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Redevelopment Agency Agendas are
available on the City's Web Page
@ www.la-quinta.org
Redevelopment Agency
Agenda
CITY COUNCIL CHAMBER
78-495 Calle Tampico
La Quinta, California 92253
Regular Meeting
Tuesday, May 7, 2002 - 2:00 P.M.
Beginning Res. No. RA 2002-08
I. CALL TO ORDER
Roll Call:
Board Members: Adolph, Pena, Perkins, Sniff, Chairperson Henderson
II. PUBLIC COMMENT
At this time, members of the public may address the Redevelopment Agency on any
matter not listed on the agenda. Please complete a "request to speak" form and limit
your comments to three minutes. Please watch the timing device on the podium.
Ill. CLOSED SESSION
1. CONFERENCE WITH CITY/AGENCY REAL PROPERTY NEGOTIATOR JERRY HERMAN
PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL
TERMS AND CONDITIONS OF ACQUISITION AND/OR DISPOSITION OF REAL PROPERTY
LOCATED WEST OF MONTEZUMA, EAST OF THE COACHELLA VALLEY WATER
DISTRICT STORM WATER CHANNEL, SOUTH OF CALLE ENSENADA AND NORTH OF
CALLE CHILLON. ASSESSORS PARCEL NUMBERS 773-245-02, 773-311-027, 773-190-
003 AND 773-002-003. PROPERTY OWNER/NEGOTIATOR: C. BYRON MURPHY/RICK
MURPHY.
2. CONFERENCE WITH CITY/AGENCY REAL PROPERTY NEGOTIATOR JERRY HERMAN
PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL
TERMS AND CONDITIONS OF ACQUISITION AND/OR DISPOSITION OF REAL PROPERTY
LOCATED AT THE NORTHEAST CORNER OF CALLE TAMPICO AND EISENHOWER
DRIVE. ASSESSORS PARCEL NUMBER - PORTION OF 773-022-014 - PROPERTY
NEGOTIATOR: HAL LYNCH, RGC
RDA Agenda May 7, 2002
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3. CONFERENCE WITH AGENCY'S REAL PROPERTY NEGOTIATOR, MARK WEISS,
PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL
TERMS AND CONDITIONS OF ACQUISITION AND/OR DISPOSITION OF REAL PROPERTY
LOCATED AT 50-777 SANTA ROSA PLAZA. PROPERTY OWNER/NEGOTIATOR: DANNY
BROWN.
NOTE: Time permitting, the Redevelopment Agency Board may conduct
Closed Session discussions during the dinner recess. In addition, when the
Agency is considering acquisition of property, persons identified as
negotiating parties are not invited into the Closed Session Meeting.
RECONVENE AT 3:00 PM
IV. PUBLIC COMMENT
At this time members of the public may address the Agency Board on items that appear
within the Consent Calendar or matters that are not listed on the agenda. Please
complete a "request to speak" form and limit your comments to three minutes. When
you are called to speak, please come forward and state your name for the record.
Please watch the timing device on the podium.
For all Agency Business Session matters or Public Hearings on the agenda, a completed
"request to speak" form must be filed with the City Clerk prior to the Agency beginning
consideration of that item.
V. CONFIRMATION OF AGENDA
VI. APPROVAL OF MINUTES
1. MINUTES OF SPECIAL MEETING OF APRIL 9, 2002
2. MINUTES OF MEETING OF APRIL 16, 2002
VII. CONSENT CALENDAR
Note: Consent Calendar items are considered to be routine in nature and will be approved by
one motion.
1. APPROVAL OF DEMAND REGISTER DATED MAY 7, 2002.
Vill BUSINESS SESSION
1. CONSIDERATION OF 1) AUTHORIZATION TO PROCEED WITH THE ISSUANCE OF LA
QUINTA REDEVELOPMENT AGENCY 2002 PROJECT AREA NO. 1 TAX ALLOCATION
BONDS; 2) APPROVAL OF BOARD DISCLOSURE COUNSEL CONTRACT AND 3)
APPROVAL OF BOND UNDERWRITER CONTRACT.
A. MINUTE ORDER ACTION
RDA Agenda -2- May 7, 2002
2. CONSIDERATION OF A RESOLUTION OF THE BOARD OF DIRECTORS OF THE LA
QUINTA REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF TAX
ALLOCATION BONDS OF SAID AGENCY IN A PRINCIPAL AMOUNT NOT TO EXCEED
$50,000,000 TO FINANCE A PORTION OF THE COSTS OF A REDEVELOPMENT
PROJECT KNOWN AS THE LA QUINTA REDEVELOPMENT PROJECT AREA NO. 1 AND
APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH.
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IX. PRESENTATIONS - None
X. STUDY SESSION - None
Xl. DEPARTMENT REPORTS
XII. CHAIR AND BOARD MEMBERS' ITEMS
XII1. PUBLIC HEARINGS - None
XIV. ADJOURNMENT - Adjourn to a Special meeting to be held on May 15, 2002 and to the
regularly scheduled Meeting of the Redevelopment Agency to be held on May 21, 2002,
commencing with closed session at 2:00 p.m. and open session at 3:00 p.m. in the City
Council Chambers, 78-495 Calle Tampico, CA 92253.
RDA Agenda
-3-
May 7, 2002
DECLARATION OF POSTING
I, June S. Greek, Secretary of the La Quinta Redevelopment Agency, do hereby declare that the
foregoing agenda for the La Quinta Redevelopment Agency meeting of Tuesday, May 7, 2002, was
posted on the outside entry to the Council Chambers, 78-495 Calle Tampico and on the bulletin board
at the La Quinta Chamber of Commerce and at Stater Bros. 78-630 Highway 111, on Friday, May 3,
2002.
DATED: May 3, 2002
JU : GREEK, CMC
Agency Secretary, City of La Quinta, California
PUBLIC NOTICES
The La Quinta City Council Chamber is handicapped accessible. If special equipment is needed for the
hearing impaired, please call the City Clerk's Office at 777-7025, 24-hours in advance of the meeting
and accommodations will be made
RDA Agenda -4- May 7, 2002
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AGENDA CATEGORY:
BUSINESS SESSION
COUNCIL/RDA MEETING DATE: MAY 7, 2002
CONSENT CALENDAR I
ITEM TITLE:
Demand Register Dated May 7, 2002
RECOMMENDATION:
It is recommended the Redevelopment Agency Board:
STUDY SESSION
PUBLIC HEARING
Receive and File the Demand Register Dated May 7, 2002 of which $49,146.51
represents Redevelopment Agency Expenditures.
PLEASE SEE CONSENT CALENDAR ITEM NUMBER 1 ON CITY COUNCIL AGENDA
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AGENDA CATEGORY:
BUSINESS SESSION:
COUNCIL/RDA MEETING DATE: May 7, 2002 CONSENT CALENDAR:
Consideration of a Resolution Authorizing
the Execution and Delivery of an Agreement
for Underwriting Services by and among the
La Quinta Redevelopment Agency, the La
Quinta Financing Authority and Wedbush
Morgan Securities
RECOMMENDATION:
STUDY SESSION:
PUBLIC HEARING:
Adopt a resolution of the Financing Authority authorizing the execution of an
Agreement for Underwriting Services by and among the La Quinta Redevelopment
Agency, the La Quinta Financing Authority, and Wedbush Morgan Securities.
FISCAL IMPACT:
None.
BACKGROUND AND OVERVIEW:
As part of its fiscal management activities the La Quinta Redevelopment Agency
Board authorized staff to evaluate the feasibility of issuing additional tax allocation
bonds secured only by Project No. 1 tax increment revenue. In February 2002 the
Agency Board authorized staff to assemble the financing team that worked on the
Agency's Project No. 1 Series 2002 Bonds to evaluate the feasibility of issuing
additional bonds. Bond proceeds would be used to purchase property and fund
improvements that would establish public golf courses, preserve open space,
expand park space, fund community park improvements, and enhance the City's
economic development initiatives. Further, the Agency may use part of the
proceeds to retire existing debt obligations where it is cost effective to do so.
Since 1988 the Agency has sold seven bond issues through direct sale to
underwriters. An experienced bond pricing consultant has been used to insure that
the interest rates, discount rates and issuance costs are equal to those incurred for
like sized and structured bond issues sold on a competitive bid basis. Given the
diligent and cost effective service that Wedbush Morgan securities provided for the
2001 bonds, staff has selected this firm to serve as underwriter for this financing.
Bond activities have progressed to a point where documents have been completed
and are ready to be distributed to bond insurance and rating agencies. This will
lead to the sale of approximately $36.0 to $46.0 million in bonds later this month.
The resolution requests the capacity to issue up to $50.0 million in the event that
at the time of pricing, interest and discount rates are favorable and allow the sale
of bonds in excess of $46.0 million. The Agency desires to sell these bonds
through the Financing Authority. In order to do so the Authority must approve the
following resolution that:
• Approves the Agreement for Underwriting Services between the Agency, the
Financing Authority and Wedbush Morgan Securities to purchase up to $50.0
million of tax allocation bonds for Redevelopment Project No. 1 (Attachment 1);
and
• Authorizes the officers of the Financing Authority and members of the
Governing Body to take such actions and execute documents necessary to
facilitate the bond sale.
FINDINGS AND ALTERNATIVES:
Alternatives available to the Financing Authority are:
1 . Adopt a resolution of the Financing Authority authorizing the execution of an
Agreement for Underwriting Services by and among the La Quinta
Redevelopment Agency, the La Quinta Financing Authority, and Wedbush
Morgan Securities.
2. Provide staff with alternative direction.
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WRespectully submitted,
- n M. Falconer, Finance Director
Approved for submission by:
Thomas P.Genovese
Executive Director
Redevelopment Agency
Attachment: 1. Agreement for Underwriting Services
a
. O G 3
RESOLUTION NO. FA
A RESOLUTION OF THE LA QUINTA FINANCING
AUTHORITY AUTHORIZING THE EXECUTION AND
DELIVERY OF A PURCHASE CONTRACT BY AND
AMONG THE LA QUINTA REDEVELOPMENT AGENCY,
THE LA QUINTA FINANCING AUTHORITY, AND
WEDBUSH MORGAN SECURITIES
WHEREAS, the City of La Quinta (the "City") and the La Quinta
Redevelopment Agency (the "Agency") have entered into a Joint Exercise of
Powers Agreement, dated as of November 3, 1988 (the "Agreement"), creating the
La Quinta Financing Authority (the "Authority"); and
WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of the
Government Code of the State of California (the "Act") and the Agreement, the
Authority is authorized to purchase bonds issued by the Agency for financing public
capital improvements, working capital, liability and other insurance needs, or
projects whenever there are significant public benefits as determined by the
Agency; and
WHEREAS, pursuant to the Act and the Agreement the Authority is further
authorized to sell bonds so purchased to public or private purchasers by public or
negotiated sale; and
WHEREAS, the Authority desires to purchase not to exceed $50,000,000
aggregate principal amount of bonds of the Agency designated "La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Area No. 1, Tax
Allocation Bonds, 2002 Series A" (the "Bonds") solely from the proceeds received
from the Authority's concurrent sale of such Bonds to Wedbush Morgan Securities
(the "Underwriter"); and
WHEREAS, in accordance therewith, the Authority now desires to authorize
the execution of a bond purchase contract by and among the Authority, the
Agency and the Underwriter (the "Purchase Contract"); and
WHEREAS, the Agency has determined that "significant public benefits" as
defined in Section 6586 of the Act will be derived by the Agency in undertaking
the issuance of the Bonds and their sale to the Authority and resale to the
Underwriter, in furtherance of the corporate purposes of the Agency;
NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BOARD OF THE
LA QUINTA FINANCING AUTHORITY AS FOLLOWS:
01 1
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1 . The foregoing recitals are true and correct and this Authority so finds
and determines.
2. The proposed form of Purchase Contract by and among the Agency,
the Authority and the Underwriter, on file with the Secretary of the Governing
Board and incorporated into this Resolution by reference is hereby approved,
provided however, (i) the principal amount of the Bonds does not exceed
$50,000,000; (ii) the Underwriter's discount exclusive of original issue discount
does not exceed 1 .00% of the principal amount of the Bonds; and (iii) the net
interest cost does not exceed 5.5%. The Chairman or Executive Director or
Finance Director is hereby authorized and directed, for and in the name and on
behalf of the Authority, to purchase the Bonds from the Agency and to accept the
offer of the Underwriter to purchase the Bonds from the Authority, subject to the
terms and conditions of the Purchase Contract, and to execute and deliver the
Purchase Contract in substantially said form, with such changes or additions
thereto that may hereafter become necessary in the interests of the Authority and
which are reviewed and approved by counsel to the Authority, any such additions
or changes to be conclusively evidenced by the execution and delivery of said
agreements.
3. The officers of the Authority and members of the Governing Board are
hereby authorized to take such other actions and execute such documents and
certificates as are necessary or appropriate for the accomplishment of the purposes
of this resolution.
4. This resolution shall take effect from and after its adoption.
PASSED, APPROVED and ADOPTED this 71h day of May, 2002, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
JOHN J. PENA, Chairman La Quinta
Financing Authority
ATTEST:
JUNE S. GREEK, CMC, Authority Secretary
La Quinta Financing Authority
(Authority Seal)
APPROVED AS TO FORM:
M. KATHERINE JENSON, Authority Counsel
La Quinta Financing Authority
SECRETARY'S CERTIFICATE
I, JUNE S. GREEK, Secretary of the La Quinta Financing Authority, do hereby
certify as follows:
The foregoing resolution is a full, true and correct copy of a resolution duly
adopted by a vote of a majority of the members of the Governing Board of said
Authority at a regular meeting of the Governing Board of said Authority duly and
regularly and legally held at the City of La Quinta, California, on , 2002,
of which all of such members had due notice, as follows:
AYES:
NOES:
ABSENT:
ABSTAIN:
As agenda of said meeting was posted at least 72 hours before said meeting
at the City Hall, a location freely accessible to members of the public, and a brief
description of said resolution appeared on said agenda.
I have carefully compared the foregoing with the original minutes of said
meeting on file and of record in my office, and the foregoing is a full, true and
correct copy of the original resolution adopted at said meeting and entered in said
minutes.
Said resolution has not been amended, modified or rescinded since the date
of its adoption and the same is now in full force and effect.
DATED: , 2002
JUNE S. GREEK, Authority Secretary La Quinta Financing Authority
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ATTACHMENT 1
AGREEMENT FOR UNDERWRITING SERVICES
THIS AGREEMENT, made this day of May, 2002, by and between the LA
QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, organized and
existing under the laws of the State of California, (together, hereinafter called the "Issuer"), party
of the first part, and WEDBUSH MORGAN SECURITIES (hereinafter called the
"Underwriter"), party of the second part:
WITNESSETH:
WHEREAS, the Issuer requires assistance in developing sound, equitable and practical
financing plans by taking into consideration sources of capital funds and cash flow requirements,
annual costs, the allocation of those costs, statutory requirements and restrictions, and methods if
applicable; and
WHEREAS, the Issuer requires the services of a municipal investment banker
experienced in underwriting debt obligations, to assist in such financial planning related thereto
and to purchase at negotiated sale the Issuer's obligations resulting therefrom; and
WHEREAS, consistent with the terms and conditions of this Agreement, the Issuer
wishes to engage the Underwriter to provide investment banker services for the Issuer.
NOW, THEREFORE, it is mutually agreed as follows, to wit:
The Issuer hereby employs the Underwrite
employment to perform the services, upon the
consideration of payments as hereinafter set forth:
Services to be Performed by the Underwriter
r
and the Underwriter hereby accepts such
terms, subject to the conditions, and in
Upon the request of the Issuer, The underwriter shall work together and in cooperation
with the Issuer's financing team (the Issuer's staff, fiscal consultant, bond counsel and disclosure
counsel), to diligently perform the following services:
1. Assemble, review and analyze available financial and economic data and
information that may have a general bearing on a program for financing any proposed project or
proj ects.
2. Based on the foregoing analysis, prepare a general review and description of the
proposed projects and outline the possible methods of financing such projects, the advantages
and disadvantages of each method as applied to a given project, the general legal and practical
requirements or restrictions applicable to each method and their attendant costs.
3. When the Issuer has approved a specific project or projects for implementation,
the estimated costs and method of financing of which have been sufficiently well established to
permit the preparation of a final financing plan, the Underwriter shall prepare such plan
containing, in addition to other information, the following:
A. A description of the financing or financings, including the purpose,
benefits, security, estimated costs and other pertinent information.
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B. Details relating to the proposed method of financing, including tentative
bond amortization schedules, call features, sources and amounts of funds to be used in
amortizing the costs and other related data.
C. Recommendations as to further procedures. The foregoing will be
designed to answer substantially all of the important questions that might arise in connection
with the particular financing or financings and will contain current information as to estimated
costs and economic and fiscal information.
4. Assist Bond Counsel and Disclosure Counsel with the preparation of necessary
resolutions and other legal documents and make recommendations as to the exact terms and
conditions under which bonds (for the purpose of this Agreement, all references to "bonds" shall
mean any "debt obligation") are to be issued and sold, including timing and method of sale, final
amortization or repayment schedules, call and redemption features, provisions governing the
issuance of additional bonds, covenants and other provisions in order to secure the best possible
rating on the bonds.
5. Prepare the text and other material for an official statement or bond prospectus
describing the project or projects, the bonds, their security, and the economic and financial
background of the Issuer.
6. Assist in obtaining bond insurance and/or a bond rating for each proposed issue to
the end that such bonds may be sold for the lowest possible cost. The Underwriter shall provide
the bond insurers, Moody's Investors Service and Standard and Poor's Ratings Group with all
information required by such agencies necessary in establishing such bond insurance and/or
ratings and make such trips and schedule such conferences with such agencies as may be
necessary to obtain the highest possible rating on the bonds.
7. The Underwriter shall be available at reasonable times by telephone or at the
offices of the Issuer to discuss on a continuing basis the results of studies and analyses and
generate such additional information as desired or requested and consult with the Issuer as to the
financial aspects of any specific project then being considered.
Sale of Bonds; Compensation; Expenses
At such time as the Issuer is satisfied that the financing program meets the goals and
objectives of the Issuer and wishes the Underwriter to proceed with the financing program, the
Issuer and the Underwriter shall enter into a bond purchase agreement for the sale of the Issuer's
obligations to the Underwriter at a discount and bearing interest at rates which are commensurate
with the rates prevailing in the market for similar securities at the time the bonds are offered to
the public and which will be approved by the Issuer's staff and pricing consultant. For financings
of the size and security of that proposed by the Issuer, depending on market conditions, it is
anticipated that an underwriter's discount ranging from .080% to 1.000% of the principal amount
of Bonds issued (the "Bond Discount") and a net interest rate ranging from 5.200% to 5.400%
will be appropriate. Original issue discount, if any, will not exceed 1.50% of the principal
amount of Bonds issued. Nothing herein shall require the Issuer to enter into any Bond Purchase
Agreement
The Bond Discount will represent the total compensation to be paid to the Underwriter
and the Issuer shall not be liable for any additional fees whatsoever. The Bond Discount shall
conform to those prevailing in the marketplace for similar securities at the time that debt
obligations are sold. The Bond Discount applicable to each debt obligation shall be specified in
each bond purchase agreement.
2
All costs of the financing program will be payable out of bond proceeds when the bonds
are sold and delivered to the Underwriter, unless otherwise specified by the Issuer. In the event
that market conditions or actions by regulatory agencies prohibit completion of the financing by
the Issuer, the Underwriter will be responsible for all fees and expenses incurred in connection
with services to be performed as the Issuer's investment banker including, without limitation, the
expenses of its counsel, if any. The Issuer will be responsible for all other fees and expenses
incurred in connection with the financing.
Named Personnel
The Underwriter commits the principal personnel listed below to provide services
pursuant to this Agreement for the duration of its term.
Underwriter's Principal Personnel:
1. Robin M. Thomas, Senior Vice President
2. Michael K. Cavanaugh, Vice President
3. Daniel P. Massiello, Assistant Vice President
It has been determined that the individuals named in this Agreement are necessary for the
successful performance of this Agreement. The Underwriter shall not replace these individuals
without written consent of the Issuer, which shall not be unreasonably withheld. The consent of
the Issuer shall be given or denied in writing within thirty (30) days of the receipt of written
notice from the Underwriter of the intent to replace personnel. If the Issuer fails to respond to the
Underwriter within thirty (30) days of notification by the Underwriter, said personnel
replacement shall be deemed approved.
Term
The term of this Agreement shall remain in full force unless terminated by either party.
This Agreement may be terminated without cause by either party by giving the other party sixty
(60) days written notice of such cancellation.
Independent Contractor
The Underwriter shall perform the services as contained herein as an independent
contractor and shall not be considered an employee of the Issuer or under the Issuer's supervision
or control. This Agreement is by and between the Underwriter and the Issuer, and is not
intended, and shall not be construed, to create the relationship of agent, servant, employee,
partnership, joint venture, or association, between the Issuer and the Underwriter.
Successor and Assignment
The services as contained herein are to be rendered by the Underwriter whose name is as
appears first above written and said Underwriter shall not assign nor transfer any interest in this
Agreement without the prior written consent of the Issuer.
Indemnification
The Underwriter agrees to indemnify, defend (upon request by the Issuer) and save
harmless the Issuer, its elected and appointed officials, officers, agents and employees from and
against any liability, expense, including defense costs and legal fees, and claims for damages or
other relief of any nature whatsoever, including, but not limited to, bodily injury, death, personal
injury or property damage arising from or connected with the Underwriter's operations, or its
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services, acts and/or omissions hereunder, including any workers' compensation suit, liability or
expense, arising from or connected with the services performed by or on behalf of the
Underwriter by any person pursuant to this Agreement.
Compliance With Laws
The parties agree to be bound by applicable federal, state and local laws, regulations and
directives as they pertain to the performance of this Agreement.
Severability
In the event that any provision herein contained is held to be invalid, void or illegal by
any court of competent jurisdiction, the same shall be deemed severable from the remainder of
this Agreement and shall in no way affect, impair or invalidate any other provision contained
herein. If any such provision shall be deemed invalid due to its scope or breadth, such provision
shall be deemed valid to the extent of the scope or breadth permitted by law.
Interpretation
No provision of this Agreement is to be interpreted for or against either party because that
party or that party's legal representative drafted such provision, but this Agreement is to be
construed as if both parties drafted it hereto.
Disputes - Attorney's Fees
If either party to this Agreement is required to initiate or defend litigation in any way
connected with this Agreement, the prevailing party in such litigation, in addition to any other
relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorney's
fees.
Waiver
No breach of any provision hereof can be waived unless in writing. Waiver of any one
breach of any provision shall not be deemed to be a waiver of any other breach of the same or
any other provision hereof.
Notice
Notices herein shall be presented in person or by certified or registered U.S. mail, as
follows:
To the Underwriter: Wedbush Morgan Securities
12526 High Bluff Drive, Suite 300
San Diego, CA 92130
Phone: (800) 659-8200
Fax: (858) 792-3498
Attention: Robin M. Thomas, Senior Vice President
To the Issuer: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Phone: (760) 777-7100
Fax: (760) 777-7101
Attention: Thomas P. Genovese, Executive Director
4 se��
service. Nothing in this paragraph shall be construed to prevent the giving of notice by personal
IN WITNESS WHEREOF, said Issuer, party of the first part, has caused these presents to
be properly executed, and said Underwriter, party of the second part, has caused these presents to
be executed by one of its officers, as of the date hereinabove set forth.
