second following or following,
as the case may be, Business Day, the Trustee shall immediately notify the Municipal Bond
Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing
by registered or certified mail,of the amount of the deficiency.
(b) If the deficiency is made up in whole or in part prior to or on the Interest Payment
Date, the Trustee shall so notify the Municipal Bond Insurer or its designee.
(c) In addition,if the Trustee has actual knowledge that any Owner has been required to
disgorge payments of principal or interest with respect to the Bonds to a trustee in bankruptcy
or creditors or others pursuant to a final judgment by a court of competent jurisdiction that
such payment constitutes a voidable preference to such Owner within the meaning of any
applicable bankruptcy laws, then the Trustee shall notify the Municipal Bond Insurer or its
designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or
certified mail.
(d) The Trustee is hereby irrevocably designated, appointed, directed and authorized to
act as attorney-in-fact for the Owners as follows:
(i) If and to the extent there is a deficiency in amounts required to pay interest
with respect to the Bonds, the Trustee shall (A) execute and deliver to State Street Bank
and Trust Company, N.A., or its successors under the Municipal Bond Insurance Policy
(the "Insurance Trustee"), in form satisfactory to the Insurance Trustee, an instrument
appointing the Municipal Bond Insurer as agent for such Owners in any legal proceeding
related to the payment of such interest and an assignment to the Municipal Bond Insurer
of the claims for interest to which such deficiency relates and which are paid by the
Municipal Bond Insurer, (B) receive, as designee of the respective Owners (and not as
Trustee)in accordance with the tenor of the Municipal Bond Insurance Policy,payment
from the Insurance Trustee with respect to the claims for interest so assigned, and (C)
disburse the same to such respective Owners,and
(ii) If and to the extent of a deficiency in amounts required to pay principal with
respect to the Bonds, the Trustee shall (A) execute and deliver to the Insurance Trustee
in form satisfactory to the Insurance Trustee an instrument appointing the Municipal
Bond Insurer as agent for such Owner in any legal proceeding relating to the payment of
such principal and an assignment to the Municipal Bond Insurer of any of the Bond
surrendered to the Insurance Trustee of so much of the principal amount thereof as has
not previously been paid or for which moneys are not held by the Trustee and available
for such payment (but such assignment shall be delivered only if payment from the
Insurance Trustee is received), (B) receive,as designee of the respective Owners (and not
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as Trustee) in accordance with the tenor of the Municipal Bond Insurance Policy,
payment therefor from the Insurance Trustee, and (C)disburse the same to such Owners.
(e) Payments with respect to claims for interest and principal with respect to Bonds
disbursed by the Trustee from proceeds of the Municipal Bond Insurance Policy shall not be
considered to discharge the obligation of the Authority with respect to such Bonds, and the
Municipal Bond Insurer shall become the owner of such unpaid Bonds and claims for the
interest in accordance with the tenor of the assignment made to it under the provisions of this
subsection or otherwise.
(f)Irrespective of whether any such assignment is executed and delivered,the Authority,
the Corporation and the Trustee hereby agree for the benefit of the Municipal Bond Insurer that,
(i) They recognize that to the extent the Municipal Bond Insurer makes payments,
directly or indirectly (as by paying through the Trustee), on account of principal or
interest with respect to the Bonds, the Municipal Bond Insurer will be subrogated to the
rights of such Owners to receive the amount of such principal and interest from the
Authority, with interest thereon as provided and solely from the sources stated in the
Lease Agreements,this Indenture and the Bonds;and
(ii) They will accordingly pay to the Municipal Bond Insurer the amount of such
principal and interest (including principal and interest recovered under subparagraph
(ii) of the first paragraph of the Municipal Bond Insurance Policy, which principal and
interest shall be deemed past due and not to have been paid), with interest thereon as
provided in the Lease Agreement, this Indenture and the Bonds, but only from the
sources and in the manner provided herein for the payment of principal and interest
with respect to the obligations to Owners, and will otherwise treat the Municipal Bond
Insurer as the owner of such rights to the amount of such principal and interest.
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ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds. At any time after the execution of this Indenture,the
Authority may execute and the Trustee shall authenticate and,upon the Written Request of the
Authority, deliver Bonds in the aggregate principal amount of twenty-seven million seven
hundred twenty-five thousand dollars ($27,725,000).
Section 3.02. Application of Proceeds of Sale of Bonds. Upon the receipt of payment for
the Bonds on the Closing Date, the Trustee shall apply the proceeds of sale thereof as follows:
(a) The Trustee shall deposit in the Interest Account the amount of $139,951.05,
constituting capitalized interest with respect to a portion of the debt service on the Bonds (and
allocable to the City of Santa Ana only) through February 1, 1997.
(b) The Trustee shall deposit the amount of$469,122.86 in the Costs of Issuance Fund.
(c) The Trustee shall deposit the amount of $2,772,500.00 in the Reserve Account,
constituting the full amount of the Reserve Requirement.
(d) The Trustee shall deposit the amount of $24,062,048.99 in the Project Fund. Within
the Project Fund, the Trustee shall account separately for such amounts as follows:
Member Deposit to Project Account
Brea $1,000,000.00
Buena Park 3,000,000.00
Fullerton 4,369,584.82
Garden Grove 2,977,931.33
Orange 3,254,189.00
Santa Ana 5,676,282.00
Seal Beach 1,102,456.84
Stanton 325,000.00
Tustin 2,356,605.00
Section 3.03. Establishment and Application of Costs of Issuance Fund. The Trustee
shall establish, maintain and hold in trust a separate fund designated as the "Costs of Issuance
Fund". The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee
to pay the Costs of Issuance upon submission of Written Requisitions of the Authority stating
the person to whom payment is to be made, the amount to be paid, the purpose for which the
obligation was incurred and that such payment is a proper charge against said fund. On March
1, 1997, or upon the earlier Written Request of the Authority,all amounts remaining in the Costs
of Issuance Fund shall be transferred by the Trustee to the Bond Fund.
Section 3.04. Establishment and Application of Project Fund. The Trustee shall
establish, maintain and hold in trust a separate fund designated as the "Project Fund." Within
the Project Fund, the Trustee shall establish, maintain and hold in trust a separate account for
each Member designated as the " Project Account," inserting in the blank the name of the
Member for whom such account is created. Amounts on deposit in the Project Fund shall be
used and withdrawn by the Trustee to pay the costs of the Project, upon the receipt from time
to time of Written Requisitions of each Member seeking payment of costs of the Project allocable
to such Member which are filed with the Trustee. Each such Written Requisition shall state the
person to whom payment is to be made, the amount to be paid and the purpose for which the
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obligation was incurred. Such payments shall be made from the Project Account created for the
Member making such request. At the Written Request of a Member filed at any time with the
Trustee, the Trustee shall close the Project Account allocable to such Member and shall transfer
all amounts therein to the Bond Fund as a credit to the Lease Payments to be made by such
Member.
Section 3.05. Validity of Bonds. The validity of the authorization and issuance of the
Bonds is not dependent on and shall not be affected in any way by any proceedings taken by
the Authority or the Trustee with respect to or in connection with the Lease Agreements. The
recital contained in the Bonds that the same are issued pursuant to the Constitution and laws
of the State shall be conclusive evidence of their validity and of compliance with the provisions
of law in their issuance.
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption.
(a) Mandatory Redemption From Optional Prepayment of Lease Payments. The Bonds
maturing on or after August 1, 2007, shall be subject to mandatory redemption as a whole or in
part, upon ninety (90) days written notice to the Trustee by a Member of its intention to
optionally prepay its Lease Payments, on any date on or after August 1, 2006, from any
available source of funds of the Member so electing to prepay, at the following redemption
prices (expressed as a percentage of the principal amount of the Bonds to be redeemed)
together with accrued interest thereon to the date fixed for redemption:
Redemption Period Redemption Price
August 1,2006 through July 31,2007 102%
August 1,2007 through July 31,2008 101
August 1, 2008 and thereafter 100
Any such redemption shall be in such order of maturity as the Member electing to
prepay its lease Payments shall designate (and, if no specific order of redemption is designated
by such Member, in inverse order of maturity); provided, however, that only Bonds in which
such Member has an interest (see Exhibit E attached hereto) may be redeemed by such
Member's election.
(b) Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Bonds
shall also be subject to redemption as a whole, or in part on a pro rata basis among maturities,
on any date, to the extent the Trustee has received title or hazard insurance proceeds or
condemnation proceeds not used to repair or replace any portion of the Leased Premises of a
Member damaged or destroyed and elected by such Member, to be used for such purpose as
provided in Section 5.07, at a redemption price equal to one hundred percent (100%) the
principal amount thereof plus interest accrued thereon to the date fixed for redemption,without
premium.
Section 4.02. Selection of Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds of a particular maturity, the Trustee
shall select the Bonds to be redeemed from all Bonds of such maturity or such given portion
thereof not previously called for redemption,by lot in any manner which the Trustee in its sole
discretion shall deem appropriate and fair. For purposes of such selection, the Trustee shall
treat each Bond as consisting of separate$5,000 portions and each such portion shall be subject
to redemption as if such portion were a separate Bond.
