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HomeMy WebLinkAbout1986-403 , . . 1 2 RESOLUTION NO. 86-403 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING EXECUTION AND DELIVERY BY THE CITY OF LEASE AGREEMENT, TRUST AGREEMENT AND AGENCY AGREEMENT WITH RESPECT TO THE ISSUANCE AND SALE OF CERTIFICATES OF PARTICIPATION (CITY OF SAN BERNARDINO 1986 PROJECTS), APPOINTING TRUSTEE AND AUTHORIZING ISSUANCE OF SUCH CERTIFICATES IN AN AMOUNT NOT TO EXCEED $2,875,000 3 4 5 6 7 8 9 10 11 12 13 14 WHEREAS, the Mayor and Common Council of the City of San Bernardino (the "City") have determined that it is in the best interests of the City and its citizens that the City participate in the financing of the acquisition, construction and installation of (i) a fire station designated Park Centre Fire Station (the acquired certain land be by "Fire Station") to the on Redevelopment Agency of the City of San Bernardino (the "Agency") 15 16 17 and (ii) a computer-aided dispatching system and such other projects as may be referred to in the hereinafter referred to (the "Equipment Projects"), all through the Lease Agreement 18 19 20 21 22 23 24 25 26 27 28 execution and delivery by the Trustee hereinafter named of Certificates of Participation in a principal amount which shall not exceed $2,875,000 which will be designated Certificates of San Bernardino Projects) Participation (City of 1986 (the "Certificates"); and WHEREAS, in order to accomplish the acquisition, construction and installation of the Fire Station and Equipment Projects and the execution, delivery and sale of the Certificates, it is necessary that the City enter into the Lease Agreement, the hereinafter and the Agency Agreement, Agreement Trust more 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 particularly described, and that certain other action be taken and authorized; NOW, THEREFORE, BE IT RESOLVED AND ORDERED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 1. The agreements entitled "Lease Agreement" and "Agency Agreement" to be entered into by and between the City of San Bernardino and the Agency, dated as of October 1, 1986, which provide generally for (i) the construction and installation of the Fire Station and the acquisition and installation of the Equipment Projects by the City, as agent of the Agency, with the proceeds of the Certificates, (ii) the leasing by the Agency to the City of the completed improvements to the Fire Station and the site where it will be located, and the Equipment Projects, as installed, and (iii) the payment by the City to the Agency of Lease Payments in amounts which will be sufficient to pay the principal and interest owing on the Certificates in each year following the completion of the acquisition, construction and installation of the Fire Station and the Equipment Projects, are hereby approved, and the Mayor and City Clerk are hereby authorized to execute, acknowledge and deliver said agreements on behalf of the City. 2. The agreement entitled "Trust Agreement" to be entered into by and among the City, the Agency and Security Pacific National Bank, as Trustee (the "Trustee"), dated as of October 1, 1986, which provides generally for (i) the execution and delivery by the Trustee of the Certificates, (ii) the establishment and maintenance by the Trustee of certain funds for the benefit of the City and the owners of the Certificates, and (iii) the performance of other duties by the Trustee, is hereby -2- . . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 approved and the Mayor and City Clerk are hereby authorized to execute, acknowledge and deliver said agreement on behalf of the City. 3. The agreement entitled "Assignment Agreement" to be entered into by and between the Agency and the Trustee, dated as of October 1, 1986, which provides for the assignment by the Agency to the Trustee of all the Agency's rights under the Lease Agreement, is hereby approved. 4. The approval of said agreements given hereby shall apply to any modification or amendment of any of said agreements which is specified and approved by Special Counsel to the City and the City Treasurer as being necessary to carry out the provisions thereof and the authorizations contained in this resolution and approved as to form by the City Attorney.- 5. Security Pacific National Bank is hereby appointed as Trustee pursuant to the Trust Agreement, to take any and all action provided therein to be taken by the Trustee, and is further designated and appointed as paying agent for the Certificates. 6. The form of the Certificates as set forth in the Trust Agreement is hereby approved, and Security Pacific National Bank, as Trustee, is hereby authorized to execute and deliver the Certificates in an aggregate principal amount which shall not exceed $2,875,000, subject to an award of the sale thereof by this City Council, and to apply and expend the proceeds thereof as specified in the Trust Agreement: provided that the Financial Consultant and City Treasurer are hereby authorized to determine the final aggregate principal amount of the Certificates to be executed and delivered based on their determination of the amount -3- . 1 2 needed to finance the cost of the acquisition of the real property and improvements to be acquired, the cost of the construction of the Fire Station and the cost of the acquisition and installation 3 4 5 6 7 8 9 10 11 of the Equipment Projects. 7. The Mayor, City Clerk, City Treasurer or any other authorized staff member or authorized public official are hereby authorized to take any and all action which is directed by Special Counsel to the City with respect to the execution, acknowledgement and delivery of the aforementioned agreements and the execution, delivery and sale of the Certificates, including but not limited to purchasing municipal bond insurance, which in the opinion of said Special Counsel is necessary in order for the authorizations and direction provided in this resolution to be carried out. 12 13 14 15 16 17 8. This Resolution shall take effect upon adoption. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San rAQ'111.'=lr meeting thereof, held on the Bernardino at a 18 19 20 lit-hday of n~t-nhp~ 1986, by the following vote, to wit: Council Members AYES: Estrada, Reilly, Hernandez, Marks, Quiel. Frazier. Strickler 21 22 23 24 25 26 27 28 NAYS: None ABSENT: None ~~#~ Ci~ erk -4- .. ~, , 1 The foregoing resolution is hereby approved this {16l day 2 of O"t-nhAr , 1986. 3 i~~h;H&:F-<T San Bernardino 4 5 6 7 8 9 10 11 12 13 14 Approved as to form: ~~fUCJ~ City Att:orney 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5- , I " :' I - SBE00087-7/2272S/dh 03/25/87 #6 REIMBURSEMENT AGREEMENT 1987 REFUNDING CERTIFICATES OF PARTICIPATION (SOUTH VALLE PUBLIC IMPROVEMENTS PROJECT) Evidencing a Proportionate Interest of the Holder Thereof in Base Rental Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Property Pursuant to a Lease Agreement with the Redevelopment Agency of the City of San Bernardino This Reimbursement Agreement entered into this first (1st) day of April, 1987, by and between the Redevelopment Agency of the City of San Bernardino (the "Agency"), a redevelopment agency, being a pUblic body, corporate and politic, duly organized and existing under the laws of the State of California, - and the" Ci-ty of San Bernardino, California (the "City"), a municipal corporation, being a charter city, duly organized and existing under the Constitution and laws of the State of California. RECITALS A. The Agency is a redevelopment agency duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the California Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California). B. A Redevelopment Plan for the redevelopment project area known and designated as the "South Valle Redevelopment project" (the "Project Area") has been considered and approved by the City and the Agency. In accordance with and to implement said Redevelopment Plan and for purposes of implementing redevelopment activities of the Agency within a Project Area, the Agency entered into a certain Lease Agreement with the City dated as of June 1, 1984 (the "1984 Lease Agreement"), pursuant to which the City agreed to pay certain base rental payments and additional rental payments to the Agency for the construction and acquisition of certain public improvements to be used by the City, and related appurtenances and improvements to be constructed in the Project Area (the "Project"). - 1 - II In order to finance the construction of the Project. the Agency has previously authorized the sale and delivery of certificates of participation evidencing proportionate ownership interests in the right to receive base rental payments and additional rental payments from the City under the 1984 Lease Agreement in an aggregate principal amount equal to $2.740.000 (the "1984 Certificates") pursuant to the terms of a certain Assignment and Trust Agreement dated as of June 1. 1984 (the "1984 Trust Agreement"). by and among the City. the Agency and the trustee thereunder. C. In connection with the 1984 Certificates. the Agency and the Mayor and Common Council of the City each have determined by resolution pursuant to Section 33445 of the Health and Safety Code that the construction of the Project shall be of benefit to the Project Area and the same are for purposes of redevelopment and shall be located within the Project Area. the implementation" of which is permitted under the circumstances as herein recited. The Agency has agreed to reimburse the City or otherwise construct or cause to be constructed the Project with funds generally available to the Agency or with tax increment revenues of the Agency generally or with tax increment revenues to be received from the Project Area. The Agency and the City have found and determined that there are no other reasonable means of refinancing the construction of the Project. D. The City agreed to make annual base rental payments and additional rental payments to the Agency. pursuant to the 1984 Lease Agreement for the use of the Project i~~ficient amounts to pay the amounts due annually to the holders of the 1984 Certificates. In consideration for the City entering into the 1984 Lease Agreement and making such base rental payments and additional rental payments by the City. including, without limitation. tax increment revenues allocated and paid to the Agency with respect to the Project Area or other redevelopment project areas (the "Revenues"), the Agency has agreed to reimburse the City for such payments from certain tax increment revenues of the Agency as permitted by Health and Safety Code Section 33445 and 33679 (the "Reimbursement Amount"). E. Pursuant to the Assignment and Trust Agreement. dated as of April 1. 1987 (the "Trust Agreement"), by and among the City. the Agency and Security Pacific National Bank (the "Trustee") the approximate $3,200.000 1987 Refunding Certificates of Participation (South Valle Public Improvements Project) Evidencing a Proportionate Interest of the Holder Thereof in Base Rental Payments to be Made by the City of San Bernardino. California. As the Rental for Certain Property Pursuant to a Lease Agreement with the Redevelopment Agency of the City of San Bernardino (the "Certificates") are being executed and delivered for the purpose of providing funds to refund and defease the 1984 Certificates. F. The Agency and the Mayor and Common Counci 1 of the City have approved the execution and delivery of the Certificates. a portion of the proceeds of which shall be set apart and irrevocably - 2 - segregated in a special trust fund (the "Escrow Fund") to be invested in certain federal securities in such principal amounts which, together with the interest earnings thereon, will be sufficient to defease the liens and covenants created by the 1984 Trust Agreement and to discharge and satisfy all rights of the owners of the 1984 Certificates thereunder by ensuring the payment of the principal of, premium, if any, and interest on the 1984 Certificates on their respective maturity dates. G. Pursuant to a certain Site Lease contained within the Lease Agreement by and between the City and the Agency dated as of April 1, 1987 (the "Lease Agreement"), the City will continue to lease certain property to the Agency for the purpose of financing certain Project costs and, pursuant to a certain Project Lease contained within the Lease Agreement, the City shall lease the Project from the Agency to provide' for its governmental uses and needs and in furtherance of its pUblic purposes. The City intends to make certain Base Rental Payments and Additional Rental Payments to the Agency from funds generally available to the City in the general fund of the City for use of the Project in sufficient amounts to pay the amounts due annually to the holders of the Certificates in the manner and as set forth and provided in the Lease Agreement. Pursuant to this Reimbursement Agreement the Agency intends to reimburse the City for the payments to be made by the City under the Lease Agreement and continue to pledge certain tax increment revenues as may be legally available to the Agency for such purpose; provided, however, that this Reimbursement Agreement shall be entered into solely for the purpose of clarifying that the Reimbursement Agreement by and between the City and the Agency dated as of June 1, 1984 (the "1984 Reimbursement Agreement") shall be applicable to the Certificates for the refunding of the 1984 Certificates and that this Reimbursement Agreement shall not obligate the Agency to incur any further financial obligation than as originally provided in the 1984 Reimbursement Agreement for the 1984 Certificates without the necessary findings pursuant to Health and Safety Code Section 33679 having first been made. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions set forth herein, the parties hereto agree to as follows: Section 1. Reimbursement Agreement. The Agency hereby agrees to continue to pay the Reimbursement Amount to the City semi-annually from the Revenues. If and to the extent that the Revenues available to the Agency in any fiscal year are insufficient to pay the Reimbursement Amount or any portion thereof, the unpaid Reimbursement Amount or portion thereof shall be added to the Reimbursement Amount due and payable to the City for any subsequent fiscal year during the term of the Lease Agreement. The Agency's obligation to reimburse the City as set forth in this Section shall constitute an "indebtedness" of the Agency within the meaning of - 3 - Health and Safety Code Section 33675. The Agency the City an annual bUdget regarding the Project and regarding actual receipts and expenditures with increment from the Project Area. sha 11 submi t to an annual report respect to tax Any amounts advanced by the City to the Agency for the purpose of enabling the Agency to meet its obligations hereunder shall bear interest at the rate of six percent (6\) per annum from the date of such advance until repaid. Section 2. Priority of Indebtedness. The indebtedness of the Agency to the City created by this Agreement shall be a first and prior pledge of the tax increment revenues and a lien thereon to the City, except as to amounts, if any, as may hereafter be required to be paid to any affected taxing agency pursuant to an agreement duly authorized and approved in accordance with Health and' Safety Code Section 33401 and approved by both the Agency and the City. Prior to the issuance of any tax allocation bonds of the Agency, the City may amend this Agreement to provide that the pledge hereunder may be released or this Agreement shall be made subordinate to the rights of the holders of any such tax allocation bonds to receive the tax increment revenues attributable to the Project Area. Any such amendment must be duly approved and executed by the Agency and the City. The tax increment revenues pledged hereunder shall be limited to that which may be attributable to the Redevelopment Plan for the Project Area. - 4 - IN WITNESS WHEREOF, the Agency and the City have executed this Agreement as of the date first set forth herein above. CITY OF SAN BERNARDINO, CALIFORNIA By: ~71' (SEAL) ATTEST: By: JAttal~~ 1ty Clerk APPROVED AS TO FORM: A. ~ /~7r~ J"" ~ Ci ty Attorney REDEVELOPMENT 'AGENCY OF THE CITY OF SAN BERNARDINO By,~)J~ (SEAL) A=~~ Secretary . APPROVED AS TO FORM: ~{-tt:~v Agency Counsel ~ SBE00087-4/2260S/sm 04/14/87 #4 ESCROW AGREEMENT 1987 REFUNDING CERTIFICATES OF PARTICIPATION (SOUTH VALLE PUBLIC IMPROVEMENTS PROJECT) Evidencing a Proportionate Interest of the Holder Thereof in Base Rental Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Property Pursuant to a Lease Agreement with the Redevelopment Agency of the City of San Bernardino This Escrow Agreement, dated for convenience as of April 1, 1987, by and between the City of San Bernardino, California (the -City-), duly organized and existing under and pursuant to the Constitution and the laws of the State of California, and Security Pacific National Bank, in the City of Los Angeles, California, as Escrow Bank pursuant to this Agreement (hereinafter referred to as -Escrow Bank-), a bank having and exercising full and complete trust powers, duly organized and existing under the laws of the United States of America, being a member of the Federal Deposit Insurance Corporation, and having an office and a principal place of business in the City of Los Angeles, California. WIT N E SSE T H: WHEREAS, the powers of the City include the power to issue certificates of participation and the power to issue refunding certificates of participation for the purpose of paying or retiring certificates of participation previously issued; and WHEREAS, the Mayor and Conunon Council of the City of San Bernardino, California (the Mayor and Conunon Council-) has heretofore adopted Resolution No. 84-210 on June 4, 1984, providing for the issuance of the -$2,740,000 1984 Certificates of Participation (South Valle Public Improvements Project) (the -1984 Certificates-); and . WHEREAS, the City deems it necessary to issue at this time an aggregate principal amount e!!timated to be $3,280,000 of the refunding certificates and to use a portion of the proceeds of such - 1 - certificates to refund the outstanding balance of the 1984 Certificates; and WHEREAS, the purposes stated above will be accomplished by issuing at this time an aggregate principal amount equal to $3,280,000 of refunding certificates pursuant to the Assignment and Trust Agreement by and among the City, the Redevelopment Agency of the City of San Bernardino, California (the -Agency-), and the Escrow Bank as Trustee thereunder dated as of April I, 1987 (the -Trust Agreement-), to be known as the -$3,280,000 1987 Refunding Certificates of Participation (South Valle Public Improvements Project)- (the -Certificates-), a portion of the proceeds of which will be set apart and irrevocably segregated in a special trust fund to be held by the Escrow Bank called the-$3,280,OOO 1987 Refunding Certificates of Participation (South Valle Public Improvements Project), Escrow Fund- (the -Escrow Fund-) (to be invested in Qualified Investments, as defined in the Trust Agreement, in such principal amounts which, together with the interest earnings thereon, will be sufficient (as determined by the original purchaser of the Certificates) to defease the liens and covenants created by the Assignment and Trust Agreement by and among the City, the Agency and The Bank of California dated as of June I, 1984 (the -1984 Trust Agreement-), by ensuring the payment of the principal of and interest and redemption premiums, if any, on the 1984 Certificates as they become due; and WHEREAS, the City has caused such calculations to be diligently made and verified prior to the delivery of the Certificates so that the proper amounts shall be placed in the Escrow Fund on or immediately following the delivery of the Certificates and the Escrow Bank shall have no responsibility for the correctness of the calculations; and in the thereon; WHEREAS, the 1984 principal amount and Certificates shall mature on June I, 1987 thereof together with accrued interest WHEREAS, the Escrow Fund will be initially funded with a total amount equal to $2,871,596.11; and WHEREAS, the Escrow Bank shall invest the initial deposit to the Escrow Fund in Qualified Investments as defined in the Trust Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth, the parties hereto agree as follows: Section 1. Receipt of copies of the 1984 Trust Agreement and the Trust Agreement, certified to be true and correct by the City Clerk, is hereby acknowledged by the Escrow Bank and said documents shall be deemed to be incorporated as part hereof in the same manner and with the same effect as if it were fully set forth herein. - 2 - Section 2. The Escrow Bank hereby agrees to hold in escrow the Escrow Fund (created pursuant to the Trust Agreement) as a special trust fund separate and apart from any other funds of the Agency or the Escrow Bank and to use the moneys and investments deposited therein solely for those purposes required or permitted by the Bond Resolution and recited therein and herein. The Escrow Fund will be established by the deposit with the Escrow Bank of certain funds of the Agency as set forth above. The Escrow Bank shall be under no obligation or responsibility to utilize any other moneys held in any of its other funds and accounts except for those moneys and investments on deposit in the Escrow Fund. Section 3. The Escrow Bank shall withdraw moneys from the Escrow Fund in sufficient amounts and at the times to make the payment without default of the principal of the 1984 Certificates upon their maturity on June 1, 1987, together with accrued interest to such date. On or before such maturity date, the Escrow Bank shall transmit such sums to the paying agent for the 1984 Certificates appointed under the 1984 Trust Agreement. Accrued interest, if any, on the original deposit shall be transferred to the Costs of Issuance Account on or after June 1, 1987. Section 4. The Escrow Bank hereby establishes the Escrow Fund and accepts the deposits made pursuant to this Agreement. The Escrow Fund shall be invested in Qualified Investments or in such manner as shall be in accordance with Section 148 of the Internal Revenue Code of 1986, and the regulations promulgated thereunder. Section 5. The Escrow Bank shall make such arrangements with the Trustee or paying agent for the 1984 Certificates as are necessary or desirable for carrying out this Escrow Agreement. Section 6. The escrow created hereby shall be irrevocable and the holders of the 1984 Certificates shall have an express lien on all moneys in trust in the Escrow Fund until paid out, used or applied in accordance with this Agreement. Section 7. The Escrow Bank' s fees and costs in consideration of the services rendered and to be rendered by the Escrow Bank in carrying out the provisions of this Agreement shall be an amount which is to be paid to the Escrow Bank by the City at the time of delivery of the funds to the Escrow Bank for purposes of establishing the Escrow Fund, and the Escrow Bank will be compensated separately and in accordance with the Trust Agreement for services rendered as the Trustee under the Trust Agreement. The Escrow Bank shall have no lien whatsoever upon any of the moneys, securities or obligations in said Escrow Fund for the payment of such fees and expenses. The City hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Bank and its respective successors, assigns, agents and servants from and against. any and all -liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and - 3 - disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Escrow Bank (whether or not also indemnified against by the Agency or any other person under any other agreement or instrument) and in any way relating to or arising out of the execution and delivery of this Agreement, the establishment of the Escrow Fund, the retention of the moneys therein and any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the provisions of this Escrow Agreement, or as may arise by reason of any act, omission or error of the Escrow Bank made in good faith in the conduct of its duties; provided, however, that the Agency shall not be required to indemnify the Escrow Bank against its own negligence, active or passive, or misconduct. The Escrow Bank shall not be responsible for the sufficiency of the Escrow Fund. In no event shall the City be liable to any person by reason of the transactions contemplated hereby other than to the Escrow Bank as set forth in this Section 7. The indemnities contained in this Section shall survive the termination of this Agreement. All moneys remaining in the Escrow Fund pursuant to this Agreement upon payment in full of the 1984 Certificates and interest thereon and after payment of any and all fees and expenses of the Escrow Bank due hereunder shall be remitted to the City and used and applied by the City in accordance with the laws of the State of California. Section 8. If anyone or more of the covenants or agreements provided in this Agreement on the part of the parties to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. Section 9. Whenever herein the City or the Escrow Bank are named or are referred to, such provisions shall be deemed to include any successor of the City or the Escrow Bank, respectively, immediate or intermediate, whether so expressed or not. All of the stipulations, obligations and agreements by or on behalf of, and other provisions for the benefit of, the City or the Escrow Bank contained herein: (1) Shall bind and inure to the benefit for any such successor, and (2) Shall bind and inure to the benefit of any officer, board, authority, agent or instrumentality to whom or to which there shall be transferred by or. in accordance with law any right, power or duty of the City or the Escrow Bank, respectively, or of its successor, the possession of which is necessary or appropriate to comply with any such stipulations, Obligations, agreements or other provisions hereof. ~ - 4 - Section 10. The Escrow Bank shall have no obligation to make any payment or disbursement of any type or incur any financial liability in the performance of its duties under this Agreement unless the City shall have deposited sufficient funds with the Escrow Bank. The Escrow Bank shall have no duties or obligations other than those specifically set forth herein. The Escrow Bank may rely and shall be protected in acting upon the written or oral instructions of the City or its agents relating to any matter or action as Escrow Bank under this Agreement. Section 11. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original and shall constitute and be but one and the same instrument. . - 5 - IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their duly authorized officers and their corporate seals to be hereunto affixed and attested as of this first (1st) day of April, 1987. (SEAL) Attest: By: -J---'1a,"~~ City Clerk (BANK SEAL) CITY OF SAN BERNARDINO, CALIFORNIA By, !&J 7l~ ayor SECURITY PACIFIC NATIONAL BANK "ESCROW BANK" By: Authorized Officer By: Authorized Officer ( ." IN WITNESS WHEREOF. the parties hereto have each caused this Agreement to be executed by their duly authorized officers and their corporate seals to be hereunto affixed and attested as of this first (1st) day of April. 1987. CITY OF SAN BERNARDINO. CALIFORNIA By: Mayor (SEAL) Attest: By: City Clerk SECURITY PACIFIC NATIONAL BANK "ESCROW BANK" By: Authorized Offic r (BANK SEAL) /2260S ~ : . CHICAGO TITLE COMPA~Y Recording requested b and return to: Best, Best & Krieger P.O. Box 1028 Riverside, CA 92502 ~ , CDS DEP H /~ _ LfO}) RECORDED IN OFFICIAL RECORDS 1986 NOV 25 P~112: 21 SAN 6ERNARDINO CO.. CAl.IF. SVY USA FTB DBP CD (JRR) 86-357444 RELATING TO CITY OF SAN BERNARDINO 1986 PROJECTS LEASE AGREEMENT Dated as of October 1, 1986 by and between THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, as Lessor and THE CITY OF SAN BERNARDINO, as Lessee ~ 'I t. '. ~ , . 86-357444 TABLE OF CONTENTS Page PARTIES 1 . . . . . . . . . . . . . . . . . . . . . . . . . . " . . . . . . . . . . RECITALS 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1.1 Definitions............................ 2 SECTION 1.2 Exhibits............................... 