RES-9941 Authorizing Purchase & Sale AgreementI
I
RESOLUTION NO. 9941
CITY COUNCIL
OF THE
CITY OF ORANGE
A RESOLUTION APPROVING THE FORM OF AND AUTHORIZING THE
EXECUTION AND DELIVERY OF A PURCHASE AND SALE AGREEMENT
AND RELATED DOCUMENTS WITH RESPECT TO THE SALE OF THE
SELLER'S VEHICLE LICENSE FEE RECENABLE FROM THE STATE;
AND DIRECTING AND AUTHORIZING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
WHEREAS, certain public agencies within the State of California (the "State") are
entitled to receive certain payments payable by the State to each such local agency on or before
August IS, 2006, in connection with vehicle license fees pursuant to Section 10754.11 of the
California Revenue and Taxation Code ("VLF Gap Repayments");
WHEREAS, the City of Orange (the "Seller") is entitled to and has determined to sell all
right, title and interest of the Seller in and to the "VLF Receivable", as defined in Section 6585(i)
of the California Government Code (the "VLF Receivable"), namely, the right to payment of
moneys due or to become due to the Seller out of funds payable in connection with vehiclelicensefeestoalocalagencypursuanttoSection10754.11 of the California Revenue and
Taxation Code, in order to obtain money to fund public capital improvements deemed necessarytomeettheneedsoftheSeller's population;
WHEREAS, the Seller is authorized to sell or otherwise dispose of its property as theinterestsofitsresidentsrequire;
WHEREAS, the California Statewide Communities Development Authority, a jointexerciseofpowersauthorityorganizedandexistingunderthelawsoftheState (the "Authority"),has been authorized pursuant to Section 6588(w) of the California Government Code to purchasetheVLFReceivable;
WHEREAS, the Authority desires to purchase the VLF Receivable and the Seller desirestoselltheVLFReceivablepursuanttoapurchaseandsaleagreementbyandbetweentheSellerandtheAuthorityintheformpresentedtothisCityCouncil (the "Sale Agreement") for the
pmposes set forth herein;
WHEREAS, in order to fmance the purchase price ofthe VLF Receivable from the SellerandthepurchasepriceofotherVLFReceivablesfromotherlocalagencies, the Authority willissueitstaxableandtax-exempt notes (the "Notes") pursuant to Section 6590 of theCaliforniaGovernmentCodeandanIndenture (the "Indenture"), by and between the Authority andWellsFargoBank, National Association, as trustee (the "Trustee"), which Notes will be payablesolelyfromtheproceedsoftheVLFReceivableandsuchotherVLF
Receivables;WHEREAS, the Seller acknowledges that the Authority will grant a security interestintheVLFReceivabletotheTrusteeandanycreditenhancertosecurepaymentofthe
Notes;
Tax-Exempt
WHEREAS, a portion of the proceeds of the Notes will be used by the Authority to,
among other things, pay the purchase price of the VLF Receivable which will be deposited in a
separate account held in the Seller's name (the "Participant Custody Account") by Wells Fargo
Bank, National Association, as custodian (the "Custodian") under a master custodial agreement
the "Custody Agreement");
WHEREAS, pursuant to the tenns of the Custody Agreement, the Custodian will hold
and invest the sale proceeds in the Participant Custody Account and will disburse such proceeds
and the investment earnings thereon only upon the written request of the Seller, as provided in
the Custody Agreement; and
WHEREAS, the Seller reasonably expects to use the proceeds from the sale of the VLF
Receivable for the purposes described in Appendix A attached hereto and by reference
incorporated herein (collectively, the "Project");
WHEREAS, the Seller will use the proceeds received from the sale of the VLF
Receivable for any lawful purpose as permitted under the applicable laws of State;
NOW THEREFORE, the City Council of the City of Orange hereby resolves as follows:
Section I. All of the recitals set forth above are true and correct, and this City
Council hereby so finds and determines.
Section 2. The Seller hereby authorizes the sale of the VLF Receivable to the
Authority for a price no less than the Minimum Purchase Price set forth in Appendix A. The
form of Sale Agreement presented to the City Council is hereby approved. An Authorized
Officer (as set forth in Appendix A) is hereby authorized and directed to execute and deliver the
Sale Agreement on behalf of the Seller, which shall be in substantially the fonn presented to this
meeting, with such changes therein, deletions therefrom and additions thereto, as such
Authorized Officer shall approve, which approval shall be conclusively evidenced by the
execution and delivery of the Sale Agreement.
Section 3. Any Authorized Officer is hereby authorized and directed to send, or
to cause to be sent, an irrevocable written instruction to the State Controller notifying the State of
the sale of the VLF Receivable and instructing the disbursement pursuant to Section 6588.5(c) of
California Government Code of the VLF Receivable to the Trustee, on behalf of the Authority.
Section 4. The City Council hereby approves the application of the proceeds
from the sale of the VLF Receivable to the funding of the Project.
Section 5. The Authorized Officers and such other Seller officers, as appropriate,
are hereby authorized and directed, jointly and severally, to do any and all things and to execute
and deliver any and all documents, including but not limited to, if required, one or more tax
certificates, appropriate escrow instructions relating to the delivery into escrow of executed
documents prior to the closing of the Notes, appropriate investment instructions, structured
investment agreements and related documents in connection with the investment of the
Participant Custody Account, and such other documents mentioned in the Sale Agreement or the
Indenture, which any of them may deem necessary or desirable in order to implement the Sale
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Agreement and otherwise to carry out, give effect to and comply with the terms and intent of this
Resolution; and all such actions heretofore taken by such officers are hereby ratified, confirmed
and approved.
I
Section 6. All consents, approvals, notices, orders, requests and other actions
permitted or required by any of the documents authorized by this Resolution, whether before or
after the sale of the VLF Receivable or the issuance of the Notes, including without limitation
any of the foregoing that may be necessary or desirable in connection with any default under or
amendment of such documents, may be given or taken by an Authorized Officer without further
authorization by this City Council, and each Authorized Officer is hereby authorized and
directed to give any such consent, approval, notice, order or request, to execute any necessary or
appropriate documents or amendments, and to take any such action that such Authorized Officer
may deem necessary or desirable to further the purposes of this Resolution.
Section 7. The City Council acknowledges that, upon execution and delivery of
the Sale Agreement, the Seller is contractually obligated to sell the VLF Receivable to the
Authority pursuant to the Sale Agreement and the Seller shall not have any option to revoke its
approval of the Sale Agreement or to determine not to perform its obligations thereunder.
I
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Exempt DOCSSFI,795595.1
Section 8. This Resolution shaH take effect from and after its adoption and
approval.
ADOPTED this ~ day of Februarv Z005
ATTEST:
It ~ (j
MaryE.y, City Clerk, 1 Orange
I, MARY E. MURPHY, City Clerk of the City of Orange, California, do hereby certify
that the foregoing Resolution was duly and regularly adopted by the City Council of the City of
Orange at a regular meeting thereof held on the 8tlL- day of FAhruarv , 'zoos, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
COUNCILMEMBERS: Smith, Ambriz, Murphy, Cavecche, Dumitru
COUNCILMEMBERS: None
COUNCILMEMBERS: None
COUNCILMEMBERS: None
3
City Clerk, City of Orange
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Exempt DOCSSFl:795393.1
1!1l'Y?31
CITY OF ORANGE, CALIFORNIA,
as SeBer
and
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY,
as Purchaser
PURCHASE AND SALE AGREEMENT
Dated March 2, 2005
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Exempt DOCSSFt ,795413.
TABLE OF CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION ......................................................................1
2. AGREEMENT TO SELL AND PURCHASE; CONDITIONS PRECEDENT ................2
3. CONVEYANCE OF VLF RECEIVABLE AND PAYMENT OF FINAL
PURCHASE PRICE ..........................................................................................................3
4. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER..........................
3
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER................................... 3
6. COVENANTS OF THE
SELLER.....................................................................................
6
7. NOTICES OF BREACH ...........................................,.....................................................,.7
8. LIABILITY OF SELLER; INDEMNIFICATION .........................................;..................7
9. LIMITATION ON LIABILITY ........................................................................................8
10. THE SELLER'S ACKNOWLEDGMENT........................................................................8
11. NOTICES............................................ ..... ............. ........... .......... ....... ..... ..... .......... ............. 8
12. AMENDMENTS ............................................................................................................... 9
13. SUCCESSORS AND ASSIGNS ....................................................................................... 9
14. THIRD PARTY
RIGHTS..................................................................................................
9
15. PARTIAL INVALIDITY .................................................................................................. 9
16. COUNTERPARTS ............................................................................................................9
17. ENTIRE AGREEMENT .................................................................................................... 9
18. GOVERNING LA W........................................................................................................ 10
EXHIBIT A - DEFINITIONS ................................................................................................... A-I
EXHIBIT Bl- OPINION OF SELLER'S COUNSEL........................................................... Bl-
l EXHIBIT B2 - BRINGDOWN OPINION OF SELLER'S COUNSEL................................. B2-
1 EXHIBIT Cl - CLERK'S CERTIFICATE............................................................................. Cl-
l EXHIBIT C2 - SELLER CERTIFICATE............................................................................... C2-
1 EXHIBIT C3 - BILL OF SALE AND BRINGDOWN CERTIFICATE................................ C3.-1
EXHIBIT D - IRREVOCABLE INSTRUCTIONS TO CONTROLLER................................D-l
EXHIBIT E - SELLER TAX CERTIFICATE..........................................................................
E-l
EXHIBIT F - ESCROW INSTRUCTION LETTER .................................................................F-l
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated March 2, 2005 (this
Agreement"), is entered into by and between:
1)
the "SeBer"); and
CITY OF ORANGE, a municipal corporation of the State of California
2) CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT
AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the
State of California (the "Purchaser").
RECITALS
A. The Seller is the owner of the VLF Receivable (as defined below).
B. The Seller is willing to seB, and the Purchaser is willing to purchase, the
VLF Receivable upon the terms specified in this Agreement.
