HomeMy WebLinkAbout1988-06-07; Public Improvement Corporation; 001; Formation Of Public Improvement Corporation. CITY OF--ARLSBAD - PUBLIC IMPROVE&F-T CORPORATION
AB# m! TITLE: FORMATION OF THE CITY OF CARLSBAD
MTG 617188
DE&. F1N
PUBLIC IMPROVEMENT CORPORATION AND APPROVAL OF DEBT ISSUE DOCUMENTS
RECOMMENDED ACTION:
I
By minute motion, the City Council should assume its role as the Board of
Directors of the Carlsbad Public Improvement Corporation.
Adopt Resolution No. 88-l adopting bylaws.
Adopt Resolution No. 88-2 electing officers.
Adopt Resolution No. 88-3 appointing the time and place of regular meetings.
Adopt Resolution No. 88-4 authorizing execution and filing of exemption application to State Franchise Tax Board.
Adopt Resolution No. 88-5 authorizing the execution and filing of various
federal forms.
Adopt Resolution No. 88-6 authorizing and directing execution of certain lease
financing documents and authorizing and directing certain actions with respect thereto.
ITEM EXPLANATION
This is the first meeting of the City of Carlsbad Public Improvement Corporation, a non-profit corporation established to assist the City in the
construction improvements and acquisition of property and other matters that
benefit the residents of the City of Carlsbad. The first action of this
corporation will be to assist in the acquisition of Hosp Grove through the issuance of certificates of participation (COP's) for the refunding of a short term note, the proceeds from which were used to purchase Hosp Grove.
The first three actions (Resolutions 88-l to 88-3) establish the basic operating
guidelines for the corporation including the adopting of bylaws, electing of
officers and setting a time and place for regular meetings.
Resolutions 88-4 and 88-5 allow the filing of certain forms with the state and federal governments related to the formation of the corporation.
Resolution 88-6 asks the board of directors to approve the lease agreement with
the'city for the Hosp Grove property, the trust agreement with Bank of
California for various services over the life of the COP issue, the agency
agreement with the City allowing the City to construct the street and storm
drain improvements in the Grove, and the assignment agreement with the trustee
assigning the lease payments from the City to the trustee to be used to pay the certificate holders.
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Page Two of AB# 001
FISCAL IMPACT
The action of forming the corporation has no direct fiscal impact. An important by-product of having the CPI Corporation formed as a part of the Hosp Grove financing is that it is then available to assist with other financings in the future where a certificate of participation may be considered or a lease Page 2 agreement is required. Without the corporation, the City would be required to pay another entity for the privilege of entering into a lease agreement and selling COP's.
EXHIBITS
1. Resolution No. 88-l
2. Resolution No. 88-2
3. Resolution No. 88-3
4. Resolution No. 88-4
5. Resolution No. 88-5
6. Resolution No. 88-6
7. Articles of Incorporation
RESOLUTION NO. 88-l
EXHIBIT 1
GFB3925 I3
A RESOLUTION ADOPTING BYLAWS
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
RESOLVED, by the Board of Directors of the City of Carlsbad Public improvement
Corporation, that the Bylaws of the City of Carlsbad Public Improvement Corporation, in
the form hereto attached and incorporated herein by reference, are hereby adopted and
approved and shall stand as the Bylaws of this Corporation until valid amendment
thereof.
l l l l l
I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the Board of Directors of the City of Carlsbad Public
Improvement Corporation, at a meeting thereof duly held on the 7th day of June, 1988,
by the following vote of the Directors thereof:
AYES,and in favorthereof, Directors: Lewis, Kulchin, Pettine, Mamaux and Larson
NOES, Directors: None
ABSENT, Directors: None
Secretary
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13061-01 JHHWGFB
dfs
04/22/66
06/20/66
BYLAWS
OF
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
ARTICLE I
Offices and Seal
Section 1. Offices. The principal office of the Corporation for the transaction of
business shall be 1200 Elm Avenue, Carlsbad, California 92008. The Board of Directors
may, however, fix and change from time to time the principal office from one location to
another by noting the change of address in the minutes of the meeting of the Board of
Directors at which the address was fixed or changed. The fixing or changing of such
address shall not be deemed an amendment to these Bylaws.
Section 2. Seal. The Corporation shall have a seal, consisting of two (2)
concentric circles with the words “City of Carlsbad Public Improvement Corporation”,
with the date of incorporation of the Corporation.
ARTICLE II
Directors
Section 1. Powers. Subject to the limitations of the Articles of Incorporation of
the Corporation, the terms of these Bylaws, and the laws of the State of California, the
powers of the Corporation shall be vested in and exercised by and its property controlled
and its affairs conducted by the Board of Directors.
Section 2. Number. The Corporation shall have five (5) Directors. Directors are
collectively to be known as the Board of Directors. The number of Directors may be
changed by a Bylaw or amendment thereof duly adopted by the Board of Directors.
Section 3. Selection, Tenure of Office and Vacancies. The individuals who act
as the members of the City Council of the City of Carlsbad (the “City”) shall constitute the
Board of Directors of the Corporation, and each member of the City Council shall be and
remain a member of the Board of Directors of the Corporation for so long as such
member remains a member of the City Council.
Section 4. Compensation. Directors shall serve without compensation but each
Director may be reimbursed his or her necessary and actual expenses, including travel
incident to his services as Director, pursuant to resolution of the Board of Directors. Any
Director may elect, however, to decline said reimbursement.
Section 5. Organization Meetings. immediately following the annual meeting of
the Board of Directors or any special meeting of the Board of Directors at which
Directors shall have been elected, the Directors shall meet for the purpose of organizing
the Board, the election of officers and the transaction of such business as may come
before the meeting. Pending such organization meeting, all officers of the Corporation
shall hold over, except any officer required by law or these Bylaws to be a Director and
who does not qualify as a Director. A Director elected at such meeting of the Board of
Directors shall forthwith become a member of the Board of Directors for purposes of
such organization.
In the event such an organizational meeting shall not be held immediately
following such meeting of the Board of Directors, it shall thereafter be held at the next
regular meeting or at a special meeting and notice thereof shall’ be given in the manner
provided in Section 7 of this Article for notice of special meetings.
Section 6. Regular and Organizational Meetings. Regular meetings of the
Board of Directors shall be held at such time as the Board may fix by resolution from
time to time: provided, however, that at least one regular meeting shall be held each
year and such meetings shall, in all respects, conform to provisions of the Ralph M.
Brown Act, being Sections 54950 through 54961 of the Government Code of the State of
California (the “Brown Act”).
No notice of any organizational meeting of the Board of Directors, held
immediately following the annual meeting of the Board of Directors or on or after any
special meeting of the Board of Directors shall have been elected, need be given;
provided, that if such an organizational meeting is not held immediately following such
meeting of the Board of Directors, then notice thereof shall be given in a manner
provided in Section 7 of this Article, in the same manner as notice of special meetings.
Section 7. Special Meetings. Special meetings of the Board of Directors shall
be called, noticed and held in accordance with the provisions of Section 54956 of the
Brown Act.
Section 8. Quorum. A quorum shall consist of a majority of the members of the
Board of Directors unless a greater ‘number is expressly required by statute, by the
Articles of Incorporation of the Corporation, or by these Bylaws. Every act or decision
done or made by a majority of the Directors present at a meeting duly held at which a
quorum is present, shall be the act of the Board of Directors.
Section 9. Order of Business. The order of business at the regular meeting of
the Board of Directors and, so far as possible, at all other meetings of the Board of
Directors, shall be essentially as follows, except as otherwise determined by the Directors
at such meeting:
(a) Report on the number of Directors present in person in order to determine the
existence of a quorum.
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(b) Reading of the notice of the meeting and proof of the delivery or mailing
thereof, or the waiver or waivers of notice of the meeting then filed, as the
case may be.
(c) Reading of unapproved minutes of previous meetings of the Board of Directors and the taking of action with respect to approval thereof.
(d) Presentation and consideration of reports of officers, and committees.
(e) Unfinished business.
(9 New business.
(g) Adjournment.
Section 10. Resignation of Directors. Any Director of the Corporation may resign
at any time by giving written notice to the President or to the Board of Directors;
provided, however, in the event of such resignation, such Director’s position shall remain
vacant until a new member of the City Council is elected to fill such Director’s position.
Such resignation shall take effect at the time specified therein, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 11. Nonliability for Debts. The private property of the Directors shall be
exempt from execution or other liability for any debts, liabilities or obligations of the
Corporation and no Director shall be liable or responsible for any debts, liabilities or
obligations of the Corporation.
Section 12. Indemnity by Corporation for Litigation Expenses of Officer,
Director or Employee. Should any Director, officer or employee of the Corporation be
sued, either alone or with others, because he is or was a director, officer or employee of
the Corporation, in any proceeding arising out of his alleged misfeasance or nonfeasance
in the performance of his duties or out of any alleged wrongful act against the
Corporation or by the Corporation, indemnity for his reasonable expenses, including
attorneys’ fees incurred in the defense of the proceedings, may be assessed against the
Corporation, its receiver, or its director by the court in the same or a separate
proceeding if the person sued acted in good faith and in a manner such person
reasonably believed to be in the best interests of the Corporation and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such person was
unlawful. The amount of such indemnity shall be so much of the expenses, including
attorneys’ fees, incurred in the defense of the proceeding, as the court determines and
finds to be reasonable.
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ARTICLE Ill
Officers
Section 1. Officers. The officers of the Corporation shall be a President, a Vice
President, a Secretary and such other officers as the Board of Directors may appoint.
When duties do not conflict, one person, other than the President, may hold more than
one of these offices. The Corporation may also have, at the discretion of the Board of
Directors, one or more additional Vice Presidents, one or more Assistant Secretaries, and
one or more Assistant Treasurers. In addition to such officers, the City Manager of the
City shall act ex officio as the Executive Director of the Corporation; the chief financial
officer of the City shall act ex officio as the Treasurer of the Corporation; the City Clerk of
the City shall act ex officio as the Secretary of the Corporation; and the City Attorney of
the City shall act ex officio as legal counsel to the Corporation.
Section 2. Election of Officers. The officers of the Corporation (other than the
Executive Director, Treasurer, Secretary and legal counsel to the Corporation) shall be
chosen by and shall serve at the pleasure of the Board of Directors and each shall hold
office until any such officer shall resign or shall be removed or otherwise disqualified to
serve or any successor shall be elected and qualified to serve.
Section 3. Subordinate Officers. The Board of Directors may elect or authorize
the appointment of such other officers than those hereinabove mentioned as the
business of the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in these Bylaws, or as the
Board of Directors from time to time may authorize or determine.
Section 4. Removal of Officers. Any officer may be removed, either with or
without cause, by a majority of the Directors then in office at any regular or special
meeting of the Board, or, except in the case of an officer chosen by the Board of
Directors, by any officers upon whom such power of removal may be conferred by the
Board of Directors. Should a vacancy occur in any office as a result of death,
resignation, removal, disqualification or any other cause, the Board of Directors may
delegate the powers and duties of such office to any officers or to any Directors until
such time as a successor for said office has been elected and appointed.
Section 5. President. The President shall preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from time
to time assigned to him by the Board of Directors or be prescribed by the Bylaws.
The President shall also be the chief corporate officer of the Corporation and shall,
subject to the control of the Board of Directors, have general supervision, direction and
control of the business and officers of the Corporation. He shall preside at all meetings
of the Board of Directors. He shall be ex officio member of all standing committees, and
shall have the general powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and duties as may be
prescribed by the Board of Directors or by these Bylaws.
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Section 6. Vice President. In the absence or disability of the President, the Vice
President, or the Vice Presidents in order of their ranks as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of Directors, shall
perform all the duties of the President and when so acting shall have all the powers of
and be subject to all of the restrictions upon the President. The Vice Presidents shall
have such other powers and perform such other duties as may from time to time be
prescribed for them, respectively, by the Board of Directors or by these Bylaws.
Section 7. Secretary. The Secretary shall keep or cause to be kept a book of
minutes at the principal office or at such other place as the Board of Directors may
order, of all meetings of the Directors, with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given, the names of
those present at Directors’ meetings and the proceedings thereof. The Secretary shall
give or cause to be given notice of all meetings of the Board of Directors of the
Corporation, shall keep the corporate records in safe custody and shall have such other
powers and perform such other duties as may be prescribed by the Board of Directors or
these Bylaws.
Section 8. Treasurer. The Treasurer shall keep and maintain or cause to be kept
and maintained adequate and correct amounts of its assets, liabilities, receipts,
disbursements, gains and losses. The books of account shall at all times be open to
inspection by any Director. The Treasurer shall deposit all monies and other valuables in
the name and to the credit of the Corporation in such depositories as may be designated
by the Directors. He shall disburse the funds of the Corporation as shall be ordered by
the Board of Directors, shall render to the President and the Directors whenever they
shall request it, an account of all of his transactions as Treasurer and of the financial
condition of the Corporation, shall take proper vouchers for all disbursements of the
funds of the Corporation, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or by these Bylaws.
Section 9. Executive Director. The Executive Director of the Corporation shall
have such powers and perform such duties as may from time to time be prescribed by
the Board of Directors or by these Bylaws.
Section 10. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries and the Assistant Treasurers in the order of their seniority as specified by the
Directors shall, in the absence or disability of the Secretary or the Treasurer, respectively,
perform the duties and exercise the powers of the Secretary or Treasurer and shall
perform such duties as the Board of Directors shall prescribe.
ARTICLE IV
Objects and Purposbs
Section 1. Nature of Objects and Purposes. The business of the Corporation is to
be operated and conducted in the promotion of its objects and purposes as set forth in
Article II of its Articles of Incorporation.
.
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Section 2. Dissolution. The Corporation may be dissolved by vote of the Directors,
or by the action of the Board of Directors in accordance with the provisions of California
law. Upon the dissolution of the Corporation, and after payment or provision for
payment, all debts and liabilities, the assets of the Corporation shall be distributed to the
City. If for any reason the City is unable or unwilling to accept the assets of the
Corporation, said assets will be distributed to the Federal Government; to a state or local
government for public purposes; or to a nonprofit fund, foundation, or corporation which
is organized and operated for charitable purposes and which. has established its tax-
exempt status under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986,
as amended.
Section 3. Merger. The Corporation may merge with other corporations organized
solely for nonprofit purposes, qualified and exempt from Federal taxation pursuant to
Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended, and
from State taxation, upon compliance with the provisions of California law relating to
merger and consolidation.
ARTICLE V
General Provisions
Section 1. Payment of Money, Slgnatures. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness issued in the name of or
payable to the Corporation and any and all securities owned by or held by the
Corporation requiring signature for transfer shall be signed or endorsed by such person
or persons and in such manner as from time to time shall be determined by the Board of
Directors.
Section 2. Execution of Contracts. The Board of Directors, except as in the
Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any contract or execute any instrument in the name of
and on behalf of the Corporation and such authority may be general or confined to
specific instances and unless so authorized by the Board of Directors, no officer, agent
or employee shall have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose or in any
amount.
Section 3. Fiscal Year. The fiscal year of the Corporation shall commence on the
1st day of July of each year and shall end on the 30th day of June of the next succeeding
year.
Section 4. Annual Audit. The affairs and financial condition of the Corporation
shall be audited annually at the end of each fiscal year (as provided in Section 3 above)
commencing with fiscal year 1988-1989 by an independent certified public accountant
selected by the Board of Directors and a written report of such audit and appropriate
financial statements shall be submitted to the Board of Directors prior to the next regular
meeting of the Board of Directors of the Corporation following the completion of such
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audit. Additional audits may be authorized as considered necessary or desirable by the
Board of Directors.
ARTICLE VI
Exempt Activities
Notwithstanding any other provisions of these Bylaws, no Director, officer, employee
or representative of the Corporation shall take any action or carry on any activity by or
on behalf of the Corporation not permitted to be taken or carried on by an organization
exempt under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as
amended, and the Regulations promulgated thereunder as they now exist or as they may
hereafter be amended.
ARTICLE VII
Amendment to Bylaws
These Bylaws may be amended by majority vote of the Board of Directors.
ADOPTED by the Board of Directors of the City of Carlsbad Public Improvement
Corporation on June 7, 1988.
BY h& k &Lb&d-F Secretary
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SECRETARY’S CERTIFICATE
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of the City of Carlsbad Public
Improvement Corporation, a California nonprofit public benefit corporation; and
2. That the foregoing Bylaws constitute a full, true and correct copy of the Bylaws of
said Corporation in full force and effect as of the date hereof.
7-4 IN WITNESS WHEREOF, I have hereunto subscribed my name this L day of
JUdE ,19z
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GFE3925/4
RESOLUTION NO. 88-2
A RESOLUTION ELECTING OFFICERS
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
RESOLVED, by the Directors of the City of Carlsbad Public Improvement
Corporation, that the following persons are elected to the offices set forth opposite their
names below, as officers of the Corporation, to serve until the election and qualification
of their successors, as provided in Article III, Section 2 of the Bylaws of the Corporation.
Name
Claude A. Lewis President
Ann J. Kulchin Vice President
Aletha L. Rautenkranz Secretary
RESOLVED, by the Directors of the City of Carlsbad Public Improvement
Corporation, that, pursuant to Article Ill, Section 1 of the Bylaws of the City of Carlsbad
Public Improvement Corporation, Ray Patchett, City Manager of the City of Carlsbad
shall be the Executive Director of this Corporation, James Elliott, Finance Director of the
City of Carlsbad shall be the Treasurer of this Corporation, Aletha L. Rautenkranz, City
Clerk of the City of Carlsbad shall be the Secretary of this Corporation, and Vincent F.
Biondo, City Attorney pf the City of Carlsbad shall act as legal counsel to this
Corporation.
* * * * *
I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the Board of Directors of the City of Carlsbad Public
Improvement Corporation, at a meeting thereof duly held on the 7th day of June, 1988,
by the following vote of the Directors thereof:
AYES, and in favor thereof, Directors: Lewis, Kulchin, Pettine, Mamaux and Larson
NOES, Directors: None
ABSENT, Directors: None
R. Ra -- Secretary
EXHIBIT 3
GFE3925 / 5
RESOLUTION NO. 88-3
A RESOLUTION APPOINTING TIME
AND PLACE OF REGULAR MEETINGS
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
RESOLVED, by the Board of Directors of the City of Carlsbad Public Improvement
Corporation that the first Tuesday in April of each year at the hour of six o’clock p.m.,
at the offices of the City of Carlsbad, 1200 Elm Avenue, Carlsbad, California, is hereby
appointed as the time and place for the regular meeting of this Board pursuant to Article
II, Section 6 of the Bylaws of this Corporation.
l l l l *
I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the Board of Directors of the City of Carlsbad Public
Improvement Corporation, at a meeting thereof duly held on the 7th day of June, 1988,
by the following vote of the Directors thereof:
AYES, and in favor thereof, Directors: Lewis, Kulchin, Pettine, Mamaux and Larson
NOES, Directors: None
ABSENT, Directors: None
EXHIBIT 4
OF83925 ! 6
RESOLUTION NO. 88-4
A RESOLUTION APPROVING AND AUTHORIZING
EXECUTION AND FILING OF EXEMPTION
APPLICATION TO STATE FRANCHISE TAX BOARD
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
RESOLVED, by the Board of Directors of the City of Carlsbad Public Improvement
Corporation, that that certain Exemption Application to the State Franchise Tax Board
(Form FTB3500), is hereby approved and Jones Hall Hill & White, A Professional Law
Corporation, is hereby authorized to complete said Application and the Secretary is
hereby authorized to execute said completed Application and directed to cause the filing
of said Application with the State of California Franchise Tax Board.
BE IT FURTHER RESOLVED, that the Secretary of the Corporation be and is
hereby designated the “person to contact” of this Corporation for purposes of the filing
of Form No. FTB3500.
I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the Board of Directors of the City of Carlsbad Public
Improvement Corporation, at a meeting thereof duly held on the 7th day of June, 1988,
by the following vote of the Directors thereof:
AYES, and in favor thereof, Directors: Lewis, Kulchin, Pettine, Mamaux and Larson
NOES, Directors: None
ABSENT, Directors: None
RESOLUTION NO. 88-5
EXHIBIT 5
GFE3925 I7
A RESOLUTION APPROVING AND AUTHORIZING
EXECUTION AND FILING OF VARIOUS FEDERAL FORMS
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
RESOLVED, by the Board of Directors of the City of Carlsbad Public Improvement
Corporation, that Federal Forms Nos. 1024 (Application for Recognition of Exemption
under Section 501(c)(4)), 2848 (Power of Attorney), SS-4 (Application for Employee
Identification Number) and Form 8718 (User Fee for Exempt Organization Determination
Letter Request), are hereby approved and that Jones Hall Hill & White, A Professional
Law Corporation, special counsel to the Corporation, is hereby authorized to complete
said Forms and the Secretary is authorized to execute said Forms and is authorized to
cause the appropriate filing of said Forms.
BE IT FURTHER RESOLVED, that the Secretary of the Corporation be and is
hereby designated the “person to contact” of this Corporation for purposes of the filing
of Federal Form No. 1024.
I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the Board of Directors of the City of Carlsbad Public
Improvement Corporation, at a meeting thereof duly held on the 7th day of June, 1988,
by the following vote of the Directors thereof:
AYES, and in favor thereof, Directors: Lewis, Kulchin, Pettine, Mamaux and Larson
NOES, Directors: None
ABSENT, Directors: None
-. EXHIBIT 6 - _ 13061-03 JIiHWWIiM:peh
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05113 M6701 05/20!33 05125/&?
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
RESOLUTION NO. 88-6
A RESOLUTION APPROVING, AUTHORIZING AND
DIRECTING EXECUTION OF CERTAIN LEASE FINANCING
DOCUMENTS AND AUTHORIZING AND DIRECTING
CERTAIN ACTIONS WITH RESPECT THERETO
RESOLVED, by the City of Carlsbad Public Improvement Corporation (the
“Corporation”):
WHEREAS, the City of Carlsbad (the “City”) has issued notes (the “Notes”) in the
principal amount of $6,555,000 to acquire approximately 52 acres of a eucalyptus grove
commonly known as “Hosp Grove” for general municipal purposes and presently zoned
open space; and
WHEREAS, the Notes mature on June 30, 1988, and the City wishes to complete
permanent financing for Hosp Grove and improvements to be made thereon; and
WHEREAS, the City and the Corporation proposes to enter into a lease agreement
dated as of June 1, 1988 (the “Lease Agreement”), whereby the City will lease Hosp
Grove (the “Site”) to the Corporation, and the Corporation will construct certain
improvements to the Site (the “Project”), and will lease the Project and the Site to the
City, and the City will lease the Project and the Site from the Corporation; and
WHEREAS, for the purpose of obtaining the moneys required to be deposited by it
with the Trustee to pay the Notes at maturity and to pay for financing the construction of
the Project, the Corporation proposes to assign and transfer certain of its rights under
the Lease Agreement to the Trustee, and in consideration of such assignment and the
execution of this Trust Agreement, the Trustee has agreed to execute and deliver
certificates of participation, each evidencing a fractional interest in the lease payments
made by the City under the Lease Agreement, to provide the moneys required herein to
be deposited by the Corporation; and
WHEREAS, in connection therewith, it is in the public interest and for the public
benefit that the Corporation authorize and direct execution of the Lease Agreement and
certain other financing documents in connection therewith; and
WHEREAS, pursuant to the City’s authorization, Rauscher Pierce Refsnes, Inc.
(the “Underwriter”) proposes to underwrite the financing and will purchase the
certificates of participation described below; and
WHEREAS, the documents below specified have been tiled with the Corporation,
and the members of the Corporation, with the aid of its staff, have reviewed said
documents; and
NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as follows:
SECTION 1. The below-enumerated documents be and are hereby approved, and
the President, or the Vice-President, are hereby authorized and directed to execute said
documents, with such changes, insertions and omissions as may be approved by such
official, and the Secretary of the Corporation is hereby authorized and directed to attest
to such official’s signature:
(a) a lease agreement, relating to the Site and the Project, between the
Corporation, as lessor, and the City, as lessee (the “Lease Agreement”);
(b) a trust agreement, by and among the Corporation, the City and The
Bank of California, National Association, California, as trustee (the “Trustee”),
relating to the financing and the execution and delivery of certificates of
participation evidencing the proportionate interests of the owners thereof in lease
payments to be made by the City under the Lease Agreement (the “Certificates of
Participation”);
(cl an agency agreement, by and between the Corporation and the City,
pursuant to which the Corporation will appoint the City to act as its agent for the
purposes of the construction of the Project; and
(d) an assignment agreement, by and between the Corporation and the
Trustee, pursuant to which the Corporation will assign certain of its rights under
the Lease Agreement, including its right to receive lease payments thereunder, to
the Trustee.
SECTION 2. The President, Vice-President, , Secretary and other officials of the
Corporation are hereby authorized and directed to execute such other agreements,
documents and certificates as may be necessary to effect the purposes of this resolution
and the lease financing herein authorized.
************
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I hereby certify that the foregoing resolution was duly adopted at a meeting of the
City of Carlsbad Public Improvement Corporation held on the 7th day of June, 1988, by
the following vote:
AYES, and in favor of: Lewis, Kulchin, Pettine, Mamaux and Larson
NOES: None
ABSENT: None
dQ&
Secretary
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13061-03
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06/l?-- Obl2
Obl26.
LEASE AGREEMENT
Dated as of June 1,1988
by and between the
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION, as Lessor
and the
CITY OF CARLSBAD, as Lessee
(HOSP GROVE PROJECT)
M6694
TABLE OF CONTENTS
Page
Section 1.1.
* Section 1.2.
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Representations, Covenants and Warranties of Corporation. . . . . . . . . . . . . , . . . . . . . . . . . 3
Section 3.1. Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2. Acquisition and Construction of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3. Payment of Acquisition and Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE I
DEFINITIONS AND EXHIBITS
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Ekhiiits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
ARTICLE III
DEPOSIT OF MONEYS; ACQUISITION
AND CONSTRUCTION OF THE PROJECT
Section 3.4. Payment of Delivery Costs ......................................................................... 6
Section 3.5. Unexpended Moneys .................................................................................... 6
ARTICLE IV
AGREEMENT TO LEASE; TERM OF THIS
LEASE AGREEMENT; LEASE PAYMENTS
Section 4.1. Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.2. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3. Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4. Lease Payment6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.5. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.6. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.7. Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
I
ARTICLE v
MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS
AND OTHER MATTERS
Section 5.1. Section
Maintenance, Utilities, Taxes and Assessments.. ........................................ 10
5.2. Modification of Project and Site.. .................................................................. 10
Section 5.3. Public Liability and Property Damage Insurance ......................................... 11
Section 5.4. Rental Interruption Insurance .................................................................... 11
Section 5.5. Title Insurance.. .......................................................................................... 12
Section 5.6. Insurance Net Proceeds; Form of Policies .................................................... 12
Section 5.7. Advances ................................................................................................... 12
Section 5.8. Installation of City’s Equipment.. ............................................................... 12
Section 5.9. Liens 13 . .........................................................................................................
Section 5.10. Private Business Use Limitation .............................................................. 13
Section 5.11. Private Loan Use Limitation .................................................................... 13
Section 5.12. Federal Guarantee Prohibition .................................................................. 13
_ ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USEOFNETPROCEEDS
Section 6.1. Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.2. Application of Net Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.3. Abatement of Lease Payments in the Event of Damage or
Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
Section 7.1. Disclaimer of Warranties.. .......................................................................... 16
Section 7.2. Access to the Site and the Project.. ............................................................. 16
Section 7.3. Release and Indemnification Covenants ...................................................... 16
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1. Assignment by the Corporation.. ................................................................. 17
Section 8.2. Assignment and Subleasing by the City.. .................................................... 17
Section 8.3. Amendment of this Lease Agreement ......................................................... 17
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined.. ......................................................................... 18
Section 9.2. Remedies on Default.. ................................................................................. 18
Section 9.3. No Remedy Exclusive ................................................................................. 20
Section 9.4. Agreement to Pay Attorneys’ Fees and Expenses.. ...................................... 20
Section 9.5. No Additional Waiver Implied by One Waiver ............................................. 20
Section 9.6. Application of Proceeds ............................................................................... 20
Section 9.7. Trustee and Certificate Owners to Exercise Rights ....... ..i ............................ 20
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 11.1.
Section 11.2.
Section 11.3.
Section 11.4.
Section 11.5.
Section 11.6.
Section 11.7.
Section 11.8.
Section 11.9.
