HomeMy WebLinkAbout0 - PFCMay 1 S, 1998
TO:
FROM:
SUBJECT:
CITY OF ,•,
1
Resource Management Division
1 • •
FACILITIES CORPORATION
May 26, 1998
Corporation Meeting
Dennis Danner, Treasurer - Newport Beach Public Facilities Corporation /jl
DISCUSSION:
In June, 1992, the Newport Beach Public Facilities Corporation issued Library Certificates of
Participation (COPS) in the principal amount of $7,500,000, the proceeds of which were used to
construct the new Central Library. These COPS were issued for 25 years with an average coupon
rate of approximately 6.1 %. Several months ago staff began examining whether annual debt
service savings could be achieved by refinancing these COPs because of the current low interest
rates, We contacted Robin Thomas of Miller & Schroeder Financial, Inc. (the original financial
consultant for this issue) and asked her to compute the savings that could be achieved by
refinancing.
At the time of her calculations she estimated that the Library COPS could be refinanced at an
average coupon rate of 4.35% with net savings of approximately $590,000 over the remaining
years of the issue, after administrative costs. Staff then contacted AMBAC and received their
commitment to insure the refunded issue if it was economically viable. Staff also contacted bond
counsel to begin work on drafting the necessary legal documents required for the refunding. All
worked performed to date has been done with the knowledge that if the refunding does not take
place the City will incur no expenses.
This information was presented to the Finance Committee in February and that Committee
directed staff to proceed working on the refunding. Almost immediately interest rates increased
and the anticipated savings nearly all evaporated. Since that time, interest rates have returned to
approximately their prior level when the original refunding computation was performed and the
anticipated savings are approximately the amounts reported above.
It is recommended that the Newport Beach Public Facilities Corporation approve the attached
resolution which is titled:
A resolution of the Newport Beach Public Facilities Corporation authorizing the
preparation, sale and delivery of not to exceed $7,500,000 principal amount of
Refunding Certificates of Participation, Series 1998 (Central Library Building
Project) and approving certain documents and authorizing certain actions in
connection therewith.
It is further recommended that the Public Facilities Corporation direct staff to proceed with the
refunding only if the approximate desired level of debt service savings is achieved.
MY.MO.nOC 05/18/98 9:20 AM
RESOLUTION NO.
RESOLUTION OF THE NEWPORT BEACH PUBLIC FACILITIES
CORPORATION AUTHORIZING THE PREPARATION, SALE AND
DELIVERY OF NOT TO EXCEED $7,500,000 PRINCIPAL AMOUNT OF
REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 1998
(CENTRAL LIBRARY BUILDING PROJECT) AND APPROVING
CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN
CONNECTION THEREWITH
WHEREAS, the City Council (the "City Council ") of the City of Newport Beach (the "City ")
has previously adopted its resolution authorizing the execution and delivery of those certain Certificates
of Participation, Series 1992 (Central Library Building Project) of the City (the "Prior Certificates");
and
WHEREAS, the Board of Directors (the `Board ") of the Newport Beach Public Facilities
Corporation (the "Corporation') has previously adopted its resolution approving the Corporation's
participation in the acquisition of the certain real property known as Central Library Building Project
and related public improvements for general municipal purposes (the "Project") through the execution
and delivery of the Prior Certificates; and
WHEREAS, a refunding of the Prior Certificates will result in a reduction of the lease
payments required to be paid by the City in connection with the Project, thereby creating a public
benefit; and
WHEREAS, in order to reduce its costs associated with the Project, the City now desires to
refund the outstanding portion of the Prior Certificates through the execution and delivery of those
certain Refunding Certificates of Participation, Series 1998 (Central Library Building Project) (the
"Certificates "); and
WHEREAS, in order to accomplish the refunding of the Prior Certificates, the City and the
Corporation further desire to enter into that certain Site Lease, by and between the City and the
Corporation (the "Site Lease "), and that certain Project Lease, by and between the City and the
Corporation (the "Lease Agreement "), each to be dated as of the first day of the month in which the
Certificates are executed and delivered, the forms of which have been presented to the Corporation for
approval; and
WHEREAS, pursuant to the Site Lease, the Corporation will agree to lease certain real
property, improvements, furnishings and equipment described therein (the "Leased Property") from the
City and pursuant to the Lease Agreement the City will agree to lease back the Leased Property from
the Corporation and to pay certain lease payments in connection therewith; and
WHEREAS, the Corporation desires to assign certain rights under the Site Lease and the Lease
Agreement, including its right to receive such lease payments from the City, to U.S. Bank Trust
584600.322459.0005 -I-
National Association, Los Angeles, California (the "Trustee ") pursuant to an Assignment Agreement to
be dated as of the first day of the month in which such Assignment Agreement is executed by the
parties thereto, between the Corporation and the Trustee (the "Assignment Agreement'), the form of
which has been presented to the Corporation for approval; and
WHEREAS, there has been presented to the Corporation for approval the form of a Purchase
Agreement (the "Purchase Agreement ") to be entered into by the City and Miller & Schroeder
Financial, Inc. (the "Purchaser ") pursuant to which the Purchaser will agree to buy the Certificates on
the terms and conditions set forth therein; and
WHEREAS, there has been presented to the Corporation for approval the form of a
Preliminary Official Statement to be delivered to prospective purchasers of the Certificates;
NOW, THEREFORE, the Newport Beach Public Facilities Corporation does hereby resolve,
determine and order as follows:
Section I. Each of the foregoing recitals is true and correct.
Section 2. The Corporation hereby authorizes the preparation, sale and delivery of the
Certificates in an aggregate principal amount not to exceed $7,500,000 in accordance with the terms
and provisions of the Trust Agreement. The proceeds of the Certificates shall be expended to refund
the Prior Certificates and to provide for a reserve fund, if required, and for payment of the costs of the
sale and delivery of the Certificates.
Section 3. The Corporation hereby approves the appointment by the City of U.S. Bank
Trust National Association, to act as Trustee on behalf of the owners of the Certificates, with the duties
and powers of the Trustee as set forth in the Trust Agreement,
Section 4. The forms of the Escrow Agreement, the Site Lease, the Lease Agreement, the
Trust Agreement and the Assignment Agreement presented at this meeting are hereby approved. Each
of the President and Secretary of the Corporation are hereby authorized to execute, acknowledge and
deliver any and all documents required to consummate the transactions contemplated by the Site Lease,
the Lease Agreement, the Trust Agreement and the Assignment Agreement and this Resolution. Each
of the President and the Secretary of the Corporation are hereby authorized for and in the name of the
Corporation to execute and deliver the Site Lease, the Lease Agreement, the Trust Agreement and the
Assignment Agreement in substantially the forms hereby approved, with such additions thereto and
changes therein as are recommended or approved by Stradling Yocca Carlson & Rauth, a Professional
Corporation, as Special Counsel to the City ("Special Counsel "), and approved by the officer or
officers executing the same, such approval to be conclusively evidenced by the execution and delivery
thereof.
Section 5. The form of the Certificates as set forth in the Trust Agreement (as the Trust
Agreement may be modified pursuant to the preceding section hereof) is hereby approved.
Section 6. The form of the Purchase Agreement presented at this meeting is hereby
approved and the sale of the Certificates pursuant thereto is hereby consented to by the Corporation;
provided that the aggregate principal amount of the Certificates does not exceed $7,500,000, the
present value of the debt service payments due with respect to the Certificates is at least three percent
584600.3\22459.0005 -2-
(3 %) less than the present value of the debt service payments due with respect to the Prior Certificates
(as set forth in writing by the City and/or the Purchaser) and the discount paid to the Purchaser
(exclusive of original issue discount and any bond insurance premium) with respect to the Certificates
does not exceed one and one -half percent (1'/2 %) of the aggregate principal amount of the Certificates.
Section 7. The Corporation consents to the preparation and distribution by the City of a
Preliminary Official Statement to prospective purchasers of the Certificates in the form deemed final by
the City for purposes of Rule 15c2 -12 of the Securities and Exchange Commission and to the
preparation of a final Official Statement in substantially the form of the Preliminary Official Statement,
with such additions thereto and changes therein as are recommended or approved by the City Attorney,
and approved by the officer or officers executing the same on behalf of the City.
Section 8. The President, Secretary and other officers of the Corporation are hereby
authorized, jointly and severally, to do any and all things and to execute and deliver any and all
documents which they may deem necessary and advisable in order to consummate the sale and delivery
of the Certificates and otherwise effectuate the purposes of this Resolution and such actions previously
taken by such officers are hereby ratified. Specifically and without limiting the foregoing, the Finance
Director is authorized and directed to solicit and accept bids for bond insurance for the Certificates,
provided he determines acceptance of the best bid will result in further debt service savings, and
appropriate changes to each of the documents referenced herein to evidence such bond insurance and
the terms thereof, are hereby authorized and approved.
Section 9. In the event the President is unavailable or unable to execute and deliver any of
the above- referenced documents, any other member of the Board of the Corporation may validly
execute and deliver such documents, and any documents required to be signed by the Secretary may be
signed by any deputy secretary.
Section 10. This Resolution shall take effect from and after its date of adoption.
ADOPTED, SIGNED AND APPROVED this day of May, 1998,
President of the Newport Beach Public Facilities
Corporation
ATTEST:
Secretary of the Newport Beach Public Facilities
Corporation
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
584600.3122459.0045 -3-
I hereby certify that the foregoing Resolution was duly and regularly adopted by the Board of
Directors of the Newport Beach Public Facilities Corporation at a regular meeting thereof held on the
day of May, 1498, by the following vote:
AYES: BOARD MEMBERS:
ABSTAIN: BOARD MEMBERS:
Secretary of the Newport Beach Public Facilities
Corporation
5846003M459,0005 -4-
TRUST AGREEMENT
.. r
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
NEWPORT BEACH PUBLIC FACILITIES CORPORATION,
and
CITY OF NEWPORT BEACH
Dated as of June 1, 1998
CITY OF NEWPORT BEACH
REFUNDING CERTIFICATES OF PARTICIPATION
SERIES 1998
(CENTRAL LIBRARY BUILDING PROJECT)
566725.2224594005
May 26, 1998
Corporation Meeting
Supplemental
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1. Definitions and Rules of Construction... ... ....... ...... ........... - ....... .........
Section 1.2, Authorization. ...... - ...... ............. - ............. ____ ........... ................
ARTICLE H
01a
ARTICLE III
APPLICATION OF PROCEEDS; ESCROW FUND
Section 3, 1. Application of Proceeds and Other Moneys.............................. ..............._._._..._._...AS
Section 3.2. [Reserved].. .......... ___ ..... _ ......... ...... ........ __ ..... - ......... 15
Section 3.3. Escrow Fund ... ........... ...... ....................... ............. ...... __ ........ ___ 15
Section 3.4. Additional Certificates . ................. ....... ........... .... ___ A5
Section 3.5. Validity of Certificates.- . ..... - ............ ...... _ ................. ...... __ ... ..... ....... ....... __ ... 16
FRISH16103
THE REFUNDING CERTIFICATES OF PARTICIPATION
Section 2.1.
Authorization....... ..... ... __ ... _ ......... - ..... .................... ......................... .......
.... _10
Section2.2.
Date . .................. - .... ......................................... __ ....... .....................................
___10
Section 2.3.
Maturity; Interest Rates......._ .............................. __ .......................................
10
Section 2.4.
Registration; Interest ........................................... ..................................
_ ....... 17
Section 2.5.
Form of Certificates, .................................... __ .............. ___ ............................
18
Section 2.6.
Execution ........ ...... ............................ ....... .......
19
Section 2.7.
Transfer and Exchange, ...................... ...... _
......... . ...... I1
Section 2,8.
Certificates Mutilated, Lost, Destroyed or Stolen........................... .............................12
.... 20
Section2.9.
Payment . ........ ......... __ ......... _ ...... _ ........ _ ....... ...............
...... 12
Section 2.10.
Execution of Documents and Proof of Ownership . ...................... ........... - .......
.... 12
Section 2.11.
Certificate Register. . . . ... - . . ... ......... ..................... ........... .......
.... A3
Section 2.12.
Destruction of Canceled Certificates.. ..... ........ .......... _,_ .......
..... _A3
Section 2.13.
Book-Entry System, ......... ...... ...... ...... ......... _ .....................
___13
ARTICLE III
APPLICATION OF PROCEEDS; ESCROW FUND
Section 3, 1. Application of Proceeds and Other Moneys.............................. ..............._._._..._._...AS
Section 3.2. [Reserved].. .......... ___ ..... _ ......... ...... ........ __ ..... - ......... 15
Section 3.3. Escrow Fund ... ........... ...... ....................... ............. ...... __ ........ ___ 15
Section 3.4. Additional Certificates . ................. ....... ........... .... ___ A5
Section 3.5. Validity of Certificates.- . ..... - ............ ...... _ ................. ...... __ ... ..... ....... ....... __ ... 16
FRISH16103
566725.2\22459-0005 1
PREPAYMENT OF CERTIFICATES
Section 4.1.
Establishment of Prepayment Fund_ .......... - ...... .......................
...... 16
Section 4.2.
Mandatory Prepayment . ...................... .................. ...........
.................. � 16
Section 4.3.
Optional Prepayment..... ............................... ............ ........ ............
_ .... _ ........... 17
Section 4.4.
Selection of Certificates for Prepayment. ....... ____ ....... _ ...... .... _ ........
_ ....... 17
Section 4.5,
Notice of Prepayment. . .................................... .............................
18
Section 4.6.
Partial Prepayment of Certificates ..................... ...... ...................................
19
Section 4.7.
Effect of Notice of Prepayment ................. ...... 1111-11-11- ...................
................ _119
Section4.8.
No Surplus .............. ...................... ..... - ........... - ... .... ........... - ..........................
.... 20
566725.2\22459-0005 1
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.1_ Security Provisions ......................................................................... .............................20
Section 5.2. Establishment of Lease Payment Fund. . ...... .... - ....... - ............... ............... 21
Section 5.3. Deposits....... .................. --- .
Section 5.4. Application of Moneys .................. ..........................................._..... .............................21
Section 5.5. Surplus Revenues. . — — - . . ....................... ........ — ................ ............ ............. 21
ARTICLE VI
RESERVE FUND
Section 6.1. Reserve Fund ................... ....._.............. ..... .. .................. --- ....................... ............... 21
Section 6.2. Deposits to the Reserve Fund ......................................................... .............................22
Section 63. Transfers of Excess ......................................................................... .............................22
Section 6.4. Application of Reserve Fund in Event of Deficiency in Lease Payment
Fund,.—..... .............. -- ............. ................. ............................... _.............................. 22
Section 6.5. Transfer to Make All Lease Payments-- . ..................... -- ... ..................................... 23
ARTICLE VII
566725.Z22459.0005 ii
NET PROCEEDS FUND
Section 7. L
Establishment of Net Proceeds Fund; Deposits ..............................
.............................23
Section 7.2.
Disbursements ................................................................................
.............................23
Section7.3.
Cooperation .....................................................................................
.............................23
Section8.1.
Held in Trust ...................................................................................
.............................23
Section 8.2.
investments Authorized...... ...................... — ....... ............... -- .......................
- ... -- .... 24
Section 8.3
Disposition of Investments. .......... ......... — ....... ................
Section8.4.
Accounting.. ................... - ...... — ............ ....... ................
.......... 24
Section 8.5.
Valuation and Disposition of Investments .......................................
.............................24
Section 8.6.
Commingling of Moneys in Funds ..................................................
.............................25
Section 8.7.
Arbitrage Covenant. .........
......... -----25
Section 8.8.
Rebate-- ..... ...... ...... ...... -- ......
..... --25
Section 8.9.
Information Concerning Investments. . .......... .........
-- ....... ......... ..... 28
Section 8.1(w
Notice Concerning Investments. . ........... ...................... -- ........
...... ............... 28
566725.Z22459.0005 ii
THE TRUSTEE
Section 9.1.
Appointment of Trustee, .................................................................
.............................28
Section 9.2.
Merger or Consolidation-- ............ ...... ..................
Section 9.3.
Protection of the Trustee,..... ...
....... ..
Section 9.4.
Rights of the Trustee...... ................ ......... .................. .. .......
............ ............................ ..30
Section9.5.
Standard of Care .............................................................................
.............................30
Section 9.6.
Compensation of the Trustee ..................
Section 9.7.
Indemnification of the Trustee. ....................... ...............
...................... .... — ......... 31
566725.Z22459.0005 ii
ARTICLE X
ARTICLE XH
LIMITATION OF LIABILITY
Section 12.1. Limited Liability of the City . ........ ...... ... 36
Section 12.2. No Liability of the City or Corporation for Trustee Performance,,.,.,...,,.. ................ --37
Section 12.3. Limited Liability of Trustee...— ......... -- ..... ...... — .... - ....... ................. ............. . ...... -37
&ctiqU. 12.4. Limitation of Rights of Parties and Certificate Owners................... .............................37
ARTICLE XIH
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
MODIFICATION OR AMENDMENT OF AGREEMENT
Section 13.1. A
Section 10.1.
Amendments Permitted. ............................. -- .......... -- ..................................
.... 32
Section 10.2.
Procedure for Amendment with Written Consent of the Owners .... .............................33
........... -- .... 34
Section 10.3.
Disqualified Certificates ............................... ..... ---- ....................... ............
........ -.33
Section 10.4.
Effect of Supplemental Agreement . .................. -- ... -- ................... — .............
--- ... -33
Section 105.
Endorsement or Replacement of Certificates Delivered After
...... ......... ....... ......... 35
Sectign_11.6.
Amendments. ....... --- ......... .............................. .............
-----.34
Section 10.6.
Amendatory Endorsement of Certificates, .................. .........
— ....... 34
Section 10.7.
Trustee's Reliance on Opinion of Special Counsel........................ ..............._.............34
...................................... ----36
Section 10.8.
Site Replacement. ....... — .... ............. .......................... ................ --- .... ..........
... 34
ARTICLE XH
LIMITATION OF LIABILITY
Section 12.1. Limited Liability of the City . ........ ...... ... 36
Section 12.2. No Liability of the City or Corporation for Trustee Performance,,.,.,...,,.. ................ --37
Section 12.3. Limited Liability of Trustee...— ......... -- ..... ...... — .... - ....... ................. ............. . ...... -37
&ctiqU. 12.4. Limitation of Rights of Parties and Certificate Owners................... .............................37
ARTICLE XIH
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
COVENANTS; NOTICES
Section 13.1. A
Section 11.1.
Compliance With and Enforcement of the Lease...........-
............... .............................34
Section 11.2.
Payment of Taxes. .. — . . . ......... .................... .....................
........... -- .... 34
Section 11.3.
Observance of Laws and Regulations. --- --- .........
....... 35
Section 11.4.
Prosecution and Defense of Suits. . ................. ......
_.......... .............................35
Section 1I.5.
City Budgets. ..,. ...... ....... ..... ----
...... ......... ....... ......... 35
Sectign_11.6.
Further Assurances....... ..... — ............................... ................................
.................. ... 35
Section 11.7.
Federal Tax Covenants . ................................... -- ..............................
......... -- .... -35
Section 11.8.
Notice of Trustee . .... -- ....................................
...................................... ----36
Section 11.9.
Continuing Disclosure Agreement . .................
................................ ... -36
ARTICLE XH
LIMITATION OF LIABILITY
Section 12.1. Limited Liability of the City . ........ ...... ... 36
Section 12.2. No Liability of the City or Corporation for Trustee Performance,,.,.,...,,.. ................ --37
Section 12.3. Limited Liability of Trustee...— ......... -- ..... ...... — .... - ....... ................. ............. . ...... -37
&ctiqU. 12.4. Limitation of Rights of Parties and Certificate Owners................... .............................37
ARTICLE XIH
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
Section 13.1. A
Assignment of Rights.... ............................. ...... -- ............ .......... ....... -
- ... --37
Section 13.2. E
Events of Default. . .......... ...... .
........ 38
Section 13.3. A
Application of Funds.........._ ............ -- ..... ................ -
--38
Section 13.4. I
Institution of Legal Proceedings.....,.- ....................... ...... ....... ...... ........ .
....... 38
Section13.5. N
Non- waiver...- .... ......... ....... -- .... ........ ---- ....... .......... -- ................................ -
-39
Section 13.6. R
Remedies Not Exclusive ................................... -- ..... ..... ......... ......... .... —
— ... ... ---39
Section 13.7. P
Power of Trustee to Control Proceedings . ......... ...... -- ................................... -
-- .... —39
Section 13.8. L
Limitation on Certificate Owners' Right to Sue. .. .......................................... .
... -- ... —39
Section 13.9. A
Agreement to Pay Attorneys' Fees and Expenses........................... .............................40
566725.2\22459-0005 iii
Section 14.1
Section 14.2
Section 14.3
Section 14.4
Section 14.5
Section 14.6
Section 14.
Section 14.8
ARTICLE XfV
MISCELLANEOUS
Defeasance ................. ...............................
Non-Presentment of Certificates . ...........
Records...................... ...............................
Execution in Counterparts .... ............. - .....
Headings.................... ...............................
Waiver of Notice ........ ..............................
Separability of Invalid Provisions ...
Payment on a Business Day.... .............
EXHIBIT A FORM OF CERTIFICATE OF PARTICIPATION
EXHIBIT' B SCHEDULE OF LEASE PAYMENTS
566725,2122459.0005 IV
.............. __40
............... _ 41
.....42
...... .... ___42
...............42
.............42
...................42
............ __.42
TRUST AGREEMENT
THIS TRUST AGREEMENT, made and entered into as of this 1 st of June, 1998, by and
among U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States of America, 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 chartered city and municipal corporation duly organized and existing under the Constitution
and laws of the State of California, as lessee under the Project Lease referenced below (the "City "):
W ITNESSETH:
WHEREAS, the City and the Corporation have previously entered into a leasing arrangement
pursuant to a Project Lease dated as of June 1, 1992 (the "Prior Lease ") whereby the Corporation
agreed to lease certain undeveloped property from the City and the City agreed to lease back such
property and improvements thereto from the Corporation; and
WHEREAS, the City agreed to pay lease payments under the Prior Lease in amounts sufficient
to pay the components of principal, premium, if any, and interest represented by certain Certificates of
Participation (the "Prior Certificates ") executed and delivered pursuant to a Trust Agreement dated as
of June 1, 1992 (the "Prior Trust Agreement ") between the Corporation, the City and Bank of America
National Trust and Savings Association, as trustee; and
WHEREAS, the City and the Corporation have determined to amend and restate the lease
obligation and to authorize the execution and delivery of Refunding Certificates of Participation
pursuant to this Trust Agreement to effect interest rate savings for the City and to effectuate other valid
public purposes of the City; and
WHEREAS, the City and the Corporation have entered into an amended and restated leasing
arrangement pursuant to a Project Lease dated as of June 1, 1998, whereby the Corporation has agreed
to lease the improved property which is the subject of the Prior Lease from the City and the City has
agreed to lease back such property and improvements thereto from the Corporation; and
WHEREAS, the City will pay Lease Payments under the Project Lease representing fair
market rental value of the 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; and
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; and
WHEREAS, the Trustee has agreed to transfer proceeds of the Certificates for deposit in the
Escrow Fund to the City hereunder to provide funds to defease the Prior Certificates and to pay Deliver
Costs for the Project described herein and in the Project Lease; and
566725.2\22459.0005
)NIHEREAS, 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:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions and Rules of Construction. Unless the context otherwise requires,
the terms defined in this Section shall, for all purposes of this 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.
"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, or Los Angeles, 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 Payment Date" means June I and December 1 of each year, commencing
December 1, 1998, so long as any Certificates remain outstanding.
"Certificate" or "Certificates" means the Refunding Certificates of Participation, Series 1998 .
(Central Library Building Project) to be executed and delivered pursuant hereto.
City.
"Certificate Year" means each successive one -year period ending on a date selected by the
"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.
"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 any regulations, rulings,
judicial decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Service interpreting and construing it.
5667252\22459.0005
"Corporation' ' means Newport Beach Public Facilities Corporation, and its authorized
successors and assigns.
"Corporation Representative" means the Chairman, President, Vice President, Chief Financial
Officer 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, bond insurance premiums, fees for execution, transportation and
safekeeping of the Certificates and charges and fees in connection with the foregoing.
"Depository" means The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Certificates, or any other securities depository
acting as Depository under Section 2.13.
"Escrow Agreement" means the Escrow Agreement dated June 1, 1998 between the City and
the Prior Trustee, as Escrow Bank, providing for the defeasance of the Prior Certificates, and any duly
authorized and executed amendments thereto.
"Escrow Fund" means the Escrow Fund established and held by the City pursuant to Article III
hereof.
"Event of Default" means an event of default under the Lease, as defined in Section 9.1
M fM
"Fiscal Year" means the fiscal year of the City commencing July I 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.
"Interest Component" means any Lease Payment, or portion thereof, which is designated and
paid as interest pursuant to the terms of the Lease Agreement; the Interest Component of a Certificate
is the proportionate interest in the Interest Component of the Lease Payments which is evidenced by
such Certificate.
"Lease" means the Project Lease.
366725.2122959.0005
"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.
"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.
"Nominee" means the nominee of the Depository, which may be the Depository, as determined
from time to time pursuant to Section 2.13.
"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 10.3 hereof) all Certificates theretofore executed and delivered by the
Trustee under this Agreement except:
(a) Certificates theretofore canceled by the Trustee or surrendered to the Trustee
for cancellation;
(b) 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 4.5 hereof or
provision satisfactory to the Trustee shall have been made for the giving of such notice; and
(c) Certificates in lieu of or in exchange for which other Certificates shall have
been executed and delivered by the Trustee pursuant to Sections 2.7 and 2.8 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.
"Participants" means those broker - dealers, banks and other financial institutions from time to
time for which the Depository holds Certificates as securities depository.
566725.2\22459.0005 4
"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.
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):
U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
2. Farmers Home Administration (FHA)
Certificates of beneficial ownership
Federal Financing Bank
Federal Housing Administration Debentures (FHA)
General Services Administration
Participation certificates
4. 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
6. U.S. Department of Project Notes Housing and Urban Development aRM)
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):
Federal Home Loan Bank System (FHL Banks)
Senior debt obligations
2. Federal Home Loan Mortgage Corporation (I U MC 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)
566725.2122454.0005
4. Student Loan Marketing Association (SLMA or "Sallie Mae)
Senior debt obligations
5. Resolution Fundine 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.
B. 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
(6) 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, issued by entities
which are rated (i) in one of the two top long -term investment categories by S &P or (ii) in the highest
short -term rating category of S &P, in either case, at the time of the investment and continuously during
the temi of the investment.
H. Commercial paper rated, at the time of purchase, "Prime -1" by Moody's and "A -1" or
better by S &P.
1. 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 Any state or county administered pool investment fund in which the City is statutorily
permitted or required to invest.
L. 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:
5667251=459.0005
They must be between the municipal entity and a dealer bank or securities firm
which are:
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.
1 The written repo contract must include the following:
a. Securities which are acceptable for transfer:
(1) 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 ma} 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.
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 market -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
566725.2\22459.0005
as collateral are FNMA or FMAC, then the value of the collateral must
equal 105 %.
3. Le al o inion must be delivered to the municipal entitv:
a. Repo Agreement meets guidelines under state law for legal investment
of public funds.
"Person" means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
"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 Component" means, with respect to a Lease Payment, the portion thereof which is
designated and paid as principal pursuant to the terms of the Lease Agreement; the Principal
Component of a Certificate is the proportionate interest in the Principal Component of the Lease
Payments which is evidenced by such Certificate.
"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.
"Prior Certificates" means the $7,500,000 Certificates of Participation, Series 1992 (Central
Library Building Project) authorized to be executed and delivered pursuant to the Prior Trust
Agreement.
"Prior Lease" means that certain Project Lease dated as of June 1, 1992 between the
Corporation and the City pertaining to the Prior Certificates.
"Prior Trust Agreement" means the Trust Agreement dated as of June I, 1992 by and among
the Prior Trustee, the City and the Corporation providing for the execution and delivery of the Prior
Certificates.
"Prior Trustee" means U.S. Bank Trust National Association, as successor -in- interest to Bank
of America National Trust and Savings Association, in its capacity as trustee for the Prior Certificates.
"Project" means the Project as defined in the Lease.
"Project Lease" means the amended and restated Project 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 8.8 hereof.
"Rebate Regulations" means any final or temporary Treasury Regulations promulgated under
Section 148(f) of the Code.
566725.2122459.0445
"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.
"Representation Letter" means the Blanket Letter of Representation from the City and the
Trustee, respectively, to the Depository, as described in Section 2.13(b) hereof.
"Reserve Fund" means the fund by that name established and held by the Trustee pursuant to
Article V 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 original principal amount of the Certificates.
"Revenues" means all revenues subject to this Trust Agreement including, without limitation,
Lease Payments and Net Proceeds.
"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 Refunding 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 on the Delivery Date
to establish certain facts and expectations and which contains certain covenants related to compliance
with the Code.
"Term" means the time during which the Lease is in effect, as provided in Section 4.2 of the
Lease.
"Treasury Regulations" means the regulations adopted by the Department of Treasury from
time to time with respect to obligations issued pursuant to Section 103 of the Code.
"Trustee" means U.S. Bank Trust National Association, a national banking association
organized and existing under the laws of the United States of America 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.
566725.2\22459.0005
Section 11. 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.
THE REFUNDING CERTIFICATES OF PARTICIPATION
Section 2.1. Authorization. The Trustee is hereby authorized and directed to execute and
deliver Refunding Certificates of Participation in an aggregate principal amount of $
evidencing proportionate and undivided ownership interests in the Lease Payments and the
Prepayments payable under the Lease.