ATTEST:
0
Agency Counsel
Agency Secretary
LA QUINTA REDEVELOPMENT AGENCY
0
Executive Director
UNDERWRITER:
WEDBUSH MORGAN SECURITIES
0
Senior Vice President
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COUNCIL/RDA MEETING DATE: May 7, 2002
Consideration of a Resolution of the
Board of Directors of the La Quinta
Redevelopment Agency Authorizing the
Issuance of Tax Allocation Bonds of Said
Agency in a Principal Amount Not to
Exceed Fifty Million Dollars
($50,000,000) to Finance a Portion of
the Costs of a Redevelopment Project
Known as the Redevelopment Project
Area No. 1 and Approving Certain
Documents and Taking Certain Other
Actions in Connection Therewith
RECOMMENDATION:
AGENDA CATEGORY:
BUSINESS SESSION:
CONSENT CALENDAR:
STUDY SESSION:
PUBLIC HEARING:
Adopt a resolution of the La Quinta Redevelopment Agency authorizing the
issuance of La Quinta Project No. 1, Tax Allocation Bonds, Series 2002 for a
principal amount not to exceed $50,000,000 and approving certain documents
and taking certain actions in connection therewith for La Quinta Redevelopment
Project No. 1, and approve a Legal Services Agreement with Stradling, Yocca,
Carlson and Rauth.
FISCAL IMPACT:
The Agency will incur issuance costs that will be funded from bond proceeds.
The Agency's financing team projects issuance costs of $1,416,707.
BACKGROUND AND OVERVIEW:
In February 2002, the Agency Board authorized staff to assemble the bond
financing team that developed and sold the Project No. 1 Series 2001 Bonds.
Team members include Bill Marticorena of Rutan and Tucker as Agency bond
counsel, Robin Thomas of Wedbush Morgan Securities as underwriter, David
Mc Ewen of Stradling, Yocca Carlson and Rauth as disclosure counsel, Suzanne
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Harrell as pricing consultant, and RSG as fiscal consultant. The purpose was to
evaluate Project No. 1 's financing capacity.
The Agency has been exploring the feasibility of purchasing property and
funding improvements that would establish public golf courses, preserve open
space, expand park space, fund community .park improvements, and enhance
the City's economic development initiatives. Further, in 1996 the Agency was
mandated by the State to make additional payments to local school districts as
part of the State budget bailout strategy (Education Revenue Augmentation
Fund or ERAF Loan). At that time the Project No. 1 Redevelopment Fund did
not have the capacity to fund this payment and Project No. 1 Housing Fund
monies were used to pay this obligation. This transaction was structured as a
loan to the Redevelopment Fund that must be repaid by 2003. Finally, the
Agency has a Project No. 1 fiscal mitigation agreement with Coachella Valley
Unified School District (CVUSD) that has fixed payments until 2012. The
financing team has evaluated this agreement and determined that the Agency
may be able to secure Coachella Valley Unified School District (CVUSD)
revenue while increasing the Project No. 1 bonding capacity by establishing a
fund for these payments thus eliminating this direct pledge of Project No. 1 tax
increment revenue. Staff continues to explore this option. If ultimately
approved by Bond Counsel, Disclosure Counsel and the Bond Insurer, this
issues provides approved monies to fund this obligation. The Series 2002
Bonds would fund these activities.
Staff anticipates that up to $46.0 million in Series 2002 Bonds will be sold.
We are requesting authorization to issue up to $50.0 million if discount and
interest rates are favorable and permit the sale of bonds in excess of $46.0
million. Agency bond and disclosure counsels are reviewing the tax
ramifications of establishing the CVUSD payment fund in terms of how this
account would satisfy IRS requirements. If, prior to the bond sale that is
scheduled for May 29, 2002, bond and disclosure counsels cannot structure
the fund to satisfy the IRS requirements, then the par amount of Series 2002
Bonds would be $35,100,000.
Activities have progressed to a point where draft documents have been
completed and are ready to be distributed to bond insurance and rating
agencies. Further, the Agency Board must approve the contracts with the
disclosure counsel in order to facilitate the sale. Staff is seeking Agency Board
approval of the attached resolution that:
• Authorizes the issuance of up to $50.0 million in Project No. 1 Series 2002
Tax Allocation Bonds;
• Authorizes the Agency Chair or Executive Director to sign the final bond
certificates and related documents, and take actions necessary to deliver
r, 4 4.1
the bonds in accordance with the attached resolution and Indenture of
Trust;
• Approves the Indenture of Trust (Attachment 1) which will serve as the
contract between the Agency and Trustee on behalf of the bond holders;
• Appoints U.S. Bank, N.A. the bond trustee (the entity that collects bond
payments from the Agency and disburses these payments to the bond
holders);
• Authorizes the bond underwriter to distribute the Preliminary Official
Statement, the document that discloses all of the details regarding the
bonds; and
• Authorizes the Executive Director and Finance Director to pay all of the
issuance costs.
Per the Agency's strategic planning activities, it is projected that Project No. 1
has $357.0 million of non -housing fund financing capacity over the next 31
years. This capacity represents revenue that remains after housing fund
deposits and taxing agency payments, and is based upon a 3% per annum
growth rate for Project No. 1 assessed values. In comparison, between fiscal
years 2000-2001 and 2001-2002, the Project No. 1 assessed values grew by
20%.
Discussions with the Agency Board surfaced a desire to access this financing
capacity in order to fund the acquisition of property that could be developed
for public golf, open space and park uses, and to retire Project No. 1
obligations in a cost effective manner. If $46.0 million of bonds are sold it is
anticipated that the net proceeds will be allocated as follows:
• $6.4 million to the CVUSD fund;
• $1.0 million to retire the ERAF loan; and
• $36.5 million to purchase property and develop park, recreation, and golf
course uses.
If $35.1 million of bonds are sold, then the net proceeds will be allocated as
follows:
• $1.0 million to retire the ERAF loan; and
• $32.4 million to purchase property and develop park, recreation, and golf
course uses.
Staff recommends that a separate legal counsel review and verify the offering
statement that is prepared by the underwriter. Staff is requesting that the
Agency Board approve the attached Legal Service Agreement (Attachment 2)
with Stradling, Yocca, Carlson and Rauth. David Mc Ewen of this firm will
serve as disclosure counsel as he did for the Series 2001 Bonds.
��3
FINDINGS AND ALTERNATIVES:
Alternatives available to the Agency Board include:
1. Adopt a resolution of the La Quinta Redevelopment Agency authorizing the
issuance of tax allocation bonds Series 2002 for principal amount not to
exceed $50,000,000, approving certain documents and talking certain
actions in connection therewith for La Quinta Redevelopment Project No. 1.
2. Provide staff with alternative direction.
Finance Director
ibmission by:
Thomas P.Genovese
Executive Director
Redevelopment Agency
Attachment: 1. Indenture of Trust
2. Legal Service Agreement
0�0 -L
.: 6"#
RESOLUTION NO. RA
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE LA QUINTA REDEVELOPMENT AGENCY
AUTHORIZING THE ISSUANCE OF TAX
ALLOCATION BONDS OF SAID AGENCY IN A
PRINCIPAL AMOUNT OF NOT TO EXCEED FIFTY
MILLION DOLLARS ($50,000,000) TO FINANCE A
PORTION OF THE COSTS OF A REDEVELOPMENT
PROJECT KNOWN AS THE LA QUINTA
REDEVELOPMENT PROJECT AREA NO. 1 AND
APPROVING CERTAIN DOCUMENTS AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the La Quinta Redevelopment Agency (the "Agency"), is a
redevelopment agency (a public body, corporate and politic) duly created,
established and authorized to transact business and exercise its powers, all
under and pursuant to the Community Redevelopment Law (Part 1 of Division
24 (commencing with Section 33000) of the Health and Safety Code of the
State of California) and the powers of the Agency include the power to issue
bonds for any of its corporate purposes; and
WHEREAS, the Redevelopment Plan for a redevelopment project known
and designated as "La Quinta Redevelopment Project Area No. 1 " has been
adopted and approved by Ordinance No. 43 of the City of La Quinta, which
became effective on December 29, 1983, and all requirements of law for and
precedent to the adoption and approval of the Redevelopment Plan have been
duly complied with; and
WHEREAS, pursuant to Resolution No. RA 85-5 the Agency issued
Twenty Million Dollars ($20,000,000) of "La Quinta Redevelopment Agency,
La Quinta Redevelopment Project, Tax Allocation Bonds, Series 1985" (the
"Series 1985 Bonds"); pursuant to Resolution No. RA 88-14 the Agency issued
Eight Million Dollars ($8,000,000) of Tax Allocation Bonds, Series 1989 (the
"Series 1989 Bonds"); pursuant to Resolution No. RA 90-4 the Agency issued
Nineteen Million Six Hundred Ninety -Five Thousand Dollars ($19,695,000) of
Tax Allocation Refunding Bonds, Series 1990 (the "Series 1990 Bonds");
pursuant to Resolution No. RA 91-12 the Agency issued Eight Million Seven
Hundred Thousand Dollars ($8,700,000) of Tax Allocation Bonds, Series 1991
(the "Series 1991 Bonds"); pursuant to an indenture of Trust, dated as of May
1,1994, between the Agency and Bank of America National Trust and Savings
Association (the "1994 Indenture"),the Agency issued Twenty -Six Million Six
ti�
Hundred Sixty Five Thousand Dollars ($26,665,000) of Tax Allocation Bonds,
Series 1994 (the "Series 1994 Bonds"); pursuant to Resolution No. RA 9801
the Agency issued Fifteen Million Seven Hundred Sixty Thousand Dollars
($15,760,000) of Tax Allocation Refunding Bonds, Series 1998 (the "Series
1998 Bonds"); and pursuant to Resolution No. RA 2001-03 the Agency issued
Forty -Eight Million Dollars ($48,000,000) of Tax Allocation Bonds, Series 2001
(the "Series 2001 Bonds"); and
WHEREAS, in order to raise additional funds for the implementation of
the Redevelopment Plan, the Agency deems it necessary at this time to issue
allocation bonds on a parity with the Series 1994 Bonds, Series 1998, and
Series 2001 Bonds for such purpose; and
WHEREAS, the corporate purposes of the Agency will be accomplished
by issuing at this time tax allocation parity bonds in a principal amount of not
to exceed Fifty Million Dollars ($50,000,000) pursuant to this Resolution and a
supplemental resolution hereto to be designated "La Quinta Redevelopment
Agency, La Quinta Redevelopment Project No. 1, Tax Allocation Bonds, Series
2002 (the "Bonds"); and
WHEREAS, the Agency is authorized to issue the Bonds pursuant to the
Community Redevelopment Law of the State of California (being Part 1 of
Division 24 of the Health and Safety Code of the State of California, as
amended) (the "Law"); and
WHEREAS, the Agency has received a proposal to purchase the Bonds
and has determined that the proposal of Wedbush Morgan Securities (the
"Underwriter") should be accepted; and
WHEREAS, this Board of Directors desires to proceed to issue the Bonds,,
sell the Bonds to the La Quinta Financing Authority (the "Authority") and then
to the Underwriter.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE LA QUINTA
REDEVELOPMENT AGENCY DOES HEREBY RESOLVE, ORDER AND
DETERMINE AS FOLLOWS:
1. Each of the above recitals is true and correct and this Board so
finds and determines.
2. The issuance of the Bonds in the principal amount of not to
exceed Fifty Million Dollars ($50,000,000) is hereby authorized. The Bonds
shall mature on the dates, pay interest at the rates, shall be subject to
redemption and shall be governed by the terms and conditions set forth in an
Indenture of Trust, dated as of June 1, 2002, (the "Indenture") to be prepared
the bonds in accordance with the attached resolution and Indenture of
Trust;
• Approves the Indenture of Trust (Attachment 1) which will serve as the
contract between the Agency and Trustee on behalf of the bond holders;
• Appoints U.S. Bank, N.A. the bond trustee (the entity that collects bond
payments from the Agency and disburses these payments to the bond
holders);
• Authorizes the bond underwriter to distribute the Preliminary Official
Statement, the document that discloses all of the details regarding the
bonds; and
• Authorizes the Executive Director and Finance Director to pay all of the
issuance costs.
Per the Agency's strategic planning activities, it is projected that Project No. 1
has $357.0 million of non -housing fund financing capacity over the next 31
years. This capacity represents revenue that remains after housing fund
deposits and taxing agency payments, and is based upon a 3% per annum
growth rate for Project No. 1 assessed values. In comparison, between fiscal
years 2000-2001 and 2001-2002, the Project No. 1 assessed values grew by
20%.
Discussions with the Agency Board surfaced a desire to access this financing
capacity in order to fund the acquisition of property that could be developed
for public golf, open space and park uses, and to retire Project No. 1
obligations in a cost effective manner. If $46.0 million of bonds are sold it is
anticipated that the net proceeds will be allocated as follows:
• $6.4 million to the CVUSD fund;
$1.0 million to retire the ERAF loan; and
• $36.5 million to purchase property and develop park, recreation, and golf
course uses.
If $35.1 million of bonds are sold, then the net proceeds will be allocated as
follows:
• $1.0 million to retire the ERAF loan; and
• $32.4 million to purchase property and develop park, recreation, and golf
course uses.
Staff recommends that a separate legal counsel review and verify the offering
statement that is prepared by the underwriter. Staff is requesting that the
Agency Board approve the attached Legal Service Agreement (Attachment 2)
with Stradling, Yocca, Carlson and Rauth. David Mc Ewen of this firm will
serve as disclosure counsel as he did for the Series 2001 Bonds.
0
purchasers of the Bonds from the Underwriter copies of the final Official
Statement. The Executive Director or Finance Director is hereby authorized to
sign a certificate pursuant to Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934 pertaining to the Preliminary Official Statement.
8. Each and every officer of the Agency is authorized to perform his
or her services on behalf of the Agency. The Executive Director or Finance
Director, or his written designee, is authorized to incur such costs and to
contract for all services necessary to effect the issuance of the Bonds. Such
services shall include, but not be limited to, printing the Bonds, printing the
Preliminary Official Statement and the Official Statement, obtaining legal
services, fiscal agent services and any other services deemed appropriate for
the issuance of the Bonds including, without limitation, the costs of Bond
Insurance, Reserve Fund Surety, and Rating Agency Services (referred to in the
Indenture as "Costs of Issuance")and the payment for said Costs of Issuance
shall be approved by the Executive Director or Finance Director. The Executive
Director or Finance Director, or his written designee, is authorized to pay for
such Costs of Issuance with Bond proceeds established pursuant to the
Indenture without further approval of this Board of Directors.
9. All actions heretofore taken by officers and agents of the Agency
with respect to the sale and issuance of the Bonds are hereby approved,
confirmed and ratified, and the Chair and Secretary and the other officers of
the Agency responsible for the fiscal affairs of the Agency are hereby
authorized and directed to take any actions and execute and deliver any and all
certificates, instruments, agreements and documents as are necessary to
accomplish the issuance, sale and delivery of the Bonds in accordance with the
provisions of this Resolution and the fulfillment of the purposes of the Bonds as
described in the Indenture as determined by Bond Counsel. In the event that
the Chair or Executive Director is/are unavailable to sign any document
authorized for execution herein, the Finance Director shall sign such document.
Any document authorized herein to be signed by the Secretary may be signed
by a duly appointed deputy secretary.
PASSED, APPROVED and ADOPTED this 71h day of May, 2002, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
TERRY HENDERSON, Chair La Quinta
Redevelopment Agency
ATTEST:
JUNE S. GREEK, CMC, Agency Secretary
La Quinta Redevelopment Agency
(Agency Seal)
APPROVED AS TO FORM:
M. KATHERINE JENSON, Agency Counsel
La Quinta Redevelopment Agency
OG9
SECRETARY'S CERTIFICATE
RE: ADOPTION OF RESOLUTION
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE
I, JUNE S. GREEK, Secretary of the La Quinta Redevelopment Agency,
DO HEREBY CERTIFY that the foregoing Resolution was duly adopted by said
Agency at a regular meeting of said Agency held on the day of ,
2002.
AYES:
NOES:
ABSENT:
ABSTAIN:
JUNE S. GREEK, CMC Agency Secretary
La Quinta Redevelopment Agency
(SEAL)
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
I, JUNE S. GREEK, Secretary of the La Quinta Redevelopment Agency,
DO HEREBY CERTIFY that the above and foregoing is a full, true and correct
copy of Resolution No. RA of said Agency and that said Resolution was
adopted at the time and by the vote stated on the above certificate, and has
not been amended or repealed.
Dated: , 2002
010
JUNE S. GREEK, CIVIC Agency Secretary
La Quinta Redevelopment Agency
(SEAL)
cl '7
Oil.
ATTACHMENT 1
INDENTURE OF TRUST
Dated as of June 1, 2002
by and between the
LA QUINTA REDEVELOPMENT AGENCY
U.S. BANK, N.A.
as Trustee
Relating to
,-q
La Quinta Redevelopment Agency
La Quinta Redevelopment Project Area No. 1
Tax Allocation Bonds, Series 2002
124/015610-0058 013
268403.02 PM02
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (the "Indenture") is dated as of June 1, 2002, by and
between LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic duly
organized and existing under the laws of the State of California (the "Agency"), and U.S.
BANK, N.A., a national banking association organized and existing under the laws of the United
States of America, as trustee (the "Trustee");
WITNESSETH
WHEREAS, the Agency is a public body, corporate and politic, duly established and
authorized to transact business and exercise powers under and pursuant to the provisions of the
Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of
the Health and Safety Code of the State (the "Law"), including the power to issue bonds for any
of its corporate purposes; and
WHEREAS, a Redevelopment Plan for the Project Area, commonly known as the La
Quinta Redevelopment Project, in the City of La Quinta, California (the "Redevelopment
Project") has been adopted by Ordinance No. 43 of the City of La Quinta, which became
effective on December 29, 1983, in compliance with all requirements of the Law; and
WHEREAS, to finance redevelopment activities within the areas constituting the
Redevelopment Project (the "Project Area"), the Agency has previously issued tax allocation
bonds in the aggregate principal amount of $20,000,000 (the "1985 Bonds"), pursuant to its
Resolution No. RA 85-5 adopted on July 30, 1985; and
WHEREAS, to finance redevelopment activities within its Project Area, the Agency has
previously issued its La Quinta Redevelopment Project, Tax Allocation Bonds, Series 1989, in
the aggregate principal amount of $8,000,000 (the "1989 Bonds"), pursuant to Resolution No.
RA 88-14 adopted by the Agency on December 20, 1988; and
WHEREAS, to finance redevelopment activities within its Project Area and to refund the
1985 Bonds, the Agency has previously issued its La Quinta Redevelopment Project, Tax
Allocation Refunding Bonds, Series 1990, in the aggregate principal amount of $19,695,000 (the
"1990 Bonds"), pursuant to Resolution No. 90-4 adopted by the Agency on April 25, 1990; and
WHEREAS, to finance redevelopment activities within its Project Area, the Agency has
previously issued its La Quinta Redevelopment Project, Tax Allocation Bonds, Series 1991, in
the aggregate principal amount of $8,700,000 (the "1991 Bonds"), pursuant to Resolution No.
FA 91-12 adopted by the Agency on October 9, 1991 (the "1991 Resolution"); and
WHEREAS, to finance redevelopment activities within its Project Area, the Agency
issued its $26,665,000 aggregate principal amount of La Quinta Redevelopment Project Tax
Allocation Refunding Bonds, Series 1994 (Project Area No. 1) (the "1994 Bonds") pursuant to
the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the Government
Code of the State of California (the "JPA Law") for the purpose of providing funds to (1)
advance refund the then outstanding principal amount of the 1989 Bonds on September 1, 1998
f
124/015610-0058 +
268403.02 PM02
and pay the principal of and interest on the 1989 Bonds to and including September 1, 1998, (ii)
advance refund the then outstanding principal amount of the 1990 Bonds on September 1, 2000
and pay the principal of and interest on the 1990 Bonds to and including September 1, 2000, (iii)
finance the costs of additional redevelopment activities, (iv) fund a reserve fund, and (v) pay
certain expenses of the Agency in issuing the Bonds; and
WHEREAS, to finance redevelopment activities within its Project Area, the Agency
issued its $15,760,000 aggregate principal amount of La Quinta Redevelopment Project Area
No. 1, Tax Allocation Refunding Bonds, Series 1998 (the "1998 Bonds") for the purpose, among
others, to (i) advance refund the 1991 Bonds, (ii) finance the costs of additional redevelopment
activities; and (iii) pay certain expenses of the Agency in issuing the Bonds; and
WHEREAS, to finance redevelopment activities within the Project Area, the Agency
issued its $48,000,000 aggregate principal amount of La Quinta Redevelopment Project Area
No. 1, Tax Allocation Bonds, Series 2001 (the "2001 Bonds"); and
WHEREAS, the Agency has determined to issue its $ aggregate principal
amount of La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002 (the
"Bonds") for the purpose, among others, to (i) finance the costs of additional redevelopment
activities; and (ii) pay certain expenses of the Agency in issuing the Bonds; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and
secured and to secure the payment of the principal thereof, premium, if any and interest thereon,
the Agency and the Trustee have duly authorized the execution and delivery of this Indenture;
and
WHEREAS, the Agency has determined that all acts and proceedings required by law
necessary to make the Bonds when executed by the Agency, and authenticated and delivered by
the Trustee, the valid, binding and legal special obligations of the Agency, and to constitute this
Indenture a legal, valid and binding agreement for the uses and purposes herein set forth in
accordance with its terms, have been done or taken;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of, premium, if any, and the interest on all the Bonds issued and
Outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the
terms and conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase
and acceptance of the Bonds by the Owners thereof, and for other valuable consideration, the
receipt of which is hereby acknowledged, the Agency and the Trustee do hereby covenant and
agree with one another, for the benefit of the respective owners from time to time of the Bonds,
as follows:
124/015610-0058 015
268403.02 PM02 -3-
ARTICLE I
DETERMINATIONS; DEFINITIONS
Section 1.1 Findings and Determinations.
The Agency has reviewed all proceedings heretofore taken and has found, as a result of
such review, and hereby finds and determines that all things, conditions and acts required by law
to exist, happen or be performed precedent to and in connection with the issuance of the Bonds
do exist, have happened and have been performed in due time, form and manner as required by
law, and the Agency is now duly empowered, pursuant to each and every requirement of law, to
issue the Bonds in the manner and form provided in this Indenture.
Section 1.2 Definition.
Unless the context otherwise requires, the terms defined in this Section 1.2 shall, for all
purposes of this Indenture, of any Supplemental Indenture, and of any certificate, opinion or
other document herein mentioned, have the meanings herein specified.
"Menc," means the La Quinta Redevelopment Agency, a public body corporate and
politic duly organized and existing under the Law.
"Alternative Reserve Account Security" means one or more letters of credit, Surety Bond
or bond insurance policies, for the benefit of the Trustee in substitution for or in place of all or
any portion of the Reserve Requirement.
