HomeMy WebLinkAbout17.1 SAUSD SETTLEMENT 12-16-02AGENDA REPORT
I i I I I r' i iiiii
MEETING DATE:
TO:
DECEMBER 16, 2002
CHAIRMAN AND MEMBERS OF THE BOARD OF DIRECTORS
TUSTIN PUBLIC FINANCING AUTHORITY
TPFA NO. 1
'12-16-02
FROM:
AUTHORITY LEGAL COUNSEL
SUBJECT:
ISSUANCE AND SALE OF NOTES IN THE TOTAL AMOUNT OF SIXTY
MILLION DOLLARS ($60,000,000)IN FULL SETTLEMENT OF SAUSD v. CITY
SUMMARY:
The Tustin Public Financing Authority (the "Authority") is proposing to issue and sell two
notes in the total amount of Sixty Million Dollars ($60,000,000). The funds received will
be used to accelerate the payments owed to the Santa Ana Unified School District
under the May 2002 Settlement Agreement by making one lump sum payment before
the end of the year, in full settlement of SAUSD v. City (OCSC No. 01CC02595).
RECOMMENDATION:
Adopt the following resolutions and approve agreements with Bond Counsel and the City's
Financial Advisor:
A. A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
TUSTIN PUBLIC FINANCING AUTHORITY MAKING AN ENVIRONMENTAL
DETERMINATION UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
("CEQA") REGARDING THE ISSUANCE AND SALE OF THE NOTES.
B. A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
TUSTIN PUBLIC FINANCING AUTHORITY PROVIDING FOR THE ISSUANCE
AND S ALE B Y THE AUTHORITY O F 2002 REVENUE ANTICIPATION NOTES
AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS WITH RESPECT
THERETO.
C. APPROVAL OF AGREEMENTS WITH BOND COUNSEL AND
FINANCIAL ADVISOR.
FISCAL IMPACT:
Within City Budget. The Notes are secured by a pledge of Land Sale Proceeds and a
Deed of Trust from the Authority.
161915.1
DISCUSSION:
The City, the Authority, and the Santa Ana Unified School District ("SAUSD") entered
into a Settlement and Release Agreement in May 2002 (the "Settlement Agreement").
According to the Settlement Agreement, SAUSD was to be paid certain sums strictly out
of the proceeds of land sales at MCAS, Tustin. The timing of the payments and total
amount owed by Tustin depended upon whether the District accepted or declined the
City's offer of 22 acres at MCAS, Tustin. In early October of this year, the District
notified the City that it declined to accept the 22 acres. That decision resulted in the
District being owed $38 Million by May 31, 2003, and $22 Million by October 8, 2003.
The payments due SAUSD under the Settlement Agreement were to be secured by a
Letter of Credit or note and deed of trust. The Authority was not able to obtain a letter
of credit by the deadline provided by the Settlement Agreement. So, as required by the
Settlement Agreement, the City timely provided a Note and Deed of Trust for 97 acres
at MCAS, Tustin. The District notified the City that it would not accept the Deed of
Trust as security and instead demanded a Letter of Credit. Unbeknownst to the City,
the District had been negotiating with a bank for a loan using the anticipated letter of
credit from the City as collateral. The District sought a Temporary Restraining Order to
prevent the City from zoning or selling land at MCAS, Tustin and taking certain other
actions until it received a Letter of Credit. The District also sought to have judgment
entered against the City and the Authority claiming that they had not used "best efforts"
to obtain a letter of credit. The City and Authority strongly disagree with this allegation.
The City and the Authority have continued their efforts to secure a letter of credit or
credit mechanism as security for payments to the District. In addition, the City has
proceeded to complete preparation of its General Plan, prepare zoning documents, and
to negotiate with potential purchasers of property so that sales can occur in advance of
the May and October payment dates. Unfortunately, a Temporary Restraining Order
("TRO") issued by the Court has prevented the very zoning which is critical to timely
land sales.
Within the last two weeks, the City received an offer from Salomon, Smith, Barney to
purchase revenue anticipation notes from the Authority in the total amount of Sixty
Million Dollars ($60,000,000). At the closing, which is anticipated to occur on December
27, 2002, the proceeds would be deposited into an escrow account for payment to
SAUSD. The notes are to be secured by the proceeds of land sales at MCAS, Tustin
and a deed of trust for property at MCAS, Tustin. Among other things, a term of the
offer from Salomon, Smithy Barney is that the case of SAUSD v. City be dismissed prior
to closing.
Although the Settlement Agreement does not require that settlement payments be made
to SAUSD until May 31, 2003 and October 8, 2003, respectively, the proposed deal with
Salomon, Smith Barney gives the City an opportunity to accelerate the payments to
SAUSD to the end of this year. This allows the City to complete all of its obligations
under the Settlement Agreement well in advance of the dates contemplated by the
Settlement Agreement, and will end all litigation between the City and SAUSD. The City
will then be free to proceed with the development of MCAS, Tustin without continuing
litigation with, or the threat of litigation from, SAUSD.
The TRO issued by the Court in November prevents the City and Authority from
encumbering the property at MCAS, Tustin except for obtaining a letter of credit. The
City Attorney's Office is working With counsel for the School District to obtain court
approval for the deal with Salomon, Smith Barney. It is hoped that this approval will be
obtained prior to the December 16 City Council meeting. If the School District does not
agree, or approval from the judge cannot be obtained prior to the meeting, then the
approval of Resolution B will have to be made effective upon the modification of the
TRO to allow the deal Salomon, Smith Barney to proceed.
ATTACHMENTS:
Resolution A
Resolution B
Agreement with Quint and Thimmig
Agreement with Gardener, Underwood & Bacon
CITY OF TUSTIN
RESOLUTION NO.°2-z24
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF TUSTIN, CALIFORNIA MAKING AN
ENVIRONMENTAL DETERMINATION UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
("CEQA") REGARDING THE ISSUANCE AND SALE
OF NOTES IN THE TOTAL AMOUNT OF $60,000,000
WHEREAS, the City of Tustin proposes to assist the the Tustin Public Financing
Authority in the issuance and sale of 2002 Revenue Anticipation Notes; and
WHEREAS, the proposed action is purely for the purposes of financing and does
not involve a ny commitment t o a ny specific project t hat may result i n physical
impacts to the environment; and
WHEREAS, Section 15378 of the State's CEQA Guidelines, Subsection (b) (4)
provides that: "project does not include: the creation of government funding
mechanisms or other government fiscal activities which do not involve any
commitment to any specific project which may result in a potentially significant
impact on the environment." Kaufman and Broad-South Bay, Inc. v. Morgan Hill
Unified School District (1992) 9 Cal. F. 4th 464.
NOW THEREFORE, the City Council of the City of Tustin does hereby find,
determine and order as follows:
,
That the adoption of a resolution of the City Council of the City Tustin
approving the issuance and sale of 2002 Revenue Anticipation Notes
by the Tustin Public Financing Authority is not a project under the
California Environmental Quality Act, and therefore no CEQA
documentation is required.
APPROVED and ADOPTED by the City Council of the City of Tustin on
December__, 2002.
ATTEST:
, Mayor
Pamela Stoker, City Clerk
Quint
11/29/02
12/07/02
12/10/02
12/13/02
RE
THE
TU~
OF
PUBLI,
CITY OF TUSTIN
RESOLUTION NO. 02-125
CITY COUNCIL OF THE CITY OF TUSTIN APPROVING
SALE OF 2002 REVENUE ANTICIPATION NOTES BY THE
FINANCING AUTHORITY AND AUTHORIZING AND
'G CERTAIN ACTIONS WITH RESPECT THERETO
RI:
follows:
31, 2002 (
Financing
("SAUSD'
derived fr~
defined in
so that am
City
the EDC A.
Authority
notes as
(the "Purl
series, to
2002
Tustin
principal
"Notes");
members o:
NO
follows:
by the City Council (the "Council") of City of Tustin (the "City"), as
iAS,
City
to that certain Settlement and Release Agreement, effective May
nt Agreement"), by and among (1) the City, (2) the Tustin Public
"Authority"), and (3) the Santa Ana Unified School District
to make certain payments to SAUSD (the "City Payments"), to be
of all land sales of all or a portion of the EDC Acres (as such term is
Agreement);
the
deriv~
lo not
desires that the Authority issue and sell revenue anticipation notes
from the proceeds thereof, will be available for the City to make the
of the required payment dates even if land sales of all or a portion of
the will convey a portion of the EDC Acres to the Authority, more
.cribed Exhibit A attached hereto (the "Collateral Real Property") so that the
the Real Property to the purchasers of such revenue anticipation
for the .ayment by the Authority of the principal and interest thereon;
the
~r") to
has received commitments from Salomon Smith Barney, Inc.
such revenue anticipation notes in two series, which
hereto as Exhibit B;
the
~ignated
the
of
has agreed to issue its revenue anticipation notes in two
the Tustin Public Financing Authority Revenue Anticipation Notes,
principal amount of $38,000,000 (the "Series A Notes"), and the
Revenue Anticipation Notes, 2002 Series B, in the aggregate
(the "Series B Notes" and, with the Series A Notes, the
the
below specified have been filed with the City and the
the aid of its staff, have reviewed said documents;
BE IT RESOLVED by the City Council of the City of Tustin as
20015.02
Sec
can offer
Authority
Sec
issuance
Sec
Purchase
purchase
be and is
to execute
approved
delivered
in the re~
Resoluti{
Sec¸
principal
sales of all
Revenues"
sales of all
proceeds
City (the
Revenues"
a first lien
not so
Authority
city
that it shal
separate
made of
that the
its a
of this
S¢c~
oul
defined in
commence
payable
Authority
will assure
bond insuJ
rents)
not later
attached
prepare
revenue b(
(a)
ance of the Collateral Real Property. The Council hereby authorizes the
teral Real Property by the City to the Authority so that the Authority
:ollateral Real Property to the Purchaser as security for the payment by the
princip~ of and interest on the Notes.
by
of the Issuance' of the Notes. The Council hereby approves the
Authority.
offic
~ant to
of
as
of the Sale of the Notes. A note purchase agreement (the "Note
and among the Authority, the City and Purchaser relating to the
Purcha: .er of the Notes, substantially in the form attached hereto as Exhibit C,
The Mayor or the City Manager is hereby authorized and directed
Agreement, with such changes, insertions or omissions as may be
and so long as the terms and conditions of the Notes issued and
Note Purchase Agreement are consistent with the requirements stated
Board of Directors adopted on the date hereof (the "Authority
in the Note Purchase Agreement.
Securi for the Notes. The Authority has pledged to the payment of the
of the Notes, together with the interest thereon the first proceeds of all land
of the EDC Acres owned by the Authority (the "Authority Pledged
City ;reby covenants to pay to the Authority the first proceeds of all land
portion of the EDC Acres owned by the City and, to the extent no land sales
June 30, 2003, from amounts on deposit in the General Fund of the
and, with the Authority Pledged Revenues, the "Pledged
of the principal of the Notes and the interest thereon shall constitute
and shall be payable from the Pledged Revenues. To the extent
the dged Revenues, the Notes shall be paid from any other moneys of the
City available therefor. The City agrees to transfer, as received, all
the Agent for deposit in the Repayment Account. The City covenants
books of record and accounts of the EDC Acres owned by the City,
other and accounts, in which complete and correct entries shall be
relating to the EDC Acres owned by the City. The City acknowledges
is upon the covenants of the City in this Section 4 in connection with
purchai the Notes and the Purchaser is hereby made a third-party beneficiary
Lease
suffici
:eedings
an
commit
to secul
1,
as
Bonds. If, on March 1, 2004, any portion of the Notes remains
moneys are not then on deposit in the Repayment Account (as
Resolution) to pay all outstanding Notes at maturity, the City agrees to
the issuance of lease revenue bonds secured by a lease agreement
fund of the City. In connection therewith, the City will lease from the
agreeable to the City, the Authority and the Purchaser and which
grade credit rating from a national rating service or a municipal
from a national bond insurance company, on terms (including
and retire such lease revenue bonds, such lease to become effective
1004. The below-enumerated documents, initial drafts of which are
dt D, be and are hereby approved, City staff is hereby authorized to
thereof if necessary in connection with the issuance of such lease
lease, by between the City and the Authority; and
-2-
(b)
therewith
Sec~
(a)
bond
or the desi
firm for its
of any
(b)
designated
Mayor,
agreement
the City,
Sec~
the Financ,
authorized
be neces:
Se£~
Council.
agreen
forms
subjec
Consult
of Q
the Aut
of any s
as be
of £
or th~
said fir~
Further
th
directed
the
ent, by and between the Authority and the City.
~f such documents and any other documents required in connection
to the approval of the Council.
~nts.
tint & Thimmig LLP, San Francisco, California, is hereby designated as
hority and the City in connection with the Notes. The Mayor, the City,
uch official, is hereby authorized to enter into an agreement with said
~nd counsel in a form acceptable to the Mayor, the City, or the designee
',ardner, Underwood & Bacon, LLC, Los Angeles, California, is hereby
.dvisor to the Authority and the City in connection with the Notes. The
designee of any such official, is hereby authorized to enter into an
a for its services as financial advisor, in a form acceptable to the Mayor,
of any such official.
Approvals. The Mayor, the City Manager, the Assistant City Manager,
e City Clerk and all other appropriate officials of the City are hereby
to execute such other agreements, documents and certificates as may
purposes of this resolution and the financing herein authorized.
Effective Date. This Resolution shall take effect upon its adoption by this
I,
full true
meeting
thereof:
City Clerk of the City of Tustin, hereby certify that the foregoing is a
of a resolution duly adopted by the City Council of the City at a
on the 16th day of December, 2002, by the following vote of the members
AB~
AB: '.
City Clerk
-3-
EXHIBIT A
DESCRIPTION OF COLLATERAL REAL PROPERTY
General Reference
to ParCel Group
D
G
H
Sub-Parcels Acres
I-D-4 124.27
Portion of I-D-4 31.64
I-G-1 110.95
I-H-1 195.46
I-H-2 109.93
I-H-15 .01
I-H-16 .01
572.27
(See attached map)
Exhibit A
Page 1
EXHIBIT B
COMMITMENTS
Exhibit B
Page I
Amernberot
CONFIDENTIAL- 1219102
INDICATIVE TERMS AND SUBJECT TO FINAL DOCUMENTATION
Issuer:
Principal Amount:
Type of Notes:
Purpose:
Purchaser:
Closing Date:
Commitment Fee:
Security:
Purchase of Notes:
Interest Rates and
Interest Periods:
Salomon Smith Barney Inc.
Summary of Terms and Conditions
$38 million Bridge Notes, Series A
Tustin Public Financing Authority (the "Issuer" or Authority"),
located in the City of Tustin, CA. (the "City").
$38 million.
18 month revenue anticipation notes (the "Notes")issued by the
Authority and secured as described below.
Provide funds to the City of Tustin to make payments due to the
Santa Ana Unified School District. It is the intent of the City of
Tustin to make one lump sum payment to the District at the time of
closing.
Salomon Smith Barney Inc. or its affiliates ("SSB")
December 30, 2002, or such other date as may be agreed upon by
the City and the Purchaser.
The Commitment Fee will be
due on the Closing Date.
~% of the Principal Amount and
The Notes will be secured by a first lien on the proceeds derived
from the sale of property at the former Tustin Marine Corps Air
Station ("MCAS"), as well as a Deed of Trust on certain parcels of
the MCAS (the "Real Estate"), subject to mutual agreement of the
Purchaser and Authority. The value of the Real Estate divided by
Principal Amount will at least be 2:1 based upon the appraisal of
Cushman & Wakefield, dated September 9, 2002.
Purchase will be $38,000,000.
Notes will bear interest at the Initial Fixed Rate for the Initial Fixed
Rate Period and then at Base Rate for each Base Rate Period.
The interest on the notes will be exempt from Federal and State
income taxes:
Initial Fixed Rate: __ percent per annum
Initial Fixed Rate Period: From the Closing Date until 5/30/03.
Base Rate: Daily effective Fed Funds rate as published bY the
Federal Reserve Bank of New York on the first business day of
NY1:1418147.1
CONFIDENTIAL
Applicable Margin:
Interest Payments:
Note Maturity Date:
Repayment:
Optional Prepayment'.
each month plus the Applicable Margin.
Base Rate Period: Each monthly period beginning June of 2003
which starts on the first day of the month and ends on the last day
of the month.
The Applicable Margin means:
basis points per annum.
Upon the occurrence and during the continuance of any Event of
Default, the Applicable Margin will increase by_ basis points
per annum.
At the end of each month. Interest will be computed on a 30/360-
day basis.
June 1,2004
The Authority will repay the Notes on the Note Maturity Date either
from 1) proceeds of the sale of all or part of the MCAS, or 2) at the
Authority's discretion, other legally available funds, or 3) from the
proceeds of a public issuance of certificates of participation or
lease revenue bonds backed by the general fund of the City. On or
prior to the Closing Date, the Authority and the City shall enter into
an agreement (the "City Agreement") (which may include the Note
Purchase Agreement in the event the Purchaser, the Authority and
the City are all parties thereto), in form and substance reasonably
satisfactory to the Purchaser, pursuant to which the City shall
obligate itself to lease from the Authority assets mutually agreeable
to the City, the Authority and the Purchaser, on terms (including
rents) sufficient to secure and retire such certificates of
participation or lease revenue bonds, such lease to become
effective not later than June 1, 2004 in the event the Notes are not
fully retired on or prior to March 1, 2004, with the rental payment
obligation thereunder to be backed by the general fund of the City.
As additional security for the Notes, the Authority will covenant to
commence actions on March 3, 2004, reasonably expected to
result in the issuance of such certificates of participation or lease
revenue bonds on or prior to June 1, 2004 in the event the Notes
have not been fully retired on or prior to March 1, 2004. The
documentation to implement such lease by the City shall be
presented to and approved by the respective governing bodies of
the City and the Authority, and a responsible officer of each shall
be authorized and direct to execute and deliver such
documentation in the event any of the Notes are outstanding as of
March 3, 2004.
Notes may be prepaid without penalty at the end of the Initial Fixed
Rate Period and at the end of any Base Rate Period.
NY1:1418147.1 2
CONFIDENTIAL
Documentation:
Conditions Precedent
to Closing:
The commitments will be subject to preparation, execution and
delivery of mutually acceptable Note documentation that will
contain conditions precedent, representations and warranties,
covenants, events of default md other provisions customary for
notes/facilities of this nature, including, but not limited to, those
noted below.
Customary for facilities of this nature, from both the Authority and
the City, each in form and substance satisfactory to the Purchaser
and its counsel, including, but not limited to:
1)
The Notes, Deed of Trust, Note Purchase Agreement, City
Agreement and other Facility documents ("Facility
Documents").
2) City council and Authority resolutions.
3) Incumbency/specimen signature certificates.
4)
Favorable legal opinions from bond counsel for the Notes
and from the respective counsel for the Authority and the
City, including customary enforceability opinions,
perfection/priority opinions and tax matters.
5) Favorable legal opinion from counsel for the Purchaser.
6) Accuracy of representations and warranties.
7)
Addition of the Purchaser as an addressee on the
Cushman and Wakefield appraisal of the property value of
the MCAS.
8)
A title insurance policy for the Real Estate naming the
Purchaser the beneficiary thereof.
9)
There is not, and there has not been, any injunction or
other impediment to the process of selling the MCAS in
portions thereof.
Acceptance by the Santa Ana Unified School District of the
deposit of these funds into an escrow account, or similar
mechanism to facilitate the simultaneous exchange of
documents and funds, as adequate security in the case of
Santa Ana Unified School District v. City of Tustin, OCSC
No: 01CC02595, as evidenced by a dismissal with
prejudice deposited into escrow for the Closing.
11)
All representations and warranties are true and correct in
all material respects on and as of the Closing Date, before
and after giving effect to the Note purchase and to the
application of the proceeds therefrom, as though made on
NY1:1418147.1 3
CONFIDENTIAL
Representations and
Warranties:
and as of such date.
12)
No Event of Default or event which, with the giving of notice
or passage of time or both, would be an Event of Default,
has occurred and is continuing on such Closing Date, or
would result from such Note purchase.
13)
The Purchaser shall be added as an Additional Named
Insured to the Pollution and Remediation Legal Liability
Policy between the City and Indian Harbor Insurance
Company ("Liability Policy").
Customary for facilities of this nature, from both the Authority and
the City, including, but not limited to:
1) Confirmation of legal status and authority.
2) Due authorization of the Facility Documents.
3)
Execution, delivery, and performance of Facility
Documents do not violate law or existing agreements.
4) No govemmental or regulatory approvals required.
5)
No litigation which would have a material adverse effect on
the business, condition (financial or otherwise), operations
or prospects, or which would affect the legality, validity and
enforceability of the Facility Documents.
6)
No material adverse change in the business, condition
(financial or otherwise), results of operations or prospects
of the Authority or the City since 2001.
7) Accuracy of information, financial statements.
8)
Material compliance with laws and regulations, including all
applicable environmental laws and regulations.
9)
Legality, validity, binding effect and enforceability of the
Facility Documents.
10) First prior perfected lien on the Real Estate.
11)
Representations/covenants to ensure efficacy of
environmental indemnity provided to the City in the
Quitclaim Deeds between City and United States of
America, acting by and through the Department of the
Navy.
12) Representations/covenants to ensure efficacy of Liability
NY1:1418147.1 4
CONFIDENTIAL
Policy.
Financial Covenants:
Covenants:
To be determined.
Customary for facilities of this nature from both the Authority and
the City, including, but not limited to:
1)
2)
Preservation and maintenance of corporate existence.
Material compliance with laws (including ERISA and
applicable environmental laws).
3)
SSB will be the underwriter of any certificates of
participation or lease revenue bonds described above; the
underwriter's discount for an investment grade certificates
or bond issue may not exceed 1% of the principal amount
of such certificates or bonds; if non-investment grade or
unrated certificates or bonds are issued, the underwriter's
discount may not exceed 1.75% of the principal amount of
such certificates or bonds; in addition, SSB will be
reimbursed for out-of-pocket expenses subject to
reasonable review by the City.
4) Payment of material obligations.
5) Visitation and inspection rights.
6) Maintenance of books and records.
7) Maintenance of properties.
8) Maintenance of insurance.
9)
Certain restrictions on liens including a negative mortgage
pledge on the MCAS other than the Deed of Trust and no
subordinate lien on any of the Real Estate.
10) Certain reporting requirements.
11) Use of proceeds.
12)
Maintain the Purchaser as an Additional Named Insured on
the Liability Policy as long as the Notes are outstanding.
Events of Defaulb
Customary for facilities of this nature, with right of acceleration,
including, but not limited to:
NY1:1418147.1 5
CONFIDENTIAL
Other:
Yield Protection,
Taxes, and Other
Deductions:
1)
2)
3)
4)
Failure to pay principal when due and failure to pay interest,
fees and other amounts within 3 business days of when
due.
Representations or warranties materially incorrect.
Failure to comply with covenants (with notice and cure
periods as applicable).
Payment defaults on City general fund payment
aggregating $4 million or more, or to other events if the
effect is to accelerate or permit acceleration of such debt.
5)
Unsatisfied judgment or order of $4 million or more either
individually or in the aggregate).
Facility Documents will include:
1)
Indemnification d the Purchaser and its affiliates, officers,
directors, employees, and advisors for any liabilities and
expenses arising out of this transaction or the use or
proposed use of proceeds.
2) Normal agency, set-off and sharing language.
1)
The Facility Documents will contain yield protection
provisions, customary for facilities of this nature, protecting
the Purchaser in the event of unavailability of funding,
funding losses, and reserve and capital adequacy
requirements.
Governing Law:
Counsel to the
Purchaser:
Expenses:
State of California
O'Melveny & Meyers LLP
The City will reimburse the Purchaser for all out-of-pocket
expenses (including fees and expenses of counsel to the
Purchaser) incurred by it in the negotiation and execution of the
Facility. Such expenses will be reimbursed by the City upon
presentation of a statement of account, regardless of whether the
transaction contemplated is actually completed or the Facility
Documents are signed.
NY1:1418147.1 6
SAI MON SMITH BARNEY
A me rn ber of c~t~lrou~
CONFIDENTIAL- 1219102
INDICATIVE TERMS AND SUBJECT TO FINAL DOCUMENTATION
Issuer:
Principal Amount'.
Type of Notes:
Purpose:
Purchaser:
Closing Date:
Commitment Fee:
Security:
Purchase of Notes:
Interest Rates and
Interest Periods:
Salomon Smith Barney Inc.
Summary of Terms and Conditions
$22 million Bridge Notes, Series B
Tustin Public Financing Authority (the "Issuer" or Authority"),
located in the City of Tustin, CA. (the "City").
$22 million.
18 month revenue anticipation notes (the "Notes") issued by the
Authority and secured as described below.
Provide funds to the City of Tustin to make payments due to the
Santa Ana Unified School District. It is the intent of the City of
Tustin to make one lump sum payment to the District at the time of
closing.
Salomon Smith Barney Inc. or its affiliates ("SSB")
December 30, 2002, or such other date as may be agreed upon by
the City and the Purchaser.
The Commitment Fee will be
due on the Closing Date.
~% of the Principal Amount and
The Notes will be secured by a first lien on the proceeds derived
from the sale of property at the former Tustin Marine Corps Air
Station ("MCAS"), as well as a Deed of Trust on certain parcels of
the MCAS (the "Real Estate"), subject to mutual agreement of the
Purchaser and Authority. The value of the Real Estate divided by
Principal Amount will at least be 2:1 based upon the appraisal of
Cushman & Wakefield, dated September 9, 2002.
Purchase will be $22,000,000.
Notes will bear interest at the Initial Fixed Rate for the 'Initial Fixed
Rate Period and then at Base Rate for each Base Rate Period.
The interest on the notes will be exempt from Federal and State
income taxes:
Initial Fixed Rate:
percent per annum
Initial Fixed Rate Period: From the Closing Date until 10/08/03.
Base Rate: Daily effective Fed Funds rate as published by the
Federal Reserve Bank of New York on the first business day of
NY1:1417000.6
CONFIDENTIAL
Applicable Margin:
Interest Payments:
Note Maturity Date:
Repayment:
Optional Prepayment:
each month plus the Applicable Margin.
Base Rate Period: Each monthly period beginning October 9 of
2003 which starts on the first day of the month and ends on the
last day of the month.
The Applicable Margin means:
__ basis points per annum.
Upon the occurrence and during the continuance of any Event of
Default, the Applicable Margin will increase by ~ basis points
per annum.
At the end of each month. Interest will be computed on a 30/360-
day basis.
June 1,2004
The Authority will repay the Notes on the Note Maturity Date either
from 1) proceeds of the sale of all or part of the MCAS, or 2) at the
Authority's discretion, other legally available funds, or 3) from the
proceeds of a public issuance of certificates of participation or
lease revenue bonds backed by the general fund of the City. On or
prior to the Closing Date, the Authority and the City shall enter into
an agreement (the "City Agreement") (which may include the Note
Purchase Agreement in the event the Purchaser, the Authority and
the City are all parties thereto), in form and substance reasonably
satisfactory to the Purchaser, pursuant to which the City shall
obligate itself to lease from the Authority assets mutually agreeable
to the City, the Authority and the Purchaser, on terms (including
rents) sufficient to secure and retire such certificates of
participation or lease revenue bonds, such lease to become
effective not later than June 1, 2004 in the event the Notes are not
fully retired on or prior to March 1, 2004, with the rental payment
obligation thereunder to be backed by the general fund of the City.
As additional security for the Notes, the Authority will covenant to
commence actions on March 3, 2004, reasonably expected to
result in the issuance of such certificates of participation or lease
revenue bonds on or prior to June 1, 2004 in the event the Notes
have not been fully retired on or prior to March 1, 2004. The
documentation to implement such lease by the City shall be
presented to and approved by the respective governing bodies of
the City and the Authority, and a responsible officer of each shall
be authorized and direct to execute and deliver such
documentation in the event any of the Notes are outstanding as of
March 3, 2004.
Notes may be prepaid without penalty at the end of the Initial Fixed
Rate Period and at the end of any Base Rate Period.
NY1:1417000.6 2
CONFIDENTIAL
Documentation:
Conditions Precedent
to Closing:
The commitments will be subject to preparation, execution and
delivery of mutually acceptable Note documentation that will
contain conditions precedent, representations and warranties,
covenants, events of cbfault and other provisions customary for
notes/facilities of this nature, including, but not limited to, those
noted below.
