HomeMy WebLinkAbout21 LOAN AGREEMENT CITIGROUP (AAE) 04-17-07Agenda Item 2~
Reviewed:
AGENDA REPORT City Manager
Finance Director
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MEETING DATE: APRIL 17, 2007
T0: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL,
REDEVELOPMENT AGENCY, AND PUBLIC FINANCING AUTHORITY
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FROM: WILLIAM A. HUSTON, CITY MANAGER
SUBJECT: LOAN AGREEMENT WITH CITIGROUP GLOBAL MARKETS
RECOMMENDATION: That the members of the Tustin City Council, Redevelopment
Agency and Public Financing Authority approve the attached resolutions which
authorize borrowing $25 million from Citigroup Global Markets.
FISCAL IMPACT: Pursuant to the Note Purchase Agreements, the loan will be secured
by tax increment income derived from the MCAS Tustin Redevelopment Project area.
The loan will be repaid over a four year period and is subject to refinancing. To comply
with IRS regulations, the total loan of $25 million is separated into two components
(Series A and Series B notes).
DISCUSSION: Pursuant to City Council Resolution No. 07-30, the Edinger widening
and Phase I Newport Avenue Extension Projects benefit the MCAS Tustin
Redevelopment Project Area and are consistent with the Project Area Plan and Five-
Year Implementation Plan for the MCAS Tustin Redevelopment Area. Proceeds from
the loan will be used to complete the acquisition of land needed for construction of the
street improvements.
Citigroup Global Markets is being recommended following discussions with potential
lenders that specialize in short-term loans for public projects. A review of financing
options analyzed by City staff and the City's financial advisor concluded that Citigroup
Global Markets offered terms best suited to meet the City's needs.
ATTACHED AS REFERENCE
RESOLUTION N0.07-30
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN MAKING FINDINGS PURSUANT TO HEALTH
AND SAFETY CODE SECTION 33445 FOR ACQUISITION
OF PROPERTY AND RIGHT-OF-WAY NECESSARY TO
CONSTRUCT THE PHASE I NEWPORT AVENUE
EXTENSIONINORTHBOUND SR-55 RAMP
RECONFIGURATIONIEDINGER AVENUE WIDENING
PROJECT IMPROVEMENTS
THE CITY COUNCIL OF THE CITY OF TUSTIN FINDS:
Whereas, pursuant to the California Community Redevelopment Law (Health
and Safety Code Section 33000 et seq.), the Community Redevelopment Agency of the
City of Tustin (the "Agency") is carrying out the Redevelopment Plan (the "MCAS Tustin
Redevelopment Plan") for the MCAS Tustin Redevelopment Project (the "MCAS Tustin
Redevelopment Project"); and
Whereas, Section 33445 of the California Community Redevelopment Law
rovides that a redevelopment agency is authorized, with the consent of the legislative
p
body, to pay all or part of the value of the land for and the cost of the installation and
construction of any building, facility, structure, or other improvement which is publicly
owned either within or without the project area if the legislative body determines that:
(1) the buildings, facilities, structures, or other improvements are of benefit to the
project area or the immediate neighborhood in which the project is located; and (2) no
other reasonable means of financing the buildings, facilities, structures, or other
improvements, are available to the community; and (3) the payment of funds for the
acquisition of land or the cost of buildings, facilities, structures, or other improvements
will assist in the elimination of one or more blighting conditions inside the project area;
and (4) the payment of funds for the acquisition of land or the cost of buildings,
facilities, structures, or other improvements is consistent with the implementation plan
adopted pursuant to Section 33490 of the Community Redevelopment Law; and
Whereas, the City has obtained an orderfor prejudgment possession for portions
of Orange County Assessor's Parcels 430-251-01,02,03,06,07,08 and 011 (the "Right-
of-Way Property") owned by AAE Pacific Park Associates, LLC ("AAE"}for the purpose
of constructing:
1. Certain street widening improvements on Edinger Avenue from the
westerly boundary of the City of .Tustin to just east of Red Hill Avenue,
including associated improvements at the Red Hill Avenue and SR-55
ramp intersections; and
Resolution No. 07-30
Page 1 of 8
2. The Phase I Newport Avenue Extension project from Edinger Avenue
south to Valencia Avenue, including the construction of six lanes and
relocation of the SR-55 north-bound ramps to south of Edinger Avenue,
together with associated improvements at the Edinger Avenue
intersection and improvements and modifications to Del Amo Avenue
(collectively, the "Street Improvements"); and
Whereas, the Right-of- Way Property and Street Improvements are all located
within the boundaries of the South Central Redevelopment Project, as amended (the
"South Central Redevelopment Project"}; and
Whereas, in order to complete the acquisition of the Right-of-Way Property, the
City and AAE have stipulated that certain additional real property owned by AAE and
adjoining the Right-of-Way Property (the "Additional Property"} must also be acquired
by the City; and
Whereas, the Street Improvements have been identified in environmental impact
reports prepared for the South Central Redevelopment Project, MCAS Tustin
Redevelopment Project and Tustin Legacy Project as necessary to provide primary
arterial access to both the South Central and MCAS Tustin Redevelopment Projects
and were identified as committed improvements in the Joint Final Environmental Impact
StatementlEnvironmental Impact Report for the disposal and reuse of the Tustin Marine
Corps Air Station certified by the City of Tustin on January 16, 2001, and supplemented
by an addendum dated April, 2006 (the "Final Program EIR"}; and
Whereas, additional costs are now anticipated as a result of the need to acquire
the Additional Property, increasing land acquisition and improvement costs for the
Street Improvements including actual construction, engineering and design costs; and
Whereas, without securing additional financing for the Street Improvements,
implementation of the MCAS Tustin Redevelopment Project, including, without
limitation, the Tustin Legacy Project would be significantly negatively impacted in that
the Street Improvements were identified as committed improvements and the inability to
construct these Street Improvements would result in delays and preclude the full
implementation of the MCAS Tustin Redevelopment Project and the Tustin Legacy
Project and result in concomitant adverse environmental and social impacts to the
community.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN DOES
HEREBY RESOLVE AS FOLLOWS:
Section 1. In accordance with section 33445(a)(1 } of the Community Redevelopment
Law, the City Council hereby finds and determines that the acquisition of land and cost
of the installation and construction of the Street Improvements will benefit the MCAS ,~
Tustin Redevelopment Project Area. The foregoing finding is based on the following
facts:
Resolution No. 07-30
Page 2 of 8
(a) The Tustin Legacy Project is located within the MCAS Tustin
Redevelopment Project Area.
(b} The Final Program EIR assumes completion of the Street Improvements
in order to provide improved traffic circulation within the project and
mitigate unacceptable levels of service at key intersections.
(c~ Currently, the Tustin Legacy Project is a dilapidated neighborhood blight
that has been declared surplus former military property and has largely
been vacant since the site was vacated by the military. The Tustin Police
Department reports that, in its present state, the MCAS Tustin Project
attracts constant trespassers and vandals.
(d} The Tustin Legacy Project will improve the MCAS Tustin Redevelopment
Project by transforming this blight into awell-maintained master planned
community which provides the following community benefits: elimination
of blighting influences in the MCAS Tustin Redevelopment Project Area
by placing vacant parcels of land into productive use; the assembly of
land into parcels suitable for modern, integrated development with
improved pedestrian and vehicular circulation in the MCAS Tustin
Redevelopment Project Area; the reuse and redevelopment of portions of
the MCAS Tustin Redevelopment Project Area which are improperly
utilized, the strengthening of the economic base of the MCAS Tustin
Redevelopment Project Area by stimulating new investment and
economic growth; the creation of job opportunities; the expansion and
improvement of the community's supply of affordable housing, and the
installation of new or replacement of existing public improvements,
facilities and utilities in areas currently inadequately served with regard to
such improvements, facilities and utilities.
(e~ The Street Improvements are required to provide primary access routes to
the Tustin Legacy Project.
(f) Construction of the Street Improvements will also benefit the MCAS Tustin
Redevelopment Project Area by stimulating and encouraging the build-out
of the Tustin Legacy Project and avoiding delays in full implementation of
that project.
Section 2. In accordance with section 33445(a)(1 ~ of the Community Redevelopment
Law, the City Council hereby finds and determines that acquisition of land for the Street
Improvements and construction of the Street Improvements will benefit the immediate
neighborhood of the MCAS Tustin Redevelopment Project Area.
The foregoing finding is based upon the following facts:
Resolution No. 07-30
Page 3 of 8
(a} The Street Improvements are located within the South Central
Redevelopment Project Area which is immediately adjacent to the MCAS
Tustin Redevelopment Project Area.
(b) The Street Improvements will improve the carrying capacity of the public
streets which serve as the primary access routes for both the MCAS
Tustin Redevelopment Project Area and the South Central
Redevelopment Project Area, thereby assisting in transforming both the
South Central Redevelopment Project Area and the MCAS Tustin
Redevelopment Project Area from their current state of dilapidation into
community assets.
Section 3. In accordance with Section 33445(a}(2) of the Community Redevelopment
Law, the City Council hereby finds and determines that there are no other reasonable
means available to the community for financing the additional acquisition 'costs of the
Street Improvements to be paid for by the Agency. While common sources of financing
street improvements include the Gas Tax, General Fund, Redevelopment Agency
Capital Project Fund, and State and Federal Highway Grants, these sources have been
used to finance the Street Improvements to date and are now exhausted and not
reasonably available to the community for financing the additional acquisition and
construction costs. Specifically:
(a) Gas Tax. Over the past two years, revenue in the gas tax fund has
remained constant while, during this same period, routine annual
expenditures in this fund have increased. As a result, sufficient gas tax
funding will not be available for capital projects next year nor to allocate
for the additional costs anticipated for the Street Improvements.
(b) General Fund. Over the past two fiscal years the City has been unable to
appropriate more than $4,500,000 in additional funds towards the Street
Improvements. Increasing operating costs and. declining revenues have
significantly reduced general funds available for capital improvement
projects. Specifically, increases in retirement and workers compensation
costs and revenue losses due to the State's financial hardship have
prevented the general fund from funding the. increased costs of the Street
Improvements as a capital project funding source.
(c) Redevelopment Agency -South Central Redevelopment Project Area
Improvement Fund. Currently there is capital improvement funds
budgeted in the South Central Redevelopment Project Area of
approximately $5,800,000 for the Street Improvements. The additional
acquisition and construction costs of these Street Improvements are
expected to exceed $34,000,000. Approximately $14,000,000, the total
projected Fund Balance of the Redevelopment Project Area, is currently
encumbered for Phase Two of the extension of Newport Avenue portion
of this project, the extension of Newport Avenue north to Sycamore
Resolution No. 07-30
Page 4 of 8
Avenue. The budgeted cost of the Phase Two extension project is
$39,800,000. There are no additional resources available in the South
Central Redevelopment Project Area to complete the Street
Improvements.
(d) State and Federal Highway Grants. Historically, road projects in the City
have received significant funding from State and Federal Highway Grants
which are administered and allocated through the Orange County
Transportation Agency (the "OCTA"). Two circumstances have depleted
the availability of this revenue source for the City this fiscal year and in
subsequent fiscal years. First, the OCT A has already provided
$22,101,428 to fund a portion of the Street Improvement costs including
$12,135,440 for Edinger Avenue widening and $9,965,988 for the Phase I
Newport Extension! SR-55 Northbound Ramp Reconfiguration Project.
Second, due to California's economy, State transportation funds have
been depleted and there is less money for the OCT Ato allocate.
(e) California Infrastructure State Revolving Fund ("ISRF") Program. The
California Infrastructure and Economic Development Bank ("I-Bank")
provides low-cost financing through its ISRF Program to public agencies,
including cities and redevelopment agencies, for a wide variety of
infrastructure projects including the construction, renovation and
acquisition of city streets. The ISRF Program is funded through a
combination of State I-Bank funds and revenue bond proceeds. The
maximum amount of ISRF Program loans that any city can receive within
a fiscal year is $20,000,000 with a maximum of $10,000,000 per project
loan. The I-Bank will consider the following four sources for loan
repayment: special enterprise funds such as the City's Gas Tax fund; tax
increment funds; the City's General Fund; andlor special taxes from
benefit assessment districts or community facilities districts. Sections 3(a)
and 3(b) clearly describe why neither gas tax funds nor the General Fund
are available sources for repayment. In addition, the proposed property to
be acquired does not fall within the boundaries of a voter approved
benefits assessment district or community facilities district. Therefore, the
only source available to the City for repayment of an ISRF Program loan
would be tax increment.
Section 4. In accordance with Section 33445(a}(3) of the Community Redevelopment
Law, the City Council hereby finds and determines that the payment by the Agency for
the cost of land for and the cost of installation and construction of the Street
Improvements will assist in the elimination of one or more blighting conditions inside the
MCAS Tustin Redevelopment Project Area. The foregoing finding is based on the
following facts:
(a) As set forth in the Community Redevelopment Law, the existence of
buildings such as those that exist within the MCAS Tustin Redevelopment
Resolution No. 07-30
Page 5 of 8
Project Area, in which it is unsafe or unhealthy for persons to live or work,
are conditions that cause blight.
(b) Large portions of the Tustin Legacy project have been vacant and
unkempt since the land was vacated by the military. Dilapidated buildings
located in the former base were designed primarily for military-specific
aviation operations and these buildings do not have the appropriate
capacity or utility for civilian reuse, nor would they be compatible or
consistent with the current market uses identified in the Redevelopment
Plan forthe MCAS Tustin Redevelopment Project Area.
(c) Structures in the Tustin Legacy Project are both unsafe and unhealthy as
they lack many services such as basic plumbing and electricity and do not
meet basic habitability standards. Infrastructure and utilities also represent
a major constraint to the effective development of the Tustin Le ac
g Y
Project, requiring significant new installations and replacements.
(d) Both on-site and off-site transportationlcirculation systems within the
MCAS Tustin Redevelopment Project lack the additional capacity needed
to serve uses proposed with the Tustin Legacy Project without major new
street improvements to enhance capacity.
(e} Development of the Tustin Legacy Project will replace the existing blighted ~~M
conditions within the MCAS Tustin Redevelopment Project with a modern,
safe and well-maintained master planned community. Construction of the
Street Improvements is necessary for the development of the Tustin
Legacy Project.
Section 5. In accordance with Section 33445(a)(3) of the Community Redevelopment
Law, the City Council hereby finds' and determines that payment by the Agency of the
cost land for and the cost of construction and installation of the Street Improvements is
consistent with the MCAS Tustin Redevelopment Plan and the Five-Year
Implementation Plan adopted by the agency for the MCAS Tustin Redevelopment
Project Area pursuant to Section 33490 of the Community Redevelopment Law. The
foregoing finding is based upon the following facts:
(a} Attachment 3 of the MCAS Tustin Redevelopment Plan specifically
identifies as an authorized use of Agency resources off-site transportation
circulation mitigation which would add lanes, change lane movements, or
enhance intersections to increase roadway capacity to reduce any
impacts of development within the MCAS Tustin Redevelopment Project
Area and to increase operational efficiency. This includes the acquisition
of additional rights-of-way necessary for the off-site
transportation/circulation improvements for the benefit of the Project Area. ~.~,
1
Resolution No. 07-30
Page 6 of 8
(b) The Agency's 2003 Implementation Plan (the "Implementation Plan")
identifies the objective of installation of new or replacement of existing
public improvements and utilities in areas which are inadequately served
with regard to such improvements, facilities, and utilities. The
improvement and/or extension of existing roadway systems is specifically
identified, including off-site roadway EIS/EIR traffic
mitigationsldedications. The Implementation Plan notes that the
installation of such improvements is for the express purpose of aiding in
the redevelopment of the MCAS Tustin .Redevelopment Project,
eliminating blight and providing the community benefits articulated above.
Section 6. The City Council hereby consents to the payment by the Agency of the
cost of acquisition of land, installation and construction of the Street Improvements, as
defined herein (and including engineering and legal costs), from funds derived from the
MCAS Tustin Redevelopment Project and in the amount necessary to conclude all
litigation related to the Street Improvements and to complete construction of said Street
Improvements.
PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on
the 20th day of March, 2007.
LOU BONE,
Mayor
PAMELA STOKER,
City Clerk
Resolution No. 07-30
Page 7 of 8
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 07-30 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on the 20~' day
of March, 2007, by the following vote:
COUNCILMEMBER AYES: ~Qne. Amante. Davert. Kawashima. Palmer (5)
COUNCILMEMBER NOES: None (0)
COUNCILMEMBERABSTAINED: None (0)
COUNCILMEMBERABSENT: None (0)
PAMELA STOKER
City Clerk
Resolution No. 07-30
Page 8 of 8
SERIES A NOTES
Quint & Thimmig LLP
Series A Note
TUSTIN PUBLIC FINANCING AUTHORITY RESOLUTION N0.07-03
RESOLUTION OF THE TUSTIN PUBLIC FINANCING AUTHORITY APPROVING
THE FORM AND AUTHORIZING THE EXECUTION OF A NOTE PURCHASE
AGREEMENT IN AN AMOUNT NOT TO EXCEED $5,100,000, IN CONNECTION
WITH THE FINANCING BY THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCY OF THE ACQUISITION OF CERTAIN LAND WITHIN THE AGENCY'S
SOUTH CENTRAL REDEVELOPMENT PROJECT BUT OF BENEFIT TO ITS MCAS
TUSTIN REDEVELOPMENT PROJECT AND AUTHORIZING AND DIRECTING
ACTIONS WITH RESPECT THERETO
(SERIES ANOTE -TAX-EXEMPT)
WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") is a
community redevelopment agency, duly created, established and authorized to transact
business and exercise its powers, all under and pursuant to the Community Redevelopment
Law (Part I of Division 24, commencing with section 33000) of the California Health and Safety
Code) ("Redevelopment Law'), and the powers of the Agency include the power to borrow
money and issue bonds for any of its corporate purposes, including authority pursuant to
sections 33671.5 and Article 5 of Chapter 6 (commencing with section 33640) of the
Redevelopment Law;
WHEREAS, on June 16, 2003, by Ordinance No. 1276, the City Council of the City of
Tustin (the "City Council") formed the MCAS Tustin Redevelopment Project (the
"Redevelopment Project");
WHEREAS, the redevelopment plan for the Redevelopment Project has been adopted in
compliance with all applicable requirements of the Redevelopment Law (the "Redevelopment
Plan" );
WHEREAS, Agency is empowered to enter into agreements and to carry out
redevelopment projects;
WHEREAS, the Agency desires to borrow moneys from Citigroup Global Markets Inc.,
or one of its affiliates (the "Bank"), in a principal amount not to exceed $5,100,000, evidenced by
a note (the "Series A Note'), pursuant to a note purchase agreement, by and among the Agency,
the Tustin Public Financing Authority (the "Authority") and the Bank (the "Series A Note
Purchase Agreement" ), to provide f unds to finance a portion of the costs of the acquisition of a
37-acre parcel of land which will provide freeway access to and from the Redevelopment
Project (the "Property") within the Agency's South Central Redevelopment Project but of
benefit to the Redevelopment Project;
20006.02
WHEREAS, pursuant to the Series A Note Purchase Agreement, the Agency will sell the
Series A Note to the Authority f orimmediate re-sale to the Bank;
WHEREAS, the Agency and the City Council have heretofore made required f findings to
establish that the acquisition of the Property is of benefit to the Redevelopment Project;
WHEREAS, the Series A Note Purchase Agreement establishes the basic terms and
conditions under which the Bank will purchase, and by which Agency will issue the Series A
Note, in a principal not to exceed $5,100,000, which Series A Note will be secured by a pledge of
a portion of the tax increment revenues generated by the Redevelopment Project, all subject to
delivery of the Series A .Note Purchase Agreement and related closing documents and/or
required in implementation of the Series A Note purchase, including payment of fees and other
costs as may be payable from the proceeds thereof;
WHEREAS, it is anticipated that the interest to be payable on the Series A Note will be
excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the issuance of the Series A Note, the Agency intends to
issue a separate note, in a principal not to exceed $19,900,000 (the "Series B Note" ), to be
separately authorized by the Agency and to finance an additional portion of the costs of the
acquisition, which Series B Note will be secured on a parity with the Series A Note;
WHEREAS, it is anticipated that the interest to be payable on the Series B Note will not
be excludable f rom gross income of the owners thereof f or f ederal income tax purposes under
section 103 of the Code;
WHEREAS, capitalized terms used in this Resolution are as defined in the Series A Note
Purchase Agreement, unless otherwise defined herein; and
WHEREAS, the Series A Note Purchase Agreement is in the best interest of the Agency
and the City of Tustin, and the health, safety and welfare of its residents, and is of benefit to the
Agency and the Redevelopment Project, and is contemplated by the Redevelopment Plan
pursuant to section 33490 of the Redevelopment Law;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE
TUSTIN PUBLIC FINANCING AUTHORITY:
Section 1. The Authority hereby approves the Series A Note Purchase Agreement and
authorizes and directs the Chair, the Executive Director, and any other appropriate official of
the Authority, and the authorized designees of any of them (together, "Designees" ), to enter
into the Series A Note Purchase Agreement among the Authority, the Agency, as borrower, and
Bank, as lender, with the final form of such Series A Note Purchase Agreement subject to the
approval of the Chair or the Executive Director and Authority Counsel.
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Section 2. The Chair or the Executive Director and the Secretary are hereby authorized to
execute and ~ attest the final Series A Note Purchase Agreement, including any related
attachments, on behalf of the Authority, their execution and attestation thereof to constitute
conclusive evidence of the Authority's approval of the terms thereof in accordance with this
Resolution. Copies of the final Series A Note Purchase Agreement, when duly executed and
attested, shall be placed on f file in the office of the Secretary. Further, the Executive Director (or
his duly authorized representative) is authorized to implement the Series A Note Purchase
Agreement and take all further actions and execute alI documents referenced therein and/ or
necessary and appropriate to carry out the transactions represented by the Series A Note and
the Series A Note Purchase Agreement as provided f or therein, and the Secretary is authorized
to attest to such documents. The Executive Director (or his duly authorized representative) is
hereby authorized, to the extent necessary during the implementation of the Series A Note
Purchase Agreement, to make technical or minor changes and interpretations thereto after
execution, as necessary, to properly implement and carry out the Series A Note Purchase
Agreement, provided any and all such changes shall not in any manner materially affect the
rights and obligations of Authority or the maximum funding provided under the f final Series A
Note Purchase Agreement.
Section 3. In addition to the authorization of Sections 3 and 4 above, the Executive
Director (or his duly authorized representative) and the Secretary are hereby authorized, on
behalf of Authority, to sign all other documents necessary or appropriate to carry out and
implement Series A Note Purchase Agreement and any implementing agreements or
documents, including causing the issuance of warrants in implementation thereto, and to
administer the Authority's obligations, responsibilities and duties to be performed under the
Series A Note Purchase Agreement.
Section 4. The Secretary shall certif y to the adoption of this Resolution.
Section 5. This Resolution shall take effect upon adoption.
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PASSED, APPROVED AND ADOPTED this 17th day of April, 2007 by the f ollowing roll
call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
TUSTIN PUBLIC FINANCING
AUTHORITY
By
Chair
Attest:
Secretary
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Quint & Thimmig LLP
Series A Note
CITY OF TUSTIN
RESOLUTION N0.07-39
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN
APPROVING THE ISSUANCE BY THE TUSTIN COMMUNITY
REDEVELOPMENT AGENCY OF A PROMISSORY NOTE IN AN AMOUNT
NOT TO EXCEED $5,100,000, IN CONNECTION WITH THE FINANCING OF
THE ACQUISITION OF CERTAIN LAND WITHIN THE AGENCY'S SOUTH
CENTRAL REDEVELOPMENT PROJECT BUT OF BENEFIT TO ITS MCAS
TUSTIN REDEVELOPMENT PROJECT
(SERIES ANOTE -TAX-EXEMPT)
WHEREAS, the Tustin Community Redevelopment Agency (the "Agency') is a
community redevelopment agency, duly created, established and authorized to transact
business and exercise its powers, all under and pursuant to the Community Redevelopment
Law (Part I of Division 24, commencing with section 33000) of the California Health and Safety
Code) ("Redevelopment Law"), and the powers of the Agency include the power to borrow
money and issue bonds for any of its corporate purposes, including authority pursuant to
sections 33671.5 and Article 5 of Chapter 6 (commencing with section 33640) of the
Redevelopment Law;
WHEREAS, on June 16, 2003, by Ordinance No. 1276, the City Council of the City of
Tustin (the "City Council") formed the MCAS Tustin Redevelopment Project (the
"Redevelopment Project");
WHEREAS, the redevelopment plan for the Redevelopment Project has been adopted in
compliance with all applicable requirements of the Redevelopment Law (the "Redevelopment
Plan" );
WHEREAS, Agency is empowered to enter into agreements and to carry out
redevelopment projects;
WHEREAS, the Agency desires to borrow moneys f rom Citigroup Global Markets Inc.,
or one of its affiliates (the "Bank"), in a principal amount not to exceed $5,100,000, evidenced by
a note (the "Series A Note"), pursuant to a note purchase agreement, by and among the Agency,
the Tustin Public Financing Authority (the "Authority") and the Bank (the "Series A Note
Purchase Agreement"), to provide funds to finance a portion of the costs of the acquisition of a
37-acre parcel of land which will provide freeway access to and from the Redevelopment
Project (the "Property") within the Agency's South Central Redevelopment Project but of
benefit to the Redevelopment Project;
20006.02
WHEREAS, the Agency and the City Council have heretofore made required f findings to
establfish that the acquisition of the Property fis of benef it to the Redevelopment Project;
WHEREAS, the Series A Note Purchase Agreement establishes the basic terms and
conditions under whfich the Bank will purchase, and by whfich Agency will issue the Serfies A
Note, in a principal not to exceed $5,100,000, which Serfies A Note will be secured by a pledge of
a portion of the tax increment revenues generated by the Redevelopment Project, all subject to
delivery of the Series A Note Purchase Agreement and related closing documents and/ or
required in implementation of the Series A Note purchase, including payment of fees and other
costs as may be payable from the proceeds thereof;
WHEREAS, it fis anticipated that the interest to be payable on the Series A Note will be
excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the issuance of the Series A Note, the Agency intends to
issue a separate note, in a principal not to exceed $19,900,000 (the "Series B Note"), to be
separately authorized by the Agency and to finance an additional portion of the costs of the
acquisition, which Series B Note will be secured on a parity with the Series A Note;
WHEREAS, it is anticipated that the interest to be payable on the Serfies B Note will not
be excludable f rom gross income of the owners thereof f or f ederal income tax purposes under
section 103 of the Code;
WHEREAS, capitalized terms used fin this Resolution are as defined in the Series A Note
Purchase Agreement, unless otherwfise def fined herein; and
WHEREAS, the Serfies A Note Purchase Agreement fis in the best interest of the Agency
and the City of Tustin, and the health, safety and welfare of fits residents, and is of beneffit to the
Agency and the Redevelopment Project, and is contemplated by the Redevelopment Plan
pursuant to section 33490 of the Redevelopment Law;
WHEREAS, Agency has adopted its resolution entitled:
RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
APPROVING THE FORM AND AUTHORIZING THE ISSUANCE OF A PROMISSORY
NOTE AND APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A
NOTE PURCHASE AGREEMENT RELATING THERETO, IN AN AMOUNT NOT TO
EXCEED $5,100,000, IN CONNECTION WITH THE FINANCING OF THE
ACQUISITION OF CERTAIN LAND WITHIN THE AGENCY'S SOUTH CENTRAL
REDEVELOPMENT PROJECT BUT OF BENEFIT TO ITS MCAS TUSTIN
REDEVELOPMENT PROJECT AND AUTHORIZING AND DIRECTING ACTIONS
WITH RESPECT THERETO (SERIES ANOTE-TAX-EXEMPT)
WHEREAS, under and pursuant to the above Resolution, Agency has authorized the
negotiation and entering into the Serfies A Note Purchase Agreement among the Authority, the
Agency, as borrower, and the Bank, as lender, and the issuance by Agency of the Series A Note
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for the purpose of raising not to exceed $5,100,000 for redevelopment purposes to fulfill
Agency's obligations and objectives under sections 33334.2, 333334.6, 33413, and 33490 of the
Redevelopment Law and to pay fees and costs in connection with the issuance of the Series A
Note and implementation of the Series A Note Purchase Agreement.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE CITY
COUNCIL OF THE CITY OF TUSTIN:
Section 1. The foregoing Recitals are true and correct and are a substantive part of this
Resolution. The City Council hereby f Inds and determines that expenditure of the proceeds of
the Series A Note inside or outside of the Redevelopment Project, is of benefit to the
Redevelopment Project.