Security Deposit ........................................................................................ 21
Purchase Option ....................................................................................... 21
Mandatory Prepayment From Net Proceeds of Insurance or
Eminent Domain ......................................................................... 22
Credit for Amount6 on Deposit .................................................................. 23
ARTICLE XI
MISCELLANEOUS
Notices.. ................................................................................................... 24
Binding Effect .......................................................................................... 24
Severability .............................................................................................. 24
Net-net-net Lease.. ................................................................................. 24
Further Assurances and Corrective Instruments ....................................... 24
Execution in Counterparts ........................................................................ 25
Applicable Law.. .... . .................................................................................. 25
Corporation and City Representatives ....................................................... 25
Captions.. ................................................................................................. 25
EXHIBIT B - DESCRIPTION OF THE SITE
EXHIBIT C - DESCRIPTION OF THE PROJECT
EXHIBIT D - SCHEDULE OF LEASE PAYMENTS
LEASE AGREEMENT
THIS LEASE AGREEMENT (the “Lease Agreement”), dated for convenience as of
June 1, 1988, by and between the CITY OF CARLSBAD PUBLIC IMPROVEMENT
CORPORATION, a nonprofit public benefit corporation organized and existing under the
laws of the State of California, as lessor (the “Corporation”), and the CITY OF
CARLSBAD, a municipal corporation and general law city organized and existing under
the laws of the State of California, as lessee (the “City”);
WITNESSETH- -__L---.---m
WHEREAS, the City has issued notes (the “Notes”) in the principal amount of
$6;555,000 to acquire approximately 52 acres of a eucalyptus grove commonly known as
“Hosp Grove” for general municipal purposes and is currently zoned open space; and
WHEREAS, the Notes mature on June 36, 1988, and the City wishes to complete
permanent financing for Hosp Grove and improvements to be made thereon; and
WHEREAS, pursuant to a Lease Agreement the City will agree to lease Hosp
Grove (the “Site”) to the Corporation, and the Corporation has agreed to construct certain
improvements to the Site (the “Project”), and to lease the Project and the Site to the City,
and the City will agree to lease the Project and the Site from the Corporation; and
WHEREAS, for the purpose of obtaining the moneys required to be deposited by it
with the Trustee to pay the Notes at maturity and to pay for financing the construction of
the Project, the Corporation proposes to assign and transfer certain of its rights under
the Lease Agreement to the Trustee, and in consideration of such assignment and the
execution of the Trust Agreement, the Trustee has agreed to execute and deliver
certificates of participation, each evidencing a fractional interest in the lease payments
made by the City under the Lease Agreement, to provide the moneys required herein to
be deposited by the Corporation; and
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
DEFmIONS AND EXHIBITS
Section 1.1. Definitions. The terms defined in Ezhibit- A attached hereto and by
this reference incorpor@ed herein, as used and capitalized herein, shall, for all purposes
of this Lease Agreement, have the meanings ascribed to them in said Exhibit A unless
the context clearly requires some other meaning.
Section 1.2. Exhibits. The following exhibits are attached to, and by this
reference made a part of, this Lease Agreement:
Exhibit A: Definitions.
Exhibit B: The description of the real property constituting the Site.
Exhibit C: The description of the Project.
Exhibit D: The schedule of Lease Payments to be paid by the City
hereunder with respect to the Site and the Project, showing the
date and amount of each such Lease Payment.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City. The City
represents, covenants _and warrants to the Corporation as follows:
(a) Due Organization and Existence. The City is a municipal corporation and
general law city duly organized and existing under the laws of the State.
(b) Authorization. The laws of the State authorize the City to enter into this
Lease Agreement, the Agency Agreement and the Trust Agreement and to 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 all of the aforesaid
agreements.
(c) No Violations. Neither the execution and delivery of this Lease Agreement,
the Agency Agreement or the Trust Agreement, nor the fulfillment of or compliance with
the terms and conditions hereof or thereof, nor the consummation of the transactions
contemplated hereby or thereby, conflicts with or results in a breach of the terms,
conditions or provisions of any restriction or any agreement or instrument to which the
City is now a party or by which the City is bound, or constitutes a default under any of
the foregoing, or results in the creation or imposition of any lien, charge or encumbrances
whatsoever upon any of the property or assets of the City, or upon the Site or the Project,
except Permitted Encumbrances.
(d) Execution and Delivery. The City has duly authorized and executed this
Lease Agreement in accordance with the laws of the State.
Section 2.2. Representations, Covenants and Warranties of Corporation. The
Corporation represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence. The Corporation is a nonprofit public benefit
corporation duly organized and existing under and by virtue of the laws of the State; has
power to enter into this Lease Agreement, the Agency Agreement, the Assignment
Agreement and the Trust Agreement; is possessed of full power to own and hold, improve
and equip real and personal property, and to lease and sell the same; and has duly
authorized the execution and delivery of all of the aforesaid agreements.
(b) No Encumbrances. The Corporation will not pledge the Lease Payments or
other amounts derived from the Project or the Site and from its other rights under this
Lease Agreement, and will not mortgage or encumber the Project or the Site, except as
provided under the terms of this Lease Agreement and the Trust Agreement.
(c) No Violations. Neither the execution and delivery of this Lease Agreement,
the Agency Agreement, the Assignment Agreement or the Trust Agreement, nor the
fulfillment of or compliance with the terms and conditions hereof or thereof, nor the
consummation of the transactions contemplated hereby or thereby, conflicts with or
results in a breach of the terms, conditions or provisions of any restriction or any
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agreement or instrument to which the Corporation is now a party or by which the
Corporation is bound, or constitutes a default under any of the foregoing, or results in the
creation or imposition of any hen, charge or encumbrance whatsoever upon any of the
property or assets of the Corporation, or upon the Project or the Site, except Permitted
Encumbrances.
(d) No Assignments. Except as provided herein, the Corporation will not assign
this Lease Agreement, its right to receive Lease Payments from the City, or its duties and
obligations hereunder to any other person, firm or corporation so as to impair or violate
the representations, covenants and warranties contained in this Section 2.2.
(e) Execution and Delivery. The Corporation has duly authorized and executed
this Lease Agreement in accordance with the laws of the State.
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ARTICLE III
DEPOSIT OF MOM!WS; ACQUISITION
AND CONSTRUCTION OF THE PROJECT
Section 3.1. Deposit of Moneys. On the Closing Date, the Corporation shall cause
to be deposited with the Trustee the proceeds of sale of the Certificates, including accrued
interest. Pursuant to Section 2.07 of the Trust Agreement, the Reserve Requirement
shall be deposited with the Trustee in the Reserve Fund, a portion of the Lease Payments
payable by the City hereunder from June 1, 1988 to June 28, 1988, shall be deposited
with the Trustee in the Lease Payment Fund, an amount necessary to pay the principal
of and interest on the Notes at maturity shall be deposited in the Escrow Fund, amounts
estimated to be required to pay Delivery Costs shall be deposited in the Delivery Costs
Fund, and the remaining balance of said amount shall be deposited in the Acquisition
and Construction Fund.
Section 3.2. Acquisition and Construction of Project. The Corporation agrees to
acquire and construct the Project pursuant to the plans and specifications after the same
are submitted to and approved by the City. The Corporation shall appoint the City as its
agent for the purposes of acquisition and construction of the Project and in furtherance
.thereof the Corporation and the City have entered into the Agency Agreement. The City,
as agent of the Corporation, shall cause the acquisition and construction of the street and
storm drain improvements, to be performed diligently to the end that the Project will be
substantially completed in accordance with the aforesaid plans and specifications on or
prior to the Completion Date. The City may change the specifications of the Project, so
long as such change does not reduce the value of the Project or substantially alter the
nature of the Project, and that any increase in Acquisition and Construction Costs shall
not result from such change, unless the City deposits in the Acquisition and Construction
Fund an amount sufficient to pay such increase. In addition, in the event that the costs
of constructing, acquiring, delivering and installing the Project are greater than the
amount of money deposited in or transferred to the Acquisition and Construction Fund,
together with investment earnings thereon, the City agrees to deposit into the Acquisition
and Construction Fund an amount of money necessary to pay such increased Acquisition
and Construction Costs, but only from funds arising in the fiscal year in which the City
has entered into this Lease Agreement. The City agrees that upon substantial
completion of any portion of the Project it will take possession of that portion of the
Project under the terms and provisions of this Lease Agreement. No changes shall be
made in such plans and specifications unless such changes are approved in writing by the
City.
Upon completion of acquisition and construction of the Project, the City shall
deliver to the Trustee, as assignee of the Corporation, a Certificate of Completion thereof
executed by a City Representative.
If the Corporation, for any reason whatsoever, cannot deliver possession of the
completed Project to the City by the Completion Date, this Lease Agreement shall not be
void or voidable, nor shall the Corporation be liable to the City for any loss or damage
resulting therefrom; but ‘m such event the remaining Lease Payments pertaining to the
Project shall be abated, in the proportion that the Acquisition and Construction Cost of
-5-
the portion of the Project not available for use by the City bears to the total Acquisition
and Construction Costs, with respect to the period between the Completion Date, and the
time when the Corporation is able to use such portion of the Project.
Section 3.3. Payment of Acquisition and Construction Costs. Payment for the
acquisition and construction of the Project, as well as all other Acquisition and
Construction Costs, shsll be made from the moneys deposited in the Acquisition and
Construction Fund as provided in the Trust Agreement, which moneys shall be disbursed
for such purpose in accordance and upon compliance with Section 3.02 of the Trust
Agreement.
Section 3.4. Payment of Delivery Costs. Payment of Delivery Costs shall be made
from the moneys deposited with the Trustee in the Delivery Costs Fund, which moneys
. shall be disbursed for such purpose in accordance and upon compliance with Section 3.04
of the Trust Agreement.
Section 3.5. Unexpended Moneys. The Corporation and the City acknowledge that
the--Acquisition and Construction Fund and the Delivery Costs Fund have been created
for the benefit of the City. All unexpended moneys remaining in the Acquisition and
Construction Fund and not required for payment of Acquisition and Construction Costs
shall, on the Completion Date be transferred by the Trustee to the Lease Payment Fund
and credited to the Lease Payments as the same shall become due and payable.
-6-
ARTICLE IV
AGREEMENT TO LEASE; TERM OF THIS
LEASE AGREEMENT; LEASE PAYMENTS
Section 4.1. Lease. The City hereby leases the Site to the Corporation, and the
Corporation hereby lz the Project and the Site back to the City, and the City hereby
leases the Project and the Site from the Corporation, upon the terms and conditions set
forth in this Lease Agreement.
Section 4.2. Term of Apreement. The Term of the Lease’ Agreement shall
commence on the date of recordation hereof, and shall end on August 1, 2008, unless
such term is extended as hereinafter provided. If on August 1, ‘2008, the Trust
Agreement shall not be discharged by its terms, or if the Lease Payments payable
hereunder shall have been abated at any time and for any reason, then the Term of the
Lease Agreement shall be extended until there has been deposited with the Trustee an
amount sufficient to pay obligations due under the Lease Agreement, but in no event
shall the Term of the Lease Agreement extend beyond August 1, 2018. If prior to August
1, 2008, the Trust Agreement shall be discharged by its terms, the Term of the Lease
Agreement shall thereupon end.
Section 4.3. Possession. The City has taken possession of the Site and agrees to
take possession of the Project on the Completion Date, and the first Lease Payment shall
be due on January 15, 1989.
Section 4.4. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Articles VI and X hereof, the
City agrees to pay to the Corporation, its successors and assigns, as rental for the use
and occupancy of the Project and the Site during each Rental Period, the Lease Payments
(denominated into components of principal and interest) for the Project and the Site in
the respective amounts specified in Exhibit D hereto, to be due and payable on the
respective Lease Payment Dates specified in Exhibit D hereto. Any amount held in the
Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the
prepayment of the Lease Payments in part but not in whole pursuant to Article X hereof
and other than amounts required for payment of past due principal or interest
represented by any Certificates not presented for payment) shall be credited towards the
Lease Payment then due and payable; and no Lease Payment need be made on any Lease
Payment Date if the amounts then held in the Lease Payment Fund are at least equal to
the Lease Payment then required to be paid. The Lease Payments for the Project and the
Site payable in any Rental Period shall be for the use of the Project and the Site for such
Rental Period.
(b) Effect of Prepayment. In the event that the City prepays all remaining Lease
Payments in full pursuant to Article X hereof, the City’s obligations under this Lease
Agreement shall thereupon cease and terminate, including but not limited to the City’s
obligation to pay Lease Payments under this Section 4.4; subject however, to the
provisions of Section 10.1 hereof in the case of prepayment by application of a security
deposit. In the event that the City prepays the Lease Payments in part but not in whole
-7-
pursuant to Section 10.2 hereof, pursuant to Section 10.3 hereof as a result of any
insurance or condemnation award with respect to any portion of the Site or the Project,
or pursuant to Section 10.4 hereof as a result of excess funds in the Acquisition and
Construction Fund, such prepayment shall be credited entirely towards the prepayment
of the Lease Payments as follows: (i) the principal components of each remaining such
Lease Payments shall be reduced on a pro rata basis in integral multiples of $5,000 (in
inverse order of payme_nt date in the case of a prepayment pursuant to Section 10.4
hereof); and (ii) the interest component of each remaining such Lease Payments shall be
reduced by the aggregate corresponding amount of interest which would otherwise be
payable with respect to the Certificates thereby redeemed pursuant to Sections 4.01(a),
(b) or (c), as the case may be, of the Trust Agreement,
(c) Rate on Overdue Payments. In the event the City should fail to make any of
the payments required in this Section 4.4, the payment in default shall continue as .an
obligation of the City until the amount in default shall have been fully paid, and the City
agrees to pay the same with interest thereon, to the extent permitted by law, from the
date of default to the date of payment at the rate of twelve percent (12%) per annum.
Such interest, if received, shall be deposited in the Lease Payment Fund.
(d) Fair Rental V a ue. 1 The Lease Payments for the Project and the Site for each
Rental Period shall constitute the total rental for the Project and the Site for each Rental
Period and shall be paid by the City in each Rental Period for and in consideration of the
right of the use and occupancy of, and the continued quiet use and enjoyment of, the
Project and the Site during each Rental Period. The parties hereto have agreed and
determined that the total Lease Payments for the Project and the Site represent the fair
rental value of the Project and the Site. In making such determination, consideration has
been given to the obligations of the parties under the Lease Agreement, the uses and
purposes which may be served by the Project and the Site and the benefits therefrom
which will accrue to the City and the general public.
(e) Budget and Appropriation. The City covenants to take such action as may be
necessary to include all Lease Payments due hereunder in each of its budgets during the
Term of this Lease Agreement and to make the necessary annual appropriations for all
such Lease Payments. The covenants on the part of the City herein contained shall be
deemed to be and shall be construed to be duties imposed by law and it shall be the duty
of each and every public official of the City to take such action and do such things as are
required by law in the performance of the official duty of such officials to enable the City
to carry out and perform the covenants and agreements in this Lease Agreement agreed
to be carried out and performed by the City.
(0 Assignment. The City understands and agrees that all Lease Payments have
been assigned by the Corporation to the Trustee in trust, pursuant to the Assignment
Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents
to such assignment. The Corporation hereby directs the City, and the City hereby agrees
to pay to the Trustee at the Principal Corporate Trust Office of the Trustee, all payments
payable by the City pursuant to this Section 4.4 and all amounts payable by the City
pursuant to Article X hereof.
-8-
Section 4.5. Quiet Enjoyment. During the Term of the Lease Agreement, the
Corporation shall provide the City with quiet use and enjoyment of the Project and the
Site, and the City shall, during such Term, peaceably and quietly have and hold and
enjoy the Project and the Site without suit, trouble or hindrance from the Corporation,
except as expressly set, forth in this Lease Agreement. The Corporation will, at the
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 and enjoyment to the extent the Corporation may
lawfully do so. NotwiThstanding the foregoing, the Corporation shall have the right to
inspect the Project and the Site as provided in Section 7.2. hereof.
Section 4.6. Title. During the Term of the Lease Agreement, the Corporation
shall hold fee title to the Project and any and all additions which comprise fixtures,
repairs, replacements or modifications to the Project or the Site, except for those fixtures,
repairs, replacements or modifications which are added to the Project or the Site by the
City at its own expense and which may be removed without damaging the Project and
except for any items added to the Project or the Site by the City pursuant to Section 5.9
hereof.
If the City prepays the Lease Payments in full pursuant to Article X hereof or
makes the security deposit permitted by Section 10.1 hereof, or pays all Lease Payments
during the Term of the Lease Agreement as the same become due and payable, all right,
title and interest of the Corporation in and to the Project and the Site shall be
transferred to and vested in the City. The Corporation agrees to take any and all steps
and execute and record any and all documents reasonably required by the City to
consummate any such transfer of title.
Section 4.7. Additional Payments. In addition to the Lease Payments, the City
shall pay when due all costs and expenses incurred by the Corporation to comply with
the provisions of the Trust Agreement, including without limitation all Delivery Costs (to
the extent not paid from amounts on deposit in the Delivery Costs Fund), compensation
due to the Trustee and all costs and expenses of auditors, engineers and accountants.
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ARTICLE V
M-NMCE; TAXES; INSVRANCE; USE LIlMITATIONS
AND OTBtERMATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the
Term of this Lease Agreement, as part of the consideration for the rental of the Project
and the Site, all improvement, repair and maintenance of the Project and the Site shall
be the responsibility of the City and the City shall pay for or otherwise arrange for the
payment of all utility services, if any, supplied to the Project and the Site which may
include, without limitation, power, gas, telephone, light, heating, water and all other
utility services, and shall pay for or otherwise arrange for the payment of the cost of the
repair and replacement of the Project and the Site resulting from ordinary wear and tear
or want of care on the part of the City or any assignee or sublessee thereof. In exchange
for the Lease Payments herein provided, the Corporation agrees to provide only the
Project and the Site, as hereinbefore more specifically set forth. The City waives the
benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such
waiver shall not limit any of the rights of the City under the terms of this Lease
Agreement.
The City shall also pay or cause to be paid all taxes and assessments of any type
or nature, if any, charged to the Corporation or the City affecting the Project and the Site
or the respective interests or estates therein; provided that with respect to special
assessments or other governmental charges that may lawfully be paid in installments
over a period of years, the City shall be obligated to pay only such installments as are
required to be paid during the Term of the Lease Agreement as and when the same
become due.
The City may, at the City’s expense and in its name, in good faith contest any
such taxes, assessments, utility and other charges and, in the event of any such contest,
may permit the taxes, assessments or other charges so contested to remain unpaid during
the period of such contest and any appeal therefrom unless the Corporation shall notify
the City that, in the opinion of Independent Counsel, by nonpayment of any such items,
the interest of the Corporation in the Project and the Site will be materially endangered
or the Project or any part thereof will be subject to loss or forfeiture, in which event the
City shall promptly pay such taxes, assessments or charges or provide the Corporation
with full security against any loss which may result from nonpayment, in form
satisfactory to the Corporation and the Trustee.
Section 5.2. Modification of Project and Site. The City shall, at its own expense,
have the right to remodel the Project and the Site or to make additions, modifications
and improvements to the Project and the Site. All additions, modifications and
improvements to the Project, but not any additional buildings or improvements, shall
thereafter comprise part of such Project and Site and be subject to the provisions of this
Lease Agreement. Such additions, modifications and improvements shall not in any way
damage the Project and the Site or cause them to be used for purposes other than those
authorized under the provisions of State and federal law; and the Project and the Site,
upon completion of any additions, modifications and improvements made thereto
pursuant to this Section 5.2, shall be of a value which is not substantially less than the
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value of the Project and the Site immediately prior to the making of such additions,
modifications and improvements. The City will not permit any mechanic’s or other hen to
be established or remain against the Project or the Site for labor or materials fiunished in
connection with any remodeling, additions, modifications, improvements, repairs,
renewals or replacements made by the City pursuant to this Section 5.2; provided that if
any such hen is established and the City shall first notify or cause to be notified the
Corporation of the City’s intention to do so, the City may in good faith contest any lien
filed or established ag&st the Project or 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 shah provide the Corporation with full security
against any loss or forfeiture which might arise from the nonpayment of any such item, in
form satisfactory to the Corporation. The Corporation will cooperate fully in any such
contest, upon the request and at the expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City shall
maintain or cause to be maintained, throughout the Term of the Lease Agreement during
the time the Project is under construction or is completed (but during the period of
construction of the Project only if such insurance is not provided by a Contractor),
insurance policies, including a standard comprehensive general insurance policy or
policies in protection of the City, the Corporation and the Trustee, including their
respective members, officers, agents and employees. Said policy or policies shall provide
for indemnification of said parties against direct or contingent loss or liability for
damages for bodily and personal injury, death or property damage occasioned by reason
of the construction or operation of the Project and the Site. Said policy or policies shall
provide coverage in the minimum liability limits of $l,OOO,OOO for personal injury or
death of each person and $3,000,000 for personal injury or deaths of two or more persons
in each accident or event, and in a minimum amount of $100,000 (subject to a deductible
clause of not to exceed $5,000) for damage to property resulting from each accident or
event. Such public liability and property damage insurance may, however, be in the form
of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability
insurance may be maintained as part of or in conjunction with any other liability
insurance coverage carried by the City, and may be maintained in the form of self-
insurance by the City. The Net Proceeds of such liability insurance shall be applied
toward extinguishment or satisfaction of the liability with respect to which the insurance
proceeds shall have been paid.
Section 5.4. Rental Interruption Insurance. The City shall procure, and maintain
through the Term of the Lease Agreement during the time the Project is under
construction or is completed, rental interruption or use and occupancy insurance to cover
loss, total or partial, of the use of any structures constituting any part of the Project
during the Term of the Lease Agreement as a result of any earthquake or earth
movement, in an amount at least equal to Lease Payments attributable to the Project for
a period of eighteen months. The Net Proceeds of such insurance shall be paid to the
Trustee and deposited in the Lease Payment Fund, and shall be credited towards the
payment of the Lease Payments in the order in which such Lease Payments come due
and payable.
The City shall be permitted to self-insure for rental interruption or use and
occupancy insurance required above, so long as:
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(1) the City segregates within its funds an amount designated as a reserve for
such loss; and
(2) the City’s liability under such self-insurance is limited to amounts on hand in
such segregated reserve;, and
(3) the co b m ined coverage under such self-insurance program and any other
rental interruption or use and occupancy insurance are equal to the miniumum insurance
coverage indicated above.
Section 5.5. Title Insurance. The City shall provide, at its own expense, on or
before the Closing Date, a CLTA title insurance policy in the amount of not less than
dollars ($ A insuring the
City’s leasehold estate in the Project and the Site, subject only to Permitted
Encumbrances. All Net Proceeds received under said policy shall be deposited with the
Trustee in the Lease Payment Fund and shall be credited towards the prepayment of the
remaining Lease Payments pursuant to Section 10.3 hereof.
Section 5.6. Insurance Net Proceeds: Form of Policies. The policy of insurance
required by Section 5.4 hereof shall provide that all proceeds thereunder shall be payable
to the Trustee and applied as provided in Section 6.2 hereof. On or before July 1 of each
year, the City shall certify to the Trustee that all policies of insurance and any
statements of self-insurance are in conformance with the requirements of this Lease
Agreement. The City shall have the adequacy of any insurance reserves reviewed at
least annually by the City’s risk manager or an independent insurance consultant and
shall maintain reserves in accordance therewith. The City shall pay or cause to be paid
when due the premiums for all insurance policies required by this Lease Agreement. All
such policies shall provide that the Trustee shall be given thirty (30) days’ notice of each
expiration, any intended cancellation thereof or reduction of the coverage provided
thereby. The Trustee shall not be responsible for the sufficiency or adequacy of any
insurance herein required and shall be fully protected in accepting payment on account of
such insurance or any adjustment, compromise or settlement of any loss agreed to by the
Trustee.
Section 5.7. Advances. If the City shall fail to perform any of its obligations
under this Article V the Corporation may, but shall not be obligated to, take such action
as may be necessary to cure such failure, including the advancement of money, and the
City shall be obligated to repay all such advances as soon as possible, with interest at the
rate of twelve percent (12%) per annum from the date of the advance to the date of
repayment.
Section 5.8. Installation of City’s Equipment. The City may at any time and from
time to time, in its sole discretion and at its own expense, install or permit to be installed
items of equipment or other personal property in or upon any portion of the Project and
the Site. All such items shall remain the sole property of the City, in which neither the
Corporation nor the Trustee shall have any interest, and may be modified or removed by
the City at any time provided that the City shall repair and restore any and all damage
to the Project or the Site resulting fYom the installation, modification or removal of any
such items. Nothing in this Lease Agreement shall prevent the City from purchasing or
leasing items to be installed pursuant to this Section 5.8 under a .lease or conditional sale
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agreement, or subject to a vendor’s hen or security agreement, as security for the unpaid
portion of the purchase price thereof, provided that no such hen or security interest shall
attach to any part of the Project or the Site.
Section 5.9. Liens. The City shall not, directly or indirectly, create, incur, assume
or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with
respect to the Project or the Site, other than the respective rights of the Corporation and
the City as provided herein and Permitted Encumbrances. Except as expressly provided
in this Article V, the City shall promptly, at its own expense, take such action as may be
necessary to duly discharge or remove any such mortgage, pledge, hen, charge,
encumbrance or claim, for which it is responsible, if the same shall arise at any time.
The City shall reimburse the Corporation for any expense incurred by it in order to
discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 5.10. Private Business Use Limitation. The City shall assure that (i) not
in excess of ten percent (10%) of the Net Proceeds of the Certificates is used for Private
Business Use if, in addition, the payment of more than ten percent (10%) of the principal
or ten percent (10%) of the interest components of Lease Payments due during the Term
of the Lease Agreement is, under the terms of this Lease Agreement or any underlying
arrangement, directly or indirectly, secured by any interest in property used or to be used
for a Private Business Use or in payments in respect of property used or to be used for a
Private Business Use or is to be derived from payments, whether or not to the City, in
respect of property or borrowed money used or to be used for a Private Business Use; and
(ii) and that, in the event that both (A) in excess of five percent (5%) of the Net Proceeds
of the Certificates are used for a Private Business Use, and (B) an amount in excess of
five percent (5%) of the principal or five percent (5%) of the interest components of Lease
Payments due during the Term of the Lease Agreement is, under the terms of this Lease
Agreement or any underlying arrangement, directly or indirectly, secured by any interest
in property used or to be used for said Private Business Use or in payments in respect of
property used or to be used for said Private Business Use or is to be derived from
payments, whether or not to the City, in respect of property or borrowed money used or
to be used for said Private Business Use, then said excess over said five percent (5%) of
Net Proceeds of the Certificates used for a Private Business Use shall be used for a
Private Business Use related to the governmental use of the Project.
Section 5.11. Private Loan Use Limitation. The City shall assure that not in
excess of five percent (5%) of the Net Proceeds of the Certificates is used, directly or
indirectly, to make or finance a loan (other than loans constituting Nonpurpose
Obligations or assessments) to persons other than state or local government units,
Section 5.12. Federal Guarantee Prohibition. The City shall not take any action
or permit or suffer any action to be taken if the result of the same would be to cause the
Lease Payments to be “federally guaranteed” within the meaning of section 149(b) of the
Code and Regulations promulgated thereunder.
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMMNT DOMAIN;
USE OF NET PROCEEDS
Section 6.1. Eminent Domain. If all of the Project and the Site shall be taken
permanently under the power of eminent domain or sold to a government threatening to
exercise the power of eminent domain, the Term of this Lease Agreement shall cease as of
the day possession shall be so taken. If’ less than all of the Project and the Site shall be
taken permanently, or if all of the Project or the Site or any part thereof shall be taken
temporarily under the power of eminent domain, (1) this Lease Agreement shall continue
in full force and effect and shall not be terminated by virtue of such taking and the
parties waive the benefit of any law to the contrary, and (2) there shall be a partial
abatement of Lease Payments as a result of the application of the Net Proceeds of any
eminent domain award to the prepayment of the Lease Payments hereunder, in an
amount to be agreed upon by the City and the Corporation such that the resulting Lease
Payments represent fair consideration for the use and occupancy of the remaining usable
portion of the Project and the Site.
Section 6.2. Application of Net Proceeds.
(a) From Insurance Award. The Net Proceeds of any insurance award resulting
from any damage to or destruction of any portion of the Project by fire or other casualty
shall be paid by the City to the Trustee, as assignee of the Corporation under the
Assignment Agreement, and deposited in the Insurance and Condemnation Fund by the
Trustee and applied as set forth in Section 7.01 of the Trust Agreement.
(b) From Eminent Domain Award. The Net Proceeds of any eminent domain
award resulting from any event described in Section 6.1 hereof shall be paid by the City
to the Trustee, as assignee of the Corporation under the Assignment Agreement, and
deposited in the Insurance and Condemnation Fund and applied as set forth in Section
7.02 of the Trust Agreement.
Section 6.3. Abatement of Lease Payments in the Event of Damage or
Destruction. The amount of Lease Payments shall be abated, during any period in which
by reason of damage or destruction (other than by eminent domain which is hereinbefore
provided for) there is substantial interference with the use and occupancy by the City of
the Project (other than any portions of the Project described in Section 5.2 hereof) or the
Site or any portion thereof. The amount of such abatement shall be agreed upon by the
City and the Corporation such that the resulting Lease Payments represent fair
consideration for the use and occupancy of the portions of the Project and the Site not
damaged or destroyed. Such abatement shall continue for the period commencing with
such dam.age or destruction and ending with the substantial completion of the work of
repair or reconstruction. In the event of any such damage or destruction, this Lease
Agreement shall continue in full force and effect and the City waives any right to
terminate this Lease Agreement by virtue of any such damage and destruction.