Section 2.2. Date. Each Certificate shall be dated June 1, 1998, and interest with respect
thereto shall be payable Tom 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
(ii) it is executed prior to the close of business on November 15, 1998, in
which event interest with respect thereto shall be payable from June 1, 1998;
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 Certificated shall be payable from
the Certificated Payment Date to which interest has previously been paid or made available for
payment with respect to the Outstanding Certificates, or from June 1, 1998, if no interest has been paid
or made available for payment.
Section 2.3. Maturity Interest Rates. The Certificates shall mature on June I of the
following years and shall bear interest at the following rates:
REFUNDING CERTIFICATES OF PARTICIPATION
Maturity Principal Interest Maturity Principal Interest
(June 1) Amount Rate (June 1 ) Amount Rate
1998
1999
2000
2001
2002
2003
566725.2\22459.0005 10
2004
2005
2006
2007
2008
2009
(final maturity)
Section 2.4. 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.
Section 2.5. Form of Certificates.
(a) Until definitive Certificates are prepared, the Trustee may execute and deliver,
in the same manner as is provided in this Article H in lieu of definitive Certificates, one or more
temporary Certificates substantially of the tenor of the definitive Certificates in lieu of which such
temporary Certificate or Certificates are issued, in denominations authorized hereunder, so long as no
such Certificate shall have its Principal Component becoming payable in more than one year, and with
such omissions, insertions and variations as may be appropriate to temporary Certificates. At the
expense of the City, the City shall prepare and the Trustee shall execute and, upon the surrender of
such temporary Certificates and the cancellation of such surrendered, temporary Certificates, the
Trustee shall without charge to the owner thereof, in exchange thereof, deliver definitive Certificates, of
the same Principal Component, series and maturity as the temporary Certificates surrendered.
(b) Until so exchanged, the temporary Certificates shall be entitled to the same
benefits under this Agreement as definitive Certificates.
Section 2.6. 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 2.7. Transfer and Excx hhnge.
(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) Exchan ge 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.
(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 2.8 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.
566725.2122459.0005 11
Section 2.8. 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 bath 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 2.9. 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 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:
566725.222459.0005 12
(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 R 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 and upon reasonable prior notice, 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 of any Certificates,
the Trustee shall, in lieu of such delivery, destroy such Certificates and upon written request of the City
deliver a certificate of such destruction to the City.
Section 2.13. Book -Entry System.
(a) Book =Entry System. The Certificates shall be initially delivered in the form of
a separate single fully registered Certificate (which may be typewritten) for each of the maturities of
the Certificates. Upon initial delivery, the ownership of each such Certificate shall be registered in the
registration books kept by the Trustee in the name of the Nominee as nominee of the Depository.
Except as provided in Section 2.13(c) hereof, all of the Outstanding Certificates shall be registered in
the registration books kept by the Trustee in the name of the Nominee.
With respect to Certificates registered in the registration books kept by the Trustee in
the name of the Nominee, the City, the Corporation and the Trustee shall have no responsibility or
obligation to any such Participant or to any Person on behalf of which such a Participant holds an
interest in the Certificates. Without limiting the immediately preceding sentence, the City, the
Corporation and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of
sccns.sizzasg.00as 13
the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in
the Certificates, (ii) the delivery to any Participant or any other Person, other than an Owner as shown
in the registration books kept by the Trustee, of any notice with respect to the Certificates, including
any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial
interests in the Certificates to be redeemed in the event the Certificates are redeemed in part, or (iv) the
payment to any Participant or any other Person, other than an Owner as shown in the registration books
kept by the Trustee, of any amount with respect to principal of premium, if any, or interest due with
respect to the Certificates. The City, the Corporation and the Trustee may treat and consider the
Person in whose name each Certificate is registered in the registration books kept by the Trustee as the
holder and absolute owner of such Certificate for the purpose of payment of principal components,
premium, if any, and interest components with respect to such Certificate, for the purpose of giving
notices of redemption and other matters with respect to such Certificate, for the purpose of registering
transfers with respect to such Certificate, and for all other purposes whatsoever. The Trustee shall pay
all principal o£, premium, if any, and interest due with respect to the Certificates only to or upon the
order of the respective Owner, as shown in the registration books kept by the Trustee, or their
respective attorneys duly authorized in writing, and all such payments shall be valid and effective to
satisfy and discharge fully the City's obligations with respect to payment of the principal components,
premium, if any, and interest components due with respect to the Certificates to the extent of the sum
or sums so paid. No Person other than an Owner, as shown in the registration books kept by the
Trustee, shall receive a Certificate evidencing the obligation of the City to make payments of principal,
premium, if any, and interest pursuant to this Trust Agreement. Upon delivery by the Depository to the
Trustee, the City and the Corporation of written notice to the effect that the Depository has determined
to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect
to Record Dates, the word Nominee in this Trust Agreement shall refer to such new nominee of the
Depository.
(b) Representation Letter. In order to qualify the Certificates for the Depository's
book -entry system, the Trustee and the City agree to execute from time to time and deliver to such
Depository a Representation Letter. The execution and delivery of the Representation Letters shall not
in any way limit the provisions of Section 2.13(a) or in any other way impose upon the City, the
Corporation or the Trustee any obligation whatsoever with respect to persons having interests in the
Certificates other than the Owners, as shown on the registration books kept by the Trustee. The
Trustee agrees to take all action necessary to continuously comply with all representations made by it in
its Representation Letter. In addition to the execution and delivery of the Representation Letter, the
Corporation Representative and the City Representative are hereby authorized to take any other actions,
not inconsistent with this Trust Agreement, to qualify the Certificates for the Depository's book -entry
program_
(c) Transfers Outside Book -Entry stem. In the event (i) the Depository
determines not to continue to act as securities depository for the Certificates, or (ii) the City determines
that the Depository shall no longer so act, then the City following delivery of a written notice of
removal to the Depository will discontinue the book -entry system with the Depository. If the City fails
to identify another qualified securities depository to replace the Depository then the Certificates so
designated shall no longer be restricted to being registered in the registration books kept by the Trustee
in the name of the Nominee, but shall be registered in whatever name or names Persons transferring or
exchanging Certificates shall designate, in accordance with the provisions of Section 2.7.
5667251\22459.0005 14
(d) Payments to the Nominee. Notwithstanding any other provisions of this Trust
Agreement to the contrary, so long as any Certificate is registered in the name of the Nominee, all
payments with respect to principal components, premium, if any, and interest components due with
respect to such Certificate and all notices with respect to such Certificate shall be made and given,
respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.
(e) Initial Depository and Nominee. The initial Depository under this Section shall
be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede & Co.,
as Nominee of The Depository Trust Company, New York, New York.
ARTICLE III
APPLICATION OF PROCEEDS; ESCROW FUND
Section 3.1. 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 of $ and capitalized interest of $ ) in the Lease Payment Fund:
(b) Reserve Fund. The Trustee shall deposit $ in the Reserve Fund;
(c) Escrow Fund. The Trustee shall transfer to the City the balance of the
proceeds to be held in the Escrow Fund.
Section 3.2. [Reserved].
Section 3.3. Escrow Fund. The proceeds of the Certificates deposited in the Escrow Fund
shall be held by the Trustee and applied as follows on the Delivery Date: (a) an amount equal to
$ shall be deposited with the Prior Trustee for application to the defeasance of the Prior
Certificates pursuant to the Escrow Agreement, and (b)an amount equal to $ shall be retained
therein.
The moneys in the Escrow Fund not transferred to the Prior Trustee as described above and
applied to pay Delivery Costs from time to time upon receipt by the Trustee of a written direction of the
City identifying the payee and amount and certifying that such amount is a bona fide Delivery Cost
hereunder.
Any remaining balance in the Escrow Fund not used to pay Delivery Costs by December 1,
1998 needed for Escrow 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 5.2.
Section 3.4. Additional Certificates. So long as any of the Certificates remain Outstanding,
the City will not cause any obligations to be issued or incurred payable from Revenues on a parity with
the Certificates.
566725.222459.0005 15
Section 3.5. Validitv 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 executed and delivered pursuant to law shall be conclusive
evidence of their validity and of compliance with the provisions of law in their execution and delivery.
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section 4.1. Establishment of Preayment Fund. The Trustee shall establish a special fund
designated in the name of the Certificates and as the "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 4.2. Mandatory Prepavment.
(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
prepayment, without premium.
(c) Mandatory PrepUment: 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, 2010, 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:
566725.2\22459.0005 16
Year
(June 1) Amount
2010
2011
2012
2013
2014
*maturity
Year
(June 1) Amount
2015
2016
2017
2018
2019*
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 Tenn
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 selects Certificates for prepayment.
Section 4.3. Optional Prepayment. Certificates maturing on or before June 1, are not
subject to optional prepayment prior to their stated maturity dates. The Certificates, including portions
thereof, maturing on or after June 1, shall be subject to prepayment prior to maturity, upon
instructions from the City, on June 1, , 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, 2007 and December 1, 2007 102%
June 1, 2008 and December 1, 2008 101%
June 1, 2009 and thereafter 1000/0
Section 4.4. Selection of Certificates for Pre aayment, Subject to Section 4.3 hereof,
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 4.2 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
566725.2V2459.0005 17
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 4.5. Notice of Preoavment.
(a) Content. When prepayment is authorized or required pursuant to this Article
IV, the Trustee shall give written notice to dte 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; Timine. Notice of such prepayment shall be sent by first class
mail, postage prepaid, to the Corporation, the City, The Depository, 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.
A copy of such notice of redemption shall be sent at least 30 days before the
Redemption Date by registered or certified mail or overnight delivery service to the three registered
securities depositories listed below or to other registered securities depositories then in the business of
holding substantial amounts of obligations of types comprising the Certificates specified by the City to
the Trustee in writing and, on the date notice is mailed to the Certificate Owners, to the national
information services listed below, or to any national information services then in the business of
receiving such information, that disseminate notice of redemption of obligations as the Certificates;
provided, however, that neither a defect in any notice sent pursuant to this paragraph nor any failure to
mail notice as required by this paragraph shall in any manner defeat the effectiveness of a call for
redemption if notice of such redemption is mailed to Certificate Owners as prescribed above.
Registered Securities Depositories
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530
Telecopy: (516) 227 -4039 or 4190
56625.222459.0005 18
Midwest Securities Trust Company
Capital Structures -Call Notification
440 South LaSalle Street
Chicago, Illinois 60605
Telecopy: (312) 663 -2343
Philadelphia Depository Trust Company
Reorganization Division
1900 Market Street
Philadelphia, Pennsylvania 19103
Attention: Bond Department
Telecopy: (215) 496 -5058
National Information Services
Financial Information, Inc.'s Financial Daily Called Bond Service
30 Montgomery Street, 10th Floor
Jersey City, New Jersey 01302
Attention: Editor
Kenny Information Service's Called Bond Service
65 Broadway
New York, New York 10006
Standard and Poor's Called Bond Record
25 Broadway
New York, New York 10004
Section 4.6. 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. 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 unprepaid 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 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 4.1. 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
566725.2122459.0005 19
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 4.8. No Surplus. Prepayment of Certificates shall be made in such manner that
there shall be no more than a minimal necessary 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 8.7
and 8.8 hereof, and after payment of any amounts due the Trustee pursuant to Sections 9.6 and 9.7
hereof.
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.1. 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 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
566725.222459.0005 20
Payments in accordance with the terms hereof, subject only to the provisions contained in Section 9.6
hereof
Section 5.2. Establishment of Lease Payment Fund. The Trustee shall establish a special
fund designated in the name of the Certificates and as the "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 5.3. Deposits. There shall be deposited in the Lease Payment Fund all Lease
Payments received by the Trustee for deposit therein pursuant to Section 4.3 of the Lease (regarding
Lease Payments), Section 3.3 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). 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 5.4. Application of Moneys. Except as provided in Section 5.5, 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 interest evidenced by the 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 5.5. Surplus Revenues. 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 8.7 and 8.8 hereof, shall be
withdrawn by the Trustee and remitted to the City after payment of any amounts due the Trustee
pursuant to Sections 9.6 and 9.7 hereof.
ARTICLE VI
Section 6.1. Reserve Fund. The Trustee shall establish a. special fund designated in the
name of the Certificates and as the "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,
566725.2122459-0005 21
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 shall be applied solely as provided herein.
Section 6.2. 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 Components 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 6.3. Transfers of Excess. The Trustee shall, on or before May 15 and November 15
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 provided, however, such
income or interest earned on amounts in the Reserve Fund in excess of the yield on the Certificates
shall, at the direction of the City, be deposited in the Earnings Account of the Rebate Fund.
Section 6.4. 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 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 otherwise delinquent Lease Payments (or Lease Payments otherwise due but for abatement)
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.
566725.2122459.0005 22
Section 6.5. 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 Components, Interest Components
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 11 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 14.1 hereof, shall be withdrawn by the Trustee and paid to the City after payment of any
amounts due the Trustee pursuant to Sections 9.6 and 9.7 hereof
ARTICLE VII
NET PROCEEDS FUND
Section 7.1. Establishment of Net Proceeds Fund Deposits, The Trustee hereby
establishes a special fiord designated in the name of the Certificates and as the "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 61(a) of the Lease.
Section 7.2. 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)(I )(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 Components and Interest Components 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
8.7 and 8.8 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 9.6 and 9.7 hereof.
Section 7.3. 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 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, unless provision acceptable to it is
made for the payment of its fees and it receives indemnity satisfactory to it relative to such action.
ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT
Section 8.1. Held in Trust. The moneys and investments held by the Treasurer and the
Trustee under this Agreement are irrevocably held in trust for the benefit of the Owners of the
5667251122459.4005 23
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 8.2. 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 registerable, 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 Agent. 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 9.5, 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 8.3. 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 8.4. 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.
Section 8.5. Valuation and Disposition of Investments.
(a) Valuation. Subject to the provisions of Sections 8.7 and 8.8 hereof for the
purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall
be valued at market price, exclusive of accrued interest. With respect to all funds, 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
43(d) of the Lease.
(b) Disposition. Subject to the provisions of Sections 8.7 and 8.8 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.
564725.2122459.0005 24
Section 8.6. 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 8.7, 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 1.43 of the Code.
Section 8.8. Rebate.
(a) The Trustee shall establish a special fund designated in the name of the
Certificates and as the "Rebate Fund" (the "Rebate Fund ") and accounts therein designate the Earnings
Account, the Rebate Account and the Alternate Penalty Account. All money at any time deposited in
the Rebate Account or the Alternative Penalty Account of the Rebate Fund shall be held by the Trustee
in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund and
accounts therein shall be governed by this Section 8.8 and the Tax Certificate, unless the City obtains
an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of
the Interest Component of each Lease Payment will not be adversely affected for federal income tax
purposes if such requirements are not satisfied.
(i) There shall be transferred to the Earnings Account for disposition as
described in this Section the amounts described in Section 6.3 hereof.
(ii) Rebate Account. The following requirements shall be satisfied with
respect to the Rebate Account:
(A) Annual Computation. Within 55 days of the end of each
Certificate Year, the City shall calculate or cause to be calculated the amount of
rebatable arbitrage for the Certificates, in accordance with Section 148(f)(2) of
the Code and Section 1.148 -3 of the Rebate Regulations (taking into account
any applicable exceptions with respect to the computation of the rebatable
arbitrage described in the Tax Certificate (e.g., the temporary investments
exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into
account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code
(the "12% Penalty ") has been made), for this purpose treating the last day of
the applicable Certificate Year as a computation date, within the meaning of
Section 1.148 -1(b) of the Rebate Regulations (the "Rebatable Arbitrage ").
The City shall obtain expert advice as to the amount of the Rebatable Arbitrage
to comply with this Section.
(B) Annual Transfer. Within 55 days of the end of each Certificate
Year for which Rebatable Arbitrage must be calculated as required by the Tax
Certificate, upon the written direction of an Authorized Representative of the
City, an amount shall be deposited to each subaccount of the Rebate Account
by the Trustee from any funds, including the Earnings Account, so designated
566725.2;22459.6005 25
by the City if and to the extent required, so that the balance in the Rebate
Account shall equal the amount of Rebatable Arbitrage so calculated by or on
behalf of the City in accordance with (A) of this Subsection (a)(ii) with respect
to the Certificates. In the event that immediately following any transfer
required by the previous sentence, or the date on which the City determines
that no transfer is required for such Certificate Year, the amount then on
deposit to the credit of the applicable subaccount of the Rebate Account
exceeds the amount required to be on deposit therein, upon written instructions
from an Authorized Representative of the City, the Trustee shall withdraw the
excess from the Rebate Account and then credit the excess to the Lease
Payment Fund.
(C) Payment to the Treasury. The Trustee shall pay, as directed in
writing by an Authorized Representative of the City, to the United States
Treasury, out of amounts in each subaccount of the Rebate Account,
(1) Not later than 60 days after the end of (A) the fifth
Certificate Year for the Certificates, and (B) each applicable fifth
Certificate Year thereafter, an amount equal to at least 90% of the
Rebatable Arbitrage calculated as of the end of such Certificate Year
for the Certificates; and
(2) Not later than 60 days after the payment or redemption
of all the Certificates, an amount equal to 100% of the Rebatable
Arbitrage calculated as of the end of such applicable Certificate Year,
and any income attributable to the Rebatable Arbitrage, computed in
accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from the
Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such
payment is due, the City shall calculate or cause to be calculated the amount of such deficiency and
deposit an amount received from any legally available source equal to such deficiency prior to the time
such payment is due. Each payment required to be made pursuant to this Subsection (a)(ii) 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 Intemal Revenue Service Form 8038 -T,
which form shall be prepared by the City and provided to the Trustee, or shall be made in such other
manner as directed by the City in accordance with the Code.
(iii) Alternative Penalty Account.
(A) Six -Month Computation. If the 1 I2% Penalty has been elected,
within 85 days of each particular Six -Month Period, the City shall determine or
cause to be determined whether the 1' /2% Penalty is payable (and the amount of
such penalty) as of the close of the applicable Six -Month Period. The City
shall obtain expert advice in making such determinations.
(B) Six -Month Transfer. Within 85 days of the close of each Six -
Month Period, the Trustee, at the written direction of an Authorized
566725.2122459.0005 26
Representative of the City, shall deposit an amount in the Alternative Penalty
Account from any source of funds held by the Trustee pursuant to this Trust
Agreement and designated by the City in such written directions or provided to
it by the City, if and to the extent required, so that the balance in the Alternative
Penalty Account equals the amount of 1' /a% of the Penalty due and payable to
the United States Treasury determined as provided in Subsection (a)(iii)(A)
above. In the event that immediately following any transfer provided for in the
previous sentence, or the date on which the City determines that no transfer is
required for such Certificate Year, the amount then on deposit to the credit of
the Alternative Penalty Account exceeds the amount required to be on deposit
therein to make the payments required by Subsection (C) below, the Trustee, at
the written direction of an Authorized Representative of the City, may
withdraw the excess from the Alternative Penalty Account and credit the
excess to the Lease Payment Fund.
(C) Payment to the Treasury. The Trustee shall pay, as directed in
writing by an Authorized Representative of the City, to the United States
Treasury, out of amounts in the Alternative Penalty Account, not later than 90
days after the close of each Six -Month Period the 1' /2% Penalty, if applicable
and payable, computed with respect to the Certificates in accordance with
Section 148(f)(4) of the Code. in the event that, prior to the time of any
payment required to be made from the Alternative Penalty Account, the amount
in such Account 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, in writing, to deposit an amount equal to such deficiency into the
Alternative Penalty Account from the Earnings Account or any other funds held
by the Trustee pursuant to this Trust Agreement and designated by the City in
such written directions prior to the time such payment is due. Each payment
required to be made pursuant to this Subsection (a)(ii) shall be made to the
internal Revenue Service, 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 form shall be prepared by the City and
provided to the Trustee, or shall be made in such other manner as the City shall
direct in accordance with the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund
with respect to the Certificates after redemption and payment of the Certificates and the payments
described in Subsection (a)(ii)(C) or (a)(iii)(C) (whichever is applicable), may be withdrawn by the
Trustee at the written direction of the City and utilized in any manner by the City.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this
Section or this Trust Agreement to the contrary, the obligation of the City to comply with the
requirements of this Section shall survive the defeasance and final payment of the Certificates.
(d) The Trustee shall be deemed conclusively to have complied with the provisions
of this Section 8.8 if it follows the written directions of the City and shall have no liability or
responsibility for enforcing compliance by the City with the terms of this Section 8.8.
566725M 22459.0005 27
(e) In the event that immediately following the calculations required by the Tax
Certificate and the transfer of accounts required by the subsections (a) -(d) 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 (d) above, upon written instructions from the City, the Trustee
shall withdraw the excess from the Rebate Fund (and accounts therein) and credit the excess to the
Lease Payment Fund.
(f) The Trustee shall invest all amounts held in the Rebate Fund and accounts
therein in Permitted Investments as directed in writing 2 days prior to the investment date by the City.
In the absence of such direction, the Trustee shall invest such amounts in Permitted Investments
specified in D of the definition thereof, Monies, including investment earnings, shall not be transferred
from the Rebate Fund to the City until all rebate requirements have been satisfied and certified by the
City to the Trustee.
Section 8.9. Information Conceming 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 available to the Trustee, 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 ConceminQ 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
Sec 'qn 9, 1. Appointment of Trustee.
(a) Appointment. U.S. Bank Trust National 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 Iess 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 may upon 30 days written notice remove the
Trustee initially appointed, and any successor thereto, and may appoint a successor or successors
thereto.
566725.2\22459,0005 28
(d) Resi >n ation. 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 acceptance of appointment by the
successor Trustee. Upon 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 9.2. 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. 1, 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 9.3. 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
parries 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
566725.2 @2459.0005 29
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.
(d) Additional Protection. 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 Site. 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, famishing or use of the Project or the Site.
Before taking any action under Article XIH hereof or this Section at the request or declaration
of the Owners, the Trustee may require indemnity satisfactory to the Trustee be famished 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 iri connection with any action.
Section 9.4. Rialits 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 9.5. Standard of Qrp. 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
5667251\22459.6005 30
conduct of his affairs. The Trustee shall make investments as provided in Section 8.2. The Trustee
undertakes to perform such duties, and only such 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 9.6. Compensation of the Trustee. As Additional Payment 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 9.7. 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 by the City, (ii) any breach or default on the part of the City in the
performance of any of its obligations 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 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 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 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.
566725.2\22459.0005 31
Section I O.I. Amendments Permitted.
(a) With Consent. This Agreement and the rights and obligations of the Owners,
and the Lease and the rights and obligations 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 10.3 hereof, shall have been filed with the Trustee. No
such modification or amendment shall:
(i) 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
(ii) 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
(iii) modify any of the rights or obligations of the Trustee without its written
assent thereto.
Copies of any such amendments or modifications to any of the foregoing documents shall be sent by
the City to S &P.
Any such supplemental agreement shall become effective as provided in section 10.2 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:
(i) 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
(ii) 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
(iii) 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
566725,2 \22459.0005 32
Trustee (which may be based upon opinions as provided in Section 9.3(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 10.2. 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 10.2
in the event the consent of the Owners is required pursuant to Section 10.1(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 10.3 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 10.3. 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 (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 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 10.3 hereof.
Section 10.4. 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
566725.222459.0005 33
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 10.5. 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 10.6. Amendatory Endorsement of Certificates. Subject to Section 10.1 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 10.7. 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.
Section 10.8. Site Replacement. If the Site is replaced pursuant to Section 7.7(c) of the
Lease, a substitute lease incorporating the substantive provisions of Exhibit C to the Lease shall be
recorded by the City.
COVENANTS; NOTICES
Section 11.1. 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 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 1 l .2. Payment of Taxes. The City shall pay all taxes relating to the Site or the
Certificates as provided in Section 7.6(b) of the Lease.
5667252\22459.0005 34
Section 11.3. Observance of Laws and Regulations. 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 11.4. 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 Site, 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 11.5. City Budgets. In accordance with Section 2.1(g) of the Lease, the City will
provide the Trustee with an annual certification by December 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 9.1(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 11.6. 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.
Section 11.7. Federal Tax Covenants. Notwithstanding any other provision of this Trust
Agreement, absent an opinion of Bond Counsel that the exclusion from gross income for federal
income tax purposes of the Interest Components with respect to the Certificates will not be adversely
affected, the City covenant to comply with all applicable requirements of the Code necessary to
preserve such exclusion from gross income and specifically covenants, without limiting the generality
of the foregoing, as follows:
(a) Private Activity. The City will not take or omit to take action or refrain from
any action or make any use of the proceeds of the Certificates of any other monies or property which
would cause the Certificates to be "private activity bonds" within the meaning of Section 141 of the
Code;
566725.2\22459.0005 35
(b) Arbitrate. The City will make no use of the proceeds of the Certificates or of
any other amounts or property, regardless of the source, or take or omit to take any action which will
cause the Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code;
(c) Federal Guarantee. The City will make no use of the proceeds of the
Certificates or take or omit to take any action that would cause the Certificates to be "federally
guaranteed" within the meaning of Section 149(b) of the Code;
(d) Information Reporting. The City will take or cause to be taken all necessary
action to comply with the informational reporting requirement of Section 149(e) of the Code;
(e) Hedge Bonds. The City will make no use of the proceeds of the Certificates or
any other amounts or property, regardless of the source, or take or omit to take any action that would
cause the Certificates to be considered "hedge bonds" within the meaning of Section 149(g) of the
Code unless the City takes all necessary action to assure compliance with the requirements of Section
149(8) of the Code to maintain the exclusion from gross income of the Interest Components due with
respect to the Certificates for federal income tax purposes; and
(f) Miscellaneous. The City will take no action inconsistent with its expectations
stated in the Tax Certificate and will comply with the covenants and requirements stated therein and
incorporated by reference herein,
Section 11.8. Nonce 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.
Section 11.9. Continuing Disclosure Agreement. The City hereby covenants and agrees that
it will comply with and carry out all of its obligations under the Continuing Disclosure Agreement to be
executed and delivered by the City in connection with the execution of the Certificates.
Notwithstanding any other provision of this Trust Agreement, failure of the City to comply with the
Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Owner or
Beneficial Owner may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the City to comply with its obligations under
this Section 11.9. For purposes of this Section, `Beneficial Owner" means any person which has or
shares the power, directly or indirectly, to make investment decisions concerning ownership of any
Certificates (including persons holding Certificates through nominees, depositories or other
intermediaries).
ARTICLE XII
Section 12.1. 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.
566725.2=459MO5 36
Section 12.2. No Liability of the City or Comoration 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 12.3. 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 in this Agreement), its right to receive
moneys pursuant to said Lease, or the value of or title to the premises upon which the Project is
located.
(c) Actions of Corporation and Citv. 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 parry 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 9.5.
(d) Recitals and Agreements of Corporation and Citv. 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 12.4. 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 renal 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 13.1. Assignment of Rights. The parties hereto acknowledge that pursuant to the
Assignment Agreement the Corporation has transferred, assigned and set over to the Trustee for the
benefit of the Owners, certain of the Corporation's rights under the Lease.
566725.2\22459.0005 37
Section 13.2. Events of Default.
(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
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.
(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 13.3. 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 LY 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 Components 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 Components 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 Components due on such date to the persons entitled
thereto, without any discrimination or preference.
Section 13.4. 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
566925.2\22454.0005 38
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 13.5. 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 therein, and every power and remedy given by
this Article XIU 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 13.6. 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 13.7. 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 13.8. 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
proceedings 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.
566725.2\22459.0005 39
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.
Section 13.9. Agreement to Pay Attorneys' Fees and Expenses. 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 City or
Corporation agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of
such attorneys and such other expanses 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 14.1. Defeasance.
(a) Methods. If and when any Outstanding Certificates shall be paid and
discharged in any one or more of the following ways:
(i) 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;
(ii) 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
(iii) Government Obligations: by irrevocably depositing with the Trustee,
in trust, noncaliable 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
566725.2 @2459.0005 40
evidenced by an independent certified 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 (21 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 certificates, Trustee shall receive an opinion of Special Counsel as to the effect that (1) the
refunding certificates are being issued in compliance with the laws of the State, (2) the interest on the
refunding certificates 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 8.7 and 8.8 hereof, or paid to the
Trustee pursuant to Section 9.6 and 9.7 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 14.2. 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. 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.
566725.222459.0005 41
Section 14.3. 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 14.4. 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 14.5, 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 14.6. 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 14.7. 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 14.8. 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.
5667251'+22454.0005 42
IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the date and
year first above written.
U.S. Bank Trust National Association,
as Trustee
In
Authorized Signatory
NEWPORT BEACH PUBLIC FACILITIES
CORPORATION,
as Lessor
0
Corporation Representative
CITY OF NEWPORT BEACH, as Lessee
In
City Representative
566725.222459.0005 43
rie
REFUNDING CERTIFICATE OF PARTICIPATION
Series 1998
(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 BENEFIT CORPORATION)
Interest Rate Maturity Date Dated Date CUSIP
June 1, 1998 .
REGISTERED OWNER:
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, 1998 (the "Lease "), by and between
NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a nonprofit corporation duly
organized and existing under the laws of the State of California and the CITY OF NEWPORT
BEACH, a chartered city and 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 U.S. Bank
Trust National 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, 1998, and semiannually thereafter on June I 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 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
566725M22459,0005 A -I
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 November 15, 1998, in which
event interest shall be payable from June 1, 1998). 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 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 Certificate 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 U.S. Bank
Trust National Association, as Trustee, acting pursuant to the Trust Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee
Authorized Signatory
Date of Execution:
566925.2\22459.0005 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, 1998 (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 obligations 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 register the transfer or exchange of any certificate
(i) between 15 days prior to selection of certificates for prepayment and the date of mailing notice of
prepayment and (ii) as to any certificate selected for prepayment. This Certificate also may be
exchanged for a like aggregate principal amount of Certificates of other authorized denominations as
566925.2\22459M05 A -3
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 an 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.
