HomeMy WebLinkAboutItem 02 - COUNCIL READING FILE_b_Indenture Series 2021 4131-8415-2872 3
4131-8415-2872.3
INDENTURE
by and between
CITY OF SAN LUIS OBISPO
COMMUNITY FACILITIES DISTRICT NO. 2019-1
(SAN LUIS RANCH)
and
U.S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE
Dated as of __________1, 2021
Relating to
City of San Luis Obispo
Community Facilities District No. 2019-1
(San Luis Ranch)
Special Tax Bonds
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; EQUAL SECURITY ....................................................................2
Section 1.01. Definitions ................................................................................................2
Section 1.02. Rules of Construction ................................................................................9
Section 1.03. Equal Security ......................................................................................... 10
ARTICLE II THE BONDS ...................................................................................................... 10
Section 2.01. Authorization of Bonds; Special Obligations ........................................... 10
Section 2.02. Terms of Series 2021 Bonds .................................................................... 10
Section 2.03. Execution of Bonds ................................................................................. 11
Section 2.04. Authentication of Bonds .......................................................................... 12
Section 2.05. Registration Books .................................................................................. 12
Section 2.06. Transfer and Exchange of Bonds ............................................................. 12
Section 2.07. Book-Entry System ................................................................................. 12
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen............................................. 15
Section 2.09. Temporary Bonds .................................................................................... 15
ARTICLE III ISSUANCE OF SERIES 2021 BONDS; APPLICATION OF PROCEEDS;
ADDITIONAL BONDS ................................................................................. 16
Section 3.01. Issuance of Series 2021 Bonds................................................................. 16
Section 3.02. Application of Proceeds ........................................................................... 16
Section 3.03. Costs of Issuance Fund ............................................................................ 16
Section 3.04. Improvement Fund .................................................................................. 17
Section 3.05. Conditions for the Issuance of Additional Bonds ..................................... 18
Section 3.06. Procedure for the Issuance of Additional Bonds....................................... 19
Section 3.07. Additional Obligations Payable from Special Tax .................................... 20
ARTICLE IV REDEMPTION OF BONDS .............................................................................. 20
Section 4.01. Redemption of Series 2021 Bonds ........................................................... 20
Section 4.02. Notice of Redemption .............................................................................. 22
Section 4.03. Selection of Bonds for Redemption ......................................................... 23
Section 4.04. Partial Redemption of Bonds ................................................................... 23
Section 4.05. Effect of Notice of Redemption ............................................................... 23
ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS ..................... 24
Section 5.01. Pledge ..................................................................................................... 24
Section 5.02. Special Tax Fund ..................................................................................... 24
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Section 5.03. Bond Fund............................................................................................... 25
Section 5.04. Reserve Fund........................................................................................... 26
Section 5.05. Redemption Fund .................................................................................... 26
Section 5.06. Rebate Fund ............................................................................................ 27
Section 5.07. Administrative Expense Fund .................................................................. 27
Section 5.08. Investment of Moneys ............................................................................. 28
ARTICLE VI COVENANTS ................................................................................................... 29
Section 6.01. Collection of Special Tax Revenues ........................................................ 29
Section 6.02. Foreclosure .............................................................................................. 30
Section 6.03. Compliance with Act ............................................................................... 30
Section 6.04. Punctual Payment .................................................................................... 30
Section 6.05. Extension of Payment of Bonds ............................................................... 30
Section 6.06. Against Encumbrances; Defense of Pledge .............................................. 30
Section 6.07. Tax Covenants ......................................................................................... 31
Section 6.08. Non-Cash Payments of Special Taxes ...................................................... 31
Section 6.09. Reduction in Special Taxes ...................................................................... 31
Section 6.10. Continuing Disclosure ............................................................................. 31
Section 6.11. Accounting Records ................................................................................ 32
Section 6.12. State Reporting ........................................................................................ 32
Section 6.13. Annual Reports to the California Debt and Investment Advisory
Commission ...................................................................................................... 32
Section 6.14. Further Assurances .................................................................................. 32
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES .................................................... 32
Section 7.01. Events of Default ..................................................................................... 32
Section 7.02. Foreclosure .............................................................................................. 33
Section 7.03. Other Remedies ....................................................................................... 33
Section 7.04. Remedies Not Exclusive .......................................................................... 33
Section 7.05. Application of Net Special Tax Revenues After Default .......................... 33
Section 7.06. Power of Trustee to Enforce .................................................................... 34
Section 7.07. Owners’ Direction of Proceedings ........................................................... 34
Section 7.08. Limitation on Owners’ Right to Sue ........................................................ 34
Section 7.09. Absolute Obligation ................................................................................ 35
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Section 7.10. Termination of Proceedings ..................................................................... 35
Section 7.11. No Waiver of Default .............................................................................. 35
ARTICLE VIII TRUSTEE ....................................................................................................... 35
Section 8.01. Duties and Liabilities of Trustee .............................................................. 35
Section 8.02. Qualifications; Removal and Resignation; Successors ............................. 36
Section 8.03. Liability of Trustee .................................................................................. 37
Section 8.04. Right to Rely on Documents and Opinions .............................................. 38
Section 8.05. Accounting Records and Financial Statements ......................................... 39
Section 8.06. Preservation and Inspection of Documents .............................................. 39
Section 8.07. Compensation and Indemnification.......................................................... 39
ARTICLE IX SUPPLEMENTAL INDENTURES ................................................................... 40
Section 9.01. Supplemental Indentures ......................................................................... 40
Section 9.02. Effect of Supplemental Indenture ............................................................ 41
Section 9.03. Endorsement of Bonds; Preparation of New Bonds .................................. 41
Section 9.04. Amendment of Particular Bonds .............................................................. 41
ARTICLE X DEFEASANCE................................................................................................... 41
Section 10.01. Discharge of Indenture .......................................................................... 41
Section 10.02. Bonds Deemed To Have Been Paid ....................................................... 42
Section 10.03. Unclaimed Moneys ................................................................................ 43
ARTICLE XI MISCELLANEOUS .......................................................................................... 43
Section 11.01. Notices .................................................................................................. 43
Section 11.02. Successor Is Deemed Included in All References to Predecessor ........... 44
Section 11.03. Limitation of Rights .............................................................................. 44
Section 11.04. Destruction of Bonds ............................................................................. 44
Section 11.05. Severability of Invalid Provisions .......................................................... 44
Section 11.06. Evidence of Rights of Owners ............................................................... 45
Section 11.07. Disqualified Bonds ................................................................................ 45
Section 11.08. Money Held for Particular Bonds .......................................................... 46
Section 11.09. Funds and Accounts .............................................................................. 46
Section 11.10. Business Days ....................................................................................... 46
Section 11.11. Waiver of Personal Liability .................................................................. 46
Section 11.12. Conflict with Act ................................................................................... 46
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Section 11.13. Conclusive Evidence of Regularity ........................................................ 46
Section 11.14. Governing Laws .................................................................................... 46
Section 11.15. Execution in Several Counterparts ......................................................... 46
EXHIBIT A PERMITTED INVESTMENTS ....................................................................... A-1
EXHIBIT B FORM OF SERIES 2021 BOND....................................................................... B-1
4131-8415-2872.3
INDENTURE
THIS INDENTURE (this “Indenture”), dated as of __________1, 2021, is by and between
the CITY OF SAN LUIS OBISPO COMMUNITY FACILITIES DISTRICT NO. 2019-1 (SAN
LUIS RANCH), a community facilities district organized and existing under the laws of the State
of California (the “Community Facilities District”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under the laws of the
United States of America, as trustee (the “Trustee”).
W I T N E S S E T H:
WHEREAS, the City Council of the City of San Luis Obispo has formed the Community
Facilities District under the provisions of the Mello-Roos Community Facilities Act of 1982 (the
“Act”);
WHEREAS, the Community Facilities District is authorized under the Act to levy special
taxes (the “Special Taxes”) to pay for the costs of certain public facilities (the “Facilities”) and to
issue bonds payable from the Special Taxes;
WHEREAS, in order to provide funds to finance certain of the Facilities, the Community
Facilities District desires to provide for the issuance of City of San Luis Obispo Community
Facilities District No. 2019-1 (San Luis Ranch) Special Tax Bonds, Series 2021 (the “Series 2021
Bonds”), in the aggregate principal amount of not to exceed $__________;
WHEREAS, the Community Facilities District desires to provide for the issuance of
additional bonds (the “Additional Bonds”) payable from the Special Taxes on a parity with the
Series 2021 Bonds, provided that said issuance is in accordance with the Act and this Indenture
(the Series 2021 Bonds and any such Additional Bonds being collectively referred to as the
“Bonds”);
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and secured
and to secure the payment of the principal thereof, premium, if any, and interest thereon, the
Community Facilities District has authorized the execution and delivery of this Indenture; and
WHEREAS, the Community Facilities District has determined that all acts and
proceedings required by law necessary to make the Bonds, when executed by the Community
Facilities District, authenticated and delivered by the Trustee and duly issued, the valid, binding
and legal special obligations of the Community Facilities District, and to constitute this Indenture
a valid and binding agreement for the uses and purposes herein set forth in accordance with its
terms, have been done and taken, and the execution and delivery of this Indenture has been in al l
respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and
outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the terms
and conditions upon and subject to which the Bonds are to be issued, and in consideration of the
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premises and of the mutual covenants herein contained and of the purchase and acceptance of the
Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby
acknowledged, the Community Facilities District does hereby covenant and agree with the Trustee,
for the benefit of the respective owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section shall for all purposes of this Indenture and of any certificate, opinion or other document
herein mentioned, have the meanings herein specified.
“Act” means the Mello-Roos Community Facilities Act of 1982, constituting Sections
53311 et seq. of the California Government Code.
“Acquisition Account” means the account by that name within the Improvement Fund
established and held by the Trustee pursuant to Section 3.04.
“Acquisition Agreement” means the Funding, Construction and Acquisition Agreement,
dated as of __________, 20__, by and between the City and the Developer, as originally executed
and as it may be amended from time to time in accordance with the terms thereof.
“Acquisition Facilities” has the meaning ascribed to the term “Authorized Facilities” in
the Acquisition Agreement.
“Additional Bonds” means Bonds other than Series 2021 Bonds issued hereunder in
accordance with the provisions of Sections 3.05 and 3.06.
“Administrative Expense Fund” means the fund by that name established and held by
the Trustee pursuant to Section 5.07.
“Administrative Expenses” means costs directly related to the administration of the
Community Facilities District, including: the costs of computing the Special Taxes and preparing
the annual Special Tax collection schedules and the costs of collecting the Special Taxes, the costs
of remitting the Special Taxes to the Trustee, the fees and costs of the Trustee (including its legal
counsel) in the discharge of the duties required of it under this Indenture, the costs incurred by the
Community Facilities District in complying with the disclosure provisions of any continuing
disclosure undertaking and this Indenture, including those related to public inquiries regarding the
Special Taxes and disclosures to Owners, the costs of the Community Facilities District related to
an appeal of the Special Taxes, any amounts required to be rebated to the federal government in
order for the Community Facilities District to comply with Section 6.07, an allocable share of the
salaries of the City staff providing services on behalf of the Community Facilities District directly
related to the foregoing and a proportionate amount of City general administrative overhead related
thereto, and the costs of foreclosure of delinquent Special Taxes.
“Annual Debt Service” means, for each Bond Year, the sum of (a) the interest due on the
Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as
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scheduled (including by reason of mandatory sinking fund redemptions), and (b) the principal of
the Outstanding Bonds due in such Bond Year (including by reason of mandatory sinking fund
redemptions).
“Authorized Denominations” means (a) with respect to the Series 2021 Bonds, $5,000
and any integral multiple thereof, and (b) with respect to each Series of Additional Bonds, the
authorized denominations for such Series of Additional Bonds specified in the Supplemental
Indenture pursuant to which such Additional Bonds are issued.
“Authorized Representative” means, with respect to the Community Facilities District,
the City Manager of the City and the Finance Director of the City, and any other Person designated
as an Authorized Representative of the Community Facilities District in a Written Certificate of
the Community Facilities District filed with the Trustee.
“Average Annual Debt Service” means the average of the Annual Debt Service for all
Bond Years, including the Bond Year in which the calculation is made.
“Beneficial Owners” means those Persons for which the Participants have caused the
Depository to hold Book-Entry Bonds.
“Bond Counsel” means a firm of nationally recognized bond counsel selected by the
Community Facilities District.
“Bond Fund” means the fund by that name established and held by the Trustee pursuant
to Section 5.03.
“Bond Year” means the twelve-month period beginning on September 2 in each year and
extending to the next succeeding September 1, both dates inclusive, except that the first Bond Year
shall begin on the Closing Date and end on September 1, 2021.
“Bonds” means the City of San Luis Obispo Community Facilities District No. 2019-1
(San Luis Ranch) Special Tax Bonds issued hereunder, and includes the Series 2021 Bonds and
any Additional Bonds.
“Book-Entry Bonds” means the Bonds of a Series registered in the name of the
Depository, or the Nominee thereof, as the registered owner thereof pursuant to the terms and
provisions of Section 2.07.
“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday in the
State, (b) a day on which banking institutions in the State, or in any state in which the Office of
the Trustee is located, are required or authorized by law (including executive order) to close, or
(c) a day on which the New York Stock Exchange is closed.
“Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of
DTC with respect to a Series of Book-Entry Bonds.
“City” means the City of San Luis Obispo, a general law city organized and existing under
the laws of the State, and its successors.
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“City Council” means the City Council of the City.
“Closing Date” means the date upon which the Series 2021 Bonds are delivered to the
Original Purchaser, being __________, 2021.
“Code” means the Internal Revenue Code of 1986.
“Community Facilities District” means the City of San Luis Obispo Community
Facilities District No. 2019-1 (San Luis Ranch), a community facilities district organized and
existing under the laws of the State, and its successors.
“Construction Account” means the account by that name within the Improvement Fund
established and held by the Trustee pursuant to Section 3.04.
“Construction Facilities” means the any Facilities for which the Developer has received
a fair share or fee credit on the basis of and in the amount of Bond proceeds and any Facilities that
are not Acquisition Facilities.
“Corresponding Bond Year” means, with respect to any Fiscal Year, the Bond Year that
commences in such Fiscal Year.
“Costs of Issuance” means all items of expense directly or indirectly payable by or
reimbursable to the Community Facilities District relating to the authorization, issuance, sale and
delivery of the Bonds, including printing expenses, rating agency fees, filing and recording fees,
initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual
administrative fee, fees, charges and disbursements of attorneys, municipal advisors, accounting
firms, consultants and other professionals, fees and charges for preparation, execution and
safekeeping of the Bonds, any premium for bond insurance securing payment of the Bonds and
any other cost, charge or fee in connection with the original issuance of the Bonds.
“Costs of Issuance Fund” means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
“County” means the County of San Luis Obispo, a county and political subdivision of the
State organized and existing under the laws of the State, and any successor thereto.
“County Assessor” means the Assessor of the County.
“County Auditor” means the Auditor-Controller of the County.
“Defeasance Securities” means (a) non-callable direct obligations of the United States of
America (“United States Treasury Obligations”), and (b) evidences of ownership of proportionate
interests in future interest and principal payments on United States Treasury Obligations 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
United States Treasury Obligations are not available to any person claiming through the custodian
or to whom the custodian may be obligated.
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“Depository” means DTC, and its successors as securities depository for any Series of
Book-Entry Bonds, including any such successor appointed pursuant to Section 2.07.
