Loading...
HomeMy WebLinkAbout2003/01/06 - Agenda Packet - Spec Jt w/RDA, PFA AGENDA RANCHO CUCAMONGA REDEVELOPMENT AGENCY, PUBLIC FINANCING AUTHORITY AND CITY COUNCIL Special Joint Meetinq January 6, 2003 - 6:00 p.m. Rancho Cucamonga Civic Center Council Chambers 10500 Civic Center Drive Rancho Cucamonga, California 91730 A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call: Alexander __, Gutierrez , Howdyshell __, Kurth __, Williams __ B. ITEM OF BUSINESS 1. CONSIDERATION OF RESOLUTIONS CONCERNING TAXALLOCATION BOND RESOLUTION NO. RA03-001 A RESOLUTION OF THE RANCHO CUCAMONGA REDEVELOPMENT AGENCY, RANCHO CUCAMONGA, CALIFORNIA, APPROVING AND AUTHORIZING THE BORROWING OF FUNDS FROM THE RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY RELATING TO THE AGENCY'S RANCHO REDEVELOPMENT PROJECT, APPROVING, AUTHORIZING AND DIRECTING THE EXECUTION OF A LOAN AGREEMENT AND APPROVING AND AUTHORIZING OTHER ACTIONS RELATING THERETO Redevelopment Agency, Public Financing Authority & City Council Agenda January 6, 2003 Page 2 RESOLUTION NO. PFA03-001 A RESOLUTION OF THE RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY, RANCHO CUCAMONGA, CALIFORNIA, APPROVING AND AUTHORIZING THE LENDING OF FUNDS TO THE RANCHO CUCAMONGA REDEVELOPMENT AGENCY RELATING TO THE AGENCY'S RANCHO REDEVELOPMENT PROJECT, APPROVING, AUTHORIZING AND DIRECTING THE EXECUTION OF A LOAN AGREEMENT AND APPROVING AND AUTHORIZING OTHER ACTIONS RELATING THERETO RESOLUTION NO. 03-001 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING THE INCURRENCE OF DEBT BY THE RANCHO CUCAMONGA REDEVELOPMENT AGENCY C. COMMUNICATIONS FROM THE PUBLIC This is the time and place for the general public to address the Redevelopment Agency, Financing Authority and City Council. State law prohibits the Agency, Financing Authority and City Council from addressing any issue not previously included on the agenda. The Agency, Financing Authority and City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual. D. ADJOURNMENT I, Debra J. Adams, City Clerk of the City of Rancho Cucamonga, hereby certify that a true, accurate copy of the foregoing agenda was posted on January 2, 2003, per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California. T H E C I T ¥ 0 F [~A N CII 0 C U CAM 0 N C,A Staff Report DATE: January 2, 2003 TO: Mayor and Members of the City Council Chairman and Members of the Redevelopment Agency Chairman and Members of the Public Financing Authority FROM: Linda Daniels, Redevelopment Director SUBJECT: Consideration of a Resolution approving a plan to facilitate the issuance of a 2003 Tax Allocation Bond for the benefit of the Redevelopment Agency's Capital Improvement Program. RECOMMENDATION: Adopt the attached resolution approving a plan to facilitate the issuance of a 2003 Tax Allocation Bond for the benefit of the Redevelopment Agency's Capital Improvement Program. BACKGROUND: Since 1984, the Rancho Cucamonga Redevelopment Agency has utilized a financing mechanism to pay for needed public improvements within the Project Area. This mechanism -- Tax Allocation Bond financing -- allows the Agency to use the proceeds of a Bond sale to pay for needed improvements that help eliminate blighted conditions in the Project Area. The debt incurred from this type of transaction is repaid by the Agency with the tax increment that it receives on an annual basis. ANALYSIS: Since its last Bond Issue in August 2001, the Agency has determined that a number of capital projects critical to the economic and safety needs of the Project Area and community require funding. To ensure that there is sufficient funding to carry out these projects, the Agency will need to issue a new Tax Allocation Bond in the spring of 2003. Planning for this next Bond Issue has been ongoing since last fiscal year. Currently, the State of California is considering several methods for reducing the State's budget crisis using local government resources, including redevelopment tax increment funding. With the potential loss of the Agency's primary source of funding, tax increment, the Agency is requested to officially declare its plan for the issuance of a new Tax Allocation Bond. Through the adoption of the attached resolution, the Agency Board will publicly affirm its intent to issue a Bond in 2003 to pay for capital projects Page 2 within the Project Area. These projects include, but are not limited to, infrastructure improvements, such as the Base Line/l-15 interchange and Foothill Boulevard Visual Improvement Plan enhancements; public facilities projects, such as a fire administration building and fire training facilities; and those projects associated with an Agency- approved Disposition & Development Agreement (DDA) obligation with Forest City Development/Lewis Investment Company, such as parking facilities and freeway-related improvements for the Victoria Gardens Regional Center. Once the timeline for the issuance of a 2003 Tax Allocation Bond has been identified, the Agency will proceed with the preparation of the required documents associated with this issuance. Staff has already established a preliminary meeting with Agency bond counsel and bond underwriter to begin work on the new bond issue. Respectfully submitted, Linda D. Daniels Redevelopment Director SO t TION NO. 0 } A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO' CUCAMONGA AUTHORIZING THE INCURRENCE OF DEBT BY THE RANCHO CUCANOGA REDEVELOPMENT AGENCY RECITALS: WHEREAS, the City Council of the City of Rancho Cucamonga has approved and adopted a redevelopment plan for the Rancho Redevelopment Project (the "Redevelopment Project") of the Rancho Cucamonga Redevelopment Agency (the "Agency"); and WHEREAS, the Agency has heretofore issued tax allocation bonds for the purpose of financing or refinancing costs of the Redevelopment Project; and WHEREAS, the City of Rancho Cucamonga (the "City") and the Agency have heretofore entered into a joint powers agreement establishing the Rancho Cucamonga Public Financing Authority (the "Authority") for the purpose of issuing bonds or incurring other obligations to be used to provide financial assistance to the City and the Agency; and WHEREAS, the Authority is authorized to Article 4, Chapter 5, Division 7, Title 1 of the Government Code to make loans to the Agency to provide financing for public capital improvements and to issue revenues bonds or incur other indebtedness for that purpose; and WHEREAS, in order to finance additional redevelopment programs, projects and activities with respect to the Redevelopment Project, the Agency has requested that Authority to fund a loan (the "Loan") to the Agency pursuant to a Loan Agreement dated as of January 1, 2003 between the Agency and the Authority (the "Loan Agreement") in an aggregate principal amount of not to exceed $110,000,000 in order to provide funds to the Agency for such purpose; and WHEREAS, such Loan will be secured by a pledge and lien on the tax increment revenues derived by the Agency from the Redevelopment Project; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA DOES HEREBY FIND, DETERMINE, ORDER AND RESOLVE, AS FOLLOWS: Section 1. The City Council hereby approves the incurrence of debt by the Agency to the Authority pursuant to the Loan Agreement, in an aggregate principal amount not to exceed $110,000,000. 11244/0001/717513v6 1 Section 2. This Resolution shall take effect from and after the date of its passage and adoption. PASSED, APPROVED AND ADOPTED this __ day of ,2003. AYES: NO: ABSENT: ABSTAiN: Mayor Attest: City Clerk 11244/0001/717813v6 2 REsoLUTION NO. fl~ 0~ '00 [ A RESOLUTION OF THE RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY APPROVING AND AUTHORIZING THE LENDING OF FUNDS TO THE RANCHO CUCAMONGA REDEVELOPMENT AGENCY RELATING TO THE AGENCY'S RANCHO REDEVELOPMENT PROJECT, APPROVING, AUTHORIZING AND DIRECTING THE EXECUTION OF A LOAN AGREEMENT AND APPROVING AND AUTHORIZING OTHER ACTIONS RELATING THERETO RECITALS: WHEREAS, the City Council of the City of Rancho Cucamonga has approved and adopted a redevelopment plan for the Rancho Redevelopment Project (the "Redevelopment Project") of the Rancho Cucamonga Redevelopment Agency (thc "Agency"); and WHEREAS, the Agency has heretofore issued tax allocation bonds for the purpose of financing or refinancing costs of the Redevelopment Project; and WHEREAS, the City of Rancho Cucamonga (the "City") and the Agency have heretofore entered into a joint powers agreement establishing the Rancho Cucamonga Public Financing Authority (thc "Authority") for the purpose of issuing bonds or incurring other, obligations to be used to provide financial