HomeMy WebLinkAboutD-1 Staff Report - Refinance Bonds Mt Cove CFD 2002-1SCHEDULED ITEM
D-1
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: MAY 17, 2021
SUBJECT: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AUTHORIZING
THE ISSUANCE OF A REFUNDING BOND OF COMMUNITY FACILITIES
DISTRICT NO. 2002-1 (MOUNTAIN COVE) OF THE CITY OF AZUSA FOR THE
PURPOSE OF DEFEASING AND REFUNDING CERTAIN OUTSTANDING BONDS
OF SUCH COMMUNITY FACILITIES DISTRICT, APPOINTING A FISCAL
AGENT, APPROVING IRREVOCABLE REFUNDING INSTRUCTIONS TO BE
EXECUTED IN CONNECTION WITH THE ISSUANCE OF THE REFUNDING
BOND AND CERTAIN OTHER ACTIONS
BACKGROUND:
On December 19, 2002, the City of Azusa (the “City”) issued $8,980,000 Special Tax Bonds, 2002
Series A for the Community Facilities District No. 2002-1 (Mountain Cove) (the “2002 Bonds”). The
2002 Bonds were issued with a 6.0% coupon in 2032 and were subject to optional redemption as of
September 1, 2011 at a price of 101%.
On June 20, 2011, the bonds were refinanced through the $7,880,000 Community Facility District No.
2002-1 (Mountain Cove) Special Tax Refunding Bonds, Series 2011 (the “2011 Bonds”). The
refinancing of the 2002 Bonds resulted in interest rate savings of $170 annually to the homeowners (a
9% - 10% reduction) through a reduction to the annual tax levy established to repay the initial CFD
bonds. The 2011 Bonds bear interest at rates of 4.70% to 5.875% and have a final maturity of 9/1/2032.
The 2011 Bonds are currently outstanding in the amount of $5,945,000 and are callable at par on any
date beginning on September 1, 2021.
RECOMMENDATION:
Staff recommends the City Council take the following action:
1) Adopt the attached Resolution No. 2021-C23 approving the issuance of a refunding bond to
refund outstanding bonds of Community Facilities District 2002-1 Special Tax Bonds (Mountain
Cove), appoint a fiscal agent, and approve the execution of necessary financing documents.
APPROVED
CITY COUNCIL
5/17/2021
Refinance CFD 2002-1 Special Tax Bonds (Mountain Cove)
May 17, 2021
Page 2
ANALYSIS:
Interest rates are currently near historic lows. Based on the current favorable interest rate environment,
the City is able to achieve savings by refunding the 2011 Bonds. The savings achieved by issuing the
2021 Bond to refund the 2011 Bonds are expected to generate savings for homeowners in the District
through a reduction in the annual special tax levy.
Working with the City’s Municipal Advisor (Urban Futures, Inc.), the City explored a private placement
refunding of the 2011 Bonds. A private placement has numerous advantages over a public sale,
including lower costs of issuance, reduced staff time, the ability to lock interest rates, and reduced
exposure to interest rate risk. In March 2021, the Municipal Advisor solicited indicative rates from 21
placement banks for the purpose of refinancing the 2011 Bonds. After receiving four indicative rates
ranging from 2.16% to 2.95%, City staff and the Municipal Advisor evaluated the bids to determine the
proposal with the lowest rate and most advantageous terms. Ultimately, staff chose to move forward
with First Foundation Bank (“First Foundation” or the “Bank”), who provided the lowest indicative rate
of 2.16% with terms most advantageous to the City.
In April 2021 the Bank provided a term sheet with the interest rate of 2.16%, which is locked through
the anticipated closing date of June 8, 2021. The Bank obtained credit approval in April 2021.
Additionally, the Bank and the City have agreed to the substantive business terms and covenants
reflected in the attached documents. The Bank and the financing team are ready to proceed to close the
transaction on June 8, 2021 if Council adopts the Resolution.
Based on the Bank’s offered rate of 2.16%, refunding the 2011 Bonds will generate an estimated $1.5
million in cash flow savings over the life of the 2021 Bond, or, on average, approximately $139,000
annually beginning in 2022. This results in net present value savings of approximately $1.1 million, or
19.8% of refunded par amount, which is greater than the Government Finance Officers’ Association
criteria of 3.0% for such transactions. Net present value savings represent the present value of savings in
“today’s dollars.” Savings from the refinancing are expected to lower the annual special taxes for
District residents by approximately $319 to $531 in each year beginning in 2022, or, on average, $427
annually.
Estimated Savings for 2021 Refunding Bond*
Existing 2011 Bonds
Outstanding Amount1 $5.945 million
Current Interest Rates 4.70% - 5.875%
2021 Refunding Bond
Bond Amount $5.5 million
True Interest Cost 2.16%
Net Present Value Savings ($) $1.1 million
Net Present Value Savings 19.8%
Avg. Annual Savings Through 2032 $139,000
Avg. Savings Per Parcel Through 20322 $427
Refinance CFD 2002-1 Special Tax Bonds (Mountain Cove)
May 17, 2021
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2021 Refunding Bond – Cash Flow Savings
Bond Year Annual Savings Per Parcel2
2022 $104,435 $319
2023 112,129 343
2024 117,654 360
2025 126,391 387
2026 132,901 406
2027 137,326 420
2028 148,245 453
2029 151,814 464
2030 163,326 499
2031 167,195 511
2032 173,714 531
Total $1,535,131 $4,695
*Preliminary; subject to change.
1. The City will pay principal of $335,000 and interest of $166,296 due 9/1/2021 from special taxes on hand. Proceeds of the 2021 Bond will be
used to refund callable 2011 Bonds maturing in 2022 through 2032.
2. Based on 327 taxable parcels.
The proposed 2021 Bond is estimated to have a par amount of approximately $5.5 million with a final
maturity in 2032, which is the same as the final maturity for the 2002 Bonds and the 2011 Bonds. The
2021 Bond will be structured with level debt service; on a going forward basis, property owners should
see a leveling off of their tax rates as a result of the refunding. A portion of the proceeds of the 2021
Bond will be used to fund a debt service reserve fund, funded at 25% of the maximum annual debt
service on the 2021 Bond.
Proceeds of the 2021 Bond are expected to be used to refund and defease the 2011 Bonds maturing in
2022 through 2032, which are subject to optional redemption at 100% on 9/1/2021. The City will pay
principal and interest of the 2011 Bonds due on 9/1/2021 from special taxes on hand.
As required under Section 5852.1 of the California Government Code (Code), good faith estimates
related to the 2021 Bond as provided by the Municipal Advisor are provided in Exhibit A of the
Resolution.
DOCUMENTS TO BE APPROVED:
The Resolution appoints and retains the financing team Urban Futures, Inc. as Municipal Advisor; Best
Best & Krieger LLP as Bond Counsel; Special District Financing & Administration as Special Tax
Consultant; and Wilmington Trust, National Association as Fiscal Agent, and approves all documents
and actions needed to authorize the issuance and sale of the 2021 Bond, including the following
substantially final form financing documents together with any changes or additions deemed advisable
and approved by the Mayor, the City Manager and the Director of Administrative Services:
• Fiscal Agent Agreement. This document contains the terms of the 2021 Bond, including
payment and redemption provisions, definition and pledge of Special Tax Revenues to pay the
2021 Bond, Rights and Duties of the Trustee, remedies upon a default in the payment of the 2021
Bond, and final discharge of the 2021 Bond and other related matters.
Refinance CFD 2002-1 Special Tax Bonds (Mountain Cove)
May 17, 2021
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• Irrevocable Refunding Instructions. These are instructions prepared by the City and
acknowledged by Wells Fargo Bank, National Association, as fiscal agent for the Refunded
Bonds (the “Prior Fiscal Agent”), with respect to the defeasance and redemption of the 2011
Bonds, whereby the Prior Fiscal Agent will receive a portion of the proceeds of the sale of the
2021 Bond and certain funds related to the 2011 Bonds that will be deposited in a bond fund
established pursuant to the Prior Fiscal Agent Agreement to provide for the defeasance and
redemption of the 2011 Bonds and will perform certain other duties.
• Term Sheet. The Term Sheet between the City and First Foundation summarizes the terms of the
2021 Bond, including interest rate, repayment terms, prepayment options, rate lock, and
covenants including annual reporting requirements.
If the Resolution and financing documents are approved by the Council, the 2021 Bond is expected to be
executed on June 8, 2021. A portion of the proceeds of the 2021 Bond will be held in the bond fund by
the prior fiscal agent, Wells Fargo, and, along with other funds on hand, applied to refund the 2011
Bonds on September 1, 2021.
FISCAL IMPACT:
The 2021 Bond is a limited obligation of the District, payable solely from special tax revenue. The
proposed CFD refunding bonds will not be a direct obligation of the City of Azusa. Neither the faith or
credit, nor the taxing power of the City, County, State or any political subdivision is pledged to the
repayment of the bonds.
The refinancing of the 2011 Bonds is estimated to provide meaningful savings to homeowners of
approximately $319 to $531 in each year beginning in 2022, or, on average, approximately $427
annually, through a reduction to the annual tax levy established to repay the initial CFD bonds. The
estimated savings are net of all issuance costs.
Prepared by: Reviewed and Approved:
Talika M. Johnson Sergio Gonzalez
Director of Administrative Services City Manager
Attachments:
1) Resolution No. 2021-C23
2) Fiscal Agent Agreement
3) Irrevocable Refunding Instructions
4) Term Sheet
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RESOLUTION NO. 2021-C23
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
AZUSA AUTHORIZING THE ISSUANCE OF A REFUNDING
BOND OF COMMUNITY FACILITIES DISTRICT NO. 2002-1
(MOUNTAIN COVE) OF THE CITY OF AZUSA FOR THE
PURPOSE OF DEFEASING AND REFUNDING CERTAIN
OUTSTANDING BONDS OF SUCH COMMUNITY FACILITIES
DISTRICT, APPOINTING A FISCAL AGENT, APPROVING
IRREVOCABLE REFUNDING INSTRUCTIONS TO BE
EXECUTED IN CONNECTION WITH THE ISSUANCE OF THE
REFUNDING BOND AND CERTAIN OTHER ACTIONS
WHEREAS, the City Council of the City of Azusa(the “City Council”) has established
Community Facilities District No. 2002-1 (Mountain Cove) of the City of Azusa (the “District”)
pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended,
Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California
Government Code (the “Act”); and
WHEREAS, the District previously issued its Special Tax Bonds, 2002 Series A (the
“2002 Bonds”) in the aggregate principal amount of $8,980,000 for the purpose of financing the
construction and acquisition of certain public facilities and school facilities as permitted pursuant
to Resolution No. 02-C133, as amended by Resolution No. 02-C142 and the Act; and
WHEREAS, the District subsequently issued its $7,880,000 Special Tax Refunding
Bonds, Series 2011 (the “Prior Special Tax Bonds”) to refund the 2002 Bonds and the City
Council has determined that it is in the best interest of the owners of property in the District that
a bond (hereinafter referred to as the “Bond”) be issued to defease and refund the outstanding
Refunded Bonds; and
WHEREAS, the Prior Special Tax Bonds were issued pursuant to a Fiscal Agent
Agreement dated July 1, 2011 (the “Prior Fiscal Agent Agreement”) by and between the District
and Wells Fargo Bank, National Association, as fiscal agent (the “Prior Fiscal Agent”); and
WHEREAS, as a result of favorable conditions in the municipal bond market, the City
Council desires to authorize the issuance of the Community Facilities District No. 2002-1
(Mountain Cove) of the City of Azusa, 2021 Special Tax Refunding Bond (the “Special Tax
Refunding Bond”) for the purpose of defeasing and refunding the Prior Special Tax Bonds prior
to the scheduled maturity thereof in order to reduce the borrowing costs on such indebtedness;
and
WHEREAS, a reduction in borrowing costs will provide savings to the property owners
in the District through reduced special taxes that will be levied on parcels of taxable property in
the District to pay the principal of and interest on the Special Tax Refunding Bond; and
WHEREAS, payment of the principal of and interest on the Prior Special Tax Bonds are
secured by special taxes that are levied on parcels of taxable property in the District (the “Special
Taxes”); and
Attachment 1
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WHEREAS, payment of the principal of and interest on the Special Tax Refunding Bond
that may be issued by the District will be secured by such Special Taxes; and
WHEREAS, upon the issuance of the Special Tax Refunding Bond and the deposit of
the appropriate portion of the proceeds of the sale of such Special Tax Refunding Bond in the
bond fund established to pay debt service on the Prior Special Tax Bonds, such Prior Special Tax
Bonds will be defeased and the property in the District will no longer be subject to the levy of
special taxes to pay debt service on such Prior Special Tax Bonds; and
WHEREAS, if the Special Tax Refunding Bond is issued and sold in an aggregate
principal amount that does not exceed the amount authorized in this Resolution, the value of the
parcels of real property within the District that will be subject to the levy of the Special Taxes
will be more than three (3) times the principal amount of such Special Tax Refunding Bond and
any other parity bonds of the District; and
WHEREAS, there has been presented to the City Council an offer for the direct purchase
of the Special Tax Refunding Bond from First Foundation Public Finance, a Delaware statutory
trust and wholly owned subsidiary of First Foundation Bank (and its successors and assigns, the
“Purchaser”), as set forth in the letter from the Purchaser to the City dated April 7, 2021 (the
“Term Sheet”); and
WHEREAS, there has also been presented to the City Council a separate form of Fiscal
Agent Agreement for the Special Tax Refunding Bond to be executed and delivered by the City
and Wilmington Trust, National Association, as fiscal agent (the “Fiscal Agent”), setting forth
the terms and conditions relating to the issuance, sale, delivery and administration of the Special
Tax Refunding Bond (the “Fiscal Agent Agreement”); and
WHEREAS, there has also been presented to the City Council form of Irrevocable
Refunding Instructions to be executed and delivered by the City and Wells Fargo Bank, National
Association, as fiscal agent for the Refunded Bonds (the “Prior Fiscal Agent”), with respect to
the defeasance and redemption of the Prior Special Tax Bonds, whereby the Prior Fiscal Agent
will receive a portion of the proceeds of the sale of the Special Tax Refunding Bond and certain
funds related to the Prior Special Tax Bonds that will be deposited in a bond fund established
pursuant to the Prior Fiscal Agent Agreement to provide for the defeasance and redemption of
the Prior Special Tax Bonds and will perform certain other duties (the “Refunding Instructions”);
and
WHEREAS, the City Council has considered the Term Sheet, the forms of the Fiscal
Agent Agreement and the Refunding Instructions and has determined that it is in the best interest
of the owners of property in and the residents of the District, that the City Council authorize the
issuance and sale of the Special Tax Refunding Bond; and
WHEREAS, Section 5852.1 of the Government Code of the State of California (“Section
5852.1”) provides that the City Council obtain from an underwriter, financial advisor or private
lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the
Special Tax Refunding Bond, good faith estimates of: (a) the true interest cost of the Special Tax
Refunding Bond, (b) the finance charge of the Special Tax Refunding Bond, meaning the sum of
45635.01438\33882867.4
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all fees and charges paid to third parties, (c) the amount of proceeds of the Special Tax
Refunding Bond received less the finance charge described above and any reserves or capitalized
interest paid or funded with proceeds of the Special Tax Refunding Bond and (d) the sum total of
all debt service payments on the Special Tax Refunding Bond calculated to the final maturity of
the Special Tax Refunding Bond plus the fees and charges paid to third parties not paid with the
proceeds of the Special Tax Refunding Bond; and
WHEREAS, in accordance with Section 5852.1, the City Council has obtained such
good faith estimates from Urban Futures, Inc., the City’s municipal advisor (the “Municipal
Advisor”), and such estimates are disclosed in Exhibit A attached hereto; and
WHEREAS, the City Council wishes at this time to authorize all proceedings relating to
the issuance and sale of the Special Tax Refunding Bond and all other agreements and
documents relating thereto.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY
THE CITY COUNCIL OF THE CITY OF AZUSA AS FOLLOWS:
SECTION 1. Recitals. The foregoing recitals are true and correct and this Council
hereby so finds and determines.
SECTION 2. Findings. The City Council finds (a) that the preceding recitals are true
and correct, (b) that the sale of the Special Tax Refunding Bond at private sale, without
advertising for bids, will result in a lower overall cost to the District, (c) that if the Special Tax
Refunding Bond is issued and sold in an aggregate principal amount that does not exceed the
aggregate principal amount set forth in this Resolution, the aggregate value of the parcels of real
property within the District that will be subject to the levy of the Special Taxes to pay the
principal of and interest on the Special Tax Refunding Bond will be more than three (3) times the
aggregate principal amount of such Special Tax Refunding Bond, (d) as to the Special Tax
Refunding Bond, the total net interest cost to maturity of such Series of Special Tax Refunding
Bond plus the principal amount of the Special Tax Refunding Bond will not exceed the total net
interest cost to maturity on the Prior Special Tax Bond being defeased and refunded from the
proceeds of such Special Tax Refunding Bond plus the principal amount of such Prior Special
Tax Bond.
SECTION 3. Authorization of the Issuance of the Special Tax Refunding Bond.
The City Council authorizes the issuance and sale of the Special Tax Refunding Bond in the not
to exceed aggregate principal amounts listed in Section 3. The Mayor, the City Manager and the
Director of Administrative Services (each an “Authorized Representative”) are authorized and
directed to take all steps and actions which are necessary to accomplish the issuance, sale and
delivery of the Special Tax Refunding Bond pursuant to the authorization given by and the
conditions specified in this Resolution. The Mayor and the City Clerk of the City are authorized
to execute the Special Tax Refunding Bond for and on behalf of the City and the District by their
manual or facsimile signatures. The last maturity date of the Special Tax Refunding Bond shall
not be later than the last maturity date of the Prior Special Tax Bonds being defeased.
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Pursuant to Section 53363.8 of the California Government Code, the City Council
determines that the designated costs of issuing the Special Tax Refunding Bond (the “Designated
Costs of Issuance”) shall include (i) all expenses incident to the calling, retiring, or paying of the
Prior Special Tax Bonds, and incident to the issuance of the Special Tax Refunding Bond,
including the charges of any agent in connection with the issuance of the Special Tax Refunding
Bond or in connection with the redemption or retirement of the Prior Special Tax Bonds, (ii) the
interest on the Prior Special Tax Bonds to the date upon which each of Prior Special Tax Bonds
will be paid pursuant to the Prior Fiscal Agent Agreement, and (iii) any premium necessary in
calling or retiring any of the Prior Special Tax Bonds.
SECTION 4. Special Tax Refunding Bond Authorized. Pursuant to the Act, this
Resolution, and the Fiscal Agent Agreement, the Special Tax Refunding Bond is hereby
authorized to be issued in an aggregate principal amount not to exceed $6,000,000. The date,
manner of payment, interest rate or rates, interest payment dates, maturity date or dates,
denomination, form of bond, registration privileges, manner of execution, place of payment,
terms of redemption, and other terms, covenants, and conditions of the Special Tax Refunding
Bond shall be as provided in the Fiscal Agent Agreement for the Special Tax Refunding Bond as
finally executed.
SECTION 5. Approval of Fiscal Agent Agreement. The form of the Fiscal Agent
Agreement which provides generally for (i) the authentication and delivery by the Fiscal Agent
of the Special Tax Refunding Bond, (ii) the establishment and administration by the Fiscal Agent
of certain funds and accounts for the benefit of the City and the owners of the Special Tax
Refunding Bond, (iii) the payment by the Fiscal Agent of the principal of and interest on the
Special Tax Refunding Bond from the Special Tax Revenues (as defined therein), and (iv) the
performance of other duties by the Fiscal Agent, are approved in the forms provided to the City
Council at the meeting at which this Resolution is adopted, and the Authorized Representatives
are each individually authorized to execute and deliver, on behalf of the City, such Fiscal Agent
Agreement with respect to the Special Tax Refunding Bond.
SECTION 6. Approval of Irrevocable Refunding Instructions. The form of the
Irrevocable Refunding Instructions which provide for the defeasance and redemption of the Prior
Special Tax Bonds, is approved in the form provided to the City Council at the meeting at which
this Resolution is adopted, and the Authorized Representatives are authorized to execute and
deliver, on behalf of the City, such Irrevocable Refunding Instructions with respect to the Prior
Special Tax Bonds.
Notwithstanding the preceding provisions of this section, as required by Section 53363.9
of the California Government Code, the amount of the proceeds of the sale of the Special Tax
Refunding Bond and other amounts to be deposited in the bond fund with respect to the Prior
Special Tax Bonds, and earnings from the investment thereof, shall be in an amount sufficient to
pay the principal of and interest on such Prior Special Tax Bonds and the Designated Costs of
Issuance, as certified by a certified public accountant licensed to practice in the State of
California.
