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Home My WebLink AboutRDA 04 REFUND BONDS 06-15-98RDA ~NO. 4 6-15-98 DATE: June 10, 1998 .lnter-Com TO: FROM: . SUBJECT: William A. Huston, f::xecutive Director .. Ronald A. Nault, Finance Director REFUNDING OF OUTSTANDING 1987 AND 1991 TOWN CENTER PROJECT AREA TAX ALLOCATION BONDS SUMMARY: At their meeting held June 1, 1,998 the Redevelopment Agency Board authorized staff to proceed with a proposal to refund outstanding 1987 and 1991 Tax Allocation Bonds. The Agency and the City are asked to adopt Resolutions RDA No. 98-2 and No. 98-54 authorizing the issuance of not to exceed $21,000,000 of refunding bonds and approving related documents and actions. RECOMMENDATION: Adopt'Resolution RDA No. 98-2 authorizing the issuance by the Tustin Community Redevelopment Agency of Tax Allocation Bonds in the aggregate principal amount of not to exceed $21,000,000 and approving related documents and actions. DISCUSSION: As reported to the Agency at the June 1 meeting, the refinancing net present value savings is 8.697%, $1,567,725 over the remaining life of the bonds. There are no proposed changes in.structure, i.e., the current maturities for both refunded issues will be retained. We are exploring the possibility of expanding the current reserve fund surety bonds on the 1991 bonds to also cover the reserve requirements of the 1987 issue. If this is possible we are recommending the current reserve balance, approximately $800,000, net of the surety premium, be used to reduce the' cost of issuance and principal of the refunding bonds. In addition to the Resolution RDA No. 2, attached you will find the following substantively complete documents: the Escrow Deposit and Trust Agreement for the 1987 refunding bonds; the Escrow Deposit and Trust Agreement for the 1991 refunding bonds; the Indenture of Trust; the Continuing Disclosure Certificate; the Bond Purchase Agreement; and the Preliminary Official Statement. i have also attached a summary of the proposed bond issue that highlights the salient points and the transaction timetable. Members of the r~financing team will be available at the meeting to answer your specific questions. ~,(::;n'~af~ A. Nault k. Finance Director RAN:ts Attachments RAN:BondRefundingRDA98.Agenda-doc 1 RESOLUTION NO. RDA 98-2 A RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY OF TIlE CITY OF TUSTIN, CALIFORNL4, AUTHORIZING THE ISSUANCE AND SALE OF TAX ALLOCATION BONDS IN THE A GG REGA TE P RIN CIPAL AMOUNT O F NO T TO EX CEED $21,000,000 TO REFUND TIlE AGENCY'S OUTSTANDING TOWN CENTER AREA REDEVELOPMENT PROJECT TAX ALLOCATION REFUNDING BONDS, SERIES 1987, AND THE AGENCY'S TOWN CENTER AREA REDEVELOPMENT PROJECT' SUBORDINATE TAX ALLOCATION BONDS, SERIES 1991, AND APPROVING RELATED DOCUMENTS AND ACTIONS 10 11 12 13 14 15 16 17 18 19 20 WHEREAS, the Agency is undertaking the redevelopment of the Town .Center Area Redevelopment Project (the "Redevelopment Project") pursuant to the Community Redevelopment Law of the State of Califomia, constituting Part 1 of Division 24 of the California Health and Safety Code; · WHEREAS, the Agency has determined at this time, due to prevailing interest rates in the, municipal bond market, to issue not to exceed $21,000,000 aggregate principal amount of its Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "B6nds"); under the provisions of Articles 10 and 11 of Chapter 3 ofpart 1 ofDivision 2 of Title 5 of the California Government Code, commencing with section 53570 of said Code (the"Bond Law"), the principal of and interest on which wil! be payable from the tax increment revenues from the Redevelopment Project, to refund (a) its Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution No. RDA 87-8, adopted by the-Agency on August 3, 1987, in the ag~egate principal amount of $8,060,000, of which $5,145,000 remains outstanding (the "1987 Bonds"), and Co) its Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No. RDA 91-12, adopted by the Agency on July 15, 1991, in the aggregate principal amount of $13,100,000, of which $12,880,000 remains outstanding (the "1991 Bonds" and, with the 1987 Bonds, the "Prior Bonds"); and WHEREAS, the Agency has duly considered such transactions and wishes at this time authorize proceedings for the issuance and sale of the Bonds; 23 24 25 26 27 28 THE TUSTIN COMMI~rlTY REDEVELOPMENT AGENCY DOES HEREBY RESOLVE: · Section 1. Issuance of the Bonds; Approval of the Indenture. The Agency hereby authorizes the issuance of the Bonds in the aggregate principal amount of not to exceed $21,000,000, for the purpose of refunding the Prior Bonds. The Bonds shall be issued pursuant to the Bond Law and pursuant to an Indenture of Trust, dated as of July 1, 1998, by and between the Agency and U.S. Bank Trust National Association, as trustee (the "Indenture"). The Agency TUAGY]~..S. 8 A/LR..'2 5 8 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 hereby approves the Indenture in substantially the form on file with the Secretary, together with such additions thereto and changes therein as the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall deem necessary, desirable or appropriate, and the execution thereof by the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall be conclusive evidence of the approval of any such additions and changes. The ChairPerson, the Vice Chairperson, the Executive Director or the Treasurer is hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest and affix the seal of the Agency to, the final form of the Indenture for and in the name and on behalf of the Agency. The Agency hereby authorizes the delivery and performance of the Indenture. Section 2. Refundin~ of the Prior Bonds. (a) A portion of the proceeds of the Bonds shall be applied to refund the 1987 Bonds in full pursuant _to an Escrow Deposit ancl T_mst Agreement, dated as of July '1, 1998, by and between the Agency and U.S. Bank Trust National Association, as escrow bank (the "1987 Bonds Escrow Agreement").' The Agency hereby approves the 1987 Bonds Escrow Agreement in substantially the form on fiIe,Mth the Secretary, together with such additions thereto and changes therein as the Chairperson, the Vice Chairperson, the Executive DirectOr or the Treasurer shall deem necessary, desirable or appropriate, and the execution thereof by the Chairperson, the Vice ChairperSon, the Executive Director or the Treasurer shall be conclusive evidence of the approval of any such additions and changes. The Chairperson, the Vice Chairperson, the Executive Director or the Treasurer is hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest and affix the seal of the Agency To, the final form of the 1987 Bonds Escrow Agreement for and in the name and on behalf of the Agency. The Agency hereby authorizes the delivery and performance of the 1987 Bonds Escrow Agreement. (b) A portion of the proceeds of the Bonds shall be applied to refund the 1991 Bonds in full pursuant to an Escrow Deposit and TruSt Agreement, dated as of July 1, 1998, by and between the Agency and U.S. Bank Trust National Association, as escrow bank (the"1991 Bonds Escrow Agreemen.t"). The Agency hereby approves the 1991 Bonds Escrow Agreement in substantially the form on file with the Secretary, together with such additions thereto and changes therein as the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall deem necessary, desirable or appropriate, and the execution thereof by the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall be conclusive evidence of the approval of any such additions and changes. The Chairperson, the Vice Chairperson, the Executive Director or the Treasurer is hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest and affix the seal of the Agency to, the final form of the 1991 Bonds Escrow Agreement for and in the name and on behalf of the Agency. The Agency hereby authorizes the delivery and performance of the 1991 Bonds Escrow Agreement. (c) The Agency finds and determines that the refunding should be at a negotiated rather than a competitive sale because (i) timing of the sale provided more flexibility; (ii) more cost savings are expected to be realized; ('fii) more flexibility in debt structure was available; and (ix,) Agency able to work with participants familiar with the issue and the issuer. .. TUAGYP. ES.gA/LR./25g 1 Section 3. Sale of the Bonds[ Desimaation of Minimum Savings. The Agency. hereby approves the Bond Purchase A~eement, by and between John Nuveen & Co. Inc., as underwriter 2 (the "Underwriter") and the Agency, in substantially the form on file with the Secretary (the "Bond 3 Purchase Agreement"), together with such additions thereto and changes therein as the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall deem necessary, 4 desirable or appropriate, and the execution thereof by the Chairperson, the Vice Chairperson, the Executive Director or the TreasUrer shall be conclusive ex~idence of the approval of any such 5 additions and changes. The Chairperson, the Vice Chairperson, the Executive Director or the 6 Treasurer is hereby authorized and directed to execute the final form of the Bond Purchase Agreement for and in the name and on behalf of the Agency. The Agency hereby approves the 7 negotiated sale of the Bonds to the Underwriter pursuant to the Bond Purchase Agreement so long as (i) the Underwriter's discount, excluding original issue discount which does not constitute 8 compensation to the Underwriter, with respect to the Bonds does not exceed 0.75%, (ii) the 9 maturity date of the Bonds does not exceed 12/1/2016, (iii) the aggregate principal amount of the Bonds does not exceed $21,000,000, and (iv) the true interest cost with respect to the Bonds does 10 not exceed 6.25%. 1I 12 13 14 15 16 17 18 19 2'0 21 22 23 24 25 26 27 28 In addition to the foregoing provisions of this Section 3, the Bonds shall not be sold, and neither the Chairperson, the Vice Chairperson, the Executive Director nor the Treasurer shall execute the Bond Purchase A~eement, unless the net present value savings to the Agency is at least equal to 3% of the refunded principal amount of the Prior Bonds. Section 4. Approval of Preliminarv Official Statement. The Agency he/eby approves the form of Preliminary Official Statement, on file with the Secretary, with such changes therein as may be approved by the Chairperson, the Vice Chairperson, the Executive. DirectOr or the Treasurer. Distribution of such Preliminary Official Statement by the Underwriter to prospective purchasers of the Bonds is hereby approved. The Chairperson, the Vice Chairperson, the Executive Director or the Treasurer is hereby authorized to certify that the Preliminary Offici'al Statement is deemed final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 except for permitted omissions, a preliminary form of Official Statement describing the Bonds in the form on file with the Secretary. Section 5. Official Statement. The Chairperson, the Vice Chairperson, the Executive Director or the Treasurer is hereby authorized to execute the final form of the Official Statement, including as it may be modified by such additions thereto and changes therein as the Chairperson, the Vice Chairperson, the Executive Director or' the Treasurer shall deem necessary, desirable or appropriate, and .the execution of the final Official Statement by the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall be conclusive evidence of the approval of any such additions and changes. The Agency hereby authorizes the distribution of the final Official Statement by the Underwriter. The final Official Statement shall be executed in the name and on behalf of the Agency by the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer. Section 6. Approval of Continuin~ Disclosure Certificate. The Agency hereby approves the form of the Continuing Disclosure Certificate of the Agency (the "Continuing Disclosure TUAGYRES.gArl..R/258 10 11 12 13 14 15 16. 17 18 19 20 21 22 23 24 25 26 27 28 Aereement") in substantially the form on file w~ith the Secretary, together with such additions thereto and changes therein as the Chairperson, Vice Chairperson, Executive Director or the Treasurer shall deem necessary, desirable or approPriate, and the execution thereof by the Chairperson, the Vice Chairperson, the Executive Director or the Treasurer shall be conclusive evidence of the approval of any such additions and changes. Section 7. Enea~ernent of Professional Services. The firm of Public Financial Manaeement, Inc., is hereby retained as financial advisor to the Agency in connection with the ' issuance and sale of the Bonds. Such firm shall be retained upon the terms and conditions set forth in its proposal which is on file with the Secretary. The Chairperson, the Vice Chairperson, the Executive Director or the Treasurer is hereby authorized and directed to execute an agreement for financial advisory services ~Sth such firm. Section 8. Official Actions. The Chairperson,' the x, qce Chairperson, the Executive Director, the Treasurer and the Secretary .of the Agency, and any and all other officers of the Agency, are hereby authorized and directed, for and in the name and on behalf of the Agency, to do any and all things and take any and all actions, including execution and delivery of any and all assignments' certificates, requisitions, a~eements, notices, consents, instruments of conveyance, warrants and other documents which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and sale of the'Bonds as described herein. Whenever in this resolution any officer of the Agency is authorized to execute or countersign any document or take any action, such execution, countersigning or actionmay be taken on behalf of such officer by'any person desiguated by such officer to act on his' or her behalf in the case such officer shall be absent or unavailable. Section 9. Effective Date,. This Resolution shall take effect from and after the date of its passage and adoption. P ASSED.~NI) ADOPTED by the Tustin community Redevelopment Agency at a regular meeting held on the 15th day of June, 1998. THOMAS K. SALTARELLI, CHAIRPERSON PAMELA STOKER, tLECO~ING SECRETARY TUAGYRE$. 8 A,'L.R.'2 5 8 I l ElU SUMMARY OF PROPOSED BOND ISSUE · RE: TUSTIN COMMIJNITY REDEVELOPMENT AGENCY SERIES 1998 TAX ALLOCATION REFUNDING BONDS ' Use of Proceeds: The proceeds of the Bonds will be used for the purpose, of refunding outstanding bonds issued by the Agency which include the Series 1987 Bonds (maturing 11/1/gg-11/1/06 $5,145,000) and the Series 1991 Bonds (maturing 12/1/98-12/1/16 $12,g80,000) and covering certain costs of issuance. Size of Issue: Not to exceed $21,000,000 Structure: Serial bonds maturing 12/1/98-12/1/16 Timing of Issue: Pricing scheduled week of June 22, 1998. Closing scheduled week of July 13,1998. Bond Security: The Bonds are special obligations of 'the Tustin Community Redevelopment Agency and are secured by an irrevocable pledge by the Agency of Pledged Tax RevenuEs. Rating: AAA/Aaa (M]3IA insured) Summary of Financing Statistics as of Market Close June 7, 1998: Par Amount: Net PV Savings: % Savings of Refunded Bonds: Tree Interest Cost: Average Coupon: $19,605,000 $1,567,725 8.697% 5.035% 4.852%' 06/10/98 WED 11'00 r,'~x o~' ~x, muv m · TUSTIN COMMUNITY REDEVELOPMENT AGENCY Series 1998 Refunding Bonds June S M TW T F S 1 2 3 4 5 6. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 July S M TW T F g 1 2 3 4 5 6 7 g 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Date Transaction Timetable Matter Party Week of May. 18 Send Credit Package to Insurers JN/PFM Monday, May 26 Agenda Package due date' All required documentation duc to City PFM Friday, June 5/ Monday, June 8 Distribute first draft of Bond Documents and Preliminary Official Statement BC Week of June Distribute second draft of Bond Documems and Preliminary Official Statement BC Receive Insurance Bids Monday, June 8 Agenda package duc date All required docnmentation due to City CilT/PFM Friday, June 12 Comments on first draft of Bond Documents and Official Statement Due All Monday, June 15 Board Approval All Tuesday, June 16 Print and Mail Preliminary Official Statement BE Week of June 22 Pricing, Underwriting and Commitment JN/PFM wednesday, July 15 Pre Closing All Thursday, July 16 Closing ~ity- City of Tustin BC - McFarlin & Anderson PFM- . Public Financial Management Jlq - John Nuveen & Co. ESCROW DEPOSIT AND TRUST AGREEMENT by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY and U.S. BANK TRUST NATIONAL ASSOCL4,TION, as Escrow Bank Dated July 1, 1998 Relating to Refunding of the Outstanding Tustin Community Redevelopment Agency Town Center Area Redevelopment Project ' Tax Allocation Refunding Bonds, Series 1987 TUSTIS$CW.SA/LR/258 ESCROW DEPOSIT AND TRUST AGREEMENT This ESCROW DEPOSIT AND TRUST AGREEMENT is dated as of July 1, 1998, by and between the TUSTIN COMIc(UNITY REDEVELOPMENT AGENCY, a public body corporate and politic, organized. and existing under the laws of the State of California (the "Agency"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized and existing under the laws .of the United States of ,America, with a corporate trust office in Los Angeles, California, and being qualified to accept and administer the trusts hereby created, as successor fiscal agent (the "Fiscal Agent") with respect to the hereinafter described 1987 Bonds and as escrow bank hereunder (the "Escrow Bank"); WITNESSETH: WHEREAS, the Agency has heretofore issued its $8,060,000 Tustin Community. Redevelopment Agency To~m Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987 (the "1987 Bonds"), the total principal mount, of $5,145,000 of which is currently outstanding; WHEREAs, the 1987 Bonds were issued for the purpose, among others, of financing and refinancing redevelopment activities within or of benefit to the Agency's Town Center Area Redevelopment Project; WHEREAS, the 1987 Bonds were issued pursuant to Resolution No. RDA 87-8, adopted by the Agency On August 3, 1987 (the "1987 Bond Resolution") WHEREAS, the 1987 Bond Resolution provides that if the Agency shall pay and discharge the entire indebtedness on all or any portion of the 1987 Bonds by irrevocably depositing with the Fiscal Agent, in trust, direct obligations of the United States, or obligations for which the full faith and credit ofthe United States are pledged for the payment of principal and interest, in such amount as an Independent Certified Public Accountant (as defined in the 1987 Bond Resolution) shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to the 1987 Bond Resolmion, be fully sufficient to pay and discharge the indebtedness on all or such portion of the 1987 Bonds (including all principal, interest and redemption premiums) at or before maturity, and if the 1987 Bonds are to be redeemed prior to the maturity thereof, and notice of such redemption is given pursuant to the 1987 Bond Resolution or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Pledged Tax Revenues (as defined in the 1987 Bond Resolution) and other funds provided for in the 1987 Bond Resolution and all other obligations of the Fiscal Agent and the Agency under the 1987 Bond Resolution with respect to all or such portion of the 1987 Bonds shall cease and terminate, except only the obligation ofthe Trustee to transfer and exchange the 1987 Bonds thereunder and except the obligation of the Agency to pay or cause to be paid to the or,hers of the 1987 Bonds nor so surrendered and paid all sums due thereon and all expenses and costs of the Trustee; and thereafter Pledged Tax Revenues shall not be payable to the Trustee; WHEREAS, the Agency has de~e,,-mined to provide for the refunding of the 1987 Bonds; WHEREAS, for the purpose of providing funds for the refunding of the 1987 Bonds, the Agency has determined to issue its $ Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax .Mlocation Refunding Bonds, 1998 Series A (the "1998 Bonds"), pursuant to and secured by an Indenture of Trust, dated as of July 1, 1998 (the "Indenture"), by and between the Agency and U.S. Bank Trust National Association, as trustee (the "Trustee"); WHEREAS, the Agency Mshes to make such a deposit with the Escrow Bank and to enter into this Escrow Deposit and Trust Agreement for the purpose of providing the terms and conditions for the deposit and application of amoun.ts so deposited; and WHEREAS, the Escrow Bank has full powers to act w/th respect to the irrevocable escrow and trust created herein and to perform the duties and obligations to be undertaken pursuant to this Escrow Deposit and Trust Ageement; NO W, THEREF ORE, in consid emil on o fthe above premises and o f the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows: Section 1. Definition of Federal Securities. As used herein, the term "Federal Securities" shall mean non-callable, direct obligatio~ ofthe United States, or obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest. Section 2. Appointment of Escrow Bank. The Agency hereby appoints the EscrOw Bank as escrow bank for all pu~-o, oses of this Escrow Deposit and Trust Agreement and in accordance with the terms and provisions of this Escrow Deposit and Trust Agreement, and the Escrow Bank hereby accepts such appointment. Section 3. Establishment of EScr°w Fund. There is hereby created by the Agency with, and to be held by, the Escrow Bank, as secm-it3' for the payment of the principal of and interest on the 1987 Bonds as hereinafter set forth, an ~evocable escrow to be maintained in trust by the Escrow Bank on behalf of the Agency and for the benefit of the owners of the 1987 Bonds, said escrow to be designated the "Escrow Fund." All moneys and Federal Securities deposited in the Escrow Fund shall constitute a special fund for the payment of the principal of and interest on the 1987 Bonds in accordance with the provisions ofthe 1987 Bond Resolution. If at any time.the Escrow Bank shall receive actual -knowledge that the moneys and Federal Securities in the Escrow Fund will not be sufficient to make any payment required by Section 5 hereof, the Escrow Bank shall notify the Agency of such fact and the Agency shall immediately cure such deficiency. Section 4. Deposit into Escrow Fund: Investment of Amount_s. Concurrently wSth deliver>' of the 1998 Bonds, the Agency shall cause to be transferred to the Escrow Bank for deposit into the Escrow Fund the amount of $ in immediately available funds, derived as follows: (a) from the proceeds of sale of the 1998 Bonds in the mount of $ . · and Co) from the special fund established pursuant to the 1987 Bond Resolution (the "1987 Special Fund") in the amount of $ pursuant to Section 8 hereof. Of the amounts deposited in the Escrow Fund pursuant-to the preceding para~aph, the Escrow Bank shall invest the sum of $ in the Federal Securities set' forth in Exhibit A attached hereto and by this reference incorporated herein (the "Escrowed Federal Securities") and shall hold the remaining amount ($ ) in cash, uninvested. The Escrowed Federal Securities shall be deposited with and held by the Escrow Bank in the Escrow Fund solely for the uses and purposes set. forth herein. The Escrow Bank may rely upon the conclusion of _, independent certified public accountants, as contained in its opinion and accompanying schedules (the "Report") dined July 16, 1998, concerning the 1987 Bonds, that the Escrowed Federal Securities mature and bear interest payable in such amounts and at such times as, together with cash on deposit in the Escrow FUnd, v~511 be sufficient to pa), the principal of and interest on the 1987 Bonds through November 1, 1998, and to provide for the redemption of the 1987 Bonds in full on November 1, 1998, at the redemption price of 101-1/2% of the principal amount thereof, plus accrued interest. The Escrow Bank shall not be liable or responsible for any loss resulting from any investment or reinvestment made pursuant to this Escrow DepOsit and Trust Agreement and in full compliance with the provisions hereof. Section 5. Instructions as to Application of Deoosi_t. The total amount of Escrowed Federal Securities and uninvested moneys deposited in the Escrow Fund pursuant to Section 4 shall be applied by the Escrow Bank for the sole purpose of paying the principal of and interest on the 1987 Bonds as the same shall become due and payable, to and including November 1, 1998, and to redeem all outstanding 1987 Bonds in full on November 1, 1998, at the price of 101-1/2% of the principal amount thereof, plus accrued interest, as more particularly set forth in Exhibit B attached hereto and hereby made a part hereof. Following the final payment of the 1987 Bonds, together accrued interest to the payment date, the Escrow Bank shall transfer any remaining amounts relating to the 1987 Bonds to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit again~ payments of principal of and interest on the 1998 Bonds. Section 6. Investment of Any Remainin~o Moneys. At the written direction of the AgencY Treasurer, the Escrow Bank shall invest and reinvest the proceeds received from any of the Escrowed Federal Securities, and the cash originally deposited into the Escrow Fund, for a period ending not later than the next succeeding interest payment date relating to the 1987 Bonds, in Federal Securities; provided, h°weYer, that (a) such wu-itten directions of the Agency Treasurer shall be accompanied by an opinion of nationally recognized bond counsel ("Bond Counsel") that investment in accordance with such directions will not affect, for Federal income tax purposes, the exclusion from gross income of interest due with respect to the 1987 Bonds or the 1998 Bonds, and Cb) if the Agency Treasurer directs such investment or reinvestment to be made in United States Treasury SecuritieswState and Local Government Series, the Agency shall, at its cost, cause to be prepared all necessary subscription forms therefor in sufficient rime to enable the Escrow Bank To acquire such securities. In the event that the Agency Treasurer shall fail to file any such. written directions with the Escrow Bank concerning the reinvestment of any such proceeds, such proceeds shall be held uninvested by the Escrow Bank. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 6 and not required for the purposes set forth in section 5 shall be transferred to the Trustee for depoSit in the Debt SerxSce Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit against payments of principal of and interest on the 1998 Bonds. The Escrow Bank may utilize any of its corporate affiliates as a depository to hold any uninvested moneys on behalf ofthe Escrow Bank in accordance with this Escrow Deposit and Trust Agreement. Section 7. Substitution or Withdrawal of Federal Securities. The Agency Treasurer may, at any time, direct the Escrow Bank in writing to substitute Federal Securities for any-or all of the Escrowed Federal Securities then deposited in the Escrow Fund, or to withdraw and transfer to the Agency any portion of the Federal Securities then deposited in the Escrow Fund, provided that any such direction and substitution or withdrawal shall be simultaneous and shall be accompanied by: (a) a certification of an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in.the refunding of obligations of political subdivisions that the Federal Securities then to be so deposited in the Escrow Fund together with interest to be derived therefrom, or in the case of withdrawal the Federal Securities To be remaining in the Escrow Fund following such withdrawal together with the interest to be derived therefrom, shall be in an amount at all times at least sufficient to make the payments specified in Section 5 hereof; and (b) an opinion of Bond Counsel that the substitution or withdrawal Mi1 not affect, for Federal income tax purposes, the exclusion from ~oss income of interest due with respect to the 1987 Bonds or the 1998 Bonds. In the event that, following any such'substitution of Federal Securities pursuant to this Section 7, there is an amount of moneys or Federal Securities in excess of an amount sufficient to make the payments required by Section 5 hereof, such excess shall be transferred to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursUant to the Indenture and applied as a credit against payments of principal of and interest on thc 1998 Bonds. Section g: Application of Surplus Funds. On the date of original delivery of the 1998 Bonds and the deposit of a portion of the procee~ thereof in the Escrow Fund pursuant to Section 4, the Agency shall direct the Fiscal Agent to'wi-~hdraw the amounts on deposit in the 1987 Special Fund ($ ) and transfer such amounts to the Escrow Fund. Any amounts remain/rig on deposit in any fund or account established under the 1987 Bond Resolution, including any investment eamngs received after the date of original delivery of the 1998 Bonds, shall be transferred by the Escrow Bank, as Fiscal Agent, to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit against payments of principal of and interest on the 1998 Bonds. Section 9. Application of Certain Terms of 1987 Bond Resolution. All of the terms of the 1987 Bond Resolution relating to the making of payments of principal of and interest on the 1987 Bonds are incorporated in this Escrow Deposit and Trust Agreement as if set forth in full herein. The Crovisions of the 1987 Bond Resolution affording protections and limitations of liability to the Fiscal Agent and relating to the resignation and removal of the Fiscal Agent are also incorporated in tiffs Escrow Deposit and Trust A~eernent as if set forth in full herein and shall be the procedure to be followed with respect to any resi~maation or removal of the Escrow Bank hereunder. Section 10. Compensation to Escrow Bank. The Agency. shall pay the Escrow Bank full compensation for its duties under this Escrow Deposit and Trust Agreement, including out-of-pocket costs such as publication costs, legal f~es and other costs .and expenses relating hereto and, in addition, fees, costs and expenses relating to the purchase of any Federal Securities after the date hereof, pursuant to a separate agreemem between the Agency and the Escrow Bank. Under no circumstances shall amounts, deposited in the Escrow Fund be deemed to be available for said purposes. Section 11. Liabilities and Obl~_~ations of Escrow Bank. The Escrow Bank shall have no obligation to make any payment or disb ,~sement of any type or incur any financial liability in the performance of its duties, under this Escrow Deposit and Trust Agreement unless the Agency shall have deposited sufficient funds with the Escrow Bank. The Escrow Bank may rely and shall be protected in acting upon the ,~a-itten or oral instructions of the Agency or its agents relating to any matter or action as Escrow Bank under tl:ds Escrow Deposit and Trust Agreement. The protections, immunities and limitations from liabiii~' provided to the Fiscal Agent under the 1987 Bond Resolution shall be afforded the Escrow Bank hereunder and are incorporated herein by reference. The Escrow Bank and its respective successors, assigns, agents and sen, ants shall not be held to any personal liability whatsoever, in tor'~ contract, or otherwSse, in connection with the execution and delivery of this Escrow Deposit and Trust Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or any securities deposited therein, the purchase of the securities to be purchased pursuant hereto, the retention of such securities or the proceeds thereof, the sufficiency of the securities or any uninvested moneys held hereunder to accomplish the defeasance of the 1987 Bonds, or any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the provisions of this Escrow Deposit and Trust Agreement or by reason of any non-negligent act, non-negligent Omission or non-negligent error of the Escrow Bank made in good faith in the conduct of its duties. The recitals of fact contained in the "whereas" clauses herein shall be taken as the statement of the Agency, and the Escrow Bank assumes no responsibility for the correctness thereof. The Escrow Bank make no representations as to the sufficiency of the securities to be purchased pursuant hereto and an), uninvested moneys to accomplish the payment of the 1987 Bonds pursuant to the 1987 Bond Resolution or to the validity of this Escrow Deposit and Trust Agreement as to the Agency and, except as otherwise provided herein, the Escrow Bank shall incur no liabili~ in respect thereof. The Escrow Bank shall not be liable in connection with the performance of its duties under this Escrow Deposit and Trust Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Bank shall be determined by the express provisions of this Escrow Deposit and Trust Agreement. The Escrow Bank may consult w/th counsel, who may or may not be counsel to the Agency, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection in respect of an), action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Deposit and Trust A~eement, such matter (except the matters set forth herein as specifically requiting a certificate of a nationally recognized finn of independent certified public accountants or an opinion of counsel) may be deemed to be conclusively established by a ~u-itten certification of the Agency. The Agency hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated), to the extent permitted by law, to indenmi~', protect,, save and hold harmless the Escrow Bank and its respective successors, assigns, agents and sen, ants from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements) Of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Escrow Bank (whether or not also indemnified against by any other person under any other agreement or instrument) and in any way relating to or arising out of the execution and deliver' of this Escrow Deposit and Trust A~eement, the establishment of the Escrow Fund, the retention of the moneys therein and any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the provisions of this Escrow Deposit and Trust Agreement, or as ma), arise by reason of any act, omission or error of the Escrow Bank made in good faith in the conduct of its duties; provided, however, that the Agency shall not be required to indemni~, the Escrow Bank against its own negligence or willful misconduct. The indemnities contained in this Section 11 and the compensation and reimbursement of expenses set forth in Section 10 shall survive the termination of this Escrow Deposit and Trust Agreement. Whenever, in the administration of this Escrow Deposit and Trust Agreement, the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Escrow Bank, be deemed to be conclusively proved and established by a certificate of an authorized representative of the Agency, and such certificate shall, in the absence of negligence or willful misconduct on the pan of the Escrow Bank, be full warrant to the Escrow Bank for any action taken or suffered in good faith by it under the provisions of this Escrow Deposit and Trust Agreement. The Escrow Bank may consult v~Sth counsel of its own choice (which may .be counsel to the Agency) and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action in accordance with such opinion of counsel. .. The Escrow Bank shall notbe responsible for any of the recitals or representations contained herein. Section 12. Amendment. This Escrow Deposit and Trust A~eement may be modified or amended at any time by a supplemental agreement which shall become effective when the ~tten consents of the owners of one hundred percent (100%) in ag~egate principal amount of the 1987 Bonds then outstanding shall have been filed with the Escrow Bank. This Escrow Deposit and Trust Agreement may be modified or amended at any time by a supplemental agreement, without the consent of any such o~aaers, but only (1) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power herein or' therein reserved to the A_oency, (2) to cure, correct or supplement any ambiguous or defective provision contained herein, (3) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which,, in the opinion of counsel, shall not materially adversely affect the interests of the owners of the 1987 Bonds or the 1998 Bonds, and that such amendment will not cause interest on the 1987 Bonds or the 1998 Bonds to become subject to federal income taxation. Section 13.' Severabilitv. If any section, paragraph, sentence, clause or provision of this Escrow Deposit and Trust Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of the remaining provisions of this Escrow Deposit and Trust Agreement. Section 14. Notice of Escrow Bank: A~encv. Any notice to or demand upon the Escrow Bank may be served and presented, and such'demand may be made, at the principal corporate trust office 'of the Escrow Bank at U.S. Bank Trust National Association, 550 South Hope Street, Suite 500.. Los Angeles, CA 90071, Attention: Corporate Trust Department (or such other address as may have been filed in writing by the Escrow Bank with the Agency). Any notice to or demand upon the Aeency shall be deemed to have been sufficiently given or served for all purposes by being mailed by registered or certified mail, and deposited, postage prepaid, in a post office letter box, addressed to such party, at 300 Centennial Way, Tustin, CA 92780, Attention: Executive Director (or such other address as ma>, have been filed in ~ariting by the Agency with the Escrow Bank). Section 15. Mer~er or Consolidation of Escrow Bank. Any company into which the Escrow Bank may be merged or converted or with which ma), it be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Bank may sell or transfer all or substantially all of its corporate trust business, provided such company Shall be eligible to act as trustee under the 1987 Bond Resolution, shall be the successor hereunder to the Escrow Bank Without the execution or filing of any paper or any further act. Section 16. Execution of Counterparts. This.Escrow Deposit and Trust Agreement may be executed in an>, number of counterparts, each of which shall for. all purposes be. deemed to be an original and all of which shall together constitute but one and the same instrument. Section 17. Governin~ Law. This Escrow Deposit and Trust Agreement shall be consn'Ued and governed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the TUSTIN CO5CMUNITY REDEVELOPMENT AGENCy has caused this Escrow Deposit and Trust Agreement to be signed in its name by its Chairman and its seal to be affixed hereon and attested to by its Secretory, and U.S. B?dqK TRUST NATIONAL ASSOCIATION, in token of its acceptance of the trt~ created hereunder, has caused this Escrow Deposit and Trust Agreement to be signed in its corporate name by its officer identified below, all as of the day and year frrst above written. TUSTi-N coMlx~NITY REDEVELOPMENT AGENCY [S E A-L] Attest: By Chairman Secretary U.S. BAaNK TRUST NATIONAL ASSOCIATION, as Escrow Bank By Authorized Officer EXHIBIT A SCHEDULE OF ESCROWED FEDERAL SECURITIES Maturity Type Date Coupon Par Arnount Price Cost Accrued Total Cost A-1 EXHIBIT B PAYMENT SCHEDULE OF 1987 BONDS Interest Payment Maturing Called Total Dat.__~e Principal Interest Principal Premium Payment 11/01/98 $425,000 $188,520 $4,720,000 $70,800 $5,404,320 ESCROW DEPOSIT AND TRUST AGREEMENT by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY and U.S. BANK TRUST NATIONAL ASSOCIATION, as Escrow Bank Dated July 1, 1998 Relating to Refunding of the Outstanding Tustin Community Redevelopment Agency Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991 TU9 IESCW.g.~LR/2-$g ESCROW DEPOSIT AND TRUST AGREEMENT' This ESCROW DEPOSIT AND TRUST AGREEMENT is dated as of July 1, 1998, by and between the TUSTIN COMMUNrl ~-Y REDEVELOPMENT AGENCY, a public body corporate and politic, organized and exis'&g under the laws of the State of California (the "Agency"), and U.S. BANK TRUST N.KTIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, with a corporate trust office in Los An. geles, C. atifomia, and being qualified to accept and administer the trusts hereby created, as successor fiscal agent (the "Fiscal Agent") with respect to the hereinafter described 1991 Bonds and as escrow bank hereunder (the "Escrow Bank"); WITNESSETH: . WHE .REAS, the Agency has heretofore issued its $13,100,000 Tustin Community Redevelopment Agency Town Center .~ea Redevelopment Project Subordinate Tax Allocation Refunding Bonds, Series 1991 (the "1991 Bonds"), the total principal amount of $121880,000 of which is currently outstanding; WHEREAS, the 1991 Bonds were issued for the purpose, among others, of financing and refinancing redevelopment activities within or of benefit to the Agency's Town Center Area Redevelopment Project; WHEREAS, the 1991 Bonds were issued pursuant to Resolution No, RDA 91-12, adopted by the Agency on July 15, 1991 (the "1991 Bond Resolution") W2_tEREAs, the 1991 Bond Resolution provides that if the Agency shall pa3' and discharge the entire indebtedness on all or any porSon of the 1991 Bonds by irrevocably depositing with the Fiscal Agent, in u'ust, direct obligations of the Un/ted States, or obligations for which the full faith 'and credit of the United States are pledged for the payment of principal and interest, in such amount as an Independent Certified Public Accountant (as defined in the1991 Bond Resolution) shall determine will, together v~4th the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to the 1991 Bond Resolution, be fully sufficient to pay and discharge the indebtedness on all or such portion of the 1991 Bonds (including all principal, interest and redemption premiums) at or before maturity, and if the 1991 Bonds are to be redeemed prior to the maturity thereof, and notice of such redemption is. given pursuant to the 1991 Bond Resolution or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Pledged Tax Revenues (as defined in the 1991 Bond Resolution) and other funds provided for in the 1991 Bond Resolution and all other obligations of the Fiscal Agent and the Agency under the 1991 Bond Resolution with respect to all or such portion ofthe 1991 Bonds shall cease and terminate, except only the obligation of the Trustee to transfer and the Fiscal Agent and the Agency under the 1991 Bond Resolution with respect to all or such portion of the 1991 Bonds shall cease and terminate, except only the obligation of the Trustee to transfer and exchange the 1991 Bonds thereunder and except the obligation of the Agency to pay or cause to be paid to the owners of the 1991 Bonds not so surrendered and paid all sums due thereon and all expenses and costs of the Trustee; and thereafter Pledged Tax Revenues shall not be payable to the Trustee; WHEREAS, the Agency has determined to provide for the refunding of the 1991 Bonds; WHEREAS, for the purpose of providing funds for the refunding of the 1991 Bonds, the Agency has determined to issue its $ Tustin Communit3, Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "1998 Bonds"), pursuant to and secured by an Indenture of Trust, dated as of July 1, 1998 (the "Indenture"), by and between the Agency and U.S. Bank Trust National Association, as trustee (the "Trustee"); WHEREAS, the Agency wishes to make such a deposit with the Escrow Bank and to enter into this Escrow Deposit and Trust A~eement for the purpose of providing the terms and conditions for the deposit and application of. mounts so deposited; and V~rHEREAS, the Escrow Bank has full powers to act w/th respect to the irrevocable escrow and trust created herein and to perform the duties and obligations to be undertaken pursuant to this Escrow Deposit and Trust Agreement; NOW, THEREFORE, in consideration ofthe above premises and ofthe mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows: Section 1. Definition of Federal Securities. As used herein, the term "Federal Securities" shall mean non-callable, direct obligations of the United States, or obligations for which the full faith and credit of the United States are pledged for the pa.~unent of principal and interest. Section 2. Appointment of l~scr0w Bank. The AgenCy hereby appoints the Escrow Bank as escrow bank for all purposes of this Escrow Deposit and Trust Agreement and in accordance w/th the terms and provisions of this Escrow Deposit and Trust Agreement, and the Escrow Bank hereby accepts such appointment. Section 3..Establishment of Escrow Fund. There is hereby created by the Agency with, and to be held by, the Escrow Bank, as security for the pa.wnent of the principal of and interest on the 1991 Bonds as hereinafter set forth, an irrevocable escrow to be maintained in trust by the Escrow Bank on behalf of the Agency and for the benefit of the owners of the 1991 Bonds, said escrow to be designated the "Escrow Fund." .~dl moneys and Federal Securities deposited in the Escrow Fund shall constitute a special fund for the payment of the principal of and interest On the 1991 Bonds in accordance with the provisions of the 1991 Bond Resolution. If at any time the Escrow Bank shall receive actual knowledge that the moneys and Federal Securities in the Escrow Fund will not be sufficient to make any payment required by Section 5 hereof, the Escrow Bank shall notify the. Agency of.such fact and the Agency shall immediately cure such deficiency. Section 4. Deposit into Escrow Fun& Investment of Amounts. Concurrently with delivery . . of the 1998 Bonds, the Agency shall cause to be transferred to the Escrow Bank for deposit into the Escrow Fund the amount of $ in immediately available funds, derived as follows: (a) from the proceeds of sale of the 1998 Bonds in the mount of $ .; and (b) from the special fund established pursuant to the 1991 Bond Resolution (the "1991 Special Fund") in the amount of $ pursuant to Section 8 hereof. Of the amounts deposited in the Escrow Fund pursuant to the preceding paragraph, the Escrow Bank shall invest the sum of $ in the Federal Securities set forth in Exhibit A attached hereto and by this reference incorporated herein (the "Escrowed Federal Securities") and shall hold the remaining amount ($ ) in cash, uninvested. The Escrowed Federal Securities shall be' deposited with and held by the Escrow Bank in the Escrow Fund solely for the uses and purposes set forth herein. The Escrow Bank may rely upon the conclusion of _, independent certified public accountants, as contained in its opinion and accompanying schedules (the "Report") dated July 16, 1998. concerning the 1991 Bonds, that the Escrowed Federal Securities mature and bear interest · payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will be sufficient to pay the principal of and interest on the 1991 Bonds through December 1,2001, and to provide for the redemption of the 1991 Bonds in full on December 1, 2001, at the redemption price of 102% of the principal amount thereof, plus accrued interest. The Escrow Bank shall not be liable or responsible for any loss resulting from any investment or reinvestment made pursuant to this Escrow Deposit and Trust Agreement and in full compliance with the provisions hereof. Section 5. InStructions as to Application of Deposit_. The total amount of EsCrowed Federal Securities and uninvested moneys deposited in the Escrow Fund pursuant to Section 4 shall be applied by the Escrow Bank for the sole purpose of paying the principal of and interest on the 1991' Bonds as the same shall become due and payable, to and including December 1,2001, and to redeem all outstanding 1991 Bonds in full on December 1, 2001, at the price of 102% of the principal amount thereof, plus accrued interest, as more particularly set forth in Exhibit B attached hereto and hereby made a part hereof. Following the final payment of the 1991 Bonds, together accrued interest to the payment date, the Escrow Bank ~shall transfer any remaining amounts relating to the 1991 Bonds to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit against payments of principal of and interest on the 1998 Bonds. Section 6. Inve,qtment of Any Remaining Moneys. At the written direction of the Agency Treasurer, the Escrow Bank shall invest and reinvest the proceeds received from any of the Escrowed Federal Securities, and the cash originally deposited into the Escrow Fund, for a period ending not later than the next succeeding interest payment date relating to the 1991 Bonds, in Federal Securities; t~rovided, however, that(a) such written directions of the Agency Treasurer shall be accompanied by an opinion of nationally recognized bond counsel ("Bond Counsel") that investment in accordance with such directions will not affect, for Federal income tax purposes, the exclusion from gross income of interest due ~dth respect to the 1991 Bonds or the 1998 Bonds, and (b) ifthe Agency Treasurer directs such investment or reinvestment to be made in United States Treasury Securities--State and Local Government Series, the Agency shall, at its cost, cause to be prepared all necessary subscription forms therefor in sufficient time to enable the Escrow Bank to acquire such securities. Inthe event that the Agency Treasurer shall fail to file any such written directions with the Escrow Bank concerning the reinvestment of any such proceeds, such proceeds shall be held uninvested by the Escrow Bank. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 6 and not required for the purposes set forth in 'Section 5 shall be transferred to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit against payments of principal of and interest on the 1998 Bonds. The Escrow Bank ma), utilize any of its corporate affiliates as a depository to hold any uninvested moneys on behalf of the Escrow Bank in accordance with this Escrow Deposit and Trust Agreement. Section 7. Substitution or Withdrawal of Federal Securities.. The Agency Treasurer may, at any time, direct the Escrow Bank in writing to substitute Federal Securities for any or all of the Escrowed Federal Securities then deposited in the Escrow Fund, or to withdraw and transfer to the Agency any portion of the Federal Securities then deposited in the Escrow Fund, provided that any such direction and substitution or withdrawal shall be simultaneous and shall be accompanied by: (a) a certification of an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions that the Federal Securities then to be so deposited in the Escrow Fund together vdth interest to be derived therefrom, or in the case of withdrawal the Federal Securities to be remaining in the Escrow Fund following such withdrawal together with the interest to be derived therefrom, shall be in an amount at all times at least sufficient to make the payments specified in Section 5 hereof; and Co) an opinion of Bond Counsel that the substitution or withdrawal will not affect, for Federal income tax purposes, the exclusion from gross income of interest due with respect to the 1991 Bonds or the 1998 Bonds. In the event that, following any such substitution of Federal Securities pursuant to this Section 7, there is an amount of moneys or Federal Securities in excess of an amount sufficient to make the payments required by Section 5 hereof, such excess shall be transferred to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit ag .ahast payments of principal of and interest on the 1998 Bonds. Section 8. Application of Surplus Funds. On the date of original delivery of the 1998 Bonds and the deposit of a portion of the proceeds thereof in the Escrow Fund pursuant to Section 4, the Agency shall direct the Fiscal Agent to withdraw the mounts on deposit in the 1991 Special Fund ($ ) and transfer such mounts to the Escrow Fund. Any mounts remaining on deposit in any fund or account established under the 1991 Bond Resolution, including any investment earnings received after the date of original delivery of the 1998 Bonds, shall be transferred by the Escrow Bank, as Fiscal Agent, to the Trustee for deposit in the Debt Service Fund created and maintained by the Trustee pursuant to the Indenture and applied as a credit against payments of principal of and interest on the 1998 Bonds. Section 9. Application of Certain Terms of 1991 Bond Resoluti0r~. All of the terms of the 1991 Bond Resolution relating to the making of payments of principal of and interest on the 1991 Bonds are incorporated in this Escrow Deposit and Trust Agreement as if set forth in full herein. The provisions of the 1991 Bond Resolution affording protections and limitations of liability to the Fiscal Agent and relating to the resignation and removal of the Fiscal Agent are also incorporated in this Escrow Deposit and Trust A~eement as if set forth in full herein and shall be the procedure to be followed Mth respect to any resignation or removal of the Escrow Bank hereunder. Section 10. Compensation to Escrow Bank;. The Agency shall pay'the Escrow Bank fUll compensation for its duties under this Escrow Deposit and Trust A~eement, including out-of-pocket costs such as publication costs, legal fees and other costs and expenses relating hereto and, in addition, fees, costs and expenses relating to the purchase of any Federal Securities after the date hereof, pursuant to a separate a~eement between the Agency and the Escrow Bank. Under no "circumstances shall amounts deposited in the Escrow Fund be deemed to be available for said purposes. Section 11. Liabilities and Obligations of Escrow Bank. The Escrow Bank shall have no obligation to make any paymem or disbursement of any type or incur any financial liability in the perf~)nnance of its duties under this Escrow Deposit and Trust A~eement unless the Agency shall have deposited sufficient funds with the Escrow Bank. The Escrow Bank may rely and shall be' protected in acting upon the written or oral instructions of the Agency or its agents relating to any matter or action as Escrow Bank under this Escrow Deposit and Trust A~eement. The protections, immunities and limitations from liability provided to the Fiscal Agent under the 1991 Bond Resolution shall be afforded the Escrow Bank hereunder and are incorporated herein by reference. The Escrow Bank and its respective successors, assigns; agents and servants shall not be held to any personal liability whatsoever, in tort, contract, or otherwise, in connection with the execution and delivery of this Escrow Deposit and Trust Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or any securities deposited therein, the purchase of the securities to be purchased pursuant hereto, the retention of such securities or the proceeds thereof, the sufficiency of the securities or any uninvested moneys held hereunder to accomplish the defeasance of the 1991 Bonds. or any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance Mth the provisions of this Escrow Deposit and Trust Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Bank made in good faith in the conduct of its duties. The recitals of fact contained in the "whereas" clauses herein shall be taken as the statement of the Agency, and the Escrow Bank assumes no responsibility for the correcmess thereof. The Escrow Bank make no representations as to the sufficiency of the securities to be purchased pursuant hereto and an3' uninvested moneys to accomplish the payment of the 1991 Bonds pursuant to the 1991 Bond Resolution or to the validity of this Escrow Deposit and Trust A~eement as to the Agency and, except as otherwise provided herein, the Escrow Bank shall incur no liability in respect thereof. The Escrow Bank shall not be liable in connection with the performance of its duties under this Escrow Deposit and Trust Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Bank shall be determined by the express provisions of this Escrow Deposit and Trust Agreement. The Escrow Bank may consult Mth counsel, who may or may not be counsel to the Agency, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection in respect of an3' action taken, suffered or omitted by it in good faith in accordance therewith. WheneVer the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Deposit and Trust A~eement, such matter (except the matters set forth herein as specifically requiring a certificate of a ~aationally recognized firm of independent certified public accountants or an opinion of counsel) may be deemed to be conclusively established by a written certification of the Agency. The Agency hereby assumes liability for, and hereby a~ees (whether or not any of the transactions contemplated hereby are consummated), to the extent permitted by law, to indemnify, Protect,. save and hold harmless the Escrow Bank and its respective successors, assigns, agents and servants from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements) of whatsoever 'kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Escrow Bank (whether or not also indemnified against by an); other person under any other a~eement or insmmaent) and in any way relating to or arising out of the execution and delivery of tl~is Escrow Deposit and Trust A~eement, the establishment of the Escrow Fund, the retention of the moneys therein and any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the provisions of this Escrow Deposit and Trust A~eement, or as max' arise by reason of any act, omission or error of the EscroW Bank made in good faith in the conduct of its duties; provided, however, that the Agency shall not be' required to indemnify the Escrow Bank agahnst its own negligence or willful misconduct. The indemnities contained in tiffs Section 11 and the compensation and reimbursement of expenses set forth in Section 10 shall survive the iermination of this Escrow Deposit and Trust Agreement. 