assistance to thc City and the Agency; and WHEREAS, the Authority is authorized pursuant to Article 4, Chapter 5, Division 7, Title 1 of the Government Code to make loans to the Agency to provide financing for public capital improvements and to issue revenue bonds or incur other indebtedness for that purpose; and WHEREAS, in order to finance additional redevelopment programs, projects and activities with respect to the Redevelopment Project, the Agency has requested that Authority to fund a loan (the "Loan") to the Agency pursuant to a Loan Agreement dated as of January 1, 2003 between the Agency and the Authority (the "Loan Agreement") in an aggregate principal amount of not to exceed $110,000,000 in order to provide funds to the Agency for such purpose; and WHEREAS, such Loan will be secured by a pledge and lien on the tax increment revenues derived by the Agency from thc Redevelopment Project. NOW, THEREFORE, THE RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY DOES HEREBY FIND, DETERMINE, ORDER AND RESOLVE, AS FOLLOWS: 11224/0001/717819v6 Section 1. Approval of Loan. The Authority hereby authorizes and approves the Loan to be made to the Agency by the Authority i~ an amount not to exceed $110,000,000. The Loan shall be made pursuant to and in accordance with the terms of the Loan Agreement. The Authority hereby approves the Loan Agreement in substantially the form on file with the Secretary together with any additions thereto or changes therein deemed necessary or advisable by the Executive Director of the Authority, whose execution thereof shall be conclusive evidence of approval of any such additions and changes. The President and Executive Director, or either of them, is hereby authorized 'and directed to execute the Loan Agreement for and in the name and on behalf of the Authority. The Authority hereby authorizes the delivery and performance of the Loan Agreement. Section 2. Preparation and Submission of Documentation. The Authority hereby directs Authority staff, in cooperation with Agency staff, to cause the preparation of appropriate documentation in connection with the consummation of the Loan. Section 3. Official Action. The officers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions deemed necessary or advisable in order to consummate the lawful making of the Loan as described herein, including but not limited to, the issuance and sale of tax allocation revenue bonds by the Authority to fund the Loan. Section 4. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. PASSED, APPROVED AND ADOPTED this day of ,2003. AYES: NO: ABSENT: ABSTAIN: President Attest: Secretary 11224/0001/717819v6 2 RESOLUTION NO. 0 00 { A RESOLUTION OF TIlE RANCHO CUCAMONGA REDEVELOPMENT AGENCY APPROVING AND AUTHORIZING TIlE BORROWING OF FUNDS FROM THE RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY RELATING TO THE AGENCY'S RANCHO REDEVELOPMENT PROJECT~ APPROVING, AUTHORIZING AND DIRECTING EXECUTION OF A LOAN AGREEMENT AND APPROVING AND AUTIIORIZING OTHER ACTIONS RELATING THERETO RECITALS: WHEREAS, thc City Council of the City of Rancho Cucamonga has approved and adopted a redevelopment plan for thc Rancho Redevelopment Project (thc "Redevelopment Project") of thc Rancho Cucamonga Redevelopment Agency (the "Agency"); and WHEREAS, the Agency has heretofore issued tax allocation bonds for the purpose of financing or refinancing costs o£thc Redevelopment Project; and WHEREAS, thc City 'of Rancho Cucamonga (thc "City") and the Agency have heretofore entered into a joint powers agreement establishing the Rancho Cucamonga Public Financing Authority (thc "Authority") for thc purpose of issuing bonds or incurring other obligations to be used to provide financial assistance to thc City and the Agency; and WHEREAS, the Authority is authorized pursuant to Article 4, Chapter 5, Division 7, Title I of the Government Code to make loans to the Agency to provide financing for public capital improvements and to issue revenue bonds or incur other indebtedness for that purpose; and WHEREAS, in order to finance additional redevelopment programs, projects and activities with respect to the Redevelopment Project, the Agency has requested that Authority to fund a loan (the "Loan") to the Agency pursuant to a Loan Agreement dated as of January 1, 2003 between the Agency and the Authority (the "Loan Agreement") in an aggregate principal amount of not to exceed $110,000,000 in order to provide funds to the Agency for such purpose; and WHEREAS, such Loan will be secured by a pledge and lien on the tax increment revenues derived by the Agency from the Redevelopment Project; NOW~ THEREFORE, THE RANCHO CUCAMONGA REDEVELOPMENT AGENCY DOES HEREBY FIND, DETERMINE, ORDER AND RESOLVE, AS FOLLOWS: . Section 1. Approval of Loan. The Agency hereby authorizes and approves the Loan to be made to the Agency by the Authority in an amount not to exceed $110,000,000. The Loan 11224/0001/717822v6 shall be made pursuant to and in accordance with the terms of the Loan Agreement. The Agency hereby approves the Loan Agreement in substantially the form on file with the Secretary together with any additions thereto or changes therein deemed necessary or advisable by the Executive Director, whose execution thereof shall be conclusive evidence of approval of any such additions and changes. The Chairman and the Executive Director, or either of them, is hereby authorized and directed to execute the Loan Agreement for and in the name and on behalf of the Agency. The proceeds of the Loan shall be applied by the Agency for the purpose of financing programs, projects and activities of the Agency relating to the Redevelopment Project. The Agency hereby authorizes the delivery and performance of the Loan Agreement. Section 2. Preparation and Submission of Documentation. The Agency hereby directs Agency staff, in cooperation with Authority staff, to cause the preparation of appropriate documentation in connection with the consummation of the Loan. Section 3. Official Action. The officers of the Agency are hereby authorized and directed, for and in the name and on behalf of the Agency, to do any and all things and take any and all actions deemed necessary or advisable in order to consummate the lawful making of the Loan as described herein, including but not limited to, the issuance and sale of tax allocation revenue bonds by the Authority to fund the Loan. Section 4. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. PASSED, APPROVED AND ADOPTED this day of ,2003. AYES: NO: ABSENT: ABSTAIN: Chairman Attest: Secretary I1224/0001/717822v6 2 LOAN AGREEMENT Dated as of January 1, 2003 by and between the RANCHO CUCAMONGA REDEVELOPMENT AGENCY and the RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY 11224/0001/717.828v6 TABLE OF CONTENTS ARTICLE I. Definitions ................................................................................................................ 2 SECTION 1.01. Definitions .............................................................................................. 2 SECTION 1.02. Rules of Construction ............................................................................. 6 ARTICLE II. The Loan; Application of Loan Proceeds; Parity Bonds ........................................ 6 SECTION 2.01. Authorization .......................................................................................... 6 SECTION 2.02. Application of Loan Proceeds ................................................................ 6 SECTION 2.03. Repayment of Loan ................................................................................. 7 SECTION 2.04. Optional Prepayment of the Loan .......................................................... 7 SECTION 2.05. Bond Proceeds Fund. ............................................................................. 7 SECTION 2.06. Parity Bonds ........................................................................................... 8 SECTION 2.07. Issuance of Subordinate Debt. ............................................................... 9 SECTION 2.08. Validity of Loan ....................................................................... : .............. 9 ARTICLE III. Pledge of Tax Revenues; Application of Funds .................................................... 9 SECTION 3.01. Pledge of Tax Revenues ......................................................................... 9 SECTION 3.02. Special Fund; Deposit of Tax Revenues ............................................... 10 SECTION 3.03. Transfer of Tax Revenues From Special Fund ..................................... 