HomeMy WebLinkAbout1997-08-26; City Council; 14317; HOSP GROVE CERTIFICATES OF PARTICIPATON REFUNDING ISSUEh
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%Y OF CARLSBAD - AGEND BILL
HOSP GROVE
REFUNDING ISSUE
\
DEPT HC AB# 14,311
MTG. 8/26/97 CERTIFICATES OF PARTICIPATION CITY AT'
CITY MG DEPT. FIN
a
TITLE:
RECOMMENDED ACTION:
Adopt Resolution No 93-57'? authorizing the preparation, sale and delivery of not
$7,000,000 principal amount of refunding certificates of participation (Hosp Grove Pro
1997 and approving certain documents and authorizing certain actions in connection there
ITEM EXPLANATION:
On June 3, 1997, the City Council adopted Resolution No. 97-468 directing staff to proce
refunding (refinancing) of several existing Certificate of Participation (COP) issues. At th
Council heard a report that explained that the decline in interest rates over the past few
provided the City with an opportunity to save hundreds of thousands of dollars by ref
outstanding COPs. Council directed staff to proceed with the selection of an underwriter a
forward with the refunding plan.
On July 8, 1997, the City Council adopted Resolution No. 97-529 selecting Dean Witter F
the underwriter to work on the refunding project, to return with an agreement, and direc
continue with the refunding project. The form of that agreement is on file with the City attached resolution limits the amount to be paid to the underwriter to not more than 1
aggregate principal amount of the Certificates. The final amount will be negotiated at tl
bonds are priced based on the market then in effect.
To insure that a fair price is achieved and to assist the staff with the review of document
also solicited proposals from financial consultants. Staff has entered into an agreement w
Ross, an independent financial consultant, who previously worked with the City on the ref
multi-family mortgage revenue bond as an underwriter with Dean Witter.
The Council also asked staff to propose a second course of action should Dean Witter Rc
be able to complete the refundings for any reason. After considering the five firms
interviewed, staff is recommending that, in the unlikely event that Dean Witter Reynolds 1
to complete the refunding, that the Council transfer the assignment of completing the ri
Stone and Youngberg. The Stone and Youngberg staff is prepared to assist the City, if ne
Following the Council's selection of the underwriter, staff consulted with the City Attor
selection of Bond Counsel. The City Attorney requested that we select the firm of Strac
Carlson and Rauth, and more specifically Kurt Yeager of that firm, to work on the Hosp
Water District refunding issues. Kurt Yeager has served the City as Bond Counsel on SI
issues, including the expansion of the Encina Wastewater Plant.
Staff and the consultants listed above have been working to complete the refunding of bot
Grove issues by late September in order to avoid having to wait six months for the ne
payment date. The documents necessary to accomplish this are on file in the City Clerk's c
In general, the attached documents will authorize the issuing of new COPs at a lower ir
than the existing issue. The proceeds of this new issue will be used to pay off the outstand
e Page 2 of Agenda Bill # 1Qa 1 1
The attached resolution requires that refunding generate a net present value savings of at in order for the transaction to proceed. The calculation of a net present value savings is z
method used by the industry to determine the amount of savings expected from a bond refu
method computes the annual savings to be achieved by the refunding (after adding in all
costs) and then discounts this stream of payments to take into account the time value of mor
The actions the Council is being asked to take are as follows:
1) Consent to the refunding.
2) Appoint First Trust of California to act as the trustee for the City and Carl:
Improvement Corporation (Corporation) on this issue. First Trust is the current tru
existing COP issue.
Approve the form of the Escrow Agreement, Site Lease, Lease Agreement, Trust 1
Continuing Disclosure Agreement, and Assignment Agreement. These document:
agreement between the various participants that make the refunding possible.
Authorize the Mayor, City Manager, Financial Management Director and City Clerk
the City of Carlsbad, and to make minor modifications as may be deemed neces
City Attorney and Bond Counsel.
5) Approve the form of the purchase agreement with Dean Witter Reynolds.
7) Approve the form of the Preliminary Official Statement.
8) Approve the form of the agreement with Stradling Yocca Carlson and Rauth.
Bond Counsel, the Dean Witter staff, and City staff will be available at the Council meetin!
any questions the Council may have on the documents listed above.
FISCAL IMPACT:
Based on current market conditions, the refunding of the Hosp Grove Certificates of Partic
produce a net savings of about $520,000 for the General Fund over the next ten years
value savings of 7%). This assumes that the average coupon rate for the new COP is
about 4.4%, compared to 7.97% for the existing issue.
All costs related to this issue will be paid from the proceeds of the issue. A summary of E
be available upon closing, now set for September 24, 1997.
EXHIBITS :
1. Resolution No. 93-5 7 7 authorizing the preparation, sale and delivery of not
3)
4)
6) Approve the form of the Certificates of Participation.
$7,000,000 principal amount of refunding certificates of participation (Hosp Grove Proj
1997 and approving certain documents and authorizing certain actions in connection thl
2. Documents on file with the City Clerk:
0 Site Lease
0 Lease Agreement
0 Assignment Agreement
0 Escrow Agreement
0 Trust Agreement - First Trust of California
0 Preliminary Official Statement
0 Purchase Agreement - Dean Witter Reynolds
0 Continuing Disclosure Certificate
0 Form of the Certificates
0 Form of the Agreement for Special Counsel Services - Stradling Yocca Carlson a
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RESOLUTION NO. 97-577
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD AUTHORIZING THE PREPARATION, SALE
AND DELIVERY OF NOT TO EXCEED $7,000,000
PRINCIPAL AMOUNT OF REFUNDING CERTIFICATES OF
PARTICIPATION (HOSP GROVE PROJECT) SERIES 1997
AND APPROVING CERTAIN DOCUMENTS AND
THEREWITH
AUTHORIZING CERTAIN ACTIONS IN CONNECTION I
WHEREAS, the City Council (the "City Council") of the City of Carlsbad (the "City") has
previously adopted its Resolution Nos. 88- 187 authorizing the execution and delivery of those cen
$8,690,000 Certificates of Participation (1 988 Hosp Grove Project) of the City (the "Prior
Certificates"); and
WHEREAS, the Board of Directors (the "Board") of the City of Carlsbad Public Improve1
Corporation (the "Corporation") has previously adopted its Resolution No. 88-06 approving the
Corporation's participation in the acquisition and construction of certain property acquired for
municipal purposes known as Hosp Grove and certain related improvements (the "Project") throuj
the execution and delivery of the Prior Certificates; and
WHEREAS, a refunding of the Prior Certificates will result in a reduction of the lease
payments required to be paid by the City in connection with the Project, thereby creating a public
benefit; and
WHEREAS, in order to reduce its costs associated with the Project, the City now desires
refund the outstanding portion of the Prior Certificates by causing the executi0.n and delivery of th
certain Refunding Certificates of Participation (Hosp Grove Project) Series 1997 (the "Certificate:
and the entering into by the City of that certain Escrow Agreement, to be dated as of September 1
1997, by and between the City and First Trust of California, National Association (the "Escrow
Agent"), the form of which has been presented to this City Council at the meeting at which this
Resolution has been adopted (the "Escrow Agreement").
WHEREAS, in order to accomplish the refunding of the Prior Certificates, the City and tb
Corporation Mer desire to enter into that certain Site Lease, by and between the City and the
Corporation (the "Site Lease"), and that certain Lease Agreement, by and between the City and th
Corporation (the "Lease Agreement"), each to be dated as of September 1, 1997, the forms of wh
have been presented to this City Council at the meeting at which this Resolution has been adoptec
WHEREAS, pursuant to the Site Lease, the Corporation will agree to lease certain real
property, improvements, hmishings and equipment described therein (the "Leased Property") frc
City and pursuant to the Lease Agreement the City wlll agree to lease back the Leased Property f the Corporation and to pay certain lease payments in connection therewith; and
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WHEREAS, the Lease payments to be made by the City under the Lease Agreement will
assigned by the Corporation to the Trustee (as defined below) for the benefit of the owners of the
Certificates to be executed and delivered pursuant to a Trust Agreement, to be dated as of
September 1, 1997, by and among First Trust of California, National Association, as trustee (the
"Trustee"), the City and the Corporation (the "Trust Agreement"), the form of which has been
presented to this City Council at the meeting at which this Resolution has been adopted; and
WHEREAS, the City Council desires to consent to the assignment of certain of the
Corporation's rights, title and interest in and to the Site Lease and the Lease Agreement, including right to receive such lease payments from the City, to the Trustee pursuant to an Assignment
Agreement, between the Corporation and the Trustee, to be dated as of September 1, 1997 (the
"Assignment Agreement"), the form of which has been presented to this City Council at the meeti
which this Resolution has been adopted; and
WHEREAS, the City Council desires to approve the form of a Purchase Agreement (the
"Purchase Agreement"), by and between the City and Dean Witter Reynolds Inc. (the "Purchaser'
pursuant to which the Purchaser will agree to buy the Certificates on the terms and conditions set
therein, the form of which has been presented to this City Council at the meeting at whch this
Resolution has been adopted;
WHEREAS, the City Council desires to approve the form of a Preliminary Official Stater
relating to the Certificates (the "Preliminary Official Statement") to be distributed to potential invc
for the purposes of facilitating the sale of the Certificates at the lowest feasible interest rate, the fc
which has been presented to this City Council at the meeting at which tlus Resolution has been
adopted; and
WHEREAS, the City Council desires to approve the form of a Continuing Disclosure
Agreement (the "Disclosure Agreement") between the City and the Trustee, the form of which ha
been presented to this City Council at the meeting at whch the Resolution has been adopted;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad tk
Section 1. Each of the foregoing recitals is true and correct. The City Council hereb
finds and determines that the total rental to be paid under the Lease Agreement does not exceed t
rental value of the Leased Property.
Section 2. This City Council hereby consents to the preparation, sale and delivery ol
Certificates in an aggregate amount of not to exceed $7,000,000 in accordance with the terms an
provisions of the Trust Agreement, with the exact principal amount to be that determined necessi
the City Manager or the Financial Management Director to refund and defease the Prior Certifice
The proceeds of the Certificates shall be expended to refund and defease the Prior Certificates an
provide for a reserve fund, if any, and the costs of the preparation, sale and delivety of the Certifi
First Trust of California, National Association is hereby appointed as TrL
on behalf of the owners of the Certificates, with the duties and powers of such Trustee as set fort
the Trust Agreement, and First Trust of California, National Association is hereby appointed as t
Escrow Agent with the duties and powers of the Escrow Agent as set forth in the Escrow Agree]
Section 3.
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Section 4. The forms of the Escrow Agreement, the Site Lease, the Lease Agreement
Trust Agreement, the Disclosure Agreement and the Assignment Agreement presented at this me€
are hereby approved. Each of the Mayor, the City Manager, the Financial Management Director a
the City Clerk is hereby authorized for and in the name of the City to execute the Escrow Agreeme
the Site Lease, the Lease Agreement, the Disclosure Agreement and the Trust Agreement in
substantially the forms hereby approved, with such additions thereto and changes therein as are
recommended or approved by Stradling, Yocca, Carlson & Rauth, a Professional Corporation, as
Special Counsel to the City ("Special Counsel"), or the City Attorney and the officer or officers
executing the same, including all changes necessary to reflect the purchase of bond insurance as
described in Section 5 below. Approval of such changes shall be conclusively evidenced by the
execution and delivery of the foregoing documents by one or more of the authorized officers. The
Mayor, the City Manager, the Financial Management Director and the City Clerk each is hereby
authorized to execute, acknowledge and deliver any and all documents required to consummate th
transactions contemplated by the Escrow Agreement, the Site Lease, the Lease Agreement, the
Disclosure Agreement, the Trust Agreement and the Assignment Agreement.
Section 5. The form of the Purchase Agreement presented at this meeting and the sal
the Certificates pursuant thereto are hereby approved, and each of the Mayor, the City Manager ar
Financial Management Director is hereby authorized to evidence the City's acceptance of the term
provisions of the Purchase Agreement by executing and delivering the Purchase Agreement in the
presented to the City at this meeting, with such additions thereto and changes therein as are
recommended or approved by Special Counsel or the City Attorney and the officers executing the
same. Approval of such additions and changes shall be conclusively evidenced by the execution a
delivery of the Purchase Agreement; provided, however, that the Purchase Agreement shall be sip
only if the aggregate principal amount of the Certificates does not exceed $7,000,000, the present
of the debt service payments due with respect to the Certificates is at least 3.5 percent less than th
present value of the debt service payments due with respect to the Prior Certificates (as set forth ii
writing by the City's Financial Advisor or the Purchaser) and the Purchaser's discount (exclusive (
original issue discount and any bond insurance premium) with respect to the Certficates does not
exceed 1.5% of the aggregate principal amount of the Certificates. The Financial Management
Director, or his designee, is authorized to reject any terms presented by the Purchaser if determinc
to be in the best interest of the City and is further authorized to evaluate whether the purchase of
municipal bond insurance for the Certificates will result in a net savings to the City and if so to
purchase such municipal bond insurance.
Section 6. The form of the Certificates as set forth in the Trust Agreement (as the TI
Agreement may be modified pursuant to Section 4 hereof) is hereby approved.
Section 7. The form of the Preliminary Official Statement presented at this meeting
hereby approved, and the Preliminary Official Statement may be distributed to prospective purch<
in the form so approved, together with such additions thereto and changes therein as are determin
necessary by the Financial Management Director, or his designee, to make such Preliminary Offii
Statement final as of its date for purposes of Rule 15c2-12 of the Securities and Exchange
Commission. Each of the Mayor and the City Manager is hereby authorized to execute a final 01
Statement in the form of the Preliminary Official Statement, together with such changes as are
determined necessary by the Financial Management Director, or his designee, and the officer exe
the same to make such Official Statement complete and accurate as of its date. The Purchaser is
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further authorized to distnbute the final Official Statement for the Certificates to the purchasers the
upon its execution by an officer of the City as described above. The City Manager, the Financial
Management Director and their written designees are hereby authorized &d directed to take what€
following their execution and delivery.
steps are necessary to comply with the requirements of Rule 15~2-12 applicable to the Cerhficates
Section 8. The City has previously selected Stradling, Yocca, Carlson & Rauth, a
Professional Corporation, to act as the legal advisor to the City on certain aspects of the execution
delivery of the Certificates, and hereby authorizes the City Manager and the Financial Managemer
Director to execute the Special Counsel Agreement for Certificates of Participation substantially ir
form which has been presented to th~s City Council. The Mayor, the City Manager, the Financial
Management Director and the City Clerk are hereby authorized, jointly and severally, to do any an
things and to execute and deliver any and all documents which they may deem necessary and advi
in order to consummate the sale and delivery of the Certificates and otherwise effectuate the purpc
of this Resolution, including the refunding and defeasance of the Prior Certificates, and such actio]
previously taken by such officers are hereby ratified and confirmed. In the event the Mayor is
unavailable or unable to execute and deliver any of the above-referenced documents, any other me
of the City Council may validly execute and deliver such document, and, in the event the City Clei
unavailable or unable to execute and deliver any of the above-referenced documents, any deputy c
may validly execute and deliver such document in her place.
Section 9. This Resolution shall take effect from and after its date of adoption.
ADOPTED, SIGNED AND APPROVED this 26th day of August , 1997. q’/ / [y.fP,./kA< ’..’ /‘d Ye7
Ma;or /
ATTEST: m City Clerk
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i
STATE OF CALIFORNTA 1 ) ss.
COUNTY OF SUT DIEGO )
Aletha L. Rautenkranz
1, I , City Clerk of the City Council of the City of Carlsbad, hereby cert
that the above and foregoing Resolution was duly and regularly adopted by the said Board at a reg1
meeting thereof held on the 26th day of August , 1997, and that it was so adopted by the followin
vote:
AYES: Council Members Lewis, Finnila, Nygaard, and Hall
NOES: None
ABSENT: Council Member Kulchin
ABSTAIN: None
IN WlTNESS WHEREOF, I have hereunto set my hand and seal this 2nd day of Septei
1997.
I
City lLGfA. Clerk dG. Q-
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9
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO 1
) ss.
Aletha L. Rautenkranz
1, I , City Clerk of the City Council of the City of Carlsbad, do hereby
certify that the above and foregoing Resolution is a full, true and correct copy of Resolution No.
97-577 of said City Council, and that the same has not been amended or repealed as of the date
hereof.
DATED: September 2, 1997.
Lih-xL 2. Q&&
City Clerk
(SEAL)
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September 11,1997
Attention: Judy Krawiec
Stradling, Yocca, Carlson and Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, CA 92660
Re: Certified copies of documents relating to Refunding Certificates of
Participation (Hosp Grove Project) and Water Revenue Certificates of
Participation (1988 Refunding Project)
Enclosed please find the requested copies (six of each) of the following:
Certified copies of Carlsbad City Council Resolution No. 97-577
Certified copies of Carlsbad Public Improvement Corporation Resolution No.
Certified copies of Carlsbad Public Improvement Corporation Resolution No.
Certified copies of Carlsbad Municipal Water District Resolution No. 993
Certified copies of Carlsbad City Council Minutes dated August 26, 1997
97-1
97-2
If you have any questions or require further assistance, please contact this office.
Sincerely,- -
b?&
Isabelle Paulsen
Administrative Secretary
Enclosures
1200 Carlsbad Village Drive Carlsbad, California 92008-1 989 - (760) 434-2
September 17, 1997
Attention: Judy Krawiec
Stradling, Yocca, Carlson and Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, CA 92660
Re: Certified copies of documents relating to Refunding Certificates of
Participation (Hosp Grove Project) and Water Revenue Certificates of
Participation (1988 Refunding Project)
Enclosed please find the requested copies of the following:
Certified copy of Carlsbad Public Improvement Corporation Resolution No. 88-1
Certified copy of Carlsbad Public Improvement Corporation Resolution No. 88-2
Certified copy of Carlsbad Public Improvement Corporation draft Minutes of
Certified copies (six) of Carlsbad Municipal Water District Minutes dated
(B y-laws)
August 26,1997
August 26,1997
If you have any questions or require further assistance, please contact this office.
Sincerely,- -
-,LL&kb ?&
Isabelle Paulsen
Administrative Secretary
Enclosures
1200 Carlebad Village Drive Carlsbad, Cailfornla 92008-1 889 (760) 434-2
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PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER A 1997
NEW ISSUE - BOOK-ENTRY ONLX Standard
In the opinion of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Cc existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain c requirements described herein, the portion of each Lease Payment constituting interest is excluded from gross income for feder purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on in( corporations. In the further opinion of Special Counsel, the portion of each Lease Payment constituting interest is exempt from Stati
personal income tax. See "TAX MAl'TERS" herein with respect to certain tax consequences with respect to the Certificates. * $ Refunding Certificates of Participation
(Hosp Grove Project) Series 1997 Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to Be Made by the CITY OF CARLSBAD, CALIFORNIA
As the Rental for a Project Pursciant to a
Lease Agreement with the
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Dated: September 1,1997 Due: August 1, as s€
The Certificates evidence and represent direct, undivided fractional interests of the Owners thereof in the Lease Pap include principal and interest components) to be made by the City of Carlsbad, California (the "City") for the right to the use c property in the City (the "Project") pursuant to a lease agreement, dated as of September 1, 1997 (the "Lease Agreement"), by and City, as lessee, and the City of Carlsbad Public Improvement Corporation (the "Corporation"), as lessor. The Certificates are being ( delivered to provide funds to (i) refund on an advance basis certain outstanding certificates of participation evidencing lease pa
made by the City with respect to the Project, (ii) fund a reserve fund for the Certificates, and (iii) pay certain costs incurred in connec
execution and delivery of the Certificates. Interest represented by the Certificates is payable on February 1,1998 and each August 1 i
1 thereafter.
The City has covenanted in the Lease Agreement to make the Lease Payments for the Project as provided for therein, 1 such Lease Payments in each of its budgets and to make the necessary annual appropriations for all such Lease Payments. The Cit to make Lease Payments is subject to abatement in the event of damage or destruction of the Project,or a taking of the Project (eithe in part, temporarily, or in part permanently) as further described herein. However, because of the nature of the City's use of the PI space, the City does not anticipate that damage to or destruction of the Project will interfere with its right to use or occupy the PI
The Certificates will be initially delivered only in book-entry form, registered to Cede 8.z Co. as nominee of The Dep Company, New York, New York ("DTC"), which will act as securities depository of the certificates. Interest and principal reprer Certificates are payable by First Trust of California, National Association, Los Angels, California, as Trustee, to DTC, which payments to its Participants for subsequent distribution to the beneficial owners of the Certificates. See "THE CERTIFICATES - Boo System" and "-General." The Certificates are subject to prepayment prior to maturity as described herein. See "THE CERTIFICATES -Prepay The obligation of the City to make the Lease Payments does not constitute a debt of the City or the State of Califon political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not c obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the State of California levied or pledged any form of taxation. This cover page contains information for reference only. Investors must read the entire Official Statement to obtain essential in making an informed investment decision. See "RISK FACTORS" for a discussion of factors that should be considered, i the other matters set forth herein, in evaluating the investment quality of the Certificates,
cause abatement of the Lease Payments (see "RISK FACTORS - Abatement" herein).
MATURITY SCHEDULE
Maturity Principal Interest Price or Maturity Principal Interest (Aumst 1) Amount - Rate Yield (Aupst 1) Amount - Rate
1998 2004
1999 2005
2000 2006
2001 2007
2002 2008
The Certificates will be offered when, as and if executed and delivered and received by the Underwriter, subject to the a1
their legality by Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel. ( matters will be passed upon for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California. In add:
legal matters will be passed upon for the City and the Corporation by the City Attorney. It is anticipated that the Certificates in de
will be available for delivery to DTC in New York, New York on or about September - 1997.
2003
MORGAN STANLEY DEAN WITTER
Dated: ,1997.
Preliminary, subject to change *
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CITY OF CARLSBAD
CTIY COUNCIL AND CORPORATION MEMBERS
Claude A. "Bud" Lewis, Mayor
Ramona Finnila, Mayor Pro Tem, Council Member
Matt Hall, Council Member
Ann J. Kulchin, Council Member
Julie Nygaard, Council Member
CITY STAFF
Raymond R. Patchett, City Manager
Frank Mannen, Assistant City Manager
James F. Elliott, Financial Management Director
Martin Oren yak, Community Development Director
James M. Stanton, City Treasurer
Lisa Hildabrand, Finance Director Aletha L. Rautenkranz, City Clerk
Ron Ball, City Attorney
FINANCIAL ADVISOR
Peter J. Ross San Francisco, California
SPECIAL COUNSEL
Stradling, Yocca, Carlson & Rauth
Newport Beach, California
TRUSTEE AND ESCROW AGENT
First Trust of California, National Association Los Angeles, California
VERIFICATION AGENT
Ernst & Young
Tucson, Arizona
e
No dealer, broker, salesperson or other person has been authorized by the City, 01
Corporation to give any information or to make any representations with respect to
Certificates other than those contained in this Official Statement and, if given or made, 5 other information or representations must not be relied upon as having been authorized by
of the foregoing. This Official Statement does not constitute an offer to sell or the solicitatic
any offer to buy nor shall there be any sale of the Certificates by any person in any jurisdic in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement shall not be construed as a contract with the purchasers o
Certificates. Statements contained in this Official Statement which involve estimates, forec
or matters of opinion, whether or not expressly so described herein, are intended solely as 6
and are not to be construed as representations of facts.
The information contained in this Official Statement has been furnished by the City Corporation and other sources which are believed to be reliable. Summaries and referencf statutes and documents in this Official Statement do not purport to be comprehensiv
definitive and are qualified in their entireties by reference to each such statute or document.
information and expressions of opinions herein are subject to change without notice and ne1 delivery of this Official Statement nor any sale made hereunder shall, under any circumstai create any implication that there has been no change in the affairs of the City, the Corporz
or any other parties described herein since the date hereof.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALl OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREV
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
DISCONTINUED AT ANY TIME.
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TABLE OF CONTENTS
Pane
INTRODUCTION ................................................................................................................ 1
CONTINUING DISCLOSURE ............................................................................................ 2
THE REFUNDING PLAN ................................................................................................... 3
Estimated Sources and Uses of Funds .......................................................................... 3
Refunding of the 1988 COPS ......................................................................................... 3
THE CERTIFICATES ........................................................................................................... 3 General ........................................................................................................................... 3
Registration. Transfers and Exchanges .......................................................................... 4
Prepayment .................................................................................................................... 4
Book-Entry Only System ............................................................................................... 5
LEASE PAYMENT SCHEDULE ........................................................................................ 8
THE PROJECT ..................................................................................................................... 8
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES .......................... 9 Nature of the Certificates .............................................................................................. 9 Covenant to Appropriate Funds for Rental Payments ................................................. 9 Abatement ...................................................................................................................... 9
Action on Default .......................................................................................................... 9 Reserve Account ........................................................................................................... 10
Lease Payments ........................................................................................................... 10
Additional Rental Payments ....................................................................................... 11
Insurance ...................................................................................................................... 11
BOND INSURANCE ......................................................................................................... 11
RISK FACTORS ................................................................................................................. 11 General Considerations -Security for the Certificates ............................................... 11 Abatement .................................................................................................................... 12 Limited Recourse on Default ....................................................................................... 12 Loss of Tax Exemption ................................................................................................ 13
Seismic Considerations ................................................................................................ 13 No Liability of Corporation to the Owners ................................................................. 13
Relevant Pending Litigation ......................................................................................... 14
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ........................................................................................................... 15
Article XIIIA of the California Constitution ................................................................ 15 Legislation Implementing Article XIIIA ........................................................................ 15
Proposition 218 ............................................................................................................ 16 Unitary Property .......................................................................................................... 17
Future Initiatives .......................................................................................................... 17
THE CORPORATION ....................................................................................................... 17
CITY OF CARLSBAD ........................................................................................................ 18
CITY OF CARLSBAD FINANCES .................................................................................... 18 Accounting Policies and Financial Reporting .............................................................. 18 Budgetary Process ........................................................................................................ 19
Sales Taxes ................................................................................................................... 24
Property Taxes ............................................................................................................. 25
Transient Occupancy Tax ............................................................................................ 28
General Fund Financial Summary ................................................................................ 20
Tax Receipts ................................................................................................................. 22
Long-Term General Fund Obligations .......................................................................... 28 Direct and Overlapping Debt ...................................................................................... 28
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Investment of City Funds ............................................................................................. 28
TAX MATTERS ................................................................................................................. 29
CERTAIN LEGAL MATTERS .......................................................................................... 30
LITIGATION ...................................................................................................................... 31
UNDERWRITING .............................................................................................................. 31
RATINGS ........................................................................................................................... 31
VERIFICATION OF MATHEMATICAL ACCURACY .................................................... 31
MISCELLANEOUS ........................................................................................................... 32
APPENDIX A - Summary of Principal Legal Documents
APPENDIX B - General Information About the City of Carlsbad
APPENDIX C - Audited Financial Statements of the City for the Year Ended
June 30. 1996
APPENDIX D - Proposed Form of Special Counsel Opinion
APPENDIX E - Form of Continuing Disclosure Certificate
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OFFICIAL STATEMENT
$
Refunding Cerdficakes of Participation (Hosp Grove Project) Series 1997 Evidencing Direct, Undivided Fractional Interests of the
Owners Thereof in Lease Payments to Be Made by the CITY OF CARLSBAD, CALIFORNIA
As the Rental for a Project Pursuant to a
Lease Agreement with the
ClIY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
INTRODUCTION
This Official Statement (which includes the cover page and Appendices hereto)
"Official Statement") provides certain information concerning the sale and delivery of the
of Carlsbad, California Refunding Certificates of Participation (Hosp Grove Project) SI 1997 (the "Certificates").
The Certificates are being executed and delivered in denominations of $5,000 or
the applicable interest rate (as set forth on the cover here00 from September 1, 1997 unti
date of maturity or prior prepayment, with interest becoming payable on each February 1
August 1, commencing February 1, 1998. The Certificates are subject to prepaymen
described herein. See "THE CERTIFICATES - Prepayment."
The net proceeds of the sale of the Certificates will be used to (i) provide fund refund on an advance basis certain outstanding certificates of participation (the "1988 CC evidencing lease payments to be made by the City with respect to certain real property ir City (the "Project"; see "THE PROJECT" herein), (ii) fund a reserve fund for the Certificates,
(iii) pay certain costs incurred in connection with the execution and delivery of the Certifica
The Certificates evidence and represent the direct, undivided fractional interests o registered owners (the "Owners") thereof in Lease Payments (as defined herein) to be mad
the City for the right to the use of the Project. The Project will be leased by the City pursua
a Lease Agreement, dated as of September 1,1997 (the "Lease Agreement"), between the (
as lessee, and the City of Carlsbad Public Improvement Corporation (the "Corporation"
lessor.
integral multiple thereof. Interest will accrue on the principal components of each Certifica
The Certificates will be executed and delivered pursuant to a Trust Agreement, date of September 1, 1997 (the "Trust Agreement"), by and among the City, the Corporation First Trust of California, National Association, as trustee (the "Trustee").
The Site will be leased by the City to the Corporation pursuant to a Site Lease, date of September 1,1997 (the "Site Lease"). The Corporation will then sublease the Project bac the City under the Lease Agreement.
The Trustee and the Corporation will enter into an Assignment Agreement, dated i
September 1, 1997 (the "Assignment Agreement"), pursuant to which the Corporation
assign to the Trustee for the benefit of the Certificate Owners substantially all of
Corporation's right, title and interest in and to the Lease Agreement, including its rig1
receive the Lease Payments due under the Lease Agreement, provided that the Corporation
retain the rights to indemnification and to payment or reimbursement of its reasonable ( and expenses under the Lease Agreement.
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The City covenants under the Lease Agreement to take such action as may be nece:
to include all Lease Payments due under the Lease Agreement in its annual budgets a1
make the necessary annual appropriations therefor, subject to abatement as described herei
Lease Payments are subject to complete or partial abatement in the event and tc extent that there is substantial interference with the City's right to use and occupancy o Project or any portion thereof, although the City does not anticipate that any damage
destruction of the Project will interfere with its use of the Project as open space. See I
PROJECT'' and RISK FACTORS - Abatement" herein. Abatement of Lease Payments unde Lease Agreement, to the extent payment is not made from alternative sources as set below, would result in all Certificate Owners receiving less than the full amount of principa interest represented by the Certificates. To the extent there are moneys in the Reserve Acc
with respect to the Certificates (as described below), Lease Payments (or a portion the
may be made during periods of abatement.
THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES 1 CONSTITUTE A DEBT OF THE CITY OR THE STATE OF CALIFORNIA (THE "STATE"
CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES :
CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE STATE IS OBLIGA
TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR
STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF 1
The summaries or references to the Site Lease, the Trust Agreement, the L Agreement, the Assignment Agreement and other documents, agreements and statutes ref(
to herein, and the description of the Certificates included in this Official Statement, dc
purport to be comprehensive or definitive, and such summaries, references and description
qualified in their entireties by reference to each such document or statute. All capitalized t
used in this Official Statement (unless otherwise defined herein) which are defined in the r~
Agreement or the Lease Agreement shall have the meanings set forth therein, some of whicl summarized in "APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS."
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the holders and beneficial owners o
Certificates to provide certain financial information and operating data relating to the Cit not later than nine months following the end of the City's fiscal year (which fiscal year curri ends on June 30), commencing with the report for the 1996-97 Fiscal Year (the "Annual Rep1 and to provide notices of the occurrence of certain enumerated events, if material. The City file, or cause to be filed, the Annual Report with each Nationally Recognized Munil Securities Information Repository, and with the appropriate State information deposit0 any. The City will file, or cause to be filed, the notices of material events with the Muni Securities Rulemaking Board (and with the appropriate State information depository, if 4 The specific nature of the information to be contained in the Annual Report or the notic! material events is set forth below in "APPENDIX E - FORM OF CONTINUING DISCLOS CERTIFICATE." These covenants have been made in order to assist the Underwritc
complying with S.E.C. Rule 15c2-12(b)(5). The City has never failed to comply, in all mat
respects, with an undertaking pursuant to said Rule.
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THE REFUNDING PLAN
Estimated Sources and Uses of Funds
The Trustee will receive the proceeds from the sale of the Certificates, upon deliver
the Certificates to the purchasers thereof, and will use such proceeds as set forth in
following table.
Estimated Sources and Uses of Funds
Sources of Funds
Par Amount of Certificates $ Less: Original Issue Discount
1988 Reserve Account
Total Sources $
Uses of Funds
Deposit to Escrow Fund $
Deposit to Reserve Account (l)
Deposit to Costs of Issuance Fund (2)
Total Uses $
(1) Equal to the Reserve Requirement with respect to the Certificates.
(*) Includes legal, financial advisory, rating agency, printing, an underwriter's discount ($ 1, other miscellaneous costs of issuance.
Refunding of the 1988 COPs
A certain portion of the proceeds of the Certificates will be used to refund 01
advance basis the remaining outstanding portion of the 1988 COPs. On the Closing Date,
proceeds used for refunding will be deposited in an Escrow Fund to be established pursuai
an Escrow Agreement, dated as of September 1,1997, by and between the City and First T
of California, National Association, as escrow agent. The 1988 COPs will be defeased on
Closing Date, and called for redemption on August 1,1998.
Verification that the proceeds of the Certificates deposited in the Escrow Fund wil
sufficient to redeem all outstanding 1988 COPs on August 1,1998 will be provided by Ern Young, Tucson, Arizona.
THE CERTIFICATES
Gt?IWal
The Certificates evidence and represent direct, undivided fractional interests of Owners thereof in the principal and interest components of Lease Payments to be made by City pursuant to the Lease Agreement.
The Certificates will be executed and delivered in principal amounts of $5,00C integral multiples thereof. Interest represented by each Certificate will accrue on the princ components represented by such Certificate at the applicable interest rate from Septembe
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1997 until its date of maturity or prior prepayment, with interest becoming payable on I February 1 and August 1 (each, an "Interest Payment Date"), commencing February 1,1998.
Interest evidenced by each Certificate will be computed on the basis of a 360-day consisting of twelve 30-day months.
Registration, Transfers and Exchanges
The Certificates will be executed and delivered as fully registered certificates, regist
in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New 1 ("DTC"), and will be available to actual purchasers of the Certificates (the "Beneficial Ownc
in the denominations set forth above, under the book-entry system maintained by DTC, (
through brokers and dealers who are or act through DTC Participants (as defined hereir
described herein. Beneficial Owners will not be entitled to receive physical delivery of Certificates. See "THE CERTIFICATES - Book-Entry Only System." In the event that the bc entry-only system is no longer used with respect to the Certificates, the Certificates wil
registered and transferred in accordance with the Trust Agreement. See "THE CERTIFICAT Book-Entry Only System - Discontinuance of DTC Service."
Prepayment
Optional Prepayment. The Certificates are not subject to optional redemption pric maturity.
Prepayment from Net Proceeds of Insurance, Title Insurance, Condemnation or Emir
Domain Award. The Certificates are subject to mandatory prepayment on any Interest Payn
Date, in whole, or in part among maturities on a pro rata basis and by lot within a matui
from the Net Proceeds of insurance or eminent domain proceedings credited towards prepayment of the Lease Payments pursuant to the Lease Agreement and the Trust Agreem
at a prepayment price equal to one hundred percent (100%) of the principal amount tc prepaid, together with accrued interest represented thereby to the date fixed for prepaym without premium. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICA - Insurance."
Selectiosl of Certificates for Prepayment. Whenever less than all of the outstand Certificates are to be prepaid on any one date, the Trustee shall select Certificates of s maturity for prepayment by lot. For the purposes of such selection, Certificates shall deemed to be composed of $5,000 portions, and any such portion may be separately prep The Trustee shall promptly notify the City and the Corporation in writing of the Certificate portions thereof so selected for prepayment.
While the Certificates are subject to DTC's book-entry system, the Trustee will
required to give notice of prepayment only to DTC as provided in the letter of representati
executed by the City and received and accepted by DTC. DTC and the Participants will h
sole responsibility for providing any such notice of prepayment to the beneficial owners of
Certificates to be prepaid. Any failure of DTC to notify any Participant, or any failurc
Participants to notify the Beneficial Owner of any Certificates to be prepaid, of a notic.
prepayment or its content or effect will not affect the validity of the notice of prepayment
alter the effect of prepayment described below under "-Effect of Prepayment."
During any period in which the Certificates are not subject to the book-entry syst notice of prepayment of any Certificates to be prepaid will be given to the respective Owner Certificates designated for prepayment by first-class mail, postage prepaid, at their addrei appearing on the registration books of the Trustee as of the close of business on the day bel
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such notice of prepayment is given, at least 30 but not more than 60 days prior to
prepayment date.
Effect of Prepayment. If notice of prepayment has been duly given as aforesaid and deposit of the prepayment price having been made by the City, the Certificates or portior Certificates so to be prepaid will, on the prepayment date, become due and payable at
prepayment price therein specified, and from and after such date interest with respect to :
Certificates or portions of Certificates will cease to accrue and be payable. Upon surrende
such Certificates for prepayment in accordance with said notice, such Certificates will be I
by the Trustee at the prepayment price. Installments of interest due on or prior to
prepayment date will be payable as provided in the Trust Agreement for payment of interes
All prepaid Certificates will be canceled by the Trustee and shall not be redelivered.
Book-Entry Only System
DTC will act as securities depository for the Certificates. The Certificates wil
executed and delivered as fully-registered securities registered in the name of Cede &
(DTC's partnership nominee). One fully-registered certificate will be issued for each maturit
the Certificates, each in the initial aggregate principal amount of such maturity, and wil:
deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking La1
"banking organization" within the meaning of the New York Banking Law, a member of
Federal Reserve System, a "clearing corporation'' within the meaning of the New York Unifc
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section . of the Securities Exchange Act of 1934. DTC holds securities that its participz ("Participants") deposit with DTC. DTC also facilitates the settlement among Participant securities transactions, such as transfers and pledges, in deposited securities through electrc computerized book-entry changes in Participants' accounts, thereby eliminating the need physical movement of securities certificates, "Direct Participants" include securities brokers i
dealers, banks, trust companies, clearing companies, and certain other organizations. DT(
owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Acc to the DTC system is also available to others such as securities brokers and dealers, banks i
trust companies that clear through or maintain a custodial relationship with a Dii Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to I3 and its Participants are on file with the Securities and Exchange Commission.
Purchases of Certificates under the DTC system must be made by or through Dir
Participants, which will receive credit for the Certificates on DTC's records. The owners
interest of each Beneficial Owner is in turn to be recorded on the Direct and lndir
Participants' records. Beneficial Owners will not receive written confirmation from DTC of tl
purchase, but Beneficial Owners are expected to receive written confirmations providing det
of the transaction, as well as periodic statements of their holdings, from the Direct or Indh
Participant through which the Beneficial Owner entered into the transaction. Transfers ownership interest in the Certificates are to be accomplished by entries made on the book Participants acting on behalf of Beneficial Owners. Beneficial Owners will not rece certificates representing their ownership interests in Certificates, except in the event that us(
the book-entry system for the Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by Participants with D
are registered in the name of DTC's partnership nominee, Cede & Co. The deposit
Certificates with DTC and their registration in the name of Cede & Co. effect no change
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certifical
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DTC's records reflect only the identity of the Direct Participants to whose accounts : Certificates are credited, which may or may not be the Beneficial Owners. The Participants remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants
Direct Participants to Indirect Participants, and by Direct Participants and Indi
Participants to Beneficial Owners will be governed by arrangements among them, subject to statutory or regulatory requirements as may be in effect from time to time.
Prepayment notices will be sent to Cede & Co. If less than all of the Certificates witb
maturity are being prepaid, DTC's practice is to determine by lot the amount of the interei each lhrect Participant in such maturity to be prepaid.
Neither DTC nor Cede & Co. will consent or vote with respect to Certificates. Undc
usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the rei
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those D Participants to whose accounts the Certificates are credited on the record date (identified listing attached to the Omnibus Proxy).
Principal and interest payments with respect to the Certificates will be made to L DTC's practice is to credit Direct Participants' accounts on the payment date in accordt with their respective holdings shown on DTC's records unless DTC has reason to believe tk
will not receive payment on a payment date. Payments by Participants to Beneficial Owl
will be governed by standing instructions and customary practices, as is the case with sear
held for the accounts of customers in bearer form or registered in "street name," and will be responsibility of such Participant and not of DTC, the Trustee or the City, subject to statutory or regulatory requirements as may be in effect from time to time. Payment of princ and interest to DTC is the responsibility of the City or the Trustee, disbursement of s
payments to Direct Participants will be the responsibility of DTC, and disbursement off
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participa
The City cannot and does not give any assurances that DTC Participants or others distribute payments with respect to the Certificates received by DTC or its nominee as registered Owner, or any prepayment or other notices, to the Beneficial Owners, or that will do so on a timely basis, or that DTC will service and act in the manner described in Official Statement.
The City, the Corporation and the Trustee cannot and do not give any assurances
DTC will distribute to Participants, or that Participants or others will distribute payment
principal or interest with respect to the Certificates paid to DTC or its nominee as the registt
Owner, or any prepayment or other notices, to the Beneficial Owners, or that they will do s(
a timely basis or will serve and act in the manner described in this Official Statement. The ( the Corporation and the Trustee are not responsible or liable for the failure of DTC or Participants to make any payment or give any notice to a Beneficial Owner with respect to
certificates or any error or delay relating thereto.
The foregoing description of the procedures and record-keeping with respec
beneficial ownership interests in the Certificates, payment of principal, interest and 0. payments with respect to the Certificates to Participants or Beneficial Owners, confirmal
and transfer of beneficial ownership interests in such Certificates and other related transactj
by and between DTC, the Participants and the Beneficial Owners is based on informal provided by DTC. Accordingly, the City takes no responsibility for the accuracy thereof.
Discontinuance ofDTC Service. In the event that (a) DTC determines not to continue tc as securities depository for the Certificates, or (b) the City determines to remove DTC fron
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functions as a depository, DTC's role as securities depository for the Certificates and use oj book-entry system will be discontinued. If the City fails to select a qualified Secur depository to replace DTC, the City will cause the Trustee to execute and deliver
Certificates in fully registered form in such denominations numbered in the manner detenn
by the Trustee and registered in the names of such persons as are requested by the Benef
Owners thereof. Upon such registration, such persons in whose names the Certificate$ registered will become the registered Owners of the Certificates for all purposes.
T~ansfer and Exchange of Certificates. The following provisions regarding the exchange
transfer of the Certificates apply only during any period in which the Certificates are
subject to DTC's book-entry system. While the Certificates are subject to DTC's book-e
system, their exchange and transfer will be effected through DTC and the Participants and
be subject to the procedures, rules and requirements established by DTC.
All Certificates are transferable by the Owner thereof, in person or by his or her attoi
duly authorized in writing, at the principal corporate trust office of the Trustee on the bc required to be kept by the Trustee pursuant to the provisions of the Trust Agreement, u
surrender of such Certificates for cancellation accompanied by delivery of a duly exec1 written instrument of transfer in a form acceptable to the Trustee, manually executed,
Whenever any Certificate or Certificates are surrendered for transfer, the Trustee execute and deliver a new Certificate or Certificates for like aggregate principal amoun authorized denominations. The Trustee will require the payment by any Owner requesting s transfer of any tax or other governmental charge required to be paid with respect to s transfer.
Certificates may be exchanged, upon surrender thereof, at the principal corporate t office of the Trustee for a like aggregate principal amount of Certificates of other authorj denominations of the same maturity. Whenever any Certificate or Certificates are surrende for exchange, the Trustee shall execute and deliver a new Certificate or Certificates for principal amount in authorized denominations. The City shall pay any costs of the Tru! incurred in connection with such exchange, except that the Trustee may require the paymen
the Certificate Owner requesting such exchange of any tax or other governmental charge requ
to be paid with respect to such exchange.
The Trustee may refuse to transfer or exchange either (i) any Certificate during period established by the Trustee for the selection of Certificates for prepayment, or (ii) Certificate selected for prepayment.
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LEASE PAYMENT SCHEDULE
Following is the annual schedule of Lease Payments due with respect to the Certific;
Period Ending Principal Interest Total (August 1) Component Component Pavments
1998 1999
2000
200 1 2002 2003 2004
2005 2006 2007 2008
To tal $ $ $
THE PROJECT
The Project consists of approximately 50 acres on six parcels of land located within City, known as Hosp Grove. The Project is zoned for open space. The Project is located in northern portion of the City, near the junction of Interstate 5 and Highway 78. The Prc includes portions of a mature stand of eucalyptus trees totaling 75 acres and sitting 01
parcels of land, and a single, two-lane road. Six of these parcels are not part of the Project
were acquired by the City through dedication by adjoining land owners.
The six parcels comprising the Project were previously owned by a developer anc
various times, were zoned for medium- to high-density residential development as we1
residential/commercial/office mixed use. In March 1987, the City asked the voters ai
advisory election whether the voters supported acquisition of the Project even if the func were to come from the City's general fund. The measure received majority approval and the ( purchased the Project from the developer with the proceeds of the 1988 COPS for over j
million and immediately rezoned the Project as open space.
Maintenance of the Project as open space is consistent with the City's legal obligatio
maintain open space in its borders, which obligation, as described below, is mandated certain measures adopted not only by the City Council but also by the City's voters. In J 1986, the City adopted Ordinance 9808 (the "Growth Management Ordinance") enactin
Growth Management Plan .for the City. In September 1986, the City Council approve Citywide Facilities and Improvement Plan (the "Citywide Plan"), which implements the Gro7 Management Ordinance. On November 4,1986, City voters approved Proposition E, ratify the Growth Management Plan and locking in the provisions of the Growth Managerr Ordinance. Ordinance 9829 was subsequently adopted by the City Council to add additional provisions of Proposition E into the Growth Management Ordinance. The Citp
Plan demands that before new development is approved, a property owner must prove to
City Council that certain public facilities and improvements, including open space, wil
maintained at or above the standards established by the Citywide Plan.
In 1992, the City Council adopted the Open Space and Conservation Resou
Management Plan (the "Conservation Plan"). The Conservation Plan shows that approximal
25 percent of the City, or approximately 7,320 acres of land (including the Project), will be
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aside for open space; this does not include open space to be preserved as part of hal
conservation requirements imposed on new development. Because the northwest portion o City is largely built-out, the City's ability to increase open space through dedicatio connection with new development is limited. Thus, the City's open space efforts are focusel preserving existing open spaces, such as the Project. Because of the restrictions imposed or City by the Growth Management Ordinance, the Growth Management Plan, the Citywide and the Conservation Plan, the City expects to continue to use the Project as open si
throughout the term of the Lease Agreement.
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
Nature of the Certificates
Each Certificate evidences and represents a direct, undivided fractional interest in principal component of the Lease Payments due under the Lease Agreement on the payn
date or prepayment date of such Certificate, and the interest component of all Lease Pap
(based on the stated interest rate with respect to such Certificate) to accrue from Septembi 1997 to its payment date or prepayment date, as the case may be.
The Corporation, pursuant to the Assignment Agreement, will assign to the Trustee the benefit of the Certificate Owners substantially all of the Corporation's right, title interest in and to the Lease Agreement, including, without limitation, its right to receive LC
Payments to be paid by the City; provided that, the Corporation will retain the right indemnification and to payment of reimbursement of its reasonable costs and expenses ur
the Lease Agreement. The City will pay Lease Payments directly to the Trustee, as assigne
the Corporation. See "Lease Payments" below.
Covenant to Appropriate Funds for Rental Payments
The City has covenanted in the Lease Agreement to take such action as may necessary to include all Lease Payments due under the Lease Agreement in its annual bud4 and to make the necessary annual appropriations therefor, subject to abatement.
Abatement
Lease Payments are to be paid by the City in each rental period for and in considera1 of the right to use and occupy the Project during each such period. Except as otherv provided in the Lease Agreement, Lease Payments will be subject to abatement during period in which there is substantial interference with the use or possession of all or a portio] the Project by the City as the result of condemnation, damage, destruction or title defect.
Given the nature of the City's use of the Project as open space, the City does
anticipate that damage to or destruction of the Project will interfere with its right to USC
occupy the Project so as to cause abatement of the Lease Payments. See "THE PROJECT" i
"RISK FACTORS - Abatement" herein.
Action on Default
Should the City default under the Lease Agreement, the Trustee, as assignee of
Corporation under the Lease Agreement, may terminate the Lease Agreement and reco
certain damages from the City, or may retain the Lease Agreement and hold the City liable
all Lease Payments thereunder on an annual basis. Lease Payments may not be accelera
upon a default under the Lease Agreement. See "RISK FACTORS - Limited Recourse on Defai herein.
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For a description of the events of default and permitted remedies of the Trustec
assignee of the Corporation) contained in the Lease Agreement and the Trust Agreement
"APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Lease Agreen and "- The Trust Agreement I'
Reserve Account
A reserve account (the "Reserve Account") is established in the Certificate Fund t held by the Trustee in trust for the benefit of the City and the Owners of the Certifici
"Reserve Requirement" is defined in the Trust Agreement to be, as of the date of calculation least of (i) an amount equal to the maximum amount of Lease Payments due on the fifte day preceding any February 1 and the next preceding August 1 with respect to Outstanc Certificates, (ii) an amount equal to 10% of the proceeds (within the meaning of Section 1~ the Internal Revenue Code of 1986) of all Certificates, or (iii) an amount equal to 125% 0'
average annual Lease Payments due with respect to Outstanding Certificates; provil however, that such Reserve Requirement or a portion thereof may be provided by one or r Reserve Account Policies or Credit Facilities (as such terms are defined in the Trust Agreem upon the filing by the City with the Trustee of (x) written evidence that the use of such Res1 Account Policies or Credit Facilities to satisfy the Reserve Requirement or any portion the will not by itself result in the downgrading or withdrawal of any credit rating then in effect I respect to the Certificates Outstanding, and (y) an opinion of Bond Counsel to the effect such event will not impair the exclusion from gross income for federal income tax purpose from State personal income taxes of the Interest Component of each Lease Payment.
If the amount initially deposited into the Reserve Account is less than the full Res1 Requirement, the Trustee shall retain therein all earnings on the investment of amounts in
Reserve Account until the full Reserve Requirement is on deposit. In the event the amoun
deposit in the Reserve Account exceeds the Reserve Requirement, the Trustee will on e
February 1 and August 1, transfer such amounts (a) first to the Rebate Fund, if directec writing by the City to make such a transfer as required by the Trust Agreement, and (b) sec to the Lease Payment Fund for application in accordance with the Trust Agreement. In event that a Reserve Account Policy or Credit Facility is provided to satisfy all or a portio
to satisfy the Reserve Requirement will be transferred by the Trustee, at the written directio
the City, to a special account to be established for the payment of the fees related to Reserve Account Policy or Credit Facility, or to the City's General Fund provided that tl shall have been delivered to the Trustee, the City and the Corporation an opinion of B Counsel to the effect that such transfer to the City's General Fund will not impair the exclui from gross income for federal income tax purposes of the Interest Component of any Le Payment.
Lease Payments
the Reserve Requirement, any cash on deposit in the Reserve Account which is no longer nee
For the right to the use and occupancy of the Project, the Lease Agreement requires
City to make Lease Payments. Lease Payments are due and payable fifteen days before e
February 1 and August 1 during the Term of the Lease Agreement.
heading "LEASE PAYMENT SCHEDULE." Scheduled Lease Payments relating to the Certificates are set forth above under
THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOE5 N CONSTITUTE A DEBT OF THE CITY OR THE STATE OR OF ANY POLITIC
SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE
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OBLIGATION FOR WHICH THE CITY OR THE STATE IS OBLIGATED TO LEVY
PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE I LEVIED OR PLEDGED ANY FORM OF TAXATION.
Additional Rental Payments
For the right to the use and occupancy of the Project, the Lease Agreement requires City to pay, in addition to the Lease Payments, all costs and expenses incurred by the City
the Corporation to comply with the provisions of the Trust Agreement, or otherwise ari
from the financing of the Project.
Insurance
The City has agreed in the Lease Agreement to maintain certain public liabili property damage, worker's compensation, hazard and title insurance with respect to Project. See "APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The LC Agreement" herein. However, because of the open-space nature of the Project, the City will maintain hazard insurance with respect to the Project so long as the Project consists who11 the property which comprises the Project on the date of delivery of the Certificates.