[“Developer” means MI San Luis Ranch, LLC, a limited liability company organized and
existing under the laws of the State of Delaware, and its successors and assigns.]
“Developer Continuing Disclosure Agreement” means the Continuing Disclosure
Agreement, dated as of __________ 1, 2021, by and between the Developer and the Trustee, as
originally executed and as it may be amended from time to time in accordance with the terms
thereof.
“District Continuing Disclosure Agreement” means the Continuing Disclosure
Agreement, dated as of __________1, 2021, by and between the Community Facilities District
and U.S. Bank National Association, in its capacity as Trustee and in its capacity as dissemination
agent thereunder, as originally executed and as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
“DTC” means The Depository Trust Company, a limited-purpose trust company organized
under the laws of the State of New York.
“Event of Default” means any event specified in Section 7.01.
“Facilities” means the public facilities authorized to be financed by the Community
Facilities District, as described in the Resolution of Formation.
“Fiscal Year” means the period beginning on July 1 of each year and ending on the next
succeeding June 30, or any other twelve-month period hereafter selected and designated as the
official fiscal year period of the Community Facilities District.
“Improvement Fund” means the fund by that name established and held by the Trustee
pursuant to Section 3.04.
“Indenture” means this Indenture, dated as of __________1, 2021, by and between the
Community Facilities District and U.S. Bank National Association, as originally executed and as
it may be modified or amended from time to time by any Supplemental Indenture.
“Independent Consultant” means any consultant or firm of such consultants selected by
the Community Facilities District and who, or each of whom (a) is generally recognized to be
qualified in the financial consulting field, (b) is in fact independent and not under the control of
the Community Facilities District or the City, (c) does not have any substantial interest, direct or
indirect, with or in the Community Facilities District or the City, with or in any owner of real
property in the Community Facilities District or in any real property in the Community Facilities
District, and (d) is not connected with the Community Facilities District or the City as an officer
or employee thereof, but who may be regularly retained to make reports to the Community
Facilities District or the City.
“Interest Account” means the account by that name within the Bond Fund established and
held by the Trustee pursuant to Section 5.03.
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“Interest Payment Dates” means March 1 and September 1 of each year, commencing
March 1, 20__.
“Lien” means the aggregate principal amount of all overlapping debt and bonds (including
the Bonds) outstanding that are secured by a special tax levied pursuant to the Act or a special
assessment levied on Taxable Parcels within the Community Facilities District, including any
overlapping debt and bonds for community facilities districts or special assessment districts that
are reasonably allocated to property within the Community Facilities District.
“Letter of Representations” means the Letter of Representations from the Community
Facilities District to the Depository, in which the Community Facilities District makes certain
representations with respect to issues of its securities for deposit by the Depository.
“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond
Year, including the Bond Year in which the calculation is made.
“Moody’s” means Moody’s Investors Service, Inc., a corporation duly organized and
existing under the laws of the State of Delaware, and its successors and assigns, except that if such
entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating
agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized
securities rating agency selected by the Community Facilities District.
“Net Special Tax Revenues” means Special Tax Revenues, less amounts required to pay
Administrative Expenses.
“Nominee” means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.07.
“Office of the Trustee” means the principal corporate trust office of the Trustee in
[__________, California] or such other office as may be specified to the Community Facilities
District by the Trustee in writing; provided, however, that with respect to presentation of Bonds
for payment or for registration of transfer and exchange, such term shall mean the office or agency
of the Trustee at which, at any particular time, its corporate trust agency business shall be
conducted, which other office or agency shall be specified to the Community Facilities District by
the Trustee in writing.
“Ordinance Levying Special Taxes” means any ordinance or subsequent resolution
adopted by the City Council levying the Special Taxes.
“Original Purchaser” means the original purchaser of the Series 2021 Bonds from the
Community Facilities District.
“Outstanding” means, when used as of any particular time with reference to Bonds,
subject to the provisions of Section 11.07, all Bonds theretofore, or thereupon being, authenticated
and delivered by the Trustee under this Indenture except (a) Bonds theretofore canceled by the
Trustee or surrendered to the Trustee for cancellation, (b) Bonds with respect to which all liability
of the Community Facilities District shall have been discharged in accordance with Section 10.01,
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and (c) Bonds in lieu of which other Bonds shall have been authenticated and delivered by the
Trustee, or that have been paid without surrender thereof, pursuant to Section 2.08.
“Owner” means, with respect to a Bond, the Person in whose name such Bond is registered
on the Registration Books.
“Participant” means any entity which is recognized as a participant by DTC in the book-
entry system of maintaining records with respect to Book-Entry Bonds.
“Participating Underwriter” has the meaning ascribed to such term in the District
Continuing Disclosure Agreement.
“Payment Request” has the meaning ascribed to the term “Request for Payment” in the
Acquisition Agreement.
“Permitted Investments” is defined in Exhibit A hereto.
“Person” means an individual, corporation, limited liability company, firm, association,
partnership, trust or other legal entity or group of entities, including a governmental entity or any
agency or political subdivision thereof.
“Principal Account” means the account by that name within the Bond Fund established
and held by the Trustee pursuant to Section 5.03.
“Rate and Method” means the rate and method of apportionment of the Special Taxes
approved by the qualified electors of the Community Facilities District.
“Rebate Fund” means the fund by that name established and held by the Trustee pursuant
to Section 5.06.
“Rebate Requirement” has the meaning ascribed to such term in the Tax Certificate.
“Record Date” means, with respect to interest payable on any Interest Payment Date, the
15th calendar day of the month preceding such Interest Payment Date, whether or not such day is
a Business Day.
“Redemption Fund” means the fund by that name established and held by the Trustee
pursuant to Section 5.05.
“Redemption Price” means the aggregate amount of principal of and premium, if any, on
the Bonds upon the redemption thereof pursuant hereto.
“Registration Books” means the records maintained by the Trustee for the registration of
ownership and registration of transfer of the Bonds pursuant to Section 2.05.
“Reserve Fund” means the fund by that name established and held by the Trustee pursuant
to Section 5.04.
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“Reserve Requirement” means, as of the date of any calculation, the least of
(a) Maximum Annual Debt Service, and (b) 125% of Average Annual Debt Service, provided that
upon the issuance of any Bonds, the Reserve Requirement shall be increased by an amount no
greater than “10% of the proceeds of the issue” of such Bonds within the meaning of Section 148
of the Code. The Reserve Requirement shall not increase except upon issuance of Additional
Bonds.
“Resolution of Formation” means Resolution No. 10998 (2019 Series), adopted by the
City Council on April 2, 2019, as originally adopted and as it may be amended, supplemented or
otherwise modified from time to time.
“S&P” means S&P Global Ratings, a business unit of Standard and Poor’s Financial
Services, LLC, its successors and assigns, except that if such entity shall be dissolved or liquidated
or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall
be deemed to refer to any other nationally recognized securities rating agency selected by the
Community Facilities District.
“Series” means the initial series of Bonds executed, authenticated and delivered on the
date of initial issuance of the Bonds and identified pursuant to this Indenture as the Series 2021
Bonds, and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a
separate Series of Bonds.
“Series 2021 Bonds” means the City of San Luis Obispo Community Facilities District
No. 2019-1 (San Luis Ranch) Special Tax Bonds, Series 2021, issued hereunder.
“Special Tax Fund” means the fund by that name established and held by the Trustee
pursuant to Section 5.02.
“Special Tax Revenues” means the proceeds of the Special Taxes received by or on behalf
of the Community Facilities District, including any prepayments 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, which shall be limited to the amount of said lien and interest and penalties
thereon.
“Special Taxes” means the special taxes described and defined in the Rate and Method as
the “Special Tax” approved by the qualified electors of the Community Facilities District.
“State” means the State of California.
“Supplemental Indenture” means any supplemental indenture modifying or amending
this Indenture, but only if and to the extent that such Supplemental Indenture is specifically
authorized hereunder.
“Tax Certificate” means the Tax Certificate executed by the Community Facilities
District at the time of issuance of the Series 2021 Bonds relating to the requirements of Section 148
of the Code, as originally executed and as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
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“Taxable Parcel” has the meaning ascribed thereto in the Rate and Method.
“Trustee” means U.S. Bank National Association, a national banking association
organized and existing under the laws of the United States of America, or any successor thereto as
Trustee hereunder substituted in its place as provided herein.
“Value” means, at the option of the Community Facilities District, either the current
assessed valuation of each Taxable Parcel or the appraised value of the Taxable Parcel determined
by an MAI appraiser.
“Verification Report” means, with respect to the deemed payment of Bonds pursuant to
clause (ii) of Section 10.02(a), a report of a nationally recognized certified public accountant, or
firm of such accountants, verifying that the Defeasance Securities and cash, if any, deposited in
connection with such deemed payment satisfy the requirements of clause (ii) of Section 10.02(a).
“Written Certificate” and “Written Request” of the Community Facilities District
mean, respectively, a written certificate or written request signed in the name of the Community
Facilities District by an Authorized Representative. Any such certificate or request may, but need
not, be combined in a single instrument with any other instrument, opinion or representation, and
the two or more so combined shall be read and construed as a single instrument.
Section 1.02. Rules of Construction. (a) The terms defined herein expressed in the
singular shall, unless the context otherwise indicates, include the plural and vice versa.
(b) The use herein of the masculine, feminine or neuter gender is for convenience only
and shall be deemed and construed to include correlative words of the masculine, feminine or
neuter gender, as appropriate.
(c) References herein to a document shall include all amendments, supplements or
other modifications to such document, and any replacements, substitutions or novation of, that
document.
(d) Any term defined herein by reference to another document shall continue to have
the meaning ascribed thereto whether or not such other document remains in effect.
(e) The use herein of the words “including” and “includes,” and words of similar
import, shall be deemed to be followed by the phrase “without limitation.”
(f) Headings of Articles and Sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affe ct the meaning,
construction or effect hereof.
(g) All references herein to designated “Articles,” “Sections,” “Exhibits,”
“subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles,
Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Indenture.
(h) The words “hereof” (except when preceded by a specific Section or Article
reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent
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words and phrases used herein refer to this Indenture and not solely to the particular portion hereof
in which any such word is used.
Section 1.03. Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitu te a contract among the
Community Facilities District, the Trustee and the Owners from time to time of all Bonds
authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and
final payment of the principal of, premium, if any, and interest on all Bonds which may from time
to time be authorized, executed, issued and delivered hereunder, subject to the agreements,
conditions, covenants and provisions contained herein; and all agreements and covenants set forth
herein to be performed by or on behalf of the Community Facilities District shall be for the equal
and proportionate benefit, protection and security of all Owners of the Bonds without distinction,
preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of
the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof
or for any cause whatsoever, except as expressly provided herein or therein.
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds; Special Obligations. (a) The Community
Facilities District hereby authorizes the issuance of the Bonds under and subject to the terms of
this Indenture, the Act and other applicable laws of the State. The Bonds may consist of one or
more Series of Bonds of varying dates, maturities, interest rates and other provisions, subject to
the provisions and conditions contained herein. The Bonds shall be designated generally as the
“City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Special Tax
Bonds,” each Series thereof to bear such additional designation as may be necessary or appropriate
to distinguish such Series from every other Series of Bonds.
(b) The Bonds shall be special obligations of the Community Facilities District,
payable, as provided herein, solely from Net Special Tax Revenues and the other assets pledged
therefor hereunder. Neither the faith and credit nor the taxing power of the Community Facilities
District (except to the limited extent set forth herein), the City or the State, or any political
subdivision thereof, is pledged to the payment of the Bonds.
Section 2.02. Terms of Series 2021 Bonds. (a) The Series 2021 Bonds shall be
designated “City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch)
Special Tax Bonds, Series 2021.” The aggregate principal amount of Series 2021 Bonds that may
be issued and Outstanding under this Indenture shall not exceed $[PAR], except as may be
otherwise provided in Section 2.08.
(b) The Series 2021 Bonds shall be issued in fully-registered form without coupons in
Authorized Denominations, so long as no Series 2021 Bond shall have more than one maturity
date. The Series 2021 Bonds shall be dated as of the Closing Date, shall be in the aggregate
principal amount of $[PAR], shall mature on September 1 of each year, shall bear interest at the
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rates per annum (calculated on the basis of a 360-day year comprised of twelve 30-day months)
and shall be in the principal amounts as follows:
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
(c) Interest on the Series 2021 Bonds shall be payable from the Interest Payment Date
next preceding the date of authentication thereof unless (i) a Series 2021 Bond is authenticated on
or before an Interest Payment Date and after the close of business on the preceding Record Date,
in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Series
2021 Bond is authenticated on or before the first Record Date, in which event interest thereon shall
be payable from the Closing Date, or (iii) interest on any Series 2021 Bond is in default as of the
date of authentication thereof, in which event interest thereon shall be payable from the date to
which interest has previously been paid or duly provided for. Interest shall be paid in lawful money
of the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee
mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the
Series 2021 Bonds at their respective addresses shown on the Registration Books as of the close
of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series
2021 Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if
and to the extent that amounts subsequently become available therefor, be paid on a payment date
established by the Trustee to the Person in whose name the ownership of such Series 2021 Bond
is registered on the Registration Books at the close of business on a special record date to be
established by the Trustee for the payment of such defaulted interest, notice of which shall be given
to such Owner not less than ten days prior to such special record date.
(d) The principal of the Series 2021 Bonds shall be payable in lawful money of the
United States of America upon presentation and surrender thereof upon maturity or earlier
redemption at the Office of the Trustee.
(e) The Series 2021 Bonds shall be subject to redemption as provided in Article IV.
(f) The Series 2021 Bonds shall be in substantially the form set forth in Exhibit B
hereto, with appropriate or necessary insertions, omissions and variations as permitted or required
hereby.
Section 2.03. Execution of Bonds. The Bonds shall be executed in the name and on
behalf of the Community Facilities District with the manual or facsimile signature of the Mayor
of the City attested by the manual or facsimile signature of the City Clerk of the City. The Bonds
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shall then be delivered to the Trustee for authentication by it. In case any of such officers who shall
have signed or attested any of the Bonds shall cease to be such officers before the Bonds so signed
or attested shall have been authenticated or delivered by the Trustee, or issued by the Community
Facilities District, such Bonds may nevertheless be authenticated, delivered and issued and, upon
such authentication, delivery and issue, shall be as binding upon the Community Facilities District
as though those who signed and attested the same had continued to be such officers, and also any
Bonds may be signed and attested on behalf of the Community Facilities District by such Persons
as at the actual date of execution of such Bonds shall be the proper officers of the City although at
the nominal date of such Bonds any such Person shall not have been such officer of the City.
Section 2.04. Authentication of Bonds. Only such of the Bonds as shall bear thereon a
certificate of authentication substantially in the form as that set forth in Exhibit B hereto for the
Series 2021 Bonds, manually executed by the Trustee, shall be valid or obligatory for any purpose
or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive
evidence that the Bonds so authenticated have been duly executed, authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
Section 2.05. Registration Books. The Trustee shall keep or cause to be kept, at the
Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds,
which shall be open to inspection during regular business hours and upon reasonable notice by the
Community Facilities District. Upon presentation for such purpose, the Trustee shall, under such
reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on such records, the ownership of the Bonds.
Section 2.06. Transfer and Exchange of Bonds. (a) Any Bond may be transferred upon
the Registration Books by the Person in whose name it is registered, in person or by such Person’s
duly authorized attorney, upon surrender of such Bond to the Trustee for cancellation,
accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to
the Trustee. Whenever any Bond or Bonds shall be so surrendered for transfer, the Community
Facilities District shall execute and the Trustee shall authenticate and shall deliver a new Bond or
Bonds of the same Series and maturity in a like aggregate principal amount, in any Authorized
Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer.
