Loading...
HomeMy WebLinkAboutPFC-2 - PFC-2 - Trust AgreementTrust Agreement Stradling Yocca Carlson & Rauth Draft of 10/27/10 TRUST AGREEMENT Dated as of November 1, 2010 by and among THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee and NEWPORT BEACH PUBLIC FACILITIES CORPORATION and CITY OF NEWPORT BEACH Relating to the CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2010A (TAX EXEMPT) (CIVIC CENTER PROJECT /CENTRAL LIBRARY REFUNDING) and CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2010B (FEDERALLY TAXABLE DIRECT PAY BUILD AMERICA BONDS) (CIVIC CENTER PROJECT) DOCSOC/ 1423520v6/022459 -0014 Section 1.01. Section 1.02. Section 1.03. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10. Section 2.11. Section 2.12. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Definitions and Rules of Construction ........................................ ..............................2 Authorization.............................................................................. .............................13 EqualSecurity ............................................................................ .............................13 ARTICLE II THE 2010 CERTIFICATES OF PARTICIPATION Authorization...................................... ............................... Description of Certificates .................. ............................... Form of Certificates ............................ ............................... Execution............................................ ............................... Application of Proceeds and Other Amounts .................... Transfer and Exchange ....................... ............................... Certificates Mutilated, Lost, Destroyed or Stolen ............. Execution of Documents and Proof of Ownership............ Certificate Register ............................. ............................... Book -Entry System ............................ ............................... Destruction of Cancelled Certificates . ............................... Additional Certificates ........................ ............................... ARTICLE III PROJECT FUND Section 3.01. Establishment of Project Fund .................................................... .............................22 Section3.02. Purpose ....................................................................................... .............................22 Section 3.03. Deposit of Moneys; Payment of Project Costs and Delivery Costs ........................ 23 Section 3.04. Transfers of Unexpended Proceeds ............................................ .............................23 ARTICLE IV I9NX17\` /kyj10,10 8 1810 C Section 4.01. Establishment of Prepayment Fund ............................................ .............................23 Section 4.02. Extraordinary Prepayment .......................................................... .............................24 Section4.03. Prepayment ................................................................................. .............................24 Section 4.04. Selection of Certificates for Prepayment .................................... .............................26 Section 4.05. Notice of Prepayment ................................................................. .............................27 Section 4.06. Partial Prepayment of Certificates .............................................. .............................27 i DOCSOC/ 1423520x6/022459 -0014 TABLE OF CONTENTS (continued) Section 4.07. Effect of Notice of Prepayment ....... ............................... Section4.08. Surplus ............................................. ............................... ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Security Provisions ............................... Section 5.02. Establishment of Lease Payment Fund. Section 5.03. Deposits ................. ............................... Section 5.04. Application of Moneys ......................... Section 5.05. Surplus ................... ............................... Section 7.01. Section 7.02. Section 8.01. Section 8.02. Section 8.03. Section 8.04. Section 8.05. Section 8.06. Section 8.07. Section 8.08. Section 9.01. Section 9.02. Section 9.03. ARTICLE VI [RESERVED] ARTICLE VII NET PROCEEDS FUND Establishment of Net Proceeds Fund: Deposits ....... ............................... Cooperation............................................................. ............................... ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Held in Trust ................. ............................... Investments Authorized ............................... Crediting of Investments ............................. Accounting ................... ............................... Valuation and Disposition of Investments. . Commingling of Moneys in Funds .............. Tax Covenants .............. ............................... RebateFund .................. ............................... ARTICLE IX THE TRUSTEE Appointment of Trustee ........................ Merger or Consolidation ....................... Protection of the Trustee ...................... ii DOCSOC/ 1423520v6/022459 -0014 Page ....27 ....28 .......31 .......31 .................... 37 .................... 37 TABLE OF CONTENTS (continued) Section 9.04. Rights of the Trustee ...................... ............................... Section 9.05. Standard of Care ............................. ............................... Section 9.06. Compensation of the Trustee .......... ............................... Section 9.07. Indemnification of Trustee ............. ............................... Section 9.08. Trustee's Disclaimer of Warranties ............................... ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Page 91 : c t� Section 10.01. Amendments Permitted .............................................................. .............................41 Section 10.02. Procedure for Amendment with Written Consent of the Owners ...........................43 Section 10.03. Disqualified Certificates ............................................................. .............................43 Section 10.04. Effect of Supplemental Agreement ............................................ .............................44 Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments .......... 44 Section 10.06. Amendatory Endorsement of Certificates .................................. .............................44 Section 10.07. Copies of Amendments Delivered to Rating Agencies .............. .............................44 ARTICLE XI COVENANTS; NOTICES Section 11.01. Compliance With and Enforcement of the Lease ....................... .............................44 Section 11.02. Payment of Taxes ....................................................................... .............................45 Section 11.03. Observance of Laws and Regulations ........................................ .............................45 Section 11.04. Prosecution and Defense of Suits ............................................... .............................45 Section11.05. City Budgets ............................................................................... .............................45 Section 11.06. Further Assurances ..................................................................... .............................45 Section 11.07. Continuing Disclosure ................................................................ .............................45 ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of the City ............................... ............................... Section 12.02. , No Liability of the City or Corporation for Trustee Performance..... Section 12.03. Limitation of Rights to Parties and Certificate Owners .................... Section 12.04. No Liability of Corporation to the Owners ........ ............................... ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights .......... Section 13.02. Events of Default ................. DOCSOC/ 1423520v6/022459 -0014 Bill 47 47 TABLE OF CONTENTS (continued) Page Section 13.03. Application of Funds .................................................................. .............................47 Section 13.04. Institution of Legal Proceedings ................................................. .............................48 Section13.05. Non - Waiver ................................................................................ .............................48 Section 13.06. Remedies Not Exclusive ............................................................. .............................48 Section 13.07. Power of Trustee to Control Proceedings ................................... .............................48 Section 13.08. Limitation on Certificate Owners' Right to Sue ......................... .............................49 ARTICLE XIV MISCELLANEOUS Section14.01. Defeasance .................................................................................. .............................49 Section 14.02. Non - Presentment of Certificates ................................................ .............................50 Section 14.03. Acquisition of Certificates by City ............................................. .............................51 Section14.04. Records ....................................................................................... .............................51 Section14.05. Notices ........................................................................................ .............................51 Section 14.06. Governing Law ........................................................................... .............................52 Section 14.07. Binding Effect: Successors ........................................................ .............................52 Section 14.08. Execution in Counterparts .......................................................... .............................52 Section14.09. Headings ..................................................................................... .............................52 Section 14.10. Waiver of Notice ........................................................................ .............................52 Section 14.11. Separability of Invalid Provisions .............................................. .............................52 Signatures................................................................................................ ............................... S -1 EXHIBIT A -1 FORM OF 2010A CERTIFICATE .................................... ............................... A -1 -1 EXHIBIT A -2 FORM OF 2010B CERTIFICATE .................................... ............................... A -2 -1 EXHIBIT B -1 FORM OF WRITTEN DELIVERY COST REQUISITION ............................ B -1 -1 EXHIBIT B -2 FORM OF WRITTEN PROJECT COST REQUISITION ............................... B -2 -1 iv DOCSOC/ 1423520v6/022459 -0014 TRUST AGREEMENT THIS TRUST AGREEMENT, dated as of November 1, 2010, by and among THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized under the laws of the United States, as trustee (the "Trustee "), the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under the laws of the State of California, as lessor under the Lease hereinafter referred to (the "Corporation "), and the CITY OF NEWPORT BEACH, a chartered city duly organized and existing under the Constitution and laws of the State of California, as lessee under the Lease (the "City"); WITNESSETH: WHEREAS, the City and the Corporation have previously entered into a Project Lease dated as of July 1, 1998 (the "1998 Lease ") relating to $7,330,000 City of Newport Beach Refunding Certificates of Participation, Series 1998 (Central Library Building Project) (the "1998 Certificates "), the proceeds of which refunded certain certificates of participation, the proceeds of which financed the acquisition and construction of the City's Central Library (the "Central Library Project "); and WHEREAS, the City and the Corporation have entered into a Lease /Purchase Agreement, dated as of November 1, 2010 (the "Lease "), whereby the City, as agent of the Corporation, shall cause the acquisition, improvement and equipping of a new City Hall, as described therein (collectively, the "Civic Center Project" and together with the Central Library Project, the "Project ") and whereby the City shall refinance the Central Library Project, and the City has agreed to lease the Leased Premises (defined below) from the Corporation; and WHEREAS, in order to finance the Project, the City and the Corporation have authorized the sale of the $ City of Newport Beach Certificates of Participation 2010A (Tax Exempt) (Civic Center Project/Central Library Refunding) (the "2010A Certificates ") evidencing fractional interests in the 2010A Lease Payments made by the City under the Lease, and the $ City of Newport Beach Certificates of Participation 2010B (Federally Taxable Direct Pay Build America Bonds) (Civic Center Project) (the "2010B Certificates" and together with the Series 2010A Certificates, the "Certificates ") each evidencing fractional interests in the 2010B Lease Payments made by the City under the Lease; and WHEREAS, as security for the Certificates, the Corporation has assigned the rights to receive all Lease Payments described in the Lease, and the Corporation and the City have granted a security interest in all moneys held by the Trustee hereunder (other than the Rebate Fund as described herein) to the extent described herein to the Trustee for the benefit of the Owners of Certificates and any Additional Certificates executed and delivered hereunder; and WHEREAS, Section 5420 et seq. of the California Government Code (the "Government Code ") provides statutory authority for pledging collateral for the payment of principal or prepayment price of, and interest on, any agreement, including certificates of participation, and the Government Code creates a continuing perfected security interest which shall attach immediately to such collateral irrespective of whether the parties to the pledge document have notice of the pledge and without the need for any physical delivery, recordation, filing or further act, and, therefore, the DOCSOC/ 1423520v6/022459 -0014 City and the Corporation hereby warrant and represent that pursuant to the Lease, this Trust Agreement and the Government Code, the Trustee has a first priority perfected security interest in the Lease Payments described in the Lease represented by the Certificates pursuant to the Government Code. WHEREAS, the Trustee has agreed to apply the proceeds of the Certificates deposited in the Project Fund to pay certain Project Costs and Delivery Costs (as such terms are defined herein) and to refinance the 1998 Certificates. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01. 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 Trust Agreement, refer to this Trust Agreement as a whole. "Additional Certificates" means certificates of participation authorized by a Supplemental Agreement that are executed and delivered by the Trustee under and pursuant to Section 2.12. "Additional Payments" means all amounts payable by the City as Additional Payments as defined in Section 4.11 of the Lease. " Assimment 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. "Beneficial Owner" means any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes. "Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions in the State of New York or the State of California are authorized or required by law or executive order to remain closed. "Certificates" means collectively, the 2010A Certificates and the 2010B Certificates. "Certificate of Completion" means a certificate of the City Representative delivered pursuant to Section 3.4 of the Lease stating that all components of the Project have been completed or concluded in conformity with the requirements of the Lease. DOCSOC/ 1423520v6/022459 -0014 "Certificate Year" means the period extending from July 2 each year to July 1 of the subsequent calendar year, provided that the first Certificate Year shall commence on the Closing Date and end on July 1, 2011. "City" means the City of Newport Beach, a chartered city organized and existing under the laws and Constitution of the State, and its successors and assigns. "City Representative" means the City Manager of the City, the Assistant City Manager or any other person authorized by the City Manager of the City to act on behalf of the City with respect to the Lease or this Trust Agreement. "Closing Date" means the date on which the Certificates, duly executed by the Trustee, are delivered to the Original Purchaser thereof. "Code" means the Internal Revenue Code of 1986, and the regulations issued thereunder, as the same may be amended from time to time, and any successor provisions of law. Reference to a particular section of the Code shall be deemed to be a reference to any successor to any such section. "Comparable Treasury Issue" means, with respect to any prepayment date for a particular 2010B Certificate evidencing a 2010B Lease Payment, the United States Treasury security or securities selected by the Designated Investment Banker which has an actual or interpolated maturity comparable to the remaining average life of the 2010B Certificates evidencing 2010B Lease Payments to be prepaid, and that would be utilized in accordance with customary financial practice in pricing new issues of debt securities of comparable maturity to the remaining average life of the 2010B Certificates evidencing 2010B Lease Payments to be prepaid. "Comparable Treasury Price" means, with respect to any prepayment date for a particular 2010B Certificate, either (a) the average of five Reference Treasury Dealer quotations for the date fixed for prepayment, after excluding the highest and lowest such quotations, and (b) if the Independent Banking Institution is unable to obtain five such quotations, the average of the quotations that are obtained. The quotations will be the average, as determined by the Independent Banking Institution, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of principal amount) quoted in writing to the Independent Banking Institution, at 5:00 p.m. New York City time on any Business Day that falls not less than three Business Days nor more than 45 calendar days immediately preceding the applicable date fixed for prepayment. "Comparable Treasury Yield" means the yield which represents the weekly average yield to maturity for the preceding week appearing in the most recently published statistical release designated "H.15(519) Selected Interest Rates" under the heading "Treasury Constant Maturities," or any successor publication selected by the Independent Banking Institution that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded United States Treasury securities adjusted to constant maturity, for the maturity corresponding to the remaining term to maturity of the 2010B Certificate being prepaid. The Comparable Treasury Yield will be determined as of any Business Day that falls not less than three Business Days nor more than 45 calendar days immediately preceding the applicable date fixed for prepayment. If the H.15(519) statistical release sets forth a weekly average yield for United States Treasury securities that have a constant maturity that is the same as the remaining term to maturity of the 2010B Certificate being prepaid, then the Comparable Treasury Yield will be equal to such weekly average 3 DOCSOC/ 1423520v6/022459 -0014 yield. In all other cases, the Comparable Treasury Yield will be calculated by interpolation on a straight -line basis, between the weekly average yields on the United States Treasury securities that have a constant maturity (i) closest to and greater than the remaining term to maturity of the 2010B Certificate being prepaid; and (ii) closest to and less than the remaining term to maturity of the 2010B Certificate being prepaid. Any weekly average yields calculated by interpolation will be rounded to the nearest 1 /100th of 1 %, with any figure of 1 /200th of 1% or above being rounded upward. If, and only if, weekly average yields for United States Treasury securities for the preceding week are not available in the H.15(519) statistical release or any successor publication, then the Comparable Treasury Yield will be the rate of interest per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) at the Comparable Treasury Price as of the date fixed for prepayment. "Continuine Disclosure Agreement" means that certain Continuing Disclosure Agreement dated as of November 1, 2010, by and between the City and the Trustee, as Dissemination Agent, as it may be amended from time to time in accordance with the terms thereof. "Corporati on' means the Newport Beach Public Facilities Corporation, a 501(c)(4) nonprofit public benefit corporation organized under the laws of the State, its successors and assigns. "Corporation Representative" means the President, Vice President, Secretary, Treasurer of the Corporation, or any other person authorized to