"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on
the Outstanding Bonds in such Bond Year, assuming that the Outstanding Term Bonds are
redeemed from mandatory sinking fund payments as scheduled, and (b) the principal amount of
the Outstanding Term Bonds scheduled to be paid or redeemed from mandatory sinking fund
payments in such Bond Year.
"Authorized Representative" means the Executive Director of the Agency or such other
person designated in writing by the Chairperson of the Agency.
"Average Annual Debt Service" means the amount determined by dividing the sum of all
Annual Debt Service amounts due in each of the Bond Years following the date of such
calculation by the number of such Bond Years.
"Bond" or "Bonds" means the La Quinta Redevelopment Agency, La Quinta
Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002 and, if the context
requires, any Parity Debt, authorized by and at any time Outstanding pursuant to this Indenture
and any Supplemental Indenture.
"Bond Counsel" means an attorney or firm of attorneys acceptable to the Agency of
nationally recognized standing in matters pertaining to the federal tax exemption of interest on
bonds issued by states and political subdivisions, and duly admitted to practice law before the
highest court of any state of the United States of America or the District of Columbia.
40
124/015610-0058 �i1 �-
268403.02 PM02
"Bond Insurer" means Ambac Assurance Corporation.
`Bondowner" or "Owner of Bonds", or any similar term means any person, who shall be
the registered owner or his duly authorized attorney, trustee or representative. For the purpose of
Bondowners' voting rights or consents, Bonds owned by or held for the account of the Agency
shall not be counted.
"Bond Year" means any twelve-month period beginning on September 2 in any year and
extending to the next succeeding September 1, both dates inclusive, except that the first Bond
Year shall commence on the Closing Date and end on September 1, 2002.
"Business Day" means a day of the year on which banks in Los Angeles, California, or
the city in which the Trust Office is located, are not required or permitted to be closed and on
which the Federal Reserve System is not closed.
"Chair" or "Chairperson" means the Chair of the Agency appointed pursuant to Section
33113 of the Health and Safety Code of the State, or other duly appointed officer of the Agency
authorized by the Agency by resolution or by-law to perform the functions of the chairperson in
the event of the chairperson's absence or disqualification.
"City" means the City of La Quinta, California.
"Closing Date" means the date on which the Bonds are delivered by the Agency to the
original purchaser thereof.
"Code" means the Internal Revenue Code of 1986, as amended and any regulations,
rulings, judicial decisions, and notices, announcements and other releases of the United States
Treasury Department or Internal Revenue Service interpreting and construing it, or any
applicable regulations adopted under the Internal Revenue Code of 1954, as amended.
"Computation Year" means the period beginning on the Closing Date and ending on
September 30, 2002 and each September 30 thereafter until there are no longer any Bonds
Outstanding.
"Continuing Disclosure Agreement" means the agreement by that name of the Agency
dated the Closing Date and any amendment or supplement thereto.
"Costs of Issuance" means the costs and expenses incurred in connection with the
issuance and sale of the Bonds, including, but not limited to, any rating agency fees, recording
fees, Financial Guaranty Insurance premiums, Alternative Reserve Account Security premiums,
the acceptance and initial annual fees and expenses of the Trustee, fees and charges payable
under the Escrow Agreement, legal fees and expenses, costs of printing the Bonds and Official
Statement, fees of financial consultants and other fees and expenses set forth in a Written
Certificate of the Agency to be paid from the Costs of Issuance Account of the Redevelopment
Fund.
"County" means the County of Riverside, a county duly organized and existing under the
laws of the State.
J
124/015610-0058 _
268403.02 PM02 -5
"Debt Service" means the scheduled amount of interest and amortization of principal
payable on the Bonds and on any Parity Debt during the period of computation, excluding
amounts scheduled during such period which relate to principal which has been retired before the
beginning of such period.
"Debt Service Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.3.
"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as
Depository pursuant to Section 2.4.
"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 8.1.
"Federal Securities" means any noncallable, direct general obligations of the United
States of America, the payment of principal of and interest on which are unconditionally and
fully guaranteed by the United States of America.
"Financial Guaranty Insurance Policy" means the Financial Guaranty Insurance policy
issued by the Bond Insurer insuring the payment when due of the principal of and interest on the
Bonds as provided therein.
"Fiscal Year" means any twelve-month period beginning on July 1 in any year and
extending to the next succeeding June 30, both dates inclusive, or any other twelve month period
selected and designated by the Agency to the Trustee in writing as its official fiscal year period.
"Indenture" means this Indenture of Trust, dated as of the date hereof, by and between
the Agency and the Trustee, as originally entered into or as it may be amended or supplemented
by any Supplemental Indenture entered into pursuant to the provisions hereof.
"Independent Financial Consultant, "Independent Engineer," "Independent Certified
Public Accountant" or "Independent Redevelopment Consultant" means any individual or firm
engaged in the profession involved, appointed by the Agency, and who, or each of whom, has a
favorable reputation in the field in which his opinion or certificate will be given, and:
(a) is in fact independent and not under domination of the Agency;
(b) does not have any substantial interest, direct or indirect, with the Agency;
and
(c) is not connected with the Agency as an officer or employee of the Agency,
but who may be regularly retained to make reports to the Agency.
124/015610-0058
268403.02 PM02 —6—
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service,"
30 Montgomery Street, IOth Floor, Jersey City, New Jersey 07202, Attention: Editor, Kenny
Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York
10006; Moody's Investors Service "Municipal and Government," 5250 77 Center Drive, Suite
150, Charlotte, North Carolina 28217, Attention: Called Bond Department, Standard & Poor's
Corporation "Called Bond Record," 55 Water Street, New York, New York 10041; and in
accordance with then current guidelines of the Securities and Exchange Commission, such other
addresses and/or such other services providing information with respect to the redemption of
bonds as the Agency may designate in a Request of the Agency delivered to the Trustee.
"Interest Paxment Date" means March 1 and September 1 of each year, commencing
September 1, 2002, and in each year thereafter so long as any of the Bonds remain outstanding
hereunder.
"Investment Agreement" means the unconditional obligation of one or more banks,
insurance companies or other financial institutions with a long-term unsecured debt rating of "A"
or better by Standard & Poor's or Moody's (or a claims -paying rating of "A" by Standard &
Poor' s or Moody' s) as of the date of execution thereof, providing for the investment of moneys
held under this Indenture. Each Investment Agreement must be reviewed and approved by
Standard & Poor's or Moody's, as the case may be, and must at all times provide for payments to
the Trustee which, together with all then scheduled payments and payments under other
Permitted Investments, are sufficient in time and amount to permit the delivery of a cash flow
certificate meeting the requirements of the definition thereof; provided that any Investment
Agreement also: (i) shall contain a provision for collateralization at a level acceptable to
Standard & Poor's or Moody's, as the case may be, and (ii) shall clearly state the exact rating
requirements to be maintained with respect thereto. Extensions of the term of an Investment
Agreement shall not require the consent of the owners of the Bonds. The Agency shall not
withdraw moneys from an Investment Agreement in a manner or at a time which would result in
it having to pay a breakage or withdrawal penalty thereunder unless such fee is paid from the
Redevelopment Fund or the Agency has delivered to the Trustee a cash flow certificate which
assumes that such withdrawal has been made and such penalty has been paid.
"JPA Law" means the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of
Title 1 of the Government Code of the State, as amended.
"Law" means the Community Redevelopment Law of the State, constituting Part 1 of
Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and
supplemental thereto.
"Maximum Annual Debt Service" means, as of the date of calculation, the largest amount
obtained by totaling, for the current or any future Bond Year, the sum of (a) the interest payable
on the Outstanding Bonds and any Parity Debt in such Bond Year, assuming that outstanding
serial Bonds are retired as scheduled and that any Outstanding term Bonds are redeemed from
mandatory sinking fund payments as scheduled, (b) the principal amount of Outstanding Bonds
and any Parity Debt payable by their terms in such Bond Year, and (c) the principal amount of
any Outstanding term Bonds scheduled to be redeemed from mandatory sinking fund payments
in such Bond Year. If any proceeds of outstanding Parity Debt shall be on deposit in an escrow
124/015610-0058
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fund from which amounts may not be released to the Agency unless the amount of Pledged Tax
Revenues for the most recent Fiscal Year (as evidenced in a written document from an
appropriate official of the County), at least equals 130% of the amount of Maximum Annual
Debt Service, which would result if the amount on deposit in such escrow fund were to be
released to the Agency from such escrow fund in accordance with the terms of the related
Supplemental Indenture, then for purposes of calculating Maximum Annual Debt Service, the
Annual Debt Service on such Parity Debt shall be determined as if the amounts then on deposit
in the escrow fund were withdrawn therefrom and applied to pay or redeem such Parity Debt in
accordance with the terms of the related Supplemental Indenture.
"Moody's" or "Moody's Investors Service" means Moody's Investors Service, Inc., New
York, New York, or any successors or assignees.
"1994 Bonds" means the $26,665,000 La Quinta Redevelopment Agency, La Quinta
Redevelopment Project, Tax Allocation Bonds, Series 1994 (Project Area No. 1) issued pursuant
to the 1994 Indenture.
"1994 Indenture" means the Indenture of Trust dated as of May 1, 1994, authorizing the
1994 Bonds.
"1998 Bonds" means the $15,760,000 La Quinta Redevelopment Agency, La Quinta
Redevelopment Project, Tax Allocation Refunding Bonds, Series 1998 issued pursuant to the
1998 Indenture.
"1998 Indenture" means the Indenture of Trust, dated as of June 1, 1998, authorizing the
1998 Bonds.
"2001 Bonds" means the La Quinta Redevelopment Agency, La Quinta Redevelopment
Project Area No. 1 Tax Allocation Bonds, Series 2001.
"2001 Indenture" means the Indenture of Trust, dated as of August 1, 2001, authorizing
the 2001 Bonds.
"Nominee" means (a) initially, Cede & Co., as nominee of DTC, and (b) any other
nominee of the Depository designated pursuant to Section 2.4(a).
"Opinion of Counsel" means a written opinion of an attorney or firm of attorneys of
favorable reputation in the field of municipal bond law. Any opinion of such counsel may be
based upon, insofar as it is related to factual matters, information which is in the possession of
the Agency as shown by a certificate or opinion of, or representation by, an officer or officers of
the Agency, unless such counsel knows, or in the exercise of reasonable care should have known,
that the certificate, opinion or representation with respect to the matters upon which his or her
opinion may be based, as aforesaid, is erroneous.
"Outstanding" when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 9.3) all Bonds except:
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(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee
for cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section
9.3; and
(c) Bonds in lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the Agency pursuant hereto.
"Owner" means, with respect to any Bond, the person in whose name the ownership of
such Bond shall be registered on the Registration Books.
"Parity Debt" means the Outstanding 1994 Bonds, Outstanding 1998 Bonds, and any
additional tax allocation bonds (including, without limitation, bonds, notes, interim certificates,
debentures or other obligations) issued by the Agency as permitted by the Indenture which are on
a parity with the Bonds.
"Participating Underwriter" shall have the meaning ascribed thereto in the applicable
Continuing Disclosure Agreement.
"Pass -Through Agreements" means the agreements entered into on or prior to the date
hereof pursuant to Section 33401 of the Health and Safety Code with (i) County of Riverside; (ii)
Desert Sands Unified School District,' (iii) Coachella Valley Water District; (iv) Desert
Community College District; (v) County of Riverside Superintendent of Schools; (vi) Coachella
Valley Mosquito Abatement District; and (vii) Coachella Valley Recreation and Park District
and such statutory obligations as provided in Section 33607.5 of the Law.
"Permitted Investments" means any of the following:
A. The following obligations may be used as Permitted Investments for all
purposes, including defeasance investments in refunding escrow accounts.
(1) Cash (insured at all times by the Federal Deposit Insurance
Corporation or otherwise collateralized with obligations described in paragraph
(2) below), or
(2) Direct obligations of (including obligations issued or held in book
entry form on the books of) the Department of the Treasury of the United States
of America.
(3) Senior debt obligations of other Government Sponsored Agencies
approved by the Bond Insurer.
B. The following obligations to be used as Permitted Investments for all
purposes other than defeasance investments in refunding escrow accounts.
r"
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(1) 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
— Farm Credit System Financial Assistance Corporation
— Rural Economic Community Development Administration
(formerly the Farmers Home Administration)
— General Services Administration
— U.S. Maritime Administration
— Small Business Administration
— Government National Mortgage Association (GNMA )
— U.S. Department of Housing & Urban Development (PHA's)
— Federal Housing Administration
— Federal Financing Bank;
(2) 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 rated "Aaa" by Moody's and "AAA"
by S&P 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 Government Sponsored
Agencies approved by Bond Insurer;
(3) U.S. dollar denominated deposit accounts, federal funds and
bankers' acceptances with domestic commercial banks which have a rating on
their short term certificates of deposit on the date of purchase of "A-1" or "A-1+"
by S&P and "P-1" by Moody's and maturing no more than 360 days after the
date of purchase. (Ratings on holding companies are not considered as the ratings
of the bank.);
(4) Commercial paper which is rated at the time of purchase in the
single highest classification, "A-1+" by S&P and "P-1" by Moody's and which
matures not more than 270 days after the date of purchase;
(5) Investments in a money market fund rated "AAAm" or "AAAm—
G" or better by S&P including those for which U.S. Bank, N.A., its affiliates,
parents, or subsidiaries provide investment, advisory or other management
services;
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(6) 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
(A) 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
(B)(i) 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 paragraph A(2) above, 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 (ii) 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;
(7) Municipal obligations rated "Aaa/AAA" or general obligations of
states with a rating of at least "A2/A" or higher by both Moody's and S&P.
(8) Investment agreements approved in writing by Bond Insurer
supported by appropriate opinions of counsel with notice to S&P; and
(9) Other forms of investments (including_ repurchase agreements)
approved in writing by Bond Insurer with notice to S&P.
C. The value of the above investments shall be determined as of the end of
each month as follows:
(1) For securities:
(a) the closing bid price quoted by Interactive Data Systems,
Inc.; or
(b) a valuation performed by a nationally recognized and
accepted pricing service acceptable to Bond Insurer whose valuation
method consists of the composite average of various bid price quotes on
the valuation date; or
(c) the lower of two dealer bids on the valuation date. The
dealers or their parent holding companies must be rated at least investment
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grade by Moody's and S&P and must be market makers in the securities
being valued.
(2) As to certificates of deposit and bankers' acceptances: the face
amount thereof, plus accrued interest; and
(3) As to any investment not specified above: the value thereof
established by prior agreement between the Agency, the Trustee and Bond
Insurer.
"Plan Limit" means the limitation contained in the Redevelopment Plan as to the number
of dollars of taxes which may be divided and allocated to the Agency pursuant to the
Redevelopment Plan, as such limitation may be required by, or pursuant to, the Law.
"Pledged Tax Revenues" means Tax Revenues, less the Tax Revenues set aside as
provided in Sections 33334.2 and 33334.3 of the Law and the Tax Revenues paid to certain
taxing entities in the County of Riverside pursuant to the senior Pass -Through Agreements as set
forth in Appendix B to the Official Statement.
"Project Area " means the territory within the La Quinta Redevelopment Project Area
No. 1, as described in the Redevelopment Plan.
"Qualified Surety Bond" means an insurance policy or surety bond issued by a company
licensed to issue an insurance policy or surety, the claims —paying ability of which is rated in the
highest rating category by A.M. Best & Company (if rated by such), Standard & Poor's and
Moody's.
"Rating Categories" means any one of the investment grade rating categories (without
regard to plus or minus signs or other numerical or qualifying designation) of Standard & Poor's
and Moody's, or their respective successors or assigns.
"Rebate Regulations" means any final, temporary, or proposed Treasury Regulations
promulgated pursuant to Section 148 (f) of the Code.
"Record Date" means, with respect to any Interest Payment Date, the close of business on
the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or
not such fifteenth (15th) calendar day is a Business Day.
"Redevelopment Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3.3.
"Redevelopment Plan" means the Redevelopment Plan for the project designated as the
"La Quinta Redevelopment Project Area No. 1", adopted and approved by Ordinance No. 43,
which became effective on December 29, 1983, together with any amendments thereof
heretofore or hereafter duly enacted pursuant to the Law.
"Redevelopment Protect Area," "Redevelopment Project," or "Project Area" means the
project area defined and described in the Redevelopment Plan.
01)
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"Rejistration Books" means the records maintained by the Trustee pursuant to Section
2.9 for the registration and transfer of ownership of the Bonds.
"Report" means a document in writing signed by an Independent Redevelopment
Consultant and including:
(a) a statement that the person or firm making or giving such Report has read
the pertinent provisions of this Indenture to which such Report relates;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the Report is based; and
(c) a statement that, in the opinion of such person or firm, sufficient
examination or investigation was made as is necessary to enable said consultant to
express an informed opinion with respect to the subject matter referred to in the Report.
"Reserve Fund" means the account by that name established and held by the Trustee
pursuant to Section 4.3(b).
"Reserve Requirement" means, with respect to the Bonds, including any Parity Debt, an
amount equal to the least of (i) ten percent (10%) of the proceeds of the Bonds, including any
Parity Debt, as applicable, (ii) Maximum Annual Debt Service, or (iii) 125% of Average Annual
Debt Service.
"Resolution" means the resolution adopted by the Agency on May 7, 2002.
"Revenues" means the Pledged Tax Revenues together with all other moneys held by the
Trustee in any Fund or Account and the interest earnings thereon.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, New York 11530, Fax—(516) 227-4039 or 4190; Midwest Securities Trust
Company, Capital Structures -Call Notification, 440 South La Salle Street, Chicago, Illinois
60605, Fax: (312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division,
1900 Market Street, Philadelphia, Pennsylvania 19103; Attention: Bond Department, Fax-(215)
496-5058; and, in accordance with then current guidelines of the Securities and Exchange
Commission,
such other addresses and/or such other securities depositories as the Agency may
designate in a Written Request of the Agency delivered to the Trustee.
"Six -Month Period" shall mean the period of the time beginning on the Closing Date and
ending six months thereafter, and each six month period thereafter until the latest maturity date
of the Bonds (and any obligations that refund the Bonds).
"SLGS" means U.S. Treasury Securities State and Local Government Series.
"Special Fund" means the fund by that name established and held by the Agency
pursuant to Section 4.02.
04
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"Standard & Poor's", "S&P" or "Standard & Poor's Ratings Group" means Standard &
Poor's Ratings Group, New York, New York, or any successors or assigns.
"State" means the State of California.
"Subordinate Debt" means any loans, advances or indebtedness issued or incurred by the
Agency pursuant to the Indenture, which are either: (a) payable from, but not secured by a pledge
of or lien upon, the Pledged Tax Revenues; or (b) secured by a pledge of or lien upon the
Pledged Tax Revenues which is subordinate to the pledge of and lien upon the Pledged Tax
Revenues for the security of the Bonds, the 1994 Bonds, the 1998 Bonds, the 2001 Bonds and
the Parity Debt.
"Supplemental Indenture" means any indenture then in full force and effect which has
been duly entered into by the Agency under the Law, or any act supplementary thereto and
amendatory thereof, at a meeting of the Agency duly convened and held, at which a quorum was
present and acted thereon, amendatory of or supplemental to the Indenture; but only if and to the
extent that such Supplemental Indenture is specifically authorized thereunder.
"Surety Bond" means the surety bond issued by the Bond Insurer guaranteeing certain
payments into the Reserve Fund as provided therein and subject to the limitations set forth
therein.
"Tax Certificate" means that certain Tax Certificate executed by the Agency on the
Closing Date with respect to the Bonds.
"Tax Reiaulations" means temporary and permanent regulations promulgated under
Section 103 and all related provisions of the Code.
"Tax Revenues" means that portion of taxes levied upon taxable property in the Project
Area and received by the Agency on or after the date of issue of the Bonds for the Project Area
of the Agency pursuant to Article 6 of Chapter 6 of the Law and Section 16 of Article XVI of the
Constitution of the State of California, or pursuant to other applicable State laws, and as
provided in the Redevelopment Plan, and (to the extent permitted by law) all payments,
subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem
taxes lost by reason of tax exemptions and tax rate limitations.
"Term Bonds" means the Bonds maturing in the years 2022 and 2032.
"Trustee" means U.S. Bank, N.A., as trustee hereunder, or any successor thereto
appointed as trustee hereunder in accordance with the provisions of Article VI.
"Trust Office" means such corporate trust office of the Trustee as may be designated
from time to time by written notice from the Trustee to the Agency, initially being Los Angeles,
California, except that with respect to presentation of Bonds for payment of or registration of
transfer and exchange, such term shall mean the office of the Trustee in St. Paul, Minnesota or
such other office designated by the Trustee.
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"Written Request of the Agency" or "Written Certificate of the A eg_ncy" means a request
or certificate, in writing signed by the Executive Director, Assistant Executive Director,
Secretary or Treasurer of the Agency or by any other officer of the Agency duly authorized by
the Agency for that purpose.
Section 1.3 Rules of Construction.
All references herein to "Articles", "Sections" and other subdivisions are to the .
corresponding Articles, Sections or subdivisions of this Indenture, and the words "herein",
"hereof', "hereunder" and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof.
ARTICLE II
AUTHORIZATION AND TERMS
Section 2.1 Authorization of Bonds.
Bonds in the aggregate principal amount of Million Dollars ($ )
are hereby authorized to be issued by the Agency under and subject to the terms of this Indenture
and the Law. This Indenture constitutes a continuing agreement with the owners of all of the
Bonds issued or to be issued hereunder and then Outstanding to secure the full and final payment
of principal and interest on all Bonds which may from time to time be executed and delivered
hereunder, subject to the covenants, agreements, provisions and conditions herein contained.
The Bonds shall be designated the "La Quinta Redevelopment Agency, La Quinta
Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002.
Section 2.2 Terms of Bonds.
The Bonds shall be issued in fully registered form without coupons in the denomination
of $5,000 or any integral multiple thereof. The Bonds shall mature on September 1 of each year
and shall bear interest (calculated on the basis of a 360-day year of twelve 30-day months) at the
rate per annum as follows:
Maturity Date
(September 1)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$10,655,000
$2805,000
Principal Amount
$635,000
645,000
665,000
685,000
710,000
735,000
765,000
800,000
830,000
870,000
% Term Bonds due September 1, 2022
% Term Bonds due September 1, 2032
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Interest on the Bonds shall be payable semiannually 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 by first class mail on each Interest Payment Date to such Owner at
the address of such Owner as it appears on the Registration Books as of such Record Date;
provided however, that payment of interest may be by wire transfer to an account in the
continental United States to any registered owner of Bonds in the aggregate principal amount of
$1,000,000 or more who shall furnish written wire instructions to the Trustee before the
applicable Record Date. Principal of any Bond shall be paid upon presentation and surrender
thereof, at maturity at the Trust Office of the Trustee. The principal of and interest on the Bonds
shall be payable in lawful money of the United States of America.
Each Bond shall be dated June 1, 2002, and shall bear interest from the Interest
Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated
after a Record Date and on or before the following Interest Payment Date, in which event it shall
bear interest from such Interest Payment Date; or (b) a Bond is authenticated on or before
, in which event it shall bear interest from June 1, 2002, provided, however,
that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond shall
bear interest from the Interest Payment Date to which interest has previously been paid or made
available for payment thereon.
Section 2.3 Redemption of Bonds.