Notwithstanding the foregoing, there shall be no abatement of Lease Payments under
this Section 6.3 to the extent that the proceeds of rental interruption insurance or
amounts in the Reserve Fund are available to pay Lease Payments which would
otherwise be abated under this Section 6.3, it being hereby declared that such proceeds
and amounts constitute special funds for the payment of the Lease Payments.
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ARTICLE VII
DISC-R OF WARRANT IES; ACCESS
Section 7.1. Disclaimer of Warranties. The Corporation makes no warranty or
representation, either- express or implied, as to the value, design, condition,
merchantibility or fitness for any particular purpose or fitness for the use contemplated
by the City of the Project or the Site, or any other representation or warranty with
respect to the Project or the Site. In no event shall the Corporation be liable for
incidental, indirect, special or consequential damages in connection with or arising out of
this Lease Agreement, the Agency Agreement or the Trust Agreement for the existence,
furnishing, functioning or the City’s use of the Project or the Site.
Section 7.2. Access to the Site and the Project. The City agrees that the
Corporation and any Corporation Representative, and the Corporation’s successors or
assigns, shall have the right at all reasonable times to enter upon and to examine and
inspect the Project and the Site. The City further agrees that the Corporation, any
Corporation Representative, and the Corporation’s successors or assigns shall have such
rights of access to the Project and the Site as may be reasonably necessary to cause the
proper maintenance of the Project and the Site in the event of failure by the City to
perform its obligations hereunder.
Section 7.3. Release and Indemnification Covenants. The City shall and hereby
agrees to indemnify and save the Corporation and its officers, agents, successors and
assigns harmless from and against all claims, losses and damages, including legal fees
and expenses, arising out of (i) the use, maintenance, condition or management of, or
from any work or thing done on the Project or the Site by the City, (ii) any breach or
default on the part of the City in the performance of any of its obligations under this
Lease Agreement, (iii) any act or negligence of ,the City or of any of its agents,
contractors, servants, employees or licensees with respect to the Project or the Site, (iv)
any act or negligence of any sublessee of the City with respect to the Project or the Site,
or (v) the acquisition and construction of the Project or the authorization of payment of
the Acquisition and Construction Costs and Delivery Costs by the Corporation. No
indemnification is made under this Section 7.3 or elsewhere in this Lease Agreement for
willful misconduct, negligence; or breach of duty under this Lease Agreement by the
Corporation, its officers, agents, employees, successors or assigns.
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ARTICLE VIII
ASSZGIWWEh’T, SURLEAS~GANDAMENDMENT
Section 8.1. Assignment by’the Corporation. The Corporation’s rights under this
Lease Agreement, inc@ing the right to receive and enforce payment of the Lease
Payments to be made by the City under this Lease Agreement have been assigned to the
Trustee pursuant to the Assignment Agreement.
Section 8.2. Assignment and Subleasing by the City. This Lease Agreement may
not be assigned by the City. The City may sublease the Project and the Site or any
portion thereof, but only with the written consent of the Corporation and subject to all of
the following conditions:
(i) This Lease Agreement and the obligation of the City to make Lease Payments
hereunder shall remain obligations of the City; and
(ii) The City shall, within thirty (30) days after the delivery thereof, furnish or
cause to be furnished to the Corporation and the Trustee a true and complete copy of
such sublease; and
(iii) No such sublease by the City shall cause the Project or the Site to be used for
a purpose other than as may be authorized under the provisions of the Constitution and
laws of the State; and
(iv) The City shall furnish the Corporation and the Trustee with a written opinion
of nationally recognized bond counsel, which shall be an Independent Counsel, stating
that such sublease does not cause the interest components of the Lease Payments to
become subject to federal income taxes or State personal income taxes.
Section 8.3. Amendment of this Lease Agreement. Without the prior written
consent of the Trustee, the City will not alter, modify or cancel, or agree or consent to
alter, modify or cancel this Lease Agreement, excepting only such alteration or
modification as may be permitted by Article X of the Trust Agreement.
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ARTICLE IX
EVENTS OF DEFAULT Ah’D REMEDIES
Section 9.1. Events of Default Defined. The following shall be “events of default”
under this Lease Agreement and the terms “events of default” and “default” shall mean,
whenever they are used in this Lease Agreement, with respect to the Project or the Site,
any one or more of the following events:
(i) Failure by the City to pay any Lease Payment or other payment required to be
paid hereunder at the time specified herein.
(ii) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as referred to in clause (i)
of this Section 9.1, for a period of thirty (30) days after written notice specifying such
failure and requesting that it be remedied has been given to the City by the Corporation,
the Trustee, or the Owners of not less than five percent (5%) in aggregate principal
amount of Certificates then outstanding; provided, however, if the failure stated in the
notice can be corrected, but not within the applicable period, the Corporation, the Trustee
and such Owners shall not unreasonably withhold their consent to an extension of such
time if corrective action is instituted by the City within the applicable period and
diligently pursued until the default is corrected.
(iii) The filing by the City of a voluntary petition in bankruptcy, or failure by the
City promptly to lift any execution, garnishment or attachment, or adjudication of the
City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by
the City into an agreement of composition with creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the City in any proceedings instituted
under the provisions of the Federal Bankruptcy Act, as amended, or under any similar
acts which may hereafter be enacted.
Section 9.2. Remedies on Default. Whenever any event of default referred to in
Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the
Corporation to exercise any and all remedies available pursuant to law or granted
pursuant to this Lease Agreement; provided, however, that notwithstanding anything
herein or in the Trust Agreement to the contrary, there shall be no right under any
circumstances to accelerate the Lease Payments or otherwise declare any Lease
Payments not then in default to be immediately due and payable. Each and every
covenant hereof to be kept and performed by the City is expressly made a condition and
upon the breach thereof the Corporation may exercise any and all rights of entry and re-
entry upon the Project and the Site, and also, at its option, with or without such entry,
may terminate this Lease Agreement; provided, that no such termination shall be effected
either by operation of law or acts of the parties hereto, except only in the manner herein
expressly provided. In the event of such default and notwithstanding any re-entry by the
Corporation, the City shall, as herein expressly provided, continue to remain liable for
the payment of the Lease Payments and/or damages for breach of this Lease Agreement
and the performance of all conditions herein contained and, in any event such rent and/or
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damages shall be payable to the Corporation at the time and in the manner as herein
provided, to wit:
(a) In the event the Corporation does not elect to terminate this Lease Agreement
in the manner hereinafter provided for in subparagraph (b) of this Section 9.2, the City
agrees to and shall remain liable for the payment of all Lease Payments and the
performance of all conditions herein contained and shah reimburse the Corporation for
any deficiency arising out of the re-leasing of the Project and the Site, or, in the event
the Corporation is unable to re-lease the Project and the Site, then for the full amount of
all Lease Payments to the end of the Term of the Lease Agreement, but said Lease
Payments and/or deficiency shall be payable only at the same time and in the same
manner as hereinabove provided for the payment of Lease Payments hereunder,
notwithstanding such entry or re-entry by the Corporation or any suit in unlawful
detainer, or otherwise, brought by the Corporation for the purpose of effecting such re-
entry or obtaining possession of the Project and the Site or the exercise of any *other
remedy by the Corporation. The City hereby irrevocably appoints the Corporation as the
agent and attorney-in-fact of the City to enter upon and re-lease the Project and the
Sit. in the event of default by the City in the performance of any covenants herein
contained to be performed by the City and to remove all personal property whatsoever
situated upon the Project and the Site to place such property in storage or other suitable
place in the County of San Diego, for the account of and at the expense of the City, and
the City hereby exempts and agrees to save harmless the Corporation from any costs,
loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing
of the Project and the Site and the removal and storage of such property by the
Corporation or its duly authorized agents in accordance with the provisions herein
contained. The City hereby waives any and all claims for damages caused or which may
be caused by the Corporation in re-entering and taking possession of the Project and the
Site as herein provided and all claims for damages that may result from the destruction
of or injury to the Site or the Project and all claims for damages to or loss of any property
belonging to the City that may be in or upon the Project and the Site. The City agrees
that the terms of this Lease Agreement constitute full and sufficient notice of the right of
the Corporation to re-lease the Project and the Site in the event of such re-entry without
effecting a surrender of this Lease Agreement, and further agrees that no acts of the
Corporation in effecting such re-leasing shall constitute a surrender or termination of
this Lease Agreement irrespective of the term for which such re-leasing is made or the
terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the
event of such default by the City the right to terminate this Lease Agreement shall vest
in the Corporation to be effected in the sole and exclusive manner hereinafter provided
for in subparagraph (b) hereof. The City further waives the right to any rental obtained
by the Corporation in excess of the Lease Payments and hereby conveys and releases
such excess to the Corporation as compensation to the Corporation for its services in re-
leasing the Project and the Site.
0.1) In an event of default hereunder, the Corporation at its option may terminate
this Lease Agreement and re-lease all or any portion of the Project and the Site. In the
event of the termination of this Lease Agreement by the Corporation at its option and in
the manner hereinafter provided on account of default by the City (and notwithstanding
any re-entry upon the Project or the Site by the Corporation in any manner whatsoever
or the re-leasing or sale of the Project or the Site), the City nevertheless agrees to pay to
the Corporation all costs, loss or damages howsoever arising or occurring payable at the
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same time and in the same manner as is herein provided in the case of payment of Lease
Payments. Any surplus received by the Corporation from such re-leasing shall be the
absolute property of the Corporation and the City shall have no right thereto, nor shall
the City be entitled to any credit in the event of a deficiency in the rentals received by the Corporation from the Project and/or the Site. Neither notice to pay rent or to deliver up
possession of the premises given pursuant to law nor any proceeding in unlawful detainer
taken by the CorporaQon shah of itself operate to terminate this Lease Agreement, and
no termination of this Lease Agreement on account of default by the City shall be or
become effective by operation of law, or otherwise, unless and until the Corporation shall
have given written notice to the City of the election on the part of the Corporation to
terminate this Lease Agreement. The City covenants and agrees that no surrender of the
Project and/or the Site or of the remainder of the Term of this Lease Agreement or any
termination of this Lease Agreement shall be valid in any manner or for any purpose
whatsoever unless stated or accepted by the Corporation by such written notice.
Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved
to the Corporation is intended to be exclusive and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Lease Agreement or now
or hereafter existing at law or in equity. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient. In order to entitle the
Corporation to exercise any remedy reserved to it in this Article IX it shall not be
necessary to give any notice, other than such notice as may be required in this Article IX
or by law.
Section 9.4. Agreement to Pay Attorneys’ Fees and Expenses. In the event either
party to this Lease Agreement should default under any of the provisions hereof and the
nondefaulting party should employ attorneys or incur other expenses for the collection of
moneys or the enforcement or performance or observance of any obligation or agreement
on the part of the defaulting party herein contained, the defaulting party agrees that it
will on demand therefor pay to the nondefaulting party the reasonable fees of such
attorneys and such other expenses so incurred by the nondefaulting party.
Section 9.5. No Additional Waiver Implied by One Waiver. In the event any
.agreement contained in this Lease Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder.
Section 9.6. Application of Proceeds. All net proceeds received from the re-lease
or other disposition of the Project and the Site under this Article IX, and all other
amounts derived by the Corporation or the Trustee as a result of an event of default
hereunder, shall be transferred to the Trustee promptly upon receipt thereof and shall be
deposited by the Trustee in the Lease Payment Fund to be applied to the Lease Payments
in order of payment date.
Section 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as tare given to the Corporation under this Article M have been assigned by the
Corporation to the Trustee under the Trust Agreement, to which assignment the City
hereby consents. Such rights and remedies shall be exercised by the Trustee and the
Owners of the Certificates as provided in the Trust Agreement.
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ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease
Agreement, the City mgy on any date secure the payment of all or a portion of the Lease
Payments remaining due by a deposit with an escrow holder under an escrow. deposit and
trust agreement as referenced in Section 14.01(b) of the Trust Agreement, of: (a) in the
case of a security deposit relating to all Lease Payments, either (i) an amount which,
together with amounts on deposit in the Lease Payment Fund, the Insurance and
Condemnation Fund and the Reserve Fund, is sticient to pay all unpaid Lease
Payments, including the principal and interest components thereof, in accordance with
the Lease Payment schedule set forth in Exhibit D, or (ii) Federal Securities specified in
clause (A) of the definition thereof, together with cash, if required, in such amount as
will, in the opinion of an independent certified public accountant, together with interest
to accrue thereon and, if required, all or a portion of moneys or Federal Securities
specified in clause (A) of the definition thereof then on deposit and interest earnings
thereon in the Lease Payment Fund, the Insurance and Condemnation Fund and the
Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective
Interest Payment Dates; or (b) in the case of a security deposit relating to a portion of the
Lease Payments, a certificate executed by a City Representative designating the portion
of the Lease Payments to which the deposit pertains, and either (i) an amount which is
sufficient to pay the portion of the Lease Payments designated in such City
Representative’s certificate, including the principal and interest components thereof, or
(ii) Federal Securities, together with cash, if required, in such amount as will, together
with interest to be received thereon, if any, in the opinion of an independent certified
public accountant, be fully sticient to pay the portion of the Lease Payments designated
in the aforesaid City Representative’s certificate.
In the event of a deposit pursuant to this Section 10.1 as to all Lease Payments,
all obligations of the City under this Lease Agreement shall cease and terminate,
excepting only the obligation of the City to make, or cause to be made, all payments from
the deposit made by the City pursuant to this Section 10.1, and title to the Project shall
vest in the City on the date of said deposit automatically and without further action by
the City or the Corporation. Said deposit and interest earnings thereon shall be deemed
to be and shall constitute a special fund for the payments provided for by this Section
10.1 and said obligation shall thereafter be deemed to be and shall constitute the
installment purchase obligation of the City for the Project. Upon said deposit, the
Corporation will execute or cause to be executed any and all documents as may be
necessary to confirm title to the Project in accordance with the provisions hereof. In
addition, the Corporation hereby appoints the City as its agent to prepare, execute and
file or record, in appropriate offices, such documents as may be necessary to place record
title to the Project in the City.
Section 10.2. Purchase Option.
The Corporation hereby grants an option to the City to prepay the principal
component of the Lease Payments in full, by paying the stipulated value of the Project set
forth in Exhibit D hereto, or in part, but not in an amount of less than $20,000, together,
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in any event, with a percentage of the portion of such principal component of Lease
Payments prepaid equal to the percentages set forth below:
Prepayment Period
July 15,1998 through July l4,1999 2.0%
July 15,1999 through July 14,200O 1.5
July 15,200O through July 14,200l 1.0
July 15,200l through July 14,2002 0.5
July 15, 2002 and thereafter 0
Said option may be exercised with respect to Lease Payments in whole at any time
or in part on any Lease Payment Date commencing July 15, 1998. Said option shall be
exercised by the City by giving written notice to the Corporation and the Trustee of the
exercise of such option at least forty-five (45) days prior to said Lease Payment Date.
Such option shall be exercised in the event of prepayment in full, by depositing with said
notice cash in an amount, which, together with amounts then on deposit in the Reserve
Fund, the Insurance and Condemnation Fund and the Lease Payment Fund, will be
sufficient to pay the stipulated value of the Project and the Site on said Lease Payment
Date as set forth in Exhibit D hereto, together with any Lease Payments then due but
unpaid, or, in the event of prepayment in part, by depositing with said notice an amount
divisible by $5,000 equal to the amount desired to be prepaid (but not less than $20,000)
together with any Lease Payments then due but unpaid. In the event of prepayment in
part, the partial prepayment shall be applied against Lease Payments in inverse order of their Interest Payment Date. Lease Payments due after any such partial prepayment
shall be in the amounts set forth in a revised Lease Payment schedule which shall be
provided by, or caused to be provided by, the Trustee to the City pursuant to Section
4.01(d) of the Trust Agreement and which shall represent an adjustment to the schedule
set forth in Exhibit D attached hereto taking into account said partial prepayment.
Section 10.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall be obligated to prepay the Lease Payments allocable to the
Project and the Site, in whole on any date or in part on any Lease Payment Date, from
and to the extent of any Net Proceeds of an insurance or condemnation award with
respect to the Project or the Site theretofore deposited in the Lease Payment Fund for
such purpose pursuant to Article VI hereof and Article VII of the Trust Agreement. The
City and the Corporation hereby agree that such Net Proceeds, to the extent remaining
aRer payment of any delinquent Lease Payments, shall be credited towards the City’s
obligations under this Section 10.3.
Section 10.4. Credit for Amounts on Deposit. In the event of prepayment of the
principal components of the Lease Payments in full under this Article X, such that the
Trust Agreement shah be discharged by its terms as a result of such prepayment, all
amounts then on deposit in the Lease Payment Fund, the Acquisition and Construction
Fund or the Reserve Fund shah be credited towards the amounts then required to be so
prepaid.
-21-
ARTICLE XI
MXSCELAANEOUS
Section 11.1. Notices. All notices, certificates or other communications hereunder
shall be sticiently given and shall be deemed to have been received 48 hours after
deposit in the United States mail in first class form with postage fully prepaid:
If to the City: City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Attention: City Manager
If to the. Corporation:
If to the Trustee:
City of Carlsbad
Public Improvement Corporation
1200 Elm Avenue
Carlsbad, California 92008
Attention: President
The Bank of California
400 California Street
San Francisco, California 94107
Attention: Vice President
The Corporation, the City and the Trustee, by notice given hereunder, may
designate different addresses to which subsequent notices, certificates or other
communications will be sent.
Section 11.2. Binding Effect. This Lease Agreement shall inure to the benefit of
and shall be binding upon the Corporation and the City and their respective successors
and assigns.
Section 11.3. Severability. In the event any provision of this Lease Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
Section 11.4. Net-net-net Lease. This Lease Agreement shall be deemed and
construed to be a “net-net-net lease” and the City hereby agrees that the Lease
Payments shall be an absolute net return to the Corporation, free and clear of any
expenses, charges or set-offs whatsoever.
Section 11.5. Further Assurances and Corrective Instruments. The Corporation
and the City agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and such
further instruments as may reasonably be required for correcting any inadequate or
incorrect description of the Project or the Site hereby leased or intended so to be or for
carrying out the expressed intention of this Lease Agreement.
-22-
Section 11.6. Execution in Counterparts. This Lease Agreement may be executed
in several counterparts, each of which shah be an original and all of which shall
constitute but one and the same instrument.
Section 11.7. Applicable Law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State.
Section 11.8. -Corporation and City Representatives. Whenever under the
provisions of this Lease Agreement the approval of the Corporation or the City is
required, or the Corporation or the City is required to take some action at the request of
the other, such approval or such request shall be given for the Corporation by an
Corporation Representative and for the City by a City Representative, and any party
hereto shall be authorized to rely upon any such approval or request.
Section 11.9. Captions. The captions or headings in this Lease Agreement are for
convenience only and in no way define, limit or describe the scope or intent of any
provisions or Section of this Lease Agreement.
-23-
IN WITNESS WHEREOF, the Corporation has caused this Lease Agreement to be
executed in its corporate name by its duly authorized officers and sealed with its
corporate seal; and the City has caused this Lease Agreement to be executed in its name
by its duly authorized officers and sealed with its corporate seal, as of the date first
above written.
CITY OF CARLSBAD
PUBLIC IMPROVEMENT CORPORATION,
as Lessor
BY President
(S E A L)
Attest:
Secretary
CITY OF CARLSBAD,
as Lessee
BY Mayor
(S E A L)
Attest:
City Clerk
-24-
EXHIBIT A
DEFINITIONS
“Acquisition and Construction Costs” means all costs of payment of, or
reimbursement for, acquisition and construction of the Project, including but not limited
to, ,architect and engineering fees, construction contractor payments, costs of feasibility
and other reports, inspection costs, performance bond premiums and permit fees.
“Acquisition and Construction Fund” means the fund by that name
established and held by the City pursuant to Article III of the Trust Agreement.
“Agency Agreement” means that certain Agency Agreement, dated as of June 1,
19&3, by and between the Corporation and the City.
“Assignment Agreement” means the Assignment Agreement, dated as of June 1,
1988, by and between the Corporation and the Trustee, together with any duly
authorized and executed amendments thereto.
“Business Day” means a day which is not a Saturday, Sunday or legal holiday on
which banking institutions in the State are closed or are required to close or a day on
which the New York Stock Exchange is closed.
“Certificate of Completion” means the certificate of a City Representative
certifying that the Project has been acquired and constructed by the City and that all
’ Acquisition and Construction Costs have been paid.
“Certificates” means the $ aggregate principal amount of certificates of
participation to be executed and delivered pursuant to the Trust Agreement.
“City” means the City sf Carlsbad, a municipal corporation and general law city
organized and existing under the laws of the State.
“City Representative” means the City Manager of the City or any other person
authorized by resolution of the City Council of the City to act on behalf of the City under
or with respect to the Lease Agreement, the Trust Agreement and the Corporation
Agreement.
“CZosing Date” means the date upon which there is an exchange of the
Certificates for the proceeds representing the purchase of the Certificates by the Original
Purchaser.
“Code” means the Internal Revenue Code of 1986.
“Completion Date” means the earlier of (i) the date of substantial completion of
acquisition and construction of the Project as evidenced by the filing with the Trustee of a
Certificate of Completion, and (ii) June 1, 1991.
“Contractor” means the contractor(s) or vendor(s) f%om whom the Corporation or
the City on behalf of the Corporation has ordered or caused to be ordered or with whom
the Corporation or the City on behalf of the Corporation has contracted or caused to be
contracted for the acquiiition and construction of the Project.
“Corporation” means the City of Carlsbad Public Improvement Corporation, a
nonprofit public benefit organized and existing under and by virtue of the laws of the
State.
“Corporation Representative” means the President of the Corporation, or any
other person authorized by resolution of the Corporation to act on behalf of the
Corporation under or with respect to the Lease Agreement, the Trust Agreement, the
Agency Agreement and the Assignment Agreement.
“Debt Servide” means the scheduled principal and interest components of Lease
Payments, payable during the period of computation, excluding amounts scheduled
during such period which relate to principal which has been retired before the beginning
of such period.
“Delivery Costs” means all items of expense directly or indirectly payable by or
reimbursable to the City or the Corporation relating to the execution and delivery of the
Lease Agreement, the Trust Agreement, the Agency Agreement and the Assignment
Agreement or the execution, sale and delivery of the Certificates, including but not
limited to filing and recording costs, settlement costs, printing costs, reproduction and
binding costs, initial fees and charges of the Trustee, financing discounts, legal fees and
charges, insurance fees and charges, financial and other professional consultant fees,
costs of rating agencies for credit ratings, fees for execution, transportation and
safekeeping of the Certificates and charges and fees in connection with the foregoing.
“Delivery Costs Fund” means the fund by that name established and held by the
Trustee pursuant to Article III of the Trust Agreement.
“Escrow Fund” means the fund by that name established and held by the Trustee
pursuant to Section 6.06 of the Trust Agreement
“Event of DefiuZt” means an event of default under the Lease Agreement, as
defined in Section 9.1 thereof.
“Federal Securities” means any of the following which are noncallable and which
at the time of investment are legal investments under the laws of the State for trust
funds held by the Trustee:
(a) direct general obligations of (including obligations issued or held in book entry
form on the books of the Department of the Treasury of the United States of America), or
obligations the payment of principal of and interest on which are guaranteed by, the
United States of America; or
(b) any of the following obligations of the following agencies of the United States
of America: (i) direct obligations of the Export-Import Bank; (ii) certificates of beneficial
ownership issued by the Farmers Home Administration; (iii) participation certificates
issued by the General Services Administration; (iv) mortgage-backed bonds or pass-
through obligations issued and guaranteed by the Government National Mortgage
Association; (v) project notes issued by the United States Department of Housing and
Urban Development; a@ (vi) public housing notes and bonds guaranteed by the United
States of America.
“Fiscal Year” means the twelve-month period beginning on July 1 of any year
and ending on June 30 of the next succeeding year, or any other twelve-month period
selected by the City as its fiscal year.
“Gross ticeecZ.s” means the sum of the following amounts:
(a) original proceeds, namely, net amounts (after payment of ail expenses of
executing and delivering the Lease Agreement and the Certificates) received by or for the
City as a result of the sale of the Certificates, excluding original proceeds which become
transferred proceeds (determined in accordance with applicable Regulations) of
obligations issued to refund in whole or in part the Lease Payments;
(b) investment proceeds, namely, amounts received at any time by or for the City,
such as interest and dividends, resulting from the investment of any original proceeds (as
referenced in paragraph (a) above) or investment proceeds (as referenced in this
paragraph (b)) in Nonpurpose Obligations, increased by any profits and decreased (if
necessary, below zero) by any losses on such investments, excluding investment proceeds
which become transferred proceeds (determined in accordance with applicable
Regulations) of obligations issued to refund in whole or in part the Lease Payments;
(cl sinking fund proceeds, namely, amounts, other than original proceeds or
investment proceeds (as referenced in paragraphs (a) and (b) above) of the Certificates,
which are held in any Lease Payment Fund and any .other fund to the extent that the
City reasonably expects to use such other fund to pay Lease Payments;
(d) amounts in the Reserve Fund and in any other fund established as a
reasonably required reserve or replacement fund;
(e) Investment, Property pledged as security for payment of Lease Payments by an
ultimate obligor or a related person or by the City;
(D amounts, other than as specified in this definition, used to pay Lease
Payments; and
(g) amounts received as a result of investing amounts described in this detition.
“Independent Counsel” means an attorney duly admitted to the practice of law
before the highest court of the state in which such attorney maintains an office and who
is not an employee of the Corporation, the Trustee or the City.
Exhibit A
pnge3
“Infirm&ion Services” means Financial Information, Inc.‘s “Daily Called Bond
Service,” 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention:
Editor; Kenny Information Services ’ “Called Bond Service,” 55 Broad Street, 28th Floor,
New York, New York 10004; Moody’s “Municipal and Government,” 99 Church Street,
8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard
& Poor’s “Called Bond Record,” 25 Broadway, 3rd Floor, New York, New York 10004; or
to such other addresses and/or such other national information services providing
information or disseminating notices of redemption of obligations such as the Certificates.
“Insurance and Condemnation Fund” means the fund by that name
established and held by the Trustee pursuant to Section 7.01 of the Trust Agreement.
“Interest Payment Date” means the first day of each February and August,
commencing February 1, 1989, so long as any Certificates are Outstanding.
“Investment Proper@” means any security (as said term is defined in section
165@(2)(A) or (B) of the Code), obligation, annuity or investment-type property,
exc&li.ng, however, obligations the interest on which is exempt from income tax under
section 103 of the Code.
“Lease Agreement” means the Lease Agreement, dated as of June 1, 1988, by
and between the Corporation and the City, together with any duly authorized and
executed amendments thereto.
“Lease Payments” means all payments required to be paid by the City pursuant
to Section 4.4 of the Lease Agreement, including any prepayment thereof pursuant to
Article X of the Lease Agreement, which payments consist of an interest component and
a principal component.
“Lease Payment Date” means the fifteenth (15th) day of July and January in
each year during the Term of the Lease Agreement, commencing January 15, 1989.
“Lease Payment Fund” means the fund by that name established and held by
the Trustee pursuant to Section 5.02 of the Trust Agreement.
“Moody’s” means Moody’s Investors Service, or its successors.
“Net Proceeds,” when used with respect to insurance or condemnation proceeds,
means any insurance proceeds or condemnation award paid with respect to the Project or
the Site, to the extent remaining after payment therefrom of all expenses incurred in the
collection thereof. “Net Proceeds,” when used with reference to the Certificates, means
the face amount of the Certificates, plus accrued interest and premium, if any, less
original issue discount and less proceeds deposited in the Reserve Fund.
“Nonpuqwse Obligation” means any Investment Property which is acquired
with the proceeds of the Certificates and is not acquired in order to carry out the
governmental purpose of the Lease Agreement.
“Notes” means the Notes of the City issued on July 16, 1987 in the principal
amount of $6,555,000, and maturing June 30,1988.
“Original Purchaser” means Rauscher Pierce Refsnes, Inc., as original
purchaser of the Certificates.
“Outstanding”, when used as of any particular time with respect to Certificates,
means (subject to the provisions of Section 10.03 of the Trust Agreement) all Certificates
theretofore executed and delivered by the Trustee under the Trust Agreement except -
(a) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee
for cancellation;
(b) Certificates for the payment or redemption of which funds or Federal
Securities in the necessary amount shall have theretofore been deposited with the
Trustee (whether upon or prior to the maturity or redemption date of such Certificates),
provided that, if such Certificates are to be redeemed prior to maturity, notice of such
redemption shall have been given as provided in Section 4.03 of the Trust Agreement or
provision satisfactory to the Trustee shall have been made for the giving of such notice;
and
(c) Certificates in lieu of or in exchange for which other Certificates shall have
been executed and delivered by the Trustee pursuant to Section 2.09 of the Trust
Agreement.
