HomeMy WebLinkAboutSS - Newport Beach Facilities CorporationSTHP'V SESSION IIGENDn
May 26, 1992 - 2:10 P.M.*
1. Joint meeting with the Harbor Quality Committee (agenda
attached).
2. Budget Reuiew (please bring your budget document with
you to the Study Session).
3, Matters not listed which Council Members may wish to
raise for question or discussion.
4. Clarification of items on the evening consent calendar.
5. Matters for continuing review:
a. lair Transportation
b. Surface Transportation
C. Planning Department
d. Legislation and Litigation
6. Review reports concerning unusual situations which may
have an impact upon the City's affairs.
7. Closed Session to discuss personnel matters and possible
and pending litigation.
* Study Session will convene after the meeting of the
Newport Beach Public Facilities Corporation to complete
the sale of the Certificates of Participation for the Central
Library project
ORGANIZATIONAL MEETING
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
AGENDA
May 26, 1992
1. Call the meeting to order.
The meeting will be called to order by the original incorpor or of the Corporation.
2. Election of Chairperson of the Board. l� '�°' l'
The original incorporator shall conduct an election of the Chairperson of the Board of
Directors of the Corporation. Following the election of the Chairperson, the Chairperson
shall preside over the remainder of the meeting.
3. Motion confirming the appointment of Corporation's agent for service of process.
State law requires that the Corporation designate an agent for service of process. The
original incorporator designated as such agent. The Board is asked to confirm and ratify
this appointment.
4. Resolution approving the bylaws of the Corporation.
The Bylaws contain the general organizational rules governing the Corporation such as
membership of the Board of Directors, officers of the Corporation, rules regarding the
calling and conduct of meetings, etc.JD
5. Motion approving a seal for the corporation.
It is recommended that the Board of Directors approve a seal of the Corporation, to
consist of a circle having on its circumference the name of the corporation, and the
words and figures "Incorporated" and the date of incorporation and "California".
6. Motion directing the Chief Financial Officer of the Corporation to file documents with
the State Franchise Tax Board and the Internal Revenue Service to establish the -��
Corporation's tax-exempt status.
In order to obtain a tax-exempt status, it will be necessary for the Corporation to file
applications with both the State Franchise Tax Board and the Internal Revenue Service.
Special Counsel will assist the Chief Financial Officer in completing and filing these
applications.
8. Resolution authorizing the preparation, sale and delivery of not to exceed 37,500,000
Principal amount of Certificates of Participation and approving certain dOCL 7lents and
authorizing certain actions in connection therewith.
9. Motion, if necessary, to authorize any other action by the Corporation necessary for the
preparation, sale and delivery of the Certificates of Participation.
to Adjourn
.
AFFADAVIT OF NOTICE OF
ORGANIZATIONAL MEETING OF
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
I, Wanda E. Raggio , hereby declare as follows:
1. I am the City Clerk for the City of Newport Beach which has its principal
office located at IMO Newport Boulevard, Newport Beach, California.
3
2. On May 2.� 1992, acting upon the direction of the Incorporator of the Newport Beach
Public Facilities Corporation, Dennis Danner, I caused to be mailed or delivered a copy of the
Notice of Organizational Meeting of the Newport Beach Public Facilities Corporation, a copy
of which is attached hereto as Exhibit A, to each of the members of the Council members of the
City of Newport Beach and to each local newspaper of general circulation, radio or television
station requesting such notices in writng.
2. On May 20, 1992, I posted a copy of such notice in a location that is freely accessible
to the members of the public.
I declare under penalty of perjury that the foregoing is true and correct and that this
affadavit was executed this 20 day of May, 1992, at Newport Beach, California.
WON
PUBLIC AC-T10ES I PUBLIC NOT 23 I PUBLIC WO i ICES I PUBLIC NOTICES I PUBLIC NOTICES
NOTICE OF SALE
$795009000
CERTIFICATES OF PARTICIPATION
Series 1992
(Central Library Building Project)
Evidencing A Proportionate Interest Of The Owners Thereof In
Lease Payments To Be Made By the
CITY OF NEWPORT BEACH
(Orange County, California)
To The
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
(A California Nonprofit Public Benefit Corporation)
Sealed proposals will be received up to 11:00 a.m., Wednesday
JUNE 391992
at the offices of Jeffries Banknote Company, 1330 West Pico Boulevard, Los
Angeles, California 90015 for the purchase of the $7,500,000 Certificates of
Participation, Series 1992 (Central Library Building Project).
The principal of and interest on the Certificates will be paid from lease
payments to be received by the Corporation from the City of Newport Beach for the
lease of certain real property and improvements to be leased to the City of Newport
Beach.
The Certificates will be dated June 1, 1992 and will mature serially on June 1
in the years 1994 to 2005, inclusive, and on June 1, 2019 (Term Bonds with
mandatory sinking account installments in the years 2006 to 2019, inclusive) as
provided in the Trust Agreement securing the payments of the Certificates. Interest
will be paid on December 1, 1992 and semiannually thereafter on June 1 and
December 1 of each year. The Certificates are subject to call as provided in the
Trust Agreement.
The legal opinion of Brown, Diven & Hentschke, San Diego, California will be
furnished to the successful bidder. -
Further information may be obtained from Miller & Schroeder Financial, Inc.
at 505 Lomas Santa Fe Drive, Suite 100, Solana Beach, California 92075-0819 or
by telephone at (619) 481-5894.
KEVIN I MURPHY
President, Newport Beach Public Facilities Corporation
f
Authorized to Publish Advertisements of all kinds it _.,ding public notices by
Decree of the Superior court of Orange County, California, Number A-6214,
September 29, 1961, and A-24831 June 11, 1963
STATE OF CALIFORNIA
County of Orange --
I am a Citizen of the United States and a
resident of the County aforesaid; I am over
.the age of eighteen years, and not a party to
or interested in the below entitled matter. I
am a principal clerk of the NEWPORT
BEACH —COSTA MESA PILOT, a
newspaper of general circulation, printed
and published in the City of Costa Mesa,
County of Orange, State of California, and
that attached Notice is a true and complete
copy as was printed and published on the
following dates:
May 23, 1992
I declare, under penalty of perjury, that the
foregoing is true and correct.
Executed on May 23 ,199 2
at Costa
`GMesa, California-,
r
Signature
PROOF OF PUBLICATION
(G°`ba
$7,500,000
CERTIFICATES OF PARTICIPATION
SERIFS 1992
(Central Library Building Project)
Evidencing Proportionate Interests of the Owners Thereof in
Lease Payments to be Made by
CITY OF NEWPORT BEACH
to the
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
CERTIFICATE REGARDING ARTICLES OF INCORPORATION
AND BYLAWS OF CORPORATION
The undersigned hereby certifies:
1. that she is the duly appointed, qualified and acting Secretary of the NEWPORT BEACH
PUBLIC FACILITIES CORPORATION , a nonprofit, public benefit corporation, duly
organized and existing under the laws of the State of California (the "Corporation"), and
as such, she is familiar with the facts herein certified and is authorized to certify the
same;
2. that attached hereto is a true and correct copy of the Articles of Incorporation of the
Corporation, including any and all amendments thereto, as filed with the California
Secretary of State, which Articles of Incorporation have not been amended, modified,
supplemented or rescinded and are in full force and effect as of the date hereof; and
3. that attached hereto is a true, correct and complete copy of the Bylaws of the
Corporation, including any and all amendments thereto, which Bylaws have not been
amended, modified, supplemented or rescinded and are in full force and effect as of the
date hereof.
DATED: June 17, 1992 NEWPORT BEACH PUBLIC FACILITIES CORPORATION
J / g
Secretary
a 01 ifornia
i OFFICE OF THE SECRETARY OF STATE
CORPORATION DIVISION
I, MARCH FONG E U, Secretary of State of the
State of California, hereby certify:
That the annexed transcript has been compared \N,ith
the corporate record on file in this office, of «/hick it
purports to be a copy, and that same is f ull, true and
correct.
REKq'**,* F^Y
m
IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
MAY 1 5 1992
V l/ ,0 `JA qWj ��
Secretary of State
SEC/STATE FORM CE-107 - "' 86 40888
1821 31
ARTICLES OF INCORPORATION
OF
NEWPORT BEACH PUBLIC FACILITIES CORPORATION 1'v;r: 1 1992
I.
The name of this corporation is: NEWPORT BEACH PUBLIC
FACILITIES CORPORATION.
II.
This corporation is a nonprofit public benefit corporation and
is not organized for the private gain of any person. It is
organized under the Nonprofit Public Benefit Corporation Law for
public purposes. The specific public purposes for which the
corporation is organized include the following:
(a) To render financial assistance to the City of Newport
Beach, California ("City") by financing, acquiring, constructing,
improving, leasing and selling buildings, building improvements,
equipment, electrical, water, sewer, road and other public
improvements, lands and any other real or personal property,
tangible and intangible, for the benefit of residents of the City
and surrounding areas;
(b) To acquire by lease, purchase or otherwise, real or
personal property, tangible or intangible, or any interest therein;
to construct, reconstruct, modify, add to, improve or otherwise
acquire or equip buildings, structures or improvements and (by
sale, lease, sublease, leaseback, gift or otherwise) make any part
of all or any such real or personal property available to or for
the benefit of the public, the City, or any one or more
il
departments, commissions, or agencies of the City;
(c) To promote the common good and general welfare of the
City and the inhabitants thereof, and the governmental, commercial,
industrial or other enterprises in the City and surrounding areas
by financing the acquisition of the real and personal property,
tangible and intangible, as hereinabove described;
(d) To borrow the necessary funds to pay the cost of
financing, acquiring, constructing, replacing, establishing,
improving, maintaining, equipping and operating such properties and
facilities for the herein described purposes, the indebtedness for
which borrowed money may, but need not, be evidenced by securities
of this corporation of any kind or character issued at any one or
more times, which may be either unsecured or secured by any
mortgage, trust deed, pledge, encumbrance or other lien upon any
part or all of the properties and assets at any time then or
thereafter owned or acquired by this corporation.
(e) To receive limited or conditional gifts or grants in
trust, inter vivos, or by way of testamentary devises, bequests or
grants in trust, or otherwise, funds of all kinds including
property, both real, personal and mixed, whether principal or
income, tangible or intangible, present or future, vested or
contingent, in order to carry on the purposes of this corporation.
The general purposes and powers for which the corporation is
organized are to have and exercise all rights and powers now or
hereafter conferred on nonprofit corporations under the laws of the
State of California; provided, however, that this corporation shall
2
not, except to an insubstantial degree, engage in any activities or
exercise any powers that are not in furtherance of the specific and
primary purposes of this corporation as set forth above.
III.
This Corporation is organized and operated exclusively for
civic purposes within the meaning of Section 501(c)(4) of the
Internal Revenue Code of 1986, and under the direction of a group
of public spirited citizens for the sole purpose of acquiring and
constructing or providing for the construction of public
improvements as a civic venture for and on behalf of the City.
This corporation shall never engage in any business or activity
other than that necessary or convenient for or incidental to the
carrying out of the purposes set forth in Article II hereof.
IV.
No part of the net earnings, if any, of this corporation,
either during its existence or upon its dissolution, shall ever
inure to the benefit of any private individual, or any director,
officer or member thereof, or any person, firm or corporation
excepting only the City. No substantial part of the activities or
this corporation shall consist of carrying on propaganda, or
otherwise attempting to influence legislation; nor shall it
participate in, or intervene in (including the publishing or
distributing of statements) any political campaign on behalf of any
candidate for public office. The property, assets, profits and
net revenues of this corporation are irrevocably dedicated to the
City; provided, however, that until all indebtedness of this
3
corporation shall have been paid, such net revenues may be used for
the purpose of paying, prepaying, or calling for redemption any
bonds, debentures, notes or other evidences of indebtedness issued
to finance public improvements. Upon the dissolution, liquidation
or winding up of this corporation, or upon abandonment, the assets
of this corporation remaining after payment of all or provision for
all debts or liabilities of this corporation and after compliance
with Chapters 15, 16 and 17 of the California Nonprofit Public
Benefit Corporation Law shall be distributed to the City.
V.
The name and address in this state of the corporation's
initial agent for service of process is;
Dennis Danner, City Treasurer
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92659-1768
VI.
The number of directors of this corporation may be fixed by
its bylaws. The persons who are directors of this corporation,
from time to time, shall be its only members, and upon ceasing to
be a director of this corporation any such person shall cease to be
a member thereof. The members and directors of this corporation
shall have no liability for dues or assessments.
4
IN WITNESS WHEREOF, for the purpose of forming the Corporation
under the law of the State of California, the undersigned has
executed these Articles of Incorporation this 1Q111 day of
C// , 1992.
i '44Z-01"Oees'e
J.
DiARIS DANNER, Incorporator
DECLARATION
I declare that I am the person who executed the above Articles
of Incorporation, and that this instrument is my act and deed.
Executed on,(-ll /6�, 1992 at Newport Beach, California.
I declare under penalty or perjury that the foregoing is true
and correct.
DEITNIS DANNER, Incorporator
5
BYLAWS
OF
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
ARTICLE I.
Name, Organization, Purpose
and Principal Office
SECTION 1.01. Name. The name of this corporation is CITY OF
NEWPORT BEACH PUBLIC FACILITIES CORPORATION (hereinafter referred
to as the "Corporation").
SECTION 1.02. Organization, Purpose and Use of Funds. The
Corporation is a nonprofit public benefit corporation organized
under the Nonprofit Corporation Law of the.State-of--California to
provide assistance to the City of Newport Beach, California, by,
among other methods, acquiring, leasing, constructing or financing
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various public facilities, land, equipment and other improvements
and property for the use, benefit and enjoyment of the public
(herein referred to as "public improvements"). The activities of
the Corporation shall be limited to the activities described in its
Articles of Incorporation. No gains, profits or dividends shall be
distributed to any of the members of the Corporation; no part of
the net earnings, funds or assets of the Corporation shall inure to
the benefit of any member, shareholder, individual person, firm or
corporation, excepting only the City of Newport Beach.
SECTION 1.03. Principal Office. The principal office of the
Corporation is hereby fixed and located at 3300 Newport Boulevard,
1
Newport Beach, California, City Manager's Office. The Board of
Directors is hereby granted full power and authority to change said
principal office from one location to another in the City of
Newport Beach. Any such. change shall be noted by the Secretary
opposite this section, but shall not be considered an amendment to
these Bylaws.
ARTICLE II.
Members
SECTION 2.01. Members. Pursuant to Section 5310 of the
Government Code, the bylaws of a nonprofit corporation may provide
that the corporation shall have no members. The Corporation shall
have no members other than the Directors as specified by Article
V of the Articles of Incorporation.
ARTICLE III.
Directors
SECTION 3.01. Powers. Subject to limitation of the Articles
of Incorporation, or the Bylaws, and of the California Nonprofit
Corporation Law, and subject to the duties of Directors as
prescribed by the Bylaws, all powers of the Corporation shall be
exercised by or under the authority of, and the business and
affairs of the Corporation shall be controlled by, the Board of
Directors. No Director shall be responsible for any error in
judgment or for anything that he or she may do or refrain from
doing in good faith. Without prejudice to such general powers, but
subject to the same limitations, it is hereby expressly declared
that the Directors shall have all of the powers permitted by law,
2
including, but not limited to, the following powers, to wit:
First - To select and remove all the
other officers, agents and employees of the
Corporation, prescribe such powers and duties
for them as may not be inconsistent with law
or the Articles of Incorporation or Bylaws,
fix their compensation and require from them
security for faithful service;
Second - To conduct, manage and control
the affairs and business of the Corporation
and to make such rules and regulations
therefor not inconsistent with law or the
Articles of Incorporation or Bylaws, as they
may deem best;
Third - To borrow money and incur
indebtedness for the purposes of the
Corporation, and to cause to be executed and
delivered therefor, in the name of the
Corporation, promissory notes, bonds,
debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of
debt and securities therefor;
Fourth - To purchase, rent or otherwise
acquire, hold, maintain, lease, sell or
otherwise dispose any real or personal
property for the purposes of the Corporation.
3
SECTION 3.02. Number and Qualifications of Directors. The
authorized number of Directors shall be seven (7) until changed by
amendment of the Articles of Incorporation or by amendment of the
Bylaws.
SECTION 3.03. Selection and Term of Office. Directors of he
Corporation shall be the members of the City Council of the City of
Newport Beach or persons designated by the City Council, and no
person shall be eligible to serve as a Director of the Corporation
except a person initially approved by a resolution of the City
Council. Unless a vacancy in the office occurs as herein provided,
each Director shall hold office for the same term as the member of
the City Council of the City of Newport Beach nominating that
Director or until a successor has been designated and -has -accepted
the office. The member of the City Council of the City of Newport
Beach nominating a Director of the Corporation may, with or without
cause, remove that Director of the Corporation from office.
SECTION 3.04. Vacancies. Subject to the provisions of
Section 5226 of the California Nonprofit Corporation Law, any
Director may resign effective upon giving written notice to the
President, the Secretary, or the Board, unless the notice specifies
a later time for the effectiveness of such resignation. If the
resignation is effective at a future time, a successor may be
selected before such time, to take office when the resignation
becomes effective.
The Board of Directors may remove a Director for failing to
attend three consecutive meetings of the Board of Directors.
4
A vacancy or vacancies in the Board of Directors shall be
deemed to exist in case of the death, resignation, or removal of
any Director, or if the authorized number of Directors is
increased.
Vacancies in the Board shall be filed in the same manner as
the Director whose office is vacant was selected. Each Director so
selected shall hold office until the expiration of the term of the
replaced Director and until a successor has been selected and has
accepted the office.
SECTION 3.05. Organization and Annual Meeting. The Board of
Directors shall hold an annual meeting for the purpose of
organization, selection of Directors and officers, and the
transaction of other business. Annual meetings of the Board shall
be held without call or notice on the second Monday of July at 2:00
o'clock p.m., local time; provided, however, should any said day
fall upon a holiday observed by the Corporation at its principal
office, then said meeting shall be held at the same time on the
next day thereafter ensuing which is a full business day.
SECTION 3.06. Regular Meetings. The Board of Directors by
resolution may provide for the holding of regular meetings and may
f ix the time and place of holding such meetings. Notice of regular
meetings need not be given.
SECTION 3.07. Special meetings. Notice Waiver. A special
meeting of the Board of Directors shall be held whenever called by
the President, or by a majority of the Directors. Written notice
of each such meeting shall be delivered personally or by mail to
5
each Director to be received at least twenty-four (24) hours before
the time of such meeting. The call and notice shall be posted at
least twenty-four (24) hours prior to the special meeting in a
location that is freely accessible to the members of the public.
Notice shall also be given to the City Council of the City of
Newport Beach if the Directors or any of them are not members of
the City Council. The call and notice shall signify the time and
place of the special meeting and the business to be transacted. No
other business shall be considered at such meetings by the Board of
Directors. Notice of Adjournment of a meeting need not be given to
absent Directors if the time and place are fixed at the meeting
adjourned. The transactions of any meeting of the Board of
Directors, however called and noticed and wherever -held, .shall be
as valid as though had at a meeting held after regular call and
notice, if a quorum be present; provided, however, that before the
meeting, each of the Directors not present signs a written waiver
of notice and files said written waiver of notice with the
Secretary; and provided further, that notice be given to each local
newspaper of general circulation, radio or television station
requesting notice in writing pursuant to Government Code Section
54956. All waivers, shall be filed with the corporate records and
made a part of the minutes of the meeting.
SECTION 3.08. Adjourned Meetings, Notice of Adjournment. The
N.
Board of Directors may adjourn any regular, adjourned regular,
special or adjourned special meeting to a time and place specified
in the order of adjournment. Less than a quorum may so adjourn
from time to time. A copy of the order or notice of adjournment
shall be conspicuously posted on or near the door of the place
where the regular, adjourned regular, special or adjourned special
meeting was held within twenty four hours after the time of
adjournment. When a regular or adjourned regular meeting is
adjourned as provided in this section, the resulting adjourned
regular meeting is a regular meeting for all purposes.
SECTION 3.09. Quorum. A majority of the authorized number of
Directors shall be necessary to constitute a quorum for the
transaction of business. Every act or decision done or,made by.a
majority of the Directors present at a meeting duly held at which
a quorum is present, shall be regarded as the act of the Board of
Directors unless a greater number be required by law or by the
Articles of Incorporation.
SECTION 3.10. Fees and Compensation. Directors shall receive
no compensation or expenses for their services as Directors.
SECTION 3.11. Ralph M. Brown Act. Notwithstanding any of the
provisions of these Bylaws to the contrary, all meetings of
Directors shall be subject to the Ralph M. Brown Act, commencing at
Section 54940 of the Government Code of the State of California.
SECTION 3.12. Conduct of Meetings. The President or, in his
7
absence, the Vice President, or a Chairman chosen by a majority of
the Directors present, shall preside.
Articles IV.
Officers
SECTION 4.01. Officers. The officers of the Corporation
shall be the Chairman of the Board, a President, and a Chief
Financial Officer. The Corporation may also have, at the discretion
of the Board of Directors, one or more Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such
other officers as may be appointed by the Board of Directors. One
person may hold two or more offices, except that the offices of
President and Secretary or President and Chief Financial Officer
may' not be combined.
SECTION 4.02. Election. The Chairman of the Board and any
Vice -Presidents shall be chosen annually by the Board of Directors
and each shall hold office until the officer shall resign, be
removed, or otherwise disqualified to serve, or the officer's
successor shall be elected and qualified.
SECTION 4.03. Removal and Resignation. Vice -Presidents may
resign, or may be removed, with or without cause, by the Board of
Directors at any time. Vacancies caused by death, resignation or
removal of any Vice -Presidents may be filled by appointment by the
Board of Directors, or by the President until such appointment by
the Board of Directors.
SECTION 4.04. President. The City Manager of the City of
:7
Newport Beach shall be the President of the Corporation and,
subject to the control of the Board of Directors, shall be
responsible for the management, supervision, direction and control
of the affairs of the Corporation.
SECTION 4.05'. Vice -President. In the absence or disability
of the President, the Vice Presidents in order of their rank as
fixed by the Board of Directors or, if not ranked, the Vice
President designated by the Board of Directors, shall perform all
the duties of the President, and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the
President. The Vice President shall have such other powers and
perform such other duties as from time to time may be prescribed
for them respectively by the Board of Directors.or-�by-the.Bylaws.
SECTION 4.06. Secretary. The Secretary shall be the City
Clerk of the City of Newport Beach. The Secretary shall keep at
the principal office of the Corporation a book of minutes of all
meetings of Directors and members, with the time and place of
holding, how called or authorized, the notice thereof given, the
names of those present or represented at member's meetings, and the
proceedings thereof.
SECTION 4.07. Chief Financial Officer. The Chief Financial
Officer shall be the City Treasurer of the City of Newport Beach.
The Chief Financial Officer shall keep and maintain adequate and
correct books of account showing the receipts and disbursements of
the Corporation, and an account of its cash and other assets, if
any. Such books of account shall at all reasonable times be open
01
to inspection by any member or Director.
The Chief Financial Officer shall deposit all moneys of the
Corporation with such depositories as are designated by the Board
of Directors, and shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, and shall render to the
President or the Board of Directors, upon request, statements of
the financial condition of the Corporation.
SECTION 4.08. Subordinate Officers. Subordinate officers
shall perform such duties as shall be prescribed from time to time
by the Board of Directors or the President.
Articles V.
Miscellaneous
SECTION 5.01. Execution of Documents. The. Board of Directors
may authorize any officer, agent or both to enter into any contract
or execute any instrument in the name of and on behalf of the
Corporation and such authority may be general or confined to
specific instances; unless so authorized by the Board of Directors,
no officer, agent or other person shall have any power or authority
to bind the Corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or to any amount.
SECTION 5.02. Inspection of Bylaws. The Corporation shall
keep in its principal office the original or a copy of these
Bylaws, as amended or otherwise altered to date, certified by the
Secretary, which shall be open to inspection by the members at all
reasonable times during office hours.
SECTION 5.03. Annual Report. The annual report referred to
10
in Section 6321 of the Government Code of the State of California
is expressly dispensed with.
SECTION 5.03. Fiscal Year. The fiscal year of the
Corporation shall begin July 1 and end June 30 of each year, except
the first fiscal year which shall run from the date of
incorporation to June 30, 1992.
SECTION 5.05. Dissolution. In the event of dissolution of
the Corporation in any manner and for any cause, after the payment
or adequate provision for the payment of all of its debts and
liabilities, all of the remaining funds, assets and properties of
the Corporation shall be paid or distributed to the City of Newport
Beach, California.
SECTION 5.06. Construction and Definitions. Unless the
context otherwise requires, the general provisions, rules of
construction and definitions contained in the Nonprofit Corporation
Law of the State of California shall govern the construction of
these Bylaws. If any section, subsection, sentence, clause or
phrase of these Bylaws, or the application thereof, is contrary to
the Nonprofit Corporation Law of the State of California the
provisions of that law shall prevail. Without limiting the
generality of the foregoing the masculine gender includes the
feminine and neuter, the singular number includes the plural and
the plural number includes the singular, and the term "person"
includes a corporation as well as a natural person.
Articles VI.
11
0
Amendments
SECTION 6.01. Power of Directors. New Bylaws may be adopted
or these Bylaws may be amended or repealed by a majority vote of
the Board of Directors.
12
RESOLUTION NO. 1
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE NEWPORT BEACH PUBLIC
FACILITIES CORPORATION ADOPTING
BYLAWS
WHEREAS, the Newport Beach Public Facilities Corporation (the
"Corporation") was duly incorporated as of May 10, 1992; and
WHEREAS, the Corporation desires to approve Bylaws to govern
the affairs of the Corporation.
'I
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of
the Newport Beach Public Facilities Corporation that:
SECTION 1: The Bylaws of the Corporation, attached hereto and
incorporated herein by this reference as Exhibit "A", are hereby
adopted and approved and shall stand as the Bylaws of the
Corporation until valid amendment thereof.
SECTION 2: The Secretary is to execute the Bylaws and the
Certificate of Adoption of the Bylaws, and to insert the certified
Bylaws in the book of minutes of the Corporation and to see that a
copy of the certified Bylaws is kept at the principal office of the
Corporation.
SECTION 3: This Resolution shall take effect from and after
its date of adoption.
ADOPTED, SIGNED AND APPROVED this 26th day of May, 1992.
Newport Beach Public Facilities
Corporation
By:
Its: Ctiairperson/
ATTEST:
rye PO
C� t
Secretary.
Cqj
1
STATE OF CALIFORNIA
SS.
COUNTY OF 07NGE )
Secretary of the Newport Beach
Public Facilities Corporat' , do hereby certify that the foregoing
Resolution No. ' was introduced and adopted by the Board of
Directors of said Corporation at an organizational meeting held on
the 26th day of May, 1992, by the following vote of the Directors
thereof:
AYES: DIRECTORS:
NOES: DIRECTORS:
ABSENT: DIRECTORS;
Secretary, Newport h Public
Facilities Corporation
Secretary of the Newport Beach
Public Facilities Corporatio do hereby certify that the foregoing
resolution is a full, true an correct copy of Resolution No._/
duly passed and adopted by said Board on the 26th day of May, 1992.