(b) The Bonds may be exchanged at the Office of the Trustee for a like aggregate
principal amount of Bonds of the same Series and maturity of other Authorized Denominations.
The Trustee shall require the payment by the Owner requesting such exchange of any tax or other
governmental charge required to be paid with respect to such exchange.
(c) The Trustee shall not be obligated to make any transfer or exchange of Bonds of a
Series pursuant to this Section during the period established by the Tr ustee for the selection of
Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for
redemption.
Section 2.07. Book-Entry System. (a) Prior to the issuance of a Series of Bonds, the
Community Facilities District may provide that such Series of Bonds shall initially be issued as
Book-Entry Bonds, and in such event, the Bonds of such Series for each maturity date shall be in
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the form of a separate single fully-registered Bond (which may be typewritten). Upon initial
issuance, the ownership of each such Bond of such Series shall be registered in the Registration
Books in the name of the Nominee, as nominee of the Depository. The Series 2021 Bonds shall
initially be issued as Book-Entry Bonds.
Payment of principal of, and interest and premium, if any, on, any Book-Entry Bond
registered in the name of the Nominee shall be made on the applicable payment date by wire
transfer of New York clearing house or equivalent next day funds or by wire transfer of same day
funds to the account of the Nominee. Such payments shall be made to the Nominee at the address
which is, on the Record Date, shown for the Nominee in the Registration Books.
(b) With respect to Book-Entry Bonds, the Community Facilities District and the
Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of
which such a Participant holds an interest in such Book-Entry Bonds. Without limiting the
immediately preceding sentence, the Community Facilities District and the Trustee shal l have no
responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the
Nominee or any Participant with respect to any ownership interest in Book-Entry Bonds, (ii) the
delivery to any Participant or any other Person, other than an Owner as shown in the Registration
Books, of any notice with respect to Book-Entry Bonds, including any notice of redemption, (iii)
the selection by the Depository and its Participants of the beneficial interests in Book-Entry Bonds
of a maturity to be redeemed in the event such Book-Entry Bonds are redeemed in part, (iv) the
payment to any Participant or any other Person, other than an Owner as shown in the Registration
Books, of any amount with respect to principal of, or premium, if any, or interest on Book-Entry
Bonds, or (v) any consent given or other action taken by the Depository as Owner.
(c) The Community Facilities District and the Trustee may treat and consider the
Person in whose name each Book-Entry Bond is registered in the Registration Books as the
absolute Owner of such Book-Entry Bond for the purpose of payment of principal of, and
premium, if any, and interest on such Bond, for the purpose of selecting any Bonds, or portions
thereof, to be redeemed, for the purpose of giving notices of redemption and other matters with
respect to such Book-Entry Bond, for the purpose of registering transfers with respect to such
Book-Entry Bond, for the purpose of obtaining any consent or other action to be taken by Owners
and for all other purposes whatsoever, and the Community Facilities District and the Trustee shall
not be affected by any notice to the contrary.
(d) In the event of a redemption of all or a portion of a Book-Entry Bond, the
Depository, in its discretion (i) may request the Trustee to authenticate and deliver a new Book-
Entry Bond, or (ii) if the Depository is the sole Owner of such Book -Entry Bond, shall make an
appropriate notation on the Book-Entry Bond indicating the date and amounts of the reduction in
principal thereof resulting from such redemption, except in the case of final payment, in which
case such Book -Entry Bond must be presented to the Trustee prior to payment.
(e) The Trustee shall pay all principal of, and premium, if any, and interest on the
Book-Entry Bonds only to or “upon the order of” (as that term is used in the Uniform Commercial
Code as adopted in the State) the respective Owner, as shown in the Registration Books, or such
Owner’s respective attorney duly authorized in writing, and all such payments shall be valid and
effective to fully satisfy and discharge the obligations with respect to payment of principal of, and
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premium, if any, and interest on the Book-Entry Bonds to the extent of the sum or sums so paid.
No Person other than an Owner, as shown in the Registration Books, shall receive an authenticated
Book-Entry Bond. Upon delivery by the Depository to the Owners, the Community Facilities
District and the Trustee of written notice to the effect that the Depository has determined to
substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect
to Record Dates, the word Nominee in this Indenture shall refer to such nominee of the Depository.
(f) In order to qualify the Book-Entry Bonds for the Depository’s book-entry system,
the Community Facilities District shall execute and deliver to the Depository a Letter of
Representations. The execution and delivery of a Letter of Representations shall not in any way
impose upon the Community Facilities District or the Trustee any obligation whatsoever with
respect to Persons having interests in such Book -Entry Bonds other than the Owners, as shown on
the Registration Books. Such Letter of Representations may provide the time, form, content and
manner of transmission, of notices to the Depository. In addition to the execution and delivery of
a Letter of Representations by the Community Facilities District, the Community Facilities District
and the Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably
necessary to qualify Book-Entry Bonds for the Depository’s book-entry program.
(g) In the event the Community Facilities District determines that it is in the best
interests of the Beneficial Owners that they be able to obtain certificated Bonds and that such
Bonds should therefore be made available, and notifies the Depository and the Trustee of such
determination, the Depository will notify the Participants of the availability through the Depository
of certificated Bonds. In such event, the Trustee shall transfer and exchange certificated Bonds as
requested by the Depository and any other Owners in appropriate amounts. In the event (i) the
Depository determines not to continue to act as securities depository for Book-Entry Bonds, or (ii)
the Depository shall no longer so act and gives notice to the Trustee of such determination, then
the Community Facilities District shall discontinue the Book-Entry system with the Depository. If
the Community Facilities District determines to replace the Depository with another q ualified
securities depository, the Community Facilities District shall prepare or direct the preparation of a
new single, separate, fully-registered Bond of the appropriate Series for each maturity date of such
Book-Entry Bonds, registered in the name of such successor or substitute qualified securities
depository or its nominee. If the Community Facilities District fails to identify another qualified
securities depository to replace the Depository, then the Book-Entry Bonds shall no longer be
restricted to being registered in the Registration Books in the name of the Nominee, but shall be
registered in whatever name or names the Owners transferring or exchanging such Bonds shall
designate, in accordance with the provisions of Sections 2.06, 2.08 and 2.09. Whenever the
Depository requests the Community Facilities District to do so, the Community Facilities District
shall cooperate with the Depository in taking appropriate action after reasonable notice (i) to make
available one or more separate certificates evidencing the Book-Entry Bonds to any Participant
having Book-Entry Bonds credited to its account with the Depository, and (ii) to arrange for
another securities depository to maintain custody of certificates evidencing the Book-Entry Bonds.
(h) Notwithstanding any other provision of this Indenture to the contrary, if the
Depository is the sole Owner of the Bonds of a Series, so long as any Book -Entry Bond of such
Series is registered in the name of the Nominee, all payments of principal of, and premium, if any,
and interest on such Book-Entry Bond and all notices with respect to such Book-Entry Bond shall
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4131-8415-2872.3
be made and given, respectively, as provided in the Letter of Representations or as otherwise
instructed by the Depository.
(i) In connection with any notice or other communication to be provided to Owners
pursuant to this Indenture by the Community Facilities District or the Trustee, with respect to any
consent or other action to be taken by Owners of Book-Entry Bonds, the Trustee shall establish a
record date for such consent or other action and give the Depository notice of such record date not
less than 15 calendar days in advance of such record date to the extent possible.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Community Facilities District, at the expense of the Owner of said Bond, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series
and maturity in a like principal amount in exchange and substitution for the Bond so mutilated, but
only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered
to the Trustee shall be canceled by it and delivered to, or upon the order of, the Community
Facilities District. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction
or theft may be submitted to the Trustee and, if such evidence and indemnity reasonably
satisfactory to the Trustee shall be given, the Community Facilities District, at the expense of the
Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the
same Series and maturity in a like aggregate principal amount in lieu of and in replacement for the
Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been
selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same
without surrender thereof). The Community Facilities District may require payment by the Owner
of a sum not exceeding the actual cost of preparing the replacement Bond delivered thereto under
this Section and the expenses incurred by the Community Facilities District and the Trustee in
connection therewith. Any Bond of a Series issued under the provisions of this Section in lieu of
any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional
contractual obligation on the part of the Community Facilities District whether or not the Bond so
alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled
to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture.
Section 2.09. Temporary Bonds. The Bonds of a Series may be issued in temporary form
exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds
may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may
be determined by the Community Facilities District, shall be in fully-registered form without
coupons and may contain such reference to any of the provisions of this Indenture as may be
appropriate. Every temporary Bond shall be executed by the Community Facilities District and
authenticated by the Trustee upon the same conditions and in substantially the same manner as the
definitive Bonds. If the Community Facilities District issues temporary Bonds of a Series it shall
execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and
thereupon the temporary Bonds of such Series may be surrendered, for cancellation, at the Office
of the Trustee and the Trustee shall authenticate and deliver, in exchange for such temporary
Bonds, an equal aggregate principal amount of definitive Bonds of such Series and maturities in
Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be
entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated
and delivered hereunder.
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ARTICLE III
ISSUANCE OF SERIES 2021 BONDS; APPLICATION OF PROCEEDS;
ADDITIONAL BONDS
Section 3.01. Issuance of Series 2021 Bonds. The Community Facilities District may, at
any time, execute the Series 2021 Bonds and deliver the same to the Trustee. The Trustee shall
authenticate the Series 2021 Bonds and deliver the Series 2021 Bonds to the Original Purchaser
upon receipt of a Written Request of the Community Facilities District and upon receipt of the
purchase price therefor.
Section 3.02. Application of Proceeds. On the Closing Date, the proceeds of the sale of
the Series 2021 Bonds received by the Trustee, $__________, consisting of the principal amount
of the Series 2021 Bonds, plus/less [net] original issue premi um/discount of $______ and less an
underwriter’s discount of $_______, shall be deposited by the Trustee as follows:
(a) the Trustee shall deposit the amount of $__________ in the Costs of Issuance Fund;
(b) the Trustee shall deposit the amount of $__________ in the Reserve Fund, which
is equal to the Reserve Requirement;
(c) [the Trustee shall deposit the amount of $__________ in the Interest Account;]
(d) the Trustee shall deposit the amount of $__________ in the Administrative
Expense Fund;
(e) the Trustee shall deposit the amount of $__________ in the Acquisition Account.
Section 3.03. Costs of Issuance Fund. (a) The Trustee shall establish and maintain a
separate fund designated the “Costs of Issuance Fund.” On the Closing Date, the Trustee shall
deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to
Section 3.02. There shall additionally be deposited in the Cost of Issuance Fund the portion, if any,
of the proceeds of the sale of any Additional Bonds required to be deposited therein under the
Supplemental Indenture pursuant to which such Additional Bonds are issued.
(b) The moneys in the Costs of Issuance Fund shall be used and withdrawn by the
Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of
the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the
amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment
is a proper charge against the Costs of Issuance Fund, and (v) that such amount has not been the
subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a
statement or invoice for each amount requested thereunder. On the last Business Day that is no
later than six months after the Closing Date, the Trustee shall transfer any amount remaining in
the Costs of Issuance Fund to the Acquisition Account and, upon making such transfer, the Costs
of Issuance Fund shall be closed.
(c) If the Costs of Issuance Fund has been closed in accordance with the provisions
hereof, the Costs of Issuance Fund shall be reopened and reestablished by the Trustee in connection
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with the issuance of any Additional Bonds, if so provided in the Supplemental Indenture pursuant
to which such Additional Bonds are issued.
Section 3.04. Improvement Fund. (a) The Trustee shall establish and maintain a
separate fund designated the “Improvement Fund.” Within the Improvement Fund, the Trustee
shall establish and maintain a separate account designated the “Acquisition Account” and a
separate account designated the “Construction Account.” On the Closing Date, the Trustee shall
deposit in the Acquisition Account and the Construction Account the respective amounts required
to be deposited therein pursuant to Section 3.02.
The moneys in the Acquisition Account shall be used and withdrawn by the Trustee from
time to time to pay the costs of the Acquisition Facilities upon submission of a Written Request of
the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the
amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment
constitutes a cost of the Acquisition Facilities and is a proper charge against the Acquisition
Account, (v) that such amount has not been the subject of a prior disbursement from the
Acquisition Account, and (vi) whether or not such costs of the Acquisition Facilities are to be paid
pursuant to a Payment Request submitted in accordance with the Acquisition Agreement, in each
case together with a statement or invoice for each amount requested thereunder. If costs of the
Acquisition Facilities are to be paid pursuant to a Payment Request submitted in accordance with
the Acquisition Agreement, a duplicate original of the signed and approved Payment Request
relating to such costs of the Acquisition Facilities, together with all exhibits and attachments
thereto, must accompany such Written Request of the Community Facilities District.
Upon the filing of a Written Certificate of the Community Facilities District stating (i) that
the portion of the Acquisition Facilities to be financed from the Acquisition Account has been
completed and that all costs of such Acquisition Facilities have been paid, or (ii) that such portion
of the Acquisition Facilities has been substantially completed and that all remaining costs of such
portion of the Acquisition Facilities have been determined and specifying the amount to be retained
therefor, the Trustee shall transfer all of the amount remaining in the Acquisition Account (less
any such retention) to the Construction Account.
(b) The moneys in the Construction Account shall be used and withdrawn by the
Trustee from time to time to pay the costs of the Construction Facilities upon submission of a
Written Request of the Community Facilities District stating (i) the Person to whom payment is to
be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv)
that such payment constitutes a cost of the Construction Facilities and is a proper charge against
the Construction Account, and (v) that such amount has not been the subject of a prior
disbursement from the Construction Account, in each case together with a statement or invoice for
each amount requested thereunder.
Upon the filing of a Written Certificate of the Community Facilities District stating (i) that
the portion of the Construction Facilities to be financed from the Construction Account has been
completed and that all costs of such Construction Facilities have been paid, or (ii) that such portion
of the Construction Facilities has been substantially completed and that all remaining costs of such
portion of the Construction Facilities have been determined and specifying the amount to be
retained therefor, the Trustee shall (A) if the amount remaining in the Construction Account (less
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any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal
to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption
Fund, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required
to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the
Construction Account (less any such retention) to the Bond Fund, to be applied to the payment of
interest on the Bonds.
(c) The Community Facilities District may transfer funds between the Acquisition
Account and the Construction Account by delivering the Trustee a Written Request of the
Community Facilities District specifying the amount to be transferred.
