HomeMy WebLinkAbout2003-05-20; City Council; 17176 Exhibit 5; Multi-Family Housing Revenue Bonds-
Exhibit 5
BOND PURCHASE AGREEMENT
June 4,2003
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
AB 17,176 s-20-0 3 KUTAK ROCK LLP
DRAFT 4/28/03
CIC Calavera, L.P.
c/o Chelsea Investment Corporation
21 5 South Highway 101, Suite 200
Solana Beach, CA 92075
$ $
City of Carlsbad
Multifamily Housing Revenue Bonds
(Mariposa Apartments) 2003 Series A
City of Carlsbad
Multifamily Housing Revenue Bonds
(Mariposa Apartments) 2003 Series B
Ladies and Gentlemen:
Red Capital Markets, Inc. (the “Underwriter”) hereby offers to enter into this Bond Purchase
Agreement (this “Bond Purchase Agreement”) with the City of Carlsbad (the “Issuer”) and CIC Calavera,
L.P., a California limited partnership (the “Borrower”), solely with respect to the Bonds (as defined
below), subject to acceptance at or prior to 5:OO p.m., Pacific time, on the date hereof.
The Issuer is authorized to issue the above-captioned 2003 Series A Bonds (the “Series A
Bonds”) and the above-captioned 2003 Series B Bonds (the “Series B Bonds” and, together with the
Series A ,Bonds, the “Bonds”), in accordance with the provisions of Chapter 7 of Part 5 of Division 3 1 of
the California Health and Safety Code, as amended (the “Act”), and pursuant to a resolution of the Issuer
authorizing issuance and sale of the Bonds and execution and.delivery of all related documents required
to be executed and delivered by the Issuer (the “Bond Resolution”). The Bonds will be issued pursuant
to a Trust Indenture, dated as of June 1, 2003 (the “Initial Indenture”), between the Issuer and Wells
Fargo Bank, National Association, as trustee (the “Trustee”).
The Bonds are being issued to provide hnding for a Mortgage Loan (the “Mortgage Loan”) to be
made by the Issuer to the Borrower. The Borrower will apply the proceeds of the Mortgage Loan to
finance the costs of acquiring, constructing and equipping a senior rental housing development known as
the Mariposa Apartments located in Carlsbad, California (the “Project”). The Mortgage Loan will be
made pursuant to a Financing Agreement, dated as of the date of the Indenture (the “Initial Financing
Agreement”), by and among the Issuer, the Trustee and the Borrower.
To secure the Bonds initially, the Borrower will cause to be delivered to the Trustee an
irrevocable direct-pay letter of credit (the “Initial Credit Facility”) issued by Provident Bank (“Provident
Bank” or the “Initial Credit Provider”). The payment of draws under the Initial Credit Facility itself will
initially be secured by a standby letter of credit (the “Initial Standby Credit Facility”) issued by the
Federal Home Loan Bank of Cincinnati (“FHLB” or the “Initial Standby Credit Provider”).
Upon the satisfaction of certain conditions including, but not limited to, completion of
acquisition, construction and equipping of the Project and the achievement of a specified level of
01 -480787. I
occupancy from the leasing of units in the Project (the “Conditions to Loan Conversion”), the Mortgage
Loan will convert (“Loan Conversion”) and the following actions will take place.
After Loan Conversion, if it occurs, Fannie Mae (“Fannie Mae” or the “Permanent Credit
Provider”) will provide credit enhancement for the Mortgage Loan, pursuant to, and subject to the
limitations of, a Stand By Credit Enhancement Instrument, dated as of the Closing Date (the “Permanent
Credit Facility”) provided by the Permanent Credit Provider to the Trustee. [The Permanent Credit
Facility will also provide liquidity support for the Series A Bonds Outstanding on the Initial Series A
Remarketing Date.]
After Loan Conversion, if it occurs, the Mortgage Loan will be evidenced by a Multifamily Note
(the “Mortgage Note”).
In connection with Loan Conversion, if it occurs, the Initial Indenture and the Initial Financing
Agreement will be automatically replaced by (a) the Trust Indenture dated as of the date of the Initial
Indenture (the “Permanent Indenture”), by and between the Issuer and the Trustee, relating to the
Permanent Credit Facility and (b) the Financing Agreement dated as of the date of the Initial Indenture
(the “Permanent Financing Agreement”), by and among the Issuer, the Trustee, and the Borrower relating
to the Permanent Credit Facility, respectively. Following Loan Conversion, the Initial Indenture and the
Initial Financing Agreement will be of no further force or effect.
References herein to the Indenture, the Financing Agreement, the Reimbursement Agreement,
the Credit Facility and the Credit Provider will be references to the Initial Indenture, the Initial Financing
Agreement, the Initial Reimbursement Agreement, the Initial Credit Facility and the Initial Credit
Provider, respectively, or the Permanent Indenture, the Permanent Financing Agreement, the Permanent
Reimbursement Agreement, the Permanent Credit Facility and the Permanent Credit Provider,
respectively, as appropriate.
In order to assure compliance with the applicable provisions of the Code and applicable laws, the
Borrower, the Trustee and the Issuer have entered into a Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of the date of the Indenture (the “Regulatory Agreement”), which
requires that certain of the residential rental units in the Project be occupied by persons and families of
low income.
The terms not otherwise defined herein will have the meaning ascribed to them in the appropriate
Indenture.
Section 1. Purchase, Sale and Delivery of Bonds. On the basis of the representations,
warranties and agreements contained herein, but subject to the terms and conditions herein set forth, the
Underwriter hereby agrees to purchase from the Issuer for reoffering to the public, and the Issuer hereby
agrees to sell to the Underwriter for such purpose on June 12,2003 (the “Closing Date”), all (but not less
than all) of the Bonds (maturing on the dates, in the principal amounts, at the rates and at the prices set
forth in Schedule I hereto). The purchase price of the Bonds shall be paid by the Underwriter by wire
transfer in federal funds. Upon the delivery of the Bonds, the Borrower agrees to pay to the Underwriter,
as compensation for services hereunder, a fee (the “Gross Underwriter’s Fee”) in an amount equal to
% of the original principal amount of the Bonds, plus the amount listed under the heading
“EXPENSES TO BE PAID BY UNDERWRITER’ in Schedule I1 hereto (the “Expense
Reimbursement”), from which amount the Underwriter will pay certain expenses listed under the heading
“EXPENSES TO BE PAID BY UNDERWRITER’ in Schedule I1 hereto. The Gross Underwriter’s Fee
and the Expense Reimbursement shall be due and payable in immediately available funds upon the
01-480787.1 2
delivery of the Bonds, solely and exclusively from the proceeds of the Bonds or hnds provided by the
Borrower.
The Borrower will deliver to the Trustee, not later than 1O:OO a.m., Pacific time, on the Closing
Date, a sum certain, which sum is the amount required to pay all costs required to be paid in order to
close the sale of the Bonds on the Closing Date, less the proceeds of the Bonds to be applied to such
costs.
Section2. Bond Documents. On or prior to the Closing Date, the Underwriter shall have
received the following:
(a) the final Official Statement relating to the Bonds (the “Official Statement”);
(b) the Initial Indenture, duly executed by the Issuer and the Trustee;
(c) Borrower;
the Initial Financing Agreement, duly executed by the Issuer, the Trustee and the
(d) the Regulatory Agreement, duly executed by the Issuer, the Borrower, and the
Trustee;
(e) the Continuing Disclosure Agreement, dated as of the date of the Initial
Indenture (the “Disclosure Agreement”), duly executed by the Borrower and the Trustee;
(0 the Assignment and Intercreditor Agreement, dated as of the date of the Initial
Indenture (the “Initial Assignment”) by and among the Issuer, the Trustee and the Initial Credit
Provider and acknowledged, accepted and agreed to by the Borrower;
(g) the Reimbursement Agreement dated as of the date of the Initial Indenture (the
“Initial Reimbursement Agreement”) by and between the Borrower and the Initial Credit
Provider;
(h) the Multifamily Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing (the “Initial Security Instrument”) from the Borrower in favor of the Issuer; and
(i) the Initial Credit Facility issued by the Initial Credit Provider;
(i) the Initial Standby Credit Facility issued by the Initial Standby Credit Provider;
(k) the Permanent Indenture, duly executed by the Issuer and the Trustee;
(1) and the Borrower;
the Permanent Financing Agreement, duly executed by the Issuer, the Trustee
(m) the Assignment and Intercreditor Agreement, dated as of the date of the Initial
Indenture (the “Permanent Assignment”) by and among the Issuer, the Trustee and Fannie Mae
and acknowledged, accepted and agreed to by the Borrower;
(n) the Reimbursement Agreement dated as of the date of the Initial Indenture (the
“Initial Reimbursement Agreement”) by and between the Borrower and the Permanent Credit
Provider;
01-480787.1 3
(0) the Permanent Credit Facility issued by Fannie Mae;
(p) the Multifamily Note dated as of the date of the Initial Indenture (the “Mortgage
Note”) executed by the Borrower
(9) the Multifamily Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing (the “Permanent Security Instrument”) from the Borrower in favor of the Issuer;
and
(r) a certified copy or copies of the Bond Resolution, as supplemented and
amended, authorizing the issuance of the Bonds and the execution of the Indenture, the Financing
Agreement, the Regulatory Agreement, the Intercreditor Agreement and the sale of the Bonds to
the Underwriter.