10 SECTION 3.04. Investment of Moneys; Valuation of Investments ................................. 11 ARTICLE IV. Other Covenants of the Agency .......................................................................... 11 SECTION 4.01. Compliance with Senior Lien Bond Documents ................................... 11 SECTION 4.02. Limitation on Additional Indebtedness ................................................ 11 SECTION 4.03. Payment of Claims ............................................................................... 11 SECTION 4.04. Books and Accounts; Financial Statements ......................................... 12 SECTION 4.05. Protection of Security and Rights ........................................................ 12 SECTION 4.06. Payments of Taxes and Other Charges ................................................ 12 SECTION 4.07. Disposition of Property ........................................................................ 12 SECTION 4.08. Maintenance of Tax Revenues .............................................................. 13 SECTION 4.09. Compliance With Plan Limitations ...................................................... 13 11224/0001/717828v6 -i- SECTION 4.11. Continuing Disclosure .......................................................................... 14 ARTICLE V. Events of Default and Remedies .......................................................................... 15 SECTION 5.01. Events of Default and Acceleration of Maturities ................................ 15 SECTION 5.02. Application of Funds Upon Default ..................................................... 16 SECTION 5.03. Absolute Obligation of the Agency ....................................................... 17 SECTION 5.04. No Waiver ............................................................................................. 17 SECTION 5.05. Agreement to Pay Attorneys' Fees and Expenses ................................ 17 SECTION 5.06. Remedies Not Exclusive ....................................................................... 17 ARTICLE VI. Miscellaneous ...................................................................................................... 17 SECTION 6.01. Benefits Limited to Parties ................................................................... 17 SECTION 6.02. Successor is Deemed Included in All References to Predecessor ........ 18 SECTION 6.03. Discharge of Loan Agreement ............................................................. 18 SECTION 6.04. Amendment ........................................................................................... 18 SECTION 6.06. Payment on Business Days ............... .................................................... 19 SECTION 6.07. Notices .................................................................................................. 19 SECTION 6.08. Partial Invalidity .................................................................................. 19 SECTION 6.09. Article and Section Headings and References ..................................... 19 SECTION 6.10. Execution of Counterparts ................................................................... 20 SECTION 6.11. Governing Law ..................................................................................... 20 SECTION 6.12. Public Hearing ..................................................................................... 20 11224/0001/717828v6 -ii- LOAN AGREEMENT This LOAN AGREEMENT (this "Loan Agreement") is made and entered into as of January 1, 2003, by and between the RANCHO CUCAMONGA REDEVELOPMENT AGENCY, a public body, corporate and politic, duly organized and existing under the laws of the State of California (the "Agency"), and the RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the "Authority"); WITNESSE TH: WHEREAS, the Agency is a public body, corporate and politic, duly established and authorized to transact business and exercise powers under and pursuant to the provisions of Part 1 of Division 24 of the Health and Safety Code of the State of California (the "Redevelopment Law"), and has the power under Section 33601 of the Redevelopment Law to borrow money for any of its corporate purposes; and WHEREAS, the Authority is a joint powers authority duly organized and existing under and pursuant a joint powers agreement by and between the City and the Agency, and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"), and is authorized pursuant to Article 4 of the Act to issue bonds for the purpose, among others, of raising funds to make a loan to the Agency to provide financing and refinancing for public capital improvements of the Agency; and WHEREAS, a Redevelopment Plan for the Rancho Redevelopment Project (the "Redevelopment Project"), in the City of Rancho Cucamonga (the "City"), has been adopted in compliance with all requirements of the Redevelopment Law; and WHEREAS, the Agency and Bank of America National Trust and Savings Association as trustee entered into a trust indenture, dated as of March 1, 1990 (the "Original Indenture") relating to the issuance of the Agency's Rancho Redevelopment Project 1990 Tax Allocation Bonds (the "Series 1990 Bonds"); and WHEREAS, pursuant to Section 3.05 of the Original Indenture, the Agency and Bank of America National Trust and Savings Association as trustee entered into a first supplemental indenture, dated as of February 1, 1994 (the "First Supplemental Indenture") relating to the issuance of the Agency's Rancho Redevelopment Project 1994 Tax Allocation Refunding Bonds (the "Series 1994 Bonds"); and WHEREAS, pursuant to Section 3.05 of the Original Indenture, the Agency and U.S. Bank Trust National Association as trustee entered into a second supplemental indenture, dated as of August 1, 1999 (the "Second Supplemental Indenture") relating to the issuance of the Agency's Rancho Redevelopment Project 1999 Tax Allocation Refunding Bonds (the "Series 1999 Bonds"); and 11224/0001/717828v6 -1- WHEREAS, pursuant to Section 3.05 of the Original Indenture, the Agency and Wells Fargo Bank, National Association as trustee entered into a third supplemental indenture, dated as of August 1, 2001 (the "Third Supplemental Indenture") relating to the issuance of the Agency's Rancho Redevelopment Project 2001 Tax Allocation Bonds (the "Series 2001 Bonds"); and WHEREAS, Section 3.05 of the Original Indenture permits and provides for the issuance of additional bonds pursuant to the terms and conditions of a supplemental indenture, to be on a parity with and secured equally and ratably with, the Series 1994 Bonds, the Series 1999 Bonds and the Series 2001 Bonds provided certain conditions set forth in the Original Indenture are satisfied; and WHEREAS, the Agency wishes to borrow funds at this time for the purpose of financing additional projects, programs and activities of the Agency relating to the Redevelopment Project; and WHEREAS, to that end the Authority has agreed to make a loan (the "Loan") to the Agency under this Loan Agreement, which is secured by a pledge and lien on the tax increment revenues derived from the Redevelopment Project on a parity with the Series 1994 Bonds, the Series 1999 Bonds and the Series 2001 Bonds; and WHEREAS, in order to raise the funds required to make the Loan to the Agency, the Authority will issue its Rancho Cucamonga Public Financing Authority 2003 Tax Allocation Revenue Bonds (Rancho Redevelopment Project) in the aggregate principal amount of not to exceed $110,000,000 (the "Bonds"); and WHEREAS, all acts and proceedings required by law necessary to make this Loan Agreement, when executed by the Agency and the Authority, the valid, binding and legal obligations of the Agency and the Authority, and to constitute this Loan Agreement a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Loan Agreement have been in all respects duly authorized; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto do hereby agree as follows: ARTICLE I DEF~INITIONS SECTION 1.01. Definitions. Except as provided by this Loan Agreement, all terms which are defined in the Agency Indenture shall have the same meanings, respectively, in this Loan Agreement. The following additional terms shall, for all purposes of this Loan Agreement, have the respective meanings herein specified. "Additional Revenues" means, as the date of calculation, the amount of Tax Revenues which, as shown in the report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed but which is not then reflected on the tax rolls, or (b) transfer 11224/0001/717828v6 -2- of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls. For purposes of this