HomeMy Public PortalAboutA 2018-02-06 LPFA4845-1913-8648.1
RESOLUTION NO. ___________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LYNWOOD APPROVING THE FINANCING OF
CERTAIN STREETS AND ROADS IMPROVEMENTS AND
AUTHORIZING OFFICIAL ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the Lynwood Public Financing Authority (the “Authority”) is a joint
powers authority duly organized and existing under the provisions of Articles 1 through 4
(commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act to borrow
money to provide financing and refinancing for public capital improvements of the City of
Lynwood (the “City”); and
WHEREAS, the City desires to finance certain streets and roads improvements (the
“Improvements”) eligible for Measure R Local Return use; and
WHEREAS, to provide financing for the acquisition and construction of the
Improvements (including the payment of capitalized interest, to the extent necessary), the City
has asked the Authority to issue bond anticipation notes (the “Notes”) under the provisions of
Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the “Law”); and
WHEREAS, as required by Section 6586.5 of the Law, the City has caused publication
of a notice of a public hearing on the financing of the Improvements once at least five days prior
to the hearing in a newspaper of general circulation in the City; and
WHEREAS, this Council held a public hearing at which all interested persons were
provided the opportunity to speak on the subject of financing the Improvements; and
WHEREAS, ZB, N.A. (the “Bank”) has issued a commitment letter (the “Commitment
Letter”) offering to purchase the Notes.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Lynwood as
follows:
Section 1. Findings and Determinations. Pursuant to the Law, and based on the
information provided to the City Council by City staff and consultants, all as set forth in the
proceedings and documents providing for the issuance and delivery of the Notes, the City
Council hereby finds and determines that the issuance of the Notes to finance the Improvements
and the transactions related thereto will result in significant public benefits within the
contemplation of Section 6586 of the Law, namely, demonstrable savings in note preparation,
note underwriting and note issuance costs, and employment benefits from undertaking the
project in a timely fashion.
4845-1913-8648.1
2
Section 2. Approval of Indenture. The City Council hereby approves the Indenture
of Trust in substantially the form on file with the City Clerk, together with such additions thereto
and changes therein deemed advisable by the Mayor, Mayor Pro Tem, City Manager or Finance
Director, or their respective designated representatives (each, an “Authorized Officer”), upon
consultation with the City Attorney and Nixon Peabody LLP (“Special Counsel”), whose
execution thereof shall be conclusive evidence of the approval of any such additions and
changes.
Section 3. Approval of Private Placement. The City hereby approves the sale of the
Notes by the Authority to the Bank, by a private placement pursuant to and in accordance with
the Commitment Letter.
Section 4. Official Actions. The Authorized Officers, the City Clerk and any and all
other officers of the City are hereby authorized and directed, for and in the name and on behalf
of the City, to do any and all things and take any and all actions which they, or any of them, may
deem necessary or advisable in order to consummate the transactions as described herein in
connection with the issuance of the Notes.
Section 5. Effective Date. This Resolution shall take effect immediately upon
adoption and the City Clerk shall certify to its adoption.
PASSED, APPROVED, and ADOPTED at a Regular meeting of the City Council of the
City of Lynwood, California this 2nd day of January, 2018.
AYES: Council Members -
NOES: Council Members -
ABSENT: Council Members -
ABSTAIN: Council Members -
___________________________________
Mayor
Attest:
________________________________
City Clerk
4839-1476-5656.2
RESOLUTION NO. __________
A RESOLUTION OF THE LYNWOOD PUBLIC FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE OF ITS 2018 BOND
ANTICIPATION NOTES, APPROVING THE EXECUTION AND
DELIVERY OF AN INDENTURE OF TRUST, AND AUTHORIZING
OFFICIAL ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Lynwood Public Financing Authority (the “Authority”) is a joint
powers authority duly organized and existing under the provisions of Articles 1 through 4
(commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act to, among
other things, borrow money for the purpose of financing and refinancing public capital
improvements of the City of Lynwood (the “City”); and
WHEREAS, the City desires to finance certain streets and roads improvements (the
“Improvements”) eligible for Measure R Local Return use; and
WHEREAS, to provide financing for the acquisition and construction of the
Improvements (including the payment of capitalized interest, to the extent necessary), the City
has asked the Authority to issue bond anticipation notes (the “Notes”) under the provisions of
Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the “Law”); and
WHEREAS, the Authority desires to assist the City by issuing the Notes designated as
Lynwood Public Financing Authority 2018 Bond Anticipation Notes; and
WHEREAS, ZB, N.A. (the “Bank”) has issued a commitment letter (the “Commitment
Letter”) offering to purchase the Notes; and
WHEREAS, the Authority has duly considered such transactions, and wishes at this time
to approve all documentation and actions relative to said transactions in the public interests of
the Authority.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY
THE COMMISSION OF THE LYNWOOD PUBLIC FINANCING AUTHORITY, AS
FOLLOWS:
Section 1. Issuance of Notes; Approval of Indenture. The Authority Commission
hereby authorizes the issuance of the Notes in the maximum principal amount of not to exceed
$2,750,000. Furthermore, the interest rate on the Notes shall not exceed 2.09% and the costs of
issuance shall not exceed $115,000. The Authority hereby approves the Indenture of Trust in
substantially the form on file with the Secretary, together with such additions thereto and
changes therein deemed advisable by the President, Vice-President, Treasurer, Chief
Administrative Officer or Finance Director, or their respective designated representatives (each,
an “Authorized Officer”), upon consultation with Authority Counsel and Nixon Peabody LLP,
4839-1476-5656.2
2
whose execution thereof shall be conclusive evidence of the approval of any such additions and
changes.
Section 2. Approval of Private Placement. The City hereby approves the sale of the
Notes by the Authority to the Bank, by a private placement pursuant to and in accordance with
the Commitment Letter.
Section 3. Approval of Financing Team. Nixon Peabody LLP is hereby appointed as
special counsel, Wolf & Company Inc. is hereby appointed as municipal advisor and Stifel,
Nicolaus & Company Incorporated is hereby appointed as private placement agent all in
connection with the issuance of the Notes.
Section 4. Official Action. The Authorized Officers, the Secretary and any and all
other officers of the Authority are hereby authorized and directed, for and in the name and on
behalf of the Authority, to do any and all things and take any and all actions which they, or any
of them, may deem necessary or advisable in order to consummate the transactions as described
herein in connection with the issuance of the Notes.
Section 5. Effective Date. This Resolution shall take effect immediately upon
adoption and the Secretary shall certify to its adoption.
PASSED, APPROVED, and ADOPTED at a regular meeting of the Commission of the
Lynwood Public Financing Authority this 2nd day of January, 2018.
AYES: Commission Members -
NOES: Commission Members -
ABSENT: Commission Members -
ABSTAIN: Commission Members -
___________________________________
President
Attest:
________________________________
Secretary
4815-4408-0980.2
INDENTURE OF TRUST
by and between the
LYNWOOD PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
Dated as of December 1, 2017
Relating to the
$_______
Lynwood Public Financing Authority
2018 Bond Anticipation Notes
4815-4408-0980.2
-i-
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY .................. 3
Section 1.01. Definitions ................................................................................................ 3
Section 1.02. Rules of Construction ............................................................................. 14
Section 1.03. Equal Security ........................................................................................ 14
ARTICLE II THE NOTES ........................................................................................................... 15
Section 2.01. Authorization of the Notes ..................................................................... 15
Section 2.02. Terms of the Notes ................................................................................. 15
Section 2.03. Form of Notes ......................................................................................... 15
Section 2.04. Execution of Notes ................................................................................. 16
Section 2.05. Transfer of Notes .................................................................................... 16
Section 2.06. Exchange of Notes .................................................................................. 16
Section 2.07. Temporary Notes .................................................................................... 17
Section 2.08. Note Registration Books ......................................................................... 17
Section 2.09. Notes Mutilated, Lost, Destroyed or Stolen ........................................... 17
ARTICLE III ISSUE OF BONDS; APPLICATION OF PROCEEDS; COSTS OF
ISSUANCE FUND ................................................................................................................. 18
Section 3.01. Issuance of Notes .................................................................................... 18
Section 3.02. Application of Proceeds of Notes and Other Moneys ............................ 18
Section 3.03. Establishment and Application of Costs of Issuance Fund .................... 18
Section 3.04. Establishment and Maintenance of Project Fund. .................................. 18
Section 3.05. Validity of Notes .................................................................................... 19
ARTICLE IV REDEMPTION OF NOTES .................................................................................. 20
Section 4.01. Terms of Redemption ............................................................................. 20
Section 4.02. Notice of Redemption ............................................................................. 20
Section 4.03. Effect of Redemption ............................................................................. 21
ARTICLE V PLEDGED REVENUES ......................................................................................... 22
Section 5.01. Pledge of Pledged Revenues .................................................................. 22
Section 5.02. Application of Note Payment Fund ........................................................ 23
Section 5.03. Investment of Moneys in Funds and Accounts ...................................... 23
ARTICLE VI COVENANTS OF THE AUTHORITY; SPECIAL TAX COVENANTS ........... 25
Section 6.01. Punctual Payment ................................................................................... 25
Section 6.02. Extension of Payment of Notes .............................................................. 25
Section 6.03. Discharge of Claims ............................................................................... 25
Section 6.04. Refunding ............................................................................................... 25
Section 6.05. Against Encumbrance ............................................................................. 25
Section 6.06. Limitations on Future Obligations Secured by Pledged Revenues ........ 25
Section 6.07. Further Assurances ................................................................................. 26
Section 6.08. Waiver of Laws ...................................................................................... 26
4815-4408-0980.2
-ii-
Section 6.09. Private Activity Bond Limitation ........................................................... 26
Section 6.10. Private Loan Financing Limitation ......................................................... 26
Section 6.11. Federal Guarantee Prohibition ................................................................ 26
Section 6.12. Rebate Requirement ............................................................................... 26
Section 6.13. No Arbitrage ........................................................................................... 26
Section 6.14. Maintenance of Tax-Exemption ............................................................. 26
ARTICLE VII RESERVED ......................................................................................................... 27
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS .................. 28
Section 8.01. Events of Default .................................................................................... 28
Section 8.02. Acceleration of Maturities ...................................................................... 28
Section 8.03. Application of Pledged Revenues and Other Funds After Default ........ 29
Section 8.04. Trustee to Represent Owners .................................................................. 29
Section 8.05. Owners’ Direction of Proceedings ......................................................... 30
Section 8.06. Limitation on Owners’ Right to Sue ...................................................... 30
Section 8.07. Absolute Obligation of Authority ........................................................... 31
Section 8.08. Termination of Proceedings ................................................................... 31
Section 8.09. Remedies Not Exclusive ......................................................................... 31
Section 8.10. No Waiver of Default ............................................................................. 31
ARTICLE IX THE TRUSTEE ..................................................................................................... 32
Section 9.01. Appointment of Trustee; Duties, Immunities and Liabilities of
Trustee .................................................................................................... 32
Section 9.02. Merger or Consolidation ......................................................................... 33
Section 9.03. Liability of Trustee ................................................................................. 33
Section 9.04. Right of Trustee to Rely on Documents ................................................. 36
Section 9.05. Preservation and Inspection of Documents ............................................ 36
Section 9.06. Compensation of Trustee ........................................................................ 36
Section 9.07. Indemnification ....................................................................................... 36
ARTICLE X MODIFICATION OR AMENDMENT OF THE INDENTURE ........................... 37
Section 10.01. Amendments Permitted .......................................................................... 37
Section 10.02. Effect of Supplemental Indenture ........................................................... 38
Section 10.03. Endorsement of Notes; Preparation of New Notes ................................. 38
Section 10.04. Amendment of Particular Notes ............................................................. 38
ARTICLE XI DEFEASANCE ..................................................................................................... 39
Section 11.01. Discharge of Indenture ........................................................................... 39
Section 11.02. Discharge of Liability on Notes ............................................................. 39
Section 11.03. Deposit of Money or Securities with Trustee ......................................... 40
Section 11.04. Payment of Notes After Discharge of Indenture .................................... 40
ARTICLE XII MISCELLANEOUS ............................................................................................. 41
Section 12.01. Liability of Authority Limited to Pledged Revenues ............................. 41
Section 12.02. Successor Is Deemed Included in All References to Predecessor .......... 41
Section 12.03. Limitation of Rights to Parties and Owners ........................................... 41
4815-4408-0980.2
-iii-
Section 12.04. Waiver of Notice .................................................................................... 41
Section 12.05. Destruction of Notes ............................................................................... 41
Section 12.06. Severability of Invalid Provisions .......................................................... 41
Section 12.07. Notices .................................................................................................... 42
Section 12.08. Evidence of Rights of Owners ................................................................ 42
Section 12.09. Disqualified Notes .................................................................................. 43
Section 12.10. Money Held for Particular Notes ........................................................... 43
Section 12.11. Funds and Accounts ............................................................................... 43
Section 12.12. Article and Section Headings and References ........................................ 43
Section 12.13. Waiver of Personal Liability .................................................................. 44
Section 12.14. Execution in Several Counterparts ......................................................... 44
Section 12.15. Governing Law ....................................................................................... 44
EXHIBIT A—FORM OF BOND
EXHIBIT B—FORM OF INVESTOR LETTER
4815-4408-0980.2
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, is dated as of December 1, 2017, by and between the
LYNWOOD PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority
organized and existing under the constitution and laws of the State of California (the
“Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a
national banking association organized and existing under the laws of the United States of
America, with a corporate trust office in Los Angeles, California, and being qualified to accept
and administer the trusts hereby created (the “Trustee”);
W I T N E S S E T H :
WHEREAS, the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated as of December 1, 1992,
by and between the City of Lynwood (the “City”) and the Lynwood Redevelopment Agency (the
“Agency” and, with the City, the “Members”), and under the provisions of Articles 1 through 4
(commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of the California
Government Code (the “Act”), and is authorized pursuant to Article 4 of the Act to borrow
money for the purpose of financing the acquisition of bonds, notes and other obligations of, or
for the purpose of making loans to, public entities, including the Members, and to provide
financing for public capital improvements of public entities, including the Members;
WHEREAS, the City desires to finance certain streets and roads improvements eligible
for Measure R Local Return use;
WHEREAS, to that end, the Authority has determined to issue its bond anticipation notes
to be designated as the Lynwood Public Financing Authority 2018 Bond Anticipation Notes in
the principal amount of $________ (the “Notes”);
WHEREAS, in order to provide for the authentication and delivery of the Notes from
time to time, to establish and declare the terms and conditions upon which the Notes are to be
issued and secured and to secure the payment of the principal thereof and premium (if any) and
of the interest thereon, the Authority Commission has authorized the execution of this Indenture;
WHEREAS, all acts and proceedings required by law necessary to make the Notes, when
executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid,
binding and legal special obligations of the Authority, and to constitute this Indenture a valid and
binding agreement for the uses and purposes herein set forth, in accordance with its terms, have
been done and taken; and the execution and delivery of this Indenture have been in all respects
duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and premium (if any) and interest on all Notes at any time issued and
Outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the
terms and conditions upon and subject to which the Notes are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase
4815-4408-0980.2
-2-
and acceptance of the Notes by the owners thereof, and for other valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Authority does hereby covenant
and agree with the Trustee, for the benefit of the respective owners from time to time of the
Notes, as follows:
4815-4408-0980.2
-3-
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.01 shall for all purposes of this Indenture and of any Supplemental Indenture and
of any certificate, opinion, request or other documents herein mentioned, have the meanings
herein specified, to be equally applicable to both the singular and plural forms of any of the
terms herein defined.
“Act” means Articles 1 through 4 (commencing with section 6500) of Chapter 5 of
Division 7 of Title 1 of the California Government Code.
“Acquisition,” “Acquire” or “Acquired” means, with respect to the Project, the acquisition
of an ownership interest in the Project, or the financing, construction or ownership of the Project.
“Acquisition Costs” with respect to the Project mean the contract price paid or to be paid
to the contractors therefor upon acquisition, construction, refinancing, improvement, repair,
modification or delivery of any portion of the Project and related equipment, in accordance with
the purchase order or contract therefor. Acquisition Costs include the costs of site preparation
necessary for the installation of any improvements to the Project, including engineering costs.
Acquisition Costs also include costs incurred by the City, the Authority and the contractors in
connection with the acquisition, delivery and installation of the Project.
“Approved Institutional Buyer” means an institution or Person which meets at least one
of the following criteria:
1. Any of the following entities, acting for its own account or the accounts of other
Approved Institutional Buyers, that in the aggregate owns and invests on a discretionary
basis at least $100 million in securities of issuers that are not affiliated with the entity:
(A) Any insurance company as defined in Section 2(13) of the
Securities Act of 1933, as amended;
NOTE: A purchase by an insurance company for one or more of its separate
accounts, as defined by Section 2(a)(37) of the Investment Company Act of 1940 (the
“Investment Company Act”), which are neither registered under Section 8 of the
Investment Company Act nor required to be so registered, shall be deemed to be a
purchase for the account of such insurance company.
(B) Any investment company registered under the Investment
Company Act or any business development company as defined in Section
2(a)(48) of that Act;
(C) Any Small Business Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;
4815-4408-0980.2
-4-
(D) Any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees;
(E) Any employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974;
(F) Any trust fund whose trustee is a bank or trust company and whose
participants are exclusively plans of the types identified in paragraph (1)(D) or (E)
of this section, except trust funds that include as participants individual retirement
accounts or H.R. 10 plans;
(G) Any business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940; or
(H) Any bank as defined in section 3(a)(2) of the Securities Act of
1933, as amended (the “Securities Act”) or a savings and loan association or other
institution as defined in Section 3(a)(5) of the Securities Act whether acting in its
individual or fiduciary capacity.
2. Any dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934, as amended, acting for its own account or the accounts of other Approved Institutional
Buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of
securities of issuers that are not affiliated with the dealer, provided, that securities constituting
the whole or a part of an unsold allotment to or subscription by a dealer as a participant in a
public offering shall not be deemed to be owned by such dealer.
3. Any dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934, as amended, acting in a riskless principal transaction on behalf of an Approved
Institutional Buyer.
NOTE: A registered dealer may act as agent, on a non-discretionary basis, in a transaction
with an Approved Institutional Buyer without itself having to be an Approved Institutional
Buyer.
4. Any investment company registered under the Investment Company Act, acting
for its own account or for the accounts of other Approved Institutional Buyers, that is part of a
family of investment companies which own in the aggregate at least $100 million in securities of
issuers, other than issuers that are affiliated with the investment company or are part of such
family of investment companies. “Family of investment companies” means any two or more
investment companies registered under the Investment Company Act, except for a unit
investment trust whose assets consist solely of shares of one or more registered investment
companies, that have the same investment adviser (or, in the case of unit investment trusts, the
same depositor), provided, that, for purposes of this section:
(A) Each series of a series company (as defined in Rule 18f-2 under the
Investment Company Act [17 CFR 270.18f-2]) shall be deemed to be a separate
investment company; and
4815-4408-0980.2
-5-
(B) Investment companies shall be deemed to have the same adviser
(or depositor) if their advisers (or depositors) are majority-owned subsidiaries of
the same parent, or if one investment company’s adviser (or depositor) is a
majority-owned subsidiary of the other investment company’s adviser (or
depositor).
5. Any entity, all of the equity owners of which are Approved Institutional Buyers,
acting for its own account or the accounts of other Approved Institutional Buyers.
6. Any bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended,
any savings and loan association or other institution as referenced in Section 3(a)(5)(A) of the
Securities Act of 1933, as amended, or any foreign bank or savings and loan association or
equivalent institution, acting for its own account or the accounts of other Approved Institutional
Buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in
securities of issuers that are not affiliated with it and that has an audited net worth of at least $25
million as demonstrated in its latest annual financial statements, as of a date not more than 16
months preceding the date of sale under Rule 144A of the Securities Act of 1933 in the case of a
U.S. bank of savings and loan association, and not more than 18 months preceding such date of
sale for a foreign bank or savings and loan association or equivalent institution.
7. Any insurance company as defined in Section 2(13) of the Exchange Act;
8. Any investment company registered under the Investment Company act of 1940,
as amended (the “Investment Company Act”), or a business development company as defined in
Section 2(a)(48) of the Investment Company Act;
9. Any Small Business Investment Company licensed by the small Business
Administration under Section 301(c) or Section 301(d) of the Small Business Investment Act of
1958, as amended;
10. Any plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivision for the benefit or its employees, if
investment decisions are made by a plan fiduciary which is a bank, savings and loan association,
insurance company, or registered investment advisor and the plan establishes fiduciary principles
the same as or similar to those contained in Sections 404-407 of Title I of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”);
11. Any employee benefit plan within the meaning of ERISA if investment decisions
are made by a, plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
12. Any natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds $2,000,000;
13. The trustee of a trust whose securities are registered pursuant to an effect
registration statement under the Securities Act.
4815-4408-0980.2
-6-
14. Any investment adviser registered under the Investment Advisers Act.
15. Any trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person.
For purposes of this defined term, a sophisticated person shall mean a purchaser who has such
knowledge and experience in financial and business matters that such purchaser is capable of
evaluating the merits and risks of the prospective investment; provided that such investor signs
an investor letter in substantially the form set forth in Exhibit B hereto.
In determining the aggregate amount of securities owned and invested on a discretionary
basis by an entity, the following instruments and interests shall be excluded: bank deposit notes
and certificates of deposit; loan participations; repurchase agreements; securities owned but
subject to a repurchase agreement; and currency, interest rate and commodity swaps.
The aggregate value of securities owned and invested on a discretionary basis by an
entity shall be the cost of such securities, except where the entity reports its securities holdings in
its financial statements on the basis of their market value, and no current information with
respect to the cost of those securities has been published. In the latter event, the securities may
be valued at market for purposes of this section.
In determining the aggregate amount of securities owned by an entity and invested on a
discretionary basis, securities owned by subsidiaries of the entity that are consolidated with the
entity in its financial statements prepared in accordance with generally accepted accounting
principles may be included if the investments of such subsidiaries are managed under the
direction of the entity, except that, unless the entity is a reporting company under Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, securities owned by such subsidiaries
may not be included if the entity itself is a majority-owned subsidiary that would be included in
the consolidated financial statements of another enterprise.
For purposes of this section, “riskless principal transaction” means a transaction in which
a dealer buys a security from any person and makes a simultaneous offsetting sale of such
security to an Approved Institutional Buyer, including another dealer acting as riskless principal
for an Approved Institutional Buyer.
“Authority” means the Lynwood Public Financing Authority, a joint exercise of powers
authority organized and existing under the constitution and laws of the State, and any successor
thereto.
“Authorized Representative” means, with respect to the Authority, the President, Vice-
President, Treasurer, Chief Administrative Officer, Finance Director or any other person
designated as an Authorized Representative of the Authority by a Certificate of the Authority
signed by the Chief Administrative Officer of the Authority and filed with the Trustee.
“Bond Law” means section 6546 of the Act, as in effect on the Closing Date or as
thereafter amended in accordance with its terms.
“Bonds” means the obligations to be issued by the Authority to refund the Notes.
4815-4408-0980.2
-7-
“Business Day” means a day of the year on which banks in Los Angeles, California or
Salt Lake City, Utah, are not required or authorized to remain closed and on which The New
York Stock Exchange is not closed.
“Certificate,” “Statement,” “Request,” “Requisition” and “Order” of the Authority mean,
respectively, a written certificate, statement, request, requisition or order signed in the name of
the Authority by an Authorized Representative of the Authority. 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.
“Certificate of Completion” means a certificate of an Authorized Representative of the
Authority certifying that all equipment and other property constituting the Project has been
acquired, constructed, installed and accepted by the Authority, and that all Acquisition Costs for
the Project have been paid.
“City” means the City of Lynwood, a general law city and municipal corporation
organized and existing under the constitution and laws of the State, and any successor thereto.
“City Council” means the City Council of the City.
“Closing Date” means the date upon which there is an exchange of the Notes for the
proceeds representing the purchase of the Notes by the original purchasers thereof.
“Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date, or as
it may be amended to apply to obligations issued on the Closing Date, together with applicable
temporary and final regulations promulgated under the Code.
“Commission” means the Commission of the Authority.
“Costs of Issuance” means all expenses directly or indirectly payable by the Authority
and related to the authorization, issuance, sale and delivery of Notes, including but not limited to
advertising and printing costs, costs of preparation and reproduction of documents, filing and
recording fees, initial fees and charges of the Trustee, compensation, fees and expenses of the
Authority, the Trustee and its respective counsel, compensation to any financial consultants or
underwriters, legal fees and expenses, rating agency fees, bond insurance fees, fees and charges
for preparation, execution, transportation and safekeeping of Notes, and any other cost, charge or
fee in connection with the original issuance of Notes.
“Costs of Issuance Fund” means the fund so designated and established pursuant to
Section 3.03.
“Defeasance Obligations” means (a) cash, and (b) Federal Securities. Any security used
for defeasance must provide for the timely payment of principal and interest and cannot be
callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding
securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar
amount at maturity or call date).
4815-4408-0980.2
-8-
“Event of Default” means any of the events of default described in Section 8.01.
“Federal Securities” means (a) cash (fully insured by the Federal Deposit Insurance
Corporation), (b) direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America (“U.S. Treasury Obligations”), (c) obligations fully
and unconditionally guaranteed as to timely payment of principal and interest by the United
States of America, (d) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United States of America when
such obligations are backed by the full faith and credit of the United States of America, or (e)
evidences of ownership of proportionate interests in future interest and principal payments on
obligations describe above held by a bank or trust company as custodian, under which the owner
of the investment is the real party in interest and has the right to proceed directly and
individually against the obligator and the underlying government obligations are not available to
any person claiming through the custodian or to whom the custodian may be obligated.
“Indenture” means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
“Independent Accountant” means any certified public accountant or firm of such
accountants appointed and paid by the Authority, and who, or each of whom:
(a) is in fact independent and not under domination of the Authority;
(b) does not have any substantial interest, direct or indirect, with the Authority; and
(c) is not connected with the Authority as an officer or employee of the Authority,
but who may be regularly retained to make annual or other audits of the books of or reports to
the Authority.
“Interest Payment Date” means _______ 1 and _______ 1 in each year, beginning
________ 1, 2018, and continuing so long as any Notes remain Outstanding.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Note Payment Fund” means the fund by that name established pursuant to Section 5.02.
“Note Registration Books” means the books maintained by the Trustee pursuant to
Section 2.08 for the registration and transfer of ownership of the Notes.
“Notes” means the Authority’s 2018 Bond Anticipation Notes, issued and at any time
Outstanding hereunder.
“Outstanding,” when used as of any particular time with reference to Notes, means all
Notes theretofore executed, issued and delivered by the Authority under this Indenture except:
(a) Notes theretofore canceled by the Trustee or surrendered to the Trustee for
cancellation;
4815-4408-0980.2
-9-
(b) Notes paid or deemed to have been paid within the meaning of Section 11.01; and
(c) Notes in lieu of or in substitution for which other Notes shall have been executed,
issued and delivered by the Authority pursuant to this Indenture or any Supplemental Indenture.
“Owner” or “Note Owner,” when used with respect to any Note, means the person in
whose name the ownership of such Note shall be registered on the Note Registration Books.
Initially, the Owner is ZB, N.A.
“Permitted Investments” means the following:
(a) Federal Securities;
(b) Federal Housing Administration debentures;
(c) The following listed obligations government-sponsored agencies which are not
backed by the full faith and credit of the United States of America:
(i) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and
participation certificates (excluded are stripped mortgage securities which are purchased at prices
exceeding their principal amounts),
(ii) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit
Banks and Banks for Cooperatives) consolidated system-wide bonds and notes,
(iii) Federal Home Loan Banks (FHL Banks) consolidated debt obligations, and
(iv) Federal National Mortgage Association (FNMA) senior debt obligations and
mortgage-backed securities (excluded are stripped mortgage securities which are purchased at
prices exceeding their principal amounts);
(d) Unsecured certificates of deposit, time deposits, and bankers’ acceptances (having
maturities of not more than 365 days) of any bank the short-term obligations of which are rated
“A-1+” or better by S&P and “Prime-1” by Moody’s, which may include the Trustee and its
affiliates.
(e) Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation, in banks which have capital and surplus of at least $15 million.
(f) Commercial paper (having original maturities of not more than 270 days) rated
“A-1+” by S&P and “Prime-1” by Moody’s.
(g) Money market funds rated “AAm” by S&P, or better and if rated by Moody’s
rated “Aa2” or better, including funds for which the Trustee, its parent holding company, if any,
or any affiliates or subsidiaries of the Trustee provide investment advisory or other management
services.
(h) “State Obligations,” which means:
4815-4408-0980.2
-10-
(i) Direct general obligations of any state of the United States of America or any
subdivision of agency thereof to which is pledged the full faith and credit of a state the unsecured
general obligation debt of which is rated at least “A3” by Moody’s and at least “A-” by S&P, or
any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose
unsecured general obligation debt is so rated,
(ii) Direct general short-term obligations of any state agency or subdivision or agency
thereof described in (i) above and rated “A-1+” by S&P and “MIG-1” by Moody’s, and
(iii) Special Revenue Notes (as defined in the United States Bankruptcy Code) of any
state or state agency described in (ii) above and rated “AA-” or better by S&P and “Aa3” or
better by Moody’s;
(i) Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by Moody’s
meeting the following requirements:
(i) the municipal obligations are (A) not subject to redemption prior to maturity or
(B) the trustee for the municipal obligations has been given irrevocable instructions concerning
their call and redemption and the issuer of the municipal obligations has covenanted not to
redeem such municipal obligations other than as set forth in such instructions,
(ii) the municipal obligations are secured by cash or U.S. Treasury Obligations which
may be applied only to payment of the principal of, interest and premium on such municipal
obligations,
(iii) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the
escrow) has been verified by the report of independent certified public accountants to be
sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on
the municipal obligations (“Verification Report”),
(iv) the cash or U.S. Treasury Obligations serving as security for the municipal
obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations
(v) no substitution of a U.S. Treasury Obligation shall be permitted except with
another U.S. Treasury Obligation and upon delivery of a new Verification Report, and
(vi) the cash or U.S. Treasury Obligations are not available to satisfy any other claims,
including those by or against the trustee or escrow agent.
(j) Repurchase agreements with
(i) any domestic bank, or domestic branch of a foreign bank, the long term debt of
which is rated at least “A-” by S&P and “A3” by Moody’s; or
(ii) any broker-dealer with “retail customers” or a related affiliate thereof which
broker-dealer has, or the parent company (which guarantees the provider) of which has, long-
term debt rated at least “A-” by S&P and “A3” by Moody’s, which broker-dealer falls under the
jurisdiction of the Securities Investors Protection Corporation, or
4815-4408-0980.2
-11-
(iii) any other entity rated at least “A-” by S&P and “A3” Moody’s (each an “Eligible
Provider”), provided that:
(A) (1) permitted collateral shall include U.S. Treasury Obligations, or senior debt
obligations of GNMA, FNMA or FHLMC (no collateralized mortgage obligations shall be
permitted for these providers), and (2) collateral levels must be at least 102% of the total
principal when the collateral type is U.S. Treasury Obligations, 103% of the total principal when
the collateral type is GNMA’s and 104% of the total principal when the collateral type is FNMA
and FHLMC (“Eligible Collateral”),
(B) the trustee or a third party acting solely as agent therefor or for the issuer (the
“Custodian”) has possession of the collateral or the collateral has been transferred to the
Custodian in accordance with applicable state and federal laws (other than by means of entries
on the transferor’s books) and such collateral shall be marked to market,
(C) the collateral shall be marked to market on a daily basis and the provider or
Custodian shall send monthly reports to the Trustee, and the Authority setting forth the type of
collateral, the collateral percentage required for that collateral type, the market value of the
collateral on the valuation date and the name of the Custodian holding the collateral,
(D) the repurchase agreement shall state and an opinion of counsel shall be rendered
at the time such collateral is delivered that the Custodian has a perfected first priority security
interest in the collateral, any substituted collateral and all proceeds thereof,
(E) the repurchase agreement shall provide that if during its term the provider’s rating
by either Moody’s or S&P is withdrawn or suspended or falls below “A-” by S&P or “A3” by
Moody’s, as appropriate, the provider must, notify the Authority, and the Trustee within five (5)
days of receipt of such notice. Within ten (10) days of receipt of such notice, the provider shall
either: (1) provide a written guarantee, (2) post Eligible Collateral, or (3) assign the agreement to
an Eligible Provider. If the provider does not perform a remedy within ten (10) business days, the
provider shall, at the direction of the trustee repurchase all collateral and terminate the
repurchase agreement, with no penalty or premium to the issuer or the Trustee.
(k) Investment agreements: with a domestic or foreign bank or corporation the long-
term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case
of a monoline financial guaranty insurance company, claims paying ability, or the guarantor is
rated at least “AA-” by S&P and “Aa3” by Moody’s (each an “Eligible Provider”); provided
that:
(i) interest payments are to be made to the Trustee at times and in amounts as
necessary to pay debt service (or, if the investment agreement is for the construction fund,
construction draws) on the Notes,
(ii) the invested funds are available for withdrawal without penalty or premium, at
any time upon not more than seven (7) days’ prior notice; the Authority and the Trustee agree to
give or cause to be given notice in accordance with the terms of the investment agreement so as
to receive funds thereunder with no penalty or premium paid,
4815-4408-0980.2
-12-
(iii) the provider shall send monthly reports to the Trustee, and the Authority setting
forth the balance the Authority or Trustee has invested with the provider and the amounts and
dates of interest accrued and paid by the provider,
(iv) the investment agreement shall state that is an unconditional and general
obligation of the provider, and is not subordinated to any other obligation of, the provider thereof
or, if the provider is a bank, the agreement or the opinion of counsel shall state that the obligation
of the provider to make payments thereunder ranks pari passu with the obligations of the
provider to its other depositors and its other unsecured and unsubordinated creditors,
(v) the Authority and the Trustee shall receive an opinion of domestic counsel to the
provider that such investment agreement is legal, valid, binding and enforceable against the
provider in accordance with its terms,
(vi) the Authority and the Trustee shall receive an opinion of foreign counsel to the
provider (if applicable) that (A) the investment agreement has been duly authorized, executed
and delivered by the provider and constitutes the legal, valid and binding obligation of the
provider, enforceable against the provider in accordance with its terms, (B) the choice of law of
the sate set forth in the investment agreement is valid under that country’s laws and a court in
such country would uphold such choice of law, and (C) any judgment rendered by a court in the
United States would be recognized and enforceable in such country;
(vii) the investment agreement shall provide that if during its term:
(A) the provider’s rating by either S&P or Moody’s falls below “AA-” or “Aa3”, the
provider shall, at its option, within ten (10) days of receipt of publication of such downgrade,
either (1) provide a written guarantee, (2) post Eligible Collateral with the Issuer, the Trustee or a
third party acting solely as agent therefor (the “Custodian”) free and clear of any third party liens
or claims, (3) assign the agreement to an Eligible Provider, or (4) repay the principal of and
accrued but unpaid interest on the investment, and
(B) the provider’s rating by either S&P or Moody’s is withdrawn or suspended or
falls below “A-” or “A3”, the provide must, at the direction of the Authority or the Trustee,
within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid
interest on the investment, in either case with no penalty or premium to the Authority or Trustee,
(viii) in the event the provider is required to collateralize, permitted collateral shall
include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no
collateralized mortgage obligations shall be permitted for these providers) and collateral levels
must be 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103%
of the total principal when the collateral type is GNMA’s and 104% of the total principal when
the collateral type is FNMA and FHLMC (“Eligible Collateral”). In addition, the collateral shall
be marked to market on a daily basis and the provider or Custodian shall send monthly reports to
the Trustee and the Authority setting forth the type of collateral, the collateral percentage
required for that collateral type, the market value of the collateral on the valuation date and the
name of the Custodian holding the collateral;
4815-4408-0980.2
-13-
(ix) the investment agreement shall state and an opinion of counsel shall be rendered,
in the event collateral is required to be pledged by the provider under the terms of the investment
agreement, at the time such collateral is delivered, that the Custodian has a perfected first priority
security interest in the collateral, any substituted collateral and all proceeds thereof, and
(x) the investment agreement must provide that if during its term: (A) the provider
shall default in its payment obligations, the provider’s obligations under the investment
agreement shall, at the direction of the Authority or the Trustee, be accelerated and amounts
invested and accrued but unpaid interest thereon shall be repaid to the Authority or Trustee, as
appropriate, and (B) the provider shall become insolvent, not pay its debts as they become due,
be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the provider’s
obligations shall automatically be accelerated and amounts invested and accrued but unpaid
interest thereon shall be repaid to the Authority or Trustee, as appropriate.
(l) the Local Agency Investment Fund of the State, created pursuant to section
16429.1 of the California Government Code, to the extent the Trustee is authorized to register
such investment in its name.
“Project” means the streets and roads improvements eligible for Measure R Local Return
use as identified in a letter approving such projects dated _________, 2017 provided by the Los
Angeles County Metropolitan Transportation Authority.
"Project Fund” means the fund by that name established in Section 3.04 hereof.
“Rating Category” means, with respect to any Permitted Investment, one or more of the
generic categories of rating by Moody’s and/or S&P applicable to such Investment Security,
without regard to any refinement or gradation of such rating category by a plus or minus sign.
“Record Date” means the fifteenth (15th) calendar day of the month immediately
preceding an Interest Payment Date.