C. The Purchaser will issue its taxable and tax-exempt notes (the "
Notes")pursuant to an Indenture (the "Indenture"), between the Purchaser and Wells Fargo
Bank,National Association, as trustee (the "Trustee"), and will use a portion of the proceeds thereof
to purchase the VLF Receivable from the
Seller.D. The Purchaser will grant a security interest in such VLF Receivable to
the Trustee and each Credit Enhancer to secure the
Notes.
AGREEMENT NOW, THEREFORE, in consideration of the above Recitals and the
mutual covenants herein contained, the parties hereto hereby agree as
follows:1. Definitions and
Interpretation.a) For aB purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires, capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in Exhibit A attached hereto and which
is incorporated by reference
herein.b) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; section and exhibits references contained in this Agreement
are references to sections and exhibits in or to this Agreement unless otherwise specified; and
the term "including" shall mean "including without
limitation."c) Any agreement, instrument or statute defined or referred to herein or inanyinstrumentorcertificatedeliveredinconnectionherewithmeanssuchagreement, instrument
or statute as from time to time may be amended, modified or supplemented and includes (in
the
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case of agreements or instruments) references to all attachments and exhibits thereto and
instruments incorporated therein; and any references to a Person are also to its permitted
successors and assigns.
2. Agreement to Sell and Purchase; Conditions Precedent.
a) The Seller agrees to sell, and the Purchaser agrees to purchase, on the Closing
Date, for cash paid by the Purchaser in an amount equal to the amount determined pursuant to
Section 3(a) (the "Final Purchase Price"), which shall be not less than $2,100,000.00 (the
Minimum Purchase Price"), all right, title and interest of the Seller in and to the "VLF
Receivable" as defined in Section 6585(i) of the California Government Code (the "VLF
Receivable"), namely, the right to payment of moneys due or to become due to the Seller out of
funds payable in connection with vehicle license fees to a local agency pursuant to Section
10754.11 of the California Revenue and Taxation Code. The Purchaser shall pay the Final
Purchase Price by depositing the Final Purchase Price in the Seller's Participant Custody
Account held by the Custodian under the Custody Agreement, as defined in and pursuant to the
Indenture.
b) The performance by the Purchaser of its obligations hereunder shall be
conditioned upon:
i) Transaction Counsel receiving on or before the date the Notes are sold (the
Pricing Date"), to be held in escrow until the Closing Date and then
delivered to the Purchaser on the Closing Date, the following documents
duly executed by the Seller or its counsel, as applicable: (1) an opinion of
counsel to the Seller dated the Pricing Date in substantially the form
attached hereto as Exhibit B 1, (2) certificates dated the Pricing Date in
substantially the forms attached hereto as Exhibit Cl and Exhibit C2,
3) irrevocable instructions to the ControBer dated as of the Closing Date
in substantially the form attached hereto as Exhibit D, (4) this Agreement,
5) a certified copy of the resolution of the Seller's City Council approving
this Agreement, the transactions contemplated hereby and the documents
attached hereto as exhibits, (6) an escrow instruction letter in substantially
the form attached hereto as Exhibit F, and (7) the Seller Tax Certificate in
substantially the formes) attached hereto as Exhibit E;
ii) Transaction Counsel receiving on or before the Closing Date, (1) a
bringdown opinion of counsel to the Seller dated as of the Closing Date in
substantially the form attached hereto as Exhibit B2, and (2) a bill of sale
and bringdown certificate of the Seller (the "Bill of Sale") in substantially
the form attached hereto as Exhibit C3: provided that the Purchaser may
waive in its sole discretion the requirements of Section 2(b)(ii)(1); and
iii) the Purchaser issuing notes in an amount which will be sufficient to pay
the Final Purchase Price.
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Exempt DOCSSFI,795413.1
c) The performance by the Seller of its obligations hereunder shaB be
conditioned solely upon the Purchaser's payment of the Final Purchase Price as set forth in this
Agreement and no other act or omission on the part of the Purchaser or any other party shaB
excuse the Seller from performing its obligations hereunder.
d) The Final Purchase Price shaB be an amount that satisfies the conditions of
Section 2 of the Resolution referred to in Section 2(b)(i)(5) above.
3. Conveyance ofVLF Receivable and Payment of Final Purchase Price.
a) Upon pricing of the Notes by the Purchaser, the Purchaser wiB inform the
SeBer of the Final Purchase Price, which shall be an amount at least equal to the Minimum
Purchase Price, and which shaB be determined by the Purchaser based on the final interest rates,
costs of credit enhancement and issuance and terms of the Notes. Upon pricing of the Notes, the
Purchaser shaB deliver a certificate to the Seller indicating the Final Purchase Price to be paid to
the SeBer on the Closing Date.
b) In consideration of the payment and delivery by the Purchaser to the SeBer of
the Final Purchase Price, the SeBer agrees to (a) transfer, grant, bargain, seB, assign, convey, set
over and deliver to the Purchaser, absolutely and not as coBateral security, without recourse
except as expressly provided herein, and the Purchaser agrees to purchase, accept and receive,
the VLF Receivable, and (b) assign to the Purchaser, to the extent permitted by law (as to which
no representation is made), aB present or future rights, if any, of the SeBer to enforce or cause the
enforcement of payment of the VLF Receivable pursuant to the Act and other applicable law.
4. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the SeBer that, as of the date hereof, (a) it is duly organized, validly existing and
in good standing under the laws of the State of California, (b) it has fuB power and authority to
enter into this Agreement and to perform its obligations hereunder, (c) neither the execution and
delivery by the Purchaser of this Agreement, nor the performance by the Purchaser of its
obligations hereunder, shaB conflict with or result in a breach or default under any of its
organizational documents, any law, rule, regulation, judgment, order or decree to which it is
subject or any agreement or instrument to which it is a party, and (d) this Agreement, and its
execution, delivery and performance hereof have been duly authorized by it, and this Agreementhasbeendulyexecutedanddeliveredbyitandconstitutesitsvalidandbindingobligation
enforceable against it in accordance with the terms hereof, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to
or affecting creditors' rights generally or the application of equitable principles in any
proceeding, whether at law or in equity.
5. Representations and Warranties of the Seller. The Seller hereby representsandwarrantstothePurchaser, as of the date hereof, as follows:
a) The SeBer is a municipal corporation validly existing under the laws and
constitution of the State of California, with full power and authority to execute and deliver this
Agreement and to carry out its terms.
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Exempt DOCSSFt,795413.1
b) The SeBer has fuB power, authority and legal right to sell and assign the VLF
Receivable to the Purchaser and has duly authorized such sale and assignment to the Purchaser
by aB necessary action; and the execution, delivery and performance by the Seller of this
Agreement has been duly authorized by the Seller by all necessary action.
c) This Agreement has been, and as of the Closing Date the Bill of Sale wiB have
been, duly executed and delivered by the Seller and, assuming the due authorization, execution
and delivery oOhis Agreement by the Purchaser, constitutes a legal, valid and binding obligation
of the Seller enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to
or affecting creditors' rights generaBy or the application of equitable principles in any
proceeding, whether at law or in equity.
d) All approvals, consents, authorizations, elections and orders of or filings or
registrations with any govemmental authority, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would adversely affect,
the sale by the SeBer of the VLF Receivable or the performance by the SeBer of its obligations
under the Resolution and the Transaction Documents and any other applicable agreements, have
been obtained and are in fuB force and effect.
e) Insofar as it would materiaBy adversely affect the SeBer's ability to enter into,
carry out and perform its obligations under any or aB of the Transaction Documents to which it is
a party, or consummate the transactions contemplated by the same, the SeBer is not in breach of
or default under any applicable constitutional provision, law or administrative regulation of the
State of California or the United States or any applicable judgment or decree or any loan
agreement, indenture, bond, note, resolution, agreement or other instrument to which it is a party
or to which it or any of its property or assets is otherwise subject, and, to the best of the
knowledge of the Seller, no event has. occurred and is continuing which with the passage of time
or the giving of notice, or both, would constitute a default or an event of default under any such
instrument, and the adoption of the Resolution and the execution and delivery by the Seller of the
Transaction Documents to which it is a party, and compliance by the Seller with the provisions
thereof, under the circumstances contemplated thereby, do not and will not in any material
respect conflict with or constitute on the part of the SeBer a breach of or default under any
agreement or other instrument to which the SeBer is a party or by which it is bound or any
existing law, regulation, court order or consent decree to which the SeBer is subject.
f) To the best of the knowledge ofthe SeBer, no action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, public board or body, is pending or
threatened in any way against the Seller affecting the existence of the Seller or the titles of its
City Council rnembers or officers to their respective offices, or seeking to restrain or to enjoin
the sale of the VLF Receivable or to direct the application of the proceeds of the sale thereof, or
in any way contesting or affecting the validity or enforceability of any of the Transaction
Documents or any other applicable agreements or any action of the Seller contemplated by any
of said documents, or in any way contesting the powers of the Seller or its authority with respect
to the Resolution or the Transaction Documents to which the Seller is a party or any other
applicable agreement, or any action on the part of the Seller contemplated by the Transaction
Documents, or in any way seeking to enjoin or restrain the Seller from selling the VLF
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ExemptDOCSSFU95413.1
Receivable or which if determined adversely to the Seller would have an adverse effect upon the
Seller's ability to sell the VLF Receivable, nor to the knowledge of the Seller is there any basis
therefor.
g) Prior to the sale of the VLF Receivable to the Purchaser, the Seller was the
sole owner of the VLF Receivable, and has such right, title and interest as provided in the Act.