RISK FACTORS
The following factors, along with the other information in this Official Statement, shc
be considered by potential investors in evaluating purchase of the Certificates. However, t
do not purport to be an exhaustive listing of risks and other considerations which maj
relevant to an investment in the Certificates. In addition, the order in which the follow
factors are presented is not intended to reflect the relative importance of any such risks.
General Considerations - Security for the Certificates
The obligation of the City to make the Lease Payments does not constitute a debt of
City or the State or of any political subdivision thereof within the meaning of any constihxtic
or statutory debt limit or restriction, and does not constitute an obligation for which the Citj
the State is obligated to levy or pledge any form of taxation or for which the City or the Si
has levied or pledged any form of taxation.
Although the Lease Agreement does not create a pledge, lien or encumbrance upon funds of the City, the City is obligated, subject to abatement, under the Lease Agreement to 3 the Lease Payments from any source of legally available funds and the City has covenantec
the Lease Agreement that it will take such action as may be necessary to include all rei
payments due under the Lease Agreement in its annual budgets and to make necessary anr appropriations for all such rental payments. The City is currently liable and may become li: on other obligations payable from general revenues, some of which may have a priority over Lease Payments.
The City has the capacity to enter into other obligations which may constitute additio charges against its revenues. To the extent that additional obligations are incurred by the C the funds available to make Lease Payments may be decreased. In the event the City's revel sources are less than its total obligations, the City could choose to fund other activities bef making Lease Payments and other payments due under the Lease Agreement.
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In addition, the Lease Agreement permits the City and the Corporation to amend
Lease in order to pay additional amounts of rental under the Lease for the use and occupa
of the Project, but only if (i) such additional amounts of rental are pledged or assigned for payment of any bonds, notes, leases or other obligations the proceeds of which shall be app to finance the completion of the Project or any portion thereof, or to finance the acquisitio construction of any additions to or modifications of other improvements to the Site or portion thereof, and (ii) the City has filed with the Trustee written evidence that I amendment to the Lease will not of themselves cause a reduction or withdrawal of any ra then assigned to the Certificates.
Abatement
In the event of substantial interference with the City's right to use and occupy
portion of the Project by reason of damage to, or destruction or condemnation of the Projec
any defects in title to the Project, Lease Payments will be subject to abatement. The amour
such abatement shall be such that the resulting Lease Payments, exclusive of the am01 described in the following paragraph, do not exceed the fair rental value (as determined by or more independent appraisers selected by the City, who are not employees of the City) foi use and possession of the portion of the Project for which no substantial interference occurred. Such abatement shall continue for the period commencing on the date of s damage, condemnation, defect in title or destruction, as applicable, and ending with remedying of such defect. In the event of any such abatement, the Lease will continue in force and effect and the City will be unable to terminate the Lease.
Notwithstanding a substantial interference with the use or possession of all or a pori of the Project, the City will remain obligated to make Lease Payments under the LE
Agreement (i) in an amount not to exceed the fair rental value during each Fiscal Year for
portion of the Project not damaged, destroyed, interfered with or taken, as determined bj
independent real estate appraiser selected by the City (who is not an employee of the C (ii) to the extent that moneys derived from any person as a result of any delay in reconstruction, replacement or repair of the Project, or any portion thereof, are available to
the amount which would otherwise be abated; or (iii) to the extent that moneys are availabl
the Certificate Fund (including the Reserve Account established therein) or the Lease Payn
Fund to pay the amount which would otherwise be abated, in which event the Lease Paym will be payable from such amounts as an obligation of the City payable from a special fi See "APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Le Agreement ."
Following the period for which funds are available from the Reserve Account or ot funds and accounts established under the Trust Agreement for payment of Lease Payments in the event that casualty insurance proceeds are insufficient to provide for complete repai replacement of such portion of the Project or prepayment of the Certificates, there could insufficient funds to make payments to Owners in full. However, given the nature of the Q
use of the Project as open space, the City does not anticipate that damage to or destructioi
the Project will interfere with its right to use or occupy the Project so as to cause abatemen
the Lease Payments. See "THE PROJECT" herein.
Limited Recourse on Default; No Acceleration
If the City defaults on its obligations to make rental payments with respect to
Project, the Corporation may retain the Lease Agreement and hold the City liable for all rei
payments on an annual basis and will have the right to re-enter and re-let the Project. In event such re-letting occurs, the City would be liable for any resulting deficiency in rei
payments.
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Due to the governmental function of the Project, the Site Lease and the Lease Agreen
it is not certain whether a court would permit the exercise of the remedies of repossession re-letting of the Project. In any case, due to the specialized nature of the Project as open SF
no assurance can be given that the Trustee would be able to re-let the Project so as to pro rental income sufficient to make principal and interest payments with respect to the Certific in a timely manner, and the Trustee is not empowered to sell the fee interest in the Projec,
the benefit of the Owners of the Certificates. Any suit for money damages would be subjel
limitations on legal remedies against cities in the State, including a limitation on enforcemei
judgments against funds needed to serve the public welfare and interest. Moreover, there ca no assurance that such reletting will not adversely affect the exclusion of any intc
component of Lease Payments from federal or state income taxation.
In addition, if the City defaults on its obligation to make Lease Payments, there i
available remedy of acceleration of the total Lease Payments due over the term of the L
Agreement. The City will only be liable for Lease Payments on an annual basis, and the Tn would be required to seek a separate judgment in each fiscal year for that fiscal year's re payments.
Loss of Tax Exemption
As discussed under the heading "TAX MATTERS," the interest represented by
retroactive to the date of delivery of the Certificates as a result of acts or omissions of the '
in violation of its covenants in the Trust Agreement and the Lease Agreement. Should suc-
event of taxability occur, the Certificates would not be subject to a special prepayment
would remain Outstanding until maturity or until prepaid under the prepayment provisj
contained in the Trust Agreement.
Seismic Considerations
Certificates could become includable in gross income for purposes of federal income taxa
Although the City, like much of California, is subject to seismic activity, the City c
not expect that any such activity would interfere with the City's right to use and occupy all
portion of the Project as open space. See "Abatement" above.
No Liability of Corporation to the Owners
Except as expressly provided in the Trust Agreement, the Corporation will not have I obligation or liability to the Owners of the Certificates with respect to the payment when du
the Lease Payments by the City, or with respect to the performance by the City of ot
the Trust Agreement, or with respect to the performance by the Trustee of any right or obligai
required to be performed by it contained in the Trust Agreement.
agreements and covenants required to be performed by it contained in the Lease Agreemen
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Relevant Pending Litigation
Rider v. City of San Diego. On April 2, 1997, the California Supreme Court granti
petition for review in the case of Rider v. City of San Diego (1996) 55 Cal.App.4th 1313. case involves a financing plan in the City of San Diego pursuant to which the San Diego Un Port District (the "Port District") planned to lease the existing Convention Center anc adjoining site on which expansion was planned to a joint powers entity (the "Conven
Authority") fonned by the Port District and the City of San Diego ("San Diego") pursuant to
Joint Exercise of Powers Act (Gov. Code 56500 et seq.). The Convention Authority plannel issue bonds to finance the Convention Center expansion. The bonds would be paid by
Authority from revenues derived from 'base rental payments" made by San Diego und financing lease (the "Facility Lease") and "support payments" made by the Port District.
Diego's rental obligations under the Facility Lease would be payable from its general fund.
Plaintiffs filed an action against San Diego and the Convention Authority challenging
validity of the lease-back financing plan. Plaintiffs claimed the financing plan violated
California Constitution Article XVI, Section 18, which prohibits the City from "incur[ring]
indebtedness ... exceeding in any year the income and revenue provided for such year, wit1 the assent of two-thirds of the qualified electors" (the "Constitutional Debt Limit") and (2) ( Charter article VII, section 90(a), which expressly prohibits San Diego from issuing bo
without a two-thirds vote of the electorate.
The trial court granted summary judgment upholding the validity of the Conven
Center financing plan. On appeal, the plaintiffs conceded the financing plan did not violate Constitutional Debt Limit, and the Court of Appeal agreed, noting that each of San Die$ rental payments was for consideration furnished that year and the lease provisions did
create present debt for future payments owed. Plaintiffs claimed, however, that provision:
the City Charter limiting issuance of bonds by San Diego, including the voter apprc requirement, are applicable to the Convention Authority. Plaintiffs cited Section 6509, founc
Authority is "subject to the restrictions upon the manner of exercising the power of one of
contracting parties, which party shall be designated" by the Convention Authority's j(
powers agreement. San Diego and the Port District designated San Diego as the entity wh
restrictions would bind the Authority.
Article 1 of the Joint Exercise of Power Act, which provides that the power of the Convenl
Defendants countered by citing Section 6587, which was added to the Joint Exercisc
Powers Act, along with other provisions of Article 4 of the Joint Exercise of Powers Act, as F
of the Marks-Roos Local Bond Pooling Act of 1985. Section 6587 declares that Articl
provides a "complete and supplemental method" of issuing bonds, which "need not comply M the requirements of any other state laws applicable to the issuance of bonds, including, but limited to, other articles, of" the Joint Exercise of Powers Act.
The Court of Appeal held that the Joint Exercise of Powers Act, specifically Articlc permits the Convention Authority to issue revenue bonds without voter approval and does :
limit the Convention Authority's bond issuing powers to the powers of the creating agencj
One justice, in dissent, while agreeing with the majority on the City Charter/Joint Exercise Powers Act decision, wrote that certain remedy provisions in the Facility Lease had the eff of converting the Facilities Lease into l1indebtedned' for purposes of the Constitutional D Limit.
The plaintiffs petitioned for review to the California Supreme Court, and the Califor
Relevance @Rider to the Lease Agreement and the Certificates. The Lease Agreement and 1 Certificates are being executed and delivered without the City securing voter approval of 1
Supreme Court granted review on April 2,1997.
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financing. However, none of the issues relating to the Joint Exercise of Powers Act are raisec the Lease Agreement or the Certificates. With respect to the Constitutional Debt Li although the Rider plaintiffs have conceded in the Court of Appeal proceedings, and the Cl
of Appeal agreed, that the San Diego lease financing does not violate the Constitutional I
Limit, plaintiffs have suggested in their opening brief before the California Supreme Court
lease financings should not be permitted if they are undertaken solely to avoid the I
requirement imposed by the Constitutional Debt Limit. However, the California Supreme Cc in upholding the lease exception to the Constitutional Debt Limit in numerous decisions over past 50 years (City of Los Angeles D. Offrzer (1942) 19 Cal.2d 483 et d.), has never requirc subjective test of this type. In fact, the Court has held that the validity of a legislative act c not depend on the subjective intent of the legislative body, but rather the objective effect of legislation itself. (County of Los Angeles D. Superior Court (1975) 13 Cal.3d 721, 727.)
The City cannot predict the nature of any decision by the California Supreme Coui Rider, including whether the Court will reach the Constitutional Debt Limit issue. As a res the City cannot predict what effect, if any, the Rider case may have on the future market V: of the Certificates.
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS
Article XIIIA of the California Constitution
In 1978 California voters approved Proposition 13, adding Article XIIIA to California Constitution. Article XIIIA was subsequently amended in 1986, as discussed belc Article XIIIA limits the amount of any ad valorem tax on real property to 1% of the full c value thereof, except that additional ad valorem taxes may be levied to pay debt service indebtedness approved by the voters prior to July 1,1978 and on bonded indebtedness for acquisition or improvement of real property which has been approved on or after July 1,l
by two-thirds of the voters voting on such indebtedness. Article XIIIA defines full cash valul
mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill un
"full cash" or thereafter, the appraised value of real property when purchased, ne1
constructed, or a change in ownership have occurred after the 1975 assessment." This full c
value may be increased at a rate not to exceed 2% per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the "full cash vab
base in the event of declining property values caused by damage, destruction or other factors provide that there would be no increase in the "full cash value" base in the event reconstruction of property damaged or destroyed in a disaster.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implemc Article XIIIA. Under current law, local agencies are no longer permitted to levy directly a property tax (except to pay voter-approved indebtedness). The 1 % property tax automatically levied by the county and distributed according to a formula among taxi agencies. The formula apportions the tax roughly in proportion to the relative shares of ta: levied prior to 1979.
Increases of assessed valuation resulting from reappraisals of property due to n
various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocati
made to a local agency continues as part of its allocation in future years.
construction, change in ownership or from the 2% annual adjustment are allocated among
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Proposition 218
On November 5, 1996, California voters approved Proposition 218-Voter Appr
for Local Government Taxes-Limitation on Fees, Assessments, and Charges-Initi;
Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the Califc Constitution, imposing certain vote requirements and other limitations on the imposition of
or increased taxes, assessments and property-related fees and charges. Proposition 21 8 st that all taxes imposed by local governments shall be deemed to be either general taxes or spc taxes. Special purpose districts, including school districts, have no power to levy general tz
submitted to the electorate and approved by a majority vote. No local government ' impose, extend or increase any special tax unless and until such tax is submitted to
electorate and approved by a two-thirds vote.
Proposition 218 also provides that no tax, assessment, fee or charge shall be asses
by any agency upon any parcel of property or upon any person as an incident of prop1 ownership except: (i> the ad valorem property tax imposed pursuant to Article XIII and Ar' XIIIA of the California Constitution, (ii) any special tax receiving a two-thirds vote pursuar the California Constitution, and (iii) assessments, fees and charges for property related sew as provided in Proposition 218. Proposition 218 then goes on to add voter requirements assessments and fees and charges imposed as an incident of property ownership, other t fees and charges for sewer, water, and refuse collection services. In addition, all assessm and fees and charges imposed as an incident of property ownership, including sewer, w; and refuse collection services, are subjected to various additional procedures, such as hean and stricter and more individualized benefit requirements and findings. The effect of such r
provisions will presumably be to increase the difficulty a local agency will have in impos increasing or extending such assessments, fees and charges,
Proposition 218 also extended the initiative power to reducing or repealing any 1( taxes, assessments, fees and charges. This extension of the initiative power is not limitec
taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and ca
result in retroactive repeal or reduction in any existing taxes, assessments, fees and char,
subject to overriding federal constitutional principles relating to the impairments of contrack
Like its antecedents, Proposition 218 is likely to undergo both judicial and legislal
scrutiny before its impact on the City and its obligations can be determined. Certain provisi of Proposition 218 may be examined by the courts for their constitutionality under both Si and federal constitutional law. The City is not able to predict the outcome of any si examination.
NO local government may impose, extend or increase any general tax unless and until such t
Although a portion of the City's general fund revenues are derived from general ta purported to be governed by Proposition 218, all of such taxes (or increases thereof) were eif
adopted prior to the effective dates of such propositions or were approved (or ratified)
majority vote of the electorate. However, there are two assessments that Proposition 218 n
used to pay for street-related maintenance services. Although the City believes Proposition :
exempts assessments of this type from its requirement for voter ratification of exist assessments, a court could hold otherwise. In such event, the City could reduce or eliminate street maintenance services financed with the assessment or it could continue the exist services and impose a reduction in current General Fund-financed programs of 3 perc (assuming the reduction was evenly distributed among all departments).
The second assessment relates to San Diego County's installation of a new rac communications system for all public safety and some community service operations. The Cil share of the cost of the system is approximately $5.5 million, plus $100,000 per year
implicate. The first, an assessment imposed under the 1972 Lighting and Landscape Act
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maintenance, and the City intended to fund these costs from revenue received from a COL Service Area C'CSA') assessment against property in the City. However, County counsel
opined with respect to Proposition 218 that the CSA charge must be approved by the vof
which cannot occur until June 1998 at the earliest, if at all. Thus, the City faces the possibilit
paying for its share of the system from the General Fund, which also could result in a reduc of General Fund services.
In light of the limited extent of the two assessments at issue, and the discretion nature of some of the implicated services, the City believes that its finances will not significantly impacted by Proposition 218.
The foregoing discussion of Proposition 218 should not be considered an exhaustiv authoritative treatment of the issues. The City does not expect to be in a position to control
consideration or disposition of these issues and cannot predict the timing or outcome of
judicial or legislative activity in this regard. Interim rulings, final decisions, legislative propo and legislative enactments may all affect the impact of Proposition 218 on the Certificate well as the market for the Certificates. Legislative and court calendar delays and other fac may prolong any uncertainty regarding the effects of Proposition 218.
Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from IT
utility property assessed by the State Board of Equalization ("Unitary Property"), commenc
102% of its prior year State-assessed revenue; and (ii) if county-wide revenues generated fi Unitary Property are less than the previous year's revenues or greater than 102% of the previ year's revenues, each jurisdiction will share the burden of the shortfall or benefit of the ex( revenues by a specified formula. This provision applies to all Unitary Property exc railroads, whose valuation will continue to be allocated to individual tax rate areas.
The provisions of AB 454 do not constitute an elimination of the assessment of i State-assessed properties nor a revision of the methods of assessing utilities by the State Bo
of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property tc shared by all jurisdictions in a county.
Future Initiatives
with the 1988-89 fiscal year, will be allocated as follows: (i) each jurisdiction will receive u]
Article XIIIA, Article XIIIB and Proposition 218 were each adopted as measures t
qualified for the ballot through California's initiative process. From time to time other initial measures could be adopted, further affecting the City's revenues.
THE CORPORATION
The Corporation is a nonprofit public benefit corporation organized and existing un~
the laws of the State of California for charitable purposes (within the meaning of Sect
501(c)(4) of the Internal Revenue Code of 1986). The Corporation is empowered to assist
City in financing public projects.
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CITY OF CARLSBAD
The City of Carlsbad is located approximately 35 miles north of the City of San D
on the southern California coast. The City is governed by a five member City Council under
Councfi/Manager form of government. It is a general law city incorporated in 1952. The t
covers approximately 42 square miles. Industries in the area include a major regional shop1
center, 16 auto dealers, 25 hotels offering 2,200 rooms for tourist lodging, high tech, multiml and biomedical businesses, electronics, golf apparel and equipment manufacturers, sev business and light industry parks, and numerous land developers building single multifamily housing in a variety of community settings.
The City provides the full range of services normally associated with a municipa
including police, fire, parks and recreation, library, planning and zoning, building i
engineering, various maintenance services and administration. The City provides water , sewer services through the Carlsbad Municipal Water District, a subsidiary district of the C Solid waste collection is provided through a franchise arrangement with a local refuse collec'
service.
The City operates a redevelopment agency that encompasses 0.4 square miles of downtown area, as well as a housing authority that provides 495 low and moderate inca families with housing assistance.
For further general and demographic information regarding the City, see "APPENDIX
General Information About the City of Carlsbad".
CITY OF CARLSBAD FINANCES
The following selected financial information provides a brief overview of the Cit finances. This financial information has been extracted from the City's audited financ statements and, in some cases, from unaudited information provided by the City's Final Department. The most recent audited financial statements of the City with an unqualif
auditor's opinion is included as Appendix C hereto. See "APPENDIX C - AUDIT
FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED JUNE 30,1996."
The City expects its audited financial statements for the fiscal year ended June 30,lS
to be available by December 31,1997,
Accounting Policies and Financial Reporting
The City's accounting records are organized and operated on a "fundtt basis, which is 1 basic fiscal and accounting entity in governmental accounting. The three broad fund catego1 include governmental, proprietary and fiduciary funds. The operations of the different fur are accounted for with separate sets of self-balancing accounts with assets, liabilities, fu
balance or equity, and revenues and expenses. The basis of accounting for all funds is more fu explained in the Notes to the City of Carlsbad General Purpose Financial Statements contain in Appendix C.
The City received the Government Finance Officers Association's Certificate Achievement for Excellence in Financial Reporting for its comprehensive annual financial rep for the fiscal year ended June 30,1995.
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Budgetary Process
The budget of the City is a detailed operating plan which identifies estimated costs, activities in relation to estimated revenues. The City follows the following procedure: establishing its budget:
During May or June, the City Manager submits to the City Council a propc operating budget for the fiscal year commencing the following July 1. The budget inch
proposed expenditures and estimated revenues on a departmental basis.
1.
2. Public hearings are conducted at City Council meetings to obtain citizr comments during May and June.
3. Prior to July 1, the budget is enacted legally through passage of an approprial resolution.
The City Manager is authorized to make transfers of appropriated amounts from
department to another within a fund for up to $100,000. The legal level of budgetary contrc
at the fund level. Revisions that alter the total appropriations of any fund must be approvec
the City Council with the exception of budget adjustments which involve offsetting reven
and expenditures. The City Manager is authorized to increase or decrease an appropriation a specific purpose where the appropriation is offset by unbudgeted revenue which is design; for said specific purpose. Quarterly budget reviews are conducted each year and any mi changes to the adopted budget are approved by the City Council at that time. During the y'
several supplementary appropriations may be necessary.
Expenditures may not exceed budgeted appropriations at the fund level. appropriations lapse at fiscal year-end unless the City Council takes action in the form ( resolution to continue the appropriation into the following fiscal year.
Set forth below is the City's fiscal year 1995-96 Adopted Budget, the fiscal year 15 96 Actuals (on a budgetary basis) and the Adopted Budgets for fiscal years 1996-97 and IS 98.
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Table No. 1
CITY OF CARLSBAD
General Fund Budgets For Fiscal Years 1995-96 through 1997-98
Actual on a
Adopted Budget Budgetary Basis Adopted Budget Adopt
1996-97 (1) - 199;
Taxes $26,970,000 $27,586,049 $27,680,000 $30,
Licenses and permits 1,985,000 2,994,344 2,510,000 2, Intergovernmental 71,382 State subventions 2,400,000 2,675,659 2,660,000 2, Charges for services 3,360,000 4,442,421 3,795,300 5,1 Fines and forfeitures 240,000 335,395 270,000 Interest income 1,200,000 1,401,592 1,300,000 1 ti Interdepartmental services 1,800,000 2,054,319 1,800,000 1 ,I Miscellaneous 900,000 840,317 1,324,500
TOTALREVETWES $38,855,000 $42,401,478 $41,339,800 $44,1
1995-96(1) 1995-96
Revenues:
Expenditures and Transfers: Current: General Government $4,03 9,713 $5,238,157 $4,358,628 $4,.
7, 3, Community services 7,022,930 7,514,086 7,724,550 8, Non-Departmental 1,607,650 2,137,650 2, Contingencies 5 44,OO 0 625,030 1,
Public Safet 16,075,655 16,577,666 16,662,673 17,’ c~mmunity Levelopment 6,832,369 7,078,249 6,996,901 Library and the arts 2,732,320 2,775,740 2,825,124
TOTALEXPENDITURES $38,854,637 $39,183,898 $41,330,556 $44,
Excess (deficiency) of revenues $363 $3,217,580 $9,244 over (under) expenditures
(1) Adopted budget numbers reflect the budget adopted by the City Council at the beginning of the fiscal yea] do not reflect either quarterly reviews or any change adopted by the City Council during the fiscal year.
Source: Cit of Carlsbad, Finance De artment; 1994-95 an’d 1995-96 Comprehensive Annual Financial Reports 1995-96,19&-97 and 1997-98 AdopteZBudgets.
General Fund Financial Summary
The information contained in the following tables of revenues, expenditures and char in fund balances, and assets, liabilities and fund equity has been derived from the Ci
audited financial statements for the past three fiscal years.
A copy of the City’s audited financial statements for the twelve months ended Junc 1996 is attached as Appendix C hereto.
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Table No. 2
CITY OF CARLSBAD
As of June 30 for Fiscal Years 1993-94 through 1995-96
General Fund Balance Sheet
1993-94 1994-95 1995-96
Assets Cash and investments $1 2,429,930 $14,108,007 $16,850,215 Receivables: Taxes 990,022 1,524,653 1,825,978
Accounts, net 155,622 81,930 60,511
Other 25,064 93,809 19,878 Accrued interest 387,336 385,318 362,592
Due from other funds 711,484 733,329 955,845 Due from other governments 88,775
Advances to other funds 11,219,823 1 1,692,93 1 11,883,979 Inventory 22,585 20,452 43,332
Prepaid expenditures 4,204
Total Assets $26,030,641 $28,640,429 $32,006,534
Liabilities, Equity and Other Credits
Liabilities: Accounts payable $ 850,728 Accrued liabilities 2,021,359 $2,923,434 $2,835,239 Accrued wages payable
Estimated claims payable 95,800 Deposits payable 4,550 12,305 1,750
Deferred revenue 4.171.101 4.641.046 5.160.423
Total Liabilities $7,047,738 $7,576,785 $8,093,212
Equity and Other Credits: Fund Balance: Reserved $ 7,682,303 !§ 7,926,946 $7,658,527
Unreserved 11,300,600 13,136,698 16,254,795
Total Equity and Other Credits $18,982,903 $21,063,644 $23,913,322
Total Liabilities, Equity and Other $26,030,611 $28,640,429 $32,006,534 Credits
Source: City of Carlsbad, Finance Department, Comprehensive Annual Financial Reports (1995,1996)
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Table No. 3
CITY OF CARLSBAD
General Fund
Summary of Revenues and Expenditures
Fiscal Years 1993-94 through 1995-96
1993-94 1994-95 1995-96
Revenues:
Taxes $26,511,005 $27,1 75,812 $27,586,049 Licenses and permits 1,822,275 2,3 92,2 70 2,994,344 Intergovernmental 28,384 42,660 71,382 State subventions 2,862,479 2,619,900 2,675,659 Charges for services 3,069,804 3,978,665 4,442,421 Fines and forfeitures 231,454 263,411 335,395 In teres t income 1,465,717 131 1,791 1,401,592 2,054,319 840,317 Interdepartmental services 2,393,576 Miscellaneous 378,771
TOTAL REVENUES $38,763,465 $41,255,769 $42,401,478
2303335 1.1 67,925
Expenditures and Transfers: Current: $4,917,082 $ 4,831,158 General Government $ 4,641,421 Public Safety 15,747,024 15,490,522 16,582,362 Community Development 6,313,757 6,3 78,074 6,777,986 Library and the arts 2,681,940 2,652,932 2,730,482 Community services 6,999,321 6,9 70,969 7,092,592
TOTAL EXPENDITURES $36,383,463 $36,409,579 $38,014,580
Excess (deficiency) of revenues $ 2,380,002 $ 4,846,190 !§ 4,386,898 over (under) expenditures
Other financing sources (uses):
Operating transfers out 11,171,055) (1,843,393) (1,601,425)
Total other financing sources (uses): $(1,171,055) $(1,828,226) $(1,593,925)
Excess (deficiency) of revenues and other
financing sources over (under) expenditures and other financing uses $ 1,208,947 $ 3,017,964 $ 2,792,973
Fund balances at beginning of year $1 7,833,956 $19,554,430 $21,063,644
Residual equity transfers in 0 291,250 56,705
Operating transfers in 0 15,167 7,500
Residual equity transfers out (60,000) (1,800,000) 0
FUND BALANCES AT END OF YEAR $18,982,903 $21,063,644 $23,9 13,322
Source: City of Carlsbad, Finance Department, Comprehensive Annual Financial Reports (1995,1996)
Tax Receipts
Taxes received by the City include property taxes, sales taxes, transient occupa;
taxes, franchise taxes and others. Of such taxes, property taxes (approximately 39.5% of
City's 1995-96 tax revenues), sales taxes (approximately 41.8% of 1995-96 tax revenues), i
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transient occupancy taxes (12.4% of 1995-96 tax revenues) constitute the major sources oj
revenues. None of the general taxes currently imposed by the City are affected by Proposj
218. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES A
APPROPRIATIONS - Proposition 21 8."
through 1995-96, by source: The following table sets forth tax revenues received by the City for fiscal years 199
Table No. 4
Tax Revenues by Source
For Fiscal Years 1991-92 through 1995-96
CITY OF CARLSBAD
Fiscal Year
Ended lune 30: - 1992 - 1993 - 1994 - 1995 - 1996 Source: Property tax $13,511,504 $12,585,129 $11,123,765 $10,889,368 $10,895,405 Sales taxes 8,723,382 9,167,849 10,840,115 11,399,568 11,542,970 Transient occupancy 3,077,595 3,098,793 3,153,084 3,252,270 3,406,917 Franchise taxes 880,719 983,584 1,183,310 1,399,151 1,447,379 235,455 293,378 Real prop. transfer taxes 206,888 184,424 209,251
Trailer coach in-lieu 24,087 5,867 1,480
Total $26,424,175 $26 I, 025 646 $26 ,511,005 $27 ,175,812, $27 I, 586 049
Source: City of Carlsbad, Finance Department, Comprehensive Annual Financial Report (1992-93,1993-94,199 1995-96)
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Sales Taxes
Sales tax receipts in the City have continued to climb since the recessionary low poh 1992; sales tax revenues for 1995-96 increased approximately $143,000 over 1994-95. The
economy, particularly at restaurants and food markets. Sales between businesses
contributed to sales tax growth, most notably in the areas of electronic equipment and busi service sales.
in taxable receipts is due to increased consumer spending connected with the recove
Auto and light industry sales remain a large segment of the City's sales tax receipts
the top 30 sales tax generators in the City, 19 are classified in vehicle sales and leasing and 1
industry (e.g., rental businesses, light manufacturing) categories. A modest portion of the t
tax growth is from additional Proposition 172 sales taxes which are used to support pu
safety programs.
A sales tax is imposed on retail sales or consumption of personal property. The tax is established by the State Legislature. Effective March 15, 1991, the statewide tax rat 7.25%. An additional .50% is collected in San Diego County for transportation purposes. State collects and administers the tax, and makes distributions on taxes collected within City as follows:
Table No. 5
Sales Tax Rates
CITY OF CARESBAD
State General Fund ................................................................................. 6.00% County Transportation Fund (Transp. Dev. Act) ................................. 0.25 County Transportation Fund (Prop. A) ................................................ 0.50
City ......................................................................................................... 1.00 -
To tal .......................................................................................... .7.75 %
The State's actual administrative costs with respect to the portion of sales t: allocable to the City are deducted before distribution and are determined on a quarterly b
The actual administrative costs attributable to the City for calendar year 1996 tot; $1 29,756.
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During the first two quarters of 1996, total taxable transactions occurring in the (
amounted to $500,671,000, a 6.0% increase over the total taxable transactions of $472,226, that occurred during the first two quarters of 1995. The following table shows tax: transactions in the City by type of business during calendar years 1991 through 1995.
Table No. 7
CITY OF CARLSBAD
Taxable Transactions by Type of Business
For Calendar Years 1991 through 1995
($'s in thousands)
Business - 1991 - 1992 1993 - 1994 1995
Retail Stores Apparel stores $ 67,149 $ 66,528 $ 67,471 $ 63,375 $ 59,802 General Merchandise 89,655 104,023 140,278 136,071 133,65f
Food Stores 46,708 50,077 39,885 39,496 40,232 Eating/drinking places 53,263 55,280 57,497 63,627 65,42C Home hum. & appliances 9,580 6,672 9,139 17,057 15,445
Bldg. matrl. & farm implmt. 31,116 27,929 31,130 29,189 21,71( Auto dealers, auto supplies 246,735 230,085 272,029 288,112 281,301 Service stations 27,381 32,335 36,239 36,457 41,07€ Other retail stores 72.780 79,103 91,622 106,650 11 0,34i
Retail Stores Total 654,982 663,750 756,738 790,868 778,63E
All Other Outlets 130,934 140,517 152,345 179,706 192,922
TOTAL ALL OUTLETS $785,916 $804,267 $909,083 $970,574 $971,55€
Drug Stores 10,615 11,918 11,448 10,834 9,642
Source: California State Board of Equalization
Property Taxes
Property taxes have historically been the largest source of revenue for the City's Genl Fund. However, due to the permanent loss of certain property taxes to the State and a St# wide deflation of real estate values, property tax revenues fell from a high of approxima $13.5 million in fiscal year 1991-92 to approximately $10.9 million for fiscal year 1995 Property values are beginning to stabilize, however, and assessed values are now beginnin]
increase.
Assessed Valuation. The valuation of property in the City is established by the San Di County Assessor, except for public utility property which is assessed by the State Boarc Equalization. Assessed valuations are reported at 100% of the full value of the property defined in Article XIIIA of the California Constitution. Prior to 1981-82, assessed valuati were reported at 25% of the full value of the property. See "CONSTITUTIONAL A STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS," above.
A State-reimbursed exemption currently provides a credit of $7,000 of the full valuc an owner-occupied dwelling for which application has been made to the County Asses: Revenue estimated to be lost to local taxing agencies due to the this exemption has in the g
been reimbursed from State sources. Reimbursement is based upon total taxes due upon si
exemption values and therefore is not reduced by any estimated amount of act delinquencies.
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The following table shows assessed valuations for fiscal years 1993-94 through 1997
Table No. 8
CITY OF CARLSBAD Assessed Valuation Fiscal Years 1992-93 through 1996-97 ($'s in thousands)
Fiscal Year 19 9 3 - 9 4 1994-95 1995-96 1996-97 1997-98
secured $5,858,987,695 $5,673,354,814 $5,676,061,219 $5,811,751,594 $6,232,883,6
Unsecured 270,l 20,519 288,206,831 31 0,402,764 348,706~ 24 352,854,l
Less Exemptions 36,151,898 40,417,338 46,279,594 55,138,448 57,681,;
Total AV (1) 6,092,956,316 5,921,144,307 5,940~ 84,389 6,105,319,270 6,528,056,(
Less 94,519,630 96,173,142 9 8,488,810 100,249,766 103,825,r Homeowner's Exemption
Net AV 5,998,436,686 5,824,971,165 5,841,695,579 6,005,069,504 6,424,230,6
% Change (1.1 %) (2.9%) 0.3% 2.8% 7s
(1) Does not include redevelopment incremental valuation or state-assessed unitary values
Source: City of Carlsbad, Finance Department
Ad Valorem Property Taxes. Taxes are levied for each fiscal year on taxable real
personal property which is situated in the City as of the preceding March 1. For assessment collection purposes, property is classified either as "secured" or "unsecured," and is lk accordingly on separate parts of the assessment roll. The ''secured roll" is that part of assessment roll containing State-assessed property, the taxes on which are a lien on property sufficient to secure payment of the taxes. Other property is assessed on "unsecured roll." See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TA AND APPROPRIATIONS."
County Tax Loss Reseme Account ("Teeter Plan"). Although the Board of Superviso:
San Diego County adopted the Alternative Method of Distribution of Tax Levies Collections and of Tax Sale Proceeds (the "Teeter Plan") in 1994-95, as provided for in Sec 4701 et seq. of the California Revenue and Taxation Code, the City is not a participant ur the Teeter Plan. Therefore, the City's property tax revenues reflect actual collections. The Cj property tax revenue is based on the City's portion of the 1% tax rate of the assessed valu residential and commercial properties.
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Property Tax Collections and Delinquencies. The table below sets forth for fiscal yc
1992-93 through 1996-97, the property tax levies, total current collections and percent of 1
collected in the City for property tax accruing to the City's general fund.
Table No. 9
CITY OF CARLSBAD
Property Tax Levies, Total Current Collections and Percent of Levy Collected
For Fiscal Years 1992-93 through 1995-96
Fiscal Total Current Total Current Percent of
& & Collections Lew Collected 1992-93 13,990,844 12,776,232 91.3% 1993-94 12,373,782 11,318,017 93.7 1994-95 11,977,833 10,843,322 90.5
1995-96 11,891,199 11,164,134 93.9 1996-97 12,227,583 14,551,981 94.5
Source: City of Carlsbad, Finance Department; Comprehensive Annual Financial Report (1996)
PvincipaZ Taxpayers. The ten largest secured taxpayers in the City for fiscal year 199!
are as follows:
Table No. 10 CITY OF CARLSBAD
Principal Taxpayers June 30,1996
Taxpaver Tvue of Business Assessed Percentage of Valuation Assessed Valu San Diego Gas & Electric Co. Power Generation $323,471,899 5.5%
Fieldstone/La Costa Associates Land Developer 96,049,241 1.6
La Costa Hotel & Spa Corp. Hotel & Health Spa 88,490,962 1.5
Aviara Land Associates Limited Land Developer 61,897,867 1.1
Hughes Aircraft Company Manufacturer 49,850,543 0.9
Callaway Golf Co. Manufacturer 49,537,050 0.9
Puritan-Bennett Corporation Manufacturer 32,531 /I 55 0.6
Plaza Camino Real Shopping Center 31,080,326 0.5
Upland Industries, Corp. Land Developer 24,591,425 0.4
Multi-Family Associates Property Management 23,206,414 - 0.4
TOTALS $780,706,882 13.4%
Source: City of Carlsbad, Finance Department, Comprehensive Annual Financial Report (1996)
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Transient Occupancy Tax
During fiscal year 1995-96, transient occupancy taxes generated approximately 12
of the City's tax revenues. The City's transient occupancy tax is imposed on "transients" F occupy a room or rooms in a hotel, inn, motel, bed & breakfast, or other lodging facility wil the City's limits for stays of less than one month. The amount of the tax is 10% of the t rental amount. The initial transient occupancy tax and all increases thereafter were appro by the electorate of the City, and the City believes that such tax will not be negatively impac by Proposition 218. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TA: AND APPROPRIATIONS- Proposition 218" herein.
The City expects transient occupancy tax revenues to increase significantly in fiscal J
1997-98, in part because of the opening of the Four Seasons Resort at Aviara, a 336-room, f
star resort to be located in the City.
Long-Term Generd Fund Obligations
As of June 30,1996, the only long-term obligations of the City's General Fund were:
(i) $6,945,000 outstanding principal amount of the 1988 COPS being adva
refunded with the proceeds of the Certificates; and
$6,570,000 outstanding principal amount of 1986 College Boulevard Assessm
District Bonds. Although these bonds are secured primarily by special assessments against
properties in the applicable assessment district, the City has agreed in the assessment bc
indenture to pay from available revenues any amounts necessary to make up shortfalls in d
service on the bonds caused by delinquent assessments. The City is entitled to recover any s'
payments when the delinquencies are paid. Maximum annual debt service on the bond $898,818, but the City has never been required to make up a delinquency from its General Fu
Direct and Overlapping Debt
(ii)
Contained within the City are overlapping local agencies providing public services wl have issued general obligation bond and other types of indebtedness. Direct and overlapp bonded indebtedness is shown in the following table compiled by California Munici Statistics, Inc., of San Francisco, California.
CITY OF CARLSBAD Statement of Direct and Overlapping Debt As of ,1997
[to come]
Source: California Municipal Statistics, Inc.
Investment of City Funds
The City Treasurer is charged with the responsibility of safeguarding the City's ass1
receiving all payments due the City and investing all inactive pooled funds. The Final Director manages investments held outside the Treasurer's pool. These funds are generally bc proceeds, employee contributions to deferred compensation plans, and other funds which
individually invested.
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The City Treasurer manages the investment portfolio, a pool of assets and cash receiv into the pool which is invested without regard to the agency or fund from which it originatc Funds are invested in various types of instruments as described below. During Fiscal Year 19! 96, the City Treasurer earned about $8 million in interest on investments in all fund types frc instruments yielding up to 8.26%, compared to earnings of $7.1 million during 1994-95. T average yield of the pooled investment portfolio for fiscal year 1995-96 decreased to 5.9: from 6.04% the previous year. Average market interest rates decreased this past fiscal ye reversing the cyclical trend from the two previous fiscal years.
The City's investment policy and state statutes authorize the City to invest obligations of the U.S. Government, its agencies and instrumentalities, commercial paper ral
A-1 by Standard and Poor's Corporation or P-1 by Moody's Commercial Paper Record wit1
maximum maturity of 180 days or 15% of the portfolio, banker's acceptances with a maxim
maturity of 270 days or 25% of the portfolio, repurchase agreements with a maximum maw of one week, certificates of deposit with national and state licensed or chartered banks
federal or state savings and loan associations, medium-term corporate notes with a maxim five-year maturity rated in the top two rating categories and not to exceed 30% of the portfo
money market funds whose portfolios consist of one or more of the foregoing investment
sweep account, and the State Treasurer's investment pool.
State statutes require that all deposits be insured or collateralized. Depositories hold public funds on deposit are required to maintain collateral in the form of a pool of governm securities with a market value of at least 10 percent in excess of the City's deposit or 50% excess of the deposit as collateral in mortgage pools.
As required by State law, the City Council annually adopts a comprehensive investm policy specifying the type and term of City investments. The policy's objective is to maintain level of investment of all idle funds as close to 100% as possible and to invest in instrumc which will provide an acceptable return without endangering the basic requirements of sa and liquidity.
Recent events in Orange County and San Diego County prompted several changes in
improving accountability and safety. For the most part, the action taken by the State Legisla did not affect the City because the enacted changes were already part of the City's investn policy. In some cases, the City has even greater accountability and safety in its investn practices. For example, for years an investment review committee has met at least quarter1 review the status of investments and potential changes to the investment policy; also, Treasurer reports monthly to Council on pooled investments.
According to the City Treasurer's Monthly Report dated as of July 30,1997, the City
invested funds totaling approximately $ million. As of July 30, 1997, over -4 the portfolio consisted of U.S. government securities. The average maturity of the portfolio
years and the average yield on the portfolio was %. [to come from City Treas on August 21,19971
California Government Code regarding the investment of public funds, primarily focusing
TAX MATTERS
In the opinion of Stradling, Yocca, Carlson & Rauth, a Professional Corpora Newport Beach, California, Special Counsel, under existing statutes, regulations, rulings
judicial decisions, the portion of each Lease Payment constituting interest is excluded j
gross income for federal income tax purposes, and is not an item of tax preference for puq of calculating the federal alternative minimum tax imposed on individuals and corporation the further opinion of Special Counsel, the portion of each Lease Payment constituting int
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is exempt from State of California personal income tax. Special Counsel notes that, wj
respect to corporations, the portion of each Lease Payment constituting interest may included as an adjustment in the calculation of alternative minimum taxable income which m
affect the alternative minimum tax liability of such corporations. In addition, the differer between the issue price of a Certificate (the first price at which a substantial amount of t Certificates of a maturity is to be sold to the public) and the stated redemption price maturity with respect to a Certificate constitutes original issue discount, and the amount original issue discount that accrues to the owner of the Certificate is excluded from gross incoi of such owner for federal income tax purposes, is not an item of tax preference for purposes
the federal alternative minimum tax imposed on individuals and corporations, and is exen
from State of California personal income tax. A complete copy of the proposed opinion
Special Counsel is set forth in Appendix C - "FORM OF OPINION OF SPECIAL COUNSEL.'
Special Counsel's opinion as to the exclusion from gross income of the portion of ei Lease Payment constituting interest (and original issue discount) is based upon cert representations of fact and certifications made by the City and others and is subject to condition that the City complies with all requirements of the Internal Revenue Code of 1986 amended (the "Code"), that must be satisfied subsequent to the execution and delivery of Certificates to assure that the portion of each Lease Payment constituting interest (and origi
issue discount) will not become includable in gross income for federal income tax purpoi
Failure to comply with such requirements of the Code might cause the portion of each Le
Payment constituting interest (and original issue discount) to be included in gross income
federal income tax purposes retroactive to the date of execution and delivery of the Certifica
the City has covenanted to comply with all such requirements.
Although Special Counsel has rendered an opinion that the portion of each Le Payment constituting interest (and original issue discount) is excluded from gross income federal income tax purposes provided that the City continues to comply with cert
requirements of the Code, the ownership of the Certificates and the accrual or receipt of inte
(and original issue discount) with respect to the Certificates may otherwise affect the liability of certain persons. Special Counsel expresses no opinion regarding any such consequences. Accordingly, before purchasing any of the Certificates, all potential purcha should consult their tax advisors with respect to collateral tax consequences relating to Certificates.
Special Counsel's opinions may be affected by actions taken (or not taken) or evl occurring (or not occurring) after the date hereof. Special Counsel has not undertake! determine, or to inform any person, whether any such actions or events are taken or do oc The Trust Agreement and the Tax Certificate relating to the Certificates permit certain act to be taken or to be omitted if a favorable opinion of Special Counsel is provided with res
thereto. Special Counsel expresses no opinion as to the exclusion from gross income of
portion of each Lease Payment constituting interest (and original issue discount) for fed
income tax purposes if any such action is taken or omitted based upon the advice of cou
other than Stradling, Yocca, Carlson & Rauth.
CERTAIN LEGAL MATTERS
The legal opinion of Stradling, Yocca, Carlson & Rauth, a Professional Corpora
Newport Beach, California, Special Counsel, substantially in the form of Appendix D he
will be made available to purchasers at the time of original delivery of the Certificates, a copy thereof will accompany each Certificate. Certain matters will be passed upon foi
Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California. Ce
legal matters will be passed upon for the Corporation and the City by the City Attorney.
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Payment of the fees and expenses of Special Counsel is contingent upon the executi and delivery of the Certificates.
LITIGATION
There is no litigation pending or, to the City's knowledge, threatened in any way
Agreement or the Tmst Agreement, to contest the validity of the Certificates, the Site Lease, Lease Agreement or the Trust Agreement, or any proceeding of the City with respect thereto
the opinion of the City and its counsel, there are no lawsuits or claims pending against the C
which will materially affect the City's finances so as to impair its ability to pay Lease Payme when due.
restrain ur enjoin the execution or delivery of the Certificates, the Site Lease, the Lei
UNDERWRITING
The Certificates are being purchased by Dean Witter Reynolds Inc. (the "Underwritc at a purchase price of $ (which represents the aggregate principal amount of
Certificates less an original issue discount of $ and an underwriter's disco
of $ 1. The purchase agreement relating to the Certificates provides that Underwriter will purchase all of the Certificates if any are purchased, the obligation to m such purchase being subject to certain terms and conditions set forth in such purcf agreement.
The Underwriter may offer and sell Certificates to certain dealers and others at pr
lower than the offering price stated on the cover page hereof. The offering prices ma)
changed from time to time by the Underwriter.
RATINGS
Moody's Investors Service, Inc. and Standard & Poor's Ratings Services have assig
their municipal bond ratings of " " and " ''/ respectively, to the Certificates. S ratings reflect only the views of such organizations and an explanation of the significanc such rating may be obtained from Moody's Investors Service and Standard & Poor's Rati Services. There is no assurance that such ratings will continue for any given period of tim that such ratings will not be revised downward or withdrawn entirely by such organizatior
in their judgment circumstances so warrant. Any such downward revision or withdraw;
such ratings may have an adverse effect on the market price of the Certificates.
VERIFICATION OF MATHEMATICAL ACCURACY
Ernst & Young, Tucson, Arizona, independent accountants, upon delivery of
Certificates, will deliver a report on the mathematical accuracy of certain computati
contained in schedules provided to them which were prepared by the District, relating tc sufficiency of the anticipated receipts from the Escrow Securities to pay, when due,
principal, whether at maturity or upon prior prepayment, interest and prepayment prerr
requirements of the 1988 COPS.
The report of Ernst & Young will include the statement that the scope of i
engagement is limited to verifying the mathematical accuracy of the computations containr
such schedules provided to them, and that they have no obligation to update their re
because of events occurring, or data or information coming to their attention, subsequent tc
date of their report.
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MISCELLANEOUS
Insofar as any statements made in this Official Statement involve matters of opinion
of estimates, whether or not expressly stated, they are set forth as such and not representations of fact. No representation is made that any of the statements will be realizi Neither this Official Statement nor any statement which may have been made verbally or
writing is to be construed as a contract with the owners of the Certificates.
During the initial offering period for the Certificates, copies of the Site Lease, Lei
Agreement and Trust Agreement may be obtained, upon written request, from the City. Ai
delivery of the Certificates copies of such documents may be obtained from the Trustee.
The execution and delivery of this Official Statement have been duly authorized by
City Council of the City.
CITY OF CARLSBAD
By :
City Manager
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APPENDIX A
SUMMARY OF PFUNCIPAL LEGAL DOCUMENTS
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APPENDIX B
GENERAL INFORMATION ABOUT THE CITY OF CARLSBAD
The following information relating to the City of Carlsbad, San Diego County, Califo
(the "City") is supplied solely for purposes of information.
miles south of LOS Angeles. City limits cover approximately 42.19 square miles and ha!
The City of Carlsbad, California is located about 35 miles north of San Diego an(
estimated population of 70,100. The City was incorporated July 16,1952.
Municipal Government
Carlsbad is a general law city with the council-manager form of government. A f
member City council is elected at large for four-year alternating terms at elections held e7 two years. The mayor is the presiding officer of the council and also is elected to serve a fi year term. The city manager, appointed by the council for an indeterminate term, acts as c executive officer in carrying out council policies. The current city manager has served fo years.
The City had approximately 725 full- and part-time employees during 1995-96. (
services include police and fire protection, public safety, parks and recreation, libr,
community development, and water and sewer services.
Climate and Topography
Carlsbad has mild summers with a mean temperature for the month of July of 73 deg-
and moderate winters with an average winter temperature of 58 degrees. The relative humic is low. Average rainfall, which occurs generally in the period between October and Februaq less than 9 inches.
The City is located on the Pacific Ocean 31 miles north of San Diego at an altitudc sea level to 585 feet above sea level.
Population
five years are shown in the following table. Population figures for the City of Carlsbad, San Diego County and the State for the
CITY OF CARLSBAD Population Estimates Calendar Years 1993 through 1997
Calendar City of County State of
\(ear Carlsbad San Diego California
1993 66,500 2,614,200 31,517,000
1994 66,700 2,638,500 31,661,000 1995 66,500 2,658,600 31,910,000 1996 68,000 2,682,100 32,223,000 1997 70,100 2,724,400 32,609,000
Source: State Department of Finance estimates (as of January 1)
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City Employees Retirement Program
The City contributes to the California Public Employees Retirement System (,'PEW), agent multiple-employer public employee retirement system that acts as a common investm and administrative agent for participating public entities within the state of California. salaried full-time employees are eligible to participate in PEE. Participants in the plan t
after 5 years of employment. Employees in the plan are eligible to retire after ages 50 to 60 i receive annual retirement benefits calculated based on age at retirement, years of members1
service and the amount of earnings based on the highest 12 consecutive months average. 1
City's payroll for employees covered by PERS for the year ended June 30, 1996 v
$22,028,791 out of a total payroll of $25,216,119.
Pension costs are recorded as expenditures when paid by monthly contributions PERS. At June 30, 1995, the market value of the net assets available for benefits v
$89,855,496. The City's to tal unfunded (overfunded) pension benefits obligation at June
1995 was approximately $12.9 million.
City Insurance Program
Effective January 1,1991, the City became a participating member of the Public Age] Risk Sharing Authority of California (''PARSAC'), a risk-management pool for general liabil
with a self insured retention provided by the City also in the amount of $500,000 per CIaim.
addition, excess general liability insurance coverage up to $10,000,000 is provided. Under 1
terms of the agreement with PARSAC, the City must maintain an unencumbered portion of fu
equity equal to $1,500,000. At June 30, 1996, unencumbered fund equity for the Gene
Liability Self-Insurance Fund was approximately $2,200,000.
Health Insurance coverage for City employees is provided by Kaiser, PEE, or indemnity plan. The majority of City employees are covered through the indemnity plan wh is administered by Northwestern National Life ('"WNL"). Under the City's agreement w NWNL, NWNL provides coverage for each individual claim over $125,000. If claims for i
City as a whole exceed 125% of the average of the previous two months, NWNL assun payment for the excess amount.
claims. Under this program, the pool provides coverage up to a maximum of $500,000 per cla
The City is insured for worker's compensation claims by Employers Reinsurar
Corporation providing coverage for losses which exceed the City's self-insured retention
$300,000 per claim.
Employment and Industry
The City of Carlsbad is included in the San Diego Metropolitan Statistical Area, whi
includes all of San Diego County. Set forth below is data from 1992 to 1996, reflecting S
Diego County's civilian labor force, employment and unemployment. In the past five years to
employment in San Diego County rose 2.3% while the labor force increased 1%.