“Owner” or “Certificate Owner” or “Owner of a Certificate”, or any similar
term, when used with respect to a Certificate means the person in whose name such
Certificate shall be registered.
“Permitted Encumbrances” means, as of any particular time: (a) liens for
general ad valorem taxes and assessments, if any, not then delinquent, or which the City
may, pursuant to provisions of Article V of the Lease Agreement, permit to remain
unpaid; (b) the Assignment Agreement; (c) the Lease Agreement; (d) any right or claim of
any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the
manner prescribed by law; (e) easements, rights of way, mineral rights, drilling rights
and other rights, reservations, covenants, conditions or restrictions which exist of record
as of the Closing Date and which the City certifies in writing will not materially impair
the use of the Site for the Project; and (0 easements, rights of way, mineral rights,
drilling rights. and other rights, reservations, covenants, conditions or restrictions
established following the date of recordation of the Lease Agreement and to which the
Corporation and the City consent in writing.
“Permitted Investments” means any of the following which at the time of
investment are legal investments under the laws of the State for the moneys proposed to
be invested therein:
(a) Federal Securities;
(b) Any of the following obligations of federal agencies not guaranteed by the
United States of America: (i) debentures issued by the Federal Housing Administration;
(ii) participation certificates or senior debt obligations of the Federal Home Loan
Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal
Intermediate Credit Banks, or Banks for Cooperatives); (iii) mortgage-backed securities
or senior debt obligations of the Federal National Mortgage Association; or (iv) credit-
backed or senior debt obligations of the Student Loan Marketing Association.
(c) interest-bearing demand or time deposits (including certificates of deposit) in
federal or State chartered savings and loan associations or in federal or State banks
(including the Trustee), provided that (i) the obligations of such savings and loan
association or bank or-the obligations of the holding company of such savings and loan
association or bank carry one of the three highest Rating Categories by Moody’s and
S&P, or (ii) such deposits are insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation;
(d) obligations issued by any corporation organized and operating within the
United States of America having assets in excess of $500,000,000, which obligations
carry one of the three highest long-term Rating Categories provided by Moody’s and
S&P;
(e) repurchase agreements with any bank, savings institution or trust company
(including the Trustee) which is insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation, or with any broker-dealer with
retail customers which falls under Securities Investors Protection Corporation protection,
provided that such repurchase agreements are fully secured by Federal Securities or
obligations of any agency or instrumentality of the United States of America, and
provided further that (i) such collateral is held by the Trustee or any agent acting solely
for the Trustee during the term of such repurchase agreement, (ii) such collateral is not
subject to liens or claims of third parties, (iii) such collateral has a market value
(determined at least once every 30 days) at least equal to the amount invested in the
repurchase agreement, (iv) the Trustee has a perfected first security interest in the
collateral, (v) the agreement shall be for a term not longer than 180 days and (vi) the
failure to maintain such collateral at the level required in (iii) above will require the
Trustee to serve notice to the other party to correct such deficiency. If such deficiency is
not corrected, the Trustee is directed to liquidate the collateral;
(D money market funds comprised exclusively of Federal Securities;
(g) commercial paper having original maturities of not more than 180 days and .
rated in the highest Rating Category by Moody’s and S&P;
(h) bills of exchange or time drafts drawn on and accepted by a commercial bank,
otherwise known as bankers acceptances, which have a maturity of not more than 270
days and which are eligible for purchase by the Federal Reserve System and the
obligations of which commercial bank or the obligations of the holding company of which
carry one of the three highest long-term Rating Categories by Moody’s and S&P; and
(i) tax-exempt obligations rated in one of the three highest rating categories by
Moody’s and S&P.
“Principal Corporate Trust Ofice” means the corporate trust office of the
Trustee at 400 California Street, San Francisco, California, or at such other address
designated by the Trustee in written notice filed with the City and the Corporation in
writing.
“Private Business Use” means use directly or indirectly in a trade or business
carried on by a natural person or in any activity carried on by a person other than a
natural person, excluding, however, use by a governmental unit and use as a member of
the general public.
“Project” means the improvements to be constructed on the Site, all as more
particularly described & Exhibit C attached to the Lease Agreement.
“Rating Category” means, with respect to any Permitted Investment, one or
more of the generic categories of rating by Moody’s or S&P applicable to such Permitted
Investment, without regard to any refinement or graduation of such rating category by a
plus or minus sign.
“Registration Books” means the records maintained by the Trustee pursuant to
Section 2.12 of the Trust Agreement for registration of the ownership and transfer of
ownership of the Certificates.
“Regular Record Date” means the close of business on the fifteenth (15th) day of
the- month preceding each Interest Payment Date, whether or not such fif%eenth (15th)
day is a Business Day.
“Regulations” means temporary and permanent regulations promulgated under
the Code.
“Rental Period” means each twelve-month period during the Term of the Lease
Agreement commencing on August 2 in any year and ending on August 1 in the next
succeeding year except that the first Rental Period shall mean the period starting on
June 1,1988 and ending on August 1, 1989.
“Reserve Fund” means the fund by that name established and held by the
Trustee pursuant to Section 6.01 of the Trust Agreement.
“Reserve Requirement” means an amount equal to $ .
“S&P” means Standard & Poor’s Corporation, of New York, New York, or its
successors.
“Securities Depositories” means The Depository Trust Company, 711 Stewart
Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities
Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago,
Illinois 60605, Fax-(3121 663-2343; Philadelphia Depository Trust Company,
Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103,
Attention: Bond Department, Dex-(215) 496-5058; or to such other addresses and/or
such other registered securities depositories holding substantial amounts of obligations of
types comprising the Certificates.
“Site” means all of that certain real property located in the City described in
Exhibit B to the Lease Agreement, on which the Project is to be constructed.
“State” means the State of California.
“Term of the Lease Agreement” means the time during which the Lease
Agreement is in effect, as provided in Section 4.2 of the Lease Agreement.
“Trust Agreement” means the Trust Agreement, dated as of June 1, 1988, by and
among the City, the Corporation and the Trustee, together with any duly authorized
amendments thereto.
“Tncstee” mea& The Bank of California, N.A., or any successor thereto, acting as
Trustee pursuant to this Trust Agreement.
EXHIBITB
DESCRIPTION OF THE SITE
Situated in the City of Carlsbad, County of San Diego, State of California, and
described as follows: _
L-TO COME]
Ekhiblt B
EXHIBITC
DESCRIPTION OF THE PROJJXT
i-Z'OCOMEl
Exhibit C
EXHIBITD
SCHEDULE OF LEASE PAYMENT!3
SEMI-ANNUAL ANNUAL S TIPUJaATED DATE PRJNCIPAL INTEREST TOTAL TOTAL VALUE
01/16/89 07/16/89 01/16/90 07/16/90 01/16/91 07/16/91 01/16/92 07/16/92 OlJJ6/93 07/16/93 01/16/94 07/16/94 01/16/96 07/16/96 01/16/96 07/16/96 01/16/97 07/16/97 OlLl6/98 07/16/98 01/16/99 07/16/99 01/16/00 07/16/00 01/16/01 07/16/01 01/16/02 07/16/02 01/16/03 07/16/03 01/16/04 07/16/04 01/16/06 07/16/06 01/16/06 07/16/06 01/16/07 07/16/07 01/16/08 07/16/08
Miblt D
1306143 JIiEiWcWHM:pch
peh
peh
06/12/t Id6666
65J20~66
05ml63
TRUST AGREJ3ME3T
Dated as of June 1,1988
by and among
THE BANK OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee,
the
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
and the
CITY OF CARLSBAD
(HOSP GROVE PROJECT)
M6696 TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions ................................................................................................ 2
Section 1.02. Authorization ........................................................................................... 2
Section 1.03. Exhibits ................................................................................................... 2
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.61. Authorization ........................................................................................... 3
Section 2.02. Date; Payment of Interest ........................................................................ 3
Section 2.03. Maturity; Interest Rates .......................................................................... 3
Section 2.04. Form of Certificates; Interest.. .................................................................. 4
Section 2.05. Form ........................................................................................................ 4
Section 2.06. Execution ................................................................................................. 4
Section 2.07. Application of Proceeds ............................................................................. 4
Section 2.08. Transfer and Exchange.. ........................................................................... 5
Section 2.09. Certificates Mutilated, Lost, Destroyed or Stolen ....................................... 5
Section 2.10. Payment .................................................................................................. 5
Section 2.11. Execution of Documents and Proof of Ownership ....................................... 6
Section 2.12. Registration Books ................................................................................... 6
ARTICLE III
ACQUIWMON AND CONSTRUCTION FUND;
DELIVERY COSTS FUND
Section 3.01. Acquisition and Construction Fund ............................................................ 7
Section 3.02. Payment of Acquisition and Construction Costs ........................................ 7
Section 3.03. Delivery Costs Fund ................................................................................. 8
Section 3.04. Payment of Delivery Costs.. ...................................................................... 8
Section 3.05. Transfers of Unexpended Proceeds ............................................................ 8
i
Page
ARTICLE Iv
REDEMPTION OF CERTIFICATES
Section 4.01. Redemption .............................................................................................. 10
Section 4.02. Selection of Certificates for Redemption ..................................................... 11
Section 4.03. Notice of R%demption .......................................................................... .: .... 11
Section 4.04. Partial Redemption of Certificate .............................................................. 12
Section 4.05. Purchase of Certificate6 ............................................................................ 12
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease Agreement ................................................ 13
Section 5.02. Establishment of Lease Payment Fund.. ................................................... 13
&ctiOn 5.03. Deposits ................................................................................................... 13
&&ion 5.04. Application of Moneys.. ............................................................................. 13
Section 5.05. Surplus .................................................................................................... 13
ARTICLE VI
RESERVE FUND; ESCROW FUND
Section 6.01. Establishment of Reserve Fund.. ............................................................... 14
Section 6.02. Deposit.. ................................................................................................... 14
SeCtiOn 6.03. Transfer6 of Excess .................................................................................. 14
Section 6.04. Application in Event of Deficiency in Lease Payment Fund ........................ 14
Section 6.05. Transfer To Make All Lease Payments ..................................................... 14
Section 6.06. Establishment of Escrow Fund .................... . ............................................ 14
Section 6.07. Deposit.. ................................................................................................... 15
Section 6.08. Payment of the Notes.. ............................................................................. 15
&?&ion 6.09. Transfer of Excess.. .................................................................................. 15
Section 6.10. Investment of Escrow Fund.. .................................................................... 15
ARTICLE VII
INSURANCE AND CONDEMNATION FUND;
INSURANCE; EMINENT DOMAIN
Section 7.01. Establishment of Insurance and Condemnation Fund;
Application of Net Proceeds of Insurance Award.. ......................... 16
Section 7.02. Application of Net Proceeds of Eminent Domain Award.. ........................... 16
Section 7.03. Cooperation .............................................................................................. 17
Page
ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT; REBATE
Section 8.01. Held in Trust.. .............. . .......................................................................... 18
Section 8.02. Investments Authorised ............................................................................ 18
Section 8.03. Accounting ............................................................................................... 18
Section 8.04. Allocation of Earnings .............................................................................. 18
Section 8.05. Valuation and Disposition of Investments ................................................. 19
Section 8.06. No Arbitrage.. .......................................................................................... 19
Section 8.07. Application of Investment Earnings; Rebate of Excess
Investment Earnings to United States.. ....................................... 19
ARTICLE IX
THE TRUSTEE
Section 9.01. Appointment of Trustee.. .......................................................................... 22
Section 9.02. Acceptance of Trusts ................................................................................ 22
Section 9.03. Fees, Charges and Expenses of Trustee ..................................................... 24
Section 9.04. Notice to Certificate Owners of Default ..................................................... 24
Section 9.05. Intervention by Trustee ............................................................................ 25
Section 9.06. Removal of Trustee .................................................................................. 25
Section 9.07. Resignation by Trustee.. ........................................................................... 25
Section 9.08. Appointment of Successor Trustee ............................................................ 25
Section 9.09. Merger or Consolidation.. .......................................................................... 25
Section 9.10. Concerning any Successor Trustee ............................................................ 26
ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 10.01. Amendments Permitted.. ........................................................................ 27
Section 10.02. Procedure for Amendment with Written Consent of
Certificate Owners.. ..................................................................... 27
Section 10.03. Disqualified Certificates .......................................................................... 28
Section 10.04. Effect of Supplemental Agreement ............ :. ............................................ 28
Section 10.05. Endorsement or Replacement of Certificates Delivered After
Amendments.. ............................................................................. 29
Section 10.06. Amendatory Endorsement of Certificates.. ............................................... 29
ARTICLE XI
COVENANTS; NOTICES
Section 11.01. Compliance With and Enforcement of Lease Agreement.. ......................... 30
Section 11.02. Observance of Laws and Regulations ...................................................... 30
Section 11.03. Prosecution and Defense of Suits ............................................................. 30
Section 11.04. Recordation and Filing.. .......................................................................... 30
Section 11.05. City Budgets .......................................................................................... 30
Section 11.06. Further Assurances.. .............................................................................. 31
. . . 111
Page
ARTICLE XU
LIMITATION OF LIABILITY
Section 12.01. Limited Liability of City ........................................... .:. ........................... 32
Section 12.02. No Liability of City or Corporation for Trustee Performance .................... 32
Section 12.03. IndemnifZation of Trustee ...................................................................... 32
Section 12.04. Limitation of Bights to Parties and Certificate Owners ........................... 32
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES OF CEBTIFICATE OWNERS
Section 13.01. Assignment of Bights ............................................................................. 33
Section 13.02. Remedies.. .............................................................................................. 33
Section 13.03. Application of Funds.. ............................................................................. 33
Section 13.04. Institution of Legal Proceedings.. ............................................................ 34
Section 13.05. Non-waiver.. .......................................................................................... 34
Section 13.06. Remedies Not Exclusive.. ........................................................................ 34
Section 13.07. Power of Trustee to Control Proceedings .................................................. 34
Section 13.08. Limitation on Certificate Owners’ Bight to Sue ....................................... 34
ARTICLE XIV
MISCELLANEOUS
Section 14.01.
Section 14.02.
Section 14.03.
Section 14.04.
Section 14.05.
Section 14.06.
Section 14.07.
Section 14.08.
Section 14.09.
Section 14.10.
Defeasance ............................................................................................. 36
Records .................................................................................................. 36
Notices. .................................................................................................. 36
Governing Law.. ..................................................................................... 37
Binding Effect; Successors ...................................................................... 37
Execution in Counterparts ...................................................................... 37
Delivery of Cancelled Certificates ............................................................ 37
Headings ................................................................................................ 37
Waiver of Notice.. ................................................................................... 37
Separability of Invalid Provisions ............................................................ 37
EXHIBIT A - Definitions
EXHIBIT B - Form of the Certificates
TRUST AGREEMENT
THIS TRUST AGREEMENT, made and entered into as of June 1, 1988, by and
among THE BANK OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of America (the
“Trustee”), the CITY OF CARLSBAD PUBLIC Ih4PROVEMENT CORPORATION, a
nonprofit public benefit corporation organized and existing under the laws of the State of
California (the “Corporation”), and the CITY OF CARLSBAD, a municipal corporation
and general law city organized and existing under the laws of the State of California (the
“City”),
WITNESSETH:
WHEREAS, the City has issued notes (the “Notes”) in the principal amount of
$6,555,000 to acquire approximately 52 acres of a eucalyptus grove commonly known as
“Hosp Grove” for general municipal purposes and presently zoned open space; and
WHEREAS, the Notes mature on June 30, 1988, and the City wishes to complete
permanent financing for Hosp Grove and improvements to be made thereon; and
WHEREAS, the City and the Corporation have entered into a lease agreement
dated as of the date hereof (the “Lease Agreement”), whereby the City has agreed to lease
Hosp Grove (the “Site”) to the Corporation, and the Corporation has agreed to construct
certain improvements to the Site (the “Project”), and to lease the Project and the Site to
the City, and the City has agreed to lease the Project and the Site from the Corporation;
and
WHEREAS, for the purpose of obtaining the moneys required to be deposited by it
with the Trustee to pay the Notes at maturity and to pay for financing the construction of
the Project, the Corporation proposes to assign and transfer certain of its rights under
the Lease Agreement to the Trustee, and in consideration of such assignment and the
execution of this Trust Agreement, the Trustee has agreed to execute and deliver
certificates of participation, each evidencing a fractional interest in the lease payments
made by the City under the Lease Agreement, to provide the moneys required herein to
be deposited by the Corporation;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Def?nitions. The terms defined in Exhibit A attached hereto and by
this reference incorporated herein, as used and capitalized herein, shall, for all purposes
of this Trust Agreeme& have the meanings ascribed to them in said Exhibit A unless the
context clearly requires some other meaning.
Section 1.02. Authorization. Each of the parties hereby represents and warrants
that it has full legal authority and is duly empowered to enter into this Trust Agreement,
and has taken all actions necessary to authorize the execution of this Trust Agreement by
the officers and persons signing it.
Section 1.03. Exhibits. The following exhibits are attached to, and by reference
made a part of, this Trust Agreement:
Exhibit A: DeGnitions.
Exhibit B: Form of the Certificates.
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ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization. The Trustee is hereby authorized and directed upon
written request fkom the Corporation to prepare, execute and deliver, to the Original
Purchaser, CertGktes .
dyllars z
aggregate principal amount of
> evidencing undivided fractional
interests of the Owners thereof in the Lease Payments.
Section 2.02. Date; Payment of Interest. Each Certificate shall be dated as of
June 1, 1988. Interest with respect thereto shall be payable from the Interest Payment
Date next preceding the date of execution thereof, unless: (i) it is executed as of an
Interest Payment Date, in which event interest with respect thereto shall be payable fkom
such Interest Payment Date; or (ii) it is executed after a Regular Record Date and before
the following Interest Payment Date, in which event interest with respect thereto shall be
payable from such Interest Payment Date; or (iii) it is executed on or before January 15,
1989, in which event interest with respect thereto shall be payable from June 1, 1988;
provided, however, that if, as of the date of any Certificate, interest is in default with
respect to any Outstanding Certificates, interest represented by such Certificate shall be
payable from the Interest Payment Date to which interest has previously been paid or
made available for payment with respect to the Outstanding Certificates.
Section 2.03. Maturity: Interest Pates. The Certificates shall mature on August 1
in each of the respective years, and in the respective amounts, and interest represented
thereby shall be computed at the respective rates, as follows:
Maturity Date
(August 1)
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2008
Principal Interest
Amount Rate
$ %
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Section 2.04. Form of Certificates; Interest. The Certikates shall be delivered in
the form of fully registered Certificates without coupons in the denomination of $5,000 or
any integral multiple thereof, except that no Certificate may have principal maturing in
more than one year. The Certificates shall be assigned such alphabetical and numerical
designation as shall be deemed appropriate by the Trustee.
Interest represented by the Certificates shall be payable on each Interest Payment
Date to and including the date of maturity or redemption, whichever is earlier, as
provided in Section 2.10 hereof. Said interest shall represent the portion of Lease
Payments designated as interest and coming due during the six-month period preceding
each Interest Payment Date with respect to the Certificates. The fractional share of the
portion of Lease Payments designated as interest with respect to any Certificate shall be
computed by multiplying the portion of Lease Payments designated as principal with
respect to such Certifkate by the rate of interest applicable to such Certificate (on the
basis of a 360-day year of twelve 30-day months).
Section 2.05. Form. The Certificates shall be substantially in the form set forth in
Exhibit B attached hereto and by this reference incorporated herein.
Section 2.06. Execution. The Certificates shall be executed by and in the name of
the Trustee by the manual signature of an authorized officer of the Trustee. If any officer
whose signature appears on any Certificate ceases to be such officer before the date of
delivery of said Certificate, such signature shall nevertheless be as effective as if the
officer had remained in office until such date.
Section 2.07. Application of Proceeds. The proceeds received by the Trustee from
the sale of the Certificates, including accrued interest, in the aggregate amount of
$ shall forthwith be set aside by the Trustee in the following respective
funds and accounts:
(a) The Trustee shah deposit in the Lease Payment Fund an amount equal to
$ representing accrued interest in the amount of $ from
June 1, 1988 io the Closing Date, plus capitalized interest for Lease Payments
attributable to the Project in the amount of $ fkom the Closing Date to
@I) The Trustee shall deposit in the Escrow Fund an amount equal to $
representing the amount necessary to pay the principal of and interest of the Notes ai
maturity.
(4 The Trustee shall deposit in the Reserve Fund an amount equal to
$ (the Reserve Requirement).
(d) The Trustee shall deposit in the Delivery Costs Fund an amount equal to
(e) The Trustee shall deposit the remainder of said proceeds in an amount equal
to $ , in the Acquisition and Construction Fund.
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Section 2.08. Transfer and Exchange.
(a) Transfer of Certificates. The registration of any Certificate may, in accordance
with its terms, be transferred upon the Registration Books by the person in whose name
it is registered, in person or by his attorney duly authorized in writing upon surrender of
such Certificate for cancellation at the corporate trust office of.the Trustee, accompanied
by delivery of a written instrument of transfer in a form approved by the Trustee, duly
executed. Whenever aiiy Certificate or Certificates shall be surrendered for registration
of transfer, the Trustee shah execute and deliver a new Certificate or Certificates for like
aggregate principal amount.
(b) Exchange of Certificates. Certificates may be exchanged’ at the Principal
Corporate Trust Office of the Trustee for a like aggregate principal amount of Certificates
of other authorized denominations of the same maturity. The Trustee may require the
payment by the Certificate Owner requesting such exchange of any tax or other
governmental charge required to be paid with respect to such exchange.
Section 2.09. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate
shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall
execute and deliver a new Certificate of like tenor, maturity and number in exchange and
substitution for the Certificate so mutilated, but only upon surrender to the Trustee of
the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee
shall be cancelled by it and redelivered by the Trustee to the City. If any Certificate shall
be lost, destroyed or stolen, evidence of such loss, destruction or theft shall be submitted
to the Trustee, and, if such evidence is satisfactory to the Trustee and if an indemnity
satisfactory to the Trustee shall be given, the Trustee, at the expense of the Certificate
Owner, shall execute and deliver a new Certi&ate of like tenor and maturity and
numbered as the Trustee shall determine in lieu of and in substitution for the Certificate
so lost, destroyed or stolen. The Trustee may require payment of the expenses which
may be incurred by the Trustee in carrying out the duties under this Section 2.09. Any
Certificate executed and delivered under the provisions of this Section 2.09 in lieu of any
Certificate alleged to be lost, destroyed or stolen shall be equally and fractionally entitled
to the benefits of this Trust Agreement with all other Certificates secured by this Trust
Agreement. The Trustee shall not be required to treat both the original Certificate and
any replacement Certificate as being Outstanding for the purpose of determining the
principal amount of Certificates which may be executed and delivered hereunder or for
the purpose of determining any percentage of Certificates Outstanding hereunder, but
both the original and replacement Certificate shall be treated as one and the same.
Notwithstanding any other provision of this Section 2.09, in lieu of delivering a new
Certscate which has been mutilated, lost, destroyed or stolen, and which has matured or
has been called for redemption, the Trustee may make payment with respect to such
Certificate.
Section 2.10. Payment. Payment of interest due with respect to any Certificate on
any Interest Payment Date shall be made to the person appearing on the Registration
Books as the Owner thereof as of the Regular Record Date immediately preceding such
Interest Payment Date, such interest to be paid by check or draft mailed to such Owner
at his address as it appears on the Registration Books or at such other address as he
may have filed with the Trustee for’that purpose or by wire transfer to the Owners of
$1,000,000 0 r more in principal amount of the Certificates. The principal, interest and
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redemption price with respect to the Certificates at maturity or upon prior redemption
shall be payable in lawful money of the United States of America upon surrender of the
Certificates at the Principal Corporate Trust Office of the Trustee.
Section 2.11. Execution of Documents and Proof of Ownership. Any request,
direction, consent, revocation of consent, or other instrument in writing required or
permitted by this Trust Agreement to be signed or executed by Certificate Owners may be
in any number of conctient instruments of similar tenor, and may be signed or executed
by such Owners in person or by their attorneys or agents appointed by an instrument in
writing for that purpose, or by any bank, trust company or other depository for such
Certificates. Proof of the execution of any such instrument, or of any instrument
appointing any such attorney or agent, and of the ownership of Cerl%cates shall be
sufficient for any purpose of this Trust Agreement (except as otherwise herein provided),
if made in the following manner:
(a) The fact and date of the execution by any Owner or his attorney or agent of
any such instrument and of any instrument appointing any such attorney or agent, may
be proved by a certificate, which need not be acknowledged or verified, of an officer of any
bank or trust company located within the United States of America, or of any notary
public, or other officer authorized to take acknowledgments of deeds to be recorded in
such jurisdictions, that the persons signing such instruments acknowledged before him
the execution thereof. Where any such instrument is executed by an officer of a
corporation or association or a member of a partnership on behalf of such corporation,
association or partnership, such certificate shall also constitute sufficient proof of his
authority.
(b) The fact of the ownership of Certificates by any person and the amount, the
maturity and the numbers of such Certificates and the date of his holding the same shall
be proved by the Registration Books.
Nothing contained in this Article II shall be construed as limiting the Trustee to
such proof, it being intended that the Trustee may accept any other evidence of the
matters herein stated which the Trustee may deem sticient. Any request or consent of
the Owner of any Certificate shall bind every future Owner of the same Certificate in
respect of anything done or suffered to be done by the Trustee in pursuant of such
request or consent.
Section 2.12. Registration Books. The Trustee shall keep or cause to be kept, at
its Principal Corporate Trust Office, sufficient records for the registration and
registration of transfer of the Certificates, which shall at all reasonable times be open to
inspection by the City and the Corporation; and, upon presentation for such purpose, the
Trustee shall, under such reasonable regulations as it may prescribe, register or transfer
or cause to be registered or transferred, on the Registration Books, Certificates as
hereinbefore provided.
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ARTICLE III
ACQUISITION AND CONSTRUCTION FUND;
DELIVERY COSTS FUND
Section 3.01. Acquisition and Construction Fund. The Trustee shall establish a
special fund designated-as the “Acquisition and Construction Fund”; shall keep such fund
separate and apart from all other funds and moneys held by it; and shall administer such
fund as provided herein and in the Lease Agreement. There shall be deposited in the
Acquisition and Construction Fund from the proceeds of sale of the Certificates required
to be deposited therein pursuant to Section 2.07(e) hereof and any other funds from time
to time deposited with the Trustee for such purpose.
Section 3.02. Pa.yment of Acquisition and Construction Costs.
(a) Amounts in the Acquisition and Construction Fund shall be disbursed for
Acquisition and Construction Costs. Disbursements from the Acquisition and
Construction Fund shall be made by the Trustee upon receipt of a sequentially numbered
requisition requesting disbursement executed or approved by a City Representative.
Subject to subsections (b) and (c) hereof, each such certificate shall:
(i) set forth the amounts to be disbursed for payment or reimbursement of
previous payments of Acquisition and Construction Costs and the person or
persons to whom said amounts are to be disbursed;
(ii) state that the amounts to be disbursed constitute Acquisition and
Construction Costs, that. said amounts are required to be disbursed pursuant to a
contract entered into therefor by or on behalf of the Corporation or the City, or
were necessarily and reasonably incurred; and that said amounts are not being
paid in advance of the time, if any, fmed for payment;
(iii) state that no amount set forth in the certificate was included in any
certificate requesting disbursement previously filed with the Trustee pursuant to
this Section 3.02;
(iv) state the portion, if any, of the Net Proceeds of the Certificates to be
used for a Private Business Use or to make or finance a loan (other than a loan
$. %nstituting a Nonpurpose Obligation or assessment) to other than a state or local ‘. _ ernmental unit;
(v) state that there has been compliance with sections 5.11 and 5.12 of the
Lease Agreement relating to the Private Business Use limitation and the private
loan limitation; and
(vi> state that the amount remaining in the Acquisition and Construction
Fund, together with interest earnings thereon or deposited therein, will, after
payment of the amount set forth in the certificate requesting disbursement, be
sufficient to pay all remaining Acquisition and Construction Costs as then
estimated.
-7-
(b) Each certificate requesting disbursement which is submitted pursuant to
subsection (a) and which relates to disbursement for a construction portion of the Project
shall be accompanied by the certificate of an architect or engineer employed by the City
approving the certificate requesting disbursement and certifying that (i) insofar as such
certificate relates to payment for work, materials, equipment or supplies, such work was
actually performed, or such materials, equipment or supplies were actually installed in
furtherance of the construction of the Project or delivered to the appropriate site for such
purpose, or delivered f&r storage or fabrication at a place approved by the City, and (ii)
as of the date of said certificate requesting disbursement an identified percentage of the
Project has been completed.