definition, the term "increases in the assessed valuation" means the amount by which the assessed valuation of taxable property in the Project Area is estimated to increase above the assessed valuation of taxable property in the Project Area (as evidenced in the written records of the County) as of the date on which such calculation is made. "Agency Indenture" means the Original Indenture as amended by the First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture, and as further amended from time to time. "Authority Bond Indenture" means the indenture, trust agreement, resolution or other instrument under which the Bonds are issued, as originally executed or as it may from time to time be supplemented, modified or amended. "Bond Insurer" means the entity, if any, issuing a policy of municipal bond insurance for the Bonds. "Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, as in existence on the date of original execution and delivery of this Loan Agreement or as thereafter amended from time to time. ~'Bond Year" means each 12-month period extending from September 2 in one calendar year to September 1 of the succeeding calendar year, both dates inclusive, except that the first Bond Year begins on the Funding Date and ends on September 1, 2003. "Bonds" means the tax allocation revenue bonds which are issued by the Authority under the Bond Law and the Authority Bond Indenture to provide funding for the Loan. "Business Day" means a day of the year (other than a Saturday or Sunday) on which banks in California are not required or permitted to be closed, and on which the New York Stock Exchange is open. "City" means the City of Rancho Cucamonga, California, a general law city and municipal corporation organized and existing under the laws of the State. "County" means the County of San Bemardino, a county duly organized and existing under the Constitution and laws of the State. "Federal Securities" means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America. 11224/0001/717828v6 -3- "Fiscal Year" means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the Agency as its official fiscal year period pursuant to a Written Certificate of the Agency filed with the Authority. "Funding Date" means the date upon which the Loan is funded by the Authority, which is also the date of delivery of the Bonds to the original purchaser thereof. "Independent Redevelopment Consultant" means any consultant or firm of such consultants appointed by or acceptable to the Agency, and who, or each of whom: (a) is judged by the Agency to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under the domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency, other than as original purchaser of the Bonds or any Parity Bonds; and (d) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Interest Payment Date" means March 1 and September 1 in each year following the Ftmding Date, except that the first Interest Payment Date must be at least six months following the Funding Date. "Loan" means the loan made by the Authority to the Agency in the aggregate principal amount of not to exceed $110,000,000 pursuant to Section 2.01. "Loan Agreement" means this Loan Agreement by and between the Agency and the Authority, as originally executed or as it may from time to time be amended, modified or supplemented. "Loan Default Event" means any of the events described in Section 5.01. "Maximum Annual Debt Service" means, with respect to all or any designated portion of Senior Lien Debt, the largest amount of principal (including principal coming due and payable by operation of mandatory sinking fund redemption) and interest coming due with respect to all such Senior Lien Debt during the current or any future Bond Year. For purposes of such calculation, there shall be excluded a pro rata portion of each installment of principal of any Parity Bonds, together with the interest to accrue thereon, in the event and to the extent that the proceeds of such Parity Bonds are deposited in an escrow fund from which amounts may not be released to the Agency unless the Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County), plus at the option of the Agency the Additional Revenues, at least equal 125% of the amount of Maximum Annual Debt Service. "Parity Bonds" means any loans, bonds, notes, advances or indebtedness payable from Tax Revenues on a parity with the Loan to finance the Redevelopment Project, issued or incurred pursuant to and in accordance with the provisions of Section 2.06. "Parity Bonds Instrument" means any resolution, indenture of trust, trust agreement, loan agreement or other instrument authorizing the issuance or incurrence of any Parity Bonds. 11224/0001/717828v6 -4- "Plan Limitations" means the limitations contained or incorporated in the Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, and (c) the period of time for establishing or repaying indebtedness payable from Tax Revenues. "Project Area" means the area of the Redevelopment Project as described in the Redevelopment Plan. "Redevelopment Law" means the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State, as in existence on the date of original execution and delivery of this Loan Agreement or as thereafter amended from time to time. "Redevelopment Plan" means the Redevelopment Plan for the Rancho Redevelopment Plan, adopted by City Ordinance No. 166, together with any amendments thereof heretofore or hereafter duly enacted pursuant to the Redevelopment Law.. "Redevelopment Project" means the undertaking of the Agency pursuant to the Redevelopment Plan and the Redevelopment Law for the redevelopment of the Project Area. "Reserve Requirement" means, as of any calculation date, an amount equal to Maximum Annual Debt Service on the Bonds. "Senior Lien Debt" means, collectively, the Series 1994 Bonds, the Series 1999 Bonds, the Series 2001 Bonds, the Loan and any Parity Bonds. "Special Fund" means the fund by that name established and held by the Agency under Section 5.02 of the Original Indenture. "Tax Code" means the Internal Revenue Code of 1986 as in effect on the Funding Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Funding Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under said Code. "Tax Revenues" means all taxes annually allocated to the Agency with respect to the Project Area following the Funding Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws, and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations and including that portion of such taxes otherwise required by Section 33334.2 of the Law to be deposited in the Low and Moderate Income Housing Fund of the Agency established pursuant to Section 33334.3 of the Law, but only to the extent necessary to r~pay that portion of the proceeds, if any, any Parity Bonds (including applicable reserves and financing costs) used to increase or improve the supply o flow and moderate income housing within or of benefit to the Project Area; but excluding all other amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund and excluding 11224/0001/717828v6 -5- amounts payable to entities other than the Agency under and pursuant to pass-through agreements or similar tax-sharing agreements entered into pursuant to Section 33401 of the Law existing on the Funding Date. "Term of the Loan" means the period beginning on the Funding Date and extending to and including the final maturity date of the Bonds, which shall not be later than the September 1 immediately preceding the final date established under the Redevelopment Plan and the Redevelopment Law for the receipt of Tax Revenues by the Agency. "Trustee" means such trustee as may be appointed by the Authority under the Authority Bond Indenture. "Written Certificate" or "Written Request" means a certificate or request, in writing, signed by the Executive Director, Redevelopment Director, Treasurer or Secretary of the Agency, or by any other officer of the Agency duly authorized by the Agency for that purpose. SECTION 1.02. Rules of Construction. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement, and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereofi ARTICLE II THE LOAN; APPLICATION OF LOAN PROCEEDS; PARITY BONDS SECTION 2.01. Authorization. The Authority hereby agrees to lend to the Agency an amount not exceeding $110,000,000 under and subject to the terms of this Loan Agreement and the Redevelopment Law. This Loan Agreement constitutes a continuing agreement with the Authority to secure the full and final payment of the Loan, subject to the covenants, agreements, provisions and conditions herein contained. SECTION 2.02. Application of Loan Proceeds. In order to provide funds to make the Loan, the Authority hereby covenants to issue the Bonds under the Authority Bond Indenture within 60 days following receipt of a Written Request of the Agency to do so. Such Written Request shall identify the exact principal amount of the Bonds to be issued, which shall not exceed the maximum authorized amount of the Loan under Section 2.01. On the Funding Date, the Authority shall cause the net proceeds of the Bonds to be disbursed by the Trustee as follows: (a) The Trustee shall apply a portion of the proceeds of the Loan to pay the costs of issuance of the Bonds. (b) The Trustee shall deposit an amount equal to the Reserve Requirement in the Reserve Accotmt established for the Bonds. 11224/0001/717828v6 -6- (c) The Trustee shall transfer the remainder of such proceeds to the Agency to be deposited in the Bonds Proceeds Fund and applied for lawful purposes of the Agency. SECTION 2.03. Repayment of Loan The Agency shall repay the principal of the Loan in annual installments on September 1 in each year during the Term of the Loan. Principal of the Loan shall be scheduled so that the Loan amoritizes on a level debt service basis through the Term of the Loan, provided that each installment of principal on the Loan must be in an integral multiple of $5000. If the unpaid princiapal installments of the Loan are prepaid in whole or in part under Section 2.04, the schedule of principal payments will be reduced on a pro rata basis in integral muliples of $5000, corresponding to the principal amount of the Bonds which are redeemed under the optional redemption provisions of the Authority Bond Indenture. Interest shall accrue on the Loan at a rate of interest equal to the lesser of(a) 8% per annum, or (b) the actual rate of interest on the respective principal maturities of the Bonds. The Maximum Annual Debt Service shall not exceed $21,200,000 per year during the Term of the Loan. Interest on each installment of principal of the Loan will accrue from and including the Funding Date to but not including the Interest Payment Date with respect to which such installment of principal is payable, calculated on the basis of a 360-day year of twelve 30-day months. Interest on the Loan is payable on each Interest Payment Date. Any installment of principal or interest which is not paid when due shall continue to accrue interest from and including the date on which such principal or interest is payable to but not including the date of actual payment. Principal of and interest on the Loan shall be payable to the Trustee as assignee of the Authority under the Authority Bond Indenture, in immediately available funds which constitute lawful money of the United States of America. Payment of such principal and interest shall be secured, and amounts for the payment thereof shall be deposited with the Trustee at the times, as set forth in Article III. SECTION 2.04. Optional Prepayment of the Loan The Agency shall have the right to prepay the unpaid principal installments of the Loan, in whole or in part in any integral multiple of $5,000, on any Interest Payment Date on which the Bonds are subject to optional redemption under the Authority Bond Indenture, by depositing with the Trustee an amount sufficient to redeem a like aggregate principal amount of Bonds under the Authority Bond Indenture, together with the amount of accrued interest and premium (if any) required to be paid upon such redemption. SECTION 2.05. Bond Proceeds Fund. There is hereby established a separate fund to be known as the "Bond Proceeds Fund," which shall be held and maintained by the Agency. Amounts on deposit in the Bond Proceeds Fund shall be derived solely from the proceeds of the Loan deposited therein pursuant to Section 2.02(c), from any other funds required to be deposited therein under the Authority Bond Indenture, and from interest, profits and other income received from the investment of amounts on deposit in the Bond 11224/0001/717828v6 -7- Proceeds Fund under Section 3.04. The moneys in the Bond Proceeds Fund shall be used solely in the manner provided by the Redevelopment Law and the Redevelopment Plan to provide financing for the Redevelopment Project, which may include the refinancing of any outstanding debt of the Agency. SECTION 2.06. Parity Bonds. The Agency may issue Parity Bonds as provided for in the Agency Indenture. If the Agency Indenture has been discharged, in addition, the Agency may issue Parity Bonds in such principal amount as it determines, subject to the following conditions: (a) No Loan Default Event (or no event with respect to which notice has been given and which, once all notice of grace periods have passed, would constitute a Loan Default Event) has occurred and is continuing, unless otherwise permitted by the Bond Insurer. (b) The Tax Revenues for the then current Fiscal Year based on assessed valuation of property in the Project Area as evidenced in a written document from an appropriate official of the County, plus at the option of the Agency the Additional Revenues, must be at least equal to 125% of Maximum Annual Debt Service on alt Senior Lien Debt which will be outstanding following the issuance of such Parity Bonds. (c) The document providing for the issuance or incurrence of such Parity Bonds must provide that: (i) interest on said Parity Bonds is payable on March 1 and September 1 in each year of the term of such Parity Bonds, except that interest during the first twelve month period may be payable on any March 1 or September 1; (ii) the principal of such Parity Bonds is payable on September 1 in any year in which principal is payable; and (iii) an amount is deposited in a reserve fund from the proceeds of the sale of such Parity Bonds in an amount equal to Maximum Annual Debt Service on such Parity Bonds or such lesser amount as is the maximum permitted under the Tax Code. (d) The proceeds of such Parity Bonds may be deposited into an escrow fund from which amounts may be released to the Agency to the extent the Tax Revenues for the most recent Fiscal Year (as evidenced in the written records of the County), plus at the option of the Agency the Additional Revenues, at least equals 125% of the amount of Maximum Annual Debt Service on all Senior Lien Debt. 11224/0001/717828v6 -8- (e) The issuance of such Parity Bonds may not cause the Agency to exceed any applicable Plan Limitations. Without limiting the generality of the foregoing, the Agency may not issue any Parity Bonds in the event and to the extent that either: (i) the aggregate amount of debt service on all outstanding obligations of the Agency, including such Parity Bonds, exceeds the aggregate amount of Tax Revenues which are eligible under the Redevelopment Plan to be allocated and paid to the Agency during the period while such outstanding obligations remain outstanding, or (ii) the aggregate principal amount of all outstanding obligations of the Agency, including such Parity Bonds, exceeds any applicable limit in the Redevelopment Plan on the aggregate principal amount of indebtedness which the Agency. is permitted to have outstanding at any one time. (f) The Agency must deliver to the Trustee and the Bond Insurer a certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Bonds set forth in this Section 2.06 and in the documents authorizing the issuance of all other Senior Lien Debt have been satisfied. SECTION 2.07. Issuance of Subordinate Debt.' In addition to the Loan, the Series 1994 Bonds, the Series 1999 Bonds, and the Series 2001 Bonds, and any other Parity Bonds, from time to time the Agency may issue or incur subordinate debt in such principal amount as shall be determined by the Agency, provided that the issuance of such subordinate debt shall not cause the Agency to exceed any applicable Plan Limitations, and does not cause the Agency to violate the provisions of Section 4.09. SECTION 2.08. Validity of Loan. The validity of the Loan shall not be dependent upon the completion of the Redevelopment Project or upon the performance by any person of its obligation with respect to the Redevelopment Project. ARTICLE III PLEDGE OF TAX REVENUES; APPLICATION OF FUNDS SECTION 3.01. Pledge of Tax Revenues. The Loan and all other Senior Lien Debt are equally secured by a first pledge of and lien on all of the Tax Revenues and all of the moneys on deposit in the Special Fund, without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Tax Revenues and other funds pledged hereunder, no funds or properties of the Agency shall 11224/0001/717828v6 -9- be pledged to, or otherwise liable for, the