Section 4.03.Notice of Redemption. Notice of redemption shall be mailed by first class
mail, postage prepaid, not less than thirty (30) nor more than sixty (60) days before any
redemption date, to the respective Owners of any Bonds designated for redemption at their
• addresses appearing on the Registration Books, and to the Securities Depositories and to the
Information Services. Each notice of redemption shall state the date of the notice, the
redemption date, the place or places of redemption, whether less than all of the Bonds (or all
Bonds of a single maturity) are to be redeemed, the CUSIP numbers and (in the event that not
all Bonds within a maturity are called for redemption) Bond numbers of the Bonds to be
redeemed, the maturity or maturities of the Bonds to be redeemed and in the case of Bonds to
be redeemed in part only, the respective portions of the principal amount thereof to be
redeemed. Each such notice shall also state that on the redemption date there will become due
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and payable on each of said Bonds the redemption price thereof, and that from and after such
redemption date interest thereon shall cease to accrue,and shall require that such Bonds be then
surrendered. Neither the failure to receive any notice nor any defect therein shall affect the
sufficiency of the proceedings for such redemption or the cessation of accrual of interest from
and after the redemption date. Notice of redemption of Bonds shall be given by the Trustee, at
the expense of the Authority, for and on behalf of the Authority.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in
part only, the Authority shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the Bonds
surrendered.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as
aforesaid,and moneys for payment of the redemption price of,together with interest accrued to
the date fixed for redemption on, the Bonds (or portions thereof)so called for redemption being
held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions
thereof) so called for redemption shall become due and payable,interest on the Bonds so called
for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled
to any benefit or security under this Indenture, and the Owners of said Bonds shall have no
rights in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed.
Section 4.06. Purchase of Bonds. In lieu of redemption of Bonds as provided in this
Article IV, amounts held by the Trustee for such redemption may also be used on any Interest
Payment Date, upon receipt by the Trustee at least seventy-five (75) days prior to the next
scheduled Interest Payment Date of the written request of an Authorized Representative of the
Authority, for the purchase of Bonds at public or private sale as and when and at such prices
(including brokerage, accrued interest and other charges) as the Authority may in its discretion
direct, but not to exceed the redemption price which would be payable if such Bonds were
redeemed. The aggregate principal amount of Bonds of the same maturity purchased in lieu of
redemption pursuant to this Section 4.06 shall not exceed the aggregate principal amount of
Bonds of such maturity which would otherwise be subject to such redemption. Remaining
moneys,if any,shall be deposited in the Bond Fund.
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ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND
INTEREST
Section 5.01.Pledge and Assignment;Bond Fund.
(a) Subject only to the provisions of this Indenture permitting the application thereof for
the purposes and on the terms and conditions set forth herein,all of the Revenues and any other
amounts (including proceeds of the sale of the Bonds) held in any fund or account established
pursuant to this Indenture are hereby pledged to secure the payment of the principal of and
interest on the Bonds in accordance with their terms and the provisions of this Indenture. Said
pledge shall constitute a lien on and security interest in such assets and shall attach, be
perfected and be valid and binding from and after the Closing Date, without any physical
delivery thereof or further act.
(b) The Authority hereby transfers in trust, grants a security interest in and assigns to
the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues
and all of the rights of the Authority in the Lease Agreements (except for the right to receive any
Additional Payments to the extent payable to the Authority and certain rights to
indemnification set forth therein). The Trustee shall be entitled to and shall collect and receive
all of the Revenues,and any Revenues collected or received by the Authority shall be deemed to
be held,and to have been collected or received,by the Authority as the agent of the Trustee and
shall forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and
shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the
Trustee determines to be reasonably necessary in its judgment to enforce,either jointly with the
Authority or separately, all of the rights of the Authority and all of the obligations of the
Members under the Lease Agreements.
The assignment of the Lease Agreements to the Trustee is solely in its capacity as
Trustee under this Indenture and the duties, powers and liabilities of the Trustee in acting
thereunder shall be subject to the provisions of this Indenture,including,without limitation,the
provisions of Article VIII hereof. The Trustee shall not be responsible for any representations,
warranties,covenants or obligations of the Authority.
(c) Subject to Section 5.09, all Revenues shall be promptly deposited by the Trustee
upon receipt thereof in a special fund designated as the "Bond Fund" which the Trustee shall
establish, maintain and hold in trust; except that all moneys received by the Trustee and
required hereunder or under the Lease Agreements to be deposited in the Redemption Fund or
the Insurance and Condemnation Fund shall be promptly deposited in such Funds. All
Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the
Trustee only as provided in this Indenture.
Section 5.02. Allocation of Revenues. Not later than the first Business Day preceding
each date on which principal of or interest on the Bonds becomes due and payable, the Trustee
shall transfer from the Bond Fund and deposit into the following respective accounts (each of
which the Trustee shall establish and maintain within the Bond Fund),the following amounts in
the following order of priority,the requirements of each such account (including the making up
of any deficiencies in any such account resulting from lack of Revenues sufficient to make any
earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any
account subsequent in priority:
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(a) The Trustee shall deposit in the Interest Account an amount required to cause the
aggregate amount on deposit in the Interest Account to be at least equal to the amount of
interest becoming due and payable on such date on all Bonds then Outstanding.
(b) The Trustee shall deposit in the Principal Account an amount required to cause the
aggregate amount on deposit in the Principal Account to equal the principal amount of the
Bonds coming due and payable on such date.
(c)The Trustee shall deposit in the Reserve Account an amount,if any,required to cause
the amount on deposit in the Reserve Account to be equal to the Reserve Requirement.
Section 5.03. Application of Interest Account. All amounts in the Interest Account shall
be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as
it shall become due and payable (including accrued interest on any Bonds purchased or
redeemed prior to maturity pursuant to this Indenture).
Section 5.04. Application of Principal Account. All amounts in the Principal Account
shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at
their respective maturity dates.
Section 5.05. Application of Reserve Account.
(a) All amounts in the Reserve Account shall be used and withdrawn by the Trustee
solely for the purpose of(i)paying principal of or interest on the Bonds when due and payable
to the extent that moneys deposited in the Interest Account or the Principal Account are not
sufficient for such purpose, and (ii) making the final payments of principal of and interest on
Bonds allocable to a particular Member on the date on which such Bonds shall be retired
hereunder or provision made therefor pursuant to Article X. After payment of the final
payments of principal and interest on the Bonds and payment of any amounts then owed to the
Trustee,all moneys then on deposit in the Reserve Account shall be withdrawn by the Trustee
and paid to the Members, on a pro rata basis (determined by computing such amount using the
same percentage as represented such Member's percentage of the Bonds on original issuance),as
a refund of overpaid Lease Payments.
(b) If, on any date, moneys on deposit in the Reserve Account allocable to a particular
Member(determined by computing such amount using the same percentage as represented such
Member's percentage of the Bonds on original issuance),together with amounts allocable to such
Member then on deposit in the Bond Fund (based upon amounts deposited therein by such
Member), are sufficient to pay all Outstanding Bonds allocable to such Member, including all
principal thereof, and interest thereon, the Trustee shall, at the written direction of the
Authority, transfer all amounts then on deposit in the Reserve Account allocable to such
Member,together with such amounts in the Bond Fund, to the Redemption Fund to be applied -
to the redemption of the Bonds in accordance with the provisions of Section 4.01(a) or applied
to the last scheduled payment due from such Member.
(c) Any amounts remaining in the Reserve Account upon payment in full of all
Outstanding Bonds and all amounts then owed to the Trustee, shall be withdrawn by the
Trustee and paid to the Members, on a pro rata basis (determined by computing such amount
using the same percentage as represented such Member's percentage of the Bonds on original
issuance), as a refund of overpaid Lease Payments. Any amounts on deposit in the Reserve
Account in excess of the Reserve Requirement shall be transferred to the Bond Fund.
(d) At any time, moneys on deposit in the Reserve Account may be substituted by the
Authority with a letter of credit,surety bond, bond insurance policy or other form of guaranty
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from a financial institution, the long-term, unsecured obligations of which are rated in the
highest rating category by Moody's and S&P, in an amount equal to the Reserve Requirement,
upon presentation to the Trustee of such letter of credit, surety bond, bond insurance policy or
other form of guaranty from a financial institution,with evidence from the Authority that such
letter of credit, surety bond, bond insurance policy or other form of guaranty from a financial
institution rated in the highest rating category by Moody's and S&P. Upon such substitution,
the Trustee shall transfer amounts on deposit in the Reserve Account to the Bond Fund in an
amount equal to the maximum limits or principal amount, as applicable, of such letter of credit,
surety bond,bond insurance policy or other form of guarantee.
(e) By reason of the allocation of earnings received from the investment on amounts on
deposit in the Reserve Account to the Bond Fund to each Member on a pro rata basis
(determined by computing such amount using the same percentage as represented such
Member's percentage of the Bonds on original issuance),and the distribution of amounts in the
Reserve Account to the Members at the termination of their respective Lease Agreements (as
described in paragraph (c) above), and because the proceeds of the Bonds are being used to
acquire the Lease Agreements,the funding of the Reserve Account is hereby deemed to be a cost
of carrying the Bonds for purposes of section 6592.5(b)(2) of the California Government Code.
Section 5.06. Application of Redemption Fund. The Trustee shall establish and maintain
the Redemption Fund, amounts in which shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal of and premium on the Bonds to be redeemed pursuant to
Sections 4.01(a) or (b); provided, however, that at any time prior to the selection of Bonds for
redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private
sale, in accordance with Section 4.06.
Section 5.07.Insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of any proceeds of insurance or eminent
domain with respect to any portion of the Leased Premises, the Trustee shall establish and
maintain a separate Insurance and Condemnation Fund, to be held and applied as hereinafter
set forth in this Section 5.07.
(b) Application of Insurance Proceeds. Any Net Proceeds of insurance against accident to
or destruction of the Leased Premises collected by a Member in the event of any such accident
or destruction shall be paid to the Trustee by such Member pursuant to Section 6.1(a) of such
Member's Lease Agreement and deposited by the Trustee promptly upon receipt thereof in the
Insurance and Condemnation Fund. Such Member shall certify to the Trustee that the Net
Proceeds, together with other available funds, will be sufficient to repair the Leased Premises
and that such repairs will be completed before the expiration of any rental interruption
insurance provided pursuant to the Lease Agreement. If such Member fails to determine and
notify the Trustee in writing of its determination,within forty-five (45) days following the date
of such deposit, to replace, repair, restore, modify or improve the affected Leased Premises,
then such Net Proceeds shall be promptly transferred by the Trustee to the Redemption Fund
and applied to the redemption of Bonds allocable to such Member pursuant to Section 4.01(b).
