HEARTLAND CHARTER SCHOOL
955 Stanislaus St. Maricopa, CA 93252
Phone (661) 525-1178 * Fax (661) 465-4544
Special Board Meeting
Heartland Charter School
June 13, 2020 –1pm
5060 California Avenue #420
Bakersfield, CA 93309
Through Teleconference
Public Comment via Zoom: https://zoom.us/j/95684469157
AGENDA Item Description Action
1. Call to Order
2. Approval of the Agenda
3. Public Comments Information
4. Discussion and Potential Action on the Factoring Proposals from Charter Asset Management and Charter School Capital to Facilitate Early RAN Takeout
5. Discussion and Potential Action on the Revenue Note Defeasance and Related Escrow Agreement
6. Board of Directors’ Requests and Comments
7. Announcement of Next Regular Scheduled Board Meeting
8. Adjournment This meeting will be by teleconference pursuant to Executive Orders N-25-20 and N-29-20. Access to Board Materials: A copy of the written materials which will be submitted to the Heartland school board may be reviewed by any interested persons on Heartland’s website along with this agenda. The posting of the agenda will occur at least 72 hours in advance of this meeting.
Public comment rules: Members of the public may address the Board on agenda or non-agenda items through the teleconference platform, Zoom. Zoom does not require the members of the public to have an account or login. Please either utilize the chat option to communicate with the administrative team your desire to address the board or simply communicate orally your desire to address the board when the board asks for public comments. Speakers may be called in the order that requests are received. We ask that comments are limited to 2 minutes each, with no more than 15 minutes per single topic so that as many people as possible may be heard. By law, the Board is allowed to take action only on items on the agenda. The Board may, at its discretion, refer a matter to district staff or calendar the issue for future discussion.
Note: Heartland Charter Governing Board encourages those with disabilities to participate fully in the public meeting process. If you need a disability-related modification or accommodation, including auxiliary aids or services, to participate in the public meeting, please contact the Governing Board Office at 559-313-3112 at least 24 hours before the scheduled board meeting so that we may make every reasonable effort to accommodate you. (Government Code § 54954.2; Americans with Disabilities Act of 1990, § 202 (42 U.S.C. § 12132)).
4138-0619-3701.3
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Escrow Agent
and
BLUE RIDGE ACADMEY (FORMERLY KNOWN
AS INSPIRE CHARTER SCHOOL – KERN),
YOSEMITE VALLEY CHARTER SCHOOL (FORMERLY KNOWN AS INSPIRE
CHARTER SCHOOL – CENTRAL),
PACIFIC COAST ACADEMY, and
HEARTLAND CHARTER SCHOOL
ESCROW AGREEMENT
Dated June __, 2020
Relating to
CALIFORNIA SCHOOL FINANCE AUTHORITY
REVENUE NOTES
(INSPIRE CHARTER SCHOOLS)
SERIES 2019B (TAX-EXEMPT)
And
CALIFORNIA SCHOOL FINANCE AUTHORITY
REVENUE NOTES
(INSPIRE CHARTER SCHOOLS)
SERIES 2019C (TAXABLE)
4138-0619-3701.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into June __, 2020, by and
among WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking
association organized and existing under and by virtue of the laws of the United States of
America, being qualified to accept and administer the trusts hereby created, in its capacity as
trustee (the “Escrow Agent”) under the Prior Indenture (capitalized terms used herein shall have
the meanings given such terms pursuant to Section 1 hereof), and BLUE RIDGE ACADEMY
(formerly known as INSPIRE CHARTER SCHOOL – KERN), YOSEMITE VALLEY
CHARTER SCHOOL (formerly known as Inspire Charter School – Central), PACIFIC
COAST ACADEMY, and HEARTLAND CHARTER SCHOOL, each a nonprofit public
benefit corporation organized and existing under the laws of the State of California (each a
“Borrower” and together, the “Borrowers”),
W I T N E S S E T H:
WHEREAS, pursuant to the Prior Indenture, the California School Finance
Authority (the “Authority”) has previously authorized and issued its (a) Revenue Notes (Inspire
Charter Schools) Series 2019B (Tax-Exempt) on behalf of the Borrowers in the aggregate
principal amount of $26,420,000 and (b) Revenue Notes (Inspire Charter Schools) Series 2019C
(Taxable) on behalf of the Borrowers in the aggregate principal amount of $19,300,000
(together, the “Prior Notes”); and
WHEREAS, $45,720,000 aggregate principal amount of the Prior Notes remain
Outstanding; and
WHEREAS, for the purpose of providing for the payment of the Prior Notes in
accordance with Article X of the Prior Indenture, the Borrowers have caused certain funds, to be
deposited into the Escrow Fund as provided in Section 2 hereof; and
WHEREAS, the amounts to be held by the Escrow Agent in the Escrow Fund,
has been certified in the Verification Report to be sufficient to pay the Escrow Requirements;
NOW, THEREFORE, the Borrowers and the Escrow Agent hereby agree as
follows:
Section 1. Definitions. Capitalized terms used in this Escrow Agreement and not
otherwise defined herein shall have the meanings given such terms in the Indenture, dated as of
July 1, 2019, between the Authority and the Escrow Agent. The following shall have the
meanings set forth below for all purposes of this Escrow Agreement.