The above-described documents, together with this Bond Purchase Agreement and the Bonds,
shall hereafter be known collectively as the “Bond Documents.”
Section3. Offering and Authorization. The Borrower has caused to be delivered to the
Underwriter copies of the Official Statement, approved for distribution by the Bond Resolution, signed
on behalf of the Issuer and the Borrower by duly authorized officers of the Issuer and the Borrower,
respectively.
The Issuer and the Borrower hereby ratify, approve and authorize the use by the Underwriter,
prior to the date hereof, in connection with the offer and sale of the Bonds, of the Official Statement, the
Bond Documents and all other documents, certificates or statements hished by the Issuer and the
Borrower to the Underwriter in connection with the transactions contemplated by the Official Statement
and the Bond Documents. The Underwriter agrees that it will not confirm the sale of any Bonds unless
the settlement of such sale is accompanied by or preceded by the delivery of a copy of the final Official
Statement
The Issuer and the Borrower acknowledge that the Underwriter is required to comply with the
requirements of Rule 15~2-12 of the Securities and Exchange Commission (the “Rule”) in connection
with the offer and sale of the Bonds and each agrees to cooperate (at the cost and expense of the
Borrower) with the Underwriter so as to enable the Underwriter to comply with the Rule. To this end:
(a) The Issuer has delivered to the Underwriter the preliminary official statement
relating to the Bonds (the “Preliminary Official Statement”) that the Issuer and the Borrower,
collectively, hereby deem final as of its date, except for the omission of no more than the
following information: the offering price(s), interest rate(s), selling compensation, aggregate
principal amount, principal amount per maturity, delivery dates, ratings, other terms of the Bonds
depending on such matters and the identity of the Underwriter (collectively, the “Permitted
Omissions”).
(b) If, during the period from the date hereof to and including the earlier of (i) the
date 90 days from the end of the underwriting period (such date of the end of the underwriting
period to be specified in writing by the Underwriter to the Issuer and the Borrower) and (ii) the
date as of which the Official Statement is available to any person from a nationally recognized
municipal securities information repository, but in no case less than 25 days following the end of
the underwriting period (such date to be specified in writing by the Underwriter to the Issuer and
the Borrower), any event occurs as a result of which the Official Statement for the Bonds as then
01-480787.1 4
amended or supplemented might include an untrue statement of material fact, or omit to state any
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading, the Issuer, if such event relates to the information included in
the Official Statement under the captions “THE ISSUER” and “NO LITIGATION-The Issuer”
or the Borrower, if such event relates to other information in the Official Statement, shall
promptly notify the Underwriter thereof and shall (in either case, at the expense of the
Borrower), upon the request of the Underwriter, prepare and deliver to the Underwriter as many
copies of an amendment or supplement which will correct such statement or omission as the
Underwriter may reasonably request.
(c) On or before the date which is seven business days after the date hereof (or such
earlier date as is necessary to accompany any confirmation that requests payment for a Bond),
the Issuer agrees to deliver or cause to be delivered to the Underwriter, at the expense of the
Borrower, as many copies of the Official Statement as the Underwriter may reasonably request.
After the Closing Date, (a) the Issuer shall not adopt any amendment of or supplement to the
Official Statement to which, after having been furnished with a copy, the Underwriter shall reasonably
object in writing and (b) if any event relating to or affecting the Issuer, the Credit Provider or the
Borrower shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or
supplement the Official Statement in order to make the Official Statement not misleading in the light of
the circumstances existing at the time it is delivered to the Underwriter, the Issuer shall cause to be
forthwith prepared and brnished to the Underwriter (at the expense of the Borrower, but in no event at
the expense of the Issuer) a reasonable number of copies of an amendment of or supplement to the
Official Statement (in form and substance satisfactory to the Underwriter) that will amend or supplement
the Official Statement so that it will not contain an untrue statement of material fact or omit to state a
material fact necessary in order to make. the statements therein, in the light of the circumstances existing
at the time it is delivered to the Underwriter, not misleading.
Section 4. Representations and Warranties of the Issuer. The Issuer represents and warrants
as of the date hereof to the Underwriter as follows:
(a) The Issuer is a municipal corporation under the laws of the State of California,
duly organized and validly existing with full legal right, power and authority (i) to enter into the
Bond Documents to which it is a party (the “Issuer Documents”), (ii) to issue, sell and deliver the
Bonds as provided herein, (iii) to finance the acquisition and construction of the Project and
certain costs associated with the issuance of the Bonds, and (iv) to carry out the transactions on
the part of the Issuer described in the Issuer Documents, as they may be amended or
supplemented from time to time by the Issuer.
(b) The Bond Resolution has been duly adopted by the Issuer, has not been
amended, modified or repealed and is in full force and effect on the date hereof. The Issuer has
the full legal right, power and authority to execute and deliver the Issuer Documents and to carry
out its obligations thereunder. The execution, delivery and performance of the Issuer Documents
have been duly authorized by the Issuer and, as of the date of the Closing Date (assuming the due
authorization, execution and delivery of such documents by the other respective parties thereto
where necessary), each of the Issuer Documents will be the duly authorized legal, valid and
binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
the rights of creditors generally and general equitable principles.
0 1-480787.1 5
(c) The Bonds have been issued in order to provide financing for the acquisition and
construction of the Project and certain costs associated with the issuance of the Bonds.
(d) When duly authenticated by the Trustee and delivered to and paid for by the
Underwriter on the date of the Closing Date in accordance with the provisions of this Bond
Purchase Agreement, the Bonds will have been duly authorized, executed, issued and delivered
and will constitute legal, valid and binding limited obligations of the Issuer in conformity with
the laws of the State, including the Act, will be entitled to the benefit and security of the
Indenture, and will be enforceable against the Issuer in accordance with their terms, subject to
bankruptcy, insolveney, reorganization, moratorium and other similar laws affecting the rights of
creditors generally and general equitable principles.
(e) To the knowledge of the Issuer, neither the Issuer’s execution and delivery of the
Issuer Documents, the consummation of the transactions on its part contemplated thereby, nor the
fulfillment of or’ compliance with the terms, conditions or provisions of the Issuer Documents
conflicts in any material respect with or results in a material breach of any of the terms,
conditions or provisions of any agreement, instrument, judgment, order or decree to which the
Issuer is now a party or by which it is bound or constitutes a material default under any of the
foregoing.
(f) Except as otherwise provided in the Indenture, the Issuer has not created and will
not create any debt, lien or charge upon the Revenues, and has not made and will not make any
pledge or assignment of or create any encumbrance thereon, other than the pledge and
assignment thereof under the Indenture.
(g) To the knowledge of the Issuer, the Issuer has complied and will comply with all
material provisions of the Act applicable to the Bonds and the transactions contemplated by the
Issuer Documents.
(h) To the knowledge of the Issuer, no litigation or administrative action of any
nature has been served on the Issuer and is now pending (i) seeking to restrain or enjoin the
execution and delivery of the Issuer Documents or in any manner questioning the proceedings or
authority relating thereto or otherwise affecting the validity of the Bonds or (ii)as to the
existence or authority of the Issuer or that of its present or former council members or officers.
(i) The Issuer, at the expense of the Borrower, will furnish such information,
execute such instruments and take such other action in cooperation with the Underwriter as the
Underwriter may reasonably request in writing in order for the Underwriter (i) to qualify the
Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such
states and other jurisdictions of the United States as the Underwriter may designate and (ii) to
determine the eligibility of the Bonds for investment under the laws of such states and other
jurisdictions; provided, however, that in no event shall the Issuer be required to take any action
which would subject it to general or unlimited service of process in any jurisdiction in which it is
not now so subject.