ZZ) � Z. Z�Z�
Secretary, Newport Wich Public
Facilities Corporation
RESOLUTION NO. 2
A RESOLUTION OF THE NEWPORT BEACH PUBLIC
FACILITIES CORPORATION, AUTHORIZING AND
DIRECTING APPROPRIATE REPRESENTATIVES OF THE
CORPORATION TO CAUSE THE EXECUTION OF A SITE
LEASE, PROJECT LEASE, TRUST AGREEMENT, AND
OTHER NECESSARY DOCUMENTS IN CONNECTION WITH
THE DELIVERY AND SALE OF A MAXIMUM OF
$7,500,000.00 OF CERTIFICATES OF
PARTICIPATION; AUTHORIZING THE SALE AND AWARD
OF THE CERTIFICATES AND THE DISTRIBUTION OF
THE OFFICIAL STATEMENT; ALL IN CONNECTION WITH
FINANCING A CENTRAL LIBRARY FACILITY AND
EQUIPMENT FOR THE BENEFIT OF THE CITY OF
NEWPORT BEACH
RESOLVED, by the Board of Directors of the Newport Beach
Public Facilities Corporation, California (the "Corporation"):
WHEREAS, the Corporation is a }ion -profit corporation organized
under the Laws of the State of California and authorized pursuant
to said law and the charter creating the Corporation to assist the
financing of public capital improvements of the City of Newport
Beach, California (the "City") through, among other things, the
leasing transactions described in this resolution;
WHEREAS, the Corporation desires to assist the City in
financing the construction of a new central library for the City
through the issuance of certain certificates of participation all
as described in the various documents identified and approved by
this resolution and on file with the Secretary of the Corporation,
including the Preliminary Official Statement, said construction
financing generally referred to herein and in the other documents
as the "Project";
WHEREAS, the City and the Corporation wish to finance the
Project Costs and Delivery Costs (as such terms are defined in the
transaction documents) by entering into a Site Lease whereby the
City will lease the Project site to the Corporation and by entering
into a Project Lease whereby the Corporation will leaseback the
site improved by the Project to the City, which leases contain
terms and condition as this Board deems to be in the best interest
of the Corporation;
WHEREAS, the City will pay Lease Payments under the Project
Lease representing the fair market rental value of the property
leased thereunder in amounts sufficient to pay components of
principal, premium, if any, and interest with respect to the
Certificates hereinafter defined;
WHEREAS, Bank of America National Trust and Savings
Association (the "Trustee") agrees to execute and deliver to the
purchaser thereof Certificates of Participation in the maximum
principal amount of $7,500,000.00 (the "Certificates"), each
representing proportionate interests in the Lease Payments made by
the City under the Project Lease, pursuant to a Trust Agreement
entered into by the City, the Corporation and the Trustee;
WHEREAS, as security for the Certificate owners, the
Corporation will assign pursuant to an Assignment Agreement the
rights to receive the Lease Payments to the Trustee for the benefit
of the owners of the Certificates;
WHEREAS, the Trustee has agreed to disburse proceeds received
from the sale of the Certificates (to be deposited in a project
fund) to pay the Project Costs and Delivery Costs of the Project;
WHEREAS, the Financial Advisor to the City has caused to be
prepared a Preliminary Official Statement and Official Notice of
Sale describing the Certificates and providing for the sale of the
Certificates, which documents this Board has had an opportunity to
review;
WHEREAS, a public sale of the Certificates pursuant to the
Official Notice of Sale is scheduled and a highest and best bid
(determined as prescribed in the Official Notice of Sale) is
anticipated to be received;
WHEREAS, the Corporation desires to authorize the award, sale
and issuance of the Certificates, the distribution of the
Preliminary Official Statement and the lease transactions necessary
for the financing of the Project;
WHEREAS, this Board approves all of said transactions;
NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as
follows:
SECTION 1. Recitals. The above recitals are true and
correct, confirmed and ratified.
SECTION 2. Commitment to Issue and Sell Certificates. The
Corporation hereby authorizes the award, sale and issuance of the
Certificates for such purposes and in such maximum principal amount
as are described above. The Certificates shall be issued under and
pursuant to the Trust Agreement, in substantially the form on file
with the Secretary together with any changes therein, additions
thereto, or both deemed advisable by the President or his designee
whose execution thereof shall be conclusive evidence of his consent
to such changes, additions or both.
SECTION 3. Approval, of Lease Trc3llsagta,ons; APrrov,=�l. 9f
Documents. The Corporation hereby approves the leasing
transactions contemplated by the Site Lease, Project Lease,
Assignment Agreement and Trust Agreement on file with the Secretary
and authorizes the execution and delivery of the Site Lease,
Project Lease, Assignment Agreement and Trust Agreement in form
substantially similar to the form on file with the Secretary,
together with any changes therein or additions thereto deemed
advisable by the President or his designee, whose execution thereof
shall be conclusive evidence of his consent to such changes,
additions or both.
SECTION 4. Approval of Preliminary Official Statement and
Notice of sale. The Corporation hereby ratifies and approves the
form of Preliminary Official Statement and Official Notice of Sale
submitted to and on file with the Secretary.
SECTION 5. Certificate Sale. The award of the sale of the
Certificates is hereby delegated to the Chief Financial Officer or
his designee (provided, however, that the net interest cost on the
Certificates shall not be in excess of 8.0-1 per annum and the
underwriter's discount shall not exceed 2.0% of the principal
amount of the Certificates issued). Final acceptance of the
successful bid shall be evidenced by the signature of the Chief
Financial Officer or his designee on behalf of the Corporation.
SECTION 6. Official Action. The President, Chief Financial
Officer and any other officers of the City are hereby authorized
and directed to take all actions and do all things necessary or
desirable hereunder with respect to the sale of the Certificates,
the issuance thereof, the lease transactions, and the financing of
the Project.
SECTION 9. EffectiveDate. This Resolution shall take effect
immediately upon its passage and adoption.
ATTEST:
By:
" - " � � - (-
secretary
F0
h
U
q.Chairma
Recording Requested By:
CITY OF NEWPORT BEACH
When Recorded Mail To:
CITY OF NEWPORT BEACH
3300 Newport Boulevard
Newport Beach, California 92659
Attn: Finance Director
S -Zh-47Z
This document is recorded for the benefit of the CITY OF NEWPORT BEACH, and recording
is fee exempt under §27383 of the Government Code.
SITE LEASE
between
CITY OF NEWPORT BEACH
and
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
Dated as of June 1, 1992
SITE LEASE
This Site Lease is made and entered into as of June 1, 1992, by and between CITY
OF NEWPORT BEACH (the "City"), a municipal corporation duly organized and existing under
the laws of the State of California, as lessor hereunder, and NEWPORT BEACH PUBLIC
FACILITIES CORPORATION, a not for profit corporation duly organized and existing under the
laws of the State of California, (the "Corporation"), as lessee hereunder.
WITNESSETH:
WHEREAS, the City may lease (as lessor) any real property of the City for municipal
purposes pursuant;
WHEREAS, the City has entered into this Site Lease (the "Site Lease") with the
Corporation, without an option to purchase, dated the date hereof, wherein the City has
leased the real property described in Exhibit "A" hereto (the "Site") to the Corporation, as
lessee hereunder;
WHEREAS, the City intends to lease back such Site from the Corporation pursuant to
the terms of a Project Lease dated the date hereof, between the Corporation and the City (the
"Lease"); and
WHEREAS, the City and the Corporation intend to enter into a Trust Agreement, dated
the date hereof (the "Trust Agreement"), with the Trustee thereunder (the "Trustee") to
provide for the execution and delivery of Certificates of Participation (the "Certificates")
representing, in part, proportionate interests in Lease Payments and Prepayments made by the
City thereunder;
NOW, THEREFORE, it is hereby mutually agreed as follows:
SECTION 1. Definitions. Unless the context otherwise requires, the capitalized terms
herein shall have the meanings specified in the Trust Agreement.
SECTION 2. Site Lease. The City hereby leases to the Corporation and the Corporation
hereby leases from the City, on the terms and conditions hereinafter set forth, the Site (i.e.,
the Site described in Exhibit "A" hereto, together with the structures located thereon)
provided that the Lease is duly executed and delivered by the parties hereto simultaneously
herewith.
SECTION 3. Term. The term of this Site Lease shall commence as of the date of
recordation hereof and shall remain in effect until the expiration of the term of the Lease, as
defined in the Lease and which terminates as provided therein, provided, however, if Lease
Payments (as defined therein) due under the Lease remain unpaid at the expiration of the
Lease term, then this Site Lease shall not terminate until the earlier of (i) June 1, 2020 or (ii)
the date on which the Certificates have been paid in full (plus a recovery of the cost of any
investment made by the Trustee as assignee of the Corporation); provided that this Site Lease
shall not expire during the term of any lease executed and delivered in place of the Lease
pursuant to Section 13.10 of the Trust Agreement, unless such term is sooner terminated as
- 1 -
hereinafter provided.
SECTION 4. Rental. The Corporation, and any assignee or successor in interest of the
Corporation under this Site Lease, shall pay annually to the City as and for rental hereunder,
the sum of One Dollar ($1.00), commencing on the date hereof, and continuing to and
including the date of termination of this Site Lease.
SECTION 5. Purpose. The Corporation shall use the Site solely for the purpose of
leasing back the Site to the City or others pursuant to the Lease and for such purposes as
may be incidental thereto.
SECTION 6. Owner in Fee. The City covenants that it is the owner in fee of the Site.
SECTION 7. Assignments and Site Leases. The City acknowledges and affirms the
assignment by the Corporation of its rights under this Site Lease to the Trustee, under the
terms of the Assignment Agreement, dated as of the date hereof, between the Corporation
and the Trustee, for the benefit of the Owners of the Certificates.
SECTION 8. Termination. The Corporation agrees, upon the termination of this Site
Lease, to quit and surrender the Site in the same good order and condition as the same was
in at the time of commencement of the term hereunder, reasonable wear and tear excepted,
and agrees that any permanent improvements and structures existing upon the Site at the
time of the termination of this Site Lease shall remain thereon and title thereto shall vest in
the City.
Upon prepayment by the City of all Lease Payments due during the term of the Lease,
the term of this Site Lease shall terminate as provided herein.
Upon payment by the City of all Lease Payments due during the term of the Lease, as
provided for in Article IV thereof, the term of this Site Lease shall terminate subject to Section
3 hereof.
SECTION 9. Quiet Enjoyment. The Corporation at all times during the term of this
Lease shall peaceably and quietly have, hold and enjoy all of the Site.
SECTION 10. Default. In the event the Corporation shall be in default in the
performance of any obligation on its part to be performed under the terms of this Site Lease,
which default continues for 30 days following written notice to and demand for correction
thereof, by the Corporation, the City, with the consent of the Trustee (subject to the Trust
Agreement), may exercise any and all remedies granted by law which do not adversely affect
the interests of the Owners of the Certificates, provided that the City may not terminate this
Site Lease and shall exercise only remedies providing for specific performance hereunder, and
provided further, however, that so long as any of the Certificates are Outstanding and unpaid
in accordance with the terms thereof, the Lease Payments assigned by the Corporation to the
Trustee under the Trust Agreement shall continue to be paid to the Trustee.
SECTION 11. Taxes. Subject to the provisions of Section 7.6(c) of the Lease, the City
covenants and agrees to pay any and all assessments of any kind or character and also all
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taxes, including possessory interest taxes, levied or assessed upon the Site.
SECTION 12. Eminent Domain. In the event the whole or any part of the Project is
taken by eminent domain proceedings, the interest of the Corporation shall be recognized and
is hereby determined to be the amount of unpaid Lease Payments or Additional Payments due
the Corporation under the Lease.
SECTION 13. Partial Invalidity. If any one or more of the terms, provisions, covenants
or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or
voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order
or decree of which becomes final, none of the remaining terms, provisions, covenants and
conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease
shall be valid and enforceable to the fullest extent permitted by law.
SECTION 14. Applicable Law. This Site Lease shall be governed by and construed in
accordance with the laws of the State of California.
SECTION 15. Representatives. Whenever under the provisions of this Site Lease the
approval of the Corporation or the City is required, or the Corporation or the City is required
to take some action at the request of the other, such approval or such request shall be given
for the Corporation by the Representative as defined in the Lease and for the City by its City
Representative, and any party hereto shall be authorized to rely upon any such approval or
request.
SECTION 16. Notices. All notices or other communications hereunder shall be
sufficiently given and shall be deemed to have been received 24 hours after deposit in the
United States mail in registered or certified form, postage prepaid:
If to the City:
CITY OF NEWPORT BEACH
3300 Newport Boulevard
Newport Beach, California 92659
Attention: Finance Director
If to the Corporation:
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
3300 Newport Boulevard
Newport Beach, California 92659
Attention: Chief Financial Officer
The Corporation and the City, by notice given hereunder, may designate different
addresses to which subsequent notices or other communications will be sent.
-3-
SECTION 17. Captions. The captions or headings in this Site Lease are for convenience
only and in no way define, limit or describe the scope or intent of any provision or Section of
this Site Lease.
SECTION 18. Execution in Counterparts. This Site Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all together shall
constitute but one and the same instrument.
SECTION 19. Incorporation. This Site Lease is hereby made a part of the Lease and
shall be subject to all the terms and conditions of the Lease.
SECTION 20. Amendment. This Site Lease may be amended with the consent of the
Trustee to provide for the substitution of sites for the Site or the addition of real property as
a Site hereunder, provided that the Lease is correspondingly amended as provided in Section
8.3 thereof.
IN WITNESS WHEREOF, the parties have caused this Site Lease to be executed by their
duly authorized officers on the date and year first above written.
CITY OF NEWPORT BEACH
Bv:
City Manager
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
Bv:
Corporation Representative
-4-
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
On this day of June in the year 1992 before me, the undersigned, a Notary
Public in and for the State of California, personally appeared to me ,
known to me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument and acknowledged to me that he executed the within
instrument pursuant to a resolution of the Board of Directors of the NEWPORT BEACH PUBLIC
FACILITIES CORPORATION, the public agency that executed the within instrument.
WITNESS my hand and official seal.
Notary Public
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STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
On this day of June in the year 1992 before me, the undersigned, a Notary
Public in and for the State of California, personally appeared to me, , known to
me (or proved to me on the basis of satisfactory evidence) to be the of CITY OF
NEWPORT BEACH, the public agency that executed the within instrument, and personally
known to me (or proved on the basis of satisfactory evidence) to be the person who executed
the within instrument on behalf of said City, and acknowledged to me that he executed the
within instrument pursuant to a resolution of said City.
WITNESS my hand and official seal.
Notary Public
2.
EXHIBIT "A"
DESCRIPTION OF SITE
[description of Library Site]
A-1
Recording Requested By:
CITY OF NEWPORT BEACH
When Recorded Mail To:
CITY OF NEWPORT BEACH
3300 Newport Boulevard
Newport Beach, California 92659
Attn: Finance Director
This document is recorded for the benefit of CITY OF NEWPORT BEACH, and recording is fee
exempt under §27383 of the Government Code.
PROJECT LEASE
between
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
Lessor
and
CITY OF NEWPORT BEACH
Lessee
Dated as of June 1, 1992
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND EXHIBITS
SECTION 1.1 Definitions and Rules of Construction ................. 2
SECTION 1.2 Exhibits ..................................... 2
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 2.1 Representations, Covenants and Warranties of the City ..... 3
SECTION 2.2 Representations, Covenants and Warranties of the Corporation 4
ARTICLE III
ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT
SECTION 3.1 Deposit of Certificate Proceeds ..................... 5
SECTION 3.2 Payment of Project Costs ......................... 5
SECTION 3.3 Completion Certification 5
SECTION 3.4 Further Assurances and Corrective Instruments .......... 6
ARTICLE IV
AGREEMENT TO LEASE; TERM OF LEASE;
LEASE PAYMENTS; ADDITIONAL PAYMENTS
SECTION 4.1
Lease ....................................... 6
SECTION 4.2
Term ....................................... 6
SECTION 4.3
Lease Payments ................................ 6
SECTION 4.4
No Withholding ................................ 7
SECTION 4.5
Fair Market Rental Value .......................... 7
SECTION 4.6
Assignment of Lease Payments ..................... 7
SECTION 4.7
Use and Possession ............................. 7
SECTION 4.8
Abatement of Lease Payments in Event of Loss of Use ..... 8
SECTION 4.9
Additional Payments ............................. 8
SECTION 4.10
Net -Net -Net Lease .............................. 8
ARTICLE V
INSURANCE
SECTION 5.1 Public Liability and Property Damage ................. 9
SECTION 5.2 Workers' Compensation .......................... 9
SECTION 5.3 Casualty Insurance .............................. 9
SECTION
5.4
Rental Interruption Insurance .......................
10
SECTION
5.5
Title Insurance .................................
10
SECTION
5.6
General Insurance Provisions .......................
10
SECTION
5.7
Cooperation ..................................
11
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
SECTION 6.1 Application of Net Proceeds ....................... 12
SECTION 6.2 Application of Other Moneys ....................... 14
ARTICLE VII
COVENANTS WITH RESPECT TO THE SITE
SECTION 7.1
Use of the Site; Non -abandonment ...................
14
SECTION 7.2
Interest in the Site ..............................
14
SECTION 7.3
Quiet Enjoyment ...............................
14
SECTION 7.4
Installation of City's Personal Property ................
15
SECTION 7.5
Access to the Site ..............................
15
SECTION 7.6
Maintenance, Utilities, Taxes and Assessments; Operating Costs
15
SECTION 7.7
Modification of the Site ..........................
16
SECTION 7.8
Liens .......................................
17
SECTION 7.9
Corporation's Disclaimer of Warranties ................
17
ARTICLE Vlll
ASSIGNMENT, SUBLEASING AND AMENDMENT
SECTION 8.1 Assignment by the Corporation .....................
SECTION 8.2 Assignment and Subleasing by the City ...............
SECTION 8.3 Amendments and Modifications .....................
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.1 Events of Default Defined .........................
SECTION 9.2 Remedies on Default ............................
SECTION 9.3 No Remedy Exclusive ............................
SECTION 9.4 Agreement to Pay Attorneys' Fees and Expenses ........
SECTION 9.5 No Additional Waiver Implied by One Waiver ............
SECTION 9.6 Application of the Proceeds from the Re -Lease of the Project
SECTION 9.7 Trustee and Certificate Owners to Exercise Rights ........
18
18
18
18
19
21
21
21
22
22
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
SECTION 10.1 Mandatory Prepayment From Net Proceeds
or Other Moneys ............................... 22
SECTION 10.2 Optional Prepayment ............................ 22
SECTION 10.3 Credit for Amounts on Deposit ..................... 22
SECTION 10.4 Effect of Prepayment ............................ 23
ARTICLE XI
MISCELLANEOUS
SECTION
11.1
Notices ......................................
23
SECTION
11.2
Binding Effect .................................
24
SECTION
11.3
Severability...................................
24
SECTION
11.4
Execution in Counterparts .........................
24
SECTION
11.5
Applicable Law ................................
24
Exhibit A - Schedule of Lease Payments ............................. A-1
Exhibit B - General Description of the Project .......................... B-1
Exhibit C - Form of Lease Supplement ............................... C-1
Exhibit D - Legal Description of the Site .............................. D-1
PROJECT LEASE
THIS PROJECT LEASE, dated as of June 1, 1992, by and between the NEWPORT
BEACH PUBLIC FACILITIES CORPORATION, a nonprofit corporation duly organized and
existing under the laws of the State of California, as lessor (the "Corporation"), and CITY OF
NEWPORT BEACH, a municipal corporation duly organized and existing under the Constitution
and laws of said State, as lessee (the "City");
WITNESSETH:
WHEREAS, the Corporation and the City wish to provide financing for the acquisition
and construction, as described herein, of certain improvements described in Exhibit B hereto
referred to as the "Project" by entering into this Project Lease (the "Lease") and authorizing
and directing the execution and delivery of Certificates of Participation, described below,
evidencing an undivided and proportionate interest in Lease Payments to be made by the City
hereunder;
WHEREAS, the City has entered into a Site Lease of even date herewith (the "Site
Lease") with the Corporation under which the Corporation has agreed to lease the site (as
herein defined) from the City and improve or provide for the acquisition, construction and
improvement of the Project to be used by the City and to lease back the Project to the City
pursuant to Section 4.1 hereof, and which Site Lease provides that the title to such Project
shall vest in the City at the expiration of such Site Lease (as provided in Section 8 thereof),
and contains other terms and conditions as the City Council of the City deems to be in the
best interest of the City;
WHEREAS, the City is authorized to enter into the lease and leaseback of the Site to
provide financing for the Project;
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
SECTION 1.1. Definitions and Rules of Construction. Unless the context otherwise
requires, the capitalized terms used herein shall, for all purposes of this Lease, have the
meanings specified in the Trust Agreement, dated as of the date hereof, by and among Bank
of America, NT & SA, as trustee thereunder, the Corporation, and the City (the "Trust
Agreement"), together with any amendments thereof or supplements thereto permitted to be
made thereunder; and the additional terms defined in this Section shall, for all purposes of this
Lease, have the meanings herein specified. Unless the context otherwise indicates, words
- 1 -
importing the singular number shall include the plural number and vice versa. The terms
"hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this
Lease, refer to this Lease as a whole.
"Permitted Encumbrances" means, as of any particular time: (i) liens for general ad
valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant
to provisions of Article VII hereof, permit to remain unpaid; (ii) the Assignment Agreement,
as it may be amended from time to time; (iii) the Site Lease, as it may be amended from time
to time; (iv) this Lease, as it may be amended from time to time; (v) any right or claim of any
mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner
prescribed by law; NO easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions which exist of record as of the Closing Date
and which will not materially impair the use of the Site by the City; and (vii) easements, rights
of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or
restrictions established following the date of recordation of this Lease and to which the
Corporation, the Trustee and the City consent in writing, and which, in the opinion of Counsel
to the City do not materially affect use by the City of the Project as intended.
"Project" means the Project described in Exhibit B hereto.
"Site" means the site or sites described in Exhibit D hereto together with all
improvements thereon.
SECTION 1.2. Exhibits. The following Exhibits are attached to, and by reference made
a part of, this Lease:
Exhibit A: Schedule of Lease Payments to be paid by the City to the Corporation,
showing the Lease Payment Date and amount of each Lease Payment.
Exhibit B: General description of the Project.
Exhibit C: Lease Supplement Form.
Exhibit D: Legal Description of the Site.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 2.1. Representations Covenants and Warranties of the City. The City
represents, covenants and warrants to the Corporation as follows:
(a) Due Organization and Existence. The City is a municipal corporation of the
State, duly organized and existing under the Constitution and laws of the State.
-2-
(b) Authorization; Enforceability. The Constitution and laws of the State authorize
the City to enter into this Lease, the Site Lease and the Trust Agreement and to enter into the
transactions contemplated by and to carry out its obligations under all of the aforesaid lease
transaction agreements, and the City has duly authorized and executed all of the aforesaid
lease transaction agreements. This Lease, the Site Lease and the Trust Agreement constitute
the legal, valid and binding obligations of the City enforceable in accordance with their
respective terms, except to the extent limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles affecting the rights of
creditors generally.
(c) No Conflicts or Default; No Liens or Encumbrances. Neither the execution and
delivery of this Lease, the Site Lease or the Trust Agreement, nor the fulfillment of or
compliance with the terms and conditions hereof or thereof, nor the consummation of the
transactions contemplated hereby or thereby, (i) conflicts with or results in a breach of the
terms, conditions or provisions of any restriction or any agreement or instrument to which the
City is now a party or by which the City is bound, or constitutes a default under any of the
foregoing, or results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of the City, or upon the Project except for the
pledges contained in the Trust Agreement and except for Permitted Encumbrances, and (ii)
results in an abatement of the City's obligations hereunder.
(d) Execution and Delivery. The City has duly authorized and executed this Lease
in accordance with the Constitution and laws of the State.
(e) Indemnification of Corporation. The City covenants to defend, indemnify and
hold harmless the Corporation and its directors and employees and assignees (collectively, the
"Indemnified Party") against any and all losses, claims, damages or liabilities, joint or several,
including fees and expenses incurred in connection therewith, to which such Indemnified Party
may become subject under any statute or at law or in equity or otherwise in connection with
the transactions contemplated by this Lease, and shall reimburse any such Indemnified Party
for any legal or other expenses incurred by it in connection with investigating any claims
against it and defending any actions, insofar as such losses, claims, damages, liabilities or
actions arise out of the transactions contemplated by this Lease. In particular, without
limitation, the City shall and hereby agrees to indemnify and save the Indemnified Party
harmless from and against all claims, losses and damages, including legal fees and expenses,
arising out of (i) the use, maintenance, condition or management of, or from any work or thing
done on the Project by the City, (ii) any breach or default on the part of the City in the
performance of any of its obligations under this Lease, (iii) any act or negligence of the City
or of any of its agents, contractors, servants, employees or licensees with respect to the
Project, (iv) any act or negligence of any assignee or sublessee of the City with respect to the
Project, or (v) the acquisition and construction of the Project or the authorization of payment
of the Project Costs by the City.
(f) General Tax and Arbitrage Covenant. The City hereby covenants that,
notwithstanding any other provision of this Lease, it will make no use of the proceeds of the
Certificates or of any other amounts or property regardless of the source or take any action
or refrain from taking any action that may cause the obligations of the City under this
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Agreement to be "arbitrage bonds" subject to federal income taxation by reason of Section
148 of the Internal Revenue Code of 1986, as amended (the "Code").
In addition, the City covenants that it will not make any use of the proceeds of the
obligations provided herein or in the Trust Agreement or any other funds of the City or take
or omit to take any other action that would cause such obligations to be a "private activity
bond" within the meaning of Section 141 of the Code, or "federally guaranteed" within the
meaning of Section 149(b) of the Code. To that end, so long as any Lease Payment is unpaid,
the City, with respect to such proceeds and such other funds, will comply with all
requirements of such Sections and all regulations of the United States Department of the
Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954, as
amended, to the extent that such requirements are, at the time, applicable and in effect.
(g) Budget. The City covenants to budget and appropriate all Lease Payments and
Additional Payments (to the extent the amount of such Additional Payments are known to the
City at the time its annual budget is proposed) due hereunder in its annual budget and to
maintain such items to the extent unpaid in that Fiscal Year in its budget throughout such
Fiscal Year. To the extent the amount of such payments becomes known after the adoption
of the annual budget, such amounts shall be included and maintained in such budget as
amended. During the Term, the City will annually on or before October 1 of each year furnish
to the Trustee certification that the City has complied with the requirements of this Section.
The covenants on the part of the City herein contained shall be deemed to be and shall be
construed to be duties imposed by law and it shall be the duty of each and every public
official of the City to take such action and do such things as are required by law in the
performance of the official duty of such officials to enable the City to carry out and perform
the covenants and agreements in this Lease agreed to be carried out and performed by the
City.
SECTION 2.2. Representations, Covenants and Warranties of the Corporation. The
Corporation represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence; Enforceability. The Corporation is a nonprofit
Corporation duly organized and existing under and by virtue of the laws of the State, has the
power to enter into this Lease, the Site Lease, the Assignment Agreement and the Trust
Agreement; is possessed of full power to own and hold real and personal property, and to
lease and sell the same; and has duly authorized the execution and delivery of all of the
aforesaid lease transaction agreements. This Lease, the Site Lease, the Assignment
Agreement and the Trust Agreement constitute the legal, valid and binding obligations of the
Corporation enforceable in accordance with their respective terms, except to the extent
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles affecting the rights of creditors generally.
(b) No Conflicts or Defaults; No Liens or Encumbrances. Neither the execution and
delivery of this Lease, the Site Lease, the Assignment Agreement or the Trust Agreement, nor
the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the
consummation of the transactions contemplated hereby or thereby, conflicts with or results
in a breach of the terms, conditions or provisions of any restriction or any agreement or
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instrument to which the Corporation is now a party or by which the Corporation is bound, or
constitutes a default under any of the foregoing, or results in the creation or imposition of any
lien, charge or encumbrance whatsoever upon any of the property or assets of the
Corporation, or upon the Project except by the pledges contained in the Trust Agreement and
except for Permitted Encumbrances.
(c) Execution and Delivery. The Corporation has duly authorized and executed this
Lease in accordance with the Constitution and laws of the State.