From and after the conveyance of the VLF Receivable by the Seller to Purchaser on the Closing
Date, the Seller shall have no interest in the VLF Receivable. Except as provided in this
Agreement, the Seller has not sold, transferred, assigned, set over or otherwise conveyed any
right, title or interest of any kind whatsoever in all or any portion of the VLF Receivable, nor has
the Seller created, or to the knowledge of the Seller permitted the creation of, any lien, pledge,
security interest or any other encumbrance (a "Lien") thereon. Prior to the sale of the VLF
Receivable to the Purchaser, the SeBer held title to the VLF Receivable free and clear of any
Liens. As of the Closing Date, this Agreement, together with the Bill of Sale, constitutes a valid
sale to the Buyer of the Seller's right, title and interest in and to the VLF Receivable.
h) The Seller acts solely through its authorized officers or agents.
Purchaser.
i) The Seller maintains records and books of account separate from those of the
j) The Seller maintains its respective assets separately from the assets of the
Purchaser (including through the maintenance of separate bank accounts); the Seller's funds and
assets, and records relating thereto, have not been and are not commingled with those of the
Purchaser.
k) The Seller's principal place of business and chief executive office is located at
300 E. Chapman Ave., Orange, CA 92866.
I) The Seller has received reasonably equivalent value for the VLF Receivable.
m)The Seller does not act as an agent of the Purchaser in any capacity, but
instead presents itselfto the public as an entity separate from the Purchaser.
n) The Seller has not guaranteed and shall not guarantee the obligations of the
Purchaser, nor shall it hold itself out or permit itself to be held out as having agreed to payor as
being liable for the debts of the Purchaser; and the Seller has not received nor shall the Seller
accept any credit or financing from any Person who is relying upon the availability of the assets
of the Purchaser to satisfy the claims of such creditor.
0) All transactions between or among the Seller, on the one hand, and the
Purchaser on the other hand (including, without limitation, transactions governed by contracts for
services and facilities, such as payroll, purchasing, accounting, legal and personnel services and
office space), whether existing on the date hereof or entered into after the date hereof, shall be on
terms and conditions (including, without limitation, terms relating to amounts to be paidthereunder) which are believed by each such party thereto to be both fair and reasonable and
comparable to those available on an arms-length basis from Persons who are not
affiliates.
Tax-Exempt DOCSSFI,795413.
6. Covenants of the Seller.
a) The Seller shall not take any action or omit to take any action which adversely
affect the interests of the Purchaser in the VLF Receivable and in the proceeds thereof. The
Seller shaB not take any action or omit to take any action that shall adversely affect the ability of
the Purchaser, and any assignee of the Purchaser, to receive payments made under the Act.
b) The Seller shall not take any action or omit to take any actiol1 that would
impair the validity or effectiveness of the Act, nor, without the prior written consent of the
Purchaser or its assignee, amend, modify, terminate, waive or surrender, or agree to any
amendment, modification, termination, waiver or surrender of, the terms of the Act, or waive
timely performance or observance under the Act, in each case if the effect thereof would be
rnaterially adverse to the Purchaser or to the Noteholders or any Credit Enhancer as assignees of
the Purchaser. Nothing in this agreement shall impose a duty on the Seller to seek to enforce the
Act or to seek enforcement thereofby others, or to prevent others from modifying, terminating,
discharging or impairing the validity or effectiveness of the Act.
c) Upon request of the Purchaser or its assignee, (i) the Seller shall execute and
deliver such further instruments and do such further acts (including being named as a plaintiff in
an appropriate proceeding) as may be reasonably necessary or proper to carry out more
effectively the purposes and intent of this Agreement, and (ii) the Seller shall take all actions
necessary to preserve, maintain and protect the title of the Purchaser to the VLF Receivable,
provided that such acts shall not impose any additional cost on the Seller that is not reimbursed.
d) The SeBer shall execute the Seller Tax Certificate containing all necessary and
appropriate representations, statements of intention, covenants, reasonable expectations, and
certifications of fact for Transaction Counsel to render its opinion that interest on the Notes is
excluded from gross income for federal income tax purposes pursuant to Section 103 of the
Code, including but not limited to matters relating to the use and investment of the proceeds of
Notes received by the Seller as the Final Purchase Price and investment earnings thereon and the
use of any and all property financed or refinanced with such proceeds and moneys.
e) The Seller shall at all times do and perform all acts and things permitted by
law and this Agreement which are necessary or desirable in order to assure that interest paid on
the Notes (or any of them) will be excluded from gross income for federal income tax purposes
and shaB take no action that would result in such interest not being excluded from gross income
for federal income tax purposes. Without limiting the generality of the foregoing, the SeBer
agrees that it will comply with the provisions ofthe Seller Tax Certificate which are incorporated
herein.
f) On or before the Closing Date, the SeBer shaB send (or cause to be sent) an
irrevocable instruction to the Controller pursuant to Section 6588.5( c) of California Government
Code to cause the ControBer to disburse all payments of the VLF Receivable to the Trustee,
together with notice of the sale of the VLF Receivable to the Purchaser and the assignment of aB
or a portion of such assets by the Purchaser to the Trustee. Such notice and instructions shaB be
in the form of Exhibit D hereto. The Seller shall not take any action to revoke or which would
have the effect of revoking, in whole or in part, such instructions to the Controller. The Seller
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Exempt DOCSSFl,795413.1
hereby relinquishes and waives any control over the VLF Receivable, any authority to collect the
VLF Receivable, and any power to revoke or amend the instructions to the Controller
contemplated by this paragraph. The Seller shall not rescind, amend or modify the instruction
described in the first sentence of this paragraph. The Seller shaB cooperate with the Purchaser or
its assignee in giving instructions to the Controller if the Purchaser or its assignee transfers the
VLF Receivable. In the event that the Seller receives any proceeds of the VLF Receivable, the
SeBer shaB hold the same in trust for the benefit of the Purchaser and the Trustee and each Credit
Enhancer, as. assignees of the Purchaser, and shaB promptly remit the same to the Trustee.
g) The Seller acknowledges that the proceeds received by the SeBer as the Final
Purchase Price hereunder continue to be proceeds of the Notes in the hands of the SeBer and
agrees that such amounts will be invested in compliance with the Seller Tax Certificate.
h) The SeBer hereby covenants and agrees that it will not at any time institute
against the Purchaser, or join in instituting against the Purchaser, any bankruptcy, reorganization,
arrangement, insolvency, liquidation, or similar proceeding under any United States or state
bankruptcy or similar law.
i) The financial statements and books and records of the SeBer prepared after the
Closing Date shall reflect the separate existence of the Purchaser.
j) The SeBer shaB treat the sale of the VLF Receivable as a sale for regulatory
and accounting purposes.
k) From and after the date of this Agreement, the SeBer shall not sell, transfer,
assign, set over or otherwise convey any right, title or interest of any kind whatsoever in all or
any portion of the VLF Receivable, nor shaB the SeBer create, or to the knowledge of the SeBer
permit the creation of, any Lien thereon.
7. Notices of Breach.
a) Upon discovery by the Seller or the Purchaser that the Seller has breached any
of its covenants or that any of the representations or warranties of the SeBer or the Purchaser are
materially false or misleading, in a manner that materiaBy and adversely affects the value of the
VLF Receivable, the discovering party shall give prompt written notice thereofto the other party
and to the Trustee, as assignee of the Purchaser, who shaB, pursuant to the Indenture, promptly
thereafter notify each Credit Enhancer and the Rating Agencies.
b) The SeBer shaB not be liable to the Purchaser, the Trustee, the Noteholders, or
any Credit Enhancer for any loss, cost or expense resulting solely from the failure of the Trustee,
any Credit Enhancer or the Purchaser to promptly notify the Seller upon the discovery by an
authorized officer of the Trustee, any Credit Enhancer or the Purchaser of a breach of any
covenant or any materially false or misleading representation or warranty contained herein.
8. Liabilitv of Seller; Indemnification. The Seller shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the SeBer under this
Agreement. The Seller shall indemnify, defend and hold harmless the Purchaser, the Trustee and
each Credit Enhancer, as assignees of the Purchaser, and their respective officers, directors,
Tax-
Exempt DOCSSFU95413.1
employees and agents from and against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or liability arose out of, or
was imposed upon any such Person by the SeBer's breach of any of its covenants contained
herein or any materiaBy false or misleading representation or warranty of the Seller contained
herein. The SeBer shall indenmifY, defend and hold harmless the Purchaser and the Trustee, as
assignee of the Purchaser, and their respective officers, directors, employees and agents from and
against any and aB costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with a breach by the Seller of its obligations under the Seller Tax
Certificate, including any rebate or other obligation to the United States Department of the
Treasury, which result from actions by or omissions of the Seller, including from the investment
of the proceeds of the Notes by the SeBer and the use by the SeBer of any and.. all property
financed or refinanced with the proceeds of such Notes received by the SeBer as the Final
Purchase Price. Notwithstanding anything to the contrary herein, the SeBer shall have no
liability for the payment of the principal of or interest on the Notes issued by the Purchaser.
9. Limitation on Liabilitv.
a) The SeBer and any officer or employee or agent of the Seller may rely in good
faith on the advice of counselor on any document of any kind, prima facie properly executed and
submitted by any Person res.pecting any matters arising hereunder. The Seller shall not be under
any obligation to appear in, prosecute or defend any legal action regarding the Act that is
unrelated to its specific obligations under this Agreement.
b) No officer or employee of the Seller shaB have any liability for the
representations, warranties, covenants, agreements or other obligations of the SeBer hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which
recourse shaB be had solely to the assets ofthe Seller.
10. The Seller's Acknowledgment. The Seller hereby agrees and acknowledges
that the Purchaser intends to assign and grant a security interest in aB or a portion of (a) its rights
hereunder and (b) the VLF Receivable, to the Trustee and each Credit Enhancer pursuant to the
Indenture. The Seller further agrees and acknowledges that the Trustee, the Noteholders, and
each Credit Enhancer have relied and shaB continue to rely upon each of the foregoing
representations, warranties and covenants, and further agrees that such Persons are entitled so to
rely thereon. Each of the above representations, warranties and covenants shall survive any
assignment and grant of a security interes.t . in all or a portion of this Agreement or the VLF
Receivable to the Trustee and each Credit Enhancer and shall continue in full force and effect,
notwithstanding any subsequent termination of this Agreement and the other transaction
documents. The above representations, warranties and covenants shall inure to the benefit of the
Trustee and each Credit Enhancer.