“Escrow Fund” means the Inspire Charter Schools Series 2019BC Escrow Fund
established pursuant to Section 2 hereof.
“Escrow Securities” means noncallable bonds, bills and bonds issued by the
Department of the Treasury (including without limitation (1) obligations issued or held in book-
entry form on the books of the Department of the Treasury and (2) the interest component of
Resolution Funding Corporation strips for which separation of principal and interest is made by
-2- 4138-0619-3701.3
request to the Federal Reserve Bank of New York in book-entry form), United States Treasury
Obligations State and Local Government Series and Zero Coupon United States Treasury Bonds.
“Escrow Requirements” means the moneys required to pay the principal amount
of the Prior Notes and all unpaid interest thereon to the Maturity Date. The schedule of Escrow
Requirements due is set forth in Exhibit B hereto.
“Maturity Date” means July 15, 2020.
“Opinion of Note Counsel” means an opinion of Orrick, Herrington & Sutcliffe
LLP.
“Prior Notes” means the (a) California School Finance Authority Revenue Notes
(Inspire Charter Schools), Series 2019B (Tax-Exempt) and (b) California School Finance
Authority Revenue Notes (Inspire Charter Schools), Series 2019C (Taxable), issued pursuant to
the Prior Indenture.
“Prior Indenture” means the Indenture, dated as of July 1, 2019, by and between
the Authority and the Escrow Agent.
“Prior Loan Agreement” means the Loan Agreement, dated as of July 1, 2019,
between the Authority and the Borrowers.
“Verification Agent” means ___________.
“Verification Report” means the verification report, dated June __, 2020, prepared
by the Verification Agent in connection with the deposit of certain proceeds in the Escrow Fund.
Section 2. Establishment, Funding and Maintenance of Escrow Fund.
(a) The Escrow Agent agrees to establish a separate irrevocable fund
designated as the “Inspire Charter Schools Series 2019BC Escrow Fund.” The Escrow Agent
shall maintain the Escrow Fund until the termination of this Escrow Agreement pursuant to
Section 10 hereof and hold the Escrow Securities and moneys therein at all times as a special and
separate fund wholly segregated from all other securities, investments or moneys on deposit with
or otherwise held by the Escrow Agent in accordance with Section 10.01(a)(ii) of the Prior
Indenture.
(b) The Borrowers have deposited with the Escrow Agent the sum of
$15,242,768.32 (consisting of $1,759,444.13 from Yosemite Valley Charter School,
$6,108,846.05 from Blue Ridge Academy, $4,412,024.65 from Heartland Charter School, and
$2,962,453.49 from Pacific Coast Academy), which amounts are to be deposited in the Escrow
Fund and invested and disbursed in accordance with this Escrow Agreement.
(c) The Borrowers hereby direct the Escrow Agent to transfer any funds held
in, and in any accounts of, the Revenue Fund to be transferred to and deposited in the Escrow
Fund and invested and disbursed in accordance with this Escrow Agreement.
-3- 4138-0619-3701.3
(d) All Escrow Securities and moneys in the Escrow Fund are hereby
irrevocably transferred to the Escrow Agent on behalf of the owners of the Prior Notes to be
applied, as provided herein, to the payment of the Escrow Requirements when due in accordance
with this Escrow Agreement.
(e) Each Borrower hereby waives any rights that it may have under the Prior
Indenture, the Prior Loan Agreement or any other document or agreement relating to the Prior
Notes (i) to give instructions as to the investment of the amounts deposited in the Escrow Fund
except as provided in Section 4, below, or (ii) to any of the moneys that remain in the Escrow
Fund after the payment of the Escrow Requirements; provided however, if any funds are
provided to the Prior Trustee from the State Controller’s Office deposited into the Revenue Fund
pursuant to the intercepts relating to the Prior Notes after the date hereof, the Prior Trustee, as
soon as practicable, shall transfer such amounts from the Revenue Fund to the appropriate
Borrower using the instructions set forth in Exhibit E, free and clear from the lien of the Prior
Indenture.
(f) Each Borrower acknowledges that it has no right, title or interest in or to
any money, Escrow Securities, or other property held in the Escrow Fund, notwithstanding any
provision of the Prior Indenture, the Prior Loan Agreement or any other document or agreement
relating to the Prior Notes to the contrary. Under no circumstances shall any such money,
securities, or other property be paid or delivered to or for the order of any Borrower, except as
set forth in Section 5 hereof; provided however, if any funds are provided to the Prior Trustee
from the State Controller’s Office deposited into the Revenue Fund pursuant to the intercepts
relating to the Prior Notes after the date hereof, the Prior Trustee, as soon as practicable, shall
transfer such amounts from the Revenue Fund to the appropriate Borrower using the instructions
set forth in Exhibit E, free and clear from the lien of the Prior Indenture.
