HomeMy WebLinkAbout2006-11-21; City Council; 18816 part 1; Public Hearing Golf Course Financing Advance Repayment AgreementCARLSBAD PUBLIC FINANCING AUTHORITY/
CITY OF CARLSBAD - AGENDA BILL 10
AB# 18,816
MTG. 11/21/06
DEPT. FIN
PUBLIC HEARING AND APPROVAL OF
GOLF COURSE FINANCING
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REP A YMENT AGREEMENT
DEPT. HEAD
CITY ATTY. <rSP
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RECOMMENDED ACTION:
That the Carlsbad Public Financing Authority ("Authority") ADOPT RESOLUTION NO.
25 authorizing and providing for the issuance of revenue bonds for the Carlsbad
Municipal Golf Course "Golf Course" Project, approving the form of the following documents
and authorizing certain actions:
1. Bond Indenture by and between the Carlsbad Public Financing Authority and The
Bank of New York Trust Company, N.A., as trustee;
2. Preliminary Official Statement;
3. Bond Purchase Agreement between Stone & Youngberg as the underwriter and
the Carlsbad Public Financing Authority;
4. Assignment Agreement;
5. Golf Course Site Lease;
6. Lease Agreement;
7. Related Facilities Site Lease.
That the City Council of the City of Carlsbad ("City") ADOPT RESOLUTION NO. 2006-344
authorizing and providing for the execution and delivery of certain Site Leases and a Lease
Agreement relating to the Golf Course Project, approving the form of the following documents
and authorizing certain actions, and making findings of significant public benefit after conducting
a public hearing:
1. Preliminary Official Statement;
2. Golf Course Site Lease;
3. Lease Agreement;
4. Related Facilities Site Lease.
26That the Carlsbad Public Financing Authority ADOPT RESOLUTION NO.
approving the Golf Course Advance Repayment Agreement between the Authority and the City.
That the City Council of the City of Carlsbad ADOPT RESOLUTION NO. 2006-345 approving
the Golf Course Advance Repayment Agreement between the Authority and the City.
DEPARTMENT CONTACT: Helga Stover, 760-602-2429 hstov(5)ci.carlsbad.ca.us
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
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CONTINUED TO DATE UNKNOWN
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ITEM EXPLANATION:
At its meeting of April 18th, 2000, the City Council of the City of Carlsbad, acting in concert with
the Board of the Carlsbad Municipal Water District, approved the Joint Exercise of Powers
Agreement, creating the Carlsbad Public Financing Authority. The Authority has become the
controlling entity which will finance, construct, manage, operate, and maintain a municipal golf
course on behalf of the City of Carlsbad which is the owner of the property upon which the
project is being developed.
The Municipal Golf Course consists of an 18-hole golf course as well as related facilities
including a driving range, Clubhouse, pro shop and maintenance facilities. Construction of the
golf course is well underway and it is anticipated the course will be open July 1, 2007. The City
agreed to advance (and has advanced) funds to the Authority from time to time for the purpose
of designing, constructing, maintaining and operating the Golf Course. At its meeting of
December 20, 2005, the Board of the Carlsbad Public Financing Authority adopted Resolution
No. 12 declaring its intention to issue bonds for the purpose of paying some of the costs of
acquiring and constructing a municipal golf course in Carlsbad. The total construction cost of
the Golf Course is currently estimated at $50 to $60 million.
This agenda item provides for the necessary approvals for the issuance and sale of revenue
bonds, and approval of the Advance Repayment Agreement.
DESCRIPTION OF FINANCING DOCUMENTS AND RELATED AGREEMENTS
Bond Indenture
The Indenture of Trust (the "Indenture"), between the Authority and the Bank of New York Trust
Company, N.A., as trustee (the "Trustee"), is the document under which the revenue bonds (the
"Bonds") will be issued by the Authority. The Indenture sets forth the security for the Bonds,
creates the different accounts to handle the flow of funds from the Authority to the Trustee, and
from the Trustee to the Bond holders, and outlines the responsibilities of the Trustee and the
Authority with regards to the administration of the Bonds.
Preliminary Official Statement
The Official Statement, in one document, provides information about the legal structure of
Bonds, the City of Carlsbad and the Golf Course project, focusing primarily on the economics of
the transaction and the financial strength of the City. This document is used by the Underwriter
to market the Bonds to potential investors.
Bond Purchase Agreement
This is an agreement between Stone & Youngberg as the underwriter and the Carlsbad Public
Financing Authority. Under this agreement, the Underwriter will agree to buy the Bonds, with
specified interest rates, and the Authority will be agreeing to sell the Bonds to the Underwriter at
those terms for a certain price.
Golf Course Site Lease
In order to better secure the Bonds, the City will lease the site upon which the Golf Course is
constructed to the Authority. The City retains title to the Golf Course at all times.
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Lease Agreement
Authority will lease the Golf Course back to the City to secure the Bond payments. The Bonds
are an obligation of the Authority, and the Authority has promised to use the net revenues
generated by the Golf Course to pay debt service on the Bonds. If at any time, however, the
net revenues from the Golf Course operations are not sufficient to pay the debt payments on
the Bonds, the City has promised, in the Lease Agreement, that it will make payments (lease
payments) up to the amount of the shortfall.
Assignment Agreement
An agreement between the Authority and the Trustee, under which the Authority will assign to
the Trustee, for the benefit of Bond holders, its right to receive Lease Payments from the City.
Related Facilities Site Lease
The City will lease back to the Authority the land upon which the driving range, the clubhouse
and the maintenance building are located. This will allow the Authority to conduct other
activities related to the Golf Course.
The terms of the preceding financing documents and agreements have been reviewed and
approved by the City Attorney, underwriter, financial advisor, disclosure counsel and bond
counsel.
Advance Repayment Agreement
To date, the City General Fund has made four separate advances to the Golf Course Enterprise
Fund since March 1997, totaling $39,437,200. The City and Authority desire to make provisions
for the eventual repayment of the Advances with interest to the City. The provisions of the
Agreement, attached as Exhibit 12, include the obligation of the Authority to reimburse the City
the full principal and all accrued interest on existing and future Advances, if any. Interest shall
accrue on all Advances from the date of the Advance to the date repaid to the City at the
average annual rate of return earned on the City's pooled funds as determined by the City
Treasurer for each fiscal year. Interest shall be compounded annually. The interest accrued
through 6/30/2006 is $2,457,101, bringing the total advanced amount to $41,894,301.
Sale of the Bonds
The attached resolution (Exhibit 1) authorizes the sale of the Bonds to Stone & Youngberg on a
negotiated basis. Council previously authorized Stone & Youngberg to act as the underwriter
on this bond issue. The resolution sets the principal at a not-to-exceed amount of $21,000,000,
and the total amount of the underwriter's discount at a not-to-exceed rate of 1.25% of the bond
issue. It also states that the interest rate on the bonds cannot exceed 6% per annum. The
actual amount of the discount and the interest rate will be set when the bonds are priced. The
City's financial advisor, Fieldman, Rolapp & Associates, will participate in the bond sale to
ensure that the City is receiving a fair price for the bonds.
FISCAL IMPACT:
The Bonds will help fund the construction of the Golf Course. Together with formation and
issuance costs and a debt service reserve fund, the total issue amount should approximate
$18,670,000, with approximately $15,900,000 available for construction; however, these
amounts may change depending on the actual interest rate at the time when the bonds are
priced. The not-to-exceed amount of $21,000,000 is requested in case the interest rates are
more favorable than currently projected. Bond funds remaining upon completion of the
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construction project will be used to repay a portion of funds previously advanced from the
General Fund. The sale of bonds is expected to occur on December 6, and the Bond closing is
expected to occur on December 20. Net revenues from the Golf Course operations will be used
to make the bond debt service payments. The bond amount was set based on estimated future
net revenues so that the revenues would be sufficient to make the debt payments on the Bonds.
Based on the total estimated issuance amount of $18,670,000 and an average projected
interest rate of approximately 4.4%, the average annual debt service payment is estimated to
be approximately $1,160,000. If the revenues are not sufficient to make the debt payments, the
General Fund will make payments up to the amount of the shortfall in the form of Lease
Payments.
ENVIRONMENTAL IMPACT:
None.
EXHIBITS:
1. RESOLUTION NO. 25 of the Board of Directors of the Carlsbad Public Financing
Authority authorizing and providing for the issuance of revenue bonds for the Carlsbad
Municipal Golf Course Project, approving the form of certain documents and authorizing
certain actions.
2. RESOLUTION NO. 2006-344 of the City Council of the City of Carlsbad authorizing and
providing for the execution and delivery of certain Site Leases and a Lease Agreement
relating to the Carlsbad Municipal Golf Course Project, approving the form of certain
documents and authorizing certain actions, and making findings of significant public benefit
after conducting a public hearing.
3. RESOLUTION NO. 26 of the Board of Directors of the Carlsbad Public Financing
Authority approving the Golf Course Advance Repayment Agreement between the Carlsbad
Public Financing Authority and the City.
4. RESOLUTION NO. 2006-345 of the City Council of the City of Carlsbad approving the
Golf Course Advance Repayment Agreement between the Carlsbad Public Financing
Authority and the City.
5. Bond Indenture by and between the Carlsbad Public Financing Authority and The Bank of
New York Trust Company as trustee (on file in the City Clerk's office).
5A. Continuing Disclosure Certificate.
6. Preliminary Official Statement (on file in the City Clerk's office).
7. Bond Purchase Agreement between Stone & Youngberg as the underwriter and the
Carlsbad Public Financing Authority (on file in the City Clerk's office).
8. Assignment Agreement (on file in the City Clerk's office).
9. Golf Course Site Lease.
10. Lease Agreement.
11. Related Facilities Site Lease.
12. Advance Repayment Agreement.
Exhibit 1
1 RESOLUTION NO. 25
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE CARLSBAD PUBLIC FINANCING AUTHORITY
3 AUTHORIZING THE ISSUANCE AND SALE OF NOT TO
4 EXCEED $21,000,000 PRINCIPAL AMOUNT OF
REVENUE BONDS, APPROVING RELATED INDENTURE
5 OF TRUST, SITE LEASES, LEASE AGREEMENT,
ASSIGNMENT AGREEMENT, OFFICIAL STATEMENT
6 AND BOND PURCHASE AGREEMENT, AND
AUTHORIZING RELATED DOCUMENTS AND OFFICIAL
7 ACTIONS
8
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10 WHEREAS, the City of Carlsbad (the "City") and the Carlsbad Municipal Water District
11 created the Carlsbad Public Financing Authority (the "Authority") pursuant to that certain
12 Joint Exercise of Powers Agreement dated as of April 1, 2000 for the purpose of
13 financing the acquisition of public capital improvements; and
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15 WHEREAS, the Authority and the City wish to finance a portion of the costs of
16 constructing and equipping a municipal golf course to be located in the City (the "Golf
17 Course"); and
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19 WHEREAS, the Authority is authorized pursuant to the provisions of Article 4 of the
20 Joint Exercise of Powers Law (the "Bond Law"), to issue its revenue bonds for the
21 purpose of financing the acquisition and construction of public capital improvements
22 such as the Golf Course; and
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24 WHEREAS, the Authority, after due investigation and deliberation, has determined that
it is in the interests of the Authority at this time to provide for the issuance of its
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Exhibit 1
1 Revenue Bonds under the Bond Law to finance the costs of acquiring and constructing
2 the Golf Course; and
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4 WHEREAS, the Board of Directors of the Authority (the "Board of Directors") has
5 determined to approve the issuance and sale of its Carlsbad Public Financing Authority
6 Revenue Bonds, 2006 Series A (Carlsbad Municipal Golf Course Project) (the "Bonds")
7 for such purpose; and
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9 WHEREAS, the Bonds will be issued pursuant to an Indenture of Trust, dated as of
10 December 1, 2006, between The Bank of New York Trust Company, N.A. (the
11 "Trustee") and the Authority (the "Indenture"); and
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13 WHEREAS, as required by Section 6586.5 of the Government Code,, the City Council
14 of the City has conducted a public hearing on the issuance of the Bonds; and
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16 WHEREAS, in order to better secure the Bonds, the City will lease the Golf Course to
17 the Authority under a Golf Course Site Lease, dated as of December 1, 2006, between
18 the Authority and the City (the "Golf Course Site Lease"), and will enter into a Lease
19 Agreement, dated as of December 1, 2006, between the Authority and the City, under
20 which the Authority will lease the Golf Course back to the City (the "Lease Agreement");
21 and
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23 WHEREAS, in order to allow the Authority to conduct other activities related to the Golf
24 Course, such as the driving range, clubhouse and maintenance shed, the City will lease
25 the sites upon which the driving range, clubhouse and maintenance shed will be located
26 (together, the "Related Facilities Site") to the Authority under a second Site Lease,
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iff
Exhibit 1
1 dated as of December 1, 2006, between the Authority and the City (the "Related
2 Facilities Site Lease"); and
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4 WHEREAS, the Authority will assign its rights under the Lease Agreement to the
5 Trustee pursuant to an Assignment Agreement, dated as of December 1, 2006,
6 between the Authority and the Trustee; and
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8 WHEREAS, the Board of Directors has duly considered such transactions and wishes
9 at this time to authorize the issuance and sale of the Bonds and the documents and
10 actions relating thereto;
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12 NOW, THEREFORE, be it RESOLVED, DETERMINED and ORDERED by the Board
13 of Directors of the Carlsbad Public Financing Authority as follows:
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15 SECTION 1. The Board of Directors hereby authorizes the issuance of the Bonds
16 under and pursuant to the Bond Law and the Indenture in the aggregate principal
17 amount of not to exceed $21,000,000 for the purpose of financing the costs of acquiring
18 and constructing the Golf Course, as set forth in the recitals of this Resolution. The
19 Board of Directors hereby approves the Indenture in substantially the form on file with
20 the Secretary, together with any changes therein or additions thereto approved by the
21 Executive Director, the Chairman, the Treasurer and the Auditor (each, an "Authorized
22 Officer"). An Authorized Officer is hereby authorized and directed to execute, and the
23 Secretary is hereby authorized and directed to attest and affix the seal of the Authority
24 to, the final form of the Indenture in the name and on behalf of the Authority. The Board
25 of Directors hereby authorizes the delivery and performance of the Indenture.
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Exhibit 1
1 SECTION 2. The Board of Directors hereby approves the lease of the Related Facilities
2 Site from the City to the Authority pursuant to the Related Facilities Site Lease, in
3 substantially the form on file with the Secretary, together with any changes therein or
4 additions thereto deemed advisable by an Authorized Officer. The Board of Directors
5 hereby authorizes and directs an Authorized Officer to execute, and the Secretary to
6 attest and affix the seal of the Authority to, said form of the Related Facilities Site Lease
7 for and in the name of the Authority.
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9 SECTION 3. The Board of Directors hereby approves the lease of the site upon which
10 the Golf Course is to be constructed from the City pursuant to the Golf Course Site
11 Lease, in substantially the form on file with the Secretary, together with any changes
12 therein or additions thereto deemed advisable by an Authorized Officer. The Board
13 hereby authorizes and directs the Authorized Officer to execute, and the Secretary to
14 attest, said form of the Site Lease for and in the name of the Authority.
15
16 SECTION 4. The Board of Directors hereby approves the lease of the site upon which
17 the Golf Course is to be constructed to the City pursuant to and in accordance with the
18 terms and provisions of the Lease Agreement, in substantially the form on file with the
19 Secretary, together with any changes therein or additions thereto deemed advisable by
20 the Authorized Officer. The Board of Directors hereby authorizes and directs the
21 Authorized Officer to execute, and the Secretary to attest and affix the seal of the
22 Authority to, said form of the Lease Agreement for and in the name of the Authority.
23 The lease of the Golf Course shall be upon the terms and conditions set forth in the
24 Lease Agreement.
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Exhibit 1
1 SECTION 5. The Board of Directors hereby approves the assignment by the Authority
2 of its right to receive Lease Payments from the City pursuant to and in accordance with
3 the terms and provisions of the Assignment Agreement, in substantially the form on file
4 with the Secretary, together with any changes therein or additions thereto deemed
5 advisable by the Authorized Officer. The Board of Directors hereby authorizes and
6 directs the Authorized Officer to execute, and the Secretary to attest and affix the seal
7 of the Authority to, said form of the Assignment Agreement for and in the name of the
8 Authority.
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10 SECTION 6. The Board of Directors hereby approves the sale of the Bonds by
11 negotiation with Stone & Youngberg LLC (the "Underwriter"). The Board of Directors
12 hereby authorizes, and delegates all necessary authorization to, the Authorized Officer
13 to undertake and complete the proceedings for the negotiated sale of the Bonds in
14 accordance with this Resolution and the Purchase Agreement on file with the Secretary,
15 which the Treasurer is hereby authorized and directed to execute, subject to the
16 limitations hereinafter set forth. The Bonds shall be sold in a principal amount of not-to-
17 exceed $21,000,000, at interest rates that shall not exceed 6%, and for a purchase
18 price which reflects a discount paid to the Underwriter of not-to-exceed 1.25%of the
19 principal amount of the Bonds.
20
21 SECTION 7. The Board of Directors hereby approves, and hereby directs the
22 Authorized Officer, on behalf of the Authority, to deem nearly final within the meaning of
23 Rule 15c2-12 of the Securities Exchange Act of 1934, the preliminary Official Statement
24 describing the Bonds when, in the judgment of such Authorized Officer, based upon the
25 advice of disclosure counsel and bond counsel, such preliminary statement is nearly
26 final. Distribution of such preliminary Official Statement by the Underwriter is hereby
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Exhibit 1
1 approved. The Authorized Officer is hereby authorized to execute the final form of the
2 Official Statement, as it may be modified by such permitted additions thereto and
3 changes therein as the Authorized Officer shall deem necessary, desirable or
4 appropriate, and the execution of the final Official Statement by the Authorized Officer
5 shall be conclusive evidence of the approval of any such additions and changes. The
6 Board of Directors hereby authorizes the distribution of the final Official Statement by
7 the Underwriter. The final Official Statement and the Continuing Disclosure Agreement
8 (as defined in the Indenture) shall be executed in the name and on behalf of the
9 Authority by the Authorized Officer.
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11 SECTION 8. This Resolution shall take effect from and after the date of its passage
12 and adoption.