payment of principal of or interest or prepayment premium (if any) on the Loan. The Loan is indebtedness of the Agency which constitutes Parity Bonds under and within the meaning of the Agency Indenture for all purposes thereof. In the event of any inconsistency or conflict between any of the provisions of this Loan Agreement and any of the provisions of the Agency Indenture, the provisions of the Agency Indenture are controlling. SECTION 3.02. Special Fund; Deposit of Tax Revenues. The Agency has previously established the Special Fund, which the Agency shall continue to hold as a separate fund during the entire Tem~ of the Loan. The Agency has the right in its sole discretion to establish one or more accounts within the Special Fund for any purposes whatsoever, provided that all of such accounts must be accounted for as part of the Special Fund. The Agency shall continue to deposit all Tax Revenues in the Special Fund promptly upon the receipt thereof, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee under Section 3.03 hereof, under the provisions of the Agency Indenture and under the provisions of the documents authorizing any Parity Bonds. All Tax Revenues received during any Bond Year in excess of such amounts shall be released from the pledge and lien hereunder and may be used for any lawful purposes of the Agency. Prior to the payment in full of the principal of and interest and premium (if any) on the Senior Lien Debt, and the payment in full of all other amounts payable under the Agency Indenture, this Loan Agreement and the documents authorizing any Parity Bonds, the Agency has no beneficial right or interest in the moneys on deposit in the Special Fund, except only as provided in the Agency Indenture, this Loan Agreement and the documents authorizing any Parity Bonds, and such moneys shall be used and applied as set forth therein and herein. SECTION 3.03. Transfer of Tax Revenues From Special Fund. In addition to the transfers required to be made under the Agency Indenture and the documents authorizing any Parity Bonds, the Agency shall withdraw from the Special Fund and transfer to the Trustee the following amounts at the following times and in the following order of priority: (a) Interest and Principal Deposits. No later than the 5th Business Day preceding each date on which the principal of or interest or prepayment premium on the Loan comes due and payable, the Agency shall transfer to the Trustee an amount which, together with the amounts then held on deposit in the Interest Account, the Principal Account and the Revenue Fund established under the Authority Bond Indenture, is equal to the aggregate amount of such principal, interest and prepayment premium. (b) Reserve Account Deposits. Immediately following each transfer made under the preceding clause (a), the Agency shall transfer to the Trustee, for deposit in the reserve account established for the Bonds, an amount (if any) which is required to cause the balance on deposit therein to equal the full amount of 11224/0001/717828v6 - 10- the Reserve Requirement, as set forth in written notice given to the Agency by the Trustee under the Authority Bond Indenture. No such transfer need be made so long as there is on deposit in the reserve account an amount at least equal to the Reserve Requirement. SECTION 3.04. Investment of Moneys; Valuation oflnvestments. The Agency shall invest moneys in any fund or account established hereunder in any investments authorized for the investment of Agency funds under the laws of the State of California. Obligations pumhased as an investment of moneys in any fund or account established hereunder shall be credited to and deemed to be part of such fund or account. The Agency may commingle any amounts in any of the funds and accounts held hereunder with any other amounts held by the Agency for purposes of making any investment, provided that the Agency shall maintain separate accounting procedures for the investment of all funds and accounts held hereunder. All interest, profits and other income received from the investment of moneys in any fund or account established hereunder shall be deposited in such fund or account. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any investment equal to the amount of accrued interest, if any, paid as part of the purchase price of such investment shall be credited to the fund from which such accrued interest was paid. ARTICLE IV OTHER COVENANTS OF THE AGENCY SECTION 4.01. Compliance with SeniorLien Bond Documents. The Agency shall punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all Senior Lien Debt, in strict conformity with the terms of the respective documents authorizing the issuance thereof. The Agency shall faithfully observe and perform all of the conditions, covenants and requirements of the respective documents authorizing the issuance of such Senior Lien Debt. SECTION 4.02. Limitation on Additional Indebtedness. So long as the Loan remains unpaid, the Agency may not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is in any case secured by a pledge of and lien upon all or any part of the Tax Revenues which is superior to or on a parity with the lien established hereunder for the security of the Loan, excepting only Parity Bonds. SECTION 4.03. Payment of Claims. The Agency will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Tax Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Loan. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims. 11224/0001/717828v6 -11- SECTION 4.04. Books and Accounts; Financial Statements. The Agency will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the City, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Tax Revenues, the Special Fund and the Bond Proceeds Fund. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Trustee (who has no duty to inspect), the Bond Insurer and the owners of not less than ten percent (10%) in aggregate principal mount of the Bonds then outstanding, or their representatives authorized in writing. The Agency will cause to be prepared within one hundred and eighty (180) days after the close of each Fiscal Year so long as any of the Bonds are outstanding, complete audited financial statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements from the Special Fund, and the financial condition of the Redevelopment Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year. The Agency will furnish a copy of such statements to the Bond Insurer and, upon reasonable request, to the Trustee and any Bond owner. The Trustee has no duty to review any such financial statement. SECTION 4.05. Protection of Security and Rights. The Agency will preserve and protect the security of the Loan and the rights of Trustee, the Bond Insurer and the Bond owners with respect to the Loan. From and after the Funding Date, the Loan shall be incontestable by the Agency. The Loan and the provisions of this Loan Agreement are and will be the legal, valid and binding special obligations of the Agency in accordance with their terms, and the Agency shall at all times, to the extent permitted by law, defend, preserve and protect all the rights of the Trustee, the Bond Insurer and the Bond owners under this Loan Agreement against all claims and demands of all persons whomsoever. SECTION 4.06. Payments of Taxes and Other Charges. The Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area, when the same shall become due. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency will duly observe and comply with all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof. SECTION 4.07. Disposition of Property. The Agency will not participate in the disposition of any land or real property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property dedicated for public right-of-way and except property planned for public ownership or use by the Redevelopment Plan in effect on the Funding Date) so that such disposition shall, when taken together with other such dispositions, would either 11224/0001/717828v6 -12- (a) aggregate more than ten percent (10%) of the land area in the Project Area, or (b) aggregate more than 10% of the assessed valuation of the Project Area. SECTION 4.08. Maintenance of Tax Revenues. The Agency shall comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and (in the case of supplemental revenues and other amounts payable by the State of California) appropriate officials of the State. The Agency shall not enter into any agreement with the County or any other governmental or private entity, which would have the effect of reducing the amount of Tax Revenues to be received in the current or any future Fiscal Year below 125% of Maximum Annual Debt Service on all Senior Lien Debt. The provisions of this Section 4.08 do not apply to any agreement with the County or with any other governmental or private entity, which by its terms is subordinate to the pledge of and lien on the Tax Revenues for the benefit of the Bond owners or which does not obligate the Agency to pay any Tax Revenues except to the extent such Tax Revenues are released from the pledge thereof and lien thereon in accordance with Section 3.02. In addition, if the Agency amends the Redevelopment Plan in a manner which has the effect of obligating the Agency to make payments from Tax Revenues under Section 33607.5 of the Redevelopment Law to other governmental entities, no such amendment shall be made which would have the effect of causing the amount of Tax Revenues to be received in the current or any future Fiscal Year to fall below 125% of Maximum Annual Debt Service on all Senior Lien Debt. In addition, if the Agency amends the Redevelopment Plan in a manner which has the effect of\obligating the Agency to make payments from Tax Revenues under Section 33607.5 of the Redevelopment Law to other governmental entities, no such amendment shall be made which would have the effect of causing the amount of Tax Revenues to be received in the current or any future Fiscal Year to fall below 125% of Maximum Annual Debt Service on all Senior Lien Debt. SECTION 4.09. ComI~liance ~t'th Plan Limitations. The Agency may not take any action, including, but not limited to the issuance of its bonds, notes or other obligations, which causes or which, with the passage of time, would cause any of the Plan Limitations to be exceeded for violated. The Agency shall not accept any Tax Revenues which would cause any of the Plan Limitations to be exceeded. The Agency shall manage its fiscal affairs in a mariner which ensures that it will have sufficient Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest and redemption premium (if any) on all Senior Lien Debt when due. The Agency shall not accept any Tax Revenues which would cause any of the Plan Limitations to be exceeded. SECTION 4.10. Tax Covenants. (a) Generally. The Agency shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, interest on the Bonds to become includable in gross income for federal income tax purposes. 11224/0001/717828v6 -13- (b) Private Activity Bond Limitation. The Agency shall assure that the proceeds of the Bonds are not used in a manner which would cause the Bonds to become "private activity bonds" within the meaning of Section 14 l(a) of the Tax Code, or which would meet the private loan financing test of Section 141(c) of the Tax Code. (c) Federal Guarantee Prohibition. The Agency shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Tax Code. (d) No Arbitrage. The Agency shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the Bond proceeds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken on the Funding Date would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Tax Code. (e) Rebate Requirement. The Agency shall take any and all actions necessary to assure compliance with Section 148(0 of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such Section is applicable to the Bonds. In the event that the Authority determines that any amounts are due and payable to the United States of America thereunder and that neither the Authority nor the Trustee has on deposit an amount of available moneys (excluding moneys on deposit in the funds and accounts established for the payment of the principal of or interest or redemption premium on the Bonds) to make such payment, the Authority shall promptly notif)~ the Agency of such fact. Upon receipt of any such notice, the Agency shall promptly pay to the Authority from available Tax Revenues or any other source of legally available funds, the amounts determined by the Authority to be due and payable to the United States of America as a result of the investment of amounts on deposit in any fund or account established hereunder, together with all other amounts due and payable to the United States of America. SECTION 4.11. Continuing Disclosure. The Agency hereby covenants and agrees that it will execute and deliver a continuing disclosure undertaking on the Funding Date, in form and substance required by Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and that it will comply with and carry out all of the provisions of such undertaking. Notwithstanding any other provision of this Loan Agreement, failure of the Agency to comply with such undertaking does not constitute a Loan Default Event; except that any participating underwriter or any owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Agency to comply with its obligations under this Section 4.11.Section 4.11. SECTION 4.12. Further Assurances. The Agency will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Loan Agreement and for the better assuring and confirming unto the Trustee, the Bond Insurer, the Authority and the owners of the Bonds of the rights and benefits provided in this Loan Agreement. 11224/0001/717828v6 -14- ARTICLE V EVENTS OF DEFAULT AND REMEDIES SECTION 5.01. Events of Default and Acceleration of Maturities. The following events shall constitute Events of Default hereunder: (a) Failure by the Agency to pay the principal of or interest or prepayment premium (if any) on any Senior Lien Debt when due and payable. (b) Failure by the Agency to observe and perform any of the covenants, agreements or conditions on its part contained in this Loan Agreement, other than as referred to in the preceding clause (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the Agency by the Trustee or the Bond Insurer; provided, however, that i fin the reasonable opinion of the Agency the failure stated in such notice can be corrected, but not within such 30 day period, such failure will not constitute a Loan Default Event if the Agency institutes corrective action within such 30 day period and thereafter diligentlypursues such action until the failure is corrected. (c) The filing by the Agency of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of · the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Agency, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Agency or of the whole or any substantial part of its property. (d) The occurrence of an event of default under and as defined in the Agency Indenture or in the documents authorizing any Parity Bonds, to the extent such failure does not constitute a Loan Default Event under the preceding clauses (a), (b) or(c). Ifa Loan Default Event has occurred and is continuing, with the prior written consent of the Bond Insurer the Trustee may, and at the written direction of the Bond Insurer or (with the prior written consent of the Bond Insurer) at the written direction of a majority in aggregate principal amount of the outstanding Bonds the Trustee shall, (a) declare the principal of the Loan, together with the accrued interest on all unpaid installments thereof, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything in this Loan Agreement to the contrary notwithstanding, and (b) subject to the provisions of the Authority Bond Indenture and receipt of indemnity satisfactory to the Trustee, exercise any other remedies available to the Trustee in law or at equity. 