A. Terms of Redemption.
(1) Optional Redemption. The Bonds may be called before maturity and
redeemed at the option of the Agency, in whole or in part from the proceeds of refunding
Bonds or any other available funds on September 1, 2012, or any date thereafter, prior to
maturity. Bonds called for redemption shall be redeemed at the redemption prices
(expressed as a percentage of the principal amount of Bonds to be redeemed) plus
accrued interest to the redemption date as shown in the following table:
Redemption Date Redemption Price
September 1, 2012 through August 31, 2013 102%
September 1, 2013 through August 31, 2014 101%
September 1, 2014 and thereafter 100%
(2) Sinking Fund Redemption. The Term Bonds maturing on September 1,
2022, will be subject to mandatory redemption in part, by lot, on September 1, 2013, and
on each September 1 thereafter to and including September 1, 2022, at a redemption price
equal to the principal amount thereof together with accrued interest thereon to the
redemption date, without premium, from minimum sinking fund payments on hand in the
Debt Service Fund in the years and amounts as follows:
Year Amount Year Amount
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268403.02 PM02
(maturity)
(3) Sinking Fund Redemption. The Term Bonds maturing on September 1,
2032, will be subject to mandatory redemption in part, by lot, on September 1, 2023, and
on each September 1 thereafter to and including September 1, 2032, at a redemption price
equal to the principal amount thereof together with accrued interest thereon to the
redemption date, without premium, from minimum sinking fund payments on hand in the
Debt Service Fund in the years and amounts as follows:
Year Amount Year Amount
(maturity)
Minimum sinking fund payments for any Term Bond redeemed pursuant to Section 2.3(A)(1)
hereof shall be reduced pro rata.
B. Call and Redemption. The Agency may by resolution direct the call and
redemption prior to maturity of Bonds by the Trustee in such amounts as funds are available
therefor and shall give notice to the Trustee of such redemption not less than sixty (60) days
prior to the redemption date.
C. Notice of Redemption. Notice of redemption prior to maturity (except as provided
below) shall be given by first class mail, postage prepaid to the registered owner of each Bond at
the address shown on the registration books of the Trustee not less than thirty (30) nor more than
sixty (60) days prior to such redemption date. Neither failure to mail such notice nor any defect
in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of any
Bonds. The notice of redemption shall (a) state the redemption date; (b) state the redemption
price; (c) state the numbers of the Bonds to be redeemed; provided, however, that whenever any
call for redemption includes all of the outstanding Bonds, the numbers of the Bonds need not be
stated; (d) state as to any Bonds redeemed in part only, the registered Bond numbers and the
principal portion thereof to be redeemed; (e) state that interest on the principal portion of the
Bonds so designated for redemption shall cease to accrue from and after such redemption date
and that on said date there shall become due and payable on each of such Bonds the redemption
o .�
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price thereof; (f) the date of issue of the Bonds as originally issued; (g) the rate of interest borne
by each Bond being redeemed and (h) the place of redemption.
D. Notice of Redemption. The actual receipt by the Owner of any Bond or notice of
such redemption shall not be a condition precedent to redemption, and failure to receive such
notice shall not affect the validity of the proceedings for the redemption of such Bonds or the
cessation of interest on the redemption date. Notice of redemption of Bonds shall be given by the
Trustee and on behalf of the Agency at the expense of the Agency.
In addition to the foregoing notice, further notice shall be given by the Trustee as set out
below, but no defect in said further notice nor any failure to give all or any portion of such
further notice shall in any manner defeat the effectiveness of a call for redemption if notice
thereof is given as above prescribed.
Each further notice of redemption shall be sent 2 days prior to sending notice of
redemption pursuant to the first paragraph of this section by registered or certified mail or
overnight delivery service to the Securities Depositories.
Upon the payment of the redemption price of any Bonds being redeemed, each check or
other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue
and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
An affidavit of mailing by the Trustee that notice of redemption has been given as herein
provided shall be conclusive as against all parties, and no Bondowner whose Bond is called for
redemption may object thereto or object to the cessation of interest on the redemption date fixed
by any claim by showing that he failed actually to receive such a notice of call and redemption.
E. Redemption Fund. There is hereby created with the Trustee a special trust fund
called the "La Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 1,
Tax Allocation Bonds, Series 2002, Redemption Fund" (hereinafter referred to as the
"Redemption Fund"). There shall be set aside in the Redemption Fund, prior to mailing as above
required, moneys for the purpose and sufficient to redeem, at the premiums, if any, payable as
provided in this Indenture, the Bonds designated in such notice of redemption to be redeemed as
provided in this section. Said moneys must be set aside in the Redemption Fund solely for that
purpose and shall be applied by the Trustee to the payment (principal and premium, if any) of the
Bonds to be redeemed upon presentation and surrender of such Bonds. Moneys for the purpose
and sufficient to redeem the Bonds designated in the notice as hereinbefore required to be
redeemed as provided in this Section shall be deposited in the Redemption Fund on or prior to
the business day preceding the redemption date. Any interest due on the Bonds on or prior to the
redemption date shall be paid, pro rata with the 1994 Bonds, the 1998 Bonds and the 2001 Bonds
then subject to mandatory sinking fund redemption, if necessary, from the Debt Service Fund
upon presentation and surrender thereof.
F. Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part
only, the Agency shall execute and the Trustee shall authenticate and deliver to the registered
owner thereof, at the expense of the Agency, a new Bond or Bonds of authorized denominations
equal in aggregate principal amount to the unredeemed portion of the Bond surrendered and of
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the same interest rate and same maturity. Such partial redemption shall be valid upon payment of
the amount thereby required to be paid to such registered owner, and the Agency and the Trustee
shall be released and discharged from all liability to the extent of such payment.
G. Effect of Redemption. Notice of redemption having been duly given as aforesaid,
and moneys for payment of the principal of, premium, if any, and interest payable upon
redemption of the Bonds being set aside as aforesaid, the Bonds, or parts thereof, as the case may
be, so called for redemption shall, on the redemption date, become due and payable at the
redemption price specified in such notice, interest on the Bonds, or parts thereof, as the case may
be, so called for redemption shall cease to accrue, shall cease to be entitled to any lien, benefit or
security under this Indenture, and the Owners of said Bonds shall have no rights in respect
thereof except to receive payment of the redemption price thereof, and, in the case of partial
redemption of Bonds, also to receive a new Bond or Bonds for the unredeemed balance as
aforesaid.
All Bonds, or parts thereof, as the case may be, redeemed pursuant to the provisions of
this Section shall be cancelled upon surrender thereof.
H. Purchase of Bonds. In lieu of redemption, the Trustee, at the written direction of
the Agency, shall purchase Bonds from amounts on deposit in the Redemption Fund on the open
market at a price not to exceed the current redemption price on the next succeeding Interest
Payment Date plus accrued interest, if any, to the date of purchase.
Section 2.4 Book Entry.
(a) Original Delivery. The Bonds shall be initially delivered in the form of a separate
single fully registered Bond without coupons (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., as nominee of the Depository Trust Company
(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 Agency and the Trustee shall have no responsibility or obligation to any
Depository System Participant or to any person on behalf of which holds an interest in the
Bonds. Without limiting the generality of the immediately preceding sentence, the Agency 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, (iii) 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 of premium, if any, or interest on the Bonds or (iv) any consent given or other action
taken by the Depository as Owner of the Bonds. The Agency 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, premium and interest on such Bond, for the purpose of
giving notices of redemption and other matter, with respect to such Bond, for the purpose of
04,w/
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268403.02 PM02 -19- () 0
registering transfers of ownership of such Bond, and for all other purposes whatsoever. The
Trustee shall pay the principal of and 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
Agency 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 Agency 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 Agency 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 Agency or the Trustee any obligation whatsoever with respect to
persons having interests in the Bonds other than the Bond Owners. The Trustee agrees to comply
with all provisions in such letter with respect to the giving of notices thereunder by the Trustee.
In addition to the execution and delivery of such letter, the Agency may take 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 Agency determines to
terminate the Depository as such, then the Agency shall thereupon discontinue the book -entry
system with such Depository. In such event, the Depository shall cooperate with the Agency 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 Agency 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 of this Article 2. Prior to its
termination, the Depository shall furnish the Trustee with the names and addresses of the
Participants and respective ownership interests thereof.
(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.
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Section 2.5 Form of Bonds.
The Bonds, the form of Trustee's Certificate of Authentication, and the form of
Assignment to appear thereon, shall be substantially in the form set forth in Exhibit A, which is
attached hereto and by this reference incorporated herein, with necessary or appropriate
variations, omissions and insertions, as permitted or required by this Indenture.
Section 2.6 Execution of Bonds.
The Bonds shall be executed on behalf of the Agency by the signature of its Chairperson,
Executive Director or Assistant Executive Director and the signature of its Secretary who are in
office on the date of this Indenture or at any time thereafter. Either or both of such signatures
shall be made manually or shall be affixed by facsimile thereof. If any officer whose signature
appears on any Bond ceases to be such officer before delivery of the Bonds to the purchaser,
such signature shall nevertheless be as effective as if the officer had remained in office until the
delivery of the Bonds to the purchaser. Any Bond shall be signed and attested on behalf of the
Agency by such persons as at the actual date of the execution of such Bond shall be the proper
officers of the Agency although on the date of such Bond any such person shall not have been
such officer of the Agency.
Only such of the Bonds as shall bear thereon a certificate of authentication in the form
hereinbefore set forth, executed manually and dated by and in the name of the Trustee 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 such Bonds have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture. In the
event temporary Bonds are issued pursuant to Section 2.10 hereof, the temporary Bonds may
bear thereon a certificate of authentication executed and dated by the Trustee, may be initially
registered by the Trustee, and, until so exchanged as provided under Section 2.10 hereof, the
temporary Bonds shall be entitled to the same benefits pursuant to this Indenture as definitive
Bonds authenticated and delivered hereunder.
Section 2.7 Transfer of Bonds.
Any Bond may, in accordance with its terms, be transferred, upon the Registration
Books, by the person in whose name it is registered, in person or by a duly authorized attorney of
such person, upon surrender of such Bond to the Trustee at its Trust Office for cancellation,
accompanied by delivery of a duly executed written instrument of transfer in a form acceptable
to the Trustee. Whenever any Bond or Bonds shall be surrendered for registration of transfer, the
Agency shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds, of like
series, interest rate, maturity and principal amount. The Trustee shall collect from the Owner any
tax or other governmental charge on the transfer of any Bonds pursuant to this Section 2.7.
The Trustee may refuse to transfer, under the provisions of this Section 2.7, any Bond
which has matured or has been called for redemption.
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Section 2.8 Exchange of Bonds.
Bonds may be exchanged at the Trust Office of the Trustee for a like aggregate principal
amount of Bonds of other authorized denominations of the same series, interest rate and
maturity. The Trustee shall collect any tax or other governmental charge on the exchange of any
Bonds pursuant to this Section 2.8.
The Trustee may refuse to exchange, under the provisions of this Section 2.8, any Bond
which has matured or has been called for redemption.
Section 2.9 Registration Books.
The Trustee will keep or cause to be kept, at its Trust Office, sufficient records for the
registration and registration of transfer of the Bonds, which shall at all times during normal
business hours be open to inspection by the Agency, upon reasonable prior notice to the Trustee;
and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as
it may prescribe, register or transfer or cause to be registered or transferred, on the Registration
Books, Bonds as hereinbefore provided.
Section 2.10 Temporary Bonds.
The Bonds shall be initially issued in temporary form exchangeable for definitive Bonds
when ready for delivery. The temporary Bonds shall be printed, lithographed or typewritten,
shall be of such denominations as shall be determined by the Agency, and shall contain such
reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond
shall be executed by the Agency upon the same conditions and in substantially the same manner
as the definitive Bonds. If the Agency issues temporary Bonds it will execute and furnish
definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for
cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall deliver
in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds
of authorized. denominations, interest rates and like maturities. Until so exchanged, the
temporary Bonds shall be entitled to the same benefits pursuant to this Indenture as definitive
Bonds authenticated and delivered hereunder.
Section 2.11 Bonds, Mutilated, Lost, Destroyed or Stolen.
If any Bond shall become mutilated, the Agency, at the expense of the owner of such
Bond, shall execute, and the Trustee shall thereupon deliver, a new Bond of like tenor and
amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the
Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be
canceled by it and delivered to, or upon the order of, the Agency. If any Bond shall be lost,
destroyed or stolen, evidence of such loss, destruction or theft shall be submitted to the Trustee
and, if such evidence and the indemnity to be given satisfactory to the Trustee, the Agency, at the
.expense of the Owner, shall execute, and the Trustee shall thereupon deliver, a new Bond of like
tenor and amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The
Agency may require payment by the Owner of a sum not exceeding the actual cost of preparing
each new Bond issued under this Section 2.11 and of the expenses which may be incurred by the
Agency. and the Trustee in the premises. Any Bond issued under the provisions of this Section in r
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lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional
contractual obligation on the part of the Agency whether or not the Bond so alleged to be lost,
destroyed or stolen be at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of this Indenture with all other Bonds issued pursuant to
this Indenture.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS;
PARITY DEBT
Section 3.1 Issuance of Bonds.
Upon the execution and delivery of this Indenture, the Agency shall execute and deliver
to the Trustee Bonds in the aggregate principal amount Million Dollars
($ ) and the Trustee shall authenticate and deliver the Bonds upon the Written
Request of the Agency.
Section 3.2 Application of Sale and Certain Other Amounts.
On the Closing Date the proceeds of sale of the Bonds in the amount of $
representing the principal amount of the Bonds of $ , less underwriters'
$ less original issue discount of $ , plus accrued interest of
$ , shall be paid to the Trustee and applied as follows:
discount of
(a) The Trustee shall deposit $ representing accrued interest
received on the sale of the Bonds in the Debt Service Fund;
(b) The Trustee shall deposit $ into the Costs of Issuance Account
within the Redevelopment Fund to pay the Costs of Issuance. At closing, the Trustee
shall wire transfer from the Costs of Issuance Account of the Redevelopment Fund
$ to the Bond Insurer as payment of the premium on the Financial Guaranty
Insurance Policy and $ to the Bond Insurer as payment of the premium on
the Surety Bond and pay the other Costs of Issuance as set forth in the Written Certificate
of the Agency;
(c) The Trustee shall deposit the remaining funds in the amount of
$ in the Redevelopment Fund.
The Trustee may establish such temporary fund or account on its records as it may deem
appropriate to facilitate such deposits and transfers.
Section 3.3 Redevelopment Fund.
There is hereby continued a separate fund known as the Redevelopment Fund (the
"Redevelopment Fund"), which the Agency hereby covenants and agrees to cause to be
maintained and which shall be held in trust by the Trustee. Within the Redevelopment Fund
herein, there is hereby established a temporary Account known as the Cost of Issuance Account,--41
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to be held by the Trustee hereunder in trust. The moneys in the Redevelopment Fund shall be
used in the manner provided by the Law solely for the purpose of aiding in financing the
Redevelopment Project. The moneys in the Cost of Issuance Account shall be used for the
payment of the Costs of Issuance. The Trustee shall pay moneys from the Cost of Issuance
Account upon receipt of claims thereon. The Agency has warranted that no funds on deposit in
the Redevelopment Fund shall be applied for any purpose not authorized by the Law. The
Trustee shall establish and hold a Costs of Issuance Account within the Redevelopment Fund
into which it shall make the deposit specified in section 3.3 (A)(3). Any amounts remaining in
said account as of October 1, 2002 shall be transferred to the Redevelopment Fund held by the
Trustee.
Section 3.4 Issuance of Parity Debt.
In addition to the Bonds, the Agency may, by Supplemental Indenture, issue or incur
Parity Debt payable from Pledged Tax Revenues on a parity with the Bonds to finance additional
redevelopment activities with respect to the Project Area in such principal amount as shall be
determined by the Agency. The Agency may issue or incur any such other Parity Debt subject to
the following specific conditions all of which are hereby made conditions precedent to the
issuance and delivery of such Parity Debt issued under this Section.
(a) The Agency shall be in compliance with all covenants set forth in this
Indenture, all Supplemental Indentures, the 1994 Indenture, and the 1998 Indenture and
the 2001 Indenture.
(b) The Pledged Tax Revenues estimated to be received for the then current
Fiscal Year based on the most recent assessed valuation of property in the Project Area as
evidenced in written documentation from an appropriate official of the County, shall be at
least equal to 130% of Maximum Annual Debt Service on all Bonds, Parity Debt, the
1994 Bonds, the 1998 Bonds, and the 2001 Bonds which will be Outstanding
immediately following the issuance of such Parity Debt; provided, however, for the
purpose of this subsection (b), Pledged Tax Revenues shall be exclusive of the product of
the following: (i) Tax Revenues attributable to all property subject to pending appeals
within the Project Area, times (ii) the percentage representing, (x) the actual amount of
reduction in assessed valuation as compared to (y) the aggregate assessed valuation of
such properties prior to the reduction as a result of successful appeals; provided further,
the percentage set forth in (ii) above shall be based on the County -wide experience, as
verified by an Independent Redevelopment Consultant, for the last two (2) fiscal years;
(c) The Supplemental Indenture providing for the issuance of such Parity
Debt under this Section 3.04 shall provide that interest thereon shall be payable on March
1 and September 1, and principal thereof shall be payable on September 1 in any year in
which principal is payable;
(d) The Supplemental Indenture providing for the issuance of such Parity
Debt may provide for the establishment of separate funds;
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(e) The aggregate amount of the principal of and interest on all Outstanding
Bonds, the 1994 Bonds, the 1998 Bonds, the 2001 Bonds, Parity Debt, if any, and
Subordinate Debt coming due and payable following the issuance of such Parity Debt
shall not exceed the maximum amount of tax increment revenues permitted under the
Plan Limit to be allocated and paid to the Agency following the issuance of such Parity
Debt;
(f) The aggregate principal amount of the Outstanding Bonds, the 1994
Bonds, the 1998 Bonds, the 2001 Bonds, the Parity Debt and Subordinate Debt following
the issuance of such Parity Debt shall not exceed the maximum principal amount of
indebtedness permitted under the Redevelopment Plan; and
(g) The Agency shall deliver to the Trustee a Written Certificate of the
Agency certifying that the conditions precedent to the issuance of such Parity Debt set
forth above in this Section 3.04 above have been satisfied and that an amount equal to the
Reserve Requirement is on deposit in the Reserve Fund as of the delivery of such Parity
Debt.
(h) For purposes of the issuance of Parity Debt or release of escrowed
proceeds unless otherwise approved by the Bond Insurer, Pledged Tax Revenues shall be
calculated by multiplying the most recent assessed value in the Project Area as certified
by the County by the basic 1 % tax rate (without regard to overrides) and shall be further
reduced by:
(i) the amount of subventions paid by the State or any other
amount appropriated by the State for the Agency;
(ii) unless the "Teeter Plan" is currently in effect and the
County has made no announcement that the plan would terminate, the
amount derived by applying the average percentage by which the actual
tax collections in the Project Area are less than the amount of the tax levy
in the Project Area for the immediately preceding two (2) Fiscal Years;
(ill) the maximum percentage of Tax Revenues payable to a
taxing entity pursuant to all non —subordinated Pass -Through Agreements,
regardless of whether such maximum percentage is in effect for that year;
if a Pass Through Agreement includes a step up provision or takes effect
upon the occurrence of some event, that pass through shall be calculated at
the maximum rate pursuant to the step up or as if the event had already
taken place;
(iv) the percentage of Tax Revenues which must be deposited
to the Low and Moderate Income Housing Fund with the exception of
amounts which, in the opinion of Bond Counsel, may be used to pay Debt
Service;
(v) The amount required to be paid to the County for
administrative expenses; 5
1]
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(i) Prior to the issuance of Parity Debt or release of escrowed proceeds an
independent redevelopment consultant shall certify that Pledged Tax Revenues, adjusted
pursuant to the parity test, are at least 1.30X Maximum Annual Debt Service on the
Bonds, the 1994 Bonds, the 1998 Bonds, the 2001 Bonds, and Parity Debt outstanding
after the issuance of the proposed Parity Debt; and
0) If the Agency has outstanding or proposes to issue bonds bearing interest
at a variable rate, the interest on such bonds shall be assumed to be the maximum interest
rate allowable under the financing document in all instances where an assumption about
interest rates is necessary unless the interest rate is "synthetically" fixed with a Bond
Insurer approved interest rate swap or cap agreement which is in effect for the life of the
bonds, in which case the synthetically fixed rate shall be used.
Section 3.5 Issuance of Subordinate Debt.
In addition to the Bonds, the Agency may incur Subordinate Debt in such principal
amount as shall be determined by the Agency. The Agency may issue or incur such Subordinate
Debt subject to the following specific conditions precedent:
(a) The Agency shall be in compliance with all covenants set forth in this
Indenture, all Supplemental Indentures, the 1994 Indenture, the 1998 Indenture and the
2001 Indenture.
(b) If, and to the extent, such Subordinate Debt is payable from tax increment
revenues within the Plan Limit, then the aggregate amount of the principal of and interest
on all Outstanding Bonds, all Subordinate Debt, Parity Debt, the 1994 Bonds, the 1998
Bonds, and the 2001 Bonds coming due and payable following the issuance of such
Subordinate Debt shall not exceed the maximum amount of tax increment revenues
permitted under the Plan Limit to be allocated and paid to the Agency following the
issuance of such Subordinate Debt.
(c) Except with respect to any Subordinate Debt issued and delivered on the
Closing Date, the Agency shall deliver to the Trustee a Written Certificate of the Agency
certifying that the conditions precedent to the issuance of such Subordinate Debt set forth
in subsections (a) and (b) of this Section 3.05 have been satisfied.
Section 3.6 Validity of Bonds.
The validity of the authorization and issuance of the Bonds shall not be dependent upon
the completion of the Redevelopment Project or upon the performance by any person of his
obligation with respect to the Redevelopment Project.
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ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS
Section 4.1 Security of Bonds; Equal Security.
Except as provided in Section 6.06, the Bonds shall be equally secured by a first pledge
of and lien on a parity with the 1994 Bonds, the 1998 Bonds, and the 2001 Bonds on all of the
Pledged Tax Revenues and a first and exclusive pledge of and lien upon all of the moneys in the
Special Fund, the Debt Service Fund and the Reserve Fund without preference or priority for
series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the
Pledged Tax Revenues and such moneys, no funds or properties of the Agency shall be pledged
to, or otherwise liable for, the payment of principal of or interest on the Bonds.
In consideration of the acceptance of the Bonds by those who shall hold the same from
time to time, this Indenture shall be deemed to be and shall constitute a contract between the
Agency and the Owners from time to time of the Bonds, and the covenants and agreements
herein set forth to be performed on behalf of the Agency shall be for the equal and proportionate
benefit, 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 and delivery thereof, or otherwise for any
cause whatsoever, except as expressly provided therein or herein.
Section 4.2 Special Fund; Deposit of Pledged Tax Revenues.
There is hereby established a special fund to be known as the "Special Fund", which shall
be held by the Agency and invested in Permitted Investments. The Agency shall deposit all of
the Pledged Tax Revenues received in any Bond Year in the Special Fund promptly upon receipt
thereof by the Agency, until such time during such Bond Year as the amounts on deposit in the
Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit
into the Debt Service Fund and the Reserve Fund in such Bond Year pursuant to Section 4.3 and
for deposit in such Bond Year in the funds and accounts established with respect to Parity Debt,
as provided in any Supplemental Indenture.