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 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, proportionate to the initial amounts of such payments.
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, 2010, . 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
(June 1)
2010
2011
2012
2013
2014
Amount
Year
(June 1)
2015
2016
2017
2018
2019 .
(maturity)
Amount
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.
Certificates maturing on or before June 1, 2008 are not subject to optional prepayment prior to
their stated maturity dates. Certificates maturing on or after June 1, 2008 are subject to optional
prepayment prior to maturity or any Certificate Payment Date on or after June 1, 2007, as a whole, or
in part in inverse order of maturity and by lot within a maturity at the respective prepayment prices
566725.Z22459.0005 A-4
(expressed as percentages of principal amount) set out below, plus accrued interest thereon to the
prepayment date:
Prepayment Dates PrepUment Prices
June 1, 2007 and December 1, 2007 102%
June 1, 2008 and December 1, 2008 101%
June 1, 2009 and thereafter 100%
As provided in the Trust Agreement, notice of prepayment shall be sent by first class mail,
postage prepaid, not less than 30 days, and not more than 60 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.
If this Certificate is called for prepayment and payment is duty 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 recitals of facts, covenants and agreements in this Certificate shall be taken as
statements, covenants and agreements of the City, and the Trustee assumes no responsibility for the
correctness of the same.
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
perforated 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.
5667252;22454.0005 A -5
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:
NOTE: The signature to this assignment must
correspond with the name as written on the face of
the within Certificate in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guaranteed
NOTICE: Signature(s) must be guaranteed by a
member of the New York Stock Exchange or a
commercial bank or trust company
566725.2\22459.0005 A -6
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
Lease Interest Principal
Payment Date Component Component Total
566725.222459.0005 B -I
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
FTfi �l
CITY OF NEWPORT BEACH
Lessee
Dated as of June 1, 1998
566678.2\22459.0005
DEFINITIONS AND EXHIBITS
Section 1.1. Definitions and Rules of Construction .................
Section 1.2. Exhibits ................................. ...............................
rJt41NLq -111
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City...... ..... ..... ... .........
Section 2.2. Representations, Covenants and Warranties of the Corporation ................
GIB "0 11
REFUNDING OF THE PRIOR CERTIFICATES
Section 3.1. Deposit of Certificate Proceeds ....................... ... ......... --- ... .... ........
Section 3.2. Payment of Project Costs ... ......................... .................. .....-- ...........
Section 3.3. Completion Certification......_ ............................ ...............................
Section 3.4. Further Assurances and Corrective instruments ...._ .......... ............ ...
Section 3.5. Substitution and Release..... . ... - ...... ..... — ..... — .......... .. _..................
ARTICLE IV
AGREEMENT TO LEASE; TERM OF LEASE; LEASE
PAYMENTS; ADDMONAL PAYMENTS
Section4, L
Lease ......................................................... ...............................
Section4.1
Term . ....... -- ...... ......... ...... .... ....... ......... ... ............ .. .......... .......
Section 4.3.
Lease Payments. .............. -- ................... ......... ...... .........
Section 4.4.
No Withholding, . ..................
Section 4.5,
Fair Market Rental Value.....—. ... ...............
Section 4.6.
Assignment of Lease Payments ................ ...............................
Section 4.7.
Use and Possession...... ...... ............ .................... --
Section 4.8.
Abatement of Lease Payments in Event of Loss of Use...........
Section 4,9.
Additional Payments ................................. ...............................
Section 4.10.
Net - Net -Net Lease.............. ...... .... --- ...... ...... .
ARTICLE V
INSURANCE
Page
2
3
3
5
..........6
.... - 6
....6
....6
..........6
.7
.7
.9
.4
9
.9
10
10
10
Section 5.1. Public Liability and Property Damage ............................................ .............................10
Section 5.2. Workers' Compensations......_ ....................................................... ..............................I I
Section 53. Casualty Insurance ........................................................................ ............................... l 1
Section 5.4. Rental Interruption Insurance .......................................................... .............................12
Section 5.5, Title Insurance. . ... ....... -- .......... .................... — ... --- ...... .... - 12
566678.2\22459.0005 1
TABLE OF CONTENTS
UM
Section 5.6. General Insurance Provisions .......................................................... .............................12
Section5.7. Cooperation ..................................................................................... .............................13
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT .DOMAIN;
USE OF NET PROCEEDS
Section 6.1. Application of Net Proceeds.... . ....... ...... _ ........... ...................... ____ ......... 13
Section 6.2. Application of Other Moneys .. ...............................
ARTICLE VII
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1. Assignment by the Corporation ....................................................... .............................21
Section 8.2. Assignment and Subleasing by the City. . ......... .......................
Section 8.3. Amendments and Modifications ..................................................... .............................21
ARTICLE IX
COVENANTS WITH RESPECT TO THE SITE
Section 7.1.
Use of the Site; Non - Abandonment ................................................ .............................15
___ .... .21
Section 7.2.
Interest in the Site. . . . ... - ............... _ .......... .................... ......
...... 15
Section 7.3.
Quiet Enjoyment. . .... _ ............ ....... .............
15
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 .. .............................16
.... ... . 24
Section 7.7.
Modification of the Site ................................................................... .............................17
... __24
Section7.8.
Liens ............................................................................................... .............................18
Section 7.9.
Corporation's Disclaimer of Warranties .......................................... .............................18
Section 7.10.
No Condemnation of the Site . ..... .................. ...... .................... ._..........................
,,,,,.,.18
Section 7.11.
Compliance with Environmental Law, Regulations, Etc ................. .............................19
Section 7.12.
Environmental Compliance ............................................................. .............................19
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1. Assignment by the Corporation ....................................................... .............................21
Section 8.2. Assignment and Subleasing by the City. . ......... .......................
Section 8.3. Amendments and Modifications ..................................................... .............................21
ARTICLE IX
566678.2\22459.0065 ii
EVENTS OF DEFAULT AND REMEDIES
Section 9.1.
Events of Default Defined.._ . .... __ ......... .................... ..........
___ .... .21
Section 9,2.
Remedies on Default........ ....... _ ..... ........ _......,...... ., ........ .............. ...........
............,,.,..22
Section 9.3.
No Remedy Exclusive .................................................................... .............................24
Section 9.4.
Agreement to Pay Attomeys` Fees and Expenses........................... .............................24
Section 9.5.
No Additional Waiver Implied by One Waiver._... ...... ..............................
..... 24
Section 9.6.
Application of the Proceeds from the Re -Lease of the Project.............................
.... ... . 24
Section 9.7.
Trustee and Certificate Owners to Exercise Rights.,... .................................
... __24
566678.2\22459.0065 ii
I ". DI"GOMA"I
IN I KV
Section 10.1. Mandatory Prepayment From Net Proceeds or Other Moneys.
Section 10.2. Optional Prepayments............................... ...............................
Section 10.3. Credit for Amounts on Deposit.. . ...... .......
Section 10.4. Effect of Prepayment . ...... --- ...... — .... ........... ...................
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices ...... ...............................
Section 11.2. Binding Effect .... — ... ..... .........
Section 11.3. Severability..............................
Section 11.4. Execution in Counterparts........
Section 11.5. Applicable Law.. .
Exhibit A - Schedule of Lease Payments .
Exhibit B - General Description of the Project.,
Exhibit C - Form of Lease Supplement .............
Exhibit D - Legal Description ...........................
566678.2%22459.0005 iii
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—B-1
—D-1
THIS PROJECT LEASE, dated as of June 1, 1998, by and between the NEWPORT BEACH
PUBLIC FACILITIES CORPORATION, (the "Corporation "), a nonprofit corporation duly organized
and existing under the laws of the State of California, as lessor and CITY OF NEWPORT BEACH,
(the "City") a chartered city and municipal corporation duly organized and existing under the
Constitution and laws of said State, as lessee;
WHEREAS, the Corporation and the City have previously provided financing for the
acquisition and construction of certain improvements described in Exhibit B hereto referred to as the
"Project" by entering into a Project Lease (the "Prior Lease ") dated as of June 1, 1992 and authorizing
and directing the execution and delivery of Certificates of Participation (the "Prior Certificates "),
evidencing an undivided and proportionate interest in certain lease payments to be made by the City
thereunder; and
WHEREAS, the City has previously entered into a Site Lease dated as of June 1, 1992 (the
"Prior Site Lease ") with the Corporation under which the Corporation has agreed to lease the Site (as
herein defined) from the City and to improve the Site by providing for the acquisition, construction and
improvement of the Project and to lease back the Project to the City, 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
WHEREAS, pursuant to the City Charter and Government Code of the State of California, the
City may enter into leases and agreements relating to real property and equipment to be used by the
City; and
WHEREAS, the City is authorized to enter into the transactions contemplated hereunder to
provide refinancing for the Project; and
WHEREAS, the City Council (the "Council ") has determined that it is in the best interests of
the City and for the common benefit of the citizens residing in the City to refinance the Project by
refunding the Prior Certificates and securing the remaining lease payments due under the Prior Lease
pursuant to Section 10.3 thereof, and
WHEREAS, the Corporation and the City wish to amend and restate the Prior Lease to
refinance its obligations thereunder by entering into this Project Lease (the "Lease") and authorizing
and directing the execution and delivery of Refunding Certificates of Participation, described below,
evidencing an undivided and proportionate interest in Lease Payments to be made by the City
hereunder, and
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 to improve the Site by providing for the acquisition, construction and improvement of the
Project and to lease back the Project to the City, 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
566678.2=459.0005
contains other terms and conditions as the City Council of the City deems to be in the best interest of
the City;
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:
s t r 41421
Section 1.1. Definitions and Rules of Construction. Unless the context otherwise requires,
the capitalized terns 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 U.S. Bank Trust National Association,
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 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.
"Asbestos Containing Materials" shall mean material in friable form containing more than one
percent (1 %) of the asbestiform varieties of (a) chrysoltile (serpentine); crocidolite (ricbeckite); (c)
amosite (cummington- itegrinerite); (d) anthophyllite; (e) tremolite; and (f) actinolite.
"Environmental Regulation" shall mean all Laws and Regulations, now or hereafter in effect,
with respect to Hazardous Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended (42 U.S.C. Section 9601, et sea.) (together
with the regulations promulgated thereunder, "CERCLA" ), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Section 6901, et seq.) (together with the regulations promulgated
thereunder, "RCRA "), the Emergency Planning and Community Right -to -Know Act, as amended (42
U.S.C. Section 11001, et SeMc .) (together with the regulations promulgated thereunder, "Title IIP'), the
Clean Water Act, as amended (33 U.S.C. Section 1321, et sM.) (together with the regulations
promulgated thereunder, "CWN ), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.)
(together with the regulations promulgated thereunder, "CAA") and the Toxic Substances Control Act,
as amended (15 U.S.C. 2601 et M.) (together with the regulations promulgated thereunder, "TSCA "),
and any state or local similar laws and regulations and any so- called local, state or federal "superfund"
or "superlien" law.
"Hazardous Substances" means any substance, waste, pollutants, or contaminants now or
hereafter included in such (or any similar) term under any federal, state or local code, statute,
regulation or ordinance now in effect or hereafter enacted or amended.
"Lease Supplement" means one or more amendments to this Lease executed substantially in
the form attached as Exhibit C hereto.
"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
566678.2\22459.0005 2
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, (vi) 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 Project 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.
" Proiect' means the Project described in Exhibit B hereto.
"Site" means the site or sites described in Exhibit D hereto together with all improvements
from time to time 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.
WISI C04:911
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. chartered city and municipal
corporation of the State, duly organized and existing under the Constitution and laws of the State.
(b) Authorization; Enforceability. The City Charter and 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
56667&2=459.0005
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 (i) 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 City Charter, 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 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 Lease 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) Bud et. 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
566678.2\22459.0005 4
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 I of each year famish 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 Encumbranceq. 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 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.
(d) 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 Certificates 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
Certificates or any other funds of the City or take or omit to take any other action that would cause such
Certificates 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
566678.2\22459.0005 5
Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1986, as amended,
to the extent that such requirements are, at the time, applicable and in effect.
ARTICLE III
REFUNDING OF THE PRIOR CERTIFICATES
Section 3.1. Deposit of Certificate Proceeds. On the Closing Date the Corporation agrees
to transfer or cause to be transferred to the City certain moneys derived from the sale of the Certificates
and to be deposited with the Trustee as provided in Section 3.01 of the Trust Agreement,
Section 3.2. Pant of Project Costs. The Corporation hereby appoints, authorizes and
directs the City to act as its agent to provide for the defeasance of the Prior Certificates.
Section 3.3. Completion Certification. The acquisition, construction, improvement or
conclusion of the Project has occurred and the City has previously delivered to the Trustee the
certificate of completion with respect thereto.
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.
Section 3.5. Substitution and Release. The City shall have the right from time to time to
add other real property and improvements (subject only to Permitted Encumbrances) or to substitute
other real property or improvements (subject only to Permitted Encumbrances) for all or a portion of
the Site or to release a portion of the real property and improvements constituting the Site, if it has
provided the Trustee with a written Lease Supplement and has obtained and provided to the Trustee
each of the following:
(a) Written consent of each municipal bond insurance company that has insured
the Certificates, if any;
(b) A copy of the written notice sent to each Rating Agency that has rated the
Certificates describing the proposed addition, substitution or release;
(c) A certificate from an independent and qualified MAI real estate appraiser
selected by the City setting forth his or her findings that the Site as constituted following such addition,
substitution or release (i) has an annual fair rental value during the remainder of the Term which is
equal to or greater than the total annual Lease Payments and Additional Payments (assuming that the
annual Additional Payments due in the future will equal the average annual Additional Payments prior
to such addition, substitution or release) required to be paid hereunder during any year of the remainder
of the Term, and (ii) has a useful life at least equal to the remaining Term hereof;
(d) Certificates of insurance applicable to the Site (at and after the addition,
substitution or release) which comply with the requirements of Sections 5.1, 5.3, 5.4 and 5.5 hereof;
566678.2122459.0005 6
(e) An opinion of Bond Counsel to the effect that such addition, substitution or
release will not adversely affect the exclusion from gross income for federal income tax purposes and
the exemption from State personal income taxation of the Interest Component of the Lease Payments
and that this Lease and the Site Lease, as amended, remain valid and binding obligations of the City;
and
(f) A certificate of an Authorized Representative of the City that the essentiality of
the remaining or substituted real property to City operations is at least comparable to that of the real
property and improvements being released.
In connection with a substitution or release, all interests of the Corporation, and its assignee, in
the portion of the Site released shall terminate and the Corporation and its assignee shall execute and
record with the County Recorder of the County of Orange all documents deemed necessary by the City
to evidence such termination of interest. Upon receipt of the items described in subparagraphs (a), (b),
(c), (d), (e) and (f) above, the Trustee also shall execute a Lease Supplement and, if necessary, a
Supplemental Trust Agreement, and shall not impose on the City any further conditions or prerequisites
to the requested addition, substitution or release. The City shall cause the Lease Supplement to be
recorded in the real property records of the County of Orange.
All costs and expenses incurred in connection with such addition, substitution or release shall
be home by the City. No addition, substitution or release under this Section 3.6 shall be, by itself, the
basis for any reduction in or abatement of the Lease Payments due from the City hereunder.
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 card 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.
566678.222459.0005
(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 semiannual 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.
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:
566678.222459.0005
(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 semiannual 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.
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 Pam. 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 that are due to the
Trustee 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.
566679.2\22459.0005 9
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, or in the Lease Payment Fund, or from 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.
ERVICOM
INSURANCE
Section 5.1. Public Liability and Property Damage.
(a) 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
566678.222459.0005 10
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 bodily 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 canceled 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 famished to the Corporation.
(b) Joint 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.
(c) 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' Compensations. The City shall maintain workers' compensation
insurance issued by a responsible carrier authorized under the laws of the State of Califomia 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) Coverage and Amount. The City shall procure and maintain, or cause to be
procured and maintained, throughout the Tenn 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. 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. The City is not required to obtain earthquake or flood insurance
with respect to the Site (unless such earthquake or flood insurance is available at reasonable cost on the
open market from reputable insurance companies). 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 anyone 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 not 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 canceled by the issuer thereof without at least thirty (3 0) days' advance written
notice to the Corporation, the City and Trustee, and shall be payable to the Trustee. Such insurance
566678.2\22454,0005 11
may be maintained as part of or in conjunction with any other insurance carried or required to be
carried by the City.
(b) Payment of Net Proceeds. The Net Proceeds of such insurance shall be paid to
the Trustee and deposited in the Net Proceeds Fund 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 certificate 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 Site, in the form of a CLTA leasehold 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 paid to the Trustee, deposited in the Net
Proceeds Fund and 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 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 f 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 Corporation and the
Trustee shall not be responsible for the sufficiency or adequacy of any insurance herein required and
566678.2122454.0005 12
shall be fully protected in accepting payment on account of such insurance or any adjustment,
compromise or settlement of any Ioss 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.
._I 1.f_
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
Section 6.1. Application of Net Proceeds.
(a) Deposit in Net Proceeds Fund. The City shall remit promptly to the Trustee
any Net Proceeds received by the City from insurance coverage required pursuant to Sections 5.3 and
5.5 hereof and the Trustee shall deposit such Net Proceeds pursuant to Section 7.01 of the Trust
Agreement 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 (except for rental interruption insurance which shall be transferred to the Trustee
for deposit in the Lease Payment Fund).
(b) Disbursement for Replacement or Repair of the Project. Upon receipt of the
certification described in paragraph (1) below and the requisition described in paragraph (2) below, the
566678.2\22459.0005 13
Trustee shall disburse moneys in the Net Proceeds Fund to the person, firm or corporation named in
the requisition as provided in Section 7.02 of the Trust Agreement.
and the Trustee that:
(1) Certification. The City Representative must certify to the Corporation
(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, 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 Com In etion. 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.
(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
Fund 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 Fund,
moneys, together with other available moneys therein, if any, sufficient to prepay the Certificates in
566678.2\22459.0005 14
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.
MWiZ4>"
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) Interest Transferred 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. ui t Enjayuent. 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 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 tQ 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
566678.2122459.0005 15
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; provided however,
the Corporation's assigns shall not have an obligation to cause such proper maintenance.
Section 7.6. Maintenance, Utilities Taxes and Assessments, Operating Costs.
(a) Maintenance: Repairs and Re llaacement. Throughout the Tenn 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 sub lessee thereof. In exchange for the Lease Payments herein
provided, the Corporation agrees to provide only the Site, as herembefore more specifically set forth.
The City waives the benefits of subsections I 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, Unli1y 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.
(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.
566678.2\22459.0005 16
Section 7.7. Modification of the Site.
(a) Additions, Modifications and Irnrovements. 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 and
Trustee 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 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 4.8 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
566678.M24591.0005 17
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 Proiect. 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 incurred by it in order to discharge or remove any such mortgage, pledge,
lien, change, encumbrance or claim.
Section 7.9. Coloration'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.
Section 7.10. No Condemnation of the Site. The Lessee hereby covenants and agrees, to the
extent it may lawfully do so, that so long as any of the Certificates remain outstanding and unpaid, the
Lessee will not exercise the power of condemnation with respect to the Site. The Lessee further
covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant
is determined to be unenforceable or if the Lessee should fail or refuse to abide by such covenant and
condemns the Site, the appraised value of the Site shall not be less than the greater of (i) if such
Certificates are then subject to redemption, the principal and interest components of the Certificates
outstanding through the date of their redemption, or (ii) if such Certificates are not then subject to
redemption, the amount necessary to defease such Certificates to the first available redemption date in
accordance with the Trust Agreement.
566678.2\22459.0005 18
Section 7.11. Compliance with Environmental Law. Regulations. Etc.
(a) The City has, after due inquiry, no knowledge and has not given or received
any written notice indicating that the Site or the past or present use thereof or any practice, procedure
or policy employed by it in the conduct of its business materially violates any applicable law,
regulation, code, order, rule, judgment or consent agreement, including, without limitation, those
relating to zoning, building, use and occupancy, fire safety, health, sanitation, air pollution, ecological
matters, environmental protection, hazardous or toxic materials, substances or wastes, conservation,
parking, architectural barriers. to the handicapped, or restrictive covenants or other agreements affecting
title to the Site (collectively, "Laws and Regulations "). Without limiting the generality of the
foregoing, neither the City nor to the best of its knowledge, after due inquiry, any prior or present
owner, tenant or subtenant of any of the Site has, other than as set forth in subsections (a) and (b) of
this Section or as may have been remediated in accordance with Laws and Regulations, (i) used,
treated, stored, transported or disposed of any material amount of flammable explosives,
polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum
products, asbestos or any Asbestos Containing Materials, methane, radioactive materials, pollutants,
hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials,
as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated
pursuant thereto, and in all other Environmental Regulations applicable to the City, any of the Site or
the business operations conducted by the City thereon (collectively, "Hazardous Materials") on, from
or beneath its Site, (ii) pumped, spilled, leaked, disposed of, emptied, discharged or released
(hereinafter collectively referred to as "Release ") any material amount of Hazardous Materials on, from
or beneath the Site, or (iii) stored any material amount of petroleum products at the Site in underground
storage tanks.
(b) Excluded from the representations and warranties in subsection (a) hereof with
respect to Hazardous Materials are those Hazardous Materials in those amounts ordinarily found in the
inventory of or used in the operation of a city library, the use, treatment, storage, transportation and
disposal of which has been and shall be in compliance with all Laws and Regulations.
(c) No Site located in an area of high potential incidence of radon has an
unventilated basement or subsurface portion which is occupied or used for any purpose other than the
foundation or support of the improvements to such Site.
Section 7.12. Environmental Compliance.
(a) The City shall not use or permit the Site or any part thereof to be used to
generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process
Hazardous Materials, except, and only to the extent, if necessary to maintain the improvements on the
Site and then, only in compliance with all Environmental Regulations, and any state equivalent laws
and regulations, nor shall it permit, as a result of any intentional or unintentional act or omission on its
part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee and agent, the storage,
transportation, disposal or use of Hazardous Materials or the Release or threat of Release of Hazardous
Materials on, from or beneath the Site or onto any other property excluding, however, those Hazardous
Materials in those amounts ordinarily found in the inventory of or used in the operation of a city civic
center, the use, storage, treatment, transportation and disposal of which shall be in compliance with all
Environmental Regulations. Upon the occurrence of any Release or threat of Release of Hazardous
566678.2122459.0005 19
Materials, the City shall promptly commence and perform, or cause to be commenced and performed
promptly, [without cost to the Insurer], all investigations, studies, sampling and testing, and all
remedial, removal and other actions necessary to clean up and remove all Hazardous Materials so
released, on, from or beneath the Site or other property, in compliance with all Environmental
Regulations. Notwithstanding anything to the contrary contained herein, underground storage tanks
shall only be permitted subject to compliance with subsection (d) and only to the extent necessary to
maintain the improvements on the Site.
(b) The City shall comply with, and shall use its best efforts to assure that its
tenant's, subtenants, agents, licensees, employees, contractors, and agents comply with, all
Environmental Regulations and shall keep the Site free and clear; provided, however, that
notwithstanding that a portion of this covenant is limited to the City's use of its best efforts, the City
shall remain solely responsible for ensuring such compliance and such limitation shall not diminish of
affect in any way the City's obligations contained in subsection (c) hereof as provided in subsection (c)
hereof Upon receipt of any notice from any person with regard to the Release of Hazardous Materials
on, from or beneath the Site, the City shall give prompt written notice thereof to the Insurer, (and in any
event, prior to the expiration of any period in which to respond to such notice under any Environmental
Regulation).
(c) Irrespective of whether any representation or warranty contained in Section
7.13 is not true or correct, the City shall defend, indemnify and hold harmless, the Certificate Owners
and the Insurer, its partners, depositors and each of its and their employees, agents, officers, directors,
trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys' fees
(including, without limitation, attorneys' fees incurred to enforce the indemnification contained in this
Section 7.14, consultants' fees, investigation and laboratory fees, liabilities, settlements (five (5)
Business Days' prior notice of which the Trustee or Insurer, as appropriate, shall have delivered to the
City), court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown,
contingent or otherwise, occurring in whole or in part, arising out of or in any way related to, (i) the
presence, disposal, Release, threat of Release, removal, discharge, storage or transportation of any
Hazardous Materials on, from or beneath the Site, (ii) any lawsuit brought or threatened, settlement
reached (five (5) Business Days' prior notice of which the Trustee or Insurer, as appropriate, shall have
delivered to the City), or governmental order relating to Hazardous Materials on, from or beneath any
of the Site, (iv) any violation of Environmental Regulations or subsection (a) or (b) [, or (e) hereof by it
or any of its agents, tenants, employees, contractors, licensees, guests, subtenants or invitees, and (v)
the imposition of any governmental Lien for the recovery of environmental cleanup or removal costs.
To the extent that the City is strictly liable under any Environmental Regulation, its obligation to the
Certificate Owners and Issuer and the other indemnitees under the foregoing indemnification shall
likewise be without regard to fault on its part with respect to the violation of any Environmental
Regulation which results in liability to any mdemnitee.
(d) The City shall conform to and carry out a reasonable program of maintenance
and inspection of all underground storage tanks if and when installed and shall maintain, repair, and
replace such tanks only in accordance with Laws and Regulations, including but not limited to
Environmental Regulations.
566678.2\22459.0005 20
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1. Assignment by the Co orp ration. 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 Subleasine 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 dtis 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 LY
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:
(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
566678.2\222459.0005 21
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
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
1M?vIEDIATELY 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 BehalfqLCity. 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 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 -lease 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
566681\22459.0005 22
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, Additional 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 by a court of
competent jurisdiction 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 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 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 and Additional 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 to the opinion of Special Counsel that such re- leasing will not cause interest on the
566678.2122459.0005 23
Certificates to become includable in gross income for Federal income tax purposes or subject to State
of California personal income taxes.
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. Agreement to Pav Attomevs' Fees and Expenses. hi 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 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 parry 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 RiEhts. 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 assigrunent 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 Prepayrnent 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 or other moneys transferred to the Trustee pursuant to Section 6.1(c) or 6.2 hereof
and deposited in the Prepayment Fund 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.
566678.2122459.6605 24
Section 10.2. Optional Prayments. 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 among the principal components of Lease Payments not
previously paid on the same basis as the prepayment of Certificates, so that following such prepayment
the remaining annual Lease Payments will, given that amounts prepaid will be used to prepay
Certificates in integral multiples of $5,000, be proportionate to the remaining Certificate payments.
Section 10.3. Credit for Amounts on Deposit.
(a) 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 and the
Reserve Fund shall be credited toward the amounts then required to be so prepaid.
(b) Notwithstanding any other provision of this Lease, the City may, on any date,
secure the payment of any unpaid Lease Payment attributable to the Site by an irrevocable deposit by it
with the Trustee of cash and/or Permitted Investments of the type described in paragraph (b) of the
definition thereof, which are adequate in the opinion of an independent certified public accountant to
provide for payment of such unpaid Lease Payment as it becomes due and payable hereunder.
In the event that the City has secured the payment of all unpaid Lease Payments attributable to
the Site, and provided that the City has made arrangements acceptable to the Trustee to pay any
Additional Payments due hereunder, all obligations of the City under this Lease, and all security
provided by this Lease for said obligations, shall cease and terminate, excepting only the obligation of
the City to make, or cause to be made, Lease Payments from such deposit. Said deposit shall be
deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with
the provisions of this Lease. The Corporation shall execute and deliver such further instruments and
take such further action as may reasonably be requested by the City for carrying out the leasehold
interest transfer for which a security deposit is made hereunder.
Section 10.4. Effect of Prepa nom.
(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 4.9
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
566678M22459.0005 25
the remaining Lease Payments pro rata, corresponding to the resulting prepayment of principal with
respect to the Certificates.
' M1_ d
MISCELLANEOUS
Section l ll. 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 first class or 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
Newport Beach, California 92659
Attention: Chief Financial Officer
If to the Trustee:
U.S. Bank Trust National Association
550 South Hope Street, Suite 500
Los Angeles, CA 90071
Attention: Corporate Trust Department
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 l 1.2. 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 1 l .3. Severabilitv. in the event any provision o£ 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.
566678.2\22459.0005 26
Section 11.5. Applicable Law. This Agreement shall be governed by and construed in
accordance with the Iaws of the State of California.
566678.2\22459.0005 27
IN WITNESS THEREOF, the Corporation has caused this Lease to be executed in its name by
its duty 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
Lm
Authorized Representative
CITY OF NEWPORT BEACH, as Lessee
City Manager
566678.2\22459.0005 28
STATE OF CALIFORNIA
COUNTY OF
On
personally appeared
ss.
before me, , Notary Public,
(Print Name of Notary Public)
❑ personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is /are subscribed to the within instrument and acknowledged to me that he /she /they
executed the same in his /her /their authorized capacity(ies), and that by his /her /their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal,
ignature Of MoTary
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
E
p Individual
❑ Corporate Officer
Title(s)
❑ Partner(s) ❑ Limited
❑ General
• Attomey -In -Fact
• Trustee(s)
❑ Guardian /Conservator
❑ Other:
Signer is representing:
Name Of Persons) Or Entity(ies)
566678.2122 459.4005
Title Or Type Of Document
Number Of Pages
Date Of Document
Signers) Other Than Named Above
STATE OF CALIFORNIA
COUNTY OF
On
personally appeared
} ss.
before me, , Notary Public,
(Print Name of Notary Public)
❑ personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is /are subscribed to the within instrument and acknowledged to me that he /she /they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
❑ Individual
❑ Corporate Officer
T {le(s)
❑ Partner(s) ❑ Limited
❑ General
• Attomey -ln -Fact
• Trustee(s)
❑ Guardian /Conservator
❑ Other:
Signer is representing:
Name Of Person(s) Or Entity(ies)
566698142454.0005
DESCRIPTION OF ATTACHED DOCUMENT
Titte Or Type Of
Number Of Pages
Date Of Document
Signers) Other Than Named Above
VAN i i:3 Y lI:\
Lease Interest Principal
Payment Date Component Component Total
566678.2\22459.0005 A -1
The project is a library for the City of Newport Beach located on the Site. The library is a two
story building of approximately 52,000 square feet constructed pursuant to plans and specifications on
file with the City of Newport Beach.
