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HomeMy WebLinkAboutT.P.F.A. RES 02-3t Quint & Thiinntig LLP TUSTIN PUBLIC FINANCING AUTHORITY RESOLUTION NO. 02-3 11/29/02 12/07/02 12/10/02 12/13/02 RESOLUTION OF THE BOARD OF DIRECTORS OF THE TUSTIN PUBLIC FINANCING AUTHORITY PROVIDING FOR THE ISSUANCE AND SALE BY THE AUTHORITY OF 2002 REVENUE ANTICIPATION NOTES AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT THERETO RESOLVED, by the Board of Directors (the "Board") of the Tustin Public Financing Authority (the "Authority"), as follows: WHEREAS, the Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated as of May 1, 1995, by and between the City of Tustin (the "City") and the Tustin Community Redevelopment Agency (the "Agency" and, with the City, the "Members"), and under the provisions of Articles 1 through 4 (commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Act"), and is authorized pursuant to Article 4 of the Act to borrow money for the purposes of the Members; WHEREAS, pursuant to that certain Settlement and Release Agreement, effective May 31, 2002 (the "Settlement Agreement"), by and among (1) the City, (2) the Authority, and (3) the Santa Ana Unified School District ("SAUSD"), the City agreed to make certain payments to SAUSD (the "City Payments"), to be derived from the proceeds of all land sales of all or a portion of the EDC Acres (as such term is defined in the Settlement Agreement); WHEREAS, the City has requested that the Authority issue and sell revenue anticipation notes so that amounts, derived from the proceeds thereof, will be available for the City to make the City Payments in advance of the required payment dates even if land sales of all or a portion of the EDC Acres do not occur; WHEREAS, the City has agreed to convey a portion of the EDC Acres to the Authority (the "Collateral Real Property") so that the Authority can offer the Collateral Real Property to the purchasers of such revenue anticipation notes as security for the payment by the Authority of the principal and interest thereon; WHEREAS, the Authority has received commitments from Salomon Smith Barney, Inc. (the "Purchaser") to purchase such revenue anticipation notes in t series, which commitments are attached hereto as Exhibit A; "' WHEREAS, the Authority has determined to issue its revenue anticipation notes pursuant to this Resolution in the manner provided herein; and WHEREAS, the Authority has determined that all acts and proceedings required by law necessary to make such revenue anticipation notes, when executed by the Authority and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Resolution a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken; 20015.02 0 NOW, THEREFORE, it is hereby DETERMINED and ORDERED as follows: Section 1. Authorization and Terms of Notes. The Authority hereby determines to and shall borrow the principal amount of sixty million dollars ($60,000,000) by the issuance of notes pursuant to the Act in two series, the Tustin Public Financing Authority Revenue Anticipation Notes, 2002 Series A, in the aggregate principal amount of $38,000,000 (the "Series A Notes"), and the Tustin Public Financing Authority Revenue Anticipation Notes, 2002 Series B, in the aggregate principal amount of $22,000,000 (the "Series B Notes" and, with the Series A Notes, the "Notes"). The Series A Notes shall be dated their date of delivery and shall mature on June 1, 2004. The Series A Notes shall bear interest initially at the rate of 3.75% per annum from their date through May 31, 2003 (the "Series A Notes Fixed Rate Period"). After the Series A Notes Fixed Rate Period and until maturity, the Series A Notes shall bear interest for each Base Rate Period (hereinafter defined) at a variable rate equal to the Base Rate (hereinafter defined) plus the Applicable Margin (as hereinafter defined). "Base Rate Period" means, with respect to the Series A Notes, each monthly period, beginning June of 2003, which starts on the first day of the month and ends on the last day of the month. "Base Rate" means the daily effective Federal Funds rate as published by the Federal Reserve Bank of New York on the first business day of each month. "Applicable Margin" means 2.50% per annum; provided, however, that upon the occurrence and during the continuance of any Event of Default (hereinafter defined), the Applicable Margin will increase to 5.00% per annum. The maximum interest rate on the Series A Notes shall be 12% per annum. The Series A Notes are subject to redemption, without penalty, at the end of the Series A Notes Fixed Rate Period and at the end of any Base Rate Period thereafter; provided, however, in the event the Authority is required to pay to the Purchaser additional amounts as set forth in Section 12 of the Note Purchase Agreement (as defined in Section 13 hereof), the Authority shall have the right to redeem the Series A Notes on the date of such request, even if such date is earlier than the end of the Series A Notes Fixed Rate Period or the end of any Base Rate Period relating to the Series A Notes so long as the Authority pays an amount equal to the