(e) General Tax and Arbitrage Covenant. The Corporation covenants that,
notwithstanding any other provision of this Lease, it will make no use of the proceeds of the
Certificates or of any other amounts or property regardless of the source or take any action
or refrain from taking any action that may cause the obligations of the City under this lease
to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the
Internal Revenue Code of 1986, as amended.
In addition, the Corporation covenants that it will not make any use of the proceeds
of the obligations provided herein or in the Trust Agreement or any other funds of the City or
take or omit to take any other action that would cause such obligations to be a "private
activity bond" within the meaning of Section 141 of the Code, or "federally guaranteed"
within the meaning of Section 149(b) of the Code. To that end, so long as any Lease Payment
is unpaid, the Corporation, with respect to such proceeds and such other funds, will comply
with all requirements of such Sections and all regulations of the United States Department of
the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954,
as amended, to the extent that such requirements are, at the time, applicable and in effect.
ARTICLE III
ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT
SECTION 3.1. Deposit of Certificate Proceeds. On the Closing Date the Corporation
agrees to pay or cause to be paid to the City certain moneys to be deposited with the Trustee
as provided in Section 3.01 of the Trust Agreement.
SECTION 3.2. Payment of Project Costs. The City, as agent of the Corporation, will
provide for the construction, acquisition and improvement of the Project pursuant to the
requirements of the City. Payment of the Project Costs shall be made from the moneys
deposited with the City in the Acquisition and Construction Fund as provided in Section 3.01
of the Trust Agreement, which shall be disbursed from the Acquisition and Construction Fund
in accordance and upon compliance with Article III of the Trust Agreement.
SECTION 3.3. Completion Certification. Upon acquisition, construction, improvement
or conclusion of the Project satisfactory to the City, the City shall deliver to the Trustee the
certificate of completion with respect thereto. On the date of filing the certificate of
Completion, all excess moneys remaining in the Acquisition and Construction Fund shall be
transferred by the City to the Trustee as provided in Section 3.03 of the Trust Agreement.
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SECTION 3.4. Further Assurances and Corrective Instruments. The Corporation and
the City agree that they will, from time to time, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any inadequate or incorrect
description of the Project or for carrying out the expressed intention of this Lease.
ARTICLE IV
AGREEMENT TO LEASE; TERM OF LEASE;
LEASE PAYMENTS; ADDITIONAL PAYMENTS
SECTION 4.1. Lease. The Corporation hereby leases the Site, as improved by the
Project, to the City, and the City hereby leases the Site, as improved by the Project, from the
Corporation, upon the terms and conditions set forth herein.
SECTION 4.2. Term.
(a) The term of this Lease shall commence on the date hereof and shall end on
June 1, 2020, unless terminated prior thereto upon the earliest of any of the following events:
(i) Default and Termination. A default by the City and the Corporation's
election to terminate this Lease under Section 9.2(b) hereof;
(ii) Payment of All Lease Payments. The payment by the City of all Lease
Payments required under Section 4.3 hereof and any Additional
Payments required under Section 4.9 hereof when due and payable,
upon prepayment as provided in Article X hereof or upon provision for
payment of all Outstanding Certificates, as provided by Article XIV of
the Trust Agreement.
(b) If on June 1, 2020, the Certificates shall not be fully paid, or if the Lease
Payments hereunder shall have been abated at any time and for any reason, then the Term
shall be extended until all Certificates shall be fully paid, except that the Term shall in no
event be extended beyond June 1, 2030.
SECTION 4.3. Lease Payments.
(a) Time and Amount. Commencing as of the date hereof, subject to the provisions
of Section 4.8 (regarding abatement in event of loss of use of any portion of the Site) and
Article X (regarding prepayment of Lease Payments), the City agrees to pay to the
Corporation, its successors and assigns, as annual rental for the use and possession of the
Site, the Lease Payments (denominated into components of principal and interest), in the
semi-annual amounts specified in Exhibit "A", to be due and payable on the dates specified
in Exhibit "A" (each a "Lease Payment Date") which are sufficient in both time and amount
to pay when due the annual principal and semi-annual interest represented by the Certificates.
WE
In the event the City does not pay Lease Payments on any such day, the Trustee shall
provide prompt written notice to the City of such failure to pay and, if unpaid, that failure to
make Lease Payments shall become an event of default in accordance with Section 9.1
hereof; provided, however, that failure to give such notice shall not excuse any event of
default under such section 9.1.
(b) Credits. Any monies on deposit in the Lease Payment Fund at the time that the
Trustee gives the City notice pursuant to Section 5.03 of the Trust Agreement (other than
amounts required for payment of past due principal or interest with respect to any Certificates
not presented for payment) shall be credited to the payment of Lease Payments due and
payable on such Lease Payment Date.
(c) Rate on Overdue Payments. In the event the City should fail to make any of the
Lease Payments required in this Section, the Lease Payment in default shall continue as an
obligation of the City until the amount in default shall have been fully paid, and the City
agrees to pay the same with interest thereon, to the extent permitted by law, from the date
such amount was originally payable at the rate equal to the original interest rate payable with
respect to each Certificate.
(d) Reserve Replenishment Rent. If
(1) funds have been withdrawn from the Reserve Fund in order to pay interest
or principal represented by the Certificates, or there shall be a deficiency in the Reserve Fund
resulting from a decrease of 10% or more in the market value of the Permitted Investments
in the Reserve Fund determined as provided in Section 8.05(a) of the Trust Agreement, and
(2) Lease Payments are not in abatement pursuant to Section 4.8 hereof, and
(3) the amount on deposit in the Reserve Fund is less than the Reserve
Requirement,
then the City shall pay, from its first available moneys after payment of Lease Payments, to
the Trustee Reserve Replenishment Rent consistent with the fair market rental value of the
Project.
(i) over a period of not more than four months, in four (4) substantially equal
payments, in the event such deficiency results from a decrease of ten percent (10%) or more
in the market value of the Permitted Investments on deposit in the Reserve Fund, or
(ii) over a one-year period, in substantially equal semi-annual payments, in the
event such deficiency results from a withdrawal from the Reserve Fund.
SECTION 4.4. No Withholding. Notwithstanding any dispute between the Corporation
and the City, including a dispute as to the failure of any portion of the Site in use by or in
possession of the City to perform the task for which it is leased, the City shall make all Lease
Payments and Additional Payments when due and shall not withhold any Lease Payments
pending the final resolution of such dispute.
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SECTION 4.5. Fair Market Rental Value. The Lease Payments shall be paid by the City
in consideration of the right of possession of, and the continued quiet use and enjoyment of,
the Site during each such period for which said rental is to be paid. The parties hereto have
agreed and determined that such total rental is not in excess of the fair market rental value
of the Site. In making such determination, consideration has been given to the fair market
value of the Site, other obligations of the parties under this Lease (including but not limited
to costs of maintenance, taxes and insurance), the uses and purposes which may be served
by the Site and the benefits therefrom which will accrue to the City and to the general public,
the ability of the City to make additions, modifications and improvements to the Site and to
replace the Site as provided in Section 7.7 hereof, and the transfer of the Corporation's
leasehold interest in the Site at the end of the Term hereof.
SECTION 4.6. Assignment of Lease Payments. Certain of the Corporation's rights
under this Lease, including the right to receive and enforce payment of the Lease Payments,
Additional Payments, and Prepayments to be made by the City hereunder, have been assigned
to the Trustee, subject to certain exceptions, pursuant to the Assignment Agreement, dated
the date hereof, between the Trustee and the Corporation, to which assignment the City
hereby consents. The Corporation hereby directs the City, and the City hereby agrees to pay
to the Trustee at the Trustee's corporate trust office in Los Angeles, California, or to the
Trustee at such other place as the Trustee shall direct in writing, all Lease Payments or
Prepayments thereof, and Additional Payments payable by the City hereunder. The
Corporation will not assign or pledge the Lease Payments or other amounts derived from the
Site and from its other rights under this Lease except as provided under the terms of this
Lease, or its duties and obligations except as provided under the Assignment Agreement and
the Trust Agreement.
SECTION 4.7. Use and Possession. The total Lease Payments due in any Fiscal Year
shall be for the use and possession of the Site for such Fiscal Year.
SECTION 4.8. Abatement of Lease Payments in Event of Loss of Use.
(a) Period. The obligation of the City to pay Lease Payments shall be abated during
any period in which by reason of damage, destruction or taking by eminent domain or
condemnation with respect to any item or portion of the Site there is substantial interference
with the use and possession of such item or portion of the Site by the City.
(b) Amount. The amount of such abatement shall be determined by the City such
that the resulting Lease Payments represent fair market rental value for the use and
possession of the item or portion of the Site not damaged, destroyed, or taken. Such
abatement shall commence with such damage, destruction or taking and end with the
substantial completion of the replacement or repair provided, however, that during abatement,
available moneys on deposit in the Reserve Fund or from drawings under an insurance policy
and the Lease Payment Fund, other special fund sources of money, including without
limitation, proceeds of rental interruption insurance, shall be applied to pay the Lease
Payments.
(c) Repair or Replacement. In the event of such abatement, the City will use its best
efforts to repair or replace the damaged or destroyed portion of the Site, with due diligence
and dispatch, as the case may be, from special funds of the City or other moneys, including
the proceeds of any property insurance policies associated with the Site, the application of
which would, in the opinion of Special Counsel addressed to the Trustee, the City and the
Corporation, not result in the obligations of the City hereunder constituting indebtedness of
the City in contravention of the Constitution and laws of the State.
SECTION 4.9. Additional Payments. In addition to the Lease Payments, the City shall
also pay such amounts ("Additional Payments") as shall be required for the payment of all
administrative costs of the Corporation relating to the Site or the Certificates, including
without limitation all expenses, compensation and indemnification of the Trustee payable by
the City under the Trust Agreement, fees of auditors, accountants, attorneys or engineers,
and all other necessary administrative costs of the Corporation or charges required to be paid
by it in order to maintain its existence or to comply with the terms of the Certificates or of
the Trust Agreement, including premiums on insurance maintained pursuant to Article V
hereof, or to indemnify the Corporation and its officers and directors.
SECTION 4.10. Net -Net -Net Lease. This Lease shall be deemed and construed to be
a "net -net -net lease" and the City hereby agrees that the Lease Payments shall be an absolute
net return to the Corporation, free and clear of any expenses, charges or set -offs whatsoever,
except as expressly provided herein.
ARTICLE V
INSURANCE
SECTION 5.1. Public Liability and Property Damage.
(a) Coverage. Prior to the commencement of work by the contractor, a certificate
of insurance will be provided to the City which shall indicate that public liability and property
damage insurance in the amount of not less than $1,000,000 is in effect and will be
maintained in full force and effect during the period of construction. The policies must be in
a form acceptable to the City and require at least 30 days written notice before any of the
policies are cancelled, limited or not renewed.
(b) Limits. After the completion of the construction and acceptance of the Project,
the City shall at its sole cost and expense, maintain or cause to be maintained at all times
during the Lease Term general property damage and public liability insurance (including but
not limited to coverage for all losses whatsoever arising from the ownership, maintenance,
operation or use of any automobile, truck or other motor vehicle), with respect to the Project
under which the Corporation, the City and the Trustee shall be named as insureds, properly
protecting and indemnifying the Corporation and the Trustee in an amount not less than
$1,000,000 for boidly injury (including death) of each person and property damage in one
occurrence and $5,000,000 in the aggregate. Such public liability and property damage
insurance may, however, be in the form of a single limit policy covering all risks in an amount
equal to $5,000,000. The policies of said insurance shall contain a provision that such
insurance may not be cancelled by the issuer thereof without at least thirty (30) days'
advance written notice to the Corporation, the City and the Trustee. Such policies or copies
or certificates thereof shall be furnished to the Corporation.
(c) Joint or Self -Insurance. Such liability insurance, including the deductible, may
be maintained as part of or in conjunction with any other insurance coverage carried by the
City.
(d) Payment of Net Proceeds. The Net Proceeds of such liability insurance shall be
applied toward extinguishment or satisfaction of the liability with respect to which the
insurance proceeds shall have been paid.
SECTION 5.2. Workers' Compensation. The City shall also maintain workers'
compensation insurance issued by a responsible carrier authorized under the laws of the State
of California to insure its employees against liability for compensation under the Workers'
Compensation Insurance and Safety Act now in force in California, or any act hereafter
enacted as an amendment or supplement thereto or in lieu thereof (with provision for self-
insurance of $100,000).
SECTION 5.3. Casualty Insurance.
(a) Casualty Insurance. The City shall procure and maintain, or cause to be
procured and maintained, throughout the Term of this Lease, insurance against loss or damage
to any item or portion of the Site by fire and lightning, with extended coverage and vandalism
and malicious mischief insurance, and earthquake insurance (but as to such earthquake
insurance only if such insurance is available at reasonable cost on the open market from
reputable insurance companies and only following completion of construction). Said extended
coverage insurance shall, as nearly as practicable, cover loss or damage by explosion,
windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally
covered by such insurance. Such insurance shall be in an amount equal to 100% of the full
insurable value of the Site as improved (except that such insurance may be subject to
deductible clauses of not to exceed $100,000 for any one loss). The full insurable value of
the Project shall be determined from time to time at the request of the Corporation or the City
(but note more frequently than once in every three years) by an architect, contractor,
appraiser, appraisal company or one of the insurers, to be selected and paid by the City,
provided, however, that in no event shall such insurance be maintained in an amount less than
the aggregate principal amount of Certificates at the time Outstanding. The insurance required
pursuant to this Section shall be maintained at the City's sole cost and expense and shall be
maintained with a generally recognized responsible insurance company or companies
authorized to do business in the State as may be selected by the City. Copies of the
insurance policies, or originals or certificates thereof, each bearing notations evidencing
payment of the premiums or other evidence of such payment, shall be delivered by the City
to the Corporation. All such policies of insurance and all renewals thereof, shall name the
Corporation, the City and the Trustee as insureds as their respective interests may appear,
shall contain a provision that such insurance may not be cancelled by the issuer thereof
without at least thirty (30) days' advance written notice to the Corporation, the City and
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Trustee, and shall be payable to the Trustee. Such insurance may be maintained as part of
or in conjunction with any other insurance carried or required to be carried by the City.
In the event that earthquake insurance is not available at reasonable cost on the open
market from reputable insurance companies as provided above, the City shall immediately
notify the Trustee of such event.
(b) Payment of Net Proceeds. The Net Proceeds of such insurance shall be paid to
the Trustee and deposited in the Net Proceeds Account and applied as provided in Section
6.1.
SECTION 5.4. Rental Interruption Insurance.
(a) Coverage and Amount. The City shall maintain or cause to be maintained on or
prior to the date that the City files the Certificates of Completion, rental interruption insurance
in an amount not less than the maximum remaining scheduled Lease Payments in any future
twelve (12) month period, to insure against loss of Lease Payments from the Site caused by
perils covered by the insurance required to be maintained as provided in Section 5.3 hereof.
Such insurance shall be obtained as of the date on which the City obtains possession of the
Site.
(b) Joint Insurance. Such insurance may be maintained as part of or in conjunction
with any other rental interruption insurance carried by the City.
(c) Payment of Net Proceeds. The net proceeds of such rental interruption insurance
shall be paid to the Trustee and deposited in the Reserve Fund to the extent necessary and
to the Lease Payment Fund, to be credited towards the payment of the Lease Payments in the
order in which such Lease Payments come due and payable.
SECTION 5.5. Title Insurance. The City shall obtain and, throughout the Term hereof,
maintain or cause to be maintained title insurance on the Project, in the form of a CLTA
owner's title policy in an amount equal to the aggregate principal component of unpaid Lease
Payments, issued by a company of recognized standing, duly authorized to issue the same,
subject only to Permitted Encumbrances. The Net Proceeds of such insurance shall be applied
as provided in Section 6.1 hereof.
SECTION 5.6. General Insurance Provisions.
(a) Form of Policies. All policies of insurance required to be procured and maintained
pursuant to this Lease, except the insurance required by Section 5.2 hereof, and any
statements of self-insurance shall be in form certified by an insurance agent, broker or
consultant to the City to comply with the provisions hereof. All such policies shall give the
Corporation, the City and the Trustee 30 days' notice of each expiration, any intended
cancellation thereof or reduction of the coverage provided thereby. Each policy of insurance
required to be procured and maintained pursuant to Section 5.3 (regarding casualty insurance),
and Section 5.4 (regarding rental interruption insurance) and Section 5.5 (regarding title
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insurance) shall provide that all proceeds thereunder shall be payable to the Trustee for the
benefit of the Owners. All policies pursuant to Section 5.3, 5.4 and 5.5 hereof shall be
endorsed to name the Trustee as co -loss payee with the City.
(b) Payment of Premiums. The City shall pay or cause to be paid when due the
premiums for all insurance policies required by this Lease.
(c) Protection of the Corporation and the Trustee. The Trustee shall not be
responsible for the sufficiency or adequacy of any insurance herein required and shall be fully
protected in accepting payment on account of such insurance or any adjustment, compromise
or settlement of any loss agreed to by the Trustee. The Corporation and the Trustee shall be
named as additional insureds under all policies required by this Article V.
(d) Evidence of Insurance. The City shall cause to be delivered to the Trustee on
the Closing Date and annually thereafter on or before October 1 of each year, a certificate of
the City stating that the insurance policies or self-insurance programs required by this Lease
are in full force and effect.
(e) Blanket Insurance Policies. The City may satisfy any of the insurance
requirements set forth in this Lease by using blanket policies of insurance, provided that the
City complies with each and all of the requirements and specifications of this Lease.
(f) Modification of Insurance Policies. Subject to the other provisions of this Lease,
the City may modify its insurance coverage, including its self-insurance, in whole or in part,
taking into account the cost and availability of insurance and the effect of the terms and rates
of such insurance on the City's costs and charges for its services, upon filing with the Trustee
the City's Certificate that the new coverage is equal to or better than that which it replaces.
(g) In the event that the insurance reserves provided pursuant to Sections 5.1 and
5.2 shall be insufficient as determined in the annual actuarial valuation (under any program
of self-insurance) by the independent insurance consultant, the City shall immediately fund
such reserves to the required level.
SECTION 5.7. Cooperation. The Corporation shall cooperate fully with the City at the
expense of the City in filing any proof of loss with respect to any insurance policy maintained
pursuant to this Article and in the prosecution or defense of any prospective or pending
condemnation proceeding with respect to the Site or any portion thereof.
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
SECTION 6.1. Application of Net Proceeds.
(a) Deposit in Net Proceeds Account. The City shall remit promptly to the Trustee
any Net Proceeds received by the City and the Trustee shall deposit such Net Proceeds
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pursuant to Section 7.01 of the Trust Agreement, which it receives in the Net Proceeds Fund
as provided in Section 5.3 (regarding casualty insurance) and Section 5.5 (regarding title
insurance) promptly upon receipt thereof. The City, the Corporation, or both shall transfer to
the Trustee any other Net Proceeds received by the City, Corporation, or both in the event of
any accident, destruction, or taking by eminent domain or condemnation with respect to the
Site, for deposit in the Net Proceeds Fund.
(b) Disbursement for Replacement or Repair of the Proiect. Upon receipt of the
certification described in paragraph (1) below and the requisition described in paragraph (2)
below, the Trustee shall disburse moneys in the Net Proceeds Account to the person, firm or
corporation named in the requisition as provided in Section 7.02 of the Trust Agreement.
(1) Certification. The City Representative must certify to the Corporation
and the Trustee that:
(i) Sufficiency of Net Proceeds. The Net Proceeds available for
such purpose, together with any other funds supplied by the
City to the Trustee in a subaccount of the Net Proceeds Fund
for such purpose, are expected to equal at least 1 10% of the
projected costs of replacement or repair, as demonstrated in
an attached reconstruction budget;
(ii) Timely Completion. In the event that damage, destruction or
taking results or is expected to result in an abatement of
Lease Payments, such replacement or repair can be fully
completed within a period not in excess of the period in which
rental interruption insurance proceeds as described in Section
5.4, together with other identified available moneys will be
available to pay in full all Lease Payments coming due during
such period as demonstrated in an attached reconstruction
schedule; and
(iii) No Unauthorized Encumbrances. There are no encumbrances
on the Site other than Permitted Encumbrances.
(2) Requisition. The City Representative must state with respect to each
payment to be made (i) the requisition number, (ii) the name and address of the person, firm
or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each
obligation mentioned therein has been properly incurred, is a proper charge against the Net
Proceeds Account, has not been the basis of any previous withdrawal, and specifying in
reasonable detail the nature of the obligation.
Subject to the requirements of section 7.02 of the Trust Agreement, any
balance of the Net Proceeds remaining after such replacement or repair has been completed
shall be paid to the City.
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(c) Disbursement for Prepayment. If the City shall not have determined to repair or
replace as provided above, the Trustee shall promptly transfer the Net Proceeds to the
Prepayment Account as provided in Section 7.02 of the Trust Agreement and apply them to
prepayment of the Certificates as provided in Section 4.02 of the Trust Agreement and
prepayment of Lease Payments as provided in Section 10.1 hereof, upon the earlier of the
following events:
(1) Written determination of the City Representative that the certification
provided in Section 6.1(b)(1) cannot be made and that replacement or repair of any item or
portion of the Site is not economically feasible or in the best interest of the City, or
(2) One year after the receipt of Net Proceeds.
SECTION 6.2. Application of Other Moneys. In the event of any accident, destruction,
theft or taking by eminent domain or condemnation with respect to a major portion of the
Site, as declared in a written certification to the Trustee, the City may pay to the Trustee for
deposit in the Prepayment Account, moneys, together with other available moneys therein,
if any, sufficient to prepay the Certificates in whole or in part as provided in Section 4.02 of
the Trust Agreement and prepayment of Lease Payments as provided in Section 10.1 hereof.
ARTICLE VII
COVENANTS WITH RESPECT TO THE SITE
SECTION 7.1. Use of the Site; Non -abandonment. The City represents and warrants
that it is using and will continue to use all of the Site, and that the City's need for the Site is
not temporary or expected to diminish in the foreseeable future. The City shall not abandon
the Site during the term of this Lease, nor shall the City acquire or construct a facility which
would render the Site useless to the City.
SECTION 7.2. Interest in the Site.
(a) Corporation Holds Interest During Term. During the Term of this Lease, the
Corporation shall hold a leasehold interest in the Site pursuant to the Site Lease. The City shall
take any and all actions reasonably required, including but not limited to executing and filing
any and all documents, reasonably required to maintain and evidence the Corporation's
leasehold interest in the Site at all times during the Term hereof.
(b) InterestyTransferred to City at End of Term. Upon expiration of the Term as
provided in Section 4.2 hereof, the interest of the Corporation in and to the Site shall be
transferred to and vest in the City, without the necessity of any additional document of
transfer.
SECTION 7.3. Quiet Enjoyment. During the Term, the Corporation shall provide the City
with quiet use and enjoyment of the Site, and the City shall during such Term peaceably and
quietly have and hold and enjoy the Site, without suit, trouble or hindrance from the
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Corporation, or any person or entity claiming under or through the Corporation except as
expressly set forth in this Lease or the Trust Agreement. The Corporation will, at the request
of the City, join in any legal action in which the City asserts its right to such possession and
enjoyment to the extent the Corporation may lawfully do so. Notwithstanding the foregoing,
the Corporation shall have the right to inspect the Site as provided in Section 7.5 hereof.
SECTION 7.4. Installation of City's Personal Property. The City may at any time and
from time to time, in its sole discretion and at its own expense, install or permit to be installed
other items of equipment or other personal property in or upon any portion of the Site. All
such items shall remain the sole personal property of the City, regardless of the manner in
which the same may be affixed to such portion of the Site, in which neither the Corporation
nor the Trustee shall have any interest, and may be modified or removed by the City at any
time; provided that the City shall repair and restore any and all damage to such portion of the
Site resulting from the installation, modification or removal of any such items of equipment.
Nothing in this Lease shall prevent the City from purchasing items to be installed pursuant to
this Section, provided that no lien or security interest attaching to such items shall attach to
any part of the Site.
SECTION 7.5. Access to the Site. The City agrees that the Corporation, any
Corporation Representative and the Corporation's successors or assigns, shall have the right
at all reasonable times to enter upon the Site or any portion thereof to examine and inspect
the Site. The City further agrees that the Corporation, any Corporation Representative, and
the Corporation's successors or assigns shall have such rights of access to the Site as may
be reasonably necessary to cause the proper maintenance of the Site in the event of failure
by the City to perform its obligations hereunder.
SECTION 7.6. Maintenance Utilities Taxes and Assessments; Operating Costs.
(a) Maintenance; Repairs and Replacement. Throughout the Term of this Lease, as
part of the consideration for the rental of the Site, all repair and maintenance of the Site shall
be the responsibility of the City, and the City shall pay for or otherwise arrange for the
payment of the cost of the repair and replacement of any portion of the Site resulting from
ordinary wear and tear or want of care on the part of the City or any sublessee thereof. In
exchange for the Lease Payments herein provided, the Corporation agrees to provide only the
Site, as hereinbefore more specifically set forth. The City waives the benefits of subsections
1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of
the rights of the City under the terms of this Lease.
(b) Tax and Assessments• Utility Charges. The City shall also pay or cause to be
paid all taxes and assessments, including but not limited to utility charges of any type or
nature charged to the Corporation or the City or levied, assessed or charged against any
portion of the Site or the respective interests or estates therein; provided that with respect
to special assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the City shall be obligated to pay only such installments
as are required to be paid during the Term of this Lease as and when the same become due.
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(c) Contests. The City may, at its expense and in its name, in good faith contest
any such taxes, assessments, utility and other charges and, in the event of any such contest,
may permit the taxes, assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom; Provided that prior to such nonpayment it
shall furnish the Corporation and the Trustee with the opinion of an Independent Counsel,
acceptable to the Trustee, to the effect that, by nonpayment of any such items, the interest
of the Corporation in such portion of the Site will not be materially endangered and that the
Site will not be subject to loss or forfeiture. Otherwise, the City shall promptly pay such
taxes, assessments or charges or make provisions for the payment thereof in form
satisfactory to the Corporation. The Corporation will cooperate fully in such contest upon the
request and at the expense of the City.
(d) Throughout the Term of this Lease the City shall pay all of the costs incurred
by the City in operating, maintaining and using the Site; and the City shall under no
circumstances look to the Corporation for any part of such costs
SECTION 7.7. Modification of the Site.
(a) Additions, Modifications and Improvements. The City shall, at its own expense,
have the right to make additions, modifications, and improvements to any portion of the Site
if such additions, modifications or improvements are necessary or beneficial for the use of
such portion of the Site. All such additions, modifications and improvements shall thereafter
comprise part of the Site and be subject to the provisions of this Lease. Such additions,
modifications and improvements shall not in any way damage any portion of the Site or cause
it to be used for purposes other than those authorized under the provisions of State and
federal law or in any way which would impair the federal income tax exclusion or the State
tax-exempt status of the interest components of the Lease Payments or diminish the fair
rental value of the Site; and the Site, upon completion of any additions, modifications and
improvements made pursuant to this Section, shall be of a value which is not less than the
value of the Site immediately prior to the making of such additions, modifications and
improvements.
(b) No Liens. The City will not permit any mechanics' or other lien to be established
or remain against the Site for labor or materials furnished in connection with any additions,
modifications or improvements or replacements made by the City pursuant to this Section;
provided that if any such lien is established and the City shall first notify or cause to be
notified the Corporation of the City's intention to do so, the City may in good faith contest
any lien filed or established against the Site, and in such event may permit the items so
contested to remain undischarged and unsatisfied during the period of such contest and any
appeal therefrom and shall provide the Corporation with full security against any loss or
forfeiture which might arise from the nonpayment of any such item, in form satisfactory to
the Trustee as assignee of the Corporation. The Corporation will cooperate fully in any such
contest upon the request and at the expense of the City.
