CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, AS TRUSTEE
INDENTURE OF TRUST
Dated as of August 1, 1997
$8,500,000
CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
VARIABLE RATE DEMAND INDUSTRIAL
DEVELOPMENT REVENUE BONDS, SERIES 1997
(ADVANCED AERODYNAMICS AND STRUCTURES, INC. PROJECT)
TABLE OF CONTENTS
Page
PARTIES......................................................................1
PREAMBLES....................................................................1
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
SECTION 1.01. Definitions...................................................2
SECTION 1.02. Content of Certificates and Opinions..........................15
SECTION 1.03. Interpretation................................................15
ARTICLE II
THE BONDS
SECTION 2.01. Authorization of Bonds........................................16
SECTION 2.02. Terms of the Bonds............................................16
SECTION 2.03. Conversion of Bonds...........................................17
SECTION 2.04. Execution of Bonds............................................19
SECTION 2.05. Transfer of Bonds.............................................19
SECTION 2.06. Exchange of Bonds.............................................20
SECTION 2.07. Bond Register.................................................20
SECTION 2.08. Temporary Bonds...............................................20
SECTION 2.09. Bonds Mutilated, Lost, Destroyed or Stolen....................20
SECTION 2.10. Special Obligations...........................................21
SECTION 2.11. Book-Entry Only System........................................21
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
SECTION 3.01. Issuance of the Bonds.........................................23
SECTION 3.02. Application of Proceeds of the Bonds..........................23
SECTION 3.03. Establishment and Application of Project Fund and Costs of
Issuance Fund.................................................23
SECTION 3.04. Validity of Bonds.............................................25
ARTICLE IV
REDEMPTION AND PURCHASE OF BONDS
SECTION 4.01. Terms of Redemption...........................................25
SECTION 4.02. Selection of Bonds for Redemption.............................26
SECTION 4.03. Notice of Redemption..........................................27
SECTION 4.04. Partial Redemption of Bonds...................................27
SECTION 4.05. Effect of Redemption..........................................27
SECTION 4.06. Purchase of Bonds by Tender Agent.............................28
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SECTION 4.07. Mandatory Tender of Bonds.....................................28
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS;
PAYMENT OF PRINCIPAL AND INTEREST
SECTION 5.01. Pledge and Assignment; Revenue Fund...........................29
SECTION 5.02. Allocation of Revenues........................................30
SECTION 5.03. Priority of Moneys in Revenue Fund; Letter of Credit Account..30
SECTION 5.04. Letter of Credit..............................................32
SECTION 5.05. Investment of Moneys..........................................32
SECTION 5.06. Additional Duties of Trustee..................................33
SECTION 5.07. Establishment of Rebate Fund..................................33
ARTICLE VI
PARTICULAR COVENANTS
SECTION 6.01. Punctual Payment..............................................34
SECTION 6.02. Extension of Payment of Bonds.................................34
SECTION 6.03. Against Encumbrances..........................................34
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment...........35
SECTION 6.05. Accounting Records and Reports................................35
SECTION 6.06. Arbitrage Covenants...........................................35
SECTION 6.07. Other Covenants...............................................35
SECTION 6.08. Further Assurances............................................36
SECTION 6.09. Covenant to Enter into Agreement or Contract to Provide
Ongoing Disclosure............................................36
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
SECTION 7.01. Events of Default; Acceleration; Waiver of Default............36
SECTION 7.02. Institution of Legal Proceedings by Trustee...................38
SECTION 7.03. Application of Revenues and Other Funds After Default.........38
SECTION 7.04. Trustee to Represent Bondholders..............................39
SECTION 7.05. Bondholders' Direction of Proceedings.........................39
SECTION 7.06. Limitation on Bondholders' Right to Sue.......................39
SECTION 7.07. Absolute Obligation of Authority..............................40
SECTION 7.08. Termination of Proceedings....................................40
SECTION 7.09. Remedies Not Exclusive........................................40
SECTION 7.10. No Waiver of Default..........................................40
SECTION 7.11. Consent To Defaults...........................................40
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ARTICLE VIII
THE TRUSTEE, THE REMARKETING
AGENT AND THE TENDER AGENT
SECTION 8.01. Duties, Immunities and Liabilities of Trustee.................41
SECTION 8.02. Merger or Consolidation.......................................42
SECTION 8.03. Liability of Trustee..........................................42
SECTION 8.04. Right of Trustee to Rely on Documents.........................43
SECTION 8.05. Preservation and Inspection of Documents......................44
SECTION 8.06. Compensation and Indemnification..............................44
SECTION 8.07. Notice to Rating Agency.......................................44
SECTION 8.08. Qualifications of Remarketing Agent...........................44
SECTION 8.09. Remarketing of Bonds..........................................45
SECTION 8.10. Creation of Purchase Fund; Purchase of Bonds Delivered to
Tender Agent..................................................46
SECTION 8.11. Delivery of Bonds.............................................47
SECTION 8.12. Delivery of Proceeds of Remarketing...........................48
SECTION 8.13. No Purchases or Sales After Default...........................48
SECTION 8.14. Qualifications of Tender Agent................................48
SECTION 8.15. Paying Agent..................................................48
SECTION 8.16. Several Capacities............................................49
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
SECTION 9.01. Amendments Permitted..........................................49
SECTION 9.02. Effect of Supplemental Indenture..............................50
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds................50
SECTION 9.04. Amendment of Particular Bonds.................................50
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Indenture.......................................51
SECTION 10.02. Discharge of Liability on Bonds..............................51
SECTION 10.03. Deposit of Money or Securities with Trustee..................52
SECTION 10.04. Payments After Discharge of Indenture........................52
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Authority Limited to Revenues...................53
SECTION 11.02. Successor Is Deemed Included in All References to
Predecessor..................................................53
SECTION 11.03. Limitation of Rights to Parties and Bondholders..............53
SECTION 11.04. Waiver of Notice.............................................53
SECTION 11.05. Destruction of Bonds.........................................53
SECTION 11.06. Severability of Invalid Provisions...........................53
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SECTION 11.07. Governing Law................................................54
SECTION 11.08. Notices......................................................54
SECTION 11.09. Evidence of Rights of Bondholders............................55
SECTION 11.10. Disqualified Bonds...........................................56
SECTION 11.11. Money Held for Particular Bonds..............................56
SECTION 11.12. Funds and Accounts...........................................57
SECTION 11.13. Waiver of Personal Liability.................................57
SECTION 11.14. Execution in Several Counterparts............................57
SECTION 11.15. Actions Due on Saturdays, Sundays and Holidays...............57
SECTION 11.16. References to Bank...........................................57
EXHIBIT A - Form of Bond
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of August 1, 1997, between the CALIFORNIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY (the "Authority"), a body public and
corporate, and a public instrumentality of the State of California (the
"State"), duly organized and validly existing under the laws of the State,
particularly Part 10.2 of Division 3 of Title 2 of the California Government
Code (commencing with Section 15710) (the "Act"), and FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION, a national banking association organized and existing
under and by virtue of the laws of the United States of America (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Authority was established for the purpose of promoting and
encouraging commerce and industry, and generally to foster economic development
in the State, and is empowered under the provisions of the Act (capitalized
terms used herein shall have the meanings given such terms in Section 1.01
hereof) to issue its bonds and to enter into loan agreements for the purpose of
financing private activity economic development projects; and
WHEREAS, in furtherance of the purposes of the Act, the Authority proposes
to finance the Costs of the Project more particularly described in Exhibit A to
the Agreement, to be owned by the Borrower; and
WHEREAS, pursuant to and in accordance with the Act, the Authority has
authorized and undertaken to issue its Bonds pursuant to this Indenture in order
to provide funds to finance the Costs of the Project; and
WHEREAS, the Authority has undertaken to finance the Costs of the Project
by loaning the proceeds derived from the sale of the Bonds to the Borrower
pursuant to the Agreement, under which the Borrower is required to make Loan
Repayments sufficient to pay when due the principal of, premium, if any, and
interest on the Bonds and to pay certain other expenses; and
WHEREAS, it has been determined that the estimated amount necessary to
finance the Costs of the Project, including a portion of the necessary expenses
incidental to the issuance of the Bonds, will require the issuance, sale and
delivery of the Bonds in the aggregate principal amount of $8,500,000; 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 and
purchase price thereof and interest thereon, the Authority has authorized the
execution and delivery of this Indenture; and
WHEREAS, in order to further secure the payments of principal and purchase
price of and interest on the Bonds, the Borrower has obtained an irrevocable
direct-pay letter of credit from the Bank; and
WHEREAS, all acts and proceedings required by law or necessary to make the
Bonds, when executed by the Authority and authenticated and delivered by the
Bond Registrar, the valid, binding and legal special obligations of the
Authority, and to constitute this Indenture a valid and binding
agreement for the uses and purposes herein set forth in accordance with its
terms, have been done and taken, and the execution and delivery of this
Indenture has been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal and purchase price of and premium, if any, and interest
on all Bonds at any time issued and Outstanding under this Indenture, according
to their tenor, and, on a basis subordinate thereto, to secure the Borrower's
obligations to the Bank under the Reimbursement Agreement, 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 Holders thereof, and for other valuable
consideration, the receipt whereof is hereby acknowledged, the Authority does
hereby covenant and agree with the Trustee, for the benefit of the respective
Holders from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms
defined in this Article shall, for all purposes of this Indenture and for the
purpose of any certificate, opinion or other document herein mentioned, have the
meanings herein specified. Such definitions are equally applicable to both the
singular and plural forms of any of the terms defined. Unless otherwise defined
in this Indenture, all terms defined in the Act and used herein shall have the
meanings assigned to such terms in the Act.
Accountant
"Accountant" means any firm of independent certified public accountants
selected by the Borrower and reasonably acceptable to the Trustee and the Bank.
Act
"Act" means Part 10.2 of Division 3 of Title 2 of the California Government
Code (commencing with Section 15710), as now in effect and as it may from time
to time hereafter be amended or supplemented.
Act of Bankruptcy
"Act of Bankruptcy" means the entry of an order or decree, by a court
having jurisdiction in the matter, for relief against the Borrower or the
Authority in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Borrower or the Authority or of any substantial part of the
property of either the Borrower or the Authority, or ordering the winding up or
liquidation of the affairs of either the Borrower or the Authority; or the
institution or commencement by or against the Borrower or the Authority of a
voluntary or involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by it to the entry
of an order for relief against it in any involuntary case under any such law, or
to the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Borrower or the Authority or of
any substantial part of the property of either the Borrower or the
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Authority, or the making by either the Borrower or the Authority of an
assignment for the benefit of creditors, or the failure of it generally to pay
its debts as they become due, or the admission by it in writing of such failure,
or the taking of any action by the Borrower or the Authority in furtherance of
any such action, or if a receiver of the business or of the property or assets
of the Borrower or the Authority shall be appointed by any court, except a
receiver appointed at the instance or request of the Authority.
Additional Payments
"Additional Payments" means the payments required to be made by the
Borrower pursuant to Sections 4.2(b), (c) and (d) of the Agreement.
Agreement
"Agreement" means that certain loan agreement by and between the Authority
and the Borrower, dated as of August 1, 1997, as originally executed and as it
may from time to time be supplemented, modified or amended in accordance with
the terms thereof and of this Indenture.
Alternate Credit Facility
"Alternate Credit Facility" means bond insurance or other similar credit
enhancement facility meeting the requirements of Section 5.7 of the Agreement.
Alternate Fixed Rate
"Alternate Fixed Rate" shall have the meaning ascribed to such term in
Section 2.03.
Alternate Letter of Credit
"Alternate Letter of Credit" means an alternate irrevocable letter of
credit or similar credit facility issued by a commercial bank or savings
institution, the terms of which, other than the expiration date, shall in all
material respects be the same as those of the initial Letter of Credit,
delivered to the Trustee pursuant to Section 5.8 of the Agreement.
Alternate Weekly Rate
"Alternate Weekly Rate" shall have the meaning ascribed to such term in
Section 2.02.
Authority
"Authority" means the California Economic Development Financing Authority.
Authorized Denominations
"Authorized Denomination" means (i) prior to the Fixed Rate Date, $100,000
or any multiple of $5,000 in excess of $100,000 and (ii) after the Fixed Rate
Date, $5,000 or integral multiples thereof.
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Authorized Representative
"Authorized Representative" means with respect to the Borrower, the person
or persons at the time designated to act on behalf of the Borrower by a written
certificate signed by the Borrower, furnished to the Trustee and the Authority,
containing the specimen signature of each such person.
Available Moneys
"Available Moneys" means moneys which are (a) continuously on deposit with
the Trustee in trust for a period of 91 days for the benefit of the Bondholders
in a separate and segregated account in which only Available Moneys are held and
(b) proceeds of (i) the Bonds received contemporaneously with the issuance and
sale of the Bonds, (ii) a drawing under the Letter of Credit, (iii) any other
moneys for which the Trustee has received a written opinion of nationally
recognized counsel experienced in bankruptcy matters and acceptable to the
Trustee to the effect that payment of such moneys to the Bondholders would not
constitute an avoidable preference under Section 547 of the United States
Bankruptcy Code in the event the Authority, the Borrower or any Related Party
were to become a debtor under the United States Bankruptcy Code, which opinion
is acceptable to each rating agency then rating the Bonds, or (iv) moneys
derived from the investment of funds qualifying as Available Moneys under the
foregoing clauses.
Bank
"Bank" means The Sumitomo Bank, Limited, acting through its Los Angeles
Branch, or any other commercial bank or other financial institution issuing a
Letter of Credit then in effect and party to a Reimbursement Agreement.
Beneficial Owners
"Beneficial Owner" means any person which has or shares the power, directly
or indirectly, to make investment decisions concerning ownership of any bonds
(including persons holding Bonds through nominees, depositories or other
intermediaries).
Bond
"Bond" or "Bonds" means any Bond or all of the Bonds, as the case may be,
of the Authority authorized and issued by the Authority, authenticated by the
Bond Registrar and delivered hereunder.
Bond Counsel
"Bond Counsel" means any attorney at law or firm of attorneys of nationally
recognized standing in matters pertaining to the exclusion of interest from
gross income for federal income tax purposes 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, but shall not include
counsel for the Borrower.
Bond Payment Date
"Bond Payment Date" means any date on which any principal of, or premium or
interest on, any Outstanding Bond shall be due and payable whether at maturity
or on a scheduled Interest
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Payment Date or upon redemption, in each case in accordance with the terms of
the Bonds and this Indenture.
Bond Registrar
"Bond Registrar" shall mean the Bond Registrar specified in Section 2.07.
Borrower
"Borrower" means Advanced Aerodynamics and Structures, Inc., a corporation
duly organized and validly existing under the laws of the State of Delaware, or
any entity which is the surviving, resulting or transferee entity in any merger,
consolidation or transfer of assets permitted under Section 5.2 of the
Agreement.
Business Day
"Business Day" means a day which is not a Saturday, Sunday or legal holiday
on which banking institutions in the State or the State of New York or in any
state in which the principal office of the Bank, the Tender Agent or the Trustee
or the office of the Bank designated for presentations under the Letter of
Credit is located are closed or a day on which the New York Stock Exchange is
closed.
Certificate, Statement, Request, Requisition or Order of the Authority or the
Borrower
"Certificate," "Statement," "Request," "Requisition" and "Order" of the
Authority or the Borrower means, respectively, a written certificate, statement,
request, requisition or order signed in the name of the Authority by the Chair
of the Authority or such other person as may be designated in a resolution as
authorized to sign for the Authority, or in the name of the Borrower by an
Authorized Representative of the Borrower. Any such instrument and supporting
opinions or representations, if any, may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or
more so combined shall be read and construed as a single instrument. If and to
the extent required by Section 1.02, each such instrument shall include the
statements provided for in Section 1.02.
Code
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations from time to time promulgated or deemed in effect
thereunder.
Component Issues
"Component Issues" means five or more issues of securities, the interest on
which is Tax-exempt, selected by the Remarketing Agent in accordance with
Section 2.03(B)(1).
Construction
"Construction" means, with respect to the Project, the acquisition,
construction, installation, rehabilitation, expansion, improvement, equipping,
furnishing, or other activities with respect to the Project described in the
Borrower's application for financing assistance from the Authority.
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Costs of Issuance
"Costs of Issuance" means all items of expense directly or indirectly
payable by or reimbursable to the Authority or the Borrower and related to the
authorization, issuance, sale and delivery of the Bonds, including but not
limited to costs of preparation and reproduction of documents, printing
expenses, application, filing and recording fees, initial fees and charges of
the Trustee and Tender Agent, legal fees and charges, including the fees and
charges of Bond Counsel, fees and disbursements of consultants and
professionals, rating agency fees, fees and charges for preparation, execution
and safekeeping of the Bonds and any other cost, charge or fee in connection
with the original issuance of the Bonds which constitutes a "cost of issuance"
within the meaning of Section 147(g) of the Code.
Costs of Issuance Fund
"Costs of Issuance Fund" means the fund of that name established pursuant
to Section 3.03(E).
Costs of the Project
"Costs of the Project" means and shall be deemed to include all of the
costs of the Construction of the Project, to the extent permitted by the Act,
whether incurred prior to or after the date of the Agreement, including, but not
limited to the following (but not including any Costs of Issuance):
(1) the cost of construction, improvement, repair and reconstruction;
(2) the cost of acquisition, including rights in land and other property,
both real and personal and improved and unimproved, and franchises, and disposal
rights;
(3) the cost of demolishing, removing, or relocating any buildings or
structures on lands so acquired, including the cost of acquiring any lands to
which such buildings or structures may be moved or relocated;
(4) the cost of machinery, equipment and furnishings, of engineering and
architectural surveys and plans, and specifications and of transportation and
storage until the Project is operational;
(5) the cost of agents or consultants, including, without limitation,
legal, financial, engineering, accounting, and auditing, necessary or incident
to the Project and of the determination as to the feasibility or practicability
of undertaking the Project;
(6) the cost of financing interest on the Bonds and fees of the Bank
allocable to the period prior to and during Construction of the Project and
reserves for principal and interest and for extensions, enlargements, additions,
repairs, replacements, renovations, and improvements to the Project; and
(7) the cost of financing the Project, and the reimbursement to any
governmental entity or agency, or any Person, of expenditures made by or on
behalf of such entity agency or Person in connection with the Project; provided,
that the Borrower shall at its own expense insure, repair, and maintain the
Project, pay such taxes with respect to the Borrower's interest in the property
relating to the Project, and pay such assessments and other public charges on
the Project or shall cause the same to be provided by others to the satisfaction
of the Authority.
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Date of Delivery
"Date of Delivery" means August 5, 1997.
Determination of Taxability
"Determination of Taxability" means the occurrence or existence of any of
the conditions or events more fully described in Section 8.3(a)(ii) or Section
8.3(a)(iii) of the Agreement.
DTC
"DTC" means The Depository Trust Company, New York, New York, or any
successor securities depository.
Event of Default
"Event of Default" means any of the events specified in Section 7.01.
Expiration Date
"Expiration Date" means the stated date upon which the Letter of Credit or
Alternate Letter of Credit shall expire in accordance with its terms.
Fiscal Year
"Fiscal Year" means the fifty two (or fifty three) week period ending on
the last Saturday of December of each year, or any other twelve month period
selected and designated as the fiscal year of the Borrower.
Fixed Interest Rate
"Fixed Interest Rate" means the interest rate borne by the Bonds from and
after the Fixed Rate Date and determined in accordance with Section 2.03.
Fixed Rate Date
"Fixed Rate Date" means the date on which the Bonds begin to bear interest
at the Fixed Interest Rate, which shall be an Interest Payment Date.
Fixed Rate Index
"Fixed Rate Index" means the interest index determined by the Remarketing
Agent pursuant to Section 2.03(B)(1).
Government Obligations
"Government Obligations" means and includes any of the following
securities, if and to the extent the same are non-callable and not subject to
redemption at the option of the issuer, at the time legal for investment: direct
obligations of, or obligations the full and timely payment of principal of and
interest on which are unconditionally guaranteed by, the United States of
America, including obligations
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issued or held in book-entry form on the books of the Department of the Treasury
of the United States of America and including a receipt, certificate or any
other evidence of a direct ownership interest of future payments in an
obligation of, or unconditionally guaranteed by, the United States of America,
or in specified portions thereof held by a custodian in safekeeping for the
holders of such receipt, certificate or any other evidence of ownership (which
may consist of specified portions of interest thereon) which is rated or
assessed in the highest rating category of Moody's and S&P to the extent each
such rating agency is then rating the Bonds, but excluding any share or interest
in any unitary investment trust or mutual fund unless such unitary investment
trust or mutual fund is rated or assessed in the highest rating category of
Moody's and S&P to the extent each such rating agency is then rating the Bonds.
Holder or Bondholder
"Holder" or "Bondholder," whenever used herein with respect to a Bond,
means the Person in whose name such Bond is registered.
Indenture
"Indenture" means this Indenture, as originally executed or as it may from
time to time be supplemented, modified, or amended by any Supplemental
Indenture.
Information Services
"Information Services" means Financial Information, Inc.'s "Daily Called
Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302,
Attention: Editor; Kenny Information Service's "Called Bond Service," 65
Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service,
525077 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attention:
Called Bond Department; and Standard and Poor's "Called Bond Record," 25
Broadway, 3rd Floor, New York, New York 10004; or, in accordance with
then-current guidelines of the Securities and Exchange Commission, to such other
addresses and/or such other services providing information with respect to
called bonds, or no such services, as the Authority may designate in a
certificate of the Authority delivered to the Trustee.
Interest Account
"Interest Account" means the account of that name in the Revenue Fund
established pursuant to Section 5.02.
Interest Payment Date
"Interest Payment Date" means (i) on and prior to the Fixed Rate Date:
September 2, 1997 and the first Business Day of each calendar month thereafter,
and (ii) after the Fixed Rate Date: August 1 and February 1 of each year
commencing on the August 1 or February 1 next succeeding the Fixed Rate Date.
Interest Period
"Interest Period" means the period from and including the date of the first
authentication and delivery of the Bonds to and including September 1, 1997,
and, thereafter, the period from and including an Interest Payment Date to and
including the day next preceding the immediately succeeding Interest Payment
Date.
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Investment Securities
"Investment Securities" means (A) obligations described in Section 103 of
the Code, the interest on which is Tax-exempt, including certificates or units
of or in any entity that (i) is treated as a "grantor trust" under Subchapter J,
Part I, Subpart E of the Code in which the certificate holders or unit holders
are treated as the owners of all assets owned by such trust and (ii) invests
solely in obligations described in Section 103 of the Code, the interest on
which is Tax-exempt; and (B) stock of a "qualified regulated investment company"
as such term is defined in Section (a)(2) of Notice 87-22 of the Internal
Revenue Service, including qualified temporary investments relating to
Tax-exempt obligations pursuant to paragraph (a) (5) of Notice 87-22 but shall
not include securities issued by the Authority or the Borrower. At the time of
investment, Investment Securities shall be legal investments under the laws of
the State for the moneys proposed to be invested therein.