(j) The information contained in the Official Statement under the captions “THE
ISSUER’ and “NO LITIGATION-The Issuer,” at the time of the Issuer’s acceptance hereof,
and (unless the Official Statement is amended or supplemented pursuant to Section 3 hereof) at
all times subsequent thereto, up to and including the date of the Closing Date, is true and correct
in all material respects and such information does not contain any untrue or misleading statement
01-480787.1 6
of material fact or omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The execution and delivery of this Bond Purchase Agreement by the Issuer shall constitute a
representation to the Underwriter that the representations and warranties contained in this Section 4 are
true as of the date hereof.
Section 5. Representations, Warranties and Covenants of the Borrower. The Borrower
represents and warrants to, and covenants with, the Issuer and the Underwriter as follows:
(a) The statements and information under the headings “THE BORROWER AND
THE PROJECT” and “NO LITIGATION-The Borrower” in the Official Statement, on the date
thereof, and are, on the date hereof, true and correct and did not, on the date thereof, and does
not, on the date hereof, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements under such headings, in light of the
circumstances under which they were made, not misleading. The Borrower hereby ratifies and
authorizes the use by the Underwriter of the Official Statement in connection with the offering,
sale and distribution of the Bonds.
(b) The Borrower is a limited partnership duly formed and validly existing under the
laws of the State of California and has now the capacity to transact business in the State of
California. The Borrower has the requisite legal right, power and authority to acquire and own
its property (including, without limitation, the Project) to cany on its business as contemplated to
be conducted by the Bond Documents to which it is a party (the “Borrower Documents”) and to
execute, deliver and perform its obligations under the Borrower Documents.
(c) The Borrower Documents, when duly executed and delivered by the Borrower
and the other parties thereto, and all other documents to be delivered by the Borrower in
connection with the consummation of the transactions contemplated by the Borrower
Documents, will constitute valid, legal and binding obligations of the Borrower, and to the
Borrower’s knowledge are enforceable in accordance with their terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally.
(d) The execution, delivery and performance of the Borrower Documents and all
other documents to be delivered and actions to be taken by the Borrower in connection with the
consummation of the transactions contemplated by the Borrower Documents, including, without
limitation, the authorization of the use of the Official Statement by the Underwriter in connection
with the offering, sale and distribution of the Bonds, have all been duly authorized by all
necessary action on the part of the Borrower.
(e) The execution, delivery and performance of the Borrower Documents and all
other documents to be delivered by the Borrower in connection with the consummation of the
transactions contemplated by the Borrower Documents will not conflict with, or constitute a
material breach of or default under, the Borrower’s organizational documents or any indenture,
mortgage, deed of trust, lease, note, commitment, agreement or other instrument or obligation to
which the Borrower is a party or by which the Borrower or any of its property is bound or under
any law, rule, regulation, judgment, order or decree to which the Borrower is subject or by which
the Borrower or any ofits property is bound.
01-480787.1 7
(f) There is no action, suit, proceeding, inquiry or investigation by or before any
governmental agency, public board or body pending or, to the best of the knowledge of the
Borrower, threatened against the Borrower (nor to the best of its knowledge is there any basis
therefor), which (i) affects or seeks to enjoin, prohibit or restrain the issuance, sale or delivery of
the Bonds or the use of the Official Statement or the execution and delivery of the Borrower
Documents, (ii) affects or questions the validity or enforceability of the Borrower Documents,
(iii) questions the tax-exempt status of the Bonds or the completeness or accuracy of the Official
Statement or (iv) questions the power or authority of the Borrower to own or operate the Project
or to execute, deliver or perform its obligations under the Borrower Documents.
(g) Any certificate signed by an authorized representative of the Borrower and
delivered to the Underwriter or the Issuer shall be deemed to be a representation and warranty by
the Borrower to the Underwriter or the Issuer, as applicable, as to the statements made therein.
(h) All permits, licenses and other authorizations necessary for the acquisition,
ownership and operation of the Project in the manner contemplated by the Borrower Documents
have been or to the best knowledge of the Borrower, will be obtained, and said ownership and
operation are not in conflict with any zoning or similar ordinance applicable to the Project.
(i) The Borrower (i) will not knowingly take any action or permit any person it
controls to take action that would violate the provisions hereof or which would adversely affect
the exclusion of interest on the Bonds from gross income for federal income tax purposes, and, if
it should take or permit any such action, it will take all lawful actions to rescind such action
promptly upon having knowledge thereof, (ii) will not fail to take any action that is required in
order to preserve the exclusion from gross income of the interest on the Bonds for federal income
tax purposes under Section 103 of the Code and (iii) will take such action or actions as it can
take including amending the Borrower Documents, as may be necessary, in the opinion of bond
counsel acceptable to the Issuer and the Trustee, to comply fully with all applicable rules,
rulings, policies, procedures, regulations or other official statements promulgated by the
Department of the Treasury or the Internal Revenue Service pertaining to the Bonds.
(j) The Borrower will not take or omit to take, as may be applicable, any action
which would in any way cause the proceeds of the Bonds to be applied in a manner contrary to
the requirements of the Borrower Documents.
(k) Whether or not the sale of the Bonds by the Issuer to the Underwriter is
consummated, the Issuer shall not have any obligation to pay any costs or expenses incident to
the performance of the obligations of the Issuer or the Underwriter under this Bond Purchase
Agreement. All costs and expenses to effect the authorization, preparation, issuance, sale and
delivery of the Bonds, including, without limitation, the preparation, printing, execution and
delivery of the Preliminary Official Statement and the Official Statement (together with any
amendments thereof and supplements thereto) and the Bond Documents, any rating agency fees,
the fees and expenses of Bond Counsel, the Initial Credit Provider’s Counsel, the Initial Standby
Credit Provider’s Counsel, Fannie Mae’s Counsel, Loan Servicer’s Counsel, Trustee’s Counsel
and Underwriter’s Counsel and the expenses incurred in qualifying the Bonds for sale under the
securities laws of various jurisdictions and of preparing the “blue sky” memorandum, shall be
paid out of the sources provided therefor in the Bond Documents.
01-480787.1 8
(1) The Borrower has executed and delivered, or will prior to the Closing Date
execute and'deliver, the Borrower Documents and shall perform all its obligations under each of
the Borrower Documents.
(m) The Borrower has performed and shall continue to perform any and all
obligations incurred pursuant to the Borrower Documents.
Section 6. Conditions to Obligations of the Underwriter. The obligation of the Underwriter
to purchase and pay for the Bonds and the obligation of the Issuer to sell the Bonds shall be subject to the
following conditions precedent:
(a) The representations and warranties of the Borrower and the Issuer herein and the
representations and warranties made in each of the Bond Documents by the respective parties
thereto shall be true, correct and complete on the date hereof and on the Closing Date, as if made
on the Closing Date, and each such party to the Bond Documents shall deliver a certificate to
such effect. The Issuer shall have performed all of its obligations hereunder and the statements
made on behalf of the Issuer hereunder shall be true and correct on the date hereof and on the
Closing Date, as if made on the Closing Date, and the Issuer shall deliver a certificate to such
effect. The Official Statement (as the same may be amended or supplemented with the written
approval of the Underwriter) on the dates thereof and on the Closing Date shall be true, correct
and complete in all material respects and shall not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(b) Except as may have been agreed to by the Underwriter, as of the Closing Date,
each of the Bond Documents, the Bond Resolution and all other official action of the Issuer
relating thereto shall be in full force and effect and shall not have been amended, modified or
supplemented, and except as may have been agreed to by the Underwriter the Official Statement
shall not have been amended or supplemented.
(c) The Issuer shall have received the approving opinion of Jones Hall, A
Professional Law Corporation, Bond Counsel, in the form attached as Appendix F to the Official
Statement, and the Underwriter shall have also received said opinion or received a letter from
said firm, dated the Closing Date and addressed to the Underwriter, to the effect that the
Underwriter may rely upon such firm's opinion as if it were addressed to the Underwriter, and
the Underwriter shall have received the supplemental opinion of Bond Counsel, dated the
Closing Date and addressed to the Underwriter substantially in the form set forth in Exhibit A
hereto.
(d) No default or event of default (as defined in any of the Bond Documents) shall
have occurred and be continuing, and no event shall have occurred and be continuing which, with
the lapse of time or the giving of notice or both, would constitute such a default or event of
default.
(e) No material adverse change shall have occurred, nor shall any development
involving a prospective material and adverse change in, or affecting the affairs, business,
financial condition, results of operations, prospects or properties (including the Project) of, either
the Issuer or the Borrower have occurred.