act on behalf of the Corporation under or with respect to the Lease. "Delivery Cost Requisition" means a written requisition substantially in the form attached hereto as Exhibit B -1. "Delivery Costs" means and 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 costs provided in the contract of purchase with the Original Purchaser, 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 of its counsel, legal fees and charges, financing and other professional consultant fees, fees of auctioning the Certificates, costs of rating agencies and costs of providing information to such rating agencies, any computer and other expenses incurred in connection with the Certificates, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Delivery Date" means the date on which any Series of Certificates or Additional Certificates are delivered to the Original Purchaser. "Depository" means the securities depository acting as depository pursuant to Section 2.10 hereof. "DTC" means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York in its capacity as securities depository for the Certificates. "Escrow Agent' means U.S. Bank National Association or any successor or assigns. DOCSOC/ 1423520v6/022459 -0014 "Escrow Agreement" means the Escrow Agreement dated as of November 1, 2010, by and between the City and the Escrow Agent relating to the 1998 Certificates. "Escrow Fund" means that fund established pursuant to the Escrow Agreement and held by the Escrow Agent. thereof. "Event of Default" means an event of default under the Lease, as defined in Section 9.1 "Extraordinary Event" means: (a) a change has occurred to Section 54AA or 6431 of the Code, (b) there is any guidance published by the Internal Revenue Service or the United States Treasury with respect to such Sections, or (c) any other determination by the Internal Revenue Service or the United States Treasury, which determination is not the result of any act or omission by the City to satisfy the requirements to qualify to receive the 35% federal cash subsidy payable with respect to the 2010B Tax Certificate, and as a result thereof, the federal cash subsidy expected to be received from the United States Treasury with respect to the Interest Component of the 2010B Lease Payments is eliminated or reduced, as reasonably determined by the City Manager or Director of Administrative Services, which determination shall be conclusive. "Fiscal Year" means the fiscal year of the City commencing July 1 and ending June 30 of the next year. "Fitch" means Fitch Ratings Group or any successors or assigns thereto. "Government Obligations" means Permitted Investments of the type described in paragraphs (A) or (B) of the definition thereof. "Independent Banking Institution" means an investment banking institution of national standing which is a primary United States government securities dealer in the City of New York designated by the City. If the City fails to appoint an Independent Banking Institution at least 30 days prior to the date fixed for prepayment, or if the Independent Banking Institution appointed by the City is unwilling or unable to determine the Comparable Treasury Yield, the Comparable Treasury Yield will be determined by an Independent Banking Institution designated by the Trustee. "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 Payment Date" means July 1 and January 1 of each year commencing January 1, 2011. 5 DOC SOC/1423520v6/022459 -0014 "Lease" means the Lease/Purchase Agreement related to the Certificates, dated as of the date hereof, by and between the City and the Corporation, and any duly authorized and executed amendments thereto. "Lease Payment" means any of the 2010A Lease Payments, the 2010B Lease Payments or lease payments relating to Additional Certificates required to be paid by the City to the Corporation pursuant to Section 4.4 of the Lease. "Lease Payment Date" means the Lease Payment Date defined in Section 4.4(a) of the Lease,. which shall be each December 15 and June 15 commencing December 15, 2011. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Article V hereof. "Leased Premises" has the meaning set forth in the Lease. "Letter of Representations" means the letter of the City delivered to and accepted by the Depository on or prior to delivery of the Certificates as book -entry certificates making reference to the DTC Operational Arrangements memorandum, as it may be amended from time to time, setting forth the basis on which the Depository serves as depository for such book -entry certificates, as such letters were originally executed or as they may be supplemented or revised or replaced by letters from the City and the Trustee delivered to and accepted by the Depository. "Make -Whole Premium" means, with respect to any 2010B Certificate to be prepaid, an amount calculated by an Independent Banking Institution equal to the positive difference, if any, between: (a) the sum of the present values, calculated as of the date fixed for prepayment of (i) each Interest Component that, but for the prepayment, would have been payable with respect to the 2010B Lease Payment or portion thereof being prepaid on each regularly scheduled Lease Payment Date occurring after the date fixed for prepayment through the maturity date of the corresponding 2010B Certificate (excluding any accrued interest for the period prior to the date fixed for prepayment); plus (ii) the Principal Component that, but for such prepayment, would have been payable on the maturity date (or applicable mandatory sinking fund prepayment date or dates) with respect to the 2010B Certificate or portion thereof being prepaid; minus (b) the principal amount of the 2010B Lease Payment or portion thereof being prepaid The present values of the Interest Components and Principal Components referred to in (a) above will be determined by discounting the amount of each such Interest Components and Principal Components from the date that each such payment would have been payable but for the prepayment to the date fixed for prepayment on a semiannual basis (assuming a 360 -day year consisting of twelve (12) 30- day months) at a discount rate equal to the Comparable Treasury Yield, plus (1) with respect to a 2010B Certificate prepaid as described in Section 4.03(c), _basis points, or (2) with respect to a 2010B Certificate prepaid as described in Section 4.03(d), basis points. DOCSOC/ 1423520v6/022459 -0014 "Make -Whole Prepayment Price" means the greater of (1) the original issue price (but not less than 100 %) of such Principal Component of the 2010B Lease Payments to be prepaid; or (2) the Principal Component of the 2010B Lease Payment to be prepaid plus the Make -Whole Premium, together, in each case, with accrued interest, if any, to the date fixed for prepayment of the 2010B Certificates. " Moody's" means Moody's Investors Service or any successors or assigns thereto. "Net Proceeds" means any proceeds of any insurance, performance bonds or taking by eminent domain or condemnation paid with respect to the Leased Premises remaining after payment therefrom of any expenses (including attorneys' fees) incurred in the collection thereof. "Net Proceeds Fund" means the fund by that name established and held by the Trustee pursuant to Article VII hereof. "1998 Certificates" means the $7,330,000 City of Newport Beach Refunding Certificates of Participation, Series 1998 (Central Library Building Project). "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.10 hereof. "Original Purchaser" means Stone & Youngberg LLC, as representative of original purchasers of the Certificates on the Closing Date, or the original purchaser of any Series of Additional Certificates. "Outstanding" when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 10.03 hereof) all Certificates or Additional Certificates theretofore executed and delivered by the Trustee under this Trust Agreement except: (1) Certificates or Additional Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates or Additional 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 or Additional Certificates), provided that, if such Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been given as provided in Section 4.05 hereof or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (3) Certificates or Additional Certificates in lieu of or in exchange for which other Certificates or Additional Certificates shall have been executed and delivered by the Trustee pursuant to Sections 2.06 and 2.07 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 book -entry certificates as securities depository. 7 DOCSOC/ 1423520v6/022459 -0014 "Permitted Investments" means, if and to the extent permitted by law and by any policy guidelines promulgated by the City: 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 timely payment of principal of and interest on which are fully and 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 and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. Farmers Home Administration (FmHA) Certificates of beneficial ownership 2. Federal Housing Administration Debentures (FHA) 3. 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. U.S. Maritime Administration Guaranteed Title XI financing (qualified under the Ship Financing Act of 1972) 6. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Corporation Bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mad') Participation certificates Senior debt obligations 8 DOCSOC/ 1423520v6/022459 -0014 3. Federal National Mortgage Association (FNMA or "Fannie Mae ") Mortgage- backed securities and senior debt obligations (excluding stripped mortgage securities which are valued greater than par on the portion of unpaid principal) 4. Student Loan Marketing Association (SLMA or "Sallie Mae ") Senior debt obligations 5. Resolution Funding Corp ( REFCORP) The interest only component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York 6. Farm Credit System Corp_ - Consolidated system -wide bonds and notes D. Money market mutual funds registered under the Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by Standard & Poor's of "AAAm -G," "AAAm" or "AAm" and by Moody's of "Aaa," "Aal" or "Aa2," including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services or serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to this Trust Agreement, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Trust Agreement may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee. E. Certificates of deposit (including those placed by a third party pursuant to an agreement between the Trustee and the City) secured at all times by collateral described in (A) and/or (B) above and having a maturity of one year or less. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks whose short-term obligations are rated "A -1 +" by Standard & Poor's and "Prime -1" by Moody's, which may include the Trustee and its affiliates. The collateral must be held by a third party and the Bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit (including those placed by a third party pursuant to an agreement between the Trustee and the City), savings accounts, deposit accounts, time deposits, trust funds, trust accounts, overnight bank deposits, interest bearing deposits, interest bearing money market accounts, bankers' acceptances or money market deposits which are fully insured by FDIC or are rated in the AA long term rating by Moody's or Standard & Poor's (including those of the Trustee and its affiliates). G. Commercial paper rated at the time of investment "Prime - 1" by Moody's and "A -1 +" or better by Standard & Poor's. H. Investment agreements, including guaranteed investment agreements, acceptable to the Trustee. 9 DOCSOC/ 1423520v6/022459 -0014 I. Bonds or notes issued by any state or municipality which are rated by Moody's and Standard & Poor's 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 or unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A- l +" or better by Standard & Poor's, including those of the Trustee and its affiliates. K. Repurchase or reverse repurchase agreements rated "AA" or better by Standard and Poor's (including those of the Trustee or any of its affiliates) and that provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer /lender), and the transfer of cash from the Trustee 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 the Trustee, in exchange for the securities at a specified date or dates. L. Any guaranteed investment contract, including forward delivery agreements ( "FDAs ") and forward purchase agreements ( "FPAs "), with a financial institution or insurance company which has at the date of execution thereof an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims - paying ability rated within the two highest rating categories of Standard & Poor's and Moody's. Only Permitted Investments described in clauses A, B or C above and having maturities equal to or less than 30 years from their date of delivery will be considered eligible for any collateralization/delivery purposes for guaranteed investment contracts, FDAs or FPAs; M. Pre - refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard & Poor's. If, however, the issue is only rated by Standard & Poor's (i.e., there is no Moody's rating), then the pre - refunded bonds must have been pre - refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre- refimded municipals to satisfy this condition. N. The Local Agency Investment Fund of the State, provided that the Trustee may deposit and withdraw monies in its own name. O. Any other investments permitted by Government Code section 53601 (including investment agreements and forward delivery or forward purchase agreements). "Value" of the above investments shall be determined by the manner currently employed by the Trustee or any other manner consistent with industry standard.- "Prepayment' means any payment made by the City pursuant to Article X of the Lease as a prepayment of Lease Payments. " Prepayment Fund" means the fund by that name established and held by the Trustee pursuant to Article IV hereof. "Principal Office or Corporate Trust Office" means the corporate trust office of the Trustee at 700 South Flower Street, Suite 600, Los Angeles, California 90017, Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee; provided, however, 10 DOCSOC/ 1423520v6/022459 -0014 that for the purposes of payment, transfer or exchange of Certificates such term means the office or agency of the Trustee at which, at any particular time its corporate trust agency business shall be conducted. "Proiect" has the meaning set forth in the Lease "Project Cost Requisition" means a written requisition substantially in the form attached hereto as Exhibit B -2. "Project Costs" means, with respect to any item or portion of the Project, the contract price paid or to be paid therefor upon acquisition, construction, procurement or improvement thereof, in accordance with a purchase order or contract therefor. Project Costs include, but are not limited to, the administrative, engineering, interior decorating, legal, financial and other costs incurred by the City and the Corporation in connection with the acquisition, construction, procurement, remodeling or improvement of the Project, all applicable sales taxes and other charges resulting from such construction, procurement, remodeling or improvement of the Project and the costs associated with making rebate calculations required by the Code. Project Costs shall not include any costs of the City or the Corporation to enforce remedies hereunder or under the Lease. "Proiect Fund" means the fund by that name established and held by the Trustee pursuant to Article III hereof. "Record Date" means the close of business on the fifteenth day of the month preceding each Interest Payment Date, whether or not such fifteenth day is a Business Day. "Reference Treasury Dealer" means any firm, specified by the City from time to time, that are primary United States Government securities dealers in the City of New York (each a "Primary Treasury Dealer "); provided, however, that if any of them ceases to be a Primary Treasury Dealer, the City will substitute another Primary Treasury Dealer. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any prepayment date for a particular 2010A Lease Payment, the average, as determined by the Designated Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Designated Investment Banker by such Reference Treasury Dealer at 3:30 P.M., New York City time, on the third Business Day preceding such prepayment date. "Series" means either the 2O1OA Certificates and such Additional Certificates which are secured by 2010A Lease Payments or the 2O1OB Certificates and such Additional Certificates which are secured by the 2010B Lease Payments as the context may suggest. "S &P" or "Standard & Poor's" means Standard & Poor's Ratings Services, a division of the McGraw Hill Companies, Inc., or any successors or assigns thereto. "Site Lease" means the Site Lease related to the Certificates, dated the date hereof, by and between the Corporation and the City. "Special Counsel" means Stradling Yocca Carlson & Rauth, a Professional Corporation, or any other attorney or firm of attorneys of nationally recognized standing in matters pertaining to the 11 DOC SOC/ 1423520v6/022459 -0014 tax - exempt status of interest on obligations issued by states and their political subdivisions and acceptable to the City. "State" means the State of California. "Supplemental Agreement" means a supplement to this Trust Agreement providing for the execution and delivery of Additional Certificates pursuant to Section 2.12. "Tax Certificate" means the Tax Certificates, each dated as of the Closing Date, concerning matters pertaining to the use and investment of proceeds of the Certificates executed and delivered to the City on the date of execution and delivery of the 2010A Certificates and the 2010B Certificates, including any and all exhibits attached thereto. "Term" means the time during which the Lease is in effect, as provided in Section 4.2 of the Lease. "Treasury Rate" means, with respect to any prepayment for a particular 2010B Lease Payment, the rate per annum truncated to the fifth decimal, expressed as a percentage of the Principal Component, equal to the semiannual equivalent yield to maturity or interpolated maturity of the Comparable Treasury Issue, assuming that the Comparable Treasury Issue is purchased on the prepayment date for a price equal to the Comparable Treasury Price, as calculated by the Designated Investment Banker. "Trustee" means The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States, and any successor trustee. "Trust Agreement" or "Agreement' means this Trust Agreement, together with any amendments hereof or supplements hereto permitted to be made hereunder. "2010A Certificates" means the $ aggregate principal amount of the City of Newport Beach Certificates of Participation 2010A (Tax Exempt) (Civic Center Project) to be executed and delivered by the Trustee pursuant to this Trust Agreement. "2010B Certificates" means the $ aggregate principal amount of the City of Newport Beach Certificates of Participation 2010B (Federally Taxable Direct Pay Build America Bonds) (Civic Center Project/Central Library Refunding) to be executed and delivered by the Trustee pursuant to this Trust Agreement. "2010A Lease Payment" means any payment required to be paid by the City to the Corporation pursuant to Section 4.4 of the Lease as set forth in Exhibit A thereto and deposited in the 2010A Account of the Lease Payment Fund. "2010B Lease Payment" means any payment required to be paid by the City to the Corporation pursuant to Section 4.4 of the Lease as set forth in Exhibit A thereto and deposited in the 2010B Account of the Lease Payment Fund. "2010A Prenavment" means any payment made by the City pursuant to Article X of the Lease as a prepayment of the 2010A Lease Payments. 12 DOCSOC/ 1423520v6/022459 -0014 "201013 Prepayment" means any payment made by the City pursuant to Article X of the Lease as a prepayment of the 2010B Lease Payments. Section 1.02. Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement, and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it. Section 1.03. Equal Securi ty. In consideration of the acceptance of the Certificates by the Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the Trustee and the Owners to secure the full and final payment of the interest, if any, and principal represented by the Certificates and any Additional Certificates which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit, protection and security of all Owners without distinction, preference or priority as to security or otherwise of any Certificates or Additional Certificates of a Series over any other Certificates or Additional Certificates of a Series by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. All of the Certificates and any Additional Certificates of a Series are equally secured as provided in this Section 1.03, except as may be otherwise expressly provided in this Trust Agreement, provided that the 2010A Lease Payments and the 2010A Prepayments shall provide security only for the 2010A Certificates and any Additional Certificates secured by the 2010A Lease Payments and the 2010B Lease Payments and the 2010B Prepayments shall provide security only for the 2010B Certificates and any Additional Certificates secured by the 2010B Lease Payments. Any cash subsidy payments received by the City and deposited into the 2010B Account of the Lease Payment Fund are hereby pledged and secure only the 2010B Certificates or any Additional Certificates secured by the 2010B Lease Payments. ARTICLE 1I THE 2010 CERTIFICATES OF PARTICIPATION Section 2.01. Authorization. Upon written request of the City Representative, the Trustee will execute and deliver to the Original Purchaser 2010A Certificates in an aggregate principal amount of $ representing fractional and undivided ownership interests in the 2010A Lease Payments and the 2010A Prepayments and 2010B Certificates in an aggregate principal amount of $ representing fractional and undivided ownership interests in the 2010B Lease Payments and the 2010B Prepayments. The Certificates shall be initially executed and delivered as book -entry certificates. The Certificates are not, and shall in no event be deemed to be, a debt or obligation of the Trustee. The payments on the Certificates shall be made from funds, provided on or behalf of the City, for such purposes to the Trustee. 13 DOCSOC/ 1423520x6/022459 -0014 Section 2.02. Description of Certificates. (a) Each 2010A Certificate shall be dated the Delivery Date and shall mature on July 1 in each of the years and in the amounts, and shall bear interest (calculated on the basis of a 360 -day year of twelve 30 -day months) at the rates, as follows: Maturity Principal Interest (July 1) Amount Rate (b) Each 2010B Certificate shall be dated the Delivery Date and shall mature on July 1 in each of the years and in the amounts, and shall bear interest (calculated on the basis of a 360 -day year of twelve 30 -day months) at the rates, as follows: Maturity Principal Interest (July 1) Amount Rate $ The Certificates shall be delivered in fully registered form, numbered from one upwards in consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The Certificates shall be executed and delivered in the denominations of $5,000 and any integral multiple thereof. 14 DOCSOC/ 1423520v6/022459 -0014 Each Certificate and any Additional Certificates shall bear interest from the Interest Payment Date next preceding the date of execution thereof, unless (i) it is executed during the period from the day after the Record Date for an Interest Payment Date to and including such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is executed on or prior to the Record Date for the first Interest Payment Date, in which event interest shall be payable from the Delivery Date; provided, however, that if, at the time of execution of any Certificate or any Additional Certificates interest with respect to such Certificate or Additional Certificate is in default, such Certificate or Additional Certificate shall bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Certificate or Additional Certificate. (b) Payment Provisions. Interest with respect to any Certificate shall be payable in lawful money of the United States of America by check or draft of the Trustee, mailed no later than the Interest Payment Date to the Owner at his address as it appears, on the Record Date, on the registration books maintained by the Trustee or at such other address as has been furnished to the Trustee in writing by the Owner on or prior to such Record Date; provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Certificates or Additional Certificates filed with the Trustee prior to any Record Date, interest with respect to such Certificates shall be paid to such Owner on each succeeding Interest Payment Date (unless such request has been revoked in writing) by wire transfer of immediately available funds to an account in the continental United States designated in such written request. Payments of defaulted interest with respect to the Certificates or Additional Certificates shall be paid by check or draft to the registered Owners of the Certificates or Additional Certificates as of a special record date to be fixed by the Trustee, notice of which special record date shall be given to the registered Owners of the Certificates or any Additional Certificates no less than ten days prior thereto. The principal of and premium, if any, on the Certificates or Additional Certificates is payable when due upon surrender thereof at the Principal Office in lawful money of the United States of America. Section 2.03. Form of Certificates. The Certificates and the assignment to appear thereon shall be substantially in the forms set forth in Exhibit A attached hereto and by this reference incorporated herein with such appropriate additions, modifications, and insertions as are permitted or required by this Trust Agreement. Pending the preparation of definitive Certificates the Certificates may be executed and delivered in temporary form exchangeable for definitive Certificates when ready for delivery. If the Trustee delivers temporary Certificates, it shall execute and deliver definitive Certificates in an equal aggregate principal amount of authorized denominations, when available, without additional charge, and thereupon the temporary Certificates shall be surrendered to the Trustee at its Principal Office. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Trust Agreement as definitive Certificates. The form of any Additional Certificates shall be as set forth in the Supplemental Agreement relating to such Additional Certificates. Section 2.04. 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 2.05. Application of Proceeds and Other Amounts. (a) The proceeds from the sale of the 2010A Certificates in the amount of $ (representing the par amount of the Certificates of $ , plus net original premium of 15 DOCSOC/ 1423520x6/022459 -0014 $ less Original Purchaser's discount of $ ) shall be deposited with the Trustee as follows: $ shall be deposited to the Delivery Costs Subaccount of the 2010A Account of the Project Fund for the payment of Delivery Costs, and $ to the 2010A Account of the Project Fund. Additionally $ shall be transferred to the Escrow Agent for deposit in the Escrow Fund. (b) The proceeds from the sale of the 2010B Certificates in the amount of $ (representing the par amount of the Certificates of $ , less Original Purchaser's discount of $ shall be deposited with the Trustee as follows: $ shall be deposited to the Delivery Costs Subaccount of the 2010B Account of the Project Fund for the payment of Delivery Costs, and $ to the 2010B Account of the Project Fund. The Trustee may, in its discretion, establish a temporary fund or account in its books or records to facilitate such deposits and transfers. Section 2.06. Transfer and Exchange. (a) Transfer of Certificates. Any Certificate may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.09 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 acceptable to 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 tenor and maturity, for like aggregate principal amount in authorized denominations. The cost of printing Certificates and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the City. The Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer, and there shall be no other charge to any Owner for any such transfer. (b) Exchange of Certificates. Certificates may be exchanged at the Principal Office for a like aggregate principal amount of Certificates of other authorized denominations of the same tenor and maturity. The Trustee may require the payment by the Certificate Owner requesting such exchange of any tax or other govemmental charge required to be paid with respect to such exchange. The cost of printing Certificates and any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the City. All Certificates surrendered pursuant to the provisions of this Section shall be cancelled and destroyed by the Trustee and shall not be redelivered. (c) Time for Transfer or Exchange. The Trustee shall not be obligated to transfer or exchange any Certificate after a Record Date and before the following Interest Payment Date, or during the period in which it is selecting Certificates for prepayment, or after notice of prepayment has been given as provided in Section 4.05. Section 2.07. 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, maturity and principal amount in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated and indemnification of the Trustee to its satisfaction. Every mutilated Certificate so surrendered to 16 DOCSOC/ 1423520v6/022459 -0014 the Trustee shall be cancelled 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, maturity and principal amount 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 Trust Agreement with all other Certificates secured by this Trust Agreement. Notwithstanding any other provision of this Section, in lieu of delivering a new Certificate in place of one which has been mutilated, lost, destroyed or stolen, and which has matured, or has been called for prepayment, the Trustee may make payment with respect to such Certificate upon receipt of the above - mentioned indemnity. Section 2.08. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Trust 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 Trust Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person, the amount and numbers of such Certificates and the date of execution shall be proved by the registration books maintained pursuant to Section 2.09 hereof. Nothing contained in this Article II shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which the Trustee may deem sufficient in its sole discretion. 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 2.09. Certificate Register. The Trustee will keep or cause to be kept at its Principal Office or another office designated by the Trustee sufficient books for the registration and transfer of the Certificates which shall, during normal working hours and upon reasonable prior notice, be open 17 DOC SOC/1423520v6/022459 -0014 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 2.10. Book -Entry System. (a) Election of Book -Entry System. Prior to the execution and delivery of the Certificates, the City may provide that such Certificates shall be initially executed and delivered as book -entry Certificates. If the City shall elect to deliver any Certificates in book -entry, then the City shall cause the delivery of a separate single fully registered Certificate (which may be typewritten) for each maturity date of such Certificates in an authorized denomination corresponding to that total principal amount of the Certificates designated to mature on such date. Upon initial execution and delivery, the ownership of each such Certificate shall be registered in the Certificate register in the name of the Nominee, as nominee of the Depository, and ownership of the Certificates, or any portion thereof, may not thereafter be transferred except as provided in Section 2.10(d). With respect to book -entry Certificates, the City and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such book -entry Certificates. Without limiting the immediately preceding sentence, the City and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in book -entry Certificates, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the Certificate register, of any notice with respect to book -entry Certificates, including any notice of prepayment, (iii) the selection by the Depository and its Participants of the beneficial interests in book -entry Certificates to be prepaid in the event the City prepays the Certificates in part, or (iv) the payment by the Depository or any Participant or any other person, of any amount with respect to principal, premium, if any, or interest evidenced and represented by book -entry Certificates. The City and the Trustee may treat and consider the person in whose name each book - entry Certificate is registered in the Certificate register as the absolute Owner of such book -entry Certificate for the purpose of payment of principal, premium and interest with respect to such Certificate, for the purpose of giving notices of prepayment 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, premium, if any, and interest evidenced and represented by the Certificates only to or upon the order of the respective Owner, as shown in the Certificate register, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal, premium, if any, and interest evidenced and represented by the Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Certificate register, shall receive a Certificate evidencing the obligation to make payments of principal, premium, if any, and interest evidenced and represented by the Certificates. Upon delivery by the Depository to the Owner and the Trustee, 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 nominee of the Depository. (b) Delivery of Letter of Representations. In order to qualify the book -entry Certificates for the Depository's book -entry system, the City shall execute and deliver to the Depository a Letter 18 DOCSOC/ 1423520v6/022459 -0014 of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the City any obligation whatsoever with respect to persons having interests in such book -entry Certificates other than the Owners, as shown on the Certificate register. In addition to the execution and delivery of a Letter of Representations, the City shall take such other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify book -entry Certificates for the Depository's book -entry program. (c) Selection of Depository. In the event (i) the Depository determines not to continue to act as securities depository for book -entry Certificates, or (ii) the City determines that continuation of the book -entry system is not in the best interest of the beneficial owners of the Certificates or the City, then the City will discontinue the book -entry system with the Depository. If the City determines to replace the Depository with another qualified securities depository, the City shall prepare or direct the preparation of a new single, separate, fully registered Certificate for each of the maturity dates of such book -entry Certificates, registered in the name of such successor or substitute qualified securities depository or its Nominee as provided in subsection (d) hereof. If the City fails to identify another qualified securities depository to replace the Depository, then the Certificates shall no longer be restricted to being registered in such Certificate register in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Certificates shall designate, in accordance with the provisions of Section 2.06 hereof. (d) Payments to Depository. Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all Outstanding Certificates are held in book -entry and registered in the name of the Nominee, all payments with respect to principal, prepayment premium, if any, and interest evidenced and represented by such Certificate and all notices with respect to such Certificate shall be made and given, respectively to the Nominees, as provided in the Letter of Representations or as otherwise instructed by the Depository and agreed to by the Trustee notwithstanding any inconsistent provisions herein. (i) The Certificates shall be initially executed and delivered as provided in Section 2.01 hereof. If such Certificates are initially registered in the name of the Nominee, then registered ownership of such Certificates, or any portions thereof, may not thereafter be transferred except: (A) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (B) of subsection (i) of this Section 2.10(d) ( "Substitute Depository"); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any Substitute Depository, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (C) to any person as provided below, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that DTC or its successor (or Substitute Depository or its successor) is no longer able to carry out its functions as depository. 19 DOCSOC/ 1423520v6/022459 -0014 (ii) In the case of any transfer pursuant to clause (A) or clause (B) of subsection (i) of this Section 2.10(d), upon receipt of all Outstanding Certificates by the Trustee, together with a written request of the City to the Trustee designating the Substitute Depository, a single new Certificate, which the City shall prepare or cause to be prepared, shall be executed and delivered for each maturity of Certificates then Outstanding, registered in the name of such successor or such Substitute Depository or their Nominees, as the case may be, all as specified in such written request of the City. In the case of any transfer pursuant to clause (C) of subsection (i) of this Section 2.10(d), upon receipt of all Outstanding Certificates by the Trustee, together with a written request of the City to the Trustee, new Certificates, which the City shall prepare or cause to be prepared, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such written request of the City, subject to the limitations of Section 2.01 hereof, provided that the Trustee shall not be required to deliver such new Certificates within a period of less than sixty (60) days from the date of receipt of such written request from the City. (iii) In the case of a partial prepayment or an advance refunding of any Certificates evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such Certificates indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee, all in accordance with the Letter of Representations. The Trustee shall not be liable for such Depository's failure to make such notations or errors in making such notations. (iv) The City and the Trustee shall be entitled to treat the person in whose name any Certificate is registered as the Owner thereof for all purposes of this Trust Agreement and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City; and the City and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the Certificates. Neither the City nor the Trustee shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any Certificates, and the Trustee may rely conclusively on its records as to the identity of the Owners of the Certificates. Section 2.11. Destruction of Cancelled Certificates. Whenever in this Trust Agreement provision is made for the surrender or cancellation by the Trustee and the delivery to the City of any Certificates, the Trustee will cancel and destroy such Certificates and deliver a certificate of such destruction to the City upon its request. Section 2.12. Additional Certificates. Subsequent to the execution and delivery by the Trustee of the Certificates, the Trustee shall, upon written request or requests of the City Representative and of the Corporation Representative, execute and deliver from time to time one or more series of Additional Certificates in such aggregate principal amount as may be set forth in such written request or requests, provided that there shall have been compliance with all of the following conditions, which are hereby made conditions precedent to the preparation, execution and delivery of such Additional Certificates: (a) The parties to this Trust Agreement shall have executed a Supplemental Agreement which (i) sets forth the terms and provisions of such Additional Certificates, including the establishment of such funds and accounts, which may be separate and apart from the funds and accounts established hereunder for the Certificates, as shall be necessary or appropriate, and 20 DOCSOC/ 1423520v6/022459 -0014 (ii) specifies whether such Certificates are payable from 2010A Lease Payments or 2010B Lease Payments; (b) The scheduled principal and interest payable with respect to such Additional Certificates shall be payable only on Interest Payment Dates applicable to the Certificates; (c) The Lease and Site Lease shall have been amended, if necessary, to (i) increase or adjust the Lease Payments due and payable on each Lease Payment Date to an amount sufficient to pay the principal, premium (if any) and interest payable with respect to all Outstanding Certificates, including all Additional Certificates as and when the same mature or become due and payable, (ii) if appropriate, amend the definition of "Leased Premises" to include as part of the Leased Premises all or any portion of additions, betterments, extensions, improvements or replacements, or such other real or personal property (whether or not located upon the Leased Premises as such Leased Premises is constituted as of the date of this Trust Agreement), to be financed, acquired or constructed by the preparation, execution and delivery of such Additional Certificates, and (iii) make such other revisions to the Lease and Site Lease as are necessitated by the execution and delivery of such Additional Certificates (provided, however, that such other revisions shall not materially prejudice the rights of the Owners of Outstanding Certificates as granted them under the terms of this Trust Agreement as may be evidenced by the opinion of counsel described under Section 10.01(b) hereof); (d) There