Letter of Credit
"Letter of Credit" means (i) that certain Letter of Credit issued by the
Bank pursuant to the Reimbursement Agreement, as the same may be amended or
modified in accordance with its terms, naming the Trustee as beneficiary and
delivered on the date of issuance and delivery of the Bonds, (ii) in the event
of delivery of an Alternate Letter of Credit, such Alternate Letter of Credit,
or (iii) in the event of delivery of an Alternate Credit Facility, such
Alternate Credit Facility.
Letter of Credit Account
"Letter of Credit Account" means the account of that name established in
the Revenue Fund pursuant to Section 5.03.
Letter of Credit Substitution
"Letter of Credit Substitution" means the substitution of an alternate
Letter of Credit for the then existing Letter of Credit pursuant to Section 5.8
of the Agreement.
Letter of Credit Substitution Date
"Letter of Credit Substitution Date" means the date an Alternate Letter of
Credit is delivered to the Trustee pursuant to Section 5.8 of the Agreement.
Liquidity Account
"Liquidity Account" means the account of that name established in the
Purchase Fund pursuant to Section 8.10.
Loan
"Loan" means the loan of the proceeds of the Bonds made by the Authority to
the Borrower pursuant to the Agreement.
Loan Default Event
"Loan Default Event" means any one or more of the events specified in
Section 7.1 of the Agreement.
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Loan Repayments
"Loan Repayments" means the payments required to be made by the Borrower
pursuant to Section 4.2(a) of the Agreement.
Mandatory Tender Date
"Mandatory Tender Date" shall mean the (i) Fixed Rate Date and (ii) any
Letter of Credit Substitution Date, pursuant to which the Bonds are required to
be tendered for purchase in accordance with Section 4.07 hereof.
Moody's
"Moody's" means Moody's Investors Service, a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, or, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, any other nationally
recognized securities rating agency designated by the Authority, with the
approval of the Borrower, which is requested to provide a rating on the Bonds.
Net Proceeds
"Net Proceeds" means the proceeds from insurance or from actual or
threatened condemnation or eminent domain action with respect to the Project,
less any costs reasonably expended by the Borrower to receive such proceeds.
Non-Tendered Bonds
"Non-Tendered Bonds" shall have the meaning ascribed to such term in
Section 4.07.
Opinion of Counsel
"Opinion of Counsel" means a written opinion of counsel (who may be counsel
for the Authority) selected by the Borrower and the Authority. If and to the
extent required by the provisions of Section 1.02, each Opinion of Counsel shall
include the statements provided for in Section 1.02.
Organization Documents
"Organization Documents" mean the Borrower's Certificate of Incorporation
and Bylaws, as amended from time to time.
Outstanding
"Outstanding," when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 11.10) all Bonds theretofore, or
thereupon being, authenticated and delivered by the Bond Registrar under this
Indenture except (1) Bonds theretofore cancelled by the Bond Registrar or
surrendered to the Bond Registrar for cancellation; (2) Bonds with respect to
which liability of the Authority shall have been discharged in accordance with
Section 10.02, including Bonds (or portions of Bonds) referred to in Section
11.10; (3) Bonds for the transfer or exchange of or in lieu of or in
substitution for which other Bonds shall have been authenticated and delivered
by the Bond Registrar pursuant to this Indenture and (4) Bonds which have been
deemed purchased pursuant to Section 4.07.
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Participating Underwriter
"Participating Underwriter" means any broker, dealer or municipal
securities dealer acting as an underwriter in a primary offering of municipal
securities subject to Securities and Exchange Commission Rule 15c2-12 under the
Securities Exchange Act of 1934, as amended.
Paying Agent
"Paying Agent" means, the Trustee, and any other paying agent for the Bonds
appointed pursuant to the provisions of this Indenture.
Permitted Investments
"Permitted Investments" means Treasury Funds, Government Obligations and
Investment Securities, which are rated "AA" by S&P or "Aa3" by Moody's;
provided, however, that such rating requirement may be waived by the Bank in its
sole discretion.
Person
"Person" means an individual, corporation, firm, association, partnership,
trust, or other legal entity or group of entities, including a governmental
entity or any agency or political subdivision thereof.
Pledge and Security Agreement
"Pledge and Security Agreement" means that certain Custody, Pledge and
Security Agreement, dated as of August 1, 1997, by and among the Borrower, the
Bank and the Tender Agent, as custodian, as the same may be amended and
supplemented from time to time.
Pledged Bonds
"Pledged Bonds" means Bonds tendered pursuant to Section 4.06 or subject to
mandatory tender pursuant to Section 4.07 and purchased from funds described in
Section 8.10(B)(ii).
Principal Account
"Principal Account" means the account of that name in the Revenue Fund
established pursuant to Section 5.02.
Project
"Project" means (i) all land, buildings, structures, fixtures
and improvements and (ii) all tangible personal property purchased with proceeds
of the Bonds by the Borrower, whether now existing or hereafter acquired,
constructed or installed as more fully described in Exhibit A to the Agreement.
Project Fund
"Project Fund" means the fund of that name established pursuant to Section
3.03.
11
Purchase Date
"Purchase Date" means (i) the date specified in each notice given by a
Bondholder pursuant to Section 4.06 on which the Bonds being tendered by such
Bondholder shall be purchased by the Tender Agent and (ii) the Mandatory Tender
Date.
Purchase Fund
"Purchase Fund" means the fund of that name established pursuant to Section
8.10.
Rebate Fund
"Rebate Fund" means the fund of that name created pursuant to Section 5.07.
Record Date
"Record Date" means, prior to the Fixed Rate Date, the Business Day
preceding each Interest Payment Date, and after the Fixed Rate Date, the
fifteenth (15th) day of the calendar month preceding each Interest Payment Date.
Redemption Account
"Redemption Account" means the account of that name established in the
Revenue Fund pursuant to Section 5.02.
Reimbursement Agreement
"Reimbursement Agreement" means the Reimbursement Agreement, dated as of
August 1, 1997, between the Borrower and the Bank (as from time to time amended
or supplemented), or any other similar agreement entered into by the Borrower
and the Bank in connection with the issuance of any Alternate Letter of Credit
or Alternate Credit Facility.
Related Party
"Related Party" means any general partner, member, affiliate or guarantor
of the Borrower.
Remarketing Account
"Remarketing Account" means the account of that name established in the
Purchase Fund pursuant to Section 8.10.
Remarketing Agent
"Remarketing Agent" means the remarketing agent or agents appointed in
accordance with Section 8.08 hereof. The Remarketing Agent shall be initially
Rauscher Pierce Refsnes, Inc. "Principal Office" of the Remarketing Agent shall
mean the office thereof designated in writing to the Authority, the Trustee, the
Tender Agent, the Bank and the Borrower.
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Remarketing Agreement
"Remarketing Agreement" means the Remarketing Agreement, dated as of August
1, 1997, between the Borrower the Remarketing Agent, as such agreement may from
time to time be amended and supplemented, to remarket the Bonds delivered or
deemed to be delivered for purchase by the Holders thereof, and any other
similar agreement entered into with any successor Remarketing Agent, subject to
approval by the Authority. No such amendment or supplement or similar agreement
shall alter the rights or obligations of the Holders of Bonds to deliver their
Bonds for purchase as provided herein.
Revenue Fund
"Revenue Fund" means the fund of that name established pursuant to Section
5.01.
Revenues
"Revenues" means all amounts received by the Authority or the Trustee for
the account of the Authority pursuant or with respect to the Agreement or the
Letter of Credit, including, without limiting the generality of the foregoing,
Loan Repayments (including both timely and delinquent payments, and any late
charges, paid from whatever source), prepayments, insurance proceeds,
condemnation proceeds, and all interest, profits or other income derived from
the investment of amounts in any fund or account established pursuant to this
Indenture, but not including any moneys paid for deposit into the Rebate Fund.
S&P
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., a corporation organized and existing under the laws
of the State of New York, its successors and their assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, any other nationally recognized
securities rating agency designated by the Authority, with the approval of the
Borrower which is requested to provide a rating on the Bonds.
Securities Depositaries
"Securities Depositaries" means the following registered securities
depositaries: (i) The Depository Trust Company, 711 Stewart Avenue, Garden City,
New York 11530, Fax-(516) 227-4039 or 4190; and (ii) Philadelphia Depository
Trust Company, Reorganization Division, 1900 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Bond Department, Fax-(215) 496-5058; or, in
accordance with then-current guidelines of the Securities and Exchange
Commission, to such other addresses and/or such other securities depositories,
or no such depositories, as the Authority or the Securities and Exchange
Commission may designate in a certificate of the Authority delivered to the
Trustee.
Special Record Date
"Special Record Date" means the date established by the Trustee pursuant to
Section 2.02(B)(2) as a record date for the payment of defaulted interest on the
Bonds.
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State
"State" means the State of California.
Supplemental Indenture
"Supplemental Indenture" means any indenture hereafter duly authorized and
entered into between the Authority and the Trustee, supplementing, modifying or
amending this Indenture; but only if and to the extent that such Supplemental
Indenture is specifically authorized hereunder.
Tax Regulatory Agreement
"Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated as of
August 1, 1997, among the Authority, the Borrower and the Trustee, as such Tax
Regulatory Agreement shall be amended from time to time.
Tax-exempt
"Tax-exempt" means, with respect to interest on any obligations of a state
or local government, including the Bonds, that such interest is excluded from
gross income for federal income tax purposes (other than in the case of a Holder
of any Bonds who is a substantial user of the Project or a "related person"
within the meaning of Section 147(a) of the Code) but such interest may be
includable as an item of tax preference or otherwise includable directly or
indirectly for purposes of calculating tax liabilities, including any
alternative minimum tax or environmental tax, under the Code.
Tender Agent
"Tender Agent" means First Trust of California, National Association, a
national banking association organized and existing under and by virtue of the
laws of the United States of America having a principal corporate trust office
at 101 California Street, Suite 1150, San Francisco, California 94111, or any
successor appointed pursuant to Section 8.14.
Treasury Funds
"Treasury Funds" means (i) any investment portfolio consisting of direct
obligations of the United States Treasury Department and repurchase agreements
in respect of those obligations, including any such investment portfolio
maintained by the Trustee or the Bank, (ii) any investment or security permitted
pursuant to Section 53601 of the California Government Code, including any
investment or security portfolio consisting of any one or more of such
investments or securities and (iii) any other investment or security permitted
by law and approved by the Bank.
Trustee
"Trustee" means First Trust of California, National Association, a national
banking association organized and existing under and by virtue of the laws of
the United States of America having a principal corporate trust office in San
Francisco, California, or its successor as Trustee hereunder as provided in
Section 8.01.
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Weekly Interest Rate
"Weekly Interest Rate" means the interest rate on the Bonds determined
pursuant to Section 2.02(C).
SECTION 1.02. Content of Certificates and Opinions. Every certificate or
opinion provided for in this Indenture with respect to compliance with any
provision hereof shall include (1) a statement that the Person making or giving
such certificate or opinion has read such provision and the definitions herein
relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3)
a statement that, in the opinion of such Person, he has made or caused to be
made such examination or investigation as is necessary to enable him to express
an informed opinion with respect to the subject matter referred to in the
instrument to which his signature is affixed; (4) a statement of the assumptions
upon which such certificate or opinion is based, and that such assumptions are
reasonable; and (5) a statement as to whether, in the opinion of such Person,
such provision has been complied with.
Any such certificate or opinion made or given by an officer of the
Authority or an officer or an Authorized Representative of the Borrower may be
based, insofar as it relates to legal, accounting or primary matter of the
business of either of them, upon a certificate or opinion of or representation
by counsel, an Accountant or a management consultant, unless such officer knows,
or in the exercise of reasonable care should have known, that the certificate,
opinion or representation with respect to the matters upon which such
certificate or statement may be based, as aforesaid, is erroneous. Any such
certificate or opinion made or given by counsel, an Accountant or a management
consultant may be based, insofar as it relates to factual matters (with respect
to which information is in the possession of the Authority or the Borrower, as
the case may be) upon a certificate or opinion of or representation by an
officer of the Authority or the Borrower, unless such counsel, Accountant or
management consultant knows, or in the exercise of reasonable care should have
known, that the certificate or opinion or representation with respect to the
matters upon which such Person's certificate or opinion or representation may be
based, as aforesaid, is erroneous. The same officer of the Authority or the
Borrower, or the same counsel or Accountant or management consultant, as the
case may be, need not certify to all of the matters required to be certified
under any provision of this Indenture, but different officers, counsel,
Accountants or management consultants may certify to different matters,
respectively.
SECTION 1.03. Interpretation. (A) Unless the context otherwise indicates,
defined terms shall include all variations thereof and words expressed in the
singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.
(B) Headings of articles and sections herein and the table of contents
hereof are solely for convenience of reference, do not constitute a part hereof
and shall not affect the meaning, construction or effect hereof.
(C) Unless otherwise indicated, all references herein to "Articles,"
"Sections" and other subdivisions are to the corresponding Articles, Sections or
subdivisions of this Indenture; the words "herein," "hereof," "hereby,"
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or subdivision hereof.
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ARTICLE II
THE BONDS
SECTION 2.01. Authorization of Bonds. There shall be issued under and
secured by this Indenture a single series of Bonds to be designated as
"California Economic Development Financing Authority Variable Rate Demand
Industrial Development Revenue Bonds, Series 1997 (Advanced Aerodynamics and
Structures, Inc. Project)" in the original principal amount of $8,500,000, to be
dated as of the Date of Delivery, and to mature fully (subject to prior
redemption at the prices and dates and upon the terms and conditions hereinafter
set forth) on August 1, 2027.
SECTION 2.02. Terms of the Bonds. (A) The Bonds shall be issued as fully
registered Bonds without coupons in the Authorized Denominations. The Bonds
shall be in substantially the form set forth in Exhibit A hereto.
(B)(1) Each Bond shall bear interest at the rates determined pursuant to
Section 2.02(C) and 2.03(B) from and including the Interest Payment Date next
preceding the date of registration thereof (unless such Bond is registered after
a Record Date and on or before the next succeeding Interest Payment Date or on
an Interest Payment Date, in which event it shall bear interest from and
including such Interest Payment Date, or unless such Bond is registered on or
prior to September 1, 1997, in which event it shall bear interest from and
including the Date of Delivery), payable on each Interest Payment Date. The
interest so payable on any Interest Payment Date will be paid on the Interest
Payment Date to the Persons in whose name the Bonds are registered at the close
of business of the Bond Registrar on the Record Date for such Interest Payment
Date; except as provided below.
(2) Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder as of the Record Date for such
payment of interest, and shall be paid to the Person in whose name the Bond is
registered at the close of business on a Special Record Date for the payment of
such defaulted interest, to be fixed by the Trustee, notice thereof being given
to the Holders not less than ten (10) days prior to such Special Record Date.
(3) Interest shall be paid in lawful money of the United States by check or
draft mailed to each Holder at the address shown on the registration books
maintained by the Bond Registrar pursuant to Section 2.07; provided, however,
interest may also be paid by wire transfer to an address in the continental
United States in the case of a Holder of at least $1,000,000 aggregate principal
amount of Bonds upon written request of the Holder thereof 15 days prior to the
applicable Record Date to the Bond Registrar in a form satisfactory to the Bond
Registrar.
(C)(1) The Bonds shall bear interest until payment of the principal thereof
and interest thereon shall have been made or provided for in accordance with the
provisions hereof, whether at maturity, upon redemption or otherwise. Prior to
the Fixed Rate Date, interest shall be computed on the basis of a year of 365 or
366 days, as appropriate, for the actual number of days elapsed.
The Bonds shall bear interest for each day from and including the Date of
Delivery until the Fixed Rate Date or final maturity date, whichever is earlier,
at the Weekly Interest Rate; provided that appropriate adjustments may be made
for the initial period following the Date of Delivery. The Weekly Interest Rate
shall be the rate determined by the Remarketing Agent (on the basis of the
examination of Tax-exempt obligations comparable to the Bonds known by the
Remarketing Agent to have been priced or traded under then prevailing market
conditions) to be the minimum interest rate which, if borne by the Bonds, would
enable the Remarketing Agent to sell the Bonds on the date such
16
rate becomes effective at a price equal to the principal amount thereof, plus
accrued interest, if any, but in no event exceeding twelve percent (12%) per
annum. The Weekly Interest Rate shall be determined by the Remarketing Agent as
of the close of business on Tuesday in each calendar week until the earlier of
the Fixed Rate Date or payment in full of the Bonds; provided that, if Tuesday
in any calendar week shall not be a Business Day, then such determination shall
be made on the next preceding Business Day; and provided further that
appropriate adjustments may be made for the initial period following the Date of
Delivery. The Weekly Interest Rate shall be effective from Wednesday in the week
of determination thereof to and including the following Tuesday irrespective of
when the rate was determined by the Remarketing Agent; provided that appropriate
adjustments may be made for the initial period following the Date of Delivery.
The Weekly Interest Rate shall be communicated by telephonic notice, promptly
confirmed in writing, by the Remarketing Agent to the Trustee on the Business
Day next following the day on which the Weekly Interest Rate is determined. The
Remarketing Agent shall also give written notice to the Tender Agent, the Bank
and the Borrower of the Weekly Interest Rate at the time it gives the aforesaid
written confirmation thereof to the Trustee. If for any reason the Remarketing
Agent does not determine the Weekly Interest Rate in any week, the Weekly
Interest Rate for the first such week in which the Remarketing Agent does not
determine the Weekly Interest Rate shall remain at the last Weekly Interest Rate
announced by the Remarketing Agent and the Weekly Interest Rate thereafter shall
be 90% of the "Alternate Weekly Rate" (as defined below).
(2) If on any date on which the Weekly Interest Rate is determined, the
Weekly Interest Rate determined in accordance with paragraph (1) of this
paragraph (C) is held by a court to be invalid or unenforceable, then the Weekly
Interest Rate shall be 90% of the Alternate Weekly Rate. The "Alternate Weekly
Rate" shall be the A-1/P-1 30-day commercial paper rate as determined by the
Remarketing Agent.
(3) Each determination of the Weekly Interest Rate by the Remarketing Agent
shall be conclusive and binding on the Holders, the Trustee and the Authority.
The Trustee shall calculate the amount of interest due on each Interest
Payment Date with respect to the then-concluding Interest Period by the close of
business on the date one (1) Business Day prior to the end of such Interest
Period, and shall notify the Borrower and the Bank of such amount. The Trustee
shall inform any Bondholder who requests the same of the Weekly Interest Rate in
effect from time to time.
(4) Anything herein to the contrary notwithstanding, in no event shall the
interest rate borne by the Bonds exceed twelve percent (12%) per annum or, if
lower, the maximum rate of interest which may be charged or collected pursuant
to applicable provisions of federal or state law.
(D) The principal of the Bonds shall be payable in lawful money of the
United States of America on August 1, 2027 at the principal corporate trust
office of the Trustee in San Francisco, California or at such other office as
the Trustee may designate. Except as provided in Section 2.09, no payment of
principal shall be made on any Bond unless and until such Bond is tendered to
the Trustee for cancellation, as the case may be.
(E) The Bonds shall be subject to redemption and purchase as provided in
Article IV.
SECTION 2.03. Conversion of Bonds. (A) On any Interest Payment Date, the
interest rate on the Bonds may be converted to a fixed annual rate of interest
upon receipt by the Authority, the Trustee, the Tender Agent, the Bank and the
Remarketing Agent not less than 45 days in advance of the proposed Fixed Rate
Date of (i) notice from the Borrower electing to have the interest rate on the
Bonds
17
converted to a fixed rate of interest and the effective date of such conversion,
(ii) an opinion of Bond Counsel (which shall be confirmed on the Fixed Rate
Date) to the effect that conversion to a Fixed Interest Rate is permitted by the
Indenture and the Act, that conversion to the Fixed Interest Rate in accordance
with the provisions of the Indenture will not cause interest on the Bonds to not
be Tax-exempt and that, to the extent required, the Borrower has complied with
the Disclosure Requirements as provided in Section 5.12 of the Agreement, (iii)
receipt by the Trustee of a commitment from the Bank evidencing that the Letter
of Credit has been increased to provide for the interest, principal and premium
requirements on the Bonds on and after the Fixed Rate Date or an Alternate
Credit Facility pursuant to the terms of Section 5.7 of the Agreement or an
Alternate Letter of Credit pursuant to the terms of Section 5.8 of the
Agreement, (iv) the written consent of the Bank to such conversion and (v)
receipt by the Trustee of written evidence from the rating agency then rating
the Bonds of its rating on the Bonds.
(B)(1) After the Fixed Rate Date, interest on the Bonds shall be computed
on the basis of a year of 360 days and 12 months of 30 days each. The interest
rate on all Bonds from the Fixed Rate Date until the maturity or prior
redemption or acceleration thereof shall be a rate per annum equal to the Fixed
Interest Rate, which shall be determined on or prior to, but not more than 15
days prior to, the Business Day immediately preceding the Fixed Rate Date. The
Remarketing Agent shall specify the Fixed Interest Rate to be borne by the Bonds
on and after the Fixed Rate Date. The Fixed Interest Rate shall be the rate, but
not exceeding the rate, which at the time of determination thereof in the
judgment of the Remarketing Agent, having due regard for prevailing financial
market conditions, would be necessary to remarket the Bonds at a price equal to
100% of the principal amount thereof on the Fixed Rate Date. If on the date of
determination by the Remarketing Agent of the Fixed Interest Rate, the Fixed
Interest Rate so determined is held by a court to be invalid or unenforceable,
then the Fixed Interest Rate shall be a rate determined by the Remarketing
Agent, not less than 90% or more than 130% of the "Alternate Fixed Rate," which
in the judgment of the Remarketing Agent, having due regard for prevailing
market conditions, would be the minimum rate at which Holders of the Bonds would
be able to sell the Bonds at a price equal to the principal amount thereof on
the Fixed Rate Date. The Alternate Fixed Rate shall be determined by the
Remarketing Agent and shall be a rate per annum based upon yield evaluations at
par of Tax-exempt securities having a remaining term equal, as nearly as
practicable, to the time remaining until the maturity of the Bonds of not less
than five Component Issues selected by the Remarketing Agent each of which would
be rated by either Moody's or S&P in a long-term debt rating category which is
the same as, or is immediately proximate to, the long-term debt rating category
which will be assigned to the Bonds after the Fixed Rate Date. Anything to the
contrary herein notwithstanding, the Fixed Interest Rate shall not exceed twelve
percent (12%) per annum. If, after the Fixed Rate Date, the Bonds shall fail to
be converted to a Fixed Interest Rate, the Bonds will continue to earn interest
at the Weekly Interest Rate as provided in this Indenture and the Holders shall
be notified thereof by the Trustee.