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METROPOLITAN STATISCAL AREA (SAN DIEGO COUNTY)
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
1992 - 1993 - 1994 - 1995 - 1996
Civilian Labor Force 1,201,000 1,226,300 1,236,500 1,234300 1,236,300 Employment 1,113,000 1,131,600 1,149300 1,155,800 1,170,700
Unemployment 88,Ooo 94,780 87,000 78,700 65,600
Unemployment Rate 7.3% 7.7% 7.0% 6.4% 5.39
Wage & Salary Employment
Total All Industries 958,400 957,900 965,800 989,300 1,009,800
Agriculture 10,600 10,700 10,600 10,800 10,800
Nonagricultural Industries 947,800 947,200 955,300 978,600 999,000
Mining 500 400 400 300 300 Construction 43,100 39,500 40,600 43,600 44,300 Manufacturing 124,100 117,500 114,100 114,900 11 6,200
Transportation, Public 34,800 35,700 36,400 37,400 38,000
Utili ties Wholesale Trade 42,300 39,700 42,000 42,900 43,300 Retail Trade 179,100 185,800 185,100 186,600 191,400 Finance, Insurance, Real 61 ,I 00 62,200 59,100 55,800 56,600
Estate Services 283,600 287,380 296,100 310,900 319,300 Government 179,300 179,180 181,500 186,100 189,600
Source: State of California Employment Development Department
The following tables list the major employers within the City and their estimated nurnl of employees.
table below.
The major manufacturing employers located within Carlsbad are summarized in
CITY OF CARLSBAD Major Manufacturing Employers As of September 1996
Emdover Emdovmen t Products
Calloway Golf 2,250 Golf Equipment The Upper Deck 700 Entertainment Cards Smith & Nephew Donjoy Inc. 500 Orthopedic Braces Nellcor Puritan Bennet Corp. 400 Medical Equipment Republic Tool & Manufact. Co. 400 Tools Taylor Made Golf Co., Inc. 400 Golf Equipment
Cobra Golf Inc. I1 350 Golf Equipment
Palomar Products 300 Integrated Circuits
Eaton-Leonard Corporation 240 Tube Bending Machines Ashworth, Inc. 250 Golf Apparel
Source: City of Carlsbad Chamber of Commerce
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A list of major non-manufacturing employees in the City is set forth in the table below
CITY OF CARLSBAD Major Non-Manufacturing Employers As of September 1996
Emdover Emplovmen t Products
Plaza Camino Real 3,000 Shopping Mall (4 major dept. stores) La Costa Resort & Spa 950 Hotel and Health Spa
City of Carlsbad 700 Municipal Government Carlsbad Unified School District 610 Education Car Country Carlsbad 500 Car Dealerships Farmers Insurance-Regional 400 Insurance Services
San Diego Gas & Electric Co. 300 Power Generation Isis Pharmaceutical 250 Research and Development Price Costco 200 Grocer / Wholesale / Retail Coast Waste Management 165 Solid Waste Disposal
Source: City of Carlsbad Chamber of Commerce
Median Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and non payments, a number often referred to as "disposable" or "after-tax" income. Personal incomc the aggregate of wages and salaries, other labor-related income (such as employer contributic
income of owner-occupants of non-farm dwellings), dividends paid by corporations, inter income from all sources, and transfer payments (such as pensions and welfare assistanc Deducted from this total are personal taxes (federal, state and local), nontax payments (fi~ fees, penalties, etc.) and personal contributions to social insurance. According to L government definitions, the resultant figure is commonly known as "disposable perso income."
Due to changes implemented in 1996 in the method of calculating Effective Buyi Income, prior years are not directly comparable with statistics for 1996. The following tal summarizes the total effective buying income for the City, the County of San Diego, the Sti and the United States for the period 1992 through 1996.
to private pension funds), proprietor's income, rental income (which includes imputed rer
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EFFECIWE BUYING INCOME
As of January 1,1991 through 1996
Total Effective Buying Income Median Household Year and Area @00'5 ofi tted) Effective Buying Incoml
1992 City of Carlsbad 1,360,268 45,754 San Diego County 40,840,447 35,776
California 490,749,649 36,943
United States 3,728,967,043 32,073
1993 City of Carlsbad 1,418,208 46,746 San Diego County 42,282,698 36,503 California 509,152,677 37,686 United States 3,916,947,023 33,178
1994 City of Carlsbad 1,407,026 48,592 San Diego County 43,795,963 38,082 California 528,958,745 39,330 United States 4,169,724,052 35,056
1995 City of Carlsbad 1,450,561 50,414 San Diego County 45,541,671 39,542
California 552,074,838 40,969 United States 4,436,178 37,070
1996 City of Carlsbad 1,302,354 43,416 San Diego County 39,777,129 33,679 California 477,640,503 34,533
United States 3,964,285,118 32,238
Source: Sales & Marketing Management Survey of Buying Power
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Building Activity
The table below summarizes building activity in the City of Carlsbad from 1992 to IS
CITY OF CARLSBAD
Building Activity and Valuation, 1992-1996
(In Thousands of Dollars)
- 1992 - 1993 - 1994 - 1995 - 1996 TvDe
Single-Family $13,583 $26,175 $57,289 $96,094 136,566 Mu1 ti-Family 0 0 4,424 11,158 1,639 Alterations/ Addi tions 6,416 5,017 4,796 2,868 /a TOTAL $19,999 $31,192 $66,509 $110,120 138,205
Commercial 8,123 1,732 2,648 15,730 n/a Industrial 4,848 1,108 5,842 9,760 n/a Other 486 851 2,798 505 n/a Alterations/Additions 8,260 11,467 9/71 0 5,009 n/a Total 21,717 15,158 20,998 31,004 n/a Total Building Valuations $41,716 $46,349 $87,508 $141,124 n/a
No. of Building - Units Single-Family 64 125 261 427 631 11
TOTAL 64 125 294 620 642
Source: Economic Sciences Corp., California Building Permit Activity
Multi-Family - 0 - 0 - 33 193 -
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APPENDIX S
AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED JUNE 30,1996
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APPENDIX D
PROPOSED FORM OF SPECIAL COUNSEL OPINION
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
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14029-04 0 JH.CKL e
PURCHASE CONTRACT
$ Refunding Certificates of Farticipation (Hosp Grove Project) Series 1997 Evidencing Direct, Undivided Fractional Interests of the
Owners Thereof in Lease Payments to Be Made by the CITY OF CARLSBAD, CALIFORNIA As the Rental for a Project Pursuant to a
Lease Agreement with the CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
PURCHASE CONTRACT
September -I 1997
City of Carlsbad 1200 Carlsbad Village Drive
Carlsbad, California 92008-1989
Ladies and Gentlemen:
The undersigned (the "Underwriter"), offers to enter into this purchase contract (i "Purchase Contract") with the City of Carlsbad, California (the "City"), which will be bindj upon the City and the Underwriter upon the acceptance hereof by the City. This offer is ma subject to its acceptance by the City by execution of this Purchase Contract and its delivery the Underwriter on or before 5:OO p.m., California time, on the date hereof. All terms us herein and not otherwise defined shall have the meanings given to such terms in the Tn Agreement (as hereafter defined).
1. Purchase and Sale. Upon the terms and conditions and upon the basis of t representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrc
to purchase, and the City hereby agrees to cause to be delivered to the Underwriter, all (but I
Refunding Certificates of Participation (Hosp Grove Project), Series 1997 (the "Certificates")
a purchase price of $ (being an amount equal to the principal amount of tl Certificates, less an original issue discount of $ , less an underwriter's discount
$ ) plus accrued interest from the date of the Certificates to the date of Closing ( hereafter defined).
less than all) of the $ aggregate principal amount of the City of Carlsb;
2. Authorizinz Instruments and Law. The City will lease real property (the "Project"),
the City of Carlsbad Public Improvement Corporation (the "Corporation") pursuant to a S
Lease, dated as of September 1,1997 (the "Site Lease"), between the City and the Corporatic
The Corporation will then sublease the Project back to the City pursuant to a Lease Agreeme
dated as of September 1,1997 (the "Lease Agreement"), between the Corporation and the Ci
The Certificates will evidence and represent fractional undivided interests of the owners therc
in Lease Payments to be made by the City to the Corporation pursuant to the Lease Agreemer The Certificates will be executed and delivered pursuant to a Trust Agreement, dated as September 1, 1997 (the "Trust Agreement"), among First Trust of California, Nation
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Association, as trustee (the "Trustee"), the Corporation and the City. The Corporation 1
assign substantially all of its rights under the Lease Agreement, including its right to rece Lease Payments, to the Trustee pursuant to an Assignment Agreement, dated as of Septem
1, 1997 (the "Assignment Agreement"), between the Corporation and the Trustee. T: Certificates shall be as described in the Trust Agreement and the Official Statement hereafter defined) .
The proceeds of the Certificates will be used (i) to provide funds to refund on advance basis the outstanding $8,690,000 initial principal amount of City of Carlsb
California Certificates of Participation (Hosp Grove Project), pursuant to that certain Escr
Agreement, dated as of September 1,1997 (the "Escrow Agreement"), by and between the C and First Trust of California, National Association, as escrow agent, (ii) to establish a Rese Fund with respect to the Certificates, and (iii) to pay the costs of execution and delivery of
Certificates.
Payment of principal of and interest with respect to the Certificates is being insured (the "Insurer").
3. public Offering. The Underwriter agrees to make a bona fide public offering of all 3-
Certificates initially at the public offering prices (or yields) set forth on Appendix A attach
hereto and incorporated herein by reference. Subsequent to the initial public offering, t
Underwriter reserves the right to change the public offering prices (or yields) as it deei
necessary in connection with the marketing of the Certificates, provided that the Underwri shall not chge the interest rates set forth on Appendix A. The Certificates may be offered a sold to certain dealers at prices lower than such initial public offering prices.
4. Delivery of Official Statement: Continuin? Disclosure. Pursuant to the authorizatii of the City, the Underwriter has distributed copies of the Preliminary Official Statement datc September -, 1997, relating to the Certificates (the "Preliminary Official Statement") prospective purchasers of the Certificates. By its acceptance of this proposal, the City here1 ratifies such use by the Underwriter of the Preliminary Official Statement; and the City agre to approve a final Official Statement relating to the Certificates (the "Official Statement") whit will consist of the Preliminary Official Statement with such changes as may be made theret
with the approval of the City and the Underwriter, and to provide copies thereof to tl
Underwriter as set forth in Section 6(0) hereof. The Underwriter hereby agrees to deposit tl
Official Statement with a nationally recognized municipal securities information depositor
The City hereby authorizes the Underwriter to use and distribute, in connection with the off.
and sale of the Certificates, the Preliminary Official Statement, the offickd Statement, the Tm Agreement, the Lease Agreement, the Site Lease, the Assignment Agreement and this Purchar Contract and all information contained herein, and all other documents, certificates an statements furnished by the City to the Underwriter in connection with the transactio1 contemplated by this Purchase Contract.
The City will undertake, pursuant to the Trust Agreement and a Continuing Disclosru Certificate (the "continuing Disclosure Certificate"), to provide certain annual financk information and notices of the occurrence of certain events, if material. A description of SUC undertaking is set forth in the Preliminary Official Statement and will also be set forth in th Official Statement.
5. The Closing. At 8:OO a.m., California time, on September 24, 1997 or at such othe time or on such earlier or later business day as shall have been mutually agreed upon by the Cit and the Underwriter, the City will cause to be delivered (i) the Certificates, through the facilitie of The Depository Trust Company, to the Underwriter in New York, New York, and (ii) th closing documents hereinafter mentioned at the offices of Stradling, Yocca, Carlson & Rauth,
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Professional Corporation ("Special Counsel"), Newport Beach, California, or another place tl mutually agreed upon by the City and the Underwriter. The Underwriter will accept s delivery and pay the purchase price of the Certificates as set forth in Section 1 hereo immediately available funds. This payment and delivery, together with the delivery of aforementioned documents, is herein called the "Closing." The Certificates will be deliverec
such denominations and deposited in the account or accounts specified by the Underwr
pursuant to written notice to the City not later than five business days prior to Closing.
covenants with to the Underwriter that:
6. Representations, Warranties and Covenants. The City represents, warrants to i
(a) Due Organization Existence and Authority. The City is a general law city d organized and existing under the Constitution and Iqws of the State of California I "State"), with full right, power and authority to execute, deliver and perform obligations under this Purchase Contract, the Trust Agreement, the Lease Agreement, Site Lease, the Escrow Agreement and the Continuing Disclosure Certificate (collectivr the "City Documents") and to carry out and consummate the transactions on its F contemplated by the City Documents and the Official Statement.
(b) Due Authorization and ApprovaZ. By all necessary official action of the C the City has duly authorized and approved the execution and delivery of, and performance by the City of the obligations on its part contained in the City Domer and as of the date hereof, such authorizations and approvals are in full force and eff and have not been amended, modified or rescinded. The City has complied, and will the Closing be in compliance in all respects, with its obligations under the C
Documents.
(c) Official Statement Accurate and Complete. The Preliminary Official Stateml was as of its date, and the Official Statement is, and at all times subsequent to the di
material respects, and the Preliminary Official Statement and the Official Statemc
contain and up to and including the Closing will contain no misstatement of a
material fact and do not, and up to and including the Closing will not, omit a
statement necessary to make the statements contained therein, in the light of 1 circumstances in which such statements were made, not misleading.
(d) Underwriter's Consent to Amendments and Supplements to Official Statemel
The City will advise the Underwriter promptly of any proposal to amend or suppleme
the Official Statement and will not effect or consent to any such amendment
supplement without the consent of the Underwriter, which consent will not
unreasonably withheld. The City will advise the Underwriter promptly of the hnstituti
of any proceedings known to it by any governmental agency prohibiting or otherwi
affecting the use of the Official Statement in connection with the offering, sale I
distribution of the Certificates.
(e) City Agreement to Amend or Supplement Official Statement. If after the date this Purchase Contract and until 25 days after the end of the "underwriting period" ( defined below), any event occurs as a result of which the Official Statement as the amended or supplemented would include an untrue statement of a material fact, or om to state any material fact necessary in order to make the statements contained tlherein, the light of the circumstances under which they were made, not misleading, and, in tl: reasonable opinion of the Underwriter, an amended or supplemented Official Stateme should be delivered in connection with the offers or sales of the Certificates to refle such event, the City promptly will prepare at its expense an amendment or suppleme
of the Official Statement up to and including the Closing will be, true and correct in
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which will correct such statement or omission and the City shall promptly furnish to
Underwriter a reasonable number of copies of such amendment or supplement. Un
the Underwriter otherwise advises the City in writing that the end of the underwrii
period shall be another specified date, the end of the underwriting period shall be
day of Closing.
(f) No Mgterial Change in Finances, At the time of the Closing there shall not h
been any material adverse changes in the financial condition of the City since the (
hereof.
(g) No Breach or Default. As of the time of acceptance hereof and as of the timl the Closing, the City is not and will not be, in any manner which would adversely af
the transactions on the part of the City contemplated hereby and by the C
Documents, in breach of or in default under any applicable constitutional provision,
or administrative rule or regulation of the State or the United States, or any applia
judgment or decree or any trust agreement, loan agreement, bond, note, resoluti
ordinance, agreement or other instrument to which the City is a party or is othern
subject, and no event has occurred and is continuing which, with the passage of timc
the giving of notice, or both, would constitute, in any manner which would advers
affect the transactions on the part of the City contemplated hereby and by the C
Documents, a default or event of default under any such instrument; and, as of s7
times, the authorization, execution and delivery of the City Documents and complia
with the provisions of each of such agreements or instruments do not and will 3
provision, law or administrative rule or regulation of the State or the United States,
any applicable judgment, decree, license, permit, trust agreement, loan agreement, boi note, resolution, ordinance, agreement or other instrument to which the City (or any its officers in their respective capacities as such) is subject, or by which it or any of properties is bound, nor will any such authorization, execution, delivery or compliar result in the creation or imposition of any lien, charge or other security interest encumbrance of any nature whatsoever upon any of its assets or properties or under t terms of any such law, regulation or instrument, except as may be provided by the C Documents.
conflict with or constitute a breach of or default under any applicable constitutio~
(h) No Litigation. As of the time of acceptance hereof and as of the date of i Closing, no action, suit, proceeding, inquiry or investigation, at law or in equity, before by any court, government agency, public board or body, is pending with respect to whi the City has been served with process, to the best knowledge of the City after d investigation, threatened (i) in any way questioning the corporate existence of the City the titles of the officers of the City to their respective offices; (ii) affecting, contesting
seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates, or any way contesting or affecting the validity of the City Documents or the consmatic of the transactions contemplated thereby, or contesting the exclusion of intere evidenced and represented by the Certificates from gross income for federal income tc purposes or contesting the powers of the City to enter into the City Documents; (i which may result in any material adverse impact on the financial condition of the Cii or (iv) contesting the completeness or accuracy of the Preliminary Official Statement the Official Statement or any supplement or amendment thereto or asserting that t: Preliminary Official Statement or the Official Statement contained any untrue stateme of a material fact or omitted to state any material fact required to be stated therein I
necessary to make the statements therein, in the light of the circumstances under whit
they were made, not misleading, and there is no known basis for any action, su
proceeding, inquiry or investigation of the nature described in clauses (i) through (iv)
this sentence.
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(i) Permitted Encumbuances. As of the time of acceptance hereof and as of the ( of the Closing, the Project shall be free of all liens other than Permitted Encumbrancek
0) Further Cooperation; Blue Sky. The City will furnish such information, exec such instruments and take such other action in cooperation with the Underwriter as Underwriter may reasonably request in order (i) tu qualify the Certificates for offer I
sale under the Blue Sky or other securities laws and regulations of such states and 01
jurisdictions of the United States as the Underwriter may designate and (ii) to detem
the eligibility of the Certificates for investment under the laws of such states and ot jurisdictions; provided, however, that the City shall not be required to execute a gent or special consent to service of process or qualify to do business in connection with i such qualification or determination in any jurisdiction.
(k) Consents and Approvals. All authorizations, approvals, licenses, perm
consents and orders of or filings with any governmental authority, legislative bo
board, agency or commission having jurisdiction in the matters which are required for
which would adversely affect the due performance by the City of its obligations
connection with, the City Documents have been duly obtained or made, except as IT be required under the Blue Sky or securities laws of any state in connection with offering and sale of the Certificates.
(l) Validity of City Documents. The City Documents, when executed and delive by the City and other parties thereto, will be legally valid and binding obligations of 1 City enforceable in accordance with their respective terms, except as enforcement m be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws equitable principles relating to or limiting creditors’ rights generally.
(m) No Other Obligations. Between the date of this Purchase Contract and t date of Closing, the City will not, without the prior written consent of the Underwrit offer or issue any bonds, notes or other obligations for borrowed money payable frc the General Fund of the City.
(n) Certificates. Any certificate signed by any official of the City and delivered
due authorization of, which would constitute a condition precedent to or the absencc
the Underwriter shall be deemed to be a representation and warranty by the City to t
Underwriter as to the statements made therein.
(0) Compliance With Rule 25~2-12. The Preliminary Official Statement heretofc
delivered to the Underwriter is deemed final by the City as of its date and as of the da
hereof, except for the omission of such information as is permitted to be omitted
accordance with paragraph (b)(l) of Rule 15~2-12. The City hereby covenants ai
agrees that, within seven business days from the date hereof, the City shall cause a fir
printed form of the Official Statement to be delivered to the Underwriter in sufficie
quantity to comply with paragraph (b)(4) of Rule 15c2-12 and Rules of the Municir
Securities Rulemaking Board.
7. Closinp Conditions. The Underwriter has entered into this Purchase Contract
reliance upon the representations, warranties and covenants of the City herein and tl
performance by the City of its obligations hereunder, both as of the date hereof and as of tl
date of the Closing. The Underwriter’s obligations under this Purchase Contract are and shall 1
subject to the following additional conditions:
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(a) Bring-Down Represenhation. The representations, warranties and covenant
the City contained herein shall be true and correct at the date hereof and at the timt
the Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder. At the time of the Closink
the City Documents and the Assignment Agreement shall be in full force and effect, i
shall not have been amended, modified or supplemented except with the written cons of the Underwriter, (ii) there shall be in full force and effect such resolutions ( "Resolutions") as, in the opinion of Special Counsel, shall be necessary in connect
with the transactions contemplated by the Official Statement, the City Documents i the Assignment Agreement, (iii) the City shall perform or have performed its obligati required as specified in this Purchase Contract or the City Documents to be perforn at or prior to Closing, (iv) the Corporation shall perform or have performed
obligations required as specified in the Trust Agreement, the Lease Agreement, the : Lease or the Assignment Agreement (collectively, the "Corporation Documents") to
performed at or prior to Closing, and (v) the Official Statement shall not have bt
supplemented or amended, except pursuant to Paragraph 6(e) or as otherwise may hi been agreed to in writing by the Underwriter.
(c) Nu Default. At the time of the Closing, no default shall have occurred or existing under the Resolutions, the Corporation Documents or the City Documents, i the City shall not be in default in the payment of any of its bonded indebtedness or i of its other obligations, which default would adversely impact the ability of the Citj make Lease Payments.
(d) Termination Events. The Underwriter shall have the right to terminate t Purchase Contract, without liability therefor, by written notification to the Corporati and the City if at any time at or prior to the Closing:
(1) Any event shall occur which causes any statement contained in i Official Statement to be materially misleading or results in a failure of 1
official Gtatement to state a material fact necessary to make the statements
the Official Statement, in the light of the circumstances under which they wc made, not misleading; or
(2) The marketability of the Certificates or the market price thereof, in t
opinion of the Underwriter, has been materially adversely affected by
amendment to the Constitution of the United States or by any legislation in or
the Congress of the United States or by the State, or the amendment of legislati pending as of the date of this Purchase Contract in the Congress of the Unit States, or the recommendation to Congress or endorsement for passage (by prr release, other form of notice or otherwise) of legislation by the President of 1 United States, the Treasury Department of the United States, the Interr Revenue Service or the Chairman or ranking minority member of the Committ on Finance of the United States Senate or the Committee on Ways and Means the United States House of Representatives, or the proposal for consideration legislation by either such Committee or by any member thereof, or t presentment of legislation for consideration as an option by either su Committee, or by the staff of the Joint Committee on Taxation of the Congress the United States, or the favorable reporting for passage of legislation to eitl House of the Congress of the United States by a Committee of such House which such legislation has been referred for consideration, or any decision of a federal or State court or any ruling or regulation (final, temporary or propose or official statement on behalf of the United States Treasury Department, tl
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Internal Revenue Service or other federal or State authority materially advers affecting the federal or State tax status of the City or the Corporation, or interest on bonds or notes or obligations of the general character of
Certificates; or
(3) Any legislation, ordinance, rule or regulation shall be introduced in be enacted by any governmental body, department or agency of the State, (
decision by any court of competent jurisdiction within the State or any cour
Underwriter, materially adversely affects the market price of the Certificates; (
(4) Legislation shall be enacted by the Congress of the United States, c decision by a court of the United States shall be rendered, or a stop order, mli
regulation or official statement by, or on behalf of, the Securities and Exchai
Commission or any other governmental agency having jurisdiction of the sub
matter shall be issued or made to the effect that the execution, delivery, offer
or sale of securities of the general character of the Certificates, or the executj
delivery, offering or sale of the Certificates, including all underlying obligatic
as contemplated hereby or by the Official Statement, is in violation or would
in violation of, or that securities of the general character of the Certificates, or
Certificates, are not exempt from registration under, any provision of the fedr securities laws, including the Securities Act of 1933, as amended and as theII effect, or that the Trust Agreement needs to be qualified under the Tr
Indenture Act of 1939, as amended and as then in effect; or
the United States shall be rendered which, in the reasonable opinion of
(5) Additional material restrictions not in force as of the date hereof sl
authority or by any national securities exchange which restrictions materi?
adversely affect the Underwriter’s ability to trade the Certificates; or
(6) A general banking moratorium shall have been established by fed(
(7) The United States has become engaged in hostilities which hi resulted in a declaration of war or a national emergency or there has occuri any other outbreak of hostilities or a national or international calamity or crii financial or otherwise, the effect of such outbreak, calamity or crisis on 1 financial markets of the United States, being such as, in the reasonable opinior the Underwriter, would affect materially and adversely the ability of i Underwriter to market or deliver the Certificates; or
have been imposed upon trading in securities generally by any governmer
or State authorities; or
(8) Any rating of the securities of the City shall have been downgrad
suspended or withdrawn by a national rating service, which/ in the Underwritf
reasonable opinion, materially adversely affects the marketability or market pi of the Certificates; or
(9) The commencement of any action, suit or proceeding described paragraphs 6(h) hereof which, in the judgment of the Underwriter, materia adversely affects the market price of the Certificates; or
(10) There shall be in force a general suspension of trading on the Nl York Stock Exchange.
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(e) Closing Documenis. At or prior to the Closing, the Underwriter shall rece (unless the context otherwise indicates) the following documents:
(1) Final 0p;nion. An approving opinion of Special Counsel dated date of the Closing and substantially in the form included as Appendix D to Official Statement, together with a letter from such counsel, dated the date of Closing and addressed to the Underwriter, to the effect that the forego
opinion addressed to the City may be relied upon by the Underwriter to
same extent as if such opinion were addressed to it.
(2) Szlpplementd Opinion. A supplemental opinion of Special Cow addressed to the Underwriter, in form and substance acceptable to Underwriter, and dated the date of the Closing substantially to the follow effect :
(i) The statements contained in the Official Statement on the co page and under the captions "INTRODUCTION," "THE CERTIFICAT
(other than under the subheading "Book-Entry Only System" as to wl
no opinion need be expressed), "SECURITY AND SOURCES PAYMENT FOR THE CERTIFICATES," and "TAX MATTERS," anc
certain provisions of the Certificates, the Trust Agreement, the Le
Agreement, the Escrow Agreement and the Site Lease, and Spel
Counsel's opinion concerning certain federal tax matters relating to Certificates, are accurate in all material respects; and
Appendix A thereto, insofar as such statements expressly summai
(ii) The Certificates are not subject to the registration requiremc
of the Securities Act of 1933, as amended, and the Trust Agreemen
exempt from qualification pursuant to the Trust Indenture Act of 1939 amended.
(3) City Attorney Opinion. An opinion of the City Attorney, dated
date of the Closing and addressed to the Underwriter, in form and substa acceptable to the Underwriter substantially to the following effect:
(i) The City is a general law city duly organized and vali existing under the Constitution and the laws of the State of California;
(ii) The City has full legal power and lawful authority to enter i the City Documents;
(iii) The City Documents have been duly authorized, executed i
delivered by the City and constitute the valid and binding agreement the City enforceable against the City in accordance with their respeci
terms, except as enforcement may be limited by bankruptcy, insolven reorganization moratorium or similar laws or equitable principles relat to or limiting creditors' rights generally;
(iv) The resolution ("City Resolution") of the City approving i authorizing the execution and delivery of the City Documents, i approving the Official Statement, was duly adopted at a meeting of City Council called and held pursuant to law and with all public no
required by law and at which a quorum was present and act
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throughout and the City Resolution is in full force and effect and has been modified, amended or rescinded;
(v) The execution and delivery of the City Documents E compliance with the provisions thereof, under the circumstan contemplated thereby, do not and will not in any material respect con!
with, or constitute on the part of the City a breach of or default unc any agreement or other instrument to which the City is a party or which it is bound or any existing law, regulation, court order or con5
decree to which the City is subject;
(vi) No additional authorization, approval, consent, waive1 any other action by any person, board or body, public or private,
previously obtained is required as of the date of the Closing for the (
to enter into the City Documents, or to perform its obligations thereunc
(vii) Except as otherwise disclosed in the Official Statement2
single road cording, action, suit, or investigation at law or in equitybef
or by any court, governmental agency or body, pending or, to the 1: knowledge of such counsel after due investigation, threatened against City, challenging the creation, organization or existence of the City, or validity of the City Documents or seeking to restrain or enjoin the Le Payments or in any way contesting or affecting the validity of the C Documents or any of the transactions referred to therein or contempla thereby or contesting the authority of the City to enter into or perform obligations under any of the City Documents, or under whicl determination adverse to the City would have a material adverse ef upon the financial condition or the revenues of the City, or which, in i manner, questions or affects the right or ability of the City to enter i the City Documents or affects in any manner the right or ability of City to make Lease Payments; and
(viii) That nothing has come to the attention of such counsel wf-
would lead it to believe that the Official Statement (excluding therefi
the financial and statistical data and forecasts included therein i
information about the Insurer and The Depository Trust Company, a
which no opinion need be expressed) contains any untrue statement 1
material fact or omits to state a material fact necessary to make
statements therein, in the light of the circumstances under which tl were made, not misleading.
(4) Trustee and Escrow Agent Counsel Opinion. The opinion of counsel to
Trustee and the Escrow Agent, dated the date of the Closing, addressed to
Underwriter, to the effect that:
(i) The Trustee has all necessary power to enter into, accept i
(ii) The Trust Agreement, the Escrow Agreement and the Assigntr Agreement have been duly authorized, executed and delivered by the Tru: and each of the Trust Agreement, the Escrow Agreement and the Assignm
enforceable in accordance with its terms, except as enforcement thereof ma)
administer the trust created under the Trust Agreement;
Agreement constitutes the legal, valid and binding obligation of the Trur
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limited by bankruptcy, insolvency or other laws affecting the enforcemen’ creditors’ rights generally and by the application of equitable principles
equitable remedies are sought; and
(iii) The Certificates have been executed by a duly authorized office
the Trustee.
(5) City Certificate. A certificate of the City, dated the date of the Closing, sig
on behalf of the City by the City Manager, Financial Management Director, (
Treasurer or other duly authorized officer of the City to the effect that:
(i) The representations, warranties and covenants of the City contai herein are true and correct in all material respects on and as of the date of Closing as if made on the date of the Closing and the City has complied witl of the terms and conditions of this Purchase Contract required to be comp
with by the City at or prior to the date of the Closing; and
(ii) No event affecting the City has occurred since the date of the Offi
statement which has not been disclosed therein or in any supplement amendment thereto which event should be disclosed in the Official Statemen order to make the statements therein, in the light of the circumstances un which they were made, not misleading.
(6) Corporation Certificate. A certificate of the Corporation, dated the date of Closing, signed on behalf of the Corporation by a duly authorized officer of
Corporation to the effect that:
(i) The Corporation is a nonprofit public benefit corporation, duly crea
and lawfully existing under the laws of the State, with full right, power i
authority to execute, deliver and perform its obligations under the Corporal
Documents and to carry out and consummate the transactions on its I contemplated by the Corporation Documents and the Official Statement;
(ii) By all necessary official action, the Corporation has duly authori and approved the execution and delivery of, and the performance by Corporation of the obligations on its part contained in the Corporal Documents and as of the Closing Date, such authorizations and approvals ar full force and effect and have not been amended, modified or rescinded. Corporation is in compliance in all material respects with the terms of
Corporation Documents;
(iii) The Corporation is not, in any manner which would adversely af the transactions contemplated by the Corporation Documents, in breach of o default under any applicable constitutional provision, law or administrative I or regulation of the State or the United States, or any applicable judgmeni decree or any trust agreement, loan agreement, bond, note, resolution, ordina
agreement or other instrument to which the Corporation is a party or is othew
subject, and no event has occurred and is continuing which, with the passag( time or the giving of notice, or both, would constitute, in any manner wl would adversely affect the transactions contemplated by the Corporal Documents, a default or event of default under any such instrument; and authorization, execution and delivery of the Corporation Documents i
compliance with the provisions of each of such agreements or instruments do
and will not conflict with or constitute a breach of or default under I
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applicable constitutional provision, law or administrative rule or regulatior the State or the United States or any applicable judgment, decree, license, pen
trust agreement, loan agreement, bond, note, resolution, ordinance, agreemen
other instrument to which the Corporation (or any of its officers in t2 respective capacities as such) is subject, or by which it or any of its propertie
bound, nor will any such authorization, execution, delivery or compliance re in the creation or imposition of any lien, charge or other security interes
encumbrance of any nature whatsoever upon any of its assets or propertie:
provided by the Corporation Documents;
(iv) There is no action, suit, proceeding, inquiry or investigation, at lab in equity, before or by any court, government agency, public board or bo pending with respect to which the Corporation has been served with process to the best knowledge of the Corporation after due investigation, threatened
in any way questioning the existence of the Corporation or the titles of officers of the Corporation to their respective offices; (b) affecting, contestinj seeking to prohibit, restrain or enjoin the execution and delivery of Certificates, or in any way contesting or affecting the validity of the Corporal Documents or the consummation of the transactions contemplated thereby contesting the powers of the Corporation to enter into the Corporat Documents; or (c) which may result in any material adverse impact on financial condition of the Corporation, and there is no basis for any action, s proceeding, inquiry or investigation of the nature described in clauses (a) throi (c) of this sentence;
under the terms of any such law, regulation or instrument, except as ma)
(v) The Corporation Documents are valid and binding obligations of
Corporation enforceable in accordance with their respective terms, excep.
enforcement may be limited by bankruptcy, insolvency, reorganizati
moratorium or similar laws or equitable principles relating to or limiting credit4
rights generally;
(vi) All authorizations, approvals, licenses, permits, consents and ord of or filings with any governmental authority, legislative body, board, agencj commission having jurisdiction in the matters which are required for the (
authorization of, which would constitute a condition precedent to or the abse
of which would adversely affect the due performance by the Corporation oj
obligations in connection with, the Corporation Documents have been d
obtained or made, except as may be required under the Blue Sky or securi
laws of any state in connection with the offering and sale of the Certificates; a
(vii) No event affecting the Corporation has occurred since the date of Official Statement which has not been disclosed therein or in any supplemen amendment thereto which event should be disclosed in the Official Statemen order to make the statements with respect to the Corporation therein, in the li of the circumstances under which they were made, not misleading.
(7) Trustee’s and Escrow Agent’s Certificate. A certificate of the Trustee and ESCI Agent, dated the date of Closing, addressed to the City and the Underwriter, in fc
and substance acceptable to the Underwriter, to the following effect:
(i) The Trustee has all necessary power to enter into, accept : administer the trust created under the Trust Agreement;
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(ii) The Trust Agreement, the Escrow Agreement and the Assignm
Agreement have been duly authorized, executed and delivered by the Trus
and each of the Trust Agreement, the Escrow Agreement and the Assignm Agreement constitutes the legal, valid and binding obligation of the Tru:
enforceable in accordance with its terns, except as enforcement thereof maj limited by bankruptcy, insolvency or other laws affecting the enforcemen creditors' rights generally and by the application of equitable principle! equitable remedies are sought;
(iii) No consent, approval, authorization or other action by I governmental or regulatory authority having jurisdiction over the Trustee that not been obtained is or will be required for the execution and delivery of
Trust Agreement, the Escrow Agreement or the Assignment Agreement or
performance by the Trustee of its duties and obligations under the TI
Agreement, the Escrow Agreement or the Assignment Agreement;
(iv) The Certificates have been executed by a duly authorized office
(v) The execution and delivery by the Trustee of the Trust Agreement, Escrow Agreement and the Assignment Agreement and compliance with terms thereof will not conflict with, or result in a violation or breach of,
constitute a default under, any loan agreement, indenture, bond, note, resolul or any other agreement or instrument to which the Trustee is a party or by wl-
it is bound, or any law or any rule, regulation, order or decree of any cour governmental agency or body having jurisdiction over the Trustee or any 0. activities or properties (except that no representation, warranty or agreerr need be made by such counsel with respect to any federal or State securitie: blue sky laws or regulations); and
(vi) There is no action, suit, proceeding or investigation, at law 01 equity, before or by any court or governmental agency, public board or bc pending, or to the best knowledge of the Trustee, threatened against the Trus which in the reasonable judgment of the Trustee would affect the existence of Trustee or in any way contesting or affecting the validity or enforceability of Trust Agreement, the Escrow Agreement or the Assignment Agreement
contesting the powers of the Trustee or its authority to enter into and perfom
obligation thereunder.
the Trustee;
(8) Escrow VeTFcatiun. Evidence satisfactory to the Underwriter, Special Cow
and counsel to the Underwriter reflecting the defeasance in whole of the 1988 COPS;
(9) Underwriter's Counsel Opinion. An opinion of Jones Hall, A Professional I Corporation, counsel to the Underwriter, dated the Closing Date, and addressed to Underwriter, to the effect that:
(i) during the course of serving as Underwriter's Counsel connection with the execution and delivery of the Certificates and without hav undertaken to determine independently or assuming any responsibility for accuracy, completeness or fairness of the statements contained in the Offil Statement, no information came to the attention of the attorneys in such f
rendering legal services in connection with the issuance of the Certificates t would lead them to believe that the Official Statement (excluding therefrom financial statements, any financial or statistical data, or forecasts, cha
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numbers, estimates, projections, assumptions or expressions of opinion inch
in the Official Statement, information regarding DTC, and the appendices to Official Statement as to which no opinion need be expressed), as of the ( thereof or the Closing Date, contains any untrue statement of a material fac
omits to state a material fact required to be stated therein or necessary in 01
to make the statements therein, in the light of the circumstances under which t
were made, not misleading; and
the Certificates are exempt from registration pursuant to
Securities Act of 1933, as amended;
(10) Transcripts. Two transcripts of all proceedings relating to the authorizat execution and delivery of the City Documents, the Corporation Documents and Certificates.
(ii)
(11) Official Statement. The Official Statement and each supplement
amendment, if any, thereto, executed on behalf of the City by a duly authorized off of the City.
(12) Documents. An original executed copy of each of the Corporal Documents and each of the City Documents.
(13) City Resolution. Certified copies of the City Resolution, certified by the (
Clerk.
(14) 8038. Evidence that the federal tax information form 8038-G has b
prepared for filing.
(15) Nunarbitrage Certificate. A tax and nonarbitrage certificate in fc satisfactory to Special Counsel.
(16) CDAC Statements. A copy of the Notices of Sale required to be deliverec the California Debt Advisory Commission pursuant to Section 53583 of the Califoi Government Code.
(17) Title Itzsuvance. Evidence of arrangements for the issuance of a binder fc CLTA title insurance policy insuring the City's leasehold interest in the Project purst to the Lease Agreement in form and substance acceptable to Special Counsel.
[(18) Bond Insurance Policy. A municipal bond insurance policy (the "BI
[(19) Insurer Certifications. A certificate or opinion of counsel, satisfactory to
City and Special Counsel, of the Insurer regarding the enforceability of the Bi Insurance Policy and the statements in the Official Statement regarding the Insurer i the Bond Insurance Policy.]
Insurance Policy") issued by the Insurer.]
(20) Additional Documents. Such additional certificates, instruments and ot documents as the Underwriter or its counsel may reasonably deem necessary.
If the City shall be unable to satisfy the conditions contained in this Section 7, or if
obligations of the Underwriter shall be terminated for any reason permitted by this Purcl-
be under further obligation hereunder, except as further set forth in Section 8 hereof.
Contract, this Purchase Contract shall terminate and neither the Underwriter nor the City s
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8. ExDenses. The Underwriter shall be under no obligation to pay, and the City shall or cause to be paid, the expenses incident to the performance of the obligations of the ( hereunder including but not limited to (a) the costs of the preparation and printing, or oi
reproduction (for distribution on or prior to the date hereof) of the Corporation Docurnents,
City Documents and this Agreement, and the cost of preparing, printing, executing ( delivering the Certificates; (b) the fees and disbursements of the Trustee, any accountant
other experts or consultants retained by the City; (c) the fees and disbursements of Spe
Counsel and Disclosure Counsel; (d) the cost of preparation and printing of the Prelimir
Official Statement and any supplements and amendments thereto and the cost of prepara
and printing of the Official Statement, including a reasonable number of copies thereof
distribution by the Underwriter; and (e) the costs of any rating agency presentations,
The Underwriter shall pay, and the City shall be under no obligation to pay,
expenses incurred by it in connection with the public offering and distribution of the Certific,
(including the fees and expenses of its counsel), applicable CDAC fees and any advertis
expenses.
9. Liquidated Damages. In the event that the Underwriter fails (other than fc reason permitted by this Purchase Contract) to accept and pay for the Certificates at Closing, the amount of one percent (1%) of the principal amount of the Certificates wil accepted as liquidated damages for such failure and any and all defaults hereunder on the 1 of the Underwriter. Acceptance of such amount by the City shall constitute a full release I discharge of all claims and rights of the City against the Underwriter. The parties hereto aj that the amount of actual damages to the City that would result from a default on the par the Underwriter is difficult to determine, and the parties further agree that the amount speci above is acceptable to both parties as fair and reasonable damages.
10. Notice. Any notice or other communication to be given to the City under 1 Purchase Contract may be given by delivering the same in writing to such entity at 1 Carlsbad Village Drive, Carlsbad, California 92008-1989, Attention, City Manager.
Any notice or other communication to be given to the Underwriter under this Pur& Contract may be given by delivering the same in writing to Dean Witter Reynolds Inc., California Street, 7th Floor, San Francisco, California 94111.
11. Entire APreement. This Purchase Contract, when accepted by the City, SI constitute the entire agreement between the City and the Underwriter and is made solely for benefit of the City and the Underwriter (including the successors or assigns of ( Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, ex( as provided herein. All of the City’s representations, warranties and agreements in Purchase Contract shall remain operative and in full force and effect, regardless of investigation made by or on behalf of the Underwriter, until the earlier of (a) delivery of, payment for the Certificates hereunder, and @) any terrnination of this Purchase Contract.
12. Countemarts. This Purchase Contract may be executed by the parties heretc separate counterparts, each of which when so executed and delivered shall be an original,
all such counterparts shall together constitute but one and the same instrument*
13. Severability. In case any one or more of the provisions contained herein shall for I
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegalit!
unenforceability shall not affect any other provision hereof.
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14. State Law Governs. The validity, interpretation and performance of this Purch
Contract shall be governed by the laws of the State.
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15. No Assienment. The rights and obligations created by this Purchase Contract sl
not be subject to assignment by the Underwriter or the City without the prior written consen the other party hereto.
DEAN WITTER REYNOLDS INC.
BY
Accepted as of the date first stated above:
CITY OF CARLSBAD
By: City Manager
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APPENDIX A
Principal
Payment Date Principal Interest {August 1) Amount Rate Price Yield
1998
1999
2000
2001 2002 2003
2004 2005 2006
2007
2008
A-1
b
9 0
TRUST AGREEMENT
among
CITY OF CARLSBAD
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
as Trustee
and
CITY OP CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Dated as of Septemlber 1,1997
RELATING TO
REFUNDING CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT)
SERIES A OF 1997
3i
SOS3OS.3\KyeagerU2062.0023
1 0 0 TABLE OF CONTENTS
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I
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION ....................
Section 101. Definitions.. .......................................................................
Section 102. Rules of Construction. .......................................................... Section 103. Exhibits. ...........................................................................
ARTICLE I1 ASSIGNMENT; DECLARATION OF TRUST;
REPRESENTATIONS AND RECITALS ...................................
Declaration of Trust by Trustee. ..............................................
Deposit of Moneys. ..............................................................
Conditions Precedent Satisfied. ................................................
Due Authorization and Execution. ............................................
TERMS AND PROVISIONS OF THE CERTIFICATES .................
Preparation of Certificates. ......................................................
Payments from Trust Estate Only; Distribution of Trust
Estate. ...............................................................................
Description of the Certificates. .................................................
Medium of Payment. .............................................................
Execution and Exchange. ........................................................
Regulations with Respect to Exchanges and Transfers ......................
Certificates Mutilated, Destroyed, Stolen or Lost. ..........................
Temporary Certificates; Form of Certificates. ...............................
Redemption of Certificates. .....................................................
Selection of Certificates to be Redeemed ......................................
Notice of Redemption. ...........................................................
Payment of Redeemed Certificates. ............................................
Cancellation of Certificates. .....................................................
Nonpresentment of Certificates. ................................................
Unclaimed Money.. ...............................................................
ESTABLISHMENT AND ADMINISTRATION OF
FUNDS AND ACCOUNTS .....................................................
Establishment of Funds; Disposition of Proceeds of
Certificates. ........................................................................
Section 402. Costs of Issuance Fund ...........................................................
Section 403. Lease Payment Fund ..............................................................
Section 404. Certificate Fund. ..................................................................
Section 405. Insurance and Condemnation Fund. ...........................................
Section 406. Rebate Fund ........................................................................
Section 407. Deposits of Money. ...............................................................
Section 408. Investment of Certain Accounts. ...............................................
Section 201.
Section 202.
Section 203.
Section 204.
ARTICLE I11
Section 301.
Section 302.
Section 303.
Section 304.
Section 305.
Section 307.
Section 308.
Section 309.
Section 310.
Section 311,
Section 312.
Section 313.
Section 314.
Section 315.
Section 3 16.
Section 306. Negotiability, Transfer and Registry ...........................................
ARTICLE IV
Section 401.
505305.3Kyeager\22062.0023 1
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r
Section 409. Valuation and Sale of Investments. ...........................................
COVENANTS, EVENTS OF DEFAULT, REMEDIES
OF OWNERS AND LIMITATIONS OF LLABILI .......................
Section 501. Trustee to Enforce Lease Agreement; Notice of
Nonpayment. ......................................................................
Section 502. Assignment of Rights. ...........................................................
Section 503. Events of Default .................................................................
Section 504. Application of Funds. ...........................................................
Section 505. Institution of Legal Proceedings. ..............................................
Section 506. Non-Waiver. ......................................................................
Section 507. Remedies Not Exclusive. .......................................................
Section 508. Power of Trustee to Control Proceedings. ...................................
Section 509. Limitation on Owners' Right to Sue. .........................................
Section 510. Reconstruction; Application of Net Proceeds.. ,. . ,, . , . . ,. , , , . , . . , . . ,, . , , . , , .
Section 51 1. Accounts and Reports. ..........................................................
Section 512. No Obligation by the City to Owners. ........................................
Section 513. No Obligation with Respect to Performance by Trustee. ..................
Section 514. No Liability to Owners for Payment. .........................................
Section 515. Possession and Enjoyment. .....................................................
Section 516. Federal Tax Covenants. .........................................................
CONCERNING THE TRUSTEE AND PAYING AGENT ...............
Section 601. Employment of Trustee. ........................................................
Section 602. Trustee Acceptance of Duties. .................................................
Section 603. Evidence on Which Trustee May Act. ........................................
Section 604. Obligations of Trustee. ..........................................................
Section 605. Compensation.. ...................................................................
Section 606. Resignation of Trustee. .........................................................
Section 607. Removal of Trustee. .............................................................
Section 608. Appointment of Successor Trustee. .. ,. ........ ,. . ,. , ... , .. , .. ,. .... I,. ..... ,.
Section 609. Transfer of Rights and Property to Successor Trustee. ....................
Section 610. Merger or Consolidation. .......................................................
Section 61 1. Adoption of Authorized Signature.. ...........................................
Section 612. Trustee Liability. .................................................................
Section 613. Indemnification. ..................................................................
ARTICLE VI1 AMENDMENTS .................................................................
Section 701. Mailing .............................................................................
Section 702. Powers of Amendment. .........................................................
Section 703. Consent of Owners. .............................................................
Section 704. Modifications by Unanimous Consent. .......................................
Section 705. Exclusion of Certificates. .......................................................
ARTICLE V
ARTICLE VI
.. 505305.3U<yeager\22062.0023 11
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Section 706. Notation on Certificates. ........................................................
ARTICLE VI11 BOOK-ENTRY SYSTEM ......................................................
Section 801. Section 802. Representation Letter. ..........................................................
Section 803. Transfers Outside Book-Entry System.. ......................................
Section 804. Payments to the Nominee. ......................................................
Section 805. Initial Depository and Nominee. ...............................................
ARTICLE IX MISCELLANEOUS .............................................................
Section 901. Defeasance. .......................................................................
Ownership of Certificates.. .....................................................
Section 903. Moneys Held for Particular Certificates. .....................................
Section 904. Preservation and Inspection of Documents. .................................
Section 905. Parties Interested Herein. .......................................................
Section 906. Severability of Invalid Provisions. ............................................
Section 907. Recording and Filing. ...........................................................
Section 908. Notices. ............................................................................
Section 909. California Law ....................................................................
Section 910. Binding on Successors. ......................................................... Section 91 1. Headings. ..........................................................................
Section 912. Execution in Counterparts. .....................................................
PROVISIONS RELATING TO MUNICIPAL BOND
"CE POLICY .........................................................
Section 1001. Consent of Insurer. ..............................................................
Section 1002. Notices to be Given to Insurer, l. e ,.. l...... ,. e I..... , e e Bo.B I el 0. D I I l I I I I. e I I I I
Section 1003. Payment Procedure Pursuant to the Municipal Bond
Insurance Policy. .................................................................
Section 1004. Trustee-Related Provisions. ....................................................
Section 1005. Parties Interested Herein. .......................................................
Section 1006. Termination of Insurance Provisions. ........................................
Book-Entry System; Limited Obligation of Agency. .......................
Section 902. Evidence of Signatures of Certificate Owners and
ARTICLE X
EXHIBIT A FORM OF CERTIFICATE
... 505305.3Kyeager\22062.0023 111
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I e 9
TRUST AGREEMENT RELATING TO THE
REFUNDING CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT) SERIES A OF 1997 -
THIS TRUST AGREEMENT, dated as of September 1, 1997 (the "Trust Agreement"), is
entered into by and among the City of Carlsbad, a general law city duly organized and validly exist
under and by virtue of the laws of the State of California (the "City"), First Trust of California, Nat
Association, a banlung corporation organized and existing under and by virtue of the laws of the Si
of California, as trustee (the "Trustee"), and City of Carlsbad Public Improvement Corporation, a
public body corporate and politic duly organized and existing under the laws of the State of Califon
. (the "Corporation");
WITNESSETH:
In consideration of the mutual agreements and covenants herein contained and for other
valuable consideration, the parties hereto agree as follows:
WHEREAS, the Corporation and the City have entered into a Site Lease dated as of the da
hereof (the "Site Lease"), pursuant to which the City has agreed to lease certain real property and
improvements described therein (the "Site") to the Corporation; and
WHEREAS, the Corporation and the City have entered into a Lease Agreement dated as oi
date hereof (the "Lease Agreement"), pursuant to which the City has agreed to lease back from the
Corporation the Site for the purpose of facilitating the sale of the Certificates (as defined herein) to
executed and delivered under this Trust Agreement, the proceeds of whlch will be used to refund tl
portion of those certain $8,690,000 City of Carlsbad 1988 Cerhficates of Participation (Hosp Grow
and
Project) that now remain outstandmg (such poaon being referred to hereln as the "Prior Ceaficate
WHEREAS, pursuant to an Assignment Agreement dated as of the date hereof (the
"Assignment Agreement"), the Corporation has transferred all of its rights, title and interest (exclud
its rights to indedcation and payment or reimbursement of its costs and expenses) in and to the
Lease and the Lease Agreement, including the right to receive certain rental payments due thereunc
(the "Lease Payments"), to the Trustee for the benefit of the Owners of the Certificates; and
WHEREAS, the Trustee shall execute and deliver the Cerhficates on the Delivery Date
therefor evidencing proportionate interests in certain rights under the Lease Agreement, includmg tk
right to receive Lease Payments payable thereunder, and shall undertake such other responsibilities
are assigned to the Trustee pursuant to this Trust Agreement; and
WHEREAS, the Corporation will deposit with the Trustee cerh of the proceeds of the
Cemficates in order to refund the Prior Certificates; and
WHEREAS, the City and the Corporation represent that all acts, conditions and Ggs requ
by law to exist, to have happened and to have been performed precedent to and in connection with 1
505305.3U(yeagerv2062 .ME3
)
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execution and entering into of thls Trust Agreement do exist, have happened and have been perforn
in due time, form and manner as required by law, and the parties hereto are duly authorized to exec
and enter into hs Trust Agreement; and
NOW, THEREFORE, in consideration of the premises, of the acceptance by the Trustee of
duties hereby imposed, and of the purchase and acceptance of the Certificates by the Owners therec
and to fix and declare the terms and conditions upon which the Certificates are to be executed,
delivered, secured and accepted by all persons who shall from time to time be or become Owners
thereof, and to secure the payment of the Certificates and the interest with respect thereto accordmg
their tenor, purpose and effect, and to secure the performance and observance of all of the covenant agreements and conditions contained therem, herein and in the Lease Agreement, the Cib and th_e
Corporation by these presents do hereby grant, bargain, sell, warrant, convey, confirm, assign, trans
in trust, grant a security interest in and pledge unto the Trustee for the benefit of the Owners of
Certificates all their right, title and interest in and to the property, real and personal, hereinafter
described, subject only to the provisions hereof permitting the application thereof for or to the purpc
and on the terms and conditions set forth herein (said property being herein sometimes referred to a
the "Trust Estate"):
GRA"G CLAUSES
All right, title and interest of the City and the Corporation, if any, in the Lease and the Site
Lease and all other security therefor or cerbficates or instruments evidencing the same, and all
amendments, modifications and renewals thereof, and all casualty insurance proceeds or condemnat
awards payable with respect thereto, and any interest earnings thereon, other than such parties' right
indemnification and payment or reimbursement of costs and expenses thereunder.