“Redemption Price” means, with respect to any Note (or portion thereof) the principal
amount of such Note (or portion) plus the applicable premium, if any, payable upon redemption
thereof pursuant to the provisions of such Note and this Indenture.
“Pledged Revenues” means (i) proceeds of sale of the Notes representing capitalized
interest; (ii) proceeds of sale of the Bonds; and (iii) earning derived from the investment of any
of the foregoing.
“S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial
Services LLC, or any successor thereto.
“Special Record Date” means the date established by the Trustee pursuant to Section 2.02
as a record date for the payment of defaulted interest on Notes.
“State” means the State of California.
4815-4408-0980.2
-14-
“Supplemental Indenture” means any indenture hereafter duly authorized and entered into
between the Authority and the Trustee, amendatory of or supplemental to this Indenture, but only
if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Trust Office” means the principal corporate trust office of the Trustee in Los Angeles,
California; provided, however, that the Trustee may from time to time designate other offices for
purposes of payment, transfer, exchange or registration of Notes.
“Trustee” means The Bank of New York Mellon Trust Company, N.A., appointed by the
Authority to act as trustee hereunder pursuant to Section 9.01, and its assigns or any other
corporation or association which may at any time be substituted in its place, as provided in
Section 10.01.
Section 1.02. Rules of Construction. All references in this Indenture to “Articles,”
“Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Indenture; and the words “herein,” “hereof,” “hereunder,” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
Section 1.03. Equal Security. In consideration of the acceptance of the Notes by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Notes; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Notes without preference,
priority or distinction as to security or otherwise of any of the Notes over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
4815-4408-0980.2
-15-
ARTICLE II
THE NOTES
Section 2.01. Authorization of the Notes. At any time after the adoption, execution and
delivery of this Indenture, the Authority may execute and the Trustee, upon Request of the
Authority, shall authenticate and deliver Notes in the aggregate principal amount of ____ million
________ thousand dollars ($_______).
Section 2.02. Terms of the Notes. The Notes shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as no Note
shall have more than one maturity date. The Notes shall be dated as of their date of delivery,
shall mature on ______ 1, 2017 and shall bear interest at the rate of _____%.
Interest on the Notes shall be payable on each Interest Payment Date to the person whose
name appears on the Note Registration Books as the Owner thereof as of the Record Date
immediately preceding each such Interest Payment Date, such interest to be paid on such Interest
Payment Date by check or, at the option of any Owner of at least $1,000,000 aggregate principal
amount of Notes and upon written notice received by the Trustee prior to the Record Date, by
wire transfer, at the Owner’s address as it appears on the Note Registration Books or to such
account as shall have been identified by the Owner in the notice requesting payment by wire
transfer. Interest on the Notes shall be computed on the basis of a year consisting of 360 days
and twelve 30-day months. Principal of and premium (if any) on any Note shall be paid upon
presentation and surrender thereof at the Trust Office of the Trustee. Both the principal of and
interest and premium (if any) on the Notes shall be payable in lawful money of the United States
of America.
Each Note shall bear interest from the Interest Payment Date next preceding the
authentication thereof, unless (a) it is authenticated after a Record Date and on or before the
following Interest Payment Date, in which event it shall bear interest from such Interest Payment
Date; or (b) it is authenticated on or before __________ 15, 2018, in which event it shall bear
interest from its date of delivery; provided, however, that if, as of the date of authentication of
any Note, interest thereon is in default, such Note shall bear interest from the Interest Payment
Date to which interest has previously been paid or made available for payment thereon until such
principal amounts are paid in full.
Any such interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Owner on such Record Date and shall be paid to the person in whose name the
Note 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 whereof being given to the Owners not less
than ten (10) days prior to such Special Record Date.
The Notes shall be subject to redemption as provided in Article IV.
Section 2.03. Form of Notes. The Notes, the form of Trustee’s certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the
respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein,
4815-4408-0980.2
-16-
with necessary or appropriate variations, omissions and insertions, as permitted or required by
this Indenture.
Section 2.04. Execution of Notes. The Notes shall be signed in the name and on behalf
of the Authority with the manual or facsimile signature of its President or Chief Administrative
Officer and attested by the manual or facsimile signature of its Secretary. The Notes shall then be
delivered to the Trustee for authentication by it. In case any officer who shall have signed any of
the Notes shall cease to be such officer before the Notes so signed shall have been authenticated
or delivered by the Trustee or issued by the Authority, such Notes may nevertheless be
authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as
binding upon the Authority as though the individual who signed the same had continued to be
such officer of the Authority. Also, any Note may be signed on behalf of the Authority by any
individual who on the actual date of the execution of such Note shall be the proper officer
although on the nominal date of such Note such individual shall not have been such officer of the
Authority.
Only such of the Notes as shall bear thereon a certificate of authentication in substantially
the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or obligatory for
any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall
be conclusive evidence that the Notes so authenticated have been duly authenticated and
delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.05. Transfer of Notes. Any Note may, in accordance with its terms, be
transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof,
by the person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Note for cancellation at the Principal Office at the Trustee, and by delivery by
the transferee of the purchaser certifications substantially in the form attached as Exhibit B.
Whenever any Note or Notes shall be surrendered for transfer, the City shall execute and
the Trustee shall authenticate and deliver a new Note or Notes, for like aggregate principal
amount.
No transfer of Notes shall be required to be made (a) fifteen (15) days prior to the date
established by the Trustee for selection of Notes for redemption or (b) with respect to a Note
after such Note has been selected for redemption.
Notwithstanding any other provision hereof, Notes may not be registered in the name of,
or transferred to, any person except an Approved Institutional Buyer.
Section 2.06. Exchange of Notes. Notes may be exchanged at the Trust Office of the
Trustee, for a like aggregate principal amount of Notes of other authorized denominations of the
same maturity. The Trustee shall require the Owner requesting such exchange to pay any tax or
other charge required to be paid with respect to such exchange. No Note, the notice of
redemption of which has been mailed pursuant to Section 4.03, shall be subject to exchange
pursuant to this Section 2.06. No exchange of Notes shall be required during the period
established by the Trustee for the selection of Notes for redemption.
4815-4408-0980.2
-17-
Section 2.07. Temporary Notes. The Notes may be issued initially in temporary form
exchangeable for definitive Notes when ready for delivery. Any temporary Note may be printed,
lithographed or typewritten, shall be of such denomination as may be determined by the
Authority and may contain such reference to any of the provisions of this Indenture as may be
appropriate. A temporary Note may be in the form of a single registered bond payable in
installments, each on the date, in the amount and at the rate of interest established for the Notes
maturing on such date. Every temporary Note shall be executed by the Authority and
authenticated by the Trustee upon the same conditions and in the same manner as the definitive
Notes. If the Authority issues temporary Notes, it will execute and deliver definitive Notes as
promptly thereafter as practicable, and thereupon the temporary Notes may be surrendered, for
cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall
authenticate and deliver in exchange for such temporary Notes an equal aggregate principal
amount of definitive Notes of authorized denominations of the same maturity or maturities. Until
so exchanged, the temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes authenticated and delivered hereunder.
Section 2.08. Note Registration Books. The Trustee will keep or cause to be kept at its
Trust Office sufficient books for the registration and transfer of the Notes, which shall at all
times during regular business hours be open to inspection by the Authority; and, upon
presentation for such purpose, the Trustee shall, under such reasonable regulations as it may
prescribe, register or transfer or cause to be registered or transferred, on said books, Notes as
hereinbefore provided.
Section 2.09. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become
mutilated, the Authority shall execute, and the Trustee shall thereupon authenticate and deliver, a
new Note of like tenor and authorized denomination in exchange and substitution for the Note so
mutilated, but only upon surrender to the Trustee of the Note so mutilated. Every mutilated Note
so surrendered to the Trustee shall be canceled by it and destroyed and the Trustee shall provide
evidence of such destruction to the Authority. If any Note issued hereunder shall be lost,
destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Authority
and the Trustee and, if such evidence be satisfactory to the Trustee and indemnity for the
Authority and the Trustee satisfactory to the Trustee shall be given, the Authority, at the expense
of the Note Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new
Note of like tenor in lieu of and in substitution for the Note so lost, destroyed or stolen (or if any
such Note shall have matured or shall have been called for redemption, instead of issuing a
substitute Note, the Trustee may pay the same without surrender thereof upon receipt of the
aforementioned indemnity). The Authority may require payment of a reasonable fee for each
new Note issued under this Section 2.09 and of the expenses which may be incurred by the
Authority and the Trustee in connection therewith. Any Note issued under the provisions of this
Section 2.09 in lieu of any Note alleged to be lost, destroyed or stolen shall constitute an original
contractual obligation on the part of the Authority whether or not the Note alleged to be lost,
destroyed or stolen be at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of this Indenture with all other Notes secured by this
Indenture.
4815-4408-0980.2
-18-
ARTICLE III
ISSUE OF NOTES; APPLICATION OF PROCEEDS; COSTS OF ISSUANCE FUND
Section 3.01. Issuance of Notes. At any time after the adoption, execution and delivery
of this Indenture, the Authority may execute and the Trustee, upon Request of the Authority,
shall authenticate and deliver Notes in the aggregate principal amount of _____ million ______
thousand dollars ($______).
Section 3.02. Application of Proceeds of Notes and Other Moneys.
(a) The Trustee shall apply the proceeds derived from the sale of the Notes
($_______), being the principal amount of the Notes, as follows:
(i) The Trustee shall deposit to the Costs of Issuance Fund the sum of
$______;
(ii) The Trustee shall deposit to the Note Payment Fund the sum of $______
and
(iii) The Trustee shall deposit to the Project Fund the sum of $_______.
(b) The Trustee may establish temporary funds or accounts on its records to facilitate
such transfers.
Section 3.03. Establishment and Application of Costs of Issuance Fund.
(a) 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 used and
withdrawn by the Trustee to pay Costs of Issuance upon receipt by the Trustee of a Requisition
of the Authority stating the person to whom payment is to be made, the amount to be paid, the
purpose for which the obligation was incurred and that such payment is a proper charge against
said account. Each Requisition of the Authority shall be sufficient evidence to the Trustee of the
facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts.
(b) At the end of six months from the Closing Date, or upon earlier receipt of a
Certificate of the Authority stating that amounts in the Costs of Issuance Fund are no longer
required for the payment of Costs of Issuance, the Costs of Issuance Fund shall be closed and
any amounts then remaining in said account shall be transferred to the Note Payment Fund.
Section 3.04. Establishment and Maintenance of Project Fund.
The Trustee hereby agrees to establish, maintain and hold in trust a separate fund
designated as the “Project Fund” until the completion of the Acquisition of the Project. All
money in the Project Fund shall be held by the Trustee in trust and shall be applied by the
Trustee for the payment of Acquisition Costs and the expenses incidental thereto.
4815-4408-0980.2
-19-
Except for the foregoing specified transfers, before any payment is made from the Project
Fund by the Trustee, the Authority shall file with the Trustee a signed requisition (stating the
amount to be disbursed and the party or parties being paid) approved by an Authorized
Representative of the Authority and accompanied by an invoice or statement for each such
amount. Upon receipt of each such requisition, the Trustee shall pay the amount set forth therein
as directed by the terms thereof from moneys on deposit in the Project Fund. Each Requisition
of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts.
When the Acquisition of the Project has been completed to the satisfaction of the
Authority or when the Authority determines that a portion of the Project will not be Acquired,
the Authority shall deliver a Certificate of Completion to the Trustee stating the fact and date of
the completion of such improvements, and stating that all the Acquisition Costs and the expenses
incidental thereto have been determined and paid (or that such claims and expenses have been
paid less specified claims which are subject to dispute and for which a retention in the Project
Fund is to be maintained in the full amount of such claims until such dispute is resolved). Upon
receipt of such Certificate of Completion, the Trustee shall transfer (but less the amount of such
retention) all remaining moneys in the Project Fund to the Note Payment Fund, to be credited to
the payment of the Notes as provided herein.
Section 3.05. Validity of Notes.
(a) The Authority has reviewed all proceedings heretofore taken relative to the
authorization of the Notes and has found, as a result of such review, and hereby finds and
determines that all acts, conditions and things required by law to exist, happen or be performed
precedent to and in the issuance of the Notes do exist, have happened and have been performed
in due time, form and manner as required by law, and the Authority is now authorized, pursuant
to each and every requirement of the Bond Law to issue the Notes in the form and manner
provided in this Indenture and the Notes shall be entitled to the benefit, protection and security of
the provisions of this Indenture.
(b) From and after the issuance of the Notes, the findings and determinations of the
Authority respecting the Notes shall be conclusive evidence of the existence of the facts so found
and determined in any action or proceeding in any court in which the validity of the Notes is at
issue, and no bona fide purchaser of any of the Notes shall be required to see to the existence of
any fact or to the performance of any condition or to the taking of any proceeding required prior
to such issuance or to the application of the proceeds of sale of the Notes. The recital contained
in the Notes that the same are issued pursuant to the Bond Law and this Indenture shall be
conclusive evidence of their validity and of the regularity of their issuance and all Notes shall be
incontestable from and after their issuance. The Notes shall be deemed to be issued, within the
meaning of this Indenture, whenever the definitive Notes (or any temporary Notes exchangeable
therefor) have been delivered to the purchaser thereof and the proceeds of sale thereof received.
4815-4408-0980.2
-20-
ARTICLE IV
REDEMPTION OF NOTES
Section 4.01. Terms of Redemption. The Notes are subject to redemption prior to its
maturity from any available funds, at the option of the Authority, in whole on any date, at a
redemption price equal to the principal amount of Notes called for redemption, without premium,
together with accrued interest to the date fixed for redemption.
When Notes are to be redeemed at the option of the Authority as set forth in this Section
4.01, the Authority shall give written notice to the Trustee of the exercise of such option at least
forty-five (45) days prior to the proposed redemption date (unless a shorter time shall be
acceptable to the Trustee). Such notice shall state the proposed redemption date, the principal
amount of Notes to be redeemed and the maturity or maturities from which such redemption
shall be made.
Section 4.02. Notice of Redemption.
(a) Unless waived by any Owner of Notes to be redeemed, notice of any such
redemption shall be given by the Trustee on behalf of the Authority by mailing a copy of a
redemption notice by first class mail, postage prepaid, at least 30 days and not more than 60 days
prior to the date fixed for redemption to the Owner of the Note or Notes to be redeemed at the
address shown on the Note Registration Books, to the Securities Depositories and the
Information Services.
All notices of redemption shall be dated and shall state: (i) the redemption date, (ii) the
redemption price, (iii) if less than all Outstanding Notes are to be redeemed, the identification
(and, in the case of partial redemption, the respective principal amounts) of the Notes to be
redeemed, (iv) that on the redemption date the redemption price will become due and payable
upon each such Note or portion thereof called for redemption, and that interest thereon shall
cease to accrue from and after said date, and (v) the place where such Notes are to be
surrendered for payment of the redemption price, which place of payment shall be the Trust
Office of the Trustee.
Notice of redemption having been given as aforesaid, the Notes or portions of Notes so to
be redeemed shall, on the redemption date, become due and payable at the redemption price
therein specified, and from and after such date (unless the Authority shall default in the payment
of the redemption price) interest with respect to such Notes or portions of Notes shall cease to
accrue and be payable. Upon surrender of such Notes for redemption in accordance with said
notice, such Notes shall be paid by the Trustee at the redemption price. Installments of interest
due on or prior to the redemption date shall be payable as herein provided for payment of
interest. Upon surrender for any partial redemption of any Note, there shall be prepared for the
Owner a new Note or Notes of the same maturity in the amount of the unredeemed principal. All
Notes which have been redeemed shall be canceled and destroyed by the Trustee and shall not be
reissued.
4815-4408-0980.2
-21-
(b) Notice of redemption of Notes shall be given by the Trustee, at the expense of the
Authority, for and on behalf of the Authority.
(c) Notwithstanding the foregoing, such notice may state that such redemption shall
be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of
moneys sufficient to pay the principal of, premium, if any, and interest on such Notes to be
redeemed and that, if such moneys shall not have been so received, said notice shall be of no
force and effect and the Trustee shall not be required to redeem such Notes. In the event that
such notice of optional redemption contains such a condition and such moneys are not so
received, the redemption shall not be made, and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice of redemption was given, that such
moneys were not so received.
Section 4.03. Effect of Redemption
Notice of redemption having been duly given as aforesaid, and moneys for payment of
the Redemption Price of, together with interest accrued to the redemption date on, the Notes (or
portions thereof) so called for redemption being held by the Trustee, on the redemption date
designated in such notice, the Notes (or portions thereof) so called for redemption shall become
due and payable at the Redemption Price specified in such notice plus interest accrued thereon to
the redemption date, interest on the Notes so called for redemption shall cease to accrue, said
Notes (or portions thereof) shall cease to be entitled to any benefit or security under this
Indenture, and the Owners of said Notes shall have no rights in respect thereof except to receive
payment of said Redemption Price and accrued interest.
All Notes redeemed pursuant to the provisions of this Article IV shall be canceled upon
surrender thereof and destroyed with a certificate of destruction delivered to or upon the Order of
the Authority.
4815-4408-0980.2
-22-
ARTICLE V
PLEDGED REVENUES
Section 5.01. Pledge of Pledged Revenues. The principal amount of the Notes, together
with the interest thereon, shall be payable from Pledged Revenues. In addition, the Notes shall
be secured by a pledge of all of the moneys in all funds and accounts held by the Trustee
hereunder, including all amounts derived from the investment of such moneys. Such pledge shall
constitute a lien on the Pledged Revenues and such other moneys for the payment of the
principal of and interest and premium (if any) on the Notes in accordance with the terms hereof.
So long as any of the Notes are Outstanding, the Pledged Revenues and such moneys shall not be
used for any other purpose, except as set forth in this Section 5.01.
In consideration of the acceptance of the Notes by those who shall hold the same from
time to time, this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Notes and the covenants and agreements
herein set forth to be performed by or on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Notes without preference,
priority or distinction as to security or otherwise of any of the Notes over any of the others by
reason of the number or date thereof or the time of sale, execution and delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
The Authority hereby represents and warrants that it has not heretofore made a pledge of,
granted a lien on or security interest in, or made an assignment or sale of the Pledged Revenues
that ranks on a parity with or prior to the pledge granted hereunder, except to secure the
obligations disclosed herein that will be outstanding upon issuance of the Notes. The Authority
also hereby represents and warrants that it has not described the Pledged Revenues in a Uniform
Commercial Code financing statement that will remain effective when the Notes are issued,
except in connection with the foregoing pledges, assignments, liens, and security interests. The
Authority shall not hereafter make or suffer to exist any pledge or assignment of, lien on, or
security interest in the Pledged Revenues that ranks prior to or on a parity with the pledge
granted hereunder, or file any financing statement describing any such pledge, assignment, lien,
or security interest, except as expressly permitted under this Indenture.
The Authority will, to the extent required by law, cause all UCC financing statements or
other instruments, to be kept, recorded and filed in such manner and in such places as may be
required by law in order to create, perfect, preserve and protect fully the security of the Owners
in the Pledged Revenues and any other collateral and the rights of the Trustee. The Authority
covenants that it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered such further acts, instruments and transfers as may be required for
the better securing, assuring, continuing, transferring, conveying, pledging, assigning and
confirming unto the Owners or the Trustee, the Pledged Revenues and any other collateral
pledged to the payment of the principal of, premium, if any, and interest on the Notes. Except to
the extent it is exempt therefrom, the Authority will pay or cause to be paid all filing fees
incident to such filing and all expenses incident to the preparation, execution and
acknowledgment of such instruments of further assurance, and all federal or State fees and other
4815-4408-0980.2
-23-
similar fees, duties, imposts, assessments and charges arising out of or in connection with the
execution and delivery of such instruments of further assurance.
Section 5.02. Application of Note Payment Fund. The Trustee shall establish and
maintain a Note Payment Fund (which the Trustee shall establish, maintain and hold in trust).
Pledged Revenues shall be deposited by the Trustee in the Note Payment Fund and shall be used
and withdrawn by the Trustee solely for the purpose of paying the principal of and interest on the
Notes as the same shall be come due and payable.
Section 5.03. Investment of Moneys in Funds and Accounts. All moneys in any of the
funds and accounts established pursuant to this Indenture shall, upon Request of the Authority
provided at least two Business Days prior to the date of investment, be invested by the Trustee,
but solely in Permitted Investments. In the absence of such Request of the Authority, the Trustee
shall invest available moneys in investments described in paragraph (h) of the definition of
Permitted Investments. In the absence of any such directions from the Authority, the Trustee
shall invest any such moneys in the money market fund set forth in the letter of authorization and
direction executed by the Authority and delivered to the Trustee. If no specific money market
fund had been specified by the Authority, the Trustee shall make a request to the Authority for
investment directions and, if no investment directions are provided within 10 days, such amount
shall be held in cash, uninvested during such 10-day period and thereafter, until specific
investment directions are provided by the Authority to the Trustee. All Permitted Investments
shall be acquired subject to the limitations as to maturities hereinafter set forth in this Section
5.07 and such additional limitations or requirements consistent with the foregoing as may be
established by Request of the Authority.
All interest, profits and other income received from the investment of moneys in any
other fund or account established pursuant to this Indenture shall be deposited when received in
the Note 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 or account for the credit of which such Permitted Investment was acquired.
The Trustee may commingle any of the funds or accounts established pursuant to this
Indenture into a separate fund or funds for investment purposes only, provided that all funds or
accounts held by the Trustee hereunder shall be accounted for separately as required by this
Indenture. The Trustee may act as principal or agent in the making or disposing of any
investment. The Trustee may sell, or present for redemption, any Permitted Investments so
purchased whenever it shall be necessary to provide moneys to meet any required payment,
transfer, withdrawal or disbursement from the fund or account to which such Permitted
Investment is credited, and, subject to the provisions of Section 9.03, the Trustee shall not be
liable or responsible for any loss resulting from such investment.
The Authority acknowledges that, to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grants the Authority the right to receive brokerage
confirmations of security transactions as they occur, the Authority specifically waives receipt of
such confirmations to the extent permitted by law. The Trustee will furnish the Authority
periodic cash transaction statements which include detail for all investment transactions made by
4815-4408-0980.2
-24-
the Trustee hereunder. The Trustee may make any investments hereunder through its own bond
or investment department or trust investment department, or those of its parent or any affiliate.
The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection
with any investments made by the Trustee hereunder.
4815-4408-0980.2
-25-
ARTICLE VI
COVENANTS OF THE AUTHORITY; SPECIAL TAX COVENANTS
Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal or Redemption Price and interest to become due in respect of all the Notes, in strict
conformity with the terms of the Notes and of this Indenture, according to the true intent and
meaning thereof, but only out of Pledged Revenues and other assets pledged for such payment as
provided in this Indenture.
Section 6.02. Extension of Payment of Notes. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of the Notes or the time of payment of
any of the claims for interest by the purchase or funding of such Notes or claims for interest or
by any other arrangement and in case the maturity of the Notes or the time of payment of any
such claims for interest shall be extended, such Notes 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 Notes then Outstanding and of all claims for interest
thereon which shall not have been so extended. Nothing in this Section 6.02 shall be deemed to
limit the right of the Authority to issue Notes for the purpose of refunding any Outstanding
Notes, and such issuance shall not be deemed to constitute an extension of maturity of Notes.
Section 6.03. Discharge of Claims. The Authority covenants that in order to fully
preserve and protect the priority and security of the Notes the Authority shall pay from the
Pledged Revenues and discharge all lawful claims for labor, materials and supplies furnished for
or in connection with the Enterprise which, if unpaid, may become a lien or charge upon the
Pledged Revenues prior or superior to the lien of the Notes and impair the security of the Notes.
The Authority shall also pay from the Pledged Revenues all taxes and assessments or other
governmental charges lawfully levied or assessed upon or in respect of the Enterprise or upon
any part thereof or upon any of the Pledged Revenues therefrom.
Section 6.04. Refunding. The Authority covenants and agrees to issue bonds or other
obligations at such time and in such amounts as will be sufficient to refund all of the Notes at
maturity. In furtherance of this covenant, the Authority and the City agree to enter into an
installment sale agreement pursuant to which the City will purchase the Improvements from the
Authority through installment payments sufficient to meet all payments of principal and interest
on the revenue bonds as the same become due.
Section 6.05. Against Encumbrance. The Authority further covenants that the Pledged
Revenues or any other funds pledged or otherwise made available to secure payment of the
principal of and interest on the Outstanding Notes shall not be mortgaged, encumbered, sold,
leased, pledged, any charge placed thereon, or disposed of or used except as authorized by the
terms of this Indenture.
Section 6.06. Limitations on Future Obligations Secured by Pledged Revenues. In order
to protect further the availability of the Pledged Revenues and the security for the Notes, the
4815-4408-0980.2
-26-
Authority covenants that no additional bonds or other indebtedness will be issued or incurred that
are payable out of the Pledged Revenues in whole or in part.
Section 6.07. Further Assurances. The Authority will adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably necessary
or proper to carry out the intention or to facilitate the performance of this Indenture, and for the
better assuring and confirming unto the Owners of the Notes of the rights and benefits provided
in this Indenture.
Section 6.08. Waiver of Laws. The Authority shall not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law
now or at any time hereafter in force that may affect the covenants and agreements contained in
this Indenture or in the Notes, and all benefit or advantage of any such law or laws is hereby
expressly waived by the Authority to the extent permitted by law.
Section 6.09. Private Activity Bond Limitation. The Authority shall assure that the
proceeds of the Notes are not so used as to cause the Notes to satisfy the private business tests of
Section 141(b) of the Code.
Section 6.10. Private Loan Financing Limitation. The Authority shall assure that the
proceeds of the Notes are not so used as to cause the Notes to satisfy the private loan financing
test of Section 141(c) of the Code.
Section 6.11. Federal Guarantee Prohibition. The Authority shall not take any action or
permit or suffer any action to be taken if the result of the same would be to cause any of the
Notes to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
Section 6.12. Rebate Requirement. The Authority shall take any and all actions
necessary to assure compliance with Section 148(f) of the Code, relating to the rebate of excess
investment earnings, if any, to the federal government.
Section 6.13. No Arbitrage. The Authority shall not take, or permit or suffer to be taken
by the Trustee or otherwise, any action with respect to the proceeds of the Notes which, if such
action had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on the Closing Date would have caused the Notes, to be “arbitrage bonds”
within the meaning of Section 148 of the Code.
Section 6.14. Maintenance of Tax-Exemption. The Authority shall take all actions
necessary to assure the exclusion of interest on the Notes from the gross income of the Owners
of the Notes to the same extent as such interest is permitted to be excluded from gross income
under the Code as in effect on the Closing Date.
4815-4408-0980.2
-27-
ARTICLE VII
RESERVED
4815-4408-0980.2
-28-
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS
Section 8.01. Events of Default. The following events shall be Events of Default:
(a) default in the due and punctual payment of the principal of any Note when and as
the same shall become due and payable, whether at maturity as therein expressed, by proceedings
for redemption, by declaration or otherwise, in the amounts and at the times provided therefor;
(b) default in the due and punctual payment of any installment of interest on any Note
when and as such interest installment shall become due and payable;
(c) default by the Authority in the observance of any of the covenants, agreements or
conditions on its part in this Indenture or in the Notes contained (other than as referred to in
subsections (a) or (b) of this Section 8.01), if such default shall have continued for a period of
thirty (30) days after written notice thereof, specifying such default and requiring the same to be
remedied, shall have been given to the Authority by the Trustee, or to the Authority and the
Trustee by the Owners of not less than twenty-five percent (25%) in aggregate principal amount
of the Notes at the time Outstanding; or
(d) the Authority’s filing a petition in voluntary bankruptcy, for the composition of its
affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency
law, or making an assignment for the benefit of creditors, or admitting in writing to its
insolvency or inability to pay debts as they mature, or consenting in writing to the appointment
of a trustee or receiver for itself or for the whole or any substantial part of the Enterprise.
Section 8.02. Acceleration of Maturities. If an Event of Default shall occur, then, and in
each and every such case during the continuance of such Event of Default, the Trustee or the
Owners of not less than a majority in aggregate principal amount of the Notes at the time
Outstanding shall be entitled, upon notice in writing to the Authority, to declare the principal of
all of the Notes 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 Notes contained to the contrary notwithstanding.
Any such declaration, however, is subject to the condition that if, at any time after such
declaration and before any judgment or decree for the payment of the moneys due shall have
been obtained or entered, the Authority shall deposit with the Trustee a sum sufficient to pay all
the principal or Redemption Price of and installments of interest on the Notes payment of which
is overdue, with interest on such overdue principal at the rate borne by the respective Notes, and
the reasonable charges and 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 Notes due and payable
solely by reason of such declaration) shall have been made good or cured to the satisfaction of
the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor,
then, and in every such case, the Owners of not less than a majority in aggregate principal
amount of the Notes then Outstanding, by written notice to the Authority and the Trustee, or the
Trustee if such declaration was made by the Trustee, may, on behalf of the Owners of all of the
4815-4408-0980.2
-29-
Notes, 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 consequent thereon.
Section 8.03. Application of Pledged Revenues and Other Funds After Default. If an
Event of Default shall occur and be continuing, all Pledged Revenues and any other funds then
held or thereafter received by the Trustee under any of the provisions of this Indenture (subject to
Section 13.10) shall be applied by the Trustee as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect
the interests of the Owners of the Notes and payment of reasonable charges and expenses of the
Trustee (including, but not limited to, reasonable fees and disbursements of its counsel) incurred
in and about the performance of its powers and duties under this Indenture;
(b) To the payment of the principal or Redemption Price of and interest then due on
the Notes (upon presentation of the Notes 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 Notes 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 or
Redemption Price of any Notes which shall have become due, whether at maturity or by
call for redemption, in the order of their due dates, with interest on the overdue principal
at the rate borne by the respective Notes, and, if the amount available shall not be
sufficient to pay in full all the Notes due on any date, together with such interest, then to
the payment thereof ratably, according to the amounts of principal or Redemption Price
due on such date to the persons entitled thereto, without any discrimination or preference.
(ii) If the principal of all of the Notes shall have become or have been
declared due and payable, to the payment of the principal and interest then due and
unpaid upon the Notes, with interest on the overdue principal at the rate borne by the
respective Notes, 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 over interest, or of interest over principal, or of any installment of
interest over any other installment of interest, or of any Note over any other Note,
according to the amounts due respectively for principal and interest, to the persons
entitled thereto without any discrimination or preference.
Section 8.04. Trustee to Represent Owners. The Trustee is hereby irrevocably appointed
(and the successive respective Owners of the Notes, by taking and holding the same, shall be
4815-4408-0980.2
-30-
conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-
fact of the Owners of the Notes for the purpose of exercising and prosecuting on their behalf
such rights and remedies as may be available to such Owners under the provisions of the Notes,
this Indenture, the Bond Law 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 Owners, the Trustee in its discretion may, and shall, upon the written request of the
Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Notes
then Outstanding, (or, if more than one such request is received, the written request executed by
the Owners of the greatest percentage of Notes then Outstanding in excess of twenty-five percent
(25%)), and upon being indemnified to its satisfaction therefor, shall, proceed to protect or
enforce its rights or the rights of such Owners 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 Owners under this
Indenture, the Bond Law 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 Pledged Revenues
and other assets pledged under this Indenture, pending such proceedings. All rights of action
under this Indenture or the Notes or otherwise may be prosecuted and enforced by the Trustee
without the possession of any of the Notes 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 Owners of such Notes, subject to the
provisions of this Indenture (including Section 6.02).
Section 8.05. Owners’ Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Notes
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 Owners not parties to such direction or would expose the Trustee to
liability for which it has not been indemnified to its satisfaction.
Section 8.06. Limitation on Owners’ Right to Sue. No Owner of any Note 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 Bond Law or any other applicable
law with respect to such Note, unless (1) such Owner shall have given to the Trustee written
notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty-five per
cent (25%) in aggregate principal amount of the Notes then Outstanding (or, if more than one
such request is received, the written request executed by the Owners of the greatest percentage of
Notes then Outstanding in excess of twenty-five percent (25%)) shall have made written request
upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or
proceeding in its own name; (3) such Owner or said Owners 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
4815-4408-0980.2
-31-
period of sixty (60) days after such written request shall have been received by, and said tender
of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Notes of any
remedy hereunder or under law; it being understood and intended that no one or more Owners of
Notes 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 Owners of Notes, or to enforce
any right under this Indenture, the Bond Law, the Government Code of the State or other
applicable law with respect to the Notes, 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 Owners of the
Outstanding Notes, subject to the provisions of this Indenture (including Section 6.02).
Section 8.07. Absolute Obligation of Authority. Nothing in Section 8.06 or in any other
provision of this Indenture, or in the Notes, contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal or Redemption Price of and
interest on the Notes to the respective Owners of the Notes at their respective dates of maturity,
or upon call for redemption, as herein provided, but only out of the Pledged Revenues and other
assets herein pledged therefor, or affect or impair the right of such Owners, which is also
absolute and unconditional, to enforce such payment by virtue of the contract embodied in the
Notes.
Section 8.08. Termination of Proceedings. In case any proceedings taken by the Trustee
or any one or more Owners 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 Owners,
then in every such case the Authority, the Trustee and the Owners, 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 Trustee and the
Owners shall continue as though no such proceedings had been taken.
Section 8.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or to the Owners of the Notes 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 8.10. No Waiver of Default. No delay or omission of the Trustee or of any
Owner of the Notes 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 Owners of the Notes may be exercised from time to time and as often as may be deemed
expedient.
4815-4408-0980.2
-32-
ARTICLE IX
THE TRUSTEE
Section 9.01. Appointment of Trustee; Duties, Immunities and Liabilities of Trustee.
(a) The Bank of New York Mellon Trust Company, N.A. is hereby appointed to serve
as Trustee under this Indenture. By execution hereof, the Trustee accepts such appointment.
(b) The Trustee shall, prior to an Event of Default, and after the curing or waiver of
all Events of Default which may have occurred, perform such duties and only such duties as are
specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of
Default (which has not been cured or waived), exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(c) The Authority may remove the Trustee at any time unless an Event of Default
shall have occurred and then be continuing, and shall remove the Trustee if at any time requested
to do so by an instrument or concurrent instruments in writing signed by the Owners of not less
than a majority in aggregate principal amount of the Notes then Outstanding (or their attorneys
duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance
with subsection (f) of this Section 9.01, or shall become incapable of acting, or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any
public officer shall take control or charge of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of
such removal to the Trustee, and thereupon shall appoint a successor Trustee by an instrument in
writing.
(d) The Trustee may at any time resign by giving ninety days prior written notice of
such resignation to the Authority and by giving the Owners notice of such resignation by mail to
the addresses shown on the Note Registration Books. Upon receiving such notice of resignation,
the Authority shall promptly appoint a successor Trustee by an instrument in writing.
(e) Any removal or resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. If no successor
Trustee shall have been appointed and have accepted appointment within forty-five (45) days of
giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any
Owner (on behalf of himself and all other Owners) may petition any court of competent
jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such
notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee
appointed under this Indenture, shall signify its acceptance of such appointment by executing and
delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and
thereupon such successor Trustee, without any further act, deed or conveyance, shall become
vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of
such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless
at the Request of the Authority or the request of the successor Trustee, such predecessor Trustee
4815-4408-0980.2
-33-
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 the Owners at the addresses shown on the registration books maintained by the
Trustee. 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.
(f) Any Trustee appointed under the provisions of this Section 9.01 in succession to
the Trustee shall be a trust company, national banking association or bank having the powers of a
trust company having a corporate trust office in the State, 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, national banking association 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, national banking association 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 (f), the Trustee shall resign immediately in the manner and with the
effect specified in this Section 9.01.
Section 9.02. Merger or Consolidation. Any company or association into which the
Trustee may be merged or converted or with which it may be consolidated or any company or
association resulting from any merger, conversion or consolidation to which it shall be a party or
any company or association to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such company or association shall be eligible under
subsection (f) of Section 9.01, shall be the successor to such Trustee, as the case may be, without
the execution or filing of any paper or any further act, anything herein to the contrary
notwithstanding.
Section 9.03. Liability of Trustee.
(a) The recitals of facts herein and in the Notes contained shall be taken as statements
of the Authority, and the Trustee assumes no responsibility for the correctness of the same, or
makes any representations as to the validity or sufficiency of this Indenture or of the Notes, or
shall incur any responsibility in respect thereof, other than in connection with the duties or
obligations herein or in the Notes assigned to or imposed upon it. The Trustee shall, however, be
responsible for its representations contained in its certificate of authentication on the Notes. 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 Notes with the
4815-4408-0980.2
-34-
same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as
depository for and permit any of its officers or directors to act as a member of, or in any other
capacity with respect to, any committee formed to protect the rights of Owners, whether or not
such committee shall represent the Owners of a majority in principal amount of the Notes then
Outstanding.
(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless 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 Owners of not less than twenty-
five percent (25%) in aggregate principal amount of the Notes 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 Owners, pursuant to
the provisions of this Indenture, unless such Owners shall have offered to the Trustee reasonable
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.
(f) No provision in this Indenture shall require the Trustee to risk or expend its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
if repayment of such funds or adequate indemnity against such risk or liability is not assured to
it. The Trustee shall provide the Authority with seven days’ notice prior to making any advance
of its own funds hereunder, and, if the Authority does not provide moneys in the amount needed,
the Trustee shall be entitled to interest on the amounts advanced at a rate equal to the then 3-
month certificates of deposit rate (by reference to the Wall Street Journal); provided that no such
prior notice shall need be given and such interest on amounts advanced shall accrue from the
date of any such advance following the occurrence of an Event of Default hereunder.