Section 2. The entering into of the Series A Note Purchase Agreement and the delivery of
the Series A .Note by Agency to the Bank, in part in order to fulfill Agency's obligations and
objectives under sections 33334.2, 33334.6, 33413 and 33490 of the Redevelopment Law to pay
costs in connection with the issuance of the Series A Note Purchase Agreement and the Series A
Note, all of which constitute a "redevelopment activity," as such term is defined in section 33678
of the California Health and Safety Code, are hereby authorized and approved pursuant to
section 33640 of the California Health and Safety Code, subject to completion of the Series A
Note Purchase Agreement and the Series A Note in accordance with the Agency Resolution
described in the Recitals hereof .
Section 3. The Mayor, City Manager and any other appropriate officials of the City, are
hereby authorized and directed to take any and all necessary and desirable steps to accomplish
the execution and delivery of the Series A Note Purchase Agreement and the Series A Note
referenced above and any related undertakings of the City, if any, including execution of any
and all other documents or implementing agreements necessary to deliver the Series A -Note
Purchase Agreement and Series A Note in a timely and expeditious manner, including without
limitation, the negotiation, execution and delivery of instruments or agreements confirming
understandings or making any f urther assurances relative to existing arrangements among the
parties or otherwise in furtherance of the delivery of the Series A Note Purchase Agreement and
Series A Note. The City Clerk is authorized to attest the f final f orm of such documents.
Section 4. This Resolution shall take effect upon adoption.
Section 5. City Clerk shall certify to the adoption of this Resolution.
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PASSED, APPROVED AND ADOPTED this 17th day of April, 2007 by the f ollowing roll
call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
CITY OF TUSTIN
By
Mayor
Attest:
City Clerk
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Quint & Thimmig LLP 04/03/07
Series A Note
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
RESOLUTION N0.07-03
RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
APPROVING THE FORM AND AUTHORIZING THE ISSUANCE OF A
PROMISSORY NOTE AND APPROVING THE FORM AND AUTHORIZING THE
EXECUTION OF A NOTE PURCHASE AGREEMENT RELATING THERETO, IN
AN AMOUNT NOT TO EXCEED $5,100,000, IN CONNECTION WITH THE
FINANCING OF THE ACQUISITION OF CERTAIN LAND WITHIN THE
AGENCY'S SOUTH CENTRAL REDEVELOPMENT PROJECT BUT OF BENEFIT
TO ITS MCAS TUSTIN REDEVELOPMENT PROJECT AND AUTHORIZING AND
DIRECTING ACTIONS WITH RESPECT THERETO
(SERIES ANOTE -TAX-EXEMPT)
WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") is a
community redevelopment agency, duly created, established and authorized to transact
business and exercise its powers, all under and pursuant to the Community Redevelopment
Law (Part I of Division 24, commencing with section 33000) of the California Health and Safety
Code) ("Redevelopment Law"), and the powers of the Agency include the power to borrow
money .and issue bonds for any of its corporate purposes, including authority pursuant to
sections 33671.5 and Article 5 of Chapter 6 (commencing with section 33640) of the
Redevelopment Law;
WHEREAS, on June 16, 2003, by Ordinance No. 1276, the City Council of the City of
Tustin (the "City Council") formed the MCAS Tustin Redevelopment Project (the
"Redevelopment Project");
WHEREAS, the redevelopment plan for the Redevelopment Project has been adopted in
compliance with all applicable requirements of the Redevelopment Law (the "Redevelopment
Plan" ;
WHEREAS, Agency is empowered to enter into agreements and to carry out
redevelopment projects;
WHEREAS, the Agency desires to borrow moneys from Citigroup Global Markets Inc.,
or one of its affiliates (the "Bank"), in a principal amount not to exceed $5,100,000, evidenced by
a note (the "Series A Note" ), pursuant to a note purchase agreement, by and among the Agency,
the Tustin Public Financing Authority (the "Authority") and the Bank (the "Series A Note
Purchase Agreement" ), to provide f unds to f finance a portion of the costs of the acquisition of a
37-acre parcel of land which will provide freeway access to and from the Redevelopment
20006.02
Project (the "Property") within the Agency's South Central Redevelopment Project but of
benefit to the Redevelopment Project;
WHEREAS, pursuant to the Series A Note Purchase Agreement, the Agency will sell the
Series A Note to the Authority f or immediate re-sale to the Bank;
WHEREAS, the Agency and the City Council have heretofore made required findings to
establish that the acquisition of the Property is of benefit to the Redevelopment Project;
WHEREAS, the Series A Note Purchase Agreement establishes the basic terms and
conditions under which the Bank will purchase, and by which Agency will issue the Series A
Note, in a principal not to exceed $5,100,000, which Series A Note will be secured by a pledge of
a portion of the tax increment revenues generated by the Redevelopment Project, all subject to
delivery of the Series A Note Purchase Agreement and related closing documents and/ or
required in implementation of the Series A Note purchase, including payment of fees and other
costs as may be payable from the proceeds thereof;
WHEREAS, it is anticipated that the interest to be payable on the Series A Note will be
excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the issuance of the Series A Note, the Agency intends to
issue a separate note, in a principal not to exceed $19,900,000 (the "Series B Note"), to be
separately authorized by the Agency and to finance an additional portion of the costs of the
acquisition, which Series B Note will be secured on a parity with the Series A Note;
WHEREAS, it is anticipated that the interest to be payable on the Series B Note will not
be excludable f rom gross income of the owners thereof f or federal income tax purposes under
section 103 of the Code;
WHEREAS, capitalized terms used in this Resolution are as defined in the Series A Note
Purchase Agreement, unless otherwise defined herein; and
WHEREAS, the Series A Note Purchase Agreement is in the best interest of the Agency
and the City of Tustin, and the health, safety and welf are of its residents, and is of benef it to the
Agency and the Redevelopment Project, and is contemplated by the Redevelopment Plan
pursuant to section 33490 of the Redevelopment Law;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE
TUSTIN COMMUNITY REDEVELOPMENT AGENCY:
Section 1, The foregoing Recitals are true and correct and are a substantive part of this
Resolution. The Agency hereby finds and determines that expenditure of the proceeds of the
Series A Note inside or outside of the Redevelopment Project, is of benefit to the
Redevelopment Project.
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Section 2. The entering into of the Series A Note Purchase Agreement and the delivery of
the Note by the Agency to Bank, in order to fulfill Agency's obligations and objectives under
sections 33334.2, 33334.6, 33413 and 33490 of the Redevelopment Law to pay costs in connection
with the issuance of the Series A Note Purchase Agreement and the Series A Note, all of which
constitute a "redevelopment activity," as such term is defined in section 33678 of the California
Health and Safety Code, are hereby authorized and approved.
Section 3. The Agency hereby approves the Series A Note Purchase Agreement and the
issuance of the Series A Note and authorizes and directs the Chair, the Executive Director, and
any other appropriate official of the Agency, and the authorized designees of any of them
(together, "Designees"), to complete negotiations of, and to enter into, the Series A Note
Purchase Agreement among the Authority, the Agency, as borrower, and Bank, as lender, with
the final form of such Series A Note Purchase Agreement and Series A Note subject to the
approval of the Chair or the Executive Director and Agency Counsel. Said Series A Note
Purchase Agreement shall include provisions and shall conform substantially to the form
thereof submitted at this meeting and this Resolution and such other material terms as in the
judgment of the Executive Director are reasonably necessary and appropriate to obtain the loan
represented by the Series A Note in the amount and time required, subject to and provided that
a the rinci al amount of the Series A Note does not exceed $5,100,000, (b) the interest rate f or
() p p
said borrowing does not exceed the rate or rates set forth in the Series A Note Purchase
Agreement (and the stated interest rate f or the Initial Note Rate Period shall in no event exceed
seven percent (7%) per annum), (c) the term of the Series A Note is between one (1) year and
five (5) years, and (d) debt is secured by a pledge of tax increment revenues generated by the
Redevelopment Project.
Section 4. The Chair or the Executive Director and the Secretary are hereby authorized to
execute and attest the f final Series A Note Purchase Agreement and Series A Note, including any
related attachments, on behalf of the Agency, their execution and attestation thereof to
constitute conclusive evidence of the Agency's approval of the terms thereof in accordance with
this Resolution. Copies of the final Series A Note Purchase Agreement, when duly executed and
attested, shall be placed on f file in the office of the Secretary. Further, the Executive Director (or
his duly authorized representative) is authorized to implement the Series A Note Purchase
Agreement and take all further actions and execute all documents referenced therein and/ or
necessary and appropriate to carry out the transactions represented by the Series A Note and
the Series A Note Purchase Agreement as provided f or therein, and the Secretary is authorized
to attest to such documents. The Executive Director (or his duly authorized representative) is
hereby authorized, to the extent necessary during the implementation of the Series A Note
Purchase Agreement, to make technical or minor changes and interpretations thereto after
execution, as necessary, to properly implement and carry out the Series A Note Purchase
Agreement, provided any and all such changes shall not in any manner materially affect the
rights and .obligations of Agency or the maximum funding provided under the final Series A
Note Purchase Agreement.
Section 5. In addition to the authorization of Sections 3 and 4 above, the Executive
Director (or his duly authorized representative) and the Secretary are hereby authorized, on
behalf of Agency, to sign all other documents necessary or appropriate to carry out and
implement Series A Note Purchase Agreement and any implementing agreements or
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documents, including causing the issuance of warrants in implementation .thereto, and to
administer the Agency's obligations, responsibilities and duties to be performed under the
Series A Note Purchase Agreement. Quint & Thimmig LLP is confirmed to act as Bond Counsel
to the Agency in connection with the Series A Note on the terms set f orth in the letter proposal
on file with the Executive Director.
Section 6. The Secretary shall certify to the adoption of this Resolution.
Section 7. This Resolution shall take of f ect upon adoption.
PASSED, APPROVED AND ADOPTED this 17th day of April, 2007 by the f ollowing roll
call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
By
Attest:
Secretary
TUSTIN COMMUNITY
REDEVELOPMENT AGENCY
Chair
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Quint & Thimmig LLP
SERIES A NOTE PURCHASE AGREEMENT
by and among the
TUSTIN PUBLIC FINANCING AUTHORITY,
the
TUSTIN COMMUNITY REDEVELOPMENT AGENCY, as Issuer
and
CITIGROUP GLOBAL MARKETS INC., as Purchaser
Dated as of Apri11, 2007
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
P-~
Section 1.01. Specific Terms ........................................................................................................................................2
Section 1.02. Accounting Matters ...............................................................................................................................7
Section 1.03. Computation of Time Periods .............................................................................................................7
Section 1.04. Interpretation .........................................................................................................................................7
ARTICLE II
THE PURCHASE OF THE NOTE
Section 2.01. Purchase of the Note ........................................................................................................................... ..8
Section 2.02. Interest ................................................................................................................................................... ..8
Section 2.03. Principal Repayment .......................................................................................................................... ..8
Section 2.04. Payment on Non Business Days ....................................................................................................... ..8
Section 2.05. Prepayments ...........................................................................................................................................8
Section 2.06. Computations; Payments; Default Interest ......................................................................................9
Section 2.07.
....................................................
Maintenance of Accounts ................................................................. 9
Section 2.08. Withholding ...........................................................................................................................................9
Section 2.09. Maximum Rate .................................................................................................................................... 10
Section 2.10. Security ................................................................................................................................................. 10
Section 2.11. Revenue Fund ..................................................................................................................................... 10
ARTICLE III
CONDITIONS PRECEDENT TO EFFECTIVENESS
Section 3.01. Conditions Precedent to Effectiveness ...........................................................................................12
ARTICLE IV
REPRESENTATION AND WARRANTIES
Section 4.01. Representations and Warranties of the Authority ....................................................................... 14
Section 4.02. Representations and Warranties of the Issuer .............................................................................. 15
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01. Compliance With Laws and Regulations ...................................................................................... 18
Section 5.02. Reporting Requirements ................................................................................................................... 18
Section 5.03. Notices .................................................................................................................................................. 18
Section 5.04. Further Assurances ............................................................................................................................ 18
Section 5.05. Right of Entry ...................................................................................................................................... 19
Section 5.06. Payment of Obligations; Removal of Liens ................................................................................... 19
Section 5.07. Disclosure to Participants ...............................................................................~.................................. 19
Section 5.08. Proceeds of the Note .......................................................................................................................... 19
Section 5.09. Licenses, Permits, Etc ......................................................................................................................... 19
Section 5.10. Maintenance of Existence .................................................................................................................. 19
Section 5.11. Related Obligations ............................................................................................................................ 19
Section 5.12. Maintenance of Tax Revenues ......................................................................................................... 19
Section 5.13. Insurance .............................................................................................................................................. 20
Section 5.14. Take-Out Financing ........................................................................................................................... 20
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Amendments ....................................................................................................................................... 21
Section b.02. Preservation of Existence .................................................................................................................. 21
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Section 6.03. Additional Debt .................................................................................................................................. 21
Section 6.04. Other Negative Covenants ............................................................................................................... 21
Section 6.05. Tax Covenants ..................................................................................................................................... 21
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Def ault ................................................................................................................................ 23
Section 7.02. Remedies .............................................................................................................................................. 24
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Obligations Absolute ......................................................................................................................... 25
Section 8.02. Liability of the Purchaser .................................................................................................................. 25
Section 8.03.
.......................................
Expenses; Indemnification ......................................................................... 25
Section 8.04. Notices .................................................................................................................................................. 26
Section 8.05. Successors and Assigns ..................................................................................................................... 26
Section 8.06. Assignment and Transfer ................................................................................................................. 27
Section 8.07. GOVERNING LAW ........................................................................................................................... 27
Section 8.08. Counterparts ....................................................................................................................................... 27
Section 8.09. Participations ...................................................................................................................................... 27
Section 8.10. Right of Setoff ...................................................................................................................................... 28
Section 8.11. Amendments and Waivers ............................................................................................................... 28
Section 8.12. Severability .......................................................................................................................................... 28
Section 8.13. Headings .............................................................................................................................................. 28
Section 8.14. Complete and Controlling Agreement ........................................................................................... 28
Section 8.15. WAIVER OF JURY TRIAL; DISPUTE RESOLUTION ................................................................. 28
Section 8.16. Termination ......................................................................................................................................... 29
Section 8.17. USA Patriot Act .................................................................................................................................. 29
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF OPINION OF COUNSEL TO ISSUER
EXHIBIT C FORM OF PURCHASER'S LETTER TO ISSUER
EXHIBIT D DESCRIPTION OF THE PURCHASED LAND
SERIES A NOTE PURCHASE AGREEMENT
THIS SERIES A NOTE PURCHASE AGREEMENT, dated as of April 1, 2007, is by and
among the TUSTIN PUBLIC FINANCING AUTHORITY (the "Authority"), the TUSTIN
COMMUNITY REDEVELOPMENT AGENCY (the "Issuer") and CITIGROUP GLOBAL
MARKETS INC., as purchaser (the "Purchaser"). All capitalized terms used herein and not
otherwise defined shall have the meaning assigned in Section 1.01.
WITNESSETH:
WHEREAS, the Issuer intends to issue its promissory note in the f orm of Exhibit A;
WHEREAS, the Issuer intends to sell such promissory note to the Authority, for
immediate re-sale to the Purchaser; and
WHEREAS, the Purchaser is willing to purchase such promissory note upon the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, for valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Specific Terms. The following terms shall have the meanings indicated
below or in the referenced Section of this Agreement, unless the context shall clearly indicate
otherwise:
"Affiliate" means any other Person controlling or controlled by or under common control
with the Issuer. For purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting rights, membership, the power
to appoint members, trustees or directors, by contract or otherwise.
"Agreement" means this Series A Note Purchase Agreement, including any and all
amendments and supplements hereto permitted pursuant to the terms hereof .
"Authority" means the Tustin Public Financing Authority, a public entity organized and
existing under the laws of the State.
"Authority Documents" means this Agreement, the Series B Note Purchase Agreement,
the Authority's Series A Resolution and the Authority's Series B Resolution.
"Authority's Series A Resolution" means, Resolution No. of the governing board of
the Authority adopted April 17, 2007.
"Authority's Series B Resolution" means, Resolution No. of the governing board of
the Authority adopted Apri117, 2007.
"Business Day" means any day other than (a) a day on which banks located in the cities
in which the principal office of the Issuer or the Purchaser is located are required or authorized
by law to close, (b) a day on which the New York Stock Exchange is closed, or (c) a day on
which the payment system of the Federal Reserve System is not operational.
"City" means the City of Tustin, California.
"Closing Date" means April 19, 2007, or such later date on which this Agreement and the
Note are fully executed and delivered.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the Note or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the date of issuance of the Note, together with applicable temporary and
final regulations promulgated, and applicable official public guidance published, under the
Code.
"County" means the County of Orange, a county duly organized and existing under the
Constitution and laws of the State.
"Debt" means with respect to any Person, all items that would be classified as a liability
in accordance with generally accepted accounting principles, including, without limitation, (a)
indebtedness or liability f or borrowed money, or for the deferred purchase price of property or
services (including trade obligations); (b) obligations as lessee under leases which should have
been, or should be, recorded as capital leases in accordance with generally accepted accounting
principles; (c) current liabilities in respect of unfunded benefits under employee benefit,
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retirement or pension plans; (d) obligations issued for the account of any other Person; (e) all
obligations arising under acceptance facilities; (f) all guarantees, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other Person or
otherwise to assure a creditor against loss; (g) obligations secured by any mortgage, lien,
pledge, security interest or other charge or encumbrance on property, whether or not the
obligations have been assumed and (h) obligations of such Person under Interest Rate
Protection Agreements.
"Default" means the occurrence of any event or the existence of any condition which
constitutes an Event of Default or the occurrence of any event or the existence of any condition
which with the giving of notice, the passage of time, or both, would constitute an Event of
Default.
"Default Rate" means a rate equal to the Note Rate described in the first sentence of the
definition of "Note Rate" herein plus 3.00% per annum.
"Determination of Taxability" means (i) the receipt by the Noteholder of a notice of
deficiency issued by the Internal Revenue Service to the effect that Note Interest is Taxable, or
(ii) the delivery to the Noteholder of a written opinion of nationally recognized bond counsel to
the of feet that Note Interest is Taxable.
"Event of Default," in relation to this Agreement, shall have the meaning assigned to such
term in Article VII.
"Event of Insolvency" means, with respect to any Person, the occurrence of one or more of
the following events:
(a) the issuance, under the laws of any state or under the. laws of the United States of
America, of an order of rehabilitation, liquidation or dissolution of such Person;
(b) the commencement by or against such Person of a case or other proceeding seeking
liquidation, reorganization or other relief with respect to the such Person or its debts under any
bankruptcy, insolvency or other similar state or federal law now or hereafter in effect,
including, without limitation, the appointment of a trustee, receiver, liquidator, custodian or
other similar official for such Person or any substantial part of its property or there shall be
appointed or designated with respect to it, an entity such as an organization, board,
commission, authority, agency or body to monitor, review, oversee, recommend or declare a
financial emergency or similar state of financial distress with respect to it or there shall be
declared or introduced or proposed for consideration by it or by any legislative or regulatory
body with competent jurisdiction over it, the existence of a state of financial emergency or
similar state of financial distress in respect of it;
(c) the making of an assignment for the benef it of creditors by such Person;
Person;
Person.
(d) the failure of such Person to generally pay its debts as they become due;
(e) the declaration of a moratorium with respect to the payment of the debts of such
(f~ such Person shall admit in writing its inability to pay its debts when due; or
(g) the initiation of any actions to authorize any of the foregoing by or on behalf of such
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"Excess Interest Amount" shall have the meaning assigned to such term in Section 2.09(b).
"Exposure" means, for any date with respect to a Person and any Interest Rate Protection
Agreement, the amount of any Settlement Amount that would be payable by such Person if
such Interest Rate Protection Agreement were terminated as of such date. Exposure shall be
determined in accordance with the standard methods of calculating such exposure under
similar arrangements as prescribed from time to time by the Purchaser, taking into account the
methodology for calculating amounts due upon early termination as set forth in the related
Interest Rate Protection Agreement and the notional principal amount, term and other relevant
provisions thereof.
"Fiscal Year" means the fiscal year of the Issuer ending on June 30 of each calendar year
or such other fiscal year as may be adopted by the Issuer from time to time to the extent
permitted hereunder.
"Funding Requirement" means (a) during the Initial Note Rate Period, an amount equal to
interest to accrue on the amount outstanding under the Note during the Initial Note Rate
Period, to the extent unpaid, plus the amount of any mandatory scheduled prepayment to be
paid pursuant to Section 2.05(c) during the Initial Note Rate Period, (b) during the period from
the end of the Initial Note Rate Period to the Maturity Date, an amount equal to interest to
accrue on the amount outstanding under the Note during such period computed at a rate of
interest equal to the greater of 7% per annum and the Note Rate most currently established
hereunder, to the extent that such interest has not been paid, plus the amount of any mandatory
scheduled prepayment to be paid pursuant to Section 2.05(c) during such period, and (c) from
the earlier of the Maturity Date and the date on which all amounts outstanding are declared
due and payable hereunder, an amount equal to all principal outstanding under the Note plus
all accrued but unpaid interest on such amount.
"Initial Note Rate Period" means the period from the Closing Date through November 6,
2008.
"Interest Rate Protection Agreement" means an interest rate swap, cap or collar agreement
or similar arrangement between any Person and a financial institution providing for the transfer
or mitigation of interest rate risks either generally or under specific contingencies.
"Issuer" means Tustin Community Redevelopment Agency, a redevelopment agency
and public body, corporate and politic duly created, established and authorized to transact
business and exercise its powers under the Redevelopment Law, and its successors and assigns
permitted hereunder.
"Issuer Documents" means this Agreement, the Series B Note Purchase Agreement, the
Resolution, the Series B Resolution, the Note and the Parity Note.
"Low and Moderate Income Housing Fund" means the Low and Moderate Income Housing
Fund maintained by the Issuer in accordance with Section 33334.3 of the Redevelopment Law.
"Margin Stock" shall have the meaning assigned to that term in Regulation U
promulgated by the Board of Directors of the Federal Reserve System, as now and hereafter
from time to time in of f ect.
"Material Adverse Change" means the occurrence of any event or change resulting in a
material and adverse change in the business, condition (financial or otherwise), operations or
prospects of the Issuer, the Redevelopment Project or the ability of the Issuer to collect sufficient
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Tax Revenues to pay its obligations hereunder and under the Note and the Parity Note since the
last day of the period reported in the financial statements of the Issuer received by the
Purchaser and described in paragraph (j) of Section 4:02 or which materially and adversely
affects the enforceability of this Agreement or the Note or the ability of the Issuer to perform its
obligations hereunder or under the Note.
"Material Adverse Effect" means (a) with respect to the Issuer a materially adverse effect
on the Issuer's ability to timely receive and apply the Tax Revenues as contemplated hereby or
on the Issuer's ability to perform its obligations under the Issuer Documents and (b) with
respect to any agreement or obligation, an adverse effect upon the binding nature, validity or
enf orceability of such agreement or obligation.
"Material Litigation" means any litigation of the type described in paragraph (e) of
Section 4.02.
"Maturity Date" means April 7, 2011.
"Maximum Rate" means twelve percent (12%) per annum, or with respect to obligations
other than the Note the maximum rate of interest on the relevant obligation permitted by
applicable law without regard to any filing made by a lender with respect to notice of rates in
excess of any statutory or regulatory threshold interest rate.
"Note" means that certain $5,100,000 promissory note issued by the Issuer and sold to
the Purchaser pursuant to the terms hereof which shall be in the form of Exhibit A.
"Noteholder" means the Person in whose name the Note is registered on the registration
books maintained by the Issuer.
"Note Interest is Taxable" means that interest paid or to be paid on the Note is or will be
includable for Federal income tax purposes in the gross income of the Noteholder, but
excluding the inclusion of interest on such Note as an item of tax preference f or purposes of the
calculation of an alternative minimum tax imposed on such Noteholder.
"Note Rate" means, during the Initial Rate Period, [4.22]% per annum, and thereafter, a
per annum rate of interest equal to the SIFMA Index as set each week on the SIFMA Reset Date,
plus eighty-two (82) basis points. Notwithstanding the foregoing, from and after the earlier of
(i) the date amounts are owed hereunder but only so long as not paid when due and (ii) during
the occurrence and continuance of an Event of Default, all amounts owed hereunder shall bear
interest at the Def ault Rate.
"Parity Note" means that certain $19,900,000 promissory note issued by the Issuer
concurrently with the Note and sold to the Purchaser pursuant to the Series B Note Purchase
Agreement, payable from Tax Revenues on a parity with the Note.
"Participant(s)" means any bank(s) or other financial institutions that may purchase from
the Purchaser a participation interest in this Agreement and the Note pursuant to a
participation agreement between the Purchaser and the Participant(s).
"Participation Agreement" means any agreement between the Purchaser and a Participant
or Participants in which the Participant(s) purchases a participation interest in this Agreement
and the Note, subject to certain terms and conditions to be specified by the parties thereto.
"Person" means an individual, a corporation, a partnership, an association, an agency, an
authority, a joint venture, a trust, a business trust, a limited liability company or any other
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entity or organization, including a governmental entity or political subdivision or an agency or
instrumentality thereof.
"Plan Limitations" means the limitations, if any, as may be amended from time to time,
contained or incorporated in the Redevelopment Plan on (a) the aggregate principal amount of
bonded indebtedness payable from Tax Revenues which may be outstanding at any time, (b)
the aggregate amount of taxes which maybe divided and allocated to the Issuer pursuant to the
Redevelopment Plan, (c) the period of time for establishing or incurring indebtedness payable
from Tax Revenues, (d) the period of time for receiving Tax Revenues for any purpose, and (e)
the time limit on the effectiveness of the Redevelopment Plan, established pursuant to sections
33333.2, 33333.4, 33333.b or 33334.1 of the Redevelopment Law, as applicable.
"Purchased Land" means the land acquired by the Issuer in whole or in part with the
proceeds from the sale of the Note to the Purchaser more fully described in Exhibit D attached
hereto.
"Purchaser" means Citigroup Global Markets Inc., and its successors and assigns.
"Redevelopment Law" means the Community Redevelopment Law (Part 1 of Division 24
commencing with Section 33000) of the Health and Saf ety Code of the State of California.
"Redevelopment Plan" means the Redevelopment Plan for the MCAS-Tustin
Redevelopment Project of the Issuer, approved by Ordinance No. 1276, adopted by the City
Council of the City on June 16, 2003, as heretofore or hereafter amended or supplemented in
accordance with the Redevelopment Law.
"Redevelopment Project" means the MCAS-Tustin Redevelopment Project designated for
a redevelopment project as described in the Redevelopment Plan.
"Resolution" means, Resolution No. of the governing board of the Issuer adopted
Apri117, 2007.
"Revenue Fund" means the Revenue Fund established by the Issuer pursuant to Section
2.11 hereof .
"Series B Note Purchase Agreement" means that certain Series B Note Purchase
Agreement, dated as of the date hereof, by and among the Issuer, the Authority and the
Purchaser, including any amendments, modifications or supplements thereto permitted by its
terms.
"Series B Resolution" means, Resolution No. of the governing board of the Issuer
adopted April 17, 2007.
"Settlement Amount" means, with respect to a Person and any Interest Rate Protection
Agreement, any amount payable by such Person under the terms of such Interest Rate
Protection Agreement in respect of, or intended to compensate the other party f or, the value of
such Interest Rate Protection Agreement upon early termination thereof.
"SIFMA Index" means the Securities Industry and Financial Markets Association
Municipal Swap Index (formerly known as Bond Market Association Municipal Swap Index), a
seven-day high grade market index published weekly and reset on each SIFMA Reset Date for
value on Thursday of each week based upon the weekly interest rate resets of tax-exempt
variable rate issues included in a database maintained by the Municipal Market Data which
meet specific criteria established by the Securities Industry and Financial Markets Association.