(2) Following an election of the Borrower to convert the interest rate on
the Bonds to the Fixed Interest Rate as provided in this Section 2.03, the
Holders of all of the Outstanding Bonds shall be required to tender their Bonds
for purchase on the Mandatory Tender Date.
(3) At least thirty (30) days prior to the Fixed Rate Date, the Trustee
shall give an irrevocable notice to the Bondholders of conversion of the Weekly
Interest Rate borne by the Bonds to the Fixed Interest Rate on the Fixed Rate
Date. If a Bondholder delivers a written request to the Trustee at least 45 days
prior to the Fixed Rate Date setting forth the appropriate telex or telecopier
number and other necessary information to enable the Trustee to deliver such
notice by telegram, telex, telecopier or other telecommunication device capable
of creating a written notice such notice shall be delivered in the manner
requested. Such notice shall (i) specify the proposed Fixed Rate Date, (ii)
require the Holders of all of the Outstanding Bonds to tender their Bonds for
purchase on the Mandatory Tender Date
18
pursuant to Section 4.07, and (iii) state that all Outstanding Bonds not
purchased on or before the Mandatory Tender Date will be deemed to be purchased
on the Mandatory Tender Date at a price equal to the principal amount thereof,
plus unpaid interest, if any, accrued to such date.
(4) Any Bond purchased by the Tender Agent pursuant to the provisions of
Section 4.06 hereof from the date notice of the proposed Fixed Rate Date is
given to Bondholders through the Fixed Rate Date shall be remarketed at the
Weekly Interest Rate for a period of time up to and including the Fixed Rate
Date; provided, however, that all Bonds remarketed from the date notice of the
proposed Fixed Rate Date is given to Bondholders through the Fixed Rate Date
shall be tendered by the Holders thereof for purchase on the Mandatory Tender
Date.
(5) The determination of the Fixed Interest Rate by the Remarketing Agent
shall be conclusive and binding on the Authority, the Trustee, the Borrower and
the Holders of the Bonds.
SECTION 2.04. Execution of Bonds. The Bonds shall be executed in the name
and on behalf of the Authority with the manual or facsimile signature of the
Chair of the Authority or the Chair's designee and attested by the manual or
facsimile signature of its Secretary. The Bonds shall then be delivered to the
Bond Registrar for authentication by it. In case any of the officers who shall
have signed or attested any of the Bonds shall cease to be such officer or
officers of the Authority before the Bonds so signed or attested shall have been
authenticated or delivered by the Bond Registrar or issued by the Authority,
such Bonds may nevertheless be authenticated, delivered and issued and, upon
such authentication, delivery and issue, shall be as binding upon the Authority
as though those who signed and attested the same had continued to be such
officers of the Authority, and also any Bonds may be signed and attested on
behalf of the Authority by such persons as at the actual date of execution of
such Bonds shall be the proper officers of the Authority although at the nominal
date of such Bonds any such person shall not have been such officer of the
Authority.
Only such of the Bonds as shall bear thereon a certificate of
authentication substantially in the form set forth in Exhibit A, with the manual
signature of the Bond Registrar, shall be valid or obligatory for any purpose or
entitled to the benefits of this Indenture, and such certificate of the Bond
Registrar shall be conclusive evidence that the Bonds so authenticated have been
duly executed, authenticated and delivered hereunder and are entitled to the
benefits of this Indenture.
SECTION 2.05. Transfer of Bonds. Any Bond may, in accordance with its
terms, be transferred, upon the books required to be kept pursuant to the
provisions of Section 2.07, by the person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such registered
Bond for cancellation, accompanied by delivery of a written instrument of
transfer, duly executed in a form approved by the Bond Registrar. Transfer of a
Bond shall not be permitted by the Bond Registrar: (i) if the Bond Registrar has
received notice from the Holder of such Bond that such Bond will be delivered to
the Tender Agent for purchase on or before the next succeeding Interest Payment
Date or (ii) if the Bond Registrar receives such written instrument of transfer
after the Record Date prior to the next succeeding Interest Payment Date.
Whenever any Bond or Bonds shall be surrendered for transfer, the Authority
shall execute and the Bond Registrar shall authenticate and deliver a new Bond
or Bonds for a like aggregate principal amount in an Authorized Denomination.
The Bond Registrar shall require the Bondholder requesting such transfer to pay
any tax or other governmental charge required to be paid with respect to such
transfer, and may in addition require the payment of a reasonable sum to cover
expenses incurred by the Authority and the Bond Registrar in connection with
such transfer.
19
Notwithstanding the foregoing, prior to the Fixed Rate Date, no Bonds held
by or for the account of the Bank or the Borrower shall be transferred upon the
books required to be kept pursuant to Section 2.07 hereof unless the Trustee has
received positive affirmation that the Bank has received all reimbursements then
due under the Reimbursement Agreement and the Trustee has notified the Tender
Agent in writing of such reimbursement, so that the amount that may be drawn
under the Letter of Credit shall have been, or shall concurrently with such
transfer be, reinstated (automatically or otherwise), in the amount of the draw
on the Letter of Credit used to purchase such Bonds proposed to be transferred.
SECTION 2.06. Exchange of Bonds. Bonds may be exchanged at the principal
corporate trust office of the Trustee in San Francisco, California, or at such
other office as the Trustee may designate, for a like aggregate principal amount
of Bonds of other Authorized Denominations. The Bond Registrar shall require the
Bondholder requesting such exchange to deliver such Bonds to be exchanged and to
pay any tax or other governmental charge required to be paid with respect to
such exchange, and may in addition require the payment of a reasonable sum to
cover expenses incurred by the Authority or the Bond Registrar in connection
with such exchange. Thereupon, the Bonds delivered to the Bond Registrar for
exchange shall be cancelled by the Bond Registrar.
SECTION 2.07. Bond Register. The Trustee is hereby designated and appointed
as the bond registrar (the "Bond Registrar"). The Bond Registrar will keep or
cause to be kept at its corporate trust office in San Francisco, California, or
at such other office as the Bond Registrar may designate, sufficient books for
the registration and transfer of the Bonds, and shall keep or cause to be kept
within the State a copy of such books, which shall at all times be open to
inspection during regular business hours by the Authority; and, upon
presentation for such purpose, the Bond Registrar shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered
or transferred, on such books, Bonds as hereinbefore provided.
SECTION 2.08. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bond
may be printed, lithographed or typewritten, shall be in an Authorized
Denomination, shall be in fully registered form without coupons and may contain
such reference to any of the provisions of this Indenture as may be appropriate
and in a form acceptable to the Paying Agent. Every temporary Bond shall be
executed by the Authority and be authenticated by the Bond Registrar upon the
same conditions and in substantially the same manner as the definitive Bonds. If
the Authority issues temporary Bonds it will execute and deliver definitive
Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds
may be surrendered, for cancellation, in exchange therefor at the principal
corporate trust office of the Bond Registrar and the Bond Registrar shall
authenticate and deliver in exchange for such temporary Bonds an equal aggregate
principal amount of definitive Bonds in Authorized Denominations. Until so
exchanged, the temporary Bonds shall be entitled to the same benefits under this
Indenture as definitive Bonds authenticated and delivered hereunder.
SECTION 2.09. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall
become mutilated, the Authority, at the expense of the Holder of said Bond,
shall execute, and the Bond Registrar shall thereupon authenticate and deliver,
a new Bond of like tenor in exchange and substitution for the Bond so mutilated,
but only upon surrender to the Bond Registrar of the Bond so mutilated. Every
mutilated Bond so surrendered to the Bond Registrar shall be cancelled by it and
delivered to, or upon the order of, the Authority. If any Bond shall be lost,
destroyed or stolen, evidence of such loss, destruction or theft may be
submitted to the Bond Registrar and, if such evidence be satisfactory to it and
indemnity satisfactory to the Bond Registrar shall be given, the Authority, at
the expense of the Holder, shall execute, and the Bond Registrar shall thereupon
authenticate and deliver, a new Bond of like tenor in lieu of and in
substitution for the Bond so lost, destroyed or stolen (or if any such Bond
shall have
20
matured or shall be about to mature, instead of issuing a substitute Bond, the
Bond Registrar may pay the same without surrender thereof upon such maturity
date). The Bond Registrar may require payment by the Holder of a sum not
exceeding the actual cost of preparing each new Bond issued under this Section
and of the expenses which may be incurred by the Authority and the Bond
Registrar in the premises. Any Bond issued under the provisions of this Section
in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an
original additional contractual obligation on the part of the Authority whether
or not the Bond so alleged to be lost, destroyed or stolen be at any time
enforceable by anyone, and shall be entitled to the benefits of this Indenture
with all other Bonds secured by this Indenture.
SECTION 2.10. Special Obligations. The Bonds, together with the interest
and premium (if any) thereon and the purchase price thereof, shall not be deemed
to constitute a debt or liability of the State or any political subdivision or
agency of the State or a pledge of the faith and credit of the State or any
political subdivision or agency of the State, but shall be payable solely from
the funds provided therefor pursuant to this Indenture. The Bonds are only a
special obligation of the Authority as provided by the Act and the Authority
shall under no circumstances be obligated to pay the Bonds or respective Costs
of the Project except from Revenues and other funds pledged therefor.
Neither the faith and credit nor the taxing power of the State or any
political subdivision or agency of the State is pledged to the payment of the
principal of, premium, if any, purchase price of or interest on the Bonds nor is
the State or any political subdivision or agency of the State in any manner
obligated to make any appropriation for such payment. The Authority has no
taxing power.
SECTION 2.11. Book-Entry Only System. (A) Except as otherwise provided in
subsections (B) and (C) of this Section 2.11, the Bonds initially authenticated
and delivered hereunder shall be registered in the name of Cede & Co., as
nominee of DTC or such other nominee as DTC shall request. Payments of interest
on, principal of and any premium on the Bonds shall be made to the account of
Cede & Co. on each Bond Payment Date at the address indicated for Cede & Co. in
the registration books maintained by the Bond Registrar by transfer of
immediately available funds. DTC has represented to the Authority that it will
maintain a book-entry system in recording ownership interests of its
participants (the "Direct Participants") and the ownership interests of a
purchaser of a beneficial interest in the Bonds (a "Beneficial Owner") will be
recorded through book entries on the records of the Direct Participants.
(B) The Bonds shall be initially issued in the form of a separate single
authenticated fully registered Bond in the amount of each separate stated
maturity. With respect to Bonds so registered in the name of Cede & Co., the
Authority, the Trustee and the Tender Agent shall have no responsibility or
obligation to any Direct Participant or to any Beneficial Owner of such Bonds.
Without limiting the immediately preceding sentence, the Authority, the Trustee
and the Tender Agent shall have no responsibility or obligation with respect to
(i) the accuracy of the records of DTC, Cede & Co. or any Direct Participant
with respect to any beneficial ownership interest in the Bonds, (ii) the
delivery to any Direct Participant, Beneficial Owner or other person, other than
DTC, of any notice with respect to the Bonds, including any notice of
redemption, (iii) the payment to any Direct Participant, Beneficial Owner or
other person, other than DTC, of any amount with respect to the principal or
redemption price of, or interest on, the Bonds or (iv) any consent given or
other action taken by DTC as Holder of the Bonds. The Authority, the Trustee and
the Tender Agent may treat DTC as, and deem DTC to be, the absolute Holder of
each Bond for all purposes whatsoever including (but not limited to) (i) payment
of the principal or redemption price of, and interest on, each such Bond, (ii)
giving notices of conversion or redemption and other matters with respect to
such Bonds and (iii) registering transfers with respect to such Bonds. The
Trustee shall pay the principal or redemption price of, and interest on, all
Bonds only
21
to or upon the order of DTC, and all such payments shall be valid and effective
to fully satisfy and discharge the Authority's obligations with respect to such
principal or redemption price, and interest, to the extent of the sum or sums so
paid. No person other than DTC shall receive a Bond evidencing the obligation of
the Authority to make payments of principal or redemption price of, and interest
on, the Bonds pursuant to this Indenture. Upon delivery by DTC to the Trustee of
written notice to the effect that DTC has determined to substitute a new nominee
in place of Cede & Co., and subject to the transfer provisions hereof, the word
"Cede & Co." in this Indenture shall refer to such new nominee of DTC.
(C) (1) DTC may determine to discontinue providing its services with
respect to the Bonds at any time by giving reasonable written notice to the
Authority, the Trustee and the Tender Agent and discharging its responsibilities
with respect thereto under applicable law.
(2) The Authority, in its sole discretion and without the consent of any
other person, may terminate, upon provision of notice to the Trustee and Tender
Agent, the services of DTC with respect to the Bonds if the Authority determines
that the continuation of the system of book-entry only transfers through DTC (or
a successor securities depository) is not in the best interests of the
Beneficial Owners of the Bonds or is burdensome to the Authority, and shall
terminate the services of DTC with respect to the Bonds upon receipt by the
Authority, the Trustee and the Tender Agent of written notice from DTC to the
effect that DTC has received written notice from Direct Participants having
interests, as shown in the records of DTC, in an aggregate principal amount of
not less than fifty percent (50%) of the aggregate principal amount of the then
Outstanding Bonds to the effect, that: (i) DTC is unable to discharge its
responsibilities with respect to such Bonds, or (ii) a continuation of the
requirement that all of the Outstanding Bonds be registered in the registration
books kept by the Trustee in the name of Cede & Co., as nominee of DTC, is not
in the best interest of the Beneficial Owners of such Bonds.
(D) Upon the termination of the services of DTC with respect to the Bonds
pursuant to subsection (C)(2)(ii) hereof, or upon the discontinuance or
termination of the services of DTC with respect to the Bonds pursuant to
subsection (C)(1) or subsection (C)(2)(i) hereof after which no substitute
securities depository willing to undertake the functions of DTC hereunder can be
found or which, in the opinion of the Authority, is willing and able to
undertake such functions upon reasonable and customary terms, the Bonds shall no
longer be restricted to being registered in the registration books kept by the
Bond Registrar in the name of Cede & Co. as nominee of DTC. In such event, the
Authority shall issue and the Trustee shall transfer and exchange Bond
certificates as requested by DTC or Direct Participants of like principal
amount, series and maturity, in Authorized Denominations to the identifiable
Beneficial Owners in replacement of such Beneficial Owners' beneficial interests
in the Bonds.
(E) Notwithstanding any other provision of this Indenture to the contrary,
so long as any Bond is registered in the name of Cede & Co., as nominee of DTC,
all payments with respect to the principal or redemption price of, and interest
on, such Bond and all notices with respect to such Bond shall be made and given,
respectively, to DTC.
(F) In connection with any notice or other communication to be provided to
Bondholders pursuant to this Indenture by the Authority, the Tender Agent or the
Trustee with respect to any consent or other action to be taken by Bondholders,
the Authority, the Tender Agent or the Trustee, as the case may be, shall
establish a record date for such consent or other action and give DTC notice of
such record date not less than fifteen (15) calendar days in advance of such
record date to the extent possible.
22
(G) Notwithstanding any provision herein to the contrary, the Authority and
the Trustee may agree to allow DTC, or its nominee, Cede & Co., to make a
notation on any Bond redeemed in part to reflect, for informational purposes
only, the principal amount and date of any such redemption.
(H) Notwithstanding any provision herein to the contrary, so long as the
Bonds are subject to a system of book-entry only transfers pursuant to this
Section, any requirement for the delivery of Bonds to the Tender Agent in
connection with a mandatory tender pursuant to Section 4.07 shall be deemed
satisfied upon the transfer, on the registration books of DTC, of the beneficial
ownership interests in such Bonds tendered for purchase to the account of the
Tender Agent, or a Direct Participant acting on behalf of the Tender Agent.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
SECTION 3.01. Issuance of the Bonds. At any time after the execution of
this Indenture, the Authority may execute and the Bond Registrar shall
authenticate and, upon Request of the Authority, deliver Bonds in the aggregate
principal amount set forth in Section 2.01.
SECTION 3.02. Application of Proceeds of the Bonds. The proceeds received
from the sale of the Bonds shall be deposited in trust with the Trustee, who
shall forthwith set aside such proceeds as follows:
(A) The Trustee shall set aside the sum of $170,000 in the Costs of
Issuance Fund, together with any additional money supplied by the Borrower to
pay the Costs of Issuance, which Costs of Issuance Fund the Trustee shall
establish and maintain as further provided in Section 3.03(E) hereof.
(B) The Trustee shall set aside the remainder of said proceeds, $8,330,000,
in the Project Fund.
SECTION 3.03. Establishment and Application of Project Fund and Costs of
Issuance Fund. (A) The Trustee shall establish, maintain and hold in trust a
separate fund designated as the "Project Fund." The moneys in the Project Fund
shall be used and withdrawn by the Trustee to pay the Costs of the Project.
(B) Subject to paragraph (C) of this Section 3.03, before any payment from
the Project Fund shall be made to pay any Costs of the Project, the Borrower
shall file or cause to be filed with the Trustee a Requisition of the Borrower
stating (i) the item number of such payment; (ii) the name of the Person to whom
each such payment is due, which may be the Borrower in the case of reimbursement
for any Costs of the Project theretofore paid by the Borrower; (iii) the
respective amounts to be paid; (iv) the purpose by general classification for
which each obligation to be paid was incurred; (v) that obligations in the
stated amounts are presently due and payable and that each item thereof is a
proper charge against the Project Fund and has not been previously paid from
said fund or from the proceeds of the Bonds; and (vi) that there has not been
filed with or served upon the Borrower notice of any lien, or attachment upon,
or claim affecting the right to receive payment of, any of the amounts payable
to any of the persons named in such Requisition, which has not been released or
will not be released simultaneously with the payment of such obligation, other
than materialmen's or mechanics' liens accruing by mere operation of law.
23
Upon receipt of each Requisition, the Trustee shall pay the amount set
forth in such Requisition as directed by the terms thereof out of the Project
Fund. The Trustee may, upon satisfaction by the Borrower of the conditions set
forth in this Section 3.03(B), pay each Requisition without the written approval
of the Bank unless the Trustee has received written notice from the Bank that
the payment of any subsequent Requisition requires the Bank's written approval.
The Trustee shall not make any such payment if it has theretofore received
notice of any lien, right to lien or attachment upon, or claim affecting the
right to receive payment of, any of the moneys to be so paid, which has not been
released or will not be released simultaneously with such payment.
(C) In the event the Borrower elects to invest any moneys on deposit in the
Project Fund in Permitted Investments other than Investment Securities pursuant
to Section 5.05 of this Indenture, the Trustee shall, prior to the payment of
any Requisition which would result in the amount remaining on deposit in the
Project Fund being less than 2% of the principal amount of the Bonds set forth
in Section 2.01, notify the Borrower that a rebate calculation is required to
determine the Rebate Requirement (as defined in the Tax Regulatory Agreement) in
accordance with Section 5.07 of this Indenture. In addition, the payment of such
Requisition by the Trustee shall be subject to prior compliance with the
provisions of Section 5.07 of this Indenture and the Tax Regulatory Agreement.
(D) Subject to paragraph (C) of this Section 3.03, upon the receipt of the
Certificate of the Borrower required by Section 3.3 of the Agreement,
accompanied by the written approval of the Bank, or at such time that there are
no Outstanding Bonds, the Trustee shall transfer any remaining balance in the
Project Fund, less the amount of any such retention, to a separate account
within the Redemption Account, which the Trustee shall establish and hold in
trust, and which shall be entitled the "Surplus Account." The moneys in the
Surplus Account shall be used and applied (unless some other application of such
moneys would not, in the opinion of Bond Counsel, adversely affect the
Tax-exempt status of interest on the Bonds) to pay principal only in connection
with the call and redemption of Bonds to the maximum degree permissible in
accordance with Section 4.01 hereof, and at the earliest possible dates at which
Bonds can be redeemed without payment of premium pursuant to this Indenture or
to reimburse the Bank for any draws theretofore made by the Trustee under the
Letter of Credit, but not yet reimbursed, the proceeds of which were used to
accomplish such redemption; provided, however, that the principal of Pledged
Bonds shall be paid from moneys in the Surplus Account prior to the payment of
principal of any other outstanding Bonds. Any moneys in the Surplus Account not
used to call and redeem Bonds or to reimburse the Bank as herein provided shall
be used and applied to pay the principal of the Bonds as such principal becomes
due and payable, in annual amounts which bear the same ratio to the annual
principal due on the Bonds that the amount deposited in the Surplus Account
bears to the original face amount of the Bonds (unless in the opinion of Bond
Counsel another use would not adversely affect the Tax-exempt status of interest
on the Bonds). Notwithstanding Section 5.05, the moneys in the Surplus Account
shall be invested at a yield no higher than the yield on the Outstanding Bonds
(unless in the opinion of Bond Counsel investment at a higher yield would not
adversely affect the Tax-exempt status of interest on the Bonds), and all such
investment income shall be deposited in the Surplus Account and expended or
reinvested as provided above.
(E) The Trustee shall establish, maintain and hold in trust a separate fund
designated as the "Costs of Issuance Fund." The moneys in the Costs of Issuance
Fund shall be held by the Trustee in trust and applied to the payment of Costs
of Issuance, upon a requisition or letter filed with the Trustee by an
Authorized Representative of the Borrower or a designee of an Authorized
Representative of the Borrower. Any money remaining in the Costs of Issuance
Fund on February 1, 1998 shall be either transferred to the Project Fund or
returned to the Borrower, at the direction of the Borrower.
24
SECTION 3.04. Validity of Bonds. The validity of the authorization and
issuance of the Bonds is not dependent on and shall not be affected in any way
by any proceedings taken by the Authority or the Trustee with respect to or in
connection with the Agreement. The recital contained in the Bonds that the same
are issued pursuant to the Act and the Constitution and laws of the State shall
be conclusive evidence of their validity and of compliance with the provisions
of law in their issuance.
ARTICLE IV
REDEMPTION AND PURCHASE OF BONDS
SECTION 4.01. Terms of Redemption. The Bonds are subject to redemption by
the Authority if and to the extent the Borrower is entitled to make and makes,
or is required to make, a payment or prepayment pursuant to Articles IV or VIII
of the Agreement. All such prepayments by the Borrower shall be deposited in the
Redemption Account. The Authority shall not call the Bonds for optional
redemption, and the Trustee shall not give notice of any such redemption, unless
the Borrower has so directed in accordance with the Agreement and has made or
caused to be made all required installments of the Borrower's obligations under
the Agreement; provided that the Authority may require such payment under
Section 8.3 of the Agreement without the Borrower's direction.
The Bonds shall be subject to redemption by the Authority upon the
following terms in increments of $5,000, provided that in the event of
redemption of less than all of the Bonds, the amount which remains Outstanding
shall be in Authorized Denominations:
(1) Sinking Fund Redemption. The Bonds are not subject to sinking fund
redemption.
(2) Prior to the Fixed Rate Date. On or prior to the Fixed Rate Date, the
Bonds are subject to optional redemption on any Interest Payment Date, in whole
or in part, to the extent of prepayments of amounts due under the Agreement made
at the option of the Borrower pursuant to Section 8.2(b) of the Agreement with
the written approval of the Bank, at a redemption price of 100% of the principal
amount of the Bonds to be redeemed, plus interest accrued thereon to the
redemption date.