All right, tide and interest of the City and the Corporation k and to any moneys held under t
Trust Agreement by the Trustee (other than amounts held in the Rebate Fund), including the procee
of the Certificates and the interest, profits and other income derived from the investment thereof, all
certificates or other instruments representing the same, and all renewals thereof, additions thereto ar
replacements or substitutions therefor.
All funds, moneys and securities and any and all other rights and interests in property whethc
tangible or intangible from time to time hereafter by delivery or by writing of any bd, conveyed,
mortgaged, pledged, assigned or transferred as and for additional security hereunder for the
Certificates by the City or by anyone on its behalf or with its written consent to the Trustee, which is
hereby authorized to receive any and all such property at any and all times and to hold and apply the
same subject to the terms hereof.
TO HAVE AND TO HOLD all and singular with all privileges and appurtenances hereby
given, granted, bargained, sold, conveyed, assigned, pledged, mortgaged and transferred or agreed c
intended so to be, whether now owned or hereafter acquired, including any and all additional propep
that by virtue of any provision hereof or of any indenture supplemental hereto shall hereafter become
subject to this Trust Agreement and to the trusts hereby created, unto the Trustee and its successors
trust and assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth for the equal and
proportionate benefit, security and protection of the registered owners from time to time of any of tht
505305.3U<yeager\22062.03 -2-
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certificates authenticated and delivered under this Trust Agreement and issued by the City and
Outstanding, without preference, priority or distinction as to lien, or otherwise of any one Cerhficatc
over any other Certificate by reason of priority in the issue, sale or negotiation thereof, or of any othc
cause;
PROVIDED, HOWEVER, that if the City, its successors or assigns, shall well and truly pa!
or cause to be pad, the principal of, premium, if any, and interest due with respect to the Certificate: at the times and in the manner mentioned in the Cerhficates according to the true intent and meaning
thereof, or shall provide, as permitted hereby, for the payment thereof by depositing with the Truster
the entire amount due or to become due thereon, and shall well and truly keep, perform and observe
the covenants and conditions pursuant to the terms of this Trust Agreement to be kept, performed ar
observed by it, and shall pay, cause to be paid or make provision for payment to the Trustee of all SL
of money due or to become due in accordance with the terms and provisions hereof, then upon such
final payment this Trust Agreement and the rights hereby granted shall cease, determine and be voic
otherwise hs Trust Agreement shall remain in full force and effect;
AND IT IS HEREBY COVENANTED that all of the Certificates shall be issued,
authenticated and delivered, and that the Trust Estate shall be held by the Trustee, subject to the furt
covenants, conditions, uses and trusts hereinafter set forth, and the City and the Corporation agree ar
covenant with the Trustee and with the registered owners from time to time of the Certificates, as
follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Definitions. The terms set forth in this section shall have the meanings Section 101.
ascribed to them for all purposes of th~s Trust Agreement unless the context clearly indicates some
other meaning.
Additional Payments shall mean any amount payable by City under the terms of the
Lease Agreement, other than the Lease Payments.
Assignment Agreement shall mean that certam Assignment Agreement, dated as of
September 1,1997, by and between the Corporation and the Trustee, pursuant to which the
Corporation assigns certain of its rights, title and interest in and to the Lease Agreement and the Site
Lease to the Trustee on behalf of the Owners of the Certificates, as amended and supplemented from
time to time.
Authorized Representative of the Corporation shall mean the Chairman and the
Executive Director of the Corporation and any other person or persons designated by the governing
board of the Corporation and authorized to act on behalf of the Corporation as certified by a written
certificate signed on behalf of the Corporation by the Chairman or the Executive Director of the
Corporation and containing the specimen signature of each such person.
Authorized Representative of the Citv shall mean the City Manager, his or her writter
designee, the City Financial Management Director and any other person or persons designated by the
City Council of the City and authorized to act on behalf of the City by a written certificate signed on
505305.3Kyeager\22062.00U -3 -
I 0 0
behalf of the City by the City Manager of the City and containing the specimen signature of each su(
person,
Bond C~unsel shall mean an attorney or firm of attorneys of nationally recognized
experience in the issuance of obligations the interest on whch is excludable from gross income for
federal income tax purposes under the Code and acceptable to the City.
Business Day shall mean any day other than (1) a Saturday or Sunday or legal holida
or a day on which banlung institutions in the city in which the principal corporate trust office ofthe
Trustee is located are authorized to close, (ii) a day on which the New York Stock Exchange is clost
(111) if a Credit Facility is then in effect, a day on which the issuer of the Credit Facility is authorized
required by law or executive order to close, or (iv) if a Reserve Account Policy is then in effect, a de
on which the issuer of any Reserve Account Policy is authorized or required by law or executive orc
to close.
Certificate or Certificates shall mean the $ Refunding Cerhficates of
Participation (Hosp Grove Project) Series A of 1997 executed and delivered by the Trustee pursuan
hs Trust Agreement.
Certificate Fund shall mean the fund by that name established in Section 401 hereof.
Certificate Year shall mean, with respect to the Certificates, (i) the period beginrung
the Delivery Date of the Certificates and endmg on the Interest Payment Date next precedmg the dat
that is twelve months subsequent to such Delivery Date, and (i) each successive twelve month (or
shorter) period thereafter until there are no longer any Certificates Outstandmg.
Code shall mean the Internal Revenue Code of 1986, as amended, and any regulatioi
rulings, judicial decisions, and notices, announcements, and other releases of the United States
Treasury Department or Internal Revenue Service interpreting and construing it.
Costs of Issuance shall mean all the costs of executing and delivering the Certificate:
including, but not limited to , City admustrative costs and expenses duectly attributable to the
execution and delivery of the Certdlcates, all printing and document preparation expenses in connect
Escrow Agreement, the Certificates, and the Official Statement pertaining to the Certificates; rating
agency fees; appraisal fees; market study fees; legal fees and expenses of counsel with respect to the
financing of the Project; fees and costs associated with obtaining any Municipal Bond Insurance Polil
Credit Facility or Reserve Account Policy obtained in connection With the Certificates; any accountin
computer and other expenses incurred in connection with the Cerhficates; the initial fees and expenst
of the Trustee and its counsel and any paying agent (including, without limitation, origination fees an
first annual fees payable in advance); the fees and expenses of the City's financial advisor; and other
fees and expenses incurred in connection with the execution and delivery of the Certificates or the
implementation of the financing for the Project, includmg amounts to reimburse the City for advance.
made for any of the foregoing, to the extent such fees and expenses are approved by the City.
with hs Trust Agreement, the Lease Agreement, the Assignment Agreement, the Site Lease, the
Costs of Issuance Fund shall mean the fund by that name which is established in
Section 40 1 hereof.
505305.3KyeagerU2062.0023 4
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Credlt Facility shall mean an irrevocable and unconditional letter of creht, a standt
purchase agreement, a line of credit or other similar credit arrangement issued by a Qualified Bank
satisfl all or a portion of the Reserve Requirement.
Defeasance Securities shall mean:
1. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Govemme
Series -- "SLGS")
Direct obligations of the Treasury which have been stripped by the Treasury itself,
CATS, TIGRS and similar securities
The interest component of Resolution Funding Corp (I'RFiFCORP") strips whch h;
been stripped by request to the Federal Reserve Bank of New York in book-entry f
Pre-refunded municipal bonds rated "Aaa" by Moody's and "M' 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 ca
direct U. S. or U. S. guaranteed obligations, or AAA rated pre-refunded municipals 1
satisfy hs condition.
Obligations issued by the following agencies wtzlch are backed by the full faith and
credit of the US.:
a. U.S. Export-Import Bank (Eximbank)
3.
4.
5.
6.
Direct obligations or fully guaranteed certificates of beneficial ownership
b. Farmers Home Adm;n;stra&on (FmKA)
Certificates of beneficial ownership
C. Federal Financing Bank
d. General Services Abstration
Participating certificates
e. U.S. Maritime Ahstration
Guaranteed Title XI financing
U.S. Deoartment of Housing and Urban Development (HUD)
Project Notes
f.
Local Corporation Bonds
505305.3KyengerQ202.00u -5-
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New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed pub11
housing notes and bonds
Delivery Date shall mean the date on which the Certificates are initially delivered.
Depository shall mean The Depository Trust Company, New York, New York, anc
successors and assigns as securities depository for the Certificates, or any other securities depositox
acting as Depository under Arhcle WI.
Escrow Agreement shall mean the Escrow Agreement, dated as of September 1, 15
by and between the City and the Escrow Bank relating to the Prior Certificates, and any duly
authorized and executed amendments thereto.
Escrow Bank shall mean First Trust of California, National Association, acting in it
capacity as such under the Escrow Agreement, and any successor thereto.
Escrow Fund shall mean the fund by that name which is established in the Escrow
Agreement.
Fiscal Year shall mean the twelve month fiscal period of the City which commencei
July 1 in every year and ends on June 30 of the succeedmg year.
Insurance and Condemnation Fund shall mean the fund by that name established m
Section 401 hereof
Insurer shall mean pond Insurer], or any successor thereto.
Interest Component shall mean any Lease Payment, or portion thereof, which is
designated and paid as interest pursuant to the terms of the Lease Agreement; the Interest Componc
of a Certificate is the proportionate interest in the Interest Component of the Lease Payments which
evidenced by such Certificate, as applicable.
Interest Pament Date shall mean February 1 and August 1 of each year, commenci
February 1 , 1998, until the earlier of the maturity date or Redemption Date of the last Outstandmg
Certificates.
Lease Agreement shall mean the Lease Agreement, dated as of September 1, 1997,
and between the Corporation and the City, and any and all modifications, alterations, amendments a
supplements thereto made in accordance with the provisions of the Lease Agreement and hs Trust
Agreement.
Lease Payment shall mean the amount to be paid by the City for the use and occupa
of the Site pursuant to Section 4.4 of the Lease Agreement, but does not include any Additional
Payments.
Lease Payment Date shall mean the fifteenth day prior to each Interest Payment Dati
505305.3 U<yeagerY22062.0023 -6-
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Lease Payment Fund shall mean the fund by that name established in Section 40 1
hereof.
Lease TUTII shall mean the period dmg which the Lease Agreement is in effect a
specified in the Lease Agreement.
Moody's shall mean Moody's Investors Service, Inc., a municipal bond rating semi
with offices in New York, New York, or any successor thereto.
Municipal Bond Insurance Policy shall mean the municipal bond insurance policy
issued by the Insurer insuring the payment when due of the Interest Components and Principal
Components represented by the Certificates.
Net Proceeds shall mean the proceeds of any insurance required to be maintained
pursuant to Sections 5.3 and 5.5 of the Lease Agreement or condemnation proceeds paid with resp
to the Site and remaining after payment therefrom of all expenses incurred in the collection thereof.
Nominee shall mean the nominee of the Depository, which may be the DepositoIy,
determined from time to time pursuant to Section 801.
Outstanding, when used with reference to any Certificates, shall mean, as of any da
the Certificates theretofore or thereupon being executed and delivered under this Trust Agreement
except:
(i) prior to such date;
(ii)
Certificates canceled or delivered for cancellation by the Trustee on
Certificates (or portions of Certificates) defeased as provided in
Section 901 of this Trust Agreement;
(iii) Certdicates in lieu of or in substitution for which other Certificates,
applicable, shall have been executed and delivered pursuant to Article III of th~s Trust
Agreement; and
(iv) Certificates of the type described in Section 3 15 hereof.
Owner shall mean the registered Owner of any Certificate.
Participants shall mean those broker-dealers, banks and other financial institutions f
time to time for which the Depository holds Certificates as securities depository.
Paying Agent shall mean the Trustee or such other entity as is appointed by the City
make principal and interest payments with respect to the Certificates.
505305.3\Kyeager\22062.0623 -7-
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Permitted Investments shall mean any of the following which at the time of investrr
are legal investments under the laws of the State for the moneys proposed to be invested therein as
shall be certified by the City to the Trustee.:
A. Direct obligations of the United States of America (includmg obligations is
or held in book-entry form on the books of the Department of the Treasury) or obligations h
principal of and interest on which are unconditionally guaranteed by the United States of
America
B. Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are back
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 Adm;n;strat;On (F&)
Certificates of beneficial ownership
Federal Housing Administration Debentures (FHA) 2.
3. General Services Administration
Participation certificates
Government National Mortgage Association (GNMA or "Ginnie Mae")
GNMA-guaranteed mortgage-backed bonds
GNMA-guaranteed pass-through obligations
4.
5. U. S I Maritime Admmstration
Guaranteed Title XI kancing
U.S. Department of Housing and Urban Development (€IUD)
Project Notes
Local Corporation Bonds
Bonds, debentures, notes or other evidence of indebtedness issued or
6.
C.
guaranteed by any of the following non-full faith and credit U.S. government agencies (strip
securities are only permitted if they have been stripped by the agency itself):
505305.3KyeagerU2062 .ooU -8-
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1. Federal Home Loan Bank System
Senior debt obligations (consolidated debt obligations)
Federal Home Loan Mortgage Cornoration (FHLMC or "Freddle Mac")
Participation certificates (mortgage-backed securities)
2.
Senior debt obligations
3. Federal National Mortgaee 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 unpi
principal)
Student Loan Marketing Association (SLMA or "Sallie Mae")
Senior debt obligations
4.
5. Resolution Funding Con, (REFCORP)
The interest only component of REFCORP strips which have been stripped
request to the Federal Reserve Bank of New York
Farm Credit System Coy. - Consolidated system-wide bonds and notes
Money market funds registered under the Investment Company Act of 1940
whose shares are registered under the Securities Act of 1933, and having a rating by Standa
& Poor's of AAAm-G, AAAm, or AAm and by Moody's of Aaa, Aal or Aa2 (includmg tho
of the Trustee and its affhates).
6.
D.
E. Certificates of deposit secured at all times by collateral described in (A) and,
(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-l+" by Standard & Poor's. The collateral must be held by a third pa
and the Bondholders must have a perfected first security interest in the collateral.
F. CeMcates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by FDIC (includmg those of the Trustee and its affiliates).
G.
Standard & Poor's.
H.
Commercial paper rated "Prime - 1" by Moody's and "A-l+" or better by
Bonds or notes issued by any state or municipality which are rated by Moodj
and Standard & Poor's in one of the two highest rahng categories assigned by such agencies.
Federal funds or bankers acceptances with a maximum term of one year of a
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.
I.
505305.3u(yeager\22062.ooU -9-
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J. Repurchase agreements approved by the Insurer with prior written notice tc
Moody's and Standard & Poor's providing for the transfer of securities from a dealer bank c
securities firm (sellerhorrower) to the Trustee, or a third party acting on behalf of the Trusi
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 Tm
in exchange for the securities at a specified date or dates.
K. Pre-refunded municipal bonds rated "Am" by Moody's and "AAA" by
Standard & Poor's. If, however, the issue is only rated by Standard & Poor's $e$, there is u
Moody's rating), then the pre-refunded bonds must have been pre-refunded with cash, direc
U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy hs
condition.
L.
M.
The Local Agency Investment Fund of the State.
A guaranteed investment contract or any other investment which the City is
permitted by law to make, but in each case only with the prior written consent of the Insure!
and prior written notice to Moody's and Standard and Poor's.
"Value" of the above investments shall be determined as of the end of each month, s
the value of any investments shall be calculated as follows:
(a) as to investments the bid and asked prices of which are published on a regui
basis h The Wall Street Journal (or, if not there, then in The New York Tim
the average of the bid and asked prices for such investments so published o
or most recently prior to such time of determination;
as to investments the bid and asked prices of which are not published on a
regular basis in The Wall Street Journal or The New York Times: the avera
bid price at such time of determination for such investments by any two
nationally recognized government securities dealers (selected by the City) a-
the time malung a market in such investments or the bid price published by I
nationally recognized pricing service;
as to cerhficates of deposit and bankers acceptances: the face amount them
plus accrued interest; and
as to any investment not specified above: the value thereof established by pi
agreement between the City and the Insurer and specified in writing to the
Trustee.
(b)
(c)
(d)
Person shall mean natural persons, firms, corporations, partnerships, associations,
trusts, public bodies and other entities.
Prepayment shall mean any payment made by the City pursuant to Article X of the
Lease Agreement as a prepayment of Lease Payments.
Principal Component shall mean, with respect to a Lease Payment, the portion there(
which is designated and paid as principal pursuant to the terms of the Lease Agreement; the Princip:
505305.3KyeagerU2062.0023 - 10-
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Component of a Certificate is the proportionate interest in the Principal Component of the Lease
Payments which is evidenced by such Certificate.
Principal Comuonent Pavment Date shall mean August 1 of each year in which a
Principal Component of a Certificate is due.
Prior Certificates shall mean that portion of the $8,690,000 City of Carlsbad 1988
Certificates of Participation (Hosp Grove Project) that now remains outstandmg and whch is being
advance refunded with the proceeds of the Certificates.
Proiect shall mean the capital project financed with the proceeds of the Prior
Certificates as more particularly described in the Lease Agreement.
Qualified Bank shall mean a financial institution whose long-term obligations are rs
in one of the two highest rating categories by each Rating Corporation.
Rating Coruoration shall mean Moody's if Moody's then rates the Certificates and
Stadad & P00r's if Standard L!z Poor's then rates the Certificates and any oftheir respective
successors and assigns that then rate the Certificates. All rating categories of each Rating Corporat
referred to in thls Trust Agreement shall be without regard to modifiers.
Rebate Fund shall mean the fund by that name established in Section 401 hereof
Rebate Renulations shall mean any final or temporary Treasury Regulations
promulgated under Section 148(f) of the Code.
Record Date shall mean the fifteenth calendar day of the month precedmg each Intel
Payment Date, whether or not such fifteenth day is a Business Day.
Redemption Date means the date fixed for mandatory redemption prior to maturity (
the Certificates.
Redemption Price shall mean with respect to each Certificate called for redemption
an amount equal to the Principal Component to be prepaid, and the premium, if any, due thereon,
together with the Interest Components due to the date fixed for redemption.
Representation Letter shall mean the Blanket Letter of Representation from the City
and the Trustee, respectively, to the Depository, as described in Section 802 hereof.
Reserve Account Policy shall mean a policy of insurance or surety bond issued by a
municipal bond insurer, obligations insured by whlch have a rating by the Rating Corporation which
the time of issuance is the highest rating then issued by said Rating Corporation, to satis@ all or a
portion of the Reserve Requirement.
Reserve Reauirement shall mean, as of the date of calculation, the least of (1) an
amount equal to the maximum amount of Lease Payments due on the fifteenth day preceding any
February 1 and the next preceding August 1 with respect to Outstandmg Certificates, (ii) an amount
equal to 10% of the proceeds (within the meaning of Section 148 of the Code) of all Cerhficates
($ ), or (iii) an amount equal to 125% of the average annual Lease Payments due with respei
505305.3Kyeager\22062.0023 -11-
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to Outstanding Certificates; provided, however, that with the prior approval of the Insurer such
Reserve Requirement or a porbon thereof may be provided by one or more Reserve Account Policic
or Credit Facilities upon the filing by the City with the Trustee of (x) written evidence that the use o
such Reserve Account Policies or Credit Facilities to satisfy the Reserve Requirement or any portio]
thereof will not by itself result in the downgrading or withdrawal of any credit rating then in effect v
respect to the Certificates Outstanding, and (y) an opinion of Bond Counsel to the effect that such e'
will not impair the exclusion fiom gross income for federal income tax purposes or from State persc
income taxes of the Interest Component of each Lease Payment.
Site shall mean the real property described fiom time to time in Exhtbit A to the Sit1
Lease and ExhibTA to the Lease Agreement, as such Ehbit A may be amended and supplementec from time to time in accordance with the provisions of the Lease.
Site Lease shall mean the Site Lease, dated as of September 1, 1997, by and betwee
the Corporation and the City pursuant to which the City has leased the Site to the Corporation, and a
and all modifications, alterations, amendments and supplements thereto made in accordance with thc
Lease Agreement and this Trust Agreement.
Six-Month Period shd mean the period of time beginning on the Delivery Date of tl
Certificates and ending six consecutive months thereafter, and each six-month period thereafter unti
the latest maturity date of the Certificates (and any obligations that refund the Certificates).
Standard & Poor's or s&p shall mean Standard & Poor's Rating Group, a municipal
bond rating service with offices in New York, New York, or any successor thereto.
State shall mean the State of Cahfomia
Sumlemental Trust Agreement shall mean any agreement supplemental to or
amendatory of this Trust Agreement.
Tax Certificate shall mean the certificate by that name to be executed by the City on
Delivery Date to establish certain facts and expectations and which contains certain covenants releva
to compliance with the Code.
Title Insurance shall mean the policy or policies of insurance required to be maintain
pursuant to Section 5.5 of the Lease Agreement.
Treasw Regulations shall mean the regulations adopted by the Department of
Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code.
Trust Ameement shall mean this Trust Agreement and any and all amendments herel
and supplements hereto made in accordance with the provisions hereof.
505305.3Kyeager\22062.0023 -12-
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Trust Estate shall mean as set forth in the Granting Clause hereof all right, title and
interest of the Trustee in and to the Lease Payments and the Lease Agreement includmg, without
limitation, all amounts from time to time deposited in the funds, accounts and subaccounts created
pursuant to hs Trust Agreement (other than the Rebate Fund), includmg to the extent set forth herc
investment earnings thereon, and any additional property that may from time to time, by delivery or
behalf.
Wrihng of any lund, be subjected to the lien hereof by the City, the Corporation, or by anyone on tht
Trustee shall mean First Trust of California, National Association, and its SUCC~SSOI
assigns which may at any time be substituted in its place pursuant to the provisions of this Trust
Agreement.
Section 102. Rules of Construction. Except where the context otherwise requires, won
importing the singular number shall include the plural number and vice versa, and words importing
persons shall include firms, associations and corporations.
Section 103.
part of th~s Trust Agreement:
Exhibits. The following exhibits are attached to and by this reference mad(
Exhlbit A: Form of Certificate
Exhibit B: Form of Requisition
ARTICLE I1
ASSIGNMENT; DECLARATION OF TRUST; REPRESENTATIONS AND RECITAL2
Declaration of Trust by Trustee. The Trustee hereby declares that it hold Section 201.
and will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the
Certificate Owners.
Section 202. Deposit of Moneys. In order to induce the City to proceed with the lease o
the Site to the Corporation and to provide the funds necessary to advance refund the Prior Certificati
the Corporation has executed the Site Lease and the Lease Agreement and has consented to the
Trustee's execution and delivery of the Cerhflcates and has deposited the net proceeds of the sale of
Certificates with the Trustee. Upon receipt of such initial deposit, the Trustee shall transfer the
amounts received from the Corporation as speclfied in Section 401 hereof.
Section 203. Conditions Precedent Satisfied. The City hereby determines that all acts,
conditions and things required by law to exist, happen and be performed precedent to and in connecl
with the execution and entering into of ttus Trust Agreement have happened and have been perform(
in regular and due time, form and manner as required by law.
Section 204. Due Authorization and Execution. Each of the parties hereby represents i
warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement, an
has taken all actions necessary to authorize the execution and delivery of hs Trust Agreement.
505305.3Kyeager\22062.0023 -13-
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ARTICLE I11
TERMS AND PROVISIONS OF THE CERTIFICATES
Section 301. Preparation of Certificates.
The Corporation hereby directs the Trustee to execute and deliver to the original purchaser I
purchasers thereof Certificates in an aggregate principal amount of $ evidencing undivr
proportionate interests in certain rights under the Lease Agreement, including the right to receive th
Lease Payments to be paid by the City under the Lease Agreement. The Certificates shall originallj
registered in the name of the Nominee. Each Certificate shall represent an undivided proportionate
interest in the Principal Component of the Lease Payments due and payable on certain Lease Payme
Dates and in the Interest Component of the Lease Payments due and payable on each Lease Paymei
Date to and including each maturity date or Redemption Date. The Certificates shall be designated
"City of Carlsbad Rehdmg Certificates of Participation (Hosp Grove Project) Series A of 1997".
Section 302. Payments from Trust Estate Only; Distribution of Trust Estate,
All amounts payable With respect to the Certificates pursuant to this Trust (a) Agreement shall be paid only from the income of and proceeds from the Trust Estate and only to the
extent that the Trustee shall have actually received s&cient income or proceeds from the Trust Est
to make such payments in accordance with the terms of Article V hereof Each Owner of a Certifici
agrees to look solely to the income of and the proceeds from the Trust Estate to the extent available
distribution to such Owner as herein provided, and each Certificate Owner agrees that the Trustee iz
not personally liable to any Owner for arry amounts payable under this Trust Agreement or subject ti
any liability under this Trust Agreement except liability under this Trust Agreement as a result of
negligence or willful misconduct by the Trustee.
(b) So long as the Lease Agreement shall be in effect, all Lease Payments,
insurance proceeds and other payments of any kmd constituting a part of the Trust Estate payable to
Trustee with respect to the Site, shall be paid directly to the Trustee for distribution, in accordance u
bcle N of this Trust Agreement.
Section 303. Description of the Certificates.
The Cerhficates shall be dated the Delivery Date for the Certificates and the (a) Principal Components evidenced thereby shall become due as set forth in Section 303(b) and (c)
below. The Certficates shall be executed and delivered in the aggregate Principal Component of
Date for the Certificates.
Dollars ($ ) with Interest Components accruing from the Delivery
505305.3Kyeager\22062.0023 -14-
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(b) The Cehficates shall mature on August 1 kt the years and amounts and intc with respect thereto shall be payable at the rates as shown below:
Maturity Date Principal Interest
(August 1) Component Rate
1998
1999
2000
2002
2003
2004
2005
2006
2007
2008
2001
(c) Interest with respect to each Certificate shall accrue fiom the Interest Paymc
Date next preceding the date of execution thereof, unless (i) it is executed on an Interest Payment D
in which event interest shall accrue from the date of execution thereof, (ii) it is executed after a Recc
Date and before the close of business on the immediately following Interest Payment Date, in which
event interest with respect thereto shall be payable from such Interest Payment Date, or (iii) it is
executed prior to the close of business on the first Record Date, in which event interest with respect
thereto shall be payable from the dated date of such Certificate; provided, however, that, if at the tim
of registration of any Certificate interest with respect thereto is in default, interest with respect there1
shall be payable from the Interest Payment Date to hch interest has previously been paid or made
available for payment or fiom the dated date of such Certificate, if no interest has been paid or made
available for payment. Interest with respect to the Certificates shall accrue on overdue Principal
Components at the same rate as borne by the particular Cerhficates.
Interest with respect to any Certificate shd be payable on each Interest Payment Da
following the Delivery Date therefor to the Owner thereof as of the close of business on the Record
Date, such interest to be paid by check, mailed by the Trustee to the Owner first class mail, postage
prepaid, on such Interest Payment Date, at his address as it appears on the registration books
maintained by the Trustee pursuant to Section 306 hereof or, in the case of an Owner of Certificates
representing at least $1,000,000 in aggregate Principal Components or by wire transfer in immediate
available funds to an account in the United States designated in writing by such Owner to the Truste
prior to the applicable Record Date. Interest Components with respect to the Certificates shall be
computed on the basis of a 360-day year comprised of 12 months of 30 days each. Payments of
defaulted Interest Components shall be paid in the same manner as payment is made on a regular
Interest Payment Date on the payment date ked therefor by the Trustee to the Owners of the
Certificates as of a special record date to be ked by the Trustee, notice of which payment date and
special record date shall be given to the Owners of the Certificates not less than ten days prior theretc
Principal Components and premium, if any, due with respect to any Certificate are payable at the
location designated by the Nominee, or, at any time the Certificates are not in book-entry form pursu,
505305.3KyeagerQ2062.0023 -15-
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to Arhcle VIJl, upon surrender thereof at the corporate trust office of the Trustee in Los Angeles,
California.
(d) The Certificates shall be delivered in fully registered form and, except as
otherwise provided in Section 801 hereof, in the denominations of $5,000 or any integral multiple
thereof. Unless the Corporation shall otherwise duect in writing, the Certificates shall be lettered iil
numbered in such manner as the Trustee shall deem adequate and appropriate for recordkeeping
purposes. Subject to the provisions of thls Trust Agreement, the Certificates shall be substantially i
the form set forth in Exhibit A hereto.
(e) The Trustee shall maintain, or cause to be maintained at its principal corpor
trust office a system by which a record of the names and addresses of the Owners of any Cemficate
of any particular time can be kept; and the Trustee shall, upon written request of the City, furnish s1
mformation to the City.
.
Section 304. Medium of Payment.
The Certificates shall be payable, with respect to Interest Components, Principal Componen
and premium, if any, in lawful money of the United States of America.
Section 305. Execution and Exchange.
(a) Subject to the provisions of Section 801 hereof, the Certificates shall be
executed in the name of, and by, the Trustee, as trustee under this Trust Agreement, by the manual
signature of an authorized signatory of the Trustee.
(b) Subject to the provisions of Section 801 hereof, upon surrender of a Certifici
at the corporate trust office of the Trustee in Los Angeles, California with a written instrument of
transfer satisfactory to the Trustee, duly executed by such Owner or his duly authorized attorney, thc
Trustee shall, at the option of such Owner and upon payment by such Owner of any charges which t
Trustee may make as provided in Section 307, exchange such Cerhficates, as applicable, for
Certificates of the same issue representing the same aggregate amount of Principal Components and
the same maturity and interest rate.
Section 306, Negotiability, Transfer and Regjstry,
(a) Each Certificate shall be transferable only upon the books of the Trustee whi
shall be kept for that purpose at the principal corporate trust office of the Trustee, by the Certificate
Owner in person or by his attorney duly authorized in writing, upon surrender thereof together with i
written instrument of transfer satisfactory to the Trustee duly executed by such Owner or hs duly
authorized attorney. Upon the transfer of any such Cerhficate, the Trustee shall deliver in the name I
the transferee a new Certificate of like maturity and representing the same issue and aggregate amou
of Principal Components as the surrendered Certificate.
(b) The Trustee and the City may deem and treat the person in whose name any
Certificate shall be registered upon the books of the Trustee as the absolute Owner of such Certificat
whether such Certificate shall be overdue or not, for the purpose of receiving payment of, or on acco
of, the Principal Components, premium, if any, and Interest Components due with respect to such
Certificate and for all other purposes; and all such payments so made to any such Owner or upon his
505305.3KyeagerU2062.0023 -16-
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order shall be valid and effectual to satisfy and discharge the liability upon such Certificate to the e:
of the sum or sums so paid; and neither the City nor the Trustee shall be affected by any notice to tl
contrary.
Section 307. Regulations with Respect to Exchanges and Transfers. In all cases in
whch the privilege of exchanging Certificates or transferring Certificates is exercised, the Trustee I
execute and deliver Certificates in accordance with the provisions of hs Trust Agreement. All
Certificates surrendered in any such exchanges or transfers shall forthwith be canceled by the Trust
For every such exchange or transfer of Certificates, whether temporary or defhtive, the Trustee m;
make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to bf
paid with respect to such exchange or transfer. The Trustee shall not be req~red 10 transfer 01
exchange any Certificates called for redemption (except for any unredeemed portion thereof) or an^
Certificates during the period of 15 days before the selection of Certificates for redemption.
Section 308. Certificates Mutilated, Destroyed, Stolen or Lost. In case any Certificat
shall become mutilated or be destroyed, stolen or lost, the Trustee shall execute and deliver, a new
Certificate of the same issue and of like matunty and Principal Component as the Certificate so
mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Certificate, up01
surrender and cancellation of such mutilated Certificate, or in lieu of and substitution for the Certific
destroyed, stolen or lost, upon receipt by the Trustee of evidence satisfactory to the Trustee that suc
Certificate has been destroyed, stolen or lost and proof of ownership thereof, and upon hshg thc
Trustee with indemnity satisfactoly to the Trustee and complying with such other regulations as the
Trustee may prescribe and paying such expenses as the Trustee may incur. All Certificates so
surrendered to the Trustee shall be canceled by it. Any such new Certificates issued pursuant to this
Section in substitution for Certificates alleged to be destroyed, stolen or lost shall be equally secured
and entitled to equal and proportionate benefits, with all other Certificates delivered under this Trust
Agreement, in any moneys or securities held by the Trustee for the benefit of the Certificate Owners
Nohvlthstanhg any other provision of thls Section 308, in lieu of delivering a new Certificate ~II
exchange and substitution for a which has been mutilated, lost, destroyed or stolen, and which has
matured or been redeemed, or has been selected for redemption, the Trustee may make payment oft
principal of or interest with respect to such Certificate.
Section 309. Temporary Certificates; Form of Certificates. So long as the Certificate:
are in book-entry form, they may be typewritten or in any other form acceptable to the City and the
Depository. At any time during which the Certificates are not in book-entry form, the definitive
Certificates shall be lithographed or printed with steel engraved borders. Until the definitive
Certificates are prepared, the Trustee may execute and deliver, in the same manner as is provided in
Section 305, in lieu of defhtive Certificates, one or more temporary certificates substantially of the
tenor of the defhtive Certificates, as applicable, in any authorized denomination, and with such
omissions, insertions and variations as may be appropriate to temporary certificates. The Trustee at i
expense of the City shall execute and, upon the surrender of such temporary Certificates and the
cancellation of such surrendered temporary Cerhflcates, shall, without charge to the Owners thereof,
exchange therefor, deliver definitive Certificates, representing the same aggregate amount of PMcipi Components and of like maturity as the temporary Cerbficates .
All temporary Certificates surrendered either in exchange for another temporary Certificate o
for a defmtive Certificate, shall be forthwith canceled by the Trustee and destroyed.
505305.3KyeagerY22062.0023 -17-
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Section 310. Redemption of Certificates. The Certificates shall be redeemable at such times, in such amount, upon such terms and upon such notice as are provided in this Article m.
among maturities and by lot withm a matunty, in whole or in part, as the case may be, &&out
premium, in an amount equal to the Principal Component thereof, together with the Interest
Components due with respect thereto to the date fixed for redemption on the first date for which not
of redemption can be given by the Trustee following the transfer of Net Proceeds to the Redemptior
Account of the Certificate Fund pursuant to Section 405(a) or (b) hereof;
(a) The Certificates are subject to extraorhary redemption on a pro rata basis
(b) Except pursuant to (a) above, the Certificates are not subject to optional
redemption at the City's election prior to maturity.
Section 311. Selection of Certificates to be Redeemed. For purposes of selecting
Certificates for redemption, the Certificates shall be deemed to be comprised of $5,000 portions. E
less than all of the Certificates shall be called for extraordinary redemption under Section 3 lO(a), the
particular Certificates, or portions thereof, to be redeemed shall be selected by the Trustee on a pro 1
basis among maturities (treating each Sinlung Account Installment due with respect to the Certificat
as a separate maturity for such purpose) such that the Lease Payments to become due in each remaming year of the Lease Term shall be as nearly as practicable equal to the Lease Payments to
become due in every other year. Within a maturity, the Trustee shall select Certificates for redempti
by lot in any manner determined to be appropriate by the Trustee. If less than all of the Certificates
shall be called for optional redemption under Section 3 lO(b), the particular Certificates or portions
thereof to be redeemed shall be selected by the Trustee by lot from one or more maturities as specific
in writing, by an Authorized Representative of the City.
Any Certificate of a denomination of more than $5,000 to be redeemed shall be redeemed in
the principal amount of $5,000 or an integral multiple thereof. In selecting p016ons of the Cefificatc
for redemption, the Trustee shall treat each such Cemficate as representing that number of Certificar
of $5,000 denomination which is obtained by dividing the principal amount of the Certificate to be
redeemed in part by $5,000. The Trustee shall promptly no ti^ the City and the Corporation in writh
of the Certificates so selected for redemption.
Section 312. Notice of Redemption. When redemption of Certificates are required, the
City shall noti@ the Trustee in writing and the Trustee shall, at the expense of the City, give notice oi
forth in Section 303(a) hereof; (ii) the rate of interest borne by each Certificate being redeemed; (111) *
Redemption Date and the place or places where amounts due upon such redemption will be payable;
(iv) if less than all of the Certificates of a maturity are to be redeemed, the letters, numbers, CUSP
numbers or other distinguishing marks of such Certificates so to be redeemed; and (v) in the case of
Certificates to be redeemed in part only, such notice shall also specify the respective portions of the
principal amount thereof to be redeemed. Such notice shall further state that on such date there shall
become due and payable upon each Certificate to be redeemed the Principal Component to be
redeemed, together with the Interest Components accrued to the Redemption Date, and premium, if
any, and that from and after such date interest on the Principal Components redeemed shall cease to
accrue and be payable. The Trustee shall mail a copy of such notice, postage prepaid, first class Unit
the redemption of such Cemficates and such notice shall include (i) the date of the Certificates as set
505305.3U<yeager\22062.0023 -18-
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states mGl, not less than 30 days and not more than 45 days before the Redemption Date, to the
Owners of any Certificates or portions thereof which are to be redeemed, at their last addresses,
appearing upon the registry books. Neither the failure of an Owner to receive a notice of redemptic
mailed by the Trustee nor any defect therein shall affect the sufficiency of the proceedmgs for the
redemption of Certificates.
A copy of such notice of redemption shall be sent at least 30 days before the Redemption D
by registered or certified mal or overnight delivery service to the three registered securities
depositories listed below and to any other registered securities depositories then in the business of
holding substantial amounts of obligations of types comprising the Certificates specified by the City
the Trustee in writing and, on the date notice is mailed to the Certificate Owners, to the national
information services listed below that disseminate notice of redemption of obligations as the
Certificates; provided, however, that neither a defect in any notice sent pursuant to th~s paragraph n
any failure to mail notice as required by this paragraph shall in any manner defeat the effectiveness
call for redemption if notice of such redemption is mailed to Certificate Owners as prescribed abovi
Registered Secdties Depositories
The Depository Trust Company
71 1 Stewart Avenue
Garden City, New York 11530
Telecopy: (5 16) 227-403 9 or 41 90
Midwest Securities Trust Company
Capital Structures-Call Notification
440 South LaSalle Street
Chicago, Illinois 60605
Telecopy: (3 12) 663-2343
Philadelphia Depository Trust Company
Reorganization Division
1900 Market Street
Philadelphia, Pennsylvania 19 103
Attention: Bond Department
Telecopy: (215) 496-5058
National Information Services
Financial Information, Inc.'s Financial Daily Called Bond Service
30 Montgomery Street, loth Floor
Jersey City, New Jersey 07302
Attention: Editor
505305.3U(yeaget\22062.0023 -19-
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Kenny Information Service's Called Bond Service
65 Broadway
New Ymk, New York 10006
Standard and Poor's Called Bond Record
25 Broadway
New York, New York 10004
Upon the payment of the Redemption Price of Certificates being redeemed, each check or o
transfer of funds issued for such purpose shall bear the CUSP number identifjnng, by issue and
maturity, the Certificates being redeemed with the proceeds of such check or other transfer.
The Trustee shall have no responsibility for a defect in the CUSP number that appears on a
Certificate or in the notice of redemption. The redemption notice may provide that the CUSP numl
have been assigned by an independent service and are included in the notice solely for the convenier
of the Owners and that the Trustee and the City shall not be liable in any way for inaccuracies of sai
numbers.
Section 313. Payment of Redeemed Certificates. Notice having been given in the man
provided in Section 3 12 hereof, the Certificates so called for redemption shall become due and paya
on the Redemption Date so designated at the Redemption Price for such Certificate, and, upon
presentation and surrender thereof at the office specified in such notice, the Redemption Price of suc Cerbficate to be redeemed shall be paid as provided in Section 303. If there shall be called for redemption less than all of a Certificate, the Trustee shall execute and deliver, upon the surrender of
such Certificate, without charge to the Owner thereof, for the unredeemed balance of the Principal
Component of any Certificate so surrendered, Certificates of the same issue and of like maturity and
interest rate in any of the authorized denominations. If, on the Redemption Date, moneys for the
redemption of all the Certificates or portions thereof or portions thereof to be redeemed together wit
interest to the Redemption Date shall be held by the Trustee so as to be available therefor on said da
and if notice of redemption shall have been given as aforesaid, then from and after the Redemption
Date the Interest Components due with respect to such Certificates or portions thereof so called for
redemption shall cease to accrue and become payable.
On each such Redemption Date, the Trustee shall give written notice to the City and the
Corporation of the Certificates selected for redemption in accordance with Section 3 1 1 hereof, and tl
City shall recompute the amount of Lease Payments to become due in each remaining year of the Le
Agreement following a redemption of the Certificates and shall noti@ the Corporation and the Trust€
in writing of the amount of such Lease Payments.
Section 314. Cancellation of Certificates. All Cerhlicates paid or redeemed, either at 01
before maturity, shall be delivered to the Trustee when such payment or redemption is made, and su
Certificates shall thereupon be promptly canceled and destroyed. Upon the cancellation of any
Certificates by the Trustee, upon the written request of an Authorized Representative of the City, the
Trustee shall execute a certificate of cancellation and destruction in duplicate by the signature of one
its authorized officers describing the certificates so canceled. One executed certificate shall be filed
with the City, and the other executed cemficate shall be retamed by the Trustee. The Trustee may
charge the City for its reasonable costs of permanent recordkeeping, including microfilming.
505305.3Kyeager\22062.0023 -20-
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Section 315. Nonpresentment of Certificates. Except as otherwise provided in Sectio
3 16 hereof, in the event any Certificate shall not be presented for payment when the Principal
Component thereof becomes due, if funds sufficient to pay such Certrficate shall be held by the Tn
for the benefit of the Ov?ner thereof, all liability of the City to the Owner thereof for the payment of
Principal Component of and Interest Component due with respect to such Certificate, shall forthwi
cease and be completely discharged and thereupon it shall be the duty of the Trustee to hold such f
(subject to Section 3 16 hereof), without liability for interest thereon, for the benefit of the Owner o
such Cerhficate, as applicable, who shall thereafter be restricted exclusively to such funds for any
claim of whatever nature on, or with respect to, such Certificate.
Section 316. Unclaimed Money. All money whch the Trustee shall have received fion
any source and set aside for the purpose of paying any of the Certificates shall be held in trust for tk
respective Owners of such Certificates, but any money and earnings thereon whxh shall be so set a
or deposited by the Trustee and which shall remain unclaimed by the Owners of such Certificates f
period of two years (or such shorter period as is required to avoid having such amounts escheat to 1
State) after the date on which the payment with respect to wluch such money is set aside became d
and payable shall be paid to the City. Thereafter, the Owners of such Certificates shall look only to
City for payment and then only to the extent of the amount so received by the City from the Trustee
without any interest thereon, and the Trustee shall have no responsibility with respect to such mone,
.
ARTICLE IV
ESTABLISHMENT AND ADMINISTRATION OF FUNDS AND ACCOUNTS
Section 401.
There are hereby established with the Trustee the following special trust funds and account:
be designated as follows and each such fund and account shall be kept by the Trustee separate and
apart from all other funds and accounts:
Establishment of Funds; Disposition of Proceeds of Certificates.
(a) The Costs of Issuance Fund, in whlch there is hereby established a Corpora.
Rental Payment Account, and a Costs of Issuance Account;
(b) The Certificate Fund, in which there is hereby established an Interest Accou
a Principal Account, a Redemption Account and a Reserve Account;
(c) The Lease Payment Fund;
(d)
(e)
The Insurance and Condemnation Fund; and
The Rebate Fund, in which there shall be established an Earnings Account,
Rebate Account and an Alternative Penalty Account.
The Trustee may establish such funds and accounts as it deems necessary to perform its
obligations under thls Trust Agreement.
On the Delivery Date of the Cerbficates, the Trustee agrees to receive from the Corporation
and deposit in the Corporation Rental Payment Account the net proceeds of the Certificates
505305.3UCyeager~2062.0023 -21-
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representing the payment by the Corporation of the rental due to the City under the Site Lease on tk
Delivery Date for the Certificates. The Trustee agrees that on the Delivery Date it will transfer
$ from the corporation Rental Payment Account to the Escrow Bank for deposit in the
Escrow Fund created thereunder in order to defease the Prior Certificates and that it will thereafter
the remainder of such proceeds pursuant to the terms of hs Trust Agreement for the benefit of the
City and will transfer such amounts to the following funds and accounts in the following amounts
(provided the Trustee shall immediately wire transfer to the Insurer the premium for the Municipal
Bond Insurance Policy from the Costs of Issuance Fund):
Costs of Issuance Account: $
Reserve Account: $
Section 402. Costs of Issuance Fund.
Costs of Issuance Account. There shall be paid into the Costs of Issuance
Account the amount required to be so paid by the provisions of Section 401 hereof and Costs of
Issuance shall be paid from amounts on deposit therein by the Trustee in accordance with written
instructions to be given to the Trustee by an Authorized Representative of the City. Any unexpendc
proceeds of the Certificates, as applicable, remaining in the Costs of Issuance Account on the date
which is 180 days after the Delivery Date for the Certificates, or such earlier date as is specified in
writing by an Authorized Representative of the City, shall be transferred by the Trustee in the case c
any proceeds of the Certificates to the Interest Account of the Certificate Fund.
(a)
(b) Comoration Rental Payment Account. There shall be paid into and
transferred from the Corporation Rental Payment Account the amount required to be so paid and
transferred by the provisions of Section 401 hereof and following such transfer, such account m;
be closed by the Trustee,
Section 403. Lease Payment Fund.
There shall be paid into the Lease Payment Fund the amount required to be so paid by the
provisions of Section 404(d)(iv) hereof, all Lease Payments, other than Prepayments, immediately
upon their receipt. The Trustee shall apply amounts deposited to the Lease Payment Fund as follow:
on the Business Day next preceding each Interest Payment Date, the Trustee
shall transfer to the Interest Account of the Certificate Fund the amount necessary to increase the
balance therein to an amount equal to the Interest Component due with respect to the Certificates on
such Interest Payment Date;
(a)
(b) on the Business Day next preceding each Principal Component Payment Dal
on which a portion of the Principal Components is due at maturity, the Trustee shall transfer to the
Principal Account of the Certificate Fund the amount necessary to increase the balance therein to an
amount equal to the Principal Components due with respect to the Certdicates on such Principal Component Payment Date:
(c) on the date of receipt of any delinquent Lease Payments, the Trustee shall
transfer to the Reserve Account of the Certificate Fund the amount needed to increase the amount
therein to the Reserve Requirement; and
505305.3KyeagerQ2062.0023 -22-
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(d) any amounts remaining in the Lease Payment Fund after the transfers referr
to in (a), (b) and (c) above shall remain in the Lease Payment Fund until all Certificates are paid,
redeemed or defeased, in which case all such amounts shall be paid to the City.
Section 404. Certificate Fund.
(a) Interest Account. Moneys transferred to the Interest Account from the Lea
Payment Fund and the Reserve Account shall be applied to pay the Interest Components due on eac
Interest Payment Date.
(b) Principal Account. Moneys transferred to the Principal Account from the
Lease Payment Fund and the Reserve Account shall be applied to pay the Principal Components at
maturity.
To the extent that the Trustee has insufficient funds on deposit in the Interest Accou
the Principal Account and the Redemption Account of the Certificate Fund (includmg amounts
transferred from the Reserve Account and paid by the Insurer) to pay the Principal Components and Interest Components due with respect to the Certificates as a result of an abatement of Lease Paymc
pursuant to Section 4.10 of the Lease Agreement, each Owner of a Certificate remaining Outstandh
will be paid a pro rata portion of the Interest Components and Principal Components of the Lease
Payments actually received that corresponds to his proportionate interest in the Lease Payments.
(c) Redemption Account. The Trustee shall apply moneys in the Redemption
Account as provided in hs Section 404(c). Amounts in the Redemption Account shall be applied
to pay the Redemption Price of Certificates pursuant to Section 3 lO(a). All expenses in connection
with any redemption shall be paid by the City.
The Trustee shall deposit in the Redemption Account as received, all Prepayments a
any amounts to be transferred to the Redemption Account in accordance with Section 405. All of sa
moneys shall be set aside in the Redemption Account for the purpose of redeeming the Certificates i
advance of their maturity and shall be applied on or after the Redemption Date for such Certificates
the payment of the Redemption Price due with respect to the Certificates to be redeemed upon
presentation and surrender of such Cert&ates. Any excess amounts remaining in the Redemption
the Lease Payment Fund.
Account following the redemption or redemptions to be made with such amounts shall be transferret
(d) Reserve Account.
(i) The Reserve Requirement shall be maintained by the Trustee in the
Reserve Account, which shall be kept separate and apart from all other funds and money held by the
Trustee, until the Lease Payments are paid in fidl pursuant to the terms of the Lease Agreement or u1
this Trust Agreement is terminated. The Trustee shall apply moneys in the Reserve Account as
provided in this Section 404(d).
(ii) If on the Business Day prior to any Interest Payment Date the amoun
in the Interest Account of the Certificate Fund shaU be less than the amount required for the Interest
Components due with respect to the Certificates on said Interest Payment Date, the Trustee shall
withdraw from the Reserve Account and deposit in the Interest Account the amount necessary to md
505305.3Kyeager!22062.00U -23-
1 T 0 a
up the deficiency on such Business Day. In the event of any such transfer, the Trustee shall, with
days thereafter, provide written notice to the City of the amount and date of such transfer.
{iii) If on the Business Day prior to any Principal Component Payment ;
the amount in the Principal Account of the Certificate Fund shall be less than the amount required tc
pay the Principd Components payable on the Certificates on such Principal Component Payment D
the Trustee shall, after making any transfers required by the precedmg paragraph, withdraw from tl-
Reserve Account and deposit in the Principal Account the amount necessary to make up the deficiei
on such Business Day. In the event of any such transfer, the Trustee shall, withm five days thereaft
provide written notice to the City of the amount and date of such transfer.
(iv) Except as permitted by the following sentence, in the event the ma
on deposit in the Reserve Account exceeds the Reserve Requirement, the Trustee shall on each
February 1 and August 1, transfer such amounts (a) first to the Rebate Fund, if directed in writing b
the City to make such a transfer as required by Section 406, and (b) second to the Lease Payment F
for application in accordance with Section 403 hereof. In the event that a Reserve Account Policy o
Credit Facility is provided to satisfy all or a portion of the Reserve Requirement, any cash on deposi
the Reserve Account which is no longer needed to satisfy the Reserve Requirement will be transfen
by the Trustee, at the written direction of an Authorized Representative of the City, to a special accc
to be established for the payment of the fees related to the Reserve Account Policy or Credit Facilio
to the City's General Fund provided that there shall have been delivered to the Trustee, the City and Corporation an opinion of Bond Counsel to the effect that such transfer to the City's General Fund u
not impair the exclusion from gross income for federal income tax purposes of the Interest Compont
of any Lease Payment. For purposes of determining the amount on deposit at any time, the Trustee
shall value all Permitted Investments in the Reserve Account in accordance with Section 409 hereof
A Reserve Account Policy must have a maturity date whxh is equal to the 12
maturity of any Outstandmg Certificate. A Credit Facility must either have a maturity date whch is
equal to the last maturity of any Outstandmg Certificate or provide that it may be drawn upon in its f
stated amount unless prior to the expiration date of the Credit Facility a substitute Credit Facility,
which when combined with the other amounts in the Reserve Account will equal the Reserve
Requirement, has been delivered to the Trustee. Any Credit Facility must permit the Trustee to drac
on such instrument in the full stated amount thereof in the event that the long-term obligations of the
issuer thereof is rated less than AA by Standard & Poor's or Aa by Moody's.
(v) Moneys in the Reserve Account shall be used solely for the purpose
A. making up deficiencies in the Interest Account as prowded ~II
Section 404(d)(ii) hereof;
B. makmg up deficiencies in the Principal Account as provided
Section 404(d)(iii) hereof;
C.
D.
makmg the transfers as provided in Section 404(d)(iv) hereoj
with respect to the amounts in any subaccount therein
established for the Certificates, providmg for the payment of the final Lease
Payments represented by the issue of Cerhficates for which such subaccount
was created, in whlch event the Trustee shall transfer such amounts on depos
505305.3KyeagerU2062.0023 -24-
1 7 0 0
in the Reserve Account to the Lease Payment Fund to be applied as a credil
against such final Lease Payments; or
E. providing for the defeasance pursuant to Section 90 1 hereoi
the Prepayment of all Lease Payments attributable to the Certificates, in wh
case the amounts in the subaccount of the Reserve Account established for
such issue, or in the case of a partial defeasance the amount in the subaccou
that will no longer be required as a part of the Reserve Requirement followi
the defeasance, shall be transferred to the Redemption Account to be applie
the defeasance or redemption of the applicable issue of Certificates or portic
thereof.