All proceeds deposited in the Insurance and Condemnation Fund and not so transferred to the
Redemption Fund shall be applied to the prompt replacement, repair,restoration,modification
or improvement of the damaged or destroyed portions of the Leased Premises by the affected
Member,upon receipt of Written Requisitions of the Member,as agent for the Authority,which:
(i)states with respect to each payment to be made (A) the requisition number, (B) the name and
address of the person to whom payment is due, (C) the amount to be paid and (D) that each
obligation mentioned therein has been properly incurred, is a proper charge against the
Insurance and Condemnation Fund,has not been the basis of any previous withdrawal; and (ii)
specifies in reasonable detail the nature of the obligation. Any balance of the proceeds
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remaining after such work has been completed as certified by such Member to the Trustee shall
after payment of amounts due the Trustee be paid to such Member.
(c)Application of Eminent Domain Proceeds. If all or any part of the Leased Premises shall
be taken by eminent domain proceedings (or sold to a government threatening to exercise the
power of eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in
the Insurance and Condemnation Fund pursuant to Section 6.1(b) of the affected Member's
Lease Agreement and shall be applied and disbursed by the Trustee as follows:
(i) If such Member has not given written notice to the Trustee, within forty-five
(45) days following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for the replacement of
the affected Leased Premises or such portion thereof, the Trustee shall transfer such Net
Proceeds to the Redemption Fund to be applied towards the redemption of the Bonds
allocable to such Member pursuant to Section 4.01(b).
(ii) If such Member has given written notice to the Trustee, within forty-five (45)
days following the date on which such Net Proceeds are deposited with the Trustee, of
its determination that such Net Proceeds are needed for replacement of the affected
Leased Premises or such portion thereof, the Trustee shall pay to such Member, or to its
order, from said proceeds such amounts as such Member may expend for such repair or
rehabilitation, upon the filing of Written Requisitions of such Member as agent for the
Authority in the form and containing the provisions set forth in subsection (b) of this
Section 5.07; provided, however, that the replacement premises must be added as a
Substitute Site or a Substitute Facility pursuant to Section 8.3 of the applicable Lease
Agreement.
(d)Application of Title Insurance Proceeds. The Net Proceeds from a title insurance award
shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to
Section 6.1(b)of the affected Member's Lease Agreement and shall be transferred by the Trustee
to the Redemption Fund to be applied towards the redemption of the Bonds allocable to such
Member pursuant to Section 4.01(b).
Section 5,08. investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments.Such investments shall be directed by the Authority pursuant to a Written Request
of the Authority filed with the Trustee at least two (2) Business Days in advance of the making
of such investments (which Written Request shall certify that the investments constitute
Permitted Investments). In the absence of any such directions from the Authority, the Trustee
shall invest any such moneys in Permitted Investments described in clause (h) of the definition
thereof. Permitted Investments purchased as an investment of moneys in any fund shall be
deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the Bond Fund,except that interest or gain
derived from the investment of the amount in the Reserve Account shall be retained therein to
the extent required to maintain the Reserve Requirement, and except that interest or gain
derived from the investment of amounts in each account of the Project Fund shall be retained
therein and used for the purposes thereof. All interest or gain derived from the investment of
amounts in the Reserve Account deposited in the Bond Fund shall be allocated to each Member
on a pro rata basis (determined by computing such amount using the same percentage as
represented such Member's percentage of the Bonds on original issuance). To the extent that any
investment agreement requires the payment of fees, such fees shall be paid from available
moneys in the Bond Fund after the deposit of moneys described in Section 5.02 (a) through (c)
-24-
above. For purposes of acquiring any investments hereunder, the Trustee may commingle funds
held by it hereunder. The Trustee may act as principal or agent in the acquisition or disposition
of any investment and may impose its customary charges therefor. The Trustee or its affiliates
may act as sponsor, advisor or depository with respect to any Permitted Investment. To the
extent that any Permitted Investment purchased by the Trustee are registrable securities such
Permitted Investment shall be registered in the name of the Trustee. The Trustee shall incur no
liability for losses arising from any investments made pursuant to this Section 5.08.
Section 5.09. Valuation and Disposition of Investments. For the purpose of determining
the amount in any fund or account, all Permitted Investments credited to such fund or account
shall be valued at the Fair Market Value thereof. Investments in funds or accounts (or portions
thereof) that are subject to a yield restriction under applicable provisions of the Code, as shall
be specified by the Authority to the Trustee, and (unless valuation is undertaken at least
annually) investments in the Reserve Account shall be valued at the cost thereof in a manner
specified by the Authority to the Trustee (consisting of the "present value" thereof as defined in
section 148 of the Code).
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ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal of and interest and premium (if any)on all the Bonds in strict conformity with the
terms of the Bonds and of this Indenture, according to the true intent and meaning thereof,but
only out of Revenues and other assets pledged for such payment as provided in this Indenture.
Section 6.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder,to the benefits of this Indenture,except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section 6.02 shall be deemed to limit the right
of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such
issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 6.03. Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the
pledge and assignment created by this Indenture. Subject to this limitation, the Authority
expressly reserves the right to enter into one or more other indentures for any of its corporate
purposes,and reserves the right to issue other obligations for such purposes.
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to
pledge and assign the Revenues and other assets purported to be pledged and assigned,
respectively, under this Indenture in the manner and to the extent provided in this Indenture.
The Bonds and the provisions of this Indenture are and will be the legal, valid and binding
special obligations of the Authority in accordance with their terms, and the Authority and the
Trustee shall at all times,subject to the provisions of Article VIII and to the extent permitted by
law, defend, preserve and protect said pledge and assignment of Revenues and other assets
and all the rights of the Bond Owners under this Indenture against all claims and demands of
all persons whomsoever.
Section 6.05. Accounting Records. The Trustee shall at all times keep, or cause to be
kept, proper books of record and account, prepared in accordance with industry standards, in
which complete and accurate entries shall be made of all transactions made by it relating to the
proceeds of Bonds, the Revenues, the Lease Agreements and all funds and accounts established
pursuant to this Indenture. Such books of record and account shall be available for inspection
by the Authority and the Members,during business hours and under reasonable circumstances.
Section 6.06. No Additional Obligations. The Authority covenants that no additional
bonds, notes or other indebtedness shall be issued or incurred which are payable out of the
Revenues in whole or in part.
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Section 6.07. Tax Covenants.
(a) Private Business Use Limitation. The Authority shall assure that the proceeds of the
Bonds..are_not.use_din a manner.which_wauld_cause the Bonds to be "private activity bonds"_
within the meaning of section 141(a) of the Code.
(b) Private Loan Limitation. The Authority shall assure that no more than five percent
(5%) of the proceeds of the Bonds are used, directly or indirectly, to make or finance a loan
(other than loans constituting nonpurpose obligations as defined in the Code or constituting
assessments) to persons other than state or local government units.
(c) Federal Guarantee Prohibition. The Authority shall not take any action or permit or
suffer any action to be taken if the result of the same would be to cause the Bonds to be
"federally guaranteed"within the meaning of section 149(b)of the Code.
(d) No Arbitrage. The Authority shall not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the Bond proceeds which, if such action had
been reasonably expected to have been taken, or had been deliberately and intentionally taken,
on the Closing Date,would have caused the Bonds to be "arbitrage bonds"within the meaning
of section 148(a) of the Code.
(e) Rebate of Excess Investment Earnings to United States. The Authority shall take any and
all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate
of excess investment earnings, if any, to the federal government, to the extent that such section
is applicable to the Bonds. Payment of any amounts due under such section 148(f) shall be
made by the Authority from amounts provided by the Member under Section 5.10(d) of the
Lease Agreements. In order to provide for the administration of this subsection (e), the
Authority may provide for the employment of independent attorneys, accountants and
consultants compensated on such reasonable basis as the Authority may deem appropriate.
Section 6.08. Collection of Amounts Due Under Lease Agreements. The Trustee shall
promptly collect all amounts due from the Members pursuant to the Lease Agreements. Subject
to the provisions of Article VIII, the Trustee shall enforce, and take all steps, actions and
proceedings which the Trustee determines to be reasonably necessary for the enforcement of all
of its rights thereunder as assignee of the Authority and for the enforcement of all of the
obligations of the Members under the Lease Agreements.
The Authority shall not amend, modify or terminate any of the terms of the Lease
Agreements,or consent to any such amendment,modification or termination,without the prior
written consent of the Trustee. The Trustee shall give such written consent only if (a) in the
opinion of Bond Counsel, such amendment, modification or termination will not materially
adversely affect the interests of the Owners, or (b) the Trustee first obtains the written consent
of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding to
such amendment,modification or termination.
Section 6.09.Continuing Disclosure.
(a) The Authority shall timely supply the information required by section 6599.1 of the
California Government Code to the California Debt Advisory Commission ("CDAC"), all such
information to be supplied annually and at such other time as required by said section 6599.1
on forms to be provided by CDAC or at such other time and in such other manner as shall
comply with the provisions of said section 6599.1.
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(b) The Authority hereby covenants and agrees that it will comply with and carry out all
of the provisions of the Authority Continuing Disclosure Certificate. Notwithstanding any other
provision of this Indenture, failure of the Authority to comply with the Authority Continuing
Disclosure Certificate shall not be considered.an Event of Default; however, the Trustee shall
at the request of any Participating Underwriter or the holders of at least 25% aggregate
principal amount of Outstanding Bonds and upon receipt of satisfactory indemnification) or
any holder or beneficial owner of the Bonds may, take such actions as may be necessary and
appropriate to compel performance,including seeking mandate or specific performance by court
order.