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If the SIFMA Swap Index is no longer published f or any applicable period, a new comparable
index shall be selected as agreed upon by the Issuer and the Purchaser.
"SIFMA Reset Date" shall mean Thursday of each week; provided, however, that if
Thursday is not a Business Day, the SIFMA Reset Date shall be the next succeeding Business
Day.
"State" means the State of California.
"Tax Revenues" means all taxes pledged and annually allocated within the Plan
Limitations, following the Closing Date, and paid to the Issuer with respect to the
Redevelopment Project pursuant to Article 6 of Chapter 6 (commencing with section 33670) of
the Redevelopment 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 Issuer specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations, excluding all other
amounts of such taxes (if any) (i) which are required to be deposited into the Low and Moderate
Income Housing Fund of the Issuer as a repayment of amounts transferred therefrom pursuant
to sections 33681 and 33681.5 of the Redevelopment Law for deposit in the Educational
Revenue Augmentation Fund created pursuant to section 97.03 of the California Revenue and
Taxation Code, (ii) which are required to be deposited into the Low and Moderate Income
Housing Fund of the Issuer pursuant to section 33334.3 of the Redevelopment Law for
increasing and improving the supply of low and moderate income housing, (111) which
constitute supplemental subventions payable by the State to the Issuer under and pursuant to
Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with section 16110) of the California
Government Code, and (iv) which constitute amounts payable by the Issuer under sections
33607.5 or 33607.7 of the Redevelopment Law for payments to affected taxing entities, except
and to the extent such amounts so payable are payable on a basis subordinate to the payment of
the Note.
"Written" or "in writing" means any form of written communication or a communication
by means of f acsimile device.
Section 1.02. Accounting Matters. All accounting terms used herein without definition
shall be interpreted in accordance with generally accepted accounting principles, consistently
applied, and, except as otherwise expressly provided herein, all accounting determinations
required to be made pursuant to this Agreement shall be made in accordance with generally
accepted accounting principles, consistently applied.
Section 1.03. Computation of Time Periods. In this Agreement, in the computation of a
period of time from a specified date to a later specified date, unless otherwise specified herein,
the word "from" means ~ "from and including" and the words "to" and "until" each mean "to
but excluding."
Section 1.04. Interpretation. All words used herein shall be construed to be of such
gender or number as the circumstances require. Reference herein to any document means such
document as amended, modified or supplemented from time to time as permitted under its
terms and the terms hereof. Reference herein to an Article, Exhibit or Section shall constitute a
reference to such Article, Exhibit or Section of or to this Agreement unless otherwise specified.
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ARTICLE II
THE PURCHASE OF THE NOTE
Section 2.01. Purchase of the Note. The Issuer hereby commits to sell the Note to the
Authority for immediate re-sale to the Purchaser. The Purchaser hereby commits to purchase
from the Authority the Note for a purchase price equal to $ ,which is equal to
$5,100,000, the principal amount of the Note, less the closing fee of $25,500.00 (.5% of the
principal amount of the Note), and less the fees of the Purchaser's counsel of $ , on the
Closing Date, and the Authority shall sell such Note to the Purchaser on the Closing Date for
such purchase price. On the Closing Date, the Issuer will deliver to the Purchaser the duly-
executed Note in definitive form; and the Purchaser will accept such delivery and pay the
purchase price thereof by wire transfer of immediately available funds to the account specified
by the Issuer to the Purchaser in writing. The Note shall be delivered in typewritten form, duly
executed on behalf of the Issuer in f ully registered form. The Issuer's obligation to pay principal
of and interest on the Note shall commence, and interest shall begin to accrue, from the Closing
Date upon the purchase of the Note by the Purchaser. On the Closing Date, the Purchaser shall
execute a letter in the f orm of Exhibit C and deliver the same to the Issuer.
The Purchaser hereby acknowledges the issuance by the Issuer of the Parity Note on the
Closing Date and hereby agrees that any restrictions or limitations imposed herein on the Issuer
f or the issuance of additional obligations shall be inapplicable to the Parity Note.
Section 2.02. Interest. The principal amount of the Note outstanding from time to time
shall bear interest at the Note Rate (computed on a 30/360 day basis). The Note Rate shall be
adjusted on each SIFMA Reset Date. Interest accruing on the principal balance of the Note shall
be payable in arrears on the first Thursday of each month, commencing May 3, 2007, and upon
earlier demand in accordance with this Agreement or upon prepayment in accordance with
Section 2.05. For informational purchases and not as a condition, Purchaser shall provide a
printout of the SIFMA Index identifying each Note Rate as promptly as practicable following
each SIFMA Reset Date.
Section 2.03. Pr~ al Repayment. The Issuer shall repay the outstanding principal
balance of the Note, with interest to the Maturity Date, on the Maturity Date or earlier, to the
extent provided herein.
Section 2.04. Payment on Non Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a date which is not a Business Day, that payment may be
made on the next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest on the amount to be paid.
Section 2.05. Prepayments.
(a) Voluntary Prepayments. The Issuer may prepay the Note in whole at any time, or in
part on any Business Day, on or after the Initial Note Rate Period, on the last Business Day of a
month, provided that (i) the Issuer gives the Purchaser not less than five Business Days' prior
written notice; (ii) each prepayment is not less than $1,000,000; (iii) the Issuer pays any interest
accrued but unpaid on the principal amount prepaid at the time of such prepayment; and (iv)
the Issuer pays any other amounts then due to the Purchaser under this Agreement.
(b) Mandatory Prepayments. The Issuer shall prepay the Note immediately upon demand
of the Purchaser on the earlier of (i) the last Business Day of the month during which there is a
sale of any of the Purchased Land, in whole or in part to the extent of the proceeds of such sale,
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and (ii) after the occurrence of an Event of Default in accordance with Section 7.02, in full,
together with accrued interest on the Note to such date of prepayment.
(c) Mandatory Scheduled Prepayments. The Issuer agrees that no less than the following
scheduled amounts of Tax Revenues shall be used by the Issuer to prepay the Note and the
Parity Note in each of the following the periods or, if such period precedes the first optional
prepayment date, such amount shall be segregated by the Issuer and applied to the prepayment
of the Note on the first possible date:
Note Parity Note
Minimum Minimum
Fiscal Scheduled Scheduled
Year PP yment Payment
2007-08 - $ 4,046,000
2008-09 - 5,992,000
2009-10 - 6,763,000
2010-11 5,100,000 3,099,000
TOTAL $ ,100,000 $19 9 )
Section 2.06. Computations; Payments; Default Interest.
(a) Method of Payment. Any payments received by the Purchaser later than 2:00 p.m. New
York, New York time on any day shall be deemed to have been paid on the next succeeding
Business Day. All payments by or on behalf of the Issuer to the Purchaser hereunder shall be
fully earned when due and nonrefundable when paid and made in lawful currency of the
United States of America and in immediately available funds. All such payments, unless
otherwise directed by the Purchaser in writing, shall be made to the Purchaser at Chase, ABA#:
021000021, A/C: 066-198-054, FFC AC: 001-85533-1-3, Ref.: Tustin Community Redevelopment
Agency, Series B Note, or such other account of the Purchaser as the Purchaser may specify in
writing to the Issuer.
(b) Default Interest. The Issuer agrees to pay the Purchaser,. upon demand, interest on any
and all amounts owed by the Issuer under this Agreement or the Note from the earlier of the
date such amounts are due and payable but not paid and the occurrence of an Event of Default
until payment thereof in full, at the Default Rate (computed on a 30/360 day basis). The
obligations of the Issuer under this Section 2.06 shall survive the termination of this Agreement.
Section 2.07. Maintenance of Accounts. The Purchaser shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the Issuer and the
amounts payable and paid from time to time hereunder and under the Note. In any legal action
or proceeding in respect of this Agreement or the Note, the entries made in such account or
accounts shall be presumptive evidence of the existence and amounts of the obligations of the
Issuer therein recorded. The failure to record any such amount shall not, however, limit or
otherwise affect the obligations of the Issuer hereunder to repay all amounts owed hereunder,
together with all interest accrued thereon as provided herein.
Section 2.08. Withholding. All payments of principal, interest and any other sums due
hereunder and under the Note shall be made in the amounts required hereunder without any
reduction or setoff, notwithstanding the assertion of any right of recoupment or setoff or of any
counterclaim by the Issuer, and without any withholding on account of taxes, levies, duties or
any other deduction whatsoever. If the Issuer is required by law to withhold or deduct any sum
from payments required under this Agreement or the Note, the Issuer shall, to the extent
permitted by applicable law, increase the amount paid by it to the Purchaser, so that, after all
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withholdings and deductions, the amount received by the Purchaser shall equal the amount the
Purchaser would have received without any such withholding or deduction.
Section 2.09. Maximum Rate.
(a) If the amount of interest payable hereunder and under the Note for any period in
accordance with the terms hereof exceeds the amount of interest that would be payable for such
period had interest for such period been calculated at the Maximum Rate, then interest for such
period shall be payable in an amount calculated at the Maximum Rate for such period.
(b) Any interest that would have been due and payable for any period but for the
operation of Section 2.09(a) shall constitute the "Excess Interest Amount." If there is any
accrued and unpaid Excess Interest Amount as of any date then the principal amount owed
hereunder and under the Note shall bear interest at the Maximum Rate without regard to any
decrease in the Note Rate below the Maximum Rate. Thereafter, interest accruing on the
principal amount owed hereunder and under the Note which exceeds the amount which would
have accrued thereon had interest accrued at the Note Rate, shall be applied to reduce the
Excess Interest Amount. Once the Excess Interest Amount is so reduced to zero, the principal
amount owed hereunder and under the Note shall, subject o the limitations of Section 2.09(a),
bear interest at the Note Rate.
(c) Notwithstanding the f oregoing, on the date on which no principal amount hereunder
and under the Note remains unpaid, the Issuer shall, to the extent possible without violating
applicable law, pay to the Purchaser a fee equal to any accrued and unpaid Excess Interest
Amount.
Section 2.10. Secy. The obligations of the Issuer under this Agreement, including,
without limitation, the Issuer's obligations to make payments hereunder and under the Note,
and the Issuer's obligation with respect to the Parity Note, shall be limited obligations of the
Issuer and shall be payable solely from the revenues and funds pledged pursuant to this Section
2.10. The Issuer, as security for the payment and performance of all of the obligations of the
Issuer under this Agreement and the Note, and the Issuer's obligation with respect to the Parity
Note, hereby irrevocably pledges to the Purchaser, and grants to the Purchaser an express lien
on and security interest in, all right, title and interest of the Issuer in and to the (i) Tax
Revenues, (ii) the moneys and securities held in, and all moneys to be deposited in, the Revenue
Fund, and (iii) the proceeds derived by the Issuer from the sale of all or a portion of the
Purchased Land.
This Agreement and the Note are special obligations of the Issuer payable solely from
the funds described in this Section 2.10 and are not a debt of the City, the Authority, the State or
any of its political subdivisions (other than the Issuer to the limited extent described herein and
therein) and none of the City, any member of the City Council of the City, the Authority, any
member of the governing board of the Authority, the State or any of its political subdivisions is
liable hereon or thereon. This Agreement and the Note do not constitute an indebtedness within
the meaning of any constitutional or statutory debt limitation or restriction. Neither the
members of the governing board the Issuer nor any persons executing the Note have any
personal liability on the Note.
Section 2.11. Revenue Fund. There is hereby established with the Issuer a separate
segregated fund entitled the Revenue Fund (the "Revenue Fund"). The Issuer shall deposit the
Tax Revenues into the Revenue Fund, limited to the amounts required by the following
sentence. The Issuer shall deposit Tax Revenues, in an amount not -less than the Funding
Requirement f or the then applicable period, into the Revenue Fund as soon as practicable prior
to any other use of any Tax Revenues it receives. The amounts so deposited shall remain in the
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Revenue Fund until used to pay amounts owed hereunder and under the Note or until the
amounts owed hereunder and under the Note are paid in f ull. The Issuer shall make payments
to the Purchaser when due hereunder and under the Note f rom the Revenue Fund. In the event
that less than the Funding Requirement is deposited in the Revenue Fund at any time, the
Issuer shall deposit such additional Tax Revenues, if and when available, into the Revenue
Fund as necessary to cause the amount on deposit therein to be equal to the Funding
Requirement. Unless the Purchaser directs otherwise, the Issuer shall be entitled to invest the
monies in the Revenue Fund in accordance with the Yssuer's investment policies. The Issuer
hereby grants the Purchaser a security interest in and lien upon the Revenue Fund and all
amounts and investments held therein. The Purchaser hereby acknowledges that any and all
surplus Tax Revenues, being all Tax Revenues in excess of the annual Funding Requirement in
each calendar year as identified above, may be used by the Issuer for any lawful purpose
whether or not previously deposited in the Revenue Fund.
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ARTICLE III
CONDITIONS PRECEDENT TO EFFECTIVENESS
Section 3.01. Conditions Precedent to Effectiveness. In addition to the satisfaction of the
obligations of the Issuer regarding delivery of the Note specified in Section 2.01 hereof, this
Agreement shall become effective on the date when the Purchaser shall have received each of
the f ollowing which are, inform and substance, satisfactory to the Purchaser and its counsel.
(a) A true and complete original executed counterpart of this Agreement and the
original executed Note and of the Series B Note Purchase Agreement and the Parity Note.
(b) Certified copies of the Resolution approving this Agreement, the Note and the other
matters contemplated hereby (which certificate shall state that such resolutions are in full force
and effect on the Closing Date), and certified copies of all other documents evidencing any
other action of the Issuer taken with respect thereto.
(c) A certified copy of the Authority's Series A Resolution approving this Agreement
(which certificate shall state that such resolution is in full force and effect on the Closing Date).
(d) A certif ied copy of the resolution of the City Council of the City approving the
issuance of the Note by the Issuer (which certificate shall state that such resolution is in full
force and of feet on the Closing Date).
(e) Originals (or copies certified to be true copies by the Issuer) of all governmental and
regulatory approvals, if any, at the time necessary f or the Issuer with respect to this Agreement
and the transactions contemplated hereby, together with a list of any approvals still to be
received, if any.
(f) A certificate of the Issuer certifying the names and true signatures of the respective
officers thereof authorized to sign this Agreement, the Note and the other documents to be
delivered by it hereunder.
(g) An opinion of Quint & Thimmig LLP, bond counsel to the Issuer, in the form of
Exhibit B hereto and an opinion of the City Attorney.
(h) A certif icate of the Authority certifying the names and true signatures of the
respective officers thereof authorized to sign this Agreement.
(i) An opinion of the counsel to the Authority.
(j) A copy certified on the Closing Date by the Issuer of the Redevelopment Plan.
(k) A certificate signed by duly authorized officers of the Issuer, dated the Closing Date,
stating that: (i) the representations and warranties of the Issuer contained in Section 4.02 are
correct on and as of the Closing Date as though made on and as of such date, both before and
after giving effect to the execution and performance of this Agreement and the Note; (ii) no
petition by or against the Issuer has at any time been filed under the United States Bankruptcy
Code or under any similar act; and (iii) except as otherwise disclosed in writing to the
Purchaser, no Default has occurred and is continuing, or would result from the execution and
performance of this Agreement or the Note.
(1) A certificate signed by duly authorized officers of the Authority, dated the Closing
Date, stating that: (i) the representations and warranties of the Authority contained in Section
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4.02 are correct on and as of the Closing Date as though made on and as of such date, both
before and after giving effect to the execution and performance of this Agreement; (ii) no
petition by or against the Authority has at any time been filed under the United States
Bankruptcy Code or under any similar act; and (iii) except as otherwise disclosed in writing to
the Purchaser, no Default has occurred and is continuing, or would result from the execution
and perf ormance of this Agreement.
(m) Such other documents, instruments, approvals and, if requested by the Purchaser,
certified duplicates of executed originals thereof, and opinions as the Purchaser may reasonably
request.
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ARTICLE IV
REPRESENTATION AND WARRANTIES
Section 4.01. Representations and Warranties of the Authority. The Authority represents
and warrants as f ollows:
(a) Organization and Powers. The Authority is a joint exercise of powers authority
organized and existing under the laws of the State of California, is authorized to transact
business and exercise its power under the Constitution and the applicable laws of the State of
California, and has full power and authority to execute, deliver and perform its obligations
under the Authority Documents.
(b) Authorization and Absence of Conflicts. The execution, delivery and performance of the
Authority Documents (i) have been duly authorized by all necessary action on the part of the
Authority and the City if applicable, (ii) do not and will not conflict with, or result in a violation
of, any provision of law, or any order, writ, rule or regulation of any court or governmental
agency or instrumentality binding upon or applicable to the Authority or any of its property
and (iii) do not and will not conflict with, result in a violation of, or constitute a default under,
any resolution, charter, agreement or instrument to which the Authority is a party or by which
the Authority or any of .its property is bound.
(c) Binding Obligation. Each of the Authority Documents, when executed by the other
parties thereto on or before the Closing Date, will be a valid and binding obligation of the
Authority enforceable in accordance with its terms, except to the extent that the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization, or other similar
laws affecting creditors' rights generally and by equity principles (regardless of whether
enf orcement is sought at law or in equity).
(d) Governmental Consent or Approval. No consent, approval, permit, authorization or
order of, or registration or filing with, any court or governmental agency, authority or other
instrumentality not already obtained, given or made is required on the part of the Authority for
the execution, delivery and perf ormance by the Authority of any of the Authority Documents.
(e) Absence of Litigation. Except as previously disclosed in writing to the Purchaser, there
is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, arbitrator, governmental or other board, body or official, pending or, to the best
knowledge of the Authority, threatened against or affecting the Authority or the City,
questioning the validity of any proceeding taken by the Authority or the City in connection
with the Redevelopment Project, the Tax Revenues, the Purchased Land or the execution,
delivery and performance by the Authority of the Authority Documents or seeking to prohibit,
restrain or enjoin the execution, delivery or performance by the Authority of any of the
foregoing documents or the timely payment to the Authority of the Tax Revenues, nor, to the
best knowledge of the Authority, is there any basis therefor, wherein an unfavorable decision,
ruling or finding would have a Material Adverse Effect with respect to the Authority.
(f) No Defaults by the Authority. The Authority is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Authority is a party or by which the Authority or any of
its property is bound, wherein such a def ault would have a Material Adverse Effect with
respect to the Authority.
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Section 4.02. Representations and Warranties of the Issuer. The Issuer represents and
warrants as f ollows:
(a) Organization and Powers. The Issuer is a public body corporate and politic duly
organized and existing under the laws of the State of California, is authorized to transact
business and exercise its power under the Constitution and the applicable laws of the State of
California, and has full power and authority (i) to issue the Note, (ii) to own or lease its
properties, and to carry on its business as now conducted and as contemplated to be conducted
in connection with the execution, delivery and performance of its obligations under the Issuer
Documents, (iii) to execute, deliver and perform its obligations under the Issuer Documents,
and (iv) to make the pledge set forth in Section 2.10 hereof.
(b) Authorization and Absence of Conflicts. The execution, delivery and performance of the
Issuer Documents (i) have been duly authorized by all necessary action on the part of the Issuer
and the City if applicable, (ii) do not and will not conflict with, or result in a violation of, any
provision of law, or any order, writ, rule or regulation of any court or governmental agency or
instrumentality binding upon or applicable to the Issuer or any of its property and (iii) do not
and will not conflict with, result in a violation of, or constitute a default under, any resolution,
charter, agreement or instrument to which the Issuer is a party or by which the Issuer or any of
its property is bound.
(c) Binding Obligation. Each of the Issuer Documents, when executed by the other parties
thereto on or before the Closing Date, will be a valid and binding obligation of the Issuer
enforceable in accordance with its terms, except to the extent that the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, or other similar laws affecting
creditors' rights generally and by equity principles (regardless of whether enforcement is
sought at law or in equity).
(d) Governmental Consent or Approval. No consent, approval, permit, authorization or
order of, or registration or filing with, any court or governmental agency, authority or other
instrumentality not already obtained, given or made is required on the part of the Issuer for the
execution, delivery and performance by the Issuer of any of the Issuer Documents.
(e) Absence of Litigation. Except as previously disclosed in writing to the Purchaser, there
is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, arbitrator, governmental or other board, body or official, pending or, to the best
knowledge of the Issuer, threatened against or affecting the Issuer or the City, questioning the
validity of any proceeding taken by the Issuer or the City in connection with the
Redevelopment Project, the Tax Revenues, the Purchased Land or the execution, delivery and
performance by the Issuer of the Issuer Documents or seeking to prohibit, restrain or enjoin the
execution, delivery or performance by the Issuer of any of the foregoing documents or the
timely payment to the Issuer of the Tax Revenues, nor, to the best knowledge of the Issuer, is
there any basis therefor, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect with respect to the Issuer (any such litigation herein referred to as
"Material Litigation").
(f) No Defaults by the Issuer. The Issuer is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any agreement or
instrument to which the Issuer is a party or by which the Issuer or any of its property is bound,
wherein such a def ault would have a Material Adverse Ef feet with respect to the Issuer.
(g) Other Indebtedness; Contractual Payments; Low and Moderate Income Housing Tax
Revenues. Except for this Agreement, the Series B Note Purchase Agreement, the Note and the
Parity Note, there are no bonds, notes, evidences of indebtedness or other obligations of the
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Issuer secured by a pledge of or lien on or security interest in, or payable from, the revenues
and other funds pledged to the Purchaser pursuant to Section 2.10 of this Agreement, on a basis
senior in right of payment to or on parity with the amounts owed hereunder and under the
Note. The payment obligations of the Issuer hereunder and under the Note constitute bonded
indebtedness f or purposes of the lien on Tax Revenues granted herein.
(h) Tax Revenues. The reports, projections and other information relating to the Tax
Revenues provided or caused to be provided to the Purchaser by the Issuer are referenced in
paragraphs (j) and (k) of this Section 4.02 and are, to the extent such information relates to Tax
Revenues previously received, true, accurate and complete, and, to the extent such information
relates to Tax Revenues to be received, fair and reasonable projections or estimates of the same
based upon the assumptions set forth therein. The Issuer has good and valid title to the Tax
Revenues free from any prior lien, charge, claim or security interest other than the liens and
security interests of the Purchaser hereunder. Purchaser acknowledges that the County deducts
its cost of collecting and allocating ad valorem tax revenues from tax increment revenues
otherwise payable to the Issuer, pursuant to statutory authority, generally referred to as SB 2557
fees. Total Tax Revenues for the Issuer's fiscal year ending June 30, 2006, were $2,224,136. Tax
Revenues for the Issuer's Fiscal Year ending June 30, 2007 are projected to be $6,171,461 based
upon certain assumptions.
(i) Compliance with Laws. The Issuer has complied with all provisions of applicable law in
all matters related to such actions of the Issuer as are contemplated by the Issuer Documents
which if not complied could cause a Material Adverse Effect.
(j) Financial Statements. The basic financial statements of the Issuer as of June 30, 2006
and the related statement of revenues, expenditures and changes in financial position for the
years then ended and the independent auditors' reports with respect thereto, copies of which
have heretofore been furnished to the Purchaser, are complete and correct and fairly present the
financial condition, changes in financial position and results of operations of the Issuer at such
date and for such period, and were prepared in accordance with generally accepted accounting
principles. Except as described in the Issuer's unaudited financial statements provided to the
Purchaser or otherwise disclosed to the Purchaser in writing, since June 30, 2006 there has been
no Material Adverse Change in the business, properties, condition (financial or otherwise) or
operations, present or prospective, of the Issuer nor any increase in its long term debt which has
not been disclosed to the Purchaser.
(k) Complete and Correct Information. Purchaser acknowledges that the only information,
reports and other data furnished by Issuer to Purchaser consist of the following: items
described in the Exhibits hereto, the Issuer's audited financials statements for its fiscal year
ended June 30, 2006, DTA tax increment projections for the Redevelopment Project, color-coded
maps of the Purchased Land and assessed value and tax roll information for the
Redevelopment Project. All such information, reports and other papers and data with respect to
the Issuer furnished to the Purchaser or its counsel by the Issuer were, taken in the aggregate
and at the time the same were so furnished, complete and correct in all material respects. No
fact is known to the Issuer which materially and adversely affects or in the future may (so far as
it can foresee) materially and adversely affect the business, ~ assets or liabilities, financial
condition, results of operations of the Issuer, or any of its business prospects which has not been
set forth in the financial statements referred to in paragraph (j} of this Section 4.02 or in such
information, reports, papers and data or otherwise disclosed in writing to the Purchaser by the
Issuer.
(1) Pending Legislation and Decisions. There is no amendment, or to the knowledge of the
Issuer, proposed amendment to the Constitution of the State or any State law or any
administrative interpretation of the Constitution of the State or any State law, or any legislation
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that has passed either house of the legislature of the State, or any judicial decision interpreting
any of the foregoing, the effect of which will materially adversely affect the Issuer's obligations
hereunder or under the Note, or the Issuer's ability to repay when due its obligations under this
Agreement and the Note.
(m) Default. No Default or Event of Default has occurred and is continuing. Except as
disclosed to the Purchaser by the Issuer in writing, the Issuer is not in default under any other
mortgage, indenture, contract, agreement, bond resolution, note, instrument or other
undertaking evidencing debt of the ,Issuer payable from Tax Revenues or which purports to be
binding on the Issuer or any of its assets, which default could reasonably be expected to have a
Material Adverse Effect with respect to the Issuer.
(n) Incorporation of Representations and Warranties. The Issuer hereby makes to the
Purchaser the same representations and warranties made by the Issuer in the Issuer Documents,
which representations and warranties, together with the related definitions of terms contained
therein, are hereby incorporated by reference with the same effect as if each and every such
representation and warranty and definition were set forth herein in its entirety. No amendment
to or waiver of such representations and warranties or definitions made pursuant to the Issuer
Documents shall be effective to amend such representations and warranties and definitions as
incorporated by reference herein without the prior written consent of the Purchaser.
(o) Usury. The terms of this Agreement and the Note regarding the calculation and
payment of interest and f ees do not violate any applicable usury laws.
(p) Federal Reserve Board Regulations. The Issuer will not use any part of the proceeds of
the funds advanced hereunder and has not incurred any indebtedness to be reduced, retired or
purchased by the Issuer out of such proceeds, for the purpose of purchasing or carrying any
Margin Stock, and the Issuer does not own and will not acquire any such Margin Stock.
(q) Investment Company Act. The Issuer is not an "investment company" or a company
"controlled" by an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(r) Insurance. The Issuer currently maintains insurance with respect to its business
operations and properties against such risks, in such amounts, with such companies and with
such deductibles as is customary for business operations and properties of like size, location
and character to those of the Issuer.
(s) Redevelopment Project Value. The Redevelopment Project has an assessed value of at
least $656,500,000.
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ARTICLE V
AFFIRMATIVE COVENANTS
So long as any obligation is owed to the Purchaser hereunder, the Issuer covenants and
agrees'as follows, unless the Purchaser shall otherwise consent in writing:
Section 5.01. C~ Hance With Laws and Regulations. The Issuer shall comply with all
laws, ordinances, orders, rules and regulations of duly constituted public authorities which may
be applicable to it or its properties.
Section 5.02. Reporting Requirements. The Issuer shall keep proper books of record and
account in which f ull, true and correct entries will be made of all dealings or transactions of or
in relation to the business and affairs of the Issuer on a consolidated or combined basis in
accordance with generally accepted accounting principles consistently applied. The Issuer shall
furnish to the Purchaser two copies of each of the following:
(a) Annual Financial Statements. As soon as available, and in any event within 180 days
after the close of each Fiscal Year of the Issuer, the complete audited financial statements of the
Issuer including the balance sheet as of the end of such Fiscal Year and the related statements of
revenues, expenses and cash flows and changes in fund balance for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the preceding Fiscal Year
all in reasonable detail, certified and prepared by an independent certified public accountant in
accordance with generally accepted accounting principles, consistently applied.
(b) Tax Revenues. Together with the financial statements described in (a) above, the
Issuer shall provide a calculation of the Tax Revenues f or such Fiscal Year.
(c) Redevelopment Plan. The Issuer shall provide copies of all amendments to the
Redevelopment Plan at the time they are executed.
(d) Other Information. Such other information respecting the business, properties or the
condition or operations, financial or otherwise, of the Issuer as the Purchaser may from time to
time reasonably request.
Section 5.03. Notices.