SECTION 7. Approval of Term Sheet. The Term Sheet is approved in substantially
the form provided to the City Council at the meeting at which this Resolution is adopted, and the
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Authorized Representatives are each individually authorized to execute and deliver, on behalf of
the City, such Term Sheet.
SECTION 8. Appointment of Professionals. The City Council hereby authorizes and
approves the following professionals to provide services in connection with the issuance of the
Special Tax Refunding Bond:
(a) Fiscal Agent. Wilmington Trust, National Association is appointed as
Fiscal Agent pursuant to the Fiscal Agent Agreement and is authorized to take any and all action
provided therein to be taken by the Fiscal Agent;
(b) Municipal Advisor. Urban Futures, Inc. is hereby appointed as Municipal
Advisor;
(c) Bond Counsel. Best Best & Krieger LLP is hereby appointed as Bond
Counsel in connection with the issuance of the Special Tax Refunding Bond; and
(d) Special Tax Consultant. Special District Financing & Administration is
hereby appointed as Special Tax Consultant in connection with the issuance of the Special Tax
Refunding Bond.
SECTION 9. Issuance of Special Tax Refunding Bond. The City Council approves
and authorizes the issuance and sale of the Special Tax Refunding Bond to the Purchaser
pursuant to the Term Sheet presented by the Purchaser. The Authorized Representatives are
each individually authorized and directed to execute and deliver the documents on behalf of the
City and the District as set forth in the Term Sheet and any modifications to the Term Sheet shall
be negotiated and approved by the Authorized Representatives upon the submission of any such
modifications by the Purchaser and shall be consistent with the requirements of this Resolution;
provided that the true interest cost on the Special Tax Refunding Bond shall not exceed 2.50%.
Notwithstanding the preceding provisions of this section or any other section of this
Resolution, the Special Tax Refunding Bond shall not be issued and sold for any District unless
(a) the interest rates contained in the Term Sheet, or any modification thereof, with respect to all
maturities of the Special Tax Refunding Bond will result in net present value savings for the
District, in total debt service with respect to the outstanding bonds of the District of at least 3%.
The Authorized Representatives are authorized and directed to provide for the modification of
the Term Sheet so that the Special Tax Refunding Bond will not be issued and sold for any
District for which the requirements of this paragraph will not be satisfied.
SECTION 10. Reserve Fund and Other Funds Related to the Prior Special Tax
Bonds. The Authorized Representatives are each authorized to direct the Prior Fiscal Agent, and
the Prior Fiscal Agent is authorized, to transfer the amount on deposit in the reserve fund and
amounts on deposit in any other funds or accounts, which the Prior Fiscal Agent holds under the
Prior Fiscal Agent Agreement with respect to the Prior Special Tax Bonds, for deposit in the
bond fund established under the Prior Fiscal Agent Agreement to be used to defease and redeem
such Prior Special Tax Bonds or to the reserve fund for the Special Tax Refunding Bond of such
District, whichever the Authorized Representatives determine is most appropriate.
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SECTION 11. Notice of Redemption. The Authorized Representatives are each
authorized and directed to provide for the mailing and publication, and the Prior Fiscal Agent, in
its capacity Prior Fiscal Agent for the Prior Special Tax Bonds, is authorized to mail and publish,
notice of the redemption of the Prior Special Tax Bonds to the registered owners thereof as
required by Section 53365 of the California Government Code and the Prior Fiscal Agent
Agreement for the Prior Special Tax Bonds.
SECTION 12. Modifications. The approval of the forms of the Fiscal Agent
Agreement and the Irrevocable Refunding Instructions given by this Resolution shall apply to
any modification or amendment of any of said agreements which is agreed upon and approved
by Bond Counsel, the Municipal Advisor and the City Manager or the Director of Administrative
Services as being necessary to carry out the provisions thereof and the authorization and
direction provided in this Resolution.
SECTION 13. Further Action. The Authorized Representatives are authorized to take
any and all action which is directed by Bond Counsel with respect to the execution and delivery
of the Fiscal Agent Agreement, Irrevocable Refunding Instructions and Term Sheet, and the
issuance, sale and delivery of the Special Tax Refunding Bond, which in the opinion of Bond
Counsel is necessary in order for the authorization and direction provided in this Resolution to be
carried out.
SECTION 14. Conditions of Approval. The approvals, authorization and direction
given by this Resolution are conditioned upon the satisfaction of the requirements of Section 10
hereof with respect to the issuance and sale of the Special Tax Refunding Bond. The officers of
the City designated above shall not take any action with respect to the execution and delivery of
the Fiscal Agent Agreement, or the issuance, sale and delivery of the Special Tax Refunding
Bond unless and until such conditions are satisfied; provided, however, that upon satisfaction of
such conditions, this Resolution shall be fully effective and shall be carried out by such officers
without further approval or action of the City Council.
SECTION 15. Effective Date. This resolution shall take effect immediately upon its
passage.
PASSED, APPROVED AND ADOPTED this 17th day of May, 2021.
Robert Gonzales
Mayor
ATTEST:
Jeffrey Lawrence Cornejo, Jr.
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2021-C23 was duly adopted
by the City Council of the City of Azusa, at a meeting thereof held on the 17th day of May 2021,
by the following vote of the Council:
AYES:
NOES:
ABSENT:
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
Marco Martinez
City Attorney
Best Best & Krieger LLP
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EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Special Tax
Refunding Bond in accordance with California Government Code Section 5852.1. Such good
faith estimates have been provided to the City by the Municipal Advisor, and consistent with the
terms of the Term Sheet.
Principal Amount. The Municipal Advisor has informed the City that, based on the
financing plan and current market conditions, its good faith estimate of the principal amount (the
“Estimated Principal Amount”), of the Special Tax Refunding Bond is $5,476,266.
True Interest Cost of the Special Tax Refunding Bond. The Municipal Advisor has
informed the City that, assuming that the Estimated Principal Amount of the Special Tax
Refunding Bond are sold, and based on market interest rates prevailing at the time of preparation
of such estimate, its good faith estimate of the true interest cost the Special Tax Refunding Bond,
which means the rate necessary to discount the amounts payable on the respective principal and
interest payment dates to the Estimated Principal Amount is 2.16%.
Finance Charges of the Special Tax Refunding Bond. The Municipal Advisor has
informed the City that, assuming that the Estimated Principal Amount of the Special Tax
Refunding Bond are sold, and based on market interest rates prevailing at the time of preparation
of such estimate, its good faith estimate of the finance charges for the Special Tax Refunding
Bond, which means the sum of all fees and charges paid to third parties (or costs associated with
the Special Tax Refunding Bond), is $95,000.
Amount of Proceeds to be Received. The Municipal Advisor has informed the City that,
assuming the Estimated Principal Amount, and based on market interest rates prevailing at the
time of preparation of such estimate, its good faith estimate of the amount of proceeds expected
to be received for each Series of Special Tax Refunding Bond, less the finance charges, as
estimated above, and any reserves or capitalized interest paid or funded with proceeds of the
Bonds, is $5,239,413.
Total Payment Amount. The Municipal Advisor has informed the City that, assuming that
the Estimated Principal Amount of the Special Tax Refunding Bond, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
total payment amount, which means the sum total of all payments the City will make to pay debt
service on the corresponding the Special Tax Refunding Bond, calculated to the final maturity of
the Bond, which excludes any reserves or capitalized interest funded or paid with proceeds of
such Bond (which may offset such total payment amount) is $6,241,523.
The foregoing estimates constitute good faith estimates only and are based on market
conditions prevailing and information available at the time of preparation of such estimates. The
actual principal amount of the Special Tax Refunding Bond issued and sold, the true interest cost
thereof, the finance charges thereof, the amount of proceeds received therefrom and total
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payment amount with respect thereto may differ from such good faith estimates due to (a) the
actual date of the sale of the Special Tax Refunding Bond being different than the date assumed
for purposes of such estimates, (b) the actual principal amount of the Special Tax Refunding
Bond being different from the Estimated Principal Amount, (c) the actual amortization of the
Special Tax Refunding Bond being different than the amortization assumed for purposes of such
estimates, (d) the actual market interest rates at the time of sale of the Special Tax Refunding
Bond being different than those estimated for purposes of such estimates, (e) other market
conditions, or (f) alterations in the financing plan, or a combination of such factors. Market
interest rates are affected by economic and other factors beyond the control of the City.
45635.01438\33882221.5
______________________________________________________________________
FISCAL AGENT AGREEMENT
by and between
CITY OF AZUSA
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of June 1, 2021
Relating to
Community Facilities District No. 2002-1
(Mountain Cove)
of the City of Azusa
County of Los Angeles
State of California
$_________
2021 Special Tax Refunding Bond
______________________________________________________________________
Attachment 2
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Page
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ARTICLE I AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement ............................................................... 2
Section 1.02. Agreement for Benefit of Bondowner ................................................. 2
Section 1.03. Definitions............................................................................................ 2
ARTICLE II THE BOND
Section 2.01. Principal Amount; Designation.......................................................... 13
Section 2.02. Terms of Bond. .................................................................................. 14
Section 2.03. Redemption ........................................................................................ 15
Section 2.04. Form of Bond ..................................................................................... 16
Section 2.05. Execution of Bond ............................................................................. 16
Section 2.06. Transfer of Bond ................................................................................ 17
Section 2.07. Exchange of Bond .............................................................................. 17
Section 2.08. Bond Register..................................................................................... 17
Section 2.09. Temporary Bond ................................................................................ 17
Section 2.10. Bond Mutilated, Lost, Destroyed or Stolen ....................................... 18
Section 2.11. Special Obligation .............................................................................. 18
Section 2.12. Refunding Bonds and Subordinate Bonds ......................................... 18
ARTICLE III ISSUANCE OF THE BOND; APPLICATION OF PROCEEDS; SPECIAL
TAX FUND; ADMINISTRATIVE EXPENSE FUND; COSTS OF ISSUANCE
FUND
Section 3.01. Issuance and Delivery of the Bond .................................................... 19
Section 3.02. Application of Proceeds of Sale of Bond ........................................... 19
Section 3.03. Special Tax Fund. .............................................................................. 19
Section 3.04. Administrative Expense Fund. ........................................................... 21
Section 3.05. Costs of Issuance Fund. ..................................................................... 21
ARTICLE IV SPECIAL TAX REVENUES; BOND FUND; RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues ........................................................ 22
Section 4.02. Bond Fund. ......................................................................................... 22
Section 4.03. Reserve Fund. .................................................................................... 25
ARTICLE V OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment............................................................................... 26
Section 5.02. Special Obligation .............................................................................. 26
Section 5.03. Extension of Time for Payment ......................................................... 26
Section 5.04. Against Encumbrances....................................................................... 27
Section 5.05. Books and Accounts .......................................................................... 27
Section 5.06. Protection of Security and Rights of the Owner ................................ 27
Section 5.07. Collection of Special Tax Revenues .................................................. 27
Section 5.08. Reduction of Maximum Special Tax Rates ....................................... 28
Section 5.09. Further Assurances............................................................................. 28
Section 5.10. Tax Covenants ................................................................................... 28
Section 5.11. Covenant to Foreclose........................................................................ 29
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Section 5.12. Prepayment of Special Taxes ............................................................. 29
Section 5.13. Calculation of Prepayments ............................................................... 29
Section 5.14. Financial Condition ............................................................................ 30
Section 5.15. Accuracy of Information .................................................................... 30
Section 5.16. Annual Reporting Requirements to Original Purchaser .................... 30
ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds .................................... 31
Section 6.02. Rebate Fund; Rebate to the United States .......................................... 32
Section 6.03. Liability of City.................................................................................. 32
Section 6.04. Employment of Agents by City ......................................................... 33
ARTICLE VII THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent ............................................................. 33
Section 7.02. Liability of Fiscal Agent .................................................................... 34
Section 7.03. Information ........................................................................................ 36
Section 7.04. Notice to Fiscal Agent ....................................................................... 37
Section 7.05. Compensation, Indemnification ......................................................... 37
Section 7.06. Books and Accounts .......................................................................... 37
ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted. ..................................................................... 38
Section 8.02. Procedure for Amendment with Written Consent of the Owner ....... 39
Section 8.03. Disqualified Bond .............................................................................. 40
Section 8.04. Effect of Supplemental Agreement .................................................... 40
Section 8.05. Endorsement or Replacement of the Bond Issued After
Amendments ...................................................................................... 40
Section 8.06. Amendatory Endorsement of Bond ................................................... 40
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
Section 9.01. Events of Default ............................................................................... 40
Section 9.02. Remedies of Owner............................................................................ 41
Section 9.03. Application of Money Collected ........................................................ 41
Section 9.04. Restoration of Positions ..................................................................... 42
Section 9.05. Rights and Remedies Cumulative ...................................................... 42
Section 9.06. Delay or Omission Not Waiver.......................................................... 42
ARTICLE X MISCELLANEOUS
Section 10.01. Benefits of Agreement Limited to Parties ......................................... 42
Section 10.02. Successor is Deemed Included in All References to
Predecessor ........................................................................................ 42
Section 10.03. Discharge of Agreement. ................................................................... 42
Section 10.04. Execution of Documents and Proof of Ownership by the
Owner ................................................................................................. 43
Section 10.05. Waiver of Personal Liability .............................................................. 44
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Section 10.06. Notices to and Demands on City and Fiscal Agent ........................... 44
Section 10.07. Entire Agreement; Partial Invalidity .................................................. 44
Section 10.08. Unclaimed Moneys ............................................................................ 45
Section 10.09. Applicable Law .................................................................................. 45
Section 10.10. Severability ........................................................................................ 45
Section 10.11. Conclusive Evidence of Regularity ................................................... 45
Section 10.12. Payment on Business Day .................................................................. 45
Section 10.13. Counterparts ....................................................................................... 45
Section 10.14. Third Party Beneficiaries ................................................................... 45
Section 10.15. No Advisory or Fiduciary Relationship ............................................. 45
Section 10.16. WAIVER OF JURY TRIAL; JUDICIAL REFERENCE .................. 46
EXHIBIT A - FORM OF BOND................................................................................................ A-1
EXHIBIT B - FORM OF LETTER OF REPRESENTATIONS .................................................B-1
EXHIBIT C – ANNUAL REPORTING REQUIREMENTS ......................................................C-1
45635.01438\33882221.5
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FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the “Agreement”) is entered into and dated as of
June 1, 2021, by and between City of Azusa, a municipal corporation (the “City”), for and on
behalf of Community Facilities District No. 2002-1 (Mountain Cove) of the City of Azusa, County
of Los Angeles, State of California (the “District”) and Wilmington Trust, National Association,
a national banking association, duly organized and existing under the laws of the United States of
America, as fiscal agent (the “Fiscal Agent”).
W I T N E S S E T H:
WHEREAS, the City Council of the City (the “City Council”) has established the District
pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended,
Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California
Government Code (the “Act”); and
WHEREAS, the District previously issued its Special Tax Bonds, 2002 Series A (the “2002
Bonds”) in the aggregate principal amount of $8,980,000 for the purpose of financing the
construction and acquisition of certain public facilities and school facilities as permitted pursuant
to Resolution No. 02-C133, as amended by Resolution No. 02-C142 and the Act; and
WHEREAS, the District subsequently issued its $8,190,000 Special Tax Refunding Bonds,
Series 2011 (the “Refunded Bonds”) to refund the 2002 Bonds, and the City Council has
determined that it is in the best interest of the owners of property in the District that a bond
(hereinafter referred to as the “Bond”) be issued to defease and refund the outstanding Refunded
Bonds; and
WHEREAS, the City Council has determined that the Bond shall be issued in the aggregate
principal amount of $_________; and
WHEREAS, all things necessary to cause such bond, when executed by the City and
authenticated by the Fiscal Agent for the District and issued as in the Act, the Resolution (as
hereinafter defined) and this Agreement provided, to be a legal, valid and binding special
obligation of the District in accordance with its terms, and all things necessary to cause the
authorization, execution and delivery of this Agreement and the authorization, execution,
authentication and delivery of such bond, subject to the terms hereof, have in all respects been
duly authorized; and
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and
for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
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ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to
the provisions of the Act and the Resolution.
Section 1.02. Agreement for Benefit of Bondowner. The provisions, covenants and
agreements herein set forth to be performed by or on behalf of the City and/or the District shall be
for the equal benefit, protection and security of the Owner.
Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this
Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any
certificate, opinion or other document herein mentioned, have the meanings herein specified. All
references herein to “Articles,” “Sections” and other subdivisions are to the corresponding
Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or subdivision hereof.
“2011 Bond Fund” means the Bond Fund established under the Fiscal Agent Agreement
dated July 1, 2011 by and between the District and Wells Fargo Bank, National Association in
connection with the Refunded Bonds.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5
(commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government
Code.
“Administrative Expenses” means any or all of the following: the fees and expenses of the
Fiscal Agent (including the fees and expenses of its counsel), the expenses of the City, acting for
and on behalf of the District, or the District in carrying out its duties hereunder (including, but not
limited to, the levying and collection of the Special Taxes, complying with the disclosure
provisions of the Act and this Agreement, including those related to public inquiries regarding the
Special Tax and disclosures to the Owner); the costs of the City and the District or their designees
related to an appeal of the Special Tax; any costs of the City and the District (including fees and
expenses of counsel) to defend the first lien on and pledge of the Special Taxes to the payment of
the Bond or otherwise in respect of litigation relating to the District or the Bond or with respect to
any other obligations of the District, the salaries of City staff directly related to the carrying out by
the City, for and on behalf of the District, the District’s obligations hereunder and a proportionate
amount of City general administrative overhead related thereto allocable to the Bond; and all other
costs and expenses of the City, the District, and the Fiscal Agent incurred in connection with the
discharge of their respective duties hereunder, and in the case of the City, in any way related to the
administration of the District and all actual costs and expenses incurred in connection with the
administration of the Bond. Included in the Administrative Expenses shall be the Priority
Administrative Expense in the amount of $34,000 annually.
“Administrative Expense Fund” means the fund by that name established by
Section 3.04(A) hereof.
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“Agreement” means this Agreement, as it may be amended or supplemented from time to
time by any Supplemental Agreement adopted pursuant to the provisions hereof.
“Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the
Outstanding Bond in such Bond Year, assuming that the Outstanding Bond is retired as scheduled,
and (ii) the principal amount of the Outstanding Bond scheduled to be paid.
“Auditor” means the Auditor-Controller of the County of Los Angeles.
“Authorized Officer” means the City Manager or Finance Director of the City in
connection with any action under this Agreement required to be undertaken by an Authorized
Officer.
“Bond Counsel” means any attorney or firm of attorneys acceptable to the City and
nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status
of securities issued by public entities.
“Bond Fund” means the fund by that name established by Section 4.02(A) hereof.
“Bond Year” means the period beginning on the Closing Date and ending on September 1,
2021 and thereafter each successive period beginning on each September 2 and ending on the
following September 1.
“Bond” means, unless otherwise expressly provided, the Community Facilities District No.
2002-1 (Mountain Cove) of the City of Azusa 2021 Special Tax Refunding Bond authorized by
and at any time Outstanding pursuant to the Act and this Agreement.
“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which
banking institutions or trust companies in New York, New York, Wilmington, Delaware, the State
of California or in any state in which the Fiscal Agent has its Principal Office are authorized or
obligated by law, regulation or executive order to be closed.
“CDIAC” means the California Debt and Investment Advisory Commission or any public
official or agency succeeding to its information collection functions under California Government
Code Section 53359.5(b) and (c).
“City” means the City of Azusa.
“City Council” means the City Council of the City.
“Closing Date” means the date upon which there is an exchange of the Bond for the
proceeds representing payment of the purchase price of the Bond by the Original Purchaser.
“Code” means the Internal Revenue Code of 1986, as amended.
“Costs of Issuance” means items of expense payable or reimbursable directly or indirectly
by the District and related to the authorization, sale and issuance of the Bond, which items of
expense shall include, but not be limited to, printing costs, costs of reproducing and binding
45635.01438\33882221.5
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documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent
including its first annual administration fee and the fees of its counsel, expenses incurred by the
District in connection with the issuance of the Bond, legal fees and charges, including the fees of
Bond Counsel, counsel to the Original Purchaser, financial advisor’s fees, CDIAC fees, charges
for authentication, transportation and safekeeping of the Bond and other costs, charges and fees in
connection with the foregoing.
“Costs of Issuance Fund” means the fund by that name established by Section 3.05(A)
hereof.
“Debt Service” means the amount of interest and principal payable on the Bond scheduled
to be paid during the period of computation.
“Default Rate” means the rate of interest on the Bond plus 3.00%.