01-480787.1 9
(0 On or prior to the Closing Date, all actions required to be taken as of the Closing
Date in connection with the Bonds, the Bond Resolution and the Bond Documents by the Issuer
and the Borrower shall have been taken, and the Issuer and the Borrower shall each have
performed and complied with all agreements, covenants and conditions required to be performed
or complied with by the Bond Resolution and the Bond Documents, and each party shall deliver
a certificate to such effect insofar as the foregoing actions, agreements, covenants and conditions
apply to each such party, and each of such agreements shall be in full force and effect and shall
not have been amended, modified or supplemented, except as has been agreed to in writing by
the Underwriter.
(g) Each of the Bond Documents shall have been executed and delivered by each of
the respective parties thereto, all such documents in forms exhibited to the Underwriter on the
date hereof with only such changes as the Underwriter may approve as evidenced by their
payments for the Bonds, and each of the Bond Documents shall be in full force and effect.
(h) None of the events referred to in Section 7 of this Bond Purchase Agreement
shall have occurred, unless waived in writing by the Underwriter.
(i) The Underwriter shall have received a certificate, dated the Closing Date and
signed on behalf of the Issuer, to the effect that:
(1) to the knowledge of the person signing the certificate, no litigation
before any court is pending with respect to which the Issuer has been served with process
or is known to be threatened in any way affecting the existence or powers of the Issuer,
or seeking to restrain or enjoin the issuance, sale or delivery of the Bonds or collection or
pledge of Revenues pledged under the Indenture to pay the principal of and interest on
the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Issuer Documents, or the proceedings of the Issuer or its authority
with respect to, the Issuer Documents;
(2) the information in the Official Statement under the headings “THE
ISSUER’ and “NO LITIGATION-The Issuer” does not contain any untrue or
misleading statement of a material fact or omit to state any material fact necessary to
make the statements under such headings, in the light of the circumstances under which
they were made, not misleading; and
(3) all approvals, consents, authorizations, elections and orders of or filings
or registrations with any governmental authority, board, agency or commission having
jurisdiction which constitutes a condition precedent to the performance by the Issuer of
its obligations under the Issuer Documents have been obtained and are in full force and
effect.
0’) The Underwriter shall have received an opinion of Counsel to the Borrower
substantially in the form set forth in Exhibit B hereto.
(k) The Underwriter shall have received written evidence that Standard& Poor’s
Credit Markets Services, a Division of The McGraw-Hill Companies, Inc. (the “Rating Agency”)
has issued a rating of “AAA” with respect to the Bonds, and as of the Closing Date, the rating
shall not have been withdrawn or lowered.
01-480787.1 10
(1) The Underwriter shall have received a certificate of the Borrower to the effect
that:
(i) Except as disclosed in the Official Statement, the Borrower has not
received notice of any pending, nor to the Borrower’s actual knowledge is there any
threatened, action, suit, proceeding, inquiry or investigation against the Borrower, at law
or in equity, by or before any court, public board or body, nor to the Borrower’s actual
knowledge is there any basis therefor, affecting the existence of the Borrower or the
titles of its officials to their respective offices, or seeking to prohibit, restrain or enjoin
the execution and delivery of the Borrower Documents, or in any way materially
adversely affecting or questioning (a) the use of the Official Statement, (c) the validity or
enforceability of the Bonds, any proceedings of the Borrower taken with respect to the
Borrower Documents, (d) the tax-exempt status of the interest on the Bonds, (e) the
accuracy or completeness of the Official Statement, (f) the execution and delivery by the
Borrower of the Borrower Documents, or (g) the power of the Borrower to carry out the
transactions on its part contemplated by the Borrower Documents;
(ii) the statements and information under the headings “THE BORROWER
AND THE PROJECT” and “NO LITIGATION-The Borrower” in the Official
Statement, on the date thereof, and are, on the date hereof, true and correct and did not,
on the date thereof, and does not, on the date hereof, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements
under such headings, in light of the circumstances under which they were made, not
misleading; and
(iii) the Borrower has complied with all the covenants and satisfied all the
conditions to be performed or satisfied by the Borrower on or prior to the Closing Date,
and the representations and warranties of the Borrower contained in the Borrower
Documents are true, correct and complete as of the Closing Date, and the Borrower has
the requisite legal right, power and authority to enter into and carry out the transactions
contemplated by the Borrower Documents.
(m) The Underwriter shall have received an opinion of counsel to the Trustee
substantially in the form set forth in Exhibit C hereto.
(n) The Underwriter shall have received a certificate, dated the Closing Date and
signed by an authorized officer of the Trustee, to the effect that (i) he or she is an authorized
officer of the Trustee; (ii) the Bond Documents to which the Trustee is a party (the “Trustee
Documents”) have been duly executed and delivered by the Trustee; (iii) the Trustee has all
necessary corporate and trust powers required to carry out the trust created by the Indenture; (iv)
to the best of his or her knowledge, the acceptance by the Trustee of the duties and obligations of
the Trustee under the Trustee Documents and compliance with the provisions thereof will not
conflict with or constitute a breach of or default under any law, administrative regulation,
consent, decree or any agreement or other instrument to which the Trustee is subject or by which
the Trustee is bound; (v) the Trustee has duly authenticated the Bonds, and the person signing the
certificate of authentication on each Bond has been duly authorized to do so; (vi) all approvals,
consents and orders of any governmental authority or agency having jurisdiction in the matter
which would constitute a condition precedent to the performance by the Trustee of its duties and
obligations under the Trustee Documents have been obtained and are in full force and effect
(except that no opinion is expressed with respect to federal or state securities laws); and (vii) to
01 -480787.1 11
the best of his or her knowledge, no litigation is pending or threatened in any way arising from its
fiduciary duties contesting or affecting the existence of powers (including trust powers) or the
Trustee’s ability to fulfill its duties and obligations under the Trustee Documents.
(0) The Underwriter shall have received a certificate of the Issuer and the Borrower,
dated the Closing Date, with respect to the facts, estimates and circumstances and reasonable
expectations pertaining to Section 148 of the Code to support the conclusion that none of the
Bonds will be an “arbitrage bond.”
(p) The Underwriter shall have received a certificate from the Initial Credit
Provider, dated the Closing Date, to the effect that the information set forth in the Official
Statement under the heading “THE CREDIT PROVIDERS-Credit Providers Prior to Loan
Conversion-Initial Credit Provider” is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the
statements under such heading, in light of the circumstances under which they were made, not
misleading.
(9) The Underwriter shall have received a certificate from the Initial Standby Credit
Provider, dated the Closing Date, to the effect that the information set forth in the Official
Statement under the heading “THE CREDIT PROVIDERS-Credit Providers Prior to Loan
Conversion-Initial Standby Credit Provider” and in Appendix I thereto is true and correct and
does not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements under such heading and in such Appendix, in light of
the circumstances under which they were made, not misleading.
(r) The Underwriter shall have received a certificate from Fannie Mae, dated the
Closing Date, to the effect that the information set forth in the Official Statement under the
heading “THE CREDIT PROVIDERS-Credit Provider After Loan Conversion-Permanent
Credit Provider” is accurate.
(s) The Underwriter and the Trustee shall have received the opinion of counsel to
the Initial Credit Bank substantially in the form set forth in Exhibit D hereto.
(t) The Underwriter and the Trustee shall have received the opinion of counsel to
the Initial Standby Credit Bank substantially in the form set forth in Exhibit E hereto.
(u) The Trustee shall have received the opinion of the Legal Department of Fannie
Mae substantially in the form set forth in Exhibit F hereto.
(v) The Underwriter shall have received a letter from Fannie Mae’s special counsel
substantially in the form attached hereto as Exhibit G.
(w) The Underwriter shall have received an opinion of its counsel substantially in the
form attached hereto as Exhibit H.
(x) There shall have been delivered the Final Cash Flows from the Underwriter and
the Verification Report from the Verification Agent (as such terms are defined in the Official
Statement).
0 1-480787.1 12
(y) The Underwriter shall have received the Borrower’s Rule 15~2-12 Certificate
signed by the Borrower in the form attached hereto as Exhibit I.
(2) The Underwriter and the Trustee shall have received the opinion of counsel to
the Issuer substantially in the form set forth in Exhibit J hereto.
(aa) The Underwriter shall have received such additional legal opinions, certificates,
proceedings, instruments and other documents as the Underwriter or Bond Counsel may
reasonably request.