(3) Taxability. In the event of a prepayment pursuant to Section 8.3(a)(ii)
or Section 8.3(a)(iii) of the Agreement as a result of a Determination of
Taxability, Bonds Outstanding on the date of the occurrence of such
Determination of Taxability shall be redeemed in whole at any time within 60
days after such occurrence, at a redemption price of 100% of the principal
amount thereof plus interest accrued thereon to the redemption date. No
redemption of Bonds shall be made pursuant to any of the other provisions of
this Section 4.01 following a Determination of Taxability. IF THE LIEN OF THIS
INDENTURE IS DISCHARGED PRIOR TO THE OCCURRENCE OF A DETERMINATION OF
TAXABILITY, THEN THE BONDS SHALL NOT BE REDEEMED AS DESCRIBED IN THIS SUBSECTION
4.01(3).
(4) Letter of Credit. The Bonds shall be redeemed in whole, at a redemption
price equal to 100% of the principal amount thereof, plus interest accrued
thereon to the redemption date, on a redemption date not less than fifteen (15)
days preceding the Expiration Date of the Letter of Credit selected by the
Trustee if no Alternate Letter of Credit has been delivered to the Trustee in
accordance with Section 5.8 of the Agreement.
25
(5) Extraordinary Events. To the extent of a prepayment by the Borrower
pursuant to Sections 8.2(a), 8.3(a)(i) or 8.3(b) of the Agreement, the Bonds are
subject to redemption prior to their stated maturity as a whole or in part, on
any date, at a redemption price equal to 100% of the principal amount thereof,
plus interest accrued thereon to the redemption date.
(6) Optional Redemption After the Fixed Rate Date. After the Fixed Rate
Date, the Bonds are subject to redemption to the extent of prepayments of
amounts due under the Agreement made at the option of the Borrower pursuant to
Section 8.2(b) of the Agreement, with the consent of the Bank, in whole or in
part, on any Interest Payment Date during the applicable periods specified
below, at the applicable redemption price stated below, plus interest accrued
thereon to the redemption date:
Number of Years
From Fixed Rate Date First Optional Redemption
to Final Maturity Redemption Date Price
greater than 9 years 7 years from 102%,
conversion declining
1% annually
to 100%
6-9 years 6 years from 101%,
conversion declining
1% annually
to 100%
less than 6 years no optional
redemption
Notwithstanding the optional redemption schedule set forth above, on or prior to
the Fixed Rate Date, the Remarketing Agent may provide an alternate optional
redemption schedule if it obtains an opinion of Bond Counsel that such alternate
schedule will not cause interest on the Bonds not to be Tax-exempt.
(7) Mandatory Redemption for Reimbursement Agreement Default. The Bonds
shall be redeemed in whole, at a redemption price equal to 100% of the principal
amount thereof, plus interest accrued thereon to the redemption date, within
five (5) calendar days (and before the following Saturday if the fifth calendar
day is a Saturday) from the date the Trustee receives written notice from the
Bank that an event of default has taken place under the Reimbursement Agreement
and directing the Trustee to redeem the Bonds.
(8) Mandatory Redemption from Excess Funds. The Bonds are subject to
redemption in part on any Interest Payment Date at a redemption price equal to
100% of the principal amount thereof, plus accrued interest to the redemption
date, on the next succeeding Interest Payment Date to the extent of amounts
remaining in the Project Fund upon completion of the Project which are deposited
in the Surplus Account and directed to be used to redeem Bonds as provided in
Section 3.03(D).
SECTION 4.02. Selection of Bonds for Redemption. Whenever provision is made
in this Indenture for the redemption of less than all of the Bonds, the Trustee
shall select the Bonds to be
26
redeemed from all Bonds or such given portion thereof not previously called for
redemption by lot in any manner which the Trustee in its sole discretion shall
deem appropriate and fair, to be credited against the principal of the Bonds to
be redeemed; provided, however, that in connection with an optional redemption
of the Bonds, Pledged Bonds shall be the first Bonds selected for redemption;
and provided further, that the Bonds Outstanding after giving effect to any
redemption shall be in Authorized Denominations. Upon selection of Bonds for
redemption on or prior to the Fixed Rate Date, the Trustee will immediately
notify the Tender Agent of the Bonds selected for redemption.
SECTION 4.03. Notice of Redemption. (A) The Trustee shall mail notice of
redemption (1) prior to the Fixed Rate Date, not less than fifteen days before
such redemption date, (except in the case of redemptions pursuant to Section
4.01(4) in which case not less than five days or in the case of redemptions
pursuant to Section 4.01(7), in which case notice shall be given as soon as
practicable), and (2) after the Fixed Rate Date, not less than thirty days
before such redemption date (except in the case of redemptions pursuant to
Section 4.01(4), in which case not less than five days or in the case of
redemptions pursuant to Section 4.01(7), in which case notice shall be given as
soon as practicable) to the respective Holders of any Bonds designated for
redemption at their addresses on the registration books maintained by the Bond
Registrar. Each notice of redemption shall state the redemption date, the place
or places of redemption, if less than all of the Bonds are to be redeemed, the
distinctive numbers of the Bonds to be redeemed, and in the case of Bonds to be
redeemed in part only, the respective portions of the principal amount thereof
to be redeemed. Each such notice shall also state that on said date there will
become due and payable on each of said Bonds the principal thereof or of said
specified portion of the principal thereof in the case of a Bond to be redeemed
in part only, and that from and after such redemption date interest thereon
shall cease to accrue, and shall require that such Bonds be then surrendered.
(B) Notice of redemption of Bonds shall be given by the Trustee, at the
expense of the Authority, for and on behalf of the Authority.
(C) In the case of redemption pursuant to Section 4.01 in connection with
refunding obligations to be issued for such purpose, notice of such redemption
may be cancelled if such refunding obligations are not issued on or prior to the
date fixed for such redemption.
(D) Receipt of such notice shall not be a condition precedent to such
redemption and failure so to mail any such notice to a Holder shall not affect
the validity of the proceedings for the redemption of Bonds of any Holder.
(E) The Trustee shall, at the same time the notice in subsection (A) above
is mailed, also send a copy of the notice by certified mail or by overnight
delivery to each Securities Depository and to an Information Service. Failure to
provide notice to the Tender Agent, the Remarketing Agent, a Securities
Depository or to an Information Service shall not affect the validity of
proceedings for the redemption of Bonds.
SECTION 4.04. Partial Redemption of Bonds. Upon surrender of any Bond
redeemed in part only, the Authority shall execute and the Bond Registrar shall
authenticate and deliver to the registered owner thereof, at the expense of the
Authority, a new Bond or Bonds of Authorized Denominations equal in aggregate
principal amount to the unredeemed portion of the Bond surrendered.
SECTION 4.05. Effect of Redemption. Notice of redemption having been duly
given as aforesaid, and Available Moneys for payment of the redemption price of
the Bonds, together with interest accrued to the date fixed for redemption,
being held by the Trustee, the Bonds (or portions
27
thereof) so called for redemption shall become due and payable on the redemption
date designated in such notice, interest on the Bonds (or portions thereof) so
called for redemption shall cease to accrue, said Bonds (or portions thereof)
shall cease to be entitled to any benefit or security under this Indenture, and
the Holders of said Bonds shall have no rights in respect thereof except to
receive payment of said principal, premium, if any, and interest accrued to the
date fixed for redemption.
All Bonds redeemed pursuant to the provisions of this Article shall be
cancelled upon surrender thereof by the Trustee and delivered to or upon the
order of the Authority.
SECTION 4.06. Purchase of Bonds by Tender Agent. Prior to the Fixed Rate
Date, the Bonds may be delivered by the Holders thereof to the Tender Agent at
its principal corporate trust office in San Francisco, California, or such other
place as the Tender Agent may designate in writing to Bondholders, the
Authority, the Trustee, the Bank, the Borrower and the Remarketing Agent. Any
Bond so delivered shall be purchased by the Tender Agent on demand of the Holder
thereof on the close of any Business Day at a purchase price equal to the
principal amount thereof plus accrued interest to but not including the date of
purchase (unless such date is an Interest Payment Date, in which case the
purchase price will be the principal amount of such Bond); provided that the
Tender Agent will be under no obligation to use its own funds to purchase such
Bonds and provided further that sufficient funds in the Purchase Fund are
immediately available for purchase of the Bonds and upon:
(A) delivery to the Tender Agent of an irrevocable written notice by 4:00
p.m., California time, (if not received by 4:00 p.m., California time, on a
Business Day it shall be deemed received on the next succeeding Business Day)
which states (A) the name and address of the Holder, (B) the number or numbers
of the Bond or Bonds to be purchased, (C) the aggregate principal amount of the
Bond or Bonds to be purchased, and (D) the date on which the Bond is or Bonds
are to be purchased, which date shall be a Business Day not prior to the seventh
(7th) calendar day next succeeding the date of delivery of such notice; and
(B) delivery to the Tender Agent at or prior to 10:00 a.m., California
time, on the Purchase Date specified in the aforesaid notice, of the Bond or
Bonds to be tendered; provided, however, that any Bond for which a notice of the
exercise of the purchase option has been given as provided in subsection (A)
above and which is not so delivered shall be deemed delivered on the date of
purchase and shall be purchased in accordance with the Indenture.
All Bonds, or portions thereof, purchased pursuant to this Section 4.06
shall be purchased in an amount equal to an Authorized Denomination. The Trustee
shall upon request of the Tender Agent calculate the purchase price of any Bonds
purchased pursuant to this Section 4.06 and shall notify the Tender Agent of
such amount prior to the Purchase Date.
SECTION 4.07. Mandatory Tender of Bonds. On each Mandatory Tender Date, the
Bonds shall be subject to mandatory tender for purchase on such Mandatory Tender
Date at a purchase price equal to the principal amount thereof, plus accrued
interest, if any. The Holders of all of the Outstanding Bonds shall be required
to tender their Bonds for purchase by the Tender Agent on the Mandatory Tender
Date. All Bonds which on the Mandatory Tender Date have not been tendered for
purchase ("Non-Tendered Bonds"), shall be deemed purchased by the Tender Agent
on the Mandatory Tender Date at a price of the principal amount thereof plus
unpaid interest accrued, if any, to such date. Replacement Bonds for the
Non-Tendered Bonds may be remarketed and delivered to new Holders as instructed
by the Borrower or the Remarketing Agent. The Tender Agent shall hold in trust
for the Holders of the Non-Tendered Bonds the purchase price thereof, and after
the Mandatory Tender Date such owners will
28
no longer be entitled to any of the benefits of this Indenture except for the
payment of such purchase price.
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS;
PAYMENT OF PRINCIPAL AND INTEREST
SECTION 5.01. Pledge and Assignment; Revenue Fund. (A) Subject only to the
provisions of this Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth herein, all of the Revenues and any
other amounts (including proceeds of the sale of Bonds) held in any fund or
account established pursuant to this Indenture (except to the extent provided in
Sections 5.05, 7.03 and 8.06 and excepting the Rebate Fund created by Section
5.07) are hereby pledged by the Authority to secure the payment of the principal
and purchase price of and interest on the Bonds in accordance with their terms
and the provisions of this Indenture and thereafter, on a basis subordinate
thereto, to secure the Borrower's obligations to the Bank under the
Reimbursement Agreement. Said pledge shall constitute a lien on and security
interest in such assets and shall attach, be perfected and be valid and binding
from and after delivery by the Trustee of the Bonds, without any physical
delivery thereof or further act.
(B) The Authority hereby transfers in trust, and assigns to the Trustee,
for the benefit of the Holders of the Bonds, and the Bank, to the extent of its
interest therein, all of the Revenues and other assets pledged in subsection (A)
of this Section and all of the right, title and interest of the Authority in the
Agreement (except for the right to receive any Additional Payments to the extent
payable to the Authority, any rights of the Authority to indemnification and
rights of inspection and consent). The Trustee shall be entitled to and shall
collect and receive all of the Revenues, and any Revenues collected or received
by the Authority shall be deemed to be held, and to have been collected or
received, by the Authority as the agent of the Trustee and shall forthwith be
paid by the Authority to the Trustee. The Trustee also shall be entitled to and
shall take all steps, actions and proceedings reasonably necessary in its
judgment to enforce, either jointly with the Authority or separately, all of the
rights of the Authority and all of the obligations of the Borrower under the
Agreement.
The Trustee agrees that, so long as the Trustee holds any Revenues or any
other amounts (including proceeds of the sale of the Bonds) in any fund or
account established pursuant to this Indenture which are pledged by the
Authority or the Borrower to secure the payment of the principal of and interest
on the Bonds and the Borrower's reimbursement obligations under the
Reimbursement Agreement, the Trustee shall hold the same as the collateral agent
and bailee of the Bank but only to the extent of amounts paid by the Bank under
the Letter of Credit for which the Bank has not received reimbursement from the
Borrower for purposes of perfecting the lien and security interest of the Bank
therein. Upon receipt of written notice from the Bank that the Borrower has
failed to reimburse the Bank for a draw under the Letter of Credit as required
by the Reimbursement Agreement, the Trustee shall either cause all accounts and
investments which are the subject of the preceding sentence to be titled in such
a manner to reflect that the Bank has an interest therein as described in the
preceding sentence or ensure that each Person with whom the Trustee places or
through whom the Trustee invests any moneys which are the subject of the
preceding sentence is advised of the Bank's interest therein as described in the
preceding sentence and instructed to mark its records to reflect such interest.
The Trustee shall not pledge, hypothecate, transfer or release all or any
portion of the Revenues to any persons (including, without limitation, the
Borrower) other than Holders of the Bonds in payment thereof or in any manner
29
not in accordance with this Indenture or the Reimbursement Agreement without the
written consent of the Authority and the Bank, except as otherwise required by a
court of law.
(C) All Revenues shall be promptly deposited by the Trustee upon receipt
thereof in a special fund designated as the Revenue Fund which the Trustee shall
establish, maintain and hold in trust; except as otherwise provided in Section
5.02, all moneys received by the Trustee and required to be deposited in the
Project Fund shall be promptly deposited in the Project Fund and all moneys
received by the Trustee and required to be deposited in the Redemption Account
shall be promptly deposited in the Redemption Account, which the Trustee shall
establish, maintain and hold in trust. All Revenues deposited with the Trustee
shall be held, disbursed, allocated and applied by the Trustee only as provided
in this Indenture. All moneys held by the Tender Agent for the payment of the
principal or purchase price of, premium, if any, and interest on the Bonds,
shall be held by the Tender Agent in trust for the payment of such Bonds.
SECTION 5.02. Allocation of Revenues. Loan Repayments received by the
Trustee from the Borrower pursuant to Section 4.2(a) of the Agreement shall be
deposited by the Trustee into the following respective accounts (each of which
the Trustee shall establish and maintain within the Revenue Fund), in the
following amounts, in the following order of priority, and the requirements of
each such account (including the making up of any deficiencies in any such
account resulting from lack of Revenues sufficient to make any earlier required
deposit) at the time of deposit shall be satisfied before any transfer is made
to any account subsequent in priority, and provided, that no moneys representing
drawings under the Letter of Credit shall be transferred into the Interest
Account, the Principal Account or the Redemption Account of the Revenue Fund:
First: to the Interest Account, the amount paid by the Borrower and
designated as or attributable to interest on the Bonds in the most recent Loan
Repayment, so that the aggregate of such amounts will, on the next Interest
Payment Date, equal the amount of interest due on the Bonds on such Interest
Payment Date.
Second: to the Principal Account, the amount paid by the Borrower and
designated as or attributable to principal of the Bonds in the most recent Loan
Repayment, so that the aggregate of such amounts will, on the next succeeding
principal payment date, equal the amount of principal due (whether at maturity
or by acceleration) on such principal payment date.
Third: to the Redemption Account, the aggregate amount of principal and
premium, if any, next coming due by redemption permitted (as directed in writing
by the Borrower) or required under Article IV hereof, or any portion thereof
paid by the Borrower.
SECTION 5.03. Priority of Moneys in Revenue Fund; Letter of Credit Account.
(A) Funds for the payment of the principal or redemption price of and interest
on the Bonds shall be derived from the following sources in the order of
priority indicated in each of the accounts in the Revenue Fund; provided
however, that amounts in the respective accounts within the Revenue Fund shall
be used to pay the principal or redemption price of and interest on the Bonds
held by Holders other than the Bank or the Borrower prior to the payment of the
principal and interest on the Bonds held by the Bank or the Borrower, and
provided further, that if principal or redemption price (or any portion thereof)
of and interest on the Bonds is paid with moneys described in subparagraph (i)
of this Section 5.03(A), any other moneys on deposit in the respective accounts
in the Revenue Fund shall be applied to immediately reimburse the Bank by wire
transfer in the amount of any such drawings:
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(i) moneys paid into the Letter of Credit Account of the Revenue Fund
representing the proceeds of drawings by the Trustee under the Letter of Credit;
(ii) moneys paid into the Interest Account, if any, representing
accrued interest received at the initial sale of the Bonds and proceeds from the
investment thereof which shall be applied to the payment of interest on the
Bonds;
(iii) moneys paid into the Revenue Fund pursuant to Section 10.01(B)
and proceeds from the investment thereof, which constitute Available Moneys;
(iv) moneys deposited into the Redemption Account pursuant to Section
3.03(D) and proceeds from the investment thereof;
(v) any other moneys (not derived from drawings under the Letter of
Credit) paid into the Revenue Fund and proceeds from the investment thereof,
which constitute Available Moneys; and
(vi) any other moneys paid into the Revenue Fund and proceeds from the
investment thereof, which are not Available Moneys.
The Trustee shall create within the Revenue Fund a separate account called
the "Letter of Credit Account," and all moneys drawn under the Letter of Credit
shall be deposited and disbursed either in the Letter of Credit Account or the
Liquidity Account established pursuant to Section 8.10. None of the Borrower,
any Related Party, the Trustee or the Authority shall have any legal, equitable
or beneficial right, title or interest in the Letter of Credit Account or the
Liquidity Account. The Letter of Credit Account and the Liquidity Account shall
be established and maintained by the Trustee and the Tender Agent, respectively,
and held in trust apart from all other moneys and securities held under this
Indenture or otherwise, and over which the Trustee and the Tender Agent,
respectively, shall have the exclusive and sole right of withdrawal for the
exclusive benefit of the Holders of the Bonds with respect to which each drawing
is made.
(B) The Trustee shall draw moneys under the Letter of Credit in accordance
with the terms thereof in amounts necessary to make full and timely payments of
principal of, premium, if any, and interest on the Bonds, other than Bonds owned
by or for the account of the Borrower or the Bank when due, whether at maturity,
redemption, acceleration, an Interest Payment Date or otherwise. In addition,
the Trustee shall draw moneys under the Letter of Credit in accordance with the
terms thereof to the extent necessary to make full and timely payments required
to be made pursuant to, and in accordance with, Article VIII hereof to pay the
purchase price of tendered Bonds. The Trustee shall notify the Borrower of any
proposed drawing on the Letter of Credit (other than with respect to scheduled
payments of principal and interest), as and when it notifies the Bank.
(C) If on the Fixed Rate Date there shall have been delivered to the
Trustee an Alternate Credit Facility pursuant to Section 5.7 of the Agreement or
if at any time there shall have been delivered to the Trustee an Alternate
Letter of Credit pursuant to Section 5.8 of the Agreement, then the Trustee
shall accept such Alternate Credit Facility or Alternate Letter of Credit, as
applicable, and promptly surrender the previously held Letter of Credit to the
issuing Bank for cancellation, and shall promptly take all actions requested by
the issuing Bank to convey to such Bank or otherwise relinquish all of its
right, title and interest in any security held jointly by the issuing Bank and
the Trustee. If at any time there shall cease to be any Bonds Outstanding
hereunder, the Trustee shall promptly surrender
31
the Letter of Credit to the Bank for cancellation. The Trustee shall comply with
the procedures set forth in the Letter of Credit relating to the surrender
thereof.
SECTION 5.04. Letter of Credit. Subject to the provisions of Section
5.03(C), the Trustee shall hold and maintain the Letter of Credit for the
benefit of the Bondholders until the Letter of Credit expires in accordance with
its terms. The Trustee shall diligently observe all terms, covenants and
conditions of the Letter of Credit, including payment when due of any draws on
the Letter of Credit, and the provisions relating to the payment of draws on,
and reinstatement of amounts that may be drawn under, the Letter of Credit, and
will not consent to, agree to or permit any amendment or modification of the
Letter of Credit which would adversely affect the rights or security of the
Holders of the Bonds. If at any time during the term of the Letter of Credit,
any successor Trustee shall be appointed and qualified under this Indenture, the
resigning or removed Trustee shall request that the Bank transfer the Letter of
Credit to the successor Trustee in accordance with the procedures for transfer
specified in the Letter of Credit. If the resigning or removed Trustee fails to
make this request, the successor Trustee shall do so before accepting
appointment. The Trustee shall send notice to the Bank and the Borrower of the
expiration of the Letter of Credit at least two months prior to the date of such
expiration.
At least thirty (30) days prior to the Letter of Credit Substitution Date,
the Trustee shall send a written notice to the Bondholders relating to the
Borrower's election pursuant to Section 5.8 of the Agreement to deliver an
Alternate Letter of Credit to the Trustee. Such notice shall (i) specify the
proposed Letter of Credit Substitution Date, (ii) require the Holders of all of
the Outstanding Bonds to tender their Bonds for purchase on the Mandatory Tender
Date pursuant to Section 4.07, and (iii) state that all Outstanding Bonds not
purchased on or before the Mandatory Tender Date will be deemed to be purchased
on the Mandatory Tender Date at a price equal to the principal amount thereof,
plus unpaid interest, if any, accrued to such date.
SECTION 5.05. Investment of Moneys. Subject to the following sentence, all
moneys in any of the funds or accounts established pursuant to this Indenture
shall be invested by the Trustee as directed in writing by an Authorized
Representative of the Borrower, in Permitted Investments maturing not later than
the date on which it is estimated that such moneys will be required for the
purposes specified in this Indenture; provided, however, that: (i) moneys on
deposit in the Letter of Credit Account and the Purchase Fund and any moneys
held pursuant to Section 4.07 shall be held uninvested; (ii) any moneys held in
trust for the payment or redemption of Bonds pursuant to Article X shall be
invested as provided in Section 10.03; (iii) moneys held in the Rebate Fund
shall be invested in direct obligations of the United States or bonds or other
obligations guaranteed by the United States government or for which the full
faith and credit of the United States is pledged for the payment of principal
and interest thereof, or in money market funds the investment of which is
limited to such obligations, in each case rated in the highest rating category
applicable to such investments which mature not later than the date on which it
is estimated that such moneys will be required; and (iv) moneys described in
clause (ii), (iii), or (iv) of Section 5.03(A) shall be invested in Permitted
Investments rated A-l or Prime 1 or higher by S&P and Moody's which mature not
later than the date on which such moneys will be required to pay the Bonds or
the interest thereon. Immediately upon the giving by the Trustee of the notice
provided for in paragraph (C) of Section 3.03 of this Indenture, all moneys in
any of the funds or accounts established pursuant to this Indenture, subject to
the limitations set forth in (i) through (iv) of the first sentence above, shall
be invested by the Trustee in Permitted Investments maturing not later than the
date on which it is estimated that such moneys will be required for the purposes
specified in this Indenture.