(g) The Trustee makes no representation, express or implied as to the title, value,
design, compliance with specifications or legal requirements, quality, durability, operation,
condition, merchantability or fitness for any particular purpose or fitness for the use
contemplated by the Authority of the Enterprise.
(h) The Trustee shall not be deemed to have knowledge of an Event of Default
hereunder unless and until it shall have actual knowledge thereof.
(i) The Trustee shall have no responsibility with respect to any information,
statement or recital in any official statement, offering memorandum or other disclosure material
prepared or distributed with respect to the Notes.
4815-4408-0980.2
-35-
(j) The immunities extended to the Trustee also extend to its directors, officers,
employees and agents.
(k) The permissive right of the Trustee to do things enumerated in this Indenture shall
not be construed as a duty.
(l) The Trustee may execute any of the trusts or powers hereof and perform any of its
duties through attorneys, agents and receivers and shall not be answerable for the same if
appointed by it with reasonable care.
(m) The Trustee shall have the right to accept and act upon instructions, including
funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using
Electronic Means (“Electronic Means” shall mean the following communications methods: e-
mail, facsimile transmission, secure electronic transmission containing applicable authorization
codes, passwords and/or authentication keys issued by the Trustee, or another method or system
specified by the Trustee as available for use in connection with its services hereunder); provided,
however, that the Authority shall provide to the Trustee an incumbency certificate listing officers
with the authority to provide such Instructions (“Authorized Officers”) and containing specimen
signatures of such Authorized Officers, which incumbency certificate shall be amended by the
Authority whenever a person is to be added or deleted from the listing. If the Authority elects to
give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act
upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed
controlling. The Authority understands and agrees that the Trustee cannot determine the identity
of the actual sender of such Instructions and that the Trustee shall conclusively presume that
directions that purport to have been sent by an Authorized Officer listed on the incumbency
certificate provided to the Trustee have been sent by such Authorized Officer. The Authority
shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the
Trustee and that the Authority and all Authorized Officers are solely responsible to safeguard the
use and confidentiality of applicable user and authorization codes, passwords and/or
authentication keys upon receipt by the Authority. The Trustee shall not be liable for any losses,
costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance
with such Instructions notwithstanding such directions conflict or are inconsistent with a
subsequent written instruction. The Authority agrees: (i) to assume all risks arising out of the
use of Electronic Means to submit Instructions to the Trustee, including without limitation the
risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by
third parties; (ii) that it is fully informed of the protections and risks associated with the various
methods of transmitting Instructions to the Trustee and that there may be more secure methods of
transmitting Instructions than the method(s) selected by the Authority; (iii) that the security
procedures (if any) to be followed in connection with its transmission of Instructions provide to
it a commercially reasonable degree of protection in light of its particular needs and
circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or
unauthorized use of the security procedures.
(n) The Trustee shall not be liable to the parties hereto or deemed in breach or default
hereunder if and to the extent its performance hereunder is prevented by reason of force majeure.
The term “force majeure” means an occurrence that is beyond the control of the Trustee and
could not have been avoided by exercising due care. Force majeure shall include, but not be
4815-4408-0980.2
-36-
limited to, acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other
similar occurrences.
(o) The Trustee shall not be responsible for or accountable to anyone for the
subsequent use or application of any moneys which shall be released or withdrawn in accordance
with the provisions hereof.
Section 9.04. Right of Trustee to Rely on Documents. The Trustee shall be protected in
acting upon any notice, resolution, request, requisition, consent, order, certificate, report,
opinion, note or other paper or document believed by it to be genuine and to have been signed or
presented by the 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.
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 to it may seem reasonable.
Section 9.05. 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 during regular business hours with reasonable prior notice to the inspection of the
Authority and any Owner, and their agents and representatives duly authorized in writing, at the
Trust Office of the Trustee and under reasonable conditions.
Section 9.06. Compensation of Trustee. The Authority covenants to pay to the Trustee
from time to time, from available moneys of the Authority, and the Trustee shall be entitled to,
reasonable compensation for all services rendered by it in the exercise and performance of any of
the powers and duties hereunder of the Trustee, and the Authority will pay or reimburse the
Trustee upon its request, from available moneys of the Authority, for all expenses, disbursements
and advances incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense, disbursement or
advance as may arise from its negligence or bad faith.
Section 9.07. Indemnification. The Authority covenants to indemnify the Trustee and to
hold it harmless against any loss, liability, expenses or advance, including fees and expenses of
counsel and other experts, incurred or made without negligence or bad faith on the part of the
Trustee, in the exercise and performance of any of the powers and duties hereunder by the
Trustee, including the costs and expenses of defending itself against any claim of liability arising
under this Indenture. Such indemnification shall survive the termination or discharge of this
Indenture and the resignation or removal of the Trustee.
4815-4408-0980.2
-37-
ARTICLE X
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 10.01. Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority and of the Owners
of the Notes and of the Trustee may be modified or amended from time to time and at any time
by a Supplemental Indenture, which the Authority and the Trustee may execute when the written
consent of the Owners of a majority in aggregate principal amount of the Notes then Outstanding
shall have been filed with the Trustee; provided that if such modification or amendment will, by
its terms, not take effect so long as any Notes of any particular maturity remain Outstanding, the
consent of the Owners of such Notes shall not be required and such Notes shall not be deemed to
be Outstanding for the purpose of any calculation of Notes Outstanding under this Section 10.01.
No such modification or amendment shall (1) extend the fixed maturity of any Note, or reduce
the amount of principal thereof, provided in this Indenture for the payment of any Note, or
reduce the rate of interest thereon, or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the Owner of each
Note so affected, or (2) reduce the aforesaid percentage of Notes 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 Pledged Revenues and other assets pledged under this Indenture prior to or on a parity
with the lien created by this Indenture, or deprive the Owners of the Notes of the lien created by
this Indenture on such Pledged Revenues and other assets (except as expressly provided in this
Indenture), or terminate the insurance of the Notes, without the consent of the Owners of all of
the Notes then Outstanding. It shall not be necessary for the consent of the Owners 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 notice,
setting forth in general terms the substance of such Supplemental Indenture to the Owners at the
addresses shown on the Note Registration Books. 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 Owners of the Notes may also be modified or amended from time to time and at any time
by a Supplemental Indenture, which the Authority and the Trustee may execute without the
consent of any Owners, but only to the extent permitted by law and only for any one or more of
the following purposes:
(i) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed, to pledge or assign
additional security for the Notes (or any portion thereof), or to surrender any right or
power herein reserved to or conferred upon the Authority, provided, that no such
covenant, agreement, pledge, assignment or surrender shall materially adversely affect
the interests of the Owners of the Notes;
4815-4408-0980.2
-38-
(ii) 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 and not inconsistent with this Indenture, and
which shall not materially adversely affect the interests of the Owners of the Notes; or
(iii) to make such additions, deletions or modifications as may be necessary to
assure exclusion from gross income for purposes of federal income taxation of interest on
the Notes.
(c) No such Supplemental Indenture shall modify any of the rights or obligations of
the Trustee without its prior written consent thereto; nor shall the Trustee be required to consent
to any such Supplemental Indenture which affects its rights or obligations hereunder.
(d) In executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an
opinion of counsel stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture and complies with the terms hereof.
Section 10.02. Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article X, 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 Owners of Notes
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 10.03. Endorsement of Notes; Preparation of New Notes. Notes delivered after
any Supplemental Indenture becomes effective pursuant to this Article X may, and if the Trustee
so determines shall, bear a notation by endorsement or otherwise in form approved by the
Authority and the Trustee as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand of the Owner of any Note Outstanding
at the time of such execution and presentation of his Note for the purpose at the Trust Office of
the Trustee or at such additional offices as the Trustee may select and designate for that purpose,
a suitable notation shall be made on such Note. If the Supplemental Indenture shall so provide,
new Notes so modified as to conform, in the opinion of the Authority and the Trustee, to any
modification or amendment contained in such Supplemental Indenture, shall be prepared and
executed by the Authority and authenticated by the Trustee, and upon demand of the Owners of
any Notes then Outstanding shall be exchanged at the Trust Office of the Trustee, without cost to
any Owner, for Notes then Outstanding, upon surrender for cancellation of such Notes, in equal
aggregate principal amounts of the same maturity.
Section 10.04. Amendment of Particular Notes. The provisions of this Article X shall not
prevent any Owner from accepting any amendment as to the particular Notes held by him,
provided that due notation thereof is made on such Notes.
4815-4408-0980.2
-39-
ARTICLE XI
DEFEASANCE
Section 11.01. Discharge of Indenture. Any or all of the Notes 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 the principal or Redemption Price of and interest
on such Notes Outstanding, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money or Permitted
Investments described in paragraph (a) of the definition thereof (“Defeasance Obligations”) in
the necessary amount (as provided in Section 11.03) to pay or redeem such Notes Outstanding;
or
(c) by delivering to the Trustee, for cancellation by it, such Notes Outstanding.
If the Authority shall pay all Notes Outstanding and 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 Notes shall not have been surrendered for payment, this Indenture and
the pledge of Pledged 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
11.02. 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 to the Authority all moneys or securities or other property held
by it pursuant to this Indenture which are not required for the payment or redemption of Notes
not theretofore surrendered for such payment or redemption.
Section 11.02. Discharge of Liability on Notes. Upon the deposit with the Trustee, in
trust, at or before maturity, of money or securities in the necessary amount (as provided in
Section 11.10) to pay or redeem any Outstanding Note (whether upon or prior to its maturity or
the redemption date of such Note), provided that, if such Note is to be redeemed prior to
maturity, 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, then all liability of
the Authority in respect of such Note shall cease, terminate and be completely discharged, except
only that thereafter the Owner thereof shall be entitled to payment of the principal of and interest
to the maturity or redemption date on such Note 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 such payment, provided further, however, that the provisions of Section 11.04 shall
apply in all events.
4815-4408-0980.2
-40-
The Authority may at any time surrender to the Trustee for cancellation by it any Notes
previously issued and delivered which the Authority may have acquired in any manner
whatsoever, and such Notes, upon such surrender and cancellation, shall be deemed to be paid
and retired.
Section 11.03. 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
Defeasance Obligations in the necessary amount to pay or redeem any Notes, the money or
Defeasance Obligations so to be deposited or held may include money or Defeasance
Obligations held by the Trustee in the funds and accounts established pursuant to this Indenture
and shall be:
(a) lawful money of the United States of America in an amount equal to the principal
amount of such Notes and all unpaid interest thereon to maturity, except that, in the case of
Notes 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 principal amount or Redemption Price of such Notes and all unpaid interest thereon
to the redemption date; or
(b) Defeasance Obligations the principal of and interest on which when due will
provide money sufficient, in the opinion of an Independent Accountant, to pay the principal or
Redemption Price of and all unpaid interest to maturity, or to the redemption date, as the case
may be, on the Notes to be paid or redeemed, as such principal or Redemption Price and interest
become due, provided that, in the case of Notes which are to be redeemed prior to the maturity
thereof, 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; 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 and interest with respect to such Notes.
The Notes shall be deemed Outstanding under this Indenture unless and until they are in
fact paid and retired or the above criteria are met.
Section 11.04. Payment of Notes After Discharge of Indenture. Notwithstanding any
provisions of this Indenture, any moneys held by the Trustee in trust for the payment of the
principal or redemption premium of, or interest on, any Notes and remaining unclaimed for two
years after the principal of all of the Notes has become due and payable (whether at maturity or
upon call for redemption or by acceleration as provided in this Indenture), if such moneys were
so held at such date, or two years after the date of deposit of such moneys if deposited after said
date when all of the Notes became due and payable, shall be repaid to the Authority free from the
trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall
thereupon cease; provided, however, that before the repayment of such moneys to the Authority
as aforesaid, the Trustee, as the case may be, may (at the cost of the Authority) first mail a
notice, in such form as may be deemed appropriate by the Trustee, to the Owners of the Notes so
payable and not presented and with respect to the provisions relating to the repayment to the
Authority of the moneys held for the payment thereof.
4815-4408-0980.2
-41-
ARTICLE XII
MISCELLANEOUS
Section 12.01. Liability of Authority Limited to Pledged Revenues. Notwithstanding
anything contained in this Indenture or in the Notes, the Authority shall not be required to
advance any moneys derived from any source other than the Pledged Revenues and other assets
pledged under this Indenture for any of the purposes mentioned in this Indenture, whether for the
payment of the principal or Redemption Price of or interest on the Notes or for any other purpose
of this Indenture.
Section 12.02. 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 12.03. Limitation of Rights to Parties and Owners. Except as provided in Article
XII hereof, nothing in this Indenture or in the Notes expressed or implied is intended or shall be
construed to give to any person other than the Authority, the Trustee, and the Owners of the
Notes, 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 and the Owners of the Notes.
Section 12.04. Waiver of Notice. Whenever the giving of notice by mail or otherwise is
required in this Indenture, 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 12.05. Destruction of Notes. Whenever in this Indenture provision is made for the
cancellation by the Trustee and the delivery to the Authority of any Notes, the Trustee may, upon
Request of the Authority, in lieu of such cancellation and delivery, destroy such Notes (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 12.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture or in the Notes 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 adopted this Indenture and each and
every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of
4815-4408-0980.2
-42-
the Notes pursuant thereto irrespective of the fact that any one or more Sections, paragraphs,
sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
Section 12.07. Notices. Any notice, request, complaint, demand, communication or other
paper shall be sufficiently given and shall be deemed given when delivered or mailed by first
class, registered or certified mail, postage prepaid, or sent by confirmed telegram, telecopy or
telex, to the address (or such other address as may have been filed with the Trustee in writing)
set forth below:
To the Authority: Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, CA 90262
Attention: Chief Administrative Officer
Fax: (310) 886-0402
To the Trustee: The Bank of New York Mellon Trust Company, N.A.
700 South Flower Street, 5th Floor
Los Angeles, CA 90017
Attention: Corporate Trust Department
Fax: (213) 630-6215
If to the Initial Owner: ZB, N.A.
One South Main Street, Suite 1800
Salt Lake City, UT 84133
Attention: Municipal Finance Department
Fax: ________________
Section 12.08. Evidence of Rights of Owners. Any request, consent or other instrument
required or permitted by this Indenture to be signed and executed by Owners may be in any
number of concurrent instruments of substantially similar tenor and shall be signed or executed
by such Owners 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 Notes 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 13.08.
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 signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
The ownership of registered Notes shall be proved by the Note Registration Books held
by the Trustee.
Any request, consent, or other instrument or writing of the Owner of any Note shall bind
every future Owner of the same Note and the Owner of every Note issued in exchange therefor
4815-4408-0980.2
-43-
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 12.09. Disqualified Notes. In determining whether the Owners of the requisite
aggregate principal amount of Notes have concurred in any demand, request, direction, consent
or waiver under this Indenture, Notes which are owned or held by or for the account of the
Authority or by any other obligor on the Notes, or by any person directly or indirectly controlling
or controlled by, or under direct or indirect common control with, the Authority or any other
obligor on the Notes, shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination. Notes so owned which have been pledged in good faith may be regarded
as Outstanding for the purposes of this Section 13.09 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee’s right to vote such Notes 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 any other obligor on the Notes. 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. Upon request of the Trustee, the Authority shall specify, in a certificate to the Trustee,
those Notes disqualified pursuant to this Section 13.09 and the Trustee may conclusively rely on
such certificate.
Section 12.10. Money Held for Particular Notes. The money held by the Trustee for the
payment of the interest, principal or Redemption Price due on any date with respect to particular
Notes (or portions of Notes in the case of registered Notes 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
without liability for interest thereon for the Owners of the Notes entitled thereto, subject,
however, to the provisions of Section 11.04.
Section 12.11. Funds and Accounts. Any fund 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 shall at all times be maintained in
accordance with customary standards of the corporate trust industry, to the extent practicable,
and with due regard for the protection of the security of the Notes and the rights of every holder
thereof.
Section 12.12. Article and Section Headings and References. The headings or titles of the
several Articles and Sections hereof, and any table of contents appended to copies hereof, shall
be solely for convenience of reference and shall not affect the meaning, construction or effect of
this Indenture.
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; and words of the masculine gender
shall mean and include words of the feminine and neuter genders.
4815-4408-0980.2
-44-
Section 12.13. Waiver of Personal Liability. No member of the Authority Commission,
officer, agent or employee of the Authority shall be individually or personally liable for the
payment of the principal or Redemption Price of or interest on the Notes or be subject to any
personal liability or accountability by reason of the issuance thereof; but nothing herein
contained shall relieve any such member of the Authority Commission, officer, agent or
employee from the performance of any official duty provided by law or by this Indenture.
Section 12.14. 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 12.15. Governing Law. This Indenture shall be construed in accordance with and
governed by the Constitution and laws of the State. If this Indenture shall be the subject of
litigation, venue shall reside in the federal or state courts of California.
4815-4408-0980.2
-45-
IN WITNESS WHEREOF, the LYNWOOD PUBLIC FINANCING AUTHORITY has
caused this Indenture to be signed in its name by the Chief Administrative Officer of the
Authority and attested by the Secretary, and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., in token of its acceptance of the trust created hereunder, has caused this
Indenture to be signed in its corporate name by one of its authorized officers, all as of the day
and year first above written.
LYNWOOD PUBLIC FINANCING
AUTHORITY
By
Chief Administrative Officer
Attest:
Secretary
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Officer
APPROVAL OF CITY
As set forth in Section 6.04 hereof, the City agrees to enter into an installment sale
agreement pursuant to which the City will purchase the Improvements from the Authority and
pay installment payments sufficient to meet all payments of principal and interest on the Bonds
as the same become due and payable.
CITY OF LYNWOOD
By
City Manager
4815-4408-0980.2
A-1
EXHIBIT A
FORM OF BOND
United States of America
State of California
County of Los Angeles
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 Bond Anticipation Notes
THIS BOND MAY ONLY BE REGISTERED IN THE NAME OF, OR
TRANSFERRED TO, AN “APPROVED INSTITUTIONAL BUYER” AS
DEFINED IN THE INDENTURE AND PURSUANT TO THE TERMS
THEREOF
INTEREST RATE MATURITY DATE DATED DATE
_____% December __, 2019 December _, 2017
REGISTERED OWNER: ZB, N.A.
PRINCIPAL AMOUNT: __________________________________ DOLLARS
The LYNWOOD PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority duly organized and existing under the laws of the State of California (the “Authority”),
for value received, hereby promises to pay to the Registered Owner named above or registered
assigns (the “Owner”), on the Maturity Date stated above (subject to any right of prior
redemption hereinafter provided for), the Principal Amount stated above in lawful money of the
United States of America, and to pay interest thereon in like lawful money from the _____ 1 or
_____ 1 (each an “Interest Payment Date”) next preceding the date of authentication hereof,
unless said date of authentication is an Interest Payment Date, in which event such interest is
payable from such date of authentication, and unless said date of authentication is on or before
__________ 15, 2018, in which event such interest is payable from the Dated Date stated above;
provided, however, that if at the time of authentication of this Note, interest is in default on this
Note, this Note shall bear interest from the date to which interest has previously been paid or
made available for payment on this Note in full at the Interest Rate per annum stated above,
payable semiannually on each Interest Payment Date, commencing __________ 1, 2018 until
such principal amounts are paid in full. The principal amount of this Note is payable at the
principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., as
trustee (the “Trustee”), in Los Angeles, California, or at such office as the Trustee may
designate, upon presentation and surrender of this Note to the Trustee. Payment of the interest on
this Note will be made to the person whose name appears on the bond registration books of the
Trustee as the Owner thereof as of the fifteenth day of the month immediately preceding an
Interest Payment Date whether or not said day is a business day (the “Record Date”), such
interest to be paid by check mailed on the Interest Payment Date to the Owner or, at the option of
4815-4408-0980.2
A-2
any Owner of at least $1,000,000 aggregate principal amount of Notes and upon written notice
received by the Trustee prior to the Record Date, by wire transfer, at the Owner’s address as it
appears on such bond registration books or to such account as shall have been identified by the
Owner in the notice requesting payment by wire transfer. Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the Owner on such Record Date
and shall be paid to the person in whose name the Note 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
whereof being given to the Owners not less than ten (10) days prior to such special record date.
Capitalized terms used herein and not otherwise defined are used with the meanings
ascribed to them in the Indenture (as hereinafter defined).
This Note is one of a series of Notes of various maturities designated as “Lynwood
Public Financing Authority 2018 Bond Anticipation Notes” (the “Notes”), issued in the
aggregate principal amount of $_______, all of like tenor (except for such variations, if any, as
may be required to designate varying numbers, maturities, interest rates or redemption
provisions), issued under and pursuant to an Indenture of Trust (the “Indenture”) by and between
the Authority and the Trustee, dated as of December 1, 2017, approved by the Authority by
Resolution No. _______, adopted by the Authority Commission on December 19, 2017, under
and pursuant to the provisions of Articles 1 through 4 (commencing with section 6500) of
Chapter 5 of Division 7 of Title 1 of the California Government Code. A copy of the Indenture
is on file at the office of the Trustee, and reference to the Indenture and any and all supplements
thereto and modifications and amendments thereof and to the Bond Law is made for a
description of the terms on which the Notes are issued, the provisions with regard to the nature
and extent of the Pledged Revenues, as that term is defined in the Indenture, and the rights of the
Owners of the Notes. All the terms of the Indenture and the Bond Law are hereby incorporated
herein and constitute a contract between the Authority and the Owners from time to time of this
Note, and to all the provisions thereof the Owner of this Note, by his acceptance hereof, consents
and agrees. Each taker and subsequent Owner hereof shall have recourse to all of the provisions
of the Bond Law and the Indenture and shall be bound by all of the terms and conditions thereof.
The Notes are payable from the Pledged Revenues consisting of (a) proceeds of sale of
the Notes representing capitalized interest; (b) proceeds of sale of refunding bonds; and (c)
earning derived from the investment of any of the foregoing.
The principal or redemption price of and interest on the Notes are payable solely from the
Pledged Revenues, and the Authority is not obligated to pay the Notes except from the Pledged
Revenues. The general fund of the Authority is not liable, and the full faith and credit or taxing
power of the Authority is not pledged, for the payment of the principal or redemption price of
and interest on the Notes. The Notes are not secured by a legal or equitable pledge of, or charge,
lien or encumbrance upon, any of the property of the Authority or any of its income or receipts,
except the Pledged Revenues.
The Notes shall be subject to redemption as set forth in the Indenture.
As provided in the Indenture, notice of redemption shall be given by first class mail not
less than forty-five (45) days prior to the redemption date to the respective registered Owners of
4815-4408-0980.2
A-3
the Notes designated for redemption at their addresses appearing on the bond registration books,
but no defect in the notice so mailed shall affect the sufficiency of the proceedings for
redemption.
If this Note is called for redemption and payment is duly provided therefor as specified in
the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Notes
may be declared due and payable upon the conditions, in the manner and with the effect provided
in the Indenture, but such declaration and its consequences may be rescinded and annulled as
further provided in the Indenture.
This Note is transferable, as provided in the Indenture, only upon the books of the
Authority kept for that purpose at the office of the Trustee, by the Owner hereof in person, or by
his attorney duly authorized in writing, upon the surrender of this Note together with a written
instrument of transfer satisfactory to the Trustee duly executed by the registered Owner or his
attorney duly authorized in writing, and thereupon a new Note or Notes, without coupons, and in
the same aggregate principal amount and of the same maturity, shall be issued to the transferee in
exchange herefor, as provided in the Indenture, and upon the payment of charges, if any,
including, after the first exchange, the cost of preparing new Notes therein prescribed.
The rights and obligations of the Authority and of the Owners of the Notes may be
modified or amended at any time in the manner, to the extent and upon the terms provided in the
Indenture. No such modification or amendment shall permit a change in the terms of redemption
or maturity of the principal of any outstanding Note or of any installment of interest thereon or a
reduction in the principal amount or the redemption price thereof or in the rate of interest thereon
without the consent of the Owner of such Note, or shall reduce the percentages or otherwise
affect the classes of Notes, the consent of the Owners of which is required to effect any such
modification or amendment, all as more fully set forth in the Indenture.
It is hereby certified that all of the conditions, things and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Note do exist, have
happened or have been performed in due time, form and manner as required by law and that the
amount of this Note, together with all other indebtedness of the Authority, does not exceed any
limit prescribed by the Constitution or laws of the State of California, and is not in excess of the
amount of Notes permitted to be issued under the Indenture.
4815-4408-0980.2
A-4
IN WITNESS WHEREOF, the Lynwood Public Financing Authority has caused this
Note to be executed in its name and on its behalf with the manual or facsimile signature of its
Chief Administrative Officer and the manual or facsimile signature of its Secretary and its seal to
be reproduced hereon all as of the Note Date stated above.
LYNWOOD PUBLIC FINANCING
AUTHORITY
By
Chief Administrative Officer
ATTEST:
Secretary
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-mentioned Indenture, which has been
authenticated and registered on __________________.
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Officer
4815-4408-0980.2
A-5
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax identifying number is
the within-mentioned Note and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the Note registration books of the Trustee with full power of
substitution in the premises.
Dated:
Signature Guaranteed:
______________________________________ ______________________________________
Notice: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.
Note: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Note in every particular
without alteration or enlargement or any
change whatsoever.
4815-4408-0980.2
B-1
EXHIBIT B
FORM OF INVESTOR LETTER
Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, CA 90262
The Bank of New York Mellon Trust Company, N.A.
700 South Flower Street, 5th Floor
Los Angeles, California 90017
$_______
Lynwood Public Financing Authority
2018 Bond Anticipation Notes
Ladies and Gentlemen:
The undersigned (the “Purchaser”), being the purchaser of the above-referenced bonds
(the “Notes”), does hereby certify, represent and warrant for the benefit of the Lynwood Public
Financing Authority (the “Authority”) and The Bank of New York Mellon Trust Company,
N.A., as trustee (the “Trustee”) for the Notes under that certain Indenture of Trust, dated as of
December 1, 2017, by and between the Authority and the Trustee that:
(a) The Purchaser is an “Approved Institutional Buyer.”
(b) The Purchaser has sufficient knowledge and experience in financial and business
matters, including the purchase and ownership of tax-exempt obligations and is capable of
evaluating the merits and risks of its investment in the Notes. The Purchaser is able to bear the
economic risk of, and an entire loss of, an investment in the Notes.
(c) The Purchaser is acquiring the Notes solely for its own account for investment
purposes, and does not presently intend to make a public distribution of, or to resell or transfer,
all or any part of the Notes.
(d) The Purchaser understands that the Notes have not been registered and will not be
registered under the Securities Act of 1933 or under any state securities laws. The Purchaser
agrees that it will comply with any applicable state and federal securities laws then in effect with
respect to any disposition of the Notes by it, and further acknowledges that any current
exemption from registration of the Notes does not affect or diminish such requirements.
4815-4408-0980.2
B-2
(e) The Purchaser is familiar with the conditions, financial and otherwise, of the
Authority and understands that the Authority has no assets other than the Pledged Revenues for
repayment of the Notes. Further, the Purchaser understands that the Notes involve a high degree
of risk. Specifically, and without in any manner limiting the foregoing, the Purchaser
understands and acknowledges that, among other risks, the Notes are payable solely from the
Pledged Revenues. The Purchaser has been provided an opportunity to ask questions of, and the
Purchaser has received answers from, representatives of the Authority and the Trustee regarding
the terms and conditions of the Notes. The Purchaser has obtained all information it has
requested of the Authority as a result of the Purchaser having attached significance thereto in
connection with the issuance of the Notes to evaluate all merits and risks of its investment in the
Notes. The Purchaser has reviewed the documents executed in conjunction with the issuance of
the Notes, including, without limitation, the Indenture.
(f) The Purchaser is not now and has never been controlled by, or under common
control with, the Authority. The Authority has never been and is not now controlled by the
Purchaser. The Purchaser has entered into no arrangements with the Authority or with any
affiliate in connection with the Notes, other than as disclosed to the Authority.
(g) The Purchaser has authority to purchase the Notes and to execute this Investor
Letter and any other instruments and documents required to be executed by the Purchaser in
connection with the purchase of the Notes. The undersigned is a duly appointed, qualified, and
acting officer of the Purchaser and is authorized to cause the Purchaser to make the certifications,
representations and warranties contained herein by execution of this letter on behalf of the
Purchaser.
(h) In entering into this transaction, the Purchaser has not relied upon any
representations or opinions of the Authority or the Trustee relating to the legal consequences or
other aspects of its investment in the Notes other than those represented in the Indenture between
the Authority and the Trustee dated [Insert Date] and executed in conjunction with the issuance
of the Notes, nor has it looked to, nor expected, the Authority to undertake or require any credit
investigation or due diligence reviews relating to the Authority, its financial condition or
business operations, or any other matter pertaining to the merits or risks of the transactions
contemplated by the Indenture, or the adequacy of the Pledged Revenues pledged to secure
repayment of the Notes.
(i) The Notes shall be and are special obligations of the Authority and are secured by
an irrevocable pledge of, and are payable as to principal, interest and premium, if any, from
Pledged Revenues, and other funds as provided in the Indenture. The Notes, interest and
premium, if any, thereon are not a debt of the City of Lynwood (the “City”), the County of Los
Angeles (the “County”), the State of California (the “State”) or any of its political subdivisions
(except the Authority), and none of the City, the County, the State nor any of its political
subdivisions (except the Authority) is liable thereon. The Notes, interest thereon and premium,
if any, are not payable from any funds or properties other than those set forth in this Indenture.
None of the members of the Authority Commission, or any persons executing the Notes is liable
personally on the Notes by reason of their issuance
4815-4408-0980.2
B-3
(j) The Purchaser has been informed that the Notes (i) have not been and will not be
registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any
jurisdiction, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry
no rating from any rating service.
(k) The Purchaser acknowledges that it has the right to sell and transfer the Notes,
subject to compliance with the transfer restrictions set forth in the Indenture. The Purchaser
agrees to indemnify and hold harmless the Authority with respect to any claim asserted against
the Authority that arises with respect to any sale, transfer or other disposition of the Notes by the
Purchaser or any transferee thereof in violation of the provisions of the Indenture.
(l) Neither the Trustee, Note Counsel, the Authority, its members, its governing
body, or any of its employees, counsel or agents will have any responsibility to the Purchaser for
the accuracy or completeness of information obtained by the Purchaser from any source
regarding the Authority or its financial condition or regarding the Notes, the provision for
payment thereof, or the sufficiency of any security therefor. No written information has been
provided by the Authority to the Purchaser with respect to the Notes. The Purchaser
acknowledges that, as between the Purchaser and all of such parties, the Purchaser has assumed
responsibility for obtaining such information and making such review as the Purchaser deemed
necessary or desirable in connection with its decision to purchase the Notes.
The Purchaser acknowledges that the sale of the Notes to the Purchaser is made in
reliance upon the certifications, representations and warranties herein by the addressees hereto.
Capitalized terms used herein and not otherwise defined have the meanings given such
terms in the Indenture.
______________, as Purchaser
By: _________________________________
Name: _______________________________
Title: ________________________________
PLACEMENT AGENT AGREEMENT
_______, 2017
Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, CA 90262
Re: Lynwood Public Financing Authority 2018 Bond Anticipation Notes
Upon the terms and conditions and based upon the representations, warranties and
covenants set forth herein, Stifel, Nicolaus & Company, Incorporated (the “Placement Agent”)
offers to enter into this Placement Agent Agreement (this “Agreement”) with the Lynwood
Public Financing Authority (the “Issuer”), which, upon acceptance of this offer, shall be binding
upon the Issuer and the Placement Agent. This offer is made subject to acceptance of this
Agreement by the Issuer before or the date hereof, and, if not so accepted, will be subject to
withdrawal by the Placement Agent upon notice delivered to your office at any time prior to
acceptance hereof. If the obligations of the Placement Agent shall be terminated for any reason
permitted hereby, neither the Placement Agent nor the Issuer shall be under further obligation
hereunder.
The above-captioned Notes (the “Notes”) are to be executed and delivered
pursuant to an Indenture of Trust, dated as of December 1, 2017 (the “Indenture”), between the
Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee. This Agreement and
the Indenture are collectively referred to herein as the “Documents.”
1. Purchase, Sale and Delivery of Notes. On the basis of the representations
and agreements contained herein, but subject to the terms and conditions herein set forth, the
Placement Agent agrees, on a best efforts basis, to locate a purchaser for the Notes (the
“Purchaser”) at a purchase price equal to the principal amount thereof (the “Purchase Price”) and
on terms consistent with the Indenture. The maturities, principal amounts, interest rates and other
terms and conditions of the Notes shall be as set forth in the Indenture.
For its services hereunder, and upon payment of the Purchase Price by the Purchaser to
the Issuer (the date of such payment herein, the “Closing Date”), the Placement Agent shall
receive compensation, payable by the Issuer, equal to $30,000 (the “Fee”). The Issuer shall be
responsible for the payment of fees charged by the California Debt and Investment Advisory
Commission. On the Closing Date, the Issuer shall pay or cause to be paid the Fee to the
Placement Agent by wire transfer or immediately available funds. The Fee does not include any
services the Placement Agent may render in the future to the Issuer with respect to any offering or
placement of municipal securities other than the Notes.
2. Representations, Warranties, and Covenants of the Issuer. The
undersigned, on behalf of the Issuer, but not individually, hereby represents and warrants to the
2
Placement Agent (and it shall be a condition of the obligation of the Placement Agent to perform
under this Agreement that it shall be represented and warranted on the Closing Date) that:
(a) The Issuer is duly organized and validly existing under the laws of
the State of California (the “State”) with the power to execute the Indenture, perform the
agreements on its part contained therein and in the agreements approved thereby and cause
the issuance of the Notes.
(b) The Issuer has complied and, in all respects on the Closing Date
will be in compliance, with all of the provisions of applicable law of the State.
(c) The Issuer has duly adopted the resolution approving the issuance
of the Notes on ________, 2017, and the Issuer has duly authorized and approved the
execution and delivery of the Documents, as well as the performance of its obligations
contained in the Notes and the consummation by it of all other transactions contemplated
hereby.
(d) Assuming due authorization, execution and delivery by the other
parties thereto, as applicable, the Documents constitute the legal, valid and binding
agreements of the Issuer enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other laws affecting the enforcement of
creditors’ rights generally and by the application of equitable principles if sought and by
the limitations on legal remedies imposed on actions against the Issuer in the State of
California.
(e) The Issuer is not in breach of or default under any applicable law
or administrative regulation of the State or any department, division, agency or
instrumentality thereof, or of the United States, or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other instrument to which
the Issuer is a party or is otherwise subject, which breach or default would materially and
adversely affect the Issuer or its ability to perform its duties and obligations under the
Documents, and the execution and delivery of the Documents, the execution of the
Indenture and the issuance of the Notes and compliance with the provisions of each will
not conflict materially with or constitute a material breach of or default under any
applicable law or administrative regulation of the State or under any certificate,
agreement or other instrument to which the Issuer is a party or is otherwise subject,
which breach or default would materially and adversely affect the Issuer or its ability to
perform its duties under the Documents and Notes.
(f) No action, suit, proceeding or investigation at law or in equity
before or by any court of governmental agency or body is pending or, to the knowledge
of the Issuer, threatened in any way affecting the existence of the Issuer or the title of the
members of the authorizing body to their respective offices or seeking to restrain or to
enjoin the sale or issuance of the Notes, or the payment or collection of any amounts
pledged or to be pledged to pay the principal of and interest on the Notes, or in any way
3
contesting or affecting the validity or enforceability of the Notes or the Documents, or
contesting the powers of the Issuer or the members of the authorizing body with respect
to the Notes.
(g) The Issuer has furnished the Placement Agent and the Purchaser
with all information and materials concerning the Issuer and the Notes that the Placement
Agent requested (the “Information Package”). The following documents and information
comprise the Information Package: [___________]. The Issuer represents and warrants
that the information made available to the Placement Agent by the Issuer or contained in
the Information Package, read as a whole, is, and will be at all times during the period of
the engagement of the Placement Agent hereunder, be complete and true and correct in
all material respects and will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not misleading
in light of the circumstances under which such statements are made.