6 Whenever, in the administration of this Escrow Deposit and Trust Agreement, the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such mauer (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Escrow Bank, be deemed to be conclusi~,ely proved and established by a certificate of an authorized representative of the Agency, and such certificate shall, in the absence of negligence or Mllful misconduct on the part of the Escrow Bank, be full warrant to the Escrow Bank for an), action taken or suffered in good faith b>' it under the provisions of this Escrow Deposit and Trust Agreement. The Escrow Bank may consult with 'counsel of its own choice (which may be counsel to the Agency) and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action in accordance x~Sth such opinion of counsel. The Escrow Bank shall not be responsible for any of the recitals or representations contained herein. Section 12. Amendment.. This Escrow Deposit and Trust A~eement may be modified or amended at any time by a supplemental agreement which shall become effective when the wa-itten consents of the owners of one hun&ed percent (100%) in aggregate principal amount of the 1991 Bonds then outstanding shall have been filed with the Escrow Bank. This Escrow Deposit and Trust Agreement may be modified or amended at any time by a supplemental agreement, without the consent of any such o,~ners, but only (1) to add to the covenants and a~eements of any parts.~,, other covenants to be observed, or to surrender any right or power herein or therein reserved to the A~ency, (2) to cure, correct or supplement any ambiguous or defective provision contained herein, (3) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and wkich, in the opinion of counsel, shall not.materially adversely affect the interests' of the ovmers of the 1991 Bonds or the 1998 Bonds, and that such amendment Mil not cause interest on the 1991 Bonds or the 1998 Bonds to become subject to federal income taxation. Section 13. Severability.. If any section, paragraph, sentence, clause or provision of this Escrow Deposit and Trust A~eement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforc~bility, of such section, para~aph, sentence, clause or provision shall not affect any of the remaining provisio~ of this Escrow Deposit and Trust Agreement. Section 14. Notice of Escrow B~nk; Agency. Any notice to or demand upon the Escrow Bank may be served and presented, and such demand may be made, at the principal corporate trust office of the Escrow Bank at U.S. Bank Trust National Association, 550 South Hope Street, Suite 500, Los Angeles, CA 90071. ?,ttention: Corporate Trust Department (or such other ad&ess as may have been filed in v,a-iting by ~e Escrow Bank with the Agency). Any notice to or demand upon the Agency shall be deemed to have been sufficiently given or served for all purposes by being mailed by registered or certified mail, and deposited,, postage Prepaid, in a post office letter box, addressed to such party, at 300 Centennial Way, Tustin, CA 92780, Attention: Executive Director (or such other address as ma.,,' have been filed in writing by the Agency with the Escrow Bank). Section 15. Merger or Consolidation of Escrow Bank. Any company into which the Escrow Bank may be merged or convened or with which may it be consolidated or any company resulting fi-om any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Bank may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible to act as trustee under the 1991 Bond Resolution, shall be the successor hereunder to the Escrow Bank without the execution or filing of any paper or any further act. Section 16. Execution of Counterparts. This Escrow Deposit and Trust Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument. Section 17. Governin_o Law. This Escrow Deposit and Trust Agreement shall be construed m~d governed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the TUSTIN COI~~TY REDEVELOPMENT AGENCY has caused this Escrow Deposit and Trust A~eement to be signed in its name by its Chairman and its seal to be affixed hereon and attested to by its Secretary, and U.S. BANrK TRUST NATIONAL ASSOCIATION, in token of its acceptance of the trust created hereunder} has caused this Escrow . Deposit and Trust Agreement to be signed in its corporate name by its officer identified below, all as of the day and year first above written. TUSTIN COMMUNITY REDEVELOPMENT AGENCY [S E A L] Attest: By Chairman Secretary U.S. BANK TRUST NATION?L ASSOCIATION, as Escrow Bank By Authorized Officer EXHIBIT A SCHEDULE OF ESCROWED FEDERAL SECURITIES Maturity Type Date Coupon par Amount Price Cost. Accrued. Total Cost A-1 EXHIBIT B PAYMENT SCHEDULE OF 1991 BoNr~s Interest Payment Date 12/01/98 06/01/99 12/01/99 06/01/00 12/01/00 06/01/01 12/01/01 Maturing Principal $5O,00O 55,000 60,000 65,000 Called Total Interest Principal Premium Payment $4~6,%>.00 - - 435.395.00 - - 35,395.00 - - 433,662.50 - - 433,662.50 - - 431,742.50 - - 431,742.50 $1o,650 000 $_5~,000 $486,945.00 435,395.00 435,395.00 433,662.50 493,662.50 431,742.50 $13,399,742.50 B-1 INDENTURE OF TRUST Dated as of July 1, 1998 by and between the TUSTLN COMMUNITY REDEVELOPMENT AGENCY and . U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee Relating to $ Tustin C°nunurdty Redevelopment Agency (Town Center .~ea Redevelopment Project) Tax .Mlocation Refunding Bonds, 1998 Series A TUIND. SA/LK255 TABLE OF CONTENTS ARTICLE I DETERlx~ATIONS; DEFINITIONS Section 1.01. Findings and'Determinations ................................... 3 Section 1.02. Definitions .................................................. Section 1.03. Rules of Construction ........................................ 14 )d~TICLE II ' AUTHORIZATION ANTD TERMS Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10. Section 2.11. Section 2.13 Authorization of Bonds ............................... ' ........ 15 Terms of Bonds ............................................. 15 Redemption of Bonds ........................................ 16 Form of Bonds .......................................... ... 19 19 Execution of Bonds ................. : ........................ Transfer of Bonds ... ~ ....................................... 19 Exchange of Bonds .......................................... 20 Registration of Bonds ............................. ,.. ......... 20 Temporary Bonds .......... :-:......, ........................ 20 Bonds Mutilated, Lost, D.estr0yed or Stolen.-. .............. , ........20 . ............ 21 CUSIP Numbers .... . ..... ~o .......... : ......... Payment Procedure Pursuant Mumcipal BOnd Insurance Policy ..... 23 .M~TICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS, PARITY DEBT SectiOn 3.01. Issuance of Bonds ............ .................. :...' ........ 25 Section 3.02. Application of Proceeds of Sale ................... Section 3.03. Costs of Issuance Fund ....................................... 25 "~ o o o , , o o o . . Section ~.04. Issuance of PariS' Debt ........ 25 SectiOn 3.05. Issuance of Subordinate Debt .................................. 27 Section 3.06. Validity of Bonds ........................................... 28 -i- ARTICLE IV SECURITY OF BONDS; FLOW OF FUNDS Section 4.01. Security of Bonds; Equal Security .............................. 29 Section 4.02. Special Fund; Deposit of Tax Revenues .......................... 29 Section 4.03. Deposit of Amounts by Trustee ................................ 30 ARTICLE V OTHER COVENANTS OF THE AGENCY Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Punctual Payment ................... .'. ....................... 33 Limitation on Additional Indebtedness; Against Encumbrances ....... 33 Extension of Payment ........................................ 33 Payment of Claims .......................................... 33 Books and Accounts; Financial Statements ....................... 33 Protection of SecUrity and Rights of Owners ...................... 34 Payments of Taxes and Other Charges ........................... 34 ARTICLE VI THE TRUSTEE Section 6.01. 'Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08. Section 6.09. Section 6.10. Duties, Immunities and' Liabilities of Trustee..: ................... 37 Merger or Consolidation' . ....................38 Liability of Trustee .......................................... 39 Right to Rely on Documents and Opinions ....................... 40 Preservation and Inspection of Documents ........................ 41 Compensation and Indemnification ............................. 41 Deposit and Investment of Moneys in Funds ...................... 42 Accounting Records and Financial Statements ..................... 43 Appointment of Co-'Trustee or Agent ........................ ,... 43 Other Transactions with Agency ................................ 44 AKTICLE VII MODIFICATION OR AME~~~ OF THIS INDENTURE Section 7.01. Amendment ................................................ 45 Section 7.02. Effect of Supplemental Indenture ............................... 45 Section 7.03. Endorsement or Replacement of Bonds After Amendment ............ 46 Section 7.04. Amendment by Mutual Consent ................................ 46 -ii- Section 8.01. Section 8.02. Section 8.03. Section 8.04. Section 8.05. Section 8.06. Section 8.07. Section 8.08. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF OX, X .~ERS Events of Default and Acceleration of Maturities .......... ' 47 Application of Funds Upon Acceleration ......................... 48 Limitation on Owmer's Right to Sue ............................. 49 Non-Waiver ................................................ 49 Actions by Trustee as Attorney-in-Fact .......................... 50 50 Remedies Not Exclusive ...................................... Parties Interested Herein ...................................... 50 Consent of Municipal Bond Insurer ............................. 51 .. ARTICLE IX ]vLISCELLANEOUS Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05. Section 9.06. Section 9.07. Section 9.08. Section 9.09. SeCtion 9.10. Section 9.i 1. Section 9.12. Section 9.13. Section 9.14. Liability of Agency Limited to Tax Revenues ..................... 52 Benefits Limited to Parties .................................... 52 Successor is Deemed Included in All References to Predecessor ....... 52 Discharge of Indenture .............. ' ......................... 52 Execution of Documems and Proof of Ownership by Owners ......... 54 Disqualified Bonds .......................................... 54 Waiver of Personal Liability ................................... 54 Destruction of canceled Bonds ................................. 54 Notices,: ................................................... > > Notices to be Given To the Municipal Bond Insurer ................. ~ Partial Invalidity ....................... : .................... 56 Unclaimed Moneys ...................... ' .......... 56 56 Execution in Counte~arts ..................................... Governing Law ............................................. 56 EXHIBIT A- Form of Bond ............................................ A-1 -111- INDENTURE OF TRUST THIS INDENTURE OF TRUST ('this "Indenture") is made and entered into as of July 1, 1998, by and bem,een the TUSTIN COM~rlTY REDEVELOPMENT AGENCY, a public body corporate and politic, duly organized and existing under the laws of the State of California (the "Agency"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of tlne United States of America. as trustee (the "Trustee"); WITNESSETH: WHEREAS, the. Agency is a public body, corporate and politic, duly established and authorized to transact business and exercise powers under and pursuant to the provisions of the Community Redevelopment Law of the S~ate of California, constituting Part 1 of Division 24 of the California Health and Safety Code (the "Law"), including the power to issue bonds for any of its corporate purposes; WHEREAS, a redevelopment plan for the Town Center Area Redevelopment Project in the City. of Tustin, California (the "Redevelopment Project"), has been adopted and, from time to time, amended in compliance with all requirements of the Law; WHEREAS, the Agency has determined at this time, due to prevailing interest rates in the municipal bond market, to issue $ aggregate principal amount of its Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "Bonds"), under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with section 53570 of said Code (the "Bond Law"), the principal of and interest on which will be payable from the tax increment revenues from the Redevelopment Project, to finance redevelopment activities within or of benefit to the Redevelopment Project and specifically to refund (a) its Town Center Area · Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution No, RDA 87-8, adopted by the Agency on August 3, 1987, in the aggregate principal amount of $8,060,000, of which $5,145,000 remains outstanding (the "1987 Bonds"), and (b) its Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No, RDA 91-12, adopted by the Agency on July 15, 1991, in the aggregate principal amount of $13,100,000, ofwhich $12,880,000 remains outstanding (the "1991 Bonds" and, with the 1987 Bonds, the "Prior Bonds"); WI-IE~AS. 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 pa)anent of the principal thereof and interest and redemption premium (if anY) thereon, the Agency and the Trustee have duly authorized the execution and delivery of this Indenture; and WHEREAS, all acts and proceedings required by law necessary to make the Bonds when executed by the Agency, and authenticated and delivered by the Trustee, the valid, binding and legal special obligations of the'Agency, and to constitute this Indenture a legal, valid and binding agreement for the uses and purposes herein set forth in accordance Mth its terms, have been done or taken; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and redemption premium (if any) on all the Bonds issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all .the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are tO be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the Agency and the Trustee do hereby covenant and agree ,~4th one ~nother, for the benefit of the respective Owners fi.om time to time of the Bonds, as follows: ARTICLE I DETERM~ATIONS; DEFINITIONS . Section 1.01. Findings and Determinations. The Agency has reviewed all proceedings heretofore taken and has found, as a result of such review, and hereby f'mds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Agency is now duly empowered, pursuant to each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture. Section 1.02. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.02 shall, for all purposes of this Indenture, of any Supplemental Indenture, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. "Additional Allowance" means, as of the date of calculation, the sum of the following: (a) the mount of Tax Revenues which, as shown in the Report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency in the next succeeding Fiscal Year as a result of increases in the assessed valuation of taxable property in the Project .Area due to either (i) construction which has been completed but has not yet been reflected on the tax roll, or (ii) transfer of ovmership or any other interest in real property, which is not then reflected on the tax rolls; and (b) the mount of Tax Revenues which, as shown in the Report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency in the next succeeding Fiscal Year as a result of increases in the assessed valuation of taxable property in the Project .Area due to inflation at an assumed annual inflation rate equal to the lesser of (i) the annual rate of inflation for the preceding twelve-month period for which figures are available or (ii) two percent (2%), but only if the rate of inflation had increased by at least two percent (2%) in each of the preceding five Fiscal Years. For purposes of this definition, the term "increases in the assessed valuation" means the amount by which the assessed valuation of taxable property in the Project Area in the next succeeding Fiscal Year is estimated to exceed the assessed valuation of taxable property in the Project ,Area (as reported by the County Auditor-Controller) in the Fiscal Year in which such calculation is made. "Additional Revenues" means, as of the date of calculation, the amount Of Tax Revenues which,, as shown in the Report of an Independent Fiscal Consultant, are estimated to be receivable by the Agency v, Sthin the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable properts' in the Project Area due to the completion of construction which is not ~en reflected on the tax rolls, or due to transfer of ov, mership or any other interest in real property which has been recorded but wkich is not then reflected on the tax rolls. For purposes of this definition, the term "increases in the assessed valuation" means the mount by which the assessed valuation of taxable property in the Project Area is estimated to increase above the assessed valuation of taxable property in the Project Area (as evidenced in the v~a-itten records of the County) as of the date on Which such calculation is made. "Agency"' means the Tustin Comm, .aniry Redevelopment Agency, a public body corporate and politic duly organized and existing under ~ne Law. "Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, assuming that the OUtstanding Serial Bonds are retired as scheduled and that the Outstanding Term Bonds are redeemed from mandatory Sinking Account payments as scheduled, Co) the principal mount of the Outstanding Serial Bonds payable by their terms in such Bond Year, and (c) the principal mount of the Outstanding Term Bonds scheduled to be paid or redeemed from mandatory Sinking Account paYments in such Bond Year. "Bond" or "Bonds" means, collectively, the Series A Bonds, and, when the context requires, any Parity Debt. "Bond Law" means the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with section 53570 of said Code, as in effect on the Closing Date or as there~-rer amended. "Bond Year" means any twelve-month period beginning on December 2 in any year and ending on the next succeeding DeCember t, both dates inclusive, except that the first Bond Year shall begin on the Closing Date, and end on December 1, 1998. "Business Day" means a day of the year on which banks in Los Angeles and San Francisco, California, are not reqtfired or permitted to D, closed and on which the New York Stock Exchange is not closed. "Chairman" means the Chairman of the Agency appointed pursuant to section 33113 of the Law, or other duly appointed officer of the Agency authorized by the Agency by resolution or by-law to perform the functions of the Chairman in the event of the Chairman's absence or disqualification. "Ci~" means the City of Tustin, a general law city and municipal corporation organized and existing under and pursuant to the laws of ~he State. "Closing Date" means the date on which the Bonds are delivered by the Agency to the original purchaser thereof. "Code" means the Internal Revenu: Code of 1986 as in effect on the date of issuance of the Bonds or (except as othem4se referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Series A Bonds, together v, Sth applicable temporary and final regulations promulgated, and applicable o~cial public guidance published, under the Code. "Continuing Disclosure Certifica~.e" means that certain Continuing Disclosure Certificate executed by the Agency dated as of Jul3' i. 1998, as originally executed and as it may be amended from time to time in accordance with the re~,'-rns thereof. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the AgenCy relating to the authorization, issuance, sale and delivery of the Bonds, including but-not limited to printing expe~es; operating expenses, rating agency fees, filing and recording fees, initial fees and charges and 5'-st annual administrative fee of the Trustee and fees and expenses of its counsel, fees, charges and ~sbursements of attorneys, financial advisors, accounting firms, consultants and other profession~s, fees and charges for preparation, execution and safekeeping of the Bonds and any other ces*., 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. "CounO," means Orange CounD~, a county duly o~anized and existing under the laws of the State. "Debt Service Fund; means the 5~nd by that name established and held by the Trustee pursuant to Section 4.03. "Defeasance Obligations" means (a) cash, Co) non-callable direct obligations of the Un/ted States of America ("Treasuries"), (c) evidences of ownership of proportionate interests in future interest and principal payments on Treasu~fies 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 '&e underlying Treasuries are not available to any person claiming through the cUStodian or to whom the cUStodian may be obligated or (d) pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively (or any combination thereof). "Escrow Banld' means U.S. Bank Tv,_st National Association, as escrow bank under the 1987 Bonds Escrow Agreement and under the 1991 Bonds Escrow Agreement, or any successor thereto appointed as escrow bank thereunder in accordance w/th the provisions thereof. "Event of Default" means any of the events described in Section 8101. '5 "Fiscal Year" means any twelve-month period beginning on July 1 in any year and exxending to the next succeeding June 30, both dates inclusive, or any other twelve month period selected and desi~ated by the Agency to the Trustee in'writing as its official fiscal year period. "Guaranty Agreement" means the Financial Guaranty Agreement, dated as of the Closing Date, by and between the Agency and the Municipal Bond Insurer relating to the Reserve Account Sure~,'Bond, as amended from time to time. "Indenture" means this Indenture of Trust by and between the Agency and the Trustee, as originally entered into or as it may be amended or supplemented by any Supplemental Indenture entered into pursuant to the provisions hereof. "Independent Accountant" means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by the Agency, and who, or each of Whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the AgencY; and (c) is not Connected with the Agency as an officer or employee of the Agency, but who maY be regularly retained to make reports to the Agency. "Independent Financial conSultant'' means any financial consultant or fn'rn of such consultants appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, Mth the Agency, other than as original Purchaser of the Bonds or any Parity Debt; and (c) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Independent Redevelopment Consultant" means any consultant or firm of such consultants appointed by the Agency, and who, or each of whom: (a) is judged by the Agency to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; Co) is in fact independent and not under domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency; and (d) is not connected with the Agency as an officer or employee of the Agency, but who may be re_.m~larly retained to make reports to the Agency. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, NJ 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, NY 10004; Moody's "Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, NC 28217, Attention: Municipal News Reports; S&P's "Called Bond Record," 65 Broadway, 16th Floor, New York, NY 10.004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other information services providing information with respect to called bonds as the Agency'may designate in a Written Certificate of the Agency delivered to the Trustee. "Interest Account" means the account by that name established and held by the Trustee pursuant to Section 4.03(a). "Interest Payment Date" means June 1 and December 1 in each year, commencing December 1, 1998, or, if such day is not a Business Day, on the next succeeding Business Day, so long as any of the Bonds remain Outstanding hereunder. "Law" means the Community Redevelopment Law of the State, constituting Part 1 of Division 24 of the California Health and Safety Code, and the acts amendatory thereof and supplemental thereto. "Low and Moderate Income Housing Fund" means the fund of the Agency established by the Agency pursuant to section 33334.3 of the Law. "Maximum Annual Debt Service" means, as of the date of calculation, the largest Annual Debt Service for the current or any future Bond Year following the anticipated issuance of Bonds, plus at the option of the Agency the Additional Allowance, as certified in writing by the Agency to the Trustee. For purposes of such calculation, there shall be excluded a pro rata portion of each installment of principal of any Parity Debt,. together w/th the interest to accrue thereon, in the event and to the ex"tent that the proceeds of such Parity Debt are deposited in an escrow fund from which amounts may not be released to. the Agency.unless the Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County) at least equal one hundred twenty-five percent (125%) of the amount of Maximum Annual Debt Service. "Moody's" means Moody's Investors Service, its successors and assigns. "Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by the Municif~al Bond Insurer insuring the pa~u'nent, when due, of the principal of and interest on the Series 1998 Bonds. "Municipal Bond Insurer" means MBIA Insurance Corporation, issuer of the Municipal Bond Insurance Policy. "1987 Bonds" means the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to ResolutiOn No, RDA 87-8, adopted by the Agency on August 3, 1987, in the aggregate principal amount of $8,060,000, of which $5,145,000 remains outstanding as of the Closing Date. "1987 Bonds Escrow Agreement" means that certain Escrow DePosit and Trust A~eement, dated as of July 1, 1998, by and between the Agency and the Escrow Bank, as originally entered into or as it may be amended or supplemented pursuant to the provisions thereof, created to prox-ide for the payment of the 1987 Bonds. "1987 Bonds Escrow Fund" means the fund by that name created and maintained by the Escrow Bank pursuant to the 1987 Bonds Escrow A~eement. "1991 Bonds" means the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No, RDA 91-12, adopted by the Agency on July 15, 1991, in the aggregate principal, mount of $13,100,000, of which $12,880,000 remains outstanding as of the Closing Date. "1991 Bonds Escrow Agreement" means that certain Escrow Deposit and Trust Agreement, dated as of July 1, 1998, by and between the Agency and the Escrow Bank, as originall) entered into or as it may be amended or supplemented pursuant to the provisions thereof, created to provide for the payment of the 1991 Bonds. .. "1991 Bonds Escrow Fund" means the fund by that name created and maintained by the Escrow Bank pursuant to the-1991 Bonds Escrow Agreement. "Original .Purchaser" means the original purchaser of the Bonds upon their delivery by the Trustee on the Closing Date. "Outstanding" when used as of any particular time w/th reference to Bonds, means (subject to the provisions of Section 9.05) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for candellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for wkich other Bonds shall have been authorized, executed, issued and delivered by the Agency pursuant hereto. "Owner" or "Bondowner" means, WSth respect to any Bond, the person in whose name the oxvnership of such Bond shall be registered on the Registration Boo'ks. "Parity Debt" means any loans, advances or indebtedness issued or incurred by the Agency on a parity with the Bonds pursuant to Section 3.05. ".Participating Underwriter" has the meaning ascribed thereto in the Continuing Disclosure Certificate. ".Permitted InvestmentS" means the following, but only to the extent that the same are acquired at Fair Market Value: (a) direct general obligations of the United States of America (including obligations issued or held in book ~'ntry form on the books of the Department of the Treasury) or obligations the payment of principal of and interest on which are unconditionally guaranteed by, the United States of America; Co) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any ofthe following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped Securities are only permiued if they have been stripped by the azency itself)' (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. ~xport-Import Bank (Eximbank), (ii) certificates of beneficial o~mership of the Farmers Home Administration; (iii) obligations of the Federal Financing Bank, (iv) debentures of the Federal Housing Administration (FHA); (v) participation certificates of the General Services Administration; (vi) guaranteed mortgage-backed bonds or guaranteed pass-through obligations (participation certificates) of the Government National Mortgage Association (GNMA); (vii) guaranteed Title XI financings of the U.S. Maritime Administration; and (viii) project notes, local authority bonds, new' · communities debentures (U.S. government guaranteed debentures) or U.S. public housing notes and bonds (U.S. government guaranteed public housing notes and bonc~s) of the U.S. Department of Housing and Urban Development (HUD); (c) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself):.(i), senior debt obligations of the Federal Home Loan Bank System; (ii) participation certificates or senior debt obligations of'the Federal ~'-' .... Home Loan Mortgage Corporation (FHLMC); (iii)mortgaged-backed securities and s~nior debt oblizations of the Federal National Mortgage Association (FNMA); (iv) senior debt obligations of the }tudent Loan Marketing Association (SLMA); (v) obligations of the Resolution Funding Corporation (REFCORP), and (v) consolidated systemwide bonds and notes of the Farm Credit System; (d) money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating bY S&P of"A.~au-G, ' "~" or "AAm" and, if rated by Moody' s, having a rating by Moody' s of"Aaa," "Aal" or "Aa2," including money market funds from which the Trustee or its affiliates derive a fee for investment advisou or other services to the fund; (e) certificates of deposit secured at all times by collateral described in (a) or Co) above, issued by commercial banks, savings and loan associations or mutual savings banks (such collateral must be held by a third party and the Trustee must have a perfected first security interest in such collateral); (f) certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by the Federal Deposit Insurance Corporation, including BIF and SAIF, including those of the Trustee or its affiliates; . (g) Investment agreements, including guaranteed investment contracts, accePtable to the Municipal Bond Insurer; (h) commercial paper rated, at the time of purchase, "Prime- 1" by Moody' s and "A- 1 +" or better by S&P; (i) bonds or notes issued by an3' state or municipality which, at the time of purchase, are rated by Moody's .and S&P in one of the tWo highest long term rating categories assigned by such agencies; (j) federal funds or bankers acceptances with a maXimum term of one year of any bank which has an unsecured, uninsured and ungUaranteed obligation rating of"Prime-1" or "A3" or better by Moody's and "A- 1 +" or better by S&P; (k) repurchase agreements for th/ny days or less wkich provide for the transfer of securities from a dealer bank or securities fn'm (seller/borrower) to the Trustee and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date, which satisfy the following criteria (unless otherwise approved by the Municipal Bond Insurer): (i) repurchase a~eements must be between the Trustee and (A) a primary dealer on the Federal Reserve reporting dealer list which is rated "A" or better by Moody's and S&P, or (B) a bank rmed "A" or better by Moody's and S&P; (ii) the x~a-irten repurchase agreement' contract must include the follOwing: (A) securities acceptable for transfer, which may be direct U.S. government obligations, or federal agency obl~ations backed by the full faith and credit of the U.S. government '" (in~lu.din~MA and the FHLMC); 03) the term ofthe repurchase a~eement may be up to n 3'0 day~; (C) the ebllateral must be delivered to the TruStee or a th/rd party acting as agent for the Trustee before or simultaneous with payment (perfection by possession of certificated securities); (D) the Trustee mUSt have a perfected fn'st priority security interest in the collateral; (E) the collateral must be free and clear of third-party liens and, in the case of a broker which falls under the jurisdiction of the Securities Investors Protection Corporation, are not subject to a repurchase a~eement or a reverse repurchase agreement; (F) failure to maintain the requisite collateral percentage, after a two day restoration period, will require the Trustee to liquidate the collateral; (G) the securities must be valued weekly, marked-to-market at current market price plus accrued interest and the value of collateral must be equal to 104% of the amount of cash transferred by the Trustee to the dealer bank or securities finn under the repurchase a~eement plus accrued interest (unless the securities used as collateral are obligations ofthe Federal National Mortgage Association orthe Federal Home Loan Mortgage Corporation, in which case the collateral must be equal to 105% of the amount of cash transferred by the Trustee to the dealer bank or securities finn under the. 10 repurchase agreement plus accrued interest). If the value of securities held as collateral falls below 104% (or 105%, if applicable) ofthe value ofthe cash transferred by the Trustee, then additional cash and/or acceptable securities must be transferred; and (iii) a legal opinion must be delivered to the Trustee to the effect that the repurchase ageement meets guidelines under state law for legal investment of public funds; (1) Shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code wkich invests exclusively in investments permit-ted by Section 53635 of Title 5, Division 2, Chapter 4 of the California Government Code, as it may be amended, including but not limited to the California Arbitrage Management Program (CAMPi; (m) The Local Agency Investment Fund of the State of. California, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name; and (n) any other investments permitted in writing by the Mtmicipal Bond Insurer. "Plan Limit" means the limitation contained in the Redevelopment Plan on the number of dollars of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, as such limitation is prescribed by section 33333.4 of the Law. · "Principal Accouter" means the account by that name established and held by the Trustee pursuant to Section 4.03Co). "Principal Corporate Trust Office" means such principal corporate trust office of the Trustee as may be designated from time to 'time by ~tten notice from the Trustee to the Agency, initially being at 550 South Hope Street, Suite 500, Los Angeles, CA 90071. "Project Area" means the territory within the Redevelopment Project, as described in the Redevelopment Plan. "Qualified Surety Bond' means a sure~ bond issued by an insurance company rated in the highest rating category by S&P and Moody's and, if rated by A.M. Best & Company, must also be rated in the highest rating category by A.M. Best & Company. "Rating Category" means any generic rating category of S&P, without regard to any refinement of such category by plus or minus sign or by numerical or other qualifying designation. "Record Date" means, with respect to any Interest Payment Date, the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day. 11 "Redemption Account" means the account by that name established and held by the Trustee pursuant to Section 4.03(e). "Redevelopment Plan" means the Redevelopment Plan for the Tovm Center Area Redevelopment Project, approved by Ordinance No. 701 enacted by the City Council of the City on November 22, 1:976, amended by Ordinance No. 855 enacted by the City Council of the City on September 8, 1981, and Ordinance No. 1021 enacted by the City Council of the City on March 20,. 1989, together with any amendments thereof at any time duly authorized pursuant to the Law. "Redevelopment Project" means the Tmam Center Area Redevelopment Project as described in the Redevelopment Plan. "Registration Books" means the records maintained by the Trustee pursuant to 'Section 2.08 for the registration and transfer of ownership of the Bonds. ' "Report" means a document in ~u-iting signed by an Independent Finimcial Consultant or an Independent Redevelopment COnsultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of this Indenture to which such Report relates; Co) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the RepOrt. "Reserve Account" means the account by that name established and held by the Trustee pursuant to Section 4.03(d). "Reserve Account Surety Bond" means the debt service reserve account surety bond issued by the Municipal Bond Insurer pursuant to the Guaranty Agreement for the credit of the Reserve Account as provided therein and subject to the limitations set forth therein. "Reserve Requirement" means, as of any calculation date, an amount, calculated by or on behalfofthe Agency and certified to the Trustee in writing, equal to Maximum Annual Debt Service on all Outstanding Bonds and any Parity Debt. The Reserve Requirement as of the Closing Date is $ . "Responsible Officer" means any Vice President, Assistant Vice President or Trust Officer of the Trustee with responsibility for matters related to this Indenture. ' "SeriesA Bonds" the $ Tustin Commurdty Redevelopment Agency (Town Center Area RedevelOpment Project) Tax Allocation Refunding Bonds, 1998 Series A. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., New York, New York, or its successors. 12 "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, NY 11530, Fax (516) 2274171 or 4190; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, PA 19103, Attention: Bond Department, Fax (215) 496-5058; and, in accordance with then current guidelines of the Securities and Exchange CommissiOn, such other addresses anc~/°r such other securities depositories as the Agency may designate in a Written Certificate of the Agency delivered to the Trustee. "Serial Bonds" means all Bonds other than Term Bonds. "Sinking Account" means the account by that name established and held by the Trustee pursuant to Section 4.03(c). .. "Special Fund" means the fund by that name established and held by the Agency pursuant to Section 4.02. "State" means the State of California. "Subordinate Debt" means any loans, advances or indebtedness issued or incurred by the Agency pursuant to Section 3.06, which are either: (a) by its terms payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax Revenues which is expressly subordinate to the pledge of and lien upon the Tax Revenues hereunder for the security of the Bonds. "Supplemental Indenture" means any resolution, agreement or other instrument which has been duly adopted or entered into by the Agency, but only ifand to the extent that such Supplemental 'Indenture is specifically authorized hereunder. "Tax Revenues', means all taxes pledged and annually allocated within the Plan Limit, following the Closing Date, and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with section 33670) of the Law and section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws, and as provided in the Redevelopment Plan, and all payments, subventions and reimbursements, if any, to the Agency specifically attributable to advalorem taxes lost by reason oftax exemptions and tax rate limitations, and including that portion of such taxes otherwise 'required by section 33334.3 of the Law to be deposited in the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the Bonds, if any, and that portion of any Parity Debt (including applicable reserves and financing costs) issued to finance amounts deposited in the Low and Moderate Income Housing Fund for use pursuant to section 33334.2 of the Law to increase or improve the supply of low and moderate income housing within or of benefit to the Project Area; but excluding all other amounts of such taxes (if any) (i) beginning in Fiscal Year 1998-99 which are required to be'deposited into the Low and Moderate Income Housing Fund of the Agency as a repayment of amounts transferred therefrom pursuant to sections 33681 and 33681.5 of the Law for deposit in the Educational Revenue 13 AUgmentation Fund created pursuant to section 97.03 of the Califorrfia Revenue and Taxation Code, (ii) required to be deposited into the Low and Moderate InCome Housing Fund of the Agency pursuant to section 33334.3 ofthe Law for increasing and improving the supply of low and moderate income housing, (iii) mounts payable by the State to the Agency under and pursuant to Chapter 1.5 of Pan 1 of Division 4 of Title 2 (commencing with section 16110) of the California Government Code, and (iv) payable by the Agency under the Pass-Through Agreements except and to the extent that any amounts so payable are payable on a basis subordinate to the payment of the Bonds or to the payment of Parity Debt, as applicable. "Term Bonds" means the Series A Bonds maturing on December 1, of any Parity Debt payable from mandatory Sinking Account payments. , and that portion "Trustee" means 550 South Hope Street, Suite 500, Los.Angeles, CA 90071, as trustee hereunder, or any successor thereto appointed as trustee hereunder in accordance with the provisions of Article VI. .' "PVritten Request of the Agency" or "PVritten Certificate of the Agency" means a request or certificate, in writing si~ed by the Executive Director, Secretary or Treasurer of the Agency or by any other officer of the Agency duly authorized by the Agency for that purpose. Section 1.03. Rules of Construction. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture, and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture' as a whole and not to any particular Article, Section or subdivision hereof. 14 A_RTICLE II AUTHORIZATION AND TER&4S Section 2.01. Authorization of Bonds. Series A Bonds in the aggregate principal' amount of dollars ($ ) are hereby authorized to be issued by the Agency under and subject to the terms of this Indenture and the Bond Law. This Indenture constitutes a continuing a~eement with the O~mers of all of the Series A Bonds issued or to be issued hereunder and then Outstanding to secure the full and final payment of principal and redemption premiums (if any) and the interest on all Series A Bonds which may from time to time be executed and delivered hereunder, subject to the covenants, agreements, Provisions and conditions herein contained. The Series A Bonds shall be designated the "Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A." .. Section 2.02. Terms of Bonds. (a) The Series A Bonds shall be issued in fully registered form without coupons in the denomination of $5,000 or any integral multiple thereof. The Series A Bonds shall mature on the dates and shall b~tr interest (calculated on the basis of a 360-day year of twelve 30-day months) at the rates per annum as follows: Maturi~, Date Principal Interest Rate Maturity Date Principal Interest Rate (December 1) Amount Per Annum fDecember 1) Amount Per Annum (b) Interest on the Bonds (including the final interest payment upon maturity or earlier 'redemption) shall be payable on each Interest Payment Date to the person whose name appears on the Registration Boo'ks as the Owner thereof as of the Record Date mediately preceding each such 15 Interest Payment Date, such interest to be paid by check of the Trustee mailed by first class mail, postage prepaid, on the Interest Payment Date, to such Owner at the address of such Owner as' it appears on the Registration Books as of such Record Date; provided however, that payment of interest may be by v~dre transfer to an account in the continental United States of America to any registered owner of Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish written wire instructions to the Trustee on or before the applicable Record Date. Principal of and redemption premium (if any) on any Bond shall be paid upon presentation and surrender thereof, at maturity or redemption, at the Principal Corporaie Trust Office. Both the principal of and interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of America. (c) Each Series A Bond shall be dated asof July 1, 1998, and shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) a Bond is authenticated on or before November 15, 1998, in which event it shall bear interest fi.om July 1, 1998; provided, however, that if.. as of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Section 2.03. Redemption of B0nds. (a) Optional Redemption of Series .4 Bonds. The Series A Bonds maturing on or before December 1, , are not subject to optional redemption prior to maturity. The Series A Bonds maturing on or after December 1,. , shall be subject to redemption, at the option of the Agency on any date on or after December 1, , as a whole or in part, by such maturities as shall be determined by the Agency, and by lot with/n a maturiq,, from any available source of funds, at the following redemption prices (expressed as percentages of the principal amount of the Series A Bonds to be redeemed) together with accrued interest thereon to the date fixed for redemption. Redemption Periods December 1,.. throu~ November 30, 102% December 1, ~ through November 30, ~ 101 December 1, ~ and thereafter 100 The Agency shall be required to ~ve the Trustee written notice of its intention to redeem Series A Bonds under this subsection (a) with a designation of the maturities to be redeemed at least sixty (60), but not more than ninet), (90) days, prior to the date fixed for such redemption, and shall transfer to the Trustee for deposit in the Debt Service Fund all amounts required for such redemption at least five (5) Business Days prior to the date fixed for such redemption. 16 (b) Sinl~qng Account Redemption of Series A Bonds. The Series A Bonds maturing on · December 1,~, shall also be subject to mandatory sinking fund redemption in part by lot on December 1,~, and on December 1 in each year thereafter to and including December 1, ~, from Sinking Account payments made by the Agency pursuant to Section 4,03(c) at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, w/thout premium, or in lieu thereof shall be purchased in whole or in part pursuant to the last paragraph of this subsection (b), in the aggregate respective principal mounts and on the respective dates as set forth in the following table; lorovided, however, that if some but not all of the Series A Bonds have been redeemed pursuant to subsection (a) above, the total amount of all furore Si 'nking Account payments shall be reduced by the ag~egate principal amount of Series A Bonds so redeemed, to be allocated among the Sinking Account payments as are thereafter payable on a pro rata basis in integral multiples of $5,000 as determined by the Agency (notice of which determination shall be given by the Agency to the Trustee). .. Sinking Account. Redemption Date (December 1) Principal Arnount To Be Redeemed ..or Purchased Sinking Account Redemption Date l'December 1) Principal Account To Be Redeemed or Purchased Maturity.. In lieu of redemption of Series A Bonds pursuant to this subsection (c), amounts on deposit as Sinking Account payments may also be used and withdrawn by the Trustee, at the w~tten 17 direction of the Agency, at any time for the purchase of Series A Bonds otherwise required to be redeemed on the follov, dng December 1 at public or private sale as and when and at such prices, but not greater than par (including brokerage and other charges and including accrued interest), as the Agency may in its discretion determine. The par amount of any of the Series A Bonds so purchased by the Agency and surrendered to the Trustee for cancellation in any twelve-month period ending on December 1 in any year shall be credited towards and shall reduce the par amount of the Series A Bonds otherwise required to be redeemed on the following December 1 pursuant to this subsection (c). (c) AJotice of Redemption. The Trustee on behalf and at the expense of the Agency shall mail Coy first class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) the Securities Depositories and to one or more Information Services designated in a Written Request of the Agency filed Mth the Trustee; but such mailing shall not be a condition precedent to such redemption and neither failure to receive any such notice nor any defect therein shall affect the validity, of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall state that such redemption is conditioned upon the timely delivery of the redemption price by the Agency to the Trustee for deposit in the Redemption Account, shall designate the CUSIP number ofthe Bonds to be redeemed, shall state the individual number of each Bond to be redeemed or shall state that all Bonds between two stated numbers (both inclusive) or all of the Bonds Outstanding are to be redeemed, and shall require that such Bonds be then surrendered at the Principal Corporate Trust Office for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue fi-om and after the redemption date. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identi~,ing, by issue and maturit).,, the Bonds being redeemed with the proceeds of such check or other transfer. (d) t~artial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency shall execute and the Trustee Shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same interest rate and maturity, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (e) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the Bonds so called for redemption shall have been duly deposited v~dth the Trustee, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price and acc~ed interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice. 18 (f) Manner of Redemption. Whenever any Bonds or portions thereof are to be selected for redemption by lot, the Trustee shall make such selection, in such manner as the Trustee shall deem appropriate, and shall notify the Agency thereof. In the event of redemption by lot of Bonds, the Trustee shall assign to each Bond then Outstanding a distinctive number for each $5,000 of the principal amount of each such Bond. The Bonds to be redeemed shall be the Bonds to wh/ch were assigned numbers so selected, but only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. All Bonds redeemed or purchased pursuant to this Section 2.03 shall be canceled. Section 2.04. Form of Bonds. The Series A Bonds, the form of Trustee's Certificate of Authentication, and the form of Assignment to appear thereon, shall be substantially in the form set forth in Exhibit A, which is attached hereto and by this reference incorporated herein, w/th necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the Agency by the signature of its Executive Director and the signature of its Secretary who are in office on the date of execution and delivery of this Indenture or at any time thereafter. Either or both of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the purchaser, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the purchaser. Any Bond may be si~_ned and attested on behalf of the Agency by such persons as at the actual date of the execution of such Bond shall be the proper officers of the Agency although on the date of such Bond any such person shall not have been such officer of the Agency. .Only such of the Bonds as shall bear thereon a Certificate of Authentication in the form hereinafter set forth,, manually executed and dated by the Trustee, shall be valid or obligator3.' for any purpose or entitled to the benefits of this Indenture, and such Certificate shall be conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture. In the event temporary Bonds are issued pursuant to Section 2.09 hereof, the temporary Bonds may bear thereon a Certificate of Authentication executed and dated by the Trustee, may be initially registered by the Trustee, and, until so exchanged as provided under Section 2.09 hereof, the temporary Bonds shall be entitled to the same benefits pursuant to this Indenture as' definitive Bonds authenticated and delivered hereunder. -Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Re~stration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Principal Corporate Trust Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. 'Whenever any Bond or Bonds shall be surrendered for regisu-ation of transfer, the Agenc. y shall execute and the Trustee shall deliver a 19 new Bond or Bonds, of like series, interest rate, maturity and principal amount of authorized denominations. The Trustee shall collect from the O~mer any tax or other governmental charge on the transfer of any Bonds pursuant to this Section 2.06. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the Agency. The Trustee may refuse to transfer, under the provisions of this Section 2.06, either (a) any Bonds during the period fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for redemption, or (b) any Bonds selected by the Trustee for redemption. Section 2.07. Exchange of Bond~. Bonds ma), be exchanged at the Principal Corporate Trust Office for a like ag~egate principal amount of Bonds of Other authorized denominations of the same series, interest rate and maturity. The Trustee shall collect any tax..or other governmental charge on the exchange of any Bonds pursuant to' this Section 2.07. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the Agency. The Trustee may refuse to exchange, under the provisions of this Section 2.07, either (a) any Bonds during the fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for redemption or (b) any Bonds selected by the Trustee for redemption. Section 2.08. Registration of Bonds. The Trustee will keep or cause 'to be kept, at its Principal. Corporate Trust Office, sufficient records for the registration and registration of transfer of the Bonds, which shall at all times during normal business hours be open to inspection by the Agency, upon reasonable prior notice to the Trustee; and, upon presentation for such purpose, the Trustee shall, under such reasonable re~m~lations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Boo'ks Bonds as hereinbefore provided. Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporal? form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewu-irten, shall be of such denominations as may be determined by the Agency, 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 Agency upon the same conditions and in substantially the same manner as the definitive Bonds. If the Agency issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange therefor at the Principal Corporate Trust Office, and the Trustee shall deliver in exchange for such temporary Bonds an equal ag~egate principal amount of definitive Bonds of authorized denominations, interest rates and like maturities. Until so exchanged, the temporary Bonds shall be entitled to the same benefits pursuant to this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.10. Bonds Mutilated. Lost. Destroyed or Stolen. If any Bond shall become mutilated, the Agency, at the expense of the Owner of such Bond, shall execute, and the Trustee 20 shall thereupon deliver, a new Bond of like tenor and 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. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Agency and the Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given, the Agency, at the expense of the Owner, shall execute, and the Trustee shall thereupon deliver, a new Bond of like tenor and amount in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond has matured or has been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee and the Agency). The Agency may require payment by the Owner of a sum not exceeding the actual cost of preparing each new Bond issued under this Section 2.10 and of the expenses wkich may be incurred by the Agency and the Trustee in the premises.- Any Bond issued under the provisions of this Section 2. I0 in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Agency whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued pursuant to this Indenture. Section 2.11. CUSIP Numbers. The Trustee and the Agency shall not be liable for any defect or inaccuracy in the CUSIP number that appears on any Bond, check, advise of payment or redemption notice and any such document may contain a statement to the effect that CUSIP numbers -- have been assigned by an independent service for convenience of reference and that neither the . . ...... A~ericy ii6r-the:Tru-stee~hatt be-liable for'any inaccuracy in-such-numbers: ............................ Section 2.12. Use of Depository. NotwithStanding any provision of this Indenture to the contrary: (a) At the request of the Original Purchaser, the Bonds shall be initially issued registered in the name of"Cede & Co.," as nominee of.The Depository Trust Company, the depository designated by the Original Purchaser, and shall be evidenced by one Bond for each maturity, as set forth in Section 2.02. Registered owuaership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to any successor of The Depository Trust Company or its nominee, or of any substitute depository designated pursuant to paragaph (ii) of this subsection (a) ("substitute depository"); provided that an), successor of The Depository Trust Company or substitute depository shall be qualified under any applicable laws to provide the sen,ice proposed to be provided by it; ' (ii) to an)' substitute depository designated ina Written Request of the Agency, upon (i) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository or (ii) a determination by the Agency that The Depository Trust Company or its successor is no longer able to carry out 21 its functions as depository; provided that any such substitute depository shal1 be qualified under any applicable laws to provide the sen, ices proposed to be provided by it; or (iii) to any person as provided below, upon (A) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository or 03) a determination by the Agency that The Depository Trust Company or its successor is no longer able to carry out its functions as depository; provided that no substitute depository which is not objected to by the Agency and the Trustee can be obtained. Co) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection (a) of this Section 2.12, upon receipt of all Outstanding Bonds by the Trustee, together with a Written Request of the Agency to the Trustee, a single new Bond shall be executed and delivered, registered in the name of such successor or such substitute depository or their nominees, as the case may be, all as specified in such Written Request of the Agency. In the case of any transfer pursuant to paragraph (iii) of subsection (a) of this Section 2.12, upon receipt of ail Outstanding Bonds by the Trustee together with a Written Request of the Agency, new Bonds shall be executed and delivered in such denominations and registered in the names of such persons as are requested in a Written Request of the Agency provided the Trustee shall not be required to deliver such new Bonds within a period less than sixty (60) days from the date of receipt of such a Written Request of the Agency. (c) In the case of partial redemption or an advance refunding of any Bonds evidencing all of the principal maturing in a particular year, The Depository Trust Company.shall deliver the Bonds to the Trustee for cancellation and re-registration to reflect the amounts of such reduction in principal. (d) The Agency and the'Trustee shall be entitled to treat the person in whose name any Bond is rezistered as the absolute Owaaer thereof for all purposes of this Indenture and any applicable laws, not~a~thstanding any notice to the contrary received by the Trustee or the Agency; and the Agency and the Trustee shall have no responsibility for transmitting payments to, communication with, notifying or othem~ise dealing with any beneficial owners of the Bonds. Neither the Agency nor the Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including The Depository Trust Company or its successor (or substitute depositor3' or its successor), except for the registered owner ofany Bond. (e) So long as all outstanding Bonds are registered in the name of Cede & Co. or its registered assign,, the Agency and the Trustee shall reasonably cooperate with Cede & Co., as sole registered Owner, or its re~stered assi~m'~ in effecting payment of the principal and interest due with respect to the Bonds by arrang~g for payment in such manner that funds for such payments are properly identified and are made imm~iately available on the date they are due. (f) So long as all Outstanding Bonds are registered in the name of Cede & Co. or its registered assign (hereinafter, for purposes of this para~aph (f), the "Owner"): 22 (i) All notices and payments addressed to the Ovmers shall contain the Bonds' CUSIP number. (ii) Notices to the Owner shall be fo~,arded in the manner set forth in the form of Blanket Issuer Letter of Representations executed by the Agency and received and accepted by The Depository Trust Company. Section 2.13. Payment Procedure Pursuant to Municipal Bond Insurance Policy. (a) In the event that, on the second Business Day, and again on the Business Day prior to each 'Interest Payment Date, the Trustee has not received sufficient moneys (following a draw on the Reserve Account SureD' Bond) to pay all principal and interest due with respect to the Bonds due on the second following or following, as the case may be, Business Day, the Trustee shall inunediately notify the Municipal Bond Insurer or its designee on'the same Business Day by telephone or tele~aph, confirmed in ~a-iting by registered or certified mail, of the amount of the deficiency. (b) If the deficiency is made up in whole or in part prior to or on the Interest Payment Date, the Trustee shall so notify the Municipal Bond Insurer or its designee. (c) In addition, if the Trustee has actual -knowledge that any Owner has been required to disgorge payments of principal or interest with respect to the Bonds to a trustee in bankruptcy or' creditors or others pursuant to a final jud~m'nent by a court of competent jurisdiction that such payment constitutes a voidable preference to such Owner within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the Municipal Bond Insurer orits designee of such fact by telephone or tele~aphic notice, confirmed in writing by registered or certified mail. .. (d) The TrUStee is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for the Owners as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest with respect to the Bonds, the Trustee shall (A) execute and deliver to State Street Bank and Trust Company, N.A., or its successors under the Municipal Bond Insurance Policy (the"Insurance Trustee"), 'in form satisfactory to the Insurance Trustee, an instrument appointing the Municipal Bond Insurer as agent for such Owners in any legal proceeding related to the payment of such interest and an assignment to the Municipal Bond Insurer of the claims for interest to wkich such deficiency relates and which are paid by the Municipal Bond Insurer, 03) receive, as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Municipal Bond Insurance Policy, payment fi.om the Insurance Trustee with respect to the claims for interest so assigned, and (C) disburse the same to such respective Owners, and 23 (ii) If and to the extent of a deficiency in mounts required to pa), principal ,Mth respect to the Bonds, the Trustee shall (A) execute and deliver to the Insurance Trustee in form satisfactory to the Insurance Trustee an instrument appointing the Municipal Bond Insurer as agent for such Owner in any legal proceeding relating to the payment of such principal and an assignment to the Municipal Bond Insurer of any of the Bond surrendered to the Insurance Trustee of so much of the principal mount thereof as has not previously been paid or for which moneys are not held by the Trustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Trustee is received), (B) receive, as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Municipal Bond Insurance Policy, payment therefor from the Insurance Trustee, and (C) disburse the same to such O~mers. (e) Payments with respect to claims for interest and principal with respect to Bonds disbursed by the Trustee from proceeds of the Municipal Bond Insurance Policy shall not be considered to discharge the obligation of the Agency with respect to such Bonds, and the Municipal Bond Insurer shall become the owner of such unpaid Bonds and claims for the interest in accordance M'da the tenor of the assignment made to it under the provisions of this subsection or otherwise. (f) Irrespective of whether any such assignment is executed and delivered, the Agency and the Trustee hereby agree for the benefit of the Municipal Bond Insurer that, (i) They recognize that to the extent the Municipal Bond Insurer makes pa.wnents, directly or indirectly (as by-paying throughthe Trustee), on account of principal or interest with respect to the Bonds, the Municipal Bond Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the Agency, ~-ith interest thereon as provided and solely from the sources stated in this Indenture and the Bonds; and (ii) They will accordingly pay to the Municipal Bond Insurer the amount of such principal and interest (including principal and interest recovered under subpara~aph (ii) of the first paragraph of the Municipal Bond Insurance Policy, which principal and interest shall be deemed past due and not to have been pa/d), Mth interest thereon as provided in Indenture and the Bonds, but only'from the sources and in the maimer provided herein for the payment of principal and interest with respect to the obligations to O~mers, and will otherwise treat the Municipal Bond Insurer as the owner of such rights to the amount of such principal and interest. 24 ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS; PARITY DEBT Section 3.01. Issuance of Bonds. Upon the execution and deliver3' of this Indenture, the Agency shall execute and deliver to the Trustee Series A Bonds in the aggregate principal amount of dollars ($ ) and the Trustee shall authenticate and deliver the Series A Bonds upon the Written Request of the Agency. Section 3.02. Application of Proceeds of Sale, On the Closing Date the net proceeds of sale of the Series A Bonds inthe amount of $ ., including accrued interest shall be paid to the Trustee and applied as follows: (a) The Trustee shall deposit A Bonds in the Interest Account; accrued interest received on the sale of the Series (b) The Trustee sh~l deposit the amount of $ in the Costs of Issuance Fund; .." (c) .The TrUStee shall transfer the amount of $ · to the; Escrow Bank for deposit in ' - . 'th~ 1987 Bonds EsCrow-F,'und;'an'd .... " -.' .o ''.. .~ , . .'~ ,.~' .' .. - . . ~ ~ .... .-. · - . · .~ . -'. '" ". - :. .. -' idi The'rustee shall trahsfer the mount-of $ .' to the Esd~-ow Bank .roi deposlt-in · -"" '..-'? i~: .the 1991 Bonds Escrow Fund. , .., ~ .--'. 'i:~. · :, --.- - ;,:;. ,.. _ .,.f: ..... . ' ":;:.-.. · The Tmst. ee may establish, .as it kleems necessary, a temportaz3' fand'°r..~Cotrnt on its re'cords ' ' -' to fa~ilitat~the deposits and transfers set forth herein. ~/,- · ,: "- : ,.. i .. -. ' ' -': ~ ' ' '~ .- ' '~. · ' "' '.' Section 3.03. Costs of Issuance Fund. There is hereby established a separate fund to be ': -knOwn as the "Costs of Issuance Fund," which shall be held by the Trustee in trust. 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 ora Written Request of the Agency stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation ~zs incurred and that such payment is a proper charge against said fund. On the date six months following the Closing Date, or upon the earlier Written Request of the Agency stating that all 'known Costs of Issuance have been paid, all amounts, if any, remaining in the Costs of Issuance Fund shall be withdra,am therefrom by the Trustee and transferred to the Agency for deposit into the Debt Service Fund. Section 3.04. Issuance of Pariw Debt. 25 (a) In addition to the Bonds, the Agency may, by Supplemental Indenture, issue or incur Parity, Debt payable from Tax Revenues on a parity with the Bonds to finance the Project in such principal amount as shall be determined by the Agency. The Agency may issue and deliver any such other Parity Debt subject to the following specific conditions precedent to the issuance and delivery of such Parity Debt issued under this Section 3.04:. (i) The Agency shall be in compliance with all covenants set forth in this Indenture and all Supplemental Indentures. (ii) The Tax Revenues for the then current Bond Year, based on the most recent assessed valuation of property in the Project Area as evidenced in ~:itten documentation from an appropriate official of the County, plus, at the option of the Agency, the Additional Allowance, shall beat least equal m one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all Bonds and Parity Debt which will be Outstanding following the issua~nce of such Parity Debt. (iii) The Supplemental Indenture providing for the issuance of such Parity Debt under this Section 3.04 shall provide that: (A) Interest on said Parity Debt shall be payable on June 1 and December 1 in each year of the term of such PariS' Debt except the first twelve month period, during which . interest may be payable on any June 1 or December 1; and -. (B) The principal of such Parity Debt shall be paya.ble on' December 1 in any year in which principal is paya. ble. .' ' .-(iv) The Suppiemental Indenture providing fr~r the-;issuance of such Parity Debt may .... provide for the e~tablishment of separate funds and hecounts;. -. · · (v) The ag~egate mount of the principal of and interest on all Outstanding Bonds and Subordinate Debt coming due and payable following the issuance of such Parity Debt shall not exceed the maximum amoUnt of Tax Revenues permitted under the Plan Limit to be allocated and paid to the Agency following the issuance of such Parity Debt; and (vi) An opinion of Bond Counsel stating (i) that the Supplemental Indenture relating to the Parity Debt is'valid and enforceable in accordance with its terms (ii) that such Supplemental Indenture Creates a valid pledge of that which it purports to pledge, and (iii) that the total principal amount of Parity Debt to be issued or incurred and then Outstanding will not exceed any limit imposed by law. (vii) The Supplemental Indenture providing for the issuance of such Parity. Debt shall provide for the deposit into the R'es,rve Account of an amount required !o cause the balance therein to equal the full amount of the Reserve Requirement or shall make provision for a 26 Qualified Suret)' Bond in lieu of cash-funding the Reserve Account, or a combination of cash and a Qualified Surety Bond. (viii) The Agency shall deliver to the Trustee a Writ-ten Certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (i), (ii), (iii), (iv), (v), (vi) and (vii) subsection (a) of this Section 3.04 have been satisfied. Ct)) For purposes of calculating Tax Revenues in applying the provisions of Section 3.04(a): (i) such Tax Revenues shall be calculated on the basis of a tax rate of $1.00 per $100 of assessed value; and · . (ii) the amount of such Tax Revenues shall be the amount received in the most recent Fiscal Year (which may be the current Fiscal Year) for wh/ch records are available from Orange County establishing the assessed valuations ofpropert)' in the Project Area;provided, however, that-if at the time such calculation is made, the Agency is party to a tax-sharing agreement or arrangement with respect to Tax Revenues which is not subordinate to the Annual Debt Service and the effect of such agreement or arrangement would be to reduce the amount of Tax Revenues payable to the Agency in any of the succeeding five (5) Fiscal Years if gross tax increment revenues were to remain constant, the amount of Tax Revenues shall be reduced by the greatest projected reduction in sUch five (5) year period. (c) In the event that the Agency has actual 'knowledge that any appeals are then pending' which seek a reduction in the assessed valuation of property within the Project Area, then for the purposes of calculating Tax Revenues in applying the provisions of Section 3.04(b), such Tax Revenues shall be reduced by one-half of the amount of the requested reductio,ns as set forth in such appeals. (d) The Additional Revenues may be taken into account in the calculation of Tax Revenues, provided that the amount of Tax Revenues for the then current Fiscal Year (based on assessed valuations set forth in the written records of the Count),) is at least equal to one hundred twenty-five percent (125%) of Max/mum Annual Debt Service on all Bonds and Parity Debt which will be Outstanding following the issuance of such Parity Debt. Section 3.05. Issuance of Subordinate Debt. In addition to the Bonds, the Agency may issue or incur Subordinate Debt in such principal amount as shall be determined by the Agency. The Agency may issue or incur such Subordinate Debt subject to the following specific conditions precedent: (a) The Agency shall be in compliance with all covenants set forth in this Indenture and all Supplemental Indentures; 27 (b) If, and to the extent, such Subordinate Debt is payable from Tax Revenues within the Plan Limit on the amount of Tax Revenues, then all Outstanding Bonds, Parity Debt and Subordinate Debt coming due and payable following the issuance or incurrence of such Subordinate Debt shall not exceed the maximum amount of Tax Revenues permitted within the Plan Limit. Section 3.06. Validi~, of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the Redevelopment Project or upon the performance by any person of his obligation with respect to the Redevelopment Project. 28 .aRTICLE IV SECURITY OF BONDS; FLOW OF FUNDS Section 4.01. Securi _ty of Bonds: Equal SecuriLy. Except as provided in Section 6.06, the Bonds shall be equally secured by a pledge of, security interest in and a first and exclusive lien on all of the Tax Revenues. and a first and exclusive pledge of, security interest in and lien upon all of the moneys in the Special Fund, the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account, without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Tax Revenues and such moneys, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if an),) on the Bonds. In consideration of the acceptance of the Bonds by those who shall hold the same from time to time, this Indenture shall be deemed to be and shall constitute a contract between the Agency and the Ovxuaers from time to time of the Bonds. and the covenants and agreements herein set forth to be performed on behalf of the Agency shall be for the equal and proportionate benefit, secm-iu, and protection of all Owners of the Bonds ~a'ithout preference, priority or distinction as to securiB, or otherwise of any of the Bonds over any of the others bv reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. Section 4.02. Special Fund: Deposit of Tax Revenues. There is hereby established a special fund to be known as the "Special Fund". which Shall be held by the Agency. The Agency shall transfer all of the Tax Revenues received in any Bond Year to the Special Fund promptly upon receipt thereof by the Agency, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amomnts required to be transferred to the Trustee for deposit' into the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and 'the Redemption Account in such Bond Year pursuant to Section 4.03. Except as provided in Section 5.18, all Tax Revenues received by the Agency during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding paragraph of this Section 4.02, includ/ng'delinquent amounts if any, shall be released from the pledge and lien hereunder for the security ofthe Bonds and may be applied by the Agency for any lav~.-ful purposes of the Agency, including but not limited to the payment of Subordinate Debt, or the payment of any mounts due and owing to the United States of America pursuant to Section 5.14. Prior to the pa)~nent in full of the principal of and interest and redemption premium (if any) on the Bonds and the pa)unent in full of all other amounts payable hereunder and under any Supplemental Indentures, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in this Indenture and in any Supplemental Indenture. 29 Section 4.03. Deposit.of Amounts by TrusTee. There is hereby established a trust fund to be known as the Debt Service Fund, which shall be held by the Trustee hereunder in trust. Moneys in the Special Fund shall be transferred by the Agency to the Trustee in the following mounts, at the following times, and deposited by the Trustee in the following respective special accounts, which are hereby established in the Debt Service Fund, and in the following order of. priority: (a) Interest Account. On or before the fifth Business Day preceding each Interest Pavment Date, the Agency shall withdraw from the Special Fund and transfer to the Trustee, for deposit in the Interest Account an amount which when added to the amount contained in the Interest Account on that date, Mil be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. All moneys in the Interest'Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to this' Indenture). Co) Pr#wipal Account. On or before the fifth Business Day preceding December 1 in each year beginning December 1, 1998, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the principal becoming due and payable on the Outstanding Serial Bonds and maturing Term Bonds on the next December 1. No such transfer and deposit need be made to the Principal Account if the amount contained therein is at least equal to the principal to become due on the next December 1 on all of the Outstanding Seri.al Bonds and maturing Term Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds and maturing Term Bonds as it shall become' due and payable. (c) Sinking Account. No later than the fifth Business Day preceding each December 1 on which any Outstanding Term Bonds are subject to mandatory redemption, or otherv,4se for purchases of Term Bonds, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the ag~egate principal amount of the Term Bonds required to be redeemed on.such December 1. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon redemption or purchase. (d) Reserve Account. (i) There shall be deposited and maintained in the Reserve Account at all times, with respect to the Series A Bonds, the Reserve Account Surety Bond in an amount equal to the 30 Reserve Requirement. The Reserve Account Surety Bond shall be held as a reserve for the payment when due of the principal of and interest on the Series A Bonds. (ii) As long as the Reser~'e Account Surety Bond shall be in full force and effect, the Agency and the Trustee agree to comply with the following provisions: (A) In the event and to the extent that moneys on deposit in the Interest Account and the Principal Account, plus all amounts on deposit in and credited to the Reserve Account in excess of the amount of the Reserve Account Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the later of: (1) three (3) days aSer receipt by the Municipal Bond Insurer of a demand for payment in the form attached to the Reserve Account Surety Bond as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment has not been made to the Trustee; or (2) the Interest Payment Date specified in the Demand for Payment presented by the Trustee to the Municipal Bond Insurer, the Municipal Bond Insurer w'ill make a deposit of funds in an account with the Trustee sufficient for the payment to the Trustee of amounts which are then due to the Trustee hereunder (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Reserve Account Surety Bond. (B) The Trustee shall, after submitting to the Municipal Bond Insurer the Demand for Payment as provided in (A) above, make available to the Municipal Bond Insurer, upon its request, copies of all records relating to the funds and accounts maintained under this Indenture. (C) The Trustee shall, upon receipt of moneys received from the draw on the Reserve Account Surety Bond, as specified in the Demand for Payment, credit the Reserve Account to the ex-tent of moneys received pursuant to such Demand. (D) Upon receipt of any delinquent payment with respect to which moneys have been credited to the Reserve Account advanced from a draw on the Reserve Account Surety Bond, such payment shall be paid to the Municipal Bond Insurer as a reimbursement for such draw to the extent required to reimburse the Municipal Bond Insurer in full, and then remaining amounts shall be transferred to the Interest Account and the Principal Account. (iii) If, at any time, the Reserve Account is funded with cash only or cash and a Qualified Surety Bond, and the Trustee has actual 'knowledge that the amount on deposit in the Reserve Account is less than the Reserve Requirement, the Trustee shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. If there shall then not be sufficient Tax Revenues to transfer an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account, 31 the Agency shall be obligated to continue making transfers as Tax Revenues become available in the Special Fund until there is an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. No such transfer and deposit need be made to the Reserve Account so long as there shall be on deposit therein a sum at least equal to the Reserve Requirement. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account, the Principal Account and the Sinking Account in such order of priority, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then Outstanding} except that so long as the Agency is not in default hereunder, any amount in the Reserve Account in excess of the Reserve Requirement (as determined by the Trustee based upon a valuation of investments held in such account performed in.accordance with Section 6.07) shall be withdra~m from the Reserve Account semiannually on or before the Business Day preceding each June 1 and December 1 by the Trustee and deposited in the Interest Account. If a valuation discloses that amounts in the Reserve Account are less than the Reserve Requirement, which Valuation must occur not less than semi-annually, the Agency shall immediately cause the cure thereof fi'om any available moneys. All amounts in the Reserve Account on the Business Day preceding the final Interest Payment Date shall be withdrawn from the Reserve Account and shall be transferred either (i) to the Interest Account and the Principal Account, in such order, to the extent required to make the deposits then required to be made pursuant to this Section 4.03 or, (ii) if the Agency shall have caused to be transferred to the Trustee an amount sufficient to make the deposits required by this Section 4.03} then, at the Written Request of the Agency, to the Agency for deposit by the Agency into the Debt'Service Fund. The Trustee may conclusively presume that there has been no change in the Reserv~e Requirement unless notified in writing by the Agency. .. (e) Redemption Account. On or before the fifth Business Day preceding any date on which Bonds are to be redeemed pursuant to Section 2.03(a), the Trustee shall withdraw from the Debt Serx.fce Fund and deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be redeemed on such date pursuant to Section 2.03(a), taking into account any funds then on deposit in the Redemption Account. The Trustee shall also deposit in the Redemption Account any other amounts received by it from the Agency designated by the Agency in x~a-iting to be deposited in the Redemption Account. All moneys in the Redemption Account shall be ,used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds to be redeemed pursuant to Section 2.03(a) on the respective dates set for such redemption. 32 .~dO,.TI CLE V OTHER COVENANTS OF THE AGENCY Section 5.01. Punctual Payment. The Agency shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds together with the premium thereon, if any, in strict conformity with the terms of the Bonds and of this Indenture. The Agency shall faithSally observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and the Bonds. Nothing herein contained shall prevent the Agency from making advances of its o~n moneys howsoever derived to any of the uses or purposes referred to herein. Section 5.02. Limitation on Additional Indebtedness: Against Encumbrance.s. The Agency hereby covenants that, so long as the Bonds are Outstanding, the Agency shall.not issue any bonds, notes or other obligations, enter into any a~eement or otherwise incur any indebtedness, for which all or any part of the Tax Revenues are pledged as security for payment, excepting only the Bonds, any Parity Debt and any Subordinate Debt. The Agency will not otherwise encumber, pledge or place any charge or lien upon any of the Tax Revenues or other amounts pledged to the Bonds superior to the pledge and lien herein created for the benefit of the Bonds. Section 5.03. Extension 0fPavment The Agency will not, directly or indirectly, extend or consent to the ex'tension of the time for the payment of any Bond or claim for interest on any of the Bonds'and will not, directly or indirectly, be a party to or approve any such arrangement by purchasing or funding the Bonds or claims for interest in any other manner. In case the maturity, of any such Bond or claim for interest shall be extended or funded, whether or not with the consent of the Agency, such Bond or claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Section 5.04. pa_x~nent of Claims. The Agency shall promptly pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Tax Revenues or other amounts pledged to the pas~nent of the Bonds, or any part thereof, or upon any funds in the hands, of the Trustee, or which might impair the security of the Bonds. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims. Section 5.05. Books and Accounts: Financial Statement.~. The Agency shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the City of Tustin, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Tax Revenues and the Special Fund. Such 33 boo'ks of record and accounts shall at all times during business hours be subject to the inspection of . the Owners of not less than ten percent (10%) in aggregate principal mount of the Bonds then Outstanding, or their representatives author, zed in ~a-iting. The Agency will cause to be prepared, within one hundred' and eighty (180) days after the close of each Fiscal Year so long as the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements of Tax Revenues and the financial condition of the Redevelopment Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year. The Agency shall furnish a copy of such fmanci~ statements to any Owner upon reasonable request and at the expense of such Owner. Section 5.06. Protection of SecuriB' and Righ'ts of Owner~. The Agency will preserve and protect the security of the Bonds and the rights of the Owners. From and after the Closing Date, the Bonds shall.be incontestable by the Agency. Section 5.07. ?awnents of Taxes and Other Charges. Except as otherwise provided herein, the Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area, or upon the revenues therefrom when the same shall become due. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof. Section 5.08. Taxation of Leased Property. All amounts derived by the Agency pursuant to section 33673 of the Law with respect to the lease of property for redevelopment shall be treated as Tax Revenues for all purposes of this Indenture. Section 5.09. Disposition of property. The Agency will not participate in the disposition of any land or real property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public o~nership or use or othem~ise (except property dedicated for public fight-of-way and excep~ property planned for public ownership or use by the Redevelopment Plan in effect on the date of this Indenture), if such disposition, when taken together with other such dispositions, would either (a) ag~egate more than ten percent (10%) of the land area in the Project Area, or Ca) aggregate more than ten percent (10%) of the most recent assessed valuation of the property in the Project Area. Section 5.10. Maintenance of Tax Revenues. The Agency shall comply with all requirements of the Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the Count5, and, in the case of amounts payable by the State, appropriate officials of the State. 34 Section 5.11. No Arbitrage. The Agency shall not take, or permit or suffer to be taken by the Trustee or othemSse, any action with respect to the proceeds of the Series A Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series A Bonds would have caused the Series A Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code. Section 5.12. Private ActMtv Bond Limitation. The Agency shall assure that the proceeds of the Series A Bonds are not so used as to cause the Series A Bonds to satisfy the private business tests of section 141 (b) of the Code or the private loan financing test of section 141 (c) of the Code. Section 5.13. Federal Guarantee Prohibition. The Agency shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series A Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code. Section 5.14. Rebate Requirement. The Agency shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the ex"tent that such section is applicable to the Series A Bonds. Section 5.15. Maintenance of Tax-Exemption. The Agency shall take ali actions necessary to assure the exclusion of interest on the Series A Bonds f~om the goss income of the Owners of the Series A Bonds to the same extent as such interest is permitted to be excluded from ~oss income under the Code as in effect on the date of issuance of the Series A Bonds. Section 5.16. Compliance with the Law; Lo~, and Moderate Income Housing Fund. The Agency shall ensure that all activities undertaken by the Agency with respect to the redevelopment of the Project Area are undertaken and accomplished in conformity with all applicable requirements of the Redevelopment Plan and the Law, including, without limitation, duly noticing and holding any public heating required by either section 33445 or section 33679 of the Law prior to application of proceeds of the Bonds to any portion of the Redevelopment Project. Without limiting the generality of the foregoing, the Agency covenants that it shall deposit or cause to be deposited in the Low and Moderate Income Housing Fund established pursuant to section 33334.3 of the Law, all amounts when, as and if required to be deposited therein pursuant to the Law; proxdded, however, that the Agency may reduce or eliminate such requirement if it makes the findings as set forth in section 33334.2 of the Law. Section 5.17. Management and Operations of Properties. The Agency will manage and operate all properties owned by the Agency and comprising any part of the Redevelopment Project, in a sound and businesslike manner, and Mll keep such properties insured at all times in conformity v~dth sound business practice. 35 Section 5.18. /)lan Limit. The Agency hereby agrees thai the aggregate mount of Annual Debt Service remaining to be paid on all Outstanding Bonds shall at no time exceed ninety-five percent (95%) of the ag~egate mount of Tax Revenues which the Agency is permitted to receive under the Plan Limit. In the event that such limit is reached or exceeded, the Agency shall (a) deposit into and retain in the Special Fund all Tax Revenues not used to pay current debt ser¥ice, to be applied for the sole purpose of paying the principal of and interest on the Bonds as they become due and payable, notwithstanding anything herein to the contrary, and (b) not later than Jul)' 1 of each succeeding Fiscal Year, cause to be prepared and filed with the Trustee an accounting which shows the ag~egate mount of Annual Debt Service remaining to be paid on all Outstanding Bonds, and the amount of Tax Revenues which the Agency is permitted to receive under the Plan Limit. Section 5.19. Continuing Disclosure. The Agency hereby covenants and agrees that it Mil comply with and can3, out all of the provisions of the Continuing Disclosure certificate. Notwithstanding any other provision of this Indenture, failure of the Agency to comply vxSth the Continuing Disclosure Certificate shall not be an Event of Default hereunder. HoWever, any Participating Underwriter or any holder or beneficial o~mer of the Bonds may take such actions as may be necessary and appropriate, including see 'king specific performance by court order, to cause the Agency to comply with its obligations under this Section 5.19. Section 5.20. Further Assurances. The Agency will adopt, make, execute and deliver any and all such further resolutions, instnm~ents and assurances as may be reasonablY necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the fights and benefits provided in tiffs Indenture. 36 ARTICLE VI THE TRUSTEE Section 6.01. Duties, Immunities and Liabilities of Trustee.... (a) The Trustee shall, prior t° the occurrence of an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants, duties or obligations shall be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable' person would exercise or use under the circumstances in the conduct of its own affairs. Co) The Agency may remove the Trustee at any time, unless an Event of Default shall have occurred and then be continuiflg, and shall remove the Trustee (i) if 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 va'iting), or (ii) if at any time the Agency has knowledge that the Trustee shall cease to be eligible in accordance with subsection (e) of this Section 6.01, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its propen3' 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, consen'ation or liquidation. In each case such removal shall be accomplished by the giving of ~¢itten notice of such removal by the Agency to the Trustee, whereupon the Agency shall immediately appoint a successor Trustee by an instnmaent in writing. (c) The Trustee may at any time resign by giving v~a'itten notice of such resignation to the Agency and by gi~dng the Ovmers notice of such resignation by fkst class mail, postage prepaid, at their respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the Agency shall promptly appoint a successor Trustee by an instrument in writing. (d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Owner (on behalf of such Owner and all other Ovmers) may petition any court of competent jurisdiction at the expense of the Agency 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, acknowledging and delivering to the Agency and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations 37 of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Agency 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 request of the successor Trustee, the Agency shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confmuing to such successor Trustee all such moneys, estates, properties, fightS, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Agency shall mail a notice of the succession of such Trustee to the trusts hereunder to each rating agency which then has a current rating on the Bonds and to the Owners at their respective addresses shov, aa on the Registration Books. If the Agency fails to mail such notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Agency. (e) Any Trustee appointed under the provisions of this Section 6.01 in succession to the Trustee shall be a financial institution having a trust office in the State, having (or in the case of a corporation or trust company included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least $75,000,000, and subject to supervision or examination by federal or state authority .and shall be acceptable to the Municipal Bond Insurer. If such financial institution publishes a report of condition at least annually, pursuant to law or to the requirements of any Super, Ssing or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such financial institution shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee snail cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this Section 6.01. The Trustee may be removed at an), time, at the request of the MuniciPal Bond Insurer w/th the consent of the Agency, for any breach of the trust set forth herein. The Municipal Bond Insurer shall receive written notice from the Agency prior to the effective date of any Trustee resignation. Notwithstanding any other provision of this Indenture, no removal, resignation or termination of the Trustee shall take effect until a successor, reasonably acceptable to the Municipal Bond Insurer, shall be appointed. Section 6.02. Merger or Consolidation. Any bank or trust company into which the Trustee may be merged or converted or with which either of them may be. consolidated or any bank or trust company resulting from an), merger, conversion or consolidation to which it shall be a party or'any bankor trust company to which the Trustee ma), sell or transfer all or substantially all of its corporate trust business, provided such bank or trust company shall be eligible under subsection (e) of Section 38 6.01, shall be the successor to such Trustee Mthout the execution or filing of any paper or an), further act, anything herein to the contras? notwithstanding. Section 6.03. Liabili~, of Trustee. (a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Agency, and the Trustee shall not assume responsibility for the correctness of the same, nor make any representations as to the validity or sufficiency of this Indenture or of the security for the Bonds or the tax status of interest thereon nor shall incur any responsibility in respect thereof, other than as expressly stated herei'n. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or intentional misconduct. The Trustee shall not be liable for the acts of .any agents of the Trustee selected by it with due care. The Trustee and its officers and employees may become the O~xmer of any Bonds with the same rights it would have if the), were not Trustee and, to the ex"tent permitted by law, may act as depository for and permit any of its officers °r directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding. (b) The Trustee shall not be liable for any error ofjudgment made by a responsible employee or officer, unless the Trustee shall have been negligent in ascertaining the pertinent facts. (c) The Trustee shall not be liable Mth respect to any action taken or omitted to be taken by it. in accordance w/th the direction of the O~mers of not less than a majority (or other percentage proVided for herein) in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (d) The Trustee shall not be liable for any action taken by it and believed by it to be authorized or within the discretion or fights or powers conferred upon it by this Indenture, except for actions arising from the negligence or intentional misconduct of the Trustee. The permissive right of the Trustee to do things enumerated hereunder shall not be construed as a mandatory duB'. (e) The Trustee shall not be deemed to have 'knowledge of any Event of Default hereunder unless and until a Responsible Officer shall have actual knowledge thereof, or shall have received written notice thereof from the Agency at its Principal Corporate Trust Office. In the absence of such actual 'knowledge or notice, the Trustee may Conclusively assume that no default has occurred and is continuing under this Indenture. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or a~eements here'm or of any of the documents executed in connection with the Bonds, or as to the existence of an Event of Default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. Without limiting 39 the generality of the foregoing, the Trustee may rely conclusively on the Agency's certificates to establish the Agency's compliance with its financial covenants hereunder, including, without limitation, its covenants regarding the deposit of Tax Revenues into the Special Fund and the investment and application of moneys on deposit in the Special Fund (other than its covenants to transfer such moneys to the Trustee when due hereunder). The Trustee shall have no liabiliB, or obligation to the Bond Ov, mers with respect to the payment of debt service by the Agency or with respect to the observance or performance by the Agency of the other conditions, covenants and terms contained in this IndentUre, or with respect to the investment of any moneys in any fund or account established, held or maintained by the Agency pursuant to this Indenture or otherwise. No provision of this Indenture shall require the Trustee to expend or risk its own funds or othem~ise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. The Trustee shall be entitled to interest on ail amounts advanced by it at the maximum rate permitted by law. The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys or receivers and shall be entitled to opinion and advice of counsel concerning ali matters of trust and its duties hereunder. The Trustee shall not be responsible for any action taken or not taken on the part of any agent, attorney or receiver appointed with due care by it hereunder. The Trustee shall have no responsibility, opinion, or liability Mth respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed Mth respect to the issuance of these Bonds. Before taking any action under Article VIII or th/s Article at the written request of a majority of the Owuaers, the Trustee may require that a satisfactory indemnity bond be furnished by the O~mers for the reimbursement of all expenses to which it may be put and to protect it against all liability,' except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds. The Trustee shall not be accountable for the use or application by the Agency or any other party of any funds which the Trustee has released in accordance with the terms of this Indenture. The immunities and exceptions fi.om liability of the Trustee shall extend to its officers, directors, employees, ~ents and attorneys. Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of this Article VI. Section 6.04..Ri..'.ght to Rely on Documents and Opinions. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion or other paper 40 or document believed by it to be genuine and to have been signed or prescribed by the proper pan)., or parties, and shall not be required to make any investigation into the facts or matters contained thereon. The Trustee may consult with counsel, including, without limitation, counsel of or to the Agency, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Trustee hereunder in accordance 'therewith. The Trustee shall not be bound to recognize an), person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and such person's title thereto is established to the satisfaction of the Trustee. Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Agency, which shall be full warrant to the Trustee for any action taken or suffered 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 to it may deem reasonable. The Trustee may conclusively rely on any certificate or Report of any Independent ACcountant or Independent Redevelopment Consultant appointed by the Agency. Section 6.05. Preservation and Inspection of Documents. Ail documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject at ail reasonable times upon reasonable notice to the inspection of the Agency and any Owner, and their agents and representatives duly authorized in writing, during regular business hours and under reasonable conditions. Section 6.06. Compensation and Indemnification. The Agency shall pay to the Trustee from time to time reasonable compensation for all serVices rendered under this Indenture in accordance with the letter proposal from the Trustee approved by the Agency and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys (including the allocated costs and disbursement of in-house counsel to the extent such services are not redundant w/th those provided by outside counsel), agents and employees, incurred in and about the performance of its powers and duties under this Indenture. The Trustee shall have a first lien on the Tax Revenues and all funds and accounts held by the Trustee hereunder to secure the payment to the Trustee of all fees, costs and expenses, including reasonable compensation to its experts, attorneys and counsel (includi:n. g the allocated costs and disbursement of in-house counsel to the extent such sen,ices are not redundant with those provided by outside counsel). The Agency further covenants and a~ees to indemnify, defend and save the Trustee and its officers, directors, agents and employees, harmless against any loss, expense and liabilities, including legal fees and expenses, Which it may incur arising out of or in connection with the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending 41 against any claim of liability, but excluding any and all losses, expenses and liabilities wkich are due to the negligence or intentional misconduct of the Trustee, its officers, directors, agents or employees. The obligations of the Agency and the fights of the Trustee under this Section 6.06 shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture. Section 6.07. Deposit and Investment of Moneys in Fund~.. Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account, the Redemption Account and the Costs of Issuance Fund shall be invested by the Trustee in Permitted Investments as di .rected by the Agency in the Written Request of the Agency filed with the Trustee at least two (2) Business Days in advance of the making of such investments. In the absence of any such Written Request of the Agency, the Trustee shall invest any such moneys in Permitted Investments described in claUse (d) of the definition thereof, which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Investments purchased with moneys deposited in the Reserve Account shall have an average ag~egate weighted term to maturity not greater than five years. The Trustee shall be entitled to rely conclusively upon the written instructions of the Agency directing investments in Permitted Investments as to the fact that each such investment is permitted by the laws of the 'State, and shall not be required to make further investigation with respect thereto. With respect to any restrictions set forth in the above list which embody legal conclusions (e.g., the existence, validity and perfection of security interests in collateral), the Trustee shall be entitled to rely conclusively on an opinion of counsel or upon a representation of the provider of such Permitted Investment obtained at the Agency's expense. Moneys in the Special Fund may be invested by the Agency in any obligations in which the Agency is .legallY authorized to invest its funds. Obligations purchased as an investment of moneys in any fund shall be deemed to be pan of such fund or account. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee hereunder shall be deposited in the Interest Account; provided, however, that all interest or gain from the investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest Account, to the ex"tent not required to cause the balance in the Reserve Account to equal the Reserve Requirement. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor..The Trustee shall incur no liability for losses arising from any investments made at the direction of the Agency or other~ise made pursuant to this Section 6.07. All moneys held by the Trustee shall be held in trust, but need not be segregated from other funds unless specifically required by this Indenture. Except as specifically provided in this Indenture, the Trustee shall not be liable to pay interest on any moneys received bY it, but shall be liable only to account to the Agency for earnings derived from funds that have been invested. The value of Permitted Investments, other than cash, shall be determined as follows: "Value," which shall be determined as of the end of each month, means that the value of any investments shall be calculated as follows: 42 (a) As to investments the bid and asked prices of wkich are published on a regular basis in The Fi'"all Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination Co) As to investments the bid and asked prices of which are not published on a r%mlar basis in The Wall Street Journal or The iVew York Times: the average bid price at such price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service. (c) As to certificates of deposit and bankers acceptances, the face amount thereof, plus accrued interest; and (d) As to any investment not specified above, the value thereof established by prior agreement between the Agency, the Trustee and the Municipal Bond Insurer. The Agency ac'knowledges that,, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grants the Agency the right to receive brokerage confirmations of security transactions as they occur, the Agency specifically waives receipt of such confirmations to the extent permitted by law. The Trustee '~411 furnish the Agency periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection x~dth any investments made by the Trustee hereunder. Section 6.08. 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 industry standards, in which complete and accurate entries shall be made of all transactions relating to the proceeds of the Bonds made by it and all funds and accounts held by the Trustee established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Agency upon reasonable prior notice, at reasonable hours and under reasonable circumstances. The Trustee shall furnish to the Agency, at least monthly, an accounting of all transactions in the form of its customary statements relating to the proceeds of the Bonds and all funds and accounts held by the Trustee pursuant to this Indenture. The Trustee shall maintain and store such records for a period of one year after the stated maturity of the Bonds. Section 6.09. Appointment of Co-Trustee or Agent. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee 43 deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the TrUstee appoint an additional individual or institution as a separate trustee or co-trustee. The following provisions of this Section 6.09 are adopted to these ends. In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, fight, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to exercise such powers, fights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co-trustee shall nm to and be enforceable by either of them; provided, however, in no event shall the Trustee be responsible or liable for the acts or omissions of any co-trustee. Should any insmanent in writing from the Agency be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, fights, powers, trusts, duties and obligations, any and all such insmunents in writing shall, on request, be executed, ac 'knowledged and delivered by the Agency. In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee. Section 6.10. Other Transaction~ with At. ency. The Trustee, either as principal or agent, may engage in or be interested in any fmanciai or other transaction ~Sth the Agency. 44 .~2XTI CLE VII. MODIFICATION OR.~\[ENDMENT OF THIS INDENTURE Section 7.01..Amendment. This Indenture and the fights and obligations of the Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, vdthout the consent of any Ovmers, to the extent permitted by law and only for any one or more of the follox~-ing purposes' (a) to add to the covenants and ag-reements of the Agency in this Indenture cOntained, other covenants and ac, reements thereafter to be observed, or to limit or surrender any rights or powers ~ · herein reserved to or conferred upon the Agency; or " (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not, in the reasonable determination of the Agency, materially adversely affect the interests of the Owners; or (c) to provide for the issuance of Parity Debt in accordance with Section 3.04; or (d) to amend any provision hereof relating to the requirements of or compliance'with the Tax Code, to any extent whatsoever but only. if and to the extent such amendment will not adversely affect the exemption from federal income taxation of interest on any of the Bonds, in the opinion of nationally recogn/zed bond counsel; Except as set forth in the preceding paragaph, this Indenture and the rights and obligations of the Agency and of the Ov~ners may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond Mthout the express v~tten consent of the Owner of such Bond, or (b) reduce the percentage of Bonds required for the ua-it-ten consent to any such amendment or modification. In no event shall 'any Supplemental Indenture modify any of the rights or obligations of the Trustee' without its prior written consent. In addition, the Trustee shall be entitled to an opinion of counsel concerning the' Supplemental Indenture's lack of any material adverse effect on the Owners and that all conditions precedent for any supplement or amendment has been satisfied. Section 7.02. Effect of Supplemental Indenture,. From and after the time any Supplemental Indenture becomes effective, pursuant to this Article VII, this Indenture shall be deemed to be 45 modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall therea.fier be determined, exercised and enforced hereunder subject in all .respects to such modification and' amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be pan of the terms mud conditions of this Indenture for any and all purposes. Section 7.03. Endorsement or Replacement 0fB0nd~ After ,&rnendment. After the effective date of any amendment or modification hereof pursuant to this Article VII, the Agency may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the Agency, as to such amendment or modification and in that case upon demand of the Agency, the Owners of such Bonds shall present such Bonds for that purpose at the Principal Corporate Trust Office', and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the Agency may determine that new Bonds shall .be prepared at the expense of the Agency and executed in exchange for any or all of the Bonds, and in that case, upon demand of the Agency, the Owners of the Bonds shall present such Bonds for exchange at the Principal Corporate Trust Office, without cost to such Owners. Section 7.04. Amendment bv Mutual Consent. The provisions of this Article VII shall not prevent any Owner from accepting any amendment as to the particular Bond held by such O~aaer, provided that due notation thereof is made on such Bond. 46 )d~TICLE VIII EVENTS OF DEFAULT AND REMEDIES OF O'~krNERS Section 8.01. Events of Default and Acceleration of Maturities. The following events shall constitute Events of Default hereunder: (a).if default shall be made by the Agency in the due and punctual payment of the principal of or interest or redemption premium (if any) on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) if default 'shall be made by the Agency in the observance of any of the covenants, a~eements or conditions on its part in this Indenture or in the Bonds contained, other than a default described in the preceding clause (a), and such default shall have continued for a period of six75' (60) days following receipt by the Agency of ~adtten notice from the Trustee or any Owner of the occurrence of such default provided that if in the reasonable opinion of the Agency the failure stated in the notice can be corrected, but not within such 60 day period, such failure MI1 not constitute an event of default if.corrective action is instituted by the Agency within such 60 day period and the Agency thereafter diligently and in good faith cures such failure 'within 120 days; or (c) if the Agency files a petition see-king reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United-States of Arnerica,. or if a court of competent jurisdiction will approve a petition seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will approve a petition, see 'king reorganization under the federal banku'uptcY laws or any other applicable law of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will assume custody or control of the Agency or of the whole or any substantial part of its properly. If an Event of Default has occurred under this Section 8.01 and is continuing, the Trustee may, and, subject to Section 9.05, if requested in writing by the Owners of a majority in ag~egate principal amount of the Bonds then Outstanding the Trustee shall, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable mediately, and upon any such declaration the same shall become immediately due and payable, anything in this Indenture or in the Bonds to the contrary not~dthstanding, and Co) the Trustee shall, subject to the provisions of Section 8.06, exercise any other remedies available to the Trustee and the Bond Owners in law or at equity. Immediately upon receiving written notice or actual knowledge (of a Responsible Officer) of the occurrence of an Event of Default, the Trustee shall give notice of such Event of Default to the Agency by telephone confn-med in writing. With respect to an5' Event of Default described in 47 clauses (a) or (c) above the Trustee shall, and with respect to any Event of Default described in clause (b) above the Trustee in its sole discretion ma>', also give such notice to the O~mers by mail, which shall include the statement that interest on the Bonds shall cease to accrue from and after the date, i/any, on which the Trustee shall have declared the Bonds to become due and payable pursuant to the preceding para~m'aph Gout only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date). This provision, howeVer, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Agency shall deposit with the Tmst~ a sum sufficient to pay all principal on the Bonds matured prior To such declaration and all -matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law), and the reasonable expenses of the Trustee, (including the allocated costs and disbursements of its in-house counsel) to and any and all other defaults of which the Trustee has notice (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration)shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, with the prior written approval of the Owners of at least a majority in ag~egate principal amount of the Bonds then Outstanding, by v~'itten notice to the Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall ex-tend to or shall affect any subsequent default or shall impair or e 'xhaust any fight -or power consequent thereon. Section 8.02. Application of Funds Upon Acceleration. All of the Tax Revenues and all sums in the funds and accounts established and held by the Trustee hereunder upon the date of the · declaration of acceleration as provided in Section 8.01, and all sums thereafter received by the Tms~e~ hereunder, shall be applied by the Trustee in the following order upon presentation of the several Bonds, and the stamping thereon of the payment if only partially paid,, or upon the surrender thereof if fully paid: First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in exercising the rights and remedies set forth in this Article VIII, includin~ reasonable compensation to its agents, attorneys (including the allocated costs and disbursements of its in-house counsel to the extent such services are not redundant with those provided by outside counsel) and counsel and any outstanding fees, expenses of the Trustee; and Second. to the payment of the whole amount then o,~5ng and unpaid upon the Bonds for principal a~d interest, with interest on the overdue principal and installments of interest at the net effective rote then borne by the Outstanding Bonds (to the extent that such interest on overdue installments of principal and interest shall have been collected), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the 48 Bonds, then to the payment of such principal and interest 'aSthout preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. Section 8.03. Limitation on O'a,'ner's Right to Sue. No Owner of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee 'au-it-ten notice of the occurrence of an Event of Default; Co) the Ovmers of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made Written Request upon the Trustee to exercise the powers hereinbefore ~anted or to institute such action, suit or proceeding in its o'aaa name; (c) said O'aaaers shall have tendered to the Trustee indenmity reasonably acceptable 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 w/th such request for a period of sixty (60) days after such Written Request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemn/ty and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners shall have any fight in any manner whatever by his or their action to enforce any fight under this Indenture, except in the manner herein proxSded, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.' , The fight of any Owner of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond as hereha provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section 8.03 or any other provision of th/s Indenture. Section 8.04. Non-Waiver. Nothing in this Article VIII or in any other provision of this Indenture or in the Bonds, shall affect or impair, the obligation of the Agency, which is absolute and unconditional, to pay from the Tax Revenues and other amounts pledged hereunder, the principal of and interest and redemption premium (if any)'on the Bonds to the respective Owners on the respective Interest Payment Dates, as herein provided, or affect or .impair the right of action, which is also absolute and unconditional, of the Owners or the Trustee to institute suit to enforce such pa.xunent by virtue of the contract embodied in the Bonds. A waiver of any default by any O'aaaer or the Trustee shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such fight or power or shall' be construed to be a waiver of any such. default or an acquiescence therein, and every power and remedy conferred upon the O'auaers and the Trustee by the Law or by this Article VIII may be 49 enforced and exercised from time to time and as often as shall be deemed expedient by the Owners and the Trustee. If a suit, action or proceeding to enforce any right or exercise any remedy shall be abandoned or detenuined adversely to the Owners or the Trustee, the Agency, the Trustee and the Owners shall be restored to their former positions, fights and remedies as if such suit, action or proceeding had not been brought or taken. Section 8.05. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding wkich any oxvner shall have the fight to bring to enforce any fight or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Ovmers similarly situated and the Trustee is hereby appointed (and the successive respective Owners by taking and holding the Bonds or Parity Debt shall be conclusively deemed so to have appointed it) the tree and lawful attorney-in-fact of the respective Ovmers for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, provided, however, the Trustee shall have no duty or obligation to exercise any such fight or remedy unless it has been indemn/fied to its satisfaction from any loss, liability or expense (including fees and expenses of its outside counsel and the allocated costs and disbursements of its in-house counsel). Section 8.06. Remedies Not Exclusive. No remedy, herein conferred.upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy ~ven hereunder or now or hereafter existing, at law or in equiD, or by statute or othem~ise, and may be exercised Mthout exhausting and without regard to any other remedy conferred by the Law or any other law. .Section 8.07. Parties Interested Herein. (a) Nothing in this Indenture expressed or implied is intended or shall be construed to confer upon,, or to give to, any person or entity,, other'than the Agency, the Trustee, the Municipal Bond Insurer, their officers, employees and agents, and the Owners any fight, remedy or claim under or by reason of this Indenture, or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Indenture contained by and on behalf of the Agency shall be for the sole and exclusive benefit of the Agency, the Trustee, the Municipal Bond Insurer, their officers, employees and agents, and the Owners. (b) Notwithstanding any other provision of this Indenture, if the Trustee is required to determine whether the fights of the Owners will be adversely affected by any action taken pursuant to the terms and prOvisions of this Indenture, the Trustee shall consider the effect on the Ov~:ners as if there was no Municipal Bond Insurance Policy. 50 ' Section 8.08. Consent of Municipal Bond Insurer. (a) Any Provision of this Indenture expressly recognizing or granting fights in or to the Municipal Bond Insurer may not be amended in any manner which affects the rights of the Murficipal Bond Insurer hereunder without the prior x~u-itten consent of the Municipal Bond Insurer. (b) Unless otherwise provided in this Section 8.08, the Municipal Bond Insurer's consent shall be required in addition to Owner consent, when required, for the folloMng purposes: (i) execution and delivery of any amendment, supplement or change to or modification of this Indenture, (ii) removal of the Trustee and selection and appointment of any successor trustee; and (iii) initiation or approval of any action not described in (i) or (ii) of this paragraph (b) which requires Ox~ner consent. ,. (c) Anything in this Indenture to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default, the Municipal Bond Insurer shall, after payment of principal and interest then due, if any, be entitled to control and direct the enforcement of all rights and remedies granted to the Owners or the Trustee, after providing the Trustee with indernnities to its satisfaction, including payment of its fees and expenses, including reasonable attorneys' fees, for the benefit of the Owners under this Indenture and the Municipal Bond Insurer shall also be entitled to approve ail waivers of Events of Default. (d) The rights ganted to the Municipal Bond Insurer hereunder shall be effective only so long as the Municipal Bond Insurer is not in default of its obligations under the Municipal Bond Insurance Policy. 51 ARTICLE IX M/SCELLANEOUS Section 9.01. Liability of Agency Limited to Tax Revenues. Notwithstanding awthing in the Indenture contained, the Agency shall not be required to advance any money derived from any source of income other than the Tax Revenues for the payment of the interest on or the principal of the Bonds or for the performance of any covenants herein contained, other than the covenants contained in Section 5.14 hereof. The Agency may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. The Agency's obligation to pay the rebate requirement to the United States of America pursuant to Section 5.14 hereof, shall be considered the general obligation of the Agency and shall be payable from any. available funds of the Agency. The Bonds are limited obligations of the Agency and are payable, as to interest thereon and principal thereof, exclusively from the Tax Revenues, and the Agency is not obligated to pay them except from the Tax Revenues. All of the Bonds are equally secured by a pledge of.. and charge and lien upon, all of the Tax Revenues, and the Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal of the Bonds. The Bonds are not a debt of the City of Tustin, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an indebtedness wdthin the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Agency nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Section 9.02. Benefits Limited to Pm-ties. Nothing in this Indenture, expressed or implied, is intended to ~ve to any person other than the Agency, the Trustee and the Owners, any fight, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Agency shall be for the sole and exclusive benefit of the Trustee and the O~ers. Section 9.03. Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Agency or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof., and all the covenants and a~eements in ti'tis Indenture contained by or on behalf of the Agency or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.04. Dischame of Indenture. 'If the Agency shall pay and discharge the entire indebtedness on all Bonds or any portiori thereof in any one or more of the following ways: 52 (a) by well and truly paying or causing to be paid the principal of and interest and premium (if an>') on all or the applicable portion of Outstanding Bonds, as and when the same become due and payable; (b) by irrevocably depositing Mth the Trustee or another fiduciary, in trust, at or before maturity, money which, together with the available amounts then on deposit in the fundS and accounts established pursuant to th/s Indenture, is fully sufficient to pay all or the applicable portion of Outstanding Bonds, including all principal, interest and redemption premiums, or; (c) by irrevocably depositing w-ith the Trustee or another fiduciary, in trust, Defeasance Obligations in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to th/s Indenture, be fully sufficient to pay and discharge the indebtedness on ail Bonds or the applicable portion of (including all principal, interest and redemption premiums) at or before maturity; and, if such Bonds are to be redeemed prior to the maturity thereof., notice of such redemption shall have been given pursuant to Section 2.03(c) or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any Bonds shall not have been surrendered for pa}~ent, the pledge of the Tax Revenues and other bands provided for in tiffs Indenture and all other obligations of the Trustee and the Agency under this Indenture shall cease and terminate with respect to all Outstanding Bonds or, if applicable, with respect to that portion of the Bonds which has been paid and' discharged, except only (a) the covenants of the Agency hereunder with respect to the Code, (b) the obligation of the Trustee to transfer and exchange Bonds hereunder, (c) the obligations of the Agency under Section 6.06 hereof, and (d) the obligation of the Agency to pay or cause to be paid to-the Ovcners, from the amounts so deposited with the Trustee, ali sums due thereon and to pay the Trustee all fees, expenses and costs of the Trustee. In the event the Agency shall, pursuant to the foregoing provision, pay and discharge any portion or all of the Bonds then Outstanding, the Trustee shall be authorized to take such actions and execute and deliver to the Agency all such instruments as may be necessary or desirable to evidence such discharge, including, w/thom limitation, selection by lot of Bonds of any maturity of the Bonds that the Agency has determined to pay and discharge in part. In the case of a defeasance or payment of all of the Bonds Outstanding, any funds thereafter held by the Trustee which are not required for said purpose or for payment of amounts due the Trustee pursuant to Section 6.06 shall be paid over to the Agency. To accomplish defeasance the Agency shall cause to be delivered (i) a Report of an Independent Accountant verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or earlier redemption date ("Verification"), (ii) an escrow deposit a~eement, and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under this Indenture; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Agency and the Trustee. 53 Section 9.05. Execution of Documents and Prgof 9f Ownership by Owners. A_ny request, declaration or other instrument which this Indenture may require or permit to be executed by any O~mer may be in one or more instruments of similar tenor, and shall be executed by such Owaner in person or by their-attorneys appointed in writing. Except as othem,ise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other insmm'lent, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take ac 'knowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof., or by an affidavit of a witness of such execution, duly sworn to before such notary Public or other officer. The ownership of Bonds and the amount, maturity, number and date of ownership thereof shall be proVed by the Registration Books. Any request,, declaration or other instrument or '~ting of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Agency or the Trustee and in accordance therewith, provided, however, that the Trustee shall not be deemed to have knowledge that any Bond is owned by or for the account of the Agency unless the AgencY is the registered Owner or the Trustee has received'v;~tten notice that any other registered Owner is such an affiliate. Section 9.06. Disqualified Bonds. In determining whether the Owners of the requisite ag~egate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the Agency or the City of Tustin (but excluding Bonds held in any employees' retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Section 9.07. Waiver of Personal Liability_. No member, officer, agent or employee of the Agency shall be individually or personally liable for the pas~nent of the principal of or interest or any premium on the Bonds; but nothing herein contained shall relieve any such member, officer, agent . or employee from the performance of any official duty' provided by law. Section 9.08. Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender to the Trustee of any Bonds which have been paid or canceled pursuant to the provisions of this Indenture, the Trustee shall destroy such bonds and upon reqUest of the Agency provide the Agency a certificate of destruction. The Agency' shall be entitled to rely upon any statement .of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to. 54 Section 9.09. Notice~. Any notice, request, complaint, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or mailed by first class, registered or certified mail, postage prepaid, or sent by telegram, addressed as follows: If to the Agency: Tustin Community Redevelopment Agency 300 Centennial Way Tustin, CA 92780 Attention: Treasurer Telephone: (714) 573-3061 Telecopier: (714) 832-0825 If to the Trustee: U.S. Bank-Trust National Association 550 South Hope Street, Suite 500 Los Angeles, CA 90071 Attention: Corporate Trust Department Telephone: (213) Telecopier: (213) If to the Municipal Bond Insurer: MBIA Insurance Corporation 113 King Street Armonk, NY 10504 Attention: Public Finance Portfolio Management Telephone: (914) 273-4545 Telecopier: (914) 765-3163 Section 9.10. Notices to be Given to the Municipal Bond Insurer. While the Municipal Bond InsUrance Policy is in effect, the Agency shall furnish, or cause to be fi.u~shed, to the Municipal Bond Insurer: (a) a copy of any notice to be given to the Owners and any certificate rendered pursuant to this Indenture relating to the security for the Bonds; Co) notice of resiffnati°n of the Trustee; and (c) such additional information it may reasonably request. The Trustee shall notify the Municipal Bond Insurer of any failure of the Agency to provide any notices or certificates required by this Indenture to be provided by the Agency to the Trustee. The Trustee shall notify S&P of all consents given by the Municipal Bond Insurer hereunder. The Agency 'aSll permit the Municipal Bond Insurer to discuss the affairs, finances and accounts of the Agency or any information the Municipal Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Agency. The Trustee or the 55 Agency, as appropriate, will permit the Mu:ficipal Boncl Insurer to have access to and to make copies of all books and records relating to the Bonds at any reasonable time upon reasonable notice. Notwithstanding any other provision of this Indenture, the Trustee shall, as soon as practicable, notify the Municipal Bond Insurer if the Trustee has actual knowledge of the occurrence of any Event of Default. Section 9.11. partial Invalidi _ry.. If any Section, para,apb, sentence, clause or phrase of this Indenture shall for any reason be held illegal~ invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The Agency hereby declares that it would have adopted this Indenture and each and evers, other Section, para~aph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, para~aPhs, sentences, clauses, or phrases of tkis Indenture may be held illegal, invalid or unenforceable. If, by reason of the judgment of any court, the Trustee is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Trustee hereunder shall, pending appointment of a successor Trustee in accordance w/th the provisions.of Section 6.01 hereof, be assumed by and vest in the Treasurer of the Agency in trust for the benefit of the Owners. The Agency covenants for the direct benefit of the Owners that its Treasurer in such case shall be vested with all of the ri~mhts and powers of the Trustee hereunder, and shall assume all of the responsibilities and perform all of the duties of the Trustee hereunder, in trust for the benefit of the Bonds, pending appointment of a successor 'Trustee in accordance with the provisions of Section 6.01 hereof. Section 9.12. Unclaimed Moneys. Anyth/ng contained herein to the contrary. notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bonds which remains unclaimed for two (2) >,ears after the date when the payments of such interest, premium and principal have become payable, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when the interest and premium (if any) on and principal of such Bonds have become payable, shall be repaid by the Trustee to the Agency as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Ovmers shall look only to the Agency for the payment of the principal of and interest and redemption premium (if any.) on of such Bonds. Section 9.13. Execution in Counterparts. This Indenture may be executed in several counterparts, each of wh/ch shall be an original and all of which shall constitute but one and the same instrument. Section 9.14. Qovemin~ Law. This Indenture shall be construed and governed in accordance with the laws of the State. 56 IN WITNESS '~¥5tEREOF, the TUSTIN COMM'U-NrlTY REDEVELOPMENT AGENCY, has caused this Indenture to be signed in its name by its Chairman and attested by its Secretary, and U.S. B)dqK TRUST NATIONAL ASSOCL-~TION, in token of its.acceptance of the trusts created herem~der, has caused this Indenture to be si~ed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written. TUSTIN COMMUNITY REDEVELOPMENT AGENCY Attest: By Chairman " By: Secretary U.S. BANrK TRUST NATIONAL ASSOCIATION, as Trustee' By Authorized Officer 57 EXHIBIT A FORM OF BOND United States of America State of California Orange CounW TUSTIN COMMUNITY REDEVELOPMENT AGENCY (Town Center Area Redevelopment Project) Tax Allocation Refunding Bond, 1998 Series A .. Interest Rate Maturity Date · % December 1,_ Dated 'Date CUSIP July 1, 1998 REGISTEP.ED OWNER: PRINCIPAL SUM: CEDE & CO. DOLLARS The TUSTIN COMMUNrlTYREDEVELOPMENT AGENCY, a public body, corporate and politic, duly organized and existing under and by x4rtue of the laws of the State of California (the or A_~ncy ), for value received hereby promises to pay to the Re~,istered Owner stated above, regi~srered assigns (the "Registered Owner"), on the Maturity Date stated above (subject to an)' fight of prior redemption hereinafter provided for), the Principal Sum stated above, in lawful money of . the United States of America, and to pay-interest thereon in like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond, unless (i) this Bond is authemicated on or before an Interest Pa.vrnent Date and after the close of business on the fifteenth (15th) day of the month mediately preceding an Interest Payment Date (the "Record Date"), in which event it shall bear.interest from such Interest Payment Date, or (ii) this Bond ;.s authenticated on or before May 15, 1998, in which event it Shall bear interest from the Dated Date above; provided however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the interest payment date to which interest has prex4ously been paid or made available for payment on this Bond, until payment of such Principal Sum in full, at the Interest Rate per annum stated above, payable semiannually on each June .1 and December 1, commencing December 1,. 1998, or, if such day is not a Business Day (as such term is defined in the Indenture, hereinafter defihed), on the next succeeding Business Day (each an "Interest Payment Date"), calculated on the basis of 360-day year comprised of twelve 30-day months. Pri'nciCal hereof and premium, if any, upon early redemption hereof are payable upon surrender of A- 1 TLIBNDFPdv'. l;.qTLk,'25 S this Bond at the Principal Corporate Trust Office (as such term is defined in the Indenture) of U.S. Bank Trust National Association, as trustee (the "Trustee"), or at such other place as designated by the Trustee. Interest hereon (including the final interest payment upon maturity or earlier redemption) is payable by check of the Trustee mailed by first class mail, postage prepaid, on the Interest Payment Date to the Registered Owner hereof at the Registered Owner's address as it appears on the registration books maintained by the Trustee as of the Record Date for which such Interest Payment Date occurs; provided however, that payment of interest may be by wire n-ansfer to an account in the United States of America to any registered owner of Bonds in the ag~egate principal amount of $1,000,000 or more upon written instructions of any such registered owner filed with the Trustee for that purpose on or before the Record Date preceding the applicable Interest Payment Date. This Bond is one of a duly authorized issue of bonds of the Agency designated as "Tustin Community Redevelopment Agency (Torten Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A" (the"Bonds"), ofan aggregate principal amount of dollars ($ ), all of like tenor and date (except for such variation, if any, as may be required to designate varying series, numbers, maturities, interest rates, or redemption and other provisions) and ail issued pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of DbSsion 2 of Title 5 of the California Government Code, commencing with section 53570 of said Code (the "Law'"'), and pursuant to Resolution No. RDA- of the Agency, adopted June 15, 1998, and an Indenture of Trust, dated as of July 1, 1998, entered into by and between the Agency and the Trustee (the "Indenture"), authorizing the issuance ofthe Bonds. Additional bonds, or other obligations may be issued on a parity with the Bonds, but only subject to the terms of the Indenture. Reference is hereby made to the Indenture (copies of which are on file at the office of the Agency) and all indentures supplemental thereto and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Tax Revenues (as that term is defined in the Indenture), and the fights thereunder of the registered owners of the Bonds and the rights, duties and immunities ofthe Trustee and the rights and obligations ofthe Agency thereunder, to all-of the provisions of which Indenture the Registered Owner of this Bond, by acceptance hereof.. assents and a~ees. The Bonds have been issued by the Agency for the purpose of providing funds to reSnance redevelopment activities with respect to its Town Center Area Redevelopment Project (the "Project Area"), to fund a reserve account for the Bonds and to pay certain expenses of the Agency in issuing the Bonds. The Bonds are special obligations of the Agency and this Bond and the interest hereon and on all other Bonds and the interest thereon (to the extent set forth in the Indenture), are payable fi'om, and are secured by a pledge of, security interest in and lien on.the Tax Revenues (as defm~ in the Indenture) derived by the Agency from the Project Area. There has been created and will be maintained by the Agency, the Special Fund (as defined in the Indenture) into which Tax Revenues shall be deposited and from which the Agency shall A-2 TLrB NDFR.~58.~.% R./258 transfer mounts to the Trustee for payment of the principal of and the interest and redemption premium, if any, on the Bonds when due. As and to the extent set forth in the Indenture, all such Tax Revenues are exclusively and irrevocably pledged to and constitute a trust fund, in accordance with the terms hereof and the provisions of the Indenture and the Law, for the security and payment or redemption of, including any premium upon early redemption, and for the security and payment of interest on, the Bonds. In addition, the Bonds shall be additionally secured at all times by a first and exclusive pledge of.. security interest in and lien upon all of the moneys in the Special Fund, the Debt Service.Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account, and the Redemption Account (as such terms are' defined in the Indenture). Except for the Tax Revenues and such moneys, no funds or properties of the Agency .shall be pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium, if any, on the Bonds. The Bonds maturing on or after December 1, ..., are subject, at the option of the Agency, to call and redemption prior to their stated maturity on any date commencing December 1, , as a whole or in part by such maturities as shall be determined b), the Agency and by lot within a maturity, at the following redemption prices (expressed as percentages of the principal amount of Bonds called for redemption) together with interest accrued thereon to the date fixed for redemption: Redemmion Periods Price December 1, ~ through November 30, ~ 102% December 1, ~ through November 30, ~ 101 December 1, ~ and thereafter 100 The Bonds shall also be subject to mandatory redemption in part by lot on December 1, ., and on December 1 in each year thereafter to and including December 1, _, from Sinking Account payments made by the Agency pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased in whole or in part pursuant to the Indenture, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of the Bonds have been redeemed at the option of the Agency, as described above, the total amount of all future Si 'nking Account payments shall be reduced by the aggregate principal amount of Bonds so redeemed,.to be allocated among the Sinking Account payments as are thereafter payable on a pro rata basis in integral multiples of $5,000 as determined by the Agency (notice of which determination shall be given by the Agency to the Trustee). TUBNDFRM. SA/LR~.58 Sinking Account Redemption Date (December 1) Principal Amount To Be Redeemed or Purchased Sinking Account Redemption Date (December 1) Principal Amount To Be Redeemed or Purchased Maturity. .'As provided in the Indenture, notice of redemption shall be given by first class mail no less than thirty (30) nor more than sixty (60) days prior to the redemption date to the respective registered o~mers of any Bonds designated for redemption at their addresses appearing on the Bond registration boo'ks maintained by the Trustee, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption. If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and ~5th the effect provided in the Indenture, but such declaration and its consequences may be rescinded and annulled as further provided in the Indenture. The Bonds are issuable as fully registered Bonds Mthout coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, Bonds may be exchanged for alike aggregate principal mount of Bonds of other authorized denominations and of the same maturity. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in v~u-iting, at the Principal Corporate Trust Office of the Trustee, but only in the manner and subject to the limitations provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new fully registered Bond or Bonds, of any authorized denomination or denominations, for the same aggregate principal amount and of the same maturity v~dll be issued to the transferee in exchange herefor. The Trustee may refuse to transfer or exchange (a) any Bonds during the fifteen (15) days prior to the date established for the selection of Bonds for redemption, or CD) any Bonds selected f({r redemption. A-4 TUB NDFPOvi. SAJLP, J2$ $ The Agency and the Trustee may treat the Registered O~mer hereof as the absolute ovmer hereof for all purposes, and the Agency and 'the Trustee shall not be affected by any notice to the contrary. The fights and obligations of the Agency and the registered o,~mers of the BOnds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided herein of any Bond without the express written consent of the registered o~mer of such Bond, (b) reduce the percentage of Bonds required for the written conSent to any such amendment or modification or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee. - Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Agency or 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 other~4se by or to any person is wrongful inasmuch as the registered ov~aaer hereof, Cede & Co., has an interest herein. This Bond is not a debt of the City of Tustin, the State of California, or any of its political subdivisions, and neither said City, said State, nor an)' of its political subdivisions is liable hereon, nor in any event shall tiffs Bond be payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The Bonds have been designated by the Agency as "qualified taX-exempt obligations" within the meaning of section 265Co)(3) of the Internal Revenue Code of 1986. It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time and manner as required by the Law and the laws of the State of California, and that the mount of this Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess ofthe amount of Bonds permitted to be issued under the Indenture. This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until the Trustee's Certificate of Authentication hereon shall have been manually signed by the Trustee. - A- 5 TUBNrDFRM. Ig A/LP,.r25 ~t IN WITNESS WHEREOF, the Tustin Communi~, Redevelopment Agency has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its Executive Director and its seal to be reproduced hereon and attested by the facsimile signature of its Secretary, all as of Dated Date stated above. TUSTIN COMMUNITY REDEVELOPMENT AGENCY ATTEST: By Executive Director Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the w/thin-mentioned Indenture. Authentication Date: U.S.B.t~N'K TRUST NATIONAL.ASSOCIATION, Trustee By Authorized Si~atory STATEMENT OF INSURANCE The MBIA Insurance Corporation (the "Insurer") has issued a policy containing the follo~Sng provisions, such policy being on file at U.S. Bank Trust National Association, Los Angeles, California. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete.payment required to be made. by or on behalf of the Tustin Community. Redevelopment Agency (the "Issuer") to U.S. Bank Trust National Association, Los Angeles, California, or its successor (the "Paying Agent"), of an mount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resultin~ from default or otherwise, other than any advancement of maturity pursuant to a mandato~, si 'nking~d Payment, the payments guaranteed hereby shall be made in such mounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii). the reimbursement of any such payment which is subsequently recovered from any pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such o~mer within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "InSured Amounts." "Obligations" shall mean: $ TUSTIN COMMUNITY REDEVELOPMENT AGENCY (Orange County, California) (Town Center Area Redevelopment Project) Tax Allocation Refunding Bond, 1998 Series A Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in w~ting by registered or certified mail, or upon receipt of'~itten notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an InSured . Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is 'later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any apPropriaTe instruments of assi.m'auent to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments m effect the appoinunent of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street A-7 TUBNDFKM. SA?~.K258 Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered o~aaer of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any part5' whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service ofprocess on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is noncanceltable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty, insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code. MBIA INSUR.~CE CORPORATION A-8 TUBNDFR.M. SAILR/2$8 ASSI GNMZENT For value received, the undersigned do(es) hereby Sell, assign and transfer unto (Nme, Address and Tax l~.ntification or Social Security Number of Assignee) the ~ithin Certificate and do(es) hereby irrevocably constitute and appoint attorney, 1o transfer the same on the re~stration boo'ks ofthe Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: , NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution (banks, stock brokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Securities and Exchange Commission Rule 17 Ad-15. NOTICE: The signature(s) on this Assi~nment must correspond with the name(s) as written on the face of the within Certificate in every particular, without alteration or enlargement or any change whatsoever. CONTI.NWING DISCLOSLrRE CERTIFICATE This Continuing Disclosure Certificate (this "Disclosure Certificate") is dated as of July 1, 1998, is executed and delivered by the Tustin Community Redevelopment Agency (the "Agency") in connection with the issuance ors Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of July 1, 1998 (the "Indenture"), by and ber~'een the Agency and U.S. Bank Trust National Association, as trustee (the "Trustee").. Pursuant to Section 5.19 of the Indenture, the Agency covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate.~ This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the Owners and Beneficial Owners (as defined below) of the Bonds and in order to assist the Participating Underwriters in Complying with S.E.C. Rule 15c2-12C0)(5). Section 2. Definitions. In addition to the defirfifions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate, unless 'otherwise defined, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any .~xnual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4 of this DiscloSure Certificate. "Beneficial Owners" shall mean any person who (a) has the power, directly or indirectly, to . vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or Co) is treated as the owner of any Bonds for federal income tax purposes. "Disclosure Representative" shall mean the of the Agency, or his or her designee, or such other officer or employee as the Agency shall designate in writing to the Trustee from time to time. "Dissemination Agent" shall mean U.S. Bank Trust National Association, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency and the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of'this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized .Municipal Securities Information Repository for purposes of the Rule. "Official Statement" shall mean the Official Statement dated July distributed in 'connection w/th the initial sale of the Bonds. ,1998, prepared and ".Participating Underwriter" shall mean any of the ori~nal undema-iters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and each State Repository.. "Rule" shall mean Rule 15c2-12Co)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As ofthe date of this Certificate, there is no State Repository. Section 3. Provision of Annual Reports. (a) The Agency shall provide, or shall cause the Dissemination Agent to' provide, each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate not later than nine (9) months after the end ofthe Agency's fiscal year (which date currently would be March 31, based upon the June 30 end of the Agency's fiscal year), commencing with the report for the 1997/1998 fiscal year. Co) Not later than fifteen (15) Business Days prior to said date, the Agency shall provide the Annual Report in a form suitable for reporting to the Repositories to the Dissemination Agent (if other than the Agency) and the Trustee. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; prox4ded that the audited financial statements of the Agency ma)' be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Agency's fiscal'year changes; it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (c) If the Agency is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the Agency shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name . and address of each National Repository and each State Repository, if any; and (ii) if the Dissemination Agent is other than the Agency, and if, and to the extent, the Agency has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the Agency and the Trustee certifying that the Annual Report has been provided to the Repositories pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. .. Section 4. Content of Annual Reports. The Agency's Annual Report shall contain or incorporate by reference the following: (a) Audited Financial Statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time bY the Governmental Accounting Standards Board. If the Agency's audited financial Statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the £mancial statements contained in the £mal Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following financial information and operating data set forth in the final Official Statement: (i) Ten largest property tax payers in the Project.Area, including name, secured value, unsecured value, total value and percent of total value substantially in the format set forth as Table 6 of the Official Statement; (ii) Annual assessed valuations, tax increment values, Tax Revenues (as defined in the Indenture) and coverage ratio of Tax Revenues to debt service on Bonds and all parity debt, in substantially the format set forth as Tables __, ~ and __ of the Official Statement (iii)Discussion of any property tax appeals, which, either alone or in the aggregate could have a material adverse effect on Tax Revenues. (c) Information relating to the Bonds as follows: (i) Balances in all funds and accounts maintained with respect to the Bonds as of · , (ii) A statement of the Reserve Requirement as of the preceding (iii) The Outstanding principal amount of the Bonds and any additional bonds as of the preceding Any or all of the items listed above may bc included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to each of the Kepositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available 'from the Municipal Securities Kulcm 'aking Board. The Agency shall clearly identify each such other document so included by reference. Section 5. Reportine of Sic, nificant Events. (a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) (ii) (iii) (iv) (v) (vii) (viii) (ix) (x) (xi) Principal and interest payment delinquencies.; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difculfies; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions or events affecting the tax-exempt status of the security; Modifications to rights of security holders; Contingent or unscheduled bond calls; Defeasances; Release, substitution, or sale of property securing repayment of the securities; and Rating changes. (b) Whenever the Agency obtains 'knowledge of the occurrence of a Listed Event, the Agency shall as soon as possible determine if such event would be material under applicable Federal securities law. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the Agency's determination. (c) If the Agency determines that 'knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Agency shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be ~ven under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. Section 6. Termination of Reportin~ Obligation. · The Agency's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds or upon the delivery to the Dissemination Agent of an opinion of nationally reco~m,./zed bond counsel to the effect that continuing disclosure is no longer required. If such termination occurs prior to the final maturity of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Dissemination Aeent (a) The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resi~ma by providing thirty days notice to the Agency and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the Agency. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Agency in a timely manner and in a form suitable for filing. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Agency pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be U.S. Bank Trust National Association. If at any time there is no designated Dissemination Agent appointed by the Agency, or if the Dissemination Agent so appointed is unwilling or unable to perform' the duties of Dissemination Agent hereunder, the Agency shall be the Dissemination Agent and undertake or assume its obligations hereunder. Any company sUcceeding to all or subs.tantially ali of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder at any time upon written notice to the Agency. Co) The Dissemination Agent' shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Agency from time to time and for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Agency hereunder and shall not be deemed to be acting in any fiduciary capacity for the Agency, O~m~rs or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the Agency or an opinion of nationally reco~maized bond counsel. Section 8. Amendment; Waiver. Notwithstanding any other provision .of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change 'in law, or change in the 'identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; Co) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally reco~m~ized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of thc Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by Owners of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Commission. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles On the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the ex"tent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(e). Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence ora Listed Event, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate, any Participating Underwriter or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall be an action to compel performance. 6 Section 11. Duties. Immunities and Liabilities of Dissemination Agenl. All of the immunities, indemnities, and exceptions from liability in Article VI of the Indenture insofar as they relate to the Trustee shall apply to the Trustee and the Dissemination Agent in this Disclosure Certificate. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the Agency or an opinion of nationally recognized bond counsel. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to Commence any action against the Trustee or Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. Section 12. Beneficiaries. This Disclosure Certifi~m shall inure solely to the benefit of thc Agency, the Dissemination Agent, the Participating Underwriters and Owners and Beneficial Owners from time to time of the Bonds, and shall create no fights in any other person or entity. Dated: July 1, 1998 TUSTIN COMMIfNITY REDEVELOPMENT AGENCY By Executive Director ACCEPTANCE OF DISSEMINATION AGENT: The undersigned hereby accepts the designation of Dissemination Agent and agrees to further the duties set forth in the foregoing Continuing Disclosure Certificate. U.S. BANK TRUST NATIONAL ASSOCL~TION By AuthOrized Signatory 'EXHIBIT A NOTICE TO MUNICIP.&L SECURITIES RLrLEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Tustin Community Redevelopment Agency Name of Bond Issue: $ Tustin Community Redevelopment Agency (Toxin Center Area Redevelopment Project) Tax Allocation Refunding Bonds, ! 998 Series A Date of Issuance: July __, 1998 NOTICE IS I-[E~BY GIVEN that the Tustin Community Redevelopment Agency (the Agency ) has not provided an Annual Report with respect to the above-named Bonds as required by Section 5.19 of the Indenture of Trust, dated as of July 1, 1998, by and between the Agency, and U.S. Bank Trust National Association, as trustee. The Agency anticipates that the Annual Report will be filed by . Dated: TUSTIN COMMUNITY REDEVELOPMENT AGENCY cc: Trustee By Name.' Title: A-1 TUSTIN COMMUNITY REDEVELOPME1N~r AGENCY (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A BOND PU-RCHASE AGREENIENT June__, 1998 Tustin Community Redevelopment Agency 300 Centennial Wa3' Tustin, California 92780 Ladies and Gentlemen: John Nuveen & Co. Inc. (hereinafter referred to as the "Underwriter"),. offers to enter into this Bond Purchase Agreement (the "Bond Purchase Agreement") with the Tustin Community Redevelopment Agency (herein referred to as the "Agency"), which will be binding upon the Agency and the Underwriter upon the Agency's acceptance hereof. This offer is made subject to the Agency's acceptance by execution of this Bond Purchase Agreement and its delivery to the Underwriter on or before 5:00 P.M., California time, on the date hereof. All capitalized terms used 'herein but not defined herein shall have the meanings ascribed thereto in the Indenture (as hereinafter · . 'defined). 1.' Purchase .and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Agency hereby agrees to sell to the Underwriter, and the Underwriter hereby agrees to purchase from the Agency, all (but not less than all) of $ aggregate principal mount of Tustin Community Redevelopment Agency (Town. Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "1998 Bonds"), at the purchase price of $ (which is the aggregate principal amount of the 1998 Bonds, less an underwriting discount of $ , less original issue discount of $ ), Plus interest accrued on the 1998 Bonds fi-om July 1, 1998 to the date of the Closing (as hereinafter defined). The 1998 Bonds will be dated July 1, 1998 and will have the maturities, bear interest at the rates and will be subject to redemption as set forth on Exhibit A hereto. TUBPA. SA/LR/258 2. Authorizing Instruments and Law. The 1998 Bonds will be issued pursuant to Articles 10 and 11 of Chapter 3 of Pan 1 of Dix4sion 2 of Title 5 of the California Government Code, commencing with section 53570 of said Code (the "Law"), Resolution No. RDA- , adopted by the Agency on June 15, 1998 (the "Resolution"), and an indenture of trust, dated as of July 1, 1998, between the Agency and U.S. Bank Trust National Association, as trustee (the "Indenture"). The proceeds of the 1998 Bonds will be used to (i) refinance redevelopment activities within or of benefit to the Agency's Tovm Center Area Redevelopment Project (the "Project Area") and specifically to refund (a) its Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution No. RDA 87-8, adopted by the Agency on August 3, 1987, in the aggregate principal amount of $8,060,000, of which $5,145,000 remains outstanding (the "1987 Bonds"), and (b) its Town Center Area 'Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No. RDA 91-12, adopted by the Agency on July 15, 1991, in the ag~egate principal amount of $13,100,000, of which $12,880,000 remains outstanding (the "1991 Bonds"); and (ii) to provide for the costs of issuing the 1998 Bonds. The refunding of the 1987 Bonds will be accomplished pursuant to an Escrow Deposit and Trust Agreement, dated as of July 1, 1998 (the "1987 Escrow A~eement"), by and between the Agency and U.S. Bank Trust National Association, as escrow bank (the "Escrow Bank"). The refunding of the 1991 Bonds will be accomplished pursuant to an Escrow Deposit and Trust Agreement, dated as of July 1, 1998 (the "1991 Escrow Agreement" and, w/th the 1987 Escrow Agreement, the "Escrow Agreements"), by and between the Agency and the Escrow Bank. The 1998 Bonds will be special obligations of the Agency and are payable solely from and secured by a pledge of the Tax Revenues (as defined in the Indenture), on a parity with any Additional Bonds (as defined in the Indenture) and a pledge of amounts in certain funds and accounts established under the Indenture, all as further described in the Indenture and Official Statement (described below). 3. Public Offering. The Agency hereby ratifies, confzrms and approves of the use and distribution by the Underwriter prior to the date hereof of the preliminary official statement dated , 1998, relating to the 1998 Bonds (the "Preliminary Official Statement"), which official statement the Agency has deemed final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule"), except for information permitted to be omitted therefrom by the Rule. Within seven (7) business days from the date hereof (or such earlier date so'as to allow the Underwriter to meet its obligations under the Rule and Rule G-32 of the Municipal Securities Rulemaking Board), the Agency shall deliver to the Underwriter a final official statement relating to the 1998 Bonds, executed on behalf of the Agency by an authorized representative of the Agency and dated the date hereof to the Underwriter, which shall include information permitted to be omitted in the Preliminary Official Statement by paragraph Co)(1) of the Rule and with such other amendments or supplements as shall have been approved by the Agency and by the Underwriter (the "Final Official Statement"). The Preliminary Official TUBPA.$A/LP, d258 Statement and the Final Official Statement, including the cover pages, summary statements and the appendices thereto, and all in/onnation incorporated therein by reference are hereinafter referred to collectively as the "Official Statement." The Underwriter agrees that it Will not confirm the sale of any BOnds unless the confirmation of sale is accompanied or preceded by thc delivery of a copy of the final Official Statement. The Agency further authorizes the Underwriter tO use, in connection with the offer and sale of the 1998 Bonds, the Official Statement, that certain Continuing Disclosure Certificate, dated as of July 1, 1998 (the "Continuing Disclosure Certificate") and the Indenture (all such.documents referred to in this sentence are hereinafter collectively referred to as the "Financing Documents"), and all information contained herein and therein and all other documents, agreements, certificates or written statements furnished by the Agency to the Underwriter or entered into by the Agency in connection with the transactions contemplated by this Bond Purchase Agreement and the 1998 Bonds. , , The Agency urill undertake, pursuant to the Indenture and the Continuing Disclosure Certificate, to provide certain annual financial information and notices of the occurrence of certain events, if material. A description of this unde~g is set forth in the Preliminary Official Statement and will also be set forth in the Final Official Statement. The Under~u-iter agrees to make a bona fide offering of ail the 1998 Bonds initially at the public offering prices (or yields) set forth on the cover page of the Official Statement. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as they deem necessary in connection with the marketing of the 1998 Bonds. The 1998 Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. 4. The Closin_~. At 8:00 A.M., California time, on July 16, 1998, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Agency and the Underwriter, the Agency will cause to be delivered (i) the 1998 Bonds to DTC in New York, New York, and (ii) the closing documents hereinafter mentioned at the offices ofMcFarlin & Anderson, San Francisco, California ("Bond Counsel"), or another place to be mutually agreed upon by the Agency and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the 1998 Bonds.as set forth in Section 1 hereof payable in immediately available funds to the order of the Agency on the date of Closing (as hereinafter defined). This payment and delivery, together with the delivery of the aforementioned documents, is herein called the "Closing." 5. A~encv Rer>resentarions. Warranties and Covenants. The Agency represents, warrants and covenants to the Undemu-iter that: (a) The Agency is a public body, corporate and politic, organized and existing under the Constitution (the "Constitution") and laws ofthe State, including the Law, with full fight, power and TUBPA. ItA/LP~.S8 authority to issue the 19911 Bonds, and to execute, deliver and perform its obligations under the 1998 Bonds, this Bond Purchase Agreement, the Continuing Disclosure Certificate, the Indenture, the Official Statement and the Escrow Agreements. Co) This Bond Purchase Agreement, the 1998 Bonds, the Continuing Disclosure Certificate, the Escrow Agr~ments and the Indenture, when duly executed and delivered by all parties thereto, will constitute valid, legal and binding obligations of the Agency enforceable against the Agency in accordance with their respective terms, except as the enforceability thereof may be limited by the application of equitable principles, if equitable' remedies are sought, or by applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally. (c) The Agency has, and at the date of the Closing will have the full legal right, power and authority to enter into this Bond Purchase Agreement, the Cont'muing Disclosure Certificate, the Escrow Agreements and the Indenture, to issue and deliver the 1998 Bonds for sale to the Underwriter as provided herein, and will have duly authorized and approved the execution and delivery of, and the performance by the Agency of its Obligations contained in, the 1998 Bonds, this Bond Purchase Agreement, the Continuing Disclosure Certificate, the Escrow Agreements and the Indenture. (d) As of the date thereof, the Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (e) If between the date hereof and the date which is 25 days after the End of the Underwriting Period (as hereinafter defined) for the 1998 Bonds, an event occurs of which the Agency has knowledge and which might or would cause the information contained in the Official Statement, as then supplemented or amended, to contain any untrue statement ofa material fact or to omit to state' a material fact required to be stated therein or necessary to make the information therein, in the light of the circumstances under which itwas presented, not misleading, the Agency will notify the Underwriter,'and, if in the opinion of the Agency, the Underwriter or its counsel, such event requires the preparation and publication ora supplement or amendment to the Official Statement, the Agency will forthwith prepare and furnish to the Underwriter (at the expense of the Agency) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to Bond Counsel and Counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to Bond purchasers, not misleading. For the purposes of this subsection, between the date hereof and the date which is 25 days after the End .of the Underwriting. Period for the 1998 Bonds, the Agency will furnish such 'reformation with respect to itself as the Underwriter may from time to time reasonably request. TUBPA. 8A/LP, J258 (f) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (e) hereof, at the time of each supplement Or amendment thereto, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the information therein, in the light of the circumstances under which it was presented, not misleading. (g) As used herein and for the purposes of the foregoing, the term "End of the Underacting Period" for the 1998 Bonds shall mean the earlier of (i) the Closing Date unless the Agency shall have been notified in writing to the contrary by the Underwriter on or prior to the Closing Date, or (ii) the date on which the End of the Underwriting Period for the 1998 Bonds has occurred under the Rule; provided, however, that the Agency may treat as the End of the Underwriting Period for the 1998 Bonds the date specified as such in a notice f~om the Underwriter stating the date which is the End of the Underwriting Period. (h) At the time of the Closing, there shall not have been any material adverse changes in the financial condition ofthe Agency or any material adverse change in the valuation oftaxable property in the Project Area (as described in the Official Statement) since the date of the final Official Statement. (i) As of the time of acceptance hereof and as of the time of the Closing, the Agency is not and will not be in material breach of or in material default under any applicable law or administrative regulation of the' State or 'in the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other insmmaent to which the Agency is a party or is otherwise subject which breach would have a material adverse effect on the 1998 Bonds; and, as of such times, the execution and delivery by the Agency of this Bond Purchase Agreement, the Indenture, the Continuing Disclosure Certificate, the Escrow Agreements and the 1998 Bonds, and compliance by the Agency with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable law or administrative regulation of the State or the United States applicable to the Agency or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Agency is a party or is otherwise subject which breach or default would have a material adverse effect on the 1998 Bonds. (j) Between the time of acceptance hereof and the Closing, the Agency will not, without the prior written consent ofthe Undem~ter, issue any bonds or securities with a pledge of or lien on the Tax Revenues. (k) As of the time of acceptance hereof and the Closing, and except as described in the Official Statement,no litigation is or will be pending and served or, to the knowledge ofthe Agency, threatened in any court (i) in any way challenging any member of the Agency, or the Chairperson ofthe Agency, to their respective offices, or (ii) seeking to restrain or enjoin the issuance or delivery TUBPA. gAILR/258 of any of the 1998 Bonds, or the collection of all the Tax Revenues which are pledged to pay the principal of and interest on the 1998 Bonds, or in any contesting or affecting the validity of the 1998 Bonds, this Bond Purchase Agreement, the Indenture, the Continuing Disclosure Certificate, the Escrow Agreements orthe collection of all ofthe Tax Revenues, orthe pledge ofthe Tax Revenues, or contesting the powers of the Agency or its authority for'the issuance of the 1998 Bonds, or (iii) contesting in any way the completeness, accuracy or fairness of the Official Statement. (I) As of the time of acceptance hereof and as of the date of the Closing, the Agency does not and will not have outstanding any indebtedness, which indebtedness is secured by a lien on the Tax Revenues of the Agency superior to or on a parity with the lien of the 1998 Bonds on the Tax Revenues '[except the 1992 Bonds and] except as otherwise described in the Official Statement. (m) The Agency will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter, at the expense of the Underwriter (except as prOvided in this paragraph), as it may reasonably request in order to qualify the 1998 Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; proxSded, however, that the Agency will not be required to execute a special or general consent to service of process or qualifY as a foreign corporation in connection with any such qualification in any jurisdiction. (n) At the time of acceptance hereof and as ofthe date ofthe Closing, all approvals, consents or orders required of the Agency by any governmental authority, board, agency or commission having jurisdiction which would constitute conditions precedent to the performance by the Agency of its obligations under this Bond Purchase Agreement, the 1998 Bonds, the Indenture and the Continuing Disclosure. Certificate have been obtained. (o) The 1998 Bonds are secured by a first pledge of and lien on all ofthe Tax Revenues and all ofthe moneys on deposit in certain funds and accounts established under the Indenture, including the Special Fund, the Debt Service Fund, the Redemption Account, the Redevelopment Fund, the Interest Account, the Principal Account, the Sinking Account and the Reserve Account (excluding the Costs of Issuance Fund), all as provided in, and subject to the provisions of, the Indenture. 6. Closing COnditions. The Underwriter has entered into tiffs Bond Purchase Agreement in reliance upon the representations, warranties and covenants herein and the performance by the Agency of its respective obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwr/ter's obligations under this Bond Purchase Agreement are and shall be subject to the following conditions: (a) At the Closing Date, the 1998 Bonds, the Indenture, the Continuing Disclosure Certificate, the Escrow Agreements and the Official Statement shall have been duly authorized, executed and delivered by the respective parties thereto, in substantially the forms heretofore submitted to the Underwriter with only such changes as shall have been agreed to by the TtJBPA. SA/LP, J258 Undem'riter, and said agreements shall not have been mended, modified or supplemented, except- as may' have been agreed to .in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the 1998 Bonds and with the transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as Bond Counsel shall deem to be necessary and appropriate; (b) The representations and warranties of the Agency contained in this Bond Purchase Agreement, the Indenture, the Escrow Agreements and the Continuing Disclosure Certificate (collectively, the "Bond Documents"), shall be true and correct in all material respects on the date hereof and on the Closing Date, as if made again on the Closing Date, and the Official Statement (as the same may be supplemented or amended with the written approval of the Underwriter) shall be true and correct in all material respects and shall not contain any untrue statement or fact or omit to state any fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading; (c) At the time of the Closing, the Agency shall perform or have performed all of its obligations'required under or specified in the Financing Documents at or prior to the Closing; (d) At the time of the Closing, no default shall have occurred or be existing under the Bond Documents and the Agency shall not be in default in the payment of principal or interest on any of its indebtedness which default shall materially adversely impact the ability of the Agency to make its payment on the 1998 Bonds; (e) In recognition of the desire of the Agency and the Underwriter to effect a successful public offering of the 1998 Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, the Underwriter shall have the right to terminate this agreement by written notification to the Agency if at any time at or prior to the Closing; (i) the marketability of the 1998 Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially adversely affected by any event occurring which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or (ii) the marketability of the 1998 Bonds or the market price thereof, in the opinion of the Undem~ter, has been materially adversely .affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the'United States or by the State, or the amendment of legislation pending as of the date of this Bond Purchase Agreement in the Con~ess of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of iegislation by the President of the United States, the Treasury Department of the United TUBPA. gA/LR/258 .7 States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House ofRepresentafiyes, orthe proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the Un/ted States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of an>, federal or State court or any ruling or regulation (final, temporary or proposed) or Official Statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority materially adversely affecting the federal or State tax status of the Agency, or the interest on bonds or notes or obligations of the general character of the 1998 Bonds; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction '~dthin the State shall,be rendered which materially adversely affects the market price of the 1998 Bonds; or (iv) a stop order, ruling, regulation or Official Statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the 1998 Bonds, orthe issuance, offering or sale of the 1998 Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture need be qualified under the Trust Indenture Act of 1939, as 'amended and as then in effect; or (v) le~slation shall be enacted by the Congress of the Un/ted States, or a decision by a court of the Un/ted States shall be rendered, to the effect that obligations of the general character of the 1998 Bonds, or the 1998 Bonds, are not exempt fi.om registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt fi.om qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (vi) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the Underwriter' s ability to trade.the 1998 Bonds; or TIJBPA.SA/LRD_SS (vii) a general banking moratorium shall have been established by federal or State authorities; or (viii) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis on the financial markets of the United States, being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the 1998 Bonds (it being agreed by the Underwriter that there is no outbreak, calamity or crisis of such character as of the date hereof); or (ix) the rating on any bonds, notes or other obligations ofthe City orthe Agency shall have been downgraded, suspended or withdm~m by a national rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the market price of the 1998 Bonds; or (x) the commencement of any action, suit or proceeding described in paragraph 50c) hereof, which, in the reasonable judgxnent of the Underwriter, materially adversely affects the market price of the 1998 Bonds. (f) At or prior to the Closing, the Underwriter shall receive with respect to the 1998 Bonds (unless the context otherwise indicates) the following documents: O) Bond Opinion. The approving opinion of B°nd Counsel to the Agency, dated the date of' the Closing and substantially in the form included as Appendix D tO the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Underwriter, to the effect that the foregoing opinion addressed to the Agency may be relied upon to the same extent as ff such opinion were addressed to them. (ii) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, dated the date of the Closing to the following effect: (A) The 1998 Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as mended; 03) This Bond Purchase Agreement and the Escrow Agreement have been duly executed and delivered by the Agency and (assuming due authorization, execution and delivery by and validity against the Underwriter) is a valid and binding agreement of the Agency, except as enforcement thereof may be limited by bank'mptcy, insolvency or other laws affecting enforcement of creditors' rights and by the application of equitable principles if equitable remedies are sought; and TUBPA. gA/LRF2$8 ~ (C) The statements contained in the Official Statement under the captions, "INTRODUCTION," "TI-~ 1998 BONDS," (except for information relating io the Depository Trust Company and the book-entry system for registration of the 1998 Bonds) "SECURITY FOR THE BONDS," and "TAX MATTERS," and in Appendices A and D, insofar as such statements expressly summarize certain provisions of the 1998 Bonds, the Continuing Disclosure Certificate, the Indenture or the Escrow Agreements and the opinion attached as Appendix D to the Official Statement are accurate in all material respects; provided that Bond Counsel need not express any opinion with respect to any financial or statistical information contained therein. (iii) Agency Counsel Opinion. An opinion of the City Attorney, as Counsel to the Agency, dated the date of the Closing and addressed to the Underwriter, to the following effect: (A) The Agency is a public body, corporate and politic, duly organized and validly existing under the laws of the State of California; 03) The Resolution of the Agency approving and authorizing the execution and delivery ofthe 1998 Bonds, the Continuing Disclosure Certificate, the Indenture, the Escrow Agreements and this Bond Purchase Agreement and approving the 'Official Statement has been duly adopted at a meeting of the governing body of the Agency, which was called and held pursuant to law and with ail public notice required by law and at which a quorum was present and acting throughout and the Resolution is in full force and effect and has not been modified, amended or rescinded; (C) The information in the Official Statement with respect to the Agency and the Project Area is fair and accurate and nothing has come to the attention of such counsel which would lead it m believe that such information (excluding therefrom the financial and statistical data and forecasts included therein as to which no opinion need be expressed) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (D) To the best of such counsel's 'knowledge, except as otherwise disclosed in the Official Statement, there is no litigation or proceeding, pending and served, or threatened, challenging the creation, organization or existence of the Agency, or the validity of the 1998 Bonds, this Bond Purchase Agreement, the Continuing Disclosure Certificate, the Escrow Agreements orthe Indenture, or seeking to rem or enjoin any of the transactions referred to therein or contemplated thereby, or under TUBPA. SA/LR]258 10 which a determination adverse to the Agency would have a material adverse effect upon the Agency's ability to pay principal of and interest on the 1998 Bonds when due, or which, in any manner, questions the fight of the Agency to issue the 1998 Bonds or to use the Tax Revenues for repayment of the 1998 Bonds or affects in any manner the right or ability of the Agency to collect or pledge the Tax Revenues or the lien priority thereof. (iv) Agency Certificate. A certificate of the Agency, dated the date of the Closing, signed on behalf of the Agency by the Executive Director or other duly authorized officer of the Agency to the effect that: (A) the representations and warranties of the Agency contained herein and in the Indenture, the Escrow Agreements and the Continuing Disclosure Certificate are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing; and 03) no event affecting the Agency has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 0. (v) Disclosure Counsel Opinion. An opinion, dated the date of the Closing and addressed to the Undem~ter, of McFarlin & Anderson ("Disclosure Counsel"), stating that based upon its participation in the preparation of the Official Statement and w/thom having undertaken to determine independently the fa/mess, accuracy or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that, as of the date of the Closing, the Official Statement (excluding therefrom the repons, financial and statistical data and forecasts therein, the information included in the Appendices thereto, information relating to The Depository Trust Company and its book-entry system and information v,~ith respect to the Municipal Bond In_qurer and its Municipal Bond Insurance Policy (each as hereinafter defined) as to which no opinion need be expressed) contains any untrue statement of a material fact or omits to state a mater/al fact required to be stated therein or necessary to make the statements therein,, in the light of the circumstances under which they were made, not misleading. (vi) Trustee's Certificate. A Certificate, dated the date of Closing addressed to the Agency and the Underwriter, to the following effect: (A) The Trustee is a national banking association duly organized and validly existing under the laws of the United States of America; and 11 TUB P A. g A/L P~.~ 5 8 (B) The Trustee has full power, authority and legal right to compty with the terms of the Indenture and to perform its obligations stated therein. (vii) Escrow Bank's C, ertificate. A Certificate, dated the date of Closing addressed to the Agency and the Underwriter, from each Escrow Bank to the following effect: (A) The Escrow Bank-is a national banking association duly organized and validly existing under the laws of the United States of America; and (B) The Escrow Bank has full power, authority and legal right to comply with the terms of the applicable Escrow Agreement and to perform its obligations stated therein. (viii) Verification Report. A verification report of sufficiency of amounts deposited under the Escrow Agreements. with respect to the (ix) 1987 Bonds Defeasance Opinion. An opinion of Bond Counsel, dated the date ofthe Closing, addressed to the Agency, the Underwriter, the Trustee and the Escrow Bank, as to the legal defeasance of the 1987 Bonds. (x) 199I Bonds Defeasance Opinion. An opinion of Bond Counsel, dated the date of the Closing, addressed to the Agency, the Underwriter, the Trustee and the Escrow Bank, as to the legal defeasance of the 1991 Bonds. (xi) Certain Financing Doc. uments. An execmed copy of the Indenture and the Continuing Disclosure Certificate. (xii) City Resolution. A certified copy of the City Resolution adopted by the City Council and certified bythe City Clerk or Assistant City.Clerk ofthe City Council approving issuance of the ! 998 Bonds. (xiii) Agency Resolution. A certified copy of the Agency Resolution adopted by the Agency and certified by the Secretary or Assistant Secretary of the Commission authorizing the execution and delivery of the Indenture, this Bond Purchase Agreement, the Escrow Agreement and the Continuing Disclosure Certificate. (x. iv) Form 8038-G. Evidence that the federal tax information Form 8038-G has been prepared for filing. (xv) Letter ofRepresentati°ns. A certified copy of the Letter of Representations by the Agency to DTC. TUBPA~ 8A/LP,~,.5 S 12 (xwi) Certain Financing Documents. An executed copy of the Indenture and the Continuing Disclosure Agreement. (xwii) Preliminary Official Statement. An executed certificate, dated as of the date of the Preliminary Official Statement, of the Agency in a form acceptable to the Underwriter relating to Rule 15c2-12. · (xwiii) Ratings. Evidence that Moody's Investors Service and Standard & Poor's Ratings Services have issued ratings of"Aaa" and "AAA," respectively, on the 1998 Bonds. ('>fix) Tm' Certificate. A Tax Certificate relating to the 1998 Bonds in form satisfactory to Bond Counsel. (x,~) Bond Insurance Policy. A policy of municipal bond insurance relating to the 1998 Bonds issued by MBIA Insurance Corporation (the "Municipal Bond Insurer"). (x,~l) Opinion of Counsel to the Municipal Bond !nsurer. An opinion of coun.qel to the Municipal Bond Insurer, dated the date of the closing, addressed to the Agency and the Underwriter in a form reasonably acceptable to the Agency and the Underwriter. (x,mii) Additional Documents. Such additional certificates, instruments and other documents as the Underwriter, Bond Counsel or Disclosure Counsel may reasonably deem necessary to evidence the truth and accuracy as of the time 'of the Closing .of.the ............................ representafions..of_theAgency~and.the, due performance or satisfaction_ bT~ the_ Agency.a_t.or ...... prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Agency.. If the Agency shall be unable to satisfy the conditions contained in this Bond Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the Agency shall be under further obligation hereunder, except as further set forth in Section 10 hereof. 7. Certain Covenants. After the Closing: (a) The Agency will not adopt any amendment of or supplement to the Official Statement to which, after having been furnished a copy, the Undema'iter shall reasonably object in writing and if any event relating to or affecting the Agency or the Project Area shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to the Underwriter, the Agency shall cause to be forthwith prepared and furnished to the Underwriter (at the expense of the Agency) a reasonable number of copies of an amendment TLIBP~..ItAJI..R/258 13 of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in Order to make the statements therein, in the light of the circumstances existing at the time it is delivered to the purchaser, not misleading; Co) The Agency shall not 'knowingly take or omit to take, as is appropriate, any action which would adversely affect the exclusion from gross income under federal tax law of the interest on the 1998 Bonds or which would cause the 1998 Bonds to become arbitrage bonds under Section 148 of the Code and the regulations thereunder; and 8. Indemnification. (a) The Agency shall indemnify and hold harmless the Underwriter, its officers, directors, employees and agents and each person who consols the Underwriter within the meaning of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (collectively, the "Securities Acts"), against any and all losses, claims, damages, liabilities, costs and expenses (including without limitation fees and claims, damages, liabilities, costs and expenses (including without limitation fees and disbursements of counsel and other expenses) incurred by them or an), of them in connection w/th investigating or defending any loss, claim, damage, liability or an), suit, action or proceeding, joint or several, to which they or any of them may become subject under the Securities Acts, or any other federal or state law or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities, costs and expenses (or any suit, action or proceeding in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Official Statement or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a fact required to be stated therein or necessary to make the Statements therein, in light of the circumstances under which they were made, not misleading. This indemnity agreement shall be in addition to an), liability which the Agency may otherwise have. -i (b) The Undefwr/ter sh~tl iiademnif3) and hold hamaless, the Agency, and each ofthe Agency' s 'Officers, employees and agents, to the same extent as the foregoing indemnity from the Agency to the Underwriter but only with reference to written information furnished to the Agency by or on behalf of the Underwriter specifically, for use in the preparation of the documents referred to in the foregoing indemnity. This indemnity agreement shall be in hddition to any liability which the Underwriter may otherwise have. The Agency acknowledges, and the Underwriter represents, that the statements set forth under the headings "RATINGS" and "UNDERWRITING" in the Official Statement constitute the only information furnished in writing by or on behalfofthe Underwriter for inclusion in the Official Statement. (c) Promptly after receipt by any party entitled to indemnification under this Section 9 of notice of the commencement of any suit, action or proceeding, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the TUBPA. SA/'LP, J2$ g 14 indemnifying party in writing of thc commencement thereof; but thc omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 9 or from any liability under this Section 9 unless thc failure to provide notice prejudices thc defense of such suit, action or proceeding. In case any such action is brought against any indemnified party, and it notifies the indemnifying part),, the indemnifying party shall be entitled to participate in, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving thc aforesaid notice' from such indemnified part),, to assume thc defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, thc indemnified party or parties shall have the fight to. select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from thc indcmni~ing party to such indemnified party or its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party shall not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with defense thereof unless (i) the indemnified part), shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifTing pan7 shall not, in connection with any action indemnified against under subparagraph 9(a), bc liable for the fees and expenses of more than one separate finn of attorneys at any point in time representing the. indemnified parties to such action), (ii) the indemnifying' party shall n°t have employed counsel satisfactory to the indemnified party to represent the indemnified party within reasonable time and after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of thc indemnifying party; and except that, if clause (i) or (ii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). 9. Expenses. All eXpenses and costs of the Agency incident to the performance of their Obligations hereunder and in connection with the authorization, execution, sale and delivery of the 1998 Bonds to the Underwriter, including any printing costs, CUSIP Service Bureau charges, CDIAC fees, fees of the Trustee, the Escrow Agents, the Dissemination Agent, rating agency fees, fees and expenses of consultants, fees and expenses of bond counsel, fees and expenses of counsel to the Agency and the City, and Bond insurance policy premiums shall be paid from the Bond proceeds or in the event that Bonds are not issued for any reason, shall be paid by the Agency. All costs and expenses of the Underwriter, including travel, Blue sky expenses, fees and expenses assessed upon the Underwriter with respect to the 1998 Bonds by. the Municipal Securities Rulemaking Board or the National Association of Securities Dealers, fees and expenses of Disclosure Counsel and advertising expenses shall be paid by the Underwriter. 15 TUBPA. gA/LR/258 10. Sun, ival of Certain Representations and Obli~ations. The respective agreements, covenants, representations, warranties and other statements of the Agency of each of its officials, partners or officers set forth in or made pursuant to this Bond Purchase Agreement shall survive delivery of and payment for the 1998 Bonds remains outstanding under the Indenture, regardless of any investigation, or statements as to the results thereof, made by or on behalf of the Underwriter.~ 11. Notice. Any notice or other commUnication to be given to the Agency under this Bond Purchase Agreement may be given by delivering the same in writing to the Agency, addressed as follows: Tustin Community Redevelopment Agency, 300 Centennial Way, Tustin, CA 92680, Attention: Mr. Ronald A. Nault, Finance Director/Treasurer. Any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by deliVering the same in writing to John Nuveen & Co. Inc., John Nuveen & Co. Inc., 19900 MacArthur Boulevard, Suite 500, Irvine, CA 92512, Attention: Mr. Don Backstrom, Vice President.' 12. Entire A~reement. This Bond Purchase Agreement, when accepted by the Agency, shall constitute the entire agreement between the Agency and the Underwriter and is made solely for the benefit of the Agency and the Undem~ter (including the successors or assigns of the Underwriter). No other person or entity shall acquire or have any right hereUnder by virtue hereof, except as expressly provided herein. 13. Counterparts..This Bond Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same insmmaent. 14. Severabilitv. In case any one or more of~he provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. · - 15. California Law Governs. The validity, interpretation and performance of this Bond Purchase Agreement shall be governed by the laws of the State applicable to contracts made 'and performed in the State. 16 TLIBPA. 8A/L,R/258 16. No Assimunent. The fights and obligations created by this Bond Purchase A~eement shall not be subject to assi.mament by the Underwriter or Agency urithout the prior written consent of the other parties hereto. JOHN NUVEEN & Co. INC. Accepted as of the date first stated above: TUSTIN COMMUNITY REDEVELOPMENT AGENCY By Authorized Representative By Name: Title: TUBPA. gATLRP-58 17 EXHIBIT A MATURITIES, PRINCIPAJ~, AMOUNTS, INTEREST RATES, PRICES OR YIELDS .~ND REDEMPTION PROVISIONS Maturity December $ Serial Bonds Principal Interest Price or Maturity Principal Interest Amount Rate Yield December 1 Amount Rate Price or Yield $ __% Term Bonds due September 1, ., Price % $ __% Term Bonds due September 1, , Price % Redemption [TO COME] A-1 TUBPA. SA/LP~_$11 EXHRBIT B Rule 15c2-12 Certificate June. ,1998 John Nuveen & Co. Inc. 19900 MacArthur Blvd., Suite 500 Irvine, California 92512 Re: Tustin Community Redevelopment Agency. Crown Center Area Redevelopment Project) Tax Allocation Refunding Bonds, i998 Series A Ladies and Gentlemen: You have been engaged by the Tustin Community Redevelopment Agency (the "Agency"), to act as the underwriter in connection with the sale of approximately $20,000,000 of Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "Bonds"). We have, in conjunction with you. 'and others, prepared a Preliminary Official Statement with respect to the Bonds dated June , 1998. For purposes of Rule 15c2-12 of the Securities and Exchange Commission ("Rule 15c2- 12"), the undersi~maed hereby certifies on behalf of the Agency that the Preliminary Official Statement is deemed final, in accordance with Rule 15c2-12 as of its date except for the omission of certain matters which may be omitted under Rule 15c2-12 (including interest rates, redemption prices and dates, ratings, and related information). Very truly yours, TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Name: Title: TUBPA.$A/LP, F2~8 B-1 NEW ~SSUE -- BOOK-EN-FRY ONLY RATINGS Moody's: Aaa Standard & Poor's: AAA (See "RATINGS" herein) In the opinion ofMcFarlin & Anderson, Lake Forest, California, Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions and assuming among other matters, compliance with certain covenants and agreements, interest on the 199g Bonds is excluded from gross income for federal income tax purposes under Section 103 of the lntemal Revenue Code of 1986 and is exempt from Sram of Califomia personal income taxes. In the opinion of Bond Counsel, interest on the 1998 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that interest on the 1998 Bonds is included in adjusted currant earnings when calculating corporate al,-rnative minimum taxable income. Bond Counsel expresses no opinion regarding other t~x consequences related to the osmership or disposition of, or the accrual or receipt of interest on, the 1998 Bonds. See the information contained herein under the caption "CONCLUDING INFORMATION - TAX EXqEMPTION" and the form of opinion of Bond Counsel attached hereto as Appendix D. TUSTIN COMMUNITY REDEVELOPMENT AGENCY (Town Center Area Redevelopment.Projec0 Tax Allocation Refunding Bonds, 1998 Series A Dated: Jul.;, I, 1998 Due: December 1, as set forth below Proceeds ii'om the sale of the Tustin Community Redevelopment Agency (the "Agency") (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "1998 Bonds"), will be used to (i) refinance redevelopment activities within or of benefit t~ the Redeveiopmeni Project and specifically to refund (a) the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution No. RDA 87-8, adopted by the Agency on August 3, 1987, in the aggregate principal 'amount of $8,060,000, of which $5,145,000 remains outstanding, and (b) the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No. RDA 91-I 2, adopted by the Agency on July 15, 1991, in the aggregme principal amount of $13,100,000, of which $12,880,000 remains outstanding; and (ii) to provide for the costs of issuing the 1998 Bonds. Interest on the 1998 Bonds will be payable semi-annually on each June 1 and December 1, commencing December 1, 1998 (each, an "Interest Payment Dam"). The' 1998 Bonds will be issued in fully registered form without coupons and will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depositor3' for the 1998 Bonds. Purchases of beneficial interests in the 1998 Bonds will be made in book-entry form only in denominations of $5,000 or any inte~mml multiple thereof. Purchasers of such beneficial interests will not receive physical certifiemes representing their interests in the 1998 Bonds. Pa.vment of principal of~ interest and premium, il'any, on the 1998 Bonds will be made directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the 1998 Bonds, Disbursement of such payments to the DTC Participants (as defined hegin) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more full), described herein. See "THE 1998 BONDS--Book-Entry-Only System" herein. The 1998'Bonds will be issued under an Indenture of TrusL dated as of July 1, 1'998 (the "Indenture"), by and betxveen .the Agency and U.S. Bank Trust National Association, as trustee (the "Trustee"). The 1998 Bonds arc special obligations of the Agency and are payable solely from and secured by a pledge ofthat portion of the tax increment revenues receivable by the Agency with respect to the To~n Center Redevelopment Project Area pursuant to se~ion 33334.3 of the Redevelopment Law (herein referred to as the "Tax Revenues"), subject to the provisions of the Indenture permitting the application thereof for other purposes, and by a pledge of amounts in certain funds and agcounts es-mblished under the lndentu=, as further discussed herein. The 1998 Bonds are subject to optional and mandatory redemption prior to maturiD'. See "TILE 1998 BONDS--Redemption" herein. The scheduled payment of principal of and interest on the 1998 Bonds will be insured by a municipal bond insurance policy to be issued simultaneously with deliver)' of the 1998 Bonds by MBIA Insurance Corporation. [MBIA logo to be inserted] THE 1998 BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY FROM THE TAX REVENUES, AS DESCRIBED HEREIN, AND AlVlOUN'I'S IN CERT.M]q FUNDS AND ACCOUNTS MatdNTAIN~D UNDER THE INDENTURE AND, AS SUCH, ARE NOT A DEBT OF THE CITY OR THE STATE OF CALIFORNIA, OR A]xrY OF THE STATE'S POLITICAL SUBDIVISIONS, AND NEITHER THE CITY NOR THE STATE'OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDMS]ONS, IS LIABLE THEREFOR. THE 1998 BONDS ARE NOT PAYABLE FROM, AND ARE NOT SECURED BY, ANY TAX INCREMENT RE'~ -rENUES OF THE AGENCY, OTHER THAN THE TAX REVENUES PLEDGED PURSUANT TO THE INDENTURE. THE 1998 BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANrY CONSTITUq30NAL OR STATUTORY DEBT LIMITATION OK RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY NOKANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE 1998 BONDS IS LIABLE PERSONALLY FOR PAYMENT OF THE 1998 BONDS BY REASON OF THEIR ISSUANCE. TUCOV.gA/LR/258 M.a, TI IRI'I%' SCHEDULE'* Maturities, Principal Amounts, Interest Rates and Prices or Yields 5; Serial 1998 Bonds Maturity Principal Interest Price or Maturity Principal Interest Price or December I Amount Rat,.e. Yield. December 1 Amount Rate Yield Term 1998 Bonds due December 1, ., Price % Term 1998 Bonds due December 1, , Price ..