Insurance and Condemnation Fund. Section 405.
(a) Application of Net Proceeds. There shall be paid into the Insurance and
Condemnation Fund the Net Proceeds of the hazard insurance maintained pursuant to Section 5.3 01
the Lease Agreement and any condemnation awards constituting Net Proceeds. In the event that tht
City elects to restore the Site as provided in Section 6.l(b) of the Lease Agreement and delivers to t
Trustee the Certificate required by Section 6.l(b), then such Net Proceeds shall be disbursed in
accordance with requisitions (complying with Section 6.l(b) of the Lease Agreement) submitted to
Trustee by an Authorized Representative of the City. Promptly upon determining that the restoratio
the Site is complete, the Authorized Representative of the City shall so notie the Trustee in writing
the restoration is complete. Any balance of Net Proceeds remaining after the final disbursement to
restore the Site, and, in the event the City elects not to restore the Site as provided in Section 6.l(c)
the Lease Agreement and notifies the Trustee in writing pursuant to Section 6.1 (c) of the Lease
Agreement, all Net Proceeds shall be transferred by the Trustee to the Redemption Account and
applied to the redemption of Certrficates on a pro rata basis pursuant to Section 3 lO(a) hereof.
(b) Amlication of Title Insurance Proceeds. The Net Proceeds of any Title
Insurance obtained in accordance with Section 5.5 of the Lease Agreement and received by the Tm
be applied and disbursed by the Trustee as follows:
(i)
in respect of the Site upon receipt shall be deposited in the Insurance and Condemnation Fund and SI
If the City determines that the title defect giving rise to such proceec
has not materially affected the operation of the Site and will not result in an abatement of Lease
Payments payable by the City under the Lease Agreement, at the written direction of an Authorized
Representative of the City, such proceeds shall be transferred into the Reserve Account of the
Certificate Fund to the extent that the amount therein is less than the Reserve Requirement. Amounl
not required to be so deposited shall be remitted to the City and used for any la* purpose.
(ii) If any portion of the Site has been Sected by such title defect, and i:
the City determines that such title defect will result in an abatement of Lease Payments payable by tl
City under the Lease Agreement, then the Trustee, at the written direction of an Authorized
Representative of the City, shall immediately transfer such proceeds to the Redemption Account oft
Certificate Fund and such proceeds shall be applied to the redemption of Certificates on a pro rata bi
pursuant to Section 3 1 O(a) hereof.
505305.3KyeagerU2062.0023 -25-
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Section 406. Rebate Fund.
(a) Establishment of Rebate Fund. All money at any time deposited in the Ret
Account or the Alternative Penalty Account of the Rebate Fund shall be held by the Trustee in trust
payment to the United States Treasury. A separate subaccount of the Rebate Account, the Alternat
Penalty Account and the Earnings Account shall be established for the Certificates. All amounts or
deposit in the Rebate Fund shall be governed by hs Section 406 and the Tax Cefificate, unless tht
purposes of the Interest Component of each Lease Payment will not be adversely affected for feder,
income tax purposes if such requirements are not satisfied.
City obtains an oplIllon of Bond Counsel that the exclusion from gross income for federal income t:
(1) There shall be transferred to the Ea~~~ngs Account for disposition a~ descrit
in th~s Section the amounts described in Section 408(b) hereof
(2) Rebate Account. The following requirements shall be satisfied with respec
each subaccount of a Rebate Account:
(i) Annual Computation. Wih 55 days of the end of each Certificate
Year, the City shall calculate or cause to be calculated the amount of rebatable arbitrage for the
Certificates, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate
Regulations (talung into account any applicable exceptions with respect to the computation of the
rebatable arbitrage described in the Tax Certificate (e.g;., the temporary investments exceptions of
Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to
last day of the applicable Certificate Year as a computation date, within the memg of Section
1.148-l(b) of the Rebate Regulations (the "Rebatable Arbitrage"). The City shall obtain expert adw
as to the amount of the Rebatable Arbitrage (or the manner of computation of such amount) to comp
with this Section.
Section 148(f)(4)(C)(vii) of the Code (the "12% Penalty") has been made), for this purpose treamg
(ii) Annual Transfer. Witlun 55 days of the end of each Certificate Yea
for which Rebatable Arbitrage must be calculated as required by the Tax Certificate, upon the writte
direction of an Authorized Representative of the City, an amount shall be deposited to each subaccoi
of the Rebate Account by the Trustee from any funds, including the Earnings Account, so designatec
by the City if and to the extent required, so that the balance in the Rebate Account shall equal the
amount of Rebatable Arbitrage so calculated by or on behalf of the City in accordance with (i) of thi:
Subsection (a)(2) with respect to the Cerhficates. In the event that immediately following any transfi
required by the previous sentence, or the date on whlch the City determines that no transfer is requin
for such Certificate Year, the amount then on deposit to the credit of the applicable subaccount of thc
Rebate Account exceeds the amount required to be on deposit therein, upon written instructions fron
subaccount of the Rebate Account and then credit the excess to the Lease Payment Fund.
an Authorized Representative of the City, the Trustee shall withdraw the excess from the appropriate
(iii) Payment to the Treasurv. The Trustee shall pay, as directed in Writin
by an Authorized Representative of the City, to the United States Treasury, out of amounts in each
subaccount of the Rebate Account,
(X) Not later than 60 days after the end of (A) the fifth Certificatc
Year for the Certificates, and @) each applicable fifth Certificate Year thereafter, an amount equal to
505305.3Kyeager\22062.0023 -26-
1 a e
at least 90% of the Rebatable Arbitrage calculated as of the end of such Certificate Year for the Cerhficates; and
(Y) Not later than 60 days after the payment or redemption of i
the Certdicates, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as c
end of such applicable Certificate Year, and any income attributable to the Rebatable Arbitrage,
computed in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from the Re
Account, the amount in the Rebate Account is not sufficient to make such payment when such pay
is due, the City shall calculate or cause to be calculated the amount of such deficiency and deposit i
amount received from any legally avdable source equal to such deficiency prior to the time such
payment is due. Each payment requred to be made pursuant to hs Subsection (a)(2) shall be ma(
the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date on wk
such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, which 1
shall be prepared by the City and provided to the Trustee, or shall be made in such other manner as
directed by the City in accordance with the Code.
(3) Alternative Penalty Account.
(i) Six-Month Computation. If the 1 %YO Penalty has been elected, wit!
85 days of each particular Six-Month Period, the City shall determine or cause to be determined
whether the 1 %% Penalty is payable (and the amount of such penalty) as of the close of the applicat
Six-Month Period. The City shall obtain expert advice in making such determinations.
(ii) Six-Month Transfer. Within 85 days of the close of each Six-Mod
Period, the Trustee, at the written direction of an Authorized Representative of the City, shall depos
an amount in the Alternative Penalty Account from any source of funds held by the Trustee pursuan
this Trust Agreement and designated by the City in such written directions or provided to it by the C
if and to the extent required, so that the balance in the Alternative Penalty Account equals the amou
of 1 %% of the Penalty due and payable to the United States Treasury determined as provided in
Subsection (a)(3)(i) above. In the event that immediately following any transfer provided for in the
previous sentence, or the date on which the City determines that no transfer is required for such
Cerhficate Year, the amount then on deposit to the credit of the Alternative Penalty Account exceed!
the amount required to be on deposit therein to make the payments required by Subsection (iii) belo!.
the Trustee, at the written direction of an Authorized Representative of the City, may withdraw the
excess from the Alternative Penalty Account and credit the excess to the Lease Payment Fund.
(iii) Pavment to the Treasury. The Trustee shall pay, as dlrected in writir
by an Authorized Representative of the City, to the United States Treasury, out of amounts in an
Alternative Penalty Account, not later than 90 days after the close of each Six-Month Period the 1 %'?
Penalty, if applicable and payable, computed with respect to the Cerhficates in accordance with
Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be mad)
from the Alternative Penalty Account, the amount in such Account is not sufficient to make such
payment when such payment is due, the City shall calculate the amount of such deficiency and direct
the Trustee, in writing, to deposit an amount equal to such deficiency into the Alternative Penalty
Account from the applicable Earnings Account or any other funds held by the Trustee pursuant to thi
Trust Agreement and designated by the City in such written directions prior to the time such paymen
505305.3KyeagerQ2062.0023 -27-
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is due. Each payment required to be made pursuant to this Subsection (a)(2) shall be made to the
Internal Revenue Service, Phladelphia, Pennsylvania 19255 on or before the date on which such
payment is due, and shall be accompanied by Internal Revenue Service Form 803 8-T, whlch form
be prepared by the City and provided to the Trustee, or shall be made in such other manner as the (
shall direct in accordance with the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fur
with respect to the certificates after redemption and payment of the Certificates and the payments
described in Subsection (a)(2)(iii) or (a)(3)(iii) (whichever is applicable), may be withdrawn by the
Trustee at the written direction of the City and utilized in any manner by the City.
(c) Survival of Defeasance and Final Pament. Notwithstandmg anydung in th
Section or hs Trust Agreement to the contrary, the obligation of the City to comply with the
requirements of hs Section shall survive the defeasance and final payment of the Certificates.
(d) The Trustee shall be deemed conclusively to have complied with the provisi
of this Section 406 if it follows the written directions of the City and shall have no liability or
responsibility for enforcing compliance by the City with the terms of hs Section 406.
Section 407. Deposits of Money.
All moneys required to be held by the Trustee under the provisions of th~s Trust Agreement
shall be deposited with the Trustee. All moneys deposited under the provisions of this Trust
of Certificates and applied only in accordance with the provisions of this Trust Agreement.
Agreement with the Trustee constituhng a part of the Trust Estate shall be held in trust for the Omt
Ail moneys deposited with the Trustee shall be credited to the particular fund, account or
subaccount to which such moneys belong.
505305.3KyeagerV2062.ooU -28-
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Section 408. Investment of Certain Accounts.
Moneys held in all Funds, Accounts and subaccounts shall be invested and
reinvested by the Trustee in Permitted Investments held in the name of the Trustee which mature n
later than such times as shall be necessary to provide moneys when needed for payments to be mac
fiom such Funds, Accounts and subaccounts. Moneys in the Reserve Account shall be invested ar
reinvested by the Trustee in Permitted Investments which mature not later than five years f0lloW;n~
date of purchase, and in no event later than the final maturity of the Certificates; provided that fund
the Reserve Account may be invested in Permitted Investments with mahulties of longer than five
years so long as such Permitted Investments may be liquidated at par if needed for the purposes
described in Section 404(d)(v) hereof Moneys in the Rebate Fund shall be invested only in obligai
of, or obligations the payment of the principal of and interest on which is unconditionally guarantee
by, the United States of America (or in the case of money market funds described in clause D of thl
dehtion of permitted investments solely in such obligations) and which have a maturity no longer
the date on which such amounts will be required to make any payments to the United States requirc
by Section 406 hereof. The Trustee shall make all such investments of moneys held by it in accord
with written instructions received from an Authorized Representative of the City two days in advan
of the investment. In the absence of such written instructions from the City, the Trustee shall invesl
investments described in subparagraph @) of the defhtion of "Permitted Investments." Each wrin
investment instruction to the Trustee shall contain a certification by the City that the investments bel
directed are Permitted Investments as required hereunder.
Any income or interest eamed on any moneys or investments rn the Costs o
(a)
(b)
Issuance Fund or the Certificate Fund shall be deposited in the Lease Payment Fund except for incc
or interest eamed on amounts in the Reserve Account in excess of the yield on the Certificates whc,
shall be deposited in the appropriate subaccount of the Earnings Account of the Rebate Fund. For
purposes of ths Section 408(b), the Trustee shall assume the yield on the Certificates to be % per annum and shall estimate the amount of the earnings on the Reserve Account which are in exces
of such yields which are to be deposited in the Earnings Account. The Trustee shall have no
responsibility for the accuracy of any such estimate. Additionally, any income or interest eamed on
moneys or investments in any Fund, Account or subaccount other than the Costs of Issuance Fund a
the Certificate Fund shall remain in the respective Funds, Accounts and subaccounts. In crediting
interest earnings, the Trustee shall post earnings to the appropriate subaccount of each of the forego]
Funds, Accounts and subaccounts so that earnings on the proceeds of the Certificates are separately
maintained and not commingled.
(e) Nothing herein shall prevent any Permitted Investments acquired as
investments of funds held hereunder fiom being issued or held in book-entry form on the books of tE
Department of the Treasury of the United States of America.
(d) The Trustee may act as principal or agent in the acquisition or disposition of
investment.
(e) To the extent that Permitted Investments are registerable securities, they shd
be registered in the name of the Trustee.
Section 409. Valuation and Sale of Investments. Obligations purchased as an investme
of moneys in any Fund, Account or subaccount created under the provisions hereof shall be deemed :
505305.3KyeagerV2062 .ooU -29-
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all times to be a part of such Fund, Account or subaccount and any profit realized from the liquida
of such lnvestment shall be credited to, and any loss resulting from the liquidation of such investm
shall be charged to, the computation of net interest earned on the moneys and investments of such
Fund, Account or subaccount.
In computing the amount in any Fund or Account created under the provisions hereof for a
purpose provided herein, obligations purchased as an investment of moneys therein shall be valued
the Value thereof at the end of each month calculated as set forth in the dehtion of "Permitted
Investments. 'I
Except as otherwise provided herein, the Trustee shall sell at the best price obtainable or
present for redemption or transfer as provided in the next sentence any obligation so purchased as i
investment whenever it shall be requested in writing by an Authorized Representative of the City s(
do or whenever it shall be necessary in order to provide moneys to meet any payment or transfer frc
any Fund, Account or subaccount held by it. In lieu of such sale or presentment for redemption, th(
Trustee may, in makmg the payment or transfer from any Fund, Account or subaccount mentioned
the preceding sentence, transfer such investment obligations or interest appertaining thereto if such
investment obligations shall mature or be collectable at or prior to the time the proceeds thereof sha
needed and such transfer of investment obligations may be made in book-entry form. Except for its
own negligence or willful misconduct, the Trustee shall not be liable or responsible for malung any such investment ~II the manner provided in this Trust Agreement or for any loss resulting from any 5
investment or the sale or liquidation thereof.
ARTICLE V
COVENANTS, EVENTS OF DEFAULT, REMEDIES OF OWNERS AND LIMITATIOF
OF LIABILITY
Section 501. Trustee to Enforce Lease Agreement; Notice of Nonpayment. Subject 1
the provisions of this Trust Agreement, the Trustee covenants and agrees with the Ce~cate Owe
to enforce the Lease Agreement against the City. In the event of delinquency in the payment of Lea
Payments due by the City pursuant to the Lease Agreement, the Trustee shall on the Business Day
following such delinquency give written notice of the delinquency and the amount thereof to the CiQ
Section 502. Assignment of Rights. Pursuant to the Assignment Agreement, the
Corporation has transferred, assigned and set over to the Trustee all of the Corporation's rights, htle
and interest in and to the Site Lease and the Lease Agreement (other than its rights to indemnificatio
and the payment of certain of its costs and expenses), including without limitation all of the
Corporation's right to receive Lease Payments from the City under the Lease Agreement, its right to
receive the Net Proceeds relating to the Site, its right to enforce payment of such Lease Payments wl
due, or othenvise protect its interests and enforce its rights under the Lease Agreement.
Section 503. Events of Default. Any event of default under the Lease Agreement, as
defined in Section 9.1 thereof, shall be an "Event of Default" under this Trust Agreement and the ten
"Events of Default" shall mean, whenever it is used in this Trust Agreement, any one or more of sucl
events.
505305.3UCyeagerU2062.00U -30-
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Section 504. Application of Funds. All moneys received by the Trustee pursuant to a~
right given or action taken under the provisions of this Article V or Article IX of the Lease Agreen
shall be applied by the Trustee in the order following upon presentation of the Certificates, and the
stmpmg hreon ofthe payment if only partidly paid, or upon the surrender thereof if Mly paid --
First, to the payment of the costs and expenses of the Trustee and thereafter, to on(
Insurer, the Certificate Owners in declaring such Event of Default, effecting collection of
moneys due and owing as a result of such Events of Default and executing remedes with
respect thereto, including reasonable compensation to its or their agents, attorneys and cou
Second, to the payment to the Persons entitled thereto of all Interest Components tl
due in the order of the due date thereof and, if the amount available shall not be sufficient tc
pay in full any Interest Component maturing on the same date, then to the payment thereof
ratably, according to the amounts due thereon, to the Persons entitled thereto without
dlscrimination or preference;
Third, to the payment to the Persons entitled thereto of the unpaid Principal
Components whxh shall have become due, whether at maturity or by call for redemption, i
the order of their due dates, with interest on each overdue Principal Component at the rate
represented by the respective Certificate to hch such Principal Component relates, and, if
amount available shall not be s&cient to pay in full all the Certificates due on any date, thc
the payment thereof ratably, accordmg to the amounts of Principal Component due on such
date to the Persons entitled thereto, without any discrimination or preference; and
Fourth, ifthere shall exist any remainder after the foregoing payments, such remain1
shall be paid to the City.
Section 505. Institution of Legal Proceedings. Subject to one right of the Tnsurer to
control all remedies so long as it is not in default in payment under the Municipal Bond Insurance
Policy. If one or more Events of Default shall happen and be continuing, the Trustee in its discretio
may, and upon the written request of the Owners of not less than a majority of the aggregate princip
amounts of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefoi
shall, proceed to protect or enforce its rights or the rights of the Owners of Certificates by enforcing
any of the remedies provided in Arhcle IX of the Lease Agreement.
Section 506. Non-Waiver. Nothing in thls Article V or in any other provision of hs TN
Agreement or in the Certificates, shall affect or impair the obligation of City to pay or prepay the Le
Payments in accordance with and subject to the terms and provisions of the Lease Agreement. No
delay or omission of the Trustee or any Certdicate Owner to exercise any right or power arising up(
the happening of any Event of Default shall impair any such right or power or shall be construed to t:
waiver of any such Event of Default or an acquiescence therein, and every power and remedy given
this Arhcle V to the Trustee or to the Cerhficate Owners may be exercised from time to time and as
often as shall be deemed expedient by the Trustee or the Certdicate Owners.
Section 507. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or the Certificate Owners is intended to be exclusive of any other remedy, and every suc
remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now o1
hereafler existing, at law or in equity or by statute or otherwise.
505305.3UCyeagerV2062.0023 -3 1-
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Section 508. Power of Trustee to Control Proceedings. In the event that the Tru51ee4
upon the happening of an Event of Default, shall have talcen any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of
Insurer or the Owners ofthe required percentages of Certificates as set forth in Section 505 hereof.
shall have full power, in the exercise of its discretion for the best interests of the Certificate Owner!
with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other dispc
of such action; provided, however, that the Trustee shall not discontinue, withdraw, compromise 01
settle, or otherwise dispose of any litigation pendmg at law or in equity, without the consent of the Owners of a majority in aggregate Principal Components of the Certificates outstm&g.
Limitation on Owners' Right to Sue. No Certificate Owner shall have th
right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon thl
Trust Agreement, unless it shall have obtained the prior written consent of the Insurer and (a) such
Certificate Owner shall have previously given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of the required percentages of Certificates as set forth in Section :
hereof shall have made written request upon the Trustee to exercise the powers granted to the Trusl
as assignee of the Corporation or to institute such action, suit or proceedmg in its own name; (c) sai
Certificate Owner shall have tendered to the Trustee reasonable indemnity against the costs, expens
and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refusec
omitted to comply with such request for a period of 60 days after such written request shall have be
received by, and said tender of indemnity shall have been made to, the Trustee.
Section 509.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
every case, to be conditions precedent to the exercise by any Certificate Owner of any remedy
in my manner whatever by his or their action to enforce any right under this Trust Agreement, excel
in the manner herein provided, and that all proceedings at law or in equity with respect to an Event (
Default shall be instituted, had and maintained in the manner herein provided and for the equal bene
of all Owners of the Outstanding Certificates.
hereunder; it being understood and intended that no one or more Certificate Owner shall have any ri
Notwithstandmg the foregoing provisions of hs Section or any other provision of this Trust
Agreement, the right of any Certificate Owner to receive payment of said Owner's proportionate
interest in the Lease Payments as the same become due shall not be impaired or affected without the
consent of such Owner.
Section 510. Reconstruction; Application of Net Proceeds. If any useful portion of the
Site shall be destroyed or is damaged by fire or other casualty, or title to, or the temporary use of, sut
portion shall be taken under the exercise of the power of eminent domain, the City shall, as
expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair,
reconstruction, restoration or replacement thereof, unless it is determined under the provisions of
Section 6.l(c) of the Lease Agreement that such repair, reconstruction, restoration or replacement
is not to be undertaken. If such repair, reconstruction, restoration or replacement is to be undertaken
Net Proceeds of any hazard insurance paid on account of such damage or destruction shall be held bj
the Trustee in the Insurance and Condemnation Fund, and made avdable for, and to the extent
necessary be applied to, the cost of the repair, reconstruction, restoration or replacement of the Site o
portion thereof damaged, destroyed or taken. Pendmg such application, such proceeds may be invesl
by the Trustee, upon written direction of an Authorized Representative of the City received two days
prior to the date of making such investment in accordance with Section 408 hereof, in Permitted
505305.3UCyesgerQ2062.00W -32-
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Investments which mature not later than such times as shall be necessary to provide moneys when
needed to pay such cost of repair, reconstruction, restoration or replacement.
Section 511, Accounts and Reports,
(a) The Trustee shall keep proper books of record and account in which compll
and correct entries shall be made of its transactions relating to the Site, the Project and each Fund,
Account and subaccount established under this Trust Agreement and the Principal Components of 1
Certificates and which shall at all reasonable times during business hours and upon reasonable prio
notice be subject to the inspection of the City and Owners of at least 25% of the aggregate Principa
Components of Certificates Outstanding.
(b) The Trustee shall provide the City on or before the twentieth day after the e,
of each month with a copy of its customary cash and asset statements relating to each Fund, Accour
subaccount held by it under the Trust Agreement; provided that the Trustee shall not be obligated tc
provide an accounting for any accounts that have had no activiw since the last reporting date and thi
have a balance of zero.
Section 512. No Obligation by the City to Owners. Except for the payment of Lease
Payments when due in accordance with the Lease Agreement and any other payment due and oMln1
the City under the Lease Agreement and the performance of the other covenants and agreements of
City contained in the Lease Agreement or hereunder, the City shall have no obligation or liability to
of the other parties or to the Certificate 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
Cerhficate Owners by the Trustee.
Section 513. No Obligation with Respect to Performance by Trustee. The Trustee
acknowledges that neither the City nor the Corporation shall have any obligation or liability to any oj
the other parties or to the Certificate Owners with respect to the performance by the Trustee of any
duty imposed upon it under hs Trust Agreement except those duties required to be performed by tE
Trustee at the direction of the City or the Corporation.
Section 514. No Liability to Owners for Payment. Except as provided in this Trust
Agreement, neither the Trustee nor the Corporation shall have any obligation or liability to the
Certificate Owners with respect to the payment of the Lease Payments by the City when due, or witl
respect to the performance by the City of any other covenant by it in the Lease Agreement.
Section 515. Possession and Enjoyment. From and after the execution of the Lease
Agreement, the City shall during the term of the Lease Agreement peaceably and quietly have and hc
and enjoy the Site, without suit, trouble or hindrance from the Trustee, except as expressly set forth i
the Lease Agreement and this Trust Agreement. The Trustee will, at the written request of the City
and at the City's cost, join in any legal action in which the City asserts its right to such possession an(
enjoyment, to the extent Trustee lawfully may do so in accordance with the provisions of this Trust
Agreement and the Lease Agreement.
Section 516. Federal Tax Covenants. Notswthstanding any other provision of dus Trust
Agreement, absent an opinion of Bond Counsel that the exclusion from gross income for federal
income tax purposes of the Interest Components with respect to the Certificates executed and deliver
505305.3 U(yeagerl22062 .ooU -33-
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on a tax-exempt basis will not be adversely affected, the City covenants to comply with dl applicat
requirements of the Code necessary to preserve such exclusion fiom gross income and specifically
covenants, without limiting the generality of the foregoing, as follows:
(i) Private Activity. The City will not take or omit to take action or ref
from any action or make any use of the proceeds of the Certificates or of any other monies or prope
which would cause the Certificates to be "private activity bonds" withm the meaning of Section 14;
the Code;
(ii) Arbitrage. The City will make no use of the proceeds of the
Certificates or of any other amounts or property, regardless of the source, or take or omit to take aq
action which will cause the Certificates to be "arbitrage bonds" with the meaning of Section 148 c
the Code;
(iii) Federal Guarantee. The City will make no use of the proceeds of tl
Certificates or take or omit to take any action that would cause the Certificates to be "federally
guaranteed" within the meaning of Section 149(b) of the Code;
(iv) Information ReDorting. The City will take or cause to be taken all
necessary adon to comply with the informational reporting requirement of Section 149(e) ofthe Cc
(v) Hedae Bonds. The City will make no use of the proceeds of the
Certificates executed and delivered on a tax-exempt basis or any other amounts or property, regard
of the source, or take or omit to take any action that would cause the Certificates executed and
delivered on a tax-exempt basis to be considered "hedge bonds" withm the meaning of Section 149(
of the Code unless the City takes all necessary action to assure compliance with the requirements of
Section 149(g) of the Code to maintain the exclusion fiom gross income of the Interest Components
due with respect to the Certificates executed and delivered on a tax-exempt basis for federal incomf
tax purposes; and
(vi) Miscellane~u~. The City will take no action inconsistent with its
expectations stated in the Tax Certificate and will comply with the covenants and requirements state
therein and incorporated by reference herein.
ARTICLE VI
CONCERNING THE TRUSTEE AND PAYING AGENT
Section 601. Employment of Trustee. In consideration of the recitals hereinabove set fc
and for other valuable consideration, the Trustee hereby agrees to receive, hold, invest and disburse
moneys to be paid to it pursuant to the Lease Agreement for credit to the various funds, accounts an
subaccounts established by this Trust Agreement; to execute and deliver the Certificates ; and to apk
and disburse the Trust Estate and other moneys received pursuant to the Lease Agreement to the
Certificate Owners; and to perform certain other functions, all as herein provided and subject to the
terms and conditions of thls Trust Agreement.
Section 602. Trustee Acceptance of Duties. The Trustee shall signify its acceptance of
duties and obligations imposed upon it hereby by executing and delivering thls Trust Agreement; an
505305.3Kyeager\22062.ooU -34-
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by executing such acceptance the Trustee shall be deemed to have accepted such duties and obliga.
with respect to all the Certificates thereafter delivered, but only, however, upon the terms and
conditions set forth herein. No duties or obligations, fiduciary or otherwise, other than those descri
herein shall be implied against the Trustee. In case an Event of Default has occurred (which has nc
been cured or waived), the Trustee may exercise such of the rights and powers vested in it by th~s
Trust Agreement, and shall use the same degree of care and skill in their exercise, as a prudent per:
would exercise or use under the circumstances in the conduct of his own &airs.
Section 603. Evidence on Which Trustee May Act.
(a) The Trustee, upon receipt of any notice, resolution, request, consent, order.
certificate, report, opinion, bond, or other paper or document (includmg facsimile copies thereof)
hshed to it pursuant to any provision hereof, shall examine such instrument to determine whethc
conforms to the requirements hereof and shall be protected in acting upon any such instrument beli
by it to be genuine and to have been signed or presented by the proper party or parties. The Truste
may consult with counsel, who may or may not be of counsel to the City, and the opinion or advise
such counsel shall be full and complete authorization and protection in respect of any action taken (
suffered by it hereunder in good faith and in accordance therewith. Any action taken or omitted to
taken by the Trustee in good faith pursuant to this Trust Agreement upon the request or authority a
consent of any person who at the time of makmg such request or giving such authority or consent i
Owner of any Certificate shall be conclusive and bindmg upon all hture Owners of the same
Certificate and upon Certificates, as applicable, executed and delivered in exchange therefor or in I
thereof. The Trustee shall not be bound to recognize any person as an Owner of any Certificate or
take any action at his request unless such person is the registered owner of a Certificate as shown c
the registration books.
(b) Whenever the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to talung or suffering any action hereunder, such matter (unless other
evidence in respect thereof be therein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate of an Authorized Representative of the City, and such certif
shall be full warrant for any action taken or suffered in good faith under the provisions hereof upon
terms hereof; but in its discretion the Trustee may in lieu thereof accept other evidence of such facl
matter or may require such further or additional evidence as to it may seem reasonable, but shall in
case be bound to secure the same. The Trustee may accept a cemlicate of an Authorized
Representative of the City or an Authorized Representative of the Corporation to the effect that an
authorization in the form therein set forth has been adopted by the City or the Corporation, as the c
may be, as conclusive evidence that such authorization has been duly adopted, and is in full force a
effect.
(c) Except as otherwise expressly provided herem, any request, order, notice c
other direction required or permitted to be furmshed pursuant to any provision hereof by the City tc
Trustee shall be sufficiently executed in the name of the City by an Authorized Representative of tl
City.
Section 604. Obligations of Trustee. Upon the termination of the Lease Term for the
reasons stated in Section 4.2 of the Lease Agreement, upon the payment of all amounts due with
respect to the Certificates from whatever source following a termination of the Lease Agreement
pursuant to Section 4.2 thereof, or upon a defeasance of all Certificates Outstanding pursuant to
505305.3KyeagerV22062.0023 -35-
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Section 901 hereof and after the payment by the City of all reasonable expenses, charges, counsel ft
and other disbursements of the Trustee as set forth in Section 605 herein and in the Lease Agreeme
the Trustee shall convey or relhquish all of its interests in the Site to the city free and clear of dl lie
thereon whch Trustee may have.
Section 605. Compensation. The City has agreed in the Lease Agreement to pay to the
Trustee from time to time reasonable compensation for all services rendered hereunder and also all
reasonable expenses, charges, counsel fees and other disbursements, includmg those of its attorneys
agents, and employees, incurred in and about the performance of its powers and duties hereunder.
Upon an Event of Default, but only upon an Event of Default, the Trustee shall have a first lien with
right to'payment prior to payment on account of principal of, premium, if any, and interest due with
respect to any Certificate, upon the amounts held hereunder for the foregoing fees, charges and
expenses incurred by it.
Section 606. Resignation of Trustee. The Trustee may at any time resign and be
discharged of the duties and obligations created hereby by giving not less than 30 days' written notic
to the City, the Insurer and the Owners of the Certificates Outstandmg, specifjrlng the date when su(
resignation shall take effect, and such resignation shall take effect upon the later of the day specified
such notice or the day on which a successor appointed by the City or the Owners as provided in Sec
608 shall have accepted its appointment as successor trustee.
Section 607. Removal of Trustee. So long as no Event of Default shall have occurred a
then be continuing, the Trustee may be removed at any time (i) upon the request of the Insurer for a
breach of the Trust Agreement, (ii) upon 30 days' written notice by the City, or (iii) by an instrument
concurrent instruments in writing, filed with the Trustee, and signed by the Owners of a majority in
aggregate principal amount of the Certificates Outstandmg or their attorneys-in-fact duly authorized.
Section 608. Appointment of Successor Trustee.
In case at any time the Trustee shall resign or shall be removed pursuant to tl
Trust Agreement or shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
if a receiver, liquidator or conservator of the Trustee, or of its property, shall be appointed, or if any
public officer shall take charge or control of the Trustee or of its property or affairs, a successor will
appointed by the City; provided, nevertheless, that unless a successor Trustee shall have been
appointed by the City upon resignation of the Trustee, the Trustee shall forthwith appoint or petition,
court of competent jurisdiction to appoint a Trustee to fill such vacancy until a successor Trustee sha
be appointed by the City as authorized in thls Section.
(a)
(b) Any Trustee appointed under the provisions of th~s Section in succession to tl
Trustee shall be a commercial bank or trust company or national banking association subject to
supervision and examination by federal or state banlung authorities doing business and having its
principal office in a city in which a Federal Reserve Bank is located or in the State and having the
power of a trust company in the State and having (or if such trustee is a member of a bank holding
company its parent bank holding company has) capital stock and surplus aggregating at least
$50,000,000.
(c) Immediately upon appointment, a successor Trustee shall mail notice to the
Owners of the Certificates Outstanding of its appointment.
505305.3KyeagerY22062.0023 -36-
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Section 609. Transfer of Rights and Property to Successor Trustee. Any successor
Trustee appointed under hs Trust Agreement shall execute, acknowledge and deliver to its
predecessor Trustee an instrument accepting such appointment, and thereupon such successor Tru!
without any further act, deed or conveyance, shall become fully vested with all moneys, estates,
properties, rights, powers, duties and obligations of such predecessor Trustee, with like effect as if
originally named as Trustee; but the Trustee ceasing to act shall nevertheless, on the written reques
the successor Trustee, execute, acknowledge and deliver such instrument of conveyance and firth€
assurance and do such other things as may reasonably be required for more fully and certdy vesb
and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee i
and to any property held by it under th~s Trust Agreement, and shall pay over, assign and deliver to
successor Trustee any money or other property subject to the trusts and conditions herein set forth.
Should any deed, conveyance or instrument in writing from the City or the Corporation be required
Trustee any such estates, rights, power and duties, any and all such deeds, conveyances and
instruments in writing shall, on request, and so far as may be authorized by law, be executed,
acknowledged and delivered by the City or the Corporation.
such successor Trustee for more fully and certamly veshng in and confirming to such successor
Section 610. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resultmg from any merL
conversion or consolidation to which it shall be a party or any company to hch the Trustee may st
or transfer all or substantially all of its corporate trust business, provided such company satisfies the
requirements of Section 608 above and is a bank or trust company organized under the laws of any
state of the United States or a national banking association and shall be authorized by law to perfon
all the duties imposed upon it hereby, shall be the successor to the Trustee without the execution or
filing of any paper or the performance of any further act.
Section 611. Adoption of Authorized Signature. In case any of the Certificates
contemplated to be delivered hereunder shall have been executed but not delivered, any successor
Trustee may, but shall not be required to, adopt the authorized signature of any predecessor Trustet
SO executing such Ceddicates and deliver such Certificates so executed; and in case any of the said
Certificates shall not have been executed, any successor Trustee may, but shall not be required to,
execute such Certificates in the name of the successor Trustee, and in all such cases such certificate
shall have the full force which it is anywhere in said Certificates or herein provided that the certifica
of the Trustee shall have.
Section 612. Trustee Liability.
(a) No provision in this Trust Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(b) The Trustee shall not be responsi0le for the sufficiency of the security for thl
Certificates executed and delivered hereunder or intended to be secured hereby and the Trustee shal
not be bound to ascertain or inquire as to the observance or performance of any covenants, conditior
or agreements on the part of the City under the Lease Agreement.
505305.3Kyeager\22062.0023 -31-
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(c) The Trustee, in its individual or any other capacity, may become the Owner
pledgee of Certificates secured hereby with the same rights whch it would have if not the Trustee;
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
protect the rights of Owners, whether or not such committee shall represent the Owners of the majc
in aggregate principal amount of the Certificates then Outstandmg.
directors to act as a member of, or in any other capacity with respect to, any committee fonned to
(d) The permissive right of the Trustee to do things enumerated in this Trust
Agreement shall not be construed as a duty and it shall not be answerable for other than its neglige]
or willful misconduct.
(e) The Trustee shall not be required to take notice or be deemed to have notic1
any Event of Default hereunder except failure by the City to make any of the Lease Payments to tht
Trustee required to be made by the City pursuant to the Lease Agreement or failure by the City or 1
Corporation to file with the Trustee any document required by hs Trust Agreement or the Lease
Agreement to be so filed subsequent to the delivery of the Certificates, unless the Trustee shall be
specifically notified in writing of such default by the City, the Corporation or by the Owners of at le
25% in aggregate principal amount of Certificates then Outstanding and all notices or other instrurr
required by this Trust Agreement to be delivered to the Trustee must, in order to be effective, be
delivered in accordance with the provisions of Section 908 hereof, and in the absence of such notic1
delivered, the Trustee may conclusively assume there is no Event of Default except as aforesaid.
(f) The Trustee shall not be liable with respect to any action taken or omitted tl
taken by it in good faith in accordance with the direction of the Owners of a majority in aggregate
principal amount of the Outstanding Certdicates, relating to the time, method and place of conducb
any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under hs Trust Agreement.
(g) The recitals, statements and representations in hs Trust Agreement or in t
Certificates have not been made by the Trustee; and the Trustee shall be under no responsibility foi
correctness thereof, except such recitals of the Trustee as are contained in Sections 201 and 204 he
Indemnification. The City agrees to indemnify and save the Trustee ham
in accordance with the provisions of Section 2.l(e) of the Lease Agreement and against any loss,
liability or expense whlch it may incur in the performance of its duties and powers under this Trusl
Agreement or the Lease Agreement wluch are not due to its negligence or willful misconduct.
Section 613.
ARTICLE WI
AMENDMENTS
Section 701. Mailing. Except as provided in Sections 312 and 703 hereof, any proVisic
this Article for the mailing for a notice or other paper to Certificate Owners shall be fully complied
only if it is mailed first class United States mail, postage prepaid to each Owner of Certificates the
Outstandmg at his address, if any, appearing upon the registry books of the Trustee.
505305.3KyeagerU2062.0023 -38-
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Section 702. Powers of Amendment. This Trust Agreement and the rights and obligati
provided herein may be mohfied or amended at any time by a Supplemental Trust Agreement, entc
into among the Trustee, the Corporation and the City but without the consent of any Certificate
Owners, and the Assignment Agreement, the Lease Agreement and the Site Lease may be amende1
with the consent of the parties thereto and in the case of the Assignment Agreement, the City and ir
case of the Lease Agreement and the Site Lease the Trustee but without the consent of the Certific;
Owners, but only (1) to cure any ambiguity, supply any omission, or cure or correct any defect or
inconsistent provision in hs Trust Agreement, the Site Lease, the Assignment Agreement or the LI
Agreement, or (2) in regard to questions arising under this Trust Agreement, the Lease Agreement
Assignment Agreement or the Site Lease whch the City and the Trustee may deem necessary or
desirable and not inconsistent with this Trust Agreement, the Lease Agreement, the Assignment
Agreement or the Site Lease, and which shall not adversely affect the interests of the Owners of the
Certificates, or (3) to provide for the substitution of property in accordance with Section 3.2 of the
Lease Agreement, or (4) for any other reason, provided such modification or amendment does not
adversely affect the interests of the Owners of the Certificates.
Any other modification or amendment hereof and of the rights and obligations of the Truste
and of the Owners of the Certificates hereunder, in any particular, may be made only by a
Supplemental Trust Agreement, entered into among the Trustee, the Corporation and the City and 1
written consent, given as provided in Section 703, of the Owners of at least a majority in aggregate
principal amount of the Certificates Outstandmg at the time such consent is given. Any other
modification or amendment to the Assignment Agreement, the Lease Agreement or the Site Lease
be made only with the written consent, given as provided in Section 703, of the Owners of at least i
majority in aggregate principal amount of the Certificates Outstandmg at the time such consent is
given. No such modification or amendment shall permit a change in the terms of redemption or
matunty of the Principal Components of any Outstanding Certificates or payment of any Interest
Component or a reduction in the Principal Component or the Redemption Price thereof, or in the ra
interest thereon or which will have a materially adverse effect on the security interest of the Owner
without the consent of the Owner of such Certificate, or shall reduce the percentages or otherwise
affect the classes of Certificates the consent of the Owners of which is required to effect any such
modification or amendment, or shall change or mow any of the rights or obligations of the Truste
without the written consent of the Trustee.
Section 703. Consent of Owners. The Trustee, the Corporation and the City may at aq
time enter into a Supplemental Trust Agreement or amendment to the Lease Agreement, the
Assignment Agreement or the Site Lease making a modification or amendment requiring the conse
Owners of Certificates under the provisions of Section 702 to take effect when and as provided in t
Section. A copy of such Supplemental Trust Agreement or amendment to the Lease Agreement, tl
Assignment Agreement or the Site Lease (or brief summary thereof or reference thereto in form
approved by Bond Counsel), together with a request to Owners of Certificates to approve the same
shall be mailed to each Certificate Owner (but failure to mail such copy and request shall not af€ec
validity of the Supplemental Trust Agreement or amendment to the Lease Agreement, the Assignn
Agreement or the Site Lease when consented to as in this Section provided). Such Supplemental 7
Agreement or amendment to the Lease Agreement, the Assignment Agreement or the Site Lease s
not be effective unless and until (i) there shall have been filed with the Trustee (a) the written consc
of the Owners of the percentages of Outstandmg Cerhficates specified in Section 702 hereof, and (
an opinion of Bond Counsel, stating that such Supplemental Trust Agreement or amendment to the
Lease Agreement, the Assignment Agreement or the Site Lease has been duly and lawfully enterec
505305.3u(yeager\22062.ooU -39-
, , 0 e
by the City or the Corporation, as applicable, and filed with the City and the Trustee in accordance I
the provisions hereof, is authorized or permitted hereby, and is valid and bindmg upon the parhes
thereto in accordance with iis terms.
c
Each such consent shall be effective only if accompanied by proof of the Owner, at the date
such consent, of the Certificates with respect to which such consent is given, whch proof shall be s
as is permitted by Section 902. A certificate or certificates executed by the Trustee and filed with t
City stating that it has examined such proof and that such proof is sufficient in accordance with
Section 902 shall be conclusive that the consents have been given by the Owners of the Certificates
described in such certificate or certificates of the Trustee. Any such consent shall be bindmg upon
Owner of the Certificates giving such consent and, anythmg in Section 902 to the contrary
notwithstanding, upon any subsequent Owner of such Certificates and of any Cerhficates issued in
exchange therefor (whether or not such subsequent Owner thereof has notice thereof) unless such
consent is revoked in writing by the Owner of such Certificates giving such consent or a subsequen
Owner thereof by filing with the Trustee, prior to the time when the written statement of the Trustel
hereinafter in hs Section provided for is filed, such revocation and, if such Certificates are held by
signer of such revocation in the manner permitted by Section 902. The fact that a consent has not b
revoked may likewise be proved by a certificate of the Trustee filed with the City to the effect that r
revocation thereof is on file with the Trustee. At any time aRer the Owners of the required percent;
of Certificates shall have filed their consents to the Supplemental Trust Agreement or amendment t
the Lease Agreement, the Assignment Agreement or the Site Lease, the Trustee shall make and file
with the City a written statement that the Owners of such required percentages of Certificates have
filed such consents. Such written statements shall be conclusive that such consents have been so fi
At any time aRer the sling of the required consents, notice shall be given by the City to the
Owners of Certificates stating in substance that the Supplemental Trust Agreement or amendment
to the Lease Agreement, the Assignment Agreement or the Site Lease has been consented to by the
Owners of the required percentages of Certificates by mailing such notice to the Owners of Certific
(but failure to receive such notice shall not prevent such Supplemental Trust Agreement or amendr
to the Lease Agreement, the Assignment Agreement or the Site Lease from becoming effective anc
binding as in hs Section provided). The City shall file with the Trustee proof of the mailing of suc
notice. A record, consisting of the Certificates or statements required or permitted by th~s Section I
made by the Trustee, shall be proof of the matters therein stated. Such Supplemental Trust Agreen
or amendment to the Lease Agreement, the Assignment Agreement or the Site Lease malung such
amendment or modification shall be deemed conclusively binding upon the City, the Trustee, the
Corporation and the Owners of all Certificates at the expiration of 20 days after the filing with the
Trustee of the proof of the mailing of such last mentioned notice, except in the event of a final decr
a court of competent jurisdiction setting aside such Supplemental Trust Agreement or amendment
the Lease Agreement, the Assignment Agreement or the Site Lease in a legal mon or equitable
proceedmg for such purpose commenced wih such 20 day period provided, however, that the
Trustee and the City during such 20 day period and any such further period during which any such
action or proceedmg may be pending shall be entitled in their absolute discretion to take such actio]
to refrain from talung such action, with respect to such Supplemental Trust Agreement or amendm
to the Lease Agreement, the Assignment Agreement or the Site Lease as they may deem expedieni
Section 704. Modifications by Unanimous Consent. Subject to the provisions of Sec
703 hereof, the terms and provisions hereof and the rights and obligations of the Trustee and of the
Owners of the Certificates hereunder may be modified or amended in any respect upon entering in
505305.3KyeagerL?2062.0023 -40-
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the parties thereto of a Supplemental Trust Agreement with the consent of the Owners of all the
Certificates then Outstandmg, such consent to be given as provided in Section 703 except that no
notice to such Owners by mailing shall be prouded.
Section 705. Exclusion of Certificates. Certificates owned or held by or for the accouni
the City or the Corporation shall not be deemed Outstanding for the purpose of consent or other act
or any calculation of Outstandmg Certificates as provided for in hs Article, and neither the City no
the Corporation shall be entitled with respect to such Certificates to give any consent or take any od
action provided for in hs hcle. At the time of any consent or other action taken under hs kc!
the City shall furnish the Trustee a certificate of an Authorized Representative of the City, upon wh
the Tistee may rely, describing all Certificates so to be excluded.
Section 706. Notation on Certificates. Certificates executed and delivered after the
effective date of any action taken as provided in Article V or hs Article provided may, and if the C
so determines shall, bear a notation by endorsement or otherwise in form approved by the City as tc
such action, and in that case upon demand of the Owner of any Certificate Outstanding at such
effective date and presentation of his Certificate, as applicable, for the purpose at the principal
corporate trust office of the Trustee or upon any transfer or exchange of any Certificate Outstandin]
such effective date, suitable notation shall be made on such Certificate or upon any Certificates issL
upon any such transfer or exchange by the Trustee as to any such action. If the City shall so detern
new Certificates so modfied as in the opinion of Bond Counsel and the City to conform to such act
shall be prepared, executed and delivered, and upon demand of the Owner of any Certificate then
Outstandmg shall be exchanged, without cost to such Owner, for Certificates, as the case may be, (
the same issue and maturity then Outstanding, upon surrender of such Certificates, as the case may
ARTICLE VI11
BOOK-ENTRY SYSTEM
Section 801. Book-Entry System; Limited Obligation of Corporation. The Certific;
shall be initially delivered in the form of a separate single fully registered Certificate (which may bc
typewritten) for each of the maturities of the Cemficates. Upon initial delivery, the ownership of er
such Certificate shall be registered in the registration books kept by the Trustee in the name of the
Nominee as nominee of the Depository. Except as provided in Section 803 hereof, all of the
Outstandmg Certificates shall be registered in the registration books kept by the Trustee in the nam
the Nominee.
With respect to Cerhficates registered in the registration books kept by the Trustee in the n
of the Nominee, the City, the Corporation and the Trustee shall have no responsibility or obligation
any such Participant or to any Person on behalf of which such a Participant holds an interest in the
Certificates. Without limiting the immediately preceding sentence, the City, the Corporation and tk
Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records oft
Depository, the Nominee, or any Participant with respect to any ownership interest in the Certificai
(ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registr
books kept by the Trustee, of any notice with respect to the Certificates, including any notice of
redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in thc
Certificates to be redeemed in the event the Certificates are redeemed in part, or (iv) the payment t
505305.3 KyeagerY22062 .ooU -41-
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any Parhcipant or any other Person, other than an Owner as shown 111 the registration books kept by
Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to
Certificates. The City, the Corporation and the Trustee may treat and consider the Person in whose
name each Certificate isaegistered in the registration books kept by the Trustee as the holder and
absolute owner of such Certificate for the purpose of payment of Principal Components, premium, 1
any, and Interest Components with respect to such Certificate, for the purpose of giving notices of
redemption and other matters with respect to such Certificate, for the purpose of registering transfe,
with respect to such Certificate, and for all other purposes whatsoever. The Trustee shall pay all
principal of, premium, if any, and interest due with respect to the Certificates only to or upon the or
of the respective Owner, as shown in the registration books kept by the Trustee, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfjl an(
discharge fully the City's obligations with respect to payment of the Principal Components, premiur
any, and Interest Components due with respect to the Certificates to the extent of the sum or sums I
paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, shall
receive a Certificate evidencing the obligation of the City to make payments of principal, premium,
any, and interest pursuant to hs Trust Agreement. Upon delivery by the Depository to the Trustee
a new nominee in place of the Nominee, and subject to the provisions herein with respect to Recorc
Dates, the word Nominee in this Trust Agreement shall refer to such new nominee of the Depositoi
City and the Corporation of written notice to the effect that the DepositoIy has determined to substi
Section 802. Representation Letter. In order to quallfL the Certificates for the
Depository's book-entry system, the Trustee and the City agree to execute fiom time to time and
deliver to such Depository a Representation Letter. The execution and delivery of the Representatic
Letters shall not in any way limit the provisions of Section 801 or in any other way impose upon the
City, the Corporation or the Trustee any obligation whatsoever with respect to persons having interc
in the Certificates or other than the Owners, as shown on the registration books kept by the Trustee
The Trustee agrees to take all action necessary to continuously comply with all representations mad
it in its Representation Letter. In addition to the execution and delivery of the Representation Lette
the Chair, the Secretary and all other officers of the Corporation, and the Authorized Representatiw
the City, are hereby authorized to take any other actions, not inconsistent with this Trust Agreemen.
qualify the Certificates for the Depository's book-entry program.
Section 803. Transfers Outside Book-Entry System. In the event (i) the Depository
determines not to continue to act as securities depository for the Certificates, or (ii) the City determ
that the Depository shall no longer so act, then the City following delivery of a written notice of
removal to the Depository will discontinue the book-entry system with the Depository. Ifthe City f
to identify another quahfied securities depository to replace the Depository then the Certificates so
designated shall no longer be restricted to being registered in the regstration books kept by the Tru
in the name of the Nominee, but shall be registered in whatever name or names Persons transferrin
exchanging Certificates shall designate, in accordance with the provisions of Section 306.
Section 804. Payments to the Nominee. Notwithstandmg any other provisions of this
Trust Agreement to the contrary, so long as any Certificate is registered in the name of the Nomine
payments with respect to Principal Components, premium, if any, and Interest Components due wi
respect to such Certificate and all notices with respect to such Certificate shall be made and given,
respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.
505305.3Kyeaged22062.0023 -42-
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Section 805. Initial Depository and Nominee. The initial Depository under th~s Article
shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cedf
Co., as Nominee of The Depository Trust Company, New York, New York.
ARTICLE IX
MISCELLANEOUS
Section 901. Defeasance.
One or more of the Certificates may be paid and discharged in any one or more of the folloi
ways:
(a) by paying or causing to be paid the Principal Component and the Interest
Components with respect to said Certificate(s), as and when the same become due and payable;
(b) by depositing with the Trustee or an escrow bank, in trust, at or before
maturity, money which, together with the amounts then on deposit in the Lease Payment Fund and
Certificate Fund applicable to the Outstanding Certificate(s) to be paid and discharged, is fully
sufficient to pay the Outstanding Certificate(s), as applicable, to be paid and discharged, including
Principal Component and the Interest Component thereof; or
(c) by depositing with the Trustee or an escrow bank, in trust, Defeasance
Securities in such amount as cerhfied by an independent certified public accountant will be sufficie
together with the interest to accrue thereon, moneys then on deposit in the Lease Payment Fund an(
Cerhficate Fund applicable to the Outstandmg Certificate@) to be paid and other avdable moneys
dedicated to such purpose, together with the interest to accrue thereon, to pay and discharge the
Outstandmg Certificate(s) to be paid and discharged (includmg the Principal Component, any
applicable premium, and the Interest Component thereof) at their respective maturity or Redemptia
Dates.
Notwithstandmg that any Certificates shall not have been surrendered for payment, all
obligations of the Corporation, the Trustee and the City under th~s Trust Agreement with respect to
those Certdicates paid, as provided in the above subsections (a) (b) or (c), shall cease and terminat1
and shall no longer be Outstanding hereunder, except only the obligation of the Trustee to pay or ci
to be paid from funds deposited therefor to the Owners of the Certificates not so surrendered and p
all sums due thereon and to transfer title to the Site to City as provided in Section 604 hereof and
except the obligation of the City to comply with the covenants set forth in Section 5 16 hereof.