“Defeasance Obligations” means any of the following:
(i) cash;
(ii) direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America (“United States Treasury Obligations”);
(iii) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by the United States of America;
(iv) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United States of America
when such obligations are backed by the full faith and credit of the United States of
America; or
(v) evidences of ownership of proportionate interests in future interest and
principal payments on obligations described above held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has the
right to proceed directly and individually against the obligor and the underlying
government obligations are not available to any person claiming through the custodian or
to whom the custodian may be obligated.
“Determination of Taxability” means a final determination made in writing by the Internal
Revenue Service that the interest on the Bond is taxable.
“EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal
Market Access service.
“Event of Default” means an event has occurred and is continuing as further set forth in
Section 9.01 herein.
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“Federal Securities” means any of the following which at the time of investment are legal
investments under the laws of the State of California for the moneys proposed to be invested
therein:
(i) Cash; and
(ii) Direct general obligations of (including obligations issued or held in book
entry form on the books of the Department of the Treasury of the United States of America
and CATS and TIGRS), or obligations, the payment of principal of and interest on which
is unconditionally guaranteed by, the United States of America.
“Fiscal Agent” means Wilmington Trust, National Association, the Fiscal Agent appointed
by the City, acting as an independent fiscal agent with the duties and powers herein provided, its
successors and assigns, and any other corporation or association which may at any time be
substituted in its place, as provided in Section 7.01 hereof.
“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to
June 30 of the succeeding year, both dates inclusive.
“Governmental Authority” means any governmental or quasi-governmental entity,
including any court, department, commission, board, bureau, agency, administration, central bank,
service, City, District or other instrumentality of any governmental entity or other entity exercising
executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or
functions of or pertaining to government, or any arbitrator, mediator or other person with authority
to bind a party at law.
“Independent Financial Consultant” means a firm of certified public accountants, a
financial consulting firm, a consulting engineering firm or engineer which is not an employee of,
or otherwise controlled by the City, or the Special Tax Consultant.
“Information Services” means EMMA and, in accordance with then current guidelines of
the Securities and Exchange Commission, such other services providing information with respect
to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Interest Account” means the account by that name established by the Fiscal Agent in the
Bond Fund pursuant to Section 4.02(A) hereof.
“Interest Payment Dates” means March 1 and September 1 of each year, commencing
March 1, 2022.
“Investment Earnings” means all interest earned and any gains and losses on the investment
of moneys in any fund or account created by this Agreement excluding interest earned and gains
and losses on the investment of moneys in the Rebate Fund.
“Letter of Representation” means a letter substantially in the form attached hereto as
Exhibit B delivered by the Original Purchaser and each subsequent Qualified Purchaser of the
Bond to the District to the effect, among other things, that such purchaser (a) has such knowledge
and experience in financial and business matters that it is capable of evaluating the merits and risks
45635.01438\33882221.5
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of the Bond, (b) is acquiring the Bond for its own account for deposit in its loan portfolio, and (c)
has no present intention of selling, negotiating, transferring, or otherwise disposing of the Bond so
purchased.
“Material Litigation” means any action, suit, proceeding, inquiry or investigation against
the District in any court or before any arbitrator of any kind or before or by any Governmental
Authority, of which the District has notice or knowledge and which, (i) if determined adversely to
the District, may have a Material Adverse Effect, (ii) seeks to restrain or enjoin any of the
transactions contemplated hereby, or (iii) may adversely affect (A) the exclusion of interest with
respect to the Bond from gross income for federal income tax purposes or the exemption of such
interest for state income tax purposes or (B) the ability of the City or the District to perform its
obligations under this Agreement.
“Material Adverse Effect” means an event or occurrence which adversely affects in a
material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or
operations of the District, (b) the ability of the District to carry out its business in the manner
conducted as of the date of this Agreement or to meet or perform its obligations under this
Agreement on a timely basis, (c) the validity or enforceability of this Agreement, or (d) the
exclusion of interest with respect to the Bond from gross income for federal income tax purposes
or the exemption of such interest for state income tax purposes.
“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond
Year after the calculation is made through the final maturity date of the Outstanding Bond.
“Moody’s” means Moody’s Investors Service, Inc., a national rating service with offices
in New York, New York.
“Officer’s Certificate” means a written certificate of the City signed by an Authorized
Officer of the City.
“Ordinance” means any ordinance of the City or resolution of the City Council levying the
Special Taxes.
“Original Purchaser” means First Foundation Public Finance, a Delaware statutory trust
and wholly owned subsidiary of First Foundation Bank and its successors, assigns and transferees.
“Outstanding,” when used as of any particular time with reference to the Bond, means
(subject to the provisions of Section 8.04 hereof) the Bond except if the:
(i) The Bond is canceled by the Fiscal Agent or surrendered to the Fiscal Agent
for cancellation;
(ii) The Bond is paid or deemed to have been paid within the meaning of
Section 10.03 hereof; and
(iii) The Bond in lieu of or in substitution for which another Bond shall have
been authorized, executed, issued and delivered by the City and authenticated by the Fiscal
Agent pursuant to this Agreement or any Supplemental Agreement.
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“Owner” means any person who shall be the registered owner of the Outstanding Bond.
“Permitted Investments” means any of the following which at the time of investment are
legal investments under the laws of the State of California for the money proposed to be invested
therein:
(1) Any Defeasance Obligation.
(2) Federal Housing Administration debentures.
(3) Direct obligations of the following federal agencies which are not fully
guaranteed by the faith and credit of the United States of America:
(a) Federal Home Loan Mortgage Corporation (“FHLMCs”) –
participation certificates (excluding stripped mortgage securities which are
purchased at prices exceeding their principal amounts) and senior debt obligations.
(b) Farm Credit Banks (formerly: Federal Land Banks, Federal
Intermediate Credit Banks and Banks for Cooperatives) – consolidated system-
wide bonds and notes.
(c) Federal Home Loan Banks – consolidated debt obligations.
(d) Federal National Mortgage Association (“FNMAs”) – senior debt
obligations and mortgage backed securities (excluding stripped mortgage securities
which are purchased at prices exceeding their principal amounts).
(e) Financing Corporation (FICO) – debt obligations.
(f) Resolution Funding Corporation – debt obligations.
(4) Unsecured certificates of deposit (including those place by a third party
pursuant to an agreement between the Fiscal Agent and the City), time deposits, savings
accounts, deposit accounts, interest-bearing money market accounts, trust funds, trust
accounts, overnight bank deposits, bank deposit products, other deposit products, interest-
bearing demand deposits, and bankers’ acceptances (having maturities of not more than 30
days) of any bank including the Fiscal Agent and its affiliates the unsecured short-term
obligations of which are rated “A-1” or better by S&P.
(5) Deposits (including bank deposit products) the aggregate amount of which
are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks which
have capital and surplus of at least $5 million.
(6) Commercial paper (having original maturities of not more than 30 days)
rated at the time of purchase “A-1+” at the time of purchase by S&P and “Prime-1” by
Moody’s.
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(7) Money market funds rated in the highest rating category by S&P and
Moody’s, including such funds for which the Fiscal Agent, its affiliates or subsidiaries
provide investment advisory or other management services or for which the Fiscal Agent
or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing
agent, and/or custodian or subcustodian, notwithstanding that (i) the Fiscal Agent or an
affiliate of the Fiscal Agent receives and retains a fee for services provided to the fund, (ii)
the Fiscal Agent collects fees for services rendered pursuant to this Agreement, which fees
are separate from the fees received from such funds, and (iii) services performed for such
funds and pursuant to this Agreement may at times duplicate those provided to such funds
by the Fiscal Agent or an affiliate of the Fiscal Agent;
(8) “State Obligations,” which means:
(a) Direct general obligations of any state of the United States of
America or any subdivision or agency thereof to which is pledged the full faith and
credit of a state the unsecured general obligation debt of which is rated “A3” by
Moody’s and “A” by S&P, or better, or any obligation fully and unconditionally
guaranteed by any state, subdivision or agency whose unsecured general obligation
debt is so rated.
(b) Direct general short-term obligations of any state agency or
subdivision or agency thereof described in (a) above and rated “A-1+” by S&P and
“MIG-1” by Moody’s.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency or subdivision described in (a) above and rated
“AA” or better by S&P and “Aa” or better by Moody’s.
(9) Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by
Moody’s meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to
maturity or (2) the trustee for the municipal obligations has been given irrevocable
instructions concerning their call and redemption and the issuer of the municipal
obligations has covenanted not to redeem such municipal obligations other than as
set forth in such instructions;
(b) the municipal obligations are secured by cash or United States
Treasury Obligations (as defined in paragraph (1) of the definition of Defeasance
Obligations) which may be applied only to payment of the principal of, interest and
premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury
Obligations (plus any cash in the escrow) has been verified by the report of
independent certified public accountants to be sufficient to pay in full all principal
of, interest, and premium, if any, due and to become due on the municipal
obligations (“Verification”);
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(d) the cash or United States Treasury Obligations serving as security
for the municipal obligations are held by an escrow agent or trustee in trust for
owners of the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be
permitted except with another United States Treasury Obligation and upon delivery
of a new Verification; and
(f) the cash or United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the trustee or escrow agent.
(10) Repurchase agreements with (1) any domestic bank, or domestic branch of
a foreign bank, the long term debt of which is rated at least “AA” by S&P and Moody’s;
or (2) any broker-dealer with “retail customers” or a related affiliate thereof which broker-
dealer has, or the parent company (which guarantees the provider) of which has, long-term
debt rated at least “AA” by S&P and Moody’s, which broker-dealer falls under the
jurisdiction of the Securities Investors Protection Corporation; or (3) any other entity rated
“AA” or better by S&P and Moody’s, provided that:
(a) The market value of the collateral is maintained at levels and upon
such conditions as would be acceptable to S&P and Moody’s to maintain an “A”
rating in an “A” rated structured financing (with a market value approach);
(b) The Fiscal Agent or a third party acting solely as agent therefor or
for the District (the “Holder of the Collateral”) has possession of the collateral or
the collateral has been transferred to the Holder of the Collateral in accordance with
applicable state and federal laws (other than by means of entries on the transferor’s
books);
(c) The repurchase agreement shall state and an opinion of counsel shall
be rendered at the time such collateral is delivered that the Holder of the Collateral
has a perfected first priority security interest in the collateral, any substituted
collateral and all proceeds thereof (in the case of bearer securities, this means the
Holder of the Collateral is in possession);
(d) All other requirements of S&P and Moody’s in respect of repurchase
agreements shall be met.
(e) The repurchase agreement shall provide that if during its term the
provider’s rating by either Moody’s or S&P is withdrawn or suspended or falls
below “A-” by S&P or “A3” by Moody’s, as appropriate, the provider must, at the
direction of the District or the Fiscal Agent, within 10 days of receipt of such
direction, repurchase all collateral and terminate the agreement, with no penalty or
premium to the District or Fiscal Agent.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with
no evergreen provision), collateral levels need not be as specified in (a) above, so long as such
45635.01438\33882221.5
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collateral levels are 103% or better and the provider is rated at least “A” by S&P and Moody’s,
respectively.
(11) Investment agreements with a domestic or foreign bank or corporation
(other than a life or property casualty insurance company) the long-term debt of which, or,
in the case of a guaranteed corporation the long-term debt is rated at least AA (stable) by
S&P and Aa (stable) by Moody’s, or, in the case of a monoline financial guaranty insurance
company, claims paying ability of the guarantor is rated at least “AAA (stable)” by S&P
and “Aaa (stable)” by Moody’s; provided that, by the terms of the investment agreement:
(a) interest payments are to be made to the Fiscal Agent at times and in
amounts as necessary to pay debt service (or, if the investment agreement is for the
construction fund, construction draws) on the Bond;
(b) the invested funds are available for withdrawal without penalty or
premium, at any time upon not more than seven days’ prior notice; the District and
the Fiscal Agent hereby agree to give or cause to be given notice in accordance with
the terms of the investment agreement so as to receive funds thereunder with no
penalty or premium paid;
(c) the investment agreement shall state that is the unconditional and
general obligation of, and is not subordinated to any other obligation of, the
provider thereof or, if the provider is a bank, the agreement or the opinion of
counsel shall state that the obligation of the provider to make payments thereunder
ranks pari passu with the obligations of the provider to its other depositors and its
other unsecured and unsubordinated creditors;
(d) the District or the Fiscal Agent receives the opinion of domestic
counsel (which opinion shall be addressed to the District) that such investment
agreement is legal, valid, binding and enforceable upon the provider in accordance
with its terms and of foreign counsel (if applicable);
(e) the investment agreement shall provide that if during its term
(i) the provider’s rating by either S&P or Moody’s falls below
“AA-” or “Aa3,” respectively, the provider shall, at its option, within 10
days of receipt of publication of such downgrade, either (i) collateralize the
investment agreement by delivering or transferring in accordance with
applicable state and federal laws (other than by means of entries on the
provider’s books) to the District, the Fiscal Agent or a third party acting
solely as agent therefor (the “Holder of the Collateral”) collateral free and
clear of any third-party liens or claims the market value of which collateral
is maintained at levels and upon such conditions as would be acceptable to
S&P and Moody’s to maintain an “A” rating in an “A” rated structured
financing (with a market value approach); or (ii) repay the principal of and
accrued but unpaid interest on the investment, and
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(ii) the provider’s rating by either S&P or Moody’s is withdrawn
or suspended or falls below “A-” or “A3,” respectively, the provider must,
at the direction of the District or the Fiscal Agent, within 10 days of receipt
of such direction, repay the principal of and accrued but unpaid interest on
the investment, in either case with no penalty or premium to the District or
the Fiscal Agent, and
(f) the investment agreement shall state and an opinion of counsel shall
be rendered, in the event collateral is required to be pledged by the provider under
the terms of the investment agreement, at the time such collateral is delivered, that
the Holder of the Collateral has a perfected first priority security interest in the
collateral, any substituted collateral and all proceeds thereof (in the case of bearer
securities, this means the Holder of the Collateral is in possession); and
(g) the investment agreement must provide that if during its term
(i) the provider shall default in its payment obligations, the
provider’s obligations under the investment agreement shall, at the direction
of the District or the Fiscal Agent, be accelerated and amounts invested and
accrued but unpaid interest thereon shall be repaid to the District or the
Fiscal Agent, as appropriate, and
(ii) the provider shall become insolvent, not pay its debts as they
become due, be declared or petition to be declared bankrupt, etc. (“event of
insolvency”), the provider’s obligations shall automatically be accelerated
and amounts invested and accrued but unpaid interest thereon shall be
repaid to the District or the Fiscal Agent, as appropriate.
(12) The following investment pools:
(a) Local Agency Investment Fund (as set forth in Government Code
Section 16429.1);
(b) Los Angeles County Investment Pool; and
(c) California Assessment Management Pool (CAMP).
Ratings of Permitted Investments shall be determined at the time of purchase of such
Permitted Investment and without regard to ratings subcategories.
“Principal Account” means the account by that name established by the Fiscal Agent
pursuant to Section 4.02(A) hereof.
“Principal Office” means the corporate trust office of the Fiscal Agent in Los Angeles,
California, or such other offices as may be specified to the City by the Fiscal Agent in writing;
provided, however, that with respect to presentation of Certificates for payment or for registration
of transfer and exchange such term shall mean the office or agency of the Fiscal Agent at which,
at any particular time, its corporate trust agency business shall be conducted.
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“Priority Administrative Expense Amount” means the amount of $_____ that will be
deposited in the Administrative Expense Fund for each Fiscal Year pursuant to Section 3.03(B)
hereof.
“Proceeds,” when used with reference to the Bond, means the aggregate principal amount
of the Bond, plus accrued interest and premium, if any, less original issue discount, if any.
“Qualified Purchaser” means either (a) a “qualified institutional buyer,” within the
meaning of Rule 144A of the Securities Act of 1933 (the “Securities Act”); or (b) an “accredited
investor” within the meaning of Rule 501 of Regulation D of the rules governing the limited offer
and sale of securities without registration under the Securities Act.
“Rate and Method of Apportionment of Special Tax” means the Rate and Method of
Apportionment of Special Tax for the District.
“Rebate Certificate” means the certificate delivered by the City upon the delivery of the
Bond relating to Section 148 of the Code, or any functionally similar replacement certificate.
“Rebate Fund” means the fund by that name established by Section 6.02 hereof.
“Record Date” means the fifteenth (15th) day of the month next preceding the applicable
Interest Payment Date whether or not such day is a Business Day.
“Refunded Bonds” means the Community Facilities District No. 2002-1 (Mountain Cove)
of the City of Azusa 2011 Special Tax Bonds.
“Regulations” means the temporary and permanent regulations of the United States
Department of the Treasury promulgated under the Code.
“Reserve Fund” means the fund by that name established by Section 4.03(A) hereof.
“Reserve Requirement” means twenty-five percent of the Maximum Annual Debt Service.
“Resolution” means Resolution No. ___________ adopted by the City Council on, May
17, 2021, authorizing the issuance of the Bond.
“Special Taxes” or “Special Tax” means the special taxes levied by the City on parcels of
taxable property within the District pursuant to the Act and this Agreement.
“Special Tax Consultant” means an engineer or financial consultant or other such person
or firm with expertise in the apportionment and levy of special taxes in community facilities
districts which is employed by the City to assist the City in levying the Special Taxes.
“Special Tax Fund” means the fund by that name established by Section 3.03(A) hereof.
“Special Tax Prepayments” means amounts received by the City as prepayments of all or
a portion of the Special Tax obligation of a parcel of property in the District.
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“Special Tax Prepayment Account” means the account by that name established by the
Fiscal Agent in the Bond Fund pursuant to Section 4.02(A) hereof.
“Special Tax Revenues” means the proceeds of the Special Taxes received by the City,
including any scheduled payments thereof, interest and penalties thereon and proceeds of the
redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the
amount of said lien and interest and penalties thereon.
“S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business,
a national rating service with offices in New York, New York.
“Subordinate Bonds” means bonds issued by the District pursuant to Section 2.12 hereof
for the purpose of accomplishing the defeasance of a portion of the Outstanding Bond pursuant to
Section 10.03 hereof, and that are secured by a pledge of and lien upon the Special Tax Revenues
and funds pledged herein for the payment of the Bond hereunder subordinate to the Outstanding
Bond.
“Supplemental Agreement” means an agreement amending and supplementing this
Agreement as permitted hereby.
“Surplus Account” means the Account by that name established in the Special Tax Fund
by Section 3.03 (A) hereof.
“Taxable Rate” means 3.00%.
ARTICLE II
THE BOND
Section 2.01. Principal Amount; Designation. The Bond, in the aggregate principal
amount of $_________, is hereby authorized to be issued by the City for the District under and
subject to the terms of the Resolution, this Agreement, the Act and other applicable laws of the
State of California. The Bond shall be designated “Community Facilities District No. 2002-1
(Mountain Cove) of the City of Azusa 2021 Special Tax Refunding Bond” and shall be issued in
the form attached hereto as Exhibit A.
Notwithstanding the preceding provisions of this Section 2.01 or the provisions of Section
2.02, 2.03 and 3.01 or any other section hereof, so long as the Outstanding Bond is held by the
Original Purchaser, the records of the Fiscal Agent with respect to the payment of the interest on
and the principal of the Outstanding Bond shall be conclusive evidence of such payment and shall
be binding upon the Owner of the Outstanding Bond. Upon payment of the principal of the
Outstanding Bond and the interest due on the maturity date of the Bond, it shall be considered for
all purposes to have been paid and to be no longer Outstanding. The Fiscal Agent shall provide to
the Original Purchaser all payments, wire transfer, required pursuant to this Agreement without
delivery of the Bond to the Original Purchaser.
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Section 2.02. Terms of Bond.
(A) The Bond. The Bond shall be issued as a single bond that is fully registered, without
coupons, in the denomination equal to the aggregate principal amount thereof. The Bond shall be
lettered and numbered in a customary manner as determined by the City. The Bond shall be dated
as of the Closing Date and shall be registered initially in the name of the Original Purchaser and
shall not be delivered in book entry form, initially or upon subsequent transfer.
(B) Maturity. The Bond shall mature on September 1, 2032, and bear interest at the rate
of 2.16% per annum. In the event of a Determination of Taxability, the rate of interest on the Bond
shall be the Taxable Rate. Upon the occurrence and continuance of an Event of Default, the Default
Rate shall apply.
(C) Interest. Interest shall be calculated on the basis of a 360-day year composed of
twelve 30-day months. The Bond shall bear interest from the Interest Payment Date next preceding
the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated prior
to an Interest Payment Date and after the close of business on the Record Date preceding such
Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or
(iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which
event it shall bear interest from the Closing Date; provided, however, that if at the time of
authentication of the Bond, interest is in default thereon, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment
thereon or from the Closing Date, if no interest has previously been paid or made available for
payment thereon.