Customary for facilities of this nature, from both the Authority and
the City, each in form and substance satisfactory to the Purchaser
and its counsel, including, but not limited to:
1)
The Notes, Deed of Trust, Note Purchase Agreement, City
Agreement and other Facility documents ("Facility
Documents").
2) City council and Authority resolutions.
3) Incumbency/specimen signature certificates.
4)
Favorable legal opinions from bond counsel for the Notes
and from the respective counsel for the Authority and the
City, including customary enforceability opinions,
perfection/priority opinions and tax matters.
5) Favorable legal opinion from counsel for the Purchaser.
6) Accuracy of representations and warranties.
7)
Addition of the Purchaser as an addressee on the
Cushman and Wakefield appraisal of the property value of
the MCAS.
8)
A title insurance policy for the Real Estate naming the
Purchaser the beneficiary thereof.
9)
There is not, and there has not been, any injunction or
other impediment to the process of selling the MCAS in
portions thereof.
Acceptance by the Santa Ana Unified School District of the
deposit of these funds into an escrow account, or similar
mechanism to facilitate the simultaneous exchange of
documents and funds, as adequate security in the case of
Santa Ana Unified School District v. City of Tustin, OCSC
No: 01CC02595, as evidenced by a dismissal with
prejudice deposited into escrow for the Closing.
11)
All representations and warranties are true and correct in
all material respects on and as of the Closing Date, before
and after giving effect to the Note purchase and to the
application of the proceeds therefrom, as though made on
NY1:1417000.6 3
CONFIDENTIAL
Representations and
Warranties:
and as of such date.
12)
No Event of Default or event which, with the giving of notice
or passage of time or both, would be an Event of Default,
has occurred and is continuing on such Closing Date, or
would result from such Note purchase.
13)
The Purchaser shall be added as an Additional Named
Insured to the Pollution and Remediation Legal Liability
Policy between the City and Indian Harbor Insurance
Company ("Liability Policy").
Customary for facilities of this nature, from both the Authority and
the City, including, but not limited to:
1) Confirmation of legal status and authority.
2) Due authorization of the Facility Documents.
3)
Execution, delivery, and performance of Facility
Documents do not violate law or existing agreements.
4) No governmental or regulatory approvals required.
5)
No litigation which would have a material adverse effect on
the business, condition (financial or otherwise), operations
or prospects, or which would affect the legality, validity and
enforceability of the Facility Documents.
6)
No material adverse change in the business, condition
(financial or otherwise), results of operations or prospects
of the Authority or the City since 2001.
7) Accuracy of information, financial statements.
8)
Material compliance with laws and regulations, including all
applicable environmental laws and regulations.
9)
Legality, validity, binding effect and enforceability of the
Facility Documents.
10) First prior perfected lien on the Real Estate.
11)
Representations/covenants to ensure efficacy of
environmental indemnity provided to the City in the
Quitclaim Deeds between City and United States of
America, acting by and through the Department of the
Navy.
12) Representations/covenants to ensure efficacy d Liability
NY1:1417000.6 4
CONFIDENTIAL
Policy.
Financial Covenants:
Covenants:
To be determined.
Customary for facilities of this nature from both the Authority and
the City, including, but not limited to:
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
Preservation and maintenance of corporate existence.
Material compliance with laws (including ERISA and
applicable environmental laws).
SSB will be the underwriter of any certificates of
participation or lease revenue bonds described above; the
underwriter's discount for an investment grade certificates
or bond issue may not exceed 1% of the principal amount
of such certificates 'or bonds; if non-investment grade or
unrated certificates or bonds are issued, the underwriter's
discount may not exceed 1.75% of the principal amount of
such certificates or bonds; in addition, SSB will be
reimbursed for out-of-pocket expenses subject to
reasonable review by the City.
Payment of material obligations.
Visitation and inspection rights.
Maintenance of books and records.
Maintenance of properties.
Maintenance of insurance.
Certain restrictions on liens including a negative mortgage
pledge on the MCAS other than the Deed of Trust and no
subordinate lien on any of the Real Estate.
Certain reporting requirements.
Use of proceeds.
Maintain the Purchaser as an Additional Named Insured on
the Liability Policy as long as the Notes are outstanding.
Events of Default:
Customary for facilities of this nature, with right of acceleration,
including, but not limited to:
NY1:1417000.6 5
CONFIDENTIAL
Other:
Yield Protection,
Taxes, and Other
Deductions:
1)
Failure to pay principal when due and failure to pay interest,
fees and other amounts within 3 business days of when
due.
2) Representations or warranties materially incorrect.
3)
Failure to comply with covenants (with notice and cure
periods as applicable).
4)
Payment defaults on City general fund payment
aggregating $4 million or more, or to other events if the
effect is to accelerate or permit acceleration of such debt.
5)
Unsatisfied judgment or order of $4 million or more either
individually or in the aggregate).
Facility Documents will include:
1)
Indemnification of the Purchaser and its affiliates, officers,
directors, employees, and advisors for any liabilities and
expenses arising out of this transaction or the use or
proposed use of proceeds.
2) Normal agency, set-off and sharing language.
1)
The Facility Documents will contain yield protection
provisions, customary for facilities of this nature, protecting
the Purchaser in the event of unavailability of funding,
funding losses, and reserve and capital adequacy
requirements.
Governing Law:
Counsel to the
Purchaser:
Expenses:
State of California
O'Melveny & Meyers LLP
The City will reimburse the Purchaser for all out-of-pocket
expenses (including fees and expenses of counsel to the
Purchaser) incurred by it in the negotiation and execution of the
Facility. Such expenses will be reimbursed by the City upon
presentation of a statement of account, regardless of whether the
transaction contemplated is actually completed or the Facility
Documents are signed.
NY1:1417000.6 6
EXHIBIT C
NOTE PURCHASE AGREEMENT
Exhibit C
Page 1
Quint & Thimmig LLP
11/29/02
12/07/02
12/10/02
12/13/02
$38,000,000
TUSTIN PUBLIC FINANCING AUTHORITY
2002 Revenue Anticipation Notes, 2002 Series A
$22,000,000
TUSTIN PUBLIC FINANCING AUTHORITY
2002 Revenue Anticipation Notes, 2002 Series B
NOTE PURCHASE AGREEMENT
December 20, 2002
Board of Directors
Tustin Public Financing Authority
300 Centennial Way
Tustin, CA 92780
City Council
City of Tustin
300 Centennial Way
Tustin, CA 92780
Ladies and Gentlemen:
The undersigned (the "Purchaser") offers to enter into this agreement with the Tustin
Public Financing Authority (the "Authority") and the City of Tustin (the "City"), which, upon
your acceptance hereof, will be binding upon the Authority, the City and the Purchaser. This
offer is made subject to the acceptance of the Note Purchase Agreement by the Authority and
the City and written delivery of such acceptance to the Purchaser at or prior to 11:59 P.M.,
Pacific Time, on the date hereof.
1. Purchase and Sale of the Notes. Upon the terms and conditions and in reliance upon
the representations, warranties and agreements herein set forth, the Purchaser hereby agrees to
purchase from the Authority, and the Authority hereby agrees to sell to the Purchaser, all (but
not less than all) of (a) $38,000,000 aggregate principal amount of the Authority's 2002
Revenue Anticipation Notes, 2002 Series A (the "Series A Notes"), and (b) $22,000,000
aggregate principal amount of the Authority's 2002 Revenue Anticipation Notes, 2002 Series B
(the "Series B Notes"). The Series A Notes and the Series B Notes are sometimes collectively
referred to herein as the "Notes."
The Series A Notes shall be dated their date of delivery and shall mature on June 1,
2004. The Series A Notes shall bear interest initially at the rate of 3.75% per annum from their
date through May 31, 2003 (the "Series A Notes Fixed Rate Period"). After the Series A Notes
Fixed Rate Period and until maturity, the Series A Notes shall bear interest for each Base Rate
20015.02
Period (hereinafter defined) at a variable rate equal to the Base Rate (hereinafter defined) plus
the Applicable Margin (as hereinafter defined). "Base Rate Period" means, with respect to the
Series A Notes, each monthly period, beginning June of 2003, which starts on the first day of the
month and ends on the last day of the month. "Base Rate" means the daily effective Federal
Funds rate as published by the Federal Reserve Bank of New York on the first business day of
each month. "Applicable Margin" means 2.50% per annum; provided, however, that upon the
occurrence and during the continuance of any Event of Default (hereinafter defined), the
Applicable Margin will increase to 5.00% per annum. The maximum interest rate on the Series A
Notes shall be 12% per annum.
The Series A Notes are subject to redemption, without penalty, at the end of the Series
A Notes Fixed Rate Period and at the end of any Base Rate Period thereafter; provided, however,
in the event the Authority is required to pay to the Purchaser additional amounts as set forth in
Section 12 hereof, the Authority shall have the right to redeem the Series A Notes on the date of
such request, even if such date is earlier than the end of the Series A Notes Fixed Rate Period or
the end of any Base Rate Period relating to the Series A Notes so long as the Authority pays an
amount equal to the costs incurred and losses, if any, incurred, determined in good faith by the
Purchaser in connection with any hedging transactions entered into by the Purchaser or its
affiliates, in connection with the purchase and/or carry of the Series A Notes.
The Series B Notes shall be dated their date of delivery and shall mature on June 1,
2004. The Series B Notes shall bear interest initially at the rate of 4.00% per annum from their
date through September 30, 2003 (the "Series B Notes Fixed Rate Period"). After the Series B
Notes Fixed Rate Period and until maturity, the Series B Notes shall bear interest for each Base
Rate Period at a variable rate equal to the Base Rate plus the Applicable Margin. "Base Rate
Period" means, with respect to the Series B Notes, each monthly period, beginning October of
2003, which starts on the first day of the month and ends on the last day of the month. The
maximum interest rate on the Series B Notes shall be 12% per annum.
The Series B Notes are subject to redemption, without penalty, at the end of the Series B
Notes Fixed Rate Period and at the end of any Base Rate Period thereafter; provided, however, in
the event the Authority is required to pay to the Purchaser additional amounts as set forth in
Section 12 hereof, the Authority shall have the right to redeem the Series B Notes on the date of
such request, even if such date is earlier than the end of the Series B Notes Fixed Rate Period or
the end of any Base Rate Period relating to the Series B Notes so long as the Authority pays an
amount equal to the costs incurred and losses, if any, incurred, determined in good faith by the
Purchaser in connection with any hedging transactions entered into by the Purchaser or its
affiliates, in connection with the purchase and/or carry of the Series B Notes.
Interest on the Notes shall be computed on a 30-day month/360-day year basis. Interest
on the Notes shall be payable on the first day of each month (each, an "Interest Payment
Date"), commencing on the first day of the month next succeeding the date of issue. The
principal of the Notes shall be payable at maturity. Both the principal of and interest on the
Notes shall be payable in lawful money of the United States of America by wire transfer of U.S.
Bank, N.A. (the "Paying Agent") to the Purchaser.
The purchase price to be paid by the Purchaser for the Notes shall be $60,000,000,
representing the principal amount of the Notes. On the date of delivery of the Notes, the
Authority will pay to the Purchaser a commitment fee of $300,000, equal to 0.5% of the par
amount of the Notes.
2. The Notes. The Notes shall be described in, and shall be issued and secured pursuant
to the provisions of the resolution of the Authority, adopted on December 16, 2002 (the
-2-
"Authority Resolution"), and Articles 1 through 4 (commencing with section 6500) of Chapter 5
of Division 7 of Title 1 of the California Government Code (the "Act").
The principal amount of the Notes, together with the interest thereon, are payable from,
and the Authority has pledged, the Pledged Revenues (as defined in the Authority Resolution).
The payment of the principal of the Notes and the interest thereon constitutes a first lien and
charge thereon and shall be payable from the Pledged Revenues. To the extent not so paid from
the Pledged Revenues, the Notes will be paid from any other moneys of the Authority or the
City of Tustin lawfully available therefor. In addition, pursuant to that certain Deed of Trust
with Assignment of Rents (the "Deed of Trust"), the Authority will grant to a trustee, as trustee
under the Deed of Trust (the "Deed of Trust Trustee"), for the benefit of the Purchaser, a first
lien and security interest in certain real property located in Orange County, California, with a
value, based upon the appraisal, dated September 9, 2002, of Cushman & Wakefield (the
"Cushman & Wakefield Appraisal"), of at least two times the aggregate principal amount of
the Notes, to further secure its obligations under the Authority Resolution.
Section 3. Bonds Constitute Investment of Purchaser.
(a) The Purchaser has sufficient knowledge and experience in financial and business
matters, including purchase and ownership of municipal and other tax-exempt obligations of a
nature similar to the Notes to be able to evaluate the risks and merits of the investment
represented by the purchase of the Notes.
(b) The Purchaser is acquiring the Notes for its own account and not with a view to, or
for sale in connection with, any distribution of the Notes or any part thereof. The Purchaser has
not offered to sell, solicited offers to buy, or agreed to sell the Notes or any part thereof, and
the Purchaser has no present intention of reselling or otherwise disposing of the Notes.
(c) As a sophisticated investor, the Purchaser has made our own credit inquiry and
analysis with respect to the Authority, the City and the Notes, and has made an independent
credit decision based upon such inquiry and analysis. The Authority and the City have
furnished to the Purchaser all the information which the Purchaser, as a reasonable investor, has
requested of the Authority and the City as a result of the Purchaser having attached significance
thereto in making its investment decision with respect to the Notes, and the Purchaser has had
the opportunity to ask questions of and receive answers from knowledgeable individuals
concerning the Authority, the City and the Notes. The Purchaser is able and willing to bear the
economic risk of the purchase and ownership of the Notes.
(d) The Purchaser understands that the Notes have not been registered with any federal
or state securities agency or commission.
4. Closing. At 8:00 A.M., Pacific Time, on December 27, 2002, or such other time or such
other date as shall have been mutually agreed upon by the Authority and the Purchaser (the
"Closing"), the Authority will deliver to the Purchaser, through the facilities of the Depository
Trust Company ("DTC"), the Notes in definitive form, duly executed and authenticated,
together with other documents hereinafter mentioned; and the Purchaser will accept such
delivery and pay the purchase price thereof in immediately available funds to the order of the
Authority. The Notes will be in fully registered form, registered in the name of the Cede& Co., as
nominee of DTC. Notwithstanding the foregoing, the Closing will not be deemed to occur until
the proceeds of the Notes have been transferred to the District in accordance with the escrow
instructions, by and among the Authority, the City, SAUSD and the Purchaser, substantially in
the form attached to the Authority Resolution as Exhibit C.
-3-
5. Representations, Warranties and Agreements of the Au'thority. The Authority hereby
represents, warrants and agrees with the Purchaser that:
(a) The Authority is a joint exercise of powers authority duly organized and validly
existing under the laws of the State of California, with the power to request the issuance of the
Notes pursuant to the Act.
(b) At or prior to the Closing, (i) the Authority will have taken all action required to be
taken by it to authorize the issuance and delivery of the Notes; (ii) the Authority has full legal
right, power and authority to enter into this Note Purchase Agreement and to adopt the
Authority Resolution, and the Authority has full legal right, power and authority to perform its
obligations under each such document or instrument, and to carry out and effectuate the
transaction contemplated by this Note Purchase Agreement and the Authority Resolution; (iii)
the execution and delivery or adoption of, and the performance by the Authority of the
obligations contained in the Notes, the Authority Resolution and this Note Purchase Agreement
have been duly authorized and such authorization shall be in full force and effect at the time of
the Closing; (iv) this Note Purchase Agreement constitutes a valid and legally binding obligation
of the Authority; and (v) the Authority has authorized the consummation by it of all
transactions contemplated by this Note Purchase Agreement.
(c) No consent, approval, authorization, order, filing, registration, qualification, election
or referendum, of or by any person, organization, court or government agency or public body
whatsoever is required in connection with the issuance, delivery or sale of the Notes or the
consummation of the other transactions effected or contemplated herein or hereby.
(d) The issuance of the Notes, the execution, delivery and performance of this Note
Purchase Agreement, the Authority Resolution and the Notes, and compliance with the
provisions hereof do not conflict with or constitute on the part of the Authority a violation of or
default under, the Constitution of the State of California or any other existing law, charter,
ordinance, regulation, decree order or resolution and do not conflict with or result in a violation
or breach of, or constitute a default under, any agreement, indenture, mortgage, lease or other
instrument to which the Authority is a party or by which it is bound or to which it is subject.
(e) Except for the case of Santa Ana Unified School District v. City of Tustin (OCSC No.
01CC02595) (the "School District Litigation"), brought by the Santa Ana Unified School
District ("SAUSD") against the City, to the best of the Authority's knowledge, no action, suit,
proceeding, hearing or investigation is pending or (to the knowledge of the Authority)
threatened against the Authority: (i) in any way affecting the existence of the Authority or in
any way challenging the respective powers of the several offices of the titles of the officials of
the Authority to such offices; or (ii) seeking to restrain or enjoin the sale, issuance or delivery of
the Notes, the application of the proceeds of the sale of the Notes, or the collection of the
revenue or assets of the Authority pledged or available to pay the principal and interest on the
Notes, or the pledge thereof, or in any way contesting or affecting the validity or enforceability
of the Notes, this Note Purchase Agreement or the Authority Resolution or contesting the
powers of the Authority or its authority with respect to the Notes, the Authority Resolution or
this Note Purchase Agreement; or (iii) in which a final adverse decision could (A) materially
adversely affect the operations of the Authority or the consummation of the transactions
contemplated by this Note Purchase Agreement and the Authority Resolution, (B) declare this
Note Purchase Agreement to be invalid or unenforceable in whole or in material part, or (C)
adversely affect the exclusion of the interest paid on the Notes from gross income for federal
income tax purposes and the exemption of such interest from California personal income
taxation.
-4-
(f) Between the date hereof and the date of the Closing, the Authority has not, without
prior written consent of the Purchaser, borrowed any additional moneys secured by the Pledged
Revenues.
(g) The Authority has not been notified of any listing or proposed listing by the Intemal
Revenue Service to the effect that the Authority is a bond issuer whose arbitrage certificates
may not be relied upon.
(h) Any certificates signed by any officer of the Authority and delivered to the Purchaser
shall be deemed a representation and warranty by the Authority, as the case may be, to the
Purchaser as to the statements made therein but not of the person signing the same.
(i) The Authority has not been notified of any listing or Proposed listing by the Internal
Revenue Service to the effect that the Authority is a bond issuer whose arbitrage certificates
may not be relied upon.
6. Representations, Warranties and Agreements of the City. The City hereby represents,
warrants and agrees with the Purchaser that:
(a) The City is a municipal corporation and general law city duly organized and validly
existing under the laws of the State of California.
(b) At or prior to the Closing, (i) the City will have taken all action required to be taken
by it to approve the issuance and delivery of the Notes; (ii) the City has full legal right, power
and authority to enter into this Note Purchase Agreement, and the City has full legal right,
power and authority to perform its obligations under this Note Purchase Agreement, and to
carry out and effectuate the transaction contemplated by this Note Purchase Agreement; (iii)
the execution and delivery or adoption of, and the performance by the City of the obligations
contained in the this Note Purchase Agreement have been duly authorized and such
authorization shall be in full force and effect at the time of the Closing; (iv) this Note Purchase
Agreement constitutes a valid and legally binding obligation of the City; and (v) the City has
authorized the consummation by it of all transactions contemplated by this Note Purchase
Agreement.
(c) The execution, delivery and performance of this Note Purchase Agreement and
compliance with the provisions hereof do not conflict with or constitute on the part of the City
a violation of or default under, the Constitution of the State of California or any other existing
law, charter, ordinance, regulation, decree order or resolution and do not conflict with or result
in a violation or breach of, or constitute a default under, any agreement, indenture, mortgage,
lease or other instrument to which the City is a party or by which it is bound or to which it is
subject.
(d) Except for the School District Litigation, to the best of the City's knowledge, no
action, suit, proceeding, hearing or investigation is pending or (to the knowledge of the City)
threatened against the City: (i) in any way affecting the existence of the City or in any way
challenging the respective powers of the several offices of the titles of the officials of the City to
such offices; or (ii) seeking to restrain or enjoin the sale, issuance or delivery of the Notes, the
application of the proceeds of the sale of the Notes, or the collection of the revenue or assets of
the Authority pledged or available to pay the principal and interest on the Notes, or the pledge
thereof, or in any way contesting or affecting the validity or enforceability of the Notes, this
Note Purchase Agreement or the Authority Resolution or contesting the powers of the City or its
authority with respect to this Note Purchase Agreement; or (iii) in which a final adverse
decision could (A) materially adversely affect the operations of the City or the consummation
of the transactions contemplated by this Note Purchase Agreement, (B) declare this Note
-5-
Purchase Agreement to be invalid or unenforceable in whole or in material part, or (C) adversely
affect the exclusion of the interest paid on the Notes from gross income for federal income tax
purposes and the exemption of such interest from California personal income taxation.
(e) Between the date hereof and the date of the Closing, the City has not, without prior
written consent of the Purchaser, borrowed any moneys secured by its General Fund.
(f) Any certificates signed by any officer of the City and delivered to the Purchaser shall
be deemed a representation and warranty by the City, as the case may be, to the Purchaser as
to the statements made therein but not of the person signing the same.
(g) At the date of the Closing, there shall not have been any material adverse changes in
the financial condition of the City since June 30, 2002.
(h) The City has not been notified of any listing or proposed listing by the Internal
Revenue Service to the effect that the City is a bond issuer whose arbitrage certificates may not
be relied upon.
7. Covenants of the Authority. The Authority covenants and agrees with the Purchaser
that:
(a) the Authority will apply the proceeds from the sale of the Notes for the purposes
specified in the Authority Resolution; and
(b) if, on March 1, 2004, any portion of the Notes remains outstanding and sufficient
moneys are not then on deposit in the Repayment Account held by the Paying Agent under the
Authority Resolution to pay all outstanding Notes at maturity, the Authority will commence
proceedings for the issuance of lease revenue bonds secured by a lease agreement payable from
the general fund of the City. In connection therewith, the Authority will lease to the City assets
mutually agreeable to the City, the Authority and the Purchaser, on terms (including rents)
sufficient to secure and retire such lease revenue bonds, such lease to become effective not later
than June 1, 2004. Pursuant to the Authority Resolution, the Authority has approved the
proposed forms of a lease agreement and an indenture of trust relating to the issuance and sale
of such lease revenue bonds. The Authority agrees that, if it is necessary to issue such lease
revenue bonds, the Purchaser will be the underwriter thereof, the underwriter's discount, if such
issue receives an investment grade rating, will not exceed 1% of the principal amount or the
underwriter's discount, if such issue is non-investment grade, will not exceed 1.75% of the
principal amount. In addition, as underwriter of such lease revenue bonds, the Purchaser will be
reimbursed for out-of-pocket expenses subject to reasonable review by the City.
8. Covenant of the City. The City covenants and agrees with the Purchaser that if, on
March 1, 2004, any portion of the Notes remains outstanding and sufficient moneys are not
then on deposit in the Repayment Account held by the Paying Agent under the Authority
Resolution to pay all outstanding Notes at maturity, the City will commence proceedings for the
issuance of lease revenue bonds secured by a lease agreement payable from the general fund of
the City. In connection therewith, the City will lease from the Authority assets mutually
agreeable to the City, the Authority and the Purchaser, on terms (including rents) sufficient to
secure and retire such lease revenue bonds, such lease to become effective not later than June 1,
2004. By resolution of its City Council on December 16, 2002 (the "City Resolution"), the City
has approved the proposed forms of a lease agreement and an indenture of trust relating to the
issuance and sale of such lease revenue bonds.
9. Conditions to Closing. The Purchaser has entered into this Note Purchase Agreement
in reliance upon the representations and warranties of the Authority and the City contained
-6-
herein and the performance by the Authority and the City of their obligations hereunder, both a s
of the date hereof and as of the date of Closing. The Purchaser's obligations under this Note
Purchase Agreement are and shall be subject, at the option of the Purchaser, to the following
further conditions at the Closing:
(a) The School District Litigation shall have been dismissed, with prejudice.
(b) SAUSD shall have agreed, in writing, that the deposit of the proceeds of the Notes in
the Proceeds Account under the Authority Resolution evidences full compliance by the City for
the security of its obligation to make the City Payments (as defined in the Authority
Resolution).
(c) The Deed of Trust and this Note Purchase Agreement shall have been executed by
the parties thereto.
(d) The representations and warranties of the Authority and the City contained herein
shall be true, complete and correct in all material respects as of the date hereof and as of the
date of Closing, as if made at and as of the Closing, and the statements made in all certificates
and other documents delivered to the Purchaser at the Closing pursuant hereto shall be true,
complete and correct in all material respects on the date of the Closing; and the Authority and
the City shall be in compliance with each of the agreements made by them in this Note Purchase
Agreement.
(e) At the time of the Closing, (i) this Note Purchase Agreement, the Deed of Trust, the
Authority Resolution and the City Resolution shall be in full force and effect and shall not have
been amended, modified or supplemented except as may have been agreed to in writing by the
Purchaser; (ii) all actions under the Act which, in the opinion of the firm of Quint & Thimmig
LLP, bond counsel ("Bond Counsel"), shall be necessary in connection with the transactions
contemplated hereby, shall have been duly taken and shall be in full force and effect; and, (iii)
the Authority and the City shall perform or have performed all of their obligations required
under or specified in the Authority Resolution, the City Resolution, the Note Purchase
Agreement or the Deed of Trust, as applicable, to be performed at or prior to the Closing.
(f) No order, decree or injunction of any court of competent jurisdiction, nor any order,
ruling or regulation of the Securities and Exchange Commission, shall have been issued or made
with the purpose or effect of prohibiting the issuance, offering or sale of the Notes as
contemplated hereby and no legislation shall have been enacted, or a bill favorably reported for
adoption, or a decision by a court established under Article III of the Constitution of the United
States rendered, or a ruling, regulation, proposed regulation or official statement by or on behalf
of the Securities and Exchange Commission or other governmental agency having jurisdiction of
the subject matter shall be made or issued, to the effect that the Notes or any securities of the
Authority or of any similar body of the type contemplated herein are not exempt from the
registration, qualification or other requirements of the Securities Act of 1933, as amended and
as then in effect, or the Trustee Indenture Act of 1939, as amended and as then in effect.
(g) At or prior to the date of the Closing, the Purchaser shall receive one copy of the
following documents in each case dated as of the Closing Date and satisfactory in form and
substance to the Purchaser:
(i) An approving opinion of Bond Counsel, as to the Notes, addressed to the
Authority.
(ii) A letter setting forth that the Purchaser can rely upon the approving opinion
of Bond Counsel.
-7-
(iii) An opinion of the City Attorney, addressed to the and the Purchaser,
substantially to the following effect that (A) the AuthoritY Resolution has been duly
adopted, and the Authority Resolution is in full force and effect and has not been
modified, amended or rescinded, and (B) to the knowledge of such counsel, there is no
litigation, proceeding, action, suit, or investigation at law or in equity before or by any
court, governmental board or body, pending and served or overtly threatened in writing
against the Authority, challenging the creation, organization or existence of the Authority
or contesting or affecting the validity of the Notes or the transactions contemplated
hereby.
(iv) An opinion of counsel to the Authority, addressed to the and the Purchaser,
substantially to the following effect that (A) the resolution (the "City Resolution") of the
City approving the transaction has been duly adopted, and the City Resolution is in full
force and effect and has not been modified, amended or rescinded, and (B) to the
knowledge of such counsel, there is no litigation, proceeding, action, suit, or investigation
at law or in equity before or by any court, governmental board or body, pending and
served or overtly threatened in writing against the City, challenging the creation,
organization or existence of the City or contesting or affecting the validity of the Notes
or the transactions contemplated hereby.
(v) A certificate signed by appropriate officials of the Authority to the effect that
(A) the representation, agreements and warranties of the Authority herein are true and
correct in all material respects as of the date of Closing; and (B) the Authority has
complied with all the terms of the Authority Resolution, this Note Purchase Agreement
and the Deed of Trust to be complied with by the Closing and such documents are in full
force and effect.
(vi) A certificate signed by appropriate officials of the City to the effect that (A)
the representation, agreements and warranties of the City herein are true and correct in
all material respects as of the date of Closing; and (B) the City has complied with all the
terms of the City Resolution, this Note Purchase Agreement and the Deed of Trust to be
complied with by the Closing and such documents are in full force and effect.