(c) Replacements Redevelopment and Renovation. The City shall, at its own
expense, have the right to make replacements, redevelopment or renovation of all or a portion
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of the Site, including substitution of any other unencumbered assets of the City as and for the
Site, if the following conditions precedent are satisfied:
(1) The City receives an opinion of Special Counsel, which the City shall
furnish to the Corporation and the Trustee, that (i) such replacement does not adversely affect
the federal income tax exclusion or the State tax-exempt status of the interest components
of the Lease Payments, and (ii) the Lease will remain the legal, valid, binding and enforceable
obligation of the City;
(2) In the event such replacement, redevelopment or renovation would
result in the temporary abatement of Lease Payments as provided in Section 4.9 hereof, the
City shall provide in advance for payment of Lease Payments from special funds of the City
or other moneys, the application of which would not, in the opinion of Special Counsel (a copy
of which shall have been delivered to the Trustee), result in such Lease Payments constituting
indebtedness of the City in contravention of the Constitution and laws of the State;
(3) The City shall certify to the Trustee that it has sufficient funds to
complete such replacement, redevelopment or renovation;
(4) In the event of such substitution, the City shall provide the Trustee and
the Corporation with (a) an appraisal of the fair rental value of such substituted Site prepared
by an independent commercial real estate appraiser showing that the fair rental value is equal
to or greater than the Lease Payments due hereunder, and (b) a policy of Title Insurance for
such substituted Site in accordance with Section 5.5 of this Lease; and
(5) The City shall determine and certify to the Trustee that the annual fair
rental value of the replacements (including any substituted Site) will be at least equal to the
lesser of (i) the annual fair rental value of the Site immediately prior to such replacement,
redevelopment or renovation, or (ii) 150% of the maximum annual Lease Payments remaining
under the Lease.
(d) Release of Portion of Project. In connection with the City's option to partially
prepay Lease Payments, the City may release a portion of the Site from the lien of the Lease
so long as the City determines and certifies to the Trustee that the annual fair rental value of
the remaining components of the Site will be at least equal to the Lease Payments remaining
under the Lease.
SECTION 7.8. Liens. Except as provided in this Article, (including without limitation
Section 7.7 hereof) the City shall not, directly or indirectly, create, incur, assume or suffer to
exist any mortgage, pledge, lien, charge, encumbrance or claim, as applicable, on or with
respect to the Site, other than the respective rights of the Corporation and the City as herein
provided and except as to Permitted Encumbrances. Except as expressly provided in this
Article, the City shall promptly, at its own expense, take such action as may be necessary to
duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for
which it is responsible, if the same shall arise at any time; provided that the City may contest
such liens if it desires to do so. The City shall reimburse the Corporation for any expense
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incurred by it in order to discharge or remove any such mortgage, pledge, lien, change,
encumbrance or claim.
SECTION 7.9. Corporation's Disclaimer of Warranties. THE Corporation MAKES NO
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE
OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE SITE OR ANY ITEM OR
PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE Corporation IS NOT A
MANUFACTURER OF ITEMS OR PORTIONS OF THE SITE OR A DEALER THEREIN, AND THAT
THE CITY IS LEASING THE ITEMS OF THE SITE AS IS. In no event shall the Corporation be
liable for incidental, indirect, special or consequential damages, in connection with or arising
out of this Lease, the Site Lease, the Assignment Agreement, or the Trust Agreement for the
existence, furnishing, functioning or City's use and possession of the Site.
ARTICLE Vill
ASSIGNMENT, SUBLEASING AND AMENDMENT
SECTION 8.1. Assignment by the Corporation. Except as provided herein and in the
Trust Agreement, the Corporation will not assign this Lease to any other person, firm or
corporation unless the Corporation has certified to the Trustee that such assignment will not
impair or violate the representations, covenants and warranties contained in Section 2.2
hereof.
SECTION 8.2. Assignment and Subleasing by the City. The rights under this Lease
may not be assigned by the City, nor may the City sublease all or any portion of the Site,
unless the City receives an opinion of Special Counsel stating that such assignment or
subleasing does not adversely affect the federal income tax exclusion or the State tax-exempt
status of the interest components of the Lease Payments or affect the validity of this Lease.
In the event that this Lease is assigned or subleased by the City, the obligation to make Lease
Payments hereunder shall remain the obligation of the City.
SECTION 8.3. Amendments and Modifications. This Lease may be amended or any of
its terms modified with the written consent of the City and the Trustee, as assignee of the
Corporation, in accordance with the Trust Agreement.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.1. Events of Default Defined. The following shall be "events of default"
under this Lease and the terms "events of default" and "default" shall mean, whenever they
are used in this Lease, any one or more of the following events:
Ms1
(a) Lease Payment Default. Failure by the City to pay any Lease Payment required
to be paid hereunder by each Lease Payment Date.
(b) Covenant Default. Failure by the City to observe and perform any covenant,
condition or agreement on its part to be observed or performed herein or otherwise with
respect hereto or in the Trust Agreement or in the Site Lease, other than as referred to in
clause (a) of this Section, for a period of 30 days after written notice specifying such failure
and requesting that it be remedied has been given to the City by the Corporation, the Trustee
or the Owners of not less than twenty percent (20%) in aggregate principal amount of
Certificates then Outstanding; provided, however, if the failure stated in the notice cannot be
corrected within the applicable period, the Trustee as assignee of the Corporation or such
Owners, as the case may be, shall not unreasonably withhold consent to an extension of such
time if corrective action is instituted by the City within the applicable period and diligently
pursued until the default is corrected.
(c) Bankruptcy or Insolvency; Abandonment. The filing by the City of a case in
bankruptcy, or the subjection of any right or interest of the City under this Lease to any
execution, garnishment or attachment, or adjudication of the City as a bankrupt, or
assignment by the City for the benefit of creditors, or the entry by the City into an agreement
of composition with creditors, or the approval by a court of competent jurisdiction of a
petition applicable to the City in any proceedings instituted under the provisions of the federal
bankruptcy code, as amended, or under any similar act which may hereafter be enacted; or
the abandonment of the Site.
SECTION 9.2. Remedies on Default. Whenever any event of default referred to in
Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the
Corporation to exercise any and all remedies available pursuant to law or granted pursuant to
this Lease; provided, however, that in the event that there is in effect a Certificate Insurance
Policy issued by MBIA insuring the payment of principal and interest on the Certificates and
an Event of Default occurs, MBIA shall have the right to direct the selection and exercise of
the remedies; but, provided further that notwithstanding anything herein or in the Trust
Agreement to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES TO
ACCELERATE THE LEASE PAYMENTS OR OTHERWISE DECLARE ANY LEASE PAYMENTS
NOT THEN IN DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. After the occurrence of
an event of default hereunder, the City will surrender possession of the Site to the
Corporation, if requested to do so by the Corporation, the Trustee or the Owners of
Certificates in accordance with Section 13.08 of the Trust Agreement.
(a) No Termination• Repossession and Re -Lease on Behalf of City. In the event the
Corporation does not elect to terminate this Lease in the manner hereinafter provided for in
subparagraph (b) hereof, the Corporation may, with the consent of the City, which consent
is hereby irrevocably given, repossess the Site and re -lease the Site for the account of the
City, in which event the City's obligation will accrue from year to year in accordance with this
Lease and the City will continue to receive the value of the use of the Site from year to year
in the form of credits against its obligation to pay Lease Payments. The obligations of the City
shall remain the same as prior to such default: to pay fixed Lease Payments and Additional
Payments whether the Corporation re-enters or not. The City agrees to and shall remain liable
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for the payment of all Lease Payments and Additional Payments and the performance of all
conditions contained herein and shall reimburse the Corporation for any deficiency arising out
of the re -leasing of the Site, or, in the event the Corporation is unable to re -lease the Site,
then for the full amount of all Lease Payments to the end of the Term of this Lease, but said
Lease Payments, deficiency, or both, shall be payable only at the same time and in the same
manner as provided above for the payment of Lease Payments hereunder, notwithstanding
such repossession by the Corporation or any suit brought by the Corporation for the purpose
of effecting such repossession of the Site or the exercise of any other remedy by the
Corporation.
The City hereby irrevocably appoints the Corporation as the agent and attorney -in -fact
of the City to repossess and re -lease the Site in the event of default and to remove all
personal property whatsoever situated upon the Site, to place such property in storage or
other suitable place in the CITY OF NEWPORT BEACH, for the account of and at the expense
of the City, and the City hereby exempts and agrees to save harmless the Corporation from
any costs, loss or damage whatsoever arising or occasioned by any such repossession and
re -leasing of the Site. The City hereby waives any and all claims for damage caused or which
may be caused by the Corporation in repossessing the Site as provided herein and all claims
for damages that may result from the destruction of or the injury to the Site and all claims for
damages to or loss of any property belonging to the City that may be in or upon the Site.
The City agrees that the terms of this Lease constitute full and sufficient notice of the
right of the Corporation to re -lease the Site in the event of such repossession without
effecting a surrender of this Lease, and further agrees that no acts of the Corporation in
effecting such re -leasing shall constitute a surrender or termination of this Lease irrespective
of the term for which such re -leasing is made or the terms and conditions of such re -leasing,
or otherwise, but that, on the contrary, in the event of such default by the City the right to
terminate this Lease shall vest in the Corporation to be effected in the sole and exclusive
manner provided for in subparagraph (b) below.
The Trustee shall remit to the City the portion of rental obtained by the Trustee as
assignee of the Corporation in excess of the Lease Payments and of the costs of the
Corporation of re -leasing the Site.
In the event that the liability of the City under this subsection (a) is held to constitute
indebtedness or liability in any year exceeding in any year the income and revenue provided
for such year, the Corporation, or the Trustee or the Certificate Owners as assignees of the
Corporation, shall not exercise the offending remedies provided by this subsection (a).
(b) Termination: Repossession and Re -Lease. In the event of the termination of this
Lease by the Corporation at its option and in the manner hereinafter provided on account of
default by the City (and notwithstanding any repossession of the Site by the Corporation in
any manner whatsoever or the re -leasing of the Site), the City nevertheless agrees to pay to
the Corporation all costs, losses or damages howsoever arising or occurring payable at the
same time and in the same manner as is provided herein in the case of payment of Lease
Payments. Any proceeds of the re -lease or other disposition of the Site by the Corporation
shall be deposited into the Lease Payment Fund and be applied in accordance with the
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provisions of Section 5.04 of the Trust Agreement. Any surplus received by the Trustee as
assignee of the Corporation from such re -leasing over the total Lease Payments that would
have been due hereunder and the cost of the Trustee as assignee of the Corporation on re-
leasing the Site shall be remitted to the City. Neither notice to pay rent or to deliver up
possession of the Site given pursuant to law nor any proceeding taken by the Corporation to
recover possession of the Site shall of itself operate to terminate this Lease, and no
termination of this Lease on account of default by the City shall be or become effective by
operation of law, or otherwise, unless and until the Corporation shall have given written notice
to the City of the election on the part of the Corporation to terminate this Lease. The City
covenants and agrees that no surrender of the Site for the remainder of the Term hereof or
any termination of this Lease shall be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Corporation by such written notice. No such termination shall
be effected either by operation of law or act of the parties hereto, except only in the manner
herein expressly provided.
The Corporation and City hereby agree that Section 1951.2 of the California
Civil Code shall apply to this Lease and that upon such termination, the Corporation may
recover, in addition to all other damages available by contract or at law, from the City: (i) the
worth at the time of award of the unpaid rental which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the unpaid rental for
the balance of the term after the time of the award exceeds the amount of such rental loss
that the City proves could have been reasonably avoided; and (iii) any other amount necessary
to compensate the Corporation for all the detriment proximately caused by the City's failure
to perform its obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom. The "worth at the time of award" of the amounts referred to in
clauses (i), (ii) and (iii) above is computed by allowing interest at the legal rate of interest per
annum at which judgments for money in the State bear interest.
(c) Opinion of Special Counsel. The re -leasing of the Site as provided herein shall
be subject (i) to the opinion of Special Counsel that such re -leasing will not cause interest on
the Certificates to become includable in gross income for Federal income tax purposes or
subject to State of California personal income taxes and (ii) the written consent of the
Trustee.
SECTION 9.3. No Remedy Exclusive. No remedy conferred herein upon or reserved to
the Corporation is intended to be exclusive and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Lease or now or hereafter existing
at law or in equity. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Corporation to exercise any remedy reserved to it in this
Article it shall not be necessary to give any notice, other than such notice as may be required
in this Article or by law.
SECTION 9.4. A_areement to Pay Attorneys' Fees and Expenses. In the event either
party to this Lease should default under any of the provisions hereof and the nondefaulting
party should employ attorneys or incur other expenses for the collection of moneys or the
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enforcement of performance or observance of any obligation or agreement on the part of the
defaulting party contained herein, the defaulting party agrees that it will pay on demand to
the nondefaulting party the reasonable fees of such attorneys and such other expenses so
incurred by the nondefaulting party.
SECTION 9.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Lease should be breached by either party and thereafter waived
by the other party, such waiver shall be limited to the particular breach so waived and shall
not be deemed to waive any other breach hereunder.
SECTION 9.6. Application of the Proceeds from the Re -Lease of the Project. All
amounts received by the Corporation under this Article IX (other than as provided in Section
9.2(b) herein regarding certain surplus) shall be deposited by the Trustee in the Lease Payment
Fund and credited towards the Lease Payments in order of Lease Payment Date.
SECTION 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as are given to the Corporation under this Article IX have been assigned by the
Corporation to the Trustee under the Trust Agreement, to which assignment the City hereby
consents. Such rights and remedies shall be exercised by the Trustee and the Owners as
provided in the Trust Agreement.
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
SECTION 10.1. Mandatory Prepayment From Net Proceeds or Other Moneys. The City
shall be obligated to prepay the Lease Payments in whole or in part on any date, from and to
the extent of any Net Proceeds, State reimbursement moneys or other moneys theretofore
deposited in the Prepayment Account pursuant to Section 4.02 of the Trust Agreement. The
City and the Corporation hereby agree that such Net Proceeds or other moneys shall be
credited towards the City's obligations hereunder (except in the case of such prepayment of
the Lease Payments in whole)'pro rata among Lease Payments so that following prepayment,
remaining annual Lease Payments are proportionate to initial annual Lease Payments.
SECTION 10.2. Optional Prepayment. Subject to the terms and conditions of this
Section, the Corporation hereby grants an option to the City to prepay in whole or in part, the
principal amount of Lease Payments relating to Certificates in the amounts, on the dates and
at the prepayment prices provided in Section 4.03 of the Trust Agreement. The City shall
execute said option by giving written notice to the Trustee thereof at least 60 days prior to
the date of prepayment and depositing with said notice cash, in the amount of the Principal
Components of all Lease Payments to be prepaid plus (1) accrued interest on the principal
amount of Lease Payments to be prepaid to the date of prepayment, plus (2) any Lease
Payments then due but unpaid.
The City and the Corporation hereby agree that such prepayment in part shall be
credited towards the City's obligations hereunder pro rata among the principal components
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of Lease Payments not previously paid, so that following such prepayment the remaining
annual Lease Payments will, to the extent practicable given that amounts prepaid will be used
to prepay Certificates in integral multiples of $5,000, be proportionate to the initial amounts
of such Lease Payments.
SECTION 10.3. Credit for Amounts on Deposit. In the event of prepayment of the
Lease Payments in full under this Article X and the payment of all Additional Payments such
that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all
amounts then on deposit in the Lease Payment Fund, the Acquisition and Construction Fund
and the Reserve Fund shall be credited toward the amounts then required to be so prepaid.
SECTION 10.4. Effect of Prepayment.
(a) In Whole. In the event that the City prepays all remaining Lease Payments
pursuant to Section 10.1 or 10.2 hereof and all amounts owing the Trustee pursuant to
Section 4.10 hereof, then the City's obligations under this Lease shall thereupon cease and
terminate, including but not limited to the City's obligation to continue to pay Lease Payments
under this Article X.
(b) In Part. In the event the City prepays less than all of the remaining principal
components of the Lease Payments either pursuant to Sections 10.1 or 10.2 hereof from Net
Proceeds or other moneys, the amount of such prepayment shall be applied to reduce the
principal components of the remaining Lease Payments pro rata, corresponding to the resulting
prepayment of principal with respect to the Certificates.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Notices. All notices, certificates or other communications hereunder
to the Corporation and City shall be sufficiently given and shall be deemed to have been
received five business days after deposit in the United States mail in certified form, postage
prepaid, to the City or the Corporation, as the case may be, at the following addresses:
If to the City:
CITY OF NEWPORT BEACH
3300 Newport Boulevard
Newport Beach, California 92659
Attention: Finance Director
If to the Corporation:
Newport Beach Public Facilities Corporation
3300 Newport Boulevard
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Newport Beach, California 92659
Attention: Chief Financial Officer
If to the Trustee:
Bank of America National Trust and Savings Association
Attention: Corporate Trust Division
All notices, certificates and other communications to the Trustee shall be sufficiently
given upon receipt by the Trustee. The Corporation, the City and the Trustee, by notice given
in writing hereunder, may designate different addresses to which subsequent notices,
certificates or other communications will be sent.
SECTION 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be
binding upon the Corporation and the City and their respective successors and assigns.
SECTION 11.3. Severability. In the event any provision of this Lease shall be held
invalid or unenforceable by a court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
SECTION 11.4. Execution in Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all together shall
constitute but one and the same instrument.
SECTION 11.5. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS THEREOF, the Corporation has caused this Lease to be executed in its
name by its duly authorized officers, and the City has caused this Lease to be executed in its
name by its duly authorized officers, as of the date first above written.
NEWPORT BEACH PUBLIC FACILITIES CORPORATION, as Lessor
Bv:
Authorized Representative
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CITY OF NEWPORT BEACH, as Lessee
By:
City Manager
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STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
On this day of June in the year 1992 before me, the undersigned, a Notary
Public in and for the State of California, personally appeared to me, , known to
me (or proved to me on the basis of satisfactory evidence) to be the Authorized Representa-
tive of the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, the public agency that
executed the within instrument, and personally known to me (or proved on the basis of
satisfactory evidence) to be the person who executed the within instrument on behalf of said
Corporation, and acknowledged to me that he executed the within instrument pursuant to a
resolution of the Board of Directors of said Corporation.
WITNESS my hand and official seal.
Notary Public
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STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
On this day of June in the year 1992 before me, the undersigned, a Notary
Public in and for the State of California, personally appeared to me, , known to
me (or proved to me on the basis of satisfactory evidence) to be the of CITY
OF NEWPORT BEACH, the public agency that executed the within instrument, and personally
known to me (or proved on the basis of satisfactory evidence) to be the person who executed
the within instrument on behalf of said City, and acknowledged to me that he executed the
within instrument pursuant to a resolution of said City.
WITNESS my hand and official seal.
Notary Public
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EXHIBIT A
SCHEDULE OF LEASE PAYMENTS
Lease Interest Principal
Payment Date Component Component Total
November 15, 1992
May 15, 1993
November 15, 1993
May 15, 1994
November 15, 1994
May 15, 1995
November 15, 1995
May 15, 1996
November 15, 1996
May 15, 1997
November 15, 1997
May 15, 1998
November 15, 1998
May 15, 1999
November 15, 1999
May 15, 2000
November 15, 2000
May 15, 2001
November 15, 2001
May 15, 2002
November 15, 2002
May 15, 2003
November 15, 2003
May 15, 2004
November 15, 2004
May 15, 2005
November 15, 2005
May 15, 2006
November 15, 2006
May 15, 2007
November 15, 2007
May 15, 2008
November 15, 2008
May 15, 2009
November 15, 2009
May 15, 2010
November 15, 2010
May 15, 2011
November 15, 2011
May 15, 2012
November 15, 2012
May 15, 2013
November 15, 2013
May 15, 2014
November 15, 2014
May 15, 2015
November 15, 2015
May 15, 2016
November 15, 2016
May 15, 2017
November 15, 2017
May 15, 2018
November 15, 2018
May 15, 2019
Ind
TOTAL
A-2
EXHIBIT B
GENERAL DESCRIPTION OF PROJECT
m
EXHIBIT C
FORM OF LEASE SUPPLEMENT
There is hereby subjected to the terms of that certain Project Lease, dated as of June 1 , 1992
(the "Lease"), between the NEWPORT BEACH PUBLIC FACILITIES CORPORATION (the
"Corporation") and CITY OF NEWPORT BEACH (the "City") the following property items
which shall comprise a portion of the Site, as defined therein:
Description of Substituted Site
I, the City Representative, hereby certify that:
(1) the fair rental value and the useful life of the above -described portion of the Site at least
equals the fair rental value and the useful life of the portion of the Site for which it was
substituted; if the fair rental value of such portion of the Site is greater than the portion of the
Site for which it was substituted, the City has deposited or caused to be deposited in the
Acquisition and Construction Fund held by the City an amount sufficient to pay such increased
cost; and
(2) the above -described portion of the Site will be used by the City for authorized public
purposes and can be leased under the provisions of the Lease;
I, the City Representative, hereby certify that the portion of the Site being acquired,
constructed or improved will be owned by the Corporation free and clear of all liens or claims
of others, except for the lien of the Trust Agreement referred to in the Lease and the rights
of the City under the Lease, and that the Corporation will not encumber title to the substituted
portion of the Site while the Certificates remain outstanding.
The following property items, which formerly constituted a portion of the Site, are released
from the terms of the Lease:
CITY OF NEWPORT BEACH
By:
City Representative
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Sm
C-1
EXHIBIT D
LEGAL DESCRIPTION OF THE SITE
D-1
S -J26-q Z
TRUST AGREEMENT
Dated as of June 1, 1992
by and among
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as Trustee
NEWPORT BEACH PUBLIC FACILITIES CORPORATION,
and
CITY OF NEWPORT BEACH
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions and Rules of Construction 2
SECTION 1.02 Authorization 9
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
SECTION 2.01
Authorization
9
SECTION 2.02
Date
9
SECTION 2.03
Maturity; Interest Rates
10
SECTION 2.04
Registration; Interest
10
SECTION 2.05
Form of Certificates
11
SECTION 2.06
Execution
11
SECTION 2.07
Transfer and Exchange
11
SECTION 2.08
Certificates Mutilated, Lost, Destroyed or Stolen
12
SECTION 2.09
Payment
12
SECTION 2.10
Execution of Documents and Proof of Ownership
13
SECTION 2.11
Certificate Register
13
SECTION 2.12
Destruction of Canceled Certificates
13
ARTICLE III
APPLICATION OF PROCEEDS; ACQUISITION AND CONSTRUCTION FUND
SECTION 3.01
Application of Proceeds and other moneys
13
SECTION 3.02
[Reserved]
14
SECTION 3.03
Acquisition and Construction Fund
14
SECTION 3.04
Additional Certificates
15
SECTION 3.05
Validity of Certificates
15
ARTICLE IV
PREPAYMENT OF CERTIFICATES
SECTION 4.01 Establishment of Prepayment Fund 16
SECTION 4.02 Mandatory Prepayment 16
SECTION 4.03 Optional Prepayment 16
SECTION 4.04 Selection of Certificates for Prepayment 17
SECTION 4.05 Notice of Prepayment 17
SECTION 4.06 Partial Prepayment of Certificates 17
SECTION 4.07 Effect of Notice of Prepayment 18
SECTION 4.08 No Surplus 18
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
SECTION 5.01 Security Provisions 18
SECTION 5.02 Establishment of Lease Payment Fund 19
SECTION 5.03 Deposits 19
SECTION 5.04 Application of Moneys 19
ARTICLE VI
RESERVE FUND
SECTION 6.01
Establishment of Reserve Fund
20
SECTION 6.02
Deposits to the Reserve Fund
20
SECTION 6.03
Transfers of Excess
20
SECTION 6.04
Application of Reserve Fund in Event of Deficiency
in Lease Payment
20
SECTION 6.05
Transfer to Make all Lease Payments
21
ARTICLE VII
NET PROCEEDS FUND
SECTION 7.01 Establishment of Net Proceeds Fund; Deposits 21
SECTION 7.02 Disbursements 21
SECTION 7.03 Cooperation 21
ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT
SECTION 8.01
Held in Trust
22
SECTION 8.02
Investments Authorized
22
SECTION 8.03
Disposition of Investments
22
SECTION 8.04
Accounting
22
SECTION 8.05
Valuation and Disposition of Investments
22
SECTION 8.06
Commingling of Moneys in Funds
23
SECTION 8.07
Arbitrage Covenant
23
SECTION 8.08 Rebate Fund 23
SECTION 8.09 Information Concerning Investments 24
SECTION 8.10 Notice Concerning Investments 24
ARTICLE IX
THE TRUSTEE
SECTION 9.01
Appointment of Trustee
25
SECTION 9.02
Merger or Consolidation
25
SECTION 9.03
Protection of the Trustee
26
SECTION 9.04
Rights of the Trustee
26
SECTION 9.05
Standard of Care
27
SECTION 9.06
Compensation of the Trustee
27
SECTION 9.07
Indemnification of the Trustee
28
ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
SECTION
10.01
Amendments Permitted
28
SECTION
10.02
Procedure for Amendment with Written Consent of the Owners
29
SECTION
10.03
Disqualified Certificates
30
SECTION
10.04
Effect of Supplemental Agreement
30
SECTION
10.05
Endorsement or Replacement of Certificates Delivered After
Amendments
31
SECTION
10.06
Amendatory Endorsement of Certificates
31
SECTION
10.07
Trustee's Reliance on Opinion of Special Counsel
31
ARTICLE XI
COVENANTS; NOTICES
SECTION
11.01
Compliance With and Enforcement of the Lease
31
SECTION
11.02
Payment of Taxes
32
SECTION
11.03
Observance of Laws and Regulations
32
SECTION
11.04
Prosecution and Defense of Suits
32
SECTION
11.05
City Budgets
32
SECTION
11.06
Further Assurances
32
SECTION
11.07
Tax Covenants
32
SECTION
11.08
Notice of Trustee
33
ARTICLE XII
LIMITATION OF LIABILITY
SECTION 12.01 Limited Liability of the City 33
SECTION 12.02 No Liability of the City or Corporation for Trustee Performance 33
SECTION 12.03 Limited Liability of Trustee 33
SECTION 12.04 Limitation of Rights of Parties and Certificate Owners 34
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES OF
CERTIFICATE OWNERS
SECTION 13.01
Assignment of Rights
34
SECTION 13.02
Events of Default
34
SECTION 13.03
Application of Funds
34
SECTION 13.04
Institution of Legal Proceedings
35
SECTION 13.05
Non -waiver
35
SECTION 13.06
Remedies Not Exclusive
35
SECTION 13.07
Power of Trustee to Control Proceedings
35
SECTION 13.08
Limitation on Certificate Owners' Right to Sue
36
SECTION 13.09
Agreement to Pay Attorneys' Fees and Expenses
36
SECTION 13.10
Term of a Substitute Lease
37
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01
Defeasance
37
SECTION 14.02
Non -Presentment of Certificates
38
SECTION 14.03
Records
38
SECTION 14.04
Execution in Counterparts
38
SECTION 14.05
Headings
38
SECTION 14.06
Waiver of Notice
39
SECTION 14.07
Separability of Invalid Provisions
39
SECTION 14.08
Payment on a Business Day
39
ARTICLE XV
CERTIFICATE INSURANCE
SECTION 15.01 General 39
SECTION 15.02 Consents Required 39
SECTION 15.03 Notices 40
SECTION 15.04 Payment of Certificate Insurance 40
SECTION 15.05 Subrogation 42
(iv)
Exhibit A - Form of Certificate of Participation
Exhibit B - (RESERVED)
(v)
A-1
B-1
AGREEMENT TO TRUST AGREEMENT
SUPPLEMENT AGREEMENT TO SUPPLEMENTAL TRUST AGREEMENT
THIS AGREEMENT TO TRUST AGREEMENT SUPPLEMENTAL AGREEMENT TO SUPPLEMENT
TRUST AGREEMENT, made and entered into as of this 1 st day of June, 1992, by and among
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as trustee (the
"Trustee"), NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a not for profit corporation
duly organized and existing under the laws of the State of California,
(the "Corporation"), and CITY OF NEWPORT BEACH, a municipal corporation duly organized
and existing under the Constitution and laws of the State of California, as lessee under said
lease (the "City");
WITNESSETH:
WHEREAS, the City and the Corporation have entered into a leasing arrangement
whereby the Corporation has agreed to lease certain undeveloped property from the City and
the City has agreed to lease back such property and improvements thereto from the
Corporation;
WHEREAS, the City will pay Lease Payments under the Project Lease representing fair
market rental value of property leased thereunder in amounts sufficient to pay the components
of principal, premium, if any, and interest represented by the Certificates executed and
delivered hereunder;
WHEREAS, as security for the Certificates, the Corporation will assign the rights to
receive such Lease Payments to the Trustee, and the Corporation and City will grant a
security interest in all moneys held by the Trustee hereunder to the Trustee for the benefit of
the Owners of Certificates;
WHEREAS, the Trustee has agreed to transfer proceeds of the Certificates for deposit
in the Acquisition and Construction Fund to the City hereunder to pay certain Project Costs
and Delivery Costs for the Project described herein and in the Project Lease;
WHEREAS, the Trustee has agreed to execute and deliver Certificates, each evidencing
proportionate interests in the Lease Payments and Prepayments made by the City under the
Project Lease;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions and Rules of Construction. Unless the context otherwise
requires, the terms defined in this Section shall, for all purposes of this Agreement to Trust
Agreement Supplement Agreement to Supplemental Trust Agreement, have the meanings
herein specified. Unless the context otherwise indicates, words importing the singular number
shall include the plural number and vice versa. The terms "hereby," "hereof," "hereto,"
"herein," "hereunder" and any similar terms, as used in this Agreement, refer to this
Agreement as a whole.