(a) Notice of Default. The Issuer shall provide to the Purchaser immediate notice by
telephone, promptly confirmed in writing, of any Default or Event of Default.
(b) Litigation. The Issuer shall promptly provide to the Purchaser written notice of all
actions, suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or f oreign, against the Issuer or any Affiliate
and which constitutes Material Litigation.
(c) Sale o f Purchased Land. The Issuer shall promptly provide to the Purchaser written
notice of the purchase and/or sale by the Issuer of the Purchased Land.
Section 5.04. Further Assurances. The Issuer shall, upon the request of the Purchaser,
from time to time, execute and deliver and, if necessary, file, register and record such further
amendments and other documents and instruments and take such further action as may be
reasonably necessary to effectuate the provisions of this Agreement and the Note. Except to the
extent it is exempt therefrom, the Issuer will pay or cause to be paid all filing, registration and
recording fees incident to such filing, registration and recording, and all expenses incident to
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the. preparation, execution and acknowledgment of such instruments of further assurance, and
all federal or state fees and other similar fees, duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of this Agreement and the Note and
such instruments of further assurance.
Section 5.05. Right of Entry. The Issuer shall permit the duly authorized representatives
of the Purchaser during normal business hours and upon reasonable notice to enter the
business offices of the Issuer, or any parts thereof, to examine and copy the Issuer's financial
and corporate books, records and accounts, and to discuss the affairs, finances, business and
accounts of the Issuer with the Issuer's officers and employees.
Section 5.06. Payment of Obligations; Removal of Liens. The Issuer shall pay (a) all
indebtedness and obligations of the Issuer payable from Tax Revenues in accordance with the
terms thereof and (b) all assessments or other governmental charges as the same respectively
become due, all taxes, assessments (general or special) and governmental charges of any kind
whatsoever that may be at any time lawfully assessed or levied against or with respect to the
Tax Revenues or any interest therein and promptly discharge or cause to be discharged all liens,
encumbrances and charges against Tax Revenues; provided, the Issuer may contest in good
faith any such indebtedness, changes or other amounts so long as such contest does not result in
the creation of a lien on Tax Revenues prior to or on a parity with the pledge hereunder.
Section 5.07. Disclosure to Participants. The Issuer agrees to permit the Purchaser to
disclose any information received by the Purchaser in connection herewith, including without
limitation the financial information described in Section 5.02, to any Participants of the
Purchaser in this Agreement.
Section 5.08. Proceeds of the Note. The proceeds of the Note will be used by the Issuer
solely for the purposes described in the Resolution unless the Purchaser consents in writing to
an alternative use or uses such consent not to be unreasonably withheld or delayed.
Section 5.09. Licenses, Permits, Etc. The Issuer will take all necessary and appropriate
action to ensure the continuance in force of all material consents, licenses, permits, orders,
decrees, approvals, authorizations, registrations and filings obtained or made in connection
with the Redevelopment Plan, the Redevelopment Project, the Tax Revenues, the Purchased
Land, this Agreement and the Note or necessary to maintain the enforceability against the
Issuer of this Agreement or the Note.
Section 5.10. Maintenance of Existence. The Issuer shall preserve and maintain (i) its
existence and (ii) its rights, franchises and privileges material to its ability to repay the
obligations hereunder and under the Note.
Section 5.11. Related Obligations. The Issuer shall promptly pay all amounts payable by
it hereunder, under the Note and the Issuer Documents according to the terms hereof or thereof
and shall duly perform each of its obligations under this Agreement under the Issuer
Documents, which provisions, as well as related defined terms contained therein, are hereby
incorporated by reference herein with the same effect as if each and every such provision were
set forth herein in its entirety without giving effect to any expiration, amendment, supplement
or termination of any Issuer Document to which the Purchaser has not given its express written
consent.
Section 5.12. Maintenance of Tax Revenues. The Issuer shall comply with all
requirements of law to facilitate receipt by the Purchaser of Tax Revenues pledged by the Issuer
pursuant to, and in the amounts contemplated by, this Agreement. The Issuer will not enter into
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any agreement which would have the effect of reducing the amount of such Tax Revenues
available for payment of the amounts due hereunder or under the Note.
Section 5.13. Insurance. The Issuer will at all times maintain insurance with respect to its
business operations and properties against such risks, in such amounts, with such companies
and with such deductibles as is customary for business operations and properties of like size,
location and character to those of the Issuer.
Section 5.14. Take-Out Financing. Not less than 90 days prior to the Maturity Date, the
Issuer will commence proceedings to arrange for the issuance and sale of bonds, notes or other
securities (the "Take-Out Financing") on or prior to the Maturity Date in a principal amount
which is not less than the amount which will be needed by the Issuer to repay the Purchaser f or
all amounts which will be outstanding under the Note on the date of the issuance of the Take-
out Financing. The Issuer agrees that Citigroup Global Markets Inc. shall be the underwriter f or
the sale of the Take-Out Financing on terms reasonably acceptable to Citigroup Global Markets
Inc. and the Issuer. The Issuer agrees that the compensation paid to Citigroup Global Markets
Inc. for servicing as underwriter shall be documented by a separate underwriting agreement.
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ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Amendments. The Issuer shall not amend, modify or supplement, nor
agree to any amendment or modification of, or supplement to, the Issuer Documents or the
Redevelopment Plan without the prior written consent of the Purchaser.
Section 6.02. Preservation of Existence. The Issuer shall not dissolve nor shall it sell,
lease, assign, transfer or otherwise dispose of all or substantially all of its properties and assets.
The Issuer shall preserve and maintain its existence, right (charter and statutory) and f ranchises
and licenses. The Issuer shall not consolidate with or merge into another Person or permit one
or more other Persons to consolidate with or merge into it or acquire all or substantially all of
the property and assets of any other Person.
Section 6.03. Additional Debt. The Issuer .shall not issue or incur any additional Debt
which would be secured by a lien on Tax Revenues on a basis senior or on a parity with the
pledge hereunder or with respect to any Take-Out Financing without the express written
consent of the Purchaser.
Section 6.04.Other Negative Covenants. So long as any amount is due and owing to the
Purchaser hereunder or under the Note, unless the Purchaser otherwise shall consent in
writing, the Issuer agrees not to:
(a) Do anything that would impair the availability of Tax Revenues in an amount
sufficient to pay the Note when due and payable; and
(b) Deduct any amount from the Tax Revenues for the payment of the Issuer's fees, costs
and expenses or for any other purpose.
Section 6.05. Tax Covenants.
(a) Rebate Requirement. The Issuer 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. In the event that the Issuer shall determine that any amounts
are due and payable to the United States of America hereunder, the Issuer shall promptly pay
from available Tax Revenues or any other source of legally available funds the sum of (a) one
hundred percent (100%) of the amounts determined to be due and payable to the United States
of America as a result of the investment of amounts on deposit in any fund or account
established hereunder, plus (b) all other amounts due and payable to the United States of
America.
(b) Private Business Use Limitation. The Issuer shall assure that the proceeds of the Note
are not used in a manner which would cause the Note to become a "private activity bond"
within the meaning of section 141(a) of the Code.
(c) Private Loan Limitation. The Issuer shall assure that no more than five percent (5%) of
the net proceeds of the Note are used, directly or indirectly, to make or finance a loan (other
than loans constituting nonpurpose obligations as defined in the Code or constituting
assessments) to persons other than state or local government units.
(d) Federal Guarantee Prohibition. The Issuer shall not take any action or permit or suffer
any action Ito be taken if the result of the same would be to cause the Note to be "federally
guaranteed within the meaning of section 149(b) of the Code.
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(e) No Arbitrage. The Issuer shall not take, or permit or suffer to be taken by the Trustee
or otherwise, any action with respect to the Note proceeds which, if such action had been
reasonably expected to have been taken, or had been deliberately and intentionally taken, on
the Closing Date, would have caused the Note to be an "arbitrage bond" within the meaning of
section 148(a) of the Code.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
The occurrence of any of the events set f orth in Section 7.01 shall constitute an event of
default (each, an "Event of Default"). Upon the occurrence of an Event of Default the Purchaser
may exercise those rights and remedies provided in Section 7.02.
Section 7.01. Events of Default.
(a) Payments. The Issuer shall fail to pay when due any amounts owed by the Issuer to
the Purchaser pursuant to this Agreement or the Note and such failure continues for three
Business Days.
(b) Representations. Any representation or warranty made by or on behalf of the Issuer in
this Agreement or in any certificate or statement delivered hereunder shall prove to have been
incorrect or untrue in any material respect when made or deemed to have been made.
(c) Covenants. The Issuer shall fail to perform the covenants in Section 5.03, 5.08, 5.10,
5.12 or 5.13 or in Article VI.
(d) Other Covenants. The Issuer shall fail to perform or observe any term, covenant or
agreement (other than ones described in any other paragraph of this Section 7.01) contained in
this Agreement on its part to be performed or observed which failure continues for 30 days nor
more after notice of such failure from the Purchaser; provided, however, if such failure is
subject to cure and for so long as the Issuer diligently pursues the cure for such failure, such
failure shall constitute an Event of Default if it continues uncured for 90 days after notice from
the Purchaser.
(e) Default. Default by the Issuer in the payment of any amount due in respect of any
Debt owed to the Purchaser or its affiliates or default by the Issuer in the payment of any
amount due in respect of any other Debt in an aggregate amount in excess of $1,000,000
(measured in the case of any Interest Rate Protection Agreement, by the Issuer's Exposure
thereunder), as and when the same shall become due, or default under any mortgage,
agreement or other instrument under or pursuant to which such Debt is incurred or issued, and
continuance of such default beyond the period of grace, if any, allowed with respect thereto, or
the occurrence of any act or omission by the Issuer under any such mortgage agreement or
other instrument which results in such Debt becoming, or being capable of becoming,
immediately due and payable (or, with respect to any Interest Rate Protection Agreement,
which results in such Interest Rate Protection Agreement being terminated early or being
capable of being terminated early).
(f) Event of Insolvency. An Event of Insolvency shall have occurred with respect to the
Issuer or the City which, in the case of an Event of Insolvency brought by a third-party against
the Issuer or the City, is not dismissed within 60 days.
(g) Contest of Validity. The Issuer, or any agent or trustee on behalf of the Issuer, shall (i)
claim that the Note or this Agreement is not valid or binding on the Issuer, (ii) repudiate its
obligations under the Note or this Agreement and / or (iii) initiate any legal proceedings to seek
an adjudication that the Note or this Agreement is not valid or binding on the Issuer.
(h) Invalidity. Any court of competent jurisdiction or other governmental entity with
jurisdiction to rule on the validity of this Agreement or the Note shall announce, find or rule
that this Agreement or the Note is not valid or not binding on the Issuer.
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(i) judgments. Entry or filing of any judgment, writ or warrant of attachment or of any
similar process payable from Tax Revenues in an amount in excess of $1,000,000 against the
Issuer or against any of its property and failure of the Issuer to vacate, bond, stay or contest in
good faith such judgment, writ, warrant of attachment or other process for a period of 30 days
or failure to pay or satisfy such judgment within 60 days or as otherwise required by such
judgment, writ or warrant of attachment.
(j) Lien on Tax Revenues. The Purchaser shall fail to have a valid and enforceable first
priority perfected security interest pursuant to Section 2.10 hereof, subject and subordinate only
to the pledges of the Issuer described herein.
(k) Determination of Taxability. A Determination of Taxability shall occur.
(1) Qther Documents. An event of default shall occur under the Series B Note Purchase
Agreement or the Parity Note.
Section 7.02. Remedies. Upon the occurrence of an Event of Default hereunder, the
Purchaser may take one or more of the following actions:
(a) Upon the occurrence of any Event of Default, (i) all amounts owed to the Purchaser
hereunder and under the Note shall bear interest at the Default Rate until paid, (ii) the
Purchaser may by written notice to the Issuer declare that all amounts owed to the Purchaser
hereunder and with respect to the Note to be immediately due and payable whereupon such
amounts shall be immediately due and payable (provided, that the obligations of the Issuer
hereunder shall be and become automatically and immediately due and payable without such
notice upon the occurrence of an Event of Default described in Section 7.01(f)) and (iii) the
Purchaser shall have all remedies provided at law or equity, including, without limitation, the
right of set off and specific performance. The Purchaser shall promptly provide written notice
to the Issuer of any acceleration of the amounts due hereunder.
(b) In the case of any Event of Default hereunder the Purchaser shall have the right, but
not the obligation, to cure any such Event of Default (in which case the Issuer shall reimburse
the Purchaser therefor pursuant to Section 2.07).
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ARTICLE VIII
MISCELLANEOUS
Section 8.01.Obli~ations Absolute. The obligations of the Issuer under this Agreement
shall be absolute, unconditional and irrevocable and shall be paid or performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever, including,
without limitation, the following circumstances:
(a) to the extent permitted by applicable law, any lack of validity or enforceability of this
Agreement or the Note or any other agreement or instrument delivered in connection herewith
or therewith;
(b) the existence of any claim, set off, defense or other right that the Issuer may have at
any time against the Purchaser or any other Person, whether in connection with .this Agreement
or otherwise;
(c) any statement or any other document presented under this Agreement or the Note
proving to be f orged, fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever; or
(d) any other circumstances or happening whatsoever, whether or not similar to any of
the f oregoing.
This Agreement and the Note are special obligations of the Issuer payable in the manner
and from the sources described herein, and are not a debt of the City, the State or any of its
political subdivisions and neither the City, the State, nor any of its political subdivisions is liable
on them and this Agreement and the Note do not constitute indebtedness within the meaning
of any constitutional or statutory debt limitation or restriction. Neither the members, officers,
employees or agents of the Issuer, the Authority or the City nor any persons executing the Note
have any personal liability on the Note or the obligations under this Agreement.
Section 8.02. Liability of the Purchaser. With respect to the Purchaser, the Issuer assumes
any and all risks with respect to the acts or omissions of the Issuer in connection with its use of
this Agreement or any amounts made available by the Purchaser hereunder. Neither the
Purchaser nor any of the officers, directors, employees or agents thereof shall be liable or
responsible for any of the following: (a) the use that may be made of this Agreement or any
amounts made available by the Purchaser hereunder or for any acts or omissions of the Issuer
in connection therewith; (b) the validity, sufficiency or genuineness of documents (except for
the validity and enforceability of the Purchaser's obligations hereunder), or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Purchaser against presentation of
documents which do not comply with the terms hereof, including failure of any documents to
bear any reference or adequate reference to this Agreement; or (d) any other circumstances
whatsoever. In furtherance and not in limitation of the foregoing, the Purchaser may accept
documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary. In no event shall the
Purchaser be liable to the Issuer for consequential, indirect or punitive damages and the Issuer
hereby waives the right to receive the same.
Section 8.03. Expenses; Indemnification.
(a) The Issuer agrees to pay all of the Purchaser's out of pocket expenses (including,
without limitation, reasonable fees and expenses of counsel to the Purchaser) arising in
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connection with the enforcement or administration of, or preservation of rights in connection
with, this Agreement or the Note. In addition, the Issuer shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement or the Note and agrees to save the Purchaser harmless
from and against any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
(b) In addition to any and all rights of reimbursement, indemnification, subrogation or
any other rights pursuant hereto or under law or equity, the Issuer hereby agrees to indemnify
and hold harmless each of the Purchaser, each Participant, the Authority and the City, and their
respective officers, directors, employees and agents (each an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities, reasonable costs or expenses whatsoever
(including reasonable attorneys' fees) that an Indemnified Party may incur (or which may be
claimed against an Indemnified Party by any Person whatsoever) that arises out of the
transactions contemplated by this Agreement or the Note other than any such claim, damage,
losses, liabilities, costs or expenses caused by the gross negligence or willful misconduct of the
Purchaser.
(c) The provisions of this Section 8.03 shall survive the termination of this Agreement
and the payment in full of the Note and the obligations of the Issuer thereunder and hereunder.
Section 8.04. Notices. Unless otherwise specified herein, all notices, requests, demands
or other communications to or upon the respective parties hereto or referred to herein shall be
deemed to have been given (a) in the case of notice by letter, when delivered by hand, (b) in the
case of notice by facsimile, upon confirmation of receipt, addressed to them as follows or at
such other address as any of the parties hereto may designate by written notice to the other
parties hereto:
Issuer: Tustin Community Development Agency
300 Centennial Way
Tustin, CA 92680
Attention: Executive Director
Telephone: (714)) 573-3010
Fax: (714) 838-1602
Purchaser: Citigroup Global Markets Inc.
390 Greenwich Street, 2nd Floor
New York, NY 10013
Attention: Michael Hershkowitz
Telephone: (212) 723-6320
Fax: (212) 723-8642
Section 8.05. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Issuer and the Purchaser and their respective successors, endorsees and
assigns, except that the Issuer may not .assign or transfer its rights or obligations hereunder
(other than by merger or consolidation) without the prior written consent of the Purchaser. This
Agreement is a continuing obligation and shall survive the Expiration Date. The Purchaser may
grant interests in its rights hereunder as provided in Section 8.10.
The Purchaser may at any time pledge or grant a security interest in all or any portion of
its rights (including, without limitation, rights to payment under this Agreement or the Note) to
secure obligations of the Purchaser to a Federal Reserve Bank, without notice to or consent of
the Issuer.
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Section 8.Ob. Assignment and Transfer. The Purchaser may assign or transfer the Note to
any entity that is an affiliate of, or controlled by the Purchaser without the consent of the Issuer
upon notation of the transfer by the Issuer on the registration books of the Issuer which the
Issuer shall cause to be maintained for such purpose. The Note is transferable only in whole or
in part, in a minimum amount of $500,000, and by notation on the registration books
maintained by the Issuer and are transferable provided that:
(a) the transferring holder thereof shall first have complied with all applicable state and
federal securities laws and regulations;
(b) the transferring holder thereof can transfer the Note or portion thereof only to:
(i) a transferee who executes and delivers to the Issuer a letter of the transferee
substantially in the form set forth in Exhibit C hereof;
(ii) such transferee may be a securitization Special Purpose Vehicle ("SPV") the
interests in which SPV are sold to institutional investors only or an accredited investor
within the meaning of Section 2(15) of the Securities Act of 1933; but in any event the
letter described in (b)(i) shall be delivered.
(c) the transferring holder thereof will not prepare or furnish, or cause to be prepared or
furnished, any disclosure regarding the Issuer's finances without the prior review and written
consent of the Issuer, in the Issuer's sole discretion;
provided, however, the Issuer shall not be put to any expense as a result of such assignment or
transfer (or review thereof ). Upon surrender of any Note to the Issuer, the Issuer shall transfer
or exchange such Note for a new Note or Notes in any denominations requested by such
Noteholder (but not less than $500,000) and in the same aggregate principal amount as the Note
that was presented for transfer or exchange.
Notwithstanding any other provision of this Agreement, the Purchaser shall have the
right to sell or assign the Note or a portion thereof to any special purpose vehicle established by
the Purchaser, directly or indirectly, or to a qualified institutional buyer who delivers a letter in
the form described in (i) above. Further, the Purchaser may assign its rights and obligations
under this Agreement and the Note to any of its affiliates.
Section 8.07. GOVERNING LAW. WITH RESPECT TO THE PURCHASER, THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA.
WITH RESPECT TO THE ISSUER AND THE AUTHORITY, THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
AND OF THE UNITED STATES OF AMERICA.
Section 8.08. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same
instrument.
Section 8.09. Participations. The Issuer acknowledges and agrees that the Purchaser may
participate portions of its obligations hereunder (collectively, the "Participated Obligations") to
other financial institutions without notice or the consent of the Issuer and without diminishing
the obligations of the Purchaser hereunder in any manner. The Issuer f urther acknowledges and
agrees that upon any such participation the Participants will become owners of a pro rata
portion of the Participated Obligations and the Issuer waives any right of setoff it may have at
any time against the Purchaser or any Participant with regard to the Participated Obligations.
_2~_
Notwithstanding the foregoing, the Issuer shall have no obligation to provide information to
any Participant, the grant of such participation interest shall not limit the obligations of the
Purchaser hereunder and the Purchaser will continue to serve as the only contact for the Issuer
f or all matters relating to this Agreement.
Section 8.10. Right of Setoff. Upon the occurrence of an Event of Default, the Purchaser
and its affiliates may, at any time and from time to time, without notice to the Issuer or any
other person (any such notice being expressly waived), set off and appropriate and apply,
against and on account of, any obligations and liabilities of the Issuer to the Purchaser or its
affiliates arising under or connected with this Agreement, without regard to whether or not the
Purchaser shall have made any demand therefor, and although such obligations and liabilities
may be contingent or unmatured, any and all deposits (general or special, including but not
limited to indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other indebtedness or other payment obligation at
any time held or owing by the Purchaser or its affiliates to or for the credit or the account of the
Issuer.
Section 8.11. Amendments and Waivers. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Issuer from any such provision shall in any
event be effective unless the same shall be in writing and signed by the parties hereto. Any such
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given. In the event any agreement contained in this Agreement should be breached by
the Issuer and thereafter waived by the Purchaser, such waiver shall be limited to the particular
breach so waived for the specific period set out in such waiver and such waiver shall not
constitute a waiver of such breach f or any other period and shall not waive any other or similar
breach hereunder.
Section 8.12. Severabili .Any provision of this Agreement that is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenf orceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.
Section 8.13. Headin s. Section headings in this Agreement are included herein for
convenience of reference only and shall not have any affect for purposes of interpretation or
construction of the terms of this Agreement.
Section 8.14. Complete and Controllin~reement. This Agreement completely sets
forth the agreements among the Purchaser and the Issuer and fully supersedes all prior
agreements, both written and oral, among the Purchaser and the Issuer relating to all matters
set forth herein. The terms and provisions of this Agreement may be amended or superseded
only by a written instrument and no oral agreements, practices, standards or other extrinsic
communications or facts shall have any bearing on the interpretation or enforcement of this
Agreement except as otherwise expressly agreed to in writing by the Purchaser and the Issuer.
Section 8.15. WAIVER OF TURY TRIAL; DISPUTE RESOLUTION. THE ISSUER, THE
AUTHORITY AND THE PURCHASER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION (WHETHER AS CLAIM, COUNTER CLAIM, AFFIRMATIVE
DEFENSE OR OTHERWISE) BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER ORAL 0R WRITTEN) OR ACTIONS OF THE
ISSUER, THE AUTHORITY OR THE PURCHASER. THE ISSUER AND THE AUTHORITY
ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
_2S_
CONSIDERATION FOR THIS PROVISION AND RECOGNIZE AND AGREE THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER ENTERING INTO
THIS AGREEMENT. THE ISSUER AND THE AUTHORITY REPRESENT AND
ACKNOWLEDGE THAT THEY HAVE REVIEWED THIS PROVISION WITH THEIR LEGAL
COUNSEL AND THAT THEY HAVE KNOWINGLY AND VOLUNTARILY WAIVED ANY
JURY TRIAL RIGHTS THEY MAY HAVE FOLLOWING CONSULTATION WITH SUCH
LEGAL COUNSEL.
TO THE EXTENT THE WAIVER IN THE PRECEDING PARAGRAPH IS NOT
PERMITTED BY LAW, THE ISSUER, THE AUTHORITY AND THE PURCHASER HEREBY
AGREE TO RESOLVE ANY DISPUTE RESULTING IN LEGAL ACTION PURSUANT TO THE
PROVISIONS FOR REFERENCE AND TRIAL BY REFEREE (WITHOUT JURY). THE PARTIES
AGREE THAT SAID REFEREE SHALL BE A JUDGE FOR ALL PURPOSES (INCLUDING,
WITHOUT LIMITATION, (X) RULING ON ANY AND ALL DISCOVERY MATTERS AND
MOTIONS AND ANY AND ALL PRETRIAL OR TRIAL MOTIONS, (Y) SETTING A
SCHEDULE OF PRETRIAL PROCEEDINGS, AND (Z) MAKING ANY OTHER ORDERS OR
RULINGS A SITTING JUDGE OF THE APPLICABLE COURT WOULD BE ENTITLED TO
MAKE IN ANY ACTION OR PROCEEDINGS BEFORE SUCH COURT. ANY DECISION OF
THE REFEREE SHALL BE APPEALABLE TO THE SAME EXTENT AND IN THE SAME
MANNER THAT SUCH DECISION WOULD BE APPEALABLE IF RENDERED BY A JUDGE
OF THE APPLICABLE COURT. NOTHING IN THIS SECTION SHALL PREJUDICE THE
RIGHT OF EITHER PARTY TO OBTAIN PROVISIONAL RELIEF OR OTHER EQUITABLE
REMEDIES AS SHALL OTHERWISE BE AVAILABLE JUDICIALLY PENDING REFERENCE
OF A DISPUTE TO A REFEREE AS PROVIDED HEREIN. IF ANY COURT OF COMPETENT
JURISDICTION DETERMINES THAT THE JURY TRAIL WAIVER OR THE APPOINTMENT
OF A REFEREE IS IMPERMISSIBLE OR OTHERWISE INEFFECTIVE, THEN THE PARTIES
HERETO AGREE THAT ANY DISPUTE BETWEEN THE PARTIES ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE EXPEDITIOUSLY RESOLVED BY
BINDING ARBITRATION IN ACCORDANCE WITH THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION.
Section 8.16. Termination. This Agreement shall terminate upon date on which the
Issuer has satisfied all of its obligations hereunder and under the Note.
Section 8.17. USA Patriot Act. The Purchaser hereby notifies the Issuer that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107 56 (signed into law October 26,
2001) the "Patriot Act"), it is required to obtain, verify and record information that identifies the
Issuer, which information includes the name and address of the Issuer and other information
that will allow the Purchaser to identify the Issuer in accordance with the Patriot Act. The Issuer
shall promptly provide such inf ormation upon request by the Purchaser.
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year f first above written.
ATTEST:
By
Name
Title
ATTEST:
By
Name
Title
TUSTIN PUBLIC FINANCING
AUTHORITY
By
Name
Title
TUSTIN COMMUNITY
REDEVELOPMENT AGENCY, as Issuer
By
Name
Title
CITIGROUP GLOBAL MARKETS INC., as
Purchaser
By
Name
Title
-30-
EXHIBIT A
FORM OF
PROMISSORY NOTE
$5,100,000
April 19, 2007
FOR VALUE RECEIVED, the undersigned (the "Issuer") hereby promises to pay to the
order of CITIGROUP GLOBAL MARKETS INC. (the "Purchaser"), or permitted assigns, the
sum of five million one hundred thousand dollars ($5,100,000) or so much thereof as from time
to time as may be due and owing by the Issuer pursuant to the Series A Note Purchase
Agreement dated as of April 1, 2007 (the "Agreement"), by and among the Tustin Public
Financing Authority, the Issuer and the Purchaser, and to pay interest (calculated as provided
in the Agreement) on such sum or the portion thereof from time to time outstanding hereunder
at the rate described below. All capitalized terms used herein and not defined shall have the
meanings given such terms in the Agreement.
The outstanding principal amount of this Note shall be payable on April _, 2011 (the
"Maturity Date") or at such earlier time as provided in the Agreement. Subject to the terms
hereof, Issuer will pay interest on the principal amount outstanding under this Note and
computed at the Note Rate as provided in the Agreement. This Promissory Note is subject to
acceleration upon the occurrence of certain events as provided in the Agreement.
The Issuer shall have the right to prepay this Promissory Note in accordance with the
Agreement.
All payments of principal of, and interest on, this Promissory Note shall be payable in
immediately available funds at the address of the Purchaser specified in the Agreement, or at
such other place as the Purchaser, f rom time to time, in writing may require, and shall be made
in any coin or currency of the United States of America as, at the respective times of such
payments, shall be legal tender f or the payment of public and private debts.