costs incurred and losses, if any, incurred, determined in good faith by the Purchaser in connection with any hedging transactions entered into by the Purchaser or its affiliates, in connection with the purchase and/or carry of the Series A Notes. The Series B Notes shall be dated their date of delivery and shall mature on June 1, 2004. The Series B Notes shall bear interest initially at the rate of 4.00% per annum from their date through September 30, 2003 (the "Series B Notes Fixed Rate Period"). After the Series B Notes Fixed Rate Period and until maturity, the Series B Notes shall bear interest for each Base Rate Period at a variable rate equal to the Base Rate plus the Applicable Margin. "Base Rate Period" means, with respect to the Series B Notes, each monthly period, beginning October of 2003, which starts on the first day of the month and ends on the last day of the month. The maximum interest rate on the Series B Notes shall be 12% per annum. The Series B Notes are subject to redemption, without penalty, at the end of the Series B Notes Fixed Rate Period and at the end of any Base Rate Period thereafter; provided, however, in the event the Authority is required to pay to the Purchaser additional amounts as set forth in Section 12 of the Note Purchase Agreement, the Authority shall have the right to redeem the Series B Notes on the date of such request; even if such date is earlier than the end of the Series B Notes Fixed Rate Period or the end of any Base Rate Period relating to the Series B Notes so long as the Authority pays an amount equal to the costs incurred and losses, if any, incurred, determined in good faith by the Purchaser in connection with any hedging transactions entered into by the Purchaser or its affiliates, in connection with the purchase and / or carry of the Series -2- 0 B Notes. 0 Interest on the Notes shall be computed on a 30-day month/360-day year basis. Interest on the Notes shall be pa able on the first day of each month (each, an "Interest Payment Date"), commencing on the first day of the month next succeeding the date of issue. The principal of the Notes shall be payable at maturity. Both the principal of and interest on the Notes shall be payable in lawful money of the United States of America by wire transfer of U.S. Bank, N.A. (the "Paying Agent") as described below. Section 2. Form of Notes; Book Entry Only System. The Notes shall be issued in fully registered form, without coupons, and shall be substantially in the forms, respectively, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Resolution, as are set forth in Exhibit B attached hereto, the blanks in said form to be filled in with appropriate words and figures. "CUSIP" identification numbers shall be imprinted on the Notes, but such numbers shall not constitute a part of the contract evidenced by the Notes and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Notes. In addition, failure on the part of the Authority to use such CUSIP numbers in any notice to registered owners of the Notes shall not constitute an event of default or any violation of the Authority's contract with such registered owners and shall not impair the effectiveness of any such notice. Except as provided below, the owner of all of the Notes shall be The Depository Trust Company, New York, New York ("DTC"), and the Notes shall be registered in the name of Cede & Co., as nominee for DTC. The Series A Notes shall be issued as one note, lettered and numbered as RA-1 and in the denomination of $38,000,000 The Series B Notes shall be issued as one note, lettered and numbered as RB-1 and in the denomination of $22,000,000. The Authority may treat DTC (or its nominee) as the sole and. exclusive owner of the Notes registered in its name for all purposes of this Resolution, and the Authority shall not be affected by any notice to the contrary. The Authority shall not have any responsibility or obligation to any participant of DTC (a "Participant"), any person claiming a beneficial ownership interest in the Notes under or through DTC or a Participant, or any other person which is not shown on the register of the Authority as being an owner, with respect to the accuracy of any records maintained by DTC or any Participant or the payment by DTC or any Participant by DTC or any Participant of any amount in respect of the principal or interest with respect to the Notes. The Paying Agent shall pay all principal and interest with respect to the Notes only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal and interest with respect to the Notes to the extent of the sum or sums so paid. Except under the conditions noted below, no person other than DTC shall receive a Note. Upon delivery by DTC to the Authority of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the term "Cede & Co." in this Resolution shall refer to such new nominee of DTC. If the Authority determines that it is in the best interest of the beneficial owners that they be able to obtain Notes and delivers a written certificate to DTC to that effect, DTC shall notify the Participants of the availability through DTC of Notes. In such event, the