(vii) A non-arbitrage certificate of the Authority in form satisfactory to Bond
Counsel.
(viii) A certificate, together with a fully executed copy of the Authority
Resolution, of an appropriate official of the Authority to the effect that (A) such copy is
a true and correct copy of the Authority Resolution; and (B) that the Authority
Resolution was duly adopted and has not been modified, amended rescinded or
revoked and are in full force and effect on the date of the Closing.
(ix) A certificate, together with a fully executed copy of the City Resolution, of
an appropriate official of the City to the effect that (A) such copy is a true and correct
copy of the City Resolution; and (B) that the City Resolution was duly adopted and has
not been modified, amended rescinded or revoked and are in full force and effect on the
date of the Closing.
(x) The Purchaser shall have been added as an addressee on the Cushman &
Wakefield Appraisal.
-8-
(xi) The Purchaser shall have received a copy of the title insurance policy for the
Collateral Real Property and evidence that the Purchaser has been named a beneficiary
thereof.
(xii) The Purchaser shall have been added as an additional named insured to the
Pollution and Remediation Legal Liability Policy issued to the City by the Indian Harbor
Insurance Company.
(xiii) Such additional legal opinions, certificates, proceedings, instruments and
other documents as the Purchaser may reasonably request to evidence compliance (A)
by the Authority or the City with legal requirements; (B) the truth and accuracy, as of
the time of Closing, of the representations of the Authority and the City herein
contained; and, (C) the due performance or satisfaction by the Authority and the City at
or prior to such time of all agreements then to be performed and all conditions then to be
satisfied by the Authority and the City.
If the Authority shall be unable to reasonably satisfy the conditions requested by the
Purchaser to evidence compliance with the terms and conditions set forth in this Note Purchase
Agreement, the Purchaser's obligations for the purchase of the Notes shall be terminated for any
reason permitted by this Note Purchase Agreement, and this Note Purchase Agreement may be
canceled by the Purchaser at, or at any time prior to, the time of Closing. Notice of such
cancellation shall be given to the Authority in writing, or by telephone or telegraph confirmed in
writing. Notwithstanding any provision herein to the contrary, the performance and any and all
obligations of the Authority hereunder and the performance of any and all conditions contained
herein for the benefit of the Purchaser may be waived by the Purchaser in writing at its sole
discretion.
10. Conditions to Obligations of the Authority. The performance by the Authority and
the City of their obligations is conditioned upon (i) the performance by the Purchaser of its
obligations hereunder; and (ii) receipt by the Authority and the Purchaser of opinions and
certificates being delivered at the Closing by persons and entities other than the Authority.
11. Expenses. The Authority shall pay the expenses incident to the performance of its
obligations hereunder from the proceeds of the Notes (or from any other source of available
funds of the Authority or the City) which expenses include and are limited to: (i) the cost of the
preparation and reproduction of the Authority Resolution; (ii) the fees and disbursements of
Bond Counsel; (iii) the costs of the preparation, printing and delivery of the Notes; and (iv) all
out-of-pocket expenses of the Purchaser (including fees and expenses of counsel to the
Purchaser) incurred by it in connection with the issuance and sale of the Notes.
12. Yield Protection. If on or after the date of Closing, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by the Purchaser with
any request or directive made on or after the date hereof (whether or not having the force of
law) of any such authority, central bank or comparable agency:
(a) shall subject the Purchaser to any tax, duty or other charge with respect to the Notes,
or shall change the basis of taxation of payments to the Purchaser of any amounts due with
respect to the Notes (except for changes in the rate of tax on the overall net income of the
Purchaser); or
(b) shall impose, modify or deem applicable any reserve (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal Reserve System), or
-9-
similar requirement against the assets of, deposits with or for the account of, or credit extended
by, the Purchaser or shall impose on the Purchaser any other condition affecting its obligations
with respect to the Notes;
and the result of any of the foregoing is to reduce the amount of any sum received or receivable
by the Purchaser with respect to the Notes, by an amount deemed by the Purchaser to be
material, then, within thirty (30) days after demand by the Purchaser (or, if such increased
costs will continue to be incurred by the Purchaser, in arrears on a monthly basis as may be
agreed between the Authority, the City and the Purchaser), the Authority shall pay to the
Purchaser such additional amount or amounts as will compensate the Purchaser for such
increased cost or reduction.
If on or after the date of Closing, the Purchaser shall have determined that the adoption
of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the effect of reducSng
the rate of return on capital of the Purchaser (or its parent) with respect to the Notes to a level
below that which the Purchaser (or its parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by the Purchaser to be material, then from time to time, within
thirty (30) days after demand by the Purchaser (or if such reductions in the rate of return on
capital of the Purchaser (or its parent) will continue to be suffered by the Purchaser (or its
parent), in arrears on a monthly basis as may be agreed between the Authority, the City and the
Purchaser), the Authority shall pay to the Purchaser such additional amount or amounts as will
compensate the Purchaser (or its parent) for such reduction.
The Purchaser will use its best efforts to notify the Authority and the City within thirty
(30) days of the Purchaser's obtaining knowledge of any event which will entitle the Purchaser
to compensation pursuant to this Section 12; provided that the failure of the Purchaser to notify
the Authority and the City within such thirty (30) day period shall not relieve the Authority
from any liability for payment of such compensation. A certificate of the Purchaser claiming
compensation under this Section 12 and setting forth the additional amount or amounts to be
paid to it shall be conclusive in the absence of manifest error. In determining such amount, the
Purchaser may use any reasonable average and attribution methods.
13. Notices. Any notice or other communication to be given under this Note Purchase
Agreement (other than the acceptance hereof as specified in the first paragraph hereof) may be
given by delivering the same in writing if to the Authority, to the Executive Director, Tustin
Public Financing Authority, 300 Centennial Way, Tustin, CA 92780, if to the City, to the City
Manager, City of Tustin, 300 Centennial Way, Tustin, CA 92780, or if to the Purchaser to the
attention of Mr. Mark ARyan, Managing Director, Salomon Smith Barney, Inc., 390 Greenwich
Street, 2nd Floor, New York, NY 10013.
14. Parties in Interest; Survival of Representations and Warranties. This Note Purchase
Agreement when accepted by the Authority and the City in writing as heretofore specified shall
constitute the entire agreement among the Authority, the City and the Purchaser. This Note
Purchase Agreement is made solely for the benefit of the Authority, the City and the Purchaser
(including the successors or assigns of the Purchaser). No person shall acquire or have any rights
hereunder or by virtue hereof. All the representations, warranties and agreements of the
Authority and the City in this Note Purchase Agreement shall survive regardless of (a) any
investigation or any statement in respect thereof made by or on behalf of the Purchaser, (b)
-10-
delivery of and payment by the Purchaser for the Notes hereunder, and (c) any termination of
this Note Purchase Agreement.
15. ExecutiOn in Counterparts. This Note Purchase Agreement may be executed in
several counterparts each of which shall be regarded as an original of all of which shall
constitute one and the same document.
16. Applicable Law. This Note Purchase Agreement shall be interpreted, governed and
enforced in accordance with the law of the State of California.
Very truly yours,
SALOMON SMITH BARNEY, INC.
The foregoing is hereby agreed to and
accepted as of the date first written above:
TUSTIN PUBLIC FINANCING
AUTHORITY
By
Mark ARyan
Managing Director
By
William A. Huston,
Executive Director
CITY OF TUSTIN
By
William A. Huston,
City Manager
-11-
EXHIBIT D
FORMS OF SITE LEASE AND LEASE AGREEMENT
Exhibit D
Page 1
Quint&~gLLP 11/29/02
AFTER RECORDATION RETURN TO:
Quint & Thimmig LLP
One Embarcadero Center, Suite 2420
San Francisco, California 94111-3737
Attention: Brian D. Quint, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SITE LEASE
Dated as of May 1, 2004
by and between the
CITY OF TUSTIN, as Lessor
and
TUSTIN PUBLIC FINANCING AUTHORITY, as Lessee
Relating to
$
Tustin Public Financing Authority
Lease Revenue Bonds, 2004 Series A
(Refinancing Project)
20015.02
SITE LEASE
This SITE LEASE, dated as of May 1, 2004, is by and between the CITY OF TUSTIN, a
municipal corporation and chartered city duly organized and existing under and by virtue of the
laws of the State of California (the "City"), as lessor, and the TUSTIN PUBLIC FINANCING
AUTHORITY, a joint exercise of powers authority duly organized and existing under and by
virtue of the laws of the State of California (the "Authority"), as lessee;
WITNESSETH:
WHEREAS, the Authority intends to assist the City by leasing certain real property and
improvements to the City pursuant to a Lease Agreement, dated as of May 1, 2004, and
recorded concurrently herewith by memorandum thereof (the "Lease Agreement"), and the City
proposes to enter into this Site Lease with the Authority as a material consideration for the
Authority's agreement to lease such real property and improvements to the City;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows:
Section 1. Definitions. Unless the context clearly otherwise requires or unless otherwise
defined herein, the capitalized terms in this Site Lease shall have the respective meanings
specified in that certain Indenture of Trust, dated as of May 1, 2004, by and between the
Authority and , as trustee thereunder.
Section 2. Site Lease. The City hereby leases to the Authority and the Authority hereby
leases from the City, on the terms and conditions hereinafter set forth, those certain parcels of
real property situated in Orange County, State of California, more particularly described in
Exhibit A attached hereto and made a part hereof (the "Property").
Section 3. Term. The term of this Site Lease shall commence on the date of recordation of
this Site Lease in the Office of the County Recorder of Orange County, State of California, and
shall end on May 1, , unless such term is extended or sooner terminated as hereinafter
provided. If, on May 1, , the aggregate amount of Lease Payments (as defined in and as
payable under the Lease Agreement) shall not have been paid, or provision shall not have been
made for their payment, then the term of this Site Lease shall be extended until such Lease
Payments shall be fully paid or provision made for such payment. If, prior to May 1, , all
Lease Payments shall be fully paid or provision made for such payment in accordance with
Section 4.3 or 4.4 of the Lease Agreement, the term of this Site Lease shall end ten (10) days
thereafter.
Section 4. Rental. The City acknowledges receipt from the Authority as and for rental
hereunder the sum of one dollar ($1.00), on or before the date of delivery of this Site Lease.
Section 5. Purpose. The Authority shall use the Property solely for the purpose of leasing
the Property to the City pursuant to the Lease Agreement and for such purposes as may be
incidental thereto; provided, however, that in the event of default by the City under the Lease
Agreement, the Authority and its assigns may exercise the remedies provided in the Lease
Agreement.
Section 6. City's Interest in the Property. The City covenants that it is the owner of fee
title to the Property.
Section 7. Assignments and Subleases. Unless the City shall be in default under the
Lease Agreement, the Authority may not assign its rights under this Site Lease or sublet the
Property, except as provided in the Lease Agreement, without the written consent of the City.
Section 8. Right of Entry. The City reserves the right, for any of its duly authorized
representatives, to enter upon the Property at any reasonable time to inspect the same or to
make any repairs, improvements or changes necessary for the preservation thereof.
Section 9. Termination. The Authority agrees, upon the termination of this Site Lease, to
quit and surrender the Property in the same good order and condition as the same were in at the
time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees
that any permanent improvements and structures existing upon the Property at the time of the
termination of this Site Lease shall remain thereon and title thereto shall vest in the City.
Section 10. Default. In the event the Authority shall be in default in the performance of
any obligation on its part to be performed under the terms of this Site Lease, which default
continues for thirty (30) days following notice and demand for correction thereof to the
Authority, the City may exercise any and all remedies granted by law, except that no merger of
this Site Lease and of the Lease Agreement shall be deemed to occur as a result thereof;
provided, however, that so long as any Bonds are outstanding and unpaid in accordance with
the terms thereof, the Lease Payments assigned by the Authority to the Trustee under the
Indenture shall continue to be paid to the Trustee.
Section 11. Quiet Enjoyment. The Authority, at all times during the term of this Site
Lease, shall peaceably and quietly have, hold and enjoy the Property subject to the provisions
of the Lease Agreement and the Indenture.
Section 12. Waiver of Personal Liability. All liabilities under this Site Lease on the part
of the Authority are solely liabilities of the Authority and the City hereby releases each and
every member, director, officer, employee and agent of the Authority of and from any personal
or individual liability under this Site Lease. No member, director, officer, employee or agent of
the Authority shall at any time or under any circumstances be individually or personally liable
under this Site Lease for anything done or omitted to be done by the Authority hereunder.
Section 13. Taxes. The City covenants and agrees to pay any and all assessments of any
kind or character and also all taxes, including possessory interest taxes, levied or assessed
upon the Property (including both land and improvements).
Section 14. Eminent Domain. In the event the whole or any part of the Property is taken
by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby
determined to be the amount of the then unpaid Bonds including the unpaid principal and
interest with respect to any such Bonds then outstanding and, subject to the provisions of the
Lease Agreement, the balance of the award, if any, shall be paid to the City.
Section 15. Use of the Proceeds. The City and the Authority hereby agree that the lease
to the Authority of the City's right, title and interest in the Property pursuant to Section 2
serves the public purposes of the City.
Section 16. Partial Invalidity. If any one or more of the terms, provisions, covenants or
conditions of this Site Lease shall, to any extent, be declared invalid, unenforceable, void or
voidable for any reason whatsoever by a court of competent jurisdiction, the finding, order or
decree of which becomes final, none of the remaining terms, provisions, covenants and
conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease
shall be valid and enforceable to the fullest extent permitted by law.
-2-
Section 17. Notices. All notices, statements, demands, consents, approvals,
authorizations, offers, designations, requests or other commtmications hereunder by either party
to the other shall be in writing and shall be sufficiently given and served upon the other party if
delivered personally or if mailed by United States registered mail, return receipt requested,
postage prepaid, and, if to the City, to the City Clerk, the City of Tustin, 300 Centennial Way,
Tustin, CA 92780, and if to the Authority, to the Secretary, Tustin Public Financing Authority,
300 Centennial Way, Tustin, CA 92780, or to such other addresses as the respective parties
may from time to time designate by notice in writing.
Section 18. Section Headings. All section headings contained herein are for convenience
of reference only and are not intended to define or limit the scope of any provision of this Site
Lease.
Section 19. Applicable Law. This Site Lease shall be governed by and construed in
accordance with the laws of the State.
Section 20. Execution in Counterparts. This Site Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original but all together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be
executed by their respective officers thereunto duly authorized, all as of the day and year first
above written.
CITY OF TUSTIN, as Lessor
Attest:
By
William A. Huston
City Manager
Pamela Stoker,
City Clerk
TUSTIN PUBLIC FINANCING
AUTHORITY, as Lessee
Attest:
By
William A. Huston
Executive Director
Pamela Stoker,
Secretary
-3-
[NOTARY ACKNOWLEDGMENTS TO BE ATTACHED]
EXHIBIT A
DESCRIPTION OF THE PROPERTY
Those parcels of land in the City of Tustin, Orange County, State of California, described as
follows:
Exhibit B
Quint&ThimmigLLP 11/29/02
LEASE AGREEMENT
Dated as of May 1, 2004
by and between the
TUSTIN PUBLIC FINANCING AUTHORITY, as Lessor
and the
CITY OF TUSTIN, as Lessee
Relating to
$
Tustin Public Financing Authority
Lease Revenue Bonds, 2004 Series A
(Refinancing Project)
2O015.02
TABLE OF CONTENTS
Page
Section 1.1.
Section 1.2.
ARTICLE I
DEFINITIONS AND EXHIBITS
Definitions ................................................................................................................ 2
Exhibits ..................................................................................................................... 2
Section 2.1.
Section 2.2.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Representations, Covenants and Warranties of the City .............................................. 3
RepreSentations, Covenants and Warranties of Authority ........................................... 4
Section 3.1.
ARTICLE III
ISSUANCE OF THE BONDS
The Bonds .................................................................................................................. 6
ARTICLE IV
LEASE OF PROPERTY; TERM OF THE LEASE AGREEMENT; LEASE PAYMENTS
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
Section 4.6.
Section 4.7.
Lease of Property ....................................................................................................... 7
Term of Lease ............................................................................................................. 7
Lease Payments .......................................................................................................... 7
Prepayment Option .................................................................................................... 8
Quiet Enjoyment ......................................................................................................... 8
Title .......................................................................................................................... 9
Additional Payments ................................................................................................. 9
Section 5.1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
Section 5.6.
Section 5.7.
Section 5.8.
Section 5.9.
Section 5.10.
Section 5.11.
ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS
Maintenance, Utilities, Taxes and Assessments ......................................................... 10
Modification of Property .......................................................................................... 10
Public Liability and Property Damage Insurance ....................................................... 11
Fire and Extended Coverage Insurance ....................................................................... 11
Rental Interruption Insurance .................................................................................... 11
Recordation Hereof; Title Insurance .......................................................................... 12
Net Proceeds of Insurance; Form of Policies ................................................................ 12
Installation of Personal Property .............................................................................. 12
Liens ........................................................................................................................ 12
Tax Covenants .......................................................................................................... 13
Continuing Disclosure ............................................................................................... 13
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; ABATEMENT OF LEASE
PAYMENTS
Section 6.1. Application of Net Proceeds ..................................................................................... 14
Section 6.2. Abatement of Lease Payments ................................................................................... 14
-i-
Section 7.1.
Section 7.2.
Section 7.3.
Section 8.1.
Section 8.2.
Section 8.3.
Section 9.1.
Section 9.2.
Section 9.3.
Section 9.4.
Section 9.5.
Section 9.6.
Section 9.7.
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
Section 10.6.
Section 10.7.
Section 10.8.
Section 10.9.
Section 10.10.
EXHIBIT A:
EXHIBIT B:
ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
Disclaimer of Warranties ......................................................................................... 15
Rights of Access ....................................................................................................... 15
Release and Indemnification Covenants .................................................................... 15
ARTICLE VIII
ASSIGNMENT, LEASING AND AMENDMENT
Assignment by the Authority .................................................................................... 16
Assignment and Subleasing by the City ..................................................................... 16
Amendment of Lease ................................................................................................. 16
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Events of Default Defined ........................................................................................ 19
Remedies on Default ................................................................................................ 19
Limitation on Remedies ............................................................................................ 20
No Remedy Exclusive ............................................................................................... 20
Agreement to Pay Attorneys' Fees and Expenses .........................................................20
No Additional Waiver Implied by One Waiver ........................................................ 20
Trustee and Bond Owners to Exercise Rights .............................................................. 21
ARTICLE X
MISCELLANEOUS
Notices .................................................................................................................... 22
Information to be Given to the Municipal Bond Insurer ............................................... 22
Binding Effect .......................................................................................................... 23
Severability ............................................................................................................ 23
Net-net-net Lease .................................................................................................... 23
Further Assurances and Corrective Instruments ..........................................................23
EXecution in Counterparts ......................................................................................... 23
Applicable Law ....................................................................................................... 23
Authorized Representatives ..................................................................................... 23
Captions .................................................................................................................. 23
Description of the Property
Schedule of Lease Payments
-ii-
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease Agreement"), dated for convenience as of May
1, 2004, by and between the TUSTIN PUBLIC FINANCING AUTHORITY, a joint exercise of
powers authority organized and existing under the laws of the State of California, as lessor (the
"Authority"), and the CITY OF TUSTIN, a municipal corporation and chartered city organized
and existing under the laws of the State of California, as lessee (the "City");
WITNESSETH:
WHEREAS, the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated , by and
betWeen the City of Tustin (the "City") and the Redevelopment Agency of the City of Tustin
(the "Agency" and, with the City, the "Members"), and under the provisions of Articles 1
through 4 (commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of the California
Government Code (the "Act"), and is authorized pursuant to Article 4 of the Act (the "Bond
Law") to borrow money for the purpose of financing the acquisition of bonds, notes and other
obligations of, or for the purpose of making loans to, public entities, including the Members, and
to provide financing or refinancing for public capital improvements of public entities, including
the Members;
WHEREAS, the Authority has heretofore issued (a) $38,000,000 aggregate principal
amount of its 2002 Revenue Anticipation Notes, 2002 Series A (the "Series A Notes"), and (b)
$22,000,000 aggregate principal amount of its 2002 Revenue Anticipation Notes, 2002 Series B
(the "Series B Notes" and, with the Series A Notes, the "Notes"), of which $~ remains
outstanding and which mature on May 1, 2004;
WHEREAS, for the purpose of providing moneys to pay the Notes at maturity, the City
will lease certain real property (the "Property") to the Authority pursuant to a site lease (the
"Site Lease");
WHEREAS, the Authority has determined to issue its Tustin Public Financing Authority
Lease Revenue Bonds, 2004 Series A (Refinancing Project), in the aggregate principal amount of
$~ (the "Bonds"), all pursuant to and secured by that certain Indenture of Trust, dated
as of May 1, 2004, by and between the Authority and ,, as trustee (the
"Trustee");
WHEREAS, in order to provide for the repayment of the Bonds, the Authority will lease
the Property to the City pursuant to this Lease Agreement, under which the City will agree to
make lease payments to the Authority (the "Lease Payments") which will be calculated to be
sufficient to enable the Authority to pay the principal of and interest and premium (if any) on
the Bonds when due and payable;
WHEREAS, the Authority and the City have duly authorized the execution and delivery
of this Lease Agreement;
NOW, THEREFORE, for and in consideration of the premises and the material
covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1. Definitions. Unless the context clearly otherwise requires or tmless otherwise
defined herein, the capitalized terms in this Lease Agreement shall have the respective meanings
specified in Section 1.01 of the Indenture.
Section 1.2. Exhibits. The following exhibits are attached to, and by this reference made
a part of, this Lease Agreement:
Exhibit A: Description of the Property
Exhibit B: Schedule of Lease Payments
-2-
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City. The City makes the
following covenants, representations and warranties to the Authority as of the date of the
execution and delivery of this Lease Agreement:
(a) Due Organization and Existence. The City is a municipal corporation and general law
city duly organized and validly existing under the laws of the State, has full legal right, power
and authority under the laws of the State to enter into the Site Lease and this Lease Agreement
and to carry out and consummate all transactions contemplated hereby and thereby, and by
proper action the City has duly authorized the execution and delivery of the Site Lease and this
Lease Agreement.
(b) Due Execution. The representatives of the City executing the Site Lease and this Lease
Agreement have been fully authorized to execute the same pursuant to a resolution duly
adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. The Site Lease and this Lease Agreement
have been duly authorized, executed and delivered by the City and constitute the legal, valid
and binding obligations of the City enforceable against the City in accordance with their
respective terms.
(d) No Conflicts. The execution and delivery of the Site Lease and this Lease Agreement,
the consummation of the transactions herein and therein contemplated and the fulfillment of or
compliance with the terms and conditions hereof and thereof, do not and will not conflict with
or constitute a violation or breach of or default (with due notice or the passage of time or both)
under any applicable law or administrative rule or regulation, or any applicable court or
administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the City is a party or by which it or its properties are
otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge
or encumbrance of any nature whatsoever upon any of the property or assets of the City, which
conflict, violation, breach, default, lien, charge or encumbrance would have consequences that
would materially and adversely affect the consummation of the transactions contemplated by
the Site Lease and this Lease Agreement, or the financial condition, assets, properties or
operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the City or of the voters of the City, and no consent, permission, authorization,
order or license of, or filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of the Site Lease and this Lease Agreement, or the
consummation of any transaction herein or therein contemplated, except as have been obtained
or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by
any court or federal, state, municipal or other governmental authority pending or, to the
knowledge of the City after reasonable investigation, threatened against or affecting the City or
the assets, properties or operations of the City which, if determined adversely to the City or its
interests, would have a material and adverse effect upon the consummation of the transactions
contemplated by or the validity of the Site Lease and this Lease Agreement, or upon the
financial condition, assets, properties or operations of the City, and the City is not in default
with respect to any order or decree of any court or any order, regulation or demand of any
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federal, state, municipal or other governmental authority, which default might have
consequences that would materially and adversely affect the consummation of the transactions
contemplated by the Site Lease and this Lease Agreement, or the financial conditions, assets,
properties or operations of the City.
Section 2.2. Representations, Covenants and Warranties of Authority. The Authority
makes the following covenants, representations and warranties as the basis for its undertakings
herein contained:
(a) Due Organization and Existence. The Authority is a joint exercise of powers authority
duly organized and existing under and by virtue of the laws of the State; has power to enter
into this Lease Agreement, the Site Lease and the Indenture; is possessed of full power to own
and hold, improve and equip real and personal property, and to lease and lease back the same;
and has duly authorized the execution and delivery of each of the aforesaid agreements and
such agreements constitute the legal, valid and binding obligations of the Authority, enforceable
against the Authority in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this Lease Agreement,
the Site Lease and the Indenture are fully authorized to execute the same pursuant to official
action taken by the governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease Agreement, the Site Lease and
the Indenture have been duly authorized, executed and delivered by the Authority and
constitute the legal, valid and binding agreements of the Authority, enforceable against the
Authority in accordance their respective terms.
(d) No Conflicts. The execution and delivery of this Lease Agreement, the Site Lease and
the Indenture, the consummation of the transactions herein and therein contemplated and the
fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict
with or constitute a violation or breach of or default (with due notice or the passage of time or
both) under any applicable law or administrative rule or regulation, or any applicable court or
administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the Authority is a party or by which it or its properties
are otherwise subject or bound, or result in the creation or imposition'of any prohibited lien,
charge or encumbrance of any nature whatsoever upon any of the property or assets of the
Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have
consequences that would materially and adversely affect the consummation of the transactions
contemplated by this Lease Agreement, the Site Lease and the Indenture or the financial
condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the Authority, and no consent, permission, authorization, order or license of, or
filing or registration with, any governmental authority is necessary in connection with the
execution and delivery of this Lease Agreement, the Site Lease and the Indenture, or the
consummation of any transaction herein or therein contemplated, except as have been obtained
or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by
any court or federal, state, municipal or other governmental authority pending or, to the
knowledge of the Authority after reasonable investigation, threatened against or affecting the
Authority or the assets, properties or operations of the Authority which, if determined
adversely to the Authority or its interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of this Lease Agreement, the
Site Lease or the Indenture, or upon the financial condition, assets, properties or operations of
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the Authority, and the Authority is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or other governmental
authority, which default might have consequences that would materially and adversely affect
the consummation of the transactions contemplated by this Lease Agreement, the Site Lease or
the Indenture or the financial conditions, assets, properties or operations of the Authority.
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ARTICLE IH
ISSUANCE OF THE BONDS
Section 3.1. The Bonds. The Authority has authorized the issuance of the Bonds
pursuant to the Indenture in the aggregate principal amount of dollars
($ ). The Authority agrees that the proceeds of sale of the Bonds shall be paid to the
Trustee on the Closing Date for deposit pursuant to the terms and conditions of the Indenture.
The City hereby approves the Indenture, the assignment to the Trustee of the rights of the
Authority assigned or purported to be assigned thereunder, and the issuance of the Bonds by
the Authority thereunder.
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ARTICLE IV
LEASE OF PROPERTY; TERM OF THE LEASE AGREEMENT;
LEASE PAYMENTS
Section 4.1. Lease of Property. The Authority hereby leases the Property to the City, and
the City hereby leases the Property from the Authority, upon the terms and conditions set forth
in this Lease Agreement.
Section 4.2. Term of Lease. This Lease Agreement shall take effect on the date hereof,
and shall end on the earlier of May 1, , or such earlier date on which the Bonds shall no
longer be Outstanding under the Indenture. If, on May 1, ____, the Indenture 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 all obligations due under the
Lease Agreement, but in no event shall the Term of the Lease Agreement extend beyond May 1,
Section 4.3. Lease Payments.
(a) Obligation to Pay. In consideration of the lease of the Property from the Authority
hereunder and subject to the provisions of Section 6.2, the City agrees to pay to the Authority,
its successors and assigns, as rental for the use and occupancy of the Property during each
Fiscal Year, the Lease Payments (denominated into components of principal and interest) for
the Property in the respective amounts specified in Exhibit C hereto, to be due and payable on
the respective Lease Payment Dates specified in Exhibit C hereto. Any amount held in the Bond
Fund (except the Reserve Account therein), the Interest Account, the Principal Account or the
Sinking Account on any Lease Payment Date shall be credited towards the Lease Payment then
due and payable. The Lease Payments coming due and payable in any Fiscal Year shall be for
the use of the Property for such Fiscal Year.