(g) The Escrow Agent acknowledge receipt of the Opinion of Note Counsel
referred to in Section 10.03 of the Prior Indenture and the Verification Report, in satisfaction of
such requirements of Section 10.03 of the Prior Indenture.
(h) The Escrow Agent acknowledges that this Escrow Agreement shall serve
as a Certificate of the Borrowers evidencing the election of the Borrowers to discharge all
indebtedness of the Prior Notes and the Prior Indenture.
(i) The Escrow Agent acknowledges that all sums payable under the Prior
Indenture have been paid.
Section 3. Investments of Moneys in the Escrow Fund.
(a) The Escrow Agent acknowledges and agrees that it has received the
amounts set forth in Section 2(b) and Section 2(c) above and hereby agrees to hold the deposit
uninvested as lawful money of the United States of America.
(b) The Escrow Agent shall not be liable or responsible for any loss resulting
from any investment made pursuant to this Escrow Agreement and in full compliance with the
provisions hereof.
-4- 4138-0619-3701.3
(c) The Escrow Agent may conclusively rely upon the conclusions of the
Verification Report to the effect that the moneys in the Escrow Fund shall be necessary and
sufficient to pay the Escrow Requirements when due.
(d) The Escrow Agent shall hold all Escrow Securities, if any, in the Escrow
Fund and the money received from time to time as principal and interest thereon or otherwise, to
be applied to the payment of the Remaining Escrow Requirements and shall collect the principal
of and interest on such Escrow Securities promptly as such principal and interest become due.
Section 4. Payment of the Prior Notes. Each Borrower hereby elects to discharge
and pay the Prior Notes as provided in this Escrow Agreement. Each Borrower hereby requests
and irrevocably instructs the Escrow Agent, and the Escrow Agent hereby agrees, to collect and
deposit in the Escrow Fund all amounts payable with respect to the Escrow Securities held to the
credit of the Escrow Fund promptly as such amounts become due and to apply, to the extent
necessary, such amounts, together with the other moneys in the Escrow Fund, to the payment of
the Escrow Requirements when due. The Escrow Agent acknowledges that this Escrow
Agreement constitutes irrevocable instructions to apply the amounts received in connection with
the Escrow Securities credited to the Escrow Fund, and the other amounts in the Escrow Fund, to
the payment of principal and interest with respect to the Prior Notes as set forth in the Escrow
Requirements.
Section 5. Transfer of Funds After Payment of Escrow Requirements. Each
Borrower hereby requests and irrevocably instructs the Escrow Agent, and the Escrow Agent
hereby agrees, to transfer any money remaining in the Escrow Fund (after the payment of the
amounts due on the Prior Notes on the Maturity Date) to the appropriate Borrowers free and
clear of the lien of the Prior Indenture.
Section 6. Notice of Defeasance. Each Borrower hereby requests and irrevocably
instructs the Escrow Agent to mail and to file with the Municipal Securities Rulemaking Board’s
Electronic Municipal Market Access System (“EMMA”) notice of defeasance of the Prior Notes.
The form of the notice of defeasance relating to the Prior Notes is attached as Exhibit D hereto.
Section 7. Fees and Costs.
(a) In consideration for the Escrow Agent to perform the services set forth in
this Escrow Agreement, the Borrowers each agree to pay the fees and charges of the Escrow
Agent in the amount of $750.00 representing a one-time fee.
(b) The Escrow Agent shall also be entitled to additional reasonable fees and
reimbursements for costs incurred, to be paid by the Borrowers, including but not limited to legal
and accountants’ services, in connection with any litigation not arising from the Escrow Agent’s
negligence or willful misconduct which may at any time be instituted involving this Escrow
Agreement. Nothing in this Escrow Agreement shall require the Escrow Agent to expend or risk
its own funds or otherwise incur any financial liability in performance of any of its duties or in
the exercise of any of its rights or its powers hereunder.
(c) The fees of and the costs incurred by the Escrow Agent shall in no event
be deducted or payable from or constitute a lien against the Escrow Fund, any Escrow Securities
-5- 4138-0619-3701.3
credited to the Escrow Fund or any moneys in the Escrow Fund, including without limitation the
Initial Escrow Securities and any proceeds thereof.