All Pledged Tax Revenues received by the Agency during any Bond Year in excess of
the amount required to be deposited in the Special Fund during such Bond Year pursuant to the
preceding paragraph of this Section 4.2 shall be released from the pledge and lien hereunder for
the security of the Bonds and may be applied by the Agency for any lawful purposes of the
Agency, including but not limited to the payment of Subordinate Debt, or the payment of any
amounts due and owing to the United States of America pursuant to Section 5.12. Prior to the
payment in full of the principal of and interest on the Bonds and the payment in full of all other
amounts payable hereunder and under any Supplemental Indentures, the Agency shall not have
any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be
provided in this Indenture and in any Supplemental Indenture.
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Section 4.3 Deposit of Amounts by Trustee.
There is hereby established a trust fund to be known as the "Debt Service Fund" and a
trust fund known as the "Reserve Fund", to be held by the Trustee hereunder in trust. Moneys in
the Special Fund shall be transferred by the Agency in the following amounts, at the following
times, for deposit by the Trustee in the funds:
(a) Debt Service Fund. On or before the second Business Day preceding each
Interest Payment Date, the Agency shall withdraw from the Special Fund and transfer to
the Trustee for deposit in the Debt Service Fund an amount which when added to the
amount contained in the Debt Service Fund on that date, will be equal to the aggregate
amount of the interest becoming due and payable on the Outstanding Bonds on such
Interest Payment Date. No such transfer and deposit need be made to the Debt Service
Fund if the amount contained therein is at least equal to the interest to become due on the
next succeeding Interest Payment Date upon all of the Outstanding Bonds. On or before
the second Business Day preceding September 1 in each year, beginning September 1,
2003 the Agency shall withdraw from the Special Fund and transfer to the Trustee for
deposit in the Debt Service Fund an amount which, when added to the amount then
contained in the Debt Service Fund, will be equal to the principal and/or sinking fund
payment becoming due and payable on the outstanding Bonds, on the next Interest
Payment Date. No such transfer and deposit need be made to the Debt Service Fund if the
amount contained therein is at least equal to the principal to become due on the next
Interest Payment Date on all of the Outstanding serial Bonds and any maturing term
Bonds. All moneys in the Debt Service Fund shall be used and withdrawn by the Trustee
solely for the purpose of paying the interest and the principal of the serial Bonds and
maturing Term Bonds as it shall become due and payable.
(b) Reserve Fund. In the event that the amount on deposit in the Reserve
Fund at any time becomes less than the Reserve Requirement, the Trustee shall promptly
notify the Agency of such fact to the extent known to the Trustee. Promptly upon receipt
of any such notice, the Agency shall withdraw from the Special Fund and transfer to the
Trustee an amount sufficient to maintain the Reserve Requirement on deposit in the
Reserve Fund. If there shall then not be sufficient moneys in the Special Fund to transfer
an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve
Fund, the Agency shall be obligated to continue making transfers as Pledged Tax
Revenues become available in the Special Fund until there is an amount sufficient to
maintain the Reserve Requirement on deposit in the Reserve Fund. No such transfer and
deposit need be made to the Reserve Fund so long as there shall be on deposit therein a
sum at least equal to the Reserve Requirement. All money in the Reserve Fund shall be
used and withdrawn by the Trustee solely for the purpose of making transfers to the Debt
Service Fund, in the event of any deficiency at any time in the Debt Service Fund for the
retirement of all the Bonds then Outstanding, except that so long as the Agency is not in
default hereunder, any amount in the Reserve Fund in excess of the Reserve Requirement
shall be withdrawn from the Reserve Fund semiannually on the third Business Day
preceding each March 1 and September 1 by the Trustee and upon receipt of a Written
Request of the Agency deposited in the Rebate Fund or in the Debt Service Fund. All
amounts in the Reserve Fund on the final Interest Payment Date shall be withdrawn from
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the Reserve Fund and shall be transferred either (i) to the Debt Service Fund, to the
extent required to make the deposits then required to be made pursuant to this Section
4.3, or (ii) if the Agency shall have caused to be deposited in the Debt Service Fund an
amount sufficient to make the deposits required by this Section 4.3, then the Trustee shall
upon the Written Request of the Agency transfer the remaining amount to the Rebate
Fund or to the Agency for deposit in the Redevelopment Fund.
The Agency reserves the right to substitute, at any time and from time to
time, one or more letters of credit, Alternative Reserve Account Security, bond
insurance policies or other form of guarantee approved in writing by the Bond
Insurer from a financial institution the long-term unsecured obligations of which
are rated to the Bond Insurer's satisfaction in substitution for or in place of all or
any portion of the Reserve Requirement, under the terms of which the Trustee is
unconditionally entitled to draw amounts when required for the purposes hereof.
Upon deposit by the Agency with the Trustee of any such letter of credit, surety
bond, bond insurance policy or other form of guarantee, the Trustee shall
withdraw from the Reserve Fund and transfer to the Agency for deposit in the
Redevelopment Fund an amount equal to the principal amount of such letter of
credit, Alternative Reserve Account Security, bond insurance policy or other form
of guarantee. The Reserve Fund will initially be funded with the Alternative
Reserve Account Security to be issued by the Bond Insurer in the amount of the
Reserve Requirement.
If and to the extent that the Reserve Fund has been funded with a
combination of cash (or Permitted Investments) and a Alternative Reserve
Account Security, then all such cash (or Permitted Investments) shall be
completely used before any demand is made on such Alternative Reserve Account
Security, and replenishment of the Alternative Reserve Account Security shall be
made prior to any replenishment of any such cash (or Permitted Investments). If
the Reserve Fund is funded, in whole or in part, with more than one Alternative
Reserve Account Security, then any draws made against such Alternative Reserve
Account Security shall be made pro-rata. If it is necessary to make a draw upon
the Bond Insurer's Alternative Reserve Account Security, the Trustee shall
deliver to the Bond Insurer a Demand for Payment (as defined in the Bond
Insurer's Alternative Reserve Account Security) substantially in the form required
by the Bond Insurer's Alternative Reserve Account Security at least three days
prior to the date on which the funds from such draw are needed. The Trustee shall
maintain adequate records, verified by the Bond Insurer, as to the amount
available to be drawn at any given time under the Bond Insurer's Surety Bond.
If during any Bond Year (i) Pledged Tax Revenues remain in the Special
Fund after providing (or otherwise reserving) for all deposits required by clause
(a) during the entirety of such Bond Year, (ii) the amounts on deposit in the
Reserve Fund and in any debt service reserve account established with respect to
any Parity Debt are equal to or exceed their respective required funding levels,
(iii) any Alternative Reserve Account Security used to fund the Reserve Fund or
any debt service reserve accounts established with respect to any Parity Debt are ff33
Uv
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fully replenished and all interest on amounts advanced under such Alternative
Reserve Account Security has been paid to the provider thereof, and (iv) the
Agency is not in default hereunder, then any moneys then on deposit in the
Special Fund may be used in any manner provided by law for the purpose of
aiding in financing the Redevelopment Project, including early redemption or
purchase of the Bonds and Parity Debt, as provided in this Indenture and
permitted by the Law.
(c) Surplus. The Agency shall not be required to deposit in the Special Fund
in any Bond Year an amount of Pledged Tax Revenues which, together with other
available amounts in the Special Fund, exceeds the amounts required to be transferred to
the Trustee from the Special Fund with respect to such Bond Year pursuant to this
Section 4.3. In the event that, for any reason whatsoever, any amount shall remain on
deposit in the Special Fund on the last day of any Bond Year (being the applicable
September 1) after making all of the transfers from the Special Fund with respect to such
Bond Year theretofore required to be made pursuant to this Section 4.3 the Agency may
withdraw such amount from the Special Fund to be used for any lawful purpose of the
Agency.
Section 4.4 Payment Procedure Pursuant to the Surety Bond.
As long as the Surety Bond shall be in full force and effect, the Agency and Trustee agree
to comply with the following provisions:
(a) In the event and to the extent that moneys on deposit in the Debt Service
Fund plus all amounts on deposit in and credited to the Reserve Fund in excess of the
amount of the Surety Bond, are insufficient to pay the amount of principal and interest
coming due, then upon the later of (i) one (1) day after receipt by the General Counsel of
Bond Insurer of a demand for payment in the form attached to the Surety Bond as
Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that
payment due from the Agency for payment of interest or principal on the Bonds under the
Indenture has not been made to the Trustee; or (ii) the payment date of the Obligations as
defined in the Demand for Payment presented by the Trustee to the General Counsel of
Bond Insurer, Bond Insurer will make a deposit of funds in an account with the Trustee
or its successor, in New York, New York, sufficient for the payment to the Trustee of
amounts which are then due to the Trustee under the Indenture (as specified in the
Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in
the Surety Bond; provided, however, that in the event that the amount on deposit in, or
credited to, the Reserve Fund, in addition to the amount available under the Surety Bond
includes amounts available under a letter of credit, insurance policy, surety bond or other
such funding instrument (the "Additional Funding Instrument"), draws on the Surety
Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the
insufficiency.
(b) Trustee shall, after submitting to Bond Insurer, the Demand for Payment
as provided in (a) above, make available to Bond Insurer all records relating to the Funds
and Accounts maintained under this Indenture. ` ;.►
IV
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(c) the Trustee shall, upon receipt of moneys received from the draw on the
Surety Bond, as specified in the Demand for Payment, credit the Reserve Fund to the
extent of moneys received pursuant to such Demand.
(d) the Reserve Fund shall be replenished in the following priority: (i)
principal and interest on the Surety Bond shall be paid from first available Revenues,
principal and interest on the Surety Bond and on the Additional Funding Instrument shall
be paid from first available Revenues on a pro rata basis; (ii) after all such amounts are
paid in full, amounts necessary to fund the Reserve Fund to the required level, after
taking into account the amounts available under the Surety Bond and the Additional
Funding Instrument shall be deposited from next available Revenues.
ARTICLE V
OTHER COVENANTS OF THE AGENCY
Section 5.1 Punctual Payment.
The Agency shall punctually pay or cause to be paid the principal and interest to become
due in respect of all the Bonds together with, the premium thereon, if any, in strict conformity
with the terms of the Bonds and of this Indenture. The Agency shall faithfully observe and
perform all of the conditions, covenants and requirements of this Indenture and all Supplemental
Indentures and the Bonds. Nothing herein contained shall prevent the Agency from making
advances of its own moneys howsoever derived to any of the uses or purposes referred to herein.
Section 5.2 Limitation of Additional Indebtedness; Against Encumbrances.
The Agency hereby covenants that, so long as the Bonds are Outstanding, the Agency
shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur
any indebtedness, which is in any case payable from all or any part of the Pledged Tax
Revenues, excepting only the Bonds, the 1994 Bonds, the 1998 Bonds, the 2001 Bonds, any
Parity Debt and any Subordinate Debt, and the Agency will not otherwise encumber, pledge or
place any charge or lien upon any of the Pledged Tax Revenues or other amounts pledged to the
Bonds superior to or on a parity with the pledge and lien herein created in the Indenture for the
benefit of the Bonds. Any Pass -Through Agreements entered into by the Agency pursuant to
Section 33401 of the Law or any other applicable provisions of the Law after the date of this
Indenture, shall provide that payment of any amounts thereunder shall be subordinate to the
pledge in this Indenture of Pledged Tax Revenues or other amounts pledged to the payment of
the Bonds.
Section 5.3 Extension of Payment.
The Agency will not, directly or indirectly, extend or consent to the extension of the time
for the payment of any Bond or claim for interest on any of the Bonds and will not, directly or
indirectly, be a party to or approve any such arrangement by purchasing or funding the Bonds or
claims for interest in any other manner. In case the maturity of any such Bond or claim for
interest shall be extended or funded, whether or not with the consent of the Agency, such Bond
or claim for interest so extended or funded shall not be entitled, in case of default hereunder, to •I
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the benefits of this Indenture, except subject to the prior payment in full of the principal of all of
the Bonds then Outstanding and of all claims for interest which shall not have been so extended
or funded.
Section 5.4 Payment of Claims.
The Agency shall promptly pay and discharge, or cause to be paid and discharged, any
and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or
charge upon the properties owned by the Agency or upon the Pledged Tax Revenues or any part
thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the
Bonds. Nothing herein contained shall require the Agency to make any such payment so long as
the Agency in good faith shall contest the validity of said claims.
Section 5.5 Books and Accounts; Financial Statements; Annual Calculation of
Available Tax Revenues.
The Agency shall keep, or cause to be kept, proper books of record and accounts,
separate from all other records and accounts of the Agency and the City of La Quinta, in which
complete and correct entries shall be made of all transactions relating to the Redevelopment
Project, the Tax Revenues and the Special Fund. Such books of record and accounts shall at all
times during business hours be subject to the inspection of the Owners of not less than ten
percent (10%) in aggregate principal amount of the Bonds then Outstanding, or their
representatives authorized in writing.
The Agency will cause to be prepared and filed with the Trustee annually, within one
hundred and eighty (180) days after the close of each Fiscal Year so long as the Bonds are
Outstanding, complete audited financial statements with respect to such Fiscal Year showing the
Tax Revenues, all disbursements of Tax Revenues and the financial condition of the
Redevelopment Project, including the balances in all funds and accounts relating to the
Redevelopment Project, as of the end of such Fiscal Year. The Agency shall furnish a copy of
such statements to any Owner upon reasonable request and at the expense of such Owner.
Section 5.6 Protection of Security and Rights of Owners.
The Agency will preserve and protect the security of the Bonds and the rights of the
Owners From and after the Closing Date, the Bonds shall be incontestable by the Agency.
Section 5.7 Payments of Taxes and Other Charges.
Except as otherwise provided herein, the Agency will pay and discharge, or cause to be
paid and discharged, all taxes, service charges, assessments and other governmental charges
which may hereafter be lawfully imposed upon the Agency or the properties then owned by the
Agency in the Project Area, or upon the revenues therefrom when the same shall become due.
Nothing herein contained shall require the Agency to make any such payment so long as the
Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency
will duly observe and conform with all valid requirements of any governmental authority relative
to the Redevelopment Project or any part thereof.
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Section 5.8 Taxation of Property.
All amounts derived by the Agency pursuant to Section 33673 of the Law with respect to
the lease of property for redevelopment shall be treated as Tax Revenues for all purposes of this
Indenture.
Section 5.9 Disposition of Property.
The Agency will not participate in the disposition of any land or real property in the
Project Area to anyone which will result in such property becoming exempt from taxation
because of public ownership or use or otherwise (except property dedicated for public right—of—
way and except property planned for public ownership or use by the Redevelopment Plan in
effect on the date of this Indenture) so that such disposition shall, when taken together with other
such dispositions, aggregate more than 10 percent of the land area or more than 10 percent of the
most recent assessed valuation of the property in the Project Area unless such disposition is
permitted as hereinafter provided in this Section 5.9. If the Agency proposes to participate in
such a disposition, it shall thereupon appoint an Independent Redevelopment Consultant to
report on the effect of said proposed disposition. If the Report of the Independent
Redevelopment Consultant concludes that the security of the Bonds or the rights of the owners
will not be materially impaired by said proposed disposition, the Agency may thereafter make
such disposition. If said Report concludes that such security will be materially impaired by said
proposed disposition, the Agency shall disapprove said proposed disposition.
Section 5.10 Maintenance of Tax Revenues.
The Agency shall comply with all requirements of the Law to insure the allocation and
payment to it of the Tax Revenues, including, without limitation, the timely filing of any
necessary statements of indebtedness with appropriate officials of the County and, in the case of
amounts payable by the State appropriate officials of the State. No amendment to the
Redevelopment Plan shall reduce Pledged Tax Revenues as certified by an Independent
Redevelopment Consultant unless consented to by Bond Insurer.
Section 5.11 Tax Covenants.
The Agency covenants and agrees to contest by court action or otherwise any assertion by
the United States of America or any department or agency thereof that the interest received by
the Bondowners is includable in gross income of the recipient under federal income tax laws.
Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that
the exclusion from gross income of interest with respect to the Bonds and any Parity Debt will
not be adversely affected for federal income tax purposes, the Agency covenants to comply with
all applicable requirements of the Code necessary to preserve such exclusion from gross income
and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The Agency will take no action or refrain from taking
any action or make any use of the proceeds of the Bonds or any Parity Debt or of any
other moneys or property which would cause the Bonds to be "private activity bonds"
within the meaning of Section 141 of the Code;
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(b) Arbitrage. The Agency, will make no use of the proceeds of the Bonds or
any Parity Debt or of any other amounts or property, regardless of the source, or take any
action or refrain from taking any action which will cause the Bonds to be "arbitrage
bonds" within the meaning of Section 148 of the Code;
(c) Federal Guaranty. The Agency will make no use of the proceeds of the
Bonds or any Parity Debt or take or omit to take any action that would cause the Bonds to
be "federally guaranteed" within the meaning of Section 149(b) of the Code;
(d) Information Repo. The Agency will take or cause to be taken all
necessary action to comply with the informational reporting requirement of Section
149(e) of the Code;
(e) Hedge Bonds. The Agency will make no use of the proceeds of the Bonds
or any Parity Debt or any other amounts or property, regardless of the source, or take any
action or refrain from taking any action that would cause either the Bonds to be
considered "hedge bonds" within the meaning of Section 149(g) of the Code unless the
Agency takes all necessary action to assure compliance with the requirements of Section
149(g) of the Code to maintain the exclusion from gross income of interest on the Bonds
for federal income tax purposes; and
(f) Miscellaneous. The Agency will take no action or refrain from taking any
action inconsistent with its expectations stated in that certain Tax Certificate executed by
the Agency in connection with each issuance of Bonds and any Parity Debt and will
comply with the covenants and requirements stated therein and incorporated by reference
herein.
Section 5.12 Establishment and Application of Rebate Fund.
(a) Establishment. A special fund is hereby created and designated the
"Rebate Fund" to be held by the Trustee and in which there shall be established two
separate accounts designated the "Rebate Account" and the "Alternative Penalty
Account." Absent an opinion of Bond Counsel that the exclusion from gross income for
federal income tax purposes of interest on the Bonds will not be adversely affected, the
Agency shall cause to be deposited in each such account of the Rebate Fund such
amounts as are required to be deposited therein pursuant to this Section and the Tax
Certificate. All money at any time deposited in the Rebate Account or the Alternative
Penalty Account shall be held by the Trustee in trust for payment to the United States
Treasury. All amounts on deposit in the Rebate Fund shall be governed by this Section
and the Tax Certificate, unless and to the extent that the Agency delivers to the Trustee
an opinion of Bond Counsel that the exclusion from gross income for federal income tax
purposes of interest on the Bonds will not be adversely affected if such requirements are
not satisfied.
(1) Rebate Account. The following requirements shall be satisfied
with respect to the Rebate Account:
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(i) Payment to the Treasury. The Trustee shall pay, as directed
by a representative of the Agency, to the United States Treasury, out of
amounts in the Rebate Account,
(X) Not later than 60 days after the end of (A) the fifth Bond
Year, and (B) each applicable fifth Bond Year thereafter, an amount equal
to at least 90% of the Rebatable Arbitrage calculated as of the end of such
Bond Year; and
(Y) Not later than 60 days after the payment of all the Bonds,
an amount equal to 100% of the Rebatable Arbitrage calculated as of the
end of such applicable Bond Year, and any income attributable to the
Rebatable Arbitrage, computed in accordance with Section 148 (f) of the
Code.
In the event that, prior to the time of any payment required to be
made from the Rebate Account, the amount in the Rebate Account is not
sufficient to make such payment when such payment is due, the Agency
shall calculate or cause to be calculated the amount of such deficiency and
deposit an amount received from any legally available source equal to
such deficiency prior to the time such payment is due. Each payment
required to be made pursuant to this Subsection (a) (1) shall be made to
the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on
or before the date on which such payment is due, and shall be
accompanied by Internal Revenue Service Form 8038—T, or shall be made
in such other manner as provided under the Code.
(2) Alternative Penalty Account.
(i) Six -Month Computation. If the 1-1/2% Penalty has been
elected, within 85 days of each particular Six —Month Period, the Agency
shall determine or cause to be determined whether the 1-1/2% Penalty is
payable (and the amount of such penalty) as of the close of the applicable
Six —Month Period. The Agency shall obtain expert advice in making such
determinations.
(ii) Six -Month Transfer. Within 85 days of the close of each
Six -Month Period, upon the written direction of an Agency
Representative, the Trustee shall deposit in the Alternative Penalty
Account from any legally available source of funds (as specified by the
Agency in the aforesaid written direction), if and to the extent required, so
that the balance in the Alternative Penalty Account equals the amount of
1-1/2% Penalty due and payable to the United States Treasury determined
as provided in Subsection (a) (2)(i) above. In the event that immediately
following the transfer provided in the previous sentence, the amount then
on deposit to the credit of the Alternative Penalty Account exceeds the
amount required to be on deposit therein to make the payments required
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by Subsection (a) (2) (iii) below, the Trustee, at the written direction of a
representative of the Agency, shall withdraw the excess from the
Alternative Penalty Account and credit the excess to the Debt Service
Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed
in writing by an Agency Representative, to the United States Treasury, out
of amounts in the Alternative Penalty Account, not later than 90 days after
the close of each Six —Month Period the 1-1/2% Penalty, if applicable and
payable, computed in accordance with Section 148 (f) (4) of the Code. In
the event that, prior to the time of any payment required to be made from
the Alternative Penalty Account, the amount in such account is not
sufficient to make such payment when such payment is due, the Agency
shall calculate the amount of such deficiency and direct the Trustee to
deposit an amount received from any legally available source of funds —
equal to such deficiency into the Alternative Penalty Account prior to the
time such payment is due. Each payment required to be made pursuant to
this Subsection (a) (2) shall be made to the Internal Revenue Service,
Philadelphia, Pennsylvania 19255 on or before the date on which such
payment is due, and shall be accompanied by Internal Revenue Service
Form 8038—T or shall be made in such other manner as provided under the
Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate
Fund after payment of the Bonds, the payments described in Subsection (a) (1)(i) or
(a)(2)(iii) (whichever is applicable), may be withdrawn by the Agency and utilized in any
manner by the Agency.
(c) Survival of Defeasance. Notwithstanding anything in this Section or this
Indenture to the contrary, the obligation to comply with the requirements of this Section
shall survive the defeasance of the Bonds.
Section 5.13 Compliance with the Code.
The Agency shall take any and 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 5.14 Compliance with the Law; Low and Moderate Income Housing Fund.
The Agency shall ensure that all activities undertaken by the Agency with respect to the
redevelopment of the Project Area are undertaken and accomplished in conformity with all
applicable requirements of the Redevelopment Plan and the Law. In the event the Agency shall
amend the Redevelopment Plan, the Agency shall receive prior written approval of such
amendment from the Bond Insurer, which approval shall not be unreasonably withheld, in
particular, with respect to those provisions which do not adversely affect the Agency's pledge of
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Pledged Tax Revenues under this Indenture. Without limiting the generality of the foregoing, the
Agency covenants that it shall deposit or cause to be deposited in the Low and Moderate Income
Housing Fund established pursuant to Section 33334.3 of the Law, all amounts when, as and if
required to be deposited therein pursuant to the Law and shall expend amounts deposited in the
Low and Moderate Income Housing Fund, including, without limitation, proceeds of any Parity
Debt deposited therein, solely in accordance with Section 33334.2 of the Law.