[CITY TO UPDATE.]
566678.2\22459.0005 B -t
There is hereby subjected to the terms of that certain Lease Agreement (the "Lease "), dated as
of June 1, 1998, between the Newport Beach Public Facilities Corporation (the "Corporation ") and the
City of Newport Beach, California (the "City ") the following real property [and improvements, if
applicable] (the "Substituted Property ") which shall hereafter comprise the Site, as defined therein:
Description of Substituted Property:
Certification
1, the Authorized Representative of the City, hereby certify that:
(1) the useful life of the Substituted Property at least equals the remaining Term of the
Lease; and
(2) the fair rental value of the Substituted Property is such that no reduction of Lease
Payments will occur upon the delivery of the Substituted Property and the portion of the Lease
Payments and Additional Payments attributable to the Substituted Property does not exceed the fair
rental value for the Substituted Property; and
(3) the Substituted Property will be used by the City for authorized public purposes, can be
leased under the provisions of the Lease and the Permitted Encumbrances thereon will not materially
impair the City's use of the Site;
(4) the City will cause Exhibit A to the Lease and Exhibit A to the Site Lease and the
Assignment Agreement (each as defined in the Lease) to be amended to reflect the Substituted
Property and will have such amendments recorded for the Substituted Property and the previous Site in
the County of Orange's recorder's office;
(5) all of the documents required to be delivered under Section 3.6 of the Lease in
connection with the provision of the Substituted Property have been delivered. The undersigned
hereby certifies that it has received copies of the documents required pursuant to Section 3.6 of the
Lease; and
(6) the Site now consists of the Substituted Property set forth in Exhibit 1 hereto and
Exhibit A to the Lease is hereby deemed to be deleted in its entirety and replaced by Exhibit 1 hereto,
and the schedule of Lease Payments is set forth in Exhibit 2 hereto and Exhibit C to the Lease is hereby
deemed to be amended to incorporate the schedule of Lease Payments set forth in Exhibit 2 hereto.
$66678 - 2=459.0005 C -1
I, the City Representative, hereby certify that the Substituted Property will be leased to 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 Property while the Certificates remain outstanding.
CITY OF NEWPORT BEACH, as Lessee
By
Its
The Undersigned Acknowledges Receipt of this Supplement:
as assignee of the Lessor
By
Its
566678.2\22459.0005 C -2
' � 1
DESCRIPTION
THE LAND SITUATED IN THE STATE OF CALIFORNIA COUNTY OF ORANGE,
CITY OF NEWPORT BEACH, AND IS DESCRIBED AS FOLLOWS:
f7fZ•I•IiI.il
THE SOUTHWESTERLY ONE -HALF OF PARCEL 2 AS SHOWN ON PARCEL MAP
NO, 90 -361, FILED IN BOOK 270, PAGES AS TO 18 INCLUSIVE OF PARCEL MAPS,
RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME
KNOWN, GEOTHERMAL STEAM AND ALL PRODUCTS DERIVED FROM ANW OF THE
FOREGOING, THAT MAY BE WITHIN OR UNDER THE LAND, TOGETHER WITH TIM
PERPETUAL RIGHT OF DRILLING, DRILLING, DRILLING, MINING, EXPLORING AND
OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM THE
LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR
DIRECTIONALLY DRILL AND ]MINE FROM LANDS OTHER THAN THOSE CONVEYED
HEREBY, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS
THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH WHIPSTOCKED OR
DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR
BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL EQUIP,
MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT,
HOWEVER, THE RIGHT TO DRILL MINE, STORE, EXPLORE AND OPERATE THROUGH
THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE LAND, AS
RESERVED BY THE IRVINE COMPANY IN THE DEED RECORDED MAY 8, 1998 AS
INSTRUMENT NO. 92- 304758 OF OFFICIAL RECORDS.
THE NORTHEASTERLY ONE -HALF OF PARCEL 2 AS SHOWN ON PARCEL MAP
NO. 90 361, FILED IN BOOK 270, PAGES 15 TO 18 INCLUSIVE OF PARCEL MAPS,
RECORDS OF ORANGE COUNTY, CALIFORNIA.
• t t • '• •1 tt " 11 "
566678.2122459.0005 D -I
BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND
SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND
TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY
SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, STORE,
EXPLORE AND OPERATE THROUGH THE SURFACE OR
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND, AS RESERVED BY THE
IRVINE COMPANY IN GIFT DEED RECORDED MAY 8, 1998 AS INSTRUMENT NO, 92-
304760 OF OFFICIAL RECORDS.
566678.2\22459.0065 D -2
Recording Requested By:
When Recorded Mail To:
CITY OF NEWPORT BEACH
3300 Newport Boulevard
Newport Beach, California 92659
Attn: Finance Director
[Space above for recorder.]
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
FIfl
U.S. BANK TRUST NATIONAL ASSOCIATION. as Trustee
Dated as of June 1, 1998
566195.2\22459.0005
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, executed and entered into as of June 1, 1998, by
NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a nonprofit corporation duly
organized and existing under and by virtue of the laws of the State of California (the "Corporation"),
and accepted by U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee under the herein -
defined Trust Agreement (the "Trustee ");
WITNESSETH:
WHEREAS, the Corporation and the 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 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 the Project;
WHEREAS, the Corporation desires to assign without recourse all of its rights in and under the
Site Lease and 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 data hereof, by and
among the Trustee, the Corporation and the City, the Trustee has agreed to execute and deliver
Refunding 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 I. 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 in, to and under the Site Lease.
566195.2\22459.0005 1
(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 in, to and under the Lease (excepting only the Corporation's rights under
Section 9.4 of the Lease, regarding payment of attorneys' fees and the Corporation's obligations
pursuant to Section 2.2 of the Lease).
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.
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.
Section 4. No Other Claims.
The Corporation hereby represents and warrants that there are no present and outstanding
claims on Lease Payments or any other moneys assigned by the Corporation 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.
566195.2\22459.0005 2
TN WI'T'NESS 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
Corporation Representative
Accepted by:
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee
M
566195.2\224540Q05
Authorized Signatory
STATE OF CALIFORNIA
COUNTY OF
On
personally appeared
ss.
before me, , Notary Public,
(Print Name of Notary Public)
❑ personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is /are subscribed to the within instrument and acknowledged to me that he /she /they
executed the same in his /her /their authorized capacity(ies), and that by his /her /their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal,
Signature Uf Notary
M2 I L41,01 FA
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
• V
❑ individual
❑ Corporate Officer
Tftle(s)
❑ Partner(s) ❑ Limited
❑ General
❑ Attorney -In -Fact
❑ Trustee(S)
❑ Guardian /Conservator
❑ Other:
Signer Is representing:
Name Of Person(s) Or Entity(ies)
566195.2+22459.0005
Title Or Type Of Document
Number Of Pages
Date Of Document
Signer(s) Other Than Named Above
STATE OF CALIFORNIA
COUNTY OF
On
personally appeared
} ss.
}
before me, , Notary Public,
(Print Name of Notary Public)
❑ personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is /are subscribed to the within instrument and acknowledged to me that he /she /they
executed the same in his/her /their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
signature Of Notary
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
❑ Individual
❑ Corporate Officer
Title(s)
❑ Partner(s) ❑ Limited
❑ General
• Attorney -In -Fact
• Trustee(s)
❑ Guardian/Conservator
❑ Other:
Signer is representing:
Name Of Person(s) Or Entlty(ies)
566195.2\22459A005
DESCRIPTION OF ATTACHED DOCUMENT
Title Or Type Of Document
Number Of Pages
Date Of Document
Signer(s) Other Than Named Above
DESCRIPTION
THE LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF NEWPORT
BEACH, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
THE SOUTHWESTERLY ONE -HALF OF PARCEL 2 AS SHOWN ON PARCEL MAP NO. 90 -361, FILED IN
BOOK 270, PAGES 15 TO 18 INCLUSIVE OF PARCEL MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA.
EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM
AND ALL PRODUCTS DERIVED PROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER
THE LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND
OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM THE LAND OR ANY
OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE
FROM LANDS OTHER THAN THOSE CONVEYED HEREBY, OU, OR GAS WELLS, TUNNELS AND
SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND
BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP,
MAIN"T"AIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER,
THE RIGHT TO DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND, AS RESERVED BY THE IRVINE COMPANY IN
THE DEED RECORDED MAY 8, 1998 AS INSTRUMENT NO. 92- 304758 OF OFFICIAL RECORDS.
17s11:T40flos �
THE NORTHEASTERLY ONE -HALF OF PARCEL 2 AS SHOWN ON PARCEL MAP NO. 90 -361 FILED IN
BOOK 270, PAGES 15 TO 18 INCLUSIVE OF PARCEL MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA.
EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL. GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM
AND ALL PRODUCTS DERIVED PROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER
THE LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND
OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM THE LAND OR ANY
OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE
FROM LANDS OTHER THAN THOSE CONVEYED HEREBY, OIL OR GAS WELLS, TUNNELS AND
SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND
BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP,
MAINTAIN, REPAIR. DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER,
THE RIGHT TO DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND, AS RESERVED BY THE IRVINE COMPANY IN
THE GIFT DEED RECORDED MAY 8, 1998 AS INSTRUMENT NO. 92- 304760 OF OFFICIAL RECORDS.
5661952=459.0005 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
[Space above for
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, 1998
569210.2\22459.M05
SITE LEASE
This Site Lease is made and entered into as of June 1, 1998, by and between CITY OF
NEWPORT BEACH (the "City "), a chartered city and municipal corporation duly organized and
existing under the laws of the State of California, as lessor hereunder, and NEWPORT BEACH
PUBLIC FACILITIES CORPORATION (the "Corporation "), a nonprofit corporation duly organized
and existing under the laws of the State of California, as lessee hereunder.
WITNESSETH:
WHEREAS, the City may lease (as lessor) any real property of the City for municipal
purposes; and
WHEREAS, the City and the Corporation have previously entered into a prior Site Lease (the
"Prior Site Lease ") dated as of June 1, 1992 with respect to the Site (defined herein) and a prior Project
Lease of the same date to provide for the lease financing of the City's central library building project;
and
WHEREAS, this Site Lease (the "Site Lease"), without an option to purchase, amends and
restates the Prior Site Lease and is entered into by the City for the purpose of leasing the real property
described in Exhibit `°A" hereto (the "Site ") to the Corporation; and
WHEREAS, the City intends to lease back such Site from the Corporation pursuant to the
terms of a Project Lease dated the date hereof (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 Refunding Certificates of Participation (the "Certificates ") representing, in
part, proportionate interests in Lease Payments and Prepayments made by the City under the Lease;
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 presently and in the future 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, which terminates as
provided therein; provided, however, if Lease Payments 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); and provided further that this Site
Lease shall not expire during the term of any lease executed and delivered in place of the Lease
5662101122459.0605
pursuant to Section 13.10 of the Trust Agreement, unless such term is sooner terminated as 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 acquiring
or constructing, or causing the acquisition or construction of, the Project and of leasing back the Site
and Project 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.
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, that so long as any of the Certificates are Outstanding
and unpaid in accordance with their terms, the Lease Payments assigned by the Corporation to the
Trustee under the Assignment 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 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.
566210.2t22459.0005
Section 13. Partial Invalid. 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:
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.
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.
566210.2122459.0005
Section 19. 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
M
City Manager
• , C o Vold"WI—VW11
CORPORATION
Un
Corporation Representative
566210.=24s9.0005 4
STATE OF CALIFORNIA
COUNTY OF
On
personally appeared
ss,
before me, , Notary Public
(Print Name of Notary Public)
❑ personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name($)
is /are subscribed to the within instrument and acknowledged to me that he /she /they
executed the same in his /her /their authorized capacity(ies), and that by his /her /their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
MID
■
❑ Individual
❑ Corporate Officer
Title(s)
❑ Partner(s) ❑ Limited
General
• Attorney -In -Fact
• Trustee(s)
❑ Guardian /Conservator
❑ Other:
Signer is representing:
Name Of Person(s) Or Erdity(ies)
566210.X22454.0005
� • • E s♦
Or Type Of Document
Number Of Pages
Date Of Document
Signer(s) Other Than Named Above
STATE OF CALIFORNIA
COUNTY OF
On
personally appeared
ss.
)
before me, , Notary Public,
(Print Name of Notary Public)
❑ personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
istare subscribed to the within instrument and acknowledged to me that he/she /they
executed the same in his /her /their authorized capacity(ies), and that by his /her /their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
Though the data below is not required by taw, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
❑ Individual
❑ Corporate Officer
Title(s)
❑ Partner(s) ❑ Limited
❑ General
• Attomey -in -Fact
• Trustee(s)
❑ Guardian /Conservator
❑ Other:
Signer is representing:
Name Of Person(s) Or Entity(ies)
5662101@2459.0005
Title Or Type Of Document
Number Of Pages
Date Of Document
Signer(s) Other Than Named Above
iAMIMM
DESCRIPTION
THE LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF NEWPORT
BEACH, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
THE SOUTHWESTERLY ONE -HALF OF PARCEL 2 AS SHOWN ON PARCEL MAP NO. 90 -361, FILED IN
BOOK 270, PAGES 15 TO 18 INCLUSIVE OF PARCEL MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA.
EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM
AND ALL PRODUCTS DERIVED PROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER
THE LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND
OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME PROM THE LAND OR ANY
OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE
FROM LANDS OTHER THAN THOSE CONVEYED HEREBY, OIL OR GAS WELLS, TUNNELS AND
SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND
BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP,
MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER,
THE RIGHT TO DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE
UPPER 500 FEET OF THE SUBSURFACE OP THE LAND, AS RESERVED BY THE IRVINE COMPANY IN
THE DEED RECORDED MAY 8, 1998 AS INSTRUMENT NO. 92- 304758 OF OFFICIAL RECORDS.
.._ ;
THE NORTHEASTERLY ONE -HALF OF PARCEL 2 AS SHOWN ON PARCEL MAP NO. 90- 361, FILED IN
BOOK 270 PAGES 15 TO 18 INCLUSIVE OF PARCEL MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA.
EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL. STEAM
AND ALL PRODUCTS DERIVED PROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER
THE LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND
OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME PROM THE LAND OR ANY
OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE
FROM LANDS OTHER THAN THOSE CONVEYED HEREBY, OIL OR GAS WELLS, TUNNELS AND
SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND
BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP,
MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER,
THE RIGHT TO DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND, AS RESERVED BY THE IRVINE COMPANY IN
THE GIFT DEED RECORDED MAY 8, 1998 AS INSTRUMENT NO. 92-304760 OF OFFICIAL RECORDS.
566210.2'22459.0005 AA
by and between
y[�'� ' (i)_T�I��i�L;ii7:7117ti07aF�fll
1=41
U.S. BANK, TRUST NATIONAL ASSOCIATION,
as Escrow Bank
Dated as of June 1, 1998
REFUNDING CERTIFICATES OF PARTICIPATION
SERIES 1998
(CENTRAL LIBRARY BUILDING PROJECT)
588141122459.0005
THIS ESCROW AGREEMENT, dated as of June 1, 1998 (this "Agreement "), is by and
between the City of Newport Beach (the "City ") and U.S. Bank Trust National Association, acting in
its capacity as escrow bank (the "Escrow Bank") pursuant to this Agreement,
97TNESSETH:
WHEREAS, to finance the costs of certain public facilities, the City has previously executed
documents related to the $7,500,000 City of Newport Beach Certificates of Participation, Series 1992
(Central Library Building Project) (the "Prior Certificates "); and
WHEREAS, the execution and delivery of the Prior Certificates was effected pursuant to the
provisions of a Trust Agreement, dated as of June 1, 1992 (the "Prior Trust Agreement"), by and
between U.S. Bank Trust National Association, as successor trustee to Bank of America National Trust
and Savings Association, as trustee (the "Prior Trustee"), the Newport Beach Public Facilities
Corporation (the "Corporation "), and the City, and the Prior Certificates represent undivided
proportionate interest of the owners thereof in payments to be made by the City, as the rental for certain
real property and improvements thereto pursuant to a Project Lease, dated as of June 1, 1992 (the
"Prior Lease "), by and between the Corporation and the City; and
WHEREAS, the City desires to refund all Prior Certificates that remain outstanding as set forth
in Schedule A with the proceeds of the $ Refunding Certificates of Participation, Series
1998 (Central Library Building Project) (the "Refunding Certificates "), executed and delivered
pursuant to the Trust Agreement, dated as of June 1, 1998, by and among the City, the Corporation and
U.S. Bank Trust National Association, as trustee thereunder (the "Trustee"), evidencing and
representing interest in the holders thereof in lease payments to be made by the City to the Corporation
under the Project Lease, dated as of June 1, 1998, by and between the City and the Corporation; and
WHEREAS, the City has determined that it is in its best interests to cause the Refunding
Certificates to be executed and delivered and apply the net proceeds of the Refunding Certificates to
secure the payment of lease payments due under the Prior Lease as permitted by Section 14.1 thereof
and effect a refunding of the Prior Certificates with the lease payments due under the Prior Lease and
payable from the amounts described herein, all as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the City and the Escrow Bank agree as follows:
Section 1. Deposit of Moneys.
(a) As used herein, the term "Investment Securities" means the Investment
Securities set forth in Schedule B hereto which constitute direct noncallable nonprepayable obligations
issued by the United States Treasury. The City hereby deposits with the Escrow Bank
$ representing $ of the net proceeds of the Refunding Certificates, and
588141.1=459.0045
$_ transferred from those certain funds held by the Prior Trustee with respect to the Prior
Certificates, to be held in irrevocable escrow by the Escrow Bank separate and apart from other funds
of the City, the Escrow Bank, and the Prior Trustee, in a fund hereby created and established and to be
known as the "Escrow Fund", and to be applied solely as provided in this Agreement. The City
represents that such moneys are at least equal to an amount sufficient to purchase the principal amount
of investment Securities set forth in Schedule B hereto; and the aggregate principal amount of
Investment Securities described in Schedule B hereto, together with all interest due or to become due
on such Investment Securities, plus $_ held as cash, will be sufficient to pay when due (i) the
principal and interest evidenced and represented by the Prior Certificates to and including June 1,
2000, and (ii) the redemption price due with respect to the Prior Certificates on June 1, 2000.
(b) The Escrow Bank hereby acknowledges receipt of the written opinion of
certified public accountants, dated , 199$ relating to the
Investment Securities.
Section 2. Use and Investment of Moneys. The Escrow Bank acknowledges receipt of
the moneys described in Section I and agrees:
(a) immediately to invest $ of the monies described in Section 1(a)
hereof in the Investment Securities all as set forth in Schedule B hereto and to deposit such Investment
Securities in the Escrow Fund and to hold $ uninvested as cash; and
(b) to make the payments required under Section 3(a) hereof at the times set forth
in Section 3(a)hereof.
Section 3. Payment of Prior Certificates.
(a) Payment. As the principal of the Investment Securities set forth in Schedule B
hereof and the investment income and earnings thereon are paid, the Escrow Bank shall, no later than
the respective Lease Payment Dates (as defined in the Prior Trust Agreement), transfer from the
Escrow Fund to the Prior Trustee amounts sufficient to pay (i) on each December 1 and June I to and
including June 1, 2000, the principal and interest evidenced and represented by the Prior Certificates,
and (ii) on June 1, 2000, the redemption price of such Prior Certificates, all as further described in
Schedule E attached hereto. Such transfers shall constitute payment of the lease payments pursuant to
Section 14.1 of the Prior Lease and payment of the principal and interest evidenced and represented by
the Prior Certificates.
(b) Unclaimed Moneys. Any moneys which remain unclaimed for two (2) years
after June 1, 2000, shall be repaid by the Escrow Bank to the City, provided, however, that the Escrow
Bank shall first publish a notice as more fully described in the Prior Trust Agreement that said moneys
remain unclaimed.
(c) Priority of Payments. The holders of the Prior Certificates shall have a first lien
on the moneys and Investment Securities in the Escrow Fund which are allowable and sufficient to pay
the Prior Certificates until such moneys and Investment Securities are used and applied as provided in
this Agreement. Any cash or securities held in the Escrow Fund are irrevocably pledged only to the
Prior Certificate holders.
588141.1=459.0005
Section 4. Performance of Duties. The Escrow Bank agrees to perform the duties set
forth herein.
Section 5. Reinvestment. Upon written direction of the City, the Escrow Bank may
reinvest any uninvested amounts held as cash under this Agreement in noncallable nonprepayable
obligations which are direct obligations issued by the United States Treasury or obligations which are
unconditionally guaranteed as to full and timely payment by the United States of America provided (i)
the amounts of and dates on which the anticipated transfers from the Escrow Fund to the paying agent
for the payment of the principal or prepayment price, and interest evidenced and represented by the
Prior Certificates will not be diminished or postponed thereby, (ii) the Escrow Bank shall receive the
unqualified opinion of nationally recognized municipal bond attorneys to the effect that such
reinvestment will not adversely affect the exclusion from gross income of interest with respect to the
Refunding Certificates or the Prior Certificates, (iii) the Escrow Bank shall receive from an
independent certified public accountant a certification that, immediately after such reinvestment, the
principal of and interest on obligations in the Escrow Fund will, together with other cash on deposit in
the Escrow Fund available for such purposes, be sufficient without reinvestment to pay, when due, the
principal or prepayment price and interest evidenced and represented by the Prior Certificates; and
(iv) the Escrow Bank shall receive an opinion of nationally recognized bond counsel that such
reinvestment is permissible under this Agreement. Except as provided in this Section 5 and Section &
hereof, the Escrow Bank shall have no power or duty to invest any funds held under this Agreement or
to sell, transfer or otherwise dispose of the moneys or Investment Securities held hereunder. In no
event shall the Escrow Bank invest or reinvest monies held under this Agreement in mutual funds or
unit investment trusts. Notwithstanding any other provision in this Agreement, the Escrow Bank shall
reinvest amounts held in the Escrow Fund as described in Schedule E. The Escrow Bank may hold
any uninvested cash in demand deposit accounts maintained by any of its corporate affiliates as
depository agent
Section 6. Indemnity. The City hereby assumes liability for, and hereby agrees (whether
or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and
keep harmless the Escrow Bank and its respective successors, assigns, directors, agents, employees
and servants, from and against any and all liabilities, obligations, Iosses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements)
of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow
Bank at any time (whether or not also indemnified against the same by the City or any other person
under any other agreement or instrument, but without double indemnity) in any way relating to or
arising out of the execution, delivery and performance of this Agreement, the establishment hereunder
of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of the
Investment Securities, the retention of the investment Securities or the proceeds thereof and any
payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with
the provisions of this Agreement; provided, however, that the City shall not be required to indemnify
the Escrow Bank against the Escrow Bank's own negligence or willful misconduct or the negligent or
willful misconduct of the Escrow Bank's respective agents and employees or the breach by the Escrow
Bank of the terms of this Agreement. In no event shall the City or the Escrow Bank be liable to any
person by reason of the transactions contemplated hereby other than to each other as set forth in this
section. The indemnities contained in this section shall survive the termination of this Agreement and
resignation or removal of the Escrow Bank.
5 85141.1122459.0005
Section 7. Responsibilities of the Escrow Bank, The Escrow Bank and its respective
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort,
contract or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein, the
purchase of the Investment Securities, the retention of the Investment Securities or the proceeds
thereof, the sufficiency of the Investment Securities to accomplish the defeasance of the Prior
Certificates or any payment, transfer or other application of moneys or obligations by the Escrow Bank
in accordance with the provisions of this Agreement or by reason of any non - negligent act, non -
negligent omission or non - negligent error of the Escrow Bank made in good faith in the conduct of its
duties. The recitals of fact contained in the "Whereas" clauses herein shall be taken as the statements
of the City and the Escrow Bank assumes no responsibility for the correctness thereof, The Escrow
Bank makes no representation as to the sufficiency of the Investment Securities to accomplish the
defeasance of the Prior Certificates or to the validity of this Agreement as to the City and, except as
otherwise provided herein, the Escrow Bank shall incur no liability with respect thereto. The Escrow
Bank shall not be liable in connection with the performance of its duties under this Agreement except
for its own negligence or willful misconduct, and the duties and obligations of the Escrow Bank shall
be determined by the express provisions of this Agreement. The Escrow Bank may consult with
counsel, who may or may not be counsel to the City, and in reliance upon the written opinion of such
counsel shall have full and complete authorization and protection with respect to any action taken,
suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem
it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting
any action under this Agreement, such matter may be deemed to be conclusively established by a
certificate signed by an authorized officer of the City.
Section 8. Substitution of Investment Securities. At the written request of the City and
upon compliance with the conditions hereinafter set forth, the Escrow Bank shall have the power to
sell, transfer, request the redemption or otherwise dispose of some or all of the Investment Securities in
the Escrow Fund and to substitute noncallable nonprepayable obligations (the "Substitute Investment
Securities ") constituting direct obligations issued by the United States Treasury or obligations which
are unconditionally guaranteed as to full and timely payment by the United States of America. The
foregoing may be effected only if (i) the substitution of Substitute Investment Securities for the
Investment Securities (or Substitute Investment Securities) occurs simultaneously; (ii) the amounts of
and dates on which the anticipated transfers from the Escrow Fund to the Prior Trustee for the payment
of the principal and/or prepayment price and/or interest evidenced and represented by the Prior
Certificates will not be diminished or postponed thereby; (iii) the Escrow Bank shall receive the
unqualified opinion of nationally recognized bond counsel to the effect that such disposition and
substitution would not adversely affect the exclusion from gross income of interest evidenced and
represented by the Prior Certificates or the Refunding Certificates, and that the conditions of this
Section 8 as to the disposition and substitution have been satisfied and that the substitution is permitted
by this Agreement; and (iv) the Escrow Bank shall receive from an independent certified public
accountant a certification that, immediately after such transaction, the principal of and interest on the
Substitute Investment Securities in the Escrow Fund will, together with other cash on deposit in the
Escrow Fund available for such purpose, be sufficient without reinvestment to pay, when due, the
principal or prepayment price and interest evidenced and represented by the Prior Certificates. Any
cash from the sale of Investment Securities (including U.S. Treasury Securities) received from the
disposition and substitution of Substitute Investment Securities pursuant to this Section 8 to the extent
such cash will not be required, in accordance with the Prior Trust Agreement and this Agreement, and
58814L1122459.0005
as demonstrated in the certification described in (iv) above, at any time for the payment when due of
the principal or prepayment price or interest evidenced and represented by the Prior Certificates shall
be paid to the City as received by the Escrow Bank free and clear of any trust, lien, pledge or
assignment securing such Prior Certificates or otherwise existing under this Agreement. Any other
substitution of securities in the Escrow Fund not described in the previous sentence must satisfy the
requirements of this Section 8. In no event shall the Escrow Bank invest or reinvest monies held under
this Agreement in mutual funds or unit investment trusts.
Section 4, Irrevocable Instructions as to Notice. The Escrow Bank hereby acknowledges
that upon the funding of the Escrow Fund as provided in this Agreement, the receipt of the opinions
described in Section 1(b) of this Agreement and the giving of irrevocable instructions to mail as
provided in the Irrevocable Instructions and Request to Prior Trustee and Escrow Bank attached hereto
as Schedule C (constituting all of the conditions precedent to the defeasance of the Prior Certificates),
the Prior Certificates shall be paid in accordance with the Prior Trust Agreement and the Prior
Certificates shall cease to be entitled to any lien, benefit or security under the Prior Trust Agreement.
Section 10. Amendments. This Agreement is made for the benefit of the City and the
holders from time to time of the Prior Certificates and it shall not be repealed, revoked, altered or
amended without the written consent of all such holders, the Escrow Bank, the City and
as insurer of the Refunding Certificates; provided, however,
but only after the receipt by the Escrow Bank of an opinion of nationally recognized bond counsel that
the exclusion from gross income of interest evidenced and represented by the Prior Certificates and the
Refunding Certificates will not be adversely affected for federal income tax purposes, the City and the
Escrow Bank may, without the consent of, or notice to, such holders, amend this Agreement or enter
into such agreements supplemental to this Agreement as shall not adversely affect the rights of such
holders and as shall not be inconsistent with the terms and provisions of this Agreement for any one or
more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this
Agreement; (ii) to grant to, or confer upon, the Escrow Bank for the benefit of the holders of the Prior
Certificates any additional rights, remedies, powers or authority that may lawfully be granted to, or
conferred upon, such holders or the Escrow Bank; and (iii) to include under this Agreement additional
funds, securities or properties. The Escrow Bank shall be entitled to rely conclusively upon an
unqualified opinion of nationally recognized bond counsel with respect to compliance with this Section
10, including the extent, if any, to which any change, modification, addition or elimination affects the
rights of the holders of the Prior Certificates or that any instrument executed hereunder complies with
the conditions and provisions of this Section 10.
Section 11. Term. This Agreement shall commence upon its execution and delivery and
shall terminate on the later to occur of either (i) the date upon which the Prior Certificates have been
paid in accordance with this Agreement, or (ii) the date upon which no unclaimed moneys remain on
deposit with the Escrow Bank pursuant to Section 3(b) of this Agreement and all amounts owed to the
Escrow Bank shall have been paid in full.