Section 6.10. Waiver of Laws. The Authority shall not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension
law now or at any time hereafter in force that may affect the covenants and agreements
contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or
laws is hereby expressly waived by the Authority to the extent permitted by law.
Section 6.11. Further Assurances. The Authority will make,execute and deliver any and
all such further indentures, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Indenture and for the
better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided
in this Indenture.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of any Bonds when and as
the same shall become due and payable, whether at maturity as therein expressed, by
proceedings for redemption,by acceleration,or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any Bonds
when and as the same shall become due and payable.
(c)Default by the Authority in the observance of any of the other covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, if such default shall have
continued for a period of thirty (30) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee;
provided, however, that if in the reasonable opinion of the Authority the default stated in the
notice can be corrected, but not within such thirty (30) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default
within such thirty (30) day period and thereafter diligently and in good faith cure such failure in
a reasonable period of time.
(d) The occurrence and continuation of an event of default under and as defined in the
Lease Agreements.
Section 7.02. Remedies Upon Event of Default. Upon the occurrence and continuance of
any Event of Default, then and in every such case the Trustee in its discretion may, and upon
the written request of the Owners of not less than 25% in principal amount of the Bonds then
Outstanding and receipt of indemnity to its satisfaction, and payment of its fees and expenses,
including the fees and expenses of its counsel, shall in its own name and as the Trustee of an
express trust:
(i)by mandamus,or other suit,action or proceeding at law or in equity,enforce all rights
of the Owners under, and require the Authority or the affected Member to carry out any
agreements with or for the benefit of the Owners of Bonds and to perform its or their duties
under the Act, the affected Lease Agreement, and this Indenture, provided that any such
remedy may be taken only to the extent permitted under the applicable provisions of the
affected Lease Agreement or this Indenture,as the case may be;
(ii)bring suit upon the Bonds;
(iii)by action or suit in equity require the Authority to account as if it were the trustee of
an express trust for the Owners of Bonds; or
(iv) by action or suit in equity enjoin any acts or things which may be unlawful or in
violation of the rights of the Owners of Bonds.
Upon the occurrence of an Event of Default, the Trustee shall be entitled as a matter of
right to the appointment of a receiver or receivers for the Leased Premises,and of the revenues,
income, product, and profits thereof, ex parte, and without notice, and the Authority consents
to the appointment of such receiver upon the occurrence of an Event of Default. In the case of
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any receivership, insolvency,bankruptcy, or other judicial proceedings affecting the Authority
or the affected Member, the Trustee shall be entitled to file such proofs of claims and other
documents as may be necessary or advisable in order to have the claims of the Trustee and the
Bond Owners allowed in such proceedings,without prejudice,however,to the right of any Bond
Owner to file a claim on his or her own behalf; provided, the Trustee shall be entitled to
compensation and reimbursement for the reasonable fees and expenses of its counsel and
indemnity for its reasonable expenses and liability from the Authority, the affected Member or
the Bond Owners, as appropriate.
Section 7.03. Application of Revenues and Other Funds After Default. If an Event of
Default shall occur and be continuing, all Revenues and any other funds then held or thereafter
received by the Trustee under any of the provisions of this Indenture shall be applied by the
Trustee as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect
the interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses
of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and
about the performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds (upon
presentation of the Bonds to be paid, and stamping or otherwise noting thereon of the payment
if only partially paid, or surrender thereof if fully paid) in accordance with the provisions of
this Indenture,as follows:
First: To the payment to the persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, and, if the amount available
shall not be sufficient to pay in full any installment or installments maturing on the same
date, then to the payment thereof ratably, according to the amounts due thereon, to the
persons entitled thereto,without any discrimination or preference;and
Second: To the payment to the persons entitled thereto of the unpaid principal of
any Bonds which shall have become due, whether at maturity or by acceleration or
redemption, with interest on the overdue principal at the rate borne by the respective
Bonds (to the extent permitted by law), and, if the amount available shall not be
sufficient to pay in full all the Bonds, together with such interest, then to the payment
thereof ratably, according to the amounts of principal due on such date to the persons
entitled thereto,without any discrimination or preference.
Section 7.04. Trustee to Represent Bond Owners. The Trustee is hereby irrevocably
appointed (and the successive respective Owners of the Bonds,by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful
attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on
their behalf such rights and remedies as may be available to such Owners under the provisions
of the Bonds, this Indenture and applicable provisions of any law. Upon the occurrence and
continuance of an Event of Default or other occasion giving rise to a right in the Trustee to
represent the Bond Owners, the Trustee in its discretion may, and upon the written request of
the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and
upon being indemnified to its satisfaction therefor, the Trustee shall, proceed to protect or
enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or
other proceedings as it shall deem most effectual to protect and enforce any such right, at law
or in equity,either for the specific performance of any covenant or agreement contained herein,
or in aid of the execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the
Bonds, this Indenture or any other law; and upon instituting such proceeding, the Trustee shall
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be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other
assets pledged under this Indenture, pending such proceedings. All rights of action under this
Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any proceeding relating thereto, and
any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the
Trustee for the benefit and protection of all the Owners of such Bonds,subject to the provisions
of this Indenture.
Section 7.05. Bond Owners' Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding,the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee,and upon indemnification of the Trustee to its reasonable
satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee
hereunder,provided that such direction shall not be otherwise than in accordance with law and
the provisions of this Indenture, and that the Trustee shall have the right to decline to follow
any such direction which in the opinion of the Trustee would expose it to liability.
Section 7.06. Limitation on Bond Owners' Right to Sue. Notwithstanding any other
provision hereof, no Owner of any Bonds shall have the right to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy under
this Indenture, the Lease Agreements or any other applicable law with respect to such Bonds,
unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such
Owner or Owners shall have tendered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall
have failed to comply with such request for a period of sixty (60) days after such written
request shall have been received by, and said tender of indemnity shall have been made to, the
Trustee; and (e)no direction inconsistent with such written request shall have been given to the
Trustee during such sixty (60) day period by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of
any remedy hereunder or under law; it being understood and intended that no one or more
Owners of Bonds shall have any right in any manner whatever by his or their action to affect,
disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds,or
to enforce any right under the Bonds, this Indenture, the Lease Agreements or other applicable
law with respect to the Bonds, except in the manner herein provided, and that all proceedings
at law or in equity to enforce any such right shall be instituted, had and maintained in the
manner herein provided and for the benefit and protection of all Owners of the Outstanding
Bonds,subject to the provisions of this Indenture.
Section 7.07. Absolute Obligation of Authority. Nothing in Section 7.06 or in any other
provision of this Indenture or in the Bonds contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest and
premium (if any) on the Bonds to the respective Owners of the Bonds at their respective dates
of maturity, or upon call for redemption,as herein provided,but only out of the Revenues and
other assets herein pledged therefor, or affect or impair the right of such Owners, which is also
absolute and unconditional, to enforce such payment by virtue of the contract embodied in the
Bonds.
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Section 7.08. Termination of Proceedings. If any proceedings taken by the Trustee or any
one or more Bond Owners on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Bond
Owners, then the Authority, the Trustee and the Bond Owners, subject to any determination in
such proceedings,shall be restored to their former positions and rights hereunder,severally and
respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the
Bond Owners shall continue as though no such proceedings had been taken.
Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy or
remedies, and each and every such remedy, to the extent permitted by law,shall be cumulative
and in addition to any other remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.
Section 7.10. No Waiver of Default. No delay or omission of the Trustee or any Owner
of the Bonds to exercise any right or power arising upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein; and every power and remedy given by this Indenture to the
Trustee or the Owners of the Bonds may be exercised from time to time and as often as may be
deemed expedient.
Section 7.11. Parties Interested Herein.
(a) Nothing in this Indenture expressed or implied is intended or shall be construed to
confer upon, or to give to, any person or entity, other than the Authority, the Trustee, the
Members,the Municipal Bond Insurer,their officers,employees and agents,and the Owners any
right, remedy or claim under or by reason of this Indenture, or any covenant, condition or
stipulation hereof, and all covenants, stipulations, promises and agreements in this Indenture
contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the
Authority, the Trustee, the Members, the Municipal Bond Insurer, their officers,employees and
agents,and the Owners.
(b) Notwithstanding any other provision of this Indenture, if the Trustee is required to
determine whether the rights of the Owners will be adversely affected by any action taken
pursuant to the terms and provisions of this Indenture,the Trustee shall consider the effect on
the Owners as if there was no Municipal Bond Insurance Policy.
Section 7.12. Consent of Municipal Bond Insurer.
(a) Any provision of this Indenture expressly recognizing or granting rights in or to the
Municipal Bond Insurer may not be amended in any manner which affects the rights of the
Municipal Bond Insurer hereunder without the prior written consent of the Municipal Bond
Insurer.
(b) Unless otherwise provided in this Section 7.12,the Municipal Bond Insurer's consent
shall be required in addition to Owner consent, when required, for the following purposes: (i)
execution and delivery of any amendment, supplement or change to or modification of this
Indenture or any Lease Agreement, (ii)removal of the Trustee and selection and appointment of
any successor trustee; and (iii) initiation or approval of any action not described in (i) or (ii) of
this paragraph (b)which requires Owner consent.
(c)Anything in this Indenture to the contrary notwithstanding, upon the occurrence and
continuance of an Event of Default, the Municipal Bond Insurer shall, after payment of
principal and interest then due, if any, be entitled to control and direct the enforcement of all
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rights and remedies granted to the Owners or the Trustee, after providing the Trustee with
indemnities to its satisfaction, for the benefit of the Owners under this Indenture and the
Municipal Bond Insurer shall also be entitled to approve all waivers of Events of Default.
( jThe rights granted toJhe d gal Bond Insurer hereunder shall be effective only-so
Municipal
long as the Municipal Bond Insurer is not in default of its obligations under the Municipal Bond
Insurance Policy.