11. Notices. AB demands upon or, notices and communications to, the SeBer, the
Purchaser, the Trustee or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, to such party at the
appropriate notice address, and shall be deemed to have been duly given upon receipt.
Tax-
Exempt DOCSSFU95413.!
12. Amendments. This Agreement may be amended by the Seller and the
Purchaser, with (a) the consent of the Trustee, (b) the consent of each Credit Enhancer, and (c) a
Rating Agency Confirmation, but without the consent of any of the Noteholders, for the. purpose
of adding any provisions to or changing in any manner or eliminating any of the provisions of
this Agreement.
Promptly after the execution of any such amendment, the Purchaser shaB furnish
written notification of the substance of such amendment to the Trustee and to the Rating
Agencies.
13. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Seller, the Purchaser and their respective successors and permitted assigns.
The Seller may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of.the Purchaser. Except as specified herein, the Purchaser may
not assign or transfer any of its rights or obligations under this Agreement without the prior
written consent of the Seller.
14. Third Party Rights. The Trustee and each Credit Enhancer are express and
intended third party beneficiaries under this Agreement. Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give, any Person, other than the
parties hereto, the Trustee, and each Credit Enhancer, and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by virtue of this
Agreement or under or by virtue of any provision herein.
15. Partial Invalidity. If at any time any provision of this Agreement is or
becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
16. Counterparts. This Agreement may be executed in any number of identical
counterparts, any set of which signed by all the parties hereto shall be deemed to constitute a
complete, executed original for aB purposes.
17. Entire Agreement. This Agreement sets forth the entire understanding and
agreement of the parties with respect to. the subject matter hereof and supersedes any and aB oral
or written agreements or understandings between the parties as to the subject matter hereof.
Tax-
Exempt DOCSSFL795413.1
18. Governing Law. This Agreement shall be governed by and construed III
accordance with the laws ofthe State of California.
IN WITNESS WHEREOF, the SeBer and the Purchaser have caused this
Purchase and Sale Agreement to be duly executed as of the date first written above.
CITY OF ORANGE, as SeBer
By:
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY, as Purchaser
By:
Member
Tax-
Exempt DOCSSFI,795413.1
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Purchase and Sale Agreement to be duly executed as of the date first written above.
CITY OF ORANGE, as Seller
By:
Authorized Officer
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY, as Purchaser
Lc-
Member
By:
Tax-
Exempt DOCSSFI :795413.
1
EXHIBIT A
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided herein
or unless the context otherwise requires, capitalized terms not otherwise defined herein shall.
have the meanings set forth below.
Act" means Section 10754.11 of the Califor:nia Revenue and Taxation Code..
Bill of Sale" has the meaning given to that term in Section 2(b )(ii) hereof.
Credit Enhancer" means any municipal bond insurance company, bank or other
financial institution or organization which is performing in all material respects its obligations
under any Credit Support Instrument for some or all of the Notes.
Credit Support Instrument" means a policy of insurance, a letter of credit, a
stand-by purchase agreement, revolving credit agreement or other credit arrangement pursuant
to which a Credit Enhancer provides credit or liquidity support with respect to the payment
of interest, principal or the purchase price of the
Notes.Closing Date" means the date the Notes are
issued.Controller" means the Controller of the
State.Final Purchase Price" has the meaning ascribed thereto in Section
2.Minimum Purchase Price" has the meaning ascribed thereto in Section
2.Noteholder" means, with respect to any Note, the person in whose name
such Note is
registered.Oustanding" has the meaning given to that term in the
Indenture.Pricing Date" means the date the Notes are
sold.Rating Agency" means any nationally recognized rating agency then
providing or maintaining a rating on the Notes at the request ofthe
Purchaser.Rating Agency Confirmation" means written confirmation from each
Rating Agency that any proposed action will not, in and of itself, cause the Rating Agency to
lower,suspend or withdraw the rating then assigned by such Rating Agency to any Outstanding
Notes.Resolution" means the resolution adopted by the City Council approving the
sale of the VLF
Receivable.by the
Seller.Seller Tax Certificate" means the Tax Certificate, dated the date hereof,
executed State" means the State of
California.
Tax-Exempt DOCSSFl,795413.
Transaction Counsel" means Orrick, Herrington & Sutcliffe LLP.
Transaction Documents" mean this Agreement, the Bill of Sale, the Seller Tax
Certificate, the Indenture, and the Notes.
Tax-
Exempt DOCSSFU95413.1
EXHIBITBl
OPINION OF COUNSEL
to
CITY OF ORANGE
March 2, 2005
California Statewide Communities Development Authority
Sacramento, California
Wells Fargo Bank, National Association
Los Angeles, California
Re: Sale ofVLF Receivable
Ladies & Gentlemen:
This Office acted as counsel for the City of Orange (the "Seller") in connection
with the adoption of that certain resolution (the "Resolution") of the City Council of the Seller
the "Governing Body") pursuant to which the Seller authorized the sale to the California
Statewide Communities Development Authority (the "Purchaser") of the Seller's "VLF
Receivable", as defined in and pursuant to the Purchase and Sale Agreement dated March 2,
2005 (the "Sale Agreement") between the Seller and the Purchaser. In connection with these
transactions, the Seller has issued certain Irrevocable Instructions For Disbursement of the
Seller's VLF Receivable to the Controller of the State of California (the "Disbursement
Instructions" and collectively with the Sale Agreement, the "Transaction Documents"). Unless
the context otherwise requires, capitalized terms used but not otherwise defined herein shall have
the meanings given to such terms in the Sale Agreement.
I have examined and am familiar with those documents relating to the existence,
organization, and operation of the Seller, the Resolution, the Transaction Documents and such
certified proceedings, certifications of officers of the Seller and others, and such other
agreements, instruments and documents, and have satisfied myself as to such other matters, as I
deem necessary in order to render the following opinions.
Based upon the foregoing, I am of the opinion that:
1. The Seller is a municipal corporation of the State of California, duly
organized and validly existing pursuant to laws and the Constitution of the State of California.
2. The Seller has full power and authority to adopt the Resolution and to execute
and deliver the Transaction Documents.
Tax-
Exempt DOCSSFI,795413.1
3. The Seller has duly authorized and executed the Transaction Documents and,
assuming delivery, each Transaction Document will be legal, valid, and binding against the
Seller, and enforceable against the Seller in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
laws relating to or affecting creditors' rights, and the application of equitable principles and the
exercise of judicial discretion in appropriate areas.
4. The Resolution was duly adopted at a meeting of the Governing Body which
was called and held pursuant to law with all public notice required by law and at which a quorum
was present and acting when the Resolution was adopted.
5. The Resolution is in full force and effect and has not been amended, modified,
supplemented or rescinded.
6. To the best of my knowledge, no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or body, is pending or
threatened in any way against the Seller affecting the existence of the Seller or the titles of its
Governing Body members or officers to their respective offices, or seeking to restrain or to
enjoin the sale of the VLF Receivable or to direct the application of the proceeds of the sale
thereof, or in any way contesting or affecting the validity or enforceability of the Resolution, the
Transaction Documents or any other applicable agreements or any action of the Seller
contemplated by any of said documents, or in any way contesting the powers of the Seller or its
authority with respect to the Resolution or the Transaction Documents or any other applicable
agreement, or any action on the part of the Seller contemplated by any of said documents, or in
any way seeking to enjoin or restrain the Seller from selling the VLF Receivable or which if
determined adversely to the Seller would have a material and adverse effect upon the Seller's
ability to sell the VLF Receivable, nor to my knowledge is there any basis therefor.
7. Insofar as it would materially adversely affect the Seller's ability to enter into,
carry out and perform its obligations under any or all of the foregoing agreements, or
consununate the transactions contemplated by the same, the Seller is not in breach of or default
under any applicable constitutional provision, law or administrative regulation of the State or the
United States or any applicable judgment or decree or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which it is a party or to which it or any of its
property or assets is otherwise subject, and, to the best of my knowledge, no event has occurred
and is continuing which with the passage of time or the giving of notice, or both, would
constitute a default or an event of default under any such instrument, and the adoption of the
Resolution and the execution and delivery by the Seller of the Transaction Documents, and
compliance with the provisions thereof, under the circumstances contemplated thereby, do not
and will not in any material respect conflict with or constitute on the part of the Seller a breach
of or default under any agreement or other instrument to which the Seller is a party or by which
it is bound or any existing law, regulation, court order or consent decree to which the Seller is
subject.
8. Prior to the sale of the VLF Receivable to the Purchaser, the Seller was the
sole owner of the VLF Receivable, and has such right, title and interest as provided in the Act.
From and after the conveyance of the VLF Receivable by the Seller to Purchaser on the Closing
Tax-
Exempt DOCSSFI,795413.1
Date, the Seller shall have no interest in the VLF Receivable. Except as provided in the Sale
Agreement, the Seller has not sold, transferred, assigned, set over or otherwise conveyed any
right, title or interest of any kind whatsoever in all or any portion of the Seller's VLF Receivable,
nor has the Seller created, or to my knowledge permitted the creation of, any Lien thereon. Prior
to the sale of the VLF Receivable to the Purchaser, the Seller held title to the VLF Receivable
free and clear of any Liens.
9. To the best of my knowledge, all approvals, consents, authorizations, elections
and orders of or filings or registrations with any govemmental authority, board, agency or
commission having jurisdiction which would constitute a condition precedent to, or the absence
of which would materially adversely affect, the sale by the Seller of the VLF Receivable or the
performance by the Seller of its obligations under the Resolution and the Transaction Documents
and any other applicable agreements, have been obtained and are in full force and effect.
10. The Seller is exempt from or has otherwise satisfied the requirements of the
California Environmental Quality Act with regard to the proposed expenditure of the sale
proceeds of the VLF Receivable.