This Promissory Note is not negotiable and, except as provided in this paragraph, may
not be assigned without the prior written consent of the Issuer. The Purchaser may assign or
transfer the Note, or a portion thereof in a minimum amount of $500,000, to any entity that is an
affiliate of, or controlled by the Purchaser without the consent of the Issuer upon notation of the
transfer by the Issuer on the registration books of the Issuer which the Issuer shall cause to be
maintained for such purpose. This Promissory Note is transferable only in whole or in part in a
minimum amount of $500,000, and by notation on the registration books maintained by the
Issuer and are f reely transf erable provided that:
(a) the transferring holder thereof shall first have complied with all applicable state and
federal securities laws and regulations;
(b) the transferring holder thereof can transfer the Note only to:
(i) a transferee who executes and delivers to the Issuer a letter of the transferee
substantially in the form of Exhibit C to the Agreement; or
Exhibit A
Page 1
(ii) a securitization Special Purpose Vehicle ("SPV") the interests in which SPV
are sold to institutional investors only provided there is delivered concurrently the
Letter described in (b)(i); or
(iii) a transferee who qualifies as an accredited investor within the meaning of
Section 2(15) of the Securities Act of 1933 provided there is delivered concurrently the
Letter described in (b)(i); and
(c) the transferring holder thereof will not prepare or furnish, or cause to be prepared or
furnished, any disclosure regarding the Issuer's finances without the prior review and written
consent of the Issuer, in the Issuer's sole discretion;
provided, however, the Issuer shall not be put to any expense as a result of such assignment or
transfer (or review thereof), and such assignment or transfer shall only be in whole and not in
part. The Purchaser agrees that the Issuer may in its sole discretion withhold consent to any
assignment or transfer in part or to more than one assignee.
Notwithstanding any other provision of this Note, the Purchaser shall have the right to
sell or assign this Note to any special purpose vehicle established by the Purchaser, directly or
indirectly, or to a qualified institutional buyer who delivers a letter in the form described in (i)
above. Further, the Purchaser may assign its rights and obligations under this Note to any of its
affiliates.
All payments hereon shall be applied first, to accrued interest then payable; and second,
to the principal amount hereof in chronological order of principal amortization.
From the date amounts hereunder are due and unpaid under the Agreement, amounts
outstanding hereunder shall bear interest at the Default Rate as provided in the Agreement,
such interest to be payable on demand.
This Promissory Note is issued under, is subject to the terms and conditions of, and is
secured by, the Agreement. All definitions, terms, conditions, rights and provisions set f orth in
the Agreement are hereby incorporated herein in their entirety. The holder hereof is entitled to
the benefits of the Agreement. The obligations of the Issuer under this Promissory Note are
limited obligations of the Issuer and are payable .solely from the revenues and other funds
ref erred to and provided f or in the Agreement.
This Note is a special obligation of the Issuer payable in the manner and from the
sources described herein and in the Agreement, and is not a debt of the City of Tustin, the State
or any of its political subdivisions and neither the City, the State, nor any of its political
subdivisions is liable on it and it does not constitute indebtedness within the meaning of any
constitutional or statutory debt limitation or restriction. Neither the members of the Issuer nor
any persons executing this Note have any personal liability on this Note.
The Issuer hereby waives presentment, demand, protest, notice of protest or other notice
of dishonor of any kind or of non-payment of this Promissory Note, and promises to pay all
reasonable costs of collection when incurred, including reasonable attorneys` fees. No extension
of the time for the payment of this Promissory Note or any installment hereof made by
agreement with any person now or hereafter liable for the payment of this Promissory Note
shall operate to release or discharge the original liability under this Promissory Note, either in
whole or in part, of the Issuer.
The Issuer shall reimburse the Purchaser for all costs and expenses, including without
limitation reasonable attorneys' fees, expended or incurred by the Purchaser in any .judicial
Exhibit A
Page 2
reference, legal action or otherwise in connection with (a) the negotiation, preparation,
amendment and enforcement of the Issuer Documents, including without limitation during any
workout, attempted workout, and/or in connection with the rendering of legal advice as to the
Purchaser's rights, remedies and obligations under the Issuer Documents, (b) collecting any
sum which becomes due the Purchaser under any Issuer Document, (c) any proceeding for
declaratory relief, any counterclaim to any proceeding, or any appeal, or (d) the protection,
preservation or enforcement of any rights or remedies of the Purchaser.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA AND OF THE UNITED STATES OF
AMERICA.
It is hereby recited, certified and declared that any and all acts, conditions and things
required to exist, to happen and to be performed precedent to and in the issuance of this
Promissory Note exist, have happened and have been performed in due time, form and manner
as required by the laws of the State of California.
IN WITNESS WHEREOF, the Issuer has caused this Promissory Note to be duly
executed and delivered by its officers thereunto duly authorized as of the date set f orth below.
Dated: , 2007 TUSTIN COMMUNITY
REDEVELOPMENT AGENCY
By
Name
Title
ATTEST:
Name
Title
Exhibit A
Page 3
EXHIBIT B
FORM OF OPINION OF COUNSEL TO ISSUER
Exhibit B
EXHIBIT C
FORM OF PURCHASER'S LETTER TO ISSUER
[DATE]
Tustin Community Redevelopment Agency
300 Centennial Way
Tustin, CA 92680
The undersigned, as purchaser (the "Purchaser") of all or a portion of the Promissory
Note (the "Note") issued by the Tustin Community Redevelopment Agency (the "Issuer")
pursuant to that Series A Note Purchase Agreement dated as of April 1, 2007 (the "Agreement")
between the Purchaser and the Issuer, hereby represents that:
1. The undersigned is purchasing the Note (a "Holder"). The Purchaser has authority to
purchase the Note and to execute this letter and any other instruments and documents required
to be executed by the Purchaser in connection with the purchase of the Note.
2. We have sufficient knowledge and experience in financial and business matters to be
able to evaluate the risk and merits of the investment represented by the Note. We are able to
bear the economic risks of such investment.
3. We acknowledge that we are purchasing the Note for investment for our own account
and not with a present view toward resale or the distribution thereof, in that we do not now
intend to resell or otherwise dispose of all or any part of our interests in the Note; provided,
however, that we may transfer the Note to the extent permitted under the Agreement. The
Purchaser understands that the Note may not be sold, transferred or disposed of in any manner
until the conditions precedent to such transfer set forth in Section 8.06 of the Agreement have
been satisfied.
4. We acknowledge that we have either been supplied with or have been given access to
information relating to the Note and we have had the opportunity to ask questions and receive
answers from knowledgeable individuals concerning the Issuer, the Note and the security for
the Note.
5. We acknowledge that we have either been supplied with or been given access to
information, including financial statements and other financial information, to which a
reasonable investor would attach significance in making investment decisions, and we have had
the opportunity to ask questions and receive answers from knowledgeable individuals
concerning the Issuer and the Note and the security therefor so that, as a reasonable investor,
we have been able to make our decision to purchase the Note.
6. We are a Qualified Institutional Buyer as defined in 17 C.F.R. 230.144A.
7. The Purchaser understands that the Note is not registered under the Securities Act of
1933, as amended (the "Securities Act"), and that such registration is not legally required as of
the date hereof and further understands that the Note (a) is not being registered or otherwise
qualified for sale under the "Blue Sky" laws and regulations of any state (b) will not be listed on
any stock or other securities exchange, and (c) will not carry a rating from any rating service.
Exhibit C
Page 1
S. The Purchaser understands that the placement of the Note is exempt from the
requirements of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), that the Issuer is not delivering a deemed final official statement with respect
to the Note, and that the Issuer is not making any representation to the Purchaser or any other
party with respect to the matters governed by Rule 15c2-12 (except to the extent set fort in the
Agreement and certificates provided by the Issuer pursuant to Section 3.01 of the Agreement).
9. Other than the documents, certificates and opinions to be provided pursuant to
Section 3.01 of the Agreement, the information contained in the Agreement and the exhibits
attached thereto or referenced in Sections 4.02(k) and (1) of the Agreement, the Purchaser
acknowledges that it has not relied upon the Issuer, including any officers or employees of
either, or upon Quint & Thimmig LLP, Bond Counsel, or Gardner, Underwood & Bacon LLC, as
financial advisor to the City (collectively, the "Public Agency Representatives") for any
information in connection with its purchase of the Note.
10. The Purchaser hereby waives the requirement of any "due diligence investigation or
inquiry" by any of the Public Agency Representatives, including the governing bodies,
members, officers, employees or agent thereof in connection with the authorization, execution,
delivery of the Note and Purchaser's purchase of the Note (except to the extent the information
set forth in the Agreement or in opinions and / or certificates provided by the Issuer or the
Public Agency Representatives pursuant to Section 3.01 or other sections of the Agreement or as
described in paragraph 9).
11. The Purchaser has not received from any of the Public Agency Representatives any
formal or informal offering or disclosure document relating to the Note and has concluded that
the receipt of one prior to the purchase of the Note is not required other than as described in
paragraph 9 above. The Purchaser acknowledges that no written information has been provided
by any of the Public Agency Representatives (except to the extent the information set forth in
opinions and / or certificates provided by the Issuer or the Public Agency Representatives
pursuant to Section 3.01 of the Agreement or as described in paragraph 9) and that any written
information furnished by any other party may not fully disclose all information pertinent to the
Note.
12. Capitalized terms used herein and not otherwise defined have the meanings given
such terms in the Agreement.
as Purchaser
By
Name
Title
Exhibit C
Page 2
EXHIBIT D
DESCRIPTION OF THE PURCHASED LAND
Exhibit D
SERIES B NOTES
Quint & Thimmig LLP
Series B Note
TUSTIN PUBLIC FINANCING AUTHORITY
RESOLUTION N0.07-02
04/10/07
RESOLUTION OF THE TUSTIN PUBLIC FINANCING AUTHORITY APPROVING
THE FORM AND AUTHORIZING THE EXECUTION OF A NOTE PURCHASE
AGREEMENT IN AN AMOUNT NOT TO EXCEED $19,900,000, IN CONNECTION
WITH THE FINANCING BY THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCY OF THE ACQUISITION OF CERTAIN LAND WITHIN THE AGENCY'S
SOUTH CENTRAL REDEVELOPMENT PROJECT BUT OF BENEFIT TO ITS MCAS
TUSTIN REDEVELOPMENT PROJECT AND AUTHORIZING AND DIRECTING
ACTIONS WITH RESPECT THERETO
(SERIES BNOTE -TAXABLE)
WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") is a
community redevelopment agency, duly created, established and authorized to transact
business and exercise its powers, all under and pursuant to the Community Redevelopment
Law (Part I of Division 24, commencing with section 33000) of the California Health and Safety
Code) ("Redevelopment Law"), and the powers of the Agency include the power to borrow
money and issue bonds for any of its corporate purposes, including authority pursuant to
sections 33671.5 and Article 5 of Chapter 6 (commencing with section 33640) of the
Redevelopment Law;
WHEREAS, on June 16, 2003, by ordinance No. 1276, the City Council of the City of
Tustin (the "City Council") formed the MCAS Tustin Redevelopment Project (the
"Redevelopment Project");
WHEREAS, the redevelopment plan for the Redevelopment Project has been adopted in
compliance with all applicable requirements of the Redevelopment Law (the "Redevelopment
Plan" );
WHEREAS, Agency is empowered to enter into agreements and to carry out
redevelopment projects;
WHEREAS, the Agency desires to borrow moneys f rom Citigroup Global Markets Inc.,
or one of its affiliates (the "Bank" ), in a principal amount not to exceed $19,900,000, evidenced
by a note (the "Series B Note"), pursuant to a note purchase agreement, by and among the
Agency, the Tustin Public Financing Authority (the "Authority") and the Bank (the "Series B
Note Purchase Agreement" ), to provide funds to f finance a portion of the costs of the acquisition
of a 37-acre parcel of land which will provide freeway access to and from the Redevelopment
Project (the "Property") within the Agency's South Central Redevelopment Project but of
benefit to the Redevelopment Project;
20006.03
WHEREAS, pursuant to the Series B Note Purchase Agreement, the Agency will sell the
Series B Note to the Authority f or immediate re-sale to the Bank;
WHEREAS, the Agency and the City Council have heretofore made required f findings to
establish that the acquisfition of the Property fis of beneffit to the Redevelopment Project;
WHEREAS, the Serfies B Note Purchase Agreement establfishes the basic terms and
conditions under which the Bank will purchase, and by whfich Agency will issue the Serfies B
Note, in a principal not to exceed $19,900,000, whfich Series B Note will be secured by a pledge
of a portion of the tax increment revenues generated by the Redevelopment Project, all subject
to delivery of the Series B Note Purchase Agreement and related closing documents and/or
required fin implementation of the Series B Note purchase, including payment of fees and other
costs as may be payable f rom the proceeds thereof;
WHEREAS, it fis anticipated that the interest to be payable on the Serfies B Note will not
be excludable f rom gross income of the owners thereof f or f ederal income tax purposes under
section 103 of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the issuance of the Series B Note, the Agency intends to
issue a separate note, in a principal not to exceed $5,100,000 (the "Serfies A Note"), to be
separately authorized by the Agency and to finance an additional portion of the costs of the
acquisition, which Series A Note will be secured on a parity with the Series B Note;
WHEREAS, it fis anticipated that the interest to be payable on the Serfies A Note will be
excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Code;
WHEREAS, capitalized terms used fin this Resolution are as defined in the Serfies B Note
Purchase Agreement, unless otherwise defined herein; and
WHEREAS, the Series B Note Purchase Agreement is in the best interest of the Agency
and the City of Tustin, and the health, safety and welt are of its residents, and is of beneffit to the
Agency and the Redevelopment Project, and is contemplated by the Redevelopment Plan
pursuant to section 33490 of the Redevelopment Law;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE
TUSTIN PUBLIC FINANCING AUTHORITY:
Section 1. The Authority hereby approves the Serfies B Note Purchase Agreement and
authorizes and directs the Chafir, the Executive Director, and any other appropriate of fficfial of
the Authority, and the authorized designees of any of them (together, "Designees"), to enter
finto the Serfies B Note Purchase Agreement among the Authority, the Agency, as borrower, and
Bank, as lender, with the final form of such Serfies B Note Purchase Agreement subject to the
approval of the Chafir or the Executive Dfirector and Authority Counsel.
Section 2, The Chair or the Executive Dfirector and the Secretary are hereby authorized to
execute and attest the final Series B Note Purchase Agreement, including any related
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attachments, on behalf of the Authority, their execution and attestation thereof to constitute
conclusive evidence of the Authority's approval of the terms thereof in accordance with this
Resolution. Copies of the final Series B Note Purchase Agreement, when duly executed and
attested, shall be placed on file in the office of the Secretary. Further, the Executive Director (or
his duly authorized representative) is authorized to implement the Series B Note Purchase
Agreement and take all further actions and execute all documents referenced therein and/ or
necessary and appropriate to carry out the transactions represented by the Series B Note and the
Series B Note Purchase Agreement as provided for therein, and the Secretary is authorized to
attest to such documents. The Executive Director (or his duly authorized representative) is
hereby authorized, to the extent necessary during the implementation of the Series B Note
Purchase Agreement, to make technical or minor changes and interpretations thereto after
execution, as necessary, to properly implement and carry out the Series B Note Purchase
Agreement, provided any and all such changes shall not in any manner materially affect the
rights and obligations of Authority or the maximum f unding provided under the f final Series B
Note Purchase Agreement.
Section 3, In addition to the authorization of Sections 3 and 4 above, the Executive
Director (or his duly authorized representative) and the Secretary are hereby authorized, on
behalf of Authority, to sign all other documents necessary or appropriate to carry out and
implement Series B Note Purchase Agreement and any implementing agreements or
documents, including causing the issuance of warrants in implementation thereto, and to
administer the Authority's obligations, responsibilities and duties to be performed under the
Series B Note Purchase Agreement.
Section 4. The Secretary shall certify to the adoption of this Resolution.
Section 5. This Resolution shall take eff ect upon adoption.
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PASSED, APPROVED AND ADOPTED this 17th day of April, 2007 by the f ollowing roll
call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
TUSTIN PUBLIC FINANCING
AUTHORITY
By
Chair
Attest:
Secretary
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Quint ~ Thimmig LLP
Series B Note
CITY OF TUSTIN
RESOLUTION N0.07-37
04/10/07
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN
APPROVING THE ISSUANCE BY THE TUSTIN COMMUNITY
REDEVELOPMENT AGENCY OF A PROMISSORY NOTE IN AN AMOUNT
NOT TO EXCEED $19,900,000, IN CONNECTION WITH THE FINANCING
OF THE ACQUISITION OF CERTAIN LAND WITHIN THE AGENCY'S
SOUTH CENTRAL REDEVELOPMENT PROJECT BUT OF BENEFIT TO ITS
MCAS TUSTIN REDEVELOPMENT PROJECT
(SERIES BNOTE -TAXABLE)
WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") is a
community redevelopment agency, duly created, established and authorized to transact
business and exercise its powers, all under and pursuant to the Community Redevelopment
Law (Part I of Division 24, commencing with section 33000) of the California Health and Safety
Code) ("Redevelopment Law"), and the powers of the Agency include the power to borrow
money and issue bonds for any of its corporate purposes, including authority pursuant to
sections 33671.5 and Article 5 of Chapter 6 (commencing with section 33640) of the
Redevelopment Law;
WHEREAS, on June 16, 2003, by Ordinance No. 1276, the City Council of the City of
Tustin (the "City Council") formed the MCAS Tustin Redevelopment Project (the
"Redevelopment Project");
WHEREAS, the redevelopment plan f or the Redevelopment Project has been adopted in
compliance with all applicable requirements of the Redevelopment Law (the "Redevelopment
Plan" );
WHEREAS, Agency is empowered to enter into agreements and to carry out
redevelopment projects;
WHEREAS, the Agency desires to borrow moneys f rom Citigroup Global Markets Inc.,
or one of its affiliates (the "Bank"), in a principal amount not to exceed $19,900,000, evidenced
by a note (the "Series B Note"), pursuant to a note purchase agreement, by and among the
Agency, the Tustin Public Financing Authority (the "Authority") and the Bank (the "Series B
Note Purchase Agreement" ), to provide f unds to f finance a portion of the costs of the acquisition
of a 37-acre parcel of Land which will provide f reeway access to and from the Redevelopment
Project (the "Property") within the Agency`s South Central Redevelopment Project but of
benefit to the Redevelopment Project;
20006,03
WHEREAS, the Agency and the City Council have heretofore made required findings to
establish that the acquisition of the Property is of benefit to the Redevelopment Project;
WHEREAS, the Series B Note Purchase Agreement establishes the basic terms and
conditions under which the Bank will purchase, and by which Agency will issue the Series B
Note, in a principal not. to exceed $19,900,000, which Series B Note will be secured by a pledge
of a portion of the tax increment revenues generated by the Redevelopment Project, all subject
to delivery of the Series B Note Purchase Agreement and related closing documents and/ or
required in implementation of the Series B Note purchase, including payment of fees and other
costs as may be payable from the proceeds thereof;
WHEREAS, it is anticipated that the interest to be payable on the Series B Note will not
be excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Internal Revenue Code of 1986, as amended (the "Code');
WHEREAS, concurrently with the issuance of the Series B Note, the Agency intends to
issue a separate note, in a principal not to exceed $5,100,000 (the "Series A Note"), to be
separately authorized by the Agency and to finance an additional portion of the costs of the
acquisition, which Series A Note will be secured on a parity with the Series B Note;
WHEREAS, it is anticipated that the interest to be payable on the Series A Note will be
excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Code;
WHEREAS, capitalized terms used in this Resolution are as defined in the Series B Note
Purchase Agreement, unless otherwise defined herein; and
WHEREAS, the Series B Note Purchase Agreement is in the best interest of the Agency
and the City of Tustin, and the health, safety and welf are of its residents, and is of benefit to the
Agency and the Redevelopment Project, and is contemplated by the Redevelopment Plan
pursuant to section 33490 of the Redevelopment Law;
WHEREAS, Agency has adopted its resolution entitled:
RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
APPROVING THE FORM AND AUTHORIZING THE ISSUANCE OF A PROMISSORY
NOTE AND APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A
NOTE PURCHASE AGREEMENT RELATING THERETO, IN AN AMOUNT NOT TO
EXCEED $19,900,000, IN CONNECTION WITH THE FINANCING OF THE
ACQUISITION OF CERTAIN LAND WITHIN THE AGENCY'S SOUTH CENTRAL
REDEVELOPMENT PROJECT BUT OF BENEFIT TO ITS MCAS TUSTIN
REDEVELOPMENT PROJECT AND AUTHORIZING AND DIRECTING ACTIONS
WITH RESPECT THERETO (SERIES BNOTE-TAXABLE)
WHEREAS, under and pursuant to the above Resolution, Agency has authorized the
negotiation and entering into the Series B Note Purchase Agreement among the Authority, the
Agency, as borrower, and the Bank, as lender, and the issuance by Agency of the Series B Note
-2-
for the purpose of raising not to exceed $19,900,000 for redevelopment purposes to fulfill
Agency's obligations and objectives under sections 33334.2, 333334.6, 33413, and 33490 of the
Redevelopment Law and to pay fees and costs in connection with the issuance of the Series B
Note and implementation of the Series B Note Purchase Agreement.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE CITY
COUNCIL OF THE CITY OF TUSTIN:
Section 1. The foregoing Recitals are true and correct and are a substantive part of this
Resolution. The City Council hereby f Inds and determines that expenditure of the proceeds of
the Series B Note inside or outside of the Redevelopment Project, is of benefit to the
Redevelopment Project.
Section 2. The entering into of the Series B Note Purchase Agreement and the delivery of
the Series B Note by Agency to the Bank, in part in order to fulfill Agency's obligations and
objectives under sections 33334.2, 33334.6, 33413 and 33490 of the Redevelopment Law to pay
costs in connection with the issuance of the Series B Note Purchase Agreement and the Series B
Note, all of which constitute a "redevelopment activity," as such term is defined in section 33678
of the California Health and Safety Code, are hereby authorized and approved pursuant to
section 33640 of the California Health and Safety Code, subject to completion of the Series B
Note Purchase Agreement and the Series B Note in accordance with the Agency Resolution
described in the Recitals hereof.
Section 3. The Mayor, City Manager and any other appropriate officials of the City, are
hereby authorized and directed to take any and all necessary and desirable steps to accomplish
the execution and delivery of the Series B Note Purchase Agreement and the Series B Note
referenced above and any related undertakings of the City, if any, including execution of any
and all other documents or implementing agreements necessary to deliver the Series B Note
Purchase Agreement and Series B Note in a timely and expeditious manner, including without
limitation, the negotiation, execution and delivery of instruments or agreements confirming
understandings or making any further assurances relative to existing arrangements among the
parties or otherwise in furtherance of the delivery of the Series B Note Purchase Agreement and
Series B Note. The City Clerk is authorized to attest the final f orm of such documents.
Section 4. This Resolution shall take of f ect upon adoption.
Section 5. City Clerk shall certif y to the adoption of this Resolution.
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PASSED, APPROVED AND ADOPTED this 17th day of April, 2007 by the f ollowing roll
call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Attest:
CITY OF TUSTIN
By
Mayor
City Clerk
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Quint & Thimmig LLP 04/ 10/ 07
Series B Note
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
RESOLUTION N0.07-02
RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
APPROVING THE FORM AND AUTHORIZING THE ISSUANCE OF A
PROMISSORY NOTE AND APPROVING THE FORM AND AUTHORIZING THE
EXECUTION OF A NOTE PURCHASE AGREEMENT RELATING THERETO, IN
AN AMOUNT NOT TO EXCEED $19,900,000, IN CONNECTION WITH THE
FINANCING OF THE ACQUISITION OF CERTAIN LAND WITHIN THE
AGENCY'S SOUTH CENTRAL REDEVELOPMENT PROJECT BUT OF BENEFIT
TO ITS MCAS TUSTIN REDEVELOPMENT PROJECT AND AUTHORIZING AND
DIRECTING ACTIONS WITH RESPECT THERETO
(SERIES BNOTE -TAXABLE)
WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") is a
community redevelopment agency, duly created, established and authorized to transact
business and exercise its owers, all under and pursuant to the Community Redevelopment
p
Law (Part I of Division 24, commencing with section 33000) of the California Health and Safety
Code) ("Redevelopment Law" ), and the powers of the Agency include the power to borrow
money and issue bonds for any of its corporate purposes, including authority pursuant to
sections 33671.5 and Article 5 of Chapter 6 (commencing with section 33640) of the
Redevelopment Law;
WHEREAS, on June 16, 2003, by Ordinance No. 1276, the City Council of the City of
Tustin (the "City Council" } formed the MCAS Tustin Redevelopment Project (the
"Redevelopment Project");
WHEREAS, the redevelopment plan for the Redevelopment Project has been adopted in
compliance with all applicable requirements of the Redevelopment Law (the "Redevelopment
Plan");
WHEREAS, Agency is empowered to enter into agreements and to carry out
redevelopment projects;
WHEREAS, the Agency desires to borrow moneys f rom Citigroup Global Markets Inc.,
or one of its affiliates (the "Bank" ), in a principal amount not to exceed $19,900,000, evidenced
by a note (the "Series B Note"), pursuant to a note purchase agreement, by and among the
Agency, the Tustin Public Financing Authority (the "Authority") and the Bank (the "Series B
Note Purchase Agreement"), to provide funds to .finance a portion of the costs of the acquisition
of a 37-acre parcel of land which will provide freeway access to and from the Redevelopment
Project (the "Property"} within the Agency's South Central Redevelopment Project but of
benefit to the Redevelopment Project;
20006.03
WHEREAS, pursuant to the Series B Note Purchase Agreement, the Agency will sell the
Series B Note to the Authority f or immediate re-sale to the Bank;
WHEREAS, the Agency and the City Council have heretofore made required f findings to
establish that the acquisition of the Property is of benefit to the Redevelopment Project;
WHEREAS, the Series B Note Purchase Agreement establishes the basic terms and
conditions under which the Bank will purchase, and by which Agency will issue the Series B
Note, in a principal not to exceed $19,900,000, which Series B Note will be secured by a pledge
of a portion of the tax increment revenues generated by the Redevelopment Project, all subject
to delivery of the Series B Note Purchase Agreement and related closing documents and/ or
required in implementation of the Series B Note purchase, including payment of fees and other
costs as may be payable f rom the proceeds thereof;
WHEREAS, it is anticipated that the interest to be payable on the Series B Note will not
be excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Internal Revenue Code of 1986, as amended (the "Code"};
WHEREAS, concurrently with the issuance of the Series B Note, the Agency intends to
issue a separate note, in a principal not to exceed $5,100,000 (the "Series A Note"), to be
separately authorized by the Agency and to finance an additional portion of the costs of the
acquisition, which Series A Note will be secured on a parity with the Series B Note;
WHEREAS, it is anticipated that the interest to be payable on the Series A Note will be
excludable from gross income of the owners thereof for federal income tax purposes under
section 103 of the Code;
WHEREAS, capitalized terms used in this Resolution are as defined in the Series B Note
Purchase Agreement, unless otherwise def fined herein; and
WHEREAS, the Series B Note Purchase Agreement is in the best interest of the Agency
and the City of Tustin, and the health, safety and welfare of its residents, and is of benef it to the
Agency and the Redevelopment Project, and is contemplated by the Redevelopment Plan
pursuant to section 33490 of the Redevelopment Law;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE
TUSTIN COMMUNITY REDEVELOPMENT AGENCY:
Section 1. The f oregoing Recitals are true and correct and are a substantive part of this
Resolution. The Agency hereby finds and determines that expenditure of the proceeds of the
Series B Note inside or outside of the Redevelopment Project, is of benefit to the Redevelopment
Project.
Section 2. The entering into of the Series B Note Purchase Agreement and the delivery of
the Note by the Agency to Bank, in order to fulfill Agency's obligations and objectives under
sections 33334.2, 33334.6, 33413 and 33490 of the Redevelopment Law to pay costs in connection
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with the issuance of the Series B Note Purchase Agreement and the Series B Note, all of which
constitute a "redevelopment activity," as such term is defined in section 33678 of the California
Health and Safety Code, are hereby authorized and approved.
Section 3, The Agency hereby approves the Series B Note Purchase Agreement and the
issuance of the Series B Note and authorizes and directs the Chair, the Executive Director, and
any other appropriate official of the Agency, and the authorized designees of any of them
(together, "Designees"), to complete negotiations of, and to enter into, the Series B Note
Purchase Agreement among the Authority, the Agency, as borrower, and Bank, as lender, with
the final form of such Series B Note Purchase Agreement and Series B Note subject to the
approval of the Chair or the Executive Director and Agency Counsel. Said Series B Note
Purchase Agreement shall include provisions and shall conform substantially to the form
thereof submitted at this meeting and this Resolution and such other material terms as in the
judgment of the Executive Director are reasonably necessary and appropriate to obtain the loan
represented by the Series B Note in the amount and time required, subject to and provided that
(a) the principal amount of the Series B Note does not exceed $19,900,000, (b) the interest rate f or
said borrowing does not exceed the rate or rates set forth in the Series B Note Purchase
Agreement (and the stated interest rate f or the Initial Note Rate Period shall in no event exceed
eight and one half percent (8.5 %) per annum), (c) the term of the Series B Note is between one
(1) year and five (5) years, and (d) debt is secured by a pledge of tax increment revenues
generated by the Redevelopment Project.