Section 3.05. Conditions for the Issuance of Additional Bonds. The Community
Facilities District may at any time issue one or more Series of Additional Bonds payable from Net
Special Tax Revenues as provided herein on a parity with all other Bonds theretofore issued
hereunder, but only subject to the following conditions, which are hereby made conditions
precedent to the issuance of such Additional Bonds:
(a) upon the issuance of such Additional Bonds, no Event of Default shall have
occurred and be continuing hereunder;
(b) the issuance of such Additional Bonds shall have been authorized under and
pursuant to this Indenture and the Act and shall have been provided for by a Supplemental
Indenture which shall specify the following:
(i) the purposes for which the proceeds of such Additional Bonds
are to be applied, which purposes may only include one or more of (A) providing
funds to finance additional Facilities and/or to refund any Bonds previously issued
hereunder, (B) providing funds to pay Costs of Issuance incurred in connection with
the issuance of such Additional Bonds, and (C) providing funds to make any deposit
to the Reserve Fund required pursuant to paragraph (vii) below;
(ii) the designation of such Series of Additional Bonds, the aggregate
principal amount of the Additional Bonds of such Series and the principal amount,
and the interest rate to be borne by, each maturity of such Additional Bonds;
(iii) that such Additional Bonds shall be payable as to interest on the
Interest Payment Dates, except that the first installment of interest may be payable
on either March 1 or September 1 and shall be for a period of not longer than twelve
months;
(iv) the date, the maturity date or dates and the dates on which
mandatory sinking fund redemptions, if any, are to be made for such Additional
Bonds; provided, however, that each such maturity date and date on which a
mandatory sinking fund redemption is to be made shall be a September 1 and,
provided, further, that serial maturities of serial Bonds or mandatory sinking fund
redemptions for term Bonds, or any combination thereof, shall be established to
provide for the redemption or payment of such Additional Bonds on or before their
respective maturity dates;
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(v) the redemption premiums and terms, if any, for such Additional
Bonds;
(vi) the form of such Additional Bonds;
(vii) the amount, if any, to be deposited from the proceeds of sale of
such Additional Bonds in the Reserve Fund; provided, however, that the amount on
deposit in the Reserve Fund at the time that such Additional Bonds become
Outstanding shall be at least equal to the Reserve Requirement; and
(viii) such other provisions that are appropriate or necessary and are
not inconsistent with the provisions hereof;
(c) [Discuss] In each year until the maturity date for the Additional Bonds, the
Maximum Annual Special Tax for Taxable Parcels classified as Developed Parcels and
Final Map Parcels (as such terms are defined in the Rate and Method) less projected
Administrative Expenses is estimated to equal at least one hundred ten percent (110%) of
the sum of the Annual Debt Service for each year on the Bonds, including such Additional
Bonds;
(d) [Discuss] Immediately after the issuance of the Additional Bonds, the Value
of all Taxable Parcels in the Community Facilities District, in aggregate, shall equal at least
three (3) times the aggregate Lien;
(e) The Community Facilities District may issue one or more series of
Additional Bonds without complying with Section 3.05(c) and (d) if, after the issuance and
delivery of such Additional Bonds, either (i) none of the Bonds theretofore issued
hereunder will be Outstanding or (ii) the Annual Debt Service in each Bond Year,
calculated for all Bonds that will be Outstanding after the issuance of such Additional
Bonds, will be less than or equal to Annual Debt Service in such Bond Year, calculated for
all Bonds that are Outstanding immediately prior to the issuance of such Additional Bonds.
Nothing contained herein shall limit the issuance of any special tax bonds payable from
Special Taxes if, after the issuance and delivery of such special tax bonds, none of the Bonds
theretofore issued hereunder will be Outstanding.
Section 3.06. Procedure for the Issuance of Additional Bonds. At any time after the
sale of any Additional Bonds in accordance with the Act, such Additional Bonds shall be executed
by the Community Facilities District for issuance hereunder and shall be delivered to the Trustee
and thereupon shall be authenticated and delivered by the Tr ustee, but only upon receipt by the
Trustee of the following:
(a) a certified copy of the Supplemental Indenture authorizing the issuance of
such Additional Bonds;
(b) a Written Request of the Community Facilities District as to the delivery of
such Additional Bonds;
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4131-8415-2872.3
(c) a Written Certificate of the Community Facilities District stating that the
conditions precedent to the issuance of such Additional Bonds specified in Section 3.05
have been satisfied;
(d) an opinion of Bond Counsel substantially to the effect that (i) this Indenture,
as modified and amended by all Supplemental Indentures theretofore, or thereupon being,
entered into, has been duly authorized, executed and delivered by, and constitutes the valid
and binding obligation of, the Community Facilities District, (ii) such Additional Bonds
constitute valid and binding special obligations of the Community Facilities District, and
(iii) the issuance of such Additional Bonds, in and of itself, will not adversely affect the
exclusion of interest on the Bonds Outstanding prior to the issuance of such Additional
Bonds from gross income for federal income tax purposes;
(e) the proceeds of the sale of such Additional Bonds; and
(f) such further documents or money as are required by the provisions hereof
or by the provisions of the Supplemental Indenture pursuant to which such Additional
Bonds are issued.
Section 3.07. Additional Obligations Payable from Special Tax. So long as any of the
Bonds remain Outstanding, the Community Facilities District shall not issue any Additional Bonds
or obligations payable from Net Special Tax Revenues on a parity with the Bonds, except pursuant
to Sections 3.05 and 3.06. So long as any of the Bonds remain Outstanding, the Community
Facilities District shall not issue any obligations payable from Net Special Tax Revenues on a
basis senior to the Bonds. The Community Facilities District may issue obligations payable from
Net Special Tax Revenues on a basis subordinate to the Bonds, without complying with Sections
3.05 and 3.06.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Redemption of Series 2021 Bonds. (a) Optional Redemption. The Series
2021 Bonds maturing on or after September 1, 20__, shall be subject to optional redemption, in
whole, or in part in Authorized Denominations, on any [date][Interest Payment Date] on or after
September 1, 20__, from any source of available funds, at the following respective Redemption
Prices (expressed as percentages of the principal amount of the Series 2021 Bonds to be redeemed),
plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
[September 1, 20__ through March 1, 20__ ___%
September 1, 20__ and March 1, 20__ ___
September 1, 20__ and March 1, 20__ ___
September 1, 20__ and thereafter] ___
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The Community Facilities District shall give the Trustee written notice of its intention to
redeem Series 2021 Bonds pursuant to this subsection not less than 45 days prior to the applicable
redemption date, unless a later date is agreed to by the Trustee.
(b) Mandatory Redemption from Special Tax Prepayments. The Series 2021 Bonds
shall be subject to mandatory redemption, in whole, or in part in Authorized Denominations, on
any Interest Payment Date, from and to the extent of prepaid Special Taxes required to be applied
thereto pursuant to Section 5.02(a) and any amount required to be applied thereto pursuant to
Section 5.04(c), at the following respective Redemption Prices (expressed as percentages of the
principal amount of the Series 2021 Bonds to be redeemed), plus accrued interest thereon to the
date of redemption:
Redemption Dates Redemption Price
[March 1, 2021 through March 1, 20__ ___%
September 1, 20__ and March 1, 20__ ___
September 1, 20__ and March 1, 20__ ___
September 1, 20__ and thereafter] ___
(c) Mandatory Sinking Fund Redemption. The Series 2021 Bonds maturing September
1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each
year, commencing September 1, 20__, at a Redemption Price equal to the principal amount of the
Series 2021 Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued
interest thereon to the date of redemption, in the aggregate respective principal amounts in the
respective years as follows:
Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
(Maturity)
If some but not all of the Series 2021 Bonds maturing on September 1, 20__ are redeemed
pursuant to Section 4.01(a), the principal amount of the Series 2021 Bonds maturing on September
1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be
reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities
District in a Written Certificate of the Community Facilities District filed with the Trustee;
provided, however, that the aggregate amount of such reductions shall not exceed the aggregate
amount of the Series 2021 Bonds maturing on September 1, 20__ redeemed pursuant to
Section 4.01(a). If some but not all of the Series 2021 Bonds maturing on September 1, 20__ are
redeemed pursuant to Section 4.01(b), the principal amount of the Series 2021 Bonds maturing on
September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1
shall be reduced by the aggregate principal amount of the Series 2021 Bonds maturing on
September 1, 20__ so redeemed pursuant to Section 4.01(b), such reduction to be allocated among
redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral
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multiples thereof, as determined by the Trustee, notice of which determination shall be given by
the Trustee to the Community Facilities District.
The Series 2021 Bonds maturing September 1, 20__ shall be subject to mandatory sinking
fund redemption, in part, on September 1 in each year, commencing September 1, 20__, at a
Redemption Price equal to the principal amount of the Series 2021 Bonds maturing September 1,
20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in
the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
(Maturity)
If some but not all of the Series 2021 Bonds maturing on September 1, 20__ are redeemed
pursuant to Section 4.01(a), the principal amount of the Series 2021 Bonds maturing on September
1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be
reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities
District in a Written Certificate of the Community Facilities District filed with the Trustee;
provided, however, that the aggregate amount of such reductions shall not exceed the aggregate
amount of the Series 2021 Bonds maturing on September 1, 20__ redeemed pursuant to
Section 4.01(a). If some but not all of the Series 2021 Bonds maturing on September 1, 20__ are
redeemed pursuant to Section 4.01(b), the principal amount of the Series 2021 Bonds maturing on
September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1
shall be reduced by the aggregate principal amount of the Series 2021 Bonds maturing on
September 1, 20__ so redeemed pursuant to Section 4.01(b), such reduction to be allocated among
redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral
multiples thereof, as determined by the Trustee, notice of which determination shall be given by
the Trustee to the Community Facilities District.
Section 4.02. Notice of Redemption. The Trustee on behalf and at the expense of the
Community Facilities District shall mail by first class mail notice of any redemption to the
respective Owners of any Bonds designated for redemption at their respective addresses appearing
on the Registration Books, at least 30 but not more than 60 days prior to the date fixed for
redemption. Such notice shall state the date of the notice, the redemption date, the redemption
place and the Redemption Price and shall designate the CUSIP numbers, if any, the Bond numbers
and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of
all of the Bonds of such maturity or maturities in whole), and shall require that such Bonds be then
surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also
that further interest on such Bonds will not accrue from and after the date fixed for redemption.
Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the
validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest
thereon from and after the date fixed for redemption. With respect to any notice of any optional
redemption of Bonds, unless at the time such notice is given the Bonds to be redeemed shall be
deemed to have been paid within the meaning of Section 10.02, such notice shall state that such
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redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such
redemption, of moneys that, together with other available amounts held by the Trustee, are
sufficient to pay the Redemption Price of, and accrued interest on, the Bonds to be redeemed, and
that if such moneys shall not have been so received said notice shall be of no force and effect and
the Community Facilities District shall not be required to redeem such Bonds. In the event a notice
of redemption of Bonds contains such a condition and such moneys are not so received, the
redemption of Bonds as described in the conditional notice of redemption shall not be made and
the Trustee shall, within a reasonable time after the date on which such redemption was to occur,
give notice to the Persons and in the manner in which the notice of redemption was given, that
such moneys were not so received and that there shall be no redemption of Bonds pursuant to such
notice of redemption.
Section 4.03. Selection of Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be
redeemed from all Bonds not previously called for redemption (a) with respect to any optional
redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written
Request of the Community Facilities District, (b) with respect to any redemption pursuant to
Section 4.01(b) and the corresponding provisions of any Supplemental Indenture pursuant to
which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as
nearly as practicable, and (c) with respect to any other redemption of Additional Bonds, among
maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds
are issued, and by lot among Bonds of the same Series with the same maturity in any manner which
the Trustee in its sole discretion shall deem appropriate. For purposes of such selection, all Bonds
shall be deemed to be comprised of separate $5,000 denominations and such separate
denominations shall be treated as separate Bonds that may be separately redeemed.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in
part only, the Community Facilities District shall execute and the Trustee shall authenticate and
deliver to the Owner thereof, at the expense of the Community Facilities Distri ct, a new Bond or
Bonds of the same Series in Authorized Denominations in an aggregate principal amount equal to
the unredeemed portion of the Bonds surrendered.
Section 4.05. Effect of Notice of Redemption. Notice of redemption of the Bonds subject
to redemption having been mailed as aforesaid, and moneys for the Redemption Price thereof, and
the interest thereon to the applicable date fixed for redemption, having been set aside with the
Trustee, such Bonds shall become due and payable on said date, and, upon presentation and
surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price
thereof, together with interest accrued and unpaid to said date.
If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to
be redeemed, together with interest to said date, shall be held by the Trustee so as to be available
therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and
not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and
become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall
be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to
such Owners for interest thereon.
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All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof
shall be canceled upon surrender thereof and destroyed.
ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.01. Pledge. Subject only to the provisions of this Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth herein, in order to
secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance
with their terms, the provisions of this Indenture and the Act, the Community Facilities District
hereby pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Net
Special Tax Revenues and any other amounts held in the Special Tax Fund, the Bond Fund and
the Reserve Fund. Said pledge shall constitute a first lien on and security interest in such assets,
which shall immediately attach to such assets and be effective, binding and enforceable against the
Community Facilities District, its successors, purchasers of any of such assets, creditors and all
others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture,
irrespective of whether those parties have notice of the pledge of, lien on and security interest in
such assets and without the need for any physical delivery, recordation, filing or further act.
Section 5.02. Special Tax Fund. (a) The Trustee shall establish and maintain a separate
fund designated the “Special Tax Fund.” As soon as practicable after the receipt by the Community
Facilities District of any Special Tax Revenues, but in any event no later than the date ten Business
Days prior to the Interest Payment Date after such receipt, the Community Facilities District shall
transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided,
however, that with respect to any such Special Tax Revenues that represent prepaid Special Taxes
(i) said prepaid Special Taxes shall be identified as such in a Written Certificate of the Community
Facilities District delivered to the Trustee at the time such prepaid Special Taxes are transferred to
the Trustee, (ii) the portion of such prepaid Special Taxes that is to be applied to the Redemption
Price of the Bonds shall be identified in such Written Certificate of the Community Facilities
District, shall be deposited by the Trustee in the Redemption Fund and shall be applied to the
redemption of Bonds pursuant to Section 4.01(b) and the corresponding provisions of any
Supplemental Indenture pursuant to which Additional Bonds are issued, and (iii) the portion of
such prepaid Special Taxes that is to be applied to the payment of interest on the Bonds to be so
redeemed shall be identified in such Written Certificate of the Community Facilities District, shall
be deposited by the Trustee in the Interest Account and shall be applied to the payment of such
interest.
(b) Upon receipt of a Written Request of the Community Facilities District, the Trustee
shall withdraw from the Special Tax Fund and transfer to the Administrative Expense Fund the
amount specified in such Written Request of the Community Facilities District as the amount
necessary to be transferred thereto in order to have sufficient amounts available therein to pay
Administrative Expenses.
(c) No later than the Business Day immediately preceding each Interest Payment Date,
after having made any requested transfer to the Administrative Expense Fund, the Trustee shall
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4131-8415-2872.3
withdraw from the Special Tax Fund Net Special Tax Revenues in an amount sufficient to enable
the Trustee to make the following transfers in the following order of priority:
(i) Interest Account. To the Interest Account, the amount, if any, necessary to
cause the amount on deposit in the Interest Account to be equal to the interest due on the
Bonds on such Interest Payment Date;
(ii) Principal Account. To the Principal Account, the amount, if any, necessary
to cause the amount on deposit in the Principal Account to be equal to the principal, if any,
due on the Bonds on such Interest Payment Date, including principal due and payable by
reason of mandatory sinking fund redemption of such Bonds; and
(iii) Reserve Fund. To the Reserve Fund, the amount, if any, necessary to cause
the amount on deposit in the Reserve Fund to be equal to the Reserve Requirement.
Upon the receipt of such amounts from the Community Facilities District, the Trustee shall
make such transfers in said order of priority.
Section 5.03. Bond Fund. (a) The Trustee shall establish and maintain a separate fund
designated the “Bond Fund.” Within the Bond Fund, the Trustee shall establish and maintain a
separate account designated the “Principal Account” and a separate account designated the
“Interest Account.” The Trustee shall deposit in the Interest Account and the Principal Account
from time to time the amounts required to be deposited therein pursuant to Section 5.02.