(b) Rate on Overdue Payments. In the event the City should fail to make any of the
payments required in this Section 4.3, 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, from the date of default to the date of payment at the highest rate
of interest borne by any Outstanding Bond. Such interest, if received, shall be deposited in the
Bond Fund.
(c) Fair Rental Value. The Lease Payments and Additional Payments coming due and
payable in each Fiscal Year shall constitute the tOtal rental for the Property for each Fiscal Year
and shall be paid by the City in each Fiscal Year for and in consideration of the right of the use
and occupancy of, and the continued quiet use and enjoyment of, the Property during each
Fiscal Year. The Authority and the City hereby agree and determine that the total Lease
Payments do not exceed the fair rental value of the Property. In making such determination,
consideration has been given to the obligations of the parties under this Lease Agreement, the
value of the Property, the uses and purposes which may be served by the Property and the
benefits therefrom which will accrue to the City and the general public.
(d) Source of Payments; Budget and Appropriation. The Lease Payments shall be payable
from any source of available funds of the City, subject to the provisions of Section 6.2. 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 the Lease Agreement and to make the necessary annual
appropriations for all such Lease Payments. The covenants on the part of the City herein
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contained shall be deemed to be and shall be construed to be ministerial 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 official 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. During the Term of the Lease Agreement,
the City shall furnish to the Authority and the Trustee, no later than ten days following the
adoption of a budget for the current Fiscal Year, a certificate stating that the Lease Payments
due in that Fiscal Year have been included in the budget approved by the City Council for such
Fiscal Year.
(e) Assignment. The City understands and agrees that all Lease Payments have
previously been assigned by the Authority to the Trustee in trust, pursuant to Section 5.01 of
the Indenture, for the benefit of the Owners of the Bonds, and the City hereby assents to such
assignment. The Authority hereby directs the City, and the City hereby agrees, to pay all of the
Lease Payments to the Trustee at its Office.
(f) Security Deposit. Notwithstanding any other provision of this Lease Agreement, the
City may on any date secure the payment of the Lease Payments for the Property in whole or in
part by depositing with the Trustee an amount of cash which, together with other available
amounts, including but not limited to amounts on deposit in the Bond Fund and the Reserve
Account, is either (i) sufficient to pay such Lease Payments, including the principal and interest
components thereof, and premium, if any, in accordance with the Lease Payment schedule set
forth in Exhibit C, or (ii) invested in whole or in part in Defeasance Obligations in such amount
as will, in the opinion of an Independent Accountant, together with interest to accrue thereon
and together with any cash which is so deposited, be fully sufficient to pay such Lease
Payments when due hereunder, as the City shall instruct at the time of said deposit. Said
security deposit shall be deemed to be and shall constitute a special fund for the payment of
Lease Payments in accordance with the provisions of this Lease Agreement.
Section 4.4. Prepayment Option. The Authority hereby grants an option to the City to
prepay the principal component of the Lease Payments in full, or in part, without premium.
Said option may be exercised with respectto Lease Payments due on and after April 15,
, in whole or in part on any date commencing August 15, 2011. Said option shall be
exercised by the City by giving written notice to the Authority and the Trustee of the exercise of
such option at least sixty (60) 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 Account, the Insurance and
Condemnation Fund and the Bond Fund, will be sufficient to pay the aggregate unpaid Lease
Payments on said Lease Payment Date as set forth in Exhibit C hereto, together with any Lease
Payments then due but unpaid, or, in the event of prepayment in part, by depositing with said
notice cash equal to the amount desired to be prepaid (the principal component of which shall
be an amount divisible by $5,000) 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 such manner as the City shall determine and if the City shall fail to make such
determination, in inverse order of their payment dates. 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 City to the Trustee and which shall
represent an adjustment to the schedule set forth in Exhibit C attached hereto taking into
account said partial prepayment.
Section 4.5. Ouiet Enioyment. During the Term of the Lease Agreement, the Authority
shall provide the City with quiet use and enjoyment of the Property, and the City shall, during
such Term, peaceably and quietly have and hold and enjoy the Property without suit, trouble or
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hindrance from the Authority, except as expressly set forth in this Lease Agreement. The
Authority 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 Authority may
lawfully do so. Notwithstanding the foregoing, the Authority shall have the right to inspect the
Property as provided in Section 7.2.
Section 4.6. Title. If the City pays all of the Lease Payments and Additional Payments
during the Term of the Lease Agreement as the same become due and payable, or if the City
posts a security deposit for payment of the Lease Payments pursuant to Section 4.3(f), and if
the City has paid in full all of the Additional Payments coming due and payable as of such
date, and provided in any event that no Event of Default shall have occurred and be continuing,
all right, title and interest of the Authority in and to the Property shall be transferred to and
vested in the City. The Authority 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 the following Additional Payments:
(a) Any fees and expenses incurred by the Authority in connection with or by reason of
its leasehold estate in the Property as and when the same become due and payable;
(b) Any amounts due to the Trustee pursuant to Section 8.06 of the Indenture for all
services rendered under the Indenture and for all reasonable expenses, charges, costs, liabilities,
legal fees and other disbursements incurred in and about the performance of its powers and
duties under the Indenture;
(c) Any reasonable fees and expenses of such accountants, consultants, attorneys and
other experts as may be engaged by the Authority or the Trustee to prepare audits, financial
statements, reports, opinions or provide such other services required under this Lease
Agreement or the Indenture; and
(d) Any reasonable out-of-pocket expenses of the Authority in connection with the
execution and delivery of this Lease Agreement or the Indenture, or in connection with the
issuance of the Bonds, including any and all expenses incurred in connection with the
authorization, issuance, sale and delivery of the Bonds, or incurred by the Authority in
connection with any litigation which may at any time be instituted involving this Lease
Agreement, the Bonds, the Indenture or any of the other documents contemplated hereby or
thereby, or incurred by the Authority in connection with the Continuing Disclosure Certificate,
or otherwise incurred in connection with the administration hereof or thereof.
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ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER
MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of the
Lease Agreement, as part of the consideration for the rental of the Property, all improvement,
repair and maintenance of the Property shall be the responsibility of the City and the City shall
pay for or otherwise arrange for the payment of all utility services supplied to the Property
which may include, without limitation, janitor service, security, 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 Property resulting from ordinary wear
and tear or want of care on the part of the City or any assignee or lessee thereof. In exchange for
the Lease Payments herein provided, the Authority agrees to provide only the Property, 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 Authority or the City affecting the Property 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 Authority shall notify the City that, in the
reasonable opinion of the Authority, by nonpayment of any such items, the interest of the
Authority in the Property will be materially endangered or the Property 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 Authority with full security against any loss which may
result from nonpayment, in form satisfactory to the Authority and the Trustee.
Section 5.2. Modification of Property. The City shall, at its own expense, have the right
to make additions, modifications and improvements to the Property. All additions,
modifications and improvements to the Property shall thereafter comprise part of the Property
and be subject to the provisions of this Lease Agreement. Such additions, modifications and
improvements shall not in any way damage the Property or cause the Property to be used for
purposes other than those authorized under the provisions of State and federal law; and the
City shall file with the Trustee and the Authority a Written Certificate of the City stating that
the Property, 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 value of
the Property immediately prior to the making of such additions, modifications and
improvements. The City will not permit any mechanic's or other lien to be established or remain
against the Property for labor or materials furnished 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 lien is established and the City shall first
notify or cause to be notified the Authority of the City's intention to do so, the City may in
good faith contest any lien filed or established against the Property, and in such event may
permit the items so contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom and shall provide the Authority with full security against any
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loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory
to the Authority. The Authority 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, a standard comprehensive
general insurance policy or policies in protection of the Authority, City, and their respective
members, officers, agents, employees and assigns. 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 operation of
the Property. Said policy or policies shall provide coverage in the minimum liability limits of
$1,000,000 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
insurance may be maintained as part of or in conjunction with any other insurance coverage
carried by the City, and such liability insurance may be maintained in whole or in part in the
form of self-insurance by the City, subject to the provisions of Section 5.7, or in the form of the
participation by the City in a joint powers agency or other program providing pooled insurance.
The proceeds of such liability insurance shall be applied by the City toward extinguishment or
satisfaction of the liability with respect to which paid.
Section 5.4. Fire and Extended Coverage Insurance. The City shall procure and maintain,
or cause to be procured and maintained, throughout the Term of the Lease Agreement, insurance
against loss or damage to the improvements constituting a part of the Property by fire and
lightning, with extended coverage and vandalism and malicious mischief insurance. Said
extended coverage insurance, if required, shall, as nearly as practicable, cover loss or damage by
explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are
normally covered by such insurance, and shall include earthquake coverage if such coverage is
available at reasonable cost from reputable insurers in the judgment of the City. Such insurance
shall be in an amount at least equal to the lesser of (a) one hundred percent (100%) of the
replacement cost of all of the insured improvements, or (b) the aggregate principal amount of
the outstanding Bonds. Such insurance may be maintained as part of or in conjunction with any
other insurance coverage carried by the City, and may be maintained in whole or in part in the
form of the participation by the City in a joint powers agency or other program providing
pooled insurance; provided however, that such insurance may not be maintained by the City in
the form of self-insurance. The Net Proceeds of such insurance shall be applied as provided in
Section 6.1(a).
Section 5.5. Rental Interruption Insurance. The City shall procure and maintain, or cause
to be procured and maintained, throughout the Term of the Lease Agreement, rental interruption
or use and occupancy insurance to cover loss, total or partial, of the use of the Property as a
result of any of the hazards covered in the insurance required by Section 5.4, in an amount at
least equal to the maximum Lease Payments coming due and payable during any future twenty-
four (24) month period. Such insurance may be maintained as part of or in conjunction with any
other insurance coverage carried by the City, and may be maintained in whole or in part in the
form of the participation by the City in a joint powers agency or other program providing
pooled insurance; provided that such insurance may not be maintained in the form of self-
insurance. The proceeds of such insurance, if any, shall be paid to the Trustee and deposited in
the Bond Fund, and shall be credited towards the payment of the Lease Payments as the same
become due and payable.
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Section 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date the City
shall, at its expense, (a) cause the Site Lease and this Lease Agreement, or a memorandum
hereof or thereof, in each case in form and substance approved by Bond Counsel, to be recorded
in the office of the Orange County Recorder, and (b) obtain a CLTA policy of title insurance
which insures the City's leasehold estate in the Property in an amount equal to the aggregate
principal amount of the Bonds. All Net Proceeds received under said policy shall be deposited
with the Trustee in the Redemption Fund and shall be applied to the redemption of Bonds
pursuant to Section 4.01(c) of the Indenture.
Section 5.7. Net Proceeds of Insurance; Form of Policies. Each policy of insurance
maintained pursuant to Sections 5.4, 5.5 and 5.6 shall name the Trustee as loss payee so as to
provide that all proceeds thereunder shall be payable to the Trustee. All required insurance
policies shall be provided by a commercial insurer in one of the two highest rating categories by
Moody's. and S&P (without regard to designations of plus (+) or minus (-)). 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 amount of any insurance or
self-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. The City shall cause to
be delivered to the Trustee and to the Municipal Bond Insurer annually, no later than August 1
in each year, a certificate stating that all of the insurancepolicies required by this Lease
Agreement are in full force and effect and identifying whether any such insurance is then
maintained in the form of self-insurance.
In the event that any insurance maintained pursuant to Section 5.3 shall be provided in
the form of self-insurance, the City shall file with the Trustee annually, within ninety (90) days
following the close of each Fiscal Year, a statement of the City risk manager, insurance
consultant or actuary identifying the extent of such self-insurance and stating the determination
that the City maintains sufficient reserves with respect thereto. In the event that' any such
insurance shall be provided in the form of self-insurance by the City, the City shall not be
obligated to make any payment with respect to any insured event except from such reserves.
The results of such review shall be filed with the Trustee.
Section 5.8. Installation of Personal Property. The City may, at any time and from time
to time, in its sole discretion and at its own expense, install or permit to be installed items of
equipment or other personal property in or upon any portion of the Property. All such items
shall remain the sole property of the City, in which neither the Authority 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 Property resulting from 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 agreement, or subject to a vendor's lien or security agreement, as security for
the unpaid portion of the purchase price thereof, provided that no such lien or security interest
shall attach to any part of the Property.
Section 5.9. Liens. Neither the City nor the Authority shall, directly or indirectly, create,
incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or
with respect to any portion of the Property, other than the respective rights of the Authority
and the City as provided herein and Permitted Encumbrances. Except as expressly provided in
this Article V, the City and the Authority shall promptly, at their own expense, take such action
as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge,
encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City
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shall reimburse the Authority for any expense incurred by it in order to discharge or remove any
such mortgage, pledge, lien, charge, encumbrance or claim.
Section 5.10. Tax Covenants.
(a) Private Activity Bond Limitation. The City shall assure that proceeds of the Bonds are
not so used as to cause the Bonds to satisfy the private business tests of section 141(b) of the
Code or the private loan financing test of section 141(c) of the Code.
(b) 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 any of the Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
(c) Rebate Requirement. The City shall take any and all actions necessary to assure
compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings,
if any, to the federal government, to the extent that such section is applicable to the Bonds.
(d) 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 Bonds 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 Bonds to be "arbitrage bonds" within the meaning of
section 148 of the Code.
(e) Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the
exclusion of interest with respect to the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income under
the Code as in effect on the Closing Date.
Section 5.11. Continuing Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Lease Agreement, failure of the City to comply
with the Continuing Disclosure Certificate shall not constitute an Event of Default hereunder;
provided, however, that any Participating Underwriter or any Owner or beneficial owner of the
Bonds may take such actions as may be necessary and appropriate to compel performance by
the City of its obligations under this Section 5.11, including seeking mandate or specific
performance by court order.
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
ABATEMENT OF LEASE PAYMENTS
Section 6.1. Application of Net Proceeds.
(a) From Insurance Award. The Net Proceeds of any insurance award resulting from any
damage to or destruction of the Property by fire or other casualty shall be paid by the City to
the Trustee and shall be deposited in the Insurance and Condemnation Fund by the Trustee and
applied as set forth in Section 5.08 of the Indenture.
(b) From Eminent Domain Award. If the Property or any portion thereof shall be taken
permanently or temporarily under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Net Proceeds resulting therefrom shall
be deposited in the Insurance and Condemnation Fund and applied as set forth in Section 5.08
of the Indenture.
(c) From Title Insurance Award. The Net Proceeds of any title insurance award shall be
paid to the Trustee, deposited in the Insurance and Condemnation Fund and applied as set
forth in Section 5.08 of the Indenture.
Section 6.2. Abatement of Lease Payments.
(a) Abatement Due to Damage or Destruction of the Property. The Lease Payments shall be
abated during any period in which by reason of damage to or destruction of the Property (other
than by eminent domain which is hereinafter provided for) which causes substantial interference
with the use and occupancy by the City of the Property or any portion thereof. The amount of
such abatement shall be an amount agreed upon by the City and the Authority such that the
resulting Lease Payments represent fair consideration for the use and occupancy of the portions
of the Property not damaged or destroyed or the portion of the Property completed and
available for use and possession by the City. Such abatement shall continue for the period
commencing with such damage or destruction and ending with the substantial completion of the
work of repair or reconstruction or the date when the remaining portion of the Property is
available for use and possession by the City. 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 or destruction. There shall be no
abatement of the Lease Payments to the extent that moneys derived from any person as a result
of such damage or destruction are available to pay the amount which would otherwise be
abated or if there is any money available in the Bond Fund or the Reserve Account to pay the
amount which would otherwise be abated.
(b) Abatement Due to Eminent Domain. If all of the Property 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 the Lease Agreement shall cease with respect to the Property as of
the day possession shall be so taken. If less than all of the Property shall be taken permanently,
or if all of the Property or any part thereof shall be taken temporarily under the power of
eminent domain, (a) 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 (b) there shall be a partial abatement of Lease Payments in an amount to be agreed upon
by the City and the Authority such that the resulting Lease Payments for the Property represent
fair consideration for the use and occupancy of the remaining usable portion of the Property.
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ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE PROPERTY, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY. IN NO
EVENT SHALL THE AUTHORITY AND ITS ASSIGNS BE LIABLE FOR INCIDENTAL,
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR
ARISING OUT OF THE SITE LEASE, THIS LEASE AGREEMENT OR THE INDENTURE FOR
THE EXISTENCE, FURNISHING, FUNCTIONING OR THE CITY'S USE OF THE PROPERTY.
Section 7.2. Rights of Access. The City agrees that the Authority and any Authorized
Representative of the Authority, and the Authority's successors or assigns, and the Mtmicipal
Bond Insurer, shall have the right at all reasonable times to enter upon and to examine and
inspect the Property. The City further agrees that the Authority, any Authorized Representative
of the Authority, and the Authority's successors or assigns, and the Municipal Bond Insurer,
shall have such rights of access to the Property as may be reasonably necessary to cause the
proper maintenance of the Property in the event of failure by the City to perform its obligations
hereunder; provided, however, that the Authority's assigns shall not be required to cause such
proper maintenance.
Section 7.3. Release and Indemnification Covenants. The City shall and hereby agrees to
indemnify and save the Authority, the Trustee and their respective officers, agents, successors
and assigns, harmless from and against all claims, losses and damages, including legal fees and
expenses, arising out of (a) the use, maintenance, condition or management of, or from any work
or thing done on the Property by the City, (b) any breach or default on the part of the City in
the performance of any of its obligations under this Lease Agreement, (c) any act or negligence
of the City or of any of its agents, contractors, servants, employees or licensees with respect to
the Property, (d) any act or negligence of any lessee of the City with respect to the Property, or
(e) the performance by the Trustee of its duties hereunder or under the Indenture. No
indemnification is made under this Section 7.3 or elsewhere in this Lease Agreement for willful
misconduct or negligence under this Lease Agreement by the Authority, the Trustee or any of
their respective officers or employees. The indemnification hereunder shall survive removal or
resignation of the Trustee, termination of this Lease Agreement or discharge of the Bonds.
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ARTICLE VIII
ASSIGNMENT, LEASING AND AMENDMENT
Section 8.1. Assignment by the Authority. Certain rights of the Authority under this
Lease Agreement, including the right to receive and enforce payment of. the Lease Payments to
be made by the City under this Lease Agreement, have been pledged and assigned to the
Trustee for the benefit of the Owners of the Bonds pursuant to the Indenture, to which pledge
and assignment the City hereby consents. The assignment of this Agreement to the Trustee is
solely in its capacity as Trustee under the Indenture and the duties, powers and liabilities of the
Trustee in acting hereunder shall be subject to the provisions of the Indenture, including, without
limitation, the provisions of Article VIII thereof.
Section 8.2. Assignment and Subleasing by the City. This Lease Agreement may not be
assigned by the City. The City may sublease the Property or any portion thereof, subject to, and
delivery to the Authority of a certificate as to, all of the following conditions:
(a) This Lease Agreement and the obligation of the City to make Lease Payments
hereunder shall remain obligations of the City;
(b) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to
be furnished to the Authority and the Trustee a true and complete copy of such sublease;
(c) No such sublease by the City shall cause the Property to be used for a purpose other
than as may be authorized under the provisions of the laws of the State; and
(d) The City shall furnish the Authority and the Trustee with a written opinion of Bond
Counsel stating that such sublease is permitted by this Lease Agreement and the Indenture, and
will not cause the interest on the Bonds to become included in gross income for federal income
tax purposes.
Section 8.3. Amendment of Lease.
(a) Substitution of Property. The City shall have, and is hereby granted, the option at any
time and from time to time during the Term of the Lease Agreement to substitute other land
("Substitute Property") for the Property (the "Former Property"), or a portion thereof, or a
portion thereof, provided that the City shall satisfy all of the following requirements which are
hereby declared to be conditions precedent to such substitution:
(i) The City shall file with the Authority and the Trustee an amended Exhibit A
· to the Site Lease which adds thereto a description of such Substitute Property and
deletes therefrom the description of the Former Property;
(ii) The City shall file with the Authority and the Trustee an amended Exhibit A
to this Lease Agreement which adds thereto a description of such Substitute Property
and deletes therefrom the description of the Former Property;
(iii) The City shall certify in writing to the Authority and the Trustee that such
Substitute Property serves the purposes of the City, constitutes property that is
unencumbered (or the portion of such property to be to substituted is unencumbered),
subject to Permitted Encumbrances, and constitutes property which the City is
permitted to lease under the laws of the State;
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(iv) The City delivers to the Trustee and the Authority evidence that the
Substitute Property (or the portions to be to substituted) is of equal or greater value than
the Property (or the portions thereof) to be to substituted then Outstanding principal
component of Bonds;
(v) The City shall certify the Substitute Property shall not cause the City to
violate any of its covenants, representations and warranties made herein;
(vi) The City shall obtain an amendment to the title insurance policy required
pursuant to Section 5.6 hereof which adds thereto a description of the Substitute
Property and deletes there&om the description of the Former Property;
(vii) The City shall certify that the Substitute Property is of the same or greater
essentiality to the City as was the Former Property;
(viii) The City shall certify that the Substitute Property has a useful life equal to
or longer than the remaining term of the Bonds;
(ix) The City shall have received the prior written consent of the Municipal Bond
Insurer to such substitution; and
(x) The City shall provide notice of such substitution to any rating agency then
rating the Bonds.
So long as the requires set forth above are satisfied, any such substitution may be
accomplished administratively and shall not require separate approval by the City Council.
(b) Release of Property. The City shall have, and is hereby granted, the option at any time
and from time to time during the Term of the Lease Agreement to release any portion of the
Property, provided that the City shall satisfy all of the following requirements which are hereby
declared to be conditions precedent to such release:
(i) The City shall file with the Authority and the Trustee an amended Exhibit A
to the Site Lease which describes the Property, as revised by such release;
(ii) The City shall file with the Authority and the Trustee an amended Exhibit A
to this Lease Agreement which describes the Property, as revised by such release;
(iii) The City delivers to the Trustee and the Authority evidence that the
Property, as revised by such release, has a total value at least equal to the principal
amount of the Bonds then outstanding;
(iv) The City shall obtain an amendment to the title insurance policy required
pursuant to Section 5.6 hereof which describes the Property, as revised by such release;
(v) The City shall have received the prior written consent of the Municipal Bond
Insurer to such release; and
(vi) The City shall provide notice of such release to any rating agency then rating
the Bonds.
So long as the requires set forth above are satisfied, any such release may be
accomplished administratively and shall not require separate approval by the City Council.
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(c) Generally. The Authority and the City may at any time amend or modify any of the
provisions of this Lease Agreement, but only (a) with the prior written consents of the Owners
of a majority in aggregate principal amount of the Outstanding Bonds and the Municipal Bond
Insurer, or (b) without the consent of any of the Bond Owners, but only if such amendment or
modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Lease
Agreement, other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein, or in any other
respect whatsoever as the Authority and the City may deem necessary or desirable,
provided that, in the opinion of Bond Counsel, such modifications or amendments will
not materially adversely affect the interests of the Owners of the Bonds; or
(iii) to amend any provision thereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not adversely affect the
exclusion from gross income of interest on the Bonds under the Code, in the opinion of
Bond Counsel.
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ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Section 9.1. Events of Default Defined. The following shall be "Events of Default" under
this Lease Agreement:
(a) Failure by the City to pay any Lease Payment required to be paid hereunder at the
time specified herein.
(b) Failure by the City to make any Additional Payment required hereunder and the
continuation of such failure for a period of thirty (30) days.
(c) 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 the preceding clauses (a) or
(b), for a period of sixty (60) days after written notice specifying such failure and requesting
that it be remedied has been given to the City by the Authority or the Trustee; provided,
however, that if in the reasonable opinion of the City the failure stated in the notice can be
corrected, but not within such sixty (60) day period, such failure shall not constitute an Event
of Default if the City shall commence to cure such failure within such sixty (60) day period and
thereafter diligently and in good faith shall cure such failure in a reasonable period of time.
(d) 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
applicable federal bankruptcy law, 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 shall have happened and be continuing, it shall be lawful for the Authority to exercise any
and all remedies available pursuant to law or granted pursuant to this Lease Agreement;
provided, however, that notwithstanding anything to the contrary herein or in the Indenture,
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 or to
terminate this Lease Agreement or to cause the fee interest or the leasehold interest of the City
in the Property to be sold, assigned or otherwise alienated. Each and every covenant hereof to
be kept and performed by the City is expressly made a condition and, upon the breach thereof,
the Authority may exercise any and all rights of entry and re-entry upon the Property. The City
hereby irrevocably consents to the Authority's repossession of the Property if such an Event of
Default shall occur and consents to the Authority's re-letting of the Property for the account of
the City. In the event of such default and notwithstanding any re-entry by the Authority, 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 damages shall be payable to
the Authority at the time and in the manner as herein provided, to wit:
(a) The City agrees to and shall remain liable for the payment of all Lease Payments and
the performance of all conditions herein contained and shall reimburse the Authority for any
deficiency arising out of the re-leasing of the Property, or, in the event the Authority is unable to
re-lease the Property, 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
-19-
hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful
detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or
obtaining possession of the Property or the exercise of any other remedy by the Authority.
(b) The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact
of the City to enter upon and re-lease the Property 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 Property to place such property in storage or
other suitable place in Orange County, for the account of and at the expense of the City, and
the City hereby exempts and agrees to save harmless the Authority from any costs, loss or
damage whatsoever arising or occasioned by any such entry upon and re-leasing of the Property
and the removal and storage of such property by the Authority or its duly authorized agents in
accordance with the provisions herein contained.
(c) The City hereby waives any and all claims for damages caused or which may be
caused by the Authority in re-entering and taking possession of the Property as herein provided
and all claims for damages that may result from the destruction of or injury to the Property and
all claims for damages to or loss of any property belonging to the City that may be in or upon
the Property.
(d) The City agrees that the terms of this Lease Agreement constitute full and sufficient
notice of the right of the Authority to re-lease the Property in the event of such re-entry without
effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority 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.
Section 9.3. Limitation on Remedies. Notwithstanding the foregoing provisions of
Section 9.2, neither the Authority nor the Trustee shall exercise any remedies against the
Property to the extent such remedies would generate funds which are not available to satisfy
the obligations of this Lease Agreement or the Indenture.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority is intended to be exclusive and every such remedy shall be cumulative and shall,
except as herein expressly provided to the contrary, 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
Authority 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 9.5. 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 9.6. 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.
-20-
Section 9.7. Trustee and Bond Owners to Exercise Rights. Such rights and remedies as
are given to the Authority under this Article IX have been assigned by the Authority to the
Trustee under the Indenture, to which assignment the City hereby consents. Such rights and
remedies shall be exercised by the Trustee and the Owners of the Bonds as provided in the
Indenture. The Trustee shall be considered a third party beneficiary for enforcing its rights under
this Lease Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All written notices to be given under this Lease Agreement shall be
given by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, confirmed by telephone, (b) upon receipt after deposit in the United
States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual
receipt.
If to the Authority:
Tustin Public Financing Authority
300 Centennial Way
Tustin, CA 92780
Attention: Executive Director
Telephone: (.~) -
Telecopy: (___) -
If to the City:
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Telephone: (__.)
Telecopy: (___) -
If to the Trustee:
Los Angeles, CA
Attention: Corporate Trust Department
Telephone: (213)
Telecopy: (213)
If to the Municipal Bond Insurer:
Attention:
Telephone: ( )
Telecopy: (___)
The Authority, the City, the Municipal Bond Insurer or the Trustee may, by written
notice to the other parties, from time to time modify the address or number to which
communications are to be given hereunder.
Section 10.2. Information to be Given to the Municipal Bond Insurer. The City will permit
the Municipal Bond Insurer to discuss the affairs, finances and accounts of the City or any
information the Municipal Bond Insurer may reasonably request regarding the security for the
Bonds with appropriate officers of the City. The City will permit the Municipal Bond Insurer to
have access to the Project and have access to and to make copies of all books and records
relating to the Bonds at any reasonable time upon reasonable notice on any Business Day.
The Municipal Bond Insurer shall have the right to direct an accounting at the City's
expense, and the City's failure to comply with such direction within thirty (30) days after
-22-
receipt of written notice of the direction from the Municipal Bond Insurer shall be deemed a
default hereunder; provided, however, that if compliance cannot occur within such period, then
such period will be extended so long as compliance is begun within such period and diligently
pursued, but only if such extension would not materially adversely affect the interests of any
Owner.