If any condition in this Section is not satisfied on or prior to the Closing Date, this Bond
Purchase Agreement may be terminated by the Underwriter by notice in writing or by facsimile to the
Borrower and the Issuer, as applicable. If the obligations of the Underwriter shall be terminated for any
reason permitted by this Bond Purchase Agreement, neither the Underwriter nor the Issuer shall be under
further obligation hereunder except for any continuing obligations of the Borrower to pay certain
expenses as hereunder provided. The Underwriter may waive in writing compliance with any one or
more of the foregoing conditions or extend the time for its or their performance.
All of the legal opinions, certificates, proceedings, instruments and other documents mentioned
above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the
provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter and the
Issuer.
Section 7. Termination. The Underwriter may terminate its respective obligations to purchase
the Bonds by written notice to the Issuer if at any time subsequent to the date hereof and on or prior to
the Closing Date:
(a) (i) Legislation shall have been enacted by the Congress, or recommended to
the Congress for passage by the President of the United States or the Department of the Treasury
of the United States or the Internal Revenue Service or any member of the United States
Congress, or favorably reported for passage to either House of the Congress by any Committee of
such House to which such legislation has been referred for consideration, or (ii) a decision shall
have been rendered by a court established under Article III of the Constitution of the United
States, or the United States Tax Court, or (iii) an order, ruling, regulation or communication
(including a press release) shall have been issued by the Department of the Treasury of the
United States or the Internal Revenue Service, in each case referred to in clauses (i), (ii) and (iii),
with the purpose or effect, and reasonable likelihood, directly or indirectly, of causing interest on
the Bonds to be included in gross income for purposes of federal income taxation.
(b) Legislation shall have been enacted or a decision by a court of the United States
shall be rendered or any action taken by the Securities and Exchange Commission which, in the
opinion of counsel to the Underwriter, has the effect of requiring the offer or sale of the Bonds to
be registered under the Securities Act of 1933, as amended, or the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended, or any event shall have occurred that, in the
judgment of the Underwriter, makes untrue or incorrect in any material respect any statement or
information contained in the Official Statement or that, in the judgment of the Underwriter
should be reflected therein in order to make the statements contained therein not misleading in
any material respect.
3 70 01 -480787.1 13
(c) In the judgment of the Underwriter, the market price of the Bonds is adversely
affected because (A) additional material restrictions not in force as of the date hereof shall have
been imposed upon trading in securities generally by any governmental authority; (B) a general
banking moratorium shall have been established by federal, New York or California authorities;
or (C) a war involving the United States of America shall have been declared, or any other
national or international calamity shall have occurred, or any conflict involving the armed forces
of the United States of America shall have escalated to such a magnitude as to materially affect
the ability of the Underwriter to market the Bonds; (ii) any litigation shall be instituted, pending
or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way contesting or
affecting any authority or security for or the validity of the Bonds, or the existence or powers of
the Issuer; or (iii) legislation shall have been introduced in or enacted by the Legislature of the
State of California that would, in the reasonable judgment of the Underwriter materially
adversely affect the security for the Bonds.
(d) There shall have occurred any change that, in the reasonable judgment of the
Underwriter, makes unreasonable or unreliable any of the assumptions upon which (i) yield on
the Bonds for purposes of compliance with the Code, (ii) payment of debt service on the Bonds,
or (iii) the basis for the exclusion from gross income for federal income tax purposes of interest
on the Bonds, is predicated.
(e) There shall have occurred any outbreak or material escalation of hostilities or
other calamity or crisis, the effect of which on the financial markets of the United States is such
as to make it, in the reasonable opinion of the Underwriter, impractical to market the Bonds or to
enforce commitments for the purchase of the Bonds.
(0 The occurrence, in the judgment of the Underwriter, of a material adverse
change in the capital markets which makes the sale of the Bonds or financing contemplated by
the Indenture and the Bonds impractical or which makes it inadvisable to proceed with such sale
or financing on the terms, in the manner and on the basis contemplated hereby.
Section 8. Indemnification. (a) The Borrower agrees to pay, defend, protect, indemnify, save
and hold harmless the Issuer, the Underwriter and each affiliate, member, officer, director, official,
employee and agent of the Issuer and the Underwriter, and each person, if any, who controls any of the
foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of
the Securities Exchange Act of 1934, as amended (each an “Indemnified Party” and all collectively
referred to herein as the “Indemnified Parties”), against any and all liabilities, losses, damages, costs,
expenses (including attorneys’ fees), causes of action (whether in contract, tort or otherwise), suits,
claims, demands and judgments of any kind, character and nature (collectively referred to herein as the
“Liabilities”) caused by or directly or indirectly arising from or in any way relating to (i) the Bonds, the
Project, the Mortgage Loan, the Financing Agreement, the Security Instrument, the Indenture, the
Continuing Disclosure Agreement, this Bond Purchase Agreement or any document related to the Bonds,
the Project, the Mortgage Loan (the “Transaction Documents”) or any transaction or agreement, written
or oral, pertaining to the foregoing, or (ii) any untrue or misleading statement or alleged untrue or alleged
misleading statement contained or alleged omission from the Preliminary Official Statement or the
Official Statement pertaining to the Borrower, the Manager or the Project necessary to be stated therein
in order to make the statements made therein, in light of the circumstances under which they were made,
not misleading.
(b) The Borrower also agrees to pay, defend, protect, indemnify, save and hold harmless the
Underwriter and each affiliate, member, officer, director, official, employee and agent of the Underwriter
01-480787.1 14 37 \
from and against the Liabilities directly or indirectly arising from or relating to (i) any errors or
omissions of any nature whatsoever contained in any legal proceedings or other official representation or
inducement made by the Issuer pertaining to the Bonds and (ii) any fraud or misrepresentations or
omissions contained in the proceedings of the Issuer relating to the issuance of the Bonds or pertaining to
the financial condition of the Borrower.
(c) Any Indemnified Party shall notify the Borrower of the existence of any Liability to
which this indemnification obligation would apply and shall give to the Borrower an opportunity to
defend the same at the Borrower’s expense and with counsel satisfactory to the Indemnified Party,
provided that the Indemnified Party shall at all times also have the right to fully participate in the
defense. If there may be legal defenses available to the Indemnified Party which are different from or in
addition to those available to the Borrower or if the Borrower shall, after this notice and within a period
of time necessary to preserve any and all defenses to any claim asserted, fail to assume the defense or to
employ counsel for that purpose satisfactory to the Indemnified Party, the Indemnified Party shall have
the right, but not the obligation, to undertake the defense of, and, with the approval of the Borrower, to
compromise or settle the claim or other matter on behalf of, for the account of, and at the risk of, the
Borrower.
(d) In order to provide for just and equitable contribution in circumstances in which the
indemnity provided for in paragraph (a) or (b) of this Section is for any reason held to be unavailable, the
Borrower and the Indemnified Party shall contribute proportionately to the aggregate Liabilities to which
the Borrower and the Indemnified Party may be subject, so that the Indemnified Party is responsible for
that portion represented by the percentage that the fees paid by the Borrower to the Indemnified Party in
connection with the issuance and administration of the Bonds bears to the aggregate offering price of the
Bonds, with the Borrower responsible for the balance; provided, however, that in no case shall the
Indemnified Party be responsible for any amount in excess of the fees paid by the Borrower to the
Indemnified Party in connection with the issuance and administration of the Bonds.
(e) The Indemnified Parties, other than the Issuer and the Underwriter, shall be considered
to be third party beneficiaries of this Bond Purchase Agreement for purposes of this Section. The
provisions of this Section will be in addition to all liability which the Borrower may otherwise have and
shall survive any termination of this Bond Purchase Agreement, the offering and sale of the Bonds and
the payment or provisions for payment of the Bonds.
Section 9. Expenses. The Underwriter shall pay its own expenses relating to the offering, sale
and purchase of the Bonds. All other expenses relating to the issuance of the Bonds, including, but not
limited to, the fees and expenses 1 isted in Section 5(k) hereof shall be paid by the Borrower.
NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF TO THE CONTRARY,
UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE OBLIGATED TO PAY ANY OF THE
EXPENSES OF THE TRANSACTION HEREIN CONTEMPLATED, EXCEPT FROM FUNDS
PROVIDED TO THE ISSUER BY THE BORROWER OR ANOTHER PARTY TO THE
TRANSACTION.