(c) Each certificate requesting disbursement which is submitted pursuant to
subsection (a) and which relates to payment to a Contractor shall be accompanied by a
certificate of said Contractor stating that no liens have been imposed on the Project as a
result of said construction except liens that have not yet ripened or that would attach by
operation of law.
Section 3.03. Delivery Costs Fund. The Trustee shall establish a special fund
des’lgnated as the “Delivery Costs Fund”; shah keep such fund separate and apart f?om
all other funds and moneys held by it; and shall administer such fund as provided herein
and in the Lease Agreement. There shall be deposited in the Delivery Costs Fund the
proceeds of sale of the Certificates required to be deposited therein pursuant to Section
2.07(c) hereof and any other funds from time to time deposited with the Trustee for such
purpose.
Section 3.04. Payment of Delivery Costs. The moneys in the Delivery Costs Fund
shall be disbursed to pay the Delivery Costs, upon the written order of a City
Representative executed and delivered to the Trustee directing such disbursements.
The Trustee shall disburse moneys in the Delivery Costs Fund only upon a receipt
of a sequentially numbered requisition signed by a City Representative setting forth the
amounts to be disbursed for payment or reimbursement of Delivery Costs and the name
and address of the person or persons to whom said amounts are to be disbursed, stating
that the amounts to be disbursed are for Delivery Costs properly chargeable to the
Delivery Costs Fund.
The Trustee shall be responsible for the safekeeping and investment of the moneys
held in the Delivery Costs Fund, the payment thereof in accordance with this Section
3.04, but the Trustee shah not be responsible for such requisitions.
Upon payment of all Delivery Costs, but in no event later than October 1, 1988,
the Trustee shall transfer any moneys then remaining in the Delivery Costs Fund to the
Acquisition and Construction Fund, the Delivery Costs Fund shall be closed and the
Trustee shall no longer be obligated to make payments from such fund.
Section 3.05. Transfers of Unexpended Proceeds. The Trustee is hereby directed
to transfer all unexpended moneys remaining in the Acquisition and Construction Fund
and not required for payment of Acquisition and Construction Costs on the Completion
Date to the Lease Payment Fund, to be credited to the Lease Payments as the same shall
become due and payable.
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-9-
ARTICLE IV
RJ?DEM..ION OF CERTIFICATES
Section 4.01. Redemption.
(a) Optional Redemption. The Certificates maturing on and after August 1, 1999,
are subject to redemption in whole at any time or in part on any Interest Payment Date
(but not in a total redemption amount of less than $20,000 at any one time) in inverse
order of maturity and by lot within a maturity on or asker August 1, 1998, at the
principal amount with respect thereto, together with the premium set forth below
(expressed as a percentage of the total amount redeemed), and accrued interest to the
date fixed for redemption, fkom the proceeds of optional prepayments of Lease Payments
made by the City pursuant to the Lease Agreement:
Redemption Period Premium
August 1, 1998 through July 31,1999 2%
August 1, 1999 through July 31,200O 1.5
August 1, 2000 through July 31,200l 1.0
August 1, 2001 through July 31, 2002 0.5
August 1, 2002 and thereafter 0
(b) Redemption From Net Proceeds of Insurance and Condemnation. The
Certificates are subject to mandatory redemption in whole on any date, or in part on any
Interest Payment Date among maturities such that approximately equal annual Lease
Payments prevail following such redemption and by lot within a maturity, from the net
proceeds of insurance or condemnation credited towards the prepayment of the Lease
Payments by the City pursuant to Section 10.3 of the Lease Agreement, at a redemption
price equal to the principal amount thereof to be redeemed together with accrued interest
to the date fixed for redemption, without premium.
(c) Mandatory Redemption. The Certificates maturing on August 1, 2008, are
subject to mandatory redemption on August 1 in each year on or after August 1, 1998,
from the principal components of the Lease Payments required to be paid by the City
pursuant to the Lease Agreement with respect to each such redemption date, at a
redemption price equal to the principal amount thereof to be redeemed together with
accrued interest thereon to the date fixed for redemption, without premium, as follows:
Redemption Date
(August 1)
1998
1999
2000
2001
2002
2003
Principal Amount
of Certificates
to be Redeemed
-lO-
2004
2005
2006
2007
2008 (Maturity)
In the event that the Trustee shall redeem Certificates in part but not in -whole
pursuant to subsections (a) or (II) of this Section 4.01, the amount of the Certificates to
be redeemed in each subsequent year pursuant to this subsection (d) shall be reduced to
correspond to the principal components of the Lease Payments prevailing following such
redemption as determined pursuant to Section 4.4(b) of the Lease Agreement.
(d) Redemption Fund. Moneys to be used for redemption of Certificates shall be
deposited in a Redemption Fund, which shall be a special fund to be held in trust by the
Trustee, separate and apart from all other funds and accounts. Said moneys shall be set
aside in the Redemption Fund solely for the purpose of redeeming the Certificates in
advance of their maturity and shall be applied on or aRer the date designated for
redemption to the payment of principal and interest with respect to the Certificates to be
redeemed upon presentation and surrender of such Certificates.
Section 4.02. Selection of Certificates for Redemption. Whenever provision is
made in this Trust Agreement for the redemption of Certificates and less than all
Outstanding Certificates are called for redemption, the Trustee shall select Certificates
for redemption from the Outstanding Certificates not previously called for redemption
such that the scheduled payments of principal represented by the Certificates in each
Rental Period corresponds to the scheduled payments of the principal components of the
Lease Payments following the corresponding prepayment of the Lease Payments pursuant
to Sections 10.2, 10.3 or 10.4 of the Lease Agreement, as determined pursuant to Section
4.4(b) of the Lease Agreement. The Trustee shall select Certificates for redemption
within a maturity by lot or in any other manner which the Trustee shall, in its sole
discretion, deem appropriate and fair. For the purposes of such selection, Certificates
shall be deemed to be composed of $5,000 portions, and any such portion may be
separately redeemed. The Trustee shall promptly notify the City and the Corporation in
writing of the Certificates so selected for redemption.
Section 4.03. Notice of Redemption. Unless waived by any Owner of Certificates
to be redeemed, official notice of any such redemption shall be given by the Trustee on
behalf of the City by mailing a copy of an official redemption notice by first class mail at
least thirty (30) days and not more than sixty (60) days prior to the date fixed for
redemption to the Owner of the Certificate or Certificates to be redeemed at the address
shown on the Registration Books or at such other address as is furnished in writing by
such Owner to the Trustee.
All official notices of redemption shall be dated and shall state: (i) the redemption
date, (ii) the redemption price, (iii) if less than all Outstanding Certificates are to be
redeemed, the identification (and, in the case of partial redemption, the respective
principal amounts) of the Certificates to be redeemed, (iv) that on the redemption date
the redemption price will become due and payable upon each such Certificate or portion
thereof called for redemption, and that interest with respect thereto shall cease to accrue
from and after said date, and (v) the place where such Certificates are to be surrendered
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for payment of the redemption price, which place of payment shall be the Principal
Corporate Trust Office of the Trustee.
Prior to any redemption date, the City shall deposit, or cause to be deposited, with
the Trustee an amount of money sufEcient to pay the redemption price of all the
Certificates or portions of Certificates which are to be redeemed on that date.
Official notice 07 redemption having been given as aforesaid, the Certificates or
portions of Certificates so to be redeemed shah, on the redemption date, become due and
payable at the redemption price therein specified, and from and after such date (unless
the City shall default in the payment of the redemption price) interest with respect to
such Certificates or portions of Certificates shall cease to be payable. Upon surrender of
such Certificates for redemption in accordance with said notice, such Certificates shall be
paid by the Trustee at the redemption price. Installments of interest due on or prior to
the redemption date shall be payable as herein provided for payment of interest. Upon
surrender for any partial redemption of any Certificate, there shall be prepared for the
Owner a new Certificate or Certificates of the same maturity in the amount of the unpaid
principal. All Certificates which have been redeemed shall be cancelled and destroyed by
the Trustee and shall not be reissued.
Failure by any Owner to receive notice as hereinabove provided shall not affect the
validity of any such redemption.
Section 4.04. Partial Redemption of Certificate. Upon surrender of any Certificate
redeemed in part only, the Trustee shall execute and deliver to the Owner thereof, at the
expense of the City, a new Certificate or Certificates of authorized denominations equal in
aggregate principal amount to the unredeemed portion of the Certificate surrendered and
of the same interest rate and the same maturity.
Section 4.05. Purchase of Certificates. In lieu of redemption of Certificates as
provided in this Article IV, amounts held by the Trustee for such redemption shall also be
used at any time, upon the written request of a City Representative, for the purchase of
Certificates at public or private sale as and when and at such prices (including
brokerage, accrued interest and other charges) as the City may in its discretion direct,
but not to exceed the redemption price which would be payable if such Certificates were
redeemed. The aggregate principal amount of Certificates of the same maturity
purchased in lieu of redemption pursuant to this Section 4.06 shall not exceed the
aggregate principal amount of Certificates of such maturity which would otherwise be
subject to such redemption. Remaining moneys, if any, shall be deposited in the Lease
Payment Fund.
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ARTICLE V
LEASE PAYMENTS; LEASE PAYMENTFUND
Section 5.01. Assignment of Eights in Lease Agreement. The Corporation has, in
the Assignment Agreement, transferred, assigned and set over to the Trustee certain of
its rights and duties in the Lease Agreement, including but not limited to alI of the
Corporation’s rights to receive and collect all of the Lease Payments and all other
amounts required to be deposited in the Lease Payment Fund pursuant to the Lease
Agreement or pursuant hereto. All Lease Payments and such other amounts to which
the Corporation may at any time be entitled shall be paid directly to the Trustee and all
of the Lease Payments collected or received by the Corporation shall be deemed to be
held and to have been collected or received by the Corporation as the agent of the
Trustee, and if received by the Corporation at any time shall be deposited by the
Corporation with the Trustee within one Business Day after the receipt thereof, and all
such Lease Payments and such other amounts shall be forthwith deposited by the
Trustee upon the receipt thereof in the Lease Payment Fund (except as provided in
Section 6.04 hereof).
Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish
a special fund designated as the “Lease Payment Fund”. All moneys at any time
deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust
for the benefit of the Owners of the Certificates. So long as any Certificates are
Outstanding, neither the City nor the Corporation shall have any beneficial right or
interest in the Lease Payment Fund or the moneys deposited therein, except only as
provided in this Trust Agreement, and such moneys shall be used and applied by the
Trustee as hereinafier set forth.
Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all
Lease Payments received by the Trustee (except aa provided in Section 6.04 hereof),
including any moneys received by the Trustee for deposit therein pursuant to Sections
2.07(a), 4.01, 5.01 or Article VII hereof, or Article X of the Lease Agreement, and any
other moneys required to be deposited therein pursuant to the Lease Agreement or
pursuant to this Trust Agreement.
Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund
shall be used and withdrawn by the Trustee solely for the purpose of paying the
principal, interest and redemption premiums (if any) with respect to the Certificates as
the same shall become due and payable, in accordance with the provisions of Article II
and Article IV hereof.
Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund, after
redemption and payment of all Certificates, including premiums and accrued interest (if
any) and payment of any applicable fees and expenses to the Trustee, or provision for
such redemption or payment having been made to the satisfaction of the Trustee, shall be
withdrawn by the Trustee and remitted to the City.
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ARTICLE VI
RESERVE FUND; ESCROW FUND
Section 6.01. Establishment of Reserve Fund. The Trustee shall establish a
special fund designated as the “Reserve Fund”. All moneys at any time on deposit in the
Reserve Fund shall be’-held by the Trustee in trust for the benefit of the Owners of the
Certificates, and applied solely as provided herein.
Section 6.02. Deposit. There shall be deposited in the Reserve Fund an amount
equal to the Reserve Requirement, in accordance with Section 2.07(c). Moneys in the
Reserve Fund shall be held in trust as a reserve for the payment when due of all the
Lease Payments to be paid pursuant to the Lease Agreement.
Section 6.03. Transfers of Excess. On or before January 15 and July 15 in each
year, the Trustee shall transfer any moneys in the Reserve Fund then in excess of the
Reserve Requirement prior to the Completion Date, to the Acquisition and Construction
Fund, and thereafter to the Lease Payment Fund to be credited to the Lease Payments
next coming due and payable.
Section 6.04. Application in Event of Deficiency in Lease Payment Fund. If on
any Interest Payment Date the moneys available in the Lease Payment Fund do not
equal the amount of the principal and interest and redemption premiums (if any) with
respect to the Certificates then coming due and payable, the Trustee shall apply the
moneys available in the Reserve Fund to make delinquent Lease Payments on behalf of
the City by transferring the amount necessary for this purpose to the Lease Payment
Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have
been advanced from the Reserve Fund, such Lease Payment shall be deposited in the
Reserve Fund to the extent of such advance.
Section 6.05. Transfer To Make All Lease Payments. If on any Interest Payment
Date the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding
amounts required for payment of principal, interest and redemption premium, if any,
with respect to Certificates not presented for payment) are sufficient to pay all
Outstanding Certificates, including all principal, interest and redemption premiums (if
any), the Trustee shall, upon the written direction of a City Representative, transfer all
amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied
to the payment of the Lease Payments on behalf of the City, and such moneys shall be
distributed to the Owners of Certificates in accordance with Article II of this Trust
Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all
Outstanding Certitlcates, or upon provision for such payment as provided in Section
14.01, shall be withdrawn by the Trustee and paid to the City.
Section 6.06. Establishment of Escrow Fund. The Trustee shall establish a
special fund designated as the “Escrow Fund”. All moneys at any time on deposit in the
Escrow Fund shall be held by the Trustee in trust for the holders of the Notes, and
applied solely as provided herein.
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Section 6.07. Deposit. There shah be deposited in the Escrow Fund an amount
equal to the amount necessary to pay the principal of and interest on the Notes at
maturity, as provided in Section 2.0701).
Section 6.08. Payment of the Notes. The Trustee shall transfer to the Paying
Agent, on or before the maturity date of the Notes (June 30, .1988), an amount equal to
the principal of and interest on the Notes, in order to fully discharge the City’s payment
obligation on the Notes’;
Section 6.09. Transfer of Excess. The Trustee shall, after making the payment
referenced in Section 6.08, transfer any monies remaining in the Escrow Fund to the
Lease Payment Fund, and shall thereupon close the Escrow Fund.
Section 6.10. Investment of Escrow Fund. All monies held in the Escrow Fund
shall, until used for payment of the Notes, be invested in Permitted Investments
described in paragraph (0 of the definition thereof.
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ARTICLE VII
INSURANCE AND CONDEMNATION FUNLJ;
INSURANCE; EMmNT DOMm
Section 7.01. Establishment of Insurance and Condemnation Fund; Application of
Net Proceeds of InsuraIice Award. Any Net Proceeds of insurance against accident to or
destruction of any part of the Project collected by the City in the event of any such
accident or destruction shall be paid to the Trustee by the City pursuant to Section 6.2(a)
of the Lease Agreement and deposited by the Trustee promptly upon receipt thereof in a
special fund designated as the “Insurance and Condemnation Fund”. If the City
determines and notifies the Trustee in writing of its determination, within ninety (90)
days following the date of such deposit, that the replacement, repair, restoration,
modification or improvement of the Project is not economically feasible or in the best
interest of the City, then such Net Proceeds shall be promptly transferred by the Trustee
to the Lease Payment Fund and applied to the prepayment of Lease Payments pursuant
to Section 10.3 of the Lease Agreement; provided, however, that in the event of damage
or destruction of the Project in full, such Net Proceeds may be transferred to the Lease
Payment Fund only if sufficient, together with other moneys available therefor, to cause
the prepayment of the principal components of all unpaid Lease Payments allocable to
the Project and the Site pursuant to Section 10.3 of the Lease Agreement. All Net
Proceeds deposited in the Insurance and Condemnation Fund and not so transferred to
the Lease Payment Fund shall be applied to the prompt replacement, repair, restoration,
modification or improvement of the damaged or destroyed portions of the Project by the
City, upon receipt of requisitions satisfactory to the Trustee signed by a City
Representative stating with respect to each payment to be made (i) the requisition
number, (ii) the name and address of the person, firm or corporation to whom payment is
due, (iii) the amount to be paid and (iv) that each obligation mentioned therein has been
properly incurred, is a proper charge against the Insurance and Condemnation Fund, has
not been the basis of any previous withdrawal, and specifying in reasonable detail the
nature of the obligation, accompanied by a bill or a statement of. account for such
obligation. Any balance of the Net Proceeds remaining after such work has been
completed shall be paid to the City.
Section 7.02. Application of Net Proceeds of Eminent Domain Award. If all or
any part of the Project or the Site shall be taken by eminent domain proceedings (or sold
to a government threatening to exercise the power of eminent domain) the Net Proceeds
therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund
pursuant to Section 6.2(b) of the Lease Agreement and shall be applied and disbursed by
the Trustee as follows:
(a) If the City has given written notice to the Trustee of its determination that (i)
such eminent domain proceedings have not materially affected the operation of the
Project or the ability of the City to meet any of its obligations with respect to the Project
and the Site under the Lease Agreement, and (ii) that such proceeds are not needed for
repair or rehabilitation of the Project, the City shall so certify to the Trustee and the City’
has given written notice to the Trustee of such determination, the Trustee, at the City’s
request, shall transfer such proceeds to the Lease Payment Fund to be credited towards
the prepayments of the Lease Payments pursuant to Section 10.3 of the Lease Agreement
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and applied to the redemption of Certificates in the manner provided in Section 4.01(b)
hereof.
(b) If the City has given written notice to the Trustee of its determination that (i)
such eminent domain proceedings have not materially affected tbe operation of the
Project or the ability of’the City to meet any of its obligations with respect to the Project
and the Site under the Lease Agreement, and (ii) such proceeds are needed for repair,
rehabilitation or repla&ment of the Project, the City shall so certify to the Trustee and
the Trustee, at the City’s request, shall pay to the City, or to its order, from said
proceeds such amounts as the City may expend for such repair or rehabilitation, upon the
filing with the Trustee of requisitions of the City Representative in the form and
containing the provisions set forth in Section 7.01.
(c) If (i) less than all of the Project or the Site shall have been taken in such
eminent domain proceedings or sold to a government threatening the use of eminent
domain powers, and if the City has given written notice to the Trustee of its
determination that such eminent domain proceedings have materially affected the
operation of the Project or the ability of the City to meet any of its obligations with
respect to the Project and the Site under the Lease Agreement or (ii) all of the Project
and the Site shall have been taken in such eminent domain proceedings, then the Trustee
shall transfer such proceeds to the Lease Payment Fund to be credited toward the
prepayment of the Lease Payments pursuant to Section 10.3 of the Lease Agreement and
applied to the redemption of Certificates in the manner provided in 4.010~) hereof.
(d) In making any determination under this Section 7.02, the City may obtain, but
shall not be required to obtain, at its expense, the report of an independent engineer or
other independent professional consultant, a copy of which shall be filed with the
Trustee. Any such determination by the City shall be final.
Section 7.03. Cooperation. The Corporation and the Trustee shall cooperate fully
with the City at the expense of the City in filing any proof of loss with respect to any
insurance policy maintained pursuant to Article V of the Lease Agreement and in the
prosecution or defense of any prospective or pending condemnation proceeding with
respect to the Project or the Site or any portion thereof.
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ARTICLE VIII
MONEY23 INFUNDS; INVESTIMENT; REBATE
Section 8.01. Held in Trust. The moneys and investments held by the Trustee
under this Trust Agreement are irrevocably held in trust for the benefit of the Owners of
the Certificates and foi! the purposes herein specified, and such moneys, and any income
or interest earned thereon, shall be expended only as provided in this Trust Agreement,
and shall not be subject to levy or attachment or lien by or for the benefit of any creditor
of the Corporation, the Trustee, the City or any Owner of Certificates.
Section 8.02. Investments Authorized. Moneys held by the Trustee hereunder
may, and upon written order of a City Representative shall, be invested and reinvested
by the Trustee, to the maximum extent practicable, in Permitted Investments. If a City
Representative shall fail to so direct investments, the Trustee shall invest the affected
moneys in Federal Securities or, to the extent such investment is not possible, in
Permitted Investments described in paragraph (f) of the definition thereof. A City
Representative may, by written order filed with the Trustee, direct such investment of
moneys held by the Trustee in specific Permitted Investments. Such investments, if
registrable, shall be registered in the name of and held by the Trustee. The Trustee may
purchase or sell to itself or any amate, as principal or agent, investments authorized by
this Section 8.02. Such investments and reinvestments shall be made giving full
consideration to the time at which funds are required to be available. The Trustee may
act as purchaser or agent in the making or disposing of any investment.
Section 8.03. Accounting. The Trustee shall furnish to the City, not less than
monthly, an accounting of all investments made by the Trustee. The Trustee shall not be
responsible or liable for any loss suffered in connection with any investment of funds
made by it in accordance with Section 8.02 hereof.
Section 8.04. Allocation of EarninPs. Subject to Section 8.07 hereof, all interest
or income received by the Trustee on investment of the Lease Payment Fund hereof shall,
prior to the Completion Date, be transferred to the Acquisition and Construction Fund
and thereafter shall be retained in the Lease Payment Fund and be applied to the
payment of delinquent payments due with respect to the Certificates, if any, and
otherwise as set forth herein. Subject to Section 8.07 hereof, all interest or income
received by the Trustee on investment of the Reserve Fund shall be retained in the
Reserve Fund in the event that amounts on deposit in the Reserve Fund are less than the
Reserve Requirement. Pursuant to Section 6.04 hereof, in the event that amounts then
on deposit in the Reserve Fund exceed the Reserve Requirement, such excess shall, prior
to the Completion Date, be transferred to the Acquisition and Construction Fund and
thereafter shall be transferred to the Lease Payment Fund. Transfers to the Lease
Payment Fund from the Reserve Fund shall be made by the Trustee on or prior to each
Lease Payment Date. Amounts retained or deposited in the Lease Payment Fund
pursuant to this Section 8.04 shall be applied as a credit against the Lease Payment due
by the City pursuant to the Lease Agreement on the Lease Payment Date following the
date of deposit. Subject to Section 8.07 hereof, all interest or income in the Acquisition
and Construction Fund shall be retained in the Acquisition and Construction Fund until
the Acquisition and Construction Fund is closed pursuant to Section 3.05 hereof. Subject
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to Section 8.07 hereof, all interest or income in the Delivery Costs Fund shall be retained
in the Delivery Costs Fund until the Delivery Costs Fund is closed pursuant to Section
3.04 hereof.
Section 8.05. Valuation and Disposition of Investments. For the purpose of
determining the amount in any fund, all Permitted Investments credited to such fund
shall be valued by the Trustee at lower of cost or market (exclusive of accrued interest).
The Trustee may selI at the best price obtainable, or present for redemption, any
Permitted Investment so purchased by the Trustee whenever it shall be necessary in
order to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund to which such Permitted Investment is credited, and the
Trustee shall not be liable or responsible for any loss resulting from any such Permitted
Investment.
Section 8.06. No Arbitrage. The City shall not take, or permit or suffer to be
taken by the Trustee or otherwise, any action with respect to the proceeds of the
Certificates which if such action had been reasonably expected to have been taken, or had
been deliberately and intentionally taken, on the Closing Date would have caused the
Lease Agreement to be an “arbitrage bond” within the meaning of section 148(a) of the
Code and Regulations promulgated thereunder.
Section 8.07. Application of Investment Earnings; Rebate of Excess Investment
Earnings to United States.
(A) Creation of Accounts. There are hereby created, to be held by the
Trustee as separate accounts distinct from all other funds and accounts held by
the Trustee under this Trust Agreement, the Investment Earnings Account and
the Excess Investment Earnings Account. All interest earnings and profits on
amounts in all funds and accounts established under this Trust Agreement, other
than interest earnings on the Lease Payment Fund if such earnings in any
Certificate Year are less than $100,000, shall, upon receipt by the Trustee, be
deposited in the Investment Earnings Account. Annually, within 30 days of the
last day of each Certificate Year the Trustee shall transfer from the Investment
Earnings Account to the Excess Investment Earnings Account for purposes of
ultimate rebate to the United States an amount equal to Excess Investment
Earnings, all as more particularly described in this Section. Following the
transfer referenced in the preceding sentence, the Trustee shall transfer all
amounts remaining in the Investment Earnings Account to the following funds and
accounts in the following order: (i) to the Acquisition and Construction Fund if
the Trustee has not received the Certificate of Completion with respect to the
Project, (ii)(l) to the Reserve Fund to the extent necessary to increase the amount
on deposit in the Reserve Fund to equal the Reserve Requirement, and (2) to the
Lease Payment Fund to be used for the payment of Lease Payments on the next
Payment Date, and for such purpose Lease Payments due from the City on such
date shall be credited by an amount equal to the amount so transferred.
(B) Definition of Excess Investment Earnings. The Trustee shall calculate
Excess Investment Earnings in accordance with subsection (C) and to pay an
amount equal to Excess Investment Earnings to the United States in accordance
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with subsection CD). The term “Excess Investment Earnings” means an amount
equal to the sum of:
(i) the excess of
(a) the aggregate amount earned from the date of delivery of the
Certificates on all Nonpurpose Obligations in which Gross Proceeds of the
CertificatZs are invested (other than amounts attributable to an excess
described in this paragraph ($1, over
(b) The amount that would have been earned if the Yield on such
Nonpurpose Obligation (other than amounts attributable to an excess
described in this paragraph (i>> had been equal to the Yield on the
Certificates,
plus (ii) any income attributable to the excess described in
paragraph (il.
(Cl Calculation of Excess. Within 30 days of the last day of the tist
Certificate Year, the Trustee shall calculate the Excess Investment Earnings
referenced in paragraph (i) of section (B). Thereafter, within 30 days of the last
day of each Certificate Year and within thirty days after the payment in full of the
Certificates, the Trustee shall calculate the amount of excess Investment Earnings
referenced in paragraphs (i) and (ii) of subsection (B).
(D) Payment to the United States. The City shall direct the Trustee to pay
from the Excess Investment Earnings Account an amount equal to Excess
Investment Earnings to the United States in installments with the first payment
to be made no later than thirty (30) days after the end of the fifth Certificate Year
and with subsequent payments to be made not later than five (5) years after the
preceding payment was due. The City shall assure that each such installment is
an amount equal to at least 90 percent of the Excess Investment Earnings with
respect to the Certificates as of the close of the computation period. Not later
than sixty (60) days after the payment in full of the Lease Payments, the City
shall direct the Trustee to pay from the Excess Investment Earnings Account to
the United States 100 percent of the theretofore unpaid Excess Investment
Earnings. If there are any amounts remaining in the Excess Investment Earnings
Account following the payment required by the preceding sentence, the Trustee
shall transfer said amounts to the City to be used for any lawful purpose of the
City. The City or the Trustee shall remit payments to the United States at the
address prescribed by such Regulations. If, for any reason, amounts in the Excess Investment Earnings Accounts are insufficient to make the payments to the
United States which are required by this subsection (D), the City shall assure that
such payments are made to the United States, on a timely basis, from any funds
lawfully available therefor.
(E) Further Obligation of the City. The City shall assure that Excess
Investment Earnings are not paid or disbursed except as required in this Section.
To that end the City shall assure that investment transactions are on an arm’s-
length basis. In the event that Nonpurpose Investments consist of certificates of
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deposit or investment contracts, investment in such Nonpurpose Investments shall
be made in accordance with the procedures described in applicable Regulations as
from time to time in effect.
(F) Maintenance of Records. The Trustee shall keep, and retain for a
period of six (6) years following the payment in full of the Certificates, such
records of the determinations made pursuant to this Section 8.07 as are required
under Section 148(f) of the Code.
(G) Independent Consultants. In order to provide for the administration of
this Section 8.07, the City and the Trustee may provide for the employment of
independent attorneys, accountants and consultants compensated on such
reasonable basis as the City or the Trustee may deem appropriate and the Trustee
may rely conclusively upon and shall be fully protected from all liability in relying
on the opinions, calculations, determinations, directions and advice of such
attorneys, accountants and consultants employed hereunder.
(H) Fees and Expenses. The City shall be responsible for the payment of
any fees and expenses incurred by the Trustee or the City under or pursuant to
this Section 8.07.
(I) Administration. The City hereby appoints the Trustee to administer
the provisions of this Section 8.07 and the Trustee hereby accepts such
appointment, subject to the provisions of paragraph (G) above.