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PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad
Public Financing Authority held on the 21st day of November, 2006, by the following
vote:
AYES: Board Members Lewis, Hall, Kulchin, Packard
NOES: Board Member Sigafoose
ABSENT: None
airman of the Board
ATTEST:
LORRAINE M. WOOD, Secretary
<SEAL>
Exhibit 1
1 STATE OF CALIFORNIA )
2 )ss
3 COUNTY OF SAN DIEGO )
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6 I, Sheila Cobian . Secretary of the Carlsbad Public Financing Authority, do hereby
7 certify that the foregoing Resolution, being Resolution No. 25 . was duly adopted by
8 the Board of Directors of the Carlsbad Public Financing Authority at a regular meeting of
9 the Board of Directors held on 11/21 . 2006, and thereafter was duly signed by the
10 Chairperson of the Carlsbad Public Financing Authority.
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EXHIBIT 2
1 RESOLUTION NO. 2006-344
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD APPROVING LEASE OF CARLSBAD
3 MUNICIPAL GOLF COURSE WITH THE CARLSBAD
4 PUBLIC FINANCING AUTHORITY, AND AUTHORIZING
EXECUTION OF RELATED SITE LEASES, LEASE
5 AGREEMENT AND OFFICIAL STATEMENT
6
7 WHEREAS, the City of Carlsbad (the "City") and the Carlsbad Municipal Water
8 District created the Carlsbad Public Financing Authority (the "Authority") pursuant to that
9 certain Joint Exercise of Powers Agreement dated as of April 1, 2000 for the purpose of
10 financing the acquisition of public capital improvements; and
11
12 WHEREAS, the City and the Authority wish to finance a portion of the costs of
13 constructing and equipping a municipal golf course to be located in the City (the "Golf
14 Course"); and
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16 WHEREAS, the Authority is authorized pursuant to the provisions of Article 4 of
17 the Joint Exercise of Powers Law (the "Bond Law"), to issue its revenue bonds for the
18 purpose of financing the acquisition and construction of public capital improvements
19 such as the Golf Course; and
20
21 WHEREAS, the Board of Directors of the Authority has determined to approve
22 the issuance and sale of its not-to-exceed $21,000,000 aggregate principal amount
23 Carlsbad Public Financing Authority Revenue Bonds, 2006 Series A (Carlsbad
24 Municipal Golf Course Project) (the "Bonds") for such purpose; and
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1 WHEREAS, the City Council has conducted a public hearing on the issuance of
2 the Bonds, as required by Section 6586.5 of the Government Code; and
3
4 WHEREAS, in order to better secure the Bonds, the City will lease the site upon
5 which the Golf Course will be constructed to the Authority under a Site Lease, dated as
6 of December 1, 2006, between the Authority and the City (the "Golf Course Site
7 Lease"), and will enter into a Lease Agreement, dated as of December 1, 2006,
8 between the Authority and the City, under which the City will lease the Golf Course back
9 from the Authority (the "Lease Agreement"); and
10
11 WHEREAS, in order to allow the Authority to conduct other activities related to
12 the Golf Course, such as the driving range, clubhouse and maintenance shed, the City
13 will lease the sites upon which the driving range, clubhouse and maintenance shed will
14 be located (together, the "Related Facilities Site") to the Authority under a second Site
15 Lease, dated as of December 1, 2006, between the Authority and the City (the "Related
16 Facilities Site Lease"); and
17
18 WHEREAS, the City Council wishes at this time to authorize certain proceedings
19 relating to the financing of the Golf Course as described herein and the execution and
20 delivery of all agreements and documents relating thereto;
21
22 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
23 Carlsbad as follows:
24
25 Section 1. Approval of Lease of Golf Course Site to the Authority; Golf Course
26 Site Lease. The Council hereby approves the lease of the Golf Course Site by the City
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1 to the Authority pursuant to the Golf Course Site Lease, in substantially the form on file
2 with the City Clerk, together with any changes therein or additions thereto deemed
3 advisable by the City Manager or Assistant City Manager (each, an "Authorized
4 Officer"). The Council hereby authorizes and directs an Authorized Officer to execute,
5 and the City Clerk to attest and affix the seal of the City to, said form of the Golf Course
6 Site Lease for and in the name of the City.
7
8 Section 2. Approval of Lease of Related Facilities Site to the Authority; Related
9 Facilities Site Lease. The Council hereby approves the lease of the Related Facilities
10 Site by the City to the Authority pursuant to the Related Facilities Site Lease, in
11 substantially the form on file with the City Clerk, together with any changes therein or
12 additions thereto deemed advisable by an Authorized Officer. The Council hereby
13 authorizes and directs an Authorized Officer to execute, and the City Clerk to attest and
14 affix the seal of the City to, said form of the Related Facilities Site Lease for and in the
15 name of the City.
16
17 Section 3. Approval of Lease of Golf Course Back From the Authority; Lease
18 Agreement. The Council hereby approves the lease of the Golf Course by the City
19 back from the Authority pursuant to and in accordance with the terms and provisions of
20 the Lease Agreement, in substantially the form on file with the City Clerk, together with
21 any changes therein or additions thereto deemed advisable by an Authorized Officer.
22 The Council hereby authorizes and directs an Authorized Officer to execute, and the
23 City Clerk to attest and affix the seal of the City to, said form of the Lease Agreement for
24 and in the name of the City so long as the aggregate principal amount of the Lease
25 Payments does not exceed $21,000,000, and so long as the interest rate used to
26 calculate the interest component of the Lease Payments does not exceed 6%. The
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1 lease of the Golf Course shall be upon the terms and conditions set forth in the Lease
2 Agreement.
3
4 Section 4. Approval of Official Statement. The City Council hereby approves, and
5 hereby directs an Authorized Officer, on behalf of the City, to deem nearly final within
6 the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the preliminary
7 Official Statement describing the Bonds when, in the judgment of such Authorized
8 Officer, based upon the advice of disclosure counsel and bond counsel, such
9 preliminary statement is nearly final. Distribution of such preliminary Official Statement
10 by Stone & Youngberg LLC (the "Underwriter") is hereby approved. The Authorized
11 Officer is hereby authorized to execute the final form of the Official Statement, as it may
12 be modified by such permitted additions thereto and changes therein as the Authorized
13 Officer shall deem necessary, desirable or appropriate, and the execution of the final
14 Official Statement by the Authorized Officer shall be conclusive evidence of the
15 approval of any such additions and changes. The City Council hereby authorizes the
16 distribution of the final Official Statement by the Underwriter. The final Official
17 Statement and the Continuing Disclosure Agreement (as defined in the Indenture) shall
18 be executed in the name and on behalf of the Authority by the Authorized Officer.
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20 Section 5. Official Actions. The Authorized Officers, the City Clerk and any and all
21 other officers of the City are hereby authorized and directed, for and in the name and on
22 behalf of the City, to do any and all things and take any and all actions, including
23 execution and delivery of any and all assignments, certificates, requisitions,
24 agreements, notices, consents, instruments of conveyance, warrants and other
25 documents, which they, or any of them, may deem necessary or advisable in order to
26 consummate any of the transactions contemplated by the documents approved
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1 pursuant to this resolution. Whenever in this resolution any action is authorized to be
2 taken by an officer of the City and such officer is absent or unavailable, such action may
3 be taken on behalf of the City by any designee of such officer.
4
5 Section 6. Effective Date. This resolution shall take effect from and after the date of
6 its passage and adoption.
7
8 Section 7. Significant Public Benefit. As required by Section 6586.5 of the
9 Government Code, the City Council has determined the significant public benefit will be
10 achieved through the Authority's financing of the Golf Course.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the 21st day of November, 2006, by the following vote:
AYES: Council Members Lewis, Hall, Kulchin, Packard
NOES: Council Member Sigafoose
ABSENT: None
ATTEST:
LORRAINE M. WOOD, City Clerk
(SEAL)
Exhibit 3
1 RESOLUTION NO. 26
2 A RESOLUTION OF THE CARLSBAD PUBLIC FINANCING
AUTHORITY ("AUTHORITY"), APPROVING AN ADVANCE
3 REPAYMENT AGREEMENT BETWEEN THE CITY
4 COUNCIL OF THE CITY OF CARLSBAD CALIFORNIA
("CITY") AND THE AUTHORITY
5
6 WHEREAS, the City has agreed to advance (and has advanced) funds to the
7 Authority from time to time for the purpose of designing, constructing, maintaining and
8 operating a municipal Golf Course; and
9
WHEREAS, the Municipal Golf Course consists of an 18-hole golf course as well
10 as related facilities including a driving range, a clubhouse, a pro shop, and maintenance
11
facilities; and
12
WHEREAS, the City and the Authority mutually desire to make provisions for the
eventual repayment of the Advances with interest to the City.
15 NOW, THEREFORE, IT IS AGREED by and between the City Council of the City
16 of Carlsbad, California, and the Carlsbad Public Financing Authority as follows:
17 1. The Carlsbad Public Financing Authority approves the Advance
1R Repayment Agreement, attached herein and dated November 21, 2006, between the
19 City and the Authority.
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PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad
Public Financing Authority held on the 21st day of November, 2006, by the following
vote:
AYES: Board Members Lewis, Hall, Kulchin, Packard
NOES: Board Member Sigafoose
ABSENT: None
, unairman of the Board
ATTEST:
LORRAINE M. WOOD, Secretary
<SEAL)
- o-
Exhibit 4
1 RESOLUTION NO. 2006-345
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA ("CITY"), APPROVING AN
3 ADVANCE REPAYMENT AGREEMENT BETWEEN THE
CITY AND THE CARLSBAD PUBLIC FINANCING
AUTHORITY ("AUTHORITY")
5
6 WHEREAS, the City has agreed to advance (and has advanced) funds to the
7 Authority from time to time for the purpose of designing, constructing, maintaining and
8 operating a municipal Golf Course; and
o
WHEREAS, the Municipal Golf Course consists of an 18-hole golf course as well
10 as related facilities including a driving range, a clubhouse, a pro shop, and maintenance
11
facilities; and
12
WHEREAS, the City and the Authority mutually desire to make provisions for the
eventual repayment of the Advances with interest to the City.
15 NOW, THEREFORE, IT IS AGREED by and between the City Council of the City
16 of Carlsbad, California, and the Carlsbad Public Financing Authority as follows:
17 1. The City Council of the City of Carlsbad approves the Advance
1 Q0 Repayment Agreement, attached herein dated November 21, 2006, between the City
19 and the Authority.
20
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24 "
25
26 //
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the 21 st day of November, 2006, by the following vote:
AYES: Council Members Lewis, Hall, Kulchin, Packard
NOES: Council Member Sigafoose
ABSENT: None
ATTEST:
LORRAINE M. WOOD, City Clerk
(SEAL)
13133-01 JH:VVHM 5/24/06
6/19/06
7/11/09
8/8/06
11/7/06
12/13/06
INDENTURE OF TRUST
by and between the
CARLSBAD PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as Trustee
Dated as of December 1,2006
Relating to:
$18,540,000
Carlsbad Public Financing Authority
Revenue Bonds, 2006 Series A
(Carlsbad Municipal Golf Course Project)
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
Section 1.01. Definitions 3
Section 1.02. Rules of Construction 10
Section 1.03. Equal Security 10
ARTICLE II
AUTHORIZATION OF 2006 BONDS
Section 2.01. Authorization of 2006 Bonds 11
Section 2.02. Terms of 2006 Bonds 11
Section 2.03. Redemption of 2006 Bonds 12
Section 2.04. Form and Execution of 2006 Bonds 15
Section 2.05. Transfer and Exchange of 2006 Bonds 15
Section 2.06. Issuance in Temporary Form 16
Section 2.07. 2006 Bonds Mutilated, Lost, Destroyed or Stolen 16
Section 2.08. Book Entry System; Original Delivery 17
Section 2.09. Payment Procedure Pursuant to Insurance Policy 18
ARTICLE III
ISSUANCE OF 2006 BONDS; RESERVE FUND; PARITY
OBLIGATIONS
Section 3.01. Issuance of 2006 Bonds 21
Section 3.02. Application of Proceeds of Sale of 2006 Bonds 21
Section 3.03. Reserve Fund 21
Section 3.04. Cost of Issuance Fund 21
Section 3.05. Project Fund 21
Section 3.06. Issuance of Parity Obligations 22
Section 3.07. Validity of Bonds 23
ARTICLE IV
PLEDGE OF NET REVENUES; LEASE PAYMENTS; FLOW OF
FUNDS
Section 4.01. Pledge of Net Revenues 24
Section 4.02. Receipt, Deposit and Application of Gross Revenues; Net Revenues 24
Section 4.03. Investments 26
Section 4.04. Acquisition, Disposition and Valuation of Investments 26
ARTICLE V
COVENANTS OF THE AUTHORITY; SPECIAL TAX
COVENANTS
Section 5.01. Punctual Payment; Compliance With Documents 28
Section 5.02. Discharge of Claims 28
Section 5.03. Operation of Golf Course in Efficient and Economical Manner 28
Section 5.04. Sale or Condemnation of Golf Course 28
Section 5.05. Insurance 28
Section 5.06. Records and Accounts 29
Section 5.07. Management of the Golf Course; Rates and Charges 29
Section 5.08. Superior and Subordinate Obligations 30
Section 5.09. Enforcement of Management Agreement 30
Section 5.10. Private Activity Bond Limitation 30
Section 5.11. Federal Guarantee Prohibition 30
Section 5.12. Rebate Requirement 30
Section 5.13. No Arbitrage 31
Section 5.14. Maintenance of Tax-Exemption 31
Section 5.15. Continuing Disclosure 31
Section 5.16. Further Assurances 31
ARTICLE VI
THE TRUSTEE
Section 6.01. Appointment of Trustee 32
Section 6.02. Payment of Bonds; Registration Books 32
Section 6.03. Acceptance of Trusts 32
Section 6.04. Fees, Charges and Expenses of Trustee 35
Section 6.05. Notice to Bond Owners of Default 35
Section 6.06. Intervention by Trustee 35
Section 6.07. Removal of Trustee 35
Section 6.08. Resignation by Trustee 35
Section 6.09. Appointment of Successor Trustee 35
Section 6.10. Merger or Consolidation 36
Section 6.11. Concerning any Successor Trustee 36
Section 6.12. Appointment of Co-Trustee 36
Section 6.13. Indemnification; Limited Liability of Trustee 37
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.01. Amendment by Consent of Bond Owners 38
Section 7.02. Disqualified Bonds 38
Section 7.03. Endorsement or Replacement of Bonds After Amendment 39
Section 7.04. Amendment by Mutual Consent 39
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 8.01. Events of Default and Acceleration of Maturities 40
Section 8.02. Application of Funds Upon Acceleration 41
Section 8.03. Other Remedies; Rights of Bond Owners 41
Section 8.04. Power of Trustee to Control Proceedings 42
Section 8.05. Appointment of Receivers 42
Section 8.06. Non-Waiver 42
Section 8.07. Rights and Remedies of Bond Owners 42
Section 8.08. Termination of Proceedings 43
ARTICLE IX
MISCELLANEOUS
Section 9.01. Limited Liability of Authority 44
Section 9.02. Benefits of Indenture Limited to Parties 44
Section 9.03. Discharge of Indenture 44
Section 9.04. Successor Is Deemed Included in All References to Predecessor 45
Section 9.05. Content of Certificates 45
Section 9.06. Execution of Documents by Bond Owners 45
Section 9.07. Waiver of Personal Liability 46
Section 9.08. Partial Invalidity 46
Section 9.09. Destruction of Canceled Bonds 46
Section 9.10. Funds and Accounts 47
Section 9.11. Notices 47
Section 9.12. Unclaimed Moneys 47
Section 9.13. Execution in Several Counterparts 48
Section 9.14. Governing Law 48
EXHIBIT A - FORM OF BOND
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of December 1, 2006, is by and between the
CARLSBAD PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency organized
and existing under the Constitution and laws of the State of California (the "Authority"), and
THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association
organized and existing under the laws of the United States of America, with a corporate trust
office in Los Angeles, California, and being qualified to accept and administer the trusts hereby
created, as Trustee (the "Trustee");
WITNESSETH:
WHEREAS, the City of Carlsbad (the "City") and the Carlsbad Municipal Water District
created the Authority pursuant to that certain Joint Exercise of Powers Agreement dated as of
April 1, 2000, for the purpose of financing the acquisition of public capital improvements; and
WHEREAS, the City and the Authority have determined to finance a portion of the costs
of the construction and equipping of the Carlsbad Municipal Golf Course (the "Golf Course");
and
WHEREAS, the Authority is authorized pursuant to the provisions of Article 4 of the
Joint Exercise of Powers Law (the "Bond Law"), to issue its revenue bonds for the purpose of
financing the acquisition and construction of public capital improvements such as the Golf
Course; and
WHEREAS, the Authority, after due investigation and deliberation, has determined that
it is in the interests of the Authority at this time to finance the Golf Course, and to that end the
Board of Directors has heretofore adopted its Resolution No. 25, approving and authorizing the
issuance of its Carlsbad Public Financing Authority Revenue Bonds, 2006 Series A (Carlsbad
Municipal Golf Course Project) (the "2006 Bonds") for such purpose; and
WHEREAS, in order to provide for the authentication and delivery of the 2006 Bonds, to
establish and declare the terms and conditions upon which the 2006 Bonds are to be issued and
secured, and to secure the payment of the principal thereof and of the interest and premium, if
any, thereon, the Board of Directors has authorized the execution of this Indenture; and
WHEREAS, all 2006 Bonds and obligations issued under Section 3.06 of this Indenture
on a parity therewith (collectively, the "Bonds") will be secured by a pledge of the Net
Revenues, as defined herein, and certain other moneys and securities held by the Authority and
the Trustee hereunder; and
WHEREAS, all acts and proceedings required by law necessary to make the 2006 Bonds,
when executed by the Authority, authenticated and delivered by the Trustee and duly issued,
the valid, binding and legal special obligations of the Authority, and to constitute this Indenture
a valid and binding agreement for the uses and purposes herein set forth, in accordance with its
terms, have been done and taken; and the execution and delivery of this Indenture have been in
all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time
issued and Outstanding under this Indenture, according to their tenor, and to secure the
performance and observance of all the covenants and conditions therein and herein set forth,
and to declare the terms and conditions upon and subject to which the Bonds are to be issued
and received, and in consideration of the premises and of the mutual covenants herein
contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other
valuable considerations, the receipt whereof is hereby acknowledged, the Authority does
hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time
to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section shall for all purposes of this Indenture and of any Supplemental Indenture and of
the Bonds and of any certificate, opinion, request or other documents herein mentioned have
the meanings herein specified.
"Additional Revenues" means, with respect to the issuance of any Parity Obligations,
an allowance for Net Revenues from any additions or improvements to or extensions of the Golf
Course to be made with the proceeds of such Parity Obligations, and Net Revenues from any
such additions, improvements or extensions which have been made from moneys from any
source, but in any case which, during all or any part of the latest Fiscal Year or for any more
recent consecutive twelve (12) month period selected by the Authority, were not in service, all
in an amount equal to ninety percent (90%) of the estimated additional average annual Net
Revenues to be derived from such additions, improvements and extensions for the first thirty-
six (36) month period in which each addition, improvement or extension is respectively to be in
operation, all as shown by the certificate or opinion of a Fiscal Consultant employed by the
Authority.
"Annual Debt Service" means principal of and interest on the Bonds due and payable
during any Bond Year, including scheduled sinking fund redemption amounts set forth in
Section 2.03(c).
"Authority" means the Carlsbad Public Financing Authority, a joint exercise of powers
agency organized and existing under the laws of the State, and any successor thereto.
"Authority Golf Course Fund" means the fund of that name established and held by
the Authority pursuant to Section 4.02.
"Authorized Denominations" means $5,000, or any integral multiple thereof.
"Authorized Investments" means any securities in which the Authority may legally
invest funds subject to its control.
"Bond Law7' means the provisions of Article 4 of the Joint Exercise of Powers Law,
commencing with Section 6584 of the California Government Code, as in effect on the Closing
Date or as thereafter amended.
"Bond Service Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02(a).
"Bonds" means, collectively, the 2006 Bonds and any Parity Obligations issued and at
any time Outstanding hereunder and under a Supplemental Indenture].
"Bond Year" means any twelve-month period commencing on September 2 in a year
and ending on the next succeeding September 1, both dates inclusive, except for the first Bond
Year, which commences on the Closing Date and ends on September 1, 2007.
"Business Day" means a day (other than a Saturday or a Sunday) on which banks are
not required or authorized to remain closed in the city in which the Office of the Trustee is
located.
"Certificate of the Authority" means a certificate in writing signed by the Chairperson
or Executive Director of the Authority, or by any other officer of the Authority duly authorized
by the Board of Directors for that purpose, with the seal of the Authority affixed.
"Closing Date" means December 20, 2006, being the date of delivery of the 2006 Bonds
to the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the Bonds or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the date of issuance of the Bonds, together with applicable temporary and
final regulations promulgated, and applicable official public guidance published, under the
Code.
"Continuing Disclosure Agreement" shall mean that certain Continuing Disclosure
Agreement executed by the Authority and dated the date of issuance and delivery of the Bonds,
as originally executed and as it may be amended from time to time in accordance with the terms
thereof.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the 2006 Bonds, including but not limited to compensation, fees
and expenses of the Authority, the City and the Trustee and their respective counsel,
compensation to any financial consultants or underwriters, legal fees and expenses, filing and
recording costs, raring agency fees, costs of preparation and reproduction of documents and
costs of printing.
"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as
Depository pursuant to Section 2.08.