3. Conditions to Closing. The obligations of the Placement Agent under this
Agreement shall be subject, at the option of the Placement Agent, to the accuracy in all material
respects of the representations, warranties and covenants on the part of the Issuer contained
herein as of the date hereof and as of the Closing Date and to the performance by the Issuer of its
obligations to be performed hereunder and under the Documents at or prior to the Closing Date
and to the following additional conditions:
(a) At the Closing Date, the Notes and the Documents shall have been
duly authorized, executed and delivered by the respective parties thereto, in substantially
the forms heretofore submitted to the Placement Agent with only such changes as shall
have been agreed to by the Placement Agent, and the Documents shall not have been
amended, modified or supplemented, except as may have been agreed to in writing by
the Placement Agent, and there shall have been taken in connection therewith, with the
issuance of the Notes and with the transactions described therein and in this Agreement,
all such action as the Placement Agent and Bond Counsel shall deem to be necessary
and appropriate;
(b) Between the date hereof and the Closing Date, the market price or
marketability, at the Purchase Price, of the Notes shall not have been adversely affected,
in the judgment of the Purchaser;
(c) At or prior to the Closing Date, the Placement Agent shall have
received the following documents, in each case satisfactory in form and substance to the
Placement Agent:
(1) The Documents (or certified copies thereof) duly executed
and delivered by the respective parties thereto, with such amendments,
modifications or supplements as may have been agreed to by the Placement
Agent;
(2) The opinion of Nixon Peabody LLP, Bond Counsel, dated
the Closing Date in form and substance satisfactory to the Placement Agent and
Purchaser, relating to the validity of the Notes and the tax-exempt status of the
Notes, together with a letter from such counsel, dated the Closing Date and
4
addressed to the Placement Agent and Purchaser to the effect that the foregoing
opinion may be relied upon by the Placement Agent and Purchaser to the same
extent as if such opinion was addressed to them;
(3) A certificate of the Issuer, dated the Closing Date, in form
and substance satisfactory to the Placement Agent, to the effect that:
(i) the Issuer has complied with and satisfied all the
conditions on its part to be performed or satisfied under the
Documents at or prior to the Closing Date; and
(ii) the representations, warranties and covenants of the
Issuer contained in this Agreement are true and correct as if made
on the Closing Date.
(4) A Purchaser Letter, in the form attached to this Agreement
as Exhibit A and in form and substance acceptable to the Placement Agent,
executed by the Purchaser and addressed to the Placement Agent; and
(5) Such additional legal opinions, certificates, proceedings,
instruments and other documents as the Placement Agent or its counsel, if any,
and Bond Counsel may reasonably request to evidence compliance by the Issuer
with legal requirements, the truth and accuracy, as of the Closing Date, of the
representations of the Issuer, and the due performance or satisfaction by the Issuer
at or prior to such time of all agreements then to be performed and all conditions
then to be satisfied by the Issuer.
4. Termination. This Agreement may be terminated by either party upon ten
(10) business days’ prior written notice; provided, however, that the Fee shall be immediately
due and payable by the Issuer if the Issuer terminates this Agreement and sells the Notes to a
purchaser identified by the Placement Agent to the Issuer prior to such termination and such sale
occurs within six (6) months after termination of this Agreement.
5. Expenses. There shall be paid solely from the proceeds of the sale of the
Notes, upon or promptly after the Closing: (a) the cost, if any, of the preparation and printing of
the Notes; (b) the fees and disbursements of Bond Counsel and of any other counsel or
consultants retained by the Issuer; and (c) the Fee as well as the fee and disbursements of counsel
to the Placement Agent, if any. The Placement Agent shall be under no obligation to pay any
expenses incident to this Agreement.
6. Regulatory Disclosure: The Issuer acknowledges that, in connection with
the purchase and sale of the Notes, the offering of the Notes for sale and the discussions and
negotiations relating to the terms of the Notes pursuant to and as set forth in this Agreement that
(a) the Placement Agent has acted at arm’s length, is acting solely for its own account and is not
agent of or advisor (including, without limitation, a Municipal Advisor (as such term is defined
in Section 975(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act)) and
owes no fiduciary duty to, the Issuer or any other person, (b) the Placement Agent’s duties and
obligations to the Issuer shall be limited to those contractual duties and obligations set forth in
this Agreement, (c) the Placement Agent may have interests that differ from those of the Issuer,
5
and (d) the Issuer has consulted its legal and financial advisors to the extent it deemed
appropriate in connection with the offering and sale of the Notes. The Issuer further
acknowledges and agrees that it is responsible for making its judgment with respect to the
offering and sale of the Notes and the process leading thereto. The Issuer agrees that it will not
claim that the Placement Agent acted as a Municipal Advisor to the Issuer or rendered advisory
services of any nature or respect, or owes a fiduciary or similar duty to the Issuer, in connection
with the offering or sale of the Notes or the process leading thereto.
7. Survival of Certain Representations and Obligations. The respective
agreements, covenants, representations, warranties and other statements of the Issuer and its
officers set forth in or made pursuant to this Agreement shall survive delivery of and payment for
the Notes and shall remain in full force and effect, regardless of any investigation, or statements
as to the results thereof, made by or on behalf of the Placement Agent.
8. Notices. Any notice or other communication to be given to the Issuer
under this Agreement may be given by delivering the same in writing to the Issuer at its address
set forth above. Any notice or other communication to be given to the Placement Agent under
this Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company,
Incorporated, 515 South Figueroa Street, Suite 1800, Los Angeles, California 90071,
Attention: Mr. Jose Vera, Managing Director.
9. No Assignment. This Agreement has been made by the Issuer and the
Placement Agent, and no person other than the foregoing shall acquire or have any right under or
by virtue of this Agreement.
10. Applicable Law. This Agreement shall be interpreted, governed and
enforced in accordance with the laws of the State of California.
11. Effectiveness. This Agreement shall become effective upon its execution
by duly authorized officials of all parties hereto and shall be valid and enforceable from and after
the time of such execution.
12. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
13. Counterparts. This Agreement may be executed in several counterparts
(including counterparts exchanged by email in PDF format), each of which shall be an original
and all of which shall constitute but one and the same instrument.
6
14. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State.
Respectfully submitted,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
____________________________
Jose Vera, Managing Director
ACCEPTED this ________ of __________, 2017.
LYNWOOD PUBLIC FINANCING AUTHORITY
__________________________
Authorized Officer
EXHIBIT A
FORM OF PURCHASER LETTER
Lynwood Public Financing Authority
Lynwood, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Re: Lynwood Public Financing Authority 2018 Bond Anticipation Notes
Ladies and Gentlemen:
The undersigned (the “Purchaser”) hereby acknowledges that it is purchasing
$_________ aggregate principal amount of the Lynwood Public Financing Authority 2018 Bond
Anticipation Notes (the “Notes”) issued pursuant to a an Indenture of Trust, dated as of
December 1, 2017 (the “Indenture”), between the Lynwood Public Financing Authority (the
“Issuer”) and The Bank of New York Mellon Trust Company, N.A., as trustee. Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.
This letter is being provided pursuant to a Placement Agent Agreement, dated ______,
2017 (the “Placement Agreement”), between the Issuer and Stifel, Nicolaus & Company,
Incorporated (the “Placement Agent”).
The Purchaser acknowledges that the proceeds of the Notes will be used to finance
certain streets and road improvements eligible for Measure R Local Return use.
The Notes together with interest thereon shall be payable from Pledged Revenues.
In connection with the sale of the Notes to the Purchaser, the Purchaser hereby makes the
following representations upon which you may rely:
1. The Purchaser has the authority and is duly authorized to purchase the Notes and
to execute this letter and any other instruments and documents required to be executed by the
Purchaser in connection with its purchase of the Notes.
2. The Purchaser is (a) a “qualified institutional buyer” as that term is defined in
Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or (b) an
“accredited investor” as that term is defined in Regulation D under the Securities Act.
3. The Purchaser is purchasing the Notes for its own loan account and not with a
view to, or for resale in connection with, any distribution of the Notes. However, the Purchaser
may sell the Notes at any time the Purchaser deems appropriate, subject to the transfer
restrictions set forth in the Notes and in the Indenture. The Purchaser understands that it may
A-2
need to bear the risks of the Notes for an indefinite period of time, since a sale of the Notes, or
any portion thereof, prior to maturity may not be possible.
4. The Purchaser understands that the Notes are not, and are not intended to be,
registered under the Securities Act and that such registration is not legally required as of the date
hereof, and further understands that the Notes (a) are not being registered or otherwise qualified
for sale under the “Blue Sky” laws and regulations of any state, (b) will not be listed in any stock
or other securities exchange, (c) will not carry a rating from any rating agency, and (d) will be
delivered in a form that may not be readily marketable.
5. The Purchaser acknowledges that it has either been supplied with or been given
access to information, financial statements and other financial information, which it has
requested from the Issuer and to which a reasonable lender would attach significance in making
lending decisions, and the Purchaser has had the opportunity to ask questions and receive
answers from knowledgeable individuals, including its own counsel, concerning the Issuer and
the Notes and the security therefor so that, as a reasonable lender, the Purchaser has been able to
make a decision to fund the loan evidenced by the purchase of the Notes. The Purchaser has
such knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risks of its purchase of the Notes.
6. The Purchaser acknowledges that the obligations of the Issuer under the Indenture
are limited obligations of the Issuer and the Notes are secured by a pledge of, security interest in
and lien on all of the Pledged Revenues and moneys in certain funds and accounts established
under the Indenture.
7. The Purchaser has made its own inquiry and analysis with respect to the Notes
and the security therefor, and other material factors affecting the security and payment of the
Notes. The Purchaser is aware that there are certain economic and regulatory variables and risks
that could adversely affect the security for the Notes. The Purchaser has reviewed the documents
executed in conjunction with the issuance of the Notes, or summaries thereof, including, without
limitation, the Indenture.
8. The Purchaser acknowledges and agrees that the Issuer takes no responsibility for,
and makes no representation to the Purchaser, or any subsequent purchaser, with regard to, a
sale, transfer or other disposition of the Notes in violation of the provisions hereof, or any
securities law or income tax law consequences thereof. The Purchaser also acknowledges that,
with respect to the Issuer’s obligations and liabilities, the Purchaser is solely responsible for
compliance with the transfer restrictions on the Notes in connection with any subsequent transfer
of the Notes made by the Purchaser.
9. The Purchaser agrees that it is bound by and will abide by the provisions of the
Indenture relating to transfer, the restrictions noted on the face of the Notes and this Purchaser
Letter. The Purchaser also covenants to comply with all applicable federal and state securities
laws, rules and regulations in connection with any resale or transfer of the Notes by the
Purchaser.
A-3
10. The Purchaser acknowledges that the purchase of the Notes is made in reliance
upon the certifications, representations and warranties herein by the addressees hereto.
11. The interpretation of the provisions hereof shall be governed and construed in
accordance with California law without regard to principles of conflicts of laws.
12. All representations of the Purchaser contained in this letter shall survive the
issuance and delivery of the Notes to the Purchaser as representations of fact existing as of the
date of execution and delivery of this Purchaser Letter.
Date: ________, 2017 Very truly yours,
Purchaser:
By:_________________________________
Name:______________________________
Title:_______________________________
Prepared by Stifel Page 1
SOURCES AND USES OF FUNDS
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Dated Date 02/09/2018
Delivery Date 02/09/2018
Sources:
Bond Proceeds:
Par Amount 2,745,000.00
2,745,000.00
Uses:
Project Fund Deposits:
Project Fund 2,500,000.00
Other Fund Deposits:
Capitalized Interest Fund 126,773.25
Delivery Date Expenses:
Cost of Issuance 115,000.00
Other Uses of Funds:
Additional Proceeds 3,226.75
2,745,000.00
Prepared by Stifel Page 2
BOND SUMMARY STATISTICS
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Dated Date 02/09/2018
Delivery Date 02/09/2018
Last Maturity 12/01/2019
Arbitrage Yield 2.551072%
True Interest Cost (TIC) 2.551072%
Net Interest Cost (NIC) 2.550000%
All-In TIC 5.000421%
Average Coupon 2.550000%
Average Life (years) 1.811
Weighted Average Maturity (years) 1.811
Duration of Issue (years) 1.781
Par Amount 2,745,000.00
Bond Proceeds 2,745,000.00
Total Interest 126,773.25
Net Interest 126,773.25
Total Debt Service 2,871,773.25
Maximum Annual Debt Service 2,814,997.50
Average Annual Debt Service 1,585,641.67
Underwriter's Fees (per $1000)
Average Takedown
Other Fee
Total Underwriter's Discount
Bid Price 100.000000
Par Average Average PV of 1 bp
Bond Component Value Price Coupon Life change
Bond Component 2,745,000.00 100.000 2.550% 1.811 494.10
2,745,000.00 1.811 494.10
All-In Arbitrage
TIC TIC Yield
Par Value 2,745,000.00 2,745,000.00 2,745,000.00
+ Accrued Interest
+ Premium (Discount)
- Underwriter's Discount
- Cost of Issuance Expense -115,000.00
- Other Amounts
Target Value 2,745,000.00 2,630,000.00 2,745,000.00
Target Date 02/09/2018 02/09/2018 02/09/2018
Yield 2.551072% 5.000421% 2.551072%
Prepared by Stifel Page 3
BOND PRICING
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Maturity
Bond Component Date Amount Rate Yield Price
Bond Component:
12/01/2019 2,745,000 2.550% 2.550% 100.000
2,745,000
Dated Date 02/09/2018
Delivery Date 02/09/2018
First Coupon 06/01/2018
Par Amount 2,745,000.00
Original Issue Discount
Production 2,745,000.00 100.000000%
Underwriter's Discount
Purchase Price 2,745,000.00 100.000000%
Accrued Interest
Net Proceeds 2,745,000.00
Prepared by Stifel Page 4
BOND DEBT SERVICE
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Period
Ending Principal Coupon Interest Debt Service
12/01/2018 56,775.75 56,775.75
12/01/2019 2,745,000 2.550% 69,997.50 2,814,997.50
2,745,000 126,773.25 2,871,773.25
Prepared by Stifel Page 5
BOND DEBT SERVICE
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Period Annual
Ending Principal Coupon Interest Debt Service Debt Service
06/01/2018 21,777.00 21,777.00
12/01/2018 34,998.75 34,998.75 56,775.75
06/01/2019 34,998.75 34,998.75
12/01/2019 2,745,000 2.550% 34,998.75 2,779,998.75 2,814,997.50
2,745,000 126,773.25 2,871,773.25 2,871,773.25
Prepared by Stifel Page 6
NET DEBT SERVICE
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Period Total Capitalized Net
Ending Principal Interest Debt Service Interest Fund Debt Service
12/01/2018 56,775.75 56,775.75 -56,775.75
12/01/2019 2,745,000 69,997.50 2,814,997.50 -69,997.50 2,745,000
2,745,000 126,773.25 2,871,773.25 -126,773.25 2,745,000
Prepared by Stifel Page 7
NET DEBT SERVICE
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Total Capitalized Net Annual
Date Principal Interest Debt Service Interest Fund Debt Service Net D/S
06/01/2018 21,777.00 21,777.00 -21,777.00
12/01/2018 34,998.75 34,998.75 -34,998.75
06/01/2019 34,998.75 34,998.75 -34,998.75
12/01/2019 2,745,000 34,998.75 2,779,998.75 -34,998.75 2,745,000 2,745,000
2,745,000 126,773.25 2,871,773.25 -126,773.25 2,745,000 2,745,000
Prepared by Stifel Page 8
COST OF ISSUANCE
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Cost of Issuance $/1000 Amount
City Attorney 1.82149 5,000.00
Bond/Disclosure Counsel 16.39344 45,000.00
Placement Agent 10.92896 30,000.00
Municipal Advisor 7.28597 20,000.00
Government/Regulatory 1.82149 5,000.00
Trustee 1.82149 5,000.00
Contingency 1.82149 5,000.00
41.89435 115,000.00
Prepared by Stifel Page 9
PROOF OF ARBITRAGE YIELD
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Present Value
PV to 02/09/2018
Date Debt Service Factor @ 2.5510718616%
06/01/2018 21,777.00 0.992144540 21,605.93
12/01/2018 34,998.75 0.979648768 34,286.48
06/01/2019 34,998.75 0.967310376 33,854.65
12/01/2019 2,779,998.75 0.955127383 2,655,252.93
2,871,773.25 2,745,000.00
Proceeds Summary
Delivery date 02/09/2018
Par Value 2,745,000.00
Target for yield calculation 2,745,000.00
Prepared by Stifel Page 10
FORM 8038 STATISTICS
Lynwood Public Financing Authority
Bond Anticipation Notes, Series 2018
Dated Date 02/09/2018
Delivery Date 02/09/2018
Redemption
Bond Component Date Principal Coupon Price Issue Price at Maturity
Bond Component:
12/01/2019 2,745,000.00 2.550% 100.000 2,745,000.00 2,745,000.00
2,745,000.00 2,745,000.00 2,745,000.00
Stated Weighted
Maturity Interest Issue Redemption Average
Date Rate Price at Maturity Maturity Yield
Final Maturity 12/01/2019 2.550%2,745,000.00 2,745,000.00
Entire Issue 2,745,000.00 2,745,000.00 1.8111 2.5511%
Proceeds used for accrued interest 0.00
Proceeds used for bond issuance costs (including underwriters' discount) 115,000.00
Proceeds used for credit enhancement 0.00
Proceeds allocated to reasonably required reserve or replacement fund 0.00
Agency
RefCode Description J?S?Type Amount Approval
Status
FY 2018 Budget
12/5/2017
Contact Person: HEMPE, LORRY
Lynwood
Report Date:
MEASURE R LOCAL RETURN - APPROVED PROJECTS NOTIFICATION
Date Approved:December 13, 2017
Los Angeles County Metropolitan Transportation Authority
1.05 (New Bonds) Design of Various Streets (Pavement Management Pl N Y CAP 500,000 New
67.0121.05 Birch Street, Lugo Avenue, Platt Avenue Street Improvement N N CAP 595,000 New
67.0131.05 (New Bonds) Beechwood Avenue, Louise Street , and Nevada Stre N N CAP 500,000 New
67.9061.05 Slurry Seal Project N N CAP 0 As Amended
67.9071.05 Duncan Avenue Improvements N N CAP 130,000 As Amended
67.9081.05 (New Bonds) Olanda Street (Atlantic Ave. to Carlin Ave ) (Constru N N CAP 274,318 As Amended
67.9081.05 Olanda Avenue Improvements (Design)N N CAP 10,000 As Amended
67.9111.05 (New Bonds) Wright Road Improvements (Duncan Ave to Fernwoo N N CAP 1,333,981 As Amended
67.9111.05 Wright Road Improvements N N CAP 16,400 As Amended
67.9121.05 (New Bonds) Louise Avenue Improvements N N CAP 643,000 As Amended
67.9171.05 Trench Cut Repairs N N CAP 0 As Amended
67.921.05 Pavement Marking Improvements N N CAP 50,000 As Amended
68.0151.05 Various Street Improvements N N CAP 794,130 As Amended
68.0171.05 (Existing Bonds) Street Improvements N Y CAP 2,075,952 New
68.0251.05 Cape Seal N N CAP 0 As Amended
68.0261.05 Street Improvements N N CAP 130,000 As Amended
68.0141.20 LED Street Light Project N N CAP 0 As Amended
2352.951.90 Measure R Bond Debt Service Payment N N CAP 391,006 As Amended
67.8851.90 Trafic Signs Improvement Project N N OPS 0 As Amended
68.0363.05 ATP Cycle II Lynwood Community Linkage (Design)N N CAP 271,781 New
67.9133.90 Pedestrian Improvements Around Various Schools (HSIP)N N CAP 20,000 As Amended
2010.1887.90 SB 375 Preparation of Subregional SCS Y Y OPS 0 As Amended
2352.4057.90 Planning N N OPS 64,992 As Amended
8.10 Administration of Measure R Funds N N OPS 250,000 New
9.10 3% local funding N N 200,000 New
8,250,560Total
-----------------------------------------
4839-1476-5656.4
RESOLUTION NO. __________
A RESOLUTION OF THE LYNWOOD PUBLIC FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE OF ITS 2018 BOND
ANTICIPATION NOTES, APPROVING THE EXECUTION AND
DELIVERY OF AN INDENTURE OF TRUST, AND AUTHORIZING
OFFICIAL ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Lynwood Public Financing Authority (the “Authority”) is a joint powers
authority duly organized and existing under the provisions of Articles 1 through 4 (commencing
with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of
California (the “Act”), and is authorized pursuant to Article 4 of the Act to, among other things,
borrow money for the purpose of financing and refinancing public capital improvements of the
City of Lynwood (the “City”); and
WHEREAS, the City desires to finance certain streets and roads improvements (the
“Improvements”) eligible for Measure R Local Return use; and
WHEREAS, to provide financing for the acquisition and construction of the
Improvements (including the payment of capitalized interest, to the extent necessary), the City has
asked the Authority to issue bond anticipation notes (the “Notes”) under the provisions of Article
4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the “Law”); and
WHEREAS, the Authority desires to assist the City by issuing the Notes designated as
Lynwood Public Financing Authority 2018 Bond Anticipation Notes; and
WHEREAS, ZB, N.A. (the “Bank”) has issued a commitment letter (the “Commitment
Letter”) offering to purchase the Notes; and
WHEREAS, the Authority has duly considered such transactions, and wishes at this time
to approve all documentation and actions relative to said transactions in the public interests of the
Authority.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY
THE COMMISSION OF THE LYNWOOD PUBLIC FINANCING AUTHORITY, AS
FOLLOWS:
Section 1. Issuance of Notes; Approval of Indenture. The Authority Commission
hereby authorizes the issuance of the Notes in the maximum principal amount of not to exceed
$2,745,000. Furthermore, the interest rate on the Notes shall not exceed 2.551% and the costs of
issuance shall not exceed $125,000. The Authority hereby approves the Indenture of Trust in
substantially the form on file with the Secretary, together with such additions thereto and changes
therein deemed advisable by the President, Vice-President, Treasurer, Chief Administrative
Officer or Finance Director, or their respective designated representatives (each, an “Authorized
Officer”), upon consultation with Authority Counsel and Nixon Peabody LLP, whose execution
thereof shall be conclusive evidence of the approval of any such additions and changes.
4839-1476-5656.4
2
Section 2. Approval of Private Placement. The City hereby approves the sale of the
Notes by the Authority to the Bank, by a private placement pursuant to and in accordance with the
Commitment Letter.
Section 3. Approval of Financing Team. Nixon Peabody LLP is hereby appointed as
special counsel, Wolf & Company Inc. is hereby appointed as municipal advisor and Stifel,
Nicolaus & Company Incorporated is hereby appointed as private placement agent all in
connection with the issuance of the Notes.
Section 4. Official Action. The Authorized Officers, the Secretary and any and all
other officers of the Authority are hereby authorized and directed, for and in the name and on
behalf of the Authority, to do any and all things and take any and all actions which they, or any of
them, may deem necessary or advisable in order to consummate the transactions as described
herein in connection with the issuance of the Notes.
Section 5. Effective Date. This Resolution shall take effect immediately upon
adoption and the Secretary shall certify to its adoption.
PASSED, APPROVED, and ADOPTED at a regular meeting of the Commission of the Lynwood
Public Financing Authority this 6th day of February, 2018.
AYES: Commission Members -
NOES: Commission Members -
ABSENT: Commission Members -
ABSTAIN: Commission Members -
___________________________________
President
Attest:
________________________________
Secretary
4845-1913-8648.6
RESOLUTION NO. ___________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LYNWOOD APPROVING THE FINANCING OF
CERTAIN STREETS AND ROADS IMPROVEMENTS AND
AUTHORIZING OFFICIAL ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the Lynwood Public Financing Authority (the “Authority”) is a joint powers
authority duly organized and existing under the provisions of Articles 1 through 4 (commencing
with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of
California (the “Act”), and is authorized pursuant to Article 4 of the Act to borrow money to
provide financing and refinancing for public capital improvements of the City of Lynwood (the
“City”); and
WHEREAS, the City desires to finance certain streets and roads improvements (the
“Improvements”) eligible for Measure R Local Return use; and
WHEREAS, to provide financing for the acquisition and construction of the
Improvements (including the payment of capitalized interest, to the extent necessary), the City has
asked the Authority to issue bond anticipation notes (the “Notes”) under the provisions of Article
4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the “Law”); and
WHEREAS, as required by Section 6586.5 of the Law, the City has caused publication of
a notice of a public hearing on the financing of the Improvements once at least five days prior to
the hearing in a newspaper of general circulation in the City; and
WHEREAS, this Council held a public hearing at which all interested persons were
provided the opportunity to speak on the subject of financing the Improvements; and
WHEREAS, ZB, N.A. (the “Bank”) has issued a commitment letter (the “Commitment
Letter”) offering to purchase the Notes.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Lynwood as
follows:
Section 1. Findings and Determinations. Pursuant to the Law, and based on the
information provided to the City Council by City staff and consultants, all as set forth in the
proceedings and documents providing for the issuance and delivery of the Notes, the City Council
hereby finds and determines that the issuance of the Notes to finance the Improvements and the
transactions related thereto will result in significant public benefits within the contemplation of
Section 6586 of the Law, namely, demonstrable savings in note preparation, note underwriting and
note issuance costs, and employment benefits from undertaking the project in a timely fashion.
4845-1913-8648.6
2
Section 2. Approval of Indenture. The City Council hereby approves the Indenture of
Trust in substantially the form on file with the City Clerk, together with such additions thereto and
changes therein deemed advisable by the Mayor, Mayor Pro Tem, City Manager or Finance
Director, or their respective designated representatives (each, an “Authorized Officer”), upon
consultation with the City Attorney and Nixon Peabody LLP (“Special Counsel”), whose
execution thereof shall be conclusive evidence of the approval of any such additions and changes.
Section 3. Approval of Private Placement. The City hereby approves the sale of the
Notes by the Authority to the Bank, by a private placement pursuant to and in accordance with the
Commitment Letter.
Section 4. Official Actions. The Authorized Officers, the City Clerk and any and all
other officers of the City are hereby authorized and directed, for and in the name and on behalf of
the City, to do any and all things and take any and all actions which they, or any of them, may
deem necessary or advisable in order to consummate the transactions as described herein in
connection with the issuance of the Notes.
Section 5. Effective Date. This Resolution shall take effect immediately upon
adoption and the City Clerk shall certify to its adoption.
PASSED, APPROVED, and ADOPTED at a Regular meeting of the City Council of the
City of Lynwood, California this 6th day of February, 2018.
AYES: Council Members -
NOES: Council Members -
ABSENT: Council Members -
ABSTAIN: Council Members -
___________________________________
Mayor
Attest:
________________________________
City Clerk
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CLOSING MEMORANDUM
February 9, 2018
_____________________________________________________________
This memorandum sets forth the actions taken in connection with the issuance, sale and
delivery by the Lynwood Public Financing Authority (the “Authority”) of its $2,745,000 Lynwood Public
Financing Authority 2018 Bond Anticipation Notes (the “Notes”).
The Pre-Closing
A Pre-Closing was held commencing at 10:00 a.m. on February 8, 2018 at the offices of
Nixon Peabody LLP, 300 South Grand Avenue, Suite 4100, Los Angeles, California 90071, at which Pre-
Closing all documents listed on the attached Closing List (the “Closing Documents”) were examined,
readied and packaged for the Closing. The Closing Documents were held in escrow by Nixon Peabody
LLP pending the Closing.
The Closing
The actions described herein which were taken as part of the closing (the “Closing”),
were taken as a simultaneous transaction, and no delivery of documents, payment of money or other
action was considered to have been completed until all such deliveries, payments or other actions had
been made or taken.
The issuance and delivery of the Notes took place at the Closing, which commenced at
8:00 a.m. on February 9, 2018 at the offices of Nixon Peabody LLP. At the Closing, all the Closing
Documents were delivered and all payments evidenced by the Closing Documents were made.
4815-5917-3976.4
2
The Parties
City of Lynwood (“City”)
Lynwood Public Financing Authority (“Authority”)
Alvarez-Glasman & Colvin, as City Attorney of the City of Lynwood and as Authority Counsel of the
Lynwood Public Financing Authority (“AC”)
Wolf & Company, Inc., Municipal Advisor (“MA”)
Nixon Peabody LLP, Note Counsel (“NP”)
Stifel, Nicolaus & Company, Incorporated, Placement Agent (“Stifel”)
Nossaman LLP, Placement Agent Counsel (“Nossaman”)
ZB, N.A. , Original Purchaser (“Purchaser”)
The Bank of New York Mellon Trust Company, N.A., Trustee (“Trustee”)
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CLOSING LIST
Closing Date: February 9, 2018
BASIC DOCUMENTS
1. Certificate of the Secretary of the Authority, dated the date of Closing, with
respect to [Resolution No. 2018.001], adopted at the February 6, 2018 meeting of the Commission of the
Authority, certifying that such Resolution of the Board is in full force and effect as of the date of Closing,
with such Resolution of the Board attached thereto. [NP]
2. Certificate of the City Clerk of the City of Lynwood, dated the date of Closing,
with respect to [Resolution No. 2018.001], adopted at the February 6, 2018 meeting of the City Council
of the City of Lynwood, certifying that such Resolution has been duly adopted by the City Counsel of the
City of Lynwood and is in full force and effect as of the date of Closing. [NP]
3. Indenture of Trust, dated as of February 1, 2018, by and between the Authority
and the Trustee. [NP]
4. The Note. [NP]
SALE DOCUMENTS
5. Executed copy of the Placement Agent Agreement, dated February 6, 2018, by
and between the Authority and the Placement Agent. [Nossaman]
DELIVERED BY THE AUTHORITY
6. Proof of Publication of Notice of Public Hearing conducted on January [25],
2018.
7. Tax Certificate as to Arbitrage relating to the Notes. [NP]
a. The Project;
b. Final Numbers;
c. Economic Life;
d. Certificate of the Purchaser; and
e. Internal Revenue Service Form 8038-G.
8. Certificate of the Authority, dated the date of Closing, as to Signature, Execution,
Incumbency and No Litigation. [NP]
4815-5917-3976.4
9. Certificate of the Secretary of the Authority, dated the date of Closing, with
respect to the Specimen Notes attached as an exhibit thereto. [NP]
10. Direction and Acknowledgment of the Authority as to Application of Moneys at
Closing with acknowledgement from the Trustee. [NP]
11. Direction from Authority to Trustee to Authenticate and Deliver the Notes. [NP]
12. Written Requisition No. 1 for Disbursements from Costs of Issuance Fund. [NP]
13. Certificate of the Authority Pursuant to the Placement Agent Agreement. [NP]
14. Certificate of the Secretary of the Authority, dated the date of Closing, with
respect to the Effectiveness of the Joint Exercise of Powers Agreements, together with the Joint Exercise
of Powers Agreement.
15. Initial Notice of a Joint Powers Agreement, filed with and certified by the
California Secretary of State, together with the Statement of Facts Roster Filing, as certified by the
California Secretary of State.
16. Bylaws of the Lynwood Public Financing Authority. [NP]
17. Letter from the Authority to the Los Angeles County Metropolitan
Transportation Authority requesting approval of the proposed projects and the proposed borrowing. [NP]
18. Letter from the Los Angeles County Metropolitan Transportation Authority to
the Authority approving the proposed projects and the proposed borrowing. [NP]
DELIVERED BY THE TRUSTEE
19. Certificate of Trustee. [NP]
20. Certificate of Incumbency of Trustee, with Trust Department Resolution of
Authority. [Trustee]
LEGAL OPINIONS
21. Final Approving Opinion of Nixon Peabody LLP, with Reliance Letter. [NP]
22. Opinion of Counsel to the Trustee. [Trustee]
23. Opinion of Counsel to the Authority addressed to the Purchaser. [AC]
MISCELLANEOUS
24. Copy of Proposed CDIAC filing relating to the Notes. [NP]
4815-5917-3976.4
25. Copy of Final CDIAC filing relating to the Notes. [NP]
26. Purchaser Letter. [NP]
27. Receipt for the Notes. [NP]
28. Commitment Letter. [Purchaser]
29. Final Cash Flows. [Stifel]
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CERTIFICATE OF THE SECRETARY OF THE AUTHORITY
WITH RESPECT TO [RESOLUTION NO. 2018.001]
I, Maria Quinonez, Secretary of the Lynwood Public Financing Authority (the
“Authority”), DO HEREBY CERTIFY as follows:
Attached hereto as Exhibit A is a copy of [Resolution No. 2018.001], which Resolution
was duly adopted at a regular meeting of the Commission of the Authority duly called and held on
February 6, 2018 (the “Meeting”), which Meeting was open to the public, and public notice of the time,
place and purpose of the Meeting was given, all as required by laws of the State of California, and at
which Meeting a quorum was present and acting throughout. Said Resolution is a true, complete and
correct copies thereof and said Resolution has not been modified, amended or repealed and are in full
force and effect on and as of the date hereof.
[Signature page follows]
4815-5917-3976.4
S-1 [Certificate of the Secretary of the Authority
With Respect to Resolution No. 2018.001]
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of February, 2018.
Maria Quinonez, Secretary
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CERTIFICATE OF THE CITY CLERK OF THE CITY COUNCIL
WITH RESPECT TO [RESOLUTION NO. 2018.001]
I, Maria Quinonez, City Clerk of the City Council of the City of Lynwood (the “City”),
DO HEREBY CERTIFY as follows:
Attached hereto as Exhibit A is a copy of [Resolution No. 2018.001], which Resolution
was duly adopted at a regular meeting of the City Council of the City duly called and held on February 6,
2018 (the “Meeting”), which Meeting was open to the public, and public notice of the time, place and
purpose of the Meeting was given, all as required by laws of the State of California, and at which Meeting
a quorum was present and acting throughout. Said Resolution is a true, complete and correct copies
thereof and said Resolution has not been modified, amended or repealed and are in full force and effect on
and as of the date hereof.
[Signature page follows]
4815-5917-3976.4
2 Certificate of the City Clerk of the City Council of
the City Council with Respect to Resolution No. 2018.001
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of February, 2018.
Maria Quinonez, City Clerk
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
SIGNATURE, EXECUTION, INCUMBENCY AND NO LITIGATION
CERTIFICATE OF THE AUTHORITY
We, the undersigned officers of the Lynwood Public Financing Authority (the
“Authority”), as indicated by the titles opposite our respective signatures below, DO HEREBY CERTIFY
as follows:
1. The undersigned President of the Authority and the Secretary of the Authority
have duly signed, by manual signatures, the Authority’s 2018 Bond Anticipation Notes (the “Notes”), and
said manual signatures appearing on the Notes are true and lawful signatures.
2. The undersigned Chief Administrative Officer of the Authority and the Secretary
of the Authority have duly signed, by manual signatures: (i) the Indenture of Trust, dated as of February
1, 2018 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust
Company, N.A., as trustee (the “Trustee”); and (ii) the Placement Agent Agreement, dated February 6,
2018 (the “Placement Agent Agreement”), by and between the Authority and Stifel, Nicolaus &
Company, Incorporated. The Indenture and the Placement Agent Agreement are hereinafter collectively
referred to as the “Authority Documents.”
3. The following are the respective signatures of the President, Chief
Administrative Officer, Secretary and the Finance Director of the Authority:
Name and Title Signature
Jose Luis Solache, President
Alma Martinez, Chief Administrative
Officer
Maria Quinonez, Secretary
Jose Ometeotl, Finance Director
At the time we signed said Authority Documents, and also on the date of this certificate,
which is the date of actual delivery of the Notes to the purchasers of the Notes, we were the duly chosen,
qualified and acting officers indicated therein and authorized to execute the same, by manual signature or
by facsimile signature, and that any officer executing said Notes by facsimile signature has filed with the
Secretary of State of the State of California his or her manual signature, certified by him or her under oath
as provided by the Uniform Facsimile Signatures of Public Officials Act (Government Code Section
5500, et seq.).
4815-5917-3976.4
2
4. The persons holding the following offices and positions are duly appointed or
elected and qualified thereto and acting therein and were so on and after February 6, 2018 to and
including the date hereof.
Name Title
Jose Luis Solache President
Alma Martinez
Chief Administrative Officer
Maria Quinonez
Secretary
Jose Ometeotl Finance Director
5. No action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, government agency, public board or body, is pending or, to the best knowledge of any of us,
threatened against the Authority, affecting the corporate existence of the Authority or the titles of its
officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance,
or delivery of the Notes or the Authority Documents or the pledge, lien or application of any moneys or
security provided for therein and for the payment of the Notes or the use of the Bond proceeds or in any
way contesting or affecting as to the Authority, the validity or enforceability of the Notes or the Authority
Documents or contesting the tax-exempt status of interest on the Notes, or contesting the powers of the
Authority for the issuance of the Notes, the execution and delivery or adoption of the Authority
Documents, nor to the best of the knowledge of any of us, is there any basis therefor, wherein an
unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of
the Notes, the Authority Documents, or the authorization, execution, delivery or performance by the
Authority of the Authority Documents.
[Signature page follows]
4815-5917-3976.4
S-1 [Signature, Execution, Incumbency and
No Litigation Certificate of the Authority]
I HEREBY CERTIFY that each of the above signatures is the true and genuine signature
of the person who is now the duly chosen, qualified and acting officer indicated by the official title
following such signature.
Dated: February 9, 2018
Maria Quinonez, Secretary
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CERTIFICATE AS TO SPECIMEN NOTES
I, Maria Quinonez, Secretary of the Lynwood Public Financing Authority (the
“Authority”), DO HEREBY CERTIFY as follows:
1. Attached hereto as an exhibit is a specimen of the Authority’s 2018 Bond
Anticipation Notes (the “Notes”), in registered form, delivered to The Bank of New York Mellon Trust
Company, N.A., as trustee (the “Trustee”).
2. Said specimen of the Notes is in substantially the form prescribed by the
Indenture of Trust, dated as of February 1, 2018, by and between the Authority and the Trustee.
[Signature page follows]
4815-5917-3976.4
S-1 [Certificate as to Specimen Bonds]
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of February, 2018.
LYNWOOD PUBLIC FINANCING AUTHORITY
____________________________________
Maria Quinonez, Secretary
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
DIRECTION AND ACKNOWLEDGMENT OF THE AUTHORITY
AS TO APPLICATION OF MONEYS AT CLOSING
February 9, 2018
The Bank of New York Mellon Trust Company, N.A.,
as Trustee
Ladies and Gentlemen:
The Lynwood Public Financing Authority (the “Authority”) is issuing its 2018 Bond
Anticipation Notes (the “Notes”) in the aggregate principal amount of $2,745,000 for the purpose of
providing financing for the acquisition and construction of certain streets and roads improvements for
eligible Measure R Local Return use.