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ARTICLE lx
TEE TRUSTEE
Section 9.01. Appointment of Trustee. The Bank of California, National
Association, a national banking association organized and existing under and by virtue of
the laws of the UnitedStates of America with its principal corporate trust office in San
Francisco, California, is hereby appointed Trustee by the Corporation and the City for the
purpose of receiving all moneys required to be deposited with the Trustee hereunder and
to allocate, use and apply the same as provided in this Trust Agreement. The
Corporation and the City agree that they will maintain a Trustee having a principal
corporate trust office in Los Angeles or San Francisco, California, with a combined
capital and surplus of at least fifty million dollars ($50,000,000), and subject to
supervision or examination by federal or State authority, so long as any Certificates are
Outstanding. If such bank or trust company publishes a report of condition at least
annually pursuant to law or to the requirements of any supervising or examining
authority above referred to then for the purpose of this Section 9.01, the combined capital
and surplus of such bank or trust company shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
The Trustee is hereby authorized to redeem the Certificates when duly presented
for payment at maturity, or on redemption, or on purchase by the Trustee prior to
maturity in accordance with Section 4.06 hereof, and to cancel all Certificates upon
payment thereof. The Trustee shall keep accurate records of all funds administered by it
and of all Certificates paid and discharged. The Trustee shall be compensated for its
services rendered pursuant to the provisions of this Trust Agreement.
Section 9.02. Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it by this Trust Agreement, and agrees to perform said trusts, but only
upon and subject to the following express terms and conditions:
The Trustee, prior to the occurrence of an Event of Default and after curing of all
Events of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Trust Agreement. In case an Event of
Default has occurred (which has not been cured or waived) the Trustee may exercise such
of the rights and powers vested in it by this Trust Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent and reasonable man would exercise
or use under the circumstances in the conduct of his own affairs.
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.
The Trustee may execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys, agents, or receivers and the
Trustee shall not be responsible for any misconduct or negligence on the part of any
attorney, agent or receiver appointed in accordance with the standard specified above,
and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder.
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The Trustee shall not be responsible for any recital herein, or in the Certificates,
or for any of the supplements thereto or instruments of further assurance, or for the
sufficiency of the security for the Certificates delivered hereunder or intended to be
secured hereby and the Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions or agreements on the part of the
Corporation or the City under the Lease Agreement. The Trustee shall not be
responsible or liable for any loss suffered in connection with any investment of funds
made by it in accordan& with Article VIII of this Trust Agreement. *
The Trustee shall not be accountable for the use of any Certificates delivered
hereunder. The Trustee may become the Owner of Certificates secured hereby with the
same rights which it would have if not the Trustee; may acquire and dispose of other
bonds or evidence of indebtedness of the City with the same rights it would have if it
were not the Trustee; and may act as a depositary for and permit any of its officers or
directors to act as a member of, or in any other capacity with respect to, any committee
formed to protect the rights of Owners of Certificates, whether or not such committee
shall represent the Owners of the majority in principal amount of the Certificates then
Outstanding.
In the absence of bad faith on its part, the Trustee shall be protected in acting
upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other
paper or document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons. Any action taken or omitted to be taken by the
Trustee in good faith pursuant to this Trust Agreement upon the request or authority or
consent of any person who at the time of making such request or giving such authority or
consent is the Owner of any Certificate, shall be conclusive and binding upon all future
Owners of the same Certificate and upon Certificates executed and delivered in exchange
therefor or in place thereof. The Trustee shall not be bound to recognize any person as
an Owner of any Certificate or to take any action at his request unless such Certificate
shall be deposited with the Trustee or satisfactory evidence of the ownership of such
Certificate shall be furnished to the Trustee.
As to the existence or non-existence of any fact or as to the sufIiciency or validity
of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a
certificate signed by an Corporation Representative or a City Representative as sticient
evidence of the facts therein contained and prior to the occurrence of an Event of Default
of which the Trustee has been given notice or is deemed to have notice, shall also be at
liberty to accept a similar certificate to the effect that any particular dealing, transaction
or action is necessary or expedient, but may at its discretion secure such further evidence
deemed by it to be necessary or advisable, but shall in no case be bound to secure the
same. The Trustee may accept a certificate of an Corporation Representative or a City
Representative to the effect that an authorization in the form therein set forth has been
adopted by the Corporation or the City, as the case may be, as conclusive evidence that
such authorization has been duly adopted, and is in full force and effect.
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 negligence or willful default. The immunities and exceptions from liability of the
Trustee shall extend to its officers, directors, employees and agents.
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The Trustee shall not be required to take notice or be deemed to have notice of
any Event of Default hereunder except failure by the City to make any of the Lease
Payments to the Trustee required to be made by the City pursuant to the Lease
Agreement or failure by the Corporation or the City to file with the Trustee any
document required by this 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 Corporation, the City or by the Owners of at
least five percent (5%)~in aggregate principal amount of Certificates then Outstanding
and all notices or other instruments required by this Trust Agreement to be delivered to
the Trustee must, in order to be effective, be delivered at the Principal Corporate Trust
Office of the Trustee, and in the absence of such notice so delivered the Trustee may
conclusively assume there is no Event of Default except as aforesaid.
The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the premises.
Notwithstanding anything elsewhere in this Trust Agreement with respect to the
execution of any Certificates, the withdrawal of any cash, the release of any property, or
any action whatsoever within the purview of this Trust Agreement, the Trustee shall
have the right, but shall not be required, to demand any showings, certificates, opinions,
appraisals or other information, or corporate action or evidence thereof, in addition so
that by the terms hereof required as a condition of such action, by the Trustee deemed
desirable for the purpose of establishing the right of the City to the withdrawal of any
cash, or the taking of any other action by the Trustee.
All moneys received by the Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received but need
not be segregated from other funds except to the extent required by law.
The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Owners of a majority in
aggregate principal amount of the Outstanding Certificates relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Trust Agreement.
Before being required to take any action, the Trustee may require an opinion of
Independent Counsel acceptable to the Trustee, which opinion shall be made available to
the other parties hereto upon request, which counsel may be counsel to any of the parties
hereto, or a verified certificate of any party hereto, or both, concerning the proposed
action. If it does so in good faith, the Trustee shall be absolutely protected in relying
thereon.
Section 9.03. Fees, Charges and Expenses of Trustee. The Trustee shall be
entitled to payment and reimbursement for reasonable fees for its services rendered
hereunder and all advances, counsel fees (including expenses) and other expenses
reasonably and necessarily made or incurred by the Trustee in connection with such
services.
Section 9.04. Notice to Certificate Owners of Default. If an Event of Default
occurs of which the Trustee has been given or is deemed to have notice, then the Trustee
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shall promptly give written notice thereof by first class mail to the Owner of each
Certificate, unless such Event of Default shall have been cured before the giving of such
notice; provided, however that unless such Event of Default consists of the failure by the
City to make any Lease Payment when due, the Trustee may elect not to give such notice
if and so long as the Trustee in good faith determines that it is in the best interests of the
Certificate Owners not to give such notice.
Section 9.05. Inrervention by Trustee. In any judicial proceeding to which the
Corporation or the City is a party which, in the opinion of the Trustee and its counsel,
has a substantial bearing on the interests of Owners of the Certificates, the Trustee may
intervene on behalf of the Certificate Owners, and shall do so if requested in writing by
the Owners of at least five percent (5%) of the aggregate principal amount of Certificates
then Outstanding. The rights and obligations of the Trustee under this Section 9.05 are
subject to the approval of a court of competent jurisdiction.
Section 9.06. Removal of Trustee. The City may, with the consent of the
Corporation, remove the Trustee initially appointed, and any successor thereto, by an
instrument or concurrent instruments in writing delivered .to the Trustee and the
Corporation, and may appoint a successor or successors thereto; provided that any such
successor shall be a bank or trust company meeting the requirements set forth in Section
9.01 hereof.
Section 9.07. Resignation by Trustee. The Trustee and any successor Trustee
may, at any time, resign by giving thirty (30) days’ written notice by registered or
certified mail to the City and the Corporation. Upon receiving such notice of resignation,
the City shall promptly appoint a successor Trustee. Any resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee. Upon such acceptance, the City shall mail notice
thereof to the Certificate Owners at their respective addresses set forth on the
Registration Books.
Section 9.08. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 9.06 or 9.07 hereof, respectively, the City
shall promptly appoint a successor Trustee. In the event the City shall, for any reason
whatsoever, fail to appoint a successor Trustee within thirty (30) days following the
delivery to the Trustee of the instrument described in Section 9.06 hereof or within thirty
(30) days following the receipt of notice by the City pursuant to Section 9.07 hereof, the
Trustee may apply to a court of competent jurisdiction for the appointment of a successor
Trustee meeting the requirements of Section 9.01 hereof. Any such successor Trustee
appointed by such court shall become the successor Trustee hereunder notwithstanding
any action by the City purporting to appoint a successor Trustee following the expiration
of such thirty (30) day period.
Section 9.09. Merger or Consolidation. Any company or association into which
the Trustee may be merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to which it shall be a
party or any company or association to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided that such company or
association shall be eligible under Section 9.01 hereof, shall be the successor to the
Trustee and vested with all of the title to the trust estate and all of the trusts, powers,
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discretions, immunities, privileges and all other matters as was its predecessor, without
the execution or filing of any paper or further act, anything herein to the contrary
notwithstanding.
Section 9.10. Concerning any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its or his predecessor and
also the Corporation and the City an instrument in writing accepting such appointment
hereunder and thereupsn such successor, without any further act, deed or conveyance,
shall become fully vested with all the estates, properties, rights, powers, trusts, duties
and obligations of its predecessors; but such predecessor shall, nevertheless, on the
written request of the City, or of its successor, execute and deliver an instrument
transferring to such successor all the estates, properties, rights, powers and trusts of
such predecessor hereunder; and every predecessor Trustee shall deliver all securities
and moneys held by it as the Trustee hereunder to its successor. Should any instrument
in writing from the City be required by any successor Trustee for more fully and certainly
vesting in such successor the estate, rights, powers and duties hereby vested or intended
to be vested in the predecessor, any and all such instruments in writing shall, on request,
be executed, acknowledged and delivered by the City. The resignation of any Trustee and
the-- instrument or instruments removing any Trustee and appointing a successor
hereunder, together with all other instruments provided for in’ this kticle IX, shall be
filed or recorded by the successor Trustee in each recording office where the Assignment
Agreement shah have been filed or recorded.
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ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 10.01. Amendments Permitted. This Trust Agreement and the rights and
obligations of the Owners of the Certificates and the Lease Agreement and the rights and
obligations of the parties thereto, may be modified or amended at any time by a
supplemental agreement which shall become effective when the written consents of the
Owners of a majority percent in aggregate principal amount of the Certificates then
Outstanding, exclusive of Certificates disqualified as provided in Section 10.03 hereof,
shall have been filed with the Trustee. No such modification or amendment shall (1)
extend or have the effect of extending the fixed maturity of any Certificate or reducing the
interest rate with respect thereto or extending the time of payment of interest, or
reducing the amount of principal thereof or reducing any premium payable upon the
redemption thereof, without the express consent of the Owner of such Certificate, or (2)
reduce or have the effect of reducing the percentage of Certificates required for the
afhrmative vote or written consent to an amendment or modification of the Lease
Agreement, or (3) modify any of the rights or obligations of the Trustee without its
written assent thereto. Any such supplemental agreement shall become effective as
provided in Section 10.02 hereof.
This Trust Agreement and the rights and obligations of the Owners of the
Certificates and the Lease Agreement and the rights and obligations of the respective
parties thereto, may be modified or amended at any time by a supplemental agreement,
without the consent of any such Owners, but only to the extent permitted by law and
only (1) to add to the covenants and agreements of any party, other covenants to be
observed, or to surrender any,right or power herein reserved to the Corporation or the
City, (2) to cure, correct or supplement any ambiguous or defective provision contained
herein or therein and which shall not, in the opinion of nationally recognized bond
counsel, adversely affect the interests of the Owners of the Certificates, (3) in regard to
questions arising hereunder or thereunder, as the parties hereto or thereto may deem
necessary or desirable and which shall not, in the opinion of nationally recognized bond
counsel, adversely affect the interests of the Owners of the Certificates, (4) to modify the
legal description either of the Site to conform to the requirements of title insurance or
otherwise to add or delete property descriptions to reflect accurately the description of
the parcels intended to be included therein; or (5) to make such additions, deletions or
modifications as may be necessary to assure exclusion from gross income for purposes of
Federal income taxation of the interest component of Lease Payments. Any such
supplemental agreement shall become effective upon execution and delivery by the
parties hereto or thereto, as the case may be.
Section 10.02. Procedure for Amendment with Written Consent of Certificate
Owners. This Trust Agreement and the Lease Agreement may be amended by
supplemental agreement as provided in this Section 10.02 in the event the consent of the
Owners of the Certificates is required pursuant to Section 10.01 hereof. A copy of such
supplemental agreement, together with a request to the Certificate Owners for their
consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his
address as set forth on the Registration Books, but failure to mail copies of such
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supplemental agreement and request shall not affect the validity of the supplemental
agreement when assented to as in this Section 10.02 provided.
Such supplemental agreement shall not become effective unless there shall be filed
with the Trustee the written consents of the Owners of sixty percent (60%) in aggregate
principal amount of the Certificates then Outstanding (exclusive of Certificates
disqualified as provided in Section 10.03 hereof) and a notice shall have been mailed as
hereinafter in this Se&on 10.02 provided. Each such consent shall be effective only if
accompanied by proof of ownership of the Certificates for which such consent is given,
which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall
be binding upon the Owner of the Certificate giving such consent and on any subsequent
Owner (whether or not such subsequent Owner has notice thereof) unless such consent is
revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the Trustee prior to the date when the notice hereinafter in this
Section 10.02 provided for has been mailed.
After the Owners of the required percentage of Certificates shall have filed their
consents to such supplemental agreement, the Trustee shall mail a notice to the Owners
of the Certificates in the manner hereinbefore provided in this Section 10.02 for the
mailing of such supplemental agreement of the notice of adoption thereof, stating in
substance that such supplemental agreement has been consented to by the Owners of the
required percentage of Certificates and will be effective as provided in this Section 10.02
(but failure to mail copies of said notice shall not affect the validity of such supplemental
agreement or consents thereto). A record, consisting of the papers required by this
Section 10.02 to be filed with the Trustee, shall be conclusive proof of the matters therein
stated. Such supplemental agreement shall become effective upon the mailing of such
last-mentioned notice, and such supplemental agreement shall be deemed conclusively
binding upon the parties hereto and the Owners of all Certificates at the expiration of
sixty (60) days after such filing, except in the event of a final decree of a court of
competent jurisdiction setting aside such consent in a legal action or equitable proceeding
for such purpose commenced within such sixty (60) day period.
Section 10.03. Disqualified Certificates. Certificates owned or held by or for the
account of the City or by any person directly or indirectly controlled or controlled by, or
under direct or indirect common control with the City (except any Certificates held in any
pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote,
consent, waiver or other action or any calculation of Outstanding Certificates provided for
in this Trust Agreement, and shall not be entitled to vote upon, consent to, or take any
other action .provided for in this Trust Agreement.
Section 10.04. Effect of Supplemental Agreement. From and after the time any
supplemental agreement becomes effective pursuant to this Article X, this Trust
Agreement or the Lease Agreement, as the case may be, shall be deemed to be modified
and amended in accordance therewith, the respective rights, duties and obligations of the
parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be,
shall thereafter be determined, exercised and enforced hereunder subject in all respects to
such modification and amendment, and all the terms and conditions of any supplemental
agreement shall be deemed to be part of the terms and conditions of this Trust
Agreement or the Lease Agreement, as the case may be, for any and all purposes.
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which
Each Certificate Owner shall certify to the Trustee whether the Certificates
such consent is given are disqualified as provided in Section 10.03 hereof.
as to
Section 10.05. Endorsement or Replacement of Certificates Delivered After
Amendments. The Trustee may determine that Certificates delivered after the effective
date of any action taken as provided in this Article X shall bear a notation, by
endorsement or otherwise, in form approved by the Trustee, as to such action. In that
case, upon demand ofthe Owner of any Certificate Outstanding at such effective date
and presentation of his Certificate for the purpose at the Principal Corporate Trust Office
of the Trustee, a suitable notation shall be made on such Certificate. The Trustee may
determine that the delivery of substitute Certificates, so modified as in the opinion of the
Trustee is necessary to conform to such Certificate Owners’ action,’ which substitute
Certificates shall thereupon be prepared, executed and delivered. In that case, upon
demand of the Owner of any Certificate then Outstanding, such substitute Certificate
shall be exchanged at the Principal Corporate Trust Office of the Trustee, without cost to
such Owner, for a Certificate of the same character then Outstanding, upon surrender of
such Outstanding Certificate.
Section 10.06. Amendatory Endorsement of Certificates. The provisions of this
Article X shall not prevent any Certificate Owner from accepting any amendment as to
the particular Certificates held by him, provided that proper notation thereof is made on
such Certificates.
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ARTICLE XI
COVENANTS; NOTICES
Section 11.01. Compliance With and Enforcement of Lease Agreement. The City
covenants and agrees with the Owners of the Certificates to perform all obligations and
duties imposed on it u.Gder the Lease Agreement. The Corporation covenants and agrees
with the Owners of the Certificates to perform all obligations and duties imposed on it
under the Lease Agreement.
The City will not do or permit anything to be done, or omit or refrain from doing
anything, in any case where any such act done or permitted to be done, or any such
omission of or refraining from action, would or might be a ground for cancellation or
termination of the Lease Agreement by the Corporation thereunder. The Corporation
and the City, immediately upon receiving or giving any notice, communication or other
document in any way relating to or affecting their respective estates, or either of them, in
the Site, which may or can in any manner affect such estate of the City, will deliver the
same, or a copy thereof, to the Trustee. \
Section 11.02. Observance of Laws and RePulations. The City will well and truly
keep, observe and perform all valid and lawful obligations or regulations now or hereafter
imposed on it by contract, or prescribed by any law of the United States, or of the State,
or by any officer, board or commission having jurisdiction or control, as a condition of the
continued enjoyment of any and every right, privilege or franchise now owned or
hereafter acquired by the City, including its right to exist and carry on business as a
municipal corporation, to the end that such rights, privileges and franchises shall be
maintained and preserved, and shall not become abandoned, forfeited or in any manner
impaired.
Section 11.03. Prosecution and Defense of Suits. The City shall promptly, upon
request of the Trustee or any Certificate Owner, from time to time take such action as
may be necessary or proper to remedy or cure any defect in or cloud upon the title to the
Project and the Site, whether now existing or hereafter developing and shall prosecute all
such suits, actions and other proceedings as may be appropriate for such purpose and
shall indemnify and save the Trustee and every Certificate Owner harmless from all loss,
cost, damage and expense, including attorneys’ fees, which they or any of them may incur
by reason of any such defect, cloud, suit, action or proceeding.
Section 11.04. Recordation and Filing. The City shall record and file the Lease
Agreement (or a memorandum thereof), the Assignment Agreement and all such
documents as may be required by law (and shall take all further actions which may be
necessary or be reasonably required by the Trustee), all in such manner, at such times
and in such places as may be required by law in order fully to preserve, protect and
perfect the security of the Trustee and the Certificate Owners.
Section 11.05. City Budpets. The City shall supply to the Trustee, on or about
July 1 in each year a written determination by a City Representative that the City has
made adequate provision in its proposed annual budget for the payment of Lease
Payments due under the Lease Agreement in the fiscal year covered by such budget.
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Such determination shall be made as soon as practicable after the first publication of any
notice of public hearing upon the proposed budget of the City and shall be made, in any
event, not later than the date fixed for any public hearing on the proposed budget. The
determination given by the City to the Trustee shall be that the amounts so budgeted are
fully adequate for the payment of all Lease Payments due under the Lease Agreement in
the annual period covered by such budget. If the amounts so budgeted are not at least
equal to the amount of the Lease Payments coming due and payable under the-Lease
Agreement, the City Gill take such action as may be necessary to cause such annual
budget to be amended, corrected or augmented so as to include therein the amounts
required to be raised by the City in such period for the payment of Lease Payments
coming due and payable under the Lease Agreement and will notify the Trustee of the
proceedings then taken or proposed to be taken by the City. The City will keep the
Trustee advised of all budgetary proceedings thereafter taken by the City.
Section 11.06. Further Assurances. The Corporation and the City will make,
execute and deliver any and all such further resolutions, instruments and assurances as
may be reasonably necessary or proper to carry out the intention or to facilitate the
performance of this Trust Agreement and the Lease Agreement, or as may be requested
by- the Trustee and for the better assuring and confirming unto the Owners of the
Certificates and the Trustee the rights and benefits provided herein.
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ARTICLE XII
LIMITATION OF LIABILITY
Section 12.01. Limited Liability of City. Except for the payment of Lease
Payments when due in accordance with the Lease Agreement and the performance.of the
other covenants and a-peements of the City contained in the Lease Agreement and this
Trust Agreement, the City shall have no pecuniary obligation or liability to any of the
other parties or to the Owners of the Certificates with respect to this Trust Agreement or
the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease
Payments to the Owners by the Trustee, except as expressly set forth herein.
Section 12.02. No Liability of City or Corporation for Trustee Performance.
Neither the City nor the Corporation shall have any obligation or liability to any of the
other parties or to the Owners of the Certificates with respect to the performance by the
Trustee of any duty imposed upon it under this Trust Agreement.
Section 12.03. Indemnification of Trustee. The City shall indemnify and save the
Trustee harmless from and against all claims, losses, costs, expenses, liability and
damages, including legal fees and expenses, arising out of (i) the use, maintenance,
condition or management of, or from any work or thing done on, the Project by the
Corporation or the City, (ii) any breach or default on the part of the Corporation or the
City in the performance of any of their respective obligations under this Trust Agreement
and any other agreement made and entered into for purposes of the Project, (iii) any act
of negligence of the Corporation or the City or of any of their respective agents,
contractors, servants, employees, licensees with respect to the Project, (iv) any act of
negligence of any assignee of, .or purchaser from the Corporation or the City or of any of
its or their respective agents, contractors, servants, employees or licensees with respect
to the Project, (v) the authorization of payment or Delivery Costs or Acquisition and
Construction Costs, (vi) the actions of any other party, including but not limited to the
ownership, operation or use of the Project by the Corporation or the City, or (vii) the
Trustee’s exercise and performance of its powers and duties hereunder. No
indemnification will be made under this Section 12.03 or elsewhere in this Trust
Agreement for willful misconduct or negligence under this Trust Agreement by the
Trustee, its officers, agents, employees, successors or assigns. The City’s obligations
hereunder shall remain valid and binding notwithstanding maturity and payment of the
Certificates.
Section 12.04. Limitation of Rights to Parties and Certificate Owners. Nothing in
this Trust Agreement or in the Certificates expressed or implied is intended or shall be
construed to give any person other than the City, the Corporation, the Trustee and the
Owners of the Certificates, any legal or equitable right, remedy or claim under or in
respect of this Trust Agreement or any covenant, condition or provision hereof; and all
such covenants, conditions and provisions are and shall be for the sole and exclusive
benefit of the City, the Corporation, the Trustee and said Owners.
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ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
Section 13.01. 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 zihd duties in and to the Lease Agreement (excepting only the
Corporation’s rights under Sections 5.8, 7.3 and 9.4 thereof), including without limitation
all of the Corporation’s rights to exercise such rights and remedies conferred on the
Corporation pursuant to the Lease Agreement as may be necessary or convenient (i) to
enforce payment of the Lease Payments and any other amounts required to be deposited
in the Lease Payment Fund or the Insurance and Condemnation Award Fund, and (ii)
otherwise to exercise the Corporation’s rights and take any action to protect the interests
of the Trustee or the Certificate Owners in an Event of Default.
Section 13.02. Remedies. If an Event of Default shall happen, then and in each
and every such case during the continuance of such Event of Default, the Trustee may,
and upon request of the Owners of a majority in aggregate principal amount of the
Certificates then Outstanding shall, exercise any and all remedies available pursuant to
law or granted pursuant to the Lease Agreement; provided, however, that
.notwithstanding anything herein or in the Lease Agreement to the contrary, there shall
be no right under any circumstances to accelerate the maturities of the Certificates or
otherwise to declare any Lease Payment not then in default to be immediately due and
payable. In the event the City has defaulted under the Lease Agreement and the Trustee
has elected to sublease the Project and Site on behalf of the City or terminate the Lease
Agreement, the Trustee shall, to the extent reasonably possible, lease or sublease the
Site and the Project to the State of California or a political subdivision thereof.
Section 13.03. Application of Funds. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article XIII or
Article IX of the Lease Agreement shall be applied by the Trustee in the order following
upon presentation of the several Certificates, and the stamping thereon of the payment if
only partially paid, or upon the surrender thereof if fully paid -
First, to the payment of the costs and expenses of the Trustee and of the
Certificate Owners in declaring such Event of Default, including reasonable
compensation to its or their agents, attorneys and counsel, including all fees and
expenses past due; and
Second, to the payment of the whole amount then owing and unpaid with
respect to the Certificates for principal and interest, with interest on the overdue
principal and installments of interest at the rate of twelve percent (12%) per
annum (but such interest on overdue installments of interest shall be paid only to
the extent funds are available therefor following payment of principal and interest
and interest on overdue principal, as aforesaid), and in case such moneys shall be
insu&ient to pay in full the whole amount so owing and unpaid with respect to
the Certificates, then to the payment of such principal and interest without
preference or priority of principal over interest, or of interest over principal, or of
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any installment of interest over any other installment of interest, ratably to the
aggregate of such principal and interest.
Section 13.04. Institution of Legal Proceedings. If one or more Events of Default
shall happen and be continuing, the Trustee in its discretion may, and upon the written
request of the Owners of a majority in principal amount of the Certificates then
Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to
protect or enforce its riihts or the rights of the Owners of Certificates by a suit in equity
or action at law, either for the specific performance of any covenant or agreement
contained herein, or in aid of the execution of any power herein granted, or by mandamus
or other appropriate proceeding for the enforcement of any other legal or equitable
remedy as the Trustee shall deem most effectual in support of any of its rights or duties
hereunder.
Section 13.05. Non-waiver. Nothing in this Article XIII or in any other provision
of this Trust Agreement or in the Certificates, shall affect or impair the obligation of the
City to pay or prepay the Lease Payments as provided in the Lease Agreement, or affect
or impair the right of action, which is absolute and unconditional, of the Certificate
Otiers to institute. suit to enforce and collect such payment. No delay or omission of the
Trustee or of any Owner of any of the Certificates to exercise any right or power arising
upon the happening of any Event of Default shall impair any such right or power or shall
be construed to be a waiver of any such Event of Default or an acquiescence therein, and
every power and remedy given by this Article XIII to the Trustee or to the Owners of
Certificates may be exercised from time to time and as often as shall be deemed expedient
by the Trustee or the Certificate Owners.
Section 13.06. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any
other remedy, and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing, at law or in equity or
by statute or otherwise.
Section 13.07. Power of Trustee to Control Proceedings. In the event that the
Trustee, upon the happening of an Event of Default, shall have taken any action, by
judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own
discretion or upon the request of the Owners of a majority in principal amount of the
Certificates then Outstanding, it shall have full power, in the exercise of its discretion for
the best interests of the Owners of the Certificates, with respect to the continuance,
discontinuance, withdrawal, compromise, settlement or other disposal of such action;
provided, however, that the Trustee shall not discontinue, withdraw, compromise or
settle, or otherwise dispose of any litigation pending at law or in equity, without the
consent of a majority in aggregate principal amount of the Certificates Outstanding.
Section 13.08. Limitation on Certificate Owners’ Right to Sue. No Owner of any
Certificate issued hereunder shall have the right to institute any suit, action or
proceeding at law or in equity, for any remedy under or upon this Trust Agreement,
unless (a) such Owner shall have previously given to the Trustee written notice of the
occurrence of an Event of Default hereunder; (b> the Owners of at least twenty-five
percent (25%) in aggregate principal amount of all the Certificates then Outstanding shall
have made written request upon the Trustee to exercise the powers hereinbefore granted
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or to institute such action, suit or proceeding in its own name; (c) said Owners shall have
tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request; and (d) the Trustee shall have refused or
omitted to comply with such request for a period of sixty (60) days after such written
request shall have been received by, and said tender of indemnity shall have been made
to, the Trustee.
Such notificatio%, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of
Certificates of any remedy hereunder; it being understood and intended that no one or
more Owners of Certificates shall have any right in any manner whatever by his or their
action to enforce any right under this Trust Agreement, except in the manner herein
provided, and that all proceedings at law or in equity with respect to an Event of Default
shall be instituted, had and maintained in the manner herein provided and for the equal
benefit of all Owners of the Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of said Owner’s
fractional interest in the Lease Payments as the same become due, or to institute suit for
the enforcement of such payment, shall not be impaired or affected without the consent of
such Owner, notwithstanding the foregoing provisions of this Section 13.05 or any other
provision of this Trust Agreement.