"Depository System Participant" means any participant in the Depository's book-entry
system.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Event of Default" means any of the events described in Section 8.01.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired
in accordance with applicable regulations under the Code, (ii) the investment is an agreement
with specifically negotiated withdrawal or reinvestment provisions and a specifically
negotiated interest rate (for example, a guaranteed investment contract, a forward supply
contract or other investment agreement) that is acquired in accordance with applicable
regulations under the Code, (iii) the investment is a United States Treasury Security—State and
Local Government Series that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State of California but only if at all times during which the investment is held its
yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable
direct obligation of the United States.
"Federal Securities" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
(a) direct general obligations of the United States of America (including obligations issued or
held in book entry form on the books of the Department of the Treasury of the United States of
America); and (b) obligations of any department, agency or instrumentality of the United States
of America the timely payment of principal of and interest on which are unconditionally and
fully guaranteed by the United States of America.
"Fiscal Consultant" means any consultant or firm of such consultants appointed by the
Authority, and who, or each of whom: (a) is judged by the Authority to have experience in
matters relating to the financing and operation of facilities such as the Golf Course; (b) is in fact
independent and not under the domination of the Authority; (c) does not have any substantial
interest, direct or indirect, with the Authority, other than as original purchaser of any Bonds;
and (d) is not connected with the Authority as an officer or employee of the Authority, but who
may be regularly retained to make reports to the Authority.
"Fiscal Year" means the period commencing on July 1 of each year and terminating on
the next succeeding June 30.
"Golf Course" means the Carlsbad Municipal Golf Course owned by the Carlsbad
Public Financing Authority, located on the Golf Course Site.
"Golf Course Site" means the real property comprising the site of the Golf Course, as
more particularly described in Exhibit A to the Lease Agreement.
"Golf Course Site Lease" means that certain Golf Course Site Lease, dated as of
December 1, 2006, between the Corporation and the Authority, as amended in accordance with
the terms thereof.
"Gross Revenues" means all gross charges received for, and all other gross income and
receipts derived by the Authority or the Trustee from, the ownership and operation of the Golf
Course or otherwise arising from the Golf Course, including but not limited to amounts paid to
the Authority or the Trustee pursuant to the terms of the Management Agreement, as well as
interest earnings on the Reserve Fund.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
"Independent Accountant" means any accountant or firm of such accountants
appointed and paid by the Authority, and who, or each of whom (a) is in fact independent and
not under domination of the Authority; (b) does not have any substantial interest, direct or
indirect, with the Authority; and (c) is not connected with the Authority as an officer or
employee of the Authority, but who may be regularly retained to make annual or other audits
of the books of or reports to the Authority.
"Independent Financial Advisor" means any firm nationally recognized for having
expertise in the area of advising public agencies on tax-exempt financings chosen by the
Authority, which (a) is in fact independent and not under domination of the Authority; (b) does
not have any substantial interest, direct or indirect, with the Authority; and (c) is not connected
with the Authority as an officer or employee of the Authority, but who may be regularly
retained to make annual or other audits of the books of or reports to the Authority.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond
Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor;
Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New
York 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th
Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's
Corporation "Called Bond Record," 65 Broadway, 16th Floor, New York, New York 10004; and,
in accordance with then current guidelines of the Securities and Exchange Commission, such
other addresses and/or such other information services providing information with respect to
called bonds as the Authority may designate in a Certificate of the Authority delivered to the
Trustee.
"Insurer" means Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance
company, including its successors, as issuer of the Insurance Policy.
"Insurance Policy" means, collectively, the Municipal Bond Insurance Policy No.
issued by the Insurer insuring the payment when due of the principal and interest
represented by the Certificates as provided therein.
"Interest Payment Date" means March 1 and September 1 in each year, beginning
March 1, 2007, and continuing so long as any Bonds remain Outstanding.
"Lease Agreement" means that certain Lease Agreement, dated as of December 1, 2006,
between the City and the Authority, as amended from time to time in accordance with the terms
thereof.
"Management Agreement" means that certain Golf Course Management Agreement,
originally dated as of May 10, 2006, by and between the Authority and the Operator, as
amended from time to time, and includes any management agreement between the Authority
and an Operator while the Bonds are Outstanding, to the extent that such management
agreement affects the operation and management of the Golf Course.
"Maximum Annual Debt Service" means, as of the date of any calculation, the
maximum sum obtained for the current or any future Bond Year by totaling the following
amounts for such Bond Year:
(a) the aggregate amount of principal of the Outstanding Bonds coming due
and payable in such Bond Year pursuant hereto, including the aggregate principal
amount thereof which is required to be redeemed in such Bond Year by operation of
mandatory sinking fund redemption; and
(b) the aggregate amount of interest which would be due during such Bond
Year on the aggregate principal amount of all Outstanding Bonds, if any, which would
be outstanding in such Bond Year if such Bonds are retired as scheduled; provided,
however, that with respect to any Parity Obligations which bear interest at a variable
rate, such interest shall be calculated at an assumed rate equal to the average rate of
interest per annum for each of the five previous whole calendar years as shown by the J.
J. Kenny Index (or, in the event and to the extent such index is not maintained for all or
any portion of such period, any similar index of variable rate interest for tax-exempt
obligations as may be selected by the Authority in its sole discretion).
"Moody's" means Moody's Investors Service, its successors and assigns.
"Net Revenues" means, with respect to any period, the amount of the Gross Revenues
received during such period, less the amount of Operation and Maintenance Costs becoming
payable during such period; provided, however, that during the term of the Management
Agreement, Net Revenues shall mean amounts characterized as "Available Funds" and paid by
the Operator to the Authority under Section 5.02 of the Management Agreement.
"Office" means with respect to the Trustee, the corporate trust office of the Trustee at
the address set forth in Section 9.11 of this Indenture, except for payment, transfer, exchange,
registration and surrender of 2006 Bonds, means the office or agency of the Trustee at which, at
any particular time, its corporate trust agency business shall be conducted or at such other
address specified by the Trustee from time to time, or at such other or additional offices as may
be specified in writing to the Authority, including for transfer, exchange, registration or
payment of the Bonds.
"Operation and Maintenance Costs" means the reasonable and necessary costs and
expenses paid by the Authority for maintaining and operating the Golf Course, including but
not limited to (1) the cost of operating the Golf Course and any improvements thereon, (2)
salaries, wages and benefits, (3) utilities, (4) insurance, (5) the cost of maintaining, repairing and
restoring the Golf Course and any improvements thereon, (6) amounts paid to any third party
to operate or manage the Golf Course or portion thereof and improvement thereon, and (7)
contributions to a capital reserve account; provided, however, that during the term of the
Management Agreement the term, "Operation and Maintenance Costs" shall mean expenditures
which the Operator is permitted to make from Gross Revenues to pay Golf Course Expenses (as
defined in the Management Agreement), plus management fees payable to the Operator under
Article IV of the Management Agreement.
"Operator" means Kemper Sports Management, or any other entity responsible for the
management and operation of the Golf Course while the Bonds are Outstanding.
"Original Purchaser" means Stone & Youngberg LLC, as the original purchaser of the
2006 Bonds upon their delivery by the Trustee on the Closing Date.
"Outstanding", when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 9.09) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to
which all liability of the Authority shall have been discharged in accordance with Section 9.03;
and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other
Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner", when used with respect to any Bond, means the person in whose name the
ownership of such Bond shall be registered on the Registration Books.
"Parity Obligations" means all bonds, notes or other obligations of the Authority
payable from and secured by a pledge of and lien upon any of the Net Revenues issued or
incurred on a parity with the 2006 Bonds pursuant to Section 3.06.
"Participating Underwriter" shall have the meaning ascribed thereto in the Continuing
Disclosure Agreement.
"Permitted Encumbrances" means the Golf Course Site Lease, the Lease Agreement and
the Assignment Agreement; and (iii) such use restrictions, minor easements, encumbrances,
rights of way and other matters of record in existence on the Closing Date or thereafter which
are set forth in a Certificate of the Authority which states that such encumbrances do not
materially adversely affect the ability of the Authority to use the Golf Course for its intended
purpose.
"Permitted Investments" means any of the following which at the time of investment
are legal investments under the laws of the State for the moneys proposed to be invested
therein:
(a) Federal Securities;
(b) obligations of any of the following federal agencies which obligations
represent the full faith and credit of the United States of America, including:
—Export-Import Bank;
—Rural Economic Community Development Administration (formerly the
Farmers Home Administration);
—U.S. Maritime Administration;
—Small Business Administration;
—U.S. Department of Housing & Urban Development (PHAs);
—Federal Housing Administration;
—Federal Financing Bank;
(c) direct obligations of any of the following federal agencies which
obligations are not fully guaranteed by the full faith and credit of the United States of
America:
—Senior debt obligations issued by the Federal National Mortgage Association
(FNMA) or Federal Home Loan Mortgage Corporation (FHLMC);
—Obligations of the Resolution Funding Corporation (REFCORP);
—Senior debt obligations of the Federal Home Loan Bank System;
—Senior debt obligations of other agencies sponsored by the federal government
approved by the Certificate Insurer;
(d) U.S. dollar denominated deposit accounts, federal funds and bankers'
acceptances with domestic commercial banks, including the Trustee and its affiliates,
which have a rating on their short-term certificates of deposit on the date of purchase of
"A-l" or "A-1+" by S&P and "P-l" by Mood/s and maturing no more than 360 calendar
days after the date of purchase (ratings on holding companies are not considered as the
rating of the bank);
(e) commercial paper which is rated at the time of purchase in the single
highest classification, "A-l4-" by S&P and "P-l".by Moody's, and which matures not
more than 270 calendar days after the date of purchase;
(f) investments in a money market fund rated "AAAm" or "AAAm-G" or
better by S&P, including funds for which the Trustee or its affiliates receive fees for
investment advisory or other services to the fund;
(g) pre-refunded municipal obligations defined as follows: any bonds or
other obligations of any state of the United States of America or of any agency,
instrumentality or local governmental unit of any such state which are not callable at the
option of the obligor prior to maturity or as to which irrevocable instructions have been
given by the obligor to call on the date specified in the notice; and
(i) which are rated, based on an irrevocable escrow account or fund (the
"Escrow"), in the highest rating category of S&P and Moody's or any successors thereto;
or
(ii) (A) which are fully secured as to principal and interest and redemption
premium, if any, by an escrow consisting only of cash or obligations described in clause
(b) of the definition of Government Securities, which escrow may be applied only to the
payment of such principal of and interest and redemption premium, if any, on such
bonds or other obligations on the maturity date or dates thereof or the specified
redemption date or dates pursuant to such irrevocable instructions, as appropriate; and
(B) which escrow is sufficient, as verified by a nationally recognized independent
certified public accountant, to pay principal of and interest and redemption premium, if
any, on the bonds or other obligations described in this paragraph on the maturity date
or dates specified in the irrevocable instructions referred to above, as appropriate;
(h) municipal obligations rated "Aaa/AAA" or general obligations of states
with a rating of least "A2/A" or higher by both Moody's and S&P;
(i) investment agreements approved in writing by the Insurer;
(j) other forms of investments, including repurchase agreements, approved
in writing by the Insurer; and
(k) the Local Agency Investment Fund of the State of California.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date, whether or not such day is a
Business Day.
"Redemption Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02(c).
"Registration Books" means the books maintained by the Trustee pursuant to Section
2.08 for the registration and transfer of ownership of the Bonds.
"Request of the Authority" means a request in writing signed by the Authority
Manager of the Authority, or by any other officer of the Authority duly authorized by the Board
of Directors for that purpose.
"Reserve Fund" means the fund by that name established pursuant and held by the
Trustee pursuant to Section 3.03.
"Reserve Requirement" means an amount equal to the lesser of (i) 10% of the principal
amount of the Bonds then Outstanding; (ii) Maximum Annual Debt Service; or (iii) 125% of
average Annual Debt Service on the Bonds.
"S&P" means Standard & Poor's Corporation, its successors and assigns.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, 50th
Floor, New York, N.Y. 10041-0099 Atn. Call Notification Department, Fax (212) 855-7232; and, in
accordance with then current guidelines of the Securities and Exchange Commission, such other
addresses and/or such other securities depositories as the Authority may designate in a
Certificate of the Authority delivered to the Trustee.
"Serial Bonds" means all Bonds other than Term Bonds.
"State" means the State of California.
"Supplemental Indenture" means any indenture, agreement, resolution or other
instrument hereafter duly adopted or executed in accordance with the provisions of Section 7.01
of this Indenture.
"Term Bonds" means the 2006 Bonds and any Parity Obligations which are payable
prior to their stated maturity by operation of mandatory sinking fund redemption.
"Trustee" means The Bank of New York Trust Company, N.A., appointed by the
Authority to act as trustee hereunder pursuant to Section 6.01, and its assigns or any other
corporation or association which may at any time be substituted in its place, as provided in
Section 6.01.
"2006 Bonds" means the Carlsbad Public Financing Authority Revenue Bonds, 2006
Series A (Carlsbad Municipal Golf Course Project), issued and at any time Outstanding
hereunder.
Section 1.02. Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Indenture; and the words "herein," "hereof," "hereto," "hereunder," and other words of
similar import refer to this Indenture as a whole and not to any particular Article, Section or
subdivision hereof.
Section 1.03. Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
priority or distinction as to security or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
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ARTICLE H
AUTHORIZATION OF 2006 BONDS
Section 2.01. Authorization of 2006 Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the 2006 Bonds and has found, as a
result of such review, and hereby finds and determines that, as of the date of issuance of the
2006 Bonds, all things, conditions, and acts required by law to exist, happen and/or be
performed precedent to and in the issuance of the 2006 Bonds do exist, have happened and
have been performed in due time, form and manner as required by law, and the Authority is
now authorized, as a joint exercise of powers agency under the laws of the State of California,
and pursuant to the Bond Law and each and every requirement of law, to issue the 2006 Bonds
in the manner and form provided in this Indenture. Accordingly, the Authority hereby
authorizes the issuance of the 2006 Bonds pursuant to the Bond Law and this Indenture for the
purpose of providing funds to refund the 1996 Bonds.
Section 2.02. Terms of 2006 Bonds. The 2006 Bonds authorized to be issued by the
Authority under and subject to the Bond Law and the terms of this Indenture shall be
designated the "Carlsbad Public Financing Authority Revenue Bonds, 2006 Series A (Carlsbad
Municipal Golf Course Project)", and shall be issued in the original principal amount of
Eighteen Million Five Hundred Forty Thousand Dollars ($18,540,000).
The 2006 Bonds shall be issued in fully registered form without coupons in Authorized
Denominations. The 2006 Bonds shall mature on September 1 in each of the years and in the
amounts shown below:
Maturity Date Principal Interest Maturity Date Principal Interest
(September 1) Amount Rate (September 1) Amount Rate
2008 $ 275,000 4.0% 2017 $ 450,000 5.0%
2009 290,000 4.0 2018 480,000 5.0
2010 305,000 4.0 2019 510,000 5.0
2011 325,000 4.0 2020 540,000 4.0
2012 340,000 4.5 2021 565,000 4.0
2013 360,000 4.5 2022 590,000 4.0
2014 385,000 4.5 2030 5,975,000 4.5
2015 405,000 4.5 2036 6,320,000 4.5
2016 425,000 4.5
Interest on the 2006 Bonds shall be payable semiannually, calculated based on a 360-day
year of twelve (12) thirty-day months on each Interest Payment Date to the person whose name
appears on the Registration Books as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date, such interest to be paid by check of the Trustee
mailed on the applicable Interest Payment Date, by first class mail to the Owner at the address
of such Owner as its appears on the Registration Books; provided however, that payment of
interest will be made by wire transfer in immediately available funds to an account in the
United States of America to any Owner of 2006 Bonds in the aggregate principal amount of
$1,000,000 or more who shall furnish written wire instructions to the Trustee before the
applicable Record Date. Principal of any 2006 Bond and any premium upon redemption shall
be paid by check of the Trustee upon presentation and surrender thereof at the Office of the
Trustee. Principal of and interest and premium (if any) on the 2006 Bonds shall be payable in
lawful money of the United States of America.
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Each 2006 Bond shall be dated as of the Closing Date and shall bear interest from the
Interest Payment Date next preceding the date of authentication thereof, unless (a) it is
authenticated after a Record Date and on or before the following Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (b) unless it is
authenticated on or before the first Record Date, in which event it shall bear interest from the
Closing Date; provided, however, that if, as of the date of authentication of any 2006 Bond,
interest thereon is in default, such 2006 Bond shall bear interest from the Interest Payment Date
to which interest has previously been paid or made available for payment thereon.
Section 2.03. Redemption of 2006 Bonds.
(a) Optional Redemption. The 2006 Bonds maturing on or after September 1, 2017 shall
be subject to redemption prior to their maturity date, at the option of the Authority, as a whole
or in part, from any source of available funds, on any date on or after September 1, 2016, at a
redemption price equal to the principal amount of the 2006 Bonds to be redeemed, plus accrued
interest to the date of redemption, without premium.
The Authority shall provide the Trustee written notice at least sixty (60) days (or such
shorter period of time acceptable to the Trustee in its sole discretion) prior to such redemption
date.
(b) Mandatory Redemption from Proceeds of Sale, Condemnation or Insurance. The
2006 Bonds shall also be subject to mandatory redemption as a whole or in part, on any date, to
the extent of the proceeds of disposition or condemnation of the Golf Course or the proceeds of
hazard insurance not used to repair or rebuild the Golf Course, or the proceeds of title
insurance, which proceeds are required to be used for such purpose pursuant to Sections 5.04 or
5.05, at a redemption price equal to the principal amount of the 2006 Bonds, plus interest
accrued thereon to the date fixed for redemption, without premium.
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(c) Mandatory Sinking Fund Redemption, (i) The 2006 Bonds maturing on September 1,
2030 shall also be subject to redemption in whole, or in part by lot, on and after September 1,
2023, from sinking fund payments made by the Authority into the Bond Service Fund pursuant
to Section 4.02(a), at a redemption price equal to the principal amount thereof to be redeemed,
without premium, plus accrued interest to the date of redemption or in lieu thereof shall be
purchased pursuant to the succeeding paragraph of this subsection (c), in the aggregate
respective principal amounts and on September 1 in the respective years as set forth in the
following table; provided, however, that if some but not all of the 2006 Bonds maturing on
September 1, 2030 have been redeemed pursuant to subsections (a) or (b) above, the total
amount of all future sinking fund payments shall be reduced by the aggregate principal amount
of 2006 Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata
basis in Authorized Denominations as determined by the Authority (notice of which
determination shall be given by the Authority to the Trustee).
Sinking Fund
Redemption Date Principal Amount to be
(September 1) Redeemed or Mature
2023 $ 620,000
2024 655,000
2025 690,000
2026 725,000
2027 760,000
2028 800,000
2029 840,000
2030* 885,000
*Maturity
The 2006 Bonds maturing on September 1, 2036 shall also be subject to redemption in
whole, or in part by lot, on and after September 1, 2031, from sinking fund payments made by
the Authority into the Bond Service Fund pursuant to Section 4.02(a), at a redemption price
equal to the principal amount thereof to be redeemed, without premium, plus accrued interest
to the date of redemption or in lieu thereof shall be purchased pursuant to the succeeding
paragraph of this subsection (c), in the aggregate respective principal amounts and on
September 1 in the respective years as set forth in the following table; provided, however, that if
some but not all of the 2006 Bonds maturing on September 1, 2036 have been redeemed
pursuant to subsections (a) or (b) above, the total amount of all future sinking fund payments
shall be reduced by the aggregate principal amount of 2006 Bonds so redeemed, to be allocated
among such sinking fund payments on a pro rata basis in Authorized Denominations as
determined by the Authority (notice of which determination shall be given by the Authority to
the Trustee).
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Sinking Fund
Redemption Date Principal Amount to be
(September 1) Redeemed or Mature
2031 $ 930,000
2032 975,000
2033 1,025,000
2034 1,075,000
2035 1,130,000
2036* 1,185,000
*Maturity
For purposes of determining whether any Event of Default has occurred under and as
described in the preceding clause (a), payments made by the Insurer under the Insurance Policy
shall be disregarded.