Section 4. The Chair or the Executive Director and the Secretary are hereby authorized to
execute and attest the f final Series B Note Purchase Agreement and Series B Note, including any
related attachments, on behalf of the Agency, their execution and attestation thereof to
constitute conclusive evidence of the Agency's approval of the terms thereof in accordance with
this Resolution. Copies of the final Series B Note Purchase Agreement, when duly executed and
attested, shall be placed on f file in the office of the Secretary. Further, the Executive Director (or
his duly authorized representative) is authorized to implement the Series B Note Purchase
Agreement and take all further actions and execute all documents referenced therein and/ or
necessary and appropriate to carry out the transactions represented by the Series B Note and the
Series B Note Purchase Agreement as provided f or therein, and the Secretary is authorized to
attest to such documents. The Executive Director (or his duly authorized representative) is
hereby authorized, to the extent necessary during the implementation of the Series B Note
Purchase Agreement, to make technical or minor changes and interpretations thereto after
execution, as necessary, to properly implement and carry out the Series B Note Purchase
Agreement, provided any and all such changes shall not in any manner materially affect the
rights and obligations of Agency or the maximum funding provided under the final Series B
Note Purchase Agreement.
Section 5. In addition to the authorization of Sections 3 and 4 above, the Executive
Director (or his duly authorized representative) and the Secretary are hereby authorized, on
behalf of Agency, to sign all other documents necessary or appropriate to carry out and
implement Series B Note Purchase Agreement and any implementing agreements or
documents, including causing the issuance of warrants in implementation thereto, and to
administer the Agency's obligations, responsibilities and duties to be performed under the
Series B Note Purchase Agreement. Quint & Thimmig LLP is confirmed to act as Bond Counsel
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to the Agency in connection with the Series B Note on the terms set f orth in the letter proposal
on f ile with the Executive Director.
Section 6, The Secretary shall certify to the adoption of this Resolution.
Section 7. This Resolution shall take effect upon adoption.
PASSED, APPROVED AND ADOPTED this 17th day of April, 2007 by the f ollowing roll
call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
By
Attest:
Secretary
TUSTIN COMMUNITY
REDEVELOPMENT AGENCY
Chair
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Quint & Thimmig LLP
04/11/07
04/12/07
SERIES B NOTE PURCHASE AGREEMENT
by and among the
TUSTIN PUBLIC FINANCING AUTHORITY,
the
TUSTIN COMMUNITY REDEVELOPMENT AGENCY, as Issuer
and
CITIGROUP GLOBAL MARKETS INC., as .Purchaser
Dated as of Apri11, 2007
20006.03
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Pte?
Section 1.01. Specific Terms ........................................................................................................................................2
Section 1.02. Accounting Matters ............................................................................................................................. ..7
Section 1.03. Computation of Time Periods ........................................................................................................... ..7
Section 1.04. Interpretation ....................................................................................................................................... ..7
ARTICLE II
THE PURCHASE OF THE NOTE
Section 2.01. Purchase of the Note ........................................................................................................................... ..8
Section 2.02. Interest .....................................................................................................................................................8
Section 2.03. Principal Repayment ............................................................................................................................8
Section 2.04. Payment on Non Business Days .........................................................................................................8
Section 2.05. Prepayments ...........................................................................................................................................8
Section 2.06. Computations; Payments; Default Interest ......................................................................................9
Section 2.07.
....................................................................
Maintenance of Accounts ................................................. 9
Section 2.08. Withholding ...........................................................................................................................................9
Section 2.09.
.............................................................
Maximum Rate ....................................................................... 10
Section 2.10. Security ................................................................................................................................................. 10
Section 2.11. Revenue Fund ..................................................................................................................................... 10
ARTICLE III
CONDITIONS PRECEDENT TO EFFECTIVENESS
Section 3.01. Conditions Precedent to Effectiveness ...........................................................................................12
ARTICLE IV
REPRESENTATION AND WARRANTIES
Section 4.01. Representations and Warranties of the Authority ....................................................................... 14
Section 4.02. Representations and Warranties of the Issuer .............................................................................. 15
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01. Compliance With Laws and Regulations ...................................................................................... 18
Section 5.02. Reporting Requirements ..........................:........................................................................................ 18
Section 5.03. Notices .................................................................................................................................................. 18
Section 5.04. Further Assurances ............................................................................................................................ 18
Section 5.05. Right of Entry ...................................................................................................................................... 19
Section 5.06. Payment of Obligations; Removal of Liens ................................................................................... 19
Section 5.07. Disclosure to Participants ................................................................................................................. 19
Section 5.08. Proceeds of the Note .......................................................................................................................... 19
Section 5.09. Licenses, Permits, Etc ......................................................................................................................... 19
Section 5.10. Maintenance of Existence .................................................................................................................. 19
Section 5.11. Related Obligations ............................................................................................................................ 19
Section 5.12. Maintenance of Tax Revenues ......................................................................................................... 19
Section 5.13. Insurance .............................................................................................................................................. 20
Section 5.14. Take-Out Financing ........................................................................................................................... 20
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Amendments ....................................................................................................................................... 21
Section 6.02. Preservation of Existence ............................................................................................
...................... 21
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Section 6.03. Additional Debt .................................................................................................................................. 21
Section 6.04. Other Negative Covenants ............................................................................................................... 21
ARTICLE VII
EVENTS OF DEFAULT .AND REMEDIES
Section 7.01. Events of Default ................................................................................................................................ 22
Section 7.02. Remedies .............................................................................................................................................. 23
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Obligations Absolute ......................................................................................................................... 24
Section 8.02. Liability of the Purchaser .................................................................................................................. 24
Section 8.03.
..........................................................
Expenses; Indemnification ...................................................... 24
Section 8.04. Notices .................................................................................................................................................. 25
Section 8.05. Successors and Assigns ..................................................................................................................... 25
Section 8.06. Assignment and Transfer .................................................................................................................. 26
Section 8.07. GOVERNING LAW ........................................................................ Error! Bookmark not defined.
Section 8.08. Counterparts ....................................................................................................................................... 26
Section 8.09. Participations ...................................................................................................................................... 26
Section 8.10. Right of Setoff ...................................................................................................................................... 27
Section 8.11. Amendments and Waivers ............................................................................................................... 27
Section 8.12. Severability ......................................:................................................................................................... 27
Section 8.13. Headings .............................................................................................................................................. 27
Section 8.14. Complete and Controlling Agreement ........................................................................................... 27
Section 8.15. WAIVER OF JURY TRIAL; DISPUTE RESOLUTION ................................................................. 27
Section 8.16. Termination ......................................................................................................................................... 28
Section 8.17. USA Patriot Act .................................................................................................................................. 28
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF OPINION OF COUNSEL TO ISSUER
EXHIBIT C FORM OF PURCHASER'S LETTER TO ISSUER
EXHIBIT D DESCRIPTION OF THE PURCHASED LAND
SERIES B NOTE PURCHASE AGREEMENT
THIS SERIES B NOTE PURCHASE AGREEMENT, dated as of April 1, 2007, is by and
among the TUSTIN PUBLIC FINANCING AUTHORITY (the "Authority"), the TUSTIN
COMMUNITY REDEVELOPMENT AGENCY (the "Issuer") and CITIGROUP GLOBAL
MARKETS INC., as purchaser (the "Purchaser"). All capitalized terms used herein and not
otherwise defined shall have the meaning assigned in Section 1.01.
WITNESSETH:
WHEREAS, the Issuer intends to issue its promissory note in the form of Exhibit A;
WHEREAS, the Issuer intends to sell such promissory note to the Authority, for
immediate re-sale to the Purchaser; and
WHEREAS, the Purchaser is willing to purchase such promissory note upon the terms
and conditions set f orth in this Agreement;
NOW, THEREFORE, for valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as f ollows:
ARTICLE I
DEFINITIONS
Section 1.01. Specific Terms. The following terms shall have the meanings indicated
below or in the referenced Section of this Agreement, unless the context shall clearly indicate
otherwise:
"Affiliate" means any other Person controlling or controlled by or under common control
with the Issuer. For purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting rights, membership, the power
to appoint members, trustees or directors, by contract or otherwise.
"Agreement" means this Series B Note Purchase Agreement, including any and all
amendments and supplements hereto permitted pursuant to the terms hereof .
"Authority" means the Tustin Public Financing Authority, a public entity organized and
existing under the laws of the State.
"Authority Documents" means this Agreement, the Series A Note Purchase Agreement,
the Authority's Series A Resolution and the Authority's Series B Resolution.
"Authority's Series A Resolution" means, Resolution No. of the governing board of
the Authority adopted Apri117, 2007.
"Authority's Series B Resolution" means, Resolution No. of the governing board of
the Authority adopted April 17, 2007.
"Business Day" means any day other than (a) a day on which banks located in the cities
in which the principal office of the Issuer or the Purchaser is located are required or authorized
by law to close, (b) a day on which the New York Stock Exchange is closed, or (c) a day on
which the payment system of the Federal Reserve System is not operational.
"City" means the City of Tustin, California.
"Closing Date" means April 19, 2007, or such later date on which this Agreement and the
Note are fully executed and delivered.
"County" means the County of Orange, a county duly organized and existing under the
Constitution and laws of the State.
"Debt" means with respect to any Person, all items that would be classified as a liability
in accordance with generally accepted accounting principles, including, without limitation, (a)
indebtedness or liability for borrowed money, or for the deferred purchase price of property or
services (including trade obligations); (b) obligations as lessee under leases which should have
been, or should be, recorded as capital leases in accordance with generally accepted accounting
principles; (c) current liabilities in respect of unfunded benefits under employee benefit,
retirement or pension plans; (d) obligations issued for the account of any other Person; (e) all
obligations arising under acceptance facilities; (f) all guarantees, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other Person or
otherwise to assure a creditor against loss; (g) obligations ,secured by any mortgage, lien,
pledge, security interest or other charge or encumbrance on property, whether or not the
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obligations have been assumed and (h) obligations of such Person under Interest Rate
Protection Agreements.
"Default" means the occurrence of any event or the existence of any condition which
constitutes an Event of Default or the occurrence of any event or the existence of any condition
which with the giving of notice, the passage of time, or both, would constitute an Event of
Default.
"Default Rate" means a rate equal to the Note Rate described in the first sentence of the
def inition of "Note Rate" herein plus 3.00% per annum.
"Event of Default," in relation to this Agreement, shall have the meaning assigned to such
term in Article VII.
"Event of Insolvency" means, with respect to any Person, the occurrence of one or more of
the f ollowing events:
(a) the issuance, under the laws of any state or under the laws of the United States of
America, of an order of rehabilitation, liquidation or dissolution of such Person;
(b) the commencement by or against such Person of a case or other proceeding seeking
liquidation, reorganization or other relief with respect to the such Person or its debts under any
bankruptcy, insolvency or other similar state or federal law now or hereafter in effect,
including, without limitation, the appointment of a trustee, receiver, liquidator, custodian or
other similar official for such Person or any substantial part of its property or there shall be
appointed or designated with respect to it, an entity such as an organization, board,
commission, authority, agency or body to monitor, review, oversee, 'recommend or declare a
financial emergency or similar state of financial distress with respect to it or there shall be
declared or introduced or proposed for consideration by it or by any legislative or regulatory
body with competent jurisdiction over it, the existence of a state of financial emergency or
similar state of financial distress in respect of it;
(c) the making of an assignment for the benefit of creditors by such Person;
Person;
Person.
(d) the f ailure of such Person to generally pay its debts as they become due;
(e) the declaration of a moratorium with respect to the payment of the debts of such
(f) such Person shall admit in writing its inability to pay its debts when due; or
(g) the initiation of any actions to authorize any of the foregoing by or on behalf of such
"Excess Interest Amount" shall have the meaning assigned to such term in Section 2.09(b).
"Exposure" means, for any date with respect to a Person and any Interest Rate Protection
Agreement, the amount of any Settlement Amount that would be payable by such Person if
such Interest Rate Protection Agreement were terminated as of such date. Exposure shall be
determined in accordance with the standard methods of calculating such exposure under
similar arrangements as prescribed from time to time by the Purchaser, taking into account the
methodology for calculating amounts due upon early termination as set forth in the related
Interest Rate Protection Agreement and the notional principal amount, term and other relevant
provisions thereof.
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"Fiscal Year" means the fiscal year of the Issuer ending on June 30 of each calendar year
or such other fiscal year as may be adopted by the Issuer from time to time to the extent
permitted hereunder.
"Funding Requirement" means (a) during the Initial Note Rate Period, an amount equal to
interest to accrue on the amount outstanding under the Note during the Initial Note Rate
Period, to the extent unpaid, plus the amount of any mandatory scheduled prepayment to be
paid pursuant to Section 2.05(c) during the Initial Note Rate Period, (b) during the period from
the end of the Initial Note Rate Period to the Maturity Date, an amount equal to interest to
accrue on the amount outstanding under the Note during such period computed at a rate of
interest equal to the greater of 9% per annum and the Note Rate most currently established
hereunder, to the extent that such interest has not been paid, plus the amount of any mandatory
scheduled prepayment to be paid pursuant to Section 2.05(c) during such period, and (c) from
the earlier of the Maturity Date and the date on which all amounts outstanding are declared
due and payable hereunder, an amount equal to all principal outstanding under the Note plus
all accrued but unpaid interest on such amount.
2008.
"Initial Note Rate Period" means the period from the Closing Date through November 6,
"Interest Rate Protection Agreement" means an interest rate swap, cap or collar agreement
or similar arrangement between any Person and a f financial institution providing f or the transfer
or mitigation of interest rate risks either generally or under specific contingencies.
"Issuer" means Tustin Community Redevelopment Agency, a redevelopment agency
and public body, corporate and politic duly created, established and authorized to transact
business and exercise its powers under the Redevelopment Law, and its successors and assigns
permitted hereunder.
"Issuer Documents" means this Agreement, the Series A Note Purchase Agreement, the
Resolution, the Series A Resolution, the Note and the Parity Note.
"LIBOR Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks are required or authorized to be closed in London, England.
"Low and Moderate Income Housing Fund" means the Low and Moderate Income Housing
Fund maintained by the Issuer in accordance with Section 33334.3 of the Redevelopment Law.
"Margin Stock" shall have the meaning assigned to that term in Regulation U
promulgated by the Board of Directors of the Federal Reserve System, as now and hereafter
from time to time in of f ect.
"Material Adverse Change" means the occurrence of any event or change resulting in a
material and adverse change in the business, condition (financial or otherwise}, operations or
prospects of the Issuer, the Redevelopment Project or the ability of the Issuer to collect sufficient
Tax Revenues to pay its obligations hereunder and under the Note and the Parity Note since the
last day of the period reported in the financial statements of the Issuer received by the
Purchaser and described in paragraph (j) of Section 4.02 or which materially and adversely
affects the enforceability of this Agreement or the Note or the ability of the Issuer to perform its
obligations hereunder or under the Note.
"Material Adverse Effect" means (a} with respect to the Issuer a materially adverse effect
on the Issuer's ability to timely receive and apply the Tax Revenues as contemplated hereby or
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on the Issuer's ability to perform its obligations under the Issuer Documents and (b) with
respect to any agreement or obligation, an adverse effect upon the binding nature, validity or
enf orceability of such agreement or obligation.
"Material Litigation" means any litigation of the type described in paragraph (e) of
Section 4.02.
"Maturity Date" means April 7, 2011.
"Maximum Rate" means twelve percent (12%) per annum, or with respect to obligations
other than the Note the maximum rate of interest on the relevant obligation permitted by
applicable law without regard to any filing made by a lender with respect to notice of rates in
excess of any statutory or regulatory threshold interest rate.
"Note" means that certain $19,900,000 promissory note issued by the Issuer and sold to
the Purchaser pursuant to the terms hereof which shall be in the f orm of Exhibit A.
"Noteholder" means the Person in whose name the Note is registered on the registration
books maintained by the Issuer.
"Note Rate" means, during the Initial Rate Period, [6.27]% per annum, and thereafter, a
per annum rate of interest equal to the One Month LIBOR, plus one hundred twenty-two (122)
basis points. Notwithstanding the foregoing, from and after the earlier of (i) the date amounts
are owed hereunder but only so long as not paid when due and (ii) during the occurrence and
continuance of an Event of Default, all amounts owed hereunder shall bear interest at the
Default Rate.
"Note Rate Adjustment Date" means each day that is the second LIBOR Business Day
prior to the f first day of each Note Rate Period occurring of ter the Initial Note Rate Period.
"Note Rate Period" means, with respect to the Note, initially, the Initial Note Rate Period,
and thereafter, each monthly period, beginning November 6, 2007, which commences on the
first LIBOR Business Day of the month and ends on the last day preceding the first LIBOR
Business Day of the next succeeding month.
"One Month LIBOR" means, as of any date of determination, the offered rate (rounded
up to the next highest 0.001 %) for deposits in U.S. dollars f or a one-month period which
appears on the Telerate Page 3750 at approximately 11:00 a.m., London time, on such date, or if
such date is not a date on which dealings in U.S. dollars are transacted in the London interbank
market, then on the next preceding day on which such dealings were transacted in such market.
One Month LIBOR (i) shall be reset on each Note Rate Adjustment Date, (ii) shall be
effective on the first day of the f ollowing Note Rate Period and (iii) shall be effective throughout
such Note Rate Period.
"Parity Note" means that certain $5,100,000 promissory note issued by the Issuer
concurrently with the Note and sold to the Purchaser pursuant to the Series A Note Purchase
Agreement, payable from Tax Revenues on a parity with the Note.
"Participant(s)" means any bank(s) or other financial institutions that may purchase from
the Purchaser a participation interest in this Agreement and the Note pursuant to a
participation agreement between the Purchaser and the Participants}.
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"Participation Agreement" means any agreement between the Purchaser and a Participant
or Participants in which the Participant(s) purchases a participation interest in this Agreement
and the Note, subject to certain terms and conditions to be specified by the parties thereto.
"Person" means an individual, a corporation, a partnership, an association, an agency, an
authority, a joint venture, a trust, a business trust, a limited liability company or any other
entity or organization, including a governmental entity or political subdivision or an agency or
instrumentality thereof .
"Plan Limitations" means the limitations, if any, as may be amended from time to time,
contained or incorporated in the Redevelopment Plan on (a) the aggregate principal amount of
bonded indebtedness payable from Tax Revenues which may be outstanding at any time, (b)
the aggregate amount of taxes which maybe divided and allocated to the Issuer pursuant to the
Redevelopment Plan, (c) the period of time for establishing or incurring indebtedness payable
from Tax Revenues, (d) the period of time for receiving Tax Revenues for any purpose, and (e)
the time limit on the effectiveness of the Redevelopment Plan, established pursuant to sections
33333.2, 33333.4, 33333.6 or 33334.1 of the Redevelopment Law, as applicable.
"Purchased Land" means the land acquired by the Issuer in whole or in part with the
proceeds from the sale of the Note to the Purchaser more fully described in Exhibit D attached
hereto.
"Purchaser" means Citigroup Global Markets Inc., and its successors and assigns.
"Redevelopment Law" means the Community Redevelopment Law (Part 1 of Division 24.
commencing with Section 33000) of the Health and Safety Code of the State of California.
"Redevelopment Plan" means the Redevelopment Plan for the MCAS-Tustin
Redevelopment Project of the Issuer, approved by Ordinance No. 1276, adopted by the City
Council of the City on June 16, 2003, as heretofore or hereafter amended or supplemented in
accordance with the Redevelopment Law.
"Redevelopment Project" means the MCAS-Tustin Redevelopment Project designated for
a redevelopment project as described in the Redevelopment Plan.
"Resolution" means, Resolution No. of the governing board of the Issuer adopted
April 17, 2007.
"Revenue Fund" means the Revenue Fund established by the Issuer pursuant to Section
2.11 hereof.
"Series A Note Purchase Agreement" means that certain Series A Note Purchase
Agreement, dated as of the date hereof, by and among the Issuer, the Authority and the
Purchaser, including any amendments, modifications or supplements thereto permitted by its
terms.
"Series A Resolution" means, Resolution No. of the governing board of the Issuer
adopted April 17, 2007.
"Settlement Amount" means, with respect to a Person and any Interest Rate Protection
Agreement, any amount payable by such Person under the terms of such Interest Rate
Protection Agreement in respect of, or intended to compensate the other party f or, the value of
such Interest Rate Protection Agreement upon early termination thereof.
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"State" means the State of California.
"Tax Revenues" means all taxes pledged and annually allocated within the Plan
Limitations, following the Closing Date, and paid to the Issuer with respect to the
Redevelopment Project pursuant to Article 6 of Chapter 6 (commencing with section 33670) of
the Redevelopment 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 Issuer specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations, excluding all other
amounts of such taxes (if any) (i) which are required to be deposited into the Low and Moderate
Income Housing Fund of the Issuer as a repayment of amounts transferred therefrom pursuant
to sections 33681 and 33b81.5 of the Redevelopment Law for deposit in the Educational
Revenue Augmentation Fund created pursuant to section 97.03 of the California Revenue and
Taxation Code, (ii) which are required to be deposited into the Low and Moderate Income
Housing Fund of the Issuer pursuant to section 33334.3 of the Redevelopment Law for
increasing and improving the supply of low and moderate income housing, (111) which
constitute supplemental subventions payable by the State to the Issuer under and pursuant to
Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with section 16110) of the California
Government Code, and (iv) which constitute amounts payable by the Issuer under sections
33607.5 or 33607.7 of the Redevelopment Law for payments to affected taxing entities, except
and to the extent such amounts so payable are payable on a basis subordinate to the payment of
the Note.
"Written" or "in writing" means any form of written communication or a communication
by means of f acsimile device.
Section 1.02. Accounting Matters. All accounting terms used herein without definition
shall be interpreted in accordance with generally accepted accounting principles, consistently
applied, and, except as otherwise expressly provided herein, all accounting determinations
required to be made pursuant to this Agreement shall be made in accordance with generally
accepted accounting principles, consistently applied.
Section 1.03. Computation of Time Periods. In this Agreement, in the computation of a
period of time from a specified date to a later specified date, unless otherwise specified herein,
the word "from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
Section 1.04. Interpretation. All words used herein shall be construed to be of such
gender or number as the circumstances require. Reference herein to any document means such
document as amended, modified or supplemented from time to time as permitted under its
terms and the terms hereof. Reference herein to an Article, Exhibit or Section shall constitute a
reference to such Article, Exhibit or Section of or to this Agreement unless otherwise specified.
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ARTICLE II
THE PURCHASE OF THE NOTE
Section 2.01. Purchase of the Note. The Issuer hereby commits to sell the Note to the
Authority for immediate re-sale to the Purchaser. The Purchaser hereby commits to purchase
from the Authority the Note for a purchase price equal to $ ,which is equal to
$19,900,000, the principal amount of the Note, less the closing fee of $99,500.00 (.5% of the
principal amount of the Note), and less the fees of the Purchaser's counsel of $ , on the
Closing Date, and the Authority shall sell such Note to the Purchaser on the Closing Date for
such purchase price. On the Closing Date, the Issuer will deliver to the Purchaser the duly-
executed Note in definitive form; and the Purchaser will accept such delivery and pay the
purchase price thereof by wire transfer of immediately available funds to the account specified
by the Issuer to the Purchaser in writing. The Note shall be delivered in typewritten f orm, duly
executed on behalf of the Issuer in fully registered form. The Issuer's obligation to pay principal
of and interest on the Note shall commence, and interest shall begin to accrue, from the Closing
Date upon the purchase of the Note by the Purchaser. On the Closing Date, the Purchaser shall
execute a letter in the form of Exhibit C and deliver the same to the Issuer.
The Purchaser hereby acknowledges the issuance by the Issuer of the Parity Note on the
Closing Date and hereby agrees that any restrictions or limitations imposed herein on the Issuer
for the issuance of additional obligations shall be inapplicable to the Parity Note.
Section 2.02. Interest. The principal amount of the Note outstanding from time to time
shall bear interest at the Note Rate (computed on the basis of a year of 360 days and actual days
elapsed). The Note Rate shall be adjusted on each Note Rate Adjustment Date, such adjusted
rate to be effective as described in the last sentence of the definition of "One Month LIBOR"
herein. Interest accruing on the principal balance of the Note shall be payable in arrears on the
first Thursday of each month, commencing May 3, 2007, and upon earlier demand in
accordance with this Agreement or upon prepayment in accordance with Section 2.05. For
informational purchases and not as a condition, Purchaser shall provide a printout of a date-
stamped Telerate page 3750 identifying each Note Rate as promptly as practicable following
each Note Rate Adjustment Date.
Section 2.03. Principal RepayT. The Issuer shall repay the outstanding principal
balance of the Note, with interest to the Maturity Date, on the Maturity Date or earlier, to the
extent provided herein.
Section 2.04. Payment on Non Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a date which is not a Business Day, that payment maybe
made on the next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest on the amount to be paid.
Section 2.05. Prepayments.
(a) Voluntary Prepayments. The Issuer may prepay the Note in whole at any time, or in
part on any Business Day, on or after the Initial Note Rate Period, on the last Business Day of a
month, provided that (i) the Issuer gives the Purchaser not less than five Business Days' prior
written notice; (ii) each prepayment is not less than $1,000,000; (iii} the Issuer pays any interest
accrued but unpaid on the principal amount prepaid at the time of such prepayment; and (iv)
the Issuer pays any other amounts then due to the Purchaser under this Agreement.
(b) Mandatory Prepayments. The Issuer shall prepay the Note immediately upon demand
of the Purchaser on the earlier of (i) the last Business Day of the month during which there is a
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sale of any of the Purchased Land, in whole or in part to the extent of the proceeds of such sale,
and (ii) after the occurrence of an Event of Default in accordance with Section 7.02, in full,
together with accrued interest on the Note to such date of prepayment.
(c) Mandatory Scheduled Prepayments. The Issuer agrees that no less than the following
scheduled amounts of Tax Revenues shall be used by the Issuer to prepay the Note and the
Parity Note in each of the following the periods or, if such period precedes the first optional
prepayment date, such amount shall be segregated by the Issuer and applied to the prepayment
of the Note on the first possible date:
Note Parity Note
Minimum Minimum
Fiscal Scheduled Scheduled
Year P~ meet P~ment
2007-08 $ 4,046,000 -
2008-09 5,992,000 -
2009-10 6,763,000 -
2010-11 3,099,000 5,100,000
TOTAL $1 Q $~
Section 2.Ob. Computations; Payments; Def ault Interest.
(a) Method of Payment. Any payments received by the Purchaser later than 2:00, p.m. New
York, New York time on any day shall be deemed to have been paid on the next succeeding
Business Day. All payments by or on behalf of the Issuer to the Purchaser hereunder shall be
fully earned when due and nonrefundable when paid and made in lawful currency of the
United States of America and in immediately available funds. All such payments, unless
otherwise directed by the Purchaser in writing, shall be made to the Purchaser at Chase, ABA#:
021000021, A/C: 066-198-054, FFC AC: 001-85533-1-3, Ref.: Tustin Community Redevelopment
Agency, Series B Note, or such other account of the Purchaser as the Purchaser may specify in
writing to the Issuer.
(b) Default Interest. The Issuer agrees to pay the Purchaser, upon demand, interest on any
and all amounts owed by the Issuer under this Agreement or the Note from the earlier of the
date such amounts are due and payable but not paid and the occurrence of an Event of Default
until payment thereof in full, at the Default Rate (computed on the basis of a year of 360 days
and actual days elapsed). The obligations of the Issuer under this Section 2.06 shall survive the
termination of this Agreement.