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ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties,Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to an Event of Default, and after the curing of all Events of
Default which may have occurred, perform such duties and only such duties as are expressly
and specifically set forth in this Indenture and no implied duties or covenants shall be read into
this Indenture against the Trustee. The Trustee shall, during the existence of any Event of
Default (which has not been cured), exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) The Authority may remove the Trustee at any time unless an Event of Default shall
have occurred and then be continuing,and the Authority shall remove the Trustee if at any time
requested to do so by the Owners of not less than a majority in aggregate principal amount of
the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the
Trustee shall cease to be eligible in accordance with subsection (e) of this Section 8.01, or shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or its property shall be appointed, or any public officer shall take control or charge of
the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, in each case by giving written notice of such removal to the Trustee and the
Members and thereupon shall appoint a successor Trustee by an instrument in writing. Any
such removal shall be made upon at least thirty (30) days'prior written notice to the Trustee.
The Trustee may be removed at any time, at the request of the Municipal Bond Insurer
with the consent of the Members, for any breach of the trust set forth herein. The Municipal
Bond Insurer shall receive written notice from the Authority prior to the effective date of any
Trustee resignation.
(c) The Trustee may at any lime resign by giving written notice of such resignation to the
Authority and the Members, and by giving the Bond Owners notice of such resignation by mail
at the addresses shown on the Registration Books. Upon receiving such notice of resignation,the
Authority shall promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. If no successor
Trustee shall have been appointed and have accepted appointment within forty-five (45) days
of giving notice of removal or notice of resignation as aforesaid,the Authority shall petition any
court of competent jurisdiction for the appointment of a successor Trustee,and such court may
thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.
Any successor Trustee appointed under this Indenture, shall signify its acceptance of such
appointment by executing and delivering to the Authority, to its predecessor Trustee a written
acceptance thereof, and thereupon such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the moneys, estates, properties,rights,powers,trusts,
duties and obligations of such predecessor Trustee, with like effect as if originally named
Trustee herein; but, nevertheless at the Written Request of the Authority or the request of the
successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of
conveyance or further assurance and do such other things as may reasonably be required for
more fully and certainly vesting in and confirming to such successor Trustee all the right, title
and interest of such predecessor Trustee in and to any property held by it under this Indenture
and shall pay over, transfer, assign and deliver to the successor Trustee any money or other
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property subject to the trusts and conditions herein set forth. Upon request of the successor
Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably
required for more fully and certainly vesting in and confirming to such successor Trustee all such
moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of
appointment by a successor Trustee as provided in this subsection, the Authority shall
promptly mail or cause the successor trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond
Owners at the addresses shown on the Registration Books. If the Authority fails to mail such
notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the Authority.
Notwithstanding any other provision of this Indenture, no removal, resignation or
termination of the Trustee shall take effect until a successor, reasonably acceptable to the
Municipal Bond Insurer,shall be appointed.
(e) Any Trustee appointed under this Indenture shall be a corporation or association
organized and doing business under the laws of any state or the United States of America or
the District of Columbia, shall be authorized under such laws to exercise corporate trust
powers,shall have (or,in the case of a corporation or national banking association included in a
bank holding company system, the related bank holding company shall have) a combined
capital and surplus of at least fifty million dollars ($50,000,000), shall be subject to supervision
or examination by federal or state agency, so long as any Bonds are Outstanding and shall be
acceptable to the Municipal Bond Insurer. If such corporation publishes a report of condition at
least annually pursuant to law or to the requirements of any supervising or examining agency
above referred to then for the purpose of this subsection (e), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this subsection (e), the Trustee shall resign
immediately in the manner and with the effect specified in this Section 8.01.
Section 8.02. Merger or Consolidation. Any bank or trust company into which the
Trustee may be merged or converted or with which it may be consolidated or any bank or trust
company resulting from any merger, conversion or consolidation to which it shall be a party or
any bank or trust company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business,provided such bank or trust company shall be eligible under subsection
(e) of Section 8.01 shall be the successor to such Trustee,without the execution or filing of any
paper or any further act,anything herein to the contrary notwithstanding.
Section 8.03. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall not be taken as
statements of the Trustee, and the Trustee shall not assume responsibility for the correctness of
the same, or make any representations as to the validity or sufficiency of this Indenture, the
Bonds or the Lease Agreements,nor shall the Trustee incur any responsibility in respect thereof,
other than as expressly stated herein in connection with the respective duties or obligations
herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be
responsible for its representations contained in its certificate of authentication on the Bonds.
The Trustee shall not be liable in connection with the performance of its duties hereunder,
except for its own negligence. The Trustee may become the Owner of Bonds with the same rights
it would have if it were not Trustee, and,to the extent permitted by law, may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capacity
with respect to, any committee formed to protect the rights of Bond Owners, whether or not
such committee shall represent the Owners of a majority in principal amount of the Bonds then
Outstanding.
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(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding relating to the time, method.
and place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this
Indenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or both,
would constitute an Event of Default hereunder unless and until it shall have actual knowledge
thereof, or a corporate trust officer shall have received written notice thereof, at its Office.
Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or
inquire as to the performance or observance by the Authority or the Members of any of the
terms, conditions, covenants or agreements herein,under the Lease Agreements or of any of the
documents executed in connection with the Bonds,or as to the existence of an Event of Default
or an event which would, with the giving of notice, the passage of time, or both, constitute an
Event of Default. The Trustee shall not be responsible for the validity, effectiveness or priority
of any collateral given to or held by it. Without limiting the generality of the foregoing, the
Trustee shall not be required to ascertain or inquire as to the performance or observance by the
Members and the Authority of the terms, conditions, covenants or agreements set forth in the
Lease Agreements, other than the covenants of the Members to make Lease Payments to the
Trustee when due and to file with the Trustee when due, such reports and certifications as the
Members are required to file with the Trustee thereunder.
(f) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it is not assured to its satisfaction that the
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g)The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed with due care
by it hereunder.
(h) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of Owners pursuant to this Indenture,
unless such Owners shall have offered to the Trustee reasonable security or indemnity against
the costs,expenses and liabilities which might be incurred by it in compliance with such request
or direction. No permissive power,right or remedy conferred upon the Trustee hereunder shall
be construed to impose a duty to exercise such power,right or remedy.
(i) Whether or not therein expressly so provided, every provision of this Indenture and
the Lease Agreements relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of Section 8.01(a), this Section 8.03 and Section
8.04 hereof.
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(j) The Trustee shall not be concerned with or accountable to anyone for the subsequent
use or application of any moneys which shall be released or withdrawn in accordance with the
provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as to the
title, value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose for the use
contemplated by the Authority or the Members of the Leased Premises In no event shall the
Trustee be liable for incidental,indirect, special or consequential damages in connection with or
arising from the Lease Agreements or this Indenture for the existence, furnishing or use of the
Leased Premises.
Section 8.04.Right to Rely on Documents. The Trustee shall be protected in acting upon
any notice, resolution, request, consent, order, certificate, report,opinion,bonds or other paper
or document believed by them to be genuine and to have been signed or presented by the proper
party or parties. The Trustee may consult with counsel, who may be counsel of or to the
Authority,with regard to legal questions,and the opinion or advice of such counsel shall be full
and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as
the absolute owners of the Bonds for all purposes and the Trustee shall not be affected by any
notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder,such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and established by a
Written Certificate, Written Request or Written Requisition of the Authority or the Members,
and such Written Certificate,Written Request or Written Requisition shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of this Indenture in
reliance upon such Written Certificate, Written Request or Written Requisition, but in its
discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require
such additional evidence as to it may deem reasonable.
Section 8.05. Preservation and Inspection of Documents. All documents received by the
Trustee under the provisions of this Indenture shall be retained by the Trustee and shall be
subject at all reasonable times to the inspection of the Authority, the Members and any Bond
Owner, and their agents and representatives duly authorized in writing, at reasonable hours
and under reasonable conditions.
Section 8.06. Compensation and Indemnification. The Authority shall pay to the Trustee
(solely from Additional Payments) from time to time the compensation for all services rendered
under this Indenture and also all reasonable expenses and disbursements (including fees and
expenses of counsel),incurred in and about the performance of its powers and duties under this
Indenture.
The Authority shall indemnify, defend and hold harmless the Trustee against any loss,
liability or expense incurred without negligence or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this trust, including costs and
expenses of defending itself against any claim or liability in connection with the exercise or
performance of any of its powers hereunder. As security for the performance of the obligations
of the Authority under this Section 8.06 and the obligation of the Members to make Additional
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Payments to the Trustee, the Trustee shall have a lien prior to the lien of the Bonds upon all
property and funds held or collected by the Trustee as such, except funds held in trust for the
payment of principal of or interest on particular Bonds. The rights of the Trustee and the
obligations of the Authority under this Section 8.06 shall survive the resignation or removal of
the Trustee or the discharge of the Bonds and this Indenture.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01. Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority and of the Owners of
the Bonds and of the Trustee may be modified or amended from time to time and at any time
by an indenture or indentures supplemental thereto,which the Authority and the Trustee may
enter into when the written consents of the Owners of a majority in aggregate principal amount
of all Bonds then Outstanding, shall have been filed with the Trustee. No such modification or
amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal
thereof or extend the time of payment, or change the method of computing the rate of interest
thereon, or extend the time of payment of interest thereon,without the consent of the Owner of
each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the
Owners of which is required to effect any such modification or amendment, or permit the
creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on
a parity with the lien created by this Indenture except as permitted herein, or deprive the
Owners of the Bonds of the lien created by this Indenture on such Revenues and other assets
(except as expressly provided in this Indenture),without the consent of the Owners of all of the
Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to
approve the particular form of any Supplemental Indenture, but it shall be sufficient if such
consent shall approve the substance thereof.