In lieu of redemption of 2006 Bonds maturing September 1, 2030 and September 1, 2036
pursuant to the preceding paragraph of this subsection (c), amounts on deposit in the Authority
Golf Course Fund may be used and withdrawn by the Authority, and amounts on deposit in
the Bond Service Fund may also be used and withdrawn by the Trustee at any time upon the
Request of the Authority, but only to the extent not required for the uses and purposes set forth
in Section 4.02, for the purchase of 2006 Bonds maturing September 1, 2030 and September 1,
2036 at public or private sale as and when and at such prices (including brokerage and other
charges) as the Authority may in its discretion determine. The par amount of any 2006 Bonds
maturing September 1, 2030 and September 1, 2036 so purchased by the Authority in any
twelve-month period ending on July 1 in any year shall be credited towards and shall reduce
the par amount of 2006 Bonds maturing September 1, 2030 and September 1, 2036 required to be
redeemed pursuant to this subsection (c) on September 1 in such year.
The Authority shall provide the Trustee written notice of at least seventy-five (75) days
prior to the redemption date relating to such purchase, and deposit such 2006 Bonds with the
Trustee for cancellation in lieu of such sinking fund redemption at least sixty (60) days prior to
the redemption date.
(d) Notice of Redemption. The Trustee on behalf and at the expense of the Authority
shall mail (by first class mail) notice of any redemption to: (i) the respective Owners of any 2006
Bonds designated for redemption, at least thirty (30) but not more than sixty (60) days prior to
the redemption date, at their respective addresses appearing on the Registration Books, and (ii)
the Securities Depositories and to one or more Information Services, at least thirty (30) but not
more than sixty (60) days prior to the redemption; provided, however, that neither failure to
receive any such notice so mailed nor any defect therein shall affect the validity of the
proceedings for the redemption of such 2006 Bonds or the cessation of the accrual of interest
thereon. Such notice shall state the date of the notice, the redemption date, the redemption
place and the redemption price and shall designate the CUSIP numbers, the bond numbers, if
less than all 2006 Bonds are called for redemption and the maturity or maturities (in the event of
redemption of all of the 2006 Bonds of such maturity or maturities in whole) of the 2006 Bonds
to be redeemed, and shall require that such 2006 Bonds be then surrendered at the Office of the
Trustee for redemption at the redemption price, giving notice also that further interest on such
2006 Bonds will not accrue from and after the redemption date.
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(e) Selection of 2006 Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the 2006 Bonds, selection of 2006 Bonds shall be
by lot; and in each case, the Trustee shall select the 2006 Bonds to be redeemed by lot in any
manner which the Trustee in its sole discretion shall deem appropriate. For purposes of such
selection, all 2006 Bonds shall be deemed to be comprised of separate Authorized Denomination
portions and such portions shall be treated as separate 2006 Bonds which may be separately
redeemed.
(f) Partial Redemption of 2006 Bonds. In the event only a portion of any 2006 Bond is
called for redemption, then upon surrender of such 2006 Bond the Authority shall execute and
the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority,
a new 2006 Bond or 2006 Bonds of the same series and maturity date, of Authorized
Denominations in aggregate principal amount equal to the unredeemed portion of the 2006
Bond to be redeemed.
(g) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the principal of and interest (and premium, if any) on the 2006
Bonds so called for redemption shall have been duly provided, such 2006 Bonds so called shall
cease to be entitled to any benefit under this Indenture other than the right to receive payment
of the redemption price, and no interest shall accrue thereon from and after the redemption date
specified in such notice. All 2006 Bonds redeemed pursuant to this Section shall be canceled
and shall be destroyed.
Section 2.04. Form and Execution of 2006 Bonds. The 2006 Bonds, the form of Trustee's
certificate of authentication, and the form of assignment to appear thereon, shall be
substantially in the respective forms set forth in Exhibit A attached hereto and by this reference
incorporated herein, with necessary or appropriate variations, omissions and insertions, as
permitted or required by this Indenture.
The 2006 Bonds shall be signed in the name and on behalf of the Authority with the
manual or facsimile signature of its Chairperson and attested by the manual or facsimile
signature of its Secretary under the seal of the Authority. Such seal may be in the form of a
facsimile of the Authority's seal and shall be imprinted or impressed upon the 2006 Bonds. The
2006 Bonds shall then be delivered to the Trustee for authentication by it. In case any officer
who shall have signed any of the 2006 Bonds shall cease to be such officer before the 2006 Bonds
so signed shall have been authenticated or delivered by the Trustee or issued by the Authority,
such 2006 Bonds may nevertheless be authenticated, delivered and issued and, upon such
authentication, delivery and issue, shall be as binding upon the Authority as though the
individual who signed the same had continued to be such officer of the Authority. Also, any
2006 Bond may be signed on behalf of the Authority by any individual who on the actual date
of the execution of such 2006 Bond shall be the proper officer although on the nominal date of
such 2006 Bond such individual shall not have been such officer.
Only such of the 2006 Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
the Trustee shall be conclusive evidence that the 2006 Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.05. Transfer and Exchange of 2006 Bonds.
(a) Transfer of 2006 Bonds. The registration of any 2006 Bond may, in accordance with
its terms, be transferred upon the Registration Books by the person in whose name it is
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registered, in person or by his duly authorized attorney, upon surrender of such 2006 Bond for
cancellation at the Office of the Trustee, accompanied by delivery of a written instrument of
transfer in a form acceptable to the Trustee, duly executed. Whenever any 2006 Bond or 2006
Bonds shall be surrendered for registration of transfer, the Trustee shall authenticate and
deliver a new 2006 Bond or 2006 Bonds of the same maturity, interest rate and aggregate
principal amount, in any authorized denominations. The Authority shall pay all costs of the
Trustee incurred in connection with any such transfer, except that the Trustee may require the
payment by the 2006 Bond Owner of any tax or other governmental charge required to be paid
with respect to such transfer.
(b) Exchange of 2006 Bonds. 2006 Bonds may be exchanged at the Office of the Trustee,
for a like aggregate principal amount of 2006 Bonds of other authorized denominations of the
same interest rate and maturity. The Authority shall pay all costs of the Trustee incurred in
connection with any such exchange, except that the Trustee may require the payment by the
2006 Bond Owner requesting such exchange of any tax or other governmental charge required
to be paid with respect to such exchange.
(c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or exchange
either (i) any 2006 Bond during the period established by the Trustee for the selection of 2006
Bonds for redemption pursuant to Section 2.03, or (ii) the portion of any 2006 Bond which the
Trustee has selected for redemption pursuant to the provisions of Section 2.03.
Section 2.06. Issuance in Temporary Form. The 2006 Bonds may be issued initially in
temporary form exchangeable for definitive 2006 Bonds when ready for delivery. The
temporary 2006 Bonds may be printed, lithographed or typewritten, shall be of such
denominations as may be determined by the Authority and may contain such reference to any
of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be
executed by the Authority and be registered and authenticated by the Trustee upon the same
conditions and in substantially the same manner as the definitive 2006 Bonds. If the Authority
issues temporary 2006 Bonds, it will execute and furnish definitive 2006 Bonds without delay,
and thereupon the temporary 2006 Bonds may be surrendered, for cancellation, in exchange
therefor at the Office of the Trustee, and the Trustee shall authenticate and deliver in exchange
for such temporary 2006 Bonds an equal aggregate principal amount of definitive 2006 Bonds of
authorized denominations. Until so exchanged, the temporary 2006 Bonds shall be entitled to
the same benefits under this Indenture as definitive 2006 Bonds authenticated and delivered
hereunder.
Section 2.07. 2006 Bonds Mutilated, Lost Destroyed or Stolen. If any 2006 Bond shall
become mutilated, the Authority, at the expense of the Owner of said 2006 Bond, shall execute,
and the Trustee shall thereupon authenticate and deliver, a new 2006 Bond of like series, tenor
and authorized denomination in exchange and substitution for the 2006 Bond so mutilated, but
only upon surrender to the Trustee of the 2006 Bond so mutilated. Every mutilated 2006 Bond
so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the
Authority. If any 2006 Bond issued hereunder shall be lost, destroyed or stolen, evidence of
such loss, destruction or theft may be submitted to the Authority and the Trustee and, if such
evidence be satisfactory to them and indemnity satisfactory to them shall be given, the
Authority, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon
authenticate and deliver, a new 2006 Bond of like series and tenor in lieu of and in substitution
for the 2006 Bond so lost, destroyed or stolen (or if any such 2006 Bond shall have matured or
shall have been called for redemption, instead of issuing a substitute 2006 Bond the Trustee may
pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee).
The Authority may require payment of a reasonable fee for each new 2006 Bond issued under
this Section and of the expenses which may be incurred by the Authority and the Trustee. Any
16
2006 Bond issued under the provisions of this Section in lieu of any 2006 Bond alleged to be lost,
destroyed or stolen shall constitute an original contractual obligation on the part of the
Authority whether or not the 2006 Bond alleged to be lost, destroyed or stolen be at any time
enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this
Indenture with all other 2006 Bonds secured by this Indenture.
Section 2.08. Book Entry System; Original Delivery. The Bonds shall be initially
delivered in the form of a separate single fully registered bond (which may be typewritten) for
each maturity of the Bonds. Upon initial delivery, the ownership of each such Bond shall be
registered on the Registration Books in the name of Cede & Co. (the "Nominee"). Except as
provided in subsection (c), the ownership of all of the Outstanding Bonds shall be registered in
the name of the Nominee on the Registration Books.
With respect to Bonds the ownership of which shall be registered in the name of the
Nominee, the Authority and the Trustee shall have no responsibility or obligation to any
Depository System Participant or to any person on behalf of which the Authority holds an
interest in the Bonds. Without limiting the generality of the immediately preceding sentence,
the Authority and the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, the Nominee or any Depository System Participant
with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System
Participant or any other person, other than a Bond Owner as shown in the Registration Books,
of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by
the Depository of the beneficial interests in the Bonds to be redeemed in the event the Authority
elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or
any other person, other than a Bond Owner as shown in the Registration Books, of any amount
with respect to principal, premium, if any, or interest on the Bonds or (v) any consent given or
other action taken by the Depository as Owner of the Bonds. The Authority and the Trustee
may treat and consider the person in whose name each Bond is registered as the absolute owner
of such Bond for the purpose of payment of principal of and premium, if any, and interest on
such Bond, for the purpose of giving notices of redemption and other matters with respect to
such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other
purposes whatsoever. The Trustee shall pay the principal of and the interest and premium, if
any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in
writing, and all such payments shall be valid and effective to fully satisfy and discharge all
obligations with respect to payment of principal of and interest and premium, if any, on the
Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall
receive a Bond evidencing the obligation of the Authority to make payments of principal,
interest and premium, if any, pursuant to this Indenture. Upon delivery by the Depository to
the Nominee of written notice to the effect that the Depository has determined to substitute a
new Nominee in its place, and subject to the provisions herein with respect to Record Dates,
such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of
such a notice the Authority shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository's book-entry
system, the Authority and the Trustee shall execute and deliver to such Depository a letter
representing such matters as shall be necessary to so qualify the Bonds. The execution and
delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any
other way impose upon the Authority or the Trustee any obligation whatsoever with respect to
persons having interests in the Bonds other than the Bond Owners. Upon the written
acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all
representations of the Trustee in such letter with respect to the Trustee to at all times be
complied with. In addition to the execution and delivery of such letter, the Authority may take
17
any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository's
book-entry program.
(c) Transfers Outside Book-Entry System. In the event that either (i) the Depository
determines not to continue to act as Depository for the Bonds, or (ii) the Authority determines
to terminate the Depository as such, then the Authority shall thereupon discontinue the book-
entry system with such Depository. In such event, the Depository shall cooperate with the
Authority and the Trustee in the issuance of replacement Bonds by providing the Trustee with a
list showing the interests of the Depository System Participants in the Bonds, and by
surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the
date such replacement Bonds are to be issued. The Depository, by accepting delivery of the
Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of
the Depository acting as such, the Authority fails to identify another Securities Depository to
replace the Depository, then the Bonds shall no longer be required to be registered in the
Registration Books in the name of the Nominee, but shall be registered in whatever name or
names the Owners transferring or exchanging Bonds shall designate, in accordance with the
provisions hereof.
In the event the Authority determines that it is in the best interests of the beneficial
owners of the Bonds that they be able to obtain certificated Bonds, the Authority may notify the
Depository System Participants of the availability of such certificated Bonds through the
Depository. In such event, the Trustee will authenticate, transfer and exchange Bonds as
required by the Depository and others in appropriate amounts; and whenever the Depository
requests, the Trustee and the Authority shall cooperate with the Depository in taking
appropriate action (y) to make available one or more separate certificates evidencing the Bonds
to any Depository System Participant having Bonds credited to its account with the Depository,
or (z) to arrange for another Securities Depository to maintain custody of a single certificate
evidencing such Bonds, all at the Authority's expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Indenture
to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with
respect to principal of and interest and premium, if any, on such Bond and all notices with
respect to such Bond shall be made and given, respectively, as provided in the letter described
in subsection (b) of this Section or as otherwise instructed by the Depository.
Section 2.09. Payment Procedure Pursuant to Insurance Policy. As long as the Insurance
Policy shall be in full force and effect, the Authority and the Trustee agree to comply with the
following provisions:
(a) At least one (1) business day prior to all Payment Dates, the Trustee will
determine whether there will be sufficient funds in the Funds and Accounts to pay the
principal of or interest on the Certificates on such Payment Date. If the Trustee,
determines that there will be insufficient funds in such Funds or Accounts, the Trustee,
shall so notify the Insurer. Such notice shall specify the amount of the anticipated
deficiency, the Certificates to which such deficiency is applicable and whether such
Certificates will be deficient as to principal or interest, or both. If the Trustee, has not so
notified the Insurer at least one (1) business day prior to an Payment Date, the Insurer
will make payments of principal or interest due on the Certificates on or before the first
(1st) business day next following the date on which the Insurer shall have received
notice of nonpayment from the Trustee.
(b) the Trustee shall, after giving notice to the Insurer as provided in (a)
above, make available to the Insurer and, at the Insurer's direction, to The Bank of New
18
York, in New York, New York, as insurance trustee for the Insurer or any successor
insurance trustee (the "Insurance Trustee"), the registration books of the Authority
maintained by the Trustee, and all records relating to the Funds and Accounts
maintained under this Trust Agreement.
(c) the Trustee shall provide the Insurer and the Insurance Trustee with a list
of registered owners of Certificates entitled to receive principal or interest payments
from the Insurer under the terms of the Financial Guaranty Insurance Policy, and shall
make arrangements with the Insurance Trustee (i) to mail checks or drafts to the
registered owners of Certificates entitled to receive full or partial interest payments from
the Insurer and (ii) to pay principal upon Certificates surrendered to the Insurance
Trustee by the registered owners of Certificates entitled to receive full or partial
principal payments from the Insurer.
(d) the Trustee shall, at the time it provides notice to the Insurer pursuant to
(a) above, notify registered owners of Certificates entitled to receive the payment of
principal or interest thereon from the Insurer (i) as to the fact of such entitlement, (ii)
that the Insurer will remit to them all or a part of the interest payments next coming due
upon proof of Holder entitlement to interest payments and delivery to the Insurance
Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of
the registered owner's right to payment, (iii) that should they be entitled to receive full
payment of principal from the Insurer, they must surrender their Certificates (along with
an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to
permit ownership of such Certificates to be registered in the name of the Insurer) for
payment to the Insurance Trustee, and not the Trustee, and (iv) that should they be
entitled to receive partial payment of principal from the Insurer, they must surrender
their Certificates for payment thereon first to the Trustee, who shall note on such
Certificates the portion of the principal paid by the Trustee, and then, along with an
appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to
the Insurance Trustee, which will then pay the unpaid portion of principal.
(e) in the event that the Trustee has notice that any payment of principal of
or interest on a Certificate which has become Due for Payment and which is made to a
Holder by or on behalf of the Authority has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States
Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable
order of a court having competent jurisdiction, the Trustee shall, at the time the Insurer
is notified pursuant to (a) above, notify all registered owners that in the event that any
registered owner's payment is so recovered, such registered owner will be entitled to
payment from the Insurer to the extent of such recovery if sufficient funds are not
otherwise available, and the Trustee shall furnish to the Insurer its records evidencing
the payments of principal of and interest on the Certificates which have been made by
the Trustee and subsequently recovered from registered owners and the dates on which
such payments were made.
(f) in addition to those rights granted the Insurer under this Trust
Agreement, the Insurer shall, to the extent it makes payment of principal of or interest
on Certificates, become subrogated to the rights of the recipients of such payments in
accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence
such subrogation (i) in the case of subrogation as to claims for past due interest, the
Trustee shall note the Insurer's rights as subrogee on the registration books of the
Authority maintained by the Trustee, upon receipt from the Insurer of proof of the
payment of interest thereon to the registered owners of the Certificates, and (ii) in the
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case of subrogation as to claims for past due principal, the Trustee shall note the
Insurer's rights as subrogee on the registration books of the City maintained by the
Trustee, upon surrender of the Certificates by the registered owners thereof together
with proof of the payment of principal thereof.
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ARTICLE III
ISSUANCE OF 2006 BONDS; RESERVE FUND; PARITY OBLIGATIONS
Section 3.01. Issuance of 2006 Bonds. Upon the execution and delivery of this
Indenture, the Authority shall execute and deliver 2006 Bonds in the aggregate principal
amount of Eighteen Million Five Hundred Forty Thousand Dollars ($18,540,000), and shall
deliver the 2006 Bonds to the Trustee for authentication and delivery to the original purchasers
thereof upon the Request of the Authority.
Section 3.02. Application of Proceeds of Sale of 2006 Bonds. Upon the receipt of
payment for the 2006 Bonds on the Closing Date, the Trustee shall apply the proceeds of sale
thereof as follows:
(a) The Trustee shall deposit in the Reserve Fund the amount of $1,238,325.
(b) The Trustee shall deposit in the Costs of Issuance Fund the amount of $220,000.
(c) The Trustee shall deposit the amount of $16,113,826.32 in the Project Fund.
(d) The Trustee shall deposit in the Capitalized Interest Account within the Bond
Service Fund the amount of $990,162.64, representing capitalized interest on the Bonds from the
Closing Date through March 1, 2008.
The Trustee may establish a temporary fund or account in its records to facilitate and
record such deposits and transfers.
Section 3.03. Reserve Fund. There is hereby created a separate fund to be known as the
"Reserve Fund", which shall be held in trust by the Trustee. On the Closing Date the Trustee
shall deposit into the Reserve Fund, from the proceeds of the sale of the 2006 Bonds, an amount
equal to the Reserve Requirement. An amount equal to the Reserve Requirement shall be
maintained in the Reserve Fund at all times, subject to the provisions of Section 4.02(a), and any
deficiency therein shall be replenished from the first available Net Revenues pursuant to Section
4.02(a). The amount required to be maintained in the Reserve Fund may be increased by any
Supplemental Indenture authorizing the issuance of any Parity Obligations pursuant to Section
3.06.
Section 3.04. Cost of Issuance Fund. There is hereby created a fund to be known as the
"Carlsbad Municipal Golf Course Revenue Bonds, 2006 Series A Cost of Issuance Fund" (the
"Cost of Issuance Fund"), which the Authority hereby covenants and agrees to cause to be
maintained and which shall be held in trust by the Trustee. The moneys in the Cost of Issuance
Fund shall be used in the manner provided by law solely for the purpose of the payment of
Costs of Issuance upon receipt by the Trustee of Requests of the Authority therefor, on or after
the Closing Date. Any funds remaining in the Cost of Issuance Fund 90 days following the
Closing Date, shall be transferred by the Trustee to the Project Fund.
The Trustee may conclusively rely upon any Request of the Authority in disbursing
funds hereunder and shall have no duty or responsibility to see to the application of any such
funds disbursed by it in accordance with such Request of the Authority.