Section 8. Indemnification. The Borrowers hereby assume liability for and hereby
agrees (whether or not any of the transactions contemplated hereby are consummated) to
indemnify, protect, save and hold harmless the Escrow Agent and its directors, officers,
employees and agents (collectively, the “Indemnified Parties”) and hold the Indemnified Parties
harmless from any and against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements)
of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at any
time, the Escrow Agent or the Borrowers (whether or not also indemnified against by any other
person under any other agreement or instrument) and in any way relating to or arising out of the
execution and delivery of this Escrow Agreement, the establishment of the Escrow Fund, the
retention of the moneys therein and any payment, transfer or other application of moneys or
securities by the Escrow Agent in accordance with the provisions of this Escrow Agreement, or
as may arise by reason of any act, omission or error of the Escrow Agent made in good faith in
the conduct of their duties; provided, however, that the Borrowers shall neither be required to
indemnify the Escrow Agent against the Escrow Agent’s own negligence or willful misconduct.
The indemnities contained in this Section shall survive the termination of this Escrow Agreement
or the resignation or removal of the Escrow Agent. Nothing in this Section shall limit the rights
of the Borrowers or the obligations of the Borrowers with respect to indemnification pursuant to
the Prior Loan Agreement.
Section 9. Resignation of Escrow Agent; Replacement of Escrow Agent.
Wilmington Trust, National Association has entered into this Escrow Agreement
in its capacity as trustee under the Prior Indenture and shall remain a party to this Escrow
Agreement until a successor trustee is appointed trustee under the Prior Indenture. If a successor
trustee is appointed as trustee under the Prior Indenture, such successor shall automatically and
without the necessity of any further act by the Borrowers, Wilmington Trust, National
Association or the successor trustee be deemed to be the Escrow Agent to this Escrow
Agreement in its capacity as trustee under the Prior Indenture. In that event Wilmington Trust,
National Association shall transfer to such successor trustee all Escrow Securities and moneys
then held by Wilmington Trust, National Association hereunder.
Section 10. Termination; Unclaimed Money. This Escrow Agreement shall
terminate when all moneys are transferred from the Escrow Fund as provided in Sections 4 and 5
hereof.
Section 11. Rights, Duties and Obligations of Escrow Agent. Subject to the
provisions of Sections 3 and 5 hereof, moneys held by the Escrow Agent hereunder are to be
held and applied for the payment of the Escrow Requirements when due in accordance with the
terms hereof. The rights, duties and obligations of the Escrow Agent shall, except as otherwise
expressly provided herein, be governed by the applicable provisions of the Prior Indenture which
by this reference are hereby incorporated into this Escrow Agreement as if set forth in full
herein.
-6- 4138-0619-3701.3
Section 12. Severability. If any section, paragraph, sentence, clause or provision of
this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity
or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any
of the remaining provisions of this Escrow Agreement. The provisions of this Escrow
Agreement shall be unalterable, subject to the provisions of Section 13 hereof.
Section 13. Amendment. The parties hereto may, without the consent or notice to the
holders of the Prior Notes, enter into such agreements supplemental to this Escrow Agreement as
shall not adversely affect the rights of such holders hereunder for either of the following
purposes:
(a) to cure any ambiguity or formal defect or omission in this Escrow
Agreement; and
(b) to grant or confer upon the Escrow Agent for the benefit of the holders of
the Prior Notes any additional rights, remedies, powers or Borrowers that may lawfully be
granted to or conferred upon the Escrow Agent.
The Escrow Agent shall enter into such agreements only upon receipt by the
Escrow Agent of, and shall be entitled to rely conclusively upon, an Opinion of Note Counsel to
the effect that any such agreement complies with this Section 13.
Section 14. Execution of Counterparts. This Escrow 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 15. Notices. All notices, certificates or other communications hereunder shall
be sufficiently given and shall be deemed given (i) if hand delivered or delivered by courier,
when delivered to the appropriate notice address, or (ii) if mailed by first class mail, postage
prepaid, three business days after deposit in the United States mail addressed to the appropriate
notice address. The parties listed below may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other communications shall be
sent. Any notice required or permitted hereunder shall be directed to the following notice
address:
-7- 4138-0619-3701.3
As to the
Borrowers:
Heartland Charter School
955 Stanislaus Street
Maricopa, California 93252
Attention: Chief Financial Officer
Blue Ridge Academy
955 Stanislaus Street
Maricopa, California 93252
Attention: Chief Financial Officer
Yosemite Valley Charter School
1781 East Fir Avenue, Suite 1010
Fresno, California 93720
Attention: Chief Financial Officer
Pacific Coast Academy
13915 Danielson Street #103
Poway, California 92064
Attention: Chief Financial Officer
As to the
Escrow Agent:
Wilmington Trust, National Association
650 Town Center Drive, Suite 800
Costa Mesa, California 92626
Attention: Global Corporate Trust Services
Reference: CSFA (Inspire Charter Schools)
2019BC Notes
Section 16. Governing Law; Venue. This Escrow Agreement shall be construed in
accordance with and governed by the constitution and the laws of the State of California (the
“State”) applicable to contracts made and performed in the State. This Escrow Agreement shall
be enforceable in the State, and any action arising out of this Escrow Agreement shall be filed
and maintained in the Sacramento County Superior Court, Sacramento, California unless each
Borrower waives this requirement.