(b) This Indenture and the rights and obligations of the Authority,of the Trustee and the
Owners of the Bonds may also be modified or amended from time to time and at any time by a
Supplemental Indenture, which the Authority and the Trustee may enter into without the
consent of any Bond Owners, if the Trustee has been furnished an opinion of counsel that the
provisions of such Supplemental Indenture shall not materially adversely affect the interests of
the Owners of the Bonds, including, without limitation, for any one or more of the following
purposes:
(i) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed,to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or
power herein reserved to or conferred upon the Authority;
(ii) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission,or of curing or correcting any defective provision,contained in
this Indenture, or in regard to matters or questions arising under this Indenture, as the
Authority may deem necessary or desirable, provided that such modification or
amendment does not materially adversely affect the interests of the Bond Owners,in the
opinion of Bond Counsel filed with the Trustee;
(iii) to modify,amend or supplement this Indenture in such manner as to permit
the qualification hereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect, and to add such other terms, conditions and
provisions as may be permitted by said act or similar federal statute;or
(iv) to modify, amend or supplement this Indenture in such manner as to cause
interest on the Bonds to remain excludable from gross income under the Code.
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(c) The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by subsections (a) or (b) of this Section 9.01 which
materially adversely affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there shall
be delivered to the Trustee an opinion of Bond Counsel stating, in substance, that such
Supplemental Indenture has been adopted in compliance with the requirements of this Indenture
and that the adoption of such Supplemental Indenture will not, in and of itself, adversely affect
the exclusion from gross income for purposes of federal income taxes of interest on the Bonds.
(e) Written notice of any amendment or modification made pursuant to this Section 9.01
shall be given by the Authority to any rating agency then rating the Bonds at least thirty (30)
days prior to the effective date of such amendment or modification.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental
Indenture pursuant to this Article IX, this Indenture shall be deemed to be modified and
amended in accordance therewith,and the respective rights, duties and obligations under this
Indenture of the Authority, the Trustee and all Owners of Bonds Outstanding shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after
the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority
so determines shall, bear a notation by endorsement or otherwise in form approved by the
Authority and the Trustee as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose at the
Office of the Trustee or at such additional offices as the Trustee may select and designate for
that purpose, a suitable notation shall be made on such Bonds. If the Supplemental Indenture
shall so provide,new Bonds so modified as to conform,in the opinion of the Authority and the
Trustee, to any modification or amendment contained in such Supplemental Indenture,shall be
prepared and executed by the Authority and authenticated by the Trustee, and upon demand
on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee,
without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation
of such Bonds,in equal aggregate principal amount of the same series and maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article IX shall not
prevent any Bond Owner from accepting any amendment as to the particular Bonds held by
him.
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may be paid
by the Authority in any of the following ways,provided that the Authority also pays or causes
to be paid any other sums payable hereunder by the Authority:
(a)by paying or causing to be paid the principal of and interest and premium (if any) on
such Bonds, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, Defeasance
Obligations in the necessary amount (as provided in Section 10.03) to pay or redeem such
Bonds; or
(c)by delivering to the Trustee,for cancellation by it, all of such Bonds.
If the Authority shall also pay or cause to be paid all other sums payable hereunder by
the Authority, then and in that case, at the election of the Authority (evidenced by a Written
Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to
discharge all such indebtedness and this Indenture), and notwithstanding that any of such
Bonds shall not have been surrendered for payment, this Indenture and the pledge of Revenues
and other assets made under this Indenture with respect to such Bonds and all covenants,
agreements and other obligations of the Authority under this Indenture with respect to such
Bonds shall cease, terminate,become void and be completely discharged and satisfied. In such
event, upon the Written Request of the Authority, the Trustee shall execute and deliver to the
Authority all such instruments as may be necessary or desirable to evidence such discharge and
satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the Members all
moneys or securities or other property held by it pursuant to this Indenture which are not
required for the payment or redemption of any of such Bonds not theretofore surrendered for
such payment or redemption.
Section 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in
trust, at or before maturity, of money or securities in the necessary amount (as provided in
Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity
or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior
to maturity, notice of such redemption shall have been given as provided in Article IV or
provision satisfactory to the Trustee shall have been made for the giving of such notice, then all
liability of the Authority in respect of such Bonds shall cease, terminate and be completely
discharged, and the Owners thereof shall thereafter be entitled only to payment out of such
money or securities deposited with the Trustee as aforesaid for their payment,subject,however,
to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee for cancellation by it any Bonds
previously issued and delivered, which the Authority may have acquired in any manner
whatsoever, and such Bonds,upon such surrender and cancellation, shall be deemed to be paid
and retired.
Section 10.03. Deposit of Money or Securities with Trustee. Whenever in this Indenture it
is provided or permitted that there be deposited,with or held in trust by the Trustee money or
securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be
deposited or held may include money or securities held by the Trustee in the funds and
accounts established pursuant to this Indenture and shall be:
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(a) lawful money of the United States of America in an amount equal to the principal
amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of
Bonds which are to be redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as provided in Article IV or provision satisfactory to the
Trustee shall have been made for the giving of such notice;the amount to be deposited or held
shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption
date; or
(b) Defeasance Obligations,the principal of and interest on which when due will,in the
written opinion of an Independent Accountant filed with the Members, the Authority and the
Trustee,provide money sufficient to pay the principal of and interest and premium (if any) on
the Bonds to be paid or redeemed, as such principal, interest and premium become due,
provided that in the case of Bonds which are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
provided,in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms
of this Indenture or by Written Request of the Authority) to apply such money to the payment
of such principal, interest and premium (if any) with respect to such Bonds, and (ii) the
Authority shall have delivered to the Trustee an opinion of Bond Counsel to the effect that such
Bonds have been discharged in accordance with this Indenture (which opinion may rely upon
and assume the accuracy of the Independent Accountant's opinion referred to above).
Section 10.04. Unclaimed Funds. Notwithstanding any provisions of this Indenture,and
subject to applicable provisions of State law, any moneys held by the Trustee in trust for the
payment of the principal of, or interest on, any Bonds and remaining unclaimed for two (2)
years after the principal of all of the Bonds has become due and payable (whether at maturity
or upon call for redemption or by acceleration as provided in this Indenture), if such moneys
were so held at such date, or two (2) years after the date of deposit of such moneys if
deposited after said date when all of the Bonds became due and payable, shall be repaid to the
Authority free from the trusts created by this Indenture, and all liability of the Trustee with
respect to such moneys shall thereupon cease; provided, however, that before the repayment of
such moneys to the Authority as aforesaid, the Trustee shall (at the written request and cost of
the Authority) first mail to the Owners of Bonds which have not yet been paid, at the addresses
shown on the Registration Books, a notice, in such form as may be deemed appropriate by the
Trustee with respect to the Bonds so payable and not presented and with respect to the
provisions relating to the repayment to the Authority of the moneys held for the payment
thereof.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. Notwithstanding anything in
this Indenture or in the Bonds contained, the Authority shall not be required to advance any
moneys derived from any source other than the Revenues, the Additional Payments and other
assets pledged under this Indenture for any of the purposes in this Indenture mentioned,
whether for the payment of the principal of or interest on the Bonds or for any other purpose of
this Indenture.Nevertheless,the Authority may,but shall not be required to, advance for any of
the purposes hereof any funds of the Authority which may be made available to it for such
purposes.
Section 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any
person other than the Authority, the Trustee, the Members and the Owners of the Bonds, any
legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant,
condition or provision therein or herein contained; and all such covenants, conditions and
provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the
Trustee,the Members and the Owners of the Bonds.
Section 11.03. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Trustee may be established and maintained in the
accounting records of the Trustee,either as a fund or an account, and may, for the purposes of
such records, any audits thereof and any reports or statements with respect thereto,be treated
either as a fund or as an account; but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with industry standards to the extent
practicable, and with due regard for the requirements of Section 6.05 and for the protection of
the security of the Bonds and the rights of every Owner thereof. The Trustee may establish such
funds and accounts as it deems necessary to perform its obligations hereunder. The Trustee
shall deliver a monthly accounting to the Authority of the funds and accounts held hereunder;
provided, that the Trustee shall not be obligated to deliver an accounting for any fund or
account that has had no activity since the last reporting date and that has a balance of zero.
Section 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in this
Indenture the giving of notice by mail or otherwise is required,the giving of such notice may be
waived in writing by the person entitled to receive such notice and in any such case the giving or
.receipt of such notice shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.Whenever in this Indenture any notice shall be required to be given by
mail,such requirement shall be satisfied by the deposit of such notice in the United States mail,
postage prepaid,by first class mail.
Section 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for
the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee
shall, in lieu of such cancellation and delivery, destroy such Bonds as may be allowed by law,
and at the written request of the Authority the Trustee shall deliver a certificate of such
destruction to the Authority.
Section 11.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from
the remaining provisions contained in this Indenture and such invalidity, illegality or
unenforceability shall not affect any other provision of this Indenture, and this Indenture shall
-43-
be construed as if such invalid or illegal or unenforceable provision had never been contained
herein. The Authority hereby declares that it would have entered into this Indenture and each
and every other Section, paragraph, sentence, clause or phrase hereof and authorized the
issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 11.07. Notices. All written notices to be given under this Indenture shall be given
by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, confirmed by telephone, (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 Authority,the Members or the Trustee 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 Authority: Countywide Public Financing Authority
20 Civic Center Plaza
Santa Ana,CA 92701
Attn: Treasurer
If to the Members: See Exhibit B Attached Hereto
If to the Trustee: U.S. Trust Company of California,N.A.
515 South Flower Street,Suite 2700
Los Angeles,CA 90071
Attn:Corporate Trust Department
If to the Municipal Bond Insurer: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management
The Authority,the Members,the Trustee and the Municipal Bond Insurer,by notice given
hereunder, may designate different addresses to which subsequent notices, certificates or other
communications will be sent.