Authority shall issue, transfer and exchange Notes as requested by DTC and any other owners in appropriate amounts. DTC. may determine to discontinue providing its services with respect to the Notes at any time by giving notice to the Authority and discharging its responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the Authority shall be obligated to deliver Notes as described in this Resolution. Whenever DTC requests the Authority to do so, the Authority will cooperate with DTC in taking appropriate action after reasonable notice to (a) make available one or more -3- D separate Notes evidencing the Notes to any DTC Participant having Notes credited to its DTC account or (b) arrange for another securities depository to maintain custody of certificates evidencing the Notes. Notwithstanding any other provision of this Resolution to the contrary, so long as any Note is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to the principal and interest with respect to such Note and all notices with respect to such Note shall be made and given, respectively, to DTC as provided in the representation letter delivered on the date of issuance of the Notes. Section 3. Proceeds of the Notes. The purchase price for the Notes shall, on the Closing Date, be transferred to First American Title Company, or other third-party, as escrow holder (the "Escrow Holder"). Moneys transferred to the Escrow Holder shall be applied in accordance with the terms and conditions of the escrow instructions, by and among the Authority, the City, SAUSD and the Purchaser, substantially in the form attached hereto as Exhibit C (the "Escrow Instructions"). Section 4. Security. The principal amount of the Notes, together with the interest thereon, shall be payable from, and the Authority hereby pledges, the first proceeds of all land sales of all or a portion of the EDC Acres owned by the Authority (the "Authority Pledged Revenues"). In addition, the City has agreed to pay to the Authority the first proceeds of all land sales of all or a portion of the EDC Acres owned by the City and, to the extent no land sales proceeds are received, until June 30, 2003, from amounts on deposit in the General Fund of the City (the "City Revenues" and, with the Authority Pledged Revenues, the "Pledged Revenues"). The payment of the principal of the Notes and the interest thereon shall constitute a first lien and charge thereon and shall be payable from the Pledged Revenues. To the extent not so paid from the Pledged Revenues, the Notes shall be paid from any other moneys of the Authority or the City lawfully available therefor. The Authority hereby pledges and grants a security interest (subject to Permitted Encumbrances) to the Purchaser in the Collateral Real Property. The Authority will enter into a deed of trust and assignment of rents (the "Deed of Trust") to further secure its obligations hereunder. The Authority agrees to execute and cause to be filed Uniform Commercial Code financing statements in form and substance satisfactory to the Purchaser, and to execute and deliver such other documents (including, but not limited to, subordination agreements and continuation statements) as the Authority or the Purchaser may reasonably require in order to perfect or maintain as perfected such security interest or give public notice thereof. The Deed of Trust, pursuant to its terms, may be amended and property released therefrom with the consent of the Purchaser. Section 5. Repayment Account. There is hereby created, to be held by the Paying Agent on behalf of the Authority, a special account to be designated the "2002 Revenue Anticipation Note Repayment Account" (the "Repayment Account") and applied as directed in this Resolution. Any money placed in the Repayment Account shall be for the sole benefit of the Purchaser and, until the Notes and all interest thereon are paid or until provision has been made for the payment of the Notes at maturity with interest to maturity, the moneys in the Repayment Account shall be applied solely for the purposes for which the Repayment Account is created. All moneys held by the Paying Agent in the Repayment Account shall be invested as directed by the Executive Director of the Authority and the proceeds of any such investments shall be retained therein. In the absence of any such directions from the Executive Director of -4- `a~•' Authority, the Paying Agent shall invest amounts on deposit in the Repayment Account in money market fund rated "AAAm" or "AAAm-G" or better by Standard & Poor's Ratings Services, including any money market fund for which the Paying Agent or an affiliate receives fees for investment advisory or other services to the fund. As received, the Authority shall transfer all Authority Pledged Revenues to the Paying Agent for deposit in the Repayment Account. As received, the City has agreed to transfer all City Pledged Revenues to the Paying Agent for deposit in the Repayment Account. On each Interest Payment Date, the Paying Agent will transfer to DTC from amounts on deposit in the Repayment Account interest then due on the Notes. On the maturity date of