11224/0001/717828v6 -15- Immediately upon becoming aware of the occurrence of a Loan Default Event, the Trustee shall give notice of such Loan Default Event to the Agency and the Bond Insurer by telephone, telecopier or other telecommunication device, promptly confirmed in writing. This provision, however, is subject to the condition that if, at any time after the principal of the Loan have been so declared due and payable, and before any judgment or decree for the payment of the moneys due has been obtained or entered, the Agency deposits with the Tru§tee a sum sufficient to pay all installments of principal of the Loan matured prior to such declaration and all accrued interest thereon, with interest on such overdue installments of principal and interest at the net effective rate then borne by the outstanding Bonds, and the reasonable expenses of the Trustee (including but not limited to attorneys fees), and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Loan due and payable solely by reason of such declaration) have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in eve~ such case, the Trustee may, by written notice to the Agency, rescind and annul such declaration and its consequences. However, no such rescission and annulment extends to or affects any subsequent default, or impairs or exhausts any right or power consequent thereon. SECTION 5.02. Application of Funds Upon Default. The Trustee shall apply all amounts received by it under any right given or action taken under this Loan Agreement in the following order: First, to the payment of the costs and expenses of the Trustee in declaring the Loan Default Event and in carrying out the provisions of this Article V, including reasonable compensation to its agents, attorneys and counsel. Second, to the payment of the whole amount of interest on and principal of the Senior Lien Debt then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the outstanding Bonds; provided, however, that if such amounts are insufficient to pay in full the full amount of such interest and principal, then the Trustee will apply such amounts in the following order of priority: (a) to the payment of all installments of interest on the Senior Lien Debt then due and unpaid, on a pro .rata basis if the available amounts are insufficient to pay all such interest in full, (b) to the payment of all installments of principal of the Senior Lien Debt then due and payable, on a pro rata basis if the available amounts are installments of principal in full, and (c) to the payment of interest on overdue installments of principal and interest, on a pro rata basis if the available amounts are insufficient to pay all such interest in full. Third, to the pfiyment of any amounts due and owing to the Bond Insurer with respect to its policy of municipal bond insurance insuring the Bonds. 11224/0001/717828v6 -16- SECTION 5.03. Absolute Obligation of the Agency. Nothing in this Article V or in any other provision of this Loan Agreement, shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay from the Tax Revenues and other amounts pledged hereunder, the principal of and interest and premium (if any) on the Loan to the Authority when due, as herein provided. SECTION 5.04. No Waiver. A waiver of any default by the Trustee shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of the Trustee to exercise any fight or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and everypower and remedy conferred upon the Authority by the Redevelopment Law or by this Article V may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee. Ifa suit, action or proceeding to enforce any fight or exercise any remedy shall be abandoned or determined adversely to the Trustee, the Agency and the Trustee shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. SECTION 5.05. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Loan Agreement should default under any of the provisions hereof and the nondefaulfing party or the Trustee should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred. SECTION 5.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law. ARTICLE VI MISCELLANEOUS SECTION 6.01. Benefits Limited to Parties. Nothing in this Loan Agreement, expressed or implied, is intended to give to any person other than the Agency, the Trustee, the Bond Insurer and the Authority, any right, remedy or claim under or by reason of this Loan Agreement. All covenants, stipulations, promises or agreements in this Loan Agreement contained by and on behalf of the Agency shall be for the sole and exclusive 11224/0001/717828v6 - 17- benefit of the Authority, the Bond Insurer, and of the Trustee acting as trustee for the benefit of the owners of the Bonds. SECTION 6.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Loan Agreement either the Agency, the Authority, the Bond Insurer or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Loan Agreement contained by or on behalf of the Agency, the Authority, the Bond Insurer or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. SECTION6.03. DischargeofLoanAgreement. IftheAgencypaysanddischargestheentire indebtedness on the Loan in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and prepayment premiums (if any) on the Loan, when due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, cash in an amount which, together with the available amounts then on deposit in any of the funds and accounts established under the Authority Bond Indenture or this Loan Agreement, in the opinion or report of an independent accounting firm is fully sufficient to pay all principal of and interest and prepayment premiums (if any) on the Loan; or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, non-callable Federal Securities in such amount as an independent accounting firm determines will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established under the Indenture or under this Loan Agreement, be fully sufficient to pay and discharge the indebtedness on the Loan (including all principal, interest and prepayment premiums) at or before maturity; then, at the election of the Agency but only if all other amounts then due and payable hereunder have been paid or provision for their payment made, the pledge of and lien upon the Tax Revenues and other funds provided for in this Loan Agreement and all other obligations of the Authority and the Agency under this Loan Agreement with respect to the Loan will cease and terminate, except only the obligation of the Agency to pay or cause to be paid to the Trustee, from the amounts so deposited with the Trustee or such other fiduciary, all sums due with respect to the Loan and all expenses and costs of the Trustee. Notice of such election must be filed with the Authority and the Trustee. The Trustee shall pay to the Agency any funds thereafter held by it hereunder which are not required for said purpose. SECTION 6.04. Amendment. This Loan Agreement shall be amended by the parties hereto but only (a) prior to the Funding Date, which any effect whatsoever, and (b) following the Funding Date, only as provided in the Authority Bond Indenture. 11224/0001/717828v6 -18- SECTION 6.05. Waiver of Personal Responsibility No member, officer, agent or employee of the Agency shall be individually or personally liable for the payment of the principal of or interest on the Loan; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. SECTION 6.06. Payment on Business Days. Whenever in this Loan Agreement any amount is required to be paid on a day which is not a Business Day, such payment shall be required to be made on the Business Day immediately following such day, provided that interest on such payment shall not accrue from and after such day. SECTION 6.07. Notices. Any notice, request, complaint, demand or other communication under this Loan Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by telecopy or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority or the Agency may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. If to the Authority: Rancho Cucamonga Public Financing Authority 10500 Civic Center Rancho Cucamonga, California 91730 Attention: Executive Director If to the Agency: Rancho Cucamonga Redevelopment Agency 10500 Civic Center Rancho Cucamonga, California 91730 Attention: Executive Director SECTION 6.08. Partiallnvalidity. If any Section, paragraph, sentence, clause or phrase of this Loan Agreement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Loan Agreement. The Agency hereby declares that it would have adopted this Loan Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the Loan irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Loan Agreement may be held illegal, invalid or unenforceable. SECTION 6.09. Article and Section Headings and References. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the 11224/0001/717828v6 -19- meaning, construction or effect of this Loan Agreement. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders. SECTION 6.10. Execution of Counterparts. This Loan Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument. SECTION 6.11. Governing Law. This Loan Agreement shall be construed and governed in accordance with the laws of the State. SECTION 6.12. Public Hearing. The Agency shall cause to be published a notice of public hearing and shall hold such notice in accordance with Government Code Section 6586.5, all prior to the issuance of the Bonds. 11224/0001/717828v6 -20- IN WITNESS WHEREOF, the RANCHO CUCAMONGA REDEVELOPMENT AGENCY and the RANCHO CUCAMONGA PUBLIC FINANCING AUTHORITY have caused this Agreement to be signed by their respective officers, all as of the day and year first above written. RANCHO CUCAMONGA REDEVELOPMENT AGENCY By: Executive Director [SEAL] Attest: Secretary RANCHO CUCAMONGA PUBLIC FiNANCING AUTHORITY By: Executive Director [SEA ] Attest: Secretary 11224/0001/717828v6 -21-