shall have been delivered to the Trustee a counterpart of the amendments required by subsection 2.12(c) hereof; (e) The Trustee shall have received a certificate of the Corporation Representative that there exists on the part of the Corporation no Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default); (f) The Trustee shall have received a certificate of the City Representative that (i) there exists on the part of the City no Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) and (ii) the Lease Payments as increased or adjusted do not exceed in any year the fair rental value of the Leased Premises (as such term is defined in the amended Lease); (g) The Trustee shall have received an opinion of Special Counsel substantially to the effect that (i) said Supplemental Agreement and said amendments to the Lease comply in all respects with the requirements of this Section 2.12, (ii) said Supplemental Agreement and said amendments to the Lease and Site Lease (if applicable) have been duly authorized, executed and delivered by the City and the Corporation, as applicable, (provided that said opinion of Special Counsel, in rendering the opinions set forth in this clause (ii), shall be entitled to rely upon one or more other opinions of counsel, including counsel to any of the respective parties to said Supplemental Agreement or said amendments to the Lease and Site Lease (if applicable)), (iii) assuming that no Event of Default has occurred and is continuing, this Trust Agreement, as amended by said Supplemental Agreement, and the Lease and Site Lease (if applicable), as amended by the respective amendments thereto, constitute the legal, valid and binding obligations of the City and Corporation, as applicable, enforceable against said parties in accordance with their respective terms (except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, moratorium, debt adjustment or other laws affecting creditors' rights generally, and except to the extent that enforcement thereof may be limited by general principles of equity, regardless of whether enforcement is sought in a legal or equitable proceeding) and (iv) the execution of such Supplemental Agreement and said amendments 21 DOCSOC/ 1423520v6/022459 -0014 to the Lease and Site Lease (if applicable), and performance by the parties thereunder, will not result in the inclusion of the Interest Component of any 2010A Lease Payments payable with respect to any 2010A Certificates, including Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), theretofore prepared, executed and delivered, in the gross income of the Owners of the 2010A Certificates or the owners of any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) for purposes of federal income taxation or the loss of the subsidy payments from the United States Treasury relating to the District's obligation to pay the Interest Component of the 2010B Lease Payments as evidenced by the 2010B Certificates; (h) There shall have been delivered to the Trustee an endorsement to or reissuance of the title insurance policy delivered under Section 5.5 of the Lease providing that the insured amount is at least equal to the aggregate principal amount of all of the Certificates and Additional Certificates outstanding upon the execution and delivery of such Additional Certificates; and (i) Such other conditions shall have been satisfied, and such other instruments shall have been duly executed and delivered to the Trustee, as the City or the Corporation shall have reasonably requested. Upon delivery to the Trustee of the foregoing instruments, the Trustee shall cause to be executed and delivered Additional Certificates of a Series representing the aggregate principal amount specified in such Supplemental Agreement, and such Additional Certificates shall be equally and ratably secured with all Certificates of like Series, including any Additional Certificates, theretofore prepared, executed and delivered, all without preference, priority or distinction (other than with respect to maturity, payment, prepayment or sinking fund payment (if any)) of any one Certificate of a Series, including Additional Certificates, over any other; provided, however, that no provision of this Trust Agreement shall require the City to consent to or otherwise permit the preparation, execution and delivery of Additional Certificates, it being understood and agreed that any such consent or other action of the City to permit the preparation, execution and delivery of Additional Certificates, or lack thereof, shall be in the sole discretion of the City. ARTICLE III PROJECT FUND Section 3.01. Establishment of Project Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach (Civic Center Project) Project Fund," referred to herein as the "Project Fund" and shall establish a 2010A Account and a 2010B Account therein. Within each of the 2010A Account and the 2010B Account, there shall be established Delivery Costs Subaccounts therein; shall keep the Project Fund separate and apart from all other funds and moneys held by it; and shall administer such fund as herein provided. The Project Fund shall be held and applied by the Trustee in accordance herewith. Section 3.02. Purpose. Moneys in the Project Fund shall be expended for Project Costs and Delivery Costs. 22 DOCSOC/ 1423520v6/022459 -0014 Section 3.03. Deposit of Monevs: Pavment of Proiect Costs and Delivery Costs (a) Deposits. There shall be credited to the 2010A Account of the Project Fund the following amounts: (1) the proceeds of sale of the 201OA Certificates required to be deposited therein pursuant to Section 2.05 hereof; (2) all investment earnings on moneys held in the 2010A Account of the Project Fund, which shall remain in the 2010A Account of the Project Fund until expended for Project Costs or applied to the prepayment of 2O10A Certificates, as described in Section 3.04 below; and (3) any other funds from time to time deposited with the Trustee to pay Project Costs. There shall be credited to the 2010B Account of the Project Fund the following amounts: (1) the proceeds of sale of the 2010B Certificates required to be deposited therein pursuant to Section 2.05 hereof, (2) all investment earnings on moneys held in the 2010B Account of the Project Fund, which shall remain in the 2O10B Account of the Project Fund until expended for Project Costs or applied to the prepayment of 2O10B Certificates, as described in Section 3.04 below; and (3) any other funds from time to time deposited with the Trustee to pay Project Costs. (b) Disbursements. The Trustee shall disburse moneys in the Project Fund from time to time to pay Project Costs directly or to reimburse the City for payment of Project Costs, upon receipt by the Trustee of a Project Cost Requisition signed by the City Representative. The Trustee shall have no duty or liability to monitor the application of any moneys disbursed hereunder. The Trustee shall disburse moneys from the Delivery Costs Subaccounts to pay Delivery Costs or to reimburse the City for payment of such Delivery Costs upon receipt by the Trustee of a Delivery Cost Requisition signed by the City Representative. The Trustee shall be absolutely protected in making any disbursement from the Project Fund in reliance upon a Project Cost Requisition or Delivery Cost Requisition signed by the City Representative. Each such Project Cost Requisition and Delivery Cost Requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to cent= the accuracy of such facts. Any remaining balance in a Delivery Costs Subaccount after June 15, 2011 shall be transferred by the Trustee to the applicable account of the Project Fund as directed in writing by City Representative. Section 3.04. Transfers of Unexpended Proceeds. Upon the filing with the Trustee of the Certificate of Completion pursuant to Section 3.4 of the Lease, the Trustee shall withdraw all remaining moneys in the Project Fund (other than any moneys retained therein to pay Project Costs not then due and payable and certified by the City Representative) and shall transfer such moneys to the applicable account of the Lease Payment Fund to be applied to the payment of principal and interest with respect to the applicable Series of Certificates as prescribed in Section 5.04 hereof or, at the written election of the City Representative delivered to the Trustee, together with an opinion of Special Counsel that such transfer will not cause interest due with respect to the 2O1OA Certificates to be included in gross income for federal income tax purposes, shall transfer such moneys to the City for the purpose of capital expenditures of the City, and following such transfer, the Project Fund shall be closed. ARTICLE IV IW3117Vaiyj1ON8a$0C Section 4.01. Establishment of PrepaMent Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach (Civic Center Project) Prepayment Fund," referred to 23 DOCSOC/ 1423520v6/022459 -0014 herein 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. Within the Prepayment Fund, the Trustee shall establish a "2010A Account' into which any 2010A Prepayments shall be deposited and a "2010B Account' into which any 2010B Prepayments shall be deposited. Moneys to be used for prepayment of the Certificates and Additional Certificates shall be deposited into the applicable account of the Prepayment Fund established for such Series and used solely for the purpose of prepaying the applicable Certificates or Additional Certificates in advance of their maturity on the date designated for prepayment and upon presentation and surrender of such Certificates or Additional Certificates to the Trustee. Section 4.02. Extraordinary Prepayment. The Certificates are subject to prepayment prior to their respective maturity dates on any date, in whole or in part, from Net Proceeds which the Trustee shall deposit in the Prepayment Fund as provided in Section 6.1(c) of the Lease at least 45 days prior to the date fixed for prepayment and credited towards the prepayment made by the City pursuant to Section 10.2(a) of the Lease, at a prepayment price equal to the principal amount thereof together with accrued interest to the date fixed for prepayment, without premium. Section 4.03. Prepayment (a) Optional Prepayment 2010A Certificates. The 2010A Certificates maturing on or after July 1, 20 are subject to prepayment prior to maturity in whole or in part on any date on or after July 1, 20 at the option of the City, in the event the City exercises its option under Section 10.3 of the Lease to prepay all or a portion of the principal component of the 2010A Lease Payments (in integral multiples of $5,000), at the prepayment price equal to the principal component to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. In the event the City gives notice to the Trustee of its intention to exercise such option, but fails to deposit with the Trustee on or prior to the prepayment date an amount equal to the prepayment price, the City will continue to pay the Lease Payments as if no such notice had been given. (b) Optional Prepayment 2010B Certificates. The 2010B Certificates maturing on or after July 1, 20 are subject to prepayment prior to maturity in whole or in part on any date on or after July 1, 20. at the option of the City, in the event the City exercises its option under Section 10.3 of the Lease to prepay all or a portion of the principal component of the 2010B Lease Payments (in integral multiples of $5,000), at the prepayment price equal to the principal component to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. In the event the City gives notice to the Trustee of its intention to exercise such option, but fails to deposit with the Trustee on or prior to the prepayment date an amount equal to the prepayment price, the City will continue to pay the Lease Payments as if no such notice had been given. (c) Extraordinary Optional Prepayment of 2010B Certificates. The 2010B Certificates are subject to extraordinary prepayment prior to their respective maturities, at the option of the City, upon the occurrence of an Extraordinary Event, as a whole or in part, on any date, and in the event the City exercises its option under the Lease to prepay the 2010B Lease Payments at the applicable Make -Whole Prepayment Price. The City shall give the Trustee written notice of its intention to prepay the Certificates under this Section and the amount of the prepayment premium thereon in sufficient time to enable the Trustee to give notice of such prepayment. (d) Optional Prepayment of 2010B Certificates with Make -Whole Payment. Before July 1, 20, the 2010B Certificates will be subject to prepayment prior to maturity at the option of 24 DOCSOC/1423520v6/022459 -0014 the City, as a whole or in part, on any Business Day in the event the City exercises its option under the Lease to prepay the 2010B Lease Payments at the Make -Whole Prepayment Price. The City shall give the Trustee written notice of its intention to prepay the Certificates under this Section and the amount of the prepayment premium thereon in sufficient time to enable the Trustee to give notice of such prepayment. (e) Mandatory Sinking Account Payment. (i) The 201OA Certificates maturing July 1, 20_ (the "20 Term 2O10A Certificates ") are subject to prepayment in part by lot, on July 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20 Term 2010A Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the 20 Term 2010A Certificates so prepaid as nearly as practicable in a pro rata basis in integral multiples of $5,000. In addition, in lieu of prepayment thereof, the 20_ Term 2010A Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions hereof. Mandatory Prepayment Date Sinking Account (July 1) Payment * Final Maturity (ii) The 2010A Certificates maturing July 1, 20 (the "20_Term 2O1OA Certificates ") are subject to prepayment in part by lot, on July 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 2039 Term 2010A Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the 20 Term 2010A Certificates so prepaid as nearly as practicable in a pro rata basis in integral multiples of $5,000. In addition, in lieu of prepayment thereof, the 20_ Term 2O10A Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions hereof. Mandatory Prepayment Sinking Account Date (July 1) Payment * Final Maturity 25 DOCSOC/ 1423520v6/022459 -0014 (iii) The 2010B Certificates maturing July 1, 20 (the "20 Term 2010B Certificates ") are subject to prepayment in part, on July 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20 Term 2010B Certificates have been prepaid pursuant to an extraordinary prepayment, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the 20 Term 2010B Certificates so prepaid as nearly as practicable in a pro rata basis in integral multiples of $5,000. In addition, in lieu of prepayment thereof, the 20 Term 2010B Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions hereof. Mandatory Prepayment Sinking Account Date (July 1) Payment * Final Maturity If prior to one of the mandatory prepayment dates specified above the City purchases any 20 Term 2010A Certificates, 20 Term 2010A Certificates or 20 Term 2010B Certificates, then at least 45 days prior to the prepayment date the City shall notify the Trustee as to the principal amount purchased, and the amount of Certificates so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce the upcoming sinking account payment for the applicable maturity of the Certificates so purchased. All Certificates purchased pursuant to this subsection shall be cancelled pursuant to Section 14.03 hereof. Section 4.04. Selection of Certificates for Prepayment. Whenever provision is made in the Trust Agreement for the prepayment of less than all of the 2010 Certificates, the Trustee shall select the 2010 Certificates to be prepaid from all Certificates not previously called for prepayment (a) with respect to any prepayment described pursuant to Section 4.02, among maturities of all 2010 Certificates and Additional Certificates on a pro rata basis as nearly as practicable, (b) with respect to any optional prepayment of 2010 Certificates, among maturities as directed by the City, (c) with respect to 2010A Certificates with the same maturity, by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair, and (d) with respect to 2010B Certificates with the same maturity, (i) if the 2010B Certificates are not book -entry bonds, the Trustee shall select the 2010B Certificates of such maturity to be prepaid among the Owners of such 2010B Certificates on a pro rata basis as nearly as practicable, and (ii) if the 2010B Certificates are book -entry bonds, the Trustee shall select the 2010B Certificates of such maturity to be prepaid on a pro rata pass - through distribution of principal basis in accordance with DTC procedures, provided that, so long as the 2010B Certificates are held in book -entry form, the selection for prepayment of such 2010B Certificates shall be made in accordance with the operational arrangements of DTC then in effect, and, if the DTC operational arrangements do not allow for prepayment on a pro rata pass - through distribution of principal basis, the 2010B Certificates will be selected for prepayment, in accordance with DTC procedures, by lot. The Trustee shall promptly notify the City and the Corporation in writing of the Certificates so selected for prepayment by mailing to the City and the Corporation 26 DOCSOC/1423520v6/022459 -0014 I copies of the notice of prepayment provided for in Section 4.05. The City shall provide the Trustee with a revised sinking fund schedule upon any prepayments. Section 4.05. Notice of Prepayment. (a) Content. When prepayment is authorized or required pursuant to this Article W, the Trustee shall give notice of the prepayment of the Certificates. Such notice shall specify: (a) the prepayment date, (b) the prepayment price, (c) if less than all of the Outstanding Certificates of a maturity are to be prepaid, the Certificate numbers (and in the case of partial prepayment, the respective principal amounts), (d) the CUSIP numbers of the Certificates to be prepaid, (e) the place or places where the prepayment will be made, and (f) the original date of execution and delivery of the Certificates. 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 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. Such notice may specify that the prepayment of the Certificates to be prepaid is conditioned upon the timely receipt of funds required for such prepayment. (b) Recipients; Timing. Notice of such prepayment shall be sent by first class mail or delivery service postage prepaid, or by telecopy, to the Depository on the date of mailing of notice to the Owners by first class mail and by first class mail, postage prepaid, to the Corporation and the respective Owners of any Certificates designated for prepayment at their addresses appearing on the Certificate registration books, at least thirty (30) days, but not more than sixty (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. Under no circumstances shall the Trustee have any liability to any party for any inaccurate CUSIP number. In addition, notice of such prepayment shall also be sent by certified mail, overnight delivery service, facsimile transmission or other secure means, postage prepaid, to all municipal registered securities depositories and to at least two of the national information services that disseminate securities prepayment notices, when possible, at least two (2) days prior to the mailing of notices required by the first paragraph above, and in any event no later than simultaneously with the mailing of notices required by the first paragraph above; provided, that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the prepayment of such Certificates. Section 4.06. Partial Prepayment of Certificates. Upon surrender by the Owner of a Certificate for partial prepayment at the Principal Office, payment of such partial prepayment of the principal amount of a Certificate will be paid to such Owner. 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 principal amount to the unprepaid portion of the Certificate surrendered and of the same tenor and 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 4.07. Effect of Notice of Prepayment. Notice having been given to the Owners of the Certificates as set forth in Section 4.05 hereof, and the moneys for the prepayment (including, the interest to the applicable date of prepayment), having, been set aside in the Prepayment Fund, the 27 DOCSOC/ 1423520v6/022459 -0014 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 prepayment price with respect thereto, plus interest accrued and unpaid to said date of prepayment. If, on the date of a prepayment, moneys for the prepayment of all the Certificates to be prepaid, together with interest to said date of prepayment, shall be held by the Trustee so as to be available therefor on such date of prepayment, and, if notice of prepayment thereof shall have been given as set forth in Section 4.05 hereof, then, from and after said date of prepayment, interest with respect to the Certificates to be prepaid 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, without liability for interest thereon. All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions of this Article shall be cancelled upon surrender thereof and destroyed. Section 4.08. Su lus. Any funds remaining in the Prepayment Fund after prepayment and payment of all Certificates Outstanding, including accrued interest and payment of any applicable fees and expenses to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments payable under the Lease or provision made therefor satisfactory to the Trustee, and provision for any amounts required to be transferred to the Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City. ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Security Provisions. (a) Assignment of Rights in Lease. The Corporation has, pursuant to the Assignment Agreement, absolutely assigned and set over to the Trustee certain of its rights in 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 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 (other than amounts due to the Corporation under Section 4.11 of the Lease) 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 five (5) Business Days after the receipt thereof, and all such Lease Payments shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund, all such Prepayments shall be forthwith deposited by the Trustee upon the receipt thereof in the Prepayment Fund. (b) Security Interest in Moneys and Funds. The Corporation and the City, as their interests may appear, hereby grant to the Trustee for the benefit of the Owners of the Certificates and all Additional Certificates a lien on and a security interest in all moneys in the following funds or accounts held by the Trustee under this Trust Agreement (excepting only the Rebate Fund and any moneys to be deposited into the 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. 28 DOC SOC/ 1423520v6/022459 -0014 In addition to the Trustee, only Owners of the 2010A Certificates and Owners of Additional Certificates (to the extent provided in a Supplemental Agreement) shall have a lien on and a security interest in all moneys in the 2010A Account of the Lease Payment Fund and the 2010A Account of the Prepayment Fund. In addition to the Trustee, only Owners of the 2010B Certificates and Owners of Additional Certificates (to the extent provided in a Supplemental Agreement) shall have a lien on and a security interest in all moneys in the 2010B Account of the Lease Payment Fund and the 2010B Account of the Prepayment Fund. (c) Pledge of Lease Payments and Proceeds. The 2010A Lease Payments are hereby irrevocably pledged to and shall be used for the punctual payment of the interest and principal represented by the 2010A Certificates (and Additional Certificates to the extent provided in a Supplemental Agreement). The 2010B Lease Payments are hereby irrevocably pledged to and shall be used for the punctual payment of the interest and principal represented by the 2010B Certificates (and Additional Certificates to the extent provided in a Supplemental Agreement). Any proceeds from the re- letting or any other disposition of the Leased Premises pursuant to Article IX of the Lease (the "Lease Proceeds ") are hereby irrevocably pledged equally to the 2010A Certificates, the 2010B Certificates and any Additional Certificates. Except as permitted under Section 2.12 hereof with respect to Additional Certificates, the Lease Payments and Lease Proceeds shall not be used for any other purpose while any of the Certificates remain Outstanding. This pledge shall constitute a first lien on the Lease Payments and Lease Proceeds in accordance with the terms hereof, subject to Section 13.03 hereof and subject to Section 2.12 hereof. Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach (Civic Center Project) Lease Payment Fund" and shall establish a 2010A Account and a 2010B Account therein. [Within each of the 2010A Account and the 2010B Account, there shall be established an Interest Subaccount therein.] All moneys at any time deposited by the Trustee in an account of the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the applicable Certificates of such Series. 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 Trust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. Section 5.03. Deposits. There shall be deposited in the 2010A Account of the Lease Payment Fund all 2010A Lease Payments and in the 2010A Account of the Prepayment Fund all 2010A Prepayments received by the Trustee, including any moneys received by the Trustee for deposit therein pursuant to Section 2.05 hereof and Section 4.4 of the Lease, and any other moneys required to be deposited therein pursuant to the Lease, including without limitation Section 5.4(c) of the Lease (regarding proceeds of rental interruption insurance) or pursuant to this Trust Agreement, which moneys shall be applied as a credit towards any 2010A Lease Payment then due. There shall be deposited in the 2010B Account of the Lease Payment Fund all 2010B Lease Payments and in the 2010B Prepayment Fund all 2010B Prepayments received by the Trustee, including any moneys received by the Trustee for deposit therein pursuant to Section 2.05 hereof and Section 4.4 of the Lease, and any other moneys required to be deposited therein pursuant to the Lease, including without limitation Section 5.4(c) of the Lease (regarding proceeds of rental 29 DOCSOC/ 1423520v6/022459 -0014 interruption insurance) or pursuant to this Trust Agreement, which moneys shall be applied as a credit towards any 201 OB Lease Payment then due. The Trustee, in accordance with the Calculation Agency Agreement, dated as of November 1, 2010, by and between the City and the Trustee, shall at least 45 days but not more than 90 days prior to each Certificate Payment Date, submit to the United States Treasury a subsidy reimbursement request with respect to the 2010B Certificates in accordance with applicable Federal regulations. Upon receipt of such subsidy, the City shall deposit such cash subsidy payment into the 2010B Account of the Lease Payment Fund and use any such cash subsidy payments to offset its obligations to pay the Interest Component of the 201OB Lease Payments under the Lease. Section 5.04. Application of Moneys. Except as provided in this Section 5.04 and Section 5.05, all amounts in the 2010A 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 2010A Certificates as the same shall become due and payable, in accordance with the provisions of Article II and Article IV hereof, subject to the requirement that certain investment earnings may be transferred to the Rebate Fund, as provided in Section 8.08 hereof. Except as provided in this Section 5.04 and Section 5.05, all amounts in the 201 OB 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 2010B Certificates as the same shall become due and payable, in accordance with the provisions of Article II and Article IV hereof. On or before each Interest Payment Date, the Trustee shall set aside an amount sufficient to pay the interest becoming due and payable on such Interest Payment Date on all Outstanding Certificates. Moneys so set aside shall be used and withdrawn by the Trustee solely for the purpose of paying the interest with respect to the Certificates as it shall become due and payable (including, accrued interest with respect to any Certificates prepaid prior to maturity). On or before each Interest Payment Date on which the principal of the Certificates shall be payable, the Trustee shall set aside an amount equal to (i) the principal amount of the Certificates coming due and payable on such Interest Payment Date pursuant to Section 2.02, and (ii) the prepayment price of the Certificates (consisting of the principal amount thereof and any applicable premiums) required to be prepaid on such Interest Payment Date pursuant to any of the provisions of Article IV hereof. Moneys so set aside shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal of the Certificates at the maturity thereof, or (ii) paying the principal of and premium (if any) on any Certificates upon the prepayment thereof pursuant to Section 4.03 hereof. Section 5.05. Surplus. Any funds remaining in the Lease Payment Fund after payment of all Certificates Outstanding, including accrued interest and payment of any applicable fees to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease, or provision made therefor satisfactory to the Trustee, and provision for any amounts required to be transferred to the Rebate Fund pursuant to Section 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City. 30 DOCSOC/ 1423520x6/022459 -0014 ARTICLE VI [RESERVED] ARTICLE VII NETPROCEEDSFUND Section 7.01. Establishment of Net Proceeds Fund: Deposits. The Trustee shall establish when required a special fund designated as the "City of Newport Beach (Civic Center Project) Net Proceeds Fund," referred to herein 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 6.1(a) of the Lease. (a) Casualty Insurance. The Trustee shall disburse Net Proceeds for replacement or repair of the Leased Premises as provided in Section 6.1(b) 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. Pending such application, such Net Proceeds may be invested by the Trustee as directed by the City Representative in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. After all of the Certificates have been paid 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 Section 8.08 hereof, the Trustee shall pay any remaining moneys in the Net Proceeds Fund to the City after payment of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease. (b) Title Insurance. Proceeds of any policy of title insurance received by the Trustee with respect to the Leased Premises shall be applied and disbursed by the Trustee upon the Written Request of the City as follows: (i) If the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Leased Premises and will not result in an abatement of Lease Payments and Additional Payments payable by the City under the Lease (such determination to be certified by the City in writing), such proceeds shall be remitted to the City and used for any lawful purpose thereof; or (ii) If the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Leased Premises and will result in an abatement of Lease Payments and Additional Payments payable by the City under the Lease; then the Trustee shall immediately deposit such proceeds in the Prepayment Fund and such proceeds shall be applied to the prepayment of Certificates in the manner provided in Section 4.02 hereof. Section 7.02. 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 Leased Premises or any item or portion thereof; provided, however, the Trustee shall not be obligated to take any action hereunder if it is not indemnified to its satisfaction from and against any liability or expense arising therefrom. 31 DOCSOC/ 1423 520v6/022459 -0014 ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section 8.01. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement, other than in the Rebate Fund, are irrevocably held in trust for the benefit of the respective Owners 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 eamed thereon, shall be expended only as provided in this Trust Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Corporation, the Trustee or the City, or any of them. Section 8.02. Investments Authorized. (a) By Trustee. Subject to the further provisions of this Article VIII, moneys held by the Trustee hereunder shall be invested and reinvested on maturity thereof by the Trustee pursuant to Section 8.02(b). The Trustee will report any such investments to the City on a monthly basis in its regular statements. (b) Upon Direction of the City. The City Representative shall direct by facsimile, to the designated trust officer responsible for the administration of this Trust Agreement, followed by distribution by U.S. Mail or overnight courier service of such notice, such investment in specific Permitted Investments not less than two Business Days prior to the date that such Permitted Investment is to take effect. Such investments and reinvestments shall be made giving full consideration for the time at which funds are required to be available based among other things, scheduled completion of the various components of the Project. In the event that the City Representative does not so direct the Trustee, the Trustee shall invest in the Permitted Investments described in paragraph (D) of the definition thereof contained in Section 1.01. Investments purchased with funds on deposit in the Lease Payment Fund and Prepayment Fund shall mature not later than the Interest Payment Date or prepayment date, as appropriate, immediately succeeding the investment. Investments instructed by the City Representative to be purchased with funds on deposit in the Project Fund shall mature not later than the dates upon which such funds shall be needed to be expended for the payment of Project Costs. Investments to the later of the final maturity of the Certificates or any Additional Certificates so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Article VI hereof. The Trustee may conclusively rely upon the written instructions of the City Representative as to both the suitability and legality of the directed investments. (c) Registration. Such investments, if registrable, shall be registered in the name of the Trustee for the benefit of the Owners and held by the Trustee or its nominee. (d) 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. The Trustee or any of its affiliates may act as a sponsor of, or as an advisor to any provider of, Permitted Investments hereunder. The City and Corporation acknowledge that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City and the Corporation the right to receive brokerage confirmations of security transactions as they occur, at no additional costs, the City and Corporation 32 DOCSOC/ 1423520v6/022459 -0014 specifically waives\ receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. (e) Trustee Standard of Care. Except as otherwise provided in Section 9.05, the Trustee shall not be responsible or liable for any consequences of any investment of funds or sale of such investment made by it in accordance with this Section or disposition made by it in accordance with Section 8.05(b). Section 8.03. Crediting of Investments. Except as otherwise provided in this Trust Agreement, any income, profit or loss on the investment of moneys held by the Trustee hereunder shall be credited to the respective fund for which it is held. Section 8.04. Accounting. The Trustee shall furnish to the City, not less than monthly, an accounting (which may be in the form of its regular statements) of all investments made by the Trustee and all funds and amounts held by the Trustee; provided, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (i) has a balance of zero and (ii) has not had any activity since the last reporting date. The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. Section 8.05. Valuation and Disposition of Investments. (a) Valuation. Subject to the provisions of Section 8.08 hereof, for the purpose of determining the amount in any fund, all Permitted Investments (except investment agreements) credited to such fund shall be valued at the lower of the cost or the market price, exclusive of accrued interest. With respect to all funds and accounts, investments shall be valued by the Trustee not less often than annually nor more often than monthly. In making any such valuations, the Trustee may utilize, and conclusively rely upon such valuation services as may be available to the Trustee, including those within its regular accounting system and brokers and dealers in securities. (b) Disposition. Subject to the provisions of Section 8.08 hereof, the Trustee shall sell, or present for prepayment, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited. Section 8.06. Commingling of Moneys in Funds. The Trustee may, and upon the written request of the City Representative shall, commingle any of the funds held by it pursuant to this Trust 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. The City shall ensure that any such commingling complies with Section 1.148 -4 of the Treasury Regulations, and shall provide written direction to the Trustee accordingly. In no event shall the Trustee have any duty or obligation, at any time and in any manner to monitor compliance with any governmental regulations relating to commingling of accounts. Section 8.07. Tax Covenants. (a) General. The City and the Corporation hereby covenant with the holders of the 2O10A Certificates that, notwithstanding any other provisions of this Trust Agreement, (to the extent that the Corporation may have control over the Project or the proceeds of the Certificates) they shall 33 DOCSOC/ 1423520v6/022459 -0014 not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest with respect to the 2010A Certificates under Section 103 of the Code. The City and the Corporation (to the extent that the Corporation may have control over the Project or the proceeds of the Certificates) shall not, directly or indirectly, use or permit the use of proceeds of the 201 OA Certificates or the Project, or any portion thereof, by any person other than a governmental unit (as such term is used in Section 141 of the Code), in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest due with respect to the 2010A Certificates. (b) Use of Proceeds. The City and the Corporation (to the extent that the Corporation may have control over the Project or the proceeds of the Certificates) shall not take any action, or fail to take any action, if any such action or failure to take action would cause the 2010A Certificates to be "private activity bonds" within the meaning of Section 141 of the Code, and in furtherance thereof, shall not make any use of the proceeds of the 2010A Certificates or the Project, or any portion thereof, or any other funds of the City, that would cause the 2010A Certificates to be "private activity bonds" within the meaning of Section 141 of the Code. To that end, so long as any 2O1OA Certificates are outstanding, the City and the Corporation, with respect to such proceeds and the Project and such other funds, will comply with applicable requirements of the Code and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent such requirements are, at the time, applicable and in effect. The City shall establish reasonable procedures necessary to ensure continued compliance with Section 141 of the Code and the continued qualification of the 201 OA Certificates as "governmental bonds." (c) Arbitrage. The City and the Corporation (to the extent that the Corporation may have control over the Project or the proceeds of the Certificates) shall not, directly or indirectly, use or permit the use of any proceeds of any 2010A Certificates, or of the Project, or other funds of the City, or take or omit to take any action, that would cause the 2010A Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code. To that end, the City and the Corporation shall comply with all requirements of Section 148 of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent such requirements are, at the time, in effect and applicable to the 201OA Certificates. (d) Federal Guarantee. The City and the Corporation (to the extent that the Corporation may have control over the proceeds of the Certificates) shall 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 the 2010A Certificates to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (e) Covenant Regarding Build America Bonds. The City and the Corporation (to the extent that the Corporation may have control over the proceeds of the 2010B Certificates) shall not make any use of the proceeds of the 2010B Certificates, or take or omit to take any other action, that would cause the City to lose the cash subsidy payments from the United States Treasury relating to City's obligations to pay the Interest Component of the 2010B Lease Payments under the Lease as evidenced by the 2010B Certificates. (f) Compliance with Tax Certificate. In furtherance of the foregoing tax covenants of this Section, the City covenants that it will comply with the provisions of the Tax Certificate, which is incorporated herein as if fully set forth herein. These covenants shall survive payment in full or defeasance of the 201OA Certificates and the 2010B Certificates. 