Section 3.05. Project Fund. There is hereby created a separate fund to be known as the
"Project Fund", which shall be held in trust by the Trustee. The Trustee shall disburse moneys
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in the Project Fund for the purpose of paying or reimbursing the payment of the costs of
acquiring and constructing the Golf Course, including but not limited to all costs incidental to
or connected with such acquisition and construction. The costs of acquiring and constructing
the Golf Course shall be paid as follows:
(1) A condition precedent to the initial disbursement from the Project Fund shall be the
recordation of the Golf Course Site Lease, the Lease Agreement and the Assignment Agreement,
and the delivery to the Trustee of a title insurance policy insuring the leasehold estate created
by the Lease Agreement.
(2) Periodic disbursements shall be made by the Trustee from amounts on hand in the
Project Fund to pay the costs of constructing the Golf Course. Such disbursements shall be
made only upon receipt by the Trustee from time to time of a Request of the Authority which:
(a) identifies the total amount of such costs to be paid pursuant to such Request, including all
items of cost in such detail as may be available to the Authority; (b) states with respect to such
disbursement (i) the requisition number, (ii) the amount to be disbursed for payment of such
costs, and (iii) that each item of cost identified therein has been properly incurred, and is a
proper charge against the Project Fund and has not been the basis of any previous
disbursement; and (c) is accompanied by an invoice, if any.
The Trustee may conclusively rely upon any Request of the Authority in disbursing
funds hereunder and shall have no duty or responsibility to see to the application of any such
funds disbursed by it in accordance with such Request of the Authority. Each such Request of
the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts.
As an alternative to the above, if the Authority wishes to withdraw the entire amount of
funds deposited to the Project Fund in a single requisition, the Authority may do so with a
single request of the Authority which contains a certification that the full amount of Project
Fund deposit is being withdrawn to reimburse the Authority or the City for Project Costs
already paid by the Authority or the City.
Any amounts remaining in the Project Fund after the acquisition and construction of the
Golf Course is complete shall, as directed by the Request of the Authority filed with the Trustee,
be transferred by the Trustee to the Bond Service Fund, to be applied to the payment of any
Outstanding Bonds as the same become due and payable.
Section 3.06. Issuance of Parity Obligations. In addition to the 2006 Bonds, the
Authority may, by Supplemental Indenture, issue or incur other loans, advances or
indebtedness payable from Net Revenues on a parity with the 2006 Bonds to provide financing
for the Golf Course in such principal amount as shall be determined by the Authority. The
Authority may issue or incur any such Parity Obligations subject to the following specific
conditions, which are hereby made conditions precedent to the issuance and delivery of such
Parity Obligations:
(a) No Event of Default shall have occurred and be continuing;
(b) The Net Revenues, calculated in accordance with sound accounting principles, as
shown by the books of the Authority for the most recent completed Fiscal Year for which
audited financial statements are available, or for any more recent consecutive twelve (12) month
period selected by the Authority, in either case verified by a certificate or opinion of an
Independent Accountant or Fiscal Consultant, plus the Additional Revenues, at least equal one
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hundred twenty percent (1.20%) of the amount of Maximum Annual Debt Service on all
Outstanding Bonds (including the Parity Obligations then proposed to be issued); and
(c) The Supplemental Indenture authorizing the issuance of such Parity Obligations
under this Section 3.06 shall provide that:
(i) The proceeds of such Parity Obligations shall be applied to the acquisition,
construction, improvement, financing or refinancing of additional facilities, improvements or
extensions relating to or of benefit to the Golf Course, or for the purpose of refunding any
Bonds in whole or in part, including all costs (including costs of issuing such Parity Obligations
and including capitalized interest on such Parity Obligations during any period which the
Authority deems necessary or advisable) relating thereto;
(ii) Interest on such Parity Obligations shall be payable on March 1 and September 1
in each year of the term of such Parity Obligations except that the first date for payment of such
interest shall not be required to be less than six (6) months following the date of issuance of
such Parity Obligations;
(iii) The principal of such Parity Obligations shall be payable on September 1 in any
year in which principal is payable; and
(iv) Money shall be deposited in the Reserve Fund from the proceeds of the sale of
such Parity Obligations or otherwise to increase the amount on deposit in the Reserve Fund to
an amount equal to the Reserve Requirement
(v) The Authority shall deliver to the Trustee a Certificate of the Authority
certifying that the conditions precedent to the issuance of such Parity Obligations set forth in
subsections (a), (b) and (c) of this Section 3.06 above have been satisfied.
Section 3.07. Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any proceedings taken by the Authority for the
acquisition or construction of the Golf Course, or by any contracts made by the Authority in
connection therewith, and the recital contained in the Bonds that the same are issued pursuant
to the Bond Law shall be conclusive evidence of their validity and of the regularity of their
issuance.
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ARTICLE IV
PLEDGE OF NET REVENUES; LEASE PAYMENTS; FLOW OF FUNDS
Section 4.01. Pledge of Net Revenues. The Bonds are special, limited obligations of the
Authority, payable solely from Net Revenues, moneys in the Bond Service Fund, and the
Reserve Fund, and shall be secured by a first pledge (which pledge shall be effected in the
manner and to the extent hereinafter provided) of all of the Net Revenues, and a pledge of all of
the moneys in the Bond Service Fund and the Reserve Fund, including all amounts derived
from the investment of such moneys as well as any Lease Payments received from the City
under the Lease Agreement. The 2006 Bonds are additionally secured by any Lease Payments
received by the Trustee from the City under the Lease Agreement. The Bonds shall be equally
secured by a pledge, charge and lien upon the Net Revenues and such moneys without priority
for series, issue, number, date of Bonds, date of sale, date of execution or date of delivery; and
the payment of the interest on and principal of the Bonds and any premiums upon the
redemption of any thereof shall be and are secured by an exclusive pledge, charge and lien
upon the Net Revenues and such moneys. So long as any of the Bonds are Outstanding, the Net
Revenues and such moneys shall not be used for any purpose not specified in the preceding
sentence.
Lease Payments payable under the Lease Agreement are intended to provide additional
security for the 2006 Bonds, and shall not be treated as additional security for Parity Debt unless
specifically provided for in a Supplemental Indenture and through an amendment of the Lease
Agreement.
Section 4.02. Receipt, Deposit and Application of Gross Revenues; Net Revenues.
The Authority hereby agrees to hold and maintain the Authority Golf Course Fund, for the
purposes and uses set forth herein. If the Authority does not renew the Management
Agreement, or does not contract with an Operator to manage the Golf Course, the Authority
shall deposit Gross Revenues in the Authority Golf Course Fund, and shall apply Gross
Revenues first, to pay Operation and Maintenance Expenses, and second, to make the deposits
provided for below. If the Authority shall continue to cause the Golf Course to be operated by
an Operator pursuant to a Management Agreement, and such Management Agreement
provides that the Operator collects Gross Revenues, out of which all Operation and
Maintenance Costs are paid, with Net Revenues paid to the Authority, then the Authority shall
deposit all Net Revenues in the Authority Golf Course Fund promptly upon the receipt thereof.
Amounts in the Authority Golf Course Fund shall be applied solely for the uses and purposes
set forth herein. The Authority shall withdraw amounts on deposit in the Authority Golf
Course Fund and apply such amounts at the times and for the purposes, and in the priority, as
follows:
(a) Bond Service Fund; Capitalized Interest Account. The Trustee shall establish and
hold in trust hereunder a fund to be known as the "Bond Service Fund" and within said Fund,
the "Capitalized Interest Account". On or before the fifth Business Day preceding each Interest
Payment Date, the Authority shall withdraw from the Authority Golf Course Fund and pay to
the Trustee for deposit to the Bond Service Fund, an amount equal to interest, principal (if any),
and the principal amount of any Term Bonds (if any) being redeemed on such Interest Payment
Date; provided, that so long as there are funds on hand in the Capitalized Interest Account
sufficient to pay interest on the Bonds as the same becomes due and payable, the Authority
shall not be obligated to transfer funds from the Golf Course Enterprise Fund to the Trustee.
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Amounts on hand in the Capitalized Interest Account shall be used solely to pay interest
on the Bonds coming due on each Interest Payment Date until the Capitalized Interest Account
is fully depleted, and the Trustee shall thereupon close the Capitalized Interest Account.
Amounts in the Bond Service Fund shall be applied by the Trustee solely for the purpose
of paying the interest on the Outstanding Bonds when and as such interest becomes due and
payable (including accrued interest on any Bonds purchased or redeemed pursuant hereto), for
the purpose of paying the principal of the Serial Bonds at the maturity thereof, and for the
purpose of paying the principal of the Term Bonds upon the mandatory sinking fund or
maturity thereof or upon the purchase thereof in lieu of such redemption. If five Business Days
prior to each Interest Payment Date there is not then on hand in the Bond Service Fund an
amount equal to principal of and interest due on the Bonds or the next occurring Interest
Payment Date, the Trustee shall immediately notify the Authority and the City of such fact. The
Trustee shall deposit any Lease Payment received after such notification into the Bond Service
Fund.
If after all of the Bonds have been paid or deemed to have been paid, there are moneys
remaining in the Bond Service Fund, such moneys shall be transferred by the Trustee to the
Authority for deposit into the Authority Golf Course Fund; provided, however, that if such
moneys are part of the proceeds of refunding bonds, such moneys shall be transferred to the
fund or account created for the payment of the principal of and interest on such refunding
bonds.
(b) Reserve Fund. In the event that the amount on deposit in the Reserve Fund at any
time falls below the Reserve Requirement, the Trustee, to the extent it is aware of such
deficiency from a valuation made by it, shall promptly notify the Authority of such fact, and the
Authority shall promptly (i) withdraw the amount of such insufficiency from available Net
Revenues on deposit in the Authority Golf Course Fund, and (ii) transfer such amount to the
Trustee for deposit in the Reserve Fund. No deposit need be made in the Reserve Fund so long
as the balance therein at least equals the Reserve Requirement. In the event that the amount on
deposit in the Reserve Fund at any time exceeds the Reserve Requirement, the amount of such
excess shall be withdrawn therefrom by the Trustee and transferred to the Bond Service Fund.
Moneys in the Reserve Fund shall be used solely for the purpose of paying the principal
of and interest on the Bonds, or mandatory redemption of the Bonds in accordance with Section
2.03(b) or the mandatory sinking fund payments required to be made for any Term Bonds, in
the event that the moneys in the Bond Service Fund are insufficient therefor, and for that
purpose the Trustee shall withdraw and transfer moneys from the Reserve Fund to the Bond
Service Fund.
(c) Redemption Fund. On or before the date which is at least forty-five (45) days prior
to any date on which 2006 Bonds are subject to redemption pursuant to Section 2.03(a), or on
which any Parity Obligations are subject to optional redemption pursuant to the provisions of
the Supplemental Indenture authorizing such Parity Obligations, the Authority shall withdraw
from the Authority Golf Course Fund and transfer to the Trustee, for deposit into the
Redemption Fund (which the Trustee shall establish and hold in trust hereunder) an amount at
least equal to the redemption price (excluding accrued interest, which is payable from the Bond
Service Fund) of such Bonds coming due and payable on such date. In addition, the Authority
shall transfer or cause to be transferred to the Trustee all amounts required to redeem any 2006
Bonds which are subject to redemption pursuant to Section 2.03(b) and any Parity Obligations
which are subject to redemption pursuant to any similar provision of the Supplemental
Indenture authorizing such Parity Obligations, when and as such amounts become available.
Amounts in the Redemption Fund shall be applied by the Trustee solely for the purpose of
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paying the redemption price of 2006 Bonds to be redeemed pursuant to Sections 2.03(a) or (b)
and to pay the redemption price of any Parity Obligations to be redeemed pursuant to similar
provisions of the Supplemental Indenture authorizing such Parity Obligations. If after all of the
Bonds have been paid or deemed to have been paid, there are moneys remaining in the
Redemption Fund, such moneys shall be transferred by the Trustee to the Authority for deposit
into the Authority Golf Course Fund.
(d) Management of Funds in Authority Golf Course Fund. The Authority shall manage,
conserve and apply moneys in the Authority Golf Course Fund in such a manner that all
deposits required to be made pursuant to this Section will be made at the times and in the
amounts so required. Subject to the foregoing sentence, so long as no Event of Default shall
have occurred and be continuing hereunder, the Authority may use and apply moneys in the
Authority Golf Course Fund after the payments provided for in paragraphs (a) through (c)
above, for (i) the payment of the Operation and Maintenance Costs of the Golf Course, (ii) the
acquisition and construction of extensions and betterments to the Golf Course; (iii) the
redemption of any of the Bonds which are then subject to redemption, or the purchase from
time to time in the open market of any Bonds, whether or not then subject to redemption
(irrespective of the maturity or number of such Bonds), at prices and in such manner, either at
public or private sale, or otherwise, as the Authority in its discretion may determine; or (iv) any
other lawful purpose of the Authority.
Section 4.03. Investments. All moneys in the Authority Golf Course Fund may be
invested by the Authority from time to time in any Authorized Investments. All moneys in any
of the funds or accounts established with the Trustee pursuant to this Indenture shall be
invested by the Trustee solely in Permitted Investments, as directed pursuant to the Request of
the Authority filed with the Trustee at least two (2) Business Days in advance of the making of
such investments. In the absence of any such directions from the Authority, the Trustee shall
invest any such moneys in Permitted Investments described in clause (e) of the definition
thereof. Obligations purchased as an investment of moneys in any fund shall be deemed to be
part of such fund or account. All interest or gain derived from the investment of amounts in
any of the funds or accounts established hereunder shall be deposited in the fund or account
from which such investment was made; except that all interest or gain derived from the
investment of amounts in the Reserve Fund shall be transferred to the Bond Service Fund to the
extent amounts in the Reserve Fund are at least equal to the Reserve Requirement. For
purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it
hereunder upon the Request of the Authority. The Trustee may act as principal or agent in the
acquisition of any investment. The Trustee shall incur no liability for losses arising from any
investments made pursuant to this Section.
The Authority acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Authority the right to receive
brokerage confirmations of security transactions as they occur, the Authority specifically waives
receipt of such confirmations to the extent permitted by law. The Trustee will furnish the period
cash transaction statements to the Authority which include detail for all investment transactions
made by the Trustee hereunder. The Trustee or any of its affiliates may act as sponsor, advisor
or manager in connection with any investments made by the Trustee hereunder.
Section 4.04. Acquisition. Disposition and Valuation of Investments.
(a) Except as otherwise provided in subsection (b) of this Section, the Authority
covenants that all investments of amounts deposited in any fund or account created by or
pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the
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meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date
that valuation is required by this Indenture or the Code) at Fair Market Value.
(b) Investments in funds or accounts (or portions thereof) that are subject to a yield
restriction under applicable provisions of the Code and (unless valuation is undertaken at least
annually) investments in the Reserve Fund shall be valued at their present value (within the
meaning of section 148 of the Code).
(c) Notwithstanding the foregoing, to the extent any valuations are made by the
Trustee, the Trustee shall value such securities at their market value, which may be obtained
from computer pricing services available to the Trustee, including, without limitation, those
available to the Trustee on its regular accounting system.
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ARTICLE V
COVENANTS OF THE AUTHORITY; SPECIAL TAX COVENANTS
Section 5.01. Punctual Payment; Compliance With Documents. The Authority shall
punctually pay or cause to be paid the interest and principal to become due with respect to all
of the Bonds in strict conformity with the terms of the Bonds and of this Indenture, and will
faithfully observe and perform all of the conditions, covenants and requirements of this
Indenture and all Supplemental Indentures.
Section 5.02. Discharge of Claims. The Authority covenants that in order to fully
preserve and protect the priority and security of the Bonds, the Authority shall pay from the
Net Revenues and discharge all lawful claims for labor, materials and supplies furnished for or
in connection with the Golf Course which, if unpaid, may become a lien or charge upon the Net
Revenues prior or superior to the lien of the Bonds and impair the security of the Bonds. The
Authority shall also pay from the Net Revenues all taxes and assessments or other
governmental charges lawfully levied or assessed upon or in respect of the Golf Course or upon
any part thereof or upon any of the Net Revenues therefrom.
Section 5.03. Operation of Golf Course in Efficient and Economical Manner. The
Authority covenants and agrees to operate the Golf Course, or cause the Golf Course to be
operated by the Operator, in an efficient and economical manner, and to operate, maintain and
preserve the Golf Course in good repair and working order, or cause the Golf Course to be
operated, maintained and preserved by the Operator in good repair and working order.
Section 5.04. Sale or Condemnation of Golf Course. The Authority covenants that the
Golf Course shall not be encumbered, sold, leased, pledged, any charge placed thereon, or
otherwise disposed of, as a whole or substantially as a whole, except for the Lease, Golf Course
Site Lease and Assignment Agreement. Neither the Gross Revenues nor any other funds
pledged or otherwise made available to secure payment of the Bonds shall be mortgaged,
encumbered, sold, leased, pledged, any charge placed thereon, or disposed or used except as
authorized by the terms of this Indenture. The Authority shall not enter into any agreement
which impairs the operation of the Golf Course or any part of it necessary to secure adequate
Net Revenues to pay the Bonds, or which otherwise would impair the rights of the Bond
Owners with respect to the Net Revenues. If any substantial part of the physical facilities of the
Golf Course shall be sold or taken under the power of eminent domain, the payment therefor
shall either (a) be used for the acquisition or construction of improvements, extensions or
replacements of facilities constituting part of the Golf Course, or (b) to the extent not so used, be
paid to the Trustee to be applied to redeem the Outstanding Bonds, in accordance with written
instructions of the Authority filed with the Trustee.
Section 5.05. Insurance. The Authority covenants that it shall at all times maintain with
responsible insurers all such insurance on the Golf Course as is customarily maintained with
respect to works and properties of like character against accident to, loss of or damage to such
works or properties. If any useful part of the Golf Course shall be damaged or destroyed, such
part shall be restored to use. The money collected from insurance against accident to or
destruction of the physical facilities of the Golf Course shall either (a) be used to repair or
rebuild such damaged or destroyed facilities or (b) to the extent not so applied, be paid to the
Trustee to be applied to redeem the Outstanding Bonds, in accordance with written instructions
of the Authority filed with the Trustee.
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Any such insurance shall be in the form of policies or contracts for insurance with
insurers of good standing and shall be payable to the Authority. The Authority may satisfy the
requirements of this Section by participating in a pooled insurance program sponsored by a
joint exercise of powers agency, so long as the reserves of such JPA pooled insurance program
are at least equal to $1,000,000 and so long as such JPA purchases from a commercial insurance
company an excess liability policy in an amount at least equal to $2,000,000. The Authority shall
file or cause to be filed with the Trustee, annually within one hundred twenty (120) days after
the dose of each Fiscal Year, a Certificate of the Authority (a) setting forth a description in
reasonable detail of the insurance then in effect, including any self-insurance fund, maintained
pursuant to the requirements of this Section, (b) stating that the Authority is then in compliance
with the requirements of this Section, and (c) stating whether during the preceding Fiscal Year
any loss has been incurred with respect to the Golf Course and, if so, the amount of insurance
proceeds, including the proceeds of any self-insurance fund, covering such loss and specifying
the reasonable and necessary costs of repair, reconstruction or replacement thereof.
Any proceeds received by the Authority or the Trustee from title insurance on the Golf
Course Site and the Lease Agreement shall be used at the direction of the Authority either: (i) to
acquire other property in the Authority's name in order to preserve and maintain the Golf
Course; or (ii) deposited in the Redemption Fund and applied to redeem Bonds in accordance
with Section 2.03(b).
Section 5.06. Records and Accounts. The Authority covenants that it shall keep proper
books of record and accounts of the Golf Course, separate from all other records and accounts,
in which complete and correct entries shall be made of all transactions relating to the Golf
Course. Said books shall, upon reasonable request, be subject to the inspection of the Owners of
not less than ten percent (10%) of the Outstanding Bonds or their representatives authorized in
writing.