the Notes, the Paying Agent will transfer to DTC from amounts on deposit in the Repayment Account the principal amount of the Notes. Any moneys remaining in the Repayment Account after the Notes and the interest thereon have been paid, or provision for such payment has been made, shall be transferred by the Paying Agent to such fund or account as shall be directed by the Authority. If the Authority elects to redeem the Series A Notes in accordance with the provisions of Section 1 hereof, amounts on deposit in the Repayment Account shall be applied by the Paying Agent to the redemption of the Series A Notes to the extent amounts on deposit therein are available therefor. If the Authority elects to redeem the Series B Notes in accordance with the provisions of Section 1 hereof, amounts on deposit in the Repayment Account shall be applied by the Paying Agent to the redemption of the Series B Notes to the extent amounts on deposit therein are available therefor. Section 6. Execution of Notes. The Chairman or the Executive Director of the Authority is hereby authorized to execute the Notes by manual or facsimile signature, and the Secretary of the Authority is hereby authorized to countersign the same by manual or facsimile signature and to affix the seal of the Authority thereto by manual or facsimile impression thereof, and said officers are hereby authorized to cause the blank spaces thereof to be filled in as may be appropriate. Section 7. Transfer or Exchange of Notes. The Notes may be transferred to a subsequent owner by the Purchaser in whole, so long as the transferee executes and delivers a certificate to the Authority substantially to the effect that: (a) The transferee has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other tax-exempt obligations of a nature similar to the Notes to be able to evaluate the risks and merits of the investment represented by the purchase of the Notes; (b) The transferee is acquiring the Notes for its own account and not with a view to, or for sale in connection with, any distribution of the Notes or any part thereof. The transferee has not offered to sell, solicited offers to buy, or agreed to sell the Notes or any part thereof, and the transferee has no current intention of reselling or otherwise disposing of the Notes; (c) As a sophisticated investor, the transferee has made its own credit inquiry and analysis with respect to the Authority, the City and the Notes, and has made an independent credit decision based upon such inquiry and analysis. The transferee has obtained all the information which the transferee, as a reasonable investor, requires as a result of the transferee having attached significance thereto in making its investment decision with respect to the Notes, and the transferee has had the opportunity to ask questions of and receive answers from knowledgeable individuals concerning the Authority, the City and the Notes. The transferee is able and willing to bear the economic risk of the purchase and ownership of the Notes; and -5- (d) The transferee understands that the Notes have not been registered with any federal or state securities agency or commission. Section 8. Note Register. The Authority shall keep or cause to be kept sufficient books for the registration and transfer of the Notes if the book entry only system is no longer in effect and, in such case, the Authority shall register or transfer or cause to be registered or transferred, on said books, Notes as herein before provided. While the book entry only system is in effect, such books need not be kept as the Notes will be represented by one Note for each series registered in the name of Cede & Co., as nominee for DTC. Section 9. Temporary Notes. The Notes may be initially issued in temporary form exchangeable for definitive Notes when ready for delivery. The temporary Notes may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority, and may contain such reference to any of the provisions of this Resolution as maybe appropriate. Every temporary Note shall be executed by the Authority upon the same conditions and in substantially the same manner as the definitive Notes. If the Authority issues temporary Notes it will execute and furnish definitive Notes without delay, and thereupon the temporary Notes may be surrendered for cancellation, in exchange therefor at the office of the Secretary of the Authority and the Authority shall deliver in exchange for such temporary Notes an equal aggregate principal amount of definitive Notes. Until so exchanged, the temporary Notes shall be entitled to the same benefits pursuant to this Resolution as definitive Notes executed and delivered hereunder. Section 10. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become mutilated the Authority, at the expense of the Purchaser, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Note of like maturity and principal amount in exchange and substitution for the Note so mutilated, but only upon surrender to the Paying Agent of the Note so mutilated. Every mutilated Note so surrendered to the Paying Agent shall be canceled by it and delivered to, or upon the order of, the Authority. If any Note shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Authority and, if such evidence be satisfactory to the Authority and indemnity satisfactory to it shall be given, the Authority, at the expense of the Purchaser, shall execute, and the Paying Agent shall thereupon authenticate and deliver, a new Note of like maturity and principal amount in lieu of and in substitution for the Note so lost, destroyed or stolen. The Authority may require payment of a sum not exceeding the actual cost of preparing each new Note issued under this Section 10 and of the expenses which may be incurred by the Authority and the Paying Agent in connection therewith. Any Note issued under the provisions of this Section 10 in lieu of any Note alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Note 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 Resolution with all other Notes issued pursuant to this Resolution. Notwithstanding any other provision of this Section 10, in lieu of delivering a new Note for which principal is about to become due for a Note which has been mutilated, lost, destroyed or stolen, the Paying Agent may make payment of such Note in accordance with its terms. Section 11. Covenants and Warranties. It is hereby covenanted and warranted by the Authority that all representations and recitals contained in this Resolution are true and correct, and that the Authority and its appropriate officials have duly taken all proceedings necessary to be taken by them, and will take any additional proceedings necessary to be taken by them, for the prompt collection and enforcement of the taxes, revenue, cash receipts and other moneys -6- pledged hereunder in accordance with law and for carrying out the provisions of this Resolution. Section 12. Covenants. (a) Punctual Payment. The Authority shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Notes, in strict conformity with the terms of the Notes and of this Resolution, according to the true intent and meaning thereof, but only out of Pledged Revenues and other assets pledged for such payment as provided in this Resolution. (b) Extension of Payment of Notes. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Notes or the time of payment of any of the claims for interest by the purchase or funding of such Notes or claims for interest or by any other arrangement and in case the maturity of any of the Notes or the time of payment of any such claims for interest-shall be extended, such Notes or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Resolution, except subject to the prior payment in full of the principal of all of the Notes then outstanding and of all claims for interest thereon which shall not have been so extended. Nothing shall be deemed to limit the right of the Authority to issue notes for the purpose of refunding any outstanding Notes, and such issuance shall not be deemed to constitute an extension of maturity of the Notes. (c) Discharge of Claims. The Authority covenants that in order to fully preserve and protect the priority and security of the Notes, the Authority shall pay from legally available funds and discharge all lawful claims for labor, materials and supplies furnished for or in connection with the Collateral Real Property which, if unpaid, may become a lien or charge upon the Pledged Revenues prior or superior to the lien of the Notes and impair the security of the Notes. The Authority shall also pay from the Pledged Revenues all taxes and assessments or other governmental charges lawfully levied or assessed upon or in respect of the Collateral Real Property or upon any part thereof or upon any of the Pledged Revenues therefrom. (d) Records and Accounts. The Authority covenants that it shall keep proper books of record and accounts of the EDC Acres owned by the Authority, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the EDC Acres owned by the Authority. (e) Against Encumbrances. Other than as described herein, the Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Pledged Revenues and other assets pledged or assigned under this Resolution while any of the Notes are outstanding, except the pledge and assignment created by this Resolution. Subject to this limitation, the Authority expressly reserves the right to enter into ,one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Collateral Real Property while any of the Notes are outstanding, except the pledge and assignment created by this Resolution and the Deed of Trust. (f) Insurance. So long as any Notes remain outstanding, the Authority will maintain or cause to be maintained with respect to the Collateral Real Property, with insurance companies or by means of self-insurance, insurance for property damage, fire and extended coverage, public liability and property damage liability insurance in amounts estimated to indemnify the reasonably estimated damage, loss or liability. If the Purchaser shall so request, the Authority shall provide summaries or other evidence of its insurance coverage. So long as the Notes are outstanding, the Authority agrees to maintain the Purchaser as an additional named