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ARTICLE XIV
MISCELLANEOUS
Section 14.01. Defeasance. If and when all Outstanding Certificates shall be paid
and discharged in any one or more of the following ways -
(a) by well and truly paying or causing to be paid the principal, and interest and
redemption premiums (if any) with respect to all Certificates Outstanding, as and when
the same become due and payable; or
(b) by depositing with an escrow holder security for the payment of Lease
Payments as more particularly described in Section 10.1 of the Lease Agreement, to. be
applied to pay the Lease Payments as the same become due and payable and prepay the
Lease Payments in full on any prepayment date, pursuant to Section 10.1 of the Lease
Agreement -
then, notwithstanding that any Certificates shall not have been.surrendered for payment,
all obligations of the Corporation, the Trustee and the City with respect to all
Outstanding Certificates shall cease and terminate, except only the obligation of the City
to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from
funds deposited pursuant to paragraph (b) of this Section 14.01, to the Owners of the
Certificates not so surrendered and paid all sums due with respect thereto, and in the
event of deposits pursuant to paragraph (b), the Certificates shall continue to represent
direct and fractional interests of the Owners thereof in Lease Payments under the Lease
Agreement.
Any funds held by the Trustee, at the time of one of the events described in
paragraphs (a) or (b) of this Section 14.01, which are not required for the payment to be
made to Owners, shall be paid over to the City.
Section 14.02. Records. The Trustee shall keep complete and accurate records of
all moneys received and disbursed under this Trust Agreement, which shall be available
for inspection by the City, the Corporation, and any Owner, or the agent of any of them,
at any time during regular business hours.
Section 14.03. Notices. All written notices to be given under this Trust
Agreement shall be given by mail or personal delivery to the party entitled thereto at its
address set forth below, or at such address as the party may provide to the other party in
writing from tune to time. Notice shall be effective upon deposit in the United States
mail, postage prepaid or, in the case of personal delivery, upon delivery to the address set
forth below:
If to the City: City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Attention: City Manager
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If to the Corporation: Public Improvement Corporation of
the City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Attention: Executive Director
If to the Trustee: The Bank of California
400 California Street
San Francisco, California 94107
Attention: Vice President
Section 14.04. GoverninP: Law. This Trust Agreement shall be construed and
governed in accordance with the laws of the State.
Section 14.05. Binding Effect; Successors. This Trust Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and
assigns. Whenever in this Trust Agreement the Corporation, the City or the Trustee is
named or referred to, such reference shall be deemed to include the successors or assigns
thereof, and all the covenants and agreements in this Trust Agreement contained by or
on behalf of the Corporation, the City or the Trustee shall bind and inure to the benefit of
the respective successors and assigns thereof whether so expressed or not.
Section 14.06. Execution in Counterparts. This Trust Agreement may be
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
Section 14.07. Delivery of Cancelled Certificates. Whenever in this Trust
Agreement provision is made for the surrender to or cancellation by the Trustee of any
Certificates, the Trustee shall deliver such cancelled Certificates to the City for
destruction or storage.
Section 14.08. Headings. The headings or titles of the several Articles and
Sections hereof, and any table of contents appended to copies hereof, shall be solely for
convenience of reference and shall not affect the meaning, construction or effect of this
Trust Agreement. All references herein to “Articles,” “Sections,” and other subdivisions
are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; and
the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this
Trust Agreement as a whole and not to any particular Article, Section or subdivision
hereof.
Section 14.09. Waiver of Notice. Whenever in this Trust Agreement the giving of
notice by mail or otherwise is required, the giving of such notice may be waived in writing
by the person entitled to receive such notice and in any case the giving or receipt of such
notice shall not be a condition precedent to the validity of any action taken in reliance
upon such waiver.
Section 14.10. Separability of Invalid Provisions. In case any one or more of the
provisions contained in this Trust Agreement or in the Certificates shall for any reason
be held to be invalid, illegal or unenforceable in any respect, then such invalidity,
illegality or unenforceability shall not affect any other provision of this Trust Agreement,
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and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein. The parties hereto hereby declare that they
would have entered into this Trust Agreement and each and every other section,
paragraph, sentence, clause or phrase hereof and authorized the delivery of the
Certificates pursuant thereto irrespective of the fact that any one or more sections,
paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal,
invalid or unenforceable.
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IN WITNFSS WHEREOF, the parties hereto have executed this Trust Agreement
as of the date and year first above written.
THE BANK OF CALIFORNIA, N.A., as
Trustee
BY Authorized Officer
CITY OF CARLSBAD
PUBLIC IMPROVEMENT CORPORATION
(S E A L)
Attest:
BY President
Secretary
CITY OF CARLSBAD
(S E A L)
Mayor
Attest:
City Clerk
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EXHIBITA
DEFINITIONS
“Acquisition arid Construction Costs” means all costs of payment of, or
reimbursement for, acquisition, construction, installation and equipping of the Project,
including but not limited to, architect and engineering fees, construction contractor
payments, costs of feasibility and other reports, inspection costs, performance bond
premiums and permit fees.
“Acquisition and Construction Fund” means the fund by that name
established and held by the City pursuant to Article III of the Trust Agreement.
“Agency Agreement” means that certain Agency Agreement, dated as of June 1,
1988, by and between the Corporation and the City.
“Assignment Agreement” means the Assignment Agreement, dated as of June 1,
1988, by and between the Corporation and the Trustee, together with any duly
authorized and executed amendments thereto.
“Business Day” means a day which is not a Saturday, Sunday or legal holiday on
which banking institutions in the State are closed or are required to close or a day on
which the New York Stock Exchange is closed.
“Certificate of Completion” means the certificate of a City Representative
certifying that the Project has been acquired, constructed, installed and equipped by the
City and that all Acquisition and Construction Costs have been paid.
“Certificates” means the $ aggregate principal amount of certificates of
participation to be executed and delivered pursuant to the Trust Agreement.
“Certificate Year” means the twelve month period beginning on the anniversary
of the Closing Date in each year and ending on the day prior to the anniversary date of
the Closing Date in the following year except that the first Certificate Year shall begin on
the Closing Date.
“City” means the City of Carlsbad, a municipal corporation and general law city
organized and existing under the laws of the State.
“City Representative” means the City Manager of the City or any other person
authorized by resolution of the City Council of the City to act on behalf of the City under
or with respect to the Lease Agreement, the Trust Agreement and the Corporation
Agreement.
“Closing Date” means the date upon which there is an exchange of the
Certificates for the proceeds representing the purchase of the Certificates by the Original
Purchaser.
“Co&” means the Internal Revenue Code of 1986, as amended.
“Completion Date” means the earlier of (i) the date of substantial completion of
acquisition, construction, installation and equipping of the Project as evidenced by the
filing with the Trustee of a Certificate of Completion, and (ii) June 1, 1991.
“Contractor” means the contractor(s) or vendor(s) from whom the Corporation or
the City on behalf of thg Corporation has ordered or caused to be ordered or with whom
the Corporation or the City on behalf of the Corporation has contracted or caused to be
contracted for the acquisition and construction of the Project.
“Corporation” means the City of Carlsbad Public Improvement Corporation, a
nonprofit public benefit corporation organized and existing under and by virtue of the
laws of the State.
“Corporation Representative” means the President of the Corporation, or any
other person authorized by resolution of the Corporation to act on behalf of the
Corporation under or with respect to the Lease Agreement, the Trust Agreement, the
Agency Agreement and the Assignment Agreement.
“Debt Seruice” means the scheduled principal and interest components of Lease
Payments, payable during the period of computation, excluding amounts scheduled
during such period which relate to principal which has been retired before the beginning
of such period.
“Delivery Costs” means all items of expense directly or indirectly payable by or
reimbursable to the City or the Corporation relating to the execution and delivery of the
Lease Agreement, the Trust Agreement, the Agency Agreement and the Assignment
Agreement or the execution, sale and delivery of the Certificates, including but not
limited to filing and recording costs, settlement costs, printing costs, reproduction and
binding costs, initial fees and charges of the Trustee, financing discounts, legal fees and
charges, insurance fees and charges, financial and other professional consultant fees,
costs of rating agencies for credit ratings, fees for execution, transportation and
safekeeping of the Certificates and charges and fees in connection with the foregoing.
“Delivery Costs Fund” means the fund by that name established and held by the
Trustee pursuant to Article III of the Trust Agreement.
“Escrolo Fund” means the fund by that name established and held by the Trustee
pursuant to Section 6.06 of the Trust Agreement
“Event of DefiuZt” means an event of default under the Lease Agreement, as
defined in Section 9.1 thereof.
“Excess Investment Earnings Account” means the account by that name
established pursuant to Section 8.07 of this Trust Agreement.
“Federal Securities” means any of the following which are noncallable and which
at the time of investment are legal investments under the laws of the State for trust
funds held by the Trustee:
Exhibit A
Page 2
(a) direct general obligations of (including obligations issued or held in book entry
form on the books of the Department of the Treasury of the United States of America), or
obligations the payment of principal of and interest on which are guaranteed by, the
United States of America; or
(b) any of the following obligations of the following agencies of the United States
of America: (i) direct obligations of the Export-Import Bank; (ii) certificates of beneficial
ownership issued by thi7Farmers Home Administration; (iii) participation certificates
issued by the General Services Administration; (iv) mortgage-backed bonds or pass-
through obligations issued and guaranteed by the Government National Mortgage
Association; (v) project notes issued by the United States Department of Housing and
Urban Development; and (vi) public housing notes and bonds guaranteed by the United
States of America.
“Fiscal Year” means the twelve-month period beginning on July 1 of any year
and ending on June 30 of the next succeeding year, or any other twelve-month period
selected by the City as its fiscal year.
- “Gross Proceeds” means the sum of the following amounts:
(a) original proceeds, namely, net amounts (aRer payment of all expenses of
executing and delivering the Lease Agreement and the Certificates) received by or for the
City as a result of the sale of the Certificates, excluding original proceeds which become
transferred proceeds (determined in accordance with applicable Regulations) of
obligations issued to refund in whole or in part the Lease Payments;
(b) investment proceeds, namely, amounts received at any time by or for the City,
such as interest and dividends,, resulting from the investment of any original proceeds (as
referenced in paragraph (a) above) or investment proceeds (as referenced in this
paragraph (b)) in Nonpurpose Obligations, increased by any profits and decreased (if
necessary, below zero) by any losses on such investments, excluding investment proceeds
which become transferred proceeds (determined in accordance with applicable
Regulations) of obligations issued to refund in whole or in part the Lease Payments;
(c) sinking fund proceeds, namely, amounts, other than original proceeds or
investment proceeds (as referenced in paragraphs (a) and (b) above) of the Certificates,
which are held in any Lease Payment Fund and any other fund to the extent that the
City reasonably expects to use such other fund to pay Lease Payments;
(d) amounts in the Reserve Fund and in any other fund established as a
reasonably required reserve or replacement fund;
(e> Investment Property pledged as security for payment of Lease Payments by an
ultimate obligor or a related person or by the City;
(0 amounts, other than as specified in this definition, used to pay Lease
Payments; and
(g) amounts received as a result of investing amounts described in this definition.
Exhibit A
Page 3
“Independent Counsel” means an attorney duly admitted to the practice of
law before the highest court of the state in which such attorney maintains an
office and who is not an employee of the Corporation, the Trustee or the City.
“Znfirmation Services” means Financial Information, Inc.‘s “Daily Called Bond
Service,” 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention:
Editor; Kenny Information Services’ “Called Bond Service,” 55 Broad Street, 28th Floor,
New York, New York 10004; Moody’s “Municipal and Government,” 99 Church Street,
8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard
& Poor’s “Called Bond Record,” 25 Broadway, 3rd Floor, New York, New York 10004; or
to such other addresses and/or such other national information services providing
information or disseminating notices of redemption of obligations such as the Certificates.
“Insurance and Condemnation Fund” means the fund by that name
established and held by the Trustee pursuant to Section 7.01 of the Trust Agreement.
“Interest Payment Date” means the first day of each February and August,
commencing February 1, 1989, so long as any Certificates are Outstanding.
“Investment Earnings Account” means the account by that name established
pursuant to Section 8.07 of this Trust Agreement.
“Investment Property” means any security (as said term is defined in section
165(g)(2)(A) or (B) of the Code), obligation, annuity or investment-type property,
excluding, however, obligations the interest on which is exempt from income tax under
section 103 of the Code.
“Lease Agreement” means the Lease Agreement, dated as of June 1, 1988, by
and between the Corporation and the City, together with any duly authorized and
executed amendments thereto.
“Lease Payments” means all payments required to be paid by the City pursuant
to Section 4.4 of the Lease Agreement, including any prepayment thereof pursuant to
Article X of the Lease Agreement, which payments consist of an interest component and
a principal component.
“Lease Payment Date” means the fifteenth (15th) day of March and September
in each year during the Term of the Lease Agreement, commencing September 15, 1988.
“Lease Payment Fund” means the fund by that name established and held by
the Trustee pursuant to Section 5.02 of the Trust Agreement.
“Moody’s” means Moody’s Investors Service of New York, New York, or its
successors.
“Net Proceeds,” when used with respect to insurance or condemnation proceeds,
means any insurance proceeds or condemnation award paid with respect to the Project or
the Site, to the extent remaining after payment therefrom of all expenses incurred in the
collection thereof. “Net Proceeds,” when used with reference to the Certificates, means
Exhibit A
Page 4
the face amount of the Certificates, plus accrued interest and premium,. if any, less
original issue discount and less proceeds deposited in the Reserve Fund.
“Nonpurpose Obligation” means any Investment Property which is acquired
with the proceeds of the Certificates and is not acquired in order to carry out the
governmental purpose of the LeasetAgreement.
“Notes” means the Notes of the City issued on July 16, 1987 in the principal
amount of $6,555,000, and maturing June 30, 1988.
“Original Purchaser” means Rauscher Pierce Refsnes, Inc., as original
purchaser of the Certificates.
“Outstanding”, when used as of any particular time with respect to Certificates,
means (subject to the provisions of Section 10.03 of the Trust Agreement) all Certificates
theretofore executed and delivered by the Trustee under the Trust Agreement except -
(a) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee
for-cancellation;
(b) Certificates for the payment or redemption of which funds or Federal
Securities in the necessary amount shah have theretofore been deposited with the
Trustee (whether upon or prior to the maturity or redemption date of such Certificates),
provided that, if such Certificates are to be redeemed prior to maturity, notice of such
redemption shall have been given as provided in Section 4.03 of the Trust Agreement or
provision satisfactory to the Trustee shall have been made for the giving of such notice;
and
(c) Certificates in lieu of or in exchange for which other Certificates shall have
been executed and delivered by the Trustee pursuant to Section 2.09 of the Trust
Agreement.
“Owner” or “Certificate Owner” or “Owner of a Certificate”, or any similar
term, when used with respect to a Certificate means the person in whose name such
Certificate shall be registered.
“Permitted Encumbrancesn means, as of any particular time: (a) liens for
general ad valorem taxes and assessments, if any, not then delinquent, or which the City
may, pursuant to provisions of Article V of the Lease Agreement, permit to remain
unpaid; (II> the Assignment Agreement; (c) the Lease Agreement; (d) any right or claim of
any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the
manner prescribed by law; (e) easements, rights of way, mineral rights, drilling rights
and other rights, reservations, covenants, conditions or restrictions which exist of record
as of the Closing Date and which the City certifies in writing will not materially impair
the use of the Site for the Project; and (f) easements, rights of way, mineral rights,
drilling rights and other rights, reservations, covenants, conditions or restrictions
established following the date of recordation of the Lease Agreement and to which the
Corporation and the City consent in writing.
Exhibit A
Page 5
“Permitted Investments” means any of the following which at the time of
investment are legal investments under the laws of the State for the moneys proposed to
be invested therein:
(a) Federal Securities;
(b) Anyofth e o f 11 owing obligations of federal agencies not guaranteed by the
United States of AmeriZa: (i) debentures issued by the Federal Housing Administration;
(ii) participation certificates or senior debt obligations of the Federal Home Loan
Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal
Intermediate Credit Banks, or Banks for Cooperatives); (iii) mortgage-backed securities
or senior debt obligations of the Federal National Mortgage Association; ‘or (iv) credit-
backed or senior debt obligations of the Student Loan Marketing Association.
(c) interest-bearing demand or time deposits (including certificates of deposit) in
federal or State chartered savings and loan associations or in federal or State banks
’ (including the Trustee), provided that (i) the obligations of such savings and loan
association or bank or the obligations of the holding company of such savings and loan
association or bank carry one of the three highest Bating Categories by Moody’s and
S&P, or (ii) such deposits are insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation;
(d) obligations issued by any corporation organized and operating within the
United States of America having assets in excess of $500,000,000, which obligations
carry one of the three highest long-term Bating Categories provided by Moody’s and
S&P;
(e) repurchase agreements with any bank, savings institution or trust company
(including the Trustee) which is insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation, or with any broker-dealer with
retail customers which falls under Securities Investors Protection Corporation protection,
provided that such repurchase agreements are fully secured by Federal Securities or
obligations of any agency or instrumentality of the United States of America, and
provided further that (i) such collateral is held by the Trustee or any agent acting solely
for the Trustee during the term of such repurchase agreement, (ii) such collateral is not
subject to liens or claims of third parties, (iii) such collateral has a market value
(determined at least once every 30 days) at least equal to the amount invested in the
repurchase agreement, (iv) the Trustee has a perfected first security interest in the
collateral, (v) the agreement shall be for a term not longer than 180 days and (vi) the
failure to maintain such collateral at the level required in (iii) above will require the
Trustee to serve notice to the other party to correct such deficiency. If such deficiency is
not corrected, the Trustee is directed to liquidate the collateral;
(0 money market funds comprised exclusively of Federal Securities;
(g) commercial paper having original maturities of not more than 180 days and
rated in the highest Bating Category by Moody’s and S&P;
(h) bills of exchange or time drafts drawn on and accepted by a commercial bank,
otherwise known as bankers acceptances, which have a maturity of not more than 270
Exhibit A
Page 6
days and which are eligible for purchase by the Federal Reserve System and the
obligations of which commercial bank or the obligations of the holding company of which
carry one of the three highest long-term Bating Categories by Moody’s and S&P; and
(i) tax-exempt obligations rated in one of the three highest rating categories by
Moody’s and S&P.
‘Principal CorpOrate Trust Oflice” means the corporate trust office of the
Trustee at 400 California Street, San Francisco, California, or at such other address
designated by the Trustee in written notice filed with the City and the Corporation in
writing.
“Private Business Use” means use directly or indirectly in a trade or business
carried on by a natural person or in any activity carried on by a person other than a ,
natural person, excluding, however, use by a governmental unit and use as a member of
the general public.
“Project” means the improvements to be constructed on the Site, all as more
particularly described in Exhibit C attached to the Lease Agreement.
“Rating Category” means, with respect to any Permitted Investment, one or
more of the generic categories of rating by Moody’s or S&P applicable to such Permitted
Investment, without regard to any refinement or graduation of such rating category by a
plus or minus sign.
“Registration Books” means the records maintained by the Trustee pursuant to
Section 2.12 of the Trust Agreement for registration of the ownership and transfer of
ownership of the Certificates.
“Regular Record Date” means the close of business on the fifteenth (15th) day of
the month preceding each Interest Payment Date, whether or not such fifteenth (15th)
day is a Business Day.
“Regulations” means temporary and permanent regulations promulgated under
the Code.
“Rental Period” means each twelve-month period during the Term of the Lease
Agreement commencing on June 2 in any year and ending on June 1 in the next
succeeding year.
“Reserve Fund” means the fund by that name established and held by the
Trustee pursuant to Section 6.01 of the Trust Agreement.
“Reserve Requirement” means an amount equal to $ .
“S&P” means Standard & Poor’s Corporation, of New York, New York, or its
successors.
“Securities Depositories” means The Depository Trust Company, 711 Stewart
Avenue, Garden City, New York 11530, Fax-(5161 227-4039 or 4190; Midwest Securities
Exhibit A
Page 7
Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago,
Illinois 60605, Fax-(3121 663-2343; Philadelphia Depository Trust Company,
Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103,
Attention: Bond Department, Dex-(215) 496-5058; or to such other addresses and/or
such other registered se,curities depositories holding substantial amounts of obligations of
types comprising the Certificates.
“Site” means aloof that certain real property located in the City described in
Exhibit B to the Lease Agreement, on which the Project is to be constructed.
“State” means the State of California.
“Term of the Lease Agreement” means the time during which the Lease
Agreement is in effect, as provided in Section 4.2 of the Lease Agreement.
“Trust Agree&W means the Trust Agreement, dated as of June 1, 1988, by and
among the City, the Corporation and the Trustee, together with any duly authorized
amendments thereto.
“Trustee” means
acting as Trustee pursuant to this Trust Agreement. , or any successor thereto,
“Yield” means that yield which, when used in computing the present worth of all
payments of principal and interest (or other payments in the case of Nonpurpose
Obligations which require payments in a form not characterized as principal and interest)
on a Nonpurpose Obligation or on the Lease Payments produces an amount equal to the
Purchase Price of such Nonpurpose Obligation or the Certificates, all computed as
prescribed in applicable Regulations.
Exhibit A
Page 8
FORM OF THE CERTIFICATES
- CERTIFICATE OF PARTICIPATION
(Hosp Grove Project)
Evidencing an Undivided Fractional Interest of the Owner
Hereof in Lease Payments to be Made by the
CITY OF CARLSBAD, CALIFORNIA
As the Rental for Certain Property Pursuant
to a Lease Agreement With the
City of Carlsbad Public Improvement Corporation
NUMBER
R-
RATE OF INTEREST MATURITY DATE DATED DATE
June 1, 1988
REGISTERED OWNER:
PRINCIPAL AMOUNT:
$-
CUSIP
DOLLARS
THIS IS TO CERTIFY THAT the registered owner identified above, or registered
assigns (the “Owner”), as the registered owner of this Certificate of Participation (the
“Certificate”), is the owner of an undivided, fractional interest in the right to receive
certain Lease Payments under and defined in that certain Lease Agreement (the “Lease
Agreement”), dated as of June 1, 1988, by between the Public Improvement Corporation
of the City of Carlsbad, a public body corporate and politic organized and existing under
the laws of the State of California (the “Corporation”), and the City of Carlsbad,
California, a municipal corporation and general law city organized and existing under the
laws of the State of California (the “City”), which Lease Payments, prepayments and
certain other rights and interests under the Lease Agreement have been assigned to The
Bank of California, N.A., as trustee (the “Trustee”), having its corporate trust office in
San Francisco, California.
The Owner of this Certificate is entitled to receive, subject to the terms of the
Lease Agreement, on the Maturity Date identified above, the Principal Amount identified
above, representing a portion of the Lease Payments designated as principal, and to
receive on August 1 and February 1 of each year, commencing February 1, 1989 (each, a
“Payment Date”), until payment in full of said Principal Amount, the Owner’s fractional
share of the Lease Payments designated as interest coming due during the six months
immediately preceding each of the Payment Dates; provided that interest represented
hereby shall be payable f+om the Payment Date next preceding the date of execution of
this Certificate unless (i) this Certificate is executed on a Payment Date, in which event
interest shall be payable from such Payment Date, or (ii) this Certificate is executed after
the close of business oxIthe fifteenth day of the month immediately preceding a Payment
Date, and prior to such Payment Date, in which event interest shall be payable from such
Payment Date, or (iii) unless this Certificate is executed on or before January 15, 1989, in
which event interest shall be payable from June 1, 1988. Said fractional share of the
portion of the Lease Payments designated as interest is the result of the multiplication of
the aforesaid portion of the Lease Payments designated as principal by the Rate of
Interest per annum identified above. Interest represented hereby is payable in lawful .
money of the United States of America by check or draft of the Trustee mailed to the
Owner hereof at his address as it appears on the registration books of the Trustee, as of
the close of business on the fifteenth (15) day preceding each Payment Date, or at such
other address as the Owner may have filed with the Trustee for that purpose. Principal
represented hereby.is payable upon presentation and surrender hereof at the corporate
trust office of the Trustee in San Francisco, California.
This Certificate has been executed and delivered by the Trustee pursuant to the
terms of a Trust Agreement by and among the Trustee, the Corporation and the City,
dated as of June 1, 1988 (the “Trust Agreement”). The City is authorized to enter into
the Lease Agreement and the Trust Agreement under the laws of the State of California.
Reference is hereby made to the Lease Agreement and the Trust Agreement (copies of
which are on file at the corporate trust office of the Trustee) for a description of the terms
on which the Certificates are delivered, the rights thereunder of the owners of the
Certificates, the rights, duties and immunities of the Trustee and the rights and
obligations of the City under the Lease Agreement, all of the provisions of which the
Owner of this Certificate, by acceptance hereof, assents and agrees.
REFERENCE IS HFREBY MADE TO THE FURTHER PROVISIONS OF THIS
CERTIFICATESETFORTHONTHEREVERSEHEREOFWHICHFURTHER
PROVISIONS SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT AS IF SET
FORTH IN THIS PLACE.
The Trustee has no obligation or liability to the registered owners of the
Certificates to make payments of principal or interest with respect to the Certificates.
The Trustee’s sole obligations are to administer, for the benefit of the registered owners
of the Certificates, the various funds and accounts established under the Trust
Agreement.
The City has certified, recited and declared that all acts, conditions and things
required by the constitution and statutes of the State of California, the Lease Agreement
and the Trust Agreement to exist, to have happened and to have been performed
precedent to and in the delivery of this Certificate, do exist, have happened and have
been performed in due time, form and manner as required by law.
Exhibit B
Page 2
IN WITNESS WHEREOF, this Certificate has been executed by
, as trustee, acting pursuant to the Trust Agreement.
Date of Execution:
Trustee
, as
BY Authorized Signatory
Exhibit B
Page 3
(FORM OF REVERSE OF CERTIFICATE)
The City is obligated under the Lease Agreement to pay Lease Payments from any
source of legally available funds and the City has covenanted in the Lease Agreement to
make the necessary annual appropriations therefor. The obligation of the City to pay the
Lease Payments does not constitute an obligation of the City for which the City is
obligated to levy or pledge any form of taxation or for which the City has levied or
pledged any form of t&&ion. The obligation of the City to pay Lease Payments does not
constitute an indebtedness within the meaning of any constitutional or statutory debt
limitation or restriction.
To the extent and in the manner permitted by the terms of the Trust Agreement,
the provisions of the Trust Agreement may be amended by the parties thereto with the
written consent of the owners of at least a majority percent in aggregate principal
amount of the Certificates then outstanding, and may be amended without such consent
under certain circumstances; provided that no such amendment shall impair the right of
any owner to receive, in any case, such owner’s tractional share of any Lease Payment or
prepayment thereof in accordance with such owner’s Certificate, without the consent of
such owner.
This Certificate is transferable by the Owner hereof, in person or by his attorney
duly authorized in writing, at the corporate trust office of the Trustee, but only in the
manner, subject to the limitations and upon payment of any charges provided in the
Trust Agreement and upon surrender and cancellation of this Certificate. Upon such
transfer, a new Certificate or Certificates of authorized denomination or denominations
for the same aggregate principal amount will be delivered to the transferee in exchange
herefor. The City, the Corporation and the Trustee may treat the Owner hereof as the
absolute owner hereof for all purposes, whether or not the payments represented by this
Certificate shall be overdue and the City, the Corporation and the Trustee shall not be
affected by any notice to the contrary.
The Certificates maturing on and after August 1, 1999, are subject to redemption
in whole at any time or in part on any Payment Date (but not in a total redemption ‘. amount of less than $20,000 at any one time) in inverse order of maturity, and by lot
within a maturity, on or after August 1, 1999, at the principal amount thereof together
with the premium set forth below (expressed as a percentage of the total amount to be
redeemed), from the proceeds of optional prepayments of Lease Payments made by the
City pursuant to the Lease Agreement:
Redemption Period Premium
August 1, 1998 through July 31,199s 2.0%
August 1, 1999 through July 31,200O 1.5
August 1, 2000 through July 31,200l 1.0
August 1,200l through July 31,2002 0.5
August 1, 2002 and thereafter 0
The Certificates are subject to mandatory redemption in whole on any date, or in
part on any Payment Date, among maturities such that approximately equal annual
Lease Payments prevail following such redemption and by lot within a maturity, from the
Exhibit B
Page 4
net proceeds of an insurance or condemnation award credited towards the prepayment of
the Lease Payments by the City pursuant to the Lease Agreement, at a redemption price
equal to the principal amount thereof to be redeemed, without premium.
The Certificates maturing on August 1, 2008 are subject to mandatory redemption
on August 1 in each year on or after August 1, 1998, by lot, from the principal
components of the Lease Payments required to be paid by the City pursuant to the Lease
Agreement with respecx to each such redemption date, at a redemption price equal to the
principal amount thereof to be redeemed, without premium, as follows:
Principal Amount
of Certificates
to be Redeemed
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008 (Maturity)
Redemption Date
(August 1)
$
$
Notice of redemption, unless waived, is to be given by the Trustee by mailing an
offkial redemption notice by first class mail at least thirty (30) days and not more than
sixty (60) days prior to the date fixed for redemption to the registered owner of the
Certificate or Certificates to be redeemed at the address shown on the Certificate
registration books maintained by the Trustee or at such other address as is furnished in
writing by such registered owner to the Trustee. Notice of redemption having been given
as aforesaid, the Certificates or portions of Certificates so to be redeemed shall, on the
redemption date, become due and payable at the redemption price therein specified, and
from and after such date (unless the City shall default in the payment of the redemption
price) interest with respect to such Certificates or portions of Certificates shall cease to
be payable.