(b) In the event that, on the Business Day prior to an Interest Payment Date, after the
deposit in the Interest Account of the amounts required to be deposited therein pursuant to
Section 5.02, amounts in the Interest Account are insufficient to pay the interest on the Bonds due
and payable on such Interest Payment Date, the Trustee shall withdraw from the Reserve Fund, to
the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts
so withdrawn to the Interest Account.
(c) On each Interest Payment Date, the Trustee shall withdraw from the Interest
Account for payment to the Owners of the Bonds the interest on the Bonds then due and payable.
(d) In the event that, on the Business Day prior to a September 1 on which principal of
the Bonds is due and payable, after the deposit in the Principal Account of the amounts required
to be deposited therein pursuant to Section 5.02, including principal due and payable by reason of
mandatory sinking fund redemption of the Bonds, amounts in the Principal Account are
insufficient to pay such principal, after having withdrawn any amounts from the Reserve Fund
required to be withdrawn therefrom on such date pursuant to subsection (b) of this Section, the
Trustee shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of
such insufficiency, and shall transfer any amounts so withdrawn to the Principal Account.
(e) On each September 1 on which principal of the Bonds is due and payable, including
principal due and payable by reason of mandatory sinking fund redemption of the Bonds, the
Trustee shall withdraw from the Principal Account for payment to the Owners of the Bonds such
principal then due and payable.
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Section 5.04. Reserve Fund. (a) The Trustee shall establish and maintain a special fund
designated the “Reserve Fund.” On the Closing Date, the Trustee shall deposit in the Reserve Fund
the amount specified in Section 3.02. The Trustee shall deposit in the Reserve Fund from time to
time the amounts required to be deposited therein pursuant to Section 5.02(c). There shall
additionally be deposited in the Reserve Fund, in connection with the issuance of Additional
Bonds, the amount required to be deposited therein under the Supplemental Indenture pursuant to
which such Additional Bonds are issued.
(b) Except as otherwise provided in this Section, amounts in the Reserve Fund shall be
used and withdrawn by the Trustee solely for the purpose of (i) making transfers to the Interest
Account in accordance with Section 5.03(b) in the event of any deficiency in the Interest Account
of the amount then required for payment of the interest on the Bonds, (ii) making transfers to the
Principal Account in accordance with Section 5.03(d) in the event of any deficiency in the
Principal Account of the amount then required for payment of the principal of the Bonds, and (iii)
redeeming Bonds in accordance with the provisions of this Section.
(c) Whenever Bonds are to be optionally redeemed or redeemed from Special Tax
prepayments, a proportionate share, determined as provided below, of the amount on deposit in
the Reserve Fund shall, on the date on which amounts to redeem such Bonds are deposited in the
Redemption Fund or otherwise deposited with the Trustee pursuant to Section 10.02, be transferred
by the Trustee from the Reserve Fund to the Redemption Fund or to such deposit held by the
Trustee and shall be applied to the redemption of said Bonds; provided, however, that such amount
shall be so transferred only if and to the extent that the amount remaining on deposit in the Reserve
Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof
said Bonds to be redeemed). Such proportionate share shall be equal to the largest integral multiple
of the minimum Authorized Denomination for said Bonds that is not larger than the amount equal
to the product of (i) the amount on deposit in the Reserve Fund on the date of such transfer, times
(ii) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the
denominator of which is the principal amount of Bonds to be Outstanding on the day prior to the
date on which such Bonds are to be so redeemed.
(d) Whenever the balance in the Reserve Fund exceeds the amount required to redeem
or pay Outstanding Bonds, including interest accrued to the date of payment or redemption and
premium, if any, due upon redemption, the Trustee shall, upon receipt of a Written Request of the
Community Facilities District, transfer the amount in the Reserve Fund to the Interest Account,
Principal Account and/or Redemption Fund, as applicable, to be applied, on the next succeeding
Interest Payment Date to the payment and redemption of all of the Outstanding Bonds.
(e) If, as a result of the scheduled payment of principal of or interest on the Bonds, the
Reserve Requirement is reduced, the Trustee shall transfer an amount equal to the amount of such
reduction to the Interest Account.
Section 5.05. Redemption Fund. (a) The Trustee shall establish and maintain a special
fund designated the “Redemption Fund.” The Trustee shall deposit in the Redemption Fund (i)
amounts received from the Community Facilities District in connection with the Community
Facilities District’s exercise of its rights to optionally redeem Bonds, (ii) the portion of prepaid
Special Taxes required to be deposited therein pursuant to Section 5.02(a), (iii) amounts required
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to be transferred to the Redemption Fund from the Improvement Fund (or account s therein)
pursuant to Section 3.04(b), (iv) amounts required to be transferred to the Redemption Fund from
the Reserve Fund pursuant to Section 5.04(c) or Section 5.04(d), and (v) amounts required to be
deposited therein pursuant to any Supplemental Indenture.
(b) Amounts in the Redemption Fund shall be disbursed therefrom for the payment of
the Redemption Price of Series 2021 Bonds redeemed pursuant to Section 4.01(a) or
Section 4.01(b) and for the payment of the Redemption Price of Additional Bonds redeemed under
the Supplemental Indenture pursuant to which such Additional Bonds are issued (other than
mandatory sinking fund redemptions thereof).
Section 5.06. Rebate Fund. (a) The Trustee shall establish and maintain a special fund
designated the “Rebate Fund.” There shall be deposited in the Rebate Fund such amounts as are
required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request
of the Community Facilities District. All money at any time deposited in the Rebate Fund shall be
held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment
to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X
or anything to the contrary contained herein, all amounts required to be deposited into or on deposit
in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate, which
is hereby incorporated herein as if fully set forth herein. The Trustee shall be deemed conclusively
to have complied with such provisions if it follows the written directions of the Community
Facilities District, and shall have no liability or responsibility to enforce compliance by the
Community Facilities District with the terms of the Tax Certificate. The Trustee may conclusively
rely upon the Community Facilities District’s determinations, calculations and certifications
required by the Tax Certificate. The Trustee shall have no responsibility to independently make
any calculation or determination or to review the Community Facilities District’s calculations.
(b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds
and after payment of any amounts described in this Section, shall, upon receipt by the Trustee of
a Written Request of the Community Facilities District, be withdrawn by the Trustee and remitted
to the Community Facilities District.
Section 5.07. Administrative Expense Fund. (a) The Trustee shall establish and
maintain a special fund designated the “Administrative Expense Fund.” On the Closing Date, the
Trustee shall deposit in the Administrative Expense Fund the amount required to be deposited
therein pursuant to Section 3.02. The Trustee shall deposit in the Administrative Expense Fund the
amounts transferred from the Special Tax Fund and required to be deposited therein pursuant to
Section 5.02.
(b) The moneys in the Administrative Expense Fund shall be used and withdrawn by
the Trustee from time to time to pay the Administrative Expenses upon submission of a Written
Request of the Community Facilities District stating (i) the Person to whom payment is to be made,
(ii) the amount to be paid, (iii) the purpose for which the obligation was incurred and that such
purpose constitutes an Administrative Expense, (iv) that such payment is a proper charge against
the Administrative Expense Fund, and (v) that such amount has not been the subject of a prior
disbursement from the Administrative Expense Fund, in each case together with a statement or
invoice for each amount requested thereunder.
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Section 5.08. Investment of Moneys. (a) Except as otherwise provided herein, all
moneys in any of the funds or accounts established pursuant to this Indenture held by the Trustee
shall be invested by the Trustee solely in Permitted Investments, as directed in a Written Request
of the Community Facilities District received by the Trustee no later than two Business Days prior
to the making of such investment. Moneys in all such funds and accounts shall be invested in
Permitted Investments maturing not later than the date on which it is estimated that such moneys
will be required for the purposes specified in this Indenture; provided, however, that Permitted
Investments in which moneys in the Reserve Fund are so invested shall mature no later than the
earlier of five years from the date of investment or the final maturity date of the Bonds and,
provided, further, that if such Permitted Investments may be redeemed at par so as to be available
on each Interest Payment Date, any amount in the Reserve Fund may be invested in such
redeemable Permitted Investments maturing on any date on or prior to the final maturity date of
the Bonds. Absent a timely Written Request of the Community Facilities District with respect to
the investment of moneys in any of the funds or accounts established pursuant to this Indenture
held by the Trustee, the Trustee shall invest such moneys in Permitted Investments described in
paragraph (6) of the definition thereof.
(b) Subject to the provisions of Section 5.06, all interest, profits and other income
received from the investment of moneys in any fund or account established pursuant to this
Indenture (other than the Reserve Fund) shall be retained therein. Subject to the provisions of
Section 5.06, all interest, profits or other income received from the investment of moneys in the
Reserve Fund shall, prior to the date on which a Written Certificate of the Community Facilities
District is delivered to the Trustee pursuant to subsection (b) of Section 3.04, be transferred to the
Construction Account and, thereafter, shall be transferred to the Interest Account; provided,
however, that, notwithstanding the foregoing, any such transfer shall be made from the Reserve
Fund only if and to the extent that, after such transfer, the amount on deposit in the Reserve Fund
is at least equal to the Reserve Requirement.
(c) Permitted Investments acquired as an investment of moneys in any fund or account
established under this Indenture shall be credited to such fund or account. For th e purpose of
determining the amount in any fund or account, all Permitted Investments credited to such fund or
account shall be valued by the Trustee at the market value thereof (without regard to costs incurred
in the acquisition or disposition thereof, including breakage, unwind or other similar fees), such
valuation to be performed not less frequently than semiannually on or before each February 15 and
August 15. To the extent of any valuations to be made by the Trustee hereunder, the Trustee may
utilize computerized securities pricing services that may be available to it, including those
available through its regular accounting system. Any Permitted Investment that is a registrable
security shall be registered in the name of the Trustee.
(d) The Trustee may act as principal or agent in the making or disposing of any
investment. Upon the Written Request of the Community Facilities District, the Trustee shall sell
or present for redemption any Permitted Investments so purchased whenever it shall be necessary
to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the
fund to which such Permitted Investments are credited, and the Trustee shall not be liable or
responsible for any loss resulting from any investment made or sold pursuant to this Section. For
purposes of investment, the Trustee may commingle moneys in any of the funds and accounts
established hereunder. The Trustee, in making or disposing of any investment permitted by this
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4131-8415-2872.3
Section, may deal with itself (in its individual capacity) or with any one or more of its affiliates,
whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as
a principal for its own account.
(e) The Community Facilities District acknowledges that to the extent regulations of
the Comptroller of the Currency or other applicable regulatory entity grant the Community
Facilities District the right to receive brokerage confirmations of security transactions as they
occur, the Community Facilities District specif ically waives receipt of such confirmations to the
extent permitted by law. The Trustee shall furnish the Community Facilities District periodic cash
transaction statements, which shall include detail for all investment transactions made by the
Trustee hereunder.
ARTICLE VI
COVENANTS
Section 6.01. Collection of Special Tax Revenues. (a) The Community Facilities
District shall comply with all requirements of the Act so as to assure the timely collection of
Special Tax Revenues, including the enforcement of delinquent Special Taxes.
(b) Prior to [August 1] of each year, the Community Facilities District shall ascertain
from the County Assessor the relevant parcels on which the Special Taxes are to be levied, taking
into account any parcel splits during the preceding and then current year . The Community
Facilities District shall effect the levy of the Special Taxes each Fiscal Year in accordance with
the Ordinance Levying Special Taxes by each [August 10], or otherwise such that the computation
of the levy is complete before the final date on which the County Auditor will accept the
transmission of the Special Tax amounts for the parcels within the Community Facilities District
for inclusion on the next real property tax roll. Upon the completion of the computation of the
amounts of the levy, the Community Facilities District shall prepare or cause to be prepared, and
shall transmit to the County Auditor, such data as the County Auditor requires in order to include
the levy of the Special Taxes on the next real property tax roll.
(c) The Community Facilities District shall fix and levy the amount of Special Taxes
within the Community Facilities District in each Fiscal Year in accordance with the Rate and
Method and, subject to the limitations in the Rate and Method as to the maximum Special Taxes
that may be levied, in an amount sufficient to yield Special Tax Revenues in the amount required
for (i) the payment of principal of and interest on any Outstanding Bonds becoming due and
payable during the Corresponding Bond Year, (ii) any necessary replenishment of the Reserve
Fund, and (iii) the payment of Administrative Expenses estimated to be paid from such Special
Tax Revenues, taking into account the balances in the funds and accounts established hereunder.
(d) The Special Taxes shall be payable and be collected in the same manner and at the
same time and in the same installment as the general taxes on real property are payable (or in such
other manner as the City Council shall determine, including direct billing of the affected property
owners), and have the same priority, become delinquent at the same time and in the same
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proportionate amounts and bear the same proportionate penalties and interest after delinquency as
do the ad valorem taxes on real property.
Section 6.02. Foreclosure. Pursuant to Section 53356.1 of the Act, the Community
Facilities District hereby covenants with and for the benefit of the Owners that it will determine
or cause to be determined, no later than September 15 of each year, whether or not any owners of
property within the Community Facilities District are delinquent in the payment of Special Taxes
and, if such delinquencies exist, the Community Facilities District will order and cause to be
commenced no later than [November 1], and thereafter diligently prosecute, an action in the
superior court to foreclose the lien of any Special Taxes or installment thereof not paid when due;
provided, however, that the Community Facilities District shall not be required to order the
commencement of foreclosure proceedings if (a) the total Special Tax delinquency in th e
Community Facilities District for such Fiscal Year is less than 5% of the total Special Taxes levied
in such Fiscal Year, and (b) the amount then on deposit in the Reserve Fund is equal to the Reserve
Requirement. Notwithstanding the foregoing, if the Community Facilities District determines that
any single property owner in the Community Facilities District is delinquent in excess of $5,000
in the payment of the Special Taxes, then the Community Facilities District shall diligently
institute, prosecute and pursue foreclosure proceedings against such property owner.
Section 6.03. Compliance with Act. The Community Facilities District shall comply
with all applicable provisions of the Act.
Section 6.04. Punctual Payment. The Community Facilities District shall punctually pay
or cause to be paid the principal, premium, if any, and interest to become due in respect of all the
Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true
intent and meaning thereof, but only out of Net Special Tax Revenues and other assets pledged for
such payment as provided in this Indenture and received by the Community Facilities District or
the Trustee.
Section 6.05. Extension of Payment of Bonds. The Community Facilities District shall
not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or
the time of payment of any claims for interest by the purchase of such Bonds or by any other
arrangement, and in case the maturity of any of the Bonds or the time of payment of any such
claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case
of any default hereunder, to the benefits of this Indenture, except subject to the prior paym ent in
full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon
which shall not have been so extended. Nothing in this Section shall be deemed to limit the right
of the Community Facilities District to issue Bonds f or the purpose of refunding any Outstanding
Bonds in accordance with the provisions hereof, and such issuance shall not be deemed to
constitute an extension of maturity of the Bonds.
Section 6.06. Against Encumbrances; Defense of Pledge. The Community Facilities
District shall not create, or permit the creation of, any pledge of, lien on, security interest in or
charge or other encumbrance upon the assets pledged under this Indenture, except as permitted
hereby. The Community Facilities District shall at all times, to the extent permitted by law, defend,
preserve and protect said pledge of such assets, and the lien thereon and security interest therein
created hereby, against all claims and demands of all Persons whomsoever.
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Section 6.07. Tax Covenants. (a) The Community Facilities District shall not take any
action, or fail to take any action, if such action or failure to take such action would adversely affect
the exclusion from gross income of interest on the Series 2021 Bonds under Section 103 of the
Code. Without limiting the generality of the foregoing, the Community Facilities District shall
comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set
forth herein. This covenant shall survive payment in full or defeasance of the Series 2021 Bonds.