7 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2.1 Representations, Covenants and Warranties of the City............... 7 SECTION 2.2 Representations, Covenants and Warranties of the Lessor............. 8 ARTICLE III DEPOSIT OF MONEYS: ACQUISITION AND CONSTRUCTION OF THE SITES AND THE PROJECTS SECTION 3.1 Deposit of Moneys...................... 9 SECTION 3.2 Construction and Acquisition of the Projects...................... 9 SECTION 3.3 Payment of Acquisition and Construction Costs................... 10 SECTION 3.4 Unexpended Proceeds.................... 10 ARTICLE IV AGREEMENT TO LEASE: TERMINATION OF THIS LEASE: LEASE PAYMENTS: TITLE TO THE PROJECTS SECTION 4.1 Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 4.2 Term of Lease.......................... 11 SECTION 4.3 Termination of Term.................... 11 -i- , 86-357444 SECTION 4.4 Possession............................. 11 SECTION 4.5 Lease Payments......................... 12 SECTION 4.6 Quiet Enjoyment........................ 15 SECTION 4.7 Title.................................. 15 SECTION 4.8 Additional Payments.................... 16 SECTION 4.9 Abatement of Rental in the Event of Delay in Completion of Projects........ 16 ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS SECTION 5.1 Maintenance, Utilities, Taxes and Assessments.......................... 16 SECTION 5.2 Modification of Projects............... 17 SECTION 5.3 Public Liability Insurance............. 18 SECTION 5.4 Theft, Fire and Extended Coverage Insurance. . . . . . . . . . . . .. . . . . . . . . . . . . . . 18 SECTION 5.5 Rental Interruption or Use and Occupancy Insurance.................. 19 SECTION 5.6 Title Insurance........................ 19 SECTION 5.7 Insurance Net Proceeds; Form of Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 5.8 Advances............................... 20 SECTION 5.9 Installation of City's Equipment....... 20 SECTION 5.10 Liens.................................. 20 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1 Eminent Domain......................... 21 SECTION 6.2 Application of Net Proceeds............ 21 -ii- , 86-357444 SECTION 6.3 Abatement of Rental in the Event of Damage or Destruction................ 22 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS SECTION 7.1 Disclaimer of Warranties............... 22 SECTION 7.2 Access to the Site and the Projects......................... 23 SECTION 7.3 Release and Indemnification Covenants............................ 23 ARTICLE VIII ASSIGNMENT, SUBLEASING; AMENDMENT; SECURITY INTEREST SECTION 8.1 Assignment by the Lessor............... 24 SECTION 8.2 Assignment and Subleasing by the City.......................... 24 SECTION 8.3 Amendment of this Lease................ 24 SECTION 8.4 Security Interest...................... 24 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1 Events of Default Defined.............. 25 SECTION 9.2 Remedies on Default.................... 26 SECTION 9.3 No Remedy Exclusive.................... 28 SECTION 9.4 Agreement to Pay Attorneys' Fees and Expenses.................... 29 SECTION 9.5 No Additional Waiver Implied by One Waiver........................ 29 SECTION 9.6 Application of Proceeds................ 29 SECTION 9.7 Trustee and Certificate Owners to Exercise Rights................... 29 -iii- , . 86-3574(14 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1 Security Deposit...................... 29 SECTION 10.2 Optional Prepayment................... 30 SECTION 10.3 Mandatory Prepayment From Net Proceeds of Insurance, Eminent Domain or Sale...................... 31 SECTION 10.4 Credit for Amounts on Deposit......... 31 ARTICLE XI MISCELLANEOUS SECTION 11.1 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 11.2 Binding Effect........................ 32 SECTION 11.3 Severabili ty. . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 11.4 Net-Net-Net Lease..................... 32 SECTION 11.5 Further Assurances and Corrective Instruments......................... 32 SECTION 11.6 Execution in Counterparts............. 32 SECTION 11.7 Applicable Law........................ 33 SECTION 11.8 Lessor and City Representatives..................... 33 SECTION 11.9 Captions.............................. 33 EXECUTION........................................... 34 EXHIBIT A: Schedule of Lease Payments EXHIBIT B: Schedule of Prepayment Dates and Prepayment Prices EXHIBIT C: Descriptions of Site and Projects -iv- JRR0250A . 86-357444 LEASE AGREEMENT THIS LEASE AGREEMENT, dated for convenience as of October 1, 1986, is entered into by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, a duly organized and existing under the laws of the State of California, as lessor (the "Lessor"), and the CITY OF SAN BERNARDINO, a chartered city, duly organized and existing under the Constitution and laws of the State of California, as lessee (the "City"). WIT N E SSE T H WHEREAS, the City desires to have the Lessor construct for the City a fire station designated Park Centre Fire Station on certain land owned by the Lessor which the Lessor proposes to lease to the City pursuant to this Lease Agreement, and to acquire for the City certain items of equipment; and ,WHEREAS, in order to provide funds to acquire said real property and improvements, to improve and construct such public improvements and to acquire said items of equip- ment, the Lessor proposes to lease such public improvements, real property and equipment to the City, and the City is authorized pursuant to the Constitution and laws of the State of California to enter into lease agreements for such purposes; and WHEREAS, the Lessor for the acquisition of said and construction of such acquisition of said items of to this Lease; will cause to be provided funds real property, the improvement public improvements and the equipment to be leased pursuant NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: , , 86-357444 ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1.1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement, have the meanings herein specified. "Acquisition and Construction Costs" means (i) all Delivery Costs; and (ii) all costs of improving, construc- ting, installing and equipping the Projects, including but not limited to: (i) all costs which the Lessor or the City shall be required to pay to a Contractor or any other person under the terms of any contract or contracts for the improving, construction, instal- lation and equipping of the Projects; (ii) obligations of the Lessor or the City incurred for labor and materials (including obli- gations payable to the Lessor or the City for actual out-of-pocket expenses of the Lessor or the City) in connection with the improving, construc- tion, installation and equipping of the Projects, including reimbursement to the Lessor or the Ci ty for all advances and payments made in connection with the Projects prior to or after delivery of the Certificates; (i ii) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect during the course of construction of the Projects; (iv) all costs of engineering and architec- tural services, including the actual out-of-pocket costs of the Lessor or the City for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as for the performance of all other duties required by or consequent to the proper acquisition, construction, improvement, equipping and installation of the Projects; and (v) any sums required to reimburse the Lessor or the City for advances made by the Lessor or the Ci ty for any of the above i terns or for any other costs incurred and for work done by the Lessor or -2- , 86;...357444 the City which are properly chargeable to the Projects. "Acquisition Fund" established and held by the the Trust Agreement. means the fund by that name City pursuant to Article III of dated as Lessor, thereto. "Agency Agreement" means of October 1, 1986, by and and any duly authorized the Agency Agreement, between the City and the and executed amendment "Assignment Agreement" means the Assignment Agreement, dated as of October 1, 1986, by and between the Lessor and the Trustee, and any duly authorized and executed amendment thereto. "Certificate of Completion" means, with respect to the improvement, construction and equipping of the Fire Station Project, a certificate of an architect, approved by the City Representative, stating that such portions of the Projects have been completed substantially in accordance with the plans and specifications therefor, and with respect to the Equipment Project, means a certificate of the City Representative stating that the acquisition and installation of such equipment has been satisfactorily completed and that the equipment is fully operational. "Certificates of participation" or "Certificates" means the $2,875,000 aggregate prlncipal amount of Certifi- cates of Participation (City of San Bernardino 1986 Projects), to be executed and delivered pursuant to the Trust Agreement. Certificate Year" means November 25, 1986 through November 24, 1987 and each successive l2-month period there- after so long as any Certificates remain Outstanding. "City" means The City of San Bernardino, California, a chartered city duly organized and existing under the Constitution and laws of the State of California. "City Representative" means the City Treasurer of the City or a person authorized by the Mayor and Common Council of the City to act on behalf of the City under or with respect to this Lease. lOCi ty Treasurer" means the Ci ty Treasurer of the City of San Bernardino, California, or such other person designated by the Mayor and the Common Council of the City. -3- 86-357444 "Closing Date" means the day when the Certificates of Participation, duly executed by the Trustee, are deliv- ered to the original purchaser thereof. "Contractors" means the contractors from whom the City or the Lessor has ordered or caused to be ordered or with whom the City or the Lessor has contracted or caused to be contracted for the construction, installation and equipping of the Projects. "Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the City or the Lessor relating to the execution, sale and delivery of this Lease Agreement or the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee (including legal fees), financing discounts, legal fees and charges, insurance fees and charges, financial and other professional consultant fees, costs of rating agencies or credit ratings, Certificate insurance premiums, fees for execution, trans- portation and safekeeping of the Certificates, and charges and fees in connection with the foregoing. "Equipment Project" means the items of equipment listed in Exhibit C attached to this Lease Agreement which are to be acquired by the Lessor pursuant to Section 3.2 hereof from moneys on deposit in the Acquisition Fund, and leased by the Lessor to the City. "Event of Default" means one or more events of default as defined in Article IX of this Lease. "Federal Securities" means any of the following which are noncallable and which at the time of investment are legal investments under the laws of the State of Cali- fornia for trust funds held by the Trustee: (a) direct general obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of Amer ica), or obligations' the payment of pr incipal of and interest on which are unconditionally guaranteed by the United States of America; or (b) bonds, debentures or notes or other evi- dence of indebtedness payable in cash issued by one or a combination of any of the following: federal agencies whose obligations represent the full faith and credit of the United States of America, Export Import Bank of the United States, Federal Financing Bank, Farmer's Home Adminis- -4- 86-357444 tration, Public Housing Authority, and Government National Mortgage Association. "Fire Station Project" means the improvements to be constructed and the equipment to be installed on the Site identified as the "Park Centre Fire Station Site" in Exhibit C attached to this Lease Agreement pursuant to Section 3.2 hereof from moneys on deposit in the Acquisition Fund. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Lessor, the Trustee or the City. "Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to Article VII of the Trust Agreement. "Lease Agreement" or "Lease" means this Lease Agreement together with any duly authorized and executed amendment hereto. "Lease Payment" means any payment required to be made by the City pursuant to Section 4.5 of this Lease and as set forth in Exhibit A attached to this Lease. "Lease Payment Date" means the dates upon which the City is to make the Lease Payments pursuant to Section 4.5 of this Lease and as set forth in Exhibit A attached to this Lease. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Article V of the Trust Agreement. "Lessor" means the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic or its successors and assigns. "Lessor Representative" means the Chairman or the Executive Director of the Lessor, or any person authorized to act on behalf of the Lessor under or with respect to this Lease as evidenced by a resolution conferring such authorization adopted by the Board of Directors of the Lessor. "Net Proceeds" means any insurance proceeds or con- demnation award in excess of $50,000, paid with respect to the Projects or the Site, or any proceeds resulting from the sale of any or all of the Projects or the Site pursuant to Section 9.2(b) of this Lease, remaining after payment -5- 86-357444 therefrom of all expenses incurred in the collection thereof. "Owner" or "Certificate Owner" or "Owner of a Certificate", or any similar term, when used with respect to a Certificate means the person in whose name such fully registered Certificate shall be registered. "Permitted Encumbrances" means, as of any particu- lar time: (i) liens for general ad valorem taxes and as- sessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V hereof, permit to remain unpaid; (ii) the Assignment Agreement; (iii) this Lease Agreement; (iv) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or per- fected in the manner prescribed by law; (v) easements, rights of way, mineral rights, dr illing rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the City certifies in writing will not materially impair the use of the Site or the Projects; and (vi) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions estab- lished following the date of recordation of this Lease and to which the Lessor and the City consent in writing. "Prepayment Date" means any date on which the City may exercise its option to prepay all or a portion of the remaining Lease Payments, as set forth in Exhibit B attached to this Lease. "Prepayment Price" means the price to be paid by the City to exercise its option to prepay all or a portion of the remaining Lease Payments, on any Prepayment Date, as set forth in Exhibit B attached to this Lease. "Projects" includes the Fire Station Project and the Equipment Project, and means all of the Projects, the acquisition, construction, improvement and equipping of which have been completed from moneys deposited in the Acquisition Fund and disbursed for such purpose pursuant to this Lease and Article III of the Trust Agreement. The term "Project" means anyone of the Projects. "Reserve Fund" means the fund by that named estab- lished and held by the Trustee pursuant to Section 6.01 of the Trust Agreement. "Reserve Requirement" means as of any date of calculation, an amount equal to the maximum aggregate Lease Payments required to be paid in the Certificate year of calculation or any subsequent Certificate year. -6- 86-357444 "Site" means that certain parcel of real property described in Exhibit C to this Lease Agreement, on which the Fire Station Project is to be located. "Term of this Lease" or "Term" during which this Lease is in effect:,as Section 4.2 of this Lease. means the time provided for in "Trustee" means Security Pacific National Bank, or any successor thereto acting as Trustee pursuant to the Trust Agreement. "Trust Agreement" means the Trust Agreement, dated as of October 1, 1986, by and among the Trustee, the Lessor and the City, together with any duly authorized and executed amendment thereto. SECTION 1.2. Exhibits. The following Exhibits are attached to, and by reference made a part of, this Lease: Exhibit A: The schedule of Lease Payments to be paid by the City hereunder, showing the date and amount of each Lease Payment. Exhibit B: The schedule of Prepayment Dates and corresponding Prepayment Prices. Exhibit C: The descriptions of the real property constituting the Site and the improvements and equipment to be constructed and installed thereon, and the descriptions of the equipment included in the Equipment Project. ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2.1. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants to the Lessor as follows: (a) Due Organization and Existence. The City is a chartered city, duly organized and existing under the Constitution and laws of the State of California. (b) Authorization. The Constitution and the laws of the State of California authorize the City to enter into this Lease, the Agency Agreement and the Trust Agree- ment and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid -7- 86-357444 Agreements, and the City has duly authorized and executed all of the aforesaid Agreements. (c) No Violations. Neither the execution and delivery of this Lease, the Agency Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, con- flicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instru- ment to which the City is now a party or by which the City is bound, or constitutes a default under any of the fore- going, or results in the creation. or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, or upon the Site or the Projects, except Permitted Encumbrances. (d) Execution and Deliver~. The City has duly authorized and executed this Lease ~n accordance with the Constitution and laws of the State of California. SECTION 2.2. Representations, Covenants and Warranties of the Lessor. The Lessor represents, covenants and warrants to the City as follows: (a) Due Organization and Existence. The Lessor is a redevelopment agency, being a public body, corporate and politic duly organized and existing under and by virtue of the Constitution and laws of the State of California; has power to enter into this Lease, the Agency Agreement, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold real and personal property, and to lease and sell the same; and has duly authorized the execution and delivery of all of the aforesaid Agreements. (b) No Encumbrances. The Lessor will not pledge the Lease payments or other amounts derived from the Projects or the Site and from its other rights under this Lease, and will not mortgage or encumber the Projects or the Site, except as provided under the terms of this Lease and the Trust Agreement. (c) No Violations. Neither the execution and delivery of this Lease, the Agency Agreement, the Assignment Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Lessor is now a party -8- 86-357444 or by which the Lessor is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Lessor, or upon the Projects or the Site, except Permitted Encumbrances, (d) No Assignments, Except as provided herein, the Lessor will not assign this Lease, its right to receive Lease Payments from the City, or its duties and obligations hereunder to any other person, firm or Lessor so as to impair or violate the representations, covenants and warranties contained in this Section 2.2. ARTICLE III DEPOSIT OF MONEYS: ACQUISITION AND CONSTRUCTION OF THE SITES AND THE PROJECTS SECTION 3.1. Deposit of Moneys. On the Closing Date, the Lessor shall cause to be deposited with the Trustee the proceeds of sale of the Certificates. Pursuant to the Trust Agreement such proceeds shall be deposited with the Trustee as follows: an amount equal to the Reserve Requirement shall be deposited with the Trustee in the Reserve Fund: the amount of the Lease Payment of advance rental payable by the City hereunder shall be deposited with the Trustee in the Capitalized Interest Subaccount in the Lease Payment Fund: the amount of the accrued interest on the Certificates to be paid by the original purchaser thereof shall be deposited with the Trustee in the Lease Payment Fund: and the remaining balance of said proceeds shall be deposited with the City Treasurer in the Acquisition Fund. SECTION 3.2. Construction and Acquisition of the Projects. The City, as agent of the Lessor under the Agency Agreement, will, in all respects in accordance with the Agency Agreement, supervise and provide for, or cause to be supervised and provided for, as agent of the Lessor, the complete acquisition, construction, improvement, equipping and installation of the Projects, and will cause the work under construction or installation contracts to be dili- gently performed after the deposit of funds with the Trustee pursuant to Section 3.1 hereof. The City will use its best efforts to ensure that the Projects will be substantially completed in accordance with plans and specifications approved by the City on or prior to November 25, 1988, in the case of the Fire Station Project, and on or prior to April 1, 1987, in the case of the Equipment Project. Said dates represent the final completion dates of the respective -9- 86....357444 Projects, and the parties agree and understand that the Projects are expected to be completed prior to such dates. The City agrees that upon substantial completion of any portion of a Project it will take possession of that portion of such Project under the terms and provisions of this Lease. Upon completion of the acquisition, construction, improvement and equipping or installation of any Project satisfactory to the City and the Lessor, but in any event not later than thirty (30) days following such completion, the City shall deliver to the Trustee a Certificate of Completion with respect to such Project. If the Lessor, for any reason whatsoever, cannot deliver possession of any completed Project to the City by the completion date thereof specified in the first paragraph of this Section 3.2, and as a result of which non-delivery the City is deprived of the use and occupancy of a substan- tial portion of such Project, this Lease shall not be void or voidable, nor shall the Lessor be liable to the City for any loss or damage resulting therefrom. In such event, however, a portion of the remaining Lease Payments allocable to such Project (which portion shall bear the same proportionate relationship to all such Lease Payments as the costs of constructing and improving or installing such por- tion of such Project bear to the total costs of constructing and improving or installing such Project) shall, with respect to the period between the final completion date thereof specified in the first paragraph of this Section 3.2, and the time when the Lessor delivers possession thereof, be payable solely from moneys on deposit in the Reserve Fund and the Lease Payment Fund and from damages or other moneys derived from the contractors or any other per- son as a result of any defect or delay in completion of such Project. SECTION 3.3. Payment of Acquisition and Construc- tion Costs. Payment of the Acquisition and Construction Costs shall be made from the moneys deposited with the City Treasurer in the Acquisition Fund as provided in Section 3.1 hereof, which shall be disbursed for such purpose in accor- dance and upon compliance wi th Article III of the Trust Agreement. In the event that there is at any time a defi- ciency in the Acquisition Fund to pay all Acquisition and Construction Costs in full, the amount of such deficiency shall be deposited therein by the City from any source (if any) of legally available funds. SECTION 3.4. Unexpended Proceeds. moneys remaining in the Acquisition Fund on All excess September 1, -10- 86-357444 1989 and not required for payment of Acquisition and Construction Costs shall be transferred by the City Treasurer to the Lease Payment Fund and applied to the redemption of Certificates, all pursuant to and in accordance with Section 3.03 of the Trust Agreement. ARTICLE IV AGREEMENT TO LEASE; TERMINATION OF THIS LEASE; LEASE PAYMENTS; TITLE TO THE PROJECTS SECTION 4.1. Lease. The Lessor hereby leases the Fire Station Project and the Site to the City, and the City hereby leases said Projects, and each of them, and the Site from the Lessor, upon the terms and conditions set forth in this Lease. The Lessor hereby further leases to the City and the City hereby leases from the Lessor the items of equipment comprising the Equipment Project. SECTION 4.2. Term of Lease. The Term of this Lease shall commence as of October 1, 1986 and, unless sooner terminated as hereinafter provided, shall terminate on October 1, 1996. SECTION 4.3. Termination of Term. The Term of this Lease shall terminate upon the earliest of any of the following events: (a) the exercise by the City of its option to pur- chase all of the Projects on any Prepayment Date, by paying the applicable Prepayment Price as provided in Section 10.2(a) hereof; (b) to terminate hereof; or an Event of Default and the Lessor's election this Lease Agreement pursuant to Section 9.2 (c) the arrival of last day of the Term of this Lease and payment of all Lease Payments and all other pay- ments due hereunder. In the event the City prepays all of the Lease Payments allocated to any Project and the related Site, if any, in accordance with Section 10.2(b) hereof, at the elec- tion of the City, the Term of this Lease shall expire as to such Project and Site, if applicable, but shall continue as to each remaining Project and related Site. SECTION 4.4. Possession. The City agrees to take possession of the Site hereunder on the date on which the -11- 86-357444 same is acquired by the Lessor. It is contemplated that the City will take possession of each of the completed Projects on or before the respective final completion dates specified in the first paragraph of Section 3.2 hereof. If any Project or portion thereof shall be substantially completed before its specified completion date, the City agrees to take possession of such Project or portion thereof upon the substantial completion thereof. SECTION 4.5. Lease Payments. (a) Obligation to Pay. Subject to the provi- sions of Section 3.2 and Articles VI and X hereof, the City agrees to pay to the Lessor, its successors and assigns, as rental for the use and occupancy of the Projects and the Site, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Exhibit A hereto; except that each Lease Payment shall be payable on the fifteenth (15th) day of the month preceding each Lease Payment Date from and after the October 1, 1988 Lease Payment Date. A portion of each Lease Payment shall be paid as, and represents payment of, interest. The interest component of each Lease Payment is set forth in Exhibit A hereto. Any amount held in the Lease Payment Fund on any Lease Payment Date on or after October 1, 1989 (other than amounts resulting from the pre- payment of the Lease Payments in part but not in whole pur- suant to Article X hereof, and other amounts required for payment of past due principal or interest with respect to any Certificates not presented for payment) shall be cred- ited towards the Lease Payment then due and payable; and no Lease Payment need be made on any Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. All Lease Payments for a Project and related Site due during any twelve-month period beginning on October 1, 1987 (other than the initial Lease Payment of advance rental) shall be for the use of such Project and related Site for such twelve- month period. (b) Lease Payment of Advance Rentals. In addition to the Lease Payments to be made by the City pur- suant to subsection (a) of this Section, the City shall be obligated to pay on the Closing Date an initial Lease Payment of advance rental for the period from October 1, 1986 to the respective Completion Dates of the Projects in an amount equal to the interest owing on the Certificates on the Apr 11 1, 1987, October 1, 1987 and the Apr 11 1, 1988 Lease Payment Dates, less the amount of accrued interest on the Certificates to be paid by the original purchaser thereof. Such initial Lease Payment of advance rental shall -12- 86-357444 be deposited by the Trustee from the proceeds of the Certificates in the Capitalized Interest Subaccount as provided in Section 2.07 of the Trust Agreement. (c) Effect of Prepayment. In the event that the City prepays all remaining Lease Payments pursuant to Article X hereof, the City's obligations under this Lease, including but not limited to the City I s obligation to pay Lease Payments under this Section, shall thereupon cease and terminate. In the event the City prepays less than all the remaining pr incipal components of the Lease Payments pur- suant to Section 10.2(b) or Section 10.3 hereof, the pr incipal components of the remaining Lease Payments shall be reduced such that approximately equal Lease Payments prevail, corresponding to the prevailing payments of principal. and interest with respect to the outstanding Certificates; and the interest component of each subsequent remaining Lease Payment shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Certificates redeemed as a result of such prepayment. (d) Fair Rental Value. The Lease Payments for each Project and related Site for each rental payment period during the Term of this Lease shall constitute the total rental for such Project and related Site, if any, for such rental payment period, and shall be paid by the City in each rental payment period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of such Project and Site during each such period for which said rental is to be paid. The parties hereto have agreed and determined that the total Lease Payments for each Project and related Site represent the fair rental value of such Project and Site. In making such determination, consideration has been given to the appraised value of the Site and the costs of acquir ing, improving, constructing, installing and financing the Projects and the Site, other obligations of the parties under this Lease, the uses and purposes which may be served by the Projects, and the benefits therefrom which will accrue to the City and the general public. (e) Lease Payments to Constitute Current Expense of the City. The City and the Lessor understand and intend that the obligation of the City to pay Lease Payments and other payments hereunder constitutes a current expense of the City and shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor shall anything contained herein constitute a pledge of the -13- ~..,.... ., . 