(D) Method of Payment. Interest on the Bond is payable by check of the Fiscal Agent
mailed by first class mail, postage prepaid, on each Interest Payment Date, until the principal
amount of the Bond has been paid or made available for payment, to the registered Owner thereof
at such registered Owner’s address as it appears on the registration books maintained by the Fiscal
Agent at the close of business on the Record Date preceding the Interest Payment Date. The
principal of the Bond is payable in lawful money of the United States of America by check of the
Fiscal Agent in which case presentment of the Bond for payment of principal shall not be required);
provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate
principal amount of the Outstanding Bond (or the total Outstanding Bond if less) filed with the
Fiscal Agent prior to any Record Date, interest and mandatory sinking fund redemption payments
on such Bond shall be paid to such Owner on each succeeding Interest Payment Date or mandatory
sinking fund redemption date, as the case may be, by wire transfer of immediately available funds
to an account in the United States of America designated in such written request. The Bond, or
portions thereof, paid by the Fiscal Agent pursuant to this subsection shall be canceled by the
Fiscal Agent.
Notwithstanding anything herein to the contrary, so long as the Bond is owned by the
Original Purchaser (or any subsequent purchaser), (i) the Fiscal Agent shall pay principal of and
interest on the Bond when due by wire transfer in immediately available funds to the Original
Purchaser (or any subsequent purchaser) in accordance with such wire transfer instructions as shall
be filed by the Original Purchaser (or any subsequent purchaser) with the Fiscal Agent from time
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to time, provided that the principal which is payable at maturity shall be made only upon
presentation and surrender at the Principal Office of the Fiscal Agent, (ii) payments of principal
on the Bond, pursuant to Section 2.03 shall be made without the requirement for presentation and
surrender of the Bond by the Original Purchaser (or any subsequent purchaser), and (iii) the Fiscal
Agent shall not be required to give notice to the Original Purchaser (or any subsequent purchaser)
of the mandatory sinking fund redemption of the Bond under Section 2.03.
Section 2.03. Redemption.
(A) Optional Redemption. The Bond is subject to optional redemption at the
election of the City on any date, in whole or in part, at the following redemption price (computed
upon the principal amount thereof to be redeemed), together with accrued interest to the date of
redemption as directed in an Officer’s Certificate to the Fiscal Agent and the Owner, as selected
among sinking fund payments by the City:
Redemption Dates
Redemption
Price
September 2, 2021 through September 1, 2023 103%
September 2, 2023 through September 1, 2025 102
September 2, 2025 through September 1, 2027 101
September 2, 2027 and thereafter 100
If some but not all of the Bond is redeemed pursuant to this Section 2.03(A), the principal
amount of the Bond to be redeemed pursuant to Section 2.03(C) on any subsequent September 1
shall be reduced as designated in an Officer’s Certificate to the Fiscal Agent and Owner; provided,
however, that the aggregate amount of such reductions shall not exceed the aggregate amount of
the Bond redeemed pursuant to Section 2.03(A). Upon any partial redemption pursuant to this
Section 2.03(A), the City shall provide the Fiscal Agent and the Owner with a revised mandatory
sinking fund redemption schedule.
(B) Mandatory Redemption From Special Tax Prepayments. The Bond is
subject to mandatory redemption in part prior to its stated maturity date on or after September 1,
2021 and on each September 1 thereafter as directed in an Officer’s Certificate to the Fiscal Agent
and Owner, as selected among sinking fund payments by the City, from moneys derived by the
City from Special Tax Prepayments, at a redemption price equal to the principal amount of the
Bond to be redeemed, together with accrued interest to the date of redemption; provided, however,
any Special Tax Prepayments pursuant to this subsection shall be subject to a covenant of the City
which will require that as a precondition to any prepayment made with respect to any parcel within
the District, a certification is provided by the City that, following any such prepayment, the ratio
of (a) the amount of the maximum Special Taxes that may be levied on all parcels within the
District on which a completed structure is located and remaining subject to the Special Taxes, to
(b) the Maximum Annual Debt Service on the Bond outstanding following such prepayment
redemption is not less than 110%.
If some but not all of the Bond is redeemed pursuant to this Section 2.03(B), the
principal amount of the Bond to be redeemed pursuant to Section 2.03(C) on any subsequent
September 1 shall be reduced by the aggregate principal amount of the Bond so redeemed pursuant
to this Section 2.03(B), such reduction to be allocated among redemption dates as nearly as
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practicable on a pro rata basis as determined by the City with notice of such determination provided
to the Fiscal Agent and the Owner. Upon any partial redemption pursuant to this Section 2.03(B),
the City shall provide the Fiscal Agent and the Owner with a revised mandatory sinking fund
redemption schedule.
(C) Mandatory Sinking Fund Redemption. The Outstanding Bond is subject to
mandatory sinking fund redemption, in part, on September 1, 2021, and on each September 1
thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be
redeemed, together with accrued interest to the date of redemption, without premium, and from
sinking fund payments as follows:
Redemption Date
(September 1)
Principal
Amounts
Interest
Rates
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
(D) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the redemption prices of the Bond called for redemption shall have
been deposited in the Bond Fund, such Bond shall cease to be entitled to any benefit under this
Agreement other than the right to receive payment of the redemption price, and interest shall cease
to accrue on the Bond to be redeemed on the redemption date.
Upon the redemption of the Bond in whole by the Fiscal Agent pursuant to this
Section 2.03, the Bond shall be surrendered and shall be canceled by the Fiscal Agent.
Section 2.04. Form of Bond. The Bond, including the Fiscal Agent’s certificate of
authentication and the assignment to appear thereon, shall be substantially in the form set forth in
Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate
variations, omissions and insertions as permitted or required by this Agreement. The Bond shall
be issued as a single bond in the denomination equal to the par amount thereof.
Section 2.05. Execution of Bond. The Bond shall be executed on behalf of the District by
the facsimile or manual signatures of the Mayor of the City and the City Clerk, who are in office
on the date of this Agreement or at any time thereafter. If any officer whose signature appears on
the Bond ceases to be such officer before delivery of the Bond to the Owner, such signature shall
nevertheless be as effective as if the officer had remained in office until the delivery of the Bond
to the Owner. The Bond may be signed and attested on behalf of the District by such persons as at
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the actual date of the execution of such Bond shall be the proper officers of the City although at
the nominal date of such Bond any such person shall not have been such officer of the City.
The Bond as shall bear thereon a certificate of authentication in substantially the form set
forth in Exhibit A hereto, manually executed and dated by the Fiscal Agent, shall be valid or
obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of
authentication of the Fiscal Agent shall be conclusive evidence that such Bond has been duly
authenticated, registered and delivered hereunder, and are entitled to the benefits of this
Agreement. Upon initial delivery of the Bond to the Original Purchaser, the Fiscal Agent shall
register the ownership of the Bond on the registration books in the name of the Original Purchaser.
Section 2.06. Transfer of Bond. Any Bond may, in accordance with its terms, be
transferred to a Qualified Purchaser, in whole upon the books required to be kept pursuant to the
provisions of Section 2.08 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
duly written instrument of transfer and accompanied with a Letter of Representations, in the form
set forth in Exhibit B hereto, and such Letter of Representations shall be conclusive evidence that
such Letter of Representations has been duly executed and the Fiscal Agent may rely upon the
representations set forth therein. The cost for any services rendered or any expenses incurred by
the Fiscal Agent in connection with any such transfer shall be paid by the District. The Fiscal
Agent shall collect from the Owner requesting such transfer any tax or other governmental charge
required to be paid with respect to such transfer. Prior to any transfer of the Bonds outside the
book-entry system (including, but not limited to, the initial transfer outside the book-entry system)
the transferor shall provide or cause to be provided to the Fiscal Agent all information necessary
to allow the Fiscal Agent to comply with any applicable tax reporting obligations, including
without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045,
as amended. The Fiscal Agent shall conclusively rely on the information.
Section 2.07. Exchange of Bond. The Bond may be exchanged at the Principal Office of
the Fiscal Agent only for a like aggregate principal amount of the Bond of authorized
denominations and of the same maturity and interest rate. The cost for any services rendered or
any expense incurred by the Fiscal Agent in connection with any such exchange shall be paid by
the District. The Fiscal Agent shall collect from the Owner requesting exchange of such Bond any
tax or other governmental charge required to be paid with respect to such exchange.
Section 2.08. Bond Register. The Fiscal Agent shall keep, or cause to be kept, at its
Principal Office sufficient books for the registration and transfer of the Bond which books shall
show the series, number, date of issuance, amount, rate of interest and Owner of the Bond and
shall at all times be open to inspection by the City during regular business hours upon reasonable
notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said
books, the ownership of the Bond as hereinbefore provided.
Section 2.09. Temporary Bond. The Bond may be initially issued in temporary form
exchangeable for a definitive Bond when ready for delivery. The temporary Bond may be printed,
lithographed or typewritten, shall be of such denominations as may be determined by the City, and
may contain such reference to any of the provisions of this Agreement as may be appropriate.
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Every temporary Bond shall be executed by the City upon the same conditions and in substantially
the same manner as the definitive Bond. If the City issues a temporary Bond it will execute and
furnish definitive Bond without delay and thereupon the temporary Bond shall be surrendered, for
cancellation, in exchange for the definitive Bond at the Principal Office of the Fiscal Agent or at
such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and
deliver in exchange for such temporary Bond an equal aggregate principal amount of a definitive
Bond of authorized denominations. Until so exchanged, the temporary Bond shall be entitled to
the same benefits under this Agreement as a definitive Bond authenticated and delivered
hereunder.
Section 2.10. Bond Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent
shall authenticate and deliver, a replacement Bond of like tenor and principal amount in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond
so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled and
destroyed by the Fiscal Agent. If the Bond shall be lost, destroyed or stolen, evidence of such loss,
destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to
it along with the Owner’s indemnity, the City, at the expense of the Owner, shall execute, and the
Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount
in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City or Fiscal Agent
may require payment of a sum not exceeding the actual cost of preparing each replacement Bond
delivered under this Section 2.10 and of the expenses which may be incurred by the City and the
Fiscal Agent for the preparation, execution, authentication and delivery thereof.
Section 2.11. Special Obligation. All obligations of the City and the District under this
Agreement and the Bond shall be special obligations of the City and the District, payable solely
from the Special Tax Revenues and the funds pledged therefor pursuant hereto. Neither the faith
and credit nor the taxing power of the City, the District (except to the limited extent set forth
herein) or the State of California or any political subdivision thereof is pledged to the payment of
the Bond.
Section 2.12. Refunding Bonds and Subordinate Bonds. The City will not issue
additional Bonds or Subordinate Bonds of the District for any purpose other than the defeasance
of all of the Outstanding Bond in conformance with the provisions of Section 8.01(B)(5) hereof.
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ARTICLE III
ISSUANCE OF THE BOND; APPLICATION OF PROCEEDS;
SPECIAL TAX FUND; ADMINISTRATIVE EXPENSE FUND;
COSTS OF ISSUANCE FUND
Section 3.01. Issuance and Delivery of the Bond. At any time after the execution of this
Agreement, the City may issue the Bond for the District in the aggregate principal amount set forth
in Section 2.01 hereof and deliver the Bond to the Original Purchaser. The Authorized Officers of
the City are hereby authorized and directed to deliver any and all documents and instruments
necessary to cause the issuance of the Bond in accordance with the provisions of the Act, the
Resolution and this Agreement, to authorize the payment of Costs of Issuance by the Fiscal Agent
from the proceeds of the Bond, and to do and cause to be done any and all acts and things necessary
or convenient for delivery of the Bond to the Original Purchaser.
Section 3.02. Application of Proceeds of Sale of Bond. The Proceeds of the sale of the
Bond to the Original Purchaser shall be paid to the Fiscal Agent, who shall forthwith set aside, pay
over and deposit such Proceeds on the Closing Date as follows:
(A) Deposit in the Reserve Fund the amount of $__________;
(B) Deposit in the Costs of Issuance Fund the amount of $______; and
(C) The Fiscal Agent shall transfer the remaining Proceeds of the Bond in the
amount of $_____ to the Prior Fiscal Agent for deposit in the 2011 Bond Fund.
The Fiscal Agent may, in its discretion, establish a temporary fund or account on its books
and records to facilitate such deposits and transfers described in this Section 3.02.
Section 3.03. Special Tax Fund.
(A) Creation of Special Tax Fund. There is hereby established, as a separate fund to be
held by the Fiscal Agent, the “City of Azusa Community Facilities District No. 2002-1 (Mountain
Cove) Special Tax Refunding Bond Special Tax Fund” to the credit of which the City shall deposit,
within ten (10) Business Days after receipt, the Special Tax Revenues received by the City. There
is hereby established in the Special Tax Fund, as a separate account to be held by the Fiscal Agent,
the “Surplus Account” to the credit of which amounts shall be deposited as provided in Section
4.02(B) hereof. Moneys in the Special Tax Fund shall be held by the Fiscal Agent for the benefit
of the City and the Owner of the Bond, shall be disbursed as provided below and, pending
disbursement, shall be subject to a lien in favor of the Owner of the Bond.
Notwithstanding the foregoing, any amounts received by the City which constitute Special
Tax Prepayments shall be transferred by the City immediately upon receipt to the Fiscal Agent for
deposit by the Fiscal Agent in the Special Tax Prepayments Account established pursuant to
Section 4.02(A) hereof.
(B) Disbursements. As soon as practicable after the receipt from the City of any Special
Tax Revenues, but no later than ten (10) Business Days after such receipt, the Fiscal Agent shall
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withdraw from the Special Tax Fund and deposit in the Administrative Expense Fund an amount
which is estimated by the City, in an Officer’s Certificate delivered to the Fiscal Agent (upon
which the Fiscal Agent may conclusively rely) to be sufficient, together with the amount then on
deposit in the Administrative Expense Fund, to pay the Administrative Expenses during the current
Fiscal Year; provided, however, that the amount deposited in the Administrative Expense Fund
prior to the deposits to the Interest Account and the Principal Account of the Bond Fund, as
provided below, shall not exceed, when added to amounts already on deposit in the Administrative
Expenses Fund, the Priority Administrative Expense Amount for any Fiscal Year. From the
amount then remaining on deposit in the Special Tax Fund (including the amount on deposit in the
Surplus Account), the Fiscal Agent shall, as soon as such amount is sufficient, deposit in the
Reserve Fund the amount, in addition to the amount transferred to the Bond Fund described below,
necessary to replenish any draw on the Reserve Fund. Thereafter, on or before each Interest
Payment Date, the Fiscal Agent shall deposit in the Interest Account and the Principal Account of
the Bond Fund the amounts required to pay the interest on and the principal of the Bond on such
Interest Payment Date, as provided in Section 4.02(B) hereof.
On or before the March 1 Interest Payment Date in each Bond Year, if the amount of other
moneys which is on deposit in the Special Tax Fund is less than the amount of the interest on the
Bond which is due on such Interest Payment Date, the Fiscal Agent shall transfer moneys from the
Surplus Account, to the extent of moneys on deposit therein and available for transfer, to and
deposit such moneys in the Interest Account of the Bond Fund in an amount not to exceed the
deficiency in the amount of other moneys which are on deposit in the Special Tax Fund, and
available for transfer, to pay the full amount of the interest on the Bond which is due and payable
on such Interest Payment Date. If the moneys on deposit in the Surplus Account are insufficient to
pay the interest on the Bond due on such March 1 Interest Payment Date, then the Fiscal Agent,
on or before the March 1 Interest Payment Date, shall transfer moneys from the Reserve Fund, to
the extent of moneys on deposit therein and available for transfer, to and deposit such moneys in
the Interest Account of the Bond Fund in an amount not to exceed the deficiency in the amount of
other moneys which are on deposit in the Special Tax Fund, and available for transfer, to pay the
full amount of the interest on the Bond which is due and payable on such Interest Payment Date.
On or before the September 1 Interest Payment Date in each Bond Year, if the amount of other
moneys which is on deposit in the Special Tax Fund is less than the amount of the interest on and
principal of the Bond which is due on such Interest Payment Date, the Fiscal Agent shall transfer
moneys from the Surplus Account, to the extent of moneys on deposit therein and available for
transfer, to and deposit such moneys in the Interest Account and the Principal Account in amounts
not to exceed the amount of the deficiency in the amount of other moneys which are on deposit in
the Special Tax Fund, and available for transfer, to pay the full amount of the interest on and
principal of the Bond which is due and payable on such Interest Payment Date. If the moneys on
deposit in the Surplus Account are insufficient to pay the interest on and principal of the Bond due
on such September 1 Interest Payment Date, then the Fiscal Agent, on or before the September 1
Interest Payment Date shall transfer moneys from the Reserve Fund, to the extent of moneys on
deposit therein and available for transfer to and deposit such moneys in the Interest Account and
the Principal Account in amounts not to exceed the amount of the deficiency in the amount of other
moneys which are on deposit in the Special Tax Fund, and available for transfer, to pay the full
amount of the interest on and principal of the Bond which is due and payable on such Interest
Payment Date. On or before May 30 of each year, commencing on May 30, 2022, the Fiscal Agent
shall notify the City of the amount which is then on deposit in the Surplus Account and the Reserve
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Fund, and of the aggregate amount of the principal of and interest on the Bond which will become
due and payable on March 1 and September 1 of the following calendar year.
(C) Investment. Moneys in the Special Tax Fund and the accounts therein shall be
invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be
retained in the Special Tax Fund to be used for the purposes of such accounts.
Section 3.04. Administrative Expense Fund.
(A) Creation of Administrative Expense Fund. There is hereby established, as a separate
fund to be held by the Fiscal Agent, the “City of Azusa Community Facilities District No. 2002-1
(Mountain Cove) Special Tax Refunding Bond Administrative Expense Fund” to the credit of
which deposits shall be made as required by Section 3.03(B) hereof. Moneys in the Administrative
Expense Fund shall be held by the Fiscal Agent for the benefit of the City, and shall be disbursed
as provided below.
(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn
by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer’s
Certificate stating the amount to be withdrawn, that such amount is to be used to pay an
Administrative Expense, the nature of such Administrative Expense, name of payee and payment
instructions.
Annually, not later than the last day of each Fiscal Year, the Fiscal Agent shall withdraw
any amount then remaining in the Administrative Expense Fund that has not been allocated by an
Officer’s Certificate received by the Fiscal Agent from the City to pay Administrative Expenses
which are expected to be incurred in the succeeding Fiscal Year prior to the receipt by the City of
Special Tax Revenues for such succeeding Fiscal Year and transfer such amount to the Surplus
Account.
(C) Investment. Subject to the provisions of subsection (B) above, moneys in the
Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01
hereof. Investment Earnings shall be retained by the Fiscal Agent in the Administrative Expense
Fund to be used for the purposes of such fund.
Section 3.05. Costs of Issuance Fund.
(A) Creation of Costs of Issuance Fund. There is hereby established, as a separate fund
to be held by the Fiscal Agent, the “City of Azusa Community Facilities District No. 2002-1
(Mountain Cove) Special Tax Refunding Bond Costs of Issuance Fund” to the credit of which a
deposit shall be made as required by paragraph (B) of Section 3.02 hereof. Moneys in the Cost of
Issuance Fund shall be held by the Fiscal Agent and shall be disbursed as provided in
subsection (B) of this Section for the payment or reimbursement of Costs of Issuance.
(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed to pay
Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the
designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent on the
Closing Date or any date thereafter. The Fiscal Agent shall pay all Costs of Issuance upon receipt
of an invoice from any such payee. Each such requisition of the City shall be sufficient evidence
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to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm
the accuracy of such facts. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period
of ninety (90) days from the Closing Date and shall then transfer and deposit any moneys
remaining therein, including any Investment Earnings thereon, to the Special Tax Fund.
(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited
in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent
in the Cost of Issuance Fund to be used for the purposes of such fund.
ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND;
RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues. The Bond shall be secured by a first and
prior pledge of and lien upon (which shall be perfected in the manner and to the extent herein
provided) all of the Special Tax Revenues (except the Priority Administrative Expense Amount
which is to be deposited in the Administrative Expense Fund pursuant to Section 3.03(B) hereof),
all moneys on deposit in the Principal Account and the Interest Account of the Bond Fund, all
moneys on deposit in the Surplus Account and all moneys on deposit in the Reserve Fund. The
Bond shall be equally secured by a pledge of and lien upon the Special Tax Revenues and such
moneys without priority for number, date of Bond, date of execution or date of delivery; and the
payment of the interest on and principal of the Bond and any premium upon the redemption of any
thereof shall be and is secured by a first and prior pledge of and lien upon the Special Tax Revenues
and such moneys. The Special Tax Revenues and all moneys on deposit in such funds and accounts
are hereby dedicated in their entirety to the payment of the principal of the Bond, and interest and
any premium on, the Bond, as provided herein and in the Act, until the Bond has been paid and
retired or until moneys or Defeasance Obligations have been set aside irrevocably for that purpose
in accordance with Section 10.03 hereof.