(b) In the event that at any time the Community Facilities District is of the opinion that
for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment
of any moneys held by the Trustee in any of the funds or accounts established hereunder, the
Community Facilities District shall so instruct the Trustee in writing, and the Trustee shall take
such action as may be necessary in accordance with such instructions.
(c) Notwithstanding any provisions of this Section, if the Community Facilities District
shall provide to the Trustee an opinion of Bond Counsel to the effect that any specified action
required under this Section is no longer required or that some further or different action is required
to maintain the exclusion from federal income tax of interest on the Series 2021 Bonds, the Trustee
may conclusively rely on such opinion in complying with the requirements of this Section and of
the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.
Section 6.08. Non-Cash Payments of Special Taxes. The Community Facilities District
shall not authorize owners of taxable parcels within the Community Facilities District to satisfy
Special Tax obligations by the tender of Bonds unless the Community Facilities District shall have
first obtained a report of an Independent Consultant certifying that doing so would not result in the
Community Facilities District having insufficient Special Tax Revenues to pay the principal of
and interest on all Outstanding Bonds when due.
Section 6.09. Reduction in Special Taxes. The Community Facilities District shall not
initiate proceedings under the Act to modify the Rate and Method if such modification would
adversely affect the security for the Bonds. If an initiative is adopted that purports to modify the
Rate and Method in a manner that would adversely affect the security for the Bonds, the
Community Facilities District shall, to the extent permitted by law, commence and pursue
reasonable legal actions to prevent the modification of the Rate and Method in a manner that would
adversely affect the security for the Bonds.
Section 6.10. Continuing Disclosure. Each of the Community Facilities District and the
Trustee shall comply with and carry out all of the provisions of the District Continuing Disclosure
Agreement applicable to it. Notwithstanding any other provision of this Indenture, failure of the
Community Facilities District or the Trustee to comply with the District Continuing Disclosure
Agreement shall not be considered an Event of Default; provided, however, that the Trustee may
(and, at the written direction of any Participating Underwriter or the Owners of at least 25%
aggregate principal amount of Outstanding Series 2020 Bonds, and upon receipt of indemnification
reasonably satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Series 2020
Bonds may, take such actions as may be necessary and appropriate to compel performance,
including seeking mandate or specific performance by court order.
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Section 6.11. Accounting Records. The Community Facilities District shall keep or
cause to be kept appropriate accounting records in which complete and correct entries shall be
made of all transactions relating to the Special Taxes, which records shall be available for
inspection by the Trustee at reasonable hours and under reasonable conditions.
Section 6.12. State Reporting. If at any time principal or interest due on any scheduled
payment date for the Bonds is not paid, or if funds are withdrawn from the Reserve Fund to pay
principal of or interest on the Bonds, the Trustee shall notify the Community Facilities District in
writing of such failure or withdrawal, and the Community Facilities District shall notify the
California Debt and Investment Advisory Commission of such failure or withdrawal within ten
days of the failure to make such payment or the date of such withdrawal.
Section 6.13. Annual Reports to the California Debt and Investment Advisory
Commission. Not later than October 30 of each year, commencing October 30, 2021 and
continuing until the October 30 following the final maturity of the Bonds, the Community
Facilities District shall supply to the California Debt and Investment Advisory Commission th e
information required to be provided thereto pursuant to Section 53359.5(b) of the Act. Such
information shall be made available to any Owner upon written request to the Community
Facilities District accompanied by a fee determined by the Community Facili ties District to pay
the costs of the Community Facilities District in connection therewith. The Community Facilities
District shall in no event be liable to any Owner or any other person or entity in connection with
any error in any such information.
Section 6.14. Further Assurances. The Community Facilities District shall make,
execute and deliver any and all such further agreements, instruments and assurances as may be
reasonably necessary or proper to carry out the intention or to facilitate the performance of th is
Indenture and for the better assuring and confirming unto the Owners of the rights and benefits
provided in this Indenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default:
(a) failure to pay any installment of principal of any Bonds when and as the
same shall become due and payable, whether at maturity as therein expressed, by
proceedings for redemption or otherwise;
(b) failure to pay any installment of interest on any Bonds when and as the same
shall become due and payable;
(c) failure by the Community Facilities District to observe and perform any of
the other covenants, agreements or conditions on its part in this Indenture or in the Bonds
contained, if such failure shall have continued for a period of 30 days after written notice
thereof, specifying such failure and requiring the same to be remedied, shall have been
given to the Community Facilities District by the Trustee, or to the Community Facilities
District and the Trustee by the Owners of not less than 5% in aggregate principal amount
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of the Bonds at the time Outstanding; provided, however, that, if in the reasonable opinion
of the Community Facilities District the failure stated in the notice can be corrected, but
not within such 30 day period, such failure shall not constitute an Event of Default if
corrective action is instituted by the Community Facilities District within such 30 day
period and the Community Facilities District shall thereafter diligently and in good faith
cure such failure in a reasonable period of time; or
(d) the commencement by the Community Facilities District or the City of a
voluntary case under Title 11 of the United States Code or any substitute or successor
statute.
Section 7.02. Foreclosure. If an Event of Default shall occur under Section 7.01(a) or
Section 7.01(b) then, and in each and every such case during the continuance of such Event of
Default, the Trustee may, or at the written direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding, and upon being indemnified to
its satisfaction therefor, shall, commence foreclosure against any parcels of land in the Community
Facilities District with delinquent Special Taxes, as provided in Section 53356.1 of the Act.
Section 7.03. Other Remedies. If an Event of Default shall have occurred and be
continuing, the Trustee shall have the right:
(a) by mandamus, suit, action or proceeding, to compel the Community
Facilities District and its officers, agents or employees to perform each and every term,
provision and covenant contained in this Indenture and in the Bonds, and to require the
carrying out of any or all such covenants and agreements of the Community Facilities
District and the fulfillment of all duties imposed upon it by this Indenture and the Act;
(b) by suit, action or proceeding in equity, to enjoin any acts or things which
are unlawful, or the violation of any of the rights of the Trustee or the Owners; or
(c) by suit, action or proceeding in any court of competent jurisdiction, to
require the Community Facilities District and its officers and employees to account as if it
and they were the trustees of an express trust.
Section 7.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or to the Owners is intended to be exclusive of any other remedy or remedies, and each
and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any
other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
Section 7.05. Application of Net Special Tax Revenues After Default . If an Event of
Default shall occur and be continuing, all Net Special Tax Revenues and any other funds thereafter
received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee
as follows and in the following order:
(a) to the payment of any expenses necessary in the opinion of the Tr ustee to
protect the interests of the Owners and payment of reasonable fees, charges and expenses
of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and
about the performance of its powers and duties under this Indentur e;
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(b) to the payment of the principal and interest then due with respect to the
Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if
only partially paid, or surrender thereof if fully paid) subject to the provisions of this
Indenture, as follows:
First: to the payment to the Persons entitled thereto of all installments of
interest on the Bonds then due in the order of the maturity of such installments and,
if the amount available shall not be sufficient to pay in full any installment or
installments maturing on the same date, then to the payment thereof ratably,
according to the amounts due thereon, to the Persons entitled thereto, without any
discrimination or preference; and
Second: to the payment to the Persons entitled thereto of all installments of
principal of the Bonds then due, whether at maturity or by call for redemption, with
interest on the overdue principal at the rate borne by the respective Bonds on the
date of maturity or redemption, and, if the amount available shall not be sufficient
to pay in full all the Bonds, together with such interest, then to the payment thereof
ratably, according to the amounts of principal due on such date to the Persons
entitled thereto, without any discrimination or preference;
(c) any remaining funds shall be transferred by the Trustee to the Special Tax
Fund.
Section 7.06. Power of Trustee to Enforce. All rights of action under this Indenture or
the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit,
action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the
benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture.
Section 7.07. Owners’ Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee, and upon indemnification of the Tr ustee to its reasonable
satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee;
provided, however, that such direction shall not be otherwise than in accordance the provisions of
this Indenture, the Act and other applicable law and, provided, further, that the Trustee shall have
the right to decline to follow any such direction which in the opinion of the Trustee would be
unjustly prejudicial to Owners not parties to such direction.
Section 7.08. Limitation on Owners’ Right to Sue. No Owner of any Bond shall have
the right to institute any suit, action or proceeding at law or in equity, for the protection or
enforcement of any right or remedy under this Indenture, the Act or any other applicable law with
respect to such Bond, unless (a) such Owner shall have given to the Trustee written notice of the
occurrence of an Event of Default, (b) the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding shall have made written request upon the Trustee to exercise the
powers hereinbefore granted or to institute such suit, action or proceeding in its own name, (c)
such Owner or said Owners shall have tendered to the Trustee indemnity reasonably satisfactory
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to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such
request, and (d) the Trustee shall have refused or omitted to comply with such request for a period
of 60 days after such written request shall have been received by, and said tender of indemnity
shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder
or under law; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by such Owner’s or Owners’ action to affect, disturb or prejudice the security
of this Indenture or the rights of any other Owners, or to enforce any right under the Bonds, this
Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein
provided, and that all proceedings at law or in equity to enforce any such right shall be instituted,
had and maintained in the manner herein provided and for the benefit and protection of all Owners,
subject to the provisions of this Indenture.
Section 7.09. Absolute Obligation. Nothing in this Indenture or the Bonds contained
shall affect or impair the obligation of the Community Facilities District, which is absolute and
unconditional, to pay the principal of and interest on the Bonds to the respective Owners as the
same become due, as herein provided, but only out of the Net Special Tax Revenues and other
assets pledged therefor hereunder, or affect or impair the right of such Owners, which is also
absolute and unconditional, to enforce such payment by virtue of the contract embodied in the
Bonds.
Section 7.10. Termination of Proceedings. In case any proceedings taken by the Trustee
or any one or more Owners on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Owners,
then in every such case the Community Facilities District, the Trustee and the Owners, subject to
any determination in such proceedings, shall be restored to their former positions and rights
hereunder, severally and respectively, and all rights, remedies, powers and duties of the
Community Facilities District, the Trustee and the Owners shall continue as though no such
proceedings had been taken.
Section 7.11. No Waiver of Default. No delay or omission of the Trustee or of any Owner
to exercise any right or power arising upon the occurrence of any default or Event of Default shall
impair any such right or power or shall be construed to be a waiver of any such default or Event
of Default or an acquiescence therein, and every power and remedy given by this Indenture to the
Trustee or to the Owners may be exercised from time to time and as often as may be deemed
expedient.
ARTICLE VIII
TRUSTEE
Section 8.01. Duties and Liabilities of Trustee. The Trustee shall, prior to an Event of
Default, and after the curing or waiver of all Events of Default which may have occurred, perform
such duties and only such duties as are expressly and specifically set forth in this I ndenture. The
Trustee shall, during the existence of any Event of Default which has not been cured or waived,
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exercise such of the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use under the circumstances
in the conduct of such person’s own affairs.
Section 8.02. Qualifications; Removal and Resignation; Successors. (a) The Trustee
initially a party hereto and any successor thereto shall at all times be a trust company, national
banking association or bank having trust powers in good standing in or incorporated under the
laws of the United States or any state thereof, having (or if such trust company, national banking
association or bank is a member of a bank holding company system, its parent bank holding
company shall have) a combined capital and surplus of at least $250,000,000, and subject to
supervision or examination by a federal or state agency. If such trust company, national banking
association or bank publishes a report of condition at least annually, pursuant to law or to the
requirements of any supervising or examining agency above referred to, then for the purpose of
this subsection the combined capital and surplus of such trust company, national banking
association or bank shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) The Community Facilities District may, by an instrument in writing, upon at least
30 days’ notice to the Trustee, remove the Trustee initially a party hereto and any successor thereto
unless an Event of Default shall have occurred and then be continuing, and shall remove the
Trustee initially a party hereto and any successor thereto if (i) at any time requested to do so by an
instrument or concurrent instruments in writing signed by the Owners of not less than a majority
in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized
in writing), or (ii) the Trustee shall cease to be eligible in accordance with subsection (a) of this
Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or its property shall be appointed, or any public officer shall take control or
charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, in each case by giving written notice of such removal to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such resignation by
first class mail, postage prepaid, to the Community Facilities District, and to the Owners at the
respective addresses shown on the Registration Books. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of subsection (a) of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in this Section.
(d) Upon removal or resignation of the Trustee, the Community Facilities District shall
promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of
the Trustee and appointment of a successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee; provided, however, that any successor Trustee shall be
qualified as provided in subsection (a) of this Section. If no qualified successor Trustee shall have
been appointed and have accepted appointment within 45 days following notice of removal or
notice of resignation as aforesaid, the removed or resigning T rustee or any Owner (on behalf of
such Owner and all other Owners) may petition any court of competent jurisdiction for the
appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it
may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this
Indenture shall signify its acceptance of such appointment by executing and delivering to the
Community Facilities District and to its predecessor Trustee a written acceptance thereof, and
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thereupon such successor Trustee, without any further act, deed or conveyance, shall become
vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such
predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the
Written Request of the Community Facilities District or the request of the successor Trustee, such
predecessor Trustee shall execute and deliver any and all instruments of conveyance or further
assurance and do such other things as may reasonably be required for more fully and certainly
vesting in and confirming to such successor Trustee all the right, title and interest of such
predecessor Trustee in and to any property held by it under this Indenture and shall pay over,
transfer, assign and deliver to the successor Trustee any money or other property subject to the
trusts and conditions herein set forth. Upon acceptance of appointment by a successor Trustee as
provided in this subsection, the successor Trustee shall, within 15 days after such acceptance, mail,
by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder
to the Owners at the addresses shown on the Registration Books.
(e) Any trust company, national banking association or bank into which the Trustee
may be merged or converted or with which it may be consolidated or any trust company, national
banking association or bank resulting from any merger, conversion or consolidation to which it
shall be a party or any trust company, national banking association or bank to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, provided such trust
company, national banking association or bank shall be eligible under subsection (a) of this
Section, shall be the successor to such Trustee, without the execution or filing of any paper or any
further act, anything herein to the contrary notwithstanding.
Section 8.03. Liability of Trustee. (a) The recitals of facts herein and in the Bonds
contained shall be taken as statements of the Community Facilities District, and the Trustee shall
not assume responsibility for the correctness of the same or incur any responsibility in respect
thereof, other than as expressly stated herein in connection with the respective duties or obligations
herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible
for its representations contained in its certificate of authentication on the Bonds.
(b) The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of any Bonds, or in respect of the security afforded by this Indenture and the Trustee
shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty
with respect to the issuance of the Bonds for value, the application of the proceeds thereof except
to the extent that such proceeds are received by it in its capacity as Trustee, or the application of
any moneys paid to the Community Facilities District or others in accordance with this Indenture.
(c) The Trustee shall not be liable in connection with the performance of its duties
hereunder, except for its own negligence or willful misconduct.
(d) No provision of this Indenture or any other document related hereto shall r equire
the Trustee to risk or advance its own funds.
(e) The Trustee may execute any of its powers or duties hereunder through attorneys,
agents or receivers and shall not be answerable for the actions of such attorneys, agents or receivers
if selected by it with reasonable care.
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(f) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(g) The immunities and protections extended to the Trustee also extend to its directors,
officers, employees and agents.
(h) Before taking action under Article VII, under this Article or upon the direction of
the Owners, the Trustee may require indemnity reasonably satisfactory to the Trustee be furnished
to it to protect it against all fees and expenses, including those of its attorneys and advisors, and
protect it against all liability it may incur.