The Authority, 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 10.3. Binding Effect. This Lease Agreement shall inure to the benefit of and shall
be binding upon the Authority and the City and their respective successors and assigns.
Section 10.4. 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 10.5. 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 Authority, free and clear of any expenses, charges or set-offs
whatsoever.
Section 10.6. Further Assurances and Corrective Instruments. The Authority 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
Property hereby leased or intended so to be or for carrying out the expressed intention of this
Lease Agreement.
Section 10.7. Execution in Counterparts. This Lease 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 instrument.
Section 10.8. Applicable Law. This Lease Agreement shall be governed by and construed
in accordance with the laws of the State.
Section 10.9. Authorized Representatives. Whenever under the provisions of this Lease
Agreement the approval of the Authority or the City is required, or the Authority 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 Authority by an Authorized Representative of the Authority and for the City by an
Authorized Representative of the City, and any party hereto shall be authorized to rely upon
any such approval or request.
Section 10.10. 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.
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IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed
in its name by its duly authorized officers; and the City has caused this Lease Agreement to be
executed in its name by its duly authorized officers, as of the date first above written.
TUSTIN PUBLIC FINANCING
AUTHORITY
Attest:
By
William A. Huston
Executive Director
By
Pamela Stoker
Secretary
CITY OF TUSTIN, as Lessee
Attest:
By
William A. Huston
City Manager
Pamela Stoker,
City Clerk
-24-
[NOTARY ACKNOWLEDGMENTS TO BE ATTACHED]
EXHIBIT A
DESCRIPTION OF THE PROPERTY
Those parcels of land in the City of Tustin, Orange County, State of California, described as
follows:
Exhibit A
Page 1
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
Lease Total
Payment Principal Interest Lease
D a t e Component Component Payment
Exhibit C
Page 1
Quint & Thimmig LLP 11 / 29 / 02
INDENTURE OF TRUST
by and between the
TUSTIN PUBLIC FINANCING AUTHORITY
and
, as Trustee
Dated as of May 1, 2004
Relating to
$
Tustin Public Financing Authority
Lease Revenue Bonds, 2004 Series A
(Refinancing Project)
20015.02
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section 1.01. Definitions ................................................................................................................ 3
Section 1.02. Rules of Construction ........................................................................................... 9
Section 1.03. Authorization and Purpose of Bonds ............................................................................ 9
Section 1.04. Equal Security .......................................................................................................... 10
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
Section 2.07.
Section 2.08.
Section 2.09.
Section 2.10.
ARTICLE II
ISSUANCE OF BONDS
Authorization of Bonds ............................................................................................ 11
Terms of the Bonds ................................................................................................... 11
Transfer and Exchange of Bonds ................................................................................ 12
Book-Entry System ................................................................................................... 12
Registration Books ................................................................................................... 14
Form and Execution of Bonds ..................................................................................... 14
Temporary Bonds ..................................................................................................... 14
Bonds Mutilated, Lost, Destroyed or Stolen ............................................................... 14
CUSIP Numbers ....................................................................................................... 15
Payment Procedure Pursuant to the Municipal Bond Insurance Policy .......................... 15
Section 3.01.
Section 3.02.
Section 3.03.
Section 3.04.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Issuance of the Bonds ................................................................................................ 17
Application of Proceeds of Sale of Bonds and Other Moneys ....................................... 17
Establishment and Application of Costs of Issuance Fund ........................................... 17
Validity of Bonds .................................................................................................... 17
Section 4.01.
Section 4.02.
Section 4.03.
Section 4.04.
Section 4.05.
Section 4.06.
ARTICLE IV
REDEMPTION OF BONDS
Terms of Redemption ................................................................................................ 18
Selection of Bonds for Redemption ............................................................................ 18
Notice of Redemption ............................................................................................... 18
Partial Redemption of Bonds .................................................................................... 19
Effect of Redemption ................................................................................................ 19
Purchase of Bonds ..................................................................................................... 19
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Section
Section
Section
Section
Section
Section
Section
Section
Section
5.01
5.02.
5.03.
5.04.
5.05.
5.06.
5.07.
5.08.
5.09.
· Pledge and Assignment; Bond Fund ............................................................................ 20
Allocation of Revenues ............................................................................................. 20
Application of Interest Account ................................................................................. 21
Application of Principal Account .............................................................................. 21
Application of Reserve Account ............................... : ................................................ 21
Application of Redemption Fund .............................................................................. 22
Insurance and Condemnation Fund ............................................................................. 22
Investments .............................................................................................................. 23
Valuation and Disposition of Investments ........................................................ 24
-i-
Section 6.01.
Section 6.02.
Section 6.03.
Section 6.04.
Section 6.05.
Section 6.06.
Section 6.07.
Section 6.08.
Section 6.09.
Section 6.10.
Section 6.11.
Section 7.01.
Section 7.02.
Section 7.03.
Section 7.04.
Section 7.05.
Section 7.06.
Section 7.07.
Section 7.08.
Section 7.09.
Section 7.10.
Section 7.11.
Section 7.12.
Section 8.01.
Section 8.02.
Section 8.03.
Section 8.04.
Section 8.05.
Section 8.06.
Section 9.01.
Section 9.02.
Section 9.03.
Section 9.04.
Section 10.01.
ARTICLE VI
PARTICULAR COVENANTS
Punctual Payment ..................................................................................................... 25
Extension of Payment of Bonds .................................................................................. 25
Against Encumbrances ............................................................................................... 25
Power to Issue Bonds and Make Pledge and Assignment .............................................. 25
Accounting Records ................................................................................................... 25
No Additional Obligations ...................................................................................... 25
Tax Covenants .......................................................................................................... 26
Collection of Amounts Due Under Lease Agreement .................................................... 26
Continuing Disclosure ............................................................................................... 26
Waiver of Laws ....................................................................................................... 27
Further Assurances ................................................................................................... 27
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Events of Default ..................................................................................................... 28
Remedies Upon Event of Default ............................................................................... 28
Application of Revenues and Other Funds After Default ........................................... 29
Trustee to Represent Bond Owners ............................................................................. 29
Bond Owners' Direction of Proceedings ...................................................................... 30
Limitation on Bond Owners' Right to Sue .................................................................. 30
Absolute Obligation of Authority ............................................................................. 30
Termination of Proceedings ....................................................................................... 31
Remedies Not Exclusive ........................................................................................... 31
No Waiver of Default .............................................................................................. 31
Parties Interested Herein ......................................................................................... 31
Consent of the Municipal Bond Insurer ....................................................................... 31
ARTICLE VIII
THE TRUSTEE
Duties, Immunities and Liabilities of Trustee ............................................................ 33
Merger or Consolidation ........................................................................................... 34
Liability of Trustee .................................................................................................. 34
Right to Rely on Documents ...................................................................................... 36
Preservation and Inspection of Documents .................................................................. 36
Compensation and Indemnification ........................................................................... 37
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Amendments Permitted ............................................................................................ 38
Effect of Supplemental Indenture .............................................................................. 39
Endorsement of Bonds; Preparation of New Bonds ...................................................... 39
Amendment of Particular Bonds ................................................................................ 39
ARTICLE X
DEFEASANCE
Discharge of Indenture ............................................................................................. 40
-ii-
Section 10.02.
Section 10.03.
Section 10.04.
Section 11.01.
Section 11.02.
Section 11.03.
Section 11.04.
Section 11.05.
Section 11.06.
Section 11.07.
Section 11.08.
Section 11.09.
Section 11.10.
Section 11.11.
Section 11.12.
Section 11.13.
Section 11.14.
Section 11.15.
EXHIBIT A
Discharge of Liability on Bonds ................................................................................ 40
Deposit of Money or Securities with Trustee .............................................................. 41
Unclaimed Funds ...................................................................................................... 41
ARTICLE X!
MISCELLANEOUS
Liability of Authority Limited to Revenues .............................................................. 42
Limitation of Rights to Parties and Bond Owners ...................................................... 42
Funds and Accounts ................................................................................................... 42
Waiver of Notice; Requirement of Mailed Notice ...................................................... 42
Destruction of Bonds ................................................................................................. 42
Severability of Invalid Provisions ............................................................................ 42
Notices .................................................................................................................... 43
Notices to be Given to the Municipal Bond Insurer ..................................................... 43
Evidence of Rights of Bond Owners ........................................................................... 44
Disqualified Bonds .................................................................................................. 45
Money Held for Particular Bonds .............................................................................. 45
Waiver of Personal Liability ................................................................................... 45
Successor Is Deemed Included in All References to Predecessor .................................... 45
Execution in Several Counterparts ............................................................................. 45
Governing Law ......................................................................................................... 45
FORM OF BOND
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this "Indenture"), made and entered into as of May 1,
2004, by and between the TUSTIN PUBLIC FINANCING AUTHORITY, a joint exercise of
powers authority organized and existing under the laws of the State of California (the
"Authority"), and , a organized and existing under the laws of the
with a corporate trust office in Los Angeles, California, and being qualified to
accept and administer the trusts hereby created (the "Trustee");
RECITALS:
WHEREAS, the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated , by and
between the City of Tustin (the "City") and the Redevelopment Agency of the City of Tustin
(the "Agency" and, with the City, the "Members"), and under the provisions of Articles 1
through 4 (commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of the California
Government Code (the "Act"), and is authorized pursuant to Article 4 of the Act (the "Bond
Law") to borrow money for the purpose of financing the acquisition of bonds, notes and other
obligations of, or for the purpose of making loans to, public entities, including the Members, and
to provide financing or refinancing for public capital improvements of public entities, including
the Members;
WHEREAS, the Authority has heretofore issued (a) $38,000,000 aggregate principal
amount of its 2002 Revenue Anticipation Notes, 2002 Series A (the "Series A Notes"), and (b)
$22,000,000 aggregate principal amount of its 2002 Revenue Anticipation Notes, 2002 Series B
(the "Series B Notes" and, with the Series A Notes, the "Notes"), of which $._~ remains
outstanding and which mature on June 1, 2004;
WHEREAS, for the purpose of providing moneys to pay the Notes at maturity, the City
will lease certain real property (the "Property") to the Authority pursuant to a site lease (the
"Site Lease");
WHEREAS, the Authority has determined to issue its Tustin Public Financing Authority
Lease Revenue Bonds, 2004 Series A (Refinancing Project), in the aggregate principal amount of
$.~ (the "Bonds"), all pursuant to and secured by this Indenture;
WHEREAS, in order to provide for the repayment of the Bonds, the Authority will lease
the Property to the City pursuant to a lease agreement, dated as of May 1, 2004 (the "Lease
Agreement"), under which the City will agree to make lease payments to the Authority (the
"Lease Payments") which will be calculated to be sufficient to enable the Authority to pay the
principal of and interest and premium (if any) on the Bonds when due and payable;
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and to
secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority
has authorized the execution and delivery of this Indenture; and
WHEREAS, the Authority has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the Authority, authenticated and delivered by
the Trustee and duly issued, the valid, binding and legal special obligations of the Authority,
and to constitute this Indenture a valid and binding agreement for the uses and purposes herein
set forth in accordance with its terms, have been done and taken, and the execution and
delivery of the Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the Bonds at any time issued and Outstanding under this Indenture, according to
their terms, and to secure the performance and observance of all the covenants and conditions
therein and herein set forth, and to declare the terms and conditions upon and subject to which
the Bonds are to be issued and delivered, and in consideration of the premises and of the
mutual covenants herein contained and of the purchase and acceptance of the Bonds by the
Owners thereof, and for other valuable consideration, the receipt of which is hereby
acknowledged, the Authority does covenant and agree with the Trustee, for the benefit of the
respective Owners from time to time of the Bonds, as follows:
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ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section 1.01 shall for all purposes of this Indenture, of any Supplemental Indenture, of the Site
Lease, of the Lease Agreement, of the Bonds and of any certificate, opinion, request or other
documents herein mentioned have the meanings herein specified.
"Additional Payments" means the additional payments to be made by the City pursuant
to Section 4.7 of the Lease Agreement.
"Agency" means the Redevelopment Agency of the City of Tustin, a public body
corporate and politic organized under the laws of the State, and any successor thereto.
"Agreement" means that certain Joint Exercise of Powers Agreement, dated ,
by and between the City and the Agency, together with any amendments thereof and
supplements thereto.
"Authority" means the Tustin Public Financing Authority, a joint exercise of powers
authority duly organized and existing under the Agreement and the laws of the State.
"Authorized Representative" means: (a) with respect to the Authority, its Executive
Director, Treasurer, Deputy Executive Director or any other person designated as an
Authorized Representative of the Authority by a Written Certificate of the Authority signed by
its Executive Director, and filed with the City and the Trustee; and (b) with respect to the City,
its City Administrator, City Treasurer, Director of Administrative Services, Finance Director, or
any other person designated as an Authorized Representative of the City by a Written
Certificate of the City signed by its City Administrator and filed with the Authority and the
Trustee.
"Bond Counsel" means (a) Quint & Thimmig LLP, or (b) any other attorney or firm of
attorneys appointed by or acceptable to the Authority of nationally-recognized experience in
the issuance of obligations the interest on which is excludable from gross income for federal
income tax purposes under the Code.
"Bond Fund" means the fund by that name established and held by the Trustee pursuant
to Section 5.01.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting
Article 4 (commencing with section 6584) of Chapter 5, Division 7, Title 1 of the Government
Code of the State, as amended from time to time.
"Bonds" means the $.~ aggregate principal amount of Tustin Public Financing
Authority Lease Revenue Bonds, 2004 Series A (Refinancing Project), authorized by and at any
time Outstanding pursuant to the Bond Law and this Indenture.
"Bond Year" means each twelve-month period extending from May 2 in one calendar
year to May 1 of the succeeding calendar year, both dates inclusive; provided that the first Bond
Year with respect to the Bonds shall commence on the Closing Date, and end on May 1, 2005.
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"Business Day" means a day (other than a Saturday or a Sunday) on which banks are
not required or authorized to remain closed in the city in which the Office of the Trustee is
located.
"City" means the City of Tustin, a municipal corporation and general law city organized
and existing under its charter and the laws of the State.
"Closing Date" means the date of delivery of the Bonds to the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or
(except as otherwise referenced herein) as it may be amended to apply to obligations issued on
the Closing Date, together with applicable proposed, temporary and final regulations
promulgated, and applicable official public guidance published, under such Code.
"Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure
Certificate executed by the City and dated the date of execution and delivery of the Bonds, as
originally executed and as it may be amended from time to time in accordance with the terms
thereof.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority,
initial fees and expenses of the Trustee (including but not limited to fees and expenses for legal
counsel), title insurance premiums, appraisal fees, compensation to any financial consultants or
underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of
preparation and reproduction of documents, out-of-pocket expenses of the City, City staff
costs and costs of printing.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"Defeasance Obligations" means: (a) cash; (b) non-callable Federal Securities (including
State and Local Government Securities); (c) non-callable direct obligations of the United States
of America which have been stripped by the Department of the Treasury of the United States of
America; (d) non-callable bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are backed
by the full faith and credit of the United States of America: (i) direct obligations or fully
guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates
of beneficial ownership of the Farmers Home Administration; (iii) obligations of the Federal
Financing Bank; (iv) participation certificates of the General Services Administration; (v)
guaranteed Title XI financings of the U.S. Maritime Administration; (vii) U.S. govemment
guaranteed public housing notes and bonds; and (vii) project notes and local authority bonds of
the U.S. Department of Housing and Urban Development; and (e) pre-refunded municipal
bonds rated "Aaa" by Moody's and "AAA" by S&P; provided, however, pre-refunded
municipal bonds rated by S&P only (i.e., no Moody's rating) are acceptable if such pre-refunded
municipal bonds were pre-refunded with cash, direct U.S. or U.S. guaranteed obligations or
AAA rated pre-refunded municipal bonds.
"Event of Default," with respect to this Indenture, means any of the events specified in
Section 7.01, and with respect to the Lease Agreement, means any of the events specified in
Section 9.1 of the Lease Agreement.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
-4-
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "fair market value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired
in accordance with applicable regulations under the Code, (ii) the investment is an agreement
with specifically negotiated withdrawal or reinvestment provisions and a specifically
negotiated interest rate (for example, a guaranteed investment contract, a forward supply
contract or other investment agreement) that is acquired in accordance with applicable
regulations under the Code, (iii) the investment is a United States Treasury Security--State and
Local Government Series, that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State of California but only if at all times during 'which the investment is held its
yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable
direct obligation of the United States. The Trustee shall have no duty in connection with the
determination of Fair Market Value other than to follow the investment directions of a City
Representative in any written directions of a City Representative.
"Federal Securities" means direct general obligations of the United States of America
(including obligations issued or held in book entry form on the books of the Department of the
Treasury) or obligations the payment of principal of and interest on which are unconditionally
guaranteed by the United States of America.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month
period selected and designated by the Authority or the City, as applicable, as its official fiscal
year period.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
"Independent Accountant" means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority or the City, and who, or each of
whom (a) is in fact independent and not under domination of the Authority or the City; (b)
does not have any substantial interest, direct or indirect, in the Authority or the City; and (c) is
not connected with the Authority or the City as an officer or employee of the Authority or the
City but who may be regularly retained to make annual or other audits of the books of or
reports to the Authority or the City.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service",
30 Montgomery Street, 10th Floor, Jersey City, NJ 07302, Attention: Editor; Kenny Information
Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, NY 10006; Moody's
5250 77 Centre Drive, Suite 150, Charlotte, NC 28217, Attention: Called Bonds Dept.; S&P's
"Called Bond Record," 25 Broadway, 3rd Floor, New York, NY 10004; and, in accordance with
then current guidelines of the Securities and Exchange Commission, such other addresses
and/or such other services providing information with respect to the redemption of bonds as
the Authority may designate in a Written Certificate of the Authority delivered to the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and held
by the Trustee pursuant to Section 5.07.
"Interest Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
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"Interest Payment Date" means each May 1 and November 1, commencing November 1,
2004.
"Lease Agreement, means that certain Lease Agreement, dated as of May 1, 2004, by and
between the Authority, as lessor, and the City, as lessee, of the Property, as originally executed
and as it may from time to time be supplemented, modified or amended in accordance with the
terms thereof and of this Indenture.
"Lease Payment Date" means, with respect to any Interest Payment Date, the fifteenth
(15th) calendar day of the month preceding such Interest Payment Date.
"Lease Payments" means the aggregate amount of all the payments required to be paid by
the City pursuant to Section 4.3 of the Lease Agreement.
"Moody's" means Moody's Investors Service, New York, New York, or its successors.
"Municipal Bond Insurer" means
"Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by
the Municipal Bond Insurer insuring the payment, when due, of the principal of and interest on
the Bonds as provided therein.
"Net Proceeds" means amounts derived from any policy of casualty insurance or title
insurance with respect to any portion of the Property, or the proceeds of any taking of the
Property or any portion thereof in eminent domain proceedings (including sale under threat of
such proceedings), to the extent remaining after payment therefrom of all expenses incurred in
the collection and administration thereof.
"Notes" means, collectively, the Series A Notes and the Series B Notes.
"Office" means, with respect to the Trustee, the main or principal corporate trust office
of the Trustee located in Los Angeles, California, except that with respect to presentation of
Bonds for payment or for registration of transfer and exchange, such term shall mean the office
or agency of the Trustee at which, at any particular time, its corporate agency business shall be
conducted.
"Original Purchaser" means the original purchaser of the Bonds upon their delivery by
the Trustee on the Closing Date.
"Outstanding", when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to
which all liability of the Authority shall have been discharged in accordance with Section 10.02,
including Bonds (or portions thereof) described in Section 11.09; and (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner", whenever used herein with respect to a Bond, means the person in whose
name the ownership of such Bond is registered on the Registration Books.
"Participating Underwriter" shall have the meaning ascribed thereto in the Continuing
Disclosure Certificate.
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"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem taxes
and assessments, if any, not then delinquent, or which the City may permit to remain unpaid
pursuant to Article V of the Lease Agreement; (b) the Site Lease, the Lease Agreement, this
Indenture and any other agreement or document contemplated hereunder to be recorded against
the Property; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor
not filed or perfected in the manner prescribed by law; (d) encumbrances shown on the CLTA
title insurance policy issued with respect to the Property on the Closing Date; and (e)
easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants,
conditions or restrictions which will not materially impair the use of the Property for their
intended purposes.
"Permitted Investments" means the following:
(a) direct 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.
(b) obligations of any of the following federal agencies which obligations represent full
faith and credit of the United States of America, including: (i) Export-Import Bank; (ii) Farm
Credit System Financial Assistance Corporation, (iii) Farmers Home Administration; (iv)
General Services Administration; (v) U.S. Maritime Administration; (vi) Small Business
Administration; (vii) Government National Mortgage Association (GNMA); (viii) U.S.
Department of Housing & Urban Development (PHA's); and (ix) Federal Housing
Administration;
(c) senior debt obligations rated "Aaa" by Moody's and "AAA" by S&P issued by the
Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and
senior debt obligations of other government-sponsored agencies approved by tf~e Municipal
Bond Insurer;
. (d) U..$. dollar denominated deposit accounts, federal funds and banker's acceptances
with cl. omestlc comm.erclal banks, including the Trustee and its af~liates, which have a rating on
their short term certitlcates of deposit on the date of purchase of P-I" by Moody's and "A-I"
or "A-l+" by S&P and maturing no more than 360 days after the date of purchase, provided
that ratings on holding companies are not considered as the rating of the bank;
(e) commercial paper which is rated at the time of purchase in the single highest
classification, "P-I" by Moody's and "A-l+" by S&P, and which matures not more than 270
days after the date of purchase;
(f) investments in a money market fund rated "AAAm" or "AAAm-G" or better by
S&P, including any money market fund for which the Trustee or an affiliate receives fees for
investment advisory or other services to the fund;
(g) pre-refunded municipal obligations defined as follows: Any bonds or other
obligations of any state of the United States of America or of any agency, instrumentality or
local governmental unit of any such state which are not callable at the option of the obligor prior
to maturity or as to which irrevocable instructions have been given by the obligor to call on the
date specified in the notice; and (i) which are rated, based upon an irrevocable escrow account
or fund (the "escrow"), in the highest rating category of Moody's and S&P or any successors
thereto; or (ii)(A) which are fully secured as to principal and interest and redemption premium,
if any, by an escrow consisting, only of cash or obligations described in paragraph (a) above,
which escrow may be applied only to the payment of such principal of and interest and
redemption premium, if any, on such bonds or other obligations on the maturity date or dates
thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as
-7-
appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized
independent certified public accountant, to pay principal of and interest and redemption
premium, if any, on the bonds or other obligations described in this paragraph on the maturity
date or dates thereof or on the redemption date or dates specified in the irrevocable instructions
referred to above, as appropriate;
(h) investment agreements approved in writing by the Municipal Bond Insurer,
supported by appropriate opinions of counsel, with notice to S&P;
(i) forward delivery agreements or forward purchase and sale agreements, approved in
writing by the Municipal Bond Insurer, having as an underlying investment property those
investments which are listed in paragraphs (a), (b) or (c) above.
(j) the Local Agency Investment Fund of the State, created pursuant to section 16429.1
of the California Government Code, to the extent the Trustee is authorized to register such
investment in its name; and
(k) other forms of investments (including repurchase agreement) approved in writing by
the Municipal Bond Insurer with notice to S&P.
"Principal Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
"Property" means that certain real property more particularly described in Exhibit A to
the Site Lease and in Exhibit A to the Lease Agreement.
"Rating Category" means, with respect to any Permitted Investment, one of the generic
categories of rating by Moody's and S&P applicable to such Permitted Investment, without
regard to any refinement or graduation of such rating category by a plus 'or minus sign or a
numeral.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date, whether or not such day is a
Business Day.
"Redemption Fund" means the fund by that name established pursuant to Section 5.06.
"Registration Books" means the records maintained by the Trustee pursuant to Section
2.05 for the registration and transfer of ownership of the Bonds.
"Reserve Account" means the account by that name in the Bond Fund established
pursuant to Section 5.02.
"Reserve Requirement" means an amount equal to $ ; provided, however, that if
the Bonds are partially refunded, such amount shall be reduced to an amount equal to the
maximum annual Lease Payments due in the then current or any succeeding calendar year
relating to the Bonds not so refunded, as specified in a certificate of an Authorized
Representative of the City delivered to the Trustee.
"Revenues" means: (a) all amounts received by the Authority or the Trustee pursuant to
or with respect to the Lease Agreement, including, without limiting the generality of the
foregoing, all of the Lease Payments (including both timely and delinquent payments, any late
charges, and whether paid from any source), prepayments and insurance proceeds, but
-8-
excluding any Additional Payments; and (b) all interest, profits or other income derived from
the investment of amounts in any fund or account established pursuant to this Indenture.
"S&P" means Standard & Poor's Credit Market Services, a division of The McGraw-Hill
Companies, Inc., New York, New York, or its successors.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, NY 11530, Fax (516) 227-4171 or 4190; and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other addresses and/or such other
securities depositories as the Authority may designate in a Written Certificate of the Authority
delivered to the Trustee.
"Series A Notes" means the $38,000,000 Tustin Public Financing Authority 2002 Revenue
Anticipation Notes, 2002 Series A.
"Series B Notes" means the $22,000,000 Tustin Public Financing Authority 2002 Revenue
Anticipation Notes, 2002 Series B.
"Site Lease" means that certain Site Lease, dated as of May 1, 2004, by and between the
City, as lessor, and the Authority, as lessee, of the Property, as originally executed and as it
may from time to time be supplemented, modified or amended in accordance with the terms
thereof and of this Indenture.
"State" means the State of California.
"Supplemental Indenture" means any indenture hereafter duly authorized and entered
into between the Authority and the Trustee, supplementing, modifying or amending this
Indenture; but only if and to the extent that such Supplemental Indenture is specifically
authorized hereunder.
"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.
"Trustee" means , a organized and existing under the laws
of the , or its successor, as Trustee hereunder as provided in Section 8.01.
"Written Certificate", "Written Request" and "Written Requisition" of the Authority or the
City mean, respectively, a written certificate, request or requisition signed in the name of the
Authority or the City by its Authorized Representative. Any such instrument and supporting
opinions or representations, if any, may, but need not, be combined in a single instrument with
any other instrument, opinion or representation, and the two or more so combined shall be read
and construed as a single instrument.
Section 1.02. Rules of Construction. All references in this Indenture to "Articles",
"Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Indenture; and the words "herein, .... hereof, .... hereunder," and other words of similar
import refer to this Indenture as a whole and not to any particular Article, Section or
subdivision hereof
Section 1.03. Authorization and Purpose of Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Bonds and has found, as a
result of such review, and hereby finds and determines that all things, conditions, and acts
required by law to exist, happen and/or be performed precedent to and in the issuance of the
Bonds do exist, have happened and have been performed in due time, form and manner as
-9-
required by law, and the Authority is now authorized under the Agreement and the Bond Law
and each and every requirement of law, to issue the Bonds in the manner and form provided in
this Indenture. Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuant
to the Bond Law and this Indenture for the purposes described herein.
Section 1.04. Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
priority or distinction as to security or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
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ARTICLE II
ISSUANCE OF BONDS
Section 2.01. Authorization of Bonds.
(a) The Authority hereby authorizes the issuance of the Bonds, which shall constitute
special obligations of the Authority, for the purpose of providing funds to provide for the
payment at maturity of the Notes. The Bonds are hereby designated the "Tustin Public
Financing Authority Lease Revenue Bonds, 2004 Series A (Refinancing Project)." The aggregate
principal amount of Bonds initially issued and Outstanding under this Indenture shall equal
dollars ($ ).
(b) This Indenture constitutes a continuing agreement with the Trustee and the Owners
from time to time of the Bonds to secure the full payment of the principal of and interest and
premium (if any) on all the Bonds, subject to the covenants, provisions and conditions herein
contained.
Section 2.02. Terms of the Bonds.