11. The Disbursement Instructions are irrevocable by the Seller, and comply with
the requirements of Section 6588.5(c) of the California Government Code.
Each Credit Enhancer, the underwriters of the Notes and Transaction Counsel
may rely upon this legal opinion as if it were addressed to them.
Very truly yours,
By:
Tax-
Exempt DOCSSFI,795413.1
EXHIBITB2
OPINION OF COUNSEL
to
CITY OF ORANGE
March 17,2005
California Statewide Communities Development Authority
Sacramento, California
Wells Fargo Bank, National Association
Los Angeles, California
Re: Sale ofVLF Receivable (Bringdown Opinion)
Ladies & Gentlemen:
Pursuant to that certain Purchase and Sale Agreement dated March 2, 2005 (the
Sale Agreement") between the City of Orange (the "Seller") and the California Statewide
Conununities Development Authority (the "Purchaser"), this Office delivered an opinion (the
Opinion") dated the Pricing Date (as defined in the Sale Agreement) as counsel for the Seller in
connection with the sale of the Seller's VLF Receivable (as defined in the Sale Agreement), the
execution of documents related thereto and certain other related matters.
I confirm that you may continue to rely upon the Opinion as if it were dated as of
the date hereof. Each Credit Enhancer, the underwriters of the Notes and Transaction Counsel
may rely upon this legal opinion as if it were addressed to them. This letter is delivered to you
pursuant to Section 2(b )(ii)(l) ofthe Sale Agreement.
By:
Tax-
Exempt DOCSSFI,795413.1
EXHIBITCl
CLERK'S CERTIFICATE
CERTIFICATE OF THE
CITY CLERK OF
CITY OF ORANGE; CALIFORNIA
Dated: March 2, 2005
The undersigned City Clerk of the City of Orange, California, do hereby certifY that the
foregoing is a full, true and correct copy of Resolution No. 9941 duly adopted at a
regular meeting of the City Council of said Seller duly 'and regularly and legally,'held at the
regular meeting place' thereof on' the 6th' day of..Ah;"nAry , 2005" of which
meeting all of the members of said Cit)l Council had due notice and at which all members thereof
were present, and that at said meeting said resolution was adopted by the following vote:
AYES:SMITH, AMBRIZ, MURPHY, CAVECCHE, DUMITRU
NOES:NONE
ABSENT: NONE
ABSTAIN: NONE
I do hereby further certifY that I have carefully compared the same with the original
minutes of said meeting on file and of record in my office and that said resolution is a full, true
and correct copy of the original resolution adopted at said meeting and entered in said minutes
and that said resolution has not been amended, modified or rescinded since the date of its
adoption and the same is now in fulHorce and effect.
I do hereby further certifY that an agenda of said meeting was posted at least 72 hours
b,efore said meeting at a location'in the Cit)l of Orange, California freely accessible to members
of the public, and a brief general description of said resolution appeared on said agenda.
WITNESS my hand as of the day and year first ab ve written.
By:
Tax,Ex.mpt
DOCSSFI:795413.1 Cl-
EXHIBITC2
SELLER CERTIFICATE
SELLER CERTIFICATE
Dated: March 2, 2005
We, the undersigned officers of the City of Orange (the "Seller"), State of
California, holding the respective offices herein below set opposite our signatures, do hereby
certify that on the date hereof the following documents (the "Transaction Documents") were
officially executed and delivered by the Authorized Officer or Officers whose names appear on
the executed copies thereof, to wit:
Document
1. Purchase and Sale Agreement, dated March 2, 2005 (the "Sale
Agreement"), between the Seller and the California Statewide
Communities Development Authority (the "Purchaser")
2. Irrevocable Instructions For Disbursement of Seller's VLF
Receivable to the Controller of the State of California dated the
Closing Date
3. Seller Tax Certificate, dated March 2, 2005
Capitalized terms used herein and not defined herein shall have the meaning given
such terms in the Sale Agreement.
We further certify as follows:
1. At the time of signing the Transaction Documents and the other documents and opinions
related thereto, we held said offices, respectively, and we now hold the same.
2. The representations and warranties contained in the Transaction Documents are true and
correct as ofthe date hereof in all material respects.
3. The City Council duly adopted its resolution (the "Resolution") approving the sale of the
Seller's VLF Receivable at a meeting of the City Council which was duly called and held
pursuant to law with all public notice required by law and at which a quorum was present and
acting when the Resolution was adopted, and such Resolution is in full force and effect and
has not been amended, modified, supplemented or rescinded.
4. In the above-mentioned Resolution, the City Council approved the financing of
the Project(
s).
Tax-Exempt DOCSSFI,795413.
5. To the best knowledge of the undersigned, no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or body, is pending or
threatened, in any way against the Seller affecting the existence of the Seller or the titles of
its City Council members or officers to their respective offices, or seeking to restrain or to
enjoin the sale of the Seller's VLF Receivable or to direct the application thereof of the
proceeds of the sale thereof, or in any way contesting or affecting the validity or
enforceability of the Resolution, the Transaction Documents, the Indenture, the Notes, or any
other applicable agreements or any action of the Seller contemplated by any of said
documents, or in any way contesting the powers of the Seller or its authority with respect to
the Resolution or the Transaction Documents or any other applicable agreement, or any
action on the part of the Seller contemplated by any of said documents, or which if
determined adversely to the Seller would have a material and adverse effect upon the Seller's
ability to sell the Seller's VLF Receivable, nor to our knowledge is there any basis therefor.
6. Insofar as it would materially adversely affect the Seller's ability to enter into, carry out and
perform its obligations under any or all of the Transaction Documents, or consummate the
transactions contemplated by the same, the Seller is not in breach of or default under any
applicable constitutional provision, law or administrative regulation of the State of California
or the United States or any applicable judgment or decree or any loan agreement, indenture,
bond, note, resolution, agreement or other instrument to which it is a party or to which it or
any of its property or assets is otherwise subj ect, and, to the best of our knowledge, no event
has occurred and is continuing which with the passage of time or the giving of notice, or
both, would constitute a default or an event of default under any such instrument, and the
adoption of the Resolution and the execution and delivery by the Seller of the Transaction
Documents, and compliance by the Seller with the provisions thereof, under the
circumstances contemplated thereby, do not and will not in any material respect conflict with
or constitute on the part of the Seller a breach of or default under any agreement or other
instrument to which the Seller is a party or by which it is bound or any existing law,
regulation, court order or consent decree to which the Seller is subject.
7. Prior to the sale of the VLF Receivable to the Purchaser, the Seller was the sole owner of the
VLF Receivable, and has such right, title and interest as provided in the Act. From and after
the conveyance of the VLF Receivable by the Seller to Purchaser on the Closing Date, the
Seller shall have no interest in the VLF Receivable. Except as provided in the Sale
Agreement, the Seller has not sold, transferred, assigned, set over or otherwise conveyed any
right, title or interest of any kind whatsoever in all or any portion of the Seller's VLF
Receivable, nor has the Seller created, or to our knowledge permitted the creation of, anyLienthereon. Prior to the sale of the VLF Receivable to the Purchaser, the Seller held title to
the VLF Receivable free and clear of any Liens.
8. All approvals, consents, authorizations, elections and orders of or filings or registrations with
any governmental authority, board, agency or commission having jurisdiction which would
constitute a condition precedent to or the absence of which would materially adversely affect,
the sale by the Seller of the Seller's VLF Receivable or the performance by the Seller of its
obligations under the Resolution and the Transaction Documents and any other applicable
agreements, have been obtained and are in full force and effect.
Tax-
Exempt DOCSSFU95413.\
Dated as of the date first above written.
Name. Official Title
Mark A. Murphy, Mayor
David L. Rudat, City Manager
Richard K. Jacobs, Finance Director
Mary E. Murphy, City Clerk
I HEREBY CERTIFY that the signatures of the officers named above are
genullle.
Dated as ofthe date first above written.
By:
Tax-
Exempt DOCSSFI,795413.1
EXHIBITC3
BILL OF SALE AND BRINGDOWN CERTIFICATE
BILL OF SALE AND BRINGDOWN CERTIFICATE
In consideration of the payment and delivery by the California Statewide
Communities Development Authority (the "Purchaser") to the undersigned (the "Seller") of
2,141,287.80 (the "Final Purchase Price"), and pursuant to terms and conditions ofthe Purchase
and Sale Agreement (the "Sale Agreement"), dated March 2, 2005, between the Seller and the
Purchaser, the Seller does hereby (a) transfer, grant, bargain, sell, assign, convey, set over and
deliver to the Purchaser, absolutely and not as collateral security, without recourse except as
expressly provided in the Sale Agreement, the VLF Receivable as defined in the Sale Agreement
the "VLF Receivable"), and (b) assign to the Purchaser, to the extent permitted by law (as to
which no representation is made), all present or future rights, if any, of the Seller to enforce or
cause the enforcement of payment of the VLF Receivable pursuant to the Act (as defined in the
Sale Agreement) and other applicable law.
The Seller hereby acknowledges receipt of the Final Purchase Price.
The Seller hereby certifies that the representations and warranties of the Seller set
forth in the Certificate of the City Clerk dated March 2, 2005, the Seller Certificate dated March
2, 2005, the Seller Tax Certificate dated March 2, 2005 and in the Transaction Documents (as
such terms are defined in the Sale Agreement) are true and correct in all material respects as of
the date hereof (except for such representations and warranties made as of a specified date,
which are true and correct as of such date).