We provide you herewith, in accordance with the provisions of the Indenture of Trust,
dated as of February 1, 2018 (the “Indenture”), between the Authority and The Bank of New York Mellon
Trust Company, N,A, as trustee (the “Trustee”), the proceeds from the Notes.
In accordance with the Indenture, you are hereby directed to deposit and transfer on the
date hereof the proceeds from the sale of the Notes, the sum of $2,745,000, as shown in Schedule A,
attached hereto.
Capitalized terms used herein and Appendix A hereof and not otherwise defined shall
have the meanings ascribed thereto in the Indenture.
4815-5917-3976.4
S-1 [Direction and Acknowledgment of the Authority
as to Application of Moneys at Closing]
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Alma Martinez, Chief Administrative Officer
4815-5917-3976.4
A-1
SCHEDULE A
APPLICATION OF MONEYS FROM THE NOTES AND AVAILABLE MONEYS AT CLOSING
In accordance with the terms of the Indenture, the Trustee shall transfer the proceeds
from the sale of the Notes in the amount of $2,745,000, as follows:
(1) the Trustee shall deposit the amount of $118,226.75 in the Costs of Issuance
Fund;
(2) the Trustee shall deposit the amount of $126,773.25 in the Note Payment Fund;
and
(3) the Trustee shall deposit the amount $2,500,000.00 into the Project Fund.
4815-5917-3976.4
ACKNOWLEDGMENT
The Bank of New York Mellon Trust Company, N.A., as trustee for the Notes, hereby
acknowledges that it has received the above-referenced proceeds and directions to transfer and has
deposited proceeds and made such transfers in accordance with such directions.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.,
as Trustee
Dated: February 9, 2018 By:
Authorized Officer
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
DIRECTION FROM AUTHORITY TO TRUSTEE TO AUTHENTICATE
AND DELIVER THE NOTES
February 9, 2018
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Ladies and Gentlemen:
There has been heretofore delivered to you, duly executed, $2,745,000 aggregate
principal amount of Lynwood Public Financing Authority 2018 Bond Anticipation Notes (the “Notes”),
issued under and pursuant to an Indenture of Trust, dated as of February 1, 2018, between the Authority
and The Bank of New York Mellon Trust Company, N.A., as Trustee.
[Signature page follows]
4815-5917-3976.4
S-1 [Direction from Authority to Trustee to
Authenticate and Deliver the Bonds]
You are hereby ordered to authenticate the Notes and when so authenticated to deliver the
Notes to ZB, N.A., as the Purchaser of the Notes.
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Chief Administrative Officer
Accepted:
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
By:______________________________
Authorized Officer
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
WRITTEN REQUISITION NO. 1
FOR DISBURSEMENTS FROM COSTS OF ISSUANCE FUNDS
The undersigned hereby states and certifies as follows:
(i) I am the duly qualified Chief Administrative Officer of the Lynwood Public
Financing Authority (the “Authority”), and as such, is familiar with the facts herein certified and is
authorized and qualified to execute and deliver this certificate.
(ii) Pursuant to Section 3.03 of the Indenture of Trust, dated as of February 1, 2018,
by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the
“Trustee”), the Trustee is hereby directed to disburse this date from the Costs of Issuance Fund to the
payees designated on Exhibit A attached hereto and by this reference incorporated herein, by check or
wire transfer in accordance with the payment instructions set forth in Exhibit A, the respective sums set
forth opposite such payees’ names, in payment of the Costs of Issuance related to the Notes described on
said Exhibit A.
(iii) Each obligation shown on said Exhibit A has been properly incurred and is a
proper charge against the Costs of Issuance Fund.
(iv) No item to be paid pursuant to this Requisition has been previously paid or
reimbursed from the Costs of Issuance Fund.
(v) The Trustee may rely on payment instructions set forth in Exhibit A as though
given by the Authority with no duty to investigate or inquire as to the authenticity of the invoice or the
payment instructions contained therein.
(vi) Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Indenture.
[Signature page follows]
4815-5917-3976.4
S-1 [Written Requisition No. 1 for
Disbursements from Costs of Issuance Funds]
Dated: February 9, 2018 LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Chief Administrative Officer
4815-5917-3976.4
A-1
Exhibit A to Written Requisition No. 1
Costs of Issuance
To Be Paid At Closing
1. Immediately upon release of the Notes, or as soon thereafter as practicable, pay up to the
following amounts to the parties listed below from the Costs of Issuance Fund held under the
Indenture upon receipt of an invoice:
a. City Attorney fees ................................................................................................. $5,000.00
b. Nixon Peabody LLP, Bond Counsel fees ........................................................... $45,000.00
c. Stifel, Nicolaus & Company, Incorporated, Placement Agent fees .................... $30,000.00
d. Wolf & Company, Inc., Municipal Advisor fees ................................................ $20,000.00
e. California Debt and Investment Advisory Commission fee ................................. $5,000.00
f. The Bank of New York Mellon Trust Company, N.A., Trustee ........................... $5,000.00
g. Contingency .......................................................................................................... $8,226.75
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CERTIFICATE OF THE AUTHORITY
PURSUANT TO THE PLACEMENT AGENT AGREEMENT
I, Alma Martinez, Chief Administrative Officer of the Lynwood Public Financing
Authority (the “Authority”), DO HEREBY CERTIFY as follows:
1. The Authority has complied with and satisfied all of the terms and conditions on
its part to be performed or satisfied under the Documents at or prior to the Closing Date.
2. The representations, warranties and covenants of the Authority contained in the
Documents and in the Agreement are true and correct in all material respects on the date hereof.
3. On the date hereof, all necessary official action of the Authority and of the other
parties to the Documents relating thereto has been taken, the Documents are in full force and effect and
the Documents have not been amended, modified or supplemented in any material respect.
Capitalized terms not otherwise defined herein shall have the meaning ascribed to them
in the Placement Agent Agreement, dated February 6, 2018 by and between the Authority and Stifel,
Nicolaus & Company, Incorporated.
[Signature page follows]
4815-5917-3976.4
S-1 [Certificate of the Authority Pursuant
to the Placement Agent Agreement]
Dated: February 9, 2018
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Chief Administrative Officer
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CERTIFICATE OF THE SECRETARY OF THE AUTHORITY
WITH RESPECT TO JOINT EXERCISE OF POWERS AGREEMENT
I, Maria Quinonez, Secretary of the Lynwood Public Financing Authority (the “Authority”), DO
HEREBY CERTIFY as follows:
Attached hereto as Exhibit A is a copy of the Joint Exercise of Powers Agreement by and
between the City of Lynwood and the Lynwood Redevelopment Agency creating the Lynwood Public
Financing Authority, dated as of December 1, 1992 (the “JPA Agreement”) and such copy is a full, true
and correct copy thereof. The JPA Agreement has not been modified, amended or repealed and is in full
force and effect on and as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of February, 2018.
By:
Maria Quinonez, Secretary
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
CERTIFICATE OF TRUSTEE
The undersigned, a duly authorized officer of The Bank of New York Mellon Trust
Company, N.A. (the “Trustee”) does hereby certify as follows:
1. Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Indenture of Trust, dated as of February 1, 2018 (the “Indenture”), between The Bank of
New York Mellon Trust Company, N.A., as trustee (in such capacity, the “Trustee”) and the Lynwood
Public Financing Authority (the “Authority”) related to the issuance by the Authority of its $2,745,000
2018 Bond Anticipation Notes (the “Notes”).
2. The Trustee is duly organized and existing as a national banking association in
good standing under the laws of the United States of America having the full power and authority to enter
into and perform its duties under the Indenture and to authenticate and deliver the Notes to ZB, N.A., as
the purchaser pursuant to the terms of the Indenture;
3. The Trustee is duly authorized to enter into the Indenture and to authenticate and
deliver the Notes.
4. The Trustee has as of the date hereof authenticated and delivered the Notes and
executed and delivered the Indenture.
5. To the best of the knowledge of the Trustee, the execution and delivery by the
Trustee of the Indenture, and compliance with the respective terms thereof will not, in any material
respect, conflict with, or result in a violation or breach of, or constitute a default under, material
agreement or material instrument to which the Trustee is a party or by which it is bound, or any law or
any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over
the Trustee or any of its activities or properties, or (except with respect to the lien of the Indenture) result
in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the property or assets of the Trustee.
6. To the knowledge of the officer of the Trustee signing this Certificate, there is no
litigation pending or threatened against or affecting the Trustee to restrain or enjoin the Trustee’s
participation in, or in any way contesting the powers of the Trustee with respect to the transactions
contemplated by the Notes and the Indenture.
[Signature page follows]
4815-5917-3976.4
S-1 [Certificate of Trustee]
Dated: February 9, 2018 THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.,
as Trustee
By:
Authorized Officer
4815-5917-3976.4
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
RECEIPT FOR THE NOTES
The undersigned, on behalf of ZB, N.A., does hereby acknowledge receipt this date of the
above-referenced Notes of the Lynwood Public Financing Authority:
ZB, N.A
By:
Authorized Representative
Dated: February 9, 2018
4815-5917-3976.4
PURCHASER LETTER
Lynwood Public Financing Authority
Lynwood, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
$2,745,000
Lynwood Public Financing Authority
2018 Bond Anticipation Notes
Ladies and Gentlemen:
The undersigned (the “Purchaser”) hereby acknowledges that it is purchasing $2,745,000
aggregate principal amount of the Lynwood Public Financing Authority 2018 Bond Anticipation Notes
(the “Notes”) issued pursuant to an Indenture of Trust, dated as of February 1, 2018 (the “Indenture”),
between the Lynwood Public Financing Authority (the “Issuer”) and The Bank of New York Mellon
Trust Company, N.A., as trustee. Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Indenture.
This letter is being provided pursuant to a Placement Agent Agreement, dated February 6, 2018
(the “Placement Agreement”), between the Issuer and Stifel, Nicolaus & Company, Incorporated (the
“Placement Agent”).
The Purchaser acknowledges that the proceeds of the Notes will be used to finance certain streets
and road improvements eligible for Measure R Local Return use.
The Notes together with interest thereon shall be payable from Pledged Revenues.
In connection with the sale of the Notes to the Purchaser, the Purchaser hereby makes the
following representations upon which you may rely:
1. The Purchaser has the authority and is duly authorized to purchase the Notes and to
execute this letter and any other instruments and documents required to be executed by the Purchaser in
connection with its purchase of the Notes.
2. The Purchaser is (a) a “qualified institutional buyer” as that term is defined in Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”), or (b) an “accredited investor” as
that term is defined in Regulation D under the Securities Act.
4815-5917-3976.4
3. The Purchaser is purchasing the Notes for its own loan account and not with a view to, or
for resale in connection with, any distribution of the Notes. However, the Purchaser may sell the Notes at
any time the Purchaser deems appropriate, subject to the transfer restrictions set forth in the Notes and in
the Indenture. The Purchaser understands that it may need to bear the risks of the Notes for an indefinite
period of time, since a sale of the Notes, or any portion thereof, prior to maturity may not be possible.
4. The Purchaser understands that the Notes are not, and are not intended to be, registered
under the Securities Act and that such registration is not legally required as of the date hereof, and further
understands that the Notes (a) are not being registered or otherwise qualified for sale under the “Blue
Sky” laws and regulations of any state, (b) will not be listed in any stock or other securities exchange, (c)
will not carry a rating from any rating agency, and (d) will be delivered in a form that may not be readily
marketable.
5. The Purchaser acknowledges that it has either been supplied with or been given access to
information, financial statements and other financial information, which it has requested from the Issuer
and to which a reasonable lender would attach significance in making lending decisions, and the
Purchaser has had the opportunity to ask questions and receive answers from knowledgeable individuals,
including its own counsel, concerning the Issuer and the Notes and the security therefor so that, as a
reasonable lender, the Purchaser has been able to make a decision to fund the loan evidenced by the
purchase of the Notes. The Purchaser has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its purchase of the Notes.
6. The Purchaser acknowledges that the obligations of the Issuer under the Indenture are
limited obligations of the Issuer and the Notes are secured by a pledge of, security interest in and lien on
all of the Pledged Revenues and moneys in certain funds and accounts established under the Indenture.
7. The Purchaser has made its own inquiry and analysis with respect to the Notes and the
security therefor, and other material factors affecting the security and payment of the Notes. The
Purchaser is aware that there are certain economic and regulatory variables and risks that could adversely
affect the security for the Notes. The Purchaser has reviewed the documents executed in conjunction with
the issuance of the Notes, or summaries thereof, including, without limitation, the Indenture.
8. The Purchaser acknowledges and agrees that the Issuer takes no responsibility for, and
makes no representation to the Purchaser, or any subsequent purchaser, with regard to, a sale, transfer or
other disposition of the Notes in violation of the provisions hereof, or any securities law or income tax
law consequences thereof. The Purchaser also acknowledges that, with respect to the Issuer’s obligations
and liabilities, the Purchaser is solely responsible for compliance with the transfer restrictions on the
Notes in connection with any subsequent transfer of the Notes made by the Purchaser.
9. The Purchaser agrees that it is bound by and will abide by the provisions of the Indenture
relating to transfer, the restrictions noted on the face of the Notes and this Purchaser Letter. The
Purchaser also covenants to comply with all applicable federal and state securities laws, rules and
regulations in connection with any resale or transfer of the Notes by the Purchaser.
10. The Purchaser acknowledges that the purchase of the Notes is made in reliance upon the
certifications, representations and warranties herein by the addressees hereto.
11. The interpretation of the provisions hereof shall be governed and construed in accordance
with California law without regard to principles of conflicts of laws.
4815-5917-3976.4
12. All representations of the Purchaser contained in this letter shall survive the issuance and
delivery of the Notes to the Purchaser as representations of fact existing as of the date of execution and
delivery of this Purchaser Letter.
Date: February 9, 2018 Very truly yours,
Purchaser:
By:_________________________________
Name:______________________________
Title:_______________________________
4814-5169-3913.3
United States of America
State of California
County of Los Angeles
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 Bond Anticipation Notes
THIS NOTE MAY ONLY BE REGISTERED IN THE NAME OF, OR
TRANSFERRED TO, AN “APPROVED INSTITUTIONAL BUYER” AS
DEFINED IN THE INDENTURE AND PURSUANT TO THE TERMS
THEREOF
INTEREST RATE MATURITY DATE DATED DATE
2.551% December 1, 2019 February 9, 2018
REGISTERED OWNER: ZB, N.A.
PRINCIPAL AMOUNT: TWO MILLION SEVEN HUNDRED AND FORTY-FIVE
THOUSAND DOLLARS
The LYNWOOD PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority duly organized and existing under the laws of the State of California (the “Authority”),
for value received, hereby promises to pay to the Registered Owner named above or registered
assigns (the “Owner”), on the Maturity Date stated above (subject to any right of prior redemption
hereinafter provided for), the Principal Amount stated above in lawful money of the United States
of America, and to pay interest thereon in like lawful money from the June 1 or December 1 (each
an “Interest Payment Date”) next preceding the date of authentication hereof, unless said date of
authentication is an Interest Payment Date, in which event such interest is payable from such date
of authentication, and unless said date of authentication is on or before May 15, 2018, in which
event such interest is payable from the Dated Date stated above; provided, however, that if at the
time of authentication of this Note, interest is in default on this Note, this Note shall bear interest
from the date to which interest has previously been paid or made available for payment on this
Note in full at the Interest Rate per annum stated above, payable semiannually on each Interest
Payment Date, commencing June 1, 2018 until such principal amounts are paid in full. The
principal amount of this Note is payable at the designated corporate trust office of The Bank of
New York Mellon Trust Company, N.A., as trustee (the “Trustee”), upon presentation and
surrender of this Note to the Trustee. Payment of the interest on this Note will be made to the
person whose name appears on the bond registration books of the Trustee as the Owner thereof as
of the fifteenth day of the month immediately preceding an Interest Payment Date whether or not
said day is a business day (the “Record Date”), such interest to be paid by check mailed on the
Interest Payment Date to the Owner or, at the option of any Owner of at least $1,000,000 aggregate
principal amount of Notes and upon written notice received by the Trustee prior to the Record
Date, by wire transfer, at the Owner’s address as it appears on such bond registration books or to
4814-5169-3913.3
2
such account as shall have been identified by the Owner in the notice requesting payment by wire
transfer. Any such interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Owner on such Record Date and shall be paid to the person in whose name the Note
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 whereof being given to the Owners not less than ten (10)
days prior to such special record date.
Capitalized terms used herein and not otherwise defined are used with the meanings
ascribed to them in the Indenture (as hereinafter defined).
This Note is one of a series of Notes of various maturities designated as “Lynwood Public
Financing Authority 2018 Bond Anticipation Notes” (the “Notes”), issued in the aggregate
principal amount of $2,745,000, all of like tenor (except for such variations, if any, as may be
required to designate varying numbers, maturities, interest rates or redemption provisions), issued
under and pursuant to an Indenture of Trust (the “Indenture”) by and between the Authority and
the Trustee, dated as of February 1, 2018, approved by the Authority by [Resolution No. 2018.001]
adopted by the Authority Commission on February 6, 2018, under and pursuant to the provisions
of Articles 1 through 4 (commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of
the California Government Code. A copy of the Indenture is on file at the office of the Trustee,
and reference to the Indenture and any and all supplements thereto and modifications and
amendments thereof and to the Bond Law is made for a description of the terms on which the
Notes are issued, the provisions with regard to the nature and extent of the Pledged Revenues, as
that term is defined in the Indenture, and the rights of the Owners of the Notes. All the terms of
the Indenture and the Bond Law are hereby incorporated herein and constitute a contract between
the Authority and the Owners from time to time of this Note, and to all the provisions thereof the
Owner of this Note, by his acceptance hereof, consents and agrees. Each taker and subsequent
Owner hereof shall have recourse to all of the provisions of the Bond Law and the Indenture and
shall be bound by all of the terms and conditions thereof.
The Notes are payable from the Pledged Revenues consisting of (a) proceeds of sale of the
Notes representing capitalized interest; (b) proceeds of sale of refunding bonds; and (c) earning
derived from the investment of any of the foregoing.
The principal or redemption price of and interest on the Notes are payable solely from the
Pledged Revenues, and the Authority is not obligated to pay the Notes except from the Pledged
Revenues. The general fund of the Authority is not liable, and the full faith and credit or taxing
power of the Authority is not pledged, for the payment of the principal or redemption price of and
interest on the Notes. The Notes are not secured by a legal or equitable pledge of, or charge, lien
or encumbrance upon, any of the property of the Authority or any of its income or receipts, except
the Pledged Revenues.
The Notes shall be subject to redemption as set forth in the Indenture.
As provided in the Indenture, notice of redemption shall be given by first class mail not
less than forty-five (45) days prior to the redemption date to the respective registered Owners of
the Notes designated for redemption at their addresses appearing on the bond registration books,
but no defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption.
4814-5169-3913.3
3
If this Note is called for redemption and payment is duly provided therefor as specified in
the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Notes
may be declared due and payable upon the conditions, in the manner and with the effect provided
in the Indenture, but such declaration and its consequences may be rescinded and annulled as
further provided in the Indenture.
This Note is transferable, as provided in the Indenture, only upon the books of the Authority
kept for that purpose at the office of the Trustee, by the Owner hereof in person, or by his attorney
duly authorized in writing, upon the surrender of this Note together with a written instrument of
transfer satisfactory to the Trustee duly executed by the registered Owner or his attorney duly
authorized in writing, and thereupon a new Note or Notes, without coupons, and in the same
aggregate principal amount and of the same maturity, shall be issued to the transferee in exchange
herefor, as provided in the Indenture, and upon the payment of charges, if any, including, after the
first exchange, the cost of preparing new Notes therein prescribed.
The rights and obligations of the Authority and of the Owners of the Notes may be modified
or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
No such modification or amendment shall permit a change in the terms of redemption or maturity
of the principal of any outstanding Note or of any installment of interest thereon or a reduction in
the principal amount or the redemption price thereof or in the rate of interest thereon without the
consent of the Owner of such Note, or shall reduce the percentages or otherwise affect the classes
of Notes, the consent of the Owners of which is required to effect any such modification or
amendment, all as more fully set forth in the Indenture.
It is hereby certified that all of the conditions, things and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Note do exist, have
happened or have been performed in due time, form and manner as required by law and that the
amount of this Note, together with all other indebtedness of the Authority, does not exceed any
limit prescribed by the Constitution or laws of the State of California, and is not in excess of the
amount of Notes permitted to be issued under the Indenture.
4814-5169-3913.3
4
IN WITNESS WHEREOF, the Lynwood Public Financing Authority has caused this Note
to be executed in its name and on its behalf with the manual or facsimile signature of its President
and the manual or facsimile signature of its Secretary and its seal to be reproduced hereon all as of
the Note Date stated above.
LYNWOOD PUBLIC FINANCING
AUTHORITY
By
President
ATTEST:
Secretary
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-mentioned Indenture, which has been authenticated
and registered on __________________.
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Officer
4814-5169-3913.3
5
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax identifying number is
the within-mentioned Note and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the Note registration books of the Trustee with full power of
substitution in the premises.
Dated:
Signature Guaranteed:
______________________________________ ______________________________________
Notice: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever.
4848-3093-1544.1
TAX AND NONARBITRAGE CERTIFICATE
REGARDING THE
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
4848-3093-1544.1
i
TABLE OF CONTENTS
Page
I. THE FINANCING PLAN. ................................................................................................. 2
A. The Notes. ............................................................................................................... 2
B. Issue Date. ............................................................................................................... 2
C. The Authority. ......................................................................................................... 2
D. Governmental Purpose. ........................................................................................... 2
E. Separate Issue.......................................................................................................... 3
F. Security for the Notes. ............................................................................................ 3
G. Funds and Accounts. ............................................................................................... 3
H. Sources and Uses. ................................................................................................... 4
I. Flow of Funds. ........................................................................................................ 5
J. Working Capital Expenditures. ............................................................................... 6
K. Reimbursement. ...................................................................................................... 6
II. PRIVATE ACTIVITY BOND RESTRICTIONS. ............................................................. 6
A. Private Activity Bonds. ........................................................................................... 6
B. Private Business Test. ............................................................................................. 6
C. Private Loan Test. ................................................................................................... 7
III. ARBITRAGE. ..................................................................................................................... 8
A. General. ................................................................................................................... 8
B. Notes. ...................................................................................................................... 8
C. Replacement Proceeds of the Notes. ....................................................................... 9
D. Miscellaneous Provisions...................................................................................... 10
IV. REBATE COMPLIANCE. ............................................................................................... 11
A. Compliance With Rebate. ..................................................................................... 11
B. Exceptions to Rebate............................................................................................. 11
C. 6-Month Spending Exception to Rebate ............................................................... 12
D. 18-Month Spending Exception to Rebate ............................................................. 12
E. 2-Year Construction Exception to Rebate. ........................................................... 12
F. Rebate Amount. .................................................................................................... 12
G. Allocation and Accounting Rules. ........................................................................ 13
H. Record-Keeping Requirements. ............................................................................ 13
V. GENERAL RESTRICTIONS. .......................................................................................... 14
A. Federal Guarantee. ................................................................................................ 14
B. Information Reporting. ......................................................................................... 14
C. Survival of Defeasance. ........................................................................................ 14
D. Future Modifications. ............................................................................................ 15
E. Responsibility. ...................................................................................................... 16
4848-3093-1544.1
TABLE OF CONTENTS
(continued)
Page
ii
APPENDIX A DEFINITIONS ....................................................................APPENDIX A-1
APPENDIX B 6-MONTH SPENDING EXCEPTION TO REBATE ........ APPENDIX B-1
APPENDIX C 18-MONTH SPENDING EXCEPTION TO REBATE ...... APPENDIX C-1
APPENDIX D 2-YEAR CONSTRUCTION EXCEPTION TO
REBATE .............................................................................APPENDIX D-1
APPENDIX E ALLOCATION AND ACCOUNTING RULES ................ APPENDIX E-1
APPENDIX F POST ISSUANCE COMPLIANCE: REMEDIATION
OF DELIBERATE ACTIONS REGARDING PRIVATE
ACTIVITY LIMITATIONS ...............................................APPENDIX F-1
APPENDIX G CERTIFICATE OF THE AUTHORITY CONCERNING
REBATE .............................................................................APPENDIX G-1
EXHIBITS
EXHIBIT A THE PROJECT ...........................................................................Exhibit A-1
EXHIBIT B FINAL NUMBERS .................................................................... Exhibit B-1
EXHIBIT C ECONOMIC LIFE ...................................................................... Exhibit C-1
EXHIBIT D RESERVED ................................................................................Exhibit D-1
EXHIBIT E CERTIFICATE OF THE PURCHASER.................................... Exhibit E-1
EXHIBIT F RESERVED ................................................................................ Exhibit F-1
EXHIBIT G INTERNAL REVENUE SERVICE FORM 8038-G ..................Exhibit G-1
4848-3093-1544.1
1
TAX AND NONARBITRAGE CERTIFICATE
REGARDING THE
$2,745,000
LYNWOOD PUBLIC FINANCING AUTHORITY
2018 BOND ANTICIPATION NOTES
This tax certificate is executed in connection with the issuance and delivery of
$2,745,000 aggregate principal amount of the Lynwood Public Financing Authority 2018 Bond
Anticipation Notes (the “Notes”) by the Lynwood Public Financing Authority (the “Authority”),
a California joint powers authority the members of which are the Lynwood Redevelopment
Agency (the “Agency”) and the City of Lynwood (the “City”). The Authority and the City
hereby represent and warrant that the facts stated herein are true and correct in all material
respects and covenant to comply with all provisions contained herein (except as expressly noted)
concerning (i) the use and investment of the proceeds of the Notes, (ii) the rebate, to the extent
required, of earnings derived from the investment of such proceeds, and (iii) the use of the
facilities financed with the proceeds of the Notes. The Authority and the City are together
referred to herein as the “Issuer.”
In Section 6.14 of an Indenture of Trust, dated as of February 1, 2018 (the “Indenture”),
by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as
trustee (the “Trustee”), the Authority has covenanted, among other things, to at all times do and
perform all acts and things permitted by law and necessary or desirable in order to assure that
interest paid by the Authority on the Notes will be excluded from the gross income, for federal
income tax purposes, pursuant to Section 103 of the Internal Revenue Code of 1986, as amended
(the “Code”). The City hereby makes the same general covenant. The representations and
covenants of the Authority and the City herein are in furtherance of such general covenants.
The accuracy of the representations and compliance with such covenants are essential to
the continued tax-exempt status of the interest on the Notes. Nixon Peabody LLP (“Bond
Counsel”) will rely on the accuracy of the Issuer’s representations of fact and the Issuer’s
compliance with the covenants set forth herein in providing its opinion with regard to the
exclusion, under Sections 103 and 141 through 150 of the Code, of the interest on the Notes from
gross income for federal income tax purposes.
The Issuer understands that compliance with the covenants and representations contained
in this tax certificate after the Issue Date (defined below) and while the Notes are outstanding is
necessary to ensure the interest on the Notes remains excludable from gross income for federal
income tax purposes. The Issuer agrees to periodically monitor the requirements applicable to
the Notes as described in this tax certificate, and to take such action to ensure such requirements
are complied with. If the Issuer determines that there is an unexpected failure to satisfy the
requirements—whether set forth in this tax certificate or otherwise—for maintaining the
exclusion of interest on the Notes from federal gross income under Section 103 of the Code, it
shall immediately evaluate, with the assistance of Bond Counsel, the availability of the remedies
as provided under the Code, including Section 1.141-12 of the Regulations and other IRS
guidance provided as to remediation of violations of Sections 103 and 141-150 of the Code.
The federal income tax limitations and restrictions described herein require ongoing
4848-3093-1544.1
2
monitoring and compliance based on actual facts and circumstances after the date hereof. The
Issuer will regularly monitor compliance with such requirements. The Issuer will contact Bond
Counsel as to any elements of the requirements in such sections that they do not feel proficient
in, and will seek additional guidance. In addition, the Issuer is aware that there are procedures
for self-reporting and correcting any post-issuance compliance violations, including procedures
such as those described in Appendix D as well as the IRS Voluntary Closing Agreement
Procedure and will comply with such procedures to the extent necessary to ensure that the
interest on the Notes remains excludable from gross income for federal income tax purposes.
The Issuer is aware that certain investment earnings on Note proceeds may be subject to rebate to
the Treasury Department of the United States and has executed Appendix E in connection
therewith.
All capitalized terms used in this tax certificate and not otherwise herein defined have the
meanings ascribed to them by the Indenture. Any term defined herein shall apply for all
purposes unless otherwise specifically provided.
I. THE FINANCING PLAN.
A. The Notes.
The aggregate principal amount of the Notes is $2,745,000.00. The Notes will mature in
the amount and on the date set forth on Exhibit B. Interest with respect to the Notes is payable
semi-annually each June 1 and December 1, commencing June 1, 2018, to and including the final
maturity date thereof, at the per annum rate set forth on Exhibit B. The Notes are being
purchased by ZB, N.A. (the “Purchaser”) pursuant to a private placement.
B. Issue Date.
The Notes are being issued to the Purchaser on the date hereof (the “Issue Date”).
C. The Authority.
The Authority was formed pursuant to the Joint Powers Law (Articles 1 through 4 of
Chapter 5, Division 7, Title 1 of the California Government Code) and a Joint Exercise of
Powers Agreement, dated as of December 1, 1992 (the “JPA Agreement”), by and between the
City and the Lynwood Redevelopment Agency (the “Agency”), and is authorized under the JPA
Agreement and under the laws of the State of California to finance the acquisition and
construction of public capital improvements, including having the power to issue bonds for any
of its corporate purposes. The Notes are being issued pursuant to a resolution of the Commission
of the Authority, adopted on February 6, 2018 (the “Resolution”).
D. Governmental Purpose.
The Notes are being issued by the Authority to (i) finance the acquisition and
construction of certain street and road improvements of the City and (ii) pay costs of executing
and delivering of the Notes. See Exhibit A for a fuller description of the Project.
4848-3093-1544.1
3
E. Separate Issue.
The Issuer hereby represents that there are no other governmental obligations (i) which
are being issued at substantially the same time as the Notes, (ii) which are being sold pursuant to
the same plan of financing as the Notes, and (iii) which are reasonably expected to be paid from
substantially the same source of funds as the Notes (or will have substantially the same claim to
be paid from substantially the same source of funds). With respect to (i) above, governmental
obligations are treated as sold at substantially the same time if they are sold less than 15 days
apart. With respect to (ii) above, factors material to the plan of financing include the purposes
for the Notes and the structure of the financing. Pursuant to Section 1.150-1(c)(1)(ii) of the
Regulations, generally:
a. bonds to finance a single project or related projects are part of the
same plan of financing;
b. short-term bonds to finance working capital expenditures and long-
term bonds to finance capital projects are not part of the same plan of financing; and
c. certificates of participation in a lease and general obligation bonds
secured by tax revenues are not part of the same plan of financing.
F. Security for the Notes.
The principal of the Notes, together with the interest thereon, shall be payable from (i)
proceeds of the sale of the Notes representing capitalized interest; (ii) proceeds of the sale of
bonds in anticipation of which the Notes are being issued for the purpose of refunding the Notes;
and (iii) earnings derived from the investment of any of the foregoing (together with (i) and (ii),
the “Pledged Revenues”). In addition, the Notes shall be secured by a pledge of all of the
moneys in all funds and accounts held by the Trustee, including all amounts derived from the
investment of such moneys. Such pledge shall constitute a lien on the Pledged Revenues and
such other moneys for the payment of the principal of an interest and premium (if any) on the
Notes in accordance with the terms of the Indenture. So long as any of the Notes are
Outstanding, the Pledged Revenues and such moneys shall not be used for any other purpose,
except as set forth in the Indenture.
G. Funds and Accounts.
The following special funds and accounts have been established in connection with the
execution and delivery of the Notes:
1. The “Project Fund,” established pursuant to Section 3.04 of the Indenture
for the purpose of paying the costs of the Project;
2. The “Note Payment Fund,” established pursuant to Section 5.02 of the
Indenture for the purpose of, among other things, paying the principal of and interest on the
Notes. The following accounts are created within the Note Payment Fund:
4848-3093-1544.1
4
(i) the “Interest Account,” created for the purpose of paying the
interest on the Notes as it shall become due and payable; and
(ii) the “Principal Account,” created for the purpose of paying the
principal or Redemption Price of the Notes as it shall become due and payable, whether at
maturity or redemption; and
3. The “Costs of Issuance Fund,” established pursuant to Section 3.03 of
the Indenture for the purpose of paying costs incurred in connection with the issuance of the
Notes; and
4. The “Rebate Fund,” established pursuant to this Tax and Nonarbitrage
Agreement, for the purpose of facilitating compliance with the rebate requirements described in
Section IV hereof.
H. Sources and Uses.
1. Proceeds of the Notes. The total amount received by the Authority from
the Purchaser on the date hereof is $2,745,000.00 (being the par amount of the Notes), which
will be deposited as follows:
a. $2,500,000.00 shall be deposited to the Project Fund to pay the
costs of the Project;
b. $126,773.25 shall be deposited to the Note Payment Fund to pay
capitalized interest; and
c. $118,226.75 shall be deposited to the Costs of Issuance Fund to
pay the costs of issuing the Notes.
2. Earnings. All investment earnings on the proceeds of the Notes deposited
to any funds or accounts established in connection with the Notes will be deposited to the Project
Fund until the completion of the Project and thereafter to the Note Payment Fund. The Trustee
may commingle any of the funds or accounts established pursuant to the Indenture into a
separate fund or funds for investment purposes only, provided that all funds or accounts held by
the Trustee shall be accounted for separately as required by the Indenture.
3. Total Sources and Uses. The total expected sources and uses of funds are
set forth on Exhibit B.
4848-3093-1544.1
5
I. Flow of Funds.
1. Note Payment Dates. The interest on the Notes will be paid on each June
1 and December 1 commencing on June 1, 2018 (each, an “Interest Payment Date”). The
principal of the Notes will be paid on December 1, 2019 (the “Maturity Date,” and together
with the Interest Payment Date, each, a “Payment Date”).
2. Project Fund. Proceeds of the Notes will be deposited to the Project Fund
to pay costs of the Project. Upon completion of the Project, any remaining balance of money in
the Project Fund shall be transferred to the Note Payment Fund to be credited to the payment of
the Notes as provided in the Indenture.
3. Costs of Issuance Fund. Proceeds of the Notes will be deposited to the
Costs of Issuance Fund to pay all expenses directly or indirectly payable by the Authority and
related to the authorization, issuance, sale and delivery of the Notes. At the end of six months
from the Closing Date, or upon earlier receipt of a Certificate of the Authority stating that
amounts in the Costs of Issuance Fund are no longer required for the payment of costs of
issuance, the Costs of Issuance Fund shall be closed and any amounts then remaining in the
Costs of Issuance Fund shall be transferred to the Note Payment Fund.
4. Note Payment Fund. All Pledged Revenues will be deposited by the
Trustee to the Note Payment Fund and will be used and withdrawn by the Trustee solely for the
purpose of paying the principal of and interest on the Notes when they become due and payable.
Any amounts on deposit in the Note Payment Fund when there are no longer any outstanding
Notes shall be transferred to the Authority for any lawful purpose.
5. Rebate Fund. Absent an opinion of Bond Counsel that the exclusion from
gross income for federal income tax purposes of interest on the Notes will not be adversely
affected, the Issuer shall cause to be deposited in the Rebate Fund which the Issuer shall
establish for such purpose such amounts as are required to be deposited therein pursuant to this
Tax and Nonarbitrage Certificate. All money at any time deposited in the Rebate Fund shall be
held by the Issuer in trust for payment to the United States Treasury. All amounts on deposit in
the Rebate Fund shall be governed by the Indenture and Section IV of this Tax and Nonarbitrage
Certificate (in case of any conflicts, the provisions of this Tax and Nonarbitrage Certificate shall
prevail), unless and to the extent that the Issuer obtains an opinion of Bond Counsel that the
exclusion from gross income for federal income tax purposes of interest on the Notes will not be
adversely affected if such requirements are not satisfied. The Issuer shall make calculations,
transfers and payments with respect to amounts deposited or to be deposited in the Rebate Fund
in accordance with this Tax and Nonarbitrage Certificate. Any funds remaining in the Rebate
Fund after redemption and payment in full of the Notes and the rebate payments described in this
Tax and Nonarbitrage Certificate being made shall be withdrawn and retained by the Issuer.
6. Surplus. After payment or prepayment of all amounts due with respect to
the Notes, the payment of all fees and expenses to the Trustee, or satisfactory provision for such
payments having been made, and the transfer of any amounts required to be transferred to the
Rebate Fund in accordance with this tax certificate, any amounts remaining in any of the funds
4848-3093-1544.1
6
or accounts established under the Indenture and not required for such purposes shall be remitted
to the Issuer and used for any lawful purpose thereof.
J. Working Capital Expenditures.
1. General. Pursuant to Section 1.148-6(d)(3) of the Regulations, the
proceeds of the Notes used for working capital expenditures (i.e., all expenditures other than
Capital Expenditures as defined in Appendix A) may be treated as expended as of any date only
to the extent that those expenditures exceed Available Amounts as of that date, with certain
exceptions.