"Acquisition and Construction Fund" means the Acquisition and Construction Fund
established and held by the City pursuant to Article III hereof.
"Additional Payments" means Additional Payments as defined in Section 4.9 of the
Lease.
"Assignment Agreement" means the Assignment Agreement, dated as of the date
hereof, by and between the Trustee and the Corporation, and any duly authorized and
executed amendments thereto.
"Authorized Denomination" means $5,000.00 or any integral multiple thereof.
"Business Day" means any day of the year other than Saturday or Sunday on which
banks in New York, New York, Los Angeles, California, or San Francisco, California, are not
authorized or obligated by law or executive order to close and on which the New York Stock
Exchange is not closed.
"Certificate Insurance Policy" or "Policy" means generally an insurance policy, if any,
which guarantees all or a portion of the Lease Payments and means initially insurance policy
numbered issued by
"Certificate Payment Date" means June 1 and December 1 of each year, commencing
December 1, 1992, so long as any Certificates remain outstanding.
"Certificate" or "Certificates" means the Certificates of Participation Series 1992
(Central Library Building Project) to be executed and delivered pursuant hereto.
"Certificate Year" means each successive one-year period ending on a date selected
by the City.
"City" means City of Newport Beach.
"City Representative" means the City Manager, or a person authorized by the City
Council or the City Manager to act on behalf of the City under or with respect to this
Agreement.
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"Closing Date" means the day when the Certificates, duly executed by the Trustee,
are delivered to the Original Purchasers thereof.
"Code" means the Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder, and all citations herein shall be deemed to refer to corresponding
sections in any such amended Code and regulations.
"Corporation" means Newport Beach Public Facilities Corporation.
"Corporation Representative" means the President or Vice President or Secretary of the
Corporation, or any person authorized to act on behalf of the Corporation under or with
respect to the Lease.
"Delivery Costs" means and further includes all items of expense directly or indirectly
payable by or reimbursable to the City or the Corporation relating to the financing of the
Project from the proceeds of the Certificates, including but not limited to filing and recording
costs, settlement costs, printing costs, word processing costs, reproduction and binding
costs, initial fees and charges of the Trustee including its first annual administration fee and
the fees and charges of its counsel, Certificate insurance premiums, legal fees and charges,
financing and other professional consulting fees, costs of rating agencies or credit ratings,
fees for execution, transportation and safekeeping of the Certificates and charges and fees
in connection with the foregoing.
"Event of Default" means an event of default under the Lease, as defined in Section
9.1 thereof.
"Fiscal Year" means the fiscal year of the City commencing July 1 and ending on the
next following June 30.
"Government Obligations" means Permitted Investments as described in paragraph A
of the definition thereof.
"Independent Counsel" means an attorney duly admitted to the practice of law before
the highest court of the state in which such attorney maintains an office and who is not an
employee of the Corporation, the Trustee or the City.
"Insurer" means generally the issuer, if any, of a Certificate Insurance Policy and
means initially
"Lease" means the Project Lease.
"Lease Payment" or "Lease Payments" means any payment or payments required to
be paid by the City to the Corporation pursuant to Section 4.3 of the Lease, including the
payments set forth in Exhibit B to this Trust Agreement.
"Lease Payment Date" means May 15 and November 15 in each year.
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"Lease Payment Fund" means the fund by that name established and held by the
Trustee pursuant to Article V hereof.
"Moody's" means Moody's Investors Service, Inc., its successors and assigns.
"Net Proceeds" means any proceeds of insurance carried pursuant to Sections 5.3 and
5.5 of the Lease, performance bonds, or a taking by eminent domain or condemnation paid
with respect to the Project and remaining after payment therefrom of any expenses (including
attorneys' fees) incurred in the collection thereof.
"Net Proceeds Fund" means the account by that name established and held by the
Trustee pursuant to Article VII hereof.
"Original Purchaser" means the original purchaser of the Certificates, or any successors
or assigns thereof.
"Outstanding" when used as of any particular time with respect to Certificates, means
(subject to the provisions of Section 10.03 hereof) all Certificates theretofore executed and
delivered by the Trustee under this Agreement except -
(1) Certificates theretofore canceled by the Trustee or surrendered to the
Trustee for cancellation;
(2) Certificates for the payment or prepayment of which funds or
Government Obligations, together with interest earned thereon, in the necessary amount shall
have theretofore been deposited with the Trustee (whether upon or prior to the maturity or
prepayment date of such Certificates) pursuant to Article XIV hereof, provided that, if such
Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been
given as provided in Section 4.05 hereof or provision satisfactory to the Trustee shall have
been made for the giving of such notice; and
(3) Certificates in lieu of or in exchange for which other Certificates shall
have been executed and delivered by the Trustee pursuant to Sections 2.07 and 2.08 hereof.
"Owner" or "Certificate Owner" or "Owner of a Certificate, or any similar term, when
used with respect to a Certificate, means the person in whose name such Certificate is
registered on the registration books maintained by the Trustee.
"Permitted Investments means any of the following which at the time of investment
are legal investments under the laws of the State for the moneys proposed to be invested
therein:
A. Direct 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) or
obligations the principal of and interest on which are unconditionally guaranteed
by the United States of America.
-4-
B. Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies, provided such obligations
are backed by the full faith and credit of the United States of America (stripped
securities are only permitted if they have been stripped by the agency itself):
1. U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial
ownership
2. Farmers Home Administration (FHA)
Certificates of beneficial ownership
3. Federal Financing Bank
Federal Housing Administration Debentures(FHA)
General Services Administration
Participation certificates
Government National Mortgage Association ("GNMA" or "Ginnie Mae")
GNMA - guaranteed mortgage -backed bonds
GNMA - guaranteed pass -through obligations
U.S. Maritime Administration
Guaranteed Title XI financing
8. U.S. Department of Project Notes Housing and Urban Development(HUD)
Local Corporation Bonds
C. Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following (non -full faith and credit U.S. government
agencies (stripped securities are only permitted if they have been stripped by
the agency itself):
1. Federal Home Loan Bank System (FHL Banks
Senior debt obligations
2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac")
Participation Certificates
Senior debt obligations
3. Federal National Mortgage Association (FNMA or "Fannie Mae")
senior debt obligations(excluded are stripped mortgage securities which
are valued greater than par on the portion of unpaid principal)
4. Student Loan Marketing Association (SLMA or "Sallie Mae")
Senior debt obligations
26V
5. Resolution Funding Corporation (REFCORP)
Only the interest component of REFCORP strips which have been
stripped by request to the Federal Reserve Bank of New York in book
entry from are acceptable.
D. Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933,
and having a rating by S&P of AAAm-G, AAAm, or AAm.
E. Certificates of deposit secured at all times by collateral described in (A), (B) or
(A) and (B) above. The collateral must be held by a third party and the Trustee
on behalf of the Certificate Owners must have a perfected first security interest
in the collateral. The certificates must have a one year or less maturity and
must be issued by commercial banks, savings and loan associations or mutual
savings banks whose short term obligations are rated A or better by S & P.
F. Certificates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by the FDIC.
G. Investment Agreements, including guaranteed investment contracts, acceptable
to
H. Commercial paper rated, at the time of purchase, "Prime-1 " by Moody's and
"A-1 " or better by S&P.
I. Bonds or notes issued by any state or municipality which are rated by Moody's
and S&P in one of the two highest rating categories assigned by such agencies.
J. Federal funds or bankers acceptances with a maximum term of one year of any
bank which has an unsecured, uninsured and unguaranteed obligation rating of
"Prime-1 " or "A-3" or better by Moody's and "A-1 " or "A" or better by S&P.
K. Repurchase agreements which provide for the transfer of securities from a
dealer bank or securities firm (seller/borrower) to a municipal entity
(buyer/lender), and the transfer of cash from a municipal entity to the dealer
bank or securities firm with an agreement that the dealer bank or securities firm
will repay the cash plus a yield to a municipal entity in exchange for the
securities at a specified date.
Repurchase agreements must satisfy the following criteria or be approved by
1. They must be between the municipal entity and a dealer bank or securities firm
a. Primary dealers on the Federal Reserve reporting dealer list which fall under
the jurisdiction of the Securities Investors Protection Corporation (the "SIPC")
and which are rated "A" or better by S&P and Moody's, or
b. Banks rated "A" or above by S&P and Moody's.
2. The written repo contract must include the following_
a. Securities which are acceptable for transfer:
0.) Direct U.S. governments
(2.) Federal agencies backed by the full faith and credit of the U.S.
Government
b. The term of the repo may be up to 30 days
C. The collateral must be delivered to the municipal entity, Trustee (if the
Trustee is not supplying the collateral) or third party acting as agent for
the Trustee (if the Trustee is supplying the collateral)
before/simultaneous with payment (perfection by possession of
certificated securities).
d. The Trustee has a perfected first priority security interest in the
collateral.
e. Collateral is free and clear of third -party liens and in the case of a SIPC
broker was not acquired pursuant to a repo agreement or reverse repo
agreement.
f. Failure to maintain the requisite collateral percentage will require the
Trustee to liquidate collateral.
g. Valuation of Collateral
(1) The securities must be valued at least weekly, marked -to -market
at current market price plus accrued interest
(a) the value of collateral must be equal to 104% of the amount of cash
transferred by a municipal entity to the dealer bank or security firm
under the Repurchase Agreement plus accrued interest. If the value of
securities held as collateral slips below 104% of the value of the cash
transferred by a municipal entity, then additional cash and/or acceptable
securities must be transferred. If the securities used as collateral are
FNMA or FMAC, then the value of the collateral must equal 105%.
3. Legal opinion must be delivered to the municipal entity:
-7-
a. Repo Agreement meets guidelines under state law for legal investment
of public funds.
Additional Notes
(i) There is no list of permitted investments for non -indentured funds. Issuer's
own credit judgment and the relevant circumstances (e.g., amount of
investment timing of investment) should dictate what is permissible.
(ii) Any state or county administered pool investment fund in which the issuer is
statutorily permitted or required to invest will be deemed a permitted
investment if approved by bond insurer.
(iii) Reserve Fund CRF") investments should be valued at cost if maturity is one
year or less, and should be valued at fair market value and marked to market
annually if maturity is longer than one year. In no event should RF investments
have maturities extending beyond 5 years.
"Prepayment" means any payment made by the City pursuant to Article X of the Lease
as a prepayment of the Lease Payments.
"Prepayment Fund" means the account by that name established and held by the
Trustee pursuant to Article IV hereof.
"Principal Office" means the corporate trust office of the Trustee in Los Angeles,
California, or such other designated office of the Trustee, or the principal corporate trust
office of any successor Trustee.
"Proiect" means the Project as defined in the Lease.
"Project Costs" means, with respect to any item or portion of the Project, the contract
price paid or to be paid therefor upon construction, procurement or improvement thereof, in
accordance with a purchase order or contract therefor. Project Costs include, but are not
limited to, the administrative, engineering, legal, financial and other costs incurred by the City
and the Corporation in connection with the construction, procurement or improvement of the
Project, all applicable sales taxes and other charges resulting from such construction,
procurement or improvement of the Project, and the costs associated with making rebate
calculations required by the Code.
"Project Lease" means the lease dated the date hereof, between the City and the
Corporation, and any authorized and executed amendments thereto.
"Rebate Fund" means the fund established pursuant to Section 8.08 hereof.
"Record Date" means the close of business on the fifteenth day of the month
preceding each Certificate Payment Date, whether or not such fifteenth day is a Business Day.
"Reserve Fund" means the fund by that name established and held by the Trustee
pursuant to Article VI hereof.
"Reserve Replenishment Rent" means Reserve Replenishment Rent payable pursuant
to Section 4.3(d) of the Lease.
"Reserve Requirement" means an amount equal to the least of (1) the maximum
aggregate annual Lease Payments payable under the Lease, (2) 125% of the average annual
aggregate Lease Payments payable under the Lease, or (3) 10% of the principal amount of
the Certificates Outstanding.
"Revenues" means all revenues subject to this Agreement to Trust Agreement
Supplement Agreement to Supplement Trust Agreement including, without limitation, Lease
Payments, Net Proceeds and Certificate Insurance Policy payments.
"S&P" means Standard & Poor's Corporation, its successors and assigns.
"Site" means the Site, as defined in the Lease.
"Site Lease" means the Site Lease, dated the date hereof, between the Corporation
and the City.
"Special Counsel" means an attorney or firm of attorneys of nationally recognized
standing in matters pertaining to the tax-exempt status of interest on certificates of
participation issued by states and their political subdivisions and acceptable to the City and
the Trustee.
"State" means the State of California.
"Tax Certificate" means that certain Tax Certificate executed by the City in connection
with the execution and delivery of the Certificates.
"Term" means the time during which the Lease is in effect, as provided in Section 4.2
of the Lease.
"Trustee" means Bank of America National Trust and Savings Association, a national
banking association or any successor trustee.
"Trust Agreement" or "Agreement" means this Agreement to Trust Agreement
Supplement Agreement to Supplemental Trust Agreement, together with any amendments
hereof or supplements hereto permitted to be made hereunder.
SECTION 1.02 Authorization. Each of the parties hereby represents and warrants that
it has full legal authority and is duly empowered to enter into this Agreement, and has taken
all actions necessary to authorize the execution of this Agreement by the officers and persons
signing it.
ARTICLE 11
THE CERTIFICATES OF PARTICIPATION
SECTION 2.01 Authorization. The Trustee is hereby authorized and directed to execute
and deliver Certificates of Participation in an aggregate principal amount of $7,500,000.00
evidencing proportionate and undivided ownership interests in the Lease Payments and the
Prepayments payable under the Lease.
SECTION 2.02 Date. Each Certificate shall be dated June 1, 1992, and interest with
respect thereto shall be payable from the Certificate Payment Date next preceding the date
of execution thereof, unless:
(i) it is executed as of a Certificate Payment Date, in which event interest
with respect thereto shall be payable from the date thereof; or
(ii) it is executed after a Record Date and before the following Certificate
Payment Date, in which event interest with respect thereto shall be
payable from such following Certificate Payment Date, or
(iii) it is executed prior to the close of business on November 15, 1992,
in which event interest with respect thereto shall be payable from June
1, 1992;
provided, however, that if, as of the date of any Certificate, interest has not been paid when
due with respect to any Outstanding Certificate, interest with respect to such Certificate shall
be payable from the Certificate Payment Date to which interest has previously been paid or
made available for payment with respect to the Outstanding Certificates or from June 1, 1992
if no interest has been paid or made available for payment.
SECTION 2.03 Maturity; Interest Rates. The Certificates shall mature on June 1 of the
following years and shall bear interest at the following rates:
CERTIFICATES OF PARTICIPATION
Maturity Principal Interest
(June 1) Amount Rate
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
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2004
2005
2019 [Term Certificates]
SECTION 2.04 Registration; Interest. The Certificates shall be delivered in the
form of fully registered Certificates without coupons in the denomination of $5,000 or any
integral multiple thereof. The Certificates shall be numbered as the Trustee deems appropriate.
Interest with respect to the Certificates shall be payable semiannually on June 1 and
December 1 of each year, commencing December 1, 1992, to the date of maturity or
prepayment, whichever is earlier. Said interest shall represent the portion of Lease Payments
designated as interest and coming due during the six-month period preceding each Certificate
Payment Date with respect to the Certificates computed on the basis of a 360-day year of
twelve 30-day months. The proportionate share of the portion of Lease Payments designated
as interest with respect to any Certificate shall be computed by multiplying the portion of
Lease Payments designated as principal with respect to such Certificate by the rate of interest
applicable to such Certificate.
SECTION 2.05 Form of Certificates. The Certificates and the assignment to appear
thereon shall be substantially in the respective forms set forth in Exhibit A attached hereto
and by this reference incorporated herein. Pending the preparation of definitive Certificates,
at the request of the Original Purchaser, the Certificates may be delivered in temporary form
exchangeable for definitive Certificates when ready for delivery. If the Trustee delivers
temporary Certificates, it shall execute and deliver definitive Certificates in an equal aggregate
principal amount, when available and thereupon the temporary Certificates shall be
surrendered to the Trustee at its Principal Office. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as definitive
Certificates.
SECTION 2.06 Execution. The Certificates shall be executed by and in the name of
the Trustee by the manual signature of any authorized signatory of the Trustee. The Trustee
shall insert the date of execution of each Certificate in the place provided thereon.
SECTION 2.07 Transfer and Exchange.
(a) Transfer of Certificates. Any Certificate may, in accordance with its
terms, be transferred upon the books required to be kept pursuant to the provisions of Section
2.11 by the person in whose name it is registered, in person or by his duly authorized
attorney, upon surrender of such Certificate for cancellation at the Principal Office
accompanied by delivery of a written instrument of transfer in a form approved by the
Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for
transfer, the Trustee shall execute and deliver a new Certificate or Certificates of the same
maturity and interest rate, for like aggregate principal amount.
(b) Exchange of Certificates. Certificates may be exchanged at the Principal
Office for a like aggregate principal amount of Certificates of other authorized denominations
of the same maturity and interest rate.
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(c) Costs of Transfer or Exchange. The Trustee may require the payment by
the Certificate Owner requesting transfer or exchange of any tax or other governmental
charge required to be paid with respect to such transfer or exchange. The City shall pay all
other registration and transfer or exchange costs, including the cost of printing Certificates,
except the expense incurred under Section 2.08 hereof. All Certificates surrendered pursuant
to the provisions of this Section shall be canceled by the Trustee and shall not be redelivered.
(d) Time for Transfer or Exchange. The Trustee shall not be obligated to
transfer or exchange any Certificate (i) between 15 days prior to selection of Certificates for
prepayment and the date notice of prepayment is mailed and (ii) selected for prepayment.
SECTION 2.08 Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall
become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute
and deliver a new Certificate of like tenor and numbered as the Trustee shall determine in
exchange and substitution for the Certificate so mutilated, but only upon surrender to the
Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the
Trustee shall be canceled by it. If any Certificate shall be lost, destroyed or stolen, evidence
of such loss, destruction or theft may be submitted to the Trustee, and, if such evidence is
satisfactory to the Trustee and, if an indemnity, satisfactory to the Trustee indemnifying the
Trustee, the Corporation and the City, shall be given, the Trustee, at the expense of the
Certificate Owner, shall execute and deliver a new Certificate of like tenor and maturity and
numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so
lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new
Certificate delivered under this Section and of the expenses which may be incurred by the
Trustee in carrying out the duties under this Section. Any Certificate executed under the
provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen shall
be equally and proportionately entitled to the benefits of this Agreement with all other
Certificates secured by this Agreement. The Trustee shall not be required to treat both the
original Certificate and any replacement Certificate as being Outstanding for the purpose of
determining the principal amount of Certificates which may be executed and delivered
hereunder or for the purpose of determining any percentage of Certificates Outstanding
hereunder, but both the original and replacement Certificate shall be treated as one and the
same. Notwithstanding any other provision of this Section, in lieu of delivering a new
Certificate which has been mutilated, lost, destroyed or stolen, and which has matured, the
Trustee may make payment with respect to such Certificate.
SECTION 2.09 Payment. Payment of interest with respect to any Certificate on any
Certificate Payment Date or prepayment date shall be made to the person appearing on the
registration books of the Trustee as the Owner thereof as of the Record Date immediately
preceding such Certificate Payment Date or prepayment date, as the case may be, such
interest to be paid by check mailed on the Certificate Payment Date by first class mail to such
Owner at his address as it appears on such registration books. Payment of interest with
respect to Certificates may, at the option of any Owner of at least $1,000,000 principal
amount of Certificates (such option to be exercised by the written request of such Owner to
the Trustee on or before the Record Date), be transmitted by wire transfer to the bank
account number on file with the Trustee as of the Record Date before the applicable
Certificate Payment Date. The principal payable upon maturity or prepayment with respect to
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the Certificates shall be payable upon surrender at the Principal Office. Said amounts shall be
payable in lawful money of the United States of America. The Trustee is hereby authorized
to pay or prepay the Certificates when duly presented for payment at maturity or on
prepayment and to cancel all Certificates upon payment thereof.
SECTION 2.10 Execution of Documents and Proof of Ownership. Any request,
direction, consent, revocation of consent, or other instrument in writing required or permitted
by this Agreement to be signed or executed by Certificate Owners may be in any number of
concurrent instruments of similar tenor, and may be signed or executed by such Owners in
person or by their attorneys or agents appointed by an instrument in writing for that purpose,
or by any bank, trust company or other depository for such Certificates. Proof of the
execution of any such instrument, or of any instrument appointing any such attorney or agent,
and of the ownership of Certificates shall be sufficient for any purpose of this Agreement
(except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his attorney or agent
of any such instrument and of any instrument appointing any such attorney or agent, may be
proved by a certificate, which need not be acknowledged or verified, of an officer of any bank
or trust company located within the United States of America, or of any notary public or other
officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that
the persons signing such instruments acknowledged before him the execution thereof. Where
any such instrument is executed by an officer of a corporation or association or a member of
a partnership on behalf of such corporation, association or partnership, such certificate shall
also constitute sufficient proof of his authority.
(b) The fact of the ownership of Certificates by any person, the amount and
numbers of such Certificates and the date of execution shall be proved by the registration
books maintained pursuant to Section 2.11.
Nothing contained in this Article II shall be construed as limiting the Trustee to
such proof, it being intended that the Trustee may accept any other evidence of the matters
herein stated which the Trustee may deem sufficient. Any request or consent of the Owner
of any Certificate shall bind every future Owner of the same Certificate in respect of anything
done or to be done by the Trustee in pursuance of such request or consent.
SECTION 2.11 Certificate Register. The Trustee will keep or cause to be kept at its
operational office sufficient books for the registration and transfer of the Certificates which
shall, during normal working hours, be open to inspection by the City and the Corporation;
and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations
as it may prescribe, register or transfer or cause to be registered or transferred, on said books,
Certificates as hereinbefore provided. The City, the Corporation and the Trustee shall be
entitled to treat the registered owner of a Certificate as the absolute owner thereof for all
purposes, whether or not a Certificate shall be overdue, and the City, the Corporation and the
Trustee shall not be affected by any notice to the contrary.
SECTION 2.12 Destruction of Canceled Certificates. Whenever in this Agreement
provision is made for the surrender or cancellation by the Trustee and the delivery to the City
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of any Certificates, the Trustee shall, in lieu of such delivery, destroy such Certificates and
deliver a certificate of such destruction to the City.
ARTICLE III
APPLICATION OF PROCEEDS; ACQUISITION AND CONSTRUCTION FUND
SECTION 3.01 Application of Proceeds and Other Moneys. The proceeds and other
moneys received by the Trustee from the original sale of the Certificates shall forthwith be
set aside or transferred by the Trustee in or to the following respective funds and accounts
and in the following order of priority:
(a) Lease Payment Fund: The Trustee shall deposit $ (representing
accrued interest and capitalized interest) in the Lease Payment Fund;
(b) Reserve Fund: The Trustee shall deposit $ in the Reserve Fund;
(c) Acquisition and Construction Fund: The Trustee shall transfer to the City
the balance of the proceeds to be held in the Acquisition and
Construction Fund.
SECTION 3.02 [Reserved]
SECTION 3.03 Acquisition and Construction Fund. The proceeds of the Certificates
deposited in the Acquisition and Construction Fund shall be held by the City in the Acquisition
and Construction Fund for the purpose of providing funds to pay Delivery Costs and Project
Costs of the Project.
The moneys in the Acquisition and Construction Fund shall be held by the City in trust
and applied to the costs of acquisition, construction and financing of the Project and the
expenses incident thereto or connected therewith, including, if necessary, interest during
construction and for a period of not to exceed twenty-four months thereafter, architectural,
engineering and inspection fees and expenses, apparatus, equipment and furnishings for the
Project, testing and inspection, surveys, insurance premiums, losses during construction not
insured against because of deductible amounts, the fees and expenses of the Trustee,
expenses in connection with the preparation, issuance, sale and delivery of the Certificates,
legal and accounting fees and expenses, and similar expenses.
When the Project shall have been completed and a certificate of the City stating the
fact and date of such acquisition or completion and stating that all of the cost of acquisition
or construction thereof, as the case may be, and incidental expenses have been determined
and paid (or that all of such costs and expenses have been paid less specified claims which
are subject to dispute and for which a retention in the Acquisition and Construction Fund is
to be maintained in the full amount of such claims until such dispute is resolved), shall be
delivered to the Trustee by the City. Any remaining balance in the Acquisition and
Construction Fund not needed for Acquisition and Construction Fund purposes (but less the
amount of any such retention) will be transferred to the Trustee for deposit in the Lease
Payment Fund established pursuant to Section 5.02 or at the direction of the City and upon
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the receipt of an opinion of Special Counsel to the effect that the transfer will not adversely
effect the excludability of the interest component of the Certificate payments from federal
income taxation, to the Trustee for deposit in the Prepayment Fund and used to prepay
certificates as early as practicable thereafter.
SECTION 3.04. Additional Certificates. So long as any of the Certificates remain
Outstanding, the City will not issue any Additional Certificates or certificates payable from
Revenues on a parity with the Certificates unless the Owners of at least sixty percent (60%)
in aggregate principal amount of the Certificates then Outstanding shall have consented in
writing to the issuance of such Additional Certificates or certificates.
SECTION 3.05. Validity of Certificates. The validity of the authorization and issuance
of the Certificates shall not be dependent on or affected in any way by any proceedings taken
by the City for acquisition or construction of the Project , or by any contracts made by the
City in connection therewith, or the failure to acquire or construct the Project or any part
thereof. The recital contained in the Certificates that the same are regularly issued pursuant
to law shall be conclusive evidence of their validity and of compliance with the provisions of
law in their issuance.
ARTICLE IV
PREPAYMENT OF CERTIFICATES
SECTION 4.01 Establishment of Prepayment Fund. The Trustee shall establish a
special fund designated as the "City of Newport Beach Prepayment Fund", shall keep such
Fund separate and apart from all other funds and moneys held by it, and shall administer such
fund as herein provided. Moneys to be used for prepayment of the Certificates shall be
deposited into the Prepayment Fund and used solely for the purpose of prepaying the
Certificates in advance of their maturity on the date designated for prepayment and upon
presentation and surrender of such Certificates.