Permitted Investments may be purchased at such prices as the Trustee may in
its discretion determine or as may be directed by the Borrower or its agent. All
Permitted Investments shall be acquired as directed by the Borrower subject to
the limitations set forth in Section 6.06, the limitations
32
as to maturities in this Section set forth, and such additional limitations or
requirements consistent with the foregoing as may be established by Request of
the Borrower. Notwithstanding any other provision herein, in the absence of
written investment instructions from the Borrower directing the Trustee by noon
of the Business Day preceding the day when investments are to be made, the
Trustee is directed to invest available funds not described in clauses (i),
(ii), or (iii) of the first paragraph of this Section in Investment Securities.
The Trustee shall not be liable for any consequences resulting from any
investments made pursuant to the preceding sentence except for its own
negligence or wilful misconduct.
All interest, profits and other income received from the investment of
moneys in any fund established pursuant to this Indenture, (1) prior to delivery
to the Trustee of the Certificate of the Borrower with respect to completion of
the Project (as provided in Section 3.03(D)) shall be deposited when received in
the Project Fund, and (2) after the delivery of such Certificate shall be
deposited in the Revenue Fund; except that any such interest, profits and other
income received from the investment of: (i) any moneys held in trust for the
payment or redemption of Bonds pursuant to Article X shall be applied as
provided in Article X; and (ii) any moneys held in the Rebate Fund shall be
deposited in such fund. Notwithstanding anything to the contrary contained in
this paragraph, an amount of interest received with respect to any Permitted
Investment equal to the amount of accrued interest, if any, paid as part of the
purchase price of such Permitted Investment shall be credited to the fund from
which such accrued interest was paid.
For the purpose of determining the amount in any fund, all Permitted
Investments credited to such fund shall be valued at the market value of such
Permitted Investments.
The Trustee may act as principal or agent in the making or disposing of any
investment. The Trustee may sell at the best price obtainable in the Trustee's
sole discretion, or present for redemption, any Permitted Investment so
purchased whenever it shall be necessary to provide moneys to meet any required
payment, transfer, withdrawal or disbursement from the fund to which such
Permitted Investment is credited, and the Trustee shall not be liable or
responsible for any loss resulting from such investment except for its own
negligence or wilful misconduct. For investment purposes only, the Trustee may
commingle moneys held in the Interest Account and Principal Account of the
Revenue Fund.
SECTION 5.06. Additional Duties of Trustee. While the Bonds bear interest
at the Weekly Interest Rate, on or prior to the Business Day preceding each
Interest Payment Date, the Trustee shall send to the Borrower an invoice for the
interest accrued on the Bonds for the current Interest Period which is to be
paid pursuant to Section 4.2 of the Agreement. While the Bonds bear interest at
the Fixed Interest Rate, thirty (30) days prior to each Interest Payment Date,
the Trustee shall send to the Borrower an invoice for the interest due on the
Bonds on the next succeeding Interest Payment Date which is to be paid pursuant
to Section 4.2 of the Agreement. The Trustee shall send a copy of any such
invoice sent to the Borrower to the Bank. If full payment of any such invoice is
not received by the date the Borrower is required to make such payment pursuant
to Section 4.2 of the Agreement, the Trustee shall immediately notify in writing
the Bank, the Borrower and the Authority of such nonpayment or underpayment by
the Borrower. The Trustee shall immediately give the Bank written notice upon
the failure of the Borrower to make any principal payment pursuant to Section
4.2 of the Agreement.
SECTION 5.07. Establishment of Rebate Fund. (A) The Trustee shall establish
and maintain a fund separate from any other fund established and maintained
hereunder designated as the "Rebate Fund." There shall be deposited in the
Rebate Fund such amounts as are required to be deposited therein pursuant to the
written instructions of the Borrower. All money at any time deposited in the
Rebate Fund shall be held by the Trustee in trust, to the extent required to
satisfy the Rebate
33
Requirement (as defined in the Tax Regulatory Agreement), for payment to the
federal government of the United States of America and neither the Authority,
the Bondholders, the Trustee, the Tender Agent, or the Bank shall have any
rights in or claim to such moneys. All amounts deposited into or on deposit in
the Rebate Fund shall be governed by this Section 5.07 and Sections 3.4 and 5.11
of the Agreement and by the Tax Regulatory Agreement (which is incorporated
herein by reference). The Trustee shall be deemed conclusively to have complied
with said Sections if it follows the written direction of the Borrower, and
shall have no liability or responsibility to enforce compliance by the Borrower
with the terms of the Tax Regulatory Agreement or said Sections.
(B) Upon receipt of the instructions required to be delivered to the
Trustee pursuant to the Tax Regulatory Agreement, the Trustee shall remit part
or all of the balance in the Rebate Fund to the United States government, as so
directed. In addition, if the instructions delivered to the Trustee pursuant to
the Tax Regulatory Agreement so direct, the Trustee shall deposit moneys into or
transfer moneys out of the Rebate Fund from or into such accounts or funds
excluding the Purchase Fund and the Letter of Credit Account, Available Moneys
and moneys being aged to become Available Moneys, as the instructions direct.
(C) Notwithstanding any provision of this Section 5.07, if the Authority or
the Borrower shall provide to the Trustee an opinion of Bond Counsel that any
specified action required under this Section is no longer required or that some
further or different action is required to maintain the exclusion from gross
income for federal income tax purposes of interest with respect to the Bonds,
the Trustee and the Authority may conclusively rely on such opinion in complying
with the requirements of this Section, and the covenants hereunder shall be
deemed to be modified to that extent.
ARTICLE VI
PARTICULAR COVENANTS
SECTION 6.01. Punctual Payment. The Authority shall punctually pay or cause
to be paid the principal, premium, if any, and interest to become due in respect
of all the Bonds, in strict conformity with the terms of the Bonds and of this
Indenture, according to the true intent and meaning thereof, but only out of
Revenues and other assets pledged for such payment as provided in this
Indenture.
SECTION 6.02. Extension of Payment of Bonds. The Authority shall not
directly or indirectly extend or assent to the extension of the maturity of any
of the Bonds or the time of payment of any claims for interest by the purchase
or funding of such Bonds or claims for interest or by any other arrangement and
in case the maturity of any of the Bonds or the time of payment of any such
claims for interest shall be extended, such Bonds or claims for interest shall
not be entitled, in case of any default hereunder, to 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 thereon which shall
not have been so extended. Nothing in this Section shall be deemed to limit the
right of the Authority to issue bonds for the purpose of refunding any
Outstanding Bonds, and such issuance shall not be deemed to constitute an
extension of maturity of Bonds.
SECTION 6.03. Against Encumbrances. The Authority shall not create, or
permit the creation of, any pledge, lien, charge or other encumbrance upon the
Revenues and other assets pledged or assigned under this Indenture while any of
the Bonds are Outstanding, except the pledge and assignment created by this
Indenture. Subject to this limitation, the Authority expressly reserves the
right
34
to enter into one or more other indentures for any of its corporate purposes,
including other programs under the Act, and reserves the right to issue other
obligations for such purposes.
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized pursuant to law to issue the Bonds and to enter
into this Indenture and to pledge and assign the Revenues and other assets
purported to be pledged and assigned, respectively, under this Indenture in the
manner and to the extent provided in this Indenture. The Bonds and the
provisions of this Indenture are and will be the legal, valid and binding
limited obligations of the Authority in accordance with their terms, and the
Authority shall at all times, to the extent permitted by law, defend, preserve
and protect said pledge and assignment of Revenues and other assets and all the
rights of the Bondholders under this Indenture against all claims and demands of
all persons whomsoever.
SECTION 6.05. Accounting Records and Reports. The Trustee shall keep or
cause to be kept proper books of record and account in which complete and
correct entries shall be made of all transactions relating to the receipt,
investment, disbursement, allocation and application of the Revenues and the
proceeds of the Bonds received by the Trustee with respect to all funds and
accounts held hereunder. Such records shall specify the account or fund to which
each investment (or portion thereof) held by the Trustee is to be allocated and
shall set forth, in the case of each Investment Security, (a) its purchase
price, (b) identifying information, including par amount, coupon rate, and
payment dates, (c) the amount received at maturity or its sale price, as the
case may be, (d) the amounts and dates of any payments made with respect
thereto, and (e) the dates of acquisition and disposition or maturity.
Such records shall be open to inspection by any Holder and the Bank at any
reasonable time during regular business hours on reasonable notice.
SECTION 6.06. Arbitrage Covenants. The Authority has in the Agreement
caused the Borrower to covenant that the Borrower shall not make any use of the
proceeds of the Bonds or of any moneys on deposit to the credit of the Project
Fund, the Revenue Fund or the Rebate Fund which may be deemed to be proceeds of
the Bonds pursuant to Section 148 of the Code and the applicable Treasury
Regulations thereunder which would cause any Bond to be an "arbitrage bond"
within the meaning of said Section and said regulations and that the Borrower
will comply with the requirements of said Section and said regulations, as the
same may be amended from time to time, so long as any Bonds remain Outstanding.
SECTION 6.07. Other Covenants. (A) The Trustee shall promptly collect all
amounts due from the Borrower pursuant to the Agreement, shall perform all
duties imposed upon it pursuant to the Agreement and shall diligently enforce,
and take all steps, actions and proceedings reasonably necessary for the
enforcement of all of the rights of the Authority and all of the obligations of
the Borrower.
(B) The Authority shall not amend, modify or terminate any of the terms of
the Agreement, or consent to any such amendment, modification or termination,
without the written consent of the Trustee and the Bank. The Trustee shall give
such written consent only if (1) in the opinion of the Trustee, in reliance upon
the advice of counsel, such amendment, modification or termination will not
materially adversely affect the interests of the Bondholders or result in any
material impairment of the security hereby given for the payment of the Bonds,
or (2) the Authority first obtains the written consent of the Holders of a
majority in principal amount of the Bonds then Outstanding to such amendment,
modification or termination, provided that no such amendment, modification or
termination shall reduce the amount of Loan Repayments to be made to the
Authority or the Trustee by the Borrower pursuant to the Agreement, or extend
the time for making such payments, without the written consent
35
of all of the Holders of the Bonds then Outstanding. The Trustee shall be
entitled to rely upon an opinion of counsel with respect to the effect of any
amendments hereto or to the Agreement.
SECTION 6.08. Further Assurances. The Authority shall make, execute and
deliver any and all such further indentures, 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 Holders of the Bonds of the rights and benefits provided in this
Indenture.
SECTION 6.09. Covenant to Enter into Agreement or Contract to Provide
Ongoing Disclosure. The Borrower has covenanted and agreed with the Authority in
Section 5.12 of the Agreement to enter into an agreement or contract,
constituting an undertaking (the "Undertaking"), to provide ongoing disclosure
for the benefit of the Bondholders as required by Paragraph (b)(5)(i) of the
Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange
Act of 1934, as amended (17 CFR Part 240 Section 240.15c2-12) (the "Disclosure
Requirements"), to the extent the Bonds or the remarketing thereof are at any
time not exempt from the Disclosure Requirements. The Undertaking is hereby
assigned by the Authority to the Trustee for the benefit of the Bondholders, any
Participating Underwriter and any Beneficial Owner. Such assignment is a present
absolute assignment and not an assignment of a security interest. Section 5.12
of the Agreement shall be enforceable by any Bondholder, Participating
Underwriter or Beneficial Owner. However, neither the Authority nor the Trustee
shall have any duty to enforce such Section 5.12. The Authority shall have no
liability to the Bondholders, Participating Underwriters, Beneficial Owners or
any other person with respect to the actions by the Borrower relating to the
Disclosure Requirements. Notwithstanding any other provision of this Indenture,
failure of the Borrower to comply with Section 5.12 of the Agreement shall not
be considered an Event of Default; provided, however, the Trustee may (and, at
the request of any Participating Underwriter or the Holders of at least 25%
aggregate principal amount in Outstanding Bonds, shall) or any Beneficial Owner
may take such action as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the Borrower to comply
with its obligations under Section 5.12 of the Agreement.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
SECTION 7.01. Events of Default; Acceleration; Waiver of Default. Each of
the following events shall constitute an "Event of Default" hereunder:
(A) default in the due and punctual payment of the principal of, or premium
(if any) on, any Bond when and as the same shall become due and payable, whether
at maturity as therein expressed, by proceedings for redemption, by declaration
or otherwise;
(B) default in the due and punctual payment of any installment of interest
on any Bond, when and as such interest installment shall become due and payable
and the continuation of such failure for a period of five days after the due
date for such payment;
(C) failure to pay the purchase price of any Bond tendered in accordance
with the provisions of Section 4.06, and the continuation of such failure for a
period of five days after such purchase price has become due and payable;
(D) failure by the Authority to perform or observe any of the other
covenants, agreements or conditions on its part in this Indenture or in the
Bonds contained, and the
36
continuation of such failure for a period of sixty (60) days after written
notice thereof, specifying such default and requiring the same to be remedied,
shall have been given to the Authority, the Bank and the Borrower by the
Trustee, or to the Authority, the Bank, the Borrower and the Trustee by the
Holders of not less than twenty-five percent (25%) in aggregate principal amount
of the Bonds at the time Outstanding; or
(E) the occurrence and continuance of a Loan Default Event described in
Section 7.1(a), (b) or (c) of the Agreement.
No default specified in (D) above shall constitute an Event of Default
unless the Authority and the Borrower shall have failed to correct such default
within the applicable period; provided, however, that if the default shall be
such that it cannot be corrected within such period, it shall not constitute an
Event of Default if corrective action is instituted by the Authority or the
Borrower within the applicable period and diligently pursued. With regard to any
alleged default concerning which notice is given to the Borrower under the
provisions of this Section, the Authority hereby grants the Borrower full
authority for account of the Authority to perform any covenant or obligation the
non-performance of which is alleged in said notice to constitute a default in
the name and stead of the Authority with full power to do any and all things and
acts to the same extent that the Authority could do and perform any such things
and acts and with power of substitution.
During the continuance of an Event of Default, unless the principal of all
the Bonds shall have already become due and payable, the Trustee may, and upon
the written request of the Holders of not less than twenty-five percent (25%) in
aggregate principal amount of the Bonds at the time Outstanding, or upon the
occurrence of an Event of Default described in (A), (B) or (C) above, the
Trustee shall, by notice in writing to the Authority, the Tender Agent, the
Remarketing Agent, the Borrower and the Bank, declare the principal of all the
Bonds then Outstanding, and the interest accrued thereon, to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Bonds
contained to the contrary notwithstanding. Upon any such declaration the Trustee
shall immediately draw upon any then existing Letter of Credit in accordance
with the terms thereof and apply the amount so drawn to pay the principal of and
interest on the Bonds so declared to be due and payable. Interest on the Bonds
shall cease to accrue upon the declaration of acceleration. The Trustee shall
notify the Bondholders of the date of acceleration and the cessation of accrual
of interest on the Bonds in the same manner as for a notice of redemption.
The preceding paragraph, 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 as hereinafter provided, and before the
Letter of Credit has been drawn upon in accordance with its terms and honored,
there shall have been deposited with the Trustee a sum sufficient to pay all the
principal of 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 as provided in the Agreement, and the
reasonable expenses of the Trustee, 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
Holders of at least a majority in aggregate principal amount of the Bonds then
Outstanding, by written notice to the Authority and to the Trustee, may, on
behalf of the Holders of all the Bonds, rescind and annul such declaration and
its consequences and waive such default; but no such rescission and annulment
shall extend to or shall affect any subsequent default, or shall impair or
exhaust any right or power as a consequence thereof.
37
SECTION 7.02. Institution of Legal Proceedings by Trustee. If one or more
Events of Default shall happen and be continuing, the Trustee in its discretion
may, and upon the written request of the Holders of a majority in principal
amount of the Bonds then Outstanding and upon being indemnified to its
satisfaction therefor shall, proceed to protect or enforce its rights or the
rights of the holders of Bonds under the Act or under this Indenture or the
Agreement by a suit in equity or action at law, either for the specific
performance of any covenant or agreement contained herein or therein, or in aid
of the execution of any power herein or therein granted, or by mandamus or other
appropriate proceeding for the enforcement of any other legal or equitable
remedy as the Trustee shall deem most effectual in support of any of its rights
or duties hereunder.
SECTION 7.03. Application of Revenues and Other Funds After Default. If an
Event of Default shall occur and be continuing, all Revenues and any other funds
then held or thereafter received by the Trustee under any of the provisions of
this Indenture (subject to Sections 5.05, 5.07 and 11.11) shall be applied by
the Trustee as follows and in the following order:
(1) To the payment of any expenses necessary in the opinion of the
Trustee to protect the interests of the Holders of the Bonds and payment of
reasonable fees and expenses of the Trustee (including reasonable fees and
disbursements of its counsel) incurred in and about the performance of its
powers and duties under this Indenture; provided, however, that moneys in the
Letter of Credit Account of the Revenue Fund and the Purchase Fund shall not be
used for the payment of any such expenses;
(2) To the payment of the principal of and interest then due on the
Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the
payment if only partially paid, or surrender thereof if fully paid) subject to
the provisions of this Indenture (including Section 6.02), as follows:
(i) Unless the principal of all of the Bonds shall have become or
have been declared due and payable,
First: To the payment to the persons entitled thereto of all
installments of interest then due in the order of the maturity of such
installments, and, if the amount available shall not be sufficient to pay
in full any installment or installments maturing on the same date, then to
the payment thereof ratably, according to the amounts due thereon, to the
persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of
the unpaid principal of any Bonds which shall have become due, whether at
maturity or by call for redemption, with interest on the overdue principal
at the rate borne by the respective Bonds, and, if the amount available
shall not be sufficient to pay in full all the Bonds, together with such
interest, then to the payment thereof ratably, according to the amounts of
principal due on such date to the persons entitled thereto, without any
discrimination or preference.
(ii) If the principal of all of the Bonds shall have become or
have been declared due and payable, to the payment of the principal and interest
then due and unpaid upon the Bonds, with interest on the overdue principal at
the rate borne by the Bonds, and, if the amount available shall not be
sufficient to pay in full the whole amount so due and unpaid, then to the
payment thereof ratably, without preference or priority of principal
38
over interest, or of interest over principal, or of any installment of interest
over any other installment of interest, or of any Bond over any other Bond,
according to the amounts due respectively for principal and interest, to the
persons entitled thereto without any discrimination or preference; provided,
however, that neither moneys derived from drawings under the Letter of Credit,
Available Moneys, moneys being aged to become Available Moneys, nor the proceeds
from remarketing of the Bonds shall be used to pay any of the items listed in
clause (1) of this Section, provided, further, that moneys held in the Purchase
Fund shall only be used to pay the purchase price of the Bonds.
SECTION 7.04. Trustee to Represent Bondholders. The Trustee is hereby
irrevocably appointed (and the successive respective Holders of the Bonds, by
taking and holding the same, shall be conclusively deemed to have so appointed
the Trustee) as trustee and true and lawful attorney-in-fact of the Holders of
the Bonds for the purpose of exercising and prosecuting on their behalf such
rights and remedies as may be available to such Holders under the provisions of
the Bonds, this Indenture, the Agreement, the Act and applicable provisions of
any other law. Upon the occurrence and continuance of an Event of Default or
other occasion giving rise to a right in the Trustee to represent the
Bondholders, the Trustee in its discretion may, and upon the written request of
the Holders of not less than twenty-five percent (25%) in aggregate principal
amount of the Bonds then Outstanding, and upon being indemnified to its
satisfaction therefor (except any actions required to be taken by Section 7.03
hereof, in which event no indemnification shall be required), shall, proceed to
protect or enforce its rights or the rights of such Holders by such appropriate
action, suit, mandamus or other proceedings as it shall deem most effectual to
protect and enforce any such right, at law or in equity, either for the specific
performance of any covenant or agreement contained herein, or in aid of the
execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Trustee or in such
Holders under this Indenture, the Agreement, the Act or any other law; and upon
instituting such proceeding, the Trustee shall be entitled, as a matter of
right, to the appointment of a receiver of the Revenues and other assets pledged
under this Indenture, pending such proceedings. All rights of action under this
Indenture or the Bonds or otherwise may be prosecuted and enforced by the
Trustee without the possession of any of the Bonds or the production thereof in
any proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in the name of the Trustee for the
benefit and protection of all the Holders of such Bonds, subject to the
provisions of this Indenture (including Section 6.02).
SECTION 7.05. Bondholders' Direction of Proceedings. Anything in this
Indenture to the contrary notwithstanding, the Holders of a majority in
aggregate principal amount of the Bonds then Outstanding shall have the right,
by an instrument or concurrent instruments in writing executed and delivered to
the Trustee, to direct the method of conducting all remedial proceedings taken
by the Trustee hereunder, provided that such direction shall not be otherwise
than in accordance with law and the provisions of this Indenture, and that the
Trustee shall have the right to decline to follow any such direction which in
the opinion of the Trustee would be unjustly prejudicial to Bondholders not
parties to such direction or for which it has not been provided adequate
indemnity to its satisfaction.
SECTION 7.06. Limitation on Bondholders' Right to Sue. No Holder of any
Bond shall have the right to institute any suit, action or proceeding at law or
in equity, for the protection or enforcement of any right or remedy under this
Indenture, the Agreement, the Act or any other applicable law with respect to
such Bond, unless (1) such Holder shall have given to the Trustee written notice
of the occurrence of an Event of Default; (2) the Holders of not less than
twenty-five percent (25%) in aggregate principal amount of the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the
powers hereinbefore granted or to institute such suit, action or proceeding in
its
39
own name; (3) such Holder or said Holders shall have tendered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request; and (4) 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 Holder of Bonds of any remedy hereunder or under law; it being understood
and intended that no one or more Holders of Bonds shall have any right in any
manner whatever by his or their action to affect, disturb or prejudice the
security of this Indenture or the rights of any other Holders of Bonds, or to
enforce any right under this Indenture, the Agreement, the Act or other
applicable law with respect to the Bonds, except in the manner herein provided,
and that all proceedings at law or in equity to enforce any such right shall be
instituted, had and maintained in the manner herein provided and for the benefit
and protection of all Holders of the Outstanding Bonds, subject to the
provisions of this Indenture (including Section 6.02).