Section 10. Transfer of Project. The Underwriter hereby agrees and understand that, in
connection with any sale or transfer of the Project in accordance with the Bond Documents and Borrower
Documents which shall have been approved in writing by the necessary parties shall constitute a release
in whole or in part (as the case may be) of the Borrower of obligations arising under this Bond Purchase
Agreement, including but not limited to the obligations under Section 8 hereof, provided that such release
01-480787.1 15
shall be conditioned upon and limited to the extent that a successor in interest of the Borrower expressly
assumes in a writing, in the form satisfactory to the Underwriter, the Borrower’s obligations hereunder.
Section 11. Notices. Any notice or other communication to be given to the Issuer or the
Borrower under this Bond Purchase Agreement may be given by delivering the same in writing to the
Issuer or the Borrower at their respective addresses on the first page hereof, any notice or other
communication to be given to the Underwriter under this Bond Purchase Agreement may be given by
delivering the same in writing to Red Capital Markets, Inc., Suite 930, 500 Newport Center Drive,
Newport Beach, California 92660, Attention: Mr. Anthony D. Cinquini,.
Section 12. Successors. This Bond Purchase Agreement is made solely for the benefit of the
Issuer, the Underwriter and the Borrower (including their successors or assigns, provided the words
“successors” and “assigns” shall not include the purchaser of any of the Bonds from or through the
Underwriter by reason of such purchasers) and no other person shall acquire or have any right hereunder
or by virtue hereof (other than pursuant to Section 10 hereof). The representations, warranties and
agreements contained herein shall remain operative and in full force and effect and shall survive delivery
of and payment for the Bonds hereunder, regardless of any investigation made by or on behalf of the
Underwri ter.
Section 13. Survival of Certain Representations and Warranties. All agreements, covenants,
representations and warranties and all other statements of the Issuer and its officials and officers and the
Borrower set forth in or made pursuant to this Bond Purchase Agreement shall remain in full force and
effect, regardless of any investigation, or statement as to the results thereof made by or on behalf of the
Underwriter, and shall survive the Closing Date and the delivery of and payment for the Bonds.
Section 14. Governing Law. This Bond Purchase Agreement shall be governed by the laws of
the State of California.
Section 15. Counterparts. This Bond Purchase 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.
01-480787.1
3 73
16
01 -480787.1
[Underwriter’s Signature Page to Bond Purchase Agreement]
RED CAPITAL MARKETS, INC.
BY Its Senior Managing Director
s-I
[Issuer’s Signature Page to Bond Purchase Agreement]
CITY OF CARLSBAD
BY Its
37s
01-480787.1 s -2
[Borrower’s Signature Page to Bond Purchase Agreement]
CIC CALAVERA, L.P., a California limited
partnership
By Pacific Southwest Community Development
Corporation, a nonprofit public benefit
corporation
Its Managing General Partner
BY Brian F. Biber, Executive Director
By CIC Calavera Hills, LLC, a California
Its Co-General Partner
limited liability company
BY James J. Schmid, Managing Member
37b
01 -480787.1 s-3
SCHEDULE I
MATURITIES, PRINCIPAL AND INTEREST RATES
Series A Bonds
$ - % Term Series A Bonds due , Price: -%
(Price includes accrued interest from June 1,2003)
[(The Series A Bonds are subject to mandatory tender for purchase on )]
Series B Bonds
% Term Series B Bonds due , Price: -% - $
(Price includes accrued interest from June 1,2003)
(The Series B Bonds are subject to mandatory tender for purchase on June 1,2005)
0 1-480787.1
SCHEDULE I1
GROSS UNDERWRITER’S FEE
Gross Underwriter’s Fee to Underwriter* $
*From such amount, the Underwriter will pay the following additional nonaccountable costs and
expenses of issuing and selling the Bonds (to the extent that such additional costs vary from the
estimates thereof, the Underwriter will be responsible to cover such variance from its Gross
Underwriter’s Fee):
EXPENSES TO BE PAID BY UNDERWRITER
Bond Clearance charges, MSRB, BMA and CUSIP
01-480787.1 s-2
$
257%
EXHIBIT A
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
[CLOSING DATE]
[ISSUER]
[UNDERWRITER]
[BOND CAPTION]
[After appropriate introductory language, the opinion shall state substantially as follows:]
Based on the foregoing, we are of the opinion, as of the date hereof, as follows:
1. The Issuer Documents have been duly authorized, executed and delivered by the Issuer,
and, assuming due authorization, execution and delivery by the other respective parties thereto, constitute
legal, valid and binding agreements of the Issuer enforceable against the Issuer in accordance with their
respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability affecting the enforcement of creditors’ rights
and to general principles of equity, regardless of whether such enforceability is considered in equity or in
law;
2. The Bonds are not subject to the registration requirements of the Securities Act of 1933,
as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as
amended; and
3. The Bonds, the Indenture, the Financing Agreement and the Regulatory Agreement
conform as to form and tenor to the descriptions thereof contained in the Official Statement relating to
the Bonds (the “Official Statement”), and the statements contained in the Official Statement under the
captions “THE BONDS” (other than under the heading “Book-Entry Only System”), “SECURITY FOR
THE BONDS” (other than under the headings “Security for the Bonds Prior to Loan Conversion-Credit
Facility-General,” “-Investment Agreement” and “Security for the Bonds After Loan Conversion-
Credit Facility-General”), “TAX MATTERS,” and in Appendices A-1, A-2, B-1, B-2, C, D-1, D-2 and
F thereto summarize the material provisions of the Bonds, the Initial Indenture, the Initial Financing
Agreement, the Regulatory Agreement, the Permanent Indenture, the Permanent Financing Agreement,
and our bond opinion concerning certain tax matters relating to the Bonds, and insofar as such statements
expressly summarize the provisions of the Bonds, the Initial Indenture, the Initial Financing Agreement,
the Regulatory Agreement, the Permanent Indenture, the Permanent Financing Agreement, and our bond
opinion concerning certain tax matters relating to the Bonds, such statements are accurate in all material
respects.
This opinion letter is fiunished by us solely for your benefit in satisfaction of the requirements of
the Bond Purchase Agreement. No one other than you may rely upon this opinion letter without or
express prior written consent.
01 -480787.1
Respectfully submitted,
37aI
EXHIBIT B
FORM OF OPINION OF BORROWER’S COUNSEL
[CLOSING DATE]
[IS SUER]
[UNDERWRITER]
[BOND CAPTION]
[After appropriate introductory language, the opinion shall state substantially as follows:]
We are of the opinion, as of the date hereof, as follows:
1. The Borrower is a validly organized and existing limited partnership under the laws of
the State of California and qualified to do business and in good standing in the State of California.
2. The Borrower has full legal right, power and authohty (i) to enter into and to carry out
and consummate the transactions contemplated by the Borrower Documents.
3. By all necessary action, the Borrower has duly authorized and adopted the Borrower
Documents, and approved the execution and delivery of the Borrower Documents, the performance by
the Borrower of its obligations under the Borrower Documents and otherwise in connection with the
issuance of the Bonds and the consummation by the Borrower of all other transactions contemplated by
the Indenture and the Borrower Documents in connection with the issuance of the Bonds.
4. The Borrower Documents have been duly executed and delivered by the Borrower and,
assuming the due authorization, execution and delivery of the Borrower Documents by the respective
other parties thereto where necessary, constitute legal, valid and binding obligations of the Borrower
enforceable in accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability
affecting the enforcement of creditors’ rights and to general principles of equity, regardless of whether
such enforceability is considered in equity or in law.
5. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, the
Borrower is not in any material respect in violation of, breach of or default under any applicable
constitutional provision or law of any state or of the United States, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Borrower or any of its activities,
properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement (including,
without limitation, the Borrower Documents) or other agreement or instrument to which the Borrower is
a party or by which the Borrower or any of its property or assets is bound, and no event has occurred and
is continuing which with the passage of time or the giving of notice, or both, would constitute such a
default or event of default under any such instruments; and the execution and delivery of the Bonds and
the Borrower Documents, and compliance with the provisions on the Borrower’s part contained therein,
do not and will not conflict with, or constitute on the part of the Borrower a violation of, breach of or
default under, any applicable constitutional provision or law of any state or of the United States, or any
order, rule or regulation of any court or governmental agency or body having jurisdiction over the
01 -480787.1
Borrower or any of its activities, properties or assets, or any indenture, mortgage, deed of trust,
resolution, note agreement or other agreement or instrument to which the Borrower is a party or by which
the Borrower or any of its property or assets is bound, nor will any such execution, delivery or
compliance result in the creation or imposition of any lien, charge or other security interest or
encumbrance of any nature whatsoever upon any of the property or assets of the Borrower or under the
terms of any such law, regulation or instrument, except as provided by the Bonds or the Borrower
Documents.
6. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, all
consents, approvals, authorizations, and orders of or filings or registrations with any governmental
authority, board, agency or commission of any state or of the United States having jurisdiction required
in connection with, or the absence of which would materially adversely affect, the execution and delivery
by the Borrower of the Borrower Documents or the performance by the Borrower of its obligations
thereunder have been obtained or made and are in full force and effect.
7. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, there
is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any judicial or
administrative court or governmental agency or body, state, federal or other, pending or, to the best of
our knowledge, threatened against the Borrower, affecting the existence of the Borrower or the titles of
its officers to their respective offices, or contesting or affecting as to the Borrower the validity or
enforceability of the Act, the Bonds, any Borrower Document or the execution and delivery or adoption
by the Borrower of any Borrower Document, or in any way contesting or challenging the completeness or
accuracy of the Official Statement or the powers of the Borrower or its authority with respect to the
Borrower Documents or the consummation of the transactions contemplated thereby; nor, to the best of
our knowledge, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein
an unfavorable decision, ruling or finding would materially adversely affect the financial condition or
operations of the Borrower or the validity of the authorization, execution, delivery or performance by the
Borrower of any Borrower Document.
Very truly yours,
01 -480787.1 B-2
EXHIBIT C
OPINION OF TRUSTEE'S COUNSEL
[CLOSING DATE]
[ISSUER]
[UNDERWRITER]
[BOND CAPTION]
[After appropriate introductory language, the opinion shall state substantially as follows:]
Based upon and subject to the foregoing, we are of the opinion that:
1. The Trustee is a validly existing national banking association, organized and in good
standing under the laws of the United States, and is duly qualified to exercise trust powers in the State of
California.
2. The Trustee has taken all corporate action necessary to assume the duties and obligations
of Trustee under the Indenture and to authorize in such capacity @e execution and delivery of the Trustee
Documents.
3. The Trustee is eligible to act as trustee under the Indenture.
4. Assuming the due, valid, binding authorization, execution and delivery of the other
parties thereto, the Trustee Documents, when executed, will be the valid, legal and binding obligations of
Trustee in its capacity as Trustee under the Indenture enforceable in accordance with their terns, except
as enforcement may be limited by bankruptcy, reorganization, receivership, insolvency, moratorium or
other laws affecting the rights and remedies of creditors generally and by the effect of general principles
of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive relief, whether applied by a
court of law or equity.
This opinion letter is delivered as of its date and without any undertaking to advise you of any
changes of la'w or fact that occur after the date of this opinion letter even though the changes may affect
the legal analysis or conclusion in this opinion letter.
This opinion may be relied upon by you only in connection with the transaction described in the
initial paragraph of this opinion letter and may not be used or relied upon by you for any other purpose or
by any other person for any purpose whatsoever without, in each instance, our prior written consent.
01-480787.1
Very truly yours,
EXHIBIT D
[Letterhead of Counsel to the Initial Credit Provider]
[TRUSTEE]
[CLOSING DATE]
[UNDERWRITER]
[BOND CAPTION]
[After appropriate introductory language, the opinion shall state substantially as follows:]
(a) The Credit Provider is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio.
(b) The Credit Provider has full right, power and authority (i) to enter into, execute
and deliver the Bond Documents to which it is a party (the “Credit Provider Documents”) and to
perform its duties and obligations thereunder; and (ii) to carry on its business as currently being
conducted and as contemplated to be conducted by the Credit Provider Documents.
(c) The Credit Provider Documents have been duly authorized, executed and
delivered by the Credit Provider, and constitute the legal, valid and binding obligations of the
Credit Provider, enforceable against the Credit Provider in accordance with their respective
terms, subject to the limitations set forth above.
(d) The execution and delivery by the Credit Provider of the Credit Provider
Documents, the performance of the obligations of the Credit Provider thereunder will not conflict
with (i) any (A) contractual or legal restriction or obligation, or (B) court or regulatory order,
binding on or affecting the Credit Provider, or (ii)any restriction contained in the Credit
Provider’s articles of incorporation or bylaws.
(e) The Credit Facility is exempt from the registration requirements of the Securities
Act of 1933, as amended.
(f) No authorization or approval or other action by, and no notice to or filing with
any governmental authority or regulatory body is required for the due execution, delivery and
performance by the Credit Provider of its obligations under the Credit Provider Documents.
(g) I am not aware of any order or decree of any court or any order, regulation or
demand of any government authority binding on the Credit Provider, a default under which might
materially adversely affect the operation of the Credit Provider.
(h) There is no pending, nor am I aware of any threatened, action, suit, proceeding,
inquiry or investigation before any court, public board or regulatory agency, against or affecting
the Credit Provider, in which an unfavorable decision, ruling or finding would adversely affect
the Credit Provider’s powers, existence or the validity and enforceability of the Bonds or the
01-480787.1
Credit Provider Documents, or affect or seek to prohibit, restrain or enjoin the issuance, sale or
delivery of the Bonds or the use of the Official Statement, or which might result in any material
adverse change in the business condition (financial or otherwise) or operation of the Credit
Provider, or which might adversely affect the Credit Provider’s ability to perform its obligations
under the Credit Provider Documents, or question the tax-exempt status of the Bonds or the
accuracy or completeness of the Official Statement.
(i) The Credit Facility and the Reimbursement Agreement conform to the
descriptions thereof contained in the Official Statement and the statements contained in the
Official Statement in Appendices E-1 (under the heading “FORM OF INITIAL CREDIT
FACILITY”) and H-1 present a fair and accurate summary of such documents.
This opinion is rendered to you in connection with the issuance of the Credit Facility by the
Credit Provider, and is intended solely for your use in connection therewith. It is not to be relied upon in
any other context, nor is it to be relied upon by any other person or entity, for any other reasons
whatsoever.
Very truly yours,
0 1-480787.1 D-2 38 Y
EXHIBIT E
[TRUSTEE]
[Letterhead of Counsel to the Initial Standby Credit Provider]
[CLOSING DATE]
[UNDERWRITER]
[BOND CAPTION]
[After appropriate introductory language, the opinion shall state substantially as follows:]
(a) The Initial Standby Credit Facility constitutes the legal, valid and binding obligation of
the FHLB enforceable against it (to the extent of the FHLB’s stated liability thereunder) in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium, receivership or similar laws affecting the rights of creditors generally or by
principles of equity, as such laws and principles may be applied in the event of the bankruptcy,
insolvency, reorganization, receivership or liquidation of the FHLB or in the event of a moratorium
applicable to the FHLB.
(b) The FHLB is a Federal Home Loan Bank organized and existing under the Federal Home
Loan Bank Act (12 U.S.C. Section 1422, et seq.).
(c) The Initial Standby Credit Facility qualifies as an obligation which a Federal Home Loan
Bank is permitted to issue under the Federal Home Loan Bank Act and the rules, regulations and
guidelines promulgated thereunder.
01480787.1
EXHIBIT F
[Letterhead of General Counsel to Fannie Mae]
[TRUSTEE]
[After appropriat
[CLOSING DATE]
[BOND CAPTION]
introductory language, the opinion shall stat
I am of the opinion, as of the date hereof, as follows:
subst antially s follows:]
1. Fannie Mae has been duly organized under the Federal National Mortgage Association
Charter Act, as amended, 12 U.S.C. 1716 et seq., and is a corporation organized and existing under the
laws of the United States;
2. Fannie Mae has full right, power and authority necessary to execute, deliver and perform
its obligations under the Credit Enhancement Instrument (Stand-By);
3. the Credit Enhancement Instrument (Stand-By) has been duly authorized, executed and
delivered by Fannie Mae and constitutes a valid and binding obligation of Fannie Mae, enforceable in
accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting creditor’s rights from time to time in effect
as such laws would be applied in the event of a bankruptcy, insolvency, reorganization, moratorium or
general principles of equity, whether applied by a court of law or of equity;
similar occurrence affecting Fannie Mae and to the exercise of judicial discretion in accordance with *
4. neither the consummation of the transact ions contemplated by the Credit Enhancement
Instrument (Stand-By) nor the fulfillment by Fannie Mae of or compliance by Fannie Mae with the terms
and conditions thereof conflicts with or results in a breach of any of the terms, conditions or provisions
of any agreement or instrument of which I am aware and to which Fannie Mae is now a party or by which
it is bound, which breach or conflict would prohibit Fannie Mae from consummating the transactions
contemplated by the Credit Enhancement Instrument (Stand-By) or the fulfillment by Fannie Mae of or
compliance by Fannie Mae with the terms and conditions thereof; and
5. there is no action or suit instituted against Fannie Mae before any court which is now
pending, or any cease and desist order or other order of a similar nature, temporary or permanent, of any
federal or state authority, which action, suit or order would have the effect of preventing or hindering in
any material respect the performance by Fannie Mae of its duties under the Credit Enhancement
Instrument (Stand-By) or which in any material respect (a) affects or seeks to prohibit, restrain or enjoin
the execution and delivery of the Credit Enhancement Instrument (Stand-By), (b) affects the validity or
enforceability of the Credit Enhancement Instrument (Stand-By) or (c) challenges the power or authority
of Fannie Mae to carry out the transactions contemplated by the Credit Enhancement Instrument
( Stand-B y) .