Section 5.15 Management and Operation of Properties.
The Agency will manage and operate all properties owned by the Agency and comprising
any part of the Redevelopment Project, in a sound and businesslike manner, and will keep such
properties insured at all times in conformity with sound business practice.
Section 5.16 Annual Review of Tax Revenue.
On the first Business Day of each Fiscal Year, the Agency will review (i) the total
amount of Tax Revenues remaining available to received by the Agency under the
Redevelopment Plan, and (ii) the outstanding principal of and interest on the Bonds, the 1994
Bonds, the 1998 Bonds, the 2001 Bonds, the Parity Debt, if any, and Subordinate Debt, if any.
In the event the Agency shall determine that its acceptance of Tax Revenues in any Fiscal Year
will cause to amount remaining under the Plan Limit to be less than the outstanding principal of
and interest on the Bonds, the 1994 Bonds, the 1998 Bonds, the 2001 Bonds, the Parity Debt, if
any, and Subordinate Debt, if any, the Agency shall (i) deposit Tax Revenues in the Special Fund
in an amount equal to the principal of and interest on the Bonds for that Fiscal Year, and (ii)
deposit the remaining Tax Revenues in an escrow fund to be then established and held by the
Agency for the purpose of redeeming all the then outstanding Bonds, the 1994 Bonds, the 1998
Bonds, the 2001 Bonds, the Parity Debt, if any, and the Subordinate Debt, if any.
Section 5.17 Covenant With Respect to Mortgages.
The Agency covenants that the proceeds of the Bonds will not be used directly or
indirectly for mortgages (or similar security instruments) on owner -occupied residences so as to
cause the Bonds to be subject to the provisions of Section 143 of the Code and the Tax
Regulations promulgated thereunder.
Section 5.18 Further Assurances.
The Agency 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 rights and benefits provided in this Indenture.
Section 5.19 Continuing Disclosure.
The Agency 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 Agency to comply with the Continuing Disclosure Agreement shall not
be considered an Event of Default; however, any Participating Underwriter or any holder or
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beneficial owner of the Bonds may take such actions as may be necessary and appropriate to
compel performance, including seeking a mandate or specific performance by court order.
ARTICLE VI
THE TRUSTEE
Section 6.1 Duties, Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to the occurrence of an Event of Default, and after
the curing or waiver of all Events of Default which may have occurred, perform such
duties and only such duties as are specifically set forth in this Indenture and no implied
covenants shall be read into this Indenture against the Trustee. The Trustee shall, during
the existence of any Event of Default (which has not been cured or waived), exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) The Agency may remove the Trustee at any time, unless an Event of
Default shall have occurred and then be continuing, and shall remove the Trustee (i) if at
any time requested to do so by an instrument or concurrent instruments in writing signed
by the Owners of not less than a majority in aggregate principal amount of the Bonds
then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time the
Agency has knowledge that the Trustee shall cease to be eligible in accordance with
subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or
any public officer shall take control or charge of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation. In each case such removal
shall be accomplished by the giving of written notice of such removal by the Agency to
the Trustee, whereupon the Agency shall appoint a successor Trustee by an instrument in
writing.
(c) The Trustee may at any time resign by giving written notice of such
resignation to the Agency and by giving the Owners notice of such resignation by first
class mail, postage prepaid, at their respective addresses shown on the Registration
Books. Upon receiving such notice of resignation, the Agency shall promptly appoint a
successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor
Trustee shall become effective upon acceptance of appointment by the successor Trustee.
If no successor Trustee shall have been appointed and have accepted appointment within
forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the
resigning Trustee or any owner (on behalf of such owner and all other Owners) may
petition any court of competent jurisdiction at the expense of the Agency for the
appointment of a successor Trustee, and such court may thereupon, after such notice (if
any) as it may deem proper, appoint such successor Trustee. Any successor Trustee
appointed under this Indenture shall signify its acceptance of such appointment by
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executing and delivering to the Agency and to its predecessor Trustee a written
acceptance thereof, and thereupon such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the moneys, estates, properties, rights,
powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if
originally named Trustee herein; but, nevertheless at the Written Request of the Agency
or the request of the successor Trustee, such predecessor Trustee shall execute and
deliver any and all instruments of conveyance or further assurance and do such other
things as may reasonably be required for more fully and certainly vesting in and
confirming to such successor Trustee all the right, title and interest of such predecessor
Trustee in and to any property held by it under this Indenture and shall pay over, transfer,
assign and deliver to the successor Trustee any money or other property subject to the
trusts and conditions herein set forth. Upon request of the successor shall execute and
deliver any and all instruments as may be reasonably required for more fully and
certainly vesting in and confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment
by a successor Trustee as provided in this subsection, the Agency shall mail a notice of
the succession of such Trustee to the trusts hereunder to each rating agency which then
has a current rating on the Bonds and to the Owners at their respective addresses. shown
on the Registration Books. If the Agency fails to mail such notice within fifteen (15) days
after acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Agency.
(e) Any Trustee appointed under the provisions of this Section in succession
to the Trustee shall be a trust company, a federally chartered savings institution or bank
having the powers of a trust company, or authorized to exercise trust powers, having a
trust office in the State, having a combined capital and surplus of at least $75,000,000,
and subject to supervision or examination by federal or state authority. If such bank,
savings institution 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 subsection the combined capital and surplus of
such bank, savings institution 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. In case
at any time the Trustee shall cease to be eligible in accordance with the provisions of this
subsection (e), the Trustee shall resign immediately in the manner and with the effect
specified in this Section.
Section 6.2 Merger or Consolidation.
Any bank, federally chartered savings institution or trust company into which the Trustee
may be merged or converted or with which either of them may be consolidated or any bank,
savings institution or trust company resulting from any merger, conversion or consolidation to
which it shall be a party or any bank, savings institution or trust company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, provided such bank,
savings institution or trust company shall be eligible under subsection (e) of Section 6.1, shall be
the successor to such Trustee without the execution or filing of any paper or any further act,
anything herein to the contrary notwithstanding.
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Section 6.3 Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as
statements of the Agency, and the Trustee shall not assume responsibility for the
correctness of the same, nor make any representations as to the validity or sufficiency of
this Indenture or of the Bonds nor shall incur any responsibility in respect thereof, other
than as expressly stated herein. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for
its own negligence or intentional misconduct. The Trustee shall not be liable for the acts
of any agents of the Trustee selected by it with due care. The Trustee may become the
Owner of any Bonds with the same rights it would have if it were not Trustee and, to the
extent permitted by law, may act as depositary 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 the Owners, whether or not such committee shall represent
the owners of a majority in principal amount of the Bonds then Outstanding.
(b) The Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with the direction of the Owners of not less
than a majority in aggregate principal amount of the Bonds at the time Outstanding
relating to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the Trustee
under this Indenture.
(c) The Trustee shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture, except for actions arising from the negligence or intentional
misconduct of the Trustee. The permissive right of the Trustee to do things enumerated
hereunder shall not be construed as a mandatory duty.
(d) The Trustee shall not be deemed to have knowledge of any Event of
Default hereunder unless and until it shall have actual knowledge thereof, or shall have
received written notice thereof at its Trust Office. Except as otherwise expressly provided
herein, the Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or of any of
the documents executed in connection with the Bonds, or as to the existence of an Event
of Default thereunder. The Trustee shall not be responsible for the validity or
effectiveness of any collateral given to or held by it. Without limiting the generality of
the foregoing, the Trustee shall not be responsible for reviewing the contents of any
financial statements furnished to the Trustee pursuant to Section 5.5.
No provision of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it. The Trustee shall be entitled to charge interest on all amounts advanced by it
hereunder at the maximum rate permitted by law.
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The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys or receivers and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent, attorney or receiver
appointed with due care by it hereunder.
The Trustee shall have no responsibility with respect to any information, statement, or
recital in any official statement, offering memorandum or any other disclosure material prepared
or distributed with respect to the Bonds.
Section 6.4 Right to Rely on Documents.
The Trustee shall be protected in acting upon any notice, resolution, request, consent,
order, certificate, report, opinion or other paper or document believed by it to be genuine and to
have been signed or prescribed by the proper party or parties, in the absence of negligence or
intentional misconduct by the Trustee.
The Trustee shall not be bound to recognize any person as the owner of a Bond unless
and until such Bond is submitted for inspection, if required, and his title thereto is established to
the satisfaction of the Trustee.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a Written
Certificate of the Agency, which shall be full warrant to the Trustee for any action taken or
suffered in good faith under the provisions of this Indenture in reliance upon such Written
Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such
matter or may require such additional evidence as it may deem reasonable. The Trustee may
conclusively rely on any certificate or report of any Independent Accountant or Independent
Redevelopment Consultant appointed by the Agency.
Section 6.5 Preservation and Inspection of Documents.
All documents received by the Trustee under the provisions of this Indenture shall be
retained in its possession and shall be subject at all reasonable times upon reasonable notice to
the inspection of the Agency and any Owner, and their agents and representatives duly
authorized in writing, during regular business hours and under reasonable conditions.
Section 6.6 Compensation and Indemnification.
The Agency shall pay to the Trustee from time to time reasonable, compensation for all
services rendered under this Indenture in accordance with the letter proposal from the Trustee
approved by the Agency and also all reasonable expenses, charges, legal and consulting fees
(including fees and expenses of internal legal counsel of Trustee) and other disbursements and
those of its attorneys, agents and employees, incurred in and about the performance of its powers
and duties under this Indenture. Upon the occurrence of an Event of Default, the Trustee shall
have a first lien on the Tax Revenues and all funds and accounts held by the Trustee hereunder to
secure the payment to the Trustee of all fees, costs and expenses, including reasonable
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compensation to its experts, attorneys and counsel incurred in declaring such Event of Default
and in exercising the rights and remedies set forth in Article VIII hereof.
The Agency 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, 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
intentional misconduct of the Trustee, its officers, directors, agents or employees. The
obligations of the Agency and the rights of the Trustee under this Section 6.6 shall survive
resignation or removal of the Trustee under this Indenture and payment of the Bonds and
discharge of this Indenture.
Section 6.7 Deposit and Investment of Moneys in Funds.
Moneys in the funds established hereunder shall, in accordance with a Written Request of
the Agency, be invested by the Trustee in Permitted Investments. The Trustee may conclusively
rely on any direction contained in a Written Request of the Agency to invest in investments that
such investments are Permitted Investments. In the absence of a Written Request of the Agency,
the Trustee shall invest moneys in item B(5) of the definition of Permitted Investments. The
obligations in which moneys in the said funds are invested shall mature on or prior to the date on
which such moneys are estimated to be required to be paid out hereunder. The obligations in
which moneys in the Reserve Fund are so invested shall be invested in obligations maturing no
later than five years after the date of investment; provided no such investment shall mature later
than the final maturity of the Bonds; provided further, if such investments may be redeemed at
par so as to be available on each Interest Payment Date, any amount of the Reserve Fund may be
invested in such redeemable investments of any maturity on or prior to the final maturity of the
Bonds. The Trustee shall sell or present for redemption any obligations so purchased whenever it
may be necessary to do so in order to provide moneys to meet any payment required under this
Indenture. Notwithstanding anything herein to the contrary, the Trustee shall not be responsible
for any loss from investments, sales or transfers undertaken in accordance with this Indenture.
Any interest, income or profits from the deposits or investments of all funds (except the Rebate
Fund and, to the extent required by Section 4.3 hereof, the Reserve Fund) shall be deposited in
the Debt Service Fund. For purposes of determining the amount of deposit in any fund held
hereunder, all income `and profits from Permitted Investments credited to such fund shall be
valued at market value. The Trustee shall annually, on or about September 1 of each year
commencing on September 1, 2002 and at such times as the Agency shall deem appropriate,
value the investments in such funds. Notwithstanding anything to the contrary contained herein,
in making any valuations of investments hereunder, the Trustee may utilize computerized
securities pricing services that may be available to it, including those available through its
regular accounting system. Except as otherwise provided in this Section, Permitted Investments
representing an investment of moneys attributable to any fund and all investment profits or losses
thereon shall be deemed at all times to be a part of said fund.
For purposes of this provision, the Trustee may act as principal or agent in the acquisition
or disposition of investments. For purposes of this Section, the Trustee may commingle moneys
in funds and accounts established under the Indenture. The Agency acknowledges that to the
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extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant
the Agency the right to receive brokerage confirmations of security transactions as they occur,
the Agency will not receive such confirmations to the extent permitted by law. The Trustee will
furnish the Agency periodic cash transaction statements which include detail for all investment
transactions made by the Trustee hereunder. The Trustee may make any investments hereunder
through its own bond or investment department or trust investment department, or those of its
parent or any affiliate. 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 6.8 Accounting Records and Financial Statements.
The Trustee shall at all times keep, or cause to be kept, proper books of record and
account, prepared in accordance with industry standards, in which complete and accurate entries
shall be made of all transactions relating to the proceeds of the Bonds made by it and all funds
and accounts held by the Trustee established pursuant to this Indenture. Such books of record
and account shall be available for inspection by the Agency at reasonable hours and under
reasonable circumstances. The Trustee shall furnish to the Agency, at least monthly, an
accounting of all transactions in the form of its customary statements relating to the proceeds of
the Bonds and all funds and accounts held by the Trustee pursuant to this Indenture.
Section 6.9 Appointment of Co -Trustee or Agent.
It is the purpose of this Indenture that there shall be no violation of any law of any
jurisdiction (including particularly the law of the State) denying or restricting the right of
banking corporations or associations to transact business as Trustee in such jurisdiction. It is
recognized that in the case of litigation under this Indenture, and in particular in case of the
enforcement of the rights of the Trustee on default, or in the case the Trustee 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 6.9 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 Agency be required by the separate 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 in
writing shall, on request, be executed, acknowledged and delivered by the Agency. In case any
separate co -trustee, or a successor, shall become incapable of acting, resign or be removed, all
the estates, properties, rights, powers, trusts, duties and obligations of such separate or co—
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trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a new successor or co —trustee to such separate or co —trustee.
No Trustee or separate or co -trustee shall be liable for the actions or omissions of such
other Trustee or separate or co -trustee.
In addition to the appointment of a co -trustee hereunder, the Trustee may, at the expense
and with the prior written consent of the Agency, appoint any agent of the Trustee in New York,
New York, for the purpose of administering the transfers or exchanges of Bonds or for the
performance of any other responsibilities of the Trustee hereunder.
Section 6.10 Powers of Bond Insurer in Relation to the Trustee.
(a) The Trustee may be removed at any time, at the request of Bond Insurer
for any breach of this Indenture.
(b) Bond Insurer shall receive prior written notice of any Trustee resignation.
(c) Every successor Trustee appointed pursuant to this Section shall be a trust
company or bank in good standing located in or incorporated under the laws of the State,
duly authorized to exercise trust powers and subject to examination by federal or state
authority, having a reported capital and surplus of not less than $75,000,000 and shall not
be appointed unless Bond Insurer approves such successor in writing.
(d) Notwithstanding any other provision of this Indenture, in determining
whether the rights of the Bondholders will be adversely affected by any action taken
pursuant to the terms and provisions of this Indenture, the Trustee shall consider the
effect on the Bondholders as if there were no Financial Guaranty Insurance Policy.
(e) Notwithstanding any other provision of this Indenture, no removal,
resignation or termination of the Trustee shall take effect until a successor, acceptable to
Bond Insurer, shall be appointed.
ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 7.1 Amendment With Consent of Owners.
Upon the prior consent of the Bond Insurer, this Indenture and the rights and obligations
of the Agency and of the owners may be modified or amended at any time by a Supplemental
Indenture which shall become binding upon adoption, without consent of any Owners, 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 Agency 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 Agency;
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(b) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in this Indenture,
or in any other respect whatsoever as the Agency may deem necessary or desirable,
provided under any circumstances that such modifications or amendments shall not
materially adversely affect the interests of the Owners;
(c) to provide for the issuance of Parity Debt pursuant to Section 3.4 or the
issuance of Subordinate Debt pursuant to Section 3.5, and to provide the terms and
conditions under which such Parity Debt or Subordinate Debt may be issued, including,
but not limited to, the establishment of special funds and accounts relating thereto and
any other provisions relating solely thereto, subject to and in accordance with the
provisions of Sections 3.4 and 3.5; or
(d) to amend any provision hereof relating to the requirements of or
compliance with the 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.
Except as set forth in the preceding paragraph, upon the prior consent of the Bond
Insurer, this Indenture and the rights and obligations of the Agency and of the owners may be
modified or amended at any time by a Supplemental Indenture which shall become binding when
the written consent of the owners of a majority in aggregate principal amount of the Bonds then
Outstanding are filed with the Trustee. No such modification or amendment shall (a) extend the
maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of
the Agency to pay the principal or interest 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.
Section 7.2 Effect of Supplemental Indenture.
From and after the time any Supplemental Indenture becomes effective pursuant to this
Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith,
the respective rights., duties and obligations of the parties hereto or thereto and all Owners, as
the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modification and amendment, and all the terms and conditions of any
Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
Section 7.3 Endorsement or Replacement of Bonds After Amendment.
After the effective date of any amendment or modification hereof pursuant to this Article
VII, the Agency may determine that any or all of the Bonds shall bear a notation, by
endorsement in form approved by the Agency, as to such amendment or modification and in that
case upon demand of the Agency the Owners of such Bonds shall present such Bonds for that
purpose at the Trust Office of the Trustee, and thereupon a suitable notation as to such action
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shall be made on such Bonds. In lieu of such notation, the Agency may determine that new
Bonds shall be prepared at the expense of the Agency and executed in exchange for any or all of
the Bonds, and in that case, upon demand of the Agency, the Owners of the Bonds shall present
such Bonds for exchange at the Trust Office of the Trustee, without cost to such Owners.
Section 7.4 Amendment by Mutual Consent.
The provisions of this Article VII shall not prevent any owner from accepting any
amendment as to the particular Bond held by such owner, provided that due notation thereof is
made on such Bond.
Section 7.5 Notice to Standard & Poor' s.
The Agency agrees to forward to Standard & Poor's Ratings Group, 25 Broadway, New
York, New York 10004, any amendments consented to by the Bond Insurer and entered into
pursuant to this Article VII.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
Section 8.1 Events of Default.
The following events shall constitute Events of Default hereunder:
(a) if default shall be made in the due and punctual payment of the principal
of or interest on any Bond when and as the same shall become due and payable, whether
at maturity as therein expressed, by declaration or otherwise;
(b) if default shall be made by the Agency in the observance of any of the
covenants, agreements or conditions on its part in this Indenture or in the Bonds
contained, other than a default described in the preceding clause (a) , and such default
shall have continued for a period of sixty (60) days following receipt by the Agency of
written notice from the Trustee or any Owner of the occurrence of such default; or
(c) if the Agency shall commence a voluntary action under Title 11 of the
United States Code or any substitute or successor statute.
If an Event of Default has occurred and is continuing, the Trustee shall, if directed by the
Bond Insurer, or if requested in writing by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding and consented to by the Bond Insurer, (a) declare the
principal of the Bonds, together with the accrued interest thereon, to be due and payable
immediately, and upon any such declaration the same shall become immediately due and
payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and (b)
exercise any remedies available to the Trustee and the owners in law or at equity.
Immediately upon receiving notice or actual knowledge of the occurrence of an Event of
Default, the Trustee shall give notice of such Event of Default to the Bond Insurer and the
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Agency by telephone confirmed in writing. Such notice shall also state whether the principal of
the Bonds shall have been declared to be or have immediately become due and payable. With
respect to any Event of Default described in clauses (a) or (c) above the Trustee shall, and with
respect to any Event of Default described in clause (b) above the Trustee in its sole discretion
may, also give such notice to the Owners by mail, which shall include the statement that interest
on the Bonds shall cease to accrue from and after the date, if any, on which the Trustee shall
have declared the Bonds to become due and payable pursuant to the preceding paragraph (but
only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually
paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal
of the Bonds shall have been so declared due and payable, and before any judgment or decree for
the payment of the moneys due shall have been obtained or entered, the Agency shall deposit
with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such
declaration and all matured installments of interest (if any) upon all the Bonds, with interest on
such overdue installments of principal and interest (to the extent permitted by law) at the net
effective rate per annum of the Bonds, and the reasonable expenses of the Trustee (including fees
and expenses of its counsel), and any and all other defaults known to the Trustee (other than in
the payment of principal of and interest on the Bonds due and payable solely by reason of such
declaration) shall have been made good or cured to the satisfaction of the Trustee or provision
deemed by the Trustee to be adequate shall have been made therefor, then, and in every such
case, the Owners of at least a majority in aggregate principal amount of the Bonds then
Outstanding, by written notice to the Agency and to the Trustee, may, on behalf of the Owners of
all of the Bonds, rescind and annul such declaration and its consequences. However, no such
rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or
exhaust any right or power consequent thereon.
Section 8.2 Application of Funds.
All of the Pledged Tax Revenues and all sums in the funds and accounts established and
held by the Trustee hereunder upon the date of the declaration of an Event of Default, and all
sums thereafter received by the Trustee hereunder, shall be applied by the Trustee in the order
following upon presentation of the several Bonds, and the stamping thereon of the payment if
only partially paid, or upon the surrender thereof if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee in declaring
such Event of Default and in exercising the rights and remedies set forth in this Article
VIII, 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 principal and interest, with interest on the overdue principal and installments of
interest at the net effective rate then borne by the outstanding Bonds (to the extent that
such interest on overdue installments of principal and interest shall have been collected) ,
and in case such moneys shall be insufficient to pay in full the whole amount so owing
and unpaid upon the Bonds, then to the payment of such principal and interest without
preference or priority of principal over interest, or interest over principal, or of any
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installment of interest over any other installment of interest, ratably to the aggregate of
such principal and interest.
Section 8.3 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
the direction of the Bond Insurer or upon the request of the Owners of a majority in principal
amount of the Bonds then Outstanding upon the consent of the Bond Insurer, 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.
Section 8.4 Limitation on Owner's Right to Sue.
No Owner of any Bond issued hereunder shall have the right to institute any suit, action
or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such
Owner shall have previously given to the Trustee 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, including fees and expenses of its counsel, to be incurred in
compliance with such request; and (d) the Trustee shall have refused or omitted to 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.
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 any remedy
hereunder; it being understood and intended that no one or more Owners 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 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
premium, if any) and interest on such Bond as herein provided, 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.
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Section 8.5 Non -Waiver.
Nothing in this Article VIII or in any other provision of this Indenture or in the Bonds,
shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay
from the Pledged Tax Revenues and other amounts Pledged hereunder, the principal of and
interest on the Bonds to the respective Owners on the respective Interest Payment Dates, as
herein provided, or affect or impair the right of action, which is also absolute and unconditional,
of the Owners or the Trustee to institute suit to enforce such payment by virtue of the contract
embodied in the Bonds.
A waiver of any default by any Owner or the Trustee shall not affect any subsequent
default or impair any rights or remedies on the subsequent default. No delay or omission of any
Owner to exercise any right or power accruing upon any default shall impair any such 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 Owners and the Trustee by the 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 Owners and the Trustee.