Dated: March 17,2005
CITY OF ORANGE
By:
Tax-
Exempt DOCSSFI,795413.\
EXHIBITD
IRREVOCABLE INSTRUCTIONS TO CONTROLLER
IRREVOCABLE INSTRUCTIONS FOR DISBURSEMENT
OF VLF RECEIVABLE OF
CITY OF ORANGE
March 17,2005
Office of the Controller
State of California
P.O. Box 942850
Sacramento, California 94250-
5872 Re: Notice of Sale ofVLF Receivable by the City of Orange
and Wiring Instructions Information
Form Dear Sir or
Madam:Pursuant to Section 6588.5( c) ofthe California Government Code, City of
Orange the "Seller") hereby notifies you of the sale by the Seller, effective as of the date of
these instructions written above, of all right, title and interest of the Seller in and to the "
VLF Receivable" as defined in Section 6585(i) of the California Government Code (the "
VLF Receivable"), namely, the right to payment of moneys due or to become due to the Seller out
of funds payable in connection with vehicle license fees to a local agency pursuant to
Section 10754.11 of the California Revenue and Taxation
Code.By resolution, the Seller's City Council authorized the sale ofthe VLF
Receivable to the California Statewide Communities Development Authority (the "Purchaser") pursuant to
a Purchase and Sale Agreement, dated March 2, 2005 and a Bill of Sale, dated March 17,
2005.The VLF Receivable has been pledged and assigned by the Purchaser pursuant to an
Indenture,dated March 2, 2005 (the "Indenture") between the Purchaser and Wells Fargo Bank,
National Association, as Trustee (the "
Trustee").The Seller hereby irrevocably requests and directs that, commencing as of
the date of these instructions written above, all payments of the VLF Receivable (and
documentation related thereto) be made directly to Wells Fargo Bank, National Association, as Trustee,
in accordance with the wire instructions and bank routing information set forth
below.Please note that the sale of the VLF Receivable by the Seller is irrevocable
and that (i) the Seller has no power to revoke or amend these instructions at any time, (ii)
the Purchaser shall have the power to revoke or amend these instructions only if there are
no notes of the Purchaser outstanding under the Indenture and the Indenture has
been discharged, and (iii) so long as the Indenture has not been discharged, these
instructions cannot be revoked or amended by the Purchaser without the consent of the
Trustee.
Tax-Exempt DOCSSFI :
795413.
Bank Name:
Bank ABA Routing #:
Bank Account #:
Bank Account Name:
Further Credit To:
Bank Address:
Bank Telephone #:
Bank Contact Person:
Wells Fargo N.A.
121000248
0001038377
Corporate Trust Clearing
CSCDA VLF #16914200
Wells Fargo Bank
707 Wilshire Blvd., 17 Floor
Los Angeles, CA 90017
213) 614-
3353 Robert
Schneider Please do not hesitate to call the undersigned if you have any questions
regarding this transaction. Thank you for your assistance in this
matter.
Tax-Exempt DOCSSFI,
795413.1 Very
truly yours,CITY
OF
ORANGE
EXHIBITE
SELLER TAX CERTIFICATE
Seller Tax Certificate
This Seller Tax Certificate is executed and delivered by City of Orange (the
Seller") in connection with the sale of its VLF Receivable (defined below) pursuant to the
Purchase and Sale Agreement, dated March 2, 2005 (the "Sale Agreement"), by and between the
Seller and the California Statewide Communities Development Authority (the "P.urchaser") in
exchange for the Final Purchase Price (as defined in the Sale Agreement). The Seller certifies,
covenants, warrants and represents as follows:
ARTICLE I. IN GENERAL
1.1 The Seller. The Seller is a political subdivision duly organized and
existing under and by virtue of the laws of the State of California. The Seller has the general
authority to exercise the power of eminent domain in furtherance of its governmental purposes.
1.2 Purpose of Seller Tax Certificate. In connection with the sale of the
VLF Receivable, the Purchaser is issuing its tax-exempt Revenue Anticipation Notes (
Vehicle License Fee Program), with appropriate series and sub-series designations (the "
Notes"), to acquire the VLF Receivable and similar receivables from other agencies participating
in the Purchaser's Vehicle License Fee Program. The Seller is delivering this Seller Tax
Certificate to the Purchaser with the understanding that the Purchaser will rely in part upon this
Seller Tax Certificate in obtaining an opinion from bond counsel that interest on the Notes is
excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue
Code
of1986.1.3 Purpose of Financing. The proceeds of the sale of the
VLF Receivable,and investment earnings thereon, will be used to finance the costs of
the acquisition,construction, improvement and/or renovation of the following public capital
improvements (the Project"), as described in more detail in the application of the Seller to
the Purchaser:Construction CostslMain Library
ExpansionProject 1.4 Definitions. Unless the context otherwise reqUIres,
the following capitalized terms have the
following meanings:Code" means the Internal Revenue Code of 1986 (
including
amendments
thereto).Tax-
Governmental Unit" means any state, or political subdivision of a state, but
excludes the United States and its agencies or instrumentalities.
Gross Proceeds" means the proceeds from the sale of the VLF Receivable
together with any investment earnings thereon.
Investment Property" means any security or obligation (other than a Tax Exempt
Bond), any annuity contract or any other investment type property.
Nongovernmental Person" means any person or entity other than a
Governmental Unit.
Nonpurpose Investment" means any Investment Property III which Gross
Proceeds are invested.
Preliminary Expenditures" means architectural, engineering, surveying, soil
testing, and sirnilar costs paid with respect to the Project in an aggregate amount not
exceeding 20% of the proceeds of the sale of the VLF Receivable. However, Preliminary
Expenditures do not include land acquisition, site preparation or similar costs incident to
the commencement of construction.
Rebate Requirement" means, with respect to the Gross Proceeds, the amount of
rebatable arbitrage computed pursuant to Section 1.148-3 of the Treasury
Regulations.Tax-Exempt Bond" means any obligation the interest on which is
excluded from federal gross income pursuant to the provisions of Section 103 of the Code,
unless such obligation is a "specified private activity bond" within the meaning
of Section 57(a)(5)(C) of the Code, and also includes stock in a regulated investment
company to the extent that at least 95% of income to the stockholder is derived from
such obligations.VLF Receivable" is defined in Section 6585(i) of the
California Government Code, namely, the right to payment of moneys due or to become due to the Seller
out of funds payable in connection with vehicle license fees to a local agency
pursuant to Section 10754.11 of the California Revenue and
Taxation Code.Yield" means the arbitrage yield on
the Notes.ARTICLE II.
TAX LIMITATIONS 2.1 Expenditure of Proceeds. For purposes of this Seller
Tax Certificate,Gross Proceeds will be treated as spent when they are used to pay for or
reimburse disbursements by the Seller that paid for (i) capital expenditures or (ii) initial operatingexpensesdirectlyassociatedwiththeProject (in aggregate amount not exceeding 5% of the amount
of the proceeds of the sale of the VLF Receivable). Absent written agreement by the
Purchaser, all expenditures of Gross Proceeds will be made in respect of (a) Preliminary
Expenditures, (b)capital expenditures reimbursed in respect of payments made by the Seller on or after
the date which is sixty days prior to the date on which the Notes are delivered to the
purchasers
thereof,Tax-Exempt
or (c) other capital expenditures or related expenditures, as described in the first sentence of this
Section 2.1, originally paid by the Seller on or after the date on which the Notes are delivered to
the purchasers thereof. In connection with all expenditures described in (b), the reimbursement
allocation will be made no later than the later of 18 months after the date on which the Notes are
delivered to the purchasers thereof or the date on which the Project is placed in service, but in no
event later than three years after the date of expenditure. If the Gross Proceeds are held by a
custodial agent, the Gross Proceeds will be requisitioned by the Seller for actual costs or
reimbursements .such that the Gross Proceeds will be spent in accordance with this Section 2.1
upon transfer to the Seller. If the Gross Proceeds are transferred to and held by the Seller, the
Seller will track the timing and amount of the expenditure ofthe Gross Proceeds. See Article III.
2.2 Governmental Bond Status. The Seller will not loan any of the Gross
Proceeds to one or more Nongovernmental Persons. The Seller will not allow more than 5% of
Gross Proceeds or more than 5% of the Project to be used directly or indirectly by any
Nongovernmental Person, other than as a member of the general public. A Nongovernmental
Person will be treated as "using" Gross Proceeds to the extent the Nongovernmental Person:
i) borrows Gross Proceeds, or
ii) uses the Project (~, as owner, lessee, service provider, operator or
manager).
2.3 Change in Use. The Seller reasonably expects to use all Gross Proceeds
and all of the Project as set forth in Section 2.2 of this Seller Tax Certificate for a period of at
least five years after the Project has been completed and placed in service. Absent written
agreement by the Purchaser, the Seller in fact will use all Gross Proceeds and all of the Project as
set forth in Section 2.2 of this Seller Tax Certificate for the entire stated term to maturity of the
Notes (i.e., through November 15, 2006). No arrangement has been entered into by the Seller
that would cause a Nongovemmental Person to be treated as "using" Gross Proceeds.
2.4 Federal Guarantee. The Seller will not directly or indirectly use or
permit the use of any Gross Proceeds or take or omit to take any action that would cause the
Notes to be obligations that are "federally guaranteed" within the meaning of Section 149(b) of
the Code. In furtherance of this covenant, the Seller, to the extent of its power, will not allow the
payment of principal or interest with respect to the Notes to be guaranteed (directly or indirectly)in whole or in part by the United States or any agency or instrumentality thereof. The Seller will
not use 5% or more of the Gross Proceeds to make or finance loans the payment of principal or
interest with respect to which is guaranteed in whole or in part by the United States or any
agency or instrumentality thereof.
2.5 No Refunding. Gross Proceeds will not be used directly or indirectly to
make principal, interest or premium payments with respect to any obligation of the Seller.
2.6 Expenditure and Investment Expectations. The Seller heretofore has
incurred or within six months hereafter will incur a binding obligation to one or more unrelated
parties involving expenditures aggregating not less than 5% of the proceeds of the sale of the
VLF Receivable. Completion of the Project and allocations of Gross Proceeds to costs of the
Tax-
Exempt DOCSSFU95413 .1
Project will proceed with due diligence. The Seller reasonably expects that more than 85% of
proceeds of the sale of the VLF Receivable will be expended for the purposes of the Project prior
to August 1, 2006. None ofthe Gross Proceeds will be invested in Nonpurpose Investments with
a maturity of four years or more.