Section 17. Immunities and Liabilities of Escrow Agent.
(a) The Escrow Agent undertakes to perform only such duties as are expressly
and specifically set forth in this Escrow Agreement and no implied duties or obligations shall be
read into this Escrow Agreement against Escrow Agent.
(b) The Escrow Agent shall not have any liability hereunder except to the
extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable
for any special indirect or consequential damages. The Escrow Agent shall have no duty or
responsibility under this Escrow Agreement in the case of any default in the performance of the
covenants or agreements of any other party contained in the Prior Indenture; provided that,
notwithstanding any such default, the Escrow Agent shall apply the moneys in the Escrow Fund
to the Escrow Requirements when due as provided in this Escrow Agreement. The Escrow
-8- 4138-0619-3701.3
Agent is not required to resolve conflicting demands to money or property in its possession
under this Escrow Agreement.
(c) The Escrow Agent may consult with counsel of its own choice (which
may be counsel to the Borrowers), and the written opinion of such counsel shall be full and
complete authorization to take or suffer in good faith any action hereunder in accordance with
such opinion of counsel. The Escrow Agent may act through attorneys or agents and shall not be
responsible for the acts or omissions of any such attorney or agent appointed with due care.
(d) The Escrow Agent shall not be responsible for any of the recitals or
representations contained herein, in the Prior Indenture or in the Indenture, other than recitals or
representations specifically made by the Escrow Agent.
(e) The Escrow Agent may become the owner of, or acquire any interest in,
any of the Prior Notes or any bonds or other securities of the Borrowers with the same rights that
it would have if it were not the Escrow Agent and may engage or be interested in any financial or
other transaction with the Borrowers.
(f) The Escrow Agent shall not be liable for the accuracy of any calculations
provided as to the sufficiency of the moneys or securities deposited with it to pay the Escrow
Requirements when due.
(g) The Escrow Agent shall not be liable for any action or omission of the
Borrowers under this Escrow Agreement, the Prior Loan Agreement, the Prior Indenture, or the
Indenture.
(h) Whenever in the administration of this Escrow Agreement the Escrow
Agent shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or willful misconduct on the part of
the Escrow Agent, be deemed to be conclusively proved and established by a certificate of any
authorized representative of the applicable Borrower(s), and such certificate shall, in the absence
of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the
Escrow Agent for any action taken or suffered by it under the provisions of this Escrow
Agreement upon the faith thereof.
(i) The Escrow Agent may conclusively rely, as to the truth and accuracy of
the statements and correctness of the opinions and the calculations provided to it in connection
with this Escrow Agreement and shall be protected in acting, or refraining from acting, upon any
written notice, instruction, request, certificate, document or opinion furnished to the Escrow
Agent in connection with this Escrow Agreement and reasonably believed by the Escrow Agent
to have been signed or presented by the proper party, and it need not investigate any fact or
matter stated in such notice, instruction, request, certificate or opinion.
(j) The Escrow Agent shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its control, including without limitation, any act
or provision of any present or future law or regulation or governmental authority; acts of God;
-9- 4138-0619-3701.3
earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics;
riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or
communications service; accidents; labor disputes; acts of civil or military authority or
governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other
wire or communication facility.
Section 18. Immunities and Liabilities of Escrow Agent. The Borrowers
acknowledges that to the extent regulations of the Comptroller of the Currency or other
applicable regulatory entity grant the Borrowers the right to receive brokerage confirmations of
security transactions as they occur, the Borrowers specifically waive receipt of such
confirmations to the extent permitted by law. The Escrow Agent will furnish the Borrowers
periodic transaction statements which shall include detail for all investment transactions made by
the Escrow Agent hereunder; provided that the Escrow Agent is not obligated to provide an
accounting for any fund or account that (a) has a balance of $0.00 and (b) has not had any
activity since the last reporting date.
S-1
4138-0619-3701.3
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be signed in their respective names by their duly authorized officers, all as of the day and year
first above written.
WILMINGTON TRUST, NATIONAL
ASSOCIATION
By:
Authorized Officer
S-2
4138-0619-3701.3
BLUE RIDGE ACADEMY,
a California nonprofit public benefit corporation
By: _______________________________________
Jessie Maron
President
S-3
4138-0619-3701.3
YOSEMITE VALLEY CHARTER SCHOOL,
a California nonprofit public benefit corporation
By: _______________________________________
Lawrence Jarocki
President
S-4
4138-0619-3701.3
PACIFIC COAST ACADEMY,
a California nonprofit public benefit corporation
By: _______________________________________
Kelly Durso
President
4138-0619-3701.3
HEARTLAND CHARTER SCHOOL,
a California nonprofit public benefit corporation
By: _______________________________________
Anthony Miranda
President
A-1 4138-0619-3701.3
Exhibit A
Defeased Notes
Maturity Date Principal Amount
July 15, 2020 $45,720,000
B-1 4138-0619-3701.3
Exhibit B
Escrow Requirements
Payment Date
Maturing
Principal Interest Total
July 15, 2020 $45,720,000 $1,551,561.67 $47,271,561.67
C-1 4138-0619-3701.3
Exhibit C
[Reserved]
C-1 4138-0619-3701.3
Exhibit D
Form of Defeasance Notice
CALIFORNIA SCHOOL FINANCE AUTHORITY
REVENUE NOTES
(INSPIRE CHARTER SCHOOLS)
SERIES 2019B (TAX-EXEMPT)
And
CALIFORNIA SCHOOL FINANCE AUTHORITY
REVENUE NOTES
(INSPIRE CHARTER SCHOOLS)
SERIES 2019C (TAXABLE)
NOTICE OF DEFEASANCE
To: The Holders of the following maturities of the above-captioned notes (the “Notes”):
Series Maturity Date CUSIP No.