If a suit, action or proceeding to enforce any right or exercise any remedy shall be
abandoned or determined adversely to the Owners or the Trustee, the Agency, the Trustee and
the Owners shall be restored to their former positions, rights and remedies as if such suit, action
or proceeding had not been brought or taken.
Section 8.6 Actions by Trustee as Attorney -in -Fact.
Any suit, action or proceeding which any owner 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 similarly situated and the Trustee is hereby appointed (and the successive
respective Owners by taking and holding the Bonds or Parity Debt, as applicable, shall be
conclusively deemed so to have appointed it) the true and lawful attorney -in -fact of the
respective Owners for the purpose of bringing any such suit, action or proceeding and to do and
perform any and all acts and things for and on behalf of the respective Owners as a class or
classes, as may be necessary or advisable in the opinion of the Trustee as such attorney -in -fact,
provided, however, the Trustee shall have no duty or obligation to exercise any such right or
remedy unless it has been indemnified to its satisfaction from any loss, liability or expense
(including fees and expenses of its counsel).
Section 8.7 Remedies Not Exclusive.
No remedy herein conferred upon or reserved to the Owners is intended to be exclusive
of any other remedy. Every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or
otherwise, and may be exercised without exhausting and without regard to any other remedy
conferred by the Law or any other law.
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ARTICLE IX
MISCELLANEOUS
•
Section 9.1 Benefits Limited to Parties.
Nothing in this Indenture, expressed or implied, is intended to give to any person other
than the Agency, the Trustee and the owners, any right, remedy, claim under or by reason of this
Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by
and on behalf of the Agency shall be for the sole and exclusive benefit of the Trustee and the
Owners.
Section 9.2 Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Agency or the
Trustee is named or referred to, such reference shall be deemed to include the successors or
assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf
of the Agency or the Trustee shall bind and inure to the benefit of the respective successors and
assigns thereof whether so expressed or not.
Section 9.3 Discharge of Indenture.
If the Agency shall pay and discharge the indebtedness evidenced by the Bonds, or any
portion thereof, 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 on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee or an escrow agent, 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 principal and interest; or
(c) by irrevocably depositing with the Trustee or an escrow agent, in
trust, Federal Securities in such amount as an Independent Certified Public Accountant
shall determine will, together with the interest to accrue thereon and available moneys
then on deposit in the funds and accounts established pursuant to this Indenture, be fully
sufficient to pay and discharge the indebtedness evidenced by such Bonds (including
principal and interest) at or before maturity;
and, in the event that the Agency has made either of the deposits referred to in paragraphs
(b) or (c) above, the Agency shall have provided the Trustee with (i) a report of an Independent
Certified Public Accountant to the effect that the moneys or obligations so deposited with the
Trustee are sufficient to pay the principal of, and interest on all Bonds Outstanding, as and when
the same shall become due and payable, and (ii) an opinion of Bond Counsel to the effect that all
conditions precedent to the defeasance of the Bonds have been met then, at the election of the
Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the
pledge of the Pledged Tax Revenues and other funds provided for in this Indenture and all other
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obligations of the Trustee and the Agency under this Indenture with respect to such Bonds shall
cease and terminate, except only (a) the obligations of the Agency under Section 5.12, (b) the
obligation of the Trustee to transfer and exchange such Bonds hereunder, (c) the obligations of
the Agency under Section 6.6, and (d) the obligation of the Agency to pay or cause to be paid to
the owners, from the amounts so deposited with the Trustee, all sums due thereon and to pay the
Trustee all fees, expenses and costs of the Trustee. Notice of such election shall be filed with the
Trustee. In the event the Agency shall, pursuant to the foregoing provision, pay and discharge
any portion or all of the Bonds then Outstanding, the Trustee shall be authorized to take such
actions and execute and deliver to the Agency all such instruments as may be necessary or
desirable to evidence such discharge, including, without limitation, selection by lot of Bonds of
any maturity of the Bonds that the Agency has determined to pay and discharge in part. In the
event the Agency shall, pursuant to the foregoing provision, pay and discharge all of the Bonds
then Outstanding, any funds thereafter held by the Trustee which are not required for said
purposes, shall be paid over to the Agency.
Notwithstanding anything herein to the contrary, in the event that the principal and/or interest
due on the Bonds shall be paid by Bond Insurer pursuant to the Financial Guaranty Insurance
Policy, the Bonds shall remain Outstaying for all purposes, not be defeased or otherwise satisfied
and not be considered paid by the Issuer, and the assignment and pledge of the trust estate and all
covenants, agreements and other obligations of the Agency to the registered owners shall
continue to exist and shall run to the benefit of Bond Insurer, and Bond Insurer shall be
subrogated to the rights of such registered owners.
Section 9.4 Execution of Documents and Proof of Ownership by Owners.
Any request, consent, declaration or other instrument which this Indenture may require or
permit to be executed by any Owner may be in one or more instruments of similar tenor, and
shall be executed by such Owner in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, declaration or other instrument, or of such writing
appointing such attorney, may be proved by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in the state in which he purports to
act, that the person signing such request, declaration or other instrument or writing
acknowledged to him the execution thereof, or by an affidavit of a witness of such execution,
duly sworn to before such notary public or other officer.
The ownership of Bonds and the amount, maturity, number and date of ownership thereof
shall be proved by the Registration Books.
Any request, consent, declaration or other instrument or writing of the owner of any Bond
shall bind all future Owners of such Bond in respect of anything done or suffered to be done by
the Agency or the Trustee in good faith and in accordance therewith.
Section 9.5 Disqualified Bonds.
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
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which are owned or held by or for the account of the Agency or the City of La Quinta (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.
Section 9.6 Waiver of Personal Liability.
No member, officer, agent or employee of the Agency shall be individually or personally
liable for the payment of the principal of or interest or any premium on the Bonds; but nothing
herein contained shall relieve any such member, officer, agent or employee from the
performance of any official duty provided by law.
Section 9.7 Destruction of Cancelled Bonds.
Whenever in this Indenture provision is made for the surrender to the Trustee of any
Bonds which have been paid or cancelled pursuant to the provisions of this Indenture, the
Trustee shall destroy such bonds and provide the Agency a certificate of destruction. The
Agency shall be entitled to rely upon any statement of fact contained in any certificate with
respect to the destruction of any such Bonds therein referred to.
Section 9.8 Notices.
Any notice, request, complaint, demand, communication or other paper shall be
sufficiently given and shall be deemed given when delivered or mailed by first class, postage
prepaid, or sent by facsimile, or other form of telecommunication, addressed as follows:
If to the Agency: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, California 92253
Attention: Executive Director
Telephone: (760) 777-7100
Facsimile: (760) 777-7101
If to the Trustee: U.S. Bank, N.A.
550 S. Hope Street, Suite 500
Los Angeles, California 90071
Attn: Corporate Trust Services
Telephone: (213) 533-8741
Facsimile: (213) 533-8729
If to the Bond Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Attn: Yolanda Ortiz
Telephone: (212) 208-3553
Facsimile: (212) 208-3404
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Section 9.9 Partial Invalidity.
If any Section, paragraph, sentence, clause or phrase of this Indenture shall for any reason
be held illegal, invalid or unenforceable, such holding shall not affect the validity of the
remaining portions of this Indenture. The Agency hereby declares that it would have adopted this
Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and
authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more
Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid
or unenforceable. If, by reason of the judgment of any court, the Trustee is rendered unable to
perform its duties hereunder, all such duties and all of the rights and powers of the Trustee
hereunder shall; pending appointment of a successor Trustee in accordance with the provisions
of Section 6.1 hereof, be assumed by and vest in the Treasurer of the Agency in trust for the
benefit of the Owners. The Agency covenants for the direct benefit of the Owners that its
Treasurer in such case shall be vested with all of the rights and powers of the Trustee hereunder,
and shall assume all of the responsibilities and perform all of the duties of the Trustee hereunder,
in trust for the benefit of the Owners of the Bonds, pending appointment of a successor Trustee
in accordance with the provisions of Section 6.1 hereof.
Section 9.10 Unclaimed Moneys.
Anything contained herein to the contrary notwithstanding, to the extent permitted by
law, any money held by the Trustee in trust for the payment and discharge of the interest or
premium (if any) on or principal of the Bonds which remains unclaimed for two (2) years after
the date when the payments of such interest, premium and principal have become payable, if
such money was held by the Trustee at such date, or for two (2) years after the date of deposit of
such money if deposited with the Trustee after the date when the interest and premium (if any)
on and principal of such Bonds have become payable, shall be repaid by the Trustee to the
Agency as its absolute property free from trust, and the Trustee shall thereupon be released and
discharged with respect thereto and the Bond Owners shall look only to the Agency for the
payment of the principal of and interest on such Bonds.
Section 9.11 Execution in Counterparts.
This Indenture may be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 9.12 Governing Law.
This Indenture shall be construed and governed in accordance with the internal laws of
the State.
Section 9.13 Provisions Relating to Bond Insurer.
A. Provisions Relating to Bond Insurer Consent.
(1) Consent of Bond Insurer. Any provision of this Indenture
expressly recognizing or granting rights in or to Bond Insurer may not be
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amended in any manner which affects the rights of Bond Insurer hereunder
without the prior written consent of Bond Insurer.
(2) Consent of Bond Insurer in Addition to Bondholder Consent.
Unless otherwise provided in this Section, Bond Insurer's consent shall be
required in addition to Bondholder consent, when required, for the following
purposes: (1) execution and delivery of any Supplemental Indenture or
amendment, supplement or change to or modification of the Indenture; (ii)
removal of the Trustee and selection and appointment of any successor trustee;
and (iii) initiation or approval of any action not described in (i) or (ii) above
which requires bondholder consent.
(3) Consent of Bond Insurer in the Event of Insolvency. Any
reorganization or liquidation plan with respect to the Agency must be acceptable
to Bond Insurer. In the event of any reorganization or liquidation, Bond Insurer
shall have the right to vote on behalf of all bondholders who hold Bond Insurer
insured bonds absent a default by Bond Insurer under the applicable Financial
Guaranty Insurance Policy insuring such Bonds.
(4) Consent of Bond Insurer Upon Default. Anything in this Indenture
to the contrary notwithstanding, upon the occurrence and continuance of an Event
of Default as defined herein, Bond Insurer shall be entitled to control and direct
the enforcement of all rights and remedies granted to the Bondholders or the
Trustee for the benefit of the Bondholders under this Indenture, including, without
limitation; (i) the right to accelerate the principal of the Bonds as described in this
Indenture, and (ii) the right to annul any declaration of acceleration and Bond
Insurer shall also be entitled to approve all waivers of Events of Default. Upon
the occurrence of an Event of Default, the Trustee may, with the consent of Bond
Insurer, and shall, at the written direction of Bond Insurer or the Bondholders
owning 51 % or more of the Principal of Bonds Outstanding with the consent of
Bond Insurer, by written notice to the Agency and Bond Insurer, declare the
principal of the bonds to be immediately due and payable, whereupon that portion
of the principal of the Bonds thereby coming due and the interest thereon accrued
to the date of payment shall, without further action, become be immediately due
and payable, anything in this Indenture or the Bonds to the contrary
notwithstanding.
B. Information to be Provided to the Bond Insurer.
(1) While the Financial Guaranty Insurance Policy or Surety Bond is
in effect, the Agency shall furnish Bond Insurer (to the attention of the
Surveillance Department, unless otherwise indicated):
(a) As soon as practicable after the filing thereof, a copy of
any financial statement of the Agency and a copy of any audit and annual
report of the Agency;
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(b) A copy of any notice to be give to the registered owners
of the Bonds, including, without limitation, notice of any redemption of or
defeasance of Bonds, and any certificate rendered pursuant to this
Indenture relating to the security for the Bonds; and
(c) Such additional information as Bond Insurer may
reasonably request.
(d) A copy of any notice to be given to the registered
owners of the Bonds, including without limitation, notice of any
redemption of or defeasance of Bonds, and any certificate rendered
pursuant to this Indenture relating to the security of the Bonds.
(e) To the extent that the Agency has entered into a
continuing disclosure agreement with respect to the Bonds, the Bond
Insurer shall be included as a party to be notified.
(2) The Trustee shall notify Bond Insurer (Attention: Surveillance
Department and General Counsel Office) of any failure of the Agency to provide
relevant notices, certificates, etc.
(3) The Agency will permit Bond Insurer to discuss the affairs,
finances and accounts of the Agency or any information Bond Insurer may
reasonably request regarding the security for the Bonds with appropriate officers
of the Agency. The Trustee or Agency will permit Bond Insurer to have access to
and to make copies of all books and records relating to the Bonds at any
reasonable time.
(4) Bond Insurer shall have the right to direct an accounting at the
Agency's expense, and the Agency's failure to comply with such direction within
thirty (30) days after receipt of written notice of the direction from Bond Insurer
shall be deemed a default hereunder; provided, however, that if compliance
cannot occur within such period, then such period will be extended so long as
compliance is begun within such period and diligently pursued, but only if such
extension would not materially adversely affect the interests of any registered
owner of the Bonds.
(5) Notwithstanding any other provision of this Indenture, the Trustee
or Agency shall immediately notify Bond Insurer (Attention: Surveillance
Department and General Counsel Office) if at any time there are insufficient
moneys under the Indenture to make any payments of principal and/or interest as
required and immediately upon the occurrence of any Event of Default hereunder.
(6) To the extent that the Agency has entered into a Continuing
Disclosure Agreement with respect to the Bonds, Bond Insurer shall be included
as party to be notified.
0 0 .1
WO
667
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Section 9.14 Payment Procedure Pursuant to the Financial Guaranty Insurance
Policy.
As long as the Financial Guaranty Insurance Policy shall be in full force and effect, the
Trustee agrees to comply with the following provisions:
(a) At least one (1) day prior to all Interest Payment Dates the Trustee will
determine whether there will be sufficient funds in the funds and accounts (including
from a draw on any Alternative Reserve Account Security) to pay the principal of or
interest on the Bonds on such Interest Payment Date. If the Trustee determines that there
will be insufficient funds in such funds or accounts, the Trustee shall so notify Bond
Insurer. Such notice shall specify the amount of the anticipated deficiency, the Bonds to
which such deficiency is applicable and whether such Bonds will be deficient as to
principal or interest, or both. If the Trustee has not so notified Bond Insurer at least one
(1) day prior to an Interest Payment Date, Bond Insurer will make payments of principal
or interest due on the Bonds on or before the first (1") day next following the date on
which Bond Insurer shall have received notice of nonpayment from the Trustee.
(b) the Trustee shall, after giving notice to Bond Insurer as provided in
(a) above, make available to Bond Insurer and, at Bond Insurer's direction, to the Bank of
New York, New York, New York, as insurance trustee for Bond Insurer or any successor
insurance trustee (the "Insurance Trustee"), the registration books of the Agency
maintained by the Trustee, and all records relating to the funds and accounts maintained
under this Indenture.
(c) the Trustee shall provide Bond Insurer and the Insurance Trustee with a
list of registered owners of Bonds entitled to receive principal or interest payments from
Bond 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 Bonds entitled to receive full or partial interest payments from Bond Insurer
and (ii) to pay principal upon Bonds surrendered to the Insurance Trustee by the
registered owners of Bonds entitled to receive full or partial principal payments from
Bond Insurer.
(d) the Trustee shall, at the time it provides notice to Bond Insurer pursuant to
(a) above, notify registered owners of Bonds entitled to receive the payment of principal
or interest thereon from Bond Insurer (i) as to the fact of such entitlement, (ii) that Bond
Insurer will remit to them all or a part of the interest payments next coming due upon
proof of Bondholder entitled to interest payments and delivery 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 Bond Insurer, they must
surrender their Bonds (along with an appropriate instrument of assignment in form
satisfactory to the Insurance Trustee to permit ownership of such Bonds to be registered
in the name of Bond 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 Bond
Insurer, they must surrender their Bonds for payment thereon first to the Trustee, who
shall note on such Bonds the portion of the principal paid by the Trustee, and then, along
Os
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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 Bond which has become due for payment and which is made to a
Bondholder by or on behalf of the Agency 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 Bond Insurer is
notified, notify Bond Insurer and 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 Bond Insurer to the extent of such recovery if sufficient funds are not
otherwise available, and the Trustee shall furnish to Bond Insurer its records evidencing
the payments of principal of and interest on the Bonds 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 Bond Insurer under this Indenture, Bond
Insurer shall, to the extent it makes payment of principal of or interest on Bonds, 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 Bond
Insurer's rights as subrogee on the registration books of the Agency maintained by the
Trustee, upon recipient from Bond Insurer of proof of the payment of interest thereon to
the registered owners of the Bonds, and (ii) in the case of subrogation as to claims for
past due principal, the Trustee shall note Bond Insurer's rights as subrogee on the
registration books of the Agency maintained by the Trustee, upon surrender of the Bonds
by the registered owners thereof together with proof of the payment of principal thereof.
Section 9.15 Payment Procedure Pursuant to the Surety Bond.
A. As long as the Surety Bond shall be in full force and effect, the Agency and
Trustee agree to comply with the following provisions:
(a) In the event and to the extent that moneys on deposit in the Debt Service
Fund, plus all amounts on deposit in and credited to the Reserve Fund in excess of the
amount of the Surety Bond, are insufficient to pay the amount of principal and interest
coming due, then upon the later of (i) one (1) day after receipt by the General Counsel of
the Bond Insurer of a demand for payment in the form attached to the Surety Bond as
Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that
payment due under the Indenture has not been made to the Trustee; or (ii) the payment
date of the Bonds as specified in the Demand for Payment presented by the Trustee to the
General Counsel of the Bond Insurer, Bond Insurer will make a deposit of funds in an
account with the Trustee or its successor, in New York, New York, sufficient for the
payment to the Trustee, of amounts which are then due to the Trustee under the Indenture
(as specified in the Demand for Payment) up to but not in excess of the Surety Bond
Coverage, as defined in the Surety Bond; provided, however, that in the event that the �, *-
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amount on deposit in, or credited to, the Reserve Fund, in addition to the amount
available under the Surety Bond or other such funding instrument (the "Additional
Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument
shall be made on a pro rata basis to fund the insufficiency.
(b) the Trustee shall, after submitting to the Bond Insurer the Demand for
Payment as provided in (a) above, make available to the Bond Insurer all records relating
to the funds and accounts maintained under this Indenture.
(c) the Trustee shall, upon receipt of moneys received from the draw on the
Surety Bond, as specified in the Demand for Payment, credit the Reserve Fund to the
extent of moneys received pursuant to such Demand.
(d) the Reserve Fund shall be replenished in the following priority: (i)
[principal and interest on the Surety Bond shall be paid from first available Pledged
Revenues] [principal and interest on the Surety Bond and on the Additional Funding
Instrument shall be paid from first available Pledged Revenues on a pro rata basis]; (ii)
after all such amounts are paid in full, amounts necessary to fund the Reserve Fund to the
required level, after taking into account the amounts available under the Surety Bond
[and the Additional Funding Instrument] shall be deposited from the next available
Pledged Revenues.
Section 9.16 Interested Parties.
A. Bond Insurer As Third Party Beneficiary. To the extent that this Indenture
confers upon or gives or grants to Bond Insurer any right, remedy or claim under or by
reason of this Indenture, Bond Insurer is hereby explicitly recognized as being a
third -party beneficiary hereunder and may enforce any such right remedy or claim
conferred, given or granted hereunder.
B. Parties Interested Herein. Nothing in this Indenture expressed or implied
is intended or shall be construed to confer upon, or to give or grant to, any person or
entity, other than the Agency, the Trustee, Bond Insurer, and the registered owners of the
Bonds, any right, remedy or claim under or by reason of this Indenture or any covenant,
condition or stipulation hereof, and all covenants, stipulations, promises and agreements
in this Agency contained by and on behalf of the Agency shall be for the sole and
exclusive benefit of the Agency, the Trustee, Bond Insurer, and the registered owners of
the Bonds.
C. Notwithstanding anything in this Indenture to the contrary, if Bond Insurer
has failed to make any payments under the Financial Guaranty Insurance Policy, and such
failure remains unremedied, all rights accruing to Bond Insurer hereunder with respect to
the giving of instructions approvals or consents shall cease to be in force and effect until
such time as such failure to make such payments has been remedied.
[SIGNATURES ON NEXT PAGE]
Oev
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IN WITNESS WHEREOF, the LA QUINTA REDEVELOPMENT AGENCY, has
caused this Indenture to be signed in its name by its Executive Director and attested by its
Secretary, and U.S. BANK, N.A., by its Authorized Officer and attested by an Authorized
Officer, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be
signed in its corporate name by its officer thereunto duly authorized, all as of the day and year
first above written.
ATTEST:
Secretary
LA QUINTA REDEVELOPMENT AGENCY
LIM
Executive Director
U.S. BANK, N.A.,
as Trustee
0
Authorized Officer
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R-1
EXHIBIT A
(FORM OF BOND)
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNT OF RIVERSIDE
LA QUINTA REDEVELOPMENT AGENCY
LA QUINTA REDEVELOPMENT PROJECT AREA NO. 1
TAX ALLOCATION BONDS, SERIES 2002
INTEREST RATE:
REGISTERED OWNER:
PRINCIPAL SUM:
MATURITY DATE: DATED DATE:
September 1, June 1, 2002
Cede & Co.
CUSIP:
504194
The LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic,
duly organized and existing under and by virtue of the laws of the State of California (the
"Agency"), for value received hereby promises to pay to the Registered Owner stated above, or
registered assigns, on the Maturity Date stated above, the Principal Sum stated above, in lawful
money of the United States of America, and to pay interest thereon in like lawful money from the
interest payment date next preceding the date of the authentication of this Bond, unless (i) this
Bond is authenticated prior to an interest payment date and after the close of business on the
fifteenth day of the month preceding such interest payment date, in which event it shall bear
interest from such interest payment date, or (iii) this Bond is authenticated on or before
, 2002, in which event it shall bear interest from the Dated Date above; provided
however, that if at the time of authentication of this Bond, interest is in default on this Bond, this
Bond shall bear interest from the interest payment date to which interest has previously been
paid or made available for payment on this Bond, until payment of such Principal Sum in full, at
the Interest Rate per annum above, payable semiannually on September 1 and March 1 in each
year, commencing September 1, 2002, calculated on the basis of 360-day year comprised of
twelve 30-day months. Principal hereof is payable at the corporate trust office of U.S. Bank,
N.A., as trustee (the "Trustee"), in St. Paul, Minnesota. Interest hereon (including the final
interest payment upon maturity) is payable by check of the Trustee mailed by first class mail to
the Registered Owner hereof at the Registered Owner's address as is appears on the registration
books maintained by the Trustee at the close of business on the fifteenth day of the month next
preceding such interest payment ate; provided however, that payment of interest may be by wire
transfer to an account in the Continental United States to any registered owner of Bonds in the
aggregate principal amount of $1,000,000 or more upon written instructions of any such
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registered owner filed with the Trustee for that purpose prior to the close of business on the
fifteenth calendar day of the month next preceding such interest payment date.