SECTION 4.02 Mandatory Prepayment.
(a) The Certificates are subject to prepayment on any date, in whole or in part,
from Net Proceeds which the Trustee shall transfer to the Prepayment Fund or other moneys
deposited with the Trustee as provided in Sections 6.1(c) and 6.2 of the Lease at least 60
days prior to a Certificate Payment Date and credited towards the Prepayment made by the
City pursuant to section 10.1 of the Lease, at a prepayment price equal to the principal
amount of Certificates prepaid together with accrued interest to the date fixed for
prepayment, without premium.
(b) The Certificates are subject to mandatory prepayment in whole or in part on any
date, in any Authorized Denomination, if and to the extent the Corporation is required to do
so in order to preserve the excludability of interest on the Certificates from gross income for
purposes of federal income taxation, as set forth in an opinion of Special Counsel, at a
prepayment price equal to the principal amount of Certificates prepaid together with accrued
interest to the date fixed for pre -payment, without premium.
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(c) Mandatory Prepayment -Sinking Fund Payment. The Term Certificates maturing on
June 1, 2019 (the "Term Certificates") will be subject to mandatory prepayment, on each
June 1, commencing on June 1, 2006, at a prepayment price equal to the principal amount
thereof together with accrued interest thereon to the prepayment date, without premium, in
the years and amounts as set forth in the following table:
Year Year
(June 1) Amount (June 1) Amount
2006
$250,000
2013
$385,000
2007
$265,000
2014
$410,000
2008
$280,000
2015
$435,000
2009
$300,000
2016
$465,000
2010
$320,000
2017
$495,000
2011
$340,000
2018
$525,000
2012
$360,000
2019
$560,000
If some but not all of the Term Certificates have been optionally prepaid or prepaid by
mandatory prepayment other than mandatory sinking fund prepayments, the total amount of
the respective future sinking fund payments shall be reduced by the aggregate principal
amount of Term Certificates so prepaid, to be allocated among such sinking funds payments
on a pro rata basis in integral multiples of $5,000.
(d) In lieu of depositing cash with the Trustee as a payment for prepayment price of
any Certificate required to be prepaid as provided for above, the Corporation or its assignee
will have the option to tender to the Trustee for cancellation any amount of Certificates which
have been purchased by or upon the direction of the City with amounts on deposit in the
Prepayment Fund or from any other source of available funds. Such Certificates may be
purchased with amounts in the Prepayment Fund at public or private sale at prices not in
excess of the otherwise applicable prepayment price; provided, however that such Certificates
must be tendered to the Trustee for cancellation prior to the date on which the Trustee mails
notice of prepayment with respect thereto.
SECTION 4.03. Optional Prepayment. Certificates maturing on or before June 1,
2000 are not subject to optional prepayment prior to their stated maturity dates. The
Certificates, including portions thereof, maturing on or after June 1, 2001, shall be subject
to prepayment prior to maturity, upon instructions from the City, on June 1, 2000, and each
Certificate Payment Date thereafter as a whole or in part in inverse order of maturity and by
lot within any maturity, at the respective prepayment prices (expressed as percentages of
principal amount) set out below, plus accrued interest thereon to the prepayment date:
Prepayment Dates Prepayment Prices
June 1, 2000 and December 1, 2000 102%
June 1, 2001 and December 1, 2001 101 %
June 1, 2002 and thereafter 100%
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SECTION 4.04 Selection of Certificates for Prepayment. Whenever provision is made
in this Agreement for the prepayment of Certificates and less than all Outstanding Certificates
are called for prepayment, the Trustee shall select Certificates for prepayment, from the
Outstanding Certificates not previously called for prepayment pursuant to Section 4.02 hereof,
pro rata among maturities and by lot within any maturity and, to the extent not equally
allocable among maturities, in inverse order of maturities so that following such prepayment,
remaining annual payments of principal and interest represented by the Certificates are, to the
extent practicable given that Certificates are issued in integral multiples of $5,000,
proportionate to the initial amounts of such payments. The Trustee shall promptly notify the
City in writing of the Certificates so selected for prepayment.
SECTION 4.05 Notice of Prepayment.
(a) Content. When prepayment is authorized or required pursuant to this Article IV,
the Trustee shall give written notice to the Owners of the prepayment of the Certificates on
behalf of and at the expense of the City. In connection with an optional prepayment, the
Trustee shall not give notice of such prepayment until the City's payment pursuant to Section
10.2 of the Lease has been received by the Trustee. Such notice shall specify: (a) that the
Certificates or a designated portion thereof are to be prepaid, (b) the numbers of the
Certificates together with the CUSIP numbers to be prepaid, (provided, however, neither the
Trustee, City or the Corporation shall be liable for the accuracy of the CUSIP numbers), (c)
the date of notice and the date of prepayment, (d) the place or places where the prepayment
will be made, and (e) the following descriptive information regarding the Certificates: date,
interest rates and stated maturity dates; provided that if all Outstanding Certificates are being
prepaid, the notice need not contain the information required by (b) above. Such notice shall
further state that on the specified date there shall become due and payable upon each
Certificate to be prepaid, the portion of the principal amount of such Certificate to be prepaid,
together with interest accrued to said date and prepayment premium, if any, and that from
and after such date, provided that moneys therefor have been deposited with the Trustee,
interest with respect thereto shall cease to accrue and be payable.
(b) Recipients; Timing. Notice of such prepayment shall be sent by first class mail,
postage prepaid, to the Corporation, the City, Depository Trust Company and the respective
Owners of any Certificates designated for prepayment at their addresses appearing on the
Certificate registration books, at least 30 days, but not more than 60 days, prior to the
prepayment date; provided that neither failure to receive such notice nor any defect in any
notice so mailed shall affect the sufficiency of the proceedings for the prepayment of such
Certificates.
SECTION 4.06 Partial Prepayment of Certificates. Upon surrender by the Owner of a
Certificate for partial prepayment at the Principal Office, payment of such partial prepayment
of the principal amount of a Certificate will be made to such Owner by check mailed by first
class mail to the Owner at his address as it appears on the registration books of the Trustee.
Upon surrender of any Certificate prepaid in part only, the Trustee shall execute and deliver
to the registered Owner thereof, at the expense of the City, a new Certificate or Certificates
which shall be of authorized denominations equal in aggregate principal amount to the
unrepaid portion of the Certificate surrendered and of the same interest rate and the same
maturity. Such partial prepayment shall be valid upon payment of the amount thereby required
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to be paid to such Owner, and the City, the Corporation and the Trustee shall be released and
discharged from all liability to the extent of such payment.
SECTION 4.07 Effect of Notice of Prepayment. Notice having been given as aforesaid,
and the moneys for the prepayment (including the interest to the applicable date of
prepayment), having been set aside in the Prepayment Fund, the Certificates shall become due
and payable on said date of prepayment, and, upon presentation and surrender thereof at the
Principal Office, said Certificates shall be paid at the unpaid prepayment price with respect
thereto, plus interest accrued and unpaid to said date of prepayment.
If, on said date of prepayment, moneys for the prepayment of all the Certificates to be
prepaid, together with interest to said date of prepayment, shall be held by the Trustee so as
to be available therefor on such date of prepayment, and, if notice of prepayment thereof shall
have been given as aforesaid, then, from and after said date of prepayment, interest with
respect to the Certificates shall cease to accrue and become payable. All moneys held by or
on behalf of the Trustee for the prepayment of Certificates shall be held in trust for the
account of the Owners of the Certificates so to be prepaid.
All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions
of this Article shall be canceled upon surrender thereof and delivered to or upon the order of
the City.
SECTION 4.08 No Surplus. Prepayment of Certificates shall be made in such manner
that there shall be no more than a minimal amount of funds remaining in the Prepayment Fund
after prepayment and payment of all Certificates Outstanding, of any series, including accrued
interest and payment of any applicable fees to the Trustee or provision made therefor
satisfactory to the Trustee and provision for any amounts required to be transferred to the
Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, and after payment of any amounts
due the Trustee pursuant to Sections 9.06 and 9.07 hereof.
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
SECTION 5.01 Security Provisions.
(a) Assignment of Rights in Lease. The Corporation has, pursuant to the
Assignment Agreement, assigned and set over to the Trustee certain of its rights in the Site
Lease and Lease, including but not limited to all of the Corporation's rights to receive and
collect all of the Lease Payments, the Prepayments, and all other amounts required to be
deposited in the Lease Payment Fund pursuant to the Lease or pursuant hereto. All Lease
Payments, Prepayments, and such other amounts to which the Corporation may at any time
be entitled shall be paid directly to the Trustee, and all of the Lease Payments and
Prepayments collected or received by the Corporation shall be deemed to be held and to have
been collected or received by the Corporation as the agent of the Trustee, and if received by
the Corporation at any time shall be deposited by the Corporation with the Trustee within one
Business Day after the receipt thereof, and all such Lease Payments, Prepayments, and such
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other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the
Lease Payment Fund or Prepayment Fund.
(b) Security Interest in Moneys and Funds. The Corporation and the City, as their
interest may appear, hereby grant to the Trustee for the benefit of the Owners a first priority
lien on and a security interest in all moneys in the funds held by the Trustee under this Trust
Agreement (excepting only the Rebate Fund and any moneys to be deposited into such Rebate
Fund), including, without limitation, the Lease Payment Fund, the Prepayment Fund, and the
Net Proceeds Fund, and all such moneys shall be held by the Trustee in trust and applied to
the respective purposes specified herein and in the Lease.
(c) Pledge of Lease Payments. The Lease Payments are hereby irrevocably pledged
to and shall be used for the punctual payment of the interest and principal represented by the
Certificates and the Lease Payments shall not be used for any other purpose while any of the
Certificates remain Outstanding. This pledge shall constitute a first and exclusive lien on the
Lease Payments in accordance with the terms hereof, subject only to the provisions contained
in Section 9.06 hereof.
SECTION 5.02 Establishment of Lease Payment Fund. The Trustee shall establish a
special fund designated as the "City of Newport Beach Lease Payment Fund." All moneys at
any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in
trust for the benefit of the Owners of the Certificates. So long as any Certificates are
Outstanding, neither the City nor the Corporation shall have any beneficial right or interest in
the Lease Payment Fund or the moneys deposited therein, except only as provided in this
Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set
forth.
SECTION 5.03 Deposits. There shall be deposited in the Lease Payment Fund all Lease
Payments received by the Trustee and any payments received by the Trustee under the
Certificate Insurance Policy, if any, including any moneys received by the Trustee for deposit
therein pursuant to Section 4.3 of the Lease (regarding Lease Payments), Section 3.03 hereof
(regarding unexpended Certificate proceeds), and any other moneys required to be deposited
therein pursuant to the Lease or pursuant to this Agreement, including pursuant to Section
5.4(c) of the Lease (regarding proceeds of rental interruption insurance) and Section 15.04
hereof (regarding any Certificate Insurance Policy). No later than five Business Days prior to
each Lease Payment Date, the Trustee shall notify the City as to what amounts are on deposit
in the Lease Payment Fund to be credited towards the Lease Payment due on such Lease
Payment Date as provided in Section 4.3(b) and Article X of the Lease; provided, however,
that any failure of the Trustee to send such notice shall not relieve the City of its obligation
to make Lease Payments.
SECTION 5.04 Application of Moneys. Except as provided in Section 5.05, all
amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal and interest with respect to the Certificates, as the same
shall become due and payable, in accordance with the provisions hereof.
On each Certificate Payment Date, the Trustee shall mail by first class mail, postage
prepaid, to the Owners an amount sufficient to pay the principal and interest evidenced by the
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Certificates becoming due and payable on such date and retain any other amounts to pay the
principal and interest evidenced by the Certificates next becoming payable.
SECTION 5.05 Interest before Completion; Surplus. All interest earnings on the Lease
Payment Fund prior to the completion date shall be transferred to the Acquisition and
Construction Fund. Any funds remaining in the Lease Payment Fund on any Certificate
Payment Date after payment of all principal and interest and premiums, if any, due and
payable on the Certificates on such date, including accrued interest and payment of any
applicable fees to the Trustee, or provision made therefor satisfactory to the Trustee, and
provision for any amounts required to be transferred to the Rebate Fund pursuant to Sections
8.07 and 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City after
payment of any amounts due the Trustee pursuant to Sections 9.06 and 9.07 hereof.
ARTICLE VI
RESERVE FUND
SECTION 6.01 Reserve Fund. The Trustee shall establish a special fund designated
as the "City of Newport Beach Reserve Fund". All moneys at any time on deposit in the
Reserve Fund shall be held by the Trustee in trust for the benefit of the City and for the
benefit of the Owners, as a reserve for the payment when due of all the Lease Payments and
Prepayments to be paid pursuant to the Lease and of all payments on the Certificates and
applied solely as provided herein.
SECTION 6.02 Deposits to the Reserve Fund.
(a) From Delinquent Lease Payments. The City hereby agrees that if at any time the
balance in the Reserve Fund shall be reduced below the Reserve Requirement, the first
payments of Lease Payments thereafter payable by the City and not needed to pay interest
and principal components of Lease Payments payable to the Certificate Owners on the next
Certificate Payment Date shall be used to increase the balance in the Reserve Fund to the
required Reserve Requirement.
(b) Reserve Replenishment Rent. Any Reserve Replenishment Rent payable pursuant
to the Replenishment terms of the Lease shall be deposited in the Reserve Fund.
SECTION 6.03 Transfers of Excess.
The Trustee shall, on or before May 1 and November 1 of each year, provide written
notice to the City of any moneys held in the Reserve Fund which are in excess of the Reserve
Requirement and the Trustee shall transfer such excess moneys to the Lease Payment Fund
to be applied to the next Lease Payment due from the City.
SECTION 6.04 Application of Reserve Fund in Event of Deficiency in Lease Payment
Fund. Whether or not Lease Payments are then in abatement, if three days immediately
preceding any Certificate Payment Date the moneys available in the Lease Payment Fund do
not equal the amount of the principal and interest with respect to the Certificates then coming
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due and payable, the Trustee shall apply the moneys available in the Reserve Fund (including
any investments purchased with such moneys, which investments shall be liquidated and the
proceeds thereof applied as required hereunder) to make delinquent Lease Payments on behalf
of the City by transferring the amount necessary for this purpose to the Lease Payment Fund.
The Trustee shall notify the City of the amount withdrawn from the Reserve Fund. The City
shall either pay Reserve Replenishment Rent if the requirements of Section 4.3 (d) of the
Lease can be met or certify to the Trustee its inability to do so.
SECTION 6.05 Transfer to Make All Lease Payments. If on any Certificate Payment
Date the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding
amounts required for payment of past due principal or interest with respect to Certificates not
presented for payment) are sufficient to pay all Outstanding Certificates, including all principal,
interest and prepayment premiums (if any), the Trustee shall, upon the written direction or oral
direction confirmed in writing of the City Representative, transfer all amounts then on hand
in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease
Payments or Prepayments on behalf of the City, and such moneys shall be distributed to the
Owners of Certificates in accordance with Articles II and IV of this Trust Agreement. Any
amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates,
or upon provision for such payments as provided in Section 14.01 hereof, shall be withdrawn
by the Trustee and paid to the City after payment of any amounts due the Trustee pursuant
to Sections 9.06 and 9.07 hereof.
ARTICLE VII
NET PROCEEDS FUND
SECTION 7.01 Establishment of Net Proceeds Fund; Deposits. The Trustee hereby
establishes a special fund designated as the "City of Newport Beach Net Proceeds Fund" to
be maintained and held in trust for the benefit of the Owners, subject to disbursement
therefrom as provided herein. The Trustee shall deposit Net Proceeds in the Net Proceeds
Fund as provided in Section 6.1(a) of the Lease.
SECTION 7.02 Disbursements. The Trustee shall disburse Net Proceeds for
replacement or repair as provided in Section 6.1(b) of the Lease only if it has received the
certification and moneys, if any, required by Section 6.1(b)(1)(i) of the Lease (and the Trustee
shall be absolutely protected in making any disbursements from the Net Proceeds Fund in
reliance upon the requisition described in Section 6.1(b)(2) of the Lease), or transfer such
proceeds to the Prepayment Fund upon notification of the City Representative as provided in
section 6.1(c) of the Lease. After all of the Certificates have been retired and the entire
amount of principal and interest with respect to the Certificates has been paid in full, or
provision made for payment satisfactory to the Trustee, including provision for all amounts
required to be transferred to the Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, the
Trustee shall pay any remaining moneys in the Net Proceeds Fund to the City after payment
of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof.
SECTION 7.03 Cooperation. The Corporation and the Trustee shall cooperate fully
with the City at the expense of the City in filing any proof of loss with respect to any
insurance policy maintained pursuant to Article V of the Lease and in the prosecution or
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defense of any prospective or pending condemnation proceeding with respect to the Project
or any item or portion thereof; provided, however, the Trustee shall not be required to conduct
such action.
ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT
SECTION 8.01 Held in Trust. The moneys and investments held by the Treasurer
under this Agreement are irrevocably held in trust for the benefit of the Owners of the
Certificates, and, in the case of the Rebate Fund, for payment as required to the United States
Treasury and for the purposes herein specified, and such moneys, and any income or interest
earned thereon, shall be expended only as provided in this Agreement and shall not be subject
to levy or attachment or lien by or for the benefit of any creditor of the Corporation, the
Trustee or the City, or any of them.
SECTION 8.02 Investments Authorized.
(a) Upon Direction of City. The City Representative shall by written order filed with
the Trustee at least two days prior to making an investment direct such investment in specific
Permitted Investments identified in such written order. In the absence of such written order,
the Trustee shall make investments solely in those Permitted Investments set forth in (D) of
the definition thereof.
(b) Registration. Such investments, if registrable, shall be registered in the name
of the Trustee for the benefit of the Owners and held by the Trustee.
(c) Trustee as Purchaser or Anent. The Trustee may purchase or sell to itself or any
affiliate, as principal or agent, investments authorized by this Section. The Trustee may act
as purchaser or agent in the making or disposing of any investment.
(d) Trustee Standard of Care. Except as otherwise provided in Section 9.05. the
Trustee shall not be responsible or liable for any loss suffered in connection with any
investment of funds made by it in accordance with this Section.
SECTION 8.03 Disposition of Investments. Any income, profit or loss on the
investment of moneys held by the Trustee or the Treasurer hereunder shall be credited to the
respective fund (or account within a fund, if applicable) for which it is held, except as
otherwise provided herein.
SECTION 8.04 Accounting. The Trustee shall furnish to the City, not less than
monthly, an accounting of all investments made by the Trustee and all amounts held by the
Trustee. The Trustee shall keep accurate records of all funds administered by it and of all
Certificates paid and discharged.
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SECTION 8.05 Valuation and Disposition of Investments.
(a) Valuation. Subject to the provisions of Sections 8.07 and 8.08 hereof for the
purpose of determining the amount in any fund, all Permitted Investments credited to such
fund shall be valued at the lower of the cost or the market price, exclusive of accrued interest.
With respect to all funds and accounts, valuation shall occur annually on or before May 1,
except in the event of a withdrawal from the Reserve Fund, whereupon it shall be valued
immediately after such withdrawal pursuant to being replenished as provided in Section 4.3(d)
of the Lease.
(b) Disposition. Subject to the provisions of Sections 8.07 and 8.08 hereof and the
Tax Certificate, the Trustee shall sell or present for prepayment, any Permitted Investment so
purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet
any required payment, transfer, withdrawal or disbursement from the fund to which such
Permitted Investment is credited.
SECTION 8.06 Commingling of Moneys in Funds. The Trustee may at its sole
discretion commingle any of the funds held by it pursuant to this Agreement into a separate
fund or funds for investment purposes only; provided, however, that all funds or accounts
held by the Trustee hereunder shall be accounted for separately notwithstanding such
commingling by the Trustee.
SECTION 8.07 Arbitrage Covenant. The Corporation and the City hereby covenant
with the Owners of the Certificates that, notwithstanding any other provision of this
Agreement, they will make no use of the proceeds of the Certificates that would cause the
Certificates to be "arbitrage bonds" under Section 148 of the Code, the interest on which is
not excludable from gross income for federal income tax purposes under Section 103 of the
Code.
SECTION 8.08 Rebate Fund.
(a) The Trustee shall establish a special fund designated as the "City of Newport
Beach Rebate Fund" (the "Rebate Fund"). Within 55 days of the end of each Certificate Year,
(1) the City shall calculate or cause to be calculated the amount that would be considered
"rebatable arbitrage" in accordance with Section 148(f) of the Code, including Section
148(f)(4)(B) of the Code, and Section 1.148-2T(a) of the Proposed and Temporary Regulations
issued under Section 148(f) of the Code (the "Rebate Regulations"), using as the
"computation date" for this purpose the end of such Certificate Year, and (2) upon the City's
written direction, an amount shall be deposited to the Rebate Fund by the Trustee from
deposits from the City, if and to the extent required, so that the balance in the Rebate Fund
shall equal the amount of "rebatable arbitrage" so calculated. All money at any time deposited
in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the
Rebate Requirement, for payment to the United States Treasury. All amounts on deposit in
the Rebate Fund shall be governed by this Section 8.08 and Section 8.07 of this Trust
Agreement and by the Tax Certificate. The Trustee shall be deemed conclusively to have
complied with such provisions if it follows the directions of the City, and shall have no liability
or responsibility to enforce compliance by the City with the terms of the Tax Certificate.
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(b) Any funds remaining in the Rebate Fund after redemption and payment of all
the Certificates and any amounts described in paragraph (2) of subsection (c), or provision
made therefor satisfactory to the Trustee, including accrued interest and payment of any
applicable fees to the Trustee, shall be withdrawn by the Trustee and remitted to the City.
(c) Upon the City's written direction, which directions shall be specific as to
payment amounts, the Trustee shall pay to the United States Treasury, out of amounts in the
Rebate Fund:
(1) not later than 60 days after the end of (i) the fifth Certificate Year, and
(ii) each fifth Certificate Year thereafter, an amount equal to at least
90% of the "rebatable arbitrage" calculated as of the end of such
Certificate Year in accordance with Section 148(f) of the Code,
including Section 148(f)(4)(B) of the Code, and Section 1.148-2T of the
Rebate Regulations; and
(2) not later than 60 days after the payment of all Certificates, an amount
equal to 100% of the "rebatable arbitrage" calculated as of the end of
such Certificate Year, and any income attributable to the "rebatable
arbitrage, both determined in accordance with Section 148(f) of the
Code, including Section 148(f)(4)(B) of the Code, and Section 1.148-2T
of the Rebate Regulations.
(d) In the event that, prior to the time of any payment required to be made from
the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when
such payment is due, the City shall calculate the amount of such deficiency and direct the
Trustee to deposit an amount received from the City equal to such deficiency into the Rebate
Fund prior to the time such payment is due.
(e) Each payment required to be made pursuant to subsection (c) shall be made to
the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date
on which such payment is due, and shall be accompanied by Internal Revenue Service Form
8038-T, which shall be prepared by the City and provided to the Trustee.
(f) In the event that immediately following the calculations required by the Tax
Certificate and the transfer of accounts required by subsection (a) above, the amount then on
deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein
to make the payments required under subsection (c) above, upon written instructions from the
City, the Trustee shall withdraw the excess from the Rebate Fund and credit the excess to
the Lease Payment Fund.
(g) The Trustee shall invest all amounts held in the Rebate Fund in Permitted
Investments as directed in writing 2 days prior to the investment date by the City. Monies,
including investment earnings, shall not be transferred from the Rebate Fund until all rebate
requirements have been satisfied and certified by the City to the Trustee.
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SECTION 8.09 Information Concerning Investments. The Trustee shall supply
information regarding investments made under this Article VIII at the request of the City, in
writing, including (i) purchase date; (ii) purchase price; (iii) information , if any, reasonably
establishing that the purchase price is the fair market value as of such date (e.g., the
published quoted bid by a dealer in such an investment on the date of purchase); (iv) any
accrued interest paid; (v) face amount; (vi) coupon rate; (vii) periodicity of its interest
payments; (viii) disposition price; (ix) any accrued interest received; and (x) disposition date.
SECTION 8.10 Notice Concerning Investments. The Trustee shall provide notice to the
City of any investments made under this Article VIII in monthly financial statements.
ARTICLE IX
THE TRUSTEE
SECTION 9.01 Appointment of Trustee.
(a) Appointment. Bank of America National Trust and Savings Association, is
hereby appointed Trustee by the Corporation and the City.
(b) Qualifications. The Corporation and the City agree that they will maintain a
Trustee having a principal administrative office in Los Angeles or San Francisco, California.
Any successor Trustee appointed pursuant to the provisions of this section shall be a trust
company or bank duly authorized to exercise trust powers and subject to examination by
federal or state authority, and have a reported capital and surplus of not less than
$25,000,000. If such bank or trust company publishes a report of condition at least annually
pursuant to law or to the requirements of any supervising or examining authority above
referred to then for the purpose of this Section the combined capital and surplus of such bank
or trust company shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(c) Removal. So long as there is no Event of Default or occurrence that with the
passage of time will become an Event of Default, the City, upon the consent of the Insurer,
or the Insurer may upon 30 days written notice remove the Trustee initially appointed, and
any successor thereto, and may appoint a successor or successors thereto.
(d) Resignation. The Trustee may resign by giving written notice to the City and the
Corporation provided that such resignation shall not take effect until the successor Trustee
is appointed as provided in this Section. Upon receiving such notice of resignation, the City
shall promptly appoint a successor Trustee. In the event the City does not name a successor
Trustee within 30 days of receipt of notice of the Trustee's resignation, then the Trustee may
petition a court of suitable jurisdiction to seek the immediate appointment of a successor
Trustee.
(e) Successor. Any successor Trustee shall be a bank or trust company meeting
the qualifications as set forth in Subsection (b) above. Any resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective upon consent to the
appointment by the Insurer and acceptance of appointment by the successor Trustee. Upon
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such acceptance, the successor Trustee shall mail notice thereof to the Certificate Owners
at their respective addresses set forth on the Certificate registration books maintained
pursuant to Section 2.11.
SECTION 9.02 Merger or Consolidation. Any company or national banking association
into which the Trustee may be merged or converted or with which it may be consolidated or
any company resulting from any merger, conversion or consolidation to which it shall be a
party or any company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided that such company shall be eligible under Section 9.01,
shall be the successor to the Trustee without the execution or filing of any paper or further
act, anything herein to the contrary notwithstanding. Notice of such merger or consolidation
shall be given to the City and the Corporation.
SECTION 9.03 Protection of the Trustee.
(a) Reliance Upon Papers or Documents. The Trustee shall be protected and shall
incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram,
request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other
paper or document which it shall in good faith believe to be genuine and to have been passed
or signed by the proper board or person or to have been prepared and furnished pursuant to
any of the provisions of this Agreement, and the Trustee shall be under no duty to make any
investigation or inquiry as to any statements contained or matters referred to in any such
instrument, but may, in the absence of bad faith on its part, accept and rely upon the same
as conclusive evidence of the truth and accuracy of such statements.
(b) Reliance Upon Opinions of Counsel. The Trustee may consult with counsel, who
may be counsel to the City, with regard to legal questions and the opinion of such counsel
shall be full and complete authorization and protection in respect of any action taken or
suffered by it hereunder in good faith in accordance therewith. Before being required to take
any action, the Trustee may require an opinion of Independent or Special Counsel acceptable
to the Trustee which opinion shall be made available to the other parties hereto upon request,
which counsel may be counsel to any of the parties hereto, or a verified certificate of any
party hereto, or both, concerning the proposed action. If it does so in good faith, Trustee shall
be absolutely protected in relying thereon.