SECTION 7.07. Absolute Obligation of Authority. Nothing in Section 7.06 or
in any other provision of this Indenture, or in the Bonds, contained shall
affect or impair the obligation of the Authority, which is absolute and
unconditional, to pay the principal of and interest on the Bonds to the
respective Holders of the Bonds at their respective dates of maturity, or upon
acceleration or call for redemption, as herein provided, but only out of the
Revenues and other assets herein pledged therefor, or affect or impair the right
of such Holders, which is also absolute and unconditional, to enforce such
payment by virtue of the contract embodied in the Bonds.
SECTION 7.08. Termination of Proceedings. In case any proceedings taken by
the Trustee or any one or more Bondholders on account of any Event of Default
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee or the Bondholders, then in every such case
the Authority, the Bank, the Trustee and the Bondholders, subject to any
determination in such proceedings, shall be restored to their former positions
and rights hereunder, severally and respectively, and all rights, remedies,
powers and duties of the Authority, the Bank, the Trustee and the Bondholders
shall continue as though no such proceedings had been taken. The Trustee shall
deliver copies of all proceedings taken by the Trustee under this Indenture to
the Tender Agent.
SECTION 7.09. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee, the Bank or to the Holders of the Bonds is intended to
be exclusive of any other remedy or remedies, and each and every such remedy, to
the extent permitted by law, shall be cumulative and in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.
SECTION 7.10. No Waiver of Default. In the event any agreement or covenant
contained in this Indenture should be breached by the Authority and thereafter
waived by the Trustee or the Holders of the Bonds, such waiver shall be limited
to the particular breach so waived and shall not be deemed to waive any other
breach hereunder. No delay or omission of the Trustee or of any Holder of the
Bonds to exercise any right or power arising upon the occurrence of 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 given by
this Indenture to the Trustee or to the Holders of the Bonds may be exercised
from time to time and as often as may be deemed expedient.
SECTION 7.11. Consent To Defaults. Notwithstanding any other provisions of
this Article VII, so long as the Letter of Credit is in full force and effect
and the Bank has not wrongfully
40
dishonored and is not continuing wrongfully to dishonor drawings under the
Letter of Credit and all payments of principal or purchase price and interest on
the Bonds have been timely made, no Event of Default shall be declared (except
in a case resulting from the failure of the Borrower to pay the Trustee's fees),
nor any remedies exercised with respect to any such Events of Default by the
Trustee or by the Bondholders and no Event of Default under Section 7.01 shall
be waived by the Trustee or the Bondholders to the extent they may otherwise be
permitted hereunder, without, in any case, the prior written consent of the
Bank. Unless an Alternate Credit Facility has been provided pursuant to Section
5.7 of the Agreement, no Event of Default can be waived, in any circumstance,
unless the Letter of Credit has been fully reinstated and is in full force and
effect as evidenced in writing by the Bank to the Trustee.
ARTICLE VIII
THE TRUSTEE, THE REMARKETING
AGENT AND THE TENDER AGENT
SECTION 8.01. Duties, Immunities and Liabilities of Trustee. (A) The
Trustee shall, prior to an Event of Default, and after the curing of all Events
of Default which may have occurred, perform such duties and only such duties as
are specifically set forth in this Indenture. The Trustee shall, during the
existence of any Event of Default (which has not been cured), exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in its exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(B) The Trustee may at any time and for any reason be removed by an
instrument or concurrent instruments in writing appointing a successor Trustee
filed with the Trustee so removed and executed by the Holders of a majority in
aggregate principal amount of the Bonds Outstanding. The Trustee may be removed
by an instrument in writing, consented to by the Bank which may be executed by
the Authority, appointing a successor Trustee filed with the Trustee so removed
upon the occurrence of any of the following events: (i) the Trustee shall become
incapable of acting; (ii) the Trustee shall be adjudged bankrupt; (iii) the
Trustee shall become insolvent; (iv) a receiver is appointed for the Trustee or
its property; (v) any public officer shall take control or charge of the Trustee
or of the property or affairs for the purposes of rehabilitation, conservation
or liquidation; or (vi) the Trustee shall cease to be eligible in accordance
with Subsection (E) of this Section; provided that the Authority may not remove
the Trustee during the occurrence and continuance of an Event of Default.
Notwithstanding the foregoing, the Trustee may not be removed until a successor
Trustee has been appointed and has assumed the duties and responsibilities of
successor Trustee under this Indenture.
(C) The Trustee may at any time resign by giving written notice of such
resignation to the Authority and the Bank and by giving the Bondholders notice
of such resignation by mail at the addresses shown on the registration books
maintained by the Bond Registrar. Upon receiving such notice of resignation, the
Authority shall promptly appoint, with the consent of the Bank, a successor
Trustee by an instrument in writing. The Trustee shall not be relieved of its
duties until such successor Trustee has accepted its appointment.
(D) Any removal or resignation of the Trustee and appointment of a
successor Trustee shall become effective only 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
Bondholder (on behalf of himself and all other Bondholders) may petition any
court of competent jurisdiction for the
41
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 executing and delivering to the Authority and to its
predecessor Trustee a written acceptance thereof and a written instrument by the
successor Trustee indemnifying the predecessor Trustee for all costs or claims
arising after the acceptance of appointment hereunder relating to such successor
Trustee's performance of its duties under this Indenture, and thereupon and
after the payment by the Authority of all unpaid fees and expenses (including
legal fees and expenses) of the predecessor Trustee 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 Request of the Authority 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 Trustee, the Authority 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 Authority
shall mail a notice of the succession of such Trustee to the trusts hereunder to
each rating agency which is then rating the Bonds, to the Bondholders at the
addresses shown on the registration books maintained by the Bond Registrar, and
to the Bank. If the Authority 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 Authority.
(E) Any Trustee appointed under the provisions of this Section in
succession to the Trustee shall be a trust company or bank having the powers of
a trust company, having a combined capital and surplus of at least fifty million
dollars ($50,000,000), and subject to supervision or examination by federal or
state authority. If such bank or trust company publishes a report of condition
at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this subsection
the combined capital and surplus of such bank or trust company shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. 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 8.02. Merger or Consolidation. Any company into which the Trustee
may be merged or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it shall be a
party or any company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such company shall
be eligible under subsection (E) of Section 8.01 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.
SECTION 8.03. Liability of Trustee. (A) The recitals of facts herein and in
the Bonds contained shall be taken as statements of the Authority, and the
Trustee shall assume no responsibility for the correctness of the same, or make
any representations as to the validity or sufficiency of this Indenture or of
the Bonds. In addition, the Trustee shall assume no responsibility with respect
to this Indenture or Bonds other than in connection with the duties or
obligations assigned to or imposed upon the Trustee herein or in the Bonds. The
Trustee shall, however, be responsible for its representations
42
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 willful misconduct. The Trustee may become the owner
of 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 Bondholders, whether
or not such committee shall represent the Holders of a majority in principal
amount of the Bonds then Outstanding.
The Trustee may execute any of the trusts or powers set forth herein and
perform the duties required of it hereunder by or through attorneys, agents, or
receivers, and shall be entitled to the advice of counsel concerning all matters
of trusts and its duties herein, and the Trustee shall not be answerable for the
default or misconduct of any such attorney, agent or receiver selected by it
with reasonable care.
(B) The Trustee shall not be liable for any error of judgment made in good
faith by a responsible officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(C) 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
Holders 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.
(D) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Bondholders pursuant to the provisions of this Indenture unless such
Bondholders shall have offered to the Trustee satisfactory security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
(E) 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 its own negligence or
wilful misconduct.
(F) The Trustee shall not be deemed to have knowledge of any default or
Event of Default hereunder unless and until it shall have actual knowledge
thereof, or shall have received written notice thereof, at its principal
corporate 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 a default or Event of Default thereunder. The Trustee shall not be
responsible for the validity or effectiveness of any collateral given to or held
by it.
(G) 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 its rights or powers. The
Trustee shall, however, in any case make drawings under the Letter of Credit,
pay principal of or interest on the Bonds as it becomes due, and accelerate the
Bonds as required by this Indenture, notwithstanding anything to the contrary
herein.
SECTION 8.04. Right of Trustee to Rely on Documents. The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, opinion, bond or other paper or document believed by it to
be genuine and to have been signed or presented by the
43
proper party or parties. The Trustee may consult with counsel, who may be
counsel of or to the Authority, with regard to legal questions, and the opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in good faith and in
accordance therewith.
The Trustee shall not be bound to recognize any person as the Holder of a
Bond unless and until such Bond is submitted for inspection, if required, and
his title thereto is satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
Certificate of the Authority, and such Certificate shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of
this Indenture in reliance upon such Certificate, but in its discretion the
Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as it may deem reasonable.
SECTION 8.05. 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 to the inspection
of the Authority and any Bondholder, and their agents and representatives duly
authorized in writing, at reasonable hours and under reasonable conditions.
SECTION 8.06. Compensation and Indemnification. The Authority shall pay
(solely from Additional Payments) to the Trustee and the Tender Agent from time
to time reasonable compensation for all services rendered under this Indenture,
and also all reasonable expenses, charges, legal and consulting fees 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, and the
Trustee and the Tender Agent each shall have a lien therefor on any and all
funds (except moneys on deposit in the Purchase Fund, the Rebate Fund and the
Letter of Credit Account, Available Moneys, moneys being aged to become
Available Moneys and funds held for the payment of Bonds or the interest thereon
which is past due or for which notice of redemption has been mailed) at any time
held by it under this Indenture which lien shall be prior and superior to the
lien of the Holders of the Bonds.
SECTION 8.07. Notice to Rating Agency. The Authority and the Trustee shall
give written notice to each rating agency then rating the Bonds of each of the
following: (i) a successor Trustee is appointed hereunder; (ii) this Indenture,
the Agreement, the Remarketing Agreement, the Letter of Credit or the
Reimbursement Agreement is amended or supplemented in any manner; (iii) the
Bonds are converted to a Fixed Interest Rate pursuant to Section 2.03 or
defeased pursuant to Section 10.01 or accelerated pursuant to Section 7.01 or
redeemed in whole pursuant to Section 4.01; or (iv) the expiration,
substitution, termination or extension of the Letter of Credit.
SECTION 8.08. Qualifications of Remarketing Agent. The Remarketing Agent
shall be a member of the National Association of Securities Dealers, Inc. or be
a banking corporation or trust company, having a capitalization of at least
$15,000,000 and shall be authorized by law to perform all the duties imposed
upon it by this Indenture. The Remarketing Agent may at any time resign and be
discharged of the duties and obligations created by this Indenture by giving at
least 45 days' notice to the Authority, the Borrower, the Bank, the Tender
Agent, the Trustee, S&P and Moody's, to the extent each rating agency is then
rating the Bonds. The Remarketing Agent may be removed at any time, at the
request of the Borrower and the Authority, by an instrument, signed by the
Borrower and the Authority
44
and filed with the Remarketing Agent, the Bank, the Tender Agent and the
Trustee. The Borrower and the Authority, with the consent of the Bank, shall
appoint a successor Remarketing Agent.
The Remarketing Agent shall designate to the Trustee its principal office
and signify its acceptance of the duties and obligations imposed on it hereunder
by a written instrument of acceptance delivered to the Authority and the Trustee
and the Tender Agent under which the Remarketing Agent will agree to perform the
obligations of the Remarketing Agent set forth in Section 8.09 hereof.
If the Letter of Credit is terminated for any reason, or an Event of
Default under this Indenture occurs, the Remarketing Agent shall have the right
to resign immediately. The initial Remarketing Agent appointed hereunder is
Rauscher Pierce Refsnes, Inc.
SECTION 8.09. Remarketing of Bonds. (A) The Tender Agent shall immediately
provide the Remarketing Agent, the Bank and the Trustee with telephonic notice,
promptly confirmed by written notice by 12:00 noon, California time, on the next
succeeding Business Day, of the receipt by the Tender Agent of a tender notice
from any Bondholder pursuant to Section 4.06 or the receipt by the Tender Agent
of a notice from the Borrower of its election to substitute an Alternate Letter
of Credit for the then existing Letter of Credit pursuant to Section 5.8 of the
Agreement and providing the Remarketing Agent, the Bank and the Trustee with the
information contained in such notices. Upon receipt of such telephonic notice,
the Remarketing Agent shall offer for sale and use its best efforts to sell the
Bonds described in such notice, any such sale to be made at a price equal to the
principal amount thereof plus accrued interest.
(B) The Remarketing Agent shall (i) by 4:00 p.m., California time, on the
Business Day prior to the Purchase Date, give telegraphic or telephonic notice,
promptly confirmed by a written notice, to the Trustee, the Tender Agent, the
Borrower and the Bank (A) directing the Tender Agent to make available for pick
up by 11:00 a.m., California time, on the Purchase Date, at the principal
corporate trust office of the Tender Agent (or at such other office as the
Tender Agent shall designate) any Bonds for which the Remarketing Agent has
arranged sales pursuant to this Section 8.09 and (B) stating the principal
amount of Bonds sold pursuant to subsection (A) of this Section 8.09, and (ii)
deliver or cause to be delivered to the Tender Agent at or prior to 8:00 a.m.,
California time, on the Purchase Date the principal of and interest accrued to
such Purchase Date on the Bond or Bonds to be so purchased that have been
remarketed by the Remarketing Agent, in immediately available funds. Upon
receipt of amounts for the purchase of Bonds from the Remarketing Agent, the
Tender Agent shall immediately give telephonic notice to the Trustee, the
Borrower and the Bank, promptly confirmed in writing of (i) the proceeds
received from the Remarketing Agent to be applied to the purchase of the Bonds
tendered for purchase, and (ii) the amount that must be drawn under the Letter
of Credit for Bonds which have been tendered as to which the Tender Agent has
not received the principal of and interest accrued thereon to the Purchase Date
from the Remarketing Agent. None of the moneys so provided to the Tender Agent
for purchase of Bonds may be derived directly or indirectly from the Borrower,
any Related Party or the Authority and therefore the Bonds may not be remarketed
to any such entity or person. The notice by the Remarketing Agent shall specify
the names, addresses, and taxpayer identification numbers of the purchasers of,
and the principal amount and denominations of, such Bonds, if any, for which it
has found purchasers as of such date and the principal amount of such Bonds, if
any, for which it has not found purchasers as of such date. The Tender Agent
shall make available for pick up new Bonds properly executed, registered in the
name(s) and issued in Authorized Denominations as may be specified in the notice
by the Remarketing Agent to the Tender Agent by 11:00 a.m., California time, on
the Purchase Date. The Remarketing Agent and the Tender Agent shall hold all
moneys available for the purchase of Bonds in trust solely for the benefit of
the person or entity which shall have so delivered such moneys until Bonds
purchased with such moneys shall have been delivered to or for
45
the account of such person or entity, and such moneys shall not be commingled
with any other moneys. Under no circumstances shall the Tender Agent be
obligated to expend any of its own funds in connection with this Indenture.
(C) On the date Bonds are to be purchased pursuant to Section 8.10, the
Trustee shall, prior to 8:30 a.m., California time, draw on the Letter of Credit
in accordance with the provisions thereof to the extent of the purchase price of
the Bonds for which the Tender Agent has not received proceeds from the
remarketing of such Bonds as evidenced by the notice from the Tender Agent to
the Trustee and shall immediately transfer or direct the proceeds of such draw
to the Tender Agent to pay the purchase price of such Bonds on the Purchase
Date; provided however, that no drawings shall be made under the Letter of
Credit to purchase Bonds held by or for the account of the Borrower or the Bank.
SECTION 8.10. Creation of Purchase Fund; Purchase of Bonds Delivered to
Tender Agent. (A) There is hereby created and established with the Tender Agent,
in a trust capacity, a separate fund to be designated as the "Purchase Fund" and
there shall be created within the Purchase Fund (i) a separate account called
the "Remarketing Account" into which all moneys representing the proceeds of
remarketing pursuant to Section 8.09 (which moneys shall be in a form
immediately available on the Purchase Date) shall be deposited and (ii) a
separate account called the "Liquidity Account" into which the proceeds of
drawings by the Trustee under the Letter of Credit shall be deposited. None of
the Borrower, any Related Party, the Trustee nor the Authority shall have any
legal, equitable or beneficial right, title or interest in the moneys held by
the Remarketing Agent or by the Tender Agent in the Purchase Fund, or the
Remarketing Account or Liquidity Account therein. The Purchase Fund and each
such Account shall be established and maintained by the Tender Agent and held in
trust apart from all other moneys and securities held under this Indenture or
otherwise, and over which the Tender Agent shall have the exclusive and sole
right of withdrawal for the exclusive benefit of the persons tendering or
purchasing Bonds with respect to which amounts were deposited into the Purchase
Fund and the Accounts created therein.
On each day on which Bonds have been tendered for purchase or are deemed to
have been tendered for purchase pursuant to this Indenture, after paying or
making provision for the payment of the purchase price of such Bonds as in this
Indenture provided, the Tender Agent shall promptly remit to the Bank any
moneys, but not exceeding the amount drawn on the Letter of Credit for such
purchase, on deposit in the Liquidity Account not used to purchase Bonds.
(B) Funds for the purchase of Bonds at the principal amount thereof plus
unpaid interest accrued to the Purchase Date, if any, shall be paid out of the
Purchase Fund in the order of priority indicated:
(i) from the Remarketing Account, proceeds from the remarketing of
Bonds pursuant to Section 8.09 hereof; and
(ii) from the Liquidity Account, moneys representing proceeds of a
drawing by the Trustee under the Letter of Credit.
(C) In the event that Bonds are not purchased pursuant to this Section, the
Trustee shall pay the principal amount of Bonds tendered pursuant to Section
4.06 or Bonds subject to mandatory tender pursuant to Section 4.07 with moneys
on deposit in the Revenue Fund pursuant to Section 5.02 hereof and cancel such
Bonds.
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(D) The Tender Agent shall:
(i) hold all Bonds delivered to it pursuant to Sections 4.06, 4.07 or
8.11 in trust solely for the benefit of the respective Holders which shall have
so delivered such Bonds until moneys representing the purchase price for such
Bonds shall have been delivered to or for the account of or to the order of such
Holders; and
(ii) hold all moneys delivered to it under this Section 8.10 for the
purchase of Bonds in trust solely for the benefit of the person or entity which
shall have so delivered such moneys until the Bonds purchased with such moneys
shall have been delivered to or for the account of such person or entity;
(iii) only make such payments called for under this Indenture from
immediately available funds transferred to the Tender Agent for payment pursuant
to this Indenture which funds are on deposit in an appropriate account
maintained by the Tender Agent;
(iv) under no circumstances be obligated to expend any of its own
funds in connection with this Indenture;
(v) in acting with regard to the purchase of Bonds under this
Indenture be acting as a conduit and shall not be purchasing Bonds for its own
account, and in the absence of written notice from the Authority or the Trustee,
shall be entitled to assume that any Bond tendered to it, or deemed tendered to
it for purchase, is entitled under this Indenture to be so purchased; and
(vi) notify the Remarketing Agent by telephone, telegram or other form
of electronic communication of the contents of, and promptly deliver to the
Borrower, the Trustee, the Remarketing Agent and the Bank a copy of, each notice
delivered to it in accordance with Section 4.06 and, immediately upon the
delivery to it of Bonds in accordance with said Section 4.06, give telegraphic
or telephonic notice to the Borrower, the Trustee and the Bank specifying the
principal amount of the Bonds so delivered.
SECTION 8.11. Delivery of Bonds.
(A) Bonds purchased by the Tender Agent with the moneys described in
subsection (B)(i) of Section 8.10 shall be made available by the Tender Agent to
the new purchasers.
(B) (i) Bonds paid with the moneys described in subsection (C) of Section
8.10 shall be cancelled.
(ii) Bonds paid by the Tender Agent with moneys described in
subsection (B)(ii) of Section 8.10 shall be held by the Tender Agent as Pledged
Bonds pursuant to the Pledge and Security Agreement for the account of the
Borrower in which Bank shall have a security interest.
(C) Bonds which have been delivered to the Tender Agent and which
thereafter have been sold shall be delivered to such new owners as the
Remarketing Agent or the Bank may designate to the Tender Agent, but only upon
(i) written confirmation to the Trustee by the Bank that the stated amount of
the Letter of Credit has been reinstated with respect to the principal of the
Bonds being so re-registered and delivered, together with the portion of the
47
Letter of Credit used to pay accrued interest for the purchase of such Bonds and
(ii) written confirmation to the Tender Agent by the Trustee that the stated
amount of the Letter of Credit has been reinstated with respect to the principal
of the Bonds being so re-registered and delivered, together with the portion of
the Letter of Credit used to pay accrued interest for the purchase of such
Bonds.
The Authority shall cooperate with the Trustee, the Tender Agent, and the
Borrower to cause the necessary arrangements to be made and to be thereafter
continued whereby funds from the sources specified herein will be made available
for the purchase of Bonds presented at the principal office of the Tender Agent
and whereby Bonds executed by the Authority and authenticated by the Tender
Agent, shall be made available to the extent necessary for delivery pursuant to
this Section 8.11.
SECTION 8.12. Delivery of Proceeds of Remarketing. The proceeds of the
remarketing by the Remarketing Agent of any Bonds delivered to the Tender Agent,
or delivered to the Remarketing Agent by the Bank or any other Bondholder, shall
be turned over to the Bank or such other Bondholder, as the case may be.
SECTION 8.13. No Purchases or Sales After Default. Anything in this
Indenture to the contrary notwithstanding, there shall be no purchases or sales
of Bonds pursuant to this Article VIII if there shall have occurred and be
continuing an Event of Default described in clauses (A)-(C) of Section 7.01.
Anything in this Indenture to the contrary notwithstanding, there shall be no
remarketing of Bonds pursuant to this Article VIII if there shall have occurred
and be continuing any Event of Default described in Section 7.01 or if any event
shall have occurred which with notice or the lapse of time would constitute such
an Event of Default.
SECTION 8.14. Qualifications of Tender Agent. The Tender Agent shall be a
bank or trust company or another institution which has a rating on its long-term
debt from Moody's of at least "Baa3" and a short term rating of at least "P-3"
authorized to perform all duties imposed upon it by this Indenture and the
Remarketing Agreement. The Tender Agent may at any time resign and be discharged
of the duties and obligations created by this Indenture by giving at least sixty
(60) days' notice to the Authority, the Borrower, the Remarketing Agent and the
Trustee. With the consent of the Bank, the Tender Agent may be removed at any
time by the Authority, by an instrument, signed by the Authority, filed with the
Tender Agent, the Remarketing Agent and the Trustee.
The initial Tender Agent appointed under this Indenture is First Trust of
California, National Association. The Authority, with the consent of the Bank,
shall appoint a successor Tender Agent. In the event the Authority fails to
appoint a successor Tender Agent prior to the effective date of the removal or
resignation of the current Tender Agent, the existing Tender Agent shall remain
in place until a successor Tender Agent is appointed. If a successor Tender
Agent is not appointed within thirty (30) days as provided herein the Trustee
shall be appointed as the successor Tender Agent. The Authority shall appoint a
Tender Agent in New York, New York, to the extent necessary for the proper
marketing of the Bonds.