insured on -7- the Pollution and Remediation Legal Liability Policy relating to the EDC Acres, issued by Indian Harbor Insurance Company. (g) Inspection. The Authority shall, at any reasonable time and from time to time, upon five (5) days prior written notice, permit the Purchaser to (i) inspect the premises and the books and records of the Authority relating to the EDC Acres for the purpose of verifying compliance by the Authority with the covenants contained herein, (ii) examine and make copies of and abstracts from the records and books of account of the Authority, (iii) discuss the affairs, finances and accounts of the Authority with any of its officers or directors and (iv) communicate with the Authority's independent certified public accountants. The Authority shall, at any reasonable time and from time to time, upon five (5) days prior written notice, permit the Purchaser to inspect the EDC Acres and/or the Collateral Real Property. (h) Further Assurances. The Authority will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Purchaser of the rights and benefits provided in this Resolution. (i) Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Resolution or in the Notes, and all benefit or advantage of any such law or laws is hereby expressly waived by the Authority to the extent permitted by law. (j) Compliance with Laws. The Authority will comply in all material respects with all laws, statutes, ordinances, re ations, covenants, conditions and restrictions now or hereafter affecting the EDC Acres and~orl the Collateral Real Property, the Authority or the operations thereof, and it will not commit, suffer or permit any act to be done in violation of any law, ordinance or regulation, except, in each case, where such noncompliance or act would not have a material adverse effect upon the Authority's assets, operations or financial condition. (k) Maintenance, Operation and Use of the Project. The Corporation will use commercially reasonable efforts to cause the EDC Acres and the Collateral Real Property to be maintained in good condition and repair, will maintain, operate and use the EDC Acres and the Collateral Real Property. (1) Tax Covenants. (i) Private Activity Bond Limitation. The Authority shall assure that the proceeds of the Notes are not so used as to cause the Notes to satisfy the private business tests of section 141(b) of the Code (as hereinafter defined) or the private loan financing test of section 141(c) of the Code. (ii) Federal Guarantee Prohibition. The Authority shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Notes to be "federally guaranteed" within the meaning of section 149(b) of the Code. (iii) Rebate Requirement. The Authority shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Notes. -8- (iv) No Arbitrage. The Authority shall not take, or permit or suffer to be taken any action with respect to the proceeds of the Notes 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 Notes would have caused the Notes to be "arbitrage bonds" within the meaning of section 148 of the Code. (v) Maintenance of Tax-Exemption. The Authority shall take all actions necessary to assure the exclusion of interest on the Notes from the gross income of the registered owners of the Notes to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Notes. For purposes of this paragraph (1), the term "Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Notes or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Notes, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code. Section 13. Sale of the Notes. A note purchase agreement (the "Note Purchase Agreement") by and among the Authority, the City and Purchaser relating to the purchase by the Purchaser of the Notes, substantially in the form attached hereto as Exhibit D, be and is hereby approved. The Chairman or the Executive Director is hereby authorized and directed to execute the Note Purchase Agreement, with such changes, insertions or omissions as may be approved by such official, and so long as the terms and conditions of the Notes issued and delivered pursuant to the Note Purchase Agreement are consistent with the requirements herein stated and as stated in the Note Purchase Agreement. Section 14. Paying Agent. (a) Appointment of Paying Agent. The Paying Agent is hereby appointed paying agent, registrar and authenticating agent for the Notes. The Paying Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Resolution no implied covenants or obligations shall be read into this Resolution against the Paying Agent. The Paying Agent shall signify its acceptance of the duties and obligations imposed upon it by this Resolution by executing and delivering to the Authority a certificate to that effect. The Authority may remove the Paying Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company doing business and having an office in the State of California, having a combined capital (exclusive of borrowed capital) and surplus of at least one hundred million dollars ($100,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 14 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Paying Agent may at any