2. Exceptions. Pursuant to Section 1.148-6(d)(3)(ii)(A) of the Regulations,
excepted from the general working capital expenditure rule described in paragraph 1 above are,
inter alia, amounts used to pay capitalized interest, amounts used to pay costs of issuance,
amounts used to make rebate payments, and principal or interest on an issue paid for unexpected
excess sale or investment proceeds. Amounts used to pay capitalized interest on the Notes,
amounts deposited to the Costs of Issuance Fund, amounts used to pay rebate, and moneys
remaining in the Project Fund upon completion of the Project that are applied to offset scheduled
Base Rental Payments are, therefore, not subject to the working capital expenditure limitation.
K. Reimbursement.
No proceeds of the Notes will be applied to reimburse the Issuer for expenditures paid
prior to the Issue Date.
II. PRIVATE ACTIVITY BOND RESTRICTIONS.
A. Private Activity Bonds.
The Notes are intended to avoid classification, for purposes of federal income taxation, as
“private activity bonds” as such term is defined in Section 141(a) of the Code. In order to
avoid such classification, the Notes must not satisfy either (i) the private business test, as
described in Section B below, or (ii) the private loan test, as described in Section C below.
B. Private Business Test.
1. General. The private business test will be satisfied (and the Notes will be
private activity bonds) if both the “private business use test” and the “private security or
payment test” are satisfied.
2. Private Business Use Test. In order to fail the private business use test, no
more than 10% of the Note proceeds (or the Project) may be used in any trade or business
activity carried on by any person or entity, including the United States Government and all of its
agencies and instrumentalities, other than a state or political subdivision of a state (hereafter, any
such person is referred to as a “Nongovernmental Person” and any such use is referred to as a
“Nongovernmental Use”). In addition, no more than 5% of the Note proceeds (or the Project)
may be used in any trade or business activity carried on by any Nongovernmental Person where
such use is (i) disproportionate to a related governmental use or is (ii) unrelated to the
4848-3093-1544.1
7
governmental use of the proceeds of the Notes. For purposes of the private business use test, the
Note proceeds (and the Project) are not deemed used by any person (including an industrial
customer) who uses the Project on the same basis as the general public. However, use by each
and every person using the Project on a basis different from the general public is aggregated in
determining if the thresholds for private activity bond status are satisfied. Nongovernmental Use
includes, for example, use as a lessee, the purchase of output, use as a joint venturer, licensing
the Project to a Nongovernmental Person, or instances in which benefits are derived from the
lease items, such as having the items satisfy zoning or other permit requirements in connection
with a trade or business of a Nongovernmental Person.
3. Management Contracts. No portion of the Project will be used by any
corporation or other Nongovernmental Person pursuant to a management or similar contract
unless the requirements of Revenue Procedure 2017-13, as amended and amplified, are otherwise
met.
4. Leases, Licenses and Joint Ventures. The Issuer does not currently lease,
license, sublease or sublicense, nor will the Issuer lease, license, sublease or sublicense during
the period the Notes are Outstanding, any portion of the Project to a Nongovernmental Person
such that the Notes will be considered private activity bonds. The Issuer is not currently engaged
in any joint venture nor will the Issuer engage in any joint venture with any Nongovernmental
Person during the period the Notes are Outstanding in which any portion of the Project will be
used by a Nongovernmental Person. No portion of the Project satisfies the zoning or permit
requirements in connection with a trade or business of a Nongovernmental Person.
5. No Nongovernmental Use. As of the date hereof, the Issuer does not
anticipate any Nongovernmental Use of any of the Project such that the Notes would constitute
private activity bonds.
6. Private Security or Payment Test. No more than 10% (5% in the case of
unrelated or disproportionate use) of the payment of the principal of and interest with respect to
the Notes will be, directly or indirectly, (i) secured by any interest in property used or to be used
in a trade or business of a Nongovernmental Person, or (ii) secured by any interest in payments
in respect of such property, or (iii) derived from payments in respect of property used or to be
used in a trade or business of a Nongovernmental Person. In any year, the Issuer will not receive
payments with respect to private use of the Project in excess of 10% (5% in the case of unrelated
or disproportionate use) of the Debt Service paid in such year.
C. Private Loan Test.
In order to fail the private loan test, no more than the lesser of $5,000,000 or 5% of the
Note proceeds may be used (directly or indirectly) to make or finance loans to a
Nongovernmental Person. No portion of the proceeds of the Notes is or shall be used, directly or
indirectly, to make or finance any loan to a Nongovernmental Person. The Issuer will not lease
any portion of the Project (or otherwise enter into any other deferred payment arrangement) in a
manner which will transfer federal income tax ownership of any portion of the Project to a
Nongovernmental Person or which, in substance, shifts significant burdens and benefits of
ownership to a Nongovernmental Person.
4848-3093-1544.1
8
III. ARBITRAGE.
A. General.
Pursuant to Section 148(c) of the Code, the investment of the Proceeds of the Notes in
Nonpurpose Investments that produce a Yield materially higher than the Note Yield is
permissible only during the temporary periods described below.
B. Notes.
1. 3-Year Temporary Period. The investment of the original and investment
proceeds of the Notes allocable to the Project, including allocable portions of the deposit to the
Project Fund and the Costs of Issuance Fund will qualify for a 3-year temporary period because
the Issuer reasonably expects to satisfy the requirements of the time test, due diligence test and
expenditure test.
(i) Time Test. The Issuer will incur within 6 months of the
date hereof a substantial binding obligation to a third party to expend at least 5% of the Net Sale
Proceeds of the Notes on the Project. An obligation is not binding if it is subject to
contingencies within the County’s or Authority’s or a related party’s control.
(ii) Due Diligence Test. The Issuer will proceed with due
diligence to acquire the Project and allocate the Net Sale Proceeds of the Notes to expenditures.
(iii) Expenditure Test. The Issuer reasonably expects to expend at least
85% of the Notes proceeds received on the date hereof and deposited to the Project Fund and to
the Costs of Issuance Fund to pay Project costs and costs of issuance on or before February 9,
2021 to complete the Project. However, to the extent the District is reimbursed, pursuant to a
grant or otherwise, by the State, the United States Government, or any other person for
expenditures made with the Notes proceeds, such reimbursed amounts shall be treated as Note
proceeds. As Note proceeds, such amounts are subject to rebate and must be invested at a
restricted yield after February 9, 2021 as if such amounts were original proceeds of the Notes.
2. Project Fund / Costs of Issuance Fund. Pursuant to Section 148(c) of the
Code and Section 1.148-2(e)(2)(i) of the Regulations, the original proceeds of the Notes
deposited to the Project Fund and the Costs of Issuance Fund to pay costs of issuance, plus
investment earnings thereon, may be invested at an unrestricted yield until expended, but no
longer than three years from the date hereof. On and after the date that is three years from the
date hereafter, the Issuer covenants to invest all amounts in the Project Fund and in the Costs of
Issuance Fund in excess of the lesser of 5% of the Sale Proceeds of the Notes or $100,000 at a
yield not greater than the Yield with respect to the Notes or in obligations the interest on which is
(i) excluded from gross income for federal income tax purposes and (ii) not subject to federal
alternative minimum tax (“Qualified Tax-Exempt Obligations”). In determining the yield on
such Investments, any amount paid to the United States in accordance with Section 1.148-5(c) of
the Regulations, including any Rebate Amount, is treated as a payment for those Investments that
reduce the yield on the Investments (“Yield Reduction Payments”). All earnings on
investments purchased with amounts held in the Project Fund and the Costs of Issuance Fund are
subject to rebate to the extent set forth in Section IV hereof.
4848-3093-1544.1
9
3. Earnings on Note Proceeds. Pursuant to Section 1.148-2(e)(6) of the
Regulations, amounts received as earnings on the proceeds of the Notes may be invested without
regard to yield for the longer of the three-year period described in paragraph 1 above or the one-
year period following receipt of such earnings. After such period, such amounts received as
earnings will be invested at a yield not in excess of the Yield with respect to the Notes or in
Qualified Tax-Exempt Obligations. Earnings attributable to amounts held in the funds and
accounts created under the Trust Agreement are subject to rebate as set forth in Section IV
hereof.
C. Replacement Proceeds of the Notes.
1. The Note Payment Fund. Amounts deposited in the portion of the Note
Payment Fund treated as a Bona Fide Debt Service Fund (the “Payment Account”) will be spent
within a 12-month period beginning on the date of deposit (and any amount received from
investment of moneys held in the fund will be spent within a 12-month period beginning on the
date of receipt), except for a reasonable carry-over amount not to exceed the greater of 12-
months’ earnings on such fund or 1/12 of annual debt service with respect to the Notes. The
Payment Account is intended to be used primarily to achieve a proper matching of revenues and
debt service within each Note Year and therefore qualify as a Bona Fide Debt Service Fund.
Pursuant to Sections 1.148-2(e)(5)(ii) and 1.148-9(d)(2)(iv) of the Regulations, any amounts
deposited in the Payment Account may be invested without regard to yield for 13 months.
Investment earnings on amounts held in the Payment Account are not subject to the rebate
requirement of Section IV hereof.
2. No Other Sinking Funds or Pledge Funds. The Issuer does not expect to
create or establish any other sinking fund or similar fund with respect to the Notes. No amounts
in other funds or accounts are reserved or pledged for the payment of the principal of or interest
with respect to the Notes and it is not expected that any such other accounts or funds will be so
used, nor is there any reasonable assurance that any portion of such other accounts or funds will
be available to make debt service payments if the Issuer encounters financial difficulties.
3. Other Replacement Funds. No portion of the proceeds from the sale of the
Notes will be used as a substitute for other funds (1) which were otherwise to be used as a source
of financing for the Project and (2) which will be used to acquire, directly or indirectly,
obligations producing a yield in excess of the Yield with respect to the Notes.
4. Reasonable Cash Balance. The Issuer’s current available cash and cash
equivalents are not more than that required as a reasonable working capital balance (which is not
disproportionate to the total annual revenues of the Issuer, respectively). Further, the Issuer
certifies that the remainder (together with future excess cash that may become available) is
expected to be used, respectively, by the Issuer to meet additional capital requirements.
5. Notes Not Outstanding Longer Than Necessary. Replacement proceeds
arise to the extent that the Issuer reasonably expects, as of the date hereof, that (i) the term of the
Notes will be longer than is reasonably necessary for the governmental purposes of the Notes,
and (ii) there will be available amounts during the period the Notes are outstanding longer than is
necessary, as determined under Section 1.148-l(c)(4)(i) of the Regulations. Replacement
4848-3093-1544.1
10
Proceeds do not arise if the Notes have a weighted average maturity that does not exceed 120%
of the average reasonably expected economic life of the Project, determined in the same manner
as under Section 147(b) of the Code.
a. Weighted Average Maturity. The final stated maturity of the
Notes is December 1, 2019. The average maturity of the Notes (determined by taking into
account the Issue Price of the Notes) is not greater than 1.8111 years. The average maturity of
the Notes is a weighted average computation determined as follows:
(1) The Issue Price of each principal maturity is multiplied by
the number of payment years that such principal maturity is Outstanding; and
(2) The products obtained as a result of the calculation
described in (1) above for each principal installment are added together, and the resulting sum is
divided by the Issue Price of the Notes.
b. Economic Life of the Project. The 120% of the reasonably
expected economic life of the Project is not less than 20.00 years. See Exhibit C. This
economic life represents a conservative estimate of the life of the Project. The reasonably
expected economic life of the various assets are not less than the guideline lives contained in
venue Procedure 62-21, 1962-2 C.B. 418 (in the case of structures) and the midpoint class line as
specified in Revenue Procedure 83-35, 1983-1 C.B. 745 (in the case of machinery and
equipment). The average maturity of the Notes, 1.8111 years, will not exceed 120% of the
“reasonably expected economic life” of the Project (24.00 years).
D. Miscellaneous Provisions.
1. Overissuance. The proceeds of the Notes and the reasonably anticipated
investment proceeds thereon do not exceed the amount necessary for the purpose for which the
Notes are executed and delivered, i.e., paying costs of Project, paying capitalized interest and
paying costs of issuance. Amounts needed for those purposes will not be less than the Issue
Price of the Notes, plus anticipated earnings arising by reason of the investment of Note proceeds
pending expenditure thereof (reduced by any earnings in excess of the amount which would have
been earned if the proceeds of the Notes had been invested at an amount equal to the Yield with
respect to the Notes, as described below).
2. Yield. The yield on the Notes is the discount rate that, when used in
computing the present value on the Issue Date of all the expected issue payments of principal and
interest and fees for qualified guarantees (if any) that are paid and to be paid on the Notes,
produces an amount equal to the present value, using the same discount rate, of the aggregate
issue price of the Notes on the Issue Date. The present value on the Issue Date of the aggregate
issue price of the Notes, based upon certain information provided by the Purchaser is
$2,745,000.00 (the par amount of the Notes). See Exhibit E. The yield on the Notes computed
in this manner and based upon calculations provided by Stifel, Nicolaus & Company,
Incorporated (the “Placement Agent”) is not less than 2.5510 percent.
3. Artifice or Device. The issuance of the Notes is not and will not be part of
a transaction or series of transactions which are an attempt to circumvent the provisions of
4848-3093-1544.1
11
Section 148 of the Code and the regulations promulgated thereunder, or under any similar
provision of prior law, which (i) enables the Issuer to exploit the difference between tax-exempt
and taxable interest rates to gain a material financial advantage and (ii) increases the burden on
the market for tax-exempt obligations.
4. No Pool Bonds. The Issuer will not use the proceeds of the Notes directly
or indirectly to make or finance loans to two or more ultimate borrowers.
5. No Hedge Bonds. The Notes qualify for a 3-year temporary period
because the Issuer reasonably expects that not less than 85% of the spendable proceeds of the
Notes will be expended on the acquisition and construction of the Project within 3 years of the
Issue Date. Less than 50% of the proceeds of the Notes will be invested in investment securities
with a “substantially guaranteed yield” for 4 years or more. Therefore, pursuant to Section
149(g) of the Code, none of the Notes are hedge bonds.
6. Hedging Transactions. The Issuer agrees that it will not enter into a hedge
related to the Notes within the meaning of Section 1.148-4(h)(2) of the Code, unless the Issuer
first obtains an opinion of Bond Counsel to the effect that such hedge will not adversely affect
the exclusion of interest with respect to the Notes from gross income for federal income tax
purposes.
7. Nonarbitrage Bonds. On the basis of the foregoing, it is not expected that
the proceeds of the Notes will be used in a manner that will cause the Notes to be treated as
“arbitrage bonds” within the meaning of Section 148 of the Code. To the best of the
knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that
would materially change such expectations.
IV. REBATE COMPLIANCE.
A. Compliance With Rebate.
Section 148(f)(2) of the Code requires that an amount equal to the Rebate Amount (as
defined in Appendix A) be paid by the Issuer to the United States Government, except as set
forth in Paragraphs B through E below. In order to satisfy the Issuer’s obligation to pay rebate,
the Issuer hereby covenants and agrees that to comply with the rebate requirements with respect
to the Notes in accordance with the procedures discussed in this Section IV and to timely provide
any funds required to be paid in accordance with this Section IV.
B. Exceptions to Rebate.
The proceeds of the Notes may qualify for the 6-Month Spending Exception to Rebate (as
defined in Appendix B), 18-Month Exception to Rebate (as defined in Appendix C) and/or the
2-Year Construction Exception to Rebate (as defined in Appendix D). However, the exceptions
to rebate are not required to be applied and the Rebate Amount may be computed and, to the
extent owed, paid.
4848-3093-1544.1
12
C. 6-Month Spending Exception to Rebate.
To the extent that proceeds of the Notes satisfy the requirements of the 6-Month
Spending Exception to Rebate, the Issuer is relieved from paying the Rebate Amount on such
Note proceeds. See Appendix B. However, the Issuer is not required to apply the 6-Month
Spending Exception to Rebate, and may pay the Rebate Amount on such proceeds.
D. 18-Month Spending Exception to Rebate.
To the extent that proceeds of the Notes satisfy the 18-Month Spending Exception to
Rebate, the Issuer is relieved from paying the Rebate Amount on such Note proceeds. See
Appendix C. However, the Issuer is not required to apply the 18-Month Spending Exception to
Rebate, and may pay the Rebate Amount on such proceeds.
E. 2-Year Construction Exception to Rebate.
To the extent that proceeds of the Notes satisfy the requirements of the 2-Year
Construction Exception to Rebate (discussed in Appendix D), the Issuer is relieved from paying
the Rebate Amount on such Note proceeds. However, the Issuer is not required to apply the 2-
Year Construction Exception to Rebate, and may pay the Rebate Amount on such proceeds.
F. Rebate Amount.
1. In General. To the extent that the Notes do not qualify for the 6-Month
Spending Exception to Rebate, the 18-Month Spending Exception to Rebate or the 2-Year
Construction Exception to Rebate, the Issuer covenants and agrees to comply with the rebate
requirements on the Notes in accordance with the procedures discussed in this Section IV.
2. Computation of Rebate Amount.
a. Annual Computation. Within 45 days of the end of each Note
Year, the Issuer shall cause the Rebate Amount from the Issue Date of the Notes through such
date to be computed. For the purposes of this computation, any Nonpurpose Investments held as
of the end of each such Note Year shall be treated as a Nonpurpose Receipt in an amount equal
to the Fair Market Value of such Nonpurpose Investments. For fixed rate investments; “Present
Value” may be substituted for “Fair Market Value” in the preceding sentence if the Issuer
chooses to treat all fixed rate investments in such manner (see Section 1.148-5(d)(5) of the
Regulations for computation of the Present Value of an Investment). The annual computation of
Rebate Amount is for record-keeping and income tax purposes. Each fifth year and in the final
Note Year, the computation is used to determine the amount of rebate to be paid to the U.S.
Government.
b. Computation Credit. On the last day of each Note Year during
which there are amounts allocated to gross proceeds of the Notes that are subject to the rebate
requirement, and on the final maturity date, the Rebate Amount may be reduced by a $1,000
computation credit, adjusted for inflation as permitted.
4848-3093-1544.1
13
c. Bona Fide Debt Service Fund Exception. Pursuant to
Section 148(f)(4)(A)(ii) of the Code, no rebate calculations need to be made with respect to
amounts held in the Bona Fide Debt Service Fund.
3. Transfer of Rebate Amount to Rebate Fund. Immediately following the
computation of the Rebate Amount, the Issuer shall transfer or cause to be transferred from the
Rebate Fund, an amount such that the total amount on deposit in the Rebate Fund is equal to
such Rebate Fund. If the amount then on deposit in the Rebate Fund is in excess of the Rebate
Amount, such excess shall be transferred to the Issuer and applied to pay the costs of capital
projects.
4. Payment of Rebate Amount from the Rebate Fund.
a. Rebate Installments. No later than 60 days after each Installment
Computation Date, the Issuer shall pay from the Rebate Fund to the United States Government
an amount that, when added to the future value of all prior payments hereunder, equals at least
90% of the Rebate Amount for the period from the Issue Date of the Notes through such
Installment Computation Date. The payment shall be accompanied by Internal Revenue Service
Form 8038-T.
b. Final Rebate Payment. No later than 60 days after the Final
Computation Date, the Issuer shall pay from the Rebate Fund to the United States Government
an amount that, when added to all prior payments under this provision, equals 100% of the
Rebate Amount for the period from the Issue Date of the Notes through the retirement date. This
payment shall also be accompanied by Internal Revenue Service Form 8038-T.
c. Insufficient Moneys. To the extent that amounts on deposit in the
Rebate Fund on the dates payments are required hereunder are insufficient to make the required
payment, the Issuer shall deposit additional moneys from legally available funds to the Rebate
Fund to cover such shortfall.
G. Allocation and Accounting Rules.
Except as otherwise provided in Appendix E, the Issuer may use any Reasonable,
Consistently Applied Accounting Method to account for the Gross Proceeds of the Notes for
purposes of calculating the Rebate Amount.
H. Record-Keeping Requirements.
1. Information Needed. In order to make the calculations necessary to
determine Rebate Amount, very detailed records with respect to each and every fund and account
must be maintained. Therefore, with respect to all Nonpurpose Investments acquired in any fund
or account established and held by or under the Trust Agreement, the following information must
be recorded and retained: (i) the purchase date of each Investment, (ii) the purchase price,
(iii) information establishing that the purchase price is the Fair Market Value as of such date (for
example, the published quoted bid by a dealer in such Investment on the date of purchase),
(iv) any accrued interest paid, (v) the face amount, (vi) the coupon rate, (vii) the periodicity of
interest payments, (viii) the disposition price, (ix) any accrued interest received upon disposition,
4848-3093-1544.1
14
and (x) the disposition date. To the extent that any Investment is allocated or deposited in any of
these funds, it shall be treated as if it were acquired at its Fair Market Value at that time. The
Issuer shall maintain or cause to be maintained such records with respect to all Investments of
Gross Proceeds. However, because each Nonpurpose Receipt is treated as a positive cash flow
as part of the Future Value computation and each reinvestment is treated as a Nonpurpose
Payment, normally the only amounts that are Future Valued are those Nonpurpose Receipts
which are not reinvested, i.e., amounts which are expended. Therefore, the Issuer must keep
particularly accurate records of the date expenditures of Nonpurpose Receipts are made.
2. Segregation of Proceeds. In order to perform the calculations required by
the Code, it is necessary to track separately all of the Gross Proceeds of the Notes. To that end,
the Issuer shall take the measures necessary to account fully for the Gross Proceeds.
3. Record Retention. The Issuer shall retain all records with respect to the
calculations required under these “Rebate Compliance” provisions for at least six years after the
date on which the principal and interest with respect to the Notes has been paid in full, whether
upon maturity, redemption or acceleration thereof.
V. GENERAL RESTRICTIONS.
A. Federal Guarantee.
Pursuant to the Section 149(b) of the Code, all proceeds of the Notes, other than
investments of the bona fide debt service funds (i.e., the amounts in the Payment Account), if
invested in obligations directly or indirectly guaranteed (in whole or in part) by the United States
(or an agency or instrumentality thereof) will be invested solely in obligations issued by the
United States Treasury Department, in obligations guaranteed by the Federal Housing
Administration, the Veterans Administration, the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association,
or in such other investments as may be permitted under regulations issued pursuant to Section
149(b) of the Code, unless another investment of such funds will not, in the opinion of nationally
recognized bond counsel, impair the exclusion from gross income of the interest on the Notes
from federal income taxation and the exemption of such interest from California personal income
taxation.
B. Information Reporting.
The Issuer has reviewed the Internal Revenue Service Form 8038-G attached hereto as
Exhibit G, and all the information thereon related to the Issuer and its anticipated use of Note
proceeds is correct and accurate.
C. Survival of Defeasance.
Notwithstanding anything in this certificate or any other provision of the Indenture to the
contrary, the obligation to remit the Rebate Amount to the United States Department of the
Treasury and to comply with all other requirements contained in this tax certificate shall survive
the defeasance of the Notes.
4848-3093-1544.1
15
D. Future Modifications.
Notwithstanding any other provision of this tax certificate, the covenants and obligations
hereunder shall be deemed modified to the extent that the Issuer secures an opinion of Bond
Counsel that any action required hereunder is no longer required or that some further action is
required in order to maintain the exclusion of the interest with respect to the Notes from gross
income for federal income tax purposes. Bond Counsel is under no obligation to monitor
statutory and regulatory developments in connection with the covenants and obligations assumed
hereunder, therefore the Issuer will, from time to time, secure advice or an opinion of Bond
Counsel with regard to the status of applicable statutory and regulatory developments as applied
to the Notes.
[Remainder of Page Left Intentionally Blank]
4848-3093-1544.1
S-1
E. Responsibility.
The undersigned and other officers of the Issuer are charged with the responsibility for
the issuance of the Notes and the management of the proceeds of the Notes, respectively. The
undersigned have made due inquiry with respect to such actions and are fully informed as to the
matters set forth in this certificate.
Dated: February 9, 2018.
LYNWOOD PUBLIC FINANCING
AUTHORITY
By:
Jose Ometeotl
Finance Director
CITY OF LYNWOOD
By:
Jose Ometeotl
Finance Director
4848-3093-1544.1
APPENDIX A-1
APPENDIX A
DEFINITIONS
Whenever the following terms are used in this certificate, with the first letter capitalized,
they shall have the meanings specified below.
1. Bona Fide Debt Service Fund means a fund, which may include Proceeds of the Notes,
that is primarily used to achieve a proper matching of revenues and debt service within
each Note Year. Amounts deposited in the fund must be spent within a 12-month period
beginning on the date of deposit (and any amount received from investment of monies
held in such funds must be spent within a 12-month period beginning on the date of
receipt), except for a reasonable carry-over amount not to exceed the greater of 12
months’ earnings on such funds (in the immediately preceding year) or 1/12 of annual
debt service with respect to the Notes. The Payment Account is a Bona Fide Debt
Service Fund.
2. Note Year means each 1-year period that ends on the day selected by the Issuer as
directed by the Issuer. The first and last Note Years may be short periods. If no day is
selected by the Issuer before February 9, 2023, Note Years will end on each February 9,
and on the final maturity date, December 1, 2019.
3. Capital Expenditure means any cost of a type that is properly chargeable to capital
account under general federal income tax principles, as provided in Section 1.150-1(b) of
the Regulations. Costs incurred to acquire, construct, or improve land, buildings, and
equipment generally are Capital Expenditures. Whether an expenditure is a Capital
Expenditure is determined at the time the expenditure is paid with respect to the property.
Future changes in law do not affect whether an expenditure is a capital expenditure.
4. Capital Project or Capital Projects means all Capital Expenditures, plus related working
capital expenditures to which the de minimis rule under Section 1.148-6(d)(3)(ii)(A) of
the Regulations applies, that carry out the governmental purposes of the Notes.
5. Code means the Internal Revenue Code of 1986, as amended.
6. Commingled Fund means any fund or account if:
a. The fund or account contains both Gross Proceeds of the Notes and
amounts in excess of $25,000 that are not Gross Proceeds of the Notes: and
b. Amounts in the fund or account are invested collectively without regard to
source of funds deposited in the fund or account.
An open-end regulated investment company (as defined in Section 851 of the Code), however, is
not a Commingled Fund. For purposes of this Appendix A, a regulated investment company is
open-end if it is offering for sale or has outstanding any redeemable security, as defined in
Section 2(a)(32) of the Investment Company Act of 1940, of which it is the issuer.
4848-3093-1544.1
APPENDIX A-2
7. Computation Date means the last day of the fifth and each succeeding fifth Note Year.
8. Computation Period means the period between Computation Dates. The first
Computation Period begins on the date hereof and ends on the first Computation Date.
Each succeeding Computation Period begins on the date immediately following the
Computation Date and ends on the next Computation Date.
9. Construction Expenditures means Capital Expenditures, as defined in Section 1.150-1 of
the Regulations, that are allocable to the cost of real property or constructed personal
property (as defined in Section 1.148-7(g)(3) of the Regulations). However, Construction
Expenditures do not include expenditures for acquisitions in land or other existing real
property, except certain acquisitions under “turnkey” contracts.
10. Fair Market Value of an Investment means the price at which a willing buyer would
purchase the Investment from a willing seller in a bona fide, arm’s-length transaction.
Fair Market Value is generally determined as of the trade date rather than the settlement
date. Except as otherwise provided for certain certificates of deposit and guaranteed
investment contracts in Section 1.148-5(d)(6) of the Regulations, an Investment that is
not of a type traded on an established securities market is rebuttably presumed to be
traded for a price that is not equal to its Fair Market Value. The Fair Market Value of a
United States Treasury obligation that is purchased directly from the United States
Treasury is its purchase price.
11. Final Computation Date means the date on which the last Outstanding Notes are
discharged. If the Notes are retired within 3 years of the Issue Date, however, the Final
Computation Date need not occur before the end of 8 months after the delivery date or
during the period the Issuer reasonably expects any of the spending exceptions under
Section 1.148-7 of the Regulations to apply to the Notes.
12. Future Value of a Receipt or Future Value of a Payment means the value of that Payment
or Receipt when it is paid or received, plus interest assumed to be earned and
compounded over the period at a rate equal to the Yield with respect to the Notes, using
the economic accrual method of computation.
13. Gross Proceeds means any Proceeds of the Notes and any Replacement Proceeds of the
Notes.
14. Higher Yielding Investments means any Investment Property which produces a Yield
over the term of the Notes which is materially higher than the Yield with respect to the
Notes.
15. Installment Computation Date means any date, however, the first Installment
Computation Date must not be a date later than five Note Years after the Issue Date. Any
subsequent Installment Computation Date must not be later than five Note Years after the
previous Installment Computation Date.
16. Installment Payment Date means the last day of the fifth and each succeeding fifth Note
Year.
4848-3093-1544.1
APPENDIX A-3
17. Investment means any Investment Property or any tax-exempt bond.
18. Investment Proceeds means, with respect to the Notes, any amounts actually or
constructively received from investing the Proceeds of the Notes.
19. Investment Property means any security, obligation, annuity contract or Investment-type
Property.
20. Investment-type Property means any property, other than property described in
Section 148(b)(2)(A), (B), (C) or (E) of the Code, held principally as a passive vehicle for
the production of income. A prepayment is Investment-type Property if a principal
purpose of prepaying is in order to receive an investment return from the time the
prepayment is made until the time payment otherwise would be made. A prepayment is
not Investment-type Property if: (i) the prepayment is made for a substantial business
purpose other than investment return and the Issuer, has no commercially reasonable
alternative; or (ii) similarly situated persons who are not the beneficiaries of tax-exempt
financing make prepayments on similar terms.
21. Investor means, with respect to Commingled Funds, each different source of funds
invested in such Commingled Fund. The same person is treated as a different Investor
with respect to each different source of funds invested in the Commingled Fund.
22. Issue Price has the meaning given to such term by Sections 1273 and 1274 of the Code,
except as otherwise provided in Section 1.148-1 of the Regulations. Issue Price means,
with respect to the Notes, the first price at which a substantial amount (10%) of the Notes
is sold to the public. The public does not include bond houses, brokers, underwriters or
wholesalers.
23. Net Sale Proceeds means Sale Proceeds, less the portion of those Sale Proceeds invested
in a reasonably required reserve or replacement fund under Section 148(d) of the Code
and less the minor portion of the Notes, not exceeding the lesser of 5% of the Sale
Proceeds or $100,000, invested in Higher Yielding Investments.
24. Nonexempt Person means any person or entity, including the United States Government
and all of its agencies and instrumentalities, other than a state or political subdivision of a
State or a 501(c)(3) organization.
25. Nongovernmental Person means any person or entity, including the United States
Government and all of its agencies and instrumentalities, other than a state or political
subdivision of a State.
26. Nonpurpose Investment means any Investment Property, as defined in Section 148(b) of
the Code, that is not a Purpose Investment.
27. Nonpurpose Payments means, with respect to a Nonpurpose Investment allocated to the
Notes: (i) amounts actually or constructively paid to acquire such Nonpurpose
Investment; (ii) for a Nonpurpose Investment first allocated to the Notes on a date after it
is actually acquired or subject to the rebate requirement on a date after it is actually
4848-3093-1544.1
APPENDIX A-4
acquired, the value of the Nonpurpose Investment on that date; (iii) for a Nonpurpose
Investment allocated to the Notes at the end of the preceding computation period, the
value of the Nonpurpose Investment at the beginning of the computation period;
(iv) yield reduction payments to the United States made pursuant to Section 1.148-5(c) of
the Regulations; and the $1,000 credited on any Installment Payment Date and on the
Final Computation Date.
28. Nonpurpose Receipts means, with respect to a Nonpurpose Investment allocated to the
Notes: (i) any amount actually or constructively received with respect to such
Nonpurpose Investment; (ii) for a Nonpurpose Investment that ceases to be allocated to
the Notes before its disposition or redemption date or that ceases to be subject to the
rebate requirement on a date earlier than its disposition or redemption date, the value of
the Nonpurpose Investment on that date; and (iii) for a Nonpurpose Investment that is
held at the end of a computation period, the value of the Nonpurpose Investment at the
end of that period.
29. Present Value of an Investment on a date means the present value of all unconditionally
payable receipts to be received from and payments to be paid for the Investment after that
date, using the Yield on the Investment as the discount rate. Present Value of an
Investment is computed under the economic accrual method, using the same
compounding interval and financial conventions used to compute the Yield with respect
to the Notes.
30. Proceeds means, with respect to the Notes, any Sale Proceeds, Investment Proceeds, and
Transferred Proceeds of the Notes. Proceeds do not include amounts actually or
constructively received with respect to a Purpose Investment that are properly allocable
to the immaterially higher yield under Section 1.148-2(d) of the Regulations or
Section 143(g) of the Code, or to qualified administrative costs recoverable under
Section 1.148-5(e) of the Regulations.
31. Purpose Investment means an Investment that is acquired to carry out the governmental
purpose of the Notes.
32. Reasonable, Consistently Applied Accounting Method means the method used to account
for Gross Proceeds, Investments and expenditures of the Notes. The Issuer may use any
reasonable, consistently applied accounting method to account for Gross Proceeds,
Investments and expenditures of the Notes. An accounting method does not fail to be
reasonable and consistently applied solely because a different accounting method is used
for a bona fide government purpose to consistently account for a particular item.
33. Rebate Amount means, as of any date, the excess of the future value, as of that date, of all
Receipts on Nonpurpose Investments over the future value, as of that date, of all
Payments on Nonpurpose Investments.
34. Regulations means the regulations of the United States Department of the Treasury
proposed or promulgated under Sections 103 and 141 through 150 of the Code which by
4848-3093-1544.1
APPENDIX A-5
their terms are effective with respect to the Notes (including regulations promulgated
under Section 103 of the Internal Revenue Code of 1954, as amended).
35. Replacement Proceeds means, with respect to the Notes, amounts that have a sufficiently
direct nexus to the Notes or to the governmental purpose of the Notes to conclude that the
amounts would have been used for that governmental purpose if the proceeds of the
Notes were not used or to be used for that governmental purpose. Governmental
purposes include the expected use of amounts for the payment of debt service on a
particular date. The mere availability or preliminary earmarking of amounts for a
governmental purpose, however, does not in itself establish a sufficient nexus to cause
those amounts to be replacement proceeds. Replacement Proceeds include, but are not
limited to, amounts held in a sinking fund, pledged fund, or reserve or replacement fund
for the issue. Furthermore, Replacement Proceeds arise to the extent the Notes are
outstanding longer than necessary and to the extent Proceeds of the Notes are used to
finance a working capital reserve, except as otherwise provided in Section 1148-1(c)(4)
of the Regulations.
36. Sale Proceeds means, with respect to the Notes, any amounts actually or constructively
received by the Issuer from the sale of the Notes, including amounts used to pay
underwriter’s discount or compensation and accrued interest other than pre-issuance
accrued interest.
37. Transferred Proceeds means transferred proceeds as defined in Section 1.148-9 of the
Regulations.
38. Yield with respect to the Notes means the discount rate that, when used in computing the
present value as of the delivery date of all unconditionally payable payments of principal,
interest and fees for qualified guarantees with respect to the Notes, and amount
reasonably expected to be paid as fees for qualified guarantees (if any) with respect to the
Notes, produces an amount equal to the present value, using the same discount rate, of the
aggregate Issue Price of the Notes as of the delivery date, The Yield on an Investment
allocated to the Notes is the discount rate that, when used in computing the present value
as of the date the Investment is first allocated to the Notes of all unconditionally payable
receipts from the Investment, produces an amount equal to the present value of all
unconditionally payable payments for the Investment.
4848-3093-1544.1
APPENDIX B-1
APPENDIX B
6-MONTH SPENDING EXCEPTION TO REBATE
A. General Rule.
Under Section 148(f)(4)(B) of the Code, the Issuer shall be relieved from paying the
Rebate Amount on the Gross Proceeds of the Notes if:
1. The Gross Proceeds are expended for the governmental purposes of the Notes
within six (6) months of the Issue Date; and
2. The Rebate Amount is paid on amounts other than Gross Proceeds (excluding
earnings on amounts in any bona fide debt service fund).
Under this exception, expenditures for governmental purposes include payments for
interest, but not principal, on the Issue.
B. Additional Six Months for Certain Notes.
The 6-Month Spending Exception is extended for an additional six (6) months if:
1. 100% of the Gross Proceeds are spent within six (6) months of the Issue Date,
with the exception of the lesser of 5% of the Issue Price of the Notes or $100,000;
and
2. 100% of the Gross Proceeds are spent within twelve (12) months of the Issue
Date.