Section 11.08. Notices to be Given to the Municipal Bond Insurer. While the Municipal
Bond Insurance Policy is in effect, the Authority shall furnish, or cause to be furnished, to the
Municipal Bond Insurer:
(a) a copy of any notice to be given to the Owners and any certificate rendered pursuant
to this Indenture or any Lease Agreement relating to the security for the Bonds;
(b)notice of resignation of the Trustee;and
(c)such additional information it may reasonably request.
The Trustee shall notify the Municipal Bond Insurer of any failure of the Authority to
provide any notices or certificates required by this Indenture to be Authority to the Trustee.
The Trustee shall notify S&P of all consents given by the Municipal Bond Insurer hereunder.
The Authority will permit the Municipal Bond Insurer to discuss the affairs, finances
and accounts of the Authority or any information the Municipal Bond Insurer may reasonably
-44-
request regarding the security for the Bonds with appropriate officers of the Authority. The
Trustee or the Authority, as appropriate,will permit the Municipal Bond Insurer to have access
to and to make copies of all books and records relating to the Bonds at any reasonable time
upon reasonable notice.
Notwithstanding any other provision of this Indenture, the Trustee shall, as soon as
practicable, notify the Municipal Bond Insurer if the Trustee has actual knowledge of the
occurrence of any Event of Default.
Section 11.09. Evidence of Rights of Bond Owners. Any request, consent or other
instrument required or permitted by this Indenture to be signed and executed by Bond Owners
may be in any number of concurrent instruments of substantially similar tenor and shall be
signed or executed by such Bond Owners in person or by an agent or agents duly appointed in
writing. Proof of the execution of any such request, consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable by delivery,
shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and the Authority if made in the manner provided in this Section 11.09.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying
that the person signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request,consent, or other instrument or writing of the Owner of any Bond shall bind
every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the
Authority in accordance therewith or reliance thereon.
Section 11.10. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand,request,direction,consent
or waiver under this Indenture,Bonds which are known by the Trustee to be owned or held by
or for the account of the Authority or the Members,or by any other obligor on the Bonds, or by
any person directly or indirectly controlling or controlled by,or under direct or indirect common
control with, the Authority or the Members or any other obligor on the Bonds, shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination.
Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the
purposes of this Section 11.10 if the pledgee shall certify to the Trustee the pledgee's right to
vote such Bonds and that the pledgee is not a person directly or indirectly controlling or
controlled by,or under direct or indirect common control with,the Authority or the Members or
any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.
Upon request, the Authority or the Members shall specify to the Trustee those Bonds
disqualified pursuant to this Section 11.10.
Section 11.11. Money Held for Particular Bonds. The money held by the Trustee for the
payment of the interest or principal due on any date with respect to particular Bonds (or
portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and
pending such payment, be set aside on its books and held in trust by it for the Owners of the
-45-
Bonds entitled thereto, subject, however, to the provisions of Section 10.04 hereof but without
any liability for interest thereon.
Section 11.12. Waiver of Personal Liability.No member, officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the principal of or
interest or premium (if any) on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof;but nothing herein contained shall relieve any
such member, officer,agent or employee from the performance of any official duty provided by
law or by this Indenture.
Section 11.13. Successor Is Deemed Included in All References to Predecessor.Whenever
in this Indenture either the Authority, the Members or the Trustee is named or referred to, such
reference shall be deemed to include the successors or assigns thereof,and all the covenants and
agreements in this Indenture contained by or on behalf of the Authority, the Members or the
Trustee shall bind and inure to the benefit of the respective successors and assigns thereof
whether so expressed or not.
Section 11.14. Execution in Several Counterparts. This Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original; and all such counterparts, or as many of them as the Authority and the Trustee shall
preserve undestroyed,shall together constitute but one and the same instrument.
Section 11.15. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State .
-46-
IN WITNESS WHEREOF, the Countywide Public Financing Authority,has caused this
Indenture of Trust to be signed in its name by its Chairman and attested by its Secretary, and
U.S. Trust Company of California, N.A., in token of its acceptance of the trusts created
hereunder, has caused this Indenture of Trust to be signed in its corporate name by its officer
thereunto duly authorized, all as of the day and year first above written.
COUNTYWIDE PUBLIC FINANCING
AUTHORITY
•
Rocef ck R. Loma
Treas .,er
[SEAL]
Attest:
By '
Janice C.
Guy
Secretary
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
B of
Y
Detf.rahYo g
Assistant Vice President
-47-
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OP CALIFORNIA
ORANGE COUNTY
COUNTYWIDE PUBLIC FINANCING AUTHORITY
1996 Revenue Bond
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
August 1, July 31, 1996
REGISTERED OWNER: CEDE &CO.
PRINCIPAL AMOUNT: DOLLARS
The COUNTYWIDE PUBLIC FINANCING AUTHORITY, a joint powers authority duly
organized and existing under and by virtue of the laws of the State of California (the
"Authority"), for value received, hereby promises to pay to the Registered Owner specified
above or registered assigns (the "Registered Owner"), on the Maturity Date specified above
(subject to any right of prior redemption hereinafter provided for), the Principal Amount
specified above,in lawful money of the United States of America,and to pay interest thereon in
like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the
date of authentication of this Bond unless (i) this Bond is authenticated on or before an Interest
Payment Date and after the close of business on the fifteenth day of the month preceding such
interest payment date, in which event it shall bear interest from such Interest Payment Date, or
(ii) this Bond is authenticated on or before January 15, 1997,in which event it shall bear interest
from the Original Issue Date specified above; provided, however, that if at the time of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest
from the Interest Payment Date to which interest has previously been paid or made available
for payment on this Bond, at the Interest Rate per annum specified above, payable
semiannually on August 1 and February 1 in each year, commencing February 1, 1997
(collectively, the "Interest Payment Dates"), calculated on the basis of a 360-day year
composed of twelve 30-day months. Principal hereof and premium, if any, upon early
redemption hereof are payable upon presentation and surrender hereof at the corporate trust
office (the "Office") of U.S. Trust Company of California, N.A,, as trustee (the "Trustee")..
Interest hereon is payable by check of the Trustee mailed to the Registered Owner hereof at the
Registered Owner's address as it appears on the registration books of the Trustee as of the close
of business on the fifteenth day of the month preceding each Interest Payment Date (a "Record
Date"), or, upon written request filed with the Trustee (at least five days prior) to such Record
Date by a Registered Owner of at least $1,000,000 in aggregate principal amount of Bonds, by
wire transfer in immediately available funds to an account in the United States designated by
such Registered Owner in such written request.
This Bond is not a debt of the Cities of Brea, Buena Park, Fullerton, Garden Grove,
Orange, Santa Ana, Seal Beach, Stanton and Tustin (the "Members"), Orange County, the State
of California, or any of its political subdivisions, and neither the Members, said County, said
Exhibit A
Page 1
State, nor any of its political subdivisions, is liable hereon nor in any event shall this Bond be
payable out of any funds or properties of the Authority other than the Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated as the
"Countywide Public Financing Authority 1996 Revenue Bonds" (the "Bonds"), in an aggregate
principal amount of twenty-seven million seven hundred twenty-five thousand dollars
($27,725,000), all of like tenor and date (except for such variation, if any, as may be required to
designate varying numbers, maturities, interest rates or redemption provisions) and all issued
pursuant to the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California
Government Code, commencing with section 6584 of said Code (the "Bond Law"), and
pursuant to an Indenture of Trust, dated as of July 1, 1996, by and between the Authority and
the Trustee (the "Indenture") and a resolution of the Authority adopted on June 19, 1996,
authorizing the issuance of the Bonds. Reference is hereby made to the Indenture (copies of
which are on file at the office of the Authority) and all supplements thereto for a description of
the terms on which the Bonds are issued, the provisions with regard to the nature and extent of
the Revenues,and the rights thereunder of the owners of the Bonds and the rights, duties and
immunities of the Trustee and the rights and obligations of the Authority thereunder, to all of
the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and
agrees.
The Bonds have been issued by the Authority to aid in financing certain 800 MHz
communications facilities and other capital improvements.
In order to provide for the repayment of the Bonds, each Member has agreed to lease
certain real property and improvements to the Authority and to lease-back such real property
and improvements from the Authority pursuant to a lease agreement, dated as of July 1, 1996,
by and between the Authority, as lessor, and such Member, as lessee, under which such
Members,in the aggregate,have agreed to make certain lease payments to the Authority which
have been calculated to be sufficient to enable the Authority to pay the principal of and interest
and premium (if any) on the Bonds when due and payable. This Bond and the interest and
premium, if any, hereon and all other Bonds and the interest and premium, if any, thereon (to
the extent set forth in the Indenture) are special obligations of the Authority, and are payable
from, and are secured by a charge and lien on the Revenues as defined in the Indenture,
consisting primarily of lease payments to be made by the Members. As and to the extent set
forth in the Indenture,all of the Revenues are exclusively and irrevocably pledged in accordance
with the terms hereof and the provisions of the Indenture, to the payment of the principal of
and interest and premium (if any)on the Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided in
the Indenture, but no such modification or amendment shall extend the fixed maturity of any
Bonds,or reduce the amount of principal thereof or premium (if any)thereon,or extend the time
of payment, or change the method of computing the rate of interest thereon, or extend the time
of payment of interest thereon,without the consent of the owner of each Bond so affected.