01-480787.1
I express no opinion on the perfection or priority of any lien or security interest described in the
Credit Enhancement Instrument (Stand-By).
My opinion is rendered only to, and may be relied upon only by, the addressees. My opinion
herein is limited to the laws of the District of Columbia and of the United States of America, and to the
extent they are applicable, and I express no opinion as to the applicability of the laws of any other
jurisdiction.
Sincere1 y,
387
01-480787.1 F-2
EXHIBIT G
[Letterhead of Outside Counsel to Fannie Mae]
[CLOSING DATE]
[UNDERWRITER]
[BOND CAPTION]
The copy of the Permanent Credit Facility attached to the Official Statement is in all material
respects a true and correct copy of the Permanent Credit Facility executed by Fannie Mae in connection
with the issuance of the above-captioned Bonds. No material changes have been made to the document
prior to Fannie Mae’s execution and delivery of the Permanent Credit Facility.
Very truly yours,
0 1-480787.1
EXHIBIT H
[Letterhead of Underwri ter’s Counsel]
[CLOSING DATE]
Red Capital Markets, Inc.
Newport Beach, CA
[BOND CAPTION]
We have acted as counsel to Red Capital Markets, Inc. (the “Underwriter”) in connection with
the issuance of the above-captioned bonds (the “Bonds”), issued pursuant to a Trust Indenture dated as of
June 1, 2003 (the “Indenture”) between the City of Carlsbad (the “Issuer”) and Wells Fargo Bank,
National Association, as trustee (the “Trustee”). As such counsel, we have reviewed such records,
certificates, opinions and documents as we have deemed necessary or appropriate for the purpose of this
opinion. Upon the basis of such examination, we are of the opinion that under the existing laws, the
Bonds may be offered and sold without registration under the Securities Act of 1933, as amended, and
the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended.
In connection with the preparation of the Official Statement (the “Offering Document”) used in
connection with the initial issuance and sale of the Bonds on the date hereof, we have reviewed generally
information furnished to us by, and have participated in conferences with, representatives of the Issuer;
Jones Hall, A Professional Law Corporation, Bond Counsel; Provident Bank (the “Initial Credit
Provider”); , the Initial Credit Provider’s Counsel; the Federal Home Loan Bank of
Cincinnati (the “Initial Standby Credit Provider”); the Initial Standby Credit Provider’s in-house counsel;
Fannie Mae; O’Melveny & Myers LLP, Fannie Mae’s outside counsel; CIC Calavera, L.P., a California
limited partnership (the “Borrower”); Pillsbury Winthrop LLP, Borrower’s counsel; the Trustee; and the
Underwriter. We also have reviewed the documents relating to the Bonds described in the Offering
Document and other documents and records relating to the issuance and sale of the Bonds. In addition,
we have relied upon certificates of officials of the Issuer, the Borrower, the Initial Credit Provider, the
Initial Standby Credit Provider, Fannie Mae, an opinion from Bond Counsel, an opinion from counsel to
the Initial Credit Provider, an opinion from counsel to the Initial Standby Credit Provider and a letter
from Fannie Mae’s outside counsel. However, we have not independently verified any factual matters in
connection with or apart from the aforementioned review and conferences and, accordingly, we do not
express any view or belief as to matters that might have been disclosed by independent verification.
Although we have made no independent investigation or verification of the accuracy,
correctness, fairness or completeness of, and do not assume any responsibility for, the information
included in the Offering Document (subject to the qualifications set forth herein), no information came to
the attention of the attorneys in our firm rendering legal services in connection with the issuance of the
Bonds which causes us to believe that the Offering Document (except for the financial statement,
financial, statistical and numerical information, forecasts, estimates, assumptions and expressions of
opinion, as to which we express no view), as of its date contained, or as of the date of this opinion
contains, any untrue statement of a material fact or omitted to state any material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading.
Respectfully submitted,
01-480787.1
EXHIBIT I
BORROWER’S RULE 15~2-12 CERTIFICATE
[BOND CAPTION]
The undersigned hereby certifies and represents to Red Capital Markets, Inc. (the “Underwriter”)
that he/she is authorized to execute and deliver this certificate on behalf of CIC Calavera; L.P., a
California limited partnership (the “Borrower”), and hereby further certify to the Underwriter as follows:
(a) This Certificate is delivered to enable the Underwriter to comply with Securities
and Exchange Commission Rule 15~2-12 under the Securities Exchange Act of 1934 (the
“Rule”) in connection with the issuance and sale of the above-captioned bonds (the “Bonds”).
(b) In connection with the issuance and sale of the Bonds, there has been prepared a
Preliminary Official Statement dated May 29, 2003, setting forth information concerning the
Bonds and the Borrower (the “Preliminary Official Statement”).
(c) As used herein, “Permitted Omissions” shall mean the offering price(s), interest
rate(s), accreted values, yield to maturity, selling compensation, aggregate principal amount,
principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on
such matters and the identity of the underwriter(s), all with respect to the issuance and sale of the
Bonds.
(d) the Preliminary Official Statement is, as of the date thereof, deemed final within
the meaning of the Rule, except for Permitted Omissions.
(e) The sections of the Preliminary Official Statement entitled “CONTINUING
DISCLOSURE” and “APPENDIX G-FORM OF CONTINUING DISCLOSURE
AGREEMENT” describes the agreement the Borrower expects to make for the benefit of the
Bondholders in the Continuing Disclosure Agreement dated as of June 1, 2003 by and between
the Borrower and Wells Fargo Bank, National Association, in its capacity as trustee and
dissemination agent by which the Borrower will undertake to provide continuing disclosure in
accordance with the Rule.
Dated: May 29,2003
[Remainder of Page Left Blank Intentionally]
01-480787.1
[Signature Page to Borrower’s Rule 15~2-12 Certificate]
IN WITNESS WHEREOF, I have hereunto set my hand as of the date set forth above.
CIC CALAVERA, L.P., a California limited
partnership
By Pacific Southwest Community Development
Corporation, a nonprofit public benefit
corporation
Its Managing General Partner
BY Brian F. Biber, Executive Director
By CIC Calavera Hills, LLC, a California
Its Co-General Partner
limited liability company
BY James J. Schmid, Managing Member
01-480787.1 1-2
EXHIBIT J
[Letterhead of Counsel to the Issuer]
[CLOSING DATE]
[TRUSTEE] [UNDERWRITER]
[BOND CAPTION]
[After appropriate introductory language, the opinion shall state substantially as follows:]
1. The Issuer is a municipal corporation duly organized and validly existing under the laws
of the State of California.
2. The Bond Resolution approving and authorizing the execution and delivery of the Issuer
Documents and the Bonds was duly adopted at a meeting of the governing body of the Issuer which was
called and held pursuant to law and with all public notice required by law and at which a quorum was
present and acting throughout.
3. The Issuer Documents have been duly executed and delivered by the Issuer and
(assuming due authorization, execution and delivery by and validity against the other parties thereto) are
valid and binding agreements of the Issuer.
4. To the best of my knowledge, no action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, regulatory agency, public board or body has been served upon the
Issuer and is pending or is otherwise known to be threatened in any way affecting the existence of the
Issuer, or the titles of the Issuer’s officials to their respective offices, or seeking to restrain or to enjoin
the issuance, sale or delivery of the Bonds or the application of the proceeds thereof in accordance with
the Indenture, or the collection or application of the Revenues (as defined in the Indenture) to pay the
principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability
of the Issuer Documents or any action of the Issuer contemplated by any of said documents, or in any
way contesting the completeness or accuracy of the Official Statement or the powers of the Issuer or its
authority with respect to the Issuer Documents or any action on the part of the Issuer contemplated by
any of said documents, nor to my knowledge is there any basis therefor.
Very truly yours,
01480787.1