Section 12. Com ensation. The Escrow Bank shall receive its reasonable fees and
expenses as previously agreed to; provided, however, that under no circumstances shall the Escrow
Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the
Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Bank under
this Agreement.
588141.1122454.61195
Section 13. Resignation or Removal of Trustee as Escrow Bank.
(a) The Escrow Bank may resign by giving 30 days prior written notice in writing
to the City. The Escrow Bank may be removed (1) by (i) filing with the City and the Escrow Bank of
an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of
the Prior Certificates then remaining unpaid, (ii) the City delivering written notice to the Escrow Bank,
or (2) by a court of competent jurisdiction for failure to act in accordance with the provisions of this
Agreement upon application by the City or the holders of 5% in aggregate principal amount of the Prior
Certificates then remaining unpaid.
(b) No resignation or removal of the Escrow Bank shall become effective until a
successor Escrow Bank has been appointed hereunder and until the cash and investments held under
this Agreement are transferred to the new Escrow Bank. The City or the holders of a majority in
principal amount of the Prior Certificates then remaining unpaid may, by an instrument or instruments
filed with the City, appoint a successor Escrow Bank who shall supersede any Escrow Bank
theretofore appointed by the City. If no successor Escrow Bank is appointed by the City or the holders
of such Prior Certificates then remaining unpaid, within 45 days after notice of any such resignation or
removal, the holder of any such Prior Certificates or any retiring Escrow Bank may apply to a court of
competent jurisdiction for the appointment of a successor Escrow Bank.
Section 1.4. Severability. If any one or more of the covenants or agreements provided in
this Agreement on the part of the City or the Escrow Bank to be performed should be determined by a
court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and
void and shall be deemed separate from the remaining covenants and agreements herein contained and
shall in no way affect the validity of the remaining provisions of this Agreement.
Section 15. Counterparts. This Agreement may be executed in several counterparts, all or
any of which shall be regarded for all purposes as one original and shall constitute and be but one and
the same instrument.
Section 16. Governing Law. This Agreement shall be construed under the laws of the
State of California.
Section 17, Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a day
on which banking institutions in the city in which is located the principal office of the Escrow Bank are
authorized by law to remain closed, such payment may be made or act performed or right exercised on
the next succeeding day not a legal holiday or a day on which such banking institutions are authorized
by law to remain closed, with the same force and effect as if done on the nominal date provided in this
Agreement, and no interest shall accrue for the period from and after such nominal date.
Section 18. Assignment. This Agreement shall not be assigned by the Escrow Bank or any
successor thereto without the prior written consent of the City, except in the event that the Escrow
Bank is merged or consolidated into another entity authorized to perform all the duties imposed upon
the Escrow Bank hereunder, such entity shall be the successor Escrow Bank without the execution or
filing of any paper or performance of any further act.
588141.1122459.0005
Section 19. Moody's and Standard & Poor's. The City agrees to provide to Moody's
Investors Service, 99 Church Street, New York, New York 1.0007, Attention: Public Finance Rating
Desk/Refunded Bonds, and Standard & Poor's Ratings Group, 25 Broadway, New York, New York
10004, prior notice of each amendment entered into pursuant to Section 10 hereof and a copy of such
proposed amendment, and to forward a copy (as soon as possible) of (i) each amendment hereto
entered into pursuant to Section 10 hereof, and (ii) any action relating to severability or contemplated
by Section 14 hereof.
588141.1\22459.0005
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their duly authorized officers and their seals to be hereunder affixed and attested as of the date and year
first written above.
CITY OF NEWPORT BEACH
By:
Its:
City Manager
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Escrow Bank
By:
Its: Authorized Officer
588141.1\22459.0005
�. 01 it
Maturity Date Principal Amount interest Rate
5sE14I,1=459.0005 Schedule A -f
"Investment Securities" are defined to be, and shall consist as follows:
Maturity Par
Twe Date .Amount Coupon
598141.1\2.2459.0005 Schedule B -I
SCHEDULE C
MY Mpg MR VNIA � VIII � J
'• .' 1 as
U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee
ESCROW AGREEMENT
RELATING TO A REFUNDING OF
$7,500,000
CITY OF NEWPORT BEACH, CALIFORNIA
CERTIFICATES OF PARTICIPATION, SERIES 1992
(CENTRAL LIBRARY BUILDING PROJECT) (the "Prior Certificates ")
Ladies and Gentlemen:
As trustee under that certain Trust Agreement dated as of June 1, 1992 (the "Prior Trust
Agreement"), you are hereby notified of the irrevocable election of the City of Newport Beach to
defease all of the outstanding Prior Certificates and to redeem on June 1, 2000 all of the Prior
Certificates maturing on and after June 1, 2000.
You are hereby irrevocably instructed to mail, as provided in the Prior Trust Agreement, notice
of redemption of the Prior Certificates scheduled to be redeemed prior to maturity. Such notice shall
substantially be in the form annexed hereto as Exhibit X.
You are hereby further irrevocably instructed to mail, as soon as practicable, a notice to the
holders of the Prior Certificates (in the form annexed hereto as Exhibit Y) that the deposit of
investment securities and moneys has been made with U.S. Bank Trust National Association, as
Escrow Bank, and that the projected withdrawals from such escrow have been calculated to be
adequate to pay the principal, redemption price and interest evidenced and represented by said Prior
Certificates outstanding as such become due or are subject to redemption.
By: _
Its: City Manager
588141J=459.0005 Schedule C -1
Receipt acknowledged and consented to:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Escrow Bank and Prior Trustee
By:
Its:
Authorized Officer
$88141.1\22459.0005 Schedule C -2
ON MTKO t • $
$7,500,000
CITY OF O ,...
Notice is hereby given to the holders of the outstanding $7,500,000 City of Newport Beach
Certificates of Participation, Series 1992 (Central Library Building Project) that the Certificates have
been called for redemption prior to maturity on June 1, 2000, in accordance with their terms, at a
redemption price of 102% of the principal amount thereof with respect to Certificates maturing on or
after June 1, 2001, together with accrued interest evidenced and represented thereby to the date of
redemption. The source of the funds to be used for such redemption is the principal of and interest on
investment securities heretofore deposited with U.S. Bank Trust National Association, as Escrow
Bank, together with moneys, if any, heretofore deposited with the Escrow Bank.
The redemption price and accrued interest evidenced and represented by the foregoing
Certificates shall become due and payable on June 1, 2000 and, from and after June 1, 2000, interest
evidenced and represented by the foregoing Certificates shall cease to accrue and be payable.
Holders of the foregoing Certificates will receive payment of the redemption price and accrued
interest to which they are entitled upon presentation and surrender thereof at the principal corporate
trust office of U.S. Bank Trust National Association, at Los Angeles, California
Dated this day of
19
CITY OF NEWPORT BEACH, CALIFORNIA
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
588141.1=459.0005 Exhibit X -1
MM31���
$7,500,000
CITY OF NEWPORT BEACH, CALIFORNIA
CERTIFICATES OF PARTICIPATION, SERIES 1992
(CENTRAL LIBRARY BUILDING PROJECT)
Notice is hereby given to the holders of the $7,500,000 City of Newport Beach, Certificates of
Participation, Series 1992 (Central Library Building Project) (the "Certificates ") that (i) such
Certificates have been advance refunded and defeased; (ii) there has been deposited with U.S. Bank
Trust National Association, as Escrow Bank, moneys and investment securities as permitted by the
Trust Agreement, dated as of June 1, 1998 (the "Trust Agreement'), relating to the Certificates, the
principal of and the interest on which when due will provide moneys which, together with such other
moneys deposited with the Escrow Bank, will be sufficient and available (a) to pay on each June 1 and
December I to and including June 1, 2002 the principal and interest evidenced and represented by the
Certificates and scheduled to be paid on such dates, and (b) to redeem on June 1, 2002 the Certificates
maturing after June 1, 2002 at the applicable redemption price contained in the Trust Agreement; and
(iii) the Escrow Bank has been irrevocably instructed to redeem all outstanding Certificates on August
1. 1998.
In accordance with Section 14.01 of the Prior Trust Agreement, the Prior Trust Agreement has
been discharged. At least 30 days, but not more than 60 days, prior to June 1, 2002, in accordance
with the terms of the Trust Agreement, the Trustee will mail a redemption notice for the Certificates.
Dated this _ day of , 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
588141.1\22459.0005 Exhibit Y -1
SCHEDULED
IMIUV U,
588141.1\22459.0005 Schedule D -1
Reinvestment
Date
REINVESTMENT
Reinvestment Maturity
Amount Rate
588141.1\22459.0005 Schedule E-1
Interest
Securi Rate
$7,330,000*
REFUNDING CERTIFICATES OF PARTICIPATION
Series 1998
(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)
June ,1998
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92663 -8915
Ladies and Gentlemen:
The undersigned, Miller & Schroeder Financial, Inc. (hereinafter referred to as the
"Underwriter'), offers to enter into this purchase agreement (the "Purchase Agreement ") with the
City of Newport Beach (herein referred to as the "City"), which will be binding upon the City
and the Underwriter upon the City's acceptance hereof. This offer is made subject to the City's
acceptance by execution of this Purchase Agreement and its delivery to the Underwriter on or
before 11:59 p.m., California time, on the date hereof.
L Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements hereinafter set forth, the City hereby agrees to sell all
(but not less than all) of $7,330,000* aggregate principal amount of City of Newport Beach
Refunding Certificates of Participation, Series 1998 (Central Library Building Project) (the
"Certificates "), dated as of June 1, 1998, at the aggregate purchase price of $
(which is the aggregate principal amount of the Certificates ($7,330,000 *), less an underwriting
discount of $ and less an original issue discount of $ , plus
interest accrued on the Certificates from June 1, 1998, to the date of the Closing (as hereinafter
defined). Each Certificate evidences the proportionate interests of the owners thereof in certain
Lease Payments to be made by the City pursuant to, and as defined in, the Project Lease, dated as
of June 1, 1998 (the "Project Lease "), by and between the City and the Newport Beach Public
Facilities Corporation (the "Corporation ") for the Central Library Building Project (the
"Project "). The Underwriter hereby agrees to purchase from the City for offering to the public all
(but not less than all) of the Certificates. The Certificates will mature June 1 in the years and bear
interest at the respective rates set forth on Exhibit A hereto. The Certificates will be subject to
prepayment as set forth in the Official Statement herein described.
* Preliminary, subject to change.
The Corporation will assign certain of its interests and rights in the Project Lease,
including the right to receive Lease Payments, to U.S. Bank Trust National Association (the
"Trustee ") pursuant to the Assignment Agreement, dated as of June 1, 1998 . (the "Assignment
Agreement "), between the Corporation and the Trustee.
2. Authorizing Instruments. The Certificates shall be executed, delivered and
secured under the provisions of a trust agreement, dated as of June 1, 1998 (the "Trust
Agreement "), by and among the City, the Corporation and the Trustee. The Certificates are
secured by Lease Payments, payable from the revenues of the City lawfully available therefor.
The proceeds of the Certificates shall be applied in accordance with the Trust Agreement
to (i) advance refund the City's Certificates of Participation, Series 1992 (Central Library
Building Project) (the "Refunded Certificates "), (ii) establish a debt service reserve account
under the Trust Agreement, and (iii) pay certain costs relating to the execution and delivery of
the Certificates.
Unless otherwise defined herein, capitalized terms used herein shall have the meaning set
forth in the Trust Agreement.
3. Public Offering. The City hereby ratifies, confirms and approves of the use and
distribution by the Underwriter prior to the date hereof of the preliminary official statement,
dated May _, 1998, relating to the Certificates (the "Preliminary Official Statement "). The City
hereby agrees to deliver or cause to be delivered to the Underwriter, within seven (7) business
days of the date hereof, copies of the final official statement relating to the Certificates, dated the
date hereof (including all information previously permitted to have been omitted by Rule 15c2-
12 and any amendments or supplements as have been approved by the City and the Underwriter)
(the "Official Statement ") in such quantity as the Underwriter shall request. The City hereby
approves of the use and distribution by the Underwriter of the Official Statement in connection
with the offer and sale of the Certificates.
The Underwriter agrees to make a bona fide public offering of all the Certificates initially
at the public offering prices (or yields) set forth on the cover page of the Official Statement.
Subsequent to the initial public offering, the Underwriter reserves the right to change the public
offering prices (or yields) as it deems necessary in connection with the marketing of the
Certificates. The Certificates may be offered and sold to certain dealers at prices lower than such
initial public offering prices. The Underwriter agrees to certify to the City the price at which a
substantial amount (at least 10 %) of each maturity of the Certificates were sold to the public.
4. The Closing. At 8:00 a.m., California time, on June _ 1998, or at such other
time or on such earlier or later business day as shall have been mutually agreed upon by the City
and the Underwriter, the City will deliver or cause to be delivered (i) the Certificates to the
Underwriter through the facilities of The Depository Trust Company, and (ii) the closing
documents hereinafter mentioned at the offices of Stradling, Yocca, Carlson & Rauth, a
Professional Corporation, Newport Beach, California, or another place to be mutually agreed
upon by the City and the Underwriter. The Underwriter will accept such delivery and pay the
purchase price of the Certificates as set forth in Section I hereof payable in immediately
available funds to the order of the City. This payment and delivery, together with the delivery of
the aforementioned documents, is herein called the "Closing."
5, Representations, Warranties and Covenants. The City represents, warrants and
covenants to the Underwriter that:
2
(a) The City is a charter city, duly organized and operating under the
Constitution (the "Constitution ") and laws of the State of California, with full right, power and
authority to execute, deliver and perform its obligations under this Purchase Agreement, the
Trust Agreement, the Project Lease, the Escrow Agreement, the Assignment Agreement and the
Continuing Disclosure Agreement by and between the City and the Trustee, as Dissemination
Agent (collectively, the "Financing Documents ");
(b) The Financing Documents, when duly executed and delivered by all
parties thereto, will constitute valid, legal and binding obligations of the City, enforceable
against the City, in accordance with their respective terms, except as the enforceability thereof
may be limited by the application of equitable principles, if equitable remedies are sought, or by
applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors'
rights generally;
(c) The City has, and at the date of the Closing will have, full legal right,
power and authority to enter into the Financing Documents, and to cause the execution and
delivery of the Certificates to the Underwriter as provided herein, and will have duly authorized
and approved the execution and delivery of, and the performance by, the City, of the obligations
contained in the Financing Documents;
(d) As of the date thereof, the Official Statement did not contain any untrue
statement of a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading;
(e) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period (as hereinafter defined) for the Certificates, an event occurs of which the
City has knowledge and which might or would cause the information contained in the Official
Statement, as then supplemented or amended, to contain an untrue statement of a material fact or
to omit to state a material fact required to be stated therein or necessary to make such
information therein, in light of the circumstances under which it was presented, not misleading,
the City will notify the Underwriter, and, if in the opinion of the City, the Underwriter or their
respective counsel, such event requires the preparation and publication of a supplement or
amendment to the Official Statement, the City will forthwith prepare and furnish to the
Underwriter (at the expense of the City) a reasonable number of copies (not to exceed 300) of an
amendment of or supplement to the Official Statement which will amend or supplement the
Official Statement so that it will not contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light of the circumstances
existing at the time the Official Statement is delivered to prospective purchasers, not misleading.
For the purposes of this subsection, between the date hereof and the date which is 25 days after
the End of the Underwriting Period for the Certificates, the City will furnish such information
with respect to itself as the Underwriter may from time to time reasonably request;
(f) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (e) hereof, at the time of each supplement or amendment
thereto, the portions of the Official Statement so supplemented or amended (including any
financial and statistical data contained therein) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make such
information therein, in light of the circumstances under which it was presented, not misleading;
(g) After the Closing, the City will not participate in the issuance of any
amendment of or supplement to the Official Statement to which, after being famished with a
copy, the Underwriter shall reasonably object in writing or which shall be reasonably
disapproved by Disclosure Counsel;
(h) As used herein and for the purposes of the foregoing, the term "End of the
Underwriting Period" for the Certificates shall mean the earlier of (i) the Closing Date wiless the
City shall have been notified in writing to the contrary by the Underwriter on or prior to the
Closing Date, or (ii) the date on which the End of the Underwriting Period for the Certificates
has occurred under Rule 15c2 -12; provided, however, that the City may treat as the End of the
Underwriting Period for the Certificates the date specified as such in a notice from the
Underwriter stating the date which is the End of the Underwriting Period;
(i) At the time of the Closing, to the best of its knowledge, there shall not
have been any material adverse changes in the financial condition of the City (as described in the
Official Statement) since June 30, 1997;
0) As of the time of acceptance hereof and as of the time of the Closing, and,
except as disclosed to the Underwriter, the City is not, nor will be, in material breach of or in
material default under any applicable law or administrative regulation of the State of California
or the United States, or to the best of its knowledge, any applicable judgment or decree or any
trust agreement, Ioan agreement, bond, note, resolution, ordinance, agreement or other
instrument to which the City, is a party or is otherwise subject which breach would have a
material adverse effect on the Certificates; and, as of such times, the execution and delivery of
the Financing Documents and compliance with the provisions of each of them do not and will
not conflict with or constitute a breach of or default under any applicable law or administrative
regulation of the State of California or the United States or any applicable judgment or decree or
any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other
instrument to which the City is a party or is otherwise subject which breach or default would
have a material adverse effect on the Certificates;
(k) Between the time of acceptance hereof and the Closing, the City will not,
without the prior written consent of the Underwriter, issue any Certificates or securities with a
pledge of or lien on the Lease Payments superior to or on a parity with the City's obligation to
pay the Lease Payments;
(1) As of the time of acceptance hereof and the Closing, no litigation is or will
be pending and served or, to the knowledge of the City, threatened in any court (i) in any way
challenging the City, or (ii) seeking to restrain or enjoin the issuance or delivery of any of the
Certificates, or the collection of the Lease Payments, or in any way contesting or affecting the
validity of the Certificates, the Financing Documents or the collection of or the pledge of the
Lease Payments under the Trust Agreement, or contesting the powers of the City, or the power of
the City to execute and deliver the Project Lease, or (iii) contesting in any way the completeness,
accuracy or fairness of the Official Statement;
(m) As of the time of acceptance hereof and as of the date of the Closing, the
City does not and will not have outstanding any indebtedness (other than as described in the
Official Statement) which indebtedness is secured by a lien on the Lease Payments superior to or
on a parity with the lien of the Project Lease. As of the time of acceptance hereof and as of the
date of the Closing, the City does not and will not have outstanding any indebtedness which
indebtedness is payable prior to the Project Lease from the Lease Payments except as described
in the Official Statement; and
(n) The City will furnish such information, execute such instruments and take
such other action in cooperation with the Underwriter as it may reasonably request in order to
qualify the Certificates for offer and sale under the Blue Sky or other securities laws and
EI
regulations of such states and other jurisdictions of the United States as the Underwriter may
designate; provided, however, that the City will not be required to execute a special or general .
consent to service of process or qualify as a foreign corporation in connection with any such
qualification in any jurisdiction.
6. Closing Conditions. The Underwriter has entered into this Purchase Agreement in
reliance upon the representations, warranties and covenants herein and the performance by the
City of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The
Underwriter's obligations under this Purchase Agreement are and shall be subject to the
following conditions:
(a) The Underwriter shall receive, within seven (7) business days of the date
hereof, copies of the Official Statement (including all information previously permitted to have
been omitted by Rule 15c2 -12 and any amendments or supplements as have been approved by
the Underwriter), in such quantity (not to exceed 300 copies) as the Underwriter shall have
requested;
(b) The representations and warranties of the City contained herein shall be
true, complete and correct in all material respects at the date hereof and on the date of the
Closing, as if made on the date of the Closing;
(c) At the time of the Closing, the City shall perform or have performed all of
its obligations required under or specified in the Financing Documents to be performed at or
prior to the Closing;
(d) At the time of the Closing, no default shall have occurred or be existing
under the Financing Documents and the City shall not be in default in the payment of principal or
interest on any of its indebtedness which default shall materially adversely impact the ability of
the City to make its Lease Payments;
(e) In recognition of the desire of the City and the Underwriter to effect a
successful public offering of the Certificates, and in view of the potential adverse impact of any
of the following events on such a public offering, the Underwriter shall have the right to
terminate this agreement by written notification to the City if at any time at or prior to the
Closing, but only to the extent such statements of fact were not known to the Underwriter on the
date of this Purchase Agreement:
(i) any event shall occur which causes any statement contained in the
Official Statement to be materially misleading or results in a failure of the Official
Statement to state a material fact necessary to make the statements in the Official
Statement, in light of the circumstance which they were made, not misleading; or
(ii) the marketability of the Certificates or the market price thereof, in
the opinion of the Underwriter, has been materially adversely affected by an amendment
to the Constitution of the United States or by any legislation in or by the Congress of the
United States or by the State of California, or the amendment of legislation pending as of
the date of this Purchase Agreement in the Congress of the United States, or the
recommendation to Congress or endorsement for passage (by press release, other form of
notice or otherwise) of legislation by the President of the United States, the Treasury
Department of the United States, the Internal Revenue Service or the Chairman or
ranking minority member of the Committee on Finance of the United States Senate or the
Committee on Ways and Means of the United States House of Representatives, or the
proposal for consideration of legislation by either such Committee or by any member
thereof, or the presentment of legislation for consideration as an option by either such
Committee, or by the staff of the Joint Committee on Taxation of the Congress of the
United States, or the favorable reporting for passage of legislation to either House of the
Congress of the United States by a Committee of such House to which such legislation
has been referred for consideration, or any decision of any Federal or State court or any
ruling or regulation (final, temporary or proposed) or official statement on behalf of the
United States Treasury Department, the Internal Revenue Service or other federal or State
authority materially adversely affecting the federal or State tax status of the City, or the
interest with respect to the Certificates or notes or obligations of the general character of
the Certificates; or
(iii) any legislation, ordinance, rule or regulation shall be introduced in,
or be enacted by any governmental body, department or agency of the State of California,
or a decision by any court of competent jurisdiction within the State of California shall be
rendered which materially adversely affects the market price of the Certificates; or
(iv) a stop order, ruling, regulation or statement by, or on behalf of, the
Securities and Exchange Commission or any other governmental agency having
jurisdiction of the subject matter shall be issued or made to the effect that the issuance,
offering or sale of obligations of the general character of the Certificates, or the
execution, offering or sale of the Certificates, including all underlying obligations, as
contemplated hereby or by the Official Statement, is in violation or would be in violation
of any provision of the federal securities laws, including the Securities Act of 1933, as
amended and as then in effect, or that the Trust Agreement need be qualified under the
Trust Indenture Act of 1939, as amended and as then in effect; or
(v) legislation shall be enacted by the Congress of the United States, or
a decision by a court of the United States shall be rendered, to the effect that obligations
of the general character of the Certificates, or the Certificates, are not exempt from
registration under or other requirements of the Securities Act of 1933, as amended and as
then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect,
or that the Trust Agreement is not exempt from qualification under or other requirements
of the Trust Indenture Act of 1939, as amended and as then in effect; or
(vi) additional material restrictions not in force as of the date hereof
shall have been imposed upon trading in securities generally by any governmental
authority or by any national securities exchange which restrictions materially adversely
affect the Underwriter's ability to trade the Certificates; or
(vii) a general banking moratorium shall have been established by
federal or State authorities; or
(viii) the United States has become engaged in hostilities which have
resulted in a declaration of war or a national emergency or there has occurred any other
outbreak of hostilities or a national or international calamity or crisis, financial or
otherwise, the effect of such outbreak, calamity or crisis on the financial markets of the
United States, being such as, in the reasonable opinion of the Underwriter, would affect
materially and adversely the ability of the Underwriter to market the Certificates (it being
agreed by the Underwriter that there is no outbreak, calamity or crisis of such character as
of the date hereof; or
(ix) the rating on any Certificates, notes or other obligations of the City
shall have been downgraded, suspended or withdrawn by a national rating service, which,
in the Underwriter's reasonable opinion, materially adversely affects the market price of
the Certificates; or
(x) the commencement of any action, suit or proceeding described in
5(1) hereof which, in the judgment of the Underwriter, materially adversely affects the
market price of the Certificates.
(t) At or prior to the Closing, the Underwriter shall receive with respect to the
Certificates (unless the context otherwise indicates) the following documents:
(i) Final Approving Opinion. The approving opinion of Stradling
Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special
Counsel to the City, dated the date of the Closing.
(ii) Supplemental Opinion. A supplemental opinion or opinions of
Special Counsel, addressed to the Underwriter, in form and substance acceptable to the
Underwriter, and dated the date of the Closing to the following effect:
(1) The Purchase Agreement has been duly authorized,
executed and delivered by the City and, assuming due and valid authorization,
execution and delivery by the other parties thereto, constitutes the valid, legal and
binding agreement of the City, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other similar laws affecting
enforcement of creditors' rights, by application of equitable principles if equitable
remedies are sought and by the limitations on legal remedies against public
agencies in the State of California.
(2) The statements contained in the Official Statement on
the cover relating to the tax - exempt status of the Certificates, and under the
captions "THE CERTIFICATES" (excluding "Book -Entry System "), "TAX
EXEMPTION," the "PROJECT LEASE" and in the "TRUST AGREEMENT ",
insofar as such statements purport to summarize certain provisions of the
Certificates, the Trust Agreement and federal tax law, are accurate in all material
respects; and
(3) The Certificates are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Trust Agreement
is exempt from qualification pursuant to the Trust Indenture Act of 1939, as
amended.
(iii) City Counsel Opinion. An opinion of Counsel to the City, dated
the date of the Closing and addressed to the Underwriter, in form and substance
acceptable to the Underwriter, to the following effect:
(1) The information in the Official Statement fairly and
accurately summarizes the information presented therein, and without
independently determining the completeness or fairness of any other information
contained in the Official Statement relating to the City, nothing has come to the
attention of such counsel which would lead it to believe that such information
(excluding therefrom the financial and statistical data and forecasts
included therein as to which no opinion need be expressed) contains any untrue
statement of material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not
misleading;
(2) To the best of its knowledge, except as otherwise disclosed
in the Official Statement, there is no litigation or proceeding, pending and served,
or threatened, challenging the creation, organization or existence of the City, or
the validity of the Financing Documents or seeking to restrain or enjoin any of the
transactions referred to therein or contemplated thereby, or under which a
determination adverse to the City would have a material adverse effect upon the
financial condition or the revenues of the City, or which, in any manner, questions
the right of the City to use the Lease Payments for debt service on the Certificates;
provided the Underwriter may in its sole discretion accept the opinion of counsel
acceptable to the Underwriter and its counsel in lieu of the opinion required by
this clause, that in the opinion of such counsel the issues raised in any related or
threatened litigation are without substance or that the contentions of any plaintiff
therein are without merit; and
(3) The execution, delivery and performance by the City of this
Purchase Agreement and Financing Documents and the execution, sale and
delivery of the Certificates and compliance with the provisions thereof will not
conflict with or constitute a material breach of or a default under any law,
administrative regulation, judgment, decree or any agreement or other instrument
known to them to which the City is a party or otherwise subject, nor will any such
delivery, issuance, sale, adoption or compliance result in the creation or
imposition of any lien, charge, encumbrance or security interest of any nature
whatsoever upon any of the revenues, property or assets of the City except as
expressly provided or permitted by the Financing Documents;
(iv) City Certificate. A certificate of the City, dated the date of the
Closing, signed on behalf of the City by its duly authorized officers to the effect that:
(1) the representations and warranties of the City contained
herein are true and correct in all material respects on and as of the date of the
Closing as if made on the date of the Closing; provided that the Underwriter may
in its sole discretion accept the opinion of Counsel to the City in lieu of the
renewal of the representation and warranty of Section 5(1) hereof, acceptable in
form and substance to them and their counsel, that in the opinion of such counsel
the issues raised in any related or threatened litigation are without substance or
that the contentions of any plaintiffs therein are without merit; and
(2) no event affecting the City has occurred since the date of
the Official Statement which has not been disclosed therein or in any supplement
or amendment thereto which event should be disclosed in the Official Statement
in order to make the statements therein relating to the City, in light of the
circumstances under which they were made, not misleading.
(v) Financing Documents and Official Statement. Fully executed
copies of all Financing Documents and the Official Statement.
(vi) Trustee/Escrow Bank. The Certificate of the Trustee/Escrow
Bank, dated the Closing Date, to the effect that (i) the Trustee /Escrow Bank is duly
organized and existing as a state banking corporation under the laws of the State having
the full power and authority to perform its duties under the Escrow Agreement, (ii) the
Trustee /Escrow Bank is duly authorized to accept the obligations created by the Escrow
Agreement and to authenticate the Certificates pursuant to the terms of the Trust
Agreement; (iii) no consent, approval, authorization or other action by any governmental
or regulatory authority having jurisdiction over the Trustee/Escrow Bank that has not
been obtained or will be required for the authentication of the Certificates or the
consummation by the Trustee/Escrow Bank of the other transactions contemplated to be
performed by the Trustee /Escrow Bank in connection with the authentication of the
Certificates and the acceptance and performance of the obligations created by the Escrow
Agreement and Trust Agreement; and (iv) compliance with the terms of the Escrow
Agreement and Trust Agreement will not conflict with or result in a violation or breach
of, or constitute a default under, any loan agreement, escrow agreement, bond, note,
resolution or any other agreement or instrument to which the Trustee /Escrow Bank is a
party or by which it is bound, or any law or any rule, regulation, order or decree of any
court or governmental agency or body having jurisdiction over the Trustee /Escrow Bank
or any of its activities or properties.