(c) Reliance Upon Requested Certificates. Whenever in the administration of its
duties under this Agreement, the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering any action hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed), in the absence of bad faith
on its part, shall be deemed to be conclusively proved and established by the certificate of the
City Representative or the Corporation Representative and such certificate shall be full
warranty to the Trustee, in the absence of bad faith on its part, for any action taken or
suffered under the provisions of this Agreement, but in its discretion the Trustee may, in lieu
thereof, accept other evidence of such matter or may require such additional evidence as to
it may seem reasonable.
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(d) Additional Protections. No provision in this Trust Agreement shall require the
Trustee to risk or expend its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
The Trustee shall not be accountable for the use or application by the City or the
Corporation or any other party of any funds which the Trustee has released in accordance
with the terms of this Trust Agreement.
The Trustee makes no representation or warranty, express or implied, as to the title,
value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose or fitness for the use
contemplated by the City or the Corporation of the Project or the Site (as that term is defined
in the Lease). In no event shall the Trustee be liable for incidental, indirect, special or
consequential damages in connection with or arising from the Lease or this Trust Agreement
for the existence, furnishing or use of the Project or the Site.
Before taking any action under Article XIII hereof or this Section at the request or
declaration of the Owners, the Trustee may require indemnity satisfactory to the Trustee be
furnished by the Owners for the reimbursement of all expenses to which it may reasonably
incur and to protect the Trustee against all liability except liability which is adjudicated to have
resulted from the Trustee's negligence or willful misconduct in connection with any action.
SECTION 9.04 Rights of the Trustee.
(a) Ownership of Certificates. The Trustee may become the Owner of the
Certificates with the same rights it would have if it were not Trustee; may acquire and dispose
of other bonds or evidence of indebtedness of the City with the same rights it would have if
it were not the Trustee; and may act as a depository for and permit any of its officers or
directors to act as a member of, or in any other capacity with respect to, any committee
formed to protect the rights of Owners of Certificates, whether or not such committee shall
represent the Owners of the majority in principal amount of the Certificates then Outstanding.
(b) Attorneys Agents, Receivers. The Trustee may execute any of the trusts or
powers hereof and perform the duties required of it hereunder by or through attorneys,
agents, custodians, or receivers, and shall be entitled to advice of counsel concerning all
matters of trust and its duty hereunder and the Trustee shall not be answerable for the default
or misconduct of any such attorney, agent or receiver selected by it with reasonable care.
Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or
inquire as to the performance or observance of any of the terms, conditions, covenants or
arrangements herein or of any of the documents executed in connection with the Certificates,
or as to the exercise of an Event of Default thereunder.
SECTION 9.05 Standard of Care. So long as there is no Event of Default, the Trustee
shall not be liable in connection with the performance of its duties hereunder or under the
Assignment Agreement, except for its own negligence or willful misconduct. In the Event of
Default, the Trustee shall exercise such care in performing its duties hereunder as a prudent
person would exercise in the conduct of his affairs. The Trustee shall make investments as
provided in Section 8.02. The Trustee undertakes to perform such duties, and only such
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duties, as are specifically set forth in this Trust Agreement and no implied duties or obligations
shall be read into this Agreement against the Trustee.
SECTION 9.06 Compensation of the Trustee. As Additional Rent under Section 4.9
of the Lease, the City shall pay to the Trustee compensation for its services as shall be agreed
upon by the Trustee and the City in connection with the Trustee's entry into this Trust
Agreement and shall reimburse the Trustee for all its reasonable expenses, advances and
disbursements, including but not limited to advances to and fees and expenses of independent
appraisers, accountants, consultants, counsel, agents, custodians and attorneys -at -law or
other experts employed by it in the exercise and performance of its powers and duties
hereunder and the Trustee shall have a lien therefor on any and all funds at any time held by
it under this Agreement, which lien shall be prior and superior to the lien of the Certificate
Owners. The City's obligations hereunder shall remain valid and binding notwithstanding
maturity and payment of the Certificates and the termination of this Agreement. The
compensation of the Trustee hereunder shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust.
SECTION 9.07 Indemnification of the Trustee. The City shall, to the extent permitted
by law, indemnify and hold the Trustee, its directors, officers, agents, employees, successors
and assigns harmless from and against all claims, losses, costs, expenses, liability and
damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition
or management of, or from any work or thing done on, the Site or Project by the City, (ii) any
breach or default on the part of the City in the performance of any of its certificates under this
Agreement, the Lease and any other agreement made and entered into for purposes of the
Project, (iii) any act of negligence of the City or of any of its agents, contractors, servants,
employees or licensees with respect to the Site or Project, (iv) any act of negligence of any
assignee of, or purchaser from, the City or of any of its or their agents, contractors, servants,
employees or licensees with respect to the Site or Project, (v) the construction or acquisition
of the Site or Project or Project Costs, (vi) the actions of any other party, including but not
limited to the ownership, operation or use of the Site or Project by the City, (vii) the Trustee's
exercise and performance of its powers and duties hereunder or (viii) any untrue statement
or alleged untrue statement of any material fact or omission or alleged omission to state a
material fact necessary to make the statements made, in light of the circumstances under
which they were made, not misleading in any official statement or other offering circular
utilized in connection with the sale of the Certificates, including the costs and expenses of
defending itself against any claim of liability arising under this Trust Agreement. No
indemnification will be made under this Section or elsewhere in this Agreement for willful
misconduct or negligence under this Agreement by the Trustee, its officers, agents,
employees, successors or assigns. The City's obligations hereunder shall remain valid and
binding notwithstanding maturity and payment of the Certificates or resignation or removal
of the Trustee or the termination of this Trust Agreement.
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ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
SECTION 10.01 Amendments Permitted.
(a) With Consent. This Agreement and the rights and obligations of the Owners,
and the Lease and the rights and oblications of the parties thereto, may be modified or
amended at any time by a supplemental agreement which shall become effective when the
written consents of the Owners of a majority in aggregate principal amount of the Certificates
then Outstanding, exclusive of Certificates disqualified as provided in section 10.03 hereof,
shall have been filed with the Trustee. No such modification or amendment shall:
(1) extend or have the effect of extending the fixed maturity of any
Certificate or reducing the interest rate with respect thereto or extending
the time of payment of interest, or reducing the amount of principal
thereof or reducing any premium payable upon the prepayment thereof
without the express consent of the Owner of such Certificate, or
(2) reduce or have the effect of reducing the percentage of Certificates
required for the affirmative vote or written consent to an amendment or
modification of the Lease, or
(3) modify any of the rights or obligations of the Trustee without its written
assent thereto.
In the event that a Certificate Insurance Policy is in effect insuring payment of principal
and interest on the Certificates, no amendment or modification of this Trust Agreement, the
Project Lease, the Site Lease or the Assignment Agreement which requires the consent of the
Owners shall be made without also obtaining the consent in writing of the Insurer. Copies of
any such amendments or modifications to any of the foregoing documents consented to by
the Insurer shall be sent to S&P and Moody's.
Any such supplemental agreement shall become effective as provided in section 10.02
hereof.
(b) Without Consent. This Agreement and the rights and obligations of the Owners,
and the Lease and the Site Lease and the rights and certificates of the parties thereto, may
be modified or amended at any time by a supplemental agreement, without the consent of any
such Owners, but only to the extent permitted by law and only:
(1) to add to the agreements and covenants required herein and therein to
be performed by the City or Corporation other agreements and
covenants thereafter to be performed by the City or Corporation or to
surrender any right or power reserved to the City; or
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(2) to cure, correct or supplement any ambiguous or defective provision
contained herein or therein which shall not materially adversely affect
the interests of the Owners; or
(3) in regard to matters arising hereunder or thereunder, as the parties
hereto or thereto may deem necessary or desirable and which, in the
opinion of the Trustee (which may be based upon opinions as provided
in Section 9.03(b), shall not adversely affect the interests of the
Owners.
Any such supplemental agreement shall become effective upon execution and delivery by the
parties hereto or thereto as the case may be.
SECTION 10.02 Procedure for Amendment with Written Consent of the Owners. This
Agreement or the Lease may be amended by supplemental agreement as provided in this
Section 10.02 in the event the consent of the Owners is required pursuant to Section
10.01(a) hereof. A copy of such supplemental agreement, together with a request to the
Owners for their consent thereto, shall be mailed by the Trustee by first class mail, postage
prepaid, to each Owner of a Certificate at his address as set forth in the Certificate
registration books maintained pursuant to Section 2.11 hereof, but failure to receive copies
of such supplemental agreement and request so mailed shall not affect the validity of the
supplemental agreement when assented to as in this Section provided.
Such supplemental agreement shall not become effective unless there shall be filed
with the Trustee the written consent of the Owners of at least a majority in aggregate
principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as
provided in Section 10.03 hereof) and notices shall have been mailed as hereinafter provided
in this Section. Each such consent shall be effective only if accompanied by proof of
ownership of the Certificates for which such consent is given, which proof shall be such as
is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of
the Certificate giving such consent and on any subsequent Owner (whether or not such
subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner
giving such consent or a subsequent Owner by filing such revocation with the Trustee prior
to the date when the notice hereinafter in this Section provided for has been mailed.
After the Owners of the required percentage of Certificates shall have filed their
consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of
the Certificates in the manner hereinbefore provided in this Section for the mailing of such
supplemental agreement, stating in substance that such supplemental agreement has been
consented to by the Owners of the required percentage of Certificates and will be effective
as provided in this Section (but failure to mail copies of said notice shall not affect the validity
of such supplemental agreement or consents thereto). A record, consisting of the papers
required by this Section to be filed with the Trustee, shall be proof of the matters therein
stated until the contrary is proved.
SECTION 10.03 Disqualified Certificates. Certificates owned or held by or for the
account of the City or the Corporation or by any person directly or indirectly controlled or
controlled by, or under direct or indirect common control with the City or the Corporation
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(except any Certificates held in any pension or retirement fund) shall not be deemed
Outstanding for the purpose of any vote, consent, waiver or other action or any calculation
of Outstanding Certificates provided for in this Agreement, and shall not be entitled to vote
upon, consent to, or take any other action provided for in this Agreement.
The City or Trustee may adopt appropriate regulations to require each Owner, before
his consent provided for in this Article X shall be deemed effective, to reveal if the Certificates
as to which such consent is given are disqualified as provided in Section 10.03 hereof.
SECTION 10.04 Effect of Supplemental Agreement. From and after the time any
supplemental agreement becomes effective pursuant to this Article X, this Agreement, the
Site Lease or the Lease, as the case may be, shall be deemed to be modified and amended in
accordance therewith, the respective rights, duties and obligations of the parties hereto or
thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any supplemental agreement shall be deemed
to be part of the terms and conditions of this Agreement, the Site Lease or the Lease, as the
case may be, for any and all purposes.
SECTION 10.05 Endorsement or Replacement of Certificates Delivered After
Amendments. The Trustee may determine that Certificates delivered after the effective date
of any action taken as provided in this Article X shall bear a notation, by endorsement, in form
approved by the Trustee, as to such action. In that case, upon demand of the Owner of any
Outstanding Certificate at such effective date and presentation of his Certificate for the
purpose at the Principal Office, a suitable notation shall be made on such Certificate at the
cost of the City. The City may determine that new Certificates, so modified as in the opinion
of the City is necessary to conform to such Owners' action, shall be prepared, executed and
delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such
new Certificate shall be exchanged in the Principal Office without cost to such Owner, for a
certificate of the same character then Outstanding, upon surrender of such Certificate.
SECTION 10.06 Amendatory Endorsement of Certificates. Subject to Section 10.01
hereof, the provisions of this Article X shall not prevent any Certificate Owner from accepting
any amendment as to the particular Certificates held by him, provided that due notification
thereof is made on such Certificates.
SECTION 10.07 Trustee's Reliance on Opinion of Special Counsel. The Trustee may
obtain an opinion of Special Counsel that any such supplemental agreement complies with the
provisions of this Article X and the Trustee may rely conclusively upon such opinion.
ARTICLE XI
COVENANTS; NOTICES
SECTION 11.01 Compliance With and Enforcement of the Lease. The City covenants
and agrees with the Owners to perform all obligations and duties imposed on it under the
Lease. The Corporation covenants and agrees with the Owners to perform all obligations and
duties imposed on them under the Lease.
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The City will not do or permit anything to be done, or omit or refrain from doing
anything, in any case where any such act done or permitted to be done, or any such omission
of or refraining from action, would or might be a ground for cancellation or termination of the
Lease by the Corporation. The Corporation and the City, immediately upon receiving or giving
any notice, communication or other document in any way relating to or affecting their
respective estates, or the leasehold interests therein, which may or can in any manner affect
such estate of the City, will deliver the same, or a copy thereof, to the Trustee.
SECTION 11.02 Payment of Taxes. The City shall pay all taxes relating to the Project
or the Certificates as provided in Section 7.6(b) of the Lease.
SECTION 11.03 Observance of Laws and Reaulations. The City will well and truly
keep, observe and perform all valid and lawful obligations or regulations now or hereafter
imposed on it by contract, or prescribed by any law of the United States, or of the State, or
by any officer, board or commission having jurisdiction or control, as a condition of the
continued enjoyment of any and every right, privilege or franchise now owned or hereafter
acquired by the City, including its right to exist and carry on business as a municipal
corporation, to the end that such rights, privileges and franchises shall be maintained and
preserved, and shall not become abandoned, forfeited or in any manner impaired.
SECTION 11.04 Prosecution and Defense of Suits. The City shall promptly, and also
upon request of the Trustee or any Owner, from time to time take such action as may be
necessary or proper to remedy or cure any defect in or cloud upon the title to the Project,
whether now existing or hereafter developing and shall prosecute all such suits, actions and
other proceedings as may be appropriate for such purpose and shall, to the extent permitted
by law, indemnify and save the Trustee and every Owner harmless from all loss, cost, damage
and expense, including attorneys' fees, which they or any of them may incur by reason of any
such defect, cloud, suit, action or proceeding.
SECTION 11.05 City Budgets. In accordance with Section 2.1(g) of the Lease, the
City will provide the Trustee with an annual certification by October 1 of each year that it has
complied with the obligations of the City required thereunder, and the City Representative
shall certify to the Trustee that the City has included all Lease Payments (other than Lease
Payments of advance rental) due under the Lease in the Fiscal Year covered by its proposed
annual budget and adopted budget. If the City fails to provide the Trustee with such
certification, the Trustee shall promptly provide the City written notice specifying that the City
has failed to observe and perform its covenant and agreement in such Section 2.1(g) and
requesting that such failure be remedied within 30 days, or such failure shall constitute an
Event of Default under Section 9.i(b) of the Lease. The Trustee shall forward a copy of such
notice to the Corporation. Upon receipt of such notice, the City shall notify the Trustee of the
proceedings proposed to be taken by the City, and shall keep the Trustee advised of all
proceedings thereafter taken by the City.
SECTION 11.06 Further Assurances. The Corporation and the City will 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 Agreement, and for the better assuring and confirming unto the Owners the rights and
benefits provided herein.
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SECTION 1 1.07 Tax Covenants. The City will not make any use of the proceeds of
the Certificates or any other funds of the City or take or omit to take any other action that
would cause such certificates to be "private activity bonds" within the meaning of Section
141 of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code.
To that end, so long as any rental payments are unpaid, the City, with respect to such
proceeds and such other funds, will comply with all requirements of such sections and all
regulations of the United States Department of the Treasury issued thereunder and under
Section 103 of the Internal Revenue Code of 1954, as amended, to the extent that such
requirements are, at the time, applicable and in effect.
The City will not use or permit the use of the Project or any portion thereof by any
person other than a governmental unit as such term is used in section 141 of the Code, in
such manner or to such extent as would result in the loss of exclusion from gross income for
federal income tax purposes of the interest portion of any Lease Payments.
SECTION 11.08 Notice of Trustee. The Trustee shall provide the City and the
Corporation with written notice within five days of the Trustee acquiring actual knowledge
of an Event of Default as defined in Section 9.1 of the Lease.
ARTICLE XII
LIMITATION OF LIABILITY
SECTION 12.01 Limited Liability of the City. Except for the payment of Lease
Payments, Additional Payments, and Prepayments when due in accordance with the Lease
and the performance of the other covenants and agreements of the City contained herein and
in the Lease, the City shall have no obligation or liability to any of the other parties or to the
Owners with respect to this Agreement or the terms, execution, delivery or transfer of the
Certificates, or the distribution of Lease Payments to the Owners by the Trustee.
SECTION 12.02 No Liability of the City or Corporation for Trustee Performance.
Except as expressly provided herein, neither the City nor the Corporation shall have any
obligation or liability to any of the other parties or to the Owners with respect to the
performance by the Trustee of any duty imposed upon it under this Agreement.
SECTION 12.03 Limited Liability of Trustee.
(a) No Investment Advice. The Trustee shall have no obligations or responsibility
for providing information to the Owners concerning the investment character of the
Certificates.
(b) Sufficiency of this Agreement or Lease Payments. The Trustee makes no
representations as to the validity or sufficiency of the Certificates, shall incur no responsibility
in respect thereof, other than in connection with the duties or obligations herein or in the
Certificates assigned to or imposed upon it. The Trustee shall not be responsible for the
sufficiency of the Lease. The Trustee shall not be liable for the sufficiency or collection of any
Lease Payments or other moneys required to be paid to it under the Lease (except as provided
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in this Agreement), its right to receive moneys pursuant to said Lease, or the value of or title
to the premises upon which the Site is located or the Project.
(c) Actions of Corporation and City. The Trustee shall have no obligation or liability
to any of the other parties or the Owners with respect to this Agreement or the failure or
refusal of any other party to perform any covenant or agreement made by any of them under
this Agreement or the Lease, but shall be responsible solely for the performance of the duties
and obligations expressly imposed upon it hereunder as provided in Section 9.05.
(d) Recitals and Agreements of Corporation and City. The recitals of facts,
covenants and agreements herein and in the Certificates contained shall be taken as
statements, covenants and agreements of the City or the Corporation (as the case may be),
and the Trustee assumes no responsibility for the correctness of the same.
(e) The Trustee shall have no responsibility or liability with respect to any
information, statement or recital in any disclosure material prepared or distributed with respect
to the sale of the Certificates.
SECTION 12.04 Limitation of Rights of Parties and Certificate Owners. Nothing in this
Agreement or in the Certificates expressed or implied is intended or shall be construed to give
any person other than the City, the Corporation, the Trustee and the Owners, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any covenant,
condition or provision hereof; and all such covenants, conditions and provisions are and shall
be for the sole and exclusive benefit of the City, the Corporation, the Trustee and the Owners.
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
SECTION 13.01 Assignment of Rights.
to the Assignment Agreement the Corporation
Trustee for the benefit of the Owners, certain
SECTION 13.02 Events of Default.
The parties hereto acknowledge that pursuant
has transferred, assigned and set over to the
of the Corporation's rights under the Lease.
(a) Remedies. If an Event of Default shall happen, then, and in each and every such
case during the continuance of such Event of Default, the Trustee may exercise any and all
remedies available pursuant to law or granted pursuant to the Lease; provided, however, that
in the event that there is in effect a Certificate Insurance Policy insuring the payment of
principal and interest on the Certificates and an Event of Default occurs, the Insurer shall be
notified of the existence thereof and shall have the right to direct, upon providing reasonable
indemnity to the Trustee, the selection and exercise of the remedies; but, provided further,
that notwithstanding anything herein or in the Lease to the contrary, THERE SHALL BE NO
RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE MATURITIES OF THE
CERTIFICATES OR OTHERWISE TO DECLARE ANY LEASE PAYMENTS NOT THEN IN
DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE.
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(b) Actual Knowledge. The Trustee shall not be deemed to have knowledge of any
Event of Default hereunder unless and until it shall have actual knowledge thereof, or shall
have received written notice thereof, at its Principal Office.
SECTION 13.03 Application of Funds. All moneys received by the Trustee pursuant
to any right given or action taken under the provisions of this Article XIII or of Article IX of
the Lease, shall be deposited into the Lease Payment Fund and be applied by the Trustee in
the following order upon presentation and surrender of the several Certificates, or the
stamping thereon of the payment if partially paid in amounts not equal to integral multiples
of $5,000 -
First, Costs and Expenses: to the payment of the costs and expenses of the
Trustee and of the Owners, including reasonable compensation to its or their
agents, attorneys and counsel;
Second, Interest: to the payment to the persons entitled thereto of all
installments of interest then due in the order of the maturity of such
installment, and, if the amount available shall not be sufficient to pay in full any
installment or installments maturing on the same date, then to the payment
thereof ratably, according to the amounts due thereon, to the persons entitled
thereto, without any discrimination or preference; and
Third, Principal: to the payment to the persons entitled thereto of the unpaid
principal of any Certificates which shall have become due, whether at maturity
or by call for prepayment, in the order of their due dates, with interest on the
overdue principal and interest at a rate equal to the rate paid with respect to
the Certificates and, if the amount available shall not be sufficient to pay in full
all the amounts due with respect to the Certificates on any date, together with
such interest, then to the payment thereof ratably, according to the amounts
of principal due on such date to the persons entitled thereto, without any
discrimination or preference.
SECTION 13.04 Institution of Legal Proceedings. If one or more Events of Default shall
happen and be continuing, the Trustee in its discretion may, and upon the written request of
the Owners of a majority in principal amount of the Certificates then Outstanding, and upon
being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or
the rights of the Owners by a suit in equity or action at law, either for the specific
performance of any covenant or agreement contained herein or in the Lease, or in aid of the
execution of any power herein granted, or by mandamus or other appropriate proceeding for
the enforcement of any other legal or equitable remedy as the Trustee shall deem most
effectual in support of any of its rights or duties hereunder.
SECTION 13.05 Non -waiver. Nothing in this Article XIII or in any other provision of
this Agreement or in the Certificates shall affect or impair the obligations of the City which
is absolute and unconditional, to pay or prepay the Lease Payments as provided in the Lease.
No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any
right or power arising upon the happening of any event of Default shall impair any such right
or power or shall be construed to be a waiver of any such Event of Default or an acquiescence
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therein, and every power and remedy given by this Article XIII to the Trustee or to the Owners
may be exercised from time to time and as often as shall be deemed expedient by the Trustee
or the Owners.
SECTION 13.06 Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy, and
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.
SECTION 13.07 Power of Trustee to Control Proceedings. In the event that the
Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial
proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion
or upon the request of the Owners of a majority in principal amount of the Certificates then
Outstanding, it shall have full power, in the exercise of its discretion for the best interest of
the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action; provided, however, that the Trustee
shall not, unless there no longer continues an Event of Default, discontinue, withdraw,
compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at
the time there has been filed with it a written request signed by the Owners of at least a
majority in principal amount of the Outstanding Certificates hereunder opposing such
discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and
if such Owners continue to indemnify the Trustee to its satisfaction.
SECTION 13.08 Limitation on Certificate Owners' Right to Sue. No Owner of any
Certificate executed hereunder shall have the right to institute any suit, action or proceeding
at law or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall
have previously given to the Trustee written notice of the occurrence of an Event of Default
under the Lease; (b) the Owners of a majority in aggregate principal amount of all the
Certificates then Outstanding shall have made written request upon the Trustee to exercise
the powers hereinbefore granted or to institute such action, suit or proceeding in its own
name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request; and (d) the
Trustee shall have refused or omitted to comply with such request for a period of 60 days
after such written request shall have been received by, and said tender of indemnity shall have
been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any
remedy hereunder; it being understood and intended that no one or more Owners shall have
any right in any manner whatever by his or their action to enforce any right under this
Agreement, except in the manner herein provided and for the equal benefit of all Owners of
the Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of said Owner's
proportionate interest in the Lease Payments as the same become due, or to institute suit for
the enforcement of such payment, shall not be impaired or affected without the consent of
such Owner, notwithstanding the foregoing provisions of this Section or any other provision
of this Agreement.
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SECTION 13.09 Agreement to Pay Attorneys' Fees and Exoenses. In the event the City
or Corporation should default under any of the provisions hereof and the nondefaulting party
should employ attorneys or incur other expenses for the collection of moneys or the
enforcement or observance of any obligation or agreement on the part of the defaulting party
contained herein, 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 by the nondefaulting party.
SECTION 13.10 Term of a Substitute Lease. In the event that the Trustee as assignee
of the Corporation enters into a new lease or leases of the Site or a portion thereof pursuant
to Section 9.2 of the Lease in the event of a default thereunder, or in the event that the Lease
terminates before all Lease Payments have been paid, then such new lease shall have a term
no longer than the remaining term of the Site Lease and no longer than is necessary to recover
all payments on the Certificates payable hereunder and any further expenditure of money
made on the Site under the Site Lease in order to facilitate the execution of such new lease.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01 Defeasance.
(a) Methods. If and when any Outstanding Certificates shall be paid and discharged
in any one or more of the following ways:
(1) Payment: by well and truly paying or causing to be paid the principal of
and interest and prepayment premiums (if any) with respect to such
Certificates, as and when the same become due and payable, and all
Additional Payments have been paid;
(2) Cash: if prior to maturity and having given notice of prepayment by
irrevocably depositing with the Trustee, in trust, at or before maturity,
an amount of cash which (together with cash then on deposit in the
Lease Payment Fund (and the Reserve Fund], in the event of payment
or provision for payment of all Outstanding Certificates) is sufficient to
pay such Certificates, including all principal and interest and premium,
if any, and all Additional Payments have been paid; or
(3) Government Obligations: by irrevocably depositing with the Trustee, in
trust, noncallable Government Obligations together with cash, if
required, in such amount as will, together with interest to accrue
thereon (and, in the event of payment or provision for payment of all
Outstanding Certificates moneys then on deposit in the Lease Payment
Fund together with the interest to accrue thereon), be fully sufficient to
pay and discharge all such Certificates (including all principal and
interest represented thereby and prepayment premiums, if any) at or
before their maturity date, as evidenced by an independent certified
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public accountant verification as to the mathematical accuracy of the
calculations delivered to the Trustee, and all Additional Payments;
then, notwithstanding that any Certificates shall not have been surrendered for payment, all
obligations of the Corporation, the Trustee and the City with respect to such Certificates shall
cease and terminate, except only the obligations of the Trustee to pay or cause to be paid,
from Lease Payments paid by or on behalf of the City from funds deposited pursuant to
paragraphs (2) and (3) of this Section, to the Owners of the Certificates not so surrendered
and paid all sums due with respect thereto, and in the event of deposits pursuant to
paragraphs (2) and (3) of this Section, the Certificates shall continue to represent direct and
proportionate interests of the Owners thereof in Lease Payments under the Lease.
(b) Refunding. If payment or provision for payment of Outstanding Certificates
pursuant to subsection (a) is made wholly or partially from funds received from the issuance
of refunding bonds, Trustee shall receive an opinion of Special Counsel as to the effect that
(1) the refunding bonds are being issued in compliance with the laws of the State, (2) the
interest on the refunding bonds is tax exempt, and (3) the Certificates have been legally
defeased.
(c) Surplus Monies. Any funds held by the Trustee, at the time of payment or
provision for payment of all Outstanding Certificates pursuant to one of the procedures
described in paragraphs (1) through (3) of subsection (a), which are not required for the
payment to be made to Owners, shall be transferred to the Rebate Fund pursuant to Section
8.07 and 8.08 hereof, or paid to the Trustee pursuant to Section 9.06 and 9.07 hereof, and
then shall be paid over to the City.
(d) Surviving Provisions. Notwithstanding the satisfaction and discharge hereof,
the Trustee shall retain such rights, powers and privileges hereunder as may be necessary or
convenient for the payment of the principal, interest and prepayment premium, if any, on the
Certificates and for the registration, transfer and exchange of the Certificates.