2.7 No Other Replacement Proceeds or Abusive Device. The Seller will
not use any Gross Proceeds directly or indirectly to replace funds of the Seller which are or will
be used directly or indirectly to acquire Investment Property reasonably expected to produce a
yield that is materially higher than the yield on the Notes. The reasonably expected useful life of
each component of the Project is at least 1.5 years. The sale of the VLF Receivable is not and
will not be part of a transaction or series of transactions that (i) enables the Seller to exploit the
difference between tax exempt and taxable interest rates to gain a material financial advantageand (ii) overburdens the market for tax exempt obligations. in any manner, including without
limitation, by selling obligations that would not otherwise be sold or selling more obligations, or
issuing them sooner, or allowing them to remain outstanding longer, than would otherwise be
necessary.
2.8 No Expected Sale. It is not expected that the Project or any part thereof
will be sold or otherwise disposed of before November 15, 2006, and the Seller has no present
plans to sell or otherwise dispose of the Project or any part thereof.
2.9 General Tax Covenant. The Seller will not take any action, or fail to
take any action, if such action or failure to take such action would adversely affect the exclusion
from gross income of the interest on the Notes pursuant to section 103 of the Code. To that end,
the Seller will comply with all requirements of Sections 103 and 141 through 150 of the Code to
the extent that such requirements are, at the time, applicable to the Gross Proceeds and in effect.
2.10 Retention of Records. The Seller covenants to maintain all records
relating to the requirements of the Code and the representations, certifications and covenants set
forth in this Tax Certificate until November 15, 2009. The records that must be retained include,
but are not limited to:
i) Documentation evidencing the expenditure of Gross Proceedss; and
ii) Documentation evidencing use ofthe Project by public and private sourcesi.e., copies of management contracts, research agreements, leases, etc.).
ARTICLE III. REBATE
3.1 Undertakings. Pursuant to the Sale Agreement, the Seller has covenanted
to comply with the requirements of the Code set forth herein. The Seller acknowledges that theGrossProceedswillbetreatedasproceedsoftheNotesandthattheUnitedStatesDepartmentoftheTreasuryhasissuedregulationswithrespecttocertainoftheseundertakings, including the
proper method for computing whether any rebate amount is due the federal government underSectionl48(f) of the Code. (Treas. Reg. Sections 1.148-1 through1.148-11, 1.150-1
and 1.150-2.) The Seller further acknowledges that the United States Department of the
Treasury may issue additional regulations with respect to certain other of these undertakings.
The
Seller covenants Tax-Exempt
that it will undertake to determine what is required with respect to the rebate proVIsIonscontainedinSection148(f) of the Code and said regulations from time to time and will complywithanyrequirementsthatmayapplytotheGrossProceeds. Except to the extent inconsistent
with any requirements of the Code or future regulations, the Seller will undertake the
methodology described in this Seller Tax Certificate. The Seller may be relieved of the
obligation with respect to the Rebate Requirement set forth herein, as directed by the Purchaser.
3.2 Recordkeeping. The Seller . shall maintain or cause to be maintained
detailed records with respect to each Nonpurpose Investment attributable to Gross Proceeds,
including: (a) purchase date; (b) purchase price; (c) information establishing fair market value
on the date such investment became a Nonpurpose Investment; (d) any accrued interest paid; (e)
face amount; (f) coupon rate; (g) periodicity of interest payments; (h) disposition price; (i) anyaccruedinterestreceived; and (j) disposition date. Such detailed recordkeeping is required to
facilitate the calculation of the Rebate Requirement. Promptly upon the request of the Purchaser,
the Seller will make available to the Purchaser, for the purpose of enabling the Purchaser to
comply with the requirements of its respective Tax Certificate, copies of any and all records that
Seller maintains, or is required to maintain, pursuant to this Seller Tax Certificate.
3.3 Rebate Requirement Calculation and Payment.
a) Unless otherwise directed by the Purchaser, the Seller represents, warrants
and covenants that it will engage BondLogistix LLC to prepare a calculation of the Rebate
Requirement with respect to the Gross Proceeds consistent with the rules described in this
Section 3.3. The Seller will engage BondLogistix LLC to prepare and deliver to the Purchaser
the calculation of the Rebate Requirement with respect to the Gross Proceeds within thirty (30)
days after the date the Notes mature (November 15, 2006). Concurrent with the delivery of such
calculation and as directed by the Purchaser, the Seller will set aside from designated funds an
amount sufficient to pay the Rebate Requirement with respect to the Gross Proceeds.
b) For purposes of calculating the Rebate Requirement with respect to the
Gross Proceeds (i) the aggregate amount eamed with respect to a Nonpurpose Investment shall
be determined by assuming that the Nonpurpose Investment was acquired for an amount equal toitsfairmarketvalue (determined as provided in Section 1.148-5(d)(6) of theTreasuryRegulations) at the time it becomes a Nonpurpose Investment, and (ii) the aggregate
amount earned with respect to any Nonpurpose Investment shall include any unrealized gain or loss
with respect to the Nonpurpose Investment (based on the assumed purchase price at fair market
value and adjusted to take into account amounts received with respect to the Nonpurpose
Investment and earned original issue discount or premium) on the first date when there are nooutstandingNotesorwhentheinvestmentceasestobeaNonpurpose
Investment.c) The Seller shall pay to the United States Department of the Treasury (or,in the alternative, to the Purchaser if so requested), out of designated funds not later thanfifty50) days after the date the Notes mature (November 15, 2006), an amount equal to one
hundred percent (100%) of the Rebate Requirement (determined as of the first date when there are
no outstanding Notes) with respect to the Gross Proceeds, plus any actual or imputed earningsonsuchRebateRequirement, all as set forth in Section 1.148-3 of the Treasury Regulationsandasdeterminedbyoronbehalfof
the
Purchaser.Tax-Exempt DOCSSFI,
d) Each payment required to be made pursuant hereto and relating to the
Notes shall be filed with the Internal Revenue Service Center, Ogden UT 84201, on or before
the date such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-
T. The Seller must retain records of the calculations required by this Section 3.3 until six (6)
years after the retirement ofthe last obligation ofthe Notes.
e) Notwithstanding any other provision of this Seller Tax Certificate, the
Seller shall not be required to make any payment under this Seller Tax Certificate unless such
payment (i) relates to the Gross Proceeds, or (ii) results from the acts or omissions of the Seller.
f) Notwithstanding any other provision of this Seller Tax Certificate, to the
extent that the Purchaser is required to make any payment under its Tax Certificate, and such
payment (i) relates to the Gross Proceeds, or (ii) results from the acts or omissions of the Seller,
then the Seller hereby agrees that, promptly upon the request of the Purchaser, it will reimburse
the Purchaser for such payment.
3.4 Investments and Dispositions.
a) General Rnle. No Investment Property may be acquired by the Seller
with Gross Proceeds for an amount (including transaction costs, except as otherwise provided in
Section 1.148-5(e) of the Treasury Regulations) in excess of the fair market value of
such Investment Property. No Investment Property acquired by the Seller with Gross Proceedsmaybesoldorotherwisedisposedofforanamount (including transaction costs, except as
otherwise provided in Section 1.148-5(e) of the Treasury Regulations) less than the fair market value
of the
Investment Property.b) Fair Market Value. In general, the fair market value of
any Investment Property is the price a willing buyer would pay to a willing seller to acquire
the Investment Property, with no amount paid artificially to reduce or increase the yield on
such Investment Property. ThisSection 3.4 describes various safe harbors for determining fair
market value.With an Opinion of Counsel, other methods may be used to establish fair marketvalue; provided,however, that such methods comply with the requirements ofSection 1.I48-5(d)(
6) of
the Treasury Regulations.c) Arm's-length Purchases and Sales. IfInvestmentPropertyisacquiredbytheSellerpursuanttoanarm's length transaction without regard to any
amount paid to reduce the yield on the Investment Property, the fair market value of the
Investment Property shall be the amount paid for the Investment Property (without increase fortransactioncosts, except as otherwiseprovided in Section 1.I48-5(e) of the Treasury
Regulations). If Investment Property is sold or otherwise disposed of by the Seller in an arm's lengthtransactionwithoutregardtoanyreductioninthedispositionpricetoreducetheRebateRequirement, the
fair market value of the Investment Property shall be the amount realized from the sale
or other disposition of the Investment Property (without reduction for transaction costs,
except as otherwise provided in Section 1.148-
5( e) of the Treasury Regulations).d) SLGS. If a United States Treasury
obligation is acquired directly from or disposed of directly to the United States Department of the Treasury (as
in
the case of the
States Treasury Securities - State and Local Government Series), such acquisition or disposition shallbetreatedasestablishingamarketfortheobligationandasestablishingthefairmarketvalue
of the obligation.e)
Investment Contracts. The purchase price of any Investment Property acquiredbytheSellerpursuanttoaninvestmentcontract (within the meaning of Section 1.148-5(d)(6)(iii) of the Treasury Regulations) shall be determined as provided in this Section 3.4(e).No
investment contract shall be acquired by the Seller with Gross Proceeds unless th~requirements
of this Section 3.4(e) are satisfied. With respect to any investment contract, the Seller
will obtain from the provider of the investment contract acquired by the Seller, broker thereof
or other party, such information, certification or representation as will enable the Seller to determine
that the requirements of this Section 3.4(e} are satisfied.The
purchase price of an investment contract acquired by the Seller will be considered
to be fair market value if:1)
the Seller has made (or has had made on its behalf) a bona fide solicitation for
the investment contract; the solicitation must have specified the material terms of the investment