Section 2.07. Maintenance of Accounts. The Purchaser shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the Issuer and the
amounts payable and paid from time to time hereunder and under the Note. In any legal action
or proceeding in respect of this Agreement or the Note, the entries made in such account or
accounts shall be presumptive evidence of the existence and amounts of the obligations of the
Issuer therein recorded. The failure to record any such amount shall not, however, limit or
otherwise affect the obligations of the Issuer hereunder to repay all amounts owed hereunder,
together with all interest accrued thereon as provided herein.
Section 2.08. Withholding. All payments of principal, interest and any other sums due
hereunder and under the Note shall be made in the amounts required hereunder without any
reduction or setoff, notwithstanding the assertion of any right of recoupment or setoff or of any
counterclaim by the Issuer, and without any withholding on account of taxes, levies, duties or
any other deduction whatsoever. If the Issuer is required by law to withhold or deduct any sum
from payments required under this Agreement or the Note, the Issuer shall, to the extent
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permitted by applicable law, increase the amount paid by it to the Purchaser, so that, after all
withholdings and deductions, the amount received by the Purchaser shall equal the amount the
Purchaser would have received without any such withholding or deduction.
Section 2.09. Maximum Rate.
(a) If the amount of interest payable hereunder and under the Note for any period in
accordance with the terms hereof exceeds the amount of interest that would be payable for such
period had interest for such period been calculated at the Maximum Rate, then interest for such
period shall be payable in an amount calculated at the Maximum Rate for such period.
(b) Any interest that would have been due and payable for any period but for the
operation of Section 2.09(a) shall constitute the "Excess Interest Amount." If there is any
accrued and unpaid Excess Interest Amount as of any date then the principal amount owed
hereunder and under the Note shall bear interest at the Maximum Rate without regard to any
decrease in the Note Rate below the Maximum Rate. Thereafter, interest accruing on the
principal amount owed hereunder and under the Note which exceeds the amount which would
have accrued thereon had interest accrued at the Note Rate, shall be applied to reduce the
Excess Interest Amount. Once the Excess Interest Amount is so reduced to zero, the principal
amount owed hereunder and under the Note shall, subject o the limitations of Section 2.09(a),
bear interest at the Note Rate.
(c) Notwithstanding the f oregoing, on the date on which no principal amount hereunder
and under the Note remains unpaid, the Issuer shall, to the extent possible without violating
applicable law, pay to the Purchaser a fee equal to any accrued and unpaid Excess Interest
Amount.
Section 2.10. Security. The obligations of the Issuer under this Agreement, including,
without limitation, the Issuer's obligations to make payments hereunder and under the Note,
and the Issuer's obligation with respect to the Parity Note, shall be limited obligations of the
Issuer and shall be payable solely from the revenues and funds pledged pursuant to this Section
2.10. The Issuer, as security for the payment and performance of all of the obligations of the
Issuer under this Agreement and the Note, and the Issuer's obligation with respect to the Parity
Note, hereby irrevocably pledges to the Purchaser, and grants to the Purchaser an express lien
on and security interest in, all right, title and interest of the Issuer in and to the (i) Tax
Revenues, (ii) the moneys and securities held in, and all moneys to be deposited in, the Revenue
Fund, and (iii) the proceeds derived by the Issuer from the sale of all or a portion of the
Purchased Land.
This Agreement and the Note are special obligations of the Issuer payable solely from
the funds described in this Section 2.10 and are not a debt of the City, the Authority, the State or
any of its political subdivisions (other than the Issuer to the limited extent described herein and
therein) and none of the City, any member of the City Council of the City, the Authority, any
member of the governing board of the Authority, the State or any of its political subdivisions is
liable hereon or thereon. This Agreement and the Note do not constitute an indebtedness within
the meaning of any constitutional or statutory debt limitation or restriction. Neither the
members of the governing board the Issuer nor any persons executing the Note have any
personal liability on the Note.
Section 2.11. Revenue Fund. There is hereby established with the Issuer a separate
segregated fund entitled the Revenue Fund (the "Revenue Fund"). The Issuer shall deposit the
Tax Revenues into the Revenue Fund, limited to the amounts required by the following
sentence. The Issuer shall deposit Tax Revenues, in an amount not less than the Funding
Requirement f or the then applicable period, into the Revenue Fund as soon as practicable prior
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to any other use of any Tax Revenues it receives. The amounts so deposited shall remain in the
Revenue Fund until used to pay amounts owed hereunder and under the Note or until the
amounts owed hereunder and under the Note are paid in full. The Issuer shall make payments
to the Purchaser when due hereunder and under the Note from the Revenue Fund. In the event
that less than the Funding Requirement is deposited in the Revenue Fund at any time, the
Issuer shall deposit such additional Tax Revenues, if and when available, into the Revenue
Fund as necessary to cause the amount on deposit therein to be equal to the Funding
Requirement. Unless the Purchaser directs otherwise, the Issuer shall be entitled to invest the
monies in the Revenue Fund in accordance with the Issuer's investment policies. The Issuer
hereby grants the Purchaser a security interest in and lien upon the Revenue Fund and all
amounts and investments held therein. The Purchaser hereby acknowledges that any and all
surplus Tax Revenues, being all Tax Revenues in excess of the annual Funding Requirement in
each calendar year as identified above, may be used by the Issuer for any lawful purpose
whether or not previously deposited in the Revenue Fund.
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ARTICLE III
CONDITIQNS PRECEDENT TO EFFECTIVENESS
Section 3.01. Conditions Precedent to Effectiveness. In addition to the satisfaction of the
obligations of the Issuer regarding delivery of the Note specified in Section 2.01 hereof, this
Agreement shall become effective on the date when the Purchaser shall have received each of
the following which are, inform and substance, satisfactory to the Purchaser and its counsel.
(a) A true and complete original executed counterpart of this Agreement and the
original executed Note and of the Series A Note Purchase Agreement and the Parity Note.
(b) Certified copies of the Resolution approving this Agreement, the Note and the other
matters contemplated hereby (which certificate shall state that such resolutions are in full force
and effect on the Closing Date), and certified copies of all other documents evidencing any
other action of the Issuer taken with respect thereto.
(c) A certified copy of the Authority's Series B Resolution approving this Agreement
(which certificate shall state that such resolution is in full force and effect on the Closing Date).
(d) A certif ied copy of the resolution of the City Council of the City approving the
issuance of the Note by the Issuer (which certificate shall state that such resolution is in full
force and eff ect on the Closing Date).
(e) Originals (or copies certified to be true copies by the Issuer) of all governmental and
regulatory approvals, if any, at the time necessary for the Issuer with respect to this Agreement
and the transactions contemplated hereby, together with a list of any approvals still to be
received, if any.
(f) A certificate of the Issuer certifying the names and true signatures of the respective
officers thereof authorized to sign this Agreement, the Note and the other documents to be
delivered by it hereunder.
(g) An opinion of Quint & Thimmig LLP, bond counsel to the Issuer, in the form of
Exhibit B hereto and an opinion of the City Attorney.
(h) A certif icate of the Authority certifying the names and true signatures of the
respective officers thereof authorized to sign this Agreement.
(i) An opinion of the counsel to the Authority.
(j) A copy certified on the Closing Date by the Issuer of the Redevelopment Plan.
(k) A certificate signed by duly authorized officers of the Issuer, dated the Closing Date,
stating that: (i} the representations and warranties of the Issuer contained in Section 4.02 are
correct on and as of the Closing Date as though made on and as of such date, both bef ore and
after giving effect to the execution and performance of this Agreement and the Note; (ii) no
petition by or against the Issuer has at any time been filed under the United States Bankruptcy
Code or under any similar act; and (iii) except as otherwise disclosed in writing to the
Purchaser, no Default has occurred and is continuing, or would result from the execution and
performance of this Agreement or the Note.
(1) A certif icate signed by duly authorized officers of the Authority, dated the Closing
Date, stating that: (i) the representations and warranties of the Authority contained in Section
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4.02 are correct on and as of the Closing Date as though made on and as of such date, both
before and after giving effect to the execution and performance of this Agreement; (ii) no
petition by or against the Authority has at any time been filed under the United States
Bankruptcy Code or under any similar act; and (iii) except as otherwise disclosed in writing to
the Purchaser, no Default has occurred and is continuing, or would result from the execution
and perf ormance of this Agreement.
(m) Such other documents, instruments, approvals and, if requested by the Purchaser,
certified duplicates of executed originals thereof, and opinions as the Purchaser may reasonably
request.
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ARTICLE IV
REPRESENTATION AND WARRANTIES
Section 4.01. Representations and Warranties of the Authority. The Authority represents
and warrants as f ollows:
(a) Organization and Powers. The Authority is a joint exercise of powers authority
organized and existing under the laws of the State of California, is authorized to transact
business and exercise its power under the Constitution and the applicable laws of the State of
California, and has full power and authority to execute, deliver and perform its obligations
under the Authority Documents.
(b) Authorization and Absence of Conflicts. The execution, delivery and performance of the
Authority Documents (i) have been duly authorized by all necessary action on the part of the
Authority and the City if applicable, (ii) do not and will not conflict with, or result in a violation
of, any provision of law, or any order, writ, rule or regulation of any court or governmental
agency or instrumentality binding upon or applicable to the Authority or any of its property
and (iii) do not and will not conflict with, result in a violation of, or constitute a default under,
any resolution, charter, agreement or instrument to which the Authority is a party or by which
the Authority or any of its property is bound.
(c) Binding Obligation. Each of the Authority Documents, when executed by the other
parties thereto on or before the Closing Date, will be a valid and binding obligation of the
Authority enforceable in accordance with its terms, except to the extent that the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization, or other similar
laws affecting creditors' rights generally and by equity principles (regardless of whether
enf orcement is sought at law or in equity).
(d) Governmental Consent or Approval. No consent, approval, permit, authorization or
order of, or registration or filing with, any court or governmental agency, authority or other
instrumentality not already obtained, given or made is required on the part of the Authority for
the execution, delivery and performance by the Authority of any of the Authority Documents.
(e) Absence of Litigation. Except as previously disclosed in writing to the Purchaser, there
is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, arbitrator, governmental or other board, body or official, pending or, to the best
knowledge of the Authority, threatened against or affecting the Authority or the City,
questioning the validity of any proceeding taken by the Authority or the City in connection
with the Redevelopment Project, the Tax Revenues, the Purchased Land or the execution,
delivery and performance by the Authority of the Authority Documents or seeking to prohibit,
restrain or enjoin the execution, delivery or performance by the Authority of any of the
foregoing documents or the timely payment to the Authority of the Tax Revenues, nor, to the
best knowledge of the Authority, is there any basis therefor, wherein an unfavorable decision,
ruling or finding would have a Material Adverse Effect with respect to the Authority.
(f) No Defaults by the Authority. The Authority is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Authority is a party or by which the Authority or any of
its property is bound, wherein such a default would have a Material Adverse Effect with
respect to the Authority.
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Section 4.02. Representations and Warranties of the Issuer. The Issuer represents and
warrants as f ollows:
(a) Organization and Powers. The Issuer is a public body corporate and politic duly
organized and existing under the laws of the State of California, is authorized to transact
business and exercise its power under the Constitution and the applicable laws of the State of
California, and has full power and authority (i) to issue the Note, (ii) to own or lease its
properties, and to carry on its business as now conducted and as contemplated to be conducted
in connection with the execution, delivery and perf ormance of its obligations under the Issuer
Documents, (iii) to execute, deliver and perform its obligations under the Issuer Documents,
and (iv) to make the pledge set f orth in Section 2.10 hereof .
(b) Authorization and Absence of Conflicts. The execution, delivery and performance of the
Issuer Documents (i) have been duly authorized by all necessary action on the part of the Issuer
and the City if applicable, (ii} do not and will not conflict with, or result in a violation of, any
provision of law, or any order, writ, rule or regulation of any court or governmental agency or
instrumentality binding upon or applicable to the Issuer or any of its property and (iii) do not
and will not conflict with, result in a violation of, or constitute a def ault under, any resolution,
charter, agreement or instrument to which the Issuer is a party or by which the Issuer or any of
its property is bound.
(c) Binding Obligation. Each of the Issuer Documents, when executed by the other parties
thereto on or before the Closing Date, will be a valid and binding obligation of the Issuer
enforceable in accordance with its terms, except to the extent that the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, or other similar laws affecting
creditors' rights generally and by equity principles (regardless of whether enforcement is
sought at law or in equity).
(d) Governmental Consent or Approval. No consent, approval, permit, authorization or
order of, or registration or filing with, any court or governmental agency, authority or other
instrumentality not already obtained, given or made is required on the part of the Issuer for the
execution, delivery and perf ormance by the Issuer of any of the Issuer Documents.
(e) Absence of Litigation. Except as previously disclosed in writing to the Purchaser, there
is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, arbitrator, governmental or other board, body or official, pending or, to the best
knowledge of the Issuer, threatened against or affecting the Issuer or the City, questioning the
validity of any proceeding taken by the. Issuer or the City in connection with the
Redevelopment Project, the Tax Revenues, the Purchased Land or the execution, delivery and
perf ormance by the Issuer of the Issuer Documents or seeking to prohibit, restrain or enjoin the
execution, delivery or performance by the Issuer of any of the foregoing documents or the
timely payment to the Issuer of the Tax Revenues, nor, to the best knowledge of the Issuer, is
there any basis therefor, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect with respect to the Issuer (any such litigation herein referred to as
"Material Litigation").
(f) No Defaults by the Issuer. The Issuer is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any agreement or
instrument to which the Issuer is a party or by which the Issuer or any of its property is bound,
wherein such a def ault would have a Material Adverse Ef feet with respect to the Issuer.
(g) Other Indebtedness; Contractual Payments; Low and Moderate Income Housing Tax
Revenues. Except for this Agreement, the Series A Note Purchase Agreement, the Note and the
Parity Note, there are no bonds, notes, evidences of indebtedness or other obligations of the
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Issuer secured by a pledge of or lien on or security interest in, or payable from, the revenues
and other f unds pledged to the Purchaser pursuant to Section 2.10 of this Agreement, on a basis
senior in right of payment to or on parity with the amounts owed hereunder and under the
Note. The payment obligations of the Issuer hereunder and under the Note constitute bonded
indebtedness for purposes of the lien on Tax Revenues granted herein.
(h) Tax Revenues. The reports, projections and other information relating to the Tax
Revenues provided or caused to be provided to the Purchaser by the Issuer are referenced in
paragraphs (j) and (k) of this Section 4.02 and are, to the extent such information relates to Tax
Revenues previously received, true, accurate and complete, and, to the extent such information
relates to Tax Revenues to be received, fair and reasonable projections or estimates of the same
based upon the assumptions set forth therein. The Issuer has good and valid title to the Tax
Revenues free from any prior lien, charge, claim or security interest other than the liens and
security interests of the Purchaser hereunder. Purchaser acknowledges that the County deducts
its cost of collecting and allocating ad valorem tax revenues from tax increment revenues
otherwise payable to the Issuer, pursuant to statutory authority, generally ref erred to as SB 2557
fees. Total Tax Revenues for the Issuer's fiscal year ending June 30, 2006, were $2,224,136. Tax
Revenues for the Issuer's Fiscal Year ending June 30, 2007 are projected to be $6,171,461 based
upon certain assumptions.
(i) Compliance with Laws. The Issuer has complied with all provisions of applicable law in
all matters related to such actions of the Issuer as are contemplated by the Issuer Documents
which if not complied could cause a Material Adverse Effect.
(j) Financial Statements. The basic financial statements of the Issuer as of June 30, 200b
and the related statement of revenues, expenditures and changes in financial position for the
years then ended and the independent auditors' reports with respect thereto, copies of which
have heretofore been f urnished to the Purchaser, are complete and correct and f airly present the
financial condition, changes in financial position and results of operations of the Issuer at such
date and for such period, and were prepared in accordance with generally accepted accounting
principles. Except as described in the Issuer's unaudited financial statements provided to the
Purchaser or otherwise disclosed to the Purchaser in writing, since June 30, 2006 there has been
no Material Adverse Change in the business, properties, condition (financial or otherwise) or
operations, present or prospective, of the Issuer nor any increase in its long term debt which has
not been disclosed to the Purchaser.
(k) Complete and Correct Information. Purchaser acknowledges that the only information,
reports and other data furnished by Issuer to Purchaser consist of the following: items
described in the Exhibits hereto, the Issuer's audited financials statements for its fiscal year
ended June 30, 2006, DTA tax increment projections for the Redevelopment Project, color-coded
maps of the Purchased Land and assessed value and tax roll information for the
Redevelopment Project. All such information, reports and other papers and data with respect to
the Issuer furnished to the Purchaser. or its counsel by the Issuer were, taken in the aggregate
and at the time the same were so furnished, complete and correct in all material respects. No
fact is known to the Issuer which materially and adversely affects or in the f uture may (so f ar as
it can foresee) materially and adversely affect the business, assets or liabilities, financial
condition, results of operations of the Issuer, or any of its business prospects which has not been
set forth in the financial statements referred to in paragraph (j) of this Section 4.02 or in such
information, reports, papers and data or otherwise disclosed in writing to the Purchaser by the
Issuer.
(1) Pending Legislation and Decisions. There is no amendment, or to the knowledge of the
Issuer, proposed amendment to the Constitution of the State or any State law or any
administrative interpretation of the Constitution of the State or any State law, or any legislation
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that has passed either house of the legislature of the State, or any judicial decision interpreting
any of the f oregoing, the effect of which will materially adversely affect the Issuer's obligations
hereunder or under the Note, or the Issuer's ability to repay when due its obligations under this
Agreement and the Note.
(m) Default. No Default or Event of Default has occurred and is continuing. Except as
disclosed to the Purchaser by the Issuer in writing, the Issuer is not in default under any other
mortgage, indenture, contract, agreement, bond resolution, note, instrument or other
undertaking evidencing debt of the Issuer payable from Tax Revenues or which purports to be
binding on the Issuer or any of its assets, which default could reasonably be expected to have a
Material Adverse Effect with respect to the Issuer.
(n) Incorporation of Representations and Warranties. The Issuer hereby makes to the
Purchaser the same representations and warranties made by the Issuer in the Issuer Documents,
which representations and warranties, together with the related definitions of terms contained
therein, are hereby incorporated by reference with the same effect as if each and every such
representation and warranty and definition were set forth herein in its entirety. No amendment
to or waiver of such representations and warranties or definitions made pursuant to the Issuer
Documents shall be effective to amend such representations and warranties and definitions as
incorporated by reference herein without the prior written consent of the Purchaser.
(o) Usury. The terms of this Agreement and the Note regarding the calculation and
payment of interest and fees do not violate any applicable usury laws.
(p) Federal Reserve Board Regulations. The Issuer will not use any part of the proceeds of
the funds advanced hereunder and has not incurred any indebtedness to be reduced, retired or
purchased by the Issuer out of such proceeds, for the purpose of purchasing or carrying any
Margin Stock, and the Issuer does not own and will not acquire any such Margin Stock.
(q) Investment Company Act. The Issuer is not an "investment company" or a company
"controlled" by an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(r) Insurance. The Issuer currently maintains insurance with respect to its business
operations and properties against such risks, in such amounts, with such companies and with
such deductibles as is customary for business operations and properties of like size, location
and character to those of the Issuer.
(s) Redevelopment Project Value. The Redevelopment Project has an assessed value of at
least $656,500,000.
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ARTICLE V
AFFIRMATIVE COVENANTS
So long as any obligation is owed to the Purchaser hereunder, the Issuer covenants and
agrees as follows, unless the Purchaser shall otherwise consent in writing:
Section 5.01. Compliance With Laws and Regulations. The Issuer shall comply with all
laws, ordinances, orders, rules and regulations of duly constituted public authorities which may
be applicable to it or its properties.
Section 5.02. Reporting Requirements. The Issuer shall keep proper books of record and
account in which f ull, true and correct entries will be made of all dealings or transactions of or
in relation to the business and affairs of the Issuer on a consolidated or combined basis in
accordance with generally accepted accounting principles consistently applied. The Issuer shall
f urnish to the Purchaser two copies of each of the following:
(a) Annual Financial Statements. As soon as available, and in any event within 180 days
after the close of each Fiscal Year of the Issuer, the complete audited financial statements of the
Issuer including the balance sheet as of the end of such Fiscal Year and the related statements of
revenues, expenses and cash flows and changes in fund balance for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the preceding Fiscal Year
all in reasonable detail, certified and prepared by an independent certified public accountant in
accordance with generally accepted accounting principles, consistently applied.
(b) Tax Revenues. Together with the financial statements described in (a) above, the
Issuer shall provide a calculation of the Tax Revenues f or such Fiscal Year.
(c) Redevelopment Plan. The Issuer shall provide copies of all amendments to the
Redevelopment Plan at the time they are executed.
(d) Other Information. Such other information respecting the business, properties or the
condition or operations, financial or otherwise, of the Issuer as the Purchaser may from time to
time reasonably request.
Section 5.03. Notices.
(a) Notice of Default. The Issuer shall provide to the Purchaser immediate notice by
telephone, promptly confirmed in writing, of any Default or Event of Default.
(b) Litigation. The Issuer shall promptly provide to the Purchaser written notice of all
actions, suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or f oreign, against the Issuer or any Affiliate
and which constitutes Material Litigation.
(c) Sale o f Purchased Land. The Issuer shall promptly provide to the Purchaser written
notice of the purchase and/or sale by the Issuer of the Purchased Land.
Section 5.04. Further Assurances. The Issuer shall, upon the request of the Purchaser,
from time to time, execute and deliver and, if necessary, file, register and record such further
amendments and other documents and instruments and take such further action as may be
reasonably necessary to effectuate the provisions of this Agreement and the Note. Except to the
extent it is exempt therefrom, the Issuer will pay or cause to be paid all filing, registration and
recording fees incident to such filing, registration and recording, and all expenses incident to
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the preparation, execution and acknowledgment of such instruments of further assurance, and
all federal or state fees and other similar fees, duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of this Agreement and the Note and
such instruments of further assurance.
Section 5.05. Right of Entry. The Issuer shall permit the duly authorized representatives
of the Purchaser during normal business hours and upon reasonable notice to enter the
business offices of the Issuer, or any parts thereof, to examine and copy the Issuer's financial
and corporate books, records and accounts, and to discuss the affairs, finances, business and
accounts of the Issuer with the Issuer's of ficers and employees.
Section 5.06. Payment of Obligations; Removal of Liens. The Issuer shall pay (a) all
indebtedness and obligations of the Issuer payable from Tax Revenues in accordance with the
terms thereof and (b) all assessments or other governmental charges as the same respectively
become due, all taxes, assessments (general or special) and governmental charges of any kind
whatsoever that may be at any time lawfully assessed or levied against or with respect to the
Tax Revenues or any interest therein and promptly discharge or cause to be discharged all liens,
encumbrances and charges against Tax Revenues; provided, the Issuer may contest in good
faith any such indebtedness, changes or other amounts so long as such contest does not result in
the creation of a lien on Tax Revenues prior to or on a parity with the pledge hereunder.
Section 5.07. Disclosure to Participants. The Issuer agrees to permit the Purchaser to
disclose any information received by the Purchaser in connection herewith, including without
limitation the financial information described in Section 5.02, to any Participants of the
Purchaser in this Agreement.
Section 5.08. Proceeds of the Note. The proceeds of the Note will be used by the Issuer
solely for the purposes described in the Resolution unless the Purchaser consents in writing to
an alternative use or uses such consent not to be unreasonably withheld or delayed.
Section 5.09. Licenses Permits, Etc. The Issuer will take all necessary and appropriate
action to ensure the continuance in force of all material consents, licenses, permits, orders,
decrees, approvals, authorizations, registrations and filings obtained or made in connection
with the Redevelopment Plan, the Redevelopment Project, the Tax Revenues, the Purchased
Land, this Agreement and the Note, or necessary to maintain the enforceability against the
Issuer of this Agreement or the Note.
Section 5.10. Maintenance of Existence. The Issuer shall preserve and maintain (i) its
existence and (ii) its rights, franchises and privileges material to its ability to repay the
obligations hereunder and under the Note.
Section 5.11. Related Obli~at~ ions. The Issuer shall promptly pay all amounts payable by
it hereunder, under the Note and the Issuer Documents according to the terms hereof or thereof
and shall duly perform each of its obligations under this Agreement under the Issuer
Documents, which provisions, as well as related defined terms contained therein, are hereby
incorporated by reference herein with the same effect as if each and every such provision were
set forth herein in its entirety without giving effect to any expiration, amendment, supplement
or termination of any Issuer Document to which the Purchaser has not given its express written
consent.
Section 5.12. Maintenance of Tax Revenues. The Issuer shall comply with all
requirements of law to facilitate receipt by the Purchaser of Tax Revenues pledged by the Issuer
pursuant to, and in the amounts contemplated by, this Agreement. The Issuer will not enter into
-19-
any agreement which would have the effect of reducing the amount of such Tax Revenues
available for payment of the amounts due hereunder or under the Note.
Section 5.13. Insurance. The Issuer will at all times maintain insurance with respect to its
business operations and properties against such risks, in such amounts, with such companies
and with such deductibles as is customary for business operations and properties of like size,
location and character to those of the Issuer.
Section 5.14. Take-Out Financing. Not less than 90 days prior to the Maturity Date, the
Issuer will commence proceedings to arrange for the issuance and sale of bonds, notes or other
securities (the "Take-Out Financing") on or prior to the Maturity Date in a principal amount
which is not less than the amount which will be needed by the Issuer to repay the Purchaser f or
all amounts which will be outstanding under the Note on the date of the issuance of the Take-
out Financing. The Issuer agrees that Citigroup Global Markets Inc. shall be the underwriter for
the sale of the Take-Out Financing on terms reasonably acceptable to Citigroup Global Markets
Inc. and the Issuer. The Issuer agrees that the compensation paid to Citigroup Global Markets
Inc. for servicing as underwriter shall be documented by a separate underwriting agreement.
-20-
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Amendments. The Issuer shall not amend, modify or supplement, nor
agree to any amendment or modification of, or supplement to, the Issuer Documents or the
Redevelopment Plan without the prior written consent of the Purchaser.
Section b.02. Preservation of Existence. The Issuer shall not dissolve nor shall it sell,
lease, assign, transfer or otherwise dispose of all or substantially all of its properties and assets.
The Issuer shall preserve and maintain its existence, right (charter and statutory) and franchises
and licenses. The Issuer shall not consolidate with or merge into another Person or permit one
or more other Persons to consolidate with or merge into it or acquire all or substantially all of
the property and assets of any other Person.
Section 6.03. Additional Debt. The Issuer shall not issue or incur any additional Debt
which would be secured by a lien on Tax Revenues on a basis senior or on a parity with the
pledge hereunder or with respect to any Take-Out Financing without the express written
consent of the Purchaser.
Section 6.04.Other Negative Covenants. So long as any amount is due and owing to the
Purchaser hereunder or under the Note, unless the Purchaser otherwise shall consent in
writing, the Issuer agrees not to:
(a) Do anything that would impair the availability of Tax Revenues in an amount
sufficient to pay the Note when due and payable; and
(b) Deduct any amount from the Tax Revenues for the payment of the Issuer's fees, costs
and expenses or for any other purpose.
-21-
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
The occurrence of. any of the events set f orth in Section 7.01 shall constitute an event of
default (each, an "Event of Default"). Upon the occurrence of an Event of Default the Purchaser
may exercise those rights and remedies provided in Section 7.02.
Section 7.01. Events of Default.
(a) Payments. The Issuer shall fail to pay when due any amounts owed by the Issuer to
the Purchaser pursuant to this Agreement or the Note and such failure continues for three
Business Days.
(b) Representations. Any representation or warranty made by or on behalf of the Issuer in
this Agreement or in any certificate or statement delivered hereunder shall prove to have been
incorrect or untrue in any material respect when made or deemed to have been made.
(c) Covenants. The Issuer shall fail to perform the covenants in Section 5.03, 5.08, 5.10,
5.12 or 5.13 or in Article VI.
(d) Other Covenants. The Issuer shall fail to perform or observe any term, covenant or
agreement (other than ones described in any other paragraph of this Section 7.01) contained in
this Agreement on its part to be performed or observed which f allure continues for 30 days or
more after notice of such failure from the Purchaser; provided, however, if such failure is
subject to cure and for so long as the Issuer diligently pursues the cure for such failure, such
failure shall constitute an Event of Default if it continues uncured for 90 days after notice from
the Purchaser.