SECTION 14.02 Non -Presentment of Certificates. In the event any Certificate shall not
be presented for payment when the principal with respect thereof becomes due, either at
maturity, or at the date fixed for prepayment thereof, if moneys sufficient to pay such
Certificate shall have been deposited in the Lease Payment Fund, all liability of the City to the
Owner thereof for payment of such Certificate shall forthwith cease, terminate and be
completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys,
without liability for interest thereon, for the benefit of the Owner of such Certificate who shall
thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his
or her part under this Trust Agreement or on, or with respect to, said Certificate.
Any moneys so deposited with and held by the Trustee not so applied to the payment
of Certificates within two (2) years after the date on which the same shall have become due
shall be paid by the Trustee to the City in proportion to the shares in the Lease Payments
represented by the Certificates for payment of which such moneys were held, free from the
trusts created by this Trust Agreement. Thereafter, Owners shall be entitled to look only to
the City for payment, and then only to the extent of the amount so disbursed by the Trustee.
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The City shall not be liable for any interest on the sums paid to it pursuant to this Section and
shall not be regarded as a trustee or trustees of such money.
SECTION 14.03 Records. The Trustee shall keep complete and accurate records of
all moneys received and disbursed under this Agreement, which shall be available upon prior
written notice for inspection by the City, the Corporation and any Owner, or the agent of any
of them, at any time during regular business hours.
SECTION 14.04 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but
one and the same agreement.
SECTION 14.05 Headings. The headings or titles of the several Articles and Sections
hereof, and any table of contents appended to copies hereof, shall be solely for convenience
of reference and shall not affect the meaning, construction or effect of this Agreement. All
references herein to "Articles," "Sections" and other subdivisions are to the corresponding
Articles, Sections or subdivisions of this Agreement; and the words "herein," "hereof,"
"hereunder" and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or subdivision hereof.
SECTION 14.06 Waiver of Notice. Whenever in this Agreement the giving of notice
by mail or otherwise is required, the giving of such notice may be waived in writing by the
person entitled to receive such notice and in any case the giving or receipt of such notice shall
not be a condition precedent to the validity of any action taken in reliance upon such waiver.
SECTION 14.07 Separability of Invalid Provisions. In case any one or more of the
provisions contained in this Agreement or in the Certificates shall for any reason be held to
be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, and this Agreement
shall be construed as if such invalid or illegal or unenforceable provision had never been
contained herein. The parties hereto hereby declare that they would have entered into this
Agreement and each and every other section, paragraph, sentence, clause or phrase hereof
and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that
any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may
be held illegal, invalid or unenforceable.
SECTION 14.08 Payment on a Business Day. If the date for making any payment or
the last day for the performance of any act or the exercising of any right, as provided in this
Agreement, is not a Business Day, such payment, with no interest accruing for the period
after such nominal date, or performance, may be made or act performed or right exercised on
the next succeeding Business Day with the same force and effect as if done on the nominal
date provided in this Agreement.
ARTICLE XV
CERTIFICATE INSURANCE
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SECTION 15.01 General. During the period when a Certificate Insurance Policy is in
effect with respect to the Certificates, the provisions in this Article shall be effective and shall
supersede any contrary provisions of this Agreement, to the extent of any inconsistency
herewith.
SECTION 15.02 Consents Required.
(a) Any provisions of this Agreement expressly recognizing or granting rights
in or to the Insurer may not be amended in any manner which affects the rights of the Insurer
hereunder without the prior written consent of the Insurer.
(b) Anything in this Agreement, the Site Lease, the Assignment Agreement or
the Project Lease to the contrary notwithstanding, , the Insurer's consent shall be required
whenever the consent of Certificates Owners, the City or the Trustee is required under this
Agreement, the Project Lease, the Site Lease or the Assignment Agreement.
(c) Anything in this Agreement or the Project Lease to the contrary
notwithstanding, upon the occurrence and continuance of an Event of Default as defined
herein, the Insurer, upon providing reasonable indemnity to the Trustee, shall be entitled to
control and direct the enforcement of all rights and remedies granted to the Certificate Owners
or the Trustee for the benefit of the Certificate owners under this Agreement, and the Insurer
shall also be entitled to approve all waivers of Events of Default.
SECTION 15.03 Notices. While the Certificate Insurance Policy is in effect, the City
or the Trustee, as appropriate, shall furnish to the Insurer (to the attention of the Surveillance
Department):
(a) A copy of any notice to be given to the registered Owners of the
Certificates, the City or the Trustee and any Certificates rendered pursuant to this Agreement
relating to the security for the Lease Payments or the Certificates; and
(b) Such additional information the Insurer may reasonably request.
Notwithstanding any other provision of this Agreement the Trustee shall notify Insurer
if at any time there are insufficient moneys to make payments with respect to the
Certificates as required and as soon as practicable upon being notified of the occurrence of
any Event of Default hereunder.
SECTION 15.04 Payment of Certificate Insurance.
(a) In the event that, on the second Business Day, and again on the Business Day prior
to a Certificate Payment Date, the Trustee has not received sufficient moneys to pay all
principal of and interest on the Certificates due on the second following or following, as the
case may be, Business Day, the Trustee shall immediately notify the Insurer or its designee
on the same Business Day by telephone, telegraph or facsimile, confirmed in writing by
registered or certified mail, of the amount of the deficiency.
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(b) If the deficiency is made up in whole or in part prior to or on the payment date, the
Trustee shall so notify the Insurer or its designee.
(c) In addition, if the Trustee has notice that any certificate holder has been required
to disgorge payments of principal or interest on the Certificate to a trustee in bankruptcy or
creditors or others pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes a voidable preference to such certificate holder within the meaning of any
applicable bankruptcy laws, then the Trustee shall notify the Insurer or its designee of such
fact by telephone, telephonic or facsimile notice, confirmed in writing by registered or certified
mail or express courier.
(d) The Trustee is hereby irrevocably designated, appointed, directed and authorized
to act as attorney -in -fact for Owners of the Certificates as follows:
1 . If and to the extent there is a deficiency in amounts required to pay interest on
the Certificates, the Trustee shall (a) execute and deliver to the Insurer's agent
(the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying
Agent, an instrument appointing the Insurer as agent for such Owners in any
legal proceeding related to the payment of such interest and an assignment to
the Insurer of the claims for interest to which such deficiency relates and which
are paid by the Insurer, (b) receive as designee of the respective Owners (and
not as Trustee) in accordance with the tenor of the Policy payment from the
Insurance Paying Agent with respect to the claims for interest so assigned, and
(c) disburse the same to such respective Owners; and
2. If and to the extent of a deficiency in amounts required to pay principal of the
Certificates, the Trustee shall (a) execute and deliver to the Insurance Trustee
in form satisfactory to the Insurance Paying Agent an instrument appointing the
Insurer as agent for such Owner in any legal proceeding relating to the payment
of such principal and an assignment to the Insurer of any of the Certificate
surrendered to the Insurance Paying Agent of so much of the principal amount
thereof as has not previously been paid or for which moneys are not held by the
Trustee and available for such payment (but such assignment shall be delivered
only if payment from the Insurance Paying Agent is received), (b) receive as
designee of the respective Owners (and not as Trustee) in accordance with the
tenor of the Policy payment therefore from the Insurance Paying Agent, and (c)
disburse the same to such Owners.
(e) Payments with respect to claims for interest on and principal of Certificates
disbursed by the Trustee from proceeds of the Policy shall not be considered to discharge the
Certificates, and the Insurer shall become the Owner of such unpaid Certificate and claims for
the interest in accordance with the tenor of the assignment made to it under the provisions
of this subsection or otherwise.
(f) Irrespective of whether any such assignment is executed and delivered, the Issuer
and the Trustee hereby agree for the benefit of the Insurer that,
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1. They recognize that to the extent the Insurer makes payments, directly or
indirectly (as by paying through the Trustee), on account of principal of or
interest on the Certificates, the Insurer will be subrogated to the rights of such
Owners to receive the amount of such principal and interest from the City, with
interest thereon as provided and solely from the sources stated in this
Agreement to Trust Agreement Supplemental Agreement to Supplemental Trust
Agreement and the Certificates; and
2. They will accordingly pay to the Insurer the amount of such principal and
interest (including principal and interest recovered under subparagraph (ii) of the
first paragraph of the Policy, which principal and interest shall be deemed past
due and not to have been paid), with interest thereon as provided in this
Indenture and the Certificate, but only from the sources and in the manner
provided herein for the payment of principal of and interest on the Certificates
to Owners, and will otherwise treat the Insurer as the owner of such rights to
the amount of such principal and interest.
(g) In connection with the issuance of additional Certificates, the City shall deliver to
the Insurer a copy of the disclosure document, if any, circulated with respect to such
additional Certificates.
(h) Copies of any amendments made to the documents executed in connection with
the issuance of the Certificates which are consented to by the Insurer shall be sent to
appropriate national rating agencies.
(i) The Insurer shall receive notice of the resignation or removal of the Trustee and the
appointment of a successor thereto.
(j) The Insurer shall receive copies of all notices required to be delivered to certificate
holders from the Trustee and, on an annual basis, copies of the Issuer's audited financial
statements and Annual Budget from the City.
Notices: Any notice that is required to be given to an Owner of the Certificates or to
the Trustee pursuant to the Agreement to Trust Agreement Supplement Agreement to
Supplementql Trust Agreement shall also be provided to the Insurer. All notices required to
be given to the Insurer under the Agreement to Trust Agreement Supplement Agreement to
Supplemental to Supplemental Trust Agreement shall be in writing and shall be sent by
registered, certified mail, facsimile or express courier.
SECTION 15.05 Subrogation. In the event that any principal or interest component
due with respect to the Certificates shall be paid by the Insurer pursuant to the Certificate
Insurance Policy the Certificates shall remain outstanding for all purposes, not be defeased
or otherwise satisfied and not be considered paid by the Corporation or the City, and the
assignment and pledge of the Lease Payments and all covenants, agreements and other
certificates of the Corporation or the City to the Owners shall continue to exist and shall run
to the benefit of the Insurer, and the Insurer shall be subrogated to the rights of such Owners.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Trustee
By:
Authorized Signatory
NEWPORT BEACH PUBLIC FACILITIES CORPORATION, as Lessor
By:
Corporation Representative
CITY OF NEWPORT BEACH, as Lessee
Bv:
City Representative
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CERTIFICATE OF PARTICIPATION
Series 1992
(Central Library Building Project)
Evidencing A Proportionate Interest
of the Owner Hereof In Lease Payments to be Made by the
CITY OF NEWPORT BEACH
(Orange County, California)
to
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
(A CALIFORNIA NONPROFIT PUBLIC FACILITIES CORPORATION)
Interest Rate Maturity Date Dated Date CUSIP
June 1, 1992
REGISTERED OWNER:
PRINCIPAL AMOUNT:
THIS IS TO CERTIFY THAT the registered owner named above, or registered assigns, as the
Registered Owner of this Certificate of Participation (the "Certificate") is the owner of a
proportionate and undivided interest in the right to receive certain Lease Payments and
Prepayments thereof under and defined in that certain Project Lease, dated as of June 1,
1992 (the "Lease"), by and between NEWPORT BEACH PUBLIC FACILITIES CORPORATION,
a public agency duly organized and existing under the laws of the State of California and the
CITY OF NEWPORT BEACH, a municipal corporation duly organized and existing under and
by virtue of the Constitution and the laws of the State of California (the "City"), which Lease
Payments and Prepayments and certain other rights and interests under the Lease have been
assigned to BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as trustee
(the "Trustee"), having a corporate trust office at which it conducts corporate trust business
in Los Angeles, California (said office being herein referred to as the "Principal Office").
The Registered Owner of this Certificate is entitled to receive, subject to the terms of
the Lease, on the maturity date specified above, the principal amount specified above,
representing a portion of the Lease Payments designated as principal coming due during the
preceding twelve months, and to receive on December 1, 1992, and semiannually thereafter
on June 1 and December 1 of each year (the "Certificate Payment Dates") until payment in
full of said portion of principal, the Registered Owner's portion of the Lease Payments
designated as interest coming due during the six months immediately preceding each of the
A-1
Certificate Payment Dates; provided that interest with respect hereto shall be payable from
the Certificate Payment Date next preceding the date of execution of this Certificate (unless
(i) this Certificate is executed on a Certificate Payment Date in which event it shall be payable
from the date thereof, or (ii) this Certificate is executed after the close of business on the
fifteenth day of the month prior to a Certificate Payment Date (the "Record Date"), and before
such Certificate Payment Date in which event interest shall be payable from such Certificate
Payment Date, or (iii) unless this Certificate is executed prior to the close of business on
October 15, 1992, in which event interest shall be payable from June 1, 1992). The portion
of the Lease Payments designated as interest is computed on the basis of a 360-day year of
twelve 30-day months and is the result of the multiplication of the aforesaid portion of the
Lease Payments designated as principal by the rate per annum identified above. Said amounts
are payable in lawful money of the United States of America. The amount representing
principal payable at maturity or upon prepayment in whole or in part is payable to the
Registered Owner upon presentation and surrender of this Certificate at the Principal Office.
In the event that this Certificate is paid in part only, payment of such partial prepayment of
principal represented by this Certificate will be by check mailed on the Payment Date by first
class mail upon presentation and surrender of this Certificate at the Principal Office. The
amounts representing interest are payable by check mailed by first class mail on each Payment
Date by the Trustee to the Registered Owner hereof as of the Record Date preceding the
Certificate Payment Date at his address as it appears on the registration books of the Trustee
or by wire transfer at the written request of the Registered Owner of $1,000,000 or more of
principal amount, such request to be filed with the Trustee on or before the applicable Record
Date.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE
ON THE REVERSE HEREOF WHICH SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT
AS THOUGH FULLY SET FORTH HEREIN.
IN WITNESS WHEREOF, this Certificate has been executed and delivered by Bank of
America National Trust and Savings Association, as Trustee, acting pursuant to the Trust
Agreement.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
Authorized Signatory
Date of Execution:
A-2
[REVERSE SIDE OF CERTIFICATE]
This Certificate has been executed and delivered by the Trustee pursuant to the terms of a
Trust Agreement by and among the Trustee, Newport Beach Public Facilities Corporation, as
lessor (the "Corporation"), and the City, dated as of June 1, 1992 (the "Trust Agreement").
Reference is hereby made to the Lease and the Trust Agreement (copies of which are on file
at the Principal Office) for a description of the terms on which the Certificates are delivered,
the rights thereunder of the Registered Owners of the Certificates, the rights, duties and
immunities of the Trustee and the rights and certificates of the City under the Lease, to all of
the provisions of which Lease and Trust Agreement the Registered Owner of this Certificate,
by acceptance hereof, assents and agrees. Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Trust Agreement.
The City is obligated to pay Lease Payments from any source of legally available funds, and
the City has covenanted in the Lease to make the necessary annual appropriations therefor.
The obligation of the City to pay the Lease Payments does not constitute an obligation of the
City for which the City is obligated to levy or pledge any form of taxation or for which the
City has levied or pledged any form of taxation. The obligations of the City to pay Lease
Payments does not constitute a debt of the City, the State of California or any of its political
subdivisions, and does not constitute an indebtedness within the meaning of any
constitutional or statutory debt limitation or restriction. The City's obligations to pay Lease
Payments may be abated during any period in which, by reason of material damage,
destruction or condemnation, there is substantial interference with the use and right of
possession by the City of the property which is the subject of the Lease. Failure of the City
to pay Lease Payments during any such period shall not constitute a default under the Lease,
the Trust Agreement or this Certificate.
To the extent and in the manner permitted by the terms of the Trust Agreement, the
provisions of the Trust Agreement may be amended by the parties thereto with the written
consent of the Registered Owners of at least a majority in aggregate principal amount of the
Certificates then Outstanding, and may be amended without such consent under certain
circumstances. No such modification or amendment shall (1) extend or have the effect of
extending the fixed maturity of any Certificate or reducing the interest rate with respect
thereto or extending the time of payment of interest, or reducing the amount of principal
thereof or reducing any premium payable upon the prepayment thereof, without the express
consent of the Owner of such Certificate, or (2) reduce or have the effect of reducing the
percentage of Certificates required for the affirmative vote or written consent to an
amendment or modification of the Lease, or (3) modify any of the rights or certificates of the
Trustee without its written assent thereto.
This Certificate is transferable by the Registered Owner hereof, in person or by his duly
authorized attorney, at the Principal Office, but only in the manner, subject to the limitations
and upon payment of the charges provided in the Trust Agreement and upon surrender and
cancellation of this Certificate. Upon such transfer a new Certificate or Certificates, of
authorized denomination or denominations, for the same aggregate principal amount, maturity
and interest rate, will be delivered to the transferee. The Trustee shall not be required to
A-3
register the transfer or exchange of any certificate (i) between 15 days prior to selection of
certificates for redemption and the date of mailing notice of redemption and (ii) as to any
certificate selected for redemption. This Certificate also may be exchanged for a like aggregate
principal amount of Certificates of other authorized denominations as prescribed in the Trust
Agreement. The City, the Corporation and the Trustee may treat the Registered Owner hereof
as the absolute owner hereof for all purposes whether or not this Certificate shall be overdue,
and the City, the Corporation and the Trustee shall not be affected by any notice to the
contrary.
The Certificates are subject to mandatory prepayment on any date prior to maturity, in whole
or in part, from the Net Proceeds of insurance or condemnation if such proceeds are
insufficient to repair or replace the Site and the City has elected to apply such proceeds to the
prepayment of all or a portion of the outstanding Certificates, at a prepayment price equal to
the principal amount thereof, without premium, together with accrued interest to the date
fixed for prepayment. The Certificates are also subject to mandatory prepayment if and to
the extent required in order to preserve to excludability of interest on the Certificates from
gross income for purposes of federal income taxation, as set forth in an opinion of Special
Counsel at a prepayment price equal to the principal amount to be prepaid, without premium,
together with accrued interest to the date fixed for prepayment.
Certificates maturing on or before June 1, 2000 are not subject to optional prepayment prior
to their stated maturity dates. Certificates maturing on or after June 1, 2000 are subject to
optional prepayment prior to maturity or any Certificate Payment Date on or after June 1,
2000, at the option of the City, as a whole, or in part on any Certificate Payment Date, in
inverse order of maturity and by lot within a maturity, , from amounts deposited with the
Trustee by the City for that purpose in accordance with the provisions of the Agreement to
Trust Agreement Supplemental Agreement to Supplemental Trust Agreement. Certificates
so called for prepayment will be prepaid at the principal amount thereof plus accrued interest
to the prepayment date, plus a premium of one percent (of 1 %) of the principal amount being
prepaid for each whole year or fraction of a year remaining between the date fixed for
prepayment and the stated maturity date.
Whenever provision is made for the mandatory prepayment of Certificates and less than all
Outstanding Certificates are called for mandatory prepayment, the Trustee shall select
Certificates for prepayment, from the Outstanding Certificates not previously called for
prepayment, pro rata among maturities and by lot within any maturity so that following such
prepayment remaining annual payments of principal and interest represented by the
Certificates are, to the extent practicable given that Certificates are issued in integral multiples
of $5,000, proportionate to the initial amounts of such payments.
As provided in the Trust Agreement, notice of prepayment shall be sent by first class mail,
postage prepaid, not less than 30 days before the prepayment date, to the Registered Owner
of this Certificate, but neither failure to receive such notice nor any defect in the notice so
mailed shall affect the sufficiency of the proceedings for prepayment.
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If this Certificate is called for prepayment and payment is duly provided therefor as specified
in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the
date fixed for prepayment.
The Trustee has no obligation or liability to the Registered Owners to make payments of
principal or interest components of Lease Payments pertaining to the Certificates except from
Lease Payments paid to the Trustee and from the various funds and accounts established
under the Trust Agreement.
The City has certified that all acts, conditions and things required by the Constitution and
statutes of the State of California and the Trust Agreement to exist, to have happened and
to have been performed precedent to and in connection with the execution and delivery of this
Certificate do exist, have happened and have been performed in regular and due time, form
and manner as required by law, and that the Trustee is duly authorized to execute and deliver
this Certificate, and that the amount of this Certificate, together with all other Certificates
executed and delivered under the Trust Agreement, is not in excess of the amount of
Certificates authorized to be executed and delivered thereunder.
F—IM41
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Please print or typewrite name, address and social security or other federal tax identifying
number of Transferee)
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and
appoints
to transfer the within Certificate on the books kept for registration thereof, with full power
of substitution in the premises.
Dated:
Signature Guaranteed
NOTICE: Signature(s) must be guaranteed by aNOTICE: The signature to this member of
the New York Stock Exchange or a assignment must correspond with the commercial bank
of trust company.name as it appears upon the face of the within Certificate in
every particular, without alteration or enlargement or any change whatever.
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EXHIBIT B
LEASE PAYMENT SCHEDULE
Lease Interest Principal
Payment Date Component Component Total
November 15, 1992
May 15, 1993
November 15, 1993
May 15, 1994
November 15, 1994
May 15, 1995
November 15, 1995
May 15, 1996
Noverriber 15, 1996
May 15, 1997
November 15, 1997
May 15, 1998
November 15, 1998
May 15, 1999
November 15, 1999
May 15, 2000
November 15, 2000
May 15, 2001
November 15, 2001
May 15, 2002
November 15, 2002
May 15, 2003
November 15, 2003
May 15, 2004
November 15, 2004
May 15, 2005
November 15, 2005
May 15, 2006
November 15, 2006
May 15, 2007
November 15, 2007
May 15, 2008
November 15, 2008
May 15, 2009
November 15, 2009
May 15, 2010
November 15, 2010
May 15, 2011
November 15, 2011
May 15, 2012
November 15, 2012
May 15, 2013
November 15, 2013
May 15, 2014
November 15, 2014
May 15, 2015
November 15, 2015
May 15, 2016
November 15, 2016
May 15, 2017
November 15, 2017
May 15, 2018
November 15, 2018
May 15, 2019
M
Recording Requested By:
CITY OF NEWPORT BEACH
When Recorded Mail To:
CITY OF NEWPORT BEACH
3300 Newport Boulevard
Newport Beach, California 92659
Attn: Finance Director
This document is recorded for the benefit of the CITY OF NEWPORT BEACH, and recording
is fee exempt under §27383 of the Government Code.
ASSIGNMENT AGREEMENT
between
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
Dated as of June 1, 1992
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, executed and entered into as of June 1, 1992, by
NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a nonprofit duly organized and
existing under and by virtue of the laws of the State of California,
(the "Corporation"), and accepted by BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association as Trustee (the "Trustee");
WITNESETH:
WHEREAS, the Corporation and CITY OF NEWPORT BEACH, a municipal corporation
duly organized and existing under and by virtue of the Constitution and laws of the State of
California (the "City"), have executed and entered into a Site Lease (the "Site Lease") and a
Project Lease (the "Lease") as of the date hereof and previously recorded whereby the City
has agreed to respectively lease certain improved property of the City, as described in Exhibit
"A" hereto and incorporated by reference herein (the "Site"), to the Corporation and the
Corporation has agreed to lease back the Site as improved (the "Project"), to the City as
provided therein;
WHEREAS, under and pursuant to the Lease, the City is obligated to make Lease
Payments, as defined therein, to the Corporation for the lease of such Site as improved;
WHEREAS, the Corporation desires to assign without recourse all of its rights to
receive the Lease Payments scheduled to be paid by the City under and pursuant to the Lease
to the Trustee;
WHEREAS, in consideration of such assignment and the execution and entering into
of a Trust Agreement (the "Trust Agreement") to be executed and entered into as of the date
hereof, by and among the Trustee, the Corporation and the City, the Trustee has agreed to
execute and deliver certificates of participation (the "Certificates") in an aggregate principal
amount equal to the aggregate principal components of such Lease Payments; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened
and to have been performed precedent to and in connection with the execution and entering
into of this assignment agreement (the "Assignment Agreement") do exist, have happened
and have been performed in regular and due time, form and manner as required by law and
the parties hereto are now duly authorized to execute and enter into the Assignment
Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants contained herein and for other valuable
consideration, the parties hereto do hereby agree as follows:
SECTION 1. Assignment.
(a) Site Lease. The Corporation hereby transfers, assigns and sets over to the
Trustee, for the benefit of the Owners of the Certificates, executed and delivered under the
Trust Agreement, all of the Corporation's rights under the Site Lease.
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(b) Lease. The Corporation hereby transfers, assigns and sets over to the Trustee,
for the benefit of the Owners of Certificates executed and delivered under the Trust
Agreement, all of the Corporation's rights under the Lease (excepting only the Corporation's
rights under Section 9.4 of the Lease, regarding payment of attorneys' fees), including,
without limitation:
(1) the right to receive and collect all of the Lease Payments, Additional
Payments and Prepayments (all as defined in the Trust Agreement) from
the City under the Lease;
(2) the right to receive and collect any proceeds of any insurance
maintained thereunder, any condemnation award rendered with respect
to the Site, or any lease of the Project in the event of a default by the
City under the Lease;
(3) the right to take all actions and give all consents under the Lease,
including without limitation, Section 7.8 (regarding liens), 8.2 (regarding
subleases), Section 8.3 (regarding amendments of the Lease), and
Section 9.2 (regarding defaults);
(4) the right to exercise such rights and remedies conferred on the
Corporation pursuant to the Lease as may be necessary or convenient
(i) to enforce payment of the Lease Payments, Additional Payments,
Prepayments, and any other amounts required to be deposited in the
Lease Payment Fund, the Prepayment Fund, the Net Proceeds Fund or
any other funds established under the Trust Agreement, or (ii) otherwise
to protect the interests of the Corporation in the event of a default by
the City under the Lease; and
(5) the right of the Corporation to receive rental in excess of Lease
Payments as compensation for re -leasing the Site upon events of default
under the Lease, as provided in Section 9.2(a) and (b) of the Lease.
(c) Assignment for Owners of Certificates. All rights assigned by the Corporation
shall be administered by the Trustee as assignee thereof according to the provisions of the
Trust Agreement and for the equal and proportionate benefits of the Owners of Certificates.
SECTION 2. Acceptance.
The Trustee hereby accepts the foregoing assignment for the benefit of the Owners
of Certificates, subject to the conditions and terms of the Trust Agreement, and all such Lease
Payments shall be applied and all such rights so assigned shall be exercised by the Trustee
under and pursuant to the Trust Agreement.
SECTION 3. Conditions.
This Assignment Agreement shall confer no rights and shall impose no obligations upon
the Trustee beyond those expressly provided in the Trust Agreement.
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SECTION 4. No Other Claims.
The Authority hereby represents and warrants that there are no present and
outstanding claims on Lease Payments or any other moneys assigned by the Authority to the
Trustee hereunder.
SECTION 5. Execution in Counterparts.
This Assignment Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all together shall constitute but one and the same
instrument
IN WITNESS WHEREOF, the parties hereto have executed and entered into this
Assignment Agreement by their officers thereunto duly authorized as of the day and year first
above written.
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
Bv:
Corporation Representative
Accepted by:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
By:
Authorized Signatory
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STATE OF CALIFORNIA )
SS.
COUNTY OF ORANGE )
On this day of June in the year 1992 before me, the undersigned, a Notary
Public in and for the State of California, personally appeared to me ,
known to me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument on behalf of NEWPORT BEACH PUBLIC FACILITIES
CORPORATION, the authority that executed the within instrument.
WITNESS my hand and official seal.
Notary Public
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STATE OF CALIFORNIA )
SS.
COUNTY OF LOS ANGELES )
On this day of
in the year 1992 before me, the
undersigned, a Notary Public in and for the State of California, personally appeared to me,
known to me to be (or proved to me on the basis of satisfactory evidence), a
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, the banking corporation that executed the within instrument, and known to
me (or proved to me on the basis of satisfactory evidence) to be the person who executed the
within instrument on behalf of said banking corporation.
WITNESS my hand and official seal.
Notary Public
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EXHIBIT "A"
DESCRIPTION OF SITE
0