86-357444 general tax revenues, funds or moneys of the City. Lease Payments due hereunder shall be payable only from current funds which are budgeted and appropriated, or otherwise legally available, for the purpose of paying Lease Payments or other payments due hereunder as consideration for use of the Projects during the fiscal year of the City for which such funds were budgeted and appropriated or otherwise made legally available for such purpose. This Lease shall not create an immediate indebtedness for any aggregate payments which may become due hereunder. The Ci ty has not pledged the full faith and credit of the City, the State of California or any agency or department thereof to the payment of the Lease Payments or any other payments due hereunder, the Certificates or the interest thereon. (f) Continuation of Lease. The City intends to continue this Lease and to pay the Lease Payments. The City reasonably believes that legally available funds of an amount sufficient to make all Lease Payments during the Term of this Lease can be obtained. The City covenants that it will take all procedural steps law(ully within its power to obtain and maintain funds from which all payments may be made, including provisions for such payments to the extent necessary in each budget submitted for the purpose of obtaining funding, using its bona fide best efforts to have such portion of the budget approved and exhausting all available administrative reviews and appeals in the event such portion of the budget is not approved. (g) Budget and Appropriation. The City cove- nants to take such act10n as may be necessary to include all Lease Payments (other than the first Lease Payments of advance rental) due hereunder in its annual budgets and to make the necessary annual appropriations for all such Lease Payments. During the Term of this Lease, the City will fur- nish to the Trustee, within sixty (60) days after the filing or adoption of the final budget of the City, but in no event later than November 1, a Certificate of a City Representa- tive to the effect that it has satisfied the budget and appropriations requirements of this Section. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law, and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable to the City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City. (h) Assignment. The City understands and agrees that all Lease Payments have been assigned by the -14- m", 86-357444 Lessor to the Trustee in trust, pursuant to the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to such assign- ment. The Lessor hereby directs the City, and the City hereby agrees to pay to the Trustee at the Trustee's prin- cipal corporate trust office in Los Angeles, California, or to the Trustee at such other place as the Trustee shall direct in writing, all payments payable by the City pursuant to this Section 4.5 and all amounts payable by the City pur- suant to Article X hereof. SECTION 4.6. Quiet Enjoyment. During the Term of this Lease, the Lessor shall provide the City with quiet use and enjoyment of the Projects and the Site, and the City shall during such Term peaceably and quietly have and hold and enjoy the Projects and the Site, without suit, trouble or hindrance from the Lessor, except as expressly set forth in this Lease. The Lessor 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 Lessor may lawfully do so. Notwi thstanding the foregoing, the Lessor shall have the right to inspect the Projects and the Sites as provided in Section 7.2 hereof. SECTION 4.7. Title. During the Term of this Lease, the Lessor shall hold title to the Site and the Projects and any and all additions which comprise fixtures, repairs, replacements or modifications thereof, except for those fixtures, repairs, replacements or modifications which are added thereto by the City and which may be removed without damaging the Projects, and except for any items added to the Projects by the City pursuant to Section 5.9 hereof. If the City prepays the Lease Payments in' full pur- suant to Article X hereof or makes an advance deposit pur- suant to Section 10.1 hereof, or pays all Lease Payments during the Term of this Lease as the same become due and payable, all right, title and interest of the Lessor in and to the Projects and the Site shall be transferred to and vested in the City. If the City prepays the Lease Payments in part but not in whole pursuant to Section 10.2 (b) hereof, in an amount sufficient to purchase one or more, but less than all, of the Projects, all right, title and interest of the Lessor in and to such Project or Projects shall be transferred to and vested in the City. Title shall be transferred to and vested in the City hereunder without the necessity for any further instrument of transfer. -15- -.c.""~.- 86-357444 SECTION 4.8. Additional Payments. In addition to the Lease Payments, the City shall pay when due all costs and expenses incurred by the Lessor to comply with the provisions of the Trust Agreement, including without limita- tion compensation due to the Trustee and all costs and expenses of audi tors, engineers and accountants, but excluding Delivery Costs. SECTION 4.9. Abatement of Rental in the Event of Delay in Completion of Projects. The amount of Lease Payments for any Project shall be abated during any period in which by reason of delay in the completion of the Project beyond the final completion date specified therefor in Section 3.2 hereof there is substantial interference with the use and occupancy of such Project by the Ci ty. The amount of such abatement shall be agreed upon by the Ci ty and the Lessor such that the resulting Lease Payments represent fair consideration for the use and occupancy of the completed portions of such Project . Such abatement shall continue for the period commencing with such final completion date and ending with the substantial completion of such Project. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 4.9 to the extent that amounts in the Reserve Fund are available to pay Lease payments which would otherwise be abated under this Section 4.9. ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS SECTION 5.1. Maintenance, Utilities, Taxes~ and Assessments. Throughout the Term of this Lease, as part of the consideration for the rental of the Projects and the Site, all improvement, repair and maintenance of the Projects and the Site shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Projects and the Site, 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 Projects resulting from ordinary wear and tear or want of care on the part of the Ci ty or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Lessor agrees to provide only the Projects and the Site, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 02 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. -16- 86-357444 The City shall also payor cause to be paid all taxes and assessments of any type or nature charged to the Lessor or affecting the Projects and the Site or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such install- ments as are required to be paid during the Term of this Lease as and when the same become due. The Ci ty or any sublessee may, at the City's or such sublessee's expense and in its name, in good faith con- test 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 Lessor or the Trustee shall notify the City or such sublessee that, in the opinion of Independent Counsel, by nonpayment of any such items, the interest of the Lessor in the Projects and the Site will be materially endangered or the Projects and the Site, or any part thereof, will be subject to loss or forfeiture, in which event the Ci ty or such sublessee shall promptly pay such taxes, assessments or charges or provide the Lessor with full security against any loss which may result from nonpayment, in form satisfactory to the Lessor and the Trustee. SECTION 5.2. Modification of Pro~cts. The City and any sublessee shall, at its own expense, have the right to remodel any Project or to make additions, modifications and improvements to any Project and the si te. All such additions, modifications and improvements shall thereafter comprise part of the Projects and the Site and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way damage any Project or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Project, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is at least equal to the value of the Project immediately prior to the making of such addi tions, modifications and improvements. The City will not permit any mechanic I s or other lien to be established or remain against any Project or the Site for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City or any sublessee or assignee pursuant to this Section; provided that if any such lien is established and the City shall first notify or cause to be notified the Lessor of the City's or any sublessee's -17- - - - - w 86-357444 intention to do so, the City or any sublessee may in good faith contest any lien filed or established against a Project or a Site, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom, and shall provide the Lessor with full security against any loss or forfeiture which might arise from the nonpayment of any such i tern, in form satisfactory to the Lessor. The Lessor will cooperate fully in any such contest, upon the request and at the expense of the City or such sublessee. SECTION 5.3 Public Liabil i ty Insurance. The City shall maintain or cause to be maintained, throughout the term of this Lease, such policies of insurance and/or sufficient reserves as the City customarily maintains with regard to other public improvements similar in nature to the Projects against claims for bodily injury or death, or damage to public property occurring upon, in or about the projects, and such other insurance as may be agreed upon from time-to-time by the City and the Lessor. All such policies shall name the City, the Trustee and the Lessor as named insureds as their interests may appear. Notwi th- standing the generality of the foregoing, the City will not be required to maintain or cause to be maintained insurance required by this Section unless the same is insurance which is available from reputable insurers on the open market. The phrase "insurance which is available from reputable insurers on the open market" means standard policies of insurance with standard deductibles offered by reputable insurers in a competitive market. SECTION 5.4. Theft, Fire and Extended Coverage Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, insurance against loss or damage to any structures or equipment constituting any part of a Project by theft or fire and lightning, with extended coverage and vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to one hundred percent (100%) of the replacement cost of each Project, or the aggregate coverage of all such policies on all of the Projects shall at least equal the principal amount of the outstanding Certificates, whichever is greater (except that such insurance may be subject to deductible clauses of not to exceed $100,000 for anyone loss). Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried or required to be carried by the City and -18- :",.:...;,.'~' 86-357444 may be maintained in whole or in part in the form of self- insurance by the City. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(a) hereof. SECTION 5.5. Rental Interruption or Use and Occupancy Insurance. The Ci ty shall procure, and maintain throughout the Term of this Lease from and after the date when it takes possession of the first of the Projects to be completed rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any struc- tures constituting any part of a Project as a result of fire and lightning, vandalism or malicious mischief, in an amount sufficient to pay (i) in the case of each Project, the maximum two Lease Payments with respect thereto payable in any twelve-month period, and (ii) in the case of the Projects, the maximum Lease Payments with respect thereto payable in any twenty-four month period. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. SECTION 5.6. Title Insurance. The City will provide, at its own expense, on or before the Closing Date, one or more CLTA title insurance policies in form satis- factory to the Trustee and in the aggregate amount of not less than One Million One Hundred and Fifty Thousand Dollars ($1,150,000). Said policy or policies shall insure the City's fee or leasehold estate in the Site, subject only to Permitted Encumbrances. All Net Proceeds received under said policy or policies shall be deposited with the Trustee in the Lease Payment Fund and shall be credited towards the prepayment of the remaining Lease Payments pursuant to Section 10.3 hereof. SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance obtained pursuant to or required by Sections 5.3 and 5.5 hereof shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Certificate Owners. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease, and shall promptly furnish or cause to be furnished evidence of such payments to the Trustee. 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 of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be -19- ---:..-"';:;;:...;.c.~..;;; - \ 86-357444 delivered to the Trustee on October 1, 1987 and on each October 1, thereafter so long as any Certificates remain Outstanding a Certificate of a City Representative to the effect that the insurance policies required by this Lease are in full force and effect. SECTION 5.8 Advances. If the City shall fail to perform any of its obligations under this Article the Lessor or the Trustee may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as soon as possible, with interest at the rate of twelve percent (12%) per annum from the date of the advance to the date of repayment. SECTION 5.9. Installation of City's Equipment. The City and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon any Project and related Site. All such items shall remain the sole property of such party, in which neither the Lessor nor the Trustee shall have any interest, and may be modified or removed by such party at any time provided that such party shall repair and restore any and all damage to the Projects resulting from the installation, modification or removal of any such items. Nothing in this Lease shall prevent the City and any sublessee from purchasing items to be installed pursuant to this Section under a conditional sale or lease purchase con- tract, 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 any Project or Site. SECTION 5.10. Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to any Project or Site, other than the respec- tive rights of the Lessor and the City as herein provided and Permitted Encumbrances. Except as expressly provided in this Article V, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City shall reimburse the Lessor for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. -20- . 86-357444 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1. Eminent Domain. If all of the Pro- jects and the Site shall be taken permanently under the power of eminent domain, the term of this Lease shall cease as of the day possession shall be so taken. If less than all of the Projects and the Site shall be taken permanently, or if all of the Projects and the Site or any part thereof shall be taken temporarily, under the power of eminent domain, (1) this Lease shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there shall be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments hereunder, but in no event shall the resulting Lease Payments be less than the amount required for the payment of the principal and interest with respect to outstanding Certificates as the same become due and payable. SECTION 6.2. Application of Net Proceeds. (a) From Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of any Project by fire or other casualty shall be deposited in the Insurance and Condemnation Fund by the Trustee promptly upon receipt thereof and, if the City determines that the replacement, repair, restoration, modi- fication or improvement of such Project is not economically feasible or in the best interest of the City, then such Net Proceeds shall be promptly transferred by the Trustee to the Lease Payment Fund and applied as provided in Section 10.3 hereof; provided, however, that in the event of damage or destruction of all of the Projects in full, such Net Pro- ceeds may be transferred to the Lease Payment Fund only if sufficient, together with other moneys available therefor, to cause the redemption of all outstanding Certificates. All Net Proceeds deposited in the Insurance and Condemnation Fund and not so transferred to the Lease Payment Fund shall be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed Project by the City, upon receipt of a requisition accept- able to the Trustee signed by the City Representative stating with respect to each payment to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid, and (iv) that each obligation mentioned therein -21- , 86-357444 . has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to the City. (b) From Eminent Domain Award. The Net Proceeds of any eminent domain award resulting from any event described in Section 6.1 hereof shall be deposited in the Insurance and Condemnation Fund to be held and applied by the Trustee pursuant to Section 7.02 of the Trust Agreement. SECTION 6.3. Abatement of Rental in the Event of Damage or Destruction. The amount of the Lease Payments shall be abated during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy of any Project by the City. The amount of such abatement shall be agreed upon by the City and the Lessor such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of such Project and related Site not damaged or destroyed. Such abatement shall continue for the period com- mencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruc- tion. In the event of any such damage or destruction, this Lease shall continue in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage or destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 in the event and to the extent that the Net Proceeds of rental interruption insurance are available for such purpose pursuant to Section 5.5 hereof and to the extent that amounts in the Reserve Fund are available to pay Lease Payments which would otherwise be abated under this Section 6.3. ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS SECTION 7.1. Disclaimer of Warranties. The Lessor and the Trustee make 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 Projects or the Site or any item thereof, or any other representation -22- , 86-357444 or warranty with respect to the Projects or the Site or any i tern thereof. In no event shall the Lessor or the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease, the Agency Agreement or the Trust Agreement, or for the existence, furnishing or functioning of, or the City's use of the Projects or the Site. SECTION 7.2. Access to the Si te and the Projects. The City agrees that the Lessor and any Lessor Representative, and the Lessor's successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the Projects and the Site. The City further agrees that the Lessor, any such Representa- tive, and the Lessor's successors or assigns shall have such rights of access to the Site as may be reasonably necessary to cause the construction of the Projects thereon, and such rights of access to the Projects and the Site as may be reasonably necessary to cause the proper maintenance of the Projects and the Site in the event of failure by the City to perform its obligations hereunder. SECTION 7.3. Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Lessor and the Trustee, as assignee of the Lessor, harmless from and against all claims, losses and damages, including legal fees and expenses, ar ising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the Projects or the Site by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Lease, (iii) any act or negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Projects or the Site, (iv) any act or negligence of any assignee or sublessee of the City with respect to the Projects or the Site, or (v) the acquisition, construction and installation of the Projects or the authorization of payment of the Acquisition and Construction Costs by the Lessor. No indemnification is made under this Section or elsewhere in this Lease for willful misconduct, negligence, or breach of duty under this Lease by the Lessor, its officers, agents, employees, successors or assigns. -23- , 86-357444 ARTICLE VIII ASSIGNMENT, SUBLEASING; AMENDMENT; SECURITY INTEREST SECTION 8.1. Assignment by the Lessor. The Lessor's rights under this Lease (excepting the Lessor I s rights under Sectio!ls 5.8, 7.3 and 9.4 hereof), including the right to recelve and enforce payment of the Lease Payments to be made by the City under this Lease have been assigned to the Trustee pursuant to the Trust Agreement, to which assignment the City hereby consents. SECTION 8.2. Assignment and Subleasing by the City. This Lease may not be assigned by the City. The Projects and the Si te may not be subleased in whole or in part by the City without the written consent of the Lessor. Any such sublease shall be subject to all of the following conditions: (i) This Lease and the obligation of the City to make Lease Payments hereunder shall remain obli- gations of the City; and (ii) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Lessor and the Trustee a true and complete copy of such sublease; and (iii) No such sublease by the City shall cause the Projects or the Site to be used for a purpose other than a governmental or proprietary function authorized under the provisions of the Constitution and laws of the State of California; and (iv) The City shall furnish the Lessor and the Trustee with a written opinion of nationally- recognized bond counsel, with respect to any such sublease, stating that such sublease shall not cause the interest component of the Lease Payments to become subject to federal or State of California personal income taxes. SECTION 8.3. Amendment of this Lease. Without the written consent of the Trustee, the City will not alter, modify or cancel, or agree or consent to alter, modify or cancel this Lease, excepting only as such alteration or modification may be permitted by Article X of the Trust Agreement. SECTION 8.4. Security Interest. The Lessor shall have throughout the Term of this Lease and is hereby given a -24- 86-357444 security interest, as defined in the Commercial Code of the State of California, in each and every item of equipment comprising the Equipment Project, as described in Exhibit C hereto. The City shall execute and deliver to the Lessor such agreements and documents as are customarily delivered in order to perfect such a security interest. In addition to the rights and remedies provided in Section 9.2 hereof, the Lessor shall have all rights and remedies with respect to the items of equipment comprising the Equipment Project as are provided in the Commercial Code for parties having security interests. Upon the arrival of the last day of the Term of this Lease and payment of all Lease Payments and all other payments due hereunder, or if the City exercises its option to purchase the Equipment Project pursuant to Section lO.2(b) hereof, the Lessor shall execute and deliver to the City such documents as are necessary to terminate the Lessor's security interest in the Equipment Project. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1. Events of Default Defined. The fol- lowing shall be "Events of Default" under this Lease and the terms "Event of Default" and "default" shall mean, whenever they are used in this Lease, anyone or more of the fol- lowing events: (i) Failure by the City to pay any Lease Payment or other payment required to be paid here- under at the time specified herein. (ii) Failure by the Ci ty to observe and per- form any covenant, condition or agreement on its part to be observed or performed, other than as referred to in clause (i) of this Section, for a period of twenty-five (25) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Lessor, the Trustee, or the Owners of not less than a majority in aggregate principal amount of Certificates then outstanding; provided, however, if the failure stated in the notice cannot be cor- rected within the applicable period, the Lessor, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected. -25- (iii) The City shall abandon or Project or the Site. (iv) The City shall sublease or transfer its interest in this Lease, in whole or in part, voluntarily or by operation of law without first obtaining the written consent of the Lessor. 