Section 4.02. Bond Fund.
(A) Deposits. There is hereby established, as a separate fund to be held by the Fiscal
Agent, the “City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) Special Tax
Refunding Bond Fund” to the credit of which deposits shall be made as required by
Section 3.03(B) and Section 4.03(B) hereof and any other provision of this Agreement or the Act.
There are hereby established in the Bond Fund, as separate accounts to be held by the Fiscal Agent,
the “Interest Account” and the “Principal Account.” There is hereby also established in the Bond
Fund, as a separate account to be held by the Fiscal Agent, the “Special Tax Prepayments Account”
to the credit of which deposits shall be made as required by Section 3.03(A) hereof and paragraph
(2) of subsection (B) below. Moneys in the Bond Fund shall be held by the Fiscal Agent for the
benefit of the Owner of the Bond, shall be disbursed for the payment of the principal of, and interest
on, the Bond as provided below, and, pending such disbursement, shall be subject to a lien in favor
of the Owner of the Bond.
(B) Disbursements.
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(1) Bond Fund Disbursements. On or before each Interest Payment Date, the
Fiscal Agent shall transfer from the Special Tax Fund (including the Surplus Account
therein) and deposit into the following respective accounts in 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
Special Tax 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:
(a) Interest Account. On or before each Interest Payment Date, the
Fiscal Agent shall deposit in the Interest Account the amount required to cause the
aggregate amount on deposit in the Interest Account to equal the amount of interest
becoming due and payable on the Bond on such date. No deposit need be made into
the Interest Account on any Interest Payment Date if the amount on deposit therein
is at least equal to the interest becoming due and payable on the Bond on such date.
All moneys in the Interest Account shall be used and withdrawn by the Fiscal Agent
solely for the purpose of paying the interest on the Bond as it shall become due and
payable (including accrued interest on the Bond redeemed prior to maturity). All
amounts on deposit in the Interest Account on the first day of any Bond Year, to
the extent not required to pay any interest then having become due and payable on
the Outstanding Bond, shall be withdrawn therefrom by the Fiscal Agent and
transferred first to the Reserve Fund to the extent the amounts on deposit in the
Reserve Fund are less than the Reserve Requirement and then any moneys
remaining in the Bond Fund shall be transferred to the Surplus Account.
(b) Principal Account. On or before each Interest Payment Date which
occurs on September 1, the Fiscal Agent shall deposit in the Principal Account the
amount required to cause the aggregate amount on deposit in the Principal Account
to equal the principal amount of the Bond becoming due and payable on such
Interest Payment Date pursuant to Section 2.03 hereof. All moneys in the Principal
Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of
(i) payin g the principal of the Bond at the maturity thereof, or (ii) paying the
principal of the Bond upon the redemption thereof pursuant to Section 2.03 hereof.
The amount on deposit in the Principal Account on the first day of any Bond Year
(i.e., September 2), to the extent not required to pay the principal of any
Outstanding Bond then having become due and payable shall be withdrawn
therefrom by the Fiscal Agent and transferred first to the Reserve Fund to the extent
the amounts on deposit in the Reserve Fund are less than the Reserve Requirement
and then any moneys remaining in the Bond Fund shall be transferred to the Surplus
Account.
On the first Business Day following each Interest Payment Date, the Fiscal Agent shall
transfer any moneys remaining on deposit in the Bond Fund after the transfers discussed above
(including the Interest Account and the Principal Account) other than moneys on deposit in the
Special Tax Prepayments Account, first to the Reserve Fund and then the remainder to the Surplus
Account.
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In the event that moneys on deposit in the Special Tax Fund, including moneys on deposit
in the Surplus Account, will be insufficient on any Interest Payment Date for the Fiscal Agent to
deposit the required amounts in the Interest Account and the Principal Account, as provided above,
the Fiscal Agent shall deposit the available funds first to the Interest Account in the amount
required to cause the aggregate amount on deposit therein to equal the amount of interest becoming
due and payable on the Bond on the Interest Payment Date, and shall then deposit the remaining
available funds in the Special Tax Fund, including funds on deposit in the Surplus Account, to the
Principal Account in the amount required to cause the aggregate amount on deposit therein to equal
the amount, if any, of principal becoming due and payable on the Bond on the Interest Payment
Date. If, after making such deposits to the Interest Account and the Principal Account, and after
transferring moneys from the Reserve Fund to such accounts, as provided in Section 4.03(B)
hereof, the amount on deposit in either the Interest Account or the Principal Account is insufficient
to pay the full amount of the interest on or principal of the Bond redeemed on the Interest Payment
Date, the Fiscal Agent shall apply any such amounts towards the payment of the interest on or
principal of from each respective account, as specified in an Officer’s Certificate provided to the
Fiscal Agent.
(2) Special Tax Prepayments Account Deposits and Disbursements. Within ten
(10) Business Days after receiving a Special Tax Prepayment, the City shall deliver the
amount thereof to the Fiscal Agent, together with an Officer’s Certificate notifying the
Fiscal Agent that the amount being delivered is a Special Tax Prepayment which is to be
deposited in the Special Tax Prepayments Account. Upon receiving a Special Tax
Prepayment from the City and such an Officer’s Certificate, the Fiscal Agent shall deposit
the amount of the Special Tax Prepayment in the Special Tax Prepayments Account. Such
an Officer’s Certificate may be combined with the Officer’s Certificate which the City is
required to deliver to the Fiscal Agent pursuant to Section 2.03(A) hereof. A portion of the
moneys on deposit in the Special Tax Prepayments Account shall be transferred by the
Fiscal Agent, upon receipt of an Officer’s Certificate directing such transfer and specifying
the amount to be transferred (upon which the Fiscal Agent may conclusively rely), to the
Principal Account and shall be used to redeem the Bond on the redemption date selected
in accordance with Section 2.03(A) hereof. The portion of the moneys on deposit in the
Special Tax Prepayments Account representing funded interest on a portion of the
Outstanding Bond shall be transferred by the Fiscal Agent, upon receipt of an Officer’s
Certificate directing such transfer and specifying the amount to be transferred (upon which
the Fiscal Agent may conclusively rely), to the Interest Account on or before each Interest
Payment Date prior to and including the Interest Payment Date on which the redemption
of such Bond will occur. Pending such transfers, the moneys on deposit in the Special Tax
Prepayments Account shall be invested in Permitted Investments of such type and at such
yield as Bond Counsel may determine is necessary to preserve the exclusion of interest on
the Bond from gross income for purposes of federal income taxation. Investment Earnings
from such Permitted Investments shall be retained by the Fiscal Agent in the Special Tax
Prepayments Account.
(C) Investment. Moneys in the Bond Fund, including all accounts therein, shall be
invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be
retained in the Bond Fund, except to the extent they are required to be deposited by the Fiscal
Agent in the Rebate Fund in accordance with Section 6.02 hereof. Investment earnings with
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respect to moneys in the Special Tax Prepayments Account shall be retained therein as specified
in paragraph (2) of subsection (B) above.
Section 4.03. Reserve Fund.
(A) Creation of Fund. There is hereby established, as a separate fund to be held by the
Fiscal Agent, the “City of Azusa Community Facilities District No. 2002-1 (Mountain Cove)
Special Tax Refunding Bond Reserve Fund” to the credit of which a deposit shall be made as
required by paragraph (A) of Section 3.02 hereof, which deposit is equal to the Reserve
Requirement, and to which deposits shall be made as provided in Section 3.03(B) hereof. Moneys
in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owner of the Bond as
a reserve for the payment of the principal of and interest and any premium on the Bond and shall
be subject to a lien in favor of the Owner of the Bond.
(B) Use of Fund. Except as otherwise provided in this Section, all amounts on deposit
in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of
making transfers to the Interest Account and the Principal Account of the Bond Fund in the event
of any deficiency at any time in either of such accounts of the amount then required for payment
of the principal of and interest on the Bond or, in accordance with the provisions of subsection (D)
and subsection (F) of this Section 4.03, for the purpose of redeeming Bond.
(C) Transfer Due to Deficiency in Interest and Principal Accounts. Whenever transfer
is made from the Reserve Fund to the Interest Account or the Principal Account due to a deficiency
in either such account, the Fiscal Agent shall provide written notice thereof to the City and to the
Original Purchaser so long as the Original Purchaser is the Owner of the Outstanding Bond.
(D) Transfer When Balance Exceeds the Outstanding Bond. Whenever the balance in
the Reserve Fund is equal to or exceeds the amount required to redeem or pay the Outstanding
Bond, including interest accrued to the date of payment or redemption and premium, if any, due
upon redemption, the Fiscal Agent shall, upon receiving written direction from an Authorized
Officer (upon which the Fiscal Agent may conclusively rely), transfer the amount in the Reserve
Fund to the Interest Account and the Principal Account to be applied, on the next succeeding and/or
applicable Interest Payment Date, to the payment and redemption, in accordance with Section 2.03
and Section 4.02 hereof, as applicable, of all of the Outstanding Bond. In the event that the amount
available to be so transferred from the Reserve Fund to the Interest Account and the Principal
Account exceeds the amount required to pay and redeem the Outstanding Bond, the excess shall
be transferred to the City to be used for any lawful purpose of the City.
(E) Transfers on Payment of Special Tax Obligations. Whenever the City receives a
Special Tax Prepayment for a lot or parcel of property within the District, the City shall by an
Officer’s Certificate notify the Fiscal Agent thereof and of the amount by which the Reserve Fund
is to be reduced and which is transferable from the Reserve Fund to the Principal Account of the
Bond Fund, which amount shall be specified in the Officer’s Certificate. Each such Officer’s
Certificate shall be accompanied by a report of an Independent Financial Consultant or the Special
Tax Consultant verifying the accuracy of the calculation of the amount to be transferred from the
Reserve Fund to the Principal Account (“Verification”).
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If the amount on deposit in the Reserve Fund is less than the Reserve Requirement on any
date due to a transfer, if any, required by paragraph (C) above or as a result of the valuation of the
Permitted Investments in the Reserve Fund pursuant to Section 6.01 below, the Fiscal Agent shall
transfer to the Reserve Fund from the first available moneys in the Special Tax Fund, as set forth
in Section 4.02(B)(1) hereof, an amount necessary to increase the balance therein to the Reserve
Requirement.
(F) Transfer of Excess of Reserve Requirement. Whenever, on any September 2, the
amount in the Reserve Fund, and any sub-account therein, less Investment Earnings resulting from
the investment of the funds therein which pursuant to Section 6.02 hereof must be rebated to the
United States, as previously directed by the City, exceeds the Reserve Requirement, as calculated
on such date by the City and provided in writing to the Fiscal Agent, the Fiscal Agent shall provide
written notice to the City of the amount of the excess. Upon receiving written direction from an
Authorized Officer (upon which the Fiscal Agent may conclusively rely), the Fiscal Agent shall,
subject to the requirements of Section 6.02 hereof, transfer an amount from the Reserve Fund, and
any sub -account therein, which will reduce the amount on deposit therein to an amount equal to
the Reserve Requirement to the Interest Account and the Principal Account, in the priority
specified in Section 4.02(B)(1), to be used for the payment of the interest on and principal of the
Bond on the next succeeding Interest Payment Date in accordance with Section 4.02 hereof.
(G) Investments. Investment Earnings shall be retained in the Reserve Fund and shall
be used for the purposes of such fund, except to the extent they are required to be deposited by the
Fiscal Agent in the Rebate Fund as provided in Section 6.02 hereof.
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the
principal of and interest and any premium on the Bond when and as due in strict conformity with
the terms of this Agreement and any Supplemental Agreement to the extent that the Special Tax
Revenues are available therefor, and it will faithfully observe and perform all of the conditions,
covenants and requirements of this Agreement and all Supplemental Agreements and of the Bond.
Section 5.02. Special Obligation. The Bond is a special obligation of the City and the
District and is payable solely from and secured solely by the Special Tax Revenues and the
amounts in the Bond Fund, the Reserve Fund and the Special Tax Fund, including the accounts
therein.
Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of
claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the
extension of the time for the payment of any claim for interest on any of the Bond and shall not,
directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding
said claims for interest or in any other manner. In case any such claim for interest shall be extended
or funded, whether or not with the consent of the City, such claim for interest so extended or funded
shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject
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to the prior payment in full of the principal of the Bond then Outstanding and of all claims for
interest which shall not have been so extended or funded.
Section 5.04. Against Encumbrances. The City shall not encumber, pledge or place any
charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bond superior
to or on a parity with the pledge and lien herein created for the benefit of the Bond, except as
permitted by this Agreement.
Section 5.05. Books and Accounts. The City shall keep, or cause to be kept, proper books
of record and accounts, separate from all other records and accounts of the City in which complete
and correct entries shall be made of all transactions relating to the expenditure of amounts
disbursed from the Administrative Expense Fund. Such books of record and accounts shall at all
times during business hours, upon reasonable notice, be subject to the inspection of the Fiscal
Agent (which shall have no duty to inspect) and the Owner of not less than ten percent (10%) of
the aggregate principal amount of the Bond then Outstanding, or their representatives duly
authorized in writing.
Section 5.06. Protection of Security and Rights of the Owner. The City will preserve and
protect the security of the Bond and the rights of the Owner, and will warrant and defend their
rights against all claims and demands of all persons. From and after the delivery of the Bond by
the City, the Bond shall be incontestable by the City.
Section 5.07. Collection of Special Tax Revenues. The City shall comply with all
requirements of the Act, including the enactment of necessary Ordinances, so as to assure the
timely collection of Special Tax Revenues, including without limitation, the enforcement of the
payment or collection of delinquent Special Taxes.
On or within five (5) Business Days of June 15 of each year, the Fiscal Agent shall provide
the City with a notice stating the amount then on deposit in the Special Tax Fund (including the
Surplus Account therein), the Bond Fund and the Reserve Fund. The receipt of such notice by the
City or the failure of the Fiscal Agent to give such notice shall in no way affect the obligations of
the City under the following two paragraphs. The Fiscal Agent shall have no liability if it does not
provide such notice to the City. Upon receipt of such notice, the City shall communicate with the
Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into
account any parcel splits during the preceding and then current Fiscal Year.
The City shall effect the levy of the Special Taxes in an amount not to exceed the Maximum
Annual Special Tax as set forth in the Rate and Method of Apportionment of Special Tax each
Fiscal Year in accordance with the Act by August 1 of each year (or such later date as may be
authorized by the Act or any amendment thereof) that the Bond is Outstanding, such that the
computation of the levy is complete before the final date on which the Auditor will accept the
transmission of the Special Tax amounts for the parcels within the District for inclusion on the tax
roll for the Fiscal Year then beginning. Upon the completion of the computation of the amounts of
the levy of the Special Taxes, the City shall prepare or cause to be prepared, and shall transmit to
the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the tax
roll.
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The City shall fix and levy the amount of Special Taxes within the District required for the
payment of the principal of and interest on the Outstanding Bond becoming due and payable during
the ensuing calendar year, including any delinquencies in the payment of defaulted principal or
interest payments on the Outstanding Bond that has occurred, any necessary replenishment or
expenditure of the Reserve Fund, and the amount estimated to be sufficient to pay the
Administrative Expenses during such calendar year. The Special Taxes so levied shall not, in any
event, exceed the amounts provided in the Rates and Method of Apportionment of Special Tax.
The Special Taxes shall be payable and be collected (except in the event of judicial
foreclosure proceedings pursuant to Section 5.11 hereof) in the same manner and at the same time
and in the same installments as the general taxes on real property are payable, and have the same
priority, become delinquent at the same times and in the same proportionate amounts and bear the
same proportionate penalties and interest after delinquency as do the general taxes on real property.
The City will not, in collecting the Special Taxes or in processing any such judicial
foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340, 53344.1,
53356.1 and 53356.8 of the California Government Code in any manner which would materially
and adversely affect the interests of the Owner and, in particular, will not permit the tender of the
Bond in full or partial payment of any Special Taxes except upon receipt of a certificate of an
Independent Financial Consultant that to accept such tender will not result in the City having
insufficient Special Tax Revenues to pay the principal of and interest on the Bond remaining
Outstanding following such tender.
Section 5.08. Reduction of Maximum Special Tax Rates. The City covenants that, to the
extent that it is legally permitted to avoid doing so, it will not initiate and conduct proceedings to
reduce the maximum rates or method of apportionment of Special Taxes which are authorized to
be levied on taxable parcels of property within the District (the “Maximum Rates”).
The City further covenants that in the event an ordinance is adopted by initiative pursuant
to Section 3 of Article XIII C of the California Constitution, which purports to reduce or otherwise
alter the Maximum Rates, it will commence and pursue legal action seeking to preserve its ability
to comply with its covenant contained in the preceding paragraph.
Section 5.09. Further Assurances. The City will adopt, make, execute and deliver any and
all such further ordinances, resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Agreement,
and for better assuring and confirming unto the Owner of the Bond of the rights and benefits
provided in this Agreement.
Section 5.10. Tax Covenants. The City covenants that:
(A) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of the initial issuance and delivery of the Bond, would have caused
the Bond to be “arbitrage bonds” within the meaning of Section 103(b) and Section 148 of the
Code;
(B) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of initial issuance and delivery of the Bond, would result in loss
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of exclusion from gross income for purposes of federal income taxation under Section 103(a) of
the Code of interest paid with respect to the Bond;
(C) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of initial issuance and delivery of the Bond, would have caused
the Bond to be “private activity bonds” within the meaning of Section 141 of the Code;
(D) It will comply with the Rebate Certificate as a source of guidance for achieving
compliance with the Code; and
(E) In order to maintain the exclusion from gross income for purposes of federal income
taxation of interest paid with respect to the Bond, it will comply with each applicable requirement
of Section 103 and Sections 141 through 150 of the Code.
The covenants of the City contained in this Section 5.10 shall survive the payment,
redemption or defeasance of Bond pursuant to Section 10.03 hereof.
Section 5.11. Covenant to Foreclose. The City hereby covenants with and for the benefit
of the Owners of the Bonds (i) that it will order, and cause to be commenced, judicial foreclosure
proceedings against properties with delinquent Special Taxes in excess of $10,000 by the October
1 following the close of the Fiscal Year in which such Special Taxes were due, and (ii) that it will
commence judicial foreclosure proceedings against all properties with delinquent Special Taxes
by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an
amount which is less than ninety-five percent (95%) of the total Special Taxes levied, and
diligently pursue to completion such foreclosure proceedings; provided, however, the City shall
not be required to order and cause judicial foreclosure proceedings to be commenced against
delinquent properties as long as no deficiency in the Reserve Fund exists (or is projected to exist
in order to make debt service payments on the Bonds in the current or next Fiscal Year).
Section 5.12. Prepayment of Special Taxes. The City shall cause all applications of
owners of property in the District to prepay and satisfy the Special Tax obligation for their property
to be reviewed by the Special Tax Consultant and shall not accept any such prepayment unless
such consultant certifies in writing that the maximum amount of the Special Taxes that may be
levied on Taxable Property both prior to and after the proposed prepayment is and will be at least
1.1 times the amount of Maximum Annual Debt Service on the Outstanding Bond. For purposes
of this Section, Taxable Property means all parcels of property in the District that are not exempt
from the levy of the Special Tax pursuant to the Act or the Rates and Method of Apportionment
of Special Tax.
Section 5.13. Calculation of Prepayments. The City will cause all Special Tax
Prepayments to be calculated to include the amount of the premium, if any, on the Outstanding
Bond that will be redeemed with the Special Tax Prepayment and negative arbitrage on the
investment of the Special Tax Prepayment from the date of receipt until the Interest Payment Date
upon which the Special Tax Prepayment and the amount to be transferred from the Reserve Fund
to the Principal Account pursuant to Section 4.03(G) hereof will be used to redeem the Outstanding
Bond pursuant to Section 2.03(A) hereof. The City will not include in any calculation of the
amount of any Special Tax Prepayment for any parcel of taxable property any portion of the
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amount then on deposit in the Reserve Fund, if at the time of such calculation the amount on
deposit in the Reserve Fund is less than the Reserve Requirement.