(i) The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Owners of not less than a majority
in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Indenture.
(j) The Trustee may become the Owner of Bonds with the same rights it would have
if it were not Trustee and, to the extent permitted by law, may act as depository for and permit any
of its officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the rights of Owners, whether or not such committee shall represent
the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.
(k) The Trustee shall have no responsibility with respect to any information, statement,
or recital in any official statement, offering memorandum or any other disclosure material prepared
or distributed with respect to the Bonds.
(l) The Trustee shall not be liable for the failure to take any action required to be taken
by it hereunder if and to the extent that the Trustee’s taking such action is prevented by reason of
an act of God, terrorism, war, riot, strike, fire, flood, earthquake, epidemic or other, similar
occurrence that is beyond the control of the Trustee and could not have been avoided by exercising
due care.
(m) The Trustee shall not be deemed to have knowledge of an Event of Default
hereunder unless it has actual knowledge thereof.
(n) The permissive right of the Trustee to do things enumerated in this Indenture shall
not be construed as a duty and it shall not be answerable for other than its negligence or willful
misconduct.
(o) The Trustee 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.
Section 8.04. Right to Rely on Documents and Opinions. (a) The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion,
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bonds or other paper or document believed by it to be genuine and to have been signed or presented
by the proper party or parties.
(b) Whenever in the administration of the duties imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence in respect ther eof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a Written
Certificate of the Community Facilities District, and such Written Certificate shall be full warrant
to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture
in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof,
accept other evidence of such matter or may require such additional evidence as it may deem
reasonable.
(c) The Trustee may consult with counsel, who may be counsel to the Community
Facilities District, with regard to legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffer ed by it hereunder in
good faith and in accordance therewith.
Section 8.05. Accounting Records and Financial Statements. The Trustee shall at all
times keep, or cause to be kept, proper books of record and account, prepared in accordance with
prudent corporate trust industry standards, in which accurate entries shall be made of all
transactions made by it relating to the proceeds of the Bonds, the Special Tax Revenues received
by it and all funds and accounts established by it pursuant to this Indenture. Such books o f record
and account shall be available for inspection by the Community Facilities District during regular
business hours and upon reasonable notice and under reasonable circumstances as agreed to by the
Trustee. The Trustee shall deliver to the Community Facilities District a monthly accounting of
the funds and accounts it holds under this Indenture; provided, however, that the Trustee shall not
be obligated to deliver an accounting for any fund or account that (a) has a balance of zero, and
(b) has not had any activity since the last reporting date.
Section 8.06. Preservation and Inspection of Documents. All documents received by
the Trustee under the provisions of this Indenture shall be retained in its possession and shall be
subject during business hours and upon reasonable notice to the inspection of the Community
Facilities District, the Owners and their agents and representatives duly authorized in writing.
Section 8.07. Compensation and Indemnification. The Community Facilities District
shall pay to the Trustee from time to time from Special Tax Revenues all reasonable compensation
pursuant to a pre-approved fee letter for all services rendered under this Indenture, and also all
reasonable expenses, charges, legal and consulting fees pursuant to a pre-approved fee letter and
other disbursements pursuant to a pre-approved fee letter and those of its attorneys, agents and
employees, incurred in and about the performance of their powers and duties under this Indenture.
The Community Facilities District shall, to the extent permitted by law, from Special Tax
Revenues, indemnify and save the Trustee harmless against any costs, claims, expenses (including
fees and expenses of its counsel) and liabilities which it may incur in the exercise and performance
of its powers and duties hereunder, including the enforcement of any remedies and the defense of
any suit, and which are not due to its negligence or its willful misconduct. The duty of the
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Community Facilities District to indemnify the Trustee shall survive the resignation or removal of
the Trustee and the termination and discharge of this Indenture.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures. (a) This Indenture and the rights and
obligations of the Community Facilities District, the Trustee and the Owners hereunder may be
modified or amended from time to time and at any time by a Supplemental Indenture, which the
Community Facilities District and the Trustee may enter into when there are filed with the Trustee
the written consents of the Owners of a majority of the aggregate principal amount of the Bonds
then Outstanding, exclusive of Bonds disqualified as provided in Section 11.07. No such
modification or amendment shall (i) extend the fixed maturity of any Bond, reduce the amount of
principal thereof or the rate of interest thereon, extend the time of payment thereof or alter the
redemption provisions thereof, without the prior written consent of the Owner of each Bond so
affected, (ii) permit any pledge of, or the creation of any lien on, security interest in or charge or
other encumbrance upon the assets pledged under this Indenture prior to or on a parity with the
pledge contained in, and the lien and security interest created by, this Indenture or deprive the
Owners of the pledge contained in, and the lien and security interest created by, this Indenture,
except as expressly provided in this Indenture, without the prior written consents of the Owners of
all Bonds then Outstanding, or (iii) modify or amend this Section without the prior written consents
of the Owners of all Bonds then Outstanding.
(b) This Indenture and the rights and obligations of the Community Facilities District,
the Trustee and the Owners hereunder may also be modified or amended from time to time and at
any time by a Supplemental Indenture, which the Community Facilities District and the Trustee
may enter into without the consent of any Owners for any one or more of the followin g purposes:
(i) to add to the covenants and agreements of the Community Facilities District
in this Indenture contained, other covenants and agreements thereafter to be observed, to
pledge or assign additional security for the Bonds (or any portion thereof), o r to surrender
any right or power herein reserved to or conferred upon the Community Facilities District;
(ii) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision contained in
this Indenture, provided that such modification or amendment does not materially
adversely affect the rights or interests of the Owners hereunder;
(iii) to provide for the issuance of one or more Series of Additional Bonds, and
to provide the terms and conditions under which such Series of Additional Bonds may be
issued, subject to and in accordance with the provisions of Article III;
(iv) to permit the qualification of this Indenture under the Trust Indenture Act
of 1939, as amended, or any similar federal statute hereafter in effect;
(v) to cause interest on the Bonds to be excludable from gross income for
purposes of federal income taxation by the United States of America; and
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4131-8415-2872.3
(vi) in any other respect whatsoever as the Community Facilities District may
deem necessary or desirable, provided that such modification or amendment does not
materially adversely affect the rights or interests of the Owners hereunder.
(c) Promptly after the execution by the Community Facilities District and the Trustee
of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be
furnished to the Trustee by the Community Facilities District), by first-class mail, postage prepaid,
setting forth in general terms the substance of such Supplemental Indenture, to the Owners at the
respective addresses shown on the Registration Books. Any failure to give such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of any such
Supplemental Indenture.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any
Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the Community Facilities District, the Trustee and the Owners shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such m odification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed
to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered
after the effective date of any Supplemental Indenture pursuant to this Article may and, if the
Community Facilities District so determines, shall bear a notation by endorsement or otherwise in
form approved by the Community Facilities District and the Trustee as to any modification or
amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the
Owner of any Bond Outstanding at the time of such effective date and presentation of such Bond
for such purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If
the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion
of the Community Facilities District and the Trustee, to any modification or amendment contained
in such Supplemental Indenture, shall be prepared and executed by the Community Facilities
District and authenticated by the Trustee and, in that case, upon demand of the Owner of any Bond
Outstanding at the time of such effective date, and presentation of such Bond for such purpose at
the Office of the Trustee, such a new Bond in equal principal amount of the same Series, interest
rate and maturity shall be exchanged for such Owner’s Bond so surrendered.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not
prevent any Owner from accepting any amendment or modification as to any particular Bond
owned by it, provided that due notation thereof is made on such Bond.
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. (a) If the Community Facilities District shall
pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds
the principal thereof and the interest and premium, if any, thereon at the times and in the manner
stipulated herein and therein, then the Owners shall cease to be entitled to the pledge of the Net
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4131-8415-2872.3
Special Tax Revenues and the other assets pledged therefor hereunder, and all agreements,
covenants and other obligations of the Community Facilities District hereunder shall thereupon
cease, terminate and become void and this Indenture shall be discharged and satisfied. In such
event, the Trustee shall execute and deliver to the Community Facilities District all such
instruments as may be necessary or desirable to evidence such dischar ge and satisfaction, and the
Trustee shall pay over or deliver to the Community Facilities District all money or securities held
by it pursuant hereto that are not required for the payment of the principal of and interest and
premium, if any, on the Bonds.
(b) Subject to the provisions of subsection (a) of this Section, if the Community
Facilities District shall pay or cause to be paid to the Owner of an Outstanding Bond the principal
thereof and the interest and premium, if any, thereon at the times and in the manner stipulated
herein and therein, such Owner shall cease to be entitled to the pledge of the Net Special Tax
Revenues and other assets pledged therefor hereunder and all agreements, covenants and other
obligations of the Community Facilities District hereunder shall thereupon cease, terminate and
become void and this Indenture shall be discharged and satisfied as to such Bond.
(c) Notwithstanding the discharge and satisfaction of this Indenture or the discharge
and satisfaction of this Indenture in respect of any Bond, those provisions of this Indenture relating
to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds,
replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of
Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the
foregoing, shall remain in effect and shall be binding upon the Trustee and the Owner of such
Bond, and the Trustee shall continue to be obligated to hold in trust any moneys or investments
then held by the Trustee for the payment of the principal of and interest and premium, if any, on
such Bond, and to pay to the Owner of such Bond the funds so held by the Trustee as and when
such payment becomes due.
Section 10.02. Bonds Deemed To Have Been Paid. (a) If moneys shall have been set
aside and held by the Trustee for the payment or redemption of any Bond and the payment of the
interest thereon to the maturity or redemption date thereof, such Bond shall be deemed to have
been paid within the meaning and with the effect provided in Section 10.01. Any Outstanding
Bond shall prior to the maturity date or redemption date thereof be deemed to have been paid
within the meaning of and with the effect expressed in Section 10.01 if (i) in case such Bond is to
be redeemed on any date prior to its maturity date, the Community Facilities District shall have
given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in
accordance with the provisions of Section 4.02, notice of redemption of such Bond on said
redemption date, said notice to be given in accordance with Section 4.02, (ii) there shall have been
deposited with the Trustee either (A) money in an amount which shall be sufficient, or
(B) Defeasance Securities, the principal of and the interest on which when due, and without any
reinvestment thereof, together with the money, if any, deposited therewith, will provide moneys
which shall be sufficient to pay when due the interest to become due on such Bond on and prior to
the maturity date or redemption date thereof, as the case may be, and the principal of and premium,
if any, on such Bond, and (iii) in the event such Bond is not by its terms subject to redemption
within the next succeeding 60 days, the Community Facilities District shall have given the Trustee,
in form satisfactory to it, irrevocable instructions to mail as soon as practicable, a notice to the
Owner of such Bond that the deposit required by clause (ii) above has been made with the Trustee
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4131-8415-2872.3
and that such Bond is deemed to have been paid in accordance with this Section and stating the
maturity date or redemption date upon which money is to be available for the payment of the
principal of and premium, if any, on such Bond.
(b) No Bond shall be deemed to have been paid pursuant to clause (ii) of subsection (a)
of this Section unless the Community Facilities District shall have caused to be delivered to the
Community Facilities District and the Trustee (i) an executed copy of a Ver ification Report with
respect to such deemed payment, addressed to the Community Facilities District and the Trustee,
in form and in substance acceptable to the Community Facilities District, (ii) a copy of the escrow
agreement entered into in connection with the deposit pursuant to clause (ii)(B) of subsection (a)
of this Section resulting in such deemed payment, which escrow agreement shall be in form and
in substance acceptable to the Community Facilities District and which escrow agreement shall
provide that no substitution of Defeasance Securities shall be permitted except with other
Defeasance Securities and upon delivery of a new Verification Report, and no reinvestment of
Defeasance Securities shall be permitted except as contemplated by the original Verification
Report or upon delivery of a new Verification Report, and (iii) a copy of an opinion of Bond
Counsel, dated the date of such deemed payment and addressed to the Community Facilities
District and the Trustee, in form and in substance acceptable to the Community Facilities District,
to the effect that such Bond has been paid within the meaning and with the effect expressed in this
Indenture, all agreements, covenants and other obligations of the Community Facilities District
hereunder have ceased, terminated and become void and the Indenture has been completely
discharged and satisfied as to such Bonds.
Section 10.03. Unclaimed Moneys. Any moneys held by the Trustee in trust for the
payment of the principal of, or premium or interest on, any Bond that remain unclaimed for two
years after the date when such principal, premium or interest has become payable, if such moneys
were held by the Trustee at such date, or for two years after the date of deposit of such moneys if
deposited with the Trustee after the date when such principal, premium or interest become payable,
shall be repaid by the Trustee to the Community Facilities District as its absolute property free
from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the
Owner of such Bond shall look only to the Community Facilities District for the payment of such
principal, premium or interest. The Trustee shall hold any such moneys uninvested.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Notices. Any written notice, statement, demand, consent, approval,
authorization, offer, designation, request or other communication to be given hereunder shall be
given to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely:
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4131-8415-2872.3
If to the Community Facilities District:
City of San Luis Obispo Community Facilities
District No. 2019-1 (San Luis Ranch)
c/o City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
Attention: Finance Director
If to the Trustee:
U.S. Bank National Association
[ADDRESS]
Attention: _________
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if given by courier or delivery service or if personally served or delivered, upon
delivery, (b) if given by telecopier, upon the sender’s receipt of an appropriate answerback or other
written acknowledgment, (c) if given by electronic mail, on the date sent, but only if confirmation
of the receipt of such electronic mail is received or if notice is concurrently sent by another means
specified herein, (d) if given by registered or certified mail, return receipt requested, deposited
with the United States mail postage prepaid, 72 hours after such notice is deposited with the United
States mail, or (e) if given by any other means, upon delivery at the address specified in this
Section.
Section 11.02. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Community Facilities District or t he Trustee is named or
referred to, such reference shall be deemed to include the successors or assigns thereof, and all the
covenants and agreements in this Indenture contained required hereby to be performed by or on
behalf of the Community Facilities District or the Trustee shall bind and inure to the benefit of the
respective successors and assigns thereof whether so expressed or not.
Section 11.03. Limitation of Rights. Nothing in this Indenture or in the Bonds expressed
or implied is intended or shall be construed to give to any Person other than the Trustee, the
Community Facilities District and the Owners any legal or equitable right, remedy or claim under
or in respect of this Indenture or any covenant, condition or provision therein or herein contained,
and all such covenants, conditions and provisions are and shall be held to be for the sole and
exclusive benefit of the Trustee, the Community Facilities District and the Owners.
Section 11.04. Destruction of Bonds. Whenever in this Indenture provision is made for
the cancellation by the Trustee and the delivery to the Community Facilities District of any Bonds,
the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds.
Section 11.05. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from
the remaining provisions contained in this Indenture and such invalidity, illegality or
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4131-8415-2872.3
unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be
construed as if such invalid or illegal or unenforceable provision had never been contained herein.
The Community Facilities District hereby declares that it would have entered into this Indenture
and each and every other Section, subsection, paragraph, sentence, clause or phrase hereof and
authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more
Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held
illegal, invalid or unenforceable.
Section 11.06. Evidence of Rights of Owners. Any request, consent or other instrument
required or permitted by this Indenture to be signed and executed by Owners may be in any number
of concurrent instruments of substantially similar tenor and shall be signed or executed by such
Owners in person or by an agent or agents duly appointed in writing. Proof of the execution of any
such request, consent or other instrument or of a writing appointing any such agent, shall be
sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and the
Community Facilities District if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of any
jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the
Person signing such request, consent or other instrument acknowledged to such notary public or
such officer the execution thereof, or by an affidavit of a witness of such execution duly sworn to
before such notary public or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent or other instrument or writing of the Owner of any Bond shall bind
every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the
Community Facilities District in accordance therewith or reliance thereon.