Principal Amount
Defeased
2019B (Tax-Exempt) July 15, 2020 13059QAB1 $26,420,000
2019C (Taxable) July 15, 2020 13059QAC9 19,300,000
In accordance with Section 4 of the Continuing Disclosure Agreement, dated as of July 1,
2019, among Inspire Charter Schools, Pacific Coast Academy, Inspire Charter School – Central
(now known as Yosemite Valley Charter School), Inspire Charter School – Kern (now known as
Blue Ridge Academy), Heartland Charter School, and Wilmington Trust, National Association,
as Trustee and as Dissemination Agent (the “Trustee”) relating to the Notes, the Trustee is
hereby providing notice of defeasance of the Notes. As of the date hereof, proceeds in the
Escrow Fund established under the Escrow Agreement, dated the date hereof (the “Escrow
Agreement”), among the Trustee, as escrow agent thereunder, Pacific Coast Academy, Blue
Ridge Academy (formerly known as Inspire Charter School – Kern), Yosemite Valley Charter
School (formerly known as Inspire Charter School – Central), and Heartland Charter School, will
be used to pay the principal and interest with respect to the Notes, as directed in the Escrow
Agreement on the Maturity Date.
Capitalized terms not otherwise defined herein and used in this notice shall have the
meanings given such terms in the Escrow Agreement.
Dated: June __, 2020 WILMINGTON TRUST, NATIONAL
CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on
behalf of the American Bankers Association by S&P Capital IQ. Copyright© 2020 CUSIP Global Services. All rights
reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and
does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of
reference only. None of the Trustee, the Authority, the Borrowers or their agents or counsel assume responsibility for the
accuracy of such numbers.
D-2 4138-0619-3701.3
ASSOCIATION, AS TRUSTEE
cc: Depository Trust Company
Municipal Securities Rulemaking Board
California School Finance Authority
E-1 4138-0619-3701.3
Exhibit E
DISBURSEMENT INSTRUCTIONS
BLUE RIDEGE ACADEMY (FORMER INSPIRE CHARTER SCHOOL – KERN)
Bank:
ABA #:
Account Name:
Account No.:
Reference:
YOSEMITE VALLEY CHARTER SCHOOL (FORMER INSPIRE CHARTER SCHOOL –
CENTRAL)
Bank:
ABA #:
Account Name:
Account No.:
Reference:
PACIFIC COAST ACAEDMY
Bank:
ABA #:
Account Name:
Account No.:
Reference:
HEARTLAND CHARTER SCHOOL
Bank:
ABA #:
Account Name:
Account No.:
Reference:
Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
Charter School
Capital +
Heartland
Charter school
RAN Payoff
June 8, 2020
2Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
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▪ Client feedback
3Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
•
WHO WE
ARE
▪ We are a specialty finance company focused
on financial, business and facilities support
for charter schools
▪ In the past 13 years, we have:
o Served more than 1,250,000 students
and their families
o Supported more than 700 charter schools
o Invested $2B in helping charter schools
better serve their communities
▪ Facilities financing arm supports charter
leaders with long-term leases
o 41 schools across the country
o Tenant improvements and energy
services
▪ More than 45 employees headquartered in Portland, OR
▪ Stellar track record with schools and
investors
COMPANY OVERVIEW
Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
WHAT WE DO
5Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
Working capital can be accessed to:
▪ Build an athletic program
▪ Pay for buses or other transportation
▪ Implement safety and security systems
▪ Provide new technology in the classroom
▪ Train and hire staff
▪ Purchase new computers
▪ Open a new school
▪ To address budget shortfalls and delays
▪ RAN Takeout
▪ Financial Safety Net for schools in these uncertain times
WORKING
CAPITALOur receivable sales product is a reliable and
flexible process that provides access to capital for
operations, facilities, programmatic expenses, or
other obligations.
To date, we’ve invested more than $1.6 billion
in more than 700 schools and supporting the
education of more than 800,000 students.
6Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
FACILITIESWhy long-term lease financing?