(e} Default. Default by the Issuer in the payment of any amount due in respect of any
Debt owed to the Purchaser or its affiliates or default by the Issuer in the payment of any
amount due in respect of any other Debt in an aggregate amount in excess of $1,000,000
(measured in the case of any Interest Rate Protection Agreement, by the Issuer's Exposure
thereunder), as and when the same shall become due, or default under any mortgage,
agreement or other instrument under or pursuant to which such Debt is incurred or issued, and
continuance of such default beyond the period of grace, if any, allowed with respect thereto, or
the occurrence of any act or omission by the Issuer under any such mortgage agreement or
other instrument which results in such Debt becoming, or being capable of becoming,
immediately due and payable (or, with respect to any Interest Rate Protection Agreement,
which results in such Interest Rate Protection Agreement being terminated early or being
capable of being terminated early).
(f) Event of Insolvency. An Event of Insolvency shall have occurred with respect to the
Issuer or the City which, in the case of an Event of Insolvency brought by a third-party against
the Issuer or the City, is not dismissed within 60 days.
(g) Contest of Validity. The Issuer, or any agent or trustee on behalf of the Issuer, shall (i)
claim that the Note or this Agreement is not valid or binding on the Issuer, (ii) repudiate its
obligations under the Note or this Agreement and / or (iii) initiate any legal proceedings to seek
an adjudication that the Note or this Agreement is not valid or binding on the Issuer.
(h) Invalidity. Any court of competent jurisdiction or other governmental entity with
jurisdiction to rule on the validity of this Agreement or the Note shall announce, find or rule
that this Agreement or the Note is not valid or not binding on the Issuer.
_22_
(i) Judgments. Entry or filing of any judgment, writ or warrant of attachment or of any
similar process payable from Tax Revenues in an amount in excess of $1,000,000 against the
Issuer or against any of its property and f allure of the Issuer to vacate, bond, stay or contest in
good f aith such judgment, writ, warrant of attachment or other process for a period of 30 days
or failure to pay or satisfy such judgment within 60 days or as otherwise required by such
judgment, writ or warrant of attachment.
(j) Lien on Tax Revenues. The Purchaser shall fail to have a valid and enforceable first
priority perfected security interest pursuant to Section 2.10 hereof, subject and subordinate only
to the pledges of the Issuer described herein.
(k) Other Documents. An event of default shall occur under the Series A Note Purchase
Agreement or the Parity Note.
Section 7.02. Remedies. Upon the occurrence of an Event of Default hereunder, the
Purchaser may take one or more of the following actions:
(a) Upon the occurrence of any Event of Default, (i) all amounts owed to the Purchaser
hereunder and under the Note shall bear interest at the Default Rate until paid, (ii) the
Purchaser may by written notice to the Issuer declare that all amounts owed to the Purchaser
hereunder and with respect to the Note to be immediately due and payable whereupon such
amounts shall be immediately due and payable (provided, that the obligations of the Issuer
hereunder shall be and become automatically and immediately due and payable without such
notice upon the occurrence of an Event of Default described in Section 7.01(f)) and (iii) the
Purchaser shall have all remedies provided at law or equity, including, without limitation, the
right of set off and specific performance. The Purchaser shall promptly provide written notice
to the Issuer of any acceleration of the amounts due hereunder.
(b) In the case of any Event of Default hereunder the Purchaser shall have the right, but
not the obligation, to cure any such Event of Default (in which case the Issuer shall reimburse
the Purchaser therefor pursuant to Section 2.07).
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ARTICLE VIII
MISCELLANEOUS
Section 8.01.Obli~ations Absolute. The obligations of the Issuer under this Agreement
shall be absolute, unconditional and irrevocable and shall be paid or performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever, including,
without limitation, the f ollowing circumstances:
(a) to the extent permitted by applicable law, any lack of validity or enforceability of this
Agreement or the Note or any other agreement or instrument delivered in connection herewith
or therewith;
(b) the existence of any claim, set off, defense or other right that the Issuer may have at
any time against the Purchaser or any other Person, whether in connection with this Agreement
or otherwise;
(c) any statement or any other document presented under this Agreement or the Note
proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever; or
(d) any other circumstances or happening whatsoever, whether or not similar to any of
the f oregoing.
This Agreement and the Note are special obligations of the Issuer payable in the manner
and from the sources described herein, and are not a debt of the City, the State or any of its
political subdivisions and neither the City, the State, nor any of its political subdivisions is liable
on them and this Agreement and the Note do not constitute indebtedness within the meaning
of any constitutional or statutory debt limitation or restriction. Neither the members, officers,
employees or agents of the Issuer, the Authority or the City nor any persons executing the Note
have any personal liability on the Note or the obligations under this Agreement.
Section 8.02. Liability of the Purchaser. With respect to the Purchaser, the Issuer assumes
any and all risks with respect to the acts or omissions of the Issuer in connection with its use of
this Agreement or any amounts made available by the Purchaser hereunder. Neither the
Purchaser nor any of the officers, directors, employees or agents thereof shall be liable or
responsible for any of the following: (a) the use that may be made of this Agreement or any
amounts made available by the Purchaser hereunder or for any acts or omissions of the Issuer
in connection therewith; (b) the validity, sufficiency or genuineness of documents (except for
the validity and enforceability of the Purchaser's obligations hereunder), or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Purchaser against presentation of
documents which do not comply with the terms hereof, including failure of any documents to
bear any reference or adequate reference to this Agreement; or (d} any other circumstances
whatsoever. In furtherance and not in limitation of the foregoing, the Purchaser may accept
documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary. In no event shall the
Purchaser be liable to the Issuer for consequential, indirect or punitive damages and the Issuer
hereby waives the right to receive the same.
Section 8.03. Expenses; Indemnification.
(a) The Issuer agrees to pay all of the Purchaser's out of pocket expenses (including,
without limitation, reasonable fees and expenses of counsel to the Purchaser) arising in
-24-
connection with the enforcement or administration of, or preservation of rights in connection
with, this Agreement or the Note. In addition, the Issuer shall pay any and all stamp and other
taxes and fees payable or determined to be payable , in connection with the execution, delivery,
filing and recording of this Agreement or the Note and agrees to save the Purchaser harmless
from and against any and all liabilities with respect to or resulting f rom any delay in paying or
omission to pay such taxes and fees.
(b) In addition to any and all rights of reimbursement, indemnification, subrogation or
any other rights pursuant hereto or under law or equity, the Issuer hereby agrees to indemnify
and hold harmless each of the Purchaser, each Participant, the Authority and the City, and their
respective officers, directors, employees and agents (each an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities, reasonable costs or expenses whatsoever
(including reasonable attorneys` fees) that an Indemnified Party may incur (or which may be
claimed against an Indemnified Party by any Person whatsoever) that arises out of the
transactions contemplated by this Agreement or the Note other than any such claim, damage,
losses, liabilities, costs or expenses caused by the gross negligence or willful misconduct of the
Purchaser.
(c) The provisions of this Section 8.03 shall survive the termination of this Agreement
and the payment in full of the Note and the obligations of the Issuer thereunder and hereunder.
Section 8.04. Notices. Unless otherwise specified herein, all notices, requests, demands
or other communications to or upon the .respective parties hereto or referred to herein shall be
deemed to have been given (a) in the case of notice by letter, when delivered by hand, (b) in the
case of notice by facsimile, upon confirmation of receipt, addressed to them as follows or at
such other address as any of the parties hereto may designate by written notice to the other
parties hereto:
Issuer: Tustin Community Development Agency
300 Centennial Way
Tustin, CA 92680
Attention: Executive Director
Telephone: (714)) 573-3010
Fax: (714) 838-1602
Purchaser: Citigroup Global Markets Inc.
390 Greenwich Street, 2nd Floor
New York, NY 10013
Attention: Michael Hershkowitz
Telephone: (212) 723-6320
Fax: (212) 723-8642
Section 8.05. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Issuer and the Purchaser and their respective successors, endorsees and
assigns, except that the Issuer may not assign or transfer its rights or obligations hereunder
(other than by merger or consolidation) without the prior written consent of the Purchaser. This
Agreement is a continuing obligation and shall survive the Expiration Date. The Purchaser may
grant interests in its rights hereunder as provided in Section 8.10.
The Purchaser may at any time pledge or grant a security interest in all or any portion of
its rights (including, without limitation, rights to payment under this Agreement or the Note) to
secure obligations of the Purchaser to a Federal Reserve Bank, without notice to or consent of
the Issuer.
-25-
Section 8.06. Assignment and Transfer. The Purchaser may assign or transfer the Note to
any entity that is an affiliate of, or controlled by the Purchaser without the consent of the Issuer
upon notation of the transfer by the Issuer on the registration books of the Issuer which the
Issuer shall cause to be maintained for such purpose. The Note is transferable only in whole or
in part, in a minimum amount of $500,000, and by notation on the registration books
maintained by the Issuer and are transferable provided that:
(a) the transferring holder thereof shall first have complied with all applicable state and
f ederal securities laws and regulations;
(b) the transferring holder thereof can transfer the Note or portion thereof only to:
(i) a transferee who executes and delivers to the Issuer a letter of the transferee
substantially in the form set forth in Exhibit C hereof;
(ii) such transferee may be a securitization Special Purpose Vehicle ("SPV") the
interests in which SPV are sold to institutional investors only or an accredited investor
within the meaning of Section 2(15) of the Securities Act of 1933; but in any event the
letter described in (b)(i) shall be delivered.
(c) the transferring holder thereof will not prepare or furnish, or cause to be prepared, or
furnished, any disclosure regarding the Issuer's finances without the prior review and written
consent of the Issuer, in the Issuer's sole discretion;
provided, however, the Issuer shall not be put to any expense as a result of such assignment or
transfer (or review thereof ). Upon surrender of any Note to the Issuer, the Issuer shall transfer
or exchange such Note for a new Note or Notes in any denominations requested by such
Noteholder (but not less than $500,000) and in the same aggregate principal amount as the Note
that was presented for transfer or exchange.
Notwithstanding any other provision of this Agreement, the Purchaser shall have the
right to sell or assign the Note or a portion thereof to any special purpose vehicle established by
the Purchaser, directly or indirectly, or to a qualified institutional buyer who delivers a letter in
the form described in (i) above. Further, the Purchaser may assign its rights and obligations
under this Agreement and the Note to any of its of filiates.
Section 8.07. GOVERNING LAW. WITH RESPECT TO THE PURCHASER, THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA.
WITH RESPECT TO THE ISSUER AND THE AUTHORITY, THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
AND OF THE UNITED STATES OF AMERICA.
Section 8.08. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same
instrument.
Section 8.09. Participations. The Issuer acknowledges and agrees that the Purchaser may
participate portions of its obligations hereunder (collectively, the "Participated Obligations") to
other financial institutions without notice or the consent of the Issuer and without diminishing
the obligations of the Purchaser hereunder in any manner. The Issuer further acknowledges and
agrees that upon any such participation the Participants will become owners of a pro rata
portion of the Participated Obligations and the Issuer waives any right of setoff it may have at
any time against the Purchaser or any Participant with regard to the Participated Obligations.
-26-
Notwithstanding the foregoing, the Issuer shall have no obligation to provide information to
any Participant, the grant of such participation interest shall not limit the obligations of the
Purchaser hereunder and the Purchaser will continue to serve as the only contact f or the Issuer
for all matters relating to this Agreement.
Section 8.10. Right of Setoff. Upon the occurrence of an Event of Default, the Purchaser
and its affiliates may, at any time and from time to time, without notice to the Issuer or any
other person (any such notice being expressly waived), set off and appropriate and apply,
against and on account of, any obligations and liabilities of the Issuer to the Purchaser or its
affiliates arising under or connected with this Agreement, without regard to whether or not the
Purchaser shall have made any demand therefor, and although such obligations and liabilities
may be contingent or unmatured, any and all deposits (general or special, including but not
limited to indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other indebtedness or other payment obligation at
any time held or owing by the Purchaser or its affiliates to or f or the credit or the account of the
Issuer.
Section 8.11. Amendments and Waivers. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Issuer from any such provision shall in any
event be effective unless the same shall be in writing and signed by the parties hereto. Any such
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given. In the event any agreement contained in this Agreement should be breached by
the Issuer and thereafter waived by the Purchaser, such waiver shall be limited to the particular
breach so waived for the specific period set out in such waiver and such waiver shall not
constitute a waiver of such breach f or any other period and shall not waive any other or similar
breach hereunder.
Section 8.12. Severability. Any provision of this Agreement that is prohibited,
unenforceable or not authorized in .any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.
Section 8.13. Headin s. Section headings in this Agreement are included herein for
convenience of reference only and shall not have any affect for purposes of interpretation or
construction of the terms of this Agreement.
Section 8.14. C~ lete and Controllin Agreement. This Agreement completely sets
forth the agreements among the Purchaser and the Issuer and fully supersedes all prior
agreements, both written and oral, among the Purchaser and the Issuer relating to all matters
set forth herein. The terms and provisions of this Agreement may be amended or superseded
only by a written instrument and no oral agreements, practices, standards or other extrinsic
communications or facts shall have any bearing on the interpretation or enforcement of this
Agreement except as otherwise expressly agreed to in writing by the Purchaser and the Issuer.
Section 8.15. WAIVER OF JURY TRIAL; DISPUTE RESOLUTION. THE ISSUER, THE
AUTHORITY AND THE PURCHASER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION (WHETHER AS CLAIM, COUNTER CLAIM, AFFIRMATIVE
DEFENSE OR OTHERWISE) BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE
ISSUER, THE AUTHORITY OR THE PURCHASER. THE ISSUER AND THE AUTHORITY
ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
_2~_
CONSIDERATION FOR THIS PROVISION AND RECOGNIZE AND AGREE THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER ENTERING INTO
THIS AGREEMENT. THE ISSUER AND THE AUTHORITY REPRESENT AND
ACKNOWLEDGE THAT THEY HAVE REVIEWED THIS PROVISION WITH THEIR LEGAL
COUNSEL AND THAT THEY HAVE KNOWINGLY AND VOLUNTARILY WAIVED ANY
JURY TRIAL RIGHTS THEY MAY HAVE FOLLOWING CONSULTATION WITH SUCH
LEGAL COUNSEL.
TO THE EXTENT THE WAIVER IN THE PRECEDING PARAGRAPH IS NOT
PERMITTED BY LAW, THE ISSUER, THE AUTHORITY AND THE PURCHASER HEREBY
AGREE TO RESOLVE ANY DISPUTE RESULTING IN LEGAL ACTION PURSUANT TO THE
PROVISIONS FOR REFERENCE AND TRIAL BY REFEREE (WITHOUT JURY). THE PARTIES
AGREE THAT SAID REFEREE SHALL BE A JUDGE FOR ALL PURPOSES (INCLUDING,
WITHOUT LIMITATION, (X} RULING ON ANY AND ALL DISCOVERY MATTERS AND
MOTIONS AND ANY AND ALL PRETRIAL OR TRIAL MOTIONS, (Y) SETTING A
SCHEDULE OF PRETRIAL PROCEEDINGS, AND (Z) MAKING ANY OTHER ORDERS OR
RULINGS A SITTING JUDGE OF THE APPLICABLE COURT WOULD BE ENTITLED TO
MAKE IN ANY ACTION OR PROCEEDINGS BEFORE SUCH COURT. ANY DECISION OF
THE, REFEREE SHALL BE APPEALABLE TO THE SAME EXTENT AND IN THE SAME
MANNER THAT SUCH DECISION WOULD BE APPEALABLE IF RENDERED BY A JUDGE
OF THE APPLICABLE COURT. NOTHING IN THIS SECTION SHALL PREJUDICE THE
RIGHT OF EITHER PARTY TO OBTAIN PROVISIONAL RELIEF OR OTHER EQUITABLE
REMEDIES AS SHALL OTHERWISE BE AVAILABLE JUDICIALLY PENDING REFERENCE
OF A DISPUTE TO A REFEREE AS PROVIDED HEREIN. IF ANY COURT OF COMPETENT
JURISDICTION DETERMINES THAT THE JURY TRAIL WAIVER OR THE APPOINTMENT
OF A REFEREE IS IMPERMISSIBLE OR OTHERWISE INEFFECTIVE, THEN THE PARTIES
HERETO AGREE THAT ANY DISPUTE BETWEEN THE PARTIES ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE EXPEDITIOUSLY RESOLVED BY
BINDING ARBITRATION IN ACCORDANCE WITH THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION.
Section 8.16. Termination. This Agreement shall terminate upon date on which the
Issuer has satisfied all of its obligations hereunder and under the Note.
Section 8.17. USA Patriot Act. The Purchaser hereby notifies the Issuer that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107 56 (signed into law October 26,
2001) the "Patriot Act"), it is required to obtain, verify and record information that identifies the
Issuer, which information includes the name and address of the Issuer and other information
that will allow the Purchaser to identify the Issuer in accordance with the Patriot Act. The Issuer
shall promptly provide such information upon request by the Purchaser.
_Zg_
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized of ficers, all as of the day and year first above written.
TUSTIN PUBLIC FINANCING
AUTHORITY
ATTEST:
By
Name
Title
ATTEST:
By
Name
Title
By
Name
Title
TUSTIN COMMUNITY
REDEVELOPMENT AGENCY, as Issuer
By
Name
Title
CITIGROUP GLOBAL MARKETS INC., as
Purchaser
By
Name
Title
_29_
EXHIBIT A
FORM OF
PROMISSORY NOTE
$19,900,000
Apri119, 2007
FOR VALUE RECEIVED, the undersigned (the "Issuer") hereby promises to pay to the
order of CITIGROUP GLOBAL MARKETS INC. (the "Purchaser"), or permitted assigns, the
sum of nineteen million nine hundred thousand dollars ($19,900,000) or so much thereof as
from time to time as may be due and owing by the Issuer pursuant to the Series B Note
Purchase Agreement dated as of April 1, 2007 (the "Agreement"), by and among the Tustin
Public Financing Authority, the Issuer and the Purchaser, and to pay interest (calculated as
provided in the Agreement) on such sum or the portion thereof from time to time outstanding
hereunder at the rate described below. All capitalized terms used herein and not defined shall
have the meanings given such terms in the Agreement.
The outstanding principal amount of this Note shall be payable on April _, 2011 (the
"Maturity Date"} or at such earlier time as provided in the Agreement. Subject to the terms
hereof, Issuer will pay interest on the principal amount outstanding under this Note and
computed at the Note Rate as provided in the Agreement. This Promissory Note is subject to
acceleration upon the occurrence of certain events as provided in the Agreement.
The Issuer shall have the right to prepay this Promissory Note in accordance with the
Agreement.
All payments of principal of, and interest on, this Promissory Note shall be payable in
immediately available funds at the address of the Purchaser specified in the Agreement, or at
such other place as the Purchaser, f rom time to time, in writing may require, and shall be made
in any coin or currency of the United States of America as, at the respective times of such
payments, shall be legal tender for the payment of public and private debts.
This Promissory Note is not negotiable and, except as provided in this paragraph, may
not be assigned without the prior written consent of the Issuer. The Purchaser may assign or
transfer the Note, or a portion thereof in a minimum amount of $500,000, to any entity that is an
affiliate of, or controlled by the Purchaser without the consent of the Issuer upon notation of the
transfer by the Issuer on the registration books of the Issuer which the Issuer shall cause to be
maintained for such purpose. This Promissory Note is transferable only in whole or in part in a
minimum amount of $500,000, and by notation on the registration books maintained by the
Issuer and are freely transferable provided that:
(a) the transferring holder thereof shall first have complied with all applicable state and
federal securities laws and regulations;
(b) the transferring holder thereof can transfer the Note only to:
(i) a transferee who executes and delivers to the Issuer a letter of the transferee
substantially in the form of Exhibit C to the Agreement; or
Exhibit A
Page 1
(ii) a securitization Special Purpose Vehicle ("SPV") the interests in which SPV
are sold to institutional investors only provided there is delivered concurrently the
Letter described in (b)(i); or .
(iii) a transferee who qualifies as an accredited investor within the meaning of
Section 2(15) of the Securities Act of 1933 provided there is delivered concurrently the
Letter described in (b)(i); and
(c) the transferring holder thereof will not prepare or furnish, or cause to be prepared or
furnished, any disclosure regarding the Issuer's finances without the prior review and written
consent of the Issuer, in the Issuer's sole discretion;
provided, however, the Issuer shall not be put to any expense as a result of such assignment or
transfer (or review thereof), and such assignment or transfer shall only be in whole and not in
part. The Purchaser agrees that the Issuer may in its sole discretion withhold consent to any
assignment or transfer in part or to more than one assignee.
Notwithstanding any other provision of this Note, the Purchaser shall have the right to
sell or assign this Note to any special purpose vehicle established by the Purchaser, directly or
indirectly, or to a qualif ied institutional buyer who delivers a letter in the f orm described in (i)
above. Further, the Purchaser may assign its rights and obligations under this Note to any of its
affiliates.
All payments hereon shall be applied first, to accrued interest then payable; and second,
to the principal amount hereof in chronological order of principal amortization.
From the date amounts hereunder are due and unpaid under the Agreement, amounts
outstanding hereunder shall bear interest at the Default Rate as provided in the Agreement,
such interest to be payable on demand.
This Promissory Note is issued under, is subject to the terms and conditions of, and is
secured by, the Agreement. All definitions, terms, conditions, rights and provisions set forth in
the Agreement are hereby incorporated herein in their entirety. The holder hereof is entitled to
the benefits of the Agreement. The obligations of the Issuer under this Promissory Note are
limited obligations of the Issuer and are payable solely from the revenues and other funds
ref erred to and provided f or in the Agreement.
This Note is a special obligation of the Issuer payable in the manner and from the
sources described herein and in the Agreement, and is not a debt of the City of Tustin, the State
or any of its political subdivisions and neither the City, the State, nor any of its political
subdivisions is liable on it and it does not constitute indebtedness within the meaning of any
constitutional or statutory debt limitation or restriction. Neither the members of the Issuer nor
any persons executing this Note have any personal liability on this Note.
The Issuer hereby waives presentment, demand, protest, notice of protest or other notice
of dishonor of any kind or of non-payment of this Promissory Note, and promises to pay all
reasonable costs of collection when incurred, including reasonable attorneys' fees. No extension
of the time for the payment of this Promissory Note or any installment hereof made by
agreement with any person now or hereafter liable for the payment of this Promissory Note
shall operate to release or discharge the original liability under this Promissory Note, either in
whole or in part, of the Issuer.
The Issuer shall reimburse the Purchaser for all costs and expenses, including without
limitation reasonable attorneys' fees, expended or incurred by the Purchaser in any judicial
Exhibit A
Page 2
reference, legal action or otherwise in connection with (a) the negotiation, preparation,
amendment and enforcement of the Issuer Documents, including without limitation during any
workout, attem ted workout, and / or in connection with the rendering of legal advice as to the
p
Purchaser's rights, remedies and obligations under the Issuer Documents, (b) collecting any
sum which becomes due the Purchaser under any Issuer Document, (c) any proceeding for
declaratory relief, any counterclaim to any proceeding, or any appeal, or (d) the protection,
preservation or enf orcement of .any rights or remedies of the Purchaser.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA AND OF THE UNITED STATES OF
AMERICA.
It is hereby recited, certified and declared that any and all acts, conditions and things
required to exist, to happen and to be performed precedent to and in the issuance of this
Promissory Note exist, have happened and have been performed in due time, f orm and manner
as required by the laws of the State of California.
IN WITNESS WHEREOF, the Issuer has caused this Promissory Note to be duly
executed and delivered by its officers thereunto duly authorized as of the date set f orth below.
Dated: , 2007 TUSTIN COMMUNITY
REDEVELOPMENT AGENCY
ATTEST:
Name
Title
By
Name
Title
Exhibit A
Page 3
EXHIBIT B
FORM OF OPINION OF COUNSEL TO ISSUER
Exhibit B
EXHIBIT C
FORM OF PURCHASER'S LETTER TO ISSUER
[DATE]
Tustin Community Redevelopment Agency
300 Centennial Way
Tustin, CA 92680
The undersigned, as purchaser (the "Purchaser") of all or a portion of the Promissory
Note (the "Note") issued by the Tustin Community Redevelopment Agency (the "Issuer")
pursuant to that Series B Note Purchase Agreement dated as of April 1, 2007 (the "Agreement")
between the Purchaser and the Issuer, hereby represents that:
1. The undersigned is purchasing the Note (a "Holder"}. The Purchaser has authority to
purchase the Note and to execute this letter and any other instruments and documents required
to be executed by the Purchaser in connection with the purchase of the Note.
2. We have sufficient knowledge and experience in financial and business matters to be
able to evaluate the risk and merits of the investment represented by the Note. We are able to
bear the economic risks of such investment.
3. We acknowledge that we are purchasing the Note for investment f or our own account
and not with a present view toward resale or the distribution thereof, in that we do not now
intend to resell or otherwise dispose of all or any part of our interests in the Note; provided,
however, that we may transfer the Note to the extent permitted under the Agreement. The
Purchaser understands that the Note may not be sold, transferred or disposed of in any manner
until the conditions precedent to such transfer set forth in Section 8.06 of the Agreement have
been satisfied.
4. We acknowledge that we have either been supplied with or have been given access to
information relating to the Note and we have had the opportunity to ask questions and receive
answers from knowledgeable individuals concerning the Issuer, the Note and the security for
the Note.
5. We acknowledge that we have either been supplied with or been given access to
information, including financial statements and other financial information, to which a
reasonable investor would attach significance in making investment decisions, and we have had
the opportunity to ask questions and receive answers from knowledgeable individuals
concerning the Issuer and the Note and the security therefor so that, as a reasonable investor,
we have been able to make our decision to purchase the Note.
6. We are a Qualified Institutional Buyer as defined in 17 C.F.R. 230.144A.
7. The Purchaser understands that the Note is not registered under the Securities Act of
1933, as amended (the "Securities Act"), and that such registration is not legally required as of
the date hereof and further understands that the Note (a) is not being registered or otherwise
qualified for sale under the "Blue Sky" laws and regulations of any state (b) will not be listed on
any stock or other securities exchange, and (c) will not carry a rating from any rating service.
Exhibit C
Page 1
8. The Purchaser understands that the placement of the Note is exempt from the
requirements of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), that the Issuer is not delivering a deemed final official statement with respect
to the Note, and that the Issuer is not making any representation to the Purchaser or any other
party with respect to the matters governed by Rule 15c2-12 (except to the extent set f ort in the
Agreement and certificates provided by the Issuer pursuant to Section 3.01 of the Agreement).
9. Other than the documents, certificates and opinions to be provided pursuant to
Section 3.01 of the Agreement, the information contained in the Agreement and the exhibits
attached thereto or referenced in Sections 4.02(k) and (1) of the Agreement, the Purchaser
acknowledges that it has not relied upon the Issuer, including any officers or employees of
either, or upon Quint & Thimmig LLP, Bond Counsel, or Gardner, Underwood & Bacon LLC, as
financial advisor to the City (collectively, the "Public Agency Representatives"} for any
inf ormation in connection with its purchase of the Note.
10. The Purchaser hereby waives the requirement of any "due diligence investigation or
inquiry" by any of the Public Agency Representatives, including the governing bodies,
members, officers, employees or agent thereof in connection with the authorization, execution,
delivery of the .Note and Purchaser's purchase of the Note (except to the extent the inf ormation
set forth in the Agreement or in opinions and / or certificates provided by the Issuer or the
Public Agency Representatives pursuant to Section 3.01 or other sections of the Agreement or as
described in paragraph 9).
11. The Purchaser has not received from any of the Public Agency Representatives any
formal or informal offering or disclosure document relating to the Note and has concluded that
the receipt of one prior to the purchase of the Note is not required other than as described in
paragraph 9 above. The Purchaser acknowledges that no written information has been provided
by any of the Public Agency Representatives (except to the extent the information set forth in
opinions and/or certificates provided by the Issuer or the Public Agency Representatives
pursuant to Section 3.01 of the Agreement or as described in paragraph 9) and that any written
information furnished by any other party may not fully disclose all information pertinent to the
Note.
12. Capitalized terms used herein and not otherwise defined have the meanings given
such terms in the Agreement.
as Purchaser
By
Name
Title
Exhibit C
Page 2
EXHIBIT D
DESCRIPTION OF THE PURCHASED LAND
Exhibit D