C. Definition.
Whenever the term “Gross Proceeds” is used in this Appendix B, with the first letter
capitalized, it shall mean the Gross Proceeds of the Notes, excluding:
1. Amounts in a bona fide debt service fund;
2. Amounts in a reasonably required reserve or replacement fund;
3. Amounts, that as of the Issue Date, are not reasonably expected to be Gross
Proceeds but that become Gross Proceeds after the end of the 6-month spending
period;
4. Amounts representing sale or Investment Proceeds received under any Purpose
investment of the Issue; and
5. Amounts representing repayment of grants financed by the Notes.
4848-3093-1544.1
APPENDIX C-1
APPENDIX C
18-MONTH SPENDING EXCEPTION TO REBATE
A. General Rule.
Under Section 1.148-7(d)(1) of the Regulations, the Issuer is relieved from paying the
Rebate Amount on the Gross Proceeds of the Notes (as defined below) if at least:
1. 15% of the Gross Proceeds of the Notes are spent for the governmental purposes
of the Notes within 6 months of the Deliver Date (the “First Spending Period”);
2. 60% of the Gross Proceeds of the Notes are spent for the governmental purposes
of the Notes within 12 months of the Issue Date (the “Second Spending
Period”);
3. 100% of the Gross Proceeds of the Notes are spent for the governmental purposes
of the Notes within 18 months of the Issue Date (the “Third Spending Period”);
and
4. The Rebate Amount is paid with respect to all amounts not required to be spent in
accordance with the 18-month expenditure schedule (other than earnings in Bona
Fide Debt Service Funds).
B. Additional 12 Months for Reasonable Retainage.
The 18-Month Exception is extended for an additional 12 months if:
1. 100% of the Gross Proceeds of the Notes are spent within 18 months of the Issue
Date, with the exception of amounts set aside as Reasonable Retainage not
exceeding 5% of the Gross Proceeds of the Notes; and
2. 100% of the Gross Proceeds of the Notes are spent within 30 months of the Issue
Date.
C. Definitions.
Whenever the following terms are used in this Appendix C with the first letter
capitalized, they shall have the meanings specified below.
1. Gross Proceeds means, for purposes of this Appendix C only, any Proceeds of the
Notes and any Replacement Proceeds of the Notes, except it does not include:
(i) amounts in a Bona Fide Debt Service Fund; (ii) amounts in a reasonably
required reserve or replacement fund that, as of the Issue Date, are not reasonably
expected to be Gross Proceeds, but that become Gross Proceeds after the end of
the Third Spending Period; (iii) amounts that represent sale or Investment
Proceeds derived from payments under any Purpose Investment of the Issue; and
(iv) amounts that represent payments of grants financed by the Notes. For
4848-3093-1544.1
APPENDIX C-2
purposes of the First and Second Spending Periods, the amount of Investment
Proceeds included in Gross Proceeds of the Notes is determined based on the
Issuer’s reasonable expectations as of the Issue Date.
2. Reasonable Retainage means an amount, not to exceed 5% of the Net Sale
Proceeds of the Notes on the date that is 18 months after the Issue Date, that is
retained by the Issuer for reasonable business purposes relating to the property
financed with proceeds of the Notes. Retainage is reasonable only if complies
with the requirements of Section 1.148-6(g) of the Regulations.
4848-3093-1544.1
APPENDIX D-1
APPENDIX D
2-YEAR CONSTRUCTION EXCEPTION TO REBATE
A. General Rule.
Under Section 148(f)(4)(C) of the Code, to the extent that the Notes qualify as a
Construction Issue, the Issuer is relieved from paying the Rebate Amount on the Available
Construction Proceeds of the Construction Issue if at least:
1. 10% of such proceeds are spent for the governmental purposes of the Tax-Exempt
Notes within 6 months of the Issue Date (the “First Spending Period”);
2. 45% of such proceeds are spent for the governmental purposes of the Tax-Exempt
Notes within 12 months of the Issue Date (the “Second Spending Period”);
3. 75% of such proceeds are spent for the governmental purposes of the Tax-Exempt
Notes within 18 months of the Issue Date (the “Third Spending Period”); and
4. 100% of such proceeds are spent for the governmental purposes of the Tax-
Exempt Notes within 24 months of the Issue Date (the “Fourth Spending
Period”).
B. Additional 12 Months for Reasonable Retainage.
The 2-Year Construction Exception to Rebate is extended for an additional 12 months if:
1. 100% of the Available Construction Proceeds of the Construction Issue are spent
within 24 months of the Issue Date, with the exception of amounts set aside as
Reasonable Retainage not exceeding of 5% of Available Construction Proceeds of
the Construction Issue; and
2. 100% of the Available Construction Proceeds of the Construction Issue are spent
within 36 months of the Issue Date.
C. Definitions.
Whenever the following terms are used in this Appendix D, with the first letter
capitalized, they shall have the meanings specified below.
1. Available Construction Proceeds
a. Available Construction Proceeds means the amount equal to: (i) the sum
of the Issue Price of the Construction Issue, actual earnings on such Issue
Price, as of each spending period, earnings on any amounts in a reasonably
required reserve or replacement fund not funded from the Construction
Issue, and earnings on all of the foregoing earnings; minus (ii) the sum of
the amount of the Construction Issue deposited in any reasonably required
4848-3093-1544.1
APPENDIX D-2
reserve fund and the amount of the Construction Issue used to pay
issuance costs.
b. Available Construction Proceeds include the earnings on any tax-exempt
bond. Available Construction Proceeds do not include payments received
under any Purpose Investment, earnings on such payments, or repayments
of any grants (as defined in Section 1.148-4(a)(4) of the Regulations)
financed by the Construction Issue.
c. The Issuer hereby elects to determine future earnings for purposes of
calculating Available Construct Proceeds based on actual facts. The
actual earnings shall be added to the amount otherwise determined to be
Available Construction Proceeds for purposes of determining whether the
Construction Notes constitute a construction issue.
d. For purposes of determining the amount of Available Construction
Proceeds, earnings on amounts in the Revenue Fund and any other
reasonably required reserve or replacement fund are included only to the
extent that those earnings accrue before the earlier of the Date
Construction is Substantially Completed or two years after the Issue Date.
e. Actual earnings will be used for purposes of determining whether the
spending requirements of Section A of this Appendix D have been met for
the first three Spending Periods.
2. Construction Expenditures means any capital expenditure (as defined in Section
1.150-1(h) of the Regulations) that, on or before the date the property is placed in
service (as defined in Section 1.103-8(a)(5) of the Regulations) will be properly
chargeable to or may be capitalized as part of the basis of:
a. improvements to real property (e.g., buildings or other inherently
permanent structures, including items that are structural components of
such buildings or structures) where the improvements have not been built
or installed at the time that the Issuer enters into the construction contract;
b. tangible personal property that is acquired by the Issuer pursuant to
Section 1.148-6(f)(3)(i) of the Regulations or tangible personal property
that is built or rehabilitated by the Issuer pursuant to Section 1.148-
6(f)(3)(ii) of the Regulations; and
c. specially developed computer software (as defined in Section 1.148-
6(f)(5) of the Regulations) that is functionally related and subordinate to
real property or constructed property.
3. Construction Issue means any issue, including a portion of a multipurpose issue
treated as a separate issue, that is not a refunding issue and for which at least 75%
of the Available Construction Proceeds are spent for Construction Expenditures
with respect to property owned by a governmental unit or 501(c)(3) organization.
4848-3093-1544.1
APPENDIX D-3
For purposes of this Appendix D, a governmental unit or 501(c)(3) organization
is treated as the owner of property if it is treated as the owner for federal income
tax purposes or would be so treated if it were subject to federal income tax.
Property leased by a governmental unit or 501(c)(3) organization will be treated
as owned by a governmental unit or 501(c)(3) organization if the lessee complies
with Section 142(b)(1)(B) of the Code, as modified by Section 146(h)(2) of the
Code in the case of a bond described in Section 142(a)(6) of the Code.
4. Date Construction is Substantially Completed means the date on which the Issuer
reasonably determines that the construction financed with the proceeds of the
Construction Issue is substantially complete or the date on which the Issuer
abandons the construction. Notwithstanding the foregoing, the Issuer may not
determine that the construction is substantially complete until the Issuer has spent
Available Construction Proceeds in an amount equal to at least 90% of the total
costs of the construction that the Issuer reasonably expects, as of that date, will be
financed with the proceeds of the Construction Issue.
5. Reasonable Retainage means an amount retained by the Issuer for reasonable
business purposes relating to the property financed with proceeds of the tax-
exempt bonds. Retainage is reasonable only if complies with the requirements of
Section 1.148-6(g) of the Regulations.
6. Spending Period means each 6-month period set forth in Section A of this
Appendix D.
4848-3093-1544.1
APPENDIX E-1
APPENDIX E
ALLOCATION AND ACCOUNTING RULES
Except as otherwise provided herein, the Issuer may use any Reasonable, Consistently
Applied Accounting Method to account for the Gross Proceeds, Investments and Expenditures of
the Notes.
A. Allocation of Gross Proceeds to the Notes.
1. In General. Except as otherwise provided herein, amounts are allocable to
the Notes as Gross Proceeds as described in the definition of Gross Proceeds contained in
Appendix A.
2. One-Issue Rule. Except as otherwise provided herein, amounts are
allocable to only one issue at a time as Gross Proceeds.
3. General Ordering Rules. Except as otherwise provided herein, amounts
that are allocable as Proceeds of the Notes must be so allocated to the Notes and may not be
allocated instead as Replacement Proceeds of another issue. Amounts cease to be Proceeds
allocated to the Notes only when they (i) are properly allocated to an expenditure for a
governmental purpose, (ii) are allocated to Transferred Proceeds of another issue, or (iii) cease to
be allocated to the Notes at retirement of the Notes or by operation of the Universal Cap
described below.
4. Universal Cap in General. Nonpurpose Investments of Gross Proceeds of
the Notes are allocated (and remain allocated) to the Notes only to extent that the value of such
Nonpurpose Investments does not exceed the value of all Outstanding Notes (the value of all
Outstanding Notes is referred to as the “Universal Cap”). Notwithstanding the preceding,
Nonpurpose Investments of Gross Proceeds of the Notes held in a Bona Fide Debt Service Fund
are not taken into account in determining the value of the Nonpurpose Investments and are
always allocated to the Notes and do not otherwise reduce the Universal Cap.
a. Computation of Value of Universal Cap and Nonpurpose Investments.
Beginning with the first Note Year that commences after the second anniversary of the
Issue Date of the Notes and as of the first day of each Note Year thereafter, the amount of
the Universal Cap and the value of Nonpurpose Investments must be computed. The
value of the outstanding Notes (and, hence, the Universal Cap) and the value of the
Investments are determined in accordance with Sections 1.148-4(e) and 1.148-5(d) of the
Regulations, respectively.
b. Application of the Universal Cap. If the value of all Nonpurpose
Investments allocated to the Gross Proceeds of the Notes exceeds the Universal Cap of
the Notes as of a date the Universal Cap is determined, Nonpurpose Investments
allocable to Gross Proceeds necessary to eliminate that excess cease to be allocated to the
Notes, in the following order of priority: (i) first, Nonpurpose Investments allocable to
Replacement Proceeds; (ii) second, Nonpurpose Investments allocable to Transferred
4848-3093-1544.1
APPENDIX E-2
Proceeds; and (iii) third, Nonpurpose Investments allocable to Sale Proceeds and
Investment Proceeds.
B. Allocation of Gross Proceeds to Investments.
1. Fair Market Value Limit on Allocations to Nonpurpose Investments.
Upon a purchase or sale of a Nonpurpose Investment, Gross Proceeds of the Notes may not be
allocated to a Payment for that Nonpurpose Investment in an amount greater than, or to a Receipt
from that Nonpurpose Investment in an amount less than, the Fair Market Value of the
Nonpurpose Investment as of that purchase or sale date.
2. Requirements for Purchase of Investment Contracts. The Issue Price of a
guaranteed investment contract (“GIC”) is treated as its fair market value on the purchase date
only if: (i) the Issuer makes a bona fide solicitation for a specified GIC and receives at least 3
bona fide bids from providers that have no material financial interest in the Notes; (ii) the Issuer
purchases the highest-yielding GIC for which a qualifying bid is made (determined net of
broker’s fees); (iii) the yield on the GIC is not less than the yield with respect to comparable
contracts then being offered by that provider to other persons; (iv) the guaranteed investment
contract takes into account the Issuer’s reasonably expected drawdown schedule; (v) the terms of
the investment contract are reasonable; and (vi) the obligor on the GIC certifies the
administrative costs it is paying (or expects to pay) to third parties in connection with the GIC.
3. Requirements for Purchase of Certificate of Deposit. The Issue Price of a
certificate of deposit is treated as its fair market value on the purchase date only if: (i) the
certificate of deposit has a fixed interest rate, a fixed payment schedule and a substantial penalty
for early withdrawal; and (ii) the yield is not less than the yield on comparable direct obligations
of the United States and the highest published or posted yield currently available from that
provider to the public.
4. Adjustments for Administrative Costs. Except as otherwise provided in
Section l.148-5(e) of the Regulations, the Fair Market Value with on a Nonpurpose Investment
shall not be adjusted to take into account any costs or expenses paid, directly or indirectly, to
purchase, carry, sell, or retire the Investment (administrative costs).
C. Allocation of Gross Proceeds to Expenditures.
1. In General. Except as otherwise provided herein, the Issuer may use any
Reasonable, Consistently Applied Accounting Method to allocate the Gross Proceeds of the
Notes to expenditures.
2. General Limitation. An allocation of Gross Proceeds of the Notes to an
expenditure must carry out a governmental purpose for which the Notes were executed and
delivered and must involve an outlay of cash, by check mailed, or available funds advanced, that
is reasonably expected to occur not later than 5 banking days after the allocation of Gross
Proceeds to the expenditure.
3. Allocations of Funds from Different Sources. Reasonable accounting
methods for allocating funds from different sources to expenditures for the same governmental
4848-3093-1544.1
APPENDIX E-3
purpose include any of the following methods applied consistently: a “specific tracing” method,
a “gross-proceeds-spent-first” method, a “first-in-first-out” method, or a ratable allocation
method.
4. Allocations for Purpose Investments. Except as provided in Section
1.148-6(d)(2)(ii) of the Regulations, Gross Proceeds of the Notes invested in a Purpose
Investment are allocated to an expenditure on the date on which the conduit borrower allocates
the proceeds to an expenditure to carry out the governmental purpose of the Notes.
5. Allocations for Working Capital. Gross Proceeds of the Notes and
available amounts (as defined in Section 1.148-6(d)(3)(iii) of the Regulations) may be allocated
to working capital expenditures only under a consistently applied “gross-proceeds-spent-last”
method. Accordingly, Gross Proceeds may be allocated to working capital expenditures as of
any date only to the extent that working capital expenditures exceed available amounts
calculated as of that date. However, Gross Proceeds may be allocated to working capital
expenditures under any Reasonable, Consistently Applied Accounting Method, without regard to
other available amounts, in the case where the expenditures are for any of the following:
(i) costs, to the extent that they do not exceed 5% if the Sale Proceeds of the Notes and are
directly related to capital expenditures financed by the Notes; (ii) issuance costs of the Notes or
any qualified administrative costs within the meaning of Sections 1.148-5(e)(2)(i) or (ii) of the
Regulations or Section 1.148-5(e)(3)(ii)(A) of the Regulations; (iii) fees for qualified guarantees
of the Notes; (iv) payments for a qualified hedge for the Notes; (v) interest with respect to the
Notes for a period commencing on the delivery date and ending on the date that is the later of 3
years from the delivery date or one year after the date on which the Project is placed in service;
(vi) amounts paid to the United States as Rebate Amounts, yield reduction payments, or penalties
in lieu of rebate payments; or (vii) principal or interest with respect to the Notes paid from either
unexpected excess Sale or Investment Proceeds or from investment earnings on a reserve or
replacement fund that are deposited in a Bona Fide Debt Service Fund.
6. Allocations for Grants. Except as provided in Section 1.148-6(d)(4)(ii) of
the Regulations, Gross Proceeds of the Notes that are used to make a grant are allocated to an
expenditure on the date on which the grant is made.
D. Special Allocation Rules for Commingled Funds.
1. Allocation Method for Payments and Receipts from Investments in a
Commingled Fund. All payments and receipts on Investments held in a Commingled Fund must
be (i) computed pursuant to a Reasonable, Consistently Applied Accounting Method and
(ii) allocated among each Investor in the fund in accordance with a consistently applied,
reasonable ratable allocation method (as defined in Section 1.148-6(e)(2)(ii) of the Regulations).
4848-3093-1544.1
APPENDIX E-4
2. Timing of Allocation of Payments and Receipts from Investments in the
Commingled Fund. A Commingled Fund may use as its Fiscal Period any consistent time period
within its fiscal year that does not exceed 3 months (e.g., a daily, weekly, monthly, or quarterly
period), but it must consistently use that time period. Not less frequently than at the end of each
Fiscal Period within its fiscal year, a Commingled Fund must compute and allocate (but not
necessarily distribute) to each Investor all payments and receipts (including deemed payments
and receipts) on all Investments.
3. Allocation of Unrealized Gains and Losses from Investments in a
Commingled Fund. If the Issuer, together with respective related parties own more than 25% of
the beneficial interests in a Commingled Fund, then not less frequently than at the end of each
Fiscal Period within its fiscal year, the Commingled Fund must treat all its Investments as if sold
at Fair Market Value and allocate the net gains and losses with respect to the deemed sales of
those Investments held by the Commingled Fund, unless: (i) the Commingled Fund serves
exclusively as a common reserve fund, sinking fund, or replacement fund for two or more issues
of the Issuer, or (ii) the remaining weighted average maturity of all Investments held by the
Commingled Fund does not exceed 18 months, and the Investments held in the Commingled
Fund consist exclusively of obligations.
If the Commingled Fund serves as a common reserve fund, sinking fund, or
replacement fund for two or more issues, after making reasonable adjustments to account for the
one issue rule and Universal Cap as provided by Sections 1.148-6(b)(i) and (2) of the
Regulations, the Investments held in the Commingled Fund must be allocated ratably in
accordance with one of the following methods: (i) the relative values of the issues under Section
1.148-4(e) of the Regulations; (ii) the relative amounts of the remaining maximum annual debt
service requirements on the outstanding principal amounts of the issues; or (iii) the relative
original stated principal amounts of the outstanding issues.
4. Allocations of Investment Proceeds deposited in a Commingled Fund. For
governmental bonds, private activity bonds executed and delivered to finance a facility that is
required by Section 142 of the Code to be owned by the Issuer, and any portion of an issue that is
not treated as consisting of private activity bonds under Section 141(b)(9) of the Code, amounts
representing Investment Proceeds are treated as allocated to expenditures for a governmental
purpose when (i) the amounts are deposited in a commingled Fund with substantial tax or other
revenues from governmental operations of the Issuer; and (ii) the amounts are reasonably
expected to be spent for governmental purposes within 6 months from the date of commingling.
4848-3093-1544.1
APPENDIX F-1
APPENDIX F
POST-ISSUANCE COMPLIANCE:
REMEDIATION OF DELIBERATE ACTIONS REGARDING
PRIVATE ACTIVITY LIMITATIONS
(a) Initial Expectations Alone Not Sufficient; Deliberate Actions Must be
Remediated. An issue is an issue of private activity bonds if the issuer reasonably expects, as of
the Issue Date, that the issue will meet either the private business tests or the private loan
financing test. An issue is also an issue of private activity bonds if the issuer takes a deliberate
action (as defined below), subsequent to the Issue Date, that causes the conditions of either the
private business tests or the private loan financing test to be met. Therefore, notwithstanding the
reasonable expectations of the Issuer as set forth in the tax certificate, the Issuer must take
remedial actions in the event of certain deliberate actions that occur after the Issue Date of the
issue. In general, the Issuer must monitor its compliance with the tax law limitations on an
ongoing basis throughout the term of the issue.
The Issuer understands that the rules relating to deliberate actions are complex and
will seek the advice of Bond Counsel as to satisfying the requirements described in this
Appendix, including measurement, reporting and any other means of remedial action not
specifically described in this Appendix or in the tax certificate, including, for example, the IRS
Voluntary Closing Agreement Program.
(b) Deliberate Action. A “deliberate action” is any action taken by the issuer that is
within its control. An intent to violate the requirements of Code is not necessary for an action to
be considered a deliberate action. However, an action is not treated as a deliberate action if—
(i) it would be treated as an involuntary or compulsory conversion under Code
Section 1033; or
(ii) it is taken in response to a regulatory directive made by the federal government.
(c) Permitted Remedial Actions. If the issuer takes a deliberate action that is not
otherwise permitted as described above, the issuer must take a permitted remedial action to
prevent the deliberate action from causing that issue to meet the private business use test or the
private loan financing test. A “Permitted Remedial Action” is a remedial action that satisfies the
requirements of section (e) below (“Remedial Action”) and with respect to which the conditions
to taking remedial action described in section (d) below are met.
(d) Conditions to taking remedial action. In order to qualify as a Permitted
Remedial Action, each of the requirements in paragraphs (i) through (v) of this section (d) must
be met.
(i) Reasonable expectations test met. The Issuer reasonably expected on the Issue
Date that the issue would meet neither the private business tests nor the private loan financing
test for the entire term of the Notes.
(ii) Maturity not unreasonably long. The term of the issue must not be longer than is
4848-3093-1544.1
APPENDIX F-2
reasonably necessary for the governmental purposes of the issue. This requirement is met if the
weighted average maturity of the Notes is not greater than 120 percent of the average reasonably
expected economic life of the property financed with the proceeds of the issue as of the Issue
Date.
(iii) Fair market value consideration. The terms of any arrangement that results in
satisfaction of either the private business tests or the private loan financing test are bona fide and
arm’s-length, and the new user pays fair market value for the use of the financed property.
(iv) Disposition proceeds treated as gross proceeds for arbitrage purposes. The issuer
must treat any disposition proceeds as gross proceeds for purposes of Code Section 148. For
purposes of eligibility for temporary periods under Code Section 148(c) and exemptions from the
rebate requirement of Code Section 148(f) the issuer may treat the date of receipt of the
disposition proceeds as the issue date of the Notes and disregard the receipt of disposition
proceeds for exemptions based on expenditure of proceeds under § 1.148-7 that were met before
the receipt of the disposition proceeds.
(v) Proceeds expended on a governmental purpose. Except for a remedial action
under paragraphs (e)(i) or (e)(iv) below, the proceeds of the issue that are affected by the
deliberate action must have been expended on a governmental purpose before the date of the
deliberate action.
(e) Remedial Actions. For purposes of Permitted Remedial Actions, a Remedial
Action must satisfy the requirements of (i), (ii), or (iii) below.
(i) Redemption or defeasance of nonqualified bonds. The requirements of this
paragraph are met if all of the nonqualified bonds of the issue are redeemed. Proceeds of tax-
exempt bonds must not be used for this purpose. Except as described in paragraph (iv) below, if
the bonds are not redeemed within 90 days of the date of the deliberate action, a qualifying
defeasance escrow must be established for those bonds within 90 days of the deliberate action.
If the consideration for the disposition of financed property is exclusively cash, the
requirements of this paragraph are met if the disposition proceeds are used to redeem a pro rata
portion of the nonqualified bonds at the earliest call date after the deliberate action. If the bonds
are not redeemed within 90 days of the date of the deliberate action, the disposition proceeds
must be used to establish a qualifying defeasance escrow for those bonds within 90 days of the
deliberate action.
The issuer must provide written notice to the IRS Commissioner of the establishment of
the defeasance escrow within 90 days of the date the qualifying defeasance escrow is established,
the form of which notice shall be provided by the issuer.
The establishment of a defeasance escrow does not satisfy the requirements of this
paragraph (i) if the period between the Issue Date and the first call date of the bonds is more than
10 1/2 years.
A “qualifying defeasance escrow” is an irrevocable escrow established to redeem bonds
on their earliest call date in an amount that, together with investment earnings, is sufficient to
4848-3093-1544.1
APPENDIX F-3
pay all the principal of, and interest and call premium on, bonds from the date the escrow is
established to the earliest call date. The escrow may not be invested in higher yielding
investments or in any investment under which the obligor is a user of the proceeds of the Notes.
(ii) Alternative use of disposition proceeds. The requirements of this paragraph are
met if—
(1) The deliberate action is a disposition for which the consideration is exclusively
cash;
(2) The issuer reasonably expects to expend the disposition proceeds within two years
of the date of the deliberate action;
(3) The disposition proceeds are treated as proceeds for purposes of Code Section 141
and are used in a manner that does not cause the issue to meet either the private business tests or
the private loan financing test, and the issuer does not take any action subsequent to the date of
the deliberate action to cause either of these tests to be met; and
(4) If the issuer does not use all of the disposition proceeds for an alternative use
described in this paragraph (ii) of this section, the issuer uses those remaining disposition
proceeds for a Remedial Action that meets the requirements of paragraph (i) of this section.
If the disposition proceeds are to be used by a 501(c)(3) organization, the nonqualified
bonds must be treated as reissued for purposes of Sections 141, 145, 147, 149, and 150 of the
Code and, under this treatment, satisfy all of the applicable requirements for qualified 501(c)(3)
bonds.
(iii) Alternative use of facility. The requirements of this paragraph are met if—
(1) The facility with respect to which the deliberate action occurs is used in an
alternative manner (for example, used for a qualifying purpose by a nongovernmental person or
used by a 501(c)(3) organization rather than a governmental person);
(2) The nonqualified bonds are treated as reissued, as of the date of the deliberate
action, for purposes of Sections 55 through 59 and 141, 142, 144, 145, 146, 147, 149 and 150 of
the Code, and under this treatment, the nonqualified bonds satisfy all the applicable requirements
for qualified bonds throughout the remaining term of the nonqualified bonds;
(3) The deliberate action does not involve a disposition to a purchaser that finances
the acquisition with proceeds of another issue of tax-exempt bonds; and
(4) Any disposition proceeds other than those arising from an agreement to provide
services (including disposition proceeds from an installment sale) resulting from the deliberate
action are used to pay the debt service on the Notes on the next available payment date or, within
90 days of receipt, are deposited into an escrow that is restricted to the yield on the Notes to pay
the debt service on the Notes on the next available payment date.
(iv) Anticipatory remedial action. The requirements of paragraph (i) above for
4848-3093-1544.1
APPENDIX F-4
redemption or defeasance of the nonqualified bonds within 90 days of the deliberate action are
met if the issuer declares its official intent to redeem or defease all of the bonds that would
become nonqualified bonds in the event of a subsequent deliberate action that would cause the
private business tests or the private loan financing test to be met and redeems or defeases such
bonds prior to that deliberate action. The issuer must declare its official intent on or before the
date on which it redeems or defeases such bonds, and the declaration of intent must identify the
financed property or loan with respect to which the anticipatory remedial action is being taken
and describe the deliberate action that potentially may result in the private business tests being
met (for example, sale of financed property that the buyer may then lease to a nongovernmental
person). Rules similar to those in Section 1.150-2(e) of the Treasury Regulations (regarding
official intent for reimbursement bonds) apply to declarations of intent under this paragraph,
including deviations in the descriptions of the project or loan and deliberate action and the
reasonableness of the official intent.
(f) Definitions and rules of application. The following definitions and rules of
application apply for purposes of this Appendix F.
(i) Disposition proceeds. Disposition proceeds are any amounts (including property,
such as an agreement to provide services) derived from the sale, exchange, or other disposition
(a “disposition”) of property (other than investments) financed with the proceeds of an issue.
(ii) Allocating disposition proceeds to an issue. In the case of a Permitted Remedial
Action, after the date of the disposition, the proceeds of the issue allocable to the transferred
property must be treated as financing the disposition proceeds rather than the transferred
property. If a disposition is made pursuant to an installment sale, the proceeds of the issue
continue to be allocated to the transferred property. If the issuer fails to take a Permitted
Remedial Action, the proceeds of the issue are allocable to either the transferred property or the
disposition proceeds, whichever allocation produces the greater amount of private business use
and private security or payments.
(iii) Allocating disposition proceeds to different sources of funding. If property has
been financed by different sources of funding, the disposition proceeds from that property are
first allocated to the outstanding bonds that financed that property in proportion to the principal
amounts of those outstanding bonds. In no event may disposition proceeds be allocated to bonds
that are no longer outstanding or to a source of funding not derived from a borrowing (such as
revenues of the issuer) if the disposition proceeds are not greater than the total principal amounts
of the outstanding bonds that are allocable to that property. For purposes of this section, principal
amount has the same meaning as in Treasury Regulation § 1.148-9(b)(2) and outstanding bonds
do not include advance refunded bonds.
(iv) Deemed Reissuances. For purposes of determining whether bonds that are treated
as reissued under section (e) (ii) and (e)(iii) above are qualified bonds—
(1) The provisions of the Code and regulations thereunder in effect as of the date of
the deliberate action apply; and
(2) For purposes of section (e)(iii) above, Code Section 147(d) (relating to the
4848-3093-1544.1
APPENDIX F-5
acquisition of existing property) does not apply.
(v) Nonqualified bonds.
(1) Amount of nonqualified bonds. The nonqualified bonds are a portion of the
outstanding bonds in an amount that, if the remaining bonds were issued on the date on which
the deliberate action occurs, the remaining bonds would not meet the private business use test or
private loan financing test, as applicable. For this purpose, the amount of private business use is
the greatest percentage of private business use in any one-year period commencing with the one-
year period in which the deliberate action occurs.
(2) Allocation of nonqualified bonds. Allocations of nonqualified bonds must be
made on a pro rata basis, except that, for purposes of section (e)(i) and (e)(iv) of this Appendix
(relating to redemption or defeasance), an issuer may treat any bonds of an issue as the
nonqualified bonds so long as (a) the remaining weighted average maturity of the issue,
determined as of the date on which the nonqualified bonds are redeemed or defeased
(determination date), and excluding from the determination the nonqualified bonds redeemed or
defeased by the issuer in accordance with this section, is not greater than (b) the remaining
weighted average maturity of the issue, determined as of the determination date, but without
regard to the redemption or defeasance of any bonds (including the nonqualified bonds)
occurring on the determination date.
(vi) Effect of remedial action on continuing compliance. For purposes of determining
whether deliberate actions that are taken after a Permitted Remedial Action cause an issue to
meet the private business tests or the private loan financing test:
(1) If a Permitted Remedial Action is taken under section (e)(i) or (e)(iv) above, the
amount of private business use or private loans resulting from the deliberate action that is taken
into account for purposes of determining whether the bonds are private activity bonds is that
portion of the remaining bonds that is used for private business use or private loans (as calculated
under section (f)(v) above).
(2) If a Permitted Remedial Action is taken under section (e)(ii) or (e)(iii) above, the
amount of private business use or private loans resulting from the deliberate action is not taken
into account for purposes of determining whether the bonds are private activity bonds.
(3) After a Permitted Remedial Action is taken, the amount of disposition proceeds is
treated as equal to the proceeds of the issue that had been allocable to the transferred property
immediately prior to the disposition.
4848-3093-1544.1
APPENDIX G-1
APPENDIX G
CERTIFICATE OF THE AUTHORITY CONCERNING REBATE
On behalf of the Lynwood Public Financing Authority (the “Authority”) and the City of
Lynwood (the “City”), the undersigned hereby certifies, represents and warrants with respect to
the sale and delivery of the Authority’s 2018 Bond Anticipation Notes (the “Notes”) that:
[Check one, and complete appropriate blanks]
the Authority has engaged or intends to engage the firm of OmniCap LLC
to perform any rebate calculations that may be required to be made from
time to time on the Notes.
_______________ has undertaken full responsibility for performing rebate
calculations that may be required to be made from time to time with respect
to the Notes.
the Authority has decided not, at this time, to designate a party responsible for
performing rebate calculations that may be required to be made from time to
time on the Notes and as a result undertakes and assumes full responsibility
for rebate compliance and acknowledges that neither OmniCap LLC nor
Nixon Peabody LLP has any such responsibility (unless later engaged in
writing for such purpose).
Dated: February 9, 2018
LYNWOOD PUBLIC FINANCING
AUTHORITY
By:
Jose Ometeotl
Finance Director
4848-3093-1544.1
TABLE OF EXHIBITS
Exhibit A The Project
Exhibit B Final Numbers
Exhibit C Economic Life
Exhibit D Reserved
Exhibit E Certificate of the Purchaser
Exhibit F Reserved
Exhibit G Internal Revenue Service Form 8038-G
4848-3093-1544.1
Exhibit A-1
EXHIBIT A
THE PROJECT
The Project is comprised of the following street and road improvements eligible for Measure R
Local Return use as identified in a letter approving such projects dated December 19, 2017
provided by the Los Angeles County Metropolitan Transportation Authority.
• Design of Various Streets (Pavement Management Plan)
• Louise Ave. Improvements
• Wright Rd. Improvements (Duncan Ave. to Fernwood Ave.)
• Olanda St. (Atlantic Ave. to Carlin Ave.) (Construction)
• Various Street Improvements
• Beechwood, Louise, and Nevada St. Improvements
• Birch, Fir, Lugo and Platt St. Improvements
4848-3093-1544.1
Exhibit B-1
EXHIBIT B
FINAL NUMBERS
(See Attached)
4848-3093-1544.1
Exhibit C-1
EXHIBIT C
ECONOMIC LIFE
Issue Date: 2/9/2018
Project Cost Useful Life Weighted Cost
Roadway Improvements $2,500,000.00 20 $50,000,000.00
Total $2,500,000.00 $50,000,000.00
Average Economic Life 20.0000
Multiply by 120% 24.0000
4848-3093-1544.1
Exhibit D-1
EXHIBIT D
RESERVED
4848-3093-1544.1
Exhibit E-2
EXHIBIT E
CERTIFICATE OF THE PURCHASER
The undersigned, on behalf of ZB, N.A. (the “Purchaser”), hereby certifies as set forth
below with respect to its purchase of the $2,745,000.00 Lynwood Public Financing Authority
2018 Bond Anticipation Notes (the “Notes”).
1. Purchase of the Notes. On the date of this certificate, the Purchaser is purchasing
the Notes for the amount of $2,745,000.00. The Purchaser is not acting as an Underwriter with
respect to the Notes. The Purchaser has no present intention to sell, reoffer, or otherwise dispose
of the Notes (or any portion of the Notes or any interest in the Notes). The Purchaser has not
contracted with any person pursuant to a written agreement to have such person participate in the
initial sale of the Notes and the Purchaser has not agreed with the Issuer pursuant to a written
agreement to sell the Notes to persons other than the Purchaser or a related party to the
Purchaser.
2. Defined Terms.
(a) Public means any person (including an individual, trust, estate, partnership,
association, company, or corporation) other than an Underwriter or a related party. The term
“related party” for purposes of this certificate generally means any two or more persons who
have greater than 50 percent common ownership, directly or indirectly.
(b) Underwriter means (i) any person that agrees pursuant to a written contract with
the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the
initial sale of the Notes to the Public, and (ii) any person that agrees pursuant to a written
contract directly or indirectly with a person described in clause (i) of this paragraph to participate
in the initial sale of the Notes to the Public (including a member of a selling group or a party to a
retail distribution agreement participating in the initial sale of the Notes to the Public).
Capitalized terms used and not defined in this certificate shall have the meaning ascribed
to them in the Tax and Nonarbitrage Certificate executed by the Issuer in connection with the
issuance of the Notes (the “Tax Certificate”), to which this is an exhibit.
The representations set forth in this certificate are limited to factual matters only.
Nothing in this certificate represents the Purchaser’s interpretation of any laws, including
specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder. The undersigned understands that the foregoing information
will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax
Certificate and with respect to compliance with the federal income tax rules affecting the Notes,
and by Nixon Peabody LLP in connection with rendering its opinion that the interest on the
Notes is excluded from gross income for federal income tax purposes, the preparation of the
Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to
the Issuer from time to time relating to the Notes.
[Remainder of Page Left Intentionally Blank]
4848-3093-1544.1
Exhibit D-2
Dated: February 9, 2018 ZB, N.A., as Purchaser
By:
Authorized Representative
4848-3093-1544.1
Exhibit F-1
EXHIBIT F
RESERVED
4848-3093-1544.1
Exhibit G-1
EXHIBIT G
INTERNAL REVENUE SERVICE FORM 8038-G
(See Attached)
LYNWOOD PUBLIC FINANCING AUTHORITY
SPECIAL MEETING MINUTES
January 16, 2018
The Lynwood Public Financing Authority of the City of Lynwood met in a special
meeting in Council Chambers, 11350 Bullis Road, Lynwood, CA on the above date at
6:14 p.m.
President Solache presiding.
Members Alatorre, Castro, Santillan-Beas, Vice-President Hernandez and President
Solache were present.
Also present were Chief Administrative Officer Martinez, Authority Counsel Tapia, City
Treasurer Camacho and Secretary Quinonez.
Secretary Quinonez announced that the Agenda had been duly posted in accordance
with the Brown Act.
Item #4. GOVERNMENT CODE SECTION 54954.3
City Clerk Quinonez stated the following:
Members of the City Council are also members of the Lynwood Public Financing
Authority, which is concurrently convening with the City Council this evening and each
Council Member is paid an additional stipend of $100 for attending the Lynwood Public
Financing Authority Meeting. Further, the Authority is scheduled to meet four (4) times
per year. If additional meetings are required beyond the scheduled four (4) meetings,
the City Council will only get paid for the first four (4) meetings.
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
NONE
CONSENT CALENDAR
MOTION: It was moved by Member Alatorre, seconded by Member Castro to approve
the consent calendar. Motion carried by the following vote:
ROLL CALL:
AYES: MEMBERS ALATORRE, CASTRO, SANTILLAN-BEAS, VICE
PRESIDENT HERNANDEZ AND PRESIDENT SOLACHE
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
Item #5. TREASURER’S MONTHLY INVESTMENT REPORT
Lynwood Public Financing Authority
Special Meeting Minutes – January 16, 2018
2
Report was received and filed.
ADJOURNMENT
Having no further discussion, it was moved by Member Santillan-Beas, seconded by
Member Castro to adjourn the Lynwood Public Financing Authority at 6:16 p.m. Motion
carried by unanimous consent.