▪ You can finance 100% of project costs
▪ You can retain control of your facility
▪ You can plan on long-term affordability
▪ You can enhance your existing building or finance new construction
▪ Your lease can be customized to your
school’s model – whether blended learning,
traditional, etc.
▪ Tenant improvements can be financed in
your lease
▪ Can be used as take-out financing for an existing bond or potential bridge to bond
financing
Our facilities financing product is based on
acquiring charter school real estate supporting
development and/or making facility upgrades.
We’ve invested $350 million to support a portfolio of 41 charter school facilities in 10 states.
Charter schools could save up to 20% on
monthly lease costs by financing through
Charter School Capital
7Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
ENROLLMENT
MARKETING▪ Our team is providing enrollment marketing
consulting and advertising services to boost enrollment through:
oWebsite improvements
oPaid search
oSocial media advertising
oDirect mail
oEmail, etc.
oSEO, SEM, local search
THE DETAILS
PAY-FOR-PERFORMANCE OPTION:
Schools pay for newly-enrolled students that Charter
School Capital sources and retains during
enrollment marketing efforts.
8Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
IMPROVE EDUCATIONAL ENVIRONMENT
▪ Custom lighting designs
▪ Smart lighting and controls
▪ Solar/safety window film
REDUCE COSTS AND ENVIRONMENTAL IMPACT
▪ Reduced energy costs
▪ Reduction in maintenance expenses
▪ Leasing and financing options available
▪ Charter School Capital finances the project cost, with
repayment covered by the school’s monthly energy
savings.
Partnering with BioStar Renewables, we
retrofit aging school energy systems with
new, efficient systems; reducing utility expenses
through upgraded electrical components (e.g.
LED lights, HVAC systems, and electrical controls).
THE DETAILS
CHARTER
SCHOOL
ENERGY
If any of your schools have fluorescent
fixtures with more than two bulbs, they probably
need an energy upgrade.
9Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
BUSINESS SERVICES: EXCLUSIVELY FOR OUR CLIENTS
THE DETAILS
• Recognized nationally for interim executive
leadership and operational support
• Financial services include:
– Budget analysis
– Cash flow planning
– AP/vendor management
• Capacity building
• Governance training
• Authorizer support and relationship building
• Operational systems and internal controls
• Systems and operational reviews
These are services included in ongoing working
capital and facilities client relationships.
10Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
TRUSTED BY CHARTER SCHOOL LEADERS
“Charter School Capital has
unbelievable integrity. Their
commitment to the industry
of charter schools is
unsurpassed.”
FRANK STUCKI, PALADIN ACADEMY
“Charter School Capital has
allowed us to work with a
product that is flexible in terms
of the amount and the timing so
we can focus on our students.”
RICARDO MIRALES, ACADEMIA AVANCE
“They’ve come through for us
when we needed it the most
and have done things that other
financial institutions have not
been able to do.”
PAUL OKAITEYE, NEW DESIGNS
CHARTER SCHOOLS
“We’ve served another 2000
students in the last two years
because of the availability of
cash flow financing with
Charter School Capital.”
SKIP HANSEN, LEARN4LIFE
“We couldn’t have even looked
at a building like this without
them. They were responsive,
communicative, and very much
about the kids.”
FREDDY MENDOZA, ARIZONA COLLEGE
PREP ACADEMY
“It’s a big relief to know that,
with Charter School Capital,
our organization can stand
alone. You don’t get that
feeling with a bank.”
DR. KRIS SIPPEL, SAN TAN LEARNING
CENTER
Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
RAN Payoff
Pricing
Proposal
12Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
RAN:
REVENUE
ANTICIPATION
NOTES
RANs are a form of note, or short-term loan
that usually repays from a named revenue
source within a period of one year.
• $45mm RAN/July 2019
• Repay in April, May, June 2020
• June deferrals would short final payment
and put schools in breach
PROPOSED SOLUTION:
Receivable sale to pay June RAN payment in full and provide additional Working Capital for
operating costs
• Future funding capacity with flexibility
THE DETAILS:
14Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
RAN PAYOFF PRICING PROPOSAL
School Total Funding RAN Payoff Working Capital Total Cost Proposed Rate
Heartland Charter
School$5,017,900 $3,370,888 $1,647,012 $91,598 5.299%
July, August and
September LCFF
Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
Prior Presentation: April Pricing
Proposal FY21 Fundings
Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
Thank you!
CAM FACTORING PROPOSAL
June 9, 2020 Ms. Courtney McCorkle Executive Director Heartland Charter School 955 Stanislaus Street, Maricopa, CA 93252 Dear Ms. Courtney McCorkle, Charter Asset Management Fund, L.P. (“Purchaser”) appreciates this opportunity to begin our relationship with Heartland Charter School (“Seller”). We would like to propose the following terms and conditions for the factoring transaction under discussion. Please note that this letter is not intended to constitute a commitment to factor on the part of the Purchaser, but to summarize for discussion purposes the working capital accommodation that we are interested in considering. Notwithstanding the foregoing, the terms under the heading “Confidentiality” as set forth below in this letter shall constitute a binding and legally enforceable agreement between the parties. Factoring is a common financing transaction used in many industries where future revenues, in this case, state-aid receivables, are purchased at a discount to advance capital for use in the present. In other words, CAM will provide capital to your charter school now by purchasing a portion of the state-aid due to your school in the future.