34 DOCSOC/ 1423520v6/022459 -0014 Section 8.08. Rebate Fund. (a) General. The Trustee shall establish a special fund designated the "City of Newport Beach (Civic Center Project) Rebate Fund" (the "Rebate Fund "). All amounts at any time on deposit in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the requirement to make rebate payments to the United States (the "Rebate Requirement ") pursuant to Section 148 of the Code and the Treasury Regulations promulgated thereunder (the "Treasury Regulations "). Such amounts shall be free and clear of any lien under this Trust Agreement and shall be governed by this Section and Section 8.07 of this Trust Agreement and by the Tax Certificate executed by the City. The Trustee shall be deemed conclusively to have complied with the Rebate Requirement if it follows the directions of the City, and shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the City with the Rebate Requirement. (b) Deposits. (i) Within 45 days of the end of the fifth Certificate Year and each fifth Certificate Year thereafter, (1) the City shall calculate or cause to be calculated with respect to the 20 1OA Certificates the amount that would be considered the "rebate amount" within the meaning of Section 1.148 -3 of the Treasury Regulations, and (2) the City shall make an Additional Payment under Section 4.11 of the Lease and transfer to the Trustee for deposit in the Rebate Fund, if and to the extent required, amounts sufficient to cause the balance in the Rebate Fund to be equal to the "rebate amount" so calculated. (ii) The City shall not be required to deposit any amount to the Rebate Fund in accordance with preceding sentence if the amount on deposit in the Rebate Fund prior to the deposit required to be made under this subsection (a) equals or exceeds the "rebate amount" calculated in accordance with the preceding sentence. Such excess may be withdrawn from the Rebate Fund to the extent permitted under subsection (f) of this Section. (iii) The City shall not be required to calculate the `rebate amount," and shall not be required to deposit any amount to the Rebate Fund in accordance with this subsection (a), with respect to all or a portion of the proceeds of the 2O1OB Certificates (including amounts treated as proceeds of the Certificates) (1) to the extent such proceeds satisfy the expenditure requirements of Section 148(f)(4)(B) or Section 148(f)(4)(C) of the Code or Section 1.148 -7(d) of the Treasury Regulations, whichever is applicable, and otherwise qualify for the exception to the Rebate Requirement pursuant to whichever of said sections is applicable, (2) to the extent such proceeds are subject to an election by the City under Section 148(f)(4)(C)(vii) of the Code to pay a 1 -1/2% penalty in lieu of arbitrage rebate in the event any of the percentage expenditure requirements of Section 148(f)(4)(C) are not satisfied, or (3) to the extent such proceeds qualify for the exception to arbitrage rebate under Section 148(f)(4)(A)(ii) of the Code for amounts in a "bona fide debt service fund." (c) Withdrawal Following Payment of 2O1OA Certificates. Any funds remaining in the Rebate Fund after prepayment of all the 20 1OA Certificates and any amounts described in paragraph (ii) of subsection (c) of this Section, or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees to the Trustee, shall be withdrawn by the Trustee and remitted to the City. (d) Withdrawal for Payment of Rebate. Upon the City's written direction, but subject to the exceptions contained in subsection (a) of this Section to the requirement to calculate the "rebate 35 DOCSOC/ 1423520x6/022459 -0014 amount" and make deposits to the Rebate Fund, the Trustee shall pay to the United States, from amounts on deposit in the Rebate Fund, (i) not later than 60 days after the end of (1) the fifth Certificate Year, and (2) each fifth Certificate Year thereafter, an amount that, together with all previous rebate payments, is equal to at least 90% of the `rebate amount" calculated as of the end of such Certificate Year in accordance with Section 1.148 -3 of the Treasury Regulations; and (ii) not later than 60 days after the payment of all 2010A Certificates, an amount equal to 100% of the "rebate amount" calculated as of the date of such payment (and any income attributable to the "rebate amount" determined to be due and payable) in accordance with Section 1.148 -3 of the Treasury Regulations. (e) Rebate Payments. Each payment required to be made pursuant to subsection (c) of this Section shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 -T, which shall be completed by the arbitrage rebate consultant for execution by the City and provided to the Trustee. (f) Deficiencies in the Rebate Fund. In the event that, prior to the time any payment is required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the City shall calculate the amount of such deficiency and direct the Trustee to deposit an amount received from the City equal to such deficiency into the Rebate Fund prior to the time such payment is due. (g) Withdrawals of Excess Amounts. In the event that immediately following the calculation required by subsection (a) of this Section, but prior to any deposit made under said subsection, the amount on deposit in the Rebate Fund exceeds the "rebate amount" calculated in accordance with said subsection, upon written instructions from the City, the Trustee shall withdraw the excess from the Rebate Fund and credit such excess to the Lease Payment Fund. (h) Record Keenine. The City shall retain records of all determinations made hereunder until six years after the complete retirement of the Certificates. (i) Survival after Defeasance. Notwithstanding anything in this Trust Agreement to the contrary, the Rebate Requirement shall survive the payment in full or defeasance of the Certificates. ARTICLE IX THE TRUSTEE Section 9.01. Annointment of Trustee (a) Appointment. Trustee, a national banking association organized under the laws of the United States, 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 corporate trust office in New York, New York, San Francisco, California, Santa Ana, California, or Los Angeles, California capable of exercising trust powers in the State of California, with a combined capital (exclusive of borrowed capital) and a surplus of at least Seventy-Five 36 DOCSOC/ 1423520v6/022459 -0014 Million Dollars ($75,000,000), or be a member of a bank holding company system, which shall have a combined capital and surplus of at least Seventy -Five Million Dollars ($75,000,000), and subject to supervision or examination by federal or state authority, so long as any Certificates are Outstanding. If such bank, corporation 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, corporation 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, the City may remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto. (d) Resi ng ation. The Trustee may, upon written notice to the City and the Corporation, resign; provided that such resignation shall not take effect until the successor Trustee is appointed as provided in this Section 9.01. 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 thirty (30) days of receipt of notice of the Trustee's resignation, then the Trustee may petition a federal or state court to seek the immediate appointment of a successor Trustee and be reimbursed by the City for all costs incurred in connection therewith. (e) Successor. Any successor Trustee shall be a bank, corporation 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 Owners at their respective addresses set forth on the Certificate registration books maintained pursuant to Section 2.12. Section 9.02. Merger or Consolidation. Any company or 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 parry or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 9.01, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 9.03. Protection of the Trustee. (a) Reliance Upon Pavers or Documents. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, facsimile, request, consent, direction, 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 Trust 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. In the event the Trustee shall make any investigation into the content of any such certifications, the Trustee shall not thereby be deemed to have expanded the scope of its duties. 37 DOCSOC/ 1423520v6/022459 -0014 (b) Reliance Upon Opinions of Counsel. The Trustee may consult with its counsel or 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 Counsel acceptable to the Trustee which opinion shall be made available to the other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken by the Trustee in reliance thereon and the City shall promptly reimburse the Trustee for such costs. (c) Reliance Upon Requested Certificates. Whenever in the administration of its duties under this Trust 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 for any action taken or suffered under the provisions of this Trust Agreement in reliance thereon, 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, provided however that the duties and obligations of the Trustee shall not be deemed expanded thereby. Section 9.04. Rights of the Trustee. (a) Ownership of Certificates. The Trustee may become an Owner 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, 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, or receivers, shall not be responsible for the actions or omissions of such attorneys, agents or receivers if appointed by it with reasonable care, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder. (c) Funds and Accounts. In addition to the funds and accounts established or required to be established pursuant to this Trust Agreement, the Trustee may establish such additional funds and accounts as it deems necessary or appropriate to perform its duties hereunder, and shall have the right to close such accounts in its discretion. Section 9.05. Standard of Care. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall only perform those duties specifically set forth herein and no implied duties, covenants or obligations whatsoever shall be read into this Trust Agreement. In the event of and during the continuance of an Event of Default, the Trustee shall exercise such care in performing its duties hereunder as a prudent person would exercise under the circumstances in the conduct of its own 38 DOCSOC/142352Ov6/022459 -0014 affairs. No action by the Trustee shall be construed or deemed to expand the limitations on the scope of the Trustee's duties. The Trustee shall not be considered in breach of or in default in its obligations hereunder in the event of enforced delay ( "unavoidable delay ") in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other govermnental action or inaction pertaining to the Project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee. Section 9.06. Compensation of the Trustee. As an Additional Payment under Section 4.11 of the Lease, the City shall, from time to time, pay such amounts and reimburse such expenses (including, without limitation, legal fees and expenses) as are specified in any written agreement with the City and, on demand, pay to the Trustee to the extent not covered by such agreement reasonable compensation for its services and the services of any accountants, consultants, attorneys and other experts as may be engaged by the Trustee to provide services under this Trust Agreement pursuant to a written agreement between the City and the Trustee. Further, in the event of a default hereunder, the City agrees that the Trustee's fees and costs shall be deemed to be a substantial contribution to the trust and bankruptcy estate and/or administrative expenses in a bankruptcy, if applicable. The City's obligation hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation and removal of the Trustee. Upon an Event of Default, and only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of and premium, if any, interest on any Certificate, upon the trust estate for the foregoing fees, charges and expenses incurred by it. Section 9.07. Indemnification of Trustee. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents, and employees harmless from and against (whether or not litigated) 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 Leased Premises by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Trust Agreement and any other agreement made and entered into for purposes of the Leased Premises, (iii) any act of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Premises, (iv) any act 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 Leased Premises, (v) the construction or acquisition of the Project or the expenditure of Project Costs, (vi) the exercise and performance by the Trustee of its powers and duties hereunder, the Lease, the Site Lease, the Assignment Agreement or any related document hereto or thereto, (vii) the sale of the Certificates and the carrying out of any of the transactions contemplated by the Certificates or this Trust Agreement, 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 in which they were made, not misleading in any official statement or other disclosure document utilized in connection with the sale of the Certificates. The indemnification set forth in this Section 9.07 shall extend to the Trustee's officers, agents, employees, successors and assigns. No indemnification will be made under this Section or elsewhere in this Trust Agreement or other agreements for willful misconduct or negligence by the Trustee, its officers, agents, employees, 39 DOCSOC/ 1423520v6/022459 -0014 successors or assigns. The City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates, or the resignation or removal of the Trustee. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and all persons, including, without limitation, the Owners, Corporation and the City, having any claim against the Trustee arising from the Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment, except as otherwise provided herein or where the Trustee has breached its standard of care as described in Section 9.05 hereof. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Certificates. No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder or in the exercise of any of its rights or powers. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Certificates at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or in the exercise of any right hereunder. In the event of conflicting instructions hereunder, the Trustee shall have the right to decide the appropriate course of action, or shall follow the direction of the group of Owners holding the largest aggregate principal amounts of Certificates, and be protected in following either course of action. The Trustee is authorized and directed to execute, in its capacity as Trustee, the Assignment Agreement. Every provision of this Trust Agreement, the Lease, the Site Lease and the Assignment Agreement relating to the conduct or liability of the Trustee shall be subject to the provisions of this Trust Agreement, including without limitation, this Article IX. The Trustee shall have no responsibility or liability with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed in any respect relating to the Certificates. The Trustee shall not to be deemed to have knowledge of any Event of Default hereunder or under the Lease unless it has actual knowledge thereof at its Principal Office. Before taking any action under Article XIII or this Article at the request of the Owners, the Trustee may require that a satisfactory indemnity bond be furnished by the Owners for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken. The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. The Trustee shall not be 40 DOCSOC/ 1423520v6/022459 -0014 accountable for the use or application by the City of any of the Certificates or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Trust Agreement. The Trustee agrees to accept and act upon instructions or directions pursuant to this Trust Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City or the Corporation elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The City and the Corporation agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. Section 9.08. Trustee's Disclaimer of Warranties. THE TRUSTEE 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 LEASED PREMISES, OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE CITY IS LEASING THE LEASED PREMISES AS IS. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of the Lease, the Site Lease, the Assignment Agreement or this Trust Agreement for the existence, funtishing, functioning or the City's use and possession of the Leased Premises. ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted. (a) With Consent. This 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, with notice to any rating agency then rating the Certificates by a Supplemental Agreement or amendment thereto which shall become effective when the written consents of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 10.03 hereof, shall have been filed with the Trustee. No such modification or amendment shall: (i) extend or have the effect of extending the maturity of any Certificate or reducing the fixed 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 Certificates being affected, or 41 DOCSOG 1423520x6/022459 -0014 (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, or (iv) amend this Section 10.01 without the prior written consent of the Owners of all Certificates then outstanding. The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning (i) the lack of material adverse effect of the amendment on Owners and (ii) the fact that the amendment will not affect the tax status of interest evidenced by the Certificates or any Additional Certificates. Any such Supplemental Agreement or amendments thereto shall become effective as provided in Section 10.02 hereof. (b) Without Consent. This 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 or amendments thereto or a supplement or amendment to the Lease, without the consent of any such Owners, but only to the extent permitted by law and only: (i) to add to the covenants and agreements of the City hereunder, (ii) to cure, correct or supplement any ambiguous or defective provision contained herein or therein, (iii) in regard to matters arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable (which may be based upon opinions as provided in Section 9.03(b)), shall not materially adversely affect the interest of the Owners, (iv) to substitute the Leased Premises, or a portion thereof, in accordance with Sections 3.5 and 7.12 of the Lease, (v) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest component of 2010A Lease Payments and the interest payable with respect to the 2010A Certificates and to maintain the federal subsidy with respect to the City's obligations to pay the Interest Component with respect to the 2010B Lease Payments under the Lease, (vi) to add to the rights of the Trustee, (vii) to maintain the rating or ratings assigned to the Certificates, or (viii) to provide for the execution and delivery of Additional Certificates in accordance with the provisions of Section 2.12 hereof. No such modification or amendment, however, shall modify any of the rights or obligations of the Trustee without its written assent thereto. Any such Supplemental Agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. 42 DOCSOC/ 1423520v6/022459 -0014 The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning (i) the lack of material adverse effect of the amendment on Owners and (ii) the fact that the amendment will not affect the tax status of interest with respect to the 2010A Certificates or any Additional Certificates. Any such Supplemental Agreement or amendments thereto shall become effective as provided in Section 10.02 hereof. Section 10.02. Procedure for Amendment with Written Consent of the Owners. This Trust Agreement or the Lease may be amended by Supplemental Agreement as provided in this Section 10.02 in the event the consent of the Owners is required pursuant to Section 10.01(a) hereof. A copy of the form of such Supplemental Agreement, together with a request to the Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth in the Certificate registration books maintained pursuant to Section 2.09 hereof, but failure to receive copies of such Supplemental Agreement and request so mailed shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided. Such Supplemental Agreement shall not become effective unless there shall be filed with the Trustee the written consent of the Owners of at least a majority in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.03 hereof) and notices shall have been mailed as hereinafter in this Section provided. 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 consent 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. The Trustee may obtain and conclusively rely on an opinion of counsel with regard to such matters. Section 10.03. Disqualified Certificates. Certificates or Additional 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 or Additional Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates or Additional Certificates provided for in this Trust Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement; except that in determining whether the Trustee shall be protected in relying upon any such approval or consent of an Owner, only Certificates that the Trustee actually knows to be 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 or Additional Certificates held in any pension or retirement fund) shall be disregarded unless all Certificates are so owned, held by or for the account of in which case such Certificates shall be considered Outstanding for the purpose of such determination. 