____________________________ _____________________________
José Luis Solache, President Maria Quinonez, Authority Secretary
Portfolio Summary
LAIF
FNMA
Market Value U.S. Treasury
Book Value FHLB
Variance FHLMC
Met Life
Par Value PNC Bank
Honda
Net Asset Value Branch Banking & Trust
Exxon Mobil
Book Yield Pfizer
Toyota
Years to Maturity Citibank
Chevron
Effective Duration Apple
*Book Value is Amortized
-$53,092 -$37,869
$17,768,148 $17,748,620
2.8%
2.0%
1.4%
1.4%
2.8%
$99.701 $99.786
12/31/17 11/30/17
$17,697,664 $17,692,966
$17,750,757 $17,730,835
1.4%
1.4%
1.4%
1.4%
1.4%
1.4%
1.4%
1.4%
12/31/2017
SECTOR ALLOCATION MATURITY DISTRIBUTION CREDIT QUALITY (MOODY'S)
City of Lynwood
ACCOUNT SUMMARY MONTH-END PORTFOLIO BOOK YIELD TOP ISSUERS
Issuer % Portfolio
40.0%
11.2%
1.55% 1.52%
1.23 1.29
1.21 1.13
Agy 16.0%
Tsy 2.8%
LAIF 40.0%
MMF0.6%
CD-FDIC
22.3%
Corp 18.3%58.8%
14.1%11.8%
7.0%8.4%
0%
10%
20%
30%
40%
50%
60%
70%
0-1Y 1-2Y 2-3Y 3-4Y 4-5Y
40.0%
22.3%
0.0%
0.0%
4.2%
7.0%
1.4%
1.4%
2.8%
20.9%
0%25%50%
NR-LAIF
P-1
A3
A2
A1
Aa1
Aa2
Aa3
Aaa
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%Jan-17Feb-17Mar-17Apr-17May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17Dec-17Total Ex LAIF
NR: Not RatedPer Book ValuePer Book Value
Per Book Value
2
Investment Policy Compliance
Securities' market values are derived from the Entity's custodian.
30% limit, 5% per issuer of US dollar-denominated senior unsecured unsubordinated obligations
guaranteed by IBRD, IFC, and IABD. Max maturity 5 years, min rating by 2 NRSRO's of AA.
Yes:
Yes:
Non-Negotiable Time Deposits
25% sector limit, 2% per issuer, maximum maturity 270 days, rated A-1 S&P or P-1 Moody's, issued by a
domestic corporation w/ at least $500 million of assets and A (S&P) or A2 (Moody;s) long term debt
Money Market Mutual Funds Sector limit 20%, issuer limit 10%, Aaa (S&P) and AAA (Moody's)
Corporate Medium Term Notes 30% sectors limit, 2% issuer limit (includes CP in aggregate), maximum maturity 5 years, rated at least A
by S&P or A2 by Moody's
Yes:
Yes:
Yes:
Yes:
Yes:
Yes:
16.0%
22.3%
0.0%
$7.1
0.0%
0.0%
0.6%
18.3%
City of Lynwood
Supranational Debt Obligations
U.S. Federal Agencies No sector limit, no issuer limit (FHLB, FFCB, FNMA, FHLMC), maximum maturity 5 years
Commercial Paper
25% sector limit, no issuer limit, maximum maturity of 1 year, issued by national/state charter banks or
savings and loan associations, collateralized according to State Code
12/31/2017
Item / Sector Parameters
LAIF No sector limit, issuer limit is $65 million
In Compliance
Negotiable Certificates of Deposit 30% sector limit, issuer limit no greater than FDIC insured limit (currently $250,000), max maturity 5 years,
issued by national/state charter banks or savings and loan associations
1.23Yes:
2.8%Yes:
Weighted Average Maturity Weighted Average Maturity (WAM) must be less than 3.0 years
U.S. Treasuries No sector limit, no issuer limit, maximum maturity 5 years
Liquidity At least 30% of the portfolio must have maturities of 1 year or less Yes:58.8%
Yrs
(Million)
3
Historical Earnings and Book Rate of Return Performance
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
$11.3 $23.2 $33.4 $54.7 $63.9 $72.7 $88.2 $98.6 $109.8 $125.3 $135.8 $145.8
$10.1 $24.6 $34.1 $51.3 $61.1 $70.7 $87.2 $96.6 $107.6 $123.5 $133.8 $144.8
$12.2 $25.2 $38.6 $60.4 $73.8 $87.6 $109.0 $122.3 $136.9 $159.5 $174.8 $190.5
$16.9 $34.0 $49.5 $78.2 $93.6 $109.5 $136.7 $154.3 $173.9 $205.9 $225.9 $245.5
$20.7 $42.0 $63.2 $85.8 $106.6 $128.0 $152.4 $176.5 $200.9 $225.6 $252.5 $281.1
$28.6 $53.2 $75.2 $99.7 $122.7 $145.5
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
1.19%1.24%1.28%1.33%1.36%1.38%
Custom Benchmark*1.11%1.12%1.14%1.15%1.17%1.18%
0.08%0.12%0.14%0.18%0.19%0.20%
*Benchmark: Average Builds Over the Fiscal Year Period--60% LAIF's Monthly Distribution Rate; 24 Month Moving Average of 25% of the BAML 1-5 Year Corporate Index, 15% of the BAML 1-5 Year Agency Index
City of Lynwood
Variance
Book Rate of Rtn
Fiscal YTD ($000s)
FY 2013
12/31/2017
Fiscal YTD
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
$0
$50
$100
$150
$200
$250
$300
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunThousandsFiscal Year-to-Date Earnings
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
1.05%
1.10%
1.15%
1.20%
1.25%
1.30%
1.35%
1.40%
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Book Rate of Return vs Benchmark
Portfolio
Benchmark
13
1-5-8
16
Moody's
Page 1
Par Value Book Value MaturityDateStatedRateMarket Value
December 31, 2017
Portfolio Details - Investments
AverageBalanceIssuer
Portfolio Management
Lynwood - Portfolio Management
S&PYTM365CUSIPInvestment #PurchaseDate
Money Market Funds
AaaGoldman Sach Govt MMF10011 110,972.77 110,972.77 1.190110,972.77 1.1909000 AAA
110,972.77 1.190110,972.77110,972.7798,155.17Subtotal and Average
LAIF
LAIF10000 7,092,174.86 7,092,174.86 1.2307,092,174.86 1.2309001
7,092,174.86 1.2307,092,174.867,092,174.867,092,174.86Subtotal and Average
Corporate Notes
Aa1Apple10118250,000.00 249,750.38 08/04/20211.55008/04/2016 242,880.00 1.579037833CC2 AA+
A1Branch Banking & Trust10117 250,000.00 250,474.69 05/10/20191.45007/05/2016 247,632.50 1.30707330NAL9 A
A1Citibank10134250,000.00 249,932.08 10/20/20202.12510/23/2017 247,612.50 2.13517325FAJ7 A+
A1Cisco10123250,000.00 244,825.01 09/20/20211.85011/29/2016 245,352.50 2.44317275RBJ0 AA-
Aa2Chevron10105250,000.00 249,892.24 06/24/20181.71801/11/2016 250,000.00 1.810166764AE0 AA-
A2John Deere10125 250,000.00 248,096.23 01/15/20201.70003/21/2017 247,562.50 2.08624422ERY7 A
A2Honda10109250,000.00 250,741.75 10/10/20182.12503/10/2016 250,395.00 1.73202665WAC5 A+
A1Jackson Natl Life10128 250,000.00 248,003.76 06/27/20222.50007/12/2017 247,217.50 2.69146849LSW2 AA
Aa3Met Life10135 250,000.00 251,928.47 04/08/20222.65011/02/2017 249,957.50 2.45859217GCD9 AA-
A1Pfizer10095250,000.00 250,011.00 06/15/20181.50007/21/2015 249,655.00 1.490717081DG5 AA
A2PNC Bank10119 250,000.00 251,392.20 03/04/20191.95008/31/2016 249,562.50 1.46669353REV6 A
Aa3Toyota10103250,000.00 249,996.79 01/10/20181.37512/23/2015 249,982.50 1.42789233P7E0 AA-
AaaExxon Mobil10110 250,000.00 250,045.10 03/01/20191.70803/10/2016 249,415.00 1.69230231GAP7 AA+
3,245,089.70 1.8693,227,225.003,250,000.003,245,081.52Subtotal and Average
Federal Agency
AaaFHLB10124500,000.00 494,656.85 12/10/20211.87512/28/2016 493,985.00 2.1623130AAB49 AA+
AaaFNMA10067500,000.00 499,894.22 11/27/20181.62503/12/2014 499,210.00 1.6493135G0YT4 AA+
AaaFNMA10114500,000.00 500,000.00 06/28/20191.10006/28/2016 494,425.00 1.1003136G3TB1 AA+
AaaFNMA10122500,000.00 499,162.59 10/17/20191.10010/17/2016 492,625.00 1.1953136G4DR1 AA+
AaaFNMA10136500,000.00 497,446.19 10/05/20222.00011/30/2017 493,755.00 2.1133135G0T78 AA+
2,491,159.85 1.6432,474,000.002,500,000.002,491,063.36Subtotal and Average
Treasury Coupon Securities
AaaU.S. Treasury10068 500,000.00 498,913.41 02/28/20191.50003/24/2014 498,010.00 1.696912828C24 AA+
498,913.41 1.696498,010.00500,000.00498,874.88Subtotal and Average
Portfolio LYNW
APData Updated: SET_PMM: 01/05/2018 09:30
Run Date: 01/05/2018 - 09:31 PM (PRF_PM2) 7.3.0
Report Ver. 7.3.6.1 18
Moody's
Page 2
Par Value Book Value MaturityDateStatedRateMarket Value
December 31, 2017
Portfolio Details - Investments
AverageBalanceIssuer
Portfolio Management
Lynwood - Portfolio Management
S&PYTM365CUSIPInvestment #PurchaseDate
Federal Agency Callable
AaaFHLMC10126350,000.00 350,000.00 04/27/20201.58004/27/2017 346,013.50 1.5803134GBHX3 AA+
350,000.00 1.580346,013.50350,000.00350,000.00Subtotal and Average
CD-FDIC
Comenity Capital Bank10083 248,000.00 247,957.95 05/25/20181.70011/28/2014 247,979.65 1.74420033AJL1
Ally Bank10127 248,000.00 247,701.41 06/22/20201.90006/23/2017 246,619.30 1.95202006L3N1
American Express Centurion Bk10090 248,000.00 248,000.00 07/02/20181.65007/01/2015 247,834.40 1.65002587DZM3
American Express Bank10082 248,000.00 248,000.00 11/13/20192.15011/13/2014 248,261.78 2.15102587CCR9
Barclays Bank10133 248,000.00 247,669.37 09/21/20201.95009/21/2017 246,658.75 2.00106740KKU0
Compass Bank10097 248,000.00 248,000.00 03/01/20181.50008/31/2015 247,948.97 1.50020451PNK8
BMW Bank10130 248,000.00 247,681.98 08/18/20201.90008/21/2017 246,434.26 1.95205580AKA1
Capital One NA10098 248,000.00 247,907.25 10/09/20181.65010/08/2015 247,529.33 1.70014042RAQ4
Capital One Bank USA10129 248,000.00 247,465.42 08/02/20222.30008/03/2017 248,507.75 2.3511404203Z1
Discover Bank10075 245,000.00 244,925.19 08/20/20181.75008/21/2014 244,889.67 1.8022546714Q0
Goldman Sachs Bank10088 248,000.00 248,000.00 04/09/20181.20004/08/2015 247,661.18 1.20738148JQB0
HSBC10116 248,000.00 248,000.00 07/08/20201.40007/08/2016 243,468.47 1.40140434AZ44
Key Bank10131 248,000.00 247,678.80 08/21/20201.85008/24/2017 246,107.54 1.90349306SYR1
Salllie Mae Bank10132 248,000.00 247,458.71 08/23/20222.35008/24/2017 249,064.07 2.402795450D36
Synchrony Bank10115 248,000.00 248,000.00 06/29/20211.55006/29/2016 242,420.38 1.55187165HNN6
Wells Fargo Bank10107 248,000.00 248,000.00 02/12/20181.15002/12/2016 247,882.85 1.1529497483K1
3,962,446.08 1.7763,949,268.353,965,000.003,962,402.39Subtotal and Average
1.54617,737,752.18 17,768,147.63 17,697,664.48 17,750,756.67Total and Average
Portfolio LYNW
APData Updated: SET_PMM: 01/05/2018 09:30
Run Date: 01/05/2018 - 09:31 PM (PRF_PM2) 7.3.0
19
Lynwood - Maturity Report
Inventory by Maturity Report
December 31, 2017
CurrentRate ParValueBookValueSec.TypeFund Date MaturityAmount Days toTotalDays360 365MaturityYTM
MaturityCUSIPInvestment #Issuer PurchaseDate
7,092,174.861.2307,092,174.86 7,092,174.8607/01/2017LAIF100009001PA2LYNL 11.2301.2131
110,972.771.190110,972.77 110,972.7707/01/2017Goldman Sach Govt MMF100119000PA1LYN 11.1901.1741
250,000.001.375249,996.79 250,000.0012/23/2015Toyota1010389233P7E0MTNLYN 01/10/2018 91.4271.408749
248,000.001.150248,000.00 248,000.0002/12/2016Wells Fargo Bank101079497483K1MC2LYN 02/12/2018 421.1521.136731
248,000.001.500248,000.00 248,000.0008/31/2015Compass Bank1009720451PNK8MC2LYN 03/01/2018 591.5001.479913
248,000.001.200248,000.00 248,000.0004/08/2015Goldman Sachs Bank1008838148JQB0MC2LYN 04/09/2018 981.2071.1911,097
248,000.001.700247,957.95 248,000.0011/28/2014Comenity Capital Bank1008320033AJL1MC2LYN 05/25/2018 1441.7441.7201,274
250,000.001.500250,011.00 250,000.0007/21/2015Pfizer10095717081DG5MTNLYN 06/15/2018 1651.4901.4691,060
250,000.001.718249,892.24 250,000.0001/11/2016Chevron10105166764AE0MTNLYN 06/24/2018 1741.8101.785895
248,000.001.650248,000.00 248,000.0007/01/2015American Express Centurion1009002587DZM3MC2LYN 07/02/2018 1821.6501.6271,097
245,000.001.750244,925.19 245,000.0008/21/2014Discover Bank100752546714Q0MC2LYN 08/20/2018 2311.8021.7771,460
248,000.001.650247,907.25 248,000.0010/08/2015Capital One NA1009814042RAQ4MC2LYN 10/09/2018 2811.7001.6771,097
250,000.002.125250,741.75 250,000.0003/10/2016Honda1010902665WAC5MTNLYN 10/10/2018 2821.7321.708944
500,000.001.625499,894.22 500,000.0003/12/2014FNMA100673135G0YT4FACLYN 11/27/2018 3301.6491.6271,721
500,000.001.500498,913.41 500,000.0003/24/2014U.S. Treasury10068912828C24TRCLYN 02/28/2019 4231.6961.6731,802
250,000.001.708250,045.10 250,000.0003/10/2016Exxon Mobil1011030231GAP7MTNLYN 03/01/2019 4241.6921.6691,086
250,000.001.950251,392.20 250,000.0008/31/2016PNC Bank1011969353REV6MTNLYN 03/04/2019 4271.4661.445915
250,000.001.450250,474.69 250,000.0007/05/2016Branch Banking & Trust1011707330NAL9MTNLYN 05/10/2019 4941.3071.2891,039
500,000.001.100500,000.00 500,000.0006/28/2016FNMA101143136G3TB1FACLYN 06/28/2019 5431.1001.0851,095
500,000.001.100499,162.59 500,000.0010/17/2016FNMA101223136G4DR1FACLYN 10/17/2019 6541.1951.1791,095
248,000.002.150248,000.00 248,000.0011/13/2014American Express Bank1008202587CCR9MC2LYN 11/13/2019 6812.1512.1221,826
250,000.001.700248,096.23 250,000.0003/21/2017John Deere1012524422ERY7MTNLYN 01/15/2020 7442.0862.0581,030
350,000.001.580350,000.00 350,000.0004/27/2017FHLMC101263134GBHX3MC1LYN 04/27/2020 8471.5801.5581,096
248,000.001.900247,701.41 248,000.0006/23/2017Ally Bank1012702006L3N1MC2LYN 06/22/2020 9031.9521.9251,095
248,000.001.400248,000.00 248,000.0007/08/2016HSBC1011640434AZ44MC2LYN 07/08/2020 9191.4011.3821,461
248,000.001.900247,681.98 248,000.0008/21/2017BMW Bank1013005580AKA1MC2LYN 08/18/2020 9601.9521.9251,093
248,000.001.850247,678.80 248,000.0008/24/2017Key Bank1013149306SYR1MC2LYN 08/21/2020 9631.9031.8761,093
248,000.001.950247,669.37 248,000.0009/21/2017Barclays Bank1013306740KKU0MC2LYN 09/21/2020 9942.0011.9731,096
250,000.002.125249,932.08 250,000.0010/23/2017Citibank1013417325FAJ7MTNLYN 10/20/2020 1,0232.1352.1061,093
248,000.001.550248,000.00 248,000.0006/29/2016Synchrony Bank1011587165HNN6MC2LYN 06/29/2021 1,2751.5511.5301,826
250,000.001.550249,750.38 250,000.0008/04/2016Apple10118037833CC2MTNLYN 08/04/2021 1,3111.5791.5571,826
250,000.001.850244,825.01 250,000.0011/29/2016Cisco1012317275RBJ0MTNLYN 09/20/2021 1,3582.4432.4091,756
500,000.001.875494,656.85 500,000.0012/28/2016FHLB101243130AAB49FACLYN 12/10/2021 1,4392.1622.1321,808
250,000.002.650251,928.47 250,000.0011/02/2017Met Life1013559217GCD9MTNLYN 04/08/2022 1,5582.4582.4241,618
250,000.002.500248,003.76 250,000.0007/12/2017Jackson Natl Life1012846849LSW2MTNLYN 06/27/2022 1,6382.6912.6541,811
248,000.002.300247,465.42 248,000.0008/03/2017Capital One Bank USA101291404203Z1MC2LYN 08/02/2022 1,6742.3512.3191,825
Portfolio LYNW
APData Updated: SET_MAT: 01/05/2018 09:26
Run Date: 01/05/2018 - 09:26 IM (PRF_IM) 7.1.1
Report Ver. 7.3.6.1
20
Current
Rate
Par
Value
Book
Value
Sec.
Type
Page 2
Fund Date Maturity
Amount
Days toTotal
Days 360 365MaturityYTM
Maturity
Inventory by Maturity Report
Lynwood - Maturity Report
CUSIP Investment #Issuer Purchase
Date
248,000.002.350247,458.71 248,000.0008/24/2017Salllie Mae Bank10132795450D36MC2LYN 08/23/2022 1,6952.4022.3691,825
500,000.002.000497,446.19 500,000.0011/30/2017FNMA101363135G0T78FACLYN 10/05/2022 1,7382.1132.0841,770
Subtotal and Average 17,768,147.63 17,768,147.6317,750,756.67 1.525 1.546 450
17,768,147.63 17,768,147.6317,750,756.67Net Maturities and Average 1.525 1.546 450
Portfolio LYNW
APData Updated: SET_MAT: 01/05/2018 09:26
Run Date: 01/05/2018 - 09:26 IM (PRF_IM) 7.1.1
Report Ver. 7.3.6.1
21
Lynwood - Credit Rating
Credit Rating Report
December 31, 2017
Sorted by Moody's - Investment Number
Security #PurchasePrincipal BookValueInvestment #% ofTotal
Moody's RatingIssuerMarketValue
S&P Rating PurchaseDate MaturityDate Days ToMaturity StatedRate YTM
10011 9000GSGF 07/01/2017Aaa AAA110,972.77 110,972.77 110,972.77 1 1.190 1.190 0.63
11/27/2018100673135G0YT4FNMA03/12/2014Aaa AA+499,450.00 499,894.22 499,210.00 330 1.625 1.649 2.82
02/28/201910068912828C24USTR03/24/2014Aaa AA+495,371.09 498,913.41 498,010.00 423 1.500 1.696 2.81
03/01/20191011030231GAP7XOM03/10/2016Aaa AA+250,115.00 250,045.10 249,415.00 424 1.708 1.692 1.41
06/28/2019101143136G3TB1FNMA06/28/2016Aaa AA+500,000.00 500,000.00 494,425.00 543 1.100 1.100 2.82
10/17/2019101223136G4DR1FNMA10/17/2016Aaa AA+498,600.00 499,162.59 492,625.00 654 1.100 1.195 2.81
12/10/2021101243130AAB49FHLB12/28/2016Aaa AA+493,290.00 494,656.85 493,985.00 1,439 1.875 2.162 2.79
04/27/2020101263134GBHX3FHLMC04/27/2017Aaa AA+350,000.00 350,000.00 346,013.50 847 1.580 1.580 1.97
10/05/2022101363135G0T78FNMA11/30/2017Aaa AA+497,400.00 497,446.19 493,755.00 1,738 2.000 2.113 2.80
SubTotal for Aaa 3,695,198.86 3,701,091.13 3,678,411.27 20.861.6341.539798
08/04/202110118037833CC2AAPL08/04/2016Aa1 AA+249,652.50 249,750.38 242,880.00 1,311 1.550 1.579 1.41
SubTotal for Aa1 249,652.50 249,750.38 242,880.00 1.411.5791.5501311
06/24/201810105166764AE0CVX01/11/2016Aa2 AA-249,450.00 249,892.24 250,000.00 174 1.718 1.810 1.41
SubTotal for Aa2 249,450.00 249,892.24 250,000.00 1.411.8101.718174
01/10/20181010389233P7E0TOY12/23/2015Aa3 AA-249,737.50 249,996.79 249,982.50 9 1.375 1.427 1.41
04/08/20221013559217GCD9MET11/02/2017Aa3 AA-252,002.50 251,928.47 249,957.50 1,558 2.650 2.458 1.42
SubTotal for Aa3 501,740.00 501,925.26 499,940.00 2.831.9452.015786
06/15/201810095717081DG5PFE07/21/2015A1 AA250,070.00 250,011.00 249,655.00 165 1.500 1.490 1.41
05/10/20191011707330NAL9BBT07/05/2016A1 A250,995.00 250,474.69 247,632.50 494 1.450 1.307 1.41
09/20/20211012317275RBJ0CSCO11/29/2016A1 AA-243,310.00 244,825.01 245,352.50 1,358 1.850 2.443 1.38
06/27/20221012846849LSW2JAC07/12/2017A1 AA247,795.00 248,003.76 247,217.50 1,638 2.500 2.691 1.40
10/20/20201013417325FAJ7C10/23/2017A1 A+249,927.50 249,932.08 247,612.50 1,023 2.125 2.135 1.41
SubTotal for A1 1,242,097.50 1,243,246.54 1,237,470.00 7.012.0101.884933
10/10/20181010902665WAC5HNDA03/10/2016A2 A+252,472.50 250,741.75 250,395.00 282 2.125 1.732 1.41
03/04/20191011969353REV6PNC08/31/2016A2 A252,972.00 251,392.20 249,562.50 427 1.950 1.466 1.42
01/15/20201012524422ERY7DE03/21/2017A2 A247,370.00 248,096.23 247,562.50 744 1.700 2.086 1.40
SubTotal for A2 752,814.50 750,230.18 747,520.00 4.231.7601.926483
10000 9001LAIF 07/01/2017None None7,092,174.86 7,092,174.86 7,092,174.86 1 1.230 1.230 39.95
08/20/2018100752546714Q0DISC08/21/2014None None244,527.15 244,925.19 244,889.67 231 1.750 1.802 1.38
11/13/20191008202587CCR9AXPFSB11/13/2014None None248,000.00 248,000.00 248,261.78 681 2.150 2.151 1.40
05/25/20181008320033AJL1ADS11/28/2014None None247,628.00 247,957.95 247,979.65 144 1.700 1.744 1.40
Portfolio LYNW
APData Updated: SET_CRE: 01/05/2018 09:20
Run Date: 01/05/2018 - 09:20 CR (PRF_CR) 7.2.0
Report Ver. 7.3.6.1
22
Sorted by Moody's - Investment Number
Page 2Credit Rating Report
Lynwood - Credit Rating
Security #PurchasePrincipal BookValueInvestment #% ofTotal
Moody's
RatingIssuerMarketValue
S&P
Rating PurchaseDate MaturityDate Days ToMaturity StatedRate YTM
04/09/20181008838148JQB0GOLD04/08/2015None None248,000.00 248,000.00 247,661.18 98 1.200 1.207 1.40
07/02/20181009002587DZM3AXP07/01/2015None None248,000.00 248,000.00 247,834.40 182 1.650 1.650 1.40
03/01/20181009720451PNK8BCOMPS08/31/2015None None248,000.00 248,000.00 247,948.97 59 1.500 1.500 1.40
10/09/20181009814042RAQ4CAP1NA10/08/2015None None247,637.92 247,907.25 247,529.33 281 1.650 1.700 1.40
02/12/2018101079497483K1WFB02/12/2016None None248,000.00 248,000.00 247,882.85 42 1.150 1.152 1.40
06/29/20211011587165HNN6SYF06/29/2016None None248,000.00 248,000.00 242,420.38 1,275 1.550 1.551 1.40
07/08/20201011640434AZ44HSBC07/08/2016None None248,000.00 248,000.00 243,468.47 919 1.400 1.401 1.40
06/22/20201012702006L3N1ALLY06/23/2017None None247,637.92 247,701.41 246,619.30 903 1.900 1.952 1.40
08/02/2022101291404203Z1COFU08/03/2017None None247,417.20 247,465.42 248,507.75 1,674 2.300 2.351 1.39
08/18/20201013005580AKA1BMW08/21/2017None None247,637.92 247,681.98 246,434.26 960 1.900 1.952 1.40
08/21/20201013149306SYR1KEY08/24/2017None None247,635.44 247,678.80 246,107.54 963 1.850 1.903 1.40
08/23/202210132795450D36SLMA08/24/2017None None247,417.20 247,458.71 249,064.07 1,695 2.350 2.402 1.39
09/21/20201013306740KKU0BACR09/21/2017None None247,635.44 247,669.37 246,658.75 994 1.950 2.001 1.40
SubTotal for No Specified Rating 11,053,349.05 11,054,620.94 11,041,443.21 62.311.4261.415249
Portfolio LYNW
APData Updated: SET_CRE: 01/05/2018 09:20
Run Date: 01/05/2018 - 09:20 CR (PRF_CR) 7.2.0
Report Ver. 7.3.6.1
23
Page 1
December 31, 2017
Interest Earnings Summary
Month EndingDecember 31 Fiscal Year To Date
Portfolio Management
Lynwood - Portfolio Management
CD/Coupon/Discount Investments:
19,182.32Interest Collected
Plus Accrued Interest at End of Period
Less Accrued Interest at Beginning of Period
38,895.19
( 42,840.16)
79,821.79
38,887.76
( 34,399.98)
Less Accrued Interest at Purchase During Period ( 0.00)( 0.00)
Interest Earned during Period
Adjusted by Premiums and Discounts
Adjusted by Capital Gains or Losses
Earnings during Periods
15,237.35
393.70
0.00
84,309.57
3,284.28
-1.04
15,631.05 87,592.81
Pass Through Securities:
0.00Interest Collected
Plus Accrued Interest at End of Period
Less Accrued Interest at Beginning of Period
0.00
( 0.00)
0.00
0.00
( 0.00)
Less Accrued Interest at Purchase During Period ( 0.00)( 0.00)
Interest Earned during Period
Adjusted by Premiums and Discounts
Adjusted by Capital Gains or Losses
Earnings during Periods
0.00
0.00
0.00
0.00
0.00
0.00
0.00 0.00
Cash/Checking Accounts:
72.22Interest Collected
Plus Accrued Interest at End of Period
Less Accrued Interest at Beginning of Period
54,249.56
( 47,158.52)
77,156.71
54,249.56
( 73,524.68)
Interest Earned during Period 7,163.26 57,881.59
Total Interest Earned during Period
Total Adjustments from Premiums and Discounts
Total Capital Gains or Losses
Total Earnings during Period
22,400.61
393.70
0.00
142,191.16
3,284.28
-1.04
22,794.31 145,474.40
Portfolio LYNW
APData Updated: SET_PMM: 01/05/2018 09:30
Run Date: 01/05/2018 - 09:31 PM (PRF_PM6) 7.3.0
Report Ver. 7.3.6.1
26
Lynwood - Interest Reports
Accrued Interest
Sorted by Security Type - Maturity Date
December 1, 2017 - December 31, 2017
Maturity
Date
Security
Type
Current
Rate
Par
Value
* Beginning
Accrued Interest
* Ending
Accrued Interest
Adjusted Acc'd Int. at Purchase During PeriodCUSIPInvestment #
Interest
Earned
Interest
Received
Money Market Funds
72.22100119000110,972.77 1.190PA1 92.46 72.22 92.460.00
72.22110,972.77Subtotal 92.4692.46 72.220.00
LAIF
47,086.301000090017,092,174.86 1.230PA2 7,070.80 0.00 54,157.100.00
47,086.307,092,174.86Subtotal 54,157.107,070.80 0.000.00
Corporate Notes
1,346.351010389233P7E0250,000.00 1.375MTN01/10/2018 286.46 0.00 1,632.810.00
1,729.1710095717081DG5250,000.00 1.500MTN06/15/2018 312.50 1,875.00 166.670.00
1,873.1010105166764AE0250,000.00 1.718MTN06/24/2018 357.91 2,147.50 83.510.00
752.601010902665WAC5250,000.00 2.125MTN10/10/2018 442.71 0.00 1,195.310.00
1,067.501011030231GAP7250,000.00 1.708MTN03/01/2019 355.83 0.00 1,423.330.00
1,178.131011969353REV6250,000.00 1.950MTN03/04/2019 406.25 0.00 1,584.380.00
211.461011707330NAL9250,000.00 1.450MTN05/10/2019 302.08 0.00 513.540.00
1,605.561012524422ERY7250,000.00 1.700MTN01/15/2020 354.16 0.00 1,959.720.00
605.031013417325FAJ7250,000.00 2.125MTN10/20/2020 442.71 0.00 1,047.740.00
1,259.3810118037833CC2250,000.00 1.550MTN08/04/2021 322.91 0.00 1,582.290.00
912.151012317275RBJ0250,000.00 1.850MTN09/20/2021 385.42 0.00 1,297.570.00
975.351013559217GCD9250,000.00 2.650MTN04/08/2022 552.08 0.00 1,527.430.00
2,673.611012846849LSW2250,000.00 2.500MTN06/27/2022 520.83 3,125.00 69.440.00
16,189.393,250,000.00Subtotal 14,083.745,041.85 7,147.500.00
Federal Agency
90.28100673135G0YT4500,000.00 1.625FAC11/27/2018 677.08 0.00 767.360.00
2,337.50101143136G3TB1500,000.00 1.100FAC06/28/2019 458.33 2,750.00 45.830.00
672.22101223136G4DR1500,000.00 1.100FAC10/17/2019 458.34 0.00 1,130.560.00
4,453.13101243130AAB49500,000.00 1.875FAC12/10/2021 781.25 4,687.50 546.880.00
1,527.78101363135G0T78500,000.00 2.000FAC10/05/2022 833.33 0.00 2,361.110.00
9,080.912,500,000.00Subtotal 4,851.743,208.33 7,437.500.00
Treasury Coupon Securities
1,906.0810068912828C24500,000.00 1.500TRC02/28/2019 642.26 0.00 2,548.340.00
1,906.08500,000.00Subtotal 2,548.34642.26 0.000.00
Portfolio LYNW
ACData Updated: SET_INT: 01/05/2018 09:24
Run Date: 01/05/2018 - 09:25 AI (PRF_AI) 7.2.8
Report Ver. 7.3.6.1
* Beginning Accrued may not include investments that redeemed in the previous month that had outstanding accrued interest. Ending Accrued includes outstanding purchase interest.
29
Maturity
Date
Security
Type
Current
Rate
Par
Value
Sorted by Security Type - Maturity Date Page 2
* Beginning
Accrued Interest
* Ending
Accrued Interest
Adjusted Acc'd Int.
at Purchase During Period
Accrued Interest
Lynwood - Interest Reports
CUSIP Investment #Interest
Earned
Interest
Received
Federal Agency Callable
522.28101263134GBHX3350,000.00 1.580MC104/27/2020 460.83 0.00 983.110.00
522.28350,000.00Subtotal 983.11460.83 0.000.00
CD-FDIC
148.46101079497483K1248,000.00 1.150MC202/12/2018 242.22 234.41 156.270.00
924.861009720451PNK8248,000.00 1.500MC203/01/2018 318.56 0.00 1,243.420.00
429.251008838148JQB0248,000.00 1.200MC204/09/2018 253.46 0.00 682.710.00
57.751008320033AJL1248,000.00 1.700MC205/25/2018 358.07 346.52 69.300.00
1,690.081009002587DZM3248,000.00 1.650MC207/02/2018 344.71 0.00 2,034.790.00
1,209.90100752546714Q0245,000.00 1.750MC208/20/2018 364.14 0.00 1,574.040.00
607.081009814042RAQ4248,000.00 1.650MC210/09/2018 348.49 0.00 955.570.00
262.951008202587CCR9248,000.00 2.150MC211/13/2019 452.85 0.00 715.800.00
2,091.351012702006L3N1248,000.00 1.900MC206/22/2020 400.20 2,362.45 129.100.00
1,388.801011640434AZ44248,000.00 1.400MC207/08/2020 294.88 0.00 1,683.680.00
1,355.501013005580AKA1248,000.00 1.900MC208/18/2020 400.20 0.00 1,755.700.00
1,256.981013149306SYR1248,000.00 1.850MC208/21/2020 389.67 0.00 1,646.650.00
940.701013306740KKU0248,000.00 1.950MC209/21/2020 410.73 0.00 1,351.430.00
1,632.391011587165HNN6248,000.00 1.550MC206/29/2021 326.47 1,927.27 31.590.00
1,890.91101291404203Z1248,000.00 2.300MC208/02/2022 484.45 0.00 2,375.360.00
1,596.7110132795450D36248,000.00 2.350MC208/23/2022 494.98 0.00 2,091.690.00
17,483.673,965,000.00Subtotal 18,497.105,884.08 4,870.650.00
0.0017,768,147.63Total 95,213.5922,400.61 19,527.8792,340.85
Portfolio LYNW
ACData Updated: SET_INT: 01/05/2018 09:24
Run Date: 01/05/2018 - 09:25 AI (PRF_AI) 7.2.8
Report Ver. 7.3.6.1
* Beginning Accrued may not include investments that redeemed in the previous month that had outstanding accrued interest. Ending Accrued includes outstanding purchase interest.
30
Client Management Team
Rick Phillips
President & Chief Investment Officer
702-575-6666
rick.phillips@ftnmainstreet.com
Tonya Dazzio
Chief Operating & Compliance Officer
702-575-6592
tonya.dazzio@ftnmainstreet.com
Greg Balls, CFA
Portfolio Manager & Analyst
702-575-6655
greg.balls@ftnmainstreet.com
Christine Wilson
Operations Analyst
702-575-6640
christine.wilson@ftnmainstreet.com
Dan Rusk
Portfolio Analyst
702-575-6633
daniel.rusk@ftnmainstreet.com
Monthly Investment Report
City of Lynwood
December 2017
10655 Park Run Drive Suite 120 | Summerlin, NV 89144 | Phone 888.278.7350 | www.FTNMainStreet.com
Historical Book Values
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
$29.4 $24.9 $22.7 $21.6 $20.4 $19.8 $20.2 $22.7 $23.1 $22.1 $19.4 $23.9
$27.2 $26.8 $26.0 $24.3 $22.1 $20.9 $21.7 $21.4 $21.4 $22.2 $24.9 $26.4
$26.4 $25.2 $24.4 $23.3 $21.8 $20.7 $20.4 $24.7 $25.0 $25.3 $27.3 $29.1
$27.6 $25.6 $25.6 $25.6 $25.6 $23.6 $25.8 $27.4 $26.1 $26.2 $26.2 $31.0
$32.2 $32.1 $31.1 $29.2 $27.6 $27.2 $27.3 $30.0 $31.3 $31.3 $32.1 $35.3
$35.3 $34.0 $31.2 $29.9 $27.3 $26.9 $25.9 $29.8 $30.0 $30.0 $29.3 $29.0
$29.0 $29.1 $29.1 $29.1 $27.7 $25.9 $27.0 $30.6 $27.7 $27.7 $28.5 $30.5
$28.2 $22.2 $19.1 $19.2 $19.0 $17.7
Figures in Millions, Average Daily Balance
Fiscal Year 2013
12/31/2017 City of Lynwood
Fiscal Year 2011
Fiscal Year 2012
Fiscal Year 2018
Fiscal Year 2017
Fiscal Year 2014
Fiscal Year 2015
Fiscal Year 2016
$16
$18
$20
$22
$24
$26
$28
$30
$32
$34
$36
$38
JulAugSepOctNovDecJanFebMarAprMayJunMillionsFY18
FY17
FY16
FY15
FY14
FY13
FY12
FY11
5
1.97%
0.00%
9.78%
0.00%
7.15%
16.63%
15.33%
0.04%
49.10%