Any funds held by the Trustee, at the time of one of the events described above in subsectic
(a) (b) or (c) shall have occurred as to all Outstandmg Certificates, which are not required for the
payment to be made to Owners, or for payments to be made by the City under Sections 406,605 a
613 hereof or otherwise, shall be paid over to the City.
Notwithstanding anythmg herein to the contrary, in the event that a Principal Component ifl
Interest Component due with respect to a Certificate shall be paid by Insurer pursuant to the Munic
Bond Insurance Policy, such Certificate shall remain Outstandmg for all purposes, not be defeased
otherwise satisfied and not be considered paid by the City, and the assignment and pledge of the TI
505305.3Kyeager\22062.0023 -43-
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Estate and all covenants, agreements and other obligations of the City to the registered Certificate
Owner shall continue to exist and shall run to the benefit of Insurer, and Insurer shall be subrogated
the rights of such registered Certificate Owner.
Section 902. Evidence of Signatures of Certificate hers and Ownership of
Certificates.
(a) Any request, consent, revocation of consent or other instrument which ttus
Trust Agreement may require or permit to be signed and executed by the Owners of Certificates m;
be in one or more instruments of similar tenor, and shall be signed or executed by such Owners of
Cerbficates in person or by their attorneys appointed in writing. Proof of (i) the execution of any su
instrument, or of an instrument appointing any such attorney, or (ii) the holding by any person of thc
Certificates, shall be sufficient for any purpose hereof (except as otherwise therein expressly provid
if made in the following manner, or in any other manner satisfactory to the Trustee, which may
nevertheless in its discretion require further or other proof in cases where it deems the same desirat
the fact and date of the execution by any Owner of Certificates or his attorney of such instruments r
be proved by a guarantee of the signature thereon by a bank or trust company or by the certificate o
any notary public or other officer authorized to take acknowledgments of deeds; that the person sig
such request or other instrument acknowledged to h the execution thereof, or by an affidavit of a
witness of such execution, duly sworn to before such notary public or other officer. Where such
execution is by an officer of a corporation or association or a member of a partnership, on behalf of
such corporatioR association or partnership, such signature guarantee, certificate or &davit shall 2
constitute sufficient proof of his authority.
(b) The ownershp of Certificates and the amount, numbers and other
identification, and date of holding the same shall be proved by the registry books.
(c) Any request or consent by an Owner of Certificates shall bind all future
Owners of Certificates in respect of anydung done or suffered to be done by the Corporation, the C
or the Trustee in accordance therewith.
Section 903. Moneys Held for Particular Certificates. The amounts held by the Trus
for the payment of the Interest Components, Principal Components or premium due on any date wi
respect to particular Cemficates shall, on and after such date and pendmg such payment, be set asic
on its books and held in trust, without responsibility for investment thereof, by it for the Owners of
Certificates entitled thereto, subject to Section 3 16 herein.
Section 904, Preservation and Inspection of Documents, All documents received by
Trustee under the provisions of this Trust Agreement shall be retained in its possession and shall bc
subject at all reasonable times during business hours on my Business Day and upon reasonable pri
notice to the inspection of the City, any Owner of 25% of the Certificates and their agents and
representatives, any of whom may make copies thereof.
Section 905. Parties Interested Herein. Nothmg in this Trust Agreement expressed 01
implied is intended or shall be construed to confer upon, or to give to, any person or corporation, 01
than the City, the Corporation, the Trustee and the Owners of the Certificates, any right, remedy or
claim under or by reason of hs Trust Agreement or any covenant, condition or stipulation thereof;
505305.3u<yeagerV2062.0023 -44-
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all the covenants, stipulations, promises and agreements herein contained by and on behalf of the
Trustee shall be for the sole and exclusive benefit of the Trustee and the Owners of the Certificates
Severability of Invalid Provisions. If any one or more of the covenants o
agreements provided herein should be contrary to law, then such covenant or covenants or agreeme
or agreements shall be deemed severable from the remaining covenants and agreements, and shall i
way affect the validity of the other provisions hereof.
Section 906.
Section 907. Recording and Filing. The City shall be responsible for the recordmg and
filing of the Lease Agreement and financing statements (or continuation statements in connection
therewith) or of any supplemental instruments or documents of further assurance as may be require
by law in order to perfect the security interests created by the Lease Agreement.
Section 908. Notices. All notices, certificates, requests or other communications hereur
shall be in writing and shall be sufficiently given and shall be deemed given when delivered or mail
by certified mail, postage prepaid, to the pkes at their respectke places of business as follows:
If to the City:
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, California 92008-1989
Attention: City Manager
Facsimile: (760) 720-9461
If to the Corporation:
City of Carlsbad Public Improvement Corporation
1200 Carlsbad Village Drive
Carlsbad, Cahfornia 92008-1989
Attention: Executive Director
Facsimile: (760) 720-9461
If to the Trustee:
First Trust of CaUornia, National Association
550 South Hope Street
Los Angeles, California 90071
Attention: Corporate Trust Department
Facsimile: (213) 533-8729
505305.3KyeagerD2062.0023 -45-
e 0
If to Insurer:
[Bond Insurer]
Standard & Poor's Ratings Group
25 Broadway, - Floor
New York, New York 10004- 1064
Attention:
Facsimile: (212)
Moody's Investors Service
99 Church Street
New York, New York 10007
Attention:
Facsimile: (212) 553
The parties hereto by written notice hereunder may designate different addresses for the purposes o
this Section.
Section 909. California Law. Thls Trust Agreement shall be construed and governed ir
accordance with the laws of the State of Caiifornia
Section 910. Binding on Successors. This Trust Agreement shall be bindmg upon and
inure to the benefit of the parties and their respective successors and assigns.
Section 911. Headings. Headings preceding the text of the several Arhcles and Section:
hereof, and the table of contents, are solely for convenience of reference and shall not constitute a p
of this Trust Agreement or affect its meaning, construction or effect.
Section 912.
several counterparts, each of which shall be deemed an original, and all of which shall constitute bu
one and the same instrument.
Execution in Counterparts. This Trust Agreement may be executed in
ARTICLE X
PROVISIONS RELATING TO MUNICIPAL BOND INSURANCE POLICY
Section 1001. Consent of Insurer.
(a) Any provision of th~s Trust Agreement expressly recognizing or granting ri
in or to Insurer may not be amended in any manner hch affects the rights of Insurer hereunder without the prior written consent of Insurer.
(b) Insurer's consent shall be required in addition to Certificate Owner's consei
when required, for the following purposes: (i) execution and delivery of any Supplemental Trust
Agreement or any amendment, supplement or change to or modfication of the Lease Agreement, t
Site Lease or the Assignment Agreement; (ii) removal of the Trustee or Paylng Agent and selectioi
and appointment of any successor trustee or paying agent; and (iii) hitiation or approval of any acb
not described in (i) or (ii) above which requires Certificate Owner consent.
505305.3KyeagerY22062.0023 -46-
<t 0 a
(c) Anythmg in tlus Trust Agreement to the contrary notwithstanding, upon the
occurrence and continuance of an Event of Default as defined herein, Insurer shall be entitled to con
and direct the enforcement of all rights and remedies granted to the Certificate Owners or the Trust(
for the benefit of the Ceaificate Owners under this Trust Agreement.
Any reorganization or liquidation plan with respect to the City must be acceptable to the
Insurer. In the event of any reorganization or liquidation, the Insurer shall have the right to vote on
behalf of all Owners who hold Certificates absent a default by the Insurer under the Municipal Bonc
Insurance Policy.
Section 1002. Notices to be Given to Insurer.
%le the Municipal Bond Insurance Policy is in effect, the City shall furms (a) Insurer:
(i) as soon as practicable after the filing thereof, a copy of the adopted
budget of the City and a copy of any audit and annual report of the City;
(ii) a copy of any notice to be given to the Owners of the Certificates 01
other party hereunder, includmg, without limitation, notice of any redemption of or defeasance of
Certificates, and any certificate rendered pursuant to this Trust Agreement relating to the security fi
the Certificates;
(iii) a copy of any amendments approved pursuant to Sections 702 and
hereof with a copy of any amendments approved pursuant to Section 703 hereof also being sent to
S&P; and
(iv)
The Trustee shall not@ Insurer of any failure of the City to provide notices
certificates to the Trustee requked under the Trust Agreement or the Lease Agreement. The Trust,
shall hsh to Insurer a copy of all notices given to it by the City pursuant to the Site Lease and th(
Lease Agreement.
(c)
such additional mformation it may reasonably request.
(b)
The City will permit Insurer to discuss the affairs, frnances and accounts of
City or any dormation Insurer may reasonably request regarding the security for the Certificates v
appropriate officers of the City. The City will permit Insurer to have access to the Site and have ac
to and to make copies of all books and records relating to the Certificates at any reasonable time.
(d) Insurer shall have the right to direct an accounting at the City's expense, an
the City's fdure to comply with such direction withm thtrty (30) days after receipt of written notice
the direction from Insurer shall be deemed a default hereunder; provided, however, that if compliar
cannot occur withm such period, then such period wdl be extended so long as compliance is begun
withm such period and diligently pursued, but only if such extension would not materially adverse1
affect the interests of any registered owner of the Cerhficates.
(e) Notwithstandlng any other provision of th~s Trust Agreement, the Trustee :
immediately notify Insurer if at any time there are insufficient moneys to make any payments of the
505305.3KyeagerD2062.0023 -47-
r< 0 0
Pnncipal Components and/or Interest Components as required and immediately upon the occurrent
any Event of Default hereunder.
Section 1003. Payment Procedure Pursuant to the Municipal Bond Insurance Policy
The Trustee shall hold and apply the Municipal Bond Insurance Policy for the benefit of the
Owners of the Certificates and shall take such actions at such times pursuant to such Municipal Bo1
Insurance Policy to assure timely payment of principal and interest (but not premium) due with res€
to the Certificates in accordance with the following provisions:
(a) In the event that, on the second Business Day, and again on the Business D
prior to the payment date on the Certificates, the Trustee has not received sufficient moneys to pay (
principal of and interest due with respect to the Certificates on the second following or following, ill
case may be, Business Day, the Trustee shall immediately notify the Insurer or its designee on the s
Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the
amount of the deficiency.
(b) If the deficiency is made up in whole or in part prior to or on the payment d
the Trustee shall so notify the Insurer or its designee on the same Business Day by telephone or
telegraph, confirmed in writing by registered or certified mail.
(c) In addition, if the Trustee has wriiten notice that any Certificate Owner has
been required to disgorge payments of principal or interest due with respect to a Certificate to a trul
in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdictio,
that such payment constitutes a voidable preference to such Certificate Owner withm the meaning c
any applicable bankruptcy laws, then the Trustee shall notify the Insurer or its designee of such fact
telephone or telegraphc notice, confirmed in writing by registered or certified mail.
(d) The Trustee is irrevocably designated, appointed, directed and authorized ti
as attorney-in-fact for Owners of the Certificates as follows:
(i) If and to the extent there is a deficiency in amounts required to pay
interest due with respect to the Certificates, the Trustee shall (a) execute and deliver to State Street
Bank and Trust Company, N.A., or its successors under the Municipal Bond Insurance Policy (the
"Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument
appointing the Insurer as agent for such Owners in any legal proceeding related to the payment of s
interest and an assignment to the Insurer of the claims for interest to which such deficiency relates i
accordance with the tenor of the Municipal Bond Insurance Policy payment from the Insurance Pay
Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respecti
Owners; and
which are paid by the Insurer, @) receive as designee of the respective Owners (and not as Trustee
(ii) If and to the extent of a deficiency in amounts required to pay princ
of the Certdicates the Trustee shall (a) execute and deliver to the Insurance Paying Agent in form
satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such
Owner in any legal proceedmg relating to the payment of such principal and an assignment to the
Insurer of any of the Cerhiicate surrendered to the Insurance Paying Agent of so much of the princi
amount thereof as has not previously been paid or for which moneys are not held by the Trustee ant
available for such payment (but such assignment shall be delivered only if payment from the Insura
505305.3u<yeager\22062.0023 -48-
I 0
Paying Agent is received), (b) receive as designee of the respective Owners (and not as Trustee) in
accordance with the tenor of the Municipal Bond Insurance Policy payment therefor from the Insura
Paymg Agent, and (c) disburse the same to such Owners.
(e) Payments with respect to claims for interest and principal due with respect 1
the Certificates dsbursed by the Trustee from proceeds of the Municipal Bond Insurance Policy sh:
not be considered to discharge the obligation of the City to make Lease Payments due with respect I
such Certificates, and the Insurer shall become the owner of such unpaid Ce~ficate and claims for
interest in accordance with the tenor of the assignment made to it under the provisions of tlus
subsection or otherwise.
(9 Irrespective of whether any such assignment is executed and delivered, the
and the Trustee agree for the benefit of the Insurer that:
(i) They recognue that to the extent the Insurer makes payments, direc
or indirectly (as by paying through the Trustee), on account of principal of or interest due with resp
to the Certificates, the Insurer will be subrogated to the rights of such Owners to receive the amow
such principal and interest from the Trustee, with interest thereon as provided and solely from the
sources stated in the Trust Agreement and the Certificates; and
(ii) The Trustee will accordingly pay to the Insurer the amount of such
principal and interest (includmg principal and interest recovered under subparagraph (ii) of the firs
paragraph of the Municipal Bond Insurance Policy, which principal and interest shall be deemed pi
due and not to have been paid), with interest thereon as provided in the Trust Agreement and the
Certificate, but only from the sources and in the manner provided herein for the payment of princip
and interest due with respect to the Certdkates to Owners, and will otherwise treat the Insurer as tl owner of such rights to the amount of such principal and interest.
Section 1004. Trustee-Related Provisions.
(a) The Trustee or Paying Agent, if any, may be removed at any time, at the
request of Insurer, for any breach of th~s Trust Agreement set forth herein.
(b) Insurer shall receive prior written notice of any Trustee or Paying Agent
resignation.
(c) Every successor Trustee appointed pursuant to th~s Trust Agreement shall
satisfl the requirements of Section 608(b) and shall be approved, in writing, by the Insurer. Any
successor Paying Agent, if applicable, shall not be appointed unless Insurer approves such succes:
writing.
(d) Notwithstandmg any other provision of hs Trust Agreement, in determini
whether the rights of the Certdicate owners will be adversely af€ected by any action taken pursuan
the terms and provisions of this Trust Agreement, the Trustee shall consider the effect on the
Certificate Owners as if there were no Municipal Bond Insurance Policy.
(e) Notwithstanding any other provision of hs Trust Agreement, no removal,
resignation or termination of the Trustee or Paying Agent, if any, shall take effect until a successoi
acceptable to Insurer, shall be appointed.
505305.3KyeagerY22062.0023 -49-
f L* 0 e
Section 1005. Parties Interested Herein. Nothing in this Trust Agreement expressed (
implied is intended or shall be construed to confer upon, or to give to, any person or entity, othc
than the City, the Trustee, Insurer, the Paying Agent, if any, and the registered owners of the
Certificates, any right, remedy or claim under or by reason of this Trust Agreement or any
covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreeme
in this Trust Agreement contained by and on behalf of the City shall be for the sole and exclusib
benefit of the City, the Trustee, Insurer, the Paying Agent, if any, and the registered owners of
Certificates.
To the extent that thls Trust Agreement confers upon or gives or grants to Insurer any right,
remedy or claim under or by reason of th~s Trust Agreement, Insurer is hereby explicitly recogmzed
being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferrec
given or granted hereunder.
Section 1006. Termination of Insurance Provisions. The provisions of this Article X
shall apply only SO long a~ the Municipal Bond Insurance Policy remains in effect and no defauh
payment has occurred thereunder.
505305.3U<yeager\22062.0023 -50-
' I- 0 0
IN WITNESS WHEREOF, the parties have executed and attested this Trust Agreement by
their officers thereunto duly authorized as of the date and year first written above.
CITY OF CARLSBAD
By:
Its: City Manager
ATTEST:
City Clerk
ClTY OF CARLSBAD PUBLIC
IMPROVEMENT CORPORATION
By:
Its: Executive Director
ATTEST:
Secretary
FIR$T TRUST OF CALIFORNIA, NATIO5
ASSOCIATION, as Trustee
By:
Its: Authorized Officer
505305.3Kyeager\22062.0023 -51-
0 TABLE OF CONTENTS I l.I *
€
EXHIBIT A
*
FORM OF CERTIFICATE
No. -
$
REFUNDING CERTIFICATE OF PARTICIPATION
(HOSP GROVE PROJECT) SERIES A OF 1997
Evidencing a Proportionate Interest of the
Owner Hereof in Lease Payments to be Made
by the
CITY OF CARLSBAD,
as Lessee
As the Rental for a Certain Site
Pursuant to a Lease Agreement
with the City of Carlsbad Public Improvement Corporation,
as Lessor
INTEREST CERTIFICATE RATE PAYMENT DATE DATED DATE CUSP
August 1, - September - 1997
REGISTERED OWNER: Cede & Co.
PRINCIPAL COMPONENT: DOLLARS
THIS IS TO CERTIFY THAT the person or entity named above is the registered owner of
Certificate of Participation (the "Certificate"), evidencing a proportionate interest in that certain Lea
Agreement, dated as of September 1, 1997 (the "Lease Agreement"), by and between the City of
Carlsbad as Lessee (the "City") and the City of Carlsbad Public Improvement Corporation, a nonpr'
public benefit corporation, as Lessor (the "Corporation"). The Corporation's rights, title and interes
lessor under the Lease Agreement, incluchg the right to receive Lease Payments and the right to
enforce the payment thereof, have been assigned to First Trust of California, National Association,
505305.3KyeageA22062.OG23 1
t <v = 0 0
trustee (the "Trustee") pursuant to an Assignment Agreement, dated as of September 1, 1997 (the
"Assignment Agreement"), between the Corporation and the Trustee.
The registered owner of th_s Cemficate is entitled to receive, subject to the terms of the Lea
Agreement and the Trust Agreement, dated as of Septem0er 1, 1997 (the "Trust Agreement"), by a
among the City, the Corporation and the Trustee, on the Certificate Payment Date specified above,
unless redeemed prior thereto as provided herein, the Principal Component specified above,
representing a pofion of the Lease Payments designated as principal coming due on the Certificate
Payment Date, and to receive on February 1, 1998 and on each February 1 and August 1 thereafter
(each, an "Interest Payment Date"), to and includmg the Certificate Payment Date or the date of
redemption, whichever is earlier, the registered owner's proportionate share of the Lease Payments
designated as interest coming due on such Interest Payment Dates. Said proportionate share of the
Lease Payments designated as interest is the product of the aforesaid portion of Lease Payments
designated as principal multiplied by the Interest Rate set forth above and divided into semiannual
payments (the "Interest Components"). Such proportionate share of the portion of the Lease Paymt
designated as interest shall be computed on the basis of a 360-day year composed of 12 months of
days each.
Interest with respect to ths Certificate shall be payable from the Interest Payment Date nex
preceding the date of execution hereof, unless hs Certficate is executed after the fifteenth day of 1
month immediately precedmg an Interest Payment Date and on or before the next Interest Payment
date in which event interest shall be payable fiom such Interest Payment Date, or unless this Certifi
is executed prior to the close of business on January 15, 1998, in which event interest with respect
hereto shall be payable from the Dated Date of th~s Certificate; provided, however, that, if at the tin
of registration of ths Certificate interest with respect hereto is in default, interest with respect heret
shall be payable from the Interest Payment Date to which interest has previously been paid or mad(
available for payment or from the Dated Date of this Certificate if no interest has been paid or mad1
available for payment.
Amounts due hereunder in respect of principal and premium, if any, are payable in lawfid
money of the United States of America upon the surrender hereof at maturity or the earlier redemp
hereof at the corporate trust office of First Trust of California, National Association, the Trustee, in
City of Los Angeles, California (or any successors thereto), or any paying agent appointed by the
Trustee. Amounts representing interest are payable by check mailed by first class mail, postage
prepaid, on the Interest Payment Date to the owner of this Certificate at such owner's address as it
Payment Date, or in the case of an Owner of $1,000,000 or more of Principal Components by wire
transfer to an account within the United States upon compliance with the requirements set forth in
Trust Agreement. Payments of defaulted interest, if any, with respect to this Certificate shall be pa
by check to the registered owner of this Certdicate as of a special record date to be fixed by the
Trustee, notice of which special record date shall be given to the owner of ths Certificate not less t
ten days prior thereto.
appears on the Certificate register as of the fifteenth day of the month next precedmg the Interest
All amounts payable by the Trustee with respect to hs Certificate shall be paid only from
Lease Payments received by the Trustee from the City and amounts from time to time deposited in
accounts designated therefor under the Trust Agreement, includmg certain investments and invesb
earnings thereon, and only to the extent that the Trustee shall have actually received sufficient inco
or proceeds from such sources to make such payments. The payment of the principal of, premium
505305.3U<yeagerY22062.0023 Exhibit A-2
1 &> * e 0
any, and interest due with respect to the Certificates is not a liability or charge upon the credit of thc
Trustee, and the Trustee has no obligation to make such payments, other than the Trustee’s obligati
to make such payments from the sources described above, to the extent the source is actually receii
This Certificate has been executed by the Trustee pursuant to the Trust Agreement. Copie
the Trust Agreement, the Assignment Agreement and the Lease Agreement are on file at the office
the City and at the corporate trust office of the Trustee in the City of Los Angeles, California, and
reference to the Trust Agreement, the Assignment Agreement and the Lease Agreement and any a~
all supplements or amendments thereto is made for a description of the hds and accounts establis
under the Trust Agreement for the purpose of securing the Certificates, the agreements and covena
of the City in the Lease Agreement with respect to the Site, as defined in the Lease Agreement, an(
Lease Payments to be made by the City, the nature, extent and manner of enforcement of such
agreements and covenants, the rights and remedies of the Owners of the Certificates with respect
thereto, and the other terms and conditions upon which the Certificates are delivered thereunder.
-
To the extent and in the manner permitted by the terms of the Trust Agreement, the provisi
of the Trust Agreement, the Lease Agreement, the Site Lease and the Assignment Agreement may
amended by the parties thereto, in some cases without the consent of Owners of the Certificates. P
such amendment shall permit a change in the terms of redemption or maturity of the principal of ar
outstandmg Certificate or of the right of any Owner to receive his proportionate share of any Lease
Payment in accordance with his Cemficate without the consent of such Owner.
This Certificate shall be transferable only upon the books of the Trustee, hch shall be kel
that purpose at the corporate trust office of the Trustee, in the City of Los Angeles, California, up01
surrender hereof together with a written instrument of transfer satisfactory to the Trustee duly exec
by the registered owner or his duly authorized attorney. Upon the transfer of ths Certificate, the
Trustee shall deliver in the name of the transferee a new Certificate or Certificates, of the same
aggregate Principal Component and maturity as the surrendered Certificate. The Trustee may deei
and treat the person in whose name this Certificate is registered as the absolute owner hereof for al
purposes, and the Trustee shall not be affected by any notice to the contrary.
The Certificates shall be delivered in registered form in the denomination of $5,000 or any
integral multiple of $5,000. This Cemficate, upon surrender hereof at the corporate trust office of
Trustee in the City of Los Angeles, California with a written instrument of transfer satisfactory to t
Trustee, duly executed by the registered owner hereof or his duly authorized attorney, may, at the
option of the registered owner and upon payment by the registered owner of any charges which the
Trustee may make as provided in the Trust Agreement, be exchanged for an equal aggregate PMc
Component of registered Certificates of the same Cemficate Payment Date and any authorized
denominations.
The Certificates are subject to extraorhary redemption on a pro rata basis among maturit
and by lot wihn a maturity, in whole or in part, on any date, without premium, in an amount equa
Components to the date fixed for redemption upon the occurrence of any of the following events: I
election by the City to apply the net proceeds of any insurance claim or condemnation award to the
prepayment of all or a portion of the Lease Payments when all or a portion of the Site is destroyed
damaged by fire or other casualty, or title to, or the temporary use of all or a portion of the Site, sh;
the Principal Component thereof, together with accrued interest due with respect to such Principal
505305.3Kyeager\22062.0023 Exhibit A-3
, I,, - 0 e
taken under the exercise of the power of eminent domain, or a title defect relatmg to the Site impair!
the City's use of the Site.
The Certificatesare not subject to optional redemption prior to maturity.
If less than all of the Certificates shall be called for redemption from the net proceeds of an) insurance or condemnation award, the particular Cerhficates or portrons of Cehficates to be redeer
shall be selected by the Trustee pro rata as approved in writing by an Authorized Representative of
City among various maturities such that the Lease Payments to become due in each remaining year
the Lease Term shall be as nearly as practicable equal to the Lease Payments to become due in ever
other year and by lot wih a maturity. If less than all of the Certificates shall be called for optional
redemption, the particular Certificates or portions thereof to be redeemed shall be selected by the
Trustee by lot from one or more maturities as specified, in writing, by an Authorized Representativt
the City. The portion of any Certificate of a denomination of more than $5,000 to be redeemed shal
in a Principal Component of $5,000 or an integral multiple thereof, and, in selecting portions of sucl
Cerbficates for redemption, the Trustee shall treat each such Certificate as representing that numbei
Certificates of $5,000 denomination whch is obtained by dividing the Principal Component of such
Certificate to be redeemed in part by $5,000.
Notice of redemption shall be given by mailing copies thereof to the Owners of any Certific:
or portion of Certificate to be redeemed, postage prepaid, not less than 30 days nor more than 45 dq
prior to said Redemption Date at their last addresses, appearing on the registration books of the
Trustee. Neither a failure of a Certificate Owner to receive such notice nor any defect in any notice
given shall affect the validity of the proceedings for the redemption of Certificates.
Ifthls Certificate is called for redemption and the Principal Component of this Certificate pli
premium (if any) and Interest Components due with respect hereto are duly provided therefor as
specified in the Trust Agreement, then interest shall cease to accrue with respect hereto from and &
the date fixed for redemption.
The City's obligation to make Lease Payments does not constitute a debt or liability of the CJ
or the State of California or any political subdivision thereof wih the meaning of any constitutional statutory limitation and neither the faith and credit nor taxing power of the City or the State of
California or any political subdivision thereof is pledged to make such payments. The City's obligati
to pay Lease Payments is abated under certain circumstances described in the Lease Agreement dur
any period in *ch there is substantial interference with the use and right of possession by the City (
the Site and funds are not otherwise avdable to the Trustee under the Trust Agreement to make SUC
Lease Payments. Failure of the City to pay Lease Payments during any such period shall not constib
a default under the Lease Agreement, the Assignment Agreement, the Trust Agreement or this
Certificate. To the extent that the Trustee lacks sufficient funds to pay the Interest Components or
Principal Components due with respect to the Certificates as a result of an abatement in Lease
Payments, each Certificate owner will be paid a pro rata portion of any Interest Components and
Principal Components due with respect to a Certificate.
The Trustee has no obligation or liabihty to the Owners of the Certificates with respect to the
payment of Lease Payments by the City. The Trustee is not responsible for the accuracy of the recia
of fact herein.
505305.3KyeagerW062.ooU Exhibit A4
0 0
+ ‘$i
This Certificate shall not be entitled to any benefit under the Trust Agreement or become v: for any purpose until it has been duly manually executed and delivered by the Trustee.
IN WITNESS WHEREOF, hs Cerhficate has been executed by the manual signature of a
Authorized Signatory of the Trustee, all as of the date specified below.
Dated: FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION, as Trustee
BY Authorized Signatory
505305.3KyeageA22062.0023 Exhibit A-5
e * ‘‘3.
(Form of Assignment)
r ASSIGNMENT
For value received the undersigned do(es) hereby sell, ~SE
and transfer unto
Participation, and hereby irrevocably constitute(s) and appoint(s)
transfer the same on the books of the Trustee with full power of substitution in the premises.
the Within mentioned registered Certificate of
attorney, to
Dated:
Note: The signature(s) of hs Assignment must
correspond with the name(s) as written on 4
face of the within registered Certificate in
enlargement or any change whatsoever.
every parhcular without alteration or
Tax1.D. #:
Signature Guaranteed:
Note: Signature must be guaranteed by an eligble guarantor institution.
STATEMENT OF INSURANCE
505305.3KyeagerQ2062.0023 Exhibit A-6
v c 0 )r=
I -- 1
RECORDING REQUESTED BY 1 AND WHEN RECORDED MAIL TO: ) 1 STRADLING, YOCCA, CARLSON & RAUTH )
660 Newport Center Drive ) Suite 1600 1 Newport Beach, California 92660 1 Attn: E. Kurt Yeager, Esq. 1
[Space above for recorder.] This document is recorded for the benefit of tl City of Carlsbad, and the recording is fee-exe under Section 273 83 of the Government Cod(
LEASE AGREEMENT
between
CITY OF CARLSBAD, as Lessee
and
CI'IY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION,
as Lessor
Dated as of September 1, 1997
Relating to
Refunding Certificates of Participation (Hosp Grove Project) Series A of 1997
!I
505306.3\KyeagerV2062.0023
L 0 e TABLE OF CONTENTS 1-
E 4-5 .
ARTICLE I
DEFINITIONS AND EXHIBIT!:
Section 1.1. Definitions and Rules of Construction ...............................................
Section 1.2. Exhibits ...................................................................................
ARTICLE I1
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1.
Section 2.2.
Representations. Covenants and Warranties of the City ..........................
Representations. Covenants and Warranties of the Corporation ................
ARTICLE I11
APPLICATION OF PROCEEDS; SUBSTITUTION OF SITE
Section 3.1.
Section 3.2.
Section 3.3.
Depolsit of Certificate Proceeds ........................................................
Substitution and Release ................................................................
Further Assurances and Corrective Instruments ....................................
ARTICLE N
AGREEMENT TO LEASE; TERM OF
LEASE; LEASE PAYMENTS
Section 4.1. Lease .......................................................................................
Section 4.2. Term .......................................................................................
Section 4.3. Extension of Lease Term ...............................................................
Lease Payments ........................................................................... Section 4.4.
Section 4.5. No Withholding ...........................................................................
Section 4.6. Fair Rental Value .........................................................................
Section 4.7. Budget and Appropriation ..............................................................
Section 4.8. Assignment of Lease Payments ........................................................
Section 4.9. Use and Possession .......................................................................
Section 4.10 . Abatement of Lease Payments and Additional Payments. ..........................
Section 4.11. Additional Payments .....................................................................
Section 4.12. Net-Net-Net Lease .......................................................................
ARTICLE V
INSURANCE
Section 5.1. Public Liability and Property Damage ................................................
Section 5.2. Worker's Compensation ................................................................
Section 5.3. Hazard Insurance .........................................................................
Section 5.4. [Reserved] .................................................................................
Section 5.5. Title Insurance ............................................................................
Section 5.6. General Insurance Provisions ..........................................................
Section 5.7. Cooperation ...............................................................................
505306.3 Kyeaged22062 . OOU
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..
ARTICLE VI
DAMAGE. DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
Section 6.1. Application of Net Proceeds ...........................................................
ARTICLE VI1
COVENANTS WITH RESPECT TO THE SITE
Section 7.1. Use of the Site ...........................................................................
Section 7.2. Leasehold Interest in the Site ..........................................................
Section 7.3. [Reserved.] ...............................................................................
Section 7.4. Quiet Enjoyment ........................................................................
Section 7.5. Installation of City's Personal Property .............................................
Section 7.6. Access to the Site .......................................................................
Section 7.7. Maintenance, Utilities, Taxes and Assessments ....................................
Section 7.8. Modification of the Site ................................................................
Section 7.9. Liens ......................................................................................
Section 7.10. Agency's Disclaimer of Warranties ..................................................
Section 7.11. City's Right to Enforce Warranties of Manufacturers, Vendors
or Contractors ...........................................................................
ARTICLE VI11
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1.
Section 8.2.
Section 8.3.
Assignment by the Corporation .......................................................
Assignment and Subleasing by the City .............................................
Amendments and Modifications ......................................................
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1.
Section 9.2.
Section 9.3.
Section 9.4.
Section 9.5.
Section 9.6.
Section 9.7.
Events of Default Defined .............................................................
Remedies on Default ....................................................................
No Remedy Exclusive ..................................................................
Agreement to Pay Attorneys Fees atid Expenses ................................... No Additional Waiver Implied by One Waiver ................................... ,.
Application of the Proceeds Following Default ....................................
Trustee and Certificate Owners to Exercise Rights ................................
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
Section 10.1. Security Deposit .........................................................................
Section 10.3. Optional Prepayment ................................................................... Section 10.2. Extraordinary Prepayment From Net Proceeds ....................................
505306.3U(yeager\22062.W
b 0 0 ,-
Section 10.4.
Section 10.5.
Credit for Amounts on Deposit. ......................................................
Effect of Prepayment. ..................................................................
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices. ..................................................................................
Section 11.2. Binding Effect. .........................................................................
Section 11.4. Execution in Counterparts. ...........................................................
Section 11.5. Applicable Law. .........................................................................
Section 11.3. Severability.. ............................................................................
Section 11.6. Captions. .................................................................................
EXHIBIT A-1 DESCRIPTION OF THE SITE
EXHIBIT A-2 DESCRIPTION OF THE PROJECT
EXHIBIT B
EXHlBIT C LEASE SUPPLEMENT
EXHIBIT 1
EXHIBIT 2
SCHEDULE OF LEASE PAYMENTS
DESCRIPTION OF SUBSTITUTED PROPERTY
AMENDED SCHEDULE OF LEASE PAYMENTS
505306.3KyeagerU2062 .OM3
L 0 w
>
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), dated as of September 1, 1997, is entered into
corporate and politic duly organized and existing under the laws of the State of California, as lessor
(the "Corporation"), and the CIR OF CARLSBAD, a political subdivision of the State of Califom duly organized and existing under and by virtue of the Constitution and laws of the State of Califorr
as lessee (the "City"), and amends and restates in its entirety;
and between the CITY OF CARLSBAD PUBLIC WRWEMENT CORPORATION, a public t
WITNESSETH:
WHEREAS, pursuant to the Government Code of the State of California, the City may ente into leases and agreements relating to real property and equipment to be used by the City;
WHEREAS, the City and the Corporation entered into that certain Facilities Lease dated as June 1, 1988 between the Corporation, as lessor, and the City, as lessee, and recorded in the officia records of the County of San Diego as Document No. 88-308589 on June 28, 1988 (the "Original Lease") to provide for the repayment of certain notes issued to finance the acquisition of an approximately - acre eucalyptus grove to be held for general municipal purposes currently zonec open space known as Hosp Grove and iden~ed below as the Site, and certain related capital improvements described in the Original Lease, as more fully described herein (the "Project"); and
Certificates of Participation (Hosp Grove Project) (the "Prior Certificates") executed and delivered connection with the Original Lease; and
WHEREAS, the City Council (the "Council") has determined that it is in the best interests ( the City and for the common benefit of the citizens residmg in the City to refinance the Site and the Project by refundmg the Prior Cerhficates and securing the remaining lease payments due under thf original Lease pursuant to Section 10.1 thereof; and
WHEREAS, the Corporation and City desire to enter into this Lease in order to permit the
execution and delivery of certificates of participation, described below, evidencing proportionate interests in certain rights of the Corporation under this Lease, includmg the right to receive lease payments to be made by the City hereunder, the proceeds of which will be applied to refund the Pri Certificates pursuant to an escrow agreement of even date herewith; and
WHEREAS, the City has entered into a Site Lease of even date herewith (the "Site Lease") with the Corporation under which the Corporation has agreed to lease from the City the real proper
and improvements described in Ehbit A hereto (the "Site"); and
WHEREAS, in consideration of the lease payments to be paid by the City to the Corporatic: hereunder, the Corporation will lease the Site to the City pursuant to Section 4.1 hereof; and
WHEREAS, the Corporation is authorized to lease the Site as lessee and has duly authoriz the execution and delivery of the Site Lease;
NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as foll
WHEREAS, the Project and the Site were financed with the proceeds of the $8,690,000
ARTICLE I
DEFINITIONS AND EXHIBITS
505306.3U(yeagerL?2062.0023 1
L 0 W
Section 1.1. Definitions and Rules of Construction. Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of hs Lease, have the meanings specified in the Trust Agreement; and the additional terms defined in this Section shall, for all purpc
of this Lease, have the meanings herein specified. Unless the context otherwise indicates, words imporhng the singular nhber shall include the plural number and vice versa. The terms "hereby," "hereof" "hereto," "herein," "hereunder" and any similar terms, as used in hs Lease, refer to hs Lc as a whole.
Refundmg Certificates of Participation (Hosp Grove Project) Series A of 1997, executed and delivered by the Trustee pursuant to the Trust Agreement.
"Component" means any portion of the Site designated in Exhibit A hereto as a Component, such Exhibit A may be amended from time to time in accordance herewith.
"Hazardous Substances" means any substance, waste, pollutants, or contaminants now or
"Certificates" means the $
hereafter included in such (or any similar) term under any federal, state or local code, statute, regulation or ordinance now in effect or hereafter enacted or amended.
"Independent Counsel'' means an attorney duly ahtted to the practice of law before the highest court of the State and who is not an employee or officer of the Corporation or the City.
"Lease" means this Lease Agreement, by and between the City and the corporation, as
"Lease SuDDlernent" means one or more amendments to thls Lease executed substantially in
amended and supplemented from time to time.
the form attached as Exhibit C hereto.
"Permitted Encumbrances" means as of any particular time: (1) liens for general ad valoren taxes and assessments, if any, not then delinquent, or which the City may, pursuant to Section 7.7 hereof, permit to remain unpaid; (2) the Assignment Agreement, as it may be amended from time to time; (3) this Lease, as it may be amended from time to time; (4) the Site Lease, as it may be ament from time to time; (5) any right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law after the Delivery Date for the Certificates which
being contested by the City in accordance with Section 7.8(b) hereof; (6) easements, rights of way, mineral rights, dnlling rights and other rights, reservations, covenants, conditions or restrictions whi exist of record as of the Delivery Date for the Cerhficates and hch the City certifies in writing on 1 Delivery Date for the Certificates will not materially impair the use of the Site; and (7) easements, rights of way, mineral rights, dnlling rights and other rights, reservations, covenants, conditions or
substituted for the Site, to which the Corporation, the Insurer and the City consent in writmg and wh the City certifies will not materially impair the use of the Site or real property substituted for the Site as the case may be.
"Project" means the real property improvements acquired or constructed or financed with tht proceeds of the Prior Certificates, all as more particularly described in Exhibit A-2 hereto.
'Site'' means the real property, inclucimg all improvements thereon, described from time to .h in Exhibit- 1 hereto, as such Exhibit A-1 may be amended and supplemented from time to time in accordance with the provisions of this Lease and the Project.
lessor, and the Corporation, as lessee, as amended and supplemented from time to time, and any dul
authorized and executed amendments thereto.
restrictions established following the Delivery Date for the CeMcates, or existmg on any real propc
"Site Lease" means the Site Lease, dated as of the date hereof, by and between the City, as
505306.3u<yenger\22062.0023 2
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v
"Termt' means the term of this Lease as established by Section 4.2 hereof,
"Trust Agreement" means the Trust Agreement, dated as of the date hereof, by and among First Trust of California, National Association, as trustee, the City and the Corporation, as amended and supplemented from time to time,
of, this Lease:
Section 1.2. Ehhibits. The following Ehbits are attached to, and by reference made a
Ehbit Ai: Exhlbit BI: Description of the Site.
Schedule of Lease Payments.
E&bk C: Lease Supplement.
ARTICLE I1
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City. The City
Due Organization and Existence. The City is a political subdivision of the
represents, covenants and warrants to the Corporation as follows:
State, duly organized and existing under and by virtue of the Constitution and laws of the State, wid the power and authority to own, lease and acquire real and personal property and equipment.
Authorization; Enforceabiliq. The Constitution and laws of the State autho the City to enter into thls Lease, the Site Lease, the Escrow Agreement and the Trust Agreement an enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements, and the City has duly authorized and executed dl of the doresaid agreements. This Lease, the Site Lease, the Escrow Agreement and the Trust Agreement constitute the legal, valid an binding obligations of the City, enforceable in accordance with their respective terms, except to the
extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally.
No Confhcts or Default; No Liens or Encumbrances. Neither the execution and delivery of this Lease, the Site Lease, the Escrow Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now i party or by hch the City is bound, or constitutes a default under any of the foregoing, or results in creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City or upon the Site, except for Permitted Encumbrances and the pledges contained ir Trust Agreement.
Execution and Deliveq. The City has duly authorized and executed this Le
the Site Lease, the Escrow Agreement and the Trust Agreement in accordance with the Constitutioi and laws of the State.
hdedcation of the Corporation and the Trustee. To the extent permittec
law, the City covenants to defend, indemmfy and hold harmless the Corporation, the Trustee and th( respective assigns, board members, hectors, officers and employees (collectively, the "Indemnifiec Party") against any and all losses, claims, damages or liabilities, joint or several, including fees and expenses incurred in connection therewith, to which such Indemnified Party may become subject UI
(a)
(b)
(c)
(d)
(e)
505306.3Kyeager\22062.00U 3
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L
any statute or at law or in equity or otherwise in connection with the transactions contemplated by tl
Lease, and shall reimburse any such Indemnified Patty for any legal or other expenses incurred by i
claims, damages, liabilities or actions arise out of the transactions contemplated by this Lease or the
Site Lease. In particulaf, Without limitation, to the extent permitted by law, the City shall and hereb agrees to indemnifl and save the Indemnified Party harmless from and against all claims, losses anc damages, including legal fees and expenses, arising out of (i) the use, maintenance, condtion or
management of, or from any work or thmg done on, the Site or the Project by the City including, without limitation, as a result of the use, storage, presence, disposal or release of any Hazardous Substances on or about the Site, (ii) any breach or default on the part of the City in the performance any of its obligations under th~s Lease, (iii) any act of negligence of the City or of any of its agents, contractors, servants, emjployees or licensees with respect to the Site or the Project, or (iv) any act o negligence of any assignee or sublessee of the City with respect to the Site or the Project. No
indemnification is made under th~s Section or elsewhere in hs Lease to the Corporation for claims, losses or damages, inclucling legal fees and expenses arising out of the willful misconduct, negligen or breach of duty under this Lease by the Corporation, its officers, board members, agents, employe successors or assigns.
notwithstandmg any other provision of hs Lease, it will make no use of the proceeds of the
Certificates or of any other amounts, regardless of the source, or of any property or take any action,
refrain from taking any action that may cause the obligations of the City under this Lease to be
"arbitrage bonds" with the meaning of Section 148 of the Code, or under applicable Treasury Regulations promulgated thereunder or to cause the Interest Component of the Lease Payments to become subject to State of California personal income taxation.
In addition, the City covenants that it will not make any use of the proceeds of the obligatio1 provided herein or in the Trust Agreement or of any other funds of the City, or take or omit to take i other action that would cause the obligations of the City under th~s Lease to be "private activity bonl withm the meaning of Section 141 of the Code, or "federally guaranteed" withm the meaning of Sec 149(b) of the Code. To that end, so long as necessary to maintain the exclusion from gross income federal income tax purposes of the Interest Component of the Lease Payments, the City will complj with all requirements of such Sections and all regulations thereunder and under Section 103 of the Code, to the extent that such requirements are, at the time, applicable and in effect.
segregation of any person or group of persons, on account of race, color, creed, religion, sex, marits status, national origin or ancesw in the leasing, subleasing, transferring, use, occupancy, tenor or enjoyment of the premises herein leased nor shall the City, or any person claiming under or through City, establish or permit any such practice or practices of discrimination or segregation with referen to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased.
Corporation represents, covenants and warrants to the City as follows:
connection with investigattng any clams against it and defendmg any actions, insofar as such losses
.
(f) General Tax and Arbitrage Covenant. The City hereby covenants that,
(g) Nondiscrimination Clause. There shall be no discrimination against or
Section 2.2. Representations, Covenants and Warranties of the Corporation. The.
(a) Due Organization and Existence: Enforceability. The Corporation is a nonprofit public benefit corporation duly organized, existing and in good standing under and by virt of the laws of the State, has the power to enter into this Lease, the Site Lease, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold real and personal property, and to lease and sell the same; and has duly authorized the execution and delivery of thls Lease, the Site Lease, the Assignment Agreement and the Trust Agreement. This Lease, the Site Lease, the Assignment Agreement and the Trust Agreement constitute the legal, valid and binding obligations of the Corporation, enforceable in accordance with their respective terms, except to the
505306.3Kyeageri22062.0023 4
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extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally.
(b) No Encumbrances. The Corporation will not pledge or encumber the Lease Payments or Addltional Payments or other amounts derived from the Site or from its other rights unc
this Lease or the Site Lease, except for Permitted Encumbrances and except as provided under the
terms of thls Lease, the Site Lease, the Assignment Agreement and the Trust Agreement.
No Conflicts or Defaults; No Liens or Encumbrances. Neither the executior and delj~ery of th~s LeGe, the $ite Lease, the Assignment Agreement or the Trust Agreement, nor tl
fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation ( the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms,
conditions or provisions of the formation documents of the Corporation or any restriction or any
agreement or instrument to which the Corporation is now a party or by which the Corporation is boL or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien charge or encumbrance whatsoever upon any of the property or assets of the Corporation or upon th Site, except for Permitted Encumbrances and except by the pledges contained in the Trust Agreeme
(d) Execution and Deliverv. The Corporation has duly authorized and executec this Lease, the Site Lease, the Assignment Agreement and the Trust Agreement in accordance with Constitution and laws of the State.
(e)
(c)
General Tax and Arbitrage Covenant. The Corporation covenants that, notwithstanding any other provision of thls Lease, it will make no use of the proceeds of the Certificates or of any other amounts or property, regardless of the source, or take any action or refra from talung any action that may cause the obligations of the City under th~s Lease to be "arbitrage bonds'' subject to federal income taxation by reason of Section 148 of the Code or to cause the Intel Component of the Lease Payments to become subject to State of California personal income taxatio
In addition, the Corporation covenants that it will not make any use of the proceeds of the obligations provided herein or in the Trust Agreement or of any other funds of the City or take or or to take any other action that would cause such obligations to be "private activity bonds" within the meaning of Section 141 of the Code, or "federally guaranteed'' wih the meaning of Section 149(b the Code. To that end, so long as necessary to maintain the exclusion from gross income for federa income tax purposes of the Interest Component of the Lease Payments, the Corporation will compl: with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent that such requiremeni? are, at the time, applicable and in effect.
Maintenance of Existence. To the extent permitted by law, the Corporatior agrees that during the term hereof it will maintain its existence as a nonprofit public benefit corporation, will not dissolve or otherwise dispose of all or substantially all of its assets, if any, will become a general or limited partner in any partnership or a joint venture in any joint venture and wi not combine or consolidate with or merge into any other entity or permit one or more other entities consolidate with or merge into it, unless such action will not cause a merger of the City's leasehold interest in the Site and the successor thereto is a public agency which expressly agrees to assume a rights and responsibilities of the Corporation under the Site Lease, the Assignment Agreement, the Trust Agreement and thk Lease.
(f)
505306.3U(yeager\22062.0023 5
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ARTICLE I11
APPLICATION OF PROCEEDS; SUBSTITUTION OF SITE
Section 3.1. Deposit of Certificate Proceeds. On the Delivery Date for the Corporati agrees that all proceeds of the Certificates shall be paid to the Trustee and that such moneys shall '
deposited with the Trustee and be applied as provided in Section 401 of the Trust Agreement.
Substitution and Release. The City shall have the right from time to timt add other real property and improvements (subject only to Permitted Encumbrances) or to substitu other real property or improvements (subject only to Permitted Encumbrances) for all or a portion the Site or to release a portion of the real property and improvements constituting the Site, if it hs
provided the Trustee with a written Lease Supplement and has obtained and provided to the Trust(
each of the following:
Written consent of each municipal bond insurance company that has insure
Section 3.2.
(a) the Cefificates and compliance with any conditions of such consent, if any;
(b)
(c)
A copy of the written notice sent to each Rating Agency that has rated the
A certificate from an independent and qual&ed MAI real estate appraiser
Certificates describing the proposed addition, substitution or release;
selected by the City setting forth his or her findings that the Site as constituted following such addi substitution or release (i) has an annual fair rental value during the remainder of the Term which is equal to or greater than the total annual Lease Payments and Additional Payments (assuming that t annual Additional Payments due in the future will equal the average annual Additional Payments p to such addition, substitution or release) required to be paid hereunder during any year of the rema of the Term, and (ii) has a useful life at least equal to the remaining Term hereof;
Certificates of insurance applicable to the Site (at and after the addition, substitution or release) hch comply with the requirements of Sections 5.1,5.3 and 5.5 hereof;
An opinion of Bond Counsel to the effect that such addition, substitution or release will not adversely affect the exclusion from gross income for federal income tax purposes a
and that this Lease and the Site Lease, as amended, remain valid and binding obligations of the CiQ
and
A certdicate of an Authorized Representative of the City that the essentialit- the remaining or substituted real property to City operations is at least comparable to that of the real property and improvements being released.
In connection with a substitution or release, all interests of the Corporation, and its assignee
the portion of the Site released shall terminate and the Corporation and its assignee shall execute an record with the County Recorder of the County of San Diego all documents deemed necessary by tl City to evidence such termination of interest. Upon receipt of the items described in subparagraphs (b), (c), (d), (e) and (f) above, the Trustee also shall execute a Lease Supplement and, ifnecessary, Supplemental Trust Agreement, and shall not impose on the City any further conditions or prerequi
to the requested addition, substitution or release. The City shall cause the Lease Supplement to be recorded in the real property records of the County of San Diego.
(d)
(e)
the exemption from State personal income taxation of the Interest Component of the Lease Paymen
(f)
All costs and expenses incurred in connection with such addition, substitution or release sha be borne by the City. No addition, substitution or release under thls Section 3.2 shaii be, by itself, tl
basis for my reduction in or abatement of the Lease Payments due from the City hereunder.
505306.3u(yeager\uO62.OU23 6
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In addition to the foregoing, any Component for whch all Lease Payments shall have beel in full shall automatically be released from the terms of thls Lease, and title to such Component SI immediately vest in the City.
Section 3.3. Further Assurances and Corrective Instruments. The Corporation an City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be exel acknowledged and delivered, such supplements hereto and such further instruments as may reaso be required for correcting any inadequate or incorrect description of the Site hereby leased or inte so to be or for canylng out the expressed intention of this Lease.
ARTICLE IV
AGREEMENT TO LEASE; TERM OF
LEASE; LEASE PAYMENTS
Section 4.1. Lease. The Corporation hereby subleases the Site to the City and the CitJ hereby subleases the Site from the Corporation upon the terms and conditions set forth herein.
The subleasing by the Corporation to the City ofthe Site described in Exhibit A hereto shi effect or result in a merger of the City's leasehold estate pursuant to thls Lease and its interest as 1 of the Site under the Site Lease, and the Corporation shall continue to have and hold a leasehold e in said Site pursuant to the Site Lease throughout the term of the Site Lease and the Term of thls 1
As to the Site, thls Lease shall be deemed and constitute a sublease.
Section 4.2. Term. The Term of thls Lease shall commence on the Delivery Date for Certificates and shall end on August 1,2008, unless extended pursuant to Section 4.3 hereof, or u terminated prior thereto upon the earliest of any of the following events:
Payments required under Section 4.4 hereof and any Additional Payments required under Section
hereof; or
PreDavment. The optional prepayment of all Lease Payments in accordanc with Section 10.3 hereof and the payment of all Additional Payments due through such prepaymer date.
Extension of Lease Term. If on the final maturity date of the Certificate: Interest Components and Principal Components represented thereby shall not be llly paid by the or if the Lease Payments or Additional Payments hereunder shall have been abated at any time as permitted by the terms hereof, then the Term shall be extended until all Certificates shall be fully I except that the Term shall in no event be extended beyond August 1,2018.
(a) Pavment of All Lease Pavments. The payment by the City of all Lease
(b)
Section 4.3.
Section 4.4. Lease Payments.