(vii) Disclosure Opinion. An opinion, dated the date of the Closing and
addressed to the Underwriter, of Stradling Yocca Carlson & Rauth, a Professional
Corporation, Newport Beach, California, to the effect that, (i) based upon its participation
in the preparation of the Official Statement and without having undertaken to determine
independently the accuracy or completeness of the statements in the Official Statement,
such counsel has no reason to believe that, as of the date of Closing, the Official
Statement (except any financial statements and any other financial and statistical data
included in the Official Statement as to all of which no view need be expressed) contains
any untrue statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (ii) that the Certificates
are exempt from the registration requirement of the Securities Act of 1933, as amended,
and the Trust Agreement is exempt from qualification under the Trust Indenture Act of
1939, as amended.
(viii) Nonarbitrage Certificate. A tax and nonarbitrage certificate in form
satisfactory to Special Counsel.
(ix) CDIAC Statement. A copy of the State of California Notice of Sale
required to be delivered to the California Debt Investment Advisory Commission .
pursuant to section 53583 of the California Government Code and section 8855(g) of the
California Government Code.
(x) Reliance Letter. A letter, dated the date of Closing and addressed
to the Underwriter, from Special Counsel to the effect that the opinion referred to in
paragraph (1) above may be relied upon by the Underwriter to the same extent as if such
opinion was addressed to it.
(xi) Additional Documents. Such additional legal opinions, certificates,
instruments and other documents as the Underwriter may reasonably deem necessary to
evidence the truth and accuracy as of the time of the Closing of the representations of the
City and the due performance or satisfaction by the City at or prior to such time of all
agreements then to be performed and all conditions then to be satisfied by the City.
0
If the City shall be unable to satisfy the conditions contained in this Purchase Agreement,
or if the obligations of the Underwriter shall be terminated for any reason permitted by this
Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor
the City shall be under further obligation hereunder, except as further set forth in Section 7
hereof.
7. Expenses.
(a) City. The City shall pay or cause to be paid the expenses incident to the
performance of its obligations hereunder, including but not limited to:
(i) the cost of processing and printing of the Preliminary Official
Statement and the Official Statement, not to exceed 300 copies, and all other documents
prepared in connection with the transactions contemplated hereby;
(ii) the fees and disbursements of the Trustee /Escrow Bank in
connection with the execution and delivery of the Certificates;
(iii) the fees and disbursements of Special Counsel and any other
experts or consultants retained by the City in connection with the transactions
contemplated hereby;
(iv) the fees and disbursements of Disclosure Counsel; and
(v) the costs related to obtaining ratings and insurance on the
Certificates.
(b) Underwriter. The Underwriter shall pay:
(i) all advertising expenses in connection with the public offering of
the Certificates;
(ii) California Debt Investment Advisory Commission fees; and
(iii) all other expenses incurred by it in connection with its public
offering and distribution of the Certificates.
8. Notice. Any notice or other communication to be given to the City under this
Purchase Agreement may be given by delivering the same in writing to the City, at the address
indicated on the first page hereof.
Any notice or other communication to be given to the Underwriter under this Purchase
Agreement may be given by delivering the same in writing to Miller & Schroeder Financial Inc.,
505 Lomas Santa Fe Drive, Suite 100, Post Office Box 946, Solana Beach, California 92075,
9. Entire Agreement. Except as otherwise provided herein, this Purchase Agreement,
when accepted by the City, shall constitute the entire agreement between the City and the
Underwriter and is made solely for the benefit of the City and the Underwriter (including the
successors or assigns of the Underwriter). No other person shall acquire or have any right
hereunder by virtue hereof, except as provided herein. All the representations, warranties and
agreements of the City in this Purchase Agreement shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of the Underwriter or with regard to
delivery of and payment for the Certificates hereunder, and (b) any termination of this Purchase
Agreement.
to
10. Counterparts. This Purchase Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same instrument.
11. Severability. In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
12. State of California Law Governs. The validity, interpretation and performance of
this Purchase Agreement shall be governed by the laws of the State of California.
13. No Assigmnent. The rights and obligations created by this Purchase Agreement
shall not be subject to assignment by the Underwriter or the City without the prior written
consent of the other parties hereto.
Accepted as of the date first stated above:
CITY OF NEWPORT BEACH
IN
Title:
MILLER & SCHROEDER FINANCIAL, INC.
0
Title:
I1
MATURITY, PRINCIPAL AMOUNT, INTEREST RATE AND REOFFERING PRICE
Maturity Principal Interest Reoffering
(June 1) Amount Rate Price
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2019
Totals
A -1
PRELIMINi f OFFICIAL STATEMENT DATED I Y ,1998
NEW ISSUE - (Book -Entry Only)
In the o,
existing status
requirements
discount with
purposes o n
Counsel, t iel
is exempt frw
price at whicl
to
. a suosianuat ,
respect to such
Standard & Poor's:
Moody's Investors Service: '
( Insured —See "Ratings" herein)
r /son & Routh, a Professional Corporation, Newport Beach, California ( "Special Counsel'), under
!judicial decisions, and assuming certain representations and compliance with certain covenants and
m ojthe Lease payments (as defened herein) designated as and comprising interest (and on ina! issue
is excluded from gross income (or federal income tai purposes and is not an item of tax pre erence for
rnative minimum tax imposed on individuals and aorporatis In the further optnton of S ecial
nts designated os and comprising interest (and artqfinal issue discormt with respect to lire Certi tcates)
"I income tax. The difference, , f any, between fhe issue price with respect to a Certtftcate the first
e Certificates with respect to a maturity are to be sold to the public) and the stated redemption price at
�aeanatev original issue discount. See "Tax Matters" herein.
$7,330, 000*
REFUNDING CERTIFICATES OF PARTICIPATION
Series 1998
(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)
Dated: June 1, 1998 Due: June 1, as shown below
The Certificates are being sold, executed and delivered to refund the $7,500,000 Certificates of Participation, Series 1992 (the "Refunded
Certificates ") currently outstanding in the amount of $6,940,000. The Refunded Certificates were used by the Newport Beach Public Facilities
Corporation (the "Corporation ") in connection with the construction of the City's Central Library (the "Project ") which is leased by the City of
Newport Beach (the "City " }, pursuant to the terms and conditions of a Project Lease, dated as of Lune 1, 1998 (the "Lease ") entered into between
the Corporation, a California nonprofit public benefit corporation, and the City. The Certificates evidence assignments of proportionate interests
in certain lease payments (the "Lease Payments "} under the Lease.
The Certificates wilt e delivered in f�i�y registered form on] and, when issued, will in
of The Depository Trust Company, New York, New York ('DTC" DTC will act as securitie
in the Cettificates may be purchased, m denominations of $5,000, or any integral mu[tipfe the
Upon rcoeipt of payments of principal of, premium,, if any, and interest on the CercificaCes,
any, and interest to the partiaipants m DTC (as desanbed herein) for subsequent disbursement
Interest on the Cerifcates will be payable semiannually on June I and December I of et
installments due with respect to the Certificates are payable annually on June 1 of each year c(
the Certificates are pa able at the corporate trust office of U.S. Bank Trust National Ass
"Trustee ") under the Trust Agreement dated as of June 1, 1998 by and among the C.
Agreement'). Interest on Certificates is payable by check mailed by first class mail to the
prepayment prior to maturity as described herein.
MATURITY SCHEDULE
in the name of Cede & Co. as nominee
will in turn i
Ire beneficial c
year commene
nendinQ June 1
as
owner. The Certificates are subject to
Due Principal Interest Due Principal Interest
June I Amount Rate Yield June I Amount Rate Yield
1999 2004
2000 2005
2001 2006
2002 2007
2003 2008
$ % Tenn Bonds Due June 1, 2019, - Yield
Under the terms of the Lease, as described herein, the City is obligated to make Lease Payments in each year payable from the revenues of
the City lawfully available therefor. The chitgation of the City to make Lease Payyments 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. In addition
payment of the principal and interest installments of the Certificates when due will be insured by a municipal bond insurance policy to be issue]
y simultaneously with the delivery of the Certificates.
THE CERTIFICATES
AN INDEBTEDNESS
TION OF
STATE (
CERTAIN
li1►k1
tes are to be offered when, as and if sold, executed and delivered, subject to the appproval as to their legality by Stradfing
Routh, a Professional Corporation, Newport Beach, Cali ornia, Special Counsel. In addition, certain legal »ratters will be
Corporation by Strolling Yaeca Carlson & Routh, a Professional Car oration, and for the Trustee by its counsel. It is
e Certificates in definitive form will be available for delivery through theJacilities of DTC in New York, New York on or about
IMMiller& Schroeder Financial, Inc.
The date of this Official Statement is June 1998
Preliminary, subject to change.
CITY COUNCIL
Thomas C. Edwards, Mayor
Dennis D. O'Neil, Vice Mayor
John W. Hedges, Council Member
Janice A. Debay, Council Member
Norma J. Glover, Council Member
John E. Noyes, Council Member
Tom W. Thompson, Council Member
CITY STAFF
Kevin J. Murphy, City Manager
Dennis C. Danner, City Treasurer /Administrative Services Director
Richard C. Kurth, Administrative Services Deputy Director
LaDonna Klenitz, Community Services Director /City Librarian
Robert H. Burnham, City Attorney
LaVonne M. Harkless, City Clerk
Don Webb, Public Works Director
NEWPORT BEACH PUBLIC FACILITIES CORPORATION
Board of Directors
Thomas C. Edwards, Chairman
Dennis D. O'Neil
John W. Hedges
Janice A. Debay
Norma J. Glover
John E. Noyes
Tom W. Thompson
Kevin J. Murphy, President
Dennis C. Danner, Chie Financial Officer
LaVonne M. Hark less, Secretary
Robert H. Burnham, Attorney
Special Counsel and Disclosure Counsel
Stradling Yocca Carlson & Rauth, a Professional Corporation
Newport Beach, California
Trustee/Escrow Bank
U.S. Bank Trust National Association
Los Angeles, California
Underwriter
Miller & Schroeder Financial, Inc.
Solana Beach, California
Certificates Not General
Obligations . ............................... 21
Constitutional Limitations
on Taxes and Expenditures. ...... 21
Paee
INTRODUCTION .......................................
I
THE PROJECT ........... ...............................
2
Sources and Uses of Funds ...............
3
THE CERTIFICATES .. ...............................
3
Book -Entry System... ......... ............
- 3
Optional Prepayment ........................
6
Mandatory Prepayment .....................
6
Notice of Prepayment .......................
7
Nature of the Certificates ..................7
Sources of Lease Payments ...............
8
Lease Payments .. ...............................
8
SUMMARY OF CERTAIN PROVISIONS
26
OF LEGAL DOCUMENTS ..................
10
SITE LEASE ............ ...............................
10
PROJECT LEASE ..... ...............................
1.0
TRUST AGREEMENT.. ................. ..... __
16
Investment of Moneys in Funds......
18
Events of Default ............................19
RISK FACTORS ....... ...............................
21
Certificates Not General
Obligations . ............................... 21
Constitutional Limitations
on Taxes and Expenditures. ...... 21
For purposes of compliance with Rule I5c2 -12 of the Securities and Exchange
Commission, the Preliminary Official Statement and the Official Statement, as of their
respective dates, are deemed final by the City and the Corporation, provided, however, that
pricing, underwriting and other information contained in the Preliminary Official
Statement is subject to completion or amendment in accordance with Rule 15c2 -12.
No dealer, broker, salesperson or other person has been authorized by the City or
the Corporation to give any information or to make any representations other than those
contained herein and, if given or made, such other information or representation must not
be relied upon as having been authorized by the City or the Corporation. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will
there be any offer or sale of the Certificates by a person in any jurisdiction in which it is
unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of
the Certificates. Statements contained in this Official Statement which involve estimates,
forecasts or matters of opinion, whether or not expressly so described herein, are intended
solely as such and are not to be construed as a representation of facts.
The information set forth herein has been obtained from official sources which are
believed to be reliable but it is not guaranteed as to accuracy or completeness. The
information and expression of opinions herein are subject to change without notice and
this
neither delivery of Official Statement nor any sale made hereunder will, under any
circumstances, create any implication that there has been no change in the affairs of the
City or the Corporation since the date hereof. All summaries of the Lease and the Trust
Agreement, or other documents, are made subject to the provisions of such documents
respectively and do not purport to be complete statements of any or all of such provisions.
Reference is hereby made to such documents on file with the City for further information in
connection therewith.
Page
No Liability of the Corporation
to the Owners . .............................23
Limited Resource on Default.., .........
23
Abatement..... ...... ____ ... __ ......... ...
. 23
Loss of Tax Exemption .....................24
THE CORPORATION ... .............................24
TAX MATTERS ........... .............................24
CERTAIN LEGAL MATTERS ....................25
ABSENCE OF LITIGATION .......................25
UNDERWRITING ......... .............................25
VERIFICATION OF MATHEMATICAL
COMPUTATIONS.. .............. ...............
26
CONTINUING DISCLOSURE .....................
26
CERTIFICATE INSURER ...........................26
RATINGS .................... .............................26
MISCELLANEOUS_ ....... ... _ ..................
,, 27
SUPPLEMENTAL INFORMATION -
THE CITY OF NEWPORT BEACH .......28
APPENDIX A - DEFINITIONS ...... ...........
A -1
APPENDIX B - SPECIMEN MUNICIPAL
BOND INSURANCE POLICY .............
B -1
APPENDIX C - FORM OF CONTINUING
DISCLOSURE AGREEMENT .............
C -1
For purposes of compliance with Rule I5c2 -12 of the Securities and Exchange
Commission, the Preliminary Official Statement and the Official Statement, as of their
respective dates, are deemed final by the City and the Corporation, provided, however, that
pricing, underwriting and other information contained in the Preliminary Official
Statement is subject to completion or amendment in accordance with Rule 15c2 -12.
No dealer, broker, salesperson or other person has been authorized by the City or
the Corporation to give any information or to make any representations other than those
contained herein and, if given or made, such other information or representation must not
be relied upon as having been authorized by the City or the Corporation. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will
there be any offer or sale of the Certificates by a person in any jurisdiction in which it is
unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of
the Certificates. Statements contained in this Official Statement which involve estimates,
forecasts or matters of opinion, whether or not expressly so described herein, are intended
solely as such and are not to be construed as a representation of facts.
The information set forth herein has been obtained from official sources which are
believed to be reliable but it is not guaranteed as to accuracy or completeness. The
information and expression of opinions herein are subject to change without notice and
this
neither delivery of Official Statement nor any sale made hereunder will, under any
circumstances, create any implication that there has been no change in the affairs of the
City or the Corporation since the date hereof. All summaries of the Lease and the Trust
Agreement, or other documents, are made subject to the provisions of such documents
respectively and do not purport to be complete statements of any or all of such provisions.
Reference is hereby made to such documents on file with the City for further information in
connection therewith.
(This Page Left Intentionally Blank)
REFUNDING CERTIFICATES OF PARTICIPATION
Series 1998
(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)
The purpose of this Official Statement is to provide certain information concerning the
sale and delivery of Refunding Certificates of Participation, Series 1998 (the "Certificates "), in
the aggregate principal amount of $7,330,000 *. The Certificates represent the direct and
proportionate interests of registered owners (collectively, the "Owners ") thereof in lease
payments (the "Lease Payments ") to be made by the City of Newport Beach, California (the
"City ") to the Newport Beach Public Facilities Corporation (the "Corporation ") for certain
facilities, real property, improvements and equipment, to be leased pursuant to a Project Lease,
dated as of June 1, 1998 (the "Lease "), between the City and the Corporation. The Certificates
are being issued pursuant to a Trust Agreement, dated as of June 1, 1998 (the "Trust
Agreement "), between the City, the Corporation and U.S. Bank Trust National Association, Los
Angeles, California (the "Trustee "). Pursuant to the Trust Agreement, the Corporation has
assigned to the Trustee for the benefit of the Owners of the Certificates its rights (i) to amounts
payable by the City under the Lease, and (ii) to enforce its rights upon default by the City.
The Certificates are being issued for the purpose of refunding the $7,500,000 certificates
of Participation, Series 1992 (the "Refunded Certificates "). The proceeds of the Refunded
Certificates were used for paying the costs of acquiring and improving property to be used as the
City's Central Library. The land, equipment and improvements are described herein collectively
as the "Project."
The Corporation, as lessee, has acquired a leasehold interest in the improved land
pursuant to a Site Lease, dated as of June 1, 1998, with the City, as lessor (the "Site Lease ").
Pursuant to the Lease, the City has agreed to lease the Project from the Corporation. In
accordance with the Lease, the City is required to pay to the Trustee specified Lease Payments for
the Project which are designed to be sufficient in both time and amount to pay, when due, the
principal and interest on the Certificates, and as additional payment, any taxes, assessment
charges, utility charges, maintenance and repair costs of the Project (see "SUMMARY OF
CERTAIN PROVISIONS OF LEGAL DOCUMENTS - PROJECT LEASE" herein).
The City has covenanted in the Lease to take such action as may be necessary to include
all such total Lease Payments in its annual budget and has further covenanted to make the
necessary annual appropriation for all such Lease Payments. Said covenants on the part of the
City are deemed to be and will be construed to be duties imposed by law. The amount of Lease
* Preliminary, subject to change.
Payments will be abated during any period in which by reason of damage or destruction, there is
a substantial interference with the use and occupancy of the Project by the City, except to the
extent moneys on deposit in the Reserve Fund will be used as a credit for Lease Payments. The
obligation of the City to pay Lease .Payments does not constitute an obligation of the City for
which the City is obligated to levy or pledge any form of taxation. The obligation of the City to
make Lease Payments does not constitute a debt of the City within the meaning of any statutory
or constitutional debt limitations, and payment will be made only from funds lawfully available
therefore. In addition, payment of the principal and interest installments of the Certificates when
due will be insured by a municipal bond insurance policy to be issued by
simultaneously with the delivery of the Certificates.
All capitalized terms in this Official Statement, not defined in the text hereof, are defined
in the Trust Agreement and the Lease. Brief descriptions of the Certificates, the Site Lease, the
Lease, the Trust Agreement and certain other matters are included in this Official Statement.
Such descriptions do not purport to be comprehensive or definitive. All references herein to the
Site Lease, the Lease and the Trust Agreement are qualified in their entirety by reference to such
documents, copies of which may be viewed at the offices of the City. All references to the
Certificates are qualified in their entirety by the definitive terms thereof and the information with
respect thereto included in the Lease and the Trust Agreement. Information concerning the
Corporation and the City has been supplied by the Corporation and the City, respectively, and has
not been verified by the Underwriter. The Underwriter makes no representation or warranty,
express or implied, as to the accuracy or completeness of such information.
The Central Library was created for the Newport Beach community. The 52,000 square
foot building is located near the intersection of MacArthur Boulevard and Pacific Coast Highway.
The four acre site for the Library was provided through a land exchange agreement with The
Irvine Company, in exchange for the current 1.97 acre site of the previous Newport Center
Library.
Simon Martin -Vegue Winkelstein Moris of San Francisco in association with Tames L.
Pirdy of Newport Beach designed the building. The contemporary styling of the stucco and stone
building takes advantage of the ocean views. It is compatible with surrounding buildings in the
Newport Center/Fashion Island area.
The design of the building with dramatic natural lighting is open and inviting for its many
users. The two -story building provides a popular library (with current books, sound and video
recordings), children's room, young adult area and public meeting room on the first level. The
second level contains the reference and information desk, the adult faction and non - fiction
collections and a special area for the business collection.
The Library houses for public access 260,000 books and recordings, 500 current magazine
and newspaper subscriptions and 300,000 microforms. Reference collections including a special
business collection, support the varied interests of the community. Exhibit space highlights
works of art from the community artists.
Sources and Uses of Funds
The proceeds to be received from the sale of the Certificates are anticipated to be applied
as follows:
Sources:
Principal Amount of Certificates .......... ............................... $7,330,000.00*
Transfers from Refunded Certificates Accounts... ............ _
Total Sources ............................ ...............................
Uses:
Underwriter's Discount ......................... ...............................
Refunded Certificates Escrow Fund (1)_ ..... _ ...... ___ ........
Reserve Fund ( 2) ................................... ...............................
Costs of Issuance Fund ......................... ...............................
TotalUses ................................. ...............................
(1) An amount to be used to purchase Federal Securities which will be sufficient, together with
other moneys in the Refunded Certificates Escrow Fund and interest earnings thereon, to
provide for the payment of the principal of, premium and interest on the Refunded
Certificates in full to the first call date of June 1, 2000.
(2) An amount equal to the Reserve Requirement on the Certificates.
THE CERTIFICATES
The Certificates will be executed and delivered as one fully registered Certificate for each
maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York,
New York ( "DTC "), as registered owner of all Certificates. See 'Book -Entry System" below.
The Certificates will be dated June 1, 1998 and mature on June I in the years and in the amounts
shown on the cover page of this Official Statement. The Certificates will bear interest at the rates
shown on the cover page of this Official Statement, payable semiannually on June 1 and
December I in each year, commencing on December 1, 1998, by check mailed by first class mail
on each Interest Payment Date to the registered owners thereof or upon the request of the Owners
of $1,000,000 or more in principal amount of Certificates„ by wire transfer to an account which
shall be designated by such Owner to the Trustee on or before the Regular Record Date preceding
the Interest Payment Date.
Book -Entry System
DTC will act as securities depository for the Certificates. The Certificates will be issued
as fully- registered Certificates registered in the name of Cede & Co. (DTC's partnership
nominee). One fully- registered Certificate will be issued for each maturity of the Certificates,
each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC is a limited - purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds securities that its participants (the
"Participants ") deposit with DTC. DTC also facilitates the settlement among Participants of
* Preliminary, subject to change.
securities transactions, such as transfers and pledges, in deposited securities through electronic
computerized book -entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities Certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ( "Indirect Participants"), The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchasers of the Certificates under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Certificates on DTC's records. The ownership
interest of each actual purchaser of each Certificate ( "Beneficial Owners ") is in turn recorded on
the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Certificates are to be accomplished by
entries made on the books of Participants acting on behalf of the Beneficial Owners. Beneficial
Owners will not receive Certificates representing their ownership interests in the Certificates,
except in the event that use of the book -entry system for the Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Certificates
with DTC and their registration in the name of Cede & Co. effect no change in beneficial
ownership DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's
records reflect only the identity of the Direct Participants to whose accounts such securities are
credited, which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as Cede & Co. is the registered owner of the Certificates, as nominee of DTC,
references herein to the holders or registered owners of the Certificates will mean Cede & Co.
and will not mean the Beneficial Owners of the Certificates.
Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Certificates within
an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Certificates. Under
its usual procedures, DTC mails an Omnibus Proxy to an issuer as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Certificates are credited on the Record Date (identified in a
listing attached to the Omnibus Proxy).
Principal, sinking fund and interest payments with respect to the Certificates will be made
to DTC. DTC's practice is to credit Participants' accounts on payment dates in accordance with
their respective holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the date payable. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with securities held for
19
the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trustee, the Corporation or the City,
subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the City or the Trustee,
disbursement of such payments to Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
The City, the Corporation, the Underwriter and the Trustee do not have any responsibility
or obligation to DTC Participants, to the persons for whom they act as nominees, to Beneficial
Owners, or to any other person who is not shown on the registration books as being an owner of
the Certificates, with respect to (i) the accuracy of any records maintained by DTC or any DTC
Participants; (ii) the payment by DTC or any DTC Participant of any amount in respect of the
principal of, redemption price of or interest on the Certificates; (iii) the delivery of any notice
which is permitted or required to be given to registered owners under the Trust Agreement; (iv)
the selection by DTC or any DTC Participant of any person to receive payment in the event of a
partial redemption of the Certificates; (v) any consent given or other action taken by DTC as
registered owner; or (vi) any other matter arising with respect to the Certificates or the Indenture.
The City, the Corporation, the Underwriter and the Trustee cannot and do not give any assurances
that DTC Participants or others will distribute payments of principal of or interest on the
Certificates paid to DTC or its nominee, as the registered owner, or any notices to the Beneficial
Owners or that they will do so on a timely basis or will serve and act in a manner described in
this Official Statement. The City and the Trustee are not responsible or liable for the failure of
DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner in
respect to the Certificates or any error or delay relating thereto.
The foregoing description of the procedures and record - keeping with respect to beneficial
ownership interests in the Certificates, payment of principal, interest and other payments on the
Certificates to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in such Certificates and other related transactions by and between DTC, the
DTC Participants and the Beneficial Owners is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither the DTC
Participants nor the Beneficial Owners should rely on the foregoing information with respect to
such matters, but should instead confirm the same with DTC or the DTC Participants, as the case
may be.
Discontinuance o(Book- Entry. DTC may discontinue providing its services with respect
to the Certificates at any time by giving notice to the Trustee and discharging its responsibilities
with respect thereto under applicable law or the City may terminate participation in the system of
book -entry transfers through DTC or any other securities depository at any time. In the event that
the book -entry system is discontinued, the City will execute, and the Trustee will authenticate
and make available for delivery, replacement Certificates in the form of registered Certificates. In
addition, the following provisions would apply: the principal of and redemption premium, if any,
on the Certificates will be payable at the principal corporate trust office of the Trustee, and
interest on the Certificates will be payable by check mailed on each Interest Payment Date to the
Owners thereof as shown on the registration books of the Trustee as of the close of business on
the fifteenth day of the calendar month immediately preceding the applicable Interest Payment
Date, or by wire transfer to Owners of $1,000,000 or more in aggregate principal amount of
Certificates, upon request, as provided in the Indenture. The Certificates will be transferable and
exchangeable on the terms and conditions provided in the Trust Agreement.
Transfer Fees. For every transfer and exchange of Certificates, Owners may be charged a
sum sufficient to cover any tax, governmental charge or transfer fees that may be imposed in
relation thereto, which charge may include transfer fees imposed by the Trustee, DTC or the DTC
Participant in connection with such transfers or exchanges.
Optional Prepayment
Certificates maturing on or before June 1, 2007 are not subject to optional prepayment
prior to their stated maturity dates, The Certificates, including portions thereof, maturing on or
after June 1, 2008, shall be subject to prepayment prior to maturity, upon instructions from the
City, on June 1, 2007, 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 prepaid) set out below, plus accrued interest
thereon to the prepayment date:
Prepayment hates Prepayment Prices
June 1, 2007 and December 1, 2007 102%
June 1, 2008 and December 1, 2008 101%
June 1, 2009 and thereafter 100%
Mandatory Prepayment
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 the Lease at least 60 days prior to a Certificate Payment Date and
credited towards the Prepayment made by the City pursuant to 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.
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
prepayment, without premium.
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, 2009, 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
(June 1)
2009
2010
2011
2012
2013
2014
(1) Maturity.
Amount
0
Year
(June 1)
2015
2016
2017
2018
2019(l)
Amount
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 fund payments on a pro rata
basis in integral multiples of $5,000.
In lieu of depositing cash with the Trustee as a payment for the prepayment price of any
Certificates 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 selects Certificates for prepayment.
Notice of Prepayment
When prepayment is authorized or required pursuant to the Trust Agreement, 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 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. ,
Notice of such prepayment shall be sent by first class mail, postage prepaid, to the
Corporation, the City, The 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.
Nature of the Certificates
Each Certificate represents a proportionate and undivided ownership interest in Lease
Payments and the Prepayments to be made by the City under the Lease which become payable
from annual appropriations of the City from funds lawfully available therefor.
The City covenants in the Lease that it will budget and appropriate all Lease Payments
and Additional Payments (see "RISK FACTORS" and "SUMMARY OF CERTAIN
PROVISIONS OF LEGAL DOCUMENTS — Project Lease" herein). The City has covenanted
through the Lease to pay or cause to be paid all taxes, assessments, insurance and other costs.
See "SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS — Project Lease"
herein.
W
The Trustee, as assignee of the Corporation, has been assigned without recourse all of the
Corporation's rights in and under the Site Lease and all of the Corporation's rights to receive
Lease Payments scheduled to be paid by the City under and pursuant to the Lease.
The City may not assign or sublease its rights under the Lease without an opinion of
Special Counsel to the effect that such assignment or sublease would not impair the tax - exempt
status of the Certificates. See "SUMMARY OF CERTAIN PROVISIONS OF LEGAL
DOCUMENTS —The Project Lease — Assignment and Subleasing" herein.
A policy or policies of title insurance will be obtained by the City in an amount equal to
the aggregate principal component of unpaid Lease Payments. See "SUMMARY OF CERTAIN
PROVISIONS OF LEGAL DOCUMENTS —The Project Lease —Title Insurance" herein.
Sources of Lease Payments
The City's obligation under the Lease is based on its authority to acquire and lease
property for the common benefit and in furtherance of its public purposes, as described in the
California Government Code Section 37350. Lease Payments are an expense, not a debt, of the
City. Lease Payments made by the City to the Corporation are payable from any revenues
available to the City except certain special fund revenues which are legally restricted as to use.
Lease Payments
Pursuant to the Lease, the City agrees that, not later than May 15 and November 15 of
each Fiscal Year, beginning November 15, 1998, it will make semiannual Lease Payments to the
Corporation in an amount which shall be sufficient to pay the annual principal of and semi - annual
interest on the Certificates when due. A portion of each Lease Payment is paid as, and represents
the payment of, interest and the balance of each Lease Payment is paid as, and represents the
payment of, principal.
The following table sets forth aggregate Lease Payments due under the Lease and payable
with respect to the Certificates:
Lease Total
Payment Date Principal Interest Fiscal Year
December 1, 1998
June 1, 1999
December 1, 1999
June 1, 2000
December 1, 2000
June 1, 2001
December 1, 2001
June 1, 2002
December 1, 2002
June 1, 2003
December 1, 2003
June 1, 2004
December 1, 2004
Junc 1, 2005
December 1, 2005
June 1, 2006
December 1, 2006
June 1, 2007
December 1, 2007
June 1, 2008
December 1, 2008
June 1, 2009
December 1, 2009
June 1, 2010
December 1, 2010
June 1., 2011
December 1, 2011
June 1, 2012
December 1, 2012
June 1, 2013
December 1, 2013
June 1, 2014
December 1, 2014
June 1, 20I5
December 1, 2015
June 1, 2016
December 1, 2016
June 1, 2017
December 1, 2017
June 1, 2018
December 1, 2018
June 1, 2019
December 1, 2019
Totals
0
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The following are brief outlines of certain provisions contained in the Site Lease, the
Project Lease and the Trust Agreement and are not considered full statements pertaining thereto.