time resign by giving written notice to the Authority and the Purchaser of such resignation, Upon receiving notice of such resignation, the Authority shall promptly appoint a successor Paying Agent by an instrument in writing. Any resignation or removal of the Paying Agent and appointment of a successor Paying Agent shall become effective upon acceptance of appointment by the successor Paying Agent. -9- ,, (b) Liability of Paying Agent. The recitals of facts, covenants and agreements herein and in the Notes contained shall be taken as statements, covenants and agreements of the Authority, and the Paying Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Resolution or of the Notes nor shall incur any responsibility in respect thereof, other than as set forth in this Resolution. The Paying Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default In the absence of bad faith, the Paying Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Resolution. The Paying Agent shall not be liable for any error of judgment made in good faith by a responsible officer of its corporate trust department in the absence of the negligence of the Paying Agent. No provision of this Resolution shall require the Paying Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Paying Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Paying Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder (c) Notice to Paying Agent. The Paying Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Paying Agent may consult with counsel, who maybe of counsel to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Resolution the Paying Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Paying Agent, be deemed to be conclusively proved and established by a certificate of the Authority, and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Resolution upon the faith thereof but in its discretion the Paying Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. (d) Compensation; Indemnification. The Authority shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Resolution, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees incurred in and about the performance of their powers and duties under this Resolution. The Authority further agrees to indemnify and save the Paying Agent harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith. -10- Section 15. Events of Default and Remedies. (a) The following events shall be Events of Default: (i) default in the due and punctual payment of the principal of the Notes when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise; (ii) default in the due and punctual payment of any installment of interest on any Note within three days of when and as such interest installment shall become due and payable; (iii) default by the Authority in the observance of any of the representations, warranties, covenants, agreements or conditions on its part in this Resolution or in the Notes contained (other than as referred to in subsections (i) or (ii) of paragraph (a) this Section 15), if such default shall have continued for a period of sixty (60) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Purchaser; the Authority agrees to promptly notify the Purchaser whenever it has knowledge of any default in the observance of any of the matters described in the first clause of this part (iii); (iv) default by the City on any obligations payable from its general fund aggregating $4,000,000 or more, or to other events if the effect thereof is to accelerate or permit the acceleration of such obligation; (v) an unsatisfied judgment or order against the City of $4,000,000 or more, either individually or in the aggregate; and (vi) an unsatisfied judgment or order against the Authority of $4,000,000 or more, either individually or in the aggregate. (b) If an Event of Default shall occur, then, and in each and every such case during the continuance of such Event of Default, the Purchaser shall be entitled, upon notice in writing to the Authority, to declare the principal of all of the Notes then outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable; anything in this Resolution or in the Notes contained to the contrary notwithstanding. Any such declaration, however, is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Authority shall deposit with the Paying Agent a sum sufficient to pay all the principal of and installments of interest on the Notes payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Notes, and the reasonable charges and expenses of the Paying Agent, and any and all other defaults known to the Paying Agent (other than in the payment of principal of and interest on the Notes due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Paying Agent or provision deemed by the Paying Agent to be adequate shall have been made therefor, then, and in every such case, the Purchaser, by written notice to the Authority and the Paying Agent, or the Paying Agent if such declaration was made by the Paying Agent, may, on behalf of the Purchaser, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. -11- C ~ If an Event of Default shall occur and be continuing, all Pledged Revenues and any other funds then held or thereafter received by the Paying Agent under any of the provisions of this Resolution shall be applied by the Paying Agent as follows and in the following order: (i) To the payment of any expenses necessary in the opinion of the Paying Agent to protect the interests of the Purchaser and payment of reasonable charges and expenses of the Paying Agent (including, but not limited to, reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Resolution; (ii) To the payment of the interest then due on the Notes; and .