(a) The Bonds shall be issued in fully registered form without coupons in denominations
of $5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity
date. The Bonds shall mature on May 1 in each of the years and in the amounts, and shall bear
interest (calculated on the basis of a 360-day year of twelve 30-day months) at the rates, as
follows:
Maturity Date Principal Interest Maturity Date Principal Interest
(May 1) .Amount Rate (May 1) Amount Rate
(b) Interest on the Bonds shall be payable semiannually on each Interest Payment Date,
calculated based on a 360-day year of twelve (12) thirty-day months, to the person whose
name appears on the Registration Books as the Owner thereof as of the Record Date
immediately preceding each such Interest Payment Date, such interest to be paid by check of the
Trustee mailed on such Interest Payment Date by first class mail to the Owners at the respective
addresses of such Owners as they appear on the Registration Books; provided however, that
payment of interest may be by wire transfer in immediately available funds to an account in the
United States of America to any Owner of Bonds in the aggregate principal amount of
$1,000,000 or more who shall furnish written wire instructions to the Trustee at least five (5)
days before the applicable Record Date. Principal of any Bond and any premium upon
redemption shall be paid by check of the Trustee upon presentation and surrender thereof at the
Office of the Trustee, except as provided in Section 2.04. Principal of and interest and premium
(if any) on the Bonds shall be payable in lawful money of the United States of America.
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(c) Each Bond shall be dated as of the Closing Date and shall bear interest from the
Interest Payment Date next preceding the date of authentication thereof, unless (a) it is
authenticated after a Record Date and on or before the following Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (b) unless it is
authenticated on or before October 15, 2004, in which event it shall bear interest from the
Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest
thereon is in default, such Bond shall bear interest from the Interest Payment Date to which
interest has previously been paid or made available for payment thereon.
Section 2.03. Transfer and Exchange of Bonds. Any Bond may, in accordance with its
terms, be transferred on the Registration Books by the person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable
to the Trustee. Transfer of any Bond shall not be permitted by the Trustee during the period
established by the Trustee for selection of Bonds for redemption or if such Bond has been
selected for redemption pursuant to Article IV. Whenever any Bonds or Bonds shall be
surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and
shall deliver a new Bond or Bonds for a like aggregate principal amount, series and maturity.
The Trustee may require the Bond Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer. The cost of printing
Bonds and any services rendered or expenses incurred by the Trustee in connection with any
transfer shall be paid by the Authority.
Any Bond may be exchanged at the Office of the Trustee for. a like aggregate principal
amount of Bonds of other authorized denominations and of like series and maturity. Exchange
of any Bond shall not be permitted during the period established by the Trustee for selection of
Bonds for redemption or if such Bond has been selected for redemption pursuant to Article IV.
The Trustee may require the Bond Owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange. The cost of printing
Bonds and any services rendered or expenses incurred by the Trustee in connection with any
transfer shall be paid by the Authority.
Section 2.04. Book-Entry System. Notwithstanding any provision of this Indenture to the
contrary:
(a) The Bonds shall be initially issued registered in the name of "Cede & Co.," as
nominee of The Depository Trust Company, the depository designated by the Original
Purchaser, and shall be evidenced by one certificate maturing on each of the maturity dates set
forth in Section 2.02 hereof to be in a denomination corresponding to the total principal therein
designated to mature on such date. Registered ownership of such Bonds, or any portions
thereof, may not thereafter be transferred except:
(i) to any successor of The Depository Trust Company or its nominee, or of any
substitute depository designated pursuant to paragraph (ii) of this subsection (a)
("substitute depository"); provided that any successor of The Depository Trust
Company or substitute depository shall be qualified under any applicable laws to
provide the service proposed to be provided by it;
(ii) to any substitute depository designated in a written request of the Authority,
upon (i) the resignation of The Depository Trust Company or its successor (or any
substitute depository or its successor) from its functions as depository or (ii) a
determination by the Authority that The Depository Trust Company or its successor is
no longer able to carry out its functions as depository; provided that any such substitute
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depository shall be qualified under any abplicable laws to provide the services
proposed to be provided by it; or
(iii) to any person a~ provided below, upon (A) the resignation of The
Depository Trust Company Or its successor (or any substitute depository or its
successor) from its functions as depository or (B) a determination by the Authority that
The Depository Trust Company or its successor is no longer able to carry out its
functions as depository; provided that no substitute depository which is not objected to
by the Authority and the Trustee can be obtained.
(b) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection
(a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee, together with a
written request of an Authorized Representative of the Authority to the Trustee, a single new
Bond shall be issued, authenticated and delivered for each maturity of such Bond then
outstanding, registered in the name of such successor or such substitute depository or their
nominees, as the case may be, all as specified in such written request of an Authorized
Representative of the Authority. In the case of any transfer pursuant to paragraph (iii) of
subsection (a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee
together with a written request of an Authorized Representative of the Authority, new Bonds
shall be issued, authenticated and delivered in such denominations and registered in the names
of such persons as are requested in a written request of the Authority provided the Trustee shall
not be required to deliver such new Bonds within a period less than sixty (60) days from the
date of receipt of such a written request of an Authorized Representative of the Authority.
(c) In the case of partial redemption or an advance refunding of any Bonds evidencing
all of the principal maturing in a particular year, The Depository Trust Company shall, at the
Authority's expense, deliver the Bonds to the Trustee for cancellation and re-registration to
reflect the amounts of such reduction in principal.
(d) The Authority and the Trustee shall be entitled to treat the person in whose name
any Bond is registered as the absolute Owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary received by the Trustee or the
Authority; and the Authority and the Trustee shall have no responsibility for transmitting
payments to, communication with, notifying or otherwise dealing with any beneficial owners of
the Bonds. Neither the Authority nor the Trustee will have any responsibility or obligations,
legal or otherwise, to the beneficial owners or to any other party including The Depository Trust
Company or its successor (or substitute depository or its successor), except for the registered
owner of any Bond.
(e) So long as all outstanding Bonds are registered in the name of Cede & Co. or its
registered assign, the Authority and the Trustee shall reasonably cooperate with Cede & Co., a s
sole registered Owner, or its registered assign in effecting payment of the principal and
redemption premium, if any, and interest due with respect to the Bonds by arranging for
payment in such manner that funds for such payments are properly identified and are made
immediately available on the date they are due.
(f) So long as all Outstanding Bonds are registered in the name of Cede & Co. or its
registered assigns (hereinafter, for purposes of this paragraph (f), the "Owner"):
(i) All notices and payments addressed to the Owners shall contain the Bonds'
CUSIP number.
(ii) Notices to the Owner shall be forwarded in the manner set forth in the form
of blanket issuer letter of representations (prepared by The Depository Trust Company)
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executed by the Authority and received and accepted by The Depository Trust
Company.
Section 2.05. Registration Books. The Trustee will keep or cause to be kept, at the Office
of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds,
which shall at all reasonable times upon reasonable prior notice be open to inspection during
regular business hours by the Authority and the City; 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 such records, the ownership of the Bonds as
hereinbefore provided.
Section 2.06. Form and Execution of Bonds. The Bonds shall be signed in the name and
on behalf of the Authority with the facsimile signature of its Chairman and attested with the
facsimile signature of its Secretary, under the printed seal of the Authority, and shall be
delivered to the Trustee for authentication by it. In case any officer of the Authority who shall
have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall
have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issue, shall be as binding upon the Authority as though the individual who signed the same had
continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the
Authority by any individual who on the actual date of the execution of such Bond shall be the
proper officer although on the nominal date of such Bond such individual shall not have been
such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.07. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by
the Authority, shall be in fully registered form without coupons and may contain such reference
to any of the provisions of this Indenture as may be appropriate. Every temporary 'Bond shall
be executed by the Authority and authenticated by the Trustee upon the same conditions and in
substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds
it will execute and deliver definitive Bonds as promptly thereafter as practicable, and
thereupon the temporary Bonds may be surrendered, for cancellation, at the Office of the
Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an
equal aggregate principal amount of definitive Bonds of authorized denominations. Until so
exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bonds authenticated and delivered hereunder.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and
delivered to, or upon the order of, the Authority. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Authority and the Trustee
and, if such evidence be satisfactory to them and indemnity satisfactory to them shall be given,
the Authority, at the expense of the Owner of such lost, destroyed or stolen Bond, shall execute,
and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and
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in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured
or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee may
pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee).
The Authority may require payment by the Owner of a sum not exceeding the actual cost of
preparing each new Bond issued under this Section 2.08 and of the expenses which may be
incurred by the Authority and the Trustee in the premises. Any Bond issued under the
provisions of this Section 2.08 in lieu of any Bond alleged to be lost, destroyed or stolen shall
constitute an original additional contractual obligation on the part of the Authority whether or
not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone,
and shall be entitled to the benefits of this Indenture with all other Bonds secured by this
Indenture.
Section 2.09. CUSIP Numbers. The Trustee, the Authority and the City shall not be liable
for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any
redemption notice. The Trustee may, in its discretion, include in any redemption notice a
statement to the effect that the CUSIP numbers on the Bonds have been assigned by an
independent service and are included in such notice solely for the convenience of the Owners
and that neither the Trustee, the Authority nor the City shall be liable for any inaccuracies in
such numbers.
Section 2.10. Payment Procedure Pursuant to the Municipal Bond Insurance Policy. As
long as the Municipal Bond Insurance Policy shall be in full force and effect, the Authority and
the Trustee agree to comply with the following provisions:
(a) At least one (1) day prior to each Interest Payment Date, the Trustee will determine
whether there will be sufficient moneys in the funds and accounts maintained by the Trustee
under this Indenture to pay the principal or interest due with respect to the Bonds on such
Interest Payment Date. If the Trustee determines that there will be insufficient moneys in such
funds or accounts, the Trustee shall so notify the Municipal Bond Insurer. Such notice shall
specify the amount of the anticipated deficiency, the Bonds to which such deficiency is
applicable and whether such Bonds will be deficient as to principal or interest, or both. If the
Trustee has not so notified the Municipal Bond Insurer at least one (1) day prior to an Interest
Payment Date, the Municipal Bond Insurer will make payments of principal or interest due with
respect to the Bonds on or before the first (lst) day next following the date on which the
Municipal Bond Insurer shall have received notice of nonpayment from the Trustee.
(b) The Trustee shall, after giving notice to the Municipal Bond Insurer as provided in (a)
above, make available to the Municipal Bond Insurer and, at the Municipal Bond Insurer's
direction, to the United States Trust Company of New York, as insurance trustee for the
Municipal Bond Insurer or any successor insurance trustee (the "Insurance Trustee"), the
Registration Books and all records relating to the funds and accounts maintained by the Trustee
under this Indenture.
(c) The Trustee shall provide the Municipal Bond Insurer and the Insurance Trustee with
a list of Owners entitled to receive principal or interest payments from the Municipal Bond
Insurer under the terms of the Municipal Bond Insurance Policy, and shall make arrangements
with the Insurance Trustee (i) to mail Checks or drafts to the Owners entitled to receive full or
partial interest payments from the Municipal Bond Insurer and (ii) to pay principal with respect
to Bonds surrendered to the Insurance Trustee by the Owners entitled to receive full or partial
principal payments from the Municipal Bond Insurer.
(d) The Trustee shall, at the time it provides notice to the Municipal Bond Insurer
pursuant to (a) above, notify Owners entitled to receive the payment of principal or interest
from the Municipal Bond Insurer (i) as to the fact of such entitlement, (ii) that the Municipal
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Bond Insurer will remit to them all or a part of the interest payments next coming due upon
proof of Owner entitlement to interest payments and delivery to the Insurance Trustee, in form
satisfactory to the Insurance Trustee, of an appropriate assignment of the Owner's right to
payment, (iii) that should they be entitled to receive full payment of principal from the
Municipal Bond Insurer, they must surrender their Bonds (along with an appropriate instrument
of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Bonds
to be registered in the name of the Municipal Bond Insurer) for payment to the Insurance
Trustee, and not the Trustee and (iv) that should they be entitled to receive partial payment of
principal from the Municipal Bond Insurer, they must surrender their Bonds for payment first to
the Trustee who shall note on such Bonds the portion of the principal paid by the Trustee and
then, along with an appropriate instrument of assignment in form satisfactory to the Insurance
Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal.
(e) In the event that the Trustee has notice that any payment of principal or interest with
respect to a Bond which has become Due for Payment (as such term is defined in the Municipal
Bond Insurance Policy) and which is made to a Owner by or on behalf of the City has been
deemed a preferential transfer and theretofore recovered from its registered owner pursuant to
the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final,
nonappealable order of a court having competent jurisdiction, the Trustee shall, at the time the
Municipal Bond Insurer is notified, notify all Owners that in the event that any Owner's
payment is so recovered, such Owner will be entitled to payment from the Municipal Bond
Insurer to the extent of such recovery if sufficient funds are not otherwise available, and the
Trustee shall furnish to the Municipal Bond Insurer its records evidencing the payments of
principal and interest with respect to the Bonds which have been made by the Trustee and
subsequently recovered from Owners and the dates on which such payments were made.
(f) In addition to those rights granted the Municipal Bond Insurer under this Indenture,
the Municipal Bond Insurer shall, to the extent it makes payment of principal or interest with
respect to Bonds, become subrogated to the rights of the recipients of such payments in
accordance with the terms of the Municipal Bond Insurance Policy, and to evidence such
subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee shall
note the Municipal Bond Insurer's rights as subrogee on the Registration Books upon receipt
from the Municipal Bond Insurer of proof of the payment of interest with respect thereto to the
Owners, and (ii) in the case of subrogation as to claims for past due principal, the Trustee shall
note the Municipal Bond Insurer's fights as subrogee on the Registration Books upon surrender
of the Bonds by the Owners thereof together with proof of the payment of principal thereof.
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ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds. At any time after the execution of this Indenture, the
Authority may execute and the Trustee shall authenticate and, upon the Written Request of the
Authority, deliver Bonds in the aggregate principal amount set forth in Section 2.01 hereof.
Section 3.02. Application of Proceeds of Sale of Bonds and Other Moneys.
(a) Upon the receipt of payment for the Bonds on the Closing Date, the Trustee shall
apply the proceeds of sale thereof as follows:
(i) The Trustee shall deposit the amount of $.
Fund;
in the Costs of Issuance
(ii) The Trustee shall transfer to ..
amount of $ ; and
, as paying agent for the Notes, the
(iii) The Trustee shall deposit in the Reserve Fund, the amount of $
(b) The Trustee may, in its sole discretion, establish such funds or accounts in its records
to facilitate the foregoing deposits.
Section 3.03. Establishment and Application of Costs of Issuance Fund.
(a) The Trustee shall establish, maintain and hold in trust a separate fund designated as
the "Costs of Issuance Fund."
(b) The moneys in the Costs of Issuance Fund shall be used and withdrawn by the
Trustee to pay the Costs of Issuance upon submission of Written Requisitions of the Authority
stating the person to whom payment is to be made, the amount to be paid, the purpose for
which'the obligation was incurred and that such payment is a proper charge against said fund.
(c) On November 1, 2004, or upon the earlier Written Request of the Authority, all
amounts remaining in the Costs of Issuance Fund shall be transferred by the Trustee to the Bond
Fund.
Section 3.04. Validity of Bonds. The validity of the authorization and issuance of the
Bonds is not dependent on and shall not be affected in any way by any proceedings taken by
the Authority or the Trustee with respect to or in connection with the Lease Agreement. The
recital contained in the Bonds that the same are issued pursuant to the Constitution and laws
of the State shall be conclusive evidence of their validity and of compliance with the provisions
of law in their issuance.
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption.
(a) Mandatory Redemption From Optional Prepayment of Lease Payments. The Bonds
maturing on or before May 1, m___, are not subject to optional redemption prior to their
respective stated maturities. The Bonds maturing on or after May 1, , are subject to
mandatory redemption, following the exercise of the City to optionally prepay Lease Payments,
as a whole, or in part in such order of maturity as the City shall designate (and, if no specific
order of redemption is designated by the City, in inverse order of maturity; on any date on or
after May 1, , from any available source of funds, at the following redemption prices
(expressed as a percentage of the principal amount of the Bonds to be redeemed) together with
accrued interest thereon to the date fixed for redemption:
Redemption Period
May 1, __ through April 30, __
May 1, __ through April 30, __
May 1, __ and thereafter
Redemption Price
(b) Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Bonds
shall also be subject to redemption as a whole, or in part on a pro rata basis among maturities,
on any date, to the extent the Trustee has received title or hazard insurance proceeds or
condemnation proceeds not used to repair or replace any portion of the Property damaged or
destroyed or elected by the City to be used for such purpose, as provided in Section 5.07, at a
redemption price equal to one hundred percent (100%) of the principal amount thereof plus
interest accrued thereon to the date fixed for redemption, without premium.
Section 4.02. Selection of Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds of a particular maturity, the Trustee
shall select the Bonds to be redeemed from all Bonds of such maturity or such given portion
thereof not previously called for redemption, by lot in any manner which the Trustee in its sole
discretion shall deem appropriate. For purposes of such selection, the Trustee shall treat each
Bond as consisting of separate $5,000 portions and each such portion shall be subject to
redemption as if such portion were a separate Bond.
Section 4.03. Notice of Redemption. Notice of redemption shall be mailed by first class
mail, postage prepaid, not less than thirty (30) nor more than sixty (60) days before any
redemption date, to the respective Owners of any Bonds designated for redemption at their
addresses appearing on the Registration Books, and to the Securities Depositories and to the
Information Services. Each notice of redemption shall state the date of the notice, the
redemption date, the place or places of redemption, whether less than all of the Bonds (or all
Bonds of a single maturity) are to be redeemed, the CUSIP numbers and (in the event that not
all Bonds within a maturity are called for redemption) Bond numbers of the Bonds to be
redeemed, the maturity or maturities of the Bonds to be redeemed and in the case of Bonds to
be redeemed in part only, the respective portions of the principal amount thereof to be
redeemed. Each such notice shall also state that on the redemption date there will become due
and payable on each of said Bonds the redemption Price thereof, and that from and after such
redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then
surrendered. Neither the failure to receive any notice nor any defect therein shall affect the
sufficiency of the proceedings for such redemption or the cessation of accrual 6f interest from
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and after the redemption date. Notice of redemption of Bonds shall be given by the Trustee, at
the expense of the Authority, for and on behalf of the Authority.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in
part only, the Authority shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion, of the Bonds
surrendered.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as
aforesaid, and moneys for payment of the redemption price of, together with interest accrued to
the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption being
held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions
thereof) so called for redemption shall become due and payable, interest on the Bonds so called
for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled
to any benefit or security under this Indenture, and the Owners of said Bonds shall have no
rights in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed.
Section 4.06. Purchase of Bonds. In lieu of redemption of Bonds as provided in this
Article IV, amounts he--i~ ~yy ~-h~ ~~ for such redemption may also be used on any Interest
Payment Date, upon receipt by the Trustee at least sixty (60) days prior to the next scheduled
Interest Payment Date of the written request of an Authorized Representative of the Authority,
for the purchase of Bonds at public or private sale as and when and at such prices (including
brokerage, accrued interest and other charges) as the Authority may in its discretion direct, but
not to exceed the redemption price which would be payable if such Bonds were redeemed. The
aggregate principal amount of Bonds of the same maturity purchased in lieu of redemption
pursuant to this Section 4.06 shall not exceed the aggregate principal amount of Bonds of such
maturity which would otherwise be subject to such redemption. Any Bonds so purchased shall
be surrendered to the Trustee for cancellation.
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ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment; Bond Fund.
(a) Subject only to the provisions of this Indenture permitting the application thereof for
the purposes and on the terms and conditions set forth herein, all of the Revenues and any other
amounts (including proceeds of the sale of the Bonds) held in any fund or account established
pursuant to this Indenture are hereby pledged to secure the payment of the principal of,
premium, if any, and interest on the Bonds in accordance with their terms and the provisions of
this Indenture. Said pledge shall constitute a lien on and security interest in such assets and
shall attach, be perfected and be valid and binding from and after the Closing Date, without
any physical delivery thereof or further act.
(b) The Authority hereby transfers in trust, grants a security interest in and assigns to
the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues
and all of the rights of the Authority in the Lease Agreement (except for the right to receive any
Additional Payments to the extent payable to the Authority and certain rights to
indemnification set forth therein). The Trustee shall be entitled to and shall collect and receive
all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to
be held, and to have been collected or received, by the Authority as the agent of the Trustee and
shall forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and
shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the
Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the
Authority or separately, all of the rights of the Authority and all of the obligations of the City
under the Lease Agreement.
The assignment of the Lease Agreement to the Trustee is solely in its capacity as Trustee
under this Indenture and the duties, powers and liabilities of the Trustee in acting thereunder
shall be subject to the provisions of this Indenture, including, without limitation, the provisions
of Article VIII hereof. The Trustee shall not be responsible for any representations, warranties,
covenants or obligations of the Authority. The Trustee is authorized and directed to execute a
Memorandum of Assignment with respect to such assignment.
(c) Subject to Section 5.08, all Revenues shall be promptly deposited by the Trustee
upon receipt thereof in a special fund designated as the "Bond Fund" which the Trustee shall
establish, maintain and hold in trust; except that all moneys received by the Trustee and
required hereunder or under the Lease Agreement to be deposited in the Redemption Fund or
the Insurance and Condemnation Fund shall be promptly deposited in such Funds. All
Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the
Trustee only as provided in this Indenture.
Section 5.02. Allocation of Revenues. Not later than the first Business Day preceding
each date on which principal of or interest on the Bonds becomes due and payable, the Trustee
shall transfer from the Bond Fund and deposit into the following respective accounts (each of
which the Trustee shall establish and maintain within the Bond Fund), the following amounts in
the following order of priority, the requirements of each such account (including the making up
of any deficiencies in any such account resulting from lack of Revenues sufficient to make any
earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any
account subsequent in priority:
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(a) The Trustee shall deposit in the Interest Account an amount required to cause the
aggregate amount on deposit in the Interest Account to be at least equal to the amount of
interest becoming due and payable on such date on all Bonds then Outstanding.
(b) The Trustee shall deposit in the Principal Account an amount required to cause the
aggregate amount on deposit in the Principal Account to equal the principal amount of the
Bonds coming due and payable on such date.
(c) The Trustee shall deposit in the Reserve Account an amount, if any, required to cause
the amount on deposit in the Reserve Account to be equal to the Reserve Requirement.
Section 5.03. Application of Interest Account. All amounts in the Interest Account shall
be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as
it shall become due and payable (including accrued interest on any Bonds purchased or
redeemed prior to maturity pursuant to this Indenture).
Section 5.04. Application of Principal Account. All amounts in the Principal Account
shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at
their respective maturity dates.
Section 5.05. Application of Reserve Account.
(a) All amounts in the Reserve Account shall be used and withdrawn by the Trustee
solely for the purpose of (i) paying principal of or interest on the Bonds when due and payable
to the extent that moneys deposited in the Interest Account or the Principal Account are not
sufficient for such purpose, and (ii) making the final payments of principal of and interest on
Bonds on the date on which such Bonds shall be retired hereunder or provision made therefor
pursuant to Article X. After payment of the final payments of principal and interest on the
Bonds and payment of any amounts then owed to the Trustee, all moneys then on deposit in
the Reserve Account shall be withdrawn by the Trustee and paid to the City, as a refund of
overpaid Lease Payments.
(b) If, on any date, moneys on deposit in the Reserve Account, together with amounts
then on deposit in the Bond Fund, are sufficient to pay all Outstanding Bonds, including all
principal thereof, and interest thereon, the Trustee shall, at the written direction of the City,
transfer all amounts then on deposit in the Reserve Account, together with such amounts in the
Bond Fund, to the Redemption Fund to be applied to the redemption of the Bonds in
accordance with the provisions of Section 4.01(a) or applied to the last Scheduled payment due
from the City.
(c) Any amounts remaining in the Reserve Account upon payment in full of all
Outstanding Bonds and all amounts then owed to the Trustee, shall be withdrawn by the
Trustee and paid to the City, as a refund of overpaid Lease Payments. Any amounts on
deposit in the Reserve Account in excess of the Reserve Requirement shall be transferred to the
Bond Fund.
(d) At any time, moneys on deposit in the Reserve Account may be substituted by the
Authority with a letter of credit, surety bond, bond insurance policy or other form of guaranty
from a financial institution, the long-term, unsecured obligations of which are rated in the
highest rating category by Moody's and S&P, in an amount equal to the Reserve Requirement,
upon presentation to the Trustee of such letter of credit, surety bond, bond insurance policy or
other form of guaranty from a financial institution, with evidence from the Authority that such
letter of credit, surety bond, bond insurance policy or other form of guaranty from a financial
institution is rated in the highest rating category by Moody's and S&P. Such letter of credit,
-21-
surety bond, bond insurance policy or other form of guaranty must extend for the remaining
term of the Bonds or, if its term is shorter than the final maturity of the Bonds, it must permit
the Trustee to draw thereon at expiration to fund the Reserve Account. If the rating of such
letter of credit, surety bond, bond insurance policy or other form of guaranty decline below any
rating of the Bonds, it shall permit substitution by the trustee without penalty. Upon such
substitution, the Trustee shall transfer amounts on deposit in the Reserve Account to the Bond
Fund in an amount equal to the maximum limits or principal amount, as applicable, of such
letter of credit, surety bond, bond insurance policy or other form of guarantee. Upon such
substitution, the Trustee shall provide notice thereof to Moody's, if Moody's shall have rated
the Bonds, and to S&P, if S&P shall have rated the Bonds.
Section 5.06. Application of Redemption Fund. The Trustee shall establish and maintain
the Redemption Fund, amounts in which shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal of and premium on the Bonds to be redeemed pursuant to
Sections 4.01(a) or (b); provided, however, that at any time prior to the selection of Bonds for
redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private
sale, in accordance with Section 4.06.
Section 5.07. Insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of any proceeds of insurance or eminent
domain with respect to any portion of the Property, the Trustee shall establish and maintain a
separate Insurance and Condemnation Fund, to be held and applied as hereinafter set forth in
this Section 5.07.
(b) Application of Insurance Proceeds. Any Net Proceeds of insurance against accident to
or destruction of the Property 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 6.1(a) of the Lease
Agreement and deposited by the Trustee promptly upon receipt thereof in the Insurance and
Condemnation Fund. The City shall certify to the Trustee that the Net Proceeds, together with
other available funds, will be sufficient to repair the Property and that such repairs will be
completed before the exPiration of any rental interruption insurance provided pursuant to the
Lease Agreement. If the City fails to determine and notify the Trustee in writing of its
determination, within forty-five (45) days following the date of such deposit, to replace, repair,
restore, modify or improve the Property, then such Net Proceeds shall be promptly transferred
by the Trustee to the Redemption Fund and applied to the redemption of Bonds pursuant to
Section 4.01(c) to the extent that such Net Proceeds permits. All proceeds deposited in the
Insurance and Condemnation Fund and not so transferred to the Redemption Fund shall be
applied to the prompt replacement, repair, restoration, modification or improvement of the
damaged or destroyed portions of the Property by the City, upon receipt of Written
Requisitions of the City, as agent for the Authority, which: (i) states with respect to each
payment to be made (A) the requisition number, (B) the name and address of the person to
whom payment is due, (C) the amount to be paid and (D) 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 (ii) specifies in reasonable detail
the nature of the obligation. Any balance of the proceeds remaining after such work has been
completed as certified by the City to the Trustee shall after payment of amounts due the
Trustee be paid to the City.
(c) Application of Eminent Domain Proceeds. If all or any part of the Property 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 6.1(b) of the Lease Agreement and
shall be applied and disbursed by the Trustee as follows:
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(i) If the City has not given written notice to the Trustee, within forty-five (45)
days following the date on which such Net Proceeds are deposited with the Trustee, of
its determination that such Net Proceeds are not needed for the replacement of the
Property or such portion thereof, the Trustee shall transfer such Net Proceeds to the
Redemption Fund to be applied towards the redemption of the Bonds pursuant to
Section 4.01(c).
(ii) If the City has given written notice to the Trustee, within forty-five (45) days
following the date on which such Net Proceeds are deposited with the Trustee, of its
determination that such Net Proceeds are needed for replacement of the Property or
such portion thereof, the Trustee 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 of Written Requisitions of the City as agent for the Authority in the form and
containing the provisions set forth in subsection (b) of this Section 5.07; provided,
however, that the replacement premises must be added as Substitute Property pursuant
to Section 8.3 of the Lease Agreement.
(d) Application of Title Insurance Proceeds. The Net Proceeds from a title insurance award
shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to
Section 6.1(b) of the Lease Agreement and shall be transferred by the Trustee to the Redemption
Fund to be applied towards the redemption of the Bonds pursuant to Section 4.01(c).