The Bonds maturing on or before August 1, 2006, are not subject to optional redemption
prior to their respective stated maturities. The Bonds maturing on or after August 1, 2007, are
subject to redemption at the option of the Authority as a whole, or in part in such order of
maturity as the Member electing to prepay its lease payments shall designate (and,if no specific
order of redemption is designated by such Member, in inverse order of maturity; provided,
however, that only Bonds in which such Member has an interest may be redeemed by such
Member's election on any date on or after August 1, 2006, from any available source of funds,
at the following redemption prices (expressed as a percentage of the principal amount of the
Bonds to be redeemed)together with accrued interest thereon to the date fixed for redemption:
Exhibit A
Page 2
Redemption Period, Redemption Price
August 1,2006 through July 31,2007 102%
August 1,2007'through July 31,2008 101
August 1,2008 and thereafter 100
The Bonds are also be subject to redemption as a whole, or in part on a pro rata basis
among maturities, on any date, to the extent the Trustee has received title or hazard insurance
proceeds or condemnation proceeds not used to repair or replace any portion of the Leased
Premises of a Member damaged or destroyed and elected by such Member, to be used for such
purpose, at a redemption price equal to one hundred percent (100%) the principal amount
thereof plus interest accrued thereon to the date fixed for redemption,without premium.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by
first class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption
date to the respective owners of any Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee,but neither failure to receive such notice nor
any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption
or the cessation of accrual of interest thereon from and after the date fixed for redemption.
If this Bond is called for redemption and payment is duly provided therefor as specified
in the Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
If an Event of Default,as defined in the Indenture,shall occur,the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect
provided in the Indenture, but such declaration and its consequences may be rescinded and
annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Office of the Trustee,but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon registration of such transfer, a new Bond or Bonds, of
authorized denomination or denominations,for the same aggregate principal amount and of the
same maturity will be issued to the transferee in exchange herefor. This Bond may be exchanged
at the Office of the Trustee for Bonds of the same tenor, aggregate principal amount, interest
rate and maturity,of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any
notice to the contrary.
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof,Cede &Co.,has an interest herein.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist,
have happened or have been performed in due and regular time, form and manner as required
Exhibit A
Page 3
by the Bond Law and the laws of the State of California and that the amount of this Bond,
together with all other indebtedness of the Authority, does not exceed any limit prescribed by
the Bond Law or any laws of the State of California, and is not in excess of the amount of
Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have
been signed by the Trustee.
IN WITNESS WHEREOF,the Countywide Public Financing Authority has caused this
Bond to be executed in its name and on its behalf with the facsimile signature of its Treasurer
and attested to by the facsimile signature of its Clerk, all as of the Original Issue Date specified
above.
COUNTYWIDE PUBLIC FINANCING
AUTHORITY
By
Treasurer
(SEAL)
Attest:
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By
Authorized Signatory
Exhibit A
Page 4
STATEMENT OF INSURANCE
The MBIA Insurance Corporation(the "Insurer") has issued a policy containing the following provisions,
such policy being on file at U.S.Trust Company of California,N.A.,Los Angeles,California.
The Insurer,in consideration of the payment of the premium and subject to the terms of this policy,hereby
unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described
obligations,the full and complete payment required to be made by or on behalf of the Countywide Public Financing
Authority (the "Issuer") to U.S. Trust Company of California, N.A.,Los Angeles, California,or its successor (the
"Paying Agent"),of an amount equal to(i) the principal of(either at the stated maturity or by any advancement of
maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations(as that term is defined
below)as such payments shall become due but shall not be so paid(except that in the event of any acceleration of the
due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or
otherwise,other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments
guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due
had there not been any such acceleration); and(ii) the reimbursement of any such payment which is subsequently
recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law.The amounts
referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured
Amounts.""Obligations"shall mean:
$27,725,000
COUNTYWIDE PUBLIC FINANCING AUTHORITY
(California)
1996 Revenue Bonds
Upon receipt of telephonic or telegraphic notice,such notice subsequently confirmed in writing by registered
or certified mail,or upon receipt of written notice by registered or certified mail,by the Insurer from the Paying Agent
or any owner of an Obligation the payment of an Insured Amount for which is then due,that such required payment
has not been made,the Insurer on the due date of such payment or within one business day after receipt of notice of
such nonpayment,whichever is later,will make a deposit of funds,in an account with State Street Bank and Trust
Company,N.A.,in New York,New York,or its successor,sufficient for the payment of any such Insured Amounts
which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of
ownership of the Obligations,together with any appropriate instruments of assignment to evidence the assignment of
the Insured Amounts due on the Obligations as are paid by the Insurer,and appropriate instruments to effect the
appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of
Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank and Trust
Company,N.A.,State Street Bank and Trust Company,N.A.shall disburse to such owners or the Paying Agent payment
of the Insured Amounts due on such Obligations,less any amount held by the Paying Agent for the payment of such
Insured Amounts and legally available therefor.This policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Obligation.
As used herein,the term"owner"shall mean the registered owner of any Obligation as indicated in the books
maintained by the Paying Agent,the Issuer,or any designee of the Issuer for such purpose.The term owner shall not
include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street,
Armonk,New York 10504 and such service of process shall be valid and binding.
This policy is non-cancelable for any reason. The premium on this policy is not refundable for any reason
including the payment prior to maturity of the Obligations.
In the event the Insurer were to become insolvent,any claims arising under a policy of financial guaranty
insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to
Article 14.2(commencing with Section 1063)of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
MBIA INSURANCE CORPORATION
•
•
Exhibit A
Page 5
ASSIGNMENT
For value received,the undersigned do(es) hereby sell,assign and transfer unto
(Name,Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es)hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the registration books of the Trustee with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
Notice: Signature(s) must be guaranteed by a qualified Notice:The signature on this assignment must correspond
guarantor institution. with the name(s) as written on the face of the within
Bond in every particular without alteration or
enlargement or any change whatsoever."
Exhibit A
Page 6
EXHIBIT B
MEMBERS
City of Brea
Number One Civic Center Circle,3rd Floor
Brea,CA 92621-5758
City of Buena Park
6650 Beach Boulevard
Buena Park,CA 90620
City of Fullerton
303 West Commonwealth Avenue
Fullerton,CA 92632
City of Garden Grove
11222 Acacia Parkway
Garden Grove, CA 92640
City of Orange
300 East Chapman Avenue
Orange, CA 92666-1591
City of Santa Ana
20 Civic Center Plaza
Santa Ana,CA 92701
City of Seal Beach
211 Eighth Street
Seal Beach,CA 90740
City of Stanton
7800 Katella Avenue
Stanton,CA 90680
City of Tustin
300 Centennial Way
Tustin, CA 92680
Exhibit B
EXHIBIT C
DESCRIPTION OF THE PROJECT
Brea: Finance a portion of its share of the costs of the Orange County countywide 800 MHz
communications system
Buena Park: (1) Finance a portion of its share of the costs of the Orange County countywide 800
MHz communications system
(2) Finance improvements to the Buena Park Civic Center
(3)Finance acquisition of an electric water meter system
Fullerton: (1) Finance a portion of its share of the costs of the Orange County countywide 800
MHz communications system
(2) Refinance existing debt relating to the Fullerton Municipal Airport
Garden Grove: Finance a portion of its share of the costs of the Orange County countywide 800 MHz
communications system
Orange: Finance a portion of its share of the costs of the Orange County countywide 800 MHz
communications system
Santa Ana: Finance a portion of its share of the costs of the Orange County countywide 800 MHz
communications system
Seal Beach: (1) Finance a portion of its share of the costs of the Orange County countywide 800
MHz communications system
(2) Finance the refurbishment of beach rest rooms located under the Seal Beach Pier
and provide alternative parking facilities, including parking meters, automation
and the beautification of the two beach lots
Stanton: Finance a portion of its share of the costs of the Orange County countywide 800 MHz
communications system
Tustin: (1) Finance a portion of its share of the costs of the Orange County countywide 800
MHz communications system
(2)Finance construction of a new park
Exhibit C
EXHIBIT'D
ALLOCATION OF PRINCIPAL TO EACH MEMBER
— - _ Allocable - --Allocable`
Member Principal Percentage
Brea $ 1,145,000 4.129847%
Buena Park 3,445,000 12.425609
Fullerton 5,005,000 18.052299
Garden Grove 3,410,000 12.299369
Orange 3,725,000 13.435528
Santa Ana 6,655,000 24.003606
Seal Beach 1,265,000 4.562669
Stanton 375,000 1.352570
Tustin 2,700,000 9.738503
$27,725,000 100.000000%
Exhibit D
EXHIBIT E
MEMBERS'PERCENTAGE OF ANNUAL DEBT SERVICE
Year Brea Buena Plc Fullerton Grdn Gr Orange Snta Ana Seal Bch Stanton Tustin Total
1997 4.44% 9.98% 17.37% 12.98% 14.32% 25.44% 3.70% 1.42% 10.35% 100%
1998 4.46 10.06 17.36 13.07 14.22 25.47 3.62 1.38 10.36 100
1999 4.34 10.00 17.39 13.02 14.29 25.39 3.70 1.49 10.38 100
2000 4.36 10.06 17.33 13.06 14.14 25.50 3.76 1.45 10.35 100
2001 4.36 10.11 17.40 13.08 14.27 25.40 3.66 1.40 10.31 100
2002 4.36 9.99 17.45 13.08 14.23 25.42 3.72 1.50 10.25 100
2003 4.34 9.99 17.41 13.01 14.27 25.48 3.75 1.44 10.30 100
2004 4.32 10.00 17.38 13.10 14.31 25.52 3.64 1.39 10.34 100
2005 4.43 10.12 17.28 12.97 14.28 25.45 - 3.67 1.47 10.34 100
2006 4.36 10.04 17.40 13.09 14.18 25.56 3.68 1.40 10.28 100
2007 - 51.97 29.04 - - - 18.99 - - 100
2008 - 51.88 29.23 - - - 18.89 - - 100
2009 - 51.79 29.42 - - - 18.79 - - 100
2010 - 52.11 29.06 - - - 18.83 - - 100
2011 - 51.61 29.03 - - - 19.35 - - 100
•
Exhibit E