The Authority covenants that it will cause the books and accounts of the Golf Course to
be audited annually by an Independent Accountant and will make available for inspection by
the Bond Owners, upon reasonable request, a copy of the report of such Independent
Accountant.
The Authority covenants that it will cause to be prepared annually, not more than one
hundred eighty (180) days after the close of each Fiscal Year a summary statement showing the
amount of Gross Revenues and the amount of all other funds collected which are required to be
pledged or otherwise made available as security for payment of principal of and interest on the
Bonds, the disbursements from the Gross Revenues and other funds in reasonable detail, and a
general statement of the financial and physical condition of the Golf Course. The Authority
shall furnish a copy of the statement to the Trustee, and upon written request, to any Bond
Owner. The Authority shall not be responsible for rendering such statements.
Section 5.07. Management of the Golf Course; Rates and Charges.
(a) Management of the Golf Course. In general, the management of the Golf Course
shall be under the control of the Authority. The Authority shall maintain reasonable fees
adequate to achieve the financial performance of the Golf Course, and the Authority shall set
fees for use of the Golf Course which are comparable to other comparable public golf courses in
the San Diego County area, as reasonably determined by the Authority. The Authority shall not
enter into any Management Agreement that would impair its ability to comply with the
covenants contained in this Indenture, including specifically the covenants contained in this
Section 5.07.
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(b) Covenant Regarding Gross Revenues. Subject to subdivision (a) of this Section 5.07,
the Authority shall, or shall cause the Operator to, fix, prescribe, revise and collect rates, fees
and charges for the use of the Golf Course during each calendar year (or such other fiscal period
as the Authority shall select as the annual financial period for the Golf Course), which, when
added to other revenues received by the Authority from other property and facilities controlled
by the Authority, are at least sufficient, after making allowances for contingencies and error in
the estimates, to yield Gross Revenues which are sufficient to pay the following amounts in the
following order of priority:
(i) All Operation and Maintenance Costs estimated by the Authority to
become due and payable in such fiscal period;
(ii) The principal of and interest on the Bonds as they become due and
payable during such Fiscal Year, without preference or priority, except to the extent such
principal and interest are payable from the proceeds of the Bonds or from any other
source of legally available funds of the Authority which have been deposited with the
Trustee for such purpose prior to the commencement of such fiscal period;
(iii) All amounts, if any, required to restore the balance in the Reserve Fund to
the full amount of the Reserve Requirement;
(iv) All other payments required to meet any other obligations of the Authority
which are charges, liens, encumbrances upon, or which are otherwise payable from,
Gross Revenues during such fiscal period.
Section 5.08. Superior and Subordinate Obligations. The Authority shall not issue or
incur any additional bonds or other obligations during the term of this Indenture having any
priority in payment of principal or interest out of the Net Revenues over the Bonds. Nothing
herein is intended or shall be construed to limit or affect the ability of the Authority to issue or
incur (a) Parity Obligations, or (b) obligations which are either unsecured or which are secured
by an interest in the Net Revenues which is junior and subordinate to the pledge of and lien
upon the Net Revenues established hereunder, the proceeds of which are used to pay the
amounts specified in Section 4.02 hereof.
Section 5.09. Enforcement of Management Agreement. The Authority shall diligently
enforce its rights and remedies under the Management Agreement, so as to protect the security
of the Bond Owners, and shall not agree to any amendment to the Management Agreement
which would materially impair the security of the Bond Owners.
Section 5.10. Private Activity Bond Limitation. The Authority shall assure that the
proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests
of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code.
Section 5.11. Federal Guarantee Prohibition. The Authority shall not take any action or
permit or suffer any action to be taken if the result of the same would be to cause any of the
Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code.
Section 5.12. Rebate Requirement. The Authority shall take any and all actions
necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess
investment earnings, if any, to the federal government, to the extent that such section is
applicable to the Bonds.
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Section 5.13. No Arbitrage. The Authority shall not take, or permit or suffer to be taken
by the Trustee or otherwise, any action with respect to the proceeds of the Bonds which, if such
action had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be
"arbitrage bonds" within the meaning of section 148 of the Code.
Section 5.14. Maintenance of Tax-Exemption. The Authority shall take all actions
necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners
of the Bonds to the same extent as such interest is permitted to be excluded from gross income
under the Code as in effect on the date of issuance of the Bonds.
Section 5.15. Continuing Disclosure. The Authority hereby covenants and agrees that
it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement.
Notwithstanding any other provision of this Indenture, failure of the Authority to comply with
the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the
Trustee, at the request of any Participating Underwriter or the holders of at least 25% aggregate
principal amount of Outstanding Bonds, shall (but only to the extent the Trustee has been
indemnified to its satisfaction from and against any liability, cost, expense or claim whatsoever,
including fees and expenses of its attorneys and advisors and fees and expenses of the Trustee),
or any holder or beneficial owner of the Bonds may, take such actions as may be necessary and
appropriate to compel performance, including seeking mandate or specific performance by
court order.
Section 5.16. Further Assurances. The Authority will adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Indenture,
and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Indenture.
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ARTICLE VI
THE TRUSTEE
Section 6.01. Appointment of Trustee. The Bank of New York Trust Company, N.A. in
Los Angeles, California, a national banking association organized and existing under and by
virtue of the laws of the United States of America, is hereby appointed Trustee by the Authority
for the purpose of receiving all moneys required to be deposited with the Trustee hereunder
and to allocate, use and apply the same as provided in this Indenture. The Authority agrees
that it will maintain a Trustee having a combined capital and surplus of at least Fifty Million
Dollars ($50,000,000), and subject to supervision or examination by federal or State authority, so
long as any Bonds are Outstanding. If such bank, national banking corporation or trust
company publishes a report of condition at least annually pursuant to law or to the
requirements of any supervising or examining authority above referred to, then for the purpose
of this Section 6.01 the combined capital and surplus of such bank, national banking corporation
or trust company shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
Section 6.02. Payment of Bonds; Registration Books. The Trustee is hereby authorized
to pay the Bonds when duly presented for payment at maturity, or on redemption or purchase
prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep
accurate records of all funds administered by it and of all Bonds paid and discharged. The
Trustee will keep or cause to be kept at its Office sufficient books for the registration and
transfer of the Bonds, which shall at all times during regular business hours be open to
inspection by the Authority upon reasonable prior notice. Upon presentation for such purpose,
the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or
cause to be registered or transferred, on said books, as provided in this Indenture with respect
to the 2006 Bonds and as provided in any Supplemental Indenture with respect to any Parity
Obligations.
Section 6.03. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed
upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the
following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after curing or waiver
of all Events of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture. In case an Event of Default hereunder
has occurred (which has not been cured or waived) the Trustee may exercise such of the rights
and powers vested in it by this Indenture, and shall use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform the duties
required of it hereunder by or through attorneys, agents, or receivers and shall not be
answerable for the actions of the same if selected by it with ordinary care and shall be entitled to
advice of counsel concerning all matters hereunder. The Trustee may rely on such advice or an
opinion of counsel in any action taken or not taken by it as Trustee.
(c) The Trustee shall not be responsible for any recital herein, or in the Bonds, or for any
of the supplements thereto or instruments of further assurance, or for the sufficiency of the
security for the Bonds issued hereunder or intended to be secured hereby or the adequacy or
validity of this Indenture and the Trustee shall not be bound to ascertain or inquire as to the
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observance or performance of any covenants, conditions or agreements on the part of the
Authority hereunder. The Trustee shall not be responsible or liable for any loss suffered in
connection with any investment of funds made by it in accordance with Section 4.03 of this
Indenture.
(d) The Trustee shall not be accountable for the use of any proceeds of sale of the Bonds
delivered hereunder. The Trustee may become the Owner of Bonds secured hereby with the
same rights which it would have if not the Trustee; may acquire and dispose of other bonds or
evidence of indebtedness of the Authority with the same rights it would have if it were not the
Trustee; and may act as a depository for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights
of Owners of Bonds, whether or not such committee shall represent the Owners of the majority
in principal amount of the Bonds then Outstanding.
(e) In the absence of bad faith on its part, the Trustee shall be protected in acting upon
any notice, request, consent, certificate, order, affidavit, letter, telegram, facsimile or other paper
or document believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith
and without negligence pursuant to this Indenture upon the request or authority or consent of
any person who at the time of making such request or giving such authority or consent is the
Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond
and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound
to recognize any person as an Owner of any Bond or to take any action at his request unless the
ownership of such Bond by such person shall be reflected on the Registration Books.
(f) As to the existence or non-existence of any fact or as to the sufficiency or validity of
any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a Certificate of
the Authority as sufficient evidence of the facts therein contained and prior to the occurrence of
an Event of Default hereunder of which the Trustee has been given notice or is deemed to have
notice, as provided in Section 6.03(h) hereof, shall also be at liberty to accept a similar certificate
to the effect that any particular dealing, transaction or action is necessary or expedient, but may
at its discretion secure such further evidence deemed by it to be necessary or advisable, but
shall in no case be bound to secure the same. The Trustee may accept a Certificate of the
Authority to the effect that an authorization in the form therein set forth has been adopted by
the Authority, as conclusive evidence that such authorization has been duly adopted and is in
full force and effect.
(g) The permissive right of the Trustee to do things enumerated in this Indenture shall
not be construed as a duty and it shall not be answerable for other than its negligence or willful
misconduct. The immunities and exceptions from liability of the Trustee shall extend to its
officers, directors, employees and agents.
(h) The Trustee shall not be required to take notice or be deemed to have notice of any
Event of Default hereunder except failure by the Authority to make any of the payments to the
Trustee required to be made by the Authority pursuant hereto or failure by the Authority to file
with the Trustee any document required by this Indenture to be so filed subsequent to the
issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default
by the Authority or by the Owners of at least twenty-five percent (25%) in aggregate principal
amount of the Bonds then Outstanding and all notices or other instruments required by this
Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Office
of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively
assume there is no Event of Default hereunder except as aforesaid.
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(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys,
experts, engineers, accountants and representatives, shall have the right (but not the duty or the
obligation) fully to inspect the Golf Course, including all books, papers and records of the
Authority pertaining to the Golf Course and the Bonds, and to take such memoranda from and
with regard thereto as may be desired but which is not privileged by statute or by law.
(j) The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the execution
of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever
within the purview of this Indenture, the Trustee shall have the right, but shall not be required,
to demand any showings, certificates, opinions, appraisals or other information, or corporate
action or evidence thereof, as may be deemed desirable for the purpose of establishing the right
of the Authority to the execution of any Bonds, the withdrawal of any cash, or the taking of any
other action by the Trustee.
(1) Before taking the action referred to in Section 8.03 or this Article, the Trustee may
require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses to
which it may be put and to protect it against all liability, except liability which is adjudicated to
have resulted from its negligence or willful misconduct in connection with any such action.
(m) All moneys received by the Trustee shall, until used or applied or invested as herein
provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law. The Trustee shall not be
under any liability for interest on any moneys received hereunder except such as may be agreed
upon.
(n) The Trustee shall not be liable for any official statement or other offering material
prepared or distributed with respect to the Bonds.
(o) The Trustee agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Indenture provided, however, that: (a)
subsequent to such facsimile transmission of written instructions and/or directions the Trustee
shall forthwith receive the originally executed instructions and/or directions, (b) such originally
executed instructions and/or directions shall be signed by a person as may be designated and
authorized to sign for the party signing such instructions and/or directions, and (c) the Trustee
shall have received a current incumbency certificate containing the specimen signature of such
designated person.
(p) The Trustee shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, Acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources of energy,
material or supplies in the open market, litigation or arbitration involving a party or others
relating to zoning or other governmental action or inaction pertaining to the project, malicious
mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors
due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
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(q) Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and established by
a Certificate of the Authority, which shall be full warrant to the Trustee for any action taken or
suffered in good faith under the provisions of this Indenture in reliance upon such Certificate,
but in its discretion the Trustee may (but shall have no duty to), in lieu thereof, accept other
evidence of such matter or may require such additional evidence as to it may deem reasonable.
Section 6.04. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
payment and reimbursement for reasonable fees for its services rendered hereunder and all
reasonable advances, reasonable counsel fees (including expenses) and other expenses
reasonably and necessarily made or incurred by the Trustee in connection with such services.
Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default, the
Trustee shall have a first lien with right of payment prior to payment of any Bond upon the
amounts held hereunder for the foregoing fees, charges and expenses incurred by it
respectively.
Section 6.05. Notice to Bond Owners of Default. If an Event of Default hereunder
occurs with respect to any Bonds, of which the Trustee has been given or is deemed to have
notice, as provided in Section 6.02(h) hereof, then the Trustee shall promptly give written notice
thereof by first-class mail to the Owner of each such Bond, unless such Event of Default shall
have been cured before the giving of such notice; provided, however, that unless such Event of
Default consists of the failure by the Authority to make any payment when due, the Trustee
may elect not to give such notice if and so long as the Trustee in good faith determines that it is
in the best interests of the Bond Owners not to give such notice.
Section 6.06. Intervention by Trustee. In any judicial proceeding to which the
Authority is a party which, in the opinion of the Trustee and its counsel, has a substantial
bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of
such Bond Owners, and subject to Section 6.03(1) hereof, shall do so if requested in writing by
the Owners of a majority in aggregate principal amount of such Bonds then Outstanding.
Section 6.07. Removal of Trustee. The Owners of a majority in aggregate principal
amount of the Outstanding Bonds may at any time, and the Authority may so long as no Event
of Default shall have occurred and then be continuing, remove the Trustee initially appointed,
and any successor thereto, by an instrument or concurrent instruments in writing delivered to
the Trustee.
Section 6.08. Resignation by Trustee. The Trustee and any successor Trustee may at
any time resign by giving thirty (30) days' written notice by registered or certified mail to the
Authority. Upon receiving such notice of resignation, the Authority shall promptly appoint a
successor Trustee in accordance with Section 6.09.
Section 6.09. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.07 or 6.08, respectively, the Authority shall
promptly appoint a successor Trustee; provided that any such successor shall be a bank,
national banking corporation or trust company meeting the requirements of Section 6.01. In the
event the Authority shall for any reason whatsoever fail to appoint a successor Trustee within
ninety (90) days following the delivery to the Trustee of the instrument described in Section 6.07
or within ninety (90) days following the receipt of notice by the Authority pursuant to Section
6.08, the Trustee may apply to a court of competent jurisdiction for the appointment of a
successor Trustee meeting the requirements of Section 6.01 hereof. Any such successor Trustee
35
appointed by such court shall become the successor Trustee hereunder notwithstanding any
action by the Authority purporting to appoint a successor Trustee following the expiration of
such ninety-day period. Upon the acceptance by any successor Trustee of appointment as such,
the Authority shall cause notice thereof to be given by first class mail to the Bond Owners at
their respective addresses set forth on the Registration Books.
Section 6.10. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided that
such company shall be eligible under Section 6.01, shall be the successor to the Trustee and
vested with all of the title to the trust estate and all of the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
Section 6.11. Concerning any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority
an instrument in writing accepting such appointment hereunder and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the Request of the Authority, or of its successor, execute and
deliver an instrument transferring to such successor all the estates, properties, rights, powers
and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as the Trustee hereunder to its successor. Should any
instrument in writing from the Authority be required by any successor Trustee for more fully
and certainly vesting in such successor the estate, rights, powers and duties hereby vested or
intended to be vested in the predecessor, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Authority.
Section 6.12. Appointment of Co-Trustee. It is the purpose of this Indenture that there
shall be no violation of any law of any jurisdiction (including particularly the law of the State)
denying or restricting the right of banking corporations or associations to transact business as
Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint an additional
individual or institution as a separate or co-trustee. The following provisions of this Section
6.12 are adopted to these ends.
In the event that the Trustee appoints an additional individual or institution as a
separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised
by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest
in such separate or co-trustee but only to the extent necessary to enable such separate or co-
trustee to exercise such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable
by either of them.
Should any instrument in writing from the Authority be required by the separate trustee
or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming
to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments
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in writing shall, on request, be executed, acknowledged and delivered by the Authority. In case
any separate trustee or co-trustee, or a successor to either, shall become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of
such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by
the Trustee until the appointment of a new trustee or successor to such separate trustee or co-
trustee.
Section 6.13. Indemnification; Limited Liability of Trustee. The Authority further
covenants and agrees to indemnify and save the Trustee and its officers, directors, agents and
employees, harmless against any loss, expense and liabilities which it may incur arising out of
or in the exercise and performance of its powers and duties hereunder, or pursuant to the
Assignment Agreement and those related to or arising from the presence on, under or about, or
release from the Golf Course, or any portion thereof, of any substance, material or waste which
is or becomes regulated or classified as toxic or hazardous under State, local or federal law, and
the violation or non-compliance with, any such laws by the Authority, Corporation or other
party, including the costs and expenses of defending against any claim of liability, but
excluding any and all losses, expenses and liabilities which are due to the negligence or willful
misconduct of the Trustee, its officers, directors, agents or employees. No provision in this
Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any
financial liability hereunder. The Trustee shall not be liable for any action taken or omitted to
be taken by it in accordance with the direction of the Owners of a majority in aggregate
principal amount of Bonds Outstanding relating to the time, method and place of conducting
any proceeding or remedy available to the Trustee under this Indenture. The obligations of the
Authority under this paragraph shall survive the resignation or removal of the Trustee under
this Indenture or any defeasance of the Bonds.
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ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.01. Amendment by Consent of Bond Owners. This Indenture and the rights
and obligations of the Authority and of the Owners of the Bonds may be modified or amended
at any time by a Supplemental Indenture which shall become binding when the written consent
of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding,
exclusive of Bonds disqualified as provided in Section 7.02 hereof, are filed with the Trustee.
No such modification or amendment shall (a) extend the maturity of or reduce the interest rate
on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal,
interest or redemption premiums at the time and place and at the rate and in the currency
provided therein of any Bond without the express written consent of the Owner of such Bond,
(b) reduce the percentage of Bonds required for the written consent to any such amendment or
modification, or (c) without its written consent thereto, modify any of the rights or obligations
of the Trustee.
This Indenture and the rights and obligations of the Authority and of the Owners of the
Bonds may also be modified or amended at any time by a Supplemental Indenture which shall
become binding upon adoption, without consent of any Bond Owners, but only to the extent
permitted by law and only for any one or more of the following purposes-
(a) to add to the covenants and agreements of the Authority in this Indenture contained,
other covenants and agreements thereafter to be observed, or to limit or surrender any rights or
power herein reserved to or conferred upon the Authority; or
(b) to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained in this Indenture, or in any other
respect whatsoever as the Authority may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall not adversely affect the interests of
the Owners of the Bonds, in the opinion of nationally-recognized bond counsel; or
(c) to provide for the issuance of any Parity Obligations, and to provide the terms and
conditions under which such Parity Obligations may be issued, including but not limited to the
establishment of special funds and accounts relating to such Parity Obligations and any other
provisions relating solely to such Parity Obligations, subject to and in accordance with the
provisions of Section 3.06; or
(d) to amend any provision hereof relating to the Tax Code, to any extent whatsoever
but only if and to the extent such amendment will not adversely affect the exemption from
federal income taxation of interest on any of the Bonds, in the opinion of nationally-recognized
bond counsel.
Section 7.02. Disqualified Bonds. Bonds owned or held by or for the account of the
Authority (but excluding Bonds held in any employees' retirement fund) shall not be deemed
Outstanding for the purpose of any consent or other action or any calculation of Outstanding
Bonds in this article provided for, and shall not be entitled to consent to, or take any other
action in this article provided for. Upon request of the Trustee, the Authority shall specify in a
certificate to the Trustee those Bonds disqualified pursuant to this Section and the Trustee may
conclusively rely on such certificate.