Reference is made to each for the complete text thereof. Copies of said documents are available
for inspection at the offices of the City,
SITE LEASE
In accordance with the Site Lease dated as June 1, 1998 by and between the City, as lessor
and the Corporation, as lessee, the Corporation acquired an interest in the Site and made
improvements to the Site. The City will lease back the Site, as improved by the Project, from the
Corporation pursuant to the Project Lease. Pursuant to the Site Lease, the Corporation shall use
the Site solely for the purpose of acquiring or constructing, or causing the acquisition or
construction of, the Project and of leasing back the Site and Project to the City or others pursuant
to the Lease and for such purposes as may be incidental thereto.
The term of the Site Lease will terminate on the expiration of the Lease, unless the term is
sooner terminated, or extended, as provided in the Site Lease.
The Corporation pays annually to the City as and for the rental due, the sum of $1.00,
commencing with the execution and delivery of the Site Lease and continuing to and including
the date of tennination of the Site Lease.
Y R
The Corporation agrees to lease the Site, as improved by the Project, to the City pursuant
to the Lease. The term of the Lease shall become effective upon the date thereof and subject to
earlier termination as provided in the Lease, and shall terminate June 1, 2020 (the "Term "). If, on
June 1, , the Certificates have not been fully paid, or if the Lease Payments were abated at
any time and for any reason, then the Term is extended until all Certificates are fully paid, except
that the Tenn shall in no event be extended beyond June 1,
Fair Market Rental Value. The Lease Payments will 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 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 the 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 Project pursuant to the Lease, and
the transfer of the Corporation's leasehold interest in the Project at the end of the Term thereof.
Budge . The City covenants to budget and appropriate all Lease Payments and Additional
Payments (to the extent the amount of such Additional Payment are known to the City at the time
its annual budget is proposed) due under the Lease 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 the Lease. The covenants on the part of the City shall be
deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each
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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 the Lease agreed to be carried out and performed by the
City.
Maintenance, Repairs and Replacement. Throughout the Lease Term, 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. 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, the Corporation agrees to provide only the Site. The City waives the benefits of
subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver does not limit
any of the rights of the City under the terms of the Lease.
Operating Costs. The City covenants and agrees that it will, during the Lease Term, pay
all of the costs incurred by it in operating, maintaining and using the Site, and under no
circumstances will the City look to the Corporation for any part of such costs.
Taxes, Assessments and Other Governmental Charges. The City shall 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
Project 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 Lease Term as and when the same become due.
Casualty Insurance. The City will procure and maintain, or cause to be procured and
maintained, throughout the Term of the 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. 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. The City is not required to obtain earthquake or flood
insurance with respect to the Site (unless such earthquake or flood insurance is available at
reasonable cost on the open market from reputable insurance companies). 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 not 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 the Lease 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 canceled by the issuer thereof without at least thirty (30) days' advance
written notice to the Corporation, the City and 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 carved by the City.
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Public Liability and Property _Damage Insurance. The City will 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 will be named as insureds, properly protecting and indemnifying the Corporation and the
Trustee in an amount not less than $1,000,000 for bodily 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 will 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 will be furnished to the Corporation.
In the event of a public liability occurrence, the Net Proceeds of liability insurance carried
pursuant to the Lease shall be applied toward the extinguishment or satisfaction of the liability
with respect to which such proceeds have been paid.
Worker's Compensation Insurance. The City will 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).
Rental Interruption Insurance. The City will maintain or cause to be maintained on or
prior to the date that the City files the certificate 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 casualty insurance required to be maintained by the Lease. Such insurance will be
obtained as of the date on which the City obtains possession of the Site. Such insurance may be
maintained as part of or in conjunction with any other rental interruption insurance carried by the
City. The net proceeds of such rental interruption insurance will 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.
Title Insurance. The City will obtain and, throughout the Lease Term, maintain or cause
to be maintained title insurance on the Site, in the form of a CLTA leasehold 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 will be paid to the Trustee, deposited in the
Net Proceeds Fund and applied as provided in the Lease.
Blanket Insurance Policie§ and Self - Insurance. The City may satisfy any of the insurance
requirements set forth in the Lease by using blanket insurance policies provided that the City
complies with each and all of the requirements and specifications of the Lease.
Subject to the provisions of the Lease, the City may modify the 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 upon 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 is being replaced.
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Option to Prepay Lease Payments. Subject to the terms of the Lease, the City will have
the option to prepay in whole or in part, the principal amount of Lease Payments relating to the
Certificates in the amounts, on the dates and at the prepayment prices provided in the Trust
Agreement.
Assignment and Subleasing. The City may not assign its rights under the Lease nor
sublease all or a portion of the Site unless the City receives an opinion of Special Counsel stating
that such assignment or sublease 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
the Lease. In the event that the Lease is assigned or subleased by the City, the obligation to make
Lease Payments will remain the obligation of the City.
Events of Default. The following constitute an "event of default" under the Lease:
(a) Lease Payment Default. Failure by the City to pay any Lease Payment
required to be paid 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 or otherwise
with respect to the Lease or in the Trust Agreement or in the Site Lease, other than as
referred to in clause (a) above, 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 1/o) 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 the 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.
Remedies on Default. Whenever any event of default 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 the Lease; provided, however, that notwithstanding
anything in the Lease 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, 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 the Trust Agreement.
(a) No Termination: Repossession and Re -Lease on Behalf of City. In the
event the Corporation does not elect to terminate the Lease in the manner hereinafter
provided for in subparagraph (b) below, the Corporation may, with the consent of the
City, which consent is 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 the 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.
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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 for the payment of all Lease Payments and
Additional Payments and the performance of all conditions contained in the Lease 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 the Lease, but said Lease Payments,
deficiency, or both, shall be payable only at the same time and in the same manner as
provided for the payment of Lease Payments, 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 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, for the account of and at the expense of the City, and the
City 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 waives any and all claims for damage caused or which may be caused by the
Corporation in repossessing the Site 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 the 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 the Lease, and agrees that no acts of the Corporation in effecting
such re- leasing shall constitute a surrender or termination of the 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 the 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- teasing 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 the Lease by the Corporation at its option and in the manner provided in the Lease 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 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 provisions 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 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
14
to recover possession of the Site shall of itself operate to terminate the Lease, and no
termination of the 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 the Lease.
The City covenants and agrees that no surrender of the Site for the remainder of the Term
of the Lease or any termination of the 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
thereto, except only in the manner expressly provided.
(e) Opinion of Special Counsel. The re- leasing of the Site shall be subject 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.
Abatement of Lease Payments in the Event of Loss of Use. 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 a substantial interference with the use and possession of such item or portion of the Site
by the City. The amount of such abatement shall be determined by the City so that the resulting
Lease Payments represent fair market rental value for the use and possession of the 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, or in the Lease Payment Fund, or from other special
fund sources of money, including without limitation, proceeds of rental interruption insurance,
shall be applied to pay the Lease Payments.
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 under the Lease constituting indebtedness of the City in contravention of the Constitution
and laws of the State.
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 the Lease or to indemnify the Corporation and its officers and directors.
Net- Net -Net Lease. The Lease is deemed and construed to be a "net-net-net lease" and
the City agrees that the Lease Payments will be an absolute net return to the Corporation, free and
clear of any expenses, charges or set -offs whatsoever, except as expressly provided in the Lease.
15
TRUST AGREEMENT
rustee. Pursuant to the Trust Agreement, the Corporation will assign the rights to
receive Lease Payments to the Trustee, as security for the Certificates, and the Corporation and
City will grant a security interest in all moneys held by the Trustee to the Trustee for the benefit
of the Owners of Certificates. The Trustee agrees to transfer proceeds of the Certificates for
deposit in the Escrow Fund to the City to provide funds to defease the Prior Certificates and to
pay Delivery Costs for the Project. The Trustee agrees to execute and deliver Certificates, each
evidencing proportionate interests in the Lease Payments and Prepayments made by the City
under the Project Lease.
Assienments. Pursuant to the Trust Agreement and the Assignment Agreement, the
Corporation assigns to the Trustee certain of its rights in the Site Lease and the 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
(together with the Corporation's rights to enforce payment of all Lease Payments, prepayments
thereof and such other amounts and exercise the Corporation's rights in an event of default).
Assignment of Revenues by the Corporation. The Corporation will, pursuant to the Trust
Agreement, assign and pledge any rents, revenues and receipts receivable by it under the Lease,
to the Trustee as security for payment of the principal of, interest and premium, if any, on the
Certificates and the City consents to such pledge and assignment.
Annlication of Proceeds and Other Moneys. The proceeds and other moneys received by
the Trustee from the original sale of the Certificates will be set aside or transferred by the Trustee
in or to the following respective funds and accounts in the following order of priority:
(1) "Lease Payment Fund." The Trustee will deposit $ (representing
accrued interest of $ and capitalized interest of $ ) in the Lease
Payment Fund.
(2) "Reserve Fund." The Trustee will deposit $ in the Reserve Fund.
(3) "Escrow Fund." The Trustee will transfer to the City the balance of the
proceeds to be held in the Escrow Fund.
Escrow Fund. The proceeds of the Certificates deposited in the Escrow Fund will be held
by the Trustee and applied as follows on the Delivery Date: (a) an amount equal to $
will be deposited with the Prior Trustee for application to the defeasance of the Prior Certificates
pursuant to the Escrow Agreement, and (b) an amount equal to $ will be retained
therein.
The moneys in the Escrow Fund not transferred to the Prior Trustee as described above
and applied to pay Delivery Costs from time to time upon receipt by the Trustee of a written
direction of the City identifying the payee and amount and certifying that such amount is a bona
fide Delivery Cost hereunder.
Any remaining balance in the Escrow Fund not used to pay Delivery Costs by October 1,
1998 needed for Escrow Fund purposes (but less the amount of any such retention) will be
transferred to the Trustee for deposit in the Lease Payment Fund.
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
16
shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited
therein, except only as provided in the Trust Agreement, and such moneys shall be used and
applied by the Trustee as hereinafter set forth.
There shall be deposited in the Lease Payment Fund all Lease Payments received by the
Trustee, and any, moneys received by the Trustee for deposit therein pursuant to the Lease
(regarding Lease Payments), the Trust Agreement (regarding unexpended Certificate proceeds),
and any other moneys required to be deposited therein pursuant to the Lease or pursuant to the
Trust Agreement, including pursuant to the Lease (regarding proceeds of rental interruption
insurance). 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 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.
Except as provided in the Trust Agreement, 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 of the Trust Agreement.
Reserve Fund. All moneys at any time on deposit in the Reserve Fund will 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 in the Trust Agreement.
The City agrees in the Trust Agreement 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 will be used to
increase the balance in the Reserve Fund to the required Reserve Requirement.
Any Reserve Replenishment Rent payable pursuant to the replenishment terms of the
Lease will be deposited in the Reserve Fund.
The Trustee will, 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.
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 due and
payable, the Trustee will 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 thereunder) 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
will notify the City of the amount withdrawn from the Reserve Fund. The City will either pay
Reserve Replenishment Rent if the requirements of the Lease can be met or certify to the Trustee
its inability to do so.
Net Proceeds Fund. The Trustee will disburse Net Proceeds for replacement or repair as
provided in the Lease only if it has received the certification and moneys, if any, required by the
Lease (and the Trustee will be absolutely protected in making any disbursements from the Net
Proceeds Fund in reliance upon the requisition described in the Lease), or transfer such proceeds
to the Prepayment Fund upon notification of the City Representative as provided in the Lease.
17
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 the Trust Agreement, the Trustee will pay any remaining moneys in the Net Proceeds
Fund to the City after payment of any amounts due to the Trustee pursuant to the Trust
Agreement.
Prepayment Fund. Moneys to be used for prepayment of the Certificates will 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.
Rebate Fund. All money at any time deposited in the Rebate Fund will 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 are governed by the Trust
Agreement and by the Tax Certificate. The Trustee will be deemed conclusively to have
complied with such provisions if it follows the directions of the City, and will have no liability or
responsibility to enforce compliance by the City with the terms of the Tax Certificate.
Investment of Moneys in Funds
The moneys and investments held by the Treasurer and the Trustee under the Trust
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 specified, and such moneys, and any income or interest earned thereon, will be
expended only as provided in the Trust Agreement and will 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. The City Representative will 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 will make investments solely
in those Permitted Investments set forth in (D) of the definition thereof. See "APPENDIX A—
DEFINITIONS." Such investments, if registrable, will be registered in the name of the Trustee
for the benefit of the Owners and held by the Trustee. The Trustee may purchase or sell to itself
or any affiliate, as principal or agent, investments authorized by the Trust Agreement. The
Trustee may act as purchaser or agent in the making or disposing of any investment. Except as
otherwise provided in the Trust Agreement, the Trustee will not be responsible or liable for any
loss suffered in connection with any investment of funds made by it in accordance with the Trust
Agreement. Any income, profit or loss on the investment of moneys held by the Trustee or the
Treasurer under the Trust Agreement will be credited to the respective Fund (or account within a
fund, if applicable) for which it is held, except as otherwise provided. The Trustee will 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 will keep accurate records of all funds administered by
it and of all Certificates paid and discharged.
Subject to the provisions of the Trust Agreement, for the purpose of determining the
amount in any fiord, all Permitted Investments credited to such fund will be valued at market
price, exclusive of accrued interest. With respect to all funds, valuation will occur annually on or
before May 1, except in the event of a withdrawal from the Reserve Fund, whereupon it will be
valued immediately after such withdrawal pursuant to being replenished as provided in the Lease.
Subject to the provisions of the Trust Agreement and the Tax Certificate, the Trustee will sell or
present for prepayment, any Permitted Investment so purchased by the Trustee whenever it
becomes 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.
W
Events of Default
An Event of Default under the Lease constitutes an Event of Default under the Trust
Agreement (Please refer to "PROJECT LEASE - Events of Default." herein).
Remedies. If an Event of Default happens, 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 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.
All moneys received by the Trustee pursuant to any right given or action taken under the
provisions of the Trust Agreement or the Lease, will 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 maturity of such installment, and, if the amount available
is not 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 have become due, whether at maturity or by all 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.
Institution of Legal Proceedings. If one or more Events of Default happen and are
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 in the Trust Agreement or in the Lease, or in aid of the execution of any
power granted in the Trust Agreement, 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.
Remedies Not Exclusive. No remedy conferred upon or reserved to the Trustee or to the
Owners is intended to be exclusive of any other remedy, and every such remedy will be
cumulative and will be in addition to every other remedy given hereunder or now or hereafter
existing, at law or in equity or by statute or otherwise.
19
Power of Trustee to Control Proceedings. In the event that the Trustee, upon the
happening of an Event of Default, takes any action, by judicial proceedings or otherwise,
pursuant to its duties, 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 will 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 opposing
such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and
if such Owners continue to indemnify the Trustee to its satisfaction.
Amendments. The Trust Agreement and the rights and obligations of the Owners, and the
Lease and the rights and obligations of the parties thereto, may be modified or amended at any
time by a supplemental agreement which will 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 the Trust Agreement 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.
The Trust 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 and 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 (2) to cure,
correct or supplement any ambiguous or defective provision contained in the Trust Agreement or
the Lease which shall not materially adversely affect the interests of the Owners; or (3) in regard
to matters arising in the Trust Agreement or the Lease, as the parties may deem necessary or
desirable and which, in the opinion of the Trustee shall not adversely affect the interests of the
Owners. Any such supplemental agreement shall become effective upon execution and delivery
by the parties.
The Trust Agreement or the Lease may be amended by supplemental agreement in the
event the consent of the Owners is required. A copy of such supplemental agreement, together
with a request to the Owners for their consent thereto, will 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, 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
provided in the Trust Agreement.
Such supplemental agreement will not become effective unless there is 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) and notices shall have
been mailed as provided in the Trust Agreement. Each such consent will be effective only if
accompanied by proof of ownership of the Certificates for which such consent is given. Any
such consent will 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 provided for has been mailed.
911
After the Owners of the required percentage of Certificates have filed their consents to
such supplemental agreement, the Trustee will mail a notice to the Owners of the Certificates 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 the Trust Agreement (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 to be filed with the Trustee, will be proof of the matters therein
stated until the contrary is provided.
T , 1 # I y
Certificates Not General Obligations
The obligation of the City to make 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. Neither the Certificates nor the obligation of the
City to make Lease Payments under the Lease constitutes a debt or indebtedness of the City, the
Corporation, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory debt limitation or restriction.
Constitutional Limitations on Taxes and E.xpenditures
Article XIII A of the California Constitution limits the taxing powers of California public
agencies. Article XIII A provides that the maximum ad valorem tax on real property cannot
exceed 1% of the "full cash value" which is defined as "the county assessor's valuation of real
property as shown on the 1975 -76 tax bill under 'full cash value' or, thereafter, the appraised
value of real property when purchased, newly constructed, or a change in ownership has occurred
after the 1975 assessment," subject to exceptions for certain circumstances of transfer or
reconstruction. The "full cash value" is subject to annual adjustment to reflect increases not to
exceed 2% per year, or decreases in the consumer price index or comparable local data, or to
reflect reduction in property value caused by damage, destruction or other factors.
Article XIII A requires a vote of two- thirds of the qualified electorate to impose special
taxes, while totally precluding the imposition of any additional ad valorem sales or transaction
tax on real property. As recently amended, Article XIII A exempts from the 1% tax limitation
any taxes above the level required to any debt service on certain voter - approved general
obligation bonds. In addition, Article XIII A requires the approval of two- thirds of all members
of the State Legislature to change any State laws resulting in increased tax revenues.
The California Supreme Court has upheld the general validity of Article XIIIA against a
series of challenges which attacked the initiative which, among other things, enacted Article
XIIIA as a whole. The Court found that it was premature to rule on a claim that Article XIIIA
impermissibly interfered with contracts in violation of the U.S. Constitution, stating that such a
challenge must come when a specific contract or obligation is impaired.
In early 1990, the United States Supreme Court struck down as a violation of equal
protection certain property tax assessment practices in West Virginia, which had resulted in
vastly different assessments of similar properties. Since Article XIIIA of the California
Constitution provides that property may only be reassessed up to 2% per year, except upon
certain changes of ownership or new construction, recent purchasers may pay substantially higher
property taxes than long -time owners of comparable property in a community. The United States
Supreme Court in the West Virginia case expressly declined to comment in any way on the
constitutionality of Article XIIIA. Based on this decision, however, property owners in
California brought three suits challenging the acquisition value assessment provision of Article
21
XIIIA. Two eases include residential property, and one case involves commercial property. In
all three cases, State trial and appellate courts have upheld the constitutionality of Article XIIIA's
assessment riles and concluded that the West Virginia case did not apply to California's laws.
However, the United States Supreme Court has recently heard the appeal in Nordlinaer v. Hahn
(225 Cal. App. 3d. 1259), one of the challenges relating to residential property. Neither the
Corporation nor the City can predict how the Supreme Court will resolve the challenges to
Article XIIIA. If the plaintiffs' contentions are upheld, it is possible that property assessments
will be substantially reduced for those who purchased property after Article XIIIA was enacted.
Neither the Corporation nor the City can predict the ultimate effect any decision holding the
State's present system of property tax assessment unconstitutional would have on general fund
revenues or on the City's ability to meet its obligations under the Lease.
Article XIII B limits the annual appropriations of the State and of any city, county, school
district, authority or other political subdivision of the State to the level of appropriations for the
prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by
the government entity. This limit is popularly known as the "Gams. Limit," named after the
author and chief proponent of the measure, The "base year" for establishing such appropriation
limit is the 1978 -79 fiscal year and the limit is to be adjusted annually to reflect changes in
population, consumer price index and certain increases or decreases in the cost of services
provided by these public agencies.
In the June, 1990 election, the voters of the State approved Proposition 111 amending the
method of calculation of State and local appropriations limits. Proposition 111 made several
changes to Article XIII B, two of which were reflected in the County's 1990 -91 computation of
its appropriations limit. First, the term "change in the cost of living" was redefined as the change
in the California per capita personal income ( "CPCPI ") from the preceding year. Previously the
lower of the CPCPI or the United States Consumer Price Index was recomputed by adjusting the
1986 -87 limit by the CPCPI for the three subsequent years. Next, Proposition II I excluded
appropriations for "qualified capital outlay for fiscal 1990 -91 as defined by the legislature" from
proceeds of taxes.
Appropriations subject to Article XIII B include generally the proceeds of taxes levied by
the State or other entity of local government, exclusive of certain State subventions, refunds of
taxes, benefit payments from retirement, unemployment insurance and disability insurance funds.
"Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds to an entity
of government from (i) regulatory licenses, user charges, and user fees (but only to the extent
such proceeds exceed the cost of providing the service or regulation), and (ii) the investment of
tax revenues. Article XIII B includes a requirement that if an entity's revenues in any year exceed
the amounts permitted to be spent, the excess would have to be returned by revising tax rates or
fee schedules over the subsequent two years.
If the City is at or over its Gann Limit, the City may be effectively precluded from
utilizing options such as a property tax or utility users tax, because such tax revenues are not
exempt from the Gann limit. General obligation bonds, in which the annual debt payments or
increased tax revenues are exempt from the Gann limit, could provide a financing alternative, but
would require two- thirds voter approval.
Both Article XIII A and XIII B were adopted as measures that qualified for the ballot
pursuant to California's constitutional initiative process. From time to time other initiative
measures could be adopted, affecting the ability of the City to increase revenues and to increase
appropriations.
22
No Liability of the Corporation to the Owners
Except as expressly provided in the Trust Agreement, the Corporation, as lessor, will not
have any obligation or liability to the Owners of the Certificates with respect to the payment
when due of the Lease Payments by the City, or with respect to the observance or performance by
the City of other agreements, conditions, covenants and terms required to be observed or
performed by the City under the Lease or under the Trust Agreement, with respect to the
performance by the Trustee of any obligation required to be performed by it under the Trust
Agreement.
Limited Recourse on Default
If the City should default on its obligation to make Lease Payments with respect to the
Project, the Trustee, as assignee of the Corporation, may, subject to the Site Lease, re -enter and
take possession of the Project pursuant to the Lease and hold the City liable for all Lease
Payments on an annual basis. Such re -entry and re- letting will not effect a waiver or release of
the Lease. Alternatively, the Trustee may, subject to the Site Lease, terminate the Lease and
proceed against the City to recover damages pursuant to the terms of the Lease. If the City
defaults on its obligations to make Lease Payments, the Trustee may, subject to the Site Lease,
have limited ability to re -let the Project so as to preserve the tax exempt nature of the interest
component of the Lease Payments and Certificates. In any event, the Trustee may have limited
ability to re -let the Project due to the nature of the Project itself and due to the essential nature of
the Project to the City it is not certain whether a court would permit the exercise of the remedies
of repossession and re- letting with respect thereto.
Any suit for money damages would be subject to Iimitations on legal remedies against
cities in the State of California, including a limitation on enforcement or judgments against funds
needed to serve the public welfare and interest.
Abatement
The amount of Lease Payments will 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 a substantial interference with the use and possession of such item or
portion of the Site by the City. The amount of such abatement will 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
will 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, or in the Lease Payment
Fund, or from other special fund sources of money, including without limitation, proceeds of
rental interruption insurance, shall be applied to pay the Lease Payments.
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.
23
Loss of Tax Exemption
As discussed under the caption "TAX EXEMPTION " herein, the interest due with respect
to the Certificates could become includable in gross income for purposes of federal income
taxation retroactive to the date such Certificates were issued, as a result of acts or omissions of
the City or the Corporation in violation of its covenants in the Trust Agreement and the Lease.
Should such an event of taxability occur, the Certificates are not subject to special prepayment
and will remain Outstanding until maturity or until prepaid under one of the redemption
provisions contained in the Trust Agreement.
The Newport Beach Public Facilities Corporation was incorporated on March 9, 1992,
and is a nonprofit public benefit corporation duly organized and existing under the Nonprofit
Public Benefit Corporation Law for the purpose of benefiting and carrying out the purposes of the
City of Newport Beach, by providing for the planning, development, acquisition, construction,
improvement, extension, repair, renovation and/or financing of public buildings, works, projects,
facilities, furnishings and equipment for the benefit or use of the City.
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport
Beach, California, Special Counsel, under existing statutes, regulations, rulings and judicial
decisions, the portion of each Lease Payment constituting interest (and original issue discount
with respect to the Certificates) is excluded from gross income for federal income tax purposes,
and is not an item of tax preference for purposes of calculating the federal alternative minimum
tax imposed on individuals and corporations. In the further opinion of Special Counsel, the
portion of each Lease Payment constituting interest (and original issue discount with respect to
the Certificates) is exempt from State of California personal income tax. Special Counsel notes
that, with respect to corporations, the portion of each Lease Payment constituting interest (and
original issue discount with respect to the Certificates) may be included as an adjustment in the
calculation of alternative minimum taxable income which may affect the alternative minimum tax
liability of such corporations.
Special Counsel's opinion as to the exclusion from gross income of the portion of each
Lease Payment constituting interest (and original issue discount with respect to the Certificates)
is based upon certain representations of fact and certifications made by the City and others and is
subject to the condition that the City complies with all requirements of the Internal Revenue Code
of 1986, , as amended (the "Code "), that must be satisfied subsequent to the execution and delivery
of the Certificates to assure that the portion of each lease Payment constituting interest (and
original issue discount with respect to the Certificates) will not become includable in gross
income for federal income tax purposes. Failure to comply with such requirements of the Code
might cause the portion of each Lease Payment constituting interest (and original issue discount
with respect to the Certificates) to be included in gross income for federal income tax purposes
retroactive to the date of execution and delivery of the Certificates. The City has covenanted to
comply with all such requirements.
The difference, if any, between the issue price with respect to a Certificate (the first price
at which a substantial amount of the Certificates with respect to a maturity are to be sold to the
public) and the stated redemption price at maturity with respect to such Certificate constitutes
original issue discount. Original issue discount accrues wider a constant yield method, and
original issue discount will accrue to a Certificate Owner before receipt of cash attributable to
such excludable income. The amount of original issue discount deemed received by a Certificate
Owner will increase the Certificate Owner's basis in the applicable Certificate.
24
Special Counsel's opinion may be affected by actions taken (or not taken) or events
occurring (or not occurring) after the date hereof Special Counsel has not undertaken to
determine or to inform any person, whether any such actions or events are taken or do occur. The
Trust Agreement and the Tax Certificate relating to the Certificates permit certain actions to be
taken or to be omitted if a favorable opinion of Special Counsel is provided with respect thereto.
Special Counsel expresses no opinion as to the exclusion from gross income of the portion of
each Lease Payment constituting interest (and original issue discount with respect to the
Certificates) for federal income tax purposes if any such action is taken or omitted based upon the
advice of counsel other than Stradling Yocca Carlson & Rauth.
Although Special Counsel has rendered an opinion that the portion of each Lease Payment
constituting interest (and original issue discount with respect to the Certificates) is excluded from
gross income for federal income tax purposes provided that the City continues to comply with
certain requirements of the Code, the ownership of the Certificates and the accrual or receipt of
interest (and original issue discount with respect to the Certificates) with respect to the
Certificates may otherwise affect the tax liability of certain persons. Special Counsel expresses
no opinion regarding any such tax consequences. Accordingly, before purchasing any of the
Certificates, all potential purchasers should consult their tax advisors with respect to collateral tax
consequences relating to the Certificates.
Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California, Special Counsel, will render an opinion with respect to the validity and enforceability
of the Lease and the Trust Agreement. Copies of such approving opinion will be available at the
time of delivery of the Certificates and will be printed on the Certificates. In addition, certain
legal matters will be passed upon for the Corporation by Stradling Yocca Carlson & Rauth, a
Professional Corporation and for the Trustee by its counsel.
There is no action, suit or proceeding known to be pending or threatened, restraining or
enjoining the execution or delivery of the Certificates, the Lease or the Trust Agreement or in any
way contesting or affecting the validity of the foregoing or any proceeding of the City taken with
respect to any of the foregoing.
The Certificates have been sold by the City to Miller & Schroeder Financial, Inc, pursuant
to a Purchase Contract dated , 1998 at a purchase price of $ . The
Underwriter intends to offer the Certificates to the public initially at the prices or yields set forth
on the cover page of this Official Statement, plus accrued interest from June 1, 1998, which
prices or yields may subsequently change without any requirement of prior notice.
The Underwriter may join with dealers and other underwriters in offering the Certificates
to the public. The underwriter may offer and sell Certificates to certain dealers (including dealers
depositing Certificates into investment trusts) at prices lower than the public offering prices, and
such dealers may reallow any such discounts on sales to other dealers.
In reoffering Certificates to the public, the Underwriter may overallocate or effect
transactions which stabilize or maintain the market prices for Certificates at levels above those
which might otherwise prevail. Such stabilization, if commenced, may be discontinued at any
time,
25
r t t t t
Upon delivery of the Certificates, McGladrey & Pullen, LLP, Minneapolis, Minnesota, a
firm of independent public accounts, will deliver a report on the mathematical accuracy of certain
computations based upon certain information and assertions provided to them by the Underwriter
relating to (a) the adequacy of the maturing principal of and interest earned on the Federal
Securities to pay all of the principal and the prepayment premium represented by and interest due
with respect to the Refunded Certificates as such principal, prepayment premium and interest
becomes due and payable, and (b) the computations of yield of the Certificates and the Federal
Securities which support Special Counsel's opinion that the portion of each Lease Payment due
under the Lease and designated as and comprising interest is not includable in gross income for
federal income tax purposes.