SECTION 8.15. Paying Agent. The Authority, with the written approval of the
Bank, may appoint and at all times have a Paying Agent in such cities as the
Authority deems desirable, for the payment of the principal of, and the interest
(and premium, if any) on, the Bonds. The Authority hereby appoints the Trustee
as paying agent in San Francisco, California. The Trustee shall not be
responsible for the failure of the Bank or any other party to make funds
available to the Trustee.
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SECTION 8.16. Several Capacities. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
Tender Agent, Remarketing Agent and Paying Agent and in any other combination of
such capacities, to the extent permitted by law.
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
SECTION 9.01. Amendments Permitted. (A) This Indenture and the rights and
obligations of the Authority and of the Holders of the Bonds and of the Trustee
may be modified or amended from time to time and at any time by an indenture or
indentures supplemental thereto, which the Authority and the Trustee may enter
into when the written consent of the Holders of a majority in aggregate
principal amount of all Bonds then Outstanding, the Borrower and the Bank shall
have been filed with the Trustee. No such modification or amendment shall (1)
extend the fixed maturity of any Bond, or reduce the amount of principal
thereof, or extend the time of payment, or change the method of computing the
rate of interest thereon, or extend the time of payment of interest thereon,
without the consent of the Holder of each Bond so affected, or (2) reduce the
aforesaid percentage of Bonds the consent of the Holders of which is required to
effect any such modification or amendment, or permit the creation of any lien on
the Revenues and other assets pledged under this Indenture prior to or on a
parity with the lien created by this Indenture, or deprive the Holders of the
Bonds of the lien created by this Indenture on such Revenues and other assets
(except as expressly provided in this Indenture), without the consent of the
Holders of all of the Bonds then Outstanding, or (3) adversely affect the
interests of the Tender Agent without its prior written consent. It shall not be
necessary for the consent of the Bondholders to approve the particular form of
any Supplemental Indenture, but it shall be sufficient if such consent shall
approve the substance thereof. Promptly after the execution by the Authority and
the Trustee of any Supplemental Indenture pursuant to this subsection (A), the
Trustee shall mail a copy of the Supplemental Indenture to the Tender Agent and
mail a notice, setting forth in general terms the substance of such Supplemental
Indenture, to each rating agency then rating the Bonds and the Holders of the
Bonds at the address shown on the registration books of the Trustee. Any failure
to give such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such Supplemental Indenture.
(B) This Indenture and the rights and obligations of the Authority, of the
Trustee and of the Holders of the Bonds may also be modified or amended from
time to time and at any time by an indenture or indentures supplemental hereto,
which the Authority and the Trustee may enter into without the consent of any
Bondholders but with the written consent of the Borrower and the Bank, but only
to the extent permitted by law including, without limitation, for any one or
more of the following purposes:
(1) to add to the covenants and agreements of the Authority contained
in this Indenture other covenants and agreements thereafter to be observed, to
pledge or assign additional security for the Bonds, or to surrender any right or
power herein reserved to or conferred upon the Authority;
(2) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision,
contained in this Indenture, or in regard to matters or questions arising under
this Indenture, as the Authority may deem necessary or desirable which do not
adversely affect the rights of the Bondholders hereunder;
49
(3) to modify, amend or supplement this Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, and to add such
other terms, conditions and provisions as may be permitted by said act or
similar federal statute;
(4) to make such provisions for the purpose of conforming to the terms
and provisions of any Alternate Letter of Credit or Alternate Credit Facility or
to obtain a rating on the Bonds which do not adversely affect the rights of the
Bondholders hereunder; and
(5) to modify, amend or supplement this Indenture in any other respect
which does not adversely affect the rights of the Bondholders hereunder. The
Trustee shall give notice of any such modification or amendment to each rating
agency then rating the Bonds.
(C) The Trustee may in its discretion, but shall not be obligated to, enter
into any such Supplemental Indenture authorized by subsections (A) or (B) of
this Section which materially adversely affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any
Supplemental Indenture pursuant to this Article, this Indenture shall be deemed
to be modified and amended in accordance therewith, and the respective rights,
duties and obligations under this Indenture of the Authority, the Trustee and
all Holders of Bonds Outstanding 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 such Supplemental Indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds
delivered after the execution of any Supplemental Indenture pursuant to this
Article may, and if the Authority so determines shall, bear a notation by
endorsement or otherwise in form approved by the Authority as to any
modification or amendment provided for in such Supplemental Indenture, and, in
that case, upon demand of the Holder of any Bond Outstanding at the time of such
execution and presentation of his Bond for the purpose at the office of the Bond
Registrar or at such additional offices as the Bond Registrar may select and
designate for that purpose, a suitable notation shall be made on such Bond. If
the Supplemental Indenture shall so provide, new Bonds so modified as to
conform, in the opinion of the Authority, to any modification or amendment
contained in such Supplemental Indenture, shall be prepared and executed by the
Authority and authenticated by the Bond Registrar, and upon demand of the
Holders of any Bonds then Outstanding shall be exchanged at the principal office
of the Bond Registrar, without cost to any Bondholder, for Bonds then
Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate
principal amounts of the same Series and maturity.
SECTION 9.04. Amendment of Particular Bonds. The provisions of this Article
shall not prevent any Bondholder from accepting any amendment as to the
particular Bonds held by such Bondholder, provided that due notation thereof is
made on such Bonds.
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ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Indenture. The Bonds may be paid by the
Authority in any of the following ways, provided that the Authority also pays or
causes to be paid any other sums payable hereunder by the Authority:
(A) by paying or causing to be paid with Available Moneys the principal of,
interest and premium, if any, on the Bonds, as and when the same become due and
payable;
(B) by depositing with the Trustee, in trust, at or before maturity, money
or securities in the necessary amount (as provided in Section 10.03) to pay or
redeem with Available Moneys all Bonds then Outstanding; or
(C) by delivering to the Trustee, for cancellation by it, the Bonds then
Outstanding.
If the Bonds are paid by the Authority pursuant to this Section 10.01(B)
prior to the Fixed Rate Date, the Authority and the Borrower shall provide to
the Trustee written evidence from Moody's, if the Bonds are then rated by
Moody's, and S&P, if the Bonds are then rated by S&P, to the effect that such
payment will not result in a withdrawal of its rating on the Bonds or a
reduction from the rating which then exists as to the Bonds. If the Authority
shall also pay or cause to be paid all other sums payable hereunder by the
Authority, then and in that case, at the election of the Authority (evidenced by
a Certificate of the Authority, filed with the Trustee, signifying the intention
of the Authority to discharge all such indebtedness and this Indenture), and
notwithstanding that any Bonds shall not have been surrendered for payment, this
Indenture and the pledge of Revenues and other assets made under this Indenture
and all covenants, agreements and other obligations of the Authority under this
Indenture shall cease, terminate, become void and be completely discharged and
satisfied except only as provided in Section 10.02. In such event, upon Request
of the Authority, the Trustee shall cause an accounting for such period or
periods as may be requested by the Authority to be prepared and filed with the
Authority and shall execute and deliver to the Authority all such instruments as
may be necessary or desirable to evidence such discharge and satisfaction, and
the Trustee shall pay over, transfer, assign or deliver all moneys or securities
or other property held by it pursuant to this Indenture which are not required
for the payment of obligations to be paid from Additional Payments or for the
payment or redemption of Bonds not theretofore surrendered for such payment or
redemption in the following order (1) first, to the Bank to the extent of any
amounts due to the Bank pursuant to the Reimbursement Agreement, and (2)
otherwise, to the Borrower, provided that moneys in the Letter of Credit
Account, the Liquidity Account and the Remarketing Account shall be returned to
the Bank.
SECTION 10.02. Discharge of Liability on Bonds. Upon the deposit with the
Trustee, in trust, at or before maturity, of money or securities in the
necessary amount (as provided in Section 10.03) to pay or redeem all Outstanding
Bonds (whether upon or prior to the maturity or the redemption date of such
Bonds), provided that, if any of such Bonds are to be redeemed prior to
maturity, notice of such redemption shall have been given as provided in Article
IV or provision satisfactory to the Trustee shall have been made for the giving
of such notice, then all liability of the Authority in respect of such Bonds
shall cease, terminate and be completely discharged, except only that the
Holders thereof shall thereafter be entitled to payment of the principal or
redemption price, as applicable, of and interest on such Bonds by the Authority,
and the Authority shall remain liable for such payment, but only out of such
money or securities deposited with the Trustee as aforesaid for their payment,
provided further, however, that the provisions of Section 10.04 shall apply in
all events. In the event any of said Bonds are not to
51
be redeemed within the next succeeding sixty (60) days, the Authority shall have
given the Trustee in form satisfactory to it irrevocable instructions for it to
mail, as soon as practicable in the same manner as a notice of redemption is
mailed pursuant to Article IV hereof, a notice to the Holders of such Bonds and
to the Securities Depositories and an Information Service that the deposit
required above has been made with the Trustee and that said Bonds are deemed to
have been paid in accordance with this Section 10.02 and stating such maturity
or redemption dates upon which moneys are to be available for the payment of the
principal or redemption price, as applicable, of said Bonds.
SECTION 10.03. Deposit of Money or Securities with Trustee. Whenever in
this Indenture it is provided or permitted that there be deposited with or held
in trust by the Trustee money or securities in the necessary amount to pay or
redeem any Bonds, the money or securities so to be deposited or held may include
money or securities held by the Trustee in the funds and accounts established
pursuant to this Indenture (exclusive of the Project Fund, the Purchase Fund,
the Letter of Credit Account and the Rebate Fund) and shall be--
(A) Available Moneys in an amount equal to the principal amount of such
Bonds, all unpaid interest thereon to maturity, and the purchase price of such
Bonds except that, in the case of Bonds which are to be redeemed prior to
maturity and in respect of which notice of such redemption shall have been given
as in Article IV provided or provision satisfactory to the Trustee shall have
been made for the giving of such notice, the amount to be deposited or held
shall be the redemption price of such Bonds and all unpaid interest thereon to
the redemption date; or
(B) Government Obligations purchased with Available Moneys which when due
will provide money sufficient to pay the principal or redemption price, as
applicable, of, all unpaid interest to maturity, or to the redemption date, as
the case may be, on the Bonds to be paid or redeemed, as such principal and
interest become due, and the purchase price of such Bonds; provided that, in the
case of Bonds which are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
and provided further that investment securities purchased pursuant to this
paragraph shall not be subject to redemption prior to their maturity other than
at the option of the holder thereof unless the moneys to be available from the
redemption of such securities on the earliest date on which such securities are
subject to redemption, other than at the option of the holder thereof, shall be
at least equal to the amount of money expected to be derived in connection with
such securities in determining that the provisions of this paragraph have been
satisfied;
provided, in each case, that the Trustee shall have been irrevocably instructed
(by the terms of this Indenture or by Request of the Authority) to apply such
money to the payment of such principal or redemption price, as applicable, and
interest with respect to such Bonds.
SECTION 10.04. Payments After Discharge of Indenture. When there are no
longer any Bonds Outstanding, and all fees, charges and expenses of the Trustee,
the Tender Agent and any Paying Agents have been paid or provided for, and all
expenses of the Authority relating to the Project and this Indenture have been
paid or provided for, and all other amounts payable hereunder and under the
Agreement have been paid, and this Indenture has been discharged and satisfied,
and subject to the escheat laws of the State, the Trustee shall pay any moneys
remaining in any fund established and held hereunder (other than moneys held in
the Rebate Fund which shall continue to be applied as provided in Section 5.07)
in the following order (1) first, to the Bank to the extent of any amounts due
to the Bank pursuant to the Reimbursement Agreement, and (2) otherwise to the
Borrower, provided that moneys in
52
the Letter of Credit Account, the Liquidity Account and the Remarketing Account
shall be returned to the Bank.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Authority Limited to Revenues. Notwithstanding
anything in this Indenture or in the Bonds contained, the Authority shall not be
required to advance any moneys derived from any source other than the Revenues
and other assets pledged under this Indenture for any of the purposes in this
Indenture mentioned, whether for the payment of the principal of or interest on
the Bonds or for any other purpose of this Indenture. Nevertheless, the
Authority may, but shall not be required to, advance for any of the purposes
hereof any funds of the Authority which may be made available to it for such
purposes.
SECTION 11.02. Successor Is Deemed Included in All References to
Predecessor. Whenever in this Indenture either the Authority 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 Authority or the Trustee shall bind and inure
to the benefit of the respective successors and assigns thereof whether so
expressed or not.
SECTION 11.03. Limitation of Rights to Parties and Bondholders. Nothing in
this Indenture or in the Bonds expressed or implied is intended or shall be
construed to give to any Person other than the Authority, the Trustee, the Bank,
the Borrower and the Holders of the Bonds, any legal or equitable right, remedy
or claim under or in respect of this Indenture or any covenant, condition or
provision therein or herein contained; and all such covenants, conditions and
provisions are and shall be held to be for the sole and exclusive benefit of the
Authority, the Trustee, the Bank, the Borrower and the Holders of the Bonds.
SECTION 11.04. Waiver of Notice. Whenever in this Indenture the giving of
notice by mail or otherwise is required, the giving of such notice may be waived
in writing by the person entitled to receive such notice and in any such case
the giving or receipt of such notice shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
SECTION 11.05. Destruction of Bonds. Whenever in this Indenture provision
is made for the cancellation by the Trustee and the delivery to the Authority of
any Bonds, the Trustee may, upon Request of the Authority, in lieu of such
cancellation and delivery, destroy such Bonds (in the presence of an officer of
the Authority, if the Authority shall so require), and deliver a certificate of
such destruction to the Authority.
SECTION 11.06. Severability of Invalid Provisions. If any one or more of
the provisions contained in this Indenture or in the Bonds shall for any reason
be held to be invalid, illegal or unenforceable in any respect, then such
provision or provisions shall be deemed severable from the remaining provisions
contained in this Indenture and such invalidity, illegality or unenforceability
shall not affect any other provision of this Indenture, and this Indenture shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein. The Authority hereby declares that it would have entered
into this Indenture and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the issuance of the Bonds pursuant
thereto irrespective of the fact
53
that any one or more Sections, paragraphs, sentences, clauses or phrases of this
Indenture may be held illegal, invalid or unenforceable.
SECTION 11.07. Governing Law. This Indenture shall be governed exclusively
by and construed in accordance with the applicable laws of the State for
contracts executed and delivered, and to be completely performed, in the State
without giving effect to conflicts of law provisions.
SECTION 11.08. Notices. If a Bondholder delivers a written request to the
Trustee setting forth the appropriate telex or telecopier number and other
necessary information to enable the Trustee to deliver notices by telex,
telegram, telecopier or other telecommunication device notices shall be
delivered to such Bondholder in the manner requested unless otherwise provided
herein and confirmed in writing as soon as practicable. In all other events,
notices shall be delivered to each Bondholder by first-class mail, postage
prepaid, at the address set forth for such Bondholder on the registration books
required to be maintained by the Bond Registrar pursuant to Section 2.07 hereof.
Any notice to or demand upon the Trustee may be served or presented, and such
demand may be made, at the principal corporate trust office of the Trustee in
San Francisco, California, which at the date of adoption of this Indenture is
located at the address set forth below or at such other address as may have been
filed in writing by the Trustee with the Authority. Any notice to or demand upon
the Authority, the Borrower, the Remarketing Agent, the Tender Agent or the Bank
shall be deemed to have been sufficiently given or served for all purposes by
being delivered or sent by telex or by being deposited, postage prepaid, in a
post office letter box, addressed, as the case may be, as set forth below or at
such other addresses as may have been filed in writing with the Trustee.
If to the Authority:
California Economic Development Financing Authority
c/o California Trade and Commerce Agency
801 K Street, Suite 1700
Sacramento, California 95814
Attention: Chair
(916) 323-8022 Fax: (916) 322-7214
If to the Borrower:
Advanced Aerodynamics and Structures, Inc.
3501 Lakewood Boulevard
Long Beach, California 90808
Attention: President
(562) 938-8618 Fax: (562) 938-8620
If to the Trustee:
First Trust of California, National Association
One California Street
4th Floor
San Francisco, California 94111
Attention: Municipal Trusts and Agency
(415) 273-4500 Fax: (415) 273-4590
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If to the Tender Agent:
First Trust of California, National Association
One California Street
4th Floor
San Francisco, California 94111
Attention: Municipal Trusts and Agency
(415) 273-4500 Fax: (415) 273-4590
If to the Bank:
The Sumitomo Bank, Limited
777 South Figueroa Street, Suite 2600
Los Angeles, California 90017
Attention: Structured Finance & Financial Institutions Group
(213) 955-0800 Fax: (213) 623-6832
If to the Remarketing Agent:
Rauscher Pierce Refsnes, Inc.
2711 North Haskell Avenue, Suite 2400
Dallas, Texas 75204
Attention: Fixed Income Banking
(214) 989-1000 Fax: (214) 989-1842
If to DTC:
Notices required to be given under this Indenture to DTC by
facsimile transmission shall be sent to DTC's Call
Notification Department at (516) 227- 4039 or (516)
227-4190. Notices to DTC by mail or any other means shall be
sent to:
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530
Attention: Call Notification Department
Muni Reorganization Manager
SECTION 11.09. Evidence of Rights of Bondholders. Any request, consent or
other instrument required or permitted by this Indenture to be signed and
executed by Bondholders may be in any number of concurrent instruments of
substantially similar tenor and shall be signed or executed by such Bondholders
in person or by an agent or agents duly appointed in writing. Proof of the
execution of any such request, consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable
by delivery, shall be sufficient for any purpose of this Indenture and shall be
conclusive in favor of the Trustee and of the Authority if made in the manner
provided in this Section.
The fact and date of the execution by any person of any such request,
consent or other instrument or writing may be proved by the certificate of any
notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person
55
signing such request, consent or other instrument acknowledged to such notary
public or other officer 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 registered Bonds shall be proved by the bond registration
books held by the Bond Registrar.
Any request, consent, or other instrument or writing of the Holder of any
Bond shall bind every future Holder of the same Bond and the Holder of every
Bond issued in exchange therefor or in lieu thereof, in respect of anything done
or suffered to be done by the Trustee or the Authority in accordance therewith
or reliance thereon.
SECTION 11.10. Disqualified Bonds. In determining whether the Holders of
the requisite aggregate principal amount of Bonds have concurred in any demand,
request, direction, consent or waiver under this Indenture, Bonds which are
owned or held by or for the account of the Authority or the Borrower, or by any
other obligor on the Bonds, or by any person directly or indirectly controlling
or controlled by, or under direct or indirect common control with, the Authority
or the Borrower or any other obligor on the Bonds, shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination. Bonds so
owned which have been pledged in good faith may be regarded as Outstanding for
the purposes of this Section if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Bonds and that the pledgee is
not a person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Authority or the Borrower or any
other obligor on the Bonds. In case of a dispute as to such right, any decision
by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 11.11. Money Held for Particular Bonds.
(A) The money held by the Trustee for the payment of the interest,
principal, or premium due on any date with respect to particular Bonds (or
portions of Bonds in the case of Bonds redeemed in part only) shall, on and
after such date and pending such payment, be set aside on its books and held in
trust by it for the Holders of the Bonds entitled thereto, (subject, however, to
the provisions of Section 10.04) for a period of two years but without any
liability for interest thereon.
(B) Upon the expiration of the period specified in subsection (A) above,
except as provided in subsection (C) below, funds held by the Trustee pursuant
to this Indenture shall be paid, subject to any prior payments pursuant to the
provisions of Section 10.04, to the Borrower, and funds held by the Tender Agent
shall be paid to the Trustee and thereafter paid, subject to the provisions of
Section 10.04, to the Borrower, upon direction of an Authorized Representative
of the Borrower, and thereafter Bondholders shall be entitled to look only to
the Borrower for payment, and then only to the extent of the amount so deposited
with the Borrower, and all liability of the Authority or the Trustee with
respect to such money shall thereupon cease, and the Borrower shall not be
liable for any interest thereon and shall not be regarded as a trustee of such
money.
(C) Any moneys held by the Trustee or the Tender Agent, as the case may be,
in the Letter of Credit Account or the Liquidity Account for the payment of the
principal, premium, or purchase price of any Bonds not so applied to the payment
of the Bonds within two years after the date on which the same shall have become
due shall be transferred to the Bank. Upon the expiration of the period
specified in subsection (A) above, any moneys held by the Tender Agent
representing the proceeds of the remarketing of the Bonds but which were not so
applied to the payment of Bonds shall be transferred to the Bank. All such
moneys shall be subject to escheat to the State in accordance with the laws
thereof.
56
Bondholders shall be entitled to look only to the Bank for payment from such
moneys, and all liability of the Authority, the Trustee or the Tender Agent with
respect to such money shall thereupon cease, and the Trustee, the Tender Agent,
the Authority, the Bank, or the Borrower shall not be liable for any interest
thereon and such parties shall not be regarded as a trustee of such money.
SECTION 11.12. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Trustee may be established and
maintained in the accounting records of the Trustee, either as a fund or an
account, and may, for the purposes of such records, any audits thereof and any
reports or statements with respect thereto, be treated either as a fund or as an
account; but all such records with respect to all such funds and accounts shall
at all times be maintained in accordance with generally accepted corporate trust
industry standards, to the extent practicable, and with due regard for the
requirements of Section 6.05 and for the protection of the security of the Bonds
and the rights of every Holder thereof and the Bank's interest created herein.
SECTION 11.13. Waiver of Personal Liability. No member, officer, agent or
employee of the Authority shall be individually or personally liable for the
payment of the principal of or premium or interest on the Bonds or be subject to
any personal liability or accountability by reason of the issuance thereof; but
nothing herein contained shall relieve any such member, officer, agent or
employee from the performance of any official duty provided by law or by this
Indenture.
SECTION 11.14. Execution in Several Counterparts. This Indenture may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original; and all such counterparts, or as many
of them as the Authority and the Trustee shall preserve undestroyed, shall
together constitute but one and the same instrument.
SECTION 11.15. Actions Due on Saturdays, Sundays and Holidays. If any date
on which a payment, notice or other action required by this Indenture falls on
other than a Business Day, then that action or payment need not be taken or made
on such date, but may be taken or made on the next succeeding Business Day with
the same force and effect as if made on such date.
SECTION 11.16. References to Bank. Notwithstanding any provisions contained
herein to the contrary, the Bank shall be entitled to take all actions and
exercise all rights hereunder for its own account so long as the Bank has not
wrongfully dishonored any drawings under the Letter of Credit and the Bank is
not in liquidation, bankruptcy or receivership proceedings. After the expiration
or termination of the Letter of Credit and after all obligations owed to the
Bank pursuant to the Reimbursement Agreement have been paid in full or
discharged, all references to the Bank contained herein (other than in Section
10.04) shall be null and void and of no further force and effect.