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Section 7.03. Endorsement or Replacement of Bonds After Amendment. After the
effective date of any action taken as hereinabove provided, the Authority may determine that
the Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner of any Bond Outstanding at such effective
date and presentation of his Bond for that purpose at the Office of the Trustee, a suitable
notation as to such action shall be made on such Bond. If the Authority shall so determine, new
Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such
Bond Owners' action shall be prepared and executed, and in that case upon demand of the
Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at
the Office of the Trustee, without cost to each Bond Owner, for Bonds then Outstanding, upon
surrender of such Outstanding Bonds.
Section 7.04. Amendment by Mutual Consent. The provisions of this Article VII shall
not prevent any Bond Owner from accepting any amendment as to the particular Bond held by
him, provided that due notation thereof is made on such Bond.
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ARTICLE VHI
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 8.01. Events of Default and Acceleration of Maturities. The following events
shall be Events of Default hereunder:
(a) Default in the due and punctual payment of the principal of any Bond when and as
the same shall become due and payable, whether at maturity as therein expressed, by
proceedings for mandatory sinking fund redemption, by declaration or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any Bond
when and as such interest installment shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, if such default shall have
continued for a period of sixty (60) days after written notice thereof, specifying such default and
requiring the same to be remedied, shall have been given to the Authority by the Trustee;
provided, however, that: (i) if in the reasonable opinion of the Authority the default stated in
the notice can be corrected, but not within such sixty (60) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default
within such sixty (60) day period and thereafter diligently and in good faith cure such failure in
a reasonable period of time; and (ii) if such covenant default relates to the covenants contained
in Section 5.07, such covenant default shall not constitute an Event of Default hereunder so long
as the City continues to pay Lease Payments, if needed, to assure the timely payment of debt
service on the 2006 Bonds, and any Parity Debt additionally secured by Lease Payments.
(d) The filing by the Authority of a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Authority, seeking reorganization under the federal bankruptcy laws or any
other applicable law of the United States of America, or if, under the provisions of any other
law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or
control of the Authority or of the whole or any substantial part of its property.
Upon the occurrence and during the continuance of any Event of Default, the Trustee
may, and upon written notice from the Owners of a majority in aggregate principal amount of
the Bonds at the time Outstanding shall, declare the principal of all of the Bonds then
Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Bonds contained to the contrary notwithstanding. This
provision, however, is subject to the condition that if, at any time after the principal of the
Bonds shall have been so declared due and payable and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered, the Authority shall deposit
with the Trustee a sum sufficient to pay all of the principal of and interest on the Bonds having
come due prior to such declaration, with interest on such overdue principal and interest
calculated at the net effective rate of interest per annum then borne by the Outstanding Bonds,
and the reasonable fees and expenses of the Trustee, including those of its attorneys, and any
and all other defaults known to the Trustee (other than in the payment of the principal of and
interest on the Bonds having come due and payable solely by reason of such declaration) shall
have been made good or cured to the satisfaction of the Trustee or provision deemed by the
Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners
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of a majority in aggregate principal amount of the Bonds at the time Outstanding may, by
written notice to the Authority and to the Trustee, on behalf of the Owners of all of the
Outstanding Bonds, rescind and annul such declaration and its consequences. However, no
such rescission and annulment shall extend to or shall affect any subsequent default, or shall
impair or exhaust any right or power consequent thereon.
Section 8.02. Application of Funds Upon Acceleration. All amounts received by the
Trustee pursuant to any right given or action taken by the Trustee under this Indenture shall be
applied by the Trustee in the following order upon presentation of the several Bonds, and the
stamping thereon of the amount of the payment if only partially paid, or upon the surrender
thereof if fully paid -
First, to the payment of the costs and expenses of the Trustee in declaring such Event of
Default and in carrying out the provisions of this Article VIII, including reasonable
compensation to its agents, attorneys and counsel; and
Second, to the payment of the whole amount then owing and unpaid upon the Bonds for
interest and principal, with interest on such overdue amounts to the extent permitted by law at
the net effective rate of interest then borne by the Outstanding Bonds, and in case such moneys
shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then
to the payment of such interest, principal and interest on overdue amounts without preference
or priority among such interest, principal and interest on overdue amounts ratably to the
aggregate of such interest, principal and interest on overdue amounts.
Section 8.03. Other Remedies; Rights of Bond Owners. Upon the occurrence of an
Event of Default, the Trustee may pursue any available remedy, in addition to the remedy
specified in Section 8.01, at law or in equity hereunder and under the Lease Agreement to
enforce the payment of the principal of, premium, if any, and interest on the Outstanding
Bonds, including specifically the right to repossess the Golf Course in accordance with the terms
of the Lease Agreement, subject to Section 4.7 of the Lease Agreement, and use reasonable
efforts to operate, or engage a consultant, manager or otherwise cause to be operated, the Golf
Course (including specifically the right to determine the necessary fees to be charged for use of
the Golf Course, subject to Section 5.07(a) herein), and the Authority hereby assigns to the
Trustee its rights under the Management Agreement, but solely for the purpose of enabling the
Trustee to exercise its rights in the Event of Default, and to enforce any rights of the Trustee
under or with respect to this Indenture.
If an Event of Default shall have occurred and be continuing and if requested so to do by
the Owners of a majority in aggregate principal amount of Outstanding Bonds and indemnified
as provided in Section 6.03(1), the Trustee shall be obligated to exercise such one or more of the
rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or
to the Bond Owners) is intended to be exclusive of any other remedy, but each and every such
remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or
to the Bond Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver of any such Event of
Default or acquiescence therein; such right or power may be exercised from time to time as
often as may be deemed expedient.
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Section 8.04. Power of Trustee to Control Proceedings. In the event that the Trustee,
upon the happening of an Event of Default, shall have taken any action, by judicial proceedings
or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the
request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall
have full power, in the exercise of its discretion for the best interests of the Owners of the
Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or
other disposal of such action; provided, however, that the Trustee shall not, unless there no
longer continues an Event of Default, discontinue, withdraw, compromise or settle, or
otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed
with it a written request signed by the Owners of a majority in principal amount of the
Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise,
settlement or other disposal of such litigation. Any suit, action or proceeding which any Owner
of Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought
by the Trustee for the equal benefit and protection of all Owners of Bonds similarly situated and
the Trustee is hereby appointed (and the successive respective Owners of the Bonds issued
hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed
it) the true and lawful attorney-in-fact of the respective Owners of the Bonds for the purpose of
bringing any such suit, action or proceeding and to do and perform any and all acts and things
for and on behalf of the respective Owners of the Bonds as a class or classes, as may be
necessary or advisable in the opinion of the Trustee as such attorney-in-fact.
Section 8.05. Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to
enforce the rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall
be entitled, as a matter of right, to the appointment of a receiver or receivers of the Gross
Revenues and other amounts pledged hereunder, pending such proceedings, with such powers
as the court making such appointment shall confer.
Section 8.06. Non-Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds, shall affect or impair the obligation of the Authority, which is
absolute and unconditional, to pay the interest on and principal of the Bonds to the respective
Owners of the Bonds at the respective dates of maturity, as herein provided, out of the Net
Revenues and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Bond
Owners shall not affect any subsequent default or breach of duty or contract, or impair any
rights or remedies on any such subsequent default or breach. No delay or omission of the
Trustee or any Owner of any of the Bonds to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein; and every power and remedy conferred upon the Trustee or
Bond Owners by the Bond Law or by this Article VIII may be enforced and exercised from time
to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the
case may be.
Section 8.07. Rights and Remedies of Bond Owners. No Owner of any Bond issued
hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for
any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to
the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority
in aggregate principal amount of all the Bonds then Outstanding shall have made written
request upon the Trustee to exercise the powers hereinbefore granted or to institute such action,
suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee
indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request; (d) the Trustee shall have refused or omitted to
42
comply with such request for a period of sixty (60) days after such written request shall have
been received by, and said tender of indemnity shall have been made to, the Trustee; and (e) the
Trustee has not received any inconsistent direction during such 60-day period from the Owners
of a majority in aggregate principal amount of the Outstanding Bonds.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any
remedy hereunder; it being understood and intended that no one or more Owners of Bonds
shall have any right in any manner whatever by his or their action to enforce any right under
this Indenture, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any provision of this Indenture shall be instituted, had and maintained in the
manner herein or therein provided and for the equal benefit of all Owners of the Outstanding
Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest
and premium (if any) on such Bond as herein provided or to institute suit for the enforcement of
any such payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this
Indenture.
Section 8.08. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the Authority, the Trustee and the Bond
Owners shall be restored to their former positions and rights hereunder, respectively, with
regard to the property subject to this Indenture, and all rights, remedies and powers of the
Trustee shall continue as if no such proceedings had been taken.
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ARTICLE IX
MISCELLANEOUS
Section 9.01. Limited Liability of Authority. Notwithstanding anything in this
Indenture contained, the Authority shall not be required to advance any moneys derived from
any source of income other than the Golf Course and the Net Revenues for the payment of the
principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the
performance of any covenants herein contained (except to the extent any such covenants are
expressly payable hereunder from the Gross Revenues). The Authority may, however, advance
funds for any such purpose, provided that such funds are derived from a source legally
available for such purpose and may be used by the Authority for such purpose without
incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Gross Revenues and
other funds as in this Indenture provided. The general fund of the Authority is not liable, and
the credit of the Authority is not pledged, for the payment of the interest on or principal of the
Bonds. The Owners of the Bonds shall never have the right to compel the forfeiture of any
property of the Authority, other than the Golf Course; provided that any remedies exercised
with respect to the Golf Course are limited to those specified in the Golf Course Site Lease and
Lease Agreement. The principal of and interest on the Bonds, and any premiums upon the
redemption of any thereof, shall not be a debt of the Authority, or a legal or equitable pledge,
charge, lien or encumbrance upon any property of the Authority or upon any of its income,
receipts or revenues except the Golf Course (as provided in the Golf Course Site Lease and
Lease Agreement) and the Gross Revenues, and other funds pledged to the payment thereof, as
in this Indenture provided.
Section 9.02. Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee,
and the Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture.
Any covenants, stipulations, promises or agreements in this Indenture contained by and on
behalf of the Authority shall be for the sole and exclusive benefit of the Trustee and the Owners
of the Bonds.
Section 9.03. Discharge of Indenture. If the Authority shall pay and discharge any or
all of the Outstanding Bonds in any one or more of the following ways-
(a) by well and truly paying or causing to be paid the principal of and interest and
premium (if any) on such Bonds, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money which,
together with the available amounts then on deposit in the funds and accounts established
pursuant to this Indenture, is fully sufficient to pay such Bonds, including all principal, interest
and redemption premiums;
(c) by depositing with the Trustee, in trust, Federal Securities in such amount as the
Authority shall determine will, together with the interest to accrue thereon and available
moneys then on deposit in the funds and accounts established pursuant to this Indenture, be
fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal,
interest and redemption premiums) at or before their respective maturity dates; and if such
Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have
44
been mailed pursuant to Section 2.03(d) or provision satisfactory to the Trustee shall have been
made for the mailing of such notice; or
(d) by delivering such Bonds to the Trustee for cancellation--
then, at the election of the Authority, and notwithstanding that any of such Bonds shall
not have been surrendered for payment, the Net Revenues and other funds provided for in this
Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority
under this Indenture with respect to all such Bonds, shall cease and terminate, except only the
obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so
surrendered and paid all sums due thereon from amounts set aside for such purpose as
aforesaid, and all expenses and costs of the Trustee. Notice of such election shall be filed with
the Trustee. Any funds thereafter held by the Trustee, which are not required for said purposes,
shall be paid over to the Authority.
Section 9.04. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Authority is named or
referred to, such reference shall be deemed to include the successor to the powers, duties and
functions, with respect to the management, administration and control of the affairs of the
Authority, that are presently vested in the Authority, and all the covenants, agreements and
provisions contained in this Indenture by or on behalf of the Authority shall bind and inure to
the benefit of its successors whether so expressed or not.
Section 9.05. Content of Certificates. Every certificate with respect to compliance with
a condition or covenant provided for in this Indenture shall include (a) a statement that the
person or persons making or giving such certificate have read such covenant or condition and
the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such
certificate are based; (c) a statement that, in the opinion of the signers, they have made or
caused to be made such examination or investigation as is necessary to enable them to express
an informed opinion as to whether or not such covenant or condition has been complied with;
and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has
been complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar
as it relates to legal matters, upon a certificate or opinion of or representations by counsel,
unless such officer knows that the certificate or opinion or representations with respect to the
matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise
of reasonable care should have known that the same were erroneous. Any such certificate or
opinion or representation made or given by counsel may be based, insofar as it relates to factual
matters, on information with respect to which is in the possession of the Authority, upon the
certificate or opinion of or representations by an officer or officers of the Authority, unless such
counsel knows that the certificate or opinion or representations with respect to the matters upon
which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in
the exercise of reasonable care should have known that the same were erroneous.
Section 9.06. Execution of Documents by Bond Owners. Any request, consent or other
instrument required by this Indenture to be signed and executed by Bond Owners may be in
any number of concurrent writings of substantially similar tenor and may be signed or executed
by such Bond Owners in person or by agent or agents duly appointed in writing. Proof of the
execution of any such request, consent or other instrument or of a writing appointing any such
agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of
the Trustee and of the Authority if made in the manner provided in this Section 9.06.
45
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person signing such request,
consent or other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be provided by the Registration Books. Any request,
consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and
the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything
done or suffered to be done by the Trustee or the Authority in pursuance of such request,
consent or vote.
In determining whether the Owners of the requisite aggregate principal amount of
Bonds have concurred in any demand, request, direction, consent or waiver under this
Indenture, Bonds which are owned or held by or for the account of the Authority (but excluding
Bonds held in any employees' retirement fund) shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, provided, however, that for the
purpose of determining whether the Trustee shall be protected in relying on any such demand,
request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or
held shall be disregarded.
In lieu of obtaining any demand, request, direction, consent or waiver in writing, the
Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance
with such rules and obligations as the Trustee considers fair and reasonable for the purpose of
obtaining any such action.
Section 9.07. Waiver of Personal Liability. No officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the interest on or
principal of the Bonds; but nothing herein contained shall relieve any such officer, agent or
employee from the performance of any official duty provided by law.
Section 9.08. Partial Invalidity. If any one or more of the covenants or agreements, or
portions thereof, provided in this Indenture on the part of the Authority (or of the Trustee) to be
performed should be contrary to law, then such covenant or covenants, such agreement or
agreements, or such portions thereof, shall be null and void and shall be deemed separable from
the remaining covenants and agreements or portions thereof and shall in no way affect the
validity of this Indenture or of the Bonds; but the Bond Owners shall retain all rights and
benefits accorded to them under the Bond Law or any other applicable provisions of law. The
Authority hereby declares that it would have entered into this Indenture and each and every
other section, paragraph, subdivision, sentence, clause and phrase hereof and would have
authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or
more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the
application thereof to any person or circumstance may be held to be unconstitutional,
unenforceable or invalid.
Section 9.09. Destruction of Canceled Bonds. Whenever in this Indenture provision is
made for the surrender to the Authority of any Bonds which have been paid or canceled
pursuant to the provisions of this Indenture, the Authority may, by a Request of the Authority,
direct the Trustee to destroy such Bonds and furnish to the Authority a certificate of such
destruction.
46
Section 9.10. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Authority or the Trustee may be established and
maintained in the accounting records of the Authority or the Trustee, as the case may be, either
as a fund or an account, and may, for the purpose of such records, any audits thereof and any
reports or statements with respect thereto, be treated either as a fund or as an account. All such
records with respect to all such funds and accounts held by the Authority shall at all times be
maintained in accordance with generally accepted accounting principles and all such records
with respect to all such funds and accounts held by the Trustee shall be at all times maintained
in accordance with industry practices; in each case with due regard for the protection of the
security of the Bonds and the rights of every Owner thereof.
Section 9.11. Notices. All written notices to be given under this Indenture shall be
given by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, (b) 48 hours after deposit in the United States mail, postage
prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The
Authority or the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
If to the Authority: Carlsbad Public Financing Authority
1200 Carlsbad Village Drive
Carlsbad, CA 92008-7314
Telecopier: (760) 720-9461
If to the Trustee: The Bank of New York Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, CA 90017
Attention: Corporate Trust Dept.
Telecopier: (213) 630-6215
If to the Insurer: Ambac Assurance Corporation
One State Street Plaza, 17th Floor
New York, NY 10004
Attention: General Counsel
Telecopier: (212) 208-3404
Section 9.12. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any
of the Bonds which remain unclaimed for one (1) year after the date when such Bonds have
become due and payable, either at their stated maturity dates or by call for earlier redemption,
if such moneys were held by the Trustee at such date, or for one (1) year after the date of
deposit of such moneys if deposited with the Trustee after said date when such Bonds become
due and payable, shall be repaid by the Trustee to the Authority, as its absolute property and
free from trust, and the Trustee shall thereupon be released and discharged with respect thereto
and the Bond Owners shall look only to the Authority for the payment of such Bonds; provided,
however, that before being required to make any such payment to the Authority, the Trustee
shall, at the expense of the Authority, cause to be mailed to the Owners of all such Bonds, at
their respective addresses appearing on the Registration Books, a notice that said moneys
remain unclaimed and that, after a date named in said notice, which date shall not be less than
thirty (30) days after the date of mailing of such notice, the balance of such moneys then
unclaimed will be returned to the Authority.
47
Section 9.13. Execution in Several Counterparts. This Indenture may be executed in
any number of counterparts and each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts, or as many of them as the Authority and the Trustee
shall preserve undestroyed, shall together constitute but one and the same instrument.
Section 9.14. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State.
48
IN WITNESS WHEREOF, the CARLSBAD PUBLIC FINANCING AUTHORITY has
caused this Indenture to be signed in its name by its Chairman, and its seal to be affixed hereon
and attested by its Secretary, and THE BANK OF NEW YORK TRUST COMPANY, N.A., in
token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in
its corporate name by its officer identified below, all as of the day and year first above written.
CARLS
AUT
.PUBLIC FINANCING
[SEAL]
Attest:
Bv: C\4~-*o
The Bank of New York Trust Company,
N.A., as Trustee
By:.
Authorized Officer
IN WITNESS WHEREOF, the CARLSBAD PUBLIC FINANCING AUTHORITY has
caused this Indenture to be signed in its name by its Chairman, and its seal to be affixed hereon
and attested by its Secretary, and THE BANK OF NEW YORK TRUST COMPANY, N.A., in
token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in
its corporate name by its officer identified below, all as of the day and year first above written.
CARLSBAD PUBLIC FINANCING
AUTHORITY
By:
Chairman
[SEAL]
Attest:
By:
Secretary
The Bank of New York Trust Company,
N.A., as Trustee
Authorized Officer
EXHIBIT A
FORM OF BOND
No. 1 *$_
CARLSBAD PUBLIC FINANCING AUTHORITY
REVENUE BOND, 2006 SERIES A
(CARLSBAD MUNICIPAL GOLF COURSE PROJECT)
INTEREST RATE:MATURITY DATE:
September 1, 20
DATED DATE: CUSIP:
October __, 2006
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:DOLLARS*
CARLSBAD PUBLIC FINANCING AUTHORITY, a joint exercise of power agency
organized and existing under the laws of the State of California (the "Authority") for value
received, hereby promises to pay (but only out of the Gross Revenues and other assets pledged
therefor as hereinafter mentioned) to the Registered Owner stated above, or registered assigns,
on the Maturity Date stated above (subject to any right of prior redemption hereinafter
mentioned), the Principal Amount stated above, in lawful money of the United States of
America; and to pay interest thereon in like lawful money from the Interest Payment Date (as
hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is
authenticated on or before an Interest Payment Date and after the fifteenth calendar day of the
month preceding an Interest Payment Date (a "Record Date") in which event it shall bear
interest from such Interest Payment Date, or unless this Bond is authenticated on or before
August 15, 2006, in which event it shall bear interest from the Dated Date stated above) until
payment of such Principal Amount shall be discharged as provided in the Indenture hereinafter
mentioned, at the Interest Rate per annum stated above, payable semiannually on each March 1
and September 1, commencing March 1, 2007 (the "Interest Payment Dates"). The principal (or
redemption premium, if any) hereof is payable upon presentation and surrender of this Bond at
the Office (as such term is defined in the hereinafter described Indenture) of The Bank of New
York Trust Company, N.A. (together with any successor trustee under the Indenture, the
"Trustee") (or such other office designated by the Trustee). Interest hereon is payable by check
mailed by first class mail by the Trustee on each Interest Payment Date to the Registered Owner
as of the preceding Record Date (except as otherwise provided in the Indenture with respect to
defaulted interest) at the address shown on the registration books maintained by the Trustee;
provided that at the written request of the owner of at least $1,000,000 aggregate principal
amount of Bonds which written request is on file with the Trustee as of any Record Date,
interest on such Bonds shall be paid on the succeeding Interest Payment Date by wire transfer
to such account in the United States of America as shall be specified in such written request.