Purchaser Charter Asset Management Fund, L.P.
Seller Heartland Charter School
Funding Amount $5,331,400.00
Funding Date June 22, 2020
Funding Options
Option School Total Funding RAN Takeout Working Capital Total Cost
Proposed Annualized
Rate
1 Heartland $5,331,400.00 $3,370,888.00 $1,960,512.00 $56,288.88 4.80%
2 Heartland $5,331,400.00 $3,370,888.00 $1,960,512.00 $87,634.03 4.80%
Repayment Schedule Pursuant to Repayment Schedule Below
Offer Expiration June 12, 2020
Receivables Schedule
Option 1
Account Authority / Payor Account Receivable Amount Purchased Admin Fee Discount % Discount Amount Funded
Kern County Office of Education
FY 20-21 Advance Apportionment Jul PMT - LCFF State Aid. CDS#
15-63628-0138131 $1,550,000.00 - 0.59% $9,145.00 -$1,540,855.00
Kern County Office of Education
FY 20-21 Advance Apportionment Aug PMT - LCFF State Aid. CDS#
15-63628-0138131 $1,550,000.00 - 0.99% $15,345.00 -$1,534,655.00
Kern County Office of Education
FY 20-21 Advance Apportionment Sep PMT - LCFF State Aid. CDS#
15-63628-0138131 $2,287,688.88 - 1.39% $31,798.88 -$2,255,890.00
Total $5,387,688.88 - $56,288.88 -$5,331,400.00
Option 2
Account Authority / Payor Account Receivable Amount Purchased Admin Fee Discount % Discount Amount Funded
Kern County Office of Education
FY 20-21 Advance Apportionment Sep PMT - LCFF State Aid. CDS#
15-63628-0138131 $2,800,000.00 - 1.39% $38,920.00 -$2,761,080.00
Kern County Office of Education
FY 20-21 Advance Apportionment Oct PMT - LCFF State Aid. CDS#
15-63628-0138131 $2,619,034.03 - 1.86% $48,714.03 -$2,570,320.00
Total $5,419,034.03 - $87,634.03 -$5,331,400.00
Repayment Schedule
Option 1
Account Receivable Repayment Date
FY 20-21 Advance Apportionment Jul PMT - LCFF State Aid. CDS# 15-63628-0138131 *Circa early August 2020
FY 20-21 Advance Apportionment Aug PMT - LCFF State Aid. CDS# 15-63628-0138131 *Circa early September 2020
FY 20-21 Advance Apportionment Sep PMT - LCFF State Aid. CDS# 15-63628-0138131 *Circa early October 2020
Option 2
Account Receivable Repayment Date
FY 20-21 Advance Apportionment Sep PMT - LCFF State Aid. CDS# 15-63628-0138131 *Circa early October 2020
FY 20-21 Advance Apportionment Oct PMT - LCFF State Aid. CDS# 15-63628-0138131 *Circa early November 2020
*Disbursement timing for federal, state, county, and local state aid can vary. Account receivables sold to CAM are due when disbursed. Thank you for choosing to fund with Charter Asset Management.
This proposal letter is provided solely for the purpose described herein and may not be disclosed to or relied upon by any other party without the Purchaser's prior written consent. This proposal is intended to form the basis for a discussion of a working capital accommodation, and further negotiations adding to or modifying the general scope of the major terms shall not be precluded by the issuance of this Proposal Letter. This proposal is confidential and proprietary for the sole purpose of discussions between the parties hereunder.
Purchaser reserves the right to issue press releases, advertisements, and other promotional materials describing any successful outcome of services provided on your behalf. The Seller agrees that Purchaser shall have the right to identify the Borrower by name in those materials.
Whether or not the transaction contemplated herein is consummated, by your acceptance hereof: (a) you agree to bear all reasonable out-of-pocket expenses of Purchaser and all fees and disbursements of Purchaser's counsel (including the allocated costs of inside counsel) relating to the preparation of this letter and of the proposed financing documentation and to the transaction contemplated hereby and thereby, if applicable, and (b) you agree to indemnify Purchaser, its affiliates, and their respective directors, officers and employees and to defend and hold Purchaser, its affiliates and such other persons harmless from and against all losses, claims, damages, liabilities and expenses (including expenses of litigation or preparation thereof) which Purchaser or any such affiliates or such other persons in connection with or arising out of the matters referred to herein, except for damages resulting from the gross negligence or willful misconduct of the Lender.
CAM Bid/ CSC BidCAM bid
CSC Bid
July, August, September
October, November