(iii) To the payment of the principal then due on the Notes (upon presentation of the Notes to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Resolution. Section 16. Acceptance of Collateral Real Property; Approval of Deed of Trust. (a) The Authority hereby accepts the conveyance of the Collateral Real Property by the City to the Authority. (b) The Deed of Trust, substantially in the form attached hereto as Exhibit E, be and is hereby approved, and the Chairman or the Executive Director, or any designee thereof, is hereby authorized and directed to execute the Deed of Trust, with such changes, insertions and omissions as may be approved by such officials. Performance by the Authority of the Deed of Trust is hereby authorized. Section 17. Lease Revenue Bonds. If, on March 1, 2004, any portion of the Notes remains outstanding and sufficient moneys are not then on deposit in the Repayment Account to pay all outstanding Notes at maturity, the Authority agrees to commence proceedings for the issuance of lease revenue bonds secured by a lease agreement payable from the general fund of the City. In connection therewith, the Authority will lease to the City assets mutually agreeable to the City, the Authority and the Purchaser and which will assure either an investment grade credit rating from a national rating service or a municipal bond insurance commitment from a national bond insurance company, on terms (including rents) sufficient to secure and retire such lease revenue bonds, such lease to become effective not later than June 1, 2004. The below- enumerated documents, initial drafts of which are attached hereto as Exhibit F, be and are hereby approved, Authority staff is hereby authorized to prepare definitive forms thereof if necessary in connection with the issuance of such lease revenue bonds: (a) a site lease, by and between the City and the Authority; (b) a lease agreement, by and between the Authority and the City; and (c) an indenture of trust, by and between the Authority and a trustee bank to be selected. The final forms of such documents and any other documents required in connection therewith and the issuance of such lease revenue bonds shall be subject to the approval of the Authority. -12- G Section 18. Consultants. (a) The firm of Quint & Thimmig LLP, San Francisco, California, is hereby designated as bond counsel to the Authority in connection with the Notes. The Chairman, the Executive Director, or the designee of any such official, is hereby authorized to enter into an agreement with said firm for its services as bond counsel, in a form acceptable to the Chairman, the Executive Director, or the designee of any such official. (b) The firm of Gardner, Underwood & Bacon, LLC, Los Angeles, California, is hereby designated as financial advisor to the Authority in connection with the Notes. The Chairman, the Executive Director, or the designee of any such official, is hereby authorized to enter into an agreement with said firm for its services as financial advisor, in a form acceptable to the Chairman, the Executive Director, or the designee of any such official. (c) U.S. Bank; N.A. is here designated as paying agent in connection with the Notes. The Chairman, the Executive Director, or the designee of any such official, is hereby authorized to enter into an agreement with said firm for its services as paying agent, in a form acceptable to the Chairman, the Executive Director, or the designee of any such official. Section 19. Preparation of Notes; Official Action. Quint & Thimmig LLP, as Bond Counsel, is directed to cause suitable Notes to be prepared and to cause the blank spaces therein to be filled in to comply with the provisions of this Resolution, and to procure their execution by the proper officers and to cause the Notes to be delivered when so executed to the Paying Agent. The Chairman, the Executive Director, the Secretary or any of them, are further authorized and directed to make, execute and deliver such certificates, agreements and other closing documents as are necessary to consummate the transactions contemplated by this Resolution. Section 20. Effective Date. This Resolution shall take effect upon its adoption by the Board. ,~***** I, the undersigned Secretary of the Tustin Public Financing Authority, hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted by the Board of Directors of the Authority at a meeting thereof on the 16th day of December, 2002, by the following vote of the members thereof: AYES: Thomas, Worley, Bone, Davert NOES: None ABSTAIN: Kawashima ABSENT: None Secretary -13-