contract (i.e., all the terms that could directly or indirectly affect the yield or the cost of
the investment including the collateral security requirements for the investment contract) and,unless
the moneys invested pursuant to such investment contract will be held in a reasonably requiredreservefundorinbonafidedebtservicefunds, the Seller's reasonably expected drawdownscheduleforthemoneystobeinvested; the solicitation has a legitimate business purpose (
i.e., a purpose other than to increase the purchase price or reduce the yield) for every termofthebidspecification;2)
all bidders have an equal opportunity to bid so that, for example, no bidder is
given the opportunity to review other bids (a last look) before bidding;3)
the Seller solicits bids from at least three (3) investment contract providers withestablishedindustryreputationsascompetitiveprovidersofinvestmentcontracts;4)
the Seller includes in the bid specifications a statement to potential bidders thatbysubmittingabid, the provider is making certain representations that the bid is bona fide,andspecificallythat1) the bidder did not consult with any other potential provider about its bid,2) the bid was determined without regard to any other formal or informal agreement that the potential
provider had with the Seller or any other person, and 3) the bid was not submitted solelyasacourtesytotheSelleroranyotherpersonforpurposesofsatisfyingtherequirementsofSection1.148-5 of the Treasury Regulations;
5) at least three bids meeting the qualification requirements of the bidsolicitation (as set forth in (1) above) have been received from different providers of investment
contracts that have no material financial interest in the Notes (the following investment contractprovidersareconsideredtohaveamaterialfinancialinterestintheissue: 1) a lead underwriterinanegotiatedunderwriting, but only until 15 days after the issue date of the issue, 2) an entityactingasafinancialadvisorwithrespecttothepurchaseoftheinvestmentcontractatthetime
Tax-
Exempt DOCSSFU95413.1
the bid specifications were forwarded to potential providers; and 3) any related party to a
provider that is disqualified for one of the two preceding reasons);
6) at least one of the bids received by the Seller that meets the requirementsoftheprecedingparagraphisfromaninvestmentcontractproviderwithanestablishedindustryreputationasacompetitiveproviderofinvestmentcontracts;
7) the investment contract has a yield (net of any broker's fees) at least equaltothehighestyieldingofthequalifyingbidsreceivedfromthebiddersthathavenomaterial
financial interest in the Notes; if the investment contract is not the highest-yielding of
the qualifying bids, the Seller must have significant non-tax reasons, such as creditworthiness
of the bidder, for failure to purchase the highest-yielding
investment contract offered;8) if an agent for the Seller conducts the bidding process, the
agent
does not bid;9) the provider of the investment contract certifies as
to all administrative costs to be paid on behalf of the Seller, including any fees paid as
broker commissions in connection with
the investment contract.f) Deemed Acquisition or Sale. The fair market value
of any Investment Property not directly purchased with Gross Proceeds for which there is
an established securities market generally is the price at which a willing buyer would purchase
Investment Property from a willing seller in a bona fide, arm'
s length transaction.g) Certificates of Deposit. The purchase price of acertificateofdepositissuedbyacommercialbankthathasafixedinterestrate, a fixed principalpaymentschedule, a fixed maturity and a substantial penalty for early withdrawal, will be considered to
be fair
market value if:1) the yield on the certificate of deposit is not less than
the yield on reasonably comparable direct obligations of the
United States; and 2) the yield on the certificate of deposit is not less thanthehighestpublishedyieldoftheproviderthereofwhichiscurrentlyavailableoncomparablecertificatesofdepositoffered
to the public.h) Broker Compensation. For purposes of computing theYieldonanyinvestmentcontractacquiredthroughabroker, reasonable compensationreceivedbysuchbroker, whether payable by or on behalf of the obligor or obligee of
such investment contract,may be taken into account in determining the cost of the investment contract (as providedin Section 1.148-5(e)(2)(iii) of the Treasury Regulations). Compensationisdeemedreasonableifdoesnotexceedthelesserof (i) $30,000 or (ii) 0.2% of the amountreasonablyexpected, as of the date of acquisition of the investment contract, to be invested
under the investment contract over its term, or $3,000 (if 0.2% of such amount reasonably expected tobeinvestedundertheinvestmentcontractoveritstermislessthan $3,000). In addition, the totalfeesreceivedbythebrokerwithrespecttotheinvestmentofanyproceedsoftheNotesthat
are
taken into account
with respect to all investment contracts, at any time, may not exceed $85,000. All amounts
referenced are to be adjusted for inflation after the Closing Date.
3.5 Segregation of Proceeds. In order to perform the calculations required by
the Code, it is necessary to track separately all of the Gross Proceeds. To that end, the Seller
shall cause to be established separate accounts or subaccounts, or shall take such other
accounting measures as are necessary in order to account fully for all Gross. Proceeds.
3.6 Filing Requirements. To the extent not filed by the Purchaser, the Seller
will file or cause to be filed such reports or other documents with the Internal Revenue Service
as are required by the Code to be filed by it.
Tax-
Exempt DOCSSFl ,795413.1
ARTICLE IV. OTHER MATTERS
4.1 Expectations. The undersigned is an authorized representative of the
Seller acting for and on behalf of the Seller in executing this Seller Tax Certificate. To the best
of the knowledge and belief of the undersigned, there are no other facts, estimates or
circumstances that would materially change the expectations as set forth herein, and said
expectations are reasonable.
4.2 Amendments. Notwithstanding any other provision of this Seller Tax
Certificate, the Seller may amend this Seller Tax Certificate and thereby alter any actions
allowed or required by this Seller Tax Certificate if such amendment is signed by an authorized
officer and is supported by formal written agreement by the Purchaser.
4.3 Survival of Defeasance. Notwithstanding any provision in this Seller Tax
Certificate to the contrary, the obligation to comply with all requirements contained in this Seller
Tax Certificate shall survive defeasance or prepayment of the Notes.
Dated: March 2, 2005.
CITY OF ORANGE
By
Authorized Offi
Tax-
Exempt DOCSSF1,795413.1
EXHIBITF
ESCROW INSTRUCTION LETTER
PARTICIPATION AGREEMENT
AND
ESCROW INSTRUCTION LETTER
March 2, 2005
California Statewide Communities Development Authority
11 00 K Street
Sacramento, CA 95814
Re: VLF Receivable Financing
Dear Sir or Madam:
The City of Orange (the "Seller") hereby notifies you of its agreement to
participate in the California Statewide Communities Development Authority VLF Receivable
Financing. By adoption of a resolution (the "Resolution") authorizing the sale of its VLF
Receivable, the Seller's City Council has agreed to sell to the California Statewide Communities
Development Authority, for a purchase price that meets the conditions set forth in the
Resolution, all of its right, title and interest in the VLF Receivable.
Enclosed herewith are the following documents which have been duly approved
and executed by the Seller and which are to be held in escrow by Orrick, Herrington &
Sutcliffe LLP, as transaction counsel ("Transaction Counsel"), as instructed below:
1. certified copy of the Resolution, together with a certificate of the City Clerk,
dated March 2, 2005;
2. the Seller Certificate, dated March 2, 2005;
3. the Seller Tax Certificate, dated March 2, 2005
4. the Opinion of Seller's Counsel, dated March 2, 2005;
5. the Purchase and Sale Agreement, dated March 2, 2005; and
6. the Irrevocable Instructions to Controller, undated.
The foregoing documents are to be held in escrow by Transaction Counsel and
shall be delivered only upon payment to the Seller on or before April 29, 2005, of the Final
Purchase Price (as defined in the Purchase and Sale Agreement) that meets the conditions of the
Tax-
Exempt DOCSSFU95413.
1
Resolution. Upon such payment, Transaction Counsel is hereby authorized to fill in the closing
date on the Irrevocable Instructions to the Controller.
If the Final Purchase Price meeting the conditions of the Resolution is not paid to
the Seller on or before April 29, 2005, this agreement shall terminate and Transaction Counsel
shall return all of the enclosed documents to the Seller.
Very truly your~,
YO>'
ORANl fA.
Enclosures
cc: Orrick, Herrington & Sutcliffe LLP
Tax-
Exempt DOCSSF1 :795413.
1
DIRECTED INVESTMENT REQUISITION
To: Wells Fargo Bank, National Association
Re: California Statewide Communities Development Authority
Revenue Anticipation Notes (Vehicle License Fee Program)
Series 2005B (Tax-Exempt) and Series 2005C (
Tax-Exempt)Requisition
No.1 The undersigned, on behalf of the City of Orange, California (
thc "Participant"),hereby requests payment from the City of Orange Participant Custody
Account (the Participant Custody Account") held under that certain Custody
Agreement, dated March 1, 2005 (the "Custody Agreement"), by and between the
California Statewide Communities Development Authority (the "Issuer" or the "Authority") and
you, as custodian (the "Custodian") entered into in connection with the Notes identified
above, of the total amount shown in the Annex attached hereto to the order of the payee
or payees named in
such Annex.Dated: March
17,2005 CITY
OF
ORANGE
Lo0",/-
t.
e?
c rr ,J---'ed
Officer
By:DOCSSFI :
804632.
1 C-l
ANNEX
DIRECTED INVESTMENT REQUISITION)
PAYEE AMOUNT
City of Orange 2,141,287.80
Wire Instructions:Union Bank of California
ABA No. 122000496
Account No. 2740013648
The Custodian will provide to the Issuer periodic cash transaction statements, which
include detail for all investment transactions made by the Custodian hercunder and will provide
to each Participant periodic cash transaction statements, which include detail for all investment
transactions made by the Custodian hereunder in the Participant Custody Account of such
Participant.
DOCSSFl :804632.]
Description of Project:
Minimum Purchase
Price:
Authorized Officers:
Tax-
Exempt DOCSSF1:795393.
1 APPENDIX
A CITY OF
ORANGE Acquisition, construction, development and/or equipping of
the following public capital improvements (the "Improvements"),
for which all necessary approvals (including CEQA
compliance)required prior to the sale of the VLF Receivable have been
obtained:Construction Costs/Main Library Expansion
Project An amount equal to or greater than $2,100,000.00 (the "
Minimum Purchase
Price").
Mayor City
Manager Finance
Director City
Clerk any designee of any ofthem, as appointed in a written certificate
of such Authorized Officer delivered to the