This Bond is one of a duly authorized issue of bonds of the Agency designated as "La
Quinta Redevelopment Agency, La Quinta Redevelopment Project Area No. 1, Tax Allocation
Bonds, Series 2002" (the "Bonds"), of an aggregate principal amount of Forty -Six Million
Dollars ($46,000,000), all of like tenor and date (except for such variations if any, as may be
required to designate varying series, numbers, maturities or interest rates and other provisions)
and all issued pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of
Title 1 of the Government Code of the State of California and the Community Redevelopment
Law, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California
(collectively, the "Law") and pursuant to a resolution of the Agency adopted on May 7, 2002,
and an Indenture of Trust, dated as of June 1, 2002, (the "Indenture") entered into by and
between the Agency and U.S. Bank, N.A. (the "Trustee"), in Los Angeles, California authorizing
the issuance of the Bonds. Additional bonds, notes or other obligations may be issued on a
parity with the Bonds, but only subject to the terms of the Indenture. Reference is hereby made
to the Indenture (copies of which are on file at the office of the Agency) and all indentures
supplemental thereto and to the Law for a description of the terms on which the Bonds are
issued, the provisions with regard to the nature and extent of the Pledged Tax Revenues, as that
term is defined in the Indenture, and the rights thereunder of the registered owners of the Bonds
and the rights, duties and immunities of the Trustee and the rights and obligations of the Agency
thereunder, to all of the provisions of which Indenture the Registered Owner of this Bond, by
acceptance hereof, assents and agrees.
The Bonds have been issued by the Agency to provide financing for additional
redevelopment projects, as further provided in the Indenture. '
The Bonds are special obligations of the Agency and this Bond and the interest hereon
and all other Bonds and the interest thereon (to the extent set forth in the Indenture), are payable
from and are secured by a first pledge of the lien of the Pledged Tax Revenues derived by the
Agency from the Project Area (as defined in the Indenture) on a parity with the 1994 Bonds and
the 1998 Bonds.
There has been created and will be maintained by the Agency, the Special Fund (as
defined in the Indenture) into which Pledged Tax Revenues shall be deposited from which the
Agency shall transfer to the Trustee moneys for payment of the principal of and the interest on
the Bonds when due. As and to the extent set forth in the Indenture, all such Pledged Tax
Revenues are exclusively and irrevocably pledged to and constitute a trust fund, in accordance
with the terms hereof and the provisions of the Indenture and the Law, for the security and
payment of principal of, and for the security and payment of interest on, the Bonds. In addition,
the Bonds shall be additionally secured at all times by a first and exclusive pledge of and lien
upon all of the moneys in the Special Fund, the Debt Service Fund and the Reserve Fund (as
such terms are defined in the Indenture). Except for the Pledged Tax Revenues and such
moneys, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the
payment of principal of or interest on the Bonds.
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The Bonds may be called before maturity and redeemed at the option of the Agency, in
whole or in part from the proceeds of refunding Bonds or any other available funds on
September 1, , or any date thereafter, prior to the maturity. Bonds called for redemption
shall be redeemed at the redemption prices(expressed as a percentage of the principal amount of
Bonds to be redeemed) plus accrued interest to the redemption date as shown in the following
table:
Redemption Date Redemption Price
September 1, through August 31, 102%
September 1, through August 31, 101%
September 1, and thereafter 100%
Sinking Fund Redemption. The Term Bonds maturing on September 1, 2021, will be
subject to mandatory redemption in part, by lot, on September 1, 2013, and on each September 1
thereafter to and including September 1, 2021, at a redemption price equal to the principal
amount thereof together with accrued interest thereon to the redemption date, without premium,
from minimum sinking fund payments on hand in the Debt Service Fund in the years and
amounts as follows:
Year Amount Year Amount
(maturity)
Sinking Fund Redemption. The Term Bonds maturing on September 1, , will be
subject to mandatory redemption in part, by lot, on September 1, , and on each September 1
thereafter to and including September 1, , at a redemption price equal to the principal
amount thereof together with accrued interest thereon to the redemption date, without premium,
from minimum sinking fund payments on hand in the Debt Service Fund in the years and
amounts as follows:
Year Amount Year
Amount
03
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268403.02 PM02 62 G e 44
(maturity)
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect provided
in the Indenture, but such declaration and its consequences may be rescinded and annulled as
further provided in the Indenture.
The Bonds are issuable as fully registered Bonds without coupons in denominations of
$5,000 and any integral multiple thereof. Subject to the limitations and conditions and upon
payment of the charges, if any, as provided in the Indenture, Bonds may be exchanged for a like
aggregate principal amount of Bonds of other authorized denominations and of the same
maturity.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the corporate trust office of the Trustee, in St. Paul, Minnesota, but
only in the manner and subject to the limitations provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon registration of such transfer a new fully registered Bond or
Bonds, the Trustee will deliver a new Bond or Bonds, of like series, interest rate, maturity and
principal to the transferee. The Trustee may refuse to transfer or exchange any Bond which has
matured.
The Agency and the Trustee may treat the Registered Owner hereof as the absolute owner
hereof for all purposes, and the Agency and the Trustee shall not be affected by any notice to the
contrary.
The rights and obligations of the Agency and the registered owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided in the
Indenture, but no such modification or amendment shall (a) extend the maturity of or reduce the
interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the
principal or interest at the time an place and at the rate and n the currency provided herein of any
Bond without the express written consent of the registered 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 Bond is not a debt of the City of La Quinta, the State of California, or any of its
political subdivisions, and neither said City, said State, nor any of its political subdivisions is
liable hereon, nor in any event shall this Bond be payable out of any funds or properties other
than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of
any constitutional or statutory debt limitation or restriction.
It is hereby certified that all of the things, conditions and acts required to exist, or have
happened or to have been performed precedent to and in the issuance of this Bond do exist, have
happened or have been performed in due and regular time and manner as required by the Law
and the laws of the State of California, and that amount of this Bond, together with all other
indebtedness of the Agency, does not exceed any limit prescribed by the Law or any laws of the
State of California, and is not in excess of the amount of Bonds permitted to be issued under the
Indenture. '1
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�tJ
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the Trustee's Certificate of Authentication hereon shall have
been manually signed by the Trustee.
Financial Guaranty Insurance Policy No. (the "Policy") with respect to payments
due for principal of and interest on this Obligation has been issued by Ambac Assurance
Corporation ("Ambac Assurance"). The Policy has been delivered to the Bank of New York,
New York, New York, as the Insurance Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee. The Policy is on file and available for
inspection at the principal office of the Insurance Trustee and a copy thereof may be secured
from Ambac Assurance or the Insurance Trustee. All payments required to be made under the
Policy shall be made in accordance with the provisions thereof. The owner of this Obligation
acknowledges and consents to the subrogation rights of Ambac Assurance as more fully set forth
in the Policy.
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IN WITNESS WHEREOF, the La Quinta Redevelopment Agency has caused this Bond
to be executed in its name and on its behalf with the original or facsimile signature of its
Executive Director and attested by the original or facsimile signature of its Secretary, all as of
June 1, 2002.
LA QUINTA REDEVELOPMENT AGENCY
0
ATTEST:
Secretary
Executive Director
0 ;" 1
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268403.02 PM02 f 1
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within -mentioned Indenture.
Authentication Date:
U.S. BANK, N.A.,
as Trustee
M
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Authorized Officer
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or Tax
Regulations:
TEN COM - - as tenants in common
TEN ENT - - as tenants in entireties
JT TEN - - as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT Custodian
(Cust.) (Minor)
under Uniform Gifts to Minors Act
(State)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
ALTHOUGH NOT IN THE LIST ABOVE
[FORM OF ASSIGNMENT]
For value received in the undersigned hereby sells, assigns and transfers unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within -registered Bond and hereby irrevocably constitute(s) and appoints(s)
attorney, to transfer the same on the registration books of the Trustee with full power of
substitution in the premises.
Dated:
Signatures Guaranteed:
Note Signature(s) must be guaranteed by an
eligible Guarantor Institution.
Note: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
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83
TABLE OF CONTENTS
Page
ARTICLE I DETERMINATIONS; DEFINITIONS....................................................4
Section 1.1 Findings and Determinations....................................................................4
Section1.2 Definition..................................................................................................4
Section 1.3 Rules of Construction.............................................................................15
ARTICLE II
AUTHORIZATION AND TERMS........................................................15
Section 2.1
Authorization of Bonds...........................................................................15
Section2.2
Terms of Bonds.......................................................................................15
Section 2.3
Redemption of Bonds.............................................................................16
Section2.4
Book Entry..............................................................................................19
Section2.5
Form of Bonds........................................................................................21
Section 2.6
Execution of Bonds.................................................................................21
Section 2.7
Transfer of Bonds...................................................................................21
Section 2.8
Exchange of Bonds.................................................................................
22
Section 2.9
Registration Books..................................................................................22
Section 2.10
Temporary Bonds....................................................................................22
Section 2.11
Bonds, Mutilated, Lost, Destroyed or Stolen..........................................22
ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS;
PARITYDEBT.......................................................................................23
Section 3.1 Issuance of Bonds...................................................................................23
Section 3.2 Application of Sale and Certain Other Amounts....................................23
Section 3.3 Redevelopment Fund..............................................................................23
Section 3.4 Issuance of Parity Debt...........................................................................24
Section 3.5 Issuance of Subordinate Debt.................................................................26
Section3.6 Validity of Bonds.................................................................................... 26
ARTICLE IV SECURITY OF BONDS; FLOW OF FUNDS.......................................27
Section 4.1 Security of Bonds; Equal Security..........................................................27
Section 4.2 Special Fund; Deposit of Pledged Tax Revenues...................................27
Section 4.3 Deposit of Amounts by Trustee..............................................................28
Section 4.4 Payment Procedure Pursuant to the Surety Bond...................................30
ARTICLE V
OTHER COVENANTS OF THE AGENCY.........................................31
Section5.1
Punctual Payment....................................................................................31
Section 5.2
Limitation of Additional Indebtedness; Against Encumbrances............
31
Section 5.3
Extension of Payment.............................................................................
31
Section 5.4
Payment of Claims..................................................................................
32
Section 5.5
Books and Accounts; Financial Statements; Annual Calculation
of Available Tax Revenues.....................................................................
32
Section 5.6
Protection of Security and Rights of Owners.........................................32
Section 5.7
Payments of Taxes and Other Charges...................................................32
Section 5.8
Taxation of Property...............................................................................
33
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Section 5.9
Disposition of Property...........................................................................
33
Section 5.10
Maintenance of Tax Revenues................................................................33
Section 5.11
Tax Covenants........................................................................................33
Section 5.12
Establishment and Application of Rebate Fund......................................34
Section 5.13
Compliance with the Code......................................................................36
Section 5.14
Compliance with the Law; Low and Moderate Income Housing
Fund........................................................................................................
36
Section 5.15
Management and Operation of Properties ..............................................
37
Section 5.16
Annual Review of Tax Revenue.............................................................37
Section 5.17
Covenant With Respect to Mortgages....................................................37
Section 5.18
Further Assurances..................................................................................
37
Section 5.19
Continuing Disclosure............................................................................37
ARTICLEVI
THE TRUSTEE......................................................................................
38
Section 6.1
Duties, Immunities and Liabilities of Trustee .........................................
38
Section 6.2
Merger or Consolidation.........................................................................
39
Section 6.3
Liability of Trustee.................................................................................40
Section 6.4
Right to Rely on Documents...................................................................41
Section 6.5
Preservation and Inspection of Documents.............................................41
Section 6.6
Compensation and Indemnification........................................................41
Section 6.7
Deposit and Investment of Moneys in Funds.........................................42
Section 6.8
Accounting Records and Financial Statements.......................................43
Section 6.9
Appointment of Co -Trustee or Agent.....................................................43
Section 6.10
Powers of Bond Insurer in Relation to the Trustee.................................44
ARTICLE VII
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
ARTICLE VIII
Section 8.1
Section 8.2
Section 8.3
Section 8.4
Section 8.5
Section 8.6
Section 8.7
ARTICLE IX
Section 9.1
Section 9.2
Section 9.3
Section 9.4
MODIFICATION OR AMENDMENT OF THIS INDENTURE .......... 44
Amendment With Consent of Owners....................................................44
Effect of Supplemental Indenture...........................................................45
Endorsement or Replacement of Bonds After Amendment ................... 45
Amendment by Mutual Consent.............................................................46
Notice to Standard & Poor' s..................................................................46
EVENTS OF DEFAULT AND REMEDIES OF OWNERS .................46
Eventsof Default.................................................................................... 46
Application of Funds...............................................................................47
Power of Trustee to Control Proceedings...............................................48
Limitation on Owner's Right to Sue.......................................................48
Non-Waiver............................................................................................. 49
Actions by Trustee as Attorney-in-Fact..................................................49
Remedies Not Exclusive.........................................................................49
MISCELLANEOUS............................................................................... 50
Benefits Limited to Parties...................................................................... 50
Successor is Deemed Included in All References to Predecessor.......... 50
Discharge of Indenture............................................................................ 50
Execution of Documents and Proof of Ownership by Owners ............... 51
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Section 9.5
Disqualified Bonds..................................................................................
51
Section 9.6
Waiver of Personal Liability...................................................................
52
Section 9.7
Destruction of Cancelled Bonds.............................................................
52
Section9.8
Notices....................................................................................................52
Section9.9
Partial Invalidity......................................................................................53
Section 9.10
Unclaimed Moneys.................................................................................
53
Section 9.11
Execution in Counterparts.......................................................................53
Section9.12
Governing Law.......................................................................................53
Section 9.13
Provisions Relating to Bond Insurer.......................................................53
Section 9.14
Payment Procedure Pursuant to the Financial Guaranty
InsurancePolicy......................................................................................56
Section 9.15
Payment Procedure Pursuant to the Surety Bond ...................................
57
Section 9.16
Interested Parties.....................................................................................58
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ATTACHMENT 2
LEGAL SERVICES AGREEMENT
This Legal Services Agreement (the "Disclosure Agreement") is executed and delivered by
the La Quinta Redevelopment. Agency (the "Agency") and U.S. Bank, N.A., a banking association,
duly authorized to accept the duties of the Dissemination Agent herein set forth (the "Dissemination
Agent"), in connection with the issuance of the Agency's $46,000,000 La Quinta Redevelopment
Agency, La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002
(the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of June 1,
2002 (the "Indenture"), by and between the Agency and U.S. Bank, N.A., as trustee (the "Trustee").
The Agency and the Dissemination Agent covenants and agrees as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Agency and the Dissemination Agent for the benefit of the holders and
beneficial owners of the Bonds in order to assist the Participating Underwriters in complying with
S.E.C. Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized term used in the Disclosure Agreement, unless otherwise defined, the
following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and as
described in Section 3 and 4 of this Disclosure Agreement.
"Dissemination Agent" shall mean U.S. Bank, N.A., or any successor Dissemination Agent
designated in writing by the Agency and which has filed with the Agency and the Trustee a written
acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required
to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State 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 Agreement, there is no State
Repository.
DOCSOC\894262v1\22338.0268 N►Y,
Section 3. Provisions of Annual Reports.
(a) The Agency shall, or shall cause the Dissemination Agent to, not later than
seven (7) months after the end of the Agency's fiscal year (which date currently would be
January 31, based upon the June 30 end of the Agency's fiscal year), commencing with the report for
the 2002-2003 fiscal year, provide to each Repository an Annual Report which is consistent with the
requirements of Section 4 of this Disclosure Agreement. Not later than fifteen (15) Business Days
prior to said date, the Agency shall provide the Annual Report to the Dissemination Agent (if other
than the Agency). 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 Agreement; provided that the audited financial statements of the Agency
may be submitted separately from the balance of the Annual Report, and later than the date required
above for the filing of the Annual Report if not available by that date. If the Agency's fiscal year
changes, it shall give notice of such change in the same manner as for a Listed Event under
Section 5(c).
(b) If the Agency is unable to provide to the Repositories an Annual Report by
the date required in subsection (a), the Agency shall send a notice to the Municipal Securities
Rulemaking Board in substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report
the name and address of each National Repository and each State Repository, if any; and
(ii) if the Dissemination Agent is other than the Agency, and if, and to the
extent, the Agency has provided an Annual Report in final form to the Dissemination Agent
for dissemination, file a report with the Agency certifying that the Annual Report has been
provided to the Repositories pursuant to this Disclosure Agreement, stating the date it was
provided and listing all the Repositories to which it was provided.
Section 4. Content of Annual Reports. The Agency's Annual Report shall contain or
incorporate by reference the following:
(a) Audited Financial Statements of the Agency prepared in accordance with
generally accepted accounting principles as promulgated to apply to governmental entities from time
to time by the Governmental Accounting Standards Board. If the Agency's, the City's or the
Agency's audited financial statements are not available by the time the Annual Report is required to
be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a
format similar to the financial statements contained in the final Official Statement, and the audited
financial statements shall be filed in the same manner as the Annual Report when they become
available.
(b) The following financial information and operating data set forth in the final
Official Statement:
(i) Ten largest property tax payers in the Project Area, including name,
assessed valuation and percent of total assessed valuation substantially the format set forth
under the caption "Largest Local Secured Taxpayers" of the Official Statement;
DOCSOC\894262v 1 \223 38.0268
(ii) Annual assessed valuations, tax increment values, Pledged Tax
Revenues (as defined in the Indenture) and ratio of Pledged Tax Revenues to debt service on
Bonds, in substantially the formats of the tables set forth under the captions "PLEDGED
TAX REVENUES — Historical Incremental Revenues" and "Projected Pledged Tax
Revenues and Debt Service Coverage" of the Official Statement.
(iii) Discussion of any property tax appeals, which, either alone or in the
aggregate could have greater than a 10% adverse effect on Pledged Tax Revenues.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the Agency or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange Commission.
If the document included by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other
document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to
be given, notice of the occurrence of any of the following events with respect to the Bonds, if
material:
(i) Principal and interest payment delinquencies.
(ii) Non-payment related defaults.
(iii) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(iv) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(v) Substitution of credit or liquidity providers, or their failure to
perform.
(vi) Adverse tax opinions or events affecting the tax-exempt status of the
security.
(vii) Modifications to rights of security holders.
(viii) Contingent or unscheduled bond calls.
(ix) Defeasances.
(x) Release, substitution, or sale of property securing repayment of the
securities.
(xi) Rating changes
DOCSOC\894262v 1 \223 38.0268
(b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event,
the Agency shall as soon as possible determine if such event would be material under applicable
Federal securities law. The Dissemination Agent shall have no responsibility for such determination
and shall be entitled to conclusively rely on the Agency's determination.
(c) If the Agency determines that knowledge of the occurrence of a Listed Event
would be material under applicable Federal securities law, the Agency shall promptly file a notice of
such occurrence with the Municipal Services Rulemaking Board and each State Repository.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix)
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 Indenture.
Section 6. Termination of Reporting Obligation. The Agency's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full
of all the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall
give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 7. Dissemination Agent.
(a) The Agency hereby appoints and engages U.S. Bank, N.A. as the
Dissemination Agent to assist it in carrying out is obligations under this Disclosure Agreement. The
Dissemination Agent shall not be responsible in any manner for the content of any notice or report
prepared by the Agency pursuant to this Disclosure Agreement. The Agency may replace the
Dissemination Agent with or without cause. If at the time there is no designated Dissemination
Agent appointed by the Agency, the Agency shall be the Dissemination Agent and undertake or
assume its obligations hereunder.
Any company succeeding to all or substantially all of the Dissemination Agent's
corporate trust business shall be the successor to the Dissemination Agent hereunder without the
execution or filing of any paper or any further act. The Dissemination Agent may resign its duties
hereunder at any time upon written notice to the Agency.
(b) The Dissemination Agent shall be paid compensation by the Agency for its
services provided hereunder in accordance with its schedule of fees agreed to between the
Dissemination Agent and the Agency from time to time and for all expenses, legal fees and advances
made or incurred by the Dissemination Agent in the performance of its duties hereunder. The
Dissemination Agent shall have not duty or obligation to review any information provided to it by
the Agency hereunder and shall not be deemed to be acting in any fiduciary capacity for the Agency,
holders or beneficial owners or any other party. The Dissemination Agent may rely and shall be
protected in acting or refraining from acting upon any direction from the Agency or an opinion of
nationally recognized bond counsel.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Agency may amend this Disclosure Agreement, and any provision of this Disclosure
Agreement 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
1 `1
4
DOCSOC\894262v 1 \22338.0268
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 compiled 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 for amendments to the Indenture with the consent of
holders, or (ii) does not, in the opinion of 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 differences in the
accounting principles and the impact of the change in the accounting principles on the presentation of
the financial information, in order to provide information to investors to enable them to evaluate the
ability of the Agency to meet its obligations. To the 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).
No amendment to this Agreement which modifies the duties or rights of the Dissemination
Agent shall be made without the prior written consent of the Dissemination Agent.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the Agency from disseminating any other information, using the means of
dissemination set forth in the Disclosure Agreement 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 Agreement. If the Agency chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event in addition to that
which is specifically equipped by this Disclosure Agreement, the Agency shall have no obligation
under this Disclosure Agreement to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Agency to comply with any provision
of this Disclosure Agreement, any Participating Underwriter 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 Agency to comply with its obligations under this
Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of
Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of
DOCSOC\894262v 1 \22338.0268
6,87
any failure of the Agency to comply with this Disclosure Agreement shall be an action to compel
performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. All of the
immunities, indemnities, and exceptions from liability in Article IX of the Indenture insofar as they
relate to the Trustee shall apply to the Trustee and the Dissemination Agent in this Disclosure
Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this
Disclosure Agreement, and the Agency agrees to indemnify and save the Dissemination Agent, its
officers, directors, employees and agents, harmless against any loss, expense and liabilities which it
may incur arising out of or in the exercise or performance of its powers and duties hereunder,
including the costs and expenses (including attorneys fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct.
The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon
any direction from the Agency or an opinion of nationally recognized bond counsel. The obligations
of the Agency under this Section shall survive resignation or removal of the Dissemination Agent
and payment of the Bonds. No person shall have any right to commence any action against the
Trustee or Dissemination Agent seeking any remedy other than to compel specific performance of
this Disclosure Agreement.
6
DOCSOC\894262v 1\22338.0268
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of
the Agency, the Dissemination Agent, the Participating Underwriters and holders and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Dated: June _, 2002 LA QUINTA REDEVELOPMENT AGENCY
Executive Director
U.S. BANK, N.A.,
as Dissemination Agent
Authorized Officer
S-1
DOC SOC\894262v 1 \22338.0268
EXHIBIT A
NOTICE OF MUNICIPAL SECURITIES RULEMAKING
BOARD OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: La Quinta Redevelopment Agency
Name of Bond Issue: $ La Quinta Redevelopment Agency,
La Quinta Redevelopment Project Area No. 1,
Tax Allocation Bonds, Series 2002
Date of Issuance: June _, 2002
NOTICE IS HEREBY GIVEN that the La Quinta Redevelopment Agency (the "Issuer") has
not provided an Annual Report with respect to the above -named Bonds as required by the Indenture,
dated as of June 1, 2002, by and between the Issuer and U.S. Bank, N.A., as trustee. The Issuer
anticipates that the Annual Report will be filed by
Date:
cc:
LA QUINTA REDEVELOPMENT AGENCY
By:
Its:
A-1 9 J
DOCSOC\894262v1 \22338.0268