This Bond is one of a duly authorized issue of bonds of the Authority designated as its
"Revenue Bonds, 2006 Series A (Carlsbad Municipal Golf Course Project)" (the "Bonds"), in the
aggregate principal amount of Eighteen Million Five Hundred Forty Thousand Dollars
($18,540,000), authorized pursuant to Article 4 of the Joint Exercise of Powers Law (the "Bond
Law"), and issued pursuant to an Indenture of Trust, dated as of December 1, 2006 (the
"Indenture"), by and between the Authority and the Trustee. The Bonds have been issued to
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finance the construction of eighteen holes of golf at the Authority's Carlsbad Municipal Golf
Course, together with related improvements (the "Golf Course").
Reference is hereby made to the Indenture (a copy of which is on file at the office of the
Trustee in Los Angeles, California) and all indentures supplemental thereto and to the Bond
Law for a description of the rights thereunder of the owners of the Bonds, of the nature and
extent of the security, of the rights, duties and immunities of the Trustee and of the rights and
obligations of the Authority thereunder. The Registered Owner of this Bond, by acceptance
hereof, assents and agrees to all the provisions of the Indenture.
The Bonds and the interest thereon are a special, limited obligation of the Authority,
payable solely from Net Revenues of the Golf Course (as those terms are defined in the
Indenture) and are secured by a pledge and assignment of said Net Revenues and of amounts
held in the Bond Service Fund and the Reserve Fund, each established pursuant to the
Indenture, subject only to the provisions of the Indenture permitting the application thereof for
the purposes and on the terms and conditions set forth in the Indenture. Payment of debt
service on the 2006 Bonds is also payable from Lease Payments (the "Lease Payments") made by
the City of Carlsbad (the "City") under a Lease Agreement, dated as of December 1, 2006,
between the City and the Authority, which Lease Payments are payable by the City, up to the
full amount of interest on and maturing principal of the 2006 Bonds, to the extent Net Revenues
are ever insufficient to pay interest on and maturing principal of the 2006 Bonds. The Bonds are
special obligations of the Authority and do not create a lien or charge upon the funds or
property of the Authority, except to the extent of the aforesaid pledge and assignment. Neither
the faith and credit nor the tax revenues received by the Authority are pledged to the payment
of the principal of or interest on the Bonds. The Bonds are not a debt of the State of California
and said State is not liable for the payment thereof.
The Bonds are subject to mandatory redemption prior to their stated maturities as a
whole or in part on any date; and the Trustee shall select the Bonds to be redeemed by lot in any
manner which the Trustee in its sole discretion shall deem appropriate, to the extent of hazard
insurance, title insurance or condemnation proceeds received with respect to the Golf Course
and not used to repair or replace the Golf Course, at the principal amount thereof and interest
accrued thereon to the date fixed for redemption, without premium.
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The 2006 Bonds maturing on September 1, 2030 are also subject to redemption prior to
their respective stated maturities, in whole, or in part by lot, from sinking fund payments made
pursuant to the Indenture, on and after September 1, 2023, at the principal amount thereof and
interest accrued thereon to the date fixed for redemption, without premium, as set forth in the
following table:
Sinking Fund
Redemption Date Principal Amount to be
(September 1) Redeemed or Mature
2023 $ 620,000
2024 655,000
2025 690,000
2026 725,000
2027 760,000
2028 800,000
2029 840,000
2030* 885,000
*Maturity
The 2006 Bonds maturing on September 1, 2036 are also subject to redemption prior to
their respective stated maturities, in whole, or in part by lot, from sinking fund payments made
pursuant to the Indenture, on and after September 1, 2031, at the principal amount thereof and
interest accrued thereon to the date fixed for redemption, without premium, as set forth in the
following table:
Sinking Fund
Redemption Date Principal Amount to be
(September 1) Redeemed or Mature
2031 $ 930,000
2032 975,000
2033 1,025,000
2034 1,075,000
2035 1,130,000
2036* 1,185,000
*Maturity
For purposes of determining whether any Event of Default has occurred under and as
described in the preceding clause (a), payments made by the Insurer under the Insurance Policy
shall be disregarded.
The 2006 Bonds maturing on or after September 1, 2017 shall be subject to redemption
prior to their respective maturity dates, at the option of the Authority, as a whole or in part,
from any source of available funds, on any date on or after September 1, 2016, at a redemption
price equal to the principal amount of the 2006 Bonds to be redeemed, without premium.
The Trustee, on behalf and at the expense of the Authority, shall mail (by first class mail)
notice of any redemption to: (i) the respective Registered Owners of any Bonds designated for
redemption, at least thirty (30) but not more than sixty (60) days prior to the redemption date, at
their respective addresses appearing on the registration books maintained by the Trustee, and
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(ii) the Securities Depositories and to one or more Information Services (as such terms are
defined in the Indenture), at least thirty (30) but not more than sixty (60) days prior to the
redemption; provided, however, that neither failure to receive any such notice so mailed nor
any defect therein shall affect the validity of the proceedings for the redemption of such Bonds
or the cessation of the accrual of interest thereon. Such notice shall state the redemption date,
the redemption place and the redemption price and shall designate the CUSIP numbers and the
serial numbers (unless such redemption is of all of the Bonds) and shall require that such Bonds
be then surrendered at the Office of the Trustee for redemption at the redemption price, giving
notice also that further interest on such Bonds will not accrue from and after the redemption
date.
If an Event of Default (as that term is defined in the Indenture) shall occur, the principal
of all Bonds may be declared due and payable upon the conditions, in the manner and with the
effect provided in the Indenture. The Indenture provides that in certain events such declaration
and its consequences may be rescinded by the owners of not less than a majority in aggregate
principal amount of the Bonds then outstanding or by the Trustee.
In addition to the Bonds, the Authority may issue or incur other loans, advances or
indebtedness payable from Net Revenues on a parity with the Bonds, for such purposes and in
such principal amount as shall be determined by the Authority, all as more fully set forth in the
Indenture.
The Bonds are issuable as fully registered Bonds in denominations of $5,000, or any
integral multiple thereof. Subject to the limitations provided in the Indenture, Bonds may be
exchanged, at said Office of the Trustee, for a like aggregate principal amount of Bonds of other
Authorized Denominations of the same maturity.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at said Office of the Trustee, but only in the manner, subject to the
limitations provided in the Indenture, and upon surrender and cancellation of this Bond. Upon
such transfer, a new Bond or Bonds, of authorized denomination or denominations, of the same
maturity and for the same aggregate principal amount, will be issued to the transferee in
exchange herefor. The Authority and the Trustee may treat the Registered Owner hereof as the
absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected
by any notice to the contrary.
The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any
Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or
redemption premiums at the time and place and at the rate and in the currency provided
therein of any Bond without the express written consent of the owner of such Bond, (b) reduce
the percentage of Bonds required for the written consent to any such amendment or
modification, or (c) without its written consent thereto, modify any of the rights or obligations
of the Trustee, all as more fully set forth in the Indenture.
It is hereby certified and recited that any and all things, conditions and acts required to
exist, to have happened and to have been performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as
required by the Bond Law, and by the Constitution and laws of the State of California, and that
the amount of this Bond, together with all other indebtedness of the Authority, does not exceed
A-4
any limit prescribed by the Bond Law or by the Constitution and laws of the State of California,
and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon endorsed shall have
been signed manually by the Trustee.
IN WITNESS WHEREOF, the Carlsbad Public Financing Authority has caused this Bond
to be executed in its name and on its behalf by the facsimile signature of its Chairman and its
seal to be reproduced hereon by facsimile and attested to by the facsimile signature of its
Secretary, all as of the Dated Date stated above.
CARLSBAD PUBLIC FINANCING
AUTHORITY
By:
Chairman
[SEAL]
Attest:
Secretary
A-5
CONTINUING DISCLOSURE CERTIFICATE
CARLSBAD PUBLIC FINANCING AUTHORITY
Revenue Bonds
2006 Series A
(Carlsbad Municipal Golf Course Project)
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and
delivered by the City of Carlsbad (the "City"), by and on behalf of itself and the Carlsbad Public
Financing Authority (the "Authority") in connection with the issuance by the Authority of the
above-referenced bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture
of Trust, dated as of December 1, 2006 (the "Indenture of Trust"), between the Authority and
The Bank of New York Trust Company, N.A., as trustee (the "Trustee").
The Bonds are special, limited obligations of the Authority, payable solely from (i) "Net
Revenues" of the Golf Course, (ii) lease payments ("Lease Payments") payable by the City
pursuant to a Lease Agreement, dated as of December 1, 2006 (the "Lease Agreement"), to
the extent necessary, and (iii) certain funds held under the Indenture.
The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the City for the benefit of the holders and beneficial owners of the
Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-
Section 2. Definitions. In addition to the definitions set forth in the Indenture of Trust,
which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined
in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
"CPO" means the Internet-based filing system currently located at
www.DisclosureUSA.org, or such other similar filing system approved by the Securities and
Exchange Commission.
"Dissemination Agent' shall mean the City, or any successor Dissemination Agent
designated in writing by the City and which has filed with the City a written acceptance of such
designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. Information on the National Repositories as of
a particular date is available on the Internet at www.sec.gov/consumer/nrmsir.htm.
"Official Statement" shall mean the Official Statement relating to the Bonds.
"Participating Underwriter" shall mean Stone & Youngberg LLC.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from
time to time.
"State Repository" shall mean any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and recognized as such by
the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is
no State Repository.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than nine
months after the end of the City's fiscal year (which currently would be March 31 based upon
the City's current June 30 fiscal year), commencing March 31, 2008 with the report for the 2006-
07 Fiscal Year, provide to the Participating Underwriter and each Repository an Annual Report
which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later
than fifteen (15) Business Days prior to said date, the City shall provide the Annual Report to
the Dissemination Agent (if other than the City). The Annual Report may be submitted as a
single document or as separate documents comprising a package, and may include by
reference other information as provided in Section 4 of this Disclosure Certificate; provided that
the audited financial statements of the City may be submitted separately from the balance of the
Annual Report, and later than the date required above for the filing of the Annual Report if not
available by that date. If the City's fiscal year changes, it shall give notice of such change in the
same manner as for a Listed Event under Section 5(c).
(b) If the City is unable to provide to the Repositories an Annual Report by the date
required in subsection (a), the City shall, by written direction, cause the Dissemination Agent to
provide to (i) each National Repository or the Municipal Securities Rulemaking Board and (ii)
each appropriate State Repository (with a copy to the Trustee) a notice, in substantially the form
attached as Exhibit A. In lieu of filing the notice with each Repository, the City or the
Dissemination Agent may file such notice with the CPO.
(c) With respect to the Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and each State Repository, if any; and
(ii) if the Dissemination Agent is other than the City, file a report with the City
certifying that the Annual Report has been provided pursuant to this Disclosure
Certificate, stating the date it was provided and listing all the Repositories to which it was
provided.
(d) In lieu of filing the Annual Report with each Repository in accordance with the
preceding paragraph (c), the City or the Dissemination Agent may file such Annual Report solely
with the CPO.
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Section 4. Content of Annual Reports. The City's Annual Report shall contain or
incorporate by reference the following:
(a) Audited Financial Statements of the City prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from time to
time by the Governmental Accounting Standards Board. If such audited financial statements are
not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall
be filed in the same manner as the Annual Report when they become available.
(b) Additional Items relating to the Authority.
(i) Outstanding principal amount of the Bonds as of the end of the most
recent fiscal year; and
(ii) Balance of the Reserve Fund as of the end of the most recent fiscal year.
(iii) Until such time as the Golf Course is completed and in use, the status of
its construction, including the estimated opening date.
(iv) For the most recently-completed reporting period, the Gross Revenues,
Operation and Maintenance Costs and Net Revenues from the Golf Course.
(v) A description of any new Management Agreement executed during the
most recently-completed calendar year and/or a description of any new Operator.
(vi) A statement of the amount of Lease Payments made by the City during
the most recently-completed fiscal year, if any.
(c) Additional Items relating to the City. Unless otherwise provided in the audited
financial statements filed on or prior to the annual filing deadline for the Annual Reports
provided for in Section 3 above, financial information and operating data with respect to the City
for the preceding fiscal year, substantially similar to that provided in the corresponding tables
and charts in the Official Statement for the Bonds, as follows:
(i) summary of investments held in the City's investment portfolio for the
preceding fiscal year, including market value, book value and a
description of any investments that do not comply with the City's
investment policies;
(ii) general fund budget for the fiscal year during which the annual report is
filed, in substantially the form of Table No. 1;
(iii) general fund balance sheet in substantially the form of Table No. 2;
(iv) general fund summary of revenues and expenditures in substantially the
form of Table No. 3;
(v) assessed valuation of property in the City, property tax levies and
collections in substantially the form of Table No. 5 and Table No. 6;
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(vi) general fund tax revenues by source in substantially the form of Table No.
4;
(vii) taxable transactions in the City in substantially the form of Table No. 9;
and
(viii) description of the City's outstanding general fund debt and lease
obligations, including long-term general fund obligations.
(d) In addition to any of the information expressly required to be provided under
paragraphs (a) through (c) of this Section, the City shall provide such further information, if any,
as may be necessary to make the specifically required statements, in the light of the
circumstances under which they are made, not misleading.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange
Commission. If the document included by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The City shall clearly identify each
such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be
given, notice of the occurrence of any of the following events with respect to the Bonds, if
material:
(D Principal and interest payment delinquencies.
(2) Non-payment related defaults.
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5) Substitution of credit or liquidity providers, or their failure to
perform.
(6) Adverse tax opinions or events affecting the tax-exempt status
of the security.
(7) Modifications to rights of security holders.
(8) Contingent or unscheduled bond calls.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of
the securities.
(11) Rating changes.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the
City shall as soon as possible determine if such event would be material under applicable
Federal securities law.
(c) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicable Federal securities law, the City shall, or by written direction cause
the Dissemination Agent (if not the City) to, promptly file a notice of such occurrence with (i)
each National Repository or the Municipal Securities Rulemaking Board and (ii) each
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appropriate State Repository with a copy to the Trustee, together with written direction to the
Trustee whether or not to notify the Bond holders of the filing of such notice. In the absence of
any such direction, the Trustee shall not send such notice to the Bond holders. Notwithstanding
the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given
under this subsection any earlier than the notice (if any) of the underlying event is given to
holders of affected Bonds pursuant to the Trust Agreement.
In lieu of filing the notice of Listed Event with each Repository in accordance with the
preceding paragraph, the City or the Dissemination Agent may file such notice of a Listed Event
with the CPO.
Section 6. Termination of Reporting Obligation. The City's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the
City shall give notice of such termination in the same manner as for a Listed Event under
Section 5(c).
Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such Agent, with or without appointing a successor Dissemination
Agent. The initial Dissemination Agent shall be the City.
Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure
Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may
only be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature, or status of an obligated person
with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion
of nationally recognized bond counsel, have complied with the requirements of the Rule at the
time of the primary offering of the Bonds, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in
the manner provided in the Indenture of Trust for amendments to the Indenture of Trust with the
consent of holders, or (ii) does not, in the opinion of the Trustee or nationally recognized bond
counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first annual financial information filed
pursuant hereto containing the amended operating data or financial information shall explain, in
narrative form, the reasons for the amendment and the impact of the change in the type of
operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
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differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the City to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be sent to the Repositories in the same manner as for a Listed Event
under Section 5(c).
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the City from disseminating any other information, using the means of dissemination
set forth in this Disclosure Certificate or any other means of communication, or including any
other information in any Annual Report or notice of occurrence of a Listed Event, in addition to
that which is required by this Disclosure Certificate. If the City chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that
which is specifically required by this Disclosure Certificate, the City shall have no obligation
under this Disclosure Certificate to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the City to comply with any provision of
this Disclosure Certificate, the Trustee may (and, at the request of any Participating Underwriter
or the holders of at least 25% aggregate principal amount of Outstanding Bonds, after receiving
indemnification satisfactory to it, shall), or any holder or beneficial owner of the Bonds may take
such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event
of Default under the Indenture of Trust, and the sole remedy under this Disclosure Certificate in
the event of any failure of the City to comply with this Disclosure Certificate shall be an action to
compel performance.
Section 11. Duties. Immunities and Liabilities of Dissemination Agent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which it
may incur arising out of or in the exercise or performance of its powers and duties hereunder,
including the costs and expenses (including attorneys fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The obligations of the City under this Section shall survive resignation or removal of
the Dissemination Agent and payment of the Bonds.
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Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the City, the Authority, the Dissemination Agent, the Participating Underwriter and holders and
beneficial owners from time to time of the Bonds, and shall create no rights in any other person
or entity.
Date: December 20, 2006
CITY OF CARLSBAD
Authorized Representative
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Carlsbad Public Financing Authority
Name of Bond Issue: Carlsbad Public Financing Authority Revenue Bonds, 2006 Series A
(Carlsbad Municipal Golf Course Project)
Date of Issuance: December 20, 2006
NOTICE IS HEREBY GIVEN that the City of Carlsbad (the "City") has not provided an
Annual Report with respect to the above-named Bonds as required by that certain Continuing
Disclosure Certificate dated December 20, 2006 with respect to the Bonds. The City anticipates
that the Annual Report will be filed by .
Dated:
CITY OF CARLSBAD
By.
cc: Trustee
Exhibit A-1
Exhibit 12
GOLF COURSE ADVANCE REPAYMENT AGREEMENT
This Advance Repayment Agreement entered into between the City
Council of the City of Carlsbad, California ("City"), and the Carlsbad Public
Financing Authority, a public entity and joint powers authority ("Authority") on
November 21, 2006, and shall be retroactive to March 31,1997.
The City has agreed to advance (and has advanced) funds to the
Authority from time to time for the purpose of designing, constructing, maintaining
and operating a municipal Golf Course. The Municipal Golf Course consists of
an 18-hole golf course as well as related facilities including a driving range,
Clubhouse, pro shop and maintenance facilities. The City and Authority desire to
make provisions for the eventual repayment of the Advances with interest to the
City.
Now, therefore, it is agreed by and between the parties to this Agreement
as follows:
1. The Authority is obligated to reimburse the City the full principal and all
accrued interest on the existing Advances and any subsequent
Advances to be made by the City to the Authority for the purpose of
designing, constructing, maintaining and operating an 18-hole
municipal Golf Course.
Exhibit 12
Interest shall accrue on all Advances from the date of the Advance to
the date repaid to the City at an average annual rate of return earned
on the City's pooled funds as determined by the City Treasurer for
each fiscal year. Interest shall be compounded annually.
Repayment shall be made from available funds in the Authority's
accounts as determined annually by the Authority Treasurer after
providing for operating, capital and reserve needs of the Municipal Golf
Course or as otherwise required under covenants for any debt issued
l for, or secured by, the Municipal Golf Course.
Clause A.'Lewis'
President of the Board - CPFA Mayor - City of Carlsbad
Attest:
Lorraine M. Wood
Secretary - CPFA
(Seal)
CUT
Attest:
Lorraine M. Wood
City Clerk - City of Carlsbad