Section 5.14. Financial Condition. Since the most current date of the information,
financial or otherwise, supplied by the City to the Owner:
(a) There has been no change in the assets, liabilities, financial position or
results of operations of the City and the District which might reasonably be anticipated to
cause a Material Adverse Effect;
(b) The District has not incurred any obligations or liabilities which might
reasonably be anticipated to cause a Material Adverse Effect; and
(c) The District has not (i) incurred any material indebtedness, other than the
payments and trade accounts payable arising in the ordinary course of the District’s
business and not past due, or (ii) guaranteed the indebtedness of any other person
Section 5.15. Accuracy of Information. All information, reports and other papers and
data furnished by the City to the Owner and/or the CDIAC were, at the time the same were so
furnished, complete and accurate in all material respects and insofar as necessary to give the Owner
a true and accurate knowledge of the subject matter and were provided in expectation of the
Owner’s reliance thereon in entering into the transactions contemplated by this Agreement. No
fact is known to the City which has had or, so far as the City can now reasonably foresee, may in
the future have a Material Adverse Effect, which has not been set forth in the financial statements
previously furnished to the Owner or in other such information, reports, papers and data or
otherwise disclosed in writing to the Owner prior to the Closing Date. Any financial, budget and
other projections furnished to the Owner by the City or its or their agents were prepared in good
faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable
in light of the conditions existing at the time of delivery of such financial, budget or other
projections, and represented, and as of the date of this representation, represent the City’s best
estimate of its future financial performance. No document furnished nor any representation,
warranty or other written statement made to the Owner in connection with the negotiation,
preparation or execution of this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state (as of the date made or furnished) any material fact
necessary in order to make the statements contained herein or therein, in light of the circumstances
under which they were or will be made, not misleading.
Section 5.16. Annual Reporting Requirements to Original Purchaser. Unless otherwise
posted by the City on EMMA, on or before each March 31 of each year, the District shall provide
to the Original Purchaser the information listed in Exhibit C. The District shall further provide to
the Original Purchaser: (a) within three (3) Business Days after the District obtains knowledge
thereof, notice by telephone, promptly confirmed in writing, of any event that constitutes an Event
of Default under this Agreement, together with a statement by an Authorized Officer of the District
of the steps being taken by the District to cure such Event of Default; (b) within ten (10) days after
the District obtains knowledge thereof, written notice of any Material Adverse Effect; and (c)
within ten (10) days after receipt of request therefor by the Original Purchaser, updates, if any, of
the information described in Section 5.15 of this Agreement; and (d) within ten (10) days after
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receipt of request therefor by the Original Purchaser, such additional information as the Original
Purchaser may reasonably request.
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds. Subject in all respects to the
provisions of Section 6.02 hereof, moneys in any fund or account created or established by this
Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted
Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least
two (2) Business Days in advance of the making of such investments. In the absence of any such
Officer’s Certificate, the Fiscal Agent shall hold such moneys uninvested. The Fiscal Agent shall
not have any responsibility for determining the legality of any Permitted Investments and may rely
on the City’s investment direction as to the suitability and legality of the directed investments. The
parties hereto acknowledge that the Fiscal Agent is not providing investment supervision,
recommendations, or advice. The Fiscal Agent shall have no obligation to pay additional interest
or maximize investment income on any funds held by it. Neither the City nor the Owner of the
Bonds shall have any claim of any kind against the Fiscal Agent in connection with investments
properly made pursuant to this Section 6.01. Obligations purchased as an investment of moneys in
any fund or account shall be deemed to be part of such fund or account, subject, however, to the
requirements of this Agreement for transfer of Investment Earnings in funds and accounts.
The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or
agent in the holding, acquisition or disposition of any investment. The Fiscal Agent shall not incur
any liability for losses arising from any investments made pursuant to this Section 6.01. For
purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted
Investments credited to such fund or account shall be valued at the cost thereof (excluding accrued
interest and brokerage commissions, if any) semi-annually at least ten (10) Business Days prior to
each Interest Payment Date.
Subject in all respects to the provisions of Section 6.02 hereof, investments in any and all
funds and accounts may be commingled in a single fund for purposes of making, holding and
disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the
credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder,
provided that the Fiscal Agent shall at all times account for such investments strictly in accordance
with the funds and accounts to which they are credited and otherwise as provided in this
Agreement.
The Fiscal Agent shall furnish the City annual cash transaction statements which include
detail for all investment transactions effected by the Fiscal Agent or brokers selected by the City.
Upon the City’s election, monthly statements will be delivered via the Fiscal Agent’s online
service and upon electing such service, paper statements will be provided only upon request except
as noted. The City waives the right to receive brokerage confirmations of security transactions
effected by the Fiscal Agent as they occur, to the extent permitted by law. The City further
understands that trade confirmations for securities transactions effected by the Fiscal Agent will
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be available upon request and at no additional cost and other trade confirmations may be obtained
from the applicable broker.
The Fiscal Agent may make any investments hereunder through its own bond or investment
department or trust investment department, or those of its parent or any affiliate.
Section 6.02. Rebate Fund; Rebate to the United States. There is hereby created, to be
held by the Fiscal Agent, as a separate account distinct from all other funds and accounts held by
the Fiscal Agent under this Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance
with written directions received from an Authorized Officer, deposit into the Rebate Fund moneys
transferred by the City to the Fiscal Agent pursuant to the Rebate Certificate or moneys transferred
by the Fiscal Agent from the Bond Fund or the Reserve Fund. The Rebate Fund shall be held either
uninvested or invested only in Federal Securities at the written direction of the City. Moneys on
deposit in the Rebate Fund shall be applied only to payments made to the United States, to the
extent such payments are required by the Rebate Certificate. The Fiscal Agent shall, upon written
request and direction of the City, make such payments to the United States.
The Fiscal Agent’s sole responsibilities under this Section 6.02 are to follow the written
instructions of the City pertaining hereto. The City shall be responsible for any fees and expenses
incurred by the Fiscal Agent pursuant to this Section 6.02.
The Fiscal Agent shall, upon written request and direction from the City, transfer to or
upon the order of the City any moneys on deposit in the Rebate Fund in excess of the amount, if
any, required to be maintained or held therein in accordance with the Rebate Certificate. The
Fiscal Agent shall be deemed conclusively to have complied with these provisions if it follows the
directions of the City, and shall have no liability or responsibility to enforce compliance by the
City with the terms hereof or of the Rebate Certificate.
Section 6.03. Liability of City. The City shall not incur any responsibility in respect of
the Bond or this Agreement other than in connection with the duties or obligations explicitly herein
or in the Bond assigned to or imposed upon it. The City shall not be liable in connection with the
performance of its duties hereunder, except for its own negligence or willful default. The City shall
not be bound to ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements of the Fiscal Agent herein or of any of the documents
executed by the Fiscal Agent in connection with the Bond.
In the absence of bad faith, the City may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or opinions furnished to
the City and conforming to the requirements of this Agreement. The City shall not be liable for
any error of judgment made in good faith unless it shall be proved that it was negligent in
ascertaining the pertinent facts.
No provision of this Agreement shall require the City to expend or risk its own general
funds or otherwise incur any financial liability (other than with respect to the Special Tax
Revenues) in the performance of any of its obligations hereunder, or in the exercise of and of its
rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to it.
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The City may rely and shall be protected in acting or refraining from acting upon any
notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party or
proper parties. The City may consult with counsel, who may be counsel to the City, with regard to
legal questions, and the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder in good faith and in accordance
therewith.
Whenever in the administration of its duties under this Agreement the City shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively
proved and established by a certificate of the Fiscal Agent, and such certificate shall be full
warranty to the City for any action taken or suffered under the provisions of this Agreement or any
Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu thereof,
accept other evidence of such matter or may require such additional evidence as to it may seem
reasonable.
Section 6.04. Employment of Agents by City. In order to perform its duties and
obligations hereunder, the City may employ such persons or entities as it deems necessary or
advisable. The City shall not be liable for any of the acts or omissions of such persons or entities
employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected
in doing so, upon the opinions, calculations, determinations and directions of such persons or
entities.
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent. Wilmington Trust, National Association, is
hereby appointed Fiscal Agent, registrar and paying agent for the Bond. The Fiscal Agent
undertakes to perform such duties, and only such duties, as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this Agreement against the
Fiscal Agent. These duties shall be deemed purely ministerial in nature, and the Fiscal Agent shall
not be liable except for the performance of such duties, and no implied covenants or obligations
shall be read into this Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it
may be consolidated or any company resulting from any merger, conversion or consolidation to
which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or
substantially all of its corporate trust business, provided such company shall be eligible under the
following paragraph of this Section 7.01, shall be the successor to the Fiscal Agent without the
execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
The City may, and shall upon the direction of a majority of the Owner with thirty (30) days
prior notice, remove the Fiscal Agent initially appointed, and any successor thereto, and may
appoint a successor or successors thereto, but any such successor shall be a bank, national banking
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association or trust company having a combined capital (exclusive of borrowed capital) and
surplus of at least $50,000,000, and subject to supervision or examination by federal or state
authority. If such bank, national banking association or trust company publishes a report of
condition at least annually, pursuant to law or to the requirements of any supervising or examining
authority above referred to, then for the purposes of this Section 7.01, the combined capital and
surplus of such bank, national banking association or trust company shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign and be discharged from its duties hereunder by
giving written notice to the City and by giving to the Owner notice by mail of such resignation.
Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent
by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective
upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section 7.01 within thirty (30) days after the Fiscal Agent shall have given to
the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by
reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply
to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may
thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal
Agent.
Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements
herein and in the Bond contained shall be taken as statements, covenants and agreements of the
City and the District, and the Fiscal Agent assumes no responsibility for the correctness of the
same, nor makes any representations as to the validity or sufficiency of this Agreement or of the
Bond, nor shall the Fiscal Agent incur any responsibility in respect thereof, other than in
connection with the duties or obligations herein or in the Bond assigned to or imposed upon it. The
Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except
for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or
liability for any information, statement or recital in any offering memorandum or other disclosure
material prepared or distributed with respect to the issuance of the Bond.
The Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and
conforming to the requirements of this Agreement. Except as provided above in this paragraph,
the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not
acting or not proceeding, reasonably and in accordance with the terms of this Agreement, upon
any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other
paper or document which it shall in good faith reasonably believe to be genuine and to have been
adopted or signed by the proper person or to have been prepared and furnished pursuant to any
provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any
investigation or inquiry as to any statements contained or matters referred to in any such
instrument.
The Fiscal Agent shall not be liable for any error of judgment made in good faith by the
Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the
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pertinent facts. In no event shall the Fiscal Agent be responsible or liable for special, indirect,
punitive, incidental or consequential loss or damage of any kind whatsoever (including, but not
limited to, loss of profit) irrespective of whether the Fiscal Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.
No provision of this Agreement shall require the Fiscal Agent 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.
The Fiscal Agent shall not be responsible for accounting for, or paying to, any party to this
Agreement, including, but not limited to the City and the Owner, any returns on or benefit from
funds held for payment of the unredeemed Bond or outstanding checks and no calculation of the
same shall affect, or result in any offset against, fees due to the Fiscal Agent under this Agreement.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested
in it by this Agreement at the request or direction of any of the Owner pursuant to this Agreement
unless such Owner shall have offered to the Fiscal Agent reasonable security or indemnity against
the costs, expenses and liabilities which might be incurred by it in compliance with such request
or direction.
The Fiscal Agent may become the Owner of the Bond with the same rights it would have
if it were not the Fiscal Agent.
All indemnification and releases from liability granted herein to the Fiscal Agent shall
extend to the directors, officers and employees of the Fiscal Agent.
The Fiscal Agent shall be entitled to request and receive written instructions from the City
and/or the Owners and shall have no responsibility or liability for any losses or damages of any
nature that may arise from any action taken or not taken by the Fiscal Agent in accordance with
the written direction of any such parties. The Fiscal Agent shall have the right to accept and act
upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this
Agreement and delivered using Electronic Means (“Electronic Means” shall mean the following
communications methods: e-mail, facsimile transmission, secure electronic transmission
containing applicable authorization codes, passwords and/or authentication keys issued by the
Fiscal Agent, or another method or system specified by the Fiscal Agent as available for use in
connection with its services hereunder); provided, however, that the City shall provide to the Fiscal
Agent an incumbency certificate listing officers with the authority to provide such Instructions
(“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which
incumbency certificate shall be amended by the City whenever a person is to be added or deleted
from the listing. If the City elects to give the Fiscal Agent Instructions using Electronic Means
and the Fiscal Agent in its discretion elects to act upon such Instructions, the Fiscal Agent’s
understanding of such Instructions shall be deemed controlling. The City understands and agrees
that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and
that the Fiscal Agent shall conclusively presume that directions that purport to have been sent by
an Authorized Officer listed on the incumbency certificate provided to the Fiscal Agent have been
sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized
Officers transmit such Instructions to the Fiscal Agent and that the City and all Authorized Officers
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are solely responsible to safeguard the use and confidentiality of applicable user and authorization
codes, passwords and/or authentication keys upon receipt by the City. The Fiscal Agent shall not
be liable for any losses, costs or expenses arising directly or indirectly or indirectly from the Fiscal
Agent’s reliance upon and compliance with such Instructions notwithstanding such directions
conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume
all risks arising out of the use of Electronic Means to submit Instructions to the Fiscal Agent,
including without limitation the risk of the Fiscal Agent acting on unauthorized Instructions, and
the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections
and risks associated with the various methods of transmitting Instructions than the method(s)
selected by the City; (iii) that the security procedures (if any) to be followed in connection with its
transmission of Instructions provide to it a commercially reasonable degree of protection in light
of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately upon
learning of any compromise or unauthorized use of the security procedures.
The permissive right of the Fiscal Agent to do things enumerated in this Agreement shall
not be construed as a duty and it shall not be answerable for other than its negligence or willful
misconduct.
[In order to perform its duties and obligations hereunder, the Fiscal Agent may employ
such persons or entities as it deems necessary or advisable. The Fiscal Agent shall not be liable for
any of the acts or omissions of such persons or entities employed by it in good faith hereunder,
and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions,
calculations, determinations and directions of such persons or entities; provided however, the
Fiscal Agent shall add the City and the District as third party beneficiaries to any agreements
engaging such third parties]. The Fiscal Agent may execute any of the trusts or powers hereof and
perform the duties required of it hereunder by or through attorneys, agents, affiliates, or receivers,
and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder,
and the Fiscal Agent shall not be answerable for any willful misconduct or negligence on the part
of any such attorney, agent, or receiver selected by it with reasonable care.
The Fiscal Agent shall not be responsible for 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.
The Fiscal Agent shall not be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement arising out of or caused, directly or indirectly,
by circumstances beyond its control, including without limitation, any act or provision of any
present or future law or regulation or governmental authority; acts of God; earthquakes; fires;
floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; quarantine restrictions;
riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or
communications service; accidents; labor disputes; acts of civil or military authority or
governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire
or communication facility.
Section 7.03. Information. The Fiscal Agent shall provide to the City such information
relating to the Bond and the funds and accounts maintained by the Fiscal Agent hereunder as the
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City shall reasonably request, including, but not limited to, quarterly statements reporting funds
held and transactions by the Fiscal Agent.
Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in
acting or refraining from acting upon any notice, resolution, request, consent, order, certificate,
report, warrant, Bond or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or proper parties. The Fiscal Agent may consult with
counsel, who may be counsel to the City, with regard to legal questions, and the advice or opinion
of such counsel shall be full and complete authorization and protection in respect of any action
taken or suffered by the Fiscal Agent hereunder in accordance therewith.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed
to be conclusively proved and established by a certificate of the City, and such certificate shall be
full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this
Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal
Agent may, in lieu thereof, accept other evidence of such matter or may require such additional
evidence as to it may seem reasonable.
Section 7.05. Compensation, Indemnification. The City shall pay to the Fiscal Agent from
time to time reasonable compensation for all services rendered as Fiscal Agent under this
Agreement, and also all reasonable expenses, charges, fees and other disbursements, including
those of its attorneys, agents and employees, incurred in and about the performance of its powers
and duties under this Agreement, and the Fiscal Agent shall have a first priority lien therefor on
any funds at any time held by it under this Agreement, and the Fiscal Agent shall pay and reimburse
all expenses, charges, fees and other disbursements, including those of its attorneys, agents and
employees, incurred in connection therewith from the funds held by it under this Agreement. The
City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal
Agent and the Original Purchaser, its officers, employees, directors and agents, harmless against
any liabilities and expenses, including legal fees and expenses, which it may incur in the exercise
and performance of its powers and duties hereunder which are not due to its negligence or willful
misconduct. The obligation of the City under this Section 7.05 shall survive resignation or removal
of the Fiscal Agent under this Agreement and payment of the Bond and discharge of this
Agreement.
Section 7.06. Books and Accounts. The Fiscal Agent shall keep, or cause to be kept,
proper books of record and accounts, separate from all other records and accounts of the Fiscal
Agent, in which complete and correct entries shall be made of all transactions made by it and with
respect to the expenditure of amounts disbursed from the Bond Fund, the Special Tax Fund, the
Administrative Expense Fund, the Reserve Fund and the Cost of Issuance Fund. Such books of
record and accounts shall, upon reasonable notice, at all times during business hours be subject to
the inspection of the City and the Owner of not less than ten percent (10%) of the aggregate
principal amount of the Bond then Outstanding, or their representatives duly authorized in writing.
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ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted.
(A) This Agreement and the rights and obligations of the District and the City and of
the Owner of the Bond may be modified or amended at any time by a Supplemental Agreement
with the written consent of the Owner of at least sixty percent (60%) in aggregate principal amount
of the Bond then Outstanding, exclusive of any disqualified Bond as provided in Section 8.03
hereof. No such modification or amendment shall (i) extend the maturity of any Bond or the time
for paying interest thereon, or otherwise alter or impair the obligation of the City on behalf of the
District to pay the principal of, and the interest and any premium on, the Bond, without the express
consent of the Owner of such Bond, or (ii) permit the creation of any pledge of or lien upon the
Special Tax Revenues, or the moneys on deposit in the Special Tax Fund, the Bond Fund or the
Reserve Fund, superior to or on a parity with the pledge and lien created for the benefit of the Bond
(except as otherwise permitted by the Act, the laws of the State of California or this Agreement),
(iii) reduce the percentage of the Bond required for the amendment hereof, or (iv) reduce the
principal amount of or redemption premium on any Bond or reduce the interest rate thereon. Any
such amendment may not modify any of the rights or obligations of the Fiscal Agent without its
written consent. The City shall deliver to the Fiscal Agent an opinion of counsel that any such
Supplemental Agreement entered into by the City and the Fiscal Agent complies with the
provisions of this Section 8.01 and the Fiscal Agent may conclusively rely on such opinion.
(B) This Agreement and the rights and obligations of the District and the City and the
Owner may also be modified or amended at any time by a Supplemental Agreement, without the
consent of the Owner, only to the extent permitted by law and only for any one or more of the
following purposes:
(1) to add to the covenants and agreements of the City in this Agreement
contained, other covenants and agreements thereafter to be observed, or to limit or
surrender any right or power herein reserved to or conferred upon the City;
(2) to make modifications not adversely affecting any Outstanding Bond in any
material respect;
(3) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provisions of this Agreement, or in
regard to questions arising under this Agreement, as the City and the Fiscal Agent may
deem necessary or desirable and not inconsistent with this Agreement, and which shall not
adversely affect the rights of the Owner;
(4) to make such additions, deletions or modifications as may be necessary or
desirable to assure compliance with Section 148 of the Code relating to required rebate of
moneys to the United States or otherwise as may be necessary to assure exclusion from
gross income for federal income tax purposes of interest on the Bond or to conform with
the Regulations; or
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(5) to provide for the issuance of refunding bonds to pay and discharge the
indebtedness of all of the Outstanding Bond (a “Discharge”) pursuant to Section 10.03
hereof.
Notwithstanding the preceding provisions of Section 8.01(B), any amendment to this
Agreement shall require the consent of the Original Purchaser so long as the Original Purchaser is
the sole Owner of the Outstanding Bond.
Section 8.02. Procedure for Amendment with Written Consent of the Owner. The City
and the Fiscal Agent may at any time enter into a Supplemental Agreement amending the
provisions of the Bond or of this Agreement or any Supplemental Agreement, to the extent that
such amendment is permitted by Section 8.01(A) hereof, to take effect when and as provided in
this Section 8.03. A copy of the Supplemental Agreement, together with a request to the Owner
for their consent thereto, shall be mailed by first class mail, postage prepaid, by the Fiscal Agent
to each Owner of the Bond Outstanding, but failure to mail copies of the Supplemental Agreement
and request shall not affect the validity of the Supplemental Agreement when assented to as in this
Section provided.