Exhibit B
Page 5
ASSIGNMENT
For value received
assign and transfer unto
the undersigned do(es) hereby sell,
, (Name, Address and Tax Identification Number of Assignee)
the within registered Certificate and hereby irrevocably
attorney, to transfer the same
the Trustee with full power of substitution in the premises.
Dated: Signature:
constitute(s) and appoint(s)
on the Certificate register of
Note: The signature(s) on this Assignment
must correspond with the name(s) as
written on the face of the within registered
Certificate in every particular without
alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
Note: Signature(s) must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank, or trust
company.
Exhibit B
Page 6
* - . 13061-03 JHHW:WHM:ct
ct
wh
05/l 3/6L
05/20/66 05/26/66
M6699
AGENCY AGREEMENT
by and between the
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
and the
CITY OF CARLSBAD
Dated as of June 1, 1988
(HOSP GROVE PROJECT)
AGENCY AGREEMENT
h
THIS AGENCY AGREEMENT, made and entered into as of June 1, 1988, by and
between the CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION, a public
body corporate and politic organized and existing under the laws of the State of
California (the “Corporation”), and the CITY OF CARLSBAD, a municipal corporation and
general law city organized and existing under the laws of the State of California (the
“City”);
WITNESSETH:
WHEREAS, the Corporation and the City have entered into a Lease Agreement,
dated as of the date hereof (the “Lease Agreement”), whereby the Corporation agrees to
lease certain improvements to Hosp Grove (the “Project”) more particularly described in
Exhibit C attached to the Lease Agreement, to the City, and the City agrees to lease the
Project from the Corporation;
WHEREAS, it is in the interest of the Corporation and the City that the
Corporation appoint the City as its agent for the purposes of acquisition and
construction of the Project, and the Corporation has agreed in the Lease Agreement to
appoint the City as its agent for said purposes;
NOW, THEREFORE, in the joint and mutual exercise of their powers, and in
consideration of the above premises and of the mutual covenants herein contained and
for other valuable consideration, the parties hereto DO HEREBY AGREE as follows:
Section 7. Definitions. The terms capitalized in this Agency Agreement shall have
the meanings ascribed to them in the Lease Agreement and in the Trust Agreement,
dated as of the date hereof, among the Corporation, the City and The Bank of California,
National Association, as trustee (the “Trust Agreement”).
Section 2. Appointment of City. The Corporation hereby appoints the City as its
agent to carry out all phases of the acquisition and construction of the Project, and the
City, as agent of the Corporation, assumes all rights, duties, responsibilities and liabilities
of the Corporation regarding supervision, acquisition and construction of the Project,
except as limited herein.
Section 3. Contracts, Bids and Payments. The City, as agent of the Corporation,
may enter into any purchase order, agreement or contract required for acquisition and
construction of the Project upon being assured that moneys sufficient for the payment
thereof are then on deposit in the Acquisition and Construction Fund created pursuant to
the Trust Agreement. The benefits of all bids received by the City for the Project shall be
and shall be deemed to be assigned by the City to the Corporation.
Section 4. Project Description. The City, as agent of the Corporation, shall have
the right to make any changes in the description of the Project or of any component
thereof whenever the City deems such changes to be necessary and appropriate;
1 r
provided, however, that the amounts in the Acquisition and Construction Fund are
sufficient to pay Acquisition and Construction Costs resulting from such changes.
Section 5. Supervision of Acquisition, Construction, Equipping and Installation.
The City, as agent of the Corporation, shall have sole responsibility for, and shall
supervise, acquisition and construction of the Project. The City shall monitor the
performance by any contractor to the extent the City deems appropriate. The City shall
permit the Corporation or its assignee to inspect the Project at any and all reasonable
times which are deemed appropriate by the Corporation or its assignee.
Section 6. Enforcement of Contracts. The Corporation hereby assigns to the City
all rights and powers to enforce and execute in its own name or the name of the
Corporation such purchase orders or contracts as are required for the Project which
enforcement may be at law or in equity; provided, however, that the assignment made by
the Corporation herein shall not prevent the Corporation or its assignee from asserting
said rights and powers in its own behalf following written notice to the City.
Section 7. Fixed Price. The Corporation shall not be responsible for payment of,
nor shall it pay nor permit to be paid by the Trustee pursuant to the Trust Agreement,
any amount for the Project in excess of the amount available therefor in the Acquisition
and Construction Fund held by Trustee pursuant to the Trust Agreement. The City shall
pay said excess amount to the extent of lawfully available funds.
Section 8. Inspection of Records. The Corporation shall have the right to inspect
periodically the books and records of the City relating to the Project, and the City shall
permit the Corporation to make such inspections thereof at all reasonable times as the
City shall deem appropriate.
Section 9. Time of Completion. The acquisition and construction of the Project
shall be completed by the Completion Date.
Section 70. Specifications. The City agrees that it will assure that the Project will
be acquired, constructed and installed in accordance with final plans and specifications
approved by the City. Upon completion of acquisition and construction of the Project,
the City will assure that there is filed with the Trustee a certificate executed by an
Authorized Officer of the City and stating that such acquisition and construction of the
Project has been completed in accordance with specifications therefor approved by the
City.
Section 77. Performance Security. The City may, if it deems appropriate, require
the provision of bid bonds or performance bonds in such percentage of the bid or
contract price as it deems desirable in advertising for and in awarding contracts or
making purchase orders.
-2-
IN WITNESS WHEREOF, the Corporation and the City have caused this Agency
Agreement to be executed in their respective names by their duly authorized officers, all
as of the date first above written.
CITY OF CARLSBAD PUBLIC
IMPROVEMENT CORPORATION
BY President
Attest
Secretary
CITY OF CARLSBAD
BY Mayor
Attest
City Clerk
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* - _ 13061-05 JHHWWHM:peh
pch c pch
05/13/s&
o5mJk33
05/26/l36
. - . AFTER RECORDATION RETURN TO:
JONES HALL HILL & WHITE,
A PROFESSIONAL LAW CORPORATION Four Embarcadero Center, Suite 1950 San Francisco, California 94111 Attention: William H. Madison, Esq.
ASSIGN-MENT AGREEMENT
(HOSP GROVE PROJECT)
THIS ASSIGNMENT AGREEMENT, made and entered into as of June 1, 1988, by
and between the CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION, a
nonprofit public benefit corporation organized and existing under the laws of the State of
California (the “Corporation”), and The Bank of California, National Association, a
naitonal banking association organized and existing under the laws of the United States
of America, as trustee (the “Trustee”);
WITNESSETH:
In the joint and mutual exercise of their powers, in consideration of the mutual
covenants herein contained, and for other valuable consideration, the parties hereto
recite and agree as follows:
Section 1. Recitals.
(a) The Corporation and the City of Carlsbad (the “City”) have entered into a
lease agreement, dated as of June 1, 1988 (the “Lease Agreement”), and recorded
concurrently herewith, whereby the Corporation has agreed to lease to the City, and the
City has agreed to lease from the Corporation, the Project and the Site (as said terms are
more particularly defined in the Lease Agreement) in the manner and on the terms set
forth in the Lease Agreement, which terms include, without limitation, the obligation of
the City to pay Lease Payments (as defined in the Lease Agreement) to the Corporation
in consideration of the City’s use and enjoyment of the Project and the Site under the
Lease Agreement.
@) Under the Lease Agreement, the Corporation is required to cause to be
deposited with the Trustee certain sums of money to be credited, held and applied in
accordance with the Lease Agreement and with a trust agreement, dated as of June 1,
1988 (the “Trust Agreement”), by and among the Corporation, the City and the Trustee.
(c) Upon delivery of the Lease Agreement, the Corporation is required to deposit
with the Trustee, in addition to other moneys to be deposited with the Trustee, moneys
for the acquisition and construction of the Project. For the purpose of obtaining such
moneys, the Corporation is willing to convey to certain persons (the “Owners”) fractional
interests in the Lease Payments, such fractional interests to be evidenced by certificates
_ - of participation therein (the “Certificates”). In order to make such fractional interests
marketable on terms acceptable to the Corporation, the Corporation is willing to assign
and transfer its rights under the Lease Agreement to the Trustee for the benefit of the
Owners. Concurrently with the delivery of this Assignment Agreement, the Trustee is
executing, selling and delivering Certificates in an aggregate face amount of
dollars ($ ) to Rauscher Pierce Refsnes, Inc. for resale
to the Owners. The proceeds of such sale are anticipated to be sufficient to permit the
Corporation to make the deposits required under the Lease Agreement and the Trust
Agreement and to permit the Corporation to pay therewith the cost of acquisition and
construction of the Project.
(d) Each of the parties has authority to enter into this Assignment Agreement
and has taken all actions necessary to authorize its officers to execute it.
Section 2. Assignment. The Corporation hereby transfers, assigns and sets over
to the Trustee, for the benefit of the Owners of Certificates executed and delivered under
the Trust Agreement, all of the Corporation’s rights under the Lease Agreement
(excepting only the Corporation’s rights under Sections 5.3, 7.3 and 9.4 of the Lease
Agreement), including without limitation (i) the right to receive and collect all of the
Lease Payments from the City under the Lease Agreement, (ii) the right to receive and
collect any proceeds of any insurance maintained thereunder and of any condemnation
award rendered with respect to the Project or the Site, and (iii) the right to exercise such
rights and remedies conferred on the Corporation pursuant to the Lease Agreement as
may be necessary or convenient (A) to enforce payment of the Lease Payments and any
other amounts required to be deposited in the Lease Payment Fund or the Insurance and
Condemnation Fund established under the Trust Agreement, or (B) otherwise to protect
the interests of the Owners in the event of a default by the City under the Lease
Agreement. All rights assigned by the Corporation shall be administered by the Trustee
in accordance with the provisions of the Trust Agreement and for the equal and fractional
benefit of the Owners of Certificates.
Section 3. Acceptance. The Trustee hereby accepts the assignments made herein
for the purpose of securing, equally and fractionally, the payments due pursuant to the
Lease Agreement and the Trust Agreement to, and the rights under the Lease Agreement
and Trust Agreement of, the Owners of the Certificates delivered pursuant to the Trust
Agreement, all subject to the provisions of the Trust Agreement.
Section 4. Conditions. This Assignment Agreement shall confer no rights or
impose no duties upon the Trustee beyond those expressly provided in the Lease
Agreement and the Trust Agreement.
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-. . . c4
A.
L
L
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement
by their officers thereunto duly authorized as of the day and year first written above.
CITY OF CARLSBAD
PUBLIC IMPROVEMENT CORPORATION
BY
(S E A L)
Attest:
Secretary
THE BANK OF CALIFORNIA, NATIONAL
ASSOCIATION, as Trustee
BY Authorized Officer
-3-
STATE OF CALIFORNIA >
> ss.
COUNTY OF SAN DIEGO >
On this _ day of in the year 1988, before me, the undersigned, a Notary
Public in and for said State, personally appeared and
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
persons who executed this instrument as the and Secretary, respectively,
of the City of Carlsbad Public Improvement Corporation, and acknowledged to me that
the City of Carlsbad Public Improvement Corporation executed it.
WITNESS my hand and official seal.
Notary Public in and for said State
Commission Expires:
Typed Name:
(S E A L)
-4-
-
, -
STATE OF CALIFORNIA )
) ss.
COUNTY OF >
On this day of , in the year 1988, before me, the undersigned, a Notary
Public in and for said State personally appeared personally
known to me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument as an authorized officer of The Bank of California, N.A.,
the corporation therein named, and acknowledged to me that The Bank of California,
N.A. executed the within instrument pursuant to its bylaws or a resolution of its board of
directors.
WITNESS my hand and official seal.
(S E A L)
Notary Public in and for said State
Typed Name:
Commission Expires:
-5-
13061-01 / GFB3924 EXHIBIT 7
ARTICLES OF INCORPORATION
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
I.
The name of this corporation is City of Carlsbad Public Improvement Corporation.
II.
A. This corporation is a nonprofit public benefit corporation and is not organized
for the private gain of any person. It is organized under the Nonprofit Public Benefit
Corporation Law for charitable purposes.
B. The purposes for which this corporation is formed are:
(1) The specific and primary purposes for which this corporation is formed are:
a. To render financial assistance to the City of Carlsbad, State of California
(the “City”), by financing, refinancing, acquiring, constructing, improving,
leasing and selling of buildings, building improvements, equipment,
electrical, water, sewer, road and other public improvements, lands, and
any other real or personal property for the benefit of residents of the
boundaries of the City and surrounding areas.
b. To acquire by lease, purchase or otherwise, real or personal property or
any interest therein; to construct, reconstruct, modify, add to, improve or
otherwise acquire or equip buildings, structures or improvements and (by
sale, lease, sublease, leaseback, gift or otherwise) make any part or all of
any such real or personal property available to or for the benefit of the
residents of the boundaries of the City.
c. To promote the common good and general welfare of the residents of the
boundaries of the City, and the governmental enterprises in the boundaries
of the City and surrounding areas by the acquisition of the real and
personal property as hereinabove described.
d. To borrow the necessary funds to pay the cost of financing, refinancing,
acquiring, constructing, replacing, establishing, improving, maintaining,
equipping and operating such properties and facilities for the herein
described purposes, the indebtedness for which borrowed money may, but
need not, be evidenced by securities of this corporation of any kind or
character issued at any one or more times, which may be either unsecured
or secured by any mortgage, trust deed, pledge, encumbrance or other lien
upon any part or all of the properties and assets at any time then or
thereafter owned or acquired by this corporation.
e. To receive limited or conditional gifts or grants in trust, inter wives, or by
way of testamentary devises, bequests or grants in trust, or otherwise,
funds of all kinds including property, both real, personal and mixed,
whether principal or income, tangible or intangible, present or future,
vested or contingent, in order to carry on the purposes of this corporation.
(2) The general purposes and powers are to have and exercise all rights and
powers now or hereafter conferred on nonprofit corporations under the laws of the State
of California; provided, however, that this corporation shall not, except to an
insubstantial degree, engage in any activities or exercise any powers that are not in
furtherance of the specific and primary purposes of this corporation: provided, further,
that this corporation shall not have the power to, and shall not, do any act or conduct
any activity, plan, scheme, design or course of conduct which in any way conflicts with
Sections 501 (c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended, and
regulations promulgated pursuant to such Sections as they now exist or as they may
hereafter be amended.
Ill.
The name and address in the State of California of this corporation’s initial agent /p for service of process is:
Mr. James Elliott
Finance Director
City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
IV.
The principal offices for the transaction of the business of this corporation is
located in the County of San Diego.
The property of this corporation is irrevocably dedicated to charitable purposes
and no part of the net income or assets of this corporation shall ever inure to the benefit
of any director, officer or member thereof or to the benefit of any private person.
V.
A. This corporation is organized and operated by a group of public spirited
citizens exclusively for charitable purposes within the meaning of Section 501(c)(4) of the /I Internal Revenue Code of 1986, as amended.
-2-
-
B. Notwithstanding any other provision of these Articles, this corporation shall not
carry on any other activities not permitted to be carried on by a corporation exempt form
federal income tax under Section 501(c)(4) of the Internal Revenue Code of 1986, as
amended.
C. No substantial part of the activities of this corporation shall consist of carrying
on propaganda, or otherwise attempting to influence legislation, and this corporation
shall not participate or intervene in any political campaign (including the publishing or
distribution of statements) on behalf of any candidate for political office.
\ VI.
A. During the continuance of this corporation, it may distribute any of its assets
to the United States of America, the State of California, or any political subdivision
thereof, to a nonprofit fund, foundation or corporation which is organized and operated
exclusively for charitable or social welfare purpose and which has established its tax-
exempt status under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986,
as amended.
B. Upon the dissolution or winding up of this corporation, its assets remaining
after payment of, or provision made for the payment of, all debts and liabilities of this
corporation, shall be distributed to the United States of America, the State of California,
or any political subdivision thereof, or to a nonprofit fund, foundation or corporation
/” which is organized and operated exclusively for charitable or social welfare purposes and
which has established its tax-exempt status under Section 501(c)(3) or 501(c)(4) of the
Internal Revenue Code of 1986. as amended.
-3-
-
IN WITNESS WHEREOF, the undersigned, being the sole incorporator of this
corporation, have executed these Articles of Incorporation, as of the day of May,
1988.
BY William H. Madison, Incorporator
I hereby declare that I am the person who
executed the foregoing Articles of
Incorporation, which execution is my act
and deed.
BY William H. Madison, Incorporator
-4-
GFB3925 I9
ACTION BY WRITTEN CONSENT OF INCORPORATOR
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
The undersigned, as sole incorporator of this public benefit corporation, took the
below stated action on , at p.m., at the offices of the Jones Hall Hill &
White, A Professional Law Corporation, San Francisco, California pursuant to Section
5134 of the California Corporations Code for the purpose of electing initial directors and
setting the time and place for the organizational meeting.
The Articles of Incorporation were duly filed with the Secretary of State of
California on , and that corporation number was assigned to this
Corporation.
RESOLVED, that the following persons be selected as the initial directors of the
corporation:
Claude A. Lewis
Ann J. Kulchin
John J. Mamaux
Mark V. Pettine
Eric Larson
BE IT FURTHER RESOLVED, that the organizational meeting of the corporation be
held on June 7, 1988 at 6:00 p.m., at the offices of the City of Carlsbad, 1200 Elm
Avenue, Carlsbad, California, and that the notice of such meeting sent to the initial
directors and other interested persons by Aletha L. Rautenkranz, City Clerk of the City of
Carlsbad, is hereby approved and ratified.
All further organizational matters being left for the new directors to take action
upon, the meeting was adjourned.
William H. Madison, Incorporator
13061-01 JHHW:GFB GFB3925
AGENDA
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
Organizational Meeting -- June 7, 1988
1. Resolution Adopting Bylaws (Resolution 88-l)
2. Resolution Electing Officers (Resolution 88-2)
3. Resolution Appointing Time and Place of Regular Meetings (Resolution 88-3)
4. Resolution Approving and Authorizing Execution and Filing of Exemption
Application to State Franchise Tax Board (Resolution 88-4)
5. Resolution Approving and Authorizing Execution and Filing of Various Federal
Forms (Resolution 88-5)
6. A Resolution Approving, Authorizing and Directing Execution of Certain Lease
Financing Documents and Authorizing and Directing Certain Actions with Respect
Thereto (Resolution 88-6)
7. Other Business
8. Adjournment
13061-03 JHHW:WHM:ct
ct
wh
05/l 3/L
05/20/88
05/26/88 EXHIBIT 4
AGENCYAGREEMENT
by and between the
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION
and the
CITY OF CARLSBAD
Dated as of June 1,1988
(HOSP GROVE PROJECT)
AGENCY AGREEMENT
THIS AGENCY AGREEMENT, made and entered into as of June 1, 1988, by and
between the CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION, a public
body corporate and politic organized and existing under the laws of the State of
California (the “Corporation”), and the CITY OF CARLSBAD, a municipal corporation and
general law city organized and existing under the laws of the State of California (the
“City”);
WITNESSETH:
WHEREAS, the Corporation and the City have entered into a Lease Agreement,
dated as of the date hereof (the “Lease Agreement”), whereby the Corporation agrees to
lease certain improvements to Hosp Grove (the “Project”) more particularly described in
Exhibit C attached to the Lease Agreement, to the City, and the City agrees to lease the
Project from the Corporation;
WHEREAS, it is in the interest of the Corporation and the City that the
Corporation appoint the City as its agent for the purposes of acquisition and
construction of the Project, and the Corporation has agreed in the Lease Agreement to
appoint the City as its agent for said purposes;
NOW, THEREFORE, in the joint and mutual exercise of their powers, and in
consideration of the above premises and of the mutual covenants herein contained and
for other valuable consideration, the parties hereto DO HEREBY AGREE as follows:
Section 7. Definitions. The terms capitalized in this Agency Agreement shall have
the meanings ascribed to them in the Lease Agreement and in the Trust Agreement,
dated as of the date hereof, among the Corporation, the City and The Bank of California,
National Association, as trustee (the “Trust Agreement”).
Section 2. Appointment of City. The Corporation hereby appoints the City as its
agent to carry out all phases of the acquisition and construction of the Project, and the
City, as agent of the Corporation, assumes all rights, duties, responsibilities and liabilities
of the Corporation regarding supervision, acquisition and construction of the Project,
except as limited herein.
Section 3. Contracts, Bids and Payments. The City, as agent of the Corporation,
may enter into any purchase order, agreement or contract required for acquisition and
construction of the Project upon being assured that moneys sufficient for the payment
thereof are then on deposit in the Acquisition and Construction Fund created pursuant to
the Trust Agreement. The benefits of all bids received by the City for the Project shall be
and shall be deemed to be assigned by the City to the Corporation.
Section 4. Project Description. The City, as agent of the Corporation, shall have
the right to make any changes in the description of the Project or of any component
thereof whenever the City deems such changes to be necessary and appropriate;
-
provided, however, that the amounts in the Acquisition and Construction Fund are
sufficient to pay Acquisition and Construction Costs resulting from such changes.
Section 5. Supervision of Acquisition, Construction, Equipping and Installation.
The City, as agent of the Corporation, shall have sole responsibility for, and shall
supervise, acquisition and construction of the Project. The City shall monitor the
performance by any contractor to the extent the City deems appropriate. The City shall
permit the Corporation or its assignee to inspect the Project at any and all reasonable
times which are deemed appropriate by the Corporation or its assignee.
Section 6. Enforcement of Contracts. The Corporation hereby assigns to the City
all rights and powers to enforce and execute in its own name or the name of the
Corporation such purchase orders or contracts as are required for the Project which
enforcement may be at law or in equity; provided, however, that the assignment made by
the Corporation herein shall not prevent the Corporation or its assignee from asserting
said rights and powers in its own behalf following written notice to the City.
Section 7. Fixed Price. The Corporation shall not be responsible for payment of,
nor shall it pay nor permit to be paid by the Trustee pursuant to the Trust Agreement,
any amount for the Project in excess of the amount available therefor in the Acquisition
and Construction Fund held by Trustee pursuant to the Trust Agreement. The City shall
pay said excess amount to the extent of lawfully available funds.
Section 8. Inspection of Records. The Corporation shall have the right to inspect
periodically the books and records of the City relating to the Project, and the City shall
permit the Corporation to make such inspections thereof at all reasonable times as the
City shall deem appropriate.
Section 9. Time of Completion. The acquisition and construction of the Project
shall be completed by the Completion Date.
Section 70. Specifications. The City agrees that it will assure that the Project will
be acquired, constructed and installed in accordance with final plans and specifications
approved by the City. Upon completion of acquisition and construction of the Project,
the City will assure that there is filed with the Trustee a certificate executed by an
Authorized Officer of the City and stating that such acquisition and construction of the
Project has been completed in accordance with specifications therefor approved by the
City.
Section 77. Performance Security. The City may, if it deems appropriate, require
the provision of bid bonds or performance bonds in such percentage of the bid or
contract price as it deems desirable in advertising for and in awarding contracts or
making purchase orders.
-2-
, -
IN WITNESS WHEREOF, the Corporation and the City have caused this Agency
Agreement to be executed in their respective names by their duly authorized officers, all
as of the date first above written.
CITY OF CARLSBAD PUBLIC
IMPROVEMENT CORPORATION
BY President
Attest
Secretary
CITY OF CARLSBAD
BY Mayor
Attest
City Clerk
-3-
CORPORATION DIVIS I ON
I, MARCH FONG EU, Secretary of State of the
State of California, hereby certify:
That the annexed transcript has been compared with
the corporate record on file in this office, of which it
purports to be a copy, and that same is full, true and
correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
Secretary of State
SEC/STATE FORM CE.107 m 86 40888
. . -- .
s 13061;Ol / GFB3924
4
ARTICLES OF INCORPORATION
1502956
ENDORSED
FILED ““yd~ks~p-
wm fm Wu, SeaebtjdSW
CITY OF CARLSBAD PUBLIC IMPROVEMENT CORPORATION . -
I.
The name of this corporation is City of Carlsbad Public Improvement Corporation.
II.
A. This corporation is a nonprofit public benefit corporation and is not organized
for the private gain of any person. It is organized under the Nonprofit Public Benefit
Corporation Law for charitable purposes.
B. The purposes for which this corporation is formed are:
(1) The specific and primary purposes for which this corporation is formed are:
a. To render financial assistance to the City of Carlsbad, State of California
(the “City”), by financing, refinancing, acquiring, constructing, improving,
leasing and selling of buildings, building improvements, equipment,
electrical, water, sewer, road and other public improvements, lands, and
any other real or personal property for the benefit of residents of the
’ boundaries of the City and surrounding areas.
b. To acquire by lease, purchase or otherwise, real or personal property or
any interest therein; to construct, reconstruct, modify, add to, improve or
otherwise acquire or equip buildings, structures or improvements and (by
sale, lease, sublease, teaseback, gift or otherwise) make any part or all of
any such real or personal property available to or for the benefit of the
residents of the boundaries of the City.
c. To promote the common good and general welfare of the residents of the
boundaries of the City, and the governmental enterprises in the boundaries
of the City and surrounding areas by the acquisition of the real and
personal property as hereinabove described.
d. To borrow the necessary funds to pay the cost of financing, refinancing,
acquiring, constructing, replacing, establishing, improving, maintaining,
equipping and operating such properties and facilities for the herein
described purposes, the indebtedness for which borrowed money may, but
need not, be evidenced by securities of this corporation of any kind or
4
character issued at any one or more times, which may be either unsecured
or secured by any mortgage, trust deed, pledge, encumbrance or other lien
upon any part or all of the properties and assets at any time then or
thereafter owned or acquired by this corporation.
e. To receive limited or conditional gifts or grants in trust, inter vivos, or by
way of testamentary devises, bequests or grants in trust, or otherwise,
funds of all kinds including property, both real, personal and mixed,
whether principal or income, tangible or intangible, present or future,
vested or contingent, in order to carry on the purposes of this corporation.
(2) The general purposes and powers are to have and exercise all rights and
powers now or hereafter conferred on nonprofit corporations under the laws of the State
of California; provided, however, that this corporation shall not, except to an
insubstantial degree, engage in any activities or exercise any powers that are not in
furtherance of the specific and primary purposes of this corporation; provided, further,
that this corporation shall not have the power to, and shall not, do any act or conduct
any activity, plan, scheme, design or course of conduct which in any way conflicts with
Sections 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended, and
regulations promulgated pursuant to such Sections as they now exist or as they may
hereafter be amended.
Ill.
The name and address in the State of California of this corporation’s initial agent
for service of process is:
Mr. Raymond R. Patchett
City Manager
City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
IV.
The principal offices for the transaction of the business of this corporation is
located in the County of San Diego.
The property of this corporation is irrevocably dedicated to charitable purposes
and no part of the net income or assets of this corporation shall ever inure to the benefit
of any director, officer or member thereof or to the benefit of any private person.
V.
A. This corporation is organized and operated by a group of public spirited
citizens exclusively for charitable purposes within the meaning of Section 501(c)(4) of the
Internal Revenue Code of 1986, as amended.
-2-
. .
B. Notwithstanding any other provision of these Articles, this corporation shall not
carry on any other activities not permitted to be carried on by a corporation exempt form
federal income tax under Section 501(c)(4) of the Internal Revenue Code of 1986, as
amended.
C. No substantial part of the activities of this corporation shall consist of carrying
on propaganda, or otherwise attempting to influence legislation, and this corporation
shall not participate or intervene in any political campaign (including the publishing or
distribution of statements) on behalf of any candidate for political office.
VI.
A. During the continuance of this corporation, it may distribute any of its assets
to the United States of America, the State of California, or any political subdivision
thereof, to a nonprofit fund, foundation or corporation which is organized and operated
exclusively for charitable or social welfare purpose and which has established its tax-
exempt status under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986,
as amended.
B. Upon the dissolution or winding up of this corporation, its assets remaining
after payment of, or provision made for the payment of, all debts and liabilities of this
corporation, shall be distributed to the United States of America, the State of California,
or any political subdivision thereof, or to a nonprofit fund, foundation or corporation
which is organized and operated exclusively for charitable or social welfare purposes and
which has established its tax-exempt status under Section 501(c)(3) or 501(c)(4) of the
Internal Revenue Code of 1986, as amended.
-3-
..t- l /-
-
r
-3 * *
IN WITNESS WHEREOF, the undersigned, being the sole incorporator of this
corporation, have executed these Articles of Incorporation, as of the 31st day of May,
1988. Lcil2L.e .
BY _’ .
William H. Madison, Incorporator
1 hereby declare that I am the person who
executed the foregoing Articles of
Incorporation, which execution is my act
and deed.
-4-