86-357444 vacate a (v) 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 bank- rupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agree- ment of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings insti- tuted under the provisions of the Federal Bank- ruptcy Statute, as amended, or under any similar acts which may hereafter be enacted. SECTION 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the Lessor to exercise any and all remedies available pursuant to law or granted pursuant to this Lease; provided, however, that notwi thstanding anything herein or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition hereof and upon the breach thereof the Lessor may exercise any and all rights of entry and re-entry upon the Site and the Projects, and also, at its option, with or without such entry, may terminate this Lease; provided, that no such termination shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. In the event of such default and notwithstanding any re-entry by the Lessor, 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 and the performance of all conditions herein contained and, in any event, such rent and/or damages shall be payable to the Lessor at the time and in the manner as herein provided, to wit: (a) In the event the Lessor does not elect to terminate this Lease in the mal ner herein provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the -26- 86-357444 performance of all conditions herein contained and shall reimburse the Lessor for any deficiency arising out of the re-letting of the Site and the Projects, or, in the event the Lessor is unable to re-let the Site and the Projects, then for the full amount of all Lease Payments to the end of the Term of this Lease, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinbefore provided for the payment of Lease Payments hereunder, notwithstanding such entry or re- entry by the Lessor _ or any suit in unlawful detainer, or otherwise, brought by the Lessor for the purpose of effecting such re-entry or obtaining possession of the Site and the Projects or the exercise of any other remedy by the Lessor. The City hereby irrevocably appoints the Lessor as the agent and attorney-in-fact of the City to enter upon and re-let the Site and the Projects in the event of default by the City in the performance of any covenants herein contained to be performed by the Ci ty and to remove all personal property whatsoever situated upon the Site and the Projects and to place such property in storage or other suitable place in the County of San Bernardino, State of California, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Lessor from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-letting of the Site and the Projects and the removal and storage of such property by the Lessor or its duly authorized agents in accordance with the provisions herein contained. The City hereby waives any and all claims for damages caused or which may be caused by the Lessor in re- entering and taking possession of the Site and the Projects as herein provided and all claims for damages that may result from the destruction of or injury to the Site or the Projects and all claims for damages to or loss of any property belonging to the City that may be in or upon the Site and the Projects. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Lessor to re-rent the Site and the Projects in the event of such re-entry without effecting a surrender of this Lease, and further agrees that no acts of the Lessor in effecting such re-renting or re-leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re-leasing or re-renting is made or the terms and conditions of such re-leasing or re-renting, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Lessor to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. The City further waives the right to any rental obtained by the Lessor in excess of the Lease Payments and hereby conveys and releases such excess to the Lessor as -27- 86-35744'1 compensation to the Lessor for its services in re-Ieasing the Site and the Projects. (b) In an event of default by the City here- under, the Lessor at its option may terminate this Lease and re-rent, re-lease or sell all or any portion of the Projects. In the event of the termination of this Lease by the Lessor at its option and in the manner hereinafter provided on account of default by the City (and notwith- standing any re-entry upon the Site or the Projects by the Lessor in any manner whatsoever or the re-renting, re- leasing or sale of the Projects or the Site), the City nevertheless agrees to pay to the Lessor all costs, loss or damages howsoever arising or occurring, payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments. Any surplus received by the Lessor from such re-renting, re-Ieasing or sale shall be the absolute property of the Lessor and the City shall have no right thereto, nor shall the City be entitled to any credit in the event of a deficiency in the rentals received by the Lessor from the Site or the Projects. Neither notice to pay rent or to deliver up possession of the premises given pursuant to law nor any proceeding in unlawful detainer taken by the Lessor shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Lessor shall have given written notice to the City of the election on the part of the Lessor to terminate this Lease. The City covenants and agrees that no surrender of the Site and the Projects for the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Lessor by such written notice. SECTION 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Lessor 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 or by law. -28- , 86-357444. SECTION 9.4. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Lease should default under any of the provisions hereof and the nonde- faulting 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 nonde- faulting party. SECTION 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the partic- ular breach so waived and shall not be deemed to waive any other breach hereunder. SECTION 9.6. Application of Proceeds. All Net Proceeds received from the sale, re-lease or other disposi- tion of the Projects under this Article IX, and all other amounts derived by the Lessor or the Trustee as a result of an Event of Default hereunder, shall be transferred to the Trustee promptly upon receipt thereof and shall be deposited by the Trustee in the Lease Payment Fund to be applied to the Lease Payments in order of payment date and, in the case of the Net Proceeds received from the sale of the Projects pursuant to Section 9.2(b), to be applied to the prepayment of the Lease Payments in accordance with Section 10.3 hereof. SECTION 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and remedies as are given to the Lessor under this Article IX have been assigned by the Lessor to the Trustee under the Trust Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement. ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may on any date secure the payment of Lease Payments by a deposit with the Trustee of: (i) an amount which, together with amounts on deposit in the Lease Payment Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the -29- ~~ - 86-357444 principal and interest components thereof, in accordance with the Lease Payment Schedule set forth in Exhibit A hereto, or (ii) Federal securi ties together with cash, if required, in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and, if required, all or a por- tion of moneys or Federal Securities then on deposit in the Lease Payment Fund and Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates or by prepayment thereof pursuant to Section 10.2 hereof, as the City shall instruct at the time of said deposit. In the event of a deposit pursuant to this Section, all obligations of the City under this Lease, and all security provided by this Lease for said obligations, shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, Lease Payments from the deposit made by the City pursuant to this Section, and title to the Projects and the Site shall vest in the City on the date of said deposit automatically and without further action by the City or the Lessor, provided that title shall be subject to the subsequent payment of Lease Payments made from said deposit in accordance with the provisions of this Lease. Said deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease. SECTION 10.2. Optional Prepayment. (a) In Whole. The City may exercise its option to purchase all of the Projects on any Prepayment Date, by paying the applicable Prepayment Price as shown in Exhibi t B hereto, together with the interest component of the Lease Payment required to be paid on such Prepayment Date. Such Prepayment Price shall be deposited by the Trustee in the Lease Payment Fund to be applied to the redemption of Certificates pursuant to Section 4.0l(a) of the Trust Agreement. The City shall give the Trustee notice of its intention to exercise its option not less than sixty (60) days in advance of the date of exercise. (b) In Part. The City may exercise its option to purchase any Project and related Site on any Prepayment Date by paying an amount equal to the principal components of the unpaid Lease Payments allocable to such Project and Site as set forth in Exhibit A hereto, together with 'the interest component of the Lease Payments required to be paid on such Prepayment Date, plus a premium equal to the premium to be paid under Section 4.0l(a) of the Trust Agreement upon the redemption of Certificates resulting from prepayment made pursuant to this paragraph (b). Such pre- payment shall be deposited by the Trustee in the Lease -30- " . 86-357444 Payment Fund to be applied to the redemption of Certificates pursuant to Section 4.01 (a) of the Trust Agreement. The City shall give the Trustee notice of its intention to exer- cise its option no less than sixty (60) days in advance of the date of exercise. SECTION 10.3. Mandatory Prepayment From Net Proceeds of Insurance, Eminent Domain or Sale. The City shall be obligated to prepay the Lease Payments with respect to any Project and related Site, in whole or in part on any April 1 or October 1 beginning April 1, 1987, from and to the extent of any Net Proceeds of insurance award or condem- nation award or sale with respect to such Project and Site theretofore deposited in the Lease Payment Fund for such purpose pursuant to Articles V, VI, IX or X hereof or pursuant to Section 7.02 of the Trust Agreement. The City and the Lessor hereby agree that such Net Proceeds, to the extent remaining after payment of any delinquent Lease Payments, if any, shall be credited towards the City's obli- gations under this Section. SECTION 10.4. Credit for Amounts on Deposit. In the event of prepayment of the principal components of the Lease Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all amounts then on deposit in the Lease Payment Fund, the Acquisition Fund or the Reserve Fund shall be credited towards the amounts then required to be so prepaid. ARTICLE XI MISCELLANEOUS SECTION 11.1. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received 48 hours after deposit in the United States mail in registered or certified form with postage fully prepaid: If to the City: City of San Bernardino 300 North "0" Street San Bernardino, California 92418 Attention: City Treasurer -31- . 86-357444 If to the Lessor: Redevelopment Agency of the City of San Bernardino 300 North "0" Street San Bernardino, California 92418 Attention: Executive Director If to the Trustee: Security Pacific National Bank Corporate Services Division (W24-30) 333 South Beaudry Avenue Los Angeles, California 90017 Attention: Trust 111-701080 The Lessor and the City, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. SECTION 11. 2. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Lessor and the City and their respective successors and assigns. SECTION 11.3. Severability. In the event any pro- vision of this Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 11.4. Net-Net-Net Lease. This Lease shall be deemed and construed to be a "net-net-net lease" and the City hereby.agrees that the Lease Payments shall be an abso- lute net return to the -Lessor, free and clear of any expenses, charges or setoffs whatsoever. SECTION 11.5. Further Assurances and Cor recti ve Instruments. The Lessor 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 rea- sonably be required for correcting any inadequate or incor- rect description of the Projects and Site hereby leased or intended so to be or for carrying out the expressed inten- tion of this Lease. SECTION 11. 6. Execution in Counterparts. This Lease may be executed in several counterparts, each of which shall be original and all of which shall constitute but one and the same instrument. -32- ", SECTION 11.7. Applicable Law. governed by and construed in accordance State of California. 86-357444 This Lease shall be with the laws of the SECTION 11.8. Lessor and City Representatives. Whenever under the provisions of this Lease the approval of the Lessor or the City is required, or the Lessor 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 Lessor by the Lessor Representative and for the City by the City Representative, and any party hereto shall be authorized to rely upon any such approval or request. SECTION 11.9. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or. describe the scope or intent of any provisions or Section of this Lease. -33- " 86-357444 IN WITNESS WHEREOF, the Lessor has caused this Lease to be executed in its name by its duly authorized officer and sealed with its seal; and the City has caused this Lease to be executed in its name by its duly authorized officers, as of the date first above written. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a,"e~ /t' By: ~ Chairpe son ~ (S E A L) CITY OF SAN BERNARDINO, as Les~ /1 , By: ~/l~ Mayor (S E A L) Attest: ~p~~~ ei.ty Clerk -34- JRR0250 . . . 86-357444 STATE OF CALIFORNIA COUNTY OF S~"" I?R"""''l:.bII\)Q ) ) ) ss. On this "}. \ st- day of )~,((!)V€-""'-\oco.~ , in the year 1986, before me, a Notary Publl.c in and for said State, personally appeared E"\I\~'" Wl\~ and s."",""",c..Q.\(l!<"\L, personally known to me t be the 1"'~ and (' ~ <:'\'l!('~of the City of San Bernardino and known 0 me to be th persons who executed the within instrument on behalf of the City of San Bernardino, and acknowledged to me that the City of San Bernardino executed it. WITNESS my hand and official seal. fI,.. ~~ . '-r.f'* CIIIll .. ......._ III ..c.:::=. *" and for (SEAL) . STATE OF CALIFORNIA ) ) ) ss. 86-357444 COUNTY OF $jtN 13€,eNl'leDINCI On this ~13'\ day of J\\ove.",,-la.. c- , in the year 1986, before me, a notary public in and for said State, personally appeared Eu I~ w, \~ and <1 \i'''>''''' 'S.c." \ , personally known to me t be the \(-~~'" and ~"l'<'< Iw>. of the Redevelopment Agency of the C1ty bf San Bernardino, 1nd acknowledged to me. that such agency executed the same pursuant to a resolution of its Board of Directors. WITNESS my hand and official seal. (I OFFICIAL SEAL CHRVL 8EAMAN . .. ""1'~oL~ .. aIIr" ..=:1r,,. in and for (SEAL) .. . .0 EXHIBIT A SCHEDULE OF LEASE PAYMENTS I. TOTAL LEASE PAYMENTS FOR ALL PROJECTS Payment Interest Principal Dates Component Component 4/1/87 $ 80,081.25* $ 0.00 10/1/87 80,081.25** 0.00 4/1/88 80,081.25** 0.00 10/1/88 80,081. 25 250,000.00 4/1/89 74,143.25 0.00 10/1/89 74,143.25 260,000.00 4/1/90 67,643.75 0.00 10/1/90 67,643.75 280,000.00 4/1/91 59,943.75 0.00 10/1/91 59,943.75 295,000.00 4/1/92 51,462.50 0.00 10/1/92 51,462.50 315,000.00 4/1/93 42,406.25 0.00 10/1/93 42,406.25 335,000.00 4/1/94 32,775.00 0.00 10/1/94 32,775.00 355,000.00 4/1/95 22,568.75 0.00 10/1/95 22,568.75 380,000.00 4/1/96 11,643.75 0.00 10/1/96 11,643.75 405,000.00 Totals $1,045,500.00 $2,875,000.00 86-357444 Total Lease Payment $ 80,081.25 80,081.25 80,081.25 330,081.25 74,143.25 334,143.75 67,643.75 347,643.75 59,943.75 354,943.75 51,462.50 366,462.50 42,406.25 377,406.25 32,775.00 387,775.00 22,568.75 402,568.75 11,643.75 416,643.75 $3,920,500.00 *Lease Payment of advance rental deposited in Capitalized Interest Subaccount pursuant to Section 4.5(b) of this Lease Agreement. **Lease Payment of advance rental deposited in Capitalized Interest Subaccount pursuant to Section 4.5(b) of this Lease Agreement plus accrued interest from October 1, 1986 through November 24, 1986. A-I , . - . II. LEASE PAYMENTS FOR 86-35744LJ EQUIPMENT PROJECT- Payment Interest Principal Total Lease Dates Component Component Payment 4/1/87 $ 48,048.75 $ 0.00 $ 48,048.75 10/1/87 48,048.75 0.00 48,048.75 4/1/88 48,048.75 0.00 48,048.75 10/1/88 48,048.75 150,000.00 198,048.75 4/1/89 44,486.25 0.00 44,486.25 10/1/89 44,486.25 156,000.00 200,486.25 4/1/90 40,586.25 0.00 40,586.25 10/1/90 40,586.25 168,000.00 208,586.25 4/1/91 35,966.25 0.00 35,966.25 10/1/91 35,966.25 177,000.00 212,966.25 4/1/92 30,877.50 0.00 30,877.50 10/1/92 30,877.50 189,000.00 219,877.50 4/1/93 25,443.75 0.00 25,443.75 10/1/93 25,443.75 201,000.00 226,443.75 4/1/94 19,665.00 0.00 19,665.00 10/1/94 19,665.00 213,000.00 232,665.00 4/1/95 13,541. 25 0.00 13,541. 25 10/1/95 13,541. 25 228,000.00 241,541.25 4/1/96 6,986.25 0.00 6,986.25 10/1/96 6,986.25 243,000.00 249,986.25 Total $627,300.00 $1,725,000.00 $2,352,300.00 A-2 . 86-357444 . . '" III. LEASE PAYMENTS FOR FIRE STATION PROJECT Payment Interest Principal Total Lease Dates Component Component Payment 4/1/87 $ 32,032.25 $ 0.00 $ 32,032.25 10/1/87 32,032.25 0.00 32,032.25 4/1/88 32,032.25 0.00 32,032.25 10/1/88 32,032.25 100,000.00 132,032.25 4/1/89 29,657.50 0.00 29,657.50 10/1/89 29,657.50 104,000.00 133,657.50 4/1/90 27,057.50 0.00 27,057.50 10/1/90 27,057.50 112,000.00 139,057.50 4/1/91 23,977.50 0.00 23,977.50 10/1/91 23,977.50 118,000.00 141,977.50 4/1/92 20,585.00 0.00 20,585.00 10/1/92 20,585.00 126,000.00 146,585.00 4/1/93 16,962.50 0.00 16,962.50 10/1/93 16,962.50 134,000.00 150,962.50 4/1/94 13,110.00 0.00 13,110.00 10/1/94 13,110.00 142,000.00 155,110.00 4/1/95 9,027.50 0.00 9,027.50 10/1/95 9,027.50 152,000.00 161,027.50 4/1/96 4,657.50 0.00 4,657.50 10/1/96 4,657.50 162,000.00 166,657.50 Total $418,200.00 $1,150,000.00 $1,568,200.00 JRR0250B \ . " JRR0250C . EXHIBIT B SCHEDULE OF PREPAYMENT DATES AND PREPAYMENT PRICES Redemption Redemption Redemption Dates Prices Amount 10/1/91 101% $2,105,850.00 4/1/92 101% 1,807,900.00 10/1/92 100.5% 1,798,950.00 4/1/93 100.5% 1,482,375.00 10/1/93 100% 1,475,000.00 4/1/94 100% 1,140,000.00 10/1/94 100% 1,140,000.00 4/1/95 100% 785,000.00 10/1/95 100% 785,000.00 4/1/96 100% 405,000.00 10/1/96 100% 405,000.00 B-1 86-357444 . . ~ ~ EXHIBIT C 86-357444 ~ DESCRIPTION OF SITE The real property situated in the City of San Bernardino, County of San Bernardino, State of California described as follows: PARK CENTRE FIRE STATION SITE LEGAL DESCRIPTION: THAT PORTION OF LOT 31, TRACT NO. 12034, PER MAP ON FILE IN BOOK 168 OF MAPS, PAGES 75-87, RECORDS OF SAN BERNARDINO COUNTY, STATE OF CALIFORNIA. , MORE PARTICULARLY DESCRIBED AS: BEGINNING AT THE SOUTHWEST CORNER OF LOT 31, THENCE NORTHERLY ALONG THE WEST LINE OF SAID LOT, A DISTANCE OF 290.00 FEET; THENCE SOUTH 89 DEGREES 58' 58" EAST. A DISTANCE OF 225.00 FEETI THENCE SOUTH 00 DEGREES 01' 02" WEST. A DISTANCE OF 190.00 FEETl THENCE SOUTH 21 DEGREES 15' 19" WEST, A DISTANCE OF 143, 18 FEETl TO A POINT ON A NON-TANGEN~ CURVE THROUGH WHICH A RADIAL LINE BEARS NORTH 21 DEQREES 15' 19" EAST WITH A RADIUS OF 493.00 FEETl SAID POINT BEING ON THE NORTH RIGHT OF WAY OF VANDERBILT WAY; THENCE ., ~RTHWESTERLY ALONG SAID CURVE THROUGH A CENTAL ANGLE OF 20 DEGREES 36' 10", 'A DISTANCE OF 177. 29 FEET TO THE TRUE POINT OF BEG\INNING. C-l JRR0250 , ... .;, .. y , . ~ '- ~ DESCRIPTION OF PROJECTS 86-357444 1. FIRE STATION PROJECT Park Centre Fire Station, consistinq of the equipping and construction of an approximate 5 ~ -square foot building, including excavation, impact fill and compaction, grading, paving, utilities, site lighting and landscaping, to be located on the Site in the Tri-City Redevelopment Project Area of the Redevelopment Agency of the City of San Bernardino. 2. EQUIPMENT PROJECTS A. A computer aided dispatching system for the Police and Fire Departments of the City of San Bernardino, an inventory of which is on file in the City Administrator of the City of San Bernardino's office. B. A telephone system for the City Hall of the Ci ty of San Bernardino, a complete inventory of which is on file in the City Administrator of the City of San Bernardino's office. C-2 JRR0250 ... . . . CHICAGO TITLE COMPANY Recording requested by and when recorded return to: Best, Best & Krieger (JRR) Post Office Box 1028 Riverside:~A 92502 ASSIGNMENT AGREEMENT by and between THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO and SECURITY PACIFIC NATIONAL BANK Dated as of October 1, 1986 86-357445 RECORDED IN OFFICIAL RECORDS 1986 NOV 25 Prl 12: 2 I SAN BERNAFlDINO CO.. CALIF. FEE SVy cos It:=.. DEP H USA FTB DBP co .. 86-357445 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT is made and entered into as of the 1st day of October, 1986, by and between THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic, duly organized and validly existing under the laws of the State of California ("Lessor") and SECURITY PACIFIC NATIONAL BANK, a national banking association duly organized and validly existing under the laws of the United States of America (the "Trustee"): R E C I TAL S -------- WHEREAS, Lessor is the owner of certain parcels of real property (the "Site") where the City of San Bernardino (the "City") proposes to construct and develop its Fire Station, (the "Fire Station Project") and for said purpose the Lessor and the City have entered into a Lease Agreement, dated as of the date hereof (the "Lease Agreement"), whereby Lessor has agreed to lease to City and City has agreed to lease from Lessor the Site and Projects (which include the Fire Station Project), to be acquired, constructed and installed by the Lessor, which are more particularly described in the Lease Agreement: and WHEREAS, under the Lease Agreement, Lessor is required to deposit or cause to be deposited with the Trustee certain sums of money to be credited, held and applied in accordance with a Trust Agreement by and among the Trustee, Lessor and City, dated as of the date hereof (the "Trust Agreement"): and WHEREAS, for the purpose of obtaining the moneys required to be deposited with the Trustee, Lessor is willing to assign and transfer its rights and interests under the Lease Agreement to the Trustee for the benefit of the Owners of Certificates to be executed and delivered by the Trustee under the Trust Agreement, and in consideration of such assignment, the Trustee will execute and deliver such Certificates to the purchaser or purchasers thereof, the proceeds of the sale of which are anticipated to be sufficient to provide the moneys required to be deposited by Lessor pursuant to the Lease Agreement: and WHEREAS, each of the parties has authority to enter into this Assignment Agreement and has taken all actions necessary to authorize its officers to enter into it: ~ . C 0 V E NAN T S 86-3574L15 NOW, THEREFORE, for and in consideration of the premises and the covenants and conditions hereinafter contained, the parties agree as follows: Section 1. Definitions. Capitalized terms used in this Assignment Agreement shall have the meanings respec- tively ascribed thereto in the Lease Agreement, unless the context clearly indicates otherwise. Section 2. Assi~nment. Lessor, for good and valuable consideration, oes hereby assign and transfer to the Trustee, for the benefit of the Owners of Certificates executed and delivered under the Trust Agreement, each and all of its rights under the Lease Agreement (excepting only the Lessor's rights under Sections 5.8, 7.3 and 9.4 thereof), and each and all of its rights under the Trust Agreement, including but not limited to, its right to receive Lease Payments from City under the Lease Agreement and its right to exercise such rights and remedies conferred on Lessor under the Lease Agreement as may be necessary to enforce payment of the Lease Payments when due or otherwise to protect its interests in the event of a default or non- appropriation by City, and all rights of entry in and upon the Site and the Projects as provided in the Lease Agree- ment. The Lease Payments shall be applied and the rights so assigned shall be exercised by the Trustee as provided in the Trust Agreement. Section 3. Acceptance. The Trustee hereby accepts such assignment for the purpose of securing such Lease Pay- ments and rights to the Owners of Certificates delivered pursuant to the Trust Agreement and subject to the provi- .sions of the Trust Agreement. Section 4. Conditions. This Assignment Agreement will impose no duties upon the Trustee beyond those expressly provided in the Trust Agreement. -2- 86-357445 IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by their officers thereunto duly autho- rized as of the day and year first written above. (SEAL) REDEVELOPMENT AGENCY OF THE CITY ~SAN BERNARDINO By:c4[~)1~ Chair erson :~ES~~ Secretary SECURITY PACIFIC NATIONAL BANK, as Trus~tee ' By: ';;nA. ~q Aut orize~f:ke -3- JRR0248 . c ~ STATE OF CALIFORNIA ) ) ss. COUNTY OF 'SPtl0 ~~p,e~rJO 86...;357445 On this ~day of \\.Jc:,ve.'I>\. be.l'" , in the year 1986, before me, a Notary Public in and for said State, personally appeared Eu\loi'" W',\<""'t and G\.jI",^^ <;"'1,,\ , personally known to me 0 be the ~\...o.~"'~"'Q.o""'" and S.,c.",,,--.\.a,,~ of the Redevelopme t Agency of the City of San Bernardino, the Lessor that executed the within instrument, and acknowledged to me that such Redevelopment Agency executed the same pursuant to a resolution of its Board of Directors. WITNESS my hand and official seal. e OFFICIAl. SEAL . CHERYL lIENttffl NalIfy"~ D.I ... ....._ III ..,ea:::~.1_ and for (SEAL) JRR0248 86-35"/445 .. . . . . STATE OF CALIFORNIA . COUNTY OF 'l2 \ ue \'~\AQ, ) ) ss. ) On this ~ 4-t~day of }()oveW\oc,", in the year 1986, before me, a Notar Pupli~in ~nd for said State, pe~sonally appeared \J \.c. \"'< \c. i , known to me to be a Trust OffIcer 0 Security clfic National Bank, the Corporation that executed the within instrument, and known to me to be the person who executed said instrument on behalf of said corporation, and acknow- ledged to me that such corporation executed the same pursuant to its bylaws or a resolution of its Board of Directors. WITNESS my hand and official seal. 8 ~eEAL rr~'~"lINlltN - ~~.. ~ ---_=:fr._ (SEAL) , .. - ~. :'&" /103 9/23/'.;6 . o ,-. AGENCY AGREEMENT by and between THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO and o THE CITY OF SAN BERNARDINO, CALIFORNIA Dated as of October 1, 1986 o ;Q (), -4- -f K c~ /'1' -,- I h / - ". F l <:::::_LY 4A;h ,_ ?; - ,! ,-. /-. . . . o AGENCY AGREEMENT THIS AGENCY AGREEMENT, made and entered into as of the 1st day of October, 1986, by and between THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic, duly organized and existing under the laws of the State of California ("Lessor"), and CITY OF SAN BERNARDINO, a chartered city, duly organized and validly existing under and by virtue of the Constitution and laws of the State of California (the "City"): o ~~f.!.!~~~ WHEREAS, Lessor and City have entered into a Lease Agreement (the "Lease Agreement"), dated as of the date hereof, whereby Lessor agrees to lease the Projects described in Exhibit "C" attached to the Lease Agreement to City, and City agrees to lease the Projects from Lessor: WHEREAS, it is in the interests of Lessor and City that Lessor appoint City as its agent for the purposes of the acquisition, construction and installation of the Projects, and Lessor has agreed in the Lease Agreement to appoint City as its agent for such purposes: fQY~!i~!i!~ NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other valuable considera- tion, the parties agree as follows: Section 1. Definitions. All words and phrases defined in Article I of the Lease Agreement shall have the same meaning in this Agency Agreement. o Section 2. Appointment of City. Lessor hereby appoints City as its ~gent to carry out all phases of the acquisition, construction and installation of the Projects and City, as agent of Lessor, assumes all rights, duties, responsibilities and liabilities of Lessor regarding the acquisition, construction and installation of the Projects, except as limited herein. The appointment by Lessor of City as its agent, as provided in this Section, and the acceptance by City of such appointment results in the assumption by City of duties, responsibilities and liabilities which are separate and apart from its duties, responsibilities and liabilities under the Lease Agreement, and such assignment does not include or transfer to City any of the rights or obligations of Lessor under the Lease . o Agreement which have been assigned by Lessor to the Trustee pursuant to the Trust Agreement. It is recognized by the parties that Lessor has appointed City for the purposes specified in this Agreement, rather than appoint another firm or entity for said purposes, based upon Lessor's determination that City is suitable to perform the duties, responsibilities and liabilities delegated to and assumed by it pursuant to this Agreement due to the expertise, knowledge and ability of City I S personnel with respect to similar undertakings. Section 3. Contracts and Payments. City, as agent of Lessor, may enter into any purchase order, construction management agreement, architecture or engineer ing contract or construction contract required for the design, construc- tion and completion of the Projects upon being assured that moneys sufficient for the payment thereof are then on deposit in the Acquisition Fund established pursuant to Section 3.01 of the Trust Agreement. Section 4. Project Description. City, as agent of Lessor, shall have the r ight to make any changes in the description of the Projects or of any component thereof whenever City deems such changes to be necessary and appro- priatel provided that any such change shall not alter the essential nature of the Projects or impair the ability of City to make Lease payments under the Lease Agreement, and that an increase in the Acquisition and Construction Costs shall not result from such change, unless City deposits in the Acquisition Fund an amount sufficient to pay such increase. o Section 5. Supervision of Construction and Instal- lation. City, as agent of Lessor, shall have sole respon- sibility for and shall supervise construction of the Proj- ects and the purchase and installation of any personal property constituting a part of the Projects. City shall monitor the performance by any construction manager and by the construction contractors to the extent City deems appropriate. City shall permit Lessor, or its assignee, to inspect construction at any and all reasonable times which are deemed appropriate by Lessor, or its assignee. o Section 6. Enforcement of Contract. Lessor hereby assigns to City all rights and powers to enforce in its own name or the name of Lessor such purchase orders or contracts as are required for design, construction, purchase and completion of the Projects, which enforcement may be at law or in equitYl provided that the assignment made by Lessor herein shall not prevent Lessor, or its assignee, from asserting such rights and powers in its own behalf. -2- . o c Section 7. Fixed Construction Price. Lessor shall not be responsible for payment of, nor shall it payor permit to be paid by the Trustee pursuant to the Trust Agreement, more than $ for the acquisition, design, installation and construction of the Projects. Section B. Time of Completion and Liquidated Damages. The acquisition, construction and installation of the Projects shall be completed on or pr ior to , . It is agreed that if City does not cause the completion of the acquisition, construction and installation of the Projects by its completion date by construction contractors or a construction manager, whichever City deems appropriate, liquidated damages will be assessed against the construction contractors or construction manager for each day completion is delayed in an amount determined by prorating the total amount of the Lease Payments which City is obligated to make to Lessor under the Lease Agreement on and . to obtain a daily rate. City shall assure that all construction contracts or the construction management agreement, whichever City deems appropriate, shall contain provision for liquidated damages in compliance with this Section. Section 9. Plans and Specifications. City agrees that it will assure that the Projects will be acquired, constructed and installed in accordance with final Plans and Specifications approved by City. No changes or modifi- cations which require an amendment to a pre-existing building permit shall be made in or to the final Plans and Specifications unless such changes or modifications are approved in writing by City. Before approving any such changes to be undertaken, City shall assure that there has been deposited in the Acquisition Fund moneys sufficient to pay any increased costs resulting from such changes or modifications. Upon completion of acquisition, construction and installation of the Projects, City will assure that there is filed with the Trustee a certificate of completion executed by an Authorized Officer of City and stating that such acquisition, construction and installation has been completed in accordance with the Plans and Specifications therefor approved by City. Section 10. Prevailing Wages. Each contract entered into between City, as the agent of Lessor, and any contractor shall provide that such contractor shall pay not less than the general prevailing rate of wages as determined in accordance with Sections 1770 et seq. of the Labor Code. The provisions of this Section shall not apply to the Equipment Project. o -3- o Section 11. Nondiscrimination. Each contract entered into between City, as the agent of Lessor, and any contractor shall provide that such contractor shall not discriminate against any other contractor or any employee or applicant for employment because of the race, religious creed, color, national origin or sex of such person, unless based upon a bona fide occupational qualification. In addition, in selecting contractors or in employing persons for the purposes of construction or construction management, City shall not discriminate on the basis of race, religious creed, color, national origin or sex of such person, unless based upon a bona fide occupational qualification. Section 12. Performance Security. Each contractor hired by City, as agent of Lessor, shall be required to provide payment and performance bonds in amounts equal to the maximum price under its contract. Section 13. Bindin~ Effect. This Agreement shall inure to the benefit of an shall be binding upon Lessor, City and their respective successors and assigns. o Section 14. Severability. In provision of this Agreement shall be unenforceable by any court of competent holding shall not invalidate or render other provision hereof. Section 15. Amendments, Changes and Modifica- tions. This Agreement may not be effectively amended, changed, modified, altered or terminated without the written agreement of both parties hereto. the event any held invalid or jurisdiction, such unenforceable any Section 16. Execution in Counterparts. Agreement may be simultaneously executed in several parts, each of which shall be an original and all shall constitute but one and the same instrument. This counter- of which Section 17. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 18. Headings. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provi- sions or sections of this Agreement. o Section 19. Notices. Any notices or required to be given or made under this Agreement served, given or made in writing upon the City by delivery or registered mail addressed to: filings shall be personal -4- " I ' o and upon the Lessor by personal delivery or registered mail addressed to: or at such other place as may be designated by either party in writing. IN WITNESS WHEREOF, City has caused this Agreement to be executed by its officers, and Lessor has caused this Agreement to be executed by its officers and its corporate seal affixed, all as of the day and year first above written. (SEAL) By: ATTEST: o By: ~~L. Clty Cle:r'~~he City of San Bernardino REDEVELOPMENT AGENCY OF THE CITY OF AN BERNARDINO (SEAL) By: ATTEST: By: o -5- JRR0247 .';;'I1F.:'~ 10-',0 . f:, It ,.&0 1)14.<-<..- ?&~k~) ~(f'l-c'~ ~r ~~~~9i!~{~(, ~ f'< I 6~ <<_..I /JA~ (" -fc.3 jU"" ("t. t/c) 2- tJ~ (rid t; ew6~/. ~.,;J :It;2~!4t r~,,1 ".,...,,1 ~ J# &...f e:L' e"! ~ -'{C"L fe!Odl of ~1J.C<7 g-tP _ L{q.? f~s,1 fot a ,.(.,,;1,4,7 /'l".( f s""J sP ~ . f ''II o o o TRUST AGREEMENT RELATING TO CITY OF SAN BERNARDINO 1986 PROJECTS Dated as of October 1, 1986 by and among SECURITY PACIFIC NATIONAL BANK, as Trustee THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO and THE CITY OF SAN BERNARDINO, CALIFORNIA f]c!0~t( <: ic ')/29/ ,,6 ") , ~.~ (Jr..>. .y,.<; j/) (" - '? 'T'- /'- '"~~. , . o o o , ~ TABLE OF CONTENTS Page PARTIES. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ._ . . . . . . . . 1 RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I DEFINITIONS Section 1.01 Definitions........................... 2 Section 1.02 Authorization......................... 8 Section Section Section Section Section Section Section Section Section Section Section 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 ARTICLE II THE CERTIFICATES OF PARTICIPATION Authorization........................ . Date................................. . Maturity; Interest Rates.............. Form of Certificates; Interest........ Form................................. . Execution............................ . Application of Proceeds............... Transfer and Exchange................. Certificates Mutilated, Lost, Destroyed or Stolen................. Payment.............................. . Execution of Documents and Proof 8 8 9 9 9 10 10 10 11 11 of Ownership_....................... 12 Section 2.12 Certificate Register.................. 13 Section Section Section ARTICLE III ACQUISITION FUND 3.01 Acquisition Fund...................... 3.02 Payment of Acquisition and Construction Costs.................. 3.03 Transfers of Unexpended Proceeds...... i 13 13 14 . , o o o 1 ( Section Section Section Section Section 4.01 4.02 4.03 4.04 4.05 ARTICLE IV REDEMPTION OF CERTIFICATES Redemption. . . . . . . .. . . . .............. .. Selection of Certificates for Redemption......................... . Notice of Redemption.................. Partial Redemption of Certificate..... Effect of Notice of Redemption........ 15 15 16 16 17 ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01 Assignment of Rights in Lease Agreement........................... 17 Section 5.02 Establishment of Lease Payment Fund; Deposi ts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 5.03 Establishment of Capitalized Interest Subaccount; Deposit................... 18 Section 5.04 Application of Moneys................. 18 Section 5.05 Transfers of Investment Earnings to Acquisition Fund.................... 19 Section 5.06 Surplus............................... 19 Section Section Section Section Section 6.01 6.02 6.03 6.04 6.05 ARTICLE VI RESERVE FUND Establishment of Reserve Fund......... Deposits............................. . Transfers of Excess................... Application in Event of Deficiency in Lease Payment Fund............... Transfer to Make All Lease Payments... 19 19 19 20 20 ARTICLE VII INSURANCE AND CONDEMNATION FUND; INSURANCE; EMINENT DOMAIN Section 7.01 Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award..... 20 Section 7.02 Application of Net Proceeds of Eminent Domain Award................ 21 Section 7.03 Cooperation........................... 22 ii '~.",;;.."..',-..c.....;;, . . o o o , { Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 9.01 9.02 9.03 9.04 ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Held in Trust......................... Investments Authorized................ Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . Allocation of Earnings................ Valuation of Investments.............. Deposit and Investment of Moneys in Funds............................ Arbitrage Covenant.................... Restriction on Yield of Acquisition Fund............................... . Limitation on Investments in Non- purpose Obligations................. Rebate of Excess Investment Earnings to the United States................ Rebate Fund........................... ARTICLE IX THE TRUSTEE Appointment of Trustee................ Liability of Trustee.................. Merger or Consolidation............... Protection and Rights of Trustee...... ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS 22 22 23 23 23 24 24 24 24 25 28 29 30 30 30 Section 10.01 Amendments Permitted.................. 32 Section 10.02 Procedure for Amendment with Written Consent of Certificate Section 10.03 Section 10.04 Section 10.05 OWners. .. . . . . . .. . ... ... . . .. .. .. . . . .. Disqualified Certificates............. Effect of Supplemental Agreement...... Endorsement or Replacement of Certificates Delivered After 33 34 34 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 10.06 Amendatory Endorsement of Certificates........................ 35 Hi . , o o o , , Section 11.01 Section 11. 02 Section 11. 03 Section 11. 04 Section 11. 05 Section 11. 06 Section 11. 07 Section 12.01 Section 12.02 Section 12.03 Section 12.04 Section 12.05 Section 12.06 Section 13.01 Section 13.02 Section 13.03 Section 13.04 Section 13.05 Section 13.06 Section 13.07 ARTICLE XI COVENANTS; NOTICES Compliance With and Enforcement of Lease Agreement..................... Payment of Taxes...................... Observance of Laws and Regulations.... Prosecution and Defense of Suits...... Recordation and Filing................ City Budgets.......................... Further Assurances.................... ARTICLE XII LIMITATION OF LIABILITY Limited Liability of City............. No Liability for Trustee Performance................. Limited Liability of Trustee.......... Indemnification....................... Opinion of Counsel.................... Limitation of Rights to Parties and Certificate Owners.............. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Assignment of Rights.................. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Application of Funds.................. Institution of Legal Proceedings...... Non-waiver. . ..... . . . .... . . . .. . . . . . .. . . Remedies Not Exclusive................ Power of Trustee to Control 35 35 36 36 36 36 37 37 37 38 38 39 39 39 39 40 40 41 41 Proceedings......................... 41 Section 13.08 Limitation of Certificate Owners' Right to Sue........................ 41 Section 13.09 Agreement to Pay Attorneys' Fees and Expenses........................ 42 iv . . o o o l' Section 14.01 Section 14.02 Section 14.03 Section 14.04 Section 14.05 Section 14.06 Section 14.07 Section 14.08 Section 14.09 Section 14.10 Section 14.11 ARTICLE XIV MISCELLANEOUS Defeasance.... ... . . . . ..... ........ ... . 43 Records.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Notices............................... 44 Governing Law......................... 44 Binding Effect; Successors............ 44 Execution in Counterparts............. 45 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Limitation of Rights to Parties and Certificate Owners.............. 45 Waiver of Notice...................... 45 Separability of Invalid Provisions.... 45 Inapplicability of Sections 8.09 and 8.10 Under Certain Circumstances.... 46 EXHIBIT A: Form of Certificate of Participation JRR0251B v . . o o o I' TRUST AGREEMENT THIS AGREEMENT, made and entered into as of this 1st day of October 1, 1986, by and among SECURITY PACIFIC NATIONAL BANK, a national banking association duly organized and existing under the laws of the United States of America (the "Trustee"), the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic duly organized and existing under the laws of the State of California (the "Lessor"), and the CITY OF SAN BERNARDINO, a chartered City, duly organized and existing under the Constitution and laws of said State (the "City"); WIT N E SSE T H ---------- WHEREAS, the City and the Lessor have entered into a Lease Agreement dated as of the date hereof (the "Lease Agreement"), whereby the Lessor has agreed to acquire, improve, construct and install certain public improvements designated in the Lease Agreement as the Fire Station Project and related and appurtenant facilities and property and to lease the site thereof, and to acquire and install certain items of equipment referred to in the Lease Agreement as the Equipment Project and to lease such improvements, site and equipment to the City, and the City has agreed to lease such improvements, site and equipment from the Lessor; and WHEREAS, for the purpose of obtaining the moneys required to be deposited by it with the Trustee for financing the acquisition, leasing, improvement, construc- tion, and installation of such improvements, site and equipment, the Lessor proposes to assign and transfer certain of its rights under the Lease Agreement to the Trustee, and in consideration of such assignment and the execution of this Trust Agreement, the Trustee has agreed to execute and deliver Certificates of Participation, each evidencing a proportionate interest in the Lease Payments and Prepayments to be made by the City under the Lease Agreement, to provide the moneys required herein to be deposited by the Lessor; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: . , o o o I' ARTICLE I DEFINITIONS Section 1. 01. Definitions. Unless the context other- wise requires, the terms defined in this Section shall, for all purposes of this Trust Agreement, have the meanings herein specified. "Acquisition and Construction Delivery Costs: and (2) all costs ting, installing and equipping the not limi ted to: Costs" means (1) all of improving, construc- Projects, including but (i) all costs which the Lessor or the City shall be required to pay to a Contractor or any other person under the terms of any contract or contracts for the improving, construction, installation and equipping of the Projects: (ii) obligations of the Lessor or the City incurred for labor and materials (including obligations payable to the Lessor or the City for actual out-of-pocket expenses of the Lessor or the City) in connection with the improving, construction, installation and equipping of the Projects, including reimbursement to the Lessor or the City for all advances and payments made in connection with the Projects prior to or after delivery of the Certificates: (iii) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect during the course of construction of the Projects: (iv) all costs of engineering and architectural services, including the actual out-of-pocket costs of the Lessor or the City for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as for the performance of all other duties required by or consequent to the proper acquisition, construction, improvement, equipping and installation of the Projects; and (v) any sums required to reimburse the Lessor or the City for advances made by the Lessor or the City for any of the above items or for any other costs incurred and for work done by the Lessor or the City which are properly chargeable to the Projects. -2- I I 1 I o o o "ACquisition Fund" means the fund by that name estab- lished and held by the Trustee pursuant to Article III of this Agreement. "Assignment Agreement" means the Assignment Agreement, dated as of October 1, 1986, by and between the Lessor and the Trustee, together with any duly authorized and executed amendment thereto. "Capitalized Interest Subaccount" means the subaccount by that name established and held by the Trustee in the Lease Payment Fund pursuant to Article V of this Agreement. "Certificate of comrletion" means, with respect to a Project, a certificate 0 an architect, approved by the City Representative, stating that such Project has been completed substantially in conformity with the plans and specifica- tions therefor, or with respect to the Project identified in the Lease Agreement as the Equipment Project, means a certi- ficate of the City Representative stating that the acquisi- tion and installation of such Project has been satisfac- torily completed and that such Project is fully operational. "Certificates of Participation" or "Certificates" means the $2,875,000 aggregate principal amount of Certificates of Participation (City of San Bernardino 1986 Projects) to be executed and delivered pursuant to this Agreement. "C~ty" means the City of San Bernardino, a chartered City, uly organized and existing under the Constitution and laws of the State of California. "City Representative" means the City Treasurer of the City or a person authorized by the Mayor and the Common Council to act on behalf of the City under or with respect to this Agreement. "City Treasurer" means the City Treasurer of the City of San Bernardino or such other person authorized by the Mayor and the Common Council of the City. "Code" means the Internal Revenue Code of 1954, as amendea;-and the regulations promulgated thereunder. "Closing Date" means the day when the Certificates, duly executed by the Trustee, are delivered to the Original Purchaser thereof. "Contractors" means the contractors from whom the City or the Lessor has ordered or caused to be ordered or wi th -3- I ( 1 I o o o whom the City or the Lessor has contracted or caused to be contracted for the improvement, construction, installation and equipping of the Projects. "Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the City or the Lessor relating to the execution, sale and delivery of the Lease Agreement or the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee (including legal fees), financing discounts, legal fees and charges, insurance fees and charges, financial and other professional consultant fees, costs of rating agencies or credit ratings, fees for execu- tion, transportation and safekeeping of the Certificates, and charges and fees in connection with the foregoing. "Event of Default" means an event of default under the Lease Agreement, as defined in Section 9.1 thereof. "Excess Investment Earnings" has the meaning ascribed thereto in Section 8.11 hereof. "Federal Securities" means any of the following which are noncallable and which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein: (a) direct general obligations of (including obli- gations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the payment of principal of and interest on which are unconditionally guaranteed by the United States of America: or (b) bonds, debentures or notes or other evidence of indebtedness payable in cash issued by one or a combina- tion of any of the following: federal agencies whose obli- gations represent the full faith and credit of the United States of America, Export Import Bank of the United States, Federal Financing Bank, Farmers Home Administration, Public Housing Authority, and Government National Mortgage Association. "Fiscal Year" means the twelve-month period on July 15 in any year and ending on June following year. commencing 30 of the "Gross Proceeds" has the meaning given such term in Section of the Code. -4- o o o . . "Inde~endent Counsel" means an attorney duly admitted to the practlce of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Lessor, the Trustee or the City. "Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to Article VII of this Agreement. "Interest paxment Date" means each of the dates specified in Sectlon 2.04 hereof on which interest is due and payable with respect to the Certificates. "Lease Agreement" means the Lease Agreement, dated as of October 1, 1986, by and between the City and the Lessor, together with any duly authorized and executed amendment thereto. "Lease Payment" means any payment required to be made by the City pursuant to Section 4.5 of the Lease Agreement, as set forth in Exhibit A to the Lease Agreement. "Lease pafalent Fund" means the fund by that name estab- lished and hel by the Trustee pursuant to Article V of this Agreement. "Lessor" means the Redevelopment Agency of the City of San Bernardino, its successors or assigns. "Lessor Representative" means the Chairman of the Lessor, or any person authorized to act on behalf of the Lessor under or wi th respect to the Lease Agreement as evidenced by a resolution conferring such authorization adopted by the Board of Directors of the Lessor. "Net Proceeds" means any insurance proceeds or condemna- tion award in excess of $50,000, paid with respect to the Projects or the Site, or any proceeds resulting from the sale of any or all of the Projects or the Site pursuant to Section 9.2(b) of the Lease Agreement, remaining after payment therefrom of all expenses incurred in the collection thereof. "Non-Pur~se Obli~ations" has the. meaning given such term in Sectlon 0 the Code. "Original Purchaser" means , as original purchaser of the Certificates. -5- () o o . . "Outstandin<t', when used as of any particular time with respect to Certlficates, means (subject to the provisions of Section 10.03 hereof) all Certificates theretofore executed and delivered by the Trustee under this Agreement except: (1) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates for the payment or redemption of which funds or Federal Securities in the necessary amount shall have theretofore been deposited with the Trustee (whether upon or prior to the maturity or redemption date of such Certificates), provided that, if such Certificates are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Section 4.03 hereof or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (3) which other delivered by Certificates in lieu of or in exchange for Certificates shall have been executed and the Trustee pursuant to Section 2.09 hereof. "Owner" or "Certificate Owner" or "Owner of a Certifi- cate" or any similar term, when used with respect to a Certificate, means the person in whose name such Certificate shall be registered. "paament Period" means the period commencing , 1986 an ending , 1987 and each successive twelve- month period thereafter. "Permitted Encumbrances" means, as of any particular time: (i) liens for general ad valorem taxes and assess- ments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V of the Lease Agreement, permit to remain unpaid; (ii) the Lease Agreement; (iii) the Assignment Agreement; (iv) any right or claim of any mechanic, laborer, materialman, supplier, or vendor not filed or perfected in the manner prescribed by law; (v) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the City certifies in writing will not materially impair the use of the Site for the Projects; and (vi) ease- ments, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease Agreement and to which the Lessor and the City consent in writing. -6- o o o . . "Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State of California for the money proposed to be invested therein: (a) Federal Securities: (b) certificates of deposit in commercial banks (including the Trustee), savings and loan associations or mutual savings banks, which certificates of deposi tare fully secured at all times by Federal Securities: (c) certificates of deposit, savings accounts, deposit accounts or depository receipts of any bank (including the Trustee), savings and loan association or mutual savings bank, which are fully secured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation: and (d) investments in repurchase agreements of any securities specified in paragraphs (a), (b) and (c) above, including repurchase agreements as to which the Trustee is the seller. "Prepayment" means any payment applied towards the prepayment of Lease Payments, in whole or in part, pursuant to Article X of the Lease Agreement as a prepayment of the Lease Payments. "Principal cor~orate Trust Office" means the principal corporate trust of ice of the Trustee at 333 South Beaudry Avenue, Los Angeles, California 90017 (W24-30). "Projects" means all of the improvements and equipment to be acquired, constructed and installed pursuant to the Lease Agreement with moneys deposited in the Acquisition Fund and disbursed for such purpose pursuant to the Lease Agreement and Article III of this Agreement. "Rebate Fund" means the fund by that name established and held by the Trustee pursuant to Section 8.11 hereof. "Regular Record Date" means the close of business on the last day of the month preceding each Interest Payment Date, whether or not such day is a business day. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Article VI hereof. "Reserve Requirement" calculation an amount equal Payments required to be paid means to the in any as of any date of maximum aggregate Lease calendar year. -7- o o o .. "Site" means that certain parcel of real property locatea-In the City of San Bernardino described in Exhibit C attached to the Lease Agreement. "State" means the State of California. "Term of the Lease Agreement" means which the Lease Agreement is in effect, Section 4.2 of the Lease Agreement. the time during as provided in "Trustee" means Security Pacific National Bank, or any successor thereto acting as Trustee pursuant to this Agreement. "Trust Afi!reement" or "Agreement" means this Trust Agree- ment, toget er with any amendments or supplements hereto permitted to be made hereunder. "Yield" has the meaning given such term in the Code. Section 1.02 Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Agreement, and has taken all actions necessary to authorize the execution and delivery of this Agreement by the officers and persons signing and delivering it. ARTICLE II THE CERTIFICATES OF PARTICIPATION Section 2.01. Authorization. The Trustee is hereby authorized and directed upon written request from the Lessor to prepare, execute and deliver to the Original Purchaser, Certificates in an aggregate principal amount of $2,875,000 evidencing proportionate ownership interests in the Lease Payments and the Prepayments. Section 2.02. Date. Each Certificate shall be dated as of October 1, 1986, and interest with respect thereto shall be payable from the Interest Payment Date next preceding the date of execution thereof, unless: (i) it is executed as of an Interest Payment Date, in which event interest with respect thereto shall be payable from the date of its execu- tion: or (ii) it is executed after an Interest Payment Date and before the next following Interest Payment Date, in which event interest with respect thereto shall be payable from the Interest Payment Date immediately preceding the date of its execution: or (Hi) it is executed prior to -8- ,. () March 16, 1986, in which event interest with respect thereto shall be payable from October 1, 1986; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest with respect to such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for pay- ment with respect to the Outstanding Certificates. Section 2.03. Maturity; Interest Rates. The Certifi- cates shall mature on the dates and in the principal amounts, and interest with respect thereto shall be computed at the rates shown below: Maturity Date Principal Interest Maturity Date Principal Interest (October 1) Amount Rate (October 1) Amount Rate 1988 $240,000 1993 $335,000 1989 255,000 1994 360,000 1990 275,000 1995 390,000 1991 290,000 1996 420,000 1992 310,000 o Section 2.04. Form of Certificates; Interest. The Certificates shall be delivered in the form of fully regis- tered Certificates without coupons in the denomination of $5,000 or any integral multiple thereof, except that no fully registered Certificate may have principal maturing in more than one year. Each maturity of Certificates shall be assigned a separate letter designation from "A" onward, excepting the letters "I" and "0" therefrom, in alphabetical order, and within a maturity the Certificates shall be numbered from "1" upwards in consecutive numerical order. Interest with respect to the Certificates shall be pay- able on April 1, 1987 and thereafter semiannually on October 1 and April 1 of each year to and including the date of maturity or redemption, whichever is earlier. Said interest shall represent the portion of the Lease Payments designated as interest and coming due during the six-month period preceding each Interest Payment Date with respect to the Certificates. The proportionate share of the portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments designated as principal with respect to such Certificate by the rate of interest applicable to such Certificate. o Section 2.05. Form. The Certificates and the assign- ment to appear thereon-shall be substantially in the respec- tive forms set forth in Exhibit A attached hereto and by this reference incorporated herein. -9- o o o .. Section 2.06. Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of an authorized officer of the Trustee. Section 2.07. Application of Proceeds. The proceeds received by the Trustee from the sale of the Certificates shall forthwith be set aside by the Trustee in the following respective funds and accounts and in the following order of priority: (1) Interest ments of under the The Trustee shall deposit in the Capitalized Subaccount an amount equal to the Lease pay- advance rental due and payable by the Ci ty Lease Agreement on the Closing Date. (2) The Trustee shall deposit in the Reserve Fund an amount equal to the Reserve Requirement. (3) The Trustee shall deposit in the Lease Payment Fund an amount equal to the accrued interest on the Certificates from October 1, 1986 to the Closing Date to be paid by the Original Purchaser. (4) The Trustee shall deposit the remainder of said proceeds in the Acquisi tion Fund to be held and administered by the City Treasurer. Section 2.08. Transfer and Exchange. (a) Transfer of Certificates. Any Certificate may, in accordance wi th its terms, be transfer red upon the books required to be kept pursuant to the provisions of Section 2.12 hereof by the person in whose name it is regis- tered, in person or by his duly authorized attorney, upon surrender of such Certificate for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certi- ficate or Certificates shall be surrendered for transfer, the Trustee shall execute and deliver a new Certificate or Certificates for a like aggregate principal amount. (b) Exchange of Certificates. Certificates may be exchanged at the Principal Corporate Trust Office of the Trustee for a like aggregate principal amount of Certifi- cates of other authorized denominations of the same maturity. The Trustee may require the payment by the Certificate OWner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. -10- o o o .. Section 2.09. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the OWner of said Certificate, shall execute and deliver a new Certificate of like tenor, maturity and number in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled by it and redelivered to, or upon the order of, the City. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and, if an indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Certifi- cate OWner, shall execute and deliver a new Certificate of like tenor and maturity, as the Trustee shall determine, in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new Certificate delivered under this Section and of the expenses which may be incurred by the Trustee in carrying out its duties under this Section. Any Certificate issued under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Agreement with all other Certificates secured by this Agreement. The Trustee shall not be required to treat both the original Certificate and any duplicate Certificate as being Outstanding for the purpose of deter- mining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding here- under, but both the original and duplicate Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu. of delivering a new Certificate in exchange for a Certificate which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Certificate. Section 2.10. Payment. Payment of interest due with respect to any CertJ.ficate on any Interest Payment Date shall be made to the person appearing on the registration books of the Trustee as the OWner thereof as of the Regular Record Date immediately preceding such Interest Payment Date, such interest to be paid by check or draft mailed to such Owner at his address as it appears on such registration books or at such other address as he may have filed with the Trustee for that purpose as of the fifteenth (15th) day preceding the Interest Payment Date. The principal and redemption price with respect to the Certificates shall be payable in lawful money of the United States of America upon -11- o o o " surrender thereof at the Principal Corporate Trust Office of the Trustee. Section 2.11. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Agreement to be signed or executed by Certificate OWners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such OWners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any OWner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgements of deeds to be recorded in the jurisdiction where the instrument is executed, that the person signing such instrument acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person and the amount, the maturity and the numbers of such Certificates and the date of his holding the same shall be proved by the registration books maintained pursuant to Section 2.12 hereof. Nothing contained in this Article II shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which the Trustee may deem suffi- cient. Any request or consent of the OWner of any Certifi- cate shall bind every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee in pursuance of such request or consent. -12- Q o o .. Section 2.12. Certificate Register. The Trustee will keep or cause to be kept, at its Principal Corporate Trust Office sufficient books for the registration and transfer of the Certificates which shall at all times be open during regular business hours to inspection by the City and the Lessor; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may pre- scr ibe, register or transfer or cause to be registered or transferred, on said books, Certificates as hereinbefore provided. ARTICLE III ACQUISITION FUND Section 3.01. Acquisition Fund. There is hereby established a special fund designated as the "City of San Bernardino 1986, Projects Acquisition Fund" which following the initial payment of Delivery Costs by the Trustee pursuant to Section 3.02(1) shall be transferred to the City Treasurer; the City Treasurer shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as provided herein and in the Lease Agreement. There shall be deposited in the Acqui- sition Fund the proceeds of sale of the Certificates required to be deposited therein pursuant to Section 2.07 hereof, investment earnings on the Lease Payment Fund and the Capitalized Interest Subaccount pursuant to Section 5.05 hereof, investment earnings on the Reserve Fund pursuant to Section 6.03 hereof, and any other funds from time to time deposited with the City Treasurer for such purpose. Section 3.02. pa)'ffient of Acquisition and Construction Costs. The moneys ln the Acquisition Fund shall be dis- bursed from time to time to pay Acquisition and Construction Costs as follows: (1) In the case of payment of Delivery Costs, the Trustee shall disburse moneys in the Acquisition Fund on the Closing Date; moneys shall be disbursed for the payment of Delivery Costs by the Trustee or the City Treasurer only upon a requisition signed by the City Representative setting forth the amounts to be disbursed for payment or reimburse- ment of Delivery Costs and the person or persons to whom said amounts are to be disbursed, stating that the amounts to be disbursed are for Delivery Costs properly chargeable to the Acquisition Fund. (2) In the case of any other Acquisition and Construction Costs, the City Treasurer shall disburse moneys -13- o o o .. in the Acquisition Fund from time to time upon receipt by the City Treasurer of a requisition signed by the City Representative which: (a) states with respect to each disbursement to be made: (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (Hi) the amount to be disbursed, and (iv) that each obligation therein has been properly incurred, and is a proper charge against the Acquisition Fund and has not been the basis of any previous disbursement: (b) specifies in reasonable detail the nature of the obligation: and (c) is accompanied by a bill or statement of account for each obligation. The City Treasurer shall be responsible for the safekeeping and investment of the moneys held in the Acquisition Fund, the payment thereof in accordance with this Section, and the application of amounts paid pursuant to such requisitions. Section 3.03. Transfers of Unexpended Proceeds. Upon the earlier of (1) the filing with the Trustee of (i) all of the Certificates of Completion pursuant to Section 3.2 of the Lease Agreement, (H) a bill of sale in favor of the Lessor as to all components of the Projects constituting personal property and (iii) a certificate of the City Representative that all Acquisition and Construction Costs have been paid or are provided for, or (2) October 1, 1989, the City Treasurer shall retain in the Acquisition Fund an amount specified in written notice signed by the Lessor Representative and filed with the Trustee to be required to pay future Acquisition and Construction Costs, and the City Treasurer shall withdraw and transfer to the Trustee for deposit in the Lease Payment Fund the balance of moneys in the Acquisition Fund. Thereafter, all amounts so retained in the Acquisition Fund but not subsequently used, and timely notice of such failure of use of which shall be given by the Lessor Representative to the Trustee, shall also be transferred by City Treasurer to the Trustee for deposit into the Lease Payment Fund. The amounts so transferred from the Acquisition Fund to the Lease Payment Fund shall be applied to the redemption of Certificates pursuant to Section 4.0l(c). -14- o o o .. ARTICLE IV REDEMPTION OF CERTIFICATES Section 4.01. Redemption. (a) Optional Redemption. Certificates maturing on or after October 1, 1992 are subject to redemption in whole or in part (but not in a total principal amount of less than $20,000 at anyone time), from Prepayments made at the option of the City pursuant to Section 10.2 of the Lease Agreement, on or after October 1, 1991, or on any October 1 or Apr il 1 thereafter, at a redemption pr ice equal to the principal amount thereof plus a premium (expressed as per- centages of the principal amount of Certificates or portions thereof to be redeemed) as set forth in the following table, together with accrued interest to the date fixed for redemption: Redemption Dates October 1, 1991 and April 1, 1992 October 1, 1992 and April 1, 1993 October 1, 1993 and thereafter Redemption Prices 101% 101t% 100% No premium shall be paid with respect to the redemption of Certificates on or after October 1, 1993. (b) Redemption From Net Proceeds of Insurance and Condemnation. The Certificates are also subject to mandatory redemption on any date prior to maturity in whole or in part, from the Net Proceeds of insurance or condemnation or sale of the Projects and Site, which Net Proceeds are deposited in the Lease Payment Fund and credited as a Prepayment made by the City pursuant to Section 10.3 of the Lease Agreement, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. (c) Redemption From Expected Proceeds of the Certificates. The Certificates are also subject to mandatory redemption on October 1, 1989, in whole or in part, from expended proceeds of the Certificates and investment earnings thereon transferred to the Trustee for deposit into the Lease Payment Fund pursuant to Section 3.03, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. Section 4.02. Selection of Certificates for Redemp- tion. Whenever provision is made in this Agreement for the -15- o o o .. redemption of Certificates and less than all Outstanding Certificates are called for redemption, the Trustee shall select Certificates for redemption, from the Outstanding Certificates not previously called for redemption, such that, as nearly as practicable, approximately equal princi- pal and interest payments prevail with respect to the Certificates in each Fiscal Year following such redemp- tion. The Trustee shall select Certificates for redemption by lot within a maturity in any manner which the Trustee shall in its sole discretion deem appropriate and fair. The Trustee shall promptly notify the City and the Lessor in writing of the Certificates so selected for redemption. Section 4.03. Notice of Redemption. When redemption is authorized or required pursuant to Section 4.01 hereof, the Trustee shall give notice of the redemption of the Certifi- cates. Such notice shall specify: (a) that the Certifi- cates or a designated portion thereof are to be redeemed, (b) the date or redemption, and (c) the place or places where the redemption will be made. Such notice shall further state that on the specified date there shall become due and payable upon each Certificate, the principal and premium, if any, together with interest accrued to said date, and that from and after such date interest with respect thereto shall cease to accrue and be payable. Notice of such redemption shall be mailed to the Origi- nal Purchaser, or if the Original Purchaser is a syndicate, to the managing member of such syndicate, and to the respec- tive Owners of Certificates designated for redemption at their addresses appearing on the Certificate registration books at least twenty-five (25) days but not more than sixty (60) days prior to the redemption date, which notice shall, in addition to setting forth the above information, set forth, in the case of each Certificate called only in part, the portion of the principal thereof which is to be redeemed; provided that neither failure to receive such notice nor any immaterial defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Certificates. Section 4.04. Partial Redemption of Certificate. Upon surrender of any Certificate redeemed in part only, the Trustee shall execute, authenticate and deliver to the registered Owner thereof, at the expense of the City, a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Certificate surrendered and of the same interest rate and the same maturity. Such partial redemption shall be valid upon payment of the amount thereby required to be paid to such Owner, and the City, the Lessor and the -16- Q Trustee shall be released and discharged from all liability to the extent of such payment, irrespective of whether an endorsement as to such partial redemption shall or shall not have been made upon the reverse of such Certificate by such Owner and irrespective of any error or omission in such endorsement. o Section 4.05. Effect of Notice of Redemption. Notice having been given as aforesaid, and the moneys for the redemption (including the interest to the applicable date of redemption), having been set aside in the Lease Payment Fund, the Certificates shall become due and payable on said date of redemption, and, upon presentation and surrender thereof at the office or offices specified in said notice, said Certificates shall be paid at the unpaid principal amount with respect thereto, plus premium, if any, and interest accrued and unpaid to said date of redemption. If, on said date of redemption, moneys for the redemp- tion of all the Certificates to be redeemed, together with interest to said date of redemption, shall be held by the Trustee so as to be available therefor on said date of redemption, and if notice of redemption thereof shall have been given as aforesaid, then, from and after said date of redemption, interest with respect to the Certificates shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Certificates shall be held in trust for the account of the OWners of the Certificates so to be redeemed. All Certificates paid at maturity or redeemed prior to maturity pursuant to the provisions of this Article shall be cancelled upon surrender thereof and delivered to or upon the order of the City. ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND o Section 5.01. Assignment of Rights in Lease Agree- ment. The Lessor has in the Assignment Agreement transferred, assigned and set over to the Trustee certain of its rights under the Lease Agreement, including but not limited to all of the Lessor's rights to receive and collect all of the Lease Payments, the Prepayments and all other amounts required to be deposited in the Lease Payment Fund pursuant to the Lease Agreement or pursuant hereto. All Lease Payments, Prepayments and such other amounts to which the Lessor may at any time be entitled shall be paid directly to the Trustee, and all of the Lease Payments and -17- o Prepayments collected or received by the Lessor shall be deemed to be held and to have been collected or received by the Lessor as the agent of the Trustee, and if received by the Lessor at any time shall be deposited by the Lessor with the Trustee within one business day after the receipt thereof, and all such Lease Payments, Prepayments and such other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund (except as provided in Section 6.04 hereof). Section 5.02. Establishment of Lease pa~ent Fund; Deposits. The Trustee shall establish a special und desig- nated as the "City of San Bernardino 1986 Projects Lease Payment Fund." All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the City and the Owners of the Certificates, and shall be used and applied by the Trustee as hereinafter set forth. o There shall be deposited in the Lease Payment Fund all Lease payments and Prepayments received by the Trustee (except as provided in Section 5.03 and Section 6.04 hereof), including any moneys received by the Trustee for deposit therein pursuant to Sections 3.4, 4.5, 5.5 or Article VI or X of the Lease Agreement, and any other moneys required to be deposited therein pursuant to the Lease Agreement or pursuant to this Agreement. Section 5.03. Establishment of Capitalized .Interest Subaccount; Deposit. The Trustee shall establish within the Lease Payment Fund a special account designated as the "City of San Bernardino 1986 Projects Capitalized Interest Sub- account." There shall be deposited into the Capi tali zed Interest Subaccount the Lease Payment of advance rental due and payable by the City under the Lease Agreement on the Closing Date, pursuant to Section 2.07 hereof. All moneys at any time deposited by the Trustee in the Capi talized Interest Subaccount shall be held by the Trustee in trust for the benefit of the City and the Owners of the Certifi- cates, and shall be used and applied by the Trustee solely to pay the interest coming due with respect to the Certifi- cates during the respective periods of time during which such interest shall have been capitalized. Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and the interest and redemption premiums (if any) with respect to the Certificates as the same shall become due and payable, in accordance with the provisions of Article II and Article IV hereof. o -18- o o o '. Section 5.05. Transfers of Investment Earnings to Acquisition Fund. The Trustee shall, at least semiannually, transfer any income or profit on the investment of moneys in the Lease Payment Fund and the Capitalized Interest Subaccount to the Acquisition Fund before the earlier of (i) the date all of the Certificates of Completion are filed with the Trustee pursuant to Section 3.2 of the Lease Agreement, or (ii) October 1, 1989. Section 5.06. Surplus. Any surplus remaining in the Lease Payment Fund, after re~emption and payment of all Certificates, including prem1ums (if any) and accrued interest, and payment of any applicable fees to the Trustee, or provision for such redemption and payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the City. ARTICLE VI RESERVE FUND Section 6.01. Establishment of Reserve Fund. The Trustee shall establish a special fund designated as the "City of San Bernardino 1986 Projects Reserve Fund." All moneys at any time on deposit in the Reserve Fund shall be held by the Trustee in trust for the benefit of the City and the Owners of the Certificates, and applied solely as provided herein. Section 6.02. Deposits. There shall be deposited in the Reserve Fund an amount equal to the Reserve Requirement, in accordance with Section 2.07 hereof. Moneys in the Reserve Fund shall be held in trust as a reserve for the payment when due of all the Lease Payments and Prepayments to be paid pursuant to the Lease Agreement. Section 6.03. Transfers of Excess. The Trustee shall, semiannually on or prior to each March 10 and September 10, beginning March 10, 1987, (i) cause the Reserve Fund to be valued pursuant to Section 8.05 hereof, and (ii) transfer any moneys available in the Reserve Fund (as so valued) in excess of the Reserve Requirement to the Acquisition Fund before the earlier of (a) the date all of the Certificates of Completion are filed with the Trustee pursuant to Section 3.2 of the Lease Agreement, or (b) October 1, 1989. There- after, the Trustee shall, on or before March 10 and September 10 of each year, transfer any moneys then on deposit in the Reserve Fund in excess of the Reserve Requirement to the Lease Payment Fund. -19- o o o " Section 6.04. Application in Event of Deficiency in Lease Payment Fund. If on any Interest Payment Date the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest and redemption premiums (if any) with respect to the Certificates then coming due and payable, the Trustee shall apply the moneys available in the Reserve Fund to make delinquent Lease Payments on behalf of the City by transferring the amount necessary for such purpose to the Lease Payment Fund. If after such a transfer, a deficiency remains in. the Lease Payment Fund, the Trustee shall apply the amount, if any, on deposit in the Lease Payment Fund first to the payment of interest past due with respect to all Certificates on a pro rata basis, and second to the payment of the unpaid principal balance with respect to each Certificate which is then past due on a pro rata basis. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment shall be deposited in the Reserve Fund to the extent of such advance. Section 6.05. Transfer To Make All Lease Payments. If on any Interest Payment Date the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding amounts required for payment of past due principal or interest with respect to Certificates not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal, interest and redemption premiums (if any), the Trustee shall, upon the written direction of the City Representative, transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments or Prepayments on behalf of the City, and such moneys shall be paid to the Owners of Certificates in accordance with Article II of this Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates, or upon provision for such payment as provided in Section 14.01 hereof, shall be withdrawn by the Trustee and paid to the City. ARTICLE VII INSURANCE AND CONDEMNATION FUND: INSURANCE: EMINENT DOMAIN Section 7.01. Establishment of Insurance and Condemna- tion Fund: Application of Net Proceeds of Insurance Award. Any Net Proceeds of insurance against accident to or destruction of any structure constituting any part of the Projects collected by the City in the event of any such -20- o o o " accident or destruction shall be transferred to the Trustee pursuant to Section 6.2 of the Lease Agreement and deposited by the Trustee in a special fund designated as the "Insurance and Condemnation Fund" to be applied and disbursed by the Trustee as provided in Section 6.2(a) of the Lease Agreement. Section 7.02. A lication of Net Proceeds of Eminent Domain Award. If all or any part of the Pro ects or the Site shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section 6.2(b) of the Lease Agreement and shall be applied and disbursed by the Trustee as follows: (a) (1) If the Trustee determines (i) that such eminent domain proceedings have not materially affected the operation of the Projects or the ability of the City to meet any of its obligations under the Lease Agreement, a~d (ii) that such proceeds are not needed for repair or rehabi- litation of the Projects, the Trustee shall transfer such proceeds to the Lease Payment Fund to be credi ted towards the Prepayment required to be paid pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates in the manner provided in Article IV hereof. (2) If the Trustee determines (i) that such eminent domain proceedings have not materially affected the operation of the Projects or the ability of the City to meet any of its obligations under the Lease Agreement, and (ii) that such proceeds are needed for repair or rehabilita- tion of the Projects, 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 requisitions of the City Representative, certifi- cates of architects or engineers and other documents as the Trustee may at its discretion request. (b) If (1) less than all of the Projects shall have been taken in such eminent domain proceedings, and if the Trustee determines that such eminent domain proceedings have materially affected the operation of the Projects or the ability of the City to meet any of its obligations under the Lease Agreement or (2) all of the Projects shall have been taken in such eminent domain proceedings, then the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited toward the Prepayment required to be paid pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates in the manner provided in Article IV hereof. -21- " o o o " lc) In making any such determinjltion under this Section 7.02, the Trustee may obtain, but shall not be required to obtain, at the expense of the City, the report of an independent engineer or other independent professional consultant. Any such determination by the Trustee shall be final. Section 7.03. Cooperation. The Lessor and the Trustee shall cooperate fully with the City at the expense of the City in filing any proof of loss with respect to any insurance policy maintained pursuant to Article V of the Lease Agreement and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Projects or any part thereof. ARTICLE VIII MONEYS IN FUNDS: INVESTMENT Section 8.01. Held in Trust. The moneys and invest- ments held by the Trustee under this Agreement other than moneys held in the Rebate Fund or required to be transferred to the Rebate Fund pursuant to the provisions of this Agreement are irrevocably held in trust for the benefit of the City and the Owners of the Certificates, and for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Lessor, the Trustee or the Ci ty or any Owner of Certificates, or any of them. Section 8.02. Investments Authorized. Moneys held by the Trustee hereunder may, and upon written order of the City Representative shall, be invested and reinvested by the Trustee, to the maximum extent practicable in Permitted Investments having the highest yield reasonably obtain- able. The City Representative may by written order filed with the Trustee direct such investment in specific Permit- ted Investments. Such investments, if registrable, shall be registered in the name of the Trustee for the benefit of the Certificate Owners and held by the Trustee. The Trustee may purchase from or sell to itself or any affiliate, as prin- cipal or agent, investments authorized by this Section. Such investments and reinvestments shall be made, giving full consideration to the time at which funds are required to be available. The Trustee may act as purchaser or agent in the making or disposing of any investment. The Trustee may sell at the best price obtainable, or present for -22- i o o o " redemption, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Invest- ment is credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment. Section 8.03. Accountin~. The Trustee shall furnish to the City, not less than sem1annually, an accounting of all investments made by the Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this Section. Section 8.04. Allocation of Earnin~s. Subject to Sections 5.05 and 6.03, any income" prof1t or loss on such investments shall be deposited 1n or charged to the respective funds from which such investments were made, and any interest on any deposit of funds shall be deposited in the fund from which such deposit was made, except as otherwise provided herein. Section 8.05. Valuation of Investments. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at the lesser of cost or market value. For purposes of this Section 8.05, the market value of any Permitted Investments shall be determined as follows: (a) as to Permitted Investments the bid and asked prices of which are published on a regular basis in The Wall Street. Journal (or, if not there, then in The New York Times), the value of such Permitted Investments shall be the average of the bid and asked prices for such investments so published on or most recently prior to the time of such determination. (b) as to Permitted Investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times, the value of such Permitted investments shall be the average bid price at the time of such determination for such investments by any two nationally recognized government securities dealers (selec- ted by the Trustee in its absolute discretion) at the time of making a market in such investments; (c) as to Permitted Investments consisting of certificates of deposit and bankers acceptances, the value of such Permitted Investments shall be the face amount thereof, plus accrued interest; and -23- o o o " (d) as to any other Permitted Investments not specified above, the value of such Permitted Investments shall be the value thereof established by prior agreement between the City and the Trustee. The Lessor shall file with the Trustee, on or before the Closing Date, a certificate signed by the Lessor Representative designating an entity to perform such valuations, which designation may be amended from time to time by the Lessor. The Trustee shall have no responsi- bility to undertake any valuation required by this Section 8.05, but shall cooperate fully with such designated entity as required to enable such designated entity to undertake such valuations from time to time. All costs and expenses of such valuation shall be paid by the City when due pursuant to Section 4.8 of the Lease Agreement. Section 8.06. Deposit and Investment of Moneys in Funds. The Trustee may, and upon the written request of the City Representative shall, commingle any of the funds held by it pursuant to this Agreement into a separate fund or funds for investment purposes only; provided, however, that all funds or accounts held by the Trustee hereunder shall be accounted for separately notwithstanding such commingling by the Trustee. Section 8.07. Arbitrage Covenant. The Trustee, the Lessor and the City hereby covenant with the OWners of the Certificates that they will make no use of the proceeds of the Certificates whiCh, if such use had been made on the Closing Date, would have caused the obligations of the City under the Lease Agreement to be "arbitrage bonds" subject to federal income taxation by reason of Section 103(c) of the Internal Revenue Code of 1954, as amended. Section 8.08. Restriction on Yield of ACquisition Fund. The Trustee shall invest moneys on deposit in the Acquisition Fund so that the aggregate Yield on moneys invested in the Acquisition Fund does not exceed ___ percent ( %) per annum, or such other percent per annum as the City may establish; provided, however, that prior to establishing a percent per annum higher than the City shall deliver to the Trustee an opinion o~nationally recognized bond counsel to the effect that investing the moneys on deposit in the Acquisition Fund at an aggregate Yield of such percent per annum shall not adversely affect the tax-exempt status of the interest component of the Lease Payments. Section 8.09. Obligations. In Limitation on Investments in Nonpurpose order to satisfy the requirements of -24- o o o '. Section of the Code, the City hereby instructs the Trustee as follows: (a) (1) At no time during any Payment Period shall the amount invested by the Trustee pursuant to this Agreement in Nonpurpose Obligations with a yield higher than (the yield on the Certificates) exceed 150\ of the debt service on the Certificates for such Payment Period. (2) To the extent of investments in Nonpurpose Obligations made contrary to the provisions of clause (1) above, the aggregate amount invested as provided in clause (1) above, if any, shall be promptly and propor- tionately reduced as and when the aggregate principal amount of Certificates Outstanding is reduced; and (3) Clauses (1) and (2) above shall not apply to (i) proceeds invested for an appropriate temporary period until disbursed for the governmental purposes of the issue, or (ii) temporary investment periods related to debt service. (b) The City shall make or cause to be made such annual and other computations, certificates and reports to the Trustee and others as may be required in order for the Trustee to comply with subsection (a) of this Section and with Section of the Code. (c) Notwithstanding any provisions of this Section 8.09 to the contrary, in the absence of written instructions with respect to investments from the City, the Trustee shall invest funds held by it in such Investment Obligations as it may deem desirable, provided that the interest thereon is exempt from federal income taxation pursuant to Section 103(a) of the Code. Section 8.10. Rebate of Excess Investment Earnings to the United States. (a) The City shall calculate or cause to be calculated Excess Investment Earnings in accordance with subsection (b) hereof and shall payor cause the Trustee to pay Excess Investment Earnings to the United States in accordance with subsection (c) hereof. The term "Excess Investment Earnings" means an amount equal to the sum of: (i) the excess of (A) the aggregate amount earned from the date of execution hereof on all Nonpurpose Obliga- tions in which Gross Proceeds are invested (other -25- .. o o o " than amounts attributable to an excess described in this paragraph (i), over (B) the amount that would have been earned if the Yield on such Nonpurpose Obligations (other than amounts attributable to an excess described in this paragraph Ii)) has been equal to percent per annum (the Yield on the Certificates), plus (ii) any income attributable to the excess described in paragraph (i). (b) Prior to the first Payment Period, the City shall calculate the Excess Investment Earnings referenced in paragraph (i) of subsection (a). Thereafter, prior to each subsequent Payment Period and on the date of the prepayment of the Certificates, the City shall calculate the amount of Excess Investment Earnings referenced in paragraphs (i) and (ii) of subsection (a). (1) Except as provided in clause (2) below in determining the amount described in paragraph (i)(A) of subsection (a), the aggregate amount earned on Nonpurpose Obligations shall mean (i) all income realized under federal income tax accounting principals (whether or not the person earning such income is subject to federal income tax) with respect to such Nonpurpose Obligations and with respect to the reinvestment of the transaction costs incurred in acquiring, carrying, selling or redeeming such Nonpurpose Obligations, including, but not limited to, gain or loss realized on the disposi tion of such Nonpurpose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to taxable year of inclusion of gross income), and income under Section 1272 of the Code (relating to original issue discount) and (ii) any unrealized gain or loss as of the date of prepayment of the Certificates in the event that any Nonpurpose Obligation is retained after such date. (2) In determining the amount descr ibed in paragraph (i) of subsection (a), an obligation or security shall be treated as acquired for its fair market value at the time it becomes a Nonpurpose Obligation, so that gain or loss on the disposition of such obligation or security shall be computed with reference to such fair market value as its adjusted basis. (3) In determining the amount described in paragraph (i) (B) of subsection (a), the Yield on the Certi- ficates shall be determined based on the actual Yield on the -26- . o o o " Certificates during the period between October 1, 1987, and the date the computation is made (with adjustments for discount or premium). (4) In determining the amount described in paragraph (ii) of subsection (a), all income attributable to the excess described in paragraph (i) of subsection (a) must be taken into account, whether or not that income exceeds the Yield on the Certificates, and no amount may be treated as "negative arbitrage." (5) In determining the amount described in subsection (a), there shall be excluded any amount earned on any fund or account which is used primarily to achieve a proper matching of revenues and debt service within each Payment Per iod and which is depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on such fund or account or one-twelfth of annual debt service as well as amounts earned on said earnings if the gross earnings on all such funds and accounts for the Payment Period is less than $100,000. (c) The Trustee shall pay Excess Investment Earnings to the United States in installments in accordance with the written directions of the City with the first payment to be made not later than thirty (30) days after the end of the fifth Payment Period and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The City shall assure that each install- ment is in an amount equal to at least ninety percent (90%) of the Excess Investment Earnings with respect to the Certi- ficates as of the close of the computation period. Not later than thirty (30) days after the prepayment of the Certificates, the Trustee shall pay 100% of the theretofore unpaid Excess Investment Earnings to the United States as certified to it by the City, which shall advise it of the necessary amounts prior to such prepayment. The Trustee shall remit such payments to the United States at the address prescribed by the applicable regulations as the same may be from time to time in effect with such reports and statements as may be prescribed by such regulation, which address shall be provided to it by the City. (d) In order to assure that Excess Investment Earnings are paid to the United States rather than to a third party, the City shall direct the Trustee to invest such moneys in certificates of deposit and in investment contracts in accordance with the applicable regulations therefor as from time to time in effect. -27- o o o '. (e) The City shall keep, and retain for a' period of six (6) years following the prepayment or payment at maturity of the Certificates, records of the determinations made pursuant to this Section 8.10. (f) Notwithstanding anything in the Section 8.10 to the contrary, the Trustee shall have no obligation here- under except to follow the directions of the City with respect to the matters set forth herein. (g) All Excess Investment Earnings shall be trans- ferred immediately to the Rebate Fund. Section 8.11. Rebate Fund. (a) The Trustee shall establish a special fund designated as the "Rebate Fund." The Rebate Fund shall not be subject to the lien of this Trust Agreement. The Trustee shall establish and maintain within the Rebate Fund an "Excess Earnings Account" and an "Investment Account." The Trustee shall establish and maintain any such subaccounts within the Excess Earnings Account and Investment Account as may be requested by the City. (b) Notwithstanding anything contained in this Trust Agreement to the contrary, there shall be deposited in the Excess Earnings Account of the Rebate Fund all Excess Investment Earnings determined from time to time pursuant to Section 8.10 hereof and all amounts deposited by the City with instructions to deposit such moneys into the Rebate Fund. All income or other gain from the investment of moneys in the Rebate Fund shall be deposited in the Invest- ment Account of the Rebate Fund. (c) The Trustee, in accordance with instructions of the City, shall apply such funds on deposit in the Rebate Fund on behalf of the City, to the extent required to make payments to the United States of America in respect of the Certificates, at the times and in the manner required by Section 8.10 hereof. (d) In the event that as of the end of any Payment Period the amount required to be deposited in the Rebate Fund exceeds the amount then available in the funds and accounts established pursuant hereto, the City agrees to promptly remit to the Trustee an amount sufficient to make up the deficiency. The Trustee shall immediately deposit in the Excess Earnings Account of the Rebate Fund all such amounts so received and identified as such by the City. -28- o Q o '. (e) The Trustee agrees, on behalf of the City, to keep and maintain all records required to be maintained by it pursuant to, and as and to the extent required by, the Code. This covenant shall survive the defeasance of this Agreement. ARTICLE IX THE TRUSTEE Section 9.01. Appointment of Trustee. Security Pacific National Bank in Los Angeles, California, a national banking association organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Lessor and the City for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Agreement. The Lessor and the City agree that they will maintain as Trustee a bank or trust company having a principal office in Los Angeles, California, with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by Federal or state authority, so long as any Certificates are outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or the requirements of any supervising or examining authority above referred to, then for the purpose of this Section the combined capi tal and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee is hereby authorized to redeem the Certifi- cates when duly presented for payment at maturity, or on redemption, or on purchase by the Trustee prior to maturity, and to cancel all Certificates upon payment thereof. The Trustee shall keep accurate records of all funds adminis- tered by it and of all Certificates paid and discharged. The Trustee shall be compensated for its services rendered pursuant to the provisions of this Agreement. The Trustee's compensation shall not be limited by any law on compensation of a Trustee of an express trust, and the Trustee shall be reimbursed upon request for all reasonable out-of-pocket expenses incurred by it; such expenses shall include, but not be limited to, the reasonable compensation and out-of- pocket expenses of the Trustee's agents and counsel. The City may remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto; provided that any such successor shall -29- " () Q o be a bank or trust company meeting the requirements of this Section 9.01. The Trustee may at any time resign by giving written notice to the City. Upon receiving such notice of resigna- tion, the City shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Upon such acceptance, the City shall mail notice thereof to the Certificate Owners at their respective addresses set forth on the Certificate registration books maintained pursuant to Section 2.12 hereof. If the City fails to appoint a suc- Cessor Trustee within thirty (30) days after receipt of such notice of resignation, the Trustee may petition a court of competent jurisdiction for the appointment of a successor Trustee. Section 9.02. Liability of Trustee. The recitals of facts, covenants and agreements herein and in the Certifi- cates contained shall be taken as statements, covenants and agreements of the Lessor and the City, and the Trustee assumes no liability or responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Certificates and shall not incur any liability or responsibility in respect thereof, other than in connection with the duties or obliga- tions herein or in the Certificates assigned to or imposed upon the Trustee, including but not limited to the Trustee's obligations under Section 8.02 hereof. Section 9.03. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 9.01, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 9.04. Protection and Rights of Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it shall in good faith believe to be genuine and to have been passed or signed by the proper board or person or to have been prepared and furnished pursuant to any of the provisions of this Agreement, and the -30- , o o o '. Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall not be bound to recog- nize any person as an Owner of any Certificate or to take any action at his request unless such Certificate shall be deposited with the Trustee and satisfactory evidence of the ownership of such Certificate shall be furnished to the Trustee. The Trustee may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete autho- rization and protection in respect of any action taken or suffered by the Trustee in good faith and in accordance therewith. Whenever in the administration of its duties under this Agreement, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffer ing any action hereunder, such matter (unless other evidence in respect thereof be herein specifically pre- scribed) shall be deemed to be conclusively proved and established by the certificate of the City Representative or the Lessor Representative, and such certificate shall be full warranty to' the' Trustee for any action taken or suffered under the provisions of this Agreement in reliance thereon, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. The Trustee may (i) become the OWner of Certificates wi th the same rights it would have it it were not the Trustee; (ii) acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and (iii) act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Certificates, whether or not such committee shall represent the Owners of the majority in principal amount of the Certificates then Outstanding. The recitals, statements and representations by the City and the Lessor contained in this Agreement or in the Certificates shall be taken and construed as made by and on the part of the City and the Lessor, as the case may be, and not by the Trustee, and the Trustee does not assume, and shall not have, any liability or responsibility or obli- gation for the correctness of any thereof. -31- . o o o " The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the Trustee shall not be answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with reasonable care. The Trustee shall not be answerable for the exercise of any discretion or power under this Agreement or for anything whatever in connection with the funds and accounts established hereunder, except only for its own willful mis- conduct or negligence. ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted. This Agreement and the rights and obligations of the Owners of the Certifi- cates and the Lease Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effec- tive when the written consents of the Owners of sixty per- cent (60\) in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 10.03 hereof, shall have been filed with the Trustee. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest thereon, or reducing the amount of principal thereof or reducing any premium payable upon the redemption thereof, without the express consent of the Owner of such Certifi- cate, or (2) reduce or have the effect or reducing the per- centage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease Agreement, or (3) modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in Section 10.02 hereof. This Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and obligations of the parties thereto, may be modi- fied or amended at any time by a supplemental agreement, without the consent of any such Owners, but only to the extent permitted by law and only (1) to add to the covenants and agreements of any party other covenants to be observed, or to surrender any right or power herein or therein reserved to the Lessor or the City, (2) to cure, correct or -32- ".I o C) o '. supplement any ambiguous or defective prov~s~on contained herein or therein, or (3) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not adversely affect the interests of the Owners of the Certifi- cates. Any such supplemental agreement shall become effec- tive upon execution and delivery by the parties hereto or thereto, as the case may be. Section 10.02. Procedure for Amendment with Written Consent of Certificate Owners. In the event the consent of the Owners of the Certificates is required pursuant to Section 10.01 hereof, this Agreement and the Lease Agreement may be amended by supplemental agreement only upon compli- ance with the provisions of this Section 10.02. A copy of the proposed supplemental agreement, together with a request to the Certificate Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth on the Certificate registration books maintained pursuant to Section 2.12 hereof, but failure to mail copies of any such supplemental agreement and request shall not affect the validity of the supple- mental agreement when assented to as in this Section provided. Such a supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consents of the Owners of sixty percent (60\) in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.03 hereof) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner thereof (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been given. After the Owners of the required percentage of Certifi- cates shall have filed their consents to such a supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the manner hereinbefore in this Section provided for the mailing of such supplemental agreements of the adoption thereof, stating in substance that the supplemental agreement has been consented to by the Owners -33- ., o o o .. of the required percentage of Certificates and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of such a supplemental agreement or consents thereto). Such a supplemental agreement shall become effective upon the mail- ing of the notice last-mentioned above, and the supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all Certificates at the expiration of sixty (60) days after such mailing, except in the event of a final decree of a court of competent juris- diction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60) day period. Section 10.03. Disqualified Certificates. Certificates owned or held by or for the account of the City or by any person directly or indirectly controlled by, or under direct or indirect common control with, the City (except any Certi- ficates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Agreement. The City may adopt appropriate regulations to require each Certificate Owner, before his consent provided for in this Article X shall be deemed effective, to reveal if the Certificates as to which such consent is given are disquali- fied as provided in this Section. Section 10.04. Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effec- tive pursuant to this Article X, this Agreement or the Lease Agreement, as the case may be, shall be deemed to be modi- fied and amended in accordance therewith, and the respective rights, duties and obligations of the parties hereto or thereto, as the case may be, and all Owners of Certificates Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifica- tion and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Agreement or the Lease Agree- ment, as the case may be, for any and all purposes. Section 10.05. Endorsement or Replacement of Certifi- cates Delivered After Amendments. The Trustee may determine that Certificates delivered after the effective date of any action taken as provided in. this Article X shall bear a notation, by endorsement or otherwise, in form approved by the Trustee as to such action. In that case, upon demand of -34- , o o o .. the OWner of any Certificate Outstanding at such effective date and presentation of his Certificate at the hereinafter mentioned office of the Trustee, a suitable notation shall be made on such Certificate. The Trustee may determine that new Certificates, so modified as in the opinion of the Trustee is necessary to conform to action taken pursuant to this Article X, shall be prepared, executed and delivered. In that case, upon demand of the OWner of any Certificate then Outstanding, such a new Certificate shall be exchanged for the Outstanding Certificate at the Principal Corporate Trust Office of the Trustee, without cost to the Owner, for a Certificate of the same character then outstanding, upon surrender of such Certificate. Section 10.06. Amendator~ Endorsement of Certifi- cates. The provisions of thlS Article X shall not prevent any Certificate OWner from accepting any amendment as to the particular Certificates held by him, provided that due notification thereof is made on such Certificates. ARTICLE XI COVENANTS; NOTICES Section 11.01. Compliance With and Enforcement of Lease Agreement. The City covenants and agrees with the OWners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The Lessor covenants and agrees with the OWners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Lease Agree- ment by the Lessor thereunder. The Lessor and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Projects or the Site, which mayor can in any manner affect such estate of the City, will deliver the same, or a copy thereof, to the Trustee. Section 11.02. Payment of Taxes. The City will payor cause to be paid all taxes, assessments and other govern- mental charges, if any, that may be levied, assessed or charged upon the Projects or the Site, or any part thereof, promptly as and when the same shall become due and payable; -35- -, o o o .. and the City will, upon request of the Trustee, from time to time keep the Trustee advised of such payments, and deliver such evidence thereof, as the Trustee may reasonably require. The City will not suffer the Projects or the Site, or any part thereof, to be sold for any taxes, assessments or other charges whatsoever, or to be forfeited therefor. Section 11.03. Observance of Laws and Regulations. The City will well and truly keep, observe and perform all valid and lawful obligations or requirements now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State of California, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every ri9ht, privilege or franchise now owned or hereafter acquired by the City, including its right to exist and carry on business as a chartered City, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Section 11. 