Such a Supplemental Agreement shall not become effective unless there shall be filed with
the Fiscal Agent the written consents of the Owner of at least sixty percent (60%) in aggregate
principal amount of the Bond then Outstanding (exclusive of any disqualified Bond as provided in
Section 8.03) and a notice shall have been mailed as hereinafter in this Section provided. Each
such consent shall be effective only if accompanied by proof of ownership of the Bond for which
such consent is given, which proof shall be such as is permitted by Section 10.04 hereof. Any such
consent shall be binding upon the Owner of the Bond giving such consent and on any subsequent
Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked
in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with
the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been
mailed.
After the Owner of the required percentage of the Bond shall have filed their consents to
the Supplemental Agreement, the City shall mail a notice to the Owner in the manner hereinbefore
provided in this Section for the mailing of the Supplemental Agreement, stating in substance that
the Supplemental Agreement has been consented to by the Owner of the required percentage of
the Bond and will be effective as provided in this Section (but failure to mail copies of said notice
shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the
mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers
required by this Section 8.02 to be filed with the Fiscal Agent, shall be proof of the matters therein
stated until the contrary is proved. The Supplemental Agreement shall become effective upon the
filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental
Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically
provided in this Article VIII) upon the City, the District and the Owner of the Bond then
Outstanding at the expiration of sixty (60) days after such filing, except in the event of a final
decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable
proceeding for such purpose commenced within such sixty (60)-day period.
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Section 8.03. Disqualified Bond. Any Bond owned or held for the account of the City or
the District, excepting any pension or retirement fund, shall not be deemed Outstanding for the
purpose of any vote, consent or other action or any calculation of the Outstanding Bond provided
for in this Article VIII, and shall not be entitled to vote upon, consent to, or participate in any
action provided for in this Article VIII. Upon request of the Fiscal Agent, the City shall specify
in a certificate to the Fiscal Agent those bond certificates disqualified pursuant to this Section and
the Fiscal Agent may conclusively rely on such certificate.
Section 8.04. Effect of Supplemental Agreement. From and after the time any
Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be
deemed to be modified and amended in accordance therewith, and the respective rights, duties and
obligations under this Agreement of the City and the Owner of the Bond Outstanding shall
thereafter be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such Supplemental
Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and
all purposes.
Section 8.05. Endorsement or Replacement of the Bond Issued After Amendments. The
City may determine that the Bond issued and delivered after the effective date of any action taken
as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form
approved by the City, as to such action. In that case, upon demand of the Owner of the Bond
Outstanding at such effective date and upon presentation of his Bond for that purpose at the
Principal Office of the Fiscal Agent or at such other office as the City may select and designate for
that purpose, a suitable notation shall be made on such Bond. The City may determine that the new
Bond, so modified as in the opinion of the City is necessary to conform to such action, shall be
prepared, executed and delivered. In that case, upon demand of the Owner of the Bond then
Outstanding, such new Bond shall be exchanged at the Principal Office of the Fiscal Agent without
cost to any Owner, for the Bond then Outstanding, upon surrender of such Bond.
Section 8.06. Amendatory Endorsement of Bond. The provisions of this Article VIII shall
not prevent any Owner from accepting any amendment as to the Bond held by him, provided that
due notation thereof is made on the Bond.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.01. Events of Default. The following events shall be Events of Default:
(a) Principal Payment Default. Default in the due and punctual payment of the
principal or redemption price of the Bond when and as the same shall become due and
payable, whether at maturity as therein expressed, by proceedings for redemption, by
declaration or otherwise, or default in the payment of mandatory sinking fund redemption
from any Sinking Account of any Bond in the amounts and at the times provided therefor;
45635.01438\33882221.5
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(b) Interest Payment Default. Default in the due and punctual payment of any
installment of interest on the Bond when and as such interest installment shall become due
and payable; and
(c) Other Covenant Default. If the City shall fail to observe or perform any
covenant, condition, agreement or provision in this Fiscal Agent Agreement on its part to
be observed or performed, other than as referred to in subsection (A) or (B) of this Section,
for a period of thirty (30) days after written notice, specifying such failure and requesting
that it be remedied, has been given to the City; except that, if such failure can be remedied
but not within such thirty (30) day period and if the City has taken all action reasonably
possible to remedy such failure within such thirty (30) day period, such failure shall not,
with the consent of the Original Purchaser so long as the Original Purchaser is the Owner
of any Outstanding Bond, become an Event of Default for so long as the City shall
diligently proceed to remedy same.
Section 9.02. Remedies of Owner. Upon the occurrence and continuance of an Event of
Default, the Default Rate shall apply, and the Owner shall have the right to exercise all remedies
contemplated under this Agreement as follows:
(a) by mandamus or other action, suit, or proceeding at law or in equity to
enforce the Owner’s rights against the City, and its members, officers and employees, and
to compel the City, and its members, officers and employees perform and carry out their
duties under the Law and the agreements and covenants with the Owner contained herein;
(b) by suit in equity to enjoin any acts or things that are unlawful or violate the
rights of the Owner; or
(c) by suit in equity upon the nonpayment of the Bond to require the City to
account as the trustee of an express trust.
Section 9.03. Application of Money Collected. If an Event of Default shall occur and be
continuing, the Fiscal Agent shall apply all funds then held or thereafter received by the Fiscal
Agent under any of the provisions of this Fiscal Agent Agreement (except as otherwise provided
in this Fiscal Agent Agreement) as follows and in the following order:
First: To the payment of reasonable fees and expenses of the Fiscal Agent
(including reasonable fees and disbursements of its counsel and other agents) incurred in
and about the performance of its duties under this Fiscal Agent Agreement;
Second: To the payment of all installments of interest then due and, if the amount
available shall not be sufficient to pay in full any installment due on the same date, then
pay the amount available for such portion of the interest installment then payable; and
Third: To the payment of the persons entitled thereto of the unpaid principal of the
Bond that shall have become due, whether at maturity or by call for redemption, in the
order of their due dates, with interest on the overdue principal at the rate borne by the Bond,
and, if the amount available shall not be sufficient to pay in full the Bond due on such date,
together with such interest, then to the payment thereof ratably, according to the amounts
45635.01438\33882221.5
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of principal due on such date to the persons entitled thereto, without any discrimination or
preference.
Section 9.04. Restoration of Positions. In case any proceedings taken by the Owner on
account of any Event of Default shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Owner, then in every such case the City and the Owner,
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
City and the Owner shall continue as though no such proceedings had been taken.
Section 9.05. Rights and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to the Owner is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other
right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 9.06. Delay or Omission Not Waiver. No delay or omission of any Owner to
exercise any right or remedy accruing upon an Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Fiscal Agent Agreement or by law to the Owner of the Bond may be
exercised from time to time, and as often as may be deemed expedient, by the Owner.
ARTICLE X
MISCELLANEOUS
Section 10.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement,
expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and
the Owner, any right, remedy or claim under or by reason of this Agreement. Any covenants,
stipulations, promises or agreements in this Agreement contained by and on behalf of the City
shall be for the sole and exclusive benefit of the Owner and the Fiscal Agent.
Section 10.02. Successor is Deemed Included in All References to Predecessor. Whenever
in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent 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 Agreement contained by or on behalf of the City or the Fiscal
Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether
so expressed or not.
Section 10.03. Discharge of Agreement.
If the City shall pay and discharge the entire indebtedness of all or a portion (a “Partial
Discharge”) of the Outstanding Bond in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of and interest
and any premium on such Bond, as and when the same become due and payable;
45635.01438\33882221.5
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(B) by depositing with the Fiscal Agent, in trust, at or before maturity, an
amount of money which, together with the amounts then on deposit in the Bond Fund, the
Special Tax Fund and the Reserve Fund, or in the event of a Partial Discharge, the
appropriate portion of such amounts, as determined by the City and confirmed by an
Independent Financial Consultant, is fully sufficient to pay the Bond, including all
principal and interest, if any; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash or non-
callable Defeasance Obligations in such amount as the City shall determine, as confirmed
by an Independent Financial Consultant, will, together with the interest to accrue thereon
and amounts then on deposit in the Bond Fund, the Special Tax Fund and the Reserve Fund,
or in the event of a Partial Discharge, the appropriate portion of such amounts, as
determined by the City and confirmed by an Independent Financial Consultant, be fully
sufficient to pay and discharge the indebtedness of the Bond (including all principal and
interest) at or before their respective maturity dates;
and if the Bond is to be redeemed prior to the maturity thereof, notice of such redemption shall
have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall
have been made for the giving of such notice; then, at the election of the City, and notwithstanding
that the Bond shall not have been surrendered for payment, the pledge of the Special Tax Revenues
and other funds provided for in this Agreement and all other obligations of the City and the District
under this Agreement with respect to the Bond shall cease and terminate, except the obligation of
the City to pay or cause to be paid to the Owner of such Bond not so surrendered and paid all sums
due thereon, the obligation of the City to pay all amounts owing to the Fiscal Agent pursuant to
Section 7.05 hereof, and the obligations of the City pursuant to the covenants contained in Section
5.10 hereof; and thereafter Special Tax Revenues shall not be payable to the Fiscal Agent with
respect to such Bond. Notice of such election shall be filed with the Fiscal Agent. The satisfaction
and discharge of this Agreement as to all of the Outstanding Bond shall be without prejudice to
the rights of the Fiscal Agent to charge and be reimbursed by the City for the expenses which it
shall thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on such Bond,
upon payment of all fees and expenses of the Fiscal Agent, which are not required for such purpose,
shall be paid over to the City.
Section 10.04. Execution of Documents and Proof of Ownership by the Owner. Any
request, consent, declaration or other instrument which this Agreement may require or permit to
be executed by Owner may be in one or more instruments of similar tenor, and shall be executed
by Owner in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such a request, consent, declaration or other instrument, or of a writing
appointing such an attorney, may be proved by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in the state in which he purports to
act, that the person signing such request, declaration or other instrument or writing acknowledged
to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before
such a notary public or other officer.
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Except as otherwise herein expressly provided, the ownership of the registered Bond and
the amount, maturity, number and date of holding the same shall be proved by the registration
books maintained by the Fiscal Agent pursuant to Section 2.08 hereof.
Any request, consent, declaration or other instrument or writing of the Owner of the Bond
shall bind all future Owners of such Bond in respect of anything done or suffered to be done by
the City or the Fiscal Agent in good faith and in accordance therewith.
Section 10.05. Waiver of Personal Liability. No member, officer, agent or employee of the
City or the District shall be individually or personally liable for the payment of the principal of, or
interest or any premium on, the Bond; but nothing herein contained shall relieve any such member,
officer, agent or employee from the performance of any official duty provided by law.
Section 10.06. Notices to and Demands on City and Fiscal Agent. Any notice, request,
complaint, demand for other communication under this Fiscal Agent Agreement shall be given by
first class mail, overnight mail, facsimile, or personal delivery to the party entitled thereto at its
address set forth below, or by telecopy or other form of telecommunication, including e-mail with
document attached in pdf format, at its number set forth below. Notice shall be effective either (a)
upon transmission by telecopy or other form of telecommunication, (b) forty-eight (48) hours after
deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any
person or the Fiscal Agent, upon actual receipt. The City, the Fiscal Agent or the Original
Purchaser 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 City: City of Azusa
213 East Foothill Boulevard
Azusa, CA 91702
Attn: Director of Administrative Services
If to the Fiscal Agent: Wilmington Trust, National Association
650 Town Center Drive, Suite 800
Costa Mesa, CA 92626
Attention: Corporate Trust Department
So long as the Original
Purchaser is the Owner of
any Outstanding Bond, to
the Original Purchaser:
First Foundation Public Finance
2233 Douglas Blvd., Suite 300
Roseville, CA 95661
Attention: Trevor Mael, Director
Section 10.07. Entire Agreement; Partial Invalidity. This Agreement and the exhibits
hereto set forth the entire agreement and understanding of the parties related to this transaction and
supersedes all prior agreements and understandings, oral or written. If any section, paragraph,
sentence, clause or phrase of this Agreement shall for any reason be held by a court of competent
jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the
remaining portions of this Agreement. The City hereby declares that it would have executed and
delivered this Agreement and each and every other section, paragraph, sentence, clause or phrase
hereof and authorized the issue of the Bond pursuant thereto irrespective of the fact that any one
45635.01438\33882221.5
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or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal,
invalid or unenforceable.
Section 10.08. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Fiscal Agent for the payment and discharge of the
principal of, and the interest and any premium on, the Bond which remains unclaimed for two (2)
years after the date when the payment of such principal, interest and premium have become
payable, if such moneys were held by the Fiscal Agent at such date, shall be paid by the Fiscal
Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon
be released and discharged with respect thereto and the Owner of such Bond shall look only to the
City for the payment of the principal of, and interest and any premium on, the Bond.
Section 10.09. Applicable Law. This Agreement shall be governed by and enforced in
accordance with the laws of the State of California applicable to contracts made and performed in
the State of California.
Section 10.10. Severability. If any covenant, agreement or provision, or any portion
thereof, contained in this Agreement, or the application thereof to any person or circumstance, is
held to be unconstitutional, invalid or unenforceable, the remainder of this Agreement and the
application of any such covenant, agreement or provision, or portion thereof, to other persons or
circumstances, shall be deemed severable and shall not be affected thereby, and this Agreement
and the Bond shall remain valid and the Owner shall retain all valid rights and benefits accorded
to them under the laws of the State.
Section 10.11. Conclusive Evidence of Regularity. The Bond issued pursuant to this
Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act
relative to their issuance and the levy of the Special Taxes.
Section 10.12. Payment on Business Day. In any case where the date of the payment of
interest on or of principal (and premium, if any) of the Bond or the date fixed for redemption is
other than a Business Day, the payment of interest or principal (and premium, if any) need not be
made on such date but may be made on the next succeeding day which is a Business Day with the
same force and effect as if made on the date required, and no interest shall accrue for the period
from and after such date.
Section 10.13. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
Section 10.14. Third Party Beneficiaries. This Agreement shall not be deemed to confer
any rights upon any individual or entity, which is not a party hereto except the Original Purchaser,
and the parties hereto expressly disclaim any such third-party benefit.
Section 10.15. No Advisory or Fiduciary Relationship. In connection with all aspects of
the transactions contemplated hereby, the City acknowledges and agrees, and acknowledges its
understanding, that: (a) the City is capable of evaluating, and understands and accepts, the terms,
risks and conditions of the transactions contemplated hereby; (b) (i) the Original Purchaser is and
has been acting solely as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary, for the City,
45635.01438\33882221.5
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or any other Person and (ii) the Original Purchaser does not have any obligation to the City with
respect to the transactions contemplated hereby except those obligations expressly set forth herein;
and (c) the Original Purchaser may be engaged in a broad range of transactions that involve
interests that differ from those of the City, and the Original Purchaser does not have any obligation
to disclose any of such interests to the City. To the fullest extent permitted by law, the City, hereby
waives and releases any claims that it may have against the Original Purchaser with respect to any
breach or alleged breach of agency or fiduciary duty in connection with any aspect of any
transactions contemplated hereby.
Section 10.16. WAIVER OF JURY TRIAL; JUDICIAL REFERENCE. THE CITY AND
THE ORIGINAL PURCHASER (BY ITS ACCEPTANCE HEREOF) HEREBY, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT,
TORT, OR OTHERWISE) BETWEEN THE CITY AND THE ORIGINAL PURCHASER
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE BOND. THIS
PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE
FINANCING EVIDENCED BY THIS AGREEMENT. IF AND TO THE EXTENT THAT THE
FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL IS UNENFORCEABLE FOR
ANY REASON IN SUCH FORUM, THE CITY AND THE ORIGINAL PURCHASER HEREBY
CONSENT TO THE ADJUDICATION OF ANY AND ALL CLAIMS PURSUANT TO
JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 638, AND THE JUDICIAL REFEREE SHALL BE EMPOWERED TO HEAR AND
DETERMINE ANY AND ALL ISSUES IN SUCH REFERENCE WHETHER FACT OR LAW.
THE CITY AND THE ORIGINAL PURCHASER REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND CONSENT AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS AND CONSENTS TO JUDICIAL
REFERENCE FOLLOWING THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL
OF ITS CHOICE ON SUCH MATTERS. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT
OR TO JUDICIAL REFERENCE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 638 AS PROVIDED HEREIN.
45635.01438\33882221.5
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IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name
on behalf of the District, and the Fiscal Agent, in acknowledgment of its acceptance of the duties
of the Fiscal Agent created hereunder, has caused this Agreement to be executed in its name, all
as of June 1, 2021.
CITY OF AZUSA, on behalf of and for COMMUNITY
FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN
COVE) OF THE CITY OF AZUSA, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA
By: __________________________________
Director of Administrative Services
WILMINGTON TRUST, NATIONAL ASSOCIATION, as
Fiscal Agent
By: __________________________________
Authorized Officer
-Signature Page-
Fiscal Agent Agreement
(CFD No. 2002-1)
45635.01438\33882221.5
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EXHIBIT A
FORM OF BOND
No. R-1
. $6,200,000
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(MOUNTAIN COVE)
OF THE CITY OF AZUSA
2021 SPECIAL TAX REFUNDING BOND
INTEREST RATE MATURITY DATE DATED DATE
2.16%∗ September 1, 2032 June ___, 2021
REGISTERED OWNER: FIRST FOUNDATION PUBLIC FINANCE
PRINCIPAL AMOUNT: SIX MILLION TWO HUNDRED THOUSAND DOLLARS
City of Azusa (the “City”), for and on behalf of Community Facilities District No. 2002-1
(Mountain Cove) of the City of Azusa, County of Los Angeles, State of California (the “District”),
for value received, hereby promises to pay, from the Special Taxes (as hereinafter defined) to be
collected in the District or amounts in the funds and accounts held under the Agreement (as
hereinafter defined) to the registered owner named above, or registered assigns, on the maturity
date specified above, the principal amount specified above, and to pay interest on such principal
amount from the Dated Date specified above (the “Dated Date”), or from the most recent interest
payment date to which interest has been paid or duly provided for, semiannually on March 1 and
September 1, commencing March 1, 2022 (“Interest Payment Dates”), at the interest rate specified
above, until the principal amount hereof is paid or made available for payment. The principal of
this Bond is payable by check to the registered owner hereof in lawful money of the United States
of America upon presentation and surrender of this Bond at the Principal Office of Wilmington
Trust, National Association (the “Fiscal Agent”). Interest on the Bond is payable by check of the
Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, until the
principal amount of the Bond has been paid or made available for payment, to the registered Owner
thereof at such registered Owner’s address as it appears on the registration books maintained by
the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date.
The principal of the Bond is payable in lawful money of the United State of America by check of
the Fiscal Agent upon surrender of such Bond at the Principal Office of the Fiscal Agent (other
than pursuant to mandatory sinking fund redemption, as provided in Section 2.03(C) of the
Agreement for which presentment will not be required); provided, however, that at the written
request of the Owner of at least $1,000,000 in aggregate principal amount of the Outstanding Bond
∗ Provided that no Event of Default or Determination of Taxability has occurred as defined in the Agreement.
45635.01438\33882221.5
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(or the total Outstanding Bond if less) filed with the Fiscal Agent prior to any Record Date, interest
and mandatory sinking fund redemption payments on such Bond shall be paid to such Owner on
each succeeding Interest Payment Date or mandatory sinking fund redemption date, as the case
may be, by wire transfer of immediately available funds to an account in the United States of
America designated in such written request.
This Bond has been duly authorized and approved by the qualified electors of the District
pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5
(commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government
Code (the “Mello-Roos Act”), for the purpose of refunding prior indebtedness of the District, and
is designated “Community Facilities District No. 2002-1 (Mountain Cove) of the City of Azusa
2021 Special Tax Refunding Bond (the “Bond”), in the aggregate principal amount of $6,200,000.
The issuance of the Bond and the terms and conditions thereof are provided for by a resolution
adopted by the City Council of the City on [May 17, 2021] (the “Resolution”), and the Fiscal Agent
Agreement, dated as of June 1, 2021, between the City and the Fiscal Agent (the “Agreement”)
and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof
the owner of this Bond assents to the terms and conditions of the Resolution and the Agreement.
The Resolution is adopted under, the Agreement is executed under, this Bond is issued under, and
all are to be construed in accordance with, the laws of the State of California.
Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and
interest on the Bond is payable from the annual levy of Special Taxes authorized under the Mello-
Roos Act to be collected within the District (the “Special Taxes”) and are secured by a pledge of
and lien upon the revenues derived therefrom and certain funds held by the Fiscal Agent pursuant
to the Agreement.