43 DOCSOC/ 1423520v6/022459 -0014 The City or the 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 or Additional Certificates as to which such consent is given are disqualified as provided in this Section 10.03 hereof. Upon request of the Trustee, the City and Corporation shall specify to the Trustee those Certificates and Additional Certificates disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate. Section 10.04. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article X, this Trust Agreement or the Lease, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Agreement shall be deemed to be part of the terms and conditions of this Trust Agreement or the Lease, as the case may be, for any and all purposes. Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments. The City 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 City, 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 such purpose at the Principal Office, a suitable notation shall be made on such Certificate. The City may determine that new Certificates, so modified as in the opinion of the Trustee is necessary to conform to such Owner's action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such new Certificate shall be exchanged in the Principal Office without cost to such Owner, for a Certificate of the same character then Outstanding, upon surrender of such Certificate. Section 10.06. Amendatory Endorsement of Certificates. Subject to Section 10.01 hereof, the provisions of this Article X shall not prevent an Owner from accepting any amendment as to the particular Certificates held by him, provided that due notification thereof is made on such Certificates. Section 10.07. Copies of Amendments Delivered to Rating Agencies. Copies of any modifications or amendments to this Agreement, the Lease, the Site Lease or the Assignment Agreement shall be delivered by the City to any rating agency then rating the Certificates at least 10 days prior to the effective date thereof. ARTICLE XI COVENANTS; NOTICES Section 11.01. Compliance With and Enforcement of the Lease. The City covenants and agrees with the Owners to perform all obligations and duties imposed on it under the Lease. The Corporation covenants and agrees with the Owners to perform all obligations and duties imposed on 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 44 DOCSOC/ 1423520v6/022459 -0014 thereunder. 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 either of them, in the Leased Premises, which may or can in any manner affect such estate of the City, will deliver the same, or a copy thereof, to the Trustee. Section 11.02. Payment of Taxes. The City shall pay all taxes as provided in Section 7.7(b) of the Lease. Section 11.03. 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 11.04. Prosecution and Defense of Suits. The City shall promptly, and also upon request of the Trustee or any Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Leased Premises, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose. Section 11.05. City Budgets. In accordance with Section 4.7 of the Lease, the City Representative shall certify to the Trustee on or before August 1 of each year that the City has included all Lease Payments (other than Lease Payments of advance rental), Additional Payments due under the Lease in the Fiscal Year covered by its annual budget and the amount so included. If the City fails to certify that it has included all such Lease Payments and Additional Payments in such annual budget, 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 4.7 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 in writing of the proceedings proposed to be taken by the City, and shall keep the Trustee advised in writing of all proceedings thereafter taken by the City. Section 11.06. Further Assurances. The Corporation and the City will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners the rights and benefits provided herein. Section 11.07. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. 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 hereunder; 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 and the Continuing Disclosure Agreement. 45 DOCSOC/ 1423520v6/022459 -0014 ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of the Citv. 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 hereto or to the Owners with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee. Section 12.02. No Liability of the City or Corporation for Trustee Performance. Except as expressly provided herein, neither the City nor the Corporation shall have any obligation or liability to any other parties hereto or to the Owners with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement. (a) No Investment Advice. The Trustee shall have no obligation or responsibility for providing information to the Owners concerning the investment character of the Certificates. (b) Sufficiency of this Trust Agreement or Lease Payments. The Trustee makes no representations as to the validity or sufficiency of the Certificates, shall incur no responsibility or liability 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 or liable for the sufficiency or enforceability of the Lease, the Site Lease or the Assignment Agreement. 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 Trust Agreement), its right to receive moneys pursuant to said Lease, or the value of or title to the Leased Premises. (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 Trust Agreement or failure or refusal of any other party to perform any covenant or agreement made by any of them under this Trust Agreement or the Lease, but shall be responsible solely for the performance of the duties and obligations expressly imposed upon it hereunder as provided in Section 9.05. (d) Recitals and Agreements of Corporation and 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. Section 12.03. Limitation of Rights to Parties and Certificate Owners. Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Corporation, the Trustee and the Owners, any legal or equitable right, remedy or claim under or in respect of this Trust 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. Section 12.04. No Liability of Corporation to the Owners. Except as expressly provided herein, the Corporation shall not have any obligation or liability to the Owners with respect to the payment when due of the Lease Payments by the City or with respect to the observance or 46 DOCSOC/ 1423520v6/022459 -0014 performance by the City of the other agreements, conditions, and covenant imposed upon the City by the Lease or by this Trust Agreement. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. 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. Section 13.02. 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. Section 9.2 of the Lease is hereby incorporated by reference. (b) Actual Knowledge. The Trustee shall not be deemed to have knowledge of any Event of Default unless and until the trust officer responsible for the administration of this Trust Agreement shall have actual knowledge thereof, or shall have received written notice thereof at the Principal Office. Section 13.03. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XIII or of Article IX of the Lease, shall be deposited into the Lease Payment Fund and be applied by the Trustee after payment of all amounts due and payable under Sections 9.06 and 9.07 hereof and Section 4.11 of the Lease in the following order upon presentation of the Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid - First, Costs and Expenses: to the payment of the costs, fees and expenses of the Trustee in declaring such Event of Default and in performing its duties and obligations hereunder, including reasonable compensation to its agents, attorneys and counsel and then to any such amounts incurred by the Owners; Second, Interest: to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installment, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Third, Principal: to the payment to the persons entitled thereto of the unpaid principal with respect to 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 47 DOCSOC/ 1423520v6/022459 -0014 sufficient to pay in full all the amounts due with respect to the Certificates on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference. Section 13.04. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, the Trustee may, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or in the Lease, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder; provided that such written request shall not be otherwise than in accordance with provisions of law and this Trust Agreement and that the Trustee shall have the right to decline to follow any such written request if the Trustee shall be advised by counsel that the action or proceeding so requested may not be taken lawfully or if the Trustee in good faith shall determine that the action or proceeding so requested would be unjustly prejudicial to the Certificate Owners not a party to such written request or expose the Trustee to liability. In no event shall counsel to the Trustee be deemed counsel to the Owners, and any communications between the Trustee and its counsel shall be deemed confidential and privileged. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Certificates or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners of the Certificates so affected. Section 13.05. Non - Waiver. Nothing in this Article XIII or in any other provision of this Trust Agreement or in the Certificates shall affect or impair the obligation of the City 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 XIII to the Trustee or to the Owners may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners. Section 13.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. Section 13.07. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interest of the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the EF DOCSOC/ 1423520x6/022459 -0014 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. Section 13.08. Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate executed hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default under the Lease; (b) the Owners of a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (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; and (e) there shall have been a default in the payment of such Owner's proportionate interest in the Lease Payments as the same become due. Such notification, request, tender of indemnity, refusal or omission, and default 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 Trust Agreement, except in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. The right of any Owner of any Certificate to receive payment of said Owner's proportionate interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Trust Agreement. ARTICLE XIV MISCELLANEOUS Section 14.01. Defeasance. (a) Methods. If and when any Outstanding Certificates shall be paid and discharged in any one or more of the following ways: (i) Payment or Prepayment: by well and truly paying or causing to be paid the principal, interest and prepayment premiums (if any) with respect to such Certificates Outstanding, as and when the same become due and payable; (ii) Cash: if prior to maturity and having given at least thirty (30) days prior written notice of prepayment by depositing with the Trustee, in trust, concurrent with the giving of such notice, an amount of cash which (together with cash then on deposit in the Lease Payment Fund together with the interest to accrue thereon, in the event of payment or provision for payment of all Outstanding Certificates) is sufficient to pay such Certificates Outstanding, including all principal and interest and premium, if any; or (iii) Government Obligations: by irrevocably depositing with the Trustee, in trust, Government Obligations together with cash, if required, in such amount as will, in the opinion of an 49 DOCSOC/ 1423520v6/022459 -0014 independent certified public accountant, 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 such Certificates (including all principal and interest represented thereby and prepayment premiums if any) at or before their maturity or prepayment date; and all other amounts due hereunder have been paid in full, 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 rights of the Trustee under Sections 9.06 and 9.07 hereof, and the obligation of the City and the Corporation to comply with the provisions of Sections 8.07 and 8.08 hereof and the obligation 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 (ii) and (iii) 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 (ii) and (iii) of this Section, the Certificates shall continue to represent direct and proportionate interests of the Owners thereof in applicable Lease Payments under the Lease. (b) Surplus Moneys. 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 (a)(i) through (a)(iii) of this Section, which are not required for the payment to be made to the Owners, shall be paid over to the City, after the payment of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease. (c) 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. (d) Opinions and Report s. Prior to any defeasance becoming effective under this Section, the City shall cause to be delivered (i) an executed copy of a report, addressed to the Trustee, the City, in form and substance acceptable to the City of a nationally recognized fern of certified public accountants, verifying that the Government Obligations and cash, if any, satisfy the requirements of Section 14.01(a) above, (ii) a copy of the escrow deposit agreement entered into in connection with such defeasance, and (iii) a copy of an opinion of Special Counsel, dated the date of such defeasance and addressed to the Trustee, the City, in form and substance acceptable to the City, to the effect that such Certificates are no longer Outstanding under the Trust Agreement. Section 14.02. Non - Presentment of Certificates. In the event any Certificate shall not be presented for payment when the principal with respect thereto 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 Prepayment Fund or Lease Payment Fund, as applicable, all liability of the City and the Trustee 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 50 DOCSOC/ 1423520v6/022459 -0014 paid by the Trustee to the City, free from the trusts created by this Trust Agreement. Prior to forwarding any such moneys to the City, the Trustee may publish notice of its intention to transfer such funds in The Bond Buyer or another financial newspaper of general circulation in New York, New York. In addition, Trustee shall be indemnified from and against any and all liabilities to third parties resulting from its actions under this Section. Thereafter, Owners shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid 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. Section 14.03. Acquisition of Certificates by Citv. All Certificates acquired by the City, whether by purchase, gift or otherwise, shall be surrendered by the City to the Trustee for cancellation. Section 14.04. Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed by it under this Trust Agreement until four years after no Certificate is Outstanding (or such longer period as required by the Trustee's policies and procedures, or by applicable law), which shall be available for inspection by the City, the Corporation and any Owner, or the agent of any of them, at any time during regular business hours upon reasonable prior notice. Section 14.05. Notices. Except as specifically provided otherwise in this Trust Agreement, all written notices to be given under this Trust Agreement shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be deemed to have been received upon the earlier of actual receipt or five Business Days after deposit in the United States mail, in certified form, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: If to the City: City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92663 Attention: City Manager If to the Corporation: Newport Beach Public Facilities Corporation 3300 Newport Boulevard Newport Beach, California 92663 Attention: Treasurer If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 700 S. Flower St., Ste. 500 Los Angeles, CA 90017 Attention: Corporate Trust Department 51 DOCSOC/ 1423520v6/022459 -0014 If to S &P: Standard & Poor's Ratings Services 55 Water Street New York, New York 10004 Attention: Public Finance Department If to Moody's Moody's Investors Service 7 World Trade Center 250 Greenwich Street New York, NY 10007 Attention: Structured Finance Group - Fully Supported If to Fitch: Fitch Ratings, Inc. One State Street Plaza New York, New York 10004 Attention: Public Finance Department, Municipal Structured Finance Group Section 14.06. Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State. Section 14.07. Binding Effect: Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Trust Agreement either the Corporation, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Corporation, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 14.08. Execution in Counterparts. This Trust 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 14.09. 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 Trust Agreement. All references herein to "Articles ", "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 14.10. Waiver of Notice. Whenever in this Trust 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 14.11. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Trust 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 Trust Agreement, and this Trust Agreement shall be construed as if 52 DOCSOC/ 1423520v6/022459 -0014 such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificate's pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable. [REMAINDER OF PAGE INTENTIONALLYLEFT BLANK.J 53 DOCSOC/ 1423520v6/022459 -0014 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: Authorized Officer NEWPORT BEACH PUBLIC FACILITIES CORPORATION By: Its: President ATTEST: Secretary CITY OF NEWPORT BEACH By: Its: Mayor ATTEST: City Clerk S -1 DOCSOC/ 1423520v6/022459 -0014 APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: David R. Hunt, City Attorney APPROVED AS TO FORM: SPECIAL COUNSEL: Lm , Stradling Yocca Carlson & Rauth, a Professional Corporation S -2 DOCSOC/ 1423520v6/022459 -0014 0 EXHIBIT A -1 FORM OF 2010A CERTIFICATE UNLESS THIS CERTIFICATE IS PRESENTED BY ANA UTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE TRUST AGREEMENT) TO THE REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY ANA UTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTERESTHEREIN UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH CERTIFICATE OF PARTICIPATION 2010A (TAX EXEMPT) (CIVIC CENTER PROJECT /CENTRAL LIBRARY REFUNDING) Evidencing the Fractional Interest of the Owner Hereof In 2010A Lease Payments to be Made by the CITY OF NEWPORT BEACH As Rental for Certain Leased Premises Pursuant to a Lease/Purchase Agreement With the NEWPORT BEACH PUBLIC FACILITIES CORPORATION INTEREST RATE REGISTERED OWNER: 11114-10412411 W4\ UT Col 81,01 i MATURITY DATE CEDE & CO. DELIVERY DATE CUSIP NO /100 DOLLARS 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 fractional and undivided interest in the right to receive certain 2010A Lease Payments thereof under and as defined in that certain Lease /Purchase Agreement dated as of November 1, 2010 (the "Lease "), by and between the Newport Beach Public Facilities Corporation, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "Corporation') and the City of Newport Beach, a chartered city organized and existing under and by virtue of the laws and Constitution of the State of California (the "City"), which 2010A Lease A -1 -1 DOCS00 1423520v6/022459 -0014 Payments and certain other rights and interests under the Lease have been assigned to The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "). 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 2010A Lease Payments designated as principal coming due during the preceding twelve months, and to receive on July 1 and January 1 of each year (the "Payment Dates ") until payment in full of said portion of principal, the Registered Owner's portion of the 2010A Lease Payments designated as interest coming due during the six months immediately preceding each of the Payment Dates provided that interest with respect hereto shall be payable from the Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed during the period from the day after the fifteenth day of the month preceding a Payment Date (the "Record Date ") to and including such Payment Date, in which event interest shall be payable from such Payment Date, or (ii) unless this Certificate is executed on or prior to June 15, 2011, in which event interest shall be payable from the Dated Date hereof. 