04. Prosecution and Defense of Suits. The City shall promptly, upon request of the Trustee, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Projects and the Site, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose, and shall indemnify and save the Trustee and every Certificate Owner harmless from all loss, cost, damage and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect, cloud, sui t, action or proceeding. Section 11.05. Recordation and Filing. The City shall record and file the Lease Agreement and all such documents as may be required by law (together with whatever else may be necessary or be reasonably required by the Trustee), all in such manner, at such times and in such places as may be requi red by law, in order fully to preserve, protect and perfect the security of the Trustee and the Certificate Owners. Section 11.06. City Budgets. The City shall supply to the Trustee, at least thirty (30) days prior to the beginning of each Fiscal Year of the City, a determination that the City has made adequate provision in its proposed budget for the Fiscal Year for the payment of Lease Payments due under the Lease Agreement during the Fiscal Year. Such determination shall be made as soon as practicable after the first publication of any notice of public hearing upon the -36- o o o , proposed budget of the City for each ensuing Fiscal Year and shall be made, in any event, not later than the date fixed for any public hear ing on the proposed budget. The determination given by the City to the Trustee shall be that the amounts so budgeted are fully adequate for the payment of all Lease Payments due under the Lease Agreement in the then ensuing Fiscal year. If in the opinion of the Trustee the amounts so budgeted are not adequate for the payment of Lease Payments due under the Lease Agreement, the City will take such action as may be necessary to cause such annual budget to be amended, corrected or augmented so as to include therein the amounts required to be raised by the City in the then ensuing Fiscal Year for the payment of Lease Payments due under the Lease Agreement, and will notify the Trustee of the proceedings then taken or proposed to be taken by the City. The City will keep the Trustee advised of all proceedings thereafter taken by the City. Section 11.07. Further Assurances. The Lessor and the City will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facili- tate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the Certificates the rights and benefits provided herein. ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of City. Except for the payment of Lease Payments and Prepayments when due in accordance with the Lease Agreement and the performance of the other covenants and agreements of the City contained in said agreement, the City shall have no obligation or liabi- lity to any of the other parties hereto or to the Owners of the Certificates with respect to this Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee. Section 12.02. No Liability for Trustee Performance. Except for those specific instances provided for herein where the Trustee must act as specifically requested or ordered by the City or the Lessor, neither the City nor the Lessor shall have any obligation or liability to any of the other parties hereto or to the Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Agreement. -37- o o o .. Section 12.03. Limited Liability of Trustee. The Trustee shall have no obligation or responsibility for providing information to the Owners concerning the invest- ment character of the Certificates, for the sufficiency or collection of any Lease Payments or other moneys required to be paid to it under the Lease Agreement, or for the actions or representations of any other party to this Agreement. The Trustee shall have no obligation or liability to any of the other parties or the Owners of the Certificates with respect to the failure or refusal of any other party to perform any covenant or agreement made by any of them under this Agreemen~or the Lease Agreement, but shall be respon- sible solely for the business-like performance of the duties expressly imposed upon it hereunder. The recitals of facts, covenants and agreements herein and in the Certificates contained shall be taken as statements, covenants and agree- ments of the City or the Lessor (as the case may be), and the Trustee assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Certificates, and shall not incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon it. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. Section 12.04. Indemnification. The Lessor and the City agree to indemnify and save the Trustee harmless from and against all claims, suits and actions brought against it, or to which it is made a party, and from all liability, losses and damages suffered by it as a result thereof, where and to the extent any such claim, suit or action arises out of the actions of any other party to this Agreement, including but not limited to the ownership, operation or use of the Projects by the Lessor or the City. Such indemnifica- tion shall not extend to claims, suits and actions brought against the Trustee for its failure to perform and carry out the duties specifically imposed upon and to be performed by it pursuant to this Agreement. In the event the Lessor or the City is required to indemnify the Trustee as herein provided, the Lessor or the City (as the case may be) shall be subrogated to the rights of the Trustee to recover losses or damages from any other person or entity. The Trustee may have its own counsel with respect to such claims, suits and actions, and such counsel shall be paid for by the City or the Lessor, whichever is appropriate, except in those instances where it is found by a court of competent juris- diction that the Trustee acted negligently or that its misconduct was willful. -38- o o o ~ Section 12.05. Opinion of Counsel. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee, which opinion shall be made available to the other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, the Trustee shall be absolutely protected in relying on such an opinion or certificate. Section 12.06. Limitation of Rights to Parties and Certificate Owners. Nothing in this Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Lessor, the Trustee and the OWners of the Certificates, any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenant, condition or provision hereof, and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City, the Lessor, the Trustee and the OWners of the Certificates. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights. Pursuant to the Assignment Agreement, the Lessor has transferred, assigned and set over to the Trustee all of the Lessor's rights in and to the Lease Agreement (excepting only the Lessor I s rights under Sections 5.8, 7.3 and 9.4 thereof), including wi thout limitation all of the Lessor' s rights to exercise such rights and remedies conferred on the Lessor pursuant to the Lease Agreement as may be necessary or convenient (i) to enforce payment of the Lease Payments, Prepayments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund, and (ii) otherwise to exercise the Lessor's rights and take any action to protect the interests of the Trustee or the Certificate Owners in an Event of Default. Such assignment shall impose no duties upon the Trustee beyond those duties expressly provided herein and in the Lease Agreement. Section 13.02. Remedies. If an Event of Default shall happen, then and in each and every such case during the continuance of such Event of Default, the Trustee may exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything herein or in the Lease Agree- -39- o o o ~ ment to the contrary, there shall be no right under any circumstances to accelerate the maturities of the Certifi- cates or otherwise to declare any Lease Payment not then in default to be immediately due and payable. Section 13.03. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XIII or Article IX of the Lease Agreement shall be applied by the Trustee in the order following upon presentation of the several Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: First, to the payment of the costs and expenses of the Trustee and of the Certificate Owners in declaring the Event of Default, including reasonable compensation to its or their agents, attorneys and counsel; Second, to the payment of the whole amount then owing and unpaid with respect to the Certificates for principal and interest, with interest on the overdue principal and installments of interest at the rate of twelve percent (12%) per annum (but such interest on overdue installments of interest shall be paid only to the extent funds are avail- able therefor following payment of principal and interest and interest on overdue principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Certi- ficates, then to the payment of such principal and interest, without preference or priority of principal over interest, or of interest over principal, or of any installments of interest over any other installment of interest, ratably to the aggregate of such principal and interest. Section 13.04. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continu- ing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemni- fied to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners of Certi- ficates by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder. -40- ", o o o " Section 13.05. Non-waiver. Nothing in this Article XIII or in any other provision of this Agreement, or in the Certificates, shall affect or impair the obligation of the City, which is absolute and unconditional, to payor prepay the Lease Payments as provided in the Lease Agreement, or affect or impair the right of action, which is also absolute and unconditional, of the Certificate Owners to institute suit to enforce such payment. No delay or omission of the Trustee or of any Owner of any of the Certificates to exer- cise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XIII to the Trustee or to the Owners of Certificates may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Certificate Owners. Section 13.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. Section 13.07. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Certificates, with respect to the continuance, discon- tinuance, withdrawal, compromise, settlement or other disposal of such action: provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of at least a majority in principal amount of the Certificates then Outstanding opposing such discontinuance, withdrawal, compromise, settlement or other disposition of such litigation. Section 13.08. Limitation of Certificate Owners' Right to Sue. No Owner of any Certificate shall have the right to institute any suit, action or proceeding at law or in equity, with respect to any remedy under or upon this Agreement, unless (a) such Owner shall have previously given -41- o o o , to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of at least a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indem- nity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or failed to comply with such request for a period of sixty (60) days after such written request shall have been received by, and such tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or failure are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Certi- ficates of any remedy hereunder; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. The right of any Owner of any Certificate to receive payment of said Owner's proportionate interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Agreement. Section 13.09. Agreement to Pay Attorneys' Fees and Expenses. In the event any party to this Agreement should default under any of the provisions hereof and a non- defaulting 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 non-defaulting party or parties the reasonable fees of such attorneys and such other expenses so incurred by the non-defaulting party or parties. -42- " o o o ~ ARTICLE XIV MISCELLANEOUS Section 14.01. Defeasance. If and when all Outstanding Certificates shall be paid and discharged in anyone or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and redemption premiums (if any) with respect to all Certificates Outstanding, as and when the same become due and payablel (b) by depositing with the Trustee, in trust, at or before maturity, money which, together with the amounts then on deposit in the Lease Payment Fund and the Reserve Fund, is fully sufficient to pay all Certi- ficates Outstanding, including all principal and interest and premium, if anYl (c) by depositing with the Trustee, in trust, Federal Securities in such amount as the Trustee shall determine will, together with the interest to accrue thereon, and moneys then on deposit in the Lease Payment Fund and the Reserve Fund, together with the interest to accrue thereon, be fully sufficient to pay and discharge all Certificates Outstanding (including all principal, interest and redemption premiums, if any) at or before their respective maturity datesl or (d) by depositing with the Trustee, under an escrow deposit and trust agreement, security for the payment of Lease Payments as more particularly described in Section 10.1 of the Lease Agreement, said security to be held by the Trustee as agent for the City to be applied by the Trustee to pay the Lease Payments as the same become due and payable and make a Prepayment in full on any Prepayment Date, pursuant to Section 10.1 of the Lease Agreementl notwithstanding that any Certificates shall not have been surrendered for payment, all obligations of the Lessor, the Trustee and the City with respect to all Outstanding Certificates shall cease and terminate and this Trust Agree- ment shall be discharged, except only the obligation of the Trustee to payor cause to be paid, from Lease Payments paid by or on behalf of the City or from funds or securities deposited pursuant to paragraphs (b) through (d) of this Section, to the Owners of the Certificates not so surren- dered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraphs (b) through (d), -43- .. o o o .. the Certificates shall continue to represent direct and proportionate interests of the Owners thereof in Lease Pay- ments under the Lease Agreement. Any funds held by the Trustee, at the time of one of the events described in paragraphs (a) through (d) of this Section, which are not required for the payment to be made to Owners of the Certificates, shall be paid over to the City. Section 14.02. Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed under this Agreement, which shall be available for inspection by the City, the Lessor and any Owner, or the agent of any of them, at any time during regular business hours. Section 14.03. Notices. All written notices to be given under this Agreement shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other parties in writing from time to time. Notice shall be effective upon deposit in the United States mail, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: If to the City: City of San Bernardino 300 North "0" Street San Bernardino, CA 92418 Attention: City Treasurer If to the Lessor: Redevelopment Agency of the City of San Bernardino .300 North "0" Street San Bernardino, CA 92418 Attention: Executive Director If to the Trustee: Security Pacific National Bank 333 South Beaudry Avenue (W24-30) Los Angeles, CA 90017 Attention: Corporate Services Division Section 14.04. Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State. Section 14.05. Binding Effect1 Successors. This ment shall be binding upon and inure to the benefi t parties and their respective successors and assigns. Agree- of the When- -44- .. o o o .. ever in this Agreement either the Lessor, 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 Agreement contained by or on behalf of the Lessor, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 14.06. Execution in Counterparts. This Agree- ment may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section 14.07. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Agreement. Unless otherwise specifically indicated, all references herein to "Articles," "Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 14.08. Limitation of Rights to Parties and Certificate Owners. Nothing in this Agreement or in the Certificates expressed or implied is intended or shall be construed to give to any person other than the Lessor, the City, the Trustee and the Owners of the Certificates, any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenant, condition or provision therein or herein contained; and all such cove- nants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Lessor, the City, the Trustee and the Owners of the Certificates. Section 14.09. Waiver of Notice. Whenever in this Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 14.10. Se arabilit of Invalid Provisions. In case anyone or more of t e prov1s10ns conta1ne 1n this Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this -45- . . o o () .. Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant hereto irrespective of the fact that anyone or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable. Section 14.11. Inapplicability of Sections 8.09 and 8.10 Under Certain Circumstances. Notwithstanding any other provision of this Agreement, if the City shall receive an opinion of nationally recognized bond counsel that any action required by Sections 8.09 and/or 8.10 hereof is no longer required, or that some further action is required to maintain the exclusion from federal income tax of interest on the Certificates, the City may rely conclusively on such opinion in instructing the Trustee as to compliance with the requirements of Section 8.09 and/or 8.10, as applicable, and the covenants contained therein shall be deemed to be modified to that extent. -46- o o o .. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. (SEAL) Attest: (SEAL) Attest: Secretary (SEAL) Attest: City Clerk JRR02Sl SECURITY PACIFIC NATIONAL BANK, as Trustee By: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Chairman CITY OF SAN BERNARDINO By: Mayor -47- . .. o o o EXHIBIT A (FORM OF CERTIFICATE OF PARTICIPATION) CERTIFICATE OF PARTICIPATION (City of San Bernardino 1986 Projects) Evidencing a Proportionate Interest of the Owner Hereof in Lease Payments to be Made by THE CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Property Pursuant to a Lease Agreement with The Redevelopment Agency of the City of San Bernardino No. $ CERTIFICATE DATE: October 1, 1986 RATE OF INTEREST: , MATURITY DATE: CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THIS IS TO CERTIFY THAT the Registered Owner iden- tified above, or registered assigns, as the registered owner of this Certificate of Participation ("this Certificate"), is the owner of an undivided proportionate interest in the right to receive certain Lease Payments and prepayments thereof under and defined in that certain Lease Agreement (the "Lease Agreement") dated as of October 1, 1986, by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic organized and existing under the laws of the State of California (the "Lessor"), and the City of San Bernardino, California, a chartered city organized and existing under and by virtue of the Constitution and laws of the State of California (the "Ci ty"), which Lease Payments and prepayments and certain A-l f' '" ., o o o other rights and interests under the Lease Agreement have been assigned to Security Pacific National Bank, as trustee (the "Trustee"), having principal corporate trust offices at which it conducts its trust business in Los Angeles, California. The Registered Owner of this Certificate is entitled to receive, subject to the terms of the Lease Agreement, on the Maturity Date specified above, the Prin- cipal Amount specified above, representing a portion of the Lease Payments designated as principal coming due during the preceding twelve months, and to receive on April 1, 1987, and semiannually thereafter on October 1 and April 1 of each year (the "Payment Dates"), until payment in full of said Principal Amount, the Registered Owner's proportionate share of the Lease Payments designated as interest coming due during the six months immediately preceding each of the Payment Dates; provided that interest with respect hereto shall be payable from the Payment Date next preceding the date of execution of this Certificate (i) unless this Certificate is executed on a Payment Date, in which event interest shall be payable from such Payment Date, or (H) unless this Certificate is executed after the close of business on the last day of the month prior to a Payment Date, in which event interest shall be payable from such Payment Date, or (Hi) unless this Certificate is executed prior to March 16, 1987, in which event interest shall be payable from the Certificate Date specified above. Said proportionate share of the portion of the Lease Payments designated as interest is the result of the multiplication of the aforesaid portion of the Lease Payments designated as principal by the per annum Rate of Interest specified above. Such interest amounts are payable in lawful money of the United States of America by check or draft mailed by the Trustee to the Registered Owner hereof at his address as it appears on the registration books of the Trustee or at such other address as he may have filed with the Trustee for that purpose. This Certificate has been executed and delivered by the Trustee pursuant to the terms of a Trust Agreement by and among the Trustee, the Lessor and the City, dated as of October 1, 1986 (the "Trust Agreement"). The City is authorized to enter into the Lease Agreement and the Trust Agreement under the Consti tution and laws of the State of California. Reference is hereby made to the Lease Agreement and the Trust Agreement (copies of which are on file at the principal corporate trust offices of the Trustee) for a description of the terms on which the Certificates are delivered, the rights thereunder of the Registered Owners of the Certificates, the rights, duties and immunities of the A-2 ~~ , . ... o o o Trustee and the rights and obligations of the City under the Lease Agreement, to all of the provisions of which Lease Agreement and Trust Agreement the Registered Owner of this Certificate, by acceptance hereof, assents and agrees. The City is obligated under the Lease Agreement to pay Lease Payments from any source of legally available funds (subject to certain exceptions) and the City has covenanted in the Lease Agreement to make the necessary annual appropriations therefor. The obligation of the City to pay the Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments does not constitute a debt of the City, the State of California or any of its political subdivisions, and does not constitute an indebtedness within the meaning of any constitutional or statutory debt limita- tion or restriction. To the extent and in the manner permitted by the terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the owners of at least sixty percent (60\) in aggregate principal amount of the Certificates then outstanding, and may be amended without such consent under certain circumstances but in no event such that the interests of the Registered Owners of the Certificates are adversely affected. No such amendment may impair the right of any Registered Owner to receive in any case the Regis- tered Owner's proportionate share of any Lease Payment or prepayment thereof, in accordance with the Registered Owner's Certificate, without the Registered Owner's express consent. This Certificate is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the principal corporate trust office of the Trustee in Los Angeles, California, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement, and upon surrender and cancellation of this Certificate. Upon such transfer a new Certificate or Certificates, of authorized denomination or denominations, for the same aggregate principal amount will be delivered to the transferee in exchange for this Certifi- cate. The City, the Lessor and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, whether or not this Certificate shall be overdue, and the City, the Lessor and the Trustee shall not be affected by any notice to the contrary. A-3 "" ... ., o o o The Trustee has no obligation or liability to the Registered OWners of Certificates for the obligation of the City to make Lease Payments. The Trustee's sole obligation is to administer for the benefit of the Registered OWners of the Certificates and the City the various funds and accounts established under the Trust Agreement. The Certificates maturing on or after October 1, 1992, are subject to redemption in whole, or in part among maturities such that approximately equal annual Lease Pay- ments prevail following such redemption, and by lot within a maturity, from prepayments of the Lease Payments made at the option of the City pursuant to Section 10.2 of the Lease Agreement, on October 1, 1991, or on any Payment Date there- after, at a redemption price equal to the principal amount thereof plus a premium (expressed as percentages of the principal amount of the Certificates or portions thereof to be redeemed) as set forth in the following table, together with accrued interest to the date fixed for redemption: Redemption Dates October 1, 1991 and April 1, 1992 October 1, 1992 and April 1, 1993 October 1, 1993 and thereafter Redemption Prices 101% looh 100% No premium shall be paid with respect to the redemption of Certificates on or after October 1, 1993. The Certificates are also subject to mandatory redemption on any date prior to maturity in whole, or in part among maturities such that approximately equal annual Lease Payments prevail following such redemption and by lot within a maturity, from the net proceeds of insurance or condemnation or sale of projects and sites credited towards the prepayment of the Lease Payments by the City pursuant to Section 10.3 of the Lease Agreement, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. The Certificates are also subject to mandatory redemption on October 1, 1989, in whole or in part, from unexpended proceeds of the Certificates and investment earnings thereon transferred to the Trustee for deposit into the Lease Payment Fund pursuant to Section 3.03 of the Trust Agreement, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. As provided in the Trust Agreement, notice of redemption shall be mailed, not less than twenty-five (25) A-4 '. . ... o o o nor more than sixty (60) days before the redemption date, to the Registered OWner of this Certificate, but neither failure to mail such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption. If this Certificate is called for redemption and payment is duly provided therefor as specified in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the date fixed for redemption. IN WITNESS WHEREOF, this Certificate has been executed and delivered by Security Pacific National Bank, as Trustee acting pursuant to the Trust Agreement, as of the date set forth below. Dated: SECURITY PACIFIC NATIONAL BANK, as Trustee By: Authorized Officer A-5 JRR025lA to transfer said Certificate on the books of Pacific National Bank, as Trustee, with full substitution in the premises. o Dated ',. , . . o o [FORM OF ASSIGNMENT] FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE Please print or typewrite name and address including postal zip code of assignee the within Certificate, and does hereby irrevocably consti- tute and appoint Attorney Security power of NOTICE: The signature on this assignment must correspond with the name(s) as written on the face of the within Certificate in every particular without alteration or enlargement, or any change whatsoever. Signature Guaranteed: NOTE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. JRR025lC