(a) Time and Amount. Subject to the provisions of Section 4.10 (regardmg abatement in event of loss of use of any portion of the Site) and Article 10 hereof (regarding prepayment of Lease Payments), the City agrees to pay to the Corporation, its successors and assij
as annual rental for the use and possession of the Site, the Lease Payments (denominated into Intel Components and Principal Components). The Lease Payments are intended to be sufficient in bot time and amount to pay when due the Principal Components and Interest Components represented the Certificates, and are due and payable in arrears and in immediately available funds fifteen days
505306.3 u(yeagerY22062.0023 7
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prior to each February 1 and August 1, commencing February 1, 1998 (the "Lease Payment Date set forth in Exhibit B hereto. The payment due fifteen days prior to each February 1 shall be renta
the period from the prior August 1 to the next January 3 1 and the payment due fifteen days prior 1 each August 1 shall be rental for the period from the prior February 1 to the next July 3 1.
of the Certificate Fund on the date any Lease Payment is made by the City (other than amounts
Certificates that have matured or been called for redemption and have not been presented for pay
or amounts which have been paid with respect to a prior Lease Payment Date but not yet distribut Owners) shall be credited towards the Lease Payment then due and payable. No payment need bt
made by the City on any Lease Payment Date if the amounts then held in the Lease Payment Fun( the Interest Account of the Certificate Fund (other than those amounts excluded under the prior sentence and amounts transferred from the Reserve Account which cause the balance therein to bl than the Reserve Requirement) are at least equal to the Lease Payment then required to be paid.
Rate on Overdue Payments. In the event the City should fail to make any Lease Payments required by thts Section 4.4, or any portion of any such Lease Payment, the Leas Payment or portion thereof in default shall continue as an obligation of the City until the amount ir default shall have been fully paid, and the City agrees to pay the same with interest thereon, to the extent permitted by law, from the date such amount was originally payable at the rate equal to the original interest rate payable with respect to each Certificate, represented by such delinquent Leas Payment.
No Withholding. Notwithstandmg any dispute between the Corporation the City, other than a dispute arising under Section 4.10 hereof as a result of which the City has concluded that it may not legally pay the Lease Payments in dispute, the City shall make all Lease Payments when due and shall not withhold any Lease Payments pending the mal resohtion of su(
dispute.
(b) Credits. Any amount held in the Lease Payment Fund or the Interest Acc
required for payment of past due Principal Components or Interest Components with respect to a
(c)
Section 4.5.
Section 4.6. Fair Rental Value. The Lease Payments and the Additional Payments (a defined in Section 4.11 hereof) shall be paid by the City in consideration of the right of possession and the continued quiet use and enjoyment of, the Site during each such period for which said renl to be paid. The parties hereto have agreed and determined that such total rental to be paid hereunc does not exceed the fair rental value of the Site during the Term of this Lease. In making such determination, consideration has been given to the fair rental value of the Site (including but not lir to costs of maintenance, taxes and insurance), the uses and purposes which may be served by the !
[includmg the current general municipal purpose] and the public benefits therefrom which will acc to the City and the general public.
Budget and Appropriation. The City covenants to take such action as n be necessary to include all Lease Payments and Additional Payments due hereunder in each of its proposed annual budgets and its final adopted annual budgets beginning with Fiscal Year 1997-98 through the Term of hs Lease and to make the necessary appropriations for such Lease PaymenQ Additional Payments. In the event in any Fiscal Year Lease Payment are not included in the adopt final budget, the City shall furrush to the Trustee wih 15 days following adoption of the final buc in such Fiscal Year a written notice stating that the Lease Payments were not included in the final budget as adopted.
To the extent that the amount of such payment becomes known after the adoption of the an budget, such amounts shall be included and maintained in such budget as amended. The City covenants to take such action as is necessary to include such amounts in a supplemental budget of City. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be ministerial duties imposed by law and it shall be the ministerial duty of each and eT
Section 4.7.
505306.3Kyeager\22062.ooU 8
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public official of the City to take such action and do such hgs as are required by law m the performance of the official duty of such officials to enable the City to cany out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City.
The obligation of the City to pay Lease Payments and Additional Payments hereunder shs constitute a current expense of the City and shall not in any way be construed to be a debt of the ( or the State, or any political subdivision thereof, m contravention of any applicable constitutional ( statutoly limitation or requirements concerning the creation of indebtedness by the City, the State any political subdivision thereof, nor shall anythmg contained herein constitute a pledge of genera revenues, funds or moneys of the City or an obligation of the City for which the City is obligated 1 or pledge any form of taxation or for which the City has levied or pledged any form of taxation.
Section 4.8. Assignment of Lease Payments. Certain of the Corporation's rights unc
&Is Lease, includmg the right to receive and enforce payment of the Lease Payments to be made 1 City hereunder, have been assigned to the Trustee, subject to certain exceptions, pursuant to the Assignment Agreement, to which assignment the City hereby consents. The Corporation hereby directs the City, and the City hereby agrees, to pay to the Trustee at the Trustee's corporate trust c or to the Trustee at such other place as the Trustee shall direct in writing, all Lease Payments or
Prepayments thereof payable by the City hereunder. The Corporation will not assign or pledge th Lease Payments or other amounts derived from the Site or from its other rights under &Is Lease e
as provided under the terms of thls Lease, or its duties and obligations except as provided under t Assignment Agreement and the Trust Agreement.
Section 4.9. Use and Possession. The total Lease Payments and Additional Paymenfi in any Fiscal Year shall be for the use and possession of the Site for such Fiscal Year. During the
Term of th~s Lease, the City shall be entitled to the exclusive use and possession of the Site, subje only to the Permitted Encumbrances.
Section 4.10. Abatement of Lease Payments and Additional Payments. Except to t extent that proceeds of the type described in the following paragraph are available, the amount of: Payments and Additional Payments shall be abated during any period in whlch there is substantial interference with the use or possession of all or a portion of the Site by the City by condemnation, damage, destruction or title defect. The amount of such abatement shall be such that the resulting Lease Payments, exclusive of the amounts described in the following paragraph, do not exceed th~ rental value (as determined by one or more independent appraisers selected by the City, who are r employees of the City) for the use and possession of the portion of the Site for which no substantir
interference has occurred. Such abatement shall continue for the period of the substantial interferc with the use or possession of the Site. Except as provided herein, in the event of any such interfer with use or possession, &Is Lease shall continue in full force and effect and the City waives any ri terminate &Is Lease by virtue of any such interference.
Notwithstanding a substantial interference with the use or possession of all or a portion of
Site, the City shall remain obligated to make Lease Payments (i) in an amount not to exceed the fi rental value during each Fiscal Year for the portion of the Site not damaged, destroyed, interfered
or taken, as determined by an independent real estate appraiser selected by the City (who is not an employee of the City); (ii) to the extent that moneys derived from any person as a result of any del, the reconstruction, replacement or repair of the Site, or any portion thereof, are available to pay the amount which would otherwise be abated; or (iii) to the extent that moneys are available in the
Certificate Fund or the Lease Payment Fund to pay the amount whlch would otherwise be abated, which event the Lease Payments shall be payable from such amounts as an obligation of the City payable from a special fund. The City shall use its best efforts to provide sufficient funds in order ensure completion of the reconstruction, repair, restoration, modification or improvement of the Si
and pendmg such reconstruction, repair, restoration, modification or improvement of the Site shall
505306.3KyeagerU2062.0023 9
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its best efforts to make all required Lease Payments which are not paid from the Reserve Accounl funds that may lawfully be applied for such purpose.
Section 4.11. Additional Payments. In addition to the Lease Payments, the City shall pay such amounts ("Additional Payments") as shall be required for the payment of all ahstrati costs of the Corporation and the City relating to the Site, the Certificates, including without limita
all expenses, assessments, compensation and indemnification of the Trustee payable by the City u the Trust Agreement, any amounts required to be rebated to the federal government in order to cc with the provisions of Section 148 of the Code, taxes of any sort whatsoever payable by the Corporation as a result of its lease of the Site or undertalung of the transactions contemplated her6 in the Trust Agreement, fees of auditors, accountants, attorneys or engmeers, insurance premium!
required by Article 5 hereof, items required by Section 7.7 hereof and all other necessary administrative costs of the Corporation and the City or charges required to be paid by it in order tc
maintain its existence or to comply with the terms of the Certificates or of the Trust Agreement, c indemnifl the Corporation and its officers and directors. All such Additional Payments to be paic hereunder shall be paid when due directly by the City to the respective parties to whom such Add Payments are owing.
Section 4.12. Net-Net-Net Lease. This Lease is and shall be deemed and construed to "net-net-net leasel' and the City hereby agrees that the Lease Payments shall be an absolute net ret the Corporation, free and clear of any expenses, taxes, fees, insurance premiums, rebate paymenfi reserve deposits, charges, counterclaims, set-offs or other costs associated with the Site or th~s Le whatsoever.
ARTICLE V
INSURANCE
Section 5.1. Public Liability and Property Damage.
Coverage. The City shall maintain or cause to be maintained, throughout Term hereof, a standard comprehensive general public liability and property damage insurance PO or policies in protection of the City and the Corporation and their respective officers, agents and
employees as additional insureds under the policy or policies. Said policy or policies shall providc indemnification of said parties against direct or contingent loss or liability for damages for bodily, personal injury, death or property damage occasioned by reason of the use or operation of the Site
Limits. Said policy or policies shall provide coverage in the minimum lid limits of $1,000,000 for personal injury or death of each person in each accident or event and
$3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in : minimum amount of $500,000 for damage to property resulting from each accident or event (subjl a deductible clause of not to exceed $250,000). Such public liabdity and property damage insurar
may, however, be in the form of a single limit policy covering all such risks in an amount equal to aggregate minimum liability limits set forth herein.
Joint or Self-Insurance. Such liability insurance may be maintained as par or in conjunction with any other liability insurance coverage carried by the City. Such liability insurance may be maintained by the City in the form of self-insurance which complies with Sectio 5.6(e) hereof.
Payment of Proceeds. The proceeds of such liability insurance shall be ap toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds have been paid.
(a)
(b)
(c)
(d)
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Section 5.2. Worker's Compensation. The City shall also maintain worker's compensation insurance issued by a responsible carrier authorized under the laws of the State to ir its employees against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force jn the State; or any act hereafter enacted as an amendment or supplement thereto, or in lieu thereof such insurance, or a part thereof, may be maintained by the City in the fc self-insurance which complies with Section 5.6(e) hereof
Section 5.3. Hazard Insurance.
(a) Coverage. The City shall maintain or cause to be maintained, throughout Term hereof, a policy or policies of insurance against loss or damage to the Site muhg from fin
lightning, vandalism, malicious mischief and such perils orbarily defined as "extended coverage'
excluding flood and earthquake; provided, however, that a flood and earthquake rider shall be purchased for the Site only if the City, in its reasonable discretion, determines that such coverage i available from reputable insurers at commercially reasonable rates. Said policy or policies shall bt maintained in an amount not less than the full replacement value of the Site, subject to a "deductib clause" not to exceed two hundred fifty thousand dollars ($250,000) for any one loss or, in the cas flood and earthquake rider, ten percent (1 0%) of the coverage obtained and shall name the Corpor and the Trustee as additional insureds under the policy or policies. The term "full replacement val
as used in ths Section 5.3 shall mean the actual replacement cost of the improvements located on Site (including the cost of restoring the surface of the Site, but excluding the cost of restoring trees plants and shrubs).
(b) Joint or Self-Insurance. Such insurance may be maintained as part of or ir conjunction with any other insurance carried by the City. The City shall not maintain such insuran the form of self-insurance.
(c) as provided in Section 6.l(a) hereof
(d)
Pavment of Net Proceeds. The Net Proceeds of such insurance shall be q
Requirements Inapplicable Under Certain Circumstances. Anything to tl
contrary in this Lease Agreement notwithstanding, so long as the Site consists wholly of the
property which comprises the Site on the Delivery Date, no insurance pursuant to this Section
shall be required.
Section 5.4. [Reserved]
Section 5.5. Title Insurance. The City shall obtain on the Delivery Date for the Certificates and in connection with any substitution of real property pursuant to Section 3.2 hereof, insurance on the Site (excluding that portion of the Project not located on the real property compri:
the balance of the Site), in the form of a CLTA leasehold title policy or an ALTA Owner'siLeasehc Policy with Western Regional Exceptions. The title policy or policies in effect at any time with res to the Site (excluding that portion of the Project not located on the real property comprising the bal of the Site) shall be in an amount at least equal to the aggregate Principal Component of unpaid LE. Payments, and be issued by a company of recognized standing duly authorized to issue the same. '
title policy or policies shall insure the City's leasehold estate hereunder in the Site, subject only to Permitted Encumbrances. The proceeds of such insurance shall be applied as provided in Section 6. I(a) hereof The City shall not maintain title insurance in the form of self-insurance.
Section 5.6. General Insurance Provisions.
(a) Form of Policies. All policies of insurance required to be procured and maintained pursuant to this Lease, other than the worker's compensation insurance and the title
insurance specified in Sections 5.2 and 5.5 hereof, respectively, and any statements of self-insuranl
505306.3U<yeager\22062.0023 11
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shall provide that the City and the Trustee shall receive 30 days' notice of each expiration, or any
intended cancellation thereof or reduction of the coverage provided thereby. Insurance required tc
procured and maintained pursuant to Section 5.3 hereof (regardmg hazard insurance); and Sectior hereof (regarding title insurance) shall provide that all proceeds thereunder shall be payable to the Trustee as the insured of loss payee. Unless otherwise consented to by each municipal bond insw company that has insured the Certificates, required insurance policies, other than self-insurance, n be provided by a commercial insurer rated A or better by Best or in the two highest rating categor S&P and Moody's. The insurance required by Section 5.3 shall name the City as the insured and
acceptable policy for purposes of Sections 5.1 and 5.3 hereof.
premiums for all insurance policies required by hs Lease.
sufficiency or adequacy of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss q
to by the City.
Evidence of Insurance. The City shall deliver certificates to the Trustee ar the Insurer with the 30 days prior to February 1 of each year during the Term of thls Lease evidencing that the insurance policies required by this Lease are in full force and effect.
Section 5.1(c) or 5.2 hereof shall afford reasonable protection to the Corporation, the City and the Trustee. Before the City elects to provide self-insurance hereunder, other than with respect to the
insurance company that has insured the Certificates. Upon receipt of written request of Bond Insu with 30 days prior to each February 1 thereafter, there shall be filed with the Trustee and any su( municipal bond insurer a certificate of an actuary, independent insurance consultant selected by thc City, or other qualified person selected by the City, stating that, in the opinion of the signer, the me or plan of protection is actuarially sound and affords adequate protection to the Corporation, the CI and the Trustee against loss and damage from the hazards and risks covered thereby, and there sh also be filed with the Trustee a certificate of the City setting forth the details of such substitute me; or plan. Any self-insurance fund must be held in a separate trust fund by an independent trustee. the event any self-insurance program is discontinued, the actuarial soundness of the claim reserve shall be maintained by the City. The Trustee shall be My protected in relying on the certificate provided in accordance with this Section 5.6(e) and shall not be responsible for the review or verification of the cerhficate describing such method or plan.
the insurance required to be maintained pursuant to Sections 5.1, 5.2 and 5.3 hereof
Trustee and the Corporation as additional insureds, The Insurer agrees that the insurance policy f
which is provided to the City by the
(b) Payment of Premiums. The City shall pay or cause to be paid when due tl
(c) Protection of the Trustee. The Trustee shall not be responsible for the
(d)
(e) Self-Insurance. Any self-insurance maintained by the City pursuant to
insurance required under Section 5.2, it must first obtain the written consent of any municipal bon
The City shall provide adequate reserves to cover the amount of any deductible provisions
Section 5.7. Cooperation. The Corporation shall cooperate fully with the City at the
expense of the City in &g any proof of loss 4th respect to any insurance policy maintained pursi
to thls Article and in the prosecution or defense of any prospective or pending condemnation
proceeding with respect to the Site or any portion thereof.
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
Section 6.1. Application of Net Proceeds.
(a) Deposit in Insurance and Condemnation Fund. Pursuant to Section 405 o Trust Agreement, the Trustee shall deposit the Net Proceeds of any insurance required by Section hereof and the proceeds of the title insurance required by Section 5,5 hereof in the Insurance and
Condemnation Fund promptly upon receipt thereof. The City and/or the Corporation shall transfe
the Trustee any other Net Proceeds received by the City andor Corporation in the event of any td by eminent domain or condemnation with respect to the Site, for deposit in the Insurance and
Condemnation Fund.
(b) Disbursement for Replacement or Repair of the Site. Upon receipt of the certification descnbed in paragraph (1) below and the requisition described in paragraph (2) belo1 Trustee is required by the Trust Agreement to disburse moneys in the Insurance and Condemnatic Fund to the person, firnn or corporation named in the requisition as provided in Section 405 of the Agreement.
Certdication. An Authorized Representative of the City must pro (i) to the Corporation and the Trustee a cerhficate stattng that:
(A) Sufficiencv of Net Proceeds. The Net Proceeds available such purpose, together with any other funds supplied by the City for such purpose, are sufscient to repair or replace the Site to a use which will hav annual fair rental value not less than the annual Lease Payments and Addi Payments (assuming that the annual Additional Payments due in the future equal the average annual Additional Payments prior to such date) due hereunder, and
Timely Comdetion. In the event that damage, destruction defect or taking results in an abatement of Lease Payments, such replacer or repair can be fully completed within a period not in excess of the perioc which amounts in the Reserve Fund, together with other legally available
funds, will be avdable to pay in full all Lease Payments coming due durir such period.
(ii)
(B)
Requisition. An Authorized Representative of the City must state respect to each payment to be made (i) the requisition number, (ii) the name and
address of the person, fum or corporation to whom payment is due, (iii) the amow be paid, and (iv) that each obligation mentioned therein has been properly incurrec proper charge against the Insurance and Condemnation Fund, has not been the ba! any previous withdrawal, and specifjmg in reasonable detail the nature of the obligation.
Any balance of the Net Proceeds remaining after such replacement or repair has been completed shall be disbursed as provided in Section 405 of the Trust Agreement.
Disbursement for Preuaynent. If an Authorized Representative of the Cit:
notifies the Trustee in writing of the City's determination that the certification provided in Section 6.l(b)(l) hereof cannot be made or replacement or repair of any portion of the Site is not economic feasible or in the best interest of the City, then the City shall deposit with the Trustee an amount w
(c)
505306.3 KyengerU2062 .ooU 13
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when combined with the Net Proceeds will prepay enough Lease Payments and result in a
Site is sufllcient to provide for payment of the Principal Components and Interest Components dul with respect to the Certificates to remain Outstandmg under the Trust Agreement after such Net Proceeds and such depo'sit by the City are applied to redeem Certificates under the Trust Agreemt The Trustee is required by the Trust Agreement to promptly transfer the Net Proceeds in respect ( such portion to the Redemption Account of the Certificate Fund as provided in Section 405 of the Agreement and apply them to the redemption of the Cerbficates as provided in Seaon 3 lO(a) oft
Trust Agreement and prepayment of Lease Payments as provided in Section 10.2 hereof.
correspondkg redemphon of Cert;f;cates such that the fir rental value of the remaining portion of
ARTICLE VI1
COVENANTS WITH RESPECT TO THE SITE
Section 7.1. Use of the Site. The City represents and warrants that it has an immediatl
need for all of the Site for open space purposes, which need is not expected to be temporary or to diminish in the foreseeable future.
Section 7.2. Leasehold Interest in the Site.
Corporation Holds Leasehold Interest During Term. During the term of tt Site Lease, the Corporation shall hold a leasehold interest in the Site pursuant to the Site Lease. T
City shall take any and all actions reasonably required, includmg but not hted to executing and f any and all documents, reasonably required to maintain and evidence the Corporation's leasehold interest in the Site at all times during the term of the Site Lease. The execution of this Lease shall cause a merger of the interests created by the Site Lease and hs Lease.
Leasehold Interest Transferred to Citv. On the day of the expiration of the Term as provided in Section 4.2 hereof, the Corporation's leasehold interest in the Site pursuant to Site Lease and all right, title and interest of the Corporation in the Site shall be transferred to and v in the City, free and clear of any interest of the Corporation or its assigns, without the necessity of; additional document of transfer. In addition, all right, title and interest of the Corporation in a
Component shall be transferred to and vest in the City, fiee and clear of any interest of the Corpors or its assigns, without the necessity of any additional document or transfer upon the payment of all Lease Payments attributable to such Component as set forth in Ehbit B hereto.
(a)
(b)
Section 7.3. [Reserved.]
Section 7.4. Quiet Enjoyment. Subject only to the Permitted Encumbrances, during t Term of hs Lease the Corporation shall provide the City with quiet use and enjoyment of the Site the City shall during such Term peaceably and quietly have and hold and enjoy the Site, without SL trouble or hdrance from the Corporation, or any person or entity claiming under or through the Corporation except as expressly set forth in this Lease or the Trust Agreement. The Corporation v at the request of the City, join in any legal action in hch the City asserts its right to such possessil and enjoyment to the extent the Corporation may lawfidly do so. Notwithstanding the foregoing, tl Corporation shall have the right of access to the Site as provided in Section 7.6 hereof
505306.3KyeagerD2062.0023 14
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Section 7.5. Installation of City's Personal Property. The City may at any time and time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon any portion of the Site. All such items shall rema sole personal property of the City, regardless of the manner in which the same may be affixed to s pohon of the Site, in wliich neither the Corporation nor the Trustee shall have any interest, and m modified or removed by the City at any time; provided that the City shall repair and restore any an damage to such portion of the Site resulting from the installation, moddication or removal of any s items of equipment and personal property. Notlung in hs Lease shall prevent the City from
attaching to such items shall attach to any part of the Site.
Corporation's successors and assigns, shall have (1) the right at all reasonable times to enter upon
Site or any portion thereof to examine and inspect the Site, and (2) such rights of access to the Sit may be reasonably necessary to cause the proper maintenance of the Site in the event of failure by
be required to cause such proper maintenance.
purchasing items to be installed pursuant to th~s Section, provided that no lien OT secuiity interest
Section 7.6. Access to the Site. The City agrees that the Corporation, and the
City to perform its obligations hereunder; provided, however, that the Corporation's assigns shall
Section 7.7. Maintenance, Utilities, Taxes and Assessments.
Maintenance; Repair and Replacement. Throughout the Term of this Lea part of the consideration for the rental of the Site, all repair and maintenance of the Site shall be th responsibility of the City, and the City shall pay for or otherwise arrange for the payment of the co the repair and replacement of the Site resulting from ordinary wear and tear or want of care on the of the City or any sublessee thereof The City shall provide or cause to be provided all security se custodial service, power, gas, telephone, light, heating and water, and all other public utility servic for the Site.
Tax and Assessments; Utilitv Charges. The City shall also pay or cause tc paid all taxes and assessments, incluchg but not limited to uidity charges of any type or nature ch to the Corporation or the City or levied, assessed or charged against any portion of the Site or the respective interests or estates therein; provided that, with respect to special assessments or other governmental charges that may 1a-y be paid in installments over a period of years, the C
as and when the same become due.
(c)
(a)
(b)
shall be obligated to pay only such installments as are required to be paid during the Term of thts 1
Contests. The City may, at its expense and in its name, in good faith contc any such taxes, assessments, utdity and other charges and, in the event of any such contest, may p the taxes, assessments or other charges so contested to remain unpaid during the period of such cc and any appeal therefrom; provided that prior to such nonpayment it shall furnish the Corporation : the Trustee with the opinion of an Independent Counsel to the effect that, by nonpayment of any SL items, the interest of the Corporation in such portion of the Site will not be materially endangered i that the Site will not be subject to loss or forfeiture. Otherwise, the City shall promptly pay such t: assessments or charges or make provisions for the payment thereof in form satisfactory to the Corporation. The Corporation d cooperate fully in such contest, upon the request and at the eq of the City.
Section 7.8. Modification of the Site.
Additions. Modifications and Improvements. The City shall, at its own (a) expense, have the right to make additions, modifications and improvements to any portion of the S
the Site. Such additions, modifications or improvements shall not in any way damage any portion the Site or cause it to be used for purposes other than those authorized under the provisions of stat
such additions, modifications or improvements are necessary or beneficial for the use of such porn
505306.3Kyeager\22062.0023 15
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federal law or in any way which would impair the exclusion from gross income for federal incomt purposes of the Interest Components of the Lease Payments or hminish the fair rental value of tht and the Site, upon completion of any additions, modifications or improvements made pursuant to Section, shall be of a value which is not less than the value of the Site immediately prior to the ma of such additions, modifications or improvements.
No Liens. Except for Permitted Encumbrances, the City will not permit a (b) mechanic's or other lien to be established or remain against the Site for hbor or materids fUrmshe
connection with any additions, modifications or improvements made by the City pursuant to tlzls
Section; provided that if any such lien is established and the City shall first noti@ or cause to be nr the Corporation of the City's intention to do so, the City may in good faith contest any lien filed or established against the Site, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Corporation and its assigns with full security against any loss or forfeiture which mi& arise from the nonpayment of any such lien, in form satisfactory to the Trustee as assignee of the Corporation. The Corporation will cooperate fully in any such contest, upon the request and at thc
expense of the City.
Section 7.9. Liens. Except as permitted by hs Lease (including without limitation Se
7.8, Section 8.1 or Section 8.2 hereof), the City shall not, directly or indirectly, create, incur, assw suffer to exist any mortgage, pledge, liens, charges, encumbrances or claims, as applicable, on or respect to the Site, other than Permitted Encumbrances and other than the respective rights of the Corporation and the City as herein provided. Except as expressly provided in hs Article, the Ciq shall promptly, at its own expense, take such action as may be necessary to duly discharge or rem1 any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the 5
shall arise at any time; provided that the City may contest such lien or claim if it desires to do so, I
long as such contest will not materially, adversely af€ect the rights of the City to the Site or the pa!
of Lease Payments hereunder. The City shall reimburse the Corporation and its assigns for any
expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 7.10. Corporation's Disclaimer of Warranties. THE CORPORATION MA: NO WARR4NTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICL PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CORPORATION OF 1 SITE OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE AGENCY NOT A MANUFACTURER OF THE SITE OR OF ANY PORTION THEREOF, AND IS NO1 DEALER THEREIN, AND THAT THE CITY IS LEASING THE SITE AS IS. In no event shal Corporation be liable for incidental, indirect, special or consequential damages, in connection with arising out of this Lease, the Site Lease, the Assignment Agreement or the Trust Agreement for th existence, furmshmg, functioning or City's use and possession of the Site.
Contractors. The Corporation hereby irrevocably appoints the City its agent and attorney-in-fact during the Term, so long as the City shall not be in default hereunder, to assert from time to time whatever claims and rights, including without limitation, warranty claims, claims for indemnificatic
may have against any vendor or contractor, or any agents thereof. The City's sole remedy for the breach of any such warranty, indemnification or representation shall be against the vendor or contr with respect thereto, and not against the Corporation, nor shall such matter have any effect whatsol on the rights and obligations of the Corporation with respect to this Lease, including the right to re1 Ml and timely Lease Payments and to cause the City to make all other payments due hereunder. 1 City shall be entitled to retain any and all amounts recovered as a result of the assertion of any sucl claims and rights. The Corporation shall, upon the City's request and at the City's expense, do all
Section 7.11. City's Right to Enforce Warranties of Manufacturers, Vendors or
and claims for breach sf any representations, respecting the Site or the Project whlch the Corporab
505306.3Kyeager\22062.00U 16
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things and take all such actions as the City may request in connection with the assertion of any su( claims and rights.
The City expressly acknowledges that neither the Corporation nor the Trustee makes, or h made, any representation or warranty whatsoever as to the existence or availability of such wma
of the manufacturer, vendor or contractor with respect to any portion of the Site.
ARTICLE VI11
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1. Assignment by the Corporation. Except as provided herein and in the r Agreement, the Corporation will not assign thls Lease, or any right, title or interest of the Corpora in and to hs Lease, to any other person, firm or corporation so as to impair or violate the representations, covenants and warranties contained in Section 2.2 hereof.
Section 8.2. Assignment and Subleasing by the City.
Assiment. This Lease may not be assigned by the City unless the City (a) receives an opinion of Bond Counsel stating that such assignment does not adversely affect the
income taxation of the Interest Components of the Lease Payments. In the event that this Lease is
assigned by the City, the obligation to make Lease Payments and Additional Payments and perfon
other covenants of the City hereunder shall remain the obligation of the City.
Sublease. The City may sublease any portion of the Site, with the prior w consent of any municipal bond insurance company insuring the Certificates, which consent shall nc unreasonably withheld, subject to all of the following conditions:
hs Lease and the obligation of the City to make Lease Payments i
exclusion from gross income for federal income tax purposes or the exemption horn State person:
(b)
(i) Additional Payments and perform the other covenants of the City hereunder shall remain obligations of the City;
the City shall, widm 30 days after the delivery thereof, hsh or I to be furnished to the Corporation and the Trustee a true and complete copy of suc sublease; and
(ii)
(iii) no sublease shall cause the Interest Components of the Lease Pay due with respect to the Site to become subject to federal income taxes or State per income taxes.
Prior to any sublease pursuant to thls Section 8.2(b), the Trustee shall be provided with
opinions of Independent Counsel with respect to the matters set forth in clause (i) above and the opinion of Bond Counsel with respect to the matters set forth in clause (1;) above.
Amendments and Modifications. This Lease may be amended or any oi
terms modified in accordance with Article VII of the Trust Agreement, with the written consent of Trustee, the City and the Corporation.
Section 8.3.
505306.3U<yeager\22062.0023 17
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined. The followmg shall be "events of default" UT this Lease and the terms "events of default" and "default" shall mean, whenever they ase used in fl
Lease, any one or more of the following events:
Payment Default. Failure by the City to pay any Lease Payment or Addtit Payments required to be paid hereunder on the date such payments are due hereunder.
Covenant Default. Failure by the City to observe and perform any warran covenant, condition or agreement on its part to be observed or performed herein or otherwise with respect hereto or in the Trust Agreement or in the Site Lease, other than as referred to in clause (a
this Section, for a period of 60 days after written notice specifjmg such failure and requesting that remedied has been given to the City by the Corporation, the Trustee or, subject to the provisions o Section 505 of the Trust Agreement, the Owners of not less than a majority in aggregate principal amount of Certificates then Outstanding; prowded, however, ifthe failure stated in the notice cannl corrected within the applicable period, then no event of default shall have occurred so long as corrective action is instituted by the City withm the applicable period and diligently pursued until tl default is corrected.
(c) Bankruptcv or Insolvencv. The filing by the City of a case in bankruptcy, ( subjection of any right or interest of the City under this Lease to any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval court of competent jurisdiction of a petition applicable to the City in any proceedings instituted unc the provisions of the federal bankruptcy code, as amended, or under any similar act whch may hereafter be enacted.
Section 9.2.
(a)
(b)
Remedies on Default. Whenever any event of default referred to in
Section 9.1 hereof shall have happened and be continuing, it shall be lawfid for the Corporation, or
assignee, subject to Section 9.7 hereof, to exercise any and all remedies available pursuant to law o
granted pursuant to this Lease; provided, however, that notwithstanding anythmg herein or in the T
ACCELERATE THE LEASE PAYMENTS OR OTHERWISE DECLARE ANY LEASE PAYMENTS NOT THEN DUE OR PAST DUE TO BE IMMEDIATELY DUE AND PAYABZ NOR SHALL THE AGENCY OR ITS ASSIGNEE €GIVE ANY RIGHT TO REENTER THE S OR RELET THE SITE, EXCEPT AS DESCRIBED IN THIS SECTION 9.2.
Agreement to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES
So long as any event of default exists hereunder, the Corporation, or its assignee, is express authorized hereby to enter and re-enter the Site for the purpose of talung possession of any portion ( the Site and to re-let the Site and, in addition, at its option, with or without such entry to terminate t Lease as described below. The City hereby irrevocably appoints the Corporation, or its assignee, a! agent and attorney-in-fact of the City either to enter upon the Site for purposes of terminating this Lease or to enter upon the Site and re-let the Site in the event of default hereunder by the City. The City hereby exempts and agrees to save harmless the Corporation and its assignee from any costs, 1
or damage whatsoever arising or occasioned by any lad entry upon the Site or re-letting of the S
The City hereby waives any and all claims for damages caused, or which may be caused, by the
Corporation, or its assignee, lawfully entering and talung possession of the Site, other than damage: caused by the negligence of the Corporation, or its assignee. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Corporation, or its assignee, to re-enter Site for purposes of terminating thls Lease and, dternaLvely, to enter upon the Site and re-let the Si m the event of such re-entry without effecting a surrender of hs Lease.
505306.3 U<yeagerQ2062.0023 18
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Anydung to the contrary in hs Lease notwithstanding, for purpose of the Corporation’s (
assignee’s) right to re-enter and re-let the Site hereunder, the Site shall not include that portion of
Site comprising the Project; there shall be right to re-enter or re-let the Project upon any event of default hereunder. -
In the event the Corporation, or its assignee, elects to terminate ks Lease, the City agree surrender immediately possession of the Site and to pay the Corporation, or its assignee, all dam2 recoverable at law that the Corporation, or its assignee, may incur by reason of default by the Cit
including, without limitation, any costs, loss or damage whatsoever arising out of, in connection \
or incident to any re-entry upon the Site by the Corporation, or its duly authorized agents in accoi
with such termination. Neither notice to pay rent or to deliver up possession of the Site given PUI
to lawnor any entry or re-entry by the Corporation, or its assignee, nor any proceeding in dad detainer, or otherwise, brought by the Corporation, or its assignee, for the purpose of effecting su entry or obtaining possession of the Site nor the appointment of a receiver upon initiative of the
Corporation, or its assignee, to protect the interest of the Corporation or its assignee under tlus LE shall of itself operate to terminate this Lease, and no termination of this Lease on account of defat the City shall be or become effective by operation of law or acts of the parties hereto, or othenvisl unless and until the Corporation, or its assignee, shall have given written notice to the City of its
election to terminate th~s Lease. The City covenants and agrees that no surrender of the Site or at termination of hs Lease shall be valid in any manner or for any purpose whatsoever unless state( accepted by the Corporation, or its assignee, by written notice.
In the event that the Corporation, or its assignee, does not elect to terminate this Lease, th agrees to and shall remain liable for the payment of Lease Payments and Additional Payments an( performance of all conditions herein contained and shall reimburse the Corporation, or its assigne any deficiency arising out of the re-letting of the Site, or, in the event that the Corporation, or its assignee, does not re-let the Site, then for the fuil amount of the Lease Payments and Adhtional Payments to the end of the Term of this Lease, but said Lease Payments, Additional Payments an
deficiency shall be payable only at the same time and in the same manner as provided in Sections and 4.1 1, notwithstanding such entry or re-entry by the Corporation, or its assignee, or any suit in
unlawfbl detainer, or otherwise, brought by the Corporation, or its assignee, for the purpose of effecting such entry or re-entry or obtaining possession of the Site or the exercise of any other ren by the Corporation or its assignee.
for any cost or expense, including attorneys’ fees, incurred by the Corporation or its assignee in connection with the exercise by the Corporation, or its assignee, of the remedies hereunder.
No Remedy Exclusive. No remedy conferred herein upon or reserved tc Corporation is intended to be exclusive and every such remedy shall be cumulative and shall be ir addition to every other remedy given under this Lease or now or hereafter existing at law or in eq No delay or omission to exercise any right or power accruing upon any default shall impair any st right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Corporation to exercise any remedy reserved to it in this Article it shall not be necessary to give at notice, other than such notice as may be required in this Article or by law.
Agreement to Pay Attorneys Pees and Expenses. In the event either p. to hs Lease should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party cont herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reason fees and disbursements of such entity’s attorneys and such other expenses so incurred by the nondefaulting party.
In the event of a default, the City further agrees to reimburse the Corporation, and its assi
Section 9.3.
Section 9.4.
505306.3KyeagerE.2062 .ooU 19
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Section 9.5. No Additional Waiver Implied by One Waiver. In the event any agree contained in tlus Lease should be breached by either party and thereafter waived by the other part^ such waiver shall be limited to the particular breach so waived and shall not be deemed to waive a other breach hereunder.
Application of the Proceeds Following Default. The Trustee is require1 deposit all amounts received by the Corporation under this Article 9 (other than fees and expenses
recovered under Section 9.4 above) in the Lease Payment Fund for application in accordance with Section 504 of the Trust Agreement.
remedies as are given to the Corporation under thls Article 9 have been assigned by the Corporatic the Trustee under the Assignment Agreement and the Trust Agreement, to which assignment the ( hereby consents. Such rights and remedies shall be exercised by the Trustee, the Certificate Ownc and owners as provided in Article V of the Trust Agreement.
Section 9.6.
Section 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
Section 10.1. Security Deposit. Notwthstandmg any other provision of this Lease, the
Component thereof as set forth in Exhibit B hereto by an irrevocable deposit by it with the Trustee cash andor Permitted Investments of the type described in paragraph @) of the definition thereof,
which are adequate in the opinion of an independent certified public accountant to provide for pay of such unpaid Lease Payment as it becomes due and payable hereunder.
In the event that the City has secured the payment of all unpaid Lease Payments attributabl the Site, and provided that the City has made arrangements acceptable to the Trustee to pay any Additional Payments due hereunder, all obligations of the City under this Lease, and all security provided by this Lease for said obligations, shall cease and terminate, excepting only the obligatior the City to make, or cause to be made, Lease Payments from such deposit. Said deposit shall be
deemed to be and shall constitute a special fbnd for the payment of Lease Payments in accordance the provisions of this Lease. The Corporation shall execute and deliver such further instruments su take such further action as may reasonably be requested by the City for carrying out the leasehold interest transfer for which a security deposit is made hereunder.
obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of a
The City and the Corporation hereby agree that such proceeds shall be credited towards the City's obligations hereunder such that approximately equal annual Lease Payments will prevail with resp
to the Site following such prepayment and, if the Lease Payments have been allocated to discrete Components of the Site in Ehbit A hereto, the Lease Payments with respect to the Component or Components from whlch such Net Proceeds were delivered will be reduced accordmgly.
of any unpaid Lease Payments pursuant to Section 10.1 above, the Principal Component of Lease Payments shall not be subject to optional prepayment by the City prior to the due date hereof.
Section 10.4. Credit for Amounts on Deposit. In the event of prepayment of the Least
Payments in full under this Article 10 and the payment of all due and payable Additional Payments
may, on any date, secure the payment of any unpaid Lease Payment attnbutabie to the Site or any
Section 10.2. Extraordinary Prepayment From Net Proceeds. The City shall be
Net Proceeds transferred to the Redemption Account pursuant to Section 405 of the Trust Agreerr
Section 10.3. Optional Prepayment. Subject to the right of the City to secure the payn
505306.3KyeagerL22062.0023 20
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such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all
amounts then on deposit in the Lease Payment Fund and the Certificate Fund shall be credited tow the amounts then required to be so prepaid.
Section 10.5. Effect of Prepayment.
(a) In Whole. In the event that the City prepays all remaining Lease Payment pursuant to Section 10.2 hereof and has paid all Additional Payments due hereunder, the City's obligations under hs Lease shall thereupon cease and terminate, including but not limited to the ( obligation to continue to pay Lease Payments hereunder.
In Part. In the event the City prepays less than all of the remaining Princij Component of the Lease Payments pursuant to Section 10.2 hereof, the amount of such prepayme shall be applied to reduce the Principal Component of the remaining Lease Payments correspondu the resulting prepayment of the Principal Component with respect to the Certificates.
(b)
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices. All notices, certificates or other communications hereunder to th Corporation and City shall be in writing and shall be sufficiently given and shall be deemed given delivered or mailed by certified mad, postage prepaid, to the parties listed below:
City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California 92008-1989
Attention: City Manager
Telecopier: (760) 720-9461
City of Carlsbad Public Improvement Corporation c/o City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, Cahfomia 92008-1989 Attention: Executive Director
Telecopier: (760) 720-9461
First Trust of Cahfornia, National Association 550 South Hope Street Los hgeles, California 90071 Attention: Corporate Trust Department
Telecopier: (213) 533-8729
If to the City:
(760) 434-2948
If to the Corporation:
(760) 434-2948
If to the Trustee:
(213) 533-8711
Notice shall also be given to the Rating Agency at the address(es) then in effect for the Rating Ag pursuant to Section 908 of the Indenture. Notices to the Trustee shall be given initially either telephonically or by written telecommunication and shall then be confmned in writing delivered b: registered or certified mail, return receipt requested. The Corporation, the City and the Trustee, I: notice given hereunder, may designate different addresses to whlch subsequent notices, certificate other communications will be sent.
505306.3 Kyeager\22062.0023 21
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Section 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be bind upon the Corporation and the City and their respective successors and assigns.
unenforceable by a courf of competent jurisdiction, such holdmg shall not invalidate or render Section 11.3. Severability. In the event any provision of this Lease shall be held invalic
unenforceable any other provision hereof.
Section 11.4. Execution in Counterparts. Th~s Lease may be executed in any numbei
counterparts, each of which shall be an original and all of which shall constitute but one and the si instrument.
Section 11.5. Applicable Law. Th~s Agreement shall be governed by and construed in accordance with the laws of the State.
Section 11.6. Captions. The captions or heaclmgs in this Lease are for convenience onl
in no way define, limit or describe the scope or intent of any provisions or sections of this Lease.
505306.3KyeagerY22M2.0023 22
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IN WITNESS WHEREOF, the Corporation has caused this Lease to be executed in its na by its duly authorized officers, and the City has caused this Lease to be executed in its name by its authorized officers, as of the date first above written.
CITY OF CARLSBAD PUBLIC IMPROVEME1 CORPORATION, as Lessor
By: Executive Director
ATTEST:
Secretary
CITY OF CARLSBAD, as Lessee
By: City Manager
ATTEST:
City Clerk
505306.3KyeagerV2062.0023 23
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CERTIFICATE OF ACCEPTANCE
Th~s is to certify that the interest in real property conveyed under the foregoing to the City Carlsbad, a body corporkte and politic, is hereby accepted by the undersigned officer or agent on 1 of the City Council of dhe City, pursuant to authority conferred by resolution of said City Council adopted on , 1997, and the grantee consents to recordation thereof by its duly auth
officer.
Dated: , 1997 CITY OF CARLSBAD
By: Its: Financial Management Director
505306.3u(yeager\22062.0023
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA - )
COUI\TTY OF )
) ss.
, before me, , Notary I - On
personally appeared
(Wt Name ofNotary Public)
Y
personally known to me
0
-or-
proved to me on the basis of satisfactoIy evidence to be the person(s) whose name(s) idare
to the within instwent and acknowledged to me that he/she/they executed the same in his/
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(
entity upon behalf of which the perso&) acted, executed the instrument.
WITNESS my hand and official seal.
Signature OfNotary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could p
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCU
0 Individual
0 Corporate Officer
- Title Or Type Of Document Title(s)
0 Partner($ 0 Limited
0 General
0 A.ttorney-In-Fact
0 Trustee(s)
0 CiuardiadConservator
0 CNher:
Signer is representing:
Number OfPages
Date OfDocument
Name <XPerson(s) Or Entity(ies)
Signer@) Other Than Named Above
50.5306.3DCyeagerL22062 .ooU
c-. 7 0 0
STATE OF CALIFORNIA 1
COUNTY OF 1
- ) ss.
, before me, , Notary I - On
(Pnnt Name ofNotary Public)
personally appeared
Y
personally known to me
0
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name@) idare
to the within instrument and acknowledged to me that he/she/they executed the same in hs/
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature OfNotary
OPTIONAL
Thoug,h the data below is not required by law, it may prove valuable to persons relying on the document and could F
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCK
El Individual
11 C:orporate Officer
- Title Or Type Of Document Title(s)
Partner@) Limited
11 General
0 Attorney-In-Fact
0 Trustee(s)
11 CiuardiadConservator
Ckher:
Signer is representing:
Number OfPages
Date OfDocument
Name OfPerson(s) Or Entity(ies)
Signer(s) Other Than Named Above
505306.3U<yeager\22062.0023
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EXHIBIT A-1
DESCRIPTION OF THE SITE
The real property and improvements, consisting of the following:
[TO BE PROVIDED BY TITLE COMPANY]
505306.3KyeagerY22062.00U Exhibit A- 1 - 1
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EXHIBIT A-2
DESCRIPTION OF THE PROJECT
r
The real property and improvements, consistmg of the following:
Two major improvements within the Hosp Grove property; first, Monroe Street widem the addition of one south bound lane for a length of 1100 feet at the intersection with Marron inc sidewalk, curb, gutter and streetlights; second, a 54" diameter storm drain 1100 feet long const along with the west side of Monroe Street to enclose an existing open ditch.
[attached legal description]
505306.3Kyeager\22062.ooW Exhibit A-2-1
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EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
c LEASE
PAYMENT PRINCIPAL INTEREST DATE COMPONENT COMPONENT PERIOD TOTAL FISCAL TO1 (1 5 days prior to each of the
dates)
0 810 1/97 0210 1 /9 8
0810 1/98
0210 1/99
OW0 1/99 02/01/00 08/01/00
OSIO 1 /o 1
0210 1 102 08/0 1/02
02/0 1/03 08/01/03
02/01/04
0 810 1 104
02/01/05
0810 1/05 02/0 1/06
08/01/06 02/01 107
08/01/07 02/01/08
08/0 1/08
following
02/01/01
505306.3\KyeageA22062.0023 Exhibit B-1
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EXHIBIT C
LEASE SUPPLEMENT
There is hereby subjected to the terms of that certain Lease Agreement (the "Lease"), d; of September 1, 1997, between the City of Carlsbad Public Improvement Corpc (the "Corporation") and the City of Carlsbad, California (the "City") the following real propert improvements, if applicable] (the "Substituted Property") which shall hereafter comprise the S defined therein:
Description of Substituted Property:
Certification
I, the Authorized Representative of the City, hereby certify that:
(1) Lease; and
(2)
the useful life of the Substituted Property at least equals the remaining Term
the fair rental value of the Substituted Property is such that no reduction of Payments will occur upon the delivery of the Substituted Property and the portion of the Payments and Additional Payments attributable to the Substituted Property does not exceed tl rental value for the Substituted Property; and
the Substituted Property dl be used by the City for authorized public purposes, I leased under the provisions of the Lease and the Permitted Encumbrances thereon will not mat impair the City's use of the Site;
the City will cause ExhibitA to the Lease and ExhlbitA to the Site Lease ar Assignment Agreement (eachas deked in the Lease) to be amended to reflect the Subsi Property and will have such amendments recorded for the Substituted Property and the previous ! the County of San Diego's recorder's office;
(3)
(4)
(5) all of the documents required to be delivered under Section 3.2 of the Lei connection with the provision of the Substituted Property have been delivered. The under: hereby certifies that it has received copies of the documents required pursuant to Section 3.2 Lease; and
(6) the Site now consists of the Substituted Property set forth in Exhibit 1 hereto and E A to the Lease is hereby deemed to be deleted in its entirety and replaced by Exhibit 1 hereto, a schedule of Lease Payments is set forth in Exhibit 2 hereto and Exhibit C to theLease is 1 deemed to be amended to incorporate the schedule of Lease Payments set forth in Exhibit 2 heretc
505306.3 UyeageA22062.0023 Exhibit C- 1
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I, the Authorized Representative of the City, hereby certify that the Substituted Property v leased to the Corporation free and clear of all liens or claims of others, except for the lien of the Agreement referred to in the Lease and the rights of the City under the Lease, and that the Corpo will not encumber title to the Substituted Property while the Certificates remain outstanding.
CITY OF CARLSBAD, as Lessee
BY Title
The Undersigned Acknowledges Receipt of thrs Supplement:
, as assignee of the Lessor
BY Title
505306.3 U<yeagerV22062.0023 Exhibit C-2
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EXHIBIT 1
DESCRIPTION OF SUBSTZTUTED PROPERTY
r
505306.3KyeagerU2062,0023 Exhibit 1
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EXHIBIT 2
AMENDED SCHEDULE OF LEASE PAYMENTS
r
505306.3KyeagerY22062.00U Exhibit 2
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4
r
ESCROW AGREEMENT
between
CITY OF CARLSBAD
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
as Escrow Bank
Dated as of September 1,1997
RELATING TO
REFUNDING CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT)
SERIES A OF 1997
and
$8,690,000
CITY OF CARLSBAD CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT)
s
505063.3\22062.0023
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*
ESCROW AGREEMENT
-
THIS ESCROW AGREEMENT, dated as of September 1, 1997 (thls "Agreement"), is b
between the City of Carlsbad (the ''City'') and First Trust of CaLforAa, Nahonal AssociaGon, act&
its capacity as escrow bank (the "Escrow Bank") pursuant to hs Agreement;
W IT N E S S E TH:
WHEREAS, to finance the costs of certain public facilities, the City has previously execul
documents related to the $8,690,000 City of Carlsbad Cerbficates of Participation (Hosp Grove
Project) (the "Prior Certificates"); and
WHEREAS, the execution and delivery of the Prior Cemficates was effected pursuant to
provisions of a Trust Agreement, dated as of June 1, 1988 (the "Prior Trust Agreement"), by and
between First Trust of California, National Association, as successor trustee to The Bank of Califc
N.A., as trustee (the "Prior Trustee"), the City of Carlsbad Public Improvement Corporation (the
"Corporation"), and the City, and the Prior Certificates represent undivided proportionate interest
owners thereof in payments to be made by the City, as the rental for certain real property and
improvements thereto pursuant to a Fac;lit;es Lease, dated as of June 1, 1988 (the "Prior Lease"),
and between the Corporation and the City; and
WHEREAS, the City desires to refund all Prior Certificates that remain outstandmg as set
in Schedule A with the proceeds of the $ Refunding Certificates of Participation (Hos
Grove Project) Series A of 1997 (the "Refunding Certificates"), executed and delivered pursuant t
Trust Agreement, dated as of September 1, 1997, by and among the City, the Corporation and FIE
TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as trustee thereunder (the "Trustee"),
evidencing and representing interest in the holders thereof in lease payments to be made by the CI
the Corporation under the Lease Agreement, dated as of September 1, 1997, by and between the (
and the Corporation; and
WHEREAS, the City has determined that it is in its best interests to cause the Refundmg
Certificates to be executed and delivered and apply the proceeds of the Refunding Certificates to
secure the payment of lease payments due under the Prior Lease as permitted by Section 10.1 the1
and effect a refunding of the Prior Certificates with the lease payments due under the Prior Lease
payable from the amounts described herein, all as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the City and the Escrow Bank agree as follows:
Section 1. Deposit of Moneys.
(a) As used herein, the term "Investment Securities" means the Investment
Securities set forth in Schedule B hereto which constitute direct noncallable nonprepayable obligat
issued by the United States Treasury. The City hereby deposits with the Escrow Bank $
505063.3U2062.0023
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representing $
transferred from those certain funds held by the Prior Trustee with respect to the Prior Certificate:
be held in irrevocable escrow by the Escrow Bank separate and apart from other funds of the City
Escrow Bank, and the Prior Trustee, in a fund hereby created and established and to be known as
“Escrow Fund”, and to be applied solely as provided in th~s Agreement. The City represents that
moneys are at least equal to an amount sufficient to purchase the principal amount of Investment
described in Schedule B hereto, together with all interest due or to become due on such Investmei
Securities, plus $0 held as cash, will be sufficient to pay when due (i)the principal and inter
evidenced and represented by the Prior Certificates to and includmg August 1, 1998, and (ii)the
redemption price due with respect to the Prior Certificates on August 1 , 1998.
of the net proceeds of the Refunding Certificates, and $
Secunties set forth in Schedule B hereto; and the aggregate principal amount of Investment Sew
(b) The Escrow Bank hereby acknowledges receipt of the written opinion of
, certified public accountants, dated March 5, 1997 relating to the Investment Secw
Use and Investment of Monevs. The Escrow Bank acknowledges receipt Section 2. the moneys described in Sechon 1 and agrees:
(a) immediately to invest $ of the monies described in Section 1 (a
hereof in the Investment Securities all as set forth in Schedule B hereto and to deposit such Invest
Securities in the Escrow Fund and to hold $ uninvested as cash; and
(b) to make the payments required under Section 3(a) hereof at the times set f
in Section 3(a)hereof
Section 3. Payment of Prior Certdicates.