% This cover page contains information for quick reference only. It is not a complete summary of the 1998 Bonds. It is n.__ot intended to be a summary of all factors relating to an investment in the 1998 Bonds. Investors must read the entire Official Statement, including the cover page and appendices hereto, to obtain information essential to making an informed investment decision with respect to the 1998 Bonds. The 1998 Bonds are offered when, as and if issued, subject to the approval as to their legaliO' b), McFarlin & Anderson, Lake Forest, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Agency' by the CiO' Attorney acting as Agency Counsel and by McFarlin & Anderson, Lake Forest, California, as Disclosure Counsel. It is anticipated ttu2! the J 998 Bonds will be available.for deliver), through DTC in New York, Ne~' York, on or about duly 16, 1998. John Nuveen & Co. Inc. Dated: June ~ 1998 *Preliminary, subject to change. TUCOV.gA/LR/258 The following language to be inserted ir), the printer, in red, at the top of the POS front cover: PRELIM]INARY OFFICL~L STATEM~E~ DATED ,1998 The following language to be inserted b), the printer, in red, vertically along the left margin of the POS front cover: This Preliminary Official Statement and the information contained herein are subject tocompletion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be an3, sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. TUCOV.gA/LP,/2$ S No dealer, broker, salesperson or other person has been authorized by the Agency or the Underwriter to give any information or to make any representations in connection with the offer or sale of the 1998 Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does no/constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 1998 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 1998 Bonds. Statements contained in this Official Statement which involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The information set forth herein has been obtained from sources which are believed to be reliable but such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriter or the Agency. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency since the date hereof. All summaries of the Indenture and other documents are made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions. This Official Statement is submitted in connection with the sale of the 1998 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. IN CONNrECTION WITH TH/S OFFERING, THE UNDERWRITER MAY OVER_&LLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE. OF THE 1998 BOlxrDS AT A LEVEL ABOVE THAT WHICH M/GHT OTHERWISE PREVAIL IN TIlE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT A_NW T~4E. THE UNDERWRITER MAY OFFERAND SELL THE 1998 BONDS TO CERTAIN DEALERS ANrD DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES Lov~rER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF ANrD SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. TUPOS.SA/LR~-58 CITY OF TUSTIN AND TUSTIN COMMUNITY REDEVELOPMEN~r AGENCY City Council Thomas R. Saltarelli, Mayor Tracy Wills Worley, Mayor Pro Tem Mike Doyle, Councilmember Jim Potts, Councilmember Jeffery M. Thomas, Councilmember Agency Board Thomas R. Saltarelli, Chairperson. Tracy Wills Worley, Chairperson Pro Tem .Mike Doyle, Agency Member Jim Potts, Agency Member Jeffery M. Thomas, Agency Member City Staff William A. Huston, City Manager Christine Shingleton, Assistant City Manger Pamela Stoker, City Clerk Lois Jeffrey (Rourke, Woodruff & Spradlin), City Attorney Elizabeth Binsack, Director of Community Development Steve Foster, Chief of Police Ron Nault, Finance Director Tim Serlet, Director of Public Works SPECIAL SERVICES Financial Advisor Public Financial Management Newport ;Beach, California Bond Counsel and Disclosure Counsel MeFarlin & Anderson Lake Forest, California Trustee U.S. Bank Trust National Association Los Angeles, California Underwriter John Nuveen & Co. Inc. Zrvine, California TUPOS. SA/LIL~_58 TABLE OF CONTENTS Pa~,e iNIRODUCTION General ............................................................................ 1 The Agency ' . ................................................. 1 Purpose of Issuance .......................................... . .......... ~ ........... ~.. 1 The Project Area ............................................ .......................... The'~, 98 Bonds .............................. Source of Payment for the Bonds ................................. 2 Paris, Debt ......................................................................... 3 Continuing Disclosure ................................................................. 3 Tax Matters ................................. - 3 Municipal Bond Insurance ............................................................. 4 Professionals Involved in the Offering ................................................... 4 Other Information ............................... 4 PI,AN OF REFUNDING Refunding of 1987 Bonds ............................................................. 4 Refunding of 1991 Bonds ............................................................. 5 ESTL¥~a, TED SOURCES AND USES OF FUNDS DEBT SER'~qCE SCHEDULE THE 1998 BONDS General Provisions ............................................................... ' .... 6 Redemption ....................... ' ................. 7 Book-Entry-Only System ' . ...................... · .............. 9 Discontinuance of DTC Services ....................................................... 11 SECURITY FOR THE BONDS Tax Revenues ...................................................................... 12 Pledge of Tax Revenues · . ............................. 13 Limit~ Obligations ................ . ................................................. 14 Reserve Account ............................................................. ' 14 Resen'e Account Surety Bond ....... , ................................................. 14 Issuance of Parity Debt .............................................................. 15 Funds and Accounts; Flow of Funds .................................................... 17 ~ MuNrICIPAL BOND INS~CE POLICY Payment Pursuant to Municipal Bond Insurance Policy ....................... .............. 19 MBIA Insurance Corporation ......................................................... 20 RISK FACTORS Bonds Are Limited Obligations and Not General Obligations ................................ '22 Tax Revenues ...................................................................... 22 Estimated Tax Revenues .............................................. : .............. 23 Educational Revenue Au~m'nentation Fund; State Budget .................................... 23 Seismic Considerations ..... ~ ........................................................ 23 -i- 2n, os.~z.w2_58 Hazm-dous Subslmnces .......................................... ; .................... 24 Loss of Tax Exemption .............................................................. 24 Assumptions and Projections .......................................................... 24 LIMITATIONS ON TAX REVENUES Property Tax Collection Procedures .................................................... 25 Supplemental Assessments ............................................................ 26 Tax Collection Fees .......... ....................................................... 26 Property Tax Rate Limitations - Article XIIIA ............................................ 26 Legislation Implementing Article XIIIA .............. : ......................... : ........ 27 Appropriation Limitation -Article XIIIB ............... : ............................ ' ....27 Unitar)' Taxation of Utility properly . .. ......................................... ; ......... 28 Exclusion of Tax Revenues for General Obligation Bonds Debt Service...: .................... 28 Housing Set-Aside .......................... · ................ ' ........................ 29 Proposition 21g ............................................... ...................... 30 Future Initiatives or Legislation ........................................................ 30 Redevelopment Plan Limitations Under AB 1290 ......................................... 30 THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY Organization ....................................... .31 Agency Powers and Duties ................................ ' ........................... 31 Financial Information ................................................................ 32 Investment of Agency Funds ...................................... , ................... 32 Controls, Land Use and Building Restrictions .............................. ...... ........ 32 TO'~k2q CENTER AREA REDEVELOPMENT PROJECT Back~ound ....................................................................... 34 Controls, Land Use and Building Restrictions ............................................ 35 Major Development Activities in the Project Area ......................................... 35 TAX REVENUES Historical and Estimated Tax Revenues ............................................ , ....37 Unsecured Audit. Adjustment .......................................................... 38 COVERAGE ANALYSIS Projection of Tax Revenues ........................................................... 38 Debt Service Coverage ................................................. · ............ 40 CERT.MN LEGAL MATTERS ........................................................ 40 CONrI'INUING DISCLOSURE ........................................................ 40 ABSENCE OF LITIGATION ................ ' .......................................... 41 VERIFICATION OF MATHEMATICAL ACCURACY ......................... ........... 41 TAX MATTERS ................................................................... 41 UNrDERWRITING .................................................................. 42 -ii- rmos.sAn.ur,.s~ RATINGS ........................................................................ 43 PROFESSIONAL FEES ............................................................. 43 MISCELLANEOUS 43 APPENDIX A - Summary of Certain Provisions of the Indenture ............................ A-1 APPENDIX B - General Information Regarding the City .................................. B-1 APPENDIX C - Agency's Audited Financial Statements for Fiscal Year Ending June 30, 1997 .... C-1 APPENDIX D - Form of Bond Counsel Opinion ......................................... D-1 APPENDIX E - Form of Continuing Disclosure Certificate ................................ E-1 APPENDIX F - Form of Municipal Bond Insurance Policy. ' F-1 -11I- TLrPos. 8A/LR.r258 OFFICIAL STATEMENT TUSTIN COMMI~ITY REDEVELOPMENT AGENCY (Tustin Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A Eh~fRODUCTION General This Official Statement of the Tustin Community Redevelopment Agency (the "Agency") Provides information regarding the sale by the Agency of $ ' ag~egate principal amount of the Agency's (Tustin Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "1998 Bonds"). Definitions of certain capitalized terms used in this Official Statement are set forth in "APPENDIX A--SLrMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" hereto. This Official Statement contains brief descriptions of the 1998 Bonds, the Indenture (as defined herein) and the Agency. Such descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to documents are qualified in their entirety by reference to such documents, and references to the 1998 Bonds are qualified in their entirety by reference to the form of the 1998 Bonds included in the Indenture. Copies of the Indenture and other documents described in this Official Statement may be obtained from the Trustee (described below) at its corporate trust office in Los Angeles, California. The Agency The Agency was activated by the CiD' Council of the City of Tustin under the provisions of Ordinance No. 696-A, adopted October 20, 1976. The five members of the City Council serve as the governing body of the Agency and exercise all rights, powers, duties and privileges of the Agency. Purpose of Issuance Proceeds from the sale of the 1998 Bonds will be used (i) to refinance redevelopment activities within or of benefit to the Redevelopment Project and specifically to refund (a) the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution No. RDA 87-8, adopted by the Agency on August 3, 1987, in the ag~egate principal amoUnt of $8,060,000, of which $5,145,000 remains outstanding (the "1987 Bonds"), and (b) the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No. RDA 91-12, adopted by the Agency on July 15, 1991, in the ag~egate principal amoUnt of $13,100,000, of which $12,880,000 remains outstanding (the "1991 Bonds" and, with the 1987 Bonds, the "Prior Bonds"); and (ii) to provide for the costs of issuing the i 998 Bonds. 'Preliminary, subjecl to change. The ?roject Area The Agency adopted a redevelopment plan (the "Redevelopment Plan") for the Project Area pursuant to Ordinance No. 701 enacted by the City Council of the City on November 22, 1976, amended by Ordinance No. 855 enacted by the City Council of the City on September 8, 1981, and Ordinance No. 1021 enacted by the City Council of the City on March 20, 1989. The Project Area consists of approximately 360 acres in the center of the City, and contains commercial, service-commercial, neighborhood commercial, and residential land uses. The total assessed valuation of taxable property in the Project Area in fiscal year 1997-98 is $ ~eater than the adjusted assessed valuation in the base year. See "THE PROJECT AREA" herein. Assessed valuations in the Project Area are subject to numerous risks which could result in decreases from those reported for fiscal year 1997-98. See "RISK FACTORS" herein. The 1998 Bonds The 1998 Bonds are being issued pursuant to the laws of the State of California (the "State"), including the provisions of issued pursuant to Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with section 53570 of said Code (the "Law"), Resolution No. RDA- , adopted by the Agency on June 15, 1998 (the "Resolution"), and an Indenture of Trust, dated as of July 1, 1998, between the Agency and U.S. Bank Trust National Association, as trustee (the "Indenture"). The 1998 Bonds will be issued in denominations of $5,000 each or inte~al multiples thereof. Interest on the 1998 Bonds is payable on each June 1 and December 1, commencing on December 1, 1998. Interest and principal on the 1998 Bonds are payable by the Trustee to DTC which will be responsible for remitting such principal and interest to the Participants which will in mrn be responsible for remitting such principal and interest to the Beneficial Owners of the 1998 Bonds. No physical distribution of the 1998 Bonds will be made to the public initially. See "THE 1998 BONrDS--Book-Entry-Only System" herein. Source of Payment for the Bonds The Bonds are special obligations of the Agency and are payable from and secured by a pledge of Tax Revenues, and amounts in certain funds and accounts held under the Indenture. The term Tax Revenues is defined in the Indenture as ail taxes annually allocated to the Agency with respect to the Project Area following the Closing Date pursuant to Article 6 of Chapter 6 (commencing Mth section 33670) of the Law and Section 16 of Article XWI of the California Constitution and as provided in the Redevelopment Plan, including all pa3ments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (a) all amounts of such taxes required to be paid by the Agency to other taxing agencies pursuant to pass-through agreements or similar tax-sharing agreements entered into pursuant to section 33401 of the Redevelopment Law existing on the Closing Date and Co) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to section 33334.3 of the Redevelopment Law. The Tax Revenues are not subject to the pledge and lien of any indebtedness of the Agency other than the 1998 Bonds and any Parity Debt issued in acCOrdance with the Indenture. The Bonds are not payable from, and are not secured by, any Tax Increment Revenues (as defined below) of the Agency other than the Tax Revenues. See "SECURITY FOR THE 1998 BONDS" herein. Parit3' Debt The Indenture provides that the Agency may issue loans, advances or indebtedness issued or incurred by the Agency secured by a pledge of Tax Revenues (as such term is defined in the Indenture for purposes of issuing Parity Debt) on a parity with outstanding Bonds provided, among other conditions specified in the Indenture, that (i) the Agency shall be in compliance with all covenants set forth in the Indenture and all Supplemental Indentures; (ii) the Tax Revenues for the then current Bond Year, based on the most recent assessed valuation of property in the Project Area as evidenced in written documentation from an appropriate official of the Count),, plus, at the option of the Agency, the Additional Allowance, shall be at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all Bonds and Parity Debt which will be Outstanding following the issuance of such Parity Debt; (iii) the Supplemental Indenture providing for the issuance of such Parity Debt shall provide that (A) interest on said ParitY Debt shall be payable on June 1 and December 1 in each year of the term of such PaNt), Debt except the first twelve month period, during which interest may be payable on any June 1 or December 1; and (B) the principal of such Pari~ Debt shall be payable on December 1 in any year in which principal is payable; (iv) the Supplemental Indenture providing for the issuance of such Parity Debt may provide for the establishment of separate funds and accounts; (v) the ag~egate amount of the principal of and interest on ail Outstanding Bonds and Subordinate Debt coming due and payable following the issuance of such Parity Debt shall not exceed the maximum amount of Tax Revenues permitted under the Plan Limit to be allocated and paid to the Agency following the issuance of such Parity Debt; (vi) an opinion of Bond Counsel stating (A) that the Supplemental Indenture relating to the Parit), Debt is valid and enforceable in accordance with its terms, (B) that such Supplemental Indenture creates'a valid pledge of that which it purports to pledge, and (C) that the total principal amount of Parity Debt to be issued or incurred and then Outstanding will not exceed any limit imposed by law; and (vii) The Supplemental Indenture providing for the issuance of such Parity Debt shall provide for the.dePosit into the Reserve Account of an amount required to cause the balance therein to equal the full amount of the Reserve Requirement or shall make provision for a Qualified Surety Bond in lieu of cash-funding the Reserve Account, or a combination of cask and a Qualified Surety Bond. Continuing Disclosure The Agency has covenanted, pursuant to a Continuing Disclosure Certificate dated as of July 1, 1998, for the benefit of holders and beneficial owners of the 1998 Bonds to provide certain financial information and operating data related to the Agency by not later than 270 days following the end of the Agency's Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Agency with each Nationally Recognized Municipal Securities Information Repository, and with the appropriate State information depositor3,, if any. The notices of material events will be filed by the Agency with the Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any). The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized below under the caption "APPENDIX EmForm of Continuing Disclosure Certificate." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12Co)(5). Tax Matters In the opinion ofMcFarlin & Anderson, Lake Forest, California, Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions and assuming, among other matters, compliance with certain covenants and a~eements, interest on the 1998 Bonds is excluded from Foss income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State Of California personal income taxes. In the opinion of Bond Counsel, interest on the 1998 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that interest on the 1998 Bonds is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the 1998 Bonds. See "TAX MATTEKS" herein. Municipal Bond Insurance Payment of principal of and interest on the 1998 Bonds as the same shall become due will become secured by a financial guaranty insurance policy to be issued simultaneously with the issuance of the 1998 Bonds by MBIA Insurance Corporation. See "THE MUNICIPAL BOND INSURANCE POLICY" herein. Professionals Involved in the Offering Public Financial Management, Newport Beach, California, is the Agency's financial advisor With respect to the 1998 Bonds. The proceedings of the Agency in connection with the issuance of the 1998 Bonds are subject to the approval as to their legality ofMcFarlin & Anderson, Lake Forest, California,. Bond Counsel to the Agency. The Underwriter for the 1998 Bonds is John Nuveen & Co. Inc. McFarlin & Anderson, Lake Forest, California, Will serve as Disclosure Counsel. U.S. Bank Trust National Association, Los Angeles, California, will act as the Trustee under the Indenture. Other Information This Official Statement speaks only as of its date, 'and the information contained herein is subject to change. PLAN OF REFUNDING Refunding of 1987 Bonds A portion of the proceeds from the sale of the 1998 Bonds, together with certain funds made available through the defeasance of the 1987 Bonds, will be deposited in mast with U.S. Bank. Trust National Association (the "Escrow Agent") pursuant to an escrow deposit and trust a~eement (the "1987 Bonds Escrow A~eement"). The funds deposited with the Escrow Agent will be applied to the purchase of direct obligations of the United States of America (the "1987 Bonds Escrow Securities"). The 1987 Bonds Escrow Securities, including interest thereon, together with other moneys held in trust by the Escrow Agent, will be sufficient to pay principal and interest coming due on the 1987 Bonds through November 1, 1998, and to redeem all of the then outstanding 1987 Bonds in full on November 1, 1998, together with a redemption premium of 1-112%. The foregoing deposit with the Escrow Agent will result in the defeasance of the 1987 Bonds, pursuant to the provisions of the financing documents under which they were issued, as of the date of issuance of the 1998 Bonds. See "VERIFICATION OF MATHEMATICAL ACCURACY" herein. The 1987 Bonds Escrow Securities and other moneys held by the Escrow Agent under the 1987 Bonds Escrow A~eement are pledged to the payment of the 1987 Bonds. Neither the principal of the 1987 Bonds Escrow Securities deposited with the Escrow Agent nor the interest thereon will be available for the payment of the 1998 Bonds. Refunding of 1991 Bonds A portion of the proceeds from the sale of the 1998 Bonds, together with certain funds made available through the defeasance of the 1991 Bonds, will be deposiied in trust with the Escrow Agent pursuant to an escrow deposit and trust agreement (the "1991 Bonds Escrow Agreement"). The funds deposited with the Escrow Agent will be applied to the purchase of direct obligations of the United States of America (the "1991 Bonds Escrow Securities"). The 1991 Bonds Escrow Securities, including interest thereon, together with other moneys held in trust by the Escrow Agent, will be sufficient to pa), principal and interest coming due on the 1991 Bonds through December 1,2001, and to redeem all of the then outstanding 1991 Bonds in full on December 1,2001, together with a redemption premium of 2%. The foregoing deposit with the Escrow Agent will result in the defeasance of the 1991 Bonds, pursuant to the provisions of the financing documents under which they were issued, as of' the date of issuance of the 1998 Bonds. See "VEKIFICATION OF MATHEMATICAL ACCURACY" herein. The 1991 Bonds Escrow Securities and other moneys held by the Escrow Agent under the 1991 Bonds Escrow Agreement are pledged to the payment of the 1991 Bonds. Neither the principal of the 1991 Bonds Escrow Securities deposited with the Escrow Agent nor the interest thereon Mil be available for the payment of the 1998 Bonds. ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth a summary of the estimated sources and uses of funds associated with the issuance and sale of the 1998 Bonds. .Table 1 Sources of Funds Par Amount of Bonds Plus: Accrued Interest Plus: Released 1987 Bond Moneys Plus: Released 1991 Bond Moneys Less: Original Issue Discount Total Sources Uses of Funds Deposit to 1987 Bonds Escrow Fund Deposit to 1991 Bonds Escrow Fund Deposit.to Costs of Issuance Fund Deposit to Interest Account o) Underwriter's Discount Total Uses Represents accrued interest from July 1, 1998. DF. BT SERVICE $CI:I~DULE The following table sets forth the scheduled debt service for the 1998 Bonds, assuming no prior redemption other than from mandatory sinking account payments. Table.2 .. Year Total Ending Debt (December 1 ) Principal Amount ' Service 1998 BONDS General Provisions The 1998 Bonds will be issued and sold in the aggregate principal amount of $ ' The 1998 Bonds will be delivered in re~dstered form, without coupons, in authorized denominations of $5;000 or any integral multiples thereof, interest on the 1998 Bonds is payable semiannually on June 1 and December 1 of each year, commencing December 1, 1998 (each, an "Interest Payment Date"), to the registered o~mer thereof as of the close of business on the fifteenth (15th) calendar day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) calendar day is a business day (each, a "Record Date"). Principal of the 1998 Bonds will be payable on December 1 in each of the'years and in the amounts shown on the cover page hereof. Interest on the 1998 Bonds is payable by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the owners of the 1998 Bonds at their respective addresses shown on the registration books kept by the Trustee as of the applicable Record Date; provided, however, that payment of interest to each registered owner of $1,000,000 or more aggregate principal amount of Bonds, as applicable, may be made by wire transfer to an account in the continental United States of America designated by such owner in a written request filed with the Trustee prior to such Record Date. Principal of the 1998 Bonds is payable in lawful money of the United States by check of the Trustee upon presentation and surrender thereof at the corporate trust office of the Trustee in [Los Angeles], California. 'Preliminary, subject to change. The 1998 Bonds will be dated as of July 1, 1998 and will bear interest (calculated on the basis ora 360-day year.comprised of twelve 30-day months) from the Interest Payment Date next preceding the date of authentication thereof, unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event such Bond will bear interest from such Interest Payment Date, or (ii) a Bond is authenticated on or before the first Record Date, in which event such Bond will bear interest from July 1, 1998, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable on each Interest Payment Date from the date to which interest has been paid in full. Interest on any of the 1998 Bonds which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the o,amership of such Bond is registered on the registration books of the Trustee at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee. Redemption OptionalRedemption ofj998 Bonds. The 1998 Bonds maturing on or before December 1, , are not subject to optional redemption prior to maturity. The 1998 Bonds maturing on or'after December 1, .... shall be subject to redemption, at the option of the Agency on any date on or after December 1, · , as a whole or in part, by such maturities as shall be determined by the Agency, and by lot within a maturity, from any available source of funds, at the following redemption prices (expressed as percentages of the principal amount of the 1998 Bonds to be redeemed) together with accrued interest thereon to the date fixed for redemption. Redemption Periods Price December 1, ~ through November 30, 102% December 1, ~ through November 30, ~ 101 December 1, and thereafter 200 The Agency shall be required to give the Trustee written notice of its intention to redeem 1998 Bonds with a designation of the maturities to be redeemed at least sixa'y (60), but not more than ninety (90) days, prior to the date fixed for such redemption, and shall transfer to the Trustee for deposit in the Debt Service Fund all mounts required for such redemption at least five (5) Business Days prior to the date fixed for such redemption. '. Sinking Account Redemption of 1998 Bonds. The 1998 Bonds maturing on December 1 ..... shall also be subject to mandatory sinking fund redemption in part by lot on December 1, ~, and on December 1 in each year thereafter to and including December 1, , from Sinking Account payments made by the Agency pursuant to the indenture at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased in whole or in part as described below, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of the 1998 Bonds have been optionally redeemed, the total amount of all future Sinking Account payments shall be reduced by the aggregate principal amount of 1998 Bonds so redeemed, to be allocated among the Sinking Account payments as are thereafter payable on a pro rata basis in integral multiples of $5,000 as determined by the Agency (notice of which determination shall be given by the Agency to the Trustee). Table Sinking Account · Redemption Date (December l ) Principal Amount To Be Redeemed or Purchased Sinking Account Redemption Date (December 1) Principal Amount To Be Redeemed or Purchased Maturity. In lieu of sinking fund redemption of 1998 Bonds, amounts on deposit as Sinking Account payments may also be used and withdrawn by the Trustee, at the written direction of the Agency, at any time for the purchase of 1998 Bonds Otherwise required to be redeemed on the following December 1 at public or private sale as and when and at such prices, but not ~eater than par (including brokerage and other charges and including accrued interest), as the Agency may in its discretion determine. The par amount of any of the 1998 Bonds so purchased by the Agency and surrendered to the Trustee for cancellation in any twelve-month period ending on December 1 in any year shall be credited towards and shall reduce the par amount of the 1998 Bonds otherwise required to be redeemed on the following December 1. Notice of Redemption. The Trustee on behalf and at the expense of the Agency shall mail (by first class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Boo'ks, and (ii) the Securities Depositories and to one or more Information Services designated in a Written Request of the Agency filed ,a,ith the Trustee; but such mailing shall not be a condition precedent to such redemption and neither failure to receive any such notice nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall state that such redemption is conditioned upon the timely delivery of the redemption price by the Agency to the Trustee for deposit in the Redemption Account, shall designate the CUSIP number of the Bonds to be redeemed, shall state the individual number of each Bond to be redeemed or Shall state that ail Bonds between two stated numbers Coofla inclusive) or all of the Bonds Outstanding are to be redeemed, and shall require that such Bonds be then surrendered at the Principal Corporate Trust Office for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity,' the Bonds being redeemed with the proceeds of such check or other transfer. Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same interest rate and maturity, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the Bonds so called for redemption shall have been duly deposited with the Trustee, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice. Manner of Redemption. -Whenever any Bonds or p6rtions thereof are to be selected for redemption by lot, the Trustee shall make such selection, in such manner as the Trustee shall deem appropriate, and shall notify .the Agency thereof. In the event of redemption by lot of Bonds, the Trustee shall assign to each Bond then Outstanding a distinctive number for each $5,0.00 of the principal amount of each such Bond. The Bonds to be redeemed shall be the Bonds to which were assigued numbers so selected, but only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. All Bonds redeemed or purchased pursuant to the Indenture shall be canceled. Book-EntrT-Only System Unless other~,ise noted, the following description of the procedures and record keeping with respect to beneficial ownership interests in the 1998 Bonds, Payment of principaI of and interest on the J998 Bonds to -participants or Beneficial Owners (as such terms are defined below9 of the J 998 Bonds, confirmation and transfer of beneficial ownership interests in the !998 Bonds and other Bond-related transactions by and bem,een DTC, .Participants and Beneficial Owners of the 1998 Bonds is based solely on information furnished by DTC to the Agency which the Agency believes to be reliable, but the Agency and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy and completeness thereof. )~reither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC .Participants, as the case may be. When the 1998 Bonds are issued, ownership interests will be available to purchasers only through a book-entry-only system maintained by DTC. Beneficial o~mership in the 1998 Bonds may be acquired or transferred only through book entries made on the records of DTC and its Participants. If the 1998 Bonds are taken out of the book-entry-only system and delivered to owners in physical form, as described below, the following discussion will not apply. The Deposltory Trust Company ("DTC"), New York, New York, will act as securities depository 'for the 1998 Bonds. The 1998 Bonds will be issued as fully registered securities registered in the name of Cede & Co. 0DTC's parmership nominee). One fully registered 1998 Bond will be issued for each maturity of the 1998 Bonds in the aggregate principal amount of each maturity of the 1998 Bonds, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds ·securities that its participants (the "Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need of physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). The Rules · applicable to DTC and its Participants .are on file with the Securities and Exchange Commission. Purchases of 1998 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 1998 Bonds on DTC's records. The ownership interest of each actual purchaser of each 1998 Bond (the "Beneficial Owner") is in mm to be'recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 1998 Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 1998 Bonds, except in the event that use of the book-entry system for the 1998 Bonds is discontinued. To facilitate subsequent transfers, all 1998 Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of 1998 Bonds with DTC and their registration in the name of Cede& Co. effect no change in beneficial ownership. DTC has no 'knowledge of the actual Beneficial Owners of the 1998 Bonds; DTC's records reflect only the identity oft he Direct Participants to whose accounts such 1998 Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial O~mers will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the 1998 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant-in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the 199.8 Bonds. Under its usual · procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the Record Date. The Omnibus Prox~y assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the 1998 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). The Agency, the Underwriter and the Trustee do not have any responsibility or Obligation to DTC Participants, to the persons for whom they act as nominees, to Beneficial Owners, or to any other person who is not shown on the registration boo'ks as being an 'owner of the 1998 Bonds, with respect to (i) the accuracy of any records maintained by DTC or any DTC Participants; (ii) the payment by DTC or any DTC Participant 10 of any amount in respect of the principal of, redemption price of or interest on the 1998 Bonds; (iii) the delive~, of any notice which is permirted or required to be given to registered owners under the Indenture: (ix,) the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the 1998 Bonds; (v) any consent given or other action taken by DTC as registered owner; or (vi) any other matter arising with respect to the 1998 Bonds or the Indenture. The Agency, the Underwriter and the Trustee cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal of or interest on the 1998 Bonds paid to DTC or its nominee, as the registered owner, or any notices to the Beneficial O~mers or that they will do so on a timely basis or will serve and act in a manner described in this Official Statement. The Agency and the Trustee are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner in respect to the 1998 Bonds or any error or delay relating thereto. Payment of the principal of and interest and premium, if any, on the 1998 Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on a payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to Beneficial Owners will be governed by standing insu-uctions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the Agency, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal, interest and any premium to DTC is the responsibility of the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its service as securities depositor), with respect to the 1998 Bonds at an5' time by giving reasonable notice to the Agency and the Trustee. Under such cir6umstances, in the event that a successor securities depository is not obtained, 1998 Bond certificates are required to be printed and delivered. The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, 1998 Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that. the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof. Discontinuance of DTC Services In the event that (a) DTC determines not to continue to act as securities depository for the 1998 Bonds, or (b) the Agency determines that DTC shall no longer act and delivers a written certificate to the Trustee to that effect, then the Agency will discontinue the Book-Entry System with DTC for the 1998 Bonds. If the Agency determines to replace DTC with another qualified securities depository, the Agency will prepare or direct the preparation of a new single separate, fully registered Bond for each maturity of the 1998 Bonds registered in the name of such successor or substitute securities depository as are not inconsistent with the terms of the Indenture. If the Agency fails to identify another qualified securities depository to replace the incumbent securities depository for the 1998 Bonds, then the 1998 Bonds shall no longer be restricted to being registered in the 1998 Bond registration books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depositor), or its nominee transferring or exchanging the 1998 Bonds shall designate. 11 In the event that the Book-Entry System is discontinued, the following provisions would also apply: (i) the 1998 BOnds will be made available in physical form, (ii) principal Of, and redemption premiums if any, on the 1998 Bonds will be payable upon surrender thereof at the principal corporate trust office of the Trustee in Los Angeles, California, (iii) interest on the 1998 Bonds will be .payable by check mailed by first-class mail or, upon the written request of any Owner of $1,000,000 or'more in aggregate principal amount of Bonds received by the Trustee on or prior to the 15th day of the calendar month immediately preceding the interest payment date (the "Record Date"), by wire transfer in immediately available funds to an account with a financial institution within the limits of the United States of America designated by such owner and (iv) the 1998 Bonds will be transferable and exchangeable as provided in the Indenture. SECURITY FOR THE BONDS Tax Revenues Tax Allocations. The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a project area. The taxable valuation ora project area last equalized prior to adoption of the redevelopment plan, or base roll, is established in the base year. Thereafter, except for any period during which the taxable valuation drops below the base year level, the taxing bodies receive the taxes produced by the levy of the then-current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (with the exception of taxes derived from increases in the tax rate imposed by taxing agencies to support new bonded indebtedness) are allocated to the redevelopment agency and may be pledged to the repayment of any indebtedness incurred in financing or refinancing redevelopment. Redevelopment agencies themselves have no authority to levy property taxes and must look exclusively to such allocation of taxes. Currently, such taxes are collected by the County of Orange (the "Count),") and paid to the affected entities. As provided in the Redevelopment Plan for the Project Area, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and section 16 of Article XVI of the State Constitution, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State, cities, counties, districts or other public corporations (collectively, the "Taxing Agencies"), for fiscal years beginning after the efl%ctive date of the Redevelopment Plan, will be divided as follows: (1) To taxing agencies: The portion equal to the amount of those taxes which would have been produced by the current tax rate, applied to the taxable valuation of such property in the redevelopment project area as last equalized prior to the establishment of the redevelopment project, or base roll, is paid into the funds of those respective taxing agencies as taxes by or for said taxing agencies; and · (2) To the Agency: The portion of said levied taxes each year in excess of the amount referred to in (1) above is allocated to, and when Collected, is paid into the Special Fund of the Agency; provided that portion of the taxes identified in (1) above which are attributable to a tax rate levied by a taxing agency to pay indebtedness approved by the voters of that taxing agency on or after January 1, 1989, shall be allocated to, and when collected shall be paid into, the fund of such taxing agency. Such excess is referred to as "Tax Increment Revenues." finding derived Housing Set-Aside Amounts. The Redevelopment Law requires generally that, unless a specified is made, redevelopment agencies set aside 20% of all Tax Increment Revenues (as described above) from redevelopment project areas into a low and moderate income housing fund (the "Low and 12 Moderate Income Housing Fund"), to be used for the purpose of increasing, improving and or preserving the supply of lob' and moderate income housing. Sections 33334.2 and 33334.6 of the Redevelopment Law dictate the low and moderate income housing set-aside requirement for the Project Area. Under the provisions of the Redevelopment Plan for the Project Area, the following limitations are imposed: (1) no loans, advances or indebtedness to finance in whole or in part projects and programs for the Project Area shall be established or incurred by the Agency beyond the period of[30 years from the date of adoption of the ordinance adopting the Redevelopment Plan (November 22, 2006)]; (2) the time limit of the effectiveness of the Redevelopment Plan shall not exceed [30 years from the effective date of the ordinance adopting the Redevelopment Plan (November 22, 2006)]; and (3) the time limit for the repayment of indebtedness shall not exceed [The average yearly tax increment which may be collected shall not exceed $3 million.] The RedeveloPment Plan established a bond debt limit of [520 million] for the Project Area. These limits can only be extended by an amendment by an amendment of the Redevelopment Plan. Pledge of Tax Revenues Pursuant to the Indenture, all right, title and interest of the Agency in Tax Revenues (as defined below) payable to or receivable by the Agency under the California Constitution, the Redevelopment Law and other applicable laws, are assi~maed and pledged to secure the payment of principal of and interest on the BondS. The Indenture defines the term Tax Revenues as all taxes annually allocated to the Agency with respect to the Project Area following the Closing Date pursuant to Article 6 of Chapter 6 (commencing with section 33670) of the Lab, and section 16 of Article XVI of the Constitution of the State of California and as provided in the Redevelopment Plan, including all payments, subventions and reimburSements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (a) all mounts of such taxes required to be paid by the Agency to other taxing agencies pursuant to pass-through agreements or similar tax-sharing agreements entered into pursuant to section 33401 of the Redevelopment Lab, existing on the Closing Date and (b) ail amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to section 33334.3 of the Redevelopment Law. Except as ma5' be otherwise provided in any Supplemental Indenture, the Agency is not obligated to transfer to the Trustee for deposit in the Special Fund in any Bond Year an amount of Tax Revenues which, together with other available amounts in the Special Fund, exceeds the amounts required in such Bond Year pursuant to the Indenture. In the event that, for any reason whatsoever, any amounts remain on deposit in the Special Fund on any September 2 after making all of the transfers theretofore required to be made to the Interest Account,. the Principal Account and the Reserve Account pursuant to the Indenture and pursuant to any Supplemental Indenture, the Trustee will withdraw such amounts from the Special Fund and transfer such amounts to the Agency to be used for any lawful purpose of the Agency. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate or collections or the value of property subject to ad valorem taxation, could reduce the amount of Tax Revenues that would otherwise be available to pay the principal of, and interest on, the Bonds. Likewise, broadened property tax exemptions could have a similar effect. 13 Limited Obligations THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF AND', ON THE BONDS ARE PAYABLE SOLELY FROM TAX REVENUES AND FROM AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS HELD BY THE TRUSTEE UNDER AND PURSUANT TO THE INDENTLrRE. THE BONDS ARE NOT A DEBT OF THE CITY, THE STATE OR Alx~r OF THE POLITICAL SUBDIVISIONS OF THE STATE, AND NEITHER THE CITY NOR THE STATE, NOR ANY OF ITS POLITICAL SUBDIVISIONS, IS LIABLE THEREFOR, NOR IN ANY EVENT WILL THE BONDS BE' PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE TAX REVENUES OF THE AGENCY AS SET FORTH IN THE INDENrI'URE. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANiNG OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTR_IC~ON. NEITHER THE MEMBERS OF THE AGENCY NOR AiNu/' PERSON RESPONSIBLE FOR THE EXECUTION OF THE BONDS IS LIABLE PERSONALLY FOR THE BONDS BY REASON OF THE ISSUANCE THEREOF. Reserve Account Pursuant to the Indenture, a reserve account (the"Reserve Account") has been established and is held by the Trustee in trust for the benefit of the Agency and the registered owners of the Bonds. The amount on deposit in the Reserve Account is required to be maintained at an amount equal to the Reserve Requirement. The term "Reserve Requirement" means, as of any calculation date, an amount, calculated by or on behalf of the Agency and certified to the Trustee in writing, equal to Maximum Annual Debt Service on all Outstanding Bonds and any Parity Debt. The Reserve Requirement as of the Closing Date is $ In the event that the amount on deposit in the Reserve Account at any time becomes less than the Reserve Requirement,. the Trustee will promptly notify the Agency of such deficiency. Promptly upon receipt of any such notice, the Agency will transfer to the Trustee an amount of available Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the pm'pose of making transfers to the Interest Account, the Principal Account and the Sinking Account established under the Indenture,. in such order of priority, on any date on which Bonds are payable in the event of any deficiency at any time in any of such accounts. So long as no Event of Default (as defined in the Indenture) shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement preceding each Interest Payment Date will be withdraam from the Reserve Account by the Trustee and-deposited in the Interest Account established under the Indenture on or before the Interest Payment Date. Reserve Account Surety Bond- MBIA will issue a surety bond (the "Reserve Account Surety Bond") in an amount equal to the Reserve Requirement which will be deposited into the Reserve Account in lieu of a cash deposit. The Reserve Account Surety Bond will provide that, upon notice from the Trustee to MBIA to the effect that insufficient mounts are on deposit in the Interest Account, the Principal Account and the Sinking Account to pay the principal of (at maturity or pursuant to mandatory redemption requirements) and interest on the 1998 Bonds, after application of any moneys on deposit in the ReServe Account,. MBIA will promptly deposit with the Trustee an amount sufficient to pay the principal of and interest on the 1998 Bonds or the available amount of the Reserve Account Surety Bond, whichever is less. Upon the later of: (i) three (3)'days after t4 receipt by MBIA of a Demand for Pa.wnent in the form attached to the Reserve Account Surety Bond, dui3, executed by the Trustee; or (ii) the payment date of the 1998 Bonds, as specified in the Demand'for Pa3quent presented by the Trustee to MBIA. MBIA will make a deposit of funds in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee (as specified in the Demand for Payment). The available amount of the Reserve Account Surely Bond is the initial face amount of the Reserve Account Surer3, Bond less the amount of any previous deposits by MBIA with the Trustee which have not been reimbursed by the Agency. The Agency will enter into a Financial Guaranty Agreement to be dated as of July 1, 1998, with MBIA (the "Financial Guaranty A~eement"). Pursuant to the Financial Guaranty A~eement, the Agency is required to reimburse MBIA, within one year of any deposit, the amount of such deposit made by MBIA with the Trustee under the Reserve Account Surety. Bond. Such reimbursement shall be made only after all required deposits to the Interest Account, the Principal Account and the Sinking Account have been made. Under the terms of the Financial Guaranty Agreement, the Trustee is required to reimburse. MBIA, with interest until the face amount of the Reserve Account Surer3, Bond is reinstated, before any amounts are paid to the Agency. No optional redemption of 1998 Bonds may be made until MBIA's Reserve Account Surety Bond is reinstated. The Reserve Account Surely'Bond will be held by the Trustee in the Reserve Account and is provided as an alternative to the deposit of funds equal to the Reserve Requirement for the 1998 Bonds. The Reserve Account Surely Bond will be issued in the face amount equal to $ and the premium therefor will be fully paid by at the time of delivery of the 1998 Bonds. See "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF T¥1E INDENTURE" hereto. Issuance of Parity Debt In addition to the Bonds, the Agency may, by SupPlemental Indenture, issue or incur Parity Debt payable from Tax Revenues on a parity, with the Bonds to finance the Project in such principal amount as shall be determined by the Agency. The Agency may issue and deliver any such other Parity Debt subject to the following specific conditions precedent to the issuance and deliver3, of such Parity Debt: (i) The Agency ihall be in compliance with all covenants set forth in this Indenture and all Supplemental Indentures. (ii) The Tax Reveriues for the then current Bond Year, based on the most recent assessed valuation of property in the Project Area as evidenced in written documentation from an appropriate official of the County., plus, at the option of the Agency, the Additional Allowance, shall be at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all Bonds and Parity Debt which will be Outstanding following the issuance of such Parity Debt. (iii) The.Supplemental Indenture providing for the issuance of such Parity Debt shall provide (A) Interest on said Parity Debt shall be payable on June 1 and December 1 in each year of the term of such Parity Debt except the first twelve month period, during which interest may be payable on any June 1 or December 1; and 15 (B) The principal of such Parity Debt shall be pa.vable on December 1 in any year in which principal is payable. (iv) The Supplemental Indenture providing for the issuance of such Parity Debt may provide for the establishment of separate funds and accounts; (v) The aggregate amount of the principal of and interest on all Outstanding Bonds and Subordinate Debt coming due and payable following the issuance of such Parity Debt shall not exceed the maximum amount of Tax Revenues'permitted under the Plan Limit to be allocated and paid to the Agency following the issuance of such Parity Debt; and (vi) An opinion of Bond Counsel stating (i) that the Supplemental Indenture relating to the Parity Debt is valid and enforceable in accordance with its terms (ii) that such Supplemental Indenture creates a valid pledge of that which it purports to pledge, and (iii) that the total principal amount of Parity Debt to be issued or incurred and then Outstanding will not exceed any limit imposed by law. (vii) The Supplemental Indenture providing for the issuance of such Parity Debt shall provide for the deposit into the Reserve Account of an amount required to cause the balance therein to equal the full amount of the Reserve Requirement or shall make provision for a Qualified Surety Bond in lieu of cash-funding the Reserve Account, or a combination of cash and a Qualified Surety Bond. (viii) The Agency shall deliver to the Trustee a Written Certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth in paragraphs (i), (ii), (iii), (iv), (v), (vi) and (vii) above have been satisfied. (b) For purposes of calculating Tax Revenues: (i) such Tax Revenues shall be calculated on the basis of a tax rate of $1.00 per $100 of assessed value; and (ii) the amount of such Tax Revenues shall be the amount receiVed in the most recent Fiscal Year (which may be the current Fiscal Year) for which records are available from Orange County establishing the assessed valuations of property in the Project Area;provided, however, that if at the time such calculation is made, the Agency is party to a tax-sharing agreement or arrangement with respect to Tax Revenues which is not subordinate to the Annual Debt Service and the effect of such agreement or arrangement would be to reduce the amount of Tax Revenues payable io the Agency in any of the succeeding five (5) Fiscal Years if gross tax increment revenues were to remain constant, the amount of Tax Revenues shall be reduced by the greatest projected reduction in such five (5) year period. (c) In the event that the Agency has actual knowledge that any appeals are then pending which seek a reduction in the assessed valuation of property within the Project Area, then for the purposes of calculating Tax Revenues, such Tax Revenues shall'be reduced by one-half of the amount of the requested reductions as set forth in such appeals. (d) The Additional RevenUes may be taken into account in the calculation of Tax Revenues, provided that the amount of Tax Revenues for the then current Fiscal Year (based on assessed valuations set forth in the written records of the County) is at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all Bond~ and Parity Debt which will be Outstanding following the issuance of such Parity Debt. 16 Not~'ithstanding the foregoing, the Agency may issue or incur Subordinate Debt, provided such Subordinate Debt will no! cause the Agency to exceed an)' applicable Plan Limitations (as defined in the Indenture). Funds and Accounts; Flow of Funds Special Fund: Deposi! of Tax Revenue. There is hereby established a special fund to be kno~m as the "Special Fund", which shall be held by the Agency. The Agency shall transfer all of the Tax Revenues received in any Bond Year to the Special Fund promptly upon receipt thereofby the Agency, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account in such Bond Year. All Tax Revenues receiVed by the Agency during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year, including delinquent amounts if an3', shall be released from the pledge and lien hereunder for the security of the Bonds and may be applied by the Agency for any lawful purposes of the Agency, including but not limited to the payment of Subordinate Debt, or the payment of any amounts due and owing to the United States of America. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the Bonds and the payment in full of all other amounts payable hereunder and under any Supplemental Indentures, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in this Indenture and in any Supplemental Indenture. Der)osit of Amounts bv Trustee. There is.hereby established a trust fund to be kno,am as the Debt. Sen'ice Fund, which shall be held by the Trustee hereunder in trust. Moneys in the Special Fund shall be transferred by the Agency to the Trustee in the following amounts, at the following times, and deposited by the Trustee in the following respective special accounts, which are hereby established in the Debt Service Fund, and inthe following order of priority: (a) interest Account. On or before the fifth Business Day preceding each Interest Payment Date, the Agency shall withdraw from the Special Fund and transfer to the Trustee, for deposit in the Interest Account an amount which when added to the amount contained in the Interest Account on that date, will be equal to the ag~egate amount of the interest becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to this Indenture). (b) £rincipal Account. On or before the fifth Business Day preceding December 1 in each year beginning December 1, 1998, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the principal becoming due and payable on the Outstanding Serial Bonds and maturing Term Bonds on the next December 1. No such transfer and deposit need be made to the Principal Account if the amount contained therein is at leaSt equal to the principal to become due on the next December 1 on all of the Outstanding Serial Bonds and maturing Term Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds and maturing Term Bonds as it shall become due and payable. 17 (c) Sinking Account. No later than the fifth Business Day preceding each December 1 on which any Outstanding Term Bonds are subject to mandato~, redemption, or otherwise for purchases of Term Bonds, the Agency shall withdraw, from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required to be redeemed on such December 1. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon redemption or purchase. (d) Reserve Account. (i) There shall be. deposited and maintained in the Reserve Account at all times, with respect to the Bonds, the Reserve Account Surety Bond in an amount equal to the Reserve Requirement. The Reserve Account Surety Bond shall be held as a reserve for the payment when due of the principal of and interest on the Bonds. (ii) As long as the Reserve Account Surety Bond shall be in full force and effect, the Agen%, and the Trustee a~ee to comply with the following provisions: (A) In the event and to the extent that moneys on deposit in the Interest Account and 'the Principal Account, plus all amounts on deposit in and credited to the Reserve Account in excess of the amount of the Reserve Account Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the later of: (1) three (3) days after receipt by the Municipal Bond Insurer of a demand for payment in the form attached to the Reserve Account Surety Bond as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment has not been made to the Trustee; or (2) the Interest ' Payment Date specified in the Demand for Payment presented by the Trustee to the Municipal Bond Insurer, the Municipal Bond Insurer will make a deposit of funds in an account with the Trustee sufficient for the payment to the Trustee of amounts which are then due to the Trustee hereunder (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Reserve Account Surety Bond. (B) The.Trustee shall, after submitting to the Municipal Bond Insurer the Demand for Payment as provided in (A) above, make available to the Municipal Bond Insurer, upon its request, copies of ali records relating to the funds and accounts maintained under this Indenture. (C) The Trustee shall, upon receipt of moneys received from the draw on the Reserve Account Surety Bond, as specified in the Demand for Payment, credit the Reserve Account to the extent of moneys received pursuant to such Demand. (D) Upon receipt of any delinquent payment with respect to which moneys have been credited to the Reserve Account advanced from a draw on the Reserve Account Surety Bond, such payment shall be paid to the Municipal Bond Insurer as a reimbursement for such drab' to the ex'tent required to reimburse the Municipal Bond Insurer in full, and then remaining amounts shall be transferred to the Interest Account and the Principal Account. (iii) If, at any time, the Reserve Account is funded with cash only or cash and a Qualified Surety Bond, and the Trustee has actual 'knowledge that the amount on deposit in the Reserve Account is less than the Reserve Requirement, the Trustee shall promptly noti~ the Agency of such 18 fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. If there shall then not be sufficient Tax Revenues to transfer an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account, the Agency shall-be obligated to continue making transfers as Tax'Revenues become available in the Special Fund until there is an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. No such transfer and deposit need be made to the Rese,we Account so long as there shall be on deposit therein a sum at least equal to the Reserve Requirement. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers to 'the Interest Account, the Prin'cipal Account and the Sinking Account in such order of priority, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then Outstanding, except that so long as the Agency is not in default hereunder, an), amount in the Reserve Account in excess of the Reserve Requirement (as determined by the Trustee based upon a valuation of investments held in such account performed in accordance with the Inden/ure) shall be withdra~q4 from the Reserve Account semiannually on or before the Business Day preceding each June 1 and December 1 by the Trustee and deposited in the Interest Account. Ifa valuation discloses that amounts in the Reserve Account are less than the .Reserve Requirement, which valuation must occur not less than semi-annually, the Agency shall immediately cause the cure thereof from an), available moneys. All amounts in the Reserve Account on the Business Day preceding the final Interest Payment Date shall be withdrawn from the Reserve Account and shall be transferred either (i) to the Interest Account and the Principal Account, in such order, to the extent required to make the deposits then required to be made or, (ii) if the Agency shall have caused to be transferred to the Trustee an amount sufficient to make the deposits required by the Indenture, then, at the Written Request of the Agency, to the Agency for deposit by the Agency into the Debt Service Fund. The Trustee may conclusively presume that there has been no change in the Reserve Requirement unless notified in writing by the Agency. (e) Redemption Account. On or before the fifth Business Day preceding any date on which Bonds are to be redeemed, the Trustee shall withdraw from the Debt Service Fund and deposit in the Redemr)tion Account an amount required to pay the principal of and premium, if any, on the Bonds to be redeemed on such date, taking into account any funds then on deposit in the Redemption Account. The Trustee shall also deposit in the Redemption Account any other amounts received by it from the Agency designated by the Agency in writing to be deposited in the Redemption Account. Ail moneys in the Redemption Account shall be used and withdra~m by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds to be redeemed on the respective dates set for such redemption. ~ IVII~]CIP~ BOND INSURANCE POLICY The information relating to MBIA Insurance Corporation ("M2~IA ") contained below and in Appendix F have been famished by 3t8IA. No 'representation is made herein by the Agency or the Unden4,riter as to the accuracy or the adequacy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof. PaYment Pursuant to Municipal Bond Insurance Policy The Municipal Bond InSurance Policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Agency to the Trustee or its successor of an amount equal to (i)the principal of(either at the stated maturity or by an advancement of maturity pursuant 19 to a mandatory sinking fund prepayment) and interest on the 1998 Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to'a mandatory sinking fund prepayment, the payments guaranteed by the Municipal Bond Insurance Policy shall be made in such mounts and at such times as such payments of principal would have.been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from an5' Owner of an 1998 Bond pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference"). The Municipal Bond Insurance Policy does not insure against loss of any redemption premium which may at any time be payable with respect to any ] 998 Bond. The Municipal Bond Insurance Poli%, does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatow sinking fund redemptions); (ii) any payments to be made on an accelerated basis; or (iii) payments of the purchase price of 1998 Bonds upon tender by an owner thereof, or (iv) any Preference relating to (i) 'through (iii) above. The Municipal Bond Insurance Policy also does not insure against nonpayment of principal of or interest on the 1998 Bonds resulting from the insolvency, negligence or any other act or omission of the Trustee or any other paying agent for the 1998 Bonds. Upon receipt oftelephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of n~-itten notice by registered or certified mail, by MBIA from the Trustee or any O~a'ner of an 1998 Bond the payment of an insured amount for which is then due, that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such 1998 Bonds or presentment of such other proof of ownership of the 1998 Bonds, together with any appropriate instruments of assignment to evidence the assi~munent of the insured amounts due on the 1998 Bonds as are paid by MBIA, and appropriate instruments to effect the appointment of MBIA as agent for such ov,'ners of the 1998 Bonds in any legal proceeding related to payment of insured amounts on the 1998 Bonds, such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A., shall disburse to such owners or the Trustee payment of the insured amounts due on such 1998 Bonds, less any amount held by the Trustee for the payment of such insured amounts and legally available therefor. MBL~. Insurance Corporation MBIA is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA has two European branches, one in the Republic of France and the other in the Kingdom of Spain. New York has laws prescribing minimum capital requirements, limiting classes and concentrations of investments and requiring the approval of policy rates and forms. State laws also regulate the amount of both the ag~egate and individual risks that may be insured, the payment of dividends by MBIA, changes in control and transactions among affiliates. Additionally, MBIA is required to maintain contingency reserves on its liabilities in certain amounts ~and for certain periods of time. 20 Effective February 17, 1998, the Company acquired all of the outstanding stock of Capital Markets Assurance Corporation ("CMAC"), through a merger with its parent CapMac Holdings, Inc. Pursuant to a reinsurance agreement, CMAC has ceded all of its net insured risks (including any amounts due but unpaid from third party reinsurers), as well as its unearned premiums and contingency reserves, to MBIA. The Company is not obligated to pay the debts of or claims against CMAC. As of December 31, 1996, MBIA had admitted assets of $4.4 billion (audited), total liabilities of $3.0 billion (audited), and total capital and surplus of $1.4 billion (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulator), authorities. As of December 31, 1997, MBIA had admitted assets of $5.3 billion (audited), total liabilities of $3.5 billion (audited), and total capital and surplus of $1.8 billion (audited) determined in accOrdance with statutory, accounting practices prescribed or permitted by insurance regulatory authorities. Furthermore, copies of MBIA's year end financial statements prepared in accordance with statutory accounting practices are available without charge from MBIA. A copy of the Annual Report on Form 10-K of the Company is'available from MBIA orthe Securities and Exchange Commission. The address of MBIA is 113 King Street, Armonk, NY 10504. The telephone number of MBIA is (914) 273-4545. Moody's Investors Service, Inc. ("Moody's") rates the claims paying ability of MBIA "Aaa". Standard & Poor's Ratings Services, a division of The McGraw-Hill.Companies, Inc. ("Standard & Poor's"), rates the claims paying ability of MBIA "AAA". Fitch IBCA, Inc. (formerly 'knov~m as Fitch Investors Service, L.P.) ("Fitch"), rates the claims paying ability of MBIA "AAA." Each rating of MBIA should be evaluated independently. The ratings reflect the rest)ective rating agency's current assessment of the creditworthiness of'MB~ and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the 1998 Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the ratings may have an adverse effect on the market price of the 1998 Bonds. lX(BIA does not guaranty the market price of the 1998 Bonds nor does it guaranty that the ratings on the 1998 Bonds will not be revised or withdrawn. In the event MBIA were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.3 (commencing with section 1063)of Chapter 1 of Part 2 of Division 1 of the California Insurance Code. RISK FACTORS The following factors, along with all other information in this Official Statement, should be considered by potential investors in evaluating the 1.998 Bonds. 21 Bonds Are Limited Obligations and Not General Obligations The 1998 Bonds and the interest thereon are limited obligations of the Agency and do not constitute a general obligation of the Agency. See "SECUR/TY FOR THE BONDS" herein. No Ovxmer &the 1998 Bonds may compel exercise &the taxing power of the State of California or any &its political subdivisions or agencies to pay the principal of or premium, if any, or interest due on the 1998 Bonds. Tax Revenues The Tax Revenues allocated to the Agency, which constitute the primary security for the 1998 Bonds, are determined by the incremental assessed value of taxable property in the Project Area,. the current rate or rates at which property in the Project Area is taxed and the percentage of taxes collected in the Project Area. Several .types of events which are beyond the control of the Agency could occur and cause a reduction in available Tax Revenues. A reduction of taxable assessed values of property in the Project Area caused by economic or other factors beyond the Agency's control could occur (such as successful appeals by the property owner for a reduction in a property's assessed value, a reduction of the general inflationary rate, a reduction in transfers of property, construction activity or other events that permit reassessment of property at higher values, or the destruction of property caused by natural or other disasters), and have occurred in recent years thereby causing a reduction in Tax Increment Revenues and correspondingly reducing the amount of Tax Revenues. Such a reduction in Tax Revenues could have an adverse impact on the Agency's ability to make timely payment of principal of and interest on the Bonds, as' applicable. As described in greater detail under "LIM/TATIONS ON TAX REVENUES--Property. Tax Rate Limitations--Article XIIIA", Article XIIIA of the California Constitution provides that the full cash value · base of real property used in determining taxable value may be adjusted from year to year to reflect the inflation rate, not to exceed a two percent increase for any given year; or may be reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the event of declining property value caused by damage, destruction or other factors (as described above). Such measure is computed on a calendar year basis. Any resulting reduction in the full cash value over the term of the Bonds could reduce Tax Revenues securing the Bonds. See "LIMITATIONS ON TAX REVENUES--Property Tax Rate LimitationsmArticle XIIIA." · . Historically, some property owners wqthin the Project Area have appealed for reductions in the assessed value of their properties. Reductions in the assessed value of the secured property in the Project Area in recent years as shown in the summaries of historical assessed valuation set forth herein can be attributed in part to such appeals and reductions in property values generally. Tax Revenues may be reduced from current levels as a result of such appeals and reductions in property values generally. See for a list &appeals filed by property owners in the Project Area during fiscal year 1997-98. In addition to the other existing limitatioris on Tax Revenues described below under"LIMITATIONS ON TAX REVENUES," the California electorate or Legislature could adopt a constitutional or legislative property tax decrease with the effect of reducing Tax Revenues payable to the Agency. There is no assurance that the California electorate or Legislature will not at some furore time approve additional limitations that could reduce the Tax Revenues and adversely affect the security of the Bonds. The Agency has no power to levy and collect property taxes. Any substantial delinquencies in the payment of property taxes by property owners in the Project Area could have an adverse effect on the Agency's ability to make timely debt service payments on the Bonds. Tax Revenues allocated to the Agency are distributed throughout the year in installments, with the first installment distributed in November and the 22 last installment distributed in August oft he succeeding fiscal year. The payments are adjusted to reflect actual collections. See "LIMITATIONS ON TAX REVENUES--Prope~, Tax Collection Procedures" herein. Estimated Tax Revenues As described in greater detail below, Article X~IIA of the California Constitution provides that the full cash value basis of real property used in determining taxable value ma3' be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or ma3, be reduced to reflect a reduction in the consumer price index or comparable.local data. Such measure is computed on a calendar year basis. For fiscal year 1997-98, the inflationary factor as determined under Article XIIIA has resulted in an increase in assessed valuation of 2%. For fiscal year 1996-97, the inflationary factor was %. For fiscal year 1995-96, the inflationary factor was %. The Agency has projected Tax Revenues to be received by it based, among other things, upon a 2% annual inflationa~ increases in real property. The Agency believes these, assumPtions to be reasonable, but to the extent the assessed valuation, the tax rates or the percentage of taxes collected are less than the Agency's assumptions, the Tax Revenues available to pay debt sen, ice on the Bonds would be reduced. See "COVERAGE ANALYSIS"and "LIMITATIONS ON TAX REVENUES - Property Tax Rate Limitations - Article XIIIA" herein. No representations are being made as to the future Tax Revenues, or as to whethei-the estimated Tax Revenues as shown under the heading "coXrERAGE ANALYSIS" will be realized. Educational Revenue Augmentation Fund; State Budget In connection with its approval of a budget for the 1993-94 fiscal year, the State Legislature enacted Senate Bill 1135 which, among other things, reallocated approximately $65 million from redevelopment agencies to school districts by shifting approximately 5.675% of each redevelopment agency's tax increment, net of amounts due to other tax agencies, to school districts' for the current and next fiscal years. The amount required to be paid .by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to indMdual project areas. The amount of tax revenues which the Agency was required to pay under the legislation with respect to the Project Area amounted to $ for fiscal years 1993-94 and 1994-95. Under similar legislation enacted for the 1992-93 fiscal year, the Agency was required to pay the amount ors from its total tax increment funds. The State has not subsequently diverted any additional property, tax increment from redevelopment agencies to other governmental agencies in the State. The Agency'cannot predict whether future State Budget legislation will further divert moneys from redevelopment agencies. Seismic Considerations The areas in and surrounding the Project Area, like those in much of California, may be sUbject to unpredictable seismic activity. Although the Agency believes that no active or inactive fault lines pass through the Project Area, if there were to be an occurrence of severe seismic activity in the Project Area, there could be a negative impact on assessed values of property in the Project Area_ This would lead to a reduction in Tax Revenues. Such reduction of Tax Revenues could have an adVerse effect on the Agency's ability to make timely pa3ments of principal of and interest on the 1998 Bonds. Of the five major 'known faults in the region, the San Andreas Fault is considered most likely to produce a large seismic event within the nex"t 100 y.,ears. The San Andreas Fault lies approximately ~ miles 23 northeast of the Ci~,. Geologic evidence suggests thata major earthquake (7.5 to 8.5 Richter magnitude) has a 50% chance of occurring within the next 30 years. An earthquake of this magnitude is comparable to the 1906 San Francisco earthquake and has the potential for causing considerable damage in the Southern California region. Other faults in the vicinity include the Newport-Inglewood Fault, which lies approximately, miles southwest of the City, with an estimated risk of 15% to 50% probability of producing a moderate (5.5 to 6.0 Richter magnitude) within the next 100 years, and the Whittier-Elsinore Fault, which lies approximately ~ miles to the of the City. The Whittier-ElSinore Fault historically has produced relatively minor earthquakes (less than 4.5 Richter magnitude). The San Jacinto Fault (almost 50 miles to the east) is not expected to produce seismic events which will impact the City significantly. The CiD, is generally located with Earthquake Zone No. [4] consequently, elements of building- design require that buildings be built to withstand a preestablished amount of motion required for this zone. Zone No. [4] requirements of City facilities are among the most rigorous in the United States. All of the City's structures have been designed and built according to Uniform Building Code earthquake specifications. The City did not experience any significant damage either to City facilities or to private property as a result of the January 17, 1994 Northridge earthquake, or subsequent aftershocks. Hazardous Substances An environmental condition that may result in the reduction in the assessed value of parcels would be the discove~ of a hazardous substance that would limit the beneficial use of a property within the Project Area. In general, the owners and operators ora property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner may be required to remedy a hazardous substance condition of property whether or not the owner or operator has an)~ing to do with creating or handling the hazardous substance. The effect, therefore, Should any of the property with the Project Area be affected by a hazardous substance would be to reduce the marketability and value of the property by the costs of remedying the condition. Loss of Tax Exemption In order to maintain the exclusion from gross income for federal income tax purposes of the interest onthe 1998 Bonds, the Agency has covenanted in the Indenture to comply with each applicable requirement of. Section 103 and Sections 141 through 150 of the Internal Revenue Code of 1986, as amended. The interest on the 199'8 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the 1998 Bonds, as a result of acts or omissions of the Agency in violation of covenants in the Indenture. Should such an event of taxability occur, the 1998 Bonds are not subject to acceleration, redemption or any increase in interest rates and will remain Outstanding until maturity or until redeemed under on of the redemption provisions contained in the Indenture. See "TAX MATTERS" herein. Assumptions and Projections Any reduction in Tax Revenues, whether for an3' of the foregoing reasons or any other reason, could have an adverse effect on the Agency's ability to make timely payments of principal of, premium, if any, and interest on the 1998 Bonds, which are secured by such Tax Revenues. To estimate the total Tax Revenues available to pay debt service on the 1998 Bonds, the Agency has made certain assumptions with regard to the assessed valuation in the Project Area, future tax rates, the percentage of taxes collected, the amount of 24 funds available for investment and the interest rate at whichthose funds will be invested. See "COVERAGE ANALYSIS" for a discussion of the assumptions underlying the projections set forth herein with respect to Tax Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the assessed valuations, the tax rates, the percentage of taxes collected or the interest rate at which funds are invested are less than the Agency's assumptions, the total Tax Revenues available will, in all likelihood, be less than those projected herein. See "COVERAGE ANALYSIS - Debt Service Coverage" herein. . , LIMITATIONS ON TAX REVENUES Proper't3' Tax Collection Procedures In California,. propert3.' which is subject to ad valorem taxes is classified as "secured" or"unsecured." The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured propert)~,, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured personal property taxes: (i) a civil action against thetaxpayer; (ii) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a jud~mnent lien on certain property of the taxpayer; (iii) filing a certificate of delinquency for record in the county, recorder's office, in order to obtain a lien on certain property of the taxpayer; and (iv) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent. Commencing in 1952, a ten percent (10%) penalty was added to delinquent taxes which have been levied with respect to property., on the secured roll. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of one and one-half percent (1.5%) per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the count), tax collector. A ten percent (10%) penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and an additional penalty of one and one-half percent (1.5%) per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The valuation of property is determined as of January 1 each year and installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31, and such taxes are levied at the prior year's secured tax rate. 25 S upplem en tal Assessm en ts 'Legislation enacted in 1983 (Statutes of 1983, Chapter 498) provides for the supplemental assessment and taxation of property upon the occurrence ora change of ownership or complet/on of new construction. Previously, statutes enabled the assessment of such changes only as of the next November tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments for up to a 3'ear. Collection of taxes based on supplemental assessments will occur throughout the year. Taxes due ~.'ill be prorated according to the amount of time rema/nin~ in the . , · aated November l through May 3 l, which wilI be ,-o~-..~-.'-~ ..ta~ 3 car, with the exception of tax fisca! year and the £ull twelve months of'thc next fiscal year. remainder o£the current .... ~.u~atea on me t~asis of'the bills For supplemental tax bills mailed during the months o£ March through September, the first installment o£taxes becomes delinquent on December 1 o£the same year, the second installment becomes delinquent after the last day of'the month following the month in which the bill was mailed and the second installment becomes delinquent four months later. Tax Collection Fees SB 2557 (Chapter 466, Statutes o£ 1990) authorizes county auditors to determine property tax administration costs proportionately attributable to loca/jurisdictions and to submit invoices to the jurisdictions/'or such costs. An estimated amount o£such costs have been excluded in determining the Tax Revenues which are pledged to repay the 1998 Bonds. Property Tax Rate Limitations _ Art/cie XIIL4~ On ,tune 6, 1978, the State's voters approved Proposition 13, a statewide initiative relating to the .taxation of real property, which added Art/cie XIIIA to the State Constitution. Among other things, Art/cie XIIIA: (a) limited ad valorem property taxes on all real property to one percent (I %) o£the full cash value o£the property; Co) exempted ex/sting voter-approved bonded indebtedness from the one percent limitation; (c) deemed "full cash value" as the county assessor's appraised value o£real property as O£April 1, 1975 or thereafter, the appraised value o£reaI property upon change in ownership or new construction, adjusted by changes in the Consumer Price Index at a rate not to exceed two percent (2%) per year;, (d) permitted establishrnent o£ a new "full cash value" when there is new construction or a change in ownership; (e) Permitted the reassessment, up to the Apr//1, 1975 value, o£property which was not current on the 1975-76 assessment roi/; (f) required count/es to collect the one percent property tax and to "apportion according to law to the districts within the counties"; (g) prohibited new ad valorem taxes on real property, or sales taxes, or transaction taxes on the sale of rea/property; (h) permitted the impos/t/on of specia/taxes by local agencies, other than those prohibited, by a two-thirds vote o£the "qualified electors" of such agencies; and (i) required a two-thirds vote of all members o£both houses o£the Legislature for any changes in State taxes which would result in increased revenues. Art/cle XIIIA has subsequently been amended to permit reduction o£the "full cash value" base in the event of declining property values caused by damage, destruction or other factors and to provide that there would be no increase in the 'YuI1 cash value" base in the event °freconstruetion °£propertydamaged or destroyed in a .disaster. Moreover, subsequent amendments have limited reasSessment under certain special categories o£change in ownership or new construction events. 26 ·' Ct ~3.6, the United States Supreme Court _ .~ · Nordhnger,,.Hahn,!1992)!1.27.._--~-~:~,, 1ProtectionClauseoftheUmted On June 15, 199.-, m .... . , ,,T,iAdoesnotv~omreu,;~.~a held that the tax scheme imposed by ^mine 2~t a legitimate interest in l~cal States Constitution- The Court stated, among other things, that (i) the State has neighborhood preservation, continuity and stability, and consequently ma)' decide to sln-ucture its tax system to discourage rapid turnover in ownership of homes and businesses, and (ii) the State may legitimately conclude that a new owner at the time of acquiring his or her properb' does not have the same reliance interest warranting protection against higher taxes as does an existing owner. · ' A~ency cannot predict whether future ,,,.~ in,,er ruhng, however, the ._ -- ~- .... ~ essful, when the ultimate · Notwithstanding the N~,,~.I o _~ ..... ~r,, x assessment wm challenges to the State's present system m l~,~v~, ~J ta decision holding such property tax resolution of any such challenge will occur, or the ultimate effect any system unconstitutional, either in whole or in part, would have on the Agency's Tax Increment Revenues. Legislation Implementing Article XIIIA Leeislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to directly lex~ any ad valorem property tax. The one percent propen).' tax is automatically levied annually by the Count)' of Orange and distributed according m a specific formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. Any special tax to pay voter-approved indebtedness is levied in addition to the one percent property tax. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment (where authorized) are allocated among the various jurisdictions in the "taxing area" based upon their respective "sims." Any such allocation made to a local agency continues as part of its allocation in future years. Since the 1981-82 fiscal year, assessors in the State no l°nger record property values on tax rolls at the assessed value of twenty-five percent (25%) of market value. All taxable property is now shown on the tax rolls at full market value as of the date of the last transfer (adjusted by the permitted 2% increase per year). Consequently, the basic tax rate is expressed as $1 per $100 of taxable value. A ppropriation Limitation - Article XIIIB On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann Initiative, : which added Article XIIIB to the State Constitution. On June 5, 1990' the voters approved Proposition 111, .' · as amended, State and local governmental agencies m the State, as 1 that limits the ability to spend certain moneys which are called ,,appropriations subject to limitation" in excess of the appropriations limit imposed. ,,Appropriations subje, ct to limitation" are authorizations to spend "proceeds of taxes," which consist of tax revenues, certain state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed "the cost reasonably borne by such entity in providing the regulation, product or serx, ice." No limit imposed on appropriations of funds which are not "proceeds of taxes," such as appropriations for debt 79 or subsequently authorized by the service on lndeb ..... :.~n e Biywltn manaa[;~ u, e voters, appropriations reqm,~- .... om~. . charges or fees and certain other non-tax funds. Generally, annual adjustments reflect changes in the State per capita personal income (or, at the entity's option, changes in aSsessed value caused by local nonresidential new construction), population and services provided by these State and local governmental entities. Among other provisions of Article X3IIB~ if the revenues of such entities in any fiscal year and the following fiscal year exceed the amounts permitted to be spent in such years, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. Statutes of 1980, Chapter 13.2 (Senate Bill 1972), enacted by the State Legislature and effective as an urgency measure on September 30, 1980, added section 33678 to the Redevelopment Law. Section 33678 provides that the allocation and payment of taxes to the Agency for the purpose of paying the principal of or interest on loans, advances or indebtedness incurred for redevelopment activities, as defined therein, shall not be deemed the receipt by the Agency of proceeds of taxes levied by or on behalf of the Agency Within the meaning or for the purposes of Article XIIIB of the State Constitution,'nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purposes of Article XIIIB or any statutory provision enacted in implementation ofAd-ticle XIIIB. The Califomia Court of Appeals, Fourth Appellate District, in Bro~w v. Community Redevelopment Agency of the City of Santa Aha, 168 Cal.App.3d 101 (1985), and the California Court of Appeals, Second Appellate District, in Bell Community Redevelopment Agency v. Woolsey, 169 Cal.App.3d 24 (1985), have determined that the appropriation of tax increment revenues by a redevelopment agency is not subject to the limitations of Article XIIIB. 'The California Supreme Court denied a petition for hearing in the Brown case, On the basis of these decisions, the Agency has not adopted an appropriations limit with respect to property taxes. Unitary Taxation of Utilit3, ProperB, AB 2890 (Statues of 1986, Chapter 1457) provides that, commencing with the fiscal year 1988-89. assessed value derived from State-assessed unitary property (consisting mostly of°perationat property o~med by utili .ty companies and herein defined as "Unitary. Property") is to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility as it received in the previous fiscal year unless the applicable county'-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro-rata basis; and (ii) if values to be allocated are greater than in the previous fiscal 3'ear, each tax rate area will receive a pro-rata share of the increase from each assessed utility aeeordine to a specified formula. Additionally, the lien date on State-assessed property has been changed to Decem~ber 1. Railroad property will continue to be assessed and revenues allocated to all tax rate areas where the railroad property is sited. Exclusion of Tax Revenues for General Obligation Bonds Debt Service An initiative to amend the California Constitution entitled "Property Tax Revenues Redevelopment Agencies" was approved by California voters at the November 8, 1988 general election. Under prior law, a redevelopment agency using tax increment revenue received additional property tax revenue whenever a local government increaSed its property tax rate to pay off its general obligation bonds. This initiative amended the California Constitution to allow the California Legislature to prohibit redevelopment agencies from receiving any of the property tax revenues raised by increased property tax rates imposed by local governments t° make payments on their bonded indebtedness. The initiative only applies to tax rates levied to finance general, obligation bonds approved by the voters on or after January 1, 1989. Any revenue reduction to redevelopment agencies would depend on the number and value of the general obligation bonds 28 approved by voters in prior years, which tax rate will reduce due to increased valuation subject to the tax or the retirement of the indebtedness. The Agency did not experience a revenue loss as a result of the legislation. l~tousing Set-Aside Sections 33334.2 and 33334.3 of the Redevelopment Law require redevelopment agencies to set aside 20% of all tax increment derived from redevelopment project areas established after December 31, 1976 in a low and moderate income housing fund. Section 33334.2 provides that this low and moderate income housing requirement can be reduced or eliminated if a redevelopment agency finds annually by resolution, consistent with the housing element of the community's general plan, the following: (a) thru no need exists in the community to improve, increase or preserve the supply of low and moderate income housing, including its share of the regional housing needs of very low income households and persons and families of low or moderate income; Co) that some stated percentage less than 20% of the mx increment is sufficient to meet the housing needs of the community, including its share of the regional housing needs of persons and families of low or moderate income and very low income households; or (c) that the community is making substantial efforts, consisting of direct financial contributions of funds from state, local and federal sources for low and moderate income housing of equivalent impact, to meet its existing and projected housing needs (including its share of regional housing needs). As amended by AB 315 (Chapter 872, Statutes of 1991), Section 33334.2 has additional restrictions on the ability to reduce or eliminate the low and moderate income housing requirement. A community can claim that no need exists, or can claim that less than 20% of tax increment revenue is sufficient, only if that claim is consistent with the housing element of the community's general plan. The authority for communities to claim an "equivalent effort" exemption was repealed as of June 30, 1993, except for obligations incurred prior to May 1, 1991, which were entered into with the understanding that the "equivalent effort" exemption would remain intact. Chapter 1135, Statutes of 1985, amended Section 33334.3 and added Section 33334.6 to the Redevelopment Law, extending the requirement for redevelopment agencies to set aside into a low and moderate income housing fund 20% of tax increment revenues allocated to redevelopment project areas .established prior to January. 1, 1977,'beginning with fiscal year 1985/86 revenues. A redevelopment agency may make the same findings described above to reduce or eliminate the low and moderate income housing requirement for such areas. Additionally, as provided in Section. 3333'4.6, as amended by Chapter 1111, for project areas (or portions thereof) established prior to January 1, 1977, a redevelopment agency may defer its low and moderate income housing deposit requirements in any fiscal year that the agency finds that the deferral is necessary to make payments on "existing obligations," and, for fiscal years through 1995/96 only, to fund the orderly and timely completion of "public and private projects, pro~m'arns or activities." Existing obligations include any loan, advance or indebtedness (whether funded, refunded, assumed or otherwise) incurred by a redevelopment agency to finance or refinance, in whole or in part, any redevelopment project existing on, and created prior to January 1, 1986, and contained on a statement of existing obligations of the agency filed with.the State. The Project Area, for which the Redevelopment Plan was adopted prior To January 1, 1977, is subject to the requirements of Section 33334.6. The Agency adopted a statement of programs and existing obligations prior to September 1, 1986 and deferred the full 20% set-aside requirement fOr low and moderate income housing. The Agency developed a housing plan to remedy its deferred 20% Set-Aside requirement. As of June 30, 1998, the amount of deferred 20% Set-Aside approxirnated $__ million. 29 The pledge of Tax Revenues excludes moneys to be used for the Housing Set-Aside, except to the extent that the Agency makes such amounts available as Tax Revenues. In the Indenture, the Agency covenants that it will comply with all requirements of the Redevelopment Law relating to the deposit of tax increment revenues allocable to the Agency from the Merged Project in the Low and Moderate Income Housing Fund established by the Agency pursuant to Section 33334.3 of the Redevelopment Law. [A portion of the proceeds of the Agency's ~ financing were utilized for eligible low and moderate income housing projects, so a portion of the Housing Set-Aside requirement for low and-moderate income housing has been met. For purposes of analysis of the ability of the Agency to meet its obligations under the Indenture, Table 2 "Debt Service Coverage" has been adjusted to reflect a credit for approximately $ of the 20% Housing Set-Aside requirement with respect to the Project Area.] Proposition 218 On November 5, 1996, California voters approved Proposition 218 - Voter Approval for Local Government Taxes - LimitatiOn on Fees, Assessments, and Charges - Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Tax Revenues.securing the Bonds are derived from property taxes which are outside the scope of taxes, assessmerits and property-related fees and charges which were limited by Proposition 218. Future Initiatives or Legislation Article XqllA, Article XIIIB and certain other propositions affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to California's initiative process and legislation described above was adopted by the Californifi Legislature. From time to time other initiative measures or legislation could 'be adopted, further affecting Agency revenues or the Agency's ability to expend revenues. Redevelopment Plan Limitations Under AB 1290 On , the City Council adopted Ordinance No. in compliance with the Re. development Reform Act of 1993 enacted by Assembly Bill 1290 ("AB 1290") which requires (i) amendment of all redevelopment plans to conform to the mandated timing requirements of the Act, and (ii) preparation of five year "Implementation Plans." The following table sets forth the redevelopment plan limitations for the Project Area pursuant to such Ordinance. Table 4 AB 1290 Impact on Project Area Existing Limit on Incurrine Debt Post AB 1290 Limit ' on incurrin~ Debt Existing Plan Termination Post AB 1290 Plan Termination Post AB 1290 Debt Repayment 30 THE TUSTIN COMMI~TrY REDEVELOPMENT AGENCY Organization The Tustin Community Redevelopment Agency was activated by Ordinance No. 696-A of the City Council of the City adopted October 20, 1976, under and pursUant to the Redevelopment Law. The five members of the City Council serve as the governing body of the Agency and exercise all rights, powers, duties and privileges of the Agency. Currently, the Agency is comprised of members who serve staggered four-year terms. The professional staff of the Agency presently consists of the following members: Name Title Agency Powers and Duties The Agency is charged with the responsibility, ofeliminating blight within the Project Area through the process of redevelopment. Generally, this process culminates when the Agency disposes of land for development by the private sector. Before this disposition can be accomplished, the Agency must complete the process of acquiring and assembling the necessary sites, relocating residents and businesses,.demoIishing the deteriorated improvement, grading and preparing the sites for purchase by developers and providing for ancillary off-site improvements. All powers, of the Agency are vested in its five members. The Agency exercises all of the govemmental functions authorized under the Redevelopment Law and has, among other powers, the authority to acquire, administer, develop and sell or lease property, including the right of eminent domain, the right to accept financial assistance from any source and the right to issue and expend the proceeds of bonds, notes or other evidences of indebtedness. The Agency can clear buildings and other improvements, can develop as a building site any real property owned or acquired, and in connection with such development can cause streets, highways and sidewalks to be constructed or reconstructed and public utilities to be installed. The Agency may, out of funds available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities, structures or other improvements to be publicly owned and operated, to the ex-tent that such improvements are of benefit to the Project Area and no other reasonable means of financing are available. The Agency must sell or lease remaining property within the Project Area for redevelopment by others in strict conformity with the redevelopment plan, and may specify a period within which such redevelopment must begin and be completed. 31 Financial Information Included in this Official Statement, as APPENDIX C, are the audited financial statements of the Agency for the fiscal year ended June 30, 1997. Investment of Agency Funds ._ The City may invest moneys not immediately required for operations and moneys held in sinking funds in a manner consistent with the City's invesm~ent policy (the "Investment Policy"). [INSERT DESCRIPTION OF CITY/AGENCY INVESTMENT POLICY] Controls, Land Use and Building Restrictions All real property in the Project Area is subject to the controls and restrictions of the Redevelopment Plan. The Redevelopment Plan provides that all new construction in the Project Area shall comply with all applicable state and local laws in effect, including the various codes of the City. The Redevelopment Plan' specifies particular land use areas. The Agency may permit an existing but nonconforming use to continue so long as the Agency determines that the use is generally compatible with other surrounding development uses. Within the limits, restrictions and controls established in the Redevelopment Plan, the Agency is authorized to limit the number, .type, size and height of buildings in the Project Area, and to establish desigm criteria, traffic circulation, traffic access and other development and design controls necessary for property development within the Project Area. Under exceptional circumstances, the Agency is authorized to permit minor variations from the limits, restrictions, and controls established by the RedeVelopment Plan. However, no variation shall be granted which changes a basic land use or which permits substantial departures from the Redevelopment Plan's provisions. In permitting a variation, the Agency must impose such conditions as are necessary to protect the public health, safety or welfare and to assure compliance with the objectives of the Redevelopment Plan. 32 TOWN CENTER REDEVELOPMENT PROJECT BOUN'DARY ~ [INSERT MAP] 33 TOWN CENTER AREA REDEVELOPMENT PROJECT Background The Redevelopment Plan for the Project Area was approved by Ordinance No. 701 and amended through the adoption of Ordinance No. 855 on September 8, 1981, Ordinance No. 1021 on March 20, 1989 [and Ordinance No.