Section 11.07. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent
or waiver under this Indenture, Bonds that are known by the Trustee to be owned or held by or for
the account of the Community Facilities District, or by any other obligor on the Bonds, or by any
Person directly or indirectly controlling or controlled by, or under direct or indirect common
control with, the Community Facilities District or any other obligor on the Bonds, shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds
so owned which have been pledged in good faith may be regarded as Outstanding for the purposes
of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to
vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, the Community Facilities District or any other
obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the
Community Facilities District shall specify in a Written Certificate of the Community Facilities
District delivered to the Trustee those Bonds disqualified pursuant to this Section and the Trustee
may conclusively rely on such Written Certificate.
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Section 11.08. Money Held for Particular Bonds. The money held by the Trustee for
the payment of the interest, principal or premium due on any date with respect to particular Bonds
(or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and
pending such payment, be set aside on its books and held in trust by it for the Owner entitled
thereto, subject, however, to the provisions of Section 10.03, but without any liability for interest
thereon.
Section 11.09. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Trustee may be established and maintained in the accounting
records of the Trustee, either as a fund or an account, and may, for the purposes of such records,
any audits thereof and any reports or statements with respect thereto, be treated either as a fund or
as an account, but all such records with respect to all such funds and accounts shall at all times be
maintained in accordance with prudent corporate trust industry standards, and with due regard for
the requirements hereof and for the protection of the security of the Bonds and the rights of every
Owner thereof. The Trustee may establish any such additional funds or accounts as it deems
necessary to perform its obligations hereunder.
Section 11.10. Business Days. If the date for making any payment or the last date for
performance of any act or the exercising of any right, as provided in this Indenture , shall not be a
Business Day, such payment may be made or act performed or right exercised on the next
succeeding Business Day, with the same force and effect as if done on the nominal date provided
in this Indenture and, unless otherwise specifically provided in this Indenture, no interest shall
accrue for the period from and after such nominal date.
Section 11.11. Waiver of Personal Liability. No member, officer, agent or employee of
the Community Facilities District or the City shall be individually or personally liable for the
payment of the principal of or premium or interest on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof , but nothing herein contained shall
relieve any such member, officer, agent or employee from the performance of any official duty
provided by any applicable provision of law or by this Indenture.
Section 11.12. Conflict with Act. In the event of any conflict between any provision of
this Indenture and any provision of the Act, the provision of the Act shall prevail over the provision
of this Indenture.
Section 11.13. Conclusive Evidence of Regularity. Bonds issued pursuant to this
Indenture shall constitute evidence of the regularity of all proceedings under the Act relative to
their issuance and the levy of the Special Taxes.
Section 11.14. Governing Laws. This Indenture shall be governed by and construed in
accordance with the laws of the State.
Section 11.15. Execution in Several Counterparts. This Indenture may be executed in
any number of counterparts and each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Community Facilities District has caused this Indenture
to be signed in its name by its representative thereunto duly authorized, and the Trustee, in token
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4131-8415-2872.3
of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its
corporate name by its officer thereunto duly authorized, all as of the day and year first above
written.
CITY OF SAN LUIS OBISPO
COMMUNITY FACILITIES DISTRICT
NO. 2019-1 (SAN LUIS RANCH)
By:
U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE
By:
Authorized Officer
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4131-8415-2872.3
EXHIBIT A
PERMITTED INVESTMENTS
“Permitted Investments” means the following:
(1) Direct general obligations of the United States of America (including obligations
issued or held in book-entry form on the books of the Department of the Treasury of the United
States of America);
(2) Obligations of any of the following federal agencies which obligations represent
the full faith and credit of the United States of America, including:
-Export-Import Bank
-Rural Economic Community Development Administration
-U.S. Maritime Administration
-Small Business Administration
-U.S. Department of Housing & Urban Development (PHAs)
-Federal Housing Administration
-Federal Financing Bank;
(3) Direct obligations of any of the following federal agencies which obligations are
not fully guaranteed by the full faith and credit of the United States of America:
-Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or
Federal Home Loan Mortgage Corporation (FHLMC)
-Obligations of the Resolution Funding Corporation (REFCORP)
-Senior debt obligations of the Federal Home Loan Bank System;
(4) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances
with domestic commercial banks which have a rating on their short term certificates of deposit on
the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing not more
than 360 calendar days after the date of purchase; (ratings on holding companies are not considered
as the rating of the bank);
(5) Commercial paper which is rated at the time of purchase in the single highest
classification, “P-1” by Moody’s and “A-1+” by S&P and which matures not more than
270 calendar days after the date of purchase;
(6) Investments in a money market fund rated “AAAm” or “AAAm-G” or better by
S&P, including a fund for which the Trustee, its parent holding company, if any, or any affiliates
or subsidiaries of the Trustee provide investment advisory or other management services;
(7) Pre-refunded Municipal Obligations defined as follows: any bonds or other
obligations of any state of the United States of America or of any agency, instrumentality or local
governmental unit of any such state which are not callable at the option of the obligor prior to
maturity or as to which irrevocable instructions have been given by the obligor to call on the date
specified in the notice; and
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4131-8415-2872.3
(a) which are rated, based on an irrevocable escrow account or fund (the
“escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or
(b) (i) which are fully secured as to principal and interest and redemption premium,
if any, by an escrow consisting only of cash or obligations described in paragraph (2)
above, which escrow may be applied only to the payment of such principal of and interest
and redemption premium, if any, on such bonds or other obligations on the maturity date
or dates thereof or the specified redemption date or dates pursuant to such irrevocable
instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally
recognized independent certified public accountant, to pay principal of and interest and
redemption premium, if any, on the bonds or other obligations described in this paragraph
on the maturity date or dates specified in the irrevocable instructions referred to above, as
appropriate;
(8) Municipal obligations rated “Aaa/AAA” or general obligations of states with a
rating of “A2/A” or higher by both Moody’s and S&P;
(9) Investment agreements with a domestic or foreign bank or corporation (other than
a life or property casualty insurance company) the long-term debt of which, or, in the case of a
guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty
insurance company, claims paying ability, of the guarantor is rated at least “Aa3” by Moody’s and
“AA-” by S&P; provided, that, by the terms of the investment agreement:
(a) the invested funds are available for withdrawal without penalty or premium,
at any time upon not more than seven days’ prior notice;
(b) the investment agreement shall state that it 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;
(c) the Trustee or the Community Facilities District receive the opinion of
domestic counsel that such investment agreement is legal, valid and binding and
enforceable against the provider in accordance with its terms and of foreign counsel (if
applicable);
(d) the investment agreement shall provide that if during its term (i) the
provider’s rating by either Moody’s or S&P falls below “Aa3” or “AA-,” respectively, the
provider shall, at its option, within 10 days of receipt of publication of such do wngrade,
either (A) 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 Trustee or a 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 Moody’s and S&P to maintain an “A”
rating in an “A” rated structured financing (with a market value approach); or (B) repay
the principal of and accrued but unpaid interest, on the investment, and (ii) the provider’s
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4131-8415-2872.3
rating by either Moody’s or S&P is withdrawn or suspended or falls below “A3” or “A-,”
respectively, the provider must, at the direction of the Community Facilities District or the
Trustee, within 10 days of receipt of such direction, repay the principal of and accrued but
unpaid interest on the investment, in either case with no penalty or premium to the Trustee;
(e) 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
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
collateral is in possession); and
(f) 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 Community Facilities District or the
Trustee, be accelerated and amounts invested and accrued but unpaid interest thereon shall
be repaid to the Trustee, and (ii) the provider shall become insolvent, not pay its debts as
they become due, be declared or petition to be declared bankrupt, etc., the provider’s
obligations shall automatically be accelerated and amounts invested and accrued but unpaid
interest thereon shall be repaid to the Trustee.
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EXHIBIT B
FORM OF SERIES 2021 BOND
Unless this Bond is presented by an authorized representative of The Depository Trust Company,
a New York corporation (“DTC”), to the Trustee for registration of transfer, exchange, or payment,
and any Bond issued is registered in the name of Cede & Co. or in such other name as is requested
by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
No. ________________ $____________
CITY OF SAN LUIS OBISPO
COMMUNITY FACILITIES DISTRICT NO. 2019-1
(SAN LUIS RANCH)
SPECIAL TAX BOND, SERIES 2021
INTEREST RATE MATURITY DATE DATED DATE CUSIP
% [September] __, 20__ __________, 2021
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch)
(the “Community Facilities District”), for value received, hereby promises to pay, solely from the
sources hereinafter described, to the Registered Owner identified above or registered assigns (the
“Registered Owner”), on the Maturity Date identified above or on any earlier redemption date, the
Principal Amount identified above in lawful money of the United States of America; and to pay
interest thereon at the Interest Rate identified above in like lawful money from the date hereof
payable semiannually on March 1 and September 1 in each year, commencing March 1, 20__ (the
“Interest Payment Dates”), until payment of such Principal Amount in full.
This Bond is one of a series of a duly authorized issue of bonds approved by the qualified
electors of the Community Facilities District, pursuant to the Mello-Roos Community Facilities
Act of 1982, constituting Sections 53311 et seq. of the California Government Code (the “Act”),
and issued for the purpose of financing certain public facilities, and is one of the series of bonds
designated “City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch)
Special Tax Bonds, Series 2021” (the “Series 2021 Bonds”) in the aggregate principal amount of
$__________. The Series 2021 Bonds are issued pursuant to the Indenture, dated as of
__________1, 2021 (the “Indenture”), by and between the Community Facilities District and U.S.
Bank National Association, as trustee (said entity or any successor thereto as trustee under the
Indenture, the “Trustee”), and this reference incorporates the Indenture herein, and by acceptance
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4131-8415-2872.3
hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more
particularly provided in the Indenture, additional bonds (“Additional Bonds”) may be issued by
the Community Facilities District on a parity with the Series 2021 Bonds. The Series 2021 Bonds
and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered
into, and this Bond is issued under, the Act and the laws of the State of California. Capitalized
undefined terms used herein shall have the meanings ascribed thereto in the Indenture.
Interest on the Series 2021 Bonds shall be payable from the Interest Payment Date next
preceding the date of authentication thereof unless (a) a Series 2021 Bond is authenticated on or
before an Interest Payment Date and after the close of business on the preceding Record Date, in
which event interest thereon shall be payable from such Interest Payment Date, (b) a Series 2021
Bond is authenticated on or before the first Record Date, in which event interest thereon shall be
payable from the Closing Date, or (c) interest on any Series 2021 Bond is in default as of the date
of authentication thereof, in which event interest thereon shall be payable from the date to which
interest has previously been paid or duly provided for. Interest shall be paid in lawful money of
the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee
mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the
Series 2021 Bonds at their respective addresses shown on the Registration Books as of the close
of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series
2021 Bond which is not punctually paid or duly provided for on any Interest Payment Date shall,
if and to the extent that amounts subsequently become available therefor, be paid on a payment
date established by the Trustee to the Person in whose name the ownership of such Series 2021
Bond is registered on the Registration Books at the close of business on a special record date to be
established by the Trustee for the payment of such defaulted interest, notice of which shall be given
to such Owner not less than ten days prior to such special record date. The principal of the Series
2021 Bonds shall be payable in lawful money of the United States of America upon presentation
and surrender thereof upon maturity or earlier redemption at th e Office of the Trustee.
The Bonds are special obligations of the Community Facilities District, payable, as
provided in the Indenture, solely from Net Special Tax Revenues and the other assets pledged
therefor thereunder. Neither the faith and credit nor the taxing power of the Community Facilities
District (except to the limited extent set forth in the Indenture), the City of San Luis Obispo or the
State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.
Pursuant to and as more particularly provided in the Indenture, subject only to the
provisions of the Indenture permitting the application thereof for the purposes and on the terms
and conditions set forth therein, in order to secure the payment of the principal of , premium, if
any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and
the Act, the Community Facilities District pledges to the Owners, and grants thereto a lien on and
a security interest in, all of the Net Special Tax Revenues and any other amounts held in the Special
Tax Fund, the Bond Fund and the Reserve Fund. Said pledge constitutes a first lien on and security
interest in such assets, which shall immediately attach to such assets and be effective, binding and
enforceable against the Community Facilities District, its successors, purchasers of any of such
assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance
with, the Indenture, irrespective of whether those parties have notice of the pledge of, lien on and
security interest in such assets and without the need for any physical delivery, recordation, filing
or further act.
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The Series 2021 Bonds are subject to redemption on the dates, at the Redemption Prices
and pursuant to the terms set forth in the Indenture. Notice of redemption of any Series 2021 Bond
or any portion thereof shall be given as provided in the Indenture.
The Series 2021 Bonds are issuable as fully-registered Bonds without coupons in
Authorized Denominations ($5,000 and any integral multiple thereof).
Any Series 2021 Bond may be transferred upon the Registration Books by the Person in
whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender
of such Series 2021 Bond to the Trustee for cancellation, accompanied by delivery of a written
instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Series
2021 Bond or Series 2021 Bonds shall be so surrendered for transfer, the Community Facilities
District shall execute and the Trustee shall authenticate and shall deliver a new Series 2021 Bond
or Series 2021 Bonds of the same maturity in a like aggregate principal amount, in any Authorized
Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer. The Series 2021 Bonds may
be exchanged at the Office of the Trustee for a like aggregate principal amount of Series 2021
Bonds of the same maturity of other Authorized Denominations. The Trustee shall require the
payment by the Owner requesting such exchange of any tax or other governmental charge required
to be paid with respect to such exchange.
The Indenture and the rights and obligations of the Community Facilities District, the
Trustee and the Owners may be modified or amended in the manner, to the extent, and upon the
terms provided in the Indenture.
The Indenture contains provisions permitting the Community Facilities District to make
provision for the payment of the principal of and the interest and premium, if any, on any of the
Bonds so that such Bonds shall no longer be deemed to be Outstanding under the terms of the
Indenture.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company to the Trustee for registration of transfer, exchange or payment, and any Bond issued is
registered in the name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.
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4131-8415-2872.3
IN WITNESS WHEREOF, the Community Facilities District has caused this Bond to be
signed in its name and on its behalf by the manual or facsimile signature of the Mayor of the City
of San Luis Obispo attested by the manual or facsimile signature of the City Clerk of the City of
San Luis Obispo, all as of the Dated Date identified above.
CITY OF SAN LUIS OBISPO
COMMUNITY FACILITIES DISTRICT
NO. 2019-1 (SAN LUIS RANCH)
By:
Mayor of the City of San Luis Obispo
Attest:
By:
City Clerk of the City of San Luis Obispo
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4131-8415-2872.3
CERTIFICATE OF AUTHENTICATION
This is one of the Series 2021 Bonds described in the within-mentioned Indenture and
registered on the Registration Books.
Date: _______________
U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE
By:
Authorized Officer
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4131-8415-2872.3
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
__________________________________, whose address and social security or other tax
identifying number is ____________________, the within-mentioned Bond and hereby
irrevocably constitute(s) and appoint(s) ______________________________, attorney, to transfer
the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature guarantee shall be made by a guarantor
institution participating in the Securities Transfer
Agents Medallion Program or in such other guarantee
program acceptable to the Trustee.
Note: The 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.