Interest on this Bond shall be payable from the Interest Payment Date next preceding the
date of its authentication, unless (i) it is authenticated on an Interest Payment Date, in which event
it shall bear interest from such Interest Payment Date, or (ii) it is authenticated prior to an Interest
Payment Date and after the close of business on the Record Date preceding such Interest Payment
Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is
authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it
shall bear interest from the Dated Date; provided, however, that if at the time of authentication of
this Bond, interest is in default hereon, this Bond shall bear interest from the Interest Payment Date
to which interest has previously been paid or made available for payment hereon, or from the Dated
Date if no interest has previously been paid or made available for payment hereon.
Any tax for the payment hereof shall be limited to the Special Taxes, except to the extent
that provision for payment has been made by the City as may be permitted by law. The Bond does
not constitute an obligation of the City for which the City is obligated to levy or pledge, or has
levied or pledged, general or special taxation other than as described hereinabove.
The City has covenanted for the benefit of the Owner of the Bond as follows: (i) it will
order, and cause to be commenced judicial foreclosure proceedings against properties in the
District with delinquent Special Taxes in excess of $5,000 by October 1 following the close of the
fiscal year in which such Special Taxes were due, and (ii) it will commence judicial foreclosure
proceedings against all properties in the District with delinquent Special Taxes by the October 1
45635.01438\33882221.5
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following the close of each fiscal year in which it receives Special Taxes in an amount which is
less than ninety-five percent (95%) of the total Special Taxes levied, and diligently pursue to
completion such foreclosure proceedings.
The Bond is subject to optional redemption at the election of the City on any date, in whole
or in part, at the following redemption price (computed upon the principal amount thereof to be
redeemed), together with accrued interest to the date of redemption as directed in an Officer’s
Certificate to the Fiscal Agent and the Owner, as selected among sinking fund payments by the
City:
Redemption Dates
Redemption
Price
September 2, 2021 through September 1, 2023 103%
September 2, 2023 through September 1, 2025 102
September 2, 2025 through September 1, 2027 101
September 2, 2027 and thereafter 100
The Bond is subject to mandatory redemption from special tax prepayments as stated in
the Agreement.
The Outstanding Bond is subject to mandatory sinking fund redemption, in part, on
September 1, 2022, and on each September 1 thereafter to maturity, at a redemption price equal to
the principal amount thereof to be redeemed, together with accrued interest to the date of
redemption, without premium, and from sinking fund payments as follows:
Maturing on September 1, 2032
Redemption Date
(September 1) Sinking Fund Payment
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032 (final maturity)
This Bond shall be registered in the name of the owner hereof, as to both principal and
interest.
Each registration and transfer of registration of this Bond shall be entered by the Fiscal
Agent in books kept by it for that purpose and authenticated by the manual signature of an
authorized signatory of the Fiscal Agent upon the certificate of authentication endorsed hereon.
45635.01438\33882221.5
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No transfer or exchange hereof shall be valid for any purpose unless made by the registered
owner or his duly authorized attorney, by execution of the form of assignment endorsed hereon,
and shall be accompanied with a Letter of Representation of the Purchaser, and authenticated as
herein provided, and the principal hereof and interest hereon shall be payable only to the registered
owner or to such owner’s order.
The Fiscal Agent shall require the registered owner requesting transfer or exchange hereof
to pay any tax or other governmental charge required to be paid with respect to such transfer or
exchange.
The Agreement and the rights and obligations of the City and the District thereunder may
be modified or amended as set forth therein.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication hereon endorsed shall have been dated and manually signed on behalf of the Fiscal
Agent.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond have existed, happened and been performed in due time, form and manner as required by
law.
IN WITNESS WHEREOF, the City Council of the City of Azusa, for Community Facilities
District No. 2002-1 (Mountain Cove) of the City of Azusa has caused this Bond to be dated as of
the Closing Date, and to be signed by the manual signature of the Mayor of the City and
countersigned by the manual signature of the City Clerk of the City.
COMMUNITY FACILITIES DISTRICT NO.
2002-1 (MOUNTAIN COVE) OF THE CITY
OF AZUSA, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA
ATTEST:
____________________________ _______________________________________
City Clerk Mayor of the City of Azusa for Community
Facilities District No. 2002-1 (Mountain Cove)
thereof
45635.01438\33882221.5
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CERTIFICATE OF AUTHENTICATION
This Bond is described in the within-defined Agreement.
Dated: ___________, 2021
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Fiscal Agent
By: ____________________________
Authorized Signatory
45635.01438\33882221.5
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FORM OF 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 and appoint ______________________
_________________________________________ attorney, to transfer the same on the books of
the Fiscal Agent, with full power of substitution in the premises.
Dated: _______________________
Signature Guaranteed:
Note: Signature guarantee shall be made by a
guarantor institution participating in
the Securities Transfer Agents
Medallion Program or in such other
guarantee program acceptable to the
Fiscal Agent.
Note: The signature(s) on this Assignment
must correspond with the name(s) as
written on the face of the within Bond
in every particular, without alteration
or enlargement or any change
whatsoever.
45635.01438\33882221.5
B-1
EXHIBIT B
FORM OF LETTER OF REPRESENTATIONS
City of Azusa
213 East Foothill Boulevard
Azusa, CA 91702
Re: $6,200,000 Community Facilities District No. 2002-1 (Mountain Cove) of the City
of Azusa 2021 Special Tax Refunding Bond
The undersigned, a duly authorized representative of First Foundation Bank, a
_________________________, and its successors, assigns and transferees (the “Purchaser”),
hereby certifies to the City of Azusa (the “City”) as follows:
(i) The Purchaser has purchased on the date hereof the above-referenced bond
(the “Bond”), issued in the aggregate principal amount of $6,200,000 pursuant to the Fiscal
Agent Agreement, dated as of June 1, 2021 (the “Fiscal Agent Agreement”), by and
between the City and Wilmington Trust, National Association, as fiscal agent, and
acknowledged and agreed to by the Purchaser, as the original purchaser of the Bond.
(ii) The Bond is being acquired by the Purchaser for its own account and not
with a present intent for any resale or distribution thereof, in whole or in part, to others;
provided, however, that the Purchaser shall not be precluded from transferring or assigning
its interest in the Bond in accordance with the terms and conditions set forth in the Fiscal
Agent Agreement. The Purchaser is not participating, directly or indirectly, in a
distribution of the Bond and will not take, or cause to be taken, any action that would cause
the Purchaser or the Placement Agent to be deemed an “underwriter” of such Bond as
defined in Section 2(11) of the Securities Act of 1933, as amended (the “Securities Act”).
The Purchaser understands that the City and the Placement Agent have no obligation to
register the Bond for resale under the Securities Act. The Purchaser further understands
that the Bond is being sold in a transaction that is exempt from the registration requirements
of the Securities Act. The Purchaser acknowledges that the City will not be entering into
a continuing disclosure agreement pursuant to Section 15c2-12 of the Securities Exchange
Act of 1934, as amended.
(iii) The Purchaser has received and carefully read all information and other
items of disclosure relating to the City, Community Facilities District No. 2002-1
(Buchanan Street) of the City of Azusa (the “District”) and the Bond that the Purchaser has
deemed necessary (the “Disclosure Items”) and, in connection therewith, has had access to
all other materials, books, records, documents, and information relating to the City, the
District and the Bond, and has been able to verify the accuracy of, and supplement, the
information contained therein.
(iv) The Purchaser has had an opportunity to ask questions of, and receive
satisfactory answers from, duly designated representatives of the City and the District
concerning the terms and conditions pursuant to which the offer to purchase the Bond is
45635.01438\33882221.5
B-2
being made, and any request for such information has been fully complied with to the extent
the City possesses such information or can acquire it without unreasonable effort or
expense.
(v) The Purchaser has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks relating to such Bond and has
evaluated: (i) the information (including the information set forth in the Disclosure Items)
furnished to it by the City and/or the District and the Placement Agent; (ii) its or such
representative’s personal knowledge of the business and affairs of the City and/or the
District; (iii) the records, files, and plans of the City and/or the District, to all of which it
or such representative has had full access; (iv) such additional information as it or such
representative may have requested and have received from the City and/or the District; and
(v) the independent inquiries and investigations undertaken by it or such representative.
(vi) The Purchaser certifies that it is (a) a “qualified institutional buyer” as that
term is defined in Rule 144A in the Securities Act, or (b) an “accredited investor” within
the meaning of Rule 501(a)(1), (2), (3) or (7) the Securities Act.
(vii) The Purchaser has made an independent investigation and evaluation of the
financial condition and prospects of, and the risks associated with, the Bond, the City and
the District, or has caused such investigation and evaluation to be made by persons it deems
competent to do so, and it has not relied upon the City or the Placement Agent in making
its decision to purchase the Bond other than the Disclosure Items.
(viii) No person employed or authorized in writing by the City, the District or the
Placement Agent has given any information or made any representation not contained in
any Disclosure Items referred to above. The Purchaser understands and agrees that any
such information or representation not contained in the Disclosure Items must not, and will
not, be relied upon and that nothing contained therein should be deemed as legal or tax
advice to the Purchaser.
(ix) None of the City, the District or the Placement Agent has made any direct
or indirect representation or warranty of any kind to the Purchaser with respect to the
economic return which may accrue to the Purchaser. The Purchaser has consulted with its
own counsel and other advisors with respect to its purchase of the Bond.
(x) The signatory of this letter is a duly authorized officer of the Purchaser with
the authority to sign this letter on behalf of the Purchaser, and this letter has been duly
authorized, executed, and delivered by the Purchaser.
Dated: June __, 2021
By: ____________________________
Authorized Signatory
45635.01438\33882221.5
C-1
EXHIBIT C
ANNUAL REPORTING REQUIREMENTS
Content of Annual Report
(a) Financial and Operating Data. The Annual Report shall contain or incorporate by
reference the following information:
(i) a table setting forth the estimated assessed value-to-lien ratios for
Developed Property (as defined in the Rates and Method) as a group and for each owner of
Undeveloped Property based upon the most recent Special Tax levy preceding the date of the
Annual Report, the most recent assessed values of the property and the principal amount of the
Bonds and any other land secured debt allocable to parcels within the District; and
(ii) a table setting forth for the five most recent fiscal years in which Special
Taxes were levied, the amount of Special Taxes levied in each fiscal year and the percentage
delinquent as of June 30 of such fiscal year and as of the date of the Annual Report, and a
description of the status of any foreclosure actions being pursued by the Issuer with respect to
delinquent Special Taxes.
(b) Any or all of the items listed in (a) above may be included by specific reference to
other documents, including official statements of debt issues of the City or related public entities,
which have been submitted to the Securities and Exchange Commission. If the document included
by reference is a final official statement, it must be available from the Municipal Securities
Rulemaking Board. The City shall clearly identify each such other document so included by
reference.
45635.01438\33882785.3
IRREVOCABLE REFUNDING INSTRUCTIONS
These IRREVOCABLE REFUNDING INSTRUCTIONS (these “Instructions”), dated as
of June 1, 2021, are given by the CITY OF AZUSA, a public entity existing under the laws of the
State of California (the “City”), as the legislative body of Community Facilities City No. 2002-1
(Mountain Cove) of City of Azusa (the “City”), to Wells Fargo Bank, National Association, a
national banking association organized and existing under the laws of the United States of
America, acting as Fiscal Agent (the “Fiscal Agent”) for the hereinafter defined Refunded Bonds;
WlTNESSETH:
WHEREAS, the City Council of the City (the “City Council”) has established the District
pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended,
Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California
Government Code (the “Act”); and
WHEREAS, the District previously issued its Special Tax Bonds, 2002 Series A (the “2002
Bonds”) in the aggregate principal amount of $8,980,000 for the purpose of financing the
construction and acquisition of certain public facilities and school facilities as permitted pursuant
to Resolution No. 02-C133, as amended by Resolution No. 02-C142 and the Act; and
WHEREAS, the District subsequently issued its $7,880,000 Special Tax Refunding Bonds,
Series 2011 (the “Refunded Bonds”) pursuant to the terms and provisions of the Mello Roos
Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of
the Government Code of the State of California (the “Act”) and a Fiscal Agent Agreement by and
between City and the Fiscal Agent, dated July 1, 2011 (the “Fiscal Agent Agreement”) to refund
the 2002 Bonds; and
WHEREAS, the Refunded Bonds are outstanding in the aggregate principal amount of
$____________, and the City Council has determined that it is in the best interest of the owners
of property in the City that bonds of the City (hereinafter referred to as the “Bonds”) be issued to
defease and refund the outstanding Refunded Bonds; and
WHEREAS, in order to provide funds for such purpose, the City, on behalf of the City, is
issuing Community Facilities District No. 2002-1 (Mountain Cove) of City of Azusa Special Tax
Refunding Bond, 2021 Series (the “2021 Bond”) and applying a portion of the proceeds thereof,
together with certain other moneys, to defease and redeem the outstanding Refunded Bonds; and
WHEREAS, the 2021 Bond is being issued pursuant to a Resolution adopted by the City
Council on May 17, 2021 (the “Resolution”); and
WHEREAS, the City wishes to give these Instructions to the Fiscal Agent for the purpose
of providing the terms and conditions relating to the deposit and application of moneys to provide
for the payment and redemption of a portion of the outstanding Refunded Bonds.
Attachment 3
45635.01438\33882785.3
2
NOW, THEREFORE, the City hereby irrevocably instructs the Fiscal Agent as follows:
Section 1. Deposit into the 2011 Bond Fund; Investment of Amounts. Concurrently
with delivery of the 2021 Bond, the City, on behalf of the City, shall cause to be deposited in the
Bond Fund established pursuant to the Fiscal Agent Agreement the amount of $____________ in
immediately available funds which represents $___________ on hand in the funds and accounts
relating to the Refunded Bonds and $___________ of the 2021 Bond proceeds. Moneys deposited
into the Refunding Fund pursuant to the preceding paragraph in the amount of $_________ shall
be held in cash.
The City signifies that by making the deposit described herein, it is discharging all of the
outstanding Refunded Bonds pursuant to Sections 9.03 of the Fiscal Agent Agreement.
Section 2. Proceedings for Redemption of Refunded Bonds. The City hereby
irrevocably elects, and directs the Fiscal Agent, to redeem, on September 1, 2021, from cash on
hand on deposit in the Bond Fund, the outstanding Refunded Bonds pursuant to the provisions of
the Fiscal Agent Agreement. The Fiscal Agent acknowledges it has given notice of such
redemption in accordance with the Fiscal Agent Agreement in order to allow for the redemption
of the Refunded Bonds on September 1, 2021.
Section 3. Application of Funds to Redeem Refunded Bonds. The Fiscal Agent shall
apply the total amount of cash and Federal Securities on deposit in the Bond Fund to (a) make the
debt service payment for the Refunded Bonds on September 1, 2021 and (b) redeem the
outstanding Refunded Bonds, as identified in Schedule 1 attached hereto, on September 1, 2021 at
a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, all in
accordance with the Fiscal Agent Agreement.
Section 4. Transfer of Remaining Funds. Any amounts on deposit in the Bond Fund
shall be used for the purpose of paying interest on and the principal of any outstanding Refunded
Bonds pursuant to the Fiscal Agent Agreement. Any amounts on deposit in the Bond Fund or any
other funds and accounts related to the Refunded Bonds following redemption or defeasance of
the Outstanding Refunded Bonds shall be transferred to the Interest Account established under the
Fiscal Agent Agreement between the City and Wilmington Trust, National Association dated as
of June 1, 2021 to be used solely for the purpose of paying interest on the 2021 Bond.
Section 5. Amendment. These Instructions shall be irrevocable by the City. These
Instructions may be amended or supplemented by the City, but only if the City shall file with the
Fiscal Agent (a) an opinion of nationally recognized bond counsel engaged by the City stating that
such amendment or supplement will not, of itself, adversely affect the exclusion from gross income
of interest on the Refunded Bonds or the 2021 Bond under federal income tax law, and (b) a
certification of an independent accountant or independent financial adviser engaged by the City
stating that such amendment or supplement will not affect the sufficiency of funds invested and
held hereunder to make the payments required by Section 3.
Section 6. Application of Certain Terms of the Fiscal Agent Agreement. All of the
terms of the Fiscal Agent Agreement relating to the payment of principal of and interest and
repayment premium, if any, on the Refunded Bonds and the redemption thereof, and the
45635.01438\33882785.3
3
protections, immunities and limitations from liability afforded the Fiscal Agent, are incorporated
in these Instructions as if set forth in full herein.
Section 7. Counterparts. These Instructions may be signed in several counterparts, each
of which will constitute an original, but all of which will constitute one and the same instrument.
[Signature page follows]
45635.01438\33882785.3
S-1
Section 8. Governing Law. These Instructions shall be construed in accordance with and
governed by the laws of the State of California.
CITY OF AZUSA, ON BEHALF OF
COMMUNITY FACILITIES CITY NO.
2002-1 (MOUNTAIN COVE) OF THE CITY
OF AZUSA
By:
Mayor
ACCEPTED:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Fiscal Agent
By:
Authorized Officer
-Signature Page-
Irrevocable Refunding Instructions
45635.01438\33882785.3
Schedule-1
SCHEDULE 1
BONDS TO BE REDEEMED
Maturity Date
(September 1)
Principal
Amount
CUSIP
2022 $ 355,000 055032DK9
2023 380,000 055032DL7
2024 405,000 055032DM5
2025 435,000 055032DN3
2026 465,000 055032DP8
2032 3,570,000 055032DQ6
Trevor Mael | SVP, Public Finance | Tel: 916.724.2423 | Email: tmael@ff -inc.com
April 7, 2021
RE : Azusa Community Facilities District No. 2002-1
2021 Refunding Bonds
Based upon your request and preliminary review of the information provided to -date, First Foundation Public Finance (“FFPF”)
would like express its interest in underwriting and obtaining credit approval for the following Credit Facility
to the Azusa Community Facilities District No. 2002-1 (Mountain Cove), CA (“Borrower”) based on the
terms outlined below. This Letter is provided by First Foundation Public Finance for discussion purposes only. It is not
intended to be binding, does not create any obligation on the part of First Foundation Public Finance to Sponsor or any third party, and is not a
commitment to lend or agreement of any kind. No obligation whatsoever on the part of First Foundation Public Finance shall arise until execution and
delivery of a formal commitment or loan documentation by a duly authorized officer of First Foundation Public Finance, which obligation shall be subject to
all of the conditions contained therein.
The proposed loan conditions are:
S TRUCTURE: Term
PURPOSE: Refund existing 2011 bonds
MAX. LOAN AMT: $6,200,000
INTEREST RATE: Tax -exempt : 2.16% (3.00% taxable equivalent)
RATE LOCK: The Rate will be locked for a period of 60-days prior to closing. If the Credit Facility fails to close within this period,
FFPF reserves the right to adjust the rate.
TERM: 11-years
REPAYMENT: Semi -annual interest, annual principal payments
AVERAGE LIFE: 5.97-years
PRE-PAYMENT: Repayable at 103% of par in years 1-2, decreasing to 102% in years 3-4, and 101% in year 5. Redeemable at par
beginning in year 6 and thereafter. Individual parcel repayment allowable on any payment date at par.
COLLATERAL: Pledge of voter-approved special tax revenues
DSR FUND: 25% MADS
ADDITIONAL TERMS:Documents to be prepared by the Borrower’s Bond Counsel for review by FFPF’s counsel Nixon Peabody, LLP.
Legal fees and expenses of Nixon Peabody, LLP should not exceed $10,000. All other filing fees and related fees
shall be paid by the Borrower in connection with the issuance (including applicable CDIAC fees).
Periodic financial and collateral reporting by the Borrower, as well as representations and warranties of the
Borrower regarding its status and ability to repay, taxability gross-up and covenants and conditions that are
appropriate for a Credit Facility of the scope and nature proposed above will be determined as part of FFPF’s
underwriting and credit approval process.
PDF’s of all executed and other documents listed on the Closing Index shall be provided to FFPF no later than
24 hours before the time of the requested wire; provided, that if any documents can only be signed after receipt of
the wire, those documents shall be provided immediately after receipt of the wire.
In an event of default, a default rate equal to the Interest Rate + 3.00% will be required.
Attachment 4
Trevor Mael | SVP, Public Finance | Tel: 916.724.2423 | Email: tmael@ff -inc.com
I f you have any questions, please call me at 916-724-2423. If the proposed terms aren’t accepted by April 15, 2021 this letter will expire.
Sincerely,
B y: _________________________________
Trevor Mael
Director of Public Finance
First Foundation Bank
Reviewed & accepted, subject to City Counsel approval,
_________________________________________
By: Date
N otice: The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national
origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any
public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The federal agency that administers
compliance with this law concerning this creditor is the Federal Deposit Insurance Corporation, Consumer Response Center, 1100 Walnut Street, Box #11, Kansas
City, MO 64106.