The City has covenanted in a Continuing Disclosure Agreement for the benefit of the
holders and beneficial owners of the Certificates to provide certain financial information and
operating data relating to the City by not later than two hundred ten (210) days following the end
of the City's Fiscal Year (currently its fiscal Year ends on June 30) (the "Annual Report"),
commending with the report for Fiscal Year ending June 30, 1998, and to provide notices of the
occurrence of certain enumerated events, if material. The Annual Report and the notices of
material events will be filed by the City with each Nationally Recognized Municipal Securities
Information Repository. The specific nature of the information to be contained in the annual
Report and the notice of material events is set forth in "APPENDIX C —FORM OF
CONTINUING DISCLOSURE AGREEMENT" hereto. These covenants have been made in
order to assist the Underwriter in complying with Rule 15c2- 12(b)(5) promulgated under the
Securities Exchange Act of 1934.
[INFORMATION TO FOLLOW]
Standard & Poor's Ratings Group and Moody's Investors Service, Inc. have assigned their
respective municipal ratings of "AAA" and "Aaa" to this issue of Certificates with the
understanding that upon delivery of the Certificates, a policy insuring the payment when due of
the principal of and interest installments on the Certificates will be issued by
The ratings reflect only the views of the respective rating organization, and explanation of the
significance of the ratings may be obtained from Standard & Poor's Ratings Group, 25 Broadway,
New York, New York 10004 (212) 208 -8000 or Moody's Investors Service, Inc., 99 Church
Street, New York, New York 10007, (212) 553 -0300. There is no assurance that the ratings will
continue for any given period of time or that it will not be revised downward or withdrawn
entirely by the respective rating agency, if in the judgment of the rating agency circumstances so
warrant. Any such downward revision or withdrawal of the ratings may have an adverse effect
on the market price of the Certificates.
26
References are made herein to certain documents and reports which are brief summaries
thereof which do not purport to be complete or definitive and reference is made to such
documents and reports for full and complete statements of the contents thereof.
Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. This Official
Statement is not to be construed as a contract or agreement among the City and the purchasers or
Owners of any of the Certificates.
City.
The execution and delivery of this Official Statement has been duly authorized by the
27
CITY OF NEWPORT BEACH
City Manager
i • Y
The following information concerning the City of Newport Beach and surrounding areas
is included only for the purpose ofsupplying general information regarding the community.
General Description
The City of Newport Beach was incorporated September 1, 1906. The Council- Manager
form of government was established by Municipal Charter on January 7, 1955. The City is
located in Orange County and is 75 miles north of San Diego, 15 miles south of Long Beach and
50 miles south of Los Angeles.
The tourist population is high throughout the year. Its harbor, recreation and special
attraction draws many to the City.
Population
The City's population, as of January 1, 1997 was 70,000 according to the California
Demographic Research Department. A historical summary of the City's population is reflected
below, which shows population trends for Newport Beach.
City of Newport Beach
Population
1991 ......................... 67,000
1992 .........................
67,600
1993 .........................
68,200
1994 .........................
68,600
1995 .........................
68,900
1996 .........................
69,200
1997 .........................
70,000
Source: California Demographic Research Department.
Commerce
The number of establishments selling merchandise subject to sales tax and the valuation
of taxable transactions is presented in the following table.
City of Newport Beach
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
Source: State Board of Equalization, California.
FT
Retail Stores
Total All Outlets
Taxable
Value of
Taxable
Value of
Year
Permits
Transactions
Permits
Transactions
1992
1,319
664,322,000
4,328
875,785,000
1993 ,
1,361
681,135,000
4,394
918,021,000
1994
1,368
739,506,000
4,296
1,021,939,000
1995
1,425
801,862,000
4,389
1,073,186,000
1996
1,455
878,593,000
4,287
1,187,127,000
Source: State Board of Equalization, California.
FT
Financial Information
Management of the City is responsible for establishing and maintaining an internal
control structure designed to ensure that the City's assets are protected from loss, theft, or
misuses; and to ensure that adequate accounting data are compiled to allow for the preparation of
financial statements in conformity with generally accepted accounting principles. The internal
control structure is designed to provide reasonable, but not absolute, assurance that these
objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control
should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits
requires estimates and judgments by management.
Revenues
The following schedule (expressed in thousands) presents a summary of General Fund,
Special Revenue Fund, Debt Service Fund and Capital Projects Fund revenues for the fiscal year
ended June 30, 1997 and the percentage of increases and decreases in relation to revenues during
the previous fiscal year, as well as the percentage increases and decreases for the six year period
beginning with fiscal year 1990 -91.
Fiscal Year 1996 -97 Governmental Revenues
Percentage Cumulative
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
29
Change
Change
Amount
Percent
From FY
Since FY
Revenues
(000)
of Total
1995 -96
1990 -91
Taxes
$44,524
48.98%
3.90%
9.99%
Licenses, Fees and Permits
4,082
4.49
33.75
45.37
Intergovernmental
11,871
13.06
42.75
7.63
Charges for Services
7,185
7.90
14.45
50.03
Fines and Forfeitures
2,529
2.78
-11.45
-18.81
Use of Money and Property
10,498
11.55
-4.56
4.98
Miscellaneous
10,208
11.23
22.40
495.22
Total
$90,897
100.00%
9.92%0
1995%
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
29
Expenditures
The following schedule (expressed in thousands) presents a summary of general
governmental expenditures for the fiscal year ended June 30, 1997 and the dollar value of the
increase or decrease during the past six years.
Fiscal Year 1996 -97 Governmental Expenditures
Percent Change
of From FY
Total 1995 -96
6.42% $ 230
40.36
17.55
3.77
7.46
23.43
i.01
100.00 °la
1,076
722
378
699
9,405
-178
$12.302
Change
Since FY
1990 -91
-$1,628
8,735
1,045
356
-698
1,198
891
IM —00
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
City's Assessed Valuation
The City's assessed valuation for the last ten fiscal years are as follows:
Assessed and Estimated Actual Value of Taxable Property
(Last Ten Fiscal Years)
Fiscal
Current
Public
Amount
Expenditures
(000)
General Government
$ 5,673
Public Safety
35,647
Public Works
15,502
Community Development
3,330
Culture and Recreation
6,585
Capital Expenditures
20,697
Debt Service
891
Total
88 325
Percent Change
of From FY
Total 1995 -96
6.42% $ 230
40.36
17.55
3.77
7.46
23.43
i.01
100.00 °la
1,076
722
378
699
9,405
-178
$12.302
Change
Since FY
1990 -91
-$1,628
8,735
1,045
356
-698
1,198
891
IM —00
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
City's Assessed Valuation
The City's assessed valuation for the last ten fiscal years are as follows:
Assessed and Estimated Actual Value of Taxable Property
(Last Ten Fiscal Years)
Fiscal
Secured
Public
Unsecured
Year
Valuation
Utility
Valuation
1987 -1988
$ 7,772,854,712
$80,739,100
S 841,558,697
1988 -1989
8,463,563,058
575,220(l)
689,901,568
1989 -1.990
9,120,361,600
575,220(l)
776,287,650
1990 -1991
10,013,611,946
575,220(l)
894,906,739
1991 -1992
10,583,498,762
354,820(l)
1,010,317,328
1992 -1.993
11,182,809,052
354,820(l)
893,375,850
1993 -1994
11,179,271,032
354,820(l)
865,424,090
1994 -1995
11,178,202,789
354,820(l)
686,344,530
1995 -1996
11,078,301,482
354,820(l)
725,943,222
1996 -1997
11,154,286,162
354,820(l)
754,892,821
Total
Assessed & Estimated
Valuation
8,695,152,509
9,154,039,846
9,897,224,470
10,909,093,905
11,594,170,910
12,076,539,722
12,045,049,942
11,864,902,139
11,804,599,524
11,909,533,803
(1) Effective fiscal year 1988 -89, public utility values have decreased due to AB2890 and AB454
transferring the public utility values to a county -wide tax rate area.
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
30
Secured Property Tax Levies and Collections
The City's secured property tax levies and collections for the last ten fiscal years are as
follows:
Secured Property Tax Levies and Collections
(Last Ten Fiscal Years)
Total
Current
Collections
Total
Fiscal
Current
Year
Levy
1987 -1988
$15,942,564
1988 -1989
17,308,591
1989 -1990
18,962,055
1990 -1991
21,031,117
1991 -1992
21,516,647
1992 -1993
18,859,889(1)
1993 -1994
17,870,028 (1)
1994 -1995
17,730,237 (1)
1995 -1996
17,843,233 (1)
1.996- 1997
20,563,561 (1)
Total
Current
Collections
% of
Levy
Collected
Delinquent
Tax
Collections
Total
Collections
% of Total
Tax Collections
To Total Levy
$15,311,519
96.04%
$493,507
$15,805,026
99.14%
16,678,689
96.36
432,523
17,111,212
98.86
18,119,326
95.56
392,912
18,512,238
97.63
19,863,098
94.45
433,571
20,296,669
9651
21,255,177
98.78
504,000
21,759,177
101.13
18,508,590
98.14
536,760
19,396,649
102.85
17,131,159
95.87
526,025
17,657,184
98.81
17,105,142 (2)
96.47
409,355(2)
17,514,497
98.78
17,432,840
97.70
368,913
17,801,753
99.77
20,096,688
97.73
897,670
20,994,358
102.09
(1) Effective FY92/93- FY95/96, Orange County reduced Secured Property Tax Levy as a result
of the State Budget Process.
(2) Funds were withheld due to the Orange County Bankruptcy.
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
Principal Taxpayers
The City's largest local secured taxpayers for fiscal year 1996 -97 are as follows:
City of Newport Beach
Principal Taxpayers
June 30,1997
Property Tax
(listed alphabetically)
Property Owner
Bayview Trust
Downey Savings & Loan
HMH Properties, Inc.
Hughes Aircraft Company
Irvine Company
Irvine Apartment Communities
Kell Center
Pacific Mutual Life Insurance Company
Park Newport Land Ltd.
Rockwell International Corporation
Total
Type of Business
1996 -97
Assessed
Valuation
Percent
of Total
Financial
$ 32,627,700
0.19%
Financial
42,056,337
0.19
Real Estate
91,411,825
0.20
Aerospace
45,116,550
0.21
Real Estate
640,564,159
0.20
Real Estate
166,737,098
0.15
Office Buildings
35,629,377
0.21
Life Insurance
30,131,237
0.20
Real Estate
63,308,620
0.20
Aerospace
467,372,034
107
$1,615,954,937
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
31
Employment and Industry
The City of Newport Beach is a part of the Orange County Labor Market Area. The
distribution of employment in this area is as follows:
Estimated Number of Wage and Salary Workers By Industry
Anaheim -Santa Ana Metropolitan Statistical Area
(Orange County)
Annual Average 1994 -1997
(in thousands)
Industry 1994 1995 1996 1997
Agriculture (1)
7.0
6.3
6.8
6.9
Mining
.9
.9
.9
.9
Construction (2)
47.3
49.8
52.1
58.0
Manufacturing:
nondurable goods
69.5
71.0
72.1
73.8
durable goods
135.5
134.5
139.7
148.1
Transportation and public
utilities
39.4
42.4
42.6
44.9
Wholesale trade
79.3
84.5
89.4
93.8
Retail trade
203.4
207.1
207.8
214.4
Finance, insurance and
real estate
91.8
84.9
85.6
91.5
Services
330.6
348.6
364.1
370.8
Government (3)
129.2
128.2
129.9
133.2
Total
1,133.8
1,158.0
1,191.0
1,236.2
Total Civilian Labor Force
1,335.0
1,331.5
1,343.9
1,379.3
Total Civilian Unemployment
76.5
67.7
55.2
45.2
Unemployment Rate
5.7%
5.10/
4.1%
3.3%
(1) Does not include farmers and unpaid family workers.
(2) Includes employees of construction contractors and operative builders; does not include force
account or government construction workers.
(3) Includes all civilian employees of federal, state and local governments regardless of the
activity in which the employee is engaged.
Source: State of California, Employment Development Department, Employment Data and
Research.
32
Construction Activity
The following table is
a five year summary of the valuation of building permits issued in
the City.
City of Newport Beach
Building Permit Valuation
(Valuation in Thousands of Dollars)
1993 1994 1995
1996
1997
Residential Valuation
New single-dwelling
$13,798 $13,583 $16,919
$ 52,207
$65,260
New multi- dwelling
2,322 2,893 3,624
61,987
27,065
Additions, alterations
19,468 19.074 18,912
0
0
Total Residential
$35,588
ILL4W 95
92 325
No. of New Dwelling Units
Single- dwelling
46 47 60
205
222
Multi- dwelling
24 24 28
566
244
Total Units
70 71 88
771
466
Source: "California Building Permit Activity" Economic Sciences Corporation.
[t3G3
Schedule of Direct and Overlapping Bonded Debt
The City's direct and overlapping bonded indebtedness is as follows:
Schedule of Direct and Overlapping Bonded Debt
June 30,1997
1996 -97 Assessed Valuation:
City of Newport Beach 1915 Act Bonds
City of Newport Beach Special Improvement District No. 95 -1
Total Direct Bonded Debt
Orange County Improvement Bonds
Metropolitan Water District
Irvine Ranch Water District Improvement District #206
Irvine Ranch Water District Improvement District #106
Irvine Ranch Water District Improvement District #161
Irvine Ranch Water District Improvement District #261
Irvine Ranch Water District Improvement District #140
Irvine Ranch Water District Improvement District #240
Total Overlapping Bonded Debt
Ratios to Assessed Valuation:
Direct Debt
Total Gross Debt
0.16%
0.25%
12 174 915 378
Percent
Applicable Debt 6/30/97
100.000% $ 3,204,506
100.000 16,075,000
$19,279,506
6.873%
$ 13,745
1.384
8,034,174
19.717
2,285,351
8.292
1,197,636
9.140
44,694
18.490
158,648
0.014
3,855
0.014
5,973
$11,744,076
$31,023x582
(1) Reflects general obligation debt being repaid through voter - approved indebtedness. It
excludes revenue, mortgage revenue, tax allocation bonds, interim financing obligations,
non- bonded capital lease obligations and certificates of participation.
Source: City of Newport Beach, Comprehensive Annual Financial Report, Year Ended June 30,
1997.
34
Utilities
Water is supplied by the City of Newport Beach. Southern California Gas Company
supplies natural gas and electric power is provided by the Southern California Edison Company.
Telephone service is provided by the Pacific Bell Telephone Company.
Community Service Facilities
The City.of Newport Beach provides police and fire protection, trash collection and
library service. Hoag Memorial Hospital is located with the City with 5 general, medical and
dental clinics also available.
The City of Newport Beach has 18 elementary schools, 4 high schools and a combination
of 15 community and 4 -year Colleges, universities and vocational schools all located within a 15
mile radius.
Cultural and recreational facilities include 25 churches, 4 libraries, 28 parks, 5 post
offices, 2 local and regional newspapers, 1 local radio station, yacht clubs, gardens, and museums
located within convenient driving distance.
Transportation
Four main freeways access the City - Interstate 405 and State Highways 55, 73 and 1
(Pacific Coast Highway), The John Wayne Orange County Airport is the closest airway service
with Greyhound bus service and Amtrak Train station to serve as the ground transportation needs.
Climate
The City of Newport Beach is located by the Pacific Ocean with a winter climate average
of 57.3 degrees and a summer climate average of 74.01 degrees. Average rainfall is 11.09 inches
annually.
35
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I: a»1y17 :t1
r
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The following are definitions of certain terms contained in the Trust Agreement and used
in this Official Statement.
Additional Payments means Additional Payments as defined in the Lease.
Assignment Agreement means the Assignment Agreement dated June 1, 1998 by and
between the Trustee and the Corporation, and any duly authorized and executed amendments
thereto.
Business Dav 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 or Certificates means the Refunding Certificates of Participation Series 1998
(Central Library Building Project) to be executed and delivered pursuant to the Trust Agreement.
Certificate Insurer means
Certificates Payment Date means June 1 and December I of each year, commencing
December 1, 1998, so long as any Certificates remain outstanding.
Certificate Year means each successive one -year period ending on a date selected by the
City.
Qi!y means the 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 the Trust Agreement.
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 Chairman, President, Vice President, Chief
Financial Officer 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 administrative 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.
FEW
DTC means The Depository Trust Company, New York, New York, and its successors
and assigns.
Escrow Agreement means the Escrow Deposit and Trust Agreement dated June 1, 1998
between the City, the Trustee and the Prior Trustee providing for the defeasance of the Prior
Certificates.
Fiscal Year means the fiscal year of the City commencing July 1 and ending on the next
following June 30.
Independent Counsel means any 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.
Information Services means Financial Information, Inc.'s "Daily Called Bond Service,"
30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07202, Attention: Editor; Kenny
Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York
10006; Moody's Investors Service "Municipal and Government, " 5250 77 Center Drive,
Suite 150, Charlotte, North Carolina 28217, Attention: Called Bond Department; Standard &
Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York
10004; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other services providing information with respect
to the redemption of bonds as the city may designate in a Request of the City delivered to the
Trustee.
Lease means the Project Lease.
Lease_ P^ayment or Lease Payments means any payment or payments required to be paid
by the City to the Corporation pursuant to the Lease, including payments set forth in the Trust
Agreement.
Lease Payment Date means May 15 and November 15 in each year.
Moody's oody's means Moody's Investors Service, Inc., its successors and assigns.
Municipal Bond Insurance Policy means the municipal bond insurance policy issued by
the Certificate Insurer insuring the payment when due of the principal of and interest on the
Certificates as provided therein.
Net Proceeds means any proceeds of insurance carried pursuant to 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.
Original Purchaser means the original purchaser of the Certificates, or any successors or
assigns thereof.
Qutstanding means, when used as of any particular time with respect to Certificates,
(subject to the provisions of the Trust Agreement) all Certificates theretofore executed and
delivered by the Trustee under the Trust Agreement except:
(1) Certificates theretofore canceled by the Trustee or surrendered to the
Trustee for cancellation;
ME
(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 the Trust Agreement; and
(3) Certificates in lieu of or in exchange for which other Certificates shall have
been executed and delivered by the Trustee pursuant to the Trust Agreement.
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.
(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).
U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial
ownership
Farmers Home Administration (FHA)
Certificates of beneficial ownership
I Federal Financing Bank
Federal Housing Administration Debentures (FHA)
General Services Administration
Participation certificates
4. Government National Mortgage Association ( "GNMA" or "Ginnie
Mae"
GNMA - guaranteed mortgage - backed bonds
GNMA. - guaranteed pass - through obligations
5.
I
U.S. Maritime Administration
Guaranteed Title XI financing
(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).
Federal Home Loan Bank System Banks)
Senior debt obligations
A -3
r4
3.
4.
Participation Certificates
Senior debt obligations
Senior debt obligations (excluded are stripped mortgage securiti
which are valued greater than par on the portion of unpaid principal)
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 form 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, issued
by entities which are rated (i) in one of the top two long -term investment categories by
S &P or (ii) in the highest short -term rating categories of S &P, in either case, at the time of
the investment and continuously during the term of the investment.
(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.
(7) 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 -I" or "A" or better by S &P.
(K) Any state or county administered pool investment fund in which the City is
statutorily permitted or required to invest.
(L) 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
A -4
agreement that the dealer bank or securities firm with repay the cash plus a yield to a
municipal entity in exchange for the securities at a specified date. Repurchase agreements
must satisfy the criteria contained in the Trust Agreement.
Prepayment means any payment made by the City pursuant to the Lease as a prepayment
of the Lease Payments.
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.
Prior Certificates means the $7,500,000 Certificates of Participation, Series 1992 (Central
Library Building Project) authorized to be executed and delivered pursuant to the Prior Trust
Agreement.
Prior Lease means that certain Project Lease dated as of June 1, 1992 between the
Corporation and the City pertaining to the Prior Certificates.
Prior Trust Agreement means the Trust Agreement dated as of June 1, 1992 by and among
the Prior Trustee, the City and the Corporation providing for the execution and delivery of the
Prior Certificates.
Prior "Trustee means First Trust of California, National Association, as successor -in-
interest to Bank of America National Trust and Savings Association, in its capacity as trustee for
the Prior Certificates.
Proiect means the Project as defined in the Lease.
Proiect Lease means the lease dated June 1, 1998, between the City and the Corporation,
and any authorized and executed amendments thereto.
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 Replenishment Rent means Reserve Replenishment Rent payable pursuant to the
Lease.
Reserve Requirement means any amount equal to the least of (i) the maximum aggregate
annual Lease Payments payable under the Lease, (ii) 125% of the average annual aggregate Lease
Payments payable under the Lease, or (iii) 10% of the principal amount of the Certificates
Outstanding.
Revenues means all revenues subject to the Trust Agreement including, without
limitation, Lease Payments and Net Proceeds.
Securities Depositories means The Depository Trust Company, 711 Stewart Avenue,
Garden City, New York 11530, Fax (516) 227 -4039 or 4190; Midwest Securities Trust Company,
Capital Structures -Call Notification, 440 South La Salle Street, Chicago, Illinois 60605, Fax
(312) 663 -2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market
Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Fax (215) 496 -5058;
and, in accordance with the current guidelines of the Securities and Exchange Commission, such
other addresses and/or such other securities depositories as the City may designate in a Certificate
of the City delivered to the Trustee.
S &P means Standard & Poor's Ratings Group, its successors and assigns.
A -5
Site means the Site, as defined in the Lease.
Site Lease means the Site Lease, dated June 1, 1998, 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 Refunding 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.
Trustee means U.S. Bank Trust National Association, Los Angeles, California or any
successor trustee.
Trust Agreement or Agreement means the Trust Agreement, together with any
amendments thereto or supplements thereto permitted.
M
ralvasaff"
;�, �
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PUBLIC FACILITIES
CORPORATION
RESOLUTIONS
DATE
ADOPTED
PFC- I Authorizing the Preparation, Sale and Delivery to Exe ed -57,500,000 Principal
Among of Refunding Certificates of Participation, :�S 1998 (Central Library
Building Project) and Approving Certain Documents and Authorizing Certain Actions
in Connection Therewith 5-26-98
PFC-2
RESOLUTION NO. PFC- I
RESOLUTION OF THE NEWPORT BEACH PUBLIC FACILITIES
CORPORATION AUTHORIZING THE PREPARATION, SALE AND
DELIVERY OF NOT TO EXCEED $7,500,000 PRINCIPAL AMOUNT OF
REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 1998
(CENTRAL LIBRARY BUILDING PROJECT) AND APPROVING
CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN
CONNECTION THEREWITH
WHEREAS, the City Council (the "City Council ") of the City of Newport Beach (the "City")
has previously adopted its resolution authorizing the execution and delivery of those certain Certificates
of Participation, Series 1992 (Central Library Building Project) of the City (the "Prior Certificates"),
and
WHEREAS, the Board of Directors (the "Board ") of the Newport Beach Public Facilities
Corporation (the "Corporation ") has previously adopted its resolution approving the Corporation's
participation in the acquisition of the certain real property known as Central Library Building Project
and related public improvements for general municipal purposes (the "Project ") through the execution
and delivery of the Prior Certificates; and
WF'REAS, a refunding of the Prior Certificates will result in a reduction of the lease
payments required to be paid by the City in connection with the Project, thereby creating a public
benefit; and
WHEREAS, in order to reduce its costs associated with the Project, the City now desires to
refund the outstanding portion of the Prior Certificates through the execution and delivery of those
certain Refunding Certificates of Participation, Series 1998 (Central Library Building Project) (the
"Certificates "); and
WHEREAS, in order to accomplish the refunding of the Prior Certificates, the City and the
Corporation further desire to enter into that certain Site Lease, by and between the City and the
Corporation (the "Site Lease "), and that certain Project Lease, by and between the City and the
Corporation (the "Lease Agreement "), each to be dated as of the first day of the month in which the
Certificates are executed and delivered, the farms of which have been presented to the Corporation for
approval; and
WHEREAS, pursuant to the Site Lease, the Corporation will agree to lease certain real
property, improvements, furnishings and equipment described therein (the "Leased Property ") from the
City and pursuant to the Lease Agreement the City will agree to lease back the Leased Property from
the Corporation and to pay certain lease payments in connection therewith; and
WHEREAS, the Corporation desires to assign certain rights under the Site Lease and the Lease
Agreement, including its right to receive such lease payments from the City, to U.S. Bank Trust
5846003\22459.0005 -I-
National Association, Los Angeles, Cahfomia (the "Trustee ") pursuant to an Assignment Agreement to
be dated as of the first day of the month in which such Assignment Agreement is executed by the
parties thereto, between the Corporation and the Trustee (the "Assignment Agreement"), the form of
which has been presented to the Corporation for approval; and
WHEREAS, there has been presented to the Corporation for approval the form of a Purchase
Agreement (the "Purchase Agreement ") to be entered into by the City and Vfiller & Schroeder
Financial, Inc. (the "Purchaser ") pursuant to which the Purchaser will agree to buy the Certificates on
the terms and conditions set forth therein; and
WHEREAS, there has been presented to the Corporation for approval the form of a
Preliminary Official Statement to be delivered to prospective purchasers of the Certificates;
NOW, THEREFORE, the Newport Beach Public Facilities Corporation does hereby resolve,
determine and order as follows:
Section 1. Each of the foregoing recitals is true and correct.
Section 2. The Corporation hereby authorizes the preparation, sale and delivery of the
Certificates in an aggregate principal amount not to exceed $7,500,000 in accordance with the terms
and provisions of the Trust Agreement, The proceeds of the Certificates shall be expended to refund
the Prior Certificates and to provide for a reserve fund, if required, and for payment of the costs of the
sale and delivery of the Certificates.
Section 3. The Corporation hereby approves the appointment by the City of U.S. Bank
Trust National Association, to act as Trustee on behalf of the owners of the Certificates, with the duties
and powers of the Trustee as set forth in the Trust Agreement.
Section 4. The forms of the Escrow Agreement, the Site Lease, the Lease Agreement, the
Trust Agreement and the Assignment Agreement presented at this meeting are hereby approved. Each
of the President and Secretary of the Corporation are hereby authorized to execute, acknowledge and
deliver any and all documents required to consummate the transactions contemplated by the Site Lease,
the Lease Agreement, the Trust Agreement and the Assignment Agreement and this Resolution. Each
of the President and the Secretary of the Corporation are hereby authorized for and in the name of the
Corporation to execute and deliver the Site Lease, the Lease Agreement, the Trust Agreement and the
Assignment Agreement in substantially the forms hereby approved, with such additions thereto and
changes therein as are recommended or approved by Stradling Yocca Carlson & Rauth, a Professional
Corporation, as Special Counsel to the City ("Special Counsel "), and approved by the officer or
officers executing the same, such approval to be conclusively evidenced by the execution and delivery
thereof.
Section 5. The form of the Certificates as set forth in the Trust Agreement (as the Trust
Agreement may be modified pursuant to the preceding section hereof] is hereby approved.
Section 6. The form of the Purchase Agreement presented at this meeting is hereby
approved and the sale of the Certificates pursuant thereto is hereby consented to by the Corporation;
provided that the aggregate principal amount of the Certificates does not exceed $7,500,000, the
present value of the debt service payments due with respect to the Certificates is at least three percent
5846003\22459,0005 -2-
(3 %) less than the present value of the debt service payments due with respect to the Prior Certificates
(as set forth in writing by the City and/or the Purchaser) and the discount paid to the Purchaser
(exclusive of original issue discount and any bond insurance premium) with respect to the Certificates
does not exceed one and one -half percent (1'h %) of the aggregate principal amount of the Certificates.
Section 7. The Corporation consents to the preparation and distribution by the City of a
Preliminary Official Statement to prospective purchasers of the Certificates in the form deemed final by
the City for purposes of Rule 150-12 of the Securities and Exchange Commission and to the
preparation of a final Official Statement in substantially the form of the Preliminary Official Statement,
with such additions thereto and changes therein as are recommended or approved by the City Attorney,
and approved by the officer or officers executing the same on behalf of the City.
Section 8. The President, Secretary and other officers of the Corporation are hereby
authorized, jointly and severally, to do any and all things and to execute and deliver any and all
documents which they may deem necessary and advisable in order to consummate the sale and delivery
of the Certificates and otherwise effectuate the purposes of this Resolution and such actions previously
taken by such officers are hereby ratified. Specifically and without limiting the foregoing, the Finance
Director is authorized and directed to solicit and accept bids for bond insurance for the Certificates,
provided he determines acceptance of the best bid will result in further debt service savings, and
appropriate changes to each of the documents referenced herein to evidence such bond insurance and
the terms thereof, are hereby authorized and approved.
Section 9. In the event the President is unavailable or unable to execute and deliver any of
the above- referenced documents, any other member of the Board of the Corporation may validly
execute and deliver such documents, and any documents required to be signed by the Secretary may be
signed by any deputy secretary.
Section 10. This Resolution shall take effect from and after its date of adoption.
ADOPTED, SIGNED AND APPROVED this 26th day of May, 1998. 1�
President of the Newport Beach Public Facilities
Corporation
ATTEST:
Secretary of th Ne rt ach Public Facilities
Corporation
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
584606.3122459.4065 -3-
I hereby certify that the foregoing Resolution was duly and regularly adopted by the Board of
Directors of the Newport Beach Public Facilities Corporation at a regular meeting thereof held on the
26th day of May, 1998, by the following vote:
AYES: BOARD MEMBERS: Debay, Noyes, Glover, Edwards
ABSENT: BOARDMEMBERS: Hedges, O'Neil, Thomson
G :i• i 1.
SecreAaryPtZe e ort Beach Public Facilities
Corporation
5846003 \22459.0005 -4-