Section 5.08. Investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments. Such investments shall be directed by the Authority pursuant to a Written Request
of the Authority filed with the Trustee at least two (2) Business Days in advance of the making
of such investments (which Written Request shall certify that the investments constitute
Permitted Investments). In the absence of any such directions from the Authority, the Trustee
shall invest any such moneys in Permitted Investments described in clause (f) of the definition
thereof. Permitted Investments purchased as an investment of moneys in any fund shall be
deemed to be part of such fund or account. The Authority shall take the liquidity needs of the
moneys held hereunder into account in making investments.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the Bond Fund, except that interest or gain
derived from the investment of the amount in the Reserve Account shall be retained therein to
the extent required to maintain the Reserve Requirement. To the extent that any investment
agreement requires the payment of fees, such fees shall be paid from available moneys in the
Bond Fund after the deposit of moneys described in Section 5.02 (a) through (c) above. For
purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it
hereunder. The Trustee or any of its affiliates may act as principal or agent in the acquisition or
disposition of any investment and may impose its customary charges therefor. The Trustee or
its affiliates may act as sponsor, advisor or depository with respect to any Permitted
Investment. To the extent that any Permitted Investment purchased by the Trustee are
registrable securities such Permitted Investment shall be registered in the name of the Trustee.
The Trustee shall incur no liability for losses arising from any investments made pursuant to this
Section 5.08.
The Authority acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Authority the fight to receive brokerage
confirmations of security transactions as they occur, the Authority specifically waive receipt of
such confirmations to the extent permitted by law; provided, however, that the Authority shall be
entitled to receive brokerage confirmations with respect to any transaction upon request. The
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Trustee will furnish the Authority monthly cash transaction statements as soon as possible after
the end of each month for those accounts which have cash balances; at least yearly for other
accounts, which include detail for all investment transactions made by the Trustee hereunder.
Section 5.09. Valuation and Disposition of Investments. For the purpose of determining
the amount in any fund or account, all Permitted Investments credited to such fund or account
shall be valued at the Fair Market Value thereof. Investments in funds or accounts (or portions
thereof) that are subject to a yield restriction under applicable provisions of the Code, as shall
be specified by the Authority to the Trustee, and (unless valuation is undertaken at least
annually) investments in the Reserve Account shall be valued at the cost thereof in a manner
specified by the Authority to the Trustee (consisting of the "present value" thereof as defined in
section 148 of the Code). Amounts in all funds and accounts shall be valued at least semi-
annually fifteen days prior to each Lease Payment Date, provided as to any valuation made by
the Trustee, such valuation shall be at the market value of such investments and the Trustee
may utilize computerized securities pricing services that may be available to it, including those
available through its regular accounting system.
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ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal of and interest and premium (if any) on all the Bonds in strict conformity with the
terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but
only out of Revenues and other assets pledged for such payment as provided in this Indenture.
Section 6.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section 6.02 shall be deemed to limit the right
of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such
issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 6.03. Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the
pledge and assignment created by this Indenture. Subject to this limitation, the Authority
expressly reserves the right to enter into one or more other indentures for any of its corporate
purposes, and reserves the right to issue other obligations for such purposes.
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to
pledge and assign the Revenues and other assets purported to be pledged and assigned,
respectively, under this Indenture in the manner and to the extent provided in this Indenture.'
The Bonds and the provisions of this Indenture are and will be the legal, valid and binding
special obligations of the Authority in accordance with their terms, and the Authority and the
Trustee shall at all times, subject to the provisions of Article VIII and to the extent permitted by
law, defend, preserve and protect said pledge and assignment of Revenues and other assets
and all the rights of the Bond Owners under this Indenture against all claims and demands of
all persons whomsoever.
Section 6.05. Accounting Records. The Trustee shall at all times keep, or cause to be
kept, proper books of record and account, prepared in accordance with industry standards, in
which complete and accurate entries shall be made of all transactions made by it relating to the
proceeds of Bonds, the Revenues, the Lease Agreement and all funds and accounts established
pursuant to this Indenture. Such books of record and account shall be available for inspection
by the Authority and the City, during business hours and under reasonable circumstances.
Section 6.06. No Additional Obligations. The Authority covenants that no additional
bonds, notes or other indebtedness shall be issued or incurred which are payable out of the
Revenues in whole or in part.
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Section 6.07. Tax Covenants.
(a) Private Business Use Limitation. The Authority shall assure that the proceeds of the
Bonds are not used in a manner which would cause the Bonds to be "private activity bonds"
within the meaning of section 141(a) of the Code.
(b) Private Loan Limitation. The Authority shall assure that no more than five percent
(5%) of the proceeds of the Bonds are used, directly or indirectly, to make or finance a loan
(other than loans constituting nonpurpose obligations as defined in the Code or constituting
assessments) to persons other than state or local government units.
(c) Federal Guarantee Prohibition. The Authority 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 Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
(d) No Arbitrage. The Authority shall not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the Bond proceeds 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 Bonds to be "arbitrage bonds" within the meaning
of section 148(a) of the Code.
(e) Rebate of Excess Investment Earnings to United States. The Authority shall take any and
all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate
of excess investment earnings, if any, to the federal government, to the extent that such section
is applicable to the Bonds. Payment of any amounts due under such section 148(f) shall be
made by the Authority from amounts provided by the City under Section 5.10(c) of the Lease
Agreement. In order to provide for the administration of this subsection (e), the Authority may
provide for the employment of independent attorneys, accountants and consultants
compensated on such reasonable basis as the Authority may deem appropriate.
(f) The Trustee shall be deemed to have complied with the provisions of this Section
6.07 if it follows the instructions of the Authority as provided herein and shall have no duty to
enforce the compliance by the Authority of the covenants of this Section 6.07.
Section 6.08. Collection of Amounts Due Under Lease Agreement. The Trustee shall
promptly collect all amounts due from the City pursuant to the Lease Agreement. Subject to the
provisions of Article VIII, the Trustee shall enforce, and take all steps, actions and proceedings
which the Trustee determines to be reasonably necessary for the enforcement of all of its rights
thereUnder as assignee of the Authority and for the enforcement of all of the obligations of the
City under the Lease Agreement.
The Authority shall not amend, modify or terminate any of the terms of the Lease
Agreement, or consent to any such amendment, modification or termination, without the prior
written consent of the Trustee. The Trustee shall give such written consent only if (a) in the
opinion of Bond Counsel, such amendment, modification or termination will not materially
adversely affect the interests of the Owners, or (b) the Trustee first obtains the written consent
of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding to
such amendment, modification or termination.
Section 6.09. Continuing Disclosure. Pursuant to Section 5.11 of the Lease Agreement,
the City has undertaken all responsibility for compliance with continuing disclosure
requirements and the Authority shall have no liability to the holders of the Bonds or any other
person with respect to such disclosure matters. Notwithstanding any other provision of this
Indenture, failure of the City to comply with the Continuing Disclosure Certificate shall not be
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considered an Event of Default, however, any Participating Underwriter or any holder or
beneficial owner of the Bonds may take such actions as may be necessary and appropriate to
compel performance, including seeking mandate or specific performance by court order.
Section 6.10. Waiver of Laws. The Authority shall not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension of
law now or at any time hereafter in force that may affect the covenants and agreements
contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or
laws is hereby expressly waived by the Authority to the extent permitted by law.
Section 6.11. Further Assurances. The Authority will make, execute and deliver any and
all such further indentures, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Indenture and for the
better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided
in this Indenture.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of any Bonds when and as
the same shall become due and payable, whether at maturity as therein expressed, by
proceedings for redemption or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any Bonds
when and as the same shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, if such default shall have
continued for a period of thirty (30) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee;
provided, however, that if in the reasonable opinion of the Authority the default stated in the
notice can be corrected, but not within such thirty (30) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default
within such thirty (30) day period and thereafter diligently and in good faith cure such failure in
a reasonable period of time.
(d) The occurrence and continuation of an event of default under and as defined in the
Lease Agreement.
Section 7.02. Remedies Upon Event of Default. Upon the occurrence and continuance of
any Event of Default, then and in every such case the Trustee in its discretion may, and upon
the written request of the Owners of not less than 25% in principal amount of the Bonds then
Outstanding and receipt of indemnity to its satisfaction, and payment of its fees and expenses,
including the fees and expenses of its counsel, shall in its own name and as the Trustee of an
express trust:
(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all
rights of the Owners under, and require the Authority or the City to carry out any agreements
with or for the benefit of the Owners of Bonds and to perform its or their duties under the Act,
the Lease Agreement, and this Indenture, provided that any such remedy may be taken only to
the extent permitted under the applicable provisions of the Lease Agreement or this Indenture,
as the case may be;
(b) bring suit upon the Bonds;
(c) by action or suit in equity require the Authority to account as if it were the trustee of
an express trust for the Owners of Bonds; or
(d) by action or suit in equity enjoin any acts or things which may be unlawful or in
violation of the rights of the Owners of Bonds hereunder.
Upon the occurrence of an Event of Default, the Trustee shall be entitled as a matter of
right to the appointment of a receiver or receivers for the Property, and of the revenues, income,
product, and profits thereof, ex parte, and without notice, and the Authority consents to the
appointment of such receiver upon the occurrence of an Event of Default. In the case of any
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receivership, insolvency, bankruptcy, or other judicial proceedings affecting the Authority or the
City, the Trustee shall be entitled to file such proofs of claims and other documents as may be
necessary or advisable in order to have the claims of the Trustee and the Bond Owners allowed
in such proceedings, without prejudice, however, to the fight of any Bond Owner to file a claim
on his or her own behalf; provided, the Trustee shall be entitled to compensation and
reimbursement for the reasonable fees and expenses of its counsel and indemnity for its
reasonable expenses and liability from the Authority, the City or the Bond Owners, as
appropriate.
Section 7.03. Application of Revenues and Other Funds After Default. If an Event of
Default shall occur and be continuing, all Revenues and any other funds then held or thereafter
received by the Trustee under any of the provisions of this Indenture shall be applied by the
Trustee as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect
the interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses
of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and
about the performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds (upon
presentation of the Bonds to be paid, and stamping or otherwise noting thereon of the payment
if only partially paid, or surrender thereof if fully paid) in accordance with the provisions of
this Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, and, if the amount available
shall not be sufficient to pay in full any installment or installments maturing on the same
date, then to the payment thereof ratably, according to the amounts due thereon, to the
persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of
any Bonds which shall have become due, whether at maturity or by redemption, with
interest on the overdue principal at the rate borne by the respective Bonds (to the extent
permitted by law), and, if the amount available shall not be sufficient to pay in full all
the Bonds, together with such interest, then to the payment thereof ratably, according to
the amounts of principal due on such date to the persons entitled thereto, without any
discrimination or preference.
Section 7.04. Trustee to Represent Bond Owners. The Trustee is hereby irrevocably
appointed (and the successive respective Owners of the Bonds, by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful
attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on
their behalf such rights and remedies as may be available to such Owners under the provisions
of the Bonds, this Indenture and applicable provisions of any law. Upon the occurrence and
continuance of an Event of Default or other occasion giving rise to a right in the Trustee to
represent the Bond Owners, the Trustee in its discretion may, and upon the written request of
the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and
upon being indemnified to its satisfaction therefor, the Trustee shall, proceed to protect or
enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or
other proceedings as it shall deem most effectual to protect and enforce any such right, at law
or in equity, either for the specific performance of any covenant or agreement contained herein,
or in aid of the execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the
Bonds, this Indenture or any other law; and upon instituting such proceeding, the Trustee shall
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be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other
assets pledged under this Indenture, pending such proceedings. All rights of action under this
Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any proceeding relating thereto, and
any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the
Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions
of this Indenture.
Section 7.05. Bond Owners' Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable
satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee
hereunder, provided that such direction shall not be otherwise than in accordance with law and
the provisions of this Indenture, and that the Trustee shall have the right to decline to follow
any such direction which in the opinion of the Trustee would expose it to liability.
Section 7.06. Limitation on Bond Owners' Right to Sue. Notwithstanding any other
provision hereof, no Owner of any Bonds shall have the fight to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy under
this Indenture, the Lease Agreement or any other applicable law with respect to such Bonds,
unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such
Owner or Owners shall have tendered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall
have failed 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; and (e) no direction inconsistent with such written request shall have been given to the
Trustee during such sixty (60) day period by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of
any remedy hereunder or under law; it being understood and intended that no one or more
Owners of Bonds shall have any fight in any manner whatever by his or their action to affect,
disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or
to enforce any right under the Bonds, this Indenture, the Lease Agreement or other applicable
law with respect to the Bonds, except in the manner herein provided, and that all proceedings
at law or in equity to enforce any such right shall be instituted, had and maintained in the
manner herein provided and for the benefit and protection of all Owners of the Outstanding
Bonds, subject to the provisions of this Indenture.
Section 7.07. Absolute Obligation of Authority. Nothing in Section 7.06 or in any other
provision of this Indenture or in the Bonds contained ~hall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest and
premium (if any) on the Bonds to the respective Owners of the Bonds at their respective dates
of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and
other assets herein pledged therefor, or affect or impair the fight of such Owners, which is also
absolute and unconditional, to enforce such payment by virtue of the contract embodied in the
Bonds.
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Section 7.08. Termination of Proceedings. If any proceedings taken by the Trustee or any
one or more Bond Owners on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Bond
Owners, then the Authority, the Trustee and the Bond Owners, subject to any determination in
such proceedings, shall be restored to their former positions and rights hereunder, severally and
respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the
Bond Owners shall continue as though no such proceedings had been taken.
Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy or
remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative
and in addition to any other remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.
Section 7.10. No Waiver of Default. No delay or omission of the Trustee or any Owner
of the Bonds to exercise any right or power arising upon the occurrence 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 Indenture to the
Trustee or the Owners of the Bonds may be exercised from time to time and as often as may be
deemed expedient.
Section 7.11. Parties Interested Herein.
(a) Nothing in this Indenture expressed or implied is intended or shall be construed to
confer upon, or to give to, any person or entity, other than the Authority, the Trustee, the City,
the Municipal Bond Insurer, their officers, employees and agents, and the Owners any right,
remedy or claim under or by reason of this Indenture, or any covenant, condition or stipulation
hereof, and all covenants, stipulations, promises and agreements in this Indenture contained by
and on behalf of the Authority shall be for the sole and exclusive benefit of the Authority, the
Trustee, the City, the Municipal Bond Insurer, their officers, employees and agents, and the
Owners.
(b) To the extent that this Indenture confers upon or gives or grants to the Municipal
Bond Insurer any right, remedy or claim under or by reason of this Indenture, the Municipal
Bond Insurer is hereby explicitly recognized as being a third-party beneficiary hereunder and
may enforce any such right remedy or claim conferred, given or granted hereunder.
(c) Notwithstanding any other provision of this Indenture, in determining whether the
rights of the Owners will be adversely affected by any action taken pursuant to the terms and
provisions of this Indenture, the Trustee shall consider the effect on the Owners as if there was
no Municipal Bond Insurance Policy.
Section 7.12. Consent of the Municipal Bond Insurer.
(a) Any provision of this Indenture expressly recognizing or granting rights in or to the
Municipal Bond Insurer may not be amended in any manner which affects the rights of the
Municipal Bond Insurer hereunder without the prior written consent of the Municipal Bond
Insurer.
(b) Unless otherwise provided in this Section 7.12, the Municipal Bond Insurer's consent
shall be required in addition to Owner consent, when required, for the following purposes: (i)
execution and delivery of any amendment, supplement or change to or modification of this
Indenture or the Lease Agreement, (ii) removal of the Trustee and selection and appointment of
any successor trustee; and (iii) initiation or approval of any action not described in (i) or (ii)
above which requires Owner consent.
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(c) Any reorganization or liquidation plan with respect to the City must be acceptable to
the Municipal Bond Insurer. In the event of any reorganization or liquidation, the Municipal
Bond Insurer shall have the right to vote on behalf of all Owners who hold the Municipal Bond
Insurer-insured Bonds absent a default by the Municipal Bond Insurer under the Municipal
Bond Insurance Policy.
(d) Anything in this Indenture to the contrary, notwithstanding, upon the occurrence and
continuance of an Event of Default, the Municipal Bond Insurer shall be entitled to control and
direct the enforcement of all rights and remedies granted to the Owners or the Trustee for the
benefit of the Owners under this Indenture, including, without limitation, (i) the right to approve
all waivers of Events of Default.
(e) The rights granted to the Municipal Bond Insurer shall not be effective to the extent it
is in default under the Municipal Bond Insurance Policy.
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ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to an Event of Default, and after the cxu'ing of all Events of
Default which may have occurred, perform such duties and only such duties as are expressly
and specifically set forth in this Indenture and no implied duties or covenants shall be read into
this Indenture against the Trustee. The Trustee shall, during the existence of any Event of
Default (which has not been cured), exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) The Authority may remove the Trustee at any time unless an Event of Default shall
have occurred and then be continuing, and the Authority shall remove the Trustee if at any time
requested to do so by the Owners of not less than a majority in aggregate principal amount of
the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the
Trustee shall cease to be eligible in accordance with subsection (e) of this Section 8.01, or shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or its property shall be appointed, or any public officer shall take control or charge of
the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, in each case by giving written notice of such removal to the Trustee and the City
and thereupon shall appoint a successor Trustee by an instrument in writing. Any such removal
shall be made upon at least thirty (30) days' prior written notice to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such resignation to the
Authority and the City, and by giving the Bond Owners notice of such resignation by mail at the
addresses shown on the Registration Books. Upon receiving such notice of resignation, the
Authority shall promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. If no successor
Trustee shall have been appointed and have accepted appointment within forty-five (45) days
of giving notice of removal or notice of resignation as aforesaid, the Authority shall petition any
court of competent jurisdiction for the appointment of a successor Trustee, and such court may
thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.
Any successor Trustee appointed under this Indenture, shall signify its acceptance of such
appointment by executing and delivering to the Authority, to its predecessor Trustee a written
acceptance thereof, and thereupon such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts,
duties and obligations of such predecessor Trustee, with like effect as if originally named
Trustee herein; but, nevertheless at the Written Request of the Authority or the request of the
successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of
conveyance or further assurance and do such other things as may reasonably be required for
more fully and certainly vesting in and confirming to such successor Trustee all the right, title
and interest of such predecessor Trustee in and to any property held by it under this Indenture
and shall pay over, transfer, assign and deliver to the successor Trustee any money or other
property subject to the trusts and conditions herein set forth. Upon request of the successor
Trustee, the Authority shall execute and deliver any and ~all instruments as may be reasonably
required for more fully and certainly vesting in and confirming to such successor Trustee all such
moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of
appointment by a successor Trustee as provided in this subsection, the Authority shall
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promptly mail or cause the successor trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond
Owners at the addresses shown on the Registration Books. If the Authority fails to mail such
notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or association
organized and doing business under the laws of any state or the United States of America or
the District of Columbia, shall be authorized under such laws to exercise corporate trust
powers, shall have (or, in the case of a corporation or national banking association included in a
bank holding company system, the related bank holding company shall have) a combined
capital and surplus of at least fifty million dollars ($50,000,000), shall be subject to supervision
or examination by federal or state agency, so long as any Bonds are Outstanding and
acceptable to the Municipal Bond Insurer. If such corporation publishes a report of condition at
least annually pursuant to law or to the requirements of any supervising or examining agency
above referred to then for the purpose of this subsection (e), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this subsection (e), the Trustee shall resign
immediately in the manner and with the effect specified in this Section 8.01.
(f) The Trustee may be removed at any time, upon thirty (30) days' written notice, at the
request of the Municipal Bond Insurer with the consent of the Authority, for any breach of the
trust set forth herein, the Municipal Bond Insurer shall receive prior written notice of any
Trustee resignation.
(g) Notwithstanding any other provision of this Indenture, no removal, resignation or
termination of the Trustee shall take effect until a successor, acceptable to the Municipal Bond
Insurer, shall be appointed.
Section 8.02. Merger or Consolidation. Any bank or trust company into which the
Trustee may be merged or converted or with which it may be consolidated or any bank or trust
company resulting from any merger, conversion or consolidation to which it shall be a party or
any bank or trust company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such bank or trust company shall be eligible under subsection
(e) of Section 8.01 shall be the successor to such Trustee, without the execution or filing of any
paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall not be taken as
statements of the Trustee, and the Trustee shall not assume responsibility for the correctness of
the same, or make any representations as to the validity or sufficiency of this Indenture, the
Bonds or the Lease Agreement, nor shall the Trustee incur any responsibility in respect thereof,
other than as expressly stated herein in connection with the respective duties or obligations
herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be
responsible for its representations contained in its certificate of authentication on the Bonds.
The Trustee shall not be liable in connection with the performance of its duties hereunder,
except for its own negligence. The Trustee may become the Owner of Bonds with the same rights
it would have if it were not Trustee, and, to the extent permitted by law, may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capacity
with respect to, any committee formed to protect the rights of Bond Owners, whether or not
such committee shall represent the Owners of a majority in principal amount of the Bonds then
Outstanding.
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(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) 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 Municipal Bond Insurer or the Owners
of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding
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 Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this
Indenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or both,
would constitute an Event of Default hereunder unless and until it shall have actual knowledge
thereof, or a corporate trust officer shall have received written notice thereof, at its Office.
Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or
inquire as to the performance or observance by the Authority or the City of any of the terms,
conditions, covenants or agreements herein, under the Lease Agreement or of any of the
documents executed in connection with the Bonds, or as to the existence of an Event of Default
or an event which would, with the giving of notice, the passage of time, or both, constitute an
Event of Default. The Trustee shall not be responsible for the validity, effectiveness or priority
of any collateral given to or held by it. Without limiting the generality of the foregoing, the
Trustee shall not be required to ascertain or inquire as to the performance or observance by the
City and the Authority of the terms, conditions, covenants or agreements set forth in the Lease
Agreement, other than the covenants of the City to make Lease Payments to the Trustee when
due and to file with the Trustee when due, such reports and certifications as the City are
required to file with the Trustee thereunder.
(f) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it is not assured to its satisfaction that the
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) The Trustee may execute any of the trusts or powerg hereunder or perform any duties
hereunder either directly or through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed with due care
by it hereunder.
(h) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of Owners or the Municipal Bond
Insurer Pursuant to this Indenture, unless such Owners or the Municipal Bond Insurer shall have
offered to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or direction. No
permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to
impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this Indenture and
the Lease Agreement relating to the conduct or affecting the liability of or affording protection
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to the Trustee shall be subject to the provisions of Section 8.01(a), this Section 8.03 and Section
8.04 hereof.
(j) The Trustee shall not be concerned with or accountable to anyone for the subsequent
use or application of any moneys which shall be released or withdrawn in accordance with the
provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as to the
title, value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose for the use
contemplated by the Authority or the City of the Property. In no event shall the Trustee be liable
for incidental, indirec, t, special or consequential damages in connection with or arising from the
Lease Agreement or this Indenture for the existence, furnishing or use of the Property.
(1) Except to the extent that information was provided by the Trustee, the Trustee shall
have no responsibility with respect to any information, statement, or recital in any official
statement, offering memorandum or any other disclosure material prepared or distributed with
respect to the Bonds.
(m) The indemnities extended to the Trustee also extend to its directors, officers,
employees and agents.
(n) The Trustee may become the owner or pledgee of any Bonds with the same rights it
would have if it were not Trustee.
Section 8.04. Right to Rely on Documents. The Trustee shall be protected in acting upon
any notice, facsimile, e-mail, resolution, request, requisition, consent, order, certificate, report,
opinion, bonds or other paper or document believed by them to be genuine and to have been
signed or presented by the proper party or parties. The Trustee may consult with counsel, who
may be counsel of or to the Authority, with regard to legal questions, and the opinion or advice
of such counsel shall be full and complete authorization and protection in respect of any action
taken or suffered by it hereunder in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as
the absolute owners of the Bonds for all purposes and the Trustee shall not be affected by any
notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to
aking or suffering any action hereunder, such matter (unless other evidence in respect thereof be
erein specifically prescribed) may be deemed to be conclusively proved and established by a
Written Certificate, Written Request or Written Requisition of the Authority or the City, and
such Written Certificate, Written Request or Written ReqUisition shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of this Indenture in
reliance upon such Written Certificate, Written Request or Written Requisition, but in its
discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require
such additional evidence as to it may deem reasonable.
Section 8.05. Preservation and Inspection of Documents. All documents received by the
Trustee under the provisions of this Indenture shall be retained by the Trustee and shall be
subject at all reasonable times to the inspection of the Authority, the City and any Bond Owner,
and their agents and representatives duly authorized in writing, at reasonable hours and under
reasonable conditions.
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Section 8.06. Compensation and Indemnification. The Authority shall pay to the Trustee
(solely from Additional Payments) from time to time compensation for all services rendered
under this Indenture and also all reasonable expenses and disbursements (including fees and
expenses of counsel), incurred in and about the performance of its powers and duties under this
Indenture.
The Authority shall indemnify, defend and hold harmless the Trustee against any loss,
liability or expense incurred without negligence or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this trust, including costs and
expenses of defending itself against any claim or liability in connection with the exercise or
performance of any of its powers hereunder. As security for the performance of the obligations
of the Authority under this Section 8.06 and the obligation of the City to make Additional
Payments to the Trustee, the Trustee shall have a lien prior to the lien of the Bonds upon all
property and funds held or collected by the Trustee as such, except funds held in trust 'for the
payment of principal of or interest on particular Bonds. The rights of the Trustee and the
obligations of the Authority under this Section 8.06 shall survive the resignation or removal of
the Trustee or the discharge of the Bonds and this Indenture.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01. Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority and of the Owners of
the Bonds and of the Trustee may be modified or amended from time to time and at any time
by an indenture or indentures supplemental thereto, which the Authority and the Trustee may
enter into when the written consents of the Owners of a majority in aggregate principal amount
of all Bonds then Outstanding, shall have been filed with the Trustee. No such modification or
amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal
thereof or extend the time of payment, or change the method of computing the rate of interest
thereon, or extend the time of payment of interest thereon, without the consent of the Owner of
each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the
Owners of which is required to effect any such modification or amendment, or permit the
creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on
a parity with the lien created by this Indenture except as permitted herein, or deprive the
Owners of the Bonds of the lien created by this Indenture on such Revenues and other assets
(except as expressly provided in this Indenture), without the consent of the Owners of all of the
Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to
approve the particular form of any Supplemental Indenture, but it shall be sufficient if such
consent shall approve the substance thereof.
(b) This Indenture and the rights and obligations of the Authority, of the Trustee and the
Owners of the Bonds may also be modified or amended from time to time and at any time by a
Supplemental Indenture, which the Authority and the Trustee may enter into without the
consent of any Bond Owners, if the Trustee has been furnished an opinion of counsel that the
provisions of such Supplemental Indenture shall not materially adversely affect the interests of
the Owners of the Bonds, including, without limitation, for any one or more of the following
purposes:
(i) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed, to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or
power herein reserved to or conferred upon the Authority;
(ii) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained in
this Indenture, or in regard to matters or questions arising under this Indenture, as the
Authority may deem necessary or desirable;
(iii) to modify, amend or supplement this Indenture in such manner as to permit
the qualification hereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect, and to add such other terms, conditions and
provisions as may be permitted by said act or similar federal statute; or
(iv) to modify, amend or supplement this Indenture in such manner as to cause
interest on the Bonds to remain excludable from gross income under the Code.
(c) The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by subsections (a) or (b) of this Section 9.01 which
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materially adversely affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there shall
be delivered to the Trustee an opinion of Bond Counsel stating, in substance, that such
Supplemental Indenture has been adopted in compliance with the requirements of this Indenture
and that the adoption of such Supplemental Indenture will not, in and of itself, adversely affect
the exclusion from gross income for purposes of federal income taxes of interest on the Bonds.
(e) Written notice of any amendment or modification made pursuant to this Section 9.01
shall be given by the Authority to any rating agency then rating the Bonds at least thirty (30)
days prior to the effective date of such amendment or modification.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental
Indenture pursuant to this Article IX, this Indenture shall be deemed to be modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the Authority, the Trustee and all Owners of Bonds Outstanding 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 such Supplemental Indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after
the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority
so determines shall, bear a notation by endorsement or otherwise in form approved by the
Authority and the Trustee as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose at the
Office of the Trustee or at such additional offices as the Trustee may select and designate for
that purpose, a suitable notation shall be made on such Bonds. If the Supplemental Indenture
shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the
Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be
prepared and executed by the Authority and authenticated by the Trustee, and upon demand
on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee,
without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation
of such Bonds, in equal aggregate principal amount of the same maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article IX shall not
prevent any Bond Owner from accepting any amendment as to the particular Bonds held by
him.