Payment. As the principal of the Investment Securities set forth in Schedi
hereof and the investment income and earnings thereon are paid, the Escrow Bank shall, no later t
the respective Interest Payment Dates (as defined in the Prior Trust Agreement), transfer from the
Escrow Fund to the Prior Trustee amounts s&cient to pay (1) on each February 1 and August 1 t
includmg August 1, 1998, the principal and interest evidenced and represented by the Prior
described in Schedule E attached hereto. Such transfers shall constitute payment of the lease pay
pursuant to Section 10.1 of the Prior Lease and payment of the principal and interest evidenced an
represented by the Prior CertZcates.
(b)
(a)
Ceaficates, and (ii) on August 1,1998, the redemption price of such Prior Certificates, all as furt
Unclaimed Moneys. Any moneys which remain unclaimed for two (2) ye;
after August 1,1998, shall be repaid by the Escrow Bank to the City, provided, however, that the
Escrow Bank shall first publish a notice as more fully described in the Prior Trust Agreement that
moneys remain unclaimed.
(c) Priority of Payments. The holders of the Prior Certificates shall have a fir!
on the moneys and Investment Securities in the Escrow Fund hch are allowable and sufficient tc
the Prior Certificates until such moneys and Investment Securities are used and applied as provide
this Agreement. Any cash or securities held in the Escrow Fund are irrevocably pledged only to tl
Prior Certificate holders.
505063.3U2062.0023 -2-
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Section 4. Performance of Duties. The Escrow Bank agrees to perform the duties se
forth herein.
Section 5. Reinvestment. Upon written direction of the City, the Escrow Bank may
reinvest any uninvested amounts held as cash under this Agreement in noncallable nonprepayable
obligations which are direct obligations issued by the United States Treasury or obligations which
unconditionally guaranteed as to full and timely payment by the United States of America provide
the amounts of and dates on which the anticipated transfers from the Escrow Fund to the paying a
for the payment of the principal or prepayment price, and interest evidenced and represented by tl:
Prior Certificates will not be diminished or postponed thereby, (ii) the Escrow Bank shall receive
reinvestment will not adversely affect the exclusion from gross income of interest with respect to t
Refunding Certificates or the Prior Certificates, (iii) the Escrow Bank shall receive from an
independent certified public accountant a certification that, immediately after such reinvestment, tl
principal of and interest on obligations in the Escrow Fund will, together with other cash on depos
the Escrow Fund available for such purposes, be sufficient without reinvestment to pay, when due
principal or prepayment price and interest evidenced and represented by the Prior Certificates; anc
(iv)the Escrow Bank shall receive an opinion of nationally recognized bond counsel that such
reinvestment is permissible under th~s Agreement. Except as provided in this Section 5 and Sectic
hereof, the Escrow Bank shall have no power or duty to invest any funds held under th~s Agreeme
to sell, transfer or otherwise dispose of the moneys or Investment Securities held hereunder. In nc
event shall the Escrow Bank invest or reinvest monies held under this Agreement in mutual funds
unit investment trusts. Notwithstanding any other provision in this Agreement, the Escrow Bank I
reinvest amounts held in the Escrow Fund as described in Schedule D. The Escrow Bank may ho
any uninvested cash in demand deposit accounts maintained by any of its corporate affiliates as
depository agent
unqualified opinion of nationally recogruzed municipal bond attorneys to the effect that such
Section 6. Indemnity. The City hereby assumes liability for, and hereby agrees (whel
or not any of the transactions contemplated hereby are consummated) to indemnifl, protect, save a
keep harmless the Escrow Bank and its respective successors, assigns, directors, agents, employee
and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claim
actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursemer
of whatsoever lund and nature which may be imposed on, incurred by, or asserted against, the Esc
Bank at any time (whether or not also indemnified against the same by the City or any other persot
under any other agreement or instrument, but without double indemnity) in any way relating to or
arising out of the execution, delivery and performance of ths Agreement, the establishment herew
of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase oft
Investment Securities, the retention of the Investment Securities or the proceeds thereof and any
payment, transfer or other application of moneys or securities by the Escrow Bank in accordance 'j
the provisions of this Agreement; provided, however, that the City shall not be required to indemni
the Escrow Bank against the Escrow Bank's own negligence or willful misconduct or the negligent
Bank of the terms of this Agreement. In no event shall the City or the Escrow Bank be liable to an
person by reason of the transactions contemplated hereby other than to each other as set forth in thi
section. The indemnities contained in th~s section shall survive the termination of th~s Agreement E
resignation or removal of the Escrow Bank.
wllfid misconduct of the Escrow Bank's respective agents and employees or the breach by the Esc
505063.3Y22062.0023 -3 -
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Section 7. Responsibilities of the Escrow Bank. The Escrow Bank and its respectivc
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in t
contract or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein, ti
thereof, the sufficiency of the Investment Securities to accomplish the defeasance of the Prior
Certificates or any payment, transfer or other application of moneys or obligations by the Escrow
in accordance with the provisions of this Agreement or by reason of any non-negligent act, non-
negligent omission or non-negligent error of the Escrow Bank made in good faith in the conduct c
duties. The recitals of fact contained in the "Whereas" clauses herein shall be taken as the statemL
of the City and the Escrow Bank assumes no responsibility for the correctness thereof. The Escro
Bank makes no representation as to the sufficiency of the Investment Securities to accomplish the
defeasance of the Prior Certificates or to the validity of this Agreement as to the City and, except i
otherwise provided herein, the Escrow Bank shall incur no liability with respect thereto. The Esci
Bank shall not be liable in connection with the performance of its duties under hs Agreement ex(
for its own negligence or willful misconduct, and the duties and obligations of the Escrow Bank SI
be determined by the express provisions of this Agreement. The Escrow Bank may consult with
counsel, who may or may not be counsel to the City, and in reliance upon the written opinion of s\
counsel shall have full and complete authorization and protection with respect to any action taken,
it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitti
any action under this Agreement, such matter may be deemed to be conclusively established by a
certificate signed by an authorized officer of the City.
purchae of the Investment Secunties, the retention of the Investment Secunties or the pmceeds
suffered or omitted by it in good faith in accordance therewith, Whenever the Escrow Bank shall
Section 8. Substitution of Investment Securities. At the written request of the City a
upon compliance with the conditions hereinafter set forth, the Escrow Bank shall have the power tl
sell, transfer, request the redemption or otherwise dispose of some or all of the Investment Securit
the Escrow Fund and to substitute noncallable nonprepayable obligations (the "Substitute Investm
Securities") constituting dlrect obligations issued by the United States Treasury or obligations whi
are unconditionally guaranteed as to 111 and timely payment by the United States of America Th
foregoing may be effected only if: (i) the substitution of Substitute Investment Securities for the
Investment Securities (or Substitute Investment Securities) occurs simultaneously; (ii) the amount
and dates on hch the anticipated transfers fiom the Escrow Fund to the Prior Trustee for the pa)
of the principal andor prepayment price and/or interest evidenced and represented by the Prior
Ceaficates will not be hshed or postponed thereby; (iii) the Escrow Bank shall receive the
unqualified opinion of nationally recognized bond counsel to the effect that such disposition and
substitution would not adversely &ect the exclusion fiom gross income of interest evidenced and
represented by the Prior Certrfcates or the Refunding Certificates, and that the conditions of th~s
Section 8 as to the disposition and substitution have been satisfied and that the substitution is pern
by this Agreement; and (iv) the Escrow Bank shall receive fiom an independent certified public
accountant a certification that, immediately after such transaction, the principal of and interest on ti
Substitute Investment Securities in the Escrow Fund will, together with other cash on deposit in th
Escrow Fund available for such purpose, be sacient without reinvestment to pay, when due, the
principal or prepayment price and interest evidenced and represented by the Prior Certificates. An
cash from the sale of Investment Securities (including U.S. Treasury Securities) received from the
disposition and substitution of Substitute Investment Securities pursuant to this Section 8 to the ex
such cash will not be required, in accordance with the Prior Trust Agreement and this Agreement,
505063.3Y22062.0023 -4-
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as demonstrated in the certification described in (iv) above, at any time for the payment when due
the principal or prepayment price or interest evidenced and represented by the Prior Certificates si
be paid to the City as received by the Escrow Bank free and clear of any trust, lien, pledge or
assignment securing such Prior Certificates or otherwise existing under this Agreement. Any othi
requirements of hs Section 8. In no event shall the Escrow Bank invest or reinvest monies held
hs Agreement in mutual funds or Unit investment trusts.
substitution of securities in the Escrow Fund not described in the previous sentence must satisfy t
Section 9. Irrevocable Instructions as to Notice. The Escrow Bank hereby acknowle
that upon the fundmg of the Escrow Fund as provided in hs Agreement, the receipt of the opinio
described in Section l(b) of hs Agreement and the giving of irrevocable instructions to mail as
provided in the Irrevocable Instructions and Request to Prior Trustee and Escrow Bank attached E
as Schedule C (constituting all of the conditions precedent to the defeasance of the Prior Certifical
the Prior Certificates shall be paid in accordance with the Prior Trust Agreement and the Prior
Certificates shall cease to be entitled to any lien, benefit or security under the Prior Trust Agreem(
Section 10. Amendments. This Agreement is made for the benefit of the City and the
holders from time to time of the Prior Certificates and it shall not be repealed, revoked, altered or
amended without the written consent of all such holders, the Escrow Bank and the City; provided,
however, but only after the receipt by the Escrow Bank of an opinion of nationally recognized bon
counsel that the exclusion from gross income of interest evidenced and represented by the Prior
Certificates and the Refunding Certificates will not be adversely afTected for federal income tax
purposes, the City and the Escrow Bank may, without the consent of, or notice to, such holders, a~
this Agreement or enter into such agreements supplemental to hs Agreement as shall not adverse
affect the rights of such holders and as shall not be inconsistent with the terms and provisions of tE
Agreement for any one or more of the following purposes: (i) to cure any ambiguity or formal de6
omission in this Agreement; (ii) to grant to, or confer upon, the Escrow Bank for the benefit of the
holders of the Prior Certificates any additional rights, remedies, powers or authority that may lawf
be granted to, or conferred upon, such holders or the Escrow Bank; and (iii) to include under thls
Agreement additional funds, securities or properties. The Escrow Bank shall be entitled to rely
conclusively upon an unqualified opinion of nationally recopzed bond counsel with respect to
compliance with this Section 10, including the extent, if any, to which any change, mo&fication,
addtion or elimination affects the rights of the holders of the Prior Certificates or that any instrumi
executed hereunder complies with the conditions and provisions of hs Section 10.
Section 1 1. Term. This Agreement shall commence upon its execution and delivery a
shall terminate on the later to occur of either (i) the date upon which the Prior Certificates have be
paid in accordance with thls Agreement, or (ii) the date upon which no unclaimed moneys remain
deposit with the Escrow Bank pursuant to Section 3(b) of thls Agreement and all amounts owed tc
Escrow Bank shall have been paid in full.
Section 12. Compensation. The Escrow Bank shall receive its reasonable fees and
expenses as previously agreed to; provided, however, that under no circumstances shall the Escroi
Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the
Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Bank und
this Agreement.
505063.3YZ2062.0023 -5-
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Section 13.
(a)
Resignation or Removal of Trustee as Escrow Bank.
The Escrow Bank may resign by giving 30 days prior written notice in wr
to the City. The EscrowBank may be removed (1) by (i) filing with the City and the Escrow Ban
an instrument or instruments executed by the holders of at least 5 1% in aggregate principal amou
the Prior Certificates then remaining unpaid, (ii) the City delivering written notice to the Escrow I
or (2) by a court of competent jurisdiction for failure to act in accordance with the provisions of tl
Agreement upon application by the City or the holders of 5% in aggregate principal amount of the
Certificates then remaining unpaid.
(b) No resignation or removal of the Escrow Bank shall become ef'fective unt; successor Escrow Bank has been appointed hereunder and until the cash and investments held w(
thls Agreement are transferred to the new Escrow Bank. The City or the holders of a majority in
principal amount of the Prior Certificates then remaining unpaid may, by an instrument or instrum
filed with the City, appoint a successor Escrow Bank who shall supersede any Escrow Bank
theretofore appointed by the City. If no successor Escrow Bank is appointed by the City or the ho
of such Prior Certificates then remaining unpaid, within 45 days after notice of any such resignatic
removal, the holder of any such Prior Certificates or any retiring Escrow Bank may apply to a cou
competent jurisdiction for the appointment of a successor Escrow Bank.
Section 14. Severability. If any one or more of the covenants or agreements provided
this Agreement on the part of the City or the Escrow Bank to be performed should be determined 1
court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null a~
void and shall be deemed separate from the remaining covenants and agreements herein contained
shall in no way affect the validity of the remaining provisions of this Agreement.
Section 15. Counterparts. This Agreement may be executed in several counterparts, a
any of which shall be regarded for all purposes as one original and shall constitute and be but one
the same instrument.
Section 16.
State of California.
Section 17.
Governing Law. This Agreement shall be construed under the laws of the
Holidays. If the date for making any payment or the last date for performa
of any act or the exercising of any right, as provided in th~s Agreement, shall be a legal holiday or i
on which banking institutions in the city in which is located the principal office of the Escrow Ban€
authorized by law to remain closed, such payment may be made or act performed or right exercise
the next succeedmg day not a legal holiday or a day on hch such banlung institutions are authori:
by law to remain closed, with the same force and effect as if done on the nominal date provided in
Agreement, and no interest shall accrue for the period from and after such nominal date.
Section 18. Assignment. This Agreement shall not be assigned by the Escrow Bank 01
successar thereto without the prior written consent of the City, except in the event that the Escrow
Bank is merged or consolidated into another entity authorized to perform all the duties imposed up1
the Escrow Bank hereunder, such entity shall be the successor Escrow Bank without the execution
filing of any paper or performance of any further act.
505063.3L2062.0023 -6-
0 a
Section 19. Moody's and Standard & Poor's. The City agrees to provide to Moody's
Investors Service, 99 Church Street, New York, New York 10007, Attention: Public Finance Ra
Desk/Refunded Bonds, and Standard & Poor's Ratings Group, 25 Broadway, New York, New Y
10004, prior notice of each amendment entered into pursuant to Section 10 hereof and a copy of s
proposed amendment, and to forward a copy (as soon as possible) of (i) each amendment hereto
entered into pursuant to Section 10 hereof, and (ii) any action relating to severability or contempl;
by Section 14 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
their duly authorized officers and their seals to be hereunder affixed and attested as of the date anc
first written above.
CITY OF CARLSBAD
By:
Financial Management Director
(SEAL)
Attest:
City Clerk
FIRST TRUST OF CALIFORNIA, NATION'
ASSOCIATION, as Escrow Bank
By:
Authorized Officer
A'ITEST:
Authorized Officer
505063.3VZ2062.0023 -7-
0 0
L
SCHEDULE A
MaturityDate .r Principal Amount Interest Rate
August 1, 1998
505063.3l22062.0023 Schedule A- 1
0 0
SCHEDULE B
r
"Investment Securities" are defined to be, and shall consist as follows:
Maturity Par
Type Date Amount Coupon
505063.3V22062.0023 Schedule B-1
0 0
SCHEDULE C
r IRREVOCABLE INSTRUCTIONS AND REQUEST TO PRIOR TRUSTEE
September
1997
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as trustee
ESCROW AGREEMENT
RELATING TO A REFUNDING OF
CITY OF CARLSBAD, CALIFORNIA
$8,160,000
CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT)
(the "Prior Certificates")
Ladies and Gentlemen:
As trustee under that certain Trust Agreement, dated as of June 1, 1988 (the "Prior Trust
Agreement"), you are hereby notified of the irrevocable election of the City of Carlsbad to defease a
the outstanding Prior Cedcates and to redeem on August 1, 1998 all of the Prior Certificates
maturing on and after August 1,1999.
You are hereby irrevocably instructed to mail, as provided in the Prior Trust Agreement, no1
of redemption of the Prior Certdicates scheduled to be redeemed prior to maturity. Such notice shal
substantially be in the form annexed hereto as Exhibit X.
You are hereby further irrevocably instructed to mad, as soon as practicable, a notice to the
holders of the Prior Certdicates (in the form annexed hereto as Exhibit Y) that the deposit of
investment securihes and moneys has been made with First Trust of California, National Association
Escrow Bank and that the projected withdrawals from such escrow have been calculated to be
adequate to pay the principal, redemption price and interest evidenced and represented by said Prior
Certificates outstanding as such become due or are subject to redemption.
CITY OF CARLSBAD
Financial Management Director
505063.3D2062.0023 Schedule C-1
e 0
Receipt acknowledged and
consented to:
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Escrow Bank and Prior Trustee
c
BY Authorized Officer
505063.3Y22062.0023 Schedule C-2
a 0
EXHIBIT X
c NOTICE OF REDEMPTION OF
CITY OF CARLSBAD, CALIFORNIA
CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT)
$8,690,000
Notice is hereby given to the holders of the outstandmg $8,160,000 City of Carlsbad
Certificates of Participation (Hosp Grove Project) that the Certificates have been called for redem
prior to maturity on August 1,1998, in accordance with their terms, at a redemption price of 102?
the principal amount thereof with respect to Certdicates maturing on or after August 1, 1999, tog6
with accrued interest evidenced and represented thereby to the date of redemption. The source of
funds to be used for such redemption is the principal of and interest on investment securities heret
deposited with First Trust of California, National Association, as Escrow Bank, together with mol
if any, heretofore deposited with the Escrow Bank.
The redemption price and accrued interest evidenced and represented by the foregoing
Certificates shall become due and payable on August 1,1998 and, from and after August 1,1998,
interest evidenced and represented by the foregoing Certificates shall cease to accrue and be payd
Holders of the foregoing Certificates will receive payment of the redemption price and acc
interest to whlch they are entitled upon presentation and surrender thereof at the principal corporal
trust office of First Trust of California, National Association, at
Dated this day of 9 19-.
CITY OF CARLSBAD, CALIFORNIA
FIRST TRUST OF CALIFORNIA, NATION1
ASSOCIATION, as Trustee
505063.3V22062.0023 Exhibit X- 1
e 0
EXHIBIT Y
NOTICE OF REFUNDING OF
$8,160,000
CITY OF CARLSBAD, CALIFORNIA
CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT)
Notice is hereby given to the holders of the $8,160,000 City of Carlsbad Certificates of
Participation { Hosp Grove Project) (the "Certificates") that (i) such Certificates have been advanct
refunded and defeased; (ii) there has been deposited with First Trust of California, National
Association, as Escrow Bank, moneys and investment securities as permitted by the Trust Agreem
dated as of June 1 , 1988 {the "Trust Agreement"), relating to the Certificates, the principal of and t
interest on which when due will provide moneys which, together with such other moneys depositec
with the Escrow Bank, will be sufficient and available (a) to pay on each February 1 and August 1
and kcldkg August 1 , 1998 the principal and interest evidenced and represented by the Cemficat
and scheduled to be paid on such dates, and {b) to redeem on August 1, 1998 the Certificates mah
after August 1,1998 at the applicable redemption price contained in the Trust Agreement; and (iii)
Escrow Bank has been irrevocably instructed to redeem all outstanding Certificates on August 1, 1
In accordance with Section 14.01 of the Prior Trust Agreement, the Prior Trust Agreement
been discharged. At least 30 days, but not more than 60 days, prior to August 1, 1998, in accordan
with the terms of the Trust Agreement, the Trustee will mail a redemption notice for the Certificate!
Dated hs day of September, 1997.
CITY OF CARLSBAD, CALIFORNIA
FIRST TRUST OF CALIFORNIA, NATIONAI
ASSOCIATION, as Trustee,
505063.3Y22062.0023 Exhibit Y-1
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SCHEDULE E
REINVESTMENT
Reinvestment Reinvestment Maturity Intere Date Amount Date Security &€
505063.3D2062.0023 Exhibit E-1
e e .
SCHEDULE F
- ESCROW FUND CASHFLOW
Total
Ad jus ted Requirements of - Date Total Receipts Prior Certificates Endinp (
505063.3\22062.0023 Exhibit F- 1
0 0
4
k
CONTINUING DISCLOSURE CERTIFICATE
Ths Conthukg4Iisclosure Certificate (the "Disclosure Certificate") is executed and deliv
by the City of Carlsbad (the "City") in connection with the execution and delivery of $ Rebdmg Revenue Certificates of Participation (Hosp Grove Project) Series A of 1997A (the "Certificates"). The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of September 1 , 1997 (the "Trust Agreement"), by and among the City, the City of Carlsl Public Improvement Corporation (the "Corporation") and First Trust of California, National Association, as trustee (the "Trustee"). The City covenants and agrees as follows:
1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being execul and delivered by the City for the benefit of the Holders and Beneficial Owners of the Certificates i
order to assist the Participating Underwriter in complying with the Rule.
2. Definitions. In addition to the defhtions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in thls Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, ' vote or consent with respect to, or to dispose of ownership of, any Cerbficates (inclubg persons holding Cerhficates through nominees, depositories or other intermediaries), or (b) is treated as thi owner of any Certificates for federal income tax purposes.
"Fiscal Year" shall mean the one-year period ending on the last day of June of each year.
"Holder" means a registered owner of the Certificates.
"Lease Agreement'' shall mean that certain Lease Agreement executed and entered into as
September 1,1997, by and between the City and the Corporation.
"Listed Events" shall mean any of the events listed in Section 5(a) of thls Disclosure
Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Informi Repository for purposes of the Rule. The National Repositories currently approved by the Securitii and Exchange Commission are set forth in Exhibit A.
"Participating Underwriter" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission unc the Securities Exchange Act of 1934, as the same may be amended from time to time.
506 103.2\22062.0023
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1
"State" shall mean the State of California.
"State Repository" shall mean any public or private repository or entity designated by the S
as a state repository for the purpose of the Rule and recognized as such by the Securities and Exch Commission. As of the date of th~s Disclosure Certificate, there is no State Repository.
3. Provision of Annual ReDorts.
(a) The City shall provide not later than 270 days following the end of its Fiscal Year (commencing with the Fiscal Year 1997-98) to each Repository an Annual Report relating to the immediately preceding Fiscal Year hch is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be submitted as a single document or as separatc documents comprising a package, and may cross-reference other dormation as provided in Sectia of this Disclosure Certificate.
(b) If the City is unable to provide to each Repository an Annual Report by the date required m subsection (a), the City shall send to each Repository a notice in substantially the form
attached hereto as Exhibit B.
4. Content of Annual ReDorts. The Annual Report shall contain or incorporate by reference the following:
(a) The audited financial statements of the City for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. Ifthe City's audlted financial statements are not avdable by the time the Annual Report is required to be filed pursuant Section 4( l), the Annual Report shall contain unaudited financing statements in a format similar to I financial statements contained in the final Official Statement, and the audited financial statements sh be filed in the same manner as the Annual Report when they come available.
(b)
(c)
Principal amount of the Certificates outstandmg.
Balance in the Reserve Fund and a statement of the reserve requirement with respec thereto.
(d) An update of the mformation in each of the tables under section entitled "CITY OF CARLSBAD FINANCES" in the Official Statement:
Any or all of the items listed above may be included by specific reference to other document including official statements of debt issues of the City or related public entities, whch have been submitted to each of the Repositories; provided, that if any document included by reference is a final official statement, it must be available from the Municipal Securities Rulemalung Board; and providc further, that the City shall clearly iden* each such document so included by reference.
5. Reportinn of Sidcant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or came to be given,
506103.2\22062.0023 2
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L.
notice of the occurrence of any of the following events with respect to the Cemficates, if material:
1.
2. non-payment related defaults.
3.
4.
5. defeasances.
6. rating changes.
7.
principal and interest payment delinquencies
c
modifications to rights of Certificateholders.
optional, contmgent or unscheduled Certificate calls.
adverse tax opinions or events affecting the tax-exempt status of the Certificates .
8. unscheduled draws on the debt service reserves reflecting financial
diffiCdtii?S.
9. unscheduled draws on the credit enhancements reflecting financial diffic~
10. substitution of the credit or liquidity providers or their failure to perform.
1 1. release, substitution or sale of property securing repayment of the Certific.
Whenever the City obtains knowledge ofthe occurrence of a Listed Event, the CitJ shall as soon as possible determine if such event would be material under applicable federal securi laws.
(b)
(c) If the City determines that knowledge of the occurrence of a Listed Event would bl material under applicable federal securities laws, the City shall promptly file a notice of such occurrence with the Repositories. Notwithstanding the foregoing, notice of Listed Events describe subsections (a)(4) and (5) need not be given under hs subsection any earlier than the notice (if an
the underlying event is given to Holders of affected Certificates pursuant to the Trust Agreement.
6. Customanlv Prepared and Public Information. Upon request, the City shall provid
any person financial dormation and operating data regarding the City which is customarily prepar
by the City and is publicly avdable.
7. Termination of Obligation. The City's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Certifici If such termination occurs prior to the final maturity of the Certificates, the City shall give notice ol such termination in the same manner as for a Listed Event under Section 5(c).
8. Amendment; Waiver. Notwithstandmg any other provision of hs Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of hs Disclosure Certificate may be waived, provided that, in the opinion of nationally recognized bond counsel, suc
506103.2U2062.0023 3
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amendment or waiver is permitted by the Rule.
9. Additional Information. Nothing in hs Disclosure Certificate shall be deemed to prevent the City from disseminating any other dormation, using the means of dissemination set fi
in th~s Disclosure Certiffcate or any other means of communication, or including any other inform in any notice of occurrence of a Listed Event, in addition to that which is required by hs Disclost
Certificate. If the City chooses to include any information in any notice of occurrence of a Listed I in addition to that which is specifically required by this Disclosure Certificate, the City shall not tf
have any obligation under this Disclosure Certificate to update such information or include it in ar future notice of occurrence of a Listed Event.
10. Default. In the event of a failure of the City to comply with any provision of this
Disclosure Certificate, any Holder or Beneficial Owner of the Certificates may take such actions a may be necessary and appropriate, including seekmg mandate or specific performance by court or to cause the City to comply with its obligations under hs Disclosure Certificate. A default under 1 Disclosure Certificate shall not be deemed an Event of Default under the Lease Agreement or Tru Agreement, and the sole remedy under hs Disclosure Certificate in the event of any failure of the to comply with this Disclosure Certificate shall be an action to compel performance.
No Holder or Beneficial Owner of the Cerhfkates may institute such action, suit or procec to compel performance unless they shall have first delivered to the City satisfactoq written eviden their status as such, and a written notice of and request to cure such failure, and the City shall havl refused to comply therewith wib a reasonable time.
1 1. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Ci the Participating Underwriter and Holders and Beneficial Owners from time to time of the Certific and shall create no rights in any other person or entity.
Dated: September 24, 1997 CITY OF CARLSBAD
By:
Its: President
506103.2\22062.0023 4
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EXHIBIT A
Nationally Recornzed Municipal Securities Information Repositories approved by the Secwitic Exchange Commission as of September 24, 1997:
Bloomberg Municipal Repository
P.O. Box 840 The Repository
Princeton, NJ 08542-0840
Internet address: MUNIS@bloomberg. doc
JJ Kenny Information Services
65 Broadway, 16th Floor
New York, NY 10006
(609) 279-3200 (212) 770-4568
FAX (609) 279-3235 (609) 279-5963 FAX (212) 797-7994
Contact: Dave Campbell
The Bond Buyer Moody's NRMSIR
Secondary Market Disclosure
395 Hudson Street, 3rd Floor
New York, NY 10014
(212) 807-3814 FAX (212) 553-1460
FAX (212) 989-9282
Contact: Joan Horai, Repository
Public Finance Information Center
99 Church Street
New York, NY 10007-2796
Internet address: Disclosure@muller.com (800) 339-6306
Contact: Claudette Stephenson
Contact: Thomas Garske (212) 553-0345
Disclosure, Inc. Donnelley Financial
Document Augmentation/ Municipal Securities 559 Main Street
5 16 1 River Road
Bethesda, MD 20816 Hnternet address:
(301) 951-1450 HTlT:\\www.municipal.com
Municipal Securities Disclosure Archives
Hudson, MA 0 1749
FAX (301) 718-2329 (800) 580-3670
Contact: Barry Sugarman (301) 215-6015 FAX (508) 562-1969
DPCData Inc.
One Executive Drive
Fort Lee, NJ 07024
(201) 346-0701
E-mail: nrmsir@dpcdata. com
FAX (201) 947-0107
506103.2\22062.0023 A- 1
0 a
9
I
EXHIBIT B
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT -
Name of Issuer:
Name of Issue:
CITY OF CARLSBAD
REFUNDING REVENUE CERTIFICATES OF PARTICIPATION
(HOSP GROVE PROJECT) 1997 SERIES A
1997 Date of Issuance A
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect
above-named Certificates as required by the Continuing Disclosure Certificate approved pwsuar
Resolution adopted by the Board of Directors of the City on August 26, 1997. The City anticipate the Annual Report will be filed by
Dated:
CITY OF CARLSBAD
BY
506103.2\22062.0023 B-1
.I 0 a
m
7.
RECORDINGREQUESTED BY ) AND WHEN RECORDED MAIL TO: 1 1 STRADLING, YOCCA; CARLSON & RAUTH
660 Newport Center Drive 1
Suite 1600 1
Am: E. Kurt Yeager, Esq. P p
P
Newport Beach, Califoma 92660 1
This document is recorded for the benefit of the City of Carlsbad, and the recording is fee-exempt
under $27383 of the Government Code.
ASSIGNMENT AGREEMENT
between
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION
as Trustee
Dated as of September 1, 1997
Relating to
$
Refunding Certificates of Participation
(Hosp Grove Project) Series A of 1997
505309.3\22062.0023
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ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of September 1, 1997 (thls
"Assignment Agreement"), is made and entered into by and between the City of Carlsbad Public
Improvement Corporation, a public body corporate and politic duly organized and existing under t!
laws of the State of California (the "Corporation"), as assignor, and First Trust of California, Natio
Association, a national banlung association organized and existing under the laws of the United Sta
as trustee (the "Trustee"), as assignee;
WITNESSETH:
In the joint and mutual exercise of their powers, in consideration of the mutual cover.
herein contained, and for other valuable consideration, the parties hereto recite and agree as follows
Section 1. Recitals.
(a) The terms capitalized in hs Assignment Agreement shall have the meanin]
ascribed to them in Section 101 of the Trust Agreement, dated as of September 1,1997, by and am
the City of Carlsbad (the "City"), the Trustee and the Corporation (the "Trust Agreement").
(b) The Corporation and the City have entered into a certain Site Lease dated z
September 1, 1997 (the "Site Lease") as recorded concurrently herewith, whereby the City has least
related thereto (the "Site"), together with any real property added or substituted in the manner and o
the terms set forth in the Lease Agreement (defined below). The Site consists of the real property i
the Project described on Ehbit A hereto, includmg the improvements thereon.
to the Corporation certan real property described in Ehbit A thereto and improvements thereon 01
(c) The Corporation and the City have entered into a certain Lease Agreement,
dated as of September 1, 1997 (the "Lease Agreement") as recorded concurrently herewith, whereb
the Corporation has leased back to the City the Leased Property.
(d) Under the Site Lease, the Corporation is required to assign its rights under t
Site Lease and the Lease Agreement in order to facilitate the execution and delivery of the Certificatl
for the benefit of the City as described in the Trust Agreement.
(e) Pursuant to the Lease Agreement the City is obligated to pay certain Lease
Payments to the Corporation or its assignee. For the purpose of facilitating the execution and delive
of the Certificates, the Corporation is wdhg to assign and transfer certain of its rights, title and inte1
Certificates to be executed and delivered under the Trust Agreement. In consideration of such
assignment, the Trustee is delivering the Certificates to the original purchasers thereof in accordance
with the provisions of the Trust Agreement. The proceeds from the sale of the Certificates will be
deposited by the Trustee in the various funds and accounts created pursuant to the Trust Agreement.
in and to the Site Lease and the Lease Agreement to the Trustee for the benefit of the Owners of the
505309.3\22062.0023
e @
I
(0 Each of the parties has authority to enter into this Assignment Agreement,
has taken all actions necessary to authorize its officers to execute and deliver thls Assignment
Agreement on its respective behalf.
Section 2. Assignment.
The Corporation, for consideration received, does hereby absolutely and irrevocably grant,
assign and transfer to the Trustee, for the benefit of the Owners of the Certificates executed and
delivered under the Trust Agreement, all of its right, title and interest in and to the Site Lease and t
Lease Agreement (other than its rights to indemnification and payment or reimbursement of its cos
expenses thereunder and its obligations under Sections 2.2(e) and 9.4 of the Lease Agreement),
includmg its right to receive Lease Payments from the City under the Lease Agreement; its right tc
receive proceeds of condemnation of, and insurance on, the Leased Property; and its right to enforc
payment of such Lease Payments when due and otherwise to protect its interests and enforce its ril
under the Lease Agreement in the event of a default by the City. The Lease Payments shall be ap~
and the rights so assigned shall be exercised, by the Trustee as provided in the Trust Agreement. '
assignment provided for in this Section 2 shall grant in favor of the Trustee all of the Corporation's
right, title and interest in and to the Site Lease and the Lease Agreement (other than its rights to
indemnification and payment or reimbursement for its costs or expenses thereunder) and all of its
interest in the Leased Property.
Section 3. Acceutance.
The Trustee hereby accepts the assignment made herein for the benefit of the Certificate
Owners, subject to the provisions of the Trust Agreement.
Section 4.
The Corporation does hereby consent to the execution and delivery of the Certificates by tl
Trustee, the receipt of payment by the Trustee for the Certificates when the same shall be sold to t
original purchaser or purchasers thereof and the transfer and deposit of such proceeds by the Trusr
into the funds and accounts created by the Trust Agreement, or any supplement thereto, all in
accordance with the terms of the Trust Agreement.
Section 5. Further Assurances.
The Corporation will make, execute and deliver any and all such firher resolutions,
instruments and assurances as may be reasonably necessary or proper to cany out the intention or
facilitate the performance of hs Assignment Agreement, and for better assuring and confirming ti
Owners of the Certificates the rights and benefits intended to be conveyed pursuant hereto.
Consent of Corporation to Deliverv of Certificates.
Section 6. Amendments.
The terms of this Assignment Agreement shall not be waived, altered, modified, supplemc
or amended in any manner whatsoever except by written instrument signed by the Corporation ani
Trustee, in accordance with Article VII of the Trust Agreement, with the prior Written consent of 1
City and subsequent notice thereof given by or at the direction of the City to the Rating Agency.
505309.3\22062.0023 2
a 0
Section 7. Applicable Law.
This Assignment Agreement shall be governed by and construed III accordance wth the 1
of the State. -
Section 8. Conditions.
This Assignment Agreement shall confer no rights and shall impose no obligations upon t
Trustee beyond those expressly provided in the Trust Agreement. The Trustee does not warrant.
accuracy of the recitals hereto.
Section 9. Partial Invalidltv.
If any one or more of the terms, provisions, covenants or conditions of this Assignment
Agreement shall to any extent be declared invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes
none of the remaining terms, provisions, covenants and conditions of this Assignment Agreement
be affected thereby, and each provision of hs Assignment Agreement shall be valid and enforcea
the fullest extent permiffed by law.
Section 10. Notices.
Notice shall also be given to the Rating Agency at the address(es) then in effect for the Rs
Agency pursuant to Section 908 of the Trust Agreement. All notices or other communications
hereunder shall be in writing and shall be sufliciently given and shall be deemed given when deli\
or mailed by certified mail, postage prepaid, to the parties at their respective places of business, a
follows:
If to the City: City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, California 92008-1989
Attention: City Manager
City of Carlsbad Public Improvement Corporation
1200 Carlsbad Village Drive
Carlsbad, California 92008-1989
Attention: Executive Director
First Trust of Cahfomia, National Association
550 South Hope Street, Suite 500
Los Angeles, California 90071
Attention: Corporate Trust Department
If to the Corporation:
If to the Trustee:
The Corporation, the City and the Trustee, by notice given hereunder, may designate diffe
addresses to which subsequent notices or other communications will be sent.
505309.3\22062.0023 3
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Section 11. Cations.
The captions or headings in th~s Assignment Agreement are for convenience only and in n
way define, limit or describe the scope or intent of any provision or section of thls Assignment
Agreement.
Section 12. Execution in Counterparts.
This Assignment Agreement may be executed in any number of counterparts, each of wh
shall be deemed to be an original but all together shall constitute but one and the same instrument
Section 13. Binding Effect.
Th~s Assignment Agreement shall inure to the benefit of and shall be bindmg upon the
Corporation and the Trustee and their respective successors and assigns.
505309.3\22062.0023 4
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IN WITNESS WHEREOF, the parties have executed th~s Assignment Agreement by the1
officers thereunto duly authorized as of the day and year first written above.
-
CITY OF CARLSBAD PUBLIC IME'ROVEMI
CORPORATION
By: Executive Director
ATTEST:
Secretary
FIRST TRUST OF CALIFORNIA, NATIONAI
ASSOCIATION, as Trustee
By:
Authorized Officer
505309.3\22062.0023 5
a 0
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA 1
COUNTY OF 1
) ss.
On , before me, , Notary
personally appeared
(Print Name of Notary Public)
0 personally known to me
0
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose nai
idare subscribed to the within instrument and acknowledged to me that he/she/tt
signature(s) on the instrument the person(s), or the entity upon behalf of which tt
person(s) acted, executed the instrument.
executed the same in hislherltheir authorized capacity(ies), and that by hislherltp
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document ai
prevent fraudulent reattachment of this form.
CAPACiTY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCU
17 individual
Corporate Officer
Title Or Type Of Document Title@) Partner@) 0 Limited
0 General
Attorney-In-Fact
0 Trustee@)
0 Guardian/Conservator
Other:
Signer is representing:
Number Of Pages
Date Of Document
Name Of Person(s) Or Enti(ies)
Signer@) Other Than Named Above
505309.3\22062.0023
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA c ) ) ss.
COUNTY OF 1
On , before me, , Notary i
(Print Name of Notary Public)
personally appeared
I
0 personally known to me
0
-or-
proved to me on the basis of satisfactory evidence to be the person@) whose nan
idare subscribed to the within instrument and acknowledged to me that he/she/th
executed the same in his/her/their authorized capacity(ies), and that by his/her/th
signature(s) on the instrument the person(s), or the entity upon behalf of which th
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document an
prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUf
0 Individual
0 Corporate Officer
Title Or Type Of Document Tale@)
0 Partner(s) 0 Limited
0 General
Attorney-In-Fact
0 Trustee(s)
0 Guardian/Conservator
0 Other:
Signer is representing:
Number Of Pages
Date Of Document
Name Of Person@) Or Entii(ies)
Signer@) Other Than Named Above
505309.3\22062.0023
a e
CONSENT
The City of Carlsbad hereby consents to the foregoing assignment to the Trustee.
CITY OF CARLSBAD, as Lessee
By:
Finance Director
ATTEST:
City Clerk
505309.3U2062.0023
0 0 -.
#
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
c
The real property and improvements, consisting of the following:
Two major improvements withm the Hosp Grove property; first, Monroe Street widenir
sidewalk, curb, gutter and streetlights; and second, a 54" diameter storm drain 1100 feet
constructed along with the west side of Monroe Street to enclose an existing open ditch.
the addition of one south bound lane for a length of 1 100 feet at the intersection with Mmon, id
[attached legal description]
505309.3Y22062.0023 Exhibit B-1
0 e
1.
RECORDINGREQUESTED BY AND )
WHEN RECORDED MAIL TO: )
)
660 Newport Center Drive, Suite 1600 1
Newport Beach, California 92660 ) Attention: E. Kurt Yeager, Esq. ) 1
STRADLING, YOCCA, CARLSON & RAUTH )
"Ius document is recorded for the benefit of the City of Carlsbad, and the recordmg is fee-exempt
under Section 27383 of the Government Code.
SJTE LEASE
between
CITY OF CARLSBAD
and
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Dated as of September 1, 1997
Relating to
$
Refunding Cerhflcates of Participation
(Hosp Grove Project) Series A of 1997
5Q5308.3\22062.0023
8 a
4.
SITE LEASE
THIS SITE LEASE (the "Site Lease") is made and entered into as of September 1,
1997, by and between the CrrY OF CARLSBAD, a political subdivision of the State of California
"State") duly organized and existing under and by virtue of the laws of the State, as lessor (the "Cii
and the CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION, a public body
corporate and politic duly organized and existing under the laws of the State, as lessee (the
"Corporation").
WITNESSETH:
WHEREAS, in order to facilitate the acquisition, improvement, construction and
equipping of certain City facilities described in Ehbit B attached hereto and incorporated herein b
reference (the "Project"), the City and the Corporation entered into that certain Lease Agreement dq
as of June 1, 1988 between the City and the Corporation, memorandum of which we recorded in tk
official records of the County of San Diego as Document No. 88-308589 on June 28, 1988 (the
"Original Lease"), pursuant to which the City, as lessor, leased certain real property to the Corporal
and the City, as sublessee, concurrently leased such real property back from the Corporation and
authorized the execution and delivery of the $8,690,000 Certificates of Participation (City of Carlst
1988 Hosp Grove Project) (the "Prior Certificates"); and
WHEREAS, the City Council (the "Council") has determined that it is in the best
interests of the City and for the common benefit of the citizens residing in the City to refinance the
Project by rehdmg the Prior Certificates and securing the payment of the lease payments due und
the Original Lease in accordance with Section 10.1 thereof; and
WHEREAS, the execution of th~s Site Lease and the leasing to the Corporation of th
real property described in Exhibit A hereto, together with all improvements thereon or related there
and identified at Exhlbit B herein as the Project (collectively, the "Site"), will facilitate the refundin$
the Prior Certificates, which refunding will lower the City's costs of financing the Project and provic
benefit to the City; and
WHEREAS, by resolution of the City Council of the City, the City has agreed to exec
thls Site Lease and to deliver it upon performance and compliance by the Corporation of all terms a
conditions hereof to be performed concurrently herewith, includmg without limitation, the delivery I
certain cefificates of participation (the "Certificates") pursuant to that certam Trust Agreement, dat as of the date hereof (as amended and supplemented fiom time to time, the "Trust Agreement"), an
the Corporation, the City and First Trust of California, National Association, as trustee (the "Truste
and
WHEREAS, the City is authorized by Section 371 50 et seq. of the California
Government Code to lease the Site as lessor and has duly authorized the execution and delivery oft
Site Lease; and
505308.3\22062.0023
a e ..
WHEREAS, the Corporation is authorized to lease the Site as lessee and has duly
authorized the execution and delivery of ths Site Lease;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, a
other valuable consideration, it is hereby mutually agreed as follows:
SECTION 1. Definitions. Unless the context otherwise requires, the capitalized terms h
which are not defined herein shall have the meanings specified in the Trust Agreement.
SECTION 2. Lease of the Site; Substitution. The City hereby leases to the Corporation
the Corporation hereby leases from the City the Site, on the terms and conditions hereinafter set fo
The City reserves the right at any time to substitute other real property and improvements I
"Substituted Site") for the real property described in Ehbit A hereto, upon compliance with the
provisions of Section 3.6 of the Lease (a "Substitution"). In the event of such Substitution, the par
hereto agree to execute the appropriate documents evidencing the termination of the Corporation's
hereunder in any portion of the Site replaced by the Substituted Site and its acceptance of an intere
A accurately describing the Substituted Site. The Corporation shall not be enatled to any offset,
abatement or reduction in rental hereunder as a result of any Substitution.
the Substituted Site, such documents to include the replacement of Exlubit A hereto with a new E?
SECTION 3. m. The term of this Site Lease shall commence as of the Delivery Date
the Certificates and shall remain in effect until the earlier of August 1,2008 or the date of expiratic
the Lease as provided for by Section 4.2 thereof, unless such term is sooner terminated as hereinaf
provided, however, if the term of the Lease is extended pursuant to Section 4.3 of the Lease, the te
of this Site Lease shall also be extended, except that the term of this Site Lease shall in no event ex
beyond August 1,2018.
SECTION 4. Consideration for Lease of Site. The Corporation, or any assignee or succc
in interest of the Corporation under this Site Lease, shall pay, upon execution and delivery of hs S
Lease to the City as and for rental hereunder, the sum of $[Bond Amount]. The Corporation shall
such rental to the Trustee for disbursement in accordance With Section 401 of the Trust Agreement
As additional consideration for the leasing of the Site to it hereunder, the Corporation shall execute
deliver the Lease and the Trust Agreement, shall perfom its obligations thereunder and shall ass@
rights under the Lease and this Site Lease to the Trustee to facilitate the execution and delivery oft
Certificates. The Corporation hereby waives any right that it may have under the laws of the State
California to receive a rebate of any rent paid hereunder in full or in part in the event there is a
substantial interference with the use and right of possession by the Corporation or its sublessee oft
Site or any portion thereof as a result of material damage, destruction or condemnation.
SECTION 5. Purpose. The Corporation shall lease back the Site to the City pursuant to 1
Lease for the purposes described in the Lease and for such purposes as may be incidental thereto.
SECTION 6. Reuresentations. Warranties and Covenants. The City represents and warri
that it is the owner in fee of the Site. The Corporation covenants that it shall not encumber the Site
except for Permitted Encumbrances (as such term is defined in the Lease).
SECTION 7. Assignments. The City acknowledges and affirms the assignment by the
Corporation of its right, title and interest in and to hs Site Lease to the Trustee, under the terms of
505308.3\22062.0023 -2-
0 0
*.
Assignment Agreement dated as of the date hereof, between the Corporation and the Trustee, for t
benefit of the Owners of the Cefificates. No other assignment of any rights hereunder shall be
permitted without the consent of the City and the Trustee.
SECTION 8. Actions on Termination. The Corporation agrees, upon the termination of
Site Lease, to quit and surrender the Site in the same good order and condition as it was in at the 'i
the real and personal property then constituting the Site became subject to this Site Lease, reasona
wear and tear excepted, and agrees that any permanent improvements and structures existing upon
Site at the time of the termination of hs Site Lease shall remain thereon and all interest therein sh
vest in the City free and clear of any interest of the Corporation.
SECTION 9. Quiet En-ioynent. The Corporation at all times during the term of th~s Site
Lease shall peaceably and quietly have, hold and enjoy all of the Site, subject only to Permitted Encumbrances (as such term is defined in the Lease).
SECTION 10. Default. In the event the Corporation shall be in default in the performam
any obligation on its part to be performed under the terms of this Site Lease, which default continu
for 3 0 days following written notice to and demand for correction thereof by the City, the City may
exercise any and all remedies granted by law whch do not adversely affect the interests of the Ow
of the Certificates, with the prior consent of the Trustee; provided that the City may not terminate tl
Site Lease and shall exercise only remedies providing for specific performance hereunder.
SECTION 1 1. Taxes. The City covenants and agrees to pay any and all assessments of ar
kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the
Site.
SECTION 12. Eminent Domain. In the event the whole or any part of the Site is taken by
eminent domain proceedings, the interest of the Corporation shall be recognized and is hereby
determined to be the amount of unpaid Lease Payments and Additional Payments due the Corporal
under the Lease,
SECTION 13. Partial Invalidity. If any one or more of the terms, provisions, covenants or
conditions of hs Site Lease shall to any extent be declared invalid, unenforceable, void or voidable
any reason whatsoever by a court of competent jurisdiction, the findmg or order or decree of which
becomes final, none of the remaining terms, provisions, covenants and conditions of thls Site Lease
shall be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the
fullest extent permitted by law.
SECTION 14. Applicable Law, Thls Site Lease shall be governed by and construed in
accordance with the laws of the State.
SECTION 15. Reuresentatives. Whenever under the provisions of this Site Lease the
approval of the Corporation or the City is required, or the Corporation or the City is required to takc
some action at the request of the other, such approval or such request shall be given for the Corpore
by an Authorized Representative of the Corporation and for the City by an Authorized Representati
of the City and any party hereto shall be authorized to rely upon any such approval or request.
505308.3\22062.O023 -3 -
0 0
SECTION 16. Notices. All notices or other communications hereunder shall be in writin<
shall be sufficiently given and shall be deemed given when delivered or mailed by certified mail,
postage prepaid: -
If to the City: City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, California 92008- 1989
Attention: City Manager
If to the Corporation: City of Carlsbad Public Improvement Corporation
1200 Carlsbad Village Drive
Carlsbad, California 92008-1989
Attention: Executive Director
First Trust of California, National Association
550 South Hope Street
Los Angeles, California 90071
Attention: Corporate Trust Department
If to the Trustee:
Notice shall also be given to the Rating Agency at the address(es) then in effect for the Ratir
Agency pursuant to Section 908 of the Trust Agreement. The Corporation, the City and the Trusta
by notice given hereunder, may designate different addresses to which subsequent notices or other
communications will be sent.
SECTION 17. Captions. The captions or headmgs in thls Site Lease are for convenience I
and in no way define, limit or describe the scope or intent of any provision or section of thls Site L(
SECTION 18. Execution in Counterparts. This Site Lease may be executed in any numb1
counterparts, each of which shall be deemed to be an original but all together shall constitute but 01
and the same instrument.
SECTION 19. Amendment. The terms of this Site Lease shall not be waived, altered,
modified, supplemented or amended in any manner whatsoever, except by written instrument sign€
by the Corporation and the City, in accordance with Article VII of the Trust Agreement, with the pi
written consent of the Trustee and subsequent notice thereof to the Rating Agency.
505308.3\22062.0023 -4-
0 e
IN WITNESS WHEREOF, the parties have caused this Site Lease to be executed by their G
authorized officers on the date and year first above written.
L CITY OF CARLSBAD, as Lessor
By:
City Manager
ATTEST:
City Clerk
CITY OF CARLSBAD PUBLIC IMPROWMEN
CORPOUTION, as Lessee
By:
Executive Director
ATTEST:
Secretary
505308.3V2062.oM3 -5-
0 e
I.
CERTIFICATE OF ACCEPTANCE
This is to certimat the interest in real property conveyed under the foregoing to the City (
Carlsbad Public Improvement Corporation (the I'Corporation''), a body corporate and politic, is her
accepted by the undersigned officer or agent on behalfof the Board of the Corporation, pursuant to
authority conferred by resolution of the said Board adopted on , 1997, and the grantee
consents to recordation thereof by its duly authorized officer.
Dated: , 1997 CJTY OF CARLSBAD PUBLIC ME'ROVEMEB
COWOWATION
By:
Its: Executive Director
ATTEST:
Secretary
505308.3\22062.O023
0
“1
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA c )
COUNTY OF )
) ss.
On , before me, , Notary F
personally appeared
(Print Name of Notary Public)
1
personally known to me
-0r-
proved to me on the basis of satisfactory evidence to be the person(s) whose nar
idare subscribed to the within instrument and acknowledged to me that he/she/th
executed the same in his/her/their authorized capacity(ies), and that by his/her/th
signature(s) on the instrument the person(s), or the entity upon behalf of which th
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Not av
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document an
prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUh
0 Individual
0 Corporate Officer
Title Or Type Of Document Title(s)
0 Partner@) 0 Limited
0 General
0 Attorney-In-Fact
0 Trustee@)
GuardianKonsewator
0 Other:
Signer is representing:
Number Of Pages
Date Of Document
Name Of Person@) Or Enti(ies)
Signer(s) Other Than Named Above
505308.3Y22062.0023
e 0
2.
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA r )
COUNTY OF )
) ss.
On , before me, , Notary F
personally appeared
(Print Name of Notary Public)
1
0 personally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose nan
islare subscribed to the within instrument and acknowledged to me that he/she/th
executed the same in his/her/their authorized capacity(ies), and that by his/her/thc
signature(s) on the instrument the person@), or the entity upon behalf of which th
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document an
prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUN
0 Individual
0 Corporate Officer
TAle Or Type Of Document Title@)
0 Partner(s) Limited
General
Attorney-In-Fact
Trustee(s)
0 Guardian/Conservator
0 Other:
Signer is representing:
Name Of Person(s) Or Enti(ies)
Number Of Pages
Date Of Document
Signer@) Other Than Named Above
505308.3\22062.0023
m 0 '.
EXHIBIT A
LEGAL DESCRIKTION OF THE SITE
[see attached]
505308.3\22062.0023 A- 1
a e
-1
EXHIBIT B
THE PROJECT
Two major improvements wih the Hosp Grove property; first, Monroe Street wideni
the addition of one south bound lane for a length of 1100 feet at the intersection with Marron incl
sidewalk, curb, gutter and streetlights; second, a 54" diameter storm drain 1100 feet long constr
along the west side of Monroe Street to enclose an existing open ditch.
505308.3\22062.0023 B- 1