~ on ]. The Project Area includes approximately 360 acres in the center of the CID', an area which includes the historic "old town" and cMc center and a majoriw of the commercial properties within the central portion of the CiW. The Project Area contains commercial, service-commercial, neighborhood commercial, and residential land uses. Although a precise breakdown of land uses is not available, the predominant land use in the Project Area is commercial, which is estimated to approximate 90% of the total area. Residential and public/institutional uses account for approximately 5% each of the Project Area's land. Residential uses are mostly multi-family with a very small proportion of the Project Area containing single-family and mobile home uses. Public institutional uses include two par'ks (Columbus-Tustin and Pepperrree), the Civic Center, the Tustin School District administrative offices, Columbus-Tustin Intermediate School, and the Tustin Post Office. The Project Area is generally bounded by portions of Beneta Avenue and Irvine Boulevard on the north, Interstate Highway 5 (Santa Ana Freeway) on the south, portions of Prospect Avenue and "B" Street on the west, and portions of Newport Avenue and Main Street on the east. The Agency initiated proceedings to establish the Project Area in 1971 after central-city merchants and the Tustin Chamber of Com/nerce requested its help in revitalizing and expanding the E1 Camino Real commercial area in central Tustin. In the early 1970's, the E1 Camino Real area consisted of mixed residential and commercial uses on substandard lots. Most of the commercial facilities lacked off-street parking. Some of the businesses dated back to the early 1900's; only one new structure, had been built in the area during the previous decade. The general objectives of the Redevelopment Plan are the elimination and prevention of blight in the Project Area. The Redevelopment Plan calls for constructing and improving streets, utilities or other public improvements; acquiring, disposing of and redeveloping real propervy'; participation of owners and tenants in the Project Area; management of property under Agency ownership and control: and demolition, rehabilitation or removal of buildings. In the Project Area particularly, the Agency's goal was to eliminate existing blight and prevent the spread of blight and deterioration by: Providing for participation by owners and residents of the Project Area by extending the them preferences to remain or relocate within the redeveloped areas should their present structures be suffering from deterioration requiring assistance; Rehabilitate structures and improvements by present owners, their successors, or the Agency; Redevelop land by private enterprise or public agencies for uses in accordance with the Redevelopment Plan; Install, construct or reconstruct streets, utilities and other public improvements such as center islands, street trees and landscaping; 34 Acquire certain real propert).., for public improvements or to help expedite private development; Provide relocation assistance to displaced residential and non-residential occupants; · Demolish or remove certain buildings and improvements; · Manage an3' property acquired under the ovmership and control of the Agency; and Dispose of an3' property acquired by the Agency for uses in accordance with the Redevelopment Plan. 'Controls, Land Use and Building Restrictions Ail real property in the Project Area is subject to the controls and restrictions of the Redevelopment Plan. The Redevelopment Plan requires that new construction shall comply with all applicable State statutes and local laws in effect, including City zoning ordinances and City codes for building, electrical, heating, ventilating and plumbing. The Redevelopment Plan further provides that no existing building shall be substantially modified, altered, repaired or rehabilitated, except in accordance with architectural, landscape and site plans submitted and approved by the Agency. The Redevelopment Plan allows for commercial, industrial, residential, and public uses within the Project Area, but specifies the particular area in which each of these uses is permitted. The Agency ma), permit an existing but nonconforming use to remain so long as the existing building is in good condition and is generally compatible with other surrounding development uses. The owner of any 'property with a nonconforming use must be willing to enter into a participation a~eemenI with .the Agency and agree to the imposition of such reasonable restrictions as are necessary to protect the development and use of the Project Area. Within the limits, restrictions and controls established in the Redevelopment Plan, the Agency is authorized to establish land coverage, setback requirements, design criteria, and other development and design controls necessary for proper development of both private and public se_.m-nents within the Project Area. Under certain circumstances, the Agency is authorized to permit a variation from the limits, restrictions and controls established by the Redevelopment Plan. However, no variation shall be ~anted which changes the basic land use or which permits other than a minor departure from the RedevelOpment Plan provisions. In permitting ~ variation, the Agency shall impose such conditions as are necessary to protect' the public health, safety and welfare and to assure compliance with the purposes of the Redevelopment Plan. Any variation permitted by the Agency shall not supersede an), other approval required under City codes and ordinances. Major Development Activities in the Project Area At the time the Redevelopment Plan was adopted, the City recognized that a number of problems existed in the Project Area, including scattered physical deterioration; limited renovation or new consUmction; lack of major street attractions; inadequate parking and amenities; increased business competition in surrounding areas; and the absence of a central shopping and commercial district for the City's town center. Developments in the area included a small'strip commercial shopping center adjacent to a railroad right-of-way and a chemical storage facility. Under the Redevelopment Plan, the Agency 35 acquired the shopping center and storage facility property as well as the railroad right-of-way. The Agency has participated in over $9.5 million of public improvements, with redevelopment resources accounting for approximately $6.8 million of the total costs for such improvements. The public projects completed to date include: undergrounding of utilities; widening 17th Street; new storm drains; the reconstruction of streets and alleys; new traffic signals; landscaping; parking facilities; civic center improvements; improvements to public open spaces including Columbus-Tustin Park, and numerous landscaping programs. Development in the-Proj.ect Area since adoption of the Redevelopment Plan includes shopping and commercial centers and a parking structure. Tustin Plaza on Newport Avenue is an office and commercial center containing about 85.500 square feet of retail 'space, 45,700 square feet of office space, and an anticipated 5,000-square-foot free standing restaurant. The office and retail development was completed in 1986. and the restaurant was completed in 1988. The Agency assisted financially in the costs of constructing public improvements for the project. The La Fayeue Plaza Shopping Area, also on Newport Avenue, is a 44,000-square-foot retail center, which was completed in 1987. An adjoining theme restaurant, Newport Square, containing approximately 9,000 square feet was recently completed. The Agency was involved in land acquisition and assistance in constructing public improvements for the project. A 247-space dox~mtown parking structure has been completed on C Street to provide additional parking for adjacent commercial and office developments. The Agency assisted in the costs of construction, and has a financial interest in spaces defined for public parking use. Additional private construction has occurred in the Project Area, including over 250,000 square feet of office space and support retail facilities. Public invesUnent by the Agency was used for street and signal improvement within the Project Area and a public plaza adjacent, to the parking structure. The following table sets forth a summary of the ten largest assessees by secured valuation in the Project Area. The ten largest tax payers account for approximately. % of the total secured assessed value of the Project Area,. corresponding to approximately. % of incremental assessed value. Table 5 TOWN CENTER AREA REDEVELOPMENT PROJECT Ten Largest Property Tax Payers 1997-98 % of Project Projected Future No. of Secured 1997-98 Value Reductions Assessee Provertv Use Parcels Value Value (~) from Avpeals Source: Orange Count' .assessor. (1) Based upon fiscal 3.ear 1997-98 total secured and unsecured Project-wide Value of $646,476,617. [Describe large property tax payors, if any, responsible for in excess of 10% of Project Area assessed value.] 36 TAX REVEN~'ES Historical and Estimated Tax Revenues As discussed in the subsection "LIMITATI'ONS ON TAX REVENUES--Property Tax Rate Limitations--Article XIIIA", the property tax rate applicable within the Project Area is limited by the State Constitution to $1 per $100 of taxable property value plus the rate necessary to sen, ice certain indebtedness' approved by the voters. An amendment to the California Constitution prohibits redevelopment agencies from receiving taxes generated by new override tax rates which are reflective of debt approved after December 31, 1988. There are forty three tax rate areas in the Project Area. The table below sets forth an historical summary of the Project Area's taxable valuations and tax revenues since fiscal year 1992-93. Table 6 TOWN CENTER AREA REDEVELOPMENT PROJECT Summary of Historical Assessed Valuation 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 Source: Coun~ of Orange Office of the Auditor and Controller · 37 Unsecured Audit AdjuStment Secured Unsecured Redemptions Horneowner,s Exemptions Supplementals . Taxpayer Refunds Excess Over Annual Cap TOTAL T OWN 'CENTER ARE A · REDEVELOPMENT PROJECT Gross Tax Increment Revenues Collected' by. the Agency 1992-93 to 1993_94r2) 1994.95o~ 1995.96(4) 1996.97f4~ .Unitary Revenue (Included m total) t~y Redevelopment.4 gency (2) (~) 1997.98~) COVERAGE ANALYSIS Project/on of Tax Revenues The fo/lowing tables set forth projections of Tax Revenues for the Project Area. These projections are based on certain assumptions assurance thatsuehprojeetionswill which are believed by the Agency to be reasonable, there can be no be achieved. See "RISK FACTORS---Estimated Tax Revenues', herein. (a) For the purposes of the projections, it is aSSumed that there will be value added to the tax rolls aS a result of new construction activi~ identified by Agency staff. See" · (b) Tax rates used in the determination of Tax Revenues each year are reduced from the pr/or year's rate by a constant percentage for the port/on of the tax override rate allocable to County uses. The 38 decline, which is due to the _m-adual redemption of general obligation debt, is projected to continue until the tax rake stabilizes at the rat~of $._---per $100 of taxable value reflecting the 1% basic tax lex~ plus the override rate for the Metropolitan Wa~er District of Southern California. See ,,LIMITATIONS ON TAX REVENUES - Property Tax Rate Limitations - Article XIIIA" herein. o annua Y for inflation, as allowed by Article ....... ed to increase 2 '/o ![ .-,--r=~,u rES - Property Tax Kate ~oo~r 'oert~.,valuesareas~u~',, ~m^mlC~NS ON TAX lxr~ ~"~ ' x'~ r .. .. __ C~C LAIVLtxJ-x California Const~muon- XIIIA of the · Limitations - Article XIIIA" hereto. (d) The revenue attributable to state assessed utility property is assumed to remain constant at its Fiscal Year 1996-97 level. See"L~MITATIONS ON TAX REVENUES --' Unitary Taxation of Utility Property" herein. REDEVELOPMENT AGENCY TUSTIN COMMUNITY Project Toxxm Center Area Redevelopment Projected Tax Revenues Fiscal Years 199'/-98 through 2002-03, (000's omitted) Reported Projected Real Propert?' Value Appeal Value Change Real Property Value Grox~da at 2% New Value Added To'al Real Property. Value Personal Property/SBE New Value Added Total Real Property Value Total Project Value Less Base Value Incremental Value Gross Tax Revenue Unitary Tax Revenue County. Admin. Charge Appeal Tax Refun~ Subtotal Housing Set-Aside It-lousing Credit at _.__% of debt serv.] [Statutory pass Throu~] Net Tax Increment Revenue 39 Debt Service Coverage The following table sets forth the est/mated Tax Revenues as set forth in the preceding table, toeether with the estimated debt service coverage for the 1998 Bonds to December 1, ~ Year Estimated Ending Tax _(DecemberD Reven u eso~ 1998-99 1999-00 2000-01 2001-02. 2002-03 Table 8 c r0ss Annual Debt Servicer2~ Coverage Rati__._.~.o Source: Mgency (1) Funds available as of June 30 of the year indicated. (2) Estimate of debt service due with respect to the 1998 Bonds. Source: John Nuveen & Co. Inc. 'CERTAIN LEGAL lVlAT~ McFarlin & Anderson, Lake Forest, California, Bond Counsel,'wilI render an opinion with respect to .the validity of the 1998 Bonds.' A copy oft he form &such approving.opinion is attached hereto as APpENrDIX D. Payment &the fees and expenses &Bond Counsel is contingent upon the deliver3, of the 998 Bonds. Certain legal matters will be passed upon for the Agency by the C/t5, Attorney and by McFarlin & Anderson, Lake Forest, California, as Disclosure Counsel. CONTIh~G DISCLOSURE , The Agency has covenanted for the benefit of holders and benefieiaI owners of the 1998 Bonds to PrOvide certain £mancial information and operating data relating to the Agency by not later than nine months following the end &the Agency's fiscal year (which currently would be March 31), commencing with the report for the 1997-1998 Fiscal Year (the "Annual Report"), and to provide notices &the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Agency with each Nationally Recognized Municipal Securities Information Repository, and with the appropriate State information depository, if any. The notices &material events will be filed by the Agency with the Municipal Securities Rulema -~g Board (and with the appropriate State information depository, if any). The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth below under the caption APPENDIX E-:Form of Continuing Disclosure Certificate. These covenants have been made in order to assist the Underwriters in complying with S.E.C. Rul~ 15e2-12(b)(5). The Agency has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices &material events. 40 .~BSENCE OF LITIGATION · ' , $ Bonds are delivered, the City Attorney, m his capacity as ~unsel to the Agency, . Atthet~methe199 ........ ~o~.~ howled eof such c°unsel' there is n° litigati°n pending will provide an opinion to the or, em tna~, tv ~,~ ~ot k g of competent jurisdiction, State or or overtly threatened against the Agency in any court or other tribunal federal, which seeks to enjoin or challenges the authority of the Agency to participate in the transactions contemplated by this Official Statement, the 1998 Bonds or the Indenture. VERIFICATION OF 1~L~THt;NL&TIC'&L ACCURACY Upon delivery of the 1998 Bonds, the arithmetical accuracy of certain computations included in the schedules provided by the Underwriter on behalf of the Agency relating to the (a) adequacy of forecasted receipts of principal and interest on the 1987 Bonds Escrow Securities and cash to be held pursuant to the escrow for the 1987 Bonds, (b) f6recasted payments of principal and interest with respect to the 1987 Bonds on and prior to their projected maturity and/or redemption dates, and (c) yields with respect to the 1998 Bonds and on the 1987 Bonds Escrow Securities to be deposited pursuant to the 1987 Bonds Escrow' Agreement upon the delivery of the 1998 Bonds, will be verified by , independent certified accountants. Such verification shall be based solely upon information and assumptions supplied to public its procedures to examining the arithmetical by the Underwriter. ~ has restricted evaluation of the information and assumptions certain computations and has not made a study or. on the'data used, the accuracy of ' on which such computations are based and, accordin~-lY, has not expressed an opinion reasonableness of the assumptions or the aehievability of the forecasted outcome· . Upon delivery of the 1998 Bonds, the arithmetical accuracy of certain computations included in the schedules provided by the Underwriter on behalf of the Agency relating to the (a) adequacy of forecasted receipts of principal and interest on the 1991 Bonds Escrow Securities and cash to be held pursuant to the escrOW' for the 1991 Bonds, (b) forecasted payments of principal and interest with respect to the 1991 Bonds on and prior to their projected maturity and/or redemption dates, and (c) yields with respect to the 1998 Bonds and on the 1991 Bonds Escrow Securities to be deposited pursuant to the 1991 Bdnds Escrow A~_reement upon the delivery of the 1998 Bonds, will be verified by _, independent certified p~blic accountants. Such verification shall be based solely upon information and assumptions supplied to by the Underwriter. has restricted its procedures to examining the arithmetical accuracy of certain computations and has not made a study or evaluation of the information and assumptions on which such computations are .based and, accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions or the achievability of the forecasted outcome. In the opinion ofMcFarlin & Anderson, Lake Forest, California, Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants and agreements, interest on the 1998 Bonds is excluded from ross income for federal income tax purposes and is exempt from State' of California personal income taXes- Bond Counsel is further of the opinion that interest on the 1998 Bonds is not a specific preference item for purp°ses of the federal individual or corporate alternative minimum taxes. However, Bond Counsel observes that interest on the 199 $ Bonds is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete form of the opnion of Bond Counsel is set forth in Appendix D and will be delivered with the 1998 Bonds. 41 The Internal Revenue Code of 1986, as amended, imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 1998 Bonds. The Agency has covenanted to comply with certain restrictions desi~cmed to assure thai interest on the 1998 Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the 1998 Bonds being included in federal gross income, possibly from the date of issuance of the 1998 Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether an), actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the 1998 Bonds may affect the tax status of interest on the bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the 1998 Bonds. Prospective Owners are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Should interest on the 1998 Bonds become includable in gross income for federal income tax purposes, the 1998 Bonds are not subject to early redemption as a result of such event and will remain outstanding until maturity, or until otherwise redeemed in accordance with the Indenture. Certain a~eements, requirements and procedures contained or referred to in the Indenture, the tax certificate and other relevant documents may be changed and certain actions (including without limitation, defeasance of the 1998 Bonds) may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. McFarlin & Anderson expresses no opinion as to any 1998 Bond or the interest thereon if any such change occurs or action is taken or omitted upon advice or approval of bond counsel other McFarlin & Anderson. Although Bond Counsel has rendered an opinion that interest on the 1998 Bonds is excluded from goss income for federal income tax purposes, the ownership or disposition of, or the accrUal or receipt of interest on, the 1998 Bonds may otherwise affect the recipient's federal or state tax liability. The nature and extent of these other tax consequences will depend upon the recipient's particular tax status and other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. UNDERWRITING The 1998 Bonds will be purchased from the Agency by John Nuveen & Co. Inc. (the"Under~q'iter"). The Underwriter has agreed to purchase the 1998 Bonds at a purchase price equal to the principal amount thereof, less an underwriter's discount of $ plus accrued interest to the Closing Date. The bond purchase agreement relating thereto (the "Bond Purchase Agreement") provides that the Underwriter will purchase all of the 1998 Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the Bond Purchase Agreement. The initial public offering prices stated on the cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the 1998 Bonds to certain dealers, banks acting as agents and others at prices lower than said public offering prices. 42 RATINGS Moody's Investors Service and Standard 8: Poor's Ratings Services have assi~ed their municipal bond ratings of"Aaa" and "AAA," respectively, to the 1998 Bonds with the understanding that upon delivery of such 1998 Bonds a Municipal Bond Insurance Policy insuring the payment when due of the principal of and interest on the 1998 Bonds will be issued by MBIA. Credit ratings reflect the views of the respective rating agencies and an)' explanation of the si~,nificance of ratings should be obtained directly from the agencies. There is no assurance that an), rating w~ll not subsequently be revised or withdrawn entirely if, in the judgment of the assigning agency, circumstances so warrant. The Agency undertakes no resPonsibility either to bring to the attention of the Owners of the 1998 Bonds any downward revision or withdrawal of such rating and any such downward revision or withdrawal could have an adverse effect on the market price of the 1998 Bonds. The Agency has no obligation to maintain any rating for the 1998 Bonds. PROFESSIONAL FEES In connection with the issuance of the Bonds, fees payable to certain professionals, including the Underwriter, McFarlin & Anderson, as Bond Counsel and Disclosure Counsel, to the Agency and U.S. Bank Trust National Association, as Trustee and as Escrow Agent, are contingent upon the issuance of the 1998 Bonds. MISCELLANEOUS ' The purpose of this Official Statement is to supply information to prospective buyers of the 1998 Bonds. Quotations from, and summaries and explanations of, the Indenture and other documents and statutes contained herein do not Purport to be complete, and reference is made to such documents, Indenture and statutes for full and. complete statements of their provisions. · Unless otherwise noted, all information contained in this Official Statement pertaining to the Agency, the City and the Project Area has been furnished by the Agency. Any statement in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as' such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or registered owners of any of the 1998 Bonds. The execution and delivew of this Official Statement has been dui3' authorized by the Agency. TUSTIN COM2MUNITY REDEVELOPMENT AGENCY Chairperson 43 APPENDIX A SLIMMA_RY OF CERTALN PROVISIONS OF THE INDENTURE [ro co~.] A-1 M~PENDIX B GENERAL IN'FORMATION REGARDING THE CITY The following information is presented as general background data. The 1998 Bonds are payable soleb, from Tax..Revenues as described in the body of the Official Statement. 777e taxi~?g power of the CIO.,, the State, or an), political subdigision thereof are not pledged to the payment of the J998 Bonds. See the section entitled "SECURJTJ'FOR THE BONDS" in the Official Statement. The economic and demographic information provided below has been collected from sources which the Cil¥ deems to be reliable. Because it is difficult to obtain timely regional economic and demo~aphic information, the impact on the City of the recent recession and the recover).' from the recession may not be fully apparent in all of the publicly available regional economic statistics provided herein. Introduction The City of Tustin (the "City"), a general law city, was incorporated in 1927 and encompasses an area of approximately 10.8 square miles in Orange County (the "Count.)"'), California. The Cit-), has a form of municipal government. The Cit? Council appoints the who is responsible for the day-to-day administration of City business and the coordination of all departments of the Cit.)'. The City Council is composed of five members elected [biannually at large to four-year] alternating terms. [The Mayor is selected by the City. Council from among its members.] The Cit.), employs a staffofapproximately full-time employees and .. part-time employees under the direction of the City Administrator. The Ciw has its own police force with approximately .... officers. The Orange Count), Fire Department pro~ides fire protection services on a contractual basis and assigns approximately ~ fireman and officers to the Cit5,~ Sewer maintenance, water: service, trash collection, street sweeping, park maintenance and building inspedtion are provided by the City. The Cit.), cooperates x~,ith the Count.), in the provisions and maintenance of flood control facilities. The City's library system services both the residential and industrial community from ~ large central library facility and ~ neighborhood branch facilities. The system contains over volumes, and a collection of recordings, tapes and films. The Tustin Unified School District operates ~ elementary, schools and . high schools located within City limits. Population Because the City's residential areas continue to build out, the City's population has generally increased since the . Results of the 1990 census indicated the City's population was ., an increase of approximately percent from the 1980 results. The City is Currently the largest in the County with a 1997 population of according to the State Department of Finance. The following table represents the population for the City and for Orange County for the years 1980 and 1990, and the annual estimates for years 1991 through 1997: B-1 Year 1980 1990 1991 1992 1993 1994 1995 1996 1997 POPULATION (ooo's) City Percent County of of Tustin Chanee Oran ee 51.5 m 2,451.1 52.7 2,510.6 53.9 2,566.3 59.8 2,596.5 Percent Chance Source: Federal Census; Californsa State l~epartment of Fman~. Demogrophtc Research Unit. Building Activity Building activity in the City for the past five years is set forth below. TOTAL BUll.DING PERMIT VALUATION (dollars in thousands) Res i d ential Res id enti al Non -Res i d ential Year Perm its Valuati on s Valuation s 1992 1993 1994 1995 1996 1997 Source: Ci .ty of Tustin Building DepartmcnL B-2 Employment As of January, 1997, the civilian labor force for the CiD' was approximately of whom were employed. The unadjusted unemployment rate as of January, 1997, was %. Civilian labor force, employment and unemployment statistics for the County, the State and the nation for the years 1992 through 1996 are sho,~m in the following table: .. CIVILIAN LABOR FORCE, EMI>LOYMENT A2qD UNEMPLO3BVlENT Annual Averages CMlian Unemployment Year Labor Force Emolovment Unemployment Rate 1992 Orange Coun5, Californm United .States 15.335,000 13,939,000 1,396,000 9.1 126,982,000 117,598,000 9,384,000 7.4 1993 Orange County Califorma United States ~ . . 9.2 15,295,000 1 ~,885,000 1.410.000 128,131,000 ' 119,273,000 8,858,000 6.9 1994 Orange Count)' Califorma United States 15,470,000 14,141,000 1,330,000 8.6 131,725,000 123,690,a00 8,035,000 6.1 Orange Count, Califomm United States 15,427,200 14,216,700 1,210,500 7.8 132,293,000 I24,892,000 7,405,000 5.6 1996 Orange County. Califorma United States 15,596,100 14,469,900 1,126,200 7.2 133,832,000 126,601,000 7,226,000 5.4 1997 Orange Count3., Califomm United States ..qource: California Department of Employment Development: United ~ates Bureau of Labor Statistics. B-3 The following tables list the major employers (manufacturing and non-manufacturing) in the City as of June 1998. ' Manufacturing Employment Emplox.,er Product Em p lo,~m ent .. Source: CiO, of Tustin Economic Development Department. Employer Non-Manufacturing Employment Product Employment Source: Ci.ty of Tustin Economic Development Department. Income "Effective Buying Income" is defined as personal income less personal tax and nontax payrnents, a number often referred to as "disposable" or "after-tax'' income. Personal income is the ae~eeate of wages and salaries, other labor-related income (such as employer contributions to privite~¢e~sion funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. Accordine to U.S. government definitions, the resultant figure is commonly 'known as "disposable personal income.7' B-4 The following table summarizes the total effective buying income for the CID', the Count),, the State and the United States for the period 1992 through 1997. Year Area Total Effective Buying Income !'000's Omitted) Median Household Effective Buvin[ Income 1992 City of Tustin Orange County. California 490,749,649 36,943 United States 3,728,967,043 32,073 1993 City of Tustin Orange County. California 509,152,677 37,686 United States 3,916,947,023 33,178 1994 Cit), of Tustin Orange County California 528,95 g,745 39,33 0 United States 4,169,724,052 35,056 1995 City of Tustin Orange Count), California 552,074,838 40,969 United States 4,436,178,724 37,070 1996' City of Tustin Orange County California 477,640,503 34,533 United States 3,964,285,118 32,238 Source: Sales & Marketing Management Survey of Buying. Power · ' Due to changes implemented in 1996 in the method of calculating Effective Buying Income, prior 3,ears are not directly comparable with statistics for 1995. B-5 Tax Receipts Taxes received by the City include Property Taxes, Sales Taxes, Motor Vehicle In-Lieu Taxes, Franchise Fees, Property Transfer Taxes, Business License Taxes and Transient Occupancy Taxes. Of such taxes, Property Taxes and Sales Taxes constitute the major sources of revenues. Certain general taxes imposed by the City may be affected by a September 28, 1995, California Supreme Court decision upholding Proposition 62 (the "Guardino Decision") or Proposition 2] 8, which was approved by theCalifornia voters at the November 1996 General Election. See "LIMITATIONS ON REVENUESmProposition 2] 8." 'The following table sets forth tax revenues received by the CID', by source, for Fiscal Years 1993-94 through 1997-98: Tax Revenues by Source Source J. 994 ! 995 1996 1997 1998 (Est.) Property Tax Sales Tax Motor Vehicle In-Lieu Franchise Fees Property Transfer Tax BUsiness License Tax Transient Occupancy Tax ,, .~'ource: Cra' of I uSt~n Ftr~nce Detn~rtment Property Taxes Property tax receipts provide the largest tax revenue source for the City, contributing % of general fund tax revenues during fiscal year 1996-97. Ad t, Zalorem .Properm. Taxes. Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City, as of the preceding March 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll, the taxes on which are a lien on real property sufficient to secure payment of the taxes. Other property is assessed on the "unsecured roll." See "Constitutional and Statutory Limitations on Taxes and Appropriations." County Tax Loss Reserve Fund ("Teeter Plan "). The Board of Supervisors of the County adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan") in fiscal year 1993-94, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Taxes and assessment installments under the 1915 Act are collected by the County and distributed pursuant to the Teeter Plan. Under the Teeter Plan, each entity levying property taxes in the County may draw on the amount of uncollected secured taxes credited to its fund, in the same manner as if the amount credited had been collected. Unsecured taxes are not normally covered under the Teeter Plan. The Teeter Plan is to remain in effect unless the Board of Super~,isors orders its discontinuance or unless, prior to the commencement of any fiscal year of the County (which commences on July 1), the Board of Superx, isors shall receive a petition for its discontinuance joined in by resolutions adopted by two-thirds B-6 of the participating revenue districts in the Count),, in which event the Board of Supervisors is to order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year. The Board .of Supervisors may, by resolution adopted not later than July 15 of the fiscal year for which it is to apply, after ho]ding a public hearing on the matter, discontinue the procedures under'the Teeter Plan with respect to any tax lexTing, agency or assessment leD,lng agency in the CounB, if the rate of secured tax delinquency in that agency in any year exceeds 3% of the total of ali taxes and assessments levied on the secured rolls for that agency. So long as the Teeter Plan remains applicable with respect to the Cit),, the Cit), will receive 100%. of the annual tax levies without regard to actual collections in the Ciw.. However, under the statute creating the Teeter Plan, the Board of Supervisors could under certain circumstances terminate the Teeter Plan in its entiret),. The City. uses the services of the Count), for assessment and Collection of property taxes. City property taxes are assessed and collected at the same time and on the same rolls as are county, school and special district prope~, taxes. Assessed valuations are based upon 100% of value as defined by Article XIIIA of the State Constitution. State law provides exemptions from ad valorem property taxation for certain classes of property such as property owned by churches, colleges, non-profit hospitals and charitable institutions. ~' State law also exempts $7,000 of the full cash value of m~ owner-occupied dwelling, but this exemption does not result in any loss of revenue to local agencies, since the State reimburses local azencies for the value of the exemptions. " The following table represents a five-year history of assessed valuations within the Cit),'s boundaries, including State-reimbursed exemptions: Assessed Valuations year Secured Utility Unsecured Rdv. Incre. Rdv. Incre. 1993-94 1994-95 !995-96 1996-97 1997-98 Source: California MUnicipal Statistics, Inc.; Coun~ of Orange B-7 Below are secured tax charges and delinquencies for the City during the past five fiscal years.. Year Secured Tax Charges and Delinquencies Secured Amount Del. % Del. Tax Chance°) June 30(2) June 30 1992-93 1993-94 1994-95 1995-96 1996-97 , Source: California Municipal Statistics, Inc.; Count)., of Orange (1) ' 1% General Fund apportionment. (2) Orange Count)' utilizes the Teeter Plan for assessmmt lev3, and distribution. This method guarantees distribution of 100% of the assessment~ levied to the taxing entity, with the County retaining all penalties and interest. B-8 o 2. 3. 5. 6. 7. g. 9. lO. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Principal Taxpayers. The following table sets forth the major taxpayers in the Ci~' in terms of their 1997-98 secured assessed valuation: Largest 1997-98 Local Secured Taxpayers 1997-98 % of Property Owner Primary Land Use Assessed Valuation Total(o (l) 1997-98 Local Secured Assessed Valuation: $ B-9 Taxable Transactions A five-year history of taxable transactions for the County and the CiD' are shown in the following tables. Orange Count3' Calendar Years 1992 through 1996 (in thousands of dollars) 1992 1993 1994 1995 1996 Apparel stores General merchandise stores Specialty stores Food stores Packaged liquor stores Eating and drinking establishments Home furnishings & appliances Second-hand merchandise Farm and garden Building materials Automotive group Total retail outlets Business and personal service All other outlets Total all outlets Source: State Board of Equalization B-10 City of Tustin Calendar Years 1992 through 1996 (in thousands of dollars) 992 .1993 1994 1995 1996 Apparel stores General merchandise stores Drug stores Food stores Packaged liquor stores Eating & drinking establishments Home furnishings & appliances Building materials Automotive ~oup Service stations Other retail stores Total retail outl ets All other outlets Total all outlets Source: State ;Board of F.,qualization Direct and OverlaPping Bonded Debt Contained within the City's boundaries are numerous overlapping agencies providing public sen'ices. These agencies may have issued outstanding bonds in the form of general obligation, special assessment, special tax and lease revenue bonds. Direct debt constitutes debt directly issued by the City while overlapping debt constitutes that portion issued by different agencies within the same tax code areas. The Direct and Overlapping Bonded Debt Statement of the City as of June 1, 1998 (except as noted in footnotes to the Statement) is shown below: B-II Statement of Direct and Overlapping Debt [TO BE PROVIDED] Source: California Municipal Statistics, Inc. B-12 Recreation The City operates ~ City parks, recreational halls and a CiD' residents are offered the use of the City's facilities for handball, racquetball and tennis, as well as ~ completely equipped gymnasiums and [an indoor Olympic-size swimming pool]. In addition, the City is centrally located for a wide variety of entertainment and recreational activities, including, among many others, Disneyland, Knott's Berry Farm The mountains to the north and east provide other kinds of outdoor recreational activities, including hiking, lake recreation, and winter skiing. Transportation The Santa Ana Freeway (Interstate 5), a major northwest-southeast corridor, crosses through the central Section of the City, the Costa Mesa Freeway (State Route 55) crosses north-south along the western edge of the CID" and the Eastern Transportation Corridor (State Route 267), a toll road is being constructed just east of the eastern edge of the CID,. The CiD, is also within minutes of the San Diego Freeway (Interstate 405, traveling north to the Los Angeles International Airport), the Riverside Freeway (State Route 91, traveling east-west) to the north and the Orange Freeway (State Route 57, traveling north-south) to the west and the San Joaquin Toll Road. Air cargo arid passenger flight services are provided at several nearby facilities, including Johrl Wayne Airport in Orange County (5 miles southwest) and the Ontario International Airport (50 miles northeast). [The City operates its own municipal bus system which serves the City and carries approximately passengers annually.] The and the Orange County Transportation Commission (OCTC) also serve the area. Greyhound Bus Lines provides service to other local areas and additional transcontinental service.. Commercial and passenger rail sen, ices are provided by Union Pacific and Amtrak lines, and the indusa-ial community is also served by the Railway. Trucking services are provided through numerous common and contract carriers. The Port of Long Beach is approximately 45 miles to the northwest and the Port of Los Angeles is approximately 50 miles northwest of the City. Both ports are within easy freeway access. B-13 APPENDIX C TUSTIN COMMUNITY REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL 'i'EAR ENDING JUNE 30, 1997 [To COMS] C-I .~PPENDIX D FORM OF OPE~'ION OF BON~ COUNSEL Upon delivery of and pa.vment for the Bonds, the firm ofMcFarlin & Anderson, Lake Forest, California, Bond Counsel to the Agency, proposes to deliver its final approving opinion with respect thereto in substantially the following form: [CLOSING DATE] Tustin Community Redevelopment Agency 300 Centennial Way Tustin, California 92680 Re: Tustin Community Redevelopment Agency (Town Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the Tustin Community Redevelopment Agency (the "Agency") in connection with the issuance by the Agency of $ aggregate principal amount of Tax Allocation Refunding Bonds, 1998 Series A (the "1998 Bonds") pursuant to the provisions of the Community Redevelopment Law of the State of California (being Part I of Division 24 of the Health and Safety Code of the State of California), Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5, commencing with Section 53570, of the Government Code of the State of California, as amended, and the Indenture of Trust, dated as of July 1, 1998 (the '~lndenture") between the Agency and U.S. Bank Trust National Association, as trustee.. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. In such connection, we have reviewed the record of proceedings submitted to us relative to the issuance of the 1998 Bonds, including the Indenture, the Tax Certificate of the Agency dated the' date hereof (the "Tax Certificate"), opinions of counsel to the Agency, certifications of the Agency and others and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the 1998 Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any 1998 Bonds or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur. Our engagement with respect to the 1998 Bonds has concluded with their issuance and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us D- l rum,zo~N.sA~.~8- (whether as originals or copies) and the due and legal execution and delive~' thereof by, and validiW against, any parties other than the Agency. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and a~eements contained in the Indenture, the Tax Certificate, and in certain other documents, including (without limitation) covenants and a~eements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the 1998 Bonds to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the 1998 Bonds, the Indenture and the Tax Certificate are subject to bankruptcy, insolvency, reorganization, arrangement,, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations On legal remedies against political subdivisions in the 'State of California. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents. We express no opinion with respect to the state or quality of title to any of the real or personal property described in or subject to the lien of the Indenture or the accuracy or sufficiency of the description of any such property contained therein. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The 1998 Bonds constitute valid and binding limited obligations of the Agency. 2.' The Indenture has been duly executed and delivered by, and constitutes a valid and binding obligation of, the Agenz.v. The Indenture creates a valid and binding pledge, to secure the payment of the principal of and interest on the 1998 Bonds, of the Tax Revenues and any other amounts (including proceeds of the sale of the 1998 Bonds) held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and upon the terms and conditions set forth in the Indenture. 3. The 1998 Bonds are not a lien or charge upon the funds or property of the Agency except to the ex"tent of the aforementioned pledge. Neither the faith and credit nor the taxing power of the State of California or of any political subdivision thereof is pledged to the payment of the principal of or interest on the 1998 Bonds. The 1998 Bonds are not a debt of the City of Tustin or the State of California and said City of Tustin and said State are not liable for the payment thereof. 4. Interest on the 1998 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of Califomia personal income taxes. Interest on the 1998 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. We express'no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the 1998 Bonds. The foregoing represent our interpretation of applicable law to the facts as described herein. We bring to your attention that our legal opinion and conclusions are an expression of professional judgment and are not a guarantee of a result. Sincerely yours, MCFARLIN & ANDERSON APPE/XrDIX E FORM OF CONTINWING DISCLOSURE CERTIFICA~ This Continuing Disclosure Certificate (this "Disclosure Certificate") is dated as of Jul3, 1, 1998, is executed and delivered by the Tustin Community Redevelopment Agency (the "Agency") in connection with the issuance ors Tustin Community Redevelopment Agency (Town Center Area Redevelopment PrOject) Tax Allocation Refunding Bonds, 1998 Series A (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of July 1, 1998 (the "Indenture"), by and between the Agency and U.S. Bank Trust National Association, as trustee (the "Trustee"). Pursuant to Section 5.19 of the Indenture, the Agency covenants and a~ees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the OWners and Beneficial O~uaers (as defined below) of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12C0)(5): Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate, unless otherwise defined, the following capitalized terms shall have the following meanings: "Annual .Report" shall mean any Annual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owners" shall mean any person who (a) has the power, directly or indirect, ly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries),' or Co) is treated as the owner of any Bonds for federal income tax purposes. "Disclosure .Representative" shall mean the of the Agency, or his or her designee, Or such other officer or employee as the Agency shall designate in writing to the Trustee from time to time. "Dissemination Agent" shall mean U.S. Bank Trust National Association, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency and the Trustee a ~witten acceptance of such designation. "Listed Events" shall mean any of the evems listed in Section 5(a) of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. E-1 "Official Statement" shall mean the Official Statement dated July distributed in connection with the initial sale of the Bonds. ,199g, prepared and "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act.of 1934, as the same may be amended from time to time. "State Repositoo," shall mean any public or private repository or emity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As ofthe date ofthis Certificate, there is no State Repository. Section 3. Provision of Annual Reports. (a) The Agency shall provide, or shall cause the Dissemination Agent to provide, each RePository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate not later than nine (9) months after the end ofthe Agency's fiscal year (which date currently would be March 31, based upon the June 30 end of the Agency's fiscal year), commencing w/th the report for the 1997/1998 fiscal year. (b) Not later than fifteen (i5) Business Days prior to said date, the Agency shall provide the Annual Report in a form suitable for reporting to the Repositories to the Dissemination Agent (if other than the Agency) and the Trustee. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Agency's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (c) If the Agency is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the Agency shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent-shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and (ii) if the Dissemination Agent is other than the Agency, and if, and to the ex'tent, the Agency has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the Agency and the Trustee certifying that the E-2 .Annual Report has been provided to the Repositories pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to Which it was provided. Section 4. Content of Annual Reports. incorporate by reference the following: .. .. The Agency's Annual Report shall contain or (a) Audited Financial Statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Agency's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the ,annual Report when they become available. ~) The following financial information and operating data set forth in the final Official Statement: (i) Ten largest property tax payers in the Project Area, including name, secured value, unsecured value, total value and percent of total value substantially in the format set forth as Table 6 of the Official Statement; (ii) Annual assessed valuations; tax increment values, Tax Revenues (as defined in the Indenture) and coverage ratio of Tax Revenues to debt service on Bonds and all parity debt, in substantially the format set forth as Tables m, andre of the Official Statement. (iii)Discussion of anY property tax appeals, which, either alone or in the ag~egate could have a material adverse effect on Tax Revenues. (e) Information relating to the Bonds as follows: (i) Balances in all funds and accounts maintained with respect to the Bonds as of · (ii) A statement of the Reserve Requirement as of the preceding (iii) The Outstanding principal amount of the Bonds and any additional bonds as of the preceding . .Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference. E-3 Section 5. Repo~ine of Sienificant Events. (a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, notice of the occurrence of any of the folloMng events with respect to the Bonds, if material: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) Principal and interest payment delinquencies.; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their'failure to perform; Adverse tax opinions or events affecting the tax-exempt status of the security; Modifications to rights of security holders; Contingent or unscheduled bond calls; Defeasances; Release, substitution, or sale of property securing repayment of the securities; and Rating changes. Co) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall as soon as possible determine if such event would be material under applicable Federal securities law. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the Agency's determination. (c) If the Agency determines that -knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Agency shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be ~ven under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. SectiOn 6. Termination of Reporting Oblieation. The Agency's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds or upon the delivery to the Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no' longer required. If such termination 'occurs prior to the final maturity'of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). ' Section 7. Dissemination Aeent. (a) The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, w/th or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty days notice to the Agency and the Trustee. The Dissemination Agent shall 'not be responsible for the content of any report or notice prepared by the Agency. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be E-4 responsible for filing an), report not provided to it by the Agency in a timely manner and in a form suitable for filing. The Dissemination Agent shall not be responsible in any manner for the content of an), notice or report prepared by the Agency pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be U.S. Bank Trust National Association. If at any time there is no designated Dissemination Agent appointed by the Agency, or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of Dissemination Agent hereunder, the Agency shall be the Dissemination Agent and undertake or assume its obligations hereunder. Any company succeeding to all or substantially all of the Dissemination Agent's corporate tmst'business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder at any time upon written notice to the Agency. Co) The Dissemination Agent shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Agency from time to time and for all expenses, legal fees and advances made or 'incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Agency hereunder and shall not be deemed to be acting in any fiduciary capacity for the Agency, Owners. or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon an3' direction from the Agency or an opinion of nationally reco~m'fized bond counsel. Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure .Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections. 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person w/th respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or Waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved.by Ovmers of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally reco~ized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Agency shall describe such amendment in the next Annual Report, and shall include, as' applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in E-5 the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Commission. If an amendment is made. to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles 'and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the ex"tent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under.Section 5(c). Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence ora Listed Event, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10..Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate, any Participating Underwriter or any Owner or Beneficial Ovmer of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties. Immunities and Liabilities of Dissemination Agent. .411 of the immunities, indemnities, and exceptions from liability in Article VI ofthe Indenture insofar as they relate to the Trustee shall apply to the Trustee and the Dissemination Agent in this Disclosure Ceffificate. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure CeRtificate, and the Agency a~ees to indemnify and save the DisseminatiOn Agent, its officers, directors, employees and agents, harmless again.qt any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent' s negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction fi'om the Agency or an opinion of nationally recognized bond counsel. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any fight to commence any action against the E-6 Trustee or Dissemination Agent see 'king any remedy other than to compel specific performance of this Disclosure Certificate. Section 12. Benefici'~es. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, the Participating Underwriters and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated: July 1, 1998 TUSTIN COMMUNITY REDE'srELOPMENT AGENCY By Executive Director ACCEPTANCE OF DISSEMINATION AGENT: The undersigned hereby accepts the designation of Dissemination Agent and agrees to further the duties set forth in the foregoing Continuing Disclosure Certificate. U.S'. BANK TRUST NATIONAL ASSOCIATION By Authorized Signatory E-7 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Tustin Community Redevelopment Agency Name of Bond Issue: 5; Tustin Community Redevelopment Agency (To,am Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A Date of Issuance: July__, 1998 NOTICE IS HEREBY GIVEN that the Tustin Community Redevelopment Agency (the "Agency") has not provided an Annual Report with respect to the above-named Bonds as required by Section 5.19 ofthe Indenture of Trust, dated as of JUly 1, 1998, by and between the Agency, and U.S. Bank Trust National Association, as trustee. The Agency anticipates that the Annual Report will be filed by Dated: TUSTIN COMMUNITY REDEVELOPMENT AGENCY cc: Trustee By Name: Title: A-1 APPEN'DIX F FORM OF MUNICIPAL BONI)LNSURANCE POLICY F-1