[End of the Indenture of Trust]
57
IN WITNESS WHEREOF, the CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
has caused this Indenture to be signed in its name by the Chair of the Authority
and attested by its Secretary and FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, in token of its acceptance of the trusts created hereunder, has
caused this Indenture to be signed in its corporate name by its officers
thereunto duly authorized, all as of the day and year first above written.
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
By
Chair
Attest
By
Secretary
APPROVED AS TO FORM
By
Counsel
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Trustee
By
Authorized Officer
Attest
By
Assistant Secretary
EXHIBIT A
FORM OF BOND
NEITHER THE STATE OF CALIFORNIA NOR ANY POLITICAL SUBDIVISION OR AGENCY OF
THE STATE OF CALIFORNIA SHALL BE OBLIGATED TO PAY THIS BOND OR THE INTEREST
HEREON. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF
CALIFORNIA OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF IS PLEDGED TO THE
PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, PURCHASE PRICE OF, OR
INTEREST ON, THIS BOND. NEITHER THE STATE OF CALIFORNIA NOR ANY POLITICAL
SUBDIVISION OR AGENCY OF THE STATE OF CALIFORNIA IS IN ANY MANNER OBLIGATED
TO MAKE ANY APPROPRIATION FOR SUCH PAYMENTS. THE AUTHORITY HAS NO TAXING
POWER. THIS BOND, TOGETHER WITH THE INTEREST AND PREMIUM (IF ANY) HEREON
AND THE PURCHASE PRICE HEREOF, SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR
LIABILITY OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR AGENCY
OF THE STATE OF CALIFORNIA.
No. R-1 $8,500,000
CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
VARIABLE RATE DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BOND, SERIES 1997
(ADVANCED AERODYNAMICS AND STRUCTURES, INC. PROJECT)
MATURITY DATE ORIGINAL ISSUE DATE CUSIP
August 1, 2027 August 5, 1997 13066P AM0
Registered Owner: CEDE & CO.
Principal Sum: EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS
The CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY (the "Authority"),
a body public and corporate, and a public instrumentality of the State of
California (the "State"), duly organized and existing under the laws of the
State, particularly Part 10.2 of Division 3 of Title 2 of the California
Government Code (commencing with Section 15710 of the California Government
Code), as amended (the "Act"), for value received, hereby promises to pay to the
registered owner specified above, or registered assigns, on the maturity date
set forth above (subject to any right of prior redemption hereinafter
mentioned), the principal sum set forth above, in lawful money of the United
States of America, and to pay interest thereon in like lawful money from and
including the Interest Payment Date (as defined herein) next preceding the date
of registration of this Bond (unless this Bond is registered after a Record Date
(as hereinafter defined) and on or before the next succeeding Interest Payment
Date or on an Interest Payment Date, in which event it shall bear interest from
and including
A-1
such Interest Payment Date, or unless this Bond is registered on or prior to
September 1, 1997, in which event it shall bear interest from and including the
date of initial issuance and delivery (the "Date of Delivery")), until payment
of such principal sum shall be discharged as provided in the Indenture (as
hereinafter defined), at the rates per annum determined as set forth below. The
interest on this Bond will be payable on September 2, 1997, and thereafter on
the first Business Day of each month on or prior to the date on which this Bond
is converted to bear a fixed rate of interest as provided in the Indenture (the
"Fixed Rate Date"), and thereafter on August 1 and February 1 in each year (each
such date being referred to herein as an "Interest Payment Date"). The principal
(or redemption price) hereof is payable upon presentation hereof at the
principal corporate trust office of First Trust of California, National
Association (together with any successor as trustee under the Indenture, the
"Trustee"), in San Francisco, California, or at such other office as the Trustee
may designate. Interest hereon is payable by check or draft mailed, except as
provided in the Indenture, to the person whose name appears on the bond
registration books of the Trustee as the registered owner hereof as of the close
of business on the Record Date, in each case, at such person's address as it
appears on such registration books. The term "Record Date" means, prior to the
Fixed Rate Date, the Business Day preceding any Interest Payment Date, and after
the Fixed Rate Date, the fifteenth (15th) day of the calendar month preceding
any Interest Payment Date.
The Authority, First Trust of California, National Association, as tender
agent (the "Tender Agent"), the Trustee, any paying agent, and any agent of the
Authority, the Tender Agent or the Trustee may treat the person in whose name
this Bond is registered as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, and the Authority, the Tender
Agent, the Trustee, any paying agent or any such agent shall not be affected by
notice to the contrary.
This Bond, together with the interest and premium (if any) hereon shall not
be deemed to constitute a debt or liability of the State or any political
subdivision or agency of the State or a pledge of the faith and credit of the
State or any political subdivision or agency of the State, but shall be payable
solely from the funds provided therefor pursuant to the Indenture. This Bond is
only a special, limited obligation of the Authority as provided by the Act and
the Authority shall under no circumstances be obligated to pay the principal of,
premium, if any, purchase price of, or interest on this Bond, or other costs
incident hereto except from the revenues and funds pledged therefor pursuant to
the Indenture. Neither the State nor any political subdivision or agency of the
State is in any manner obligated to make any appropriation for such payments.
The Authority has no taxing power.
No member or officer of the Authority, nor any person executing this Bond
shall in any event be subject to any personal liability or accountability by
reason of the issuance of this Bond.
This Bond is one of a duly authorized issue of bonds of the Authority
designated as captioned above (the "Bonds") pursuant to the provisions of the
Act, and pursuant to an indenture of trust, dated as of August 1, 1997, between
the Authority and the Trustee (the "Indenture"). The Bonds are issued for the
purpose of making a loan to Advanced Aerodynamics and Structures, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(the "Borrower"), to assist in the financing of a Project (as such term is
defined in the Indenture) owned by the Borrower, pursuant to a loan agreement,
dated as of August 1, 1997, between the Authority and the Borrower (the
"Agreement"), for the purposes and on the terms and conditions set forth
therein. The payment of principal of and interest on the Bonds is secured by an
irrevocable Letter of Credit issued by The Sumitomo Bank, Limited, acting
through its Los Angeles Branch, (the "Letter of Credit" and the "Bank",
A-2
respectively). Such Letter of Credit may be renewed or substituted by a letter
of credit of another financial institution or an alternate credit facility as
provided in the Agreement and the Indenture.
Reference is hereby made to the Indenture (a copy of which is on file at
said office of the Trustee) and all indentures supplemental thereto and to the
Act for a description of the rights thereunder of the registered owners of the
Bonds, of the nature and extent of the security, of the rights, duties and
immunities of the Trustee and the Tender Agent and of the rights and obligations
of the Authority thereunder, to all the provisions of which Indenture the
registered owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds and the interest thereon are payable solely from Revenues (as
defined in the Indenture) and are secured by a pledge of said Revenues and of
amounts held in the funds (except as provided in the Indenture) and accounts
established pursuant to the Indenture (including proceeds of the sale of the
Bonds), subject only to the provisions of the Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth
in the Indenture. The Bonds are further secured by an assignment of the right,
title and interest of the Authority in the Agreement (to the extent and as more
particularly described in the Indenture) and by the Letter of Credit.
The Bonds shall bear interest from and including the Date of Delivery of
the Bonds to and including a date specified in the Indenture at the rate
specified in the Indenture. Thereafter, prior to the Fixed Rate Date or final
maturity date, whichever is earlier, the Bonds shall bear interest, calculated
on the basis of a year of 365 or 366 days, as appropriate, at a rate per annum
equal to the Weekly Interest Rate (as hereinafter defined). Each period from and
including the Date of Delivery to and including September 1, 1997 and,
thereafter, the period from and including an Interest Payment Date to and
including the day next preceding the immediately succeeding Interest Payment
Date is herein called an "Interest Period."
The Weekly Interest Rate shall be the rate determined by Rauscher Pierce
Refsnes, Inc. (together with any successor as Remarketing Agent under the
Indenture, the "Remarketing Agent"), on the basis of the examination of
Tax-exempt (as defined in the Indenture) obligations comparable to the Bonds
known by the Remarketing Agent to have been priced or traded under then
prevailing market conditions, to be the minimum interest rate which, if borne by
the Bonds, would enable the Remarketing Agent to sell the Bonds on the date such
interest rate becomes effective at a price equal to the principal amount thereof
plus accrued interest, if any, but in no event exceeding twelve percent (12%);
provided, however, that if for any reason a Weekly Interest Rate so determined
shall be held to be invalid or unenforceable by a court of law, the Weekly
Interest Rate shall be the rate established in accordance with the Indenture.
The Remarketing Agent shall determine the Weekly Interest Rate as of the
close of business on Tuesday in each calendar week until the earlier of the
Fixed Rate Date, or payment in full of the Bonds; provided that if Tuesday in
any calendar week shall not be a Business Day then such determination shall be
made on the next preceding Business Day, and communicate by telephonic notice
such rate to the Trustee (with prompt confirmation in writing). The Weekly
Interest Rate so determined shall become effective Wednesday in the week of
determination thereof, to and including the following Tuesday irrespective of
when the rate was determined by the Remarketing Agent. If the Remarketing Agent
shall fail to determine a new Weekly Interest Rate in any week, the previously
effective Weekly Interest Rate shall remain in effect for the next succeeding
week and shall thereafter be determined in accordance with the Indenture.
A-3
Each determination of the Weekly Interest Rate by the Remarketing Agent
shall be conclusive and binding on the owners of the Bonds.
Anything herein to the contrary notwithstanding, in no event may the
interest rate borne by the Bonds exceed twelve percent (12%) per annum or, if
lower, the maximum rate of interest which may be charged or collected pursuant
to applicable provisions of federal or state law.
On any Interest Payment Date, the interest rate on the Bonds may be
converted to a fixed annual rate of interest (the "Fixed Interest Rate") upon
receipt by the Authority, the Trustee, the Tender Agent, the Bank and the
Remarketing Agent not less than 45 days in advance of the date on which the
Bonds begin to bear interest at the Fixed Interest Rate (the "Fixed Rate Date")
of (i) notice from the Borrower electing to have the interest rate on the Bonds
converted to a Fixed Interest Rate, (ii) an opinion of Bond Counsel to the
effect that conversion to a Fixed Interest Rate is permitted by the Indenture
and the Act and that conversion to the Fixed Interest Rate in accordance with
the provisions of the Indenture will not cause interest on the Bonds to not be
Tax-exempt and (iii) satisfaction of certain other conditions set forth in the
Indenture.
After the Fixed Rate Date, interest on the Bonds shall be computed on the
basis of a year of 360 days and 12 months of 30 days each. The interest rate on
all Bonds from the Fixed Rate Date until the maturity or prior redemption or
acceleration thereof shall be a rate per annum equal to the Fixed Interest Rate,
which shall be determined as follows on or prior to, but not more than 15 days
prior to, the Business Day immediately preceding the Fixed Rate Date. The
Remarketing Agent shall specify the Fixed Interest Rate to be borne by the Bonds
on and after the Fixed Rate Date.
The Fixed Interest Rate shall be the rate, but not exceeding the rate,
which at the time of determination thereof in the judgment of the Remarketing
Agent, having due regard for prevailing financial market conditions, would be
necessary to remarket the Bonds at a price equal to 100% of the principal amount
thereof on the Fixed Rate Date. If on the date of determination by the
Remarketing Agent of the Fixed Interest Rate, the Fixed Interest Rate so
determined is held by a court to be invalid or unenforceable, then the Fixed
Interest Rate shall be a rate determined by the Remarketing Agent, not less than
90% or more than 130% of the "Alternate Fixed Rate," which in the judgment of
the Remarketing Agent, having due regard for prevailing market conditions, would
be the minimum rate at which owners of the Bonds would be able to sell the Bonds
at a price equal to the principal amount thereof on the Fixed Rate Date. The
Alternate Fixed Rate shall be determined by the Remarketing Agent and shall be a
rate per annum based upon yield evaluations at par of Tax-exempt securities
having a remaining term equal, as nearly as practicable, to the time remaining
until the maturity of the Bonds of not less than five Component Issues (as
defined in the Indenture) selected by the Remarketing Agent each of which would
be rated by either Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group in a long-term debt rating category which is the same as, or is
immediately proximate to, the long-term debt rating category which will be
assigned to the Bonds after the Fixed Rate Date. Anything to the contrary herein
notwithstanding, the Fixed Interest Rate shall not exceed twelve percent (12%)
per annum. If, after the Fixed Rate Date the Bonds shall fail to be converted to
a Fixed Interest Rate, the Bonds will continue to earn interest at the Weekly
Interest Rate as provided in the Indenture and the registered owners shall be
notified thereof.
At least thirty (30) days prior to the Fixed Rate Date, the Trustee shall
give an irrevocable notice to the registered owners of conversion of the Weekly
Interest Rate borne by the Bonds to the Fixed Interest Rate. Such notice shall
(i) specify the proposed Fixed Rate Date, (ii) require owners of all of the
Outstanding Bonds to tender their Bonds for purchase on the Fixed Rate Date and
(iii) state
A-4
that all Outstanding Bonds not purchased on or before the Fixed Rate Date
pursuant to the Indenture will be deemed to be purchased on the Fixed Rate Date
at a price equal to the principal amount thereof, plus unpaid interest, if any,
accrued to such date.
Any Bond purchased by the Tender Agent from the date notice of the proposed
Fixed Rate Date is given to registered owners through the Fixed Rate Date shall
be remarketed at the Weekly Interest Rate for a period up to and including the
Fixed Rate Date; provided, however, that all Bonds remarketed from the date
notice of the proposed Fixed Rate Date is given to an owner through the Fixed
Rate Date shall be tendered by the owner thereof on the Fixed Rate Date pursuant
to the provisions of the Indenture.
The Bonds are also subject to mandatory tender for purchase on the date an
alternate letter of credit is substituted for the Letter of Credit (the "Letter
of Credit Substitution Date"). The Fixed Rate Date and the Letter of Credit
Substitution Date are also referred to as the "Mandatory Tender Date."
All Bonds which on the Mandatory Tender Date have not been tendered for
purchase ("Non-Tendered Bonds"), shall be deemed purchased by the Tender Agent
on the Mandatory Tender Date at a price of the principal amount thereof plus
unpaid interest, if any, accrued to such date. Replacement bonds for the
Non-Tendered Bonds may be remarketed and delivered to new owners as instructed
by the Borrower or the Remarketing Agent. The Tender Agent shall hold in escrow
for the owners of the Non-Tendered Bonds the purchase price thereof, and after
the Mandatory Tender Date such owners will no longer be entitled to any of the
benefits of the Indenture except for the payment of such purchase price.
The Indenture provides that prior to the Fixed Rate Date, the Bonds may be
delivered by the owners thereof to the Tender Agent at its principal corporate
trust office in San Francisco, California or at such other place as the Tender
Agent may designate in writing to the owners. Any Bond so delivered or notice
with respect to which is received shall be purchased by the Tender Agent on
demand of the owner thereof on the close of any Business Day at a purchase price
equal to the principal amount thereof plus accrued interest to but not including
the date of purchase (unless such date is an Interest Payment Date, in which
case the purchase price will be the principal amount of such Bond) upon:
(A) delivery to the Tender Agent of an irrevocable written notice by 4:00
p.m., California time, which states (i) the name and address of the registered
owner, (ii) the number or numbers of the Bond or Bonds to be purchased, (iii)
the aggregate principal amount of the Bond or Bonds to be purchased, and (iv)
the date on which the Bond is or Bonds are to be purchased, which date shall be
a Business Day not prior to the seventh (7th) calendar day next succeeding the
date of delivery of such notice; and
(B) delivery to the Tender Agent at or prior to 10:00 a.m., California
time, on the Purchase Date specified in the aforesaid notice, of the Bond or
Bonds to be tendered; provided, however, that any Bond for which a notice of the
exercise of the purchase option has been given as provided in subsection (A)
above and which is not so delivered shall be deemed delivered on the date of
purchase and shall be purchased in accordance with the Indenture.
The Bonds are subject to redemption by the Authority upon the following terms in
increments of $5,000, provided that in the event of redemption of less than all
of the Bonds, the amount which remains outstanding shall be in Authorized
Denominations (as defined in the Indenture):
A-5
(i) The Bonds are not subject to sinking fund redemption.
(ii) On or prior to the Fixed Rate Date, the Bonds are subject to
redemption on any Interest Payment Date, in whole or in part, to the extent of
prepayments of amounts due under the Agreement made at the option of the
Borrower, with the written approval of the Bank, at a redemption price of 100%
of the principal amount of the Bonds redeemed, plus interest accrued thereon to
the redemption date.
(iii) The Bonds Outstanding on the date of the occurrence of a
Determination of Taxability (as defined in the Indenture) shall be redeemed in
whole, at a price of 100% of the principal amount thereof plus interest accrued
thereon to the redemption date, at any time within 60 days after such
occurrence. IF THE LIEN OF THE INDENTURE IS DISCHARGED PRIOR TO THE OCCURRENCE
OF A DETERMINATION OF TAXABILITY THE BONDS SHALL NOT BE REDEEMED AS DESCRIBED
HEREIN.
(iv) The Bonds shall be redeemed in whole, at a redemption price equal
to 100% of the principal amount thereof plus interest accrued thereon to the
redemption date, on a redemption date not less than fifteen (15) days preceding
the expiration date of the Letter of Credit selected by the Trustee if no
Alternate Letter of Credit has been delivered to the Trustee in accordance with
the Agreement.
(v) The Bonds are subject to redemption in whole or in part, on any
date, at a redemption price equal to 100% of the principal amount of Bonds
redeemed, plus interest accrued thereon to the redemption date, to the extent of
prepayments of amounts due under the Agreement made at the option of the
Borrower following the occurrence of damage to, or the destruction of, the
Project, the taking thereof under the power of eminent domain or the Agreement
is void unenforceable, impossible of performance or unlawful.
(vi) After the Fixed Rate Date, the Bonds are subject to redemption to
the extent of prepayments of amounts due under the Agreement made at the option
of the Borrower, with the consent of the Bank, in whole or in part, on any
Interest Payment Date during the applicable periods specified below, at the
applicable redemption price stated below, plus interest accrued thereon to the
redemption date:
Number of Years From
Fixed Rate Date to First Optional Redemption
Final Maturity Redemption Date Price
greater than 9 years 7 years from 102%,
conversion declining
1% annually
to 100%
6-9 years 6 years from 101%,
conversion declining
1% annually
to 100%
less than 6 years no optional
redemption
A-6
Notwithstanding the optional redemption schedule set forth above, on or prior to
the Fixed Rate Date, the Remarketing Agent may provide an alternate optional
redemption schedule if it obtains an opinion of Bond Counsel that such alternate
schedule will not cause interest on the Bonds not to be Tax-exempt.
(vii) The Bonds shall be redeemed in whole, at a redemption price
equal to 100% of the principal amount thereof, plus interest accrued thereon to
the redemption date, within five (5) calendar days (and before the following
Saturday if the fifth calendar day is a Saturday) from the date the Trustee
receives written notice from the Bank that an event of default has taken place
under the Reimbursement Agreement and directing the Trustee to redeem the Bonds.
(viii) The Bonds are subject to redemption, in part on any Interest
Payment Date, at a redemption price equal to 100% of the principal amount
thereof, plus accrued interest to the redemption date, to the extent of amounts
remaining in the Project Fund upon completion of the Project which are deposited
in the Surplus Account (as such terms are defined in the Indenture) as provided
in the Indenture.
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. The Indenture provides
that in certain events such declaration and its consequences may be rescinded.
The Bonds are issuable as fully registered Bonds without coupons in
denominations of $100,000 or any multiple of $5,000 in excess of $100,000,
provided that after the Fixed Rate Date the Bonds will be issued in
denominations of $5,000 or any integral multiple thereof. This Bond is
transferable by the registered owner hereof, in person or by his attorney duly
authorized in writing, but only in the manner, subject to the limitations and
upon payment of the charges, if any, provided in the Indenture, and upon
surrender and cancellation of this Bond. Upon such transfer a new registered
Bond or Bonds, of authorized denomination or denominations, for the same
aggregate principal amount, will be issued to the transferee in exchange
therefor.
The Indenture and the rights and obligations of the Authority and of the
owners of the Bonds and of the Trustee or Tender Agent may be modified or
amended from time to time and at any time (and in certain cases without the
consent of the owners) in the manner, to the extent, and upon the terms provided
in the Indenture; provided that no such modification or amendment shall (i)
extend the fixed maturity of this Bond, or reduce the amount of principal
hereof, or extend the time of payment or change the method of computing the rate
of interest hereon, or extend the time of payment of interest hereon, without
the consent of the owner hereof, (ii) reduce the percentage of Bonds the consent
of the owners of which is required to effect any such modification or amendment,
or permit the creation of any lien on the Revenues and other assets pledged as
security for the Bonds prior to or on a parity with the lien created by the
Indenture, or deprive the owners of the Bonds of the lien created by the
Indenture on such Revenues and other assets (except as expressly provided in the
Indenture), without the consent of the owners of all Bonds then outstanding, or
(iii) adversely affect the interests of the Tender Agent without its prior
written consent. The Trustee shall not be required to consent to any such
amendment which materially adversely affects its rights, duties and immunities
under the Indenture or otherwise, all as more fully set forth in the Indenture.
If moneys or securities shall have been set aside and held for the payment
or redemption of Bonds and the interest installments therefor to the maturity or
redemption date thereof in accordance
A-7
with the Indenture, such Bonds shall be deemed to be paid within the meaning
provided in the Indenture and the pledge of Revenues and other assets made under
the Indenture and all covenants, agreements and other obligations of the
Authority under the Indenture shall cease, terminate, become void and be
completely discharged and satisfied.
It is hereby certified and recited that any and all conditions, things and
acts required to exist, to have happened and to have been performed precedent to
and in the issuance of this Bond do exist, have happened and have been performed
in due time, form and manner as required by the Act, and by the Constitution and
laws of the State, and that the amount of this Bond, together with all other
indebtedness of the Authority, does not exceed any limit prescribed by the Act,
or by the Constitution and laws of the State, and is not in excess of the amount
of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or
become valid or obligatory for any purpose, until the certificate of
authentication and registration hereon endorsed shall have been signed by the
Trustee.
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IN WITNESS WHEREOF, the California Economic Development Financing Authority
has caused this Bond to be executed in its name and on its behalf by the manual
or facsimile signature of the Chair of the Authority and attested by the manual
or facsimile signature of its Secretary, all as of the date set forth above.
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
By
Chair
Attest:
Secretary
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CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within-mentioned Indenture, which
has been registered on August 5, 1997.
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Trustee
By
Authorized Signatory
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ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer
unto (Insert name, address, zip code and Social Security, taxpayer or other
identification numbers of Assignee) the within-mentioned registered Bond and
hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same
on the books of the Bond Registrar with full power of substitution in the
premises.
Dated:
Notice: The signature on this Assignment
must correspond with the name of the
Registered Owner as it appears upon the
face of the within Bond in every
particular without alteration or
enlargement or any change whatsoever.
Signature guaranteed:
(NOTE: Signature must be guaranteed by
an Eligible Guarantor Institution
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