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. The amounts representing interest are payable by check mailed by the Trustee by first class mail to the Registered Owner hereof as of the Record Date preceding the Payment Date at his address as it appears on the registration books of the Trustee. Interest with respect to any Certificates may, at the option of any Owner of Certificates in an aggregate principal amount of $1,000,000 or more evidenced by the written request of such Owner to the Trustee, be paid to such Owner by wire transfer to the bank and account number on file with the Trustee as of the Record Date. This Certificate is one of the $ aggregate principal amount of Certificates of Participation 2010A (Tax Exempt) (Civic Center Project/Central Library Refunding) (the "Certificates ") which have been executed and delivered by the Trustee pursuant to the terms of a Trust Agreement dated as of November 1, 2010 (the "Trust Agreement "), by and among the Trustee, the Corporation and the City. Concurrently, with the execution and delivery of the Certificates, the Trustee will execute the $ aggregate principal amount of the Certificates of Participation 2010B (Federally Taxable Direct Pay Build America Bonds) (Civic Center Project) (the "2010B Certificates ") pursuant to the terms of the Trust Agreement. The City is authorized to enter into the Lease and the Trust Agreement under the Constitution and laws of the State of California. 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. The City is obligated to pay 2010A 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 2010A 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 obligation of the City to pay 2010A Lease Payments does not constitute a debt of the City, the State of California or any of its political A -1 -2 DOC SOC/ 1423520v6/022459 -0014 subdivisions within the meaning of any Constitutional or statutory debt limitation or restriction. The City's obligation to pay 2010A Lease Payments may be completely or partially abated during any period in which, by reason of noncompletion of the Project by the date specified in the Lease or material damage, destruction, title defect, or taking by eminent domain or condemnation there is substantial interference with the use and right of possession by the City of the Leased Premises. Failure of the City to pay 2010A 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 and the 2010B Certificates then Outstanding, and may be amended, without such consent of the Registered Owners under certain circumstances. No such modification or amendment shall (i) extend or have the effect of extending the 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 Registered Owner of such Certificate being affected, or (ii) reduce or have the effect of reducing the percentage of Certificates and 2010B Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease, (iii) modify any of the rights or obligations of the Trustee without its written assent thereto, or (iv) amend the section of the Trust Agreement dealing with permitted amendments thereof without the prior written consent of the owners of all Certificates and 2010B Certificates. 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 an authorized denomination or denominations, for the same aggregate principal amount, maturity and interest rate, will be delivered to the transferee. This Certificate also may be exchanged for a like aggregate principal amount of Certificates of other authorized denominations as prescribed in the Trust Agreement. The City, the Corporation, and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes whether or not this Certificate shall be overdue, and the City, the Corporation and the Trustee shall not be affected by any notice to the contrary. The Trustee shall not be required to transfer any Certificate selected for prepayment or be required to transfer any Certificate during the period in which the Trustee is selecting Certificates for prepayment or after notice of prepayment has been given in accordance with the Trust Agreement. The Certificates are subject to prepayment, on any date, in whole or in part, from Net Proceeds deposited by the Trustee in the Prepayment Fund established under the Trust Agreement at least forty-five (45) days prior to the date fixed for prepayment, at a prepayment price equal to the principal amount thereof together with accrued interest to the dated fixed for prepayment, without premium. In the event that Net Proceeds are to be applied to the prepayment of Certificates when Certificates, 2010B Certificates and Additional Certificates, if any, are Outstanding, the Net Proceeds will be applied to prepay a proportionate amount of Certificates, 2010B Certificates and Additional Certificates based on the Outstanding principal amount and by lot within any maturity or sinking account prepayment. A -1 -3 DOCSOC/1423520v6/022.459 -0014 The Certificates maturing on or after July 1, 20 are subject to prepayment prior to maturity in whole or in part on any date on or after July 1, 20_, at the option of the City, in the event the City exercises its option under the Lease to prepay all or a portion of the principal component of the 2010A Lease Payments (in integral multiples of $5,000), at the prepayment price equal to the principal component to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. The Certificates maturing July 1, 20_ (the "20_ Term Certificates ") are subject to prepayment in part by lot, on July 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20_ Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the 20_ Term Certificates so prepaid as nearly as practicable in a pro rata basis in integral multiples of $5,000. In addition, in lieu of prepayment thereof, the 20 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Sinking Account Date (July 1) Payment * Final Maturity The Certificates maturing July 1, 20_ (the "20 Term Certificates ") are subject to prepayment in part by lot, on July 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20_ Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the 20_ Term Certificates so prepaid as nearly as practicable in a pro rata basis in integral multiples of $5,000. In addition, in lieu of prepayment thereof, the 20 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Sinking Account Date (July 1) Payment * Final Maturity A -1 -4 DOCSOC/ 1423520v6/022459 -0014 As provided in the Trust Agreement, notice of prepayment shall be mailed, not less than 30 nor 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 duly provided therefor as specified in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the date fixed for prepayment. The City has certified that all acts, conditions and things required by the statutes of the State of California and the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate, and that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. Terms used herein which are not otherwise defined shall have the respective meanings assigned thereto in the Trust Agreement. The Trustee has no obligation or liability to the Registered Owners to make payments of principal or interest with respect to this Certificate except from 2010A Lease Payments paid to the Trustee and from the various funds and accounts established under the Trust Agreement. The Trust Agreement provides that 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 Trustee has executed this Certificate solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. A -1 -5 DOCSOC/ 1423520v6/022459 -0014 IN WITNESS WHEREOF, this Certificate has been executed and delivered by the Trustee, acting pursuant to the Trust Agreement. Date of Execution: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: Authorized Officer [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (print or typewrite name, address, including postal zip code, and social security or other identifying number of Transferee) the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s) guarantee should be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or such other guarantee program acceptable to the Trustee. DOCSOC/ 1423520v6/022459 -0014 NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration or enlargement or any change whatever. A -1 -6 EXHIBIT A -2 FORM OF 2010B CERTIFICATE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED I7V THE TRUST AGREEMENT) TO THE REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH CERTIFICATE OF PARTICIPATION 2010B (FEDERALLY TAXABLE DIRECT PAY BUILD AMERICA BONDS) (CIVIC CENTER PROJECT) Evidencing the Fractional Interest of the Owner Hereof In 2010B Lease Payments to be Made by the CITY OF NEWPORT BEACH As Rental for Certain Leased Premises Pursuant to a Lease/Purchase Agreement With the NEWPORT BEACH PUBLIC FACILITIES CORPORATION INTEREST RATE REGISTERED OWNER PRINCIPAL AMOUNT: MATURITY DATE CEDE & CO. DELIVERY DATE CUSIP NO /100 DOLLARS 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 fractional and undivided interest in the right to receive certain 2010B Lease Payments thereof under and as defined in that certain Lease /Purchase Agreement dated as of November 1, 2010 (the "Lease "), by and between the Newport Beach Public Facilities Corporation, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "Corporation ") and the City of Newport Beach, a chartered city organized and existing under and by A -2 -1 DOCSOC/ 1423520v6/022459 -0014 virtue of the laws and Constitution of the State of California (the "City "), which 2010B Lease Payments and certain other rights and interests under the Lease have been assigned to The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "). 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 2010B Lease Payments designated as principal coming due during the preceding twelve months, and to receive on January 1 and July 1 of each year (the "Payment Dates ") until payment in full of said portion of principal, the Registered Owner's portion of the 2010B Lease Payments designated as interest coming due during the six months immediately preceding each of the Payment Dates provided that interest with respect hereto shall be payable from the Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed during the period from the day after the fifteenth day of the month preceding a Payment Date (the "Record Date ") to and including such Payment Date, in which event interest shall be payable from such Payment Date, or (ii) unless this Certificate is executed on or prior to June 15, 2011, in which event interest shall be payable from the Dated Date hereof. The portion of the 2010B 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 2010B 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. The amounts representing interest are payable by check mailed by the Trustee by first class mail to the Registered Owner hereof as of the Record Date preceding the Payment Date at his address as it appears on the registration books of the Trustee. Interest with respect to any Certificate may, at the option of any Owner of Certificates in an aggregate principal amount of $1,000,000 or more evidenced by the written request of such Owner to the Trustee, be paid to such Owner by wire transfer to the bank and account number on file with the Trustee as of the Record Date. This Certificate is one of the $ aggregate principal amount of Certificate of Participation 2010B (Taxable) (Civic Center Project) (the "Certificates ") which have been executed and delivered by the Trustee pursuant to the terms of a Trust Agreement dated as of October 1, 2010 (the "Trust Agreement "), by and among the Trustee, the Corporation and the City. Concurrently, with the execution and delivery of the Certificates, the Trustee will execute the $ aggregate principal amount of the Certificate of Participation 2010A (Tax Exempt) (Civic Center Project/Central Library Refunding) (the "2010A Certificates ") pursuant to the terms of the Trust Agreement. The City is authorized to enter into the Lease and the Trust Agreement under the Constitution and laws of the State of California. 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. The City is obligated to pay 2010B 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 2010B 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 obligation of the City to pay 2010B A -2 -2 DOCSOC/ 1423520v6/022459 -0014 Lease Payments does not constitute a debt of the City, the State of California or any of its political subdivisions within the meaning of any Constitutional or statutory debt limitation or restriction. The City's obligation to pay 2010B Lease Payments may be completely or partially abated during any period in which, by reason of noncompletion of the Project by the date specified in the Lease or material damage, destruction, title defect, or taking by eminent domain or condemnation there is substantial interference with the use and right of possession by the City of the Leased Premises. Failure of the City to pay 2010B 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 and the 2010A Certificates then Outstanding, and may be amended, without such consent of the Registered Owners under certain circumstances. No such modification or amendment shall (i) extend or have the effect of extending the maturity of any Certificate or reducing the fixed 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 Registered Owner of such Certificate being affected, or (ii) reduce or have the effect of reducing the percentage of Certificates and 2010A 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 or (iv) amend the section of the Trust Agreement dealing with permitted amendments thereof without the prior written consent of the owners of all Certificates and 2010A Certificates. 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 an authorized denomination or denominations, for the same aggregate principal amount, maturity and interest rate, will be delivered to the transferee. This Certificate also may be exchanged for a like aggregate principal amount of Certificate of other authorized denominations as prescribed in the Trust Agreement. The City, the Corporation, and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes whether or not this Certificate shall be overdue, and the City, the Corporation and the Trustee shall not be affected by any notice to the contrary. The Trustee shall not be required to transfer any Certificate selected for prepayment or be required to transfer any Certificate during the period in which the Trustee is selecting Certificates for prepayment or after notice of prepayment has been given in accordance with the Trust Agreement. The Certificates are subject to prepayment, on any date, in whole or in part, from Net Proceeds deposited by the Trustee in the Prepayment Fund established under the Trust Agreement at least forty -five (45) days prior to the date fixed for prepayment, at a prepayment price equal to the principal amount thereof together with accrued interest to the dated fixed for prepayment, without premium. In the event that Net Proceeds are to be applied to the prepayment of Certificates when 2010A Certificates, Certificates and Additional Certificates, if any, are Outstanding, the Net Proceeds will be applied to prepay a proportionate amount of 2010A Certificates, Certificates and A -2 -3 DOCSOC/ 1423520v6/022459 -0014 Additional Certificates based on the Outstanding principal amount and by lot within any maturity or sinking account prepayment. The Certificates maturing on or after July 1, 20 are subject to prepayment prior to maturity in whole or in part on any date on or after July 1, 20_, at the option of the City, in the event the City exercises its option under the Lease to prepay all or a portion of the principal component of the 2010B Lease Payments (in integral multiples of $5,000), at the prepayment price equal to the principal component to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. Extraordinary Optional Prepayment. The 2010B Certificates are subject to extraordinary prepayment prior to their respective maturities, at the option of the City, upon the occurrence of an Extraordinary Event (as defined in the Trust Agreement), as a whole or in part, on any Business Day and in the event the City exercises its option under the Lease to prepay the 2010B Lease Payments at the applicable Make -Whole Prepayment Price (as defined in the Trust Agreement). Optional Prepayment with Make -Whole Payment. Before July 1, 2020, the 2010B Certificates will be subject to prepayment prior to maturity at the option of the City, as a whole or in part, on any Business Day in the event the City exercises its option under the Lease to prepay the 2010B Lease Payments at the applicable Make -Whole Prepayment Price (as defined in the Trust Agreement). The Certificates maturing July 1, 20_ (the "20 Term Certificates ") are subject to prepayment in part pro rata among Owners, on July 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20 Term Certificates have been prepaid pursuant to an extraordinary prepayment, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the 20_ Term Certificates so prepaid as nearly as practicable in a pro rata basis in integral multiples of $5,000. In addition, in lieu of prepayment thereof, the 20 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Sinking Account Date (July 1) Payment * Final Maturity As provided in the Trust Agreement, notice of prepayment shall be mailed, not less than 30 nor 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 duly provided therefor as specified in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the date fixed for prepayment. A -2 -4 DOCSOC/ I423520v6/022459 -0014 The City has certified that all acts, conditions and things required by the statutes of the State of California and the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate, and that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. Terms used herein which are not otherwise defined shall have the respective meanings assigned thereto in the Trust Agreement. The Trustee has no obligation or liability to the Registered Owners to make payments of principal or interest with respect to this Certificate except from 2010B Lease Payments paid to the Trustee and from the various funds and accounts established under the Trust Agreement. The Trust Agreement provides that 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 Trustee has executed this Certificate solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. IN WITNESS WHEREOF, this Certificate has been executed and delivered by the Trustee, acting pursuant to the Trust Agreement. Date of Execution: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: A -2 -5 DOCSOC/ 1423520v6/022459 -0014 Authorized Officer [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (print or typewrite name, address, including postal zip code, and social security or other identifying number of Transferee) the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s) guarantee should be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or such other guarantee program acceptable to the Trustee. DOCSOC/ 1423520x6/022459 -0014 NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration or enlargement or any change whatever. i i EXHIBIT B -1 f j FORM OF WRITTEN DELIVERY COST REQUISITION Trustee, as Trustee RE: Disbursement from the Project Fund pursuant to Section 3.03 of the Trust Agreement related to the City of Newport Beach Certificates of Participation, 2010A and 2010B (Civic Center Project), dated as of November 1, 2010 (the "Agreement"), by and among you, as trustee, the Newport Beach Public Facilities Corporation and the City of Newport Beach (the "City ") REQUISITION NO. You are hereby instructed to pay to the City, or to at $ as a Delivery Cost from the Project Fund as provided in Section 3.03 of the Agreement. This Delivery Cost has been properly incurred, is a proper charge against the Project Fund and has not been the basis of any previous disbursements. The amount remaining in the Project Fund, together with interest earnings on the Project Fund plus investment earnings on other funds that will be transferred into the Project Fund, will, after payment of the amount set forth in this requisition, be sufficient to pay all remaining Delivery Costs and Project Costs as presently estimated. Very truly yours, City Representative B -1 -1 DOCSOC/ 1423520v6/022459 -0014 Im►�:11lYllba FORM OF WRITTEN PROJECT COST REQUISITION Trustee, as Trustee RE: Disbursement from the Project Fund pursuant to Section 3.03 of the Trust Agreement related to the City of Newport Beach Certificates of Participation, 2010A and 2010B (Civic Center Project), dated as of November 1, 2010 (the "Agreement'), by and among you as trustee, the Newport Beach Public Facilities Corporation and the City of Newport Beach (the "City ") REQUISITION NO. You are hereby instructed to pay to the City, or to at $ as a Project Cost from the Project Fund as provided in Section 3.03 of the Agreement. This Project Cost has been properly incurred, is a proper charge against the Project Fund and has not been the basis of any previous disbursements. The amount remaining in the Project Fund, together with other moneys available to the City and together with interest earnings on the Project Fund plus investment earnings on other funds that will be transferred into the Project Fund, will, after payment of the amount set forth in this requisition, be sufficient to pay all remaining Delivery Costs and Project Costs as presently estimated. Very truly yours, City Representative B -2 -1 DOCSOC/ 1423520x6/022459 -0014