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may be paid
by the Authority in any of the following ways, provided that the Authority also pays or causes
to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest and premium (if any) on
such Bonds, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, Defeasance
Obligations in the necessary amount (as provided in Section 10.03) to pay or redeem such
Bonds; or
(c) by delivering to the Trustee, for cancellation by it, such Bonds.
If the Authority shall also pay or cause to be paid all other sums payable hereunder by
the Authority, then and in that case, at the election of the Authority (evidenced by a Written
Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to
discharge all such indebtedness and this Indenture), and notwithstanding that any of such
Bonds shall not have been surrendered for payment, this Indenture and the pledge of Revenues
and other assets made under this Indenture with respect to such Bonds and all covenants,
agreements and other obligations of the Authority under this Indenture with respect to such
Bonds shall cease, terminate, become void and be completely discharged and satisfied. In such
event, upon the Written Request of the Authority, the Trustee shall execute and deliver to the
Authority all such instruments as may be necessary or desirable to evidence such discharge and
satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the City all moneys or
securities or other property held by it pursuant to this Indenture which are not required for the
payment or redemption of any of such Bonds not theretofore surrendered for such payment or
redemption.
Section 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in
trust, at or before maturity, of money or securities in the necessary amount (as provided in
Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity
or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior
to maturity, notice of such redemption shall have been given as provided in Article IV or
provision satisfactory to the Trustee shall have been made for the giving of such notice, then all
liability of the Authority in respect of such Bonds shall cease, terminate and be completely
discharged, and the Owners thereof shall thereafter be entitled only to payment out of such
money or securities deposited with the Trustee as aforesaid for their payment, subject, however,
to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee for cancellation by it any Bonds
previously issued and delivered, which the Authority may have acquired in any manner
whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid
and retired.
Notwithstanding anything herein to the contrary, in the event that the principal and/or
interest due with respect to the Bonds shall be paid by the Municipal Bond Insurer pursuant to
the Municipal Bond Insurance Policy, the Bonds shall remain Outstanding for all purposes, not
be defeased or otherwise satisfied and not be considered paid, and the assignment and pledge
of the trust created under this Indenture and all covenants, agreements and other obligations of
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the City to the Bond Owners shall continue to exist and shall run to the benefit of the Municipal
Bond Insurer, and the Municipal Bond Insurer shall be subrogated to the rights of such Bond
Owners.
Section 10.03. Deposit of Money or Securities with Trustee. Whenever in this Indenture it
is provided or permitted that there be deposited with or held in trust by the Trustee money or
securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be
deposited or held may include money or securities held by the Trustee in the funds and
accounts established pursuant to this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the principal
amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of
Bonds which are to be redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as provided in Article IV or provision satisfactory to the
Trustee shall have been made for the giving of such notice, the amount to be deposited or held
shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption
date; or
(b) Defeasance Obligations, the principal of and interest on which when due will, in the
written opinion of an Independent Accountant filed with the City, the Authority and the
Trustee, provide money sufficient to pay the principal of and interest and premium (if any) on
the Bonds to be paid or redeemed, as such principal, interest and premium become due,
provided that in the case of Bonds which are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms
of this Indenture or by Written Request of the Authority) to apply such money to the payment
of such principal, interest and premium (if any) with respect to such Bonds, and (ii) the
Authority shall have delivered to the Trustee an opinion of Bond Counsel to the effect that such
Bonds have been discharged in accordance with this Indenture (which opinion may rely upon
and assume the accuracy of the Independent Accountant's opinion referred to above).
Section 10.04. Unclaimed Funds. Notwithstanding any provisions of this Indenture, and
subject to applicable provisions of State law, any moneys held by the Trustee in trust for the
payment of the principal of, or interest on, any Bonds and remaining unclaimed for two (2)
years after the principal of all of the Bonds has become due and payable (whether at maturity
or upon call for redemption as provided in this Indenture), if such moneys were so held at such
date, or two (2) years after the date of deposit of such moneys if deposited after said date
when all of the Bonds became due and payable, shall be repaid to the Authority free from the
trusts created by this Indenture, and all liability of the Trustee with respect to such moneys
shall thereupon cease; provided, however, that before the repayment of such moneys to the
Authority as aforesaid, the Trustee shall (at the written request and cost of the Authority) first
mail to the Owners of Bonds which have not yet been paid, at the addresses shown on the
Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with
respect to the Bonds so payable and not presented and with respect to the provisions relating
to the repayment to the Authority of the moneys held for the payment thereof.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. Notwithstanding anything in
this Indenture or in the Bonds contained, the Authority shall not be required to advance any
moneys derived from any source other than the Revenues, the Additional Payments and other
assets pledged under this Indenture for any of the purposes in this Indenture mentioned,
whether for the payment of the principal of or interest on the Bonds or for any other purpose of
this Indenture. Nevertheless, the Authority may, but shall not be required to, advance for any of
the purposes hereof any funds of the Authority which may be made available to it for such
purposes.
Section 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any
person other than the Authority, the Trustee, the City and the Owners of the Bonds, any legal or
equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition
or provision therein or herein contained; and all such covenants, conditions and provisions are
and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the City
and the Owners of the Bonds.
Section 11.03. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Trustee may be established and maintained in the
accounting records of the Trustee, either as a fund or an account, and may, for the purposes of
such records, any audits thereof and any reports or statements with respect thereto, be treated
either as a fund or as an account; but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with industry standards to the extent
practicable, and with due regard for the requirements of Section 6.05 and for the protection of
the security of the Bonds and the rights of every Owner thereof. The Trustee may establish such
funds and accounts as it deems necessary to perform its obligations hereunder. The Trustee
shall deliver a monthly accounting to the Authority of the funds and accounts held hereunder;
provided, that the Trustee shall not be obligated to deliver an accounting for any fund or
account that has had no activity since the last reporting date and that has a balance of zero.
Section 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in this
Indenture 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 such 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. Whenever in this Indenture any notice shall be required to be given by
mail, such requirement shall be satisfied by the deposit of such notice in the United States mail,
postage prepaid, by first class mail.
Section 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for
the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee
shall, in lieu of such cancellation and delivery, destroy such Bonds as may be allowed by law,
and at the written request of the Authority the Trustee shall deliver a certificate of such
destruction to 'the Authority.
Section 11.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from
the remaining provisions contained in this Indenture and such invalidity, illegality or
unenforceability shall not affect any other provision of this Indenture, and this Indenture shall
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be construed as if such invalid or illegal or unenforceable provision had never been contained
herein. The Authority hereby declares that it would have entered into this Indenture and each
and every other Section, paragraph, sentence, clause or phrase hereof and authorized the
issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 11.07. Notices. All written notices to be given under this Indenture shall be given
by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, confirmed by telephone, (b) after deposit in the United States mail,
postage prepaid, upon receipt, or (c) in the case of personal delivery to any person, upon actual
receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from
time to time modify the address or number to which communications are to be given hereunder.
If to the Authority:
Tustin Public Financing Authority
300 Centennial Way
Tustin, CA 92780
Attention: Executive Director
Telephone: (___)
Telecopy: (.__) -
If to the City:
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Telephone: (___)
Telecopy: (.__) -
If to the Trustee:
Los Angeles, CA
Attention: Corporate Trust Department
Telephone: (213)
Telecopy: (213)
If to the Municipal Bond Insurer:
Attention:
Telephone: (__)
Telecopy: (__)
The Authority, the City, the Trustee and the Municipal Bond Insurer, by notice given
hereunder, may designate different addresses to which subsequent notices, certificates or other
commtmications will be sent.
Section 11.08. Notices to be Given to the Municipal Bond Insurer. While the Municipal
Bond Insurance Policy is in effect, the Trustee, the Authority or the City, as appropriate, shall
furnish to the Municipal Bond Insurer:
(a) as soon as practicable, a copy of any financial statement of the Authority or the City
and a copy of any audit and annual report of the Authority or the City; and
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(b) a copy of any notice to be given to the Owners including, without limitation, notice of
any redemption of or defeasance of the Bonds and any Written Certificate rendered pursuant to
this Indenture or the Lease Agreement relating to the security for the Bonds.
The Trustee shall notify the Municipal Bond Insurer of any failure of the Authority or the
City to provide notices or certificates required to be given by the Authority or the City to the
Trustee under this Indenture or the Lease Agreement.
The Authority will permit the Municipal Bond Insurer to discuss the affairs, finances
and accounts of the Authority or any information the Municipal Bond Insurer may reasonably
request regarding the security for the Bonds with appropriate officers of the Authority. The
Authority will permit the Municipal Bond Insurer to have access to the Project and have access
to and to make copies of all books and records relating to the Bonds at any reasonable time
upon reasonable notice on any Business Day.
The Municipal Bond Insurer shall have the right to direct an accounting at the
Authority's expense, and the Authority's failure to comply with such direction within thirty
(30) days after receipt of written notice of the direction from the Municipal Bond Insurer shall
be deemed a default hereunder; provided, however, that if compliance cannot occur within such
period, then such period will be extended so long as compliance is begun within such period
and diligently pursued, but only if such extension would not materially adversely affect the
interests of any Owner.
Notwithstanding any other provision of this Indenture, the Trustee shall notify the
Municipal Bond Insurer if at any time there are insufficient moneys to make any payments of
principal and/or interest as required by Section 2.10(a) hereof and immediately upon the
occurrence of any Event of Default of which it has notice or is deemed to have notice in
accordance with Section 7.01 hereof.
Notwithstanding anything herein to the contrary, (i) the Trustee undertakes no
responsibility for delivering to the Municipal Bond Insurer any information or notices other than
those specifically required herein; (ii) the Trustee undertakes no responsibility for evaluating the
financial condition or creditworthiness of the Authority or the City or for delivering tothe
Municipal Bond Insurer information it may have with respect thereto, unless required under
clause (i) above; and (iii) no act or omission of the Trustee shall impair or affect in any manner
the enforceability of the Municipal Bond Insurance Policy or any other agreement or arrangement
relating thereto in accordance with the terms thereof.
Section 11.09. Evidence of Rights of Bond Owners. Any request, consent or other
instrument required or permitted by this Indenture to be signed and executed by Bond Owners
may be in any number of concurrent instruments of substantially similar tenor and shall be
signed or executed by such Bond Owners in person or by an agent or agents duly appointed in
writing. Proof of the execution of any such request, consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable by delivery,
shall be sufficient for any purpose of this In~ienture and shall be conclusive in favor of the
Trustee and the Authority if made in the manner provided in this Section 11.08.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying
that the person signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
-44-
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind
every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the
Authority in accordance therewith or reliance thereon.
Section 11.10. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent
or waiver under this Indenture, Bonds which are known by the Trustee to be owned or held by
or for the account of the Authority or the City, or by any other obligor on the Bonds, or by any
person directly or indirectly controlling or controlled by, or under direct or indirect common
control with, the Authority or the City or any other obligor on the Bonds, shall be disregarded
and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned
which have been pledged in good faith may be regarded as Outstanding for the purposes of this
Section 11.10 if the pledgee shall certify to the Trustee the pledgee's right to vote such Bonds
and that the pledgee is not a person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Authority or the City or any other obligor on the
Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice
of counsel shall be full protection to the Trustee.
Upon request, the Authority or the City shall specify to the Trustee those Bonds
disqualified pursuant to this Section 11.10.
Section 11.11. Money Held for Particular Bonds. The money held by the Trustee for the
payment of the interest or principal due on any date with respect to particular Bonds (or
portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and
pending such payment, be set aside on its books and held in trust by it for the Owners of the
Bonds entitled thereto, subject, however, to the provisions of Section 10.04 hereof but without
any liability for interest thereon.
Section 11.12. Waiver of Personal Liability. No member, officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the principal of or
interest or premium (if any) on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof; but nothing herein contained shall relieve any
such member, officer, agent or employee from the performance of any official duty provided by
law or by this Indenture.
Section 11.13. Successor Is Deemed Included in All References to Predecessor. Whenever
in this Indenture either the Authorit,v, 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 Indenture contained by or on behalf of the Authority, 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 11.14. Execution in Several Counterparts. This Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original; and all such counterparts, or as many of them as the Authority and the Trustee shall
preserve undestroyed, shall together constitute but one and the same instrument.
Section 11.15. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State.
-45-
IN WITNESS WHEREOF, the TUSTIN PUBLIC FINANCING AUTHORITY has caused
this Indenture to be signed in its name by its Deputy Executive Director and Secretary and
, in token of its acceptance of the trust created hereunder, has caused this
Indenture to be signed in its corporate name by its officers identified below, all as of the day
and year first above written.
TUSTIN PUBLIC FINANCING
AUTHORITY
Attest:
By
William A. Huston
Executive Director
By.
Pamela Stoker
Secretary
, as Trustee
By
Name
Title
-46-
Quint&ThimmigLLP 11/29/02
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
ORANGE COUNTY
TUSTIN PUBLIC FINANCING AUTHORITY
Lease Revenue Bond, 2002 Series A
(Refinancing Project)
INTEREST RATE: ] MATURITY DATE:
% May 1, __ May __, 2004
t ORIGINAL ISSUE DATE: t CUSIP: ]
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CEDE & CO.
DOLLARS
The TUSTIN PUBLIC FINANCING AUTHORITY, a joint powers authority duly
organized and existing under and by virtue of the laws of the State of California (the
"Authority"), for value received, hereby promises to pay to the Registered Owner specified
above or registered assigns (the "Registered Owner"), on the Maturity Date specified above
(subject to any right of prior redemption hereinafter provided for), the Principal Amount
specified above, in lawful money of the United States of America, and to pay interest thereon in
like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the
date of authentication of this Bond unless (i) this Bond is authenticated on or before an Interest
Payment Date and after the close of business on the fifteenth day of the month preceding such
interest payment date, in which event it shall bear interest from such Interest Payment Date, or
(ii) this Bond is authenticated on or before October 15, 2004, in which event it shall bear interest
from the Original Issue Date specified above; provided, however, that if at the time of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest
from the Interest Payment Date to which interest has previously been paid or made available
for payment on this Bond, at the Interest Rate specified above, payable semiannually on May 1
and November 1 in each year, commencing November 1, 2004 (collectively, the "Interest
Payment Dates"), calculated on the basis of a 360-day year composed of twelve 30-day
months. Principal hereof and premium, if any, upon early redemption hereof are payable upon
presentation and surrender hereof at the corporate trust office (the "Office") of ,
as trustee (the "Trustee"), or such other place as designated by the Trustee. Interest hereon is
ayable by check of the Trustee mailed on the Interest Payment Date to the Registered Owner
ereof at the Registered Owner's address as it appears on the registration books of the Trustee
as of the close of business on the fifteenth day of the month preceding each Interest Payment
Date (a "Record Date"), or, upon written request filed with the Trustee at least five days prior
to such Record Date by a Registered Owner of at least $1,000,000 in aggregate principal amount
of Bonds (as hereinafter defined), by wire transfer in immediately available funds to an account
in the United States designated by such Registered Owner in such written reques, t.
Exhibit A
Page 1
20025.02
This Bond is not a debt of the City of Tustin (the "City"), Orange County, the State of
California, or any of its political subdivisions, and neither the City, said County, said State, nor
any of its political subdivisions, is liable hereon nor in any event shall this Bond be payable out
of any funds or properties of the Authority other than the Revenues (as defined in the Indenture
hereinafter defined).
This Bond is one of a duly authorized issue of bonds of the Authority designated as the
"Tustin Public Financing Authority Lease Revenue Bonds, 2002 Series A (Refinancing Project)"
(the "Bonds"), in an aggregate principal amount of dollars ($. ), all of like
tenor and date (except for such variation, if any, as may be required to designate vat3~g
numbers, maturities, interest rates or redemption provisions) and all issued pursuant to the
provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code,
commencing with section 6584 of said Code (the "Bond Law"), pursuant to an Indenture of
Trust, dated as of May 1, 2004, by and between the Authority and the Trustee (the
"Indenture"), and a resolution of the Authority adopted on ,2004. Reference is hereby
made to the Indenture (copies of which are on file at the office of the Authority) and all
supplements thereto for a description of the terms on which the Bonds are issued, the
provisions with regard to the nature and extent of the Revenues, and the rights thereunder of the
owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and
obligations of the Authority thereunder, to all of the provisions of which the Registered Owner
of this Bond, by acceptance hereof, assents and agrees.'
The City of Tustin (the "City") is proceeding to provide for the payment of the
Authority's (a) $38,000,000 2002 Revenue Anticipation Notes, 2002 Series A, and (b)
$22,000,000 2002 Revenue Anticipation Notes, 2002 Series B, of which $ ..... remains
outstanding and which mature on June 1, 2004. For the purpose of providing moneys for such
purposes, the City has leased certain real property (the "Property"), to the Authority pursuant
to a site lease, dated as of May 1, 2004 (the "Site Lease"). For the purpose of such financing,
the Authority has determined to issue the Bonds. In order to provide for the repayment of the
Bonds, the Authority will sublease the Property to the City pursuant to a lease agreement,
dated as of May 1, 2004 (the "Lease Agreement"), under which the City has agreed to make
lease payments to the Authority (the "Lease Payments") which have been calculated to be
sufficient to enable the Authority to pay the principal of and interest and premium (if any) on
the Bonds when due and payable.
This Bond and the interest and premium, if any, hereon and all other Bonds and the
interest and premium, if any, thereon (to the extent set forth in the Indenture) are special
obligations of the Authority, and are payable from, and are secured by a charge and lien on the
Revenues as defined in the Indenture, consisting primarily of Lease Payments. As and to the
extent set forth in the Indenture, all of the Revenues are exclusively and irrevocably pledged in
accordance with the terms hereof and the provisions of the Indenture, to the payment of the
principal of and interest and premium (if any) on the Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided in
the Indenture, but no such modification or amendment shall extend the fixed maturity of any
Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the time
of payment, or change the method of computing the rate of interest thereon, or extend the time
of payment of interest thereon, without the consent of the owner of each Bond so affected.
The Bonds maturing on or before May 1, , are not subject to optional redemption
prior to their respective stated maturities. The Bonds maturing on or after May 1, , are
subject to mandatory redemption, following the exercise of the City to optionally prepay Lease
Payments, as a whole, or in part in such order of maturity as the City shall designate (and, if no
Exhibit A
Page 2
specific order of redemption is designated by the City, in inverse order of maturity; on any date
on or after May 1, , from any available source of funds, at the following redemption prices
(expressed as a percentage of the principal amount of the Bonds to be redeemed) together with
accrued interest thereon to the date fixed for redemption:
Redemption Period
May 1, through April 30, ~
May 1, ~ through April 30, ~
May 1, __ and thereafter
Redemption Price
The Bonds are also subject to redemption as a whole, or in part on a pro rata basis
among maturities, on any date, to the extent the Trustee has received title or hazard insurance
proceeds or condemnation proceeds not used to repair or replace any portion of the Property
damaged or destroyed and elected by the City, to be used for such purpose, at a redemption
price equal to one hundred percent (100%) of the principal amount thereof plus interest accrued
thereon to the date fixed for redemption, without premium.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by
first class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption
date to the respective owners of any Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee, but neither failure to receive such notice nor
any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption
or the cessation of accrual of interest thereon from and after the date fixed for redemption.
If this Bond is called for redemption and payment is duly provided therefor as specified
in the Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect
provided in the Indenture, but such declaration and its consequences may be rescinded and
annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Office of the Trustee, or such other place as designated by the
Trustee, but only in the manner, subject to the limitations and upon payment of the charges
provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration
of such transfer, a new Bond or Bonds, of authorized denomination or denominations, for the
same aggregate principal amount and of the same maturity will be issued to the transferee in
exchange herefor. This Bond may be exchanged at the Office of the Trustee, or such other place
as designated by the Trustee, for Bonds of the same tenor, aggregate principal amount, interest
rate and maturity, of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any
notice to the contrary.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Authority or the Trustee for registration of
transfer, exchange, or payment, and any bond issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
Exhibit A
Page 3
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist,
have happened or have been performed in due and regular time, form and manner as required
by the Bond Law and the laws of the State of California and that the amount of this Bond,
together with all other indebtedness of the Authority, does not exceed any limit prescribed by
the Bond Law or any laws of the State of California, and is not in excess of the amount of
Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have
been manually signed by the Trustee.
IN WITNESS WHEREOF, the Tustin Public Financing Authority has caused this Bond to
be executed in its name and on its behalf with the facsimile signature of its Chairman and
attested to by the facsimile signature of its Secretary, all as of the Original Issue Date specified
above.
TUSTIN PUBLIC FINANCING
AUTHORITY
Attest:
By
Chairman
Secretary
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
, as Trustee
By
Authorized Signatory
Exhibit A
Page 4
STATEMENT OF INSURANCE
[TO COME]
Exhibit A
Page 5
FORM OF ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es) hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the registration books of the Trustee with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
Notice: Signature(s) must be guaranteed by a qualified Notice: The signature on this assign:re, ent must correspond
guarantor institution, with the name(s) as written on the face of the within
Bond in every particular without alteration or
enlargement or any d_hange whatsoever."
Exhibit A
Page 6
Agreement For Legal Services
(2002 Revenue Anticipation Notes)
THIS AGREEMENT FOR LEGAL SERVICES is entered into this 16th day of December,
2002, by and between the TUSTIN PUBLIC FINANCING AUTHORITY (the "Authority") and
the CITY OF TUSTIN (the "City") and QUINT & THIMMIG LLP, San Francisco, California
("Attorneys");
WITNESSETH:
WHEREAS, pursuant to that certain Settlement and Release Agreement, effected May
31, 2002 (the "Settlement Agreement"), by and among (1) the City, (2) the Authority, and (3)
the Santa Ana Unified School Authority ("SAUSD"), the City agreed to make certain payments
to SAUSD (the "City Payments"), to be derived from the proceeds of all land sales of all or a
portion of the EDC Acres (as such term is defined in the Settlement Agreement);
WHEREAS, the City has requested that the Authority issue and sell revenue
anticipation notes so that amounts, derived from the proceeds thereof, will be available for the
accelerated payment to SAUSD of $60 million, in full settlement of SAUSD v. City (OCSC No.
01CC02595);
WHEREAS, the City has agreed to convey a portion of the EDC Acres to the Authority
(the "Collateral Real Property") so that the Authority can offer the Collateral Real Property to
the purchasers of such revenue anticipation notes as security for the payment by the Authority
of the principal and interest thereon;
WHEREAS, the Authority has received commitments from Salomon Smith Barney, Inc.
to purchase such revenue anticipation notes;
WHEREAS, the Authority has determined to borrow the principal amount of sixty
million dollars ($60,000,000) by the issuance of temporary notes in two series, the Tustin Public
Financing Authority Revenue Anticipation Notes, 2002 Series A, in the aggregate principal
amount of $38,000,000 (the "Series A Notes"), and the Tustin Public Financing Authority
Revenue Anticipation Notes, 2002 Series B, in the aggregate principal amount of $22,000,000
(the "Series B Notes" and, with the Series A Notes, the "Notes");
WHEREAS, in connection with such proceedings the Authority and the City require the
advice and assistance of bond counsel;
WHEREAS, the Authority and the City have determined that Attorneys are qualified by
training and experience to perform the services of bond counsel, and Attorneys are willing to
provide such services; and
WHEREAS, the public interest, economy and general welfare will be served by this
Agreement for Legal Services;
NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS FOLLOWS:
Section 1. Duties of Attorneys. Attorneys shall do, carry out and perform all of the
following services as are necessary for the issuance of the Notes:
A. Consultation and cooperation with officials of the Authority, Authority legal counsel,
the City, the City Attorney, financing consultants and other consultants, staff and employees of
the Authority and the City, and assisting such consultants, staff and employees in the
formulation of a coordinated financial and legal Note issuance.
B. Preparation of all legal proceedings for the authorization, issuance and delivery of
Notes by the Authority; including preparation of the resolution authorizing the issuance of the
Notes, fixing the date, denominations, numbers, maturity and interest rates, providing the form
of the Notes and authorizing their execution, authentication and registration; certifying the
terms and conditions upon which the same are to be issued; providing for the setting up of
special funds for the disposition of proceeds of the sale of the Notes, including creation of
reserve funds, if any, and such other funds as may be advisable, and providing all other details
in connection therewith, including special covenants and clauses for the protection of the
interests of the Note holders; preparation of the resolution selling all or any part of the
authorized Note issue; preparation of all documents required for Note delivery, including
cumulative cash flow deficit certificates required by federal tax law, and supervising such
delivery; preparation of all other proceedings incidental to or in connection with the issuance,
sale and delivery of the Notes.
C. Application for any Internal Revenue Service or other nalings necessary to assure tax-
exempt status of the Notes, or as required by the purchasers of the Notes.
D. Upon completion of proceedings to the satisfaction of Attorneys, providing a legal
opinion approving in all regards the legality of all proceedings for the authorization, issuance
and delivery of Notes, and stating that interest on the Notes is excluded from gross income for
purposes of federal income taxes and is exempt from State of California personal income
taxation, which opinion shall inure to the benefit of the purchasers of the Notes.
E. Any and all legal consultation requested by the Authority concerning the Notes at any
time after delivery of the Notes.
F. Such other and further services as are normally performed by bond counsel in
connection with the issuance of the Notes.
Section 2. Compensation. For the services of Attorneys described in Section 1, including
any out-of-pocket expenses of the Authority or the City, the Authority will pay Attorneys a fee
of $60,000, due and payable upon the issuance of the Notes, payable from the proceeds of the
Notes or other available moneys of the Authority or the City.
If, for any reason, the Notes are not issued and sold, for the services of Attome~,s
described in Section 1, including any out-of-pocket expenses of the Authority or the Cit~, the
Authority will pay Attorneys a fee of $30,000, payable from available moneys of the Authority
or the City.
Section 3. Responsibilities of the Authority. The Authority and the City shall cooperate
with Attorneys and shall furnish Attorneys with certified copies of all proceedings taken by the
Authority, or other deemed necessary by Attorneys to render an opinion upon the validity of
such proceedings. All costs and expenses incurred incidental to the actual issuance and delivery
of Notes, including the cost and expense of preparing certified copies of proceedings required
by Attorneys in connection with the issuance of the Notes, the cost of preparing the Notes for
execution and delivery, all printing costs and publication costs, and any other expenses
incurred in connection with the issuance of Notes, shall be paid by the Authority or the City.
Section 4. Exceptions. Any services rendered in any litigation involving the Authority, the
City or the financing proceedings relating to the Notes are excepted from the services to be
-2-
rendered for the above compensation. For such services which Attorneys are directed to render
for and on behalf of the Authority or the City, compensation shall be on the basis of reasonable
fees to be agreed upon by the Authority and the City and Attorneys.
Section 5. Termination of Agreement. This Agreement for Legal Services may be
terminated by the Authority at any time by giving written notice to Attorneys with or without
cause. In the event of termination, all finished and unfinished documents, exhibits, project data,
reports, and evidence shall, at the option of Authority, becomes its property and shall be
delivered to it by Attorneys.
IN WITNESS WHEREOF, the Authority and Attorneys have executed this Agreement
for Legal Services as of the date first above written.
TUSTIN PUBLIC FINANCING
AUTHORITY
By
Executive Director
CITY OF TUSTIN
By
City Manager
QUINT & THIMMIG LLP
By
Brian D. Quint
-3-
I:Jnancid end l~,gernen! kdWs~
December 12, 2002
Lois Jeffrey, Esq.
City Attorney, City of Tustin
c/o Woodruff, Spradlin & Smart
701 South Parker Sh-cet, 8th Floor
Orange, CA 92868
City of Tustin
$60,000,000 Serios A and B Notes
De~r ~is:
This invoice is being submitted for Financial Advisory services rendered in connection
with the above referenced engagement.
Our f¢~ is as follows and may be wired to the account listed below:
Financial Advisory Services
Expenses
$60,000
543.92
Total:
Account ii: 003 4200964
Routing #: 3210 70007
Bank: Cai Fed
Regards,
~Prlncipal ~'
Gardner, Underwood & Bacon LLC
1212] WJL~re 8~vd.- Suite 207. Los Angeles · CA- g0025
Phone: (310) '~2.1200